First Half of Fiscal 2019
Earnings Briefing

Dōgo Onsen Honkan (Matsuyama City)
Dōgo Onsen Honkan, with a 125 year history, has been
under maintenance and repair work since January 2019
and work will continue for about five and a half more
years.
Visitors can enjoy various attractions available only
during construction, such as wrapping art from
“Phoenix,” one of manga artist Osamu Tezuka's
masterpieces, currently covering the building.
ⓒTEZUKA PRODUCTIONS

December 6, 2019

IndexI. Summary of Earnings for the First Half of Fiscal 2019

Pg

◎Profit and Loss Conditions for the First Half of Fiscal 20193

◎Factors in Increase / Decrease in Core Business Gross Profit (First Half of Fiscal 2019)4◎Conditions in Loans, Deposits, and Assets in Custody

5◎Conditions in Credit Costs and Disclosed Non-performing Loans

6◎Conditions in Evaluation Gain on Securities and Equity Ratio

7

II. Main Strategies and Progress of the Fiscal 2018 Medium-Term Management Plan

Pg

◎Major Numerical Targets of Fiscal 2018 Medium-Term Management Plan

9

◎Plans for Loans, Deposits, and Assets in Custody◎[Consulting Strategy (Personal Banking)] Provide Diversified Services Responding to “Thoughts” of More
Customers◎[Consulting Strategy (Corporate Banking)] Strengthen Ability to Provide Value Toward Solutions for Customer
Issues◎[Consulting Strategy (Corporate Banking)] Expansion of Fee Businesses through Enhanced Consulting
Functions◎[Consulting Strategy (Corporate Banking)] Efforts for Enhancing Ship Finance

10
11
12
13
14

◎[Online Business Strategy] Efforts for Offering Value and Enriching Services through Direct Channels

15◎[ICT Strategy] Expansion and Improvement of Touch Point Utilizing Digital Technologies◎[BPR Strategy] Shift to Creative Operations by Utilizing Digital Technologies and Improving Operational
Efficiency◎[Branch Strategy] Review Branch Locations and Functions Toward Realizing “D-H-D Bank”

16◎[Regional Revitalization Strategy] Support Regional Revitalization Together with the Region

19◎[Market Strategy] Strategic Asset Allocation Responding to Low Interest Environment

20◎[Market Strategy] Ensure Earnings from Market Investment; Stabilize Foreign Currency Procurement

21◎[Personnel Strategy] Efforts for Improving Ability to Offer Value

22

17
18

◎Efforts for SDGs

23

◎Efforts for SDGs

24

◎Customer Support through the Group’s Collective Strengths and Alliances

25◎Profit / Loss Forecasts for Fiscal 201926

1

I. Summary of Earnings for theFirst Half of Fiscal 2019

Garyusanso (Ozu City)
In this mountain cottage facing the most picturesqueplace in the Hijikawa River basin, architectural beauty
unique to Japan and beautiful Japanese gardens canbe appreciated.
This cottage received one star in the “Michelin Green
Guide Japan” in 2011 and designation as a national
Important Cultural Property in 2016.

Profit and Loss Conditions for the First Half of Fiscal 2019
 Although profit was down year-on-year at every income level, a certain level of profit was
secured, exceeding the earnings forecast
Earnings for the first half of Fiscal 2019 (Nonconsolidated)
First half of
Fiscal 2019

YoY

(Units: Millions of yen)
Increase/
Decrease(2.6%)First half of
Fiscal 2018

Core business gross profit (Note 1)

37,852(993)

38,845Interest and dividend income

32,474(1,770)34,244

3,717

+104

3,613

880

(198)

1,078
986

Key factors in increase / decrease, etc. (YoY)
Core business gross profit: Down ¥993 million YoY◎Interest and dividend income down due to a decrease in interest and dividends
from securities, although interest on loans and discounts increased◎Fees and commissions up due to an increase in solution-related commissions◎Other operating income up due to an increase in gain (loss) on foreign exchangetransactions, etc.

Fees and commissions
Of which, revenue on assets incustody
Other operating income (Excluding
profit/loss related to bonds
including JGBs, etc.)
Expenses ( - )

1,659

+673

25,360+253

Personnel expenses

13,099(280)

13,379Nonpersonnel expenses

10,710+519

10,191

Taxes

1,549

+13

1,536

Core business net income (Note 2)

12,491(1,246)

Credit costs ( - ) ①+②-③
Provision of reserve for general loan
losses ①
Amortization of non-performing
loans ②
Recoveries of written off claims ③

3,296+2,403893

684+1,203

(519)

2,869

+1,167

1,702

258

(31)

289

Gain (loss) related to securities
Gain (loss) related to bonds
including JGBs
Gain (loss) related to stock, etc.

4,086

+1,598

2,488

2,630

+2,514

116

1,456

(915)

2,371

◎Retirement benefit expenses down

Other temporary gain (loss)

1,706

+492

1,214

Ordinary income(266)

Due to a decrease in core business net income, an increase incredit costs, and other factors, ordinary income decreased, down
¥1,557 million YoY

16,279Extraordinary income (loss): Up ¥200 million YoY+1.0%(9.1%)(9.4%)

25,107

13,737

14,989(1,557)Extraordinary income (loss)

(66)

+200

Income before income taxes

14,923(1,356)

Net income

10,884(587)(5.1%)

11,471

Ordinary revenue

54,480(906)(1.6%)

55,386

Business net income

14,437+64+0.4%

14,373(Note 1) Core business gross profit: “Business gross profit” excluding profit/loss related tobonds including JGBs, etc.
(Note 2) Core business net income: Core business gross profit - Expenses

16,546

Expenses: Up ¥253 million YoY◎Personnel expenses down as the number of personnel decreased, etc.
◎Nonpersonnel expenses up as system investments increased, etc.

