Mebuki Financial Group, Inc. Annual Report 2020 Mebuki Financial Group, Annual Report 2020 Year Ended March 31, 2020 005_0849485842009.indd 1-3 2020/09/10 14:29:30 Corporate History (As of March 31, 2020) Contents Notice Regarding the Basic Group Philosophy of Mebuki Financial Group........1 Agreement Concerning a Business Developments of Mebuki Financial Group .............3 November 2015 Integration through a Share Exchange of The Joyo Bank, Ltd. Performance of Mebuki Financial Group ...............5 Group Philosophy of Mebuki Financial Group and Ashikaga Holdings Co., Ltd. Value Creation Process .........................................7 Notice Regarding Definitive A Message from the Management ........................9 Agreement Concerning the Management and Financial Strategies ................13 Together with local communities, we will continue to build a more prosperous Business Integration of The Joyo April 2016 Initiatives for Value Creation ................................17 Bank, Ltd. and Ashikaga Holdings future by providing high-quality comprehensive financial services. Co., Ltd. through a Share Create Growth Business Models with Local Regions ...17 Exchange Structural Reform for Enhanced Productivity ....19 The ingenuity of the entire Group will be combined to contribute to sustainable growth in communities. Approval of stock exchange Developing Human Resources for Value Creation ...21 agreement at the ordinary general We will build a better future together with local communities, seeking solutions to challenges that affect Measures Against the Spread of COVID-19 ........22 June 2016 meeting of shareholders of The these communities by providing high-quality, comprehensive financial services. Joyo Bank, Ltd. and Ashikaga SDGs Initiatives ..................................................23 Holdings Co., Ltd. Governance of Mebuki Financial Group ..............25 Establishment of the Mebuki Corporate Governance ....................................25 October 2016 Financial Group, Inc. List of Directors ............................................31 Acquired all shares of Mebuki Interview with Outside Directors ....................33 Lease Co., Ltd. (formerly known as April 2017 Risk Management System ...............................35 The Joyo Lease Co., Ltd.) from The Joyo Bank, Ltd. Initiatives for Compliance .................................37 Acquired all shares of Mebuki Group Structure and Corporate Data ..................39 Securities Co., Ltd. (formerly known Organization .......................................................40 October 2017 as The Joyo Securities Co., Ltd.) Stock Information ...............................................40 The Japanese word mebuki, or “green shoots,” conveys an image of new leaves budding from The Joyo Bank, Ltd. on tree branches. This word is used in the Group’s name to express its approach of drawing Market of the Group ...........................................41 Opened The Ashikaga Bank, Ltd. on the knowledge and creativity of each of its companies to create fresh ideas and December 2017 Bangkok Representative Office Mebuki Financial Group’s Overseas Business new value. The name Mebuki expresses our wish to create new energy and value Support Activities ...............................................43 in local communities and pursue sustainable growth along with these communities. Opened The Joyo Bank, Ltd. Hanoi March 2018 Financial Data ............................................... 45-82 Representative Office Disclaimer regarding forward-looking statements This Annual Report contains certain forward-looking statements, including estimates, forecasts, targets and plans. Such forward-looking statements are based on the information available and the assumptions deemed reasonable by management at the time of publication of the Annual Report, and do not represent any guarantee by management of future performance. We are under no obligation, and disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. Details on ESG information are available on our website : https://www.mebuki-fg.co.jp/eng/esg/esg.html 1 Mebuki Financial Group, Inc. Annual Report 2020 2 005_0849485842009.indd 1-3 2020/09/10 14:29:30 Developments of Mebuki Financial Group 1974 Completion of Tohoku Expressway within Tochigi Prefecture 1960 2005 2011 2020 Start of development of Utsunomiya Opening of the Tsukuba Great East Japan Earthquake Spread of COVID-19 1999 History of Ibaraki Prefecture Industrial Park 1985 Express “Shrines and Temples of History of Tochigi Prefecture 1962 Holding of Tsukuba EXPO 2019 Nikko” registered as Suffered extensive damage by Typhoon Hagibis and other disasters Start of large-scale development 1982 World Heritage