Information Meeting The Year Ended March 2012

Transcription

1 Information Meeting The Year Ended March 212 June 8, 212 THE NANTO BANK, LTD

2 Table of Contents Ⅰ. Financial Results for FY211 Ⅱ. Management Strategy Financial Results for FY Profit and Loss 2 2. Core Net Business Profit 3 3. Deposits 4 4. Loans 5 5. Share in Nara Prefecture 6 6. Securities 7 7. Disposal of Non-Performing Loans 8 8. Capital Adequacy Ratio 9 Business Forecast for FY212 1 Business Strategy for Osaka 12 Sales System for Retail Customers 13 Assets in Custody 14 Personal Loan 15 Promoting Relationship-based Local Banking 16 Implementation of the Solution Business Approach 17 Overseas Business Support 18 Focus on Growth Sectors 19 Effective Use of Corporate Responses 2 <Appendix> Appendix 1-1

3 表紙 Ⅰ I. Financial Results for FY211 II. Management Strategy 1

4 Financial Results for FY Profit and Loss FY21 FY211 Y/Y change 1 Core gross business profit Interest income Fees and commissions Other operating income (*1) (.2) (.2) -. 5 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) Net business profit Non-recurrent gains/losses (7.6) (5.3) Gains/Losses on stocks (1.) (4.2) Disposal of non-performing loans Reversal of bad debt reserve Bad debt recovered Ordinary income Extraordinary gains/losses 1. (.4) Bad debt recovered Loss on adjustment for changes of accounting standard for asset retirement obligations Impairment loss Income before taxes Income taxes Net income Credit cost (*2) *1 Except gains/losses on bonds (JGBs, etc.) *2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) (Reversal of reserves) (Bad debt recovered) <No.1 Core net business profit> Despite lower Expenses, declines in Interest income and Fees and commissions caused Core net business profit to decline by 2.6 billion year on year to 11.3 billion. <Breakdown of Interest income> FY21 FY211 Y/Y change Interest income Interest on loans and deposits Interest on loans Interest on deposits Interest on market sector Interest on securities Interest on fund management Interest on fund procurement <No.26 Net income> Even with an improvement in Credit cost, factors like lower Gains on securities caused Net income to decline by 3.2 billion year on year to 3.3 billion. <Breakdown of Gains/losses on securities and credit cost> FY21 FY211 Y/Y change Gains/Losses on securities 2.3 (1.) -3.3 Gains/Losses on bonds (JGBs, etc.) Gains/Losses on stocks (1.) (4.2) -3.1 Credit cost Net transfer to general provision for possible loan losses (1.7) +1.7 Disposal of non-performing loans Reversal of bad debt reserve Reversal of general provision for possible loan losses Reversal of specific provision for loan losses (2.2) -2.2 Bad debt recovered

5 Financial Results FY Core Net Business Profit Analysis of Change Factors in Core Net Business Profit Profit increase factor Core net business profit for FY21 1) Average balance of loans 2) Interest rate on loans 3) Average balance of deposits 4) Interest rate on deposits.14 5) Average balance of securities 6) Yield on securities 7) Interest on fund management 8) Interest on fund procurement 9) Fees and commissions 1) Others 11) Expenses Core net business profit for FY Profit decrease factor Lending/ deposit operations billion Market operations -.6 billion 1) Average balance of loans 2,714.5 billion (Y/Y change billion) 2) Interest rate on loans 1.6% (Y/Y change -.12pp) 3) Average balance of deposits 4,39.9 billion (Y/Y change billion) 4) Interest rate on deposits.1%(y/y change -.3pp) 5) Average balance of securities 1,688.4 billion (Y/Y change billion) 6) Yield on securities 1.6% (Y/Y change -.1pp) 7) Interest on fund management Y/Y change 8) Interest on fund procurement Y/Y change 9) Commissions on investment trust Y/Y change Commissions on life insurance Y/Y change +. billion -. billion +.8 billion -.4 billion 11) Expenses -.12 billion Personnel expenses Y/Y change +.59 billion Non-personnel expenses Y/Y change -.6 billion Taxes Y/Y change -.11 billion 3

