THE AKITA BANK, LTD.

Business Details

Through a total of 98 offices, including the head office, 96 branches, and 1 sub-branch, the segment conducts deposit-taking, lending, securities investment, domestic and foreign exchange operations, and over-the-counter sales of public bonds, investment trusts, and insurance products. It is the core business accounting for approximately 91% of the group's total ordinary income. Under the management philosophy of "Regional Co-Prosperity," the segment provides comprehensive financial services to individual, corporate, and public sector customers, fulfilling the role of regional financial intermediation.

Recent Overview

Rising interest rates and loan growth drove a substantial increase in net interest income, and non-consolidated net income for the period reached a record high

In FY2026 (ending March 2026), ordinary income in the Banking Business segment was ¥55,416 million (up ¥9,016 million year on year, +19.4%). Against the backdrop of the Bank of Japan's monetary policy normalization, the loan yield rose to 1.19% (+0.23pt) and the securities yield rose to 1.54% (+0.54pt), driving a substantial increase in net interest income to ¥35,311 million (+¥8,062 million). Credit-related costs turned into a reversal gain of ¥161 million, an improvement of ¥2,948 million year on year. On the other hand, gains/losses on bonds including government bonds were △¥11,393 million (a deterioration of ¥4,635 million year on year), and gains/losses related to equities and other securities also deteriorated to ¥3,863 million (down ¥3,308 million year on year). Core net business profit reached a record ¥17,996 million (+60.5%), and non-consolidated net income for the period of ¥7,838 million also renewed its record high.

Key Products

Growth Drivers

• Improvement in loan yield (1.19%, up 0.23pt year on year) and increase in average loan balance (¥2,103,600 million, up ¥100,659 million year on year) driven by rising policy interest rates amid the Bank of Japan's monetary policy normalization, expanding interest income on loans
• Substantial increase in interest and dividends on securities (¥14,521 million, up ¥5,885 million year on year) driven by an increase in the average securities balance (¥942,400 million) and a rise in yield (1.54%, up 0.54pt year on year)
• Significant improvement in credit-related costs: a reversal gain of ¥161 million in FY2026 (versus an expense of ¥2,787 million in the prior year), with individual provisions for loan losses declining sharply to ¥288 million (from ¥2,988 million in the prior year)
• Improvement in the non-performing loan ratio: 2.40% at the end of March 2026 (down 0.31pt from the end of the previous fiscal year), with doubtful claims decreasing from ¥45,975 million to ¥38,148 million
• Expansion of loans to SMEs and others: balance of ¥1,152,459 million at period-end (up ¥40,656 million from the end of the previous fiscal year, +3.6%), with renewable energy and marketable loans also growing to ¥181.9 billion
• Increase in custodial assets balance: ¥273,848 million (up ¥33,579 million from the end of the previous fiscal year, +14.0%), with increases across investment trusts, life insurance, and public bonds

Risks

• Continued deterioration in gains/losses on bonds including government bonds: △¥11,393 million in FY2026 (a deterioration of ¥4,635 million year on year), with losses on sales of government bonds and other securities expanding to ¥7,757 million and redemption losses to ¥3,740 million
• Increase in deposit funding costs amid a rising interest rate environment: interest expense on deposits of ¥5,711 million (up ¥3,886 million year on year), with total deposit yield continuing to rise to 0.18% (up 0.13pt year on year)
• Decline in the capital adequacy ratio: domestic standard of 11.17% (down 0.62pt from the end of the previous fiscal year), with risk assets increasing by ¥96,255 million mainly due to loan growth
• Instability in valuation gains/losses on other securities: valuation losses of △¥4,674 million (non-consolidated) remained as of the end of March 2026, with bond valuation losses of ¥40,471 million being substantial (a valuation gain of ¥3,100 million after considering interest rate swap hedges)
• Deterioration in gains/losses related to equities and other securities: ¥3,863 million in FY2026 (down ¥3,308 million year on year), with gains on sales of equities and other securities decreasing from ¥7,443 million to ¥4,355 million
• Substantial increase in impairment losses on fixed assets: ¥431 million in FY2026 (versus ¥3 million in the prior year)
• Risk of regional economic contraction and long-term concerns about declining loan demand due to population decline and aging in Akita Prefecture, with the prefectural economy's recovery momentum stalling