Will the broad-based earnings growth of FY2027 1Q be repeated in the first half?

In FY2027 1Q, operating revenue was ¥434,364 million, up 33.1% year on year, while operating income was ¥77,512 million, up 114.3%. Ordinary income was ¥88,089 million and net income attributable to owners of the parent was ¥56,414 million, up 101.5% and 80.6%, respectively. Operating income as a percentage of operating revenue was approximately 17.8%, up approximately 6.8 percentage points from approximately 11.1% in the prior-year period.

By segment, the wealth management division reported net operating revenue of ¥88.230 billion and ordinary income of ¥37.274 billion, up 40.3% and 88.9%, respectively, year on year. The asset management division reported ¥40.928 billion and ¥30.362 billion, up 45.1% and 105.5%. The global markets and investment banking division reported ¥76.512 billion and ¥22.710 billion, up 53.6% and 354.0%. The fact that all three divisions reported higher profits indicates that the result was not a recovery in a single business, but reflected simultaneous contributions from client flows, assets under management, and underwriting and M&A transactions.

Expenses also increased. Transaction-related expenses were ¥28.866 billion and personnel expenses were ¥71.610 billion, with performance-linked bonuses, commissions, and wage increases among the drivers. Depreciation and amortization was also ¥12.293 billion. As revenue expansion continues, the focus for the profit margin will be the extent to which personnel and system costs, as well as variable costs, increase in tandem.

The company does not disclose a full-year earnings forecast because market conditions in the securities business are highly volatile. Accordingly, 1Q results cannot be assessed using a progress rate against a full-year forecast. At the next earnings announcement, it will be necessary to confirm cumulative first-half operating revenue and ordinary income, whether all three divisions continue to report year-on-year profit growth, whether the operating margin can remain in the 17% range, and whether the rate of expense growth is exceeding revenue growth.