6 Financial Results for FY Deposits Balance of Deposits by Sector The deposit balance as of March 31, 212 stood at 4,289.8 billion, up billion year on year due mainly to a steady rise in Personal deposits. 4,5. 4, , , Balance of Deposits by Prefecture Deposits for all prefectures rose year on year. Deposit balance for Nara Prefecture was 3,472.2 billion, which accounted for 8.9% of Nanto Bank s total as of March 31, ,5. 4, , , , , , , ,354. 3,472.2 March 31, 21 March 31, 211 March 31, 212 March 31, 21 March 31, 211 March 31, 212 Personal Corporate Government/Banks Nara Pref. Osaka Pref. Kyoto Pref. Others *Osaka Pref. includes Amagasaki branch in Hyogo Pref.. 4

7 Financial Results for FY Loans Balance of Loans by Sector Driven by steady increases mainly in Retail business loans and Personal loans, the balance of loans for FY211 rose by 76.1 billion year on year to 2,796.4billion. Balance of Loans by Prefecture With outstanding loans of 1,475.5 billion, Nara Prefecture accounted for 52% of total loans outstanding. At 6.9 billion, Osaka Prefecture accounted for 21% of the total. 3,. 2, ,72.3 2, ,. 2, ,72.3 2, ,56.1 1, , March 31, 21 March 31, 211 March 31, 212 March 31, 21 March 31, 211 March 31, 212 Personal loans Retail business loans Wholesale loans Loans for local governments Nara Pref. Osaka Pref. Others *Osaka Pref. includes Amagasaki branch in Hyogo Pref.. 5

8 Financial Results for FY211 5 Share in Nara Prefecture Share in Loans Share in Deposits Nanto Bank Megabank RB Shinkin Trust Nanto Bank Megabank RB Shinkin Trust Increased.43 pp YoY Mar Increased.34 pp YoY Mar Mar Mar Mar Mar % 1.%.% 1.% * commercial banks, trust banks, and shinkin banks in Nara Prefecture. (excluding agricultural cooperatives, Japan post bank) 6

9 Financial Results for FY Securities Balance of Outstanding Securities Unrealized Gains/Losses of Securities 2,. Japanese government bonds (domestic) Other domestic bonds Stocks (domestic and overseas) Local government bonds (domestic) Foreign securities (excluding stocks) Other securities 1, Bonds Stocks Others , , , , , (Year) Bond Duration Mar. 3, Yen-denominated bonds Dollar, Euro-denominated bonds Total Sep. 3, Sep. 3, Sep. 3, * Book value basis (after deduction of unrealized gains/losses of securities) 7

10 Financial Results FY Disposal of Non-Performing Loans Credit Cost Breakdown of Credit Cost (%).5 2. Disposable of non-performing loans Bad debt recovered Net transfer to general provision for possible loan losses Credit cost Credit cost ratio *Credit cost ratio = Credit cost / Average balance of loans x 1 Disposal of Non-Performing Loans by Region FY27 FY28 FY29 FY21 FY211 FY212 Forecast Total of credit cost FY27 FY28 FY29 FY21 FY211 FY212 Forecast Loans Based on the Financial Reconstruction Law // Non-performing Loans Ratio Nara Pref. Osaka Pref. Others Bankrupt or de facto bankrupt Special attention Doubtful Non-performing loans ratio (%) FY27 FY28 FY29 FY21 FY

11 Financial Results FY Capital Adequacy Ratio Capital Adequacy Ratio Capital Tier I Capital adequacy ratio Tier I ratio (%) 12. ( billion, %) 21 Sep. 3, Sep. 3, Change from 211 Change from Sep. 3, Tier I (Core capital) Preferred securities Tier II (supplementary capital) General provision for possible loan losses , Hybrid debt capital instruments Deductions Capital Risk weighted assets 1, , , ,84. 1, Loan risk 1,47.4 1,442. 1, , , Stock risk Capital adequacy ratio (No.7 / No.8 1) Tier I ratio (No.1 / No.8 1) Sep. 3, Sep. 3, * Calculated by standard method of Basle II from the end of March 27. As for risk-weighted assets, calculated by credit risk = standard approach, Operational risk = basic indicator approach. Unrealized gains/losses on floating rate government bonds are calculated based on theoretical price from the first half of FY28.. <Interest-rate risk for bank account> (As of March 31, 212) 99 percentile method Amount of interest-rate risk 1.2billion Outlier ratio.6% 9

