Profit is ahead of schedule in Q1; assess confidence in the full-year forecast in FY2027-H1

In Q1 of the fiscal year ending March 2027, ordinary revenue was ¥32,424 million, ordinary profit was ¥8,586 million and net profit attributable to owners of the parent was ¥6,312 million. These represented increases of 26.6%, 59.1% and 63.4%, respectively, from the same period a year earlier, with profit growth outpacing the top line. The full-year forecasts are ¥133,000 million in ordinary revenue, ¥28,500 million in ordinary profit and ¥19,100 million in net profit, implying simple progress rates of 24.4%, 30.1% and 33.0%, respectively.

As of Q1, there had been no changes to the full-year earnings or dividend forecasts. The company cited increases in interest on loans, interest and dividends on securities, and interest on deposits with other institutions as factors behind the increase in ordinary profit. In addition, credit-related expenses resulted in a ¥751 million reversal, improving from the ¥501 million expense recorded in the same period a year earlier. However, this could be a temporary factor boosting profit progress, so it will be necessary to determine whether similar reversals continue in H1 or credit costs turn into expenses.

At the next results announcement, ¥66,500 million in ordinary revenue, ¥14,250 million in ordinary profit and ¥9,550 million in net profit will serve as mechanical halfway benchmarks for H1. We will look beyond whether the company simply exceeds 50% and examine the composition of the results. In particular, it will be important to see whether the company can separately disclose the increase in net interest income from higher interest rates, funding costs such as deposit interest, credit-related expenses and operating expenses. Annual dividends were ¥25.00 in FY2026 and are forecast at ¥27.50 for FY2027, with a policy of targeting a payout ratio of 40%, so we will also assess whether the shareholder return policy is maintained relative to profit progress.