Resona Group Integrated Report 2025

Taking ongoing changes in the business environment into account, I believe a CEO’s most important responsibility is to accurately assess changes and blaze a path toward the future. Specifically, I deem it important to consider the following three perspectives in leading the Resona Group to the next stage of growth.

First, we need to maintain an accurate understanding of the current era. We have seen the emergence of an unexpectedly competitive environment due to the shifts in monetary policies, the fusion of financial and non-financial businesses, the disappearance of sector boundaries, and the rapid advancement of technologies. These developments are, in turn, clouding the future outlook and often contributing to disruptive changes. Amidst a changing environment, our customers’ financial behavior has been evolving, even as they confront more diverse and complex issues requiring ever more sophisticated solutions.

Constantly finding ways to satisfy the evolving needs of our customers is a cornerstone of our business. Accordingly, we must approach changes as new growth opportunities. In addition, we need to actively pursue ongoing learning even as we swiftly adapt to the changing landscape. These are the only ways we can remain viable. Therefore, I urge all officers and employees across the Group to adopt a growth-oriented mindset and break free of the shackles of preconceived notions. It is now time for us to remake ourselves through these endeavors and come together to overcome the challenges coming our way.

Second, we need to ensure a shared recognition among all officers and employees of the direction the Group should take. In 2023, the Resona Group established its Purpose, “Beyond Finance, for a Brighter Future.” This represents our commitment to contributing to the sustainable development of society as a whole through the creation of value that transcends the scope of finance.

For any corporation, its purpose must reflect both its starting point and where it aims to be, that is, its final goal. I deem it important to continuously strive to identify resonance between the Group’s Purpose and each officer and employee’s value system and personal convictions. Accordingly, we will continue promoting a “My Purpose” Project that empowers 30,000 employees to establish their own purposes. The realization of the Purpose will require persistent effort. Nevertheless, we intend to persevere in the face of challenges to achieve it and thereby secure a foundation for the overall growth of the Group.

Third, we need to enhance corporate governance while improving the solidity of the stakeholder trust we earn. The causative factors leading to the 2003 “Resona Shock,” were, ultimately, found to be corporate governance and risk management issues. Our desire to remain a company deserving stakeholder trust is precisely why we are so strongly focused on pursuing highly transparent management irrespective of circumstances. Resona Holdings has adopted a company with a nominating committee system. Of the 10 directors currently serving as members of the Board, seven are outside directors who are independent from management. As such, we have built a framework for securing management transparency and objectivity. Within this framework, the Board of Directors engages in vigorous discussions encompassing diverse perspectives and takes a serious approach to enhancing the effectiveness of Group governance and internal control.

Starting with addressing issues our customers and society as a whole are confronting, we are seeking to thoroughly reconfigure our business approach. We will continue doing so and, above all, fulfilling our responsibilities as a financial group deserving stakeholder trust.

In FY2024, the price book-value ratio (PBR) of Resona Holdings’ stock recovered to 1 time for the first time in nine years, while our market capitalization reached 3 trillion yen. Due to rising stock prices and other positive factors, public expectations for the Resona Group have steadily grown stronger. Nevertheless, there remain a number of issues that must be overcome to realize “Retail No. 1.” From the perspective of securing sustainable improvement in corporate value, I consider both “enhancing ROE” and “reducing the cost of capital” to be key to improving PBR as an aspect of market valuation.

With regard to enhancing ROE, restoring our formerly strong earnings power is essential. Specifically, we will enhance ROA via the use of two principal income sources, namely, net interest income and fee income. We will also push ahead with a stable transition to a next-generation model, to this end increasing the sophistication of our hybrid approach, which integrates the face-to-face and digital channels. At the same time, we will accelerate process reforms as well as the digital transformation (DX) of in-house operations. These reforms are expected to enable us to innovate the customer experience while drastically improving productivity. Furthermore, as we enter into a phase of capital utilization, we will strive for sustainable improvement in ROE by getting a virtuous cycle of capital circulation on track via, for example, inorganic growth investment.

