CEO Message

Even as the business environment evolves, individuals’ value systems are growing increasingly diverse. Our organization consists of individuals and, therefore, needs to align its management approach with these changes.

Our Purpose provides us with not only an ultimate goal but also the starting point for our corporate value chain. In following this path, however, we must keep in mind that the realization of the Purpose is unlikely to be a smooth or simple process.

We must start with enabling each employee to deeply understand the Group’s Purpose and to discover resonance between that and their own purpose. This will ensure that every employee is clearly aware of what they are working toward and highly motivated to perform their duty.
Furthermore, we will foster a corporate culture in which 30,000 officers and employees are autonomously thinking about, discovering and taking action to meet customer needs. Such a corporate culture will, in turn, make the Group stronger and enable us to navigate an era of rapid changes and address the increasingly diverse and complex issues that our customers will require ever more sophisticated solutions to confront.

Therefore, the Purpose should never be seen as merely a slogan. If we don’t seriously dedicate ourselves to its realization, the Purpose will be just a nice-sounding wish. As CEO, I truly believe in the significance of the Purpose and am determined to fulfill my tasks accordingly, taking the lead in the overall transformation of the Group’s organization as well as in the optimization and realignment of our corporate value chain.

Looking ahead, we will remain a financial group that does its utmost to help customers and society as a whole resolve issues they are confronting. To that end, each officer and employee will remain mindful of how they contribute to a brighter future and for whom they are doing so.

We are also aware that solutions to such issues may not lie in the conventional framework of financial services.

The discovery of solutions to create a brighter future for those we serve may well entail our exploring myriad options and venturing into uncharted areas. This is exactly why we deem it important to avoid overly relying on conventional wisdom and value systems and to empower each employee to take a deep look into, and identify the best possible solution to, issues their customers are facing.

I believe that the processes discussed above will help 30,000 officers and employees achieve personal growth and serve as a driving force that lends the Resona Group fresh competitive strength.

Here, I will once again address our ideals with regard to what our Group should look like over the long term. Starting with addressing issues confronting customers and society as a whole, we seek to thoroughly configure our business approach to create and maximize customer value. To this end, we are combining the potential strength of the Group and the power of innovation. Our endeavors will serve as a premise for the realization of “Retail No. 1” in line with our Long-Term Vision as well as the embodiment of our Purpose, namely, “Beyond Finance, for a Brighter Future.”

Currently, such megatrends as those related to decarbonization and digital transformation (DX) are expected to result in long-term structural changes. Simultaneously, we are witnessing the emergence one after another of major events that had before now been considered rare, occurring only once every several decades. There is no doubt that we are facing a moment of profound transition. Domestically, the economy is finally seeing deflation recovery. On the back of a recent trend toward modest inflation, we have seen changes in the issues and needs customers and regional societies are confronting on diverse fronts.

For us to deliver new value to customers amid this evolving environment, it is important that we swiftly adapt ourselves to changes without overly relying on conventional ideas and frameworks. This is why we have included corporate transformation (CX) in objectives under the Group’s current medium-term management plan (MMP). Changes always bring us both fresh opportunities and risks. The success of our endeavors hinges on how we seize opportunities arising from such changes by taking full advantage of the Group’s strengths and realizing innovation.

With this in mind, it is essential to leverage the collective capabilities of all Resona Group members. Specifically, we need to bring to bear the combined functions of the four commercial banks, each of which boasts unique strengths, and the capabilities of all other Group companies as well as our strategic partners outside the Group.

The Resona Group boasts a robust customer base nurtured over the course of its long history, maintaining transactions with 16 million individual customers and 500,000 corporate customers. The Group is also equipped with strong potential in other areas, with its highly competitive lineup of functions, products and services encompassing trust banking, real estate, and other fields. These operations also provide us with access to a diverse range of information. However, it is frustrating to see that these capabilities have yet to be utilized to the fullest possible extent. In other words, the Group still possesses considerable potential that could be realized going forward. In order to provide as many customers as possible with solutions best suited to meeting their needs, we will drastically accelerate the development of connections among all Resona Group members, to this end shifting away from dependence on conventional ideas.

Over past few years, our stock prices have remained on an upward track on the back of growing market expectations for the normalization of Bank of Japan (BOJ) monetary policy. On the other hand, although PBR rose to 0.84 times at the end of March 2024, I have also been personally frustrated by the ongoing stagnation of this indicator at a level below 1 time.

