Shizuoka Financial Group (5831): FY2025 Results Summary — Record Net Income of JPY 90.5 bn on Rising Yen Interest Rates

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Shizuoka Financial Group reported consolidated net income of JPY 90.5 bn for FY2025, up JPY 15.9 bn YoY and JPY 2.5 bn above its forecast, a record high and the fourth consecutive year of profit growth. Higher net interest income at Shizuoka Bank (nonconsolidated), up JPY 23.0 bn YoY on rising JPY interest rates, drove the increase, while the Group also proceeded with replacement of its bond holdings and recorded preventive allowances for loan losses. For FY2026 the Group targets consolidated net income of JPY 105.0 bn (up JPY 14.5 bn YoY) and ROE of 8.4% based on net assets. Consolidated PBR reached 1.1 at the end of FY2025, surpassing the 1.0 milestone.

Consolidated Results (Full-Year Actual)

Core gross operating profit rose JPY 29.0 bn YoY (+14.6%) to JPY 226.8 bn on growth in core business earnings, while gross operating profit fell JPY 8.4 bn YoY to JPY 178.9 bn because of losses on sale of JGBs and other bonds associated with bonds replacement — the first decline in four periods. Net operating profit decreased JPY 16.3 bn to JPY 75.1 bn on higher operating expenses (+JPY 8.2 bn) and those bond-sale losses. Ordinary profit rose JPY 28.2 bn YoY to JPY 130.3 bn, as a JPY 47.7 bn increase in gains on stocks offset a JPY 4.4 bn increase in credit-related costs attributable to preventive reserves. ROE based on net assets improved to 7.5% and ROE based on shareholder equity to 9.1%. The company notes that core gross operating profit, ordinary profit and net income were record highs.

Item (JPY bn, %)	FY2025	FY2024	Increase/decrease	Increase/decrease (%)
Core gross operating profit	226.8	197.8	+29.0	+14.6
Gross operating profit	178.9	187.3	-8.4	-4.4
Operating expenses (−)	105.3	97.1	+8.2	+8.4
Share of profit (loss) of entities accounted for using equity method	1.5	0.8	+0.7	+84.2
Net operating profit	75.1	91.4	-16.3	-17.8
Credit-related costs (−)	9.2	4.8	+4.4	+90.1
Gain (loss) on stocks	61.5	13.8	+47.7	+346.3
Ordinary profit	130.3	102.1	+28.2	+27.6
Extraordinary profit (loss)	-3.2	2.6	-5.8	—
Net income before taxes	127.1	104.6	+22.5	+21.4
Total income taxes (−)	36.6	30.0	+6.6	+21.9
Net income (attributable to owners of the parent)	90.5	74.6	+15.9	+21.2
ROE (based on net assets)	7.5	6.3	+1.2	—
ROE (based on shareholder equity)	9.1	7.7	+1.3	—

Results by Group Company

At Shizuoka Bank (nonconsolidated), core gross operating profit rose JPY 25.5 bn YoY to JPY 203.4 bn and net income rose JPY 14.9 bn to JPY 81.6 bn, while gross operating profit declined JPY 11.9 bn to JPY 155.5 bn on income related to JGBs and other bonds of -JPY 47.9 bn. Ordinary profit reached JPY 119.0 bn (up JPY 27.6 bn YoY), helped by gains on stocks of JPY 61.1 bn (up JPY 47.7 bn). For the 17 consolidated subsidiaries other than Shizuoka Bank, ordinary profit totaled JPY 12.7 bn (up JPY 0.9 bn) and net income JPY 8.9 bn (up JPY 0.6 bn); Shizugin Saison Card Co., Ltd. was made a consolidated subsidiary in July 2025. Ordinary profit of Shizuoka Financial Group subsidiaries excluding Shizuoka Bank, Shizuoka Bank subsidiaries and fees for customer referrals to the Bank together reached JPY 15.3 bn in FY2025 versus JPY 14.2 bn in FY2024.

