Kiraboshi FG Q2 FY2027: Revenue jumps as profit growth stays modest

Kiraboshi FG reported revenue of ¥106.4 billion for the six months ended September 2026, up 19.4% from a year earlier. Ordinary profit rose 5.8% to ¥29.2 billion, while interim net profit attributable to owners of the parent increased 2.5% to ¥19.7 billion. Revenue growth outpaced gains in profit.

• Interest income on loans: At Kiraboshi Bank, this rose ¥6.8 billion year on year, supported by deeper customer relationships and higher policy rates.
• Interest costs on deposits and other funding: Rising rates lifted interest expenses on deposits and other funding, reducing profit by ¥4.5 billion year on year.
• Non-interest income: This increased ¥3.7 billion year on year, helped in part by lower hedging costs on yen-denominated bonds.
• Gains and losses on bonds, stocks and other securities: Higher stock-sale gains were outweighed by larger bond-sale losses, reducing profit by ¥3.3 billion year on year.

Growth in loan interest and non-interest income offset higher deposit costs and bond losses. Kiraboshi Bank, which accounts for most of the group’s earnings, posted ordinary profit of ¥26.6 billion, up 3.0% year on year. The modest increase in interim net profit puts the focus on whether higher lending income can continue to outpace rising deposit rates.

The company did not disclose revenue or profit by reportable segment. Among the businesses supporting the group, the main bank’s profit growth and expansion in digital banking stood out, alongside activity at group companies in digital, finance and solutions businesses.

Kiraboshi Bank reported ordinary profit of ¥26.6 billion, up 3.0% year on year. Higher interest income on loans and stock-sale gains absorbed increases in deposit interest and bond-sale losses. Both its loan balance and lending yield rose, with initiatives to deepen customer relationships supporting earnings.

UI Bank recorded revenue of ¥8.4 billion, up 36.5% year on year, and ordinary profit of ¥300 million. Interest income on loans and securities, as well as lending fees, increased, lifting profit from a small gain a year earlier. Retail lending balances were up about ¥249.7 billion from the end of the same period last year, as the digital bank continued to expand.

Group companies excluding Kiraboshi Bank generated profit of ¥1.95 billion, an increase of ¥350 million year on year. The company said digital business improved substantially, but interim progress against the full-year plan of ¥6.6 billion remained slow. It aims to build earnings in the second half.

Total assets stood at ¥765.92 billion at the end of September 2026, up ¥34.19 billion from the previous fiscal year-end. Loans and securities increased, while net assets declined amid the treatment of preferred shares and a deterioration in valuation differences on securities.

The equity ratio on the consolidated balance sheet was 5.1%, a measure distinct from the regulatory capital adequacy ratio. The consolidated capital adequacy ratio under the domestic standard was 8.48%, down from the previous fiscal year-end following the redemption of preferred shares in May 2026. The earnings release did not provide interim cash flow figures.

The dividend on common shares is ¥15 per share for the interim period, with a year-end forecast of ¥15. The full-year forecast is ¥30 on a post-stock-split basis, above the previous year’s split-adjusted ¥21.25. The company expects to raise its dividend for a sixth consecutive year. It also repurchased and canceled ¥40 billion of its own shares, and canceled all preferred shares, converting them into common shares. With these capital policy changes, investors will be watching whether the group can restore capital while growing earnings.

Kiraboshi FG left its consolidated forecast for the year ending March 2027 unchanged from the outlook announced in May 2026. Interim ordinary profit reached 49.9% of the full-year forecast, while interim net profit attributable to owners of the parent reached 49.3%.

The company made no upward revision to its full-year forecast. Profit progress is roughly halfway, but deposit interest costs may continue to rise as rates increase, and costs could also grow if credit quality deteriorates at some large borrowers. The key question is whether group companies can add enough profit in the second half to meet the annual plan.

Higher interest income on loans supported profit, but funding costs, bond losses and credit expenses also increased. The interest-rate environment and the credit quality of borrowers will shape the durability of earnings.

• Rising deposit rates: Higher rates increased interest expenses on deposits and other funding. If loan yields and lending balances do not rise enough to keep pace, net interest income will come under pressure.
• Bond-sale losses and valuation losses: Kiraboshi Bank recorded higher bond-sale losses, while consolidated valuation losses on other securities also widened. Further rate increases could make the valuation and sale of held bonds more challenging.
• Higher credit costs: Loan-loss provisions increased after credit quality weakened at some large borrowers, and credit-related expenses rose ¥800 million year on year. A deterioration in the economy or customers’ financing conditions could lead to further costs.
• Lower capital ratio: The consolidated capital adequacy ratio under the domestic standard declined from the previous fiscal year-end, partly because of preferred-share redemptions. Balancing growth investment and shareholder returns with maintaining capital strength remains a challenge.