Information Meeting The First Half Ended September 2010

Transcription

1 Information Meeting The First Half Ended September 21 December 3, 21 THE NANTO BANK, LTD.

2 Table of Contents I. Financial Results for the First Half of FY21 and Business Forecast for FY21 Financial Results for the First Half of 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 7 7. Capital Adequacy Ratio 8 Business Forecast for FY21 9 II. Management Strategy Outline of Business Area 11 Corporate Banking Policies 1. Strategies for Osaka Region Promoting Community Focused Financing 13 Retail Banking Policies 1. Business Development Model Target on Middle and Affluent Clients Promoting Retail Transactions as a Main Bank Reinforcing Personal Loans 17 Regional Development 18 <Appendix> Appendix1-9

3 表紙 Ⅰ I. Financial Results for the First Half of FY21 and Business Forecast for FY21 II. Management Strategy 1

4 Summary of Profit and Loss 1H 1H FY21 ( billion) FY29 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 22 Income before taxes (.) (.5) Net business profit Non-recurrent gains/losses (4.6) (4.2) Gains/Losses on stocks (.2) (1.3) Disposal of non-performing loans Retirement benefit costs Ordinary income Extraordinary gains/losses Bad debt recovered Loss on adjustment for changes of accounting standard for asset retirement obligations 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) (Bad debt recovered) <No1 Core net business profit> Even with higher fees and commissions and lower expenses, a decline in interest income pulled core net business profit down.9 billion year on year to 7.2 billion. <Breakdown of real net interest income> Net interest income Interest on loans and deposits Interest on loans Interest on market sector Interest on securities Interest on fund management Interest on fund procurement <No24 Net income> Credit cost decreased, but with lower gains on securities and higher income taxes, net income decreased 1.3 billion year on year to 3.5 billion Interest on deposits 4.5 <Breakdown of gains/losses on securities and credit cost> Gains/Losses on securities Gains/Losses on bonds (JGBs, etc.) Gains/Losses on stocks Credit cost Net transfer to general provision for possible loan losses Disposal of non-performing loans Bad debt recovered ( billion) ( billion) 1H FY29 1H FY (.2) 2.7 (.) H FY H FY (1.3).8 (.5) 2.3 Y/Y Change Y/Y Change

5 Summary of Core Net Business Profit Factor Analysis of Changes in Core Net Business Profit ( billion) Core net business profit for 1H FY29 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. 9) Fees and commissions 1) Expenses 11) Others Profit increase factor Core net business profit for 1H FY Profit decrease factor Lending/ deposit operations billion +. Market operations -.2 billion 1) Average balance of loans 2,687.6 billion (Y/Y change billion) 2) Interest rate on loans 1.76% (Y/Y change -.11%) 3) Average balance of deposits 4,25.3 billion (Y/Y change billion) 4) Interest rate on deposits.15% (Y/Y change -.6%) 5) Average balance of securities 1,545.1 billion (Y/Y change billion) 6) Yield on securities 1.16% (Y/Y change -.8%) 7) Interest on fund management, etc. Y/Y change +. billion 8) Interest on fund procurement, etc. Y/Y change +.1 billion 9) Commissions from life insurance Y/Y change +.45 billion Commissions from investment trust Y/Y change +.19 billion 1) Personnel expenses Y/Y change -.7 billion Non-personnel expenses Y/Y change +.19 billion Taxes Y/Y change -.13 billion 3

6 Deposits Average Balance of Deposits by Sector The average balance of deposits during the first half of FY21 rose 57.2 billion year on year to 4,25.3 billion since mainly personal deposits steadily increased. Average balance ( billion) 4,5. 4,76. 4, , Interest rate(%).5 Average Balance of Deposits by Prefecture Deposits for all prefectures rose year on year. During the first half of FY21, the average balance of deposits in Nara Prefecture was 3,392.1 billion, which accounted for 8.7% of the Bank s total deposits. ( billion) 4,5. 4,76. 4, , ,19.2 3, , , , , H FY28 1H FY29 1H FY21. 1H FY28 1H FY29 1H FY21 Personal Corporate Government/Banks Negotiable CD Interest rate on deposits Nara Pref. Osaka Pref. Kyoto Pref. Others 4