12 Business Forecast for FY212 FY211 FY212 Forecast Y/Y change 1 Core gross business profit Interest income Fees and commissions Other operating income (*1) (.2) 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 Net business profit Non-recurrent gains/losses (5.3) (3.6) Gains/Losses on stocks (4.2) Disposal of non-performing loans Bad debt recovered Reversal of bad debt reserve Ordinary income Extraordinary gains/losses (.4) (.) Income before taxes Income taxes Net income Credit cost (*2) *1 Except gains/losses on bonds (JGBs, etc.) *2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) (Reversal of reserves) (Bad debt recovered) <No.1 Core net business profit> Interest income is expected to decline by 5 million year on year, however with anticipated higher fees and commissions (by 7 million) and lower expenses (by 4 million), core net business profit is expected to increase by 1. billion year on year to 12.4 billion. <Breakdown of real net interest income> FY212 FY211 Forecast Y/Y change Interest income Interest on loans and deposits Interest on loans Interest on deposits Interest on market sector Interest on securities Interest on fund management Interest on fund procurement <No. 23 Net income> Despite higher credit costs, better gains/losses on securities and other factors are expected to increase net income by 1.7 billion year on year to 5.1 billion. <Breakdown of gains/losses on securities and credit cost> FY212 FY211 Forecast Y/Y change Gains/Losses on securities (1.) +1. Gains/Losses on bonds (JGBs, etc.) Gains/Losses on stocks (4.2) +4.2 Credit cost Net transfer to general provision for possible loan losses Disposal of non-performing loans Reversal of bad debt reserve Bad debt recovered

13 I. Financial Results for FY211 II. Management Strategy 11

14 Business Strategy for Osaka Nara Prefecture Osaka Prefecture No. Indicator National National Source ranking ranking 1 Population 1,399 thou 29 8,862 thou 3 21 Population Census Number of private enterprises 2 (offices) 5 thou thou 2 29 Economic Census by METI 3 Housing starts 6 thou 3 54 thou 4 29 Ministry of Land, Infrastructure, Transportation and Tourism 4 Deposits balance 1.6 trillion trillion 2 Kinyu Journal Regional Financial Map Loan balance 3.1 trillion trillion 2 Kinyu Journal Regional Financial Map Personal savings (per capita) 3,5 thou 4 4,33 thou 2 21 Bank of Japan Newspapers subscriptions 21 Japan Newspaper (per household) Association Number of residents traveling 29 Annual Report of Statistics Abroad (per 1, people) on Legal Migrants Household consumption 21 National Survey of Family expenditure (thousand yen) Income and Expenditure Employment rate outside the 1 prefecture Population Census 65. Nanto Bank s Lending Performance in in Osaka Prefecture Share 1.64% as of % Total Lending Balance Nanto Bank s share in Osaka % % % 1.64% Retail Business Lending Balance Balance increased centered on retail business Establish the Geographically Broad-based Business Foundation, which will Focus on Business Loans, by Enhancing the Office Network Mainly in Osaka Expansion of Personal Banking Business Focused on Assets in Custody and Personal Loans, and Maintaining or Increasing the Loan Market Share Including Business Loans, Mainly in Nara Prefecture; the Potential Markets 5. Sep. 3, Sep. 3, % *Lending balance in Osaka : Megabank, RB, Second Association of RB, Trust bank 37. Sep. 3, Sep. 3, Branches in Osaka Area <New Strategic Forces in in Osaka> Osaka Pref. Head Office Around 15 minutes from Nara by train. Nara Pref. 1) Oct. 2 Higashiosaka Corporate Business Office 2) Oct. 2 Yao Corporate Business Office 3) Oct. 21 Daitoh Corporate Business Office 4) Jan. 23Osaka Corporate Business Office 5) Jun. 23Osaka-Kita Corporate Business Office 6) Jun. 24Sakai Corporate Business Office 7) Aug. 25 Shin-Osaka Corporate Business Office 8) Feb. 26 Osaka Housing Loan Center 9) Oct. 27 Amagasaki Corporate Business Office 1) Jun. 28 Osaka-Chuo Office 11) Nov. 28 Osaka-Minami Corporate Business Office 12) Nov. 28 Osaka-Nishi Corporate Business Office 13) Sep. 29 Amagasaki Branch Two new branches (Eiwa Branch and Wakaeiwata Branch) scheduled to open in FY212/1H 12

