Regional Economic Contraction, Intensifying Competition and Narrowing Margins
First written in FY2016. 9 of 17 entries say "Materialised", first in FY2017-Q2. Latest entry: FY2026.
The Awa Bank moved to the "Worse" side of this theme in 2016, 5 years before the typical company in this theme (2021).
The whole theme swung hardest in 2025: 3 of 6 companies on the "Worse" side.
3 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「In addition to market contraction resulting from population decline and the declining birthrate and population aging, the normalization of monetary policy has made it urgent to respond fully to the “world with interest rates,” including trends in lending and deposit rates and intensifying competition to attract deposits. Greater attention is also required regarding geopolitical risks, trade and monetary policy trends, and financial market volatility resulting from them, and uncertainty about the outlook remains extremely high.」
In addition to the previous pressures of population decline, market contraction and intensifying competition, the “world with interest rates” resulting from monetary policy normalization, competition to attract deposits, and uncertainty arising from geopolitical and trade policies are described as new pressures on the operating environment. - FY2026-H1MaterialisedAnnual report
「Ordinary expenses increased by ¥7.047 billion from the previous interim consolidated accounting period to ¥35.754 billion, due mainly to higher funding costs, including interest on deposits.」
Higher funding costs, including interest on deposits, were reflected in higher ordinary expenses, and risks in the earnings environment, including low interest rates and narrower margins, continue to materialize. - FY2022WorsenedAnnual report
「The operating environment surrounding regional financial institutions remains challenging due to structural issues such as population decline and contraction of regional economies resulting from the declining birthrate and population aging, as well as continued margin compression since the introduction of the negative interest rate policy. In addition, concerns over heightened geopolitical risks and the worldwide spread of COVID-19 have not been dispelled, and uncertainty about the outlook, including stagnation in economic activity, has increased further.」
It states that, in addition to the previous issues of population decline, regional economic contraction and narrowing margins, geopolitical risks and the continued spread of infectious disease have further increased uncertainty about the outlook. - FY2020WorsenedAnnual report
「In addition to the contraction in net interest income accompanying the prolonged negative interest rate environment, the global low-interest-rate environment is expected to persist for the time being as monetary policy responds to the worldwide spread of COVID-19. This raises concerns that the earnings environment will become even more challenging.」
It states that, in addition to the previous issues of population decline, intensifying competition and narrowing margins, the spread of infectious disease and continued low interest rates will make the earnings environment even more challenging. - FY2020-Q2RestatedAnnual report
「Long-term interest rates remained in negative territory as the Bank of Japan continued its strong monetary easing policy.」
The continuation of monetary easing and the movement of long-term interest rates in negative territory continue to be described. The business and other risks section states that there have been no significant changes or newly arising risks. - FY2019WorsenedAnnual report
「The operating environment surrounding regional financial institutions is becoming increasingly challenging amid accelerating structural changes in society, including population decline, market contraction caused by the declining birthrate and population aging, and widening regional disparities caused by urban concentration. Competition among financial institutions across regional boundaries is intensifying, as is competition with businesses in other industries, including IT companies, driven by technological innovation such as FinTech. In addition, margins have narrowed further since the introduction of the negative interest rate policy, against a backdrop of persistently low interest rates worldwide, making the earnings environment even more challenging.」
Market contraction, intensifying competition including from FinTech, and margin compression caused by low and negative interest rates are described as creating a more challenging earnings environment. In terms of results, net interest income declined by ¥2.692 billion and consolidated core operating profit declined by ¥1.860 billion. - FY2019-Q3MaterialisedAnnual report
「For the first nine months of the current fiscal year, the funds investment balance was ¥25.327 billion, down ¥1.868 billion from the first nine months of the previous fiscal year, due mainly to lower interest income on loans.」
The funds investment balance declined by ¥1.868 billion year on year due mainly to lower interest income on loans and other factors, continuing to reflect narrower margins and the challenging earnings environment. - FY2019-Q2MaterialisedAnnual report
「Ordinary income was ¥37.202 billion, up ¥2.088 billion from the first six months of the previous fiscal year. Although funds investment income declined due mainly to lower lending yields while the Bank of Japan’s negative interest rate policy continued, the Bank recorded gains on sales of equities and other securities in connection with a review of its capital structure aimed at making a consolidated subsidiary a wholly owned subsidiary.」
