Shizuoka Financial Group

Summary of FY2023
Interim Financial Results

November 2023
Clearing the way
to a new era

Contents

1. Summary of FY2023 Interim Financial Results

2.

Progress on First Medium-term Business Plan
(Efforts to Increase Corporate Value)

p. 3 -

p. 17 -– Efforts to raise ROE

p. 19 - 25

– Medium-/long-term growth strategy

p. 26 - 29

3. Capital Policies

p. 30 -

4. Reference Materials

p. 34 -

2

Summary of FY2023 interim financial results (consolidated)
YoY change*1

FY2023 1H(JPY bn, %)Gross operating
profitUp in second
consecutive period

Increase/decrease

Impact on interim financial results of September 2023 revaluation of fixed assets

Increase/decrease (%)

Amount of impact

After deducting
impactKey factors

85.1

+3.9

+4.8

–

49.9

+1.5

+3.1

−0.2

1.0

+0.7

+211.3

–

36.1

+1.9

+5.6

+0.2

Credit-related costs (−)

2.2

−2.0

−47.4

–

Gain (loss) on stocks

21.5

+12.2

+130.9+15.0

6.5 Impact minimized via gains on sale of cross-

55.4

+16.5

+42.4

+15.2

40.2 recording of future costs, etc.

Extraordinary profit (loss)

−19.3

−19.3

–

−19.2

−0.1  Extraordinary loss: JPY 19.2bn

Net income before taxes

36.1

−2.8

−7.1

−4.0

40.1

Total income taxes (−)

11.4

+0.7

+6.8

+0.4

11.8

24.8

−3.5

−12.2

−3.6

28.4 −JPY 2.6bn)

4.3

−0.8

–

Operating expenses (−)
Share of profit (loss) ofentities accounted for using
equity method

Net operating
profit*2

Up in second
consecutive period

Up in second
consecutive period

Ordinary profit

Net income*3

Down for the first time infour periods

ROE*1 For FY2022 1H and earlier, consolidated financial results of Shizuoka Bank
*2 Net operating profit = net operating profit for Shizuoka Bank (nonconsolidated) + consolidated ordinary profit –ordinary profit for Shizuoka Bank (nonconsolidated)*3 Net income attributable to owners of the parent–
50.1 Depreciation expenses on subject assets for–one month decreased.

 Depreciation expenses: −JPY 0.4bn (forSeptember 2023)
35.9  Sized-based tax: JPY 0.2bn–
shareholdings, together with early lump-sum
 Gain (loss) on stocks: +JPY 15.0bn(Projected FY2023 2H depreciation expenses:(JPY bn, %)[Reference:
Excluding the above
key factors]

Progress (%)
FY2023 1H

YoY change

vs. figures announced
May 2023

Consolidated ordinary
profit

40.2

+1.3

50.2

Consolidated interim net
income

28.4

+0.2

50.7

3

Results for major Group companies (1)Shizuoka Bank Nonconsolidated
YoY change
FY2023 1H(JPY bn, %)1

Increase/decrease

Increase/decrease (%)

77.4

+3.7

+5.0

62.7
13.3
0.4
1.1
(2.2)
(−1.6)

+0.5
+2.2
−0.5
+1.6
(+9.5)(−8.1)

+0.7
+19.9
−56.7
−326.4(−129.2)(−124.6)

Expenses (−)

45.1

+1.1

+2.4

Actual net operating profit *

32.3

+2.6

+8.9

Provision for general allowance for loan losses
(−)

−0.8

+0.6

−42.8

33.1

+2.0

+6.5

19.4

+14.6

+304.9

2.4
21.5

−2.9
12.2

−54.3
+132.4

52.5

+16.6

+46.3

Extraordinary profit (loss)

−20.7

−20.7

–

Net income before taxes

31.8

−4.0

−11.2

Total income taxes (−)

9.8

+0.7

+8.0

22.0

−4.8

−17.7

1.6

−2.3

−59.1

Gross operating profit
Net interest income
Fees and commissions
Trading income
Other operating profit(Income related to JGBs and other bonds)(Foreign exchange trading profit)

Net operating profit

2

Nonrecurring profit and loss

Bad debt written-off (−)
Gain (loss) on stocks
Ordinary profit

Net income
Credit-related costs (−)

3

4* Actual net operating profit = net operating profit + provision for general allowance for loan losses

1 Gross operating profit➢ Net interest income:Up due mainly to increase both in interest on loans
in the domestic business segment and in interestand dividends on securities➢ Fees and commissions: Fees and commissions related to lending andconsulting increased➢ Other operating profit: Transitory factors, such as losses on sale of foreign
bonds and foreign exchange trading profit recordedin the previous fiscal year, have been eliminated2

Net operating profit➢ Up despite increases in non-personnel expenses, thanks to higher
gross operating profit

3

Ordinary profit➢ Up due mainly to gains on sale of strategic shareholdings simultaneously
recorded with revaluation of fixed assets, in addition to higher grossoperating profit

4

Net income➢ Down due mainly to early lump-sum recording of future branch-related
costs as extraordinary losses

4Results for major Group companies (2)Striving to link autonomous growth to enhancements in Group functions by leveraging the strengths and distinguishing features ofeach company to deliver solutions to community challenges under the holding-company structure

Shizugin TM Securities Co. Ltd.

Shizugin Management Consulting Co. Ltd.

Striving to achieve further enhancements in earnings foundations through growth of stock revenues,
such as those from investment trust and wrapped products(JPY bn)

FY2023 1H

Gross operating
profitYoY change

3.6

Expenses (−)
Ordinary profit
Net income[Trends in assets under management] (JPY bn)

+0.1

2.6
1.0
0.7

+0.2
−0.0
−0.0

(JPY bn)

0.7

+0.2

Expenses (−)

0.6
0.2
0.1

+0.2
−0.0
−0.0

477.7

565.8

Equities

156.7
355.5

186.6
320.4

Ordinary profit

FY2022 1H

FY2023 1H

Net income

Other

Shizugin TM Securities holds the top spot among
regional bank-affiliated securities companies in termsof both sales and profit.

2.2

Gross operating
profitWrappedproducts

Transforming to an asset management business
resistant to market fluctuations that uses trust fees
(stock revenues) to cover labor costs

2.3

YoY change

1,030.1

Compared to other regional bank-affiliatedsecurities companies

2.2

FY2023 1H(JPY bn)

1,118.5

Investment
trust

Transforming the earnings structure

Stock revenues > Labor costs

In addition to launching operations related to J-Credits, numbers of new mergers andacquisitions and other projects are increasing.
Enhanced midcareer hiring and other efforts increased staffing to about 50.

Shizugin Lease Co. Ltd.
FY2023 1H

YoY change

Gross operating
profit1.6−0.0

Expenses (−)

0.8
0.9
0.6

−0.1
+0.1
+0.1

(JPY bn)

Ordinary profit
Net income

1.2

1.1

0.5

2.3

2.0

0.0

1.4
1.1
FY20200.0

1.3

FY2021

FY2022

Stock revenues

FY2022
1H

2.0

4.0

6.0

Labor costs

Net Operating Profit (JPY bn)* FY2022 results

44

30
50

82

44

56

FY2022 1H

FY2023 1H[Trend in balance of lease claims]
Balance of lease claims(JPY bn)

116.0

118.9

FY2023 1H

Shizuoka Capital Co. Ltd.
Focusing on IPO investment through venture-capital funds and on business succession
support for community firms[Venture-capital investments](JPY bn)

FY2023 1H

YoY change

Gross operating
profit0.3−0.0

Expenses (−)

0.1
0.1
0.1

+0.0
−0.0
−0.0

Ordinary profit

-1.0

M&A

124

FY2022 1H

8.0

-0.5
FY2023
1H

Net Profit (JPY bn)

Shizugin TM Securities

Net Operating Profit: JPY 6.8bn
Net Profit: JPY 1.2bn

182

Management
supportBusiness
succession(Projects)

Growing lines of business by enhancing product lines that contribute to finding solutions tocommunity challenges, including launching carbon-offset leases[Comparisons of financial results for 27 regionalbank-affiliated securities companies]
1.5

1.0

[Trends in consulting projects]

Net income

Investment amount (JPY bn)
Number of investments

0.8

0.5
10

14

FY2022 1H

FY2023 1H

5Net interest income (Shizuoka Bank nonconsolidated)
Steady growth in domestic net interest offset declines in the international segment, maintaining a growth trend for total net interest
income.

Breakdown of net interest income(JPY bn)

FY2021 1H

Loan balance (average balance) and yields

FY2022 1H

FY2023 1H

Domestic

61.8

62.2

62.7

+0.5

56.0

56.4

57.9

+1.5

Interest on loans

44.6

44.9

46.3

+1.4

Interest and dividend on
securities

11.2

10.9

11.6

+0.7

(Bonds)

0.9

1.8

4.3

+2.4

(Investment trusts)

2.4

0.7

0.4

−0.3

0.6

0.5

0.6

+0.2

0.6

0.5

0.4

−0.1

Other

0.8

1.1

0.7

−0.4

International

5.9

5.8

4.7

−1.1

4.2

9.6

22.3

+12.7

4.1

6.4

12.5

+6.1

(Bonds)

2.3

3.8

12.2

+8.3

(Investment trusts)

1.0

0.8

0.0

−0.8

2.6

11.3

37.7

+26.3

Net interest income
Domestic

Funding costs (−)(Interest paid on
deposits, etc.) (−)

Interest on loans
Interest and dividend on
securities

Funding csots (−)(Interest paid on
deposits, etc.) (−)
Other

International

YoY change
Average balance

4.7

19.8

+15.1

0.1

1.1

7.7

+6.6

Average balance+365.6

Yields+38.1

Yields9,413.0+287.5715.5

9,047.4

677.4

8,759.9+110.9

6.20%

566.5

1.01%

0.99%

2.83%

0.98%
1.49%

FY2021 1H

FY2022 1H

FY2021 1H

FY2023 1H

FY2022 1H

FY2023 1HInterest on loans
International(JPY bn)

Domestic

+5.8

0.6

(JPY bn)(JPY bn)

54.6

48.8
4.2

+5.4

9.6

44.6

+0.3

44.9

+13.9

68.5

+12.7

22.3

+1.4

46.3

[Key factors underlying changes
in interest on international loans]
Balance factors:−JPY 0.0bn
Interest-rate factors: +JPY 11.7bn
Forex factors:+JPY 1.0bn[Key factors underlying changes
in interest on domestic loans]

Balance factors:+JPY 1.8bn
Interest-rate factors: −JPY 0.5bn
FY2021 1H

FY2022 1H

FY2023 1H

6

Loans (Shizuoka Bank nonconsolidated)
The total loan balance (average balance) increased due to growth mainly in loans to SMEs and retail loans (+4.1% annual).

Loan balance (average balance)

Loan balance (by region)(JPY bn)(JPY bn, %)Total loan balance

FY2023 1H

YoY change

10,128.6

Annual rate

+403.8

Shizuoka Pref.

4,085.6+252.2+6.5%

Loan balance to large andmedium-sized enterprises

1,870.7

+6.3

+0.3%

Retail loans

3,790.4+144.0+3.9%

Loan balance in foreign
currency

668.0

+26.8

+4.1%

9,326.4
205.3

Bank as a whole
Shizuoka Prefecture+398.4+14.3

4,269.5+329.4

4,598.95,202.2+59.9

5,262.1+47.9+336.4

5,188.0+14.2

FY2021 1H

FY2022 1H

FY2023 1H

Share of loans in Shizuoka Prefecture+252.2(JPY bn)

4,085.6

3,833.4

267.5

253.2

(%)

Term-end balance of so-called “Zero-Zero loans”
Sept. 30, 2023: JPY 156.8bn(Down JPY 45.9bn YoY)+185.6

10,128.6

9,724.8

3,933.1

Balance factors: −JPY 2.0bn
Forex factors:+JPY 28.8bn

SMEs loan balance (average balance)

Overseas+403.8+4.1%

Loan balance to SMEs

Outside Shizuoka Pref.

Shizuoka Bank

32.3

34.2

36.8

36.4

28.9

27.9

34.8

36.8

36.7

36.9

29.7

29.8

3,647.830.5

2,238.0 +10.2+58.9
2,248.2

2,307.1

12.4

29.2
11.3

8.7

8.3

27.2

27.7

8.8

9.1

Shinkin banks

11.7

11.6

Megabanks
FY2021 1H

FY2022 1H

FY2023 1H

FY2004

FY2007FY2010FY2013

FY2016FY2019FY2022

Aug. 2023

7

Home loans, apartment loans, and other (Shizuoka Bank nonconsolidated)
The balance of home loans, apartment loans, and other loans continued to grow. Revenues including loan-related fees and commissions grew by JPY 1.5bn YoY.
Opened the new Tachikawa Loan Center to promote residential lending in Tokyo area, responding to robust funding demand.

