Focus on earnings levels and sustainability ahead of another upward revision to the FY2027 forecast

For the first quarter of the fiscal year ending March 2027, ordinary income was ¥20,753 million, ordinary profit was ¥3,600 million, and net income attributable to owners of the parent was ¥2,652 million, representing year-on-year increases of 47.4%, 66.2% and 65.3%, respectively. First-quarter ordinary profit represented 29.8% of the initial full-year forecast of ¥12,100 million and 27.7% of the latest full-year forecast of ¥13,000 million.

Segment profit was ¥3,837 million in banking, ¥35 million in leasing and ¥55 million in credit guarantees. Credit guarantees was the only segment to post a year-on-year decline, down 60.4%.

Subsequently, the consolidated first-half ordinary profit forecast was raised from ¥5,600 million to ¥6,600 million, and the full-year ordinary profit forecast from ¥12,100 million to ¥13,000 million. The forecast for net income attributable to owners of the parent was also raised from ¥7,500 million to ¥8,500 million, with EPS set at ¥275.5. Based on the first-half forecast of ¥6,600 million, ¥6,400 million in ordinary profit will be required in the second half to achieve the full-year forecast. Under the previous plan, first-half ordinary profit was forecast at ¥5,600 million and full-year ordinary profit at ¥12,100 million, implying ¥6,500 million was required in the second half. The latest increase therefore largely reflects the first-half upside.

The reasons cited for the upward revision include net interest income and net fees and commissions exceeding the initial assumptions, and credit-related costs and expenses coming in below the initial forecasts. However, the information provided on the upward revision does not sufficiently break down the monetary contribution of each factor or its relationship with the significant increase in gains and losses on stocks and other securities in the first quarter. In FY2027-H1, at a minimum, net interest income, net gains and losses on stocks and other securities, other operating expenses, credit-related costs and expenses should be reviewed on a year-on-year monetary basis.

By segment, banking profit of ¥3,837 million in the first quarter led the overall improvement, while leasing also increased 133.3% year on year to ¥35 million. Credit guarantees, however, declined from ¥139 million in the prior-year quarter to ¥55 million. It remains unconfirmed whether the upward revision to the full-year forecast extends beyond the bank's core earnings to the consolidated group, including leasing and credit guarantees. At the next results announcement, particular attention should be paid to first-half segment profit, actual credit costs, expense progress and whether the full-year forecast is revised again.