Because it is a machine translation, it is notalways an accurate translation.

Update the Medium-Long Term Management Strategy
And summary of financial results for the fiscal year
ended March 31, 2023

May 8, 2023

Contents
1.Summary of Business results

・Key Businesses (Corporate Consulting)21

・Summary of Financial Results for the Fiscal Year Ended March 2023

4・ Key Businesses (Personal Consulting and Investment advisory)

22

・Forecast for the Fiscal Year Ending March 2024

5・ Key Businesses (Expansion of Investment Operations)23

・ Key Businesses (Market Management Strategy)

24・System strategy

25

2.The Medium-Long Term Management Strategy ~ Update ~・The Medium-Long Term Management Strategy 2023

7

・Sustainability (E: Environment)

26

・Update points

8・Sustainability (S: Strengthen human capital)

28

・Shareholder Return Policy and ROE・PBR Targets

9・Sustainability (G: Governance)

29

・Cost-of-Capital, ROE, and Performance-Based Compensation

10

Summary of Fiscal Year Ended March 31, 3.2023 (Reference Data)・Utilization of capital

12

・Reduction of strategic stockholdings

13

・Target levels over the medium to long term

15・Trends in Expenses and OHR

17・Future Non-personnel Expenses

18

・ Key Businesses (integrated management of loans and Leasing)19

・ Key Businesses (Progress of Cashless)20

・Loans and discounts outstanding by segment and yields

32

・Loan ~ Yield by segment ~33

・Trends and Prospects of Credit Costs

34

・Operation of negotiable securities

35

・Portfolio of the market sector

36

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

1. Summary of Business results

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

Summary of Financial Results for the Fiscal Year Ended March 2023
[Hokkoku Financial Holdings Consolidated Profile]<Ordinary income ¥16.046 billion, YoY △ ¥3.121 billion><Net income ¥8.741 billion, YoY △ ¥646 million>
Expenses to dispose of non-performing loans decreased, but due to an increase in foreign currency funding costs and the recording of a loss on the sale of foreign bonds, etc.,
Recurring profit and net income both declined.

Hokkoku Bank Non-consolidated Profit and Loss
Core net operating profit

Ordinary income(Unit: 100 million yen)

Net income

180
156
117

130

112

96

90

90

59
Year ended March 31, 2021

Year ended March 31, 2022

Year ended March 31, 2023

Consolidated Capital Adequacy Ratio
Uniform international standard
13.04%

Domestic standards

12.61%

10.08%

Year ended March 31, 2021

Year ended March 31, 2022

Year ended March 31, 2023

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

4Forecast for the Fiscal Year Ending March 2024
• In the fiscal year ending March 2024, we anticipate an increase in foreign currency funding costs due to an increase in foreign currency interest rates.
Net income is expected to increase due to the effects of various measures, including the continued reduction of strategic shareholdings.
• The dividend forecast is ¥110 per share, an increase of ¥10. The total return ratio, including the acquisition of treasury stock, is expected to exceed
100%.

【北國フィナンシャルホールディングス 連結】
（通期）

（中間期）
2023年3月期実績

経常利益
当期純利益*1

2024年3月期
予想

2023年3月期
中間期 実績

16,046

16,500

経常利益

20,463

8,741

11,000

中間純利益*1

12,8952024年3月期
中間期 予想

9,000
6,000

* 1:親会社株主に帰属する当期(中間)純利益【北國銀行 単体】

（百万円）

（通期）

（中間期）
2023年3月期実績

2024年3月期
予想

2023年3月期
中間期 実績

経常利益

15,651

14,500

経常利益

19,996

当期純利益

9,054

10,000

中間純利益

12,819

コア業務純益

9,677

6,000

コア業務純益7,343

一株当たり配当金

2024年3月期
中間期 予想

8,000
5,500
3,000
（予想）

2022年3月期*2

2020年3月期

2021年3月期

2023年3月期

2024年3月期

年間配当

70円

80円

90円

100円

110円

うち中間配当

35円

30円

40円

50円

55円

うち期末配当

35円

50円

50円

50円

55円

* 2:2021年度中間配当までは、株式会社北國銀行で実施

5
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

2. The Medium-Long Term Management Strategy~ Update ~HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

The Medium-Long Term Management Strategy 2023
The Medium-Long Term Management Strategy~ Update Plan ~※2023.5.8 Released※ From 2021, medium-to long-term goals and strategies are updated every fiscal year.

