1Q earnings surged on market revenues, with gains on business transfers also contributing

FY2027-1Q operating revenue was ¥30,072 million, up 53.3% from ¥19,619 million in the year-earlier period. Operating profit was ¥8,090 million, ordinary profit was ¥8,943 million, and net income attributable to owners of the parent was ¥7,192 million. Compared with operating profit of ¥392 million and net income of ¥340 million in the year-earlier period, profit growth substantially outpaced revenue growth. On a simple calculation, the operating margin rose sharply from approximately 2.0% in the year-earlier period to approximately 26.9% in 1Q, indicating significant operating leverage from improved market conditions.

By revenue category, total fees received increased 47.8% year on year to ¥14,446 million, while total trading gains and losses rose 60.4% to ¥12,219 million. The year-on-year increase included ¥4,173 million from brokerage commissions, ¥2,963 million from trading gains and losses on stocks and other securities, and ¥1,639 million from trading gains and losses on bonds, foreign exchange and other instruments. By contrast, other fees received reduced revenue by ¥223 million, so not all revenue categories moved in the same direction.

Final profit also benefited from the ¥2,828 million gain on the transfer of a business recorded as extraordinary income. Income before income taxes and other adjustments was ¥11,772 million, making the gain on the business transfer equivalent to approximately 24% of that amount. Accordingly, 1Q net income of ¥7,192 million cannot be viewed as the company’s sustainable earning power without adjustment. Operating profit in 1Q also reached approximately 54.6% of the ¥14,815 million recorded for FY2026 as a whole, underscoring the need to distinguish market-driven earnings volatility from one-off gains.

For the next period, FY2027-H1, it will be important to assess not only the growth rate in operating revenue but also the breakdown of fees received, trading gains and losses, financial revenue, and selling, general and administrative expenses, as well as whether pretax profit and net income excluding the gain on the business transfer will be disclosed. We will assess whether the operating margin exceeds 10% in H1 and whether core revenue remains above the year-earlier level, to determine whether 1Q’s high profitability was temporary and market-driven or accompanied by a buildup of recurring revenue.