Financial Results for FY2023(Ended March 31, 2024)

May 2024

Table of Contents
Financial Results for FY2023

Management Strategy
5-6Summary of Financial Results

SX Strategy

Net Interest Income

7

Net Fee and Commission Income

8

G&A Expenses and Net Credit Cost

9

Capital Adequacy Ratio

10

partners

Earnings Forecast and Shareholder Return11

Promoting the decarbonization of the region

34

Enhancing response to TCFD recommendations

35

Overview of GX strategy
Promoting the decarbonization of banks
Strengthening decarbonization support for business

Progress in Medium-Term
Management Plan
Progress in Medium-Term Management Plan

13-14

Initiatives to Increase Corporate
Value

Improve Top Line

30-31
32-33

DX Strategy
Overview of DX strategy
Various initiatives

Initiatives to Increase Corporate Value

29

16
17-25

Cost Control

26

Improve Shareholder Return and Capital Efficiency

27

36
37-38

HR Strategy
Overview of HR strategy
Various initiatives

39
40-41

Summary
Financial Results
Net income on a consolidated basis considerably exceeded the initial earnings forecast as core net business profits
such as interest on loans and discounts remained strong.
- Interest on loans and discounts increased ¥1.1 billion year on year with corporate consulting-related revenue up ¥0.2 billion year on year.
- Core net business profits declined due to an increase in expenses for strategic investment for the future.

- Ordinary profits decreased due to the implementation of the operation to improve the yield of securities (mainly foreign bonds and JPYdenominated bonds).
⇒ Net interest income on securities is expected to improve from FY2024 onward.
- Net credit costs significantly decreased by ¥9 billion year on year partly due to the limited financial impact of the Noto Peninsula Earthquake of2024.
- Net income increased by ¥3.7 billion year on year due in part to gains related to cancellation of retirement benefit trust and a decrease in taxes.

Medium-term Management Plan
- Key indicators and key KPIs made strong progress.
- The target of ¥25 billion as net income for the final fiscal year on aconsolidated basis is expected to be fulfilled on an earnings forecast
basis.

Management Strategy[SX Strategy]- KPIs such as environment-related loans improved steadily due toexpansion and reinforcement in human resource development andproduct lineups.
- A support system for next-generation industries was strengthened.

Enhancement of corporate value[Improve Top Line]- The Group’s CO2 emissions were reduced toward the realization ofcarbon neutrality.

[DX Strategy]- Asset allocation (increasing and strengthening loans operated by Head
Office, and restructuring the securities portfolio) was reinforced.

- The number of users rose steadily due to improvements to app
functions.

- A consulting subsidiary is planned to be established in the Group to
further strengthen consulting functions.

- Drove operational innovation by adopting marketing automation
tools and generative AI.

[HR Strategy][Cost Control]
Expect an increase in expenses due to strategic investments, but aim
to reduce OHR by raising the top line.

- Strengthened investment in human capital to enhance corporate
value- Various KPIs such as the number of career hires remained strong.

Financial Results for FY2023

4

Summary of Financial Results
Financial Summary for FY2023[Group Consolidated]

Plan

ResultChangeOrdinary profits

26.0

23.2

(3.1)

Net income attributable to owners of the parent

17.0

23.0

1.6

(JPY Bn)[Total of two banks]

Hokuriku Bank
Plan

Core gross business profits

115.0

ResultChange

118.8

(1.0)

99.8

Loans
Securities

Net Interest Income

Net fees & commissions
Net other income (excluding gains (losses) related tobonds)
G&A expenses (-) (excluding extraordinary treatment)

80.0

Plan

Hokkaido Bank

Change

66.8

1.5

(0.6)

53.4

83.8

1.1

23.7

(2.5)
(3.0)

42.0

0.7

41.7

0.4

1.9

16.4

3.4

7.2

(1.4)

19.5

0.0

12.5

(0.1)

6.9

0.2

(0.5)

(0.4)

0.8

(0.7)

(1.3)

0.2

40.8

1.3
0.68%

25.9

0.1

(3.4)

25.3

(31.3)(12.4)

9.9(16.1)

(1.2)

(9.0)

14.4

3.9

22.8

(4.1)

Net extraordinary gains (losses)

5.9

Income taxes (-)

Core net business profits

35.0(excluding gains (losses) related to cancellation of
investment trusts)
Gains (losses) related to bonds
Net business profits*
Net credit cost (-)

8.0

Gains (losses) related to stocks
Ordinary profi ts

Net income

27.5

19.5

Change

46.4

77.5

2.7
2.85%

41.3

(3.7)

40.6

42.5

52.0

Result2.4

61.14%(Reference) OHR

Plan

52.0

65.24%

63.0

Result36.6

1.3

70.50%

5.81%

15.3

(3.9)

0.4

15.3

(3.9)

(20.4)(9.8)(10.9)

(2.5)

5.4

(9.7)

4.4

(6.4)

0.0

(9.3)

(1.3)

0.3

10.7

1.1

3.7

2.7

15.1

0.5

7.7

(4.7)

6.5

2.8

3.2

3.1

3.3

2.0

(1.3)

(0.3)

(0.1)

2.3

(1.1)

26.7

3.7

18.2

3.9

8.5

(0.1)

20.5

4.5

15.0

11.0

37.5
14.5

3.5

12.5

8.5

*Before provision (reversal) of general allowance for loan losses

5Summary of Financial Results
Factors contributing to the change in top line
(core net business profits)

Factors contributing to the change in bottom
line (net income)(JPY Bn)(JPY Bn)
Corporate consulting +0.2
Net Interest
Income0.6

0.0
Net fees &commissions

Net otherincome0.4

Net sales profit/loss on stocks +3.9
Gains (losses) related to bonds
including government bonds(12.4)

G&A
expenses

1.3

2.7

3.7

Net foreign exchange
gains (losses)(0.8)
Financial derivatives, etc. +0.3

0.9

Incometaxes

Core netbusiness
profits

Interest on loans anddiscounts+1.1
Interest on securities +1.9
Foreign currency
funding cost (-)
+4.2

6.5
Gains
(losses)onsecurities

Net
extraordinary
gains (losses)

45.0
Personnel expenses (-)+0.7
Non-personnel expenses (-) +0.8
Taxes (-)
+1.0

Others

41.3

23.0

8.4

26.7

9.0
Gain on sale ofnon-current assets+3.3
Gain related to cancellationof retirement benefit trust +3.3

Net credit
costs

FY22

FY23

FY22

FY23

6

Net Interest Income
Interest on loans and discounts increased ¥1.1 billion by adding the volume that offset a decline in interest rates. Although interest on
securities also rose ¥1.9 billion due to improved interest rates, the overall net interest income decreased ¥0.6 billion yen due to higher
foreign currency funding cost. Part of the securities portfolio was reshuffled. However, it is expected that the balance will be improvedby a further addition in the future.

Factors contributing to the change innet interest income

Total oftwo banks

Net interest income(JPY Bn)
Total of two banks
FY23
Net interest income
Loans
Avg. balance
Interest rate
Securities
Avg. balance
Interest rate

ChangeHokuriku Bank

Hokkaido Bank

FY23

FY23

Change

(0.6)

53.4

2.4

46.4

(3.0)

83.8

1.1

42.0

0.7

41.7

0.4

9,656.7239.3

5,210.9

37.0

4,445.7

202.3

0.86%

(0.01%)

0.80%

0.01%

0.93%

(0.04%)

1.9

16.4

3.4

7.2

(1.4)

1,776.2(304.4)

1,092.6

1.33%

0.29%

1.50%

(111.8)683.6(192.5)

0.43%

1.06%

0.07%

Total oftwo banks

Ave. balance and rate of loans

Securities
interest rate

Loan
averagebalance2.0

Change99.8

23.7(JPY Bn)

Total of two
banks

0.9

4.2

Loan
interest rate

JPY funding
cost

5.6
3.6

0.2

100.5

99.8

Foreigncurrency
funding cost

Securities
avg. balance

FY22

FY23

Loans interest rate by segment (JPY)

Total oftwo banks

Loans interest rate
0.92%

0.90%

0.87%

0.86%

(JPY Bn)
10,0009,041.1

9,171.1

9,417.3

9,656.7

8,000

2,110.8

2,221.4

2,335.7

2,473.0

6,000

2,623.7

2,794.2

2,899.5

2,967.7

4,000
2,000
0

1.59%

0.84%

0.26%
4,306.4

4,155.5

4,182.0

4,215.8

FY20

FY21

FY22

FY23

Corporate

Consumer loan

Public

FY20
Public

1.48%

1.44%

1.43%

0.85%

0.84%

0.84%

0.22%

0.18%

0.16%

FY21

FY22

FY23

Corporate

Consumer loan

7

Net Fee and Commission Income
Corporate consulting-related revenue increased mainly in business matching revenue. Plan to establish a consulting subsidiarywith the aim of accommodating customers’ diversifying needs by integrating the expertise of the two banks (May 2024).
On the expense side, loan insurance expenses and guarantee fees (-) increased due to growth in outstanding consumer loans.

