Kyushu Financial Group,Inc.
7180・Prime Market・Banks
Business
Kyushu Financial Group, Inc. is a bank holding company established in October 2015 through a joint share transfer by Higo Bank and Kagoshima Bank. It operates primarily in Kumamoto, Kagoshima, and Miyazaki Prefectures, with 25 consolidated subsidiaries. Centered on Banking (deposits, loans, securities investment, trust operations, etc.), the group also operates a Leasing Business (equipment leasing and lending for corporations), a securities business (Kyushu FG Securities), and Credit Card Operations, Credit Guarantee Operations, DX Solutions, and EC mall business, among others. Amid the growing concentration of semiconductor-related industries in central and southern Kyushu triggered by TSMC's entry into Kumamoto, the group possesses a comprehensive business foundation that supports the regional economy from both financial and non-financial perspectives as a regional value co-creation group.
Business Model
The primary revenue sources are the fund management income/expenses of Higo Bank and Kagoshima Bank (FY2026 (ending March 2026): ¥113,345 million) and fee business (service transactions) income/expenses (same period: ¥17,925 million). Against the backdrop of the Bank of Japan's interest rate hikes, loan yields have risen, widening the deposit-loan interest margin. Through consulting sales leveraging the collaboration among banking, securities, and trust operations ("Gin-Sho-Shin"), the group captures NISA, inheritance, and asset succession needs to build up fee income. Subsidiaries in leasing, securities, EC malls, and other areas complement cross-selling within the group, forming a structure aimed at diversifying revenue.
Company Strengths
Centered on Higo Bank's "Electronic Device Related Industry Project Team," cumulative loans to semiconductor-related industries from April 2022 to March 2026 reached approximately ¥378.8 billion, with 29 companies supported in entering the supply chain. The loan balance to manufacturing has surged to ¥524,903 million (up ¥66,030 million from the previous fiscal year-end), with the region-focused branch network and specialized team structure serving as differentiating factors versus competitors.
Kyushu FG Securities' assets under custody expanded rapidly to ¥484,103 million (up ¥100,369 million year on year). The number of Trust Operations contracts reached 2,833 in FY2025 (up 845 year on year), placing it among the top tier of regional banks nationwide. The one-stop system combining Higo Bank and Kagoshima Bank with securities and trust services captures customers' asset formation and succession needs, contributing to the steady accumulation of fee income.
Total deposits, etc. (including negotiable certificates of deposit) expanded steadily to ¥10,811,025 million (up ¥231,613 million from the previous fiscal year-end). The loan balance stood at ¥9,244,296 million (up ¥201,835 million from the previous fiscal year-end). The wide-area branch network spanning three prefectures in central and southern Kyushu, along with long-standing region-focused operations, has formed a solid customer base, supporting the low and stable funding cost (deposit yield of 0.20%).
ENVALITH's Perspective
Performance Trend
Ordinary income expanded by more than 40% over five fiscal periods, from ¥187,630 million in FY2022 to ¥263,250 million in FY2026. In FY2026 (ending March 2026), revenue increased 4.7% year on year, ordinary profit rose 25.0% year on year to ¥53,766 million, and net income attributable to owners of the parent surged 24.0% year on year to ¥37,674 million, achieving substantial profit growth. The main external driver was the Bank of Japan's interest rate hikes, which led to a sharp increase in interest on loans to ¥106,462 million (up 24.3% year on year). Gross operating profit rose significantly to ¥129,922 million (up ¥22,303 million year on year), and core net business profit reached ¥48,491 million (up ¥12,229 million year on year). Comprehensive income improved substantially to ¥77,857 million, from a loss of ¥5,497 million in the previous period, as improvements in valuation differences on securities and deferred hedge gains/losses boosted net assets.
Growth Strategy
Evolving into a regional value co-creation group through four pillars: semiconductor-related financing, asset management, non-financial DX, and improved capital efficiency
Capturing capital investment demand from semiconductor-related industries associated with TSMC's entry into Kumamoto Prefecture and surrounding areas, Higo Bank's loan balance to the manufacturing sector expanded significantly to ¥336,547 million (up ¥55,574 million from the previous fiscal year-end) at the end of FY2026 (ending March 2026). Total corporate loans on a two-bank combined basis also increased to ¥4,312.8 billion (up ¥193.4 billion from the previous fiscal year-end), demonstrating steady progress in the strategy of supporting regional economic growth through lending.
Assets under custody at Kyushu FG Securities expanded rapidly to ¥484,103 million (up ¥100,369 million from the previous fiscal year). Two-bank combined assets under custody (individual) also increased to ¥1,396,409 million (up ¥49,575 million from the previous fiscal year), with cumulative sales of individual annuity insurance and other products reaching ¥1,203,341 million. Fee Business (Service Transactions) income on a consolidated basis steadily expanded to ¥30,004 million (up ¥1,609 million from the previous fiscal year), reflecting progress in diversifying the fee business.
The Group is expanding non-financial platform businesses such as the EC Mall Business (Yokamoru) and the smartphone app "Hugmeg." The number of consolidated subsidiaries expanded to 25, an increase of 3 from the previous fiscal year, promoting diversification of the business foundation. Ordinary income in the "Others" segment grew to ¥14,932 million (up ¥1,762 million from the previous fiscal year), and segment profit grew to ¥1,961 million (up ¥544 million from the previous fiscal year); however, the contribution to overall Group revenue remains limited, and accelerating monetization remains a challenge.
In FY2026 (ending March 2026), the Company conducted share buybacks totaling ¥10,000 million, improving return on equity to 5.1% (up from 4.2% in the previous fiscal year). The annual dividend was increased to ¥29 (from ¥21 in the previous fiscal year), with a dividend payout ratio of 33.1%. For FY2027 (ending March 2027), the Company plans an annual dividend of ¥38 (of which ¥38 is the ordinary dividend), with an expected dividend payout ratio of 36.3%. Shareholder returns are being strengthened through dividend increases, including a commemorative dividend (¥1 each) for the 10th anniversary of the Company's founding, with continuation of capital policies aimed at restoring a PBR above 1x remaining a challenge.
Last updated: July 19, 2026