Core business net income down as core business gross profit
decreased and expenses increased, down ¥1,246 million YoY
Credit costs: Up ¥2,403 million YoY◎Provision of reserve for general loan losses increased due to a rise in loan loss result,etc.
◎Amortization of non-performing loans increased due to an increase in bankruptcies
and downgrades, etc.

Gain (loss) related to securities: Up ¥1,598 million YoY

Gain (loss) related to bonds including JGBs (Up ¥2,514 million YoY)

◎Gain (loss) related to bonds including JGBs up due to sales of foreign bonds

Gain (loss) related to stock, etc. (Down ¥915 million YoY)
◎Gain (loss) related to stock, etc., down due to a decrease in gains on sales of stock,etc.

Other temporary gain (loss): Up ¥492 million YoY

As a result, net income was down ¥587 million YoY

3

Factors in Increase / Decrease in Core Business Gross
Profit (First Half of Fiscal 2019) Interest and dividend income were down due to a decrease in gain on securities management, etc.
 Fees and commissions were up due to higher solutions-related commissions
Year-on-year(First Half of Fiscal 2019 – First Half of Fiscal 2018)(Units: Billions of yen)
(Note) Differences in yield utilize
yield differences withdeposits, etc.

Interest anddividend income(¥32.4 billion)

Gain on loan
management(¥23.2 billion)(0.06)(0.03)Of which, foreign currency(¥2.9 billion)+0.03(1.77)
Gain on securities
management(¥9.2 billion)

Core businessgross profit(¥37.8 billion)

Of which, domestic currency(¥20.3 billion)

Of which, domestic currency(¥7.8 billion)(1.76)(2.13)(0.99)Of which, foreign currency(¥1.4 billion)

Other(-¥0.1 billion)(0.37)+0.10
Other(¥1.6 billion)+0.67

Yield difference factors (0.94) (Yield difference down 0.04%)
Volume factors +0.55 (Average loan balance up ¥70.4 billion)
Yield difference factors (0.52) (Yield difference down 0.25%)
Volume factors (1.36) (Average securities balance down ¥186.0
billion)Yield difference factors +0.21
Gain on fund cancellation factors (0.61)(Decrease in gain on cancellation of stock trusts, etc.)
Volume factors +0.42 (Average securities balance up ¥46.5
billion)Yield difference factors (0.79) (Yield difference down 0.90%)+0.39

Fees andcommissions(¥3.7 billion)

Volume factors +0.88 (Average loan balance up ¥168.7 billion)

Revenue on assets
in custody(¥0.8 billion)(0.20)…

Insurance agency commissions (0.13) (including corporate insurance [solutions-related
revenue] (0.11)), investment trust related commissions (0.05), etc.

Other(¥2.8 billion)+0.30… Solutions-related commissions +0.27, etc.

…+0.44 from gain (loss) on foreign exchange transactions, +0.22 from gain (loss) on derivatives (including
solutions-related revenues +0.11), etc.

4Conditions in Loans, Deposits, and Assets in Custody “Deposits, etc.” were up 5.0% year-on-year
 “Loans” were up 4.2% year-on-year, up in all regions
Balance of deposits, etc. by region

4,375.0
238.6
163.2
228.3
138.4
357.0
41.3
5,542.2

4,456.3
230.2
163.2
232.5
149.8
445.6
139.4
5,817.3

Balance of assets in custody

YoY
+81.3
(8.4)
+0.0
+4.2
+11.4
+88.6
+98.1
+275.1

Increase/
Decrease+1.9%(3.5)%
+0.0%
+1.8%
+8.2%
+24.8%+237.5%+5.0%(Units: Billions of yen)First half of First half of
Fiscal 2018 Fiscal 2019
Group assets in custody
Balance at the Bank
Balance at Shikoku Alliance
Securities
Sales of Group assets in custody
Sales at the Bank

560.3
351.9

565.0
357.1

+4.7
+5.2

Increase/
Decrease
+0.8%
+1.5%

208.3

207.8

(0.5)

(0.2)%

61.8
28.9

53.9
27.0

(7.9)
(1.9)

(12.8)%(6.6)%

Sales at Shikoku Alliance Securities

32.8

26.8

(6.0)

(18.3)%

Balance of loans by region
RegionWithin Ehime Prefecture
Shikoku (excluding Ehime)
KyushuChugoku
Kinki
Tokyo and Nagoya
Financial Market Business OfficeTotal (domestic branches)
Overseas, etc.
Total

Deposits

Within Ehime Prefecture
Shikoku (excluding Ehime)
KyushuChugoku
Kinki
Tokyo and Nagoya
Overseas, etc.
Total

First half of First half of
Fiscal 2018 Fiscal 2019

Loans

RegionShare within Ehime Prefecture as of September 30, 2019(excluding Japan Post, agricultural cooperatives, etc.)(Units: Billions of yen)YoY

The Bank

Composition byregion for balance of
deposits, etc.

Regional banksother than the BankTokyo and Nagoya

City banks /Trust banks

Secondregional banks

Credit unions

Overseas,
etc.