Net fee and commission income

Total oftwo banks(JPY Bn)(JPY Bn)

12.0

FY23
Change10.0(1) Net fees and commissions

19.5

0.0

8.0

Fees and commissions

35.5

0.4

6.0

Remittance

9.2

0.0

Assets under custody

6.3

0.0

Solution services

5.2

0.2

Private placement bond, syndicated loan

2.2

(0.0)

M＆A support, business succession support, etc.

1.4

0.0

Business matching

1.2

0.3

16.0

0.3

Remittance (-)

0.9

(0.0)

Loan related expenses (-)

12.5

0.3

0.0

0.0

(2) Net trading income

10.8

11.3

11.6

4.6

5.0

5.2

6.2

6.3

6.3

FY21

FY22

FY23

8.8
3.4

4.0
2.0

5.3

0.0
FY20

Fees and commissions payments (-)

Total oftwo banks

Consulting-related service revenue

Assets under custody

Corporate consulting(Reference) Trend in assets under custody(JPY Bn)

24/3
23/3

22/3

Vs. 23/3 Vs. 22/3

(3) Net other income(excluding gains (losses) related to bonds)

(0.5)

(0.4)

(0.8)

(0.8)

19.0

(0.3)

Total of investment-type financial
instruments for individual investors

Gains (losses) on foreign exchange transaction

A+B

601.8

43.2

10.7

558.6

591.1

A

465.0

14.2

(19.6)

450.7

484.6

B

136.8

28.9

30.3

107.8

106.4

Total investment-type instruments for(4) Fee revenue (1)+(2)+(3)individual investors (total of the twobanks)(5) Core gross business profits

118.8

(1.0)

(6) Fee revenue ratio (4)/(5) (%)

15.98(0.16)

Investment-type financial instruments
for individual investors by Hokuhoku
Tokai Tokyo Securities Co., Ltd.

8

G&A Expenses and Net Credit Cost
G&A expenses increased by ¥2.7 billion primarily due to human asset investment and investment in the future, such as renewal anddigitalization of systems, as well as costs for construction of a new Hoku Hoku Sapporo building and relocation expenses. Regarding
net credit costs, general allowance for loan losses was reversed, and specific allowance factors, etc., also declined as the environment
improved in the wake of the end of the COVID-19 pandemic. The financial impact of the Noto Peninsula Earthquake was also limited.
As a result, net credit costs decreased ¥9 billion year on year.
Total oftwo banks

G&A expenses and OHR(JPY Bn)

100.0
80.0
60.0

OHR

68.19%

0.14%

62.39%

0.14%

0.08%

82.3

78.8

74.7

77.5

6.3

5.8

5.6

6.7

15.0

36.7

35.4

32.9

33.7

10.0

13.5

13.0

7.7
7.3

10.2
5.0

39.2

37.4

37.0

36.2

2.8

0.0

FY21

Personnel expenses

FY22

FY23

Non-personnel expenses

(5.0)

Taxes

11.0

(1.2)

(3.3)

0.8
(2.1)

FY22

FY23

6.2

0.0
FY20

(0.01%)

20.0

40.0
20.0

Credit cost ratio(JPY Bn)

65.24%

63.15%

Total oftwo banks

Net credit costs

FY20

FY21

General allowance for loan losses

Specific allowance for loan losses and others

Breakdown of net credit costs

Breakdown of expenses(JPY Bn)(JPY Bn)
Total of

Total oftwo banks

two banks

FY23

ChangeHokuriku Bank

Hokkaido Bank

FY23

FY23

Change

FY23
Net credit costs

37.0

0.7

20.2

0.2

16.7

0.5

Non-personnel expenses

33.7

0.8

17.1

0.6

16.6

0.2

Taxes

6.7

1.0

3.4

0.5

3.3

0.5

General allowance for

Total

77.5

2.7

40.8

1.3

36.6

1.3

Hokkaido Bank

FY23

FY23

ChangeChangePersonnel expenses

Hokuriku Bank

doubtful accounts

ChangeChange

(1.2)

(9.0)

0.0

(9.3)

(1.3)

0.3

(2.1)

1.1

(1.8)

0.6

(0.3)

0.5

0.8

(10.1)

1.8

(9.9)

(1.0)

(0.2)

Specific allowance for
doubtful accounts andothers9

Capital Adequacy Ratio
The capital adequacy ratio was 9.40%, a similar level to a year earlier, resulting from the effort for preferential risktaking mainly in the prime area while adding capital with retained earnings.
FG consolidation

Hokuriku Bank

Consolidated capital adequacy ratio(JPY Bn)

9.54%

9.45%

9.49%

9.40%

(JPY Bn)

600.0

9.31%

9.06%

9.12%

400.0

26.8

32.2

37.6

42.9

9.14%

300.0
400.0

200.0

527.5

511.5

499.5

540.8

300.4

306.8

312.9

330.2

21/3

22/3

23/3

24/3

100.0

200.0

0.0

Shareholders' equity

0.0
21/3

22/3

23/3

Shareholders' equity

24/3

Hokkaido Bank

Preferred stocks(JPY Bn)<Basel III Standards in Japan>(JPY Bn)

Application of transitional arrangements

400.0

8.88%

8.94%

8.99%

8.97%

42.9

37.6

32.2

26.8

169.0

177.8

184.5

191.7

21/3

22/3

23/3

24/3

Full implementation basis

300.0
24/3

23/3

24/3

ChangeCapital23/3
Change

200.0

579.7

9.4

570.2

552.1

15.6

536.4

Basic item

602.6

20.3

582.3

575.0

26.5

548.4

Adjustment item (-)

22.9

10.8

12.0

22.9

10.8

12.0

Risk-weighted assets

6,163.0

158.5

6,004.4

6,163.0

171.1

5,991.8

Capital adequacy ratio

9.40%(0.09%)

9.49%

8.95%

0.00%

8.95%

100.0
0.0

Shareholders' equity

Preferred stocks

10Earnings Forecast and Shareholder Return
The Group plans to increase by ¥3 from the initial forecast and pay ¥40 as the year-end dividend per common stock for the fiscal year
ended March 2024 by taking into account the strong trend of core net business profits, including profits from interest on loans anddiscounts, and fees and commissions, as well as improvements to the balance by reshuffling the securities portfolio.
For FY2024, the Group plans to pay interim dividends and continue to pay a dividend per common stock of ¥40 on a full-year basis. The
total return ratio is expected to remain at the 60% level.

Forecasts for FY2024

Shareholder return
Total return ratio(JPY Bn)

InterimYear-end

forecast

forecast(JPY Bn)

69.6%

66.1%
52.1%

ChangeFG consolidation Ordinary profits

20.0

38.0

14.8

FG consolidation Net income (*)

13.5

25.0

2.0

60.0%
(Forecast)

15.00

3.99

3.23
10.00
5.00

*Net income attributable to owners of the parent

5.37

5.37

5.37

1.20
4.47

1.04
4.74

0.88
4.98

FY21

FY22

0.00

(JPY Bn)

FY23

FY24

Common stock dividend

Preferred stock dividend

Redemption of preferred stock

Acquisition of treasury stock

Total of two banks
Hokuriku BankInterim
forecast

Core gross businessYear-end

Interim

forecast
Changeforecast

Hokkaido Bank

Year-end

Interim

forecast
Changeforecast* Total return ratio =Year-end

Net income attributable to owners of the parent

forecast
ChangeDividends (per common stock)

62.5

124.5

5.7

35.0

70.5

3.7

27.5

54.0

2.0

G&A expenses (-)

41.0

82.0

4.5

21.0

43.0

2.2

20.0

39.0

2.4

Core net business profits

21.5

42.5

1.2

14.0

27.5

1.6

7.5

15.0

(0.3)

Net credit costs (-)

2.0

6.0

7.2

1.0

4.0

4.0

1.0

2.0

3.3 common stock

Ordinary profits

21.5

38.5

15.7

15.0

25.5

10.4

6.5

13.0

5.3

Net income

15.0

26.0

(0.7)

10.0

16.5

(1.7)

5.0

9.5

1.0 Preferred stock

profits(Dividends + Redemption + Purchase of Treasury Stock)

Dividend per(Forecast)

FY21

FY22

FY23

¥35

¥37

¥40

FY24

¥40
(¥20 for interim)(¥35 for year-end) (¥37 for year-end) (¥40 for year-end) (¥20 for year-end)

¥15

¥15

¥15

¥15

11

Progress in Medium-Term
Management Plan

12

Progress in Medium-Term Management Plan (Key indicators)
Net income is expected to reach the target level of the final fiscal year thanks to the strong trend of core net businessprofits, including profits from interest on loans, discounts, fees and commissions, by steadily implementing the reshuffleof the portfolio and a set of strategies although the external environment has been significantly changed from initialassumptions by a rise in interest rates in Japan and overseas and others.

