ENVALITH
株式会社大光銀行 logo

THE TAIKO BANK,LTD.

8537・Standard Market・Banks

Official website
株式会社大光銀行 logo
THE TAIKO BANK,LTD.8537

Business

THE TAIKO BANK, LTD. was founded in 1942 and operates as a community-based regional bank with its main business base in Niigata Prefecture. Centered on 62 branches within Niigata Prefecture, it also has a presence in the Kanto region, and offers Securities Investment Business, domestic and foreign exchange, sales of public bonds, investment trusts, and insurance, and various consulting services, in addition to its core Lending Business and deposit operations. Its consolidated subsidiaries include Taiko Capital & Consulting, which handles M&A brokerage and consulting, and Taiko Card, which handles Credit Card & Credit Guarantee Business, and it also engages in leasing operations through its equity-method affiliate Taiko Lease. In 2022, the bank concluded a strategic capital and business alliance with SBI Holdings, aiming to strengthen its functions in the digital and asset management domains.

Business Model

The main revenue source is fund management income (FY2026 (ending March 2026): ¥20,740 million), comprising interest on loans and interest and dividends on securities, with margin management against deposit funding costs forming the core of profitability. In addition, revenue is supplemented by investment trust and insurance over-the-counter sales (Fee Business income: ¥3,846 million) and corporate M&A consulting fees. The structure aims to expand loan and deposit balances through in-depth sales activities targeting regional small and medium-sized enterprises and individual customers, while diversifying fee income by building up assets under custody.

Company Strengths

Leveraging the 'approachability' cultivated since its days as a mutual bank, the bank operates 62 branches in Niigata Prefecture (including the head office), plus 7 branches in the Kanto region and an internet branch. Loan balances reached ¥1,193,451 million (up ¥22,268 million year on year) and deposit balances reached ¥1,497,378 million (up ¥28,026 million year on year), with steady balance growth underpinned by long-term relationships with regional customers.

Growth in sales of investment trusts and public bonds expanded assets under custody to ¥198,086 million (up ¥22,188 million year on year). Fee revenue from the over-the-counter sales business for investment trusts and insurance rose to ¥1,286 million (from ¥1,195 million in the previous period), functioning as a source of fee income independent of interest margins.

The consolidated capital adequacy ratio (domestic standard) for FY2026 (ending March 2026) stood at 8.55%, well above the regulatory minimum of 4%. In asset assessment, doubtful claims stood at ¥23.0 billion and substandard claims at ¥0.0 billion, indicating stable non-performing loan quality. Actual credit-related costs also declined substantially on a non-consolidated basis to ¥500 million (from ¥1,017 million in the previous period), maintaining sound asset quality.

ENVALITH's Perspective

In FY2026 (ending March 2026), ordinary income increased substantially to ¥29,344 million (up 30.7% year on year), but the increase in interest income (from ¥17,088 million to ¥20,740 million) was mainly driven by the external factor of the Bank of Japan's policy rate hike. Interest expenses also surged from ¥1,147 million to ¥3,476 million, raising the risk that the interest margin could be squeezed depending on future interest rate trends. The forecast for FY2027 (ending March 2027) projects a decline in ordinary income to ¥29,030 million (down 1.0% year on year), and continued attention should be paid to sensitivity to changes in the interest rate environment.

In FY2026 (ending March 2026), the return on equity attributable to owners of parent (consolidated) improved to 3.6% (from 3.2% in the previous period), but it remains at a low level compared to the average for regional banks. Net assets per share increased steadily to ¥8,455.12, but the expansion in the scale of net assets is weighing on ROE improvement. The forecast for profit attributable to owners of parent for FY2027 (ending March 2027) is ¥3,300 million (up 17.8% year on year), and further ROE improvement is expected if this forecast is achieved as planned. However, attention should be paid to the fact that trends in gains/losses related to government bonds and other securities (non-consolidated: ¥-2,937 million) associated with the review of the securities portfolio could widen the fluctuation range of profits.

Both loans and deposits show a high degree of concentration in Niigata Prefecture, resulting in a business structure highly susceptible to trends in the regional economy. As Niigata Prefecture continues to experience population decline and aging, there are concerns about a medium- to long-term contraction in loan demand and a decrease in depositors. On the other hand, the ratio of loans to SMEs and others stands at a high 77.74%, and capturing demand for business succession and capital investment from regional companies will be key to maintaining earnings. The expansion of assets under custody (¥198,086 million) can be evaluated as diversification of non-interest income, but it should be noted that this also carries market fluctuation risk related to investment trusts.

Growth Strategy

Under the 13th Medium-Term Management Plan "Value Up," the Bank is advancing corporate consulting, personal asset formation support, DX, and sustainability initiatives

Loans outstanding to SMEs steadily expanded to ¥534,590 million (up ¥11,073 million year on year). Through deeper client relationships via consulting services such as business succession, M&A, and management improvement support, the Bank aims to simultaneously expand loan balances and increase fee income.

Assets under custody expanded substantially to ¥198,086 million (up ¥22,188 million year on year). Non-interest income is being diversified through three pillars: investment trusts (¥94,990 million), insurance (¥90,721 million), and public bonds (¥12,375 million). The Bank aims to capture individual customers' asset formation needs, supported by the tailwind of NISA program expansion.

With losses widening on government bonds and other bond-related gains/losses to ¥(2,937) million (from ¥(461) million in the prior period), the Bank reduced its securities balance to ¥325,879 million (down ¥17,091 million year on year). While increasing its government bond balance to ¥95,999 million (from ¥72,644 million in the prior period), it reduced other securities to ¥101,828 million (from ¥136,675 million in the prior period), aiming for a qualitative transformation of the portfolio.

The annual dividend for FY2026 (ending March 2026) was substantially increased to ¥89 (from ¥65 in the prior period), raising the dividend payout ratio to 30.2% (from 24.8% in the prior period). For FY2027 (ending March 2027), the Bank plans an annual dividend of ¥106 (interim ¥53, year-end ¥53), maintaining a payout ratio of 30.6%. A minimum annual dividend of ¥50 per share has been set as a floor.

Last updated: July 19, 2026