Hokuhoku Financial Group, Inc.

Integrated
Report2023

CONTE NTS
The history of the Hokuhoku
Financial Groupp03

GX strategy(initiatives in the environmental field) p35

Our strengths p05

GX strategy (disclosure based on TCFD) p39

Regional potential 

p07

Promotion of DX p45

Financial and non-financial highlights

p09

Human capital management initiatives p49

President’s message

p11

p57

Deputy president’s message

p15

Opinion exchange meetings between
outside directors and employees

Process for value creation

p19

Strengthening group comprehensive
capabilities 

p61

Key sustainability management activity
themes

p21

Stakeholder communication 

p65

Message from the officer in charge offinance (concerning initiatives for the
improvement of corporate value)

Strengthening group governance

p67

p23

Initiatives for customer-centeredbusiness operations 

p79

Medium-term management plan
“Go forward with our region” andthe state of progress of KPIs 

p27

Corporate information 

p81

NON-CONSOLIDATED FINANCIAL
STATEMENTS 

p89

Improvement of comprehensive
consulting abilityp29

Major financial data over the past 10 yearsp93
北北金融控股集团简要p95

Toyama Prefecture: Kurobe Dam
Editorial policy
The Hokuhoku Financial Group recently published its Integrated Report 2023. In editing this report, the company refers to guides such as the International
Integrated Reporting Framework put forward by the International Integrated Reporting Council and the Guidance for Collaborative Value Creation by the
Ministry of Economy, Trade and Industry.
This integrated report is the disclosure document prepared based on Article 21 and Article 52-29 of the Banking Act. This integrated report contains
statements concerning future results, but these statements do not guarantee future results and may differ from actual results due to changes in the
management environment and other factors. Please see the Integrated Report 2023 Financial Data for detailed financial data and other information.

Management philosophy
Hokuhoku Financial Group will continue to deliver comprehensive financial services
with its extensive regional network to contribute to mutual prosperity with customers
and the region.

Prospering together
with the region

We execute our social mission to prosper mutually with customers and local community.

Fair and steadymanagement

We aim at fair and steady management to respond to social confidence.

Progressive andinnovative services

We pursue creativity and innovation in a vital workplace to provide attractive services.

Long-term vision
Sustainable growth together with local communities and customers through problem solving

Region and customers
Towards an attractive region
Development of the regional economy and industry

Realization ofsustainable growth

Towards an attractive company
Becoming a chosen and loved presence

Comfortable, prosperous living

Success of attractive and diverse human resources

Sustainable society

Improvement of shareholder value and corporate value

Hokkaido: Shinkushiro River

Logo markThe gold gradation that extends vertically expresses the growth and profitability of the company, and the lines that draw a gentle arc express our network
as a regional bank covering a wide area. In addition, the calm blue square gives an image of the unshakeable stability of our organization and placing thevertical line and curved line within that square expresses the “h” that is the initial letter of Hokuhoku.
Hokuhoku Financial Group, Inc. Integrated Report 2023

2

The founding of The Hokuriku Bank, Ltd.

The founding of The Hokkaido Bank, Ltd.

The Hokuriku Bank was established on August 26, 1877, with the Houseof Kaga-Maeda providing 70% of the capital. The bank was the creationof the family established by Maeda Toshiie, the founder of the Kaga clan.

The Hokkaido Bank was established on March 5, 1951 in response to thestrong demand for financing from small and medium sized corporations in
Hokkaido accompanying the sudden increase in population and development of
new industries in Hokkaido during the post-war recovery period.

August 1877 Kanazawa 12th National Bank founded
February 1879 Toyama 123rd National Bank founded

March 1951 Hokkaido Bank established

July 1943 Four banks, 12th, Takaoka, Chuetsu, and Toyama Bank, merged to form Hokuriku Bank

April 1961 Launched foreign exchange operations

January 1950 Launched foreign exchange operations (first regional bank to do so)

May 1962 Listed on the Sapporo Stock Exchange

September 1961 Listed on the Tokyo Stock Exchange

September 1987 Listed on the first section of the Tokyo Stock Exchange

The history of Hokuhoku Financial Group
Hokuhoku Financial Group placed its foundations in Hokuriku and Hokkaido and has long contributed tothe prosperity of the region and customers as a regional financial organization.
We will continue to create shared value by growing and developing together with the region from now on.

April 2016
■ Loans (balance)■ Deposits (balance) including certificates of deposit

Establishment of
Hokuhoku TT Securities

May 2011

Launch of the MEJAR system shared by 3 banks(Unit: billion yen)

The Hokuriku Bank and The Hokkaido Bank started
shared use of a core system with The Bank of Yokohama

10,627

September 2004

10,147

9,982

The birth of Hokuhoku Financial Group

9,670

9,491
9,083

8,458

8,311

8,661

8,435

8,203

7,133
6,682

6,678

6,813

6,871

7,224

7,272

7,387

Medium-term management plan

FY 2004

FY 2005

FY 2006

Hokuhoku Financial Group, Inc. Integrated Report 2023

FY 2007

FY 2008

7,546

6,981

Road to 10

3

7,323

FY 2009

GO for IT!

Ideal situation

Ideal situation

Being a financial group that is loved andcounted on by the region

Being a financial group that is loved
and counted on by the region

Positioning of the plan

Positioning of the plan

A period of challenge towards sustainablegrowth~ Gaining a foothold towards becoming afinancial group with deposits of 10 trillion
yen ~A period working on the optimizationof business strategy for sustainablegrowth

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

The Hokuriku Bank, Ltd., and The Hokkaido Bank, Ltd., integrated their management and the Hokuhoku
Financial Group centered on the two banks was born aimed at the streamlining of management using
management resources more efficiently, the strengthening of sales capabilities using a wide network, and thestabilization of management foundations in September 2004, when the environment for financial institutions
continued to be difficult.

June 2020

July 2021

April 2023

Selected as a support institution under the FY 2020 ESG Regional Finance

Formulation of the Policy on Investment and Loan in Special Business, etc.

Promotion Program implemented by the Ministry of the Environment

Raising of the CO2 Emissions Reduction Target

New establishment of SX
Promotion Department

February 2021

November 2021

Formulation of the Hokuhoku Financial Group Environment Policy

New establishment of the Sustainability Promotion Committee

Approval of the TCFD recommendations

Setting of Sustainable-Related Investment and Loan Targets

June 2023

New establishment of Personnel
Strategy Department and DX
Promotion Department

March 2021

70th anniversary of the establishment of The Hokkaido Bank
13,513

April 201913,202

Announcement of the Hokuhoku Financial Group SDGs

12,788Declaration and formulation of the Key CSR Activity Themes
11,638
11,410
11,151
10,701
10,475

9,533
9,050

9,193

8,656
8,172
7,582

8,344

7,771

Go forwardwith Our Region
BEST for the Region

FY 2015

ALL for the Region

Ideal situation

Ideal situation

Long-term vision

Being a financial group that plays a role in regional
revitalization and grows and develops together
with the region by contributing to customers andregional society through the provision of the best
financial services in the region

Being a comprehensive financial group that creates
shared value and grows and develops together withthe region by contributing to customers and regionalsociety through the provision of the best financial
services in the region

Sustainable growth together with local communities andcustomers through problem solving

Positioning of the plan

Positioning of the plan

Positioning of the plan

A period of working on the reform of businessmodels and the further pursuit of group synergy
effects to back up the regional economy during
expected environmental changes

A period of working on the construction of aframework that contributes to the region sustainably,with all of the group’s officers and employees
evolving in terms of both face-to-face services close
to customers and convenient digital financial
services

A period of working on productivity improvement through the
improvement of consulting ability, the promotion of DX andother measures to realize long-term vision, and taking on thechallenge of new business areas such as the environmental
field

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

FY 2024

Hokuhoku Financial Group, Inc. Integrated Report 2023

4

Our strengths

We use the strengths we have cultivated to contribute to the regions andFinancial capital
Fifth biggest regional bank
We have secured a big share of both deposits andloans by walking and growing together with ourcustomers for many years in the three prefecturesof the Hokuriku region and Hokkaido.
The company is a financial group with assets thatmake it the fifth biggest regional bank, and being
able to provide transactions and diverse financial
services that allow customers to feel secure byhaving not only market share, but also a large asset
base, is also a strength of the company group.

Balance of deposits, etc.

Balance of loans, etc.

13,513.7 billion yen

9,533.4 billion yen

Manufacturing capital
Financial infrastructure that uses a wide area networkof branches, including overseas, and digital functions
We are a super-regional financial group without parallel among
regional banks that has an extensive network also including
offices overseas.
Using this extensive network, we are able to provide information
to customers and support the expansion of sales channels.
In addition, we have established systems that allow us to dobusiness wherever customers are by introducing tablet, TV
conferencing systems and the like.

3 Hokuriku
prefectures

Hokkaido

Other areas

3 major cities

151 branches 161 branches
6 branches

14 branches

Overseas

8 bases

Human capital
Strong and diverse human resources
Based on our management philosophy and long-term vision, we carry out activities
prioritizing contributions to the value creation of the region and customers
dynamically and in detail, while using our strengths deployed over a wide area underthe banner of our human resources initiative policy “the development of people who
connect with the region and customers and are the driving force of value creation.”
We will strive for the development of human resources who can accompany thesustainable growth of the region and customers by establishing an environment inwhich diverse human resources can gather and work autonomously to enhancetheir value while feeling satisfaction in their work.
5

Hokuhoku Financial Group, Inc. Integrated Report 2023

Total training hours

3,535(FY 2022)

hours

realize the sustainable growth of the company group.

Intellectual capital
Top-class know-how among regional banks
In addition to the establishment of a training menu toprovide high quality consulting, we have a groupcompany network including securities, cards, lease,software and a think-tank that allows us to provide
know-how and wide-ranging solutions centered on
M&A and business succession that are top-classamong regional banks. We are aiming for both therevitalization of the regional economy and the growthof the company by using these to the maximum.

Employees who have acquired
consulting-related qualifications

315

Consulting support for M&A
and business succession548

peoplecases* P eople who have acquired 1 st grade FP, CFP andsmall and medium enterprise consultant qualifications

Social capitalHigh regional share and wide-area network
We have established business foundations with customers supported by history,
with The Hokuriku Bank founded in 1877 and The Hokkaido Bank established in
1951, and boast a high share in the Hokuriku region and Hokkaido, which areprime areas.
In addition, we have built strong relationships by cooperating with local
governments and other organizations.

Cooperation with local governments

49

3 Hokuriku prefectures (Toyama, Ishikawa and Fukui)

Hokkaido

No.1 share for both deposits and loans

No.2 share for both deposits and loans

29.4%

19.6%

27.7%

16.5%

23.0%

27.8%

23.4%

30.9%

Share ofdeposits
30.5%■ Hokuhoku FG

Share ofloans

Share ofdeposits

33.1%
20.5%
■ Local top competing bank

22.7%
■ Other banks■ Credit unions

9.8%■ Hokuhoku FG

9.7%

Share of
loans

36.2%

39.1%

■ Local top competing bank

■ Other banks■ Credit unions

Hokuhoku Financial Group, Inc. Integrated Report 2023

6

Regional potential

The company group engages in business across a wide area centered

Rich tourism resources
Tourism resources including the majestic nature and hot springsof the Hokuriku region and Hokkaido are very popular not only
among domestic tourists, but also foreign tourists, and both areequipped with excellent conditions as tourism areas.
The Hokuriku region is awaiting the completion of the extensionof the Hokuriku Shinkansen to Tsuruga, and the activation ofround-trips with the Tokyo metropolitan area, including moretourists, is expected.

The foremost industrial zones by the Japan Sea
The three prefectures of Hokuriku exude a roughly equivalent presence while taking advantage of their respective
characteristics. Everything from local traditional industries to developed industries have become the foundations
that have created many companies with the top share in their fields.
Total production in the
3 Hokuriku prefectures(nominal, FY 2019)
Total 13,384.1 billion yen
Fukui
Prefecture
3,694

ToyamaPrefecture
4,910

Items with top nationwide share by amount of manufactured products shipped(Unit: %)Item
Aluminum sash for residential
construction
Office and retail store equipment
Spectacle frames
Polyester long fiber fabric…

Ishikawa
Prefecture
4,779(billion yen)

Source: ‌Ministry of Internal Affairs andCommunications “Prefectural
Accounts”

Nationwide
share
ToyamaPrefecture No.1
Ishikawa
Prefecture No.1
Fukui
Prefecture No.1
Fukui
Prefecture No.1

Source: ‌Ministry of Internal Affairs and Communications “2021
Economic Census”

The initiatives of the company group to strengthen regional potential further

Participation in Team Sapporo-Hokkaido
Team Sapporo-Hokkaido was established as a consortium made up of industry, academia, government and finance in June
2023, and the Hokuhoku Financial Group also participates as a founding member. This consortium is advancing initiatives thatwill contribute to the promotion of the GX (green transformation) of Hokkaido and Sapporo City making maximum use of
Hokkaido’s renewable energy potential, the best in Japan.
The Hokuhoku Financial Group serves as the head of the Fund and Finance Working Group on this consortium. In addition toconsidering funding and finance schemes in accordance with the growth stage of involved companies, we will advancecooperation among consortium members as a member of the secretariat.
We will accumulate know-how on these advanced initiatives in Hokkaido and contribute to the promotion of GX in the three
Hokuriku prefectures, not just Hokkaido, by using the company group’s wide-area branch network.

7

Hokuhoku Financial Group, Inc. Integrated Report 2023

on the three Hokuriku prefectures and Hokkaido. We will use the potential of each region to grow together with them.

The Hokkaido food brand
Diverse foodstuffs are produced against the backdrop of
meteorological and geographical conditions unique to
Hokkaido.
Agricultural production (billion yen)

Marine fisheries and aquaculture production (billion yen)①

Hokkaido

1,310①

Hokkaido

256②

Kagoshima

499②

Nagasaki93③

Ibaraki

426

③

Ehime

84

④

Miyazaki347④

Kagoshima

65⑤

Kumamoto

347⑤

Miyagi

65

Source: ‌Ministry of Agriculture, Forestry and Fisheries “2021
Statistics on Agricultural Income”

Source: ‌Ministry of Agriculture, Forestry and Fisheries “Fisheries
Output”

Plentiful renewable energy potential
Hokkaido is endowed with plentiful and diverse energy
resources including sunlight, wind, biomass, geothermalenergy and coal, and has the best potential nationwide
for the use of new energy especially.
In May 2023, five marine areas were designated“promising areas” based on the Act on Promoting theUtilization of Sea Areas for the Development of Marine
Renewable Energy Power Generation Facilities, andconcrete consideration aimed at the development ofoffshore wind farms has advanced.
The attraction of the semiconductor industry and data
centers has progressed towards the use of thispotential, and development into an area of
agglomeration of advanced industry is expected.

Overview of Team Sapporo-Hokkaido
Team Sapporo-Hokkaido was established with Hokkaido and Sapporo City as its joint representatives to attract to
Hokkaido and Sapporo investment from around the world in response to the public and private GX investment said
to exceed as much as 150 trillion yen over the next ten years. In addition to government agencies, megabanks andregional banks, 21 organizations including Hokkaido industries will advance initiatives together. Specifically, Team
Sapporo-Hokkaido is working on initiatives such as the gathering and sharing of information on GX finance andother matters, the promotion of supply of renewable energy, funding and financing in accordance with the level ofgrowth of business, consideration of regulatory relaxation, etc., that will accelerate environmental investment, thedevelopment of environmental finance human resources active in Japan and overseas, the transmission of
information effective at attracting global investment, and the acquisition of international knowledge.

Hokuhoku Financial Group, Inc. Integrated Report 2023

8

Financial highlights

Deposits (Including negotiable certificatesof deposit) (two banks combined)

13,540.6 billion yen
13,233.3

12,815.6

billion yen

billion yen

FY 2020

FY 2021(Increase of 307.3 billion yen
compared to the end of last term)

13,540.6
billion yen

FY 2022Core gross business profit (two banks combined)

119.8 billion yen
124.8

120.7

(Decrease of 4.9 billion
compared to last term)

119.8

Balance of loans at term-end (two banks combined)

9,545.1 billion yen(Increase of 333.9 billion yen
compared to the end of last term)

9,211.1

9,065.1
billion yen

billion yen

FY 2020

FY 20219,545.1
billion yen

FY 2022

Net income attributable to owners of the parent(consolidated)

21.4 billion yen
21.3(Increase of 900 million yen
compared to last term)

20.5

21.4

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

FY 2020

FY 2021

FY 2022

FY 2020

FY 2021

FY 2022

Capital adequacy ratio (consolidated)

9.49%(Decrease of 0.05 points
compared to the end of last term)

9.45%

FY 2020

9.54%

9.49%

FY 2021

FY 2022

OHR (two banks combined)
Core gross business profit basis

62.39%(Decrease of 0.76 points
compared to the end of last term)

Return on equity (ROE) (two banks combined)
Net income basis

3.99%(Increase of 0.09 points
compared to last term)

4.13%
3.90%

FY 2020

FY 2021

3.99%

FY 2022

Disclosed claims ratio under the Act on Emergency Measures for
the Revitalization of the Financial Functions (two banks combined)

2.23%(Decrease of 0.01 points
compared to last term)

2.24%

2.23%

FY 2021

FY 202268.19%FY 2020963.15%

62.39%

1.93%

FY 2021

FY 2022

FY 2020

Hokuhoku Financial Group, Inc. Integrated Report 2023

Non-financial highlights

Sustainability-related investment(cumulative)

CO2 emissions (Scope 1, 2)

Number of cases of realized
Hokuhoku cooperation

289.3 billion yen▲45.2%

1,901* Investment and loan in business partners working towards theachievement of the SDGs, and investment and loan in medicine,
health, education, fisheries, agriculture, business establishment,
business succession, resilience and the environment* Compared to FY 2013

* Initiatives that contribute to the resolution ofcustomer’s problems through the cooperation of thetwo banks (co-financing, business matching, etc.)

Accumulation-type productcontracts

Female manager ratio

Number of qualified employees

127,58618.8%

1,541 people* Total of people with 1 s t grade FP, CFP and IT
passport qualifications

Rating information
Rating company

RatingR&I

A

External evaluations

Acquired company(Rating and Investment
Information, Inc.)

S&P

A-

A “rating” is a device with which a rating company, a third-party organization with norelationship of interest, expresses a company’s creditworthiness and ability to meet
obligations using a concise symbol.
The company, The Hokuriku Bank and The Hokkaido Bank have each acquired an “A”
rating from R&I, meaning we have been evaluated as having high creditworthiness. Further,
The Hokuriku Bank has also acquired an “A- “ rating from S&P.
Hokuhoku Financial Group, Inc. Integrated Report 2023

10

President’s message

We practice sustainability
management to increase
corporate value

Hiroshi Nakazawa,
President

Hokuhoku Financial Group will aim for the next stage based on “one-team” power
and new challenges
The year 1986, when I joined The Hokuriku Bank, wasright in the middle of the era when asset price increases
and economic expansion continued, later to be known as
the bubble economy. Subsequently, when the bubble
economy collapsed in the first half of the 1990s and theera of stable growth came to an end, the values of assets
including stocks and real estate turned and fell sharply,
and every financial institution suffered over the processingof bad debt.
While the stabilization of the management foundationsof financial institutions was called for to fill in the “blankdecade” following the collapse of the bubble, the
Hokuhoku Financial Group was launched in 2004, aheadof such moves by other banks. The colleague banks of
distant regions, headquartered in Toyama and Sapporo,integrated their management under the Hokuhoku

11

Hokuhoku Financial Group, Inc. Integrated Report 2023

Financial Group, a financial holding company, and workedon the strengthening of their management foundations byusing each other’s management resources effectively andmutually.
At the same time, the banks worked on sales activities
cooperatively under the two brands, “The Hokuriku Bank”
and “The Hokkaido Bank,” and advanced the further
strengthening of their business foundations in the prime
areas of Hokuriku and Hokkaido.
At the time, this kind of initiative involving ourmanagement integration attracted the attention of society
as the first case in Japan.
We received the support of our regions in sales
activities rallying the power of the two banks, which hadcompeted until then, and the scale of our deposits andloans expanded steadily. In addition, we also realizedintegration synergies in forms visible to the eye, such as
the integration of our accounting system foundations andimprovements in capital quality.
Reflecting on the period from the establishment of the
Hokugin Financial Group, the predecessor of the
Hokuhoku Financial Group, to now, it was never a straightand easy road, including the external environment, but weovercame everything because the two banks improved
through friendly rivalry and grew together. From now on
too, I would like us to pursue further synergistic effects bystrengthening our union as “one team.”
Japan today is facing structural changes such as thedeclining population and the progression of aging, and I
feel that their impacts have also become apparent in ourprime areas too. In addition, there is a global trend
towards decarbonization and heightened awareness of
biodiversity and circular economies, while the handling of
ESG issues is also required in economic activities,
including respect for human rights as well as diversity andinclusion.
Moreover, the current handling of COVID-19 infections,which lasted over about three years, has dropped a level,
and the long-term trend has reached a turning point withstagnant economies starting to move. From deflation to
inflation, from low interest rates to global interest rateincreases, from globalization to de-globalization.
Until now, we have been able to find the answers in
the past, but we are now in an age of unpredictability. On
the one hand, there is also risk related to the timing ofwhen change occurs, but we are also able to grasp
opportunities. We know that we should take onchallenges boldly so that we respond to changes in theexternal environment resiliently, are free from priorconstraints, and do not miss out on new opportunities.
I think that the areas that will be the key to newchallenges are DX (digital transformation), SX (sustainability
transformation) and consulting, which has been ourstrength for some time, and we are advancing initiatives
aimed at securing and developing the human resourcesthat will support them. It is not easy to evolve or reform abusiness model, but I would like to strengthen the systems
that support officers and employees so that they canacquire the required skills tailored to the changes of theage.
We will support the development of regional
economies and industries and contribute to the realizationof sustainable regional societies by further improving ourfunctions in DX, SX and consulting to respond to achanging society. I think that through these initiatives, wewill realize the sustainable growth of the company groupand the improvement of corporate value by becoming apresence that is required by the regions and by being
selected as a place to work by attractive and diverse
human resources.
Throughout the 147-year history of The Hokuriku
Bank, and the 73-year history of The Hokkaido Bank, wehave worked on the expansion of our business areas,
including the change from banking business into a general
financial group, and have practiced sustainable
management linked to our management philosophy ofprospering together with the region and fair and steadymanagement. And, I am convinced that the one-teamstrength we have cultivated as the Hokuhoku Financial
Group will continue to live from now on as the motive force
towards future change and further growth.

Reflections on fiscal year 2022
Our long-term vision, “Sustainable growth together withlocal communities and customers through problem
solving,” which was newly established last year, wasformulated after repeated debate starting from what it isthat stakeholders are demanding of us. This suggests
developing together with our regions and customers,
whose presence we value above all as a regional financial
institution, by contributing to the resolution of theirproblems. This incorporates the idea of “co-prosperity,”

namely also becoming an attractive company throughinvolvement in creating attractive regions.
Under our medium-term management plan “Go
forward with Our Region” (hereinafter referred to as“management plan”), we have positioned the three-yearplan period as “a period to work on the improvement ofour consulting abilities and the improvement of productivity
based on the promotion of DX, etc., and to take on thechallenge of new business areas such as the environment,”

Hokuhoku Financial Group, Inc. Integrated Report 2023

12and have established and been working on key strategies.
In fiscal year 2022, the first year of the management
plan, concerns over inflation arose for the first time inabout 40 years due to confusion over resources andsupply chains triggered by the Russia-Ukraine conflict, andinterest rates in Europe and America soared. As a result,
we were exposed to a difficult management environment,
including earnings deteriorating significantly in foreign
bond management. However, even in such circumstances,

we worked on the strengthening of services income
through the provision of consulting services and the
reduction of expenses through the revision of businessprocesses using DX, and were able to record net income
above that of last year.
In addition, with each and every officer and employee
firmly aware of their own roles within the organization, wewere also able to achieve almost all of the major KPIs
raised in the management plan.

Further improvement in the level of our consulting abilities—initiatives for SX and DX—
We have evaluated based on the details of the settlementof accounts and the state of achievement of the KPIs thata certain level of results has been produced in what wehave worked on intensively.
In SX, especially in the environmental field, we worked
on our own decarbonization and support for that bycustomers, and in support for decarbonization bycustomers, saw significant increases, including theexecution of sustainability-related investment and loans ofabout 180 billion yen in one year, and 1,762 cases of useof SDGs and environment-related services, an increase of
seven times compared to last year. This feels like evidence
that the company group is recognized as the leading
company in the region in the environmental field. We havebrought forward the achievement of carbon neutrality,
which was set for fiscal year 2050 to fiscal year 2030 tofurther accelerate these initiatives towards theenvironment. From now on, I would like to contribute to
the decarbonization of the region by accelerating our
initiatives for the region and customers.

In the DX field, we started sales of SaaS-type ERP
package for corporations and sole proprietorships, andstarted on new areas, including the provision of services
useful for customers to acquire new profit opportunities
and solve problems. In fiscal year 2023, we will advancethe streamlining of the internal administration of the bank,and use data linkage platforms to upgrade the functions ofapps provided to customers and improve customer
convenience. I would like to build a framework that allows
us to expand and strengthen points of contact withcustomers, such as consulting face-to-face at sales
branches and bank transactions through apps, andprovide high-level services in accordance with customer
needs.
We established an SX Promotion Department and a
DX Promotion Department to incorporate SX and DX into
sales strategies and growth strategies than ever before.
We will aim to raise our level further by rebuilding ourframework.

We will maximize the value of human resources through human capital management.
In order to handle what I have raised so far, we will needto invest management resources boldly in promisingbusiness areas, and continuous human development willbe essential to that end.
We have also raised the key strategy in the management
plan of advancing the realization of “progressive andinnovative services,” part of our management philosophy
that connects to the resolution of the issues of the region

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Hokuhoku Financial Group, Inc. Integrated Report 2023

and customers by increasing each and every officer andemployee’s engagement in their work and commitment to
the organization while feeling well-being, and putting into
practice spontaneous and creative behavior.
The sources of our competitiveness as a financial
institution are our officers and employees, and based on
the understanding that people are our most importantmanagement resource, we need to secure and develop

specialist human resources matched to management
growth strategies, aim for improvements in ourorganizational culture so that people can be livelier andmore active than before, and sublimate this into
organizational power with a sense of speed.
In realizing the above, I think that we will need to digeven deeper into the arrangement of human issues, andrecently, we newly established a Personnel Strategy
Department to resolve human-related issues incooperation with the Personnel Department of both banks.
We arranged human capital issues from the threeperspectives of securing the required human resources,developing the required human resources, andorganizational culture, and established the “Continuous

creation of self-directed professionals that embody
management strategies,” “Empowering diverse humanresources for innovation (DE&I)” and “Creating anenvironment that encourages challenge and growth andmaximizes ability,” the three pillars to realize our policy onhuman capital management initiatives “human resource
development that joins the region and customers, and is
the motive force for value creation.”
I think that the creation of an environment within which
each and every officer and employee can work
autonomously with satisfaction and pride is precisely what
will lead to the virtuous cycle of improvement of thecompany’s corporate value and the sustainable growth ofregional society.

From the creation of new value to the improvement of corporate value
Strong movement has been apparent in the company’s
share price recently, partly because of initiative’s aimed at
the enhancement of shareholder returns, but at the 0.2
times level, our PBR is low within the regional bank sector
and the TSE Prime market as a whole. We are aware ofthis PBR situation as a management issue and I would likethe whole of Hokuhoku Financial Group to make
improvements together. I think that working firmly on bothour growth strategy and capital strategy and disclosingthat situation positively will be the points in doing that.
The company boasts the fifth largest assets among
listed regional financial groups, but as shown by ROE, its
profitability is inferior and that is reflected in its share priceevaluation. The growth strategy aimed at the improvementof earning power is more important than anything and wewill focus on the strengthening of our main business andinitiatives aimed at new fields. Specifically, I would like toimprove the profitability of the company’s business whilesatisfying customers by providing services matched tocustomers’ needs and issues through various consulting
over matters such as funding, asset formation support,
business matching and M&A. In addition, we will also
further strengthen solutions, which continue to develop
into a pillar of the company group’s business, including
support for customer DX and support for environmental
measures through the establishment of dedicatedorganizations and dedicated human resources.

Furthermore, we will work on new business domains
such as project finance related to renewable energy andsocial infrastructure, and participation in projects that
support regional digitization and decarbonization. And, we
will accelerate investments in human capital centered on
HR Strategy Department towards securing and developing
the human resources required for those kinds of initiatives.
Under our capital policy, we will emphasize theimprovement of capital efficiency and continue thereduction of cross-shareholdings. In addition, we will work
positively on shareholder returns while balancing with theretained earnings that are the resources for growth. In
addition to dividends, I think that the flexible acquisition oftreasury stock is also an option that leads to the
optimization of the scale of ordinary and preferred stock.
And, I would like to establish the image of a secure
financial group by disclosing firmly our way of thinking withregard to these initiatives, as well as their targets and stateof progress, and focusing on engagement withstakeholders.
The company group has the trust of customers,
trading foundations, and wide-area branch and information
networks supported by a long history, and I think thatthese are the biggest assets of the company group. We
will aim for the continuous improvement of corporate value
by making maximum use of these assets. Please continue
to provide us with your support and patronage.

Hokuhoku Financial Group, Inc. Integrated Report 2023

14

Deputy President’s message

We will realize our longterm vision by promoting
sustainability management
Deputy President
Officer in charge of SX Promotion Department

Yuji Kanema

Sustainability in corporate management
Global interest in the resolution of environmental and“having to work” on sustainability to the “positive”

social issues has changed greatly in the past few

idea of “how do we connect this field to ouryears. There is virtually nobody among thebusiness” has increased.

customers of our regional financial institution either

The world has switched from the idea of CSR

who does not know the words “SDGs” and “carbon(corporate social responsibility) to the idea of CSV

neutral.”(creating shared value), as resolving such social

We often hear now about individuals who preferissues will connect to big business opportunities

goods and services with an ESG perspective or who

and, as a result, contribute to the improvement of

select companies from an ESG perspective when

corporate value. I understand that because of this,looking for work, as seen in words like “ethicalhow quickly a company can build a sustainability

consumption” or “ethical employment.” That sort ofmanagement framework in its original sense hastrend is also becoming apparent little by little in the

become an important mission of corporate

investment products handled at the company group.

management.

In addition, students who emphasize those kinds ofFurther, I think strongly that only our regional

points are also increasing in number in recruitment

financial institution is able to support the sustainability

activities.

management of our regional business partners.

