The Hyakugo Bank, Ltd. First Section of TSE and First Section of NSE - PowerPoint PPT Presentation

The Hyakugo Bank, Ltd. First Section of TSE and First Section of NSE (8368) INFORMATION MEETING Presentation for FY2018 Financial Results May 31, 2019

Table of Contents Strengthening Integrated Financial Effects of Road Construction on Mie’s Economy Service Capabilities ………… 33 Effects of Road Construction on Rebuilding the Securities Portfolio ………… 34 Mie’s Economy ………… 4 Detailed Review of Cost Structure ………… 35 Outline of Financial Position Organizational/Personnel Innovation Summary of Financial Results ………… 8-16 Promoting Diversity ………… 36 FY 3/2020 Forecasts (published figures) ………… 17 Review of the Previous Medium-term Management Optimizing the Branch Network ………… 37 Plan: “Next COMPASS 140” Branch Strategy and Personnel Planning ………… 38 Achievements in Three Priority Areas ………… 19 The Medium-term Management Plan: IT & Digital Innovation ………… 39 Results for Key Numerical Targets ………… 20 Initiatives for ESG/SDGs ………… 40 Status of Operating Income from Services to Customers (published figures) ………… 21 New Medium-term Management Plan Appendix “KAI-KAKU 150 1st STAGE—Gateway to the Future" Deposits and Loans ………… 42 Long-term Vision Deposits (including negotiable certificates of deposit), Long-term Vision and Five Future Goals ………… 23 Depository Assets ………… 43 Timeline for Realizing the Vision of the Bank Loans ………… 44 within 10 Years ………… 24 Risk-monitored Loans ………… 45 Milestones Toward Realizing the Long-term Vision ………… 25 Integrated Risk Management ………… 46 Gateway to the Future Outstanding Nonperforming Loans Overview of the New Medium-term Management Plan ………… 26 by Disclosure Standard and Coverage ………… 47 Numerical Targets (General) ………… 27 Trends of Debtor Classification ………… 48 Profit Structure Innovation Hyakugo Bank’s Credit Policies ………… 49 Strengthening Loan Income ………… 28-30 Mie Prefecture’s Shares of Deposits and Loans ………… 50 Strengthening Fees and Commissions ………… 31-32 Group Companies ………… 51 2

Effects of Road Construction on Mie’s Economy

Effects of Road Construction on Mie’s Economy Yoro JCT Maibara JCT Daian IC Tokai-Kanjo Expressway Toin IC Shin-Yokkaichi Nagoya-Nishi JCT JCT Meishin Expressway Komono IC Isewangan Yokkaichi Suzuka PA Expressway JCT Shin-Meishin Smart IC Expressway Kameyama- Nishi JCT Higashi Meihan (routes running in Mie Prefecture) Expressway Kameyama JCT Kusatsu JCT Number of occurrences of traffic congestion Time required to drive on the Higashi Meihan Expressway between junctions (Yokkaichi JCT – Kameyama JCT) 45 min 1.279 times Approx. Reduction 90% of up to 25 min reduction 20 min Before opening of After opening of Before the opening of After opening of Shin-Meishin Expressway Shin Meishin Expressway Shin Meishin Expressway Shin-Meishin Expressway (2017) (expected) (with congestion on a (with no congestion) holiday) 4 * Source: Website of Central Nippon Expressway Company Ltd.

Effects of Road Construction on Mie’s Economy Development of industrial park anticipating opening of the Manufacturing industries are flourishing in Mie Prefecture Shin-Meishin Expressway <National ranking> Daian Land readjustment project Tokai-Kanjo Area: 46.6ha Value of manufactured Expressway 10 th Factory site area 2 nd Construction start in goods shipment FY2019 (1,000 m 2 or more) Nagoya- Toin (Business establishments with Shin- Nishi four employees or more) Yokkaichi Land readjustment project * Source: METI in 2016 * Source: METI, 2016 Area: 17.7ha Opening of Shin-Meishin Expressway and extension of Yokkaichi Construction start in Komono IC Tokai-Kanjo Expressway FY2019 Suzuka PA Higashi-Meihan Expressway Shin- Smart IC Mie Prefecture Meishin Chubu region Kansai region Kanto region Improved accessibility both Suzuka IC Industrial Kusatsu Kameyama eastward and westward Kameyama- Park Nishi <All Units Taken> Trends of factory construction by companies from outside Mie Prefecture (new construction and Matsusaka- expansion) shi Newly established Expanded factories factories (Unit: Number of constructions) 31 29 28 26 12 6 Arranging business meetings with local 10 6 Gestamp Hot Stamping Japan companies 23 20 19 Inabe-shi Toin-cho 18 Around 30 factories are newly established or expanded each year 2015 2016 2017 2018 ※ Prepared based on data on factory location trends by year Yamazaki Mazak Manufacturing Hamaotome 5 and area released by Mie Prefecture

