Fukuoka Financial : Financial Highlights in May, 2024

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Fukuoka Financial Group

Financial Highlights FY2023

May 13, 2024

Financial Highlights_ FY2023

Contents

Profit & Loss	...	P2-9
		- Profit & Loss Summary	...	P2
		- Top Line (Consolidated Core Business Profit)	...	P3
		- Bottom Line (Consolidated Net Income)	...	P4
		- [Supplement] Core Business Profit (banks total)	...	P5
		- Net Interest Income (banks total)	...	P6
		- Consolidated Non-interest Income (excluding gains (losses) on bonds)	...	P7
		- Consolidated Expenses	...	P8
		- Consolidated Credit Cost	...	P9
Assets and Liabilities, etc.	...	P10-13
		- Loans	...	P10
		- Deposits, etc. (including CDs)	...	P11
		- Securities	...	P12
		- NPLs Disclosed under the FRL, Reserve for Possible Loan Losses, Capital	...	P13
		Adequacy Ratio
Minna Bank	...	P14
Earnings Projections for FY2024	...	P15
Financial Data (Information by Bank, etc.)	...	P17-27

Fukuoka Financial Group

Definitions of terms and figures used in this document

In cases where definitions are different from those listed below, details are stated on each page.

FFG consolidated	Consolidated financial results of Fukuoka Financial Group
Banks total	Simple sum of the non-consolidated figures of the Bank of Fukuoka, the
Kumamoto Bank, the Juhachi-Shinwa Bank and the Fukuoka Chuo Bank(Note)
Existing 3 banks	Simple sum of the non-consolidated figures of the Bank of Fukuoka, the
Kumamoto Bank and the Juhachi-Shinwa Bank
Group total	Banks total + FFG Securities
Related to Minna Bank	Total of Minna Bank and Zerobank Design Factory
Net income	Net income for the period (interim, quarter) for non-consolidated and banks
combined
Consolidated net income	Net income for the period (interim, quarter) attributable to owners of the
parent

Note: About the figures of the Fukuoka Chuo Bank

• Business integration between the Company and the Fukuoka Chuo Bank took effect on October 1, 2023.
• Regarding the Fukuoka Chuo Bank, profit (loss) figures for the second half of FY2023 (six months) and figures for the balance as of March 31, 2024 have been consolidated and combined after making necessary adjustments. Figures for previous fiscal years do not include figures for the Fukuoka Chuo
  Bank.

1

Financial Highlights_ FY2023	Fukuoka Financial Group

Profit & Loss Summary	Profit & Loss

FFG consolidated				FY2023
	FY2023		FY2022	Chg. from
(Unit: bil.)	YoY chg.	projected*
					projected

Core gross business profit1				250.7	+16.6		234.0
Overhead expenses (-)				150.2	+9.6	140.6
Core business profit	1	100.4	+7.0	93.4
Credit cost (-)				24.2	+18.4	5.8
Gains (losses) on securities				-17.3	+19.6	-36.8
Ordinary profit				56.9	+6.9	50.1			59.5	-2.6
Consolidated net income	2	61.2	+30.0	31.2			61.5	-0.3
Special factors (after-tax)				0.5	+26.6	-26.1
	FY2023 special factors				0.5	+0.5		－
	FY2022 special factors				－	+26.1	-26.1

Financial highlights (FFG consolidated)

	Core business profit: ¥100.4 billion (YoY chg. +¥7.0 billion)	▶ See P2
1

• Increased by ¥7.0 billion year-on-year due to an increase in core gross business profit of ¥16.6 billion attributable primarily to net interest income in Japan, despite an increase in overhead expenses of ¥9.6 billion due to ¥3.0 billion in second-half expenses at Fukuoka Chuo Bank and DX-related growth investments

2 Consolidated net income: ¥61.2 billion (YoY chg. +¥30.0 billion)

• Increased by ¥30.0 billion year-on-year due mainly to an increase in core business profit and a turnaround from FY2022 loss-cutting in foreign bonds (¥26.1 billion after tax)

2' Consolidated net income (excluding special factors): ¥60.7 billion (YoY chg. +¥3.5 billion) ▶ See P3