At companies too, needs arising from the desire
to use “sustainability finance” products and demanda daily basis with business partners and local

arising from the desire to work on carbon neutrality

governments over many years. In addition, I takehave increased. Seeing this kind of situation before

pride in the fact that we have grasped more of the

my very eyes, it feels strongly like this field will

issues unique to the region than others as well. I

expand as a business market for our financial

think that the strengthening of sustainability support

institution too.

is the most important work of a regional financial

As a recent trend, the number of companies thatare changing from the idea of “feeling forced,” or of
15

Regional financial institutions have been engaged on

Hokuhoku Financial Group, Inc. Integrated Report 2023

institution.

The new establishment of SX (sustainability transformation) Promotion Department
Since expressing the Hokuhoku Financial Group
SDGs Declaration in April 2019, the company grouphas emphasized the perspective of sustainability incorporate management.
Because of the nature of our original business asa regional financial institution, and the fact that thespirit of contributing “for the region” and “forbusiness partners” is “for us” has taken root, if
anything, rather than saying we have started to think
like this newly, it may be better to say that we havearticulated what we already do.
Subsequently, triggered by the company group’s
Hokuriku Bank and Hokkaido Bank being selected
as supporting financial institutions for the Fiscal Year
2020 ESG Regional Finance Promotion Program
implemented by the Ministry of the Environment inJune 2020, we gained momentum, accelerating
initiatives for the environment in particular.
Awareness of the environment was not that strong
previously, but through these initiatives, howimportant giving consideration to the environment
was to continuity came to be discussed even at
meetings of the Management Committee. Right inthe middle of that, Japan’s Carbon Neutral
Declaration was announced and the world changed
at an increasing tempo.
Partly because of such circumstances, we newly
established the Sustainability Promotion Group, thepredecessor of the current SX Promotion
Department, and the Sustainability Promotion
Committee at management level in November 2021,
which further activated discussion of sustainability
management within the company.
In association with the launch of SX Promotion
Department in April 2023, thinking that it was
important for management to lead this field andmake it take root in the culture of the company
group, I became the officer in charge of thedepartment and we are promoting initiatives firmly
throughout the group as a whole.

Hokuhoku Financial Group’s sustainability promotion framework

November 2021•  Newly established Sustainability Promotion Committee•  Newly established Sustainability Promotion Group in Corporate Planning Department•  Launched the cross-organizational Sustainability Promotion Team

April 2023•  Newly established SX Promotion Department and increased its dedicated members

July 2023•  ‌Newly established GX Promotion Group (planning and promotion of climate change
countermeasures by the company, business partners and regions) and Next-Generation Industry
Support Group (establishment of a support framework for the semiconductor and other nextgeneration industries) within SX Promotion Department

Carbon Neutrality by 2030
The company group is working from four
perspectives to promote sustainability. These are “thepromotion of initiatives at the company,” “thestrengthening of support for business partners,” “thepromotion of regional initiatives,” and “thestrengthening of information disclosure.” I think that
we will be able to accelerate each initiative further byinterlocking these perspectives at all times. First ofall, I would like to advance “the promotion of
initiatives at the company.” That is because nobody
will come with us if we do not do this ourselves.
We are advancing at all times under the motto“start with us before we talk to people.” Because ofthat, we are also trying as many varied means as
possible with regard to GX (green transformation)
too, such as purchasing renewable energy based on
the offsite PPA (power purchase agreement) method,purchasing non-fossil certificates, ZEB branches,
and the introduction of EVs and hydrogen-powered
vehicles, and advancing the provision to business
partners of the services considered to be the mosteffective. In addition, we are starting from Scope 1
and 2, but we have also raised the target of being
carbon neutral by fiscal year 2030.
Hokuhoku Financial Group, Inc. Integrated Report 2023

16

We will also resolve the issues of our business partners
As discussed at the start, the responses of ourbusiness partners have changed greatly over the
past year in particular. Companies want to pursue
sustainability for the reasons that “such demand
from customers has increased” or “information
disclosure is required as a listed company,” but there
has been an increase in the number of companies
with the mindset that “we want to make it a weaponof the company as we will be working on it from nowon.”
Listed companies and big regional companies
have many needs right now, even among small andmedium-sized enterprises, the number of companies
showing interest in carbon neutrality andsustainability has increased beyond what wethought.
In particular, what troubles almost all small andmedium-sized enterprises are things like soaring
prices and human resource problems. There is no
doubt that these are also ESG issues. What toprioritize in addressing such issues has become
important.

At the company group, I think it is important that
we support business partners from the stage ofidentifying the order of priority in their issues.
Hokuhoku Three Targets (SDGs fixed target typeproduct) is a financial product that I have beenworking on since the first half of fiscal year 2022. It isa financial product unique to the company group thatsets the formulation of an SDGs declaration, support
for the SDGs and fixed targets, and identifies andshares the priority issues of customers throughdialogue.
In addition, Hokuhoku Sustainable Finance“positive impact finance” (so-called PIF), whichstarted in March 2023, is a loan product that
supports the identification of the order of priority ofcustomers’ issues and the determination of target
values for how far to aim through finance.
By strengthening this support along with solutions
to resolve issues, we will aim to create a virtuous
cycle whereby our customers’ business continues
and develops, and transactions with the company
group are also activated.

ServiceResults (FY 2022) (Hokuriku Bank and Hokkaido Bank combined)

Support for the formulation of SDGs declarations

Cases of service provision 218 cases

SDGs fixed target type product: Hokuhoku Three Targets

Amount of finance 38.8 billion yen

Contributions to the decarbonization of Hokuriku and Hokkaido
Moves towards carbon neutrality have also become
active among local governments.
I think that the founding of the Team SapporoHokkaido consortium made up of industry,
academia, government and finance, and which the
Hokuhoku Financial Group also participates in, is a
big move in particular. This consortium wasestablished with Hokkaido and Sapporo aiming for
GX-related information, human resources andfunding from around the world to accumulate there
and for the area to develop as an Asian and global
financial center by promoting GX using Hokkaido’s
untapped potential for renewable energy, etc. The
consortium will advance various initiatives to callpublic and private GX investment, which it is said will
17

Hokuhoku Financial Group, Inc. Integrated Report 2023

exceed 150 trillion yen nationwide over the next ten
years, and investment from around the world
responding to that, to Hokkaido and Sapporo.
Naturally, I would also like the company group toplay a role at the core of this consortium and leadthe decarbonization of the region.
Hokuriku is also a region with plentiful water
resources and has high potential for renewableenergy in association with that.
I believe that rolling out the good examples that
we carry out in advance in Hokkaido in the Hokuriku
region as well shows the true value of the company
group, which has a wide-area branch network, andis an important mission.
The important point in our business with local

governments is how to advance not merely
decarbonization, but “decarbonization x regional
creation,” and both Hokuriku and Hokkaido havebetter potential than other areas.

I take it squarely that the responsibility of thecompany group is extremely large with regard towhether we can utilize this potential, and I would like
us to create a vigorous region by fulfilling our duties
with all our power.

The aims of support for next-generation industries
Hokkaido, the foundation of the company group, isrich in renewable energy resources including offshore
wind power, and massive investment from aroundthe world can be expected from now on. In addition,
Rapidus, a semiconductor manufacturer, hasdecided to establish a base at Chitose and theopportunity for the expansion of manufacturing has
arisen in Hokkaido, where there has never been anabundance of manufacturing industry. In terms of
tourism too, COVID-19 has dropped off a level andsigns of a recovery in inbound tourists have become

apparent.
In Hokuriku too, the Hokuriku Shinkansen line will
extend to Tsuruga by the end of fiscal year 2023.
When that happens, Hokuriku will attract attention interms of both industry and tourism.
In order to ride such tailwinds firmly, I would likethe company group to further improve its knowledgeof next-generation technology and increase the valueof the company group by providing useful
information that connects to the future to ourbusiness partners.

Towards realization of our long-term vision
The company group, whose medium-term
management plan “Go forward with Our Region”
started last fiscal year, has raised the long-term
vision of “Sustainable growth together with local
communities and customers through problem
solving.”
When I consider how we should realize that
long-term vision, I think, as might be expected, that
promoting sustainability will be essential for us as aregional financial institution.

As I have said to this point, within the sustainability
field, the company group will firstly advance initiatives
focused on the two areas of GX and next-generationindustries in particular, based on global trends andour role as a regional financial institution.
With SX Promotion Department, myself included,
at the center, we will advance the promotion ofsustainability promptly and with certainty at our own
company, business partners and in the region, andaim for the realization of our long-term vision.
Hokuhoku Financial Group, Inc. Integrated Report 2023

18

Hokuhoku Financial Group’s process for value creation
We will create common value through the provision of services corresponding toIssues of sustainabilityof the region■■

Changes in the global
environment caused byclimate change
Destruction and deteriorationof infrastructure caused bynatural disasters■

Harmful impacts on industries
in the region caused bychanges in the ecosystem■

Shortages of the humanresources to lead theregional economy■

Responding to diverse
senses of value■

Acceleration of the digital shift

Customer issues■

Growing complexity of asset formation■

Asset succession to the next generation■

Changes in the industrial structure■

Business succession problems■

Shortages of digital human resources

Management
Prospering together
with the region

Fair andsteadyCapital to utilize
Community issues■

Declining birthrate and aging population■

Population decrease■

Overconcentration in urban areas■

Widening regional disparities

Financial capital
5th biggest asset size among
regional banks

Manufacturing capital
Global branch networkand leading-edge digital
infrastructure

Human capital
Strong and diverse
human resourcesIntellectual capital

Financial issues

Top-class know-how among
regional banks

Society-related capital■

Normalization of low
interest rates domestically■

Entry from different industries

High regional share andwide-area network

Natural capitalRich nature of
Hokkaido and Hokuriku

Sustainability andStable financial base rooted in the region, solid
19

Hokuhoku Financial Group, Inc. Integrated Report 2023

the issues of customers and the community

Value provided to eachstakeholder

Long-term vision

Shareholders

We will achieve sustainable growth
together with communities andcustomers through problem-solving.

philosophy
Steadymanagement

Progressive &innovative services

Medium to long-term improvement ofcorporate value■ Enhancement of shareholder returns■ Highly transparent information
disclosure (enhancement of dialogue)■ Practice of sustainability management■

Medium-term management planCommunity「Go forward with Our Region」

Consulting

Environmental
field

Contribution
Governanceto the local
communityGroup
comprehensive
capabilities

Digitaltransformation

Contributions to the activation ofregional economy and industry■ Support for efforts to achieve theSDGs in the region■ Leading of industry-academiagovernment collaboration■

Customers

Well-being

Provision of highly convenient services
Customer-oriented proposals inaccordance with life-stage■ Contributions to sustainable businessgrowth■ Support for smooth business succession

Local communities and customers
To be an attractive region
Regional economic and industrial development
Comfortable and prosperous living◦ Sustainable society◦◦

The Hokuhoku financial GroupTo be an attractive company group
A presence that is chosen and loved
Success of attractive and diverse human resources◦ Improvement of shareholder and corporate value◦◦

Targets for 2030 toward therealization of a sustainable region■■

Practice of ESG regional finance・Announcement of the Hokuhoku
Financial Group SDGs Declaration

Employees

・Establishment of the Hokuhoku
Financial Group Environmental Policy
・Endorsement of the TCFD
recommendations

Sustainability-related loans*1

1.5 trillion yen
Environment-related loans*1

700 billion yen
CO2 emissions*2

Choice of the optimum work style
A rewarding work environment■ Improvement of employment conditions■ Skill improvement and career formation■■

Carbon neutrality*2*1: ‌Cumulative loan execution amount for ten years from FY
2021 to FY 2030
*2: ‌Scope 1 and 2 at the domestic places of business of allgroup companies

Realization of a sustainably developing community and our sustainable growth

governancegovernance structure and a strong management system
Hokuhoku Financial Group, Inc. Integrated Report 2023

20

Key sustainability management activity themes
Hokuhoku Financial Group works positively on activities corresponding to issues based on ESG (Environment,
Social, Governance) required for the sustainable growth of the company and the SDGs (sustainable
development goals) advocated by the United Nations, and established Key CSR Activity Themes on April 1,
2019 to aim for the sustainable development of the company group, regional economy and regional society.

Key theme identification process
Collection of issues

Arrangement in accordancewith degree of importance

We extracted 150 issues with reference to theJapanese Bankers Association SDGs
promotion policy, the UN SDGs, the GRI
guidelines (standard), SASB sector-specificguidelines, the evaluation items of external
ESG evaluation institutions, and the status ofother banks.

Based on the results of collection, we
extracted 36 items. In addition, we arranged
these an order of priority in accordance with
their degree of importance from theperspectives of “the degree of impact onregional society” and “the degree of impact on
the corporate value of the company group.”

Reporting to company groupmanagement and approval

Final arrangement
We organized 24 items into five themes basedon the results of prioritization, and identified
these as the key themes.

The company group’s Management
Committee and Board of Directors approved
the key themes to be worked on as the
Hokuhoku Financial Group.

Prioritization in accordance with degree of importanceBig

Issues for the company group to address intensively

Degree of impact on regional society

Regional economic revitalization
Creation of employment
Promotion of various collaboration
Promotion ofenvironmental business

Promotion of diversity

Support for growth fields

Promotion of initiatives for the prevention of financial crime

Support for business start-ups

Improvement of customer satisfaction

Promotion of asset formation

Safety of goods and services

Thorough implementation of management of customer information, etc.
Building of a robust compliance posture

Promotion of financial and economic education

Promotion of dialogue with stakeholders

Provision of advanced financial services

Promotion of work-life balance

Implementation of fair transactions
Reduction of environmental burden

Business and asset succession

Promotion of
responsible finance

Human resource
development

Improvement of access to financial services

Advancement of governanceBig

Degree of impact on the corporate value of the company group

Final arrangement
Management philosophy

Prospering together withthe region

Fair & steady management

Progressive & innovative
services21

Key issue
Regional economic revitalization
Promotion of responsible finance
Promotion of environmental businessSupport for growth fields
Support for business start-ups
Creation of employment
Promotion of various collaboration
Reduction of environmental burden
Promotion of financial and economic education
Promotion of asset formation
Business and asset succession
Advancement of governance
Building of a robust compliance posture
Promotion of initiatives for the prevention of financial crime
Implementation of fair transactions
Thorough implementation of management of customer information, etc.
Promotion of dialogue with stakeholders
Provision of advanced financial services
Improvement of access to financial services
Safety of goods and services
Improvement of customer satisfaction
Promotion of diversity
Promotion of work-life balance
Human resource development

Hokuhoku Financial Group, Inc. Integrated Report 2023

Key theme

Realization of sustainable regional society

Improvement of regional financial literacy

Building of healthy and strong management foundations

Improvement of convenience for all customers
Creation of workplaces that leads to productivity
improvements

Hokuhoku Financial Group’s key activity themes
Management
philosophy

Key themes

Realization of sustainable community

Prospering
together withthe region

E

S

G

Contribute to responsible investment and financing as aregional financial institution by promoting constructive
dialogue based on issues including SDGs and ESG,
stable job creation by actively supporting startup
companies and growth companies in the region, and therealization of sustainable local communities by promoting
collaboration with local governments and customers

GX strategy(initiatives for theenvironmental area)
P35
GX strategy(initiatives in theenvironmental field)
P35

Strive to reduce environmental burden, including
promoting the use of renewable energy and reducing
greenhouse gas emissions

Improving financial literacy in the region

S

Improvement ofcomprehensive
consulting
capabilities
P29

Work to improve the financial literacy of customers andchildren through financial and economic education andfinancial consulting, and support asset formation andsmooth business and asset succession for the future

Building a sound and resilient management foundation

Fair andsteadymanagement

Progressive
and innovative
servicesG

Enhance transparency by promoting dialogue withstakeholders, build a stronger management base byenhancing governance, thoroughly managing various
risks, and further strengthening compliance

Improving convenience for all customers

Work to create rewarding and fulfilling workplaces bypromoting the active participation of diverse personnel,
promoting work style reform including a balance between
work and childcare/nursing care, and developing
personnel who will lead the group in the future

Communication
withstakeholders
P65
Strengtheningof group
governance
P67

S

Strive to further improve convenience by providing
advanced financial products and services that all
customers can easily access and use with peace of mind

Ensuring good work environment leading to better productivity

Improvement ofcomprehensive
consulting
capabilities
P29

Promotion of DX
P45

S

Human capitalmanagement
initiatives
P49

Hokuhoku Financial Group, Inc. Integrated Report 2023

22

Message from the officer in charge of finance (concerning
The company group is working on the improvementof profitability based on its growth strategy and theimprovement of capital efficiency based on its
capital strategy towards the improvement of its
market evaluation.
Under its growth strategy, the company isstriving to secure appropriate profit while working
on the supply of capital and consulting connected
directly to the resolution of customer issues, andworking with priority on improving the profitabilityof its main business.
In addition, we will also strengthen investment
and loan in areas of high expertise such as
structured finance, and balance the dispersion of
our investment portfolio and raising the level of ourearning power.

Shigeru Urasaki, Executive Officer
Analysis of the current situation

PBR and ROE at 22 regional banks with a market capitalization of 100 billion yen or more

The document “Action to Implement Management that is
Conscious of Cost of Capital and Stock Price” wasreleased by the Tokyo Stock Exchange and I think that thecompany’s PBR is at a low level at 0.2 times, which is an
issue for the company.
The Board of Directors of the company analyzed thecurrent situation and identified the issues and considered
the direction of its response in light of the characteristics ofthe banking industry.
The company’s cost of capital is higher than the
average for first tier regional banks and its return on equity
is ranked lowly. As a result, the cost of capital exceeds thereturn on equity and this is evaluated as the main cause ofa PBR below one and an unfavorable PBR comparison
with other banks.
In addition, with regard to the market evaluation
pertaining to corporate value, although the company
boasts considerable size with the fifth largest assets
among first tier regional banks, it is ranked sixteenth bymarket capitalization. Other indicators are also all at
medium to low levels, with PBR at 0.26 times, PER at 8.7
times, and ROE at 2.95% (RORA is 0.28%). An
unfavorable comparison in terms of earning power, profit
PBR

PER

0.26 times

8.7 times

2.95%

0.28% 10.4 times

Average for first
0.32 times
tier regional banks

9.0 times

3.97%

0.47%

9.6 times

22nd

36th

39th

18th

The
company

Rank

41st

ROE

RORA

* Trial calculations by the company based on published information

23

Hokuhoku Financial Group, Inc. Integrated Report 2023

Financial leverage

0.65

Vertical axis PBR, horizontal axis ROE (using results forecasts forthe term ending March 2024 and stock prices as of June 15)

Bank B

0.60

Bank EBank A
0.55

Bank D
Bank C Bank H

0.50

Bank U

0.45

Bank SBank I
0.35

Bank K

Bank F

0.40

Bank GBank R

0.30

Bank M
Bank LBank QBank O Bank N

Bank JBank V Bank T

0.25

Hokuhoku FG

0.20
2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0 (%)

growth expectations, cost of capital and capital efficiency
is evaluated as the main cause.
As a result of repeated consideration based on thisanalysis of the current situation, we arrived at theconclusion that the following will lead to the improvementof the company’s corporate value.
[1]	‌Improvement of profitability based on the growthstrategy (continuous improvement of ROE);[2]	‌Improvement of capital efficiency based on the capital
strategy; andinitiatives for the improvement of corporate value)
Direction of PBR improvement
Growth strategy (improvement of profitability)
Issues of the company[1] Low loan-deposit ratio[2] Low investment yield[3] Relatively low corporate solutions
revenue level

Capital strategy (improvement of capital efficiency)

Supply of capital to local and growth areas
Review of portfolio towards the improvement of profitability
Corporate solutions matched to business loans

Specific key strategies
・ Provision of consulting in accordance with the level of priority and level of importance of theresolution of the management issues of diverse customers and issues that differ by region
・ Further strengthening of the SX and DX areas where we see ourselves as regional number one
・ Initiatives towards structured finance, etc.
・ Human capital investment towards securing expert human resources (external secondment, training)
Examples of consulting based on business partners’ management issues
Company founding, business succession ... IPO, start-up, M&A, etc.
Business growth ... business matching, corporate-type DC, public subsidies, etc.
Business consulting ... management consulting, strengthening of sales power, IT consulting, etc.
Financial consulting ... finance, leasing, equity funds, etc.

[3]	‌positive disclosure of the state of initiatives for thegrowth strategy and capital strategy

Profitability issues
Based on analysis of the current situation, I thought that
we would be able to achieve the improvement of
profitability and continuous improvement of ROE byovercoming the issues of the company listed above. We
identified the causes of our low profitability by conducting
a broad-ranging comparison based on financial results,
strategies and policies with banks and groups of a similar
size to the company whose PBR and ROE are better thanthose of the company.
The first is that our ratio of loans against deposits (loandeposit ratio) is low. The company group’s loan-deposit
ratio is close to 10% lower compared to other banks at
70.1%, and I think that the strengthening of investments is
an urgent issue. As a regional financial institution, I thinkthat increasing investment and loans in the various
industries of the region and areas that promise growth isimportant.
The second is that our investment yield is low. the maincause is that the proportion of lending to local
governments, which was excuted from perspective suchas asset control, is at a level in excess of 30%. I would liketo take risks appropriately towards the improvement ofyield as our capital adequacy ratio has improved due tothe accumulation of retained earnings recently.
The third is that the level of corporate solutions revenue
for our loan balance is relatively low compared to otherbanks. We do not compare unfavorably in areas where wehave been strengthening for some time such as M&A andbusiness succession, but there is room for more initiatives
in the finance-related area, and I take this as the reason
why the level of our corporate solutions revenue is

Improvement of capital efficiency
・ Reduction of cross-shareholdings
・ Acquisition of treasury stock
・ Redemption of preferred stock

Establishment of a framework forrealization of the growth strategy
・ SX Promotion Department(Hokuhoku FG)
・ DX Promotion Department(same)
・ Human Reseaurces Strategy Department(same)・ Structured Finance Office(Hokuriku Bank)

subordinate. I would like to strengthen the consulting
functions we have been working on for some time still
further, and expand areas such as structured finance.

Strengthening of our main business as aregional financial group and improvementof earning power
Currently too, the main source of the earning structure of aregional financial institution is interest on loans. However,this is influenced heavily by the external environment andunder the recent situation of low interest rates, interest ratecompetition occurred with other banks and it feels like
excessive competition has been ongoing.
The strengthening of consulting has been raisedamong the key strategies in the medium-term management
plan, and I think that grasping the management issues ofcustomers accurately and proposing solutions to potential
issues that customers have not yet realized will lead to theimprovement of business growth. It seems that there willdefinitely be demand for funds in that so I would like toexpand the supply of funds to fields that promise growth,
centered on prime areas, by carrying out those kinds ofactivities steadily.

Consulting that grasps the management
issues of business partners precisely
The company develops business in the three Hokuriku
prefectures, Hokkaido and three major cities and boasts
strong customer, information and branch foundations.
Using these foundations, we have provided various
consulting services to both corporations and individuals forsome time.
On the other hand, the environment surrounding ourcustomers is changing rapidly and management issues
Hokuhoku Financial Group, Inc. Integrated Report 2023

24

Message from the officer in charge of finance (concerning

Initiatives for new areas
In addition, we will strengthen the management
framework for securities management and marketablelending in areas such as structured finance in a form
that goes side-by-side with the strengthening of earning
power in our main business.
Structured finance is a comparatively new area forthe company and we established a Structured Finance
Office under the umbrella of Treasury and Securities
Department at Hokuriku Bank, a subsidiary bank, inJune 2023 to establish a framework for thestrengthening of initiatives. We will establish a promotion
framework looking also at research on various
marketable lending products and the new establishmentof an independent department to develop this into thethird profit center after sales branch loans and securities
management.
The table above shows the distribution of the loan
portfolio at the company group and profitability (ROA) by
area. Currently, the balance of structured finance, which
is highly profitable, is low, as is ROA. The investment
25

Hokuhoku Financial Group, Inc. Integrated Report 2023

ROA by business area (FY 2022)(billion yen)
35
30

Loans tosmall andmedium-sizedenterprises

25
Residential loans

Gross profit

have also diversified in association with that.
In addition, the level of priority and level ofimportance of issues also varies depending on theregion. For example, in the Hokuriku region, there aremany manufacturers and the level of priority of action for
the environment is high, while in the Hokkaido region,
shortages of workers and successors unique to
Hokkaido due to factors such as wide-area distribution
over its expansive land area are urgent issues.
The level of difficulty of customer issues has
increased, such as the increased sophistication ofenvironmental measures, administrative DX and stableasset formation in a low interest rate environment. In thesense of contributing to the resolution of those too, I
think that there is a lot of room for more consulting
initiatives and we will strengthen these.
In response to such customer issues, in addition toadvancing the conventional consulting areas of thecompany such as M&A and business succession, we
will strengthen the framework for new areas such as SX
and DX. Further, we will work on securing expert humanresources through measures such as external
secondment and the enhancement of training systems.
With regard to secondment destinations too, whereas
these centered formerly on consulting companies
specializing in M&A and business succession, we will
expand to the Ministry of the Environment, environmentrelated companies and DX-related companies. Also, weare steadily advancing measures within our DX strategy,
such as a review of the ideal ways of use of digital tools
and sales activities to diversify points of contact withcustomers.

20
15
10

Unsecured loans
Loans to
local
governments
Loans to large and medium-sized companies

5
0
0.0

Structured finance
0.5

1.0

1.5

2.0

2.5

8.0

(%)

ROA

subjects cover a wide range, including LBO loans,project finance and real estate non-recourse loans, but
we will scrutinize their essential risk and bear in mind thebalance between the risk assets used and equity capital,
and advance consideration to reconcile the distributionof investments by reviewing portfolio and theimprovement of profitability while also balancing these
activities with loans to the people of the region.

Practice of highly resilient risk management
The global monetary easing environment has changed
completely, increases in interest rates in Europe andAmerica have become a reality and a review of Japan’s
ultra-low interest rate policy has also come into view. Asa financial institution, we must make our risk
management more robust against interest rate
fluctuations.
At the company group, we hold meetings
appropriately including management, such as the ALM,
Risk Management Committee and Investment Policy
Meetings, and consider specifically the impacts on
interest income from loans and securities management,
the impacts on profit or loss from valuation, the impacts
on equity capital, etc., assuming various policy changes
such as the modification of the Bank of Japan’s yield
curve control (YCC) or the lifting of the negative interest
rate policy.
We will also assume increases in interest rates ofdeposits in association with the abolition of the YCC
and the lifting of the negative interest rate policy in thenear future, and practice appropriate risk management
while assuming further changes in the economy andmarket.

initiatives for the improvement of corporate value)
Reduction of cross-shareholdings
The reduction of cross-shareholdings can be raised as
an option for capital policy aimed at the improvement of
capital efficiency. We calculate the risk and return ofeach shareholding based on an index taking the cost ofcapital into account. The Board of Directors, etc., thenconducts a comprehensive review each year todetermine whether or not to hold shares in light of theeconomic rationale based on prospects, businessstrategies such as business relationships and businessalliances, and the significance of holding the shares inlight of their relevance to the local economy.
The table below shows the results and forecasts forcross-shareholdings. Overall, our policy is to reducecross-shareholdings and we are planning to do this by
the amount equivalent to 25% of their book value (about
15.6 billion yen) over the three-year period from fiscal
year 2022. In the medium to long-term, we are aiming to
reduce cross-shareholdings to less than 20% ofconsolidated net assets on a market-value basis.
Balance of cross-shareholdings (including deemed held shares)
and consolidated net assets ratio
35.2%[1] Market value
30.9%[2] Book value

Consolidated equity ratio([1] / consolidated net assets(billion yen)

29.4%

224
192

109

180

98

86
Reduction of about
15.6 billion yen (*)
by the end of March 2025

2021/32022/32023/32025/3(target)* The target amount (about 15.6 billion yen) has been calculated by book value, excluding deemed held shares, to eliminate the effect of market value.

Initiatives for shareholder returns
The strengthening of shareholder returns is important for
the improvement of capital efficiency. In addition, we
also need to work on the issues in the capital structureof increases in the numbers of preferred stock andcommon stock associated with past capital
reinforcement.
The following table shows the state of implementationof capital policy. We will work flexibly with regard tooptions such as dividends, the redemption of preferredstock, and the repurchase of common stock, while giving
full consideration to trends in the earnings environment
and equity capital to enhance shareholder returns andsolve the issues of capital structure.

We announced an increase in common stock dividends and share repurchases.
(Common stock dividend from 35 yen to 37 yen, acquisition of treasury stock up to 4 billion yen)(billion yen)

Total return ratio
87.4%
69.6%

15

53.1%

52.1%

Acquisition of treasury stock

10

Redemption of preferred stock
Preferred stock dividend
50Common stock dividend

FY2020

FY2021

FY2022

FY2023 * Estimates basedon current earnings(* plan)

37 yen37 yenDividends per common stock
35 yen35 yenand dividend
forecasts* Total return ratio = (dividends + redemption + purchase of treasury stock) /net income attributable to owners of the parent

Strengthening dialogue with shareholders
and investors
Part of the management philosophy raised by thecompany is “prospering together with the region” andactivities that contribute to “prospering together with theregion” will not grow into businesses that increase
profitability right away, as represented by the SX area andother areas that we are strengthening currently.
The improvement of corporate value is an important
aim as a listed company, but we will be unable to realize“prospering together with the region” by implementing
management that looks only at immediate profitability, tooconscious of our PBR, and I do not think that would leadto the sustainable growth of the company group as aresult.
Initiatives for the improvement of corporate value are
not realized overnight. In particular, I think that strategic
and systematic framework building is essential on new
initiatives, such as securing expert human resources andaccumulating know-how through external collaboration.
I think that the important thing is to share withshareholders and investors what the company group isaiming for and to explain the state of progress throughappropriate disclosure and dialogue.
With regard to our PBR, we will aim first of all for 0.5 to
0.6 times, the upper level among first-tier regional banks,
during the next medium-term management plan period(fiscal year 2025 to fiscal year 2027), and work after thaton the growth strategy and capital strategy explained thistime to push it up to the 1.0 times level, and engage inpositive disclosure and dialogue.

Hokuhoku Financial Group, Inc. Integrated Report 2023

26

Medium-term management plan “Go forward with Our Region” and state of progress of KPIs
State of progress of the medium-term management plan
Medium-term management plan (April 2022 to March 2025)

Go forward with Our Region
A period to work on the improvement of productivity based on the improvement of ourconsulting abilities and the promotion of DX, and to take on the challenge of new business areas
such as the environmental field towards the realization of our long-term vision.

