Information Meeting The Year Ended March 2010

Transcription

1 Information Meeting The Year Ended March 21 June 11, 21 THE NANTO BANK, LTD

2 Table of Contents I. Financial Results for FY29 II. Management Strategy Financial Results for FY Summary of Profit and Loss 2 2. Summary of Core Net Business Profit 3 3. Deposits 4 4. Loans 5 5. Securities 6 6. Disposal of Non-Performing Loans 8 7. Capital Adequacy Ratio 9 Business Forecast for FY21 1 Outline of Business Area 12 Corporate Banking Policies 1. Focus on Osaka Business Area Business Development Structure 14 Retail Banking Policies 1. Business Development Structure Target on Middle and Affluent Clients Promoting Retail Transactions as a Main Bank Reinforcing Personal Loans Channel Strategy 19 <Appendix> Appendix1-13

3 I. Financial Results for FY29 II. Management Strategy 1

4 Financial Results for FY29 1. Summary of Profit and Loss ( billion) FY28 FY29 Y/Y change 1 Core gross business profit Interest income Fees and commissions Other operating income (*1) (3.) Cost of derivative financial products Expenses Personnel expenses Non-personnel expenses Taxes Core net business profit Gains/Losses on bonds (JGBs, etc.) (13.) Net transfer to general provision for possible loan losses Net business profit Non-recurrent gains/losses (3.6) (7.) Gains/Losses on stocks (17.3) (.2) Disposal of non-performing loans Retirement benefit costs Ordinary income (27.5) Extraordinary gains/losses Bad debt recovered Reversal of provision for possible loan loss Income before taxes (24.8) Net income (22.3) Credit cost (*2) *1 Except bonds (ex. Government Bonds) gains/losses *2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) (Bad debt recovered) <No.1 Core net business profit> Core net business profit rose 2 million year on year to 16.4 billion because even though real net interest income, which deducts cost of derivative financial products, and fees and commissions declined, expenses also declined.9 billion. <Breakdown of real net interest income> FY29 ( billion) FY28 Y/Y Change Net interest income [Real net interest income] 63. [59.6] 59.3 [59.3] -3.6 [-.3] Interest on loans and deposits Interest on loans Interest on deposits Interest on market sector [Real interest on market sector] 2.1 [16.8] 16.6 [16.6] -3.5 [-.1] Interest on securities Interest on fund management Interest on fund procurement [Cost of derivative financial products] [3.3] [-] [-3.3] <No.23 Net income> Net income increased 29.6 billion year on year to 7.3 billion because of an increase in core net business profit, a 32.9 billion improvement in gains/losses on securities, a 3.2 billion decline in credit costs, and other reasons. <Breakdown of gains/losses on securities and credit cost> ( billion) FY28 FY29 Y/Y Change Gains/losses on securities (3.4) Gains/Losses on bonds (JGBs, etc.) (13.) Gains/Losses on stocks (17.3) (.2) Credit cost Net transfer to general provision for possible loan losses (2.2) Disposal of non-performing loans Bad debt recovered

5 Financial Results for FY29 2. Summary of Core Net Business Profit Factor Analysis of Changes in Core Net Business Profit 1) Average balance of loans 2) Interest rate on loans 3) Average balance of deposits 4) Interest rate on deposits 5) Average balance of securities 6) Yield on securities 7) Interest on fund management, etc. 8) Interest on fund procurement, etc. Cost of derivative financial products Profit increase factor Core net business profit for FY ) Fees and commissions 1)Expenses 11)Others Core net business profit for FY Profit decrease factor ( billion) Lending/ deposit operations -.1 billion Market operations -.1 billion 1) Average balance of loans 2,751. billion (Y/Y change billion) 2) Interest rate on loans 1.85% (Y/Y change -.14%) 3) Average balance of deposits 4,126.9 billion (Y/Y change billion) 4) Interest rate on deposits.2% (Y/Y change -.7%) 5) Average balance of securities 1,481.2 billion (Y/Y change billion) 6) Yield on securities 1.21% (Y/Y change -.21%) 7) Interest on fund management, etc. Y/Y change -.8 billion 8) Interest on fund procurement, etc. Y/Y change Cost of derivative financial products Y/Y change billion billion 9) Fees from exchange transactions and debit transfer, etc. Y/Y change -.47 billion Commissions from investment trust and insurance Y/Y change +.18 billion 1)Personnel expenses Y/Y change -. billion Non-personnel expenses Y/Y change -.4 billion Taxes Y/Y change -.4 billion? Factors behind the increases included depreciation of software for the regional bank partnership 3

6 Financial Results for FY29 3. Deposits Average Balance of Deposits by Sector The average balance of deposits during FY29 rose 94. billion year on year to 4,126.9 billion since mainly personal deposits steadily increased. Average Balance of Deposits by Prefecture Deposits for all prefectures rose year on year. During FY29, the average balance of deposits for Nara Prefecture was 3,317.2 billion, which accounted for 8.4% of Nanto Bank s total deposits. Average balance ( billion) 4,5. 4,47.9 4, , Interest rate (%).5 Average balance ( billion) 4, , , , , , ,317.2 FY27 FY28 FY29. FY27 FY28 FY29 Personal Corporate Government/Banks Negotiable CD Interest rate on deposits Nara Pref. Osaka Pref. Kyoto Pref. Other Pref. 4

7 Financial Results for FY29 4. Loans Average Balance of Loans by Sector Loans outstanding for FY29 amounted to 2,751. billion, a year-onyear increase of 48.1 billion due to increases in both wholesale loans and personal loans. Average balance ( billion) 3, Interest rate (%) 2.1 Average Balance of Loans by Prefecture <Retail business loans> 1,. ( billion) , ,72.9 2, <Personal loans> 1,. ( billion) FY27 FY28 FY29 Nara Pref. Osaka Pref. Others FY27 FY28 FY Personal loans Retail business loans Wholesale loans Loans for local government Interest rate on loans FY27 FY28 FY29 Nara Pref. Osaka Pref. Others 5

