Q1 generated more than half of the full-year forecast, but first-half results need to confirm whether this is repeatable

In Q1 of the fiscal year ending March 2027, ordinary income was ¥5,725 million, ordinary profit was ¥1,210 million and quarterly net income attributable to owners of the parent was ¥824 million. Year on year, ordinary income increased 30.8%, ordinary profit 51.8% and final profit 50.6%, with profit growth outpacing the increase in revenue. As the full-year forecasts are ¥2,300 million in ordinary profit and ¥1,600 million in net income, simple calculation puts progress at 52.6% and 51.5%, respectively.

On a full-year basis, ordinary profit increased from ¥1,901 million in FY2025 to ¥2,243 million in FY2026, while the FY2027 forecast is ¥2,300 million, implying planned growth of 2.5% year on year. Ordinary profit increased from ¥796 million in Q1 of FY2026 to ¥1,210 million in Q1 of FY2027, indicating a strong start to the year. However, the increase in the full-year forecast is only ¥57 million from the previous year, so the sharp rise in Q1 profit does not necessarily imply equivalent upside to the full-year forecast.

According to the company, interest and dividend income on loans and securities increased net interest income, while funding costs, including higher interest expense on deposits, and losses on securities sales also increased. The Q1 financial summary provided does not break down the amounts attributable to these individual factors, or provide details of domestic net interest income, deposit yields or loan yields. Accordingly, assessing the quality of the profit growth will require checking in the first-half results whether higher income reflects improved yields, growth in balances or temporary gains and losses on securities.

At the next results announcement, ordinary profit of at least ¥1,150 million would represent half of the full-year forecast, although this is only a mechanical benchmark that does not take seasonality into account. In practice, we will need to check, together with year-on-year changes, whether funding costs continue to rise, whether losses on securities sales narrow and whether fee and commission income continues to increase. Even if the earnings forecast and ¥50 annual dividend are maintained, a change in the sources of first-half profit could alter the assessment of the likelihood of achieving the second-half target.