Hello, my name is Minami from Resona Holdings. Thank you very much for taking the time to attend today's briefing session despite your busy schedule. Please let me dive right into the explanation. We have conducted an analyst call after the earnings briefing, so I will mainly talk about our growth strategy today. First, the point we would like to communicate. This shows one of the financial KPIs we focus, ROE. With the normalization of monetary policy, the rate rose from 6.5% to 9.2% over the three years of the previous Midterm Management Plan. In the new MMP, we aim to achieve 12% ROE, assuming a policy rate of 1%. If the policy rate rise to 1.5%, we will consider around 14% ROE. These are the key points of the new MMP.
We would like to show a new form towards becoming a frontrunner in next-generation retail financing in the new MMP. First, as you see on the left top, we will aim to deliver JPY 1 trillion in top line, mainly around growth of our core businesses. We have been talking about reviving our ability to generate profit, but we aim to take this even further. In the upper right, we will work to create next-generation growth drivers by expanding our value proposition through strategic partnerships, ecosystem development, and BaaS. In the middle of this is an ongoing process of structural reform. We are moving quickly to build a management foundation that will support the next generation by reviewing work styles, business processes, and IT systems.
Last year, we mentioned that we will aim to reach the 40% range within five years for OHR, but we have moved up the target by one year, and now we intend to achieve this by the final year of the new MMP. We will create a capital cycle that enhances the Group's corporate value over the mid to long term by allocating our growing capital flows to growth investments and enhanced shareholder returns. Please refer to page five. This is the model that Resona Group aims to achieve in the long term. Top right, "Beyond Finance for a Brighter Future." This purpose is the origin and the ultimate goal of everything we do. In addition to that, we have a long-term vision to become Retail Number One.
On the left, the previous MMP was positioned as the first 1,000 days of taking on corporate transformation, marking the major shift from recovery to new growth. Resona Group has changed significantly over the last three years. Building on this momentum of transformation, we are now launching Shift to the Next Stage, Three Years to Create Our New Ways of Doing Business, with the goal of becoming a frontrunner in next-generation retail finance. Please turn to page seven. Just one point here. On the left bottom, our Group was included in the SX Brands yesterday in 2026. This is the first in the banking industry. This recognition reflects our strategy to enhance corporate value to become Retail Number One while strengthening our profitability and reforming cost structure at the same time with a focus on corporate transformation. Please move to page 11.
I will be explaining the specific activities in the new MMP. First is the growth of our core businesses. We will leverage the strength of our high-quality balance sheet that we developed over time, mainly around our retail business. We will maintain low beta as much as possible and enjoy upsize of the net interest income. As you see at the bottom, amid unprecedented monetary easing, the loan-to-deposit ratio and security-to-deposit ratio, which fell to 77% in March 2022, has recently recovered to 92%. ROA, shown at the top, has also reversed significantly. On the other hand, we believe the world with interest rate has already moved into phase two. To maintain and expand the strength of our current balance sheet through qualitative improvements and enhancements to our ALM, we will implement a variety of measures on both the asset management and funding side towards the next generation.
This is a simulation of the impact on our profitability in case of interest rate hike. For a while, our net interest income is expected to grow JPY 60 billion for every 0.25% interest rate hike. This shows deposit, which is the core of indirect financing. The value of deposit base is increasing further while the world with interest rate is penetrating. Fifth bottom shows the deposit balance since the end of March 2020. While leveraging our strong balance sheet, we are maintaining a growth trend for both corporate and personal customers without placing an excessive burden on our procurement cost. Since the end of negative interest rate, the pass-through rate of policy rate has been around 34%. It remains within the initially expected 40% range. We believe that the key to attracting loyal deposits lies in deep connections with households and business networks.
The data in the lower right corner illustrates the strength of Resona Group's deposit base. There's also a chart showing the trend of funds transferred to inheritor accounts, along with our deposit market share in the Tokyo and Kansai regions, which form the core of our businesses. The inflow of funds from regional areas are continuing, driven by factors such as inheritance. Number of debit card issues that lead to personal accounts becoming the main accounts and having strong link with the Group's app has reached 3.43 million. Number of companies naming us as their main bank is 69,000, and we are ranked third, which is higher than some mega banks. From a macro perspective, there will be various stresses on deposit.
