Shizuoka Financial Group

Results of FY2022

May 22nd, 2023
President & CEO Hisashi Shibata
Clearing the way
to a new era

Contents

1.

Review of the 14th Medium-term Business Plan

P3～

2.

Results of FY2022

P8～

3.

To realize the 1st Medium-term Business Plan

P23～

4.

Capital policy

P33～

5.

Reference

P37～
2

Review of the 14th Medium-term
Business Plan

Review of the 14th Medium-term Business Plan (1) – Positioning of the Plan
In the 14th Medium-term Business Plan, under the medium- to long-term vision, we have realized sophistication of the group management, while aggressively
challenging to transform our business model for the future growth.
In the 1st Medium-term Business Plan, we keep the 10-year Vision and will create new values, while further developing the existing basis for growth.

Outline of 14th Medium-term Business Plan
(FY2020–FY2022)

Outline of 1st Medium-term Business Plan
FY2023–FY2027

COLORsClearing the way
to a new era

10-year Vision A corporate group committing itself to future of region and producing growth of region

VisionChange to a problem-solving corporate group assisting regional customers
with hands-on support

Three Basic Strategies
1. Group Sales Strategy – Find a way out from “banking centered”
2. Innovation Strategy – Pursue new profit opportunities
3. Business Portfolio Strategy – Optimize allocation of management resource

10-year Strategy

VisionA problem-solving corporate group
creating new values leading to the
futureFour Basic Strategies
1.
2.
3.
4.

Regional-Co-Creation Strategy
Group Business Strategy
Transformation Strategy
Group Governance Strategy

Region-producing Strategy
4

Review of the 14th Medium-term Business Plan (2) – Main measures
Based on three basic strategies and 10-year strategy, we steadily implemented measures in the plan, addressing to changes inbusiness environment. We will utilize such achievements in the 1st Medium-term Business Plan.

Main Measures

Results of Related Items
Sustainable FinanceGroup Sales Strategy- Find a way out from“banking centered”

Enhance solution programs
Strengthen the group
comprehensive sales system

461.6

Amount executed

JPY461.6bn

113.3

Innovation Strategy- Pursue new profit
opportunities

Business Portfolio
Strategy- Optimize allocation ofmanagement

Start operating the next
generation account system
Established Silicon Valley Rep.
OfficeReorganize overseas bases
Increase market credit
investment earnings
Fundamentally reform
personnel system

FY2021

Region-producing
Strategy(JPY bn)+JPY6.5bn

30.8

FY2019FY2022

System development efficiency
Number of development / year (Case)
Cost / year (JPY bn)

322
208

37.3

(accumulated basis)

before operation

Maintaining the same level ofdevelopment cost and period

More than
1.5 times

3.6

3.5

after operationof systems cases
can be developed.

Market credit investment freeincomeIncome from PE and others

Make alliance with two regionalbanks (The Yamanashi Chuo Bankand the Bank of Nagoya)Transition to holding company
structure

By the end of FY2022,
executed

Fees and commissions (Consolidated)

Fee income

15.9 (JPY bn)

Income and expenditure on loans

Earnings increased to

10.1

1.6 times
due to growth ineach area.

FY2019FY2022

Execution amount of venture debt
Applied (Case)
Executed (Case)

294

JPY7.2bn
46(accumulated basis)
Aim at the averagebalance of

FY2022

JPY100.0 bn

95
11FY2021

By the end of FY2022,
executed

by FY2027

Alliance effect(The Yamanashi Chuo Bank andthe Bank of Nagoya)
By the end of FY2022,

JPY12.5bn

approx.
earnings effect (in 5-year basis)

FY20225

Review of the 14th Medium-term Business Plan (3) – Target indexes
Amid rapid and drastic changes in business environment such as the COVID-19 pandemic, we achieved solid growth, steadily
implementing business model transformation for future growth.

FY2019Ordinary profit

ROE(consolidated)

JPY 54.6bn

3.8%

FY2020

FY2021

FY2022

TargetTarget14th MBP

1st MBPJPY 74.0bn

JPY 63.3bn

80bn

Over JPY

JPY 54.2bn

4.6%

4.1%

Over

3.8%

5%

90bn

Over JPY

Approx.

6%64.2% *1

OHR
(consolidated)

58.9%

60.2%

59.5%

55%

Approx.

14%

Over

Approx.

55%

18.42%
16.56%

CET1(consolidated)

15.59%

Shareholder
return ratio

54.9%(consolidated)

16.08%

14.17% *2
56.2%
32.8%

51.1%

Over

Mid to long-term
shareholder return
ratio of
over

50%

13%

Dividend pay out
ratio ofover40%

*1 Effect of depreciation of the first generation account system *2 Preliminary estimate after the full application of the Basel III finalization

6

Major items in the 14th Medium-term Business Plan
Transformation into a problem-solving corporate group is steadily progressing under three basic strategies and a 10-year strategy

FY2020

FY2021

FY2022

Corporate

Group
Sales
Strategy●Started business of IT support
Entry into HR introduction business●Started to handle ESG leases●Support for cash management (COVID-19)●Started Positive Impact Financing for SMEs●

Acquire 100% ownership of SCC●●

Acquire 100% ownership of TJS●Changed the role and name of the loan center in Shizuoka prefectureLife-planning(changed to Life Design Station, and in the station, opened Hoken No Madoguchi or established aninsurance counter)●

Started testamentary trusts●Started face-to-face wrap services (Shizugin Wrap)●

Launched Next Generation System●Reinforce non-face-to-face channel

DX Strategy●

Launched New system to assist sales● Started operating platform toanalyze and utilize data

(Mobile apps, Contact Center, Portal website for corporate customers)

Innovation
Strategy●

Business for venture firms

Started venture debt
●iYell (housing loan platform)
au Jibun Bank (guaranty)●Tailor Works (community platform)●

Cross-industry collaboration

Global strategy●

Address (utilization of vacant houses)
asoview! (sightseeing)●●

Established Silicon Valley Rep. Office●

Change Rep. Office Registered in Singapore to a branchBusiness
Portfolio
Strategy

Human resource strategy

New evaluation system (Value, OKR)

●Human interaction Among Group Companies●(228 employees to date)Side-job and second business systemstarted to recruit personnel for sports & art●

First female executive officer (Shizuoka Bank) and
Representative Director (Shizugin Heartful)●

Introduction of full flextime system, etc.

●

High school graduate hiring resumes; para-athlete hiring begins.

●

Established Shizugin TM Securities Yamanashi
Head Office● Shizuoka-Yamanashi Alliance

Alliance with regional banks

10-yearStrategy●

Initiatives in response to changes in the environment●

Co-established business succession
fund● Shizuoka-Nagoya Alliance●Industrial Transformation Support PT●

Transition to holding company
structure

7

Results of FY2022

Results of FY2022 (Consolidated)
YoY*1

Gross operating
profitFY2022(JPY bn,%)

Increase/Decrease

Rate of change

Gross operating profit

160.2

+8.7

+5.7

operating expenses (-)

95.9

-1.8

-1.8

Profit based on the equitymethod investment balance

0.4

-1.5

-78.6

Net operating profit*2

65.5

+12.8

+24.2

Credit-related costs (-)

5.6

-1.2

-17.6

Gain (loss) on stocks

13.8

+10.2

+286.4

Ordinary profit

74.0

+19.7

+36.4

Increased by JPY 8.7bn, mainly due to increase in grossoperating profit of Shizuoka Bank (JPY 9.7bn )Net operating profit

-0.6

-5.2

-114.0Net income before taxes

73.3

+14.5

+24.6

Corporate taxes (-)

20.9

+3.8

+22.1

Net income※3

52.4

+10.8

＋25.8

4.6

+0.8

－

JPY 74.0bn (first increase in 2 periods) *1

Increased by JPY 19.7bn, because gain (loss) on stocks
increased while provision for specific allowance for loan
losses increased

Net income
ROE

JPY65.5bn (first increase in 2 periods) *1

Increased by JPY 12.8bn, due to increase in gross operating
profit, and decrease in provision for general allowance for loan
and operating expenses, and other factors

Ordinary profit

Extraordinary profit and loss

JPY 160.2bn (first increase in 2 periods) *1

JPY 52.4bn (first increase in 2 periods) *1

Increased by JPY 10.8bn thanks to an increase in operating profit*1 Consolidated results of Shizuoka Bank for fiscal years 2021 and before*2 Net operating profit = Net operating profit of Shizuoka Bank nonconsolidated + Consolidated ordinary profit –Ordinary profit of Shizuoka Bank nonconsolidated*3 Net income attributable to owners of the parent

9

Financial results of major group companies
Shizuoka Bank Nonconsolidated

Record high for both ordinary profit and net income

Major Group Companies other than the Bank

YoY
(JPY bn,%)
Gross operating profit(Core gross operating profit)
Net interest income
Fees and commissions
Trading income
Other operating profit(Bond-related income such as JGBs)(Foreign exchange trading profit)
Expenses(-)

Actual net operating profit

FY2022

Increase/
Decrease

144.3
151.9

+9.7
+7.6

+7.1
+5.2

121.6
21.1
1.4
0.2
(-7.5)
(7.1)

-2.8
+6.3
+0.5
+5.7
(+2.1)(+3.3)

-2.2
+42.5
+57.3
+103.2
＋21.8
+86.0

86.9

-1.3

-1.5

57.4

+11.0

+23.6

Core net business profit
excluding gains (losses) on bonds andcancellation of investment trusts

63.1

+9.8

+18.3

Provision for general allowance for loan losses (-)

-1.7

-4.4

-167.1

Net operating profit

59.2

+15.3

+35.0

Nonrecurring profit and loss

8.4

+7.0

+470.6

6.5
13.6

+3.6
+10.2

+123.3+292.4

Ordinary profit

67.6

+22.3

+49.2

Extraordinary profit and loss

-3.2

-7.7

-169.9Net income before taxes

64.4

+14.6

+29.3

18.3

+4.6

+33.5

46.2

+10.0

+27.8

Bad debt written-off(-)
Gain (loss) on stocks

Corporate taxes(-)

Net income
Credit-related costs

(-)

4.8

-0.8

Shizugin Management
Consulting

Rate of change-13.5(JPY bn)

YoY

FY2022

Shizugin Lease
YoY

FY2022Gross operating profit

1.4

+0.2

3.4

+0.1

Expenses (-)

1.0

+0.3

1.8

+0.2

Ordinary profit

0.5

-0.1

1.6

-0.0

Net income

0.3

-0.1

1.1

-0.0

Shizuoka Capital
FY2022

Shizugin TM Securities

YoY

FY2022You Y

Gross operating profit

0.5

+0.1

6.7

-0.8

Expenses (-)

0.3

+0.0

4.9

-0.2

Ordinary profit

0.3

+0.0

1.8

-0.5

Net income

0.2

+0.0

1.2

-0.4

Actions by major group companies
Shizugin Management
Consulting Co. Ltd.

Fee income increased by addressing to needs for M&As, etc.
Expanded sales force to enhance consulting programs

Shizugin Lease Co. Ltd.

Maintained upward trend in lease receivables balance by steadily
meeting customer needs through group alliance. Secured profits at thesame level as the previous year

Shizuoka Capital Co. Ltd.

Managed existing funds and carried out exits. Established “ShizuokaYamanashi Mirai Growth Support Fund” with the alliance bank.

Shizugin TM Securities
Co. Ltd.

Weak sales of investment trusts and bonds due to concerns over economic
slowdown following rate hikes by central banks. Decrease in profit negatively
affected by the review of market credit investment policy, though earnings fromrecurring fee revenues are steadily increasing by building up stocks of wrap
accounts.

10

Net interest income - Shizuoka Bank nonconsolidated
Net interest income in domestic section steadily increased while total net interest income decreased mainly due to higher funding
costs in international section
Breakdown of net interest income(JPY bn)

FY2020Loan balance (average balance) and loan rate
FY2021

FY2022

Domestic

International

YoY

Net interest income

114.7

124.5

121.6

-2.8

Domestic section

103.4

110.0

110.7

+0.7

9,500

Interest on loans

87.9

89.3

90.9

+1.6

9,000

Interest and dividend on
securities

15.6

19.0

18.5

-0.5

Loan rate

Total loan balance
Loan rate+355.29,150.5

8,621.1(JPY bn)(JPY bn)

Total loan balance

8,795.3

700.0

613.1
600.0

2.5

5.2

+2.7

(Gains on investment
trust)

2.2

2.5

0.0

-2.5

550.0
7,500

1.01%

1.01%

0.99%

1.2

1.0

0.8

450.0

1.81%

-0.1
FY2020

1.1

0.9

0.8

-0.2

1.1

2.7

2.1

-0.6

International section

11.2

14.5

11.0

-3.5

Interest on loans

11.1

8.7

25.9

+17.2

Interest and dividend on
securities

7.8

10.8

16.2

+5.4

(Bond)

6.1

4.8

11.8

+7.0

(Gains on investment
trust)

0.9

2.6

1.9

-0.7

Fund-raising expense (-)

8.3

5.3

37.1

+31.8

(Interest paid on
deposits etc.) (-)

2.4

1.3

17.4

+16.1

0.6

0.3

6.0

+5.7

1.48%

400.0

6,000

Others

3.90%

500.0
7,000

6,500

Others

586.7

8,000

1.9

(Interest paid on
deposits etc.) (-)

664.5

650.0

8,500

(Bond)

Fund-raising expense (-)+77.8

FY2021

FY2020

FY2022

FY2021

FY2022

Interest on loans
International
Domestic(JPY bn)

+18.8

99.0

98.0

11.1

8.7

87.9

89.3

116.8

+17.2

25.9

+1.6

90.9

【Factors of increase inInternational section】
by amt. chg. : JPY -0.3bn
by rate chg. : JPY 13.9bn
by ex. rate : JPY 3.7bn【Factors of increase in
Domestic section】
by amt. chg. : JPY 3.6bn
by rate chg. : JPY -1.9bn

FY2020

FY2021

FY202211

Loans - Shizuoka Bank nonconsolidated
Loan balance (average balance) increased mainly due to an increase in loans for SMEs and Retails (+4.6% annual rate) .
Term-end balance exceeded JPY 10tn for the first time.

Loan balance (average balance)

Loan balance (by region)

FY2022

Annualgrowth rate

YoY

Portion in Shizuoka Pref.
Overseas(JPY bn)

Outside the Shizuoka pref

+432.99,815.0

Total loan balance

JPY 9,815.0bn

JPY +432.9bn+4.6%

9,234.2

9,382.1

Loan balance
for SMEs

JPY +250.7bn

+6.8%

229.5

215.2

+15.2

230.4

JPY 3,911.6bn

Loan balance for large andmedium size Enterprises

JPY 1,867.1bn

JPY +38.1bn+2.0%

3,822.8

3,987.1＋375.3

4,362.4

Loan for Retails

JPY 3,681.5bn

JPY +138.9bn+3.9%Loan balancein foreign currency

JPY 626.4bn

JPY +80.4bn+14.7%

5,182.0

5,179.7＋42.5

5,222.2

FY2020

FY2021by amt. chg. :JPY -8.2bn
by ex. rate :JPY +88.5bn

Share of loans in Shizuoka Prefecture

SMEs loan balance (average balance)
Whole bank

(JPY bn)＋250.7
32.3

34.2

36.8

36.4

36.8

35.9

36.4

36.7

27.2

27.7

28.6

29.4

29.5

9.1

11.3

10.9

11.6

8.8

34.8

3,911.6

3,660.9

30.5

＋38.9
2,206.2(%)

Shizuoka Bank

Portion in Shizuoka Pref.

