The Bank of Iwate: Embodying the Iwagin Spirit

The Bank of Japan has finally ended its long-standing negative interest rate policy, marking a historic turning point for the country. In your company’s case, you implemented your first rate hike in 17 years in April 2024. What kind of impact do you expect from this rate hike, and what opportunities do you believe may arise as a result?

An increase in the policy interest rate has both positive and negative implications for banks. In the short term, as policy rates rise, deposit interest rates are raised immediately, leading to higher interest payments to customers. This is a negative impact. On the other hand, lending rates tend to rise gradually, so in the long run, the effect is positive.

Generally, at many Japanese banks, deposit balances exceed loan balances, so this trend tends to occur.

During the negative interest rate environment, we focused on diversifying our business, including launching consulting services and establishing a trading company. Rather than relying solely on traditional finance, we can now leverage these businesses to take greater advantage of the benefits of rising interest rates. Ultimately, we believe that new ventures such as trading and consulting will contribute to both loan growth and improved profitability.

Foreign direct investment in Japan’s financial sector has been steadily increasing, surpassing JPY 8 trillion in 2025. There are two main factors behind this trend. First, due to geopolitical tensions and the effects of former U.S. President Donald Trump’s global trade tariffs, alternative markets such as China have become less attractive to foreign investors. In contrast, Japan has seen a wave of corporate governance reforms and a rise in new leadership across many companies. From your perspective, what makes Japan’s current financial market attractive to investors? And what are the unique strengths of Iwate Prefecture in this context?

One of the main factors is the weak yen, and another is the recent rise in interest rates. After 30 years of market stagnation, there is a growing perception that we may now be entering a period of upward momentum.

In Iwate Prefecture, an international school recently opened. For many Japanese people, a three-hour distance from Tokyo may seem far. However, for many foreigners—especially Americans—that distance is not considered far at all, and living in a region with abundant natural surroundings is actually seen as an advantage. We believe this has become a strong selling point for the school.

Landscape of Iwate

Are you actively seeking additional foreign direct investment in Bank of Iwate?

Rather than seeking direct investment in Bank of Iwate itself, we believe the bank’s key role is to serve as a bridge between local businesses and overseas investors. To effectively showcase the region’s growth potential and competitiveness, it’s essential for the bank to further strengthen its ability to communicate and promote Iwate internationally.

Joint sales initiatives with the prefectural and municipal governments, as well as IR activities targeting overseas institutional investors, can be especially effective.

In collaboration with Iwate Prefecture, we are actively advancing support measures for our core industries—semiconductors, automotive, and health tech—to help local companies seize business opportunities in the global market.

More than 40 prefectures across Japan are experiencing population decline, prompting the national government to intensify efforts to promote the appeal of regional areas. How do you interpret Iwate Prefecture’s vision, and in what ways are you working to contribute to regional revitalization?

We view the concentration of population and resources in major cities as a serious challenge. It’s a long-standing issue that has persisted for decades without a clear solution. Not only is it detrimental to the country’s overall development, but it also poses risks from the perspective of disaster preparedness.

Addressing population decline is no easy task, and it’s not something a bank can tackle alone. That’s why we are committed to working in collaboration with local governments, public institutions, and private companies. At the same time, we believe it is increasingly important to make full use of the region’s unique assets and resources in partnership with these stakeholders.

One of our long-term goals as a bank is to help Iwate Prefecture achieve a growth rate in its gross prefectural product (GPP) that surpasses the national GDP growth rate. By actively addressing the challenges we’ve discussed, we aim to contribute meaningfully to the revitalization of the region.

In your medium-term plan, you’ve set a goal of advancing a “social solution business.” Could you tell us more about the initiatives you’ve introduced to achieve this goal—particularly any collaborations or partnerships you’ve established or plan to pursue? Additionally, how do you envision turning this vision into reality?

We operate in a highly regulated industry, but in recent years, we’ve seen a trend toward deregulation in the financial sector. This shift has enabled us to branch out into new areas such as consulting and regional trading companies. By fully committing to these activities, we’ve been able to develop valuable expertise and capabilities. Going forward, we recognize that our stakeholders are facing a variety of challenges, and we intend to address them from multiple angles by leveraging the experience and knowledge we’ve accumulated.

