Shizuoka Financial Group

Summary of FY2023
Financial Results

May 22, 2024
Hisashi Shibata
President
Clearing the way
to a new era

Contents

1.

Summary of FY2023 Financial Results

2.

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

－ Efforts to raise ROE－ Medium-/long-term growth strategy

p. 3－

p. 17－
p. 21－27
p. 28－33

3.

Capital Policies

p. 34－

4.

Reference Materials

p. 38－

2

Summary of FY2023 financial results (consolidated)
Both ordinary profit and net income reached new record highs, driven mainly by the steady growth in gross operating profits centeredon net interest income and fees and commissions.
New record highs forprofits in each segment

Main causes of changes

YoY change

FY2023

Increase/decrease(JPY bn, %)1 Increase in gross operating profit

Increase/decrease (%)

Gross operating
profit171.3

Operating expenses (−)

96.5

+0.6

+0.6

Share of profit (loss) of entities
accounted for using equity method

8.1

+7.7

ー

Net operating profit*1

83.1

+17.6

+26.8

Credit-related costs (−)

5.0

-0.6

-11.2

Gain (loss) on stocks

23.0

+9.2

+66.7

Ordinary profit

102.2

+28.3

+38.2

Extraordinary profit (loss)

-22.7

-22.1

ー

Net income before taxes

79.5

+6.2

+8.4

+11.2

+6.9

Increase mainly due to higher gross profit at Shizuoka Bank (net interest income, fees andcommissions, etc.)

２ Increase in share of profit (loss) of entities accounted for using equity method
Sale by the Monex Group of stock in subsidiaries temporarily boosted share of profit (loss) ofentities accounted for using the equity method.

３ Effect of revaluation of fixed assets
Extraordinary losses recorded accompanying revaluation of fixed assets in efforts to minimize
future depreciation
In addition, gains recorded on sale of stock, etc. (JPY15.0 bn) by reducing strategic
shareholdings

Increase/decrease in net income

３
２

1 Gross operating
profit +11.2

Other
Fees and (extraordinary,
other)
commissions+7.0
Total income taxes (−)

21.7

+0.9

+4.1

Net
interest
incomeNet income*2

57.8

+5.4

+10.2

+8.9

Share of profit(loss) of entities
accounted forusing equity
methodGain (loss) on Extraordinary
profit/loss
stocks

+9.2(JPY bn)

-22.1

+7.7

-4.7

Other

-0.6
ROE (based on net assets)

4.9

+0.2

ー

ROE (based on shareholder
equity)

6.2

+0.3

ー

57.8
52.4

vs. FY2022: +5.4

*1 Net operating profit = net operating profit for Shizuoka Bank (nonconsolidated) + consolidated ordinary profit – ordinary
profit for Shizuoka Bank (nonconsolidated)*2 Net income attributable to owners of the parent

FY2022

FY20233

Results for major Group companies (1)Gross operating profit reached a new record high at JPY153.8 bn (up JPY9.5 bn YoY), driven mainly by the steady growth in net interest
income and fees and commissions.

Shizuoka Bank, Nonconsolidated
YoY change(JPY bn, %)Gross operating profit

FY2023

1

Increase/decrease

Increase/decrease (%)

1

Gross operating profit
Net interest income:Record highest profit

153.8

+9.5

+6.5

➢

129.7
25.7
0.7
-2.3
(-0.3)(-2.7)

+8.1
+4.6
-0.6
-2.5
(+7.2)(-9.8)

+6.6
+21.5
-46.9
-1,418.1(-95.7）(-137.8)➢➢

Expenses (−)

86.3

-0.6

-0.6

Up mainly due to higher interest on loans in thedomestic business segment and higher interestand dividends on securities
Fees and commissions: Financial and consulting fees, etc. increased.
Other operating profit: Transient factors, such as losses on sale offoreign bonds and foreign exchange trading profit
recorded in the previous fiscal year, have been
eliminated

Actual net operating profit *

67.5

+10.1

+17.5

２

Net operating profit

Provision for general allowance for loan
losses (−)

-0.5

+1.3

-73.8

➢

67.9

+8.8

+14.8

Net operating profit rose with the increase in gross operating profit
despite higher provisions for general allowances for loan losses.

Nonrecurring profit and loss

19.1

+10.7

+126.6

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

３

Ordinary profit

4.4
22.7

-2.1
+9.1

-32.2
66.5

➢

87.1

+19.5

+28.8

Extraordinary profit (loss)

-24.0

-20.8

+660.0Up mainly due to gains on sale of strategic shareholdings withsimultaneously recorded re-evaluation of fixed assets, in addition
to higher gross operating profit

Net income before taxes

63.0

-1.4

-2.1

Total income taxes (−)

17.8

-0.4

-2.3

45.2

-1.0

-2.0

3.9

-0.8

-17.4

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

Ordinary profit

Net income
Credit-related costs (−)

2

3

4

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

Record highest profit

４ Net income➢

Down mainly due to early lump-sum recording of future branch-related
costs as an impairment loss and costs of transition of the European
subsidiary to a representative office as extraordinary losses
4Results for major Group companies (2)The earning capability of the Group companies grew steadily under the holding company structure. We will continue striving todemonstrate the further synergies through Groupwide coordination.
Shizugin Lease Co. Ltd.
Trend in profit contributions to the GroupGrowing lines of business by enhancing product lines that help create or identify solutions to community
challenges, including efforts to launch carbon-offset lease
Improving credit risk management and profit management by adopting the internal rating method in March
2024

Group company profits, including fees for customer referrals to the Bank, aregrowing steadily.
Fees for customer referrals to the Bank
Ordinary profit of Shizuoka Bank subsidiaries *

10.3
0.5

(JPY bn)

Ordinary profit of Shizuoka Financial Group subsidiaries

10.6

+0.3

11.1

+0.5

1.5

1.0
4.1

4.8

(JPY bn)

Ordinary profit

5.1

4.5

Net income

6.0

3.4

+0.1

1.7
1.7
1.2

-0.1
+0.1
+0.1

[Trend in balance of leases
and installment claims](JPY bn)

126.0

129.6

FY2022

FY2023Completed the first investment in alliance fund formed to promote regional industrial reform
Activities to grow investments in venture capital were also accelerated, and new investments remained
steady5.5

FY2021

YoY change

Shizuoka Capital Co. Ltd.

YoY change in
Shizugin TM
Securities revenues
related to structured
bonds: -JPY600 mn

5.0

Gross operating
profitExpenses (−)

FY2023

5.2

FY2022(JPY bn)

Gross operating
profitExpenses (−)

FY2023* Not including Shizuoka Bank (Europe) S.A. (Liquidated in FY2023 with transition to a representative office)Ordinary profit
Net income

FY2023

YoY change

0.5

+0.0

0.3
0.3
0.2

+0.0
+0.0
-0.0

[Investment in venture capital]
Amount invested (JPY bn)
Number of investments(venture capital)

1.2

0.8
19

FY202224

FY2023

Shizugin Management Consulting Co. Ltd.
Enhancing the staffing structure for future expansion of the business lineup through additional hiring ofspecialized human resources (eight new midcareer hires)
Enhancing the capacity to provide new services in aspects such as J-Credit and digital transformation (DX)
while strengthening the marketing capabilities of existing businesses through M&A and related activities(JPY bn)

Gross operating
profitExpenses (−)

Ordinary profit
Net income

FY2023

1.8
1.3
0.5
0.4

YoY change

+0.5
+0.4
+0.1
+0.0

(JPY bn)[Trend in consulting fees]
1.6

Management
support1.2

Business
succession

0.2
0.2

M&A

0.8

FY2022

0.2
0.2
1.1

FY2023

Shizugin TM Securities Co. Ltd.
Steady growth in sales commissions, centered on investment in stock. Also, steadily establishing asales structure with an emphasis on stock assets[Trend in balance on［預り資産残高の推移］
customer assets](JPY bn)

Gross operating
profitExpenses (−)
Ordinary profit
Net income

FY2023

YoY change

7.5

+0.9

5.5
2.0
1.4

+0.6
+0.2
+0.2

Corporate
うち法人
Retail
うち個人

1,047.3
10,473
485.4
4,854
561.9
5,619

(JPY bn)

1,285.6
12,856
593.9
5,939
691.7
6,917

March
31, 2023 March
31, 2024
2023年3月末
2024年3月末

5Net interest income (Shizuoka Bank, nonconsolidated)
Total net interest income grew by JPY8.1 bn, driven mainly by steady growth in the domestic segment.

Breakdown of net interest income(JPY bn)
Net interest income

FY2021

Loan balance (average balance) and yields

FY2022

FY2023

YoYchange

124.5

121.6

129.7

+8.1

110.0

110.7

118.0

+7.3

Interest on loans

89.3

90.9

93.4

+2.5

Interest and dividend on
securities

19.0

18.5

24.6

+6.1

(Bonds)

2.5

5.2

9.4

+4.2

(Investment trusts)

2.5

0.0

1.1

+1.1

1.0

0.8

1.7

+0.9

0.9

0.8

0.7

-0.1

Other

2.7

2.1

1.7

-0.4

International

14.5

11.0

11.7

+0.8

Interest on loans

8.7

25.9

45.6

+19.7

Interest and dividend on
securities

10.8

16.2

28.8

+12.6

Domestic

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

4.8

11.8

26.4

+14.6

(Investment trusts)

2.6

1.9

0.4

-1.5

5.3

37.1

76.3

+39.2

1.3

17.4

40.2

+22.8

0.3

6.0

13.6

+7.6

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

Domestic

International(JPY bn)(JPY bn)

Average balance
Yields+319.7+355.2

8,795.3

Average balance+61.9

Yields9,470.2

9,150.5

+77.8

726.4

664.5
6.28%

586.7
3.90%
1.01%

0.99%

0.98%

FY2021

FY2022

FY2023

1.48%
FY2021

FY2022

FY2023

Interest on loans
International
Domestic

98.0
8.7
89.3

FY2021

+18.8
+17.2

+1.6

(JPY bn)

116.8
25.9

90.9

FY2022[Key factors underlying
changes in interest on
international loans]

+22.3

139.1

+19.7

45.6

Balance factors:
Interest rate factors:
Forex factors:

93.4[Key factors underlying
changes in interest on
domestic loans]+2.5

FY2023

Balance factors:
Interest rate factors:

-0.6
+16.6
+3.7

+3.2
-0.7

6

Loans (Shizuoka Bank nonconsolidated)
Total loan balance (average balance) grew due to growth mainly in loans to SMEs and retail loans (+3.8% annually).

Loan balance (average balance)(JPY bn, %)FY2023

Loan balance (by segment)
YoY change

Total loan balance

10,196.6+381.6+3.8%

Loan balance to SMEs

4,134.2+222.6+5.6%

Loan balance to large andmedium-sized enterprises

1,849.9

-17.2

-0.9%

Retail loans

3,828.7+147.2+4.0%

Loan balance in foreign
currency

673.6

Shizuoka Prefecture

Annual rate

+47.2

+432.99,382.1

SMEs loan balance (average balance)
Term-end balance of“Zero-Zero loans”
March 31, 2024: JPY 127.3 bn(Down JPY 65.1 bn YoY)

+222.6
4,134.2

3,660.9

+15.2

230.4

+41.8

272.2

3,987.1+375.3

4,362.4+293.2

4,655.6

5,179.7+42.5

5,222.2+46.5

5,268.7

2,231.8

2,270.7+38.9

FY2023

Maintaining approx.
10% annual growth

FY2022Kanagawa Prefecture

1,245.5 （+104.7）

1,367.7（+122.2）

1,517.5（+149.9）

Shizuoka + Kanagawa
Prefectures

6,425.2 （+102.5）

6,589.9（+164.7）

6,786.3（+196.4）

32.3

24.7

2,309.6

12.4

Shizuoka
Bank

(%)

36.8

36.4

29.2

28.9

27.9

29.0

27.7

25.3

25.6

27.4

27.2

26.3

34.2

30.5

+38.9

10,196.6

215.2(JPY bn)

3,911.6+381.6

Share of loans in Shizuoka Prefecture

Bank as a whole
Shizuoka Prefecture+250.7

9,815.0(JPY bn)

Overseas branches

FY2021+7.5%

Balance factors: -JPY8.3
Forex factors: +JPY55.5

Outside Shizuoka Prefecture

34.8

36.8

Other regional banks
11.3

8.7

FY2010

8.3

8.8

9.1

FY2013

FY2016FY2019

36.7

37.1

29.7

29.9

Shinkin banks
21.8

21.2

11.7

11.7

FY2022Feb. 2024

Megabanks
FY2021

FY2022

FY2023

FY2004

FY2007

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 andcommissions grew YoY by JPY 3.6 bn.
Home loan and apartment loan balances by region
Term-end balance(term-end balances)
3,888.6 +178.4
Unsecured loans

Home loans

4,067.0 +190.2

2,469.5+130.62,600.1+140.0Outside Shizuoka Prefecture

190.9

Apartment loans

1,060.0

1,117.1

1,172.8

67.1

58.3

March 31, 2022

1,692.3

March 31,2022

March 31, 2024

54.1

3.7
5.6

4.1
5.8

1.301%

Averagerate

57.7

1,733.4

501.3

659.8

665.5

671.5

+49.8

+5.7

March 31,2022

March 31,
2024

+6.0

March 31,2023

March 31,2024

(JPY bn)

March 31,2022

March 31,2023

March 31,
2024

6.1

Home loans

0.11％

0.14%

0.11%

Apartment loans

0.01％

0.03％

0.04%

0.26％

0.14%

0.39％

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2022

Shizuoka Prefecture

92.5％

93.5％

94.0%

Outside Shizuoka
Prefecture

93.3％

94.1％

95.1%

24.7

25.0

Loans for asset building

1.260%

1.231%

6.8

6.5

Rental property occupancy
rate

11.6

12.1

Other

0.8

0.6

0.5

FY2022

451.5

6.6

13.0

FY2021

400.2

+51.3

+19.3

March 31,2023

1,172.8

Delinquency rate (threemonths or longer)

Loans for asset
building
Apartment loans

6.9

1,714.1

1,117.1

1,060.0

1,006.6(JPY bn)

Delinquency rate and occupancy rate
+3.6

53.2

2,740.1+120.7

+21.8

47.1

March 31, 2023

+0.9

24.5

885.9

777.3

Interest amounts, fees, and rates

Home loans

2,600.1+108.6

197.9

Apartment loans
Shizuoka Prefecture
Outside Shizuoka Prefecture(JPY bn)

Shizuoka Prefecture

2,740.1

185.8

Loan-related fees
and commissions
Unsecured loans

Home loans

2,469.5

Loans for asset
building

Other(JPY bn)

111.4

100.7

94.0

4,257.2

FY20238

Market credit investment
Revenues have grown through efforts which was launched in FY2013 to develop investment and lending fields based on the sound risk and return analysis.
Valuation gains on private equity investment grows steadily, despite the recent decline in the returns due to Exit delays caused by IPO reduction and cost
increase in raising funds in foreign currencies, and other factors.

