Mebuki Financial Group,Inc.

Business Details

Centered on The Joyo Bank, Ltd. and The Ashikaga Bank, Ltd., this segment provides deposits, loans, foreign exchange, securities investment, trust, insurance over-the-counter sales, and financial product intermediary services. The main business area is the North Kanto region (Ibaraki, Tochigi, Gunma, etc.). Disclosure of segment information for Other (Non-Banking Business) (leasing, securities, guarantees, credit cards, etc.) has been omitted due to limited materiality, and consolidated results are essentially synonymous with the performance of this segment. For FY2026 (ending March 2026), full-year ordinary income was ¥443,313 million and ordinary profit was ¥115,668 million, up 23.0% and 39.6% year-on-year respectively, with profit attributable to owners of the parent reaching a record high.

Recent Overview

FY2026 (ending March 2026) marked a record-high profit, driven by margin expansion amid rising interest rates and loan growth

Profit attributable to owners of the parent for FY2026 (ending March 2026) reached a record high of ¥84,163 million (up 44.5% year-on-year). Against the backdrop of additional rate hikes by the Bank of Japan (policy rate reaching approximately 0.75% in December), interest on loans rose significantly to ¥167,181 million (up ¥35,937 million year-on-year), interest and dividends on securities to ¥104,131 million (up ¥21,981 million), and interest on deposits with banks to ¥16,820 million (up ¥7,200 million). Meanwhile, funding costs also increased, with interest on deposits at ¥37,297 million (up ¥23,507 million). Despite recording losses on sales of government bonds and other bonds (¥54,473 million on a combined two-bank basis), gains/losses related to equities and other securities (¥30,419 million on a combined two-bank basis) helped supplement earnings. The combined two-bank total interest margin (domestic operations) improved to 0.40% (up 0.17 percentage points year-on-year). Provision for loan losses increased to ¥10,527 million on a consolidated basis (up ¥9,659 million year-on-year), but the disclosed claims ratio improved to 1.24% (from 1.33% at the previous fiscal year-end). Cumulative sustainable finance execution reached ¥2,200,000 million, representing progress of approximately 74% toward the FY2030 target of ¥3,000,000 million.

Key Products

Growth Drivers

• Expansion of the deposit-loan interest margin (combined two-bank total interest margin of 0.40%, up 0.17 percentage points year-on-year) and the rise in long-term interest rates (reaching the 2.3% range at fiscal year-end) driven by the Bank of Japan's additional rate hikes (policy rate reaching approximately 0.75% in December, the highest level in roughly 30 years), marking a transition to a "world with interest rates"
• Continued increase in loan balances (combined two-bank period-end balance of ¥14,156,880 million, up ¥797,567 million from the previous fiscal year-end) leading to expanded interest income on loans (consolidated ¥167,181 million, up ¥35,937 million year-on-year)
• Increase in interest and dividends on securities (consolidated ¥104,131 million, up ¥21,981 million year-on-year) and expansion of gains/losses related to equities and other securities (combined two-bank ¥30,419 million, up ¥7,648 million year-on-year)
• Diversification of revenue sources through diverse financing support including business succession, M&A, mezzanine finance (subordinated loans, LBO loans, etc.), and startup financing
• Expansion of solution-oriented business for corporate clients, including cumulative sustainable finance execution of ¥2,200,000 million (approximately 74% progress toward the FY2030 target of ¥3,000,000 million)
• Operational efficiency and enhanced proposal capabilities through human capital investment (cumulative ¥3.0 billion planned over the plan period, ¥1.0 billion invested in the current fiscal year), use of generative AI (RAG environment development), and DX promotion under the 4th Group Medium-Term Management Plan (FY2025-2027)
• Strengthening of the individual customer base through expanded non-face-to-face channels, including enhanced banking app functionality and the rollout of fully web-based loans

Risks

• Risk that rising funding costs amid rising interest rates (consolidated interest on deposits of ¥37,297 million, up ¥23,507 million year-on-year) may pressure earnings
• Risk of valuation and sale losses on the bond portfolio due to rising interest rates, including expanded losses on sales of government bonds and other bonds (¥54,473 million combined two-bank basis) and valuation losses on held-to-maturity bonds (-¥17,635 million)
• Risk of rising credit costs, including an increase in provision for loan losses (consolidated ¥10,527 million, up ¥9,659 million year-on-year)
• Long-term risk of declining loan demand due to economic contraction in the North Kanto region driven by population decline and aging
• Risk of increasing non-performing loans (Mebuki FG consolidated total disclosed claims of ¥176,581 million, 1.24% of total loans), particularly as doubtful claims of ¥141,167 million account for the majority of the balance
• Risk to earnings from global economic uncertainty, including impacts from changes in U.S. trade policy and supply chains, and renewed geopolitical risk from tensions in the Middle East
• Risk of financial market volatility, including continued yen depreciation (temporarily reaching the ¥160 range in the second half of the fiscal year) and capital outflows from Japan
• Risk of changes in revenue structure due to intensifying competition, including from other industries, and the advancement of financial digitalization