Strong first-quarter earnings growth provides an early indication of full-year target achievement, but sustainability must be confirmed in the first half

Ordinary income in the first quarter of the fiscal year ending March 2027 was ¥24,483 million, up ¥6,495 million from ¥17,987 million in the same period of the previous year. Ordinary expenses also increased, but ordinary profit rose ¥2,145 million from ¥4,723 million to ¥6,868 million. Net income attributable to owners of the parent increased ¥1,552 million from ¥3,201 million to ¥4,753 million. The fact that both revenue and profit grew in the 40% range year on year is the strongest positive indication ahead of the next earnings announcement.

The company’s full-year forecasts for the fiscal year ending March 2027 are ordinary profit of ¥18.3 billion and net income attributable to owners of the parent of ¥12.5 billion. Based on a simple calculation using first-quarter results alone, ordinary profit has reached 37.5% of the full-year forecast and net income 38.0%. However, bank earnings fluctuate from quarter to quarter because of gains and losses on securities sales, market conditions and credit costs, so these progress rates cannot be treated as a direct indication of the likelihood of achieving the full-year forecasts. The key test will be whether cumulative ordinary profit through the second quarter exceeds the ¥6,047 million recorded in the same period of the previous year and approaches half of the full-year forecast.

The main drivers of profit growth were increases in interest on loans and interest and dividends on securities. At the same time, interest on deposits and other instruments and losses on sales of Japanese government bonds and other bonds also increased, so profit growth was not driven solely by an improvement in the interest margin. At the next earnings announcement, interest on loans, interest on deposits and other instruments, interest and dividends on securities, and losses on sales of Japanese government bonds and other bonds should be reviewed separately to determine whether the increase in revenue reflects first-quarter-specific booking timing or an underlying trend continuing through the first half.

There was no change to the full-year earnings forecasts as of the first quarter. Accordingly, the key issue at the next earnings announcement will not simply be whether earnings growth continues, but how much headroom has been secured through the second quarter against the forecasts of ¥18.3 billion for ordinary profit and ¥12.5 billion for net income. If first-half ordinary profit reaches around ¥9.0 billion and market gains and losses and credit costs have not deteriorated, it will be easier to discuss potential upside to the full-year forecasts. Conversely, if interest income growth slows in the second quarter and higher losses on bond sales or interest on deposits weigh on profit, the first quarter’s high growth rate alone will not be sufficient for assessment.