THE TOWA BANK, LTD.
8558・Prime Market・Banks
Business
THE TOWA BANK, LTD. was founded in 1917 and is headquartered in Maebashi City, Gunma Prefecture. Operating primarily in Gunma and Saitama Prefectures, it provides comprehensive financial services including deposits, loans, domestic and foreign exchange, securities, and over-the-counter insurance sales. Its consolidated subsidiaries include Towa Bank Lease Co., Ltd. (leasing business) and Towa Card Co., Ltd. (credit card business), but the Banking Business accounts for the majority of earnings, resulting in a single-segment structure. As a mid-tier regional bank with loans outstanding of ¥1,646,482 million, deposits of ¥2,170,932 million, and total assets of ¥2,416,200 million, its main customer base consists of small-and-medium enterprises, local public bodies, and individuals. The bank is listed on the Prime Market of the Tokyo Stock Exchange.
Business Model
A fund-profit-centered business model that raises deposits from regional customers (¥2,170,932 million) and deploys them into loans to SMEs and individuals (¥1,646,482 million) and securities (¥411,313 million). In FY2026 (ending March 2026), interest income on fund management was ¥31,401 million, and fee and commission income was ¥7,260 million. The Fee Business (Services Transactions), driven by sales of custodial assets such as investment trusts and life insurance, also plays a complementary role in earnings.
Company Strengths
Loan balances continued to expand, rising ¥39,782 million from the previous fiscal year-end to ¥1,646,482 million (consolidated). By industry, the main components were real estate & goods rental/leasing (18.20%), other individuals (23.68%), and local governments (15.07%), maintaining a regionally diversified portfolio. The non-performing loan ratio improved by 0.14 percentage points year on year to 2.39%, confirming the stability of asset quality.
In FY2026 (ending March 2026), the Bank conducted a bulk sale of approximately ¥200 billion in securities, fundamentally revamping its portfolio. As a result, the securities yield rose from 0.76% to 1.18%. By directing the proceeds from the sale toward increasing loans and reinvesting in securities, the Bank significantly reduced interest rate risk while laying the groundwork for future growth in net interest income—a self-directed structural reform worthy of recognition.
Fee and commission income rose by ¥432 million year on year to ¥7,260 million. Of this, deposit and lending business fees expanded to ¥4,359 million (from ¥3,827 million in the previous fiscal year). Assets under custody grew, with investment trusts reaching ¥87.3 billion, life insurance and other products ¥70.3 billion, and public bonds ¥9.6 billion, while securities-related business income also increased to ¥801 million (from ¥759 million in the previous fiscal year). Revenue diversification away from reliance on net interest income is progressing.
ENVALITH's Perspective
Performance Trend
Ordinary income reached ¥43,504 million (up 15.0% year on year), maintaining an increasing revenue trend for the fifth consecutive period. As an external factor, driven by the Bank of Japan's interest rate hikes, interest income on fund management expanded sharply to ¥31,401 million (up 26.7% year on year), and core net business profit rose to ¥8,846 million (up 51.3% year on year), showing a significant improvement in core earnings power. However, in connection with a review of the securities portfolio aimed at reducing future interest rate risk, the company recorded losses on sales of government bonds and other bonds of ¥37,147 million, resulting in an ordinary loss of ¥29,837 million and a net loss attributable to owners of the parent of ¥24,499 million. For FY2027 (ending March 2027), the company forecasts a recovery to ordinary profit of ¥5,000 million and net profit of ¥5,500 million. Total assets stood at ¥2,416,250 million (up ¥33,497 million year on year), maintaining an expansionary trend.
Growth Strategy
Pursuing deepening of the region-focused business model and improved profitability through the four strategies of the medium-term management plan 'TOWA Future Plan I'
Deepening the provision of comprehensive financial services to regional customers through continuous expansion of the loan balance (non-consolidated ¥1,649,022 million, up ¥39,777 million year on year) and strengthened sales of assets in custody (investment trust balance of ¥87.3 billion, life insurance and other products of ¥70.3 billion). Contributing to regional economic revitalization by using reinvestment funds for business financing and other purposes.
In FY2026 (ending March 2026), bonds with an average remaining maturity of over 3 years were processed in a lump sum, compressing unrealized losses on other securities valuation to ¥4.2 billion. Going forward, the investment approach has shifted to focus primarily on government bonds and similar instruments with maturities of 2 years or less, establishing a framework that achieves both improved yield (securities yield of 1.18%) and risk control.
Operating expenses are on an increasing trend at ¥21,314 million (up ¥843 million year on year), but efficiency has improved, with the core gross operating profit OHR at 70.39% (an improvement of 7.21 percentage points year on year). Gain on disposal of fixed assets of ¥1,691 million (from the sale of owned real estate as part of branch policy initiatives) was recorded, promoting asset efficiency.
A dividend of ¥35 per share was maintained even in a period with a recorded loss, and an increase to ¥50 is planned for FY2027 (ending March 2027). The policy of maintaining a total payout ratio of 30% or more is being upheld. Effective June 25, 2026, executive changes including the replacement of the Representative Director and President were carried out, renewing the management structure.
Last updated: July 19, 2026