8 Financial Results for FY29 5. Securities Gains/Losses on Securities Gains/losses on securities Gains/losses on bonds (Japanese government bonds, etc.) Unrealized Gains/Losses of Securities ( billion) Bonds Stocks Other Gain on disposal of bonds Gain on redemption of bonds Loss on disposal of bonds Loss on redemption of bonds Write-offs Gains/losses on stocks Gain on disposal of stocks Loss on disposal of stocks Write-offs As of Mar. 31, 28 FY28 (3.4) (13.) (17.3) As of Mar. 31, 29 FY (.2) ( billion) Y/Y Change As of Mar. 31, 21 No.2 Gains/losses on bonds 2.7 bn No.3 Gain on disposal of bonds 3.7 bn (Securitized products 2.5 bn, Japanese government bonds 1. bn, Foreign bonds.1 bn, etc.) No.5 Loss on disposal of bonds.6 bn (Japanese government bonds.5 bn, etc.) No.8 Gains/losses on stocks -.2 bn No.11 Write-offs.7 bn (Impairment loss due to 3% or more decline in value.7 bn) < Securitized products for losses on bonds > * From the end of Sep. 28, fair value of floating rate bonds is reasonably calculated based on Practical Solution on Measurement of Fair Value Financial Assets (ASBJ PITF No.25). Other Synthetic CDO CDO Capital note Total Overseas securities Government bonds Government guaranteed bonds, etc. Corporate bonds Other foreign securities Other securities (investment trust, J- REIT, investment partnership), etc. As of Mar. 31, 28 Number of stocks traded < Breakdown of other securities> As of Mar. 31, 28 Book value Book value Unrealized Gain/loss As of Mar. 31, 29 Number of stocks traded As of Mar. 31, 29 Book value Unrealized Gain/loss Book value Book value ( billion) As of Mar. 31, 21 Change from Mar ( billion) As of Mar. 31, 21 Number of stocks traded 1 1 Book value Unrealized Gain/loss Change from Mar

9 Financial Results for FY29 5. Securities-2 Balance of Outstanding Securities Asset Management Plan for FY21 ( billion) Japanese government bonds (domestic) Other domestic bonds Stocks (domestic and overseas) Local government bonds (domestic) Foreign securities (excluding stocks) Other securities Building of a sound portfolio which leads to stable return with control of risk 1,5. 1, , , Yen- Denominated Bonds Increase, based on the expectation for prolonged low-interest policy Continue to build a ladder portfolio centered around Japanese government bonds Increase investment returns through active trading, options usage, etc. 1, Japanese and U.S. Stocks Increase slightly, based on the outlook for a mild recovery Build a high quality equity portfolio for net investment purpose through adjusting the portfolio mix Build earnings through active trading of stock funds Foreign Bonds Increase slightly, based on the large spread between acquisition cost and investment returns for dollar-denominated bonds Shift from euro-denominated bonds to yen-denominated bonds Continue investment focused on safe, liquid U.S. government bonds End-Mar. 28 End-Mar. 29 End-Mar. 21 * Book value basis (after deduction of appraisal profit and loss of securities) (Year) Bond Duration Yen-denominated bonds Dollar, Euro-denominated bonds Total End-Mar. 28 End-Sep. 28 End-Mar. 29 End-Sep. 29 End-Mar. 21 7

10 Financial Results for FY29 6. Disposal of Non-Performing Loans Credit Cost Breakdown of Credit Cost ( billion) Core net business profit Credit cost Credit cost ratio (%) ( billion) Disposal of non -performing loans Net transfer to general provision for possible loan losses Bad debt recovered FY24 FY25 FY26 FY27 FY28 FY Credit Cost -1.3 FY24 FY25 FY26 FY27 FY28 FY Disposal of Non-Performing Loans by Region Credits Disclosed under the Financial Reconstruction Law // Non-performing Loans Ratio ( billion) Osaka Pref. Nara Pref. Other Pref ( billion) quasi-bankrupt debtors bankrupt debtors (%) Non-performing loans ratio Loans to bankrupt and Loans to substandard debtors Loans to potentially FY26 FY27 FY28 FY As of As of As of As of As of As of. Mar. 31, 25 Mar. 31, 26 Mar. 31, 27 Mar. 31, 28 Mar. 31, 29 Mar. 31, 21 Total

11 Financial Results for FY29 7. Capital Adequacy Ratio Capital Adequacy Ratio Capital Capital adequacy ratio ( billion) 4. Tier I Tier I ratio (%) 12. ( billion, %) As of Mar. 31, 28 As of Sep. 3, 28 As of Mar. 31, 29 As of Sep. 3, 29 As of Mar. 31, 21 Change from Mar Tier I Of which, preferred securities Tier II General provision for possible loan losses Hybrid debt capital instruments Deductions Capital Risk weighted assets 2,84.8 2,32.4 2,55.6 1, , Credit-risk assets 1,96.4 1,96.1 1,931. 1, , Amount equivalent to operational risk Capital adequacy ratio (No.7 / No.8? 1) Tier I ratio (No.1 / No.8? 1) Core Tier I ratio* Deferred tax assets Deferred tax assets ratio (No.14 / No.1? 1) As of Mar. 31, 28 As of Sep. 3, 28 As of Mar. 31, 29 As of Sep. 3, 29 As of Mar. 31, 21. * Calculated by standard method of Basle II from March 27 As for risk-weighted assets, calculated by credit risk = standard method, Operational risk = basic method Unrealized gains/losses on floating rate bonds are calculated based on theoretical price from September 28. * Core Tier I ratio = (Tier I Preferred securities Deferred tax assets) / (Risk weighted assets Deferred tax assets ) <Interest-rate risk for bank account> (As of March 31, 21) 99 percentile method Amount of interest-rate risk 25.9 billion Outlier ratio 11.2% * Core deposit model was introduced in demand deposit from the end of September 29. 9

