Hello, I'm Minami from Resona Holdings. Thank you very much for joining the IR presentation today, despite your busy schedule. I'll go straight into the presentation. On this page are three points that I'd like to share with you today. The first point is the revival of our earnings power. As interest rates pick up, with strong deposits at the base, we will leverage the balance sheet that is highly sensitive to interest rates and strive to steadily increase net interest income. In addition, we've developed the fee-income business under the negative interest rate environment, and we will strive to grow fee-income substantially this fiscal year again, aiming for a record high for five fiscal years in a row. Regarding top line this fiscal year, driven by these two engines, we're aiming to reach the ¥800 billion mark for the first time in 19 years since March 2007.
The second point is further growth potential through structural reforms. In January this year, the integration of Minato Bank's back-office operations and systems was completed, and now the foundation for a one-platform, multi-regional strategy is in place. Furthermore, this fiscal year, we aim to centralize the backyards of the four banks, integrate dispersed functions with our subsidiary RBF, and promote drastic internal digital transformation at once, including the use of generative AI, etc. Because we are amid a tailwind of rising interest rates, further structural reforms will be promoted, with an eye on the next generation. The third point is capital management. As capital flows increase due to earnings exceeding the midterm plan, we will invest in growth and expand returns to shareholders. At the bottom of the slide is ROE. From now on, disclosure of ROE on a TSC standard basis will also be disclosed.
On this premise, last fiscal year was 7.8%. The plan for this fiscal year is 8.4%. I will now speak according to the table of contents. For starter results for fiscal 2024 and the outlook for this fiscal year, I will only briefly touch upon this page, as we already had an analyst call after the earnings announcement. Core net operating profit for the previous fiscal year was ¥288.5 billion, up ¥50.1 billion, or 21% year-on-year. Net income attributable to owners of the parent company was ¥213.3 billion, an increase of ¥54.3 billion, or 34.2% year-on-year, and was the first time in seven years since the year ended March 2018 that we were able to exceed ¥200 billion. Net income attributable to owners of the parent company this fiscal year is expected to be ¥240 billion, an increase of ¥26.7 billion year-on-year.
Assumptions for this fiscal year earnings are shown at the bottom. The BOJ's policy rate was left unchanged at 0.5%. Due to the lack of market clarity, the assumptions account for a certain degree of downward pressure, especially on net gains on stock and credit-related expenses. On the other hand, regarding the impact of U.S. tariffs, we can expect various spillover impact, but as they are hard to quantify at this time, we will work to grasp the circumstances at an early stage and strengthen predictive management and customer support. This section shows the changes in net income comparing last fiscal year results with this fiscal year's guidance. Last fiscal year, top line expanded due to two key factors: net interest income and fee income, which offset the increase in expenses, leading to higher core net income. The overall trend will be the same for this fiscal year.
The other item section includes major items contributing to the increase and decrease in income. The breakdown is provided at the bottom of the page. The left side shows last fiscal year results. In addition to solid core earnings, policy-oriented stock sales made progress, while credit costs remained low. In Q4, we implemented initiatives to improve future earnings, including: one, strategic replacement of the securities portfolio, and two, one-time recognition of Minato Bank's back-office operation and system integration costs. In last fiscal year, we were able to absorb this impact, but we were still able to exceed guidance by 20%. At the bottom right, for this fiscal year's plan, the absence of fixed income-related losses and extraordinary losses from the previous year will be a factor in boosting profit.
On the other hand, under the uncertain business environment, we have factored in less stock-related gains and an increase in credit costs, which are the negative factors weighing on profit. From here on, I will cover measures to enhance corporate value. We have been communicating about financial and non-financial approaches to improve corporate value from before. We believe that by working on both enhancing ROE and reducing cost of capital, we'll lead to an increase in PBR as a way of market evaluation. I will talk about specific initiatives from here on. This chart shows the balance sheet as of the end of March, the loan-to-deposit ratio, the securities-to-deposit ratio, and ROA. At the bottom left is the loan-securities-to-deposit ratio, which has fallen to 77% at the end of March 2012 amid extraordinary monetary easing, but has recovered to 86% now.
