THE GUNMA BANK REPORT 2020 the GUNMA BANK REPORT Integrated Report

Disclosure magazine [main part] magazine [main Disclosure Integrated Report Integrated

The Gunma Bank, Ltd.

THE GUNMA BANK REPORT 2020 THE GUNMA BANK REPORT Integrated Report

Disclosure magazine [main part]

Published in July 2020 Edited by Public Relations Ofﬁce, Corporate Planning Department, The Gunma Bank, Ltd. 194 Motosojamachi, Maebashi, Gunma 371-8611, Japan Phone: +81-(0)27-252-1111 (key number) The Gunma Bank, Ltd. Corporate Philosophy

It is our mission to take actions that will foster the development of regional communities. As a member of the regional community, we are committed to strengthening a relationship of trust with all community members and playing a central role in promoting prosperity within local regions. To this end, we will strive to improve ﬁnancial services and continue healthy growth while expanding our areas of activity. Our primary goal is to support regional communities in their efforts to develop industries, promote culture and build a prosperous life.

The foundation of our business is to strengthen a creative relationship with our customers. We highly value close ties with our customers and always strive to create what we believe is best for them. Our job starts at this point by pursuing what we can do to support them. It is our goal to establish a future together with our customers.

Our operations are based on the motto “Be a good citizen first to become a good entrepreneur.” Our first goal is for each employee to be a good citizen. It is the first step in building empathy and trust with our customers. In doing this, we can actively take part in society by acting as honorable people. We work each day under the principle of good citizenship.

Our corporate culture is based on the value of face-to-face communication within our organization. We endeavor to create an efﬁcient organization where each employee’s personality traits are best used. To achieve this, we respect each individual’s personality and place high importance on opportunities where individuals can perform at their full potential as well as the generation of accurate performance reviews. These measures allow us to establish a corporate culture assuring a good work environment. Kazuo Saito Akihiko Fukai Chairman President

Editorial Policy Coverage of Reporting Inquiries The Gunma Bank created the “The Gunma Bank Report 2020 (Integrated Duration: Fiscal 2019 (from April This report acts as a main part of the disclosure magazine (explanatory doc- Public Relations Office, Report)” to give our stakeholders an overview of our Bank Group, the devel- 2019 to March 2020) uments pertinent to business and financial status) prepared pursuant to the Corporate Planning Also includes some in- opment of our marketing strategies and its management base from the two Banking Act Article 21. When using this report as a disclosure magazine, please Department, formation for April 2020 refer, at the same time, to “The Gunma Bank Report 2020 (Annex).” The Gunma Bank, Ltd. perspectives of financial information and non-financial information. and later. When editing the report, we referred to the “International Integrated This report includes “descriptions about future performance” relating to Scope: The Gunma Bank, Ltd. and the financial situation and operating results of the Gunma Bank and its Group Reporting Framework” released in December 2013 by the International Inte- its subsidiaries (The Gunma 194 Motosojamachi, Companies. These descriptions have been based on the information available grated Reporting Council (IIRC) and the “Guidance for Integrated Corporate Bank Group) Maebashi, Gunma 371-8611, Disclosure and Company-Investor Dialogues for Collaborative Value Cre- at the date when this material was prepared, and the outlook that might influ- Japan Phone: +81-(0)27-252-1111 ation” formulated by the Japanese Ministry of Economy, Trade and Industry. ence future results in addition to some preconditions (assumptions). They do Date of Publication (key number) This integrated report was confirmed by our management to be appropri- not guarantee the described future results of the Bank and its Group and may ately created and information disclosed according to our “disclosure policy.” July 2020 involve risks and uncertainties.

1 Content Gunma Bank Image Song You can listen to the song on our website:

T h e

G u n 1. The Gunma Bank

m https://www.gunmabank.co.jp/info/song/ a Profile and History of The Gunma Bank �� 4 B

a Company Overview/ n Financial Information Highlights �� 6 k Message from the President �� 10 You can also obtain a variety of information from Interview with an Outside Director �� 16 our official SNS sites.

Value Creation Process at the Gunma Bank � 18

2 2. Mid-Term Business Plan

M 2019 Mid-Term Business Plan i d “Innovation New Dimension” - T - Toward delivering value - �� 20 L I N E I D ： USER ID： e

r @gungin @gunma_bank

m Basic Policies and Strategic Themes �� 22

B Consolidated Quantitative Target u

s as of the Final Fiscal Year of the Plan i n (fiscal year ending March 31, 2022) �� 24 e s s Long-Term Target �� 25 P l Major Quantities for Achieving the Targets � 26 a n

3. ESG Initiatives Declaration of SDGs and Priority Issues �� 36 Environmental Initiatives �� 38

Social Contribution Activity Initiatives �� 40

3 Non-Financial Information Highlights

E (ESG/SDGs) �� 42 S

G Corporate Governance �� 44 I n

i Executives �� 48 t i a Compliance Management System �� 52 t i v Risk Management �� 54 e s Response to the Novel Coronavirus Infection � 60 Communication with our Shareholders and Investors �� 61 Service Network �� 63

2 3 1. The Gunma Bank

Proﬁle and History of The Gunma Bank

1 1

群馬銀行についてh

e History of Integration and Reorganization ■February 1970 Tokyo Stock Exchange, Inc. (Listing changed to the ﬁrst section) G It is 142 years since the original bank started, 88 years since the foundation of the current bank, u

n and 65 years under the name of The Gunma Bank.

m a September 1932 ■Trend of business performance B The Gunma Prefecture Kinyu, Ltd. was established Consolidated net proﬁt attributable to owners of the parent a

n with the aim of integrating small and middle-sized (Unit: Hundred millions of yen) k ﬁnancial institutions in Gunma Prefecture. The origin bank Establishment of the Bank Name changed 300 286 283 259 263 233 222 206 198 200 187

The 39th The

Integration The Gunma 2 National and Gunma 100

M reorganization Daido Bank

i Bank Bank d -

T 0

e FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 r

m 1878 Establishment November 1932 1955

B of the origin bank The name was changed to The

u Gunma Daido Bank after an ■Recent Mid-Term Business Plans s

i absorption-type merger of two banks n

e (Gunma and Joshu). Strengthen Value-proposition s s Foundation of the Bank P l a “V-Plan” “Value for Tomorrow” n Around 23 2 1926 1932 1944 - Evolution to a bank that - Value proposition toward tomorrow - 1915 2 enables value proposition - 2 Establish a sustainable business model for While continuing our tradition of “tomorrow” through the creation of new opportunities for revenue. Ordinary, savings (24 banks) (7 banks) 6 banks “Improvement in the quality of service,” and commercial were this concept has evolved to that of banks in Gunma integrated “Value Proposition.” Prefecture

(About 40 banks) 3

E S

I n i

t Jun. 1989 Dec. 1998 Aug. 2005 Aug. 2008 i

a Finance futures trading OTC sales of securities Securities Inheritance-related service t i Start of investment trust intermediary v

e service

s Business Apr. 1961 Apr. 1983 Jan. 1994 Apr. 2001 Feb. 2007 Nov. 2016 Foreign exchange business OTC sales of public bonds Trust business OTC sales of Issuing of credit cards by the Bank’s main body Leasing intermediary service insurance products

2 2 2 2 22

1981 New Banking Act 1993 Financial System Reform Act 1998 Financial System Reform Act Apr 2013 Financial liberalization (Establishment of securities (Investment and insurance Introduced quantitative and qualitative monetary easing policy From Jan 2016 Establishing fully started subsidiary, bank enters trust ) window sales lifted) Changed to minus interest rate policy and Investing Feb. 1971 Mar. 1982 Feb. 1991 Feb. 2016 Apr. 2018 Gunma Chuo Kogyo Co., Ltd. The Gungin Card Co., Ltd. Gunma Finance (Hong Kong) Ltd. Gungin Securities Co., Ltd. Gungin Consulting Co., Ltd. in Subsidiaries Transportation of goods, Credit card services Financing and securities dealing in Hong Kong Securities dealing Customer consulting services maintenance of automated and the Like Equity method afﬁliate Consolidated subsidiary Consolidated subsidiary Consolidated subsidiary teller machines (ATM)

Expansion of the of Expansion Business of Scope Consolidated subsidiary Sept. 1983 Jul. 2016 (capital participation) Jun. 2018 Gunma Shinyo Hosyo Co., Ltd. Sky Ocean Asset Management Co., Ltd. FinX DIGITAL Co., Ltd. Loan guarantee business Investment trust management business Promotion of digitalization Consolidated subsidiary Equity method afﬁliate Joint investment by seven regional banks

Oct. 1973 Jul .1986 Gungin Lease Co., Ltd. Gungin System Service Co., Ltd. Providing consulting proposals with highly specialized expertise based on the Leasing Software development and sales collective strengths of the Group. Consolidated subsidiary Equity method afﬁliate

4 5 7 (%) 5.34 4.76 3.01 2.81 2.63 2.54 1.88 1.84 1.81 1.75 osits, etc. d investment share dividends ization e Defined Act, in addition to Shareholding ratio Shareholding s, and other st and Liquidation ments. d deposits, periodic as exports, imports, f Japan 7,887 7,747 7,608 7,380 22,404 19,998 12,633 11,815 11,056 10,657 Number of shares held shares (in thousands) Agency services for receipt of paid-in advances on stocks and payments of and the principal and interest of public and corporate bonds Non-life insurance agent services Name floating public bonds, and conducting agency services for issuances and pay Services as a trustee of bonds and debentures under the Secured Bond Trust Current deposits, ordinary deposits, savings deposits, deposits at notice, fixe Current deposits, ordinary deposits, savings deposits, Negotiable certificates of deposit Loans on bills, loans on deeds, overdrafts documentary bills Discounts on bank acceptance, commercial bills, bonds Trading of public bonds such as national government bonds, corporate bonds, stock Investments in government bonds, municipal securities for bank reserves and fund management Transfers, debt collection, etc. for purposes such Various services related to foreign exchange transactions deposits, separate deposits, earmarked deposits for taxes, foreign currency dep deposits, separate deposits, earmarked deposits foreign remittances, currency exchanges, etc. Over-the-counter sales of public bonds such as national government bonds an trusts #4 #2 Handling of public funds for local public bodies #3 Agency services for the Workers’ Retirement Allowance Mutual Aid Organ #5 Agency service for loans from the Japan Finance Corporation #6 Trust agent services for pension trusts #7 #8 Life insurance agent services #1 Acting branch of the Bank of Japan, acting revenue branch of the Bank o Trust as a substitute for a will, land trust, real estate management trust, specific charitable trust, charitable public trust; Also, we handle inheritance-related services (will tru of inheritance property services). Operations and management of defined contribution pension plans under th Contribution Pension Act. (as of March 31, 2020) (as of March (2) Safe deposit box (3) Loan of securities (4) Loan guarantee (acceptance of payment) (5) Financial instruments brokerage (6) Underwriting of public bonds (7) Credit card services (8) Derivative transactions of interest rates and currencies (9) Handling of commercial papers (10) Staffing Deposits Certificates of deposit Loans Bill discounting (1) Agency services The shareholding ratio is calculated by subtracting the number of treasury shares from the total number of outstanding shares, and is rounded down to decimal places. two The Master Trust Bank of Japan, Ltd. (Trust account) The Master Trust Bank Japan Trustee Services Bank, Ltd. (Trust account) Japan Trustee Services Stockholdings Association The Gunma Bank Employees’ Bank, Ltd. (Trust account 9) Japan Trustee Services Company Meiji Yasuda Life Insurance Company Sumitomo Life Insurance Bank, Ltd. (Trust account 5) Japan Trustee Services 4) Japan Trustee Services Bank, Ltd. (Trust account Nippon Life Insurance Company JP MORGAN CHASE BANK 385151 Services as a trustee of bonds and debentures and an issuing and paying agent Deposit services Loan services Trading of trading account securities Portfolio investments Domestic exchange transactions Foreign exchange transactions Over-the-counter sales of investment trusts Supplementary services Trust services Handling of defined contribution pension plans Major Shareholders Major Shareholders thousand. nearest to the down held is rounded of shares Number Note1: Note2: (16,375 thousand shares). shares and number of treasury shares) (435,888 thousand number of outstanding shares Total 3: Note Operations Key - - - - - 43.3 55.0 54.5 50.0 Subsidiaries, etc. 20.0 15.0 31.6 45.4 50.0 100.0 100.0 100.0 100.0 by the Group by Gunma Bank 75.0 15.0 75.0 (as of March 31, 2020) (as of March （%） 100.0 100.0 100.0 100.0 100.0 100.0 The Gungin Card Co., Ltd. Co., The Gungin Card Achieve payment diversification and cashless payments Ratio of ownership of voting rights of voting Ratio of ownership 30 30 30 30 10 100 300 180 3,000 8,403.1 billion yen 8,403.1 billion 7,050.1 billion yen 5,602.3 billion yen 471.0 billion yen 11.95%, Consolidated 11.57% Non-consolidated JCR AA R&I A+ Moody's A3 A- S&P Capital Sky Ocean Asset Management Co., Ltd. Co., Management Asset Ocean Sky and satellite core through asset formation Encourage strategies investment Gunma Shinyo Hosyo Co., Ltd. Co., Hosyo Gunma Shinyo Assist customers in their dream of purchasing houses, cars, etc. (Million JPY) Gungin Securities Co., Ltd. Gungin Securities Co., asset needs for Meet various such as stocks and bonds management （Million USD） 1991 2018 1986 2014 1982 2016 1983 1971 1973 Oct. 1, Jul. 26, Apr. 18, Feb. 19, Feb. Feb. 12, Feb. Feb. 24, Feb. Mar. 12, Nov. 25, Nov. Sept. 28, Establishment Total assets: Total Deposits: Loans and bills discounted: assets: Net international standards): capital adequacy ratio(uniform Total Ratings: Location *2 194 Motosojamachi, Maebashi, Gunma 171-1 Motosoja- machi, Maebashi, Gunma 3-1-1 Minatomirai, Yokohama, Nishi-ku, Kanagawa 194 Motosojamachi, Maebashi, Gunma 2-2-11 Honmachi, 2-2-11 Honmachi, Maebashi, Gunma 194 Motosojamachi, Maebashi, Gunma 171-1 Motosoja- machi, Maebashi, Gunma 226 Motosojamachi, Maebashi, Gunma Gunma Chuo Kogyo Co., Ltd. Co., Gunma Chuo Kogyo Support banking infrastructure through and maintenance transportation The Gunma Bank, Ltd. Develop various financial solutions through the innovation of services that provide we collaboration going beyond beyond going collaboration Deliver enhanced value through through value enhanced Deliver the boundaries of individual companies Key operations Key Financing and securities dealing Customer consulting services, Customer consulting capitaling venture Software development and development Software sales Credit card services card Credit Securities dealing Assurance engagements Assurance Leasing Transportation of goods, of goods, Transportation of automated maintenance etc. teller machines (ATM), Asset management Support companies entering Asia Support companies Gunma Finance (Hong Kong) Ltd. Kong) (Hong Gunma Finance *1 ES ES CS CS CS CS CS CS EA (excluding temporary employees) temporary (excluding Gunma) (109 in Gunma, 48 outside 157 banking outlets in Japan 157 banking outlets in York; one banking outlet in New in Shanghai and offices two Bangkok companies Seven Kong) (Hong One company One company The Gunma Bank, Ltd. The Gunma 1932 September Maebashi, 194 Motosojamachi, Gunma 48.6 billion yen 3,030 Gungin Consulting Co., Ltd. Co., Gungin Consulting Gungin System Service Co., Ltd. Co., Service Gungin System systematization through improvements Support productivity Provide Provide optimal solutions to the challenges of individual companies Opened in October 2018 Names

Gungin Lease Co., Ltd. Gungin Lease Co., equipment introduce to need to effectively Respond Number of bases Domestic: Overseas: Subsidiaries Domestic: Overseas: Affiliates Domestic: Name: of establishment: Date head office: Location of Capital: Number of employees:

Number of in employees the consolidated companies is 3,159 (2,960 for the Gunma Bank and 199 for its subsidiaries). of Employees the Gunma Bank include “locally hired overseas employees and secondees to etc., “secondees and the from indicating the exclude Bank” the Bank,” number of employees based on the establishment employment. Gunma Finance (Hong Kong) Ltd. Kong) (Hong Gunma Finance Gungin System Service Co., Ltd. Co., Service Gungin System Ltd. Co., Management Asset Ocean Sky Gungin Consulting Co., Ltd. Co., Gungin Consulting The Gungin Card Co., Ltd. Co., The Gungin Card Gungin Securities Co., Ltd. Gungin Securities Co., Gunma Shinyo Hosyo Co., Ltd. Co., Hosyo Gunma Shinyo Gungin Lease Co., Ltd. Gungin Lease Co., Gunma Chuo Kogyo Co., Ltd. Co., Gunma Chuo Kogyo *1 CS (Consolidated subsidiary), ES (Equity-method subsidiary), EA (Equity-method affiliate) subsidiary), EA (Equity-method subsidiary), ES (Equity-method *1 CS (Consolidated Kong Hong Kowloon, Tsui, Sha Tsim City, 25 Canton Road, Harbour The Gateway, 1, Tower *2 Suite 608, Consolidated Subsidiaries, etc. Subsidiaries, Consolidated Fincross DIGITAL Co., Ltd. Co., DIGITAL Fincross Drive enhanced banking services through digital technology The Gunma Bank Group consists of the Bank, six consolidated subsidiaries, two non-consolidated equity-method subsidiaries, and one equity-method affiliates. In addition to ourcore banking services,we provide a widerange of such as leasing. and services financial products Note: Note: of the Group Overview Company Overview Company Established in June 2018

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Gun ma 群馬銀行について 1

9 784 240 544 1,162 52.79 FY 2019 66.3% (Unit: yen) 561 285 847 FY 2019 ConsolidatedOHR Lifeinsurance per share 518 ■ 778 409 52.79 yen 4,696 Net income 2,105 2020 8,508 (Consolidated EPS) (Consolidated 1,221 65.27 856 561 295 FY 2017

Consolidated BPS Consolidated EPS

[Corporate] Total 575 334 63.2% ■ 910

FY 2018 (Unit: Hundred millions of yen) (Unit: Hundred (Unit: Hundred millions of yen) 1,126 63.78 FY 2015 895 332 562 486 631 484 per share 4,739 2,434 2019 Net assets 8,776 60.5% 375 575 950 FY 2017 (Consolidated BPS) (Consolidated 1,162.64 yen 988 42.58 FY 2013 (Consolidated) Investment trusts Investment [Non-consolidated] Expenses [Non-consolidated] [Non-consolidated] Core business net income 886 319 566 ■ ■ ■ 62.0% 352 577

930 FY 2016 816 38.89 370 392 586 FY 2011 4,749 2,484 2018 8,583 916 567 349 [Consolidated] [Consolidated] Gungin Securities (including intermediary) Public bonds bonds Public 746 59.3% 569 390 Core business net income = Core business gross income - Expenses ■

■ 960 36.89 As of March 2020 31, (excluding non-recurrent expenses) (including Gungin Securities) Core business net income Core business Balance of personal ﬁnancial assets (As ofMarch each31 year) ■ ■ FY 2015 Index per share FY 2009

179 784 676 107 4.4% 222 2020 Tier 1 171 FY 2019 675 10.74% 11.95% 847 FY 2019 10.74% Common equity Consolidated ROE 209 856 112 744 ▲

4.4% 233 2019

743 167 910 11.45% FY 2018 FY 2018 12.25% (Unit: Hundred millions of yen) (Unit: Hundred (Unit: Hundred millions of yen)

Total capital ratio Common equity Tier 1 ratio 895 121 773 260 ▲ 2018 283 5.4% 176 772 12.41% 11.95% 11.83% 950 FY 2017 Total capitalTotal FY 2017 Non-consolidated 95 886 790 252 ▲ [Non-consolidated] Net interest income 5.1% 2017 263 141 789 11.93% 930 12.58% FY 2016 FY 2016 ■ 916 814 101 266 ▲ Consolidated ■ 147 813 [Consolidated] [Non-consolidated] Not-interest business income (Excluding gains and losses on bonds) [Consolidated] 5.6% 286 2016 960 11.81% 12.62% As of March 2020 31, (As of March 31 each year) Breakdown of core business gross income of core business Breakdown Consolidated total capital ratio ■ (International Financial Reporting Standards) Current net proﬁt FY 2015 FY 2015 ■ ■ ■ as of 8,992 2020 23,147 23,883 Others 56,023 March 31, 2020 9,080 2019 23,517 23,056 43% 55,654 Pref. (As of March 31, 2019) (As of March 31, 2020) Bank 5.6 trillion yen 5.6 trillion 35.9% Gunma Gunma (10th out of 64 regional banks) 9,977 2018 22,545 22,663 55,186 Small and medium companies ■ 9,373 2017 21,593 21,276 52,242 ■ share of loans and bills in Gunma Prefecture Note: Breakdown of the accounts of the domestic banking outlets

Personal 2016 10,050 20,029 20,394 (As of March each 31 year) ■ 50,473 Major banks（4.3％） JA Bank（3.6％） Shinkumi Bank（5.1％） Chuo Labor Bank（5.6％） Second-tier regional banks（8.6％） Other regional banks（15.3％） Shinkin Bank（21.6％） Saitama Pref.(20%) (Unit: Hundred millions of yen) Head Ofﬁce and other（4%) Keihin and Osaka（24%) （9%) Tochigi Pref. Loans and bills discounted Loans and Loans and bills discounted per area Banks’ Source: The Financial Journal Special Issue “Financial Mapping” 2020 version 19,974 2020 50,526 70,501 2019 18,788 49,296 as of March 31, 2020 as of March 68,084 (As of March 31, 2019) (As of March 31, 2020) 82% Pref. Bank 34.7% (10th out of 64 regional banks) Gunma Gunma Other（1%) 2018 18,330 48,360 Corporate deposits and other 66,691 ■ 7.0 trillion yen 7.0 trillion 17,958 47,014 2017 64,973

Note: Breakdown of the accounts of the domestic banking outlets

Personal deposits Personal 17,257 2016 45,678 (As of March each 31 year) ■ 62,936 Deposits Banks’ share of deposits in Gunma Prefecture Banks’ share of deposits in Gunma (Unit: Hundred millions of yen) Deposits per area Tochigi Pref.（5%) Saitama Pref.(9%) Keihin and Osaka （3%) Keihin and Osaka Chuo Labor Bank （3.4％） Chuo Labor Bank （4.8％） Other regional banks Shinkumi Bank（4.3％） Major banks（4.4％） Second-tier regional banks（5.8％） JA Bank（10.1％） Japan Post Bank（15.8％） Shinkin Bank（16.7％） Source: The Financial Journal Special Issue “Financial Mapping” 2020 version Financial Information Highlights Information Financial

