Hokuhoku Financial Group, Inc.

Business Details

Hokuriku Bank is a regional bank with offices in the three Hokuriku prefectures of Toyama, Ishikawa, and Fukui, as well as the three major metropolitan areas of Tokyo, Nagoya, and Osaka. It conducts Deposits & Loans Business centered on business loans, personal loans, and public sector loans, and also provides Securities Investment Business and Fee Business (Consulting & Fee Services) (consulting, foreign exchange, securities-related). It also concurrently operates a Trust Business, and provides comprehensive financial services in cooperation with group subsidiaries such as securities, leasing, and card companies. Ordinary income from external customers for FY2025 (fiscal year ended March 2025) was ¥153,532 million.

Recent Overview

Net interest income expanded significantly due to rising interest rates and higher loan balances, with net income reaching a record-high level of ¥38,557 million

In the Hokuriku Bank segment for FY2026 (ending March 2026), net interest income increased significantly to ¥83,324 million (up ¥21,095 million year on year), driven by improvement in the loan yield to 1.11% (up 0.21 percentage points year on year) and the securities yield to 2.76% (up 0.84 percentage points year on year). Core net business profit was ¥51,452 million (up ¥17,439 million, or +51.3%, year on year). Credit-related expenses improved to ¥-3,109 million (an improvement of ¥13.1 billion year on year), due in part to the recording of ¥3,486 million in reversal gains on the allowance for doubtful accounts. Gains/losses on equities and other securities also increased to ¥12,986 million (up ¥6,672 million year on year). On the other hand, gains/losses on government bonds and other bonds deteriorated to ¥-17,379 million (down ¥12,154 million year on year). Expenses increased by ¥2,221 million year on year to ¥44,299 million due to investment in human capital and systems, but the OHR improved significantly to 46.26% (down 9.03 percentage points year on year). The ratio of disclosed claims under the Financial Reconstruction Act declined to 1.90% (from 2.24% at the end of the previous fiscal year), indicating improved asset quality. The earnings forecast for FY2026 is ordinary profit of ¥55.5 billion (up ¥3.8 billion year on year) and net income of ¥38.5 billion (flat year on year).

Key Products

Growth Drivers

• Continued improvement in loan yield and securities yield (loan yield 1.11%, securities yield 2.76%) driven by rising domestic interest rates (Bank of Japan policy rate hikes)
• Increase in interest income on loans (up ¥16,948 million year on year) due to growth in business loan balances (¥2,959,951 million) and personal loan balances (¥1,734,166 million)
• Improved economic sentiment and expanded loan demand in the three Hokuriku prefectures due to the Hokuriku Shinkansen extension, demand related to recovery and reconstruction from the Noto Peninsula earthquake, and increased public works projects
• Increased interest income due to agile rebalancing of the securities portfolio (interest income on securities of ¥35,132 million, up ¥12,261 million year on year)
• Expansion of corporate consulting fees (M&A, business succession, private placement bonds, syndicated loans) through cooperation with Hokuhoku Consulting and other group companies
• Deepening of problem-solving capabilities through the integration of financial and non-financial services, and promotion of business loan expansion and retail strategy under the 6th Medium-Term Management Plan 'NEXT STAGE' (FY2025-FY2027)
• Improvement in credit-related expenses (down to ¥-3,109 million due in part to reversal gains on allowance for doubtful accounts), boosting the bottom line

Risks

• Risk of rising funding costs and margin compression due to a sharp increase in interest paid on deposits (¥16,111 million, up ¥10,804 million year on year): the deposit yield continued to rise, reaching 0.20% (up 0.14 percentage points year on year)
• Expansion of losses on sales of government bonds and other bonds: in FY2025, this reached ¥-17,379 million (a deterioration of ¥12,154 million year on year), with losses continuing due to rebalancing of the securities portfolio
• Decline in the capital adequacy ratio: 9.65% (down 0.43 percentage points from 10.08% at the end of the previous fiscal year), due to an increase in risk assets (¥3,785,339 million, up ¥300,587 million year on year) accompanying loan growth
• Impact on the regional economy and client business conditions from destabilization of the international situation, including US tariff policy and Middle East affairs
• Increased expenses due to investment in human capital and systems (¥44,299 million, up ¥2,221 million year on year), and a significant increase in the amount of increase in fixed assets (¥15,536 million, up ¥11,691 million year on year)
• Risk of a slowdown in the economy of the three Hokuriku prefectures once demand related to recovery and reconstruction from the Noto Peninsula earthquake runs its course, and the associated risk of a renewed increase in credit costs
• A certain level of non-performing loan risk remains, with the balance of disclosed claims under the Financial Reconstruction Act at ¥119,666 million (ratio of 1.90%)