Home loan and apartment loan balances by region (term-end balances)Term-end balance
3,806.1
Unsecured loans+169.4

3,975.5+187.0(JPY bn)

Home loans

2,403.4+128.52,531.9+138.32,670.2

383.4

1,723.8
1,704.2
+19.6
+29.0

653.8

+99.6
1,675.2

Loans for asset
building

200.0

195.5

188.7

Apartment loans

1,037.2

1,089.4

1,145.6

Other

72.9

61.9

52.4

Sept. 30, 2021

Sept. 30, 2022

Sept. 30, 2023

Sept. 30, 2021

Interest amounts, fees, and rates

Loan-related fees
and commissions
Unsecured loans

Home loans

Loans for asset
building
Apartment loans
Other

27.0

26.6

2.0
2.9

1.9
2.8
12.3

670.1

664.0

+10.2

Sept. 30, 2021

Sept. 30, 2023

475.5

+50.1

+6.1

Sept. 30, 2022

Sept. 30, 2023

(JPY bn)

28.5
3.1
3.0

12.4

12.5

1.313%

1.270%

1.236%

3.5

3.4

3.3

5.8
0.5

6.0
0.3

6.4
0.3

FY2021 1H

FY2022 1H

FY2023 1H

Average rate

425.4

+42.0

Delinquency rate and occupancy rate
+1.5

+0.4

Sept. 30, 2022

1,145.6

1,089.4

1,037.2

946.4
827.7
+118.7728.1(JPY bn)

Shizuoka Pref.
Outside Shizuoka Pref.

2,670.2

2,531.9

2,403.4
Home loans

Apartment loans(JPY bn)

Shizuoka Pref.
Outside Shizuoka Pref.

105.7

96.8

92.7

4,162.5

Delinquency rate
(three months or longer)

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2023

Home loans

0.13%

0.10%

0.11%

Apartment loans

0.16%

0.04%

0.03%

Loans for asset building

0.18%

0.43%

0.49%

Rental property
occupancy rate

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2022

Shizuoka Pref.

92.5%

93.5%

94.0%

Outside Shizuoka Pref.

93.3%

94.1%

95.1%

8

Deposits (Shizuoka Bank nonconsolidated)
Continued growth in balances of both corporate and retail deposits (average balance) (+3.0% annual)

Trends in deposit balance (average balance)

Deposit balance (by region)
Shizuoka Pref.
Overseas(JPY bn, %)FY2023 1H

YoY change

11,765.2

Total deposits

Annual rate

+348.1

Outside Shizuoka Pref.
Share within prefecture+249.3

11,167.8+3.0%

10,044.2+201.3+2.0%

Corporate deposits

3,055.7+135.1+4.6%

Retail deposits

7,676.8

+94.5

+1.2%

Public deposits

354.2

−2.4

−0.6%

1,149.5

9,592.1

+43.9

137.7

1,181.7+32.2+250.89,842.9

11,167.8
2,949.7

Public, overseas, etc.

+249.3+348.1

11,417.1
2,920.6-29.1+135.1

7,582.3+240.6+94.5+201.3

10,044.2

Share within
prefecture(term-end basis)

FY2022 1H

FY2023 1H

Loan-deposit ratio / security-deposit ratio (excluding NCDs)(%)(JPY bn)

11,765.2
3,055.7

Loan-deposit ratio + security-deposit ratio

116.8
104.3

85.7
7,341.7

1,254.6* As of August 31, 2023

+46.7%

Deposit balance (average balance)
Retail+72.9

38.3% *

37.5%

FY2021 1H

Corporate

466.4

392.5

37.4%

NCDs

11,765.2

11,417.1

426.2

Deposits in
Shizuoka(JPY bn)+348.1

7,676.8

876.4

914.1

1,032.8

FY2022 1H

FY2023 1H

88.9

114.4

88.0

105.3

101.0

106.0

109.4

85.0

88.1

85.7

86.0

75.1
Loan-deposit ratio

29.2

FY2021 1H

113.5

FY200431.2

FY200724.6

26.4

FY2010FY2013

Security-deposit ratio

20.3

FY201612.9
FY201920.2

FY202223.3

FY2023 1H

9

Securities (Shizuoka Bank nonconsolidated)
Restructured the portfolio to improve overall yields with the goal of securing stable revenues over the medium to long term amid dramaticallychanging domestic and international market conditions.
Maintained valuation gains of JPY258.5 bn for securities as a whole

Gains and losses on securities

Securities[Breakdown of bonds]

Government-guaranteed bonds:
Corporate bonds:(Private placement bonds:
Financial institution bonds:
Corporate bonds held to maturity:

2,947.7(JPY bn)

JPY 31.0bn
JPY 233.2bn
JPY 25.9bn)
JPY 173.8bn
JPY 40.9bn+82.9(JPY bn)

437.0
447.6

Foreign bonds(variable)
Foreign bonds(fixed)Investment
trustsOther−1.1 (−1.0)

3.5

0.8

−2.6

−7.3
7.5
14.8

2.2
13.1
10.9

+9.5
+5.6
−3.9

Gains and losses on equities

9.2

21.5

+12.2

Gains on sale

9.3

21.5

+12.2

Losses on sale and amortization (−)

0.0

0.0

−0.0

825.7

−28.8

Income related to JGBs and other bonds

+17.0

252.9

496.0

−17.2

478.8

457.4

−4.1

453.3

(201.5)+86.5(229.5)

534.5
4,136

(391.6)

+16.2
+13.2

269.0
129.7

245.3

Equities

0.4 (−0.5)

Investment trusts (gains [losses] on
cancellation)

Gains on sale

235.9

Corporatebonds

1.5 (0.5)

Foreign bonds

640.7

Municipal
bonds

+6.8
+2.4
+8.3

Investment funds

854.5(233.6)(333.0)(224.8)

268.3
93.8

252.8
116.5

Sept. 30, 2022

March 31, 2023

YoY change

24.0
4.3
12.2

JPY bonds

3,030.6

FY2023 1H

17.2
1.8
3.8

Interest and dividends on securities

2,591.1
JGBs

FY2022 1H

Losses on sale and redemption (−)

2,437
621.0*

Gains and losses on revaluation of securities(JPY bn)Sept. 30,2022

March 31,2023

Sept. 30,2023

After hedging

vs. March 31,2023

Gains and losses onrevaluation of securities+273.7+325.8+258.5+274.8−67.2* Balance on Sept. 30, 2023 includes JPY 36.6bn transferred from Shizuoka Bank (Europe) S.A.

Equities+319.4+355.5+354.9−−0.7[Average holding period (excluding bonds hedged against interest-rate fluctuations)]

Yen bonds

−13.3

−9.9

−49.8

−48.0

−39.8

Foreign bonds

−41.3

−32.5

−64.5

−50.1

−32.1

Sept. 30, 2022

Sept. 30, 2023

March 31, 2023

* Excluding futures

Sept. 30, 2023

JPY bonds

6.40 years

6.12 years

7.34 years

Investment
trusts

−3.9

+0.2

+3.6

−

+3.4

Foreign bonds*

2.65 years

2.48 years

2.52 years

Investment
funds, etc

+12.9

+12.5

+14.3

−

+1.9

10

Fees and commissions
Fees and commissions and trading income continued to grow, due mainly to consulting fees earned by demonstrating Group functions.

Fees and commissions

Wholesale fee income (Shizuoka Bank, Shizugin Management Consulting, Shizugin Lease)[Consolidated] Fees and commissions

15.7

19.1

YoY
change22.2+3.1[Shizuoka Bank nonconsolidated] Fees andcommissions

7.8

11.0

13.3

(JPY bn) FY2021 1H FY2022 1H FY2023 1H

3.6
0.8
1.0

1.1

0.6

0.7

1.0

1.2

1.0

1.0

FY2021 1H

FY2022 1H

FY2023 1H

1.2

15.9

17.1

19.0

+1.9

Fees and commissions expenses (−)

8.1

6.1

5.7

−0.3*

Solutions-related* Including a decrease of JPY 0.5bn due to increased group trust dividends

Ordinary profit(Shizugin Management
Consulting/Shizugin Lease)

Major items of fees and commissions (including other incomes)
3.6

4.5

4.6

+0.1

Related to market credit investment

0.8

1.6

1.4

−0.3

Corporate lending (syndicated loans, etc.)

1.0

1.1

1.2

+0.1

Solutions-related (business matching,

0.6

0.7

1.0

+0.3

Revenues/balance on customer assets (Shizuoka Bank, Shizugin TM Securities)
Customer assets revenues

1.2

1.0

1.0

Investment trust sales commission
Investment trust stock revenues
Insurance product sales commission
Insurance product stock revenues
Share of stock revenues+0.0

Other lending (home loan fee income, etc.)

2.1

1.8

2.8

+1.0

Fee income on customer assets

4.5

4.9

5.7

+0.8

Shizuoka Bank (insurance, investment
trust)

2.7

3.0

2.9

−0.1

Shizugin TM Securities (investment trust)

1.7

1.9

2.8

+0.9

Forex fee income (revenues, expenditures)

2.9

2.6

2.6

−0.1

[Shizuoka Bank nonconsolidated] Trading
income

0.5

0.9

0.4

−0.5

+0.4

(JPY bn)

+0.8

5.7
1.5

0.9
1.0

4.9
0.8
1.2

2.0

2.4

2.2

4.5

(JPY bn)

Shizugin TM Securities

Annuities and insurance (Shizuoka Bank)
Other (foreign currency deposits, investment trusts, public and corporate bonds) (Shizuoka Bank)

35%

34%

34%

Customer assets balance (ending balance)

十億Shizugin Management
Consulting/Shizugin Lease (ordinary profit)(JPY bn)

1.4

1.6

Related to market
credit investment
Corporate lending

support for subsidies, etc.)

4.6

+2.2

Fees and commissions income

Wholesale fee income

+0.1

4.5

+0.9

+127.8+83.7
1,521.6

1,605.3

516.1

536.2

904.0

975.4

1.4

1,733.1
608.1

1,023.9

0.6

0.5

0.6

101.5

93.7

101.1

FY2021 1H

FY2022 1H

FY2023 1H

Sept. 30, 2021

Sept. 30, 2022

Sept. 30, 2023

11

Expenses
While overall expenses increased, consolidated OHR fell to 58.9% (down 1.2 pts. YoY) thanks to top-line growth.

Expenses and OHR

Key factors contributing to changes in expenses
Consolidated

Consolidated
Non-personnel expenses
Personnel expenses (excluding nonrecurring personnel expenses*)
Tax
49.7
OHR
48.8

−0.9

25.3

(JPY bn)

+1.3

50.1

24.8

24.4
62.0%

20.3

60.1%

58.9%

(JPY bn)

ChangeMain change

Nonpersonnel
expenses+ 0.4

Costs associated with software use: +JPY 0.4bn

Personnel
expenses+ 0.4

Increase in salaries due to increase in base pay:
+JPY 0.2bn

Tax

+ 0.5

Shizuoka Bank: +JPY 0.4bn(consumption tax, etc.)

Total

+ 1.3

21.2

20.8

4.1

3.6

4.1

FY2021 1H

FY2022 1H

FY2023 1H

Shizuoka Bank nonconsolidated

Shizuoka Bank nonconsolidated
Non-personnel expenses
Personnel expenses (excluding nonrecurring personnel expenses*)
Tax
OHR

45.3

−1.3

25.7

44.0

+1.1

45.1

25.3

24.5
62.2%

15.6

(JPY bn)(JPY bn)

59.7%
16.0

58.2%

Nonpersonnel
expenses
Personnel
expenses
Tax
Total

ChangeMain change
Depreciation: −JPY 0.6bn+ 0.8(due to revaluation of fixed assets: −JPY 0.4bn)

Costs associated with software use: +JPY 0.4bn;
business administration fees paid to SFG: +JPY 0.7bn− 0.1

Salaries, etc.: −JPY 0.1bn

+ 0.4
+ 1.1

Consumption tax: +JPY 0.3bn

15.9[Effects of fixed asset revaluation (JPY bn)]
4.0

3.5

3.9

FY2021 1H

FY2022 1H

FY2023 1H*Amortization of actuarial gains and losses in retirement benefit cost, and other

1H (results)
2H (projected)

Total non-personnel
costs

Next-generation accounting system
expenses

−0.4
−2.6
−3.0

−0.3
−1.6
−1.9

12

Credit-related costs (Shizuoka Bank nonconsolidated)
Overall credit-related costs decreased YoY and remained low.