The decline in funds investment income due to the prolonged negative interest rate policy and lower lending yields continued to be reflected in results. - FY2019-Q1MaterialisedAnnual report
「For the first three months of the current fiscal year, the funds investment balance was ¥8.474 billion, down ¥342 million from the first three months of the previous fiscal year, due mainly to lower interest income on loans.」
The funds investment balance declined by ¥342 million due to lower interest income on loans. In addition, ordinary expenses increased by ¥847 million, due mainly to higher credit-related costs, and ordinary profit declined by ¥450 million. - FY2018MaterialisedAnnual report
「Ordinary income was ¥68.051 billion, down ¥1.076 billion from the previous consolidated fiscal year, as funds investment income declined due mainly to lower lending yields while the Bank of Japan’s negative interest rate policy continued.」
The prolonged negative interest rate policy and lower lending yields were reflected in lower funds investment income, resulting in a ¥1.076 billion decline in ordinary income. - FY2018-Q3MaterialisedAnnual report
「For the first nine months of the current fiscal year, from 1 April 2017 to 31 December 2017, ordinary income was ¥50.996 billion, down ¥644 million from the first nine months of the previous fiscal year, due mainly to lower interest income on loans. Ordinary expenses increased by ¥829 million to ¥35.866 billion, due mainly to higher foreign-currency funding costs. As a result, ordinary profit declined by ¥1.474 billion to ¥15.130 billion, while net income for the quarter attributable to owners of the parent declined by ¥650 million to ¥9.326 billion.」
Lower interest income on loans and higher foreign-currency funding costs resulted in a ¥644 million decline in ordinary income and an ¥829 million increase in ordinary expenses. Ordinary profit and net income for the quarter attributable to owners of the parent declined by ¥1.474 billion and ¥650 million, respectively. The challenging earnings environment continues to be reflected in results. - FY2018-Q2MaterialisedAnnual report
「For the first six months of the current fiscal year, the funds investment balance was ¥18.114 billion, down ¥621 million from the first six months of the previous fiscal year, due mainly to lower interest income on loans and higher funding costs for foreign-currency funds.」
The narrowing of margins and challenging earnings environment were reflected in a ¥621 million decline in the funds investment balance due to lower interest income on loans and higher funding costs for foreign-currency funds. - FY2018-Q1MaterialisedAnnual report
「For the first three months of the current fiscal year, from 1 April 2017 to 30 June 2017, ordinary income was ¥16.554 billion, down ¥472 million from the first three months of the previous fiscal year, due mainly to lower interest income on loans.」
Ordinary income declined by ¥472 million year on year due mainly to lower interest income on loans, while ordinary profit also declined by ¥763 million. The difficult earnings environment continues to be reflected in results. - FY2017WorsenedAnnual report
「The operating environment surrounding regional financial institutions is becoming increasingly challenging amid structural changes in society, including population decline, the accelerating decline in the birthrate and population aging, and widening regional disparities caused by urban concentration. Competition among financial institutions across regional boundaries and competition with businesses in other industries, including IT companies, are also intensifying. In addition, margins have narrowed further since the introduction of the negative interest rate policy, making the earnings environment increasingly challenging.」
It states that, in addition to intensifying competition, margins have narrowed further since the introduction of the negative interest rate policy, making the earnings environment even more challenging. - FY2017-Q3RestatedAnnual report
「For the first nine months of the current fiscal year, ordinary income was ¥51.641 billion, up ¥100 million from the first nine months of the previous fiscal year, despite lower interest income on loans and other items due to the negative interest rate policy, as gains on sales of equities increased.」
Although lower interest income on loans and other items due to the negative interest rate policy continued, overall ordinary income increased due to gains on sales of equities and other factors. The assessment of existing risks was effectively unchanged. - FY2017-Q2MaterialisedAnnual report
「Ordinary income was ¥34.229 billion, down ¥649 million from the first six months of the previous fiscal year. This reflected lower funds investment income, including lower investment yields, due to the impact of the negative interest rate policy.」
The longstanding challenging margin and earnings environment is described as having materialized in lower funds investment income due to the negative interest rate policy and lower investment yields. - FY2016First statedAnnual report
「Amid accelerating structural changes in society, including population decline, the declining birthrate and population aging, and the contraction of regional economies caused by urban concentration, competition among banks across regional boundaries and competition with businesses in other industries, including IT companies, are intensifying. In addition, the earnings environment is becoming increasingly challenging as margins continue to narrow amid further expansion of monetary easing policies.」
Demographic trends, regional economic contraction, competition including from other industries, and margin compression resulting from monetary easing are cited as risks in the operating environment.