First Read: Japan Financials "Key points for Q1 results: Company..."

Research evidence excerpt

First Read: Japan Financials "Key points for Q1 results: Company..."

Global Research

14 July 2026ab

First Read

EquitiesJapan Financials

Key points for Q1 results: Company Japan

communication capabilities to be tested amid Financial

expectations preceding fundamentals KoichiAnalystNiwa

koichi.niwa@ubs.com

+81-3-5208 6245

Makoto IshiiConclusion

Associate Analyst

In the Q1 results for the financial companies under our coverage, we expect the focus to makoto.ishii@ubs.com

be on the extent to which earnings and company communications can catch up with +81-3-5208 3097

preceding market expectations. Following the additional rate hike in June, the policy

rate reached 1.00%, and the terminal policy rate priced in by the OIS market has also

risen to nearly 2%. Expansion in yen interest income is highly beneficial for banks and

life insurers, and we believe the market's earnings expectations are already above

company guidance.

However, we expect Q1 results to include little in the way of contribution from the June

rate hike, and the numbers themselves are likely to make for a quarter with limited

surprises. However, the low likelihood of surprises does not mean companies should be

consistently conservative in their messaging. If companies present cautious outlooks

that do not fully reflect changes in actual conditions, it could lead to unnecessary

disappointment in the market. For these results announcements, we believe investors

should focus more on what each company communicates regarding the likelihood of

achieving plans and the scope for upside, rather than on the numbers themselves.

Order of sector preference

For the short term, i.e., from the earnings announcements until before the Bank of

Japan meeting in September, we are raising our preference ranking for securities from