■Focus period to establish new business model from April 2023 to March 2026
Measures for increasing corporate value

1.Improving capital efficiency
・Raised the basic policy for shareholder returns to a total return ratio of 50% or more・Continue share buybacks (¥9 billion for the year ended March 31, 2024)

・Maintain the equity ratio at around 10%, while periodic profit/loss and surplus capital are to return profits toshareholders and invest in new businesses

2.Expansion of Key Business Domains (Three Pillars → Seven New Pillars)
・In three priority projects ("Cards", "Loans and Leasing" and "Consulting")
In addition to our key businesses of "digital regional currencies," "Investment advisory," "investment funds," and"market management,"Revenue after 5 years to 49.8 billion yen. (+ approx. 11 billion yen, 2023/3)
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

7

Update points■Improving capitalefficiency

While maintaining the equity ratio at around 10%, excess capital will strengthen shareholder
returns and new business investments.
Aim to exceed ROE7% in the fifth year and achieve 8% at an early stage.

■Expansion of Key Business Domains①Consulting & advisory

Segmented approach to local governments and non-Hokuriku region
Strengthen asset-management Investment advisory businesses for personals, businesscorporations and financial institutions②Integrated management of loans and Leasing

Achieve digital speed and efficiency through financing through understanding ofbusiness prospect according and Internet banking③Progress of cashless

Increase cashless ratio through card and digital regional currencies④Expansion of investment operations

Significant expansion of investment limits, investment regions, and target industries⑤Further advancement of the market sector

Improve risk management level and profitability with the aim of achieving an expected
return of around 2%⑥DX and system modernization

Improve quality and Cost reduction by developing next-generation banking system andadvancing in-house development initiatives⑦Strengthen ESG initiatives

Further investment of resources in human capital, strengthening of governance, andstrengthening of efforts for environmental consideration
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

8
8

Shareholder Return Policy and ROE・PBR Targets■ Targeting a total return ratio of 50% or more.
■ Achieve ROE8% above the cost-of-capital ratio of 7% and aim for PBR1.0 multiples.
FYE March 2023
ActualFYE March 2024
A year later

Total return ratio

122%

115%

Total dividends

2.6 Billion yen

2.7 Billion yen

Repurchase of theCompany's stock

8.1 Billion yen

Item

9.9 Billion yen

Cost of capitalFYE March 2026
Three years later

FYE March 2028
5 years later

FYE March 2033
About 10 years later

Total return ratio: 50% or more
The Company will periodically review and implement share buybacks andincreases in dividends in light of its capital adequacy ratio and strategic
investment opportunities.

7.0%
3.9%

5.0%

5.0% or more

7% or more

8% or moreCore capital

226.0 Billion

223.8 Billion

238.7 Billion

255.7 Billion

300.0 Billion

Risk Assets

2,240.2 Billion

2,205.0 Billion

2,476.5 Billion

2,796.5 Billion

3,000.0 Billion

Equity ratio

10.1%

10.1%

0.5

0.6 Or more

ROE

PBR

Around 10%
0.7 Or more

1.0 Or more

1.0 Or more
9

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

Cost-of-Capital, ROE, and Performance-Based Compensation■ Capital cost is assumed to be 7% based on CAPM (capital value pricing model).
■ Shares are granted to all employees based on ROE's calculation criteria and corresponding to the level.
・ROE formulas

・Capital cost assumed to be 7%
・ Calculated based on CAPM (capital-value-pricing model)
・ Market risk premium of 7.5%

ROE=
Net Income Attributable to Shareholders of Parent ÷ Core
Equity (Basel III Domestic Standard)・Standards for granting performance-based compensation to directors and employees
1% to lessthan 2%

ROE level

Directors(*)

2 to less than
3%

3% to lessthan 4%

4% to lessthan 5%5% to lessthan 6%(Unit: 100 million yen)

6% to lessthan 7%7% to lessthan 8%8% or more

Money

0.8

1.5

2.3

3.0

3.8

4.5

4.5

4.5

RS

0.1

0.8

1.6

2.3

3.1

4.1

5.9

7.7

-

1.7

3.5

3.5

7.0

15.0

22.0

30.0

Employees RS※Includes directors and executive officers of Hokkoku FHD, as well as directors and executive officers of individual group companies.
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

10

Cost-of-Capital, ROE, and Performance-Based Compensation
・Compensation Composition and Percentage[officers]※Includes directors and executive officers of Hokkoku FHD, as well as directors and executive officers of individual group companies.

Medium-term target level

Medium-term target level

Compensation image of ROE5% (for the president and director)
Fixed amount compensation(45%)[employees]

Performance-linked (money)(30%)

Compensation image of ROE5%
Performance-linked(shares)(25%)

Salary and bonus(95%)
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

Stock grants
(5%)

11

Utilization of capital■ While maintaining the equity ratio at around 10%, excess capital is used for new strategic investments.
FYE Mar. 2022

2,864

Unrealized gain on
available-for-salesecurities

2,387

367
Subordinated bonds 200

FYE Mar. 2028

Total capital 2,864

Unrealized gain on available-for-Unrealized gain on available-for-sale securities △367
Subordinated bonds △200
Net income (23～26/3)+425
Stock repurchase※1(〃) △180
Dividends※2 (〃) △ 175)

2,557

Issuance of RS shares + 20

= Around 10%=12.6%

Loans △ 650
Marketable securities + 200
Fund(QRI) + 800
Arena-※1:Only publicly announced share repurchases are shown.
※2:The dividend amount will be the planned amount until the announced
fiscal year ending March 24,
Since then, the annual total return ratio has been 50% or more.
Calculation is based on the assumption of the amount.
Dividend amount for FY3/25 and thereafter has not been determined
yet.We do not promise.