Positioning

Crucial strategies

Improvement of comprehensive
consulting abilities

・Sophistication and expansion of solution menu・‌Improvement of transaction profitability bysegment strategy
・‌Strengthening of the handling of COVID-19
・‌Strengthening of proposal capabilities

Strengthening of group
comprehensive capabilities
・‌Expansion of resource sharing between
the two banks
・‌Providing comprehensive financial
services by strengthening collaboration
with related and close companies

Crucialindices

Environmental
field

Consulting

Strengthening of group governance・‌Enhancement of equity capital andshareholder returns‌Sophistication and diversification of・
operations・‌Advanced risk management system

Initiatives in the environmental field

Six crucial strategies

GovernanceContribution to
the local
community・‌Response to TCFD recommendations
・‌Reduce our company's CO2 emissions・‌Strengthening of environmental business・‌Strengthening of cooperation with local
governments and various entities

Promotion of digital transformation
・‌Strengthening of digital banking functions・‌Business reform utilizing digitalDX

technologies

Well-being work styleGroupcomprehensive
capabilities

Well-being・‌Improvement of working environment andsystems・‌Realization of diverse work styles‌Strengthening of support for the・
improvement of skills

Consolidated / two banks combined

FY 2022 results

Compared withprevious term

FY 2024 target

1

Consolidated net income

21.4 billion yen+900 million yen

Over 25.0 billion yen

2

Consolidated capital adequacy ratio

9.49%-0.05%

Higher 9% range

3

OHR

62.39%-0.76%

Lower 60% range

4

Non-interest revenue ratio(non-interest revenue)
Environment-related investments
and loans (cumulative)

16.14% (19.3 billion yen)

+1.00% (+400 million yen)

16% range (over 20.0 billion yen)

147.4 billion yen+110.3 billion yen

210.0 billion yen

5* The figures for OHR, non-interest revenue ratio (non-interest revenue) and environment-related investments and loans are the combined total for the two banks.

27

Hokuhoku Financial Group, Inc. Integrated Report 2023

Improvement of comprehensive consulting abilities(billion yen)

FY2024targetFY2022Compared withprevious term

Balance of assets under custody*1

535.9

+30

650.0

Corporate solutions earnings

5.0

+4

5.6

Initiatives in the environmental field(t-CO2)CO2 emissions*(People)(Cases)Number of cases of support for
M&A and business succession
Number of trust and single
premium insurance contracts*2
Number of funded productcontract holders*3

FY2024targetFY2022Compared withprevious term

355

±0

450

11,481+7,977

10,300(billion yen)

127,586+8,291

161,800

Amount of environmentrelated investment and loans*1 ‌Total of investment trust balance of the two banks and TT Securities assets under custody*2 ‌Number of contracts for trust-related products and single premium insurance*3 Number‌of holders of contracts for funded investment trusts and level premium insurance

Number of people who have taken financial,economic or SDGs-related educational courses(People)Number of users of SDGs andenvironment-related services (cumulative)

FY 2022

aCompared
with FY 2013

16,658△45.2%FY2022Compared withprevious term

18,810+11,488

FY2022Compared withprevious term

147.4

+110.3

FY2022Compared withprevious term

1,762

+1,514

FY 2030
target△100%

FY2024target20,000

FY2024target210.0

FY2024target800* Scope 1, 2 at domestic places of business of all group companies

Strengthening of group comprehensive capabilities
2025/3target(Holders)

2023/3+33.5

3,441.2

Number of holders of IB andapp contracts

710,386 +125,053

950,000△0.5

3.6(Accounts)

2023/3Compared withprevious term

2025/3targetNumber of web accounts

287,978+66,779

FY2022Compared withprevious term

1,541

+1,093(billion yen)2023/3Compared withprevious term

Hokkaido area loan balance

3,306.3

Profits of related companies*1

2.2(Cases)Number of cases of realizationof Hokuhoku cooperation*2

Promotion of DX

FY2022Compared withprevious term

1,901

+1,346FY2024targetCompared withprevious term

2025/3target470,000900*1 ‌Total of current net profit of related companies (excluding credit costs) and TT
Securities referral fees
*2 ‌Initiatives that contributed to the resolution of customer issues based on thecooperation of the two banks (co-financing, business matching, etc.)

Initiatives in human capital management (realization of work styles with well-being)(%)
Female manager ratio

FY2022
18.75

Compared withprevious term

FY2024target+1.18％ 20％以上(People)Number of qualified employees*

FY2024target3,790* ‌Total of employees with 1st grade FP or CFP qualifications and employees with IT
passports

Hokuhoku Financial Group, Inc. Integrated Report 2023

28

Improvement of comprehensive consulting ability

We will strengthen our issue resolution abilities by making the consulting business we have worked on for some time more sophisticatedand expanding our areas into new business. In addition, we will improve our consulting abilities in a wide range of fields by developing
the advanced human resources who will support the above and handling the diversification of points of contact with customers.

Sophistication and expansion of solution menu
Upgrading
DX and IT introduction support

Regional trading company

Temporary staffing business

M&A and business succession support

Management consulting

Overseas expansion and trade support< Affiliated company >Securities
Lease
Card
CapitalGuarantee

Corporate portal
Finance function

Strengthening of
problem-solving capabilities
Non-financial sector
Consideration of new services

Financial sector

Advertising business
Data analysis
Services for the elderly

Sustainable financeReal estate services

Equity business

Environment-related consulting

Existing solution area

Business matching

Expansion

Establishment of a framework
Development of professional humanresources by external dispatch

Use of tools for non-face-to-face meetings
Provision of communication tools equippedwith chat and various other functions

People dispatched externally in FY 2022: 16 people

Establishment of training system
Participants in related training in FY 2022:
1,150 people

Support for the acquisition of qualifications
People who have acquired related qualifications:
315 people

Development ofadvanced humanresources

Diversificationof points ofcontact

Sales branches
Ability to
Branch managers
participate inand personnel
web meetings!
External
companies
Expert companies
and practitioners
System vendors
Business matchingpartners, etc.

Provision of efficient and high dimension consulting services
29

Hokuhoku Financial Group, Inc. Integrated Report 2023

Customers• Chat • Web interviews President, personnel• Document exchange

Headquarters
Expertdepartments

Direct communication
with division personnel
is also possible!

Strengthening of corporate consulting(Evolution of existing solution areas)
The number of cases of support in various consulting and corporate consulting fees are increased strongly as a result of the thorough implementationof proposal activities matched closely to customers. We will work on the greater sophistication of solutions to respond to diversifying needs.
Number of cases of M&A, business succession and consulting deals

Corporate consulting fees (billion yen)

548

366

319

3.4

■Consulting

244

159

5.0

4.6

453

■ Businesssuccession
■M&A

157

164

159

43

50

72

FY2020

FY2021

FY2022

FY2020Topics: Expansion of Hokuhoku sustainable financeWe started handling positive impact finance (Hokuhoku PIF) in
March 2023 to respond to diversifying needs for sustainable

Evaluation
document

Target
SPTs

activities have on the economy, society and environment
supports initiatives aimed at the expansion of identified positive

FY2022

Hokuhoku sustainable finance product line-up

finance. This product analyses the impacts that corporate
comprehensively, and provides finance that continuously

FY2021

Hokuhoku sustainable finance
Sustainability Linked Loan
(Hokuhoku SLL)

DifficultStarted September 16, 2021

Yes

Positive impact
finance(Hokuhoku PIF)

KPI

impacts and the mitigation of identified negative impacts.
We will work towards the realization of a sustainable

Green Loan
(Hokuhoku GL)
Started March 24, 2023

society together with our region’s customers through financial
support.
No

Fixed
Easy
targets

Hokuhoku Three Targets(Hokuhoku fixed targets)

Started April 1, 2022

Working capitalUse of funds

Sustainability-related investment and loans (cumulative) Unit: billion yen■Hokuhoku FG■The Hokuriku Bank

Equipment funding

Number of cases of use of SDGs and environment-related services Unit: cases■Hokuhoku FG

289.3■The Hokuriku Bank■The Hokkaido Bank

1,762

■The Hokkaido Bank

153.8

135.5

864

898

102.6
46.3

2022/356.3

2482023/31402022/31082023/3
Hokuhoku Financial Group, Inc. Integrated Report 2023

30

Improvement of comprehensive consulting abilities

Policy for initiatives related to management support for corporate customers
Hokuhoku Financial Group has been responding to the needs of customers of the region and growing and developing alongside customers
under the spirit of “prospering together with the region” as its management philosophy. We will strive to accumulate knowledge and know-how
and provide appropriate advice and solution proposals to work together on customers’ management issues. In addition, we will use the group’s
network and strive to provide high quality services and smooth financial support as the torchbearer for the region’s finance. We will aim to be afinancial group that is familiar to and trusted by the region by contributing to regional invigoration through support for customers’ management.

<< Framework for initiatives >>Customer
Provision of optimal solutions in accordance with the company’ s management issues and life-stage
Growth period

Founding period / new business

Mature period

Information provision / support for sales channel expansion /support for overseas expansion

Subsidies / financial support

Turning point
Business succession / M&A /formulation and follow-up of rebuilding plans

Provision of diverse means of fund procurement

The Hokuriku Bank
Sales branches
SupportThe Hokkaido Bank

Cooperation

Sales branches

Request for
supportSupport

Request for
supportHeadquarters

Headquarters

Consulting Sales Department

Consulting Sales Department

Cooperation

Cooperation

International Department

International Department

Sales Planning Department
Loan Department, etc.

Regional Revitalization Department

Sales Planning Department

Group related companies

Loans Department

Cooperation

Cooperation

External organizations
Cooperating regional banks, cooperating foreign banks, cooperating foreign government and public organizations, lawyers, certified public accountants, theRegional Economy Vitalization Corporation, the Council to Support Revitalization of Small and Medium Enterprises, business revitalization funds, etc.

Support for start-ups and new business development
STEP1

STEP2

STEP3

STEP4

STEP5

Start-up motive Clarification of purpose

Formulation of start-up plan

Preparation of equity capitalFund procurement

Start of businessSupport for start-ups
The company group invests in the Hokuhoku Innovation Co-Creation No.1 Investment Limited Partnership (The Hokuriku Bank) andthe Hokkaido Growth No.1 Investment Limited Partnership (The Hokkaido Bank) and supports start-ups positively.
We think that attracting the cutting-edge technology and services of start-up companies nationwide to the company’s sales
regions will lead to support for the growth and economic invigoration of our regions and customers.

[1] Business synergy[2] Business partner growth [3] Support for local start-ups

Local area
Local start-ups
Investment

Hokuhoku FG
Investment

Local companies, universities, local governments, etc.

Local start-ups

Greater business efficiency
Expansion of business areas

New services, etc.
Tenders, joint development

Support for nationwide
advancement

Start-ups

Start-ups

Business partner companies

Nationwide area
Start-ups
31

Hokuhoku Financial Group, Inc. Integrated Report 2023

Support at the growth stage<< Support for business matching using our network >>We provide support for business matching using our wide-area network to contribute to the expansion of our customers’ sales
channels and the diversification of procurement. We have also started on the strengthening of our framework for doing this, including
communizing the business matching systems of our two banks, and our proposals to customers are growing wider.
Company business strategy and management issues

Number of cases of businessmatching

Business expansion

Strengthening of existing business

Rationalization●Strategic alliances ●FC participation●Sales channel expansion ●Supplier expansion and review●Outsourcing ●Securing and development of human resources

5,467

3,803

Business partners
Sales needs

3,255
Other

●We want to expand sales ●We want to provide services●We want to outsource manufacturing ●We want to propose solutions●Outsourcing needs

Administration, manufacturing, sales, welfare, advertising●Cost reduction needs

Expenses, labor costs

Procurement needs●Other management issues●We want to procure xx at a low price

Productivity improvements, securing of professional human resources, system rebuilding●We want to procure unique products●We want to be introduced to suppliers with technological capabilities●We want to be introduced to companies that can manufacture xx

Sales
branchSales
branchSales
branchThis is a matching management and searchsystem based on use of the cloud. Besides
connecting customers’ business matchingneeds and business partner information
directly, it is possible to browse and display
product information (documents, video) on atablet. The Hokuriku Bank and The Hokkaido
Bank started operating their systems
cooperatively on the BMS.

Sales
branchCooperation

The Hokuriku Bank The Hokkaido BankFY2022

Production, technology, product development, sales, logistics, new business●Real estate needs
Factory car park, acquisition of alternative sites

Sales
branchSales
branchFY2020 FY2021●Partnership needs

Business matchingsystem<< Support for overseas business >>We provide information aimed at customers’ overseas expansion using our bases overseas. We have built a framework that allows us
to respond to customer needs speedily using the web even while business negotiations are restricted under the impact of COVID-19
infections.

Number of interviews with business partners(FY 2022)

Asia

The Hokkaido Bank
Vladivostok representative office

2,075

The Hokkaido Bank
Shenyang representative office
The Hokuriku Bank
Shanghai representative office

The Hokuriku Bank
Dairen representative office

The Hokuriku Bank
Ho Chi Minh representative office

Number of overseas business matching deals(FY 2022)

53
Number of interviews related to overseas business support atoverseas representative offices (including web interviews)

The Hokuriku Bank
Bangkok representative office

North America

The Hokuriku Bank
Singapore representative office

The Hokuriku BankNew York representative officeHokuhoku Financial Group, Inc. Integrated Report 2023

32

Improvement of comprehensive consulting ability

Support for management improvement, business transformation, business revitalization, etc.
<< Support for management improvement >>The Hokuriku Bank and The Hokkaido Bank implement

Results in management improvement
support initiatives (FY 2022)

detailed support activities based on business evaluations using
SWOT analysis, monitoring based on the PDCA cycle, andjoint or bank management consulting to clarify management
improvement issues and improvement plans.

The Hokuriku The Hokkaido
Bank
Bank

Business partners requiring key
management improvements

419

1,236

Of whom, business partners who have
prepared revitalization plans

363

500

Of whom, business partners where business
improvements could be confirmed

33

215

<< Support for business succession and M&A >>Headquarters departments with expert knowledge of matters like business succession and M&A cooperate with sales branches tomake proposals that correspond to customer needs while using external expert organizations and implement support activities forsmooth business succession and business expansion.
Number of cases of M&A and businesssuccession deals

The company group’s M&A support framework

We are worried
about our growthstrategy
We want to selectand concentrate
our business

Customer

We want to expand
our business in ashort period of time

Strengths of thecompany group

Corporate
analysis

Initialconsultation

Selection ofpartner candidates

Hearing
proposalSupport fornegotiations

Business partner Cooperation
Provisionof information
Cooperation

Headquarters

External expert organizations
Partners

Consultation

We have no
successor

207

209

FY2020

FY2021229[1] Accumulated know-how based on history in M&A business over 20 years[2] Wide-area matching is possible using our wide-area branch network[3] Consulting, proposals and follow-up closely matched to business managers is
possible as a regional financial institution

FY2022

Topics << Example of share transfer based on the use of a business succession fund >>We supported the smooth transfer of theshares owned by the founding owner’sfamily to the current management teamand employees by having the Hokuhoku

Before investment

Time of investment

After share assignment

Founding
owner family

The Hokuhoku
Hokuriku
Bank Capital

Current management
team and employees

Investment

Business Succession Fund act as theintermediary.

Consulting
services

We provide support in both thecapital and management aspects, suchas support for the transition from former
owner-management to organizedmanagement, and being involved in thebuilding of a sustainable management
framework.

33

Hokuhoku Financial Group, Inc. Integrated Report 2023

SharesInvestment destinationcompany

Hokuhoku
Business
Succession Fund
SharesInvestment destinationcompany

Investment
Dispatch of officers

Newly establishedcompany
SharesInvestment destinationcompanyStrengthening of consulting for individuals<< Delivery of optimal proposals in accordance with customer needs and life stage >>In anticipation of an age of 100-year life, we provide optimal financial services and products in accordance with customers’ life stages
and life plans. Moreover, we also continue post-contract follow-up appropriately.

Providing one-stop solution services in

Number of cases of trust / one-time
payment insurance

asset formation and succession needs

11,481

Proposals
according tolife stage

Full productlineupThoroughimplementation of acustomer-oriented
attitudeand customer needs

Enhancementof systems

FY2021

Improvementof services
provided

FY2022

Number of funded product contracts(number of policyholders)Establishment of a Fiduciary

Reviewing product lineup to
match market conditions

6,301

Duty Promotion Committee

119,295

127,586

Improvement of the functionality of apps (investment trust
procedures, recommendation functions, etc.)
Holding of seminars
Renewal of investment trust website

2022/32023/3Topics << Initiatives concerning loans >>The Hokuriku Bank has renewed its unsecured loan products and introduced an “SDGs
discount.” With some of the revised products, the bank is lowering its interest rate for loans for
EVs and other eco-friendly cars, and loans for the introduction of associated charging
equipment and residential solar power systems.
We will continue to strive to provide products and services that can respond to wideranging customer needs and will work on activities aimed at the realization of a sustainable
society.

Hokuhoku Financial Group, Inc. Integrated Report 2023

34

GX strategy (initiatives in the environmental field)

Overall image of the GX strategy
Hokuhoku Financial Group aims to be an environmentally advanced financial group and will realize decarbonization by working as a groupwhile linking each of our actions in the four areas of promoting the decarbonization of the company, strengthening decarbonization
support for business partners, promoting the decarbonization of the region, and enhancing our response to the TCFD recommendations.

Enhancing our
response to
the TCFD
recommendations

Promoting thedecarbonizationof the company

CarbonNeutralPromoting thedecarbonizationof the region

35

Hokuhoku Financial Group, Inc. Integrated Report 2023

Strengthening
decarbonization
support forbusiness
partners

1 Promoting the decarbonization of the company
The significance and aims of the company’s initiatives
・‌With the company taking the lead in working on decarbonization, it will spread decarbonization among business
partners and to the region, and lead decarbonization.
・‌It will connect to the strengthening of the brand power of the company.

(1) Strengthening of the promotion framework
New establishment of SX Promotion Department
We newly established SX Promotion
Department in April 2023 and strengthened
the sustainability promotion framework of
Hokuhoku Financial Group for the prompt
and positive support as a regional financial
institution of initiatives aimed at carbon
neutrality in the region and customer initiatives
for the achievement of the SDGs. In addition,
in July 2023, we newly established the GX
Promotion Group and Next-Generation
Industry Support Group within SX Promotion
Department and are expanding the role of SX
Promotion Department within the company
group.

Board of Directors
Management Committee
Sustainability Promotion Committee
The Hokuriku Bank Management
Planning Department
Sustainability Promotion GroupSX Promotion Department
Cooperation

Cooperation

GX Promotion Next-Generation Industry
Group
Support GroupThe Hokkaido Bank Management
Planning Department
Cooperation Sustainability Promotion Department
Cooperation

Cooperation

Each group company(2) Development of SX human resources
The company group positions the decarbonization accounting adviser qualification started by the Ministry of the Environment as thebase qualification for human resources, and has established an internal hierarchical training system to strengthen the development of
SX human resources.
Programs

Description

Trial internshipprogramOffering opportunities toexperience HQ operations for aminimum of one week

Sustainability
trainees

Classroom lectures andon-the-job training

Challenge job
system

Employees can request to work
in SX Promotion Department

Challenge job system
Sustainability trainees

SX
core talent

Trial internship program

Use of the decarbonization adviser qualification program(3) Initiatives for the reduction of the company’s CO2 emissions
New construction of the company group’s first ZEB
The Hokuriku Bank newly established the company group’s first ZEB branch in Nonoichi City, Ishikawa Prefecture in April 2023.
In addition to giving the external walls of the building very high heat insulation and introducing highly efficient energy-saving equipment, thebank realized the highest-level ZEB by creating energy with solar power generation. In addition, the bank has introduced electric vehicles topromote the spread of clean energy.

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GX strategy (initiatives in the environmental field)

2 Decarbonization support for business partners
The significance and aims of the company’s initiatives
・‌To create a pillar of business for the company group・‌To make the maintenance and improvement of business partners’ results an opportunity・‌To establish a “market-in” sales style(1) Strengthening of financial support
The company group is advancing the enhancement of various sustainable finance products to promote ESG finance in line withcustomer needs.
Enhancement of the finance products lineupWith report
Conformance withinternational standards
Without report

The Hokuriku Bank and The Hokkaido Bank started handling Hokuhoku sustainable“positive impact finance” as a finance product common to both banks in March 2023.
This product conforms with the Principles for Positive Impact Finance developed by
the United Nations Environment Programme Finance Initiative (UNEP FI). This productanalyzes the impacts that customers’ corporate activities have on the environment, society
and economy, and promotes finance to provide positive support for initiatives aimed at the
expansion of positive impacts and the mitigation of negative impacts.

Use of funds

Sustainability Linked Loan
(Hokuhoku SLL-type)

Green loan
(Hokuhoku GL-type)

Positive Impact
Finance(Hokuhoku PIF-type)

Hokuhoku Three Targets(Hokuhoku standard goal-type)

Unrestricted

Restricted(2) Strengthening of consulting support
The company group is strengthening collaboration with various solution providers and companies that have been invested in todevelop solutions that meet the needs of our business partners.

Business partners’ needs

Understand・Dispatching experts
・Card game・Holding seminars
・Energy-saving evaluation

Measure・LCA / CFP calculation
・‌GHG emission
・‌ESG performance
calculation
visualization
・Carbon accounting PF

Reduce・Self-consumption
・Off-site PPA
・On-site PPA

Disclose・Environmental management ・TCFD disclosure
・CDP questionnaire answers ・SBT certification

・Energy-saving equipment
・Carbon credits
・Non-fossil certificates

Support for ventures in anticipation of business cooperation
The company group’s The Hokuriku Bank and Hokuhoku Capital undertook a third-party allocation of new shares in WOTA Corporation using
the Hokuhoku Innovation Co-Creation No.1 Investment Limited Partnership, which they established to invest in start-ups.
Since its establishment in 2014, WOTA has developed small-scale decentralized water circulation systems and the autonomous water
treatment control technology that realizes such systems, recycling and making maximum use of domestic wastewater for the resolution ofvarious problems generated by the uneven distribution, depletion and pollution of global water resources.
The shortfall in freshwater resources is expected to reach 40% of the required amount by 2030, and while the financial issues of watersupply and sewerage will rise to the surface in developed countries, problems with water have become a serious issue in human society as awhole. WOTA’s initiatives are expected to contribute greatly to the resolution of these water problems so the company made this investment.
The company group is promoting business collaboration with WOTA aimed at the social implementation of small-scale decentralized water
circulation systems.

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Hokuhoku Financial Group, Inc. Integrated Report 2023

3 Promoting the decarbonization of the region
The significance and aims of the company’s initiatives
・Grasping decarbonization as an opportunity to invigorate the region
・Collaboration with various partners, including in the same and other industries(1) Strengthening of cooperation with government agencies and local governments
Adoption under the “Program for model regional decarbonized management support system construction”
Under a joint application with Awara City, Kaga City, Awara City Tourism Association, Katayamazu Onsen Kanko Kyokai, Yamashiro Onsen
Kanko Kyokai, Yamanaka Spa Association, The Fukui Bank and The Hokkoku Bank, the company group’s The Hokuriku Bank was adopted
under the “Program for model regional decarbonized management support system construction,” a support program of the Ministry of theEnvironment aimed at building decarbonized management support systems for small to medium-sized enterprises in the regions.
On this model program, three regional financial institutions of Arawa City, Fukui Prefecture, and Kaga City, Ishikawa Prefecture will
collaborate to support initiatives for the decarbonization management of tourism business operators centered on the four spa areas of the twocities (Awara spa, Katayamazu spa, Yamashiro spa and Yamanaka spa). Through these activities, we will increase the value of tourism
resources, leading to region-building with more tourists visiting.

(2) Strengthening of collaboration with other companies
Conclusion of a “Partnership agreement aimed at the promotion of carbon neutrality” based on electricity x financeThe company group’s Hokuriku Bank and Hokuriku Electric Power concluded a “Partnership agreement aimed at the promotion of carbon
neutrality” in October 2022. By using the financial solutions of The Hokuriku Bank and the energy solutions of Hokuriku Electric Power effectively
and engaging in close mutual collaboration and cooperation, the parties are advancing initiatives using collaboration to contribute to therealization of carbon neutrality, and the sustainable development of local society and the environment in the region.

4 Enhancing responses to the TCFD recommendations
The significance and aims of the company’s initiatives
・Transparent disclosure to stakeholders
・Greater sophistication of risk management(1) Positive information disclosure
Received a “B” rating in the CDP Climate Change Survey
We received a “B” rating, the highest among financial institutions headquartered in the three Hokuriku prefectures and Hokkaido, in the Climate
Change Survey implemented by CDP, an international non-profit organization, mainly for our risk management processes and efforts to reduce
CO2 emissions.
We will promote various initiatives aiming for a rating of “B” or higher from this fiscal year on.

(2) Greater sophistication of risk management
Use of the carbon accounting system supplied by Persefoni
The company group is using the carbon accounting system supplied by Persefoni that complies strictly with the GHG protocol and PCAF
international emissions standards to start centralized calculation of the company’s emissions and financed emissions (greenhouse gas emissions
at company’s we have invested in) from this fiscal year. By calculating GHG emissions at many investment destinations collectively, we will aim
to streamline calculation work significantly and work on the analysis and management of financed emissions to strengthen initiatives for
decarbonization.

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38

GX strategy (disclosure based on the TCFD)

Fiscal year 2022 highlights
Hokuhoku Financial Group positions responding to climate change as an important issue in management based on the understandingthat climate change is also an important issue at regional financial institutions, and is strengthening initiatives.
Progress in fiscal year 2022 is as follows.

Core element

Main initiatives in fiscal year 2022

GovernanceNew establishment of SX
Promotion Department

We newly established SX Promotion Department as the department specializing insustainability.
We appointed the officer in charge at the same time and strengthened our posture as
an organization. (from April 1, 2023)

Expansion of the subjectsof scenario analysis

In addition to the electricity sector and real estate sector, we added the metals andmining sector to the subjects of transition risk.
With regard to physical risk, we expanded the subjects from only companies
providing real estate collateral to all business partners.

Expansion of initiatives
aimed at decarbonization

We expanded financial products and consulting product aimed at supporting
business partners.
We promoted various measures aimed at our own company’s decarbonization.

Riskmanagement

Understanding Scope 3
Category 15

We calculated Scope 3 Category 15 emissions, which are important at financial
institutions, in grasping risk.

Indicator /targetRaising of targets

We expanded the range of the domestic CO2 emissions (scope 1, 2) reduction target
to the group overall, and brought forward the deadline for the achievement of carbon
neutrality from fiscal year 2050 to fiscal year 2030.

Strategy

Governance: Organizational governance related to the risks and opportunities of climate changea. We explain the supervising of the Board of Directors of climate-related risks and opportunities.
b. We explain the roles of management in the evaluation and management of climate-related risks and opportunities.

1 Stance on governance related to climate change
We have taken the stance of having the various climate change initiatives reported to the Board of Directors following discussions on
the execution side in the form of the Sustainability Promotion Committee and the Management Committee, and supervised by the
Board of Directors.
Supervision

Audit and Supervisory Committee

Board of Directors•Supervises reports on important matters related to the sustainability of thecompany group (state of initiatives for the environment, etc.)
Supervision

ReportPresident

Management Committee (chair: President)•Control of initiatives•Discussion on the policies, plans,
indicators and target setting related tosustainability and regular reports to theBoard of Directors on the state of initiatives

Execution

Officer in charge of SX Promotion Department•Planning, promotion and risk
management of the strategies
and plans of the group overall
related to sustainability
Promotion /risk management•Audits the state of initiatives
executed

ReportGeneral Manager of Audit Department
Sustainability Promotion Committee(chair: President)•Discussion of matters related tosustainability•Evaluates the appropriateness and effectivenessof group companies’ stance on internalmanagement and recommends improvements
and corrections for the resolution of issues

Monitoring
SX Promotion Department•Instructions on and handling of the promotion of initiatives such as the formulation of strategies andplans at group companies, and plans related to risk management
All group companies
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Hokuhoku Financial Group, Inc. Integrated Report 2023

Disclosure

Monitoring

Strategy: W‌ e disclose information about the actual and potential impacts that climate-related risks and opportunities
have on our organization’s business, strategy and financial planning if such information is important.
a. We explain climate-related risks and opportunities that the organization has identified in the short, medium and long-term.
b. We explain the impacts that climate-related risks and opportunities have on the organization’s business, strategy andfinancial planning.
c. We explain the resilience of strategy of the organization in light of consideration based on various climate-related
scenarios, including the no more than two degrees Celsius scenario.

1.Basic policy
We formulated an “Environmental policy” to put environmental considerations into practice in company activities in February 2021.

Hokuhoku Financial Group environment policy
The Hokuhoku Financial Group aims to realize one of our management philosophies, "Prospering together with the region," throughenvironmentally friendly corporate activities.
1. We will comply with laws and regulations related to environmental conservation.
2. We will actively support customers who are working on environmental issues through the provision of financial products and services.
3.	‌We will promote resource conservation, energy conservation, and recycling activities to reduce environmental impact in all corporate
activities.
4. We will regularly verify the impact of our corporate activities on the environment and strive to actively disclose information.
5. We will promote environmental conservation activities ,actively cooperating with local communities.
6. We will make this policy known to our employees and disclose it externallyIn addition, we think that collaborating with international organizations,the government, local governments, companies, industry groups, etc.,
is important and promote participation in initiatives.

2.Understanding or risks and opportunities
We have assumed the risks and opportunities associated with climate change as follows.

Main risks and opportunities

Transition
risks

Physicalrisks

Impact on the company group

Time axis

Strengthening of laws on
the introduction of carbon
taxes, etc.

• ‌Cost increases due to carbon taxes being imposed on the company
group’s emissions• ‌Credit cost increases for the company group in association with its
financial situation deteriorating due to customers responding to laws on
carbon taxes, etc.

Medium tolong-term

Technological innovation that
contributes to decarbonization• ‌Credit cost increases for the company group due to customers’ financial
situations deteriorating having been forced to invest in new technologies, etc.

