A Hub Connecting Hokkaido’s Growth — Dialogue with Hokuyo Bank and a Field Study of Hokkaido’s GX

This month we share an example of our dialogue with The Hokuyo Bank. We also report on a week-long field visit, from late August to early September 2026, to GX (green transformation) sites across Hokkaido, from the Do-to (eastern Hokkaido) region to Sapporo.

Company Overview

The Hokuyo Bank is Hokkaido’s largest regional bank. When Hokkaido Takushoku Bank failed in 1997, Hokuyo Bank—then the second-largest regional bank in Hokkaido—took over its in-prefecture operations in November of the following year, and has operated as the leading regional bank ever since. Looking at the current management team, President Hirotsune Tsuyama, who took office in April 2024, joined Takugin (Hokkaido Takushoku Bank) in 1991 and moved to Hokuyo Bank in November 1998. Kazushi Yoneda, who has served as Senior Managing Director (CSO and CFO) since June 2026, also joined Takugin in 1989 and likewise moved to Hokuyo Bank in November 1998. People who experienced the failure of their employer yet remained in Hokkaido, continuing to support regional finance, now form the core of the bank’s management. Under President Tsuyama, management reforms are underway, including the introduction of a new personnel system called “Polaris.” Senior Managing Director Yoneda is also active in IR, frequently traveling to Tokyo to engage directly with investors.

The vision of the medium-term management plan “Make the HOKKAIDO Way 1st stage,” which began in fiscal 2026, is “Together, making Hokkaido’s attractiveness and happiness levels No. 1 in Japan.” Based on the bank’s own recognition that Hokkaido ranks first in attractiveness surveys yet only in the 30s–40s in happiness rankings, the plan sets a goal of raising impact indicators such as GDP per capita for Hokkaido residents by 1.3x over ten years. The fact that the bank has set “regional revitalisation” itself—a precondition for the development of regional financial institutions—as a management goal is unique to the bank, and is the starting point for understanding its strategy. The “Hokkaido Growth Business Division” and the “Community Development Promotion Office” have been newly established as organisations responsible for regional strategy.

The bank is also in a strong phase financially. Average loan balances stand at ¥8.2 trillion and average deposit balances at ¥10.9 trillion, giving it an overwhelming base within Hokkaido, with target shares of 41.4% for loans and 40.0% for deposits in the prefecture. Net income for the fiscal year ended March 2026 rose 24.2% year-on-year to ¥25.6 billion. With rising interest rates as a tailwind, the bank plans to front-load growth investments—including the new personnel system—totaling ¥6.2 billion cumulatively over the three years of the medium-term plan. Even after absorbing this, the plan calls for raising net income to around ¥50 billion by fiscal 2028, improving consolidated ROE from around 6.3% to around 11%, and improving the core OHR (overhead ratio) from the 60% range to around 50%. The fact that the bank is in a phase where it can continue to invest proactively while improving capital efficiency is the backdrop that allows it to direct management resources toward its regional strategy.

Why We Focus on Hokkaido

The widening of regional disparities and rural depopulation are major social challenges in Japan. Cadira believes that manufacturing investment in regional areas can be a key to solving this, and has been following developments closely. In July 2024, we visited Kyushu to observe the changes brought about by TSMC’s entry. In Kumamoto, the concentration of the semiconductor industry has accelerated, and surrounding land prices have risen sharply, generating major effects on the regional economy and society.

A similar pattern is now emerging in Hokkaido. The economic ripple effect from Rapidus is estimated at up to ¥18.8 trillion over the 14 years from 2023, a scale comparable to Hokkaido’s nominal gross prefectural product of ¥19.7 trillion. Hokkaido also possesses renewable energy potential that stands out even within Japan. Whether these two growth factors take root in the region and become established as a sustained flow of capital depends heavily on the vision of the financial institutions that serve as intermediaries. Our dialogue with The Hokuyo Bank began from this problem awareness.

Dialogue with The Hokuyo Bank

Cadira has been engaged in ongoing dialogue with the management of The Hokuyo Bank. Our focus is on serving as a dialogue partner regarding the bank’s envisioned development scenario through regional revitalisation, while also gathering primary information on the ground. In particular, we are paying close attention to the following three points.