7 Loans Average Balance of Loans by Sector Average balance of loans during the first half of FY21 declined 96. billion year on year to 2,687.6 billion due to weak economic conditions and resulting lower loan demand. Average Balance of Loans by Prefecture With average balance of loans of 1,461.7 billion, Nara Prefecture accounted for 54% of the total. At billion, Osaka Prefecture accounted for about 2% of the total. Average balance ( billion) 3,. 2, , , Interest rate(%) 2.5 Average balance ( billion) 3,. 2, , , ,5.1 1, , H FY28 1H FY29 1H FY21. Personal loans Retail business loans Wholesale loans Loans for local government Interest rate on loans 1H FY28 1H FY29 1H FY21 Nara Pref. Osaka Pref. Others *Osaka Pref. includes Amagasaki Branch. 5

8 Securities Balance of Outstanding Securities Unrealized Gains/Losses of Securities ( billion) 1,5. 1,. Japanese government bonds (domestic) Other domestic bonds Stocks (domestic and overseas) 1, , Local government bonds (domestic) Foreign securities (excluding stocks) Other securities 1,53.2 1, ( billion) Bonds Stocks Other Mar. 31, 28 Mar. 31, 29 Mar. 31, 21 Sep. 3, Bond Duration ,1.7 Mar. 31, 28 Mar. 31, 29 Mar. 31, 21 Sep. 3, 21 (Year) Yen-denominated bonds Dollar, Euro-denominated bonds Total * Book value basis (after deduction of appraisal profit and loss of securities) 1.5 Mar. 31, 28 Sep. 3, 28 Mar. 31, 29 Sep. 3, 29 Mar. 31, 21 Sep. 3, 21 6

9 Disposal of Non-Performing Loans Credit Cost ( billion) Core net business profit Credit cost Credit cost ratio (%) Breakdown of Credit Cost ( billion) Disposal of non-performing loans Net transfer to general provision for possible loan losses Bad debt recovered FY27 FY28 FY29 1H FY FY27 FY28 FY29 1H FY Disposal of Non-Performing Loans by Region Balance and Ratio of Non-performing Loans Based on the Financial Reconstruction Law ( billion) Nara Pref. Osaka Pref. Other Pref FY27 FY28 FY29 1H FY21 Bankrupt or de facto Doubtful ( billion) bankrupt Special attention Non-performing loans ratio (%) Mar. 31, 27 Mar. 31, 28 Mar. 31, 29 Mar. 31, 21 Sep. 3,

10 Capital Adequacy Ratio Capital Adequacy Ratio ( billion) (%) 4. Capital Tier I Capital adequacy ratio Tier I ratio ( billion, %) Sep. 3, 28 Mar. 31, 29 Sep. 3, 29 Mar. 31, 21 Sep. 3, 21 Change from Mar. 31, 21 1 Tier I Preferred securities Tier II General provision for possible loan losses Hybrid debt capital instruments Deductions Capital Risk weighted assets 2,32.4 2,55.6 1, , , Credit-risk assets 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) Deferred tax assets Deferred tax assets ratio (No.13 / No.1 1) Sep. 3, 28 Mar. 31, 29 Sep. 3, 29 Mar. 31, 21 Sep. 3, 21. * Calculated by standard method of Basle II from the end of Mar. 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 the first half ended Sep. 28. <Interest-rate risk for bank account> (As of Sep. 3, 21) 99 percentile method Amount of interest-rate risk 3.1 billion Outlier ratio 14.2 % * Core deposit model was introduced in demand deposit from Sep. 3, 29. 8

