TOMONY Holdings, Inc.

Business Details

The Banking Business, operated by Tokushima Taisho Bank, Ltd. and The Kagawa Bank, Ltd., is the Group's core business. It provides deposits, lending, domestic and foreign exchange, securities investment, and registered financial institution operations, offering financial services to small and medium-sized enterprises (SMEs) and individuals across a broad area centered on Shikoku, Osaka, and Tokyo. For FY2026 (ending March 2026), consolidated ordinary income reached ¥104,775 million and total assets reached ¥5,204,096 million, accounting for virtually all of the Group's revenue.

Recent Overview

Interest income on loans rose significantly on higher interest rates, but a sharp increase in credit-related costs limited profit growth

In FY2026 (ending March 2026), interest on loans increased significantly to ¥60,233 million (up ¥8,611 million year on year), and ordinary income reached ¥104,775 million (up 10.1% year on year). On the other hand, provision for allowance for doubtful accounts related to business turnaround support for client companies, among other factors, surged to ¥7,958 million (up ¥5,218 million year on year), pushing consolidated credit-related costs up to ¥9,531 million (up ¥5,839 million year on year). Ordinary profit was ¥24,360 million (up 4.2% year on year), and profit attributable to owners of parent was ¥16,163 million (up 2.0% year on year), a limited increase. Core net business profit was ¥33,005 million (up ¥5,099 million year on year), reflecting steady improvement in core earnings power. The annual dividend was ¥26 per share (up ¥9.50 year on year), with a total payout ratio of 37.1%. For the next fiscal year (FY2027, ending March 2027), the Group forecasts ordinary profit of ¥26,600 million (up 9.1% year on year) and profit for the year of ¥17,850 million (up 10.4% year on year), with an annual dividend of ¥30 (a sixth consecutive year of dividend increases).

Key Products

Growth Drivers

• Increase in interest income on loans (consolidated ¥60,233 million, up ¥8,611 million year on year) driven by the Bank of Japan's policy rate hikes, with a further increase of ¥7,650 million expected in the next fiscal year
• Expansion of the loan balance (combined bank ¥3,856,139 million, up ¥157,882 million from the end of the prior fiscal year) through the active promotion of lending to SMEs and individuals
• Increase in deposit balances (combined bank ¥4,579,488 million, up ¥151,861 million from the end of the prior fiscal year), driven mainly by corporate and individual deposits
• Expansion of other ordinary income (consolidated ¥5,202 million, up ¥952 million year on year) due to increased gains on sales of equities and other securities
• Increase in fees and commissions income (consolidated ¥14,148 million, up ¥696 million year on year) and improvement in core business profit (combined bank core business profit after deducting foreign currency funding costs of ¥20,092 million, up ¥2,821 million year on year) due to lower foreign currency funding costs
• Improved earnings efficiency through improvement in core gross business profit OHR (combined bank 50.55%, down 3.80 percentage points year on year)
• Strengthened fee income base through expansion of total deposits and assets in custody (combined bank ¥5,051,555 million, up ¥202,044 million from the end of the prior fiscal year)

Risks

• Pressure on earnings from a substantial increase in provision for allowance for doubtful accounts (consolidated credit-related costs of ¥9,531 million, up ¥5,839 million year on year) related to business turnaround and restructuring support for client companies
• Increase in disclosed claims under the Financial Reconstruction Act (combined bank ¥72,759 million, up ¥6,966 million from the end of the prior fiscal year, 1.84% of total credit balance), and a rise in The Kagawa Bank's non-performing loan ratio (2.16%)
• Rising funding costs due to a sharp increase in interest on deposits (consolidated ¥12,640 million, up ¥8,562 million year on year), with a further increase of ¥8,800 million expected in the next fiscal year
• Pressure on net interest income due to a decrease in interest and dividends on securities (consolidated ¥16,091 million, down ¥2,559 million year on year), with a further decrease of ¥1,900 million expected in the next fiscal year
• Structural contraction of the regional economy (Tokushima, Kagawa, Shikoku) due to population decline, the falling birthrate and aging population, and a decrease in the number of business establishments
• Risk of deteriorating earnings and rising credit costs among client companies due to external factors such as geopolitical risks including the situation in the Middle East, US tariff measures, and exchange rate fluctuations
• Interest rate risk in the securities portfolio, which carries valuation losses on other securities (combined bank negative ¥6,626 million)