Assessing profit progress against the FY2027 full-year plan and the quality of earnings

In FY2026, ordinary revenue was ¥167,102 million, ordinary profit was ¥19,756 million, and net profit attributable to owners of the parent was ¥12,632 million. Ordinary profit increased 60.6% from ¥12,298 million in the previous fiscal year, while net profit increased 55.5% from ¥8,120 million, representing a significant recovery from the previous year’s declining earnings trend. However, the ordinary profit margin on ordinary revenue declined from 13.7% to 11.8%, meaning that the expansion in revenue did not translate directly into improved profitability.

For FY2027, the company forecasts ordinary profit of ¥26,500 million and net profit attributable to owners of the parent of ¥17,000 million. These figures represent planned increases of 34.1% in ordinary profit and 34.5% in net profit from FY2026 actual results, and are consistent with the targets for the fiscal year ending March 2027 set out in Medium-Term Management Strategy 2026: ordinary profit of ¥26.5 billion and net profit of ¥17.0 billion. Accordingly, at the next results announcement it will be necessary to assess not only whether the company raises its forecast but also which of growth in banking revenue, net interest income, credit costs, and non-interest income will support achievement of ¥26.5 billion.

In the latest period, FY2027-Q1, ordinary revenue increased 8.0% year on year to ¥27,884 million, while ordinary profit declined 13.5% to ¥7,213 million. Interest on loans and interest and dividends on securities increased, but ordinary expenses also rose as interest paid on deposits and other items increased. Net profit attributable to owners of the parent rose 31.7% to ¥7,521 million, helped by a decline in deferred income taxes. The increase in net profit therefore cannot be assessed as a straightforward improvement in recurring earnings power.

In FY2027-H1, the initial benchmarks will be whether ordinary profit exceeds ¥12,345 million in the year-earlier period and reaches at least ¥13,250 million against the full-year plan of ¥26,500 million. For net profit, ¥8,500 million represents half of the full-year plan, but because the impact of tax effects is significant, it will be important to disclose profit before tax, deferred income taxes, and extraordinary gains and losses separately. The Q1 report does not disclose operating profit, a cash flow statement, or a full-year ordinary revenue forecast, so supplementary disclosure in H1 covering the revenue and profit breakdowns of the banking and leasing businesses would be desirable.