Medium tolong-term

Changes in demand for
products in association
with market changes• ‌Credit cost increases for the company group due to customers’ financial
situations deteriorating because of raw material cost increases

Short tolong-term

Stronger environmental
orientation of stakeholders• ‌Decline in sales of the company group due to being unable to provide
the decarbonization solutions desired by customers• ‌Fall in share price due to the company group’s initiatives for the handlingof climate change falling below investors’ expectations

Short tolong-term

Increase in large-scaledisasters such as heavy
rain and typhoons• ‌Credit cost increases for the company group in association withcustomers’ financial situations deteriorating due to damage caused bylarge-scale disasters and the implementation of disaster countermeasures

Long-term

Stronger environmental
orientation of stakeholders• ‌Increases in the sales of the company group due to the provision ofsolutions matched to customers’ needs such as sustainable finance anddecarbonization consulting

Short tolong-term

Improvement of customer
resilience• ‌Credit cost decreases for the company group in association withcustomers’ financial situations improving with the increased resilience ofcustomers’ business due to decarbonization initiatives

Short tolong-term

Opportunities(Short-term: 0 to 3 years, medium-term: 3 to 10 years, long-term: 10 to 30 years)

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GX strategy (disclosure based on the TCFD)

3.Scenario analysis
Hokuhoku Financial Group analyzes scenarios to grasp the impacts that climate change will have on the company group’s portfolio in
the future.

Analysis of transition risks
Scenario

NGFS net zero 2050, below 2 degrees Celsius, current policies scenario (REMIND model)

Analysis method

We set parameters for evaluation of the impact on business in each sector due to transition
risks. We forecast the future financial situation of business partners based on the parametersand calculate the additional credit costs of the company group.

Sectors subject to analysis

Electric power sector, real estate sector, metals and mining sector

Result of analysis

Additional cumulative credit costs of 15.4 billion yen (maximum) by 2050

Analysis of physical risks
Scenario

IPCC RCP 8.5, RCP 2.6

Analysis method

We forecast the future financial situation of business partners due to flood damage and theamount of damage to collateral property due to flooding. We calculate the additional credit costsof the company group due to this.

Region subject to analysis

Nationwide

Parties subject to analysis

All business partners

Result of analysis

Additional cumulative credit costs of 72.8 billion yen (maximum) by 2050

4.Countermeasures
Hokuhoku Financial Group regards the handling of technological development and the building of business models aimed at the
decarbonization of business partners as an opportunity, and supports the transition to a decarbonized society and the handling ofclimate change positively, starting from engagement with business partners. In addition, the company is also leading thedecarbonization of the region by decarbonizing itself positively.

[1] Support for the decarbonization of business partners through loan business
Product lineup

41

Details

Hokuhoku Sustainable Finance“SLL-type”

This is a loan instrument that sets targets consistent with the customer’s sustainable
management strategy and whose interest rate fluctuates in accordance with the state ofachievement of those targets, conditional on being evaluated by an external organization withregard to conformance with the various standards announced by the International CapitalMarket Association (ICMA).

Hokuhoku Sustainable Finance“GL-type”

This is a loan instrument that limits the use of funds to business and projects that improve theenvironment, conditional on being evaluated by an external organization with regard to
conformance with the various standards announced by the International Capital Market
Association (ICMA).

Hokuhoku Sustainable Finance“Standardized Loan Product:
Hokuhoku Three Targets”

This loan instrument was designed uniquely by the company under the concept “wide ranging
and simple” to have a wide range of companies work on sustainable management. It is a loan
instrument aimed at the improvement of corporate value and the realization of sustainableregional society through the achievement of three targets chosen in advance by the customer.

Hokuhoku Sustainable Finance“PIF-type”

This is a loan instrument that analyzes and evaluates the impact that customers’ corporate
activities have on the environment, society and economy comprehensively by international
standard methods, and provides continuous support for initiatives aimed at the expansion or
mitigation of the identified impacts.

Hokuhoku Financial Group, Inc. Integrated Report 2023

[2] Support for the decarbonization of business partners through consulting services
Main solution menu

Contents

GHG emissions calculation / visualization cloud service(Business matching partner: Zeroboard Inc.)

This is a cloud service that enables the calculation and visualization ofemissions of GHG, represented by CO2 emitted as a result of corporate
activities, based on the international standard GHG protocol.

CO2 emissions visualization cloud service(Business matching partner: Asuene Inc.)

This is a service that supports the calculation, visualization and reduction ofgreenhouse gas and CO2 emissions, carbon offsets, reports on Scope 1 to 3
in the supply chain overall and information disclosure.

Brokerage service for FIT non-fossil certificates (bidding
procedure agents)(Business matching partner: Hokusan Co., Ltd.)This is a service that enables the acquisition of non-fossil certificates, which
certify the environmental value of non-fossil fuel derived electricity.

Physical risks calculation service(Business matching partner: Fujitsu Corporation)

This is a service that enables the calculation of flooding risk in line with theguidelines of the Ministry of the Environment based on the location ofproperty.

Climate change information disclosure support service(Business matching partner: Bluedotgreen Inc.)

This is a consulting service that supports the disclosure of climate change
information based on CDP responses and the TCFD framework.

Decarbonization service(Business matching partner: Bywill Inc.)

This is a service that supports the procedures required to generate and sell
carbon credits, and Bywill also sells the carbon credits it possesses.

[3] Promotion of the decarbonization of the company to contribute to the realization of regional decarbonization
Details of main initiatives

Contents

Switch to renewable energy based on the use of off-site
PPA

We have introduced the “Hokuhoku Solar Park” initiative whereby Hokuriku
Electric Power Group builds and operates solar power generation facilities
on sites owned by The Hokuriku Bank in the form of off-site PPA. By doingso, it is possible to cover electricity equivalent to about 25% of the power
consumed at bases of The Hokuriku Bank in the Hokuriku region withrenewable energy with high additionally.

Switch to EVs for company cars

We are reducing greenhouse gas emissions by introducing electric vehicles
and fuel cell vehicles for use as some of the commercial vehicles at
headquarters and branches.

Use of carbon neutral gas

We are purchasing town gas offsetting the greenhouse gas emissions
emitted in the natural gas lifecycle with the same amount of carbon credits.

New establishment of ZEB branches

We opened a branch that meets the ZEB standards when transferring to the
newly built Nonoichi Branch of The Hokuriku Bank. This building has highenergy-saving performance and is equipped with solar power energy
creation facilities. Our policy is to increase the number of bases that meet
the ZEB standards when renovating and refurbishing branches from now on.

Greening of electricity using non-fossil certificates

While we will continue to implement initiatives for the reduction of thecompany’s greenhouse gas emissions, we will substitute fossil powersources by purchasing non-fossil certificates for the greenhouse gas
emissions that we are unable to reduce.

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GX strategy (disclosure based on the TCFD)

Risk management: We disclose how we identify, assess and manage climate-related risks.

a. We explain the process through which the organization identifies and evaluates climate change-related risks.
b. We explain the process through which the organization manages climate change-related risks.
c. We explain how the processes through which the organization identifies, evaluates and manages climate changerelated risks are integrated by the organization’s integrated risk management.

Hokuhoku Financial Group understands that climate change risks are an important issue in corporate management and is working on thegreater sophistication of risk management.
◦We understand the transition risks and physical risks attributable to climate change, clarify our handling of such risks in the risk
management policy resolved upon by the Board of Directors, and are prepared to manage risks within an integrated risk management
framework.
◦Based on the “Investment policy for specified business, etc.,” (established in July 2021), we have strengthened engagement withcustomers who are business operators in coal-fired power generation, weapons manufacturing, the development of palm oil
plantations or deforestation, sectors that are highly likely to have negative impacts on the environment or society.
◦From this fiscal year, we are calculating Scope 3 Category 15 emissions (subject: commercial loans to all borrowers). We haveidentified the high-emission companies at the company group. We have prioritized these, including carbon-related sectors,
strengthened engagement and are providing support positively for initiatives aimed at the transition to a decarbonized society.

Indicators and targets: ‌We disclose the measurement standards (indicators) and targets used to evaluate
and manage climate-related risks and opportunities if that information is material.

a. We disclose the indicators used when the organization evaluates climate change-related risks and opportunities inaccordance with its strategies and risk management processes.
b. We disclose Scope 1 and Scope 2 greenhouse gas emissions and their related risks, and those of Scope 3 if they are
relevant.
c. We explain the targets the organization uses to manage climate change-related risks and opportunities, and the results
related to them.

1 Indicators and targets
Indicators
GHG emissions (Scope 1, 2)

Target value
Note 1

Achievement deadline

Carbon neutrality

2030

Sustainability-related investment and loans
Note 2

From fiscal year 2021 ~ cumulative total of 1.5 trillion yen

2030

Environment-related finance

From fiscal year 2021 ~ cumulative total of 700 billion yen

2030

Note 3Note 1: Target for CO2 emissions reductions at the domestic places of business of all group companies
Note 2: Investment and loans to business partners working towards achievement of the SDGs, and investment and loans for medicine, health, education, the fishing industry, agriculture,
start-ups, business succession, resilience, environment-related, etc.
Note 3: Investment and loans that support initiatives considerate of the environment, such as responses to climate change

Reasons for selection of the indicators and targets
The company group brought forward the deadline for achievement of the carbon neutrality target from 2050 to 2030 to promotedecarbonization even further. It was decided to raise targets like this based on the judgment that we need to advance the reduction of
Scope 1, 2 emissions ahead of schedule towards being net zero in 2050, the global target. We will also advance consideration withregard to Scope 3 targets from now on.
With regard to finance, we set targets for the investment and loans amounts that were judged will contribute to achievement of the
SDGs. In particular, with regard to the climate change area, we set a target separately as environment-related finance, and set a target
reflecting the company group’s policy of working with priority on the handling of climate change within the SDGs.

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Hokuhoku Financial Group, Inc. Integrated Report 2023

2 Results
Indicators
GHG emissions (Scope 1, 2)

Results
Note 4

17,127t-CO2

Scope 1 emissions

4,325t-CO2

Scope 2 emissions

12,802t-CO2

Sustainability-related investment and loans

289.3 billion yen(+186.7 billion yen compared to last year)

Environment-related finance147.4 billion yen(+110.3 billion yen compared to last year)

Reference values
GHG emissions (Scope 3: excluding Category 15)Category 1 (purchased products and services)

Note 551,874t-CO2

Note 6

20,125t-CO2

Category 2 (capital goods)

13,490t-CO2

Category 3 (fuel and energy-related activities not included in Scope 1, 2) Note 7

1,679t-CO2

Category 4 (transportation and deliveries (upstream))

2,009t-CO2

Category 5 (waste from business)

273t-CO2

Category 6 (business trips)

596t-CO2

Category 7 (employee commuting)

1,528t-CO2

Category 13 (lease assets (downstream))

Note 8

12,175t-CO2

GHG emissions (Scope 3; Category 15 (investment))

Note 922,695Mt-CO2

Carbon-related assets

Note 1015.89%

Note 4: For GHG emissions (Scope 1, 2, 3), we calculated supply chain emissions at the domestic places of business of all group companies based on the “Basic Guidelines on the
Calculation of Greenhouse Gas Emissions throughout the Supply Chain Ver 2.5 (March, 2023)” by the Ministry of the Environment and Ministry of Economy, Trade and Industry.
Note 5: Of the Scope 3 categories, categories 8, 9, 10, 11, 12 and 14 do not apply.
Note 6: C alculated based on repair expenses, property and real estate management expenses, printing expenses, stationery expenses, equipment expenses, book and newspaper
expenses, communication expenses, vehicle fixtures and repair expenses and administrative work outsourcing expenses.
Note 7: Calculated based on electricity consumption.
Note 8: Calculated based on estimated electricity consumption based on the standard use scenario assuming the number of units operating per contract amount and deeming all lease
contracts and repeat lease contracts of Hokugin Lease to be “information-related device (tablet PC)” lease contracts.
Note 9: We calculated the emissions related to commercial loans at The Hokuriku Bank and The Hokkaido Bank (commercial loans means “business loans,” the first part of “business loans
and unlisted equity” of the asset classes classified in PCAF).
Note 10: Carbon-related assets at The Hokuriku Bank and The Hokkaido Bank: The proportion of loans for energy utilities (excluding water supply business and renewable energy business),transportation, materials, structures, agriculture, food and forestry productsState of progress against targets
Total Scope 1, 2 GHG emissions in fiscal year 2022 were 17,127 t-CO2. A comparison cannot be made simply because we expanded
the subjects to all group companies, but if compared as the same range as last fiscal year (only The Hokuriku Bank and The HokkaidoBank, the major subsidiaries of the company group), the result for fiscal year 2022 was down 45.2% compared to fiscal year 2013, anddown 6.1% compared to the previous fiscal year. We are progressing steadily towards the target of carbon neutrality in 2030. With
regard to sustainability-related loans and environment-related finance, we have progressed steadily in fiscal year 2022 in comparison to
the targets. We did not cover the shortfall in fiscal year 2021, and will continue to aim for the achievement of these targets bystrengthening support for our business partners.

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Promotion of DX

Initiatives for DX<< Inauguration of DX Promotion Department >>The company launched a project team to consider the digitalization and DX of the company group with members from The Hokuriku
Bank, The Hokkaido Bank and Hokugin Software in 2020. The team implemented measures that contribute to the improvement of
convenience for customers and initiatives for the reduction of simple clerical work within the group.
A total of 53 Employees participated interchangeably as members of the project team, implemented more than 20 measures, large
and small, including the introduction of a data introduction platform and a web interview tool.
Initiatives aimed at DX have become very active at other companies recently, and we inaugurated DX Promotion Department in June
2023 aimed at the formulation of a DX strategy and the reliable execution of various measures based on that strategy at the company.
The company group as a whole will promote DX strongly so that customers, the region and employees can experience transformation.

The company’s DX strategy<< Overall image >>We aim to be a financial group that releases employees from simple clerical work, shifts to work that employees can engage in positively
and happily, strengthens earning power through the improvement of customer satisfaction through high-precision marketing using digital
resources (= data), and resolves regional issues with the external provision of banking functions and new technological areas.

Restructuring ofclerical work

Efficiency gain

Creation of surplus
personnel

Development of
new branches using
digital technology

Improvement ofapp functions

Earnings enhancement
Hokuhoku Financial Group, Inc. Integrated Report 2023

Enhance face-to-face
Develop new businessfieldsIncrease
the sophisticationof marketing

External provisionof functions

Capture of newtechnological areas

45

LinkageDX human resource
development

Restructuring of clerical work
We will thoroughly digitalize work that was previously carried out mainly on paper such as customer account openings, various
notifications and applications for various services, and reduce the burdens on both customers and employees.
In digitalizing this work, we will simplify and integrate the work flow in points of contact with customers such as branches, externalsituations, apps and ATMs as much as possible and build a service flow that enables procedures to be carried out comfortably in any
channel.
In addition, we will aim to switch from human processing to the automatic processing of data in subsequent office work after
reception, and reassign the human resources previously assigned to clerical processing to front office work and service planning
work.

Development of new branches using digital technology
Through the restructuring of clerical work, we will carry out a fundamental review of the infrastructure facilities that were previously
essential to branches, to save space and redefine the shape of new branches that are comfortable for customers.
We will also consider the use of empty space in branches after this space saving work in projects with a high level of social
contribution, such as use for the region.

Improvement of app functions
We will strengthen the functions of the “Hokuriku Bank portal app” and “Dogin app” for individual users and enable more banking(finance) procedures to be completed on the apps.
In addition, we will also strengthen non-financial functions and aim for apps that are useful in the lives of customers.

Increase the sophistication of marketing
We will use the data obtained in various transactions and analyze the services demanded by customers to enable proposals to morecustomers through channels that provide easier contact, more appropriately and more quickly.
To do that, apart from digitalizing customer information, we will consider the introduction of marketing automation tools and thelike, and strengthen our inside sales framework of sales activities carried out non-face-to-face.

External provision of functions
The wave of digitalization around us has grown tall and large, including the spread of invoice systems and the My Number card.
We will not limit ourselves to the digitalization of the group’s internal work, but will provide our digitalization-related knowledge andtechnology to business partners and the region to contribute to the improvement of the digital life of the region overall, and theimprovement of productivity.

Capture of new technological areas
ChatGPT and other generative AI, and web 3.0 technology hold the potential to change existing banking work greatly.
We will capture such new technologies at a high tempo and accelerate the digitalization of services and work overall.

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Promotion of DX

Main initiatives (reflections)<< Enhancing corporate portal functions >>March 2023
January 2023

Introduction of aremote sales tool

Starting from the electronic delivery of various forms that
July 2022

were previously posted to customers such as interest
statements, repayment schedules and balance
we are currently working on the unification of the login

Electronically-delivered forms added
February 2021

process with corporate internet banking. The corporate
portal is being used by about 43,000 customer

Unified login process

April 2022

certificates on the corporate portal in fiscal year 2022,

October 2020

companies of both banks.

Recommendations CSV linkage function
Started sending e-mail promotional
announcements and outbound calls

Started offering services
to corporate IB users

Introduction of Smart-Biz
We introduced the “Smart-Biz” tool for communication between customers and employees at sales branches and headquarters in
March 2023.
Smart-Biz allows the use of three functions: chat, web interviews and the exchange of documents.
Customers can communicate and consult easily with sales personnel and headquarters specialists in a secure environment
without worrying about sales hours.

Digitalization of loan work
In June 2023, we established a web reception form that can be completed online without receiving the conventional loan application
form to customers with a loan overdraft facility.
This has enabled loan applications to be made efficiently by omitting bank visits and the trouble of mailing.

<< Enhancement of personal app functions >>In April 2023, we released a “COTRA remittances” function, which allows small value remittances to be made simply and free of processing
fees, and a “QR tax payment function,” which allows the easy payment of regional taxes without visiting a branch, on the personal apps.
In particular, there were about 25,000 cases of use of the “QR tax payment function” at both banks in the two-month period to June2023.
We will continue to expand the non-face-to-face menu steadily so that customers can do the things they can at a branch counter on
the apps too, and aim for apps that can be used easily by speeding up the UI and UX improvement cycle.

Start the Hokuriku Bank account opening and reception of address change at the Seven Bank ATMs
We will start the handling of The Hokuriku Bank account opening and reception of changes on address using the Seven Bank ATMs
operated by Seven Bank Ltd., from November 2023. Procedures can be carried out by simple operations 24 hours a day* on the
new-style Seven Bank ATMs currently being installed successively at Seven Banks nationwide.
In addition to branch counters and the apps, enabling reception on these ATMs expands the options for reception channels in linewith customer needs and will lead to the further improvement of convenience.
We will continue to provide customers with new service experiences while collaborating with various companies, whether financial
or non-financial.
* There may be case where an ATM cannot be used due to maintenance, etc.

47

Hokuhoku Financial Group, Inc. Integrated Report 2023

<< Strengthening of corporate inside sales >>Rather than conventional brute force face-to-face sales, we incorporated “inside sales” into our sales process aimed at strengthening
the discovery of prospective customers, arousing needs and improving the precision of proposals, and built a database of customers’
business card information for use in nurturing* and the strengthening of our brand power.
The database has an e-mail delivery tool and seminar guidance, application and questionnaire functions, etc., and we will
advance the creation of a system that can provide the information desired by customers in a timely manner.
In addition, by creating a database and centralizing customer information management, we will aim for the improvement ofrelationship building power able to provide support for customer issues with the organization as a whole, including headquarters,
rather than one-to-one relationships between customers and personnel.
* Nurturing: Customer development. Stimulating demand from prospective customers and guiding them to becoming customers. Building relationships of trust with existing customers
through superior customer experiences and guiding them to becoming excellent customers.

Announce /acquire prospective
customers

Create lists
Conventionalsales process

Propose andnegotiate

Stimulate needs

Receive orders
and sign contracts

Follow-up

Sales representative
Using both channels enables liaison officers / sales reps to reduce the workload assigned to themProcess using
inside sales

Face-to-face sales
representative

Inside sales representative

Online sales
representative<< Optimization of back-office work for corporations and sole proprietors >>We started sales of “Hokuhoku Biz-Management,” a SaaS ERP* package to realize company-wide back-office optimization from April
2023.
Hokuhoku Biz-Management is a tool that can realize the automation of work such as cash flow management and accounts
processing, which customers have been doing as manual operations, at a low price.
* ERP: A system that supports corporate work such as finance, and personnel and customer information

Main functions

Commonmaster
Sales

Salaries
Company information

Employee information
Case management
Salaries
Settings are
Settings are
Sales management automatically Customer information automatically Social insurance
Link to sales
reflected
reflected
EC, POS,
Purchasing management
Supplier information
Bonusesetc.
Inventory management

Automatic issue of invoices
Automatic receipt write-off

Automatic sales data
journalizing function
Automatic journalizingof sales, purchasing,receipt and payment data

Link tosalaries

Attendance
management

Product information
Year-end adjustment
Settings areautomatically reflected

Accounting
Daily

Automatic salary data
journalizing function
Automatic journalizing ofsalaries, bonuses, social
insurance and year-end
adjustment data

Web salarystatements

Monthly
Expense settlement

Link to approval

Settlement of accounts
Fixed assets

Cash flow
management

Automatic accounting
entry function

Link with othercompanies’ softwarefor journalizing・‌Manage miscellaneous indirect work
appropriately, including the systemizationof order receipt work and the automationof accounts receivable receipt write-off
through linkage with internet banking.
・‌Existing accounting systems can be used
as is due to the link function with othercompanies’ accounting software.
・‌The system handles invoices andcomplies with the Preservation of Books
and Documents Related to National
Taxes in Electronic or Magnetic Records,
an issue for companies.
・‌This system and compatible systems canalso transfer documents by EDI (electronic
data interchange).

Cloud platform(Security management, system duplication and automatic back-ups)

Hokuhoku Financial Group, Inc. Integrated Report 2023

48

Human capital management initiatives

Overview of human resources strategy
We formulated our “Policy on human capital management initiatives” based on our long-term vision and are working on human capitalmanagement throughout the group. Moreover, we have organized our “to be” as the “three pillars of human capital management”
and are implementing six specific actions towards their realization.
Our policy on human resource development and internal environment development is to “create a virtuous cycle of value creation
with our customers and develop human resources capable of contributing to the sustainable growth of the region” and “create anenvironment in which diverse human resources can work autonomously to enhance their value while feeling satisfaction in their work,”
and starting from our current “as is” issues, we will continue to strive for the sustainable growth of employees and the organization bypracticing human capital management while also bringing in back-casting ideas from our “to be” pillars.
Long-term vision

We achieve sustainable growth together with local communities and customers through problem-solving

Policy on human capitalmanagement initiatives

Developing human resources who lead value creation by connecting communities and business partners

Organization of issues (As is)Specific actions

The three pillars of human capital management (To be)
Continuous creation ofself-directed professionals who
embody management strategies

Securing the required talent

Clarification of required talent

The number of employees is tending to decrease
due to difficulties in recruiting new graduates andthe turnover of young employees.

Human resource development

Nurturing the required talent

Strengthening of recruitment

Defining and understanding the human resources
required to realize priority strategies, and thedevelopment of training systems are insufficient.

Empowerment of women

Organizational culture

Corporate culture that encourages challenges

The handling of diversifying values and work
styles, and an environment that fosters
self-directed personnel are insufficient.

Realization of well-being

Empowerment of diverse humanresources for innovation (DE&I)

Creation of an environment thatencourages challenges andgrowth, and maximizes ability

Six specific actions

49

Clarification of required talent

Empowerment of women

Define the human resources required for the promotion of each area torealize the key strategies of the medium-term management plan andestablish development systems corresponding to each area and level.

We are striving for the establishment of various systems and theenhancement of our support framework to respond to diversifying
values and work styles centered on Diversity Promotion Office.

Human resource development

Corporate culture that encourages challenges

We are establishing the training systems and support environment that will
support the development of professional human resources and autonomous
career formation by dispatching employees to outside companies.

We are striving to establish mechanisms and foster an organizational
culture that enables challenges so that employees can design theirown careers and work vibrantly.

Strengthening of recruitment

Realization of well-being

We are increasing the number of career recruiters to focus on the
recruitment of new graduates and mid-career employees, and working
on the strengthening of the dissemination of information, the expansionof recruitment channels, and raising starting salaries.

We are working on the realization of well-balanced work styles for theenhancement of employees’ work-life balance.

Hokuhoku Financial Group, Inc. Integrated Report 2023

The details are on the following pages.

Clarification of the talent required for realization of management strategies and its systematic development
One of the most important management resources for the company, a regional financial services operator, is human capital.
We grasp this human capital from both aspects of “securing the talent required and its development,” and think that repeating
the reflection of these aspects in personnel measures and verifying the effects, and building human capital appropriate for theage is “human capital management” at the company.
We are working on the systematic development of the talent required, making the “continuous creation of self-directed
professionals who embody management strategies” our highest priority issue.

Clarification and definition of the talent required
We define the human resources linked to ”the promotion of DX,” “the improvement of comprehensive consulting ability” and“initiatives in the environmental field,” the key strategies of our medium-term management plan, as “DX human resources, consulting
human resources and SX human resources, and classify each individual into the three skill ranks of “core, middle and base” inconsideration of factors such as their qualifications and work experience. We then develop them in accordance with their field andlevel. In addition, we have set targets for the end of March 2025 as KPI.
DX human resources
Current(end-March 2023)

53 people
Core

Base

+17 people

70 people

Consulting human resources
Current(end-March 2023)

201 people

Human resources who can plan anddrive management strategy using IT
and digital resources

71 people
MiddleTarget(end-March 2025)+54 people

125 people

SX human resources

Target(end-March 2025)+99 people

Current(end-March 2023)

300 people

12 people+275 people+48 people

60 people

Human resources who can make plans for therealization of the decarbonization managementof the region, customers and the company

Human resources who canuse expert knowledge to makeplans and proposals

1,675 people

Target(end-March 2025)

1,950 people

14 people+126 people

140 people

Human resources who canpromote each DX measure

Human resources who can propose
solutions in line with customer needs

Human resources who can provide
comprehensive advice in response to thedecarbonization needs of customers

Human resources who have basic
knowledge of IT and digital resources
and can make appropriate proposals

Human resources who can grasp
customer needs through dialogue

Human resources with basic knowledgeof decarbonization who can explain its
importanceStrengthening of the development of expert human resources
We are striving for the creation of a support framework that enables each individual to acquire planned expert knowledge matched totheir skill level and career path, from basic knowledge to expert knowledge, to respond to diverse needs.
Acquisition of IT passport qualification

We encourage employees to take the IT passport course, aimed at
the improvement of IT literacy and the development of DX basehuman resources. A total of 1,247 employees of the two banks
combined had acquired this qualification by the end of March 2023.
Improvement of skills through internal certification systems

We newly established the “Hokuriku customer adviser system(HCA),” which certifies human resources able to make wide-ranging
proposals internally, in fiscal year 2022. A cumulative total of 26
employees had been HCA certified as of the end of March 2023.
In addition, we have also introduced a “Money adviser certification
system” aimed at the development of personal liaison
representatives who can make high quality proposals. We are
implementing feedback training, etc., to holders regularly.

Holders of public qualifications (excerpt) (as of end-March 2023)
Qualification

Holders

Qualification

Holders

Lawyer5 people

Real estate notary

385 people

Certified public accountant

4 people

Labor and social security attorney

11 people

Securities analyst

51 people

Administrative scrivener

25 people

Small and medium-sized enterprisemanagement consultant

21 people

IT passport holders(people)(people)

490
3,300

Holding of “Training for the improvement of sustainability public relations ability”

We held this training at both banks aimed at the acquisition ofpractical conversation methods and starters on the SDGs aimed at
the strengthening of the promotion of sustainability. A total of morethan 1,000 employees participated.

1st level FP and CFP holders

282

294

2022/32023/3

1,247
1752022/32023/32025/3target2025/3targetStrengthening of talent management
We use various information, such as the skills, experience and aptitude of each individual employee, as well as work aptitude
information accumulated by interviews of Human Resources Department, questionnaire surveys and 360-degree surveys in thedevelopment and assignment of employees.
We invest positively in personnel-related systems to visualize the skills of the company as a whole and further promote use in support
for autonomous career path creation and human resource strategies.
Hokuhoku Financial Group, Inc. Integrated Report 2023

50

Human capital management initiatives

Human resource development
Development of professional human resources by dispatching personnel to outside companies
We dispatch employees to outside companies positively through open recruitment to acquire advanced expertise, foster practicalskills and a sense of management, and form personal networks. In particular, we are working positively on dispatches to outsidecompanies to develop professional human resources related to DX, consulting and SX in coordination with our medium-term
management plan.
Dispatch destination results (excerpt)
Field

Dispatch destinations

DX

Hamagin Research Institute, Ltd., Resona Digital Hub Co., Ltd.,NTT Communications Corporation

Consulting
SX

Strike Co., Ltd., Aoyama Zaisan Networks Co., Ltd.,
Hokkaido University
Ministry of the Environment,
Mizuho Research & Technologies, Ltd.

Number of employees dispatched tooutside companies

Total education and training expenses(In million yen)(people)

50

330
222
170

14

16

2022/32023/32022/32025/3target2023/32025/3targetSelf-directed learning and reskilling
We have introduced e-learning for various kinds of self-development support and reskilling tools covering various subjects, fromprofessional knowledge to business skills. In addition to utilizing the knowledge for business purposes, we have established a systemthat encourages personal growth and the realization of each individual’s career path by deepening insight into areas they wish to learn
about.
As for acquiring skills in new areas such as DX or SX, we will strengthen various tools and contents such as training, seminars,
web training and correspondence courses so that employees can take on new challenges by their own will.

Training systems
We have established various training systems for management skills, future leader training, etc., in accordance with expert knowledge
and work style reform aimed at wide-ranging human resource development and the acquisition of skills. In addition, we are fostering a
sense of unity within the Hokuhoku Financial Group by actively providing opportunities for interaction among group colleagues
through the holding of joint group training.
Human skills training

This is training aimed at the acquisition of human skills related
to “basic education, career advancement and management” inaccordance with each employee’s degree of proficiency andrank.

Function (work) specific training

We implement “function (work) specific training” that increases
expertise in each area, cultivates practical abilities, and promotes
the autonomous career formation of bank employees linked withOJT and practical work. This advances careers systematically.

OJT education support at sales offices
We have introduced an education staff placement system for new
employees that links Personnel Department and sales offices
aimed at the acquisition of basic knowledge and early
development as members of society, with education staff
providing one-on-one support. In addition to support to acquire
work skills, education staff also provide support in the living andmental health aspects straight after joining the company.

Name• Mentor• Blender

Provide appropriate advice and guidance on
the performance of daily work and support themental aspect, etc.

• Office instructor• Helper

Provide advice on work procedures and plans,etc., to learn about work that should be learnt

Self-development support
We have rolled out a campaign promoting the acquisition of FP and IT-related
qualifications aimed at raising the base of consulting abilities.
Together with this, we hold holiday seminars about some public qualifications toback up the acquisition of qualifications. In addition to incentive systems for theacquisition of various qualifications including public qualifications and the banking
proficiency test, we have also introduced a subsidy system for the fees forcorrespondence courses with content essential for work.