3,602.7

FY20222,231.8

12.4

29.2
11.3

2,270.7

28.9

27.9
Shinkin banks

8.7

8.3

Mega banks
FY2004FY2020

FY2021

FY2007FY2010FY2013

FY2016FY2019FY2020

FY2021 Feb. 2023

FY202212

Housing Loan, apartment loan and other loans - Shizuoka Bank nonconsolidated
Balance of housing loan, apartment loan and other loans maintained an increasing trend

Housing loan and apartment loan breakdown by region (term-end balance)

Term-end balance(JPY bn)＋178.4
Unsecuredloans

3,731.9

2,469.5

2,346.7＋130.6＋108.6

200.8

197.9

190.9

Apartment loans

1,013.1

1,060.0

1,117.1

Others79.3
End of Mar. 2021

67.1

End of Mar.
2021

End of Mar. 2023

Interest amounts, fees and rates
60.0

Loan
related fees
50.0

1,060.0

361.5

400.2

451.5

651.7

659.8

665.5

＋51.3

＋21.8

58.3

End of Mar. 2022

End of Mar.
2022

1,117.1

1,013.1

1,714.1

1,692.3

1,662.4(JPY bn)

885.9

777.3

2,600.1

Loans forasset building

Outside the Shizuoka pref
Inside the Shizuoka pref

2,600.1

2,469.5

2,346.7
684.3

Housing loans(JPY bn)

Inside the Shizuoka pref

100.7

94.0

92.0

Apartment loans

Outside the Shizuoka pref

4,067.0

3,888.6

Housing loans＋5.7

End of Mar.
2021

End of Mar.
2023

End of Mar.
2022

End of Mar.
2023

Delinquency rate and occupancy rate
＋0.9

54.1

52.4

53.2

3.1
5.7

3.7
5.6

4.1
5.8

24.3

24.5

24.7

1.358%

Average rate 1.301%(JPY bn)
Delinquency rate
(3 months or longer)

End of Mar.
2021

End of Mar.
2022

End of Mar.
2023

Housing loans

0.12%

0.11%

0.14%

Apartment loans

0.03%

0.01%

0.03%

Loans
for asset building

0.12%

0.26%

0.14%

Unsecured loans
40.0

Housing loans
30.0

1.260%

20.0

Loans forasset building

7.0

6.9

6.8

Apartment loans

11.3

11.6

12.1

10.0

Others
0.0

1.1

0.8

0.6

FY2020

FY2021

FY2022

Occupancy rate

Dec. 2019
SurveyDec. 2020
SurveyDec. 2021
SurveyInsideShizuoka Pref.

92.7%

92.5%

93.5%

OutsideShizuoka Pref

93.2%

93.3%

94.1%

13

Market credit investment - Shizuoka Bank nonconsolidated
Earnings from capital commitment in PE decreased negatively affected by decrease in IPOs, while income and expenditure on loans and fee income increased

Breakdown of SF loan by loan type

Earnings from market credit investment(Average balance in FY2022: JPY 764.5bn)(JPY bn)

Income from PE and others
Fee income
Income and expenditure on loans

11%

Corporate credit risk (senior)
Corporate credit risk (mezzanine)
Asset finance
Project financeReal estate non-recourse loan
Securitized loan (CLO etc.)

28%

21%

-0.5

16.4

15% 23%
2%

15.9

14.2

CLO balance (As of the end of Mar. 2023)
JPY 88.9bn (24 contracts, JPY 3.7bn on average)
All have AAA rating
Subordination ratio: 35.0 to 41.8%

Well-diversified portfolio

-2.7

8.3

5.7

(JPY-based : Other-currencies-based = 6 : 4)

5.6

Breakdown of SF loan by credit rating＋1.2*Excluding real estate non-recourse loan

2.1

Performing (Equivalent to or higher than single A)

2.2

Performing (Lower than single A)

1%

0.9

Non-performing or lower

31%

＋1.1

7.2

6.3

68%

8.3

99% are classified as “Performing”
68% are equivalent to or higher than single A* Average LTV is 58.2% for real estate non-recourse
loans

Ratio of capital commitment in PE by investment types

FY2020

FY2021

Profitability indicators of SF loan

FY2022

FY2021

FY2022YoY

ROA (Return on Assets)

1.08%

1.07%

-0.01pt

RORA (Return on Risk-Weighted assets)

1.95%

1.82%

-0.13pt

Well-diversified portfolio,same as SF loan

Infrastructure

No. of investment : 109(Of which 46 are international)

Debt
29%

3%

Others4%

Growth/Start-up
12%

Buyout52%

14

Deposits - Shizuoka Bank nonconsolidated
Deposit balance (average balance) increased mainly due to increase in retail deposit balance (+1.8% annual late)
Deposit balance (average balance)

Deposit balance by region
Inside the Shizuoka Pref.

(JPY bn)
Total deposit balance
Deposit balance in
Shizuoka
Corporate deposit
balance

FY2022

Annualgrowth rate

YoY

JPY 11,441.0bn

JPY +212.7bn
JPY +217.9bn＋2.2%

JPY 2,939.0bn

JPY +18.0bn+0.6%

JPY 7,613.8bn

JPY +197.8bn＋2.6%

Public deposit balance

JPY 331.3bn

JPY -12.4bn

-3.6%

NCD

JPY 89.3bn

JPY -52.0bn-36.7%

Retail deposit balance

Deposit balance (average balance)
Corporate

Retail

10,582.3
2,689.1

7,073.4

Public&Overseas, etc

2,921.0＋197.8393.2

1,160.6＋14.7

1,175.3

9,186.9

9,643.4＋217.99,861.3

FY2020

FY2021

1,002.2(JPY bn)

Loan-Deposit ratio +Security-Deposit ratio

2,939.0

116.8

7,613.8

85.7
75.1

891.3
FY2021

FY2022(excluding NCD)

29.2
819.8
FY2020

404.4

424.4

104.3

7,416.0

11,441.0

10,582.3

11,441.0＋18.0(JPY bn)

Loan-Deposit ratio/Security-Deposit ratio＋212.7

11,228.3＋212.7

11,228.3＋1.8%

JPY 9,861.3bn

Outside the Shizuoka Pref.

Overseas, etc

113.5

88.9

114.4

88.0

101.0

99.9

85.0

88.1

83.5

31.2

24.6

26.4

FY2007FY2010FY2013

106.0

85.7

SecurityDeposit ratio

Loan-Deposit ratio

888.2
FY2022
FY2004

105.3

(%)

20.3

12.9

16.4

FY2016FY2019FY2021

20.2

FY202215

Securities (1)– Shizuoka Bank nonconsolidated

Restructure foreign bonds flexibly, purchase yen-based bonds systematically to build a medium-to long-term portfolio. Maintain avaluation gain of 325.8 billion yen as the whole of securities.

Securities
Balance (*1)
(JPY bn)+323.7+51.5＋355.5

ー

＋67.5

-9.9

-14.8

-3.3

End of Mar.
FY2023After hedging

2,621.9＋579.2＋325.8

101.9

-26.6

1,596.4＋367.7

StocksYen based bonds

Changefrom End ofMar.
FY2022

Change fromEnd of Mar.
FY2022End of Mar.
FY2023(JGBs)[Duration]

Unrealized gains and losses(＋251.5)(-1.5)(-6.3)(+2.7)

567.0+135.6

-32.5

-29.7

-14.7

(Fixed rate)(341.4)(＋141.6)(-8.3)(-5.5)(＋0.8)(Floating rate)(225.6)(-6.1)(-24.1)ー(-15.4)

Investment trust

252.6

+88.5

+0.2

ー

-0.4

Others

104.1

＋14.0

＋12.5

ー

+2.4

Foreign bonds*1 Balance is based on acquisition cost excluding unrealized valuation gains/losses

Gains and losses on securities(JPY bn)

FY2021

FY2022YoY

End of Mar. 2022

End of Sep. 2022

End of Dec. 2022

End of Mar. 2023

Yen based bonds

6.17 years

6.40 years

6.41 years

6.12 years

Foreign bonds*

4.15 years

2.65 years

2.65 years

2.48 years* Excluding futures transactions

Simulation of the effect of replacing U.S. Bonds*

1H 2022

U.S. Bonds(856.0)(Excluding interest rate hedged portion)

sell
buy

2nd Half

JPY 92.8bn
JPY 65.5bn

sell
buy

JPY 64.8bn
JPY 108.0bn

gain- JPY 10.1bn(loss)

gain(loss)- JPY 2.8bn

Effect of replacing to high-yield bonds on net
interest income and valuation gains/losses

Compared to case without replace(1) Net interest income(annualized)(2) Valuation gains/losses
as the end of Mar. 2023

*Excluding asset swap transactions+ JPY 3.7bn+JPY 13.8bn
improved(+ JPY 0.9bn considering realized losses)

Forecast of net interest income for the entire foreign currency
portfolio (assets and liabilities) *1• Although there is some negative spread in foreign currency investments, overall foreign currency net
interest income is positive due to the diversification of foreign currency investment and procurement
methods.
• Foreign currency net interest income is expected to turn to an increase in the first half of FY2023, due tothe effect of replacing US$ bonds in FY2022 and other factors

29.7
2.5
4.8

34.7
5.2
11.8

＋4.9
＋2.7
＋7.0

5.1 (2.7)

1.9 (1.9)-3.2 (-0.9)

120

6.5

5.0

-1.5

100

5.00%

-9.6

-7.5

＋2.1

80

4.00%

19.0

19.1

＋0.1

60

3.00%

28.6

26.6

-2.0

40

2.00%

Gains and losses on stocks

3.5

13.6

＋10.2

20

1.00%

Gain on sales of stocks

4.8

13.7

＋9.0

0

Amortization (-)

1.3

0.1

-1.2

Interest and dividend on securities
Yen based bonds
Foreign bonds
Gains on investment trusts(Gains (losses) on cancellation)
Investment funds

Gains and losses on bonds
such as JGBs
Gain on sell of bonds such as JGBs
Loss on sell and redemption of bonds
such as JGBs (-)

Foreign currency interest income(USD1MM, left)*1→ Simulation

FF rate *2（％, light）

6.00%

0.00%
FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026*1 Overall net interest income including loans, securities, deposits, corporate bonds, etc.
*2 FF rate forecast by market participants (Estimate based on portfolio as of end of Nov. 2022)

16

Securities (2) - Effect of rising long-term yen interest rates
As an appropriate level of the stickiness of deposits is detected, a rise in the long-term yen interest rate gives a positive impact to in
the yen-based balance sheet as a whole.
(2) Medium- to Long-Term Impact(1) Short-term Impact
Modification of Yield Curve Control by BOJ
Yield at the end of Mar. 2023

Yield at the end of Sep. 2022

1.2
1

0.4

10.0
StocksYen basedbonds

Foreign
bonds

-6.6

-17.8

Investment
trusts/Others

Net Interest Income

End of Mar. 2022

+274.2+288.0

+10.6

-7.1

-7.4

Valuation gains and losses
on yen based bonds

6.0

-8.0
-8.3

-0.2
-0.4

-7.0

8.0

0.2
0

(Valuation gains and losses: JPY bn) -6.0

(Yen based net interest income：JPY bn)

Gain (loss)
on valuationof securities

0.6[Prerequisite] (calculated based on the portfolio at the end of March 2023)- At maturity of fixed-rate loans, 50% of the amount is renewed to reflect increases in market interest rates (excluding consumer loans)- When the yen based bond maturity date arrives, the same amount is purchased to reflect the full market interest rate increase.

(JPY bn)

Valuation
gain or loss

0.8

• Yen based net interest income will increase due to interest
rate changes on loans and bonds.
• Valuation gains and losses on yen based bonds will also
improve due to shorter remaining maturities.

• Although net valuation gains/losses on yen based bonds
will deteriorate, interest margin will be secured due to thebalance with core deposits, which are stable and lesssensitive to interest rates.

End of Mar. 2023

+325.8+355.5

-9.9

-32.5

-9.0

4.0

+12.7

-9.3

6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 16Y 17Y 18Y 19Y 20Y

Change from End
of Mar. 2022

2.0
+51.5

+67.5

-3.3

-14.7

-10.0

+2.1

0.0

0.2

0.8

End of Mar.
2023

1st year

2nd year0.0[ Yen Based Portfolio Structure Mar. 2023]

Liquiddeposit

Floating rate

Based onprime rate
27.8%

Assets10bpv

By depositor

1.8

-11.0
3rd year

4th year

5th year(JPY bn)• Built stable deposit raising base, mainly small retail deposits• Deposit share in Shizuoka prefecture steadily increased.

End of Sep. 2022

Retail deposit

71.5%

70.5%

Corporate deposit

24.2%

26.2%

Others4.3%

3.3%

Liabilities and Shareholders' equity-24.2 10bpv

+31.7

Loans

-15.3

+23.6

Bonds

-8.9

Deposits
Core deposits+21.7

Total assets, liabilities and shareholders' equity (10bpv)

Market rate
16.0%

(68.2%)

68.2%(100%)

Fixed rate
23.9%

79.2%

Core
deposits

44.3%

DepositLoan

End of Mar. 2020

58.1%

(44.2%)(44.2%)

Depositcovered bydeposit(63.0%)
insurance(63.0%)(100%)

By amount

End of Mar. 2020

End of Sep. 2022

49.2%

45.8%

Fixed-term deposit
20.7%

Stocks/investment trusts3.0%

Short-term marketable
operation

Short-term marketablefinancing 10.8%

13.1%
Others 4.4%

Equity and others 10.0%+7.5*10bpv: Regarding assets, liabilities etc., change in unrealized valuation gains/losses in the case of interest rate parallel shift of+0.1% under the assumption of MTM. If 10bvp of total of assets and liabilities/shareholders' equity is positive, it means positive
impact on unrealized valuation gains/losses and future income

Deposit share in Shizuoka prefecture (%)

Up to JPY10mn
Bond 11.3%

-10.0

3.1

Change in yen-based balance sheet valuation gains and losses (10bpv)

Deposit raising structure
Asset (100%) JPY 13,740.0bn Liability and Equity (100%)

5.6

-10.2

JPY10mn - JPY100mn

30.3%

32.7%

Over JPY100mn

20.4%

21.5%

37.9

35.8

35.5

16.0

15.8

End of Mar. 2020

End of Feb. 2023

35.4
34.4
18.7
End of Mar. 2017

Shizuoka Bank

37.6

Shinkin Banksin the prefecture

Other regional
banks

17

Fees and commissions, trading income
Fees and commissions increased mainly due to an increase in corporate-related income and fee income on retail customer assets.
Fee incomes from wholesale (Shizuoka Bank/Shizugin
Fees and commissions, Trading income
Management Consulting/Shizugin Lease)
FY2020

FY2021

FY2022(JPY bn)[Consolidated] Fees and commissions[Shizuoka Bank nonconsolidated] Fees and

32.2

31.3

37.3

Derivatives

14.8

21.1

+6.3

Fees and commissions incomes

31.3

30.9

34.8

+3.9

Fees and commissions expenses (-)

15.4

16.0

13.6

-2.4

Ordinary income(Shizugin Management
Consulting/Shizugin Lease)

Market credit
investment
Syndicated loan etc.