Credit-related costs and credit-related cost ratio

Breakdown of credit-related costs(JPY bn)

Credit-related costs(JPY bn)

FY2021
1H

FY2022
1H

FY2023
1H

3.7

4.2

2.2

−2.0

3.0

3.9

1.6

−2.3

2.0

−1.4

−0.8

+0.6

[Consolidated] Credit-related costs[Shizuoka Bank nonconsolidated]
Credit-related costs
Provision for general allowance
for loan losses
Provision for specific allowance
for loan losses
Other non-performing loans(NPL) disposal *YoYchange

0.9

5.1

2.2

−2.9

0.1

0.2

0.2

+0.0

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

Credit-related costs ratio (Credit-related costs ratio = credit-related costs / average loan balance)

11.7
8.7

0.09%

5.5

4.8

0.05%

0.04%

0.12%

1.6
FY2019FY2020

FY2021(JPY bn)

Provision for specific allowance for loan losses

1.42%

Provision for general allowance for loan losses(negative figures: transfers from provision)

PD historical average since March 2008: 0.88%

1.05%

1.01%

0.88%
0.96%

Full-fledged
post-COVID
repayments

0.79%

0.86%

11.7
0.4

2.7

7.8

0.62%

0.64%

0.50%

Excluding Business Quick Loan* users

Changes in credit category, etc.
Decrease in the value of collateral
Upgraded credit rating, decrease in loan
and credit balance via collections, etc.

−1.5

Total

2.2

5.5
0.1
2.8

5.5
3.5

2.6

FY2020

FY2021

4.8
0.4
6.1

March 31,2012

March 31,2014

March 31,2016

March 31,2018

March 31,2020

MarchMarch
31, 31,2023 2023

FY2019

1.6
0.2
2.2

0.4
March 31,
2010

3.7
0.0

8.7

* Small loans backed by 100% external guarantees
March 31,2008

FY2023 1H

Other NPL disposal*PD of performing borrowers and borrowers warranting close monitoring (based on number of borrowers)(excluding Business Quick Loan users)

FY2022

Provision for allowance for loan losses and other NPL disposal

Probability of default (PD)PD historical average since March 2008: 0.78%

0.03%

-1.7
FY2022-0.8
FY2023 1H

13

Loans under risk management (Loans disclosed under the Financial Reconstruction Act) (Shizuoka Bank nonconsolidated)
Loans under risk management fell overall from the end of the previous fiscal year. The percentage of loans under risk management
remained low.

Loans under risk management

Net loans under risk management
JPY 104.1bn(JPY bn)

Loans to borrowers in bankruptcy
Loans to borrowers at risk of failure or effectively insolvent
Loans requiring management

JPY 3.8bn

Partial direct write-off

JPY 35.5bn

Guaranteed loans bycredit guarantee
associations

243.4
8.8

166.1
5.2

Delinquency ratio

100.9

216.2
144.4

92.2

3.0

3.4

84.4

75.0

106.7

104.9

104.1

2.4

2.2

2.4

90.8

89.4

In arrears
14%

88.4

18.4

16.4

13.6

13.8

13.6

13.3

13.3

March 31,2011

March 31,2014

March 31,2017

March 31,2020

Sept. 30,2022

March 31,2022

Sept. 30,
2023

Collateral/reserves, etc.

JPY 48.8bn

Not inarrears86%

Net loans under risk
management

JPY 16.0bn

Expected loss (EL) in one year: JPY 1.1bn

Ratio of loans under risk management

NPL removal from balance sheet[Breakdown of − JPY 11.7bn](JPY bn)

FY2022

FY2023 1H

Newly recognized NPLs

+34.5

+12.2

Removal from balance
sheet (NPL to borrowers−28.0(−24.3)−13.0(−11.7)classified as at risk of failure or in
categories of greater risk)

Loans under risk
management

104.9

104.1

Collected fromborrower / offset
against deposits
Collateral disposal /subrogated toguarantor
Loans sold / direct
write-off
Reclassified to lower
risk categories

3.59%

Ratio of loans under risk management
Ratio of net loans under risk management

−1.9

2.25%

−5.7

1.24%
1.01%

1.05%

1.02%

1.00%

−2.7
0.38%

−1.5
March 31,
2011

0.26%

0.15%

0.15%

0.15%

0.16%

0.15%

March 31,2014

March 31,2017

March 31,2020

Sept. 30,2022

March 31,2023

Sept. 30,
2023

14

FY2023 forecasts
Financial results forecasts have been revised to reflect the effect on profit/loss of the September 2023 revaluation of fixed assets and other factors.
Project ordinary profit of JPY 98.0bn (up JPY 18.0bn from initial plans) and net profit of JPY 56.0bn (unchanged) on a consolidated basis.
(JPY bn)

FY2023 revised
forecast(B)

FY2023 1H
results(C)

Change(B−A)

Progress rate
(C/B)

Ordinary profit

74.0

80.0

98.0

+18.0

55.4

56.5%

Consolidated

FY2023 initial
forecast(A)

Net income attributableto owners of the parent

52.4

56.0

56.0

−

24.8

44.2%

ROE

4.6%

5.0%

5.0%

−

4.3%

−

OHR

60.2%

58.3%

58.3%

−

58.9%

−

18.42%(14.17%)17.14%(13.44%)17.14%(13.44%)−17.94%(13.78%)−

Shizuoka Bank nonconsolidated

FY2022 results

Gross operating profit

144.3

151.0

151.0

−

77.4

51.2%

Net interest income

121.6

125.0

126.0

+1.0

62.7

49.7%

Fees andcommissions

21.1

21.5

22.5

+1.0

13.3

58.9%

Trading income

1.4

1.5

1.0

−0.5

0.4

41.0%

Other operating
profit

0.2

3.0

1.5

−1.5

1.1

74.2%

Expenses (−)

86.9

89.0

86.0

−3.0

45.1

52.4%

Ordinary profit

67.6

71.0

89.0

+18.0

52.5

58.9%

Net income

46.2

49.0

49.0

−

22.0

44.9%

Credit-related costs (−)

4.8

4.0

4.0

−

1.6

39.3%

CET1 ratio

15

[Reference] Revision of account processing in valuation of fixed assets based on the medium- to long-term branch strategy
To realize the medium- to long-term branch vision in the First Medium-term Business Plan, revising account processing (fixed assets valuation methods) to ensure consistency
with the strategy
Suppressing potential future branch-related costs through lump-sum cost recording of decreases in valuation of fixed assets; reducing depreciation burdens in each fiscal year
to boost capacity available for strategic investments

Medium- to long-term branch strategy: Transformation Strategy

Implementing account processing consistent with the branch strategy

Optimizing sales office roles to reflect rapid changes in the business environment,
including changes in social structures and advancing digital technologies

Revising account processing in consideration of the diversifying roles and functions ofindividual branches and the growing importance of computer systems in branch operations

Fewer customers
visiting branches

Increasing digitaltransactions

Issues facing customers growing more diverseand complex

Transformation of branch roles throughdigital transformation (DX) initiatives

1

Revising valuation methods for branches and other facilities(asset grouping)

2

Adding software, etc. to fixed assets belonging to branches

Financial accounting effects(JPY bn)

Key points (1)Network

Branchfunctions

Medium- to long-term branch vision−19.2

Currently

Future• Centered on in-person operations,complemented by digital technologies• Shifting daily transactions to digitalplatforms to allow in-person operations
to focus on high value-added sales• Sales offices centered on banking
operations• Comprehensive functions demonstrated
through division of responsibilities among
branches in respective areas
Full banking branches

Currently• Regional development hubs thatcombine and integrate multiple Groupfunctions• Branch functions suited to respective
regions and branch roles (improving thebranch network to match customer
trends)Key points (2)➢Reducing expenses by reducing depreciation burdens in each fiscal year,
thereby boosting funds available for strategic investments in human capital,
DX, and other areas

Software
−16.0

-3.0

-5.0

-5.0

-3.0

FY2024FY2025

FY2026

Nonpersonnel
costs

Other branches

Approx. 110 branches
Consolidating personnel and focusing
on high value-added sales

Future➢ Suppressing potential future costs of changes to branches (e.g., losses onretirement) by revising fixed asset valuation methods➢ Minimizing impact on financial results by capturing the timing of stock pricerises and utilizing gains from stock sales (approx. JPY 15.0bn)

Approx. 80 branches
Streamlining through use ofdigital technologies

Amounts recorded as
extraordinary loss
(estimates)

FY2023

FY202716

Progress on First Medium-term
Business Plan
(Efforts to Increase Corporate Value)Efforts to raise corporate value – Current conditions
Amid a changing environment in the finance industry, PBR remains low despite efforts to boost ROE by reforming earnings and cost structures and other efforts.
Strive for further improvements in ROE while reducing equity capital costs and working toward solutions to community challenges to generate sustained growth in earnings
in order to improve PBR.

To improve PBR

ROE and PBR trends (current conditions)Have focused on consolidating operations, rebuilding sales structures, and developing newrevenue drivers in face of headwinds against the finance industry. While ROE indicates animproving trend, PBR remains low.
ROE
September 2008
Global financial crisis

5.9%

4.7%

5.1%

5.7%
4.6%
3.1%

1.23

0.78

0.58

3.8%
4.3%

PBR
FY2004

FY2007FY2010FY2013

FY20160.38

0.46

FY2019FY20220.60

FY2023(interim)* After deducting effects of revaluation of fixed assets[Reference: BPS and EPS trends]
Implementing management attuned to the need for sustained growth in share prices over thelong term

2050.71545.6
BPS (JPY)

878.8

1003.81024.650.0

49.3
FY2007FY201067.2

FY2016

Alliances with other banks: p. 26
Efforts in new businessfields:pp. 27, 28
Support for community
decarbonization:p. 29

Reducing equity capital costs• Enhanced disclosure• Proactive dialogue withshareholders and investors

Enhanced IR activities anddisclosure

Current conditions of equity capital costs

Equity capital costs under the First Medium-term
Business Plan
Values calculated based on results of PBR and ROE

48.0
FY2013• Sustained community growth(solutions to community
challenges)• Expanding revenue opportunities(Calculated as BPS  ROE / share price)
FY2019Approx. 6%(Calculated by us independently based on CAPM)

EPS (JPY)

FY2004

Sustained earnings growth

Recognize equity capital costs to be 6–10% as shown below:
92.9

52.9

PBR
improvements

Efforts to raise ROE: p. 19 andfollowing
Capital policy: p. 30 and following

1727.11290.1
74.1• Improving profitability• Controlling capital adequacy
levels

4.9% *

1.17
0.67

Further raising ROE

January 2016
Negative interest rates
introduced

FY2022

Approx. 8–10%
18

Efforts to raise ROE (1) – Basic concepts
Strive to control capital level appropriately and raise ROE while improving earning capabilities by enhancing the top line and controlling expenses.
Expect further improvements in profitability through the positive effects of medium- to long-term interest rate hikes.

How to raise ROE and profit levels
12Expect to achieve an ROE of 6% during the period covered by the First Medium-term
Business Plan and an ROE of 8% or better over the medium to long term by promoting thePlan's basic strategies.

Anticipate the rapid achievement of 6% ROE and continuing growth based on improved
profitability driven by rising interest rates.

Enhancing
the top line

➢ Steady growth of core businesses (loans, deposits, fees) (pp. 7, 9, 11)➢ Asset allocation through an awareness of ROA, RORA, and liquidity(p. 20)✓ Venture capital business (p. 21), market credit investment (p. 22)✓ Portfolio management (JPY, foreign currency) (pp. 23, 24)

Consolidated net income (JPY bn)
Effect of rising interest rates (JPY bn)

TowardhigherROE

ROE (%)

Cost control

ROE changes due
to rising interest
rates➢ Growing strategic investments while controlling costs and securing
revenues✓ Revaluation of fixed assets (September 2023) (p. 16)
Use of available investment leeway(p. 25)

21
8.0% and over
6.0%
5.0%
4.6%

52.4

64.0

56.0

80.0 andover➢ Appropriate control of equity capital levels (p. 31)

Capitalpolicies➢ Reducing cross-shareholdings (p. 32)➢ Steadily increasing the dividend payout ratio and dynamically acquiring
treasury shares (p. 33)

Effects of rising interest rates[JPY portfolio management (p. 23)]

FY2022(actual)FY2023(planned)

Rising interest
rates

FY2027(planned)

Medium- to longterm vision➢ While yields are expected to improve on new loans and newly purchased bonds, our stable
fundraising structure will minimize fundraising costs, leading to higher profitability.

19

Efforts to raise ROE (2) – Asset allocation
Effectively accumulate risk-weighted assets by executing basic strategies of Medium-term Business Plan through asset allocation management suited to the characteristics of each asset.
Secure ROA while striking an ideal balance with the capital adequacy ratio as accumulating assets associated with comparatively high risk-weight is possible due to enhanced equity capital.

Asset allocation concept
1

ROA (high) - RORA (high)✓ Accumulate assets in accordance with market conditions and securing RORA and ROA while
monitoring conduct risk.