Let us now turn to a discussion of both financial and non-financial aspects of our endeavors to improve corporate value. It is my view that specific measures to do so must involve the simultaneous pursuit of higher ROE and lower capital costs. This twofold approach will help us raise PBR and thus garner higher market ratings.

First, to improve ROE, we intend to achieve a turnaround in and raise ROA through the enhancement of net interest income and fee income while overhauling the Group’s cost structure via the acceleration of business process reforms. This is our basic approach. Furthermore, as we are already progressing toward the full utilization of capital, we will continue implementing investment in both organic and inorganic growth fields. Once a virtuous cycle of capital circulation is established, we will be able to pursue sustainable improvement in ROE. For the final year of the current MMP, we have set an ROE target of 8% (based on total shareholders’ equity). This indicator amounted to 7.2% in FY2023, and we have formulated an annual target of 7.3% at the beginning of FY2024. However, if we were to factor in possible further hikes in the policy rate, our ROE could be well above 8% in the future. If this scenario comes into play, we could aim for a drastically higher target.

To reduce capital costs, it is important to develop a high-quality, stable earnings structure that enables us to live up to the expectations of market participants even as we properly manage risks arising in this era of increasing uncertainty. We will also proactively enhance the content of financial and non-financial information disclosure to secure the widespread public understanding of the Group’s sustainability while stepping up initiatives to address ESG issues.

The Resona Group has pushed ahead with the qualitative and quantitative enhancement of capital even after fully repaying the loan of public funds in 2015. Having marked eight years since the above accomplishment, we have finally entered a phase in which we can fully utilize capital. Looking ahead, we will step up investment aimed at achieving organic and inorganic growth while enhancing the content of shareholder returns in a balanced manner that gives due consideration to financial soundness. In these ways, we will establish a capital circulation structure supporting the improvement of corporate value.

In FY2023, the first year of the current MMP, net income for the period remained above the planned target. This made it possible for us to accelerate growth investment, especially in areas of organic growth. Meanwhile, major accomplishments involving inorganic growth included the closing of two deals regarding the transformation of two leasing companies into wholly owned subsidiaries and the expansion of a capital and business alliance with Digital Garage, Inc. In addition, the above leasing companies merged together in April 2024, with the resulting company renamed Resona Leasing Co., Ltd. to make a fresh start.

With regard to shareholder returns, the volume of dividends per share for FY2023 was increased by 1 yen, while the Group executed share buybacks by expending 25 billion yen over the course of said fiscal year. The latter amount is equivalent to the total volume of funds allocated to share buybacks during the three-year period under the previous MMP.

We also consider the reduction of policy-oriented stockholdings an important capital management issue. In May 2024, we announced a refreshed plan that calls for cutting back on the current book value-based balance of these stockholdings by two thirds or more over the six years leading up to March 2030. Once completed, the balance will be slashed by 94% compared with the figure for March 2003, when we initiated the reduction of policy-oriented stocks. We aim to reallocate spare capital freed up in the course of executing this plan to secure funds necessary to augment the Resona Group’s abilities to deliver new customer value and achieve sustainable growth in an era of change. Specifically, we will reallocate management resources thus obtained to growth investment in the retail field. This will, in turn, yield upside profit effects and provide us with a basis for planning the ongoing enhancement of shareholder returns.

The Resona Group aims to become the most significant contributor to its retail customers’ successful SX. Accordingly, we have strengthened initiatives to address environmental, social and governance (ESG) issues. We deem it important to engage with customers to help them assess opportunities and risks associated with SX based on their current situation, which may vary widely by company. As a financial group aimed at realizing “Retail No. 1,” our mission is to provide customers with these and other specific forms of support and act as their “running partner” on an ongoing basis. To this end, we also need to transform ourselves. We need to be more open-minded and attentive to changes in society in order to lead the way in adapting to such changes. Looking ahead, therefore, we will accelerate our initiatives in ESG fields even as we extend meticulous support to customers pursuing SX.

Currently, we are striving to achieve Long-Term Sustainability Indicators, which encompass the diverse aspects of our operations, including customer value, environmental value, social value and employee value, with the target year set at FY2030. Specific details of our initiatives to this end are discussed by our CSuO and CHRO in their respective messages. We will steadily move forward toward realizing each indicator while staying customer-centric and leveraging a medium- to long-term perspective.