• In FY2023, recorded a gain on negative goodwill associated with business integration with the Fukuoka Chuo Bank, as well as a
  temporary loss to secure future earnings and reduce risks (loss-cutting in domestic bonds, strengthening of credit cost reserve, etc.). Profit of the
  Fukuoka Chuo Bank was also consolidated in the second half of the year.
• Excluding FY2022 and FY2023 special factors (see table below), real year-on-year growth was ¥3.5 billion

Consolidated net income	2'	60.7	+3.5	57.3
(excluding special factors)
Banks total								FY2023
	(Unit: bil.)	FY2023	YoY chg.	FY2022		projected*	Chg. from
										projected
Core gross business profit1				233.0	+17.8	215.2
	Net interest income				202.7	+16.3	186.4
	Non-interest income (excluding				30.2	+1.5	28.7
	bond-related income)
Overhead expenses (-)				115.0	+5.7	109.3
Core business profit				118.0	+12.2	105.9		114.1	+3.9
Ordinary profit				82.4	+15.3	67.1	78.5	+3.9
Net income	3		62.1	+11.5	50.7		58.5	+3.6

Special factors (FY2023, FY2022)

Credit cost	▶ See P9		Loss-cutting in bonds	▶ See P12
		(Unit: ¥ bil.)		FY2023		FY2022
			Before	After		Before	After
						tax	tax		tax	tax
Special factors, total		-8.4	0.5		-37.5	-26.1
	Gain on negative goodwill		21.5	21.5		－		－
	Loss-cutting in bonds2		-19.1	-13.4		-37.5	-26.1
	Credit cost (existing 3 banks, Fukugin	-9.4	-6.6		－		－
	Guarantee)
	Fukuoka Chuo Bank		-2.2	-1.5		－		－
		Unification of FFG standards	-1.9	-1.3		－		－
		on credit cost
		Integration-related expenses	-0.3	-0.2		－		－
	Fukuoka Chuo Bank 2H profit3	0.9	0.5		－		－

Consolidation difference in bottom line

(Unit: ¥ bil.)		FY2023	YoY chg.
Net income (banks	3	62.1	+11.5
total)
Gain on negative goodwill		21.5	+21.5
FFG non-consolidated		-14.0	-2.1
Related to Minna Bank		-9.3	+1.9
Subsidiary income		2.3	-2.7
Other consolidation		-1.4	-0.0
adjustments
Consolidated net	2 61.2	+30.0
income

*Based on disclosure of November 13, 2023	1. Core gross business profit = Gross business profit -	2. Realized losses on foreign bonds in FY2022 and on domestic bonds in FY2023 (existing 3 banks)	2
Gains (losses) on bonds	3. Contribution after consolidation adjustment

Financial Highlights_ FY2023

Top Line (Consolidated Core Business Profit)

Core business profit (FFG consolidated)	(Unit: ¥ bil.)

[Non-interest income] excluding gains (losses)		+¥7.0 billion
on bonds
[Overhead expenses] excluding non-recurring
expenses					100.4 *
		86.3	Core business	93.4
67.5	68.3	profit
			49.4
			Non-interest	50.0
		47.9
41.1	41.9	income
174.3	174.8	181.2	Net interest	184.1	201.2
			income
-147.9	-148.5	-142.9	Overhead	-140.6	-150.2
expenses
FY2019	FY2020	FY2021		FY2022	FY2023

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥0.8 billion

Fukuoka Financial Group

Profit & Loss

Breakdown of year-on-year changes (FFG consolidated) (Unit: ¥ bil.)

Consolidated core business profit +¥7.0 billion

		Consolidated net interest		Consolidated non-interest
		income +17.1		income -0.5
		Domestic
		funds +19.5	+1.8

	+13.1		+0.8		+2.9
						-4.7		-0.5
		-3.2
											100.4 *
+6.4											-9.6
93.4
	Banks total
Net interest income
	+16.3
Interest on deposits and loans	Securities, other fund transactions	International division	(subsidiaries, consolidation adjustment, etc.)	Other net interest income	Investment trusts & insurance	Corporate-related fees	derivatives	Foreign exchange and	(subsidiaries, consolidation adjustment, etc.)	Other non-interest income	Consolidated Expenses
FY2022											FY2023

3

Financial Highlights_ FY2023	Fukuoka Financial Group

Bottom Line (Consolidated Net Income)	Profit & Loss

Excluding the turnaround from loss-cutting in foreign bonds in FY2022 (FY2022 factors) and the gain on negative goodwill associated with business integration with the Fukuoka Chuo Bank, loss-cutting in domestic bonds, and recording of credit cost (strengthening the reserve) (FY2023 special factors), real year-on- year growth was ¥3.5 billion

Consolidated net income	(Unit: ¥ bil.)