Medium-Term Management Plan (April 2022 to March 2025)

Go forward with Our Region

Key
Indicators

FY24 Target

Consolidation / Total of two banks

FY23 Results(1)

Net income on aconsolidated basis¥23 billion+¥1.6 billion¥25 billion or more

(2)

Consolidated capital
adequacy ratio

9.40%(0.09%)High 9% level

(3)

OHR

65.24%+2.85％

Low 60% revel(4)

Fee revenue ratio[Amounts of net fee andcommission income]15.98%[¥19.0 billion](0.16％)[(¥0.3 billion)]

16% level[¥20 billion or more](5)

Actual environment-related
investments and loans(cumulative)¥229.5 billion+¥82.1 billion¥210 billion

ChangeEarnings forecast¥25.0 billion* OHR, the fee revenue ratio (amounts), and actual environment-related investments and loans are the total of the two banks.

13

Progress
Medium-Term
Management
Progress inin
Medium-Term
Management
Plan (KeyPlan
indicators)
Initiatives in the environmental field

Improvement of comprehensive consulting ability

5.0

FY22

5.6

5.2

FY23

Number of funded productcontracts(JPY Bn)

Corporate solution revenue

127,586

143,056(Number ofpolicyholders)

161,800

Actual environment-related
investments and loans(cumulative)

229.5(JPY Bn)

Number of participants infinancial, economic and
SDG-related seminars

210.0

147.4

23/3

Target for FY24

24/3

Target for 25/3

18,81023/3

24/3* Dollar-cost averaging mutual fund holders, and level
premium insurance contracts(Number of contracts)

FY23

Number of M&A and businesssuccession support cases

389(JPY Bn)

24/3

629.2

Balance of assets under custody+34

Target for
25/3

Change

+93.3

FY23

Number of cases of trust/onetime payment insurance

15,453

Change+3,972

10,300

Profit of affiliated subsidiaries(JPY Bn)

4.2

3.6

FY23

Target for FY24

20,000

FY23

Target for FY24

Target for
FY24

Change

1,677

(85)

800

DX promotion
Consulting

Environment

GovernanceDX* Number of contracts for trust products and one-time payment life insurance

Strengthening group comprehensive capabilities

20,460<<Six Key Strategies>>

650.0

Target for
FY24

FY23

Number of usage of
SDGs / environmentrelated services

450* Total of investment trust balance and assets of TT Securities in custody of the two banks(Number of contracts)(Cases and cumulative
total)

Target for
FY24

ChangeFY22

Target for 25/3

(Number ofparticipants)(Destinations)

24/3

Number of IB and app.
contract customers

876,255(Account)Group
comprehensive
capabilities

Well-being

24/3

365,478

Number of web accounts

Target for
25/3

Change+165,869

950,000
Target for
25/3

Change+77,500

470,000

2.2

Realization of well-being work styles
FY22* Total of net income of related subsidiaries (excluding net credit costs) and TT Securities referral processing fees

(JPY Bn)

Hokkaido-area loan balance(Number of contracts)
Number of achievements

24/3

3,306.3
FY23

1,281

Target for
25/3

Change0Change(620)

Ratio of female managers

18.75

（％）

21.53

24% orover

24/3

Target for 25/3

3,441.2
Target for
25/3

900

* Initiatives to help resolve customer issues through collaboration between the two banks (cofinancing and business matching, etc.)

23/3

Number of qualification
holders

1,541
FY22

(Number ofholders)

3,790

2,015

FY23

Target for FY24

* Total number of FP1/CFP and IT passport holders

14

Initiatives toIncrease Corporate Value

15

Initiatives to Increase Corporate Value
Recognition of the current status
Trends in ROE and PBR
8.00%
Current cost of equity (CAPM*2)

Approx. 6%

6.00%

4.01%
4.00%
2.00%

3.78%

3.88%

4.10%

3.51%

3.29%

3.52%

3.66%

FY20

FY21

FY22

FY23

0.00%

ROE (TSE basis)*1*2

ROE is below cost of equity, and PBR is low.

ROE (The Group’s standard*1)

ROE (Based on consolidation and cost of equity)=Consolidated net income (after deducting preferred stock dividends)/(beginning shareholders' equity [excluding
preferred stocks]-(ending shareholders' equity [excluding preferred stocks])/2
CAPM = Government bond rate + Beta x TOPIX risk premium * Calculated based on the Group’s standards

0.38
0.22

0.19

0.20

21/3

22/3

23/3

PBR

24/3

Firstly, aim at an ROE of 6%, which is the level ofcost of equity, with an eye on a PBR of one in themedium to long term.
Interest rate income field

Logic tree for PBR improvement
Improve top line

Interest rate income field
Build a medium- to long-term portfolio with RORA in mind

Net fee and commission income field
Net fee and commission income field
Expand solution revenues by reinforcing human capital

ROE
improvement

PBR
improvement

Mid- to longterm goals

Cost control

Net credit cost control
Strengthening of business operator support and discernment skills

6%

PER
improvement

Cost control
Strategic mechanization, capital investment, and productivity
improvement

Strengthening shareholder
return and improving
capital efficiency

Dividend levels that bring the total return rate to 50%, acquisition ofcommon treasury stocks, and partial redemption of preferred stocks
Reduction of cross-shareholdings

Lower cost of equity

Ensuring stable profit levels and shareholder return
Proactive disclosure of information, including non-qualitative
information

Boost profit growth rate

16

Interest rate income field

Improve Top LineStrengthening asset allocation
Conceptual representation of increase(decrease) of risk-weighted assets

Total oftwo banks

ROA by Business Field (FY2023)
35.0

Loans to small andmedium-sized enterprises

1

2

3

4

Gross business profits (JPY Bn)

30.0

5

Housing loan

20.0

15.0
Unsecured loan

10.0

5.0

Head Office

Sales office

25.0

Public funds
lending
Loans to large- and middleclass enterprises

Structured finance(Unit: %)FY23 Results

1

Business lending

2

Loan

3

Structured finance4Market-rate basedloans/Corporate loans

5

Securities

Medium-term•••

Add assets in line with area-by-area strategy
Strive to improve profitability for each business partner based on an upward trend of interest rates
Expand market share as a pillar for acquiring lifetime transactions with individual customers•

Strive to enhance earnings and RORA by broadening the range of investment destinations
while taking into account the situation of interest rate risk and risk-weighted assets•

Build a portfolio that ensures stable earnings from a medium- to long-term perspective

17

Interest rate income field

Improve Top LineStrengthen loans

Trend in balance of loans (outstanding amount in JPY Bn)

Market-rate based loans

Total oftwo banksStrive to enhance earnings and RORA by broadening the range ofinvestment destinations while taking into account the situation ofinterest rate risk and risk-weighted assets
Secure front-line personnel and establish risk management andback-up systems

9,211.1

9,545.1

9,544.5

2,241.8

2,417.0

2,300.1

2,862.5

2,934.3

2,996.0

4,106.7

4,193.7

4,248.3

Business lending and loans

22/3

23/3

24/3



Public funds lendingCorporate

Consumer loan---

PublicMedium-term

Loans operated by Head Office

Shift to assets with higher profitability by reducing low-interestrate public funds in response to the lifting of negative interest
rates

Strive to improve profitability for each business partner based on
an upward trend of interest rates
Expand market share as a pillar for acquiring lifetime transactions
with individual customers
Add assets in line with area-by-area strategy

TOPICS Strengthen efforts for the semiconductor field

TOPICS Enhance loans operated by Head Office(Next-generation industry support)

Established the Structured Finance Office in June 2023
Eight dedicated staff members have been assigned, and the balance has
increased steadily. The policy is to expand the staff to 20 people or so overthe medium-term period and increase the balance in particular.