11 Business Forecast for FY Disposal of non-performing loans Bad debt recovered Loss on adjustment for changes of accounting standard for asset retirement obligations Income before taxes ( billion) FY 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 (.6) Net business profit Non-recurrent gains/losses (7.) (6.8) Gains/Losses on stocks (.2) (1.1) Retirement benefit costs Ordinary income Extraordinary gains/losses 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) (Bad debt recovered) +. <No1 Core net business profit> Though market sector interest is forecast to increase, lower interest on loans and deposits is expected to result in a 1.4 billion year on year decrease in net interest income. Fees and commissions are expected to increase, by 8 million, but an anticipated 8 million increase in expenses is expected to reduce core net business profit by 1.6 billion year on year to 14.8 billion. <Breakdown of real net interest income> ( billion) FY29 FY21 Forecast Y/Y Change Net 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 <No24 Net income> Even with credit costs forecast to decline, smaller gains on securities and higher taxes are expected to reduce net income by 1.3 billion year on year to 6. billion. <Breakdown of gains/losses on securities and credit cost> ( billion) FY29 FY21 Forecast Y/Y Change Gains/Losses on securities Gains/Losses on bonds (JGBs, etc.) Gains/Losses on stocks (.2) (1.1) -.8 Credit cost Net transfer to general provision for 1.7 (.6) -2.4 possible loan losses Disposal of non-performing loans Recoveries of write-offs

12 表紙 Ⅰ I. Financial Results for the first half of FY21 II. Management Strategy 1

13 Outline of Business Area <Office Channels> [Branches] Nara 92, Osaka 13, Kyoto 15, Wakayama 7, Mie 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 Sep. 3, 21) Deposits balance Loans balance From Nara to Osaka, 3 minutes by train. Hyogo Pref Kyoto Pref Kansai Science City Mie Pref No. Indicator Nara Prefecture National ranking 1 Population 1,398 thousand 29 8,8 thousand 3 29 Population Census Number of private enterprises 2 48 thousand (offices) thousand 2 26 Establishment and Enterprise Censu 3 Housing starts 6 thousand 3 54 thousand Ministry of Land, Infrastructure, Transportation and Tourism 4 Deposits balance 1.4 trillion trillion Kinyu Journal 2 Regional Financial Map 211 Kinyu Journal 5 Loan balance 3.1 trillion trillion 2 Regional Financial Map 211 Personal savings 6 3,426 thousand (per capita) 4 3,972 thousand 2 29 Bank of Japan Newspapers subscriptions (per household) Japan Newspaper Association Number of residents traveling abroad (per 1, people) Annual Report of Statistics on Legal Migrants 9 Household consumption expenditure National Survey of Family Income and Expenditure 1 Employment rate outside the prefecture 29.32% % Population Census <Our Strength> Well-developed office network Maintained approx. 5% of deposit and loan market share in Nara Pref. Osaka Pref. has the 2nd largest prefectural economy in Japan. Osaka Prefecture National ranking Source <Market Characteristics> Nara prefecture: Retail market Osaka prefecture: Business market From Nara to Amagasaki in Hyogo, 5 minutes Osaka Pref. 5,51.2 3,39.7 Nara Pref. Wakayama Pref Tokyo ,446.3 =Branches and Offices (As of Sep. 3, 21) < 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. 11

14 Strategies for Osaka Region New Strategic Forces in Osaka Strengthen Relationships with Corporate Customers 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) Nov. 28, established Osaka-Nishi Corporate Business Office Strengthen tie-ups and relationships with corporate customers, through Nanto Clubs in branches located in Osaka Prefecture. Osaka-Kita Club Shin-Osaka Club Yosida Club Osaka Club Kawachinagano Club Ishikiri Club Osaka-Chuo Club Corporate Customers Daitoh Club Sakai Club Habikino Club Osaka-Higashi Club Izumisano Club Yao Club Change in Average Balance of Loans in Osaka Pref. 6. ( billion) Corporate Personal loans Retail Local government Average balance of loans, mainly to retail businesses, nearly doubled over the past 1 years! Composite ratio 7% Composite ratio 3% First half FY21 First half FY22 First half FY23 First half FY24 First half FY25 First half FY26 First half FY27 First half FY28 First half First half FY29 FY21 *Osaka Pref. includes Amagasaki Branch. 12