*Including the effect of changes in account, +JPY2.8bn

Solution-related

Major items of Shizuoka Bank (branch sales division)
Fee incomes from wholesale

10.5

Others

7.4

7.5

0.3
2.1

0.4
2.2

2.5

1.7

0.9
0.6
1.0

1.0
1.0
1.2

FY2020

FY2021

2.0
3.1
1.5

1.1
1.4
FY2022

5.0

5.0

7.1

+2.1

Related to market credit investment

2.5

1.7

3.1

+1.3

Fee income on and balance of customer assets

Syndicated loan, etc.

0.9

1.0

1.5

+0.5

(Shizuoka Bank/Shizugin TM Securities)

Solution-related (Business matching,support for subsidy, etc.)

0.6

1.0

1.1

+0.1

Fee incomes on customer assets

Others (covenants loan, etc.)

1.0

1.2

1.4

+0.2

Other fees on loans

3.5

4.0

3.8

-0.2

Fee incomes on customer assets

4.6

5.0

5.7

+0.7

Investment trust

0.2

0.3

0.3

-0.0

Insurance products

4.4

4.7

5.4

+0.7

9.1

Net profit on exchange

5.9

5.6

5.3

-0.3

3.3

0.9

0.9

1.4

+0.5

0.3

0.4

1.4

+0.9

[Shizuoka Bank nonconsolidated] Trading

incomeDerivatives(JPY bn)

1.4

+6.1

15.9

commissions

＋3.0

vs.
previous
FY

investment trust sales commision
Investment trust stock fee
Insurance product sales commission
Insurance product stock fee
Stock fee income ratio 32%

Shizugin TM Securities

Pensions and insurances (The Shizuoka Bank)

36%

24%

1.4

3.6

8.8
2.1
2.0
3.9

9.5

+0.7

Customer assets balance (term-end balance) (JPY bn)

1.7
2.4
4.4

Others (Foreign currency deposits, investment trusts, public andcorporate bonds) (The Shizuoka Bank)

1,611.4

1,472.1

1,587.0

480.3

539.1

561.9

948.2

953.8

889.8

+24.4

0.8

0.9

1.0

101.9

99.6

95.7

FY2020

FY2021

FY2022End of Mar. 2021

End of Mar. 2022

End of Mar. 2023

18

Expenses
Expenses in FY2022 decreased from FY2021
Expenses and OHR

Main factors for change of expenses
Consolidated

Consolidated

Tax
Non-personnel expense
Personnel expense (Excluding nonrecurring personnel expenses*)
OHR

97.3

92.9

50.1

43.2

6.8

Tax

JPY +0.4bn

Shizuoka Bank JPY +0.3bn

48.3Nonpersonnel
expenses

JPY -1.8bn

Deposit insurance premium JPY -1.5bn

Personnel
expenses

JPY +0.6bn

Shizuoka Bank JPY +0.2bn
SFG JPY +0.4bn

Total

JPY -0.9bn

64.2%

59.6%

Main factors

YoY

96.4

-0.9

6.5

9.3

(JPY bn)

60.2%

40.4

40.7

41.3

FY2020

FY2021

FY2022*Amortization of actuarial gains and losses in retirement benefit cost, and others

Nonconsolidated

Nonconsolidated

Tax
Non-personnel expense
Personnel expense (Excluding nonrecurring personnel expenses*)
OHR

88.2

84.4

6.2

9.0

50.7

44.1

Tax

6.5
48.9

31.3

YoY

86.9

65.5%

60.9%
31.3

-1.3

(JPY bn)

60.2%
31.5

Nonpersonnel
expenses
Personnel
expenses
Total

Main factors

JPY +0.3bn

Consumption tax JPY +0.1bn
Size based business tax JPY +0.2bn

JPY -1.8bn

Deposit insurance premium JPY -1.5bn

JPY +0.2bn

Salaries, etc. JPY +0.2bn

JPY -1.3bn(Reference)

FY2020

FY2021*Amortization of actuarial gains and losses in retirement benefit cost, and others

FY2022Next-Generation-System-related(Estimated full-year amount)

JPY 10.3bn(decrease of JPY1.3bn from FY2021)

19

Credit-related costs - Shizuoka Bank nonconsolidated
Overall credit costs decreased YoY and remained at a low level
Credit-related costs and credit-related cost ratio

Breakdown of credit-related costs(JPY bn)

Credit-related costs
FY2020(JPY bn)

FY2021

13.0[Consolidated] Credit-related Costs

Credit-related costs rate * Credit-related costs rate =FY2022

6.8

Credit-related costs / Average loan balance

YoY

5.6

14.0

-1.2

11.7

12.0

11.7

5.5

4.8

-0.8

3.5

2.6

-1.7

-4.4

7.8

2.8

6.1 ＋3.4

0.4

0.1

0.4 ＋0.2* Including provision for the estimated future payments to credit guarantee corporations,provision for allowance for accidental losses, and losses on sell of loans

0.33%

8.0

6.0

5.5

4.8

0.13%

4.0

2.0

0.05%

0.09%

1.42%

Historical average of PD since Mar. 2008 : 0.88%

FY2019FY2020

FY2021

FY2022(JPY bn)

Provision for specific allowance for loan losses

Changes in credit rating, etc.

Provision for general allowance for loan losses(negative figures:Appropriate back)Decrease in the value ofcollaterals
Upgrade of credit rating, decreasein loan and credit balances by
foreclosure, etc.

11.7

1.01%

12.4
0.1
-6.4
6.1

Total

0.4

8.7
0.82%

Historical average of PD since Mar. 2008 : 0.79%(Excluding users of Business Quick Loan)

0.62%

0.64%

Excluding users of Business Quick Loan (*)*Small amount loan with 100% external guaranty

End ofMar.'120.04%-0.07%FY20180.79%

End ofMar.'10

0.03%

0.05%

0.0

0.88%

End ofMar.'08

0.12%

Other NPL disposal*PD of sound borrowers and borrowers needing careful monitoring (On the basis of no. of borrowers)

0.96%

0.23%

4.8

Provision for allowance for loan losses and other NPL disposal

Probability of default (PD)

1.05%

0.43%

8.7

10.0

[Nonconsolidated] Credit-related
Costs
Provision for general allowance
for loan losses
Provision for specific allowance
for loan losses
Other non-performing loans(NPL) disposal *0.53%

End ofMar.'140.44%

End ofMar.'16

End ofMar.'18

End ofMar.'20

End ofMar.'22

4.8

2.7

0.4
3.4

5.5

1.0

0.4

FY2018FY2019

7.8

5.5
0.1
2.8

3.5

2.6

FY2020

FY2021

4.8
0.4
6.1
-1.7
FY202220

Risk-management loans (Loans based on the Financial Reconstruction Act*) Shizuoka Bank nonconsolidated
Overall risk-management loans increased compared to End of Mar. 2022, while net risk-management loans remained at a low level
Net risk-management loans

Trends in risk-management loans(JPY bn)

JPY 104.9bn

Loans to customers who have gonebankrupt
Loans wiith interest payment in arrears

JPY 3.4bn

Partial direct
write-off

JPY 36.4bn

Guaranteed by credit
guarantee associations

JPY 48.5bn

Collateral/
Reserves

JPY 16.6bn

Net risk-management
loans

243.4
8.8

166.1
5.2

Delinquency ratio

100.9

216.2

3.0

144.4

84.4

91.9

92.2

102.9

98.4

104.9

2.1

2.2

82.2

89.4

4.3

3.4

6.2

71.3

75.0

82.9

18.4

16.4

13.6

16.3

13.8

13.9

14.1

13.3

End ofMar.'11End ofMar.'14

End ofMar.'17

End ofMar.'19

End ofMar.'20

End ofMar.'21End ofMar.'22End ofMar.'23

In arrears
16%
Not
arrears84%

EL (Expected loss in 1 year from now on) : JPY 1.1bn

NPL removal from the balance sheet

The ratio of risk-management loans[Breakdown of JPY -24.3bn](JPY bn)
New recognition of NPLs

FY2021

＋29.5

3.59%

FY2022+34.5

Collected from borro
wer/ set off against deposit
account-5.8

Collateral disposal/
subrogated to guarantor-7.8

Reclassified to better
categories-4.7

Loans sold-off-5.9

Risk-management loans
Net risk-management loans
2.25%

Removal from thebalance sheet(NPL to borrowers classified
as “at risk of failure” or riskier
categories)

Risk-management
loans

-34.0
(-30.7)-28.0(-24.3)

98.4

104.9

* Reconcile risk-management loans with loans based on the Financial Reconstruction Act according to revision ofOrder for Enforcement of the Banking Act since the end of Mar. 2022. Adopt the standard retroactively to the past.

1.24%

0.38%

End ofMar.'11

1.05%

1.01%

1.08%

1.01%

1.02%

0.26%

0.15%

0.16%

0.15%

0.17%

0.16%

0.16%

End ofMar.'14

End ofMar.'17

End ofMar.'19

End ofMar.'20

End ofMar.'21End ofMar.'22End ofMar.'23

21

Capital adequacy ratio - Consolidated
In the first year of application of the Basel III finalization, the effect of decreasing factors of risk assets will be considerable, and the total capital ratio and
CET1 (Common equity Tier 1) ratio will be 18.42% (up 2.34pt)
The ratio obtained from the trial calculation assuming complete application of Basel III finalization is 14.17%

Impact of Basel III finalization

Capital adequacy ratio (Consolidated basis)(%)

CET1ratio
Total capital ratio
CET1ratio excluding valuation difference on available-for-sale securities(1) Reduction in LGD*1 value on credit given to corporations set by the financial
authorities
March 2022
March 2023
⇒ a factor to decreaserisk-weighted assets
45%
40%

18.42
16.56
12.69

16.08

14.17 *(In the case of full application of
the Basel III finalization)

12.85

10.96

End of Mar.'22

End of Mar.'23(JPY bn)[Basel III]End ofMar. '22

End ofMar. '23⇒ a factor to increase riskweighted assets(3) Step-by-step application of capital floor*3

Changes in capital and risk-adjusted assets (Consolidated basis)
End ofMar. '21(2) Removal of scaling factor*2 (removal by the financial authorities)
March 2022
March 2023
⇒ a factor to decreaserisk-weighted assets
1.06 times(removed)*1 Loss Given Default (1-amount recovered)*2 A factor to be multiplied to credit risk-weighted assets amount when using the internal ratings-based approach*Preliminary estimate after full application of the Basel III finalization when taking the capital floor, etc. into
account (tentatively calculated with the affected value at the end of September 2022)

End of Mar.'21[Major impact]

Change fromthe end of Mar. '22

March 2023

March 2024

March 2025

March 2026

March 2027

March 2028

50%

55%

60%

65%

70%

72.5%

⇒ Capital floor will not be applicable in the year ending March 2023. Capital floor will
be gradually raised toward the year ending March 2028, which will increase riskweighted assets

Total capital*

990.4

965.4

1,006.1

+40.8

CET1

990.4

965.4

1,006.1

+40.8

759.2

771.6

778.2

+6.5

Other Tier 1

ー

ー

ー

ー

◼ Results of materiality test: ∆EVE (Economic Value of Equity)

Tier 2ーーーー(Decrease in economic value of equity due to interest rate shock within IRRBB)

5,979.7

6,001.2

5,459.3-542.0Decrease in economic value

Tier 1Results of materiality test*

5,658.0

5,672.1

5,283.6-388.5

JPY 36.1bn

JPY 1,006.1bn

3.6%≦15%

19.4

20.2

0.6

-19.6

302.3

309.0

175.2

-133.9Excluding valuation difference on
available-for-sale securities

Risk-adjusted assets
Total credit-risk adjusted assets
Amount corresponding to market
risk
Amount corresponding tooperational risk

*Capital does not include preferred shares, subordinated debts, etc.

Interest rate risk in the banking book (IRRBB)(Consolidated basis, End of Mar. 2023)*Financial Services Agency supervision guidelines require ∆EVE to be less than 15% of Tier 1 capital◼ ΔNII (Net Interest Income) : JPY 9.3bn(Decrease in net interest income due to interest shock within IRRBB)

22

Towards the Achievement of the 1st
Medium-term Business Plan
*Please see details of the first medium-term business plan briefing session held on April 17,
2023 at the website of the Shizuoka Financial Group. (Check with the QR code on the right)

Outline of the 1st Medium-term Business Plan
Concepts behind the nameName of the Plan
Clearing the way
to a new era“Crossover” means a mixture of different fields or elements. In addition, “X” means
unknown or multiplication in Japan.
As the first medium-term business plan under the holding company structure, the planname is filled with our determination to open up a new era in VUCA world
by co-creating new value with all stakeholders.

Term of the Plan

FY2023–2027 (5 years)

10-year Vision

A corporate group committing itself to future of region and producing growth of region

1st Medium-term
Business Plan Vision

A problem-solving corporate group creating new value for the future

Stakeholders

FutureGenerations• Increase in SFG’s corporate value

Employees• Practicing human capital management

Revitalizing the community(management base) throughsolving regional problems andexpanding revenue
opportunities.

Group Business Strategy
Resolve social problems and meet needs of local
communities and customers through our diversified
financial services.

Transformation Strategy
Transform “Customer Contact,” “Sales,” “Human
Resources,” and “Expenses” to generatemanagement resources and increase revenue.

Group Governance Strategy
Sophisticate the corporate governance system under a holding company structureand drive group synergies and agile management.

SFG

Shareholders

Regional-Co-Creation
Strategy

Indicators

Social Impact

Customers• Healthy growth of the local community• Addressing population decline,
low birthrate, and the aging population• Industrial development and financial
innovation• Forming a digital society• Enhancing society so the needs of theenvironment and society are balanced

Basic Strategies

Sustainability Indicators

RegionMateriality of SFG

24

Sustainability Indicators
Sustainability Indicators consist of financial targets, engagement indicators, and social impact indicators. We set financial targets andengagement indicators with the aim of raising our corporate value as a public-listed company, and social impact indicators in order tocreate social value as a regional financial institution.