12 Business Forecast for FY21 ( billion) FY29 FY21 Forecast Y/Y change 1 Core gross business profit Interest income Fees and commissions Other operating income (*1) Cost of derivative financial products Expenses Personnel expenses Non-personnel expenses Taxes Core net business profit Gains/Losses on bonds (JGBs, etc.) Net transfer to general provision for possible loan losses 1.7 (.3) Net business profit Non-recurrent gains/losses (7.) (7.6) Gains/Losses on stocks (.2) Disposal of non-performing loans Ordinary income Extraordinary gains/losses Bad debt recovered Income before taxes Net income Credit cost (*2) *1 Except bonds (ex. Government Bonds) gains/losses *2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) (Bad debt recovered) <No1 Core net business profit> Real net interest income is expected to increase by 1.6 billion year on year due to an increase in interest on market sector income, including interest on loans and deposits, and deducting the cost of derivative financial products. Fees and commissions are also expected to increase, by 7 million, but an anticipated 2.1 billion increase in expenses is forecast to hold core net business profit to 16.7 billion, an increase of 2 million year on year. <Breakdown of real net interest income> Net interest income [Real net interest income] ( billion) FY [59.3] FY21 Forecast 61. [6.9] <No21 Net income> Though credit costs should remain basically unchanged, net income is forecast to decline 1.2 billion, to 6. billion, due to a decline in gains on securities. <Breakdown of gains/losses on securities and credit cost> Y/Y Change +1.6 [+1.6] Interest on loans and deposits Interest on loans Interest on deposits Interest on market sector [Real interest on market sector] 16.6 [16.6] 18. [18.] +1.4 [+1.3] Interest on securities Interest on fund management Interest on fund procurement [Cost of derivative financial products] [-] [.] [+.] ( billion) FY29 FY21 Forecast Y/Y Change Gains/Losses on securities Gains/Losses on bonds (JGBs, etc.) Gains/Losses on stocks (.2) Credit cost Net transfer to general provision for possible loan losses 1.7 (.3) -2. Disposal of non-performing loans Recoveries of write-offs

13 I. Financial Results for FY29 II. Management Strategy 11

14 Outline of Business Area <Office Channels> [Branches] Nara Pref. 92, Osaka Pref. 13, Kyoto Pref. 15, Wakayama Pref. 7, Mie Pref. 3, Hyogo Pref. 1, Tokyo 1 [Housing loan centers] 8 locations; Nara, Heijo, Gakuenmae, Ikoma, Mamigaoka, Kashihara, Oji, Osaka [Everyday-life Consultation Office] 6 locations Saidaiji, Heijo, Gakuen-mae, Mamigaoka, Rinkan-eki-mae Gardenmall Kizugawa ( billion, As of Mar. 31, 21) Deposits balance Loans balance Hyogo Pref. 1.2 Around 3 minutes from central Nara to Osaka city Around 5 minutes from Kintetsu Nara to Hanshin Amagasaki in Hyogo Prefecture Osaka Pref Wakayama Pref Kyoto Pref ,299.9 Nara Pref. Kansai Science City Population: approx. 23 thousand (Planned population: 41 thousand people) Area: approx. 15, ha Academic/cultural research facilities: approx. 1 1, Mie Pref Tokyo Metropolis NANTO BANK branches and offices As of Mar. 31, 21 No. No Indicator Indicator Population Number of private enterprises (offices) Housing starts Deposits balance Loans balance Personal savings (per capita) Newspapers subscriptions (per household) Number of residents traveling abroad (per 1, people) Number of households with piano (per 1, households) Employment rate outside the Prefecture <Saving balance by prefectural capital> (Per household (with more than 2 people) basis Source: Ministry of Internal Affairs and Communications ) Nara city CY28: million (Nation s top rank) <Our strength> Well-developed office network Maintained approx. 5% of deposit and loan market share in Nara Pref. Osaka Pref. which adjoins Nara Pref. has the second largest economy in Japan. Nara Prefecture 1,44 thousand 48 thousand 8 thousand trillion trillion 5,891 3,366 thousand % National ranking National ranking <Market Characteristics> Nara prefecture =>Retail market Osaka prefecture =>Business market Source < Nanto Bank s Growth Scenario > Priority strategic areas Nanto Bank will increase business loans and personal loans and strive to expand and strengthen sales offices in areas such as Osaka, which are the bank s important strategic areas. Existing area centered on Nara prefecture Nanto Bank will make a detailed breakdown of customer segments, develop more strategic business activities, and promote asset management products and personal loans Osaka Prefecture 8,86 thousand 421 thousand thousand trillion trillion 6,4 3,891 thousand % Population Census 26 Establishment and Enterprise Census 28 Ministry of Land, Infrastructure, Transportation and Tourism Kinyu Journal Regional Financial Map 21 Kinyu Journal Regional Financial Map Bank of Japan 28 Japan Newspaper Association 27 Annual Report of Statistics on Legal Migrants 24 National Survey of Family Income and Expenditure 25 Population Census 12