➢ Established the Next-Generation-Industry Support Group, the SX
Promotion Department➢ Assigned seconded staff to local governments➢ Formulated a semiconductor supply chain map(JPY Bn)(GX strategy)

414.4➢ Expanded and reinforced an environment-related loan lineup➢ Assigned seconded staff to government agencies, etc.
PIF results

258.0

FY23 1H

FY23 2H

Number of executions (cases)

5

16

Executed amount (JPY Bn)

3.7

6.5

22/3

298.3

23/3

24/3

---

Medium-term* Structured finance, market-rate based loans, etc.

18

Improve Top LineInterest rate income field

Rebuild securities portfolio
Total oftwo banks

Trend in balance of securities (JPY Bn)

Of which, asset swaps¥59.1 billion (+59.1)
Of which, floating ratenotes
¥52.6 billion (+52.6)

2,199.5
250.3
221.0
407.0

1,321.1

1,846.7

1,783.2

233.1

205.3

210.0

219.3

283.6

281.5

1,119.8

JPY-denominated bonds

1,076.9

Of which, asset swaps¥34.3 billion (+14.0)
Of which, floating ratenotes
¥9.2 billion (0.5)( ) Year-on-year change

22/3

23/3

JPY-denominated bonds

24/3
Foreign bonds

Medium-term--Domestic stocks

For FY2024, build up mainly short- and medium-term bonds
based on the possibility of interest rates rising. At the time ofredemption, switch assets to ones in the medium- to longterm zone while keeping an eye on the portfolio laddersituation and the interest rate situation.

Foreign bonds
Improve the portfolio yield by replacing low-return securities
with high-return assets while reducing low-return securities.

Investment Trusts, etc.

Domestic stocks[Bond duration (after taking hedging into account)]

Build up the balance by balancing a group of stocks withmedium- to long-term growth potential with high dividendpaying stocks.

6.91
5.77
5.22
5.57

[Basic policy]
Considering the balance between risk and return and thecorrelation among assets, build a mid- to long-term stableportfolio that suppresses risk and grows return, and aim at
expanding the balance and earnings.

3.95

5.70
4.99

2.59

Investment trusts, etc.
Build up stock-investment trusts, REITs, etc., to improve the risk
and return of the portfolio.

21/3

22/3

Yen-denominated bonds

23/3

24/3
Foreign bonds

19

Improve Top LineInterest rate income field

Rebuild securities portfolio
Total oftwo banks

Gains (losses) on valuation of securities(JPY Bn)(JPY Bn)

FY23

89.8

111.0
120.0

Change44.1

75.2

Gains (losses) related to bonds

90.0
60.0

115.6

98.0

123.5

102.5

30.0
0.0

(6.9)

(9.0)
(13.0)(11.6)(15.6)(7.4)(24.2)(30.0)

22/3

21/3

23/3

24/3

Investment trusts, etc.

JPY-denominated bonds

Foreign bonds

StocksTotal of two banks

Hokuriku Bank

FY23

ChangeOther loss (gain) on valuation

Hokkaido Bank

FY23
Change

45.7

83.2

30.1

6.5

Stocks

123.5

21.0

92.8

10.4

30.6

10.5

JPY-denominated bonds(13.0)

(5.5)

(6.7)

(3.3)

(6.2)

(2.2)

Foreign bonds(11.6)

23.7

(1.4)

18.6

(10.1)

5.0

Investment trusts, etc.

(9.0)

6.5

(1.3)

4.3

(7.7)

2.1

15.5

4.4

(1.9)

Gain on redemption

0.0

0.0

Loss on sale (-)

31.2

5.8

Loss on redemption (-)

4.5

4.5

Amortization (-)

0.0

0.0

14.4

3.9

Gain on sale

19.0

0.8

Loss on sale (-)

3.9

2.8

Amortization (-)

0.6

(5.9)

TOPICS
Established the Market Finance Department afresh within
Hokuhoku FG (from June 2024)<Purpose of establishment><Reference>
Gains (losses) on derivatives that we engage in to minimize market value volatility of securities

Foreign currency-denominatedGain on sale

Change89.8

Yen-denominated interest rate swaps(12.4)

Estimated improvement in net interest income
from the sale of foreign bonds in FY2023+¥6.8 billion (FY2024, the total of two banks)(JPY Bn)
FY23(31.3)Net sales profit/loss on stocks(35.3)(60.0)

interest rate swaps

Total oftwo banks

Gains (losses) on securities

0.1

0.3

0.1

0.3

―

―

(1.2)

(1.2)

(1.2)

(1.2)

―

―

Consolidate the planning functions of the market divisions of the twobanks into FG to build an integrated operation system that leverages
the scale of assets in FG. Optimize risk and return in the portfolios ofinvestment securities and other assets in the entire group.

20

Improve Top LineInterest rate income field

Impact of a rise in interest rates
Regarding loans, short-term and variable interest rates account for 48%, andfixed interest rates of 3 years or less account for 61%.
Operation and procurement structure
Operation and funding structure(JPY and term-end balance)(JPY Trillion)

13.8
1.2
1.9

10.9

Other fixed
loans
2%

Public10%

Fixed term
(1 year or less)Yendenominatedloans¥9.5 trillion

Housing loan
fixed
23%

1.4

Liquidity

9.5

10.6

Fixed
52%

Yendenominatedloans

Operation

Business loan fixed
17%

Funding

Simulations of how the balance of deposits andloans increases as interest rates rise
Increase in the balance of deposits and loans at the time ofrising interest rates (50BP)+¥13.1billion+¥9.8
billion3 years later5 year later* Estimated increase in the balance of deposits and loans when the market interest rate rises
to 50BP parallel.

Other
fluctuations
3%

Over 7 years
15%
More than 5 years
to 7 years
9%

4 years later

Business
fluctuations
17%

Housingloan
fluctuations
6%

Remaining years of fixedinterest rate periods

More than 3 years
to 5 years
15%

2 years later

Short term
22%

Fixed term
(over 1 year)

Securities

1 year later

Short-term andvariable48%

Upto 1 year
26%

Remaining
years of fixedinterest rate
periods
More than 1 year
to 3 years
35%

Within 3 years:
61%

21

Improve Top LineNet fee and commission income field

Strengthening consulting functions
Percentage of employees in specialized departments, such as
business succession and M&A, who have been dispatched toorganizations outside the group in the past

Strengthen thesystemConsulting-related service revenue(JPY Bn)

Development of highly skilled human resourcesby dispatching personnel to outside companies
A measure to cultivate a high level of expertise andpractical skills, as well as to build personal
networks

Employees who havebeen dispatched toorganizations outside theGroup in the past

60%.

11.3

11.6

6.3

6.3

5.0

5.2

FY22

FY23

47 people

Development of training system
Establishing a training system to enhance expertise and develop more practical skills
Assistance in obtaining qualifications
Developing a support system for the acquisition of qualifications, mainly through the
expansion of incentives, to raise the level of consulting capabilities
Number of consulting-related qualification holders: 338 (total of two banks at 24/3)

Assets under custody

Corporate consulting

Expansion of consulting area

Existing consulting area
Corporate field

Individual field

SX field

DX fieldNumber of M&A advisory
contracts received

Number of assets included
in investment trusts

Number of environmentrelated business-matchingcases

Number of cases ofDX support

134

FY22

148

60,761

72,933
466

821

499
430

FY23

23/3

24/3

FY22

FY23

FY22

FY23

22

Improve Top LineTOPICS 1: Establishment of a consulting subsidiary

Hokuhoku Consulting Corporation (Plan: Establishment in May 2024. Operation start in July 2024)[Significance of establishment]

Integrate services of two banks, upgrade expertise, and expand the business field into untappedzones in the prime area.
[Company profile][Vision]Hokuhoku FG
100% ownership[Enhance earnings power]
Strategic shift system- Optimal resource allocation- Win orders from businesses otherthan banks[Strengthen the organizational
structure]
Diverse career paths- Hire talent from outside- Highly specialized services

Hokuhoku Consulting Corporation[Service quality improvement]
Share and expand knowhow- Increase and reinforce matching
projects for both banks- Roll out management consulting
throughout the region[Human resource integration anddriving power boost]
Build One Team- Group integration- Integrate and deploy specialized
personnel and knowledge[Earnings plan]
Aim to double
the current level(JPY Bn)

Hokuriku Base

Hokkaido Base(Principal business activities)
Expand business areas by pivoting
around M&A, business succession,and management consulting

1.4

FY23 Results

FY32 Plan* FY23 results are the revenues of two banks from M&A, businesssuccession, and management consulting.