Kinki
Chugoku
KyushuWithin Ehime
Prefecture

Shikoku(Units: Billions of yen)First half of First half of
Fiscal 2018 Fiscal 2019
2,322.9
280.4
283.8
388.8
335.7
629.8
104.2
4,345.985.5
4,431.5

2,361.4
299.7
298.6
420.9
364.0
630.5
109.2
4,484.6
132.8
4,617.5

YoY
+38.5
+19.3
+14.8
+32.1
+28.3
+0.7
+5.0
+138.7+47.3+186.0

Increase/
Decrease
+1.7%
+6.9%
+5.2%
+8.3%
+8.4%
+0.1%
+4.8%
+3.2%
+55.3%+4.2%*Please refer to pages 12 and 13 of the Reference Materials section for the
breakdown, etc. of the balance of loans and deposits at the end of the period.

Composition byregion for balance ofloansTokyo and Nagoya
Kinki

Financial Market
Business Office
Overseas,etc.

ChugokuWithin Ehime
Prefecture
KyushuShikoku5

Conditions in Credit Costs and Disclosed Non-performing Loans Credit costs were up year-on-year mainly due to increases in bankruptcies and downgrades Ratio of disclosed non-performing loans was 1.52%, remaining at a low level
Credit costs by factor(Units: Billions of yen)

Fiscal 2016

First Half

Fiscal 2017

First HalfFirst Half

Fiscal 2018

First Half of
Fiscal 2019

YoY

Credit costs total

(0.2)

0.6

0.6

3.5

0.8

5.8

3.2

+2.4

Provision of reserve forgeneral loan losses

0.0

(0.8)

(0.0)

(0.6)

(0.5)

0.2

0.6

+1.2

Amortization of nonperforming loans

(0.0)

2.4

0.9

4.7

1.7

6.1

2.8

+1.2

Bankruptcies

0.0

0.2

0.3

0.8

0.5

1.0

0.8

+0.3

Downgrades, etc.

2.1

5.0

1.9

6.3

2.3

6.9

3.6

+1.3

Upgrades and collections

(2.2)

(2.9)

(1.3)

(2.3)

(1.1)

(1.8)

(1.6)

(0.5)

Recoveries of written off
claims ( - )

0.3

0.8

0.2

0.5

0.2

0.5

0.2

(0.0)

(0.01)%

0.02%

0.03%

0.09%

0.04%

0.13%

0.14%

+0.10P

Credit management
expense ratio (*)(*) Credit management expense ratio = Credit costs / Average loan balance

Amounts and ratios of disclosed non-performing loans
under the Financial Reconstruction Act(Units: Billions of yen)

Fiscal 2016

Fiscal 2017

Fiscal 2018

First Half of
Fiscal 2019

Loans to bankrupt or effectively
bankrupt borrowers

4.4

3.0

6.0

6.1

Doubtful assets

39.8

44.1

46.6

45.1

Credit subject to specific risk
management

18.1

18.0

18.6

22.7

Total disclosed non-performing loans

62.4

65.2

71.3

74.0

Ratio of disclosed non-performing
loans

1.48%

1.44%

1.48%

1.52%

6

Conditions in Evaluation Gain on Securities and Equity Ratio Evaluation gain on securities was ¥242.9 billion, maintaining a top level among regional banks
 Consolidated equity ratio (BIS standards) was 14.89%
Evaluation Gain on Securities (Nonconsolidated)(Hundreds ofMillions of Yen)

Consolidated Gross Equity Ratio

Nikkei Average (Yen)

March
2015

March
2016

Gain / loss on securities(left axis)

March
2017

March
2018

March
2019

Nikkei average(right axis)

September
2019

March
March
2016
2015
Tier 1 ratio for common
stock, etc.

March
March
2018
2017
Gross equity ratio

March
2019

September
2019(Note) Excludes evaluation gains / losses on money held in trust7II. Main Strategies andProgress of the Fiscal 2018
Medium-Term Management Plan
Second Stage for 150(April 1, 2018 – March 31, 2021)

Streetscape of Uchiko (Uchiko Town)
Uchiko Town, which flourished through the production ofvegetable wax since the Edo period, was designated as anational Important Preservation District for Groups of
Traditional Buildings in 1982.
In August of this year, the town received the “2019 Asian
Townscape Award” for town-wide efforts to preserve thelandscape and natural environment, an extension ofpreservation of streetscapes in the Uchiko area.

Major Numerical Targets of Fiscal 2018 Medium-Term
Management Plan
 Present progress is generally steady against numerical targets of the Medium-Term Management Plan
 Net income is planned for ¥20.5 billion for the final year due to implementation of various measures, despite
continued expectations for a difficult business environment

Fiscal 2018

Fiscal 2020
Targets

Targets

Results

Fiscal 2019
Forecast

Core business grossprofit\75.0 billion\76.1 billion\75.5 billion\76.5 billion

Fees andcommissions\7.0 billion\7.0 billion\7.5 billion\8.5 billion\18.0 billion\18.2 billion\18.5 billion\20.5 billion

ROE

3.0% or more

2.99%

3.00%

3.0％ or moreCore OHR

70.0% or less66.10%

66.70%

65.0％ or less

Equity ratio(BIS standard)

15.0％ or more

14.38%

14.70%

15.0％ or more

2.0％ or less

1.48%

1.50%

2.0％ or lessTarget items

Net income

Ratio ofnon-performing loans

9Plans for Loans, Deposits, and Assets in Custody Deposits, etc., are planned to be increased approx. ¥402.0 billion during the three years of the Medium-Term Management
Plan, with an average balance totaling ¥5,856.0 billion during fiscal 2020
 Loans are planned to be increased approx. ¥644.0 billion during the three years of the Medium-Term Management Plan,
with an average balance totaling ¥4,762.0 billion during fiscal 2020

