April 10, 2023－IR Day
Main Questions and Answers[The 15th Mid-term Plan]
Q. Please tell us what you consider to be the most challenging issue among those presented

cultivating a DX culture at the Bank through DX training, employee dispatch, and active
mid-career recruiting as a means to improving our employees’ capabilities.

in the new mid-term plan as well as leading into the next mid-term plan and beyond.
A. The operational guideline of the new Mid-term Plan, or “Phase 1”, is the evolution of theQ. First of all, could you tell us about the background behind your decision to set the target

customer-focused business model. We have to be upstream of the commercial

range of 10.5% to 11.5% for your CET1 ratio? Next, regarding growth investments anddistribution and deliver personalized product proposals at the right time based on theshareholder returns, am I correct in understanding that this distribution will be balanced?

needs of our customers. We feel the biggest challenge going forward is to monetize thisFinally, what areas of inorganic investment are you currently considering?

steadily as a business. “Phase 2” will be focused on enhancing corporate engagement

A. We have set our goal from 10.5% to 11.5% with a 1% buffer to increase our risk tolerance

and in “Phase 3”, we will aim to further increase the number of fans of Chiba Bank.

in the event of increased volatility in the economic environment, while maintaining alevel above 10.5%, which is not subject to the Basel regulation's dividend limit.

Q. In order to strengthen one-to-one marketing, the ability of each bank employees must beWe will continue to give priority to growth investments as they are fundamentallyraised, and they also must be strong as a team. Can you tell us your thoughts on this inindispensable for the Bank's sustainable growth. The idea is to maintain appropriate

terms of the state of your organization and corporate culture?

capital adequacy commensurate with growth investments while seeking to return any

A. Through one-to-one marketing, we can link customers that already use their accounts tosurplus to shareholders. The dividend payout ratio target is above 35%, with a long-term

product sales and encourage the 700,000 customers that already have purchased

target of 40%. In addition, the Bank intends implement flexible share buybacks. We

products to use more than one and promote the use of products to the 2 million customers

have always intended to provide balanced returns, with about 50% invested in growth

who use their accounts without buying products. For example, we have devisedand 50% in returns.

campaigns to increase credit and debit card use rates and strive to deliver well-timed

Finally, with regard to potential inorganic strategies, as we continue to strengthen ties

proposals, such as offering asset management services to a borrower who has just paidoff their housing loan, and as a result, we expect to increase gross business profit by 4.5

with our partners, we will consider as an option partial investment in and acquisitionsof businesses when we seek to determine the effectiveness of capital alliances. There isbillion yen.

also a good chance that we may establish a new business subsidiary as a joint venture

For in-person sales, we use a data search system to support sales staff so that they canapproach customers efficiently. We also take into consideration the best practices ofwith our own bank or with a partner company, as we did with Himawari Green EnergyCo., Ltd, an energy generation company.

sales branches and horizontally-deploy these ideas while accumulating data. Virtual
sales are promoted in collaboration with the departments in charge of each product andthe Digital Strategy Division through the use of marketing automation tools. We areQ. Regarding interest on loans to corporations, can you give us a little more backgroundabout your plan for yields to increase while volumes grow at a reasonable rate?
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A. In light of the current interest rate conditions influenced by the BOJ's revision of its YCC
framework last December , the yen swap rate, which is the benchmark for the base rateof medium- to long-term fixed rate loans,

expect an increase in net interest income of about 2 billion yen due to higher yields on
yen-denominated bonds. In the event of a rise in TIBOR, we expect an increase of aboutis expected to riseby 16 basis points, and an2 billion yen in interest on variable-rate loans. On the other hand, we estimate theincrease of about 8 basis points for medium- to long-term fixed rate loans with a 50%

negative impact on net interest income due to rising deposit rates to be about 1 billion

pass-through rate. Based on this, we are planning for an increase of about 4 basis points,yen. The total effect of the above items is an increase in net interest income of 7.5 billion

since variable-rate lending makes up the remaining half of the total corporate loans.

yen based on these interest rate assumptions. After the 30% tax deduction, the amountwill be about 5 billion yen.

Q. ROE is leveraging multiplied by ROA. Please tell me if you are considering raisingleverage to improve ROE.?

Q. Can you tell us to the extent possible how long it is expected to take to achieve a 40%

A. While leveraging is expected to remain generally flat, our plan is to increase net interest

dividend payout ratio.

income by increasing loan and securities assets while expanding net fees andA. In the previous mid-term plan, we raised the dividend by about 10 yen, from 18 to 28

commissions, which do not use much risk-weighted assets. In addition, we plan toyen. In addition, the dividend payout ratio was increased from 28% to 34%. In the newimprove our RORA and ROE through cost-control.

Mid-term Plan, we have expressed our desire to first prioritize ongoing dividend payout

On the other hand, with the introduction of the Bank of Japan's negative interest rateincreases at a level above 35% and then aim for 40% in the long term. Most mega-banks

policy and the special interest rate system, the Bank's current account at the Bank ofhave a dividend ratio of around 40%, and we have a keen desire to return profits to ourJapan has swelled considerably, increasing to about 3 trillion yen compared to 2 trillion
yen under normal circumstances. As a result, this also led to an expansion of total assets,shareholders at a level close to that. We cannot say when we will reach our long-termgoal of 40%, but we would like to move forward to achieve it as far ahead of schedule

but when the special interest rate system ends and the negative interest rate is removed

as possible.