23

Improve Top LineTOPICS (2): Strengthening support for nextgeneration industries

Strengthen the system
Support for next-generation industries, including “semiconductors,”
which the State positions as a growth industry, along with boosting
countermeasures against climate change such as offshore wind power (GXpromotion), is an important role as a local financial institution.

Hokuhoku Financial Group, Inc.
Corporate Planning Department

Business Strategy Department

Established the SX Promotion Department in April 2023 in order to collectinformation in a centralized manner. As an organization under the
Department, the “Next-Generation Industry Support Group” waslaunched to establish a supportive system for semiconductor-relatedindustries.

Risk Management Department

SX Promotion Department

GX Promotion Group

Next-Generation Industry
Support Group

Audit Department

SX: Sustainability Transformation

Supportive system “to make semiconductor-related industries take root in Hokkaido”➢ Collect and sort out information on the entry of semiconductor-related industries and
Rapidus to Hokkaido

Sapporo: 3➢ Efforts to create clusters of semiconductor-related industries in Hokkaido
Main roles

Collaboration with and approach to related organizations (government, business
community, etc.)

Full-time
staff

Tokyo: 1
Dispatched to related organizations: 3* The destination of the dispatched staff is
ANIC, Chitose City, Hokkaido

Dialogue with and support for local companies (real estate, construction, new entrants
into semiconductors, etc.)
Provision of information and support to companies in the semiconductor supply chain

Semiconductor-related industries take root in Hokkaido

Cooperation with relatedorganizations

Entry of Rapidus Corporation to Hokkaido/
Cluster of semiconductor related industries

SupportWith the entry of Rapidus Corporation into
Hokkaido, a variety of organizations and frameworks
were launched with the aim of supporting
semiconductor-related industries.
The Group has proactively cooperated with those
associations by seconding employees to suchorganizations and participation in such frameworks
for the purpose of collecting and providing
information in a speedy manner.

Local administration

Local economy

Hokkaido Bureau of
Economy,Trade and Industry

Agency for New Industry
Cluster of Hokkaido

Next-generation
semiconductor industry
platform

Dispatchloanedemployees

Hokkaido Promotion Council
for Developing Semiconductor
Human Resources

Support
Next Generation
Semiconductor Strategy Officein Hokkaido

Next Generation
Semiconductor Center
Promotion Officein Chitose City

Dispatchloanedemployees

Dispatchloanedemployees

Participation

Participation

24

Improve Top LineTOPICS (2): Strengthening support for nextgeneration industries

Support for business partners
Under the slogan of “Making semiconductor-related industries take root in Hokkaido,” Hokuhoku FG is taking thelead in supporting companies in the semiconductor supply chain and local companies in cooperation with related
associations.

Secure HR (engineers)
Industrial agglomeration✓

Entry of companies from thesemiconductor supply chain✓ Entry of Hokkaido-based companies⇒ Support in making subsidy
applications
Real estate information
Business matching

Industrial
agglomeration

SecureHP✓ Acquire work-ready HR✓ Develop HR⇒ Accommodate M&A needs and refer to staffing
agencies
Collaboration with universities and technicalcolleges

Make
International International trade✓ Semiconductor export fromsemiconductortrade
Hokkaido✓ Coming and going of foreign
related industries
researchers, etc.
take root in⇒ Expansion and reinforcement
Hokkaido
of foreign exchange services

Environmental
conservation

Environmental✓ Utilization of green energy✓ Decarbonization initiatives
consideration⇒ Support in measurement,
reduction, and disclosure of CO2
emissions
Corporate support throughsustainable finance

Multilingual support

Town-making

Town-making✓

Reinforcing urban functions such as
housing, offices, and commercial
facilities⇒ Investments and loans to promoteprivate-sector development
Collaboration with the real estate andconstruction industries

25

Cost Control
Trends and forecasts of expenses

OHR is expected to decrease by improving
the top line despite an expense increase
resulting from strategic investment.

(JPY Bn)

120

94.0

93.6

90.9

80.00%

60.00%

89.8

88.8

86.5

85.3

82.3

80

78.8

74.7

77.5

82.0

40.00%

20.00%

40

0.00%--G&A expenses

Upcoming strategic investments

Initiatives up to the present➢ Revised branch functions and personnel allocation
rationally while retaining local financial infrastructure.
FY13
Substantial number ofbranches:309

Number of employees:

8,267

FY23
⇒
⇒

272

- Revise a branch network by opening branches inside
branches.

➢ OHR is expected to decrease by raising the top line despite
an expense increase resulting from strategic investment.
Systems and DX
fieldsApps, marketing automation tools,
in-store reception tools, etc.

Human capital
investment

Add personnel in strategic areas,develop and secure specialized
human resources (career
recruitment), improve employee
treatment, etc.

6,630

- Establish branches specializing in retail and other functions
and integrate specialized personnel thereto.

- Slash clerical work through digitization.

OHR

26

Strengthening shareholder return and improving capital efficiency
Reduction of cross-shareholdings(1)Targets for reduction of cross-shareholding of theGroup
Aim to reduce cross-shareholdings in possession by
the amount equivalent of 25% of their book value(about ¥15.6 billion) over the three years from FY2022.
Aim to achieve lowering the ratio to less than 20% ofconsolidated net assets over the medium- to longterm.
(2)Status of efforts toward reduction
As of March 31, 2024, the balance of crossshareholdings was ¥84.5 billion (book value), down
¥14.4 billion (92.3% of target) from March 31, 2022.

Compared to the end of March 2022
Reduction of ¥14.4 billion (Book value)

35.2%
30.9%

(JPY Bn)

250.0

224.5
192.5

200.0

50.0

109.2

98.9

(year on year)

Number ofstock issues
567

21/3
Market value

84.5

87.9

Number ofstock issues
632

22/3

23/3

24/3

Consolidated net assets ratio (market value/consolidated net assets)

Book value(Forecasts on published basis)
Common stock
dividend

FY21

FY22

FY23

FY24

¥35

¥37

¥40

¥40

(¥35 for year-end)(¥37 for year-end)(¥40 for year-end)(¥20 for interim)(¥20 for year-end)

Acquisition oftreasury stock¥3.2 billion

69.6%

-

52.1%

39.9%
23.2%

FY2024 (Forecasts on published basis)
Plan to distribute interim dividends on common stock(plan to maintain ¥40 for the full year)
Plan to acquire treasury stocks of ¥4.0 billion.

198.2

A rise in market value

30.2

100.0

0.0

FY2023
Increased common stock dividends by ¥3 to ¥40.
Repurchased ¥4.0 billion of treasury stocks.

181.5

150.0

Strengthen shareholder return
Boost shareholder returns with a total return ratio of 50% as theguideline.
The Group also puts importance in returns to commonshareholders, and implemented a dividend increase andacquired treasury stocks for two years in a row.
The Group will consider shareholder returns on each occasion
while ensuring the balance against internal reserves for growthin light of earnings.

29.8%

29.7%

Total return ratio* Total return ratio on common stocks¥4.0 billion

66.1%
40.5%

¥4.0 billion

60.0%
36.7%

Total return ratio on common stocks(Common stocks dividends + acquisitions of treasury stocks) /(Net income attributable to owners of parent - preferred stock dividends)

27

Management Strategy

28

SX Strategy
Overview of GX strategy
Aiming to become an environmentally advanced financial group, we will achieve decarbonization by working
as a group while linking each of our initiatives.

Enhancing
response to
TCFD
recommendations• Enhancing information
disclosure• Upgrading various kinds ofanalysis

Promotingthedecarbonizationof banks••• Strengthening allianceswith ministries, local
governments and various
entities

Promoting thedecarbonizationof the region•

Enhancing finance andconsulting support

Developing SX talent
Promoting initiatives toreduce in-house CO2
emissions

Strengthening
decarbonization
support forbusiness
partners

29

SX Strategy
Promoting the decarbonization of banks
Developing SX talent
Expansion of the programs to develop SX talent
Programs

Overview

Trial Internship Program

Offering opportunities toexperience HQ operations fora minimum of one week

Sustainability Trainee

Classroom lectures and onthe-job training

Challenge Job System

Employees can request to
work in the SX Promotion
Department

Challenge Job System
Sustainability Trainee

SX
Core
TalentTrial Internship Program

Utilization of the decarbonization advisor qualification program

Trial Internship Program
Started a trial internship program from May 2023. Interns try their hand at jobs in the SX Promotion Department forthree to five days for the purpose of the program to be utilized as a starting point to becoming SX core HR.