				+¥30.0 billion
110.6					61.2 *
		54.1			Gain on negative goodwill
				21.5
	44.6	0.0
Gain on negative
goodwill	0.0		Consolidated	31.2
(business integration with
		net income
former Eighteenth Bank)			0.0
1,174
		68.8			62.1
	57.3
		Banks total	50.7
2.7
-9.5	-12.7	-14.7	Subsidiaries,
	-19.5	-22.5
			etc.
FY2019	FY2020	FY2021		FY2022	FY2023

Breakdown of year-on-year changes	(Unit: ¥ bil.)

YoY chg. +¥30.0 billion

FY2023 special

Real YoY chg.

factors

Excluding FY2022

+¥0.5 billion

factors and FY2023

+21.5

special factors:

+¥3.5 billion

FY2022 factors

+6.2

+1.1

60.7

61.2

57.3

+2.9

+0.5

+¥26.1 billion

Results (excludingspecialfactors)

-21.5

Results

Results

loss-cutting in foreign bonds (after tax)

Turnaround from

Results(excludingloss-cuttingin foreign bonds)

profit

Consolidatedcorebusiness

Consolidatedgains(losses)on securities

Consolidatedcreditcost

Non-recurring/extraordinary gains(losses),incometaxes, etc.

Gain onnegativegoodwill

H (afterconsolidationadjustment)

ProfitcontributionofFukuoka

Recording oftemporarylossessuch as loss-cuttingindomesticbonds and credit cost

-6.8

Chuo Bank

Excluding FY2023 special factors

31.2

in

2

FY2022		FY2023

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): -¥1.5 billion

4

Financial Highlights_ FY2023

Fukuoka Financial Group

[Supplement] Core Business Profit (banks total)

Profit & Loss

Core business profit (banks total)

(Unit: ¥ bil.)

Breakdown of year-on-year changes (banks total)

(Unit: ¥ bil.)

[Non-interest Income] excluding gains (losses)

YoY chg. +¥12.2 billion

on bonds

+¥12.2 billion

Net interest income

Non-interest

[Overhead expenses] excluding non-recurring

+16.3

income

+1.5

expenses

Domestic interest on

118.0 *

97.5

profit

105.9

deposits and loans

+9.9

+2.9

118.0 *

+6.4

Core business

78.9

79.7

30.2

105.9

+7.8

-1.3

-5.7

28.1

Non-interest

28.7

23.5

23.1

income

-0.0

-1.3

1

2

3

4

Loaninterestratefactors

Loanvolumefactors

Interestondeposits,etc.

Investmenttrust

178.4

179.0

184.8

Net interest

186.4

202.7

Securities,international division,etc.

commissions& insurancefees

Othernon-interest income

Overheadexpenses

income

-115.4

Overhead

-109.3

-115.0

FY2022

FY2023

-123.1

-122.4

Domestic securities: +3.7, Domestic, other fund transactions: +9.5,

expenses

1

International division, etc.: -3.2

2 Investment trusts: +2.8, Insurance +0.1

3

Corporate-related fees +1.8, Group credit life insurance premiums: -

0.7, Gains (losses) on foreign exchange derivatives, etc.: -2.0...

FY2019

FY2020

FY2021

FY2022

FY2023

4

Fukuoka Chuo Bank: -3.0, Personnel expenses: +0.1, Non-personnel

expenses: -2.3, Taxes: -0.5

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥0.8 billion (Net interest income: +3.6, Non-interest income +0.2,	5
Overhead expenses: -3.0)

Financial Highlights_ FY2023	Fukuoka Financial Group

Net Interest Income (banks total)	Profit & Loss

• Domestic net interest income increased by ¥19.5 billion due mainly to increases in interest on deposits and loans and in fund transactions (interest on swaps, etc.); international net interest income decreased by ¥3.2 billion due to higher funding costs resulting from rising overseas interest rates

Net interest income (banks total)	(Unit: ¥ bil.)
Domestic deposits and loans: Excluding loans to Government	+¥16.3 billion
and Bank of Fukuoka loans to FFG

Domestic interest on deposits and loans (banks total) (Unit: ¥ bil.)

