ENVALITH
株式会社四国銀行 logo

The Shikoku Bank, Ltd.

8387・Prime Market・Banks

Official website
株式会社四国銀行 logo
The Shikoku Bank, Ltd.8387

Business

The Bank of Shikoku, Ltd. is a long-established regional bank founded in 1878 (Meiji 11), headquartered in Kochi Prefecture with its primary business base across the entire Shikoku region. The group comprises the Bank, six consolidated subsidiaries (Shigin General Lease, Shikoku Guarantee Service, Shigin Computer Service, Shigin Regional Economic Research Institute, Shigin Agency, and Shigin Capital Partners), among others, and provides peripheral financial services such as leasing, guarantees, think tank functions, and investment funds centered on core banking operations. Its main customers are small and medium-sized enterprises, individuals, and local public bodies in the Shikoku region, with loans outstanding at fiscal year-end of ¥2,228,884 million and deposits and other balances of ¥3,013,313 million. Listed on the Prime Market of the Tokyo Stock Exchange.

Business Model

The main revenue source is the margin between fund procurement (deposits and borrowed money) and fund deployment (loans and securities) (net interest income of ¥38,206 million), complemented by non-interest income from asset management consulting and financial instruments intermediary services (net fees and commissions of ¥8,088 million) leveraging the comprehensive business alliance with Daiwa Securities. Advanced financial domains such as LBO loans and ship financing, as well as investment fund business through Shigin Capital Partners, also contribute to revenue diversification.

Company Strengths

Under the comprehensive business alliance with Daiwa Securities that began in April 2023, the balance of Daiwa Securities intermediary accounts expanded to ¥537,599 million (up ¥140,777 million from the end of the previous fiscal year). The increase in assets under custody, including a fund wrap balance of ¥129,389 million, has been the main driver of Fees and Commissions (Fee Income) of ¥10,885 million (up ¥1,253 million year on year), reflecting structural strengthening of the non-interest income base.

To address business succession issues at companies lacking successors, the company has strengthened its capabilities in advanced financial fields, including LBO loans, expanding loans to small and medium-sized enterprises to ¥1,223,122 million (up ¥69,480 million from the end of the previous fiscal year). The bank's non-consolidated loan balance of ¥2,232,077 million marks a new record high, demonstrating differentiated lending capabilities as a regional financial institution.

Shigin Capital Partners Co., Ltd., established in October 2024, manages the "Shigin Mirai Fund" (investment capacity of ¥2.0 billion) and the "Shigin Regional Revitalization Fund No. 2" (investment capacity of ¥1.0 billion), actively investing to support regional companies' entrepreneurship, business succession, and growth. This has internalized equity-based support functions that are difficult to provide at the bank alone, achieving sophistication in corporate consulting capabilities.

ENVALITH's Perspective

Profit attributable to owners of parent for FY2026 (ending March 2026) increased sharply to ¥17,445 million (up 156.0% year-on-year), but this includes one-time factors netting approximately ¥8,846 million in upward impact, comprising a ¥12,777 million gain on negative goodwill arising from making Shigin General Lease a wholly-owned subsidiary and a ¥3,931 million loss on step acquisition. Excluding these, underlying net profit is approximately ¥8.2 billion, which is broadly consistent with the FY2027 (ending March 2027) forecast of ¥8,800 million (consolidated). It is important for investors to evaluate the company based on recurring earnings power excluding one-time factors.

As an external factor, interest rate normalization driven by the Bank of Japan's additional rate hikes is providing a tailwind that boosts both interest income on loans and yields on securities. On the other hand, losses on bond sales and redemptions associated with improving the securities portfolio (on a non-consolidated basis, losses on sales of Japanese government bonds and other bonds of ¥10,565 million, and redemption losses of ¥3,673 million) along with a sharp increase in deposit interest expenses (¥5,820 million, up ¥3,698 million year-on-year) are pressuring earnings. FY2027 (ending March 2027) ordinary profit is forecast to be roughly flat at ¥14,000 million (down 0.3% year-on-year), and profit growth is expected to remain limited until the costs associated with portfolio improvement run their course.

The annual dividend for FY2026 (ending March 2026) was ¥60 (up ¥10 year-on-year), with total dividends paid of ¥2,513 million. Starting from FY2026, the dividend payout ratio target has been raised from 30% or higher to 40% or higher, and the forecast dividend for FY2027 (ending March 2027) is ¥86 (up 43.3% year-on-year), a substantial increase. Net assets per share stood at ¥4,558.40 (up ¥724.26 year-on-year), showing steady accumulation, and the capital adequacy ratio (domestic standard) of 8.17% significantly exceeds the regulatory minimum of 4%. On the other hand, continued attention is warranted regarding the medium- to long-term sustainability of loan demand in the Shikoku region, where population decline and aging are advancing.

Growth Strategy

Toward realizing the 10-year vision, the company is advancing consulting enhancement, digitalization, asset management expansion, and advanced finance initiatives

Through the comprehensive business alliance launched in April 2023, the company achieved a Daiwa Securities intermediary account balance of ¥537,599 million and a fund wrap balance of ¥129,389 million. For FY2026 (ending March 2026), fees and commissions (fee income) is planned at ¥6.2 billion (a decrease of ¥1.0 billion year on year), and the company aims to maintain a high level of profitability while absorbing the reversal effect from large-scale transactions.

The company continues to build up its loan balance in advanced financial areas such as LBO loans and ship financing, aiming to improve loan yields and diversify revenue sources. By upgrading various manuals and increasing staffing, the company is enhancing its credit risk management framework, and for FY2026 (ending March 2026), it expects actual credit-related expenses of ¥3.9 billion (an increase of ¥2.5 billion year on year) while building a stable operational foundation.

The company continues to sell low-yield bonds and investment trusts to improve securities yields. For FY2026 (ending March 2026), it plans a loss on bonds including government bonds of ¥-3.9 billion (an improvement of ¥4.9 billion year on year) and expects a gradual reduction in portfolio improvement costs. It aims to pursue yield improvement while compressing the average securities balance to ¥925.0 billion (forecast).

The company is expanding the loan operations reform to all branches and the branch back-office reform to branches in Kochi and Tokushima prefectures, aiming to reduce the operational burden on branches and lower operational risk. Following the reduction in workload, the company is promoting reskilling based on employees' preferences and aptitudes, accelerating the shift of human resources from routine tasks to planning and consulting work.

Starting in FY2026 (ending March 2026), the dividend payout ratio target has been raised from 30% or higher to 40% or higher. For FY2027 (ending March 2027), an annual dividend of ¥86 (up 43.3% year on year) is planned, aiming for further enhancement of shareholder returns. The company will pursue expanded returns while maintaining financial soundness, with net assets per share of ¥4,558.40 and a capital adequacy ratio of 8.17% (domestic standard).

Last updated: July 19, 2026