The San-in Godo Bank,Ltd.

Business Details

At the head office and branches, the segment conducts deposit-taking, lending, securities investment, domestic exchange, foreign exchange, and bond trustee and registration operations, among others. As a wide-area regional bank based in the Sanin region, it serves individuals, corporations, local governments, and financial institutions as customers. Of the Group's consolidated ordinary income of ¥167,078 million, the Banking segment's standalone ordinary income of ¥146,304 million accounts for approximately 87.6%, making it the central segment. With Corporate Consulting Services, personal asset management, and housing loan expansion as growth pillars, the segment achieved record profits for the fifth consecutive fiscal year.

Recent Overview

Interest on loans increased by ¥15.8 billion year on year, achieving record profits for the fifth consecutive fiscal year

In the Banking segment for FY2026 (ending March 2026), loan interest income increased substantially to ¥77,715 million, driven by a rise in the loan yield (from 1.03% to 1.29%) amid the Bank of Japan's rate hikes and an increase in the loan balance (standalone average balance of ¥5,232.5 billion, up ¥331.4 billion year on year). Meanwhile, interest on deposits also surged to ¥24,043 million (up ¥17,425 million year on year), pushing up funding costs. Gains/losses related to bonds widened to a loss of -¥15,312 million due to sales of JGBs and low-yield investment trusts, among others. Credit costs improved to ¥6,893 million (an improvement of ¥5,957 million year on year), partly due to a decrease in the general allowance for loan losses. Gains/losses related to stocks, etc. increased to ¥7,315 million due to sales of policy investment shares, among others. As a result, segment profit rose to ¥31,397 million (up ¥5,407 million year on year), marking a new record profit.

Key Products

Growth Drivers

• Expansion of net interest income (standalone net interest income of ¥79.7 billion, up ¥3.1 billion year on year) driven by a rise in the loan yield (1.29%) and an increase in loan balances amid the Bank of Japan's rate hike phase
• Increase in assets under custody (¥1,252.8 billion, up ¥182.5 billion year on year) and expansion of fee income through the business alliance with Nomura Securities
• Increase in corporate solution fees (¥4.7 billion) through deepening of Corporate Consulting Services
• Geographic broadening of the revenue base through increased corporate and individual loan balances across all areas (Sanin, Sanyo, Kansai, Tokyo)
• Securing stable interest and dividend income on securities (¥31,986 million) through risk hedging of the securities portfolio using interest rate swaps

Risks

• Risk that a sharp rise in deposit interest expenses (¥24,043 million, up ¥17,425 million year on year) amid a rising rate environment will compress the fund margin (overall fund margin fell to 0.45%, down 0.02 percentage points year on year)
• Risk of expanding valuation losses on other securities (particularly bonds) due to rising domestic interest rates (consolidated valuation loss of -¥148,253 million; -¥100,484 million on a combined basis after hedging)
• Risk of increased credit costs associated with a rising non-performing loan ratio (from 1.25% to 1.47%) and an increase in doubtful receivables (from ¥34,405 million to ¥47,106 million)
• Long-term risk of a shrinking regional economy and declining loan demand due to the declining birthrate, aging population, and population decline in the Sanin region
• Risk of recognizing losses associated with securities portfolio restructuring, as evidenced by a sharp increase in losses on redemption of bonds such as JGBs to ¥12,376 million (from ¥2,030 million in the prior period)