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11 - Structural Structural changes in the regional economy and society, including demographics, and changes is- such addressing by advantage to our environment the in changes dramatic these will turn We competence? What is our core First is the “ability to collect based information” on the networks and relationships with - cus thus far. been fostering have that we proposals” “ability to formulate the comes Next We have strengthened our consulting business as a pillar for marketing strategy and have been For corporate customers, we have devoted efforts to supporting them in solving management Based on our core competence, we expect to concentrate our efforts on areas where customer However, it is critical to keep making efforts to redefinecore competence andfoster new abil- omy omy under that any conditions. hard Fully aware times are the true test of regional financialinstitu- our customers. to support doing our utmost are tions, we in lifestyles and business models due to the progress in digitization combined with the COVID-19 the speed of change. further accelerating pandemic are sues as taking the initiative for revitalizing regional economies, implementing a - radical transforma tion of the profitresponding structure, to emerging needs business involving and succession inheri- structure. management to build a robust on digital transformation taking the initiative and tance, Challenges Management Tackle To As a regional financial institution,we have been able to grow mainly through accepting deposits and making loans. However, to tackle the management challenges mentioned above, we are - re quired to redefine the businesses we are targeting. It is effective to once more consider the core competence of the Bank, namely, “Our core strength which other companies cannot imitate, and through which we can deliver value to our customers” while reducing our dependence on - conven to customers and contribute new value able to create are that we I believe tional business resources. and society through effective utilization of the Bank’s management resources upon accurately understanding and defining them. with markets in the expansion of geographical engaged Thus far, the Bank has been actively tomers. notable accomplishments. The networks we have developed so far with more than 34,000 - corpora tions and sole proprietors both inside and outside built were carefully Gunma many over Prefecture The that information can years. be obtained these from is networks of a new source business as well in deposits and loans. business as conventional engaged in strengthening our staff’s ability to devise new ideas to be presented as proposals. For personal customers, we are holding more than 600 seminars a year on building assets and other topics with sales branch managers as instructors as well as making efforts to present the best - pro posals to meet diverse customer needs by strengthening our banking/securities collaboration with Ltd. Gungin Securities Co., challenges with the establishment of Gungin Consulting Co., Ltd. and the launch of a human re source referral service. In fiscal 2019,we successfullyresolved 739 of our customers’ management feasibility assessments. our business and other issues identified through challenges and regional needs are significant and which may lead to business expansion and increased- profit and inheritance. of business succession example, the area ability, for ities since the effectiveness of practices differs depending on the market and competitive - environ ment, and, in some cases, our traditional competitive advantage may become obsolete through environment. in the market changes Akihiko Fukai Akihiko President Gunma Bank Fully aware that hard times are times are that hard aware Fully financial regional the true test of our utmost doing are institutions, we customers. to support our in changes will turn the dramatic We to our advantage, the environment in profit shift making a radical and tackling diverse structure building a robust issues to continue structure. management

The environment for management at financial institutions has also become even more difficult We play a key role in the infrastructure that is essential for social and economic stability, and

with fluctuations in global financial and capital markets due to the pandemic coming on top of per- yield sistently on spreads narrowing loans and securities due rate interest negative to the prolonged policy. This dramatic change in the global economic situation is having a greater impact than the impactregional on the a marked 2008 whileglobal alsofinancial having crisisoverseas in Japan and economy. our our financialmission intermediaryis functionsto - andfully regional supportdischarge econ the The Japanese economy, which had maintained a moderate recovery based on the recent economic situation, deteriorated sharply with an about-turn into extremely challenging conditions due to the pandemic. impact of the COVID-19 Preface Message from the President the from Message

1 The Gun ma Bank 2 Mi d- Ter m Busi ness Pl an 3 ESGI niti ati ves

群馬銀行について 1 10

13 - Goal Goal shared with customer own stock, company will be sold select party to which Transfer of company’s successionplan Prepare business business Prepare Select a successor (relatives/employees/third party) (relatives/employees/third Grasp current situation Present In order to achieve a radical transformation of our profit structure, it is essential to the improve As part of our business succession support initiatives, in fiscal 2018, theyear before the start of As part of our inheritance-related services, in fiscal 2019,we increased the number of dedicated Calculate backwards from goal, draw timeline, and build up necessary processes. Ensure realization of goal by managing and evaluating processes. How to proceed with business succession (image) with business succession to proceed How Realizing Advanced Value Through Evolution of our Business Model of our Business Evolution Through Value Advanced Realizing the For “Realizing policy advanced value through on evolution of which our is business our model,” other basic policy, we set forth five strategic themes, namely, “fostering andrevitalizing regional industries as well as supporting business succession “supporting of the these growth industries,” of customers through “improving our appropriate consulting operations to services,” steadily increase “strengthening customer our assets,” management structure to adjust to changes in the - environ and “responding ment,” to multifaceted needs through exerting our comprehensive Un strength.” der these strategic themes, we will work on ways to cope with discontinuous changes rather than a continuation of conventional measures, carry out high-quality consulting services that meet the needs of individual customers while broadening cooperation with our Group companies, and will structure. dimension) of our profit (new transformation a radical aim to achieve likely less is which income, business non-interest increasing as well as stock asset our of profitability to interest involve rate competition and does not depend on risk assets, through the exercise of our core competence. Our particular focus in this area is business succession support and inheritance services. the current Mid-term Business Plan, we conducted interviews with 21,000 customers about the exis- tence of successors and shareholder equity composition. In fiscal 2019,we increased the number of dedicated staff at our headquarters to put a structure in place as well as rolling out presentations on return of own valuation stock of and company’s succession methods focused on customers with - obvi ous business succession issues and a pressing need to address them. We set a target to provide these presentations to 6,000 customers over the three years of the Business Mid-Term Plan. However, we provided presentations for 3,083 customers in fiscal 2019, achieving more than 50% progress toward terms, In based concrete our on target. our has there presentations, been a steady in increase - cases re loans. covenant such means as M&As and structured through sulting in smooth business succession staff at our headquarters to put a structure in place as well as conducting interviews on needs and family structure with approximately 6,000 customers for whom smooth inheritance and asset succession could be an issue. based Consulting on these interviews led to for contracts related services, testamentary trusts, and estate liquidation. such as insurance, -

In the area of channel reform, we have been reviewing the roles and functions of each branch In the area of human resources reform, we have worked to reform our personnel system with In the area of proceeded with process reform, we have the elimination and review radical of our The Bank worked Business on Plans two previous over the Mid-Term past six years, and - provid To achieve what we aspire to be, we set forth the basic policies our of “Transforming - manage

Main Initiatives in Fiscal 2019 Main Initiatives Concept of the Mid-Term Business Plan Business the Mid-Term of Concept in pursuit of both higher value added and streamlining of We are operations. also aiming to build a and- collab sophisticated customer needsthat withcan meet diversified the structure needs of more under a sales structure introduced In April 2020, we areas. in neighboring branches between oration which we Branch whichdesignated as is“flagshipthe a Tatebayashi branch,” thecore branch in the with area, and some “satellite three reductions surrounding branches” in branches as services at the satellite branches. The flagship branch and the satellite brancheswork together to service the area. Based on feedback from customers and the status of collaboration between the branches, we will included in this structure. expanding the number of branches consider the aim of securing and developing expert human and resources supporting the active participation of diverse human We resources. have revised the conventional generalist-oriented single-track personnel system into a multi-track personnel system by also developing a system of work conditions and consulting. operations, market expertise such in as areas IT, with advanced human resources for in June 2020. this system began operating We al reform project to solicit a broad range of opinions from across the Bank on operations, administration, products and services that could be reduced or eliminated and promptly began eliminating and reviewing those that were identified. By March 31, 2020,we had already achieved an annual of 71 people. to the work equivalent volume, of 126,000 hours in our operations reduction In accordance with the basic policy our of “Transforming management platform through three - re form initiatives, we have been working on the three reforms (the of “Process” attitude and process of our daily jobs), (customer “Channel” interface channels), and “Human (work-style Resources” philosophy. of staff based on our corporate the motivation which enhances and career-path operations to enable our staff to deepen their relationships with customers over the medium- to operation an launched we 2019, May In activities. customer-oriented on concentrate and long-term Transforming our Management Platform Through Three Reform Initiatives Initiatives Reform Three Through Platform Management our Transforming ed customers with our unique proposals and support based on the basic concept of “value - propo thus sition,” enabling us to grow together with the regional community and our customers. In the new Business Mid-Term Plan, we focus on realizing value proposition based on “propositions with value” and aspire to be a “regional financial group that can achievegreater value by meeting cus- innovation.” financial service tomer needs through ment platform through three reform initiatives” and “Realizing advanced value through evolution of our business Given model.” the dramatic changes in the environment due to COVID-19, we are had planned. we and deepen the measures expecting to further accelerate The three-year Mid-Term The Business three-year Mid-Term Plan “Innovation New Dimension – delivering Toward value” above. described 2022 is based on the perspectives 2019 and ending in March launched in April Initiatives under Mid-Term Business Plan : “Innovation New Dimension” New “Innovation : Business Plan under Mid-Term Initiatives Message from the President the from Message ■ ■

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15 - July 2020 President Gunma Bank *Compared with fiscal 2013 *Compared Akihiko Fukai In view of shareholder returns, the Bank will be engaged in strengthening the financial structure structure financial the strengthening in engaged be will Bank the returns, shareholder of view In In addition, as various environmental and social issues are becoming serious, we must play By expanding these action programs and the policies of the Business Mid-Term Plan, we will Now a new crisis has arrived once more due to the COVID-19 pandemic. However, unlike the In order to overcome the current crisis, we will steadily work on the measures discussed so far. support. warm continued your for gratitude sincere my to express like Last, I would and management strength, we will steadily work on loan promotion that ensures return commensu return ensures that promotion loan on work steadily will we strength, management and portfolio. loan a highly profitable risk to establish with rate and, under the basic policy of continuously providing stable dividends, return performance-linked profits to shareholders.For the time being,we are setting a target of 40% of the non-consolidated current net income for the ratio of total payout to shareholders combining dividends and treasury stock acquisition. a more proactive role through action programs that include the Sustainable Development Goals (SDGs). In February 2019, we formulated “Gunma the Bank Group with SDGs the Declaration” aim of contributing to the resolution of environmental and social issues through business activities and In SDGs based fiscalphilosophy weDeclaration. on 2020, willour newlycorporate establish the SDGs and ESG Management Office within the General Planning Department aswell as set numerical targets, including at least a 26% reduction* in greenhouse gas emissions and 40% reduction* in our action programs. fiscal 2030 to further strengthen paper use by to strive realize a sustainable society and in create economic value, addition to fulfilling ourrespon- sibilities to our stakeholders, including regional communities, customers, employees, shareholders and investors. Conclusion for local customers support my best to provide the time of the global financial crisis in 2008, I did At as the manager of a sales branch. I firmly believed thatregional financial institutions, such as Gun- ma Bank, are part of the essential infrastructure of the regional economy, and I learned a lot about such institutions should play. and roles the responsibilities - completely changing the post-contain of the effect is having crisis global financial crisis, the current ment environment into a new society, overturning our previous lifestyles and notions rather than returning to the way society was before. Therefore, the provision of support to regional customers must go beyond the financial aspect such as funding to provide extensive support that includesre- of business models. and transformation form We will thus achieve a transformation to a new dimension of business model and create a new - re in partnership with our customers. gional community Thus far, we have worked to strengthen the - gover nance nance system, including establishing a Nomination - Ad visory Committee and a Compensation Advisory - Com mittee composed of Independent Outside Directors and the Representative Director as well as the introduction and performance-linked stock remuneration of restricted stock remuneration. In June 2020, we increased the number of Outside Directors by one and appointed a new outside Audit & Supervisory Board member, - cre ating an even more effective governance system. More In addition, we will push further forward with efforts aimed at strengthening governance and conducting integrated control and operation for risk, return, and capital.

As a framework for business management, we promote the creation and utilization of a “Risk In In fiscal 2019,we developedbusiness activities witha focus on sharingthe current issues and also We expect to speed up the three reform initiatives aimed at our transforming management

Challenges in Fiscal 2019 and Initiatives in Fiscal 2020 in Fiscal and Initiatives in Fiscal 2019 Challenges Appetite Framework” Appetite that Framework” is a core tool to optimally balance the levels of risk and return through maximized, effective utilization of limited capital and management resources. This framework is indispensable for regional financial institutions, such as our bank, when creating a sustainable business model. While being ready to accept necessary risk for return in accordance with our financial than one-third of the members of the Board of Directors are Outside now Directors, with a balanced composition in terms of their areas of expertise, which finance, and management, include corporate and their gender. law, Strengthening of Governance and Capital Policy and Governance of Strengthening goals goals of each customer through interviews and presentations for both business succession support and inheritance services. In fiscal 2020, we expect to enter a phase in which we fully utilize the and maximize the the number of dedicated staff increasing by put in place and capabilities structure functions of Group companies while making optimal solutions that meet the individual issues and needs of customers a concrete reality. We will draw timelines based on backcasting from the goals - appro in which the steps to act on timelines progress with customers and build up processes shared for the Bank. yield profit as issues as well customers’ priately to resolve platform which will facilitate this. Our lifestyles, mindsets and social environment have changed completely due to the impact of the COVID-19 pandemic, and there has been a rapid proliferation will use this as We or seals. without signatures and paperless transactions of online communications an opportunity to accelerate the “DigiCal also strategy” set forth in the plan and promote a digital shift in of customer internet contact based banking, the on apps, convenience improving and online and implementing online customer communication. services conclusion As a result of these initiatives, the financialresults for the fiscal year ended March 31, 2020, the first year of the Mid-term Business Plan, progressed largely in line with the consolidated quantitative targets set forth in the plan. non-interest However, business income, which we focused on expanding to transform our profit structure,was limited at the Bank although subsidiaries such as Gungin area. in this well Lease performed Securities and Gungin Message from the President the from Message ■

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17 - - - - What are your thoughts on Gunma Bank’s efforts to strengthen governance go ing forward? ．．What are your thoughts on Gunma Bank’s strengths and weaknesses? weaknesses? and strengths Bank’s Gunma on thoughts your are ．What ．Looking ahead, what．Looking do you think BankGunma should focus on most? The framework has been put in place, so I The firstIndependent Outside Directorwas The outlook is uncertain, but first ofall I think itis important to achieve the targetsunder theMid-term Busi To do this, It is important to firmly address the three reforminitiatives for transforming the management “A company is“A its is people” a phrase that has been around a long time, but it is a phrase that I am even more People People with different experience and char I also feel it is truly wonderful that the Bank is a company which represents the region, has many outstanding I am not sure if it can be described as a weakness, but in a society that is forecast to change - dramatically go tors will play their role fully. feel it is now the stage when the Outside Direc focused on the regional economy, and its strong I brand. also think that the locational advantage of its proximity metropolitan area,to which istheTokyo the center of the financial markets,is one of its strengths. transparency. The Bank’s strengthsThe Bank’s are its strong relationships of trust with the region based on a long track record of activities We have entered a time in which Philosophy, Corporate “Itthe namely,isBank’s our mission to take actions that The Bank has been working steadily on will foster the development willof be regionaltruly communities” tested. employees who come from Gunma, and has a corporate culture of being earnest about everything it does. does. it everything about earnest ofbeing culture corporate a has and Gunma, from come who employees and make sure that employees are not just a“modelwho groupdo students” ofwhatever they are told. ofaware than ever in a time of dramatic change. acteristics are chosen as Outside Directors, so appointed in 2015. In 2020, there are three strengthening its governance based on the questionnaires for evaluating the effectiveness of the Board of Directors, and I think I can rate one third of the nine Directors. In 2018, the Corporate Corporate Governance Code and analysis of the ing forward, I think it is important to try to develop human resources who can act quickly with a sense of crisis significant. as years few past the over progress platform which forms the basis for business activities, and, in particular, “Human Resources Reform”. Reform”. Resources “Human particular, in platform forms activities, and, the basis which for business rector. mittees in which the Independent Outside Di- rectors participate were established, increasing ness Plan “Innovation New which Dimension,” the Bank has been working on since last year, business activitieswith in accordance the SDGs Declaration. and to conduct Nomination Nomination and Compensation Advisory - Com Directors is very diverse, including a female Di- Q2 Q3 Q4 I I think that the composition of the Board of Independent Outside Directors accounting for - - - Please see the list of executives (page 49) for Jun 49) for (page Please see the list of executives history. career Kondo’s We have entered a time in which the a time in which entered have We namely, Philosophy, Corporate Bank’s actions that to take “It is our mission of regional the development will foster will be truly tested. communities” to firmly address It is important as set Reform” Resources “Human Plan. Business in the Mid-Term forth I am change, In a time of dramatic “A that than ever aware more even people.” is its company Jun Kondo Director

．What do you think is your role as an Outside Director? Outside an as role your is think you do ．What

Specifically, I try tokeep in mind what kind ofin-house discussions havepreceded aproposal, whether the I am from a manufacturing industry background and worried about what kind of role I could play without I I also try to use such opportunities as meetings to exchange opinions with the Audit & Supervisory Board Interview with an Outside Director Outside an with Interview substance of the proposal reflects thecorporate philosophy, and also how it feels from theuser perspective, part nal, third-party perspective to fulfill a management supervisory function. having had any involvement in finance.However, I believe that the fundamentalsand points to look out forin management are the same in industryany and try to make comments based on my own experience. ularly whether there is a positive atmosphere. members and interviews with the executive officers to checkup on the cultureand character of the Bank, partic many years. ly because I come from Gunma Prefecture and have been involved in corporate activities in the Gunma area for

I think the role of an Outside Director is participating in the discussion at the Board of Directors from an exter Q1

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Value Creation Process at the Gunma Bank

● As a comprehensive regional ﬁnancial service institution, the Gunma Bank promotes businesses by using vari- ● Value creation will result in even a higher value creation through increasing capital of the Bank Group and ous management resources, and endeavors to realize a sustainable society and create economic value while raising its corporate value. providing value to the stakeholders including regional customers, shareholders, investors, employees and

1 regional communities as well as contributing to achieve the SDGs. 1

群馬銀行についてh

G Strong management u

n base that supports our

m a Utilizing capital resources Business model of the Gunma Bank Group business model Products and services provided to customers B a n

k Financial capital ● Sound ﬁnancial portfolio ● Abundant equity capital Consolidated: 11.95% (As of March 31, 2020) Human capital Corporate governance ● Number of employees on a consolidated basis: 3,159 Deposits ● High abilities and strong organizing power

High quality ● Extensive specialized human resources

2 37 SME consultants, 54 securities analysts, 123 Level 1 ﬁnancial planners, etc. communications (as of March 31, 2020) ● Ordinary, time, and foreign M ● Risk management exchange deposits i Corporate culture rich in individuality Comprehensive d ● Retirement allowance - ﬁnancial service Personal and T Intellectual capital Financial functions plans e ● Knowledge and systems that are backed by corporate

r products and

our long years of experience and achievements - Bank customers

m Loan products services ● Excellent information-collecting ability and ability to create proposals - Group companies (needs and challenges)

B Number of solution proposals: 12,211 (41.4% of all suppliers: FY 2018) - Specialized ● Government bonds, Compliance ● u Various kinds of housing loans ● Ability to meet a variety of financial approaches human investment trusts, personal s resources Consulting sales pension insurance, etc. i including financial technology (fintech) ● Special purpose loan ● n Financial instruments Fincross DIGITAL initiatives Business feasibility (car, education and housing reform)

e assessment intermediation, NISA, iDeCo

s ● Inheritance consulting services ● All-purpose loan (card loan) s Regional social capital （accurate understanding） including the provision of ● P Favorable relations with customers Needs and challenges testamentary trusts ● Reverse mortgage, etc. l Number of Gungin Management Club members: 13,212 (as of March 31, 2020)

a (provision of specialized products

n ● Resilient networks and services) Number of branches: 157 in Japan, 1 overseas Mid-Term Meeting needs and External environment ● Overwhelming business base Business Plan solving challenges (high shares of deposits and loans) (Improvement (revitalization of (social challenges) Within Gunma Prefecture initiatives) regional economy) Financial services Loans 35.9%, Deposits 34.7% (as of March 31, 2019) ● Initiative for SDGs (building a sustainable society) for companies Other services (high percentage of major customers) ● Decreasing birthrate and increasing aging population Major customers 18,944 (55.5% of all customers: FY 2018) ● Fundraising support Utilization of ● Growing expectations for women and elderly to ● Our service area is a good location for companies. Loans, SDGs private placement take active roles in society ● Internet banking Within 1 hour from the Tokyo metropolitan area new ideas and bonds, syndicated loans,

4th in Japan for number of locations and location area technologies ● Work style reform and funds ● Cashless settlement

3 (2019 Survey of Factory Location Trends) ● ● (introduction of digital technology) ● Accumulation of companies with signiﬁcant technologies Progress in digitization Consulting schemes E Manufactured product shipments, etc.: 9,088 billion yen (2018: 13th in Japan), ● M&A, business succession, S Slowdown in the pace of business expansion

of which transportation equipment was 38.8% derivatives, business matching, G ● Prolonged negative interest rate policy etc. (specialized consulting) I ● n Natural capital Diversiﬁcation of asset management and fundraising

i ● Blessed with a natural environment t ● Growth in demand for inheritance and i 46 days with fair weather (2nd in Japan)

a (2016 Statistics Bureau, Ministry of Internal Affairs and Communications) business succession services t i ● Others v Region has few natural disasters

e Number of earthquakes with seismic intensity of 4 or higher

s (1919-2020: JMA seismic intensity database) Gunma 66, Tokyo 564, Chiba 222, Kanagawa 113, Saitama 155, Tochigi 225, Ibaraki 367

Creating shared value (CSV)

The Gunma Bank Group (image that we aspire to be) A regional ﬁnancial group that responds to customer needs and creates value through the innovation of ﬁnancial services

Initiatives to realize a sustainable society allow us to enhance the corporate value and create higher value.

