Financial Results for FY2018 ended March 2019
May 22, 2019
The 13th Medium Term Management Plan Best Bank 2020 (Tokyo StockFinal StageExchange - 3 years First of value Section: co-creation 8331) The 13th Medium Term Management Plan Table of contents Best Bank 2020 Final Stage - 3 years of value co-creation
Summary of Financial Results Alliance and Channel Strategies Summary of Financial Results 3 Overview of Alliances 26 Net Interest Income 4 TSUBASA Alliance 27 Deposits and Loans Portfolio 5 Chiba-Musashino Alliance 28 Securities Portfolio 6 Branch Network Strategy (1) 29 Net Fees and Commissions Income 7 Branch Network Strategy (2) 30 Expenses 8 TSUBASA FinTech Platform 31 Net Credit Costs 9 Digital Banking Promotion 32 Earnings Projections 10 Cashless Payment Initiatives 33 Platform Concept 34 Medium Term Management Plan
Progress toward Numerical Targets in the Plan 12 ESG and Capital Policy 35 Key Measures of the Plan 13 ESG (1) Trends in the Regional Economy 36 ESG (2) Sustainable Management 37 Business Strategies ESG (3) Declaration on SDGs 38 Loans for Corporate Customers (1) 15 ESG (4) Environment and Society 39 Loans for Corporate Customers (2) 16 ESG (5) Governance 40 Loans to Real Estate Leasing Sector (1) 17 Capital Policy (1) 41 Loans to Real Estate Leasing Sector (2) 18 Capital Policy (2) 42 Housing Loans 19 Unsecured Consumer Loans 20 Group Total Balance of Financial Products 21 Trust Business and Inheritance-related Services 22 Market and International Business 23 Improved Operational Efficiency and Personnel Reassignment 24 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation 1 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation
Summary of Financial Results
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 2 The 13th Medium Term Management Plan Summary of Financial Results Best Bank 2020 Final Stage - 3 years of value co-creation
Non-consolidated 2018/3 2019/3 Non-Consolidated Gross Business Profits （¥Bil.） YoY 180 Gross business profits 149.4 152.2 2.8 (¥Bil.) Net interest income 121.5 122.6 1.0 p.4 149.4 152.2 144.0 Net fees and commissions income 23.7 22.4 -1.3 p.7 140 Trading income 2.0 1.1 -0.8 Profit from other business transactions 2.1 6.0 3.8 121.1 121.5 122.6 Gains (losses) related to bonds -0.5 4.5 5.1 100 Expenses (-) 82.8 81.1 -1.7 p.8 Net interest income Real net business income 66.5 71.1 4.5 Core net business income 67.1 66.5 -0.5 60 p.9 Net transfer to general allowance for loan losses (-) - 2.5 2.5 2017/3 2018/3 2019/3 Net business income 66.5 68.5 2.0 Non-recurring income and losses 4.0 -1.4 -5.5 Disposal of non-performing loans (-) 0.8 8.7 7.9 p.9 Key Results for FY2018 ended March 2019 Gains (losses) related to stocks, etc. 1.6 1.8 0.2 Ordinary profit 70.6 67.0 -3.5 Extraordinary income (loss) -1.3 -0.2 1.1 Gross business profits increased by ¥2.8 Bil. YoY, with an increase in net interest income and an Profit 49.6 48.0 -1.6 improvement in bond-related profit/loss Net credit costs (-) 0.8 11.3 10.5 p.9 Expenses were controlled below target level Net credit costs increased, setting preventive Consolidated 2018/3 2019/3 YoY reserve for some customers, and conservative （¥Bil.） increase in allowance for loan losses as well Ordinary profit 78.4 72.4 -6.0 Profit attributable to owners of parent 53.7 50.4 -3.3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 3 The 13th Medium Term Management Plan Net Interest Income Best Bank 2020 Final Stage - 3 years of value co-creation
Steady increase in domestic loans, with marginal yield declining at a slower pace
Average balance and yield of domestic loans （¥Bil.） 2018/3 2019/3 YoY 1.16% △6bp Net interest income 121.5 122.6 1.0 1.07% 1.01% Loans and deposits 101.6 103.1 1.4 △10bp 10,000 △8bp Loans 106.9 110.8 3.8 9,503.7 （¥Bil.） Domestic 98.0 96.7 -1.3 9,093.1 9,000 8,631.0 International 8.9 14.1 5.2 +4.5+4.5%% Deposits 5.3 7.7 2.4 8,000 +5.3%+5.3% +4.1% Domestic 0.9 0.7 -0.1
International 4.3 7.0 2.6 7,000 Securities 28.7 31.7 2.9 2017/3 2018/3 2019/3 Bonds 12.8 13.7 0.8 Interest income Domestic 3.9 3.3 -0.6 120 110.8 International 8.9 10.3 1.4 105.9 106.9 Stocks 8.0 9.0 1.0 （¥Bil.） Growth in Investment trusts (dividends) 4.5 5.0 0.5 80 increase Investment trusts (sold) 3.3 3.9 0.5 Market operations, -8.9 -12.2 -3.3 40 52.7 53.3 55.2 procurement etc. (incl. NCD) 1H
Domestic 116.6 115.5 -1.0 0 International 4.8 7.0 2.1 2017/3 2018/3 2019/3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 4 The 13th Medium Term Management Plan Deposits and Loans Portfolio Best Bank 2020 Final Stage - 3 years of value co-creation
SME loans, housing loans and unsecured consumer loans growth remain strong
SME loans 5,000 2018/3 2019/3 YoY 4,586.0 （¥Bil.） Increase/Decrease (%) 4,410.9 （¥Bil.） Deposits 12,017.0 12,333.4 316.3 2.6% 4,141.6 +3.9% 4,000 3,786.6 Domestic deposits 11,604.1 11,962.8 358.7 3.0% 3,583.9 +6.5% +9.3% Personal deposits 8,660.6 8,914.8 254.2 2.9% +5.6% 3,000 2018/3 2019/3 （¥Bil.） YoY Increase/Decrease (%) 2015/3 2016/3 2017/3 2018/3 2019/3 Loans 9,816.0 10,136.8 320.8 3.2% Domestic loans 9,606.1 9,903.9 297.8 3.1% Housing loans 3,700 3,548.6 excl. Public sector 9,388.2 9,687.3 299.1 3.1% 3,431.1 （¥Bil.） 3,281.7 Corporate loans 5,803.7 5,971.0 167.3 2.8% 3,140.5 +3.4% 3,200 3,016.3 +4.5% Large Corporates 1,392.7 1,385.0 -7.7 -0.5% +4.4% +4.1% SMEs 4,410.9 4,586.0 175.0 3.9% 2,700 Consumer loans 3,584.5 3,716.3 131.7 3.6% 2015/3 2016/3 2017/3 2018/3 2019/3 Housing loans 3,431.1 3,548.6 117.5 3.4%
Unsecured consumer loans 142.2 157.8 15.6 11.0% Unsecured consumer loans 170 157.8 Public sector 217.8 216.5 -1.2 -0.5% 142.2 （¥Bil.） 126.3 +11.0% Domestic loans 9,606.1 9,903.9 297.8 3.1% 107.8 120 +12.5% Branches in Chiba 6,797.6 6,963.0 165.3 2.4% 89.5 +17.1% +20.3% Branches outside Chiba 2,808.4 2,940.9 132.4 4.7% 70 Special branches* 1,461.2 1,482.8 21.5 1.4% 2015/3 2016/3 2017/3 2018/3 2019/3 Retail branches 1,347.1 1,458.1 110.9 8.2% The 13th Medium Term Management Plan Best Bank 2020 * Tokyo Head Office, Shinjuku Branch and Osaka Branch Final Stage - 3 years of value co-creation 5 The 13th Medium Term Management Plan Securities Portfolio Best Bank 2020 Final Stage - 3 years of value co-creation
Controlling interest rate risks while diversifying investments
