FIDEA Holdings Co. Ltd.

Business Details

A banking business segment centered on two core banks, Shonai Bank (Yamagata Prefecture) and Hokuto Bank (Akita Prefecture), with deposits, lending, securities investment, and fee-based services as its main revenue sources. It also encompasses peripheral businesses such as credit cards, credit guarantees, leasing, retail electricity, and investment operations. Its main business areas are Yamagata, Akita, and Miyagi Prefectures, and it aims to expand earnings by strengthening business-purpose lending and structured loans to financial institutions. A merger of Shonai Bank and Hokuto Bank (new company name: FIDEA Bank, Ltd.) is planned for January 2027.

Recent Overview

Ordinary profit rose 29.7% on wider net interest income and lower credit costs; a new progressive dividend policy was introduced

In FY2026 (ending March 2026), the widening of the loan-deposit interest margin (consolidated interest on loans of ¥25,418 million, up ¥3,864 million year on year) and a sharp increase in interest on due from banks (¥2,131 million, up ¥1,519 million year on year) expanded net interest income to ¥29,689 million (up ¥1,105 million year on year). Credit-related expenses improved substantially to ¥475 million (down ¥952 million year on year). Consolidated ordinary profit reached ¥5,461 million (up 29.7% year on year), and profit attributable to owners of parent reached ¥4,128 million (up 46.5% year on year), exceeding the previously announced earnings forecast by ¥661 million for ordinary profit and ¥828 million for net income. At a board of directors meeting held on May 15, 2026, the shareholder return policy was changed to a dividend payout ratio target (40% of consolidated net income), introducing a progressive dividend policy. For FY2027 (ending March 2027), the company plans to incorporate merger-related one-time costs (advertising expenses, new equipment costs, etc.), forecasting consolidated ordinary profit of ¥4,800 million (down 12.1% year on year) and consolidated net income of ¥3,200 million (down 22.4% year on year). The target for profit attributable to owners of parent in FY2029 (ending March 2029), the final year of the Sixth Medium-Term Management Plan (FY2026–FY2028), is ¥6,000 million.

Key Products

Growth Drivers

• Expansion of net interest income driven by an increase in interest on loans amid the BOJ's rate-hike phase (FY2026, ending March 2026: ¥25,418 million, up ¥3,864 million year on year) and a sharp rise in interest on due from banks (¥2,131 million, up ¥1,519 million year on year)
• Boost to stable fund management income from structured loans to financial institutions (combined balance of ¥280.0 billion for the two banks)
• Strengthening of business-purpose lending (combined business-purpose loan balance of ¥797,900 million for the two banks, up ¥18,400 million from the previous fiscal year-end) and expansion of loans to local governments and central government
• Profit boost from normalization of credit-related expenses (FY2026, ending March 2026: ¥475 million, down ¥952 million year on year)
• Early realization of management efficiency and synergy effects from the January 2027 merger of Shonai Bank and Hokuto Bank (FIDEA Bank) — expanded business base, enhanced funding capacity, and deeper consulting-based sales after the merger
• Reduction in risk assets (consolidated risk assets: ¥1,001,192 million, down ¥17,361 million from the previous fiscal year-end) and improvement in the capital adequacy ratio due to the change in credit risk measurement method from the standardized approach to the foundational internal ratings-based approach (effective end of March 2026)
• Support for fee income from an increase in assets under custody (combined for the two banks: ¥419,600 million, up ¥36,100 million from the previous fiscal year-end)
• Strengthening of financial soundness through restructuring of the securities portfolio (balance reduction and improvement in deferred hedge gains/losses)

Risks

• Pressure on net interest income from an early rise in funding costs (interest on deposits) accompanying additional BOJ rate hikes (funding costs in FY2026, ending March 2026, were ¥6,304 million, up ¥3,467 million year on year)
• Unrealized losses in the securities portfolio (combined valuation gains/losses on other securities for the two banks: ¥-26,813 million, of which bonds accounted for ¥-37,328 million)
• Declining trend in net fee and commission income (FY2026, ending March 2026: ¥5,061 million, down ¥494 million year on year; insurance-related fees down ¥500 million year on year)
• Medium- to long-term contraction in loan demand due to population decline, aging, and a decreasing number of business establishments in the Tohoku region (consumer loan balance: ¥400,195 million, down ¥27,016 million from the previous fiscal year-end)
• Geopolitical risks such as U.S. trade policy (tariffs), which could affect the business conditions of client companies, particularly in the automotive industry, and financial market volatility risk
• Implementation risk associated with the merger and system integration of the two banks in January 2027 (one-time merger-related costs of ¥2,100 million to be recorded in FY2027, ending March 2027; risk of cost overruns, system failures, etc.)
• Downward pressure on consolidated performance from deteriorating standalone results at Hokuto Bank (FY2026, ending March 2026: ordinary profit of ¥714 million, down 23.1% year on year; net income of ¥512 million, down 45.8% year on year)
• Pressure on gross operating profit from continued losses on Japanese government bonds and other bonds (FY2026, ending March 2026: ¥-7,862 million)