Indicators

EffectivenessSoundness

commitSFG

Financial Targets

Consolidated ordinary income
Profitability

Approx. 6%

Consolidated OHR

Approx. 55%

Consolidated CET1 Ratio *1

13% or more

Engagement of Group Employees *3

Carbon Neutrality (Scope 1 and 2)
Shizuoka Prefecture’s Populationaim

Social Value
Creation

Rate of Social Change in
Social Impact

More than 90.0 billion yen

Consolidated ROE

Customer satisfaction with Group Transactions *2
Engagement

Target for FY2027

Real Gross Output in Shizuoka Prefecture (GDP)

Percentage Reduction of GHG Emissions
in Shizuoka Prefecture

Increase from thePrevious Fiscal Year
4.0 or above
Achieved (FY2030)
Continuously Increasing
Sustainably Developing-46% compared to FY2013 (FY2030)*1: Basel III finalization basis *2: Measured by “NPS” through customer surveys. NPS: Net Promoter Score [Degree of willingness to recommend the product, service, or company itself to family, friends, or others.]*3: Overall employees’ satisfaction which is measured as averaged score of the five factors: fulfillment at work, adaptation to work, satisfaction with workplace, satisfaction with superiors, and loyalty to company (on a scale of 1 to 5).

25

Implementation of Human Capital Management (1) – Whole Picture
We interface management strategies with HR strategies and eliminate gaps from the targets through four actions.
Organic linkage between management strategies
and HR strategies

Human resources that can voluntarily
consider, act, accept various opinions
and continue to challenge

HR strategies increase
the feasibility ofmanagement strategies.

Targets

HR strategies

Roadmap towards the achievement of the targets

Corporate
Philosophy

Problems / Gaps

Purpose-type corporate
philosophy

creating new values for the future

Change in Employee Engagement Survey Results
Shizuoka Bank
Shizuoka Financial Group
3.80

3.79

3.77

3.76

Actions to Lessen the Gaps

Expand dreams andaffluence with ourcommunity
Management strategies
enhance the superiority
Management strategies
of human resources
A problem-solving corporate group

3.78

10-year Vision

Medium-term
Business Plan

Actions

1

Diversification of recruitment
and expansion andreinforcement of HR(P27)
development

The gap between the picture wetarget and the personnel
assessment system

2

Change in the personnel
evaluation system andleadership training

Conservative corporate culture

3

Optimize the human resources
portfolio (Redeployment to meetchange in business).

(Reference material: P41)

Creation of corporate culture
to accelerate changes(Reference material: P42)

The spread andinstitutionalization of each
personnel scheme to group
employees

4

Increase in employee
engagement(Reference material: P43)

3.70
3.67
3.64

3.62
FY20083.76

KPI
FY2009FY2010FY2016FY2020

FY2021

FY2022

Employee engagement
survey result

FY2027: 4.0 or more
26

Human CapitalManagement Action

Implementation of Human Capital Management (2) – Optimization of HR portfolio

１

Build a human resources portfolio for realizing management strategy through boosting development of internal human resources andutilizing diverse recruitment channels.

HR Portfolio’s Target
Problem-solving

Value-creating

Diversification of ways to secure human resources
Digitalization

New businesses

4,150

4,060

4,004

975

984

Reallocation due todigitalization

810

100
350

200

155

2,578

2,575

FY2022(Actually)450
In addition toexisting business,create new value forcustomers.

FY2023(Planned)

列2

Confirmation of HR definition
Value-creating Human Resources
Human resources that realize the creation of regional
value by leveraging expertise and networks
Development area

2,440

FY2027(planned)

46 persons in FY2022

Establishment of a new certification system

3

New graduate recruitment

1
24

57

248

263

Acceptance of sidebusiness persons
6 persons in total by
FY2022Mercari

21

258

FY2020

FY2021

Dispatch to companies
that offer side jobs andsecond jobs
26 persons in total by
FY2022
HR tech companies(member of the personnel
system reform PJ)(CS promotion of SaaS tools)

Tourism-related companies(Regional revitalization)(Drafting plans for adopting
SaaS tools)

Concept art production
company

Business consulting service
Real estate appraisal service

Real estate tech companies

FY2022

Digital Human Resourcesthat can use cutting-edge technology

Professional expertise
acquisition(Dispatch to external
enterprises, side business, etc.)

Global recruitment

HR development policy toward the targets

Professional expertise
acquisition(External training, research at
graduate schools, etc.)

side jobs and second jobs

recruitment portfolio(recruitment promotion throughYouTube)

IT/DX support, medical care and health, decarbonization,
wealth business, venture firm establishment,

Practical skill acquisition■Diversify human resources through■Change in the

Career recruitment

10
300

287

Middle, backTrainees outside the bank

Practical skill acquisition
Side-jobs at relevant
divisions of
the headquarters

10 persons in FY2022

IT literacy improvement of the whole group
As of the end of
March 2023

IT passport acquirers: about 1,000 persons

Problem-solving Human Resourcesthat can co-create and solve issues incooperation with customers
Professional
expertise acquisition

In-house qualification
certification system

Improvement/expansion ofinternal training

Certification requirement

Business succession,
Corporate
rehabilitation,
M&A,
Staffing, etc.

Publicly qualified

4 ranks
Diamond
Platinum

Business skill
check

Gold
Silver27

Cross-industry collaboration / Business for venture firms
Since FY2014, we have accelerated activities through cross-industry collaboration. In the 14th Medium-term Business Plan, we have used the network,
expanded investment in venture capital, and started venture debt activities. In the 1 st Medium-term Business Plan, we aim to accelerate venture business tomake it a revenue pillar.

Activities in the 1st Medium-term Business Plan

Activities in the 14th Medium-term Business Plan
Business partner

Collaboration and
Investment Income

Details of collaboration

Cross-industry
collaboration

Monex Group

Wrap products, VC investment, etc.

Monex Forward

Smartphone app development / VC
investment

Commons Asset Management

Fund OTC sales/ fund investment

Hokennomadoguchi(Insurance Window)

Store parallel establishment

ARUHI / au Jibun Bank

Housing loan guarantee/ RMBS

Collaboration resultsby the end of FY2022

9.5

About JPYbn（about JPY 1.7 bn in
FY2022）

Venture Investment

through investment of

19.0

about JPYbn
in 21 funds at the end of
FY2022.

For corporations / SaaS

Financial service (Fin Tech)
Medical care / nursing care / biotechnology
AI / data analysis
Manufacturing / robotics / IoT
OthersTotal

JPY

7.2 bn in total by the end of FY2022

Venture Debt

Executed (Cases)
Applied (Cases)
Amount executed (JPY bn)

294

7.2

13%

115
66
64
34
31
212
522 start-ups

9%

17%
61%

95

11

1.5

FY202146
FY2022TECH BEAT Shizuoka
Cutting-edge technology fairs that match start-ups and regional companies
8 fairs in total held by the end of FY2022
Attendees

About 34,000
persons

Individual businessconsultations

About 1,400
cases

Venture firms

About 400
companies

Different
industry

VenturecapitalShizuoka FG’s
network

Start-up

Start-up business category in whichinvestment has been madeInvestment in 522 start-ups

Regional-Co-Creation Strategy

seed
middle

early
later

Tourism and community development
Development by combining asoview of strategic partners (vitalizationof tourism business) and address (use of empty houses, etc.)

Group Business Strategy[Average balance of venture debt (JPY bn)]
venture debt

Develop new markets
Expand sourcing channels for venture
debt.
Invest and finance in collaboration
with allied banks

23.0

To 100 billion
yen scale

3.6
FY2022

FY2023

FY2027

Enhance existing business services [Venture-related free income (JPY bn)]
VC,
Propose post-IPO asset
VC revenue
Stock acquisition
2.5 tomanagement and operations.
Venture debt
rights, etc.
3.0
Answer capital needs of the board+5.0 to 6.0
members.
2.5 to0.7 Venture debt 3.0
Develop new services in collaboration
0.1
with ventures.
FY2022

FY2023

FY202728

Alliance Strategy with Local Banks
Demonstrate synergy effects through cooperating with alliance partner banks in various fields thereby aiming
at regional sustainable development.
Shizuoka Nagoya Alliance (from April 2022)
Shizuoka Yamanashi Alliance (from October 2020年)
We aim to produce revenue effects of 10 billion yen or more (5 years in total/twobanks in total) with a focus on regional revitalization, market finance (structured finance,etc.), and life-planning (Shizugin TM Securities).
Results in FY2022

About JPY 2.31 bn
Single-year comparison withthe target 113.6％

5-year conversion (estimation)

Rate ofprogress

Shizugin TM Securities (Yamanashi Head Office)Amount of sales of customer asset: Approx. JPY 35.4 bn
Balance of customer asset: Approx. JPY 26.5 bn
Exchange of human resources (20 persons) tostrengthen cooperation

Business Succession Fund(May 2022)
Establish “Shizuoka-Yamanashi Mirai
Growth Support Fund”
3 cases / JPY 0.1 bn

Execute the Deep Tech Venture
Co-financing through the Debt
Guarantee Program
Working capital for
upfront investment in
MaaS business

5-year conversion (estimation)

Results in FY2022

About JPY 1.13 bn

91％

Main Results (by FY2022)
Field of Life-planning

We aim to produce revenue effects of 10 billion yen or more (5 years in total/two banks intotal) by emphasizing support to business partners with regard to structural reform ofregional industries, endeavoring to solve clients’ problems, expanding topline growth andreducing cost.

Field of Finance
Extend real estate non-recourse loans

16 loans / JPY 74.5 bn
Jointly arrange syndicated loans
18 loans / JPY 28.4 bn

Support to expand sales channels
Events for individual business talks for customers:
21 times
Contracts of business matching completed:
120 cases (Contract Rate: 16.0%)

Extend the syndicated loan related
to regional revitalization in the
Alliance
Capital to build sharedsecond-housein Yamanashi Pref.

Single-year comparison withthe target 103.0％

Rate ofprogress

34％

Main Results (by FY2022)
Initiatives that contribute to supporting Field of Financeindustrial reform
Jointly arrange syndicated loans
Organize the automotive supply chain
8 loans / JPY 7.6 bn
Exchange of human resource in the field of
Joint investment in venture funds
corporate revitalization (2 persons)
2 investments / JPY 2.6 bn
Jointly organize various events
Web seminar on response to COVID-19 in China
Hydrogen Web seminar—Forecast on Chinese Economy and Its Problems—Appeal as Next-generation Fuel—after the Lockdown—
Invoice response seminar
Web seminar on response to EV and on explanationof parts and structures
Development of joint products Start handling the variable insurance product “Tsumitate Kajutsu(a savings account) (November) (Shizuoka, Nagoya and Yamanashi Cho)

Agreement conclusion by three banks at the time of occurrence of disasters◼ The Shizuoka Bank, the Bank of Nagoya and the Yamanashi Chuo Bank concluded the“Mutual Support Agreement on Deposit Refund at the Time of Occurrence of Large
Disasters.”◼ A mutual support/cooperation system has been established so that each bank may
stably provide financial functions even when large disasters occur.

29

Expansion of Problem-solving Domains – New business field
Establish new company “SFG Marketing Co., Ltd., which offers new value that leads to solving issues of regions and business
partners.

Four challenge points toward new business domains
Establishment of SFG Marketing1

Realize a sustainable society

3

Pursue profitability and growth2

Develop business that captureschanges in the social structure

4

Leverage management
resources efficiently

Issues ofregions andbusiness
partners

IT, DX
Insufficient HR

Sales channel
expansion

Business
succession

Branding

Decarbonization

NEW

Scheduled to beestablished on July 3,
2023

Take on the challenge of solving social issues in regions from various angles, including
marketing support, by leveraging highly accurate attribute and payment data that arestrengths of SFG, and the data analysis foundation that SFG has prepared as well as
knowledge and know-how of marketing that the Dentsu Group possesses.

SFG Marketing
Customer base with a wide
variety of attributes
SFG brand’s trust and recognition

Business know-how that SFG does not have
Consulting power that adds a new appeal<Assumed business domain>

Acquisition of 100% ownership of TJS

February 1, 2023

By combining software development business and staffing business for more than
40 years of TJS with SFG’s business domains, we aim to demonstrate synergy
effects to solve problems related to IT, DX and HR.

Marketing support to regions andbusiness partners

Additional I business implementation tosolve social issues◼ Support to expand sales channels◼ Branding support◼ Support to make marketing strategies◼ Creation of communities where foreigners
can work without difficulty◼ Regional super applications◼ Social business, etc.

Establishment of an in-house venture system (from September 2021)
Establishment of an in-house venture system with the aim of creating corporate
culture to challenge in new business domains◼ 59 applications in FY2021

Software development

IT support to business
partners

HR dispatch

HR introduction

By assigning winners to relevant divisions, westarted examination towards commercialization.
Themes under investigation◼ Entrusted business at whistle-blowing
windows of external companies◼ Financial service for foreign employees

30System Investments
Planning to invest 80 billion yen in systems over 5 years in the 1st Medium-term Business Plan.
Identify priorities and at the same time steadily make progress on touchpoints and sales transformation to realize thebasic strategy.
FY2023
Shizugin app.
WebsiteExpandchannels
andfunctionsContact center

Business portal

Point program,
etc.

Digital platforms

Consumer loans

Sales systeminfrastructure

New sales
support system
Cashless
Securities

Group-widesysteminfrastructureNew
services

Data analysis anduse platform

FY2025

FY2026FY2027

Expand ShizuGin app functions (expand non-face-to-face transactions,enhance non-financial content, collaboration with group companies）
Expand the My page functions (expand non-face-to-face transactions, collaboration withRenew the My page and website
group companies)
Expand the contact center functions (consolidate reception locations, deploy inside sales)
Improve digital marketing

Digital marketing

Digital branches

Back-end
operations
and digitalplatforms

FY2024

Expand business portal functions (expand services handled, collaboration with group companies)
Transition face-to-face operations to selfservice operations
Introduce a point program

Vision➢ Complete all financialtransactions for both
corporations andindividuals through digitalcontact points➢ Strengthen acquisition ofcustomer transactions
through non-face-to-facechannels➢ Provide group functions
to solve customers'
issues at one location
Promote business BPR
through digitization of
back-end operations➢ Seamless system
integration➢

Digitization (automation) of back-end
operations
Unification of customer authentication
and API integration
Expand consumer loan screening system functionality (web-based completion ofprocedures, streamline consumer loan operations)
Expand sales support system functions (linkage with business smartphones and other systems, transformation of sales activities)

Build a cashless payment network
Strengthen non-face-to-face transactions for NISA andaccumulated investment trusts (improve UI for online investment trusts)

Expand products subject to non-face-to-face transactions

Expand data analysis and platform functions used (expand BI tool use targets, use more advanced analysis)

OA

Integrate group companies’ OA

OtherGroup cloud (migrate business systems and expand infrastructure)➢

Generate sales timethrough automation andstreamlining ofoperations➢ Maximize results byimproving the accuracyof sales activities➢ Lead the region's shift tobeing cashless
Use data collected
through various channels
strategically➢ Improve efficiency ofmanagement andoperational productivity
throughout the group➢31

Roadmap towards the Achievement of Carbon Neutrality
We aim to be carbon neutral (Scope 1 and 2) by FY2030. In addition, the Group will work together to provide funding and consulting
services to help the region make a smooth transition to a decarbonized society, and will proactively disclose information based on TCFD
recommendations.
2020/32023/42030
2040
Main activities

すいPromotion of zero (net) GHG emission of Shizuoka FG

Agreement to the TCFD proposal

Achievement of carbon
neutrality(Sustainability Indicators）

Promotion of zero (net) GHG emission of Shizuoka FG (P45)

Results by FY2022 (estimation)
A decrease of 28.9% compared with
FY2013⇒ Aiming for -73% in FY2023

Promotion of a shift towards decarbonized society

We aim to achieve carbon neutrality (Scope1 and 2) in FY2030
through a shift of electricity consumed to renewable energy bymeans of PPA introduction and through energy saving including
electricity saving and LED introduction.
*Plan to switch all of the company's contracted electricity torenewable energy sources from FY2023

Achievement of carbon neutrality (Scope3)

Promotion of activities towards a shift to decarbonized society (P46)
GHG emission calculation and support for reduction

Solution-based activity

Promoting Sustainable FinanceZero outstanding amount of investment/loan
for coal-fired power generation

Finance-based activity

We aim to achieve carbon neutrality (Scope3) by supporting business
partners from the viewpoints of solution and finance, towards a regionalsmooth shift to decarbonized society.
• Scope 3 (Investments and Loans) estimates (PCAF Standard)• GHG emission calculation and support for reduction• Promoting Sustainable FinanceWe received the Golden Prize (Minister of the Environment Prize)in the ESG Finance Awards Japan.
Received the Gold Prize in the Indirect Financing category for its Positive
Impact Finance initiative for SMEs and development and promotion of theSDGs Support Guarantee Program in collaboration with the Shizuoka Credit
Guarantee Corporation.

