Increasingly challenging operating environment due to population decline, low interest rates and cross-industry entrants

「In FY2026, uncertainty about the outlook is increasing as expectations for the new administration's growth strategy coexist with concerns about a global economic slowdown stemming from geopolitical risks. In the financial sector, competition is also intensifying across industry and regional boundaries against a backdrop of advances in technological innovation, including AI, and changes in the interest-rate environment.」

「During the interim consolidated accounting period, Japan's economy continued to recover moderately. Although consumer sentiment showed weakness due in part to the impact of rising prices, personal consumption remained firm against a backdrop of improving employment and income conditions. Capital investment increased moderately, supported by high corporate earnings and favorable business sentiment.」

「The competitive environment is becoming increasingly intense, the scale of change in society, including social trends and digital and technological innovation, is growing further, and the outlook remains unclear and uncertain.」

「In March 2024, the Bank of Japan stated that it had confirmed a virtuous cycle from wages to prices and that conditions had been reached where the sustainable and stable achievement of its 2% price stability target could be foreseen, and decided to lift its negative interest rate policy and abolish yield curve control, among other measures. Responding to the so-called "world with interest rates" is an important issue that will affect the Group's earnings and corporate value.」

「During the first nine months of the fiscal year, the Japanese economy recovered moderately despite being affected by a slower recovery in overseas economies and higher prices.」

「During the first six months of the fiscal year, the Japanese economy was expected to face higher prices and a slowdown in overseas economies, but it recovered moderately as the impact of COVID-19 continued to subside.」

「The current business environment is becoming more uncertain due to the emergence of geopolitical risks and continued monetary tightening by central banks. In addition, changes that could be called a paradigm shift are taking place, including structural challenges such as population decline, advances in technology exemplified by ChatGPT, the trend toward sustainability including decarbonization, and changes in working styles and individual values brought about by the COVID-19 pandemic, increasing uncertainty.」

「Meanwhile, in addition to longstanding issues such as population decline, declining birth rates and population aging in Japan and the prolonged low-interest-rate environment, changes in customer behavior and the social environment are advancing, including the rapid evolution of technology, the transition to new lifestyles accompanying the spread of COVID-19 and growing awareness of sustainability, including the shift to a decarbonized society.」

「During the first quarter of the fiscal year, Japan's economy remained extremely challenging in terms of exports, production and personal consumption, as economic activity was substantially restricted under the state of emergency while the global economy stagnated due to the impact of COVID-19.」

「Japan's economy in FY2020 is expected to remain uncertain, with declines in personal consumption and inbound tourism demand caused by the impact of COVID-19, as well as declines in capital investment resulting from deteriorating corporate earnings, acting as downward pressures.」

「The environment surrounding regional financial institutions is expected to become even more challenging due to population decline, the progression of declining birth rates and population aging, the prolonged low-interest-rate environment and entry by companies from other industries into banking.」

「The operating environment surrounding regional financial institutions is becoming increasingly challenging while changing rapidly due to population decline, the progression of declining birth rates and population aging, the prolonged low-interest-rate environment and entry by companies from other industries into banking, as well as shifts in industrial structure brought about by advances in ICT.」