Strategic Initiatives CLSA Japan 2007 February 26, 2007 Thierry - PowerPoint PPT Presentation

Strategic Initiatives CLSA Japan 2007 February 26, 2007 Thierry Porté President and Chief Executive Officer 0

Contents � Shinsei - A Different Kind of Japanese Bank � Our Strategic Approach � Business Strategy - Three Pillar Business Model � Approach to Risk Pricing � Capital Strategy � Financial Update and Forecast 1

A Different Kind of Japanese Bank What Sets Us Apart What Sets Us Apart Responsible to Responsible to Customer More Local Than Customer More Global Than More Global Than More Local Than Shareholders and Shareholders and Focused Global Competition Focused Local Competition Local Competition Global Competition Society Society Empowered Proud Heritage Innovative Products Transparency Value-Focused Long-Term Approach High Standards Better Service Ethics and Integrity Flexible Open Thinking Decisions Made in Japan Measures and Rewards Open-Minded Japan First and Last Useful Network Long Term Profitable Growth Long Term Profitable Growth Strong Results Strong Results Recognized Established Established Recognized Diversified Income Diversified Income and Appreciated Three Pillar Three Pillar and Appreciated Growing Profitable Growing Profitable Banking Approach Strategic Business Model Strategic Business Model Banking Approach Customer Base Customer Base 2

Shinsei’s Strategic Approach Business Enablers Our Challenge We need to continue building a brand Delivering service quality and value Customers based on customer loyalty and trust added solutions to customers while and gearing up for expansion Brand Continue to innovate in products, Changing the culture to be more services and business models entrepreneurial while retaining risk Innovation awareness and financial control We need to leverage our advanced Delivering improvements in technological capabilities and improve efficiency and analytics to fund Technology our internal processes investment in new capabilities and expansion We need to build and retain a highly Finding and motivating the right staff motivated and skilled workforce with an to deliver growth with control People entrepreneurial culture Our growth strategy requires high level Implementing a high performance acquisition skills and trained acquisition and integration process Growth integration teams “We are too small to be a slow mover!” 3

Shinsei’s Strategic Approach The diversified businesses face contrasting challenges High Institutional Banking (IBG) Market Attractiveness IBG: Focus on profitable customers Retail Banking Customers RBG: Build scale to (RBG) Medium leverage brand Consumer CCF: Growth through and acquisitions Commercial Finance (CCF) Low Weak Average Strong Risk Management Corporate Governance Technology Platform Competitive Strength 4

IBG Consumer and Commercial Finance RBG CCF Consumer and Commercial Finance companies grouped into three key business lines Overview of Consumer and Commercial Revenue and Ordinary Business Profit (OBP) 4 Overview of Consumer and Commercial Revenue and Ordinary Business Profit (OBP) 4 Finance Subsidiaries (JPY Billion) Finance Subsidiaries (JPY Billion) 70 60.7 57.6 60 Consumer Solutions 50 APLUS 1 20 3.5 Shinki 2 40 10 21.1 17.5 27.8 25.7 0 30 Small & Medium Specialty Property 20 Solutions Business Solutions 11.2 Shinsei Property Finance 10 Showa Leasing 3 5.5 Life Housing Loan 0 1H FY2005 1H FY2006 Revenue OBP OBP after net credit costs 1 APLUS was consolidated in September 2004, contributing to Shinsei since 2HFY2004 2 Shinki is an equity-method affiliate, Shinsei ownership 36.4% 3 Showa Leasing was consolidated in March 2005, contributing to Shinsei since FY2005 4 Management accounting basis 5

