Breaking Down The Hyakugo Bank, Ltd. Financial Health: Key Insights for Investors

Founded on November 19, 1878, The Hyakugo Bank, Ltd. has spent over 145 years serving Mie Prefecture and today combines regional roots with growth ambitions under its 2022 Medium-term Management Plan, "KAI-KAKU 150 2nd STAGE"; recent moves include Hyakugo Securities' 2024 launch of an online trading platform for U.S. stocks and a strong FY2025 performance with profit attributable to owners up 26.3% and Banking-segment revenue of ¥103.76 billion, supported by a diversified model spanning Banking, Leasing and Others (Leasing contributed ¥16.82 billion, or 13.51% of total revenue) across a network of 145 branches and two overseas representative offices; capital structure and shareholder engagement are robust-22,446 shareholders, 254,119 thousand outstanding shares and paid-in capital of ¥20.0 billion-while strategic corporate actions in 2025 included leadership changes and a buyback of 817,200 shares for over ¥578 million to optimize capital; market metrics as of July 25, 2025 show a market cap of $1.3 billion and trailing 12‑month revenue of $679 million, with a rising profit margin of 17% in FY2025 and targets to become a Green & Consulting Bank Group (ROE ≥ 5% and consolidated net income ≥ ¥24.0 billion by FY2028), backed by commitments to net-zero by FY2030, ¥50 billion for renewables, ~¥1 billion in tech upgrades (new app in spring 2025) and expanded fee income from housing loans, depository asset commissions and corporate solutions.

The Hyakugo Bank, Ltd. (8368.T): Intro

• Founded: November 19, 1878 - primary market: Mie Prefecture and surrounding areas.
• Strategic plan: Medium-term Management Plan 'KAI-KAKU 150 2nd STAGE' launched in 2022 to sharpen competitiveness and efficiency.
• Retail & wealth expansion: Hyakugo Securities launched an online trading platform in 2024, adding U.S. equities to customer access.

• Retail banking: deposit-taking, consumer mortgages, personal loans, payment services and neighborhood branch network.
• SME & corporate banking: working capital loans, term lending, cash-management, trade-related services for local companies.
• Fee income & wealth: brokerage, asset management, and advisory via Hyakugo Securities (now with online trading access to U.S. markets).
• Investment & trading: interest-earning securities portfolio, interbank placements, and proprietary positions within regulatory limits.
• Other: fee-based services (guarantees, trust-related services) and commissions from insurance and structured products.

• FY ending Mar 31, 2025: profit attributable to owners increased by 26.3% compared with prior fiscal year.

• Listed ticker: 8368.T (Tokyo Stock Exchange).
• Governance focus: regional-bank governance with board and executive adjustments in 2025 to align with medium-term strategy.

The Hyakugo Bank, Ltd. (8368.T): History

• Founded as a regional savings and commercial bank, expanding through organic growth and regional consolidation.
• Listed on the Tokyo and Nagoya Stock Exchanges (securities code 8368) to access capital markets while retaining strong local ties.
• Maintains a community-centric governance model with significant local institutional and individual shareholders.

• Shareholder composition: a diverse mix of regional institutions (including local government-related entities and corporations) and individual investors, supporting balanced governance.
• Local ownership and retail shareholder base contribute to stable deposit funding and community alignment.

The Hyakugo Bank, Ltd. (8368.T): Ownership Structure

• Customer-centricity: personalized lending, deposits and advisory services for individuals and SMEs.
• Sustainability: target of net‑zero greenhouse gas emissions by FY2030 and active investments in renewable energy projects and green loans.
• Innovation: ongoing investments in digital platforms, mobile banking and back‑office automation to improve service delivery and efficiency.
• Community engagement: financing local development projects, supporting regional SMEs and sponsoring civic initiatives.
• Integrity & transparency: governance and reporting practices aligned to build trust with customers and shareholders.

• Shareholder base is dominated by domestic institutional investors, trust banks and regional stakeholders, with cross‑shareholdings typical among regional corporations and municipal entities.
• Major shareholders typically include trust banks (e.g., The Master Trust Bank of Japan), regional corporate partners and indirect holdings by financial institutions; institutional ownership helps support stable governance and long‑term regional focus.
• Corporate governance comprises a board with outside directors to strengthen oversight and alignment with transparency and integrity commitments.

• Stable institutional ownership enables long‑term lending to local SMEs and investment in infrastructure and renewable projects aligned with the FY2030 net‑zero goal.
• Local stakeholder influence encourages continued emphasis on regional economic development and community banking services.
• Shareholder support funds ongoing digital transformation investments to improve customer experience and operational efficiency.

The Hyakugo Bank, Ltd. (8368.T): Mission and Values

• Business segments: Banking, Leasing, Others - each tailored to serve retail, SME, and corporate clients across Mie Prefecture and selected overseas relationships.
• Branch network: 145 domestic branches and 2 overseas representative offices to maintain local presence and cross-border correspondent relationships.
• Customer reach: Retail depositors, small- and medium-sized enterprises, agricultural cooperatives, public-sector counterparties, and individual lessees.

