Will the strong Q1 progress continue into FY2027 H1?

In Q1 of the fiscal year ending March 2027, consolidated ordinary income was ¥7,343 million, up 13.3% year on year, ordinary profit was ¥1,279 million, up 184.9%, and net income attributable to owners of the parent was ¥869 million, up 191.0%. Profit growth was greater than revenue growth, indicating an improvement in margins from the year-earlier quarter, although operating profit was not disclosed, so performance cannot be assessed on an operating-margin basis.

Simple progress against the full-year forecasts was 24.9% for ordinary income, calculated as ¥7,343 million ÷ ¥29,500 million, 41.3% for ordinary profit, calculated as ¥1,279 million ÷ ¥3,100 million, and 43.5% for net income, calculated as ¥869 million ÷ ¥2,000 million. Revenue was broadly on track for an even quarterly pace, while more than 40% of the full-year profit forecasts was generated in Q1. Even after taking the interest-rate environment and seasonality in expense recognition into account, this was a strong start in terms of profit.

If H1 reaches ordinary income of ¥14,750 million, ordinary profit of ¥1,550 million and net income of ¥1,000 million, equivalent to 50% of the full-year forecasts, progress will exceed a simple even split between the two halves. These are mechanical benchmarks that do not adjust for seasonality, however, and reaching them alone does not establish that full-year results will exceed the forecasts. No earnings forecast revision had been made as of Q1, so next time it will be necessary to confirm whether the strong profit progress continued into Q2.

At the next results announcement, we will review the cumulative amounts of ordinary income, ordinary profit and net income, as well as whether the full-year forecasts were revised and the contributions from interest on loans, interest on deposits, gains and losses related to securities, and credit-related expenses. In particular, because operating profit was not disclosed for either Q1 or the full-year forecast, it will be important for a bank to show, mainly through ordinary profit, how far the drivers of changes in profit can be broken down on a monetary basis.