Balance of securities* Unrealized gains (losses) on other securities* *excl. unrealized gains (losses) 230 *incl. overseas CDs 2,500 Average Duration of Securities （¥Bil.） （¥Bil.） 2,308.8 (including bonds with variable interests) 2,226.4 2018/3 2019/3 168.1 161.0 2,187.6 Yen bonds 3.5 years 3.5 years 170 25.1 147.1 10.6 148.9 Foreign bonds 1.6 years 1.4 years 139.0 9.3 3.1 12.6 8.9 1.7 10.8 14.4 12.8 8.3 1,995.6 2.5 2,000 1,933.7 【Change from 2018/3】 110 20.9 821.1 651.9 Government 260.6 144.1 871.9 446.9 -41.6％ 128.9 124.0 129.9 50 101.2
↑Gains 1,500 -2.3 -3.0 -10 2015/3 2016/3 2017/3 2018/3 2019/3 Corporate 775.5 bonds, etc. ↓Losses Stocks Yen bonds Foreign bonds Ohters 646.6 765.1 771.8 +0.4％ USD funding (as of the end of 2019/3) 585.4 1,000 Investment Funding Long-term stable funding ratio*
Investment Lower liquidity Stable funding As of the end of assets 172.1 trust, etc. 2019/3 203.5 335.7 $3,060 Mil. ＜ $3,845 Mil. 118.9 261.9 +28.1％ 125.7% 119.3 Loans more than Deposits 122.6 122.7 one year Currency Swaps 500 114.1 Stocks 115.5 BOJ operation * Long-term stable funding ratio: -1.1％ Foreign bonds, etc. Ratio of stable funding (incl. foreign-currency deposits, bonds 549.4 Loans of one year Repo, Money Market and terms of more than one year) 488.6 483.1 Foreign to loans of more 399.3 447.6 or less Central Bank than one year securities Foreign bonds, etc. deposits, etc. +12.0％ 0 2015/3 2016/3 2017/3 2018/3 2019/3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 6 The 13th Medium Term Management Plan Net Fees and Commissions Income Best Bank 2020 Final Stage - 3 years of value co-creation
Fees and commissions revenue remain high level, mainly solution-related fees from corporate customers
2018/3 2019/3 YoY 23 Net fees and commissions revenue （¥Bil.） (half-year trends) Net fees and commissions income 23.7 22.4 -1.3 （¥Bil.） 22.1 Fees and commissions revenue 43.4 42.8 -0.6 21.6 Fees and commissions payments (-) 19.7 20.4 0.6 21.2 21.2 20
Payment and settlement transactions 12.2 12.2 0.0 3.5 4 4.6 4.6 Fee improvement items 1.1 1.6 0.4 2.3 1H 2.8 Guarantee charges and group insurance costs(-) 12.7 13.5 0.7 0.9 1.3 0 (Reference) Other non-recurring income and loss 2015/3 2016/3 2017/3 2018/3 2019/3 Dividends from group credit life insurance 3.0 2.1 -0.9 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 7 The 13th Medium Term Management Plan Expenses Best Bank 2020 Final Stage - 3 years of value co-creation
Further improvement in operating efficiencies and controlling expenses
2020/3 2018/3 2019/3 OHR level comparison （¥Bil.） YoY (Projection) YoY
Expenses (-) 82.8 81.1 -1.7 82.0 0.8 Ave. of 3 mega group*1 Personnel 42.4 41.4 -1.0 40.9 -0.4 Chiba Bank 68.8% expenses (-)
Non-personnel 54.7% *2 34.5 34.1 -0.3 34.9 0.7 < Ave. of 64 regional banks expenses (-) 67.2% Taxes (-) 5.9 5.6 -0.2 6.1 0.5
*1 Expenses ÷ (Consolidated gross business profits - Gains/losses related to bonds) OHR 55.26% 54.78% -0.47% [2019/3]: Calculation based on disclosed information *2 Expenses ÷ (Non-consolidated gross business profits - Gains/losses related to bonds) [2018/9]: Disclosed by Regional Banks Association of Japan
Main factors behind increase/decrease in expenses Strategic investment plan
2019/3 (Actual) 2020/3 (Projection) （¥Bil.） Strategic investment ¥ 9.9 billion (forecast) (3 years) after cost reductions Personnel Overtime reductions etc. -0.2 Overtime reductions etc. -0.2 Initial plan: through review of system ¥ 15.0 billion development etc. expenses -1.0 Retirement benefit trust -0.2 -0.4 Retirement benefit trust -0.2 (-) Personnel reduction -0.3 Creating shared value with customers ¥7.2 Bil. → ¥3.1 Bil. Operational reform and Operational reform and Achieving workplace reforms Non- digitalization +0.2 digitalization +0.6 where all staff members can shine ¥2.7 Bil. → ¥1.3 Bil. personnel Strengthening the management structure -0.3 Systems-related expenses +0.7 expenses etc. -0.3 for sustained growth ¥5.1 Bil. → ¥5.5 Bil. Insurance premiums on (-) ¥15.0 Bil. → ¥9.9 Bil. deposits -0.1 Taxes Consumption tax -0.1 Consumption tax +0.7 -0.2 +0.5 2017/4 2020/3 (-) Stamp duty -0.1 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 8 The 13th Medium Term Management Plan Net Credit Costs Best Bank 2020 Final Stage - 3 years of value co-creation
Maintain a sound loan portfolio through strict credit controls
2020/3 2018/3 2019/3 （¥Bil.） YoY (Projection) YoY Net credit costs (-) 0.8 11.3 10.5 7.8 -3.5 (Note) The total sum of transfer to allowance for loan losses is expressed as “Reversal of allowance Net transfer to general allowance for loan losses (-) -3.0 2.5 5.6 0.5 -2.0 for loan losses,” in the case of a reversal. However, it is indicated separately as Net Disposal of non-performing loans (-) 3.9 8.7 4.8 7.3 -1.4 transfer to general allowance for loan losses and Net transfer to specific Write-offs / Net transfer to specific allowance, etc. (-) 5.5 10.2 4.6 8.9 -1.2 allowance for loan losses in the left hand table to New downgrades (-) 7.3 10.6 3.3 10.0 -0.6 enable comparison with previous figures. Decreases in collateral value, etc. (-) 0.2 0.4 0.2 0.4 -0.0 Collections etc. 1.9 0.9 -1.0 1.4 0.5 Recoverries of written-off claims 1.6 1.4 -0.1 1.6 0.1 Allowance for loan losses to large corporates (2 cases / ¥3.5 Bil.), etc. are included. Net credit costs ratio (-) 0bp 11bp 10bp 7bp -3bp
Disposal of non-performing loans 200 Customer default cases 20 (Cases) 159 159 （¥Bil.） (new occurrences) (2H 97) (1H 02) 150 15
98 6.9 100 (2H 08) 10 2H 2.8 4.5 7.6 31 3.4 50 5 4.9 10.0 (2H 18) 5.5 6.1 2.0 1H 4.1 4.2 1.9 2.3 3.0 0 0 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 1995 2000 2005 2010 2015 (projection) The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 9 The 13th Medium Term Management Plan Earnings Projections Best Bank 2020 Final Stage - 3 years of value co-creation
Non-consolidated 2020/3 2019/3 Average balance and yield of domestic loans (¥ bil.) (Projection) YoY 1.07% 1.01% 0.97% 0.95% Gross business profits 152.2 152.5 0.2 11,000