Risk Assets 22,715

24,765

Hirooka Terrace + 200
Strategic Investment +1500

sale securities △367
Subordinated bonds △200
Net income (23～28/3)+730
Stock repurchase※1 (〃) △180
Dividends※2 (〃) △ 350)
Issuance of RS shares + 60

= Around 10%

Risk Assets

Risk Assets

Risk Assets 22,715(Unit: 100 million yen)

Total capital 2,864Core capitalCore capital

Total capitalFYE Mar. 2026

27,965

Risk Assets 22,715
Loans △ 850
Marketable securities +2,200
Fund(QRI) +2,000
Arena + 200
Hirooka Terrace + 200
Strategic Investment +1500

In the absence of new strategic investments, the corresponding core capital will be used for
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.
dividends and share repurchases
12Reduction of strategic stockholdings■ Continuously sell cross-shareholdings (financial institutions, insurance companies, etc.) since 2009.
■ Plan to halve the book value of investments by the end of March 2025 (compared to March 2022) is ¥2.4
billion for one year
Reduction (progress rate: 35%)
Balance of Strategic Shareholdings (100 million yen)
1,000

Investment amount

Appraisal profit/loss

800

660

600
493
279

380
404

400

411
297

386

410

138

114

92

69

2022.32023.32024.32025.3

200
317

286

282

284

220

200

181

0

2013.32016.32017.32018.32019.32020.32021.30

In the future

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

13

Reduction of strategic stockholdings■ Negotiations progressed to approximately 94% of the target of halving the amount in the fiscal year ending March 2025 (△ 6.9
billion).
■ The Bank will continue dialogue on capital policy, etc. for those with difficulties in negotiations.
■ Carefully select investment targets, such as profitability, and strengthen management of net investment-purpose stocks.
Reduction and negotiation status of strategic
stockholdings for listing

Net investment objective equity management policy

Book value(100 million yen)

Number of issues■ Investment policy

2022.350

1382023.3

37

114

Number of reductions

13

▲24

Target for 2025-

▲69

Progress rate-

35%

Number of borrowers

Book value(100 million yen)

Sale commitment

2

1

Projected sale by FY3/2025

23

40

Projected sale from April 2025

7

19

Ongoing negotiators

554

・By investing in blue-chip Japanese stocks, which are expected to grow over the medium to long term,

Aim for revenue from increasing corporate value■ Investment strategy
・80 to 100, taking into account the macroeconomic environment and stock price valuations

Manage a portfolio carefully chosen for the issues, and gain and stability in the value of the shares
Achieve a higher level of revenues from payments.

■ Investment approach
・Macroeconomic analysis, quantitative analysis of corporate finances, etc., performance outlook, etc.

Carefully select investment targets through a qualitative analysis.
・Implement a monthly rebalancing to lock in profits and improve the portfolio.
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

14

Target levels over the medium to long term～Medium-to long-term image based on future environmental forecasts and action policies※2023.5.8 Contents publishedFYE March2023
ActualFYE March2024
A year later

FYE March2026
3 years later

FYE March2028
5 years later

FYE March2033
10 years later

Consolidated Operating Income

16 billion yen

16.7 billion yen

18.1 billion yen

28.3 billion yen

40.4 billion yen

Consolidated Net Income

8.7 billion yen

11 billion yen

11.4 billion yen

18.4 billion yen

26.9 billion yen

Core Business Earnings (Consolidated)

38.8 billion yen

35.1 billion yen

39.1 billion yen

49.8 billion yen

60 billion yen

3.9%

5.0%

5% or more

7% or more

8% or more

Item

ROE (Consolidated)*※ ROE is calculated based on the amount of net income attributable to owners of the parent to Basel III core capital based on domestic banks<Reference: Based on shareholders'equity>ROE (Consolidated)

4.0%

5.1%

5% or more

7% or more

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

8% or more

15

Target levels over the medium to long term (detailed
breakdown, consolidated)※2023.5.8 Contents published(Unit: 100 million yen)Item

FYE March 2023
ActualFYE March 2024
A year later

FYE March 2026
Three years later

FYE March 2028
5 years later

FYE March 2033
About 10 years later

388

351

391

498

600

Business loans and Leasing

148

148

160

162

167

Cashless

14

17

26

40

89

Consulting & advisory

10

20

31

40

62

Investment advisory

1

2

5

8

11

Investment fund

2

4

7

85

101

212

161

161

163

169

Other income (consumer loans, etc.)