We aim to remain the financial group of choice by enhancing customer touchpoints through the integration of the physical and digital world, and by creating attractive services and innovative systems through our ecosystem. Moving on to asset management. First, corporate loans. Building on our established presence in the two major metropolitan areas, we are expanding our capabilities to handle complex cases by enhancing our consulting expertise, in addition to leveraging our traditional strength, such as a full range of trust services and strong client relationships. Furthermore, with the backdrop of mild inflation and rising working capital needs, and amid ongoing structural changes such as capital investment for growth, business restructuring and succession planning, and CX and DX initiatives, we are expanding our portfolio of high-quality loans to respond to a variety of business challenges.
As you see at the left bottom, our corporate loan balance increased significantly by 22% in the three years of the previous MMP. We expect to achieve more than 15% growth in the three years of the new MMP. Loan rate that improved 43 basis points in the previous MMP is expected to increase another 47 basis points in the next three years based on 1% policy rate assumption. Right bottom shows RORA, and we will continue to focus on the quality of loans. Next, I will talk about personal housing loans. Left top shows the trend of housing loan rate and new origination. With the change in interest rate environment and competition, new origination is increasing significantly due to differentiated products and new services.
A very high proportion of our housing loans have variable interest rates, and while yield improvements are occurring with a lag, we expect yields to improve by about 43 basis points over the next three years. As noted on the right, housing loans, which serve as the foundation for long-term relationships with individual customers, are extremely high-quality loan assets. Relatively, housing loans are portfolio with high RORA level, but we expect further improvement. Please move on to page 19. Now, I will talk about fee business. The top shows our image to enhance our fee income over the medium to long term, where different types of fee income builds on top of each other. We are starting to feel that we are getting closer to this image in both B2B and B2C. The pie chart shows the image of our profit structure. Currently, approximately 70% is from net interest income.
However, over the mid to long term, we aim to transition to a next-generation profit structure that is less impacted by interest rates by expanding the scale of our income, strengthening a recurring fee-based income, and securing new growth drivers. The bottom chart shows the trend of consolidated fee income. It has been marking a record high for five consecutive periods until last year. We will maintain this trend and aim to achieve JPY 250 billion in the final year of the new MMP. We have attached slides related to each businesses after page 20, so please refer to them later. Please turn to page 24.
Regarding creating next-generation growth drivers. Amid rapidly changing social and customer needs, we aim to acquire the functions, customer base, and the capabilities required to maintain the financial group for the customer's choice. The lower section shows the inorganic investments during the previous MMP period. Creating next-generation growth drivers is not necessarily limited to capital-intensive initiatives. We will significantly expand inorganic investment down the road. As a part of our new ways of doing business beyond finance, we have already launched several initiatives. Please take a look at some of them. Our collaboration with Digital Garage, which has become an equity method affiliate, is one example of our new ways of doing business. As in the lower right, we released an update on DG Bank last week.
As a part of BaaS, leveraging Digital Garage strength in the payment space and the combination of commercial flow data and AI, we will provide a new banking experience for SMEs. We will also roll out this functionality to platform providers such as the Tabelog service of the Kakaku.com Group, with which Digital Garage has a partnership. This is another example of our new ways of doing business through the alliance with JR West, which we announced on May 1st. It is part of our efforts to strengthen our new regional strategy. Centered on the Kansai region, an important mother market for the Resona Group, we aim to deliver new customer experiences and unprecedented options by integrating mobility, daily life, and finance. At present, our initiatives are built around three main pillars. The first is community-based BaaS functions.
Specifically, we are establishing Kansai Mirai Bank, which brings together the financial services offered through Kansai Mirai Bank and the extensive customer base and attractive assets and content of the JR West Group. The second is the expansion of settlement functions. Assuming the setup of a joint venture, we will leverage the wider range of customer touchpoints, data, knowhows, and digital marketing capabilities of both companies to realize a new form of payments with excellent UI/UX, convenience, and benefits. The third is community building. By combining the rich assets, content, information, and development capabilities of both groups with financial functions, we will promote a new form of community development that makes our customers' lives richer. This is Resona Plus, a new consumer service announced yesterday through our partnership with Dai-ichi Life Group and JCB. This new consumer service is centered on the integration of finance and everyday life.
It is a new ecosystem in which the three companies' extensive customer bases are integrated, their diverse expertise and know-how are connected, and a wide range of attractive content is delivered to customers through an exceptional UI/UX. We plan to launch the service in late September 2026 and aim to further expand its offerings. Going forward, we intend to extend it to regional financial institutions through our financial digital platform, thereby spreading a chain of win-win relationships. These initiatives signal that the financial digital platform that we have been working on is entering a new phase. Starting with the group-wide deployment of digital channels in 2018 and then rolling out to regional financial institutions in 2021, the platform is now utilized by nine Group 10 banks. With a collaboration that goes beyond finance, it will evolve into a more attractive and competitive financial platform.