Net interest income 122.6 119.8 -2.8 （¥Bil.） Net fees and commissions income 22.4 24.0 1.5 10,080.0 9,915.7 Trading income 1.1 2.8 1.6 10,000 9,503.7 Profit from other business transactions 6.0 5.9 -0.1 9,093.1 Gains (losses) related to bonds 4.5 3.4 -1.1 +4.3% 9,000 increase Expenses (-) 81.1 82.0 0.8 (excl. Loans to Real net business income 71.1 70.5 -0.6 Ministry of Finance) Core net business income 66.5 67.1 0.5 8,000 Net transfer to general allowance for loan losses (-) 2.5 0.5 -2.0 2018/3 2019/3 2020/3 (Projection) Net business income 68.5 70.0 1.4 Non-recurring income and losses -1.4 0.0 1.4 Interest income 120 Disposal of non-performing loans (-) 8.7 7.3 -1.4 （¥Bil.） 110.8 111.4 Gains (losses) related to stocks, etc. 1.8 2.5 0.6 110 106.9 Ordinary profit 67.0 70.0 2.9 105.9 14.1 14.7 Extraordinary income/losses -0.2 -2.8 -2.5 5.7 8.9 100 International Profit 48.0 48.2 0.1 100.1 98.0 96.7 96.7 Net credit costs (-) 11.3 7.8 -3.5 90 Toward reversal Domestic Consolidated 2020/3 of domestic loan 2019/3 interest (¥ bil.) (Projection) YoY 80 Consolidated ordinary profit 72.4 76.0 3.5 2017/3 2018/3 2019/3 2020/3 (Projection) Profit attributable to owners of parent 50.4 51.0 0.5 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 10 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation
Medium Term Management Plan
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 11 The 13th Medium Term Management Plan Progress toward Numerical Targets in the Plan Best Bank 2020 Final Stage - 3 years of value co-creation
¥60.0Bil. 60.0 60
Consolidated ROE (based on total shareholders’ equity) （¥Bil.） -11.8 7% range Interest factors 51.0
+4.3 50 -6.3 Volume +4.3 Consolidated CET1 capital ratio Financial factors Income products +2.3 -2.0 taxes Corporate 12% range Other decrease, solutions +1.5 etc. -1.3 Cost Credit reduction Net interest costs Balance of loans ¥10.5Tri. 40 income -7.5 Net Fees and Taxes, commissions etc. income -6.0 +4.3 Balance of deposits Credit Expe- costs nses ¥12.5Tri. -1.3 +1.5 30 2020/3 2020/3 Group total balance of financial products TargetMedium in the term medium plan DisclosedDisclosed projection term management plan for FY2019 targets projection for ¥2.5Tri. FY2019 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 12 The 13th Medium Term Management Plan Key Measures of the Plan Best Bank 2020 Final Stage - 3 years of value co-creation
■ Business viability appraisal and regional Current medium term plan Next medium term plan revitalization - Start offering Chiba Sports Bond ■ Provision of comprehensive financial ■ Strengthen our consulting functions services for personal customers ⇒ Advisory services, business succession, M&A, trusts - Promoting entry to new markets via Co-creating accumulation investment trusts and ■ Strengthen channels of financial product sales customer accumulation NISAs Domestic ⇒ Protection-based insurance (such as Hoken-no value ■ New services to support digitalization sales madoguchi @ Chiba Bank, etc.) - Digital passbooks and entirely web-based investment trust schemes ■ Expansion of retail base in Tokyo ■ Strengthen the card business ⇒ Cashless payments, metropolitan area TSUBASA Card - Opening of Ebisu branch and Hamamatsucho Corporate Banking Office ■ Strengthen international business Market and international ⇒ TSUBASA partnership, diversification of operations Realizing work ■ Diversity style reforms - Opened Himawari Nursery School Chiba ■ Reinforce Group functions Group that allow all Held a Diversity Forum ⇒ Establishment of new securities locations, strategy employees to ■ Workplace reforms staffing business shine - Increase in electronic workflow
■ Operational reforms Improvi ⇒ TSUBASA Smile and platform ■ Strategic alliances Allianceng Strengthening - Supporting opening of the Musashino efficien a sustainable cy ■ Joint branches and ATMs management Bank’s Singapore Rep. office ⇒ Ikebukuro Branch, structure ■ Unified Group management Mito Corporate Banking Office - Creation of Group Chief Officer position
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 13 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation
Business Strategies
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 14 The 13th Medium Term Management Plan Loans for Corporate Customers (1) Best Bank 2020 Final Stage - 3 years of value co-creation
Strengthening corporate loans, proactive approach to meet client’s needs and provide solutions Strengthen support functions towards Balance of SME loans resolving management issues 6,000 +3.9% Management issues at Reinforcement of （¥Bil.） from 2018/3 corporate counter-parties support functions 4,900.0 5,000 Formulating medium-term Advisory services 4,586.0 4,410.9 plans 4,141.6 Formulating business plans Business analysis associated New 4,000 with funding Staffing services
Labor shortage 3,000 Lack of successor Business succession 2017/3 2018/3 2019/3 2020/3 and M&A (Target) Business succession needs
Number and percentage of borrowers for whom loans are based on evaluation of business Number of borrowers supported in relation to business succession and M&A 30,000 58.0% 60% （Borrowers） 708 40.2% 521 541 borrowers 20,000 40% borrowers borrowers 23.5% 26,764 10,000 2016/3 2017/3 2018/3 18,139 20% 10,380 New Advisory Department, 0 0% Corporate Business Division 2016/3 2017/3 2018/3 Promote advisory services and M&A
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 15 2,000
The 13th Medium Term Management Plan 52 Best Bank 2020 1,500 176 Loans for Corporate Customers (2) Final Stage - 3 years of value co-creation 120 489 1,000 325 Further expansion of retail bases within and outside Chiba Prefecture 48 980 154 803 500 591 55 Number of new borrowers (by sector, Balance of domestic loans (by area) 343 excl. special branches outside Chiba Pref.) 8,000 0 5,000 6,963.0 6,536.4 6,797.6 (Cases) 3,938 （¥Bil.） 2016/3 2017/3 2018/3 2019/3 3,742 4,000 6,000 3,093 Branches in Chiba 3,000 Other than real estate 1,982 leasing sector 4,000 2,000 2,404.3 1,329 2,129.7 2,304.7 Branches 1,015 in Tokyo 2,000 1,000 Real estate leasing sector 449.6 503.7 536.5 Others 0 0 2017/3 2018/3 2019/3 2017/3 2018/3 2019/3 Amount of increase of SME loan balance Balance of loans at newly-established branches in Tokyo and composition by sector 200 [Hamamatsucho] （¥Bil.） * Before direct partial write-offs Manufacturing 5.2 Corporate banking office; est. Jun 2018 Construction 150 17.6 [Ikebukuro] Electricity, Gas, Heating Corporate banking office; supply, Water 12.0 48.9 est. Oct 2016 Telecommunications 100 32.5 [Ebisu] Increase in Transport, Post 98.0 Corporate banking office; balance from 4.8 est. Oct 2015 15.4 80.3 Branch; est. Jul 2017 Mar 2018 Wholesale, Retail 50 5.5 59.1 [Shinagawa] Real Estate Leasing Corporate banking office; 34.3 est. Oct 2013 Real Estate Transactions 0 Branch; est. Jul 2015 Medical, Welfare, Services 2016/3 2017/3 2018/3 2019/3 Other The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 16 The 13th Medium Term Management Plan Loans to Real Estate Leasing Sector (1) Best Bank 2020 Final Stage - 3 years of value co-creation