Item / Company (JPY bn)	FY2025	YoY change
Shizuoka Bank (nonconsolidated) — Core gross operating profit	203.4	+25.5
Shizuoka Bank (nonconsolidated) — Gross operating profit	155.5	-11.9
Shizuoka Bank (nonconsolidated) — Net interest income	172.2	+23.0
Shizuoka Bank (nonconsolidated) — Fees and commissions	29.0	+1.5
Shizuoka Bank (nonconsolidated) — Expenses (−)	90.8	+4.3
Shizuoka Bank (nonconsolidated) — Actual net operating profit	64.7	-16.2
Shizuoka Bank (nonconsolidated) — Gain (loss) on stocks	61.1	+47.7
Shizuoka Bank (nonconsolidated) — Ordinary profit	119.0	+27.6
Shizuoka Bank (nonconsolidated) — Net income	81.6	+14.9
Shizuoka Bank (nonconsolidated) — Credit-related costs (−)	8.1	+3.6
Shizugin TM Securities — Ordinary profit	3.9	+0.9
Shizugin Lease — Ordinary profit	1.5	-0.2
Shizugin Management Consulting — Ordinary profit	0.4	-0.1
Shizuoka Capital — Ordinary profit	0.3	+0.0
SFG Marketing — Ordinary profit	0.0	+0.1
SFG Real Estate Investment Advisors — Ordinary profit	1.0	+0.2
Shizuoka Bank subsidiaries (11 companies) — Ordinary profit	5.6	+0.0
Consolidated subsidiaries total (17 companies, not including Shizuoka Bank) — Ordinary profit	12.7	+0.9
Consolidated subsidiaries total (17 companies, not including Shizuoka Bank) — Net income	8.9	+0.6

Net Interest Income and Fees

Net interest income at Shizuoka Bank (nonconsolidated) rose JPY 23.0 bn YoY to JPY 172.2 bn. The domestic segment increased JPY 22.2 bn to JPY 153.4 bn, with interest on loans up JPY 29.7 bn to JPY 134.2 bn and interest and dividends on securities up JPY 7.2 bn to JPY 42.0 bn, against funding costs of JPY 29.1 bn (up JPY 18.0 bn). The international segment rose JPY 0.8 bn to JPY 18.8 bn. The domestic yield on loans improved 0.25 pt to 1.32% and the domestic loan-deposit rate spread widened 0.11 pt to 1.11%, on an average domestic loan balance of JPY 10,111.8 bn. Consolidated fees and commissions increased JPY 5.0 bn YoY to JPY 54.1 bn, and fees and commissions at the Bank (nonconsolidated) rose JPY 1.5 bn to JPY 29.0 bn, led by home loan fee income and fee income on customer assets (JPY 13.8 bn, up JPY 1.1 bn). The retail customer assets balance stood at JPY 2,166.2 bn as of March 31, 2026.

FY2026 Forecast

For FY2026 the Group forecasts consolidated ordinary profit of JPY 152.0 bn (up JPY 21.7 bn) and net income attributable to owners of the parent of JPY 105.0 bn (up JPY 14.5 bn), with ROE based on net assets of 8.4% and ROE based on shareholder equity of 10.2%. The main drivers are net interest income (+JPY 13.8 bn at the Bank) and a smaller drag from income related to JGBs and other bonds (+JPY 12.9 bn), partly offset by higher Shizuoka Bank expenses (+JPY 6.2 bn) and lower gains on stocks (-JPY 3.1 bn). JPY net interest income is projected at JPY 167.5 bn, up JPY 13.2 bn YoY, assuming a policy interest rate of 0.75%; a further 0.25% rate rise is estimated to add approximately JPY 3.0 bn. Credit-related costs at the Bank are planned at JPY 8.0 bn, essentially level with FY2025, to allow for downside risks.