Effects of Road Construction on Mie’s Economy Areas along the Tokai-Kanjo Economic benefits of extending the Tokai-Kanjo Expressway Expressway (Inabe-shi) Yoro Maibara Gifu Prefecture Daian Inabe-shi Tokai-Kanjo Expressway Nagoya-Nishi Toin Meishin Yokkaichi Komono IC Isewangan Shin- Suzuka PA Aichi Mie Yokkaichi Expressway Prefecture Smart IC Daian IC Prefecture Shin-Meishin (routes in Mie Prefecture) Higashi-Meihan Industrial park Kusatsu Kameyama Kameyama- complexes Nishi Toin IC Tokai-Kanjo Expressway Shin- Yokkaichi Number of companies that have located Number of employees at companies their factories in industrial park located in industrial parks Approx. Approx. (Unit: persons) (Unit: number of companies) 1.8 times 1.2 times 13,200 46 11,200 26 Relocation and construction of new Inabe 1996 2018 1996 2018 Branch (May 27, 2019) (Before start of (before start of 6 construction) construction)

Outline of Financial Position

Summary of Financial Results Outline of Financial Position  A decrease in gain and loss from stocks and other securities and an increase in credit costs caused net income to decline 1.7% year-on-year (Unit: million yen) Comparison with the FY 3/18 FY 3/19 Change Gross operating income (Million yen) Medium-term Management Plan 51,753 55,131 3,378 Gross operating income (1) The Medium-term 551,609 Management Plan 48,108 49,388 1,279 Interest income targets 106.8% 8,628 9,300 671 Fees and commissions 55,131 FY 3/19 (actual) (4,983) (3,556) 1,426 Other operating income Of which, gain and loss from Net operating income (2,785) 70 2,855 (2) government bonds and other bonds The Medium-term Provision of general allowance for Management Plan 7,947 (574) (574) (3) － loan losses targets 185.2% 41,216 40,987 (229) Expenses (4) 14,718 FY 3/19 (actual) 10,536 14,718 4,181 Net operating income (1) – (3) – (4) Ordinary income Core net operating (1) – (2) – (4) 13,322 14,073 751 income The Medium-term 9,124 Management Plan 4,995 304 (4,690) Non-recurring gain and loss targets 164.7% 166 1,387 1,221 (5) Of which, disposal of bad debts 15,023 FY 3/19 (actual) Reversal of allowance for doubtful 1,526 － (1,526) (6) accounts Gain and loss from stocks and other Net income 4,318 1,665 (2,652) securities The Medium-term 6,529 15,531 15,023 (508) Management Plan Ordinary income targets 164.9% (154) (177) (22) Extraordinary gain and loss 10,766 FY 3/19 (actual) 15,377 14,845 (531) Net income before income taxes 10,956 10,766 ▲ 190 Net income • Net operating income increased due mainly to increases in interest income and (1,360) 812 2,173 Credit costs (3) + (5) – (6) other operating income. • Each profit item significantly overachieved the Medium-term Management * Part of dividend income of insurance reported under “Non-recurring gain and loss” in the previous Plan’s targets. fiscal year has been reported under “Fees and commissions” and “Expenses” from the current fiscal year, and the figures for the previous fiscal year have been reclassified accordingly. 8

Interest Income Outline of Financial Position  An increase in interest on loans contributed to an increase in interest income of 2.7% year-on-year Factors behind increase/decrease in interest income (Unit: million of yen) <Head Office and all branches (both domestic and international operations departments)> FY 3/18 FY 3/19 Change (Unit: million yen) Loans Deposits Securities Interest income 48,108 49,388 1,279 Total interest income 53,153 54,044 891 + 2,150 + 137 (1,270) Loan interest 31,938 34,089 2,150 +2,744 Interest and dividends +170 20,061 18,791 (1,270) on securities (594) (33) Other 1,152 1,164 11 +262 +2 Interest expenses 5,045 4,657 (388) (1,272) Other Interest on deposits 1,137 999 (137) Other 3,908 3,657 (251) balance factor Average Yield factor Yield on loans 49,388 48,108 (head office and all branches) Deposit-loan yield margin (domestic operations departments) 1.06%  1.05% minus 0.01P Loans 1.22% Deposits 1.15% 1.05% + 1,279 million yen 1.00% 0.91% 1.17% 1.10% FY 3/18 FY 3/19 1.02% 0.98% 0.90% Historical overall profit margin ＜ Head office and all branches (including domestic 0.05% 0.05% 0.03% 0.02% and international operations departments)> 0.01% Returns on securities investments (domestic operations departments) 0.22% +0.08 P 1.03% 0.14% 1.02% 0.95% 0.94% 0.08% 0.08% 0.08% 0.93% FY 3/15 FY 3/16 FY 3/17 FY 3/18 FY 3/19 FY 3/15 FY 3/16 FY 3/17 FY 3/18 FY 3/19 9