Fukuoka Financial Group (8354): FY2025 Results Summary — Net Income of ¥85.4 Billion and an Upgraded FY2027 ROE Target

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

Fukuoka Financial Group (FFG) posted consolidated net income of ¥85.4 billion for FY2025, an increase of ¥13.3 billion year on year, with ROE of 8.5% (YoY chg. +1.1%). Consolidated core business profit rose ¥32.6 billion to ¥151.7 billion, driven by profit growth in the core businesses of Commercial Banking, Investment Banking and Markets. The annual dividend was ¥180 per share, up ¥45 year on year, including a year-end dividend of ¥95. For FY2026 the Group projects consolidated net income of ¥100.0 billion and an annual dividend of ¥210 per share.

Consolidated Results (Full-Year Actual)

Core gross business profit increased ¥45.1 billion year on year to ¥324.4 billion. At the banks total, domestic net interest income rose ¥34.9 billion to ¥245.6 billion: interest on loans and discounts grew ¥41.8 billion to ¥204.9 billion as the yield on loans increased on the back of rising domestic interest rates, while interest on deposits moved to -¥43.5 billion (-¥30.7 billion year on year). Interest on securities, etc. rose ¥23.9 billion to ¥84.1 billion, including gains (losses) on cancellation of investment trusts recorded in connection with rebalancing the securities portfolio. Subsidiaries and consolidation adjustment contributed ¥28.7 billion (+¥8.5 billion), reflecting revenue from external system sales related to Minna Bank.

Overhead expenses increased ¥12.4 billion to ¥172.7 billion following growth investments such as increases in base pay and DX, and core business profit rose ¥32.6 billion to ¥151.7 billion; excluding gains (losses) on cancellation of investment trusts, core business profit increased ¥20.0 billion year on year to ¥142.1 billion. Core OHR (excluding non-recurring expenses) improved to 53.2% from 57.4% in FY2024, while OHR was 74.0%.

FFG consolidated (¥ bil.)	FY2025	YoY chg.
Core gross business profit	324.4	+45.1
Banks total	295.7	+36.6
Net interest income (domestic)	245.6	+34.9
Interest on loans and discounts	204.9	+41.8
Interest on deposits	-43.5	-30.7
Interest on securities, etc.	84.1	+23.9
Net interest income (international)	16.7	+1.9
Non-interest income	33.3	-0.3
Subsidiaries, consolidation adjustment	28.7	+8.5
Overhead expenses	-172.7	-12.4
Core business profit	151.7	+32.6
Gains (losses) on securities	-13.1	-3.3
Credit cost	-18.2	-12.1
Consolidated net income	85.4	+13.3
ROE	8.5%	+1.1%

Below core business profit, gains (losses) on securities were -¥13.1 billion (-¥3.3 billion year on year) as FFG used gains on the sale of strategic shareholdings and unrealized gains on diversified investments to rebalance the securities portfolio; the impact from rebalancing was -¥69.8 billion within gains (losses) on bonds and +¥59.4 billion within gains (losses) on stocks. Credit costs increased ¥12.1 billion to ¥18.2 billion after provisioning a forward-looking allowance reflecting an increased risk of economic downturn from heightened tensions in the Middle East. Consolidated net income still rose ¥13.3 billion to ¥85.4 billion.

Group Banks and Minna Bank

“Banks total” in this presentation is the simple sum of the non-consolidated figures of the Bank of Fukuoka, the Kumamoto Bank, the Juhachi-Shinwa Bank and the Fukuoka Chuo Bank. Core business profit at the banks total was ¥164.9 billion in FY2025, up from ¥136.0 billion in FY2024, and is projected at ¥172.0 billion for FY2026. Average loan balances (excluding loans to Government (public) and Bank of Fukuoka loans to FFG) totalled ¥16,155.7 billion, an annual rate of +2.6%, and are projected at ¥16,373.1 billion for FY2026 (+1.3%). Average deposit balances including CDs were ¥21,847.0 billion.

Average loan balance (banks total, ¥ bil.)	FY2025	FY2024	FY2026 (projected)
The Bank of Fukuoka	11,050.4	10,765.6	11,207.9
Kumamoto Bank	1,571.6	1,489.5	1,635.2
Juhachi-Shinwa Bank	3,145.5	3,101.6	3,144.3
Fukuoka Chuo Bank	388.4	396.0	385.7
Total	16,155.7	15,752.7	16,373.1

Figures related to Minna Bank are the total of Minna Bank and Zerobank Design Factory (ZDF) after eliminating internal transactions between the two. Gross business profit rose ¥5.5 billion to ¥7.4 billion, including revenue from external system sales, and net income improved ¥3.7 billion to -¥5.1 billion. As of March 31, 2026 the number of downloads was 4,630 thousand and the number of accounts 1,610 thousand, the balance of deposits (excluding special deposits) was ¥46.6 billion (+¥13.5 billion) and the balance of loans and cover was ¥35.7 billion (+¥10.5 billion), while the disclosed NPL ratio improved 1.41 points to 3.92%. For FY2026 Minna Bank targets 2,300,000 accounts and a loan balance of ¥51 billion, with net income projected at -¥8.4 billion.

