THE TOTTORI BANK, LTD.

Business Details

The only reporting segment of the Bank's group. It provides financial services to the region, including the Credit Card Business of consolidated subsidiary Torigin Card Service, and the Leasing Business and Venture Capital Business of equity-method affiliates. The segment conducts a full range of banking operations including deposits, lending, securities investment, domestic and foreign exchange, and the Fee Business, aiming to be a "consulting bank that powerfully leads the development of the local community." In December 2025, the Bank established the Investment Specialty Subsidiary "Torigin Future Co-Creation Capital Co., Ltd." to strengthen business succession and regional revitalization support.

Recent Overview

Driven by fund management and fee income, ordinary profit rose 17.9% year on year to ¥2,243 million

In FY2026 (ending March 2026), fund management income of ¥13,641 million (up ¥2,568 million year on year) and fee and commission income of ¥3,784 million (up ¥412 million year on year) drove revenue growth, with ordinary income reaching ¥18,991 million (up 16.3% year on year). Meanwhile, funding costs surged to ¥2,384 million (up ¥1,605 million year on year) in response to the Bank of Japan's rate hike. Core net business profit improved significantly to ¥2,978 million (up ¥1,193 million year on year), and the core OHR reached 77.4%, achieving the medium-term plan target (low-to-mid 80% range) ahead of schedule. The NPL ratio rose slightly to 1.13% (from 1.00% at the end of the prior fiscal year). For FY2027 (ending March 2027), the full-year forecast calls for moderate profit growth, with ordinary profit of ¥2,300 million (up 2.5% year on year) and net income of ¥1,600 million (up 1.0% year on year).

Key Products

Growth Drivers

• Increase in interest on loans: Interest on loans in FY2026 (ending March 2026) increased significantly to ¥11,376 million (up ¥1,722 million year on year), driving overall fund management income. Loan yield improved to 1.27% (up 0.16 percentage points year on year)
• Expansion of loan balance: Lending to corporate and individual customers increased, with the non-consolidated loan balance reaching ¥917,291 million (up ¥35,039 million from the end of the prior fiscal year). Personal loans also remained solid, with housing loan balances of ¥249,621 million
• Increase in fee and commission income: Consolidated fee and commission income expanded to ¥3,784 million (up ¥412 million year on year), with fee and commission profit reaching ¥2,085 million (up ¥310 million year on year)
• Steady increase in assets in custody balance: Total assets in custody reached ¥1,348,317 million (up ¥54,382 million from the end of the prior fiscal year), capturing asset management needs. Cumulative investment trust sales totaled ¥404,334 million
• Improvement in securities yield: Interest and dividends on securities increased to ¥1,814 million (up ¥622 million year on year), with securities yield improving significantly to 1.50% (up 0.47 percentage points year on year)
• Establishment of an investment specialty subsidiary and a regional revitalization business company: The Bank established "Torigin Future Co-Creation Capital Co., Ltd." and "Torigin Regional Design Partners Co., Ltd." to build a new revenue base for business succession and regional revitalization support

Risks

• Sharp rise in funding costs: Interest on deposits increased approximately 3.1-fold to ¥2,339 million (up ¥1,586 million year on year). In the event of further rate hikes by the Bank of Japan, there is a risk of further increases in funding costs, with the overall interest margin remaining thin at 0.06%
• Rise in NPL ratio: The non-consolidated disclosed claims ratio rose to 1.13% (from 1.00% at the end of the prior fiscal year). Doubtful claims increased to ¥8,581 million (up ¥1,020 million from the end of the prior fiscal year), posing a risk of increased credit costs
• Risk of fluctuation in valuation differences on other securities: Although the non-consolidated valuation difference improved to negative ¥839 million from negative ¥1,629 million at the end of the prior fiscal year, there remains a risk of expanding unrealized losses on the bond portfolio (bond valuation losses of negative ¥5,013 million) in a rising interest rate environment
• Population decline and regional economic contraction: As the Bank's main business base is Tottori Prefecture, there is a long-term risk of declining loan demand due to population decline and the aging/declining birthrate. The in-prefecture loan ratio of 78.12% reflects a high degree of regional concentration
• Gap with medium-term management plan targets: The number of in-house professional personnel stands at 125 (target: 150), leaving a gap in specialization metrics relative to the target. Ordinary profit of ¥2.2 billion in FY2025 has already exceeded the final-year target of ¥2.0 billion under the medium-term plan, raising the issue of revisiting target levels
• Conservatism of the FY2027 (ending March 2027) earnings forecast: The full-year ordinary profit forecast of ¥2,300 million (up 2.5% year on year) reflects only modest profit growth, and further increases in funding costs or credit costs could be downside risks