Domestic deposits and loans: Excluding loans to	+¥6.4 billion
Government and Bank of Fukuoka loans to FFG

					202.7 *
178.4	179.0	184.8	Total	186.4	10.8
	International		19.4
		15.2	14.0
9.6	11.6	division
5.0	Domestic fund	9.9
0.2	0.6
transactions,	26.4
30.1	27.2	25.8	etc.	22.7
Domestic
			securities

International

-3.2

Domestic

+19.5

138.6	139.6	138.9	Interest on	139.8	146.2	*
			deposits and
			loans
139.4	140.2	139.2	Interest on loans	140.1	146.6
and discounts
-0.8	-0.6	-0.3	Interest on	-0.3	-0.4
deposits, etc.
FY2019	FY2020	FY2021	FY2022	FY2023

Domestic deposit loan gross margin (banks total)	(Unit: %)

Yield on loans: Excluding loans to Government and Bank of Fukuoka loans to FFG

138.6	139.6	138.9	Domestic	139.8	146.2
deposits and
			loans

1.10 1.05

1.09
	1.05

1.02

1.01

Yield on loans

Deposit loan gross margin

1.00

1.00

0.99

0.99

FY2019

FY2020

FY2021

FY2022

FY2023

0.00	0.00	0.00	Yield on	0.00	0.00
			deposits, etc.
FY2019	FY2020	FY2021		FY2022	FY2023

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥3.6 billion

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥3.1 billion

6

(Unit: ¥ bil.)

Financial Highlights_ FY2023	Fukuoka Financial Group

Consolidated Non-interest Income (excluding gains (losses) on bonds)	Profit & Loss

• Investment trust commissions and insurance fees (+¥2.9 billion YoY), corporate-related fees (+¥1.8 billion) and net fees and commissions increased steadily
• Gains (losses) on foreign exchange and derivatives decreased by ¥4.7 billion due mainly to an increase in swap costs and the decline from the previous year's foreign exchange gains

Non-interest income (FFG consolidated)	(Unit: ¥ bil.)

Corporate-related fees: Loan fees (syndicated loans, structured finance, etc.), M&A fees, etc.

				-¥0.5 billion
			-¥0.7 billion>
48.5		47.9	Total	50.0	49.4 *
9.9	41.9	12.8	Investment trusts	13.5	16.3	+2.9
	& insurance
8.7	9.8
	9.1	Corporate-related	9.1
		fees	10.9
	7.7		+1.8
21.9			Other services	23.5
	22.6	23.5
			24.0
2.5
	2.6	3.2	Foreign exchange,	4.6	-0.1
	derivatives	-4.7
17.1	10.9	12.0	Subsidiaries, etc.	11.9	11.8
-6.5	-6.6	-7.9	Group credit life	-7.8	-8.5
insurance
-5.1	-5.1		premiums
-4.7	Loan guarantee	-4.6	-4.9
FY2019	FY2020	FY2021	fees	FY2022	FY2023

Asset management product sales (Group total)	(Unit: ¥ bil.)
* FFG Securities: Total sales of investment trusts and bonds	+¥136.6 billion

		458.3	Total		576.4 *
	395.8	FFG Securities *	439.8	52.7
336.9	73.3			9.6
	Foreign currency	58.2	162
59.1	7.7	5.2	deposits &	8.6
71	government bonds	129
8.8	113.5
80		Insurance
121			352
	308
		Investment	244
	195
148
	trusts
FY2019	FY2020	FY2021		FY2022	FY2023

Balance of assets under management for individual customers (Group total)

* FFG Securities: Total balance of investment trusts, stocks and		+¥430.3 billion
bonds for individual customers

					2,792.4*
1,976.5	2,169.4	2,301.2	Total	2,362.0	431.4
	366.8	FFG Securities *	369.8	48.9
	388.3
293.1	67.6	Foreign currency	55.0
83.4	1,328
86.1
		deposits &	1,202
	1,190	1,215	government bonds
1,169
	Insurance
		651	Investment	735	984
428	507	trusts