51

Hokuhoku Financial Group, Inc. Integrated Report 2023

Role, etc.

Results for fiscal year 2022
Seminars

Number oftimes

Number ofpeopleReal estatecertification seminar

13

89

FP seminar

3

136

Strengthening of recruitment
Increase in the number of recruiters
The external environment has changed greatly in recent years for both new graduate and mid-career recruitment. Competition for
new graduates has intensified due to the decrease in student numbers and their concentration in the Tokyo metropolitan area. On theother hand, the liquidity of mid-career human resources has advanced and the job market is booming. We have increased thenumber of recruiters and enhanced recruiting systems to respond to the turning point in graduate recruitment and good opportunities
in mid-career recruitment, and are working on strategic recruitment activities to secure diverse human resources.

Strengthening of the transmission of information on recruitment
We renewed the recruitment homepage to a structure focused on “people.” Rather than just work details, we have sought content
that enables people to understand what kind of job satisfaction and thoughts the people they would be working with have from things
like interviews and videos so it feels closer and easier to picture their own growth and life and work career plan. In addition, we arealso implementing recruitment strengthening measures such as the holding of joint financial group company briefings and recruitment
events. We were top among financial institutions in the Hokkaido area and Hokuriku area in the corporate popularity rankings* among
students seeking employment in 2024.
* Nikkei x Mynavi new graduate recruitment advertising feature, Nihon Keizai Shimbun, morning edition, April 12, 2023

The Hokuriku Bank recruitment homepage

The Hokkaido Bank recruitment homepage

Raising of starting salaries
We decided to raise starting salaries in May 2023 to recruit the superior human resources who will be responsible for the future of thegroup. We will work positively on human investment including the improvement of employee compensation to secure diverse humanresources and draw the maximum potential out of each and every employee, and by doing so, provide high value-added financial
services and contribute to the development of the region.

Strengthening of the recruitment of expert human resources
We are strengthening the recruitment of expert human resources including in the DX

Number of mid-career hires

field. In addition to conventional general position recruitment based on new graduates,(people)55

we have newly established two courses to develop expert human resources at The
Hokuriku Bank from April 2024, a “digital / systems” course, and a “market / risk”
course. These are courses aimed at recruiting diverse human resources widely andcreating specialists in various fields while experiencing work in related departments froman early stage, and effects in encouraging autonomous career formation are also
expected. Further, Hokugin Software is also strengthening recruitment of the human102022/3142023/32025/3targetresources who will take charge of group system and DX strategies from now on.

Strengthening of alumni and referral recruitment
In mid-career recruitment, we focus on the building and use of a unique talent pool (human resource capitalization). In addition, tobuild a human resource portfolio with various backgrounds and expertise, we are promoting recruitment from multiple channels,
including alumni and referrals. We will also simultaneously establish an internal environment in which people with wide-ranging careers
can work vibrantly.

Hokuhoku Financial Group, Inc. Integrated Report 2023

52

Human capital management initiatives

Promotion of the empowerment of women and DE&I
Work-life balance support initiatives

External evaluation

Centered on Diversity Promotion Office, we are working positively on thecreation of an environment where employees can work while realizing awork-life balance. In addition, we are also strengthening the creation ofan environment where women can work vibrantly, including theenhancement of support to return to work by appointing career advisors
and holding seminars. Both The Hokuriku Bank and The Hokkaido Bank
have acquired “Platinum Kurumin” and “Eruboshi (level 3)” certification.
Pregnancy and childbirth leave
Pre-birth
Post-birthmaternity leave maternity leave(6 weeks)(8 weeks)

Childcare leave

Long-term childcare leave

Before school

Elementary schoolChild nursing leave

Long-term childcare leaveat the time of birthWork measure systems for child rearing

Eruboshi (level 3)

Female manager ratio

Nursing care(%)

Nursing care
leave

24.0

Long-term nursing
care leave(Post-childbirth father’s leave)

Work measure systems
for pregnancy

Platinum Kurumin

18.8

17.5

Work measuresystems fornursing care
2022/3

Parent plaza

Hokugin support NET
Do support system(home PC browsing system)

2023/32025/3targetCompany nursery(Dosanko Kids’ Room)

Male childcare leave rate

Nursery school at thejoint place of business(%)(Nikotto nursery school)

126.7
103.8

Return to work
support seminars

100% or higher

Congratulatory
money forchildbirth2022/3Re-hiring system

2023/32025/3targetEmpowerment of women
We held “Women’s Do,” training aimed at thedevelopment of medium and high-level female managers
jointly at The Hokuriku Bank and The Hokkaido Bank,and different industry exchange meetings aimed at
thinking about career formation and work styles, leading
to increased motivation, through interaction with othercompanies.
In addition, in fiscal year 2022, we newly appointed afemale officer as an Outside Director.
We are aiming for a female manager ratio of 24.0%
or higher by fiscal year 2024 and will continue to focus
on female career development and the cultivation of
female human resources to take charge of management,
and work on their positive assignment and hiring.

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Hokuhoku Financial Group, Inc. Integrated Report 2023

Female executive
development course
Female manager
training course
Female leader course formanagement positions
Different industry
exchange meetings
Women’s Do

The gender pay gap
Regular workers
At The Hokuriku Bank, we have established a pay gap between regular positions with transfers involving relocation and area positions
and administrative positions without transfers involving relocation. In addition, at The Hokkaido Bank, we have established a pay gap
between regular positions with transfers involving relocation and area positions and general positions without transfers involving
relocation. Because we have not established a gender gap in the wage systems at either of the two banks, there is no large differencein male and female pay when looked at by course or ranking. On the other hand, because the proportion of males in regular positions
and management positions, which have relatively high wages, is high, the following gaps have been created as a whole.
We carried out a system revision in July 2023 to allow employees to switch course flexibly regardless of gender as an initiative toeliminate this gap.
In addition, in new graduate recruitment in recent years, the ratio of female employment in regular positions has increased
gradually to about 20% at both The Hokuriku Bank and The Hokkaido Bank. On the other hand, because there are a lot of regularfemale employees in the younger segment, with average ages at The Hokuriku Bank being 41.8 years old for males and 29.6 years
old for females, and average ages at The Hokkaido Bank being 42.8 years old for males and 29.6 years old for females, it will taketime for the pay gap to narrow, we will advance female recruitment and hiring positively.
In combination with this, we will cultivate career improvement mindset among female employees based on one-on-one meetings,
management training, etc., and further promote the establishment of various systems to facilitate the raising of children. By doing so,
we would like to support the long-term career formation of women and connect this to the positive appointment of female managers
in accordance with their experience and desires.
The Hokuriku Bank
Position category

Overall
Wage gap

The Hokkaido Bank

Regular positions

Area positions /administrative positions

Overall

Wage gap

Wage gap

Wage gap

Regular positions

Special positions /general positions

Wage gap

Wage gap

Top management

72.3%

81.1%

―

76.9%

83.2%

73.3%

Management

68.7%

89.4%

91.0%

74.2%

99.6%

103.6%

Non-management

66.4%

78.2%

77.6%

66.2%

76.7%

55.9%

Overall

51.0%

61.6%

79.6%

48.2%

59.1%

51.5%

Part-time and fixed-term contract workers
At The Hokuriku Bank the proportion of females is high among part-time workers employed for counter work in branches, branchback-office work and internal administration assistance. On the other hand, the proportion of males is high among special and expert
contract workers with relatively high wages centered on human resources with experience and expertise. In addition, at The Hokkaido
Bank too, the proportion of females is high among part-timeworkers employed for counter work in branches, branch backWage gap (female ratio)
office work and internal administration assistance. On the other
Position category
hand, contract workers with relatively high wages are centered on
The Hokuriku Bank The Hokkaido Bank
human resources with experience and expertise, including
Contract
53.4%
66.5%
employees re-hired after mandatory retirement, and at present,Part-time
124.0%
50.1%
the proportion of males is high. There are no wage gaps due togender among the various forms of employment, but we will
Senior bank employee
83.4%―
strengthen mid-career recruitment in fields that require expertise,
Overall
32.8%
31.2%
and hire people under the ability standards regardless of gender.

Hokuhoku Financial Group, Inc. Integrated Report 2023

54

Human capital management initiatives

Corporate culture that encourages challenges
The creation of challenge opportunities
We have established an environment in which employee can take on challenges so that they design their own careers autonomously
and work vibrantly. In addition, we respect what each and every employee wants to try and strive to foster an organizational culture
where they can raise a hand. We implement the “challenge job,” “work side-job” (internal side-jobs) and “try internship” initiatives in an
open recruitment format so that employees can engage in work they want to challenge themselves in.
Fiscal year 2022

Number of open recruitment applicants(people)Challenge job

Employees apply for a personnel transfer to a
department they want to challenge themselves in

50 people

Work side-job

Employees engage in work that interests them in
an internal side-job format

96 people

Try internship

Employees experience work in a department
they are interested in for 3 to 5 business days

10 people

255

156

53

2022/32023/32025/3targetDialogue with directors
We provide opportunities for the management team to communicate management strategies and their ideas while listening toopinions in the workplace. We are fostering an organizational culture within which each and every employee takes on the challenge ofhigher-ranked work and positions with a higher line of sight.

Twelve young employees engaged
in free discussion with President
Nakazawa

Twelve young employees exchange
opinions with six directors including
Deputy President Kanema at a
Dosanko Young ForumAppointment of career advisors
We have appointed career advisors as consultants for each and every employee. They hold interviews with employees and respondto various inquiries on matters including career advancement, ability development and life design. They are supporting the creation ofan environment within which employee can take on challenges with peace of mind through support for the growth and establishmentof young employees, and advice on the career designs of diverse employees and work-life balance.

55

Hokuhoku Financial Group, Inc. Integrated Report 2023

Realization of well-being
Initiatives for the improvement of well-being and work-life balance

Rate of taking of paid leave

We are working on the realization of balanced work styles for the enhancement of
employees’ work-life balance. We have newly introduced system leave matched
to life events and measures to promote the taking of leave including a campaign
aimed at taking paid leave, and the rate of taking of paid leave is improving. We
will aim for the further enhancement of the workplace environment from now on
by enhancing welfare systems to realize flexible work styles corresponding toemployees’ new senses of value.

75.6

(%)

75% or higher

72.7

2022/32023/32025/3targetWork style reform
Productivity improvements

360-degree surveys

At The Hokuriku Bank, we are working on the “Smart-work
movement” for originality and ingenuity to improve productivity
and the thorough implementation of time management, and at
The Hokkaido Bank on “No-side 7” an initiative targeting 7pm as
the average time at all branches for leaving work. We willcontinue to work in future towards the realization of a high-quality
work-life balance.

The staggered work attendance and short-time work systems
We have introduced staggered work attendance and short-timework systems aimed at the realization of flexible work formats
based on work-life balance that enable flexible work inaccordance with customer needs and the details of work.

We implement these surveys for all levels of management from the perspectivesof managers understanding their own management characteristics and theimprovement of employee ES.

Business casual
We started a trial of this initiative inJanuary 2023 and introduced it officiallyin July 2023.
A workplace environment has been
established in which each and every
employee can work in their own way,and employee motivation has also
improved.

Financial wellness
We have introduced initiatives such as a stock holding association and matching contributions on a corporate DC plan to improve thefinancial wellness of our employees, who are responsible for the value creation of the region and customers.
In addition, we have also introduced an education refinancing system (low interest loan system for employees) and are striving forthe further enhancement of welfare systems.

Promotion of health management
We have formulated a “health management declaration” andare implementing measures that will lead to the maintenanceand promotion of health such as various campaigns, including
a walking campaign, and the holding of seminars.
In addition, both The Hokuriku Bank and The Hokkaido
Bank have acquired “Excellent Health Management Corporation– White 500” certification for six consecutive years.

External evaluation

Personnel system revision
While the diversification and advancement of bank work continued and employees’ consciousness of work also changed, we revised
our personnel system in July 2023 based on the perspectives of a “fair and convincing personnel system, “support for careerformation” and “the establishment of an environment where employees can work for a long time with peace of mind.” In addition, weraised base pay from July 2023 for the establishment of an environment that protects employees’ lives from inflation so that they canwork with peace of mind, and the improvement of employee engagement.
Main details of the revision
1 ‌Organization of the course system based on work
details

2 ‌Support for career formation through flexible course
switching

3 ‌Reorganization of the allowance system to correspondto work burdens and relocation and transfer burdens

4 ‌Review of the executive age-limit system from 55
years old on

Hokuhoku Financial Group, Inc. Integrated Report 2023

56

Opinion exchange meetings between Outside Directors and employees
We held frank exchanges of opinion between female employees currently participating actively in the workplace
and Outside Directors over what is required for the realization of the long-term vision.

Q

What does the company group require to realize the long-term vision?

A

From a long-term perspective, the creation of an environment in which employees can participate actively
and enjoyably and the active communication among colleague employees to that end will be important.

Okajima
The importance of responding to climate change and the securing of humanresources, issues that the company should work on, is growing day by day. I am
grateful to be able to experience that kind of work currently in SX Promotion
Department, and I have been able to find fulfilling work.
I think that an open environment where employees can work enjoyably will bevery important for the realization of the long-term vision. To that end, I feel that
communication among colleague employees about the group’s strategies will be
more necessary.

Namiko Okajima

GX Promotion Group Manager,
SX Promotion Department,
Hokuhoku Financial GroupKato
I do not think that what our ideal situation is, or what the vision we should aim foris have yet been communicated fully to employees, myself included.
For example, selling investment trusts or insurance itself is not our aim. Rather, ouressential aim is to provide information that customers require in their lives and help
them with asset formation. From that kind of perspective, I think that
communicating the important, essential things firmly first of all is required to realize
the long-term vision.

57

Hokuhoku Financial Group, Inc. Integrated Report 2023

Yuka Kato

Senior investigator,
Retail Promotion Department,
The Hokkaido BankUeno
The systems world is an industry that changes greatly every five or ten years, andworking in that kind of industry, I feel the pleasure of wondering how it will change
in the future.
I think that the important thing for the realization of the long-term vision will befirstly, for each and every employee to have long-term perspective. I think that
communicating the pleasure and importance of having a long-term perspective will
be important to that end too.

Maki Ueno

Group Manager,
No.1 Development Department,
Hokugin Software

YamauchiBeing involved in the development of human resources, and being conscious ofthat at all times means how to communicate the significance of working at thecompany group to employees. Having employees think about why they have to beat the group leads to the development of human resources, and in the end, I think,will be important for realization of the long-term vision.
I think that if the company is able to communicate that significance firmly, we will
have an organization that can create innovation unique to the company group andwe will be able to contribute to our customers in the region through the resolutionof issues.

Erina Yamauchi

General Manager, Skill Development andCultivation Office, and General Manager,
Diversity Promotion Office, Personnel
Department, The Hokkaido Bank

Funamoto

Kaoru Funamoto

Director serving as Audit & Supervisory
Committee Member

Listening to all of your ideas on what we should do for the realization of the longterm vision, I felt that you should definitely transition them to execution. I would like
you all put in senior positions with the authority and responsibility to execute thoseideas so that you can pursue your own concepts and directions. I cannot forget theweight I felt when I became Director-General of, and the person responsible for, theCriminal Affairs Bureau of the National Police Agency. I think that I was able to think
about the essentials and do that job because I was in that kind of position. I would
like all of you to work hard to make the bank better while feeling the responsibility.

Yokoi

Yutaka Yokoi

As you all say, I also think that employee motivation will be important for therealization of the long-term vision.
I think of “the realization of your own ideas” as an important element of motivation.
I think that realizing ideas is so much fun, you do not need money for it.
Does it feel like there are opportunities to be able to feel that kind of realization
exists within the group?

Director

Saiki
I was originally at a bank, but I am currently working on secondment at thegroup’s securities company. At Hokuhoku TT Securities, I have been assigned towork where I can realize something, think and transition to execution.
As the General Manager of Personnel Office, I also participate in meetings of theManagement Committee, and I have become able to think about things from acompany-wide perspective. Because of that, I can think that I want to try harder.
In that sense, I think that there are definitely those kinds of opportunities at thecompany group.

Aya Saiki

General Manager,
Personnel Office,Hokuhoku TT Securities

Hokuhoku Financial Group, Inc. Integrated Report 2023

58

Q

What is required to promote initiatives in new fields?

A

The establishment of organized educational systems and proactive action by all will
be important.

Ogawa
I think we will need to work on new fields such as DX and GX to survive as aregional financial group, but do you think that we have been able to implement
initiatives to obtain knowledge of new fields?
Other companies also think that new fields are a source of revenue so I thinkthat we have to improve our skills rapidly to differentiate ourselves. Does it feel likethat kind of environment has been established at the company group?

Marie Ogawa

Director serving as Audit &Supervisory Committee Member

Muranaka

Satomi Muranaka
Senior Financier,Loan Department,
The Hokuriku Bank

When I was in my former position as a branch manager, I consciously created
opportunities to explain the importance of DX, which will be essential to financial
institutions from now on, to employees and had them understand.
I think that how to have everybody in a branch thoroughly understand theimportance of switching work to apps and tablets is an important role demandedof branch managers.
Organizationally, creating the environment is important, but I think rather than justthat, branch managers themselves acting proactively will also be important.

Yonemitsu

Kyoko Yonemitsu

Investigator,
Personnel Department,
The Hokuriku Bank

We need everybody to be equipped with the minimum knowledge of work in new
fields. In addition to that, beyond work, I think that the environment and systems
for employees who would like to improve their career or skills have been built.
For example, opportunities for external secondment and training to acquire
specialist knowledge that cannot be obtained with bank experience alone havechanged from a designation system to an open application system. Further, thecompany has introduced the “Try internship” system for employees to observe
specialist work through short-term OJT at headquarters, so it has increased
opportunities to acquire knowledge.

OkajimaThe “Try internship” was trialled first of all in SX Promotion Department. I heard from a young employee who
actually participated that it was very stimulating. Even though it is short, I think having young employees observe
work is a very good system.
This system has just been expanded to almost all headquarters departments this fiscal year and I hear there
were about 100 entries so it feels like it has also led to an improvement in employee awareness too.

Funamoto
It feels like the strength of the company group in the DX field as an organization is that we have Hokugin
Software, but what is the awareness of employees with regard to the promotion of DX at Hokugin Software?

Ueno
The framework we have at Hokugin Software allows all employees to take e-learning courses so that they candeepen their knowledge. There are several hundred courses apart from DX too, and we have communicated to
employees that they can study when they have time. There are a lot of people who are studying steadily when
they find some spare time.
59

Hokuhoku Financial Group, Inc. Integrated Report 2023

Q

What do we need to invigorate human resources development and theempowerment of women?

A

The creation of an environment in which anybody, male or female, can take on thechallenge of something they want to do is important.

Yokoi
It is good that your authority increases as you are promoted, but there is an opinion that there are a lot of people
who become negative because responsibility increases. What do you think?

Saiki
Personally, I can understand the opinion that although it is good that there are more things you can do, people do
not want to bear responsibility when they consider the balance of various things. However, I think it would be awaste if you gave up without taking on the challenge so I think you should give it a go. Just a part is fine, noteverything, so try taking responsibility. It is also important for people to feel the satisfaction of having responsibility
and if it is in a form where that is supported by your superior, I think that would be the foundation for people to try
taking on the challenge.

Ogawa
In the sense of taking on challenges, I have heard that female branch managers are mainly at retail branches atregional financial institutions. I think that retail work is important, but corporate sales are important too. I would
like female careers to be expanded to corporate sales too rather than being centered on individual sales.

Yokoi
I think that there are a lot of people who would say yes if they were asked if they wanted to try corporate sales. If
we have an organization that can prioritize people because they want to do something rather than because they
are women, it will invigorate the organization more from the perspectives of both human resource development
and female empowerment.

Muranaka
There is various work at the company group. Also, employees now have various work styles that they can choose
from as well. I think that it is fine if there are people who value their family over work. I also think it is fine if there
are people who want to use their expertise to work without taking on responsibility.
Rather than making employees do things, I think it is important to create a culture that asks whether we cancreate the independence and positivity for employees to want to do things.

SuzukiRegardless of whether they are male or female, to have people take on morechallenges, it is necessary to show them what they need to do to be given theopportunity, and also that they will definitely be able to receive different
opportunities supposing that an opportunity they were given does not go well.
Without that, it may be difficult to generate the proactive behavior of taking on achallenge and trying to aim for a position with more responsibility.

Nobuya Suzuki

Director serving as Audit &Supervisory Committee Member

Funamoto
I think that the important thing when thinking about the future of the company group is how to work with a senseof unity while people working in various organizations also carry out human resource exchanges. I think that there
are people who I have met for the first time at this opinion exchange meeting today and I think that this kind ofopportunity is important.
I think that knowing people at various levels fosters the sense of unity of the company group and is the firststep towards the future Hokuhoku Financial Group. I would definitely like everybody to promote exchanges invarious forms.
Hokuhoku Financial Group, Inc. Integrated Report 2023

60

Strengthening group comprehensive capabilities

Making maximum use of our sales base over a wide area, a feature of the company group, we will further accelerate collaboration inpursuit synergistic effects at The Hokuriku Bank and The Hokkaido Bank to provide customers with value.
Moreover, we will strengthen the provision of comprehensive services that go beyond the financial or non-financial framework,
such as leases, cards, real estate and systems.

Provision of added value to customers
through group collaboration
Support for sales channel expansion• Business matching through Hokuhoku collaboration

Diversification of fund procurement methods• Lease proposals through collaboration with Hokugin Lease
The Hokuriku Bank
The Hokkaido BankGreater sophistication of fund management proposals

Hokuhoku Tokai
Tokyo Securities• Wide-ranging fund management proposals throughcollaboration with Hokuhoku TT Securities

Support for digitalization and DXDogin Regional
Research Institute

Hokugin Lease
Hokuhoku Capital

Provision of comprehensive
financial services
Hokuhoku Services

Hokugin Software• Digitalization through Hokuriku Card and Dogin Card
• DX support by Hokugin Software

Support using funds• Fund investment from Hokuhoku Capital
Hokuriku Card
Dogin Card

Hokuriku Hosho Services

Improvement of the corporate value of the company
Increased opportunities to acquire revenue
Strengthening of recruitment capabilities
Sharing and greater sophistication of specialist skills
Rationalization based on the sharing of management resources61

Hokuhoku Financial Group, Inc. Integrated Report 2023

Support for sales channel expansion
The Hokuriku Bank and The Hokkaido Bank are working positively on support for the expansionof customers’ sales channels and the provision of information using their wide-area network ofbranches.
The number of achievements of “Hokuhoku collaboration,” such as business matching thatconnects the business partners of The Hokuriku Bank and The Hokkaido Bank, and cofinancing, has increased dramatically.
We will continue to strive to provide customers with added value by strengthening initiatives
that take advantage of the features of the company group.

<< Main examples of Hokuhoku business matching >>• ‌Expansion of food-related sales channels
and suppliers• ‌Expansion of sales channels for productequipment• ‌Acquisition and sale of real estate (via anintermediary)• ‌System introduction and expansion ofsales channels• ‌Introductions to consulting companies

Number of collaboration achievements(cases)

1,901

555
FY2021

FY2022

Hokkaido area loan balance(billion yen)

3,272.8

3,306.3

2022/32023/3

Diversification of fund procurement methods
The Hokuriku Bank and The Hokkaido Bank have diversified customers’ fund procurement
methods through collaboration with Hokugin Lease. They promoted environmentally friendly
ESG leases to contribute to the decarbonization of the region. We will continue initiatives aimed
at a decarbonized society through our customers in the region throughout the group.

Number and amount of ESG leases(billion yen)

Number of cases
11

28
14.5

9.8

FY2021

FY2022

Greater sophistication of fund management proposals
The Hokuriku Bank and The Hokkaido Bank are providing highly specialized asset management
advice and consulting services through collaboration with Hokuhoku Tokai Tokyo Securities.
We will continue to strengthen group collaboration to respond to customers’ diverse needs.

Hokuhoku Tokai Tokyo Securities
deposited asset balance(billion yen)

227.7

230.1

2022/32023/3

Hokuhoku Financial Group, Inc. Integrated Report 2023

62

The group’s comprehensive capabilities

Number of member merchants (*)

Support for digitalization and DX(stores)

Digitalization by Hokuriku Card and Dogin Card
Hokuriku Card and Dogin Card are expanding member merchant transactions to promote
the switch to cashless trade in collaboration with the banks.
They are working on the resolution of customers’ issues and promoting thedigitalization of the region to improve the productivity of the community and promote theimprovement of convenience.

45,34846,6422022/32023/3(*) Number of member merchants of Hokuriku Cardand Dogin Card

TopicsHokuriku Card is collaborating with transportation facilities to introduce touchpayments, including the introduction of touch payments on Toyama airport express
buses and the implementation of a demonstration experiment for touch payments on
Toyama City circular sightseeing buses. By doing so, it is improving regional
convenience and contributing to the attractiveness of Toyama as a tourism city.

Support for DX by Hokugin Software
In addition to contract systems development and operation,
Hokugin Software, a systems company, also plays roles
including system sales and IT consulting for business partners.
In addition, it is also selling the deposited property
management system it introduced to The Hokuriku Bank and
The Hokkaido Bank to other regional financial institutions.
Hokugin Software will use the sophisticated and efficientsystems development capabilities it has cultivated in thefinancial field to promote support for regional DX.

Internal management

Entry of delivered
property

Deposit registration

Return registration

Internal management

Entry of delivered property

Business cooperation

Distribution

Investment

As part of the strengthening of the group’s comprehensive capabilities, we implemented ajoint training meeting for new employees for the first time since inaugurating the group. At
the training meeting, participants engaged in lively opinion exchanges with therepresentatives and others, and group work on the themes of the group’s history andfuture. By considering the group’s strategies based on the concept of flexible thinking, thismeeting contributed to the raising of awareness as FG employees.

Hokuhoku Financial Group, Inc. Integrated Report 2023

Distribution

Management company
Hokuhoku Capital

FG joint training for new employees

63Management andadministration

Cooperation forsupport of investment
destination

Hokuhoku Innovation Co-Creation
No.1 Investment Limited Partnership

Investment
Acquisition of shares

Management supportand improvement ofcorporate value

Investee companies

Investment

Managementcompensation

The Hokuriku Bank and Hokuhoku Capital established the
Hokuhoku Innovation Co-Creation No.1 Investment Limited
Partnership in October 2022 to support start-up companies
with cutting-edge technologies and services.
In addition to unearthing and developing the entrepreneurs
who will play central roles in the region’s future, we will
investment in companies at a wide range of stages, targetingcompanies aiming for public share offerings whose growth isexpected due to their innovative business.

Return registration

Investors The Hokuriku Bank

Support using funds

Deposit registration

Group fusion and the maximization of synergies~ Construction of Hokuhoku Sapporo Building completed as a new group base ~Business was carried out on the land for many years as the Sapporo Branch of The Hokuriku Bank, but it has been reborn as a newbase of the Hokuhoku Financial Group. We will fuse the group and maximize synergies with The Hokuriku Bank, The Hokkaido Bankand group companies using the facilities jointly. We will strive for the growth and development of the region and create new joint
value.
Hokuhoku Sapporo Building is an environmentally-friendly, sustainable office building and has secured performance andenvironmental characteristics equivalent to the CASBEE Sapporo A ranking.

Overview of Hokuhoku Sapporo Building
Name : Hokuhoku Sapporo Building
S i z e	  : 13 floors above ground, 3 floors undergroundU s e	  : The Hokuriku Bank Sapporo Branch,
The Hokkaido offices,
The Hokkaido Bank offices,
The Hokkaido Bank headquarters functions,group companies
Timing of completion : During fiscal year 2023 (plan)

The seven axes of Hokuhoku Sapporo Building
1. ‌Inheritance of history and leaping into the
future2. Co-prosperity with local society
3. ‌Group fusion and the maximization ofsynergies
4. ‌Provision of comfortable space and services
for customers
5. New work styles and diversity
6. BCP handling based on resilience
7. Reduction of the environmental burden

Policy on initiatives for the environment
Policy 1

Environmentally-friendly exterior design

Policy 2

Use of highly efficient facilities and equipment

Policy 3

Optimization of operation based on automatic
control of facilities and equipment

Policy 4

Connection to community air-conditioning andsurface environment consideration

CASBEE Sapporo
Environmental efficiency of buildings

BEE rank A (BEE=1.5)

Lifecycle CO2☆☆ (89％)

Primary energy consumption

BElm = 0.79
Hokuhoku Financial Group, Inc. Integrated Report 2023

64

Stakeholder communication
Relationships with stakeholders
Hokuhoku Financial Group will work towards the realization of a sustainable society through relationships with its
various stakeholders, namely, customers, the environment, the community, shareholders and investors, employees,
municipalities, educational institutions and industry associations.

Social contribution activities, financial andCommunity

economic education, various CSR events,
information exchanges with various group

Shareholders
Investors

Environment

Cooperation with central government

General meetings of shareholders,ministries and agencies and various

company briefings for investors,

groups, appropriate disclosure ofcompany briefings for individual

environmental information

investors, individual interviews, mini
disclosure letters, publication of theintegrated report

Customers

Employees

Customer opinion cards, satisfaction

Various training, seminars forsurveys, call centers, opinion andemployees, dialogue withcomplaint forms on websites

Municipalities
Educational institutions
Industry associations

management
Appropriate responses to the supervisory authorities,
industry-academia-government collaboration,
financial and economic education, Japanese Bankers
Association, Regional Banks Association of Japan

Hokuhoku Financial Group disclosure policy
Basic policy
Hokuhoku Financial Group (hereinafter referred to as “company”) and its subsidiaries and related companies undertake positive
information disclosure to all stakeholders, including shareholders, investors, customers, the community and employees, under the
management philosophy of “continuing to deliver comprehensive financial services with its extensive regional network to contributeto mutual prosperity with customers and the region.”
In addition, we will sustain and develop relationships of trust with stakeholders through various communication activities.

65

Hokuhoku Financial Group, Inc. Integrated Report 2023

Investors and shareholders
The Hokuhoku Financial Group values dialogue with shareholders and investors. In fiscal year 2022, we held
briefings for institutional investors in May and November, and briefings for individual investors in June. We
explained the company group’s profile, results and strategies at these briefings. Recently, we held briefings
for institutional investors in May 2023 in a hybrid format (assembly + web), and briefings for individual
investors in June in a web format. In addition, we have enhanced dialogue with participants by having
Outside Directors participate in these briefings.

