A sharp rise in first-quarter profit has increased confidence in achieving the full-year earnings target, but the focus is now on assessing sustainability in the first half

Net profit attributable to owners of the parent was ¥19.382 billion for the fiscal year ended March 2026, up ¥4.664 billion from ¥14.718 billion in the previous fiscal year. The company forecasts net profit of ¥20.6 billion for the fiscal year ending March 2027, implying an increase of ¥1.218 billion, or 6.2%, year on year. By contrast, ordinary profit is forecast at ¥30.5 billion, up 37.8% from the ¥22.132 billion recorded for the fiscal year ended March 2026. Thus, the planned rate of growth differs between ordinary profit and net profit.

For the first quarter of the fiscal year ending March 2027, ordinary profit was ¥8.487 billion and net profit was ¥5.720 billion. Progress against the full-year forecasts was 27.8% for both ordinary profit and net profit. Assuming that 50% of the full-year forecast is earned in the first half, the next checkpoint at the cumulative second-quarter stage would be ordinary profit of ¥15.250 billion and net profit of ¥10.3 billion. However, banking-sector earnings are affected by the interest-rate environment and the timing of securities transactions, so it is too early to assess full-year achievement based solely on first-quarter progress.

The factors behind the first-quarter earnings growth were increases in funds-related operating income, including interest on loans and interest and dividends on securities, as well as other ordinary income, including gains on sales of shares and other securities. At the same time, funds-related expenses, such as interest on deposits, and losses on sales of Japanese government bonds and other bonds also increased. In the next earnings release, it will be necessary to distinguish on an amount basis whether the earnings growth was recurring, driven by improved lending and deposit yields, or resulted from market transactions such as gains on sales of shares and other securities and losses on sales of bonds.

There has been no revision to the full-year earnings forecast at this point, and the first-quarter profit level alone does not confirm the company's assumptions of slower earnings growth and higher expenses in the second half. In the first-half results, the key points to confirm will be cumulative progress for ordinary profit and net profit, the reason for maintaining the full-year forecasts, whether the contribution from higher interest rates will continue into the second half, and the level of underlying profit excluding one-off income such as gains on sales of shares and other securities.