FY2027-Q1 turned loss-making after the failure of a major borrower, raising the bar for a full-year recovery

Ordinary revenue for April to June 2026 was ¥15.516 billion, while ordinary profit fell from ¥1.453 billion in the year-earlier period to a ¥4.850 billion loss. Quarterly net income attributable to owners of the parent also turned from a ¥1.906 billion profit in the year-earlier period to a ¥3.017 billion loss. The deterioration at the profit level was substantial, and at the next interim results the key issue will be whether earnings excluding credit costs have recovered, rather than simply whether revenue has increased.

The main factor was the response to the major borrower 全東信, for which the commencement of bankruptcy proceedings was announced in July 2026. The company wrote off in full the ¥5.8 billion of unsecured claims out of ¥8.0 billion owed by the borrower, causing Q1 credit costs to swell to approximately ¥7.890 billion. At the next H1 results, it will be necessary to check not only whether additional provisions have been made for this case, but also whether conservative provisioning remains in place for other major borrowers and specific industries.

The company has maintained its full-year forecasts for the fiscal year ending March 2027 of ¥5.0 billion in ordinary profit and ¥5.5 billion in net income attributable to owners of the parent. Assuming the Q1 ordinary loss of ¥4.850 billion, it will need to generate cumulative ordinary profit of ¥9.850 billion over the three quarters from Q2 onward, requiring a substantial recovery over the remainder of the year. As of Q1, the company had not disclosed an H1 earnings forecast, operating profit, revenue or quarterly cash flow.

At the next results announcement, credit costs should be assessed together with whether they return from the exceptional Q1 level to normal levels, whether interest income on loans and interest and dividend income on securities continue to increase, and whether sufficient second-half earnings are accumulating to support the full-year forecast. A reduction in the loss alone will not be enough. The minimum condition for confirming a recovery is for ordinary profit excluding additional write-offs to turn positive.