The Bank of Iwate, Ltd.

Business Details

The Group's central business, conducting deposit-taking, lending, securities investment, and foreign exchange operations through 110 branches and sub-branches of the Bank. Its principal operating base is Iwate Prefecture, serving corporate, individual, and local government customers. In FY2025 (fiscal year ended March 2026), ordinary income from external customers was ¥71,358 million, and segment profit was ¥12,713 million. Rising loan yields and securities yields amid a rising interest rate environment, along with a substantial increase in gains on sales of equity securities, drove revenue growth.

Recent Overview

Achieved two consecutive years of increased revenue and profit, driven by a sharp rise in gains on sales of equity securities and higher loan yields

In FY2025 (fiscal year ended March 2026), the Banking segment achieved ordinary profit of ¥12,713 million (up ¥3,164 million year on year), supported by growth in net interest income—interest on loans of ¥27,704 million (up ¥6,625 million year on year) and interest and dividends on securities of ¥16,096 million (up ¥3,633 million year on year)—along with a significant contribution from extraordinary income in the form of gains on sales of equity securities of ¥16,868 million (up ¥16,736 million year on year). On the other hand, gains/losses on JGBs and other bonds recorded a substantial loss of ¥(19,581) million. Credit costs increased to ¥1,350 million (up ¥550 million year on year). Starting in April 2026, the Bank launched its 22nd Medium-Term Management Plan (April 2026 to March 2029), with key financial targets of a consolidated ROE of 6% or higher and consolidated net income of ¥13 billion or more by FY2028.

Key Products

Growth Drivers

• Expansion of investment income from rising loan yield (0.97% to 1.23%, up 0.26 percentage points year on year)
• Growth in loan balances driven by across-the-board increases in lending to corporations, individuals, and local governments (up ¥117,107 million from the end of the previous fiscal year)
• Increase in interest and dividends on securities driven by rising securities yield (1.06% to 1.37%)
• Extraordinary income gained through sales of held equity securities (gains on sales of equity securities of ¥16,868 million)
• Strengthening of the fee income base through expansion of assets under custody balance (up ¥43,732 million from the end of the previous fiscal year to ¥421,609 million)
• Improved profitability and progress in cost efficiency, reflected in the substantial improvement of OHR (66.60% to 59.06%)
• Balancing offensive and defensive management under the 22nd Medium-Term Management Plan (Regional Value Co-Creation Plan – The 2nd)

Risks

• Sharp increase in funding costs such as interest on deposits amid rising interest rates (FY2025: ¥8,048 million, up ¥5,199 million year on year)
• Risk of volatility in securities-related gains/losses, including a significant deterioration in gains/losses on JGBs and other bonds (FY2025: ¥(19,581) million)
• Impact on net assets and capital adequacy ratio from deterioration in unrealized gains/losses on securities (non-consolidated: ¥(16.1) billion, down ¥6.8 billion from the end of the previous fiscal year)
• Increase in credit costs (FY2025: ¥1,350 million, up ¥550 million year on year) and a slight increase in the balance of non-performing loans (¥57.7 billion)
• Reduction in risk buffer due to decline in capital adequacy ratio (non-consolidated) (11.09% to 10.85%)
• Risk of rising funding costs due to intensifying competition for deposits from internet banks and other banks outside the prefecture
• Long-term decline in regional economy and loan demand due to population decline and aging in Iwate Prefecture