15 Corporate Banking Policies -1 (Osaka Strategy New Strategic Forces in Osaka <New Offices> 1) Oct.2, established Higashi-Osaka Corporate Business Office -> Oct.22 Osaka-Higashi Branch 2) Oct.2, established Yao Corporate Business Office -> Apr.24 Yao Branch (Transfer of the Yao-Minami Office) 3) Oct.21, established Daitoh Corporate Business Office -> Dec.23 Daitoh Branch 4) Jan.23, established Osaka Corporate Business Office ->Jun.28 incorporated into Osaka-Chuo Office 5) Jun.23, established Osaka-Kita Corporate Office -> Jan.24 Osaka-Kita Branch 6) Jun.24, established Sakai Corporate Business Office -> Nov.25 Sakai Branch 7) Aug.25, established Shin-Osaka Corporate Business Office -> Aug.26 Shin-Osaka Branch 8) Oct.27, established Amagasaki Corporate Business Office -> Sep. 29 Amagasaki Branch 9) Jun.28, established Osaka-Chuo Office 1) Nov.28, established Osaka-Minami Corporate Business Office 11) established Osaka-Nishi Corporate Business Office Hyogo Prefecture Amagasaki Branch (Established: Sep. 29) Osaka-Nishi Corporate Business Office (Established: Nov. 28) Osaka Prefecture Shin-Osaka Osaka City Osaka-Kita Izumisano Osaka Sakai Osaka-Higashi Kawachi-nagano Wakayama Prefecture Newly established branches (In and after 22) Osaka-Chuo Office (Established: Jun. 28) Kyoto Daitoh Prefecture Ishikiri Yoshida Yao Osaka-Minami Corporate Business Office (Established: Nov. 28) Habikino Nara Prefecture Change in Outstanding Loans in Osaka Pref. Strengthen Relationships with Client Companies 6 ( billion) Corporate Personal loans Retail Office Local government 578. Strengthen tie-ups and relationships with client companies, established Nanto Clubs in branches located in Osaka Prefecture. Lending balance doubled within 1 years Loans composition shifted from Corporate to Retail loans Composition ratio 31% Composition ratio 71% Osaka-Kita Club Shin-Osaka Club Osaka Club Osaka-Chuo Club Clients Sakai Club Habikino Club Izumisano Club Yosida Club Yao Club FY2 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Kawachinagano Club Ishikiri Club Daitoh Club Osaka-Higashi Club 13

16 Corporate Banking Policies -2 (Business Promotion System) Business Structure Clients Channels Large Target corporations Corporate Banking Office Branches Corporate Solutions Group Scale Semi-target Branch Office Manager Corporate Business Promotion Staff Regional Promoter Business Promotion System WIN Venture Business Support Office ASIA Business Support Group Small Mass corporations /Offices Business Center Corporate Finance Support Office Solution Business Development Develop business to solve customer problems through a cooperation between branches and headquarters Business Matching Business Creation Support Business Succession/M&A Overseas Expansion Support Business Promotion Using WIN Bulletin Board Sales Proposal Real Estate Others Status Section Proposal Category All Pending In action COMPL Updated Area Y M D Y M D Annual Business <Nou-Shou-Kou (agriculture, commerce and industry) Business Fair 29> Held: December 29 Participating companies: 222 Visitors: around 2,7 Business negotiations: around 6,7 <Monozukuri (Manufacturing) Business Shanghai 29 WINTER> co-hosted by 8 local banks and 2 local governments Held: December 29 Participating companies: 139 (including our 14 clients) Visitors: around 2,4 Business negotiations: around 3,5 Updated Current Status In action In action In action In action In action In action In action Branch Code Customer Section Preferred Proposal Category Area Annual Business Title Extension of market Electric Machinery Nara and others From.3 bn to Proposal of energy management under the Act on the Rational Use of Energy.5 bn Extension of market Other Wholesale Nara and others.5 bn and up Request for sale destination of bonded wood Request for sale destination of uniforms and work clothes Extension of market Food Products Nara and others Requiring extension of market Extension of market Food Nara and others Request for a collaborating western confectionery manufacturer Expansion of supplier Other Wholesale (Food) Nara and others Request for a supplier of ingredients for confectioneries Extension of market Restaurants Nara and others Request for as sale destination (restaurants) for Japanese liquor Up to.5 bn From.1 bn to.3 bn.5 bn and up Up to.5 bn 14

17 Retail Banking Policies -1 (Business Promotion System) Sales system Ratio of demographics to the total of personal deposits and personal asset management products in Nanto Bank Client segment Strategy by segment Major financial products and channels Headquarters 1.5% 19.6% 2.6% 49.3% <Number of clients> 1,2 households <Number of clients> 12, households Very affluent (SP) 6, households The number shows target households as of March 31, 21 Affluent (SS) 27, households Middle 74, households Financial assets Large Strengthen response to advanced and diverse customer needs through cooperation between headquarters and sales offices Increase deposits and assets on deposit by expanding sales of consulting services that meet customer needs FA (Financial Advisory) Offices (2 locations) Financial products Privately-placed structured bonds Housing loan centers (8 locations) Business Promotion System WIN 132 Branches Corporate bonds, Publicly-placed structured bonds Telephone center (1 location) Assigned 2 specialized workers from Oct. 29 Mass 1,572, households Financial assets Small Expand the retail customer base with Point Circle Promote retail loans for particular life stage Foreign bonds, Lifetime medical/nursing-care insurance, Benefit life insurance Foreign-currency deposits, Investment trusts, Personal pension insurance Yen deposits/public bonds, Direct deposits (for salaries), Pension, Credit Cards, Point Circle The figure shows the number of target households (As of Mar. 31, 21) Includes households which holds financial deposits in other financial institutions) 15