One area we’re particularly focused on is business succession support. As you know, Japan is an aging society, and we’re determined to prevent profitable businesses from shutting down due to a lack of successors. To this end, we see initiatives such as promoting M&A, nurturing future leaders, and offering consulting services as essential solutions.

Another pressing issue is population decline. To reverse this trend, one key factor is ensuring a stable population of women. Specifically, we believe it’s important to create communities where young women want to live long-term. This means not only providing safe and reliable workplaces, but also ensuring that head office functions—such as development departments—are located in the region, offering meaningful, fulfilling jobs. To support this vision, we plan to collaborate closely with local governments and actively pursue corporate relocation and investment in the area.

This year, you formed a strategic partnership with Daiwa Securities, with the primary goals appearing to be the enhancement of your wealth management services and stronger support for local businesses. Could you share what motivated this alliance and what your short-term expectations are for the partnership? Additionally, are you considering similar collaborations in the future?

In Iwate Prefecture, the proportion of households holding financial securities is relatively low compared to other regions. By combining Daiwa Securities’ expertise and platform with Bank of Iwate’s regional network, we aim to improve the region’s financial income and literacy.

Additionally, asset management has traditionally posed profitability challenges due to high operating costs. Through this partnership, we can leverage Daiwa’s platform to reduce long-term costs, and in the short term, we expect to generate greater revenue from this business area.

Beyond Daiwa Securities, we’ve also begun partnerships with several other companies, including NTT East and Meiji Yasuda Life Insurance. In order to continue delivering value to our region, we are open to expanding such collaborations in the future.

Current Headquarters

You previously mentioned your consulting services for business succession, which address a critical issue in Japanese corporate management. At the same time, we’re seeing certain prefectures—such as Fukuoka—emerge as hubs for entrepreneurship. Iwate, too, has a growing startup ecosystem, and your bank plays an advisory role in its development. Could you share your perspective on the potential for entrepreneurship in Iwate Prefecture? And how is Bank of Iwate supporting startup companies in the region?

We support startup companies in a variety of ways. As I mentioned earlier, the core industries in Iwate are automotive and semiconductors. In addition, a third pillar of growth that is rapidly emerging is health tech. We are a member of TOLIC (Tohoku Life Science Instrument Cluster), which consists of around 90 participating organizations. TOLIC functions as a network covering everything from market research and product development to sales, and it is actively engaged both in Japan and internationally. As part of our support for startups in the health tech sector, we provide early-stage funding through investment funds, assist with technology development, and place strong emphasis on human resource development.

We are also working to enable more women entrepreneurs to launch businesses in the region. To support female founders, we organize seminars and help set up pop-up shops, among other initiatives.

We’ve heard that regional banks across Japan are increasingly committing to decarbonization efforts. In the case of Bank of Iwate, you're not only offering sustainable green loans, but also playing a role beyond financial services—such as supporting the expansion of EV charging station infrastructure throughout the prefecture. How is Bank of Iwate contributing to the sustainable development of Iwate Prefecture?

We’re seeing a growing divide between companies that are advancing their decarbonization efforts and those that are not. For many small and medium-sized enterprises, it’s still challenging to address all aspects of the SDGs, and many struggle even at the planning stage. That’s why we provide support from the early stages of planning through to implementation.

We also act as an intermediary for municipalities looking to sell carbon credits, working closely with local governments to provide support tailored to their specific circumstances.

Through these efforts, we are committed to accelerating decarbonization and contributing to a more sustainable future.

As President of Bank of Iwate, what would you most like to accomplish in the years ahead?

We will continue to uphold our core management principles: “contributing to the development of the regional community” and “maintaining sound management.”

To put these principles into practice, we are committed to ensuring the financial soundness of our own institution. A stable financial foundation is essential if we are to fulfill our role in supporting the local community.

In addition, we are working to improve key financial indicators such as ROE and PBR in order to be positively evaluated by the market. These are ambitious goals, but we are fully committed to achieving them.

How would you describe Bank of Iwate in a single phrase?

We strive to be a company that shares the talent and appeal of Iwate with the world—because we believe that is the key to the region’s growth.

For more information, please visit their website at: https://www.iwatebank.co.jp/