FY2027-H1: whether earnings growth can continue after the major upward revision

For the first quarter of the fiscal year ending March 2027, ordinary income was ¥37,937 million, ordinary profit was ¥8,326 million, and net income attributable to owners of the parent was ¥5,809 million, representing year-on-year increases of 73.6%, 56.5% and 53.7%, respectively. By segment, banking recorded ordinary income of ¥33,476 million and ordinary profit of ¥8,056 million, with banking accounting for nearly all of the year-on-year increase in profit. Leasing also recorded higher ordinary income of ¥4,580 million and ordinary profit of ¥272 million, but income growth was limited to 0.1%, while profit rose 113.4%.

As of May, the FY2027 full-year forecast was ordinary income of ¥117.6 billion, ordinary profit of ¥26.0 billion and net income of ¥17.6 billion. In the September earnings forecast revision, these were raised to ¥134.8 billion, ¥29.6 billion and ¥20.0 billion, respectively. The net income forecast was raised by ¥2.4 billion, or 13.6%, implying a 28.8% increase from FY2026 actual net income of ¥15,527 million. On a first-quarter basis alone, progress against the revised ordinary income and ordinary profit forecasts was 28.1% in both cases, above the simple quarterly benchmark of 25%.

However, the disclosed drivers of first-quarter revenue growth include higher interest income on loans and interest and dividend income on securities, as well as gains on cancellation of asset swaps and gains on sales of shares and other securities. The amounts attributable to each factor, and the breakdown between recurring net interest income and one-off gains and losses on sales and cancellations, are not separated in the first-quarter information provided. In FY2027-H1, it will be necessary to examine not only progress against the ordinary profit forecast but also net interest income, net fees and commissions, gains and losses on sales of bonds, and gains on sales of shares and other securities individually, to determine whether the revised ¥20.0 billion net income target is supported by recurring earnings.