Mar. 2020

Mar. 2021

Mar. 2022

Mar. 2023

Mar. 2024

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥0.2 billion (Investment trusts & insurance: 0.3,	* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): [Sales] ¥6.7 billion,	7
Corporate-related fees: 0.1, Loan guarantee fees :-¥0.3...)	[Balance] ¥43.0 billion

Financial Highlights_ FY2023	Fukuoka Financial Group

Consolidated Expenses	Profit & Loss

• Increased by ¥9.6 billion year-on-year due to absorption of Fukuoka Chuo Bank's 2H overhead expenses and growth investments (DX-related system costs, etc.)
• Consolidated core OHR improved by 0.2% year-on-year to 59.9% thanks to the accumulation of core gross business profit

Overhead expenses (FFG consolidated)	(Unit: ¥ bil.)
[Excluding non-recurring expenses]	+¥9.6 billion

Breakdown of year-on-year changes

FY2022	YoY chg. +¥9.6 billion

(Unit: ¥ bil.)

FY2023

							Subsidiaries, etc.
										150.2
								Banks total +5.7	+3.9
	148.5				150.2					+2.2
147.9	142.9			*				+1.7
		FFG	140.6			140.6		+2.6	FFGnon- consolidated, othersubsidiaries, etc.
					Relatedto MinnaBank
							Fukuoka Chuo	Existing3 banks
			consolidated					+3.0
24.8	26.1				35.2	Subsidiaries
		27.5	Subsidiaries,		, etc. +3.9
		31.3
			etc.
							Core OHR (FFG consolidated)
							OHR (%) = Overhead expenses (excluding non-recurring expenses ) ÷ Gross business profit
							Core OHR (%) = Overhead expenses (excluding non-recurring expenses ) ÷ Core gross business profit
										OHR		72.6%	← Impact of loss-cutting
123.1	122.4					Banks total						in foreign bonds in 2H
115.4		109.3	115.0	68.9%	68.4%		(FFG consolidated)
		Banks total
				+5.7			64.6%				65.6%
							68.7%	68.5%				-0.2%
									62.3%	Core OHR		60.1%	59.9%
										(FFG consolidated)
FY2019	FY2020	FY2021		FY2022	FY2023		FY2019	FY2020	FY2021			FY2022	FY2023

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): ¥3.0 billion

8

Financial Highlights_ FY2023	Fukuoka Financial Group

Consolidated Credit Cost	Profit & Loss

• Revised reserve standards at the existing 3 banks and guarantee subsidiary in light of recent bankruptcy trends, and unified reserve standards at the Fukuoka Chuo Bank (+¥11.3 billion)
• Credit cost, excluding these special factors, increased ¥6.8 billion year-on-year (Banks: mainly due to business rehabilitation support for major customers, Subsidiaries: increase in defaults of unsecured loans)
• Although there is no apparent significant deterioration in the loan portfolio at this point, effort will be made to reduce credit cost by strengthening the reserve and providing support for management improvement

Credit cost (-) (FFG consolidated)			Breakdown of year-on-year changes	(+ indicates increase in
(Unit: ¥ bil.)		transfers)	(Unit: ¥ bil.)

663
4.9				+¥18.4 billion
					24.2 *
Including introduction of forward-
looking allowances: 41.8				8.4
614
			FFG	5.8	15.8
			consolidated
		3.1	Subsidiaries,	2.6
	1.5	etc.
	1.6	Banks total
	1.2	3.1
	1.5
	0.3
FY2019	FY2020	FY2021		FY2022	FY2023

FY2022

Excluding
special
factors
+6.8
	+2.9
+4.0
5.8	Subsidiaries , etc.
Existing 3 banks
Fukugin Guarantee
+1.6
Minna Bank +1.1

	YoY chg. +¥18.4 billion
		FY2023

FY2023 special factors
(strengthening of reserve,
unification of standards)
	+11.3			24.2
LoweringofDCFreserve specificationstandard (Fukuoka,Kumamoto, Juhachi-Shinwa)	Revision ofstandardsforunsecured loan reserve (FukuginGuarantee)	+1.9	+0.3
Unification of FFGreservestandards (Fukuoka Chuo)	(Fukuoka Chuo)	Other thanunificationofreservestandards
	+2.9
+6.5
12.6

* Including Fukuoka Chuo Bank [non-consolidated] for 2H of FY2023 (6 months): Transfer of ¥2.2 billion

9