Response based on strict review, operations flow, and internal controls system
■ Agents management Consultations ■ Briefings to customers Real estate agents customers • Carry out face-to-face customer • Each case is individually assessed interviews, eliminate tampering and and checked if agents are appropriate falsification of screening documents • Inappropriate agents are listed, • Confirm reason for purchase and and not permitted to deal with as a Consultations thorough explanation of risks general rule for malicious cases
Business Promotion Credit Unit Unit ■ Screening • As lending based on business Ensuring Credit Division independ- Branches viability, simulate income and ence expenditure throughout entire the Evaluate loan period (utilizing the software Support aspects program “Chintai-o”) collateral • Investigate coverage ratio and Business Operation Business Promotion sale/purchase cases and verify Division Division appropriateness through rent map Monitoring •Screening including asset situations, etc. Risk Management Division Report Report Compliance Division Report
■ Control of ongoing credit Report • Balance, executed amounts, default Committees ratio and occupancy rates etc. are (Credit Risk Management Committee, ALM Committee, Compliance Committee, etc.) assessed every quarter • Understand and report on the status of visible risks at other banks Report Verification (such as problems with share houses and incomplete construction Audit and Inspection apartments, etc.) Board of Directors (Board of Designated Directors) Report Division
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 17 The 13th Medium Term Management Plan Loans to Real Estate Leasing Sector (2) Best Bank 2020 Final Stage - 3 years of value co-creation
Performing ongoing credit management thoroughly
Occupancy rates of our customers’ apartments by region Default* ratio trend *Default: 100 91.9 92.1 91.3 90.9 93.3 3% 2.73% Downgrade to potentially bankrupt debtors (%) 80 83.8 Non-real estate 81.2 80.1 81.2 2% leasing sectors 2.21% 60 73.4 Overall 40 ■Our customers’ apartments: as of the end of 2017 1% 0.72% Real estate leasing 1.03% ■Prefectural average: Based on Ministry of Internal Affairs and sector 0.71% 20 Communications “Housing and Land Survey” (2013) Rental occupancy = Number of inhabited properties ÷ (Number of inhabited properties + Number of vacant properties) 0% 0.14% 0 2009/3 2011/3 2013/3 2015/3 2017/3 2019/3 All Chiba Tokyo Saitama Ibaraki
DSCR/LTV distribution *To eliminate outliers, average Properties subject to loans which were calculated by removing top and bottom 5 percentile constructed by Leopalace 21 Corporation 1,200 1,000 (cases) (cases) Balance of loans 1,000 800 ¥55.1 Bil. 800 Under investigation 600 ¥12.3 Bil. Coverage ratio 600 68% 400 Incomplete 400 ¥3.7 Bil. 200 With sub-lease 200 agreement 97% No problem 0 0 ¥39.0 Bil. 200% 150% 100% 50% 0% 0% 50% 100% 150% 200% Average occupancy 93% Good DSCR Poor Good LTV Poor Average* 151% Average* 82% * Surveys conducted at all stores (Feb 2019)
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 18 The 13th Medium Term Management Plan Housing Loans Best Bank 2020 Final Stage - 3 years of value co-creation
Respond proactively to customer needs, improving both convenience and operating efficiency
Balance of housing loans Measures to increase housing loans +3.4% from 2018/3 Improved level ■ Further centralization of back-office functions at headquarters 4,000 of convenience 3,548.6 3,600.0 Improved ■ Pre-assessment app and Web handling 3,431.1 ■ Implementation of electronic 3,281.7 operating （¥Bil.） agreement for loans efficiency New 3,000 ■ Group credit life insurance for 11 lifestyle diseases ■ Premium housing 2,000 loans (with insurance for all lifestyle diseases*) 2017/3 2018/3 2019/3 2020/3 *excl. mental diseases, etc. (Target) New
Executed amount of housing loans Price of a condominium in Differentiation Amount Over ¥0.1 Bil. of lending and under ¥0.3 Bil. Tokyo metropolitan area from other banks 208.2 (2016 - 2018) Loan 35 years or less 188.6 200 181.6 period 21.0 80 168.3 10.7 （¥Bil.） 2016 Interest Handled in line with housing 25.3 （¥Mil.） 14.9 rate loans 150 Refinancing 2017 60 Main • Company management 2018 coverage • Officers at a major company • Private business owners etc. 100 40 187.1 177.9 156.2 153.4 ■ Increase operator projects 50 New 20 Review of sales ■ Cooperative activities with blocks structure ■ Strengthening operational activities in urban areas 0 0 Tokyo Kanagawa Saitama Chiba 1H_2017 2H_2017 1H_2018 2H_2018 23 wards The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 19 The 13th Medium Term Management Plan Unsecured Consumer Loans Best Bank 2020 Final Stage - 3 years of value co-creation
Precisely response to customer requirements with appropriate screening systems
Balance of unsecured consumer loans +11.0% Promotion of loans for different purposes 200 from 2018/3 170.0 Reinforcement of non-face-to-face channels （¥Bil.） 157.8 142.2 New Entirely web-based schemes 150 126.3 Loans by (Launch Scheduled for Jul 2019) purposes Improve product marketability 97.7 +14.2% 100 85.6 74.9 Promotion of card loans 50 Card loans Cross-selling to housing loan customers 51.3 56.5 60.0 +6.1% Approach to employees of our business partners 0 2017/3 2018/3 2019/3 2020/3 (Target) Balance of auto loans and education loans Our actions related to card loans • Receiving written proof of income if “lending over 50 ¥0.5Mil.” (since October 2017). 45.1 Auto loan Confirmation （¥Bil.） • Reinforcement of the web system for convenience 39.3 +14.7% of earnings 40 (uploading the identification documents, written proof 34.5 from 2018/3 of income, etc.). 38.4 30 Confirmation 33.5 • Considering competing debts such as card loans of Education loans from us and other banks, etc., conduct appropriate 28.3 repayment 20 screening to prevent over-lending. +14.6% ability
10 • Regular information exchange with guaranteeing Control of company, and building a system that does not ongoing credit 0 depend solely on guaranteeing companies.
