Message from the President

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July 2017

Innovative Bank: “Shizugin” will Continue to Create New Value along with the Region

Having assumed office as President of the Shizuoka Bank, I resolve to do my utmost to meet your expectations and earn your trust. I would greatly appreciate your support.

To Protect the Tradition of Sound Management

Hisashi Shibata President

Hisashi Shibata

Looking back at fiscal 2016, the Bank operated in a challenging environment in view of the unprecedented monetary easing policy characterized by nega-tive interest rates. We made a Group-wide effort to bring the final year of the 12th Medium-term Business Plan, “TOBIRA-Open a Gate for the Next” to a successful conclusion despite the adverse environment.

  While major initiatives are mentioned in this report, due to the worsening of losses on valuation of foreign bonds owing to turmoil in financial markets following the U.S. presidential election, the Bank wrote off the losses to ensure flexibility in bond investment in order to maintain its sound financial standing, the traditional strength of the Shizuoka Bank Group. The Bank also recorded a loss on valuation of stocks of subsidiaries and affiliates with a view to reducingoperating risks. Unfortunately, profit decreased as a result.

  However, we saw solid progress in our initiatives based on the 12th Medium-term Business Plan, resulting in favorable increases in both deposits and loans. In particular, retail loans steadily increased as housing loan prod-ucts with life insurance, offering extensive coverage of illness and injury, were well received. Moreover, we offered solutions to help local companies resolve their management issues, including support for business succession and management improvement, and provided funds based on business evaluation including technological capabilities and potential. As a result of these initiatives to further enhance region-based relationship banking, the total balance of loans increased by about ¥700 billion in the three years covered by the 12th Medium-term Business Plan.

Seeking Possibilities for Collaboration with Companies in Other Business Sectors

With the declining regional population becoming a social issue, attention has been focused on management integration among regional financial institutions in a bid to survive. The Shizuoka Bank, however, has set itself apart from this trend and is endeavoring to establish a new business model through collabo-ration with companies in business sectors other than banking to open up new possibilities as a regional financial institution.

  As a first step, we entered into a capital and business alliance with Monex Group, Inc. in April 2014. Then, following the capital and business alliances with Money Forward, Inc. in August 2015 and Commons Asset Management,Inc. in October 2015, we formed business tie-ups with HOKEN NO MADOGUCHI INC. in June 2016 and renoveru co., ltd. in August 2016.

  These alliances with companies in other business sectors have started to yield tangible results. Money Forward for Shizuoka Bank, an app for house-hold budget management launched in April 2016, is now helping over 50,000 customers manage their household accounts. HOKEN NO MADOGUCHI@Shizugin is a new type of service desk offering insurance consultation.

Opened in Shizuoka City and Hamamatsu City, these desks serve as points for consultation-based sales starting with life planning, enabling us to address the diverse needs of customers. Moreover, we are working with renoveru co., ltd. to vitalize the market for property renovation, which is expected to be a means of countering the issue of vacant residential property in the regions.

  We are also taking an active approach to FinTech, which is creating new trends in financial services. For example, we participated in a pilot project for vitalization of a community, in which the NeCoban e-coupon service devel-oped based on blockchain technology is being provided in Yoshiwara shopping street in Fuji City.

For Sustainable Growth of the Region

Regarding regional revitalization, each region seeks to capitalize on its char-acteristics in order to foster autonomous, sustainable societies. The Shizuoka Bank Group has entered into alliance agreements with all 35 municipalities in Shizuoka Prefecture to offer comprehensive support for their regional revital-ization initiatives. Fulfilling our role as a coordinator for all elements of regional society, including industry, government, academia, the financial sector, the labor force, the mass media, and licensed professionals, we are conducting a wide range of activities, including promotion of tourism and support for human resources development.

  For example, the Shizuoka Bank Group organized the second Conference on Regional Revitalization in which some 500 people, including people involved in regional revitalization at municipal governments, participated via a teleconference system. They shared information and exchanged opinions about how best to support small and medium-sized enterprises so as to vital-ize the region, as well as tourism promotion measures involving cooperation between the public and private sectors.

