What is Growth Strategy and Future Prospects of Yamaguchi Financial Company?

The company is deeply invested in digital transformation (DX) to modernize its operations and customer interactions. This includes the adoption of new technologies and streamlining internal processes.

A significant step in their DX strategy is the unified adoption of groupware. For instance, The Juroku Bank implemented Google Workspace in September 2023, with plans to extend this to all 12 group companies by March 2024.

Yamaguchi Financial Group is forging alliances to accelerate innovation. A key example is the planned banking app in spring 2025, developed in partnership with the Resona Group, to improve customer convenience.

The group is exploring the strategic use of data to optimize operations. This includes enhancing loan income and fee generation through data-driven insights.

The company is integrating technology into its sustainability efforts. Services like 'CO₂ emissions calculation support consulting' and 'CO₂ reduction roadmap formulation support consulting' launched in fiscal year ended March 31, 2024, showcase this commitment.

The Financial Services Agency (FSA) actively encourages financial institutions to embrace digital transformation through FinTech collaborations, aligning with YMFG's strategic direction.

For the fiscal year ending March 31, 2025, the group anticipates ordinary profits of ¥47.5 billion and a net income of ¥33.0 billion. The target ROE is set at 5.0%, with an aspiration to achieve record-high net income.

Yamaguchi Financial Group intends to maintain or increase its dividends per share, adhering to a progressive dividend policy. The payout ratio is projected to rise to around 50% by fiscal 2029, reflecting a commitment to shareholder returns.

The group aims for a Common Equity Tier 1 Ratio (CET1 Ratio) of approximately 11.5% by fiscal 2029. This target balances financial soundness with the capacity for growth investments and shareholder distributions.

Flexible and expeditious treasury stock buybacks are planned, alongside a reduction in strategic share investments to less than ¥35 billion by the end of March 2030. This approach aims to optimize capital allocation.

As of March 31, 2025, unrealized losses on securities were reported at ¥14,759 million. However, these are not anticipated to affect the performance or dividend forecasts for the current fiscal year.

Understanding the Growth Strategy of Yamaguchi Financial is key to appreciating its future prospects. The company's business development is focused on leveraging its competitive advantages and adapting to economic trends.

Changes in leadership, legislation, and deregulation campaigns in key markets can create an uncertain regulatory landscape. This could lead to increased financial risk-taking for financial institutions.

Fluctuating interest rates, inflation, and global instability pose significant risks. Proactive risk management strategies, such as stress testing and scenario analysis, are crucial.

While investing in digital transformation, new technologies increase vulnerability to cyberattacks. The company projects an increase in IT system development costs, with reliance on third-party vendors adding further risk.

The regional nature of operations presents challenges like a declining birthrate and an aging population. A lack of successors and human resources among business partners in specific regions also poses a risk.

Strengthening cost control is emphasized to improve earning capacity. This is particularly important given projected increases in labor and equipment costs for human resources and IT development.

Maintaining a balance between risk exposure and risk buffer is key. This involves scaling down cross-shareholdings and implementing other risk reduction measures.