15 Sales System for Retail Customers Sales System CUSTOMERS NANTO BANK Retail Banking Type Very affluent Affluent (Including clients with real-estate loans) Middle Mass Housing related company Needs Inheritance and business succession consultation Various asset management needs Asset formation tailored to different lifestyles Various functional services Offer regional information Build up a win-win relationship Career-oriented staff Branch Manager/Officers Corporate Business Promotion Staff Regional Promoter Branch Manager/Officers Regional Promoter Regional Promoter Branch Channels Specialized Specific staff Officers Retail sales staff Counter Officer Front office staff Back office staff Marketing Support System WIN Headquarters Business Channels L-PLAZA Financial Advisory (FA) Offices Call center <Sales Network> L-PLAZA Branches Hyogo Pref. Osaka Pref. Kyoto Pref. L-PLAZA Housing Loan Centers and Life Consultation Office have been integrated as L-PLAZAs since April 211 to strengthen the consultation services for personal loans and assets in custody (open also on Saturdays and Sundays). 7 locations in Nara Prefecture and 4 locations outside of Nara Prefecture Retail Sales Staff The retail sales staff currently includes 8 female bank clerks with significant experience and financial knowledge to provide attentive services. Financial Advisory (FA) Offices Wakayama Pref. Nara Pref. Financial Advisory Offices currently includes 18 bank clerks with highly specialized financial knowledge (three locations in Nara Prefecture). They respond to the various needs of customers by providing consultation for asset management, inheritance, business succession and effective use of real estate. 13

16 Assets in Custody Sales of Investment Trust and Life Insurance, etc. Sales by FA Office Sales of securities Sales of insurance Sales of investment trust Other Life insurance Investment trusts Securities Average number of FA specialists (People) H FY21 2H FY21 1H FY211 2H FY211 1H FY212 (Plan) 2H FY212 (Plan) FY28 FY29 FY21 FY211 FY212 Plan 5 Commission of Investment Trust and Life Insurance, etc. Sales by Specialized Staff Sales commission of securities Sales commission of insurance Sales commission of investment trust Investment trusts Life insurance Public bonds Time deposit Number of specialized staff (People) H FY21 2H FY21 1H FY211 2H FY211 1H FY212 (Plan) H FY212 (Plan) H FY29 1H FY21 2H FY21 1H FY211 2H FY211 14

17 Personal Loan Personal Loan Balance by Prefecture 1,. Nara Pref. Osaka Pref. (incl. Amagasaki branch) Others Increase of 26.5 billion from Housing Loans Actually Made at L-PLAZAs 6. In Nara Pref Others L-PLAZAs Since April.211~ (Plan) 1H FY21 2H FY21 1H FY211 2H FY211 *Osaka Pref. includes Amagasaki branch in Hyogo Pref. 1% Low Composition of Housing Loans Actually Made by Rating System A~C D~E F~G 19.36% 2.72% 45.76% Housing Loan Delinquency 6 (Cases) Housing Loan (with Nanto credit guarantees) Delinquencies (2 or more payments in arrears) / Delinquency Rate *Based on number of loans (%) Ranking 5.91% Rank A-C increased approx. 22 points 51.52% High 29.73% % 1H FY27 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 2H FY21 1H FY211 2H FY211 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 2H FY21 1H FY211 2H FY