Customers Shareholders Employees Environment and ● Financial services that meet and investors ● Promotion of a variety of regional communities their various needs human resources into active ● Maximize shareholder value ● Preservation and creation of ● Overcoming management challenges on a mid- to long-term basis positions the global environment such as business succession ● Fostering human resources to play ● Sustainable development of ● Asset building to accommodate an active role at work, and offering regional economy each stage of life ﬂexible work arrangements ● Promotion of the partnership ● Fulﬁlling corporate culture

18 Creation of the value 19 21 20% 1,500 6,000 2,000 12% level Around 65% Around 1 trillion yen Increase of Increase 24 billion yen 20 billion yen 60 billion yen 5% and above 4.2 billion yen 0.5% and above 4,780 billion yen ) realize value （Increase corporate value） April 2019-March 2022 Ensure revenue for the Bank Ensure revenue for the “Innovation New dimension” and realize sustainable growth and realize sustainable Foster value propositions to ” through innovations in ﬁnancial services. - Toward realizing- Toward higher value - 〈Realize value for the Bank〉〈Realize value for so that they lead to the “ability to realize value Foster the “ability to make value propositions” 〈〉 compared to March 31, 2019 to March compared - Value propositions “Value for Tomorrow” April 2016-March 2019 of new opportunities for revenue. for “tomorrow” through the creation to meet tomorrow’s needs - Support business expansion Support business expansion Establish a sustainable business model and asset building for customers and asset building for 〈Realize value for customers〉〈Realize value for Customers’ deposited financial assets (consolidated) (consolidated) deposited financial assets Customers’ Proceeds from corporate service provision (consolidated) (consolidated) provision service corporate from Proceeds assessment feasibility business through solved Number of problems business succession support for that received Number of companies business start-up support for that received Number of companies positions ( in managerial Number of women shareholders company parent attributable to net income Current business income Non-interest RORA OHR capital ratio Total ROE loans receivable Retail loans receivable consumer Unsecured

〉〉

The Gunma Bank website is releasing materials used to explain the Mid-Term Busi- the Mid-Term materials used to explain is releasing The Gunma Bank website to view materials. below code the QR Please read meeting of analysts. a ness Plan for https://www.gunmabank.co.jp/ir/hosin/pdf/setsumeikai.pdf if theyif can lead to what can “Realize produce ⇒ Continuously value” value *Please see from P24 to P35 for progress of each target. progress P24 to P35 for *Please see from Note: “V-Plan” or 〈Strengthen the ability to make value propositions〉〈Strengthen the ability to make value - Evolving into a bank new ideas and technology April 2013-March 2016 Identify services to see at one a time they if to are of both value customers the Bank, and Non-interest business income Non-interest vitalization / SDGs Regional unique ﬁnancial services using While continuing the conventional concept Assess the real needs of customers that offers value propositions - of “Improvement in the quality of service (Q),” 〈Efficiency index〉〈Soundness index〉 index〉〈Profitability income〉 interest 〈Net 〈Profitability index〉〈Profitability for both customers and the Bank.〉 both customers for Provide customers with the Bank’s Respond Respond to customer needs, provide customers with our unique financial services, andrealize value through high-quality communication enhance it to the concept of Value Proposition (V). Deliver the “Best Value” that the Bank can Provide that the Value” “Best the Deliver targets) (quantitative Planning Quantitative 〈

〈

■ Long-term target ■ achieving the targets Major quantities for ■March 31, 2022) year ending plan (fiscal year of the as of the final fiscal target quantitative Consolidated 〈〈 ■ unique propositions ability to create Enhance - - Gunma Bank Group SDGs Declaration (made public in February 2019) Human resource innovation New dimension New strengths of the Group Exerting the collective Increase Increase life toward the future Sustaining a prosperous customer assets B tered tered thus far, we will carry out high-quality consulting ser vices that meet the needs of individual customers instead of financial services.continuing we Inconventional way can this “deliver the best value” to customers and achieve a radical structure. Dimension) of our revenue (New transformation Deliver enhanced value through evolution of business model evolution through value enhanced Deliver While taking over the “value that proposition” we have fos G - Innovation Channel innovationChannel New dimension support business succession business support Foster regional industries and our customers our Support growth of Steady revenue and continuing financial soundness regionalcommunities Image of a company that we aspire to be aspire we that ofa company Image Deliver enhanced value through evolution of our business model Development of sustainable Transform our business platform through three reform initiatives Strengthen Strengthen and delivers value through the innovation of financial services and delivers value through the innovation of financial services the innovation through value and delivers the management structure Becoming regional a financial group that responds to customer needs Innovation Becoming a regional financial group that responds to customer needs that financial group a regional Becoming Process innovation

“Human Resources (work-style and career-path which enhances the motivation of staff based on our corporate philosophy).” (April 2019-March 2022) 2019 Mid-Term Business Plan We grapple with the reforms of “Process (the attitude and process of our daily “Channel jobs),” (customer interface channels)” and Innovation New Dimension

In a new Mid-Term In Business a Plan, new the Mid-Term Bank mainly addresses of ways realizing value proposition based on our six- This plan was formulated based on the concept of and “SDGs the by Declaration,” working toward “realization the Company Image and Basic Policies Image Company Perspectives tomer tomer interface channels and (Channel)” (3) work-style and career-path which enhances the motivation of staff based on our corporate philosophy (Human Resources) to promote effective. our new strategies to make reforms structural Transform the business platform through three reform initiatives reform three through the business platform Transform This major undertaking tackles the three innovations of (1) the attitude and process of our daily jobs (Process), (2) cus Over the past six years, the Bank has posted the “2013 Mid-Term Business Plan: V-Plan - Evolution to - becoming Business a V-Plan Evolution Plan: Bank the Over past six “2013 the years, Mid-Term Bank has posted the while Business that focusing and Plan: offers “2016 on Value the for value Tomorrow” Mid-Term growing proposition” together with the regional communities and our customers through providing customers with our unique proposition.” “value proposals of is based on the basic concept support that and providing this in mind, the plan has With in social conditions. while meeting changes proposition” “value of providing efforts year been termed “Innovation New which Dimension” represents our aspiration to be a “regional financial group that can provide. that we of services the innovation through value” greater achieve of to value” achieve this plan, we will realize the development of sustainable local communities and the fulfillment of of the Bank. sound development leading to the into the future, that continue rich livelihoods Dimension” - Toward delivering value - value delivering Toward - Dimension” 2019 Mid-Term Business Plan “Innovation New New “Innovation Plan Business Mid-Term 2019 2. Mid-Term Business Plan Business Mid-Term 2. ■ basic policies Two ■ to be aspire that we of a company Image 《Outline of the Mid-Term Business Plan》 Business 《Outline of the Mid-Term 《Duration of plan: Three years from April 2019 to March 2022》 2019 to March April from years Three of plan: 《Duration

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23 The Gunma Bank Group companies External consulting companies external specialized institutions, etc.) cal licentiates, (local licentiates, of consultation needs of consultation Sustainable Finance Awards Sustainable Finance Collaboration Introduction Received Regional Finance Prize at the Prize Finance Regional Received Issued the first regional bank green bond regional bank green Issued the first Kiryu” set up inside the Kiryu Branch Kiryu” Kiryu City Tourist Information Center “Silkuru Center Information Tourist Kiryu City Kojin Soudan Plaza Takasaki meets a wide range meets a wide range Takasaki Soudan Plaza Kojin Gungin Consulting Ltd. Co., Specialized issues challenging Extremely issues Close collaboration sharing Information Sharing know-how resource Human and exchange development Customer Consulting Department Business case consultation Sales branch Realize value through specialized solution proposals and execution support and execution specialized solution proposals through value Realize Provide speedy solution proposals speedy solution proposals Provide the between collaboration through and the headquarters sales branch Strengthen management structure to meet environmental changes to meet environmental structure management Strengthen Promotion of efforts to steadily increase customer assets steadily increase to of efforts Promotion strengths collective the Group’s exerting needs by to multifaceted Responding Efforts to foster and revitalize regional industries and support business succession and support industries regional revitalize and to foster Efforts services consulting first-rate providing by growth Support customers’ Provide “one-stop service” over a wide range of sophisticated consulting services services of sophisticated consulting a wide range over “one-stop service” Provide Management issues Management /needs Meet various needs for asset management in collaboration between the bank and between in collaboration asset management needs for Meet various securities companies and personal customers corporate sales for integrated for Implement new measures management and wealth manner risk and capital in an integrated of revenue, and management Implement control Collaboration with local public bodies Collaboration for the of growth the entire regional areas of the fruit of our efforts and acquisition Provide support to enhance added value for major industries as well as support expansion of start-up businesses efforts Comprehensive to resolve the challenges of business succession faced by our business customers in social structure the changes grasping accurately customers by business options for service Diversify transactions. exchange activities and expand foreign and transaction business development Support overseas Corporate customers ○ Implement customer-oriented, asset building initiatives ○ ○ needs of senior citizens to increasing respond Proactively ○ personal customers for strategies marketing Restructure ○ ○system management a sophisticated market through profitability Increase ○ ○ value of corporate enhancement to allow system the governance Strengthen ○ system the compliance improving by organization Establish a healthy ○ infrastructure system utilization of IT and improve strategic Promote ○ our main business activities to achieving SDGs through Contribute ○ revenue to maximize consolidated Efforts ○ strengths our collective to further enhance of business areas Development ○ ○ ○ ○ money” “support of injection of business support and proactive Expansion ○ studies based on business feasibility services Implement consulting ○ markets. in promising with companies and transactions Expand networks ○ ○ ○ customers. core our recognizing qualified loans and promoting Expand customer base by “Realizing enhanced value through evolution of our business model” of our business evolution through value enhanced “Realizing [Strategic Theme 4] [Strategic Theme 5] [Strategic [Strategic Theme 1] [Strategic Theme 2] [Strategic Theme 3] [Strategic We We will strengthen our system governance and enhance risk return management our business activities. the SDGs through to achieve as enrich measures as well We are prepared to respond to multifaceted customers’ needs by making the most of the functions of the Group - com services. in lease, securities and consulting panies, including those involved We proactively grapple with the challenges involved in supporting with - grapple region the involved proactively challenges We abil- networking using the Bank’s and al business revitalization succession economy. the vitality of the regional to maintain and improve ity in order By correctly understanding the challenges and needs of our customers, we can provide them with optimal solutions and support their growth. We provide customers with asset building support according to their life stages customer assets on a mid- to long-term basis.” “Increase under our mission of ES Call center PC website of quality services Improve Smartphonewebsite Consulting center in a shopping mall CS and organizations Individual Consulting Plaza services from a female perspective a female from services - L-NEXT, a team for promoting women’s women’s promoting a team for L-NEXT, Website for individual companies Customer empowerment in FY2019, planned products and in FY2019, planned products empowerment Fincross DIGITAL Fincross digital technology through banking services enhanced Drive Branch The “DigiCal refers Strategy” to a strategy that effectively mixes the “Digital Channel” included in the growth area with “Physical (face-to face) Sales” which is one of the of the Bank. strengths SNS Sub-branch Note: Note: IB ATM Internet branch Branch branch) (ﬂagship Branch branch) (satellite Smartsub-branch, mobile banking vehicle Personal Personal customers customers customers Mainly personal customers customers Corporate Corporate Innovation of the Channel to expand customer interface channels customer interface of the Channel to expand Innovation Innovations in human resources aimed at making the best use of creativity in human resources Innovations

Innovation of the Process to improve the quality of jobs to improve Process of the Innovation

Branch Sub-Branch Establish a foundation for mid- and long-term fostering of specialized human - re sources Build on the collective strengths of human and resources the transform - organiza initiative staff members can act on their own tion into one where staff member of each to support the lifestyle in workstyle Implement reforms Selection and concentration of the bank network and functions for optimization the sales by strengthened channels through Expand customer contact by area of sales service and the introduction head office with outside partners in collaboration A new customer approach expanded communications through customer loyalty Improve Virtuous cycle of employee satisfaction (ES) and customer satisfaction that (CS) are based on of services in the quality improvement In June 2018, seven regional banks established “Fincross DIGITAL Co., Ltd.” Co., DIGITAL “Fincross banks established regional In June 2018, seven Selection and concentration of bank functions Selection and concentration

○ ○ the company that leads to enhancing the vitality of diversity Promote ○ ○ process “talent management” a job satisfaction through Improve ○ ○ ○ ○ ○“DigiCal Strategy” the through customer experience Improve ○ ○“Job Sorting” through reductions Cost ○ thinking by using zero-based work office Radically streamline ○ using new digital technologies by Job innovation ○ and quality of jobs the process of cherishing a culture Nurture ○ Transforming our business platform through three reform initiatives reform three through our business platform Transforming [Strategic Theme 3] [Strategic [Strategic Theme 2] [Strategic [Strategic Theme 1] [Strategic

In this plan, we set forth the following strategic themes for each of the two basic policies and carry out company. of the “ideal image” to be the our aspiration realize to measures specific Basic Policies and Strategic Themes Strategic and Policies Basic We We encourage our staff to make the best use of their own creative style and support our customers to the best of their ability by evolving from with similar abilities human resources of fostering practice the traditional unique abilities. their own each person can realize to a staff where Improve Improve convenience to customers and increase - communica tion opportunities by promoting innovation of the bank’s net- channels. non-face-to-face and significant expansion of work nologies, nologies, we allow our staff to concentrate on customer-oriented interactions so with customers. relationship can establish a mid- to long-term that we To To improve satisfaction between our staff and customers through job abolishment and total job restructuring in addition to increasing the utilization of digital tech

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25 As a result of the above, consolidated OHR The consolidated ROE, which expresses the - re turn on equity (capital efficiency),was 4.4%, the same level as last year. The average ROE for the last five years was 4.9%. The Bank’s long-term of 5% or above. an ROE is to achieve target Expenses were 56.1 billion yen, a reduction of 1.3 a reduction 56.1 billion yen, Expenses were billion yen, mainly from personnel expenses and property expenses. Meanwhile, core business gross income 6.3 decreased by billion to yen 84.7 billion yen, mainly due to a decrease in - invest losses. ment trust cancellation YoY. points percentage 66.3%, up 3.1 was As a result of a decrease in the total capital ratio due mainly to a decrease in unrealized gains on securities, the consolidated total capital ratio declined points by 0.3 to percentage The 11.95%. in the Mid-term Business Plan is set at 12% target level. ○ Overview of the fiscal year under review year under of the fiscal Overview ○ ○ Overview of the fiscal year under review year under of the fiscal Overview ○ review year under of the fiscal Overview ○ 65% level or above 2022 2022 (Unit: %) (Unit: %) (Unit: %) 12% 5% Around Target Target Target 12% level 12% level 5% or above 5% or above Around 65% Around Long-term target As of March 31, 2022 As of March 31, 2022 As of March 2021 2021 2021 4.4 66.3 2020 2020 2020 11.95 Plan Plan Plan 4.1% 67.7% Around 12% Around As of March 31, 2021 As of March As of March 31, 2021 As of March 31, 2021 As of March 4.4 63.2 Mid-term Business Plan period Mid-term Business Plan period Mid-term Business Plan period 2019 2019 2019 12.25 4.4% 66.3% 5.4 Results Results Results 11.95% 60.5 2018 2018 2018 12.41 As of March 31, 2020 As of March As of March 31, 2020 31, As of March 31, 2020 As of March 5.1 62.0 2017 2017 2017 12.58 4.4% 63.2% Results Results Results 12.25% 5.6 59.7 2016 2016 2016 12.62 Profitability Index Profitability Efficiency Index Efficiency Soundness Index As of March 31, 2019 As of March As of March 31, 2019 31, As of March 31, 2019 As of March ROE OHR Capital Ratio Total Results of the previous of the previous Results Results of the previous of the previous Results of the previous Results Mid-term Business Plan Mid-term Business Plan Mid-term Business Plan Long-Term Target Long-Term This is the ratio of profit to equity capital, and it represents the return on equity capital. the represents to equity capital, and it of profit This is the ratio equity capital at the beginning and end of owners of parent/average attributable to = profit ROE the period - expenses) to prof non-recurring expenses (excluding and administrative of general This is the ratio efficiency. gains (losses), and represents bonds-related excluding income it, which is business gross (losses)) gains bonds-related − income gross expenses/(business administrative and general = OHR the soundness of the company. it represents of total capital to risk assets, and This is the ratio assets = total capital/risk capital ratio Total Year of the Plan (fiscal year ending March 31, 2022) 31, March ending year (fiscal Plan of the Year As a result of the above, ordinary profit was In order to achieve the target (20.0 billion As a result of the above, the decline in profit Ordinary Ordinary income decreased by 5.6 billion yen to YoY 143 billion yen, mainly due to decreases in interest income and gain on sales of equity securities, despite an in increase gains on sales of bonds. Ordinary expenses decreased by 1.3 billion to yen YoY 111.5 billion yen, mainly due to expenses and administrative in decreases general loan losses. for of allowance and provision 31.5 billion yen, a decrease of 4.2 YoY, billion yen and profit attributable to owners of parent was 22.2 billion yen, a decrease of 1.0 YoY. billion yen Because non-consolidated net profit was 17.9 billion yen, the difference between consolidated net profit and non-consolidated net profit was 4.3 billion yen, and the ratio of consolidated net profit and non-consolidated net profit was 1.24 times. Non-interest Non-interest business income, a key focus area of the Mid-term Business Plan, increased by 0.4 billion yen to YoY 17.1 billion yen due to an increase in proceeds from corporate service - pro vision and contributions from the earnings of Securities and Gungin (Gungin companies Group Lease). yen) of the Mid-term Business Plan, the Bank will continue to strengthen its consulting capabilities in areas such as business succession and mergers and acquisitions, and respond to a - va riety of needs including asset management in a manner. attentive more 4,232.1 a of billion Risk decrease yen, assets were attributableProfit toowners 93.7 billion YoY. yen of parent decreased by 1 billion to yen YoY 22.2 billion yen. attributable to owners of parent exceeded the - 0.01 percent fell decline in risk assets, and RORA to 0.53%. YoY point age ○ Overview of the fiscal year under review year under of the fiscal Overview ○ review year under of the fiscal Overview ○ ○ Overview of the fiscal year under review year under of the fiscal Overview ○ or above 200 240 (Unit: %) 2022 2022 2022 0.5% Target Target Target 0.5% or above 20.0 billion yen 24.0 billion yen As of March 31, 2022 As of March 31, 2022 As of March As of March 31, 2022 As of March (Unit: 100 million yen) (Unit: 100 million yen) 2021 2021 2021 171 222 0.53 2020 2020 2020 Plan Plan Plan Around 0.5% Around 17.6 billion yen 20.5 billion yen As of March 31, 2021 As of March As of March 31, 2021 As of March As of March 31, 2021 As of March 167 233 0.54 2019 2019 Mid-term Business Plan period Mid-term Business Plan period Mid-term Business Plan period 2019 0.53% 178 Results Results Results 283 0.67 2018 2018 2018 17.1 billion yen 22.2 billion yen As of March 31, 2020 As of March As of March 31, 2020 As of March As of March 31, 2020 31, As of March 141 263 0.66 2017 2017 2017

0.54% Results Results Results

147 286 0.77 16.7 billion yen 23.3 billion yen 2016 2016 2016 Profitability Index Profitability As of March 31, 2019 As of March As of March 31, 2019 As of March As of March 31, 2019 As of March RORA Non-interest Business Income Non-interest Profit Attributable to Owners of Parent of to Owners Attributable Profit Results of the previous of the previous Results Results of the previous of the previous Results Results of the previous of the previous Results Mid-term Business Plan Mid-term Business Plan Mid-term Business Plan This is the ratio of profit to risk assets, and it represents the return on risk. the represents to risk assets, and it of profit This is the ratio assets owners of parent/risk attributable to = Profit RORA Total of fees and commissions and other business income and other business income and commissions of fees Total gains (losses)) bonds-related (excluding

Profit attributable to owners of parent of the net profit in the consolidated statements of income in the of the net profit owners of parent attributable to Profit Consolidated Quantitative Target as of the Final Fiscal Fiscal Final of the as Target Quantitative Consolidated

1 The Gun ma Bank 2 Mi d- Ter m Busi ness Pl an 3 ESGI niti ati ves

1 群馬銀行について 24

Major Quantities for Achieving the Targets

(Unit: 100 million yen)

As of March 31, 2019 As of March 31, 2020 As of March 31, As of March 31, Retail loans receivable Unsecured consumer loans receivable 2019 2020 Results 45,008 45,505

1 SME loans 21,952 22,358 Results 51.5 billion yen 54.6 billion yen

Target of billion yen Target of 60 billion yen 4,780 Individual loans 23,056 23,147

T Achievement rate － 91.0%

群馬銀行についてh (balance as of March 31, 2022) (balance as of March31, 2022)

Achievement rate － 95.1% e

G u n

m a B

a Initiatives to Achieve Targets Initiatives to Achieve Targets n

k (1) SME loans ○ In November 2018, we expanded the products covered by the web-based completion service for unsecured consumer loans to ○ The Bank continued to implement consulting services based on proactive cash flow support and business feasibility assess- allow customers to make web-based contracts for loans including car loans and educational loans. ments by exercising discernment based on the life stage of client companies. ○ The Bank proactively promoted lending by responding to diversifying customer needs and gaining an accurate under- [Products covered by the web-based completion service (loans on deeds)] [Ratio of web-based contracts standing of the funding needs of individual companies, through efforts such as starting to handle loans with a special (based on the number of contracts)] Private car loan Educational loan clause for principal waiver in the event of an earthquake disaster and improvements to the product features of monitored 9,000 ■Web-based contracts ■Face-to-face contracts • Purchase of new cars, used cars, • Admission fees, tuitions

short-term extension loans . and motorcycles • Funds sent to family members 8,000 2 • Refinancing of loans from other • Other expenses at the time of 7,000 (2) Individual loans companies, such as credit with admission and during the school

M residual value, etc. year, etc. 6,000 i ○ In order to support the overall consultation needs of individual customers, we opened the Individual Consulting Plaza d Non-purpose loan Home renovation Energy saving 19.1% 35.8% - Takasaki and the Individual Consulting Plaza East , and expanded points of contact with customers, including the com- 5,000 65.7% T mencement of loan consultations inside booths at shopping malls. Good Life Plan loans loans

e 4,000 Omatome Taro Eco plans r

○ We also actively worked to improve the product features of loan products and launched various campaigns to meet the di- Internet loans 3,000 m versifying needs of customers. 2,000 B

u 1,000 s i

n 0

e Status as of March 31, 2020 FY 2017 FY 2018 FY 2019 s (Unit: 100 million yen) s

P YoY change ○ Retail loans increased by 1.1% to ○ The Bank worked to expand transactions through advertising in various channels, including posting advertisements for unse- l As of March As of March

a 4,550.5 billion yen. 31, 2019 31, 2020 Rate of cured consumer loans on social networking sites. n Change change ○ Total SME loans increased by 1.9% ○ The Bank revised the product features of various loans to meet the diversifying needs of customers. Retail loans 45,008 45,505 497 1.1% to 2,235.8 billion yen as a result of For example, the Bank raised the borrowing limit for car loans (from 5 million yen to 10 million yen), raised the age at the robust performance in Gunma Pre- time of full repayment (from under age 71 to under age 76) , and expanded the scope of loan coverage to include customers SME loans (*) 21,952 22,358 406 1.9% fecture, in a highly competitive envi- with less than one continuous year of employment. Individual loans 23,056 23,147 91 0.4% ronment.

Of which, housing loans 13,170 13,124 (46) (0.4%) ○ Total individual loans increased by 0.4% YoY to 2,314.7 billion yen, main- Status as of March 31, 2020

Of which, apartment loans 6,316 6,514 198 3.1% ly due to an increase in apartment 3 ○ The balance of unsecured consumer loans was 54.6 billion yen as a result of revisions to various loan product features, im- Of which, unsecured consumer loans 515 546 31 6.1% loans and unsecured consumer loans. E *SMEs exclude local public corporations and accounts of Tokyo and Osaka branches. proved convenience through the introduction of the web-based completion service, and enhanced telemarketing utilizing the S

G loan desk established in June 2019.

I ○ Demand for financing for automobiles, travel and other products is declining as a result of the spread of the novel coronavirus n

i infection, which will have a negative effect on achieving the target. t i a

t Policy for Future Initiatives i v e

s (1) SME loans Policy for Future Initiatives ○ In response to the rapid changes in the economic environment caused by factors including the spread of the novel corona- ○ The Bank will strengthen efforts to capture unsecured consumer loans by promoting the web-based completion service, which virus infection, the Bank will continue to fulfill its responsibilities as a regional financial institution by proactively support- allows customers to complete the entire process from application to contracting channels utilizing the non-face-to-face chan- ing the cash flows of corporate customers. nel. ○ In addition, the Bank is actively promote high-value-added lending products including structured covenant loans and ○ The Bank will endeavor to improve its services by reviewing the content of its products to meet the needs of customers in the monitored short-term extension loans. future. ○ The Bank will improve the quality of its loans and maintain and enhance net interest income and non-interest business income by instilling and deepening efforts to secure customer profitability commensurate with credit risk through standard- [Web-based completion service flow] ized profit margins (the internal target level of customer profitability). (2) Individual loans STEP1 STEP2 STEP3 STEP4 ○ The Bank will strengthen efforts to capture new execution projects, mainly for housing loans in Gunma Prefecture, includ- Tentative application Contact on the results Upload the documents Provision of loan ing the launch of special interest rates for group credit joint life insurance for couples and special interest rates for group via the Internet of a tentative review Apply for an ofﬁcial review credit cancer insurance and improvements to the efficiency of examinations through enhanced cooperation with guaran- Signing of contract Email notiﬁcation on tee companies. the day of the loan Available On the same day No necessary to ○ In addition, the Bank will improve its housing loan and apartment loan products and services to meet the needs of cus- 24 hours a day at the shortest visit a branch! tomers, and it will proactively hold consultations at Connect booths at housing exhibitions and shopping malls. ○ The Bank will also respond to the growing need for non-face-to-face channels triggered by the spread of the novel coronavirus infection through means such as improving the product features of the web-based unsecured loans, using reception channels including the Internet, and considering the introduction of electronic contracting services.