Revenue trend

Market credit investment balance (ending)

Fee revenues
Lending revenues/expenditures

11.5
3.2

4.7

1.0
0.7
3.0

1.3
0.8
0.1
0.4

FY2013

FY201615.1

5.6

PE (overseas)

62.6

1.5

2.6
5.7

33.1

9.1

8.3

FY2022

FY2023

Lending balance (average) and composition(JPY bn)

836.6

567.7

124.4

Securitization loans(CLO, etc.)
15%

Projectfinance
14%
FY2016FY2019FY2022

Well-diversified portfolio (JPY: foreign currency = 6:4)
99% allocated to performing borrowers
LTV real estate nonrecourse loan average: 59.7%

Lending profitability indicators
Return on assets (ROA)
Return on risk-weighted assets (RORA)

3.2
9.7

23.0

March 31, 2017

March 31, 2020

FY2023

Corporate(senior)26%
Corporate(mezzanine)
21%
Asset finance2%

CLO balance (March 31, 2024)
JPY 145.4 bn (34 details: JPY 4.3 bn average)
All AAA-rated
Subordination ratio: 35.0–41.8%

FY20221.07%
1.82%

FY2023
1.07%
1.85%

10.8
54.7

41.0

31.4

30.8

March 31, 2023

March 31, 2024

Private equity investment ( excluding private REITs and real estate investment funds )Composition (FY2023)

Real estate
nonrecourse
loans
22%

377.4

March 2014
(monthly)

9.8

9.8
1.6
March 31, 2014

764.5

20.2

11.4

FY201929.8

YoY change+0.00pt+0.03pt•••(JPY bn)

20.3

83.2

PE (domestic)

4.5

2.8

105.8

Real estate related (private REITs and real estate investment funds)(JPY bn)

16.7

Private equity, etc.

Building a time-diversified portfolio through renewed annual
investments
Building a geographically and strategically diversified portfolio
through well-balanced investments in various domestic and foreign
funds
Securing average yields of 8% or more over the most recent threeyears

Composition (FY2023)
Infrastru Other
cture
3%
3%
Mezzaninedebt
32%
Growth VC
10%Buyout52%[Private equity investment results (excluding private REITs and real estate investment funds)](JPY bn)
Investment commitment (annual)
Investment commitment (total)
Domestic
ForeignInvestment balance (ending)Investment gain/loss (annual)
Revaluation gain/loss (term end)

FY2013
4.7
14.0
14.0
0.0
1.6
0.7
+1.2

FY2016
8.9
36.7
27.7
9.0
12.9
0.2
+0.5

FY2019
10.8
66.1
45.5
20.6
32.8
1.7
+3.6

FY2022
21.9
129.0
63.2
65.9
72.4
4.4
+10.1

FY2023
20.8
156.4
67.9
88.5
85.5
4.0
+12.1

9

Deposits (Shizuoka Bank nonconsolidated)
Balances of the both corporate and retail deposits sustained to grow (average balance) (+2.7% annual).

Trends in deposit balances (average balance)
FY2023

YoY change

Share of deposits in Shizuoka Prefecture
ShizuokaBank

Annual rate

Total deposits

11,755.5+314.5+2.7%

Deposits in
Shizuoka Prefecture

10,022.7+161.4

+1.6%

34.7
34.4

Corporate deposits

3,039.8+100.8+3.4%

Retail deposits

7,694.6

+80.8

+1.0%

327.6

Public deposits

-3.7

35.4

34.6

36.0

34.8

35.2
34.9

37.6

38.1

38.4

35.8

35.6

35.8

35.4
34.4

Shinkin banks

Other regional banks

18.6

17.8

12.1

11.9

-1.1%

18.1
11.0

19.1

10.6

(%)

18.7
11.3

16.0

15.5

15.3

10.3

10.7

10.3

FY2019FY2022February
2024

Megabanks

135.0

NCDs

+45.7

+51.1%

Outside Shizuoka Prefecture

11,228.3 +212.7

404.4

424.4
1,160.6

9,643.4

FY2021

11,441.0+14.7+217.91,175.3

9,861.3

FY2022

FY2007FY2010FY2013

FY2016

Loan deposit ratio / security deposit ratio (excluding NCDs)

Deposit balance (by region)
Shizuoka Prefecture

FY2004(JPY bn)

Overseas+314.5

11,755.5
471.8

+85.7

+161.4

104.3

116.8

113.5

114.4

1,261.0

10,022.7

75.1
29.2

FY2023(%)

Loan deposit ratio +security deposit ratio

FY200485.7
31.2

FY2007

88.9

88.0

105.3

101.0

106.0

110.6

85.0

88.1

85.7

86.7

Loan deposit ratio

24.6

26.4

FY2010FY2013

Security deposit ratio

20.3

FY201612.9
FY201920.2

23.9

FY2022

FY202310

Securities (Shizuoka Bank, nonconsolidated)
Managing the securities portfolio based on the appropriate risk management while accounting for the impact of fluctuating interest rates

Gains and losses on securities

Securities
Breakdown of bonds: Government-guaranteed bonds: 31.0 Financial institution bonds: 157.2
Corporate bonds: 288.6
Corporate bonds held to maturity: 25.2
(Private placement bonds: 25.5)+386.7

954.6
854.5

2,317.0+254.1

Municipal bonds
Corporate bonds
Equities
Foreign bonds

600.4(fixed)(190.7)

Other

164.6
100.1

496.0

+70.9

457.4

+40.9

416.5
(223.0)Investment trusts

+39.3

425.1

(variable)

Foreign bonds

235.9

196.6

(201.5)

March 31, 2022

+120.8+88.2+16.4

3,334.4

2,947.7+630.7

JGBs(JPY bn)+100.1

+0.5
+6.0
+56.6
+84.0

236.4
502.0
514.0
(227.0)(391.4)(333.0)

534.5
4,136

252.8
116.5

+97.3
+42.2

350.1

March 31, 2023

2,437
618.5

158.7
March 31, 2024

* Excluding futures

March 31, 2023

Interest and dividends on securities
JPY bonds
Foreign bonds
Investment trusts (gains[losses] on cancellation)
Investment funds

March 31, 2024

JPY bonds

6.17 years

6.12 years

6.72 years

Foreign bonds *4.15 years

2.48 years

1.47 years

FY2022

FY2023

YoY change

34.7
5.2
11.8

53.3
9.4
26.4

+18.7
+4.2
+14.6

1.9 (1.9)

1.6（-1.1)-0.3（-3.0)

5.0

5.4

+0.3

Income related to JGBs and otherbonds
Gains on sale
Losses on sale andredemption (−)

-7.5

-0.3

+7.2

19.1

18.5

-0.6

26.6

18.8

-7.8

Gains and losses on equities

13.6

22.7

+9.1

Gains on sale

13.7

23.1

+9.3

Losses on sale andamortization (−)

0.1

0.4

+0.2

Gains and losses on revaluation of securities(JPY bn)[Average holding period (excluding bonds hedged against interest rate fluctuations)]
March 31, 2022

(JPY bn)

March 31,2022

March 31,2023

March 31,2024

After hedging

vs. March 31,2023

Gains and losses onrevaluation of
securities+274.2+325.8+351.2+351.9+25.4

Equities+288.0+355.5+415.9―+60.3

Yen bonds

-6.6

-9.9

-41.4

-44.0

-31.4

Foreign bonds

-17.8

-32.5

-38.7

-35.5

-6.3

Investment
trusts

+0.6

+0.2

+0.5

―

+0.3

Investment
funds, etc.

+10.0

+12.5

+14.9

―

+2.5

11

Fees and commissions
Fees and commissions continued to grow, due to growth in the consulting fees etc. earned by demonstrating the Group functions.

Fees and commissions(JPY bn)

Wholesale fee income
FY2021

FY2022

FY2023

YoYchange[Consolidated] Fees and commissions

31.3

37.3

44.4

+7.0

[Shizuoka Bank nonconsolidated] Fees and

14.8

21.1

25.7

+4.6

commissions
Fees and commissions income
Fees and commissions expenses (−)

30.9
16.0

34.8
13.6

39.0

+4.3

13.3

-0.3*

7.2
Related to market
credit investment

Dynamically securing
revenues based onmarket conditions

3.1

1.7

Corporate lending
Solutions-related
Ordinary profit

Major items

2.7
1.9

1.6

(0.1)*(JPY bn)

2.9

Enhancement ofsolutions sales by
Shizuoka Bank

2.6

2.0
1.3

(Shizugin Management
Consulting/Shizugin
Lease)* Including a decrease of JPY 0.5 bn due to increased group trust dividends

9.8

9.3

(0.6)*(0.4)*

Growing revenues
through growth ofGroup companies

2.2

2.0

FY2021

FY20222.2
FY2023

7.2

9.3

9.8

+0.5

Related to market credit investment

1.7

3.1

2.9

-0.2

Revenues/balance on customer assets (Shizuoka Bank, Shizugin TM

Corporate lending (syndicated loans,
etc.)

2.0

2.6

2.7

+0.1

Securities)

Wholesale fee income

Solutions-related (business matching,support for subsidies, etc.)

1.3

1.6

1.9

+0.3

Investment trust stock (JPY bn)
保険販売手数料
revenues
Insurance product stock
Insurance product sales
投信ストック収益
投信販売手数料
revenues
commission
Share of stock
ストック収益比率
36.6%
36.3%
revenues
Investment trust sales

2.2

2.0

2.2

+0.2

Other lending (home loan fee income, etc.)

4.0

4.5

6.7

+2.2

8.8

9.5

11.9

+2.4

Fee income on customer assets

Customer assets revenues
保険ストック収益
commission

Shizugin Management
Consulting/Shizugin Lease (ordinary
profit)* Figures in parentheses under solutions-related fees and commissions indicate fees and commissions paid by Shizugin Lease and
Shizugin Management Consulting to Shizuoka Bank

32.6%

8.8

Shizuoka Bank (insurance,
investment trust)
Shizugin TM Securities (investment
trust)
Forex fee income (revenues,
expenditures)

5.0

5.7

5.7

+0.1

2.1

3.8

3.9

6.1

+2.3

2.0

5.6

5.3

5.4

+0.1

3.9

[Shizuoka Bank nonconsolidated]
Trading income

0.9

1.4

0.7

-0.6

0.9

FY2021

+0.7

+2.4

11.9

Customer (retail) assets balance(ending)
Shizugin TM Securities(JPY bn)

Annuities and insurance (Shizuoka Bank)
Other (foreign currency deposits, investment trusts, public and corporate
bonds) (Shizuoka Bank)+24.4+223.4

1,587.0

1,611.4

539.1

561.9

1,834.8
691.7

9.5
1.7

3.4

2.4

3.0

4.4

4.1

948.2

953.8

1,032.0

1.1

1.3

FY2022

FY2023

99.6

95.7

111.2

March 31, 2022

March 31, 2023

March 31, 2024

12

Expenses
The effects of reducing expenses through revaluation of fixed assets covering rising personnel expenses, so that overall expenses remained largely
unchanged from last year.
Consolidated OHR improved to 56.3% (down 3.9 pts. YoY) due to the 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
+0.1
-0.9
96.4
OHR
96.5
97.3

50.1

64.2%

(JPY bn)

46.9

48.3
60.2%

56.3%

40.7

41.3

42.4

6.5

6.8

7.2

FY2021

FY2022

FY2023

ChangeNonpersonnel
expenses-JPY1.4 bn

Depreciation: -3.0 bn; costs associated with software
use: +JPY1.0 bn

Personnel
expenses+JPY1.1 bn

Increase in salaries due to increase in base pay:
+JPY0.8 bn

Tax+JPY 0.4 bn

Shizuoka Bank: +JPY 0.3 bn (pro forma taxation, etc.)

Total+JPY 0.1 bn

Shizuoka Bank nonconsolidated

Shizuoka Bank nonconsolidated
Non-personnel expenses
Personnel expenses (excluding nonrecurring personnel expenses*)
Tax
-1.3
OHR

88.2

50.7

86.9

65.5%

-0.6

48.9

(JPY bn)

Change

86.3

47.7
60.2%

56.1%

Main changes
Depreciation: -3.0 bn (due to revaluation of fixed assets:−JPY 3.0 bn);costs associated with software use: +JPY0.7 bn;
business administration fees paid to SFG: +JPY0.9
bn

Nonpersonnel
expenses-JPY1.1 bn+JPY 0.3 bn Salaries, etc.: +JPY 0.1 bn

31.3

31.5

31.7

Personnel
expenses

6.2

6.5

6.9

Tax

+JPY 0.3 bn

FY2021

FY2022

FY2023

Total-JPY 0.6 bn* Amortization of actuarial gains and losses in retirement benefit cost, and other

Main changes

Pro forma taxation: +JPY 0.3 bn; consumption tax:
+JPY 0.1 bn

13

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
FY2021(JPY bn)

FY2022

FY2023

YoYchange(JPY bn)
Credit-related costs
Credit-related costs ratio (Credit-related costs ratio = credit-related costs / average loan balance)
11.7[Consolidated] Credit-related costs

6.8

5.6

5.0

-0.6

[Shizuoka Bank nonconsolidated]
Credit-related costs

5.5

4.8

3.9

-0.8

Provision for general allowance
for loan losses

2.6

-1.7

-0.5

+1.3

Provision for specific allowance
for loan losses

2.8

6.1

4.1

-2.0

0.09%

0.12%

Other non-performing loans(NPL) disposal *

0.1

0.4

0.3

-0.1

FY2019FY2020* Including provision for the estimated future payments to credit guarantee corporations, provision
for allowance for accidental losses, and losses on sale of loans

Probability of default (PD)

3.9

0.05%

0.04%

0.03%

FY2021

FY2022

FY2023

Provision for allowance for loan losses and other NPL
disposal(JPY bn)

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

PD historical average since March 2008: 0.88%

1.05%

1.01%

0.92%
0.79%

PD historical average since March 2008: 0.77%(excluding Business Quick Loan users)

0.85%
0.54%
0.45%

Excluding Business Quick Loan* users* Small loans backed by 100% external guarantees

March 31,2012

March 31,2014

March 31,2016

March 31,2018

March 31,2020

March 31,2022

March 31,2024

Changes in credit category, etc.

7.3

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

0.0

2.7

7.8

5.5
2.8

5.5
3.5
0.4
FY2019FY2020

4.8
0.4

3.9
0.3

6.1
4.1

2.6
FY2021

-3.2
4.1

Total

8.7

0.1

0.62%

0.64%

11.7
0.4

Full-fledged postCOVID repayments

0.88%

March 31,
2010

4.8

Provision for specific allowance for loan losses

1.42%

March 31,
2008

5.5

Other NPL disposal* PD of performing borrowers and borrowers warranting close monitoring (based on number of borrowers)

0.96%

8.7

-1.7
FY2022-0.5
FY202314

Loans under risk management (Loans disclosed under the Financial Reconstruction Act) (Shizuoka Bank, nonconsolidated)
Loans under risk management are on the decreasing profile, and the percentage of loans under risk management remained low.