18 Promoting Relationship-based Local Banking Further promotion of relationship-based local banking is carried out under the current medium-term management plan Best Value Nanto, which incorporates relationship-based local banking efforts as part of steps to implement key strategies. Nanto Bank s basic strategy is to pursue financial services tailored to our customers Support by Headquarters Business Channels Corporate Solution ASIA Business Support Group Business succession support Business matching Venture Business Support Office Venture business loans Investment through investment funds IPO support, etc. M&A advisory services Support for growth sectors, etc. Customers Provision of information on entering overseas markets Help in in local fund procurement Conduct of overseas observation tours Overseas business matching, etc. Corporate Business Office Provision of business loans Solutions-oriented business initiatives Corporate Finance Support Office Support for making the turnaround plans Effective use of Business Support Council for SME Finance support in in cooperation with public organizations, etc. Tourism Planning Office Planning/proposals making the most of tourist resources Seminars on tourism promotion Administration of a local tourism portal site 16

19 Implementation of the Solution Business Approach Business Matching Business Matching Navigator Business Fair Intermediary function for effective, efficient matchmaking Client-A Branch-A Accumulation of data on potential suitor companies Collection of information on companies and their needs < Nanto Agricultural,Industrial,Commercial Business Fair 211 > December companies/organizations of participants Approx. 3,5 visitors 6 negotiation cases <Consumer Monitor Fair> Department stores/ Supermarkets Manufacturing B2B Network Value-creation Div. Development Navigator WIN BB JBA s e-business market Industrygovernmentacademia collaboration Branch-B Client-B Other matching sites <Number of Business Succession and M&A Support Cases> <Major Solutions Provided in in Cooperation with Business Partners> 25 (Company) Business succession 148 M&A Company eguarantee. Inc. Tokio Marine & Nichido Fire Insurance Co., Ltd. Sekisui House, Ltd., Daiwa House Industry Co., Ltd., PanaHome Corporation Service Accounts receivable guarantee service Outsourcing of defined contribution pension administration including acceptance of applications Construction of rental apartments, etc. Rating and Investment Information, Inc. Middle-ranking companies rating service Mitsubishi UFJ Lease & Finance Company Limited, Century Tokyo Leasing Corporation Overseas leases Asahi Calpis Beverage Co., Ltd. Introduction of companies wishing to install vending machines Secom. Co., Ltd. Security services FY21 FY211 FY212 (Plan) Cardinal Co., Ltd. Japan Business Management Inc., SOGO MEDICAL CO., LTD. Introduction of companies wishing to purchase business application software Medical and nursing consulting services General Electric Japan Ltd., M-Cast inc. Used medical equipment purchase and resale services 17

20 Overseas Business Support <Overseas Support System> Customers Value-creation Division ASIA Business Support Group Representative offices in Shanghai and Hong Kong Bangkok Desk Network in Asia Support Nanto Economic Research Institute Shanghai Rep. Office Hong Kong Rep. Office Alliance Alliance Alliance Alliance Tokio Marine&Nichido Fire Insurance Co.,ltd. Mizuho Corporate Bank, Ltd. Five foreign banks Mitsubishi UFJ Lease & Finance Co., Ltd. Century Tokyo Leasing Corporation Sumitomo Mitsui Finance and Leasing Co., Ltd. Alliance <Partnership with five foreign banks> (Areas covered )) Bangkok Bank Industrial and Commercial Bank of of China Limited Bank of of China ANZ Bank Standard Chartered Bank China China Vietnam Whole Asia <Number of Customer Overseas Locations/Cases of Support by the Bank> (Locations) 7 2 <Major Support Services Provided by the Bank> Provision of of information on entering overseas markets <Overseas business matching>(fy212) Overseas business support and advise Hong Kong/ Southern China Japanese Company Business Forum (May) Overseas strategy seminars A business seminar and forum held jointly with Senshu Ikeda Bank (July) Help in in local fund procurement Conduct of of overseas observation tours Overseas business matching ( million) 6 <Coupon Swap Commissions> Thai China Europe etc Asia (excl. China) Number of support cases H FY21 2H FY21 1H FY211 2H FY (Cases) 4 2 Japan-China Monozukuri (manufacturing) Business 212 (September) Japan-China Monozukuri (manufacturing) Business 212 (December) FY29 FY21 FY