18 Retail Banking Policies -2 (Target on Middle and Affluent Clients) Promotion Measures Introduction of new products of investment trusts and life insurance Target on affluent clients in cooperation with more FA specialists Nov. 29: Expanded to 2 FA offices and increased by 4 to 1 members Apr. 21: Increased by 2 to 12 staff members Increase of specialized workers Oct. 29 Allocated 1 specialized workers at sales offices Apr. 21 Increased 1 more specialized workers Improve sales skills through seminars and training courses Strengthen over-the-counter sales system of main branches and offices, etc. Sales by FA (Financial Advisory) Office Sales amount ( billion) 15. Sales of insurance Sales of FA Commission Total Sales (Nov. 28) Expansion of offices and commitment of human resources Commission ( million) H FY27 1H FY28 2H FY28 1H FY29 2H FY29 2 Lobby Upgrades for for Main Branches ATM Branches High Counter Low counter Reception Room Reception Room Consulting Booth Customer Consulting Booths appropriate for asset management consultations and other activities aimed at increasing customer interest in investing will be installed General Reception and Passbook Updating Counter A General Reception and Passbook Updating Counter that is equipped with an EQ system and passbook terminal, and acts to focus customer traffic, will be installed in lobbies, and those in charge of lobby sales will work to expand earnings opportunities and improve the efficiency of teller operations. Achievements by Specialized Worker (Asset management products, etc.*) Net sales per teller (all-branch average) (2H FT29) 61 Net sales per specialized worker (2H FT29) Net sales of asset management products per specialized worker is three times higher than that of an average teller. 165 ( million) *Investment trust + Insurance + Public bonds 2 16

19 Retail Banking Policies -3 (Promoting Retail Transaction as a Main Bank) Efforts to Expand Retail Transaction Base Promote retail transaction as a main bank through Point Circle (point system) as a non human sales tool By sending direct mails (DMs) to non-members, promote the membership program Implement cross-selling to encourage Point Circle members to make their Nanto account their main account for salary deposits, credit card payments, etc. Point Circle Overview Transaction Types Direct deposits (for salaries) 4 Automatic bill payment (5) 25 Total points 65 *Plus Cumulative deposit automatic transfer 5 Housing loan 3 Credit card (Nanto DC, Nanto VISA, or Nanto JCB) 2 Total points 12 Point Stage 1 5 or more points Stage 2 1 or more points Privileges No usage fee for convenience store ATMs.5% per annum interest benefit on auto loans, etc. No usage or after-hours fees for convenience store ATMs No after-hours fee for Nanto ATMs Free transfers between Nanto head office and branch accounts 5% off fee for early home loan repayment 1.% per annum interest benefit on auto loans, etc. Promote retail transaction as a main bank Create a mechanism to gather deposits Improve the stable operational base *Plus Deposit/loan balance of 5 million Nanto Bank s shareholder (1, shares and over) Stage 3 15 or more points Total points 165 * For customers of Stage 2 (1 or more points) or higher with time deposit or assets on deposit of 1 million or more (As of January 31 of each year) 3 1 *Plus No usage fee for early home loan repayment 2.% per annum interest benefit on card loans, etc. 5% off fee for safe deposit box, etc. Coupon for a stay at a renowned hotel (April 21 or later) 15 (Thousand people) Number of Point Circle Members Number of Point Circle members increased through DMs. Expansion of transaction base is expected As of Mar. 31, 26 As of Mar. 31, 27 Stage 1 Stage 2 Stage 3 Dec. 28 No. of DMs sent: 31, As of Mar. 31, 28 Jan. 21 No. of DMs sent: 16, As of Mar. 31, As of Mar. 31, 21 Of which, new members: 6, Change in in Transactions among New 6, Point Circle Members (From Sep. 28 to to Mar. 21) Promotion of base items Increase rate of deposit balance 8.%.% Increase rate among Point Circle members Increase rate within Nanto Bank 6.1% Cumulative deposits customers 6.8% 1.7% 1.6% Credit card customers 6.%.% Increase rate among Point Circle members Increase rate within Nanto Bank 4.2% 3.% 5.7% 4.8% Personal deposit balance Of which time deposits Improve the operational base through the active Point Circle transactions by customers. 17

20 Retail Banking Policies -4 (Reinforcing Personal Loans) Measures for Reinforcing Personal Loans Promote personal loans that balance volume and quality Strengthen business with high-quality tie-up partners Strengthen tie-ups between 8 housing loan centers and sales offices Strengthen efforts to promote refinancing Strategically allocate staff specializing in housing loan Hold holiday counseling services by housing loan centers Strengthen delinquency management by Housing Loan Administration Team Strengthen management of lower score ranking clients Composition of of New Personal Loans Actually Made by Borrower Categories New Housing Loans Actually Made ( billion) , New loan Refinancing Housing starts in Nara Pref. (Households) 5, 4, , Housing Loan Delinquency Rate 3,655 3, , H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 Lower 1% A - E 19.36% F - G Lower score ranking customers: -16 points 3.6% (Case) Housing Loan (with Nanto credit guarantees) Delinquencies (2 or more payments in arrears) (%) Delinquency Rate *Based on number of loans 6 Establishment of Housing Loan Administration Team (July 29) Delinquency rate abates Rank 8.64% 96.4% Higher % 1H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9. 18

