Break down the sharp Q1 profit increase into core earnings and equity-related gains and losses

In Q1 of FY2027, ordinary revenue rose 40.8% year on year to ¥63.975 billion, ordinary income rose 80.1% to ¥31.789 billion, and net income attributable to owners of the parent rose 80.6% to ¥22.204 billion. The year-on-year increase in ordinary income was ¥14.143 billion, meaning that profit growth significantly outpaced revenue growth.

Breaking down the profit increase, net interest income rose ¥5.3 billion year on year, driven by higher interest on loans and interest and dividends on securities, while equity-related gains and losses also increased by ¥9.5 billion. Since the company identified higher gains on sales of equities and other securities as a factor behind the increase in other ordinary revenue, the overall profit increase cannot be explained solely by recurring revenue such as interest on loans. Deposit interest and losses on sales of government bonds and other bonds also increased, meaning that part of the revenue growth was offset by higher expenses.

Comparable Q1 ordinary income increased from ¥17.646 billion in FY2026 to ¥31.789 billion in FY2027. FY2026 full-year ordinary income was ¥78.469 billion, while the FY2027 full-year forecast is ¥89.500 billion, representing growth of only 14.0%. Accordingly, the 80.1% Q1 increase does not directly represent the company's full-year earnings power.

In FY2027-H1, it will be important to disclose separately the increases in equity-related gains and losses and net interest income. In particular, if gains on sales of equities and other securities remain substantial in H1, this would improve the likelihood of achieving the ¥89.500 billion full-year forecast, but it will also be necessary to confirm whether the forecast assumes gains on sales of a similar scale in the second half. Expenses such as deposit interest, losses on sales of bonds and allowance for loan losses will also need to be monitored in assessing earnings quality.