From the perspective of reducing the cost of capital, we will endeavor to develop a stable, high-quality profit structure so that we can meet ever-stronger stakeholder expectations even as we skillfully manage risks amid the present era of growing uncertainty. To achieve our goal of “becoming the most significant contributor to customer success in SX,” we will also step up our ESG-related initiatives.

In FY2025, we began disclosing our ROE target based on the Tokyo Stock Exchange standard in response to requests from a number of investors with whom we engaged in dialogue. Going forward, we will continue to sincerely take heed of stakeholder feedback while enhancing the content of financial and non-financial information disclosure. In these ways, we will practice highly transparent and trustworthy business management.

Now, let’s move on to the specific description of our aims going forward. First and foremost, we will strive to restore our formerly strong earnings power. This does not, of course, simply mean that we will blindly pursue maximum earnings. As always, we intend to start with addressing issues confronting our customers and society as whole and, in doing so, uncover opportunities to secure “proper” profit. In short, we aim to ensure that our profit is always based on our customers’ best interests and earned in a way that resonates with the Resona Group’s reason for being. Premised on these endeavors, we will employ two primary engines.

First, we will enhance the deposit and loan business, the core of indirect finance, along with securities management, amid the reinstatement of the world with interest rates. This is how we will stably improve net interest income while taking full advantage of the Group’s inherent strengths backed by a stable deposit base boasting strong retention.

Second, we will increase fee income from diverse sources we have assiduously developed in the low-interest rate environment. Specifically, we have introduced new businesses by employing a medium- to long-term perspective and leveraging the combination of face-to-face and digital channels. These efforts have enabled us to secure a number of fresh sources of income and thereby succeed in achieving all-time highs in fee income for the fourth consecutive fiscal year. At present, these income sources constitute a solid profit base which will, in turn, support our operations in the future.

In sum, it is important to constantly develop the best mix of income sources that bolster next-generation retail financing without overly relying on interest rates based on a medium- to long-term perspective even as we fully take advantage of benefits arising from interest rate hikes.

Our traditional business frameworks and processes have undoubtedly been what has enabled the Resona Group to achieve rehabilitation following its financial crisis and corporate growth to date. However, given rapid changes now affecting our business environment, transitioning to a next-generation retail financing business via the adoption of new ways of thinking, frameworks, processes and systems is unavoidable. This is the impetus behind the launch of structural reforms and an aspect of the major challenges we need to overcome.

We have defined the three-year period of the current MMP as the first 1,000 days of taking on corporate transformation (CX). In this regard, we are executing “frontline reforms,” “middle- and back-office reforms,” “investment in human capital” and “workstyle reforms.” Through these reforms, we aim to restructure a foundation for the Group’s overall growth while breaking away from the inherently cost-intensive nature of our retail operations. At long last, the cost income ratio of the Resona Group is expected to fall within the 50% range in FY2025. Through profit growth backed by the two principal income sources and the positive effects of structural reforms, we intend to aim for a cost income ratio in the 40% range within five years.

Let me start by discussing frontline reforms. The aim of these reforms is to innovate contact points with customers through the integration of face-to-face and digital channels. As the result of these reforms, day-to-day transactions will be fully digital. On the other hand, face-to-face consulting will still be required when an in-depth, specialized approach is called for. We expect the latter endeavor to set the Group apart from the competition. To realize this worldview, both enhancing and securing close coordination between the face-to-face and digital channels are essential. We will therefore deploy digital technologies to upgrade our face-to-face channels while augmenting the consulting capabilities and financing expertise of frontline staff. At the same time, we will update our digital channels to innovate customer experience and enhance our ability to deliver new value.

Enhancing the Resona Group’s contact points with customers is vital to ensuring that we remain capable of addressing issues customers and society as a whole are confronting - the starting point of our businesses. We will take full advantage of these contact points with the aim of acquiring high-quality information through face-to-face channels while collecting multilateral data with high frequency via digital channels. This information and data will enable us to increase the accuracy of customer profiling and the formulation of forecasts. Furthermore, by utilizing data as part of our ongoing efforts to further enhance and optimize value to be delivered to each customer, we will ensure that we remain the financial group of choice for customers.