RORA (high)

2

1

2

✓ Accumulate balances of strategically important corporate lending and home loans while
monitoring their shares of transactions, as revenues should increase with rising JPY interest rates.

Loans forasset building

3 ROA (high) - RORA (low)Home loans✓ Have focused on accumulating assets with high risk-weights in the market credit investment field in orderto enhance earnings capabilities using the equity capital achieved to date.
✓ Seek to accumulate assets and strengthen profitability while striking an ideal balance with equity capitalduring the First Medium-term Business Plan.
✓ Establish a new real estate investment advisory company in the real estate finance field (p. 27).

Unsecuredloans

Apartment loans[Reference: Results in the market credit investment segment]
The balance (total of loans and private equity) has grown to about JPY1 trillion. Revenues have grown tomore than JPY15.0 bn/year (p. 22).

Venture debt
Field where further growth is targeted by establishing a
new real estate investment advisory company

Corporate
lending

ROA (low) - RORA (high)ROE vision
Accumulating riskweighted assets

Market Credit Investment(loans)Real estate nonrecourse
loansReal estate private REITSReal estate private
investment funds

ROA
(low)

ALM
(JPY bonds,
investment
trusts)

Effects ofBasel III
finalization,
etc.

(JPY tn)

7.5

SF*1
VC, etc.

ROA(high)

ROE

Loans

Investment funds

3
RORA (low)Seeking to achieve an ROE of 6%during the Medium-term Business Planby accumulating risk-weighted assets
based on an awareness of ROA and
RORA

4.3%

5.5
FY2022*1 Market credit investment(loans, private equity)

FY2023 1H
FY2027 planned

Approx.

6%
FY2027 planned

20Efforts to raise ROE (3) – Business for venture firms
Cumulative venture debt executed has reached more than JPY 12.0bn. Shizuoka Financial Group's comprehensive functions continue
to support startup growth.

Venture debt executedGroupwide support structure
100.0

Exceeds
JPY(JPY bn)

Leverage the functions of individual Group companies to meet a wide range of needs,
including needs related to capital policy, leasing, and wealth management for managers.

12.0bnDiverse startup needs
12.8

7.2

Business funding

Home loans for
managers

VC investment

IPO/M&A support

Funding related tocapital policy

Wealth management
for managers

Leasing

Corporate credit
cards

1.5
FY2021

FY2022

Improvements in the Start-up Support
Division
Structural improvements to grow lines ofbusiness
Sections

Staff

FY2022: one section

FY2022: 6

FY2023 1H

FY2027

Borrowers across four stages

1%

42%

Shizugin
Saison Card

Investment in VC funds[Examples of industries targeted for investment]

Sept. 30, 2023: 14

Front office section

VC/planning section

Shizugin
Lease

Investing in VC funds from a medium- to long-term perspective diversified byindustry and stage

44%

Monitoring section

Leveraging alliances with Yamanashi
Chuo Bank and Nagoya Bank tomeet demand for more fundraisingcontact points

13%

Front office section

Sept. 30, 2023: three
sections

Shizuoka Capital

Borrowers by stage

Seeding
Middle

Early
Later

SaaS

Data Long-termcareanalysis

Healthcare

Robotics

FintechBiotechAI

26 funds, 650 startups
Pledged investment:

JPY 22.8bn(As of September 30, 2023)

21

Efforts to raise ROE (4) – Market Credit Investment
Have grown revenue by developing investment and lending fields based on sound risk and return analysis since launching these efforts in FY2013.
Valuation gains on private equity investment are growing steadily, even with the recent decline in returns due to factors such as exit delays caused by reduced IPOs and the risingcost of raising funds in foreign currencies.

Revenue trend

Private equity investment

5.6

11.5
3.2

1.0
0.7
3.0

0.8
0.1
0.4
FY2013

9.1

2.8

2.6

4.7
1.3

(JPY bn)

16.7

Private equity, etc.
Fee revenues
Lending revenues/expenditures

8.3
5.7

FY2016FY2019FY2022

3.8

5.8

1.2

0.4
0.8

4.0

4.6

FY2022 1H

FY2023 1H

Lending balance (average) and composition(JPY bn)

764.5

822.9

Composition (FY2023 1H)
Securitization loans(CLO, etc.)
14%

Real estate
nonrecourse loans
22%

124.4
March 2014
(monthly)

Projectfinance
14%

FY2016FY2019FY2022

Well-diversified portfolio (JPY : foreign currency = 6:4)
99% allocated to performing borrowers
LTV real estate nonrecourse loan average: 58.0%
Structured finance lending profitability
indicators
Return on assets (ROA)
Return on risk-weighted assets (RORA)

FY2023
1H

Corporate(senior)27%
Corporate(mezzanine)
21%
Asset finance2%

CLO balance (Sept. 30, 2023)
JPY 137.0bn (29 details: JPY 4.7bn average)
All AAA-rated
Subordination ratio: 35.0–41.8%

FY2022 1H
1.08%
1.84%

FY2023 1H
1.08%
1.86%

YoY change+0.00pt+0.02pt

Composition (FY2023 1H)
Infrastructure Other
3% 3%Mezzanine
Buyoutdebt
52%
31%
Growth VC
11%[Private equity investment results (excluding private REITs andreal estate investment funds)](JPY bn)

FY2013

Investment commitment(annual)Investment commitment(total)Domestic

567.7

377.4

• Building a time-diversified portfolio through continual investment every
year• Building a geographically and strategically diversified portfolio throughwell-balanced investments in various domestic and foreign funds• Securing average yields of 8% or more over the most recent five years

ForeignInvestment gain/loss(annual)
Revaluation gain/loss(term end)

FY2016FY2019FY2022

FY2023 1H

4.7

8.9

10.8

21.9

10.6

14.0

36.7

66.1

129.0

146.2

14.0
0.0

27.7
9.0

45.5
20.6

63.2
65.9

65.4
80.8

0.7

0.2

1.7

4.4

0.2

+1.2

+0.5

+3.6

+10.1

+12.1

Future initiative policies[Future earnings plans]• Accumulating balances based on anawareness of ROA and RORA
• Securing earnings by arranging LBO loans
and real estate nonrecourse loans• Securing profitability in asset turnoverbusinesses by distribution of structured
products and sales of existing assets

Lending revenues/expenditures
Fee revenues
Private equity, etc.

16.7

17.0–17.5

19.5–20.0+2.5–3.0

5.6
2.8
8.3
FY2022

FY2023plannedFY2027planned22

Efforts to raise ROE (5) – JPY portfolio management
While rising long-term interest rates have a negative effect on short-term valuation gains/losses, they have a positive effect on the JPY balance sheet as a whole, andprofitability is projected to increase.

Long-term and short-term interest rate variation scenarios and impacts

JPY balance sheet structure (September 2023)
Deposits account for about 70% of funds raised. Core deposits, which are stable and less sensitive to interest rate
fluctuations, account for more than 40% of all deposits.
Liabilities, capital (100%)

Deposit fundraising structure• Building a stable fundraising structure centered on small,diversified retail deposits• More than 60% of all deposits are covered by deposit insurance.

Variable interest rate

Liquiddeposits

Prime rate
26.6%

Marketinterest rate
14.8%

63.7%
(68.2%)

Core deposits

41.8%

54.7%

Deposits

Lending

Assets (100%): JPY 14,896.6bn

74.2% (44.2%)(100%)(100%)

By depositor

March 31, 2020

Sept. 30, 2023

Retail deposits

71.5%

70.0%

Corporate deposits

24.2%

27.0%

Other

4.3%

3.1%

March 31, 2020

Sept. 30, 2023

Deposits
subject todepositinsurance(63.0%)Up to JPY 10mn

49.2%

44.3%

JPY 10–100mn

30.3%

33.3%

(62.3%)

Above JPY 100mn

20.4%

22.4%

By amountStage of interest rate
hikes
(1) Abolition of yield curve
controls(10-year rate 1.0%)

Details, impact• Rising yields on new bond investments• Rising new rates on marketable fixed rate loans(2) Policy interest rate hikes• Rising yields with each rate update for market rate loans(from negative interest to 0%)[Impact of interest rate fluctuations on returns on assets]
Assumptions (based on portfolio as of Sept. 30, 2023)• Updating fixed rate loans to reflect rising market interest rates on each maturity date (excluding
retail lending)• Purchasing the entire amount in bonds reflecting rising market interest rates each time JPY bonds
mature(Gains on JPY funding: JPY bn)(Valuation gains/losses: JPY bn)(1) Abolition of yield curve
controls-28.0

JPY bond valuation
gains/losses

-32.3

-36.6

JPY

(42.7%)

Fixedinterest rate

-40.9
-45.3

Changes in revaluation gain/loss on JPY balance sheet (10 BPV)
(JPY bn)

10.8%

9.0bn/year(Fifth year after rate hike)

21.7%

Bonds

Effect on profits of risinginterest rates

Time
deposits
18.8%

Equities, investment trusts 2.8%

Assets10 BPV
Loans

Short-term
marketinvestment

Short-term market
fundraising 15.7%

18.9%

Equity capital, other

Other 3.7%

10.1%

8.0

-49.8

6.5

Liabilities and equity−27.5 10 BPV

+31.2

−14.6

+23.2

Deposits
Core deposits+21.4

Total assets, liabilities, and equity (10 BPV)

+3.7

Bonds

9.0

−13.0

* 10 BPV: Change in valuation gains/losses of assets, liabilities, etc. assuming markto-market valuation if interest rates rise by 0.1%. If total 10 BPV for assets,
liabilities, and equity is positive, this has a positive effect on valuation
gains/losses and future earnings.

5.0
3.5
1.3

5.8

6.8

Increase in ROE(rough estimate)

4.3
2.8

+0.8 %(2) Impact of discontinuation of
2.2
2.2
2.2
2.2
2.2
negative interest rates: +2.2
Sept. 30,
2023

Year 1

Year 2

Year 3

Year 4

Year 523

Efforts to raise ROE (6) – Foreign currency portfolio management
Secure positive gains on foreign currencies overall by diversifying both investment and funding in foreign currencies in foreign currency portfolio management.
Anticipate net interest income to increase in FY2024 and beyond as US policy interest rates are expected to fall.

Foreign currency (USD) portfolio composition✓ Securing margins by diversifying fundraising methods✓ All lending is at variable rates, resulting in a portfolio resistant to interest rate fluctuations.

Lending42%

Fixedinterest rate

Marketinvestment
14%

Liabilities
Variable interest rate

Assets

Bonds
40%

Other 4%

Short-term
marketfundraising64%[Distinguishing characteristics of foreign currency
portfolio management]
1. Medium-/longterm market
fundraising
2. Customer
deposits, etc.

Focusing on diversification by fundraising method, term,
and region
Borrowing, bonds: BoJ borrowing, retail foreign currency
bonds, etc.
Secured fundraising: Currency swaps through long-term
conversion to JPY
Focusing on retention in addition to diversification byregion, industry, and other characteristics

3. Lending

15%

In addition to focusing on yields, maintaining a structurein which all lending is at variable interest rates
Securing steady spreads independent of interest rate
fluctuations

Customer
deposits, etc.
21%

4. Bonds

Holding bonds easily convertible to funds, with a majority
consisting of highly liquid assets such as foreign
treasuries

Medium-/longterm market
fundraising

Projected net interest income*1 on the foreign currency portfolio(assets and liabilities)• Thanks to sustained efforts since FY2022 to improve yields on the asset side, including repurchasesof USD bonds, future growth is projected after YoY declines through FY2023, when FF interest
should peak.
→ Simulation
140
120

Foreign currency net interest
income(USD mn, left axis)
FF interest rate *2(%, right axis)

5.00%

100
4.00%
80
3.00%
60
2.00%
40

1.00%

20
0

0.00%
FY2018Results of USD bond repurchase operations

6.00%

FY2019FY2020

FY2021

FY2022

FY2023

FY2024FY2025

FY2026FY2027*1 Total net interest income including lending, securities, deposits, bonds, etc.
*2 FF interest rates based on market participant projections(Estimated based on portfolio as of Sept. 30, 2023)

FY2022 1H
USD bonds

Sold:

FY2022 2H

JPY 92.8bn Sold:

FY2023 1H

JPY 64.8bn Sold:

JPY 33.5bn

Repurchased: JPY 65.5bn Repurchased: JPY 108.0bn Repurchased:
Gain/loss on sale:−JPY 10.1bn* Not including asset swaps

Gain/loss on sale:−JPY 2.8bn

JPY 142.1bn

Gain/loss on sale:+JPY 0.2bn

Net interest income and valuation gain/loss
improved through repurchase toward high-yieldbonds
Comparison to case assuming no
repurchasing(1) Net interest income (annualized)
Improved by JPY 4.2bn(2) Valuation gain/loss as of Sept. 2023:
Improved by JPY 22.4bn(Improved by JPY 9.6bn after accounting for realized losses)

Effect on profits of interest rate
fluctuations

JPY

6.8bn/year(Fifth year after fluctuation)

Increase in ROE(rough estimate)+0.5 %
24

Efforts to raise ROE (7) – Cost controls
The transformation strategy of the First Medium-term Business Plan calls for achieving sustained growth for the region and the Shizuoka
Financial Group through strategic investments in areas such as human capital and new business fields, in addition to aggressive IT investment.