Site of Kashima Industrial Zone Opening of Tohoku Shinkansen Financial and economic developments and history of the prefectures 1929 1964 1991 1997 2005 2016 Financial and economic Start of the Great Depression Tokyo Olympic Games Collapse of bubble economy Japanese version of “Big Bang” Full implementation of pay-off system in Japan BOJ’s introduction of negative interest rate policy financial reforms developments 2008 Asian currency crisis 1945 1985 Global financial crisis following Lehman Brothers’ bankruptcy End of the Pacific War Plaza Accord 2010 European debt crisis Developments of Mebuki Financial Group Developments of Mebuki Financial Group History of Joyo Bank 1974 1995 2007 2014 Establishment of Joyo Lease Established Joyo Industrial Research Institute Established Joyo Securities (currently Opened New York Representative Office (currently Mebuki Lease) in commemoration of the Bank’s 60th Mebuki Securities) Launched “PLUS+” Project for the Collaborative Creation of the Region’s Future anniversary 2015 Initiated study sessions and seminars for development of regional comprehensive 1996 strategies 1935 Opened Shanghai Representative Office Establishment of Joyo Bank through 2016 the merger of the Tokiwa Bank and 2011 Launched Joyo’s reconstruction project Commenced handling of private placement bonds with donation schemes to “support the Goju Bank 1999 “Kizuna (bond)” in hopes of the regional future dreams” Established the “sound 2006 recovery and growth after the Great East Started operating new branches in management, collaboration, and Japan Earthquake 2018 partnership with the home region” areas along the new Tsukuba Express Joyo Industrial Research Institute started offering personnel placement philosophy line services Opened Joyo Tsukuba Building in 2008 2012 Opened Representative Office Registered in Opened Hanoi Representative Office Singapore History of Mebuki Financial Group Joyo Bank and Ashikaga Bank of Mebuki Financial Group (“the Group”), with their core markets in Ibaraki and Tochigi Prefectures, have been meeting the needs of the times and growing together with their customers and the region. In October 2016, Joyo Bank and Ashikaga Holdings entered into a business integration, and with the subsequent consolidation of Mebuki Lease and Mebuki Securities, the Group has grown into a structure 2016 2019 Established Mebuki Financial Group Commenced handling of Mebuki SDGs private capable of meeting the diverse needs of its customers more than ever before. The Company Hosted the Mebuki Business Award placement bonds will continue to forge ahead in order to solve regional problems and to realize the region’s Set up the Mebuki Regional Revitalization Fund 2020 Completed the system integration of Joyo sustainable growth as well as the improvement of the Company’s corporate value. 2017 Bank and Ashikaga Bank Mebuki Lease and Mebuki Securities became directly Invested in fund to help recovery efforts in and wholly-owned subsidiaries. areas affected by typhoons in 2019 History of Ashikaga Bank 2003 2015 Decision made by Japanese Opened Hong Kong Representative Office government to designate Ashikaga Signed agreements with 10 local governments as part of its efforts Bank a bank under special crisis under the Comprehensive Strategy for Overcoming Population Decline management and Vitalizing Local Economy (as of July 2020) 1985 2008 2017 1967 Established “Corporate Philosophy” in Established Ashikaga Holdings Relocated the head office to Utsunomiya Commenced handling of private placement bonds with commemoration of its 90th anniversary Special crisis management designation city in Tochigi Prefecture donation schemes to “support the future of children” Established the Ashigin International lifted 1895 Opened Bangkok Representative Office Established in Ashikaga town, Exchange Foundation 2009 Ashikaga county Tochigi Established Ashigin Research Institute 2019 Prefecture Started offering personnel placement 2013 services 1897 Ashikaga Holdings listed on Started offering trust services Opened its first branch in Kiryu town, the first section of the Tokyo Yamada county, Gunma Prefecture Stock Exchange 3 Mebuki Financial Group, Inc. Annual Report 2020 4 Performance of Mebuki Financial Group Financial Highlights Non-financial Highlights (Bank Total) Mebuki FG (Consolidated) Consolidated net income Consolidated ROE (%) Capital adequacy ratio (%) Number of business matches (Cumulative total) Number of customers of accumulation services (Billion yen) 46.3 10.95 5.1 10.38 43.0 4.9 9.94 1,605 157,272 36.3 4.0 149,374 142,458 1,077 520 Performance of Mebuki Financial Group FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 As of March 31, 2018 As of March 31, 2019 As