As for middle- and back-office reforms, we completed the integration of back-office operations and systems in place at Minato Bank in January 2025, establishing a foundation for the Group’s transition to the single platform. Looking ahead, we will promote the centralization of back-office operations in our pursuit of a “one-platform, multi-regional strategy.” Our concept for these reforms is to “make it simple.” We will also push ahead with DX- and AI-driven business process reengineering (BPR) as part of these efforts, with the aim of accelerating the downsizing of middle- and back-office departments within the Group.

With regard to workstyle reforms, I recognize that the Group lags behind its peers in spending on these in-house reforms. However, we have already begun fully allocating funds to this area. Through these reforms, we are striving to break away from our conventional, familiar business processes while executing thorough streamlining that spares nothing, leaving no stone untouched. The reforms will also involve the simultaneous introduction of generative AI as standard. As we do so, we will redefine each employee’s missions, reshuffle our portfolio of human resources, and empower each individual to expand their capacities, with the aim of significantly increasing our overall organizational abilities.

By taking on these and other new challenges, we will raise our capabilities to deliver value to customers and enhance productivity to an overwhelming degree in order to bolster the Group’s sustainable growth. We will thus strive for a major breakthrough. To this end, I will call for all Group members to be on the same page regarding the value of taking on new challenges.

Since fully repaying the public funds in 2015, the Resona Group has pushed ahead with the qualitative and quantitative enhancement of capital. Moreover, when the current MMP was launched in 2023, our Common Equity Tier 1 (CET1) capital ratio exceeded 10% (based on regulations to be effective upon the full enforcement of the finalized Basel 3; excluding unrealized gain on available-for-sale securities). This suggests that the Group has finally entered a phase of capital utilization. Going forward, we will invest in both organic and inorganic growth measures while maintaining a focus on securing financial soundness and enhancing the content of shareholder returns. We will thus develop a capital circulation structure that enables the Group to enhance its corporate value.

In light of changes in the business environment, we partially updated our shareholder return policy in May 2025. While maintaining our total shareholder return target of around 50%, we have newly set a dividend on equity ratio (DOE) target of 3% for FY2029 as a dividend-related indicator. This target is discussed in greater detail in the CFO Message. Our intention behind the setting of this target is to focus on robustly and steadily increasing the volume of dividends through means other than share buybacks, which had been our primary measure for enhancing shareholder returns. Looking ahead, we will steadily work to secure profit growth even as we optimize the number of shares outstanding through the expansion of the volume of share buybacks, with the aim of sustainably raising EPS.

With regard to growth investments, we are now leaning toward undertaking organic growth measures amid the return of the world with interest rates. We are especially focused on securing a high-quality loan balance. This is a natural trend. On the other hand, we recognize that it is time to develop a profit mix for optimal next-generation retail financing. For us to remain capable of ceaselessly and swiftly meeting increasingly diverse and complex customer needs, we must proactively utilize external insights and networks, including those afforded by partners from different sectors. Similarly, forming strategic alliances through capital utilization is essential to securing new profit opportunities.

The Resona Group aims to become the most significant contributor to securing the success of its retail customers’ SX efforts. Accordingly, we provide “running partner”-type support to customers pursuing progress in this area. These efforts are not limited to the provision of financial services. Rather, our efforts aim to genuinely embody the Resona Group’s reason for being, that is, to contribute to the resolution of social issues and the sustainable development of regional communities. In this light, we have identified Long-Term Sustainability Indicators that encompass value for customers, value for the environment, value for society, value for employees and other diverse perspectives. These targets are set for FY2030, with the aim of enhancing our initiatives to address issues in environmental, social and governance (ESG) areas. The specific descriptions of such initiatives are discussed in the CSO/CSuO Message (PDF:106KB) and CHRO Message(PDF:190KB). Here, I will share my strong aspiration to lead the Group’s initiatives to address social (S) issues through investment in human capital and the revitalization of regional communities.