Related to Minna Bank (¥ bil.)	FY2025	YoY chg.	FY2024
Gross business profit	7.4	+5.5	1.9
Net interest income	3.5	+1.2	2.2
Non-interest income (excl. gains (losses) on bonds)	4.8	+5.1	-0.3
Overhead expenses (-)	13.1	+0.8	12.3
Core business profit	-4.9	+5.5	-10.4
Ordinary profit	-6.8	+5.0	-11.9
Net income	-5.1	+3.7	-8.8
Credit cost (-)	1.1	-0.4	1.5

Asset Quality, Securities and Capital

On an FFG consolidated basis, NPLs disclosed under the FRL stood at ¥308.5 billion as of March 31, 2026, a decrease of ¥1.1 billion, and the disclosed NPL ratio excluding loans to Government, etc. improved 0.07 points to 1.85%. The reserve for possible loan losses was ¥199.0 billion, with a reserve ratio of 1.2% excluding loans to Government, etc. Equity rose to ¥986.1 billion and the capital adequacy ratio was 11.42%. Within the securities portfolio, hedged long-term and super-long-term bonds were fully exited during the fourth quarter, reducing that balance to zero, and unrealized gains (losses) on securities after hedges improved from -¥19.3 billion to ¥102.7 billion.

FFG consolidated	Mar. 31, 2026	Mar. 31, 2025
Disclosed NPLs under the FRL (¥ bil.)	308.5	309.6
Disclosed NPL ratio (excluding loans to Government, etc.)	1.85%	1.92%
Disclosed NPL ratio (including loans to Government, etc.)	1.51%	1.62%
Reserve for possible loan losses (¥ bil.)	199.0	192.7
Equity (¥ bil.)	986.1	942.2
Capital adequacy ratio	11.42%	12.37%
Unrealized gains (losses) on securities, after hedges (¥ bil.)	102.7	-19.3

FY2026 Forecast

For FY2026, on an assumed policy interest rate of 0.75%, FFG projects ordinary profit of ¥149.5 billion (+¥28.9 billion) and consolidated net income of ¥100.0 billion (+¥14.6 billion). Core gross business profit is projected at ¥336.6 billion (+¥12.2 billion), with domestic net interest income of ¥261.7 billion (+¥16.1 billion) as the accumulation of loan balances, rising interest rates and securities portfolio rebalancing offset the tapering off of gains on cancellation of investment trusts and the Special Deposit Facility. Non-interest income is projected to decline ¥4.2 billion to ¥29.1 billion, and subsidiaries and consolidation adjustment to decline ¥2.6 billion to ¥26.1 billion on the absence of revenue from external system sales related to Minna Bank. Gains (losses) on securities are projected to improve ¥21.1 billion to ¥8.0 billion.

FFG consolidated (¥ bil.)	FY2026 Projection	FY2025 (Actual)	Change
Core gross business profit	336.6	324.4	+12.2
Banks total	310.5	295.7	+14.8
Domestic net interest income	261.7	245.6	+16.1
International net interest income	19.7	16.7	+3.0
Non-interest income	29.1	33.3	-4.2
Subsidiaries, consolidation adjustment, etc.	26.1	28.7	-2.6
Overhead expenses	-184.6	-172.7	-11.9
Core business profit	152.0	151.7	+0.3
Core business profit (excluding gains (losses) on cancellation of investment trusts)	152.0	142.1	+9.8
Credit cost	-17.4	-18.2	+0.8
Gains (losses) on securities	8.0	-13.1	+21.1
Ordinary profit	149.5	120.6	+28.9
Consolidated net income	100.0	85.4	+14.6

FFG also presents a rate-sensitivity simulation. Assuming the policy interest rate is raised to 1.00% from June 2026 and remains flat thereafter, net interest income would increase by ¥4.5 billion in FY2026 (after tax: +¥3.0 billion) and by ¥13.0 billion in FY2027 (after tax: +¥9.0 billion) compared with the earnings projection, corresponding to ROE effects of +0.3% and +0.8% respectively. The yen balance sheet as of March 31, 2026 comprised approximately ¥30 trillion of deployment and ¥30 trillion of funding.

Shareholder Returns

The FY2025 annual dividend was ¥180 per share, an increase of ¥45 year on year, comprising the year-end dividend of ¥95 per share. The target dividend payout ratio was raised from 35% to 40% in FY2025. Based on the shareholder return policy of a dividend payout ratio of around 40%, the projected FY2026 annual dividend is ¥210 per share (¥105 interim and ¥105 year-end), an increase of ¥30 year on year. FFG states that it is maintaining an upward dividend trend driven by sustainable profit growth, and that DPS has more than doubled from ¥95 in FY2021.

Medium-Term Management Plan

The 8th Medium-Term Management Plan covers FY2025 to FY2027 and sits within a Long-Term Strategy running from FY2025 to FY2034. Against FY2025 results of ROE 8.5%, net income of ¥85.4 billion and a capital adequacy ratio of 10.05% (Basel III finalization basis, full implementation), the original FY2027 targets were ROE of about 9.0%, net income of ¥100.0 billion and a capital adequacy ratio at the 10% level. FFG revised the FY2027 targets upward to ROE of about 10% and net income of more than ¥110.0 billion, citing the accumulation of risk assets, appropriate capital control and the capture of positive effects from MTMP measures and rising interest rates; the capital adequacy ratio target remains at the 10% level.

Under the Long-Term Strategy the Group targets an ROE of 10% or more, an increase in the profit contribution from market, investment banking and new areas to approximately 60% of the business portfolio, and a shift in the ratio of generalists to specialists to 7:3. FFG describes its balance sheet of ¥34 trillion as the largest among regional banking groups and is allocating risk assets toward growth areas, with growth through FY2027 relative to FY2024 results of about +7% in commercial banking and about +20% in investment banking. Other FY2025 initiatives cited include the rollout of “vary” to promote main bank status, the centralization of the M&A business, the launch of the BaaS alliance with Merpay at Minna Bank, and the development of a new personnel system for operational launch in FY2026.

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.