Courses of action for investment under the First Medium-term Business Plan
(JPY bn)

Investment leeway expanded thanks to revaluation of fixed
assets in September 2023

(Investment
leeway)Aggressive
investment
IT investment
70.0–80.0

50.0–60.0

20.0

Other
investment

Touchpoint X, Sales X✓ Retail:

JPY 15.0–20.0bn(apps, cashless, etc.)✓ Corporate:

JPY 10.0bn(new sales support system, businessportal, etc.)✓ Platform:

JPY 20.0–25.0bn(Group shared platform, etc.)

Investment in maintenance and updates

Human capital, new business fields, etc.

Fields of investment

Effects, courses of action

Expanding investment in AI
and digital transformation(DX)➢ Further expanding Touchpoint X and Sales X
initiatives (e.g., use of generative AI)

Expanding investment in
human capital➢ Maximizing human capital to support strategic
implementation through means such asincreasing compensation and investing in HR
development

Investment in highly
profitable nonfinancial fields➢ Also considering M&A activities to help realize
profits quickly and impact society

Investment in community
innovation➢ HR development and industrial development in
the region➢ Promoting cooperation with businesses in theregionEffects of revaluation of fixed assets
Aggressive financial strategy of accelerating strategic investment while minimizing possible future
costs and losses
Reduction by JPY 16.0bn during the period(JPY bn)−19.2
covered by the Medium-term Business Plan

−3.0

Software(included in the
figure above)−16.0
Amount recorded上限
as extraordinary
losses

−5.0

−5.0

−3.0

Nonpersonnel
costs

Accelerating strategic investment✓ Promoting new investment while increasing the
likelihood of achieving profit plans by lowering costs
through reducing the annual burden of write-offs✓ Keeping consolidated OHR at an appropriate level(Planned for approx. 55% in FY2027)

FY2023

FY2024FY2025

FY2026FY202725

Medium-/long-term growth strategy (1) – Alliance strategy with regional banks
Realizing sustained growth for each region and partner group through joint efforts with alliance partner banks on solutions
to various regional challenges

Shizuoka Nagoya Alliance (established in Apr. 2022)

Shizuoka Yamanashi Alliance (established in Oct. 2020)
Focusing on economic development in both prefectures and on projects to contribute to mutual use
of management resources
Revised the initial KPI (JPY 10.0bn in total for both banks, cumulative over five years) to JPY 12.0bn (total forboth banks, cumulative over five years) in the third year of this alliance, assuming that the initial KPI is
likely to be achieved by the end of five-year timeframe.

Aim to achieve revenue effects of JPY 10.0bn or more (total for both banks, cumulative over five
years) through solutions to customers' challenges, chiefly by supporting business partners instructural reform of regional industries.

Asset-building support
Life planning

Finance

Shizugin TM Securities Yamanashi Head Office
Customer assets balance: JPY 24.6bn

Lending field JPY 122.4bn
Joint lending included above
JPY 37.4bn
Business-succession M&A projects
First deal concluded(As of Sept. 30, 2023)

Offering jointly developed products (insurance,
investment trust)Three-bank cooperation

Sales-channel
development support

24 individual meetings, 128 business matching cases(JPY bn)
Finance
Life planning
Other

6.9

New KPI:
JPY
12.0bn10.2

Shizugin TM Securities Nagoya Head Officeopens(On Second floor of Bank of Nagoya’s Head Office)15 staff members (including five staff members
seconded from Bank of Nagoya)Supports asset building for Bank of Nagoya’s
customers

Establishing the Shizuoka Nagoya AllianceFund to support industrial reforms(June 2023)

4.6

Finance

1.1

Futureoutlook

FY2023(projected)

JPY 33.1bn

Joint lending included above
JPY 10.0bn

vs.
Target:

Other

2.6

FY2022

Lending field(JPY bn)

2.3
FY2021

Finance

Supporting industrial reforms

FY2025(projected)• Highly likely to achieve initial KPI mainly due to life planning and financebusinesses• Moving to the next stage of the alliance by focusing on solutions to social
challenges, chiefly through measures to help increase related populations,an issue confronting both regions.

FY2022Futureoutlook

FY2023 (projected)

6.2

62%
FY2026 (projected)• Have achieved significant results in the finance field, and planning to expand
it to life planning and other fields of business partnerships.
• Will provide appropriate support for reforms to regional businesses throughenhancements based on the main theme of measures to help support
industrial reforms, including use of the Alliance Fund.

26

Medium-/long-term growth strategy (2) – Efforts to advance into new business fields
Have established SFG Real Estate Investment Advisors, Inc., a new company intended to balance solutions to community challenges and businesspotential.

Establishment of SFG Real Estate Investment Advisors Co., Ltd.

Four key points in tackling new business fields

1

Realizing sustainable communities

3

Pursuing profitability andgrowth2

Business development for structuralchanges in society

4

Putting management
resources to effective use

Challenges
confronting theregion andcustomers

IT, digitaltransformation (DX)

Growing sales
channels

Community
development

Labor shortage

Branding

Redevelopment

Synergies with TJS

SFG Marketing

Target solutions related to IT, DX, and HR
with TJS, a major player in the softwaredevelopment and staffing business with over
40 years of experience.

Tackle solutions in areas such as marketing
support, by combining the customer baseand payments data of Shizuoka Financial
Group with the Dentsu Group's expertise• Establish this new company in the asset management business for private real estate investment funds.
• Through active participation in regional development projects in cooperation with local governments,
business partners, and other entities, the new company will contribute to regional growth over the long termby attracting businesses and creating jobs.

SFG's information on the region and insights into its needs and its expertise and humanresources in the real estate finance business
SFG's strengths

BeforeLack of asset managers capable ofarranging deals to meet potential
needs in the region
Hidden information
Difficulty of pursuing development
over the long term and failure tolink development to sustained
regional growth

VisionIT support forcustomers

Advertising promotion

Business model

Customers

Sales ofbeneficiaryrightsLocal governments,
business partners

Proceeds fromsale

HR referrals

Trust banks

Trust contracts

Adding businesses to deliver
solutions to social challenges
Tenants

Establishment of
SFG Real Estate
Investment
Advisors Co., Ltd.

Creating growth opportunities
along with the region throughinvolvement in projects from a longterm perspective
Securing new revenue
opportunities through active efforts
by the new company

SFG Real Estate Investment
Advisors, Inc.
Asset management
contracts

SPC

Loan
arrangement

Lending

Financial institutions

Digital marketing support

Staffing
business

After

Balancing related population growth (community co-creation) andbusiness potential

Revenue opportunities
for SFG

Softwaredevelopment

NEW(launch slated for April 2024)

Trust
beneficiaryrightsNonrecourse
loansInterest, fees

Investment

Investment
CapitalInvestors
Dividends, etc.

27

Medium-/long-term growth strategy (4) – Regional decarbonization initiatives
Enhancing support for decarbonization initiatives by partnering with local governments and providing funding to enable the region's smoothtransition to a carbon-zero society
Shizuoka Financial Group will seek to achieve carbon neutrality (Scopes 1, 2) by FY2030.
March 2020

April 2023

2030

2040

Initiatives in the community

Support for TCFD recommendations

Shizuoka Financial Group's progress toward net zero GHG emissions
Achieving carbon neutrality on Scope 1 and2 emissions

2

Cooperative agreements with local governments

Have concluded cooperative agreements with the cities of Hamamatsu and Iwata, which are striving to
reduce their GHG emissions; the city of Kosai, which has declared its intention to be a carbon-zero city; andthe city of Gotemba, which is striving to build a community characterized by a virtuous circle between regional
decarbonization and economic growth to achieve carbon neutrality and sustainable development in the region.

1

Sustainability KPIPromoting initiatives toward a carbon-zero society
Achieving carbon neutrality on Scope 3 emissions
Balance of zero loans to and investments in coal-fired power
Support for GHG emissions calculation and reduction
Promoting sustainable financeCity of Kosai

2

City of Hamamatsu

Introduction of cloud-based GHG emissions
calculation service (Shizuoka GX Support)

3

Switching Group electricity use to renewables (began in June 2023)

1

Drawing on Shizuoka Green Denki (CO2-free electricity) and renewable energy from Shizugin
Solar Park as well as FIT and non-FIT non-fossil-fuel certificates being awarded, reduction of
approx. 70% vs. FY2013 by FY2023 is expected.

Providing green financial services Group-wide
Promoting sustainable finance3

Target for FY2030: JPY 2tn(Shizuoka Bank)(including JPY 1tn in environmental finance)[Results and projections of Greenhouse gas (GHG) emissions reduction]

Progress rate:

17,137FY2013

16,2071,360

14,848FY201914,696
1,271
13,425

FY2021

Approx. 70%
reduction vs.
FY2013

11,538FY2022(JPY bn)

Environmental financeincluded+153.3

30.7%

614.9

461.6

Efforts to support J-Credit generation

Scope2
12,714
1,177[Sustainable finance execution amounts](including 28.9% on environmental finance)(unit: t-CO2e)

Scope1

2◼ This cloud-based service allows users to quantify their GHG emissions
simply by entering data on subjects such as volumes of gasoline andelectricity used.
◼ Sharing the data with local governments and other entities will help
support decarbonization efforts by local firms.

Shizuoka Financial Group's initiatives

18,514
1,377

City of Gotemba(Shizugin Management Consulting)

Shizugin Solar Park

• First project expected to be certified during FY2023

113.3

Offering carbon offset auto leases

54.7
FY2021(Shizugin Lease)
FY2023(projected)(Began operation in October 2023)• Launched in June 2023; contracts concluded on 82 vehicles
by the end of September

229.7

FY2022

+59.4

289.1

FY2023 1H

29

Capital Policies

Capital adequacy ratio
The total capital ratio and the Common Equity Tier 1 (CET1) ratio stand at 17.94% (down 0.48 pt. from the end of March 2023).
Factors contributing to reduction in risk-weighted assets had significant impact upon the initial application of the final Basel III standards. As of September 30, 2023, the ratio is
estimated to be around 13.78% following the full-scale application of the final Basel III standards.

Capital adequacy ratio
Reference: Impact of Basel III finalization

CET1 ratio(%)

Total capital ratio
CET1 ratio excluding valuation difference on
available-for-sale securities

16.56

17.94

18.42

14.17
12.85

March 31, 2021

March 31, 2022

(after full-scale application of final Basel III standards)

10.96

11.26

March 31, 2023

Sept. 30, 2023

Total capital*
CET1
Excluding valuationdifference on availablefor-sale securities
Other Tier 1
Tier 2
Risk-weighted assets
Credit risk-weighted assets
Amount corresponding tomarket risk
Amount corresponding tooperational risk

March 2022
1.06 times

March 2023
(Discontinued)⇒ Reduces risk-weighted
assets.

(3) Step-by-step application of capital floor*3 ⇒ Increases risk-weighted assets.

March 31,2021

March 31,2022

March 31,
2023

990.4
990.4

965.4
965.4

1,006.1
1,006.1

981.6
981.6

−24.5
−24.5

759.2

771.6

778.2

801.7

+23.5

−
−
5,979.7
5,658.0−−
6,001.2
5,672.1−−
5,459.3
5,283.6−−
5,471.2
5,287.7

−
−
+11.9
+4.1

19.4

20.2

0.6

1.6

+1.1

302.3

309.0

175.1

181.9

+6.7

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

⇒ Reduces risk-weighted
assets.

*1 Loss given default (1-amount recovered)*2 Multiplied by credit risk-weighted assets under the internal ratings-based approach

Trends in capital, risk-weighted assets, etc.
(JPY bn)

March 2023
40%(2) Removal of scaling factor*2 (discontinued by financial authorities)

13.78 ** Preliminary estimate after full-scale application of final Basel III standards, accounting for capital floor
adjustments and other factors.

