ENVALITH
株式会社横浜フィナンシャルグループ logo

Yokohama Financial Group, Inc.

7186・Prime Market・Banks

Official website
株式会社横浜フィナンシャルグループ logo
Yokohama Financial Group, Inc.7186

Business

Yokohama Financial Group, Inc. is a regional financial group centered on three banks—Yokohama Bank, Higashi-Nippon Bank, and Kanagawa Bank—and also operates securities business, leasing business, information services and research business, venture capital business, and more. It was established in 2016 through the business integration of Yokohama Bank and Higashi-Nippon Bank, made Kanagawa Bank a consolidated subsidiary in 2023, and made L&F Asset Finance a consolidated subsidiary in April 2025, accelerating its evolution into a comprehensive financial group. Its main customers are individuals, SMEs, corporations, and local governments primarily in Kanagawa Prefecture, and it holds a loan balance of ¥16,745,606 million and a deposit balance of ¥20,412,965 million.

Business Model

Net interest income (deposit-lending spreads and interest/dividends on securities) accounts for approximately 80% of consolidated gross operating profit of ¥260,311 million. In addition, fees and commissions income of ¥59,677 million, including structured finance-related fees, supplements revenue. Expanding loan balances through solution-based sales and improving deposit-lending spreads by leveraging the Bank of Japan's rate-hike phase are the main drivers of revenue growth.

Company Strengths

Following two rate hikes by the Bank of Japan, domestic deposit and lending interest income increased. Net interest income rose by ¥21,317 million year on year to ¥208,027 million. The average yield on loans also rose from 1.13% in the previous period to 1.24% in the current period, steadily translating the improved interest rate environment into earnings.

In the medium-term management plan for fiscal years 2022–2024, the company achieved all target indicators: ROE (consolidated) of 7.0% (against a target of approximately 6.0%), OHR (consolidated) of 51.5% (against a target of the low 50% range), and Common Equity Tier 1 ratio of approximately 11.9% (against a target of the mid-11% range). The company achieved both stronger earnings power and maintained financial soundness.

The non-performing loan ratio (consolidated) declined by 0.1 percentage points, from 1.4% in the previous period to 1.3% in the current period. Meanwhile, the combined loan balance of the three banks increased by ¥1,263 million year on year to ¥166,638 million (combined total of the three banks). Both loans to small and medium-sized enterprises and to individuals increased, improving asset quality and quantity simultaneously.

ENVALITH's Perspective

In FY2026 (ending March 2025), the company achieved its fifth consecutive year of profit growth, with ordinary income of ¥155,018 million (up 26.2% year on year) and profit attributable to owners of parent of ¥106,523 million (up 28.6% year on year). The forecast for FY2027 (ending March 2026) calls for continued high growth, with ordinary income of ¥191,500 million (up 23.5% year on year) and net income of ¥129,000 million (up 21.1% year on year). While the continuation of the rising interest rate phase is a tailwind as an external factor, deposit interest expense has surged to ¥57,731 million (up ¥27,085 million year on year), and close attention is needed to the risk that rising funding costs could compress the interest margin.

In April 2025, the company made L&F Asset Finance a subsidiary at an acquisition cost of ¥54,485 million. The earnings contribution in the first year (after amortization of goodwill, etc.) was limited to ¥4.9 billion. Goodwill of ¥7,406 million is being amortized on a straight-line basis over 10 years (approximately ¥740 million per year). The subsidiary's loan balance was large, at ¥475,127 million as of the business combination date, and expansion of earnings is expected in the differentiated niche market of Real Estate-Secured Lending targeting foreign nationals, elderly individuals, and older properties. However, trends in credit costs and the pace of earnings contribution acceleration will be key evaluation criteria going forward.

In FY2026 (ending March 2025), the company acquired ¥41,754 million of treasury stock, causing the number of treasury shares at fiscal year-end to surge to 33,138 thousand shares (up sharply from 3,129 thousand shares at the previous fiscal year-end). Dividend per share was ¥38 (versus ¥29 in the previous period), and the forecast for FY2027 (ending March 2026) is ¥47, continuing the trend of dividend increases. The payout ratio was maintained at 40.4%. On the other hand, the consolidated total capital adequacy ratio (preliminary figure) declined to 14.94% (from 15.67% at the previous fiscal year-end). The estimated Common Equity Tier 1 ratio on a finalized Basel III basis is approximately 11.4%, and balancing improved capital efficiency with maintaining regulatory capital levels remains an ongoing challenge.

Growth Strategy

By deepening solution-based business and accelerating L&F earnings contribution, the company aims to achieve ROE exceeding 9% and net income of ¥129.0 billion.

Continuing to expand corporate fee income centered on syndicated loan and other fees (¥20,685 million combined across 3 banks, up ¥3,006 million year on year) and to build up loan balances to SMEs. For FY2027 (ending March 2027), the company plans combined gross operating profit of ¥319.7 billion across 3 banks (up ¥46.3 billion year on year).

Expanding earnings contribution from L&F Asset Finance (Real Estate-Secured Lending) (specializing in real estate-secured lending), which became a subsidiary in April 2025. Plans to increase consolidated earnings contribution from ¥4.9 billion (after amortization of goodwill, etc.) in the first year to ¥5.3 billion in FY2027 (ending March 2027). The company will address diverse financial needs of foreign nationals, elderly individuals, and owners of older properties, developing customer segments that the bank cannot capture on its own.

The group total (3 banks combined plus Hamagin TT Securities) balance of investment-type products for individuals stood at ¥3,186.2 billion (up ¥304.7 billion from the end of the previous fiscal year). The company will continue to strengthen sales of investment trusts, insurance, and public bonds, building a robust fee income base that is not dependent on interest income.

In FY2026 (ending March 2026), the company acquired ¥41,754 million of treasury stock, achieving EPS of ¥94.02 (up 31.3% year on year). Dividends were increased to ¥38 (from ¥29 in the previous fiscal year). For FY2027 (ending March 2027), the company plans a dividend per share of ¥47 and ROE of 9.0%. The policy is to continue shareholder returns while maintaining a dividend payout ratio of approximately 40.4%.

Last updated: July 17, 2026