2017/3 2018/3 2019/3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 20 The 13th Medium Term Management Plan Group Total Balance of Financial Products Best Bank 2020 Final Stage - 3 years of value co-creation
Ensuring "customer-centered" business operations (fiduciary duties)
Group total balance of financial products Number of insurance policies taken out 3,000 150 at Hoken-no-madoguchi New （¥Bil.） (Cases) Since April 2019 Kashiwa and Tsudanuma +0.1% 2,500.0 2,500 from 2018/3 100
2,012.6 2,049.9 2,053.7
2,000 50
Since 2017.10 Chiba and Funabashi Life Design System 1,500 0 Increasing the number 2017/3 2018/3 2019/3 2020/3 10Oct月 1月Jan 4Apr月 7月Jul 10Oct月 1月Jan of stores where it is (Target) 2017 2018 2019 implemented
Number of accounts registered with Chibagin Securities Fees and commissions for level paying life insurance 85,000 4 branches in Saitama Pref. 82,108 4 3.5 (Accounts) 3.3 （¥Bil.） 80,000 0.8 Initial fees 77,892 3 0.9 2.2 74,660 2.7 2 2.4 75,000 1.1 Stock fees
Chibagin Securities 1 70,000 Funabashi Branch 1.1 (Opened Feb 2019) 0 65,000 2017/3 2018/3 2019/3 Total 21 branches 2017/3 2018/3 2019/3 15 in Chiba / 4 in Saitama / th 1 in Tokyo / 1 in Ibaraki The 13 Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 21 The 13th Medium Term Management Plan Trust Business and Inheritance-related Services Best Bank 2020 Final Stage - 3 years of value co-creation
Expande business with alliance banks, broadening products to address aging society
Number of contracts and income Number of applications at alliance banks
for inheritance-related services 800 600 524 cases 1,471 cases (Cases) 504 cases (¥Mil.) 500 703 418 cases 600 1,134 cases 878 cases 400 328 cases 555
400 764 cases 478 300
200 350 cases 200 253 56 cases 172 100
0 0 2015/3 2016/3 2017/3 2018/3 2019/3 2H_2016 1H_2017 2H_2017 1H_2018 2H_2017
Support for smooth asset succession of high net-worth clients Daishi Musashino Chugoku Toho such as landlords and entrepreneurs Bank Bank Bank Bank Since Oct 2016 Since Apr 2017 Since Oct 2016 Since Jun 2017
Inheritance-related services Trust business (Agency method) (Contracting out method) Tie-up Customer-facing operations Chiba Bank is the subcontractor method are contracted out by Chiba for administrative tasks such as Management succession Bank clerical work Testamentary trust Land trust support service public interest trust Advantages They can enter the market Being able to directly respond to Will preparation support Family trust for alliance without needing to have Specified gift trust customer inquiries service support service banks an administrative division Guardianship support trust Inheritance sorting service Alternative testamentary trust Advantages Utilization of accumulated operational know-how for and access to new business opportunities and increased profitability Expand income opportunities through Chiba Bank utilization of new support tools and knowhow * Applications from April 2019 onwards from Musashino Bank are via the contracting out method The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 22 The 13th Medium Term Management Plan Market and International Business Best Bank 2020 Final Stage - 3 years of value co-creation
Take advantage of the largest overseas network of regional banks
Chiba Bank's overseas network Co-financing scheme with alliance banks New Alliance’s first ever foreign currency-denominated syndicated loan for the affiliate of a Japanese company
London Branch New York Branch Loans Shanghai Rep. Hong Kong Branch Bangkok Rep.
Singapore Rep.
Aug 2018 Co-location with Musashino Bank
Measures against money laundering Balance of loans to Japanese companies and terrorism funding in overseas branches 2,000 Complete compliance with obligations under the laws and regulations ($Mil.) Advanced mechanism in place as required by the Guidelines 1,438 1,500 1,311 Customer information Assessment result 1,076 management 935 1,000 Money laundering risk rating system (external centers) 500 Cooperation with Alliance banks Consider sharing of the systems, scoring models and database etc., 0 and centralizing operations that are required for customer management 2016/3 2017/3 2018/3 2019/3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 23 The 13th Medium Term Management Plan Improved Operational Efficiency and Personnel Reassignment Best Bank 2020 Final Stage - 3 years of value co-creation
Reassign personnel to growth fields through business reforms
Reduction of work volumes through Personnel re-deployment to reinforce our efficiency improvement sales capabilities
Front-of-branch and 600 staff Work reforms have already started with target of in-branch operations around 880 staff (work volume equivalent) About 600 staff of these can be reassigned in medium to long term Lending operations 200 staff 880 staff
Career change support with training, etc. Headquarters operations 80 staff
Capacity creation ■2020/3 ■2019/3 ■2018/3 Reassignment ■2018/3 ■2019/3 ■2020/3 Career design training • Promote understanding of operations reforms and awareness Work volume reduction / Centralization / Branch network review Corporate sales / Asset management/ New branches changes
Branches Reform of career path system (general / area career track) Planning / Business operation / Centralization Reassignment of staff • Eliminate restrictions on Headquarters (medium-term plan) operations due to career path ca. 350 employees Results up to Mar 2019 Strengthen mid-career hiring Group company sales, etc. Expand the trainee scheme (Cumulative total) • Promote early development of Other 180 employees young employees
(Staff) -200 -150 -100 -50 0 50 100 150 200
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 24 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation
Alliance and Channel Strategies
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 25 The 13th Medium Term Management Plan Overview of Alliances Best Bank 2020 Final Stage - 3 years of value co-creation
Develop the largest alliance of regional banks, seeking further synergies
Broader based areas ＜ Ranking of banks in consolidated asset size as of 2019/3 ＞ (¥Tri.) Total assets Deposits Loans MUFG 311.1 180.1 107.4 SMFG 203.6 122.3 77.9 Tokyo Metropolitan Area Mizuho FG 200.7 124.3 78.4 TSUBASA*4 65.7 54.1 41.8 Resona HD*1 59.1 51.1 36.1
SMTrust HD*2 57.0 31.9 29.0
TSUBASA*3 55.0 45.1 34.5 HOKUETSU BANK Fukuoka FG 20.8 14.0 12.9 New Concordia FG 18.9 15.9 12.6 Mebuki FG 17.3 14.3 11.1
