Towa Bank, Ltd. (8558) AI Stock Analysis

• Market Cap: ¥34.73B
• Dividend Yield: 3.22%
• Average Volume (3M): 144.98K
• Price to Earnings (P/E): 6.0
• Beta (1Y): 0.93
• Revenue Growth: 16.42%
• EPS Growth: 119.62%
• Country: JP
• Employees: 1,257
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 34.66
• Shares Outstanding: 37,180,270
• 10 Day Avg. Volume: 109,450
• 30 Day Avg. Volume: 144,976
• PEG Ratio: 0.14
• Price to Book (P/B): 0.25
• Price to Sales (P/S): 0.64
• P/FCF Ratio: 4.33
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ¥988.00 ▲(0.00% Upside)

Towa Bank's overall stock score is driven by strong financial performance, particularly in revenue growth and profitability, despite leverage concerns. The valuation is attractive with a low P/E ratio and solid dividend yield. Technical analysis shows mixed signals, with no clear momentum trend.

Positive Factors

Revenue Growth

The bank's strong revenue growth indicates effective market penetration and product adoption, which supports long-term business expansion.

Profitability Improvement

Improved profitability suggests better cost management and operational efficiency, enhancing the bank's competitive position.

Cash Flow Generation

Strong cash flow generation relative to earnings indicates robust financial health, supporting future investments and stability.

Negative Factors

Increased Leverage

Higher leverage can increase financial risk, potentially impacting the bank's ability to manage economic downturns and invest in growth.

Sustainability of Growth

Uncertainty in sustaining growth rates may affect long-term revenue projections and strategic planning, posing a risk to future performance.

Free Cash Flow Sustainability

The unsustainable nature of free cash flow growth from a low base may limit future cash availability for strategic initiatives.

Towa Bank, Ltd. Business Overview & Revenue Model

Company Description

Towa Bank, Ltd. (8558) is a regional bank based in Japan, primarily serving the Tohoku region. The bank offers a comprehensive range of financial services including personal banking, corporate banking, asset management, and treasury services. Towa Bank focuses on fostering relationships with local businesses and individuals, providing tailored financial solutions to meet the diverse needs of its clientele.

How the Company Makes Money

Towa Bank generates revenue primarily through interest income from loans and advances provided to both individual and corporate clients. This includes personal loans, mortgages, and business loans, which are charged at varying interest rates. Additionally, the bank earns fees from services such as transaction processing, wealth management, and investment advisory services. Another significant revenue stream comes from investment income generated by the bank's portfolio of securities. Towa Bank also engages in treasury operations, which can contribute to its earnings through forex and derivative transactions. Strategic partnerships with local businesses and government entities enhance its lending capacity and customer base, further supporting its revenue growth.

Towa Bank, Ltd. Financial Statement Overview

Summary

Towa Bank exhibits strong revenue growth and improved profitability, with some concerns over increased leverage. Cash flow metrics indicate solid cash generation, although the sustainability of recent growth rates is uncertain. Overall, the financial health is positive with areas to monitor, particularly leverage and cost efficiency.

Income Statement

Towa Bank has shown a strong revenue growth rate of 15.47% in the most recent year, indicating a positive trajectory. The net profit margin improved to 14.78%, reflecting enhanced profitability. However, the gross profit margin is not available, which limits a full assessment of cost efficiency. The EBIT and EBITDA margins have also improved, suggesting better operational efficiency.

Balance Sheet

The debt-to-equity ratio increased to 1.34, indicating higher leverage, which could pose a risk if not managed properly. Return on equity improved to 4.99%, showing better utilization of equity. The equity ratio is not available, limiting the assessment of financial stability. Overall, the balance sheet shows moderate strength with some leverage concerns.

Cash Flow

The free cash flow growth rate is notably high, but this is due to a recovery from a negative base, which may not be sustainable. The operating cash flow to net income ratio is strong at 2.14, indicating good cash generation relative to earnings. The free cash flow to net income ratio is 0.67, showing a healthy conversion of income to cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	27.32B	31.14B	29.88B	29.49B	32.88B	32.62B
Gross Profit	27.32B	29.75B	29.74B	29.34B	32.67B	32.36B
EBITDA	2.52B	8.22B	5.92B	6.55B	4.85B	5.30B
Net Income	3.85B	4.52B	3.53B	4.09B	1.75B	2.50B
Balance Sheet
Total Assets	2.40T	2.38T	2.41T	2.39T	2.57T	2.55T
Cash, Cash Equivalents and Short-Term Investments	0.00	167.71B	195.49B	188.35B	376.58B	383.66B
Total Debt	125.19B	121.49B	120.39B	115.89B	292.99B	298.71B
Total Liabilities	2.30T	2.29T	2.29T	2.27T	2.44T	2.42T
Stockholders Equity	92.06B	90.64B	118.07B	117.16B	124.69B	134.61B
Cash Flow
Free Cash Flow	0.00	5.25B	-1.61B	-211.22B	3.50B	175.27B
Operating Cash Flow	0.00	7.87B	941.00M	-209.39B	5.00B	178.22B
Investing Cash Flow	0.00	6.16B	7.42B	22.39B	-10.91B	-33.40B
Financing Cash Flow	0.00	-15.21B	-1.12B	-169.78B	-1.30B	-1.85B

Towa Bank, Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 988.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:8558, the sentiment is Positive. The current price of 988 is above the 20-day moving average (MA) of 926.60, above the 50-day MA of 935.38, and above the 200-day MA of 763.17, indicating a bullish trend. The MACD of 7.55 indicates Negative momentum. The RSI at 64.01 is Neutral, neither overbought nor oversold. The STOCH value of 89.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:8558.

Towa Bank, Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8537	77 Outperform	¥16.54B	6.75	―	3.77%	16.60%	-5.51%
8551	75 Outperform	¥31.35B	7.89	―	3.50%	22.26%	-12.68%
8338	72 Outperform	¥27.89B	4.68	―	1.57%	8.45%	168.74%
8558	69 Neutral	¥34.73B	5.99	―	3.22%	16.42%	119.62%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
8542	64 Neutral	¥15.94B	11.09	―	3.55%	3.70%	24.98%
8550	56 Neutral	¥58.60B	-2.69	―	2.69%	10.91%	-1225.48%

Towa Bank, Ltd. Corporate Events

Towa Bank Finalizes Details for 16th Stock Options Issuance

Towa Bank, Ltd. has finalized the details for its 16th issuance of share-based compensation-type stock options, a decision initially resolved in June 2025. This issuance involves 7,686 stock acquisition rights, allocated to four directors and nine executive officers, with a paid-in amount of ¥6,548 per stock acquisition right. This move is part of the bank’s strategy to align the interests of its executives with the company’s performance, potentially impacting its operational dynamics and stakeholder relations.

Towa Bank Reports Unrealized Losses with No Impact on Financial Forecasts

Towa Bank, Ltd. reported unrealized losses on held-to-maturity debt securities amounting to ¥2,846 million as of the end of the first quarter of the fiscal year ending March 31, 2026. Despite these losses, the bank stated that there will be no impact on its financial results or dividend forecasts for the fiscal year, indicating stability in its financial outlook.

Towa Bank Reports Robust Financial Growth in Q2 2025

Towa Bank, Ltd. reported significant growth in its financial performance for the three months ending June 30, 2025, with a notable increase in ordinary income, ordinary profit, and profit attributable to owners of the parent compared to the previous year. The bank’s financial position improved, as evidenced by an increase in total assets and net assets, along with a stable equity-to-asset ratio. These results indicate a strong recovery and positive momentum for the bank, potentially enhancing its market position and stakeholder confidence.