• Interest income from loans and securities is the core revenue driver; fee income from commissions, trust fees, and insurance sales complements net interest margin.
• Leasing generates rental and interest-type income and supports client retention by bundling financing with banking services.
• 'Others' diversifies non-interest revenue through credit card fees and financial instruments operations, reducing reliance on interest spread.

• Credit risk: A multi-tiered internal credit rating system evaluates obligors across retail and corporate portfolios; concentration limits are applied by industry, borrower, and geographic area.
• Market risk: ALM (asset-liability management) policies govern maturity matching and interest-rate sensitivity; securities portfolios are classified and monitored for unrealized losses.
• Operational and compliance risk: Internal controls, periodic audits, and compliance programs aim to meet JFSA guidelines and anti-money-laundering standards.
• Portfolio diversification: Strategic allocation among consumer loans, SME lending, municipal loans, and investment securities to smooth credit-cycle volatility.

• Domestic footprint: 145 branches enabling nationwide deposit collection and local lending origination.
• Overseas presence: 2 representative offices to support international trade finance, foreign-currency services, and correspondent banking.
• Product mix: Balanced between net interest income (majority), fee income (investment trusts, insurance, brokerage), and leasing revenue.
• Capital and liquidity: Capital adequacy and liquidity buffers are maintained in line with regulatory requirements and local bank practice to support lending and risk-weighted assets.

The Hyakugo Bank, Ltd. (8368.T): How It Works

• Primary business segments: Banking (retail & corporate), Leasing, Securities/Investment Products, and Other Financial Services.
• Customer base: individuals (housing, consumer loans), SMEs (working capital, equipment finance), and local institutions (municipal, public projects).
• Distribution: branch network in Mie and neighboring prefectures, digital channels, and partnership networks for product intermediation.

• Interest income: earned on loans to individuals and corporates and on securities portfolios; this is the backbone of the Banking segment's ¥103.76 billion revenue in FY2025.
• Fee & commission income: generated from investment trust sales, insurance intermediation, and product distribution; grows with assets under custody and sales activity.
• Leasing: equipment and property leasing contracts contribute ¥16.82 billion (13.51% of total), providing steady recurring returns and diversification from interest rate cycles.
• Corporate solutions: M&A advisory, syndicated loans, and structured financing - reached record-high fee levels in FY2023 and continue to be a material source of non-interest revenue.
• Housing loans & depository asset commissions: elevated fee income driven by mortgage origination activity and adoption of the new NISA system boosting asset-related commissions.

• Loan lifecycle: origination → risk assessment → pricing (spread over funding cost) → monitoring → repayment/collection; spreads generate core net interest margin.
• Asset-liability management: balance of deposits, wholesale funding, and securities to manage interest rate and liquidity risk, preserving net interest income.
• Product intermediation: bancassurance and investment trust platforms connect customers to third-party products, yielding upfront and recurring fees.
• Leasing operations: long-term lease contracts recorded as operating/financial lease revenue with amortization profiles that stabilize medium-term cash flow.
• Corporate advisory: fee recognition upon deal completion; cross-selling to loan and deposit clients increases lifetime client value.

• Medium-term Management Plan focus: diversification into green finance, expansion of digital services, and enhancement of consulting capabilities to reduce reliance on pure interest income.
• Green initiatives: financing renewable projects and ESG-linked loans expected to open fee and interest opportunities while attracting sustainability-focused deposits.
• Digital transformation: improving customer acquisition, reducing branch operating costs, and enabling scale in fee businesses (e.g., online investment products).
• Consulting services: advisory for SMEs (digitalization, succession, M&A) to deepen relationships and generate higher-margin fee income.

The Hyakugo Bank, Ltd. (8368.T): How It Makes Money

• Market capitalization: $1.3 billion (as of July 25, 2025)
• Trailing 12-month revenue: ¥- / $679 million (as of March 31, 2025)
• Profit margin: 17% in FY2025 (up from 14% in FY2024)
• Medium-term targets: consolidated ROE ≥ 5% and consolidated net income ≥ ¥24.0 billion by FY2028

• Core revenue drivers:
  • Net interest income from mortgages, corporate loans, and regional lending
  • Fee income: payment services, account services, wealth-management advisory
  • Investment income and securities trading from asset portfolio
  • Consulting and advisory fees increasingly tied to sustainability and project finance
• Strategic growth & efficiency levers:
  • Transformation to a Green & Consulting Bank Group by 2028 to capture ESG financing demand
  • ¥1 billion technology upgrade and a new mobile app to improve customer acquisition, retention, and fee cross-sell
  • ¥50 billion dedicated to renewable energy initiatives to build long-term, fee-generating green finance pipelines