*1 Consolidated Kansai Mirai FG from 2018/4 *2 Deconsolidated three entities from 2018/10 *3 Hokuetsu Bank joined in 2018/4 and Daishi Hokuetsu FG from 2018/10 *4 Musashino Bank joined in 2019/3 and Shiga Bank joined in 2019/5
Total assets are next only to Head office location those of the mega banks Branch locations
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 26 The 13th Medium Term Management Plan TSUBASA Alliance Best Bank 2020 Final Stage - 3 years of value co-creation
Increase effects of initiatives, expanding alliance scale
New Member banks added March 2019 Musashino May 2019 Shiga HOKUETSU BANK
New ● Introduction of Passbook App Member bank added (Chiba Bank and Hokuyo in Feb 2019, April 2018 Hokuetsu New Daishi in Apr 2019, Chugoku in May 2019)
● Introduction of TSUBASA Smile
(Daishi in Nov 2018, Chiba Bank in Apr 2019, Chugoku in May 2019) ● Operation of common TSUBASA FinTech Platform (Apr 2018)
● Agreement to share administrative divisions Member banks added (Chiba Bank and Daishi in Feb 2018) March 2016 Iyo, Toho, Hokuyo Indirect ● Tie-up of asset management services department (Toho in Jun 2017, Hokuyo in Aug 2017, Daishi in Jan 2018) rationalization TSUBASA Alliance launched ● Cooperation on inheritance-related services October 2015 Chiba Bank, (Daishi and Chugoku in Oct 2016, Toho in Jun 2017) Daishi and Chugoku Alliance across New business different industries creation ● Establishment of T&I Innovation Center (Chiba Bank, Daishi, Chugoku, Iyo, Toho, Hokuyo, IBM Japan in Jul 2016)
● Main frame system shared and transition made to a new system Further cost reductions and (Chiba Bank in Jan 2016, Daishi in Jan 2017, Chugoku in May 2017) improvements in service levels
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 27 The 13th Medium Term Management Plan Chiba-Musashino Alliance Best Bank 2020 Final Stage - 3 years of value co-creation
Unique alliance between both banks based in Tokyo metropolitan area
Year 4 and 5 ・Co-branch (Ikebukuro Branch) ・Tie-up with TSUBASA Alliance
Stable operation of realized initiatives and deeper tie-up from the long-term perspective
FY2018 • Co-location of branches (Akihabara Branch Hamamatsucho Corporate Banking Office, (year 3) Singapore Rep.) • API (TSUBASA FinTech Platform)
「Building a "New tie-up model for regional banks" and achieve major initiatives such as inheritance and securities FY2017 (year 2) • Chiba-Musashino Alliance Co., Ltd. • Inheritance-related services • Intermediary services • Insurance call center Singapore Rep. Quickly implement initiatives • Business Succession Funds
through mainly work groups • Joint ATM FY2016 (year 1) • Asset • Joint purchase of management ATM/deposit machines • Lease • Reduction in rent for intermediary branches • Private • Screening tools placement • Partner fund • Customer • Establishment of foreign introduction currency lines Chibagin Securities; Hamamatsucho Corporate Saitama (Omiya), • Syndicate loans etc. Banking Office Urawa, Soka, Tokorozawa The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation 28
The 13th Medium Term Management Plan Branch Network Strategy (1) Best Bank 2020 Final Stage - 3 years of value co-creation
Collaborate to increase share in Tokyo metropolitan area and streamline the operation of offices
New Branch network in Tokyo Open a joint branch with Musashino Bank (Ikebukuro branch) Ikebukuro area Expected new companies First ever joint branch for the Alliance inflow with redevelopment progress around Toshima ward
Utilization of information and solutions of both banks Response to deregulation Staff reduction and effective utilization of floor space Improve customer convenience (Roll-out to existing branches in the future)
Balance of loans made by the Reinforce Ikebukuro Corporate Banking Office Improve sales Ikebukuro Corporate Work Reduce costs * Before direct partial write-offs capabilities Banking Office Efficiency 20 17.6 (Opened in Oct 2016) (Tokyo North)
（¥Bil.） 12.0 Minimize cost burden & streamline the operation of offices
10 4.8 Branch upgrade Collaborate to increase share (Scheduled for Oct 2019) in Tokyo metropolitan area 0
2017/3 2018/3 2019/3 The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 29 The 13th Medium Term Management Plan Branch Network Strategy (2) Best Bank 2020 Final Stage - 3 years of value co-creation
Streamline branch operations based on customers’ needs
New Establish a joint office with Toho Bank Establish new sales bases in growth areas (Mito Corporate Banking Office) Issues Review branch network based on market potential First joint establishment with TSUBASA bank
Reinforce sales Improve Enhance efficiency Purpose / capabilities/ customer and productivity/ effect Utilization of information and solutions of both banks Increase profit convenience Reassign personnel Reducing the costs of opening a branch
Open new Relocate, Review/ Mito area Initiatives branches/ rebuild, Consolidation of Many corporates and offices Branch upgrades renovate branch functions of our customers are located as the capital of Ibaraki Pref. Under Initiatives Completed consideration Revise functions (Personal finance 26 branches 8 branches specialization, money plaza format) (started in 1999) Mito Corporate Branches in stores Tsukuba Branch Banking Office 9 branches 8 branches (Scheduled for (started in 2013) Moriya Branch Oct 2019) To be located within Improving efficiency Mito Branch of Toho Bank (introduction of lunch breaks, 14 branches 38 branches etc.) (started in 2018) Kamisu Branch
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 30 The 13th Medium Term Management Plan TSUBASA FinTech Platform Best Bank 2020 Final Stage - 3 years of value co-creation
Develop advanced services with T&I Innovation Center
Targets Access channels Service content groups Public API New service base Banking system
TSUBASA FinTech Platform (API Platform) Personal customers External API Main frame Service content platform platform New service Smartphones NEW platform Inte Digital passbooks Public API Lending platform rnal Product/ API support Banking services app CRM
Site for receiving API various notices etc. DWH Payment-related app Transaction statements ・・・・・ Corporate portal Tablet ・・・・・・Authentication/ s Authorization app Authenti Data storage cation External back-office services
Corporate API management customers External tie-up API AI service Data conversion Managed Personal Money Forward /analysis Mail/Push/ API products / computers SNS notification insurance API Nest Egg (finbee) API Open data
Zaim Data acquisition ・・・・・・API Marketing data
Chiba Bank App API Operational apps ・・・・・・