SX human resources(Core and middle) (Number of HRs)

54

Sustainability Trainee
A sustainability trainee program has been held since October 2023 for staff in charge of client liaisons for the
purpose of producing bankers who have knowledge of and experience and practical skills in the sustainability field.
Participants in this trainee program are defined as a SX HR middle tier.

Utilization of the decarbonization advisor qualification program

26

FY2022

FY2023

In January 2024, employees of the Group, en masse, sat for “Sustainable Management Support,” a qualification
examination of banking operations, provided by the Economic Legal Research Institute, which was certified as“Decarbonization Advisor Basic” of Ministry of the Environment. Approximately 500 people acquired thequalification.

Implementation of SDGs card game in all branches
In the second half of FY2023, a business card game training on the theme of “Sustainability” was held for all
branch managers and managers in charge of client liaisons of the banks as an opportunity to understand theSDGs as their own story.

30

SX Strategy
Promoting the decarbonization of banks
Promoting initiatives to reduce in-house CO2 emissions
Long-term goals

CO2 emissions in our Scope 1 and 2 *Carbon neutral by FY2030

CO2 emission (adjusted) reduction at all Hokuhoku Financial Group's domestic branches

Trend in CO2 emissions in our Scope 1 and 2(t-CO2)

Formulation of Hokuhoku FG “Decarbonization Roadmap.”

17,127

Scope 2
Scope 1

12,802

7,128
5,402

4,325
FY2022

1,726
FY2023 2Q

In February 2024,
the Group
formulated a“decarbonization
roadmap” toachieve the goal ofcarbon neutrality
by FY2030.
Accelerate various
initiatives, aiming
to achieve thetarget ahead ofschedule.

FY2022
2022年度

Scope1

FY2023
2023年度

2024年度FY2024FY2025
2025年度～FY20302030年度Switchcompany vehicles to environmentallyfriendly ones  Adopt a minimum of 50 EVs and 170 HVs
社用車の環境対応車切替⇒ EV化50台以上・HV化170台以上
Additional
adoption of carbon neutral gas  ⇒400 400千㎥以上
thousand m3 or more
カーボンニュートラルガスの追加導入
Purchasecarbon credits
カーボン・クレジットの購入
Continue
other initiatives (e.g., use of non-face-to-face tools)
その他取組の継続（非対面ツール活用等）

Scope2

Convertbranches to⇒
ZEB
 10 branches or more
店舗のZEB化
10店舗以上Energy-saving
at branches (new building construction,
adoption of LED, etc.)  90 branches or more
店舗の省エネ化(建替・LED化など)⇒ 90店舗以上
Additional
adoption of renewable energy-derived electricity (Corporateetc.)  12,500 MWh or more
再エネ由来電力の追加導入(コーポレートPPAなど)⇒ PPA,
12,500MWh以上
Purchaseof non-fossil certificate
非化石証書の購入
Continue
other initiatives (energy saving, operational efficiency improvement, etc.)
その他取組の継続（節電、業務効率化など）

Utilize forest-derived carbon credits based on local production for local consumption
Hokuriku Bank has adopted “Mori no Chikara Gas,” a carbon-neutral gas that utilizes carbon credits
created by the Toyama City Carbon Offset Management Council, since January 2024.
This is the first time in Japan for a private company to adopt city gas whose CO2 emission was offset
by forest-derived credits based on local production for local consumption.

Applicable branches

11 sales branches of Hokuriku Bank

Assumed CO2 reduction volume (per year)

Approx. 390 t-CO2

First (of its kind) in Japan31

SX Strategy
Strengthening decarbonization support for business partners
Long-term
goals

Sustainability-related investments and loans (*1)

Cumulative amount disbursed from FY2021 to FY2030: ¥1.5 trillion

Environment-related investments and loans (*2)

Cumulative amount disbursed from FY2021 to FY2030: ¥700 billion(*1) Investments and loans to business partners who work toward achieving the SDGs, as well as investments and loans for medical care, health care, education, fisheries,
agriculture, business start-ups, business succession, resilience, and environment-related activities, etc.
(*2) Investments and loans to support environmentally friendly initiatives, such as addressing climate change

Support through sustainable financeReinforcing the financial support
Sustainability-related investments and loans(cumulative amount) (JPY Bn)

Syndication system
Financial institutions work together to assist business partners in their efforts
for sustainability by utilizing sustainable finance by a syndication system.

471.6

List of companies that adopted the scheme

289.3

259.8
211.8

153.8

102.6

February 2024

Tsuchiya Holdings Co., Ltd.

Sustainability-linked loan

March 2024

Hokkaido Leasing Co. Ltd.

Sustainability-linked loan

135.5
46.3

Positive Impact Finance

56.3

22/3 Results
Hokuhoku FG

23/3 Results
Hokuriku Bank

24/3 Results
Hokkaido Bank

List of companies that adopted the scheme

Environment-related investments and loans(cumulative amount) (JPY Bn)

229.5
147.4
117.5
77.3

37.1
14.3

22.8

22/3 Results
Hokuhoku FG

112.0

70.1

23/3 Results
Hokuriku Bank

Financial institutions support their business partners' sustainability initiatives
through Positive Impact Financing, which the banks began offering from March
2023.

24/3 Results
Hokkaido Bank

Hokuriku Bank

Hokkaido BankFY2022

Hanshin Kasei Kogyo Co. Ltd.

Soramame Company LLC.

FY2023

Aroc Sanwa Co., Ltd.
Mitsutoyo Industry Co., Ltd.
Fushiki Kairiku Unso Co., Ltd.
Goshu Yakuhin Co., Ltd.
Hagiurakogyo Co., Ltd.
F.K.Solutions Co., Ltd.
Kenroku Kensetsu Co., Ltd.
Yamaichi Seiko Co., Ltd.
Daiichikoei Co., Ltd.
Mugen Estate Co. Ltd.

Yoshikawa Foods Co., Ltd.
Niseko Environment Co., Ltd.
Nomura Real Estate Holdings, Inc.
ACOM Co., Ltd. Kouseikigyo Co., Ltd.
Koushin Industry Co., Ltd.
Dominion Corp.
Factor Nine Organization
BOLD Inc. Nihon Kasetsu Co., Ltd.
Tsugaru Kaikyo Ferry Co., Ltd.

32SX Strategy
Strengthening decarbonization support for business partners
Enhancing consulting support
Revenue from sustainability-related solutions*

Number of SDGs/environment-related services
used (Number of cases)
Hokuhoku FG

Hokuriku Bank

1,762

1,677
864

898

FY2022

FY2023Finance-related fees

¥756 million¥756 million

Consulting-related fees

¥122 million¥159 million

Total¥878 million¥915 million

Hokkaido Bank

846

831

* Revenue from sustainability-related finance and consulting fees only
FY22 Results

FY23 Results

Utilization of solutions for business partners
Business partners’ needs

Solutions of the Group

UnderstandConsulting - BM

Finance

We want our employees to understand the need to engage in GX and SX harder.

Implementation of a card game

Loan products that sort out the issues ofbusiness partners

GX or SX cannot be sorted out internally.

SDGs assessment service

For small- and medium-sized enterprises

There are no personnel internally that can deal with the situation.

Dispatching experts

We do not know how to measure CO2 emissions - We want to measure them.

Emissions measurement cloud service

Three targets

MeasureFor large- and middle-class companies

We have already measured CO2 emissions, but want to do it efficiently.
We want to measure CO2 emissions for each product.

Positive Impact Finance
Sustainability Linked Loan

Emissions measurement consulting

We also want to measure CO2 emissions throughout the supply chain.

ReduceWe want to step up energy saving.
We want to install a solar power generation system.
We want to install solar power generation equipment without the burden of upfront costs.

Energy-saving diagnostic service

Financing products for the implementation ofsustainability measures by business partners

Self-consumption solar power generation

Green loan

PPA scheme solar power generation

Transition finance

Purchase of non-fossil certificate

Social loan

We want to adopt various reduction methods.