15 Promoting Community Focused Financing External environment Demographic issues Low birth rate, rapid aging Slowing domestic and global economic growth Market and industry trends Nanto Bank s basic strategy is to pursue finance tailored to local needs Clients Customer needs New business development Customer base expansion Supplier changes Factory and other capital investment Overseas expansion Business succession issues Human resource development Recruiting and benefits issues New accounting standard adoption Environmentally conscious management Establish a win-win relationship Nanto Bank s comprehensive support system Corporate Banking Office Branches Branch Office Manager Corporate Business Promotion Staff Regional Promoter Business Center Business Promotion System WIN Corporate Solutions Group Venture Business Support Office ASIA Business Support Group Corporate Finance Support Office Solution Business Development Business matching Installation of Business Matching Navigator Nou-Shou-Kou (agriculture, commerce and industry) Business Fair 21 Held: Dec. 21 Participants: 215 cos./orgs. Hong Kong / Southern China Japanese Company Business Forum Held: Jun. 21 Participants included our 12 clients Japan-China Monozukuri (Manufacturing) Business Shanghai 21 Held: Sep. 21 Participants included our 18 clients External Links Provision of business matching opportunities via the Manufacturing B2B Network Introduction of solutions Introduction of customers to tie-up partners (Details) Sales receivable guarantee services, defined-contribution pensions, management/administration systems, security services, credit ratings for mid-size companies, overseas leasing, etc. Trading and overseas business support Business succession/m&a Strengthen services for clients requiring focused forex trading support Began handling Web-Business Banking (forex) (Jul. 21) Relaxed requirements for direct dealing of foreign exchange contracts (Oct. 21) Business Succession Support First half of FY21 Business succession consultations and recommendations for 49 clients Financing for 7 clients M&A Advisory Services First half of FY21 M&A Projects: 17 13

16 Business Development Model 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 1.6% 19.4% Very affluent 6, households The number shows target households as of Sep. 3, 21 Financial assets Large Strengthen response to advanced customer needs through cooperation between headquarters and sales offices FA (Financial Advisory) Offices (2 locations, 12 staff) Housing loan centers (8 locations) Business Support System WIN Telephone center (1 location) 22.% 47.9% Affluent 27, households Middle 79, households Increase deposits and assets on deposit by expanding sales of consulting services that meet customer needs 132 Branches Added dedicated customer relationship managers (RMs) in Oct. 29 Financial products Privately-placed structured bonds Mass 1,525, households Financial assets Small The figure shows the number of target households (As of Sep. 3, 21) (Includes households which holds financial deposits in other financial institutions) Expand the retail customer base with Point Circle Promote retail loans for coming-reach life stage Corporate bonds, Publicly-placed structured bonds 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 14

17 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. 28: Expanded to 2 FA offices and increased by 4 to 1 specialists Apr. 21: Increased by 2 to 12 specialists Increase of specialized RMs Sales by FA (Financial Advisory) Office 15, 3 Investment trust ( million) ( million) 263 Life insurance 251 Total sales Sales of FA Commission (Nov. 28) Expansion of offices and commitment of human resources 7, ,95 12,195 Oct. 29: Allocated 1 RMs at sales offices Apr. 21: Increased 1 more RMs Second half of FY21: Plan to increase 2 more RMs 2, ,296 2, Improve sales skills through seminars and training courses Strengthen over-the-counter sales system of main branches and offices, etc. 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 Sales of Investment Trust and Life Insurance Commission of Investment Trust and Life Insurance 8. ( billion) Investment trust Life insurance 3. ( billion) Investment trust Life insurance H FY H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY H FY H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 15

