KYOTO - Bank of Kyoto, a regional lender based in the ancient Japanese city, has a unique buffer against the hit to tourism from the coronavirus - dividends from local high-tech heavyweights.

After thriving from a flood of overseas visitors attracted by its historic sites, Kyoto is suffering from plunging inbound tourism as Japan closes its borders to contain the pandemic.

The blow has been eased by a handful of big Kyoto-based manufacturers like Nintendo, which Bank of Kyoto invested in as start-ups and continues to back despite pressure from overseas investors to sell.

The strategy is paying off as COVID-19 ravages the region, forcing Bank of Kyoto to set aside 5 billion yen ($47 million) in reserves to guard against bad loans in the year ending in March - triple the previous year's sum.

"By owning their shares, we helped these firms grow. They're now global giants, but we want to maintain deep relationships with them," Bank of Kyoto President Nobuhiro Doi told Reuters.

"They also pay high dividends, which is a major source of our revenue. We have no plan of selling the shares as it's good investment in the current low-interest-rate environment."

Tech stocks owned by Bank of Kyoto include game console maker Nintendo, and electronics makers Nidec and Omron.

Over the last three years, all of them outperformed the benchmark Nikkei 225 average in total returns - a measure that includes dividends and capital gains.

Omron returned 50% over the last three years, compared with 22% for the Nikkei 225, when dividends were included.

Latent profits from these shareholdings rose to 700 billion yen from around 580 billion yen in March, which will serve as buffers to survive in a tough business environment, Doi said.

"With the pandemic, we can't foresee an end to ultra-low interest rates. That will be a huge hit to bank profits," he said. "We need to stay in good health to help our borrowers."

Years of ultra-low interest rates have hit profits of Japan's regional banks that are already reeling from a shrinking population. Over 70% of them reported a fall in profit or chalked up losses in the year to March.

($1 = 106.7400 yen)

(Reporting by Leika Kihara and Takahiko Wada; Editing by Stephen Coates) ((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters Messaging: leika.kihara.reuters.com@reuters.net))