Message from the President

Top > Message from the President

July 2019

“Shizugin”is Committed to Always Being a Good Partner of the Region and Achieving SustainableGrowth Together with the Region

Hisashi Shibata President

Major change in the business environment

  As the Heisei era has ended and the new Reiwa era has just begun, let me look back over the 30 years of the Heisei era. After the Nikkei Stock Average reached a record high of 38,915 yen on the very last trading day of the first year of the Heisei era (December 29, 1989), the bubble economy burst and Japan entered a deflationary period widely referred to as the lost two decades. The Japanese economy plummeted from its peak, experiencing hardships in the wake of the collapse of Lehman Brothers in 2008 and the Great East Japan Earthquake of 2011, and eventually began to mount a recovery. Moreover, the rapid progress of population aging with a low birthrate and the trends of informatization and globalization are leading to the transformation of social systems and diversification of our lifestyles and values.

  Meanwhile, the environment in which the banking industry operates also underwent far-reaching changes. One change of great significance for the management of regional financial institutions is that regional economies, the bedrock of such institutions, are unlikely to achieve substantial growth for the foreseeable future. Amid ongoing population decline and aging, the excessive concentration of population in Tokyo is continuing and the economies of most regions, excluding the Tokyo Metropolitan area, are at the risk of shrinking.

  However, sustainable growth of regional financial institutions cannot be achieved without development of regional economies. Thus, “being close to the region” should always be the priority of the Bank’s management.

I think that tak-ing the lead in vitalization of every aspect of the regional economy and aiming to achieve sustainable growth together with the region constitute the Bank’s social mission and the reason for our existence as a regional financial institution.

Initiatives for the 13th Medium-term Business Plan

  In these circumstances, the Shizuoka Bank Group launched the 13th Medium-term Business Plan “TSUNAGU” in April 2017. The vision-Innovative Bank: “Shizugin” will Continue to Create New Value along with the Region-embodies our strong commitment to always being a good partner of the region and achieving sustainable growth together with the region.

  Under this plan, we are implementing four basic strategies in three business fields to realize the vision. The four strategies are “reinforce core businesses by focusing on regional economic growth”, “build a new business model for a re-gional 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”. The three business fields are the core business (region-based), the Tokyo Metropolitan area, and the nationwide market.

  First of all, in the core business field, we are emphasizing the Bank’s busi-ness in the region centering on Shizuoka Prefecture.

  Specifically, in order to further promote region-based relationship banking, we are emphasizing provision of loans based on a business assessment involv-ing evaluation of technological capabilities and potential, support for business start-ups and entry to new business fields and support for management im-provement and business rehabilitation to maintain and enhance the vitality of the region, and fostering of successors with a view to the next generation. From the viewpoint of regional revitalization, we have entered partnership agreements with all local governments in Shizuoka Prefecture, and are conducting wide-ranging activities including promotion of tourism and support of human resourc-es.

  Above all, our top priority is to strengthen the support for inheritance and business succession, which are urgent issues in the region in line with the trend of the aging society. This is an important initiative to hand over the vitality of the region to the next generation. In fiscal 2018, we established a hands-on support system for business succession involving business restructuring. Fully utilizing the Group’s comprehensive financial functions, we are establishing support sys-tems to meet the various needs of enterprises.

  Sharing and addressing the issues of the region in a concerted effort to re-solve them constitute the Bank’s social mission, and we are doing so from vari-ous perspectives. Even if these initiatives may not lead to short-term gains, we think they should be implemented with a view to the future. Thus, costs neces-sary for the future of the region must be covered by our business in fields be-yond the region, which is why we are also active in the Tokyo Metropolitan area and the nationwide market.

13th Medium-term Business Plan:Conceptual Diagram

  Specifically, in the Tokyo Metropolitan area, with a view to cultivating a new business field that will become a pillar of earnings over the medium- to long-term, we are emphasizing businesses that meet diverse and sophisticated needs unique to the Tokyo Metropolitan area. Especially, we began establishing a system for market credit investment in 2013, ahead of other regional banks, and en-hanced the expertise and flexibility of our operation. As a result, market credit in-vestment has become one of our growth drivers. Going forward, we will vigorously hold workshops with other regional banks to encourage them to participate in such investment. We believe that the greater the number of banks participating in the market, the more the transactions in the market will be vitalized, leading to sound and stable growth of the market and the steady expansion of business op-portunities.

  Our business in the nationwide market is conducted mainly via the Internet. The Bank’s Internet Branch, which is the foundation of our strategy, has gained the support of many customers including those outside Shizuoka Prefecture. In-deed, it has grown to be the branch with the largest deposit balance and is playing a vital role in raising funds. As of March 31, 2019, it had 234,000 ac-counts (of which 61% were held by customers outside Shizuoka Prefecture) and a deposit balance of 560.5 billion yen.

  In addition, we are striving to expand and improve functions of the Bank’s “Shizugin STATION” smartphone app launched in 2015 with the concept “Turn your smartphone into a bank teller!”. As of March 31, 2019, “Shizugin STATION” subscribers exceeded 380,000.

  Moreover, we have enhanced the convenience of online procedures for loans for the purchase of cars and for educational expenses. As a result, applications for loans via smartphones now account for over 80% of total loan applications.

  Furthermore, in August 2018, Shizugin Credit Guaranty Co., Ltd., a group company, started a new business to provide guaranty for the “ARUHI Variable S” housing loan product offered by ARUHI Corporation, a financial institution special-izing in housing loans that has branches in 40 prefectures nationwide. We intend to apply this business model to collaboration with other partners and develop it as a source of revenue for the housing loan business in the nationwide market.

