FY2027 Q1 got off to a strong start, but absorbing credit costs and market-related losses will be necessary to meet the full-year targets

In the first quarter from April to June 2026, ordinary revenue rose 9.3% year on year to ¥39,287 million, ordinary profit rose 26.4% to ¥11,235 million, and net profit attributable to owners of the parent rose 24.4% to ¥7,560 million. With both ordinary profit and net profit posting growth in the 20% range, FY2027 appears to have got off to a strong start.

The increase in profit was driven by a ¥3,336 million increase in net interest income, a ¥319 million increase in net fees and commissions, a ¥564 million increase in other operating income, and a ¥209 million reduction in expenses. Credit-related expenses, however, increased by ¥1,853 million, while gains and losses related to stocks and other securities decreased by ¥2,263 million. The first-quarter increase in profit therefore reflected not only core operating revenue, but also the absorption of headwinds from market-related gains and losses and credit costs through expense controls.

FY2026 actual ordinary profit was ¥42,766 million and net profit attributable to owners of the parent was ¥27,380 million. The current FY2027 full-year forecasts are ¥44,000 million for ordinary profit and ¥30,000 million for net profit. Progress at the end of the first quarter was therefore 25.5% and 25.2%, respectively, with no significant lag compared with simple even quarterly progress. However, market-related gains and losses and credit costs tend to fluctuate from the second quarter onward in banking, so it would not be appropriate to extrapolate the first-quarter profit growth rate directly to the full year.

The first-quarter summary does not disclose operating profit, and no quarterly consolidated statement of cash flows has been prepared. In FY2027-H1, it will be necessary to review not only ordinary profit and net profit, but also year-on-year changes in net interest income, net fees and commissions, other operating income, expenses, credit-related expenses, and gains and losses related to stocks and other securities. In particular, the assessment of the results will depend on whether the ¥44,000 million and ¥30,000 million full-year forecasts can be maintained, and whether the credit-related expenses that increased in the first quarter prove temporary or ongoing.