Does FY2027-H1 performance after the upward revision validate growth in interest income?

FY2027-Q1 ordinary income was ¥9.899 billion, ordinary income was ¥2.252 billion, and quarterly net income attributable to owners of the parent was ¥1.582 billion, representing year-on-year increases of 19.9%, 45.8% and 31.1%, respectively. As quarterly operating income is not disclosed, the focus for a bank should be on ordinary income and net income, while examining the composition of earnings.

The initial full-year forecasts were ordinary income of ¥37.8 billion, ordinary income of ¥3.8 billion and net income of ¥2.5 billion, but on 26 October the full-year ordinary income forecast was raised to ¥4.7 billion and the net income forecast to ¥2.9 billion. The first-half ordinary income forecast was also revised from ¥2.4 billion to ¥3.4 billion, and the net income forecast from ¥1.7 billion to ¥2.2 billion. Against the revised first-half ordinary income forecast of ¥3.4 billion, first-quarter ordinary income of ¥2.252 billion represents 66.2% on a simple calculation, making it important to see whether this earnings level was maintained in the second quarter.

The explanation for the increase in earnings was that interest income on loans and interest and dividends on securities, among other funds investment income, exceeded expectations, while funding costs such as interest on deposits also increased. FY2026 as a whole also saw higher ordinary income of ¥33.674 billion, ordinary income of ¥3.134 billion and net income of ¥2.000 billion. However, the breakdown of amounts by individual revenue and expense factors remains limited. It is therefore necessary to determine whether the upward revision reflects improvements in lending yields and deposit funding costs, rather than simply gains on bond sales or temporary market factors.

Next time, the focus will be on actual results against the revised first-half plan of ¥3.4 billion in ordinary income and ¥2.2 billion in net income, whether the full-year forecasts of ¥4.7 billion and ¥2.9 billion are revised again, and the breakdown of lending interest and interest and dividends on securities. In particular, the current earnings release does not quantify sufficiently how much the increase in funding costs offset the increase in investment income, or how much core net business profit, equivalent to operating income, and net business profit on a non-consolidated basis increased.