21 Retail Banking Policies -5 (Channel Strategy) <Purpose of Satellite Bank Operations> 1) To fulfill the duties and responsibilities as a regional financial institution and deliver a certain level of financial services even to areas where no increase in population for households can be expected. 2) To secure business shares and maintain stable procurement in the region by continuing to keep staffed locations. 3) To lower costs and improve profitability of service outlets even in limited markets. Office Reorganization of Gojo region Osaka Wakayama Gojo city Former Nishiyoshino village Kyoto Former Daito village Two villages merged into Gojo city in Sept. 25, 25 Before Nanto Bank Utilize Agency System Nanto Bank Nanto Bank s agencies Nara City <Gojo branch> <Gojo branch> <Agency> Nanto Bank <Shiroto branch> Nanto Bank <Ootou sub branch> Nanto Bank Nanto Bank <Ootou agency> Nanto Bank <Shiroto agency> Nanto Bank <Agency> Nanto Bank Nanto Bank Looking ahead, the use of satellite operations will be considered regarding sales offices in areas where no increase in population for households can be expected. <Nohara branch> Nanto Bank <Total workers of 4 agencies> Workers Employees 48 Part-time workers 15 Total 63 <Nohara subbranch> Nanto Bank Total workers of 4 agencies Workers Employees 38 Agencies workers 6 Part-time workers 14 Total 58 <Cost Benefits> Savings of approx. annual 5 million per location 19

22 Appendix Profile of the Nanto Bank Progress in Implementing the Medium-Term Management Plan Industrial Production Index / Business Projection for Local Companies Business Bankruptcy and Employment Conditions Number of Population, Households, and Housing Starts in Nara Prefecture Sales of Investment Trusts and Life Insurance Various Interest Rates Smooth Financing for SMEs Ratio of Loans by Industry Shift in Classification of Debtors Promoting CSR PR for the 13th Anniversary of Nara Heijo-kyo Capital Efforts to Improve CS Appendix-1 Appendix-2 Appendix-3 Appendix-4 Appendix-5 Appendix-6 Appendix-7 Appendix-8 Appendix-9 Appendix-1 Appendix-11 Appendix-12 Appendix-13

23 Profile of the Nanto Bank 1. Founded June 1, Location of head office 16, Hashimoto-cho, Nara City 3. Capital 29,249 million 4. Number of employees 2, Number of offices 132 (Japan), 2 (representative offices in Hong Kong and Shanghai) 6. Total assets 4,557.9 billion 7. Deposits outstanding 4,46.4 billion 8. Outstanding loans 2,742.5 billion 9. Capital ratio Non-consolidated: 11.88% Consolidated: 12.12% 1. Deposit and loan market share in Nara Prefecture (As of the end of March 21) (Head Office) <Deposit Market Share in Nara Pref.> Trust 4.1% PB 4.1% Shinkin 16.1% City Bank 27.6% Nanto Bank 47.9% <Loan Market Share in Nara Pref.> Shinkin 13.5% City Bank 29.7% PB 7.1% Trust.1% Nanto Bank 49.4% Appendix-1

24 Progress in Implementing the Medium-Term Management Plan Medium-Term Management Plan More Value Nanto Strive to expand the business foundation and improve risk management with the goal of further increasing corporate value April 28 March 211 Basic Policies (summary) Numerical Targets Item FY27 (Results) 1. Strengthen profitability and improve risk management 2. Invigorate employees and the organization 3. Invigorate local economies 4. Promote CSR (Results) More Value NANTO FY 28 FY 29 FY 21 Compared Compared Compared with midterm MP term MP term (Results) with mid- (Projection) with mid- MP 1. Core net business profit 19.3 bn 16.1 bn bn 16.4 bn bn 16.7 bn bn 2. Net income 5. bn bn bn 7.3 bn bn 6. bn bn 3. Outstanding loans 2.69 tn 2.86 tn.7 tn 2.74 tn -.15 tn 2.8 tn -.19 tn Priority Strategies I. Strengthen the sales capabilities of regions and divisions II. Enhance and upgrade internal control systems III. Strengthen human resource management Management indicators Profitability 1. ROE 2.7% % +.1% 3.31% -2.9% Efficiency 2. OHR 7.83% 75.67% 1.22% 74.97% 5.3% 75.45% 9.2% 3. Capital ratio 1.53% 9.82% -.93% 11.88% 1.18% 11.21%.54% Soundness 4. Bad debt ratio 3.86% 3.32% -.32% 3.12%.7% 3.1%.29% Interest rate scenario (%) FY29 FY21 As of Sep. 29 As of Mar. 31, 21 As of Sep. 3, 21 As of Mar. 31, 211 (Results) Compared with Mid-term MP (Results) Compared with Mid-term MP (Estimate) Compared with Mid-term MP (Estimate) Compared with Mid-term MP Overnight unsecured call rate Japan Short-term prime month TIBOR year JGB U.S. 3-month LIBOR US 5-year bond EU 3-month LIBOR German 5-year bond IV. Promote CSR All measures Appendix-2

25 Industrial Production Index / Business Projection for Local Companies Industrial Production Index Business projection for local companies 14. (Year 25 =1) 6. (DI) Improve Downturn DI Production index - National Production index - Nara Pref. Production index -Kinki Region Inventory index - National Inventory index - Nara Pref. Inventory index - Kinki Region (Projection) Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 21 Jan Feb [Source: Ministry of Economy, Trade and Industry, Kansai Bureau of Economy, Trade and Industry] [Source: Nanto Economic Research Institute] Appendix-3

26 Business Bankruptcy and Employment Conditions Number of Bankruptcies in Nara Pref. Effective Ratio of Job Offers to Applicants ( billion) 1. Total debts Number of bankruptcies (Cases) National average Nara Pref Kinki region Number of Bankruptcies in Osaka Pref. ( billion) Total debts 1,5 Number of bankruptcies 1,814 1,951 (Cases) 2, ,222. 1,228 1, Mar. 29 Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. 21 Feb. Mar [Source: Health, Labor and Welfare Ministry ] Source: TEIKOKU DATABANK] Appendix-4