Bottom right shows ROA, which has also rebounded substantially, but is still midway in the process of reemerging, leaving great room for growth. We will continue to further improve ROA through active risk-taking, more sophisticated ALM, and other measures. This is an update of the impact of rising interest rates. Please only refer to these values for reference purposes. As in the past, the details shown here are the impact of interest rate changes on a pre-tax income basis without considering changes in the balance sheet. The bar on the far left of the graph are results from the previous period, and it shows ¥33 billion as the earnings impact of up to 50 basis points in policy rates. On the next bar on the right, we estimate that the cumulative two-year earnings upside expected to be realized during the current fiscal year will be about ¥99 billion.
As a result, we expect this year's profit increase to be about ¥66 billion, double the amount of last fiscal year. On the very right side, the full effect of the policy rate hike to 50 basis points is expected to translate into a cumulative top line increase of ¥108 billion. If interest rates were raised to 75 basis points hypothetically, a further increase of ¥56 billion can be expected. Cumulatively, the upside is ¥164 billion. Based on the current level of capital, this allows us to foresee an ROE of 10% based on TSC standards. As we do not take into account changes in the balance sheet, we believe that there is a possibility of further upside.
From here on, I'd like to talk about our two engines: one, net interest income, and two, fee income, starting with deposits, which are the foundation of indirect finance. The deposit base is becoming even more valuable in a world of positive interest rates. The top left shows the group's deposits over the past three years, which have increased on both corporates and individuals. The top right is a comparison between our deposits and the data for Japanese banks. The size of highly sticky individual deposits and the depth of our current deposits are one of our strengths. This comes from daily transactions, not due to offering high interest rates. Specifically, we believe that deep connections with household finances and business transactions, high convenience, and other factors contribute to this result.
We need to pay extra attention to changes in customers' financial behavior and the trends of other companies in the future, but as for now, we'll continue to maintain a strong deposit base without spending excessive funding costs. Going forward, we intend to further solidify these strengths through overwhelming improvements in convenience brought about by the fusion of real and digital worlds, and through the creation of attractive new mechanisms. The first engine of the two key businesses are loans. As we enter the capital utilization phase and interest rates pick up as the core part of organic growth, expansion of high-quality loans is underway. The lower left-hand side shows the year-on-year change in domestic deposit and loan interest income.
During the negative interest rate period, cumulatively, ¥75 billion pushed down income, but we are finally starting to see a turnaround on a full-year basis since the previous fiscal year. We are also focused on the quality of our loans, and RORA is steadily improving. We are going after a diverse range of funding needs, addressing ever-changing customer problems during a time of structural changes, such as increased working capital against a backdrop of moderate inflation, CX, SX, and GX, and labor market tightness. This is the second engine of the two key businesses. It's the fee business. The top row is an image of our plans. Our traditional strengths in trusts, real estate, succession, and corporate solutions are becoming stronger, and our steady and diversified efforts to sow seeds into areas like digital have been successful. We continue to evolve into a new, optimal, and extensive income mix.
As shown in the middle, different types of fee income are being generated as the real and digital worlds continue to merge, supporting record-high income four years in a row. Last fiscal year, the company recorded extremely strong growth of 6.7%, particularly due to a large increase in real estate income. We expect the growth rate to be somewhat moderate this fiscal year in reaction to last fiscal year results and other factors, but even so, we aim to achieve record-high profits for the fifth consecutive fiscal year. The bottom shows some examples about the steadily expanding foundation of this business that will be a source of stable earnings for the next generation. At the bottom left are the number of clients who have investment trusts, bond wrap, and insurance, which has exceeded 1 million people.
The number of partner banks of the financial digital platform is steadily on the rise, and amazing results are materializing. At the bottom right, compared to six years ago, the number of debit cards issued has increased 2.1 times to 3.3 million. The number of downloads on our app, which used to be less than a million, has exceeded 10 million and is still on a growth trajectory. From this slide onward, I will talk about the structural reforms. As the financial sector itself is facing a major turning point, providing a customer experience aligned with the times as well as fair value is a prerequisite to remain as the preferred choice of customers, and improving productivity is one source of future competitiveness. We're being tested precisely on the ability to adapt.
