THE HOWA BANK,LTD. (8559) Stock Price

Toyowa Bank operates financial services centered on banking, serving individuals and businesses in its region. Specifically, the bank handles a wide range of products including deposits and loans, foreign exchange services, securities brokerage, and over-the-counter sales of investment trusts and insurance products.

The company's primary customers are individuals and small-to-medium enterprises, meeting the funding needs of local businesses and households. The revenue structure is centered on interest income from lending, with fee income from securities brokerage and investment trust and insurance sales serving as complementary revenue sources.

The company operates as a single business segment focused on banking, with operations organized around deposits, lending, foreign exchange, and asset management consulting. While emphasizing face-to-face service at branch counters, the bank also addresses customers' asset management needs through securities brokerage and the sale of investment trusts and insurance products.

Through its "Management Strengthening Plan" (April 2022–March 2025), the company aims to stabilize its earnings base while supporting the local community. Key performance indicators include core operating net income and operating gross profit expense ratio. Latest figures show core operating net income of 1,802 million yen, exceeding the plan by 281 million yen, and the operating gross profit expense ratio improved to 63.43%, on track to meet targets. However, the company faces near-term challenges: lending balance to small and medium-sized businesses fell short by approximately 8.3 billion yen at 309.6 billion yen, and the ratio of management improvement support initiatives reached 3.66%, missing the target by 0.57 percentage points.

The company has identified two priority investment areas: support for regional small and medium-sized enterprises and personal asset management services. For small and medium-sized businesses, the company is expanding support offerings including "V Support," the "Management Improvement Support Fund," and the "Working Capital Stabilization Fund" to secure lending balances and ratios. For individuals, the company is strengthening securities brokerage, investment trust, and insurance product sales alongside deposits and loans, aiming to diversify revenue streams by expanding fee-based income beyond interest income.

The company prioritizes market development and business expansion in its home region of Oita, targeting growth through deepening relationships with existing customers and acquiring new ones. Specifically, it aims to increase the ratio of "management improvement support recipients" by deploying accumulated expertise to more businesses, while focusing on business succession and startup support. Recognizing local economic conditions such as rising prices and labor shortages, the company pursues revenue improvement for local enterprises and long-term lending base strengthening through hands-on lending and restructuring support.

The company is also investing in technological innovation, executing digitalization and automation investments to improve operational efficiency. The operating gross profit expense ratio calculation incorporates automation-related costs, allowing the company to prioritize near-term system investments while achieving long-term cost reduction and service quality improvement. Additionally, the company is optimizing customer touchpoints by adjusting deposit and lending rates in response to interest rate changes and combining in-branch face-to-face services with online services.