THE BANK OF KOCHI,LTD.

Business Details

A regional financial institution operating deposit business, lending business, securities investment business, exchange settlement business, etc., mainly through the parent entity, the Bank of Kochi, with Kochi Prefecture as its primary business base. This core segment accounts for approximately 77% of the group's total ordinary income and provides its primary value through supporting the financing needs of regional small and medium-sized enterprises and asset formation support for individuals. It is the largest of the three segments — Banking, Leasing Business, and Credit Card Business.

Recent Overview

Revenue expanded on a surge in gain on sale of equities and increased loan interest income, but credit costs and funding costs rose significantly.

In the Banking segment for FY2026 (ending March 2026), ordinary income was ¥21,811 million (up ¥3,971 million year on year) and segment profit was ¥1,123 million (up ¥56 million year on year), representing both higher revenue and higher profit. Gain on sale of equities, etc. of ¥3,252 million (non-consolidated) and increased loan interest income of ¥10,959 million (up from ¥9,875 million in the prior period) contributed. Meanwhile, funding costs surged, with deposit interest expenses of ¥2,203 million (up from ¥650 million) and borrowing interest expenses of ¥268 million (up from ¥41 million). Credit costs also increased significantly, with provision for allowance for loan losses of ¥894 million and write-off of loans of ¥657 million. Valuation gains/losses on other securities deteriorated to ¥-13,647 million (non-consolidated), down from ¥-8,491 million in the prior period.

Key Products

Growth Drivers

• Increase in loan interest income (non-consolidated ¥10,959 million, up from ¥9,875 million in the prior period), boosting interest income
• Utilization of gain on sale of equities, etc. (non-consolidated ¥3,252 million) to secure extraordinary income
• Increase in fee and commission income (consolidated ¥2,703 million, up from ¥2,652 million in the prior period) and expansion of individual assets under custody balance (¥125,817 million, up ¥11,766 million year on year)
• Expansion of securities balance (consolidated ¥297,267 million, up ¥13,352 million year on year), increasing interest and dividends on securities
• Increase in housing loan balance (¥98,923 million, up ¥3,541 million year on year), expanding loans to individuals
• Improvement in overall interest margin (non-consolidated 0.10%, up from 0.09% in the prior period), enhancing profitability

Risks

• Sharp increase in credit-related expenses (non-consolidated: write-off of loans of ¥657 million, provision for specific allowance for loan losses of ¥662 million; effective credit costs of ¥1,261 million, sharply up from ¥338 million in the prior period)
• Sharp rise in deposit interest cost due to rising interest rates (non-consolidated ¥2,203 million, up from ¥650 million in the prior period) and increased borrowing interest expenses (non-consolidated ¥268 million, up from ¥41 million in the prior period)
• Widening unrealized losses on other securities (non-consolidated ¥-13,647 million, versus ¥-8,491 million in the prior period) and occurrence of valuation losses on held-to-maturity bonds of ¥-333 million
• Deterioration in gains/losses on bonds including government bonds (non-consolidated ¥-2,577 million, versus ¥-1,420 million in the prior period), pressuring gross operating profit
• Decline in loan balance (non-consolidated ¥737,026 million, down from ¥748,907 million in the prior period) and decline in deposit balance, etc. (non-consolidated ¥1,011,897 million, down from ¥1,032,697 million in the prior period)
• Structural challenges in the Kochi Prefecture economy (declining birthrate, aging population, and shrinking working-age population) leading to sluggish loan demand and a decline in normal claims (non-consolidated ¥719,627 million, down from ¥734,560 million in the prior period)