145

170

174

191

202

Total Credit Cost

62

30

30

30

30

Expenses

310

324

354

376

368

68

69

62

62

48

160

167

181

283

404

Key business

Market management

Of which, system costs*
Ordinary income※:Total of software development costs (depreciation) and running costs (outsourcing expenses, etc.)

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

16

Trends in Expenses and OHR(Unit: 100 million yen)Item

FYE March 2023

FYE March 2024

FYE March 2026

FYE March 2028

FYE March 2033

Personnel expenses

151

155

158

186

190

Incentive fee

6

9

9

33

43

145

146

149

153

148

Non-personnel
expenses and taxes

159

169

195

190

177

System costs

68

69

62

62

48

Others

91

100

134

128

129

Others①Core OHR (Core gross operating income basis)②OHR (gross margin basis)

Gross operating profit from core business: net interest income + net fees and commissions + other operating income-net
gains on government bonds and other bonds (5-account)

FYE March 2023

FYE March 2024

FYE March 2026

FYE March 2028

FYE March 2033

77.2%

86.1%

72.7%

67.9%

56.2%

Gross profit: Gross operating profit from core business + Gain (loss) on government bonds, etc. + Gain (loss) on stocks, etc. (equity-3 account)

FYE March 2023

FYE March 2024

FYE March 2026

FYE March 2028

FYE March 2033

59.6%

63.3%

63.6%

56.5%

47.4%

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

17

Future Non-personnel Expenses■ Material expenses were reduced mainly in ATM and system-related costs due to the digitization of banking functions.
■ Overall increase due to environmental measures at new bases and strengthening of investment related to Arena and real estate.
(Unit: 100 million yen)

(Unit: 100 million yen)FYE Mar. 2026
(compared to March
2023)(compared toMarch 2023)

Strategic investment

Systems △ 6

Environmental Investments(EV・ZEB)+ 5

Branch consolidation △ 1

Hirooka Terrace +28+3.1 billion

ATM and Office Equipment △ 4

Arena Business +4(compared to

Rolling Stock Leasing △ 1

Use of paid real estate-

Trends in Non-personnel Expenses+3.6 billion

Strategic reduction

Digital regional currencies, etc. + 9

March 2023)

Others + 2
+48

△12

195
159

FYE March 2023

169

FYE March 2024

FYE March 2026

190

FYE Mar. 2028
(compared to March
2023)

Strategic investment

Strategic reduction
Systems △ 6

Environmental Investments(EV・ZEB)+ 6

Branch consolidation △ 2

Hirooka Terrace + 8

ATM and Office Equipment △ 4

Arena Business +11

Rolling Stock Leasing △ 1

Use of vacant real estate +3
Digital regional currencies, etc. +11

FYE March 2028

Others + 5△13
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

+44
18

Key businesses (integrated management of loans and Leasing)■ Continue dialogue by sharing understanding of business prospect according and finances.
■ Understand issues and needs and optimize pricing by improving relationship levels.
■ Achieve speed and efficiency by digital using Internet banking.
■ Exercising Financing Functions through understanding of business(Unit: 100 million yen)

Earnings Plan
148

148

160
15

14

prospect according
・Dialogue through understanding of business prospect according and Financial Sharing

162

167

17

22

・Implementation of communication plans by segment
・Improve relationship level and increase core clients

14

・Initiatives for early involvement in reserve classification
・Expand shares of current Leasing products
134

134

145

145

145

・Creation of new revenue oppotunities (auto Leasing)■ Initiatives for Digital Speed and Efficiency
FYE March 2023

FYE March 2024

FYE March 2026
Loan

Leasing

FYE March 2028

FYE March 2033

・Implementation of Lending Function to internet banking for corporate clients(scheduled for release in 2024)
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

19

Key businesses(Progress of Cashless)■ Expand payment domains by building platforms linked to local operators.
■ Issued digital regional currencies (Stable Coins) by strengthening collaboration with local governments andother financial institutions.
■ Further increase the cashless ratio through the implementation of the above measures.
Earnings Plan

(Unit: 100 million yen)
89

■Expansion of payment domains
・Corporate and personal debit penetration rates and the increase in the number of transactions
・Proposals combining cash registers and settlement machines in addition to merchant terminals

32

Expansion of franchisees
・Expand earnings by introducing new handsets (for QR, etc.) and recurring

40■Issuance of digital regional currencies

26

14

17

15

57

7

Issuance of regional currency (stable coins) underway around winter of fiscal 2023

1
14

16

19

FYE March 2023

FYE March 2024

FYE March 2026
Card・Digital collaboration with Suzu City using distributed ID blockchain

25

FYE March 2028

・Initiatives for expansion to Ishikawa Prefecture and other local governments
FYE March 2033

Local currency
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

20

Key businesses(Corporate Consulting)■ Basic strategy: Increase in number of clients x increase in fees per customer

・Provides consulting services for dealing with multiple issues, starting with the sharing of understandingof business prospect according and finances.