in the future, our balance at the Bank of Japan will naturally decrease and leveraging
will be reduced somewhat.
Q. I would like to ask about YCC and the effect on revenue growth when negative interest
rates are lifted. What are your assumptions about the asset and liabilities sides?
A. Our estimate is an increase of 5 billion yen for FY20250 based on our interest rate
assumptions that the YCC range will increase from 0.5% to 0.75% during April-June
and that YCC and the negative interest rate policy will be lifted during July-September.
First, we expect the change or removal of the YCC to spur a rise in long-term interest
rates to about 1%. We also estimate that if medium- to long-term interest rates rise, theincrease in interest on loans and bills discounted will be about 5 billion yen, and we2

[DX Strategy]
Q. Regarding the Chibagin app, can you tell us about the current gap between thecontract processes paperless, this will help expand the scope of our products andincrease operational efficiency. By doing so, we will be able to secure more time torevenue from users and non-users, and how much that gap will change when thetarget for FY2025 is achieved?
A. Including digital customers who also make use of internet banking, the number of app
users has tripled over the course of the previous Mid-term Plan. Looking at the agegroups, 65% of digital customers are of the ages between 10 and 40, while only 39% of
non-digital customers are in the same age range. The digital customer base is expanding
mainly among younger people. In terms of per-user gross business profit, the amountper digital customer is about 15,000 yen, while that of non-digital customers is only
6,000 yen. As a result, the unit price of digital customers is currently more than doublethat of non-digital customers.
We will aim to double the number of registered app users to 1.5 million during this Midterm Plan period. While new digital customers may initially start with lower profitability,
because we will continue to expand the lineup of products available through the app,such as new investment trusts and unsecured loans, we plan to improve per-user grossbusiness profit.

properly explain our consulting services to customers, which we believe will lead tohigher conversion rates. In addition to increasing profits by introducing such products,
we plan to introduce a wide range of digital services, such as in-app loans and providing
housing loans fully online. Through these digital initiatives, we expect an increase in net
income of around 5 billion yen by FY2030. Furthermore, as you stated earlier we expect
to generate an increase of 4 billion yen or more in net income from new businesses by
FY2030, taking into account personalization strategies, regional ecosystem strategies,
and the expansion of cashless, advertising, and Chibagin Market services.

Q. In which areas is AI being used? What are the results achieved by utilizing suchtechnology, and in which areas do you want to apply it in the future?
A. We are currently applying AI in the fields of bankruptcy prediction and fraud detection.
We are currently exploring how to make better use of it going forward and we believethat it may be possible to utilize AI in the analysis of customer data and human resource
data.
Q. What kind of impact do you expect your DX strategy initiatives to have on your future
earnings?
A. Regarding DX, in terms of financial products, we are introducing the ability to purchasein investment trusts through our app. Combined with new proposal tools and making
3[HR Strategy]
Q. My question is about personnel exchange between the Group companies. Can you

The other point is the DX specialists at the Head Office. We are planning to proceedwith a three-pronged approach, which includes nurturing talent internally, sending

explain the intention behind focusing on staff and leader levels for these exchanges,trainees externally, and hiring for specific careers. We plan to fill the human resources

while the number of managers is planned to decrease slightly?

gap by aiming to develop 90 employees over the next three years by dispatching

A. In the past, personnel dispatched from the Bank to Group companies were often thosetrainees externally and we plan to hire about 110 people annually through mid-career

who had held positions like department head, deputy department head, or branch

recruitment as well as outsourcing.

manager at the Bank. Generally, Group companies were managed by staff from the Bank,
while the employees handling the actual work were permanent employees of said

Q. While number of Bank employee dispatched to Group companies is stated as 73 people,company. With the new Mid-term Plan, we have adopted a unified Group-wide approach

you also indicated that the number of Group employees will decline by 10. What kindto personnel management and are promoting Group personnel exchange as part of ourof change will see in the overall number of Group company personnel?

career step support. Furthermore, we are changing the position of division head in ourA. Starting from this Mid-term Plan, we have switched to a system of unified Group hiring

Group companies. We are shifting to a slightly younger manager layer, with more mid-

where some employees will be dispatched to Group companies, so the number oflevel than veterans, who will gain experience as department heads at Group companies

dispatched employees will increase. On the other hand, due to a reduction of 70

as a way to help both individuals and the organization grow.

employees through improvements in efficiency and consolidation of existing businesses
and 60 employees that will be redeployed to new businesses, the overall number of

Q. What is your impression of the "as is" and "to be" of the qualitative gap sin your humanresources? How long do you think it will take to fill these gaps?

Group company personnel will be a net decrease of 10 employees.

A. We believe that there are two major points in the gap between the ideal humanQ. Could you tell us about the involvement of young Bank and subsidiary employees in theresources portfolio and the current situation in this Mid-term Plan. The first point issales personnel. As of the end of March, we have about 920 sales personnel, but weformulation of this Mid-term Plan?
A. During the formulation of the Mid-term Plan, we organized a committee comprisingplan to increase the number of sales personnel at sales branches to 1,020 in the next

mid-level and younger employees and gathered their opinions. The younger staff

three years. The challenge is how to train those 100 people. We have implemented aseriously considered and shared their opinions on how to make customer-centeredtrainee system to train 50 people each in both corporate and retail sales starting in

proposals, and this is reflected in the Mid-term Plan. The human resource

April. This is a measure aimed at increasing the sales force by 100 people, and in thedevelopment policy has also been created by consolidating opinions from among
those who will be supporting our organization 10 and 20 years from now, rather
than just the management level.

case of corporate sales, we have a training system in which they will spend one year
going through six departments at the Head Office and visiting group companies inorder to gain practical skills. In the case of retail sales, they will also build experienceat the Head Office and Group companies as a means towards improving our consulting
proposal capabilities.
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