Item (JPY bn unless stated)	FY2025 (Actual)	FY2026 (Forecast)	Change
Consolidated ordinary profit	130.3	152.0	+21.7
Consolidated net income attributable to owners of the parent	90.5	105.0	+14.5
Consolidated ROE (based on net assets)	7.5%	8.4%	+0.9 pt
Consolidated ROE (based on shareholder equity)	9.1%	10.2%	+1.1 pt
Consolidated OHR (figures in parentheses based on core gross operating profit)	58.4% (46.0%)	53.6% (46.0%)	-4.8 pt
Consolidated CET1 ratio (figures in parentheses under full application of finalized Basel III)	15.60% (13.45%)	14.07% (13.35%)	-1.53 pt (-0.10 pt)
Shizuoka Bank (nonconsolidated) core gross operating profit	203.4	218.0	+14.6
Shizuoka Bank (nonconsolidated) gross operating profit	155.5	183.0	+27.5
Shizuoka Bank (nonconsolidated) net interest income	172.2	186.0	+13.8
Shizuoka Bank (nonconsolidated) fees and commissions	29.0	29.0	—
Shizuoka Bank (nonconsolidated) expenses (−)	90.8	97.0	+6.2
Shizuoka Bank (nonconsolidated) ordinary profit	119.0	140.0	+21.0
Shizuoka Bank (nonconsolidated) net income	81.6	95.5	+13.9
Shizuoka Bank (nonconsolidated) credit-related costs (−)	8.1	8.0	-0.1

Shareholder Returns

The projected FY2026 dividend per share is JPY 98, up JPY 18 YoY, for a dividend payout ratio of 49.8% (up 2.1 pt YoY), rising steadily toward the 50% target. FY2025 dividends were JPY 80 per share with a payout ratio of 47.7% and a total payout ratio of 80.6%. The policy is to raise the dividend payout ratio to 50% or better by FY2027 and maintain that level in FY2028 and beyond, while purchasing treasury stock dynamically at the level needed to reach the ROE target as part of capital controls. Dividends received on shareholdings are considered a source of dividend payments. Consolidated EPS was JPY 167.66 in FY2025 against JPY 92.92 in FY2022, an increase of 80.4% over the period of the 1st Medium-term Business Plan.

Item	FY2023	FY2024	FY2025	FY2026 (projected)	FY2028 (final FY of 2nd Medium-term Business Plan)
Dividend per share (JPY)	39.0	60.0	80.0	98.0	—
Dividend payout ratio	37.4%	44.0%	47.7%	49.8%	50.0%~
Total payout ratio	49.3%	57.3%	80.6%	—	—
Net income attributable to owners of the parent (JPY bn)	57.8	74.6	90.5	105.0	125.0

Medium-Term Plan and Topics

Under the 1st Medium-term Business Plan, consolidated ordinary profit, ROE and OHR were assessed as on track against the FY2027 targets of JPY 145.0 bn or more, approximately 8.5% and approximately 50% respectively, while the consolidated CET1 ratio at 15.6% (13.4% under full application of finalized Basel III) remained above the approximately 13% target level. The 2nd Medium-term Business Plan covers FY2026 to FY2028 and sets targets of consolidated ordinary profit of JPY 170.0 bn or more, consolidated ROE (based on net assets) of approximately 9.5%, consolidated OHR of approximately 47% and a consolidated CET1 ratio of approximately 13%, with consolidated net income of JPY 125.0 bn in FY2028. The Group also plans to reduce strategic shareholdings to less than 20% of net assets by March 31, 2031, and projects gains on sales of stock of approximately JPY 58.0 bn in FY2026.

Shizuoka Financial Group has concluded a memorandum of understanding on a business integration with The Bank of Nagoya. On a simple-sum basis as of March 31, 2026, the combined entity would have consolidated total assets of JPY 22,288.7 bn, deposits of JPY 18,088.4 bn, loans of JPY 15,586.4 bn and consolidated net income of JPY 110.8 bn. The planned schedule is execution of the definitive agreement and the share exchange agreement in March 2027, extraordinary general meetings of shareholders in December 2027, and an effective date for the share exchange of April 1, 2028.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.