26 27 Major Quantities for Achieving the Targets

(Unit: million yen) Fiscal year ended Fiscal year ended Proceeds from corporate service March 31, 2019 March 31, 2020 Status as of March 31, 2020 (Unit: million yen) provision (consolidated) Proceeds from corporate service provision 2,216 2,967 YoY change

Fiscal year ended Fiscal year ended

1 Of which, the Bank 2,158 2,760 1

March 31, 2019 March 31, 2020 (Amount) (Rate of change)

T Of which, Gungin Securities 56 95

群馬銀行についてh Target of 4.2 billion yen [Corporate service provision] 2,216 2,967 751 33.9% e Of which, Gungin Consulting* 2 112

G Of which, the Bank 2,158 2,760 602 27.9%

u Progress rate － 70.6% n Total fee and commission income from corporate services. *After consolidation adjustments Syndicated loans 533 703 170 31.9%

m Includes Gungin Consulting and Gungin Securities a Private placement bonds 258 290 32 12.4% B a

n Financial instruments intermediation for corporate customers 52 91 39 75.0% k Business insurance for corporate customers 316 50 (266) (84.2%)

Initiatives to Achieve Targets M&As 181 277 96 53.0%

(1) Problem solving through business feasibility assessment ⇒ P32 Business matching 307 440 133 43.3%

Structured covenant loans and short-term extension loans 63 272 209 331.7%

(2) Business succession initiatives ⇒ P33

2 Derivatives (interest rate and foreign exchange) 435 623 188 43.2% Seminar on growth strategy through M&As M (3) M&A initiatives Other 13 13 0 0.0% i d

- The Bank supported 13 clients without a successor in business succession through M&As during FY 2019 through the Bank’s Of which, Gungin Securities 56 95 39 69.6% T independent support and collaboration with external experts with whom it has partnerships. The Bank entered business al- e

r liance agreements on M&As with the following external organizations in order to accelerate support for resolving business Of which, Gungin Consulting* 2 112 110 5,500.0%

m succession issues for SMEs and small businesses with a successor undecided. *After consolidation adjustments B July 2019: Hoken no Madoguchi Group *First time in Japan for this group and a financial institution to form an alliance u

s related to business succession ○ Results were up 751 million yen YoY, the rate of change was steady at +33.9%, and progress on the Mid-term progress rate was i

n 70.6%. March 2020: Three credit unions in Gunma Prefecture (Takasaki Shinkin Bank, Kiryu Shinkin Bank, and Shinonome e

s Shinkin Bank) ○ Efforts were made to steadily increase syndicated loans, business matching, and derivatives (foreign exchange). s In addition, the major policies of the Mid-term Business Plan are showing results, including structured covenant loans to sup- P

l port business succession and M&As due to the effect of increasing the number of dedicated head office staff . a (4) Business matching n ○ Business insurance for corporate customers decreased significantly YoY due to a sharp decline in term insurance for corporate The Bank is actively providing group company functions, providing introductions to external partners of the Bank, and pro- customers following a revision of tax treatment. viding support for sales channel development to contribute to improvements in the productivity of client companies. ○ Sales increased steadily for Gungin Securities due to an increase in proposal opportunities in collaboration with banks and se- The Bank introduced the Gungin Business Matching System in September 2019 to create a database of information on curities companies and the development of initiatives to meet surplus funds management needs. the needs of its corporate clients to enable more sophisticated business matching. ○ Gungin Consulting had a full year of activity since fully launching operations in October 2018. More than 330 requests for problem resolution were received, bringing the total number of contracts to 103. (5) Issuance of private placement bonds

Along with fundraising support, the Bank provides services such as Gungin SDGs private placement bonds to support the Clariﬁcation of management issues,

3 Formulation of strategic policy aimed at support for the vision aimed for, etc. needs of customers to contribute to the achievement of the SDGs. A portion of the fees received by the Bank for the issuance realization of growth strategy,

E formulation of basic concepts,

S of SDGs private placement bonds are donated to schools, local public bodies, or groups that engage in the SDGs efforts. planning various measures, etc.

Management

G As of March 31, 2020 consultation Business eﬃciency, I and diagnosis Support for productivity improvement, n Total amount issued 72.9 billion yen security environment optimization, etc.

i Support for IT utilization t (including private placement bonds for environmentally-friendly projects and regional revitalization) business strategy i Business improvement plan

a formulation support and planning

t Total amount of donations 348 cases; 62,052 thousand yen post-implementation support, i coordination with ﬁnancial v (including private placement bonds for regional revitalization) institutions, etc. e

s Support for organizational Support for (6) Gungin Consulting personnel and management human resource The consultants of Gungin Consulting use their expertise to propose the best solutions and support the implementation of improvement Gungin Consulting Co., Ltd. development solutions when consulting on a client’s business issues requires a high level of expertise or a complex and difficult approach. Provision of advanced solutions Dedicated staff with a wealth of knowledge help solve the issues of local businesses. Personnel and institutional design, various training programs including (7) Gungin Securities Support for new employee training, etc. The Bank works in collaboration with Gungin Securities to provide a wide range of financial products including stocks, invest- manufacturing Support for subsidy ment trusts, and bonds that Gungin Securities offers, as well as specialized services, to meet the diverse needs of customers business application Improvement of and support surplus fund management. succession manufacturing Support for manufacturing subsidy M&As, succession to planning sites applications and procedures, etc. family members, oﬃcers, employees, etc. Visualization and improvement of issues and challenges facing factories and workplaces, etc.

Policy for Future Initiatives In addition to conducting sales activities that combine financing and consulting, the Bank is actively working to diversify its earnings by providing services that meet the challenges and needs of our client companies and changes in social structure. Particularly in the area of business succession, the Bank is striving to support its clients by providing value-added solutions through M&A, business matching, and structured covenant loans, which are directly linked to our corporate services and financing functions, in order to increase its profitability.

28 29 31 （Unit: cases） 2020 2020 47.8% 50,776 2019 2019 37.7% 45,907 the overall Key Performance Performance Key the overall custom- Indicators (KPI) for er-oriented business conduct. to code the QR Please read view materials. Asset management seminars Asset management https://www.gunmabank.co.jp/ about/gyomuunei/ Note: Please refer to our website for for to our website Please refer Note: (As of March 31 each year) 2018 2018 (As of March 31 each year) 7 32.9% 42,113 26 38 66 45 2 14 615 (Unit: times) YoY change YoY (Unit: people) [Balanced product ratio in investment trust balance] [Balanced product ratio investment trust contracts] [Number of installment-type March 31, 2020 March Fiscal year ended Fiscal year 142 681 668 123 2,114 31, 2020 As of March As of March 9 16 504 116 643 602 116 2,069 March 31, 2019 March 31, 2019 Fiscal year ended Fiscal year As of March As of March 95 605 498 113 9 2,008 16 37 31, 2018 As of March As of March March 31, 2018 March Fiscal year ended Fiscal year Customer-Oriented Business Conduct Business Customer-Oriented Level 1 Level Level 2 Level Beginner Advanced Advanced Intermediate Feature Article Feature We We have also introduced performance evaluations that encourage custom- For For customers in the life stage of asset building, we - recom Human Resource Development and Evaluation Development Resource Human Selection of Useful Products for for Products Selection of Useful Customers etc. Commissions, of Bank Transparency Improved Manner in an Easy-to-understand of Important Information Provision Customers for Available and Services of Suitable Products Provision Large-scale seminars Large-scale seminars and evening Holiday Branch manager seminars manager Branch *Internal bank qualification Certified Financial Certified Planner Deposited financial assets In order to improve the skills of employees so that they can make appropriate asset appropriate so that they can make the skills of employees to improve In order management proposals according to the customer’s life cycle and various needs, we strive to develop specialized skill holders by implementing weekend and night classes for employees. In addition to encouraging employees to acquire Level 1 Financial Planner certification,we are alsofocusing on supportfor certification ac- seminars. in weekend courses quisition, such as holding exam preparation er-oriented sales activities. [Number of qualified employees] In June 2017, the Bank, together with Gungin Securities, established the Customer-Oriented Business Conduct Policy and Action Plan based on Customer-Oriented Business Conduct Policy, and regularly announces the status of its efforts, indicators. including performance The Bank proposes core-satellite management as an asset management method. In core-satellite management, we aim to increase operational efficiency from a long-term perspective by a well-balanced combination of core assets, which are stable the medium- over to long-term using investments in- diversified vestments (balanced products, for example) and satellite assets, returns. for high on specific fields and aim which focus NISA, trusts utilizing Reserve mend installment-type investment etc. trusts and costs investment for “Main services on information prepared have trusts, we investment for bank commissions For This Lineup sales materials) manner. in an easy-to-understand Trust (included in the Investment to customers” be borne by as a sales company. receive we that of commissions on the level our fundamental perspective document also shows funds. of core features the product comparing for as a resource Lineup is available Product Fund The Core We conduct seminars on weeknights and on holidays to improve the financial of customers. of a wide range literacy 4.2% (7.8%) 55.5% (17.1%) 85.1% (Rate of change) 400 cases Plan target for for Plan target March 31, 2022 March Mid-term Business (Unit: million yen) YoY change YoY 694 225 850.8 billion yen 850.8 billion yen 737.5 billion 113.2 billion yen (186) (283) As of March 31, 2020 As of March (Amount) 2020 10 cases 71 cases 61 cases Plaza Maebashi As of March 31, As of March － 1,944 2,212 5,531 1,375 FY 2019 FY (Maebashi Minami Mall Sub-branch) 2019 13 cases 36 cases 23 cases 91.5 billion yen 786.0 billion yen 786.0 billion 877.6 billion yen 877.6 billion As of March 31, As of March As of March 31, 2019 As of March 1,250 2,398 5,306 1,658 FY 2018 FY Achievement rate Achievement Of which, the Bank Of which, the Of which, Gungin Securities Customers’ deposited financial assets Customers’ Total Liquidation of inheritance property services property Liquidation of inheritance Will trusts Will trust and liquidation of inheritance property services achievements services property Will trust and liquidation of inheritance Gungin Securities (for individuals), etc. Gungin Securities (for Investment trust handling commissions Investment Insurance sales commissions (individuals) sales commissions Insurance [Customers’ deposited financial assets] [Customers’ [Reference] Customers’ deposited financial assets commissions deposited financial assets Customers’ [Reference] Plan for Plan for 13 people March 31, 2021 March As of trillion yen 9 people 1 March 31, 2020 March

assets (consolidated) Target: Target: As of

4 people The Bank will respond to a wide range of asset management needs of customers through proposals for foreign bonds and pri- foreign for proposals through needs of customers of asset management to a wide range The Bank will respond vate placement structured bonds. It will strengthen its ability to make proposals to customers with diverse needs investment with Gungin Securities. its alliance strengthening by The Bank will increase the number of head office staff dedicated to inheritance-related services and improve its organizational services. property will trust and liquidation of inheritance to provide to meet the latent needs of customers in order structure The Bank meets the needs of customers who are concerned about the risk of living longer in 100 an era by of providing people insurance products living including to age whole life annuities that complement public pension insurance. The and gift giving. inheritance for Bank including measures services consulting comprehensive also offers The The Bank will continue to promote balanced core funds that can be expected to deliver stable medium- investment to results long-term over the while minimizing risk through diversified investment.In addition, theBank will supportasset formation of theour customers by strengthening the promotion stable of installment-type trusts investment that time provide di- benefits. versification With the addition of the Takasaki and With East in the branches October addition - 2019, of three Takasaki the branch es, including the Maebashi branch, meet the asset management and insurance consultation needs of asset building customers who are not able to visit standard on weekdays. branches The Bank has introduced investment trust products that extend the life of money through asset management while receiving fixed-rate distributions aswell as life the risk of longevity. against that protect products insurance The Bank expanded the number of balanced core funds and introduced a principal-protected funds for low-risk customers. low-risk funds for a principal-protected funds and introduced core number of balanced The Bank expanded the The Bank expanded the of NISA range Reserve dedicated products, which provide long-term tax benefits. In addition, a cam- installment-type products. launched for paign was Policy for Future Initiatives Future for Policy Status as of March 31, 2020 Status as of March Initiatives to Achieve Targets to Achieve Initiatives Customers’ deposited financial financial deposited Customers’ March 31, 2019 March - including invest deposited financial assets Customers’ insurance. and life ment trusts, public bonds, Including Gungin Securities (4) Inheritance-related services (4) Inheritance-related (3) Bonds (financial instruments intermediation) (2) Life insurance (2) Life (1) Investment trusts (1) Investment Customers’ Customers’ deposited financial assets de- due to creased the impact of a in sharp drop of the the spread from resulting stock prices novel coronavirus infection and a general decline in the net asset value of investment trusts. However, the impact of cancellation was minimal thanks to careful follow-ups with a wide range of customers after the conditions. in market sudden change (4) Expansion of Individual Consulting Plazas as a holiday sales base Plazas as a holiday (4) Expansion of Individual Consulting (3) Support for an era of people living to age 100 of people living to age an era (3) Support for (2) Support for asset formation for customers through long-term, installment-type, and diversified investments investments installment-type, and diversified long-term, customers through for asset formation (2) Support for (1) Realization of stable asset formation for customers for stable asset formation of (1) Realization Major Quantities for Achieving the Targets the Achieving for Quantities Major Increasing the number of dedicated head office staff the number of dedicated head office Increasing *

1 The Gun ma Bank 2 Mi d- Ter m Busi ness Pl an 3 ESGI niti ati ves

1 群馬銀行について 30

Major Quantities for Achieving the Targets

As of March 31, 2020 Number of cases with issues resolved Number of business succession support cases As of March 31, 2020 through business feasibility assessments Number of business feasibility assessments 1,430 cases

1 Number of support cases 3,083 cases

1 Number of problems resolved 739 cases

Target: cases T 6,000 Target: 1,500 cases Progress rate 49.2% Progress rate 51.3% 群馬銀行についてh

e *The number of solutions to customer problems identified through business G feasibility assessments (cumulative total) u n

m a Initiatives to Achieve Targets Initiatives to Achieve Targets B

a ○ In addition to expanding the businesses of our corporate customers, we provide optimal solution proposals (value proposi- ○ Amid concerns about aging managers and successor issues, management issues related to business succession by customers

n tions) for overcoming various obvious and/or potential management issues such as for human resources, sales, and risk man- will have a significant impact on local economies in terms of passing down technology, maintaining supply chains, and main- k agement. We believe that we can create shared values with our customers only after realizing such value propositions. taining employment. ○ To that end, we are strengthening our business feasibility assessment efforts by sharing awareness of management issues ○ Up until now, the Bank has provided various types of support for business succession, including (1) understanding the current through repeated dialogue with corporate managers. situation, (2) consolidating issues, and (3) proposing solutions, through consultations with customers. Because regional financial institutions are increasingly being required to provide business succession support for SMEs, all branches have worked to support business succession by customers since FY 2018. [Implementation system for business feasibility assessment] ○ Sales branches, Customer Consulting Department, and the wholly-owned subsidiary, Gungin Consulting Co., Ltd., work to-

gether to support customers in resolving their issues by consolidating issues and proposing solutions.

2 ○ The Bank also strives to resolve issues by providing a place where customers and experts can consult with each other on an in-

M Headquarters

i dividual basis.

d 〇 Survey and analysis of automobile-related industries - Business feasibility T assessment by 〇 Sharing of management issues by conducting [Activity scheme] [Individual consultation meetings, M&A seminars] e business feasibility assessment

r industry cluster

〇 Solutions to management issues

m External [2019 Mid-term organizations The Bank Total number

B Cooperation Business Plan target] Location Cooperation /experts Name of seminar Date held of u held Number of cases with Sales branches Customers participants s

i Sales branches issues resolvedthrough (1) Understanding the

n Business feasibility business feasibility current situation

e assessment by 〇 Sharing of management issues by conducting assessments: 1,500 Inside the

s Customer Consulting Department (2) Consolidating issues Individual consul- May and Sept. Number of s individual company business feasibility assessment (cumulative total from prefecture: 2 Person responsible for (3) Proposing solutions tation meetings on 2019 and companies: P characteristics 〇 Solutions to management issues FY 2019 to FY 2021) Advisory Outside the l business succession/ ・Successor issues contracts business succession Mar. 2020 20 a prefecture: 2 person responsible for M&As ・Treasury share measures n ・Inheritance measures Inside the Seminar on growth ・Capital policy May and Nov. prefecture: 1 strategy through 49 people 2019 Outside the Tax advisors, etc. M&As Status as of March 31, 2020 [Group companies] prefecture: 1 Gungin Consulting Co., Ltd. Collaboration with experts [Partner external experts] ・ Collaboration with tax advisors, etc. of clients Average time to Major problem solving items Number of cases Resolution rate* Tax accountants,

resolution certiﬁed public accountants, etc. ・ Gungin Consulting Co., Ltd., introduction of

partner external experts

3 Expansion of business facilities 150 cases 74.0% 8 months E

S ○ The number of business succession support cases as of March G Diversification of funding and improve- 145 cases 79.6% 7 months Status as of March 31, 2020 I ment of financial structure 31, 2020 totaled 3,083 as a result of efforts at all sales branches. n [Number of business succession support cases] i ○ Progress has been steady, with a progress rate of 51.3% com- t Recruitment and training of human i 64 cases 54.2% 8 months pared to the plan. a resources 4,000 t

i ○ In addition, the Bank has increased the number of dedicated

v 3,083

e Business succession 63 cases 47.7% 10 months 3,000 head office staff in order to strengthen efforts to meet the needs s of clients. There are also plans to increase the number of staff *The ratio of the management issues of clients that Sales channel development 44 cases 57.9% 9 months have been resolved by identifying and helping to 2,000 1,804 going forward. resolve them. As of As of Plan for The largest number of projects are related to financing operations, such as expansion of business facilities, 1,000 Item diversification of funding, and improvement of the financial structure. In addition, the Bank is also proactively March 31, 2019 March 31, 2020 March 31, 2021 309 addressing social issues such as the recruitment and training of human resources and business succession. Business succession 6 people 8 people 12 people 0 As of March 31, As of March 31, As of March 31, M&A 6 people 8 people 12 people 2018 2019 2020

Results of M&A initiatives Support starting from business succession (fiscal year ended March 31, 2020)

Policy for Future Initiatives Loan amount: 4,790 million yen / Structured covenant loans FY 2017 FY 2018 FY 2019 84 million yen in commissions The headquarters and branch offices work together to provide optimal solutions regarding the management issues through the shared awareness on the business feasibility assessment, and when implementing more advanced consulting proposals, the Bank 11 cases 18 cases 28 cases Business matching 42 cases / 6 million yen in commissions will provide a wide range of one-stop in-depth consulting services in cooperation with Gungin Consulting Co., Ltd. The Bank will Promotion of corporate and individual inte- 232 million yen 181 million yen 277 million yen 12 million yen in commissions also collaborate with other Group companies, local professionals, and external professional organizations as necessary. gration (assets under management)

Policy for Future Initiatives The Bank will continue to meet with customers and provide optimal solutions for each customer to resolve issues, thereby ensuring smooth succession and maintaining and improving regional economic vitality.

32 33 35 90.9% 131 people As of March 31, 2020 As of March Highest grade 3 Highest grade － 120 people Women in managerial positions in managerial Women As of March 31, 2019 As of March Results Progress rate Progress Policy for Future Initiatives Future for Policy At At the same time, the Bank will continue to support and develop So that female employees can continue working, the Bank will enhance the systems and programs that enable them to make the balance. work-life most of their abilities while achieving a good the career development of female employees, who will form the base for women in managerial positions, and actively promote - fe male employees.

20% increase from March 31, 2019 March from Target: Target: In 2019, the team’s name was changed from the all-women staff team to L-NEXT, with an “L” which stands for luminous, and which stands for “L” with an staff team to L-NEXT, all-women the from changed name was In 2019, the team’s Increase Increase women managers by 20% (deputy/vice branch managers or higher positions) compared to the number as of March managers) 31, 2019 (120 women 31, 2019) (39.1% as of March employees women of percentage Improve length Improve average of service for women (14 years and six months for women 31, 2019) as of March in service Improve paid leave acquisition rate (60.8% in fiscal year 2018: total of men and women) year 2018: total of men and in fiscal (60.8% rate acquisition paid leave Improve Status as of March 31, 2020 Status as of March Initiatives to Achieve Targets to Achieve Initiatives Since November Since 2014, November the Bank has continued team activities to identify issues to promote the advancement of women from these issues. to address specific measures and propose perspective a woman’s in which an environment of the team to create the desire This reflects to the next generation”. “to connect which means “next”, each person of different ages and genders can be luminous with energy and enthusiasm, and carry on with activities that will and enthusiasm shining into the next generation. energy to bring that continue Based on the Act on Promotion of ‘Female Participation and Career Advancement in the Workplace, the Bank formulated numerical targets. its the following that incorporates Plan in April 2019 Action Employer General second The Bank has eliminated specific days with a 17:45 end of the workday from recommendations. July to the team’s 2019 in response With the end of the at workday this time, the Bank will promote the achievement of reforms. work-style promoting by the organization and revitalize balance work-life 19 19 new appointments were made in April 2020, Number of women in managerial positions managerial in of women Number ・・・・ Platinum Kurumin Mark certified by the Ministry of Health, Labor and Welfare Welfare Health, Labor and (June 2017) by the Ministry of Mark certified Platinum Kurumin Gunma Prefecture breath breath G company: certifiedby GunmaPrefecture (February 2019, excellence commendation) office Allowance for the Allowance support of early return to who for employees work after return to (provision childcare leave work child before of age) one and a half years becomes Childcare support for (provision allowance employees for the birth of the second child and each subsequent child (up to 2 million yen)) use their maiden name if they wish) their surname may changed who have Use of business names (employees Evaluation of Women’s Participation and Enhancement Participation Women’s of Evaluation In addition to assigning human resources and training managers to enable women to play an fields, the Bank isactive systems that developing enableswomen to achieve arole work balance between and family life andin to more maximize their abilities. of Systems Development Systems Various of Expansion and Dissemination The Bank’s efforts for participation women’s and enhancement have resulted in the following - achieve continued. is that the certification to ensure systems to improve efforts to make ments, and it will continue As of March 31, 2020, the number of women in managerial positions was 131 (down 13 compared to the target). bringing the total number of women in managerial to the target). six compared positions to 150 (up The Bank has established its own systems to help women achieve their full potential. their full achieve to help women systems The Bank has established its own ○ Continuous initiatives to identify issues and propose solutions from a woman’s perspective a woman’s solutions from and propose issues to identify initiatives Continuous ○ Plan Action Employer of General Formulation ○ of specific days Abolition ○ ・ Welfare 3) Health, Labor and (June 2018, highest grade by the Ministry of Mark certified ・Eruboshi ・・・ the hour) by annual paid leave acquiring for (a system leave ・Timely ・ days) up to five for treatment fertility for of absence leave (special plan leave ・Child systems) the use of various of a booklet to promote (issuance Handbook Balance ・Work-Life 565 Loans Start-up support plan formulation Matching Introduction of other ﬁnancial institutions Other 28.2% FY 2019 Contents of 796 cases of start-up support for 565 companies * As of March 31, 2020 As of March 500 6 Manufacturing division Innovation division Regional revitalization division Student idea division 45 － 911 118 178 [Contents of start-up support in FY2019] [Contents 45 80 As of March 31, 2019 As of March 3 cases adopted with application support 57 cases adopted with application support 57 cases adopted with 89 Manufacturing, Commerce, and Service Manufacturing, Management Commerce, Support Subsidy: Capabilities Improvement Efficiency Investments: Energy Subsidy for 97 Medicine and social welfare Service industry Construction industry Retail industry Manufacturing industry Wholesale industry Real estate industry Transport industry Other FY 2018 supplemental budget 2018 supplemental FY 2019 FY [Status of applications by division in the 7th Awards] division in the [Status of applications by Number of Progress rate Progress start-up support cases* start-up support 54% Number of corporations and sole proprietors who plan to establish a business with- who plan to establish sole proprietors and Number of corporations years or less five been in business for in six months or who have * 311 7th 15% 12% 340 7% 6th 1% 2% 2% 3% 3% [Breakdown of start-up support cases by industry in FY2019] of start-up support cases by [Breakdown 420 5th cases 565 298 4th FY 2019 2,000 911 258 3rd FY 2018 843 217 2nd FY 2017 Target: Target:

1st 382 996 The Bank provides useful information on interest subsidies and supports interest subsidy applications in order clients. to stimulate the latent equipment needs of As an organization supporting business innovation, the Bank provides useful information on subsidies and supports subsidy applications. FY 2016

The Bank has provided support in cooperation with local public bodies and other related institutions, such as start-up by support handling loans in cooperation with the Credit of Guarantee Corporation Gunma and the Japan Finance Corporation, Start-up Support School. dispatching instructors to the Maebashi City and by In addition to start-up loans, the Bank has also provided multifaceted support for growth, including business matching and the dispatch of external experts. Number of start-up support cases of start-up support Number 0 Strengthen the structure for the start-up dedicated desk for the structure Strengthen ○ Interest subsidy system Interest ○ ○ Subsidies ○ ・・ Policy for Future Initiatives Future for Policy Status as of March 31, 2020 Status as of March Initiatives to Achieve Targets to Achieve Initiatives 0 200 600 800 400 1200 1000 100 200 500 300 400 [Number of applications for the Gungin Business Support Grand Award] the Gungin Business Support Grand [Number of applications for

There have been a total of 2,226 applications for the Gungin Business Support Grand Award, and the Bank has supported 818 companies with commercialization. companies and the Bank has supported 818 Award, the Gungin Business Support Grand been a total of 2,226 applications for have There cases, amount of loans: 48,893 million yen] to applicants: 1,460 [Number of loans provided Major Quantities for Achieving the Targets the Achieving for Quantities Major The Bank will promote the commercialization of new business plans through the Gungin Business Support Grand Award while continuing to provide multifaceted support in cooperation with the start-up support measures of Gunma Prefecture and other municipalities in Japan. Furthermore, the Bank will actively provide consulting support such as dispatching external experts and of companies. to the issues and needs on subsidies in response information providing Although the Bank has proactively provided support, the number of support cases has been on trend a due downward to the enhancement of various start-up support programs by agencies government and efforts by other financial institutions. Meanwhile, from the perspective of fostering and revitalizing local industries, the Bank recognizes the importance institutions. with related of support in cooperation active to provide and will continue supporting start-ups [Number of start-up support cases] (3) Expansion and implementation of multifaceted growth support measures growth (3) Expansion and implementation of multifaceted (2) Promoting the commercialization of new business plans through the Gungin Business Support Grand Award Business Support Grand the Gungin of new business plans through the commercialization (2) Promoting The Bank is actively working to find and support start-upcompanies in order to maintain and improve the vitality of the economy. regional (1)

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37 Conservation Conservation and creation of the global - environ ment 2. of partnerships 4. Promotion [Priority issues] [Priority (GB Sustainability Policy 2030) Sustainability Policy (GB society and create economic value. Reduction of at least 23% compared to FY2013 23% compared of at least Reduction to FY2013 26% compared of at least Reduction to FY2013 30% compared of at least Reduction to FY2013 40% compared of at least Reduction The Gunma Bank Group SDGs Declaration SDGs Bank Group The Gunma We are working to achieve the SDGs through our business activities We are working to achieve the SDGs FY2025 FY2030 FY2025 FY2030 Promotion Promotion of a variety of human resources into positions active that will foster the development of regional communities as well as to realize a sustainable that will foster the development of 1. Sustainable development of regional economy of regional 1. Sustainable development 3. Against this backdrop, the Bank declared its support for the recommendations of TCFD in July 2020. The Group will The Group in July 2020. TCFD of the recommendations its support for the Bank declared this backdrop, Against This office will continue to lead steady Group-wide efforts. continue to lead steady Group-wide will This office Declaration of Support for the Recommendations of the Task Force on Force Task of the the Recommendations of Support for Declaration (TCFD) Financial Disclosures Climate-related Establishment of the SDGs & ESG Management Office & ESG Management Establishment of the SDGs Reduction Consumption and Paper Gas Emission Greenhouse for Targets Setting Reduction Greenhouse gas emissions are calculated by fixing the emission factor for electricity to the FY2013 figures in order to eliminate the effect of changes in emission factors. of changes order to eliminate the effect in electricity to the FY2013 figures for fixing the emission factor calculated by gas emissions are Greenhouse The on Force TCFD (Task Climate-related Financial Disclosures) is a private-sector-led task force on climate-related financial disclosure establishedby the Finan- cial Stability Board (FSB) in 2015 in response to a request from the G20 Finance Ministers and Bank Central Governors. It released its finalreport in 2017,- recom in line with its recommendations. risks and opportunities about climate-change-related and others disclose information mending that companies The scope of the greenhouse gas emissions calculation is part of scope 1, scope 2, and scope 3 for the domestic offices of Gunma Bank the domestic offices 3 for 2, and scope 1, scope gas emissions calculation is part of scope of the greenhouse The scope * * * New Initiatives for Achieving the Gunma Bank Group Group Bank the Gunma Achieving for Initiatives New Declaration SDGs The SDGs identifiesDeclaration four priority issues, with afocus ongoals seven to which the Group can amake partic- so- to address and it is working in which it of operates, its business and the based areas on the nature ular contribution, issues its The through is cial business Group to committed to and activities. contributing the environmental realization of a sustainable society and the creation of economic value by implementing each of the Business measures Plan, in which its is Mid-Term based on the perspective of the SDGs Declaration, as well as taking new the issues faced. initiatives to resolve We have set for the new reduction of targets greenhouse gas have emissions at We the Bank as part of our efforts to address one of the key issues in the SDG declaration, conservation and creation of the global environment. As part of these initiatives, we also have set reduction for targets paper consumption, and we will continue to review operations that are de- digitization. through a paperless environment pendent on paper and aim for As the damage caused by extreme weather events and large-scale disasters has become increasingly severe in countries in countries severe increasingly disasters has become and large-scale events weather extreme by caused As the damage around the world recently, there has been a growing momentum to address climate change on a panies global are being scale. - required Com to improve their disclosure of information as the risks and opportunities of climate change and strategies. financial information an impact on corporate have continue to enhance its disclosure of information on climate-related risks and opportunities in line with TCFD. mendations of the the - recom We established the SDGs & ESG Management Office within the Corporate Planning Department in June 2020 to manage June 2020 to manage Planning Department in Corporate within the Office established the SDGs & ESG Management We the SDGs. to achieve initiatives the SDGs, with the aim of stepping up and accelerating to achieve efforts and oversee Paper (copy paper) usage reduction targets reduction paper) usage (copy Paper Greenhouse gas emission reduction target gas emission reduction Greenhouse ▼ contribution The Gunma Bank Group SDGs The Gunma Bank Group here. can be found Declaration * operations of our Bank Group. of our Bank Group. operations SDGs to which our Bank Group is able to make a valuable a valuable is able to make SDGs to which our Bank Group SDGs that have close ties to the service areas and business areas close ties to the service SDGs that have

Level Level of relationship and importance for business Bank Group of the Gunma operations

a sustainable society sustainable a Level of contribution to to contribution of Level - It is our mission to take actions that will foster the development of the development actions that will foster It is our mission to take communities. regional our business activities that the SDGs through to achieve working are We as to realize as well communities of regional the development will foster value. economic a sustainable society and create A regional financial group that responds to customer needs and delivers responds to customer needs and delivers that financial group A regional of financial services innovation by value Corporate philosophy Corporate

Mid-Term Business Plan Mid-Term Declaration of SDGs Declaration “Innovation New Dimension” New “Innovation

[Image of a company we aspire to be] aspire we of a company [Image The Group’s corporate philosophy is as follows: “It is our mission is to philosophy actions as take corporate that follows: will foster the development of The Group’s In this context, upon declaring our SDGs, we have determined our priority issues and policies for action that are - on social and environmen initiatives to further strengthen making efforts are of SDGs, we Based on our declaration Declaration of SDGs and the Mid-Term Business Plan of SDGs and the Mid-Term Declaration Perspective of the Declaration of SDGs Declaration of the Perspective SDGs（Sustainable Development Goals）represent 17 goals posted “2030 for on Sustainable Agenda - the Devel opment” adopted at the United Nation Summit in Sep- tember 2015. The goals address solving social and envi ronmental issues through achieving “just, peaceful and “gender and “zero equality” hunger,” inclusive societies,” a sustainable society. 2030, to realize by The “2019 Mid-Term Business Plan “Innovation New Dimension” – Toward Delivering Value” that started in Value” April Delivering 2019 – Toward Dimension” New “Innovation Business Plan “2019 Mid-Term The achiev- is tackling actions toward The Gunma Bank Group of SDGs. in the declaration based on the ideas expressed was Business ing Plan the that Mid-Term will allow people to realize a rich fulfilling life that is closely tied to the- develop ment of sustainable communities in the region and to secure stable and sound revenues for the future. (For the Mid- 20-35.) to pages Business Plan, please refer Term * - environmen and social to relevant SDGs the achieve to working by this accomplish to hope We communities.” regional business activities. our through with initiatives grapple tal issues, and proactively centered on seven out of 17 SDGs goals, and we hope to achieve these goals while recognizing the business contents of the Group. areas and service tal issues through our business activities as well as to realize a sustainable society and create economic value. In addition, we intend to expand SDGs actions to all the local communities by raising awareness and dissemination of SDGs the SDGs. to achieve and supporting them in their efforts our customers for The Bank formulated and publicly “The released Gunma Bank Group in SDGs February 2019 Declaration” to promote actions tackled by the Group as a whole, toward achieving the “Sustainable Development Goals (SDGs)*” as adopted the United Nations. by Declaration of SDGs and Priority Issues and Priority of SDGs Declaration 3. ESG Initiatives ESG 3.

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39 for Environmental Finance Environmental for Sustainable Finance Award Award Sustainable Finance held by the Research Institute the Research held by Green buildings Green at the 5th Sustainable Finance Awards Awards at the 5th Sustainable Finance private placement bonds placement private Environmentally-friendly Environmentally-friendly Construction, purchase, and repair of and repair purchase, Construction, buildings that meet official standards Underwriting of private placements of of placements Underwriting of private in an engaged companies bonds issued by business environmentally-friendly Energy efficiency Energy Renewal of LED lighting and air Renewal systems conditioning ・ of buildings, etc. ・Repair Bronze Medal in Bronze by the Ministry of the Environment by the 1st ESG Finance Awards Japan held Awards the 1st ESG Finance First Green Bond Issuance by a Regional Bank a Regional by Issuance Bond First Green Renewable energy Renewable Hydroelectric power generation generation power Hydroelectric business Clean transportation Electric vehicles, fuel cell vehicles fuel cell Electric vehicles, ・Solar power generation ・Solar power generation ・Biomass power ・・ November 26, 2029 November year 26 every 26 and November May 10 billion yen 26, 2019 November +0.42% yen LIBOR years: 6-month Euro five following year: 0.37% per annum, First five clause) early redemption (with 10 years The funds raised through the issuance of green bonds will be used to fund new and existing loans or expenditures that meet that meet bonds will be used to fund new and existing loans or expenditures of green the issuance through The funds raised eligibility criteria. the following 5th Series of Unsecured Corporate Bonds with Early Redemption Clause (With an Exemption Clause in the Event of Clause in the Event Clause (With an Exemption Bonds with Early Redemption Corporate 5th Series of Unsecured the Gunma Bank, Ltd. Clause) of Bankruptcy and a Subordinated reduction impact report for each use category is disclosed on our website once a year. (The firstreport is 2 bond Use of Feature Article Feature The Gunma Bank Group SDGs Declaration positions the conservation and creation of the global environment as one Date of Date Interest Interest amount Maturity Issuance Issuance the funds redemption Interest rate Interest Name of the Issuance date Issuance payment date payment scheduled to be released in November 2020.) in November scheduled to be released Reporting on status of allocation of funds] [Reporting The amount of funds allocated and unallocated each and for use the category amount of bonds green outstanding is a year. once disclosed on our website [Impact reporting] A CO Been Highly Commended. Have Bond Initiatives Our Green We became the first regional bank in Japan to issue a green bonds in November 2019. November in bonds to issue a green regional bank in Japan became the first We of the key issues for achieving a sustainable society and creating economic The value. Bank issued green bonds ahead of other regional banks to support customers who are undertaking measures for environmental conservation and the - cre ation of a beautiful environment, as well as to raise awareness of the proactive Bank’s efforts in the SDGs among a wide of stakeholders. range Bond of the Green Overview (Manba Elementary School, Kanna-machi) Education Award: Nature School (Release of Brook Trout) Trout) of Brook School (Release Nature Award: Education As a subsidy program, in November 2019, 14 schools in As November a subsidy program, were commended among the elementary schools, junior high schools, and high schools in Gunma Prefecture for their outstanding activities for - envi ronmental improvement and conservation, and they received the Gunma Bank Environmental - Founda tion Education Award. In March 2020, seven - organi zations were commended for outstanding - achieve ments in conservation activities and research on the natural environment, and they received the Gunma Award. Foundation Bank Environmental Environmental Expedition Group Expedition Environmental

Eco-Kids Camp Eco-Kids

Support customers who are engaged in environmental conservation through the provision of financial products and services. A new employee training course incorporates [Environment Conservation Behavior Code] Behavior Conservation [Environment impact. environmental activities to reduce and recycling saving energy saving, resource 1. Promote 2. and employees. executives activities for conservation education and support environmental environmental 3. Promote activities. conservation environmental 4. Support regional [Environmental Policy] Policy] [Environmental We want to cherish the natural environment of our hometown with the aim of realizing a truly will an and play where We industry role active play conservation in is environmental compatible with affluentthe environment. community as a citizen. role a responsible As part of educational activities, in August 2019, we held the Eco-Kids Camp in Akagiyama, where elementary school students learned about - environ mental issues such as global warming. In Septem- ber and October, we organized the Environmental Expedition Group for junior high school students to learn about the importance of protecting the natural environment through environmental learning and tree-planting experiences, specifically by visiting the headwaters of the Watarase River and the mine site. Ashio copper former Environmental Foundation Activities Foundation Environmental The Gunma Bank Environmental Foundation was established with the aim of promoting a comfortable and healthy environment and has been engaged in education and subsidy programs for environmental - conserva research. tion and environmental forest forest maintenance experience and conducts employee education on forest maintenance and - pro tection. (Not conducted in 2020 due to the impact infection.) coronavirus of the novel As part of our environmental conservation activities, we named a forest as the Gungin Forest based Mainte- Forest on the designation in the Prefectural nance Partner Project Implementation Agreement signed with Gunma Prefecture, and are working on activities. and conservation its maintenance Maintenance Activities for Gungin Forest for Activities Maintenance Environmental Initiatives Environmental Based on the Gunma Bank Environmental Policy/Environment Conservation Behavior Code established and - environmen supporting by environment the on impact our reduce to working are we 2009, May in announced education. As part continuing of conservation are our we activities efforts, and environmental tal conservation such to as conservation, in engage actively selling environmental financial products that cancontribute to en- protection. vironmental

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41 Gunma Tournament Gunma placement bonds: Inter Zone Co., Ltd.) Co., bonds: Inter Zone placement Creative wooden playground equipment playground wooden Creative donated to a child care center (Issuer of private (Issuer of private center donated to a child care 50 high school students who participated in the 50 high school students - Barrier-Free Initiatives Barrier-Free This was the 8th tournament in Gunma Prefecture, and it was at- In April 2019, we began dealing in private placement bonds that For customers For who are visually impaired or have difficultyreading, our staff will do theby procedure reading or writing on behalf of the customer. The transfer fee at the counter for visually impaired customers will be the same as that for ATM transfer fees. transfer ATM customers will be the same as that for visually impaired for at the counter fee The transfer Support for Finance and Economics Education and Economics Finance for Support In order to provide opportunities for high school students to enjoy learning about finance and the economy and acquire financial - litera cy while having fun, we hold the Gunma Tournament of the National High School Finance and Economics Quiz Championship “Economics Koshien.” the The top six teams with 50 students. a total of 25 teams by tended by highest total points from the written and quick-press quizzes advanced to the finals. Itwas won by GunmaPrefectural Chuo Secondary School and strategy. knowledge through quiz the board which won “GYM,” Gungin SDGs Private Placement Bond Placement Gungin SDGs Private In our funding support services for customers who (companies) wish to participate in activities that contribute to environmental protec tion, social contributions and achievement of the SDGs, we deal in private placement bonds in which part of the bond issuance fee - re ceived by the Bank will be donated to schools, local public bodies, the SDGs. to achieve that work and groups fee treatment to offer preferential customers who conduct businesses the SDGs. that help achieve Barrier-free ATMs Barrier-free with been handsets installed have at ATMs all so branches that visually impaired or elderly customers can use ATMs smoothly. Operations such as deposits and withdrawals can be made according to the voice guidance from the handset placed next to the We ATM. are also proceeding with installing universal design ATMs so ATMs. that customers using wheelchairs can easily access at Banking Outlets Support Barrier-free We are promoting the creation of a banking service environment that is safe and convenient for the elderly or customers with disabilities, such as by eliminating steps inside and outside banking outlets, and installing disabled people and those in wheelchairs. for convenient parking areas Other Initiatives Introduction of a Remote Sign Language Interpretation Service Interpretation Sign Language of a Remote Introduction A remote sign interpretation language service at introduced was 26 banking outlets in June 2019. Operators who know sign language provide interpretation through a video call using a tablet with a special application installed. Installation of Communication Tools at All Branches Tools Installation of Communication Various communication tools that can be used by customers who are elderly or those who need hearing writing assistance or are available at the counters of all sales branches, including hearing aids, ear mark plates, communication. for and writing boards ○ ○ ○ the customer. from request by postal mail upon will send notifications in braille We ○ customers. visually impaired used for are business cards Braille ○ function. reading is equipped with a voice Our website ○ - participate as volun employees Many At the Gunma Marathon Race - (No teers teers in the management of marathons each district. held in and sports events vember 3, 2019), 55 employees - enthu siastically participated as volunteers to support 15,000 runners.

Initiatives for Social Contribution Activities Social Contribution for Initiatives The team will continue to play in the League V. and other The Gunma Symphony Orchestra is engaged in artistic Social Contribution Activity Initiatives Activity Contribution Social The Gunma Bank Green Wings is participating in the V2 level of League. V. the It Women’s won their first-ever V2 League championship with a record of 18 wins and three losses, beat- ing the second-place finisherby a wide margin. Although the team lost in the exchange match against a V1 team, and their promotion to the V1 League was unfortunately postponed, job. they did a great national-level - com petitions, as well as actively contribute to the local community such activities through classes. as volleyball Support for Sports Activities Support for activities closely connected to regional communities and contributes to the improvement of regional music culture by holding music traveling classes for elementary and junior concerts. regular high school students in addition to Support for Arts and Cultural Activities Arts and Cultural Support for We support activities such as sponsoring regular concerts for Orchestra. the Gunma Symphony At At Gunma Bank, our mission is to be a good citizen and contribute to the development of local industry and culture and to the enrichment of lives, people’s and we are committed to supporting the arts, culture, sports, and financial and economic education, in addition to the protection of localcultural heritage. In addition,for corporate customers, we provide fundraising support for private placement bonds that can either contribute of the SDGs. to the achievement to contribute of the SDGs or support businesses to the achievement We We work with the Silk Tomioka Mill, Silk Industrial Heritage Group Protection Activity Support Fund (nickname: Silk Inheritance of Gunma) that donates part of the trust fee - re ceived by the Bank and the trustee company for the - protec tion of the World Cultural Heritage site of the Tomioka Silk sites. Mill and Related Sales of Investment Trusts that Support Cultural that Support Cultural Trusts Sales of Investment Activities Conservation Heritage

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43 ------1,430 3,083 11.2% 47.8% 47.2% 71 cases 71 11 times FY 2019 18 times/ 15 classes 15 53 people 53 50 people 25 teams/ 25 123 people123 1,008 people 1,008 13,212 people13,212 Championship 114 donations/114 7th competition 43 thousand yen (May 18 19) and 18 (May 176 176 thousand yen 960 thousand yen 1,312.4 billion1,312.4 yen 2,115 thousand2,115 yen 1,022 thousand yen 16,408 thousand yen ------Third 1,058 1,804 41.9% 10.0% 37.7% 36 cases 13 times FY 2018 20 times/ 18 classes 18 33 people 60 people 30 teams/ 116 people 981 people 99 donations/ 12,067 people 12,067 6th competition 1,317.0 billion 1,317.0 yen (March 10 and 11) and 10 (March 2,060 thousand yen 1,256 1,256 thousand yen 1,051 thousand1,051 yen 16,513 thousand16,513 yen J-Coin, PayPay, Merpay, LinePay, etc. LinePay, Merpay, PayPay, J-Coin, ------Intra-bank document search system (April 2019) 2019) (April system search document Intra-bank 680 309 8.5% 40.1% 32.9% 28 cases 13 times FY 2017 13 times/ 14 classes 14 56 people 66 people 28 teams/ 113 people 113 720 people 10,216 10,216 people Championship 110 donations/110 5th competition and (Octoberfinancialproduct recommendationsystem 2019) 1,314.8 billion1,314.8 yen (March 18 and 19) and 18 (March 2,105 2,105 thousand yen 1,566 1,566 thousand yen 1,070 thousand yen 23,472 thousand yen Main achievements Number of people acquiring Level 1 FP qualification 1 FP Level Number of people acquiring Gunma Silk Inheritance Heritage, World Donations to Gunma Prefecture (total amount of 6,814 thousand yen) Fund Succession Health as an Excellent of certification Acquisition Enterprise 2020 Management and Productivity 2020) (White (March 500) plan remuneration share to a restricted Transition Number of classes conducted Structure with three outside directors (including one female outside (including one female outside directors with three Structure June 2020 from director) for investors Number of briefing sessions Issuance amount of 10 billion yen in November 2020 in November yen amount of 10 billion Issuance energy renewable for equipment of loans for the payment Allocated to Foundation Donations to Oze Preservation thousand yen) (total amount of 14,969 number of participants Total and LED lighting when newly generation Installed solar power banking outlets. constructing Department parking lot Sales Office stands at the Head Installed EV assessment cases Number of business feasibility Number of members Number of seminars and study sessions held (times/participants) loan balance Housing trust balance in investment ratio product Balanced projects Main development money partnerships and digital Online payment achievements V2 level League V. Women’s regionals for the that qualified 30 teams by Competition as a sponsor or supporting performances of the regular Support four year member every Number of teams/number of participants manager of female Percentage (2017) and Eruboshi Platinum Kurumin Acquired (2018) 3) certification (highest grade to shareholders Ratio of total payout Number/amount of donations from SDGs private placement bonds (348 total placement SDGs private Number/amount of donations from donations/62,052 thousand yen) Total amount of subsidies (Foundation Prize and Education Prize) and Education Prize amount of subsidies (Foundation Total support cases Number of business succession services property Number of will trust and liquidation of inheritance provided Specific initiatives (ESG/SDGs) Donations from the donation course of the shareholder of the shareholder the donation course Donations from year ended the fiscal from (conducted benefits program 31, 2019) March Donations from SDGs private SDGs private Donations from bonds placement Donations from the donation course of the shareholder of the shareholder the donation course Donations from benefits program of specialized human resources Development of Gunma the Silk Inheritance Donations from trust investment to health and productivity approach Proactive management system remuneration of the directors’ Reviewing Financial education classes at high schools Improving the effectiveness of the Board of Directors of the Board the effectiveness Improving IR activities Conducting Provision of useful management of useful management Provision information Implementation of customer-oriented, asset building initiatives initiatives DIGITAL Fincross Bank of the Gunma Activities League V. Wings in the Green Orchestra the Gunma Symphony Support for of Tournament the Gunma Holding the National High School Finance Quiz Championship and Economics Koshien” “Economics employees elderly, and young women, Support for to business linked returns of shareholder Provision performance First green bond issuance by a regional bank a regional by issuance bond First green Protection Environment the Natural Donations from Kiko” “Oze Fund activities Educational expeditions) camp, environmental (holding eco-kids at banking outlets Energy-saving on based practices Consulting assessments business feasibility Bank of the Gunma Activities Club Management such as marriage, events to life according Consulting education, and home purchase Cashless payment initiatives Cashless payment of the Gungin Cup Holding Team Volleyball Mothers’ Competition certifications of various Acquisition Subsidy programs Subsidy programs Prize) and Education Prize of Foundation (awarding the to resolve Initiatives succession of business challenges needs of to increasing response Proactive senior citizens Main initiatives Improving corporate governance Communication with shareholders and investors Promotion of sports in the community Building a workplace where all staff members are ableto play an active part Environmental Environmental conservation through initiatives business the core Solutions to issues management Initiatives to increase the assets of customers Support for digitalization Promotion of art and culturein the community Improve financial literacy in the community The Gunma Bank Environmental Foundation Initiatives to reduce the environmental impact Information provision and development of next-generation management leaders Provision of service according to the life stage active active SDGs declaration positions economy of human Promotion Promotion of regional of regional of a variety of a variety Sustainable and creation and creation of the global environment Conservation Conservation development development resources into resources Regional Regional Regional Regional Customers Employees community community Stakeholder Shareholders Management