Target on a cumulative basis by FY2030: JPY 2.0tn (of that, financerelated to environment 1.0tn)• Zero outstanding amount of investment/loan for coal-fired power
generation
Should be zero in or around FY2040 (as of the end of March 2023: JPY
15.9bn)※CDP：GHG排出量削減（Scope1～3）に関する国際的な評価

32

Capital Policy

Shareholder return
We aim to raise the dividend payout ratio progressively to 40% or more by FY2027, and flexibly implement share buybacks based on market
conditions, including stock prices. In addition, we intend to continuously improve ROE, EPS, and BPS while keeping shareholder return in mind.
Increase by JPY 4
Profit distribution to shareholders
Annual dividend (JPY bn)

Share buybacks (JPY bn)

Annual dividend per share （JPY）
Increase by JPY 3 Increase by JPY 1

Increase by JPY 4

34.0
30.0

Average in the period of the past
mid-term business plan

25.0

15.2

8.9

9.5

Average in the period of the Average in the period of the Average in the period of the

12.8

8.8
FY2020

18.8

16.8

14.7

14.4

12.7

11.4

9.4

21.8

21.7

18.7
14.7

Average in the mostrecent ten years

26.0

FY2021*
10.0
FY20229.7
FY2023(E)Average results for11th mid-term business12th mid-term business13th mid-term businessthe last 10 years

plan (2011−2013)

plan (2014−2016)

plan (2016−2019)(FY 2013-2022)

27.0％
48.1％

28.5％
48.9％

32.8％
32.8％

35.4％
56.2％

32.2％
51.1％

33.7％

Shareholder return ratio

20.1％
52.3％

ー

28.6％
50.2％

Profit attributable toowners of the parent

JPY47.0bn

JPY42.4bn

JPY45.2bn

JPY43.6bn

JPY41.6bn

JPY52.4bn

JPY56.0bn

JPY44.7bn

Dividend payout ratio

EPS/BPS Trends (Consolidated)*Shareholder returns for FY2022 include implemented share buybacks (amount: 10.0 billion yen, period:
February to May 2023).

2050.65

EPS (Earnings Per Share) (JPY)BPS (Book value Per Share) (JPY)

92.92

632.1820.84
FY1998FY2001

FY2004

FY2007FY2010FY2013

FY2016FY2019FY202234

Strategic shareholdings
Make it a rule to reduce strategic shareholdings, and select stocks to sell and continuously sell shares in every
fiscal year
Acquisition cost of strategic shareholdings*1
Figures in parentheses indicate listed shares.
(JPY bn)

Retirement benefit equivalent trust
Business investment and community contribution

No. of companies whose
shares the Bank holds

About
500

288

About
110.0

About
11%

End of Mar.
2000

Amountof sales(JPY bn)

About 170.0

About
33%

Results ofsales

End of Mar.
2017

287

267

106.0

100.6
（93.8）

10.7%

End of Mar.
2020

Further
reduction

8.8%

End of Mar.
2023

*1 Excluding shares of group companies and equity method affiliate

200

87.0
（80.0）FY2020

8.9

1.6

7.3

FY2021*3

12.4
（8.2)

3.8
(2.3)

8.7
(6.0)

FY2022

16.9

4.2

12.7

*2 Excluding amortization*3 Figures in parentheses indicate sales of shares of Monex Group, Inc.

The amountagreed to sell
(27 companies)(JPY bn)

About 8%End of Mar.
2028
(Plan)

Acquisition
cost basis

Profit (loss)
on sales*2

End of Mar.
2023

Amountof sales48.6

Acquisition
cost basis
12.1

Valuation
profit and
loss
36.6

Profits from the sale will be used to invest in systems
and human resources.
35

Projected performance in FY2023
We expect ordinary profit of 80 billion yen and profit attributable to owners of the parent of 56 billion yen in FY2023.
（JPY bn)

FY2020

FY2023(Projected)（B）

FY2022(A)

FY2021

YoY（B－A）

Consolidated

Ordinary profit

63.3

54.2

74.0

80.0

+6.0

Profit attributable to owners of theparent

43.6

41.6

52.4

56.0

+3.6

ROE

4.1%

3.8％

4.6%

5.0%

+0.4pt

OHR

59.5%

64.2％

60.2%

58.3%

-1.9ptCET1 ratio *16.56％

16.08％

18.42%(14.17％)17.14%（13.44%）-1.28pt（-0.73pt）*Actual results for FY2022 and forecast for FY2023 are ratios after the application of the finalization of Basel III.
Figures in parentheses are estimates assuming full application of the finalization of Basel III.

Shizuoka Bank Nonconsolidated

Gross operating profit

138.5

134.7

144.3

151.0

+6.7

Net interest income

114.7

124.5

121.6

125.0

+3.4

Fees and commissions

15.9

14.8

21.1

21.5

+0.4

Trading income

0.9

0.9

1.4

1.5

+0.1

Other operating profit

7.0

-5.5

0.2

3.0

+2.8

84.4

88.2

86.9

89.0

+2.1

Ordinary profit

51.5

45.3

67.6

71.0

+3.4

Net income

35.5

36.1

46.2

49.0

+2.8

Credit related costs (-)

11.7

5.5

4.8

4.0

-0.8

Expenses(-)

36

Reference (1) (ESG/SDGs)

Sustainability Management (1) - Identify the materiality
After identifying issues for the local community and Shizuoka FG, evaluate them from the perspective of creating social value and improving corporate
value, then identify the materiality◼ Materiality Identification Procedure

Evaluated and narrowed
down the issues

Decided onMateriality

From the perspective of creating social value andenhancing corporate value, evaluatedopportunities and risks for both local communities
and Shizuoka FG, and narrowed down issues④①

Grouped issues and decided on Materiality◼ Issues to consider

⑩

②

⑤

➓

⑥
⑫
⓫

➌
➐
⑧
⑦
③
⑪
⑨ ⓬

➋

➒
➑

➏

➍ ➎
Corporate value

Issues in Shizuoka Prefecture① Creating safe communities that protect
lives★
② Improving medical care and welfare tolive with peace of mind ★
③ Creating a digital society④ Forming a society where the environment
and the economy are compatible⑤ Forming a society where children canlearn and grow in good health ★
⑥ Developing people with talent and virtue

Red: Materiality Black: Issues➊

Identified issues for local communities and Shizuoka
FG from various perspectives (social, economic, andenvironmental)

Social value

Identified issues toconsider◼ Definition of Materiality⑦ Realizing a society where everyone canplay an active role ★
⑧ Developing wealth-creating industries ★
⑨ Proposing a variety of lifestyles⑩ Enhancing transportation networks toincrease the region’s value⑪ Enhancing and disseminating theattractiveness of “Fuji no Kuni”⑫ Expanding exchanges with people
around the world

Issues for SFG❶ Addressing population decline, the lowbirthrate, and the aging population❷ Industrial development and financial
innovation❸ Healthy growth of the local community❹ Expanding group business areas(addressing the deteriorating
profitability of existing businesses)❺ Challenge for new business (revisionof the Banking Act)❻ DX realization and modernization❼ DE&I penetration❽ Transformation of the corporate culture❾ Providing customer-driven products andservices❿ Enhancing group governance (groupindependence and collaboration)⓫ Dealing with complex and advanced
security⓬ Developing environmentally friendly
products and services

38

Sustainability Management (2)- Overall picture

Identify seven key issues (materiality) under the theme of society, economy, and environment and create social impact throughsolving local issues

SocialBusiness activities

Addressing population decline, thelow birthrate, and the aging population

Support the creation of towns
that attract people

No. of tourist
destinations createdHealthy growth of the local community

Improve financial literacy in the region

No. of consultations
on asset formation

Shareholder

Employees

No. of cases of
support for industrial
transformation

ImpactIncrease in therelevant populationin Shizuoka Pref.

Rate of social change in
Shizuoka Prefecture’s
population(Continuously increasing)

Increase in the no.
of companies in
Shizuoka Pref.

Real gross prefectural product(Developing sustainably)

Industrial development andfinancial innovation

Support for industrial transformation

Creating a digital society

Support regional DX

No. ofDX-certified
businesses

Society that balances the environment andeconomyPromote regional development thatbalances decarbonization andbusiness needs

Amount ofenvironmental
financing executed

Penetration of carbon
offsets

Improve corporate value

Increase productivity and revenue
through each strategy

Revenue expansion
Cost reduction

Profit increase

Financial targets:Profitability Soundness
EffectivenessManaging human capital

Transform human capital

Creation of problemsolving and value-creating
human resources

Employeeengagement

Well-being of employees(Engagement)

EconomyEnvironment

Output/Outcome

Materiality

Rate of reduction of GHG
emissions in Shizuoka
Prefecture(-46% compared to FY2013 (FY2030))

39

Sustainability Management (3)- Social Impact Roadmap

Input・Activity

OutputOutcome

ImpactManagement Resources &Corporate Activities

Direct Results

Indirect Results

Social Impact

Support for medical and nursing carebusiness
Hiring support for people with disabilities

No. of cases of support for opening new
businesses
Hiring rate of people with disabilities

Attract from overseas and metropolitan
areas

Improvement of medical and nursing
care
Expanded employment for people
with disabilities

Tourism promotion

Increase in inbound tourists

Town development project

No. of municipal services contracted

Improved public services

Promote cashless transactions

No. of cashless services

Cashless transactions in the region

Penetrate digital transactions

No. of users of non-face-to-face services

Improved transaction convenience

Financial and economic education

No. of community education projects

Improved financial literacy in theregion

Propose long-term asset building

Stock revenue asset balanceHousehold financial assets increased

Asset management advisory business

Wealth, inheritance, and other income

Increase in income and assets

Support for overseas expansion

Expansion of overseas transactions

Business for venture firms

No. of cases of overseas inbound &outbound support
No. of cases of venture debt executed

Inheritance & business succession

Various consulting revenues

Increase in the no. of regional companies

Strengthen equity businessBuyout fund origination amount

Succession of business, technology, etc.

Addressing human resource shortages

Introduction of personnel

Secure and expanded labor force

Support for industrial transformation

No. of cases of support for industrial
transformation
No. of DX support for business partners

Transformed industrial structure

Support for introduction of energy-saving
equipment

No. of ESG leases handled

Support for SDG initiatives

Amt. of environmental finance executed

Expanded introduction of renewableenergy and energy-saving equipment, etc.

Promote DX

Extension of healthy life expectancy
Improved employment environment
Increase in the no. of people involved

Rate of social change in
Shizuoka Prefecture’s
population (continuously
increasing)

Improved quality of life

From savings to investment

Real gross prefectural
product (developing
sustainably)

Support for venture firms
Ensured sustainability of local
companies (improved businessperformance, increased corporate
tax payments)

Improved productivity and secured
profits

Developed and expanded range of
products and services with zero GHG
emissions

Rate of reduction of GHG
emissions in Shizuoka Pref.
(-46% compared to FY2013 (FY2030))

30

Initiatives in Human Capital Management (1) - Alignment of Philosophy and Actions through Reform of Personnel System and Leadership

Human Resource
Management Action

2

Introduced OKR into the personnel evaluation system to join management strategy and employee behavior. In addition, systematizedtraining for leaders to lead organizational change.
Renewal of personnel evaluation system

Systematization of leadership education

Introduced a new personnel evaluation system to join management strategies and employee behavior. The
new system incorporates OKR, which joins each employee's dreams and actions with the organization's
vision, and Value, a set of values to be embodied in daily actions to bring about management strategies andbasic philosophy.

Former target management
systemTarget achievement level

Qualitative evaluation ofprocesses, etc.

Challenge +Achievement

Training program

Officers

Executive
academyManagement
academyLine head

Leader academy
Compliance

Behavior
evaluation

OKR evaluation

Level

Personnel requirements

Value evaluation *Managers
Organization
management workshop

Degree of conformity between
basic principles and daily actions*Including compliance

OKR Evaluation

Value Evaluation

The evaluation system is not based solely on
performance targets and is composed of Objective and
Key Results.

New value standards for behavior required of
employees to bring about management strategies
and basic principles

Young
employees
aspiring tobecome leaders

Next generation leader
workshop

Executive academy
Examples of lecturers
and themes

Mr. Shunsuke
Takahashi (Liberal arts)

Objective

Key Results

Key Results

Go Wild!

Mr. Hiroyuki Morikawa(Digital society)

Be Innovative!

Mr. Kunio Ito (Human
capital management)

Do Collaboration!