・Develop new approaches by segment that transcend the Hokuriku region, such as large corporations and■Main Initiatives

local governments.

(Unit: 100 million
yen)・Approach at urban stores, use of media, and increased contact with industry associations

45

Earnings Plan

・Expansion of consulting areas such as marketing and external sales of in-house IT tools
・Promotion of appropriate pricing such as expansion of value fees

33
29

・Early training of consultants and improvement of skills of senior consultants■Indicators for 3 years from now (FYE Mar. 2026)

19

・Number of consultations: 1200 ⇒ 2400 or more

10・Percentage of understanding of business prospect according customers contracted increased by 13% ⇒ 26%
・Percentage increase of multiple consultants 43% ⇒ 70%

2023/3期

2024/3期

2026/3期

2028/3期

2033/3期

・Personnel system 97 persons ⇒ 130 persons

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

21

Key businesses(Personal Consulting and Investment advisory)■ Pursuing the best interests of customers with a customer-oriented approach, establishing the first advisorybusiness in Japan.
■ Integrated management with Investment advisory firm ALCOLAB.
■ Enhance expertise through management integration and provide consulting to business corporations,(Unit: 100 million yen)financial institutions, etc.

14

Earnings Plan

■Initiatives to Establish an Advisory Business・Leverage our market management expertise to advise individuals.

11・Transferred the main functions of market management of the Hokkoku Bank.
7

11
8

3

1

・Provision of solutions (support for investment strategies, operation plans,

and budget formulation) based on management issues to financial institutions that5

2

⇒ Sophistication of operations and risk management

share common values
2

3

3

FYE March 2028

FYE March 2033

2

1

1

FYE March 2023

FYE March 2024

FYE March 2026

Consulting

・Consolidate specialized personnel and recruit and train them at advisory

companies

Investment advisory
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

22

Key businesses(Expansion of Investment Operations)■Equity investment leads the regional ecosystem and creates quality regions (QR)
■Major investment targets are the Hokuriku region, while expanding investments nationwide and overseas■Acquired knowledge (temporary staffing, management involvement, etc.) through external collaboration[Investment Plan]
3 years later(Unit: 100 million
yen)

Earnings Plan

5 years later

Number of investments

110

170

250

Investment balance(100 million yen)

700

900

1,000

Number of
cases

Issue amount(100 million
yen)[Status of Fund Investment (as of Mar. 2023)]
Total (100Fund namemillion yen)

85

2
FYE March 2023

4
FYE March 2024

101

7
FYE March 2026

FYE March 2028

FYE March 2033

10 years later

Hokuriku Region Venture Fund

ー

4

2

Noto SDGs Fund

7

11

3

QRI Growth Support Fund

10

1

1

Ishikawa SME Revitalization Fund

20

5

14

QR Fund

200

14

96

―

35

116

Total

IRR of about 14%

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

23

Key businesses(Market Management Strategy)■Transferred core operations related to market-based investment to Investment advisory companies (FDA)
and reviewed the operational structure.
■Formulate investment plans and strategies that are conscious of the risks and returns of the entire portfolio.
■Secure stable earnings and aim for total earnings of around 2%.
Formulation of medium-to long-term model port
Earnings Plan (Realized Gain/Loss)(Unit: 100 million yen)
Formulate a medium-to long-term model port based on a medium-to long-term
scenario, with modifications based on constraints (income/risk/regulation, etc.).

Investment planning, budget formulation, and portfolio construction
While aiming for a medium-to long-term portfolio, build a short-term portfolio
by taking into account short-term market scenarios, budgets, and risk constraints.

212
161

161

163

169

Revision of forecast
FYE March 2023

FYE March 2024

FYE March 2026

FYE March 2028

※Overall gains/losses = realized gains/losses + changes in
unrealized gains/losses

FYE March 2033

It is not too relevant to the medium-to long-term pod, and the market scenario
is expected to fluctuate. When the market changes suddenly, the portfolios
will be flexibly corrected.