(S) (E) (G) ESG Social Governance

Environment Environment Non-Financial Information Highlights Information Non-Financial

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45 - “Large “Large amount” refers to an amount of 10 million yen or years. the past three over on average more can “Recently” be regarded as being almost equal to For “presently.” example, at the time when the content of the proposals was determined for the General Meeting of Shareholders where the person was elected as an Outside or Outside Auditor. Director “Important” refers to those who are directors, general managers and the like (executive officers); and certified public accountants and lawyers (accounting professionals and legal experts). A person whose main business partner is the Bank,A person whose main or, if it is a corporate or legal entity, its executive officer, A person who is a major business partner of the - or legal entity, its exec Bank, or, if it is a corporate officer, utive pro legal or accountant professional consultant, A fessional who has gained a “large amount” (Note 1) of fees or other properties in addition to - execu the Bank, from remuneration tive A person who “recently” (Note 2) fell under (1), (2), or (3), and A “close (Note relative” 4) of a person who falls under any of the following items from A to D - (ex cluding those who are “important” not considered 3). (Note A person fell “recently” who under B or C above or of the Bank officer an executive was A person who falls under (1) to (4) above A director who is not an executive officer of the subsidiary Bank’s An executive officer of the Bank’s subsidiary of the Bank’s officer An executive At At the meeting of the Board of Directors in March With regard to the issue of “Encouraging spirited In light of these issues, we have appointed one - fe to share information such as reports on the status of Auditors. standing the by conducted audits Note 1: 1: Note 2: Note 3: Note relatives. to first and second-degree refers relative” “Close 4: Note of of the Board Ensuring the effectiveness Directors of the entire the effectiveness analyze and evaluate We Board of Directors based on self-evaluation of the Di- rectors and Auditors regarding items such as - composi tion of the Board of Directors, operational status, support system, deliberations, roles and responsibilities, with shareholders. and communications 2020, we confirmed that the ofeffectiveness the Board secured. was of Directors discussions at the meeting of the Board of Directors,” which had been with shared the of Board as Directors an issue, the Board of Directors commended the fact that the Outside Directors and Outside Auditors were able to engage in lively discussion based on their experience and knowledge, and recognized that securing time for deliberation on important management themes is an issue that must be continued. Regarding the issue of “Reviewing the composition of the Board of Directors,” which was also shared by the Board of Directors, the - invit consider the need to recognized of Directors Board ing women and legal experts to serve as outside board members in of consideration diversity, expertise and the of Directors. of the internal composition ratio male Outside Director who has extensive experience and knowledge of corporate management, and one Outside Auditor who has extensive experience as an attorney and specialized knowledge of legal matters in 2020. as Outside Directors to serve overall Evaluation criteria for independence of independence for criteria Evaluation Auditors and Outside Directors Outside Candidates for Outside Director or Outside Auditor of Bank the from to be independent deemed are the Bank when they do not come under any of the following conditions: Ｄ . Ａ . Ｃ . Ｂ . （1）（2）（3）（4）（5） - The members of the Audit & Supervisory Board - con Outside Audit & Supervisory Board members are Also, the Audit & Supervisory Board Office- consist - Accounting audit fee for fiscal year 2019 paid by us: 66 million yen by us: 66 million year 2019 paid fiscal for audit fee - Accounting 89 million yen our Group: paid by of remuneration amount Total - ing of dedicated staff members, has been set - up direct and is working Board, & Supervisory ly under the Audit audit system. effective to maintain a more duct audits in accordance with the auditing policies, audit plans and audit duties established by the Audit & Supervisory Board in accordance with the Audit & Supervisory Board Member Auditing Standards. The performance of duties by the Directors is monitored and verified through attendance at board meetings and other important meetings, audits of the headquarters, visits to branch offices, investigations of Groupcompa- ny operations, examinations of important documents, and of surveys the operations and assets of the Bank. In of is to working share awareness addition, the Company management policies, management issues and important auditing issues by meeting regularly with the - Presi Auditor. and the Accounting dent, Outside Directors and Outside Directors for Support system Outside Auditors The Secretariat, which is responsible as the secretariat of the Board of Directors, has a key role in supporting Outside Directors while distributing materials for the Board of Directors meetings in advance by the tablet. In order to allow for sufficient time to preparefor deliberations, the Outside Directors receive the materi als at the same time as Inside Directors. Along with supplying information on the new Bank’s initiatives in advance, they are also provided with opportunities for and Auditors. with the President exchange information Through these efforts, we are working to create an environment where the Outside Directors can always to the Board. useful recommendations make also provided with the materials for the Board of Di- rectors in and advance, the dedicated staff in the Audit & Supervisory Board Members’ Office offers necessary support for auditing operations by distributing materials for the Audit & Supervisory Board meetings in & Supervisory Board, In addition, at the Audit advance. the standing Auditors explain the agenda of the Board of Directors meetings and minutes of the Executive Committee meetings in detail to the Outside Auditors Audit & Supervisory Board Supervisory & Audit The Audit & Supervisory Board meets once a month in principle, and its members decisions make based on discussions on how to resolve various issues. Additionally, each member of the Audit & Supervisory Board reports on the results of audits, and shares information, and ex- when necessary. with the others opinions changes system officer Executive The Bank has adopted an executive officer system to enhance corporate governance and separate - manage ment decision-making from business operations and Directors. of of the Board role the promote audit Accounting Our accounting auditor, Ernst & ShinNihon Young LLC - with the Com audits in accordance accounting conducts panies Act and the Financial Instruments and Exchange the executive between no special interests are There Act. and the Bank. Young ShinNihon LLC Ernst & of officers Internal audit internal For audits, the Inspection & Audit Department, which is independent from the departments to be au- dited, conducts annual audits of the entire Group based of Directors. the Board on an audit plan determined by Main Initiatives Introduction of share remuneration-type stock options remuneration-type of share Introduction of Directors Board assessments for Start of effectiveness and Compensation Establishment of the Nomination Committees Advisory Plan Remuneration Share “Restricted of Introduction Plan” Remuneration Share and Performance-linked ・Introduction of executive officer system officer of executive ・Introduction ・Appointment of Outside Directors members ・Designation of independent board ・・・ remuneration executive of basic policy for ・Release ・ Outside Director ・Appointment of one female 2005 2010 2012 2015 2018 2019 2020 2001 Fiscal Year Fiscal strongly strongly aware that the structure of the Board of Di- rectors should consist of members with diverse values and perspectives based on different types of - knowl and attributes. experience, edge, In order to establish a system in which Independent Outside Directors are appropriately involved in the decision-making for nomination process and - remuner ation of the Directors, to increase the objectivity and transparency of the process, and to enhance corporate governance, the Nomination Advisory Committee and the Compensation Advisory Committee were established as advisory bodies to the Board of Directors. The majority of the members of both committees are independent Outside Directors. Nomination and Compensation Advisory Advisory and Compensation Nomination Committees 3 outside 60% Ratio 3 outside, 1 female

33% Ratio Decision-making Decision-making for appropriate management and establishment of an efficient business operations system the basis of sound management that form systems management and risk of compliance Enhancement Timely and appropriate disclosure of corporate information and active IR activities aimed at - transpar ent management

In addition, we appointed one Outside Auditor who has extensive experience as an attorney and specialized The Board of Directors consists of nine Directors, including three Outside Directors. three including of nine Directors, consists of Directors The Board achieve To our management goals, we believe that it is effective to enhance the corporate auditor system Outside Directors are responsible of management oversight for the Board of Directors, and Outside - Au In addition, to enhance corporate governance and manage oversight functions of the entire Group, the In order to execute important business operations The term of Directors is limited to one year to build In nominating Outside Director candidates, we are （1）（2）（3） based on management policies determined by the Board of Directors, the Executive Committee, which is a consultative body to the President, meets once a week in principle to conduct thorough deliberations for decision-making to ensure prompt and smooth execution. a management system that can respond more quickly environment. in the business to changes Board of Directors Board The Board of Directors consists of six Inside Directors and three Outside Directors (one third of total are Outside Directors), makes decisions on basic - manage ment-related matters and important business - opera tions, and supervises the performance duties of each Director. knowledge of knowledge are We working legal to matters ensure overall. that the Board of Directors as a whole has a - diver and efficiently. effectively performed and capabilities, and that its functions are experience sity of knowledge, Governance Strengthening Initiatives Strengthening Governance the of shared In of issue the our the of of Board as self-evaluation effectiveness Directors the a have whole, we composition of the Board of Directors, and have been considering the ratio of Outside Directors, and inviting female Directors and legal experts. In 2020, we appointed one female Outside Director with extensive experience and insight into corporate management, bringing the number of Outside Directors to three out of nine or one third. Directors, by by appointing Inside and Outside Auditors, as well as to strengthen management oversight functions by the and Outside Auditors. of Outside Directors presence ditors are responsible of the auditing in the corporate auditor system, and all have the governance. corporate monitoring and supervising for role of management Group Management Meeting is held every six months to report and discuss management policies and - opera level. on the executive company tional status of each Group Corporate Governance System Governance Corporate The Bank has a corporate auditor system with the five membersof theAudit and Supervisory Board (includ- Outside Auditors). ing three

While always keeping in mind the development of regional communities, the Bank’s basic policy is in to keeping mind respond the of development regional communities, the While Bank’s always appropriately to the financialneeds of customers, enhancecorporate value by ensuring asset soundness and strengthening its profitability, and to be highly evaluatedby shareholdersand To therealize market. this basic policy, we positioned have the enhancement as of the governance corporate most important management points: three on the following working and are challenge, Corporate Governance Corporate Basic Perspective

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47 remuneration Mid- to long-term Mid- to long-term performance-linked performance-linked Performance-linked share Performance-linked Share remuneration Share Mid- to long-term incentive remuneration incentive Mid- to long-term remuneration Restricted share Restricted Variable remuneration Variable Non-performance-linked Non-performance-linked Calculated based on consolidated current net income per share Calculated based on consolidated over-head-ratio (OHR) Calculated based on total shareholder return Calculated based on SDGs management indicators (contribution to achieving SDGs) Bonus remuneration Short-term performance-linked Short-term performance-linked Short-term incentive remuneration Short-term incentive #1 Profit indicator Cash remuneration #2 Efficiency#2 indicator #3 Shareholder value indicator #4 Non-financial indicator = remuneration Base remuneration Monthly remuneration Non-performance-linked Non-performance-linked share Amount of share remuneration performance-linked Cash/Share We We have set profit as our number one indicatorfor measuring medium- to long-termresults, andwe have setconsolidated as our benchmark. shareholders, indicator for EPS, which is a key We We will use consolidated OHR, which is also a key indicator in the numerical targets of plan, as a benchmark. our medium-term management The shareholder Bank’s value index, which shows the return on investment, will be used to raise awareness of the benefits management. of shareholder-oriented and the importance to shareholders evaluation indicators The will Bank’s be selected from among management indicators associated to the seven goals set out in our SDGs declaration. Consolidated earnings per share (EPS/Earnings Per Share) (EPS/Earnings Per per share earnings Consolidated Consolidated over-head-ratio (OHR/Over Head Ratio) Head (OHR/Over over-head-ratio Consolidated remuneration Performance-linked Performance-linked Performance-linked #1 #2 #3 Total shareholder return (TSR/Total Shareholders Return) Shareholders (TSR/Total return shareholder Total #3 to achieving the SDGs) our contribution indicator (indicator that measures #4 SDGs management Type of remuneration of Type In order to share of awareness the interest with shareholders and raise of awareness management with the emphasis on - share holders, we introduce share remuneration to the Directors, excluding Outside Directors, and them encourage to hold a certain depending on their positions. shares treasury of the Bank’s amount or more Also, as a leading company in the region, we are aware of the appropriate level of regional remuneration businesses received through by survey executives of data from obtained by regularly participating in surveys conducted by external research organizations (so-called executive remuneration survey, etc.) and use this information as a reference in determining our own remuneration. Due to the nature of short-term consolidated incentive remuneration, current net income is adopted as an evaluation indicator with the aim of increasing motivation to contribute to business performance for each fiscalyear. Forportion, the the amount performance-linked of remuneration is determined within the range of 0 to 200% depending on the status of net income. achievement current consolidated of In principle, the Bank issues the Bank’s common shares equivalent to the above remuneration in each reasonably fiscaladjusted year in after accordance being with the executive tenure during the evaluation period (the immediately preceding years). three fiscal To prevent excessive risk taking excessive prevent and ensure the soundness of To and management, to serious prevent scandals, such as accounting fraud or significantcorrections required for past fiscal year financial statements, which may be caused excessive by incentives, we established the clauses clause (Clawback and Malus clause) for the and recovery forfeiture of all or part of the share - remu of the circumstances. in the event neration The Bank determines the appropriate amount of remuneration based on its business performance, the environment - surround and industry trends. conditions, economic ing the Bank, social and The following four indicators are adopted as evaluation indicators, with the aim of enhancing corporate value over the mid- to long-term as well as sharing profitawareness with shareholders andraising managementawareness that values the- sharehold of 0 to 200% depending on the status of achievement. is determined within the range amount of remuneration The ers. Remuneration Remuneration for Outside Directors and Auditors shall consist of only base remuneration, considering their role and independent status. The executive remuneration for individuals shall be set at a ratio of 3:1:1 in the following order: 1) Base remuneration, 2) Short- 2) 1) Base remuneration, order: of 3:1:1 in the following set at a ratio shall be individuals for remuneration The executive term incentive remuneration, and 3) Mid- to long-term incentive remuneration, taking into account the absolute amount remuneration. of We We release this disclosure policy publicly to the stakeholders appropriately through media and the following disclosure materials: etc. our website, governance, on corporate reports Meeting of Shareholders, the General documents for reference securities reports, Features of remuneration Features - - - - - - - - - - - [Evaluation indicators to calculate the amount of remuneration for performance-linked share] performance-linked for indicators to calculate the amount of remuneration [Evaluation remuneration clauses for and recovery on the forfeiture 6. Perspective shares on holding treasury 7. Perspective policy 8. Disclosure 3. Remuneration structure 3. Remuneration Directors Outside excluding (1) Directors, structure] of remuneration [Summary level 4. Remuneration remuneration 5. Performance-linked (1) Bonus share (2) Performance-linked (2) Outside Directors and Auditors (2) Outside Directors 2 5 10 (people) members Number of eligible board eligible board ― ― ― Performance share share Performance (performance linked) (performance ― ― 54 Stock linked) transfer transfer RS stands for “Restricted Share Remuneration,” and PS and Remuneration,” Share “Restricted RS stands for Remuneration.” Share “Performance-linked stands for restrictions (non-performance (non-performance compensation with compensation Note: Note: ― ― 61 Bonus ― RS and PS (performance linked) (performance 120 million yen per year 120 million yen 43 34 199 linked) Monthly compensation compensation ― (non-performance (non-performance Bonus 43 34 315 (millions of yen) of (millions Total compensation Total Total 360 million yen per year 360 million yen Total 80 million yen per year 80 million yen Fixed-amount remuneration Fixed-amount Auditors Auditors Directors Directors Items such as policies needed when deliberating each of the above items, which are deemed necessary by and the Committee, - tion Advisory Compensa Because the Directors are primarily responsible for the performance of the entire Bank, individual evaluation for incentive is remuneration more focused on contributing of to performance the the Bank overall than the of performance the business and is in charge, in which the Director To To further motivate the Directors to contribute to sustainable growth of the Bank and increase the the mid- to long-term, Bank over corporate value of the 1. The number includes three Directors and one outside board member who retired during the current fiscal year. fiscal during the current member who retired and one outside board Directors The number includes three 1. position. is determined by remuneration share bonuses and restricted amount of monthly remuneration, The standard 2. #1 Proposal for the General Meeting of Shareholders on Director and Auditor Remuneration, and Auditor on Director Meeting of Shareholders the General for #1 Proposal this policy), (including of Directors remuneration for #2 Policy individuals), by (including amount of remuneration Directors for system #3 Remuneration #4 Members. & Supervisory Board the Audit discussions by is determined through Auditors for #5 Remuneration #1 #1 focusing on shareholders, awareness raise management and with shareholders awareness profit share To #2 a sound incentive, and give with business performance linkage maintain proper To #3 risk taking, inappropriate avoid To #4 talent, managerial excellent or secure be able to hire To #5 #6 decision-making process. and transparent an objective show To #7 In accordance In with accordance the regulations set forth separately, the Board of Directors determines the following items based on the ad- vice and recommendations from the Compensation Advisory Committee consisting of three or more members (at least half of the Board by to the request the items in response has deliberated after the committee Independent Outside Directors) them are of Directors. In order to create a remuneration directors’ system that contributes to realization of the management Bank’s policy, as follows: our Code Governance basic is based on the principles of the Corporate system remuneration on the directors’ perspective The remuneration of the Directors, excluding the Outside Directors, is comprised of fixed-amountremuneration, The remuneration limit was determined by the resolutions of the General Meeting of Shareholders in 2012 and - - Board member category Board Outside board members Outside board Auditor (excluding Outside Auditors) (excluding Director (excluding Outside Directors) (excluding Total amount of remuneration, etc. by board member category, category, member board by etc. amount of remuneration, Total members> and number of eligible board etc., type of remuneration, total amount by 2. Governance for determining remuneration for 2. Governance Basic policy for executive remuneration executive Basic policy for system remuneration on the directors’ 1. Basic perspective Basic policy for executive remuneration executive Basic policy for We formulated the “Basic policy for and executive the remuneration,” Bank determines the and Directors’ Auditors’ based on this policy. and procedures with the perspectives in accordance remuneration Current fiscal year (from April 1, 2019 to March 31, 2020) April 1, 2019 to March (from year fiscal Current <

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49 同社取締役兼専務執行役員戦略本部長株式会社 SUBARU 代表取締役副社長当行常務執行役員総合企画部長当行常務取締役（現職）当行熊谷支店長当行審査部審査業務室長同社取締役兼専務執行役員群馬テレビ株式会社社外取締役当行取締役（現職）株式会社 SUBARU 取締役会長同社常務執行役員戦略本部長兼スバル原価企画管理本部長当行総務部長当行執行役員総合企画部長 Manager, Internal Review Office, Office, Internal Review Manager, Department Credit Branch Kumagaya Manager, General Manager, General Affairs Department General Manager, and General Officer Executive Planning Department Corporate and Officer Managing Executive Planning Corporate Manager, General Department position) (current Managing Director Management Chairman, NTT Data Inc. Laboratories, Takashimaya Auditor, Outside Corporate position) (current Ltd. Co., & Trust Mizuho Outside Director, Ltd. Banking Co., Promoting for Chairman, Organization Urban Development position) of the Bank (current Director Chief General Officer, Managing Executive Division, Development Strategy Manager, Subaru Cost Manager, and Chief General of the Company Planning & Management Senior Managing Executive Director, Manager, and Chief General Officer, Division of the Development Strategy Company and Senior Managing Executive Director Company of the Officer Outside Director, Ltd. Co., Television Gunma Subaru Corp. President, Vice Executive position) of the Bank (current Director Chairman, Subaru Corp. Outside Director, Outside Director, Corporation OMRON President, Inc. Healthcare, FRONTEO Auditor, Outside Corporate KK AIG Japan Holdings of the Bank Director position) (current Solasto Corp. Outside Director, position) (current Outside Director, KK AIG Japan Holdings position) (current 2011 年 6 月 2011 年 6 2009 年 6 月 2009 年 6 2007 年 4 月 2007 年 4 2019 年 6 月 2010 年 6 月 2011 年 6 月 2017 年 6 月 2016 年 6 月 Jun. 2015 Jun. 2018 Jun. 2020 Jun. 2020 Jun. 2020 Jun. 2009 Jun. 2011 Jun. 2014 Jun. 2016 Jun. 2018 Jun. 2019 Jun. 2006 Jun. 2010 Jun. 2015 Jun. 2008 Jun. 2010 Jun. 2011 Jun. 2016 Jun. 2017 Apr. 2007 Apr. 2009 May 2017 May May 2007 May Nov. 2010 Nov. 2018 年 6 月 2008 年 6 月 2009 年 4 月 2016 年 6 月 2014 年 6 月常務取締役 Outside Director Managing Director Outside Director Outside Director 社外取締役（いりさわひろゆき）当行高崎支店統括次長当行所沢支店長当行審査部主任審査役株式会社 SUBARU（当時の商号 : 富士重工業株式会社）入社同社執行役員スバル製造本部長兼群馬製作所長同社執行役員スバル原価企画管理本部長兼コスト企画部長同社常務執行役員スバル原価企画管理本部長当行入行当行所沢法人営業所 ( 出張所 ) 開設準備委員長同社常務執行役員スバル原価企画管理本部長兼スバル購買本部副本部長（こんどうじゅん） Joined the Bank Manager, Deputy Administration Branch Takasaki Chairman, Opening Preparation Sales Corporate Tokorozawa Committee, (Sub-branch) Office Manager, General Branch Tokorozawa Manager, Deputy General Department Credit Joined the Bank of Japan Shimonoseki Branch, Manger, General Bank of Japan Examination Manager, General Department, Bank of Japan Bank Branch, Nagoya Manager, General of Japan Bank of Japan Director, Industries Ltd. Heavy Joined Fuji Subaru Corp.) (present Manager, Chief General Officer, Executive Subaru Manufacturing Division, and Plant Company Gunma Plant of the Manager, Manager, Chief General Officer, Executive Planning and Management Subaru Cost Manager, Department, and General Planning Department of the Company Cost Chief General Officer, Managing Executive and Planning Subaru Cost Manager, Division of the Company Administration Chief General Officer, Managing Executive and Planning Subaru Cost Manager, General Vice Division and Administration Division of Subaru Purchasing Manager, the Company Joined Citibank, N.A. Kearney Joined A.T. Ltd. Super Nurse Co., President, Healthcare FIRSTSTAR President, position) (current Ltd. Co., Economy Regional Outside Director, of Japan Vitalization Corporate Benesse MCM Corp. President, 10 月 10 月 12 月 Jul. 1971 1984 年 4 月 1984 年 4 1976 年 4 月 1976 年 4 2005 年 6 月 2005 年 6 2003 年 6 月 2003 年 6 Jun. 2013 Jun. 2005 Jun. 2003 Jun. 2004 Jun. 2006 2003 年 Oct. 2003 Oct. 2006 Apr. 1986 Apr. 2013 Apr. 1984 Apr. 1976 Feb. 1996 Feb. Feb. 2002 Feb. 2006 年 2006 年 May 1993 May 2000 May 2004 May Dec. 2006 Aug. 2010 Aug. 2004 年 6 月 2004 年 5 月 2006 年 6 月 Sept. 2000 Sept. 1998 Kuniko Nishikawa Kuniko Hiroyuki Irisawa 入澤広之Hiroyuki Eiji Muto 近藤潤Jun Kondo General Manager, Personal Financial Personal Manager, General Assets Department Banking Personal Manager, General Department Manager, and General Officer Executive Department Personnel Officer; as Executive Dispatched, treated Ltd. Gungin Securities Co., President, as Managing Dispatched, treated Gungin President, Officer; Executive Ltd. Securities Co., position) (current Managing Director General Manager, Manager, General Banking Department Corporate and General Officer Executive Branch Takasaki Manager, and Officer Managing Executive Business Planning Manager, General Department & Administration Managing Director position) (current Director and General Manager, Manager, and General Director Department Planning Corporate and General Managing Director & Business Planning Manager, Department Administration Managing Director Senior Managing Director position) (current President Director, Executive Officer and Gen- Officer Executive Director, Department Credit Manager, eral and General Managing Director Department Credit Manager, Managing Director Senior Managing Director President position) Chairman (current Executive Officer and General Manager, Manager, and General Officer Executive Department Personnel and General Officer Executive Director, Department Personnel Manager, Personnel Manager, and General Director Department Manager, and General Managing Director Department Compliance Managing Director Senior Managing Director position) (current President Vice Executive Jun. 2011 Jun. 2014 Jun. 2017 Jun. 2019 Jun. 2013 Jun. 2014 Jun. 2015 Jun. 2017 Jun. 2019 Jun. 2005 Jun. 2006 Jun. 2007 Jun. 2009 Jun. 2011 Jun. 2019 Jun. 2011 Jun. 2014 Jun. 2016 Jun. 2017 Jun. 2019 Oct. 2012 Jun. 2011 Jun. 2012 Jun. 2013 Jun. 2014 Jun. 2015 Jun. 2017 Jun. 2019 Director and Executive Vice President Vice and Executive Director Managing Director Managing Director Chairman President Joined the Bank Branch Fukiage Manager, General Personnel Manager, Deputy General Department Business Manager, Deputy General Department Planning & Administration Manager, Senior Deputy General Business Planning & Administration Manager, Department and General Office Business Strategy Branch Omiya Manager, General Joined the Bank Branch Fukaya-Kamishiba Manager, General Manager, Deputy General Department Personnel Manager, Senior Deputy General Department Personnel Branch Kumagaya Manager, General Banking Corporate Manager, General Department Manager, and General Officer Executive Branch Utsunomiya Joined the Bank Nakaizumi Branch Manager, General Musashi-urawa Manager, General Branch Manager, Senior Deputy General Branch Tokyo Branch Tomioka Manager, General Joined the Bank Osaka Branch Manager, General Kiryu Branch Manager, General Ota Branch Manager, General Risk Management Manager, General Department Corporate Manager, General Planning Department Joined the Bank Ota-nishi Branch Manager, General Manager, Senior Deputy General Planning Department Cooperate Manager General Secretariat Branch Tokyo Manager, General Department Credit Manager, General

