FY2027 fiscal year ending March started in the red, raising the hurdle for meeting the full-year forecast

In Q1, from April to June 2026, ordinary revenue was ¥7.752 billion, up 8.4% year on year. However, ordinary expenses increased by ¥1.736 billion year on year, causing ordinary profit to turn from ¥646 million in the year-earlier period to a ¥484 million loss. Quarterly net income attributable to owners of the parent also declined from ¥376 million to a ¥471 million loss. The company therefore started the year in the red, with higher revenue failing to translate into profit.

The company attributed the increase in ordinary revenue to higher gains on sales of stocks and other securities and higher interest and dividend income on securities, while citing increases in provision for loan losses and losses on sales of Japanese government bonds and other bonds on the expense side. Accordingly, in the next results announcement, it will be necessary to determine whether credit costs and bond sale losses will continue from Q2 onward or were one-off factors concentrated in Q1, rather than focusing only on the sustainability of revenue growth. The banking segment posted a loss of ¥543 million, which was not fully offset by profits of ¥56 million in leasing and ¥1 million in credit cards.

The full-year forecasts are ordinary profit of ¥1.5 billion, net income attributable to owners of the parent of ¥570 million and earnings per share of ¥44.48. A simple calculation starting from the Q1 ordinary loss of ¥484 million shows that ¥1.984 billion in ordinary profit will be required over the remaining 3 quarters to achieve the full-year forecast. For net income, the company will need ¥1.041 billion in profit over the remaining period to reach ¥570 million from the Q1 loss of ¥471 million. These are mechanical amounts required if the full-year forecasts are maintained, not the company’s quarterly targets.

The Q1 summary did not disclose operating profit, and the company did not prepare a quarterly consolidated cash flow statement. Care is therefore required because profitability at the operating level and cash generation cannot be verified using operating profit and operating cash flow. In FY2027-H1, we will look for cumulative ordinary profit to turn positive, provision for loan losses and losses on sales of bonds to fall below the year-earlier levels, and the ¥1.5 billion full-year forecast to remain intact.