21 Focus on Growth Sectors Focusing on the growing sectors,such as environment,medical and long-term care,nanto Bank s branches and headquarters are working together to aggressively support customers. < Loan Balance in the Medical and Long-Term Care Sector> <Loan Balance in the Environmental Sector> 5. Hospital and clinics 36.1 Social security and welfare services and nursing homes billion (compared to March 211) 1. Balance Number of cases (Case) Sep. 3, Sep. 3, Sep. 3, Sep. 3, < Provision of of various services for medical and long-term care businesses with business partners> < Japan Business Management Inc. Various Consulting Services > Management consulting for medical institutions Consulting for the establishment of of clinics Sogo Medical Co., Ltd. Management consulting for long-term care and welfare facilities GE Japan Corporation < Sponsorship of of medical and long-term care seminars > < Assignment of of 2 specialized persons > < Purchasing of of used medical equipment > The figures in the graph above represent the balance of loans provided under the BOJ growth support fund (loans to the environmental and energy sectors) Provision of Green Private Placement Bonds targeted at environmental businesses <Qualifying companies> (1)Companies that have obtained third-party authentication from the national or local government (2) Companies engaging in a business that contributes to the reduction of environmental burden <Actual issuance amount> 6 deals/ 65 million M-Cast Inc. < Sale of of used medical equipment > 19

22 Effective Use of Corporate Resources <Key Initiatives> Headquarters operations Check and implementation of efficiency and reduction measures for headquarters operations Advancement of efficiency and streamlining measures for centralized operations Branch operations Reduction of work volume by revamping and centralizing branch operations Advancement of paperless approaches Across-the-board expense reductions Implementation and verification of reduction measures led by the Expense Reduction Committee* (Started in November 21) Priority Importance <Purpose> Improve Profitability and Efficiency Strengthen promoting capabilities Streamline operations 51. Change in Expenses 75.6 Expenses OHR Medium Term Management Plan BEST VALUE NANTO 77.5 Amortization of IT investment-related costs will decline significantly beginning in FY213 (%) 85. Efficiency Improvement of Centralized Operations at the Headquarters In January 212,one Local Centralized Operations Center was consolidated with the Centralized Operations Division of Headquarters. As of March 31, 212, 56 staffs (including part-time employees) have been reduced or transferred to another position as a result of the efforts under the Centralized Operations Streamlining Project FY28 FY29 FY21 FY211 FY212 FY213 FY214 FY215 FY (Result) (Result) (Result) (Result) (Plan) (Plan) (Forecast) (Forecast) (Forecast) 2

23 Appendix Profile of the Nanto Bank Business Conditions for Local Companies (Sentiment on Local Economy) Business Bankruptcy and Employment Conditions Number of Population, Households and Housing Starts Various Interest Rates Response to SME Financing Facilitation Act Ratio of Loans by Industry Shift in Classification of Debtors Total Risk Management Continuous Promotion of CSR Appendix-1 Appendix-2 Appendix-3 Appendix-4 Appendix-5 Appendix-6 Appendix-7 Appendix-8 Appendix-9 Appendix-1

24 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 2,83 5. Number of offices Japan: 132 Overseas: 2 (representative offices in Hong Kong and Shanghai) 6. Total assets 4,799. billion 7. Deposits outstanding 4,289.8 billion 8. Loans outstanding 2,796.4 billion 9. Capital adequacy ratio Non-consolidated: 11.23% Consolidated: 11.63% <Sales network> <Branches> Nara 92 branches, Osaka 13 branches, Hyogo1branch, Kyoto 15 branches, Mie 3 branches, Wakayama 7 branches Tokyo 1 branch 24 ATM <FA offices> <3 offices in Nara Pref.> North, Central, South area <Nanto> L-PLAZA L-PLAZA (As of March 31, 212) (Head Office) <ATM in in convenience stores> About 37, ATM in convenience stores in Japan <7 In Nara Pref.> Saidaiji, Heijo, Gakuen-Mae, Ikoma, Mamigaoka, Kashihara, Oji-Minami <4 outside of Nara Pref.> Garden Mall Kizugawa, Uji-Okubo, Osaka, Sakai Appendix-1

