San in Godo Bank : Investor Relations Meeting for FY2021

The creative bank that best fulfills the dreams of the region and customers it serves

Investor Relations Meeting for

FY2021

May 31, 2022

Table of Contents

Summary of Financial Report for FY2021 and Numerical Plans for FY2022

Summary of Earnings for FY2021	3
Net Core Banking Profit (Excl. Net Gains on
Cancellation of Investment Trusts) & Income from
Customer Services	4
Interest Income	5
Deposits and Loans	6
Loans to Individual Customers	7
Securities	8
Securities (Reference Information)	9
Net Fees and Commissions	10
Capital Adequacy Ratio	11
OHR	12
Credit Costs and NPLs	13
Earnings Forecasts	14

Medium-Term Management Plan (FY2021 to FY2023) Overview and Progress

Overview and Progress of Medium-Term
Management Plan	16

The Bank's Growth Strategy

Assessment and Direction of the Current State of
Restructuring	18
Deployment to Outside the Prefecture (1)	19
Deployment to Outside the Prefecture (2)	20
Contributing solutions to community and customer issues
(Corporate Consulting)	21
Contributing solutions to community and customer issues
(N Alliance)	22
Promoting digital transformation (1)	23
Promoting digital transformation (2)	24
Enhancing Management Foundations (System Revision)	25

ESG Initiatives

ESG Initiatives	27
Entry into the Renewable Energy Power Generation Business	28
Unique Social Contribution Activities	29
Diversity & Inclusion	30
ESG-Related Awards	31
Enhancing Returns to Shareholders	32
Cross-Shareholdings	33
Governance Initiatives	34
Introduction of Outside Directors in attendance	35

Summary of Financial Report for FY2021

and Numerical Plans for FY2022

Summary of Earnings for FY2021

Summary of earnings

Consolidated

(Billion yen)

	FY2020	FY2021	YoY	YoY change (%)
			change
Ordinary income	89.1	95.1	5.9	6.6%
Net income attributable to owners of	9.6	14.4	4.8	49.6%
parent

Non-consolidated					(Billion yen)
				FY2020	FY2021
					YoY	YoY change (%)
							change
Gross banking profit	58.6	58.7		0.1	0.1%
	Net interest income	54.8	58.3		3.4	6.3%
			Interest on loans and bills	34.9	36.1		1.2	3.4%
			discounted
			Interest and dividends on securities	20.6	21.8		1.2	5.9%
	Net fees and commissions	6.2	8.0		1.8	29.8%
	Gains (losses) related to bond	(2.6)	(9.3)		(6.7)	-
	transactions
Expenses	37.1	37.5		0.3	1.0%
Transfer to general reserve for possible	2.3	(1.4)		(3.8)	-
loan losses
Net banking profit	19.1	22.6		3.5	18.5%
	Adjusted net banking profit	21.5	21.2		(0.2)	(1.2)%
	Net core banking profit	24.0	30.6		6.5	27.0%
	(excl. net gains on cancellation of investment trusts)
Nonrecurring gains (losses)	(5.2)	(2.3)		2.9	-
		Bad debt disposals	4.8	3.3		(1.5)	(31.6)%
Ordinary profit	13.8	20.3		6.4	46.4%
Extraordinary profit (loss)	(1.3)	(0.5)		0.7	-
Net income	8.3	14.2		5.8	70.8%

Financial highlights

• Strong performance in the core business, with top-class growth among regional banks in interest on loans and net fees and commissions
• Net income hit a record high for both consolidated and non- consolidated financial results

Financial highlights (non-consolidated)

Net interest income (+3.4 billion yen YoY)

• Thanks to an increase in loans, interest on loans grew for the fourth consecutive period
• Interest and dividends on securities also increased

Net fees and commissions (+1.8 billion yen YoY)

• Increase in income related to business support, and fees related to assets under management through the alliance with Nomura Securities

Expenses (+300 million yen YoY)

• Increased due to strategic expenses and expenses related to financial instruments brokerage business

Net core banking profit (+6.5 billion yen YoY excluding net gains on cancellation of investment trusts)

• Income from core business steadily increased

FY2018	FY2019	FY2020	FY2021
22.1 billion yen	19.1 billion yen	24.0 billion yen	30.6 billion yen

Credit costs (-5.3billion yen YoY)

• Decreased sharply mainly due to little deterioration in business conditions of borrowers

Extraordinary profit (loss) (+700 million yen YoY)

• Increased due to the absence of a non-recurring loss on valuation of shares of subsidiaries of 1 billion yen recorded in the previous year

Credit costs	7.2	1.8	(5.3)	(73.9)%

Net income (+5.8 billion yen YoY)

 Recorded profit, up 5.8 billion yen from the previous year

3

Net interest income:

(Billion yen)

Net Core Banking Profit (Excl. Net Gains on Cancellation of Investment Trusts) & Income from Customer Services

• Net core banking profit increased by 6.5 billion yen due to growth in interest income and service income
• Corporate consulting activities led to an increase in loans, and interest on loans grew at top-class level among regional banks
• Income from customer services, which shows the earning power of sales, is also on the rise

Trends in net core banking profit

(excl. net gains on cancellation of investment trusts)

(Billion yen)

Net core banking profit and its increase/decrease factors

Net core banking profit (excl. net gains on cancellation of investment trusts): +6.5

Net fees and commissions:

		+6.5	30.6
	24.0	+27.0%
19.1
FY2019	FY2020		FY2021

Income from Customer Services

(Billion yen)

+3.4		+1.8	1.5	(0.3)
				30.6
		0.6	0.6
0.9	0.1	0.6
1.2
1.2
24.0

	+3.1	4.9
1.8
+173.4%
(0.3)

Income from Customer Services

• Average balance of loans × (Yield on loans − Yield on Deposits, etc.)

+ Net fees and commissions − Expenses − Retirement benefit expenses (nonrecurring losses)

FY2019

FY2020

FY2021

profitbankingcore Net 2020 ofcancellationon gains net .(excl trusts) investment	discountsandloans on Interest	dividendsand Interest securities on	management fund	Other	expensesFinancing	managementunder Assets	support Business	services Other	Other	Expenses
			(*1)fromincome				(*2)	incomeoperating
									(*3)

*Increase in expenses is stated as a factor of decrease in profit (−)

(*1) Increase due to BOJ special interest rate, etc.

(*2) Increase due to administrative fees, etc. for adjustable-rate housing loans

(*3) Profit or loss, etc. on financial derivatives (asset swaps, derivatives, etc.)

of	Net2021
(excl
investment	banking
	core
	net .
trusts)	ongains
cancellation
	profit

4