Environment
The Hokuriku Bank and The Hokkaido Bank concluded an agreement on the “MEJAR Sustainability Solutions Collaboration,” apartnership agreement concerning products and services in the sustainability area, with Bank of Yokohama, Higashi-Nippon Bank,
The 77 Bank and The Hiroshima Bank, joint operators of the MEJAR core system. Each bank is working positively on supporting thedecarbonization of its customers, and we will contribute to regional decarbonization and the development of regional economies by
sharing information on future sustainability solutions.

Community
Initiatives for the improvement of financial literacy are expected from regional financial institutions, such as
reducing the age of adulthood and including learning on financial products such as investment trusts incurriculum guidelines for high schools. Hokuhoku Financial Group also implements financial and economic
education and workplace experience in elementary, secondary and higher education, as well as in adulteducation for local authorities and company employees.
While the population is aging and the conversion to a cashless economy is advancing, financial crimes
such as fictitious billing and fraudulent transactions are increasing. We will advance initiatives in cooperation
with the community so that people can understand financial systems and correct knowledge as consumers,
and form a sense of money and morality independently.

Municipalities, educational institutions and industry associations
The Hokuriku Bank and The Hokkaido Bank are strengthening communication through cooperation withmunicipalities, educational institutions and industry associations, and collaborating and cooperating
positively on the matching of regional needs and research seeds, and various initiatives in accordance withthe features, strengths and issues of each region.
As of the end of fiscal year 2022, we had built cooperative relationships with 49 municipalities and were
promoting initiative for regional co-creation based on industry-academia-government collaboration.

Customers
The Hokuriku Bank and the Hokkaido Bank listen sincerely to the opinions of customers and conduct surveys of customers engaging
in asset management transactions to propose better services and products. The surveys use Net Promoter Score® (NPS®), whichshows how interested a customer is in a company’s brand, product or representative and how likely it is it that a customer would
recommend the company brand, product or representative to a friend or family member.
In fiscal year 2022, as in fiscal year 2020 and fiscal year 2021, both banks received ratings that exceeded the average for the 50
regional banks that participated in the survey.

Employees
The Hokuriku Bank and The Hokkaido Bank provide forums to invigorate communication with employees
through dialogue between directors and employees.
The Hokuriku Bank implements free discussion with the management team to communicate
management strategies and thoughts, and listen to the opinions of employees. The management team andemployees share the direction that the company group should move in, and these have also become
opportunities for considering skill improvements and career formation.
On the occasion of its 70th anniversary, The Hokkaido Bank held “Do Talk,” where employees andmanagement could talk directly. We are exchanging opinions freely and openly on themes such as job
satisfaction, thoughts on work and headquarters policies.
We will promote dialogue with employees while also using online tools to invigorate internal
communication.
Hokuhoku Financial Group, Inc. Integrated Report 2023

66

Strengthening group governance  List of directors (as of June 27, 2023)

Position and responsibilities
at the company

Hiroshi Nakazawa Yuji Kanema Masahiko Kobayashi Yoshimasa Takada Yoshikazu Sakamoto

Akira Sakai

Director
Director
Second in charge ofIn charge of BusinessBusiness Planning
Representative Director
Planning Department
Department
Representative Director Deputy President
In charge of DX
Second in charge of DX
In charge of SX
President
Promotion Department
Promotion Department
Promotion Department
Second in charge of SX
Second in charge of SX
Promotion Department
Promotion Department

Director
In charge of Risk
Management
Department●

Corporate management
HR management●

Consulting

●

●

●

●

●

●

Director
In charge of Loan
Planning Division

●

●
●

●

●

●
●

Risk management / ComplianceMarket●●Global affairs●

IT / DX

●

●

●

●

GX

●

●

●

●

Finance

●

●

●

●

Finance / Accounting

●

●

●

●

●

●

●

Executive officers
In charge of Corporate Planning Department
and Personnel Strategy Department
Second in charge of Administration and
Systems Division

Shigeru Urasaki
Taro Nishino

Director and Chairman

The Hokuriku Bank, Ltd.

Directors andAuditors

Director
Director
Auditor (outside)
Chairman and Executive Officer
Managing Executive Officer

Executive
officers

Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

67

Hokuhoku Financial Group, Inc. Integrated Report 2023

Second in charge of Corporate Planning Department
and Personnel Strategy Department
Second in charge of Loan Planning Division

Eishin Ihori
Yoshikazu Sakamoto
Akira Sakai
Seiichiro Yagi
Eishin Ihori
Yoshikazu Sakamoto
Osamu Yoshii
Akihiro Tamasaku
Nakaba Kurokawa
Naohisa Otsuka
Akira Sakai

President
Director
Director (Outside)
Auditor (Outside)
President and Executive Officer
Managing Executive Officer
Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

In charge of Administration and

Tetsuya Yamazaki Systems Division
Second in charge of Risk
Tsuyoshi Sasaki Management Department

Hiroshi Nakazawa
Tsuyoshi Tatsushima
Koetsu Yamazaki
Susumu Kyuwa
Hiroshi Nakazawa
Tsuyoshi Tatsushima
Katsuya Morita
Koji Kida
Shingo Shimada
Masaru Sumitani
Tetsuya Yamazaki

Director
Director
Full-Time Auditor

Senior Managing Executive Officer
Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Tsuyoshi Tatsushima
Naohisa Otsuka

Masahiko Kobayashi
Shigeru Urasaki
Yasushi Numata
Masahiko Kobayashi
Takuya Hatakeyama
Shigeru Urasaki
Yukio Ikurumi
Yasukazu Tega
Sadakazu Maeda
Taro Nishino

Yutaka Yokoi Hirokuni Kitagawa Masaaki Manabe Nobuya Suzuki Kaoru Funamoto Marie Ogawa

Position and responsibilities
at the company

Outside Director

Outside Director serving Outside Director serving Outside Director serving Outside Director serving
Director serving as an
as an Audit andas an Audit andas an Audit andas an Audit andAudit and Supervisory
Supervisory Committee Supervisory Committee Supervisory Committee Supervisory Committee
Committee Member
MemberMemberMemberMember●Corporate management●●

HR management●

Consulting
Risk management / Compliance

●

●

●

●

●

●

●

●

MarketGlobal affairs
IT / DX
GX
Finance●Finance / Accounting●●■ Name of the accounting auditors

Deloitte Touche Tohmatsu LLC

The accounting auditors have concluded auditing contracts with the following three companies: Hokuhoku Financial
Group, Inc.; The Hokuriku Bank, Ltd.; and The Hokkaido Bank, Ltd.

Chairman

The Hokkaido Bank, Ltd.

Directors andAuditors

Director
Director (Part-Time)
Auditor (Outside)
President and Executive Officer
Managing Executive Officer

Executive
Officers

Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Masahiro Sasahara
Tsuyoshi Sasaki
Takuya Hatakeyama
Shuji Iwamura
Yuji Kanema
Yoshimasa Takada
Etsuro Yarimizu
Naohiro Maeda
Kazuyuki Numada
Takehiko Higashida
Tsuyoshi Tatsushima

President
Director
Full-Time Auditor
Auditor (Outside)
Deputy President and Executive Officer
Managing Executive Officer
Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Yuji Kanema
Yoshimasa Takada
Makoto Suzuki
Satoshi Chiba
Masaru Saito
Tomoo Aida
Taro Nishino
Tetsuya Yamazaki
Shu Yamamoto
Kohei Kitagawa
Akira Sakai

Director and Deputy President
Director
Auditor (Outside)

Senior Managing Executive Officer
Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Masaru Saito
Tetsuya Yamazaki
Ken Ebina
Tsuyoshi Sasaki
Yukiya Onishi
Masayuki Hirakawa
Masanori Nishizawa
Yasunori Sato
Shigeru Urasaki

Hokuhoku Financial Group, Inc. Integrated Report 2023

68

Strengthening group governance  Corporate governance
Basic approach
The company and all group companies regard strengthening and enhancing corporate governance as one of the most importantmanagement priorities. We have drawn up a basic policy - our management philosophy - covering all our activities including theformulation of management strategies and making management decisions. We share basic values and a sense of ethics through the
Hokuhoku Financial Group Code of Conduct, and endeavor to increase corporate value and realize solid management aimed atcontributing to the development of the Hokuriku and Hokkaido regions.

Corporate governance guidelines
https://www.hokuhoku-fg.co.jp/info/governance/

Corporate governance
We have established a framework that enables quick decision-making, with the Shareholders’ Meeting and Board of Directors at the
top of the framework, and day-to-day operational authority delegated in accordance with internal rules. Bodies such as theManagement Committee are able to respond quickly to specific and expert matters based on basic policies established by the Boardof Directors. Furthermore, separate from the Management Committee, we have established a Fiduciary Duty Promotion Committee, aSustainability Promotion Committee and a Business Promotion Committee, which consider the required handling and orientation withregard to the issues of group companies.
We use a company with Audit and Supervisory Committee system and also appoint outside directors. Additionally, in order tobolster our group governance framework and, ensure that operations are managed appropriately as a holding company, people fromeach of our principal subsidiaries, The Hokuriku Bank and The Hokkaido Bank, are appointed as directors at the other bank topromote mutual understanding and mutual checks and balances.
In this way, in addition to having established this framework to enable the cycle of effective decision-making, implementation,
evaluation, and improvements, the Board of Directors decides the basic policy on internal controls, to create an effective internal
control system.

Basic policy on internal controls
https://www.hokuhoku-fg.co.jp/info/governance/policy/

Overview of key bodies
Main features■Organizational format: Company with an Audit and Supervisory Committee■Consulting body for the Board of Directors: Nomination and Compensation Committee

Board of Directors

Audit and Supervisory Committee

Nomination and Compensation Committee

Ratio of outside directors 41.7%

Ratio of outside directors 80%

Ratio of outside directors 71.4%

OutsideInsideInside5 people

1 person

2 people

Directors

Directors
5 people

12 people
Inside7 people

Directors
7 people
OutsideOutside4 people5 people(As of June 27, 2023)

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Hokuhoku Financial Group, Inc. Integrated Report 2023

[1] Board of Directors

Met 12 times during fiscal year 2022

Responsible for decisions related to important policies for management of the group as a whole, and for overseeing business
management, risk management and auditing carried out by the holding company and its subsidiaries.
Five outside directors are appointed and oversight is strengthened by incorporating perspectives that are independent frommanagement.
Total time of meetings

Number of deliberations by the Board of Directors
Discussions

41

Reports

162

17.6 hours[2] Audit and Supervisory Committee

The main discussion items in fiscal year 2022
Appointment of representative directors and executive directors
Appointment of executive officers
Determination of the basic policy for the internal control system

Met 11 times during fiscal year 2022

Determines matters related to auditing policies, plans and methods, and matters related to the execution of duties of directors serving
as Audit and Supervisory Committee members. Also conducts audit on the performance of duties by directors, and determines
opinions related to the nomination, compensation, etc., of directors other than those serving as Audit and Supervisory Committee
members.

[3] Nomination and Compensation Committee

Met 7 times during fiscal year 2022

Composed of a minimum of three directors, the majority of whom are outside directors. Provides appropriate advice and involvement
in matters related to personnel and remuneration for directors and senior management.

[4] Management Committee

Met 41 times during fiscal year 2022

Comprised of full-time directors of the company, makes decisions on matters relating to overall business execution policies andmatters related to the implementation of particularly important tasks by specific divisions based on the basic policies determined by
the Board of Directors.

[5] Fiduciary Duty Committee

Newly established. Met for the first time in February 2023

Comprised of full-time directors of the company, the directors and general managers of responsible departments, and the generalmanagers of the responsible department of some subsidiaries (the banks and the securities company), and confirms and evaluates
the state of practice of customer-oriented work operations throughout the group, and considers the handling and improvements
required.

[6] Sustainability Promotion Committee

Met twice during fiscal year 2022

Comprised of full-time directors of the company, the directors and general managers of responsible departments, considers the
direction of sustainability management for the entire group.

[7] Business Promotion Committee

Met 4 times during fiscal year 2022

Comprised of full-time directors of the company and the presidents of subsidiaries, responsible for making sure that important issues
and management policies for the entire group are widely known and understood, and reflected in appropriate business execution byconfirming the state of management of each company.

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70

Strengthening group governanceApproach to the appointment of directors and procedures
Candidates for director excluding those serving as Audit and Supervisory Committee members
The company selects people with knowledge and experience that allows them to manage a bank appropriately, fairly and efficiently,
or with the high-level ability, knowledge and insight required for the performance of duties viewed from their work experience outsideof the company group, and who have sufficient social trust and can be expected to increase the corporate value of the company
group based on the management philosophy.
The Board of Directors obtains advice from the Nomination and Compensation Committee and receives opinions that a candidate
is qualified from the Audit and Supervisory Committee before determining the appointment of a candidate for director excluding thoseserving as Audit and Supervisory Committee members to ensure fair and transparent procedures.

Candidates for directors serving as Audit and Supervisory Committee members
The company selects people with knowledge and experience that allows them to perform audits of the duties of directors
appropriately, fairly and efficiently, or with the high-level ability, knowledge and insight required for the performance of duties viewed
from their work experience outside of the company group, and who have sufficient social trust and can be expected to increase thecorporate value of the company group based on the management philosophy.
The Board of Directors obtains consent from the Audit and Supervisory Committee based on the selecting standards, etc. before
determining the appointment of a candidate for director serving as an Audit and Supervisory Committee member.

Reason for appointment as outside director
In the selection of candidates to be outside directors, in addition to the knowledge, experience and capabilities required to execute
duties and meeting the requirements for outside directors established in the Companies Act, we emphasize the securing of
independence from the company to exercise the function of supervision over its management.
The outside directors of each company are designated as independent officers because they meet the standards on
independence established by the Tokyo Stock Exchange and the Sapporo Stock Exchange, as well as the standards for the judgmentof independence established by the company, and there is no danger that conflicts of interest will occur with general shareholders.
Name

Reason for appointment

Attendance at Board of Directors
meetings and Audit and Supervisory
Committee meetings in fiscal year 2022

Masaaki Manabe

The company has appointed Mr. Manabe as an outside director as he is well versed inmanagement and local economies as a business manager and can be expected tostrengthen the function of supervision of the company’s overall management.

Board of Directors meetings 12/12
Audit and Supervisory
11/11
Committee meetings

Nobuya Suzuki

The company has appointed Mr. Suzuki as an outside director as he has extensive
experience in the management of financial institutions (life insurance) and can be expected
to strengthen the function of supervision of the company’s overall management.

Board of Directors meetings 12/12
Audit and Supervisory
11/11
Committee meetings

Kaoru Funamoto

The company has appointed Mr. Funamoto as an outside director due to his extensive experience andbroad insight at the National Police Agency and The Resolution and Collection Corporation, and because
he can be expected to strengthen the function of supervision of the company’s overall management.

Board of Directors meetings 12/12
Audit and Supervisory
11/11
Committee meetings

Marie Ogawa

The company has appointed Ms. Ogawa as an outside director as she has a wealth of experienceand wide-ranging knowledge in the financial and legal fields at the Bank of Japan, and can be
expected to strengthen the function of supervision of the company’s overall management.

Board of Directors meetings 10/10
Audit and Supervisory
9/9
Committee meetings

Yutaka Yokoi

The company has appointed Mr. Yokoi as an outside director due to his extensive international
experience at the Ministry of Foreign Affairs and wide-ranging knowledge, and because he canbe expected to strengthen the function of supervision of the company’s overall management.

Board of Directors
meetings

10/10

The succession plan
As its succession plan, the company has clarified its approach and processes at each important stage with regard to the series of
initiatives leading to the designation of successors so that people with the knowledge and experience enabling them to implement the
management of the company and group companies appropriately, fairly and efficiently, and sufficient social trust, and who can be
expected to increase the corporate value of the company group, can be appointed continuously as the management team, including
the representative directors of each core group company.
In addition, the Nomination and Compensation Committee, which is comprised of a majority of outside directors and has anindependent outside director serve as the chair, carries out the deliberations required and interviews candidates in the important
process of selecting, developing and evaluating candidate successors based on the succession plan. The company operates the
succession plan based on these initiatives, so that the designation of candidate successors of the company group is carried out very
effectively while preserving objectivity and transparency.

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Hokuhoku Financial Group, Inc. Integrated Report 2023

The directors’ skills matrix
The company considers the roles to be fulfilled by the Board of Directors and the skills (knowledge, experience and capabilities) required to perform long-term
strategies for the realization of the long-term vision to be as follows.

Long-term vision

Sustainable growth
together with local
communities andcustomers throughproblem solving

Long-term strategies
Solving more challenges by
expanding business domain
Building a management basethat supports sustainablegrowthDeveloping a corporate culture
through the active participationof employees

The roles the Board of Directors should fulfill

Required skills

Supervision of management strategies and the formulation and implementation of investment, human resources
Corporate management,
and capital strategies consistent with them based on deep insight into the future management environment
financing, finance and accounting
Leading corporate reform and growth with deep insight into DX

IT and DX

Risk management andcompliance
Consulting,globalRealizing a company group that co-exists with regional society and international society affairs and markets
Managing the organization and human resources appropriately and leading
Personnel and GX
the diversity and sustainability of the company group
Leading compliance and risk management

Details of skills
Corporate management

Knowledge, experience and capabilities in the management of companies, etc., and organizational management

HR management

Knowledge, experience and capabilities in personnel matters, labor relations, human resources strategy and diversity

Consulting

Knowledge, experience and capabilities in solution proposals and corporate support

Risk management / Compliance

Knowledge, experience and capabilities in risk management, legal affairs and complianceMarketKnowledge, experience and capabilities in market operations

Global affairs

Knowledge, experience and capabilities in global perspectives and overseas businessIT / DX

Knowledge, experience and capabilities in system planning, operation and management, and the digital field

GX

Knowledge, experience and capabilities in initiatives for sustainability and the environmental field

Finance

Knowledge, experience and capabilities in the financial industry

Finance / Accounting

Knowledge, experience and capabilities in financial strategy and accounting

Assessment of the effectiveness of the Board of Directors
The company’s Board of Directors conducts analysis and assessment of the overall corporate governance system including the overall effectiveness of the Board of
Directors each year in light of the purpose of our Corporate Governance Guidelines, discloses an overview of the results and aims to make the necessary improvements.

The PDCA cycle
Formulation of initiative policy

Operation of the Board of Directors

Assessment of effectiveness

Extraction of issues

Overview of the results of analysis and assessment of the effectiveness of the Board of Directors in fiscal year 2021
It was assessed that the composition and operation of the Board of Directors and the Corporate Governance Committee (* Nomination and Compensation Committee from November 2021), establishedunder the Board of Directors and whose main members are outside directors, were appropriate and that the effectiveness of the Board of Directors had been secured. We will continue to implement themeasures required to increase the effectiveness of the Board of Directors, such as enhancing and improving the provision of advance information to independent outside directors and materials.

Initiatives in fiscal year 2022
We increased the number of outside directors by two people, including one woman, to five people, thereby raising the ratio of outside directors, to activate discussions on the Board of
Directors, improved the detail of materials (enhancement of information), accelerated the provision of materials, and established a forum for Q&A ahead of meetings of the Board of Directors.

Overview of the process of analysis and assessment of the effectiveness of the Board of Directors in fiscal year 2022
We implemented a named self-assessment questionnaire among all directors, obtained advice from the Audit and Supervisory Committee based on questionnaire
results, and carried out the assessment of effectiveness at the meeting of the Board of Directors in May.
Items (major items) on the self-assessment questionnaire[1] Composition of the Board of Directors [2] Operation of the Board of Directors [3] Composition and operation of the Nomination and Compensation Committee [4] Roles and duties of directors,
support for outside directors, etc. [5] Relations with shareholders and investors [6] Corporate governance, effectiveness of the Board of Directors overall [7] Improvements from last fiscal year

Overview of the results of analysis and assessment of the effectiveness of the Board of Directors in fiscal year 2022
It was assessed that the composition and operation of the Board of Directors and the Nomination and Compensation Committee, established under the Board of Directors and whose main members are outside directors, were appropriate
and that the effectiveness of the Board of Directors had been secured. On the other hand, based on opinions for the further improvement of the effectiveness of the Board of Directors, we will strive for improvements in operational aspects
such as the expansion of forums for the discussion of medium to long-term management issues and the future image of the group, the securing of sufficient time for meetings, and the setting of appropriate time for explanations.
Hokuhoku Financial Group, Inc. Integrated Report 2023

72

Strengthening group governanceDirectors’ remuneration
The company determines the “policy for the determination of remuneration, etc.,” at a meeting of the Board of Directors and has
established policy and procedures for the determination of amounts such as directors’ remuneration, etc., as follows.
i. The company sets the level and composition of directors’ remuneration so that it functions as an incentive for the sustainablegrowth of the company group and the improvement of its medium to long-term corporate value.
ii. The remuneration, etc., of directors excluding directors serving as Audit and Supervisory Committee members is comprised of thefollowing basic remuneration and share remuneration, with the respective amounts within the upper limits of the annual
remuneration approved at the General Meeting of Shareholders, and determined by the Board of Directors in an objective andtransparent manner upon the recommendation from the Nomination and Compensation Committee concerning theappropriateness and validation of the amounts calculated in accordance with separately established directors’ remuneration
provisions and share remuneration-type stock option provisions.

(a) Basic remuneration
Basic remuneration shall be a fixed amount of remuneration established for each position.
(b) Share remuneration
Share remuneration share remuneration-type stock options equivalent to the amounts established for each position.
iii. The remuneration, etc., of directors serving as Audit and Supervisory Committee members is comprised only of basic remuneration inlight of their role of supervising and auditing the execution of business from a neutral and independent perspective, and determinedbased on discussions of the Audit and Supervisory Committee Members in accordance with the separately established directors’
remuneration provisions, within the upper limits of the annual remuneration approved at the General Meeting of Shareholders.

The details of resolutions concerning directors’ remuneration, etc., at the General Meeting of Shareholders are as follows.
i. A resolution was passed at the Ordinary General Meeting of Shareholders held on June 27, 2017.
ii. The amount of remuneration including bonuses for directors (excluding directors serving as Audit and Supervisory Committee
members) is to be an amount not exceeding 250 million yen per year (not including the salaries of employees serving concurrently
as directors).
iii. The amount of remuneration for directors serving as Audit and Supervisory Committee members is to be an amount not exceeding
80 million yen per year.
iv. In addition to the upper limit of the amount of remuneration for directors (excluding directors serving as Audit and Supervisory
Committee members), there is to be a separate allocation of stock acquisition rights as share remuneration-type stock options for
directors (excluding directors serving as Audit and Supervisory Committee members and outside directors) of an amount notexceeding 45 million yen per year (not including the salaries of employees serving concurrently as directors).

Total amounts of remuneration (fiscal year 2022)
Total amounts by category of remuneration, etc.

Number of
eligible
directors

Category of directors

Total amountsof remuneration(billions of yen)

Directors (excluding directors serving
as Audit & Supervisory Committee
members and outside directors)

12.2

10.3

Directors serving as Audit &Supervisory Committee members(excluding outside directors)

2.5

2.5

1

Outside Directors

2.5

2.5

5

Basic
Variable
Stock options
remuneration remuneration
1.9

Retirement
benefits

Of the amounts on theleft, non-monetary
remuneration, etc.
1.98(Note) ‌The full amount of non-monetary remuneration, etc., for directors (excluding directors serving as Audit & Supervisory Committee
members and outside directors) was for stock options.

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Hokuhoku Financial Group, Inc. Integrated Report 2023

Handling of cross-shareholdings
The company and its core subsidiaries (The Hokuriku Bank and The Hokkaido Bank) have established a policy concerning crossshareholdings of listed companies and standards for exercising voting rights as follows. With regard to shares that are not deemed
appropriate to hold, we will proceed with the sale after adequate dialogue with the business partners. In addition, we may sell cross-heldshares even if holding is deemed appropriate, taking into consideration the market environment, management and financial strategies, etc.

Policy on cross-shareholdings(1) Cross-shareholdings shall be made when it is judged that they will maintain and strengthen long-term and stable relationships with the target
company and benefit the bank’s business strategy, thereby helping to enhance the corporate value of the target company and the group.
(2) For cross-shareholdings, the risk and return of holding the shares shall be measured for individual stocks based on an index considerate of
the cost of capital.
The Board of Directors will then conduct a comprehensive review each year to determine whether or not to hold the shares in light of theeconomic rationale based on prospects, business strategies such as business relationships and business alliances, and the significance ofholding the shares in light of their relevance to the local economy.
(3) Overall, our policy is to reduce cross-shareholdings by 25% (about 15.6 billion yen) of the book value of cross-shareholdings over the three years
from fiscal year 2022. In the medium to long-term, we are aiming to reduce cross-shareholdings to less than 20% of consolidated net assets.

Policy on the exercise of voting rights
When exercising voting rights for cross-shareholdings, the following points shall be confirmed for each agenda item, and if
necessary, a comprehensive decision for approval or disapproval shall be made through dialogue with the business
partner.
(1) Will it contribute to increasing the medium to long-term corporate value and sustainable growth of the partner company?
(2) Will it contribute to increasing the medium to long-term economic benefits of the company group?

Internal auditing mechanisms
Basic approach
The company group believes that the establishment of internal auditing mechanisms that effectively meet requirements according
to the scale and nature of operations, laws and regulations applied to business and categories of risk, is indispensable to theappropriate legal and regulatory compliance of the company group, customer protection and risk management.
Based on this conviction, the company and its subsidiary banks, The Hokuriku Bank and The Hokkaido Bank, have eachestablished an internal Audit Department.
The internal Audit Department of each company has secured independence from other departments and establishedmechanisms of checks and balances.

■ Initiatives at the company group
The company has established Audit Department, which verifies the appropriateness and effectiveness of the internal management mechanisms of groupcompanies and oversees the internal audit function of group companies. Based on the basic policy and the Rules on Internal Audits established by the
Board of Directors, Audit Department carries out internal audits on the company and its subsidiaries (other than The Hokuriku Bank and The HokkaidoBank) and affiliates, and receives reports from The Hokuriku Bank and The Hokkaido Bank that include the results of internal audits and the state of
improvement of points at issue. Furthermore, when necessary, Audit Department grasps and manages the state of implementation of internal audits atgroup companies centrally through on-site verification of the banks, guidance and reports.
The results of internal audits of group companies are reported regularly to the Board of Directors and promptly when needed. In particular, mechanisms
have been put in place for prompt reporting to the Board of Directors of events that could have a significant impact on the management of the group.
The Audit Departments of The Hokuriku Bank and The Hokkaido Bank also conduct operational and asset audits of the headquarters, branches andsubsidiaries of each bank based on their policy and Rules on Internal Audits. In implementing these audits, they grasp the state of legal and regulatorycompliance, customer protection, and risk management of the department subject to audit, and formulate efficient and effective internal audit planstaking into account factors such as the frequency and extent of such audits.
In addition, when necessary, the Audit Departments of both banks and the Audit Department of the company conduct audits jointly in order tostrengthen and streamline the functions of the group as a whole in audits.
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74

Strengthening group governance  Risk management■ Integrated risk management framework
The company group has established a basic risk management policy for various risks and is striving for the establishment of
an integrated risk management framework to ensure risk taking and management resource allocation balanced with earnings
targets while keeping overall levels of risk within the group’s managerial capacity to ensure the protection of customer deposits
and the trust of shareholders and creditors.
In addition, we have established an integrated Risk Management Department to integrate and manage various risks, while theindependent Audit Department carries out internal audits and we have a framework that verifies the appropriateness andeffectiveness of risk management system.
Hokuhoku Financial Group, Inc.

Board of Directors
Audit and Supervisory Committee
Management Committee
Risk Management Department

The Hokuriku Bank The Hokkaido Bank

Audit Department

Board of Directors

Management Committee
ALM Risk Management Committee
Market risk

Liquidity risk

Credit risk

Other subsidiaries

Auditors, Audit and Supervisory Board

Operational risk

■ Allocation of risk capital
The company group quantifies the various risks generated with respect to its operations as uniformly as possible and manages risk so that theoverall level of risk is kept within the group’s management capacity.
The subsidiary banks estimate maximum potential losses by quantifying credit risk, market risk and operational risk, allocate risk capitalsourced from core capital to make effective use of capital resources, and control and manage risk within the range permissible for management.
Meanwhile, the company manages risk so that excessively large risks are not taken relative to capital on a group-wide basis, such as verifying
the risk allocation plans of subsidiary banks, and whether amounts in excess of risk capital allocations are sufficient to cover risk conceivably
affecting subsidiaries other than the subsidiary banks as well as risk not included in the risk assumptions, and monitoring actual levels of risk.
In addition, we perform stress tests to calculate the extent of potential losses that would be anticipated in certain scenarios such as a normallyinconceivable deterioration of business conditions or market fluctuations. By doing so, we verify regularly the substantiality of our capital
position against risk.

■ Credit risk management
Basic approach
Credit risk involves means the risk that it will become impossible to recover the principal or interest of loans, etc., due to a reason such as thedeterioration of a customer’s management situation. Although this is an unavoidable risk for a bank, whose mission is financial mediation, thecompany group strives to develop and strengthen its credit risk management systems to maintain and enhance the soundness of its assets.

Credit risk management systems
To maintain and enhance the soundness of assets, the company group strives to grasp credit risk promptly and accurately
using its internal ratings system and asset self-assessment, and performs appropriate write-offs and provisions to reserves.
When making individual judgements on the granting of credit, we carry out rigorous screening in accordance with thestandards and principles specified in our credit policy.

Internal ratings systems
To grasp the credit risk of loans, etc., objectively, our subsidiary banks have introduced internal ratings systems. They grasp trends inratings continuously by breaking customers’ creditworthiness down into fifteen levels based on financial data and qualitative information.
In addition, we monitor the credit concentration status of large borrowers based on the Group Management Rules for Credit Limits andmanage loans so that no excessive credit concentration risk arises.
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Hokuhoku Financial Group, Inc. Integrated Report 2023

Self-assessment standards
Self-assessments are implemented strictly by asset assessment departments at the subsidiary banks based on the asset selfassessment standards, and their appropriateness is verified by Risk Management Department and an independent internalmanagement department.

Corporate rehabilitation
After making a loan to a corporate customer, we strive to prevent bad debt from occurring by assessing the businessconditions faced by the borrower and following up their business plans. Meanwhile, we strive for the soundness of assets
through the creation of a framework dedicated to the management of bad debt and the strengthening of support functions forcorporate rehabilitation.