First, the harmony between GX (green transformation) and the natural environment. The bank plans to build up cumulative GX-related loans to approximately ¥650 billion by the end of March 2031. Cadira has confirmed on the ground that reconciling GX with biodiversity is not a matter of principle but comes down to site-specific judgments case by case, and on that basis raised the question of whether the balance target could lead to a loosening of site-selection discipline. In response, the bank made clear its policy of not providing investment or financing for projects that fail to gain the understanding of local residents or municipalities. We also discussed the compatibility of environmental contribution with economic viability, and the bank shared its current awareness of challenges. For example: the challenge of biomass projects achieving self-sufficiency without a buyer for heat or steam after FIT (feed-in tariff) support ends; and, while the bank promotes efforts to position Hokkaido as a site for implementing data centres and the like, the question of whether end-users can accept the high cost of renewable electricity remains. What matters is not simply accumulating the number of projects or loan balances, but whether, at the project design stage, the bank can secure both buyers willing to purchase the energy generated without relying on subsidies, and parties willing to take on byproducts such as digestate from fermentation. Whether the bank can evaluate projects from this perspective will determine the quality of its GX-related financing.

Second, the positioning of “S (Social)” within sustainable finance. The bank plans to raise its cumulative execution amount from a projected ¥900 billion in fiscal 2025 to ¥2 trillion in fiscal 2030. Given Hokkaido’s regional characteristics—relatively little manufacturing and a limited number of apex companies in supply chains—the bank has indicated its view that efforts addressing social issues broadly, not just environment-related financing, will be important. The “management support financing” that the bank positions as the “core” of this area is a framework in which clients themselves set SDG-related goals and jointly design solutions with the bank, where bank staff’s hearing/listening skills determine success. The social domain is one where results are harder to see than in the environmental domain, requiring ingenuity in how KPIs are set and how outcomes are explained. Cadira, drawing on its extensive experience discussing impact indicators with many companies, shared its views based on the methodology gained through that experience.

Third, the semiconductor field, which is drawing attention because of Rapidus. What is interesting about The Hokuyo Bank’s approach is that it is proactively taking on the role of a “connecting node,” leveraging the strengths of a regional bank—for example, by supporting supply chain entry and matching companies with industrial parks. Semiconductor plants involve projects on the scale of trillions of yen with high technical difficulty; the bank leaves the role of major lender or arranger to the megabanks and others, while focusing on roles that only an institution close to local companies and municipalities can play. On this basis, the bank plans cumulative semiconductor-related financing of approximately ¥165 billion by the end of March 2031. A concern the bank raised during our dialogue was not funding but educational infrastructure—specifically, the awareness that options for higher education institutions within Hokkaido are limited, and that highly paid overseas engineers may not settle with their families as a result. Cadira intends to follow the bank’s measures on these points going forward.

We will continue our dialogue while confirming whether these points are explained not just in terms of balances, but as measures of profitability and outcomes.

One-Week Field Survey in Hokkaido

Hokkaido and the City of Sapporo have received designation as a “GX Finance and Asset Management Special Zone,” and are advancing, on two fronts, the concentration of GX industries leveraging Hokkaido’s renewable energy potential and the concentration of financial functions including asset management firms. Sapporo in particular has been actively reaching out to Tokyo’s financial community, and Cadira has been involved with the city’s efforts for some time. Last year, at a seminar held in Tokyo by the city to attract financial firms, Cadira joined a panel discussion together with Sapporo Mayor Akimoto and others. This past summer, we participated in an on-site tour that the city organised for asset management firms considering investment in the GX field. We toured GX-related facilities in the Tokachi and Kushiro areas, and, on the days before and after the tour, also visited sites not included in the tour itinerary.

A common theme through the visits was whether projects can become self-sustaining once the FIT period ends. Whether profitability can be maintained as the price received for electricity sales falls sharply is a practical challenge for GX in Hokkaido. What determines whether self-sufficiency is achievable was, first of all, the handling of byproducts. In biogas projects, securing a destination for the digestate produced after fermentation is key. In some areas, spreading it on farmland is an established practice, but in areas with no such destination, water treatment costs weigh on profitability. Another factor was cost structure. Liquefied biomethane is priced well above ordinary LNG, and currently relies on customers’ decarbonisation appeal and subsidies for support. How to build self-sustaining demand remains a challenge.

Human resource constraints were also severe. While demand for geothermal and CCS is surging, drilling engineers are in short supply, with job-offer-to-applicant ratios at vocational schools exceeding 10 to 1. Our sense from the field is that the constraint on GX is neither capital nor technology, but people. Finally, there is the question of coexistence with the natural environment. We saw a site where megasolar development adjacent to a Ramsar Convention wetland has been halted. On the other hand, there are also wetlands where the natural environment has been preserved even in close proximity to manufacturing sites; whether coexistence is achievable varies according to site-specific conditions.

Destinations for byproducts, costs acceptable to end-users, human resources, and coexistence with the natural environment are conditions that must be assessed at the project design stage. Whether Hokkaido’s GX takes root as a self-sustaining industry independent of subsidies depends heavily on the role of regional financial institutions in assessing these conditions project by project. Cadira will apply the insights gained on the ground to its dialogue with The Hokuyo Bank, and will continue to confirm whether GX-related financing is achieving results not only in balance but also in quality.