The Nanto Bank, Ltd.

Business Details

Operates a banking business centered on deposits, lending, securities investment, and fee-based services in areas primarily around Nara Prefecture. In the Lending Business, the segment offers personal housing loans and financing for small and medium-sized enterprises and corporations, while the market division invests in domestic and foreign bonds, equities, investment trusts, and other assets. For FY2026 (ending March 2026), segment assets stood at ¥6,658,595 million and segment profit (ordinary income basis) was ¥23,721 million. This is the core business, accounting for approximately 86% of the Group's total ordinary income.

Recent Overview

Profitability improved markedly due to a significant increase in interest on loans and portfolio restructuring.

In the Banking Business segment for FY2026, interest on loans increased significantly to ¥55,126 million (up ¥11,669 million year on year) against a backdrop of rising domestic interest rates, expanding net interest income to ¥61,740 million (up ¥5,439 million year on year). As part of the restructuring of the securities portfolio, the Bank sold low-yield foreign currency bonds and other assets, reducing the securities balance by ¥176,410 million, while a reduction in risk assets raised the non-consolidated capital adequacy ratio to 12.38% (up 1.45 percentage points year on year). Core net business profit increased to ¥23,585 million (up ¥3,407 million year on year), and ordinary income increased to ¥23,721 million (up ¥4,642 million year on year). Non-consolidated credit-related costs rose only modestly to ¥2,880 million (up ¥122 million year on year), and total disclosed claims under the Financial Reconstruction Act improved to ¥57.7 billion (down ¥3.8 billion year on year), indicating improved asset quality.

Key Products

Growth Drivers

• Continued expansion of net interest income driven by rising loan yields (from 0.99% to 1.21%) amid a rising domestic interest rate environment and an increase in loan balances (up ¥138,985 million year on year)
• Solid growth in corporate loans (to manufacturing, real estate, electric power and gas industries, etc.) and housing loans (balance of ¥1,208,800 million, up ¥30,800 million year on year)
• Strengthened profitability of the market division through restructuring of the securities portfolio (selling low-yield foreign currency bonds and shifting into JGBs and municipal bonds)
• Boost to fee-based services income from expansion of assets in custody (Group total of ¥457,400 million, up ¥106,300 million year on year)
• Maintenance of a stable funding base with increases in both personal and corporate deposits (non-consolidated deposit balance of ¥5,923,598 million)
• Forecast for increased profit toward FY2027 (ending March 2027), with non-consolidated core net business profit of ¥32.0 billion and ordinary income of ¥31.5 billion (up ¥8.4 billion and ¥7.7 billion year on year, respectively)

Risks

• Continued upward pressure on funding costs due to a sharp increase in interest on deposits (¥11,809 million, up ¥8,049 million year on year) amid rising domestic interest rates
• Residual risk of deterioration in gains/losses on bonds such as JGBs (-¥1,286 million) and valuation losses on foreign currency bonds (-¥5,588 million) during the process of restructuring the securities portfolio
• Increasing trend in credit-related costs (non-consolidated ¥2,880 million), including an increase in write-offs of loans (¥2,566 million, up ¥2,063 million year on year)
• Upward cost pressure from an increase in operating expenses (non-consolidated ¥42,429 million, up ¥735 million year on year) (OHR: 64.2%)
• Risk from the continued high level of doubtful claims (non-consolidated ¥47,800 million) and the coverage ratio for loans to borrowers at risk of bankruptcy remaining at only 84.7%
• Valuation risk on holdings of equity securities, including an increase in write-offs of equities (¥1,463 million, up ¥1,445 million year on year) (net unrealized gains/losses on other securities of -¥1,678 million)