Disclose

We want to publicize our company's efforts strongly to strengthen recruitment.

CreatePurchase of carbon credits

We want to sell the environmental value of energy conservation and renewable energy
initiatives.

Disclosure support consulting

Sustainability Linked Loan

We want to enhance external disclosure such as CDP and TCFD.

We want to sell the environmental value in the forest.

Loan products that can be used for external PR
Positive Impact Finance

We want to publicize our company's efforts to deal with business partners.

Carbon credit creation support

Financing products for the introduction ofequipment for creation
Green loan

Support for the acquisition of SBT in collaboration with
KMRI, Co., Ltd.
Hokuriku Bank supported Tsujihiro-gumi Co., Ltd., which is active inengaging in decarbonization, in obtaining SBT certification, in
cooperation with KMRI Co., Ltd., which is a business matching partner.

Support in the decarbonization of the entire supply chain incooperation with Zeroboard, Inc.
Hokuriku Bank
supported FUKUVIChemical Industry Co.,
Ltd., which has
stepped up the effort
for the decarbonizationof the entire supply
chain, in calculation of
GHG emissions, incooperation with
Zeroboard, Inc., which
is a business matchingpartner.

“Collaboration in calculating GHG emissions toward thedecarbonization of the entire supply chain”
Collaboration invisualization of
GHG emissions

Collaboration for the
decarbonization of theentire supply chain

Business matching
agreement

Collaboration by
providing GHG
emissions visualization
tools

Collaboration for the
decarbonization of theentire supply chain

Decarbonization in the entire supply chain

33

SX Strategy
Promoting the decarbonization of the region
Realization of the decarbonization of the region
Won contracts of municipal projects
Toyama Prefecture
In April 2024, Hokuriku Bank won the contract“FY2024 Toyama-type GX Promotion Project,”
for which Toyama Prefecture solicited
applications from the public.
Hokuriku Bank operates this project incooperation with Hokuriku Hakuhodo Inc.,
Kitanihonshimbun Kaihatsucenter Inc. andKitanihon Broadcasting Co., Ltd.
Hokuriku Bank aims to drive the decarbonizationof local companies in Toyama Prefecture bysolidifying cooperation with Toyama Prefecture
and other companies

Tomakomai City
Overall supervision, planning of keynote
presentations and preparation of manuals

Planning, operational support andPR management

PR, production of visual presentations andsupport for the secretariat

PR support

In April 2024, Dogin Regional Research InstituteCo., Ltd., Hokuriku Bank and Hokkaido Bank
were entrusted with “Tomakomai Zero Carbon
Support Consulting Project,” for which
Tomakomai City opened for a public
competition.
The above companies formed a consortium with
Hokkaido Electric Power Co., Inc. and Zeroboard
Inc. and operate this project.
The consortium aims to drive thedecarbonization of local companies inTomakomai City by solidifying cooperation with
Tomakomai City and other companies

Consortium

Strengthening the alliances
Joint implementation of “Customer Questionnaire on Decarbonization Management” in collaboration with MEJAR

The questionnaire revealed that a number ofclients were interested in decarbonizationand needed support such as public support
and the provision of information on industrial
trends and initiatives of competitors.
Hokuhoku Financial Group will lead theoutcome of this questionnaire to supportclients’ decarbonization.

MEJAR Sustainability Solutions
Collaboration0%

The degree of the impact of decarbonization

In August 2023, Hokuhoku Financial Group (Hokuriku Bank and Hokkaido Bank), the Bank of
Yokohama, the Higashi Nippon Bank, and the 77 Bank, all of which used the joint-usage system“MEJAR,” collaborated to conduct a “Customer Questionnaire on Decarbonization Management.”
The questionnaire was sent to customers who had engaged in “business evaluation” to survey a totalof 23 items concerning “Decarbonization Initiatives.”

脱
炭
素
に
よ
る
影
響
の
大
き
さ

20%

Very large or large
非常に大きい、大きい(n=107)
Rather large
どちらかと言えば大きい(n=339)

40%

60%

61.7

32.4

7.6
どちらかと言えば小さい(n=328)
Rather small

80%
28.0

100%
10.3 0.0

57.8

7.7 2.1

71.3

18.0

3.0

0.0

非常に小さい、小さい(n=69)
Very small or small

34.8

60.9

4.3

4.0

わからない(n=126)
Not sure

34.1

18.3

43.7

We recognize it as a management issue that needs to be resolved as a priority
優先的に解決すべき経営課題と認識している
Although we recognize it as a management issue, the priority is not high.
経営課題のひとつと認識しているが、優先順位は高くない

経営課題とは認識していない
We do not recognize it as a management issue.
わからない
Not sure34

SX Strategy
Enhancing response to TCFD recommendations

Initiatives to sophisticate various analyses
Initiatives to sophisticate calculations of financed emissions
Verified GHG emissions calculation support using Persefoni's platform for business partners
With the support of SCSK Corporation, Hokuriku Bank and Hokkaido Bank conducted verification of GHG emissions calculation support and the realization of
the acquisition of actual emissions data by employing the Climate Management and Carbon Accounting Platform (CMAP) provided by Persefoni from October
2023. The banks will analyze the verification results and accelerate their support for the decarbonization of business partners.

STEP 2

STEP 3

Efforts

Assist business partners in calculating GHG emissions and obtain
actual emissions data through the CMAP utilization.

PurposeAscertain actual emissions of business partners and realize highquality engagement based on accurate emissions data, thereby
driving decarbonization in the region as a reginal financial
institution.

Efforts

Verify the promotion of decarbonization consulting to business
partner by utilizing the net zero navigator* function of CMAP.

PurposeSupport as many business partners as possible in their specificinitiatives toward decarbonization at a uniform level, as a reginal
financial institution.

- Provide green loans- Provide sustainability linked
loan

Providefinancing

Understanding
and analysis- Provide reduction solutions
through business matching

Providesolutions

Consulting- Provide environmental energythat draws on nature<Step 1>
- Calculate and analyze financed emissions<Step 2>
- Understand the actual emissions of business
partners<Step 3>
- Analyze the gap between goals and current status<Step 2>- Support business partners in calculating GHG
emissions<Step 3>- Support goal setting- Develop reduction measures tailored to theindustry* A function that presents advice on the setting of reduction targets andreduction methods, based on the past trend of greenhouse gas emissions.
A feature that was jointly developed by Bain & Company, which is aleading consulting firm, and Persefoni.

Received a “B” rating in the CDP Climate Change Survey (FY2023)
A “B” rating, the highest among financial institutions headquartered in the three
Hokuriku prefectures (Toyama, Ishikawa and Fukui) and Hokkaido, was given mainly
for its risk management processes and efforts to reduce CO2 emissions. They received
the same rating for two years in a row from FY2022. We also aim at a rating of B or
higher this fiscal year35

DX Strategy
Overview of DX strategy

Restructuring of clerical work
Digitize operations and create optimal
service lines from the customer’s
perspective

Development of new branchformats

DX Human Resource
Development

Pursue new branch formats withhigher customer satisfaction

Enhance face-to-face services
Develop new business fields
Start of trial internshipUtilization of e-learning

Efficiency gain

Digitalization of OTC
operations
Adoption of internal FAQ bot

Rebalancing
personnel

Maximizing the effectivenessof the apps
Expand banking functions on a parwith branches
The opening of accounts has become
possible
Other functions are planned to bereleased, one after another

Linkage

Realization of sophisticatedmarketing
Establish a system to respond to
customer needs in a timely manner
through data analysis
Strengthen inside sales by utilizing abusiness card management system

Venturing into new business
areas

External provision offunctionality

Build a structure that allows us tocontinue taking on challenges in new
areas

Provide services that help capture
new revenue opportunities and solve
stakeholders’ issues
Drive open innovation with startups

Utilize generative AI

Earnings enhancement

36

DX Strategy
Various initiatives
Maximizing the effectiveness of apps
Launch a banking app development projectA project was launched with the aim of enhancing the convenience of banking apps toward improving the convenience of existing individual
customers and expanding to new customers.
As the first function, the “Service for application for opening ordinary deposit accounts” was started. (Hokuriku Bank: Started from March 2024.
Hokkaido Bank: Planned to start from October 2024)<<Outline of the service for application for opening ordinary deposit accounts>>
Open an ordinary deposit accountFast

An application for account opening can be completed in about 5 minutes through the app.
⇒An account is opened. An account number is advised via electronic mail, and simultaneously, the app becomes
available. This process can be completed on the next business day after making an application at the earliest.
⇒To improve clerical work inside the bank, automation, digitization of paperwork and swift clerical processing
were realized on the data linkage foundation.