Loans under risk management

Net loans under risk management

243.4

101.0

(JPY bn)

Loans to borrowers in bankruptcy
Loans to borrowers at risk of failure or effectively insolvent
Loans requiring management(JPY bn)

4.0

Partial direct write-off

33.9

8.8

Guaranteed loans bycredit guarantee
associations

166.1
5.2

92.2

98.4

104.9

101.0

3.0

3.4

2.1

2.2

2.0

84.4

75.0

82.2

89.4

85.8

100.9

216.2
144.4

18.4

16.4

March 31,2011

March 31,
2014

13.6

March 31,
2017

13.8

March 31,
2020

14.1

March 31,
2022

13.3

March 31,
2023

Delinquency
ratio
In
arrears17%
Not inarrears83%

13.2

March 31,
2024

48.1

Collateral/reserves, etc.

15.0

Net loans under risk
management
Expected loss (EL) in one year: JPY 0.8 bn

Ratio of loans under risk management

NPL removal from balance sheet
Breakdown of − JPY 24.1 bn(JPY bn)
Newly recognized
NPLs
Removal frombalance sheet (NPL toborrowers classified as at
risk of failure or in
categories of greater risk)

Loans under risk
management

FY2022+34.5-28.0(-24.3)

104.9

3.59%

Ratio of loans under risk
management

FY2023+22.1-26.0(-24.1)101.0

Collected from borrower/offset
against deposits-3.8

Collateral disposal/subrogatedto guarantor-11.5

Loans sold / direct write-off-5.1

Reclassified to lower risk
categories-3.7

Ratio of net loans under risk
management

2.25%

1.24%
0.38%

March 31,
2011

1.01%

1.01%

1.02%

0.95%

0.26%

0.15%

0.15%

0.16%

0.16%

0.14%

March 31,2014

March 31,2017

March 31,2020

March 31,2022

March 31,2023

March 31,2024

15

FY2024 forecasts
Ordinary profit of JPY 88.0 bn and net profit of JPY 60.0 bn are projected on a consolidated basis.
FY2023 results(A)

Consolidated

FY2022 results

Change(B−A)

Ordinary profit

74.0

102.2

88.0

-14.2

Net income attributable toowners of parent

52.4

57.8

60.0

+2.2

ROE (based on net assets)

4.6%

4.9%

5.1%

+0.2ptROE (based on shareholder equity)

5.8％

6.2％

6.2％

+0.0pt

OHR

60.2%

56.3%

54.2%

-2.1pt18.42%(14.17%)18.17%(14.22%)

16.86%(13.76%)-1.31pt(-0.46pt)

144.3

153.8

163.0

+9.2

Net interest income

121.6

129.7

135.0

+5.3

Fees and commissions

21.1

25.7

24.5

-1.2

Trading income

1.4

0.7

1.0

+0.3

Other operating profit

0.2

-2.3

2.5

+4.8

Expenses (−)

86.9

86.3

89.0

+2.7

Ordinary profit

67.6

87.1

77.0

-10.1

Net income

46.2

45.2

52.0

+6.8

Credit-related costs (−)

4.8

3.9

6.0

+2.1

CET1 ratio

Gross operating profit

Shizuoka Bank
nonconsolidated

FY2024 forecast(B)(JPY bn)

16

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

Efforts to increase corporate value – Current conditions and policies
Both ROE and PBR in FY2023 improved YoY, backed by the profit growth, BoJ policy revisions, etc.
The Group will strive to further improve in the ROE, solve local issues in order to yield profit growth and reduce equity capital costs
inorder to improve PBR.

ROE and PBR trends (current conditions)
ROE is improving due to the strengthened based on top-line the strategiesof the Medium-term Business Plan.

To improve PBRThe Group will strive to improve PBR the efforts to achieve sustainability KPIs and active dialogue with the investors

First Medium-term Business PlanPBR also improved supported by the move away from negative interest
rates in addition to review of capital policies–Sustainability KPIs–

5.8%

5.9%

5.7%

4.9%

3.8%

ROE

4.6%

(based on net
assets)

1.23

3.1%

PBR
(times)0.66
0.38

FY2004

Sept. 2008
Global financial
crisisJan. 2016
Adoption ofnegative interest
rates

0.46

FY2022

FY2023

PBR
improvements

Sustained growthin earnings• Sustained community
growth (solutions tothe community
challenges)• Expanding revenue
opportunities

Financial
targets• Improving
profitability• Controlling capital
adequacy levels

6.2%

Engagement
KPIs

6.7%

Consolidated ordinary profit
Consolidated ROE
Consolidated OHR
Consolidated CET1 ratio

Customer satisfaction withGroup transactions
Carbon neutrality (Scopes 1, 2)Group employee engagement

Social impact
KPIs

6.9%

Further increasein ROE

Eliminating
negative interest
rates

Creatingsocial value(based onshareholder equity)

Increasing corporate value

ROE

Change in population rate of
Shizuoka Prefecture
Real GDP in Shizuoka Prefecture
Reduction in GHG emissions in
Shizuoka Prefecture

Reducing equity
capital costs• Proactive
disclosure• Proactive dialogue
with shareholders
and investors

Enhancing disclosure anddialogue through IR activities, etc.
18

Progress on sustainability KPIs –Assessment of FY2023 results
Steady progress was made toward financial targets in FY2023.
The Group aims at sustained growth through medium- to long-term strategies toward community co-creation
while securing the basic earnings.

Financial targets

Increasing corporate value

KPI

Earnings

Consolidated ordinary profit
Consolidated ROE

JPY98.0 bn
5.0%

FY2023 actual

Assessment

Based on net assets: 4.9%
Based on shareholder equity):

Efficiency

Consolidated OHR

58.3%

56.3%

Soundness

Consolidated CET1 ratio *1

17.1%

18.1%

Engagement
KPIs

Socialimpact KPIs

（13.4%）

YoY increase-

Group employee engagement *3

3.8 or higher

3.81
Achievement
projected-73.4%(vs. FY2013)

Change in population change of
Shizuoka PrefectureContinual increase

Real GDP in Shizuoka PrefectureContinual growth

Reduction GHG emissions
Shizuoka Prefecture

vs. FY2013: -46%
(FY2030)

Balancing between growthinvestment growth and expenselevelsControlling to maintainappropriate capital adequacylevel（14.2%）

Customer satisfaction with Grouptransactions *2-

Contributing through various
measures under the community
co-creation strategy (mediumto long-term efforts)(+0.015%)Growth(FY2022 real economic growth rate:+5.2%)( FY2021: -15.8%)

Implementing efficient andeffective management activities
Further progress of culturalchangeAccelerating efforts towardachieving neutrality ahead ofschedule

Increased

Decrease slowed

Future courses of action
Appropriate management ofbalance sheet reflectingchanges in the interest rate
conditions (JPY, foreign
currency)

JPY102.2 bn
6.2%

Carbon neutrality (Scopes 1, 2)

Creatingsocial value

FY2023 planned-

Horizontal efforts incooperation with local
governments, etc., using GHG
calculation tools*1 (Based on final Basel III standards) *2 Net promoter score (NPS; percentage who would recommend a product, service, or company to friends, family, or acquaintances) based on customer surveys*3 Average overall satisfaction measured using the five elements of rewarding work, job suitability, satisfaction with the workplace, satisfaction with superiors, and loyalty to employer (graded 1-5)

19

Revisions to sustainability KPIs
The financial targets of the First Medium-term Business Plan were revised in light of changing domestic andinternational interest rates and other conditions

Revisions to sustainability KPIs
FY2027 target

FY2027 target

JPY90.0 bn or more

JPY100.0 bn or more

Consolidated ROE (based on net
assets)Approx. 6%

Approx. 6.5%

Consolidated ROE (based onshareholder equity)

Approx. 7%

Approx. 7.5%

Consolidated OHR

Approx. 55%

Controlled to a level ofapprox. 53%

Financial targets

KPI
Consolidated ordinary profit
Earnings

Efficiency

Background of financial target revisions
Change in BoJ monetary policy(Eliminating negative interest rates, discontinuing yield curve controls)

Change in US interest rate forecasts (Rate decrease no longer expected)

Agile revisions to the financial targets that serve as milestones
for growth strategies, based on business conditions

Shizuoka Financial GroupFirst Medium-term Business Plan (FY2023-2027)

Clearing the way
to a new era

Revised expense levels(Re-evaluation of fixed assets, investment in human capital, etc.)

Clarification of management attitude to toward increase PBR
and ROE

Accelerating strategies to achieve the medium- to long-term
visions20

Efforts to raise ROE (1) –Basic concepts
ROE target levels reflect updated target profit levels based on recent interest rate fluctuations and other conditions as well as room for further growth.
The Group will strive to achieve further increases in ROE by effectively controlling capital levels while boosting earning capabilities by strengthening the top
line and controlling expenses.

ROE targets

Key factors driving ROE growthProfit plans

1

ROE targets
Set levels reflecting further profit growth of rising interest rates andother factors in addition to the profit plans of the revised Medium-term
Business Plan

1

6.2

ROE
(based on
net assets)

4.9

6.2

6.5

5.1

Profit level after revising Mediumterm Business Plan

58.0

FY2024(planned)(JPY, foreign
currency)

9.0-➢ Effect of rising JPY interest rates accompanied by changes in
BoJ monetary policy (p. 23)✓ Revision of Medium-term Business Plan scenarios✓ Simulation of future interest rate hikes➢ Impact on foreign currency net interest income reflecting
reduced expectations for rate decreases in the US (p. 26)➢ Asset allocation to grow profits (p. 24)✓ Adopting a new core deposits model (p. 25)

Enhancing the
top line➢ Growth in Group profit contributions by Group companies

7.0(p. 5)

6.0

Cost control+3.0➢ Revising the cost plans based on changes in accounting
standards, etc. (p. 27)✓ Increasing investment in human capital✓ Revising target OHR levels

80.0-

+2.0

FY2023(Actual)as

5.0
Room for upward revision
to reflect further interest
rate hikes, etc.

57.8

Tow ard ROE

re
i nc

Interest rate
fluctuations

8.0-

7.5

ROE
(based onshareholder
equity)es

Set conservatively based on the factors such as interest rate scenariosand steady investment plans reflecting recent interest rate fluctuations(JPY, foreign currency)➢ Appropriate control of equity capital levels (p. 35)

64.0
Capitalpolicies
FY2027(planned)

Medium-/long-term
goal➢ Revising targets for reducing cross-shareholdings (p. 36)➢ Industry-leading dividend payout ratio and dynamic acquisitionof treasury shares (p. 37)

21

Efforts to raise ROE (2) –Key factors underlying changing profit levels
The Medium-term Business Plan was revised in light of various emerging factors, including recent change in interest rate conditions and the effects
of revisions to accounting treatment implemented in FY2023.
Planned net income in FY2027 has increased to JPY67.0 bn. by JPY3.0 bn from the initial plan.

Main changes

Changing consolidated net income
Foreign-

Rising yen interest rates

1 Revised based on market interest rate expectations following the Marchnet interest
A JPY income
currency net+15.82024 Monetary Policy Meeting

B

Costs -1.6

Cinterest income-5.3

Investment
in humancapital, etc.

US interest rate outlook
2 Changing
Scenarios revised to reflect lower expectations for rate cuts

-6.6

Lower
depreciation+8.2(JPY bn)

Extraordinary
losses-6.1
Sale of
stock

-2.0

Revised cost levels

3 Lowered non-personnel expenses due to re-evaluation of fixed assets,

Other

-1.0
67.0

64.0

increased investments in human capital

Increased amount due to plan revisions: +3.0

Balance sheet structure

FY2027(Initial plan)

Reduced short-term market transactions (e.g., deposits) based on assumptions ofbalance sheet plans in the initial Medium-term Business Plan
FY2023(Actual)FY2027(Planned)

Change

10.2

11.6

+1.4

JPY lending(Japan)9.5

10.5

Foreigncurrency/over
seas

0.7

(JPY tn)
Lending

Securities
JPY bonds
Deposits
receivable, etc.

Main causes of changes

FY2023(Actual)FY2027(Planned)

ChangeDeposits, etc.

11.9

12.9

+1.0

+1.1

JPY
deposits
/NCD

11.3

12.1

+0.7

1.0

+0.3

0.6

0.9

+0.3

2.8

4.2

+1.4

Foreigncurrency
deposits

1.7

2.7

+1.1

Call money

0.8

0.3

-0.5

Other
liabilities,
equity capital

3.4

3.6

+0.2

3.0

1.1

-1.9

FY2027(Revised plan)

1 Net interest income (JPY, foreign currency)
JPY net interest income increased by JPY15.8 bn due to higher balances of lending, bonds, etc. inaddition to rising JPY interest rates.
Foreign-currency net interest income expected to decrease by JPY5.3 bn in light of higher
fundraising costs with weakened expectations for interest rate cuts

２ Revision of cost levels
Reduced by JPY1.6 bn due to lower depreciation due to revaluation of fixed assets, despite
increased investments in human capital

３ Recording of extraordinary loss
Depreciation related to aggressive investment launched in the Medium-term Business Plan recorded
as extraordinary loss ahead of schedule to reduce costs during the next Medium-term Business Plan
period and beyond

22

Efforts to raise ROE (3) –Simulation of rising JPY interest rates
A simulation of further future hikes in JPY interest rates was conducted. ROE is estimated to increase by about 1.6% in FY2027 as a result.

FY2024
Items of net interest income
in JPY
Planned based on fluctuation of thecurrent interest rate and the financial
results of FY2023

YoY＋6.9bnInterest rate factor＋3.1bnBalance factor＋3.8bn

Revised Medium-term
Business Plan scenario
Remain unchanged after March 2024 change in
BoJ policy interest rate

• Policy interest rate: 0.0%
• Yield on 10-year JGBs: 0.8%
• TIBOR: Maintaining level from after change in policy
interest rate
(Ref.) 1M: 0.19%; 3M: 0.25%; 6M: 0.25%• Short-term prime rate: No change• Deposit interest rates: March 31, 2024 level• Tracking rate: 50% for commercial fixed-rate lending
Deposits

Net interest
income(vs. FY2023)

Invest businessassociations
Investment
trust

Loan

JPY bonds

Prime

Market-linked• Policy interest rate: 0.50%• Yield on 10-year JGBs: 1.50%• TIBOR: Parallel increases of 0.4 percentage points(Ref.) 1M: 0.59%; 3M: 0.65%; 6M: 0.65%• Short-term prime rate: +0.250• Deposit interest rates: Expected to increase with risingmarket interest rates• Tracking rates: 50% for commercial fixed-rate lending
50% for prime lending
Savings

＋1.6％

+6.9
+1.0％
+1.3
+1.6

+3.5

ROE
improvement
effect*

+21.5
+15.8
+14.3

Net interest
income(vs. initial plans)

+11.9

+2.8

Deposits-2.0

Savings-0.4

FY2024

+2.9

+2.9

+3.7
+6.6

Bonds

Fixed

Simulation of additional
rate increases
Estimated under the following scenario
after March 31, 2025

+17.2

+1.7

+3.2

+10.7

+11.3
+7.2

+7.6

+10.6
+7.1

+6.9

+5.2

+24.6
+1.8
+10.8

+11.8
+7.3

+7.0

+11.5

+13.9

+7.8

+8.9

-2.4
-0.4

-2.6
-0.4

-2.7
-0.4

-18.8

-20.0

-20.8

FY2025

FY2026FY2027

FY2025

FY2026FY2027+5.8*based on shareholders' equity

23

Efforts to raise ROE (4) –Asset allocation
Appropriately accumulate risk-weighted assets by implementing basic strategies through asset allocation management tailored to thecharacteristics of each asset.
Boost RORA by actively restructuring the asset portfolio with profitability in mind.