27 Number of Population, Households, and Housing Starts in Nara Prefecture As of Mar. 21, population and the number of households in Nara prefecture was 1.39 million and 56, households, respectively. Due to the trend toward nuclear families, the number of households has been on a increasing trend. The number of housing starts for Nara Prefecture during FY29 was 6,163, declined from FY28. 1,5 (Thousand of people) Nara Prefecture: Population and Households Population Households (Thousand households) The number of Housing Starts in Nara Pref. 6, (Unit) Housing starts Y/Y growth rate (%) ,474 3,655 3,2 3,143 1,398 1H FY8 2H FY8 1H FY9 2H FY9-6. The number of Housing Starts in Osaka Pref. 5, (Unit) Housing starts Y/Y growth rate +1. (%) ,2 25,631 26,48 32, , H FY8 2H FY8 1H FY9 2H FY9-5. Appendix-5

28 Sales of Investment Trusts and Life Insurance Changes in Total Sales of Investment Trusts and Related Commissions Sales ( billion) Sales of investment trusts 14.3 Commissions (sales charges + trust fees) H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 1H FY1 2H FY1 (Estimate) (Estimate) Commission ( billion) 1.6 [1.18] [3.] [1.31] [35.]. Changes in Total Sales of Life Insurances and Related Commissions Sales ( billion) [.93] [.93] Sales of life insurance Commissions Commission ( billion) [3.] [3.] 1H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 1H FY1 2H FY1 (Estimate) Estimate). Appendix-6

29 Various Interest Rates Interest on Deposit and Loan Yield on Securities 2.5 Interest on loans Interest on deposits Interest margin between deposits and loans 4. Yield on securities Domestic Foreign FY25 FY26 FY27 FY28 FY29. FY25 FY26 FY27 FY28 FY29 <Interest on Deposit and Loan> (%: half-year basis) 1H FY5 2H FY5 1H FY6 2H FY6 1H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 Interest on loans Interest on deposits Interest margin between deposits and loans <Yield on Securities> (%: half-year basis) 1H FY5 2H FY5 1H FY6 2H FY6 1H FY7 2H FY7 1H FY8 2H FY8 1H FY9 2H FY9 Yield on securities Domestic Foreign Appendix-7

30 Smooth Financing for Small and Medium Enterprises (SMEs) Based on the idea that our mission is to smoothly respond to local financing needs and fully live up to the role of a financial intermediary, it has long been our practice to flexibly respond to payment extension and other requests based on the circumstances of individual clients. With the implementation of the Act on Facilitating Financing for SMEs, we will take steps to make it easier for clients to seek financing advice. Bank Operations Flow Chart Clients Nanto Bank Basic Policy on Facilitating Financing Seek advice, Submit application for new loan, Modify loan terms Branch Marketing Division Board of Corporate Auditors Board of Directors, etc. Board of Directors Managing Directors Committee Director in Charge of Financing Facilitation Management Disclose and report according to the Act on Facilitating Financing for SMEs SMEs, etc. Housing loan customers, etc. Smoothly provide necessary funds, Modify loan terms, Give adequate and full explanatory consulting service Lodge complaint Seek advice Seek advice, Submit application for new loan, Modify loan terms Smoothly provide necessary funds, Modify loan terms, Give adequate and full explanatory advice Financing Facilitation Manager (Marketing Div. Manager, Branch Manager) Staff in Charge of Financing Facilitation (Marketing Div. and Branch employees) Housing loan center Daily Living Advice Center Instruct Support Report Consult Headquarters Credit Analysis Division Financing Facilitation Management Division Financing Facilitation Management Chief Administrator (Credit Division Manager) Review applications for new loans and loan modifications Reports on financing facilitation status Financing Facilitation Promotion Team Leader Credit Analysis Division Manager Sub-Leader Credit Analysis Division Deputy Manager Staff in charge of SMEs Staff Staff in charge of housing loan customers Duties Monitor advice and applications Support sales offices Toll-free phone service Corporate Finance Support Office Give management advice and guidance Support business improvement and improvement planning Information Sharing and Cooperation Improve systems for providing information to customers Operations Control Division Financing Facilitation Management Deputy Administrator (Operations Control Division Manager) Control of management system for customer protection, etc. Compliance Management Group Osaka Regional HQs Operations Division Personnel Division General Planning Division Improve personnel evaluation system Instruction on financing facilitation management method, etc. Improve customer support management system Complaint and advice hotline Toll-free phone service Evaluate business performance and improve systems Cooperate Cooperate Credit Guarantee Association Japan Finance Corporation Enterprise Turnaround Initiative Corporation of Japan Japan Housing Finance Agency Other financial institutions etc. Nanto Credit Guarantee Co., Ltd. Nanto Lease Co., Ltd. etc. Internal Audit Internal Audit Internal Audit Division Conduct internal audits Appendix-8

31 Ratio of Loans by Industry Loans Outstanding by Industry Ratio of Loans by Industry ( billion) End of Sep. End of Mar. Change from end of Sep. 29 Total lending volume 2, , Manufacturing Agriculture and forestry Fishery Mining, stone and gravel quarrying Construction Electric, gas, heat supply and water utility Information communication Transportation and postal service Wholesaling and retailing Finance and insurance Real estate and leasing Services Local public entity Others (%) End of Sep. 29 End of Mar. 21 Total lending volume Change from end of Sep. 29 Manufacturing Agriculture and forestry Fishery Mining, stone and gravel quarrying Construction Electric, gas, heat supply and water utility Information communication Transportation and postal service Wholesaling and retailing Finance and insurance Real estate and leasing Services Local public entity Others Appendix-9

