Shizuoka FG Q1 FY2027: Ordinary Profit Soars 51%, Guidance Lifted

Shizuoka FG's strong first-quarter performance was propelled by a sharp rise in other ordinary income, which surged to ¥36,134 million from ¥6,700 million a year earlier, primarily due to gains on stock sales. Interest and dividend income from securities also climbed ¥2,600 million to ¥20,015 million, while net interest income from loans rose over ¥7,200 million to ¥48,046 million, reflecting the benefits of higher interest rates on its loan portfolio.

On the expense side, ordinary expenses increased ¥29,093 million to ¥89,833 million, driven by a ¥3,219 million rise in deposit interest costs to ¥14,855 million and a spike in other business expenses, which reached ¥24,242 million from ¥1,412 million, largely due to losses on bond sales. Despite these higher costs, ordinary profit still expanded 51.0%.

Buoyed by this result, Shizuoka FG raised its full-year ordinary profit forecast to ¥167.0 billion from ¥152.0 billion and net profit to ¥115.0 billion from ¥105.0 billion. The company also lifted its planned annual dividend to ¥108 per share, up from ¥80 the previous year, and unveiled a share buyback program of up to ¥30 billion.

During the quarter, Shizuoka FG incorporated Tokyo Gas Lease Co. into its Leasing segment and merged two subsidiaries to form Shizuoka Bank Business Partners, realigning its group structure.

_Note: Banking segment profit increased ¥13,761 million year-on-year, while Leasing profit edged up ¥121 million. The Other segment profit includes intersegment transactions before elimination._

The core Banking segment benefited from loan growth: total loans rose ¥19.3 billion from March 2026 to ¥11,204.7 billion. Despite a ¥74.3 billion decline in deposits to ¥12,312.3 billion, interest-earning asset yields improved, and gains on bond and stock sales boosted profits. In the Leasing segment, the inclusion of Tokyo Gas Lease contributed to both higher revenue and profit.

As of June 30, 2026, Shizuoka FG's total assets stood at ¥15,922.9 billion, down ¥93.0 billion from the end of the previous fiscal year. Cash and due from banks declined, but securities holdings increased ¥76.9 billion to ¥3,074.4 billion, and loans grew ¥19.3 billion. Net assets climbed ¥47.6 billion to ¥1,279.5 billion, aided by a ¥29.2 billion increase in unrealized gains on securities to ¥213.2 billion. The common equity Tier 1 capital ratio improved to 8.0% from 7.7%.

On August 6, 2026, the board authorized a share repurchase program of up to 10 million shares or ¥30 billion, running from August 7 through September 18. Together with the planned dividend hike to ¥108 per share (up ¥28 from the previous year's ¥80), the company is rapidly accelerating shareholder returns.

Shizuoka FG identifies several risks to its outlook:

• Rising deposit costs: Funding expenses rose ¥3,219 million year-on-year to ¥23,860 million, and further Bank of Japan rate increases could pressure margins.
• Securities portfolio volatility: A significant portion of the quarter’s profit came from one-off stock and bond sale gains, which may not be sustainable if market conditions turn unfavorable.
• Local economic softness: While Shizuoka Prefecture’s economy is gradually recovering, housing investment remains weak, and geopolitical factors could dampen regional activity.
• Competitive pressures: Intensifying competition from megabanks, online banks, and fintech firms may erode the profitability of traditional banking businesses.

Based on the stronger-than-expected first quarter, Shizuoka FG raised its consolidated earnings forecast for FY2027. The revision mainly reflects larger stock sale gains and sustained net interest income.

The revised outlook implies ordinary profit growth of 28.2% and net income growth of 27.1% over the previous full year.

In a display of commitment to enhancing shareholder value, Shizuoka FG on August 6, 2026, decided on a fast-paced share buyback of up to ¥30 billion (10 million shares) over roughly six weeks. Combined with the dividend increase announced alongside the earnings release, the group is aggressively improving capital efficiency and total shareholder returns.