Japan’s Chiba Bank to maintain strong long quality, profitability: Moody’s

Its NPL ratio is lower than the average of large regional banks in the country.

Chiba Bank is expected to maintain its strong loan quality and stronger-than-peers’ profitability in 2025.

The Japanese bank’s strong loan quality is demonstrated by its better nonperforming loan (NPL) ratio of 0.92% as of December 2024, much lower than the 1.6% average of large regional banks in Japan, according to Moody’s Ratings.

Chiba Bank originates most of its loans—96% as of the end of December 2024—in the domestic market, with a strong focus on its home market of Chiba Prefecture and the eastern part of the Greater Tokyo metropolitan area, Moody’s said in its latest ratings report on the bank, where it affirmed the bank’s A1 long-term domestic and foreign currency deposit ratings.

Its loan portfolio is adjudged diverse with 83% of its unconsolidated total domestic loans being residential mortgage loans and loans to small and medium-sized enterprises (SMEs) as of December 2024.

Whilst Chiba Bank does have loan concentration to the domestic real estate sector (27.6% of its total loans as of September 2024), the problem loan ratio for the property sector loans remained low at 0.66% as of the same date, Moody’s said.

“Moreover, while the bank has concentration risk related to loans originated in Chiba Prefecture, this risk is mitigated by the prefecture's favorable location in the affluent Greater Tokyo Metropolitan area,” the ratings agency said.

Chiba Bank's profitability, as measured by its net income/tangible assets, was 0.34% in the first six months of fiscal year ended March 2025. This level of profitability is stronger than that of most other regional banks, Moody’s said.

Profitability was attributed to the bank's relatively large and vibrant home market economy, as well as the bank's cost-control efforts including forming alliances with other regional banks.

Chiba Bank also had steady net fee and commission income through sales of investment-type financial products and corporate-related services.