Portfolio modification
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

24

System strategy■In-house development of strategic systems to support priority businesses
Improve productivity of development through agile development, cloud utilization, and AI utilization
Achieve ➡ quality improvement and Cost reduction
Proper development personnel and reduced system costs

Promoting Priority Businesses through Strategic Systems

Trends in Personnel Expenses(100 million yen)

Trends in development personnel (people)
Internet banking
Corporate: Hokkoku Digital Banking
Individuals: Hokkoku Cloud Banking••

Complete all transactions non-face-to-faceContributing to Customer productivity
improvement

Hokkoku FHD employees

368

365

356

178

145

104

187

211

229

FYE March2026 Three years
later

FYE March2028 5 years
later

227

IB Platform (Integrated
Business Platform)

Digital of integrated regional
companies
Platform(Region Ecosystem)

•
•

•

•
•

Regional digital currency•

Unified client data into IB platforms
Evolve the provision of value to customers by
utilizing data as a group
Provision of banking functions and cardpayment infrastructure to regional businesscorporations (API/BaaS)
Next core banking system to support the above
Issuance of Stable Coins in collaboration withlocal governments
Providing a new cashless option and making
Hokuriku a cashless advanced region

141
FYE March2023 Actual

IT Partner engineers

333

Hokkoku FHD employees

IT Partner engineers

31

30

29

21

17

14

10

13

15

16

10
FYE March2033 About 10
years later

System Costs (100 million yen)

26

FYE March 2023 FYE March 2026 FYE March 2028 FYE March 2033
ActualThree years later 5 years later
About 10 years
later■System development expenses (software depreciation)■Running expenses (non-personnel expenses)

68

62

62

43

37

33

25

25

29

FYE March 2023 Actual

FYE March 2026 Three years later

FYE March 2028 5 years later

48
31

System cost peak: ¥7 billion for
FYE March 2025

16
FYE March 2032 About 10 years
later

10-year ▲ 1.9※System cost is calculated excluding
the amountof officeequipmentINC.
and AllATMequipment.
HOKKOKU
FINANCIALHOLDINGS,
rightsreserved.

25

Sustainability (E: Environment)■ Reduce CO2 emissions by 100% on ▲ from 60% in fiscal 2030 (compared to fiscal 2013).
■ Based on TCFD recommendations, scenario analysis to Climate-Change. (Transition risks ・ physical risk)■Action plan for CO2 emissions
12,000・Consolidation of stores and implementation of ZEB response when constructing new buildings
10,191

・Implementation of energy-saving equipment at existing store facilities

Compared
to fiscal
2013
48.5%
reduction

9,000

6,000

・Solar power generation installed on idle land and on existing store roofs
・Reducing sales vehicles and replacing vehicles with EV(HV)・Switch to carbon offset power (*)

5,245■Response based on TCFD recommendations
3,000

・Scenario analysis of transition risks and physical risk

0% in real terms
0
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2030

・The results of the analysis are shared with customers in the target industries,

Work on creating a consulting menu

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

26

Sustainability (E: Environment)(Reference) scenario analysis of transition risks and physical risk
■ Transition risks■Physical risk

Scenario

IPCC of 2°C

Scenario

AnalysisContent

Evaluate transition risks and investigate the impact
on each company's finances

AnalysisContentrisks, the top 10 companies in the three sectors of "Metal mining," "Food
Products," and "Land, rail, and air logistics services" were implemented.

Term

Targetfrom suspension of business

Buildings (Head Office and collateral properties) in Ishikawa Prefecture withbusiness-oriented credit facilities Our properties in Ishikawa Prefecture

Term

Until 2050

Until 2050

■ Amount of impact■ Amount of impact
4℃

Increase in credit costs through 2050

Increase in provision due to deterioration in business conditions resulting

Investigate the amount of damage to buildings in the event of flooding

Considering the amount of credit and the degree of impact of transition

Target

IPCC 2°C and 4°C scenariosー(no transition response)

4℃

2℃

Increase in credit costs through 2050

Approx.
4.7billion

Approx.
2.4billion

Impact of our buildings

Approx.
0.2billion

Approx.
0.1billion

2℃

Approx.
3.2 billion

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

27

Sustainability (S: Strengthen human capital)■ Average annual income also increased due to performance-linked stock grants. We will continue to invest in
Recurrent education and other areas to strengthen our human capital. We will also promote Provision of
Human Resources in the region.
Total amount of personnel costs

Average annual income(Unit: 100 million yen)

(Unit：Millions of yen)

190

200

186

160

151
6

155
9

158
9

・Total Human resource development cost

8.8

33

43

8.5

8.0

33 persons (YoY +9 persons) * Total of those who completed the course and those who went to school

6.9
6.8

80

145

6.9

146

FY2020 58 million yen → FY2022 73 million yen
・Number of students attending universities and graduate schools

7.5
120

■Strengthening human capital■Promotion of regular employment
Percentage of employees

149

153

148

6.5

2013/3 77.2% → 2023/3 84.4% → 2033/3 97.5%■Regional Provision of Human Resources
Increase in the number of employees seconded to regional companies and local governments
40

5.5

FYE March 2023 FYE March 2024 FYE March 2026 FYE March 2028 FYE March 2033
Personnel expenses