■ Market risk management
Basic approach
Market risk means the risk of incurring losses due to fluctuations in the value of assets and liabilities held or in earnings
generated caused by fluctuations in various market risk factors such as interest rates, stock prices and foreign exchange rates.
The company group strives to control market risk appropriately and manage operations so that we can ensure stable earnings.
To that end, at the subsidiary banks that mainly handle transactions involving market risk, we have established regulations formarket risk management and manage assets and liabilities comprehensively (ALM).

■ Liquidity risk management
Liquidity risk includes fund procurement risk involving losses that may be incurred by being unable to procure funds due to a decline increditworthiness, etc., and being forced to procure funds at a significantly higher interest rate than normal, and market liquidity risk
involving losses that may be incurred due to market disorder, etc., preventing a company from trading or forcing it to trade on
considerably less favorable cost than normal.
The subsidiary banks, which account for a majority of the group’s liquidity risk, have stipulated regulations on liquidity risk management
and maintain adequate levels of government bonds and other payment reserve assets that are readily convertible into cash. They also set
various management indices and monitor these on a daily basis. The state of liquidity risk is reported and discussed regularly at meetingsof the ALM Risk Management Committee, etc., so that we will be able to respond appropriately should a crisis occur.
The company grasps the state of management and procurement at subsidiary banks, and takes every precaution possible for smoothfund procurement.

■ Operational risk management
Basic approach
Operational risk means the risk of losses that may arise as a result of operational processes, the conduct of executives or employees,
or computer systems being inappropriate, or adverse external events.
The company group has established Rules for the Management of Operational Risk and categorizes operational risk into sevencategories: 1) administrative risk; 2) system risk; 3) legal risk; 4) human risk; 5) tangible asset risk; 6) reputational risk; and 7) otherrisks. The state of these risks is monitored by the Operational Risk Specialist Committee, which convenes each month at thesubsidiary banks, and we strive to establish a PDCA cycle framework by grasping potential risks through risk assessments, etc., andevaluating preventive measures.

Risk management systems by major category
Administrative risk management
The company group considers measures to prevent reoccurrence through analysis of the causes of administrative errors and otherincidents, advances the centralization and streamlining of administrative processing at headquarters from the perspectives of
consolidation and mutual checks and strives to implement initiatives aimed at reducing administrative risk.
System risk management
The company group has formulated Rules for System Risk Management and a basic policy on ensuring the safety of information
assets (security policy), has established a robust management and operating framework, and implements various security
management measures, including backup systems. In addition, we are working on the strengthening of the security management
framework aimed at responding promptly to cyberattacks, which have tended to increase in recent years.

■ Crisis management
To minimize the impact of any large-scale disaster or other emergency, should one occur, the company group has formulated a “Crisis
management manual (contingency plans, etc.)” and has also established a framework for information-gathering and the centralizationof instructions and commands in the event of a crisis.
In particular, the subsidiary banks have established a “Business continuity plan (BCP),” so that they can continue the settlement
functions and other work required of financial institutions in the event an earthquake, infections or other crisis occurs, and have alsoestablished a framework that will allow them to respond thoroughly to any crisis situation.
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Strengthening group governanceコンプライアンス  Compliance
Basic policy
At Hokuhoku Financial Group, we regard compliance as one of our most important management priorities, fully recognizingthat the incompleteness of compliance could weaken our business foundations. The Board of Directors has established basic
compliance policies and we strive to engage in business activities in a fair and honest manner.

■ Basic compliance policy
1. Recognition of the company group’s basic mission and social responsibilities

As a regional financial institution, the company group recognizes its public mission and social responsibilities,
and strives to establish trust inside and outside the company through sound business operations.

2. Provision of high-quality financial services

We contribute to stable regional economic and social development and the enhancement and improvementof customers’lives by providing high-quality, comprehensive financial services.

3. Strict observance of laws, regulations and rules

We observe laws, regulations and rules strictly, and conduct business in a fair and prudent mannerso that we do not deviate from our own corporate ethics and social norms.

4. Rejection of anti-social forces

We contribute to a sound society by refusing to tolerate anti-social elements that threaten social orderand safety, and responding to them resolutely.

5. Ensuring management transparency

We strive for accurate and smooth information disclosure and decision making and aim for a highly
transparent management and organizational culture.

■ Systems
To establish compliance systems, the company group has established Compliance Rules, put in place organizational
structures, and the company and each group company take measures in cooperation.
Risk Management Department is the department responsible for overseeing compliance within the group, and the head of
Risk Management Department is the person responsible for compliance.
Compliance officers, etc., are assigned to each branch of the subsidiary banks and each group company to actively
implement education and awareness-raising initiatives on compliance in the workplace. In addition, the subsidiary banks haveeach established a Compliance Management Department and Compliance Committee to grasp the state of compliance andmake improvements.

Hokuhoku Financial Group, Inc.
Board of Directors
Audit and Supervisory Committee
Management Committee
Compliance management department

Risk Management Department

Audit Department

Subsidiaries, etc.
Board of Directors
Auditors, Audit and Supervisory Board
Management Committee

President

Compliance Committee

77

Management Committee
Compliance Committee

Compliance Management Department

Compliance Management Department

Compliance Management Department

Compliance officers, etc.

Compliance officers, etc.

Compliance manager

The Hokuriku Bank

Other subsidiaries, etc.

The Hokkaido Bank

Hokuhoku Financial Group, Inc. Integrated Report 2023

■ Compliance manual and compliance programs

To ensure the thorough implementation of compliance, we have formulated a Compliance Manual (Code of Conduct) bringing together all of the basic
matters that executive officers and employees should observe. This manual is distributed to all executive officers and employees, and we make the content
known to them in training and internal study meetings.
In addition, each year, the Board of Directors determines the Compliance Program, a detailed action plan for the maintenance of compliance systems,
while the Board of Directors also receives reports on the state of implementation of the program regularly and strives for the certain practice of compliance.

■ Measures for better customer protection and greater customer convenience

To protect customers’ assets, information and other interests, the company group has established a Policy on the Management of Customer
Protection within its Basic Rules for the Management of Customer Protection.
Furthermore, to provide appropriate explanations to customers in accordance with the Japanese Financial Instruments and Exchange Act
and other laws, and to respond appropriately to customers’ inquiries and complaints through Customer Consultation Office, we haveformulated rules from five perspectives and established a framework to respond appropriately.
In addition, the Compliance Management Department of each group company is the department responsible for the management ofcustomer protection, and they operate in cooperation with other departments through a framework that enables them to draft and implement
various improvement measures through ongoing reviews, problem resolution and data analysis so that management systems function fully.

■ Measures for protection of personal information

In financial business, ensuring the safety of information assets is an essential and important matter for obtaining customer trust. As such, we
protect and use all customer information in our custody strictly and prevent its leakage.
With regard to personal information, in particular, the company group has established a Personal Information Protection Declaration,
disclosed on our website, to comply with the Personal Information Protection Act and other laws, and we strive so that we can obtain the
maximum trust from customers as a financial institution that contributes to local communities.
Basic rules for the management of customer protection

Explain to the customer
Customer service support
Protection of customer data
Outsourcing
Conflict of interest

Policies for the management of customer protection

When carrying out transactions with customers, we will explain and provide information on
financial products adequately and fully In accordance with laws and regulations.
We will listen carefully to customer inquiries and complaints and handle them appropriately
and fully.
We will acquire information concerning customers lawfully and manage it safely in accordancewith the law.
When outsourcing operations related to transactions with customers, we will manage service
providers appropriately to protect customers’ information and interests.
We will manage appropriately transactions involving customers where conflict of interest could
be an issue so that customers’ interests are not harmed unjustly.

■ Measures for dealing with anti-social forces

The company group has established a Basic Policy for Responding to Anti-Social Forces to maintain the public’s trust and theappropriateness and soundness of our financial services.
In addition, each group company has assigned managers to respond to anti-social forces, takes resolute measures in cooperation withthe police, etc., and severing all relations with anti-social forces that threaten the order and safety of civil society.

■ Internal notification system

The company group has established a whistleblower and consultation hot line and a framework to strengthen compliance also including
checks and balances to detect and correct unfair practices promptly.

■ The prevention of money laundering and measures to deal with financial crime

The company group positions measures for the prevention of money laundering and other financial crimes as an important management issue, hasclarified the division of roles within the company based on our Policy on the Prevention of Money Laundering, and has built a management system able toimplement appropriate measures in a timely manner with regard to verifying transactions, reporting suspicious transactions and managing correspondentbank relationships. In addition, we have been educating executive officers and employees through training, and striving to improve our efforts, including
the implementation of audits on the state of compliance with measures to prevent money laundering, etc.
Special fraud and other financial crimes have increased and our subsidiary banks have prevented harm and strengthened security, and are also handling
victims appropriately, including reimbursements based on the Act on Damage Recovery Benefit Distributed from Fund in Bank Accounts Used for Crimes.

■ Measures for a financial alternative dispute resolution (ADR) system

In order to respond promptly and appropriately to customer opinions and complaints, our subsidiary banks have concluded agreementswith the Japanese Bankers Association. The association is a designated bank dispute resolution organization that works to resolve disputes
from a fair and impartial position.
Name of designated bank dispute resolution organization: Japanese Bankers
Association Customer Relations Center, Japanese Bankers Association (banking)Tel: 0570-017-109 or 03-5252-3772

Name of designated bank dispute resolution organization: Financial
Instruments Mediation Assistance Center (financial instruments)
Tel: 0120-64-5005
Hokuhoku Financial Group, Inc. Integrated Report 2023

78

Initiatives
for customer-centered business operations
お客さま本位の業務運営に向けた取組み

フィデューシャリー・デューティーへの取 組み  Fiduciary duty initiatives■ Basic policy on fiduciary duty initiatives
1. Support for asset management and asset formation
Based on our management philosophy of “prospering together with the region,” “fair and steady management” and“progressive and innovative services,” we will give customers the optimum proposals in accordance with their needs
and life-stage to contribute to the stable development of regional economy and society and customers’ asset
management and asset formation through the provision of financial services.
2. Provision of the optimum financial services
By having customers share their life-stages and life-plans, we will propose and provide the optimum financial services
and products in line with their intentions and continue to follow up appropriately after concluding contracts.
We will make improvements and investments so that customers can use services conveniently through channels
other than branches such as the internet.
In addition to The Hokuriku Bank and The Hokkaido Bank, we will work throughout the group while being
conscious of conflicts of interest so that we can meet customers’ needs, such as by using the financial products andservices of Hokuhoku Tokai Tokyo Securities, the group’s securities company.
3. Enhancement of information provision
We will establish a system so that we can explain important information on the financial services we provide in ways that are easy tounderstand to provide appropriate information in accordance with the investment experience and financial knowledge of customers.
4. Explanations of fees in ways that are easy to understandWe will explain the fees for each product so that customers can understand them to contribute to investment decisions by customers.
5. Thorough implementation of the governance system
We will enhance education and training on products and services for employees and develop human resources towards
the realization of the provision of optimum financial services to customers.
We will listen carefully to the life-stage and life-plans of customers and review and improve the evaluation of results sothat we provide the optimum proposals and products.
When selecting products, we will do so without being prejudiced towards group company products and also while being
conscious of conflict of interest.
We will build and implement thoroughly a governance system that questions whether this basic policy is being observed.

■ Policy on initiatives in fiscal year 2023
1. Support for asset management and asset formation
We will support the asset management and asset formation of customers with a sense of ethics and for their best interests by “making the optimum proposals inaccordance with the needs and life-stage of customers” and “contributing to the asset formation and portfolio building of customers by strengthening consulting functions.”

2. Provision of the optimum financial services(1) We will raise the quality of the proposal process starting from knowing customers well (needs, life-stage, knowledge and experience of asset
formation, etc.) through dialogue for the realization of customers’ life plans.
(2) We will review the product line-up so that we can make the optimum proposals based on customers’ intentions, including their asset
background, investment experience and thinking on risk.
(3) We will review the line-up of the insurance products handled by the banks so that we can make proposals for needs to prepare for various futurecontingencies by putting together a line-up for different security functions.
(4) We will implement regular post-contract follow-up in accordance with customer desires using non-face-to-face services as well as face-to-face contact.
(5) We will improve functions such as internet banking, the bank apps and Hokuhoku TT Direct and improve convenience so that we can provide
financial services in accordance with the lifestyles of customers.
(6) We will prepare information provision and services that enable us to respond to customers’ wide-ranging asset formation goals through thecooperation of all companies of the Hokuhoku Financial Group.

3. Enhancement of information provision(1) We will make proposals in line with customers’ intentions by striving to know about their life-stages and life-plans through dialogue with customers. We will provide
information in accordance with customers’ money plans by providing information using pamphlets and various tools, and holding seminars for customers.
(2) We will provide information using “important information sheets,” etc., on the mechanisms of the financial products we provide and their assumed customers.
(3) We will strive for the improvement of pamphlets and various tools so that we can provide information in accordance with the level of understanding of customers.

79

Hokuhoku Financial Group, Inc. Integrated Report 2023

4. Explanations of fees that are easy to understand(1) We will clarify the fees related to financial services and products and prepare a system to explain fee comparisons across different products inways that are easy to understand using “important information sheets” and other methods.
(2) If multiple transactions methods can be chosen, we will explain the differences in the fees and their various merits and demerits in ways that areeasy to understand and by making fair comparisons so that customers can make a well-considered choice.

5. Thorough implementation of the governance system(1) We will disseminate the values and know-how to put into practice the optimum proposals in accordance with customers’ needs and life-stages
with a sense of ethics through continuous internal and external training. In addition, we will strive to develop human resources motivated to
improve their knowledge and skills by recommending the acquisition of external qualifications such as FP (financial planner).
(2) We will review our results evaluation systems so that employees observe the law and make appropriate proposals that contribute to customers’ interests.
(3) When selecting products, we will do so in accordance with the procedures of the Rules on Internal Group Transactions when selecting the productsof group companies in particular, without being prejudiced towards group company products and also while being conscious of conflict of interest.
(4) We will confirm regularly whether service proposals suitable for customers are being put into practice as an organization and strive for improvements.

■ Fiscal year 2022 KPI[1] NPS questionnaire results[2] Number of savings-type investment trust contract holders and annual savings[3] Number of NISA users[4] Sales and composition ratio of top 10 investment trusts by sales[5] Human resource development, number of people who have acquired FP qualifications[6] Holding of customer seminars[7] Proportion of customers by investment trust or fund wrap by gain or loss on investments[8] Cost return on top 20 investment trusts by deposited asset balance[9] Risk return on top 20 investment trusts by deposited asset balance[10] Proportion of customers by foreign currency-denominated insurance management valuation[11] Cost return by foreign currency-denominated insurance instrument (maximum of 20)■ State of progress of main KPIs in fiscal year 2022
Number of savings-type investment trust contract holders and annual savings
The Hokuriku Bank

The Hokkaido Bank

Annual savings (unit: million yen)
Number of contract holders(unit: people)
25,95831,126
10,835

Annual savings (unit: million yen)

34,880

Number of contract holders(unit: people)
20,053

11,18823,91324,82011,714

11,8862022/32023/3

8,116

7,950

2021/32022/32023/32021/3

Number of NISA users
The Hokuriku Bank

The Hokkaido Bank

(Unit: people)(Unit: people)

43,72639,2352022/3(Unit: people)
30,15632,222

26,73534,8762021/3

Hokuhoku Tokai Tokyo Securities

2023/32021/32022/32023/3

1,456

1,516

1,577

2021/32022/32023/3

Hokuhoku Financial Group, Inc. Integrated Report 2023

80

Corporate information
Profile(As of end-March, 2023)

Date of establishment:

September 26, 2003

Employees:

88

Location of head office:1-2-26 Tsutsumicho-dori, Toyama City

Total assets (consolidated):¥16,172.7 billion

Purpose of business:

Management and control of subsidiaries

Deposits (consolidated):¥13,513.7 billion(including certificates of deposit)

and affiliates, ancillary business, and otherbusiness recognized by The Banking Act
Capital:¥70,895 million

Shares issued and outstanding:Common stock

128,770,814

Preferred stock (type 5)

64,469,000

Exchange listings:

Loans:¥9,533.4 billion

Consolidated capital adequacy ratio:

9.49%(Japanese standard)

Tokyo Stock Exchange (Prime Market)
Sapporo Securities Exchange

Organization chart(As of July 1, 2023)

Shareholders’ meeting
Board of Directors
Audit and Supervisory Committee

Nomination and Compensation Committee
Management Committee

Fiduciary Duty Promotion Committee
Sustainability Promotion Committee

Corporate Planning
Department

81

SX Promotion
Department

Hokuhoku Financial Group, Inc. Integrated Report 2023

Human Reseaurces
Strategy Department

Business Promotion Committee

Business Strategy
Department

DX Promotion
Department

Risk Management
Department

Audit
Department

(As of March 31, 2023)

Details of business
The Hokuhoku Financial Group is composed of the holding company, twelve consolidated subsidiaries and one affiliate. Our
core business is banking, and we also provide a wide range of financial services including financial instrument transactions,leases, credit cards, loan guarantees and venture capital. The following is a diagram of our business.

Business diagram

Hokugin Business Services Co., Ltd.
(Document management, concentrated business processing)

The Hokuriku Bank, Ltd.

Hokuhoku Financial Group, Inc.

Dogin Business Service, Ltd.
(Document management, cash management and settlement, concentrated business processing)

The Hokkaido Bank, Ltd.

Dogin Card Co., Ltd. (Credit card operations, loan guarantees)
Dogin Regional Research Institute Co., Ltd.
(Economy surveys, survey and research services, consulting)

Hokuhoku Tokai Tokyo Securities Co., Ltd. (financial instruments business)
Hokugin Lease Co., Ltd. (leasing)
Hokuriku Card Co., Ltd. (credit card operations)
Hokuriku Hosho Services Co., Ltd. (loan guarantees)
Hokugin Software Co., Ltd. (software development)
Hokuhoku Services Co., Ltd. (servicer)
Hokuhoku Capital Co., Ltd. (venture capital)** Equity method-affiliated company

Major subsidiaries, etc.

(Units: millions of yen, %)Company name

Address

Established

Capital

FG’s share of
voting rights

The Hokuriku Bank, Ltd.

1-2-26 Tsutsumicho-dori, Toyama City Banking

July 31, 1943

140,409100.00

The Hokkaido Bank, Ltd.

4-1 Odori Nishi, Chuo-ku, Sapporo City Banking

March 5, 1951

93,524100.00—Financial instruments business April 21, 2016

1,250

60.00

—
—

Hokuhoku Tokai Tokyo Securities Co., Ltd. 1-8-10 Marunouchi, Toyama City

Main business activities

Dividend
6,337

Hokugin Lease Co., Ltd.

2-21 Aramachi, Toyama City

Leasing

July 21, 1983

100

70.25

Hokuriku Card Co., Ltd.

1-2-1 Shintomi-cho, Toyama City

Credit card operations

March 2, 1983

36

87.39

3

Hokuriku Hosho Services Co., Ltd. 1-2-26 Tsutsumicho-dori, Toyama City Loan guarantees

December 12, 1978

50

100.00—

Hokugin Software Co., Ltd.

1-5-25 Higashidenjigata, Toyama City

Software development

May 1, 198630

100.00—

Hokuhoku Services Co., Ltd.

1-6-8 Chuo-dori, Toyama City

Servicer

December 5, 2003

500

100.00—

Hokugin Business Services
Co., Ltd.

1883 Hiyodorijima, Toyama City

Document management,
March 25, 1953
concentrated business processing

30(100.00)—

Dogin Business Service, Ltd.

Higashisapporo Dogin Building, Higashisapporo Document management, cash management andJune 8, 1979
3-1-2-33, Shiroishi-ku, Sapporo City
settlement, concentrated business processing

50(100.00)—

Dogin Card Co., Ltd.

2-2-14 Chuo-ku Minami, Sapporo City

Credit card operations, loan
June 13, 1977
guarantees

120(100.00)—

Dogin Regional ResearchInstitute Co., Ltd.

Dogin Annex Building, 4-1 Odori
Nishi, Chuo-ku, Sapporo City

Economic surveys, survey
and research services,
consulting

August 8, 2002

100

(100.00)—

Hokuhoku Capital Co., Ltd.

1-6-8 Chuo-dori, Toyama City

Venture capital

January 11, 1985

250

5.00
(38.75)—* ( ) Indicates voting rights including shares held directly by subsidiaries.

Hokuhoku Financial Group, Inc. Integrated Report 2023

82

Corporate information

The Hokuriku Bank, Ltd.
Logo markHistory
August 1877

Kanazawa 12th National Bank founded

February 1879

Toyama 123rd National Bank founded

January 1884

Kanazawa 12th National Bank and Toyama 123rd
National Bank merged to form Toyama 12th
National Bank with headquarters in Toyama City

July 1897
July 1943

Toyama 12th National Bank changed name to 12th Bank
Four banks, 12th, Takaoka, Chuetsu, and Toyama
Bank, merged to form The Hokuriku Bank

on August 26, 1877, with the House of Kaga-Maeda providing 70% of the capital. The bankJanuary 1950

Launched foreign exchange operations (first regional bank to do so)

was the creation of the family established by Maeda Toshiie, the founder of the Kaga clan.

September 1961

Listed on the Tokyo Stock Exchange

November 1961
January 1971

Completed present head office
Received blanket approval to engage incorrespondent banking services

Together with the Region,” “Fair & Steady Management”, and “Progressive & Innovative

November 1973

Launched first online system

Services,” The Hokuriku Bank draws fully on its management resources to provide high-quality

March 1974

comprehensive financial services, aiming to become the bank preferred and relied on by local

July 1978

Received blanket approval to engage in foreign exchange business
Received blanket approval to handle yen denominatedand foreign-denominated syndicated loans

October 1979

Launched second online system

November 1981

Launched online foreign exchange system

January 1984

Launched firm banking service

May 1987

Introduced VI (visual identity)

August 1990

Launched third online system

November 1993

Launched investment trust agent operations

December 1998

Launched over-the-counter sales of securities investment trusts

June 2000

Launched internet and mobile banking services

July 2000

Completed new computer center (Alps building)January 2001

Launched new computer system

April 2001
February 2002

Launched over-the-counter sales of casualty insurance
Third-party allocation worth ¥39.1 billion,
brought new capital to ¥140.4 billion

February 2002

Launched convenience store ATM service

October 2002

Launched over-the-counter sales of life insurance

March 2003

Took over part of The Ishikawa Bank’s operations
Established Hokugin Financial Group, Inc., through share transfer,then became a subsidiary of Hokugin Financial Group, Inc.
Integrated management with The Hokkaido Bank, name of parent
company changed to Hokuhoku Financial Group, Inc.

Website address
https://www.hokugin.co.jp/

Establishment
The Hokuriku Bank has its origins as the Kanazawa 12th National Bank, which was established

Since its founding, the bank has worked hand-in-hand with customers in the region, andgrown into a bank with a wide branch network covering Hokuriku, Hokkaido, as well as Japan’s
three major metropolitan areas. Based on the bank’s management philosophy of “Prosperingcommunities.

Company outline (as of March 31, 2023)
Company name:
The Hokuriku Bank, Ltd.
Business:Banking
Incorporation: July 31, 1943 (founded in 1877)
Location of headquarters: 1-2-26 Tsutsumicho-dori, Toyama City, Toyama
Total assets: ¥9,477.3 billion
Deposits (including NCDs):
¥7,680.3 billion
Loans and bills discounted:
¥5,186.3 billion
Issued shares:
Common stock: 
1,047,542,335
Capital adequacy ratio (non-consolidated):9.06%
Employees: 
2,167
Branches Domestic: 188(145 branches, 43 sub-branches)(as of June 30, 2023) Overseas: 6
(6 representative offices)83

Hokuhoku Financial Group, Inc. Integrated Report 2023

September 2003
September 2004
December 2004
May 2011
December 2013

Launched securities agency operations
Commenced use of joint IT system withThe Hokkaido Bank and Bank of Yokohama
The head office building was registered as aTangible Cultural Property (structures)

October 2015

Opened an individual consulting base “Hokugin Plaza”

April 2019

Launched trust business service

July 2019

Launched recruitment service

■ The Hokuriku Bank, Ltd.
Details of main business
Handling of current account deposits, ordinary account deposits, deposits for settlement, savings account deposits, notice account deposits,
fixed-term deposits, periodical deposits, tax payment preparation deposits, non-resident yen deposits, foreign currency deposits, etc.
(2) Certificates of deposit
Handling of transferable fixed-term deposits(1) Loans
Handling of bill loans, loans on deed and overdrafts
Loans(2) Discounts on bills and electronically Handling of discounts of bankers’ acceptance, commercial bills, documentary
recorded monetary claims
bills and electronically recorded monetary claims
Buying and selling of trading securities Buying and selling of government bonds and other public bonds
Securities investment Investments in government bonds, local government bonds, corporate bonds, shares and other securities in preparation for the payment of deposits and for use in fund management
Domestic exchange
Handling of remittance bills, bank transfers, collections, etc.
Foreign exchange
Various services related to exports, imports, foreign remittances and other foreign exchange
Entrustment of corporate bonds, etc. Entrustment of corporate bonds, etc., services related to the entrustment for subscription of public bonds
Trust and inheritance Money trust (living trust, chronological gift trust), testamentary trust and inheritance arrangement services(1) Agency business◦Bank of Japan agency, Bank of Japan revenue agency and government bond agency◦Handling of the public funds of local governments◦Agency work for the Organization for Workers Retirement Allowance Mutual Aid, etc.
◦Stock payment acceptance agency work and share dividend and bond principal and interest payment agency work
◦Loan agency work for the Japan Finance Corporation, etc.
◦Trust agency work
Ancillary business◦Agency work for the Japan Housing Finance Agency(2) Custody and safe deposit box services, loaning of securities, debt guarantees (acceptances and guarantees), underwriting of public bonds,
over-the-counter sales of government bonds and other public bonds and securities investment trusts, financial instrument intermediaryservices, over-the-counter sales of insurance products, handling of commercial paper, etc., defined contribution pension management,
handling of the private placement of securities, derivative transactions with interest and currency, etc., human resource recruitment(1) Deposits

Deposits

Organization chart

Corporate Secretariat(as of July 1, 2023)

Corporate Planning Department

General Affairs Office

Personnel Department

Diversity Promotion Office

General Administration Department

Central Administration Office

System Management Department

Business Strategy Office

Retail Promotion Department
Digital Strategy Department

Regional Revitalization OfficeConsulting Business Department

International Administration Center

International Department

New York Representative Office
Shanghai Representative Office

Branches

Business Promotion Division

Management Committee

Board of Directors

Shareholders’ meeting

Business Planning Department

Singapore Representative Office
Dairen Representative Office

Audit and Supervisory Committee

Bangkok Representative OfficeMarket Finance Department
Finance Department
Tokyo Office

Ho Chi Minh Representative Office
Structured Finance Office

Hokkaido OfficeIntegrated Risk Management Department

Asset Appraisal OfficeCompliance Management Department

Customer Consultation Office

Audit Department

Hokuhoku Financial Group, Inc. Integrated Report 2023

84

Corporate information

The Hokkaido Bank, Ltd.
Logo markHistory
March 1951

Hokkaido Bank established

April 1961

Launched foreign exchange operations

May 1962

Listed on the Sapporo Stock Exchange

Website address

August 1964

Completed present head officehttps://www.hokkaidobank.co.jp/

June 1971

Launched first online system

July 1976

Launched second online system
Received blanket approval to engage incorrespondent banking services
Hokkaido Small and Medium Corporation Human
Resource Development Fund establishedEstablishment

December 1980

The Hokkaido Bank was established on March 5, 1951, in response to thestrong demand for financing from small and medium-sized corporations in

April 1981

Hokkaido accompanying the sudden increase in population and thedevelopment of new industries in Hokkaido during the post-war recovery period.

June 1986

Launched online foreign exchange system

Based on this background, and as a bank deeply rooted in Hokkaido, The

September 1987

Listed on the first section of the Tokyo Stock Exchange

Hokkaido Bank considers its mission to be to contribute to regional economic

October 1990

Completed the Higashi Sapporo Dogin Building

growth by providing finance and quality financial services smoothly to its

March 1991

Established the Dogin Cultural Foundation

customers in Hokkaido. Going forward, The Hokkaido Bank will never abandon

October 1991

Launched a new foreign exchange online system

the spirit with which it was created, and will continue to move forward together

November 1991

Completed Dogin Building Annex

with its customers in Hokkaido.