1

Directions of future increases in asset balances

Shizuoka: Steadily growing toward a 40% share of theprefecture
Kanagawa: Maintaining annual growth of approx. 10% byinvesting management resources in growthmarkets
Tokyo, etc.: Promoting transactions with consideration for(Operating
profitability
companies, etc.)(JPY tn)

Loans (domestic, JPY)
Loans (foreign currency,
overseas branches)

JPY bonds
Foreign bonds, etc.

9.5

+1.1

10.5

0.7
1.7

+0.3

1.0

+1.1

2.7

1.1

+0.3

1.4

FY2023 average balances

RORA: FY2023 2.9%

FY2027 average balances (planned)

2

Asset allocation
RORA (high)

1

Home
loans

JPY
bonds

Corporate
lending

ROA (low)

Loans for asset
building(p. 26)

RORA (low)FY2027 3.0%

Securities investment(JPY bonds)

RORA: FY2023 10.6%

3

Market credit investment
Foreign-currency
lending
Ship finance

ROA (high)Foreignbonds

IncludesJPY1.5 tn in
Kanagawa
Pref.

9.0

FY2023 results

10.0

FY2027 planned

Building a portfolio for stable earnings
Balance (JPY bonds)

Venture debt (p.28)
Apartment loans(JPY tn)

Balance (outside Shizuoka Pref.)残高(神奈川県)
Balance (Shizuoka Pref.)• Increasing balance under management to build aportfolio to secure stable carried earnings• Advancing interest rate risk management throughrevisions to the core deposit model (p. 25)

Unsecured loans

2

Growing transactions through strategies
reflecting market potential

JPY lending

3

2.7
1.7

FY2027 11.2%

Market credit investment/global

FY2023 results

FY2027 2.0%

FY2027 planned

Growing areas of investment and financebased on appropriate risks and returns

Market credit investment:
Selecting lending transactions based on appropriate
risks and returns
Striving to build up PE continuously
Overseas: Expanding domains to transactions involving highlevels of specialization, such as non-Japanese
deals and ship finance

RORA: FY2023 1.8%

(JPY tn)(JPY tn)
Foreign-currency lending (other than market
credit investments)
Market credit investment (lending, investments)

1.3

FY2023 results

1.6

FY2027 planned

24Efforts to raise ROE (5) –JPY portfolio management and adoption of new core internal model deposits
New core deposit model enhanced risk resilience to rising interest rates under interest rate risk regulations. Aiming to realize growthstrategies based on appropriate risk management.

JPY balance sheet structure (March 2024)
Deposits account for more than 70% of funds raised. Core deposits, which are stable and lesssensitive 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 the deposit insurance.

Variable interest rate

Liquid deposits

Prime rate

58.5％

By depositor

Marketinterest rate
15.6％

67.5％
(68.2%）(100%）

78.2％(100％)

Fixedinterest rate

Core deposits

44.9％(44.2%）(62.9％)

Current model

New model

Factors affecting retention

Factors affecting retention

March 31, 2024

Retail deposits

69.3％

68.7％

Corporate deposits

26.2％

26.8％

Other

4.5％

4.5％

March 31, 2023

March 31, 2024

Up to JPY 10 mn

44.5％

42.8％

JPY 10–100 mn

32.5％

33.1％

Longest maturity

5 years

Longest maturity

10 years

24.1％

Duration (core deposits)

4.5-5 years

Duration (core deposits)

6.5-7 years

Duration (overall)

2.5-3 years

Duration (overall)

3.5-4 years

By amount

Deposits
subject todeposit(63.0%）
insurance• More than 10 years have passed since the current model was adopted, and depositor
behavior and other factors have since changed.
• Efforts to improve interest rate risk management will be based on a new model that betterreflects deposit viscosity.

March 31, 2023

28.8％

Deposits

Lending

Assets (100%): JPY 14,235.2 bn

Revisions to core deposit internal model (scheduled for adoption
September 30, 2024)

Above JPY 100 mn

23.0％• Interest rates (no differentiation
between rising and falling rates)• Seasonal factors (semiannual)• Payoff factors• Interest rates (adjusted for rising andfalling trends)• Seasonal factors (monthly)• Adjustments for rates of change in
population, etc.
More conservative assessment ofviscosity

Estimates (September 2023 basis)

Estimates (September 2023 basis)(45.6％)

22.6％

Changes in revaluation gains/losses on
JPY balance sheet (10 BPV)

Impacts of switching to new model(JPY bn)(JPY bn)

Bonds

Time deposits

12.2％

19.3％

Equities, investment trusts
3.7％

Short-term
marketinvestment
12.3％

Other 4.2％

Short-term market
fundraising 10.2％
Equity capital, other
11.6％

Assets10 BPV

Liabilities and equity

Assets-30.0 10 BPV+30.5

10 BPV

Loans

-14.8

+22.5

Bonds

-15.2

Deposits
Core deposits

Total assets, liabilities, and equity (10 BPV)

+20.6
+0.5

* 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 on future earnings.

Liabilities and equity-30.0 10 BPV

+37.9

Loans

-14.8

+29.9

Bonds

-15.2

Deposits
Core deposits

Total assets, liabilities, and equity (10 BPV)

+28.0
+7.9

* Projected figures under the new model are the results of estimates at thetime of preparation.

Strengthened risk resilienceagainst rising interest rates underinterest rate risk regulations(interest rate risk in the banking
book [IRRBB])
Linked to realization of growthstrategies based on appropriate
risk management25

Efforts to raise ROE (6) –Foreign currency portfolio management
Revise the Medium-term Business Plan to a more conservative scenario as expectations for lower US interest rates fade.
Secure positive gains on net interest income in foreign currencies even after the scenario revisions by diversifying funding and building an investment
portfolio resistant to rate fluctuations.

Foreign currency (USD) portfolio composition (March 2024)✓ Securing margins by diversifying fundraising methods✓ All lending is at variable rates, resulting in a portfolio resistant to interest rate
fluctuations.
AssetsFixed rates

Marketinvestment
11%

Variable rates

Lending
44%

Liabilities

Bonds
40%

Short-term
marketfundraising
66%

Medium-/long-term
market fundraising

13%
Customer
deposits
21%

Other 5%[Distinguishing characteristics of foreign currency
portfolio management]
1. Medium-/longterm market
fundraising

Focusing on diversification of fundraising
method, term, and region
Borrowing: BoJ, JBIC borrowing
Secured fundraising: Currency swaps throughlong-term conversion to JPY

2. Customer
deposits

Focusing on retention in addition todiversification by region, industry, and othercharacteristics

3. Lending

In addition to focusing on yields, maintaining
the structure in which all lending is at variableinterest rates
Securing steady spreads independent ofinterest rate fluctuations

4. Bonds

Holding bonds readily convertible to funds,
with a majority consisting of foreign treasuries
and other highly liquid assets

Projected net interest income*1 on foreign currency portfolio(assets and liabilities)• FF rate projections revised based on weakened expectations for lower US interest
rates• Maintaining positive gains over on net interest income in foreign currencies despite lower
gains than initially projected due to rising funding costs and other factors

After
変更後

Before変更前
FF interest rate: Gradual decrease instages from 3.75%(FY2024-2027 average: 3.125%)

FF interest rate: Gradual decrease instages from 5.5%
(FY2024-2027 average: approx. 4.25%)→ Simulation
Foreign currency net interest income (USD mn, left axis)

180

FF interest rate (at time of formulation)
FF interest rate*2 (%, right axis)-JPY5.3 bn vs. initial plan
(Rising funding costs, etc.)

160

5.00%

140
120

4.00%

100

3.00%

80

Results of USD bond repurchase operations

USD bonds

FY2022
Sold
Purchased

FY2023

JPY157.6 bn Sold
JPY173.5 bn Purchased

JPY110.2 bn
JPY186.1 bn

Gain/loss on sale
Gain/loss on sale
-JPY13.0 bn-JPY2.9 bn* Not including asset swaps

Net interest income and valuation gain/loss
improved through repurchase and shift toward highyield bonds

Comparison to the case of no repurchasing(1) Net interest income (annualized)
Improved by JPY5.5 bn(2) Valuation gain/loss as of March 2024:Improvedby JPY20.1 bn(Improved by JPY4.2 bn after accounting for realized
losses)

60

2.00%

40

1.00%

20
0

6.00%

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027

0.00%*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 March 31, 2024)

26

Efforts to raise ROE (7) – Cost controls

Main changes
Lower depreciation via
revised valuation of fixed
assets12

Enhanced investments inhuman capital etc.

IT investments and IT expenses
IT investment plan
IT expenses

Related to next-generationaccounting system• Review investment timing, etc. in line withcurrent progress• Total investment (approx. 80 billion yen) is
almost the same level

Related to aggressive investments
for the Medium-term Business Plan

System investment plan (after review)
System investment plan (initial plan)

Higher personnel costs, etc.

(JPY bn)
Depreciation
Extraordinary loss (accelerated depreciation)

23.2

24.3

12.0

14.0

11.2

10.3

Review investment timing

Revisions to cost levels and OHR targets

Human capital investment

56.3%

54.2%

Other

101.6
96.5

IT expenses➢ Future expenses (depreciation)
recorded in advance to reduce future
expenses

Appox. 53.0%
Consolidated OHR

Extraordinary loss
OHR

12.7

(JPY bn)

IT

23.2

24.3

➢ Controlling based onlevels reflecting
extraordinary losses
plus expenses (actual
expenses) in FY2027

103.9

21.6

50.9

(JPY bn)

Benefits expenses

0.8
0.5

-8.1
-8.2

FY2027vs. Initial plans

Investment in training and education

0.9

・ Enhancing training and education to develop
value-creation human resources

0.6

0.6
Base-payincreases

45.0
FY2023

FY2024FY20270.9

FY202448.1
FY2027

＋1.9

＋4.3

6.1

22.1

FY2023

6.1(p. 33)

46.5

43.7
3.0

vs. Initial plans(Depreciation)

8.3

49.6

46.5

Extraordinary loss
➢ Recording depreciation on assets in use
ahead of schedule in addition todepreciation on a next-generationaccounting system

FY2024

13.3

Human capital investment

Personnel costs

45.0

3.0

22.1
FY2023

FY20232023FY2024
2024FY2025
2025FY2026
2026FY2027
2027

45.0
➢ Enhancing human capital investments todevelop strategic HR and thereby
contribute to medium-/long-term growth

11.7

8.1

Investment in training and education, etc.

Human capital investment

21.6(JPY bn)

Enhancing development ofstrategic human resources

Strengthening the hiring capabilities
・ Securing strategic human resources
through higher pay etc.

Enhancing medium-/long-termcompetitive strengths

Leaving room for additional investments while investing in medium-/long-term growth

Reviewing costs to reflect lower depreciation via revised valuations of fixed assets while enhancing investments in human capital and in other areas.
Aiming to control costs to about 53% of consolidated OHR in the final fiscal year, including extraordinary losses from depreciation recorded ahead of schedule.

27

Medium-/long-term growth strategy (1) – Inter-industry alliances, VC business
Inter-industry collaboration was launched in 2014. Providing Groupwide support to leverage and grow the network with startups, lay thegroundwork for regional innovation, and support the growth of the VC business through VC debt and VC fund investments, etc.
Startup Growth
ShizuokaStartupの運営開始
LaunchingGrowth Shizuoka

Serving as a bridge to further regional innovation by matching firms in Shizuoka Prefecture to
startups and providing opportunities to create new value and reform existing businesses

Joint operation of Startup Growth Shizuoka, whereby Shizuoka Capital
supports new startups in joint efforts with regional firms, began in January2024.

Held for the ninth time July 19-21. 2023

Shizuoka Capital Co., Ltd.

Through March 31, 2024

Approx. JPY18.8 bn

Participants at all nine events Approx.

Growing andleveraging
the network

Investment in VC funds

Exhibitors in ninth event

Human resources

Enhancing capacity to support startups by strengthening
and developing human resources
FY2023: 17 persons

VC Business Support Division

FY2022: 6 persons

Value-creation human resources

VC business support professionals: 8 persons

investments (As of March 31, 2024)

Cumulative VC debt executed (JPY bn)
100.0

Examples of industries targeted
for investments

SaaS Fintech Data analysis
Robotics Long-term care
Healthcare Bio AI

Solving community issues and making the community more attractive
by fostering entrepreneurship and creating new businesses

VC business support structurewith startups

31 funds
782 startups
JPY25.5 bn in pledged

39,000102 (record high)

21.2
7.2
1.5
FY2021

FY2022

FY2023

FY2027

Breaking through the
JPY20.0 bn level incumulative VC debt executed
Meeting startup fundingneeds and supporting their
growthConsidering up to JPY10 mn
investment in selected firms

Interviews with venture-capitalist
team
Offering business planning andfunding consultations

Resultsin alliances formed(Approx. JPY10.0 bn in FY2023)

Two or three firms chosen throughbusiness-plan contests
Hand in hand support provided forabout five months

Laying the groundwork for aregional innovation ecosystem byaccelerating the transition todigital transformation andinnovation by regional firms

Creatingsocial value

TECH BEAT Shizuoka 2023 held

Group businesses supporting startups
Startup needs
Leveraging Group company capabilities to meet wideranging needs
For managers
Business funding

Home loans

Funding for capital policies

Wealth management

VC investment

IPO/M&A support

Corporate credit cards

Leasing

Shizuoka Financial Group
Shizuoka Bank

Shizuoka Capital Shizugin TM Securities

Shizugin Lease

Shizugin Saison Card

Increasing
corporate value

Inter-industry alliances

28Medium-/long-term growth strategy (2) – Initiatives in new business fields
Promoting efforts in new fields to find solutions to materiality issues, adding the foreign worker premium placement service at SFG
Marketing in April 2024
Launching the foreign-worker premium

Efforts to find solutions to materiality issues: New businesses considered for
future implementation: New businesses implemented under
the First Medium-term Business Plan

Responding to depopulation, lowbirth rates, societal aging

Sound growth of local communities

Foreign-worker
premium placement
serviceplacement service (April 2024): Existing businesses grown under theFirst Medium-term Business Plan
Human capital management

Labor shortages

Sales-channel expansion

Community
development

IT, DX

Branding

Redevelopment

Shizuoka Bank
Social businesses

HR referrals,
placement

Shizuoka BankReal estate
AssetDX
management
supportShizugin IT Solution
Shizuoka Bank

Web3.0

Environmental
businesses
Shizuoka Financial GroupVC business support
Assetbuilding

Eco-friendly
financial products

Shizugin Lease
Cashlesspayments

Building a digital society

Foreign-worker premium
placement service

・・・

Added to SFGm

Premium placement service for foreign trainees newly hired by Shizuoka
Bank customers

Marketing

Banking

Shizuoka Financial Group

Shizuoka Bank

Specific issues facing the community and customers

NEW

Financialservices for
non-JapanesecustomersNEW

Shizuoka Bank
Industrial development and financial
innovation

J-Credits
Shizugin Management
Consulting

Realizing a society that strikes an idealbalance between environmental andeconomic concerns

BeforeIncreasingly severe regional
labor shortages

Poor working conditions,visa violations, and othersocial issues

After
Solving labor
shortages through theplacement of foreign
workers
Providing peace ofmind for both foreign
workers andemployers

SFG Marketing(Established July 2023)

Combining the Shizuoka Financial Group's
customer base and payments data with theDentsu Group's expertise to support branding,marketing, and other initiatives

Advertising and promotion
Hand in hand digital marketing support
Additional businesses to help findsolutions to societal challenges

Helping to realize a multicultural society through efforts to build acommunity amenable to foreign workers and establish a region inwhich foreign workers will want to work

Creating social value × Increasing corporate
value
29

Medium-/long-term growth strategy (3) – 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 12.0 bn (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.