Plans for average deposits, etc., balance and assets in custody balance
Fiscal 2018
Fiscal 2017
Results

Results(Units: Billions of yen)

Fiscal 2019

YoY

Forecast

Fiscal 2020

YoY

Plan

Increase/decreaseduring the
Plan

YoY

Average deposits, etc., balance

5,453.7

5,576.3+122.6

5,813.0+236.7

5,856.0+43.0+402.3

Of which, individual deposits

3,387.1

3,417.2+30.1

3,462.0+44.8

3,477.0

+15.0

+89.9

Group assets in custody balance

544.4

557.4

+13.0

579.0

+21.6

621.0

+42.0

+76.6

343.0

357.9

+14.9

367.0

+9.1

391.0

+24.0

+48.0

201.4

199.5

(1.9)

212.0

+12.5

230.0

+18.0

+28.6

Of which, balance of assets in custody at theBank
Of which, balance at Shikoku Alliance
Securities

Plans for average loan balance(Units: Billions of yen)

Fiscal 2018
Fiscal 2017
Results

Results

Fiscal 2019

YoY

Forecast

Fiscal 2020

YoY

Plan

YoY

Increase/decreaseduring thePlan

Average loan balance

4,118.0

4,398.6+280.6

4,619.0+220.44,762.0+143.0+644.0

Corporate loans

2,784.6

2,940.1+155.5

3,051.0+110.93,115.0+64.0+330.4

Of which, within Ehime

1,254.3

1,300.4+46.1

1,335.0+34.6

1,343.0

+8.0

+88.7

Individual loans

996.5

1,034.8+38.3

1,083.0+48.2

1,114.0+31.0+117.5

Municipal loans

236.8

241.5

+4.7

236.0

(5.5)

240.0

+4.0

+3.2

Financial Market Business Office

74.4

98.8

+24.4

113.0

+14.2

135.0

+22.0

+60.6

Singapore Branch

25.5

83.2

+57.7

136.0

+52.8

158.0

+22.0

+132.510

[Consulting Strategy (Personal Banking)]

Provide Diversified Services Responding to “Thoughts” of More Customers
 Provide a wide variety of financial services responding to various customer needs with the arrival of“100-Years Life Society”
70
years
old

Start to receive
pensionRetirement▲ Prepare fordonation andinheritance

▲

▲

60
years
old

▲ Grandchild isbornChild becomes
independent

Buy house

Needs forloans

Number of contracts on assets in custody

NISA, investment trust, savings trust, personal pension,
iDeCo, Tsumitate (regular saving) NISA
Auto loan, education loan, housing loan

Level premium insurance sales andnumber of policies held
Number of sales (left axis)
Number of policies held (right axis)

2018/3Results▲ Child getsmarried

50
years
old
▲

40
years
old

▲ Child goes on
to higher
education

Have a baby▲

Get married

▲

30
years
old

Whole life insurance, term insurance, income security insurance, educational endowment insurance,
medical insurance, cancer insurance
Needs forincreasing(Number of
Policies)▲▲ Start a job

20
years
old

Enter university

Needs forpreparation▲

Enter highschool▲ Birth

▲

10
years
old

0
years
old

2018/9Results

2019/3Results

2019/9Results* Contracts of the assets in custody balance not less than ¥1 (including accounts
managed/introduced by Shikoku Alliance Securities, Nomura MRF, accounts
intermediated by Mitsubishi, and level premium insurance contracts)

2018/9Results

2019/3Results

2019/9Results

2020/3
Plan

Needs forinheritanceSingle premium whole life
insurance
Testamentary trust,legacy planning<Establishment of insurance
proposal structure>◆ Insurance plazas
12 locations (31 staff members)◆ Insurance consulting staff
60 locations (100 staff members)● Medical insurance sales results inthe first half of fiscal 2019 is No. 1
among regional banks for threeconsecutive years (survey by The Japan
Financial News)

11

[Consulting Strategy (Corporate Banking)]

Strengthen Ability to Provide Value Toward Solutions for Customer Issues
 Share our customers’management issues based on business feasibility assessment and conduct high value-added consulting services fortheir resolution
 Expand menus for business succession consulting services to respond to more diversifying needs of succession and inheritance
Sharing of Management Issues and Optimal Offering of Value
through Business Feasibility Assessment

Diversification of Schemes for Business Succession Consulting● Solve customers’management issues using the “Mirai Support Sheet”
as a business feasibility assessment tool and the “business feasibility
assessment investigation committee”● The number of cases and commission revenue have increased steadily due toexpansion of menus such as family trusts, employee stock ownership,
incorporation for management of real estate
Number of business succession consulting casesand commission revenue(Thousandsof Yen)Number of business feasibility assessment

事業性評価実施先数(累計)推移
conducted (accumulated)(Number)(Number)(Number ofcases)

Commission revenue (left axis)
Number of cases (right axis)

Number of Mirai Support Sheet prepared (left axis)
Number of business feasibility
assessment investigation committee
held (right axis)

March
2017
(Hundreds ofMillions of Yen)

September
2017

March
2018

September
2018

March
2019

September
2019

Total average loan balance of customers for which the business feasibility
assessment investigation committee was conducted

March
2017

September
2017

March
2018

September
2018

March
2019

September
2019[Family trusts]
Concludecontract

Put real estate andfinancial assets and thecompany’s own stock
in trust
March
2017

September
2017

March
2018

September
2018

March
2019

September
2019

Manage/disposeof assets in trust,
etc.