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 31
Phasing in various transactions on the common API Platform and increasing the range of services that can be completed without the need for face-to-face interactions The 13th Medium Term Management Plan Digital Banking Promotion Best Bank 2020 Final Stage - 3 years of value co-creation
Promote digital banking, considering cooperation with external partners
New Digital passbooks Second FinTech Business Contest
Joint development by Chiba Bank and Hokuyo Bank, utilizing the TSUBASA FinTech Platform
Introduced Chiba and Hokuyo in Feb 2019, Daishi in Apr and Chugoku in May Strengthening the drive force for digital-related initiatives Reinforcement of non-face-to-face channels New Cost reduction (stamp duty and passbook issuance Digital Planning Office, Business Planning Division costs etc.) (Reorganized FinTech Business Promotion Office, More compact ATMs in the future Corporate Planning Division)
Phasing in transactions on the API Platform and Comprehensive coverage of projects including digital banking, FinTech, EB/IB, payment transactions, inter-sectorial collaborations, increasing the range of services that can be completed etc. without the need for face-to-face interactions
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 32 The 13th Medium Term Management Plan Cashless Payments Initiatives Best Bank 2020 Final Stage - 3 years of value co-creation
Aim to provide our own comprehensive payment solutions, building the platform
New Cashless market forecast for Chiba Prefecture TSUBASA Cashless Payment Platform Based on the 40% cashless target set by the Government of Japan
TSUBASA Cashless Services for Merchants Various brands
Function Multi-payment 2025 devices Currently ¥6 Tri. Credit / Debit Pre-paid ¥3 Tri. Smartphone QR Electronic money QR payment Credit/debit card Card issuance / Point management / E-mail / Contactless Services for merchants / Coupon / Data analysis, smartphone etc. Multi-payment Chiba Bank customers Devices Electronic money devices (retailers etc.), local authorities and Function Touch Hospitals, etc. payment TSUBASA Visa Debit Card Systems and payment device manufacturers Establishing Chibagin Brand in the cashless payment To meet all cashless payment requirements Top-line target: ¥4 Bil. in five years segment Aiming to create a card business that utilizes our Payment Establishing TSUBASA Brand settlement in the cashless payment alliances operators
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 33 The 13th Medium Term Management Plan Platform Concept Best Bank 2020 Final Stage - 3 years of value co-creation
Further efficiency improvement by the Alliance Platform Concept
New Sharing administrative operations with Daishi Bank Alliance Platform Concept
Development of joint main frame systems Chiba Bank (from Jan 2016), Daishi Bank (from Jan 2017) Alliance banks Joint administrative operations (agreed in Feb 2018) Planning Sales Planning Sales Creating, changing and Compli- abolishing administrative ops. Product Risk Compli- ance Product Risk Inquiries from branches ance Training Service center consolidation, etc. Admin. System Audit Admin. System Audit
Expansion of operations and other banks included New TSUBASA Smile
Alliance Platform
Compli- Product Risk Admin. System Audit ance
Improving productivity by centralizing common functions Joint development of a new counter reception system by Chiba Bank, and indirect departments, sharing expertise and talents Daishi Bank and Chugoku Bank based on “Smile Branch” by Nihon Unisys (cost reduction and sophisticated services)
Introduced at some branches Roll-out to all branches from Apr 2019 (scheduled for FY2020) The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 34 The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation
ESG and Capital Policy
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 35 The 13th Medium Term Management Plan ESG (1) Trends in the Regional Economy Best Bank 2020 Final Stage - 3 years of value co-creation
Chiba Prefecture‘s economy remains healthy, progressing in various kinds of projects
Population of Chiba Prefecture Status of improvements (monthly survey on the resident population) in transportation infrastructure Ken-O Expressway extension 6.28628 Taiei JCT – Matsuo-Yokoshiba IC (Mil.) 2019 2018 (opening planned for FY2024) Improvements of key access roads to each area of 6.26626 2017 Chiba Pref. Narita area development 2016 6.24624 Third runway of Narita Airport (C runway) 2015 University Hospital (opening planned for 2020) of the International University of Health and Welfare 6.22622 (Medical School opened in 2017)
Olympics, Paralympics 6.20 620 Chiba City, Makuhari Messe (fencing, taekwondo, wrestling/ goalball, sitting volleyball, taekwondo, wheelchair fencing) 6.18618 Tsurigasaki beach, Chosei-gun, Ichinomiya-town 1Jan月 Apr4月 7Jul月 10Oct月 (Surfing)
Main events in Chiba Pref. during Rate of change in Chiba Pref. “Heisei” era (Jan 1989 - Apr 2019) published land prices (by land use) Year Heisei Events 1989 1 Makuhari Messe opened 4 (%) 1990 2 Full opening of JR Keiyo Line (Soga - Tokyo) Commercial +2.9% 1996 8 Toyo Express Railway opened 1997 9 Tokyo Bay Aqua-Line opened 3 2000 12 Mitsui Outlet Park Makuhari opened 2001 13 Tokyo Disney Sea opened Industrial +1.9% 2005 17 Tsukuba Express launched 2 Development during 2010-2018 2007 19 Ken-O Expressway (Kisarazu Higashi IC - Kisarazu JCT) opened Opening planned for 2010 22 Narita Sky Access opened FY2024 1 Residential +0.6% 2012 24 Mitsui Outlet Park Kisarazu opened 2013 25 Shisui Premium Outlets opened AEON Mall Makuhari-shintoshin opened 2014 26 Specified as National Strategy Zone 0 (Narita City and Chiba City) Population of Chiba Pref. 2015 2016 2017 2018 2019 2018 30 Tokyo-Gaikan Expressway +0.85 Mil. (15.7%) The 13th Medium Term Management Plan Best Bank 2020 (Misato-minami IC - Koya JCT) opened 5.42 Mil. in 1989 → 6.27 Mil. in 2019 Final Stage - 3 years of value co-creation 36 The 13th Medium Term Management Plan ESG (2) Sustainable Management Best Bank 2020 Final Stage - 3 years of value co-creation
Aim to achieve both social and economic value, taking a more long-term view
ESG Promotion Committee Sustainable management = “long-term aims” + "ESG Promotion Committee", chaired by the president of the bank, to discuss key (material) issues that Chiba Bank deal with over “social value (solving social issues) + economic value” medium to long-term, taking into account regional issues, issues in Japan, and common issues across the world.