Jul. 2006 Jun. 2008 Jun. 2009 Jun. 2005 Jun. 2003 Jun. 2005 Jun. 2007 Jun. 2009 Jun. 2011 Jun. 2004 Jun. 2005 Jun. 2007 Jun. 2009 Jun. 1995 Jun. 2001 Jun. 2003 Jun. 2004 Oct. 2002 Apr. 1983 Apr. 2007 Apr. 1983 Apr. 1984 Apr. 1978 Apr. 1972 Apr. 1998 Feb. 2003 Feb. 2010 Feb. Feb. 2000 Feb. Mar. 2002 Aug. 2005 Aug. Satoshi Inoue Yukio Yuasa Yukio Nobuyuki Horie Nobuyuki Kazuo Saito Fukai Akihiko

Directors Executives

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Department Inspection & Audit Audit & Inspection ●

Co., Ltd. Ltd. Co., Department

Management Administration Planning Corporate

Sky Ocean Asset Ocean Sky Department

(as of June 30, 2020) ● Risk Management Management Risk

Legal Secretariat Naofumi Arisaka Morijiri Yasuhiro Okada Yoshihisa Satomi Nagaoka Hideyuki Saito Ishizeki Takashi Hasegawa Takeshi Akihiko Horie Akihiko Muto Keita Goto Akihiro Takei Tsutomu Kitamura Nobuyuki Uchibori Takeo Hirota Atsushi Kimitoshi Mashimo Gungin System Gungin System Service Co., Ltd. Ltd. Co., Service

● Personnel Department Personnel Financial

Expertise accounting

Administration Department Administration Business Planning & & Planning Business The Gungin Card Co., Ltd. Ltd. Co., Card ● ●

Nomination Advisory Committee Advisory Nomination

Finance

Compensation Advisory Committee Advisory Compensation Department Customer Consulting Consulting Customer

Gunma Shinyo Gunma Shinyo Hosyo Co., Ltd. Ltd. Co., Hosyo ● ● Support Department Support Asset Management Management Asset Corporate Corporate

management Credit Department Credit Co., Ltd. Ltd. Co., President

Gungin Lease ーーー

Department Board of Directors Board Securities & Treasury companies 1 company 1 company 1 company Executive Committee, Committee, Executive positions at listed Number of concurrent Number of concurrent

General Meeting of Shareholders General International Department International Ltd. Ltd.

(Hong Kong) Kong) (Hong

Department Gunma Finance New Administration Operations New 4 years 5 years 6 years 4 years

Term of office Term General Manager, Business Planning & Administration Department Planning & Administration Business Manager, General Department & Audit Inspection Manager, General Department Personnel Manager, General Sales Department Office Head Manager, General Branch Takasaki Manager, General Planning Department Corporate Manager, General Branch Tokyo Manager, General Branch Omiya Manager, General Department Development Systems Manager, General & Securities Department Treasuries Manager, General Ota Branch Manager, General Department Credit Manager, General Department Risk Management Manager, General Isesaki Branch Manager, General Affairs Department General Manager, General Operations Department Operations Audit & Audit Gungin Co., Ltd. Ltd. Co.,

Consulting Consulting

Supervisory Board Department Systems Development Development Systems

Name Department

Eiji Muto Jun Kondo Affairs General Yasuo Kamiya Yasuo Makoto Tanaka Makoto

Gungin Kuniko Nishikawa Kuniko Kaneo Fukushima Co., Ltd. Ltd. Co.,

Securities

Department Head Ofﬁce Sales Sales Ofﬁce Head

- Audit & Supervisory Audit Branches Domestic Board Members’ Ofﬁce Members’ Board

Position Overseas Branches Overseas Gunma Directors Members Co., Ltd. Ltd. Co., Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Managing Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer Executive visory Board visory Board Chuo Kogyo Chuo Kogyo Audit & Super Audit Findings of Outside Directors and Auditors Findings of Outside Directors Executive officers Executive Chart Organization Member of the Gunma Prefectural Public Member of the Gunma Prefectural Commission Safety Public Chairman, Gunma Prefectural Commission Safety Pollution Chairman, Gunma Prefectural position) (current Board Review Member of & Supervisory Board Audit position) the Bank (current Superintendent of Education, Gunma Superintendent of Education, of Education Board Prefectural Chairman, Gunma Prefecture Culture and Education for Foundation Gunma Symphony Director, Orchestra Member & Supervisory Board Audit position) of the Bank (current The Japanese Institute of Director, Tokyo Accountants Public Certified Chapter Chamber Shibukawa President, Vice and Industry (current of Commerce position) Corporation; Established Suisei Audit position) (current Partner Representative Member of & Supervisory Board Audit position) the Bank (current and Supervisory Board Outside Audit (current Corp. Member, Hochiki position) General Manager, Manager, General Banking Department Corporate Manager, General Affairs Department General Manager, and General Officer Executive Affairs Department General and General Officer Managing Executive Affairs Department General Manager, Board & Supervisory Standing Audit position) Member (current General Manager, Shibukawa Branch Shibukawa Manager, General and General Officer Executive Department Compliance Manager, and General Officer Executive Department Personnel Manager, & Supervisory Board Standing Audit position) Member (current Jul. 2013 Jul. 2012 Jul. 2014 Jul. 2010 Jun. 2015 Jun. 2016 Jun. 2018 Jun. 2012 Jun. 2012 Jun. 2014 Jun. 2014 Jun. 2016 Jun. 2017 Jun. 2019 Jun. 2020 Jun. 2020 Jun. 2016 Jun. 2016 Apr. 2008 Mar. 2016 Nov. 2018 Nov. Nov. 2010 Nov. Outside Audit & Supervisory Board Member & Supervisory Board Outside Audit Member & Supervisory Board Outside Audit Member & Supervisory Board Outside Audit Standing Audit & Supervisory Board Member Supervisory Board & Standing Audit Member & Supervisory Board Standing Audit Registered as a lawyer (Gunma Bar (Gunma as a lawyer Registered Association) (currently Office Law Established Kamiya position) (current Office) Law Ryomo Member of Dispute Coordinating Gunma Committee, Chairman, Gunma Bar Association; Japan Federation Governor, Executive of Bar Association; Managing Director, of Bar Association Kanto Federation Pollution Member of Gunma Prefectural position) (current Board Review Joined Tokio Marine & Fire Insurance Insurance Marine & Fire Tokio Joined Ltd. Co., public as a certified Registered Tanaka Opened Makoto accountant; Office Accountant Public Certified tax accountant as a certified Registered Public Certified Joint Established Suiran Representative Office; Accountant public accountant certified Accounting Tax Tanaka Established Accounting Tax Tucks (currently Office certified tax Representative Office); position) (current accountant Gunma External Auditor, Comprehensive Prefecture Joined the Bank Manager, Deputy General Department Inspection & Audit Manager, Senior Deputy General Branch Kencho Manager, Senior Deputy General Assets Department Financial Personal Branch Kencho Manager, General Joined Gunma Prefectural Office Joined Gunma Prefectural Finance Tomioka Manager, General Prefecture of Gunma Office Gunma Director, Executive Bureau Hospitals Prefectural Gunma Director, Executive Department of General Prefectural Affairs Joined the Bank Manager, Deputy General Planning Department Corporate Manager, Deputy General Department Inspection & Audit Manager, General Branch Takasaki-kita Secretariat Manager, General

Jun. 2008 Jun. 2012 Jun. 2007 Jun. 2009 Jun. 2011 Oct. 2003 Apr. 1981 Apr. 1983 Apr. 2008 Apr. 1978 Apr. 2007 Apr. 1984 Apr. 1972 Apr. 1997 Apr. 2003 Apr. 1983 Feb. 2010 Feb. Mar. 1998 Nov. 2009 Nov. Nov. 1993 Nov. Nov. 2007 Nov. Aug. 1993 Aug. Aug. 2007 Aug. Aug. 2006 Aug. Sept. 2002 Yasuo Kamiya Yasuo Makoto Tanaka Makoto Kaneo Fukushima Noriyuki Watanabe Noriyuki Koitabashi Shinya

Audit & Supervisory Board Members Board & Supervisory Audit Executives

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Compliance Management System Compliance Action Plan protection and use of personal information obtained in connection with our operations by as- With a view to fulfilling the social responsibility and public mission of a bank, it is indispensable to The Board of Directors formulates a Compliance signing personnel responsible for managing and establish and implement a compliance management system. Thus, we regard compliance as one of the Action Plan every year as a specific practical plan supervising business partner information, including

1 most important management tasks and will work together with all of our executives and employees for fulfilling compliance requirements. personal information throughout the Bank, and 1

to foster a corporate culture that emphasizes the importance of compliance. In the Compliance Action Plan, the highest pri- developing and establishing a management system

T ority items are listed as common themes across the

群馬銀行についてh to implement meticulous safety management mea-

e Bank. sures and supervise outsourcers. G Compliance Management System The Compliance Committee confirms the imple-

u To protect specific information on corporate

n mentation status of the Compliance Action Plan ev- The Board of Directors is the highest organization responsible for compliance, and its authorized Compliance entities acquired by executives and employees, we

m ery quarter, and the Board of Directors confirms the a Committee deliberates on important matters related to compliance. In addition, managers and personnel in have established measures to communicate and

B charge of compliance are assigned to all departments and branches to ensure thorough compliance by raising implementation status of the plan every six months. manage such information, and aim to prevent un- a

n compliance awareness of the executives and employees and providing educational guidance to them. The fair transactions using such information. k Risk Management Department that oversees compliance, centrally manages compliance-related matters, and 1. Prevention of fraud strives to develop and establish a system for compliance with applicable laws and regulations and a manage- 2. Eradication of harassment Measures to Manage Conflicts of Interest ment system to protect our customers. 3. Prevention of money laundering Together with announcing a “Conflict of Interest 4. Performance of accountability Management Policy,” we perform our business op-

Compliance in Practice 5. Appropriate management of customer information

erations so as not to unduly harm our customers’

2 In order to put our “Corporate Philosophy” into practice, we have established “Corporate Ethics” as a basic pol- profits, by properly managing transactions that may icy for compliance and “Action Guidelines” as the criteria for compliance. Measures to Protect Customers M cause conflicts of interest between customers and

i All executives and employees are provided with “Compliance Guidelines” summarizing all matters consid- d In addition to announcing a “Customer Protection the Bank or its Group as well as between customers - ered to be necessary for practicing compliance, including “Corporate Ethics” and “Action Guidelines.” In addi- T Management Policy,” the Bank assigns personnel of the Bank or its Group companies. e tion, the “Compliance Action Plan,” which is a specific practical plan for fulfilling compliance requirements, is r in charge of customer protection management to

m formulated annually by the Board of Directors, based on which measures should be taken. We are striving to each department and branch, allowing them to of-

B Severing Ties with Anti-social Forces further enhance and reinforce our compliance practices, such as checking and monitoring compliance status fer sufficient explanations about this to customers u

s and conducting consultations and guidance by visiting branches. i and handle consultations, requests, and complaints Unfair intervention by anti-social forces can lead to n

e from customers in a timely manner. We are work- a decline in confidence of a bank, making it difficult s s Contents of “Corporate Ethics” ing to develop and establish an enhanced customer to ensure the suitability and soundness of business

P Compliance system

l and “Action Guidelines” protection management system. operations. a

n Our “Customer Support Office” handles custom- [Corporate Ethics] Based on the importance of the social responsi- er complaints. In addition, we support the financial bility of a bank, we take a firm position against an- 1. Awareness of social responsibility and public mission Highest responsible Alternative Dispute Resolution (ADR) system in organization ti-social forces in accordance with the three princi- 2. Strict compliance with laws and regulations which a designated dispute resolution organization ples of “Prevent access to our funds, prevent use of Board of Directors 3. Transparency in management and openness to society settles conflicts from a fair and neutral position. their funds, and do not fear such anti-social forces 4. Measures to deal with anti-social forces 《Contacts and phone numbers for suggestions or complaints》 and groups.” We are working to suspend relation-

(crime syndicates) Organization Departments ships with such anti-social forces.

for deliberations for management 3 Designated dispute resolution organization Specifically, starting new solicitation and trans-

E Customer Support [Action Guidelines] Compliance Committee Risk Management Consultation Office, Investors Consultation

S Office, Gunma Bank action activities for anti-social forces is banned, and

Department Japanese Bankers Office, The Investment

G 1. Understanding and complying with laws, regulations, Association (JBA) Trusts Association, Japan transactions already made are reduced and eventu- I and rules n ally stopped when such transactions are discovered.

i Departments 0570-017109 t 0120-203041 (Navi Dial (NTT’s 0120-817335 i 2. Maintaining and improving confidence in charge (Domestic toll free) In addition, we have introduced stipulations to ex- a Phone Japan-wide call (Domestic toll free) t

i 3. Reporting, communicating, and consulting clude anti-social forces in contracts. Departments at numbers +81-(0)27-252-1111 handling service)) v headquarters +81-(0)3-6206-3988 e 4. Drawing a line between public and private matters (key number) +81-(0)3-5252-3772 In order to eliminate unreasonable claims from s anti-social forces and transactions with such groups, 5. Honesty and sincerity in customer service Reception time 09:00-17:00 09:00-17:00 09:00-17:15 we ensure the safety of executives, employees and 6. Steadfast actions against anti-social forces Practice departments Reception Monday to Friday related parties. The Bank and its Group companies 7. Strict management of customer information Overseas bases Domestic branches date (excluding public holidays and Dec 31-Jan 3) take measures together and cooperate, on a daily 8. Prevention of money laundering Departments at headquarters basis, with external organizations such as the police In April 2019, we also announced that we would and lawyers. conduct foreign exchange operations adequately Themes of Training Sessions for Each Internal Whistleblowing System in compliance with the Global Code of Conduct for Other Measures Department and Branch Foreign Exchange and released publicly our “Basic We have established a system (Compliance Hotline) The Bank has established “Guidelines for Gifts and (Second Half of FY 2019) Policy on Foreign Exchange Transactions,” which that allows all executives and employees to report Entertainment” to eliminate acts that may lead to stipulates how to conduct foreign exchange trans- October: Prevention of harassment violations of laws and regulations directly to the Risk suspicion, distrust, misunderstanding, and criticism actions with customers and how to protect custom- December: Eradication of drunk driving Management Department and outside lawyers. This from society, and maintains sincere, fair, and trans- er information within the transactions. February: Internal whistleblowing system system has an important mechanism for protecting parent relationships with our business partners, and the confidentiality of whistleblowers and prohibiting Measures to Protect Business Partner will strive to prevent a loss of social trust and con- disadvantageous handling of them, which results in Information (Personal Information) fidence. The guidelines stipulate the type of gifts ensuring the effectiveness of the system by protect- and entertainment that the Bank may give and the ing whistleblowers, and encouraging early detection The Bank published a “Personal Information Pro- type of gifts and entertainment that the Bank may of violations of laws and regulations. tection Declaration” as our policy for appropriate receive from business partners.

52 53 55 risk Buffer Cross- Credit risk Credit Market risk Market Risk amount (post-stress) shareholdings shareholdings Operational risk Operational Stress risk Cross- Credit risk Credit Market risk Market Risk amount shareholdings shareholdings Operational risk Operational Assessment of buffer sufﬁciency Assessment of buffer risk Buffer Cross- Credit risk Credit Market risk Market

shareholdings shareholdings

Allocation capital Operational risk Operational

and translation adjustments translation and Common equity Tier 1 capital excluding valuation valuation excluding capital 1 Tier equity Common Allocation source In specific terms, the Board of Directors determines allocation of risk capitalby risk category every six months, The department for risk management regularly monitors the risk amount to determine whether it is within the

[Integrated risk management framework] risk management [Integrated Integrated Risk Management Integrated (1) Basic perspective (1) Basic to comprehensively risks, it is necessary and liquidity market, credit, risks such as to managing individual In addition manage risks such as risk overall of the Bank as a whole, and to compare and contrast these risks with management vitality. For this reason, the Risk Management Department is taking the lead in developing a system for integrated risk management, strengthening the management of various risks, and promoting the advancement of integrated risk management. framework risk management (2) Integrated As one to risk of of implemented management the we risk integrated a methods management, system integrated for measure the amount of risk by each category such as credit risk and market risk using a (value at unified framework capital). vitality (equity with management them to be compared integrate etc.) and risk (VaR), with the amount obtained by subtracting valuation and translation adjustments, etc. from common equity Tier 1 capital as the allocation source. allocated risk capital. The Management Committee is reported the results every month through the Asset Liability Committee. well as the Executive Committee as Management / Profits (ALM) Management Delegation of authority of Delegation risk

Emergency Reports Department Reputational Secretariat Corporate Planning Response Committee

< Crisis management >

Department Risk Management Management Risk

Legal risk Instructions Personnel Department Personnel risk

Human Department

Reports Cooperation General Affairs Affairs General for risk management) asset risk Tangible Board of Directors Executive Committee

(Highest responsible organization Department

Risk Management Department (Integrated risk management departments) Risk Management Management Risk risk

System Operational risk

General Affairs Department Affairs General

Department/Operations Departent/ Department/Operations

Business Planning & Administration Administration & Planning Business

Treasury & Securities Department/ Securities & Treasury International Department/ International

Reports Life Support Department / Department Support Life

Opinions

Customer Consulting Department/ Consulting Customer

Department/Credit Department/ Department/Credit

Operations Administration Administration Operations (Administrial risk management)/ risk (Administrial

Group Companies and Outsourcers

Risk Management Department Department Management Risk Administrative risk & Securities Department Securities & Domestic and overseas branches and headquarters

Reports Department/Treasury Department/Treasury Risk Management Management Risk risk Reports

Liquidity

& Securities Department Securities & Department/Treasury Department/Treasury

Audit Audit Audit on risk management Risk Management Management Risk Organizational framework of risk management Organizational framework of

Market risk

& Securities Department Securities &

Department/Treasury Department/Treasury

Department/Credit Department/Credit Risk Management Management Risk Credit risk Auditor (Inspection & Internal auditing External auditing Credit Risk Management Committee Reports Audit Department) ALM/Proﬁts Management Committee (Audit corporation) Opinions

Audit & Supervisory Board Operational Risk Management Committee Committees related to risk management

management Types of risks Departments related to risk Cooperation

In addition, the Department Risk has Management been established - as organiza risk an management integrated concerning departments together The work Department Risk risk and Management management-related various The Bank understands adequate risk management as one of the most important managerial tasks. The Board of The Board of Directors fully recognizes the importance of risk management, determines the risk management policy determines the of risk the risk management importance management, fully of The recognizes Directors Board based on the management Bank’s policy, etc., and strives to foster a corporate culture that places emphasis on risk management. tion for the entire bank, which comprehensively grasps and manages the status of various risks including risk mea- perspective. a cross-sectional from results surement based on of Directors and the Board Committee to the Executive the results and report risk situations and challenges discussions and reviews by the Committee,ALM/Profits Management the Credit RiskCommittee, Management and Committee. Risk Management the Operational Overview of Risk Management System Management of Risk Overview

Basic Perspective The risks that banks in Japan face are becoming increasingly diversified andcomplicated as financial liberalization and internationalization progress and financial and information technology advances. Under such circumstances, in order to the improve value corporate while ensuring soundness and stability of management, it is necessary that we and risks. of operations to the characteristics risks according and control manage appropriately Directors has established the Basic on Policy Risk Management and strengthens and the improves risk management this basic policy. following the risk management including system, Risk Management Risk