25 Business Conditions for Local Companies (Sentiment on Local Economy) Business Sentiment among Local Companies Industrial production index (DI). Quarter on quarter DI QOQ DI=(percentage of companies reporting favorable business sentiment quarter on quarter) (percentage of companies reporting unfavorable business sentiment) Current judgment (Year 25=1) 11 National average Nara Pref. Kinki region Forecast 6 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. FY21 FY211 FY FY29 (Source: Nanto Economic Research Institute) (Source: Ministry of Economy, Trade and Industry, Kansai Bureau of Economy, Trade and Industry, Nara Prefecture) Appendix-2

26 Business Bankruptcy and Employment Conditions Number of Bankruptcies in Nara Pref. Effective Ratio of Job Offers to Applicants 1. Total debts Number of bankruptcies (Case) 2 (Times) National average Osaka Pref. Nara Pref. Kinki region [Source: Teikoku Databank ] Number of Bankruptcies in Osaka Pref. Total debts Number of bankruptcies 1,951 (Case) 1,5. 1,814 2, 1,7 1,569 1,515 1,222. 1, [Source: Teikoku Databank ].5 Mar. 211 Jun. 211 Sep. 211 Dec. 211 Mar. 212 [Source: Ministry of Health, Labor and Welfare] Appendix-3

27 Number of Population, Households and Housing Starts Population and Households in Nara Pref. Housing Starts in Nara Pref. (Thousand of people) 1,5 Population Households (Thousand of households) 6 6, (Unit) Housing starts Y/Y growth rate (%) 1,425 1,42 1,415 1,412 1,47 3,2 3,143 3, , , , H FY29 2H FY29 1H FY21 2H FY21 1H FY211 2H FY211 Housing Starts in Osaka Pref. 5, (Unit) Housing starts Y/Y growth rate (%) 25,631 26,48 27,317 29,547 29,72 31, , [Source: Nara Prefecture] -5. 1H FY29 2H FY29 1H FY21 2H FY21 1H FY211 2H FY211 [Source: Ministry of Land, Infrastructure, Transport and Tourism] Appendix-4

28 Various Interest Rates Interest on Deposit and Loan, Interest Margin Yield on Securities 2.5 (%) Interest on loans Expense ratio Interest on deposits Interest margin 4. (%) Yield on securities Foreign Domestic H FY8 2H FY8 1H FY9 2H FY9 1H FY1 2H FY1 1H FY11 2H FY11 1H FY8 2H FY8 1H FY9 2H FY9 1H FY1 2H FY1 1H FY11 2H FY11 Appendix-5

29 Response to SME Financing Facilitation Act Response to Applications for Changes, etc. to Loan Terms <To SMEs> As of September 3, 211 (April September 211) As of March 31, 212 (October March 212) Number Number of loans Amount Number Number of loans Amount (Customers) (Cases) To application ( million) (Customers) (Cases) To application Change from Sep. 3, 211 ( million) Total application 4,937 9,96 1.% 284,318 6,112 12,495 1.% 345,238 Accepted 4,385 8, % 249,75 5,469 11, % +.5% 35,869 Rejected % 16, % -.4% 18,283 Under review % 12, % +.1% 14,834 Turnaround plan % 5, % -.3% 6,251 <To housing loan customers> As of September 3, 211 (April September 211) As of March 31, 212 (October March 212) Number Number of loans Amount Number Number of loans Amount (Customers) (Cases) To application ( million) (Customers) (Cases) To application Change from Sep. 3, 211 ( million) Total application % 14, % 15,982 Accepted % 8, % +2.3% 1,371 Rejected % 1, % -.3% 1,645 Under review % % -1.4% 457 Turnaround plan % 3, % -.6% 3,58 Appendix-6