Performance-linked portion

Average annual income

March 2023: 46 people → March 2030: 190-200 people

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

28

Sustainability (G: Governance)■ With the expansion of operations and the deepening of specialization, the importance of responding to laws and risks also increased■ Respond with a sense of speed through data utilization and accompanying support■ Further improve auditing quality by auditing from a management perspective that deeply understands Business strategy and tactics

Management Administration Department(Risk Management/Legal Compliance)[Vision]Strategy
Agile business expansion

Business management
Strengthen resilience■Information to customers and others outseide the company
・Proactive disclosure of governance and compliance transparency■Use of data
・ Utilize data lake AI to improve monitoring accuracy■Effective use and in-house development of experts
・Employment of specialists (lawyers, etc.) Accumulation of knowledge by outside experts■Improving problem-solving capabilities through accompanying
propagation
・Not only in the final stage, but also in response to project progress

Audit Department (Internal Audit)[Vision]Auditing from a management perspective that deeply understands Business strategy and tactics
Business audits and internal control consulting for business partners■Improve audit quality
・Interviews and other dialogue-oriented audits
・Deepen risk approach and improve internal control through cause analysis■Professional Human resource development
・Toward a level where external companies can be audited with a wealth of experience and deep knowledge■To improve efficiency・DX・Establishment of an auditing system that can be remotely completed through company-wide DX
・In the future, we will engage in real-time risk analysis using data.
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

29

(Reference) Accreditation and Awards
Human capital-related

DX related

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

30

3. Summary of Financial Results for the Year Ended
March 31, 2023 (Reference Data)

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

Loans and discounts outstanding by segment and yields
・Housing loans increased due to loans to individuals. Despite a slight decline in business loans, the ratio of lending to SMEs was still at a high level of 77.5%.
・Overall, yields were slightly higher as a result of improved yields resulting from the progress of dialogue with pricing emphasis on business loans.

Stores by region

Loans Outstanding and Yields
30,00020,000yen)(100 million

1.06%

1.02%

3699
3209

3425
3026

0.95%

0.92%

0.93%

3152
3175

3135
2973

3228
2509

1.00%
(億円)

0.50%
10,0000

18,921

19,72820,012

19,931

End of March 19 End of March 20 End of Mar. 21

19,719End of Mar. 22

0.00%

End of Mar. 23

Local public entities and public corporations

Medium-sized and large companies

Small and medium-sized enterprises, etc.

Interest on loan

22年3月比
増減

21年9月比増減率

21年3月末22年3月末23年3月末北陸３県合計24,08923,956

23,794

△ 162

うち石川県

18,167

18,11918,139

20

0.1%

うち富山県

4,718

4,645

4,511

△ 134

△ 2.9%

うち福井県

1,202

1,190

1,144

△ 46

△ 3.9%

2,250

2,083

1,662

△ 421

△ 20.2%その他△ 0.7%Breakdown by attribute

Breakdown by size
(Billions of yen)
End of Mar. 21 End of Mar. 22

End of Mar. 23

Compared toMarch 22
ChangeCompared toMarch 22
Rate of change

Meter Loan

26,33926,03925,456

△583

△2.2%

Of which, SMEs, etc.

20,012

19,931

19,719

△212

△1.1%

(Ratio of SMEs, etc.)

75.9%

76.5%

77.5%

―

―

Medium-and large-sizedcompanies, etc.

3,175

2,973

2,509

△464

△15.6%Of which, local public
entities and public
corporations

3,152

3,135

3,228

93

3.0%

21年3月末 22年3月末

23年3月末22年3月比増減(億円)
22年3月比増減率

事業性貸出

13,18012,757

12,060△ 697△ 5.5%

消費者ローン

10,006

10,146

10,168220.2%

うち住宅ﾛｰﾝ

9,642

9,819

9,867

48

0.5%

うちその他ﾛｰﾝ

363

327

301

△ 26

△ 8.0%

地公体･公社

3,152

3,135

3,228

93

3.0%

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

32

Loan ~ Yield by segment ~Average Newly Executed Interest Rates (by Attribute)

Yield by attribute

(％)

(％)
20年3月期差異→

21年3月期差異→

22年3月期差異→

23年3月期

事業性貸出

1.237

-0.0691.168-0.029

1.139

0.013

1.152

消費者ローン

0.854-0.0140.840-0.021

0.819-0.020

0.799

うち有担保

0.724

0.005

0.729

-0.0080.721-0.011

0.710

うち無担保

3.305

-0.0783.227-0.054

3.173

0.008

3.181

地公体･公社

0.519-0.1400.379-0.0750.304-0.0200.284

20年3月期21年3月期22年3月期23年3月期

事業性貸出

1.127

0.899

0.894

1.174

消費者ローン

0.694

0.575

0.548

0.489

Profitable lending

Yield situation by attribute

Consumer loans

Yields by Region (Business Loans)

(%)

1.4
1.3

1.276

1.237
1.168

1.2
(％)