12

[Consulting Strategy (Corporate Banking)]

Expansion of Fee Businesses through Enhanced Consulting Functions
 Solutions-related revenue was steady at ¥1,387 million in the first half of fiscal 2019
Results and plans for solutions-related revenue(Millions of yen)

Fiscal 2018 Medium-Term
Management Plan
Other (ICT consulting, lease intermediary, etc. )Corporate life insurance
Business matching
Business succession/M&A
Private placement bonds
Syndicated loans, etc.

Fiscal 2015
Results

Fiscal 2016
Results

Fiscal 2017
Results

Fiscal 2018
Plan

April 2018

ICT consulting
business

Fiscal 2018
Results

May 2018

Natural disaster
responsive financing

Fiscal 2019
Plan

First half of
Fiscal 2019 Results

Fiscal 2020
Plan

October 2018

Lease intermediary
operations●Further improve menus and strengthen the structure toward achieving the Fiscal 2018 Medium-Term Management Plan
target of ¥3,000 million
13

[Consulting Strategy (Corporate Banking)]

Efforts for Enhancing Ship Finance Support further development of the maritime-related industry by utilizing expertise in ship finance, the Bank’s strength● Maritime-related companies are concentrated in Ehime Prefecture
Number of ocean-going vessels
owned by ship owners in Ehime

Construction results for
Ehime Prefecture

No. 1 in Japan
Domestic
Operators
1,051 ships

Ehime Ship
Owners
1,063 ships

No. 2 in Japan
Units:
10,000gross tons

Other

Existing vessels
eligible for loans

Japan

China
South Korea

Non-Ehime Ship Owners
1,459 ships●Risk management is becoming more important as main charter
destinations are shifting from “domestic operators” to “foreign
operators”

Compiled by the Bank based on data from the
Shikoku Transport & Tourism Bureau and The
Shipbuilders' Association of Japan (As of 2017)

The Bank’s strength in ship finance◆ Accumulated good-quality loan assets through solid efforts ofship finance over a long period (transactions with 70% of Ehime
ship owners)

Foreign
operators
54.9%

Domestic
operators
55.4%

Cases planned
to be
implemented

Foreign
operators
63.3%

Domestic
operators
36.7%

Domestic
operators
45.1%

September 30, 2019

December 31, 2015

* Breakdown of cases
planned to be implemented
only

IRC survey (As of September 30, 2018)

Foreign
operators
44.6%

Cases of foreign operators
increased as domestic
operators plan to decrease
fleets◆ Understand actual conditions of companies by exchanging information
with overseas bases, foreign operators, etc.
◆ Conduct risk management by, for example, evaluating charterers basedon the Bank’s original standards(Hundreds ofMillions of
Yen)

Loan balance for the maritime industry
For domestic and
For other maritime industry and overseas
overseas ocean transport
For Singapore Branch ocean transport◆ Collects and provides high-quality information by visiting
domestic and foreign maritime-related companies◆ Develops professional human resources by conducting longterm dispatch to domestic operators, trade companies, etc. andusing the trainee system at the Bank
◆ Established a structure for organizing
syndicated loans to respond todiversifying finance needs
2018/3Results

2018/9Results

2019/3Results

2019/9Results

2020/
Plan

14

[Online Business Strategy]

Efforts for Offering Value and Enriching Services through Direct Channels
 Realize topline growth and more efficient operations through digitalization and differentiationof non-face-to-face channels
Full Operation of “HOME,”
the New Digital Service of Home Loan

Patent application was made; first for regional banks in western JapanHOME TICKETHOME

A maximum loanable amount displayed inapprox. three minutes

Handling loan procedure“easily, anytime, and anywhere”- Smooth diagnosis with responses in a chatform

- Increase convenience for customers through full
digitalization and non-face-to-face channels- Strengthen competitiveness through reduction inscreening periods and increases in operational efficiency

Securing applications ofhousing loans in an early stage

Electronic contract and digital group credit
life insurance
Full digitalization and non-face-to-face
operation even for peripheral business of
screening- No branch visit required for contract procedures- Also no revenue stamp fees for contracts or
storage of written contracts required

Growth of revenue through an increase in application &improvement of operational efficiency of bank employees

Full Operation of Prime Desk
●Realized non-face-to-face sales to wealthy customers, etc. with whom face-to-face interview is difficult

Prime Desk(Operation started in
September 2019)

Stimulate needs andencourage customers tovisit a branch

Customers

Increase contact points andstrengthen relationship

Sharing of information

Bank branch

15

[ICT Strategy]

Expansion and Improvement of Touch Point Utilizing Digital Technologies
Focus on expansion and improvement of digital touch points through expansion of API
linkage services and improvement of channels
Improvement of Smartphone Applications
Renewal of balance inquiry application “MoneyManager”●Greatly expanded inquiry functions through API linkage with
“TSUBASA FinTech Common Platform”●Plan to develop new application utilizing the updatable API<Details of renewal>
Item

Before renewal

Scope of balance
Ordinary andinquirysavings deposits
Period of account100 activities
activity statementmax.
Number of tapping
3 tapping min.
for inquiry
New function-

After renewal
Ordinary and term deposits,
investment trust, loans, etc.
10 years max.
1 tapping min.
Record of account activity
statement on memos