30 Ratio of Loans by Industry Loans Outstanding by Industry Ratio of Loans by Industry Change from 211 (%) Change from 211 Total lending volume 2, ,72.3 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 Total lending volume 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-7

31 Shift in Classification of Debtors <As of March 31, 212> Total credit (loans): 2,817.1 billion (increase of 73.5 billion from 211) Loans to normal debtors: 2,515.7 billion (increase of 75.5 billion from 211) Loans to debtors requiring caution and substandard debtors: 23.3 billion (decrease of 3.9 billion from 211) Loans to potentially bankrupt debtors and lower: 7.9 billion (increase of 2. billion from 211) (Subject: Credit related claimable assets such as loans) Beginning balance (As of March 31, 211) Normal assets Assets requiring caution As of March 31, 212 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 2,44.2 2, Debtors requiring caution Substandard debtors Potentially bankrupt debtors Bankrupt and effectively bankrupt debtors New debtors Total 2, , Change over March 31, 211 Normal assets Assets requiring caution Substandard assets Potentially bankrupt assets Bankrupt and effectively bankrupt assets Total Appendix-8

32 Total Risk Management Total Risk Management 25. Distribution for capital adequacy (as of 212) 23.6 billion Risk Capital (1H FY212) billion Risk Measurement (as of 212) 82. billion Non-distributed capital adequacy 84.3 billion Buffer 37.3 billion Operational risk Credit risk Stock risk Interest rate risk Distribution for capital adequacy = Tier I + Gains (losses) on other securities reported on the balance sheet Interest-rate risk measurement includes use of an internal model that considers core deposits <Risk Measurement Method> Credit risk Measurement Approach Confidence Level V a R 99% 1 year Holding Period Stock risk Interest rate risk, etc. Operational risk Investment purposes V a R 99% 6 business days V a R 12 business days V a R 99% 6 business days V a R 99% 1 business days Basic indicator approach Strategic purposes 99% Interest rate, foreign exchange, investment trust Short-term trade Appendix-9

33 Continuous Promotion of CSR About our CSR Management Policy Work to promote the development of local community Cool Biz campaign Recycling centers Environmentally friendly financial products ISO 141 Promote environmental protection Nanto Forest (for tree planting) Electric vehicles The Yoshino Cherry Tree Preservation Group Support to Yoshino Heart Project (promoting use of woods grown in Yoshino) Small Kindness Movement Clean-up operation Blood donation campaign Nanto Scholarship Promote contributions to the local Community Women s hockey team *Two athletes will compete in London Olympics Volunteer tour guide group (composed of retired bank clerks) Held a walking tour to visit places that appear in Manyoshu* *Manyoshu ("Collection of Ten Thousand Leaves") is the oldest existing collection of Japanese poetry. Financial and Economics Education The medium-term management plan Promote ongoing community contribution activities CSR Assessment by Specialized Organizations Outside UK FTSE Group: The FTSE added Nanto Bank as one of the companies making up the SRI FTSE4Good index in 28 Kinki Local Finance Bureau: Recognized Nanto Bank s support for the Yoshino Heart Project in 29 Governor of Nara Prefecture: Presented the Nanto Nara Support Group, volunteers consisting of Nanto Bank retirees, with a letter of appreciation for their historical interpretation work in 21 Kinki Regional Agricultural Administration Office: Presented Nanto Bank with the Regional Office Manager's Award for its participation in the Kinki Local Production Local Consumption Food Service Menu Contest in 21 Governor of Nara Prefecture: Letter of appreciation regarding Nanto Bank s social welfare initiatives in 211 Minister of Agriculture, Forestry and Fisheries: Letter of appreciation regarding Nanto Bank s active efforts to promote understanding of and participation in the Kizukai campaign to promote greater use of Japanese wood products in 211 Appendix-1

34 In this material, we refer to the future performance of the bank. However, please be aware that these contents do not guarantee our future performance and it may change due to the unexpected risks and uncertainties in the operating environment. [Contact, if any:] THE NANTO BANK, LTD. General Planning Division IR Group TEL: FAX: URL: