Yamagata Bank, Ltd.

Daiwa Securities Group announced on the 1st that it has signed a basic agreement with Yamagata Bank for a comprehensive business alliance centered on the asset management field. Yamagata Bank's over-the-counter sales accounts for investment trusts and public bonds will be succeeded to and integrated into Daiwa Securities, after which Daiwa Securities will entrust financial instrument intermediary services to Yamagata Bank, combining the regional customer base with the securities firm's expertise to strengthen consulting functions covering asset building as well as inheritance and business succession. The two companies aim to conclude a final contract by the end of March 2027 and plan to launch the new framework during 2028, and they said that at this point the impact of the alliance on consolidated earnings is minor. According to the two companies, in Yamagata Prefecture the share of securities in household financial assets is about 9 percent, below the national average of about 25 percent, and dependence on deposits and savings is high. Daiwa Securities has been expanding its asset management business through alliances with regional banks, including comprehensive alliances with Shikoku Bank and Iwate Bank.

With the upward trend in domestic long-term interest rates continuing, the performance of mid-tier regional bank stocks has been strong, with the structure of expanding interest margins through higher lending rates boosting earnings being valued. Among the 33 sectors on the Tokyo Stock Exchange, the banking sector has risen 49.1% since the start of the year, significantly outpacing the TOPIX's 21.9% gain. Among individual stocks, Fukui Bank has risen 2.7 times, Yamagata Bank 2.3 times, and Akita Bank 2.2 times, surpassing the gains of megabanks such as Mitsubishi UFJ Financial Group's 47.6% rise and Sumitomo Mitsui Financial Group's 38.3% rise. On the other hand, lower-tier regional banks, whose profits are squeezed by higher funding costs due to deposit rate hikes, are lagging behind, and selection is progressing. In the market, the view that "bank stocks = buy" has run its course, and it is seen that investors have entered a phase of carefully weighing the pros and cons of rising interest rates.