Improvement of the API Linkage Service
Started linkage with external services for business customers● Started linkage with “Money Forward Cloud” in December 2019
● Plan to gradually increase external linkage services for individualand business customers
External services

API infrastructureBank[Individual]
TSUBASA FinTech
Common Platform[Business]
HitachiCorporation IB
API linkage service
Account
information
linkageStrengthening of Linkage with Cashless Payment Services
Support of recognition and dissemination of code payment●Plan to start intermediation of a multi QR code payment device inDecember 2019
●Continue to expand linkage with external payment services
External payment operators

Multi QR
payment device

Bank

16

[BPR Strategy]

Shift to Creative Operations by Utilizing Digital Technologies and Improving
Operational Efficiency
 Accelerate digitalization to strengthen efforts toward a “bank where procedures are the simplest inJapan”
Digitalization of Branch’s Administrative Tasks●Digitalization of approx. 40% of administrative tasks at
Bank Branches●Counter Reception Tablet“AGENT”●CX ASIA EXCELLENCE AWARD 2019

- International awards given to companies and projects which
realized excellent customer experience (CX) in the entire Asia
region -Received Awards●Web service for corporations“AGENT for Business”“BEST USE OF CX TECHNOLOGY” department

Reduction of 150 Bank Branchadministrative staff members- Time generated is used for proposal tocustomers ● “AGENT” is equipped with an “attentive listening function”

SILVER AWARD“BEST CUSTOMER EXPERIENCE” department

Honorary Mention<Award ceremony in Singapore>●Good Design Award 2019
- Scheme to improvecustomers’ convenience
was highly appreciated Improving Operational Efficiency at Headquarters●Minimize human tasks through “groupware and RPA”

●Attentively listen to customers’

problems in a “3-minute talk” onlive chat●Provide optimal information for each and every
customer

Workflowfunction ofgroupware

Automation
function for RPA
data processing17

[Branch Strategy]

Review Branch Locations and Functions Toward Realizing “D-H-D Bank”
 Shift to a “place where customers’ issues are solved” from a “place mainly for administrative tasks” inorder to make next-generation branches that are required even after 10 years
Next-generation Branches

Yougo Branch will complete its construction and open in April 2020 as part of our
mission to realize a “D-H-D Bank”

Lobby advisor guides customers to a proper counter

Layout with a “place where customers’ issues are solved” designed at thecenter of the branch<Efforts toward reduction of administrative tasks and review of branch locations and functions>
From February 2018
From February 2019
From March 2019
From August 2019▼▼▼▼
Satto Madoguchi (Quick Counter)
introduced“Cashless processing”

Satto Madoguchi[Introduction status] Completed
in 58 branches (as of the end of
September 2019)

The AGENT System introduced“Digitalization of administrative
tasks”

AGENT System[Introduction status] Completed in
79 branches (as of the end of
September 2019)

Relocation/integration into neighboring
branches to improve branch network
efficiency

Fourth branchwithin a public office<Completed or planned relocation>
Mar 2019: Yamagoe Branch
Jul 2019: Midoridai Branch, Omachi Branch
Sep 2019: Mitsukue Branch, Ote Branch
Jan 2020 Chikami Branch, Noborimichi Branch(Plan)

Utilize a “branch within a branchmethod”

Takayama Branch

Realized a compact branch andone-stop access to bank andpublic administration services

18

[Regional Revitalization Strategy]

Support Regional Revitalization Together with the Region
 Support “regional vitalization” in cooperation with diverse stakeholders in a region
Cooperation with a Government-affiliated Financial Institution

Cooperation with Local Governments●Support recovery from the disaster due to torrential rain in
West Japan together with Japan Finance Corporation“Iyogin Regional Revitalization Seminar” for local governments (August

Cooperation

Japan
Finance
Corporation

・Agricultural fund ¥20 million
・Agency loan ¥20 million

2019)●Seek for regional vitalization projects and create industryacademia-government collaboration businesses- First seminar held for Ehime Prefecture and 20 cities and towns
in the prefecture -“Agreement on Tourism Promotion Cooperation”
with Beppu City (September 2019)●Increase the number of visitors between “Ehime and Beppu/Kyushu” andpromote to attract inbound traffic

Floral Kumagai(Nomura Town, Seiyo City,
Ehime Prefecture)- Attempting greenhouse cultivation of tomatoes andstrawberries toward recovery from the disaster Cooperation with Educational Institutions●Organized and held a workshop for vitalizing a roadside station toutilize ideas of students, who hold the key to the future, for operating
the “Kihoku Town Roadside Station in Ehime Prefecture”

Originator of Beppu tourism“Kumahachi Aburaya” Statue(born in Ehime Prefecture)

Dōgo Onsen bathhouse

Shikoku Alliance●Support business succession, foundation and rehabilitation throughinvestment under “Shikoku Alliance Capital Co., Ltd” fundmanagement company, which was jointly invested by four banks- Organize the new “Shikoku Energy Fund” which invests incompanies utilizing natural energy such as photovoltaic and wind
power generation ●Results in utilization of three banks by ”Shikoku Alliance Securities
Co., Ltd.” were record high in the first half of fiscal 2019

- Regional vitalization focused on the “roadside station” -●Held a first business fair in Shikoku with the cooperation of NEXCO
WEST

19

[Market Strategy]

Strategic Asset Allocation Responding to Low Interest Environment
 Make diversified investments emphasizing liquidity to build a portfolio with superior risk versus return for responding to themarket environment Plan ¥20.0 billion in gain on securities management, centering on investment in foreign currency bonds (with/without forex
hedges), maintaining an eye on foreign interest rates and currency movement
New Investment Policy by Risk Category
Gain on Securities Management and Yield(Risk category)Yen-denominated
bonds

Not
changeForeign bonds (withforex hedges)

Increase

Foreign bonds(without forex hedges)

Increase

Domestic and overseas
Decreasestocks (including
investment trust)
Alternatives, etc.