Easy to understandThe app enables customers to make an application smoothly without fuss by presenting a color scheme andscreen design that have uniformity and easy-to-understand descriptions of information on the screen.

Easy to navigate

It is possible to make applications for the accompanying services of “Debit card,” “Account opening of investment
trusts” and “Application for NISA accounts” along with the opening of ordinary deposit accounts.

New

A new identity verification method was introduced by using the Japanese Public Key Infrastructure (JPKI) service
for My Number cards (the first case in regional banks headquartered in three Hokuriku prefectures).

Effects of launching this service

Verify user
identityEnter application
details

Complete theapplication

You can apply along withan ordinary deposit account!
Investment trust
Debit card
account

Start an application* Please note that you cannot make an application
between 11:50 p.m. and 12:10 a.m.

Number of IB and app contract customers(as of April 2024 in Hokuriku Bank)

Number of accounts opened
through the app

Approx.

2 times876,255
585,333

Ratio of accounts opened throughthe app
Account openings through the use of the app ÷ accountopenings including ones received in physical branches

Approx.

950,000

710,386

3 times
22/3

23/3

24/3

25/3
(Target)(Target)37

DX Strategy
Various initiatives
Venturing into new business areas

Marketing sophistication

Generative AI utilization

Efforts for realizing 1-on-1 marketing

The “Third AI Open AI Service” of Softbank was verified, and thefull-scale service has been started since April 2024.
Future Prospects for Generative AI

Integrate into existing systems
Office software with AI functions- Improve efficiency in preparing
business documents, emails, - Improve productivity
charts, presentations, etc.
- Further enhance
Adoption of service
business efficiency- Improve the document search function- Improve efficiency in handling internal QA- All bank employees began using the service- They use it for document preparation,summarization, translation, etc.

Strategic value

Internal document search function- Verify the accuracy of generative AI- Consider usage cases

Fiscal year

Marketing automation tools were adopted to strengthen mass
marketing. (Scheduled to start operation in July 2024)<Functions of Marketing Automation Tool>[1] Maximize understanding of customers through data analysis bycollecting digital channel data from sources such as apps and websites and centrally integrating them with data accumulated inside
the banks[2] Offer appropriate content via the optimal channel to customers andautomate the follow-up
Face-to-face channel - Bank transaction history

Annual:80,000 hours
40 hours x 2,000 people (Current number ofgenerative AI users)

Redirect freed-up hours to planning andpromotion (the creation of new business)

Automated One
to One approach

Measures basedon data analysis
Banktransaction data

Marketingautomation

Integration withdigital data

Expected work hours cut by generative AI utilization

Digital channel

Contact-point
data collection

Upcoming measures that employ this tool to be taken by
the Group
Provide services to meetthe diversity of business
partners.

Ascertain needs in real-time based on analysis
of behavioral history data on apps and websites,
and make one-to-one recommendations on loan
products, financial products, etc.

Enhance customer
engagement andexperience.

Provide information immediately after the startof trading and at the right time for follow-up.

Broaden approach andcontact points withbusiness partners.

Utilize multiple channels through mutual
collaboration between physical branches anddigital domains.

38

HR Strategy
Overview of HR strategy
Carry out six specific actions based on the “Human Capital Management Policy”[Long-term vision]

We achieve sustainable growth together with local communities
and customers through problem-solving[Human capital management policy]

Developing human resources who lead value creation by connecting
communities and business partners
Sort out issues (As is)[Securing the required talent]
The number of employees is on a
downward trend due to difficulties inhiring new graduates and rising turnover[Nurturing the required talent]
Definition, understanding or training
schemes of human resources necessary
for realization of key strategy are notsufficient[Organizational Culture]
Response to diversifying values and work
styles and an environment fordevelopment of self-driven humanresources are not sufficient[Specific actions][The Three Pillars of Human CapitalManagement (To be)]Creation of strategic
human resources

Continuous creation of selfdirected professionals that
embody management
strategies

Human resource
development

Strengthening recruitment
DE&I Promotion
Corporate culture thatencourages challenges
Realizing well-being

Empower diverse humanresources for innovation

Creating an environment thatencourages challenge andgrowth and maximizes ability[Policy on human resource development and internal environment development]

Develop human resources that can create a virtuous cycle of value creation with our customers and arecapable of contributing to the sustainable growth of the region.
Create an environment in which diverse human resources can take the initiative in enhancing their value whilefeeling job satisfaction.

39

HR Strategy
Various initiatives
Creation of strategic humanresources

Strengthening recruitment

Corporate culture thatencourages challenges

Human resource development

DE&I Promotion

Realizing well-being

Percentage of holders of decarbonization-related qualifications inregular employees of Hokuriku Bank and Hokkaido Bank

Production and development of strategic
human resources

4%

Developing SX talent

Decarbonizationqualification holders

33%

1,401 persons

1,401 employees (as of March 31, 2024) have passed
examinations for the “Decarbonization Advisor Basic”
certification program as a result of the joint effort for
acquisition of the certification in the group.

FY2022

Strengthening recruitment

FY2023

Number of midcareer hires and ratio of career hires

Strengthening midcareer worker hiring

60

Step up the recruitment of specialized personnel through awide range of recruitment channels, including direct
recruiting. Institutionalize alumni hiring and referral hiring,aiming to create an organization in which diverse humanresources can play an active role.

40
20
0

Corporate culture that encourages challenges

8.6%
5.6%
10
FY2021

20%

40

10%

Main expertise
Cyber security
System planning anddevelopment
International AML
Market middle/RAF
·
·
·

14
0%
FY2022

Expand invitations to training opportunities for
employees.
Invite employees to apply for “trial internship” that allows
them to try their hand at the job they are interested in for ashort period of time, and encourages the participants todevelop their own career vision.

17.0%

FY2023600
Utilize Trial Internship Program
Try them on jobs that employees want to do

Number of applicants for an internal job
posting system “Job Challenge”

400

531

200
0

156
FY2022

FY202340

HR Strategy
Various initiatives
Creation of strategic humanresources

Strengthening recruitment

Corporate culture thatencourages challenges

Human resource development

DE&I Promotion

Realizing well-being

DE&I Promotion
Career diversification

Implementation of corporate
career program
Training

OJT

Assign staff toclient liaison
positions

Number and ratio of women in managerial positions
500
400

Eliminate barriers against the limitation of jobs that
employees are assigned to due to non-career tracks orgender, and encourage employees to challengethemselves and try a career path that they choose froma wide range of choices, such as working in a sales
branch or the head office, and corporate or retailbusiness.

Realizing well-being
Expansion of human capital investment
Aim to solve regional and client issues and achievesustainable growth by strengthening investment in humancapital and improving employee engagement. Following
the wage hike in FY2023 (5% or more), an average wage
increase of 4.6% or more is planned for July 2024,
including base and starting salary increases andindividual salary hikes. Education and training expenses
will also be increased while allocating strategically withthe aim of enhancing corporate value.

15.9%

17.4%

300
“Corporate career program,” which
executes training, OJT and assignment
in an integrated manner, was started
from FY2023. Twenty-five female
employees are challenging themselves
and involved in corporate businessliaison work, which has been
traditionally a job for male employees.

Increase in starting salary(for those who will join the bank inthe spring of 2025)

200

307

331

18.8%

358

21.5%

25%
20%

419

15%
10%

100

5%

0

0%
FY2020

FY2021

FY2022

FY2023

Total education and training expenses (million yen)
400
300
330

+¥25,000¥250,000

275

200
222
100

¥225,000

0
FY2022* Management-track G course in Hokuriku
Bank and Hokkaido BankFY2023

FY2024 Target

41Inquiries related to this material should be addressed to

Hokuhoku Financial Group, Inc.
Managing Planning Division

TEL: (+81) 76-423-7331
FAX: (+81) 76-423-9545
E-MAIL: info@hokuhoku-fg.co.jp
https://www.hokuhoku-fg.co.jp/

This document may not be reproduced or distributed to any third party
without prior approval of Hokuhoku Financial Group, Inc. This document has
been prepared for information purposes only and does not form part of asolicitation to sell or purchase any securities. The information contained
herein may be changed or revised without prior notice. This document may
contain forecasts of the results of operations. No forecasts are guaranteed
and actual results of operations may differ from those projected.