ENVALITH
株式会社南都銀行 logo

The Nanto Bank, Ltd.

8367・Prime Market・Banks

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株式会社南都銀行 logo
The Nanto Bank, Ltd.8367

Business

Nanto Bank is a regional bank group founded in 1934, with Nara Prefecture as its primary business base. The group comprises 10 consolidated subsidiaries and 3 equity-method affiliates, and provides a diverse range of financial and related services centered on its core Banking Business, including Leasing Services (Nanto Lease), Securities Business (Nanto Mahoroba Securities), Credit Card Business (Nanto DC Card and Nanto Card Service), Credit Guarantee Business (Nanto Shinyo Hosho), and Consulting Business (Nanto Research & Consulting). Its main customers are individuals, small and medium-sized enterprises, and local public bodies within Nara Prefecture, and it also has offices in Osaka, Kyoto, and Tokyo. In February 2025, the head office was relocated to Omiya-cho, Nara City, and the bank continues to strengthen its functions as a regional financial institution.

Business Model

The core of earnings is the traditional deposit-and-lending model, in which deposits gathered from individuals and corporations are deployed into corporate loans, housing loans, loans to local governments, and other assets. In addition, the Bank combines market-related income from securities investment (JGBs, municipal bonds, equities, investment trusts, etc.), fee income from sales of assets under custody and corporate solutions, and cross-sell fee income with group companies to diversify its revenue sources. Of consolidated ordinary income of ¥115,665 million, net interest income forms the largest pillar.

Company Strengths

The Bank holds a non-consolidated deposit balance of ¥5,923,598 million and a loan balance of ¥4,601,265 million (consolidated), maintaining a transaction base with individuals, corporations, and public entities built up over many years within Nara Prefecture. It covers a broad customer base, including ¥1,640,653 million in loans to small and medium-sized enterprises and ¥1,220,580 million in loans to individuals (non-consolidated), forming region-focused customer relationships that competitors find difficult to replicate in a short period of time.

The consolidated ratio of disclosed claims under the Financial Reconstruction Act stood at 1.23% (improved from 1.35% in the previous fiscal year), and the non-consolidated coverage ratio remained high at 84.6% (82.4% in the previous fiscal year). Through thorough credit management and core business support activities, the Bank has curbed the emergence of new non-performing loans, and the balance of doubtful claims also declined to ¥47,844 million (from ¥50,394 million in the previous fiscal year). Continued improvement in asset quality supports the stability of earnings.

In addition to the Bank itself, the group comprises 10 consolidated subsidiaries covering leasing, securities, credit cards, credit guarantees, consulting, and other businesses, establishing a framework capable of providing one-stop financial services to corporate and individual customers. Cross-selling through group collaboration is producing tangible results, as seen in the ¥45.3 billion increase in assets under custody at Nanto Mahoroba Securities compared to the previous fiscal year.

ENVALITH's Perspective

In FY2026 (ending March 2026), non-consolidated interest on loans rose 26.9% year on year to ¥55,126 million, becoming the primary driver of the 26.1% increase in ordinary profit and 26.2% increase in net income. The rising domestic interest rate environment was a major external contributing factor, and achieving the FY2027 (ending March 2027) forecast (consolidated ordinary profit of ¥32,500 million, up 30.9% year on year) is premised on this interest rate environment continuing. Interest on deposits also surged, increasing by ¥8,040 million year on year to ¥11,800 million, and close attention must be paid to the impact of accelerating funding cost increases on the interest margin.

Securities balances (consolidated) were significantly reduced, down ¥176,312 million year on year to ¥1,372,777 million. Non-consolidated valuation gains/losses on other securities improved substantially, from ¥(24,513) million in the previous period to ¥(4,701) million, turning positive at ¥1,369 million after taking deferred hedge gains/losses into account. The strategy of selling low-yield assets such as foreign currency bonds and reallocating into JGBs and municipal bonds has been successful, but interest and dividends on securities (non-consolidated) declined slightly, down ¥325 million year on year to ¥19,575 million, leaving the accumulation of reinvestment income as a future challenge.

Consolidated fee-based services income was ¥11,412 million, a slight decrease of ¥98 million year on year. On a non-consolidated basis it also declined, down ¥606 million year on year to ¥6,752 million, indicating that growth in assets under custody sales (Nanto Bank non-consolidated: ¥105.0 billion, up ¥2.6 billion year on year) has not been sufficiently reflected in fee income. Meanwhile, consolidated operating expenses increased ¥817 million year on year to ¥45,080 million. Although OHR improved to 64.2% (a 3.1 point improvement year on year), moving away from a revenue structure dependent on interest income and expanding non-interest income remain medium- to long-term challenges.

Growth Strategy

Strengthen earnings capacity through expansion of loans and assets under custody along with securities portfolio restructuring, aiming to achieve ROE and net income targets.

Through active promotion of corporate loans (to manufacturing, real estate, electricity and gas industries, etc.) and housing loans, the non-consolidated loan balance was expanded by ¥138.9 billion year-on-year to ¥4,632.2 billion. For FY2027 (ending March 2027), non-consolidated interest on loans is projected at ¥68.6 billion (up ¥13.5 billion year-on-year), with the aim of continuing improvement in both balance and yield.

Low-yield foreign currency bonds and other securities were sold, with proceeds reallocated to Japanese government bonds (¥355,233 million, up ¥120,203 million year-on-year) and municipal bonds (¥341,852 million, up ¥84,492 million year-on-year). Net unrealized gains/losses on other securities improved significantly from ¥(24,513) million in the previous period to ¥(4,701) million. For FY2027 (ending March 2027), interest on securities is projected at ¥24.6 billion (up ¥5.1 billion year-on-year), aiming to strengthen earnings capacity.

The group's total assets under custody balance was expanded by ¥106.3 billion year-on-year to ¥457.4 billion. Nanto Bank's non-consolidated sales amounted to ¥105.0 billion (up ¥2.6 billion year-on-year). By boosting non-interest income through investment trust, life insurance, and financial instruments intermediary channels, the company aims to achieve a recovery in fee-based services income. Non-consolidated fee-based services income for FY2027 (ending March 2027) is projected at ¥7.2 billion (up ¥0.4 billion year-on-year).

For FY2027 (ending March 2027), non-consolidated core net business profit is projected at ¥32.0 billion (up ¥8.4 billion year-on-year), ordinary profit at ¥31.5 billion (up ¥7.7 billion year-on-year), and net income at ¥21.5 billion (up ¥4.9 billion year-on-year). On a consolidated basis, the targets are ordinary profit of ¥32,500 million and net income of ¥22,000 million, with continued improvement in ROE (net income basis, consolidated) to 5.90% (up 1.22 percentage points year-on-year).

A stock split at a ratio of five shares for every one share held will be implemented with an effective date of April 1, 2026, reducing the investment unit amount to improve stock liquidity and expand the investor base. The annual dividend per share for FY2027 (ending March 2027) is planned at ¥56 (equivalent to ¥280 on a pre-split basis), with a policy to maintain a dividend payout ratio of 39.9%.

Last updated: July 19, 2026