[Basel III](1) Decline in LGD*1 value on credit to corporations (set by financial authorities)
March 2022
45%

16.08

12.69

[Major impacts]

Sept. 30,
2023

vs. March 31,
2023

March 2023

March 2024

March 2025

March 2026

March 2027

March 2028

50%

55%

60%

65%

70%

72.5%

⇒ Floor not applied in initial application; to be raised in stages through March
2028. This is projected to increase risk-weighted assets.
*3 Minimum level of risk-weighted assets

Interest rate risk in the banking book (IRRBB) (Consolidated basis, end of Sept. 2023)◼ Results of materiality test: ∆ Economic value of equity (EVE)(Decrease in economic value of equity due to interest rate shock within IRRBB)

Decrease in economic value

Tier 1Results of materiality test (*)

JPY 58.0bn

JPY 981.6bn

5.9%  15%* Financial Services Agency supervision guidelines require ∆EVE to be 15% of Tier 1 capital or less.

◼ Δ Net interest income (NII): JPY 9.4bn(Decrease in net interest income due to interest shock within IRRBB)

31

Strategic shareholdings
Reduced strategic shareholdings by JPY4.3 bn vs. the First Medium-term Business Plan's target of a JPY 13.6bn reduction (for 31.6% progress vs. the target) In FY2023 1H.
Will continue to sell stocks in line with our basic policy of reducing strategic shareholdings, and apply the gains from such sales to strategic investments.

Acquisition cost of cross-shareholdings*1 (Figures in parentheses are for listed shares.)
Retirement benefit trust
Enhanced transaction relationships

Business investment and community contribution
Percentage of capital(JPY bn)

Number of issues held

Stocks whose issuers agree with sales

Approx. 500

Further
reduction

Approx. 170.0(Issuers, JPY bn)
287

Approx.
33%

96.3

200

(89.5)

87.0(80.0)

10.7%

March 31,
2000

100.6

March 31,
2020

8.5%

8.8%

March 31,2023

Sept. 30,
2023

Change

265

267

106.0

March 31,2023

Approx. 8%

Sept. 30,
2023

Issuers27

27−

Amount subject toagreement on sale

48.6

55.7

+7.1

Based onacquisition cost

12.1

13.4

+1.3

Revaluation
gain/loss

36.6

42.4

+5.8

March 31,2028 (planned)* Excluding shares in Group companies and equity method affiliates[Status of cross-shareholding reductions]
PeriodResults under 14th MidTerm Business Plan
(FY2020–2022)➢

Gains from sales will be applied to make strategic investments inhuman capital, digital transformation (DX), new businesses,
etc.

➢

The decrease in risk-weighted assets accompanying the sale ofstock will be reinvested in fields that promise high returns, suchas venture capital and private equity.

(JPY bn)

Target under First Mediumterm Business Plan
FY2023 1H (results)(FY2023–2027)

ProgressAmount of reductions(based on acquisition
cost)

5.4

13.6

4.3

31.6%

Amount of sale

38.3

−

23.6

−

Gain/loss on sale

28.7

−

20.1

−

32

Shareholder returns
Seek to progressively increase the dividend payout ratio to 40% or more by FY2027, as well as purchase treasury stock dynamically with an eye on market
conditions, including our share price. Strive to achieve sustained growth in ROE as well as EPS and BPS while monitoring the total payout ratio.

Distribution of profit to shareholders
Total dividends (JPY bn)

Increased by JPY 4

Purchase of treasury stock (JPY bn)

Dividend per share (JPY)
Increased by JPY 3 Increased by JPY 1

Averages over past Medium-term
Business Plans

25.0

Increased by JPY 4

34.0
30.0

26.0

21.8

21.7

18.7
14.7

15.2

9.5

12.8

8.8

10.0 *

9.7

11th Mid-TermBusiness Plan average(2011-2013)

12th Mid-TermBusiness Plan average(2014-2016)

13th Mid-TermBusiness Plan average(2017-2019)

FY2020

FY2021

FY2022

FY2023 (projected)

Averages over past
10 years(FY2013–2022)

20.1%
52.3%

27.0%
48.1%

28.5%
48.9%

32.8%
32.8%

35.4%
56.2%

32.2%
51.1%

33.7%
−

28.6%
50.2%

JPY 47.0bn

JPY 42.4bn

JPY 45.2bn

JPY 43.6bn

JPY 41.6bn

JPY 52.4bn

JPY 56.0bn

JPY 44.7bn

Dividend payout ratio
Total payout ratio
Net income
attributable to ownersof the parent

8.9

18.8

16.8

14.7

14.4

12.7

11.4

9.4

Averages overpast 10 years* Returns to shareholders in FY2022 include purchases of treasury stock already completed (amount: JPY10.0 bn; period: Feb.–May 2023).

EPS/BPS trends (consolidated)(JPY)

2050.65

Earnings per share (EPS)Book value per share (BPS)

92.92

632.1820.84
FY1998FY2001

FY2004

FY2007FY2010FY2013

FY2016FY2019FY202233

Reference Materials

Major initiatives in FY2023 (1)4月April

5月⚫ Launch of "Xover: Clearing the way to a
new era"; First Medium-term Business
Plan (Shizuoka FG)

Region-CoCreation
strategyGroup
BusinessstrategyMay⚫ Community attraction discovery
project implemented (Shizuoka Bank)

6月

June 7月、8月⚫ Tachikawa Loan Center opened (Shizuoka Bank)

Clearing the way
to a new era⚫ "Fujisan de noru" auto leasing
service launched (Shizugin Lease)⚫ First joint lending scheme with theJapan Finance Corporation executed topromote Sustainable Development
Goals (SDGs)(Shizuoka Bank)Transformation
strategy

Shizuoka Financial Groupnews releases⚫ Lauch of Shizuoka Bank Mikatano Works
service to support digitalization of corporate
and owner-operator businesses(Shizuoka Bank)⚫ Increase in starting salaries
announced (Shizuoka FG)⚫ Specialized community co-creation strategy
managers assigned to each regional company(East, Central, West) (Shizuoka Bank)⚫ Jibun Nenkin Kaigo
Plus individual annuity
insurance jointly
developed with alliancepartner banks
introduced(Shizuoka Bank)⚫ Shizugin Lease concludes partnershipagreement with three firms within thecommunity on a sales partnership for the
resale of used vehicles (Shizugin Lease)⚫ Shizuoka Nagoya Alliance Fundestablished (Shizuoka Capital)⚫ Carbon offset auto lease introduced(Shizugin Lease)⚫ Start of feasibility testing of the Metaterrace
online metaverse branch(Shizuoka Bank)⚫ Increase in base pay announced for all
Group employees and executives(Shizuoka FG)35

Major initiatives in FY2023 (2)Region-CoCreation
strategyGroup
Businessstrategy

Shizuoka Financial Groupnews releases

July
4月

August5月

6月
September⚫ SFG Marketing, first new company
under the holding-company structure,established⚫ Agreement on mutual cooperation andjoint efforts to promote carbon
neutrality concluded with city of Kosai(Shizuoka FG)⚫ Cooperative agreement on efforts topromote cyclical co-creation ecogarden city at the eastern base of
Mt. Fuji concluded with the city ofGotemba (Shizuoka FG)⚫ Carbon neutrality partnershipagreement concluded with city ofHamamatsu (Shizuoka FG)⚫ Selected by the Ministry of theEnvironment for the FY2023 ESG
Regional Finance Promotion
Program (Shizuoka Bank)⚫ TECH BEAT Shizuoka 2023 held
(Shizuoka Bank)⚫ Memorandum on advancement of
auto-industry support concluded
with seven regional banks(Shizuoka Bank)Transformation
strategy⚫ Joint research and development on
use of generative AI launched with
PKSHA Workplace (Shizuoka Bank)

Gold card

Platinum card

⚫ Shizugin Busikul introduced(Shizuoka Bank)⚫ Shizugin TM Securities Nagoya
Head Office opened(Shizugin TM Securities)⚫ Shizuoka GX Support service
introduced (Shizuoka Bank)⚫ Shizugin Solar Park began
operation (Shizuoka Bank)⚫ Three-prefecture Future
Fund service introduced
to invest in firms basedin Shizuoka, Aichi, andYamanashi prefectures(Shizugin TM
Securities)⚫ JCB brand corporate cards
introduced(Shizugin Card)

Standard card

⚫ Business partnership agreement
concluded with Money Forward
Kessai (Shizuoka Capital)⚫ Partnership agreement concluded
with W Tokyo on efforts to promote
community cocreation projects(Shizuoka Bank)

7月、8月
October⚫ New Shizugin Web Overdraft ande-delivery features introduced on
corporate portal site
(Shizuoka Bank)⚫ October 2023 entrance ceremonyand FY2024 preliminary job offer
ceremony held
(Shizuoka FG)⚫ Business partnership agreement
concluded with CIMB Bank Berhad(Malaysia) (Shizuoka Bank)⚫ Start of participation in Tokyo Stock
Exchange Carbon Credit Market(Shizugin Lease)* Shizuoka Bank plans to participate in
December 2023

36

Initiatives in Human Capital Management (1) − Improving engagement and well-being −Shizuoka Financial Group
Integrated Report

Strive to improve employee engagement and well-being through efforts to expand HR system reforms throughout the organization.

Efforts to expand HR system reforms
Introducing My Sustainability Books
Produced and distributed to employees “My Sustainability Books –Xover: Clearing the way
to a new era” to link the actions of each employee to management strategies.
Used mainly as a tool in one-on-one meetings, each employee will complete the book overthe medium term (five years) in communication with supervisors.

External evaluations and support for external initiatives
Certification related to participation and advancement of womenPlatina Kurumin

Shizuoka Bank

Shizugin Business
CreateHolding townhall meetings

Establishing a new sustainability training program

Hold townhall meetings to allow directcommunication between management andemployees and deepen understanding of thecorporate philosophy and management strategies.

Have established a new sustainability training
program for all employees to help themunderstand the concepts of the medium-term
management plan and how to make effective
use of their My Sustainability Book.

Platina Eruboshi

The following four
companies are certified ascompanies that provide
stronger childcare support
than required under the
Kurumin program:

Shizugin TM Securities

The following four
companies are
certified as having
workplaceenvironments thatempower women:

The following company is certified
as having a workplaceenvironment that empowers
women to a degree exceeding therequirements of the Eruboshi
program:

Shizugin IT Solution

Shizugin Business
CreateCertified as 2023 Health & Productivity
Management Outstanding Organization
The following three companies are
certified as outstanding healthmanagement organizations:

SFG
Shizuoka Bank

Eruboshi (3 stars)

Shizuoka Bank
Shizugin Mortgage
Service

Shizugin TM Securities
Shizugin IT Solution

Supporting The Valuable 500
The following company supports
The Valuable 500, an international
initiative that seeks to promote theinclusion of people with disabilities:

Shizuoka Bank
Shizugin IT Solution

37

Initiatives in Human Capital Management (2) − Organizational culture reforms
Help create a sustainable society by transforming our organizational culture to one in which diverse values and individuality meet tofind solutions to problems from a perspective of innovation.

✓
✓

✓

✓
✓

✓

SFG First Medium-Term Business Plan

14th Mid-Term Business Plan

13th Mid-Term Business Plan

Introduced full flextime system.
Expanded work systems related
to diversity (relearning, life
events, etc.).
Extended the age limit for
veteran human resources.

Adopted flexible dress code.
Expanded flextime and remote
work (to all Bank staff).
Enabling second jobs and
WSI 2.0 (April 2021 and thereafter)side businesses in stages.
Creating innovative ideas and new attitudes
by promoting diversity, recognizing
different values, and bringing out thebest in each individual

Culture and Wellbeing Innovation 1.0(April 2023 and thereafter)

WSI 3.0 (October 2022 and Maintaining the corporate culture and tradition of being
close to the community and to our customers while Pursuing the wellbeing of executives, simultaneously reforming the company's internal culture
employees, and their families Improving health and wellbeing (mutual growth of Respecting and maximizing diversity
individuals and the organization by enhancing healthmanagement and acceptance of diversity)
thereafter)✓ Holding townhall meetings between management✓

WSI (July 2019 and thereafter)
Shifting our perspective from internal
rules to a focus on customers and thecommunity; establishing autonomous
work styles✓✓

Enhanced leave and work systems forchildcare support
Further expansion of diversity-related leave
and work programs
Introduced same-sex partnership program(March 2023 and thereafter)

WSI 3.1

and employees✓ Eliminating use of titles among executives andemployees✓ Launching trials of the Health Keeper System(by visually impaired employees who work as in-housephysiotherapist employees)✓ Expanding eligibility for using personal-injury andsick-leave programs, etc.

(March 2023 and thereafter)

38

Addressing Climate Change – Initiatives in response to TCFD recommendations

Shizuoka Financial Group
Integrated Report

Enhance disclosure and promote initiatives to make the region carbon free and to strengthen the sustainability of both the region and the Group.

Initiatives in response to TCFD recommendations• Our responses to TCFD recommendations in four areas are outlined below.