Outsideopportunities

Work experience
Multiple career development
including group companies

Department head and manager
mentoring system

Performance
evaluation

Business contributionlevel

New personnel evaluation system

Systematize leadership education combining training programs and outside opportunities tostrategically develop human resources who can lead reformBlockmanager

Division chief PresidentGroup chief

Business school

Generalmanager

Sectionchief

Sectionchief

Section
chief

Crew

Crew

Crew

Bank
branches

Bank head
officeGroupcompanies

Cross-industry
exchange

Number of training program
participants

237
165
129

FY2020

FY2021

FY202241

Human CapitalManagement Action

Initiatives in Human Capital Management (2) - Fostering a corporate culture that accelerates change

3

Aim to foster a corporate culture that accelerates change by promoting DE&I for autonomous career development and maximizing human resource value

Support for autonomous career development

Accelerate DE&I to maximize human resource value

Systematize support for autonomous career development and help each employee achieve hisor her dreams

Aim to build an environment where diverse individuals respect each otherand can demonstrate their abilities through the promotion of DE&I

KPI

Visualization

Motivate
Career training
Career counseling

My career design sheet
Describe the dreams and visions
that employees want to achieve at
SFG and the position they want totake in order to achieve their dreams
and vision.
Visualize the skills and experience
necessary to realize their dreams

Provide training that supports
diverse career development andcareer counseling by career
counselors

Dispatch to external companies and internal
training (84 persons)Acquire expertise on business succession, digitaltechnology, etc. through dispatch to external
companies and training in specialized divisions
Post challenge/Side job (104 persons)Enable to challenge for a post in a department of yourchoice or have a side job within the company

Number of users: 116

A system that financially supports the development of skills
necessary to achieve your dreams
Support cases◼
◼

Business schools (Graduate School ofManagement, GLOBIS University, etc.)
Qualification preparation schools(certified tax accountant, real estateappraiser)

My career design
systemInitiatives to promote women's
participation in the workforce

Realize
dreamsValue-up system
Meetup system◼
◼

Language schools (Berlitz,
etc.)
Programming schools

Dispatch to local companies (19 persons)
Deepen understanding of management issues
faced by local companies and develop humanresources capable of providing optimal solutions
Transfer system between group companies(103 persons)Regardless of employment status, transfers between
companies are possible

Meetup system

Number of users: 52

A system that supports the expenses to participate in crossindustrial exchange meetings and local events for the purpose ofdeveloping human networks and broadening vision

March 31 2024:22％ or more

Number of female directors in
the entire group companies

Ratio of women in leadership
positions (Including those incompanies entrusted with bankadministrative tasks)
19.6
4
18.5
2

16.1

15.7
FY2018FY2019March 31, 2031: 40% or more

◼ Local events*Note: Cumulative numbers of participants for FY2019 to FY2022.

10
22.2

6
4

17.9

FY202065.3

FY2019FY2020

FY2021

FY2022

Establish childcare-related systems topromote and strengthen participation inchildcare without gender differences•

By eliminating hesitancy to take up
childcare leave and correcting
unconscious bias in balancing family
and work, we maintain an acquisition
rate of 100% for male employees
taking parental leave

11.9
2.8

FY2021

•

7.3

5.0

18.1

16.9

Average No. of days acquired (days)
Acquisition rate (%)
100
100
64.9

22.8

21.3

Maintain an acquisition rate of 100% formale employees taking parental leave

Support cases◼ Cross-industrial exchange
meetings◼ Study sessions and study tours

Ratio of women in
leadership positions

Ratio of women in leadership
positions

Number of users: 348

My career design system

Value-up system

Utilizing the system

FY202242

Human CapitalManagement Action

Initiatives in Human Capital Management (3) - Improve engagement and Well-being

4

Aim to improve employee engagement and well-being through efforts to spread HR system reforms
External evaluations and participation in externalorganizations

Spread of new approaches to the HR system
Introduce My Sustainability Book

Certification related to participation and advancement of women

Created My Sustainability Book and distributed to all employees with the aim of linking the actionsof each employee to management strategy.
Mainly used as a tool for 1-on-1 meetings and each employee will complete the book over the
medium term (5 years) in communication with supervisors.

“Platina Kurumin”
Four companies are
certified as companies thatprovide a higher level ofchildcare support than
Kurumin

Hold town meetings for direct dialog between management and employees to deepen
understanding of corporate philosophy and management strategy.

Four companies are
certified as having aworkplaceenvironment
conducive to theempowerment of
women

Shizuoka Bank

Shizugin Business Create

Shizugin Mortgage Service

Shizugin TM Securities

Shizugin TM Securities

Shizugin IT Solution

Shizugin IT Solution

Certified as 2023 Health & Productivity
Management Outstanding Organization

Establish new sustainability training program“Eruboshi” (3 stars)

One company iscertified as having aworkplaceenvironment for theempowerment of
women that is better
than that of Eruboshi

Shizugin
Business Create

Shizuoka Bank

Hold Town Meetings“Platina Eruboshi”

Newly establish sustainability training for all employees to help them understand the concept of
medium-term management plan and how to effectively use My Sustainability Book.

Joined The Valuable 500* An international initiative aimed atpromoting disability inclusion in business

Satisfaction and understanding of the HR system
Satisfaction with the HR evaluation system in the Employee Engagement Survey has improved since
FY2021, when the HR system was reformed.
(Shizuoka Bank)
HR system is able to fairly evaluate performance

Evaluation and attitude of employees based on facts
item
SFG operates its HR system that fairly evaluates
employees to practice Corporate Philosophy

FY2020

FY2021

FY2022

YoY

2.94

3.12

3.20

+0.08

3.10

3.13

3.18

+0.05

SFG
Shizuoka Bank

Introduced
OKR

Shizugin IT Solution

Shizuoka Bank

43

Initiatives in Human Capital Management (4) - Transformation of Organizational Culture
Help to create a sustainable society by transforming organizational culture to one in which diverse values andpersonalities are combined to solve problems with new ideas.
14th Mid-Term Business Plan

13th Mid-Term Business Plan

✓
✓

✓

✓
✓

✓

Introduced a full flextime system
Expanded work systems for diversity(relearning, life events, etc.)
Extended the age limit for employing
veterans

Enhanced flexibility in the dress code
Expanded flextime and telework(to all staff)
Developed side businesses step by
step

SFG 1st Medium-Term Business Plan

Culture & Wellbeing Innovation 1.0

WSI 3.0 (October 2022-)• Pursuit of the wellbeing of executives,
employees, and their families.
• Respect and maximize diversity.

WSI 2.0 (April 2021-)
Create innovative ideas and new feelings
by promoting diversity, recognizing thevalue of each person, and bringing thebest of their personalities.

(April 2023-)• Maintain the corporate culture and tradition of being
close to the community and customers, while
simultaneously reforming the company’s internal
culture.
• Improve health and wellbeing (deepening healthmanagement, mutual growth of individuals andorganizations through acceptance of diversity).

✓

WSI (July 2019-)
Shift viewpoint from “internal rule” to“customers, community,” establishing anautonomous style of work.

✓

✓

✓

Enhanced leave and work systems forchildcare support
Expanded diversity-related leave andwork programs
Introduced same-gender partnershipsystem
WSI 3.1(in March 2023)(March 2023-)✓✓✓

Hold town meetings between management andemployees
Eliminate titles among executives andemployees
Start the Health Keeper System Trial(In-house physiotherapist for the visually
impaired)
Expand eligibility for using the personal injury
and sick leave system, etc.

44

Addressing Climate Change (1) - TCFD Recommendations
Enhance disclosure and promote initiatives to decarbonize the region
Initiatives related to TCFD Recommendation• Below are the Bank’s responses to 4 recommendations by TCFD

GovernanceTargets◼ Established Group Policy on Environment (Oct. 2022)◼ SFG's Greenhouse Gas (GHG) Emissions Reduction Targets◼ Established Environmental Committee (Oct. 2022)

・ Achieve carbon neutrality by FY2030 (Scope 1 and 2)◼ Sustainable Finance, Environmental Finance◼ Conducted interview with customers on decarbonization (second round,covering about 2,300 companies)

・ Cumulative total of JPY 2tn by FY2030 (including JPY 1tn inenvironmental finance)◼ Promoting sustainable finance◼ Outstanding investments and loans for coal-fired power generation

・ Selected by the Ministry of the Environment for the ESG Regional
Finance Promotion Program (Jul. 2022)
Strategy

・ Received the Gold Award of ESG Finance Award Japan (Feb. 2023)◼ Signed Partnership Agreement with Suzuyo Shoji Co., Ltd. and Shizuoka
Gas Co., Ltd. (Sep. 2022)◼ Funded Japan Green Investment Corp. for Carbon Neutrality (Oct. 2022)

・ Should be zero in or around FY 2040

◼ Results in decrease in GHG emission (t-CO2)
Scope2

Indicatorsand targets

17,682636

16,160619◼ Set Shizuoka Prefecture GHG emissions reduction rate target as an
impact indicator in the first Medium-term Business Plan
17,046

15,541Result15,273

14,677

13,981

516

548

636

14,757

14,12913,345

Forecast

13,001

Scope1
FY2021compared to
FY13-20.9%

4,858

Risk
management◼ Establish policy on investment in and loan to specified sectors (Apr. 2021)• Do not newly invest in and extend loan to coal fired power generation inprinciple

FY2013

FY2018FY2019FY2020

FY2021

FY2022

FY2023

Note: Plan to switch all of the company's contracted electricity to renewable energy sources from FY2023.

◼ Conduct risk and scenario analysis on climate change◼ Calculate the percentage of loans to the four carbon-related asset
sectors◼ Participate in PCAF and estimate GHG emissions of the investees andborrowers◼ Endorse the basic concept of GX League and participate in the league◼ Obtained a "B-" rating in the CDP climate questionnaire (December
2022)

45

Addressing Climate Change (2) - Support for Decarbonization
Develop support for customers with a focus on sustainable finance
Scope 3 (Category 15 (Investments and Loans))

Promoting Sustainable Finance• Target by FY2030 JPY 2tn (Finance related to environment JPY 1tn)
Progress: 23.0% (22.9% is for environment-related financing)• Joined PCAF in November 2022. Calculated GHG emissions of corporate financing clients
Carbon intensity: t-CO2e/mn yen, Emissions: t-CO2e
in accordance with PCAF standards
Carbonintensity

Emissions(Scope 1 & 2)

Industry

Carbonintensity

Emissions(Scope 1 & 2)

Beverages

0.33

2,919

Petroleum and
gas

9.80

2,737,911

Agriculture

6.73

47,461Coal

3.32

12,659Packaged foods
and meat

0.82

219,806

Electric power

11.99

246,061

Paper & forest
products

2.28

594,78012.24

4,550,676

Air cargo

－

0

3.32

269,714

Passenger
transport

4.75

15,080

Building materials

0.11

1,017

Maritime transport

9.81

170,359

Capital properties(Buildings, etc.)

0.34

71,341

Rail transport

1.12

28,271

Property managementand development

0.02

199,539

Truck service

2.73

416,065

Other

0.67

2,216,874

Automotive andcomponents

0.20

121,704

Total

Industry[Cumulative amount of sustainable finance executed］
Finance related to environment(JPY bn)

461.6
361.0
276.5

215.8
113.3
54.7
FY2021

113.7

138.4

162.4

1Q
FY20222Q
FY2022

3Q
FY2022

SDGs Support Guarantee
Program• A guarantee program developed in cooperation
with the Shizuoka Credit Guarantee
Corporation to support companies engaging in
the SDGs.
• Started in April 2022, ahead of other banks• The number of guarantees approved
exceeded approx. 3,200(End of Mar. 2023) (Approx. JPY 102.0bn)

229.7

FY2022

Establish IMM system• Visualize the regional impact and establish an
Impact Measurement and Management (IMM)system, and selected by the Ministry of theEnvironment for the ESG Regional Finance
Promotion Program• Work to visualize and measure the economic
ripple effects of identified impacts to further
spread and promote sustainable finance

Metals andminingChemicalproducts

11,922,235

Future Policies• Consider appropriate support based on sophistication of calculations and results➢ Establish an efficient and accurate calculation system➢ In addition to loan balances, we will identify and analyze key sectors in addressing climatechange based on GHG emissions and carbon intensity, and consider ways to support them.

• Strengthen support for business partners by further promoting sustainable finance46

Addressing Climate Change (3) - Risk management
Recognize the risks associated with climate change and reflect them in strategies for decarbonization initiatives

Risks related to climate change

Carbon-related assets• Classify risks due to climate change based on TCFD recommendations• Assume examples of transition and physical risks for each risk category as
shown in the table below, and work to manage them appropriately•

Risk due to damage fromwind, flooding, etc.

Transition risk
Risks associated with changes in thebusiness environment, including changes inpolicies, regulations, and technologicaldevelopments, as well as risks due to delays
in decarbonization efforts.

Increase in credit-related
expenses due to deteriorating
customers' businessperformance

Decrease in prices of securities
and other assets held

Calculate the percentage of loans to the four carbon-related asset sectors in the Bank's loan balance

EnergyTransport

Materials/Building

Agriculture/Food/Forest Products

Total

2.33%

8.05％

14.09％

4.30％

28.77％

Scenario Analysis
Due to damage caused by wind, flood,etc.

Credit risk

Market risk

Deterioration in the Group's
credit rating and resulting
limitation of market funding
sourcesLiquidityriskHarmful rumors resulting
financial damage

Operational
risk

•
•
•

Increase in credit-related
expenses due to deterioration ofcustomers' businessperformance and damage tocollateral assets

Decrease in prices of
securities and other assets
held
Outflow of deposits due to cash on
hand needs arising from the disasterand difficulty in raising funds in themarket due to turmoil in the financial
markets

Damage to assets held andresulting operational
interruption

Future Policies• Manage appropriately based on the characteristics of various risks and take into
account the impact of climate change.