Finance

Life planning
Shizugin TM Securities Yamanashi Head Office
Customer assets balance: JPY 27.5 bn(As of May 31, 2024)

Lending field
Joint lending included above

investment trust)Business-succession M&A projects
First deal concluded

Three-bank cooperation

27 individual meetings, 187 business matching cases(JPY bn)

Finance
Life planning
Other
＋2.3

＋2.7

Asset-building support
Shizugin TM Securities opens
Nagoya Head Office(Oct. 30, 2F, Nagoya Bank Head Office)Balance of deposit assets: JPY1.5 bn(Results through March 31, 2024)(Cumulative execution amount since start of alliance)

Offering jointly developed products (insurance,

Sales-channel
development support

JPY 126.2 bn
JPY 38.9 bn

Aim to achieve revenue effects of JPY 10.0 bn 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.

7.3

vs.
revisedtarget:10.9

Establishing the Shizuoka Nagoya
Alliance Fund to support industrial
reforms(March 2024)

＋2.3

3.4

Futureoutlook

FY2023

Joint lending included above

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.

JPY52.5 bn
JPY25.5 bn(Cumulative execution amount since start of alliance)

FY2022Futureoutlookvs.
target:78%

1.1
FY2022

Lending field

7.8

Finance
Other

2.3
FY2021

Finance

Supporting industrial reforms(JPY bn)90%

4.6

15 personnel (including five seconded from
Nagoya Bank)FY2023

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.

30

Medium-/long-term growth strategy (4) – Digital-technology and data-utilization initiatives
Launching new sales-support system (S-CRM) (January 2023)
The S-CRM concept
S-CRM developed for more efficient and advanced sales activities and administration.
Together with aiming to maximize Group synergies through stronger information sharing and coordination
with Group companies, improving sales efficiency by increasing productivity, to propose high-value-added
solutions

Launching the S-hare data analysis and utilization
platform (January 2023)
Data-utilization vision
Building S-hare, a platform for analyzing and utilizing data held by the Group with the aim of maximizing
customer lifetime value (LTV), improving earnings, and cutting costs using various systems, external data,and newly obtained data.

Adopting S-CRM at 10 Group companies

Maximizing synergies withGroup companies
Instant sharing of customer information
Enhancing Group coordination
Customer understanding and proposal ofhigh-value-added solutions

Productivity gains

S-CRM

Standardization/advancementof sales activities
Normalization/concentration ofadministrative operations

Customers Attributes

Transaction data

Sales information

Example of demonstrating Group synergies using S-CRM: Changes in numbers of joint visits by the Bank and Group companies

S-CRM adoption

increased approx.

1,552

2.5-fold

Example of demonstrating Group synergies using S-CRM: Changes in numbers of joint visits by the
Bank and Group companiesEnhancing cooperation between Shizuoka Bank and Shizugin TM
Securities, including sharing of information among Group companies and joint visits
Increasing sales of assets under management through high-added-value sales in line with customer
needs（JPY bn）
Sales commissions on assets
under management（Shizugin

Deepening understanding of655

customers to enable proposal of

S-hareEmployees Activity records

Data linkage

Number of joint visits*

Improved earnings,
lower costs

LTV maximization

External
dataManagement Business data

Statistical data

Priority areas of data utilization

3.9

Digital marketing

TM Securities）

Newly
obtained
data

2.0

Fields and initiative enhanced through data utilization(ex.)
Using AI to
anticipate
needs

Fields

FY2024 target

NISA accounts

Number of accunts
opened up 65%/year

Unsecured loans

Balance up 5％/ year

Data-driven
approaches tocustomers

solutions to meet needs
FY2022 4Q

FY2023 4Q*Total for Shizugin TM Securities and Shizugin Lease

FY2022

FY2023Business administration,
sales-promotion management

Deep
顧客理解の Use of services by
understanding
retail customrs
深化of customers

S-CRM functions and results (ex.)
Functions

Key results

Audio recordings and transcripts
of meetings

Instant, efficient linkage of Group information
Identifying potential customer needs and proposing high added
value
Reducing administrative workloads, achieving more advanced
internal controls structures

AI to support lending consultation
voucher preparations

Knowledge-sharing, eliminating reliance on specific individuals,
achieving more efficient in-branch consultations

Sharing schedules and customer
information

Drafting
strategies

Normalization ofstaff assignments
Hiring management on a
per-company basis

Initiatives toward more advanced data utilization

Alliances with Resona Bank, Ltd. and BrainPad Inc. (Shizuoka Bank)NEW

Contracts concluded with both companies on hand in hand support to move toward more advanced data utilization.
Aiming to accelerate efforts to contribute to data utilization through means such as expanding analytical themes,organizational reforms, and HR development.

Establishment of Data Science Coordination Office (Shizuoka Bank)NEW

The Data Science Coordination Office was established in April 2024 to bring together data human resources andknowledge within the Group.
Generating results from various measures through promoting data development together with accumulation of skills andknowledge and advancing data analysis using AI and other technologies.

31Medium-/long-term growth strategy (5) – Regional decarbonization support initiatives
Supporting regional decarbonization efforts via Shizuoka GX Support; decarbonizing the region by enhancing joint efforts with local
public agencies and with other banks
Shizuoka Prefecture's greenhouse-gas
emissions

STEP1
Visualizing GHG emissions

STEP2
Policy and target setting

STEP3
GHG emissions reductions

STEP4
Disclosure

Measuring GHG emissions

Information provision, issue identification

Adopting energy-conservation/
renewable-energy equipment

External certification, improving
veracity of calculations• Reduced by 15% vs. the base year in FY2021■GHG emissions(10,000 t-CO2)■ GHG emissions
calculation service■ Joint efforts with local governments(concluding partnership agreements)

Offering Shizuoka GX Support

-15%
-46%

Cooperation with local governments (concluding cooperationagreements).
Concluding partnership agreements toward regional carbon
neutrality and sustainable development• Used by more than 1,000 firms
through April 30, 2024

[Future prospects]
GotembaHamamatsu
Kosai

3,355

FY2013
FY2021(Base year) (Preliminary figures)

FY2030(Targets)• Ascertaining emissions
trends• Managing reduction plans[Shizuoka FG]• Hand in hand solutions■GHG emissions by sector (FY2021)
Household17.7%
Industry
38％

Business18％• Partnerships with local
governments andenergy firms

Corporate
emissionsaccount for morethan 80%the total

Initiatives by firms
in the region are
essential

Growing into integrated regional
initiatives through joint efforts withlocal governments, other financial
institutions, etc.

Iwata

FukuroiModeldeployment

ESG Finance Awards Japan
Gold Prize(two consecutive years)■ Joint efforts that transcend boundaries between financial

Shimizu Bank・ Offering Shizuoka GX Supports to regional firms through various organizations
including municipal governments, other banks, and chambers of commerce andindustry

Suruga Bank・ Data links to the city of Hamamatsu for use in planning and promoting city measures

Sustainable finance

Providing
Shizuoka GX
support tocustomers

Seishin Shinkin Bank
Mishima Shinkin Bank

Shimada Kakegawa Shinkin Bank

Support for J-Credit generation

JPY1 tn in environmental
FY2030 target: JPY2 tn (including
finance)

Progress: 42.5% (including 37.5% on environmental finance)＋387.5(JPY BN)

849.1(Environmental finance)＋145.8113.3
229.7
FY2022• Providing support for application for J-Credit
certification of forests owned by customers in
Shizuoka Prefecture• Support for generation of three J-Credits in
FY2023

Carbon offset auto lease

461.6

54.7
FY2021

Expandingcooperation
partners
Hamamatsu Iwata Shinkin Bank

Shizuoka Bank

institutions

Business opportunities for
Shizuoka FG

1,792

Integrated regional initiatives[Customers]

2,824

Other gases
6％
Wastes2％
Transport
18％[Initiatives targeting regional decarbonization based on GX support]

375.5• Shizugin Lease purchases J-Credits to offset
CO2 emissions of leased vehicles• 286 contracts concluded during FY2023
FY202332

Medium-/long-term growth strategy (6) –Human capital management initiatives
Strengthening the development and strategically hiring of human resources to realize the basic strategies of the Medium-term Business Plan by growing investments inhuman capital.
Through FY2023, 71 value creation human resources and 119 problem-solving human resources were certified. The strategy will be accelerated by arranging these humanresources in the signiticant areas.

Human resource portfolio

Development and certification status

Defining strategic human resources to implement the basic strategies of the Medium-term Business
Plan
Enhancing the HR portfolio through development and hiring in each human resource category

Problem-solving
human resources

Problem-solving
human resources

Human resources capable of solving problems centered on existing corebusinesses
Areas targeted: Finance, asset management, business succession, M&A,
inheritance, staffing business, etc.

Value creation
human resources

Human resources capable of creating new value which has not found in theexisting core businesses
Activity areas: VC, wealth, decarbonization, industrial reform, health andmedicine, etc.

Digital humanresources

Human resources capable of delivering business model reforms and newcustomer value using technology
Activity areas: App development, data utilization, marketing, knowledge
sharing, etc.

HR vision, KPIs

Strategic relevance

High

Low

*Figures in parentheses are from FY2027 KPIs.
Redefining human resource
assignments/responsibilities
Digital humanresources

Reassignment
accompanying thedigital shift of business

Middle/backofficeNarrow

Problemsolving humanresources

Value creation
human resources
Securing capable humanresources through training
and hiring

Increasing earnings
perperson by enhancing
problem-solving capabilities

Domains/fields

FY2027 KPIs
Problem-solving
human resources

800
Value-creating
human resources

450

Broad

119 newly certified or upgraded in FY2023
Diamond100

Platinum(Number certified) 3

Value creation
human resourcesGold

Silver

69

292

13

Including 221 in the corporate field,
156 in the life planning field
Steadily improving skills fordelivering solutions to theissues confronting customers

Number certified through FY2023: 71

Examples of certification fields
Community innovation coordinators

Advanced technologies

Wellness coordinators

Health and medicine business

Sustainable coordinators

Decarbonization, industrial reforms

Intrapreneurs

New businesses

VC business support professionals

VC business

Estate business coordinators

Real estate, community development

Digital humanresources

Creating new value through theassignment of certified humanresources in the significant
areas

Now preparing for certification in FY2024 and beyond through adevelopment program (75 persons)Enhancing midcareer hiring
Securing human resources who are not expertized in finance by enhancing mid-carrier
hiring resources capable of making immediate contributions
New graduates
Midcareer hires
Global hires

New midcareer hiring methods
8

3
57

73

261

256

249

329

FY2021

FY2022

FY2023

FY2024

3
23

Digital humanresources

Number certified through FY2023: 377

50-100

Direct recruiting by
individual Head Officesections

Referral-based hiring ofspecialized HR
Utilizing on alumni
communities

Robust in hiring practices lead todifferences in corporate competitivenessover the medium to long term.

33

Capital Policies

Capital Management
Building risk-weighted assets and keeping returns to shareholders to appropriate level of the CET1 ratio targeting 13% or more in the
final year of the Medium-term Business Plan

Capital adequacy ratio

Factors underlying changes in the CET1 ratio

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

(%)

18.17

18.42
16.56

Increase in riskNet income weighted assets

14.22

March 31, 2021*

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

12.85

12.69

March 31, 2022

10.96

10.89

March 31, 2023

March 31, 2024

Increasing RORA through appropriate asset
allocation while accounting for profitability

Targeting at steady growth in the dividend payout
ratio to at least 50% while updating dividend targets
in the Medium-term Business Plan
(P37)

16.08

14.17

(P24)

Returns toshareholders

18.17%

Basel
finalization,etc.

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

Trends in capital, risk-weighted assets, etc.
[Basel III]
Total capital*

March 31, March 31, March 31, March 31, vs. March(JPY bn)
2021
2022
2023
2024
31, 2023
990.4
965.4
1,006.1
1,045.4
+39.3
990.4

965.4

1,006.1

1,045.4

+39.3

759.2

771.6

778.2

800.4

+22.2

Other Tier 1

ー

ー

ー

ー

ー

Tier 2

ー

ー

ー

ー

ー

5,979.7

6,001.2

5,459.3

5,752.0+292.8Credit risk-weighted assets

5,658.0

5,672.1

5,283.6

5,561.6+278.0

Amount corresponding to market risk

19.4

20.2

0.6

0.1

Amount corresponding to operational
risk

302.3

309.0

175.1

190.3

CET1
Excluding valuation difference on
available-for-sale securities

Risk-weighted assets* Capital does not include preferred shares, subordinated debt, etc.

10.5％
(Regulation
capital)Approx. 2-3 percentage above
regulatory levels that is essential
for stable management

March 31, 2028
(planned)

March 31, 2024

ROE targets

13% orhigherInitial plans(FY2027)

Revised plan
(FY2027)

Net income

JPY64.0 bn

JPY67.0 bn or more

-0.4

Equity capital

JPY1.0-1.1 tn

JPY1.05-1.15 tn+15.2

ROE (based on net assets)

Approx. 6.0%

Approx. 6.5%
35

Strategic shareholdings
We are accelerating our reductions of strategic shareholdings. As of March 31, 2024, we had made 53.4% progress toward the target of JPY 13.6 bn in reductions (based on
acquisition price).
The revised Medium-term Business Plan seeks to achieve planned reductions by the end of March 2026, two years ahead of schedule. The Group will strive to achieve further
reductions while to clarifying the meaning of strategic shareholdings.

