April 8, 2024－IR Day
Main Questions and Answers[Growth Strategy]

Q. What are your thoughts on the future trend of the BOJ's current account balance andQ. What is the meaning or message in choosing "Growth Strategy" as the theme of IR Day?

investment in yen-denominated bonds?

A. In the changing business environment caused by the lifting of negative interest rates inA. The Bank currently expects the BOJ's current account balance to remain at the same levelMarch, we believe that once again communicating to investors the Bank Group'sas in the previous fiscal year, ¥4 trillion. The increase in revenues under the simulation

strengths, growth potential through business expansion into non-financial services, andof an interest rate rise is conservatively estimated. Funding from the call market is now

strategic thinking will lead to an increase in the Bank's PER and P/B ratio. We also

possible at lower rates than expected after the end of the negative interest rate, so thewanted to explain that our growth potential has been increasing due to the 0.5% surplus

BOJ's current account could be increased from 4 trillion yen.

in the CET1 ratio that is expected to be generated by the implementation of the Basel III

The Bank plans to purchase 350 billion yen of yen bonds in the first half and 600finalization. There has been no change to our traditional management strategy ofbillion yen in the full year, mainly 5- and 7-year fixed-rate bonds, to take advantage ofemphasizing ROE and OHR.

rising interest rates. After taking redemptions into account, the balance will increase by
more than 500 billion yen, which is expected to contribute about 1.5 billion yen to net

Q. Please tell us about the policy for the allocation of surplus capital and the assumption ofinterest income for the current fiscal year.

the investment effect in the next mid-term plan.
A. As for capital policy, the policy to keep the CET1 ratio, excluding the unrealized

Q. Please tell us your thoughts on improving ROE and expecting profit growth amid thegains/losses on securities, in the range of 10.5% to 11.5% remains unchanged. Even if

anticipated rise in capital costs due to the rise in the risk-free rate.

shareholder return are continued based on the mid-term plan, the ratio in FY3/29 isA. We will improve its ROE by improving cost and asset efficiency through aggressively

expected to exceed the range. Therefore, the Bank plans to promote growth investment

investing in in-organic businesses and further promoting DX as a means of reform, insuch as strategic system investment, real estate funds, renewable energy related

addition to further enhancing our strengths, developing existing businesses and taking

investment, and in-organic investment, and return the excess capital after making theseon the challenge of new businesses as a growth strategy. We will also increase thegrowth investments.

number of customers and increase the gross profit per customer and per company by

As for the investment effect, the total of strategic system investment and expenses isimproving the customer experience. By explaining the stability of these businesses andplanned to be about 20 billion yen in the three years of the current mid-term plan, withlowering β, the sensitivity to the market portfolio, we aim to reduce the capital costs andan average payout period of 3.4 years and the 5-year ROI of 141%.

improve the PER.

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Q. Is there downside risk in the BOJ’s current account, etc. in the simulation of an interest

implemented for two consecutive years, while monitoring the progress and status of therate rise?

business going forward. In-organic investment will be pursued more aggressively thanA. The BOJ's funds-supplying operation, which serves as the procurement side for the BOJ'sbefore, and specific projects are under consideration.

current account, have already been factored into the simulation, although funding costs
may gradually increase as the maturity of the four-year funding period arrives. There are

Q. If the policy interest rate rises, the BOJ's current account is extremely advantageous in

no downside risks assumed for call financing and loans and deposits.

terms of risk weight, liquidity, price fluctuation risk, and other factors. Could a strategy
be adopted to earn interest margin by depositing funds in the BOJ's current account

Q. Regarding the outlook for credit costs, is there any impact from rising interest rates?

instead of purchasing JGBs or lending mortgages?

A. In the stress scenario, credit costs in the final year of the mid-term plan are estimated to

A. As a regional financial institution, the Bank's approach is based on the concept ofbe 3 billion yen under scenario 1 and 5.5 billion yen under scenario 2. However, there

investing funds collected from the region to the region. Funds that cannot be invested

is a reasonable possibility that the stress scenario will not materialize because real estate-

locally are allocated to the BOJ's current account and bond purchases. On the funding

related loans, which account for 7 trillion yen of the approximately 12 trillion yen inside, the BOJ's current account is collateralized by BOJ operations, and call funding isloans, are subject to an entrance screening based on the assumption that interest rates

also subject to certain limits due to the existence of counterparties, although we wouldwill rise to around 4%. In addition, the Bank will curb the occurrence of credit costs bylike to increase it if it is economically rational.

providing accompanying support to regional businesses, including Solution Review
Meeting.

Q. In order to raise market expectations, it is important to strengthen the policy ofshareholder returning. What do you think about this?

Q. The target CET1 ratio based on B/S at the end of December was 11.98%, exceeding theA. The Bank intends to raise its dividend payout ratio above 35% and to 40% in the longrange. How long should CET1 ratio return to within the range? Also, is there a possibility

term, and hopes to achieve a dividend yield of 3% as soon as possible. We also have aof inorganic investment at a scale that would keep CET1 ratio within the range?

track record of a total shareholder return ratio of 50%. Although we have not achieved

A. The Bank hopes to keep CET1 ratio within the range by March 2029, when the final

a dividend yield of 3% due to the rising stock price, we would like to consider taking

implementation of Basel III finalization will be complete. While focusing on businessanother step to demonstrate a higher level of return.

expansion through growth investment, the Bank will also return profits to ourshareholders. While focusing on business expansion through growth investments, wewill also promote returns to shareholders. Rather than putting off the return of capital,
we will consider the possibility of returning more than the 4-yen dividend increase
implemented for three consecutive years and the 10 billion yen share buyback
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[DX Strategy]

A. In addition to reducing the cost of counter personnel in branches, it is possible to improve

Q. What is the status of DX for subsidiaries other than the Bank, and what is your policy forthe convenience of customers. Especially, the allocation of back-office personnel has

the future?

been greatly changed. Rather than reducing the number of branches, we would like toA. DX for subsidiaries is a little later than the Bank, and this is a challenge. In particular,

reduce costs by reducing the weight of branches.

there was a lot of demand for infrastructure development, and first of all, the humanEnd

resources system used by the Bank was introduced to all group companies. We willcontinue to develop infrastructure in the digital field.
Q. It may be difficult for banks to grasp customers' life events in a timely manner.
A. It is possible to obtain a precise understanding of customers who have multiple
transactions with Chiba Bank. For example, we can identify customers who may beconsidering purchasing a house based on their family structure and the ratio of houserent to annual income. The Chibagin App also enables us to understand the preferencesof customers and make proposals in the most appropriate manner. We would like tocreate a customer experience in which customers feel as if “I have received informationfrom Chiba Bank just when I was interested.”
Q. What is a needs rank model?
A. The model is based on an analysis of what other transactions are being conducted bycustomers who use the relevant services. Using this model, the Bank will approachcustomers who match the model. At present, models have been created for four products:
housing loans, renovation loans, education loans, and testamentary trusts. The joint
business plan with Google Cloud is working to serve more personalized advertisements
to customers, and we believe it will show results in the future.
Q. What is the expected cost reduction effect in the retail sector due to the increased
penetration of app?
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