Strategy

 Set a target rate for GHG emissions reductions in Shizuoka Prefecture
as a part of the impact metrics under the First Medium-term Business
Plan (targeting a 46% reduction [vs. FY2013] by 2030)
 Conclude partnership agreements with local governments (cities ofHamamatsu, Iwata, Kosai, and Gotemba) p. 29
 Begin offering Shizuoka GX Support (October 2023) p. 29
 Engage in dialogue with customers on decarbonization
 Promote sustainable finance Selected by the Ministry of the Environment for the ESG Regional
Finance Promotion Program for the second year in succession
 ESG Finance Awards Japan winner for two consecutive years (Silver Award
in FY2021 and Gold Award in FY2022)

 Establish policies on investments in and loans to specified sectors
 No new investments in or lending to coal-fired power generation in principle
 Conduct analysis of risk and scenario on climate change

Riskmanagement

Transition
risks

Subject industries: Automotive and components, paper, electric power
Results of analysis: Total increase of up to approx. JPY 18.8bn in creditrelated costs by 2050
Scope:

Physicalrisks

Risks such as physical damage to SMEs andborrowers
Results of analysis: Total increase of up to approx. JPY 14.8bn in creditrelated costs by 2050

SectorRiskmanagement

Targets

Governance Calculate balances and percentages of loans to four carbon-related asset
sectors

 Establish Group Policy on the Environment Operate structures established for dynamic promotion of environmental
management and oversight by the Board of Directors (Establisheddeliberation and reporting structures based on the Environmental Committee)

EnergyTransport

Materials/
buildings

Agriculture,
food,forestry
products

Total

Percentage

2.33%

8.05%

14.09%

4.30%

28.77%

Balance(JPY bn)

234.2

810.0

1,417.8433.0

2,895.0

 SFG's Greenhouse Gas (GHG) Emissions Reduction Targets
 Achieve carbon neutrality by FY2030 (Scopes 1 and 2)
 Sustainable Finance, Environmental Finance Cumulative total of JPY 2tn by FY2030 (including JPY 1tn
in environmental finance) Outstanding investments and loans for coal-fired power
generation
 Zero by or around FY 2040

Targets andmetrics
 Results and forecast of decreases in GHG emissions (unit: t-CO2)
 Switch all Company electricity contracts to renewables (June 2023)
 Operation of Shizugin Solar Park Participate in PCAF and estimate GHG emissions of the investees andborrowers
 Endorse and participate in GX League basic concept
 Respond to the CDP climate questionnaire (FY2022 rating: B-)

39

ESG initiatives

Environment

Efforts to achieve carbon neutrality by FY2030
Steadily convert electricity at all Group companies to renewable power

Since June
2023

Adopt impact metrics under the First Medium-term Business Plan.
Target decrease in GHG emissions in Shizuoka Prefecture: down 46% vs. FY2013 (FY2030)

April 2023

ESG Finance Awards Japan winner in two consecutive years (Silver Award in FY2021 and Gold
Award in FY2022)

February 2023

Earn a "B-" (management level) rating from the CDP
Establish targets for sustainable finance (JPY 2tn by FY2030).
Cumulative results through FY2023 1H: JPY 614.9bn (cumulative progress rate: 30.7%)

Establish the Shizuoka Financial Group Human Rights Policy

Society

December
2022

October 2021

March 2023

Sign Japan Impact-driven Financing Initiative.

November 2021

Join The Valuable 500.*

February 2021

Hold TECH BEAT Shizuoka (nine times in total)

Since 2018

* An international initiative intended to promote inclusion for people with disabilities

GovernanceTransform to a holding company structure (adopt the structure of a company with an audit andsupervisory committee)

October 2022

Introduce the Group Chief Officer system

October 2022

Disclose Board of Directors Skills Matrix (indicating areas in which each member is expected to play animportant role)

December
2021
40

Region-based Relationship Banking
Provide support from various perspectives, reflecting customer growth stages
Support for improving management and revitalizing businesses

Support for entrepreneurship and new businesses

Provide support for revitalization by developing business plans, partnering with external
agencies, and drawing on business regeneration funds.
Trends in number of projects
Firms involved(Projects)

Projects completed

54

57

58

59

60

58

13

12

12

14

14

7

FY2018FY2019FY2020

FY2021

FY2022

FY2023 1H

Some 300 firms have completed business
revitalization efforts since FY2005.

Preserve jobs for about 27,000 people and maintain theeconomic power of the local community.

Among customers provided support by the Business Support Division in response to
COVID-19 (approx. 700 customers), ratio of performing borrowers increased and that ofrequiring attention or lower remained almost unchanged.
Requiringattention or lower
Performing
10%
17%

Credit rating
trendsRequiringattention or lower
13%

Shizugin Entrepreneur Awards
These awards seek to expand employment and stimulate theeconomy in the region through support for new companies and new
businesses.
 The theme for FY2022 (the ninth awards) was Taking on New
Challenges Creates a Prosperous Future for the Local Community.
(Awards were presented to five winners chosen from 80 entries in
April 2023.)
 The nine awards to date have drawn 1,229 entries, with 64 winners.
 Follow-up of past award winners shows that this program contributes
to local economic development through the following improvements
achieved since the awards were granted:


Sales

March 31, 2022

Sept. 30, 2023

Efforts of the Industrial Transformation Support Project Team Create supply chain diagrams and begin proposing support initiatives through gathering information,

research, and analysis
 Launch the Shizuoka Nagoya Alliance Fund to support industrial reforms with Bank of Nagoya
 Conclud memorandum on advancement of auto-industry support with six regional banks:

Ashikaga, Gunma, Nagoya, Hiroshima, Yamagata, and Yokohama+419

This membership-based service seeks to enhance the management capabilities of the next
generation young business leaders and contribute to business and economic development in
Shizuoka Prefecture.
 It is undertaken in partnership with the Yamanashi Chugin Keieisha Club and the Bank of Nagoya
Business Club.
Structure of Shizuginship
Members: 667 corporate and 978 individual members as of the end of September 2023
Participants in activities in FY2023: 426 persons in total

Performing
21%

Nonperforming
66%

Employees“Shizuginship”; next-generation management courses

Cooperation

Shizuoka Bank
Nonperforming
73%+JPY 5.8bn[Leading companies in
Shizuoka Prefecture]

Various events andseminars
Providinginformation on theInternet

Advisory board

Requests

Supporting companies

Opinions

Support for activities

Chosen from
among
Shizuginshipmembers

Shizuginship members+ Collaboration

Cosponsorship andactive support by
local firms
Training next
generation ofmanagers
Networking among
members

Yamanashi Chugin Keieisha Club and Nagoya Bank Business Club members

41

Regional Revitalization
Promote new industrial development as an entity facilitating joint efforts among industry, government, and the academy by helping
create businesses that will contribute to the progress of the region
Shizuoka Kids Academy

Joint Shizuoka-Yamanashi Manufacturing Meeting held

Seek to develop human resources in the region by encouraging local children to learn about
the appeal of their hometowns while enjoying themselves, helping them feel a stronger
attachment to their hometowns, and encouraging them to remain in and work for the region in
the future.
<Activities in FY2023>

 In July 2023, with the industrial support agencies of both prefectures,
meetings were held between small and medium-sized
manufacturing firms in Shizuoka and Yamanashi prefectures andmanufacturers from the nearby prefectures of the Kanto region and
the Chukyo region as part of Shizuoka-Yamanashi Alliance initiative.
 Totals of 86 client firms and 199 subcontractors took part both inperson and online, resulting in 470 business discussions.

Date

Event

Participants@ Kadode Ooigawa: 100-year food and tea
experience
September(Cosponsored by JA Ooigawa and Kadode
Ooigawa K.K.)@ Kanogawa Kamishima Park: Kanogawa
Octoberhands-on learning experience(Cosponsored by JM K.K.)

Regional Bank Food Selection 2023 Event held32

 In October 2023, this large-scale trade show was held for foodproducts businesses at Tokyo Big Sight, together with 51
regional banks from across Japan.
 The event welcomed 874 participant companies and 6,782
food buyers over two days.

68

Partnership agreement concluded with W Tokyo Inc.
Concluded a partnership agreement with W Tokyo Inc., which operates the Tokyo Girls Collection
platform, to promote community co-creation projects in September 2023
Activities to build the future together with the younger generation
Community branding
New business creation
Promoting awarenessof the SDGs among
the young

City promotion
Communicating
community appeal
nationwide and worldwide

Contribute to fostering civic pride among the young andto build a sustainable and vibrant community

Individual business discussion meetings held
As part of Shizuoka-Yamanashi Alliance initiative intended to grow mutual trade and interaction
between the two prefectures, held business discussion meetings for suppliers hoping to tradewith supermarkets, food product wholesalers, and other businesses in Shizuoka andYamanashi prefectures.
<Meetings held (January 2021–September 2023)>
Total

Meetings held
Applications
Participants
Business
discussions

26
830
594
843

From Shizuoka From Yamanashi
Bank
Chuo Bank
–
–
535
251
354
211
535

279

* Including those cosponsored with partners other than Yamanashi Chuo Bank

42

Economy of Shizuoka Prefecture – Economic scale
Accounting for 3% of Japan's national economy, the Shizuoka Prefecture economy ranks 10th among Japanese
prefectures. Its prefectural GDP exceeds the combined GDPs of the four prefectures of Shikoku or the three
Hokuriku prefectures and rivals the national GDPs of Algeria and Hungary.

Shizuoka Prefecture KPIs

Shizuoka Prefecture's economic scale
Nationwide share

Population

3.53 mn

2.9%

Prefectural GDP (FY2019, nominal)

Nationwide rank

10/47 (2023)

Rank

Prefecture, region(USD bn)

9

Fukuoka

183.5

Households

1.58 million

2.7%

10/47 (2023)

10

Shizuoka

164.4

Prefectural GDP (nominal)

JPY 17.1tn

3.1%

10/47 (FY2020)

11

Ibaraki

129.7

Prefectural GDP per capita

JPY 3,110k−

Four prefectures of Shikoku

136.6

−

Three prefectures of
Hokuriku

123.2

Business locations
Shipments of manufactured
goods, etc. by value
Agricultural production
Fisheries production
Factory locations
New housing starts−

6/47 (FY2020)

190,000

3.0%

10/47 (2019)

JPY 17.3tn

5.2%

4/47 (2021)

JPY 208.4bn

2.4%

15/47 (2021)

210,000 t

6.5%

4/47 (2022)

52

5.6%

4/47 (2022)

20,0002.3%

10/47 (2022)

Comparison to national GDPs (2019)
Rank

Country, region(USD bn)54

Kazakhstan

181.7

55

Qatar

176.4

56

Algeria

171.7−

Shizuoka Prefecture

164.4

57

Hungary

164.0

58

Ukraine154.0

Source: Economic and Social Research Institute (ESRI), Cabinet Office, Government of Japan and other43

Shizuoka Prefecture's Attractions (1) – Nature, tourism
Southern
Japan Alps
UNESCO Eco Park

Positioned at a transportation hub between Tokyo, Nagoya, and Osaka.
Chubu Odan Expressway enables convenient north-south transport.
One of Japan's leading sightseeing destinations, thanks to its natural
attractions that include Mt. Fuji, the southern Japan Alps, and Lake
Hamana.
Rank highly among desired relocation destinations in Japan.

Mt. Fuji

Chubu Odan
Expressway◼ Rankings of desired relocation destinations in Japan by prefecture

Port of Tagonoura

Ranked highest in 2022 survey (for third consecutive year)
Popular as a relocation destination among all generations

Shin-Tomei
Expressway

Ranking of desired relocation destinations
2019

2020

2021

2022

3

1

1

1

Tomei
Expressway

Lake
HamanaSource: Survey by the nonprofit Center for Support to Returnto Hometown

Lake Hamana
 The 10th largest lake in Japan Renowned for recreation and the cultivation of eelsand other aquaculture

Source: Hamamatsu and Lake Hamana Bureau of Tourism website

Port of Shimizu

Included in the World Heritage List as “Fujisan,sacred place and source of artistic inspiration”

Global Geopark
SurugaBay

Port of Omaezaki

UNESCO World Heritage Sites in Shizuoka Prefecture
Mt. Fuji (added June 2013)

Izu
PeninsulaPort of Yaizu

Nirayama Reverberatory Furnaces (added July 2015)

Included in 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)

The ninth certified Global Geopark in Japan44

Shizuoka Prefecture's Attractions (2) – Industry, economy
One of the leading manufacturing prefectures in Japan, Shizuoka Prefecture features a wellbalanced industrial structure that includes vehicles, pharmaceuticals and medical devices,and musical instruments.
The health and medicine industry has a hub in the eastern prefecture, and various advanced
industry hubs exist within the prefecture.
It ranks highly among relocation destinations for headquarters and factories in Japan every
year.
◼ Headquarters relocation to Shizuoka Prefecture◼ Plant locations in Shizuoka Prefecture

Number of certifications under the regional facility
enhancement tax program:82 (cumulative through end of FY2022)
Top nationwide for four consecutive years

It ranks highly among numbers of factory
locations in Japan every year.