IBG Consumer and Commercial Finance RBG CCF Acceleration of APLUS Business Transformation APLUS’ Core APLUS’ Core APLUS Business Transformation Shinsei’s Commitment APLUS Business Transformation Shinsei’s Commitment Strengths Strengths � Shopping & Credit � Management Changes � Revised Reserve Level １ � Shopping & Credit � Management Changes � Revised Reserve Level １ Card Platform – JPY 10 Billion reserve for grey zone interest refund – Deployment of key senior Card Platform – JPY 10 Billion reserve for grey zone interest refund – Deployment of key senior � Servicing – JPY 51 Billion reserve for credit losses managements � Servicing – JPY 51 Billion reserve for credit losses managements � Drastic Revision of Cost Structure – Credit view – President & CEO: � Drastic Revision of Cost Structure – Credit view – President & CEO: – Reduction of expenses (slimmer/flatter divisional structure, – Operational Clark Graninger, – Reduction of expenses (slimmer/flatter divisional structure, – Operational Clark Graninger, voluntary early retirement program, etc.) management currently Head and voluntary early retirement program, etc.) management currently Head and – Curb on credit costs Chief Executive of IBG – Collection – Curb on credit costs Chief Executive of IBG – Collection � Reformation of the Business Model and Revenue at Shinsei � Reformation of the Business Model and Revenue � Shinsei Group’s at Shinsei � Shinsei Group’s Structure Structure – Chairman: Technology and – Chairman: Technology and – Structure reform of the main business following the Junji Sugiyama, – Structure reform of the main business following the Network Junji Sugiyama, Network amended Money Lenders Law amended Money Lenders Law currently Chairman of currently Chairman of – Strengthen relationships with mutually valuable partners Shinsei, assumes – Strengthen relationships with mutually valuable partners Shinsei, assumes – Business expansion via new products/ services, new – Business expansion via new products/ services, new additional responsibility additional responsibility partners partners � Capital Injection � Cultural Reform � Capital Injection � Cultural Reform – APLUS maintains sound – Place top priority on the frontline (business promotion, – APLUS maintains sound – Place top priority on the frontline (business promotion, capital base collection, etc.) capital base collection, etc.) Towards Efficient and Sustainable Business Model as the Core CCF Subsidiary � Targeting positive earnings in FY2007 and return to normalized profitability by FY2009 � Strong and clean operational base to encounter new lending interest limits implementation � Stable revenue source for Shinsei 6 1 For the end of March, 2007 forecast

IBG Consumer and Commercial Finance RBG CCF Showa Leasing has an increasingly strong presence in the SME market Showa Leasing has an increasingly strong presence in the SME market Trend of Leasing Assets and Installment Payments Showa Leasing: Attractive SME Platform Showa Leasing: Attractive SME Platform Trend of Leasing Assets and Installment Payments Receivable 2 Receivable 2 (JPY Billion) (JPY Billion) � Major general and automobile leasing � Major general and automobile leasing 600 company After Shinsei’s Acquisition company � Significant customer base � Significant customer base 464 464 449 435 428 – Over 37,500 business customers – Over 37,500 business customers 400 160 161 140 139 137 – Over 250 dealer partners 1 – Over 250 dealer partners 1 � Enhancing SME loan business � Enhancing SME loan business 200 – Merged Shinsei Business Finance – Merged Shinsei Business Finance 309 303 302 296 291 into its platform to achieve further into its platform to achieve further scale scale 0 Credit Rating (JCR) Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 — / NJ A- / J-1 Leasing Assets Installment Payments Receivable (January 2005) (March 2005) 1 As of September 30, 2006 Source: Showa Leasing 2 All figures presented above are Showa Leasing’s disclosed non-consolidated financials 7 (numbers rounded)

IBG Consumer and Commercial Finance RBG CCF Transformation towards a new business model Transformation towards a new business model Key Issues Actions Key Issues Actions • Increasing Shinsei management support • Consumer (JPY 1.8 trillion of Total Assets) • Accelerating APLUS transformation to become leading Shinpan partner - Changing Money Lending Law and increased industry scrutiny • Significantly reducing both operating and credit costs at APLUS and Shinki • Focusing development resources on long- term mutually beneficial partnerships • Commercial (JPY 0.5 trillion of Total Assets) • SME concentration should minimize impact - Anticipated lease accounting changes • Growth via product line expansion • Further industry consolidation possible • Consistent execution has led to strong • Property (JPY 0.15 trillion of Total Assets) growth - Mega banks recovery and new market • Projecting to exceed FY06 earnings target entrants • Future growth from product expansion 8