Acquisition cost of strategic shareholdings** Excluding shares in Group companies
and equity method affiliates

Before
変更前

After変更前

Target date for reduction
achievement: end of March 2028

Target date for reduction
achievement: end of March 2026

Enhanced transaction relationships
Business investment and community contribution
Amount on balance sheet

317.5

Initial reductionplans achieved
ahead of schedule

100.6

106.0

(93.8)

93.3(86.5)

Transfer to pure investments

87.0(80.0)➢ Shares which is recognized significant as the investment assets in light ofinvestment efficiency will continue to be held as pure investments after
removing them from the strategic shareholdings.
➢ Amount of strategic shareholdings transferred to pure investments: JPY3.5 bn

Further
reductions

March 31, March 31, March 31, March 31,
2000
2020
2023
2024
2000年
March 31,2020年
March 31,2023年
March 31,2024年
March 31,
2000
2020
3月末
2023
3月末
2024
Approx.
500 3月末
287
267
259
Issuers 3月末
NikkeiAverage

20,337

18,91728,04140,369March 31,
2026
2026年
March 31,
3月末
2026
ー

March 31,
2028
2028年
March 31,
3月末
2028
200

ー

ー

[Status of strategic shareholding reductions]
FY2020-2022(JPY bn)

FY2023-2025

Results under 14th
Mid-Term Business
Plan

Target amount of
reduction

Amount of
reductions (based on
acquisition cost)

5.4

13.6

Amount of sale

38.3

ー

24.5

ー

Gain/loss on sale

28.7

ー

20.4

ー

PeriodIn accordance with the Corporate Governance Code, strategic shareholdings
which has no significance for holding will be removed to systemically reduce thebalance of strategic shareholdings on an acquisition cost basis.

483.6

456.1

Approx. 170.0

Thinking on strategic shareholdings

FY2023 (results)

7.3

Progress

53.4％

Sale of shares➢ Shares which are not recognized significant from an investment assets
perspective are considered to be sold. Gains from the sale will be utilized
to the strategic investments in human capital, digital transformation (DX),and other goals.
Status of issuers'
agreement to sale

March 31, 2023

March 31, 2024

ChangeIssuers

27

27

±0

Amount subject toagreement on sale (JPY bn)

48.6

80.8

+32.2

Based on acquisition
cost

12.1

14.5

+2.4

Revaluation gain/loss

36.6

66.3

+29.7

36

Shareholder returns
Dividends per share in FY2023 grew by JPY9 YoY to JPY39. Planned dividends per share in FY2024 are up an additional JPY9 YoY to JPY48.
Based on the goal to gradually increase the dividend payout ratio to 50% or more by FY2027, the Group will purchase treasury stock dynamically with an eye onmarket conditions and other factors.

Distribution of profit to shareholders
Total dividends (JPY bn)
Purchase of treasury stock (JPY bn)
Dividend per share (JPY)

Averages over past Medium-term
Business Plans
21.7

18.7

15.3

12.7

11.4

9.5

8.9

27.0

Increased by
JPY1
26.0

39.0

30.0

26.4 ※3

Averages overpast 5 years
28.4

21.5

8.8
FY2021

16.0

※1

※2

10.0

12th Mid-Term Business Plan

13th Mid-Term Business Plan

14th Mid-Term Business Plan

average (2014-2016)average (2017-2019)average (2020-2022)

Total payout ratio

27.0％
48.1％

28.5％
48.9％

33.3％
46.9％

35.4％
56.2％

32.2％
51.1％

Net income attributable toowners of the parent

JPY42.4 bn

JPY45.2 bn

JPY45.9 bn

JPY41.6 bn

JPY52.4 bn

Dividend payout ratio

48.0

16.8

14.7

6.3

Increased by
JPY4

Increased by
JPY9

Increased by
JPY9

FY20226.9

7.0
FY2023

FY2024

Averages over past 5 years(Projected)(FY2019–2023)

37.4％
49.3％

43.9％
ー

34.1％
48.8％

JPY57.8 bn

JPY60.0 bn

JPY46.8 bn*1 Returns to shareholders in FY2022 include purchases of treasury stock already completed (amount: JPY10.0 bn; period: Feb.–May 2023).
*2 Treasury stock as purchased in FY2023 (amount: JPY7.0 bn; period: Feb.–March 2024).
*3 Estimates are based on shares issued and outstanding (not including treasury stock) as of March 31, 2024.

EPS/BPS trends (consolidated)(JPY)

2188.02

Earnings per share (EPS)

104.18Book value per share (BPS)

632.1820.84
FY1998FY2001

FY2004

FY2007FY2010FY2013

FY2016FY2019FY2022 FY2023

37

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)

39

Major initiatives in FY2023 (2)4月July⚫ SFG Marketing, first new company
under the holding-company structure,established

Region-CoCreation
strategyGroup
Businessstrategy⚫ 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)

Shizuoka Financial Groupnews releases

5月

August⚫ Agreement on mutual cooperation andjoint efforts to promote carbon
neutrality concluded with city of Kosai(Shizuoka FG)⚫ Memorandum on advancement of
auto-industry support concluded
with seven regional banks(Shizuoka Bank)

6月

7月、8月
September⚫ Cooperative agreement on efforts to promote
cyclical co-creation eco-garden city at theeastern base of Mt. Fuji concluded with thecity of Gotemba (Shizuoka FG)⚫ Partnership agreement concluded with W
Tokyo on efforts to promote community
cocreation projects (Shizuoka Bank)⚫ JCB brand corporate cards
introduced(Shizugin Card)⚫ New Shizugin Web Overdraft and e-delivery
features introduced on corporate portal site
(Shizuoka Bank)Transformation
strategy⚫ Business partnership agreement
concluded with Money Forward
Kessai (Shizuoka Capital)⚫ Shizugin Busikul introduced(Shizuoka Bank)⚫ October 2023 entrance ceremony and
FY2024 preliminary job offer ceremony held
(Shizuoka FG)⚫ Joint research and development on
use of generative AI launched with
PKSHA Workplace (Shizuoka Bank)

40

Major initiatives in FY2023 (3)October
4月⚫ Shizugin TM Securities Nagoya
Head Office opened(Shizugin TM Securities)

Region-CoCreation
strategyGroup
Businessstrategy

Shizuoka Financial Groupnews releases

5月

November

6月⚫ Agreement on mutual cooperation and joint efforts
to promote carbon neutrality concluded with city of
Iwata (Shizuoka FG)⚫ Project to visualize GHG emissions of local firms
launched by the city of Hamamatsu, Shizuoka Bank,and Hamamatsu Iwata Shinkin Bank. (Shizuoka Bank)⚫ Registered as TNFD Adopter (Shizuoka FG)⚫ Shizuoka GX Support service
introduced (Shizuoka Bank)⚫ Shizugin Solar Park began
operation (Shizuoka Bank)⚫ Aoharushihodai final contest held as program to
identify Shizuoka's attractions (Shizuoka Bank)⚫ NISA Investment Caravan in
Shizuoka Prefecture
held(Shizuoka Bank, Shizugin
TM Securities)⚫ Three-prefecture
Future Fund service
introduced to invest infirms based in Shizuoka,
Aichi, and Yamanashi
prefectures (Shizugin
TM Securities)

Transformation
strategy

7月、8月
December⚫ Business partnership agreement
concluded with CIMB Bank Berhad(Malaysia) (Shizuoka Bank)⚫ SFG Real Estate Investment Advisors established(Shizuoka FG)⚫ Start of participation in Tokyo Stock
Exchange Carbon Credit Market(Shizugin Lease)⚫ Applicants for Shizuoka
GX Support CO2emissions calculation
service surpasses 300
in one month(Shizuoka Bank)* Shizuoka Bank plans to participate in
December 2023

⚫ Brussels Representative Office opened(Shizuoka Bank)⚫ Cloud-first policy decided (Shizuoka Bank)

41

Shizuoka Financial Groupnews releases

Major initiatives in FY2023 (4)January
4月⚫ Launched Startup Growth Shizuoka program
which supports startup(Shizuoka Capital)

Region-CoCreation
strategyGroup
Businessstrategy

February⚫ Changes announced to financial targets andshareholder return policies of the First Mediumterm Business Plan
(Shizuoka FG)

6月

7月、8月
March-April⚫ Named KENKO Investment for Health
Stock Selection and Next Nadeshiko:Companies Supporting Dual-career
and Co-parenting for the first time
(Shizuoka FG)⚫ Introduced RS Trust for Group employees(Shizuoka FG)⚫ Made donation to the community through healthmanagement(Shizuoka FG)⚫ Awarded Gold Prize in ESG Finance Awards
Japan (Ministry of Environment Prize) for thesecond consecutive year
(Shizuoka Bank)⚫ Services for foreign workers (premium job
referral business) launched to provide solutions
for regional labor shortages(SFG Marketing)⚫ Cooperative agreement to move closer to carbon-zero
city status was concluded among City of Fukuroi,
Shizuoka Financial Group, and Hamamatsu Iwata
Shinkin Bank (Shizuoka FG)⚫ Shizuoka Nagoya Alliance held a joint online
seminar on corresponding to legal amendments
and subsidies for IT adoption(Shizuoka Bank, Shizugin IT Solution).

Transformation
strategy

5月⚫ Earned two stars in Carbon-Neutral Business
Certification Program held by City of Hamamatsu(Shizuoka Bank)⚫ Held Indonesia-Shizuoka Friendship
Meeting and Thailand-Shizuoka Friendship
Meeting, which support customers’ overseas
businesses, for first time in four years(Shizuoka Bank)⚫ Regional firms that create in J-Credits (from forestry)in the cities of Hamamatsu, Fujieda, and Shizuoka
and in the town of Mori (Shizugin Management
Consulting)⚫ Feasibility testing for Digital CIO, a generative
AI dialogue partner was launched(Shizuoka Bank)

42

Revision of the organization
Organization partly revised in April 2024 to aim at achieving the First Medium-term Business Plan.
Establishing Group Business Development
Department

Goal

Enhancing new business and innovation to aim at
growth of the Group and creating synergy

BeforeGoal

Materialize the international strategies byredesigning the organization into the following three
departments: business solution of the clients,
investment and lending and Asia strategy

BeforeShizuoka Financial Group
Business Development
Department

Redesigning the organization to implement theinternational strategies（Plan new projects）

Shizuoka Bank
Corporate Planning
Department

・・・

・・・

Innovation Promoting Group・・・

Developing a portfolio that possesses

ALM Strategy Office profitability and soundness over the capitalcosts

IT Security OfficeEnhancing the treatment for cybersecurity

Data Management
OfficeEnhancing data usage in sales
promotion and management business

After

Shizuoka Financial Group

Shizuoka BankTransfer the organization from the Bank to enhance the function

Redesign the existing International Business Department
into two Departments and a Project TeamGroup Business Development
Department

Establish the specialized offices as theinternational functions of the BankInternational Business Promotion
Group
Asia Strategy Project Team

After

Goal

Enhancing the planning that related to thesignificant operation such as management andsales strategies

Establishing
the specialized
offices

Shizuoka BankInternational
Business Department

Establishing the new offices to reinforce thesignificant operation

Business Development OfficeInnovation Promoting OfficeInternational Business
Department

Enhance support of the client business issue, ie: expanding theinternational business

Wealth Management Enhancing planning of wealthmanagement business
OfficeInternational Finance
Department

Establishing Chief Innovation Officer(CINO) to enhance the organization

Expand profit opportunity through investment and lending that captures theinternational financial market
Asia Strategy Project Team

Accelerating the growth strategies that capture the trends in Asian region

Web Marketing
Strategy OfficeEnhancing marketing utilizing the web
technologies

43

ESG initiatives
Initiatives that aims at achieving carbon neutrality in FY2023
Own-contract power of all Group companies has been shifted to renewable energy

Environment

Society

Governance2023/6～

Awarded Gold Prize in ESG Finance Awards Japan (Ministry of Environment Prize) for thesecond consecutive year (Shizuoka Bank)

2024/2

Registered as the TNFD Adopter (Taskforce on Nature-related Financial Disclosures)

2023/12

Participated in Carbon Credit Market that was opened by Tokyo Stock Exchange (Shizuoka
Bank and Shizugin Lease Co., Ltd.)

2023/10～

Setting the goal for sustainable finance (To be executed JPY 2,000bn by FY 2030)
Cumulative execution by FY 2023JPY 849bn（42.5% progressed）

2021/10～

Established Shizuoka Financial Group Human Rights Policy

2023/3

Held TECH BEAT Shizuoka (Cumulative 9 times)

2018～2023/7

Established a new company that contributes solution to the local issues (SFG Marketing,Co., Ltd. and SFG Real Estate Investment Advisors, Co., Ltd.)

2023/72023/11

Selected for the first time as KENKO Investment for Health and Next Nadeshiko:Companies Supporting Dual-career and Co-parenting

2024/3Disclosed the skill matrix of the Board Committee (especially in the discipline that is expected todemonstrate the role)

2021/12

Shifted to a Holding Company (Adopted Company with Audit and Supervisory Committee)

2022/10～Introduced the Group Research Officer system (Established Chief Innovation Officer (CINO) thatsupervise and promote the overall new business (April 2024))2022/10～44

Improving engagement and well-being
Strive to improve employee engagement and well-being through efforts to expand HR system reforms throughout the organization.
Profile of engagement by the employees of Shizuoka Financial GroupThe overall engagement of Shizuoka Financial Group employees resulted in 3.81 (+0.05pt YoY)
That of Shizuoka Bank resulted in 3.83 (+0.04 YoY), which marked the ever highest

Shizuoka Bank

External evaluations and support for external initiatives
Selected for the first time as KENKO Investment
for HealthSelected as the company that engages insupport of work-life balance for both male andfemale employees

Shizuoka Financial Group
3.80

3.78

3.83

3.79

3.76

3.70

SFG

SFG

3.81
3.77

Next Nadeshiko: Companies
Supporting Dual-career and Coparenting

3.76

Certified as 2024 Health & Productivity Management
Outstanding Organization

Endorsed The Value 500

The following four companies are certified as outstanding
health management organizations:

3.67

Endorsed the international initiatives that
supports the people with disability to take arole in the society

white 500

3.64

SFG

3.62
Shizuoka Bank

FY2008FY2009FY2010FY2016FY2020

FY2021

FY2022

Shizuoka BankFY2023

Shizugin IT Solution
Shizugin Business
CreateAnalysis of FY 2023 results and the KPI of FY 2024
The 4 items in the KPI marked higher
YoY (Shizuoka Bank)KPI items for FY 2023

①Satisfaction②Attractiveness for theemployees③Challenges④Diversity

Compared to FY
2022

+0.08
+0.05
+0.03
+0.02

Setting the KPI for FY 2024
Resetting the 6 items (below) to evaluate
the penetration of culture transformationand sustainable management①Satisfactioin②Attractiveness for theemployees③Challenge / Value
creation④Wellbeing⑤Culture transformation⑥Sustainability
management

Certification related to participation and advancement of womenPlatina Eruboshi

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

Shizugin Business
CreateShizugin TM Securities

Shizugin IT Solution

Shizugin Business
Create

The following company iscertified as having a workplaceenvironment that empowers
women to a degree exceeding
the requirements of the Eruboshi
program:Eruboshi (3 stars)
The following four
companies are
certified as having
workplaceenvironments thatempower women:
Shizuoka Bank

Shizugin Mortgage
Service

Shizugin TM Securities

Shizugin IT Solution

45

Initiatives in Human Capital Management − 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 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

Implementing culture and innovation measures
Implementing measures intended to reform our culture and atmosphere and to connect employee aspirations to management strategy,
based on engagement survey results

Holding town hall meetings

Awareness and atmosphere reforms moving from a
top-down approach toward one of co-creation

Aiming to raise awareness of co-creation andencourage reforms to the internal atmosphere bydeepening understanding of the corporate philosophy
and management strategy through opportunities for
direct dialogue between management and employees

Communicating messages from management

We are communicating messages from management to all employees on the themes ofhuman capital management and the Medium-term Business Plan, to increase understandingof strategy.