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57 In In the event of a computer system outage or malfunction due to computer equipment or use of a computer due to unauthorized of information or leakage malfunction or the destruction program failure, communication line or external attack, settlement functions or service operations may be suspended, or business performance. public on the Bank’s effect confidence an adverse have This could may damaged. be The occurrence of a natural disaster such as an earthquakes, social infrastructure damage such as outages a or power damage caused by crimes, terrorism, etc. to facilities owned by the Bank, such office as buildings, branches, or head computer centers, may interfere with the Bank’s business operations. This could have an business performance. on the Bank’s effect adverse Factors such as various problems in personnel management (such as remuneration, benefits, or termination) or discriminatory behavior (such as sexual harassment) could have an adverse effect on the Bank’s business performance. If the Bank fails to comply with laws, regulations, and contracts due to differences in interpretation of laws and regulations, deficiencies in legal violations procedures, of and laws regulations by the Bank or its and executives employees, etc., the Bank may be subject to penalties or compensation for This damages. could an have adverse business performance. Bank’s on the effect Failure Failure to properly handle the administrative work associated with each type of transaction may result in accidents, which may result in the loss of financial assets orcosts associated business performance. on the Bank’s with effect an adverse have This could restoringpublic trust. or a loss of original condition, the property to its Disaster Risk, Infectious Disease Risk, and Reputational Risk Reputational Disease Risk, and Disaster Risk, Infectious Operational Risk Operational The occurrence of a large-scale natural disaster, such as an earthquake with an epicenter in the Tokyo metropolitan metropolitan Tokyo in the with an epicenter disaster, such as an earthquake natural of a large-scale The occurrence area or an outbreak of an infectious disease such as the novel coronavirus could result activity in in sluggish the economic region or interfere with the Bank’s business activities, and this could have an performance. business adverse Bank’s effect on the Negative press and malicious rumors about the Bank and the banking industry, which business performance. may on the Bank’s effect an adverse or have lead to liquidity risk, and this could could may not be true, Based on our social responsibility and public mission as a regional financial institution, the Bank has developed a system that can respond to emergencies quickly and appropriately in the event of a major natural disaster, system within the organization. to everyone information relevant pandemic, etc. and convey coronavirus novel failure, Specifically, in order to ensure the safety of our customers, executives and employees, and to perform operations smoothly, we have a crisis management plan (business contingency plan (BCP)). We conduct regular training to ensure its effectiveness and periodically review its contents. We have also established a system of a in crisis. the In event major particular, earthquake for the to President by chaired committee response emergency convene an based on the expected impact. systems and backup such as backup offices measures developed have disasters, we Operational Operational risk is the possible loss that the Bank may suffer due to inadequate operational processes, activities of workers such as executives, employees, and temporary employees, and functions of systems, or exogenous events. The Bank divides operational risk into five categories in accordance with the organizational structure andcontent of operations. The Board of Directors has established a Basic Policy on Risk Management and Basic Regulations on Operational Risk, which stipulate basic matters concerning operational risk management. The Director in charge of the Management Risk Department is designated as the person in charge of supervising overall operational risks and Risk the Management Department is designated as the integrated operational risk management division. The Risk Management Department plans and supervises the overall management of operational risk under the direction and supervision of each and department the risk each manages in a director from risk charge, management-related specialized standpoint. Measures in response to risks in response Measures Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, that the risk will materialize and timing of materialization, of likelihood of the risk, the degree The nature if the risk does materialize and the impact on business performance The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, of materialization, and timing the risk will materialize that of likelihood risk, the degree of the The nature if the risk does materialize business performance and the impact on (2) Systems risk (2) Systems asset risk Tangible (3) risk (4) Human (5) Legal risk (1) Administrative risks (1) Administrative ・・・・・・ [Management by Risk Category] Risk by [Management

The three prefectures of Gunma Prefecture, Saitama Prefecture, and Tochigi Prefecture are the Bank’s core areas. Core areas account total loans and more than 90% for Bank’s of total deposits on a more non-consolidated basis. A in downturn in the an our economy effect adverse areas on could core have than 70% of the business performance. the Bank’s The Bank has been working to increase its lending to SMEs and individuals. Although the Bank and seeks individuals, to trends diversify such risk as by the reducing business the performance size of of SMEs, falling its prices loans of to secured SMEs real estate, and business performance. the on the Bank’s effect adverse household budgets of individuals could have an Liquidity Risk Market Risk Market Credit Risks Credit Our basic policy is to recognize the importance of impact of liquidity risk for the Bank. When liquidity risk becomes becomes risk liquidity When Bank. the for risk liquidity of impact of importance the recognize to is policy basic Our apparent, there arises a possibility of directly leading to management failure. We constantly assess the status liquidity risk precisely. of Cash flow risk means the possible loss that a bank may suffer ifthe Bank is unabledue toto secure themismatches necessary between funds operating and funding periods or unexpected capital outflows or is forced rates than usual. funds at significantly higher to raise because of market due to an inability to trade suffer to the possible loss that a bank may liquidity risk refers Market price. significantly unfavorable to accept the Bank is forced where turmoil, etc. or a trade The Bank could incur losses if it is not be able to obtain the significantly highernecessary rates interest thanfunds usual due toor changes in internalis or externalforced economicconditions orto market raise funds at or conditions, due to a example, decline if of in liquidity the the risk Bank. creditworthiness materializes For due to business performance. on the Bank’s effect an adverse have it could downgrade, rating factors such as a credit Credit Credit risk refers to the possible loss that a bank may suffer because a business bank’s partner or securities etc. business conditions, to worsening due and/or principal as promised issuer interest cannot repay/redeem The occurrence of unexpected nonperforming loans due to various factors such as the local economic situation in the local area (*1), business conditions of borrowers (*2), fluctuations inreal estate prices and increase stockthe cost pricesof may disposing of nonperforming loans, which could have an adverse effect on the business Bank’s performance. For For the departments in charge of market transactions, the department in charge of trading (front office) separated from is the department in charge of risk management and the department in charge of routine paperwork system. a check and balance to provide and back offices) (middle Our basic policy is to recognize the importance of impact of fluctuations in market factorsfor management and to take appropriate actions. In particular, bonds and shares are subject to price fluctuations, and determining suitable and sufficient risk assessment. size by transaction of proper therefore,with them within the range we deal Market Market risk refers to the possible loss that a bank may suffer due to fluctuations in market factors such as interest prices. and share rates, exchange rates, Although the Bank manages securities appropriately while keeping a close eye on market trends, it valuation may losses incur on bonds including Japanese government bonds due to rising interest rates, foreign exchange losses due to fluctuationsin foreign exchange rates, and stock write-downs due to declines performance. business in on the Bank’s effect an adverse have stock it could result, prices. As a At the Bank, asset-based lending accounts for the majority of credit risk, and ensuring the soundness of asset-based risk, and the majority of credit for accounts the Bank, asset-based lending At risk in the future. credit lending is an important task in managing In order to perform strict credit risk management, mutual checks on credit risks between related departments are necessary. At the Bank, the Risk Management Department is independent from the sales promotion departments and the examination departments, and plans and verifies the managementsystem thatforms the basisrisk management, such ofas a credit credit rating system, asset self-assessment, and amortization and depreciation system, check function. as a regular which all work Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, that the risk will materialize and timing of materialization, of likelihood of the risk, the degree The nature if the risk does materialize and the impact on business performance Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, that the risk of likelihood of the risk, the degree The nature does materialize if the risk and the impact on business performance Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, of materialization, and timing the risk will materialize that of likelihood risk, the degree of the The nature if the risk does materialize business performance and the impact on *2. Loans to SMEs *1. Local economic situation *1. Local economic Risk Management Risk ・・Liquidity risk consists of cash flow risk and market liquidity risk. market risk and of cash flow ・Liquidity risk consists ・・・・・・・・・・・

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59 ROE Capital Profits/Equity capital Profits/Equity Profits Capital adequacy ratio Equity capital/Risk assets Equity Risk RA ROA RA [Integrated management of profit, risk. and capital] of profit, management [Integrated Profits/Risk asset Profits/Risk Establishment of a Risk Appetite Framework (RAF) Appetite Framework Establishment of a Risk Gunma Bank “Financial Crime Prevention Service” “Financial Crime Prevention Gunma Bank number: 0120-788511 free Toll bank holidays) 09:00-17:00 (excluding Hours: Initiatives of the Financial Crime Countermeasures Office Crime Countermeasures of the Financial Initiatives service Financial crime prevention The The Bank has established the Financial Crime Countermeasures Officein the Risk ManagementDepartment and it is enhancing system to centrally manage and cope with money laundering. Based on the a Required Financial Actions for Institution indicated by the Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism issued by the Financial Services Agency, the Bank has taken a risk-based approach to assess identify risks and and enhance risk mitigation measures. Specifically, we analyze each suspicious transaction report by category such as reason of notification, area of occurrence, and type of entity, and laundering prepare our risk own assessment money report . This money laundering risk assessment report not only analyzes of the the details suspicious transactions reported, but also describes the risk factors for each product/service, including anti-money laundering measures, describes a series of report The customer country. counterparty attributes, and the the implementation of risk reduction measures according to the level of risk and regularly of risk. the level to updating according information customer service. the following please contact fraud, bank-transfer by affected are If you The Bank performs integrated management of profits, risk, and capital, and makes the best use of limited capital and management resources, and accordingly, builds and utilizes a risk appetite framework (RAF), a framework for business that optimizes risk and return. management Risk Related to Financial Crime Risk Related Risk Related to Outsource Operations and Introduction of and Introduction Operations to Outsource Risk Related Businesses and New Products New Risk of Cyber Attacks Cyber Risk of When outsourcing operations, the Bank has established the Outsourcing Management Regulations that outline the procedures for starting outsourcing, during outsourcing, and at the end of outsourcing to maintain operation equivalent to work a done in house, level and we strive of to ensure that functions for customer risk management operations. in outsourced well work risk management and operational In addition, when the introducing new and in products and identify, evaluate, manage advance we new operations, a management established and operated have we types of risks. Further, risks and the of inherent presence/absence framework that allows multiple departments to verify risks from various angles so that they can prepare materials with risks and explain them to our customers. coping for and measures If an incident, such as an administrative accident, system failure, or information leakage, occurs at outsourcers, any the of resulting our damage to public confidence could have an adverse effect on the Bank’s business performance. If a violation of laws and regulations, loss of customers, or leakage of information, etc. inappropriate new product or occurs new business structure or the processing due system, administrative resulting damage to to an business performance. on the Bank’s effect an adverse could have public confidence Unauthorized access to computer systems and networks via means such as the Internet could result falsification,in orthe destruction theft, of information, aswell as malfunctions or shutdowns ofcomputer business performance. systems, the Bank’s on effect an adverse etc., have this could and In order to cope with cyber-attacks, we have established a list of Regulations for Cyber Security Management and implement multi-layered measures to prevent unauthorized entry into the system and to detect viruses. We are their effectiveness. to ensure these regulations reviewing continuously The Gungin CSIRT* installed in the Risk Management Department plays a central role in dealing attacks. with In addition to information and taking conduct classes necessary collect measures, relevant we and training cyber- system. our security management strengthening continuously are We cyber-attacks. in cyber security and In view of the increasing diversification and sophistication of financial crimes such as forgery and cash theft cards of and remittance fraud, the Bank is taking measures to strengthen security to prevent occurring. damage The from Bank is aware of the risk of our products and services being used financing for of money terrorism laundering due and to the borderless nature of financial crimes, and it has money positioned laundering the and financing prevention of of terrorism as an important management issue and isworking to strengthen its measures. preventive In the event of a financial crime of a greater magnitude than anticipated, the regulations Bank of may violate domestic the and laws foreign and authorities, incur significantcompensation to victims, incur significant costs for security measures, or be imposed with fines. Theresulting increase in expenses or loss of credibilitycould have business performance. on the Bank’s effect an adverse Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, that the risk will materialize and timing of materialization, of likelihood of the risk, the degree The nature if the risk does materialize and the impact on business performance The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, that the risk of likelihood of the risk, the degree The nature does materialize if the risk and the impact on business performance Measures in response to risks in response Measures The nature of the risk, the degree of likelihood that the risk will materialize and timing of materialization, of materialization, and timing the risk will materialize that of likelihood risk, the degree of the The nature if the risk does materialize business performance and the impact on Measures in response to risks in response Measures *CSIRT: Abbreviation for “Computer Security Incident Response Team” Security Incident Response “Computer for Abbreviation *CSIRT: ・・・・・・・・・

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52,622 million yen 2,462 cases Of which, funding in response to the novel coronavirus* to the novel Of which, funding in response Of which, loas executed Of which, loas executed 184,737 million yen 4,857 cases (cumulative total from February 5 to June 25) February total from (cumulative 1,081 million yen 34,059 million yen (number of new loans actually accepted out of 22,583 new loans consultations) of new loans actually accepted (number Interviews were held with approximately 30,000 customers to discuss matters including held with approximately were Interviews needs. immediate cash flow Set up cash flow consulting desks at 113 sales branches that consulting desks at 113 sales branches Set up cash flow also visited and representatives managers handle loans. Branch customers. Saturday. desks every telephone consultation Set up holiday desks at 21 sales branches telephone consultation Set up holiday period holiday Week during the Golden * 7,082 cases New loans accepted New 79 customers 402 customers *Financing programs started on May 1 as a government economic measure economic 1 as a government started on May *Financing programs accepted Number and amount of term changes B. A. New loans A. New [Consultations received] [Consultations (2) Number and amount of housing loan term changes accepted (2) Number and amount of housing loan term changes (1) Number of consultations on business funding (1) Number of consultations Although Although the declaration of a state of emergency was fully lifted on May 25, the spread of the - novel coro forward. going coronavirus with the coexistence to new business models for to adapt It will be necessary Excerpt from remarks by the President at a meeting of branch managers held on April 1, 2020 held on April managers a meeting of branch at the President by remarks from Excerpt The time to fulfill ourrole as aregional financial institution iswhen our customersare facingdifficulties and feeling We need insecure. to make the most of the results of our daily efforts including communications with our customers and business feasibility assessments. I urge you to provide tailored support to customers by and subsidies. including financing programs of tools taking advantage [Hot Springs Support Team] In this project, bank employees who wish to who wish bank employees In this project, Team] Springs Support [Hot hot for tickets hot spring and accommodation pre-paid participate purchase which can be used facilities in Gunma Prefecture, springs and accommodation and A total of 1,574 executives has been contained. coronavirus after the novel with this project. cooperated have employees Split operations (employees performing the same duties are divided into two teams and work in shifts or at in shifts teams and work divided into two are the same duties performing (employees Split operations been implemented. have locations) and telecommuting work different Three the to avoid in order visits to sales branches non-urgent from to refrain been encouraged Customers have on entry to Restrictions settings) in the lobbies of sales branches. close-contact places, crowded spaces, Cs (closed periods. been implemented during busy have stores Shift work arrangements have been implemented at sales branches to prevent infection of customers and infection to prevent been implemented at sales branches have arrangements Shift work has been some branches) for to 12:30, except (11:30 A lunch break business continuity. and to ensure employees, implemented in line with this. The Bank has made donations to Gunma Prefecture to prevent novel novel to prevent The Bank has made donations to Gunma Prefecture (June Amount of donations: 10,000,000 yen infection. coronavirus 1, 2020) 3. Other Measures 2. Infection Prevention and Business continuity Initiatives and Business continuity Prevention 2. Infection 1. Cash flow consultations 1. Cash flow From March 14: March From 6: 2 to May May Transparent acrylic panels have been installed at sales branch counters to prevent droplet infection. droplet to prevent counters been installed at sales branch acrylic panels have Transparent From February 5: February From Response by the Bank by Response The first novel coronavirus (COVID-19) infection in Japan was confirmed in January 2020, and the coronavirus coronavirus and the January 2020, confirmed in was in Japan infection (COVID-19) coronavirus novel The first subsequently spread throughout the country. On April 7, the government declared a state of emergency and to close businesses. out and going from to refrain people request navirus infection has had a direct impact on the restaurant, retail, and accommodation industries including a decrease in sales. It has also had a serious impact on a wide range of industries in Gunma includ- Prefecture, suspension of production. ing a temporary Response to the Novel Coronavirus (COVID-19) Infection (COVID-19) Coronavirus the Novel to Response The Bank has provided consultations with customers on their cash flow needs as well needs as with customers on their cash consultations flow The Bank has provided as on various financing programs, subsidies, and employment adjustment subsidies customers. optimal support methods for to propose ● ● ● ● ● ● ● ● ●

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Communication with our Shareholders and Investors

Basic Perspective

The Bank strives to make timely and appropriate disclosure of company information with a high level of transparency as well as have constructive dialogues with our shareholders and investors through IR activities. The opinions of shareholders and investors obtained through such dialogues are reported to the management in a timely and appropriate manner and utilized in management strategies. Plans and results of IR activities are regularly reported to the Board of Directors, and efforts are being made to improve such activities. IR Activities

Our IR activities include regularly holding financial briefings for analysts by the President, IR briefings for individual investors, and IR briefings for overseas investors. Small meetings are hosted by the directors in charge to meet analysts’ request for individual interviews. In this way, we have set up opportunities to explain our business performance and sales strategies, etc. to the shareholders and investors and to absorb market opinions. A breakdown of voting rights of the shareholders shows that foreign corporations account for a little less than 20%, and we therefore strive to promote constructive dialogues with overseas investors. In addition to overseas IR briefings, our directors in charge actively participate in conferences hosted by a securities firm for overseas investors. Also, based on the disclosure policy, English translations of timely-disclosed information and financial results briefing materials, etc. for analysts are quickly posted on our website.

<> Breakdown of voting rights by shareholder (as of March 31, 2020) Individuals Overseas Financial institutions Trust banks (including employee Other corporations Securities firms Public Total corporations (excluding trust banks) shareholding association) 22.2% 23.1% 18.7% 18.5% 14.4% 1.1% 2.0% 100.0%

IR Activity Results in Fiscal year 2019

IR activities (FY 2019 results) Number of participants

For analysts and institutional investors

Mid-Term Business Plan briefing Once 33

Financial results briefing (large meeting) Twice (May/November) 260 Profitability trend briefings (small meeting) Four times (every quarter) 69 Individual interviews 11 IR briefings for individual investors Two times (September) 268 Overseas IR briefings Twice (June/Europe, November/Asia)

Briefing for analysts Briefing for individuals

*In fiscal 2019, the Bank had scheduled a brief for analysts and a briefing for individuals in March 2020, but they were postponed in order to prevent the spread of COVID-19.

Book value Market value Market value Book value ■ ■ (%) Shareholder return ratio Equivalent to 2,500 yen Equivalent to 4,000 yen Equivalent to 6,000 yen Equivalent 1,102 Total dividendsTotal (hundred millions of yen) (hundred millions of yen) 2020 ■Share repurchases ■ 12.4％ 25.4％ 539 �� 30 54 (Unit: Hundred millions of yen) 47.2％ FY 2019 1,373 2019 12.0％ 28.9％ 569 55 32 (Local specialties, etc.) 41.9％ FY 2018 1,600 2018 �� 33.5％ 12.8％ 613 47 56 50 ※ 2020 85.1％ 40.1％ FY 2017 1,659 Jun. 2 (Tue.) 2017 Jun. 24 (Wed.) May 27 (Wed.) May 15.1％ 36.6％ 683 (As of March each 31 year) Cross-shareholdings and non-consolidated Tier 1 ratio <> as of March registration (shareholder benefits program <

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Service Network (as of June 30, 2020)

Tochigi Pref. Gunma Pref. Number of banking outlets: 10 Number of banking outlets: 109 ● Oze Tone County Maebashi City ● Headquarters Sales Department ● Otone SB ● Maebashi City Hall SB ● Maebashi-eki-minami ● Maebashi/Hiyoshicho SB ● Soja ● Tatsumachi ● Hirose Tsukiyano/Minakami ● Shimokoide SB ● Katakai ● ● Prefectural Ofﬁce ● Komagata Numata City ● Maebashi-higashi ● Ogo/Kasukawa ● Maebashi-kita ● Kasukawa Smart SB Agatsuma County Numata/Numata-ekimae ● Hikarigaoka ● Fujimi ● Kusatsu ● Nakanojo

● ● Haramachi Naganohara

Kanai SB ● Tsumagoi Shibukawa City Ota City ● Utsunomiya ● Ota ● Takahayashi Shibukawa/Shibukawa-chuo SB/ ● Utsunomiya-higashi ● Ota City Hall SB ● Morita SB Ikaho SB● Shikishima ● Ota-chuo/Ota-nishi SB ● Obara Takasaki City ● Kuragano Kitagunma County Midori City ● Godo ● Ojima ● Takasaki ● Toyooka ● Shinto Omama ● Hosen ● Nitta ● Takasaki City Hall SB ● Kaneko ● Yoshioka Kiryu City ●Niisato ● Niragawa ● Takasaki-Tamachi/Takasaki-kita ● Nakaizumi Aioi Kiryu Takasaki-eki SB ● Minowa ● ● Kiryu-minami ● Kuzuu Takasaki-higashi ● Shinmachi Kasakake ● Shin-Kiryu ● Takasaki-Sakaecho ● Muroda Tochigi/Iwafune SB ● Takasaki-nishi ● Yoshii Annaka City Tanuma ● Nakai Annaka Sawa County Ashikaga ● Matsuida Oyama ● Ashikaga-minami ● Isobe Tamamura Sano Oura County Tomioka City ● Tomioka Fujioka/ Fujioka-kita Kamisato Tatebayashi City Oizumi/ ● ● Kanramachi Tatebayashi Oizumi-higashi SB ● Ouramachi ● Tatebayashi-minami Honjo/Honjo-minami ● Chiyoda Kanra County Shimonita ● Itakura/Itakura New Town SB Fujioka City ● Meiwa SB Fukaya Onishi ● Kagohara Hanyu ● ● Fukaya-Kamishiba Menuma Kumagaya Manba ● Isesaki City Gyoda Nagano Pref. Tano County ● Isesaki ● Isesaki-kita Fukiage Number of banking outlets: 1 ● Isesaki City Hall SB ● Sakai ● Ueda ● Isesaki-nishi ● Akabori Konosu ● Isesaki-minami ● Azuma Osaka Pref. ● Toyouke Number of banking outlets: 1 ● Osaka Ageo Kasukabe Overseas Saitama Pref. Omiya Number of banking outlets: 1 Number of banking outlets: 23 ● New York Yono ● Kawagoe Koshigaya

Urawa Musashi-Urawa

Tokyo Tokorozawa Toda Kawaguchi ● Matsudo Number of banking outlets: 9 ● Adachi

Hachioji Tachikawa Ikebukuro ● Chiba Pref. Note 1: Banking outlets in Gunma include the Internet ● Ogikubo Ueno Branch, ATMs at convenience stores, Branch for Kanagawa Pref. ● Number of banking outlets: 1 Tokyo Money Transfer, Plaza Branch, Maebashi Number of banking outlets: 3 Yotsuya Minami Mall Sub-Branch, Takasaki Plaza ● Sub-Branch, and EAST Sub-Branch. Kasai ● Note 2: SB stands for Sub-Branch. Kawasaki Sagamihara ● ● Yokohama

Overseas bases and business alliance partners 〈China〉 Overseas bases Hong Kong and Shanghai Business partners Banking Corp. Industrial and Commercial Bank of China Ltd.

〈Hong Kong〉 Shanghai Representative 〈Mexico〉 Hong Kong Trade Office (two employees) Banco Nacional De México, S.A., 〈India〉 Development Council Integrante Del Grupo Financiero Banamex State Bank of India Estade de Aguascalientes [Closed] Gunma Finance (Hong Kong) Ltd. Estade de Jalisco, Estade de Guanajuato 〈Vietnam〉 [Opened] Hong Kong Representative Office (two employees) Estade de Nuevo Leon HD Bank(one employee dispatched) Vietnam Export Import Commercial Joint Stock Bank(Eximbank) New York Branch 〈Philippines〉 (12 employees) Bank for Investment and [Opened] Metropolitan Bank Development of Vietnam Ho Chi Minh Representative Office and Trust Co. Foreign Investment Agency (two employees) Department of Overseas Labour Bangkok Representative Office (four employees) 〈Singapore〉 United Overseas Bank Ltd. 〈Thailand〉 Kasikorn Bank/Bangkok Bank 〈Indonesia〉 Bank Negara Indonesia

*In October 2020, we will open a representative office in Ho Chi Minh City, Vietnam.

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The Gunma Bank, Ltd.

THE GUNMA BANK REPORT 2020 THE GUNMA BANK REPORT Integrated Report

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