From here, let us move on to structural reforms. Structural reforms mean eliminating mismatches in our thinking, systems, processes, and other mechanisms in order to support the enhancement of our earning power and the rethinking of how we earn. With human capital, generative AI, and data in combination as our core, we aim to enhance our value creation capabilities. In addition to improving OHR, we will transform customer experiences, deliver new value, and achieve a notable productivity improvement. We believe that the speed of reforms, including generative AI-driven initiatives across the front, middle, and back offices, as well as work style transformation, will determine our future competitiveness. Aiming to become one of Japan's top companies in AI utilization, we shall continue to tackle with these initiatives. Please turn to page 34. Here, let me provide some additional explanation regarding our human capital initiatives.
On point one, the total number of group employees had already been streamlined back to the pre-KMFG integration level by the end of March 2023, which served as the starting point of the previous Midterm Management Plan. During the previous Plan, we leveraged the management resources secured through the streamlining process to expand our investment in human capital, including improvements in compensation, talent development programs, and recruitment. Point two, through these initiatives, we also have confirmed that employees' sense of fulfillment and engagement has been improving. Point three shows the transition of our human capital portfolio. Through initiatives such as business process improvement, we have been shifting management resources that have long remained fixed. Point four, in the near term, we will continue to raise labor cost per employee while uplifting revenue per head to outpace such cost increase.
Lastly, let me talk about the acceleration of capital circulation. Our basic approach to capital management remains unchanged. We have made partial revisions to the shareholder return policy shown in the center of the chart. Let me begin from there. First, we have clarified the lower threshold for the total return ratio by setting it at 50% or higher. In addition, as we have raised our target ROE level under the new Midterm Management Plan, our ROE target for FY 2029 is revised upward from the previous around 3% to around 3.5%. While setting a higher target, we continue to pursue stable and sustainable dividend hike. This page illustrates our capital allocation approach. Reflecting the expansion of capital flows, we will further drive capital deployment. The left-hand side shows the actual results during the previous MMP period, and the right-hand side is the image for the new plan period.
Under the new plan, we plan to allocate more than JPY 1.1 trillion in capital flows as shown here. Although our approach to organic investment remains unchanged, we will substantially increase the actual amount allocated to inorganic investment and shareholder returns compared with the previous plan. This page summarizes our shareholder return initiatives. The upper section shows the actions we announced together with the earnings release, and the lower section is the trend in shareholder returns. For FY ending March 2027, our DPS forecast is JPY 37, an increase of JPY 8 year on year. The amount of the dividend hike will be double that of last year. We also have announced a share buyback with an up limit of JPY 35 billion. Based on our current earnings target of JPY 310 billion for this fiscal year, the total shareholder return ratio stands at 38.2% at this point.
Given our stated target of 50% or higher, however, we will take appropriate actions while closely monitoring the progress of our earnings. In addition to delivering stable and sustainable dividend growth, we will continue to work on EPS growth through flexible share buybacks. We expect the relative weight of share buybacks to gradually decline over time. That said, we recognize that the current level of shares outstanding remains an issue given the need to maintain flexibility in our future capital policy. We therefore will continue to pursue sustainable EPS growth by expanding earnings and optimizing the number of shares outstanding. Let me also go through our policy-oriented shareholdings. For the FY ended March 2026, the reduction amounted to ¥32.6 billion on an acquisition cost basis for listed stocks. On a consolidated basis, gains on sales totaled ¥106.5 billion. In particular, these gains meaningfully exceeded our initial plan of ¥52 billion.
Since launching our new reduction plan two years ago, we believe progress has been steady and in line with expectations. As shown in the center of the slide, over the past two years, we have reduced the balance by 25% on an acquisition cost basis, with the decline in fair value exceeding JPY 260 billion. Even so, due to the rise in the remaining balance, the fair value is yet up by more than JPY 130 billion. As a result, the earliest possibility for the ratio of policy-oriented stock holdings to consolidated net asset on a fair value basis to hit and pass the 20% level is March 2028. From here, we have prepared several slides outlining our ESG initiatives that support the sustainable improvement of corporate value. I would appreciate it very much if you could review them later. That concludes my presentation. Thank you very much for your kind attention.