Iyogin Holdings, Inc.

Business Details

Centered on Iyo Bank, Ltd., this segment conducts deposit-taking, lending, securities investment, and foreign exchange operations. Consolidated subsidiaries engaged in banking administration agency services, credit guarantee, credit cards, securities investment, and investment fund management are also consolidated within this segment. The segment develops region-focused business activities based in Ehime Prefecture and is positioned as the core segment responsible for the majority of the Group's overall earnings. In FY2026 (ending March 2026), the segment achieved a substantial increase in profit driven by rising domestic interest rates, an increase in loan balances, and sales of policy-holding shares.

Recent Overview

Rising domestic interest rates, loan growth, and cost reductions combined to drive core net business profit up 64.9% year on year

Segment profit in the Banking segment for FY2026 (ending March 2026) was ¥98,160 million (up ¥23,894 million year on year). Net interest income expanded to ¥104,432 million (up ¥14,902 million year on year), driven by rising domestic interest rates, wider yen-denominated deposit-loan margins, and lower foreign currency funding costs. Non-personnel expenses declined significantly due to the elimination of expenses related to the construction of the next-generation core banking system, and consolidated expenses were ¥62,635 million (down ¥3,627 million year on year). Gains/losses related to stocks, etc. of ¥28,435 million were recorded from the sale of policy-holding shares and pure investment shares. On the other hand, credit costs expanded to ¥7,816 million (up ¥5,976 million year on year) due to an increase in bankruptcies and downgrades. The Company recorded a settlement receipt of ¥6,000 million related to "changes in the plan for advancing the sophistication of the core banking system" as extraordinary income.

Key Products

Growth Drivers

• Expansion of net interest income due to rising domestic interest rates (overall interest margin of 0.43%, up 0.22 percentage points year on year) and widening of yen-denominated deposit-loan margins
• Continued growth in loan balances (consolidated balance of ¥6,107,233 million as of the end of March 2026, up ¥268,070 million from the end of the prior fiscal year, the 29th consecutive year of increase)
• Increase in other business profit due to lower foreign currency funding costs and gains recorded on foreign exchange and derivatives transactions
• Expansion of gains/losses related to stocks, etc. from the sale of policy-holding shares and pure investment shares (¥28,435 million on a consolidated basis)
• Increase in fee income due to expansion of assets in custody balance (consolidated total of ¥1,008,322 million, up ¥198,206 million from the end of the prior fiscal year)
• Significant reduction in non-personnel expenses due to the elimination of expenses related to the construction of the next-generation core banking system (Iyo Bank stand-alone non-personnel expenses of ¥29,314 million, down ¥5,805 million year on year)

Risks

• Risk of adverse impact on the regional economy and export-related companies and increased credit costs due to geopolitical risks such as U.S. trade policy (reciprocal tariffs) and the situation in the Middle East
• Risk of increased non-performing loans due to sluggish personal consumption and deteriorating earnings at local industries amid rising prices and population decline (non-performing loan ratio rose to 1.58%, up 0.04 percentage points year on year)
• Risk of erosion of gains/losses related to stocks, etc. as the reduction of policy-holding shares progresses (high dependence on one-time gains)
• Risk of expanding valuation losses on securities (particularly bonds) amid rising interest rates (bond valuation gains/losses were ¥-14,218 million)
• Risk of decline in the capital adequacy ratio following full application of the finalized Basel III framework (estimated at 14.98% after full application, down 0.55 percentage points from the current level)
• Upward pressure on expenses due to rising personnel costs (including base salary increases) (Iyo Bank stand-alone personnel expenses of ¥27,507 million, up ¥1,265 million year on year)