● Gain on securities management (after deduction of procurement cost)(New investment policy)

Notchange(Units: Billions of yen)

Keep a certain amount as assets inversely correlated with stocks,
while in view of interest trends.
In a continuing low interest environment in Japan, keep the balance
as a bond including foreign bonds with hedges.

Fiscal 2018
Results

Gain on securities
management

25.1

20.8

● Yield(Note) Gain on securities management = Interest and dividend income (after procurement cost
deduction) + gain (loss) related to securities (excluding strategic equity holdings).

Results(First Half)

Plan

Fiscal 2020
Plan

11.8

20.0

20.0

Plan investment with forex risk to secure stable profit from carrytrading (with strategic re-balancing to be implemented).

(Total) Yield(Domestic
currency) Yield(Foreign
currency) Yield

Assess and classify strategic equity holdings in terms of investment
and policy, and sell off stocks if the necessity of holding is notrecognized.

* Figures in parenthesis are results as of
September 2019.

Consider investment to secure stable carrying and portfolio
diversification.
March 2018 Results

March 2017 Results

Balance of Securities at Market Value by Risk Category(Hundreds ofMillions of Yen)

Fiscal 2019

Fiscal 2017
Results

Yen-denominated bonds
Domestic and overseas stocks(including investment trust)

Foreign bonds (with forex
hedges)Alternatives, etc.

Foreign bonds(without forex hedges)

New
investment

March 2020 Plan

March 2019 Plan

Portfolio Risk Sensitivity and Duration●Portfolio risk sensitivity
Impact of fluctuations in interest rates, stock prices, and exchange rates on gain (loss) on valuation of
securities● Yen-denominated bond portfolio
10BPV¥3.3 billion● Foreign bond portfolio (with hedges)
10BPV¥2.3 billion● Stock portfolio
Nikkei Stock Average ¥1,000V¥12.5 billion● Forex portfolio
USD/JPY ¥10V ¥13.5 billion(*As of September 30, 2019)● Duration(Of which,
JGBs)

10 years
8 years
6 years
4 years
Yen-denominated bonds
Foreign bonds(with forex hedges)

2 years
March 2018
Results

Balance atMarket Value

March 2019
Results

September 2019
Results

March 2020
Plan

March 2021
Plan

0 years

March 2017
Results

March 2018
Results

March 2019
Results

September 2019
Results(Note) Yen-denominated bond durations exclude variable rate government bonds from March 2018.

March 2020
Plan

20

[Market Strategy]
Ensure Earnings from Market Investment; Stabilize Foreign Currency Procurement
 Increase loan amounts in growth areas mainly in the Singapore Branch and Financial Market Business Office Aim to establish a stable procurement structure in response to increases in foreign currency assets and changes in
the market environment

Singapore Branch(Hundreds ofMillions of Yen)

(Millions of Yen)

Gain (left axis)
Year-end balance (right axis)

Status of Foreign Currency Investment and Procurement(September 30, 2019)●Seek stability and profitability through timely long-term procurement
and short-term procurement tailored to changes in the market
environment●Use repo procurement and short-term procurement in an integrated
way for securities related procurement
Procurement Investment<Loans + Market Investment (Securities) >March 2018
Results

March 2019
Results

March 2020
Plan

March 2021
Plan

September 2019 results
Year-end balance ¥132.9 billion
Gain¥0.78 billion

Financial Market Business Office(Hundreds ofMillions of Yen)

(Millions of Yen)

Gain (left axis)
Year-end balance (right axis)

Loans

Deposits, etc.

Long-term
procurement

Shortterm

Securities, etc.

Mainly assets with highliquidity

Repo procurement

Strengthening anddiversification of foreign
currency procurement● Proportion of deposits and long-term procurement in total procurementrose to over 60%●Liquidity is secured for loans through deposits and long-term
procurement ⇒ Stability gap is narrowing●Furthermore, through establishment of commitment lines, set up a
structure which enables stable procurement even at a time of suddenchange in market ⇒ Liquidity gap is excessive procurement

Investment<Only Loans>
Loans

Of which, multi-currency loans(Currency change option granted)

Procurement

Stability gap is positive(excessive investment)

March 2018
Results

March 2019
Results

March 2020
Plan
September 2019 results
Year-end balance ¥109.2 billion
Gain¥0.42 billion

March 2021
Plan

Deposits, etc.

