F3/27 1Q Results: NII, Fee Income Drive Earnings; Strong Profit Progress

Research evidence excerpt

F3/27 1Q Results: NII, Fee Income Drive Earnings; Strong Profit Progress

Update

July 31, 2026 09:42 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MAozora Bank (8304) | Japan Mia Nagasaka

Equity Analyst

F3/27 1Q Results: NII, Fee Mia.Nagasaka@morganstanleymufg.com +81 3 6836-8406

Income Drive Earnings; Strong

Profit Progress

Aozora Bank (8304.T, 8304 JT)

Banks | Japan

AlphaSignals Earnings Reaction Stock Rating Underweight

Industry View Attractive

Unchanged Modest upside Meaningful revision higher Price target ¥3,070

Impact to our thesis Financial results versus consensus Direction of next 12-month Shr price, close (Jul 31, 2026) ¥3,038

consensus EPS Mkt cap, curr, basic (bn) ¥420.4

Source: Company data, Morgan Stanley Research Avg daily trading value (bn) ¥3.0

Key Takeaways

Aozora Bank reported strong profit progress in 1Q. It also made progress in

reducing legacy assets, and balance-sheet improvement continues.

Alliance with Daiwa Securities Group: Both corporate and retail businesses are

progressing smoothly.

F3/27 1Q results overview: 1) 1Q profit attributable to owners of parent showed

strong progress toward full-year guidance (42.6%). Both net interest income and

non-interest income were up sharply. Fee income and gains from limited

partnerships were higher than expected, supporting earnings ahead of our forecasts.

2) Domestic and overseas interest income increased YoY; domestic income

supported by higher yen interest rates and growth in the loan balance, while yen

weakness and lower foreign currency fundraising costs contributed to overseas

income. 3) Non-interest income was supported by loan-related fee income (mainly

from LBO finance) and gains from limited partnerships (mainly exit gains from

buyout-related transactions).