Conduct scenario analysis for credit risk to visualize the amount of risk
For transition risk, conduct in-depth analysis of automotive industry and enhance the analysis by adding electric
power industry to the scope
For physical risk, newly add small and medium and small sized enterprises and mortgage borrowers in Kanagawa
Prefecture and Tokyo to the scope of the analysis■Transition risk (Initiatives in FY2022)
TargetSectorScenario

MethodAnalysis
Result

Paper
pulp

•
•
•

Manufacture of
motor vehicles
and theiraccessories■Physical risk (Initiatives in FY2022)

Scope ofcoverage

Calculation of creditrelated expenses forbuilding damage andbusiness continuity
risk for small andmedium-sizedbusinesses in
Shizuoka, Kanagawa,and Tokyo

Calculation ofbuilding damage andcredit-related
expenses for
mortgage borrowers
in Shizuoka,
Kanagawa, and
Tokyo

Loan
balances
subject toanalysis

JPY2,525.0bn

JPY2,502.5bn

Scenario

RCP8.5 in the IPCC WGⅡ AR6 (4°C
Scenario)

Analysis
ResultIncrease in credit-related expenses
up to approximately JPY14.8bn intotal by 2050

Electricity
EnergyIEA net zero by 2050 (NZE2050)
IEA/ETP 2017 Beyond 2°C
NGFs Net Zero 2050

Analyze changes in credit costs basedon scenarios, using carbon tax andother forecast data to project changes in
profit/loss and financial position by 2050

Increase in credit-related expenses
up to approximately JPY18.8bn intotal by 2050

47

Initiatives for ESG

Environment

SocialRaise up reduction target of decrease in GHG emission(aim at achieving carbon neutrality in FY2030)

2022/4

Establish target on Sustainable Finance (JPY 2tn in total by FY2030)
Cumulative results through FY2022：JPY461.6 bn (Progress rate to annual target: 23.0％)

2021/10

Join PCAF (Partnership for Carbon Accounting Financials)
Join GX (Green Transformation) League

2022/11

Receive a "B-" rating in the results of the 2022 Climate Change Report by CDP

2022/12Winner of two awards at the ESG Finance Awards Japan in two consecutive years (SilverAward in FY2021 and Gold Award in FY2022)

2023/2

Establish Industrial Transformation Support Project Team

2022/4Sign Japan Impact driven Financing Initiative

2021/11

Join The Valuable 500 *

2021/2

Has held TECH BEAT Shizuoka（Total 8 times）
Established the Shizuoka Financial Group Human Rights Policy

Since 20182023/3* An international initiative aimed at promoting disability inclusion in businessGovernance

Disclose Board of Directors Skills Matrix, field where each member is expected to play an importantrole

2021/12

Transition to holding company structure (Adopted the structure of a company with an audit
committee)

2022/10Introduced the Group Chief Officer system

2022/1048

ESG/SDGs (1) – Contribute to the region
Conduct diverse community contribution activities in line with our basic philosophy of expanding dreams and affluence together with the community
Proactively respond to disaster prevention and disaster mitigation in the region amid the possibility of a major earthquake in the Nankai TroughPromotion of local culture and sports
Regularly hold concerts by domestic and foreign first class artists and events of
Rakugo, Japanese traditional storytelling performance, for people in the region

Facilitate promotion of children sports by supporting tournaments of soccer andbaseball for boys and girls

Business continuity in emergency• Create outline of measures against emergency as abusiness continuity plan
• Establish a system where the Bank can instantly
resume operation in emergency by introducing baseisolation, installing standby generators, and preparing
backup of systems• Build a system to support people in the region in
emergency by utilizing a special room in theheadquarters[Equipment for videoconference(in a special room for emergency)]

Agreement with NTT DOCOMO on service offering
during a disaster• Arrange battery chargers for mobile phones which can be usedduring a disaster in some branches and headquarters• Use the Bank’s headquarters as a site of NTT DOCOMO during adisaster

Measures against tsunami

Education of finance and economy⚫

⚫

⚫

Actively work on education of finance and economy byproviding people with opportunity to learn banks’ role ineconomy and society through study tour in the Bank andlecture by the Bank’s staff
Hold Shizuoka Prefectural tournament of “Economics
Koshien,” a competition on economic and financial knowledge
by high school students
Hold a program where high school students, enterprisemanagers, and the Bank’s staff seek attractiveness of
Shizuoka as part of activity to develop human resources in thecommunity• Deploy life jackets for customers and employees in branches in areas
where people should immediately evacuate when tsunami occurs• Prepare shelters against tsunami which work by floating in branches inareas where altitude is not high enough• Take measures against tsunami when reconstructing branches on thecoast➢ Structure to prevent collapse bytsunami, rooftop higher than
expected height of tsunami➢ Outdoor upstairs to rooftop[Life jackets][Outdoor upstairs to rooftop]49

ESG/SDGs (2) – Region based Relationship Banking
Provide support from various perspectives depending on the growth stage of customers
Support for business restructuring and turn aroundSupport for entrepreneurship and new businesses<Shizugin Entrepreneur Awards>

Support restructuring through building business plans, alliances with external
agencies, and utilizing business regeneration fund

Holding the event in order to expand employment and to activate
economy in the region through support for foundation and new
businesses• The theme for FY2022 (9th) is New Challenges Create a
Prosperous Future for the Local Community (80 entries, 5 award
winners was awarded in April 2023).
• Held 9 rounds in total so far, resulting in 1,229 applicants, 64
winners• Achieved following results compared to the point of winning
through continued support to winners in the past rounds,
contributing to development of local economy•

Changes in the number of projects
No of firms under the projects

58

58

57

54

(Cases)No of projects completed

60

59

Revenue
15

13

12

12

14

14

FY2017FY2018FY2019FY2020

FY2021

FY2022

Has completed business restructuring forabout 300 firms since FY2005

Saves labor opportunities for opportunities
for labor for about 27,000 people and maintaineconomic power in the local community

Credit ratings of customers supported by the Business Support Division in relation to Covid 19 haveturned to increase for performing customers and remained unchanged for those requiring attention or
lower.
Requiring

Requiringattention or
lower 10%attention or
Performing

lower 11%

Performing

20%

17%

Non-performing73%

End of Mar. 2022

Non-Performing69%

End of Mar. 2023

Collaboration on non competitive fields with other financial
institutions within Shizuoka Pref.

•⚫

Established the Industrial Transformation Support Project Team in April 2022 to strengthen thebusiness support system that contributes to sustainable growth of local industries.
Gathering information, researching and analyzing the automotive supply chain to create a supply
chain tree diagram.

+ 433

•

Membership-based service which aims at enhancing ability of next-generation business leaders andcontributing to development of the corporations and economy in Shizuoka Pref.
Cooperation with “Yamanashi Chu-gin Keieisha Club” and "Nagoya Bank Business Club”

Structure of ShizuginshipNo. of members: At the end of Mar. 2023 / 682 corporates, 1,001 people No. of participants inactivities in FY2022: Total 1,179 persons
Collabor
ation

Various eventsand seminars

Providinginformation on
Internet

Advisory board[Leading companies in Shizuoka Pref.]

Requests&
opinions

Support companies
Support for activities

Shizuginship members⚫

No. ofemployees“Shizuginship” training club for the next generation managers

The Bank

Credit rating+ JPY 6.6 bn

Electedamong
members

Strong appreciation andsupport from local
corporates
Growth of next
generation businessleaders
Human network among
members＋ Collaborate
Yamanashi Chugin Keieisha Club members
Nagoya Bank Business Club50

ESG/SDGs (3) – Regional revitalization
Promote regional industry development by working as a coordinator among industry, government, academia and etc., andcontributing to embodying businesses which help the development of the region

Shizuoka Kids Academy

8th meeting to discuss regional revitalization

Aim at developing human resources for regional areas by encouraging local children to learn about theirhome towns in a fun way, fostering a greater attachment to their home towns and encouraging them tolive locally in the future• Held the meeting to share advanced initiatives on regional revitalization within thecommunity and to foster awareness on regional revitalization in Oct. 2022
• Staff in local government in Yamanashi Pref. and Yamanashi Chuo Bank
participated the event this year based on the Shizuoka Yamanashi Alliance. Approx.
600 people participated online.

<Activities in FY2022>
PeriodDetails of the event

May, Aug. @Okushizu Agricultural Experience
Jun.

No. ofParticipants

37@Inatori Omotenashi Experience, etc.

44

@Miho Aquaculture Experience

43

With Agricultural production

130

Sep.

Kids Academy “Tokugawa

Oct.–Jan. Ieyasu Project”

51

Shizugin Idea Competition “Joint LAB.”
Aim at creating new businesses that will lead to the sustainable regional
communities through collaboration among local businesses and organizations
and the Bank
⚫ Held the 1st round in FY2019, attracting 43 applications and resulting in ties
up with 3 applicants in Aug. 2020⚫

◼ The themes of the 2nd round are “Sustainability” and“Diversity & Inclusion”◼ Number of Applications: 67◼ Announced ideas for collaborative projects with threepartners in Dec. 2022 after the first and second roundof selection, and presentation[Lectures]◼Hamamatsu City Flower Green Promotion
Foundation
Director Ms. Konami Tsukamoto◼Mayor of Minami Alps City in Yamanashi Pref.
Mr. Kazumoto Kanemaru◼Mayor of Numazu City
Mr. Shuichi Yorishige

Events for individual business talks
Held event for business talks to attract suppliers hoping to start business with grocery store andpharmacy in both Shizuoka and Yamanashi Pref. in order to expand business and to activateinteraction between the two prefectures as part of Shizuoka Yamanashi Alliance<Results (Jan. 2021–Mar. 2023)>
Total
No. of events

24

No. of application

789

ShizuokaBankYamanashi
Chuo Bank

ー

ー
513

249

No. of
570
343
203
participants
No. of business
819
524
271
talks
*Includes projects not related to Yamanashi Chuo Bank

51

Reference (2)Economy in Shizuoka Prefecture – Economic scale
The economy has a 3% share of the national economy and ranks 10th by prefecture, and its gross prefectural product in Shizuoka
Prefecture is higher than that of the four prefectures in Shikoku and three prefectures in Hokuriku in Japan.
In comparison with the gross domestic product of other countries in the world, on par with Algeria and Hungary.

Shizuoka Prefecture
economic scale

Shizuoka Prefecture indices
Share ofall-Japan

National ranking

Prefectural GDP (FY2019, Nominal)

Population

3.58mil

2.9%

10th of 47 (2022)

Rank

Prefecture/Region(USD bn)

No. of households

1.62mil

2.7%

10th of 47 (2022)

9

Fukuoka Prefecture

183.5

10

Shizuoka Prefecture

164.4

3.1%

10th of 47(FY2019)

11

Ibaraki Prefecture

129.7

－

4 prefectures in Shikoku

136.6

－

3 prefectures in Hokuriku

123.2

Nominal prefectural GDP

JPY 17.8tn

Per-capita income

JPY 3.407mil―

No. of businessestablishments

190K

Amount of shipments ofmanufactured goods, etc.

JPY 16.5tn

Agricultural output

JPY 208.4bn

2.4%

Fishery production volume

250k tons

No. of industrial locations
No. of new housing starts

3.0%

3rd of 47 (FY2019)

10th of 47 (2019)
GDP comparison with countries (2019)
Rank

Country (Region)(USD bn)54

Kazakhstan

181.7

15th of 47 (2021)

55

Qatar

176.4

7.7%

3rd of 47 (2021)

56

Algeria

171.7

49

5.7%

4th of 47 (2021)－

Shizuoka Prefecture

164.4

57

Hungary

164.0

21K

2.5%

10th of 47 (2021)

58

Ukraine

153.9

5.4%

3rd of 47 (2020)*Sources: Economic and Social Research Institute (ESRI)
Cabinet Office, Government of Japan etc.

53

Attractiveness of Shizuoka Pref. (1) – Nature, Sightseeing
Position as distribution hub between Tokyo and Nagoya/Osaka
More convenient in transportation in north-south direction due to open of
Chubu Odan Expressway
Own rich nature such as Mt. Fuji, South Alps, and Lake Hamana
One of the best Japanese sightseeing spots with nature
Rank high in survey of place to hope to relocate in Japan

Mt. FujiSouth Alps
Certified as UNESCO Eco Park

Chubu-Odan Expressway◼ Ranking of place to hope to relocate by prefecture

The Port ofTagonoura

Top in 2022 survey (3 consecutive years)
Popular to all generation

Shin-Tomei Expressway

Ranking of place to hope to relocate
2019

2020

2021

2022

3rd

1st

1st

1st

・ 10th largest lake in Japan・ Famous for marine sports and farming of eels andyoung sardines

Source: Website of public interest incorporated foundation“Bureau of Tourism in Hamamatsu and Lake Hamana”

Izu Peninsula

The Port of
Yaizu

Tomei
Expressway

Certified as a
Global Geopark

Mt. Fuji Shizuoka Airport

Source: Research by NPO “Center for Support to Return to Hometown”

Lake Hamana

The Port ofShimizu

Lake
HamanaSuruga Bay
The Port ofOmaezaki

UNESCO World Heritage Site in Shizuoka Prefecture
Mt. Fuji (Registered in Jun. 2013)

Nirayama Reverberatory Furnaces

Inscribed on the World Heritage List as “Fujisan, sacredplace and source of artistic inspiration”(Registered in Jul. 2015)
Inscribed on the World Heritage List as“Sites of Japan’s Meiji Industrial Revolution: Iron and Steel, Shipbuilding and
Coal Mining”

Source: Shizuoka Prefectural Tourism Association website

Izu Peninsula
Certified as a Global Geopark by UNESCO(April 2018)
Ninth region in Japan to be certified

54

Attractiveness of Shizuoka Pref. (2) – Industry, Economy
Leading “Manufacturing Prefecture” in Japan- Well-balanced industrial structure with transportation machine, medicines and medical devices, music
instrument, etc.
Medical health industry agglomerates mainly in eastern part of the Pref. and various advanced industry
agglomerates in the whole Pref.
Rank high in no. of industrial location every year

Amount of shipments of manufactured goods etc.
: JPY 16,451.3bn 3rd largest in Japan (2020)
Transport
ation
Machine26%

Others28%●STAR MICRONICS●HAMAMATSU PHOTONICS●YAMAHA●SUZUKI ●YAMAHA MOTOR◼ Listed companies with
headquarters within the Pref.

◼ No. of industrial location◼ Industrial structure●SHIBAURA MACHINE*As of the end of Mar. 2023

Rank high in Japan every year
Listing
FY

2017

2018

2019

2020

2021

No.

97

67

78

54

49

Ranking

1st

4th

2nd

3rd

4th

No. of companies

TSE Prime

20

TSE Standard

30

TSE Growth

1

Total

51

Source: Factory Location Trends Survey by METI

◼ Medical health industry
Pulp, Paper
5%◼ Agglomeration of advanced industry

Production amount of medicines and medical devices:
approx. JPY 1tn → 2nd in Japan (2021)
Category

Beverage, Tobacco,
Feed 6%Food
7%

ChemicalIndustry
13%

Electronic
Machine15%

Source: Economic Census by METI

Production
amount(JPY bn)

Next generation cars, Light quantum technology,
Marine biotechnology, and Cellulose nanofiber(CNF) etc.

Ranking

Medicines

699.8

3rd

Medical devices

339.1

1st

Total

1,038.9

2nd

Source: “Statistics of Production by Pharmaceutical Industry” by MHLW andPharmaceutical Affairs Office in Shizuoka Pref.

Source: website of center for next
generation cars Hamamatsu

55

Strategies by Region in the “Group Business Strategy”
Formulate strategies for each region and market, and optimally allocate management resources. Restructure
strategy flexibly based on appropriate profitability analysis and verification.

Formulate strategies by region andmarketDiscover and solve regional problems

Kanagawa (Western part)- Same strategy as Shizuoka

Kanagawa (Other), Western Tokyo- Life planning business with a focus on real estateTokyo, Osaka - Pursue largescale, highly profitable projects• Increase major customers bypromoting to general
corporations and expanding
market share• Reinforcement of capturing real estate-related
market needs• Developing a life-planning business with loans as
the starting point• Increase major customers by
expanding market share ofwholesale transactions

Environment

Economies

Sustainable finance (loans, leases, etc.)

Aichi - Life Plan Business Alliance• Collaboration with the Bank of Nagoya to support industrial
transformation• Developing a life-planning business with loans as the startingpoint
Society

Economies

Industrial Transformation Support
Life-planning Business

Yamanashi - Alliance• Group business growth through alliances• Revitalization of Shizuoka and Yamanashi prefectures as one
economic zone

Economies

Society

WealthEconomies

Venture businessEconomies

Asset-building businessEconomies

Cutting-edge financial services

Shizuoka - All-round support and business development• Focus on consulting services that leverage the Group’s collective strengths by developing
measures and allocating personnel to resolve issues specific to each region.