Theme (1) Why is human capital management necessary?

I was able to reaffirm my status as amember of the Shizuoka Financial Groupby listening directly to management’s views(Shizugin TM Securities employee)

Discussion of how the growth of local firms leads
directly to Company profits gave me a chance toreconsider my own views.
(Shizuoka Bank employee)

Adopting My Sustainability Books

Connecting management strategy toemployee aspirations

President Yagi spoke with Kunio Ito, a leader inhuman capital management, and Piotr Feliks
Grzywacz, who provided support for adopting oneon-one meetings and OKR, on the theme of humancapital management.
Pronoia GroupCEO

Piotr Feliks
Grzywacz

Shizuoka Financial Group
Director
Chair of Human CapitalManagement Committee
Shizuoka Bank President

Director of Hitotsubashi
CFO Education andResearch Center

Kunio Ito

Minoru Yagi

These books, which are about 250 pages long, will
be completed over the five years of the Mediumterm Business Plan in communication with superiors,
using them as tools for one-on-one meetings inparticular.

They explained purpose-driven management andSX management based on the thinking of theMedium-term Business Plan.

Theme (2) Why do we need to achieve the goals of the First Medium-term
Business Plan?
Basing our actions on our purpose, instead ofnumbers

We adopted My Sustainability Books and distributed
to employeesto connect management strategy to theaspirations of individual employees.

Increasing understandingof strategy

Purpose-driven
corporate vision

Expand dreams and affluence withour community

BeforeUnder the new Medium-term Business Plan

Actions based on numericalfigures

Actions based on our purpose

Do they enliven our region
and customers?

Do they enliven ourselves?

Enlivening our region andcustomers
We see the meaning of ourwork through contributing to society
This contributes to rewarding work andachieving numerical targets

This message explained the background of
formulating the First Medium-term Business Plan,
which differs greatly from the previous Medium-term
Business Plan due to consideration of subjects suchas purpose-driven management and balancing
corporate and social value.
Management communicated its views on how totransform our behavior from that based on
numerical figures to that based on our purpose andhow to balance short-term and long-term profits.

47

Support for autonomous career development
Growing the Shizuoka Financial Group’s business portfolio and boosting profitability by changing the corporate culture to stimulate
individual initiative
Shizuoka Financial Group Open College (Liberal Arts)

In-house startup program

We provide executives and employees with opportunities to learn about new
topics through means such as seminars on liberal arts, IT/DX, the environment,
and DE&I in courses offered on weekends and weeknights.

Entrants come from a wide range of generations, and a corporate culture of challenge
spreads throughout the Group.

2nd Awarded Theme

Those in their 20s and 30s account for about
60% of entrants.

2%

12%
20s
30s
40s
50s
60s

25%
35%
26%

29%

23%

Electronic circular for community
associations, Online collection
agency services

Open College participants(persons)

Second program
entrants(Total entrants: 60)

The Grand Prize was awarded to a new
employee who joined the company in 2023.

As the age range of applicants grows, people across a wide range of generations areactively choosing their own career paths.
Increased number of entrants, mainly in their
20's and 30's

Diverse career choices

1% 4%

External
In-house trainee
dispatch
Tackling the challenge of a posting
to a requested section
Transfer between Group
companies

4% 4%

56%

FY2022

3,843

4,498

5,696

Value Up program

My Career Design program

39%

FY2021

17%

31%First program
entrants(Total entrants: 59)

FY202020s 25%
30s
40s
50s

67%

Dispatch to a local firm

FY2019 applicants

FY2023 applicants(Total applicants: 72)(Total applicants: 185)

Working concurrently
in another section

Cumulative
total users:

363* From FY2019 to theend of Sept. 2023

This program provides financial support for skills development initiatives plannedby the individual employees themselves.

[Examples of past support]
Business schools (e.g., Globis, Waseda University), programming schools,
qualification schools (e.g., for tax accountants and real-estate appraisers),
language schools, etc.

Meet Up programThis program provides support for part of the cost of participating in various events,
including community events, study meetings, and inter-industry exchange meetingsorganized by government or local firms.
[Main examples of past support]
Participation in inter-industry exchange meetings, seminars on recent wine
trends, events for learning about local history, fishing classes (community
vitalization), etc.
48

External exchange of human resources
Implementing active human exchange to aim at robust relationship with the local community and initiative to new operation
Mutually learning knowledge and know-how’s through the exchange and train the human resources who take initiatives
to develop the society sustainable.
(As of May 1, 2024)【Dispatch】• Contributing to the growth if thelocal companies• Understanding the local economy
and industry and grasping thepotential needs and issues

Part of the human resources arerecruited through Shizugin General
Service Co., Ltd.

【 Dispatch 】• Acquiring new skills and knowhow’s of new disciplines such as
venture capital and digital skills• Developing relationships amongstart-up’s and companies from thedifferent industries【Acceptance (Side-job)】• Boost the strategy by utilizing theexternal knowledge

Dispatch to the different industries
10 employees (Cumulative 47）

Dispatch to the local companies
8 employees（Cumulative 21）

Local Community

Different industries

Coming back as anexpert who possesses
knowledge and knowhow’s

Coming back as an
employee who possesses
understanding of the local
companies

Acceptance from the different
industries
4 employees (Cumulative 8）

Retired employees
As an employee of a general financial group in thelocal area, his/her expertise is passed on to the
local community
Dispatch to the financial
institutions
14 employees（Cumulative 49）

Other financial Institutions

Dispatch to the local government
2 employees （Cumulative 11*）

Coming back as an expert
who possesses
knowledge and knowhow’s

Enhance the partnershipin the co-creation
projects

Local Governments

Acceptance from the insurancecompanies
34 employees (Implemented constantly)

Acceptance from the local
government
5 employees （Cumulative 22*）

【 Dispatch ・Acceptance】• Enhance the partnership in
the co-creation projects*Cumulative number of employees since FY 2015 (Regional
revitalization Department settles)【 Dispatch 】• Acquiring the knowledge and knowhow’s of the growing areas such as
forefront finance and wealth【Acceptance】• Acquiring know-how’s of insurance
sales【Exchange of human resources
through the Alliances】• Exchange of human resources ineach discipline of the partnership

Support the sustainable growth of the local community through problem-solving and creating of the new value demonstrated by the group employees who possess the diverse
knowledge and skills(As of the end of March 2024)
Value creating human resources
Problem-solving human resources

Number of qualified employees

Certified Financial
Planner1級

338

Registered Management
Consultant

69

IT Passport

1,220

Fundamental Information
Technology Engineer

84

Social Insurance Labor
Consultant

Administrative Scrive

17

16

MBA

13

49

DE&I enhancements to maximize human resource value
Initiatives to empower women

Supporting women’s careers

We seek to achieve a ratio of at least 22% of leadership positions (at thesection manager level and above) being women by the end of March 2024 andat least 40% by the end of March 2031, as we actively assign and appoint
women to these positions while supporting women’s career development anddevelopment women managers.

○ Holding training for women executives and employees to make work more
rewarding and to help them tackle the challenges of career development○ Raising awareness of women’s health issues○ Holding seminars to promote better understanding among colleagues

General employer action plan initiatives

TOPICs: Support for the “Challenge
to 30% by 2030” program

Five Group companies—Shizuoka Bank, Shizugin TM Securities, Shizugin IT
Solution, Shizugin Mortgage Service, and Shizugin Business Create—haveformulated general employer action plans, as we strive to advance the roles ofwomen Groupwide with the aim of strengthening our DE&I initiatives.

KPI

Ratio of leadership positions filled by women (Shizuoka Bank)
27% or more by the end of March 2027 and 40% or more by theend of March 2031

22.6
Number of women in leadership
positions in the Group

Ratio of leadership positons filled by
women (%)
(Five companies with generalemployer action plans)
Ratio of leadership positions fille bywomen (%)
(Shizuoka Bank only)

Maintaining a percentage of 100% of eligible male employees
taking childcare leave*

23.4

22.0
21.0

12
10
6

4

18.6
17.9

18.1

16.9
FY2020

FY2021

FY2022

We support the program promoted by theJapan Business Federation. As of April 2023,
ten female executives, including thepresident of a Group company, play active
management roles within the Group.

FY2023In line with amendment of the Child Careand Family Care Leave Act in April andOctober 2022, in April of that year we
expanded our “Ikusapo” childcare support
program. Alongside establishing a system
to promote gender-neutral participation inchildcare, we seek to overcome
resistance to men taking childcare leaveand rectify unconscious biases
concerning balancing family and work.
* At five companies with general employer action plans
Percentage of 100% of eligible male employees taking childcare
leave (%) = number of male employees who took (began)childcare leave in the fiscal year/number of male employees
whose spouses gave birth in the fiscal year * 100

Average days of leave taken*
Percentage of leave taken*

136.3
104.1

118.6

63.6
18.9
12.0
7.2
2.9
FY2020

FY2021

FY2022

FY202350

Promoting efforts toward net zero GHG emissions in the Shizuoka Financial Group (Scopes 1, 2)
We have set the target of achieving net zero GHG emissions (Scopes 1, 2) within the Group by FY2030. We have been a pioneer in adoption of energy conservation and renewable energy in theregion.
We have attained reductions of approx. 70% by FY2023 and aim to achieve net zero through GHG emissions reductions other than from direct energy use in the future.

GHG emission (Scopes 1, 2) results and projections
Scope1
Scope2２ FY2023 efforts

１

18,514
1,377

Switching to use of renewable energy (starting June 2023)
12,714
1,177

２ Down approx.

11,5384,924

70% vs.
FY2013

17,137FY2013• In addition to use of Shizuoka Green Power and operation of
Shizugin Solar Park, switching steadily to renewables in direct
power use by the Shizuoka FG as a whole, through means
including issue of non-fossil-fuel certificates

FY2022

３

FY2023 (projected)

Operation of Shizugin Solar Park (starting October 2023)

Carbon neutrality
achieved
FY2030 (planned)* Scope of calculation expanded in FY2023 to include scope of calculation under TCFD guidance inaddition to that required by the Act on Rationalizing Energy Use

１ Efforts through FY2022[Efforts at Shizuoka Bank’s
headquarters tower]• LED lighting (adjusted
automatically)• Powered vents[Adoption of energy
conservation equipment ]• LED lighting• High-efficiency airconditioning• Adoption of motion
sensors etc.

[Adoption of renewable energy]• Beginning to purchase renewableenergy produced in Shizuoka
Prefecture (Shizuoka GreenPower) in September 2021
Shizuoka Green Power[Energy conservation efforts ]• Reducing hours of lighting andair-conditioning use in ways
linked to workstyle reforms• Established based on an offsite
corporate PPA* agreement
concluded with the Chubu ElectricPower Group* Purchase of power from powergeneration equipment installed in aremote location

Shizugin Solar Park

Started receiving renewable energy electricity generated at the“Shizugin Aqua Energy Park” (April 2024).
• In April 2024, the company will enter into a contract for
procurement of all renewable energy power derived from thepower plant and begin receiving power.

３ Efforts to achieve carbon neutrality• Advancing study of offsets and other efforts to reduce GHG
emissions related to energy other than direct power use
51

Initiatives to support customer decarbonization (1): Research, analysis
Interviewing customers on the state of their decarbonization efforts to provide support that addresses their issues (conducted annually since FY2021)
Based on the results of interviews, enhancing support options in accordance with customer issues and deploying active support

Customer interviews on decarbonization (approx. 1,700 customers)

Scope 3 (Category 15 [Investments])

Percentage of customers implementing or planning to implement efforts has
increased to approx. 60%.

• We joined the PCAF in November 2022. We calculated GHG emissions ofcorporate borrowers based on PCAF standards.

[State of decarbonization efforts ]• In the future, we will improve precision through calculation on a measured value
basis using emissions calculation tools, to provide more effective support byidentifying priority sectors through analysis of the results of measurement

First interviews (FY2021)

None
49%

Most recent interviews (FY2023)

Underway31%

Planned
20%

None
39%

Carbon intensity: t-CO2e/JPY mn; emissions: t-CO2e

Underway47%

Planned14%[Issues in decarbonization efforts]
The issues facing customers are shifting toward practical implementation issues.
Issue
Unsure where to begin

FY202134%

FY2023
26%

Change-8pt

Unsure how to calculate CO2 emissions

9%

16%

＋7pt

Lack the human resources to implement measures

12%

30%

＋18pt

Do not understand subsidies and other support measures.

14%

21%

＋7pt

Would like to formulate business simulation of capital investment.

7%

12%

Carbonintensity

Emissions

Carbonintensity

Emissions

Beverages

0.33

2,919

Oil, gas

9.80

2,737,911

Agriculture

6.73

47,461Coal

3.32

12,659Packaged foods,
meat

0.82

219,806

Power companies

11.99

246,061

Paper, forest
products

2.28

594,780

Metals, mining

12.24

4,550,676

Air transport(cargo)－0

Chemicals

3.32

269,714

Air transport(passenger)

Building materials

0.11

1,017

4.75

15,0800.34

71,341Sea

9.81

170,359

Capital goods(buildings, etc.)

Rail transport

1.12

28,271

Real estate
management anddevelopment

0.02

199,539

Trucking services

2.73

416,065

Others0.67

2,216,874

Automobiles,
auto parts

0.20

121,704

Total

Industry＋5pt

Of the firms interviewed, 348 plan to make capital investments.

We will provide appropriate support for customer
decarbonization efforts while enhancing support optionsin accordance with customer issues(Scope1, 2)

Industry(Scope1, 2)

11,922,235

52

Climate change risks: Impact on credit costs
There is a risk that credit costs may rise up to roughly JPY33.6 bn by 2050 if the transition and physical risks identified in the analyses should actually emerge.
We will strive to reduce risks through proper management of risks associated with climate change and realizing a smooth migration to a decarbonized society inthe region.

Trend in credit costs

Climate change risks

Total credit costs through FY2050 anticipated based on results of scenario analysis are roughly
equivalent to those during the 2008 financial crisis. We will strive to reduce them gradually bysupporting customer decarbonization.

• We reviewed risks due to climate change based on TCFD recommendations.
• We anticipated cases of transition and physical risks for each risk category.
• We will carry out appropriate management with consideration for the impacts of climatechange in accordance with the properties of each risk type.