Toward establishment of a sustainable business model

  Under the 13th Medium-term Business Plan, in addition to implementation of the basic strategies in the three business fields, we are also tackling three structural reforms.

  The first is the “earnings-based” structural reform. In the persisting low-interest-rate environment, we are endeavoring to strengthen the earnings power of the Bank’s core business by increasing loan interest income and reinforcing the fee business with the aim of reducing the dependence on the market opera-tions division as a proportion of total earnings.

  The second is the “channel-based” structural reform. We are promoting the sales structure reform with the aim of offering higher-value-added financial services through revision of branch functions with a view to optimization according to re gional characteristics and markets and through integration of business processes and personnel at major branches supervising areas. In addition, we are implement-ing initiatives to enrich non-face-to-face services.

  The third is the “people-based” structural reform. Centering on workstyle re-form, we are emphasizing the strengthening of human resources development while striving to reduce the total number of working hours and revising adminis-trative operations in order to respond to employees’ diverse views and values.

  Regarding these reforms, most of the action plans formulated at the time of the drafting of the 13th Medium-term Business Plan have already been launched and we believe they are already proving to be beneficial. In fiscal 2019, the final year of the 13th Medium-term Business Plan, we intend to accelerate our initiatives to enhance the structure so as to anticipate change in the current era and respond effectively.

  As the business environment remains challenging, an increasing number of financial institutions are seeking management integration or are engaged in large-scale streamlining of management. Setting itself apart from this trend, the Shizuoka Bank Group is working to establish a new business model that will open up possibilities for regional financial institutions.

  Starting with a capital and business alliance with Monex Group, Inc. in April 2014, we have continuously promoted collaboration with many companies in other business sectors, including Money Forward, Inc. and HOKEN NO MADOGUCHI INC. Moreover, in April 2019, the Bank established the “Innovation Promoting Of fice” that directly reports to the General Manager of the Corporate Center to further accelerate initiatives for creating businesses that will transform banking man-agement through collaboration with companies in other business sectors.

  In July 2019, jointly with the Shizuoka Prefectural government, the Bank held TECH BEAT Shizuoka, a business matching fair focused on advanced technology. Companies possessing advanced technologies related not only to finance, but also to various other fields were invited to this event held in Shizuo-ka to offer opportunities to network with companies in Shizuoka Prefecture and match potential partners. We are also promoting initiatives for vitalization of re-gional industries and creation of new industries through utilization of advanced technologies in order to achieve sustainable growth together with the region.

Major achievements and progress of the three structural refoms

Initiatives for creation of a sustainable society

In promoting such business development, we are also emphasizing initiatives for ESG and SDGs, including environmental protection and response to social is-sues, with the aim of achieving a sustainable society.

  Considering that population aging is more advanced in Japan than in any other country, financial institutions are urged to offer proposals for asset building in readiness for the 100-year life and financial services that can be used with peace of mind even by elderly customers. In other words, the need for services embodying the concept of “financial gerontology” is increasing. Therefore, the Shizuoka Bank joined the Japan Financial Gerontology Institute, ahead of other regional banks.

  As Japan is poised to become a super-aged society, it is vital to strike a bal-ance between three life expectancies: “life expectancy,” “healthy life expectancy (continuing to work and maintaining cognitive functions),” and “asset life expec-tancy (asset management and management capabilities)”. In these circumstances, we are conducting research into financial services jointly with major financial insti-tutions in Japan and intend to reflect the knowledge gained through discussion and study in order to offer the optimum services to customers.

Relations between life expectancy,healthy life expectancy,andasset life expectancy

Shareholder return policy and our perspective

Let me comment on shareholder returns.

  Under the 13th Medium-term Business Plan, “the target shareholder return ratio is 50% level over the medium- to long-term.” The Bank paid dividends amounting to \22 per share for the full year of fiscal 2018, an increase of \1 from the previous year. In addition, the Bank repurchased 10 million shares of its own stock. As a result, the shareholder return ratio and the payout ratio of the Shizuoka Bank on a non-consolidated basis were 53.99% and 30.38%, respec-tively.

  The Bank’s policy is to increase its share value expressed as earnings per share (EPS) and the book-value per share (BPS) by appropriate shareholder re-turns while promoting a growth strategy through strategic investment based on the recording of stable revenue far into the future. We wish to be an enterprise whose share value continues to increase regardless of the timing of the share purchase by shareholders so as to encourage long-term shareholding.

Future of regional financial institutions

  A while ago I heard a bank executive use the metaphor of a dam to describe the role of a bank. The role of a dam is to hold back rainwater accumulating up-ply of water for growth of crops during drought.

  The role of a dam in relation to the supply of water is similar to that of a bank in relation to the supply of funds. For example, following the collapse of Lehman Brothers, we strove to overcome the threat to the regional economy together with our customers. Our general managers and personnel at branches visited customers in the region one by one to find out about their cash flows and sup-plied necessary funds.

  Being a good partner of the region and sustaining the regional economy, not only through supply of funds, but also through the provision of support for inheri-tance and business succession and for business restructuring, will always constitute the role and mission of regional financial institutions no matter how the economic environment changes.

  Thus, regardless of the changes brought by the progress of AI and other digital technology or by the advent of an era in which platform operators and fin-tech companies perform certain financial functions, I believe they cannot replace banks as good partners that are always side by side and sustain the regional economy. This is the role that the Shizuoka Bank Group aims to fulfill.

  Fiscal 2019 is the final year of the 13th Medium-term Business Plan. By gathering and deploying the Shizuoka Bank Group’s manifold capabilities, we are determined to realize our vision-Innovative Bank: “Shizugin” will Continue to Create New Value along with the Region-and establish a business model for achieving sustainable growth together with the region.

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


Top of page