Life planning

Corporate
Society

Industrial Transformation Support

Society

Environment

Sustainable Finance and Consulting

Economies

Venture Business (Regional Innovation)

Economies

Equity BusinessEconomies

Business Succession and M&A
Business

Economies

Expansion of Group Businesses(Securities, Leases, Guarantees, etc.)
Regional Development and Tourism
Revitalization

Economies

Real estate related businessSociety

Economies

Society

ALM, markets, overseas- Revenue growth• Capture profit opportunities throughappropriate risk-taking

Cashless
Economies

Non-Japanese Loans
Ship Finance

Economies

Market Credit Investment

Economies

Market Management

Economies

ALM Strategy Operation

WealthFinancial and Economic Education
Total Asset Sales(inheritance, asset formation, etc.)
Business Improvement and Turnaround56

Historical data of loans and deposits
Total Loan and Deposit balance (average balance) has maintained increasing trend both inside and outside
Shizuoka pref. since FY2004, and the Bank has received highest level of credit ratings
Total loan balance (average balance)

External ratings(JPY bn)
9,815.0

Portion in Shizuoka Pref.
8,740.1

Shizuoka Financial Group
Rating and Investment Information (R&I)

7,694.2
7,011.5
5,791.3

6,325.6

3,858.5*The rating is down one notch due to structural subordination inherent in a holding company＋4,798.7

5,016.3

3,411.8

4,276.6

4,576.6

4,739.7

5,006.3

5,222.2＋1,810.4
FY2004

FY2007A+*

FY2010FY2013

FY2016FY2019Shizuoka Bank
Moody’s

A1

S&P Global Ratings

A-

Rating and Investment Information (R&I)

AA-

FY2022

Deposit balance (average balance)(JPY bn)

11,441.0

Portion in Shizuoka Pref.

Moody’s Long-Term Ratings (As of the end of Mar. 2023)

9,914.0
8,408.6

9,049.1

7,615.6
6,678.6

5,574.6

6,759.2

5,834.3

A1

Shizuoka Bank, MUFG Bank, and Sumitomo Mitsui
Banking Corporation, Mizuho Bank, Chiba Bank and 7
other banks

A2

Resona Bank, Bank of Yokohama, and 4 other banks(including 2 regional banks)

A3

The Bank of Fukuoka, Joyo Bank, and 4 other banks(including 4 regional banks)＋4,762.4

6,407.9

7,045.1

7,692.1

8,613.4

9,861.3＋4,286.7
FY2004

FY2007FY2010FY2013

FY2016FY2019FY202257

Loans – Loans by industries deposits
Expected Loss (EL) for all industries: JPY 11.3 bn and Unexpected Loss (UL) for all industries: JPY 91.4 bn
Contemporary status of business loans to particular industries
Credit balance vs. expected loss rate*

Credit balance (as of the end of Mar. 2023)(JPY bn, %)Composition
ratio

Balance

Change from theend of Mar. ’22(JPY bn)

Excluding borrowers classified as“practically bankrupt” and below

1,050.0

Real estate
950.0

All industries

6,732.7

100.0+408.8850.0

Transportation
machinery
Wholesaler (*2)

997.9

14.8

+113.6
750.0

509.4
486.8

7.5
7.2

-7.6
+57.1

Credit balanceReal estate (*1)

650.0

550.0

Leasing

401.7

5.9

+19.7

Money lending
and investment

358.6

5.3

+41.2

350.0

Retailer

289.3

4.3

+5.7

250.0

Construction

293.7

4.3

+17.8

150.0

Accommodation

88.7

1.3

+0.9

50.0

Wholesaler
Transportation machinery

450.0

Leasing
Money lending and investment
Retailing0(*1) excluding apartment loans and loans for asset building(*2) excluding a general trading companies

0.4

Expected loss amount

0.8

(%)

*Expected loss (EL) amount / Credit balance

58

Operation process reform
Aim to enhance productivity and to build new sales structure by promoting BPR, RPA, and sales structure reform

Management
policyMajor process
reform

Improvement ofefficiency andproductivity

FY2005 - FY2010

FY2011 - FY2016

9th Medium-term Business Plan 10th Medium-term Business Plan

11th Medium-term Business Plan 12th Medium-term Business Plan

FY2017 - FY2019

Enhancement of productivity offront-office workload
Establishment of new work styleStandardization, centralization,systematization of back-office
workload

13th Medium-term
Business Plan

14th Medium-term
Business Plan

3 structural reforms
Continuation of growth strategy

Reform of business modelWork style reform
Change of personnel
in charge of business

Reinforcement of
housing loans
sales

Relocation of staff at backoffice to front office

Small branch specializing in retail

FY2020 -Digitaltransformation

Realization and expansion of “digital branch”

Branch focusing on consulting

Branch specializing in front function

Sales structure reform
Utilization and expansion of RPA

Centralization andspecialization ofoperation

Auto navigation in loan operation

Auto navigation in branch operation

Digitalization in branch operation

Writing less/seal less

Shift to “5 less” at branches*

Major achievement so far
Backoffice workload
at branches

Reduced by 57%(Comparison between FY2007 andFY2010)

Relocation ofstaff at back-office tofront-office

Reduced by 63%(Comparison between FY2010 and
FY2013)

Increased front- office
employees

Expand businessas well as enhance
productivity

while reducing total employees* Including temporary employees(person)Time to process
workload on
housing loans*Paperless, Seal-less, Cashless, Counter-terminal-less, Counter-less

End of Mar. 2008

End of Mar. 2022

Increase/
Decrease

Front-office at branches

2,411

2,701

＋290

Back-office at branches

1,693

792

-901

Shizuoka Bank*

5,164

3,493

-1,671Compared to FY2004
Average balanceof loan

x 2.0(FY2022)

Consolidated
ordinary profit

x 1.5(FY2022)59

Sales structure reform (13th Medium-term Business Plan - 14th Medium-term Business Plan
) Provide high-quality financial services in the unit of Area through sales structure reforms, further enhancing
customers' convenience and satisfaction, and conduct a review of ATM network

Sales Structure Reform (FY2018-2022)
Traditionally

Achievements

Area

Branch with fullbanking function

Areas where the reform
was conducted

Approx. 90%

Branches decreased-23 branches

Review of branch function

39 branches

Branch closing at noon

35 branches

Personnel reallocation

269 staff

Branch-managing cost reduced

JPY -2.0bn

All branches provide full banking function

After Sales Structure Reform

Result by FY2022

Area
Relocation of stores to public facilities/Review on ATM network
Merge

Branch with fullbanking function
Branch with fullbanking function

Life Design Station

Integrate consumer
loan business

Integrate
personnel• Relocated and opened the Asaba Branch in the Asaba Shopping Town “PADDY”
Continue to exist with lighter branch functions and maintain a network of locations(Nov. 2022)• Form appropriate ATM network based on situation of utilization[Historical data of no. of ATMs (both inside and outside branches)]-243 (-25%)

Branch withspecific function

Provide full banking function in the unit of Area

～
～

958
End of Mar. 2017

Reduction Effect
JPY - 0.4bn(total until Mar. 2024)

724

715

End of Mar. 2023

End of Mar. 2024
(prospects)

60

Goal through the “Transformation Strategy”
Aiming to optimize the channel and branch networks, improve productivity, and increase the value of humanresources by correlating the transformation of each area
FY2023

FY2027Development of digital
infrastructure

Phase

Recruitment and development of digital
human resources

Human
Resource X

Expenses X
Human capital
investment

Reform operations and strengthen
sales force
Developing and reallocating humanresources to solve problems and create
value
Back-office staffing generation

Operational efficiency

System maintenance

Review of workflows in linewith digitization

Personalized Apps

Digital Platform(individual andcorporate)

Personal Site
Contact Center
Corporate Portal Site

Dataaccumulation
Platform to analyze
and utilize data

Expenses X
Reduction of branch costs
Branch investment

System investment

Touch Point(Customer
Contact) X

Face-to-face and non-face-to-face
optimization

UI/UX
improvement

Data utilization
Digitalmarketing

Optimized channel
and location
networks

Consolidation of sales
officesFace-to-face◆ Decrease in window
processing work
◆ Decrease in the no. ofcustomers

Non-face-to-face◆ Increased use of digitaltransaction

Set up optimal touch points byconsolidating sales offices, etc.,
in accordance with customer
trendsPractice high value-added sales
through consolidation of sales
offices

Improved
management
efficiency andoperational
productivity

Face-to-faceValue creation and problem
solving practices

A data-driven
approachNon-face-to-faceCovers routine transactions

Improved humancapital value

Generating time for sales

Sales X
New system to assist sales
Group company OA(common infrastructure)

Improved productivity of sales
activities

Improve the sales levelof the entire organization

Knowledge sharing

61

Allocation of risk capital
Risk capital
allocated(JPY bn)

Allocation source

Credit risk
296.0

Market risk
335.3

Ratio of risk
capital used

Loan (Credit risk)

211.3

128.2

60％

Treasury division

408.1

119.5

29％

(111.5)(12.5)(11％)(strategic shareholdings)

Core capital
JPY 778.2bn

Risk capitalused

Subsidiaries of holding
company, etc.
(Excluding Shizuoka Bank)

2.7

11.9
4.1

Subsidiaries of Shizuoka Bank(End of Mar. 2023
basis)

Strategic investments
12.0
Operational risk
24.2
Buffer capital, etc.
110.7

56％

Strategic investments

12.0

7.4

61％

Operational risk

24.2

24.2

100％

Sub total

667.5

286.0

42％

Buffer capital, etc.

110.7

－

－

778.2

－

－

Total

・Core capital = CET1 (excluding valuation difference on available-for-sale securities) <Fully-loaded basis>・Risk capital amount = <Market risk> │VaR│<Credit risk>(1)│UL│ (loan balance includes bad debt written off, CVAs)(2) Basel III capital requirement amount (designated loan claims, securitization transactions, investment funds, and private placement REIT)<Operational risk> Amount equivalent to operational risk
・Buffer capital is kept aside for emergencies such as the anticipated Great Earthquake and other unquantifiable risks62

Group companies (Excluding bank)
The total ordinary profit of group companies (excluding Shizuoka Bank) in FY2022 was JPY 9.3bn(down JPY 0.3bn YoY)
Company nameBusiness(JPY bn)
FY2022
Ordinary Profit

YoY change

Shizugin Management Consulting Co., Ltd.

Corporate and financial management advisory services
Bill collection services

0.5

-0.1

Shizugin Lease Co., Ltd.

Leasing

1.6-0.0

Shizuoka Capital Co., Ltd.

Public-offering assistance
Support for corporate rehabilitation

0.3

+0.0

Shizugin TM Securities Co., Ltd.

Securities

1.8

-0.5

Shizugin IT Solution Co., Ltd.

Computer system development and operation

0.3

+0.0

Shizugin Credit Guaranty Co., Ltd.

Guarantee of housing loans, etc.

4.1

+0.3

Shizugin DC Card Co., Ltd.

Credit card and guarantee of consumer loans

0.9

-0.0

Shizuoka Bank (Europe) S.A.

Finance and securities-related services

-0.3

-0.2

Shizuoka Liquidity Reserve Ltd.

Purchases of monetary receivables

0.2

+0.2

Shizugin General Service Co., Ltd.

Fee-based job placement service, general administration

0.0

-0.0

Shizugin Mortgage Service Co., Ltd.

Appraisal of real estate for loan collateral
Operation center for loans

0.0

+0.0

Shizugin Business Create Co., Ltd.

Operation center for remittance and bill collection
Part-time employee management

0.0

+0.0

Shizugin Heartful Co., Ltd.

Making, printing and binding of documents

0.0

-0.4

9.3

-0.3

Subsidiaries of Shizuoka Bank

Total excluding Shizuoka Bank (13 companies)(Ref.) Affiliates under equity method of accounting
Shizugin Saison Card Co., Ltd.

Credit card, prepaid card, and guarantee of consumer loans

0.2

+0.1

Monex Group, Inc.

Holding stocks of companies practicing securities and so on

* 4.7

-16.1

*Profit before income tax 63

Shareholder return – Share buybacks (Time series data)
210 million shares (26.1% of shares outstanding before the initial retirement in 1997) have been retired by FY2022
We plan to cancel 10mil shares on May 31th 2023

FY1997
FY1998FY1999FY2000FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008FY2009FY2010FY2011FY2012FY2013
FY2014FY2015FY2016FY2017FY2018FY2019FY2020
FY2021
FY2022
Total

Sharesbought backRepurchaseamount of shares

Number of sharescancelled

Cancellation
amount(thousand shares)(JPY mil)(thousand shares)(JPY mil)

7,226
6,633
8,357
24,954
8,234
29,928
10,712－－－
10,000－5,000
20,00020,00010,00020,00010,000
4,767
10,00010,00010,00010,000－10,00010,000255,811

9,997
9,142
9,143
23,281
8,267
23,107
8,566－－－
12,621－
3,996
14,98014,575
8,239
22,642
11,315
6,999
8,496
9,736
10,069
8,623
－
8,759
10,000242,557

7,226
6,633
8,357
24,9548,234－
30,000－－－10,000－5,000
20,000－20,000－－－20,000－30,00010,00010,000－ー
210,404

9,997
9,142
9,143
23,281
8,267－
23,381－－－
10,130－
4,638
15,957－
14,953－－－
20,578－30,530
10,1399,619－－
199,758

Shareholder
return ratio

EPS

BPS

DPS

<Consolidated><Consolidated><Consolidated><Consolidated>

(Yen)

(Yen)

(Yen)

(%) (*)

－
84.1
52.6
150.3
170.5
222.1
50.2
16.9
21.4
24.3
62.6
69.7
39.8
65.7
63.0
31.5
69.3
42.4
40.2
70.6
44.3
49.1
54.9
32.9
56.2
51.1
－

20.4
20.8
33.4
24.0
10.0
17.1
37.6
50.0
46.6
53.4
49.3
18.6
46.9
52.9
56.3
87.5
74.1
80.3
77.8
48.0
83.7
79.3
67.2
76.0
73.3
92.9
－

587.6
632.2
652.8
792.0
742.5
722.3
833.4
878.8
1,024.6
1,086.0
1,003.8
909.2
1,005.4
1,024.6
1,109.7
1,242.1
1,290.1
1,500.2
1,500.3
1,545.6
1,669.0
1,738.5
1,727.1
1,922.6
1,926.0
2,050.7
－

6.0
6.0
6.0
6.0
6.0
7.0
7.0
8.5
10.0
13.0
13.0
13.0
13.0
13.0
13.5
15.0
15.5
16.0
20.0
20.0
21.0
22.0
22.0
25.0
26.0
30.0
－

*Consolidated financial statements have been prepared since FY1998

64

This document includes statements concerning future business results.
These statements do not guarantee future business results, but contain risks
and uncertainties.

Please note that future business results may differ from targets for reasons
such as changes in the business environment.
Note: As a rule, financial amounts in this report are rounded to the nearest unit. Figures in the graphs thatshow year-on-year comparisons are calculated in the tables.

Contact
Shizuoka Financial Group. Corporate Planning Department (Yukimasa Okumoto)
TEL: 054-261-3111 (main) 054-345-9161 (direct)

FAX: 054-344-0131
E-mail: ir@jp.shizugin.com URL: https://www.shizuoka-fg.co.jp/
Shizuoka Financial Group
Website (IR News)

65