410

343

Transition risks
117

FY2008FY202055

48

39

FY2021

FY2022

FY2023

Scenario
analysis results

Global financial crisis

Scenario analysis (details of FY2022 measures)

Total through FY2050 due
to manifestation of risks• For credit risks, scenario analysis was conducted to make value at risk visible.
• For transition risks, analysis was enhanced through more thoroughly reviewing the auto industry
and the addition of the electric power industry.
• For physical risks, SMEs and small businesses and home mortgage debtors in Kanagawa
Prefecture and Tokyo were added to the subjects of analysis.

■Physical risks■Transition risks
Subject
sectors

Scenarios
usedAnalyticalmethodAnalyticalresults

Paper and
pulp

Manufacture of
motor vehicles,
parts, andaccessories

Electric
energy• IEA Net Zero Emissions by 2050 Scenario(NZE2050)• IEA/ETP 2017 Beyond 2°C Scenario• NGFS Net Zero 2050
Analysis of credit costs by forecasting changes
in profit, loss, and financial standing through2050 using data from forecasts of carbon taxesetc. based on scenarios.
Increase of up to approx. JPY23.0 bn
in credit costs in total by 2050

Scope

Calculation of credit costs
related to building
damage and businesscontinuity risks to SMEs
and small businesses in
Shizuoka and Kanagawa
Prefectures and in Tokyo

Calculation of building
damage and credit costs
to home loan debtors in
Shizuoka and Kanagawa
Prefectures and in Tokyo

Balance ofloans
subject toanalysis

JPY2,525.0 bn

ScenariousedHigh-emission scenario (RCP8.5) from IPCC
Sixth Assessment Report (4°C Scenario)

Analyticalresults

Increase of up to approx. JPY18.0

JPY2,502.5 bn

bn in credit costs in total by 2050

Physical risks

Risks associated with a changing businessenvironment, such as changes in policies,
regulations, and technological development,
and risks of delays in decarbonization

Risks of damage from natural disasters
caused by climate change, such as windand floods

Increase in credit costs associatedwith worsening customer
business performance

Credit risk

Increase in credit costs associated withworsening customer business performanceand damage to security assets

Decrease in value of securities andother assets heldMarket risk

Decrease in value of securities andother assets held

Worsening of Group’s credit rating
and associated restrictions on meansof raising funds from the markets

Liquidityrisk

Difficulty in raising funds from the markets due tooutflow of deposits as cash is needed to respondto damage and to financial market turmoil

Reputation damage

Operationalrisk

Damage to assets held andassociated business interruptions

Carbon-related industries
we have ascertained lending balances to carbon-related industries as part of efforts to quantify
climate change risks.
Subject sector

EnergyTransport

Materials,
structures

Agriculture,
foods,
forestry

Total

Share

1.74%

7.85%

14.03%

4.32%

27.94%

1,822

8,205

14,654

4,508

29,189Loan balance(JPY100 mn)

53Natural capital management initiatives
In addition to making this region, which is endowed with the blessings of nature, more sustainable through efforts to conserve and restore the natural capitalon which regional industry is based, leveraging such efforts to generate business opportunities to achieve the Shizuoka FG’s materiality goal of social
enhancement balancing environmental and economic interests

Relationship between natural capital and local industry

Shizuoka FG’s initiatives• Shizuoka Prefecture is blessed with a wealth of natural capital, on which its diverse
industries are based.
• Conservation and recovery of this underlying natural capital will lead to the region’ssustained growth.

Understanding of the issues
IssuesWater pollution(Illustration of relationship) Promoting future initiatives
ClimatechangeAir

Decrease in biodiversity
・・・
Deforestation

Lower numbers of
tourists Business
contraction

Flooding and landslides
Impediments to business
continuity

Biodiversity

Water

Soil

Flora andfauna

Agriculture,
forestry,
fisheries

Various industries depend
on natural capital
Secondary industries also arehighly dependent on andaffected by water resources.

Manufacturing

Food

Tourism

Paper

・・・

ImpactLow

High

Plant closure

Impacts on
Decreased fisheriescommunity
resources

Recent initiatives• Beginning efforts toward conservation and recovery of the natural capital on which
industry is based• Targeting disclosure in FY2024 based on TNFD recommendations

Mt. FujiSouthern
Japan Alps

Structurebuilding

UNESCO Park
certification
Port of Tagonoura

Port of Yaizu
Port of Omaezaki

SurugaBay✓

Beginning analysis of relationships (dependence/impacts) between
customers and natural capital✓✓

Joining the Fujinokuni Biodiversity Strategy Promotion Partnership
Registered to TNFD Adopter (December 2023). NEW(Registered with the adopters of the TNFD recommendations
published in September 2023)

Future policies

Port of Shimizu
Lake
Hamana・・・

Contraction of Shizuoka FG’s customer base (basis of future earnings)

Research,
analysis
Wealth ofnaturalresources

Degradation ofnatural scenery

Izu Peninsula

GlobalGeopark• Disclosure of measures in accordance with the four items recommended by the
TNFD (FY2024)
Governance

Strategy

Risk and impact
management

KPIs andtargets54

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

Efforts of the Industrial Transformation Support Project Team

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

58

54

research, and analysis
 Conclud memorandum on advancement of auto-industry support with six regional banks:(Projects)

Projects completed57

 Create supply chain diagrams and begin proposing support initiatives through gathering information,

Ashikaga, Gunma, Nagoya, Hiroshima, Yamagata, and Yokohama (August 2023)
 Execution of the first investment by the Shizuoka-Nagoya Alliance Fund, established with Nagoya

59

61

60

Bank to support industrial reform (March 2024)“Shizuginship”; next-generation management courses
 This membership-based service seeks to enhance the management capabilities of the next

13

12

12

14

14

16

FY2018FY2019FY2020

FY2021

FY2022

FY2023

Over 300 firms have completed business
revitalization efforts since FY2005.

Preserve jobs for about 28,000 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
11%
20%

Credit rating
trendsRequiringattention or lower
14%

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: 658 corporate and 969 individual members as of the end of March 2024
Participants in activities in FY2023: 1,189 persons in total
Cooperation

Shizuoka Bank

[Leading companies in
Shizuoka Prefecture]

Various events andseminars
Performing
22%

Nonperforming
69%

Nonperforming
64%

March 31, 2023

March 31, 2024

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

55

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
Individual business discussion meetings held
Shizuoka Kids Academy
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.

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.

<Activities in FY2023><Meetings held (January 2021–September 2023)>

Date

Event

Participants@ Kadode Ooigawa: 100-year food and tea
experience
September(Cosponsored by JA Ooigawa and Kadode
Ooigawa K.K.)

32@ Kanogawa Kamishima Park: Kanogawa
hands-on learning experience(Cosponsored by JM K.K.)

68

October

Total
Meetings held
Applications
Participants
Business
discussions

31
948
719
980

From Shizuoka
From Yamanashi
Bank
Chuo Bank
–
–
591
314
432
248
615

321

* Including those cosponsored with partners other than Yamanashi Chuo Bank

Joint exhibition to the World Tea Expo 2024 with the 5 local companies
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

As a regional co-creation strategy, Shizuoka’s tea industry was
exhibited with Shizuoka Prefecture in the World Tea Expo 2024,
which is the largest exhibition in North America＜Overview＞
Dates March 18-20, 2024
Venue Las Vegas, USA＜Visitors＞
circa. 12,000

Joint Shizuoka-Yamanashi Manufacturing Meeting held
 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.
 Planned for July 23 during FY2024

56

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. Ranked next after Qatar, Algeria, and Hungary in a comparison with national GDPs aroundthe world.

Shizuoka Prefecture KPIs

Shizuoka Prefecture's economic scale
Nationwide share

Population

3.53 mn

2.9%

Prefectural GDP (FY2020, nominal)

Nationwide rank

10/47 (2023)

Rank

Prefecture, region(USD bn)

9

Fukuoka

178.1

Households

1.58 million

2.7%

10/47 (2023)

10

Shizuoka

161.3

Prefectural GDP (nominal)

JPY 17.1tn

3.1%

10/47 (FY2020)

11

Ibaraki

129.9

Prefectural GDP per capita

JPY 3,110k−

6/47 (FY2020)−

Four prefectures of Shikoku

133.0

−

Three prefectures of
Hokuriku

121.0

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

190,000

3.0%

10/47 (2019)

JPY 17.3tn

5.2%

4/47 (2021)

JPY 213.2bn

2.4%

15/47 (2022)

210,000 t

6.5%

4/47 (2021)

52

5.6%

4/47 (2022)

19,0002.4%

10/47 (2023)

Comparison to national GDPs (2020)
Rank

Country, region(USD bn)

55

Qatar

176.4

56

Algeria

171.7

57

Hungary

164.0−

Shizuoka Prefecture

161.3

58

Ukraine154.0

59

Kuwait136.2

Source: Economic and Social Research Institute (ESRI), Cabinet Office, Government of Japan and other57

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 2023 survey (for fourth consecutive year)
Popular as a relocation destination among all generations

Shin-Tomei
Expressway

Ranking of desired relocation destinations
2020

2021

2022

2023

1

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 Japan58

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 March 31, 2024

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

19

TSE Standard

31

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. JPY1.2 tn: Highest in Japan (2022)
Product

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

National rank

Pharmaceuticals

8,305

3

Medical devices

347.3

1

Total

11,7781

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

59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

10,196.6

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

5,268.7+1,856.9
FY2004

FY2007FY2010FY2013

FY2016FY2019FY2022

FY2023

Total deposit balance (average)(JPY bn)

Portion in Shizuoka Prefecture

11,441.0

11,755.5

Shizuoka Bank

Moody’s

A1

S&P Global Ratings

A-

Rating and Investment Information
(R&I)

AA-

Moody’s long-term ratings (as of March 2024)

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+5,076.9

6,407.9

7,045.1

7,692.1

8,613.4

9,861.3

10,022.7+4,448.1
FY2004

FY2007FY2010AA-+5,180.3

5,016.3
4,276.6

Shizuoka Financial GroupFY2013

FY2016FY2019FY2022

FY2023

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

A2

Resona Bank, Bank of Yokohama, and five other banks

A3

The Bank of Fukuoka, Joyo Bank, and four other banks
60

Loans – Loans by industry
Expected loss (EL) for all industries totals JPY 11.9 bn, while unexpected loss (UL), or credit risk, for all industries totals JPY 96.0 bn.

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

Credit balance (as of the end of March 2024)(JPY bn, %)Balance
6,887.5

100.0

Change fromprevious FY(JPY bn)+154.8
1,050

Real estate *1

1,049.0

15.2

＋51.1

Transportation
machinery

508.5

7.3

-0.9

Wholesale *2

445.7

6.4

-41.2

Leasing

424.9

6.1

＋23.2

Money lending andinvestment

393.5

5.7

+34.9

Construction

296.3

4.3

Real estate

850

Credit balance

All industries

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

650

Transportation machinery
450

Leasing Wholesale
Money lending andinvestment

＋2.6
250

Retail

274.1

3.9

-15.3

Accommodations

92.0

1.3

+3.4

Construction

RetailAccommodations
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 balance61

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

132.8

80%

Treasury division

279.6

128.7

46%

7.0

2.5

36%

Subsidiaries of Shizuoka
Bank

2.0

0.1

3%

Strategic investments

15.0

7.6

50%

Operational risk

25.5

25.5

100%

Subtotal

493.6

297.2

60%

306.8

−

−

800.4

−

−

(JPY bn)

Subsidiaries of holding
company, etc.
(excluding Shizuoka Bank)Core capital
JPY 800.4bn

Market risk
205.1

(End of March 2024)

Strategic investments
15.0
Operational risk
25.5
Buffer capital, etc.
306.8

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 risks62

Group companies (excluding Shizuoka Bank)
The total ordinary profit of group companies (excluding Shizuoka Bank) in FY2023 was JPY 5.3bn (down JPY 4.0bn YoY).
Ordinary profit of 9.6 billion yen, excluding Shizuoka Bank (closed in March 2024) in Europe, maintaining an increasing trend.
Company name

Shizugin Management Consulting Co., Ltd.
Shizugin Lease Co., Ltd.
Shizuoka Capital Co., Ltd.
Shizugin TM Securities Co., Ltd.
SFG Marketing Co., Ltd.
SFG Real Estate Investment Advisors Co., Ltd.
Subsidiaries of Shizuoka Bank
Shizugin IT Solution Co., Ltd.
Shizugin Credit Guaranty Co., Ltd.
Shizugin Card Co., Ltd.
Shizuoka Bank (Europe) S.A.

FY2023
ordinary profit

Main businesses

0.5
1.7
0.3
2.0
-0.0

+0.1
+0.1
-0.0
+0.2
-0.0

Investment advisory services regarding private real-estate investment funds; consulting services

-0.0

-0.0

Computer system development and operation; data processing services
Credit guarantees
Credit card business; credit guarantees
Banking; finance and securities services

0.2
4.0
0.8
-4.3*
0.1
0.0
0.0
-0.0
0.0
0.0
0.0

-0.1
-0.0
-0.1
-4.0
-0.1
+0.0
+0.0
-0.0
-0.0
-0.0
+0.0

5.3

-4.0

Purchase of monetary receivables

Shizugin General Service Co., Ltd.
Shizugin Mortgage Service Co., Ltd.
Shizugin Business Create Co., Ltd.
Shizugin Heartful Co., Ltd.

HR, general affairs, financial operations; fee-based job placement service
Evaluation and appraisal of real estate loan collateral; operation center for loans
Operation center for forex remittance, bill collection,etc.
Production, printing, and binding of documents

Total excluding Shizuoka Bank (16 companies)

Shizugin Saison Card Co., Ltd.
Monex Group, Inc.

YoY change

Corporate and financial management advisory services; bill collection services
Leasing
Support for public offering of stock shares; rehabilitation support for SMEs
Financial instruments brokerage
Marketing support; advertising agency

Shizuoka Liquidity Reserve Ltd.
Shizuoka EU Liquidity Reserve Ltd.
Shizuoka SG Liquidity Reserve Ltd.

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

Credit cards; prepaid cards; credit guarantees
Holding stocks of companies involved in financial instruments brokerage andother businesses

0.2

-0.0

25.2*

+24.3
* Pretax income

63Shareholder returns – Share buybacks (over time)Through FY2022, 210 million shares (26.1% of shares outstanding before initial retirement in 1997) were retired.
In addition, 5 million shares to be retired on May 31, 2024.
* Consolidated financial statements have been prepared since FY1998.

Shares boughtback (thousand)

FY1997
FY1998FY1999FY2000FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008FY2009FY2010FY2011FY2012FY2013
FY2014FY2015FY2016FY2017FY2018FY2019FY2020
FY2021
FY2022
FY2023Cumulative 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
10,00010,00010,00010,000－10,0009,857
4,829
260,497

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
10,0007,000
249,557

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
51.2
49.3
－

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
104.2
－

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
2,188.0－

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
39.0
－

64

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)