32 Shift in Classification of Debtors <End of March 21> Total credit (loans): 2,768.8 billion (decrease of billion from Mar. 29) Loans to normal debtors: 2,462.1 billion (decrease of billion from Mar. 29) Loans to debtors requiring caution and Substandard debtors: billion (increase of 19.8 billion from Mar. 29) Loans to potentially bankrupt debtors and lower: 67.6 billion (decrease of 2.7 billion from Mar. 29) ( billion) (Subject: Credit related claimable assets such as loans) Balance (As of March 31, 29) Normal assets Assets requiring caution As of March 31, 21 Substandard assets Potentially bankrupt assets Bankrupt and effectively bankrupt assets For collection or write-offs a b c d e F g 1 Normal debtors 2,69. 2, Debtors requiring caution Substandard debtors Potentially bankrupt debtors Bankrupt and effectively bankrupt debtors New debtors Total 2, , Loans to normal debtors: Decrease of billion from March 29 Loans to debtors requiring caution and Substandard debtors Increase of 19.8 billion from March 29 Loans to potentially bankrupt debtors or below Decrease of 2.7 billion from March 29 Loans to potentially bankrupt debtors or below For collection or write-offs 2.5 billion Appendix-1

33 Promoting CSR Promote CSR (Corporate Social Responsibility) Promote environmental preservation activities Organize CSR Promote social contribution activities Expand disclosure of CSR information Environmental Preservation Activities Conduct a Cool Biz (casual day) campaign at all offices Digitalize internal documents Grow trees and cut grass in Asuka-village Support the Yoshino Heart Project incl. PR campaign at convenience stores in Tokyo metropolitan area for the 13th Anniversary of Nara Heijo-kyo Capital, and making use of products made from waste Yoshino Japanese cedar and cypress lumber Establish a recycling center to recycle waste paper Social Contribution Activities Sento-kun ad chopsticks Actively support the 13th Anniversary of the Nara Heijo-kyo Capital (from Jan. 21) Dispatch Nanto Bank retirees to work for the special public showing of Nara Yamatoji treasures and the Hibutsu (Hidden Buddha) Work with the Yoshino Cherry Tree Preservation Group Spread monetary economy education in local communities Overview of Yoshino Heart Project Participate in product design, PR programs and tree-planting activities Designers, Designers, musicians, musicians, professional professional athletes, athletes, etc. etc. CSR + PR image strategy Back up and support Participate Commerce and Commerce and industry societies, industry societies, various associations, various associations, etc. etc. Sponsoring Sponsoring and and participating participating companies companies Sponsor Revitalize the whole area Purchase Use Project Portal function in Yoshino area NPO NPO Yoshino Heart Lumber-related Lumber-related businesses businesses Aware of the importance of participating in forest preservation and CO2 reduction activities Consumers Consumers Companies in Yoshino area widely corporate Foresters Foresters Create demand Corporate and collaborate Seek marketing product planning sponsors Heart Heart Tree Tree Project Project Contribute a portion of profits to tree-planting and thinning activities NANTO BANK Public-private sectors cooperate Nara Nara Prefecture Prefecture and and other other local local government government entities entities Monetary economy class at local elementary school Appendix-11

34 PR for the 13th Anniversary of Nara Heijo-kyo Capital Period: January 1, 21 to December 31, 21 Locations: (Heijo Palace Site: April 24 to November 7) Heijo Palace Site and other locations in Nara Prefecture and the other Kansai area Projects: 1) Heijo Palace Site projects 2) Projects within Nara Prefecture 3) Related wide-area projects 4) Lead-up projects Project Scale Expected attendance: Total: Approx. 12 to 13 million Total budget: Heijo Palace Site: Approx. 2.5 million Approx. 1. billion Nanto Bank TV CMs 21 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Heijo Palace Site projects Flower and Greenery Fair Spring Light and Candle Fair Summer Heijo-kyo Fair Fall Throughout the year : From April 24 to November 7, 21 Projects within Nara Pref. Public Showing of Treasures of Shrines and Temples and the Hibutsu (Hidden Buddha) Local and widearea events History and art museums Related widearea events Opening Various locations in Nara Prefecture and around Heijo Palace January 1 to December 31 Winter Opening Spring Opening Fall Opening Ikaruga and Shigisan Areas Asuka and Fujiwara Areas Yoshino Area Katsuragi Area Yamato Kogen Plains and Uda Areas Greening Fair Walking, Marathon, and Cycling Events Special Exhibitions Convention and Forum Joint events with other localities in Japan and abroad Appendix-12

35 Efforts to Improve CS Return to the origin of the service industry, strengthen efforts to improve customer satisfaction, and implement measures to improve CS, centered on the CS Improvement Committee and the CS Improvement Working Group CS Improvement Approach Customers Customer proposal Customer survey Customer opinions (complaints, requests, needs, etc.) Environmental and system changes, etc. Collect/ Analyze Analyze Nanto CS Improvement Committee Report Propose/ Advise CS Improvement Working Group - Consider concrete measures for CS improvement Implement measures Instruct Teach Headquarters/ sales offices Provide quality products, Improve services, etc. Customers CS Declaration We will greet customers with a smile and strive to provide customers with thoughtful service. We will endeavor to provide better products and services that satisfy customers. We will work to provide accurate and quick responses and easy-tounderstand, precise explanations. All-office Smile Campaign With the CS Declaration, an All-office Smile Campaign is held in which employees working at counters and visiting customers provide service with a smile, the foundation of the service industry. (from October 1 through December 3, 29) CS Training Based on items such as requests from customers, staff receive thorough training to deepen their understanding of the significance and importance of CS and about what their role should be in improving CS. Appendix-13

36 In this material, we refer to the future performance of the bank. However, these descriptions do not guarantee the performance mentioned in the material and include risks and uncertainties. Please be aware that the future performance mentioned in this material may change from the targets as a result of, for example, changes in the operating environment. [Inquiries:] The NANTO BANK, LTD. General Planning Division IR Group TEL: FAX: ir-souki@nantobank.co.jp URL: As one of Nanto Bank s environmental efforts, we support Yoshino Heart Project and Kizukai Activities.