Sustainable growth Sustainable society Reorganizing our operational activities from the ESG of Chiba Bank perspective, and responding to various lending policies and international frameworks
ESG New (Environment, Social and Governance) Sustainability Manager
Assigned to Corporate Planning Division to strengthen our ESG efforts Promoting projects and initiatives for sustainability management Environment New Integrated Reports
Preparing integrated reports in accordance with various guidance Social Governance Active involvement in disclosure of non-financial information
New Information provision activities including non-financial information
The view that three perspectives, Strengthening our governance through engagement i.e. environmental, social and governance factors, with institutional investors are required for the sustained growth of a company
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 37 The 13th Medium Term Management Plan ESG (3) Declaration on SDGs Best Bank 2020 Final Stage - 3 years of value co-creation
Cooperate for realizing sustainable society
New TSUBASA Declaration on SDGs
In line with the Sustainable Development Goals (SDGs) adopted by the United Nations, the TSUBASA Alliance hereby declares that it will utilize the knowledge it has gathered on the common local issues
listed below, as mutually recognized by each member bank, Local to tackle social and environmental issues in its respective localities economy and community in order to achieve sustainable growth in the region HOKUETSU BANK - which is one of the Alliance's main objectives. TSUBASA
Financial Aging Declaration 1 Local economy and community services population on SDGs Contribute to the vitalization of local economy and communities 2 Aging population Support peace of mind and safe living for the elderly
3 Financial services Environmental Diversity protection Provide financial services for a better life 4 Diversity Promote diversity and work reforms 5 Environmental protection Contribute to the preservation of a sustainable environment
The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 38 The 13th Medium Term Management Plan ESG (4) Environment and Society Best Bank 2020 Final Stage - 3 years of value co-creation
Response to environmental issues, regional revitalization, a wide variety of human resources
Promoting environmental finance Promoting diversity Providing financial support to customers who are working on utilizing renewable energy Status of promotion of Selected as a “Nadeshiko Brand”
women in the workplace under the Ministry of Economy, Trade and Industry and TSE initiative As of Apr 2019 120 104.2 （¥Bil.） 94.2 For 2 years running 87.2 Directors 2 90 Executive Officers 60.1 1 60 (General Managers) 33.5 General Managers 5 30 Balance of renewable energy-related loans Branch General Managers, 24 Deputy General Managers 0 2015/3 2016/3 2017/3 2018/3 2019/3
Contributing to regional revitalization Appointment of female managers
"Unique examples" of financial institutions etc. providing End of As of FY2020 funding for regional revitalization Mar 2006 Jul 2018 Target (Certified by the Headquarters for Overcoming Population Decline and Vitalizing Local Economy in Japan, Cabinet Secretariat Office) Percentage of female 2.0% 12.7% managers Rebranding disused public facilities as New (17) (129) 20% “Sports Towns” - Choshi Sports Town – (No. of persons) Percentage of females 9.4% 30.4% Supporting the local government to revitalize the in leadership roles town by reusing a disused school as a sports (98) (273) 30% camp facility (No. of persons)* Investments and loans from the Chiba Bank * Staff members who are in a position with subordinates such as deputy Group and branding has resulted in increased population engagement, the creation of branch managers etc. and those in an equivalent position with employment and a reduction in the burden on organizational management responsibilities as the person in charge of public finances etc., which have been highly assigned work. rated. The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 39 The 13th Medium Term Management Plan ESG (5) Governance Best Bank 2020 Final Stage - 3 years of value co-creation
Develop top-grade corporate governance
Incl. 3 external directors
President Deputy President Director and Director and Director and Director and Directors Representative Representative Managing Executive Managing Executive Managing Executive Managing Executive Director Director Officer Officer Officer Officer 9 Group CEO Group COO Group CIO Group CRO Group CBO Group CSO Hidetoshi Sakuma Osamu Kimura Norio Takatsu Yukihito Inamura Tsutomu Yonemoto Tadayoshi Shinozaki
External External External Group Chief Officer system Group CEO (Chief Executive Officer) Group COO (Chief Operating Officer) Group CSO (Chief Strategy Officer) Incl. 3 external Audit & Group CRO (Chief Risk Officer) Supervisory Board Members Group CBO (Chief Business Officer) Non-Standing Non-Standing Non-Standing Group CIO (Chief Information Officer) Director Director Director Tomoyuki Yokota Yuko Tashima Yasuko Takayama
External External External Audit & Supervisory Board Members 5 Standing Audit & Standing Audit & Standing Audit & Non-Standing Audit Non-Standing Audit Supervisory Supervisory Board Supervisory Board & Supervisory Board & Supervisory Board Board Member Member Member Member Member Toshikazu Okubo Tomohiko Sakamoto Kazuhiko Ishihara Kazuyoshi Fukushima Akio Shirato The 13th Medium Term Management Plan Best Bank 2020
Final Stage - 3 years of value co-creation 40 The 13th Medium Term Management Plan Capital Policy (1) Best Bank 2020 Final Stage - 3 years of value co-creation
Maintain financial soundness and improve capital efficiency
Consolidated CET1 capital ratio Book value* of stocks and ratio to Tier1 capital 10 15 (Consolidated) (¥Tri.) (%) Risk assets *acquisition cost of other securities with market value 8 14 250 60 53.8 [Policy regarding cross-shareholdings] 12.65 6 12.48 13 （¥Bil.） Based on economic rationales and forward-looking stock values, taking into account risk and return, (%) 11.97 appropriately verify the validity of the rationale for 4 Consolidated 12% 12 holdings CET1 capital range 200 ratio 40 2 11 189.8 0 10 Book value / Tier 1 capital (%) 2017/3 2018/3 2019/3 2020/3 150 (Target) 20.9 18.3 17.4 16.2 20 Consolidated ROE* 14.6 13.4 12.6 *Based on total shareholders’ equity on B/S, 11.3 11.0 8 excl. the impact of changes in "unrealized gains or losses” 100
(%) 100.4 6.86 6.76 7 Consolidated 7% 0 ROE range 50 6.15 Book value of stocks 5.97 5.83 6 5.32 (TSE Standard) 0 -20 5 2001/3 2011/3 2013/3 2015/3 2017/3 2019/3 2017/3 2018/3 2019/3 2020/3 The 13th Medium Term Management Plan Best Bank 2020 (Target) Final Stage - 3 years of value co-creation 41 The 13th Medium Term Management Plan Capital Policy (2) Best Bank 2020 Final Stage - 3 years of value co-creation
Active approach toward shareholder returns, targeting around 50% of profit
Shareholder returns
2020/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 Flexible acquisition (Projection) Stable dividends （¥） of treasury stocks
Dividend per 12 13 14 15 15 16 16 Shareholder share 20 return ratio 60 IncreasIncrease IncreasIncrease IncreasIncrease Increase (%) e e e （¥Bil.） （¥Bil.） 50 Non- consolidated net 43.2 45.8 52.5 48.6 49.6 48.0 48.2 15 income Annual cash 10.2 10.8 11.5 12.0 11.7 12.2 11.9 40 dividends Payout ratio 23.6% 23.6% 21.9% 24.7% 23.7% 25.6% 24.7% 10 30 Acquisition of 9.9 9.9 9.9 14.9 13.9 14.9 treasury stocks Total shareholder 20.2 20.8 21.5 27.0 25.7 27.2 20 return Shareholder 5 46.8% 45.4% 40.9% 55.5% 51.9% 56.8% return ratio 10 During the current medium term management plan Shareholder return ratio*2 Around 50% 0 0 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 * Shareholder return = (Projection) Total shareholder return (amount of dividend payout + amount of acquiring treasury stocks, etc.) Non-consolidated net income The 13th Medium Term Management Plan Best Bank 2020 Final Stage - 3 years of value co-creation 42 Inquiries related to this presentation should be addressed to
The Chiba Bank, Ltd. Corporate Planning Division Investors Relations
Tel:(81) 43-301-8459 Fax:(81) 43-242-9121 e-mail:[email protected]
This material contains forward-looking statements. These statements are not represented as providing a guarantee of the Bank’s future performance, and actual results may be subject to risks and uncertainties. Please note that future performance may be different from the views presented here owing to changes in the operating environment and other factors.
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