Long-term
procurement

Effectively short-termloans →Partially covered byshort-term procurement

Liquidity gap is negative(excessive procurement)

Commitment
line

Liquidity gap: Loans - (deposits, etc. + long-term procurement + commitment line)
Stability gap: Loans - (deposits, etc. + long-term procurement)21[Personnel Strategy]

Efforts for Improving Ability to Offer Value
 Promote “human resource development” and build a ”diversified organization” towardrealizing “D-H-D Bank”
Development of Human Resources Who Can Offer Value to Customers●New establishment of ”Committee to Improve Value Offering Capability”
By thoroughly utilizing digital technologies, strengthen the structure toward realizing a “D-H-D Bank,” which offers
meticulous and high value consulting services that only “humans” can provide
To realize the management philosophy by
Purpose ofcreating new value contributing to solution
establishmentof social issues and customers’ problems

Support for “skill upgrading” and “skill shifting”

Corporate &Managing
RetailDirector
Secretariat
Chairperson
Banking PlanningManager, BranchBanking Group
Division

Productivity Improvement through Work Style Reform<Change in overtime work under the Labor Standards Act>

●Promote utilization of the “Course Change
System” and “Career Challenge System”
13.8
6.6
3.3
●Newly establish “Wealth
hours
hours
Management Human
hours
Resource Trainees”
system to develop sales
January to
January to
January to
personnel who deal
December 2018
September 2019
December 2017with both corporate(Note) The calculation method is different before and after a flex time system was introduced in April 2018
and individual<Change in paid leave utilization rate>
customers
65.2%●Develop personnel
62.5%
who are well versed in
59.5%
specialized fields
January to
January to
January to
through domestic and
December
2018
December 2016
overseas dispatch
December 201722

Efforts for SDGs
 Established the “Iyogin Declaration on SDGs” in July 2019 to promote efforts toward realizing
sustainable local communities
Diversity and work
style reforms

Local economy andcommunity

Iyogin Challenge ＆ Smile
Co., Ltd.

We will expand our efforts forpromoting growth in local
economies and regional
development, and contributeto enriching the lifestyles anddeveloping the businesses ofour customers.

Environmental
protection

We will actively and continuously
work to reduce the environmental
burden and participate inactivities for environmental
conservation, and endeavor topreserve and protect thenatural local
environment.

- Established in 2018 -● Offers a working environment where
disabled persons can work in a
comfortable and safe manner

Financial andinformation services
We will provide advanced, highquality, and comprehensive
financial and information services,and continue to maintain thetrust and meet the expectationsof our customers.

Iyogin Declaration
on SDGs●●●●●

Environmental
protection
Iyo Bank Environment Foundation“Evergreen” (Public Trust)- Established in 2008 -Diversity and work
style reforms

We will promote diversity andwork style reforms, andendeavor to create anorganization in which various
types of human resources canactively perform theirroles.

Strong managementfoundation
We will work to further
strengthen and enhance ourmanagement foundation, andfulfill our social responsibilities
as a regional bank.

● Supports activities for restoration anddevelopment of the environment●Cumulative total of approx. ¥50 million
granted to 139 recipients

Financial andinformation services●Started handling of SDG-related products

Local economy andcommunity

SDGs private placement bonds

Kaisha-no-Mirai (Future of the Company)

Preferential coupon rates
Support of companies engaged in SDGs

Subsidization of expenses for goods
contributing to employees’ welfare
Support of work environment improvement
and work style reforms

Iyo Bank Social Welfare Fund (Public
Interest Incorporated Foundation)- Established in 1976 -●Donates welfare equipment and grants
gratis scholarships●Cumulative total of ¥632 million granted23

Efforts for SDGs
Strong managementfoundation
Corporate Governance Structure●Build structures that secure transparency and objectivity ofmanagement
Management
Deliberation Committee

Advisory Board

Countermeasures against Money Laundering and Terrorism
Funding●Conduct strict risk management as well as thoroughexamination and verification

Strict customer
management
ReportConsult
Deliberation on thenomination of andcompensation for Directors,
etc., and important mattersregarding management

Evaluation and advice on
the Bank’s management
strategy and governance

Board ofDirectors●Strengthen counter reception structure for when acustomer opens a deposit account●Introduce “customer risk ratings” based on various criteria

Thorough examinationand verification●Conduct “track monitoring” for ship financing●Conduct verification tests of overseas remittance monitoring
utilizing AI

Internal
Directors

Independent
Outside Directors

Audit and Supervisory Committee◆ 1/3 or more of Directors are Independent Outside Directors◆ Appointment of female Directors◆ Strengthening of audit and supervision functions andrevitalization of the Board of Directors<Track monitoring>24

Customer Support through the Group’s Collective Strengths and Alliances Exhibit higher value-added consulting functions and respond to various customer needs byfully utilizing the Iyo Bank Group’s collective strengths and alliance network
Iyo Bank Group
Iyogin Computer Service

Shikoku Alliance Securities
Asset management proposals,
securities businessIyogin Regional Economy Research Center

Human resource consulting, investigation and researchbusiness regarding industry, economics, finance, etc.

ICT consulting, consigned information processing
business, software development businessIyogin DC Card

Iyogin Leasing

Credit card business, guarantee business, etc.

Lease business, auto maintenance lease

Iyogin Capital

The Iyogin Business Service

Investment business for stocks andcorporate bonds, etc., management ofinvestment funds

Cash organization and inspection business,maintenance and management business of
automated cash facilities

Iyogin Challenge & Smile

The Iyogin Credit Guaranty

Credit guarantee business for housing
loans and consumer loans

Special subsidiary company under the ”Acton Employment Promotion etc. of Persons
with Disabilities”
Manufacturing business for novelties, officesupplies, etc.

Iyo Bank
Shikoku Alliance

Realizing “Shikoku’s revitalization”
through “support of industrial
promotion,” “branding of Shikoku
resources,” “support of network
expansion” and “support ofbuilding of financial assets”

TSUBASA Alliance

Cooperation in a wide range of fields
such as “research and study ofadvanced IT technologies,” “support ofnewbusinesscreation,”“jointorganization of syndicated loans” and“support of M&A operations”

25Profit / Loss Forecasts for Fiscal 2019 Interest and dividend income to decrease year-on-year due to decreases in gain on