◼ Shizuoka Prefecture's industrial composition
Shipments of manufactured goods, etc. by value:
JPY 17,290.5bn
Fourth highest in Japan (2021)
Food
products
12%

Production
machinery
11%
Vehicles8%
Pulp andpaper
6%* As of September 30, 2023

2020

2021

2022

67

78

54

49

52

4

2

3

 Yamaha Motor◼ Listed companies headquartered in
Shizuoka Prefecture (TSE)2019

Nationalrank Hamamatsu Photonics
 Yamaha Suzuki

2018

Locations Star Micronics

4

4

Source: Ministry of Economy, Trade and Industry, Factory
Location Trends Survey

Exchange

Companies

TSE Prime

20

TSE Standard

30

TSE Growth

1

Total

51

◼ Shizuoka Prefecture's health and medicine industry
Metallic
products
12%

Other
44%

FY

 Shibaura Machine

Beverages, tobacco
products, feed 7%

Source: Ministry of Economy, Trade and Industry,
Economic Census

Total production of pharmaceuticals and medical
devices by value
Approx. JPY1 tn: Second highest in Japan (2021)
Product

Production(JPY bn)◼ An advanced industrial hub
Next-generation vehicles, optical and quantum
technologies, marine biotechnologies, cellulose
nanofiber (CNF), etc.

National rank

Pharmaceuticals

699.8

3

Medical devices

339.1

1

Total

1,038.92

Source: Ministry of Health, Labour and Welfare and Shizuoka
Prefecture Pharmaceutical Affairs Office, Statistics ofProduction by Pharmaceutical Industry

Source: Center for Next Generation Cars
Hamamatsu website

45

Trends in loans and deposits
Balances of both loans and deposits have steadily trended up both inside and outside Shizuoka Prefecture since FY2004,
and the Bank has one of the highest external credit ratings of any Japanese bank.

One of the highest external credit ratings of any Japanese bankTotal loan balance (average)(JPY bn)

Portion in Shizuoka Prefecture

9,815.0

10,128.6

8,740.1

5,791.3

6,325.6

7,011.5

3,411.8

3,858.5

Rating and Investment Information (R&I)

7,694.2

4,576.6

4,739.7

5,006.3

5,222.2

5,262.1+1,850.3
FY2004

FY2007FY2010FY2013

FY2016FY2019FY2022

FY2023 1H

Total deposit balance (average)(JPY bn)

Portion in Shizuoka Prefecture

11,441.0

11,765.2

Shizuoka Bank
Moody’s

A1

S&P Global Ratings

A-

Rating and Investment Information
(R&I)

AA-

Moody’s long-term ratings (as of September 2023)

9,914.0

8,408.6

9,049.1

A1

7,615.6
6,678.6

5,574.6

6,759.2

5,834.3+5,086.6

6,407.9

7,045.1

7,692.1

8,613.4

9,861.3

10,044.2+4,469.6
FY2004

FY2007FY2010FY2013

FY2016A+ ** The rating is one rank below consolidated subsidiary Shizuoka Bank due to thestructural subordination inherent to a holding company.

+5,112.3

5,016.3
4,276.6

Shizuoka Financial GroupFY2019FY2022

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

A2

Resona Bank, Bank of Yokohama, and four other banks(including two regional banks)

A3

The Bank of Fukuoka, Joyo Bank, and four other banks(including four regional banks)

FY2023 1H

46

Loans – Loans by industry
Expected loss (EL) for all industries totals JPY 12.4bn, while unexpected loss (UL), or credit risk, for all industries totals JPY 88.9bn.

Status of business loans to certain industries
Credit balance vs. expected loss rate*

Credit balance (as of the end of September 2023)(JPY bn, %)All industries

Composition ratio

6,781.4

100.0

Change fromprevious FY+146.1

Real estate *1

1,038.7

15.3

+97.1

Transportation
machinery

502.6

7.4

−31.7

Wholesale *2

462.2

6.8

+17.3

Leasing

401.9

5.9

+6.2

Money lending andinvestment

370.5

5.4

+41.6

Construction

283.2

4.1

(JPY bn)

1,050

Real estate

850

Credit balance

Balance(Excluding borrowers classified as effectively insolvent or lower)
1,250

650

Transportation
machinery
WholesaleLeasing450

Money lending andinvestment+3.4

RetailConstruction

250

Retail

280.9

4.1

−1.1
Accommodations

Accommodations

88.6

1.3

−0.6

50

0

*1 Excluding apartment loans and loans for asset building*2 Excluding general trading companies

0.4

0.8

(%)

Expected loss amount* Expected loss (EL) amount / Credit balance47

Allocation of risk capital

Allocation source
Credit risk
248.0

Percentage of risk
capital used

Risk capital
allocated

Risk capital used

Loans (credit risk)

164.5

124.0

75%

Treasury division

279.6

135.2

48%

7.0

2.5

36%

Subsidiaries of Shizuoka
Bank

2.0

0

1%

Strategic investments

15.0

6.1

40%

Operational risk

25.5

25.5

100%

Subtotal

493.6

293.4

59%

308.1

−

−

801.7

−

−

(JPY bn)

Subsidiaries of holding
company, etc.
(excluding Shizuoka Bank)Core capital
JPY 801.7bn

Market risk
205.1

(End of Sept. 2023)

Strategic investments
15.0
Operational risk
25.5
Buffer capital, etc.
308.1

Buffer capital, etc.
Total

 Core capital = CET1 (excluding valuation difference on available-for-sale securities) <fully-loaded basis>
 Risk capital used = <Market risk> │VaR│<Credit risk> (1) │UL│ (loan balance includes bad debt written off, CVAs)(2) Basel III capital requirement (designated loan claims, securitization transactions, investment funds, private REITs)<Operational risk> Amount corresponding to operational risk
 Buffer capital is set aside for emergencies such as major earthquakes and other unquantifiable risks

48

Group companies (excluding Shizuoka Bank)
The total ordinary profit of group companies (excluding Shizuoka Bank) in FY2023 1H was JPY 0.3bn (down JPY 4.6bn YoY).
The profit without extraordinary factors of Shizuoka Bank (Europe) S.A. was JPY 4.2bn (down JPY 0.7bn YoY).
Company name

FY2023 1H
ordinary profit

Main businesses(JPY bn)

YoY change

Shizugin Management Consulting Co., Ltd.

Corporate and financial management advisory services; bill collection
services

0.2

−0.0

Shizugin Lease Co., Ltd.

Leasing

0.9+0.1

Shizuoka Capital Co., Ltd.

Support for public offering of stock shares; rehabilitation support for SMEs

0.1

−0.0

Shizugin TM Securities Co., Ltd.

Financial instruments brokerage

1.0

−0.0

SFG Marketing Co., Ltd.

Marketing support; advertising agency

−0.0

−0.0

Shizugin IT Solution Co., Ltd.

Computer system development and operation; data processing services

0.1

−0.1

Shizugin Credit Guaranty Co., Ltd.

Credit guarantees

2.0

−0.1

Shizugin Card Co., Ltd.

Credit card business; credit guarantees

0.4

−0.1

Shizuoka Bank (Europe) S.A.

Banking; finance and securities services

−4.4*

−4.3

Shizuoka Liquidity Reserve Ltd.

Purchase of monetary receivables

0.1

−0.0

Shizugin General Service Co., Ltd.

HR, general affairs, financial operations; fee-based job placement service

−0.0

−0.0

Shizugin Mortgage Service Co., Ltd.

Evaluation and appraisal of real estate loan collateral; operation center for
loans

−0.0

−0.1

Shizugin Business Create Co., Ltd.

Operation center for forex remittance, bill collection,etc.

0.0

+0.0

Shizugin Heartful Co., Ltd.

Production, printing, and binding of documents

0.0

+0.0

0.3

−4.6

Subsidiaries of Shizuoka Bank

Total excluding Shizuoka Bank (14 companies)(Reference) Equity method affiliates* Includes −JPY 3.9bn from transfer of securities to Shizuoka Bank (offset on a consolidated basis)

Shizugin Saison Card Co., Ltd.

Credit cards; prepaid cards; credit guarantees

0.1

−0.0

Monex Group, Inc.

Holding stocks of companies involved in financial instruments brokerage andother businesses

5.5*

+3.4
* Pretax income49Shareholder returns – Share buybacks (over time)Through FY2022, 210 million shares (26.1% of shares outstanding before initial retirement in 1997) have been retired.
Have retired an additional 10 million shares on May 31, 2023.
* Consolidated financial statements have been prepared since FY1998.
Shares boughtback (thousand)

FY1997
FY1998FY1999FY2000FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008FY2009FY2010FY2011FY2012FY2013
FY2014FY2015FY2016FY2017FY2018FY2019FY2020
FY2021
FY2022
FY2023 (interim)
Cumulative total

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
10,00010,00010,00010,000–10,00010,000–255,811

Repurchaseamount (JPY mn)

Number of shares
retired (thousand)Retirement amount(JPY mn)

Shareholder return
ratio (consolidated)
(%)*

EPS
(consolidated)*
(JPY)

BPS
(consolidated)*
(JPY)

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
10,000–242,557

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––10,000220,404

9,997
9,142
9,143
23,281
8,267–
23,381–––
10,130–
4,638
15,957–
14,953–––
20,578–30,530
10,139
9,619
–
–
9,210
208,968

–
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––

DPS(consolidated)*
(JPY)

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
–
–

50

This document includes statements concerning future business results.
These statements do not represent guarantees of future business results andentail various risks and uncertainties.
Note that future business results may differ from targets for various reasons,
including changes in the business environment.
Note: Figures in graphs that show year-on-year comparisons are calculated using the figures that appear
in the graphs.

Contact
Yukimasa Okumoto, Corporate Planning Office, Corporate Planning Department,
Shizuoka Financial Group, Inc.
Tel:

+81-54-261-3111 (main switchboard)Fax:+81-54-344-0131

Email: ir@jp.shizugin.com+81-54-345-9161 (direct)
URL: https://www.shizuoka-fg.co.jp/

Shizuoka Financial Group
Website (IR News)Medium-/long-term growth strategy (1) – Alliance strategy with regional banks
Realizing sustained growth for each region and partner group through joint efforts with alliance partner banks on solutions
to various regional challenges

Shizuoka Nagoya Alliance (established in Apr. 2022)

Shizuoka Yamanashi Alliance (established in Oct. 2020)
Focusing on economic development in both prefectures and on projects to contribute to mutual use
of management resources
Revised the initial KPI (JPY 10.0bn in total for both banks, cumulative over five years) to JPY 12.0bn (total forboth banks, cumulative over five years) in the third year of this alliance, assuming that the initial KPI is
likely to be achieved by the end of five-year timeframe.

Aim to achieve revenue effects of JPY 10.0bn or more (total for both banks, cumulative over five
years) through solutions to customers' challenges, chiefly by supporting business partners instructural reform of regional industries.

Asset-building support
Life planning

Finance

Shizugin TM Securities Yamanashi Head Office
Customer assets balance: JPY 24.6bn

Lending field JPY 122.4bn
Joint lending included above
JPY 37.4bn
Business-succession M&A projects
First deal concluded(As of Sept. 30, 2023)

Offering jointly developed products (insurance,
investment trust)Three-bank cooperation

Sales-channel
development support

24 individual meetings, 128 business matching cases(JPY bn)
Finance
Life planning
Other

6.9

New KPI:
JPY
12.0bn10.2

Shizugin TM Securities Nagoya Head Officeopens(On Second floor of Bank of Nagoya’s Head Office)15 staff members (including five staff members
seconded from Bank of Nagoya)Supports asset building for Bank of Nagoya’s
customers

Establishing the Shizuoka Nagoya AllianceFund to support industrial reforms(June 2023)

4.6

Finance

1.1

Futureoutlook

FY2023(projected)

JPY 33.1bn

Joint lending included above
JPY 10.0bn

vs.
Target:

Other

2.6

FY2022

Lending field(JPY bn)

2.3
FY2021

Finance

Supporting industrial reforms

FY2025(projected)• Highly likely to achieve initial KPI mainly due to life planning and financebusinesses• Moving to the next stage of the alliance by focusing on solutions to social
challenges, chiefly through measures to help increase related populations,an issue confronting both regions.

FY2022Futureoutlook

FY2023 (projected)

6.2

62%
FY2026 (projected)• Have achieved significant results in the finance field, and planning to expand
it to life planning and other fields of business partnerships.
• Will provide appropriate support for reforms to regional businesses throughenhancements based on the main theme of measures to help support
industrial reforms, including use of the Alliance Fund.

26