Mebuki Financial Group (7167) 1Q results: Raises guidance by more than impact of BoJ rate hike

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

06 August 2026

Mebuki Financial Group (7167)

1Q results: Raises guidance by more than impact of

BoJ rate hike

Somewhat positive: FY2026 1Q net profit rose 55% YoY and 77% QoQ to ¥34.5

billion, above our estimate (¥26.3 billion). Versus our estimate, net interest

income was as expected, but capital gains were stronger. The company did not

announce a buyback, which we had expected, but raised FY2026 net profit

guidance from ¥95 billion to ¥105 billion (+25% YoY) and lifted DPS guidance

from ¥40 to ¥44. The upward revision was more than the earnings boost suggested

by the BoJ’s June rate hike.

Guidance hike also reflects balance sheet expansion, improved yields on

yen bonds: Management raised net profit guidance by ¥10 billion, breaking

down as a ¥19 billion increase in net interest income, a ¥1 billion increase

in profit on service transactions, etc., and a ¥5.5 billion reduction in capital

gains on securities. On capital gains, the outlook for losses on yen bond sales

was raised, reflecting portfolio restructuring operations amid rising Japanese

interest rates. In contrast, net interest income guidance was raised by ¥5.5

billion on benefits from securities portfolio repositioning. In addition, partly

reflecting steady deposit growth, the outlook for interest income earned on BoJ

reserves was raised. Alongside the higher net profit guidance, DPS guidance

was also raised, and the implied dividend payout ratio based on guidance is

broadly unchanged at 39.3% from the start of the fiscal year. See Figure 1 for

quarterly earnings trends. Net interest income was close to our estimate,

while profit on service transactions, etc., operating expenses, and credit

costs were better than we expected. 1Q capital gains were ¥11.7 billion, versus

revised full-year guidance of ¥9.5 billion. Even after the upward revision, we

see profit guidance as retaining a certain buffer. 1Q net income represents 33%

progress against revised full-year guidance.

No buyback announced while the capital adequacy ratio rises: In 1Q, gains

on shares more than offset yen bond losses. Also reflecting a decline in risk

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