18 Promoting Retail Transactions as a Main Bank Expand Retail Transaction as a Main Bank Using Point System Promote the Bank as a main financing bank through Point Circle (point system) without using human sales tools such as home-visit and over-the-counter sales Implement cross-selling to encourage Point Circle members to make their Nanto account their main account for salary deposits, credit card payments and other measures Promote our main bank status Create deposit-gathering mechanism 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 *Plus Deposit/loan balance of 5 million 3 Nanto Bank s shareholders (1, shares and over) 1 Total points 165 Point Stage 1 5 or more points Stage 2 1 or more points Stage 3 15 or more points Privileges Free of charge for convenience store ATMs.5% per annum interest benefit on auto loans, etc. Free of usage and after-hours charges for convenience store ATMs Free of after-hours charge for Nanto ATMs Free transfers among Nanto head office and branch accounts 5% off for early home loan repayment fee 1.% per annum interest benefit on auto loans, etc. *Plus No fee for early home loan repayment 2.% per annum interest benefit on card loans. 5% off for safe deposit box fee, etc. Improve the stable operational base * 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 Jan. 31 of each year) Coupon for a stay at a renowned hotel (Apr. 21 or later) 2 (Thousands of 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 Dec. 29 Announced hotel coupon sent Dec. 28 No. of DMs sent: 31, As of Mar. 31, As of Mar. 31, 29 Stage 1 Stage 2 Stage 3 Jan. 21 No. of DMs sent:16, As of Mar. 31, 21 As of Sep. 3, 21 Hotel coupons sent: 17, Additional applications after perk announced: 1,5 1.%.% Hotel Coupon Sent (Jan. Sep. 21) Total Hotel coupon sent Additional application.5% 4.4% 5.5% Domestic deposit growth rate 2.%.% Total Hotel coupon sent Additional application.8% 6.5% 12.9% Time deposit growth rate Customers actively increased their balances in response to the hotel perk, demonstrating its effectiveness in expanding the business base. 16

19 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 efforts to promote refinancing Hold holiday counseling services by housing loan centers Stricter reviews in line with rating system Strengthen tie-ups between 8 housing loan centers and sales offices Strategically allocate staff specializing in housing loan Secure smooth funding by Housing Loan Administration Team in response to customer need (c.f. Modification of housing loan terms and conditions, etc.) New Housing Loans Actually Made ( 億円 9. ) 4,474 5, ( 件 ) ( billion) (Households) , , New loan ,655 Housing starts in Nara Pref. 3,2 3, , Composition of New Personal Loans Actually Made by Rating System Low 1% Rating A-E 19.36% 8.64% F-G Rating A-E increased approx. 15 points 4.2% 95.98% 1H FY27 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 High % 1H FY27 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 Housing Loan Delinquency Housing Loan Defaults Housing loan (with Nanto credit guarantees) delinquencies (2 or more payments in arrears) Delinquency rate *based on number of loans (Case) (%) H FY27 1H FY H FY H FY H FY29 1H FY21..2 No. of defaults Default rate.18 1 (%) (Case) H FY H FY H FY H FY H FY29 2H FY H FY21 17

20 Regional Development Actively Support the 13th Anniversary of the Nara Heijo-kyo Capital <Project overview> Period: Jan. 1, 21 to Dec. 31, 21 (Heijo Palace Site: Apr. 24 to Nov. 7) Locations: Heijo Palace Site as well as other sites in Nara Prefecture and throughout Kansai region Projects: 1) Heijo Palace Site projects 2) Projects within Nara Prefecture 3) Related wide-area projects 4) Lead-up projects Project Scale: Number of visitors Total: Approx. 12 to 13 million Heijo Palace Site: (Expected) Approx. 2.5 million (Actual) Approx million Total budget: Approx. 1. billion Support Provided by Nanto Bank In celebration of the 13th Anniversary of the Nara Heijokyo Capital, the Bank offered the Nanto de Sento commemorative time deposit. (May 27, 29 to Sep. 1, 21) *Achieved targeted deposits of 13 billion 2 days ahead of schedule. Sent the Nanto Nara Supporters, a volunteer group made up of Nanto Bank retirees to act as guides for the special public showing of the Nara Yamatoji treasures. Helped to boost awareness of the 13th Anniversary of the Nara Heijo-kyo Capital project through TV commercials (weather report). Support the Yoshino Heart Project The purpose of this undertaking is to provide multifaceted support for the Yoshino Heart Project, which aims to invigorate the forestry industry and preserve forests by stimulating demand for Yoshino wood (Japanese cedar and cypress) products. Promote use of ad chopsticks to fuel demand for chopsticks made of Yoshino wood Increased demand by 7 million sets of chopsticks by partnering with Tokyo-metropolitan area convenience stores. Nanto Bank helped to promote the 13th Anniversary of the Nara Heijokyo Capital. Expanded use of forest thinnings in the form of Yoshino 3.9 paper Using this paper in Nanto Bank s disclosure publications, posters, etc. Supported the Kurashi no Dogu Design Competition Provided prize money and other support for the Kurashi no Dogu Design Competition, a nationwide competition for the design of daily life products made with Yoshino cedar and cypress. The competition was sponsored by Nara Prefecture as a way to boost brand awareness for Yoshino cedar and cypress and received broad support from the Yoshino Heart Project. Separately, the Wooden Toy Project is presently being implemented in cooperation with a major ad agency. Opening of a Yoshino shop in the Toranomon area of Tokyo (Grand opening on Dec. 15) A shop for promoting and selling Yoshino wood products will be established inside the Mori Café due to open in the Toranomon area of Tokyo. Yoshino cedar is being used for the café s interior and business matching efforts will put Yoshino and Nara food products on the menu. Akasaka Roppongi Kasumigaseki public offices Tokyo Ginza Yusei-Fukushi Kotohira Bldg. 1F Toranomon, Minato-ward, Tokyo 18