  With regard to tourism promotion, the Shizuoka Bank, Shizuoka Prefectural Government, Kanagawa Prefectural Government, and the Bank of Yokohama jointly established the Kanagawa-Shizuoka Prefectural Border Regional Revitalization Liaison Committee. Efforts are underway to promote regional revitalization by pursuing synergy through collaboration among adja- cent areas, including preparation of a map emphasizing the unity of the Fuji, Hakone, and Izu areas by eliminating the names of the prefectures and the prefectural borders.

  As for initiatives unique to the Shizuoka Bank, we hosted the fifth Shizugin Entrepreneur Awards with the aim of fostering entrepreneurs in the region. Cumulative applications totaled 716. We are making a Group-wide effort to support not only award winners but also other applicants who aspire to realize business plans, in order to spur the vitalization of the region’s economy and contribute to job creation.

  In addition, our Shizuginship training club for next-generation managers, which helps foster the development of people who will lead the regional econ- omy in the future, celebrated its 10th anniversary. Shizuginship offers young managers opportunities to cultivate networks transcending business sectors while enhancing their managerial capabilities. Going forward, we plan to promote integration of the Shizuginship training club with education and train- ing of Shizuoka Bank Group employees as part of our intention to make greater efforts for comprehensive human resources development to foster next-generation business leaders in the region.

13th Medium-term Business Plan “TSUNAGU” Launched

The Shizuoka Bank launched its 13th Medium-term Business Plan “TSUNAGU” in April this year. The plan is linked to the vision-“Innovative Bank:‘shizugin’will continue to create new value along with the region.”

  The plan comprises four basic strategies, namely, reinforce core busi- nesses by focusing on regional economic growth, build a new business model for regional bank by developing and monetizing new business fields, reform sales operations using the retail channel and IT infrastructure, and help realize the dreams and increase the wealth of the region, customers, employees, and shareholders. By implementing these strategies, we seek to accelerate the growth capabilities that we have cultivated under the 12th Medium-term Business Plan. At the same time, we will endeavor to create new value in the business fields that have sustained the Shizuoka Bank Group’s growth so far. This plan articulates our direction as a financial institution that, no matter what the circumstances may be, is always side by side, growing together with the region.

  In addition, to steadily promote this plan, we conducted a significant reor- ganization in June 2017. For example, the organizations that were arranged according to markets have been reorganized into a new structure based on a channel strategy. We established the Solutions Business Department to promote proposal-driven business, involving business succession for exam- ple, and the Direct Business Promotion Department supervising non-face-to- face sales operations. The purpose of this reorganization is to enhance consulting functions and to facilitate cross-organizational collaboration for formulation and promotion of sales strategies based on the Medium-term Business Plan.

Keen Insight into Change of the Era

Given the changes in social structure emerging in various fields, it is possible to say that we are in the midst of the most tempestuous changes of any era we have ever experienced.

  In this era in which it is particularly difficult to anticipate future, we believe it is more important than anything else to take the initiative and illuminate a path to the future by creating a new business model of a regional bank as a frontrunner among regional financial institutions. However, when extending the conventional approach does not provide answers, it is also important to be unafraid to disconnect from convention and pursue a new direction. The 13th Medium-term business Plan “TSUNAGU” provides the guiding principles to be applied in decision-making in these situations.

  Based on these principles, the Shizuoka Bank Group is committed to management with a focus on what a regional financial institution should be in 10 to 20 years’time, and thus fulfill the expectations of our stakeholders and earn their trust. If, through the financial services we offer, we can connect the region, customers, employees, and shareholders, strengthen mutual ties, and envisage a prosperous future, that will be the realization of our corporate philosophy to “expand dreams and affluence with our community,”and the fulfillment of our mission as a regional financial institution.

  I would be grateful for your continued understanding and support in the years ahead.

Hisashi Shibata President
Hisashi Shibata


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