August 5, 2024－
Financial Results for the First Three Months of FY2024 ending June 30, 2025
Main Questions and Answers[Management]

A. Considering that many of the sales staff do not have experience negotiating withQ. Are there any blind spots in the strong business performance? Looking ahead to the next

customers when market interest rates rise, the Bank informed staff the concept of interest

year or two year, please tell us how you see the risks to the business performance orrate management and how to explain it to customers starting last year. We consider thatmanagement?

the recent increase in yield on interest income is the result of these efforts to conduct

A. The Bank Group have newly selected “stagnation of sustainable growth due to lack ofdetailed negotiations. We believe it will be possible to secure a sufficient spread throughhuman resources and human resources capability” as the top risk for the Group this year.

careful dialogue with customers even when interest rates rise in the future.

Without sufficient human resources, both in terms of quality and quantity, there is a riskthat it will become difficult to expand business in the future. To address this human

Q. How do you think a policy interest rate hike will affect interest rates and delinquency

resource risk, we are promoting human capital investment with “human resource

rates on existing loans to the real estate rental industry?

development” and “improvement of employee engagement” as key elements. The

A. We will secure a spread by negotiating according to applicable interest rates, such as

budget for human capital investment is nearly double that of the previous mid-term plan,

fixed-rate loans and short-term prime rate linked loans. In addition to the fact that rents

and we are promoting human resource development for each specialized area, including

are expected to rise under inflation, we do not anticipate a significant impact on thecorporate, individual, and DX. In terms of “employee engagement,” we are actively

delinquency rate due to the stressed entrance screening process when lending.

seeking the opinions of employees and implementing measures that will lead to job
satisfaction for employees. We believe that by enhancing the expertise of employees[Pure investment shares / Cross-shareholdings]

through human capital investment and maximizing their capabilities through improving

Q. What is the outlook for the sale of pure investment shares?

engagement, we will be able to improve employees productivity, which will lead toA. We intend to proceed with sales while taking into consideration the market environment

revenue enhancement. Furthermore, we believe that improving the basic strength of theas well as the impact of expected gains on sales and dividend income on our earnings

organization will lead to stable earnings posting over the medium to long term.

plan. Although sales are proceeding ahead of the full-year plan, we intend to proceedwith sales for the full year in line with the plan at the beginning of the period.

[Impact of a rise in interest rates]
Q. Please tell us about the outlook for spreads on business loans after the July interest rate

Q. Regarding the sale of shares in the current fiscal year, are you considering only sellinghike.

shares from pure investment shares?
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A. Our policy is to sell shares through dialogue with our business clients, and there is a

A. We expect a reduction in the unrealized losses on our foreign bond portfolio, but at thispossibility of selling shares from cross-shareholdings as well as from pure investment

time, we do not anticipate a major impact on our profits.

shares. Our plan for the current fiscal year is focused on pure investment shares, but it
is not necessarily limited to that.

[Capital policy / Shareholder returns]
Q. With the macro environment moving so dramatically, what are your thoughts on

Q. Please tell us about the communication with the authorities regarding the sale of pureenhancing corporate value, including your shareholder return policy?

investment shares.

A. There is no change in our growth strategy focused on DX and our policy of continuing

A. By identifying the significance of holding pure investment shares and cross-to solve customers' problems by understanding the needs of clients and individuals.

shareholdings, we have reorganized our approach to holding these shares, and we will

Regarding shareholder returns, we will return profits to shareholders while keeping incontinue to communicate with the authorities.

mind a future dividend payout ratio of 40%. We announced a 4 yen dividend increase at
the beginning of this fiscal year, and we will continue to consider effective utilization of[Securities Management]

capital and additional returns while monitoring the progress of our business and theQ. What is your securities management policy going forward in the face of greater interest

accumulation of profits.

rate volatility?
A. With regard to yen-denominated bonds, there is no change in our plan to purchase fix

Q. With regard to the CET1 ratio, please reiterate your approach to capital utilization, as thebonds while carefully monitoring the interest rate situation. As for foreign bonds,

excess over the upper end of the target range of 11.5% has increased to approximatelyinterest rate levels are moving significantly, and we intend to secure the interest income

60 basis points.

by promoting investment in bonds with asset swaps.

A. We intend to actively utilize excess capital relative to our target range, first of all as
growth investments. Specifically, we are considering increasing risk-weighted assets,

Q. Please tell us about the risk of increased losses on unrealized losses on yen-denominatedinvesting in new areas such as real estate funds, and making DX and in-organic

bonds when interest rates rise.

investments. We will consider these investments while balancing growth investments

A. The Bank manages risk parity and does not take too much of any particular risk. We

that will serve as a source of future returns and shareholder returns. In terms of time line,

expect unrealized losses to increase due to the impact of monetary policy, but we will

we would like to take action by March 2029 to keep within the range.

control these and other factors as well.
Q. With the stock price in adjustment, please tell us whether there is any room to consider
Q. What is the impact of the decline in the U.S. policy rate?

securing flexibility in share buybacks or expanding the volume of share buybacks.
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A. We are always considering share buybacks and other shareholder returns, but at this point
we are not making any major changes to our current policy.
Q. Regarding the target range for the CET1 ratio, if you mean to keep within the range of
10.5% to 11.5% by March 2029, could you consider reviewing the range?
A. We will take it as your opinion and consider it.
[Credit-related expenses]
Q. Credit-related expenses have increased compared to the same period last year. How doyou see the accuracy of the stress test and other factors changing? Also, what is theoutlook for credit-related expenses in the rising interest rate environment?
A. In 1Q, the number of bankruptcies remained flat YoY, while the number of non-interestand unsecured loan clients decreased. Since COVID-19 factors have decreased and there
is no industry bias, we do not consider that macroeconomic factors are causing a large
increase in defaults, and we assess that the outlook has been confirmed by stress tests
rather than a sudden outbreak. In addition, we believe that the increase in credit costs
can be controlled in the future by continuing to provide support ahead of time inresponse to changes in the business environment of our clients.
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