21 Appendix Profile of the Nanto Bank Industrial Production Index / Business Projection for Local Companies Business Bankruptcy and Employment Conditions Number of Population, Households, and Housing Starts in Nara Prefecture Various Interest Rates Response to SME Financing Facilitation Act Ratio of Loans by Industry Shift in Classification of Debtors Efforts to Improve CS Appendix-1 Appendix-2 Appendix-3 Appendix-4 Appendix-5 Appendix-6 Appendix-7 Appendix-8 Appendix-9

22 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 4,566.6 billion 7. Deposits outstanding 4,83.4 billion 8. Outstanding loans 2,685.5 billion 9. Capital adequacy ratio Non-consolidated: 11.33% Consolidated: 11.6% 1. Deposit and loan market share in Nara Prefecture <Deposit market share in Nara Pref.> PB 4.1% Shinkin 16.4% Trust 4.1% City bank 27.4% Nanto Bank 47.9% <Loan market share in Nara Pref.> PB 7.5% Shinkin 13.7% City bank 29.9% (Head Office) Trust.1% Nanto Bank 48.7% (As of Sep. 3, 21) Appendix-1

23 Industrial Production Index / Business Projection for Local Companies Industrial Production Index Business Projection for Local Companies (25=1) Production index- National Production index- Nara Pref. Production index-kinki Region Inventory index- National Inventory index- Nara Pref. Inventory index- Kinki Region Feb. May Aug. Nov. 21 Feb. May Aug (DI) Jan.- Apr.- Jul.- Oct.- Jan.- Mar. Jun. Sep. Dec. Mar Improve Downturn DI Apr.- Jun Jul.- Sep Oct.- Dec. (Projection) [Source: Ministry of Economy, Trade and Industry, Kansai Bureau of Economy, Trade and Industry, and Nara Prefecture] [Source: Nanto Economic Research Institute] Appendix-2

24 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 (Case) 2 (Times) National average Nara Pref 出所: 帝国データバンク Jan.-Sep Kinki region Number of Bankruptcies in Osaka Pref. ( billion) Total debts 1,951 (Case) 1,5. Number of bankruptcies 2, 989 1,228 1,7 1,814 1,187 1, 出所: 帝国データバンク Jan.-Sep. [Source: Teikoku Databank ].4 Mar. 29 Jun. Sep. Dec. Mar. 21 [Source: Health, Labor and Welfare Ministry] Jun. Sep. Appendix-3

25 Number of Population, Households, and Housing Starts in Nara Prefecture As of Mar. 21, population and the number of households in Nara prefecture were 1.39 million and 56, households, respectively. Due to the trend toward nuclear families, the number of households has been on a increasing trend, but the population has been decreasing. The number of housing starts for Nara Prefecture during the first half of FY21 was 3,31, up 9.3% year on year. 1,5 (Thousands of people) Nara Prefecture: Population and households Population Households (Thousands of households) The number of housing starts in Nara Pref , Housing starts +1. Y/Y growth rate ((Unit) 戸 ) -4. (%) (%) ,474 3,655 3,2 3,143 3,31 1,398 1H FY28 2H FY28 1H FY29 2H FY29 1H FY , (Unit) The number of housing starts in Osaka Pref Housing starts Y/Y growth rate (%) 1, [Source: Nara Prefecture] 39,2 32,477 25,631 26,48 27,317 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 [Source: Ministry of Land, Infrastructure, Transport and Tourism] -8. Appendix-4