The business environment surrounding us is evolving radically and constantly. To adapt to these changes and secure a stronger competitive edge into the future, we need to help each employee realize their full potential while rallying the overall strengths of our organization. We are currently seeing a rise in per-capita personnel expenses in step with progress in our human resource strategy. At the same time, growth in these expenses has been outstripped by the rate of expansion in core net operating profit per employee. Thus, investment in human capital is now yielding stable results.

As the CEO, I strive to reach out to each Group officer and employee to urge them to step up their focus on realizing their own version of the Group’s Purpose, “Beyond Finance, for a Brighter Future.” Their personal versions of the Purpose would likely include better serving their customers, cultivating a high level of job satisfaction, achieving tangible personal growth and striving for other personally important goals, regardless of financial reward. Accordingly, we endeavor to systematically implement human resource management that better motivates those engaged in self-directed learning, those who constantly take on new challenges, those capable of delivering higher value to customers and those exercising leadership in implementing reforms across the entire Group, while striving to ensure that all employees feel appropriately compensated with regard to wages.

In FY2025, we decided to introduce an employee share benefit trust system for those in senior management positions. This move is intended to align the interests of next-generation top management candidates with those of shareholders and thereby facilitate a medium- to long-term improvement in corporate value while helping enhance recipients’ awareness of the importance of participating in business management.

Investment in human capital is essential to securing a foundation supporting the Resona Group’s sustainable growth and, therefore, an integral part of our efforts to remain the financial group of choice for customers in an era of radical changes like this moment. We will strive to be a front runner in next-generation retail financing, with 30,000 Group officers and employees on the same page about the value of taking on new challenges.

In July 2024, Resona Holdings became a title partner for B.LEAGUE, a professional male basketball league in Japan. Since its founding in 2015, B.LEAGUE has been navigating a challenging path, with “Transformation and Challenge” as keywords and a strong commitment to contributing to the revitalization of regional communities. We find B.LEAGUE’s aspiration to be a contributor to a brighter future for these communities to resonate with our own history and philosophy. We consider having a partner like this to be a wonderful opportunity to identify what prompts us to take on new challenges and pulls together our 30,000 Group officers and employees in ways that transcend the scope of their duties.

Sports help communities nurture interpersonal ties while bringing vitality and hope. By helping regional community members connect with each other through sports, we hope to play diverse roles in building a vibrant society. At present, business matching contracts have already been signed between our Group banks and club teams nationwide. This is but the beginning of synergetic effects arising from our partnership with B.LEAGUE. In addition, “Resona Group Kids’ Money Academy,” a long-running educational program covering financial and economic topics that recently marked its 20th anniversary, now includes collaborative classes that welcome B.LEAGUE members. Through this program, we are together endeavoring to deliver value “Beyond Finance” to the children who will lead the future of their communities.

We have also identified “JOIN THE HOPE” as the catchphrase symbolizing our co-sponsorship of B.LEAGUE and aspiration to help create an exciting future. Going forward, we will work in tandem with this partner to contribute to the vitalization of regional communities and the creation of a brighter future in a manner that embodies the Resona Group’s Purpose.

Over the course of more than 120 years, we have been amassing a track record of strength as a specialist retail financing. Now, we will take full advantage of this strength and will continue to move forward while staying true to our fundamental stance, “Customers’ happiness is our pleasure.”

The Group has also maintained the “DNA of Reform,” which it has long nurtured through ongoing endeavors to take on and overcome one challenge after another. This “DNA” constitutes our foundation and serves as a source of power as we blaze a path toward the future. In this era where clarity and certainty are lacking, we are determined to ceaselessly play our part in creating hope for the next generation. This is our mission and exactly why we continue to take on new challenges beyond the scope of finance without fear of change.

In these ways, we will rally the might of our 30,000 officers and employees in relentless endeavors aimed at creating a brighter future. We encourage our stakeholders to expect great things from the Resona Group going forward.