Fukuoka Financial Group (8354) Investor Presentation summary

FY2024 financial performance and FY2025 outlook

• Consolidated core business profit rose by ¥18.6 billion in FY2024, driven by higher domestic net interest income and increased non-interest income from investment trust sales and corporate fees.

• Net income increased by ¥11.0 billion, supported by improved credit costs and core profit growth, despite a lack of extraordinary gains seen in the prior year.

• FY2025 projections anticipate a further ¥5.4 billion increase in core business profit and a ¥7.9 billion rise in net income, mainly from higher domestic net interest income and subsidiary contributions.

• Overhead expenses are expected to rise due to base pay increases and investments in system renewal and digital transformation.

• Credit costs are projected to increase conservatively, reflecting external environment risks.

Medium-term management strategy and targets

• The 8th Medium-Term Management Plan (MTMP) focuses on building a growth platform for sustainable business expansion and new value creation from FY2025 to FY2027.

• FY2027 targets include consolidated net income of ¥100 billion, ROE of about 9%, and a capital adequacy ratio at the 10% level.

• Key strategies include transforming existing businesses, strengthening investment banking, acquiring new revenue streams, and building strong management foundations.

• Capital will be allocated to high-RORA business segments, with a dividend payout ratio target raised to 40%.

• The plan emphasizes digital transformation, regional BaaS expansion, and collaboration with external partners.

Business environment and competitive landscape

• The group faces significant changes in customer behavior, technological innovation, and demographic shifts, including population decline and increased digitalization.

• Competition is intensifying due to digital banks, non-financial entrants, and mega-banks offering specialized solutions.

• Customer segments are evolving, with a shift toward investment products and digital channels, and increased demand for personalized, AI-driven services.