January 1993

Launched third online system

April 1994

Launched investment trust agent operations
Launched over-the-counter sales of
securities investment trusts
Issued preferred stock (Type 2)(issue amount was ¥53.716 billion)

December 1998
July 1999
November 1999

Launched telephone banking service

June 2000

Launched internet mobile banking

April 2001

Launched over-the-counter sales of casualty insurance

October 2002

Launched over-the-counter sales of life insurance

December 2003

Opened Business Loan Plaza

April 2004

Launched convenience store ATM service

September 2004

Came under the management of Hokugin
Financial Group, Inc., parent of The Hokuriku
Bank; Hokuhoku Financial Group, Inc. launched

April 2005

Launched securities agency operations
Entered into a contract on joint system use withThe Hokuriku Bank and Bank of Yokohama

Company outline (as of March 31, 2023)
Company name:
The Hokkaido Bank, Ltd.
Business: Banking
Incorporation: March 5, 1951
Location of headquarters:  4-1 Odori Nishi, Chuo-ku, Sapporo City
Total assets:
¥6,655.6 billion
Deposits (including NCDs):
¥5,860.3 billion
Loans and bills discounted:
¥4,358.7 billion
Issued shares:
486,634,512
Common stock:
Preferred stock (Type 2):64,459,200
Capital adequacy ratio (non-consolidated):
8.99%
Employees: 
1,981
Branches Domestic: 144 (136 branches, 8 sub-branches)(as of June 30, 2023) Overseas: 2
(2 representative offices)85

Hokuhoku Financial Group, Inc. Integrated Report 2023

March 2006
August 2006
March 2009
January 2010
May 2011

Opened representative office in Shenyang, China
Opened representative office in YuzhnoSakhalinsk, Russia
Taiwan ATM started
Commenced use of joint IT system withThe Hokuriku Bank and Bank of Yokohama

March 2019

Opened representative office in Vladivostok, Russia
Opened Account Opening Plaza “Odori
Subway Station Sub-Branch”

April 2019

Opened the Niseko Sub-Branch

June 2021

Opened Corporate Sales Department

March 2014

■ The Hokkaido Bank
Details of main business
Handling of current account deposits, ordinary account deposits, deposits for settlement, savings account deposits, notice account deposits,
fixed-term deposits, periodical deposits, tax payment preparation deposits, non-resident yen deposits, foreign currency deposits, etc.
(2) Certificates of deposit
Handling of transferable fixed-term deposits(1) Loans
Handling of bill loans, loans on deed and overdrafts
Loans(2) Discounts on bills and electronically Handling of discounts of bankers’ acceptance, commercial bills, documentary
recorded monetary claims
bills and electronically recorded monetary claims
Buying and selling of trading securities Buying and selling of government bonds and other public bonds
Securities investment Investments in government bonds, local government bonds, corporate bonds, shares and other securities in preparation for the payment of deposits and for use in fund management
Domestic exchange
Handling of remittance bills, bank transfers, collections, etc.
Foreign exchange
Various services related to exports, imports, foreign remittances and other foreign exchange
Entrustment of corporate bonds, etc. Entrustment of corporate bonds, etc., services related to the entrustment for subscription of public bonds(1) Agency business◦Bank of Japan revenue agency◦Handling of the public funds of local governments◦Agency work for the Organization for Workers Retirement Allowance Mutual Aid, etc.
◦Stock payment acceptance agency work and share dividend and bond principal and interest payment agency work
◦Loan agency work for the Japan Finance Corporation, etc.
◦Trust agency work
Ancillary business◦Agency work for the Japan Housing Finance Agency(2) Custody and safe deposit box services, loaning of securities, debt guarantees (acceptances and guarantees), underwriting of publicbonds, over-the-counter sales of government bonds and other public bonds and securities investment trusts, financial instrument
intermediary services, over-the-counter sales of insurance products, handling of commercial paper, etc., defined contribution
pension management, handling of the private placement of securities, derivative transactions with interest and currency, etc.
(1) Deposits

Deposits

Organization chart
Corporate Planning Department

Public Relations and CSR Office

Personnel Department

General Affairs Office

General Administration Department

Work Style Reform Office

Tokyo OfficeSustainability Promotion Office

Corporate Secretariat

Risk Management
Division

Accounting OfficePlanning Management
Division(as of July 1, 2023)

System Management Department

Diversity Promotion OfficeIntegrated Risk Management Department

Asset Appraisal OfficeCompliance Management Department

Customer Consultation Office

Capability Development Office

General Administration Department

Administration Center
Monitoring OfficeBusiness Planning Department

Regional Industry Survey Office

Digital Strategy Department

Direct Banking Cente

Branches

Management Committee

Retail Promotion Department
International Department

Asia Office
Russia Office
Overseas Representative OfficeConsulting Business Department

Commercial Evaluation Office
Agribusiness Promotion Office
Healthcare Promotion Office

Regional Revitalization OfficeFinance
Division

Audit Department

Audit and Supervisory Committee (secretariat)

Sales Division

Board of Directors

Shareholders’ meeting

Market Business Office

Hokkaido Northeast Relations Promotion Office
Tourism Industry Promotion OfficeFinance Department

Finance Business OfficeFinance Support OfficeHokuhoku Financial Group, Inc. Integrated Report 2023

86

Corporate information
Addresses
Hokuhoku Financial Group, Inc.
1-2-26, Tsutsumicho-dori Toyama
City, Toyama 930-8637, Japan
Telephone: +81-76-423-7331
https://www.hokuhoku-fg.co.jp/
E-mail: info@hokuhoku-fg.co.jp

The Hokuriku Bank, Ltd.
International Department

Treasury and Securities Department

7F Shenmao Building 147 Zhongshan

14F, Nihonbashi Muromachi

Road, Xigang District, Dalian,

Mitsui Tower, 2-1, 3-chome,

Liaoning, 116011 P.R. of China

Nihonbashi Muromachi,

Telephone: +86-411-3960-8018

Chuo-ku, Tokyo 103-0022, Japan

Facsimile: +86-411-3960-8019

Telephone: +81-3-3241-3457

E-mail: dalian@hokugin-zg.com

Facsimile: +81-3-3242-3588• Representative Office
Registered in Singapore

Overseas Offices (Hokkaido Bank)• Shenyang Representative Office

1-2-26, Tsutsumicho-dori Toyama

6 Battery Road # 15-02 Singapore

Room 1118, Office Tower 1,

City, Toyama 930-8637, Japan

049909Forum 66, No. 1-1 Qingnian

Telephone: +81-76-423-7815

Telephone: +65-6534-0010

Da jie, Shenhe District,Facsimile: +81-76-423-7561

Facsimile: +65-6534-0070

Shenyang 110063, China

E-mail: kokusaibu@hokugin.co.jp

E-mail: hokuriku@singnet.com.sg

Telephone: +86-24-3185-7008

International Operations Center
Kanda Higashinippon bldg
5F 2, Kandatomiyamacho
Chiyoda-ku, Tokyo 101-0043, Japan
Telephone: +81-3-3252-8350
Facsimile: +81-3-3252-8360
E-mail: b.office@hokugin.co.jp
SWIFT Address: RIKBJPJTTreasury and Securities Department
14F, Nihonbashi Muromachi
Mitsui Tower, 2-1, 3-chome,
Nihonbashi Muromachi,
Chuo-ku, Tokyo 103-0022, Japan
Telephone: +81-3-3231-7360
Facsimile: +81-3-3246-1255
E-mail: shikintky@hokugin.co.jp
Overseas Offices (Hokuriku Bank)• New York Representative Office
780 Third Avenue, 28th Floor,
New York, NY 10017, U.S.A.
Telephone: +1-212-355-3883
Facsimile: +1-212-355-3204
E-mail: newyork@hokugin.com• Shanghai Representative Office
Shanghai International Trade
Center, 602, Yan’an West Road
2201,
Changning, Shanghai 200336,
P.R. of China
Telephone: +86-21-6270-8108
Facsimile: +86-21-6270-8338
E-mail: shanghai@hokugin.net

87• Dalian Representative OfficeHokuhoku Financial Group, Inc. Integrated Report 2023

• Bangkok Representative Office
23rd Floor Unit 2314, Bhiraj Tower
at EmQuartier, 689 Sukhumvit

Facsimile: +86-24-3185-7018
E-mail:hokkaidobank@doginsy.com• Vladivostok Representative Office

Road, North Klongton, Wattana

Room 613,Fresh Plaza, 17

Bangkok 10110, Thailand

Okeanskiy Pr., Vladivostok

Telephone: +66-2-261-8495

690091, Russia

Facsimile: +66-2-261-8497

Telephone: +7-4232-65-8851

E-mail: bangkok@hokugin.asia

Facsimile: +7-4232-65-8852• Ho Chi Minh Representative OfficeE-mail: kramskoy@hbvl.ru

Suite 1709, 17 Floor, Saigon Tower,th

29 Le Duan Street, Ben Nghe Ward,
District 1, Ho Chi Minh City, Vietnam
Telephone: +84-28-7300-1015
E-mail: hochiminh-city@hokugin.co.jp

The Hokkaido Bank, Ltd.
International Department
1, Nishi 4-chome, Odori, Chuo-ku,
Sapporo City, Hokkaido 060-8676,
Japan
Telephone: +81-11-233-1093
Facsimile: +81-11-231-3133
E-mail: sckikaku@cello.ocn.ne.jp
Markets and International
Administration Center
2-33, Higashisapporo 3-jo
1-chome, Shiroishi-ku,
Sapporo City, Hokkaido 003-0003,
Japan
Telephone: +81-11-815-1315
Facsimile: +81-11-815-2237
SWIFT Address: HKDBJPJT

Hokuhoku Financial Group, Inc. Integrated Report 2023

88

NON-CONSOLIDATED FINANCIAL
FINANCIAL STATEMENTS
NON-CONSOLIDATEDSTATEMENTS
NON-CONSOLIDATEDBALANCE SHEET(UNAUDITED)NON-CONSOLIDATEDBALANCESHEET(UNAUDITED)The Hokuriku Bank, Ltd.

2023

2022

Thousands of
U.S. dollars
2023

Cash and due from banks¥2,875,482¥3,607,139$21,534,356

Call loans and bills bought

52,344

26,731

392,003

Monetary claims bought

15,51921,217116,223

March 31

Millions of yen

Assets

601

1,048

4,505

4,935

4,945

36,963

Securities

1,185,438

1,294,377

8,877,694

Loans and bills discounted

5,186,353

5,061,661

38,840,358

Foreign exchanges

12,10919,98390,686

Other assets

70,69866,270529,457

Tangible fixed assets

76,29476,244

571,368

Intangible assets

2,501

2,774

18,731

Prepaid pension cost

3,034

3,616

22,726

Customers’ liabilities for acceptances and guarantees

31,30332,708234,433

Allowance for loan losses(39,311)(40,527)(294,400)¥9,477,305¥10,178,190$70,975,103

Trading assets
Money held in trust

Total assets
Liabilities and equity
Liabilities¥7,680,339¥7,536,937$57,517,711

Call money and bills sold155,210

318,920

1,162,365

Payables under repurchase agreements

10,43021,123

78,116

Payables under securities lending transactions

219,345

186,628

1,642,671

Deposits

Trading liabilities

266

651

1,995

Borrowed money

939,184

1,630,857

7,033,511

336

354

2,522

Borrowed money from trust account

5,230

4,514

39,169Other liabilities

50,45754,485

377,874

Reserve for employee retirement benefits

1,653

948

12,386

Reserve for directors’ and audit & supervisory board members’ retirement benefits

―

43

―

Reserve for contingent losses

603

562

4,521

Reserve for reimbursement of deposits

918

1,015

6,882

Deferred tax liabilities

7,162

13,84753,643

Deferred tax liabilities for land revaluation

4,941

4,984

37,009Foreign exchanges

Acceptances and guarantees
Total liabilities

31,30332,708234,433

9,107,387

9,808,584

68,204,808

140,409140,409

1,051,521

EquityCapital stock
Capital surplus

14,99814,998112,326

Retained earnings

165,821

157,746

1,241,827
308,464

Valuation and translation adjustments
41,18948,649Deferred gains (losses) on hedges

(195)

9

(1,465)

Revaluation reserve for land

7,694

7,791

57,622

Valuation difference on available-for-sale securities

Total equity
Total liabilities and equity

89

Hokuhoku Financial Group, Inc. Integrated Report 2023

369,917369,606

2,770,295¥9,477,305¥10,178,190$70,975,103

Hokuhoku Financial Group, Inc. Financial Data 2023

49

NON-CONSOLIDATEDSTATEMENT OFOF
INCOME(UNAUDITED)NON-CONSOLIDATEDSTATEMENTINCOME(UNAUDITED)The Hokuriku Bank, Ltd.
Thousands of
U.S. dollars
2023

Millions of yen
2023

2022

Interest on loans and discounts¥41,706¥41,196$312,339

Interest and dividends on securities

12,976

12,664

97,184

Interest on deposits with other banks

3,213

3,386

24,066

339

224

2,544

IncomeInterest income:

Other interest income
Trust fees
Fees and commissions

30

36

227

18,97018,743142,072

22

14

170

Other ordinary income

3,347

4,322

25,067

Other income

16,651

8,428

124,700

Total income

97,25989,016728,369

Interest on deposits

751

315

5,628

Interest on payables under repurchase agreements

390

9

2,922

Interest on payables under securities lending transactions

3,329

205

24,934

Interest on borrowings and rediscounts

1,201

1

8,997

Other interest expenses

1,572

609

11,777

Trading income

Expenses
Interest expenses:

Fees and commissions

6,315

7,386

47,296

Other ordinary expenses

12,364

5,675

92,597

General and administrative expenses

40,80542,447

305,590

Provision of allowance for loan losses

2,644

8,369

19,808Other expenses

13,7403,921

102,903

Total expenses

83,11568,942

622,452

Income before income taxes

14,14320,074

105,917

Current

860

7,205

6,444

Deferred(1,032)(233)(7,731)

Net income¥14,314¥13,102$107,204

Income taxes:

Hokuhoku Financial Group, Inc. Integrated Report 2023

90

NON-CONSOLIDATED FINANCIAL
FINANCIAL STATEMENTS
NON-CONSOLIDATEDSTATEMENTS
NON-CONSOLIDATEDBALANCE SHEET(UNAUDITED)NON-CONSOLIDATEDBALANCESHEET(UNAUDITED)The Hokkaido Bank, Ltd.

2023

2022

Thousands of
U.S. dollars
2023

Cash and due from banks¥1,480,393¥1,862,525$11,086,598

Trading account securities

1,618

2,406

12,121

Money held in trust

9,313

9,179

69,746661,272

905,214

4,952,236

4,358,785

4,149,502

32,642,745

March 31

Millions of yen

AssetsSecurities
Loans and bills discounted
Foreign exchanges

5,866

5,645

43,933

Other assets

79,68585,968596,762

Tangible fixed assets

29,14828,337218,291

Intangible assets

2,582

2,313

19,340Prepaid pension cost

6,708

5,797

50,243

Deferred tax assets

9,851

6,391

73,777

Customers’ liabilities for acceptances and guarantees

32,576

27,599243,963

Allowance for loan losses(22,103)(25,637)(165,535)¥6,655,698¥7,065,244$49,844,220$43,887,905

Total assets
Liabilities and equity
Liabilities¥5,860,351¥5,696,452

Call money and bills sold

6,810

─

51,000

Payables under securities lending transactions

93,925102,186

703,403

Borrowed money

408,500

972,200

3,059,238

398

293

2,988

Other liabilities

38,071

41,940285,113

Reserve for employee retirement benefits

1,296

1,359

9,709

Reserve for directors’ and audit & supervisory board members’ retirement benefits

37

37

282

Reserve for contingent losses

452

374

3,389

Deposits

Foreign exchanges

466

479

3,494

32,576

27,599243,9636,442,887

6,842,923

48,250,484

Capital stock

93,524

93,524700,397

Capital surplus

16,795

16,795

125,778

Retained earnings

108,489

105,150

812,476(5,997)

6,535(44,915)

─

315

─

212,811

222,320

1,593,736¥6,655,698¥7,065,244$49,844,220

Reserve for reimbursement of deposits
Acceptances and guarantees
Total liabilities
EquityValuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Total equity
Total liabilities and equity

91

Hokuhoku Financial Group, Inc. Integrated Report 2023

Hokuhoku Financial Group, Inc. Financial Data 2023

51

NON-CONSOLIDATEDSTATEMENT OFOF
INCOME(UNAUDITED)NON-CONSOLIDATEDSTATEMENTINCOME(UNAUDITED)The Hokkaido Bank, Ltd.
Thousands of
U.S. dollars
2023

Millions of yen
2023

2022

¥41,343¥41,445$309,616

8,756

6,227

65,579Interest on receivables under securities borrowing transactions

43

―

324

Interest on receivables under resale agreements

(9)

―

(73)

1,580

2,117

11,839

144

137

1,082

Fees and commissions

16,103

16,128120,599

Other ordinary income

4,698

3,147

35,187

Other income

4,293

7,752

32,155

Total income

76,95476,956576,308

IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities

Interest on deposits with other banks
Other interest income

Expenses
Interest expenses:
124

120

934

2,114

184

15,838Interest on borrowings and rediscounts

74

(30)

556

Other interest expenses

17

33

129

Fees and commissions

9,367

9,790

70,150

Other ordinary expenses

14,745

4,988

110,426

General and administrative expenses

34,98137,023261,974

Interest on deposits
Interest on payables under securities lending transactions

Provision of allowance for loan losses

―

4,708

―

Other expenses

3,338

6,751

25,003

Total expenses

64,76363,571

485,010

Income before income taxes

12,191

13,38591,298Current

1,343

3,406

10,062

Deferred

2,136

1,207

15,999Net income¥8,711¥8,770$65,237

Income taxes:

Hokuhoku Financial Group, Inc. Integrated Report 2023

92

Major financial data over the past 10 years
Figures are for the two banks combined except for those noted as (consolidated).

■ Results summary

Unit
FY2013

FY2014FY2015FY2016

Core gross business profits¥billion

142.2

144.8

143.0

133.8

Interest on assets¥billion

121.7

122.1

120.9

116.1

Profit on service transactions, etc.

¥billion

17.7

19.9

20.0

17.8

Other business profits (excluding gains or losses¥billionon government bonds and other bonds, etc.)

2.4

2.4

1.8

▲0.2

Expenses¥billion

94.0

93.6

90.9

89.8

Core net business profits¥billion

48.2

51.2

52.0

43.9

Credit costs¥billion

▲1.3

6.0

3.7

▲0.6

Ordinary profits¥billion

48.5

47.1

46.7

40.2

Net income¥billion

27.5

28.2

29.9

29.6

Net income attributable to owners of theparent (consolidated)¥billion

27.3

28.2

28.8

28.1

FY2013

FY2014FY2015FY2016■ Balance sheet summary

Total assets¥billion

11,059.4

11,628.5

11,581.9

12,380.9

Loans¥billion

7,336.3

7,561.7

7,599.6

7,788.3¥billion

4,639.6

4,767.8

4,845.0

4,972.2

Securities¥billion

2,481.4

2,481.4

2,395.8

2,439.3

Total liabilities¥billion

10,585.9

11,096.2

11,045.2

11,832.7¥billion

10,172.0

10,651.3

10,502.6

10,731.0¥billion

473.4

532.3

536.7

548.2

Total shareholders’ equity¥billion

400.1

419.8

441.5

455.5

Total valuation, conversion differences, etc.

¥billion

73.2

112.5

95.1

92.6

FY2013

FY2014FY2015FY2016

Small and medium-enterprises, etc.

Deposits + certificates of deposit
Total net assets■ Financial indicators, etc.

Core OHR (core overhead ratio)

%

66.08

64.64

63.57

67.13

ROE (consolidated)

%

5.9

5.5

5.3

5.1

Capital adequacy ratio (consolidated)

%

12.31

11.13

10.30

9.43

Net assets per share (consolidated)*Yen

3,353.6

3,858.3

3,806.1

4,028.6

Net profit per share (consolidated)*

Yen

192.0

198.7

203.1

201.3

Dividend per share*

Yen

40.00

42.50

42.50

44.00

Payout ratio (consolidated)

%

20.8

21.4

20.9

21.9

* Values for years prior to 2016 calculated assuming the stock merger implemented on October 1, 2016 (one share per ten common shares) had alreadybeen carried out.

93

Hokuhoku Financial Group, Inc. Integrated Report 2023

FY2017

FY2018FY2019FY2020

FY2021

FY2022

130.7

125.7

123.2

120.7

124.8

119.8

112.5

108.1

105.4

103.7

105.9

100.5

16.7

16.5

16.5

15.9

17.7

19.4

1.5

0.9

1.1

1.0

1.1

0.0

88.8

86.5

85.3

82.3

78.8

74.7

41.9

39.1

37.8

38.4

46.0

45.0

0.5

4.6

12.0

13.0

13.5

7.7

33.1

36.7

31.4

32.0

30.4

26.9

24.0

26.6

20.8

22.4

21.8

23.0

21.1

24.3

20.2

21.3

20.5

21.4

FY2017FY2018FY2019FY2020

FY2021

FY2022

12,952.9

13,142.9

13,605.5

16,594.8

17,243.4

16,133.0

8,189.4

8,360.8

8,673.1

9,065.1

9,211.1

9,545.1

5,153.9

5,275.8

5,397.4

5,766.6

5,836.4

5,931.1

1,943.3

1,788.8

1,807.2

2,100.1

2,199.5

1,846.7

12,378.1

12,548.8

13,033.0

15,987.2

16,651.5

15,550.2

11,180.7

11,439.7

11,662.6

12,815.6

13,233.3

13,540.6

574.8

594.0

572.5

607.6

591.9

582.7

475.3

494.1

508.9

518.9

528.6

540.0

99.5

99.9

63.5

88.6

63.3

42.6

FY2017FY2018FY2019FY2020

FY2021

FY2022

67.89

68.85

69.27

68.19

63.15

62.39

3.6

4.0

3.4

3.5

3.3

3.5

9.49

9.09

8.94

9.45

9.54

9.49

4,215.9

4,348.7

4,138.4

4,504.9

4,539.1

4,491.9

149.4

173.5

142.7

152.1

147.4

159.1

44.00

44.00

40.00

35.00

35.00

37.00

29.4

25.4

28.0

23.0

23.7

23.2

Hokuhoku Financial Group, Inc. Integrated Report 2023

94

北北金融控股集团简要设立日期∶2003年9月26日

北北金融集团的经营活动范围不是限于一个地域，而是在广泛的地域内展开着。

总行地址∶富山县富山市堤町通1丁目2番26号

我们广泛的营业网点分布在下列地区范围里 ：经营目的∶集团伞下的子公司的经营管理，以及连带的相关业务

北陆地区.................................................... 151分行（或支行）资本金∶708亿9,500万日元

富山县 ....................................................... 93分行（或支行）企业名称∶北北金融控股集团股份有限公司发行股份∶ 普通股 ...........................

128,770,814股

石川县 ....................................................... 36分行（或支行）第一次第5种优先股 ..........

64,469,000股福井县 ....................................................... 22分行（或支行）

上市交易所∶ 东京证券交易所（主板）札幌证券交易所简介自从1877年北陆银行成立以来已经在北陆地区设立了广域性的经营网点。

三大都市圈 ................................................ 16分行（或支行）东京、横滨 ................................................

9分行（或支行）

名古屋 .......................................................

3分行（或支行）

大阪、京都 ................................................

4分行（或支行）其他地区（仙台、新泻、长野、高山）..........

4分行（或支行）

海外............................................................

8代表处

纽约代表处 （北陆银行）从“北前船”或者说“北航船（北上的经济圈）”的交易关
系和客户的需要出发还在北海道各个主要城市内设立了自己的经营网点。
北海道银行成立于1951年，以支援中小企业和个人业务为中心在北海道道内的各个地区都设有营业网点。
北陆银行和北海道银行于2004年9月进行了经营统合，成立了（控股公司）北北金融控股集团股份有限公司。现在，北北金融控股集团已经形成了覆盖日本北陆地区北海道以及日本三大都市圈（东京，名古屋，大阪）的巨大的地方金融网络。

2002年5月

北海道地区 ................................................ 161分行（或支行）符拉迪沃斯托克代表处 （北海道银行）新加坡代表处（北陆银行）
曼谷代表处 （北陆银行）大连代表处 （北陆银行）
上海代表处 （北陆银行）沈阳代表处 （北海道银行）
胡志明代表处（北陆银行）

2023年6月30日

符拉迪沃斯托克北陆银行和北海道银行缔结了全面业务协助协议沈阳
大连

2003年5月

北陆银行和北海道银行对经营统合取得一致意见

上海
曼谷
胡志明

新加坡

2003年9月

纽约设立北银金融控股集团股份有限公司
北陆银行成为北银金融控股集团伞下的银行
北海道

通过股份交换实现经营统合

2004年9月

北北金融控股集团股份有限公司诞生

注：北银金融控股集团股份有限公司改名为北北金融控股集团
股份有限公司。
北陆地区
石川

富山

福井

东京
大阪

名古屋

三大都市圈

95

Hokuhoku Financial Group, Inc. Integrated Report 2023

北北金融控股集团 董事致辞

董事长

中泽

董事副社长

宏（北陆银行 总行长）兼间 祐二（北海道银行 总行长）大家好！承蒙各位平时对北北金融控股集团以及本集团公司的厚爱，在此深表谢意！
本集团所处的环境，随着经济活动逐渐向正常化的方向发展，整体出现了缓慢回升的迹象。
另一方面，受地缘政治风险加剧的影响，能源、粮食等供给受限，价格高涨，劳动力供求紧张等
背景下，全球通货膨胀压力不断加大。各国实施了大幅度的金融紧缩，其影响也表现在汇率的急剧变动和国内金融政策的修正等，前景不明。
在这种情况下，本集团怀着“与地区共同前进(迈向未来)”的强烈愿望，从2022年4月开始的
第5次中期经营计划《Go forward with Our Region》（到2025年3月为止）迎来了第2年。我们希望，通过本集团的各种服务和功能，提供符合顾客需求的价值，从而为地区社会的持续发展做出贡献。
本着【以地方为立足点开展活动】的理念，从促进地域社会发展、帮助客户解决课题出发，全体职工上下团结一致为地方经济的持续成长做贡献，
请大家一如既往地给予支持，谢谢！

董事长

中泽

宏

2023年7月

Hokuhoku Financial Group, Inc. Integrated Report 2023

96

中期经营计划（2022年4月～2025年3月）
中期经营计划
（2022 年 4 月～ 2025 年 3 月）

Go forward with Our Region为了实现长期愿景，在致力于提高咨询对应力和推进DX等提高生产率的同时，挑战
环境领域等新事业领域的期间

定位

重点战略

六项重点战略提高综合咨询应对能力·提高、扩充解决方案菜单·通过分段战略提高交易利润·对应支援新型冠状病毒·强化咨询提案力

环境领域的努力咨询

·支持TCFD建议·削减本公司的CO2排放量·强化环境商务·加强与自治体和各种团体的合作环境

加强集团治理·充实自有资本和股东还原（把利润返还给股东）·运用的高度化·多样化·风险管理态势的高度化

企业治理

向地域社会
贡献

DX的推进

DX

·强化数字银行功能·利用数字改革业务强化集团综合力量·进一步推进北北金融控股集团内
部合作·通过强化与关联子公司、关系密
切公司的合作，提供综合金融服务实现健康·幸福的工作方式

集团
综合实力

健康·幸福 ·工作环境/制度的完善·实现多种工作方式·强化技能提升支持

重点指标
重点指标

2024年度（中期经营计划最后年度）

前期比214亿日元+9亿日元

250亿日元以上

合并资本比率9.49％-0.05％

9.5～9.9%

OHR

62.39％-0.76％

60～64%

16.14%（193亿日元）+1.00％（+4亿日元）

16.0～16.9%（200亿日元以上）

1,474亿日元

+1,103亿日元

2,100亿日元

合并本期净利润

非利息收入比率（非利息收入额）环境相关投融资执行额（累计）97

2022年度Hokuhoku Financial Group, Inc. Integrated Report 2023

环境领域的努力

提高综合咨询应对能力（亿日元）存款资产余额※1
法人解决方案收益额

前期比

25/3期
目標

（ｔ－CO2)

2022
年度

13年度比

2030年度
目標

5,359

+30

6，500

CO2排放量※16,658△45.2%

△100%

50

+4

56
前期比

25/3期
目標

+11,488

20,000

前期比

25/3期
目標

+1,103

2,100

前期比

25/3期
目標

+1,514

800

23/3期

（名）
前期比

25/3期
目標

355

±0

450

信托、一次性支付保险合同件数※2

11,481+7,977

10,300（亿日元）积累型产品合同数量※3

127,586+8,291

161,800环境相关的投融资执行数额（件）

M＆A·事业继承支援件数

23/3期※1 2家银行的投资信托余额及TT证券存款资产余额的合计※2 信托类商品及一次性支付人寿保险的合同件数※3 累积投资信托·平准给付保险的合同对象数

23/3期
18,810

参加金融经济·SDGs相关培训的人数

23/3期
1,474

（名）

23/3期
1,762

SDGs·环境相关服务利用件数（累计）※集团全公司国内事业所的Scope1,2

DX的推进强化集团综合力量（亿日元）
北海道地区贷款余额
子公司·联营企业利润※1（件）
北北金融控股集团内部合作实行件数※2

前期比

25/3末
目標

33,063+335

34,412

22

△5

36

23/3末

23/3期
1,901

前期比

25/3末
目標

+1,346

900

（对象）

23/3末

前期比

25/3末
目標

IB·手机软件签约方数

710,386 +125,053

950,000

（账户）

23/3末

前期比

25/3末
目標

网银帐户数

287,978+66,779

470,000

23/3期

前期比

25/3期
目標

+1,0933,790※1 子公司·联营企业当期净利润（信用成本除外）、TT证券介绍手续费的合计值※2 通过两行的合作来帮助客户解决课题（联合融资和商务对接等）

人力资本管理的措施（实现健康工作方式）（％）
女性管理人员比率

23/3期
18.75

前期比

25/3期
目標

（名）

+1.18％

20％以上

认证人数※

1,541

※FP1级·CFP持有者、“IT护照”资格持有者合计Hokuhoku Financial Group, Inc. Integrated Report 2023

98

业绩精粹
营业概况（北北金融控股集团联结）（单位：亿日元）

3月期

前期比

2022年
3月期

经常收益

1,878

100

1,777

经常利润

263

－38

302

归属于母公司股东的净利润

214

9

205

9.49％

－0.05％

9.54％

2023年

资本充足率

合并经常收益以有价证券利息红利的增加和
股票等买卖价差收入的增加为主要原因而增加。
合并经常利润以卖出国际证券所发生的国债
等债券损益的减少为主要原因而减少。归属于母公司股东的当期净利润以企业所得税费用等的减少而增加。
合并资本充足率由于风险资产的增加等而降低。

营业概况（北陆银行，北海道银行）（单位：亿日元）

2家银行合算
前期比

2022年
3月期

2023年
3月期
经常收益

1,741

121

1,619

主营业务毛利润

1,198

－49

1,248

经费（临时处理部分除外）

747

－40

788

主营业务净利润

450

－9

460

扣除投资信托解约损益后

441

－6

448

信贷相关成本

77

－58

135

经常利润

269

－34

304

本期净利润

230

11

218

3.99％

0.09％

3.90％

ROE

在北陆银行，经常收益以股票等买卖价差收
入的增加为主要原因而增加。经常利润由于国债
等债券损益的减少和信用成本的增加而减少。当期净利润以企业所得税费用等的减少而增加。
在北海道银行，经常收益以有价证券利息的增加为主要原因而增加。经常利润虽然以国债等债券损益而减少，但最终由于信用成本的减少而增加。当期净利润由于特别损益的减少与前期相
比达到了相同水平。

（单位：亿日元）（单位：亿日元）

北陆银行

3月期

前期比

2022年
3月期

3月期

前期比

2022年
3月期

经常收益

972

82

889

769

39

729

主营业务毛利润

652

－31

684

546

－18

564

经费（临时处理部分除外）

394

－22

417

353

－18

371

主营业务净利润

258

－9

267

192

0

192

扣除投资信托解约损益后

249

－6

255

192

－0

192

2023年

99

北海道银行

2023年

信贷相关成本

93

8

85

－16

－66

49

经常利润

145

－63

209

124

28

95

本期净利润

143

12

131

87

－0

87

资本充足率

9.06％

－0.25％

9.31％

8.99％

0.05％

8.94％

ROE

3.87％

0.40％

3.47％

4.23％

－0.57％

4.80％

Hokuhoku Financial Group, Inc. Integrated Report 2023

Hokuhoku Financial Group, Inc.

Hokuhoku Financial Group, Inc.

Integrated Report 2023