26 Various Interest Rates Interest on Deposit and Loan (%) (%) Interest on loans Interest on deposits 2.5 Interest margin between deposits and loans H FY25 2H FY25 1H FY26 2H FY26 1H FY27 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 Yield on Securities (%) (%) Yield on securities Domestic Foreign H FY25 2H FY25 1H FY26 2H FY26 1H FY27 2H FY27 1H FY28 2H FY28 1H FY29 2H FY29 1H FY21 Appendix-5

27 Response to SME Financing Facilitation Act 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. Response to Applications for Changes, etc. to Loan Terms As of Sep. 3, 21 (Case, million) Small and medium enterprises (SMEs) Housing loan customers Number Amount Number Amount To application To application To application To application Total application 4,879 1.% 144,373 1.% % 7,983 1.% Accepted 3, % 116, % % 3, % Rejected % 8, % % % Under inspection % 16, % % 1, % Turnaround plan % 2, % % 2, % <Response by prefecture> To housing loan customers Nara Pref. Osaka Pref. Kyoto Pref. Wakayama Pref. Other Number Amount Number Amount Number Amount Number Amount Number Amount Total application 3,49 96, , , , ,194 Accepted 2,771 78, , , , Rejected 136 4, , , Under inspection ,42 7 2, , Turnaround plan 86 2, To SMEs Nara Pref. Osaka Pref. Kyoto Pref. Wakayama Pref. Other Number Amount Number Amount Number Amount Number Amount Number Amount Total application 253 3, , Accepted 137 2, Rejected Under inspection Turnaround plan Appendix-6

28 Ratio of Loans by Industry Loans Outstanding by Industry Ratio of Loans by Industry ( billion) As of Mar. 31, 21 As of Sep. 3, 21 Change from Mar. 31, 21 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 (%) As of Mar. 31, 21 As of Sep. 3, 21 Change from Mar. 31, 21 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

29 Shift in Classification of Debtors <As of Sep. 3, 21> Total credit (loans): 2,71.3 billion (decrease of 58.5 billion from Mar. 31, 21) Loans to normal debtors: 2,397.7 billion (decrease of 64.3 billion from Mar. 31, 21) Loans to debtors requiring caution and substandard debtors: billion (increase of 4. billion from Mar. 31, 21) Loans to potentially bankrupt debtors and lower: 69.3 billion (increase of 1.7 billion from Mar. 31, 21) 7 Total (Subject: Credit related claimable assets such as loans) Balance (As of Mar. 31, 21) a 2,768.8 Normal assets 2,397.7 Assets requiring caution As of Sep. 3, 21 Substandard assets 23.9 Potentially bankrupt assets 1 Normal debtors 2, , Debtors requiring caution Substandard debtors Potentially bankrupt debtors Bankrupt and effectively bankrupt assets 12.5 For collection or write-offs b c d e F g 5 Bankrupt and effectively bankrupt debtors New debtors Changes from Mar.31, 21 Normal assets Assets requiring caution Substandard assets Potentially bankrupt assets Bankrupt and effectively bankrupt assets For collection of write-offs Appendix-8

30 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 We will will greet greet customers customers with with a a smile smile and and strive strive to to provide provide customers customers with with thoughtful thoughtful service. service. We We will will endeavor endeavor to to provide provide better better products products and and services services that that satisfy satisfy customers. customers. We We will will work work to to provide provide accurate accurate and and quick quick responses responses and and easy-to-understand, easy-to-understand, precise precise explanations. explanations. Appendix-9

31 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: B-(3)-831 As one of Nanto Bank s environmental efforts, we support Yoshino Heart Project and Kizukai Activities.