Can the upward revision to the first-half earnings forecast be supported by actual results?

Consolidated ordinary profit for the first quarter of FY2027, the fiscal year ending March 2027, was ¥3.898 billion, while quarterly net income attributable to owners of the parent was ¥2.737 billion. In the earnings forecast revision announced on 27 October, the first-half ordinary profit forecast for April through September was raised to ¥8.5 billion, and the first-half net income forecast was set at ¥6.0 billion. The first-half ordinary profit forecast was increased by ¥1.6 billion from the previous forecast of ¥6.9 billion and is expected to represent approximately 23% growth year on year.

Simply deducting first-quarter actual results from the first-half forecast implies that standalone second-quarter ordinary profit of approximately ¥4.602 billion and net income of approximately ¥3.263 billion will be required. Whether these levels can actually be achieved will be a useful checkpoint for assessing progress against the first-half forecast. As the full-year ordinary profit forecast remains unchanged at ¥14.6 billion, achieving first-half ordinary profit of ¥8.5 billion would still leave ¥6.1 billion required in the second half.

The reasons given for the upward revision were the expected outperformance of net interest income and fees and commissions, and credit costs coming in below assumptions. However, at the time of the first-half forecast revision, the company had not disclosed how many billions of yen each of net interest income, fees and commissions, and credit costs was expected to contribute to the upside, or whether banking or leasing would be the main contributor.

At the next results announcement, it will be necessary to distinguish not only whether first-half ordinary profit of ¥8.5 billion and net income of ¥6.0 billion were achieved, but also whether the outperformance resulted from higher interest on loans and fees, or from a temporary decline in credit costs. If the full-year forecast of ¥14.6 billion is maintained, it will also be necessary to determine whether the first-half upside is being offset by conservative assumptions for the second half, or whether there is still headroom in the full-year forecast itself.