20年3月期差異→

21年3月期差異→

22年3月期差異→

北陸３県合計1.365-0.0801.285-0.0421.248-0.005

1.243

うち石川県

1.351

-0.0771.274-0.030

1.239

0.005

1.244

うち富山県

1.430

-0.0971.333-0.0731.287-0.027

1.260

うち福井県

1.287

-0.0661.221-0.0451.196-0.020

1.176

その他

0.552

-0.018

0.534

0.040

0.526

0.048

0.574

1.152

1.139

1.1

23年3月期

1.0

0.912
0.854

0.9

0.840

0.819

0.799

0.8
0.7
2019.32020.32021.32022.32023.3

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

33

Trends and Prospects of Credit Costs■Credit costs for the year ended March 31, 2023 were approx. 6.2 billion yen, partly due to the effect of the change in allowancemethods (approx. ▲: 2.4 billion yen).
■The Company's policy is to maintain a high maintenance ratio and reduce the risk of impact on future profits and losses
through the implementation of sufficient reserves in the future.
Changes in credit costs
15,00011,820<Preservation Status>

2020.32021.32021.92022.32023.3Disclosed claims under thefinancial reconstruction law(100 million yen)

561

608

645

758

734

Conservation amount(100 million yen)

534

587

619

659

706

Coverage ratio (%)

95.1

96.5

95.8

86.9

96.2

2023.3Credit cost 6.2 billion yen
2.4 billion yen ▲ the impact of thechange in the provision methodology

10,000

6,214
5,000

3,000

0

3,000

FYE March 2020 FYE March 2021 FYE March 2022 FYE March 2023 FYE March 2024 FYE March 2026 FYE March 2028 FYE March 2033

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

34

Operation of negotiable securities■In addition to diversifying investments from a medium-to long-term perspective, secure profits through flexible trading.
■In fiscal 2022, gains on sales of net investment stocks and strategic stockholdings were posted, while losses on sales of foreign bonds were posted.
Balance of securities (book value)

Trends in realized gains/losses by asset(Billions of yen)(Billions of yen)
16,00014,491

2,540

11,07512,0009,550
10,000

8,000
1,848

693

837

819
927

200
775

747

785
918

1,880

187

200
115

150

1,500

10,076300
250

13,00914,000

350

8

28
26

78

28

100

45

686

60

50

42
1
27

32
23

2,138

200

72

853

0

202

281

150
16
8

164

9
23

19

2022.3▲ 87
2023.3-50

2,2512019.32020.32021.3213

1,221

Valuation gains (devaluation losses) on securities

6,000(Billions of
8,189

4,000
6,481

6,626

8,274

7,012

1000 yen)
900
800

2,000

700
600

882
784

500
0
FY2018FY2019Fiscal 2020

FY2021

FY2022

400

499

300

335

200
100

136

0
2019.32020.32021.32022.32022.9

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

35

Portfolio of the market sector (excluding strategic stockholdings)■Of the total outstanding shares, about 60% of the total shares for net investment (market value basis)■The market sector's portfolio, excluding strategic stockholdings, becomes unrealized losses as a whole due to the effects of risinginterest rates.
■Increase investment in multi-asset funds to strengthen diversification and stabilize net interest income.
Stock Investment as of the end of March 2023

31

Status of Operation at the End of March 2023
(excluding strategic stockholdings)

Stock outstanding (market value)¥136.8 billion
Net investment of 81.3 billion yen

410

Book value
at end ofyear(100 million
yen)Appraisal
profit/loss(100 million
yen)

Net
investment
Purposeshares

540

273

575

Yen bond

8,274

▲170

8,010

Foreign
bonds

2,138

▲152

2,485

Investment
trusts

853

▲66

846

Multi-asset

2,540

▲159

3,040

Total

14,345▲274

14,956

Net investment equity book value540

Net unrealized gains on
investment securities
Book value of strategic
stockholdings
Gain on valuation of strategic
stockholdings
Unlisted equity securities

114
273

Multi-asset allocation as of the end of March 2023
8%
Japanese stock

17%
Foreign stock

49%

26%

FY2024 Forecast
Balance at endof year (100million yen)

36
HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.

You are prohibited from transferring or reproducing this material or distributing it to third parties without firstobtaining the permission of Hokkoku Financial Holdings, Inc. These materials have been prepared solely for the
purpose of providing information, and we do not solicit the purchase or sale of any particular security. All or part ofthe items described in this document are subject to revision or change without notice. These materials include forwardlooking statements about future performance. These statements are not guarantees of future performance. Please notethat these statements may differ from targets due to changes in the business environment and other factors.

Contact for inquiries regarding this material
Hokkoku FINANCIAL HOLDINGS INC. General Planning Department PR IR
E-mail : cyosa@hokkokubank.co.jp

HOKKOKU FINANCIAL HOLDINGS, INC. All rights reserved.