The current manpower-intensive business processes have supported the bank's growth to date, but it is essential to transform the processes for a smooth transition to a more efficient system that will support the future business. The three years under the current and medium-term management plan are positioned as the first seven days of our structural reform efforts, and we are making steady progress despite some ups and downs. The slide illustrates our intentions: frontline reforms, middle and back-office reforms, investment in human capital, and work-style reform. The series of reforms underway would strengthen the group's foundation for growth and would help overcome the high-cost structure inherent to the retail business. OHR will finally go to 50% range this fiscal year, but we are aiming to achieve 40% range within five years through two drivers: top-line growth and efficiency gains on the back of various transformation.
I hope to secure understanding that whilst making upfront investments, these structural reforms are underway. Let me elaborate on our thoughts behind each of the initiatives. First, the frontline reforms that integrate the face-to-face and the digital channels, the reform of customer contact points. The upper half of the slide visualized what we aim to achieve as the next generation retail banking model. The idea is to be 100% digitally connected for daily transactional services and to differentiate with a face-to-face channel for special moments that would require deep consultation advices. As indicated by the diagram on the left, Group App was launched in February 2018, and today, 70% of our contacts with customers are via the app. The overwhelming increase in transaction volume will boost revenue, and the collection of data will give us granular information about the customers, enabling more accurate forecasting. Everything is evolving in tandem.
At the same time, whilst enhancing consulting capabilities, digital and data-driven approach on the face-to-face channel would further enhance our competitiveness. As shown on the right, we'll also accelerate the shift from dedicated terminals to tablets at the branches. This is not simply a shift to different types of devices, but a transformation of the business process itself where consultation and administrative processes are integrated. This implies a renewed customer experience and, at the same time, a boost in productivity. The financial digital platform has already been expanded to eight banking entities from seven financial groups, and concrete track records have been accumulated. These efforts are supported by the digital knowledge and experience we have acquired through tackling new challenges. Next, let's look at the middle and the back-office reforms.
In January this year, Minato Bank's back-office and IT systems were integrated, and building a single platform for the whole group was completed. The first step was to integrate the back offices of each banking entity into a single platform, and from there on, promote business process reengineering using DX AI. We have already started to streamline the middle and back-office organizations within the group. The bottom half of the page shows the work-style reforms that will be in full swing starting this month. This is internal DX. As part of the structural reforms, we'll pathways with familiar business processes, decommission operations without leaving any stones unturned, and proceed at once to standardize the use of Gen AI. We'll change the mission for each individual, enhance their capabilities, and aim to significantly expand organizational capabilities as a whole. Next, human capital investment.
We have been promoting structural reforms for some time now. In the three years under the previous midterm plan, we reduced the group headcount by 3,400 people while also redeploying personnel to strategic businesses, and total workforce has already been downsized to the level before the key MFG integration. In the current midterm plan, we are capitalizing on the management strength acquired through this process to quickly raise the level of organizational capabilities for the future. As the graph on the right indicates, while the personal cost per head is rising, the core net operating profit per head is rising at a much faster pace. In the future, through structural reforms, we'll control total personal cost while further raising compensation per employee by accelerating the reorganization of the talent pool by operation. As indicated at bottom right, we have now introduced employees' share benefit trust system.
We hope to further raise the awareness of the talent pool for future leaders to participate more in management matters while aiming to enhance corporate value over the medium to longer term. Next, credit costs. Although the future economic environment is extremely uncertain, for instance, with the impact of U.S. tariff policies, we believe that credit risks would be manageable given how diversified our loan book is with a small amount per borrower. The top graph shows the historical trend of the credit cost. Even after including the major risk event, the Lehman Crisis, the long-term average is 11 basis points. The net loss ratio for mortgages, the chart in the middle, has also remained extremely low. Housing loans are long-term secured loans, and credit screening is conducted with reasonably stressed interest rates. Even in view of future uncertainties, we believe that the housing loan book is a high-quality asset.
Bottom left are some stability data of SMEs for your reference. You can see the significant improvement of companies' resilience against risk over time. I'll now move on to our capital management policy. In light of changes in the business environment, we have updated part of our shareholder return policy, so let me share the key points of the update referring to the box in the middle. Up to now, optimizing the number of shares outstanding was positioned as a critical aspect of the capital management, so we have focused more on share buybacks for shareholder returns while giving due consideration to maintaining good balance with dividend policy.
Currently, we are paying due consideration to multiple factors such as improving profitability aiming to return to a positive rate environment, accelerating the sales of strategic equity holding leading up to 2030, declining growth of economics of share buybacks due to the rising price-to-book ratio, and the need to improve the attractiveness of dividend payouts. After considering these multiple factors, we decided to maintain a total return ratio target of approximately 50% and set a new dividend-related KPI, a DOE of around 3% for FY 2029 in order to achieve steady dividend hikes. Now, we are in the process of divesting a significant amount of strategically held shares, targeting the end of FY 2029.
Considering the volatility of the extraordinary gains and losses during this period, we set the DOE target for FY 2029 with an intention of raising the dividend at a steady pace, agnostic of the level of sales gains. Over the five years, we aim to raise the DOE to approximately 3%, about 1.5 times greater than the current level. In the meantime, we'll continue to buy back shares and set a 5% ceiling on how much will be kept as the treasury shares. This is reflective of the possibility of using these shares in the future as stock-based compensation to the executives and employees and for inorganic opportunities. Obviously, we will use these shares for EPS-accretive opportunities. This is the shareholder return-related actions that we announced together with the financial results and the trend of shareholder returns.
First, as additional action for FY 2025, we raised the year-end dividend to ¥13.5 per share, which is higher by ¥2 compared to the projection. This is in response to the significant earnings upside in the previous fiscal year compared to our guidance. Altogether, the FY 2025 annual dividend of ¥25 per share would be a ¥3 hike from the previous fiscal year. For FY 2026, based on the new shareholder return policy explained earlier, the annual dividend forecast is ¥29 per share, a year-on-year increase of ¥4. In addition, we have decided on share buyback up to ¥30 billion, an increase of ¥10 billion from the amount implemented in the first half of last year.
Based on this year's earnings guidance of ¥240 billion, with just the actions taken at the outset of the fiscal year, the projected total return rate would be 40.3%. This slide shows the trend of ROE, numbers of shares outstanding, and EPS. While having set a new dividend-related KPI, we still acknowledge that the level of the share count remains as an issue. Furthermore, we'll strive to enhance enterprise value by enhancing ROE. We will also continue to work on sustainable expansion of EPS through earnings growth and optimization of share count. This image illustrates the capital allocation policy and how we plan to use the capital under the current midterm plan.
The upper half indicates what we projected in the process of putting together the midterm plan, whereas the bottom half illustrates the actual capital allocation for the first two years with MMP and the plan for this fiscal year. Now, earnings have exceeded the midterm plan. One of the drivers is the loan growth, mainly to corporate clients. This is a natural trend as we now operate in a positive interest rate environment, and the focus of growth investment is now in the organic area. In particular, we are very much focused on growing the high-quality loans. Against such backdrop, the CD1 ratio has remained stable at the 10% range. We'll continue to maintain a high level of soundness, expand shareholder returns, and pursue both organic and inorganic growth opportunities in utilizing our capital to demonstrate sustainable growth. Next, the strategic shareholdings.
In May last year, we unveiled a new plan to reduce the equity holdings. The plan calls to reduce the book value-based balance by more than two-thirds over six years. This means that we'll reduce the book value-based balance by 94% by 2030, compared to March 2003, the year which Resona was established. By fair value, we intend to reduce the balance to roughly 10% vis-à-vis the consolidated net asset by 2030. At this point, we expect to reach and pass the 20% level by the end of March 2027 at the earliest. In the previous year, the first year under the new plan, we reduced the book value-based listed equity exposure by ¥34.5 billion. We believe that we are off to a good start with a progress rate of 90.8% against the six-year plan.
On the other hand, we assume a certain level of uncertainty in reflecting gains from equity sales in this fiscal year's earnings plan, taking into account the uncertain business environment. There is a possibility of both upside and downside depending on the circumstances. From this section, we have prepared some ESG-related slides as we aim to be a company that best contributes to retail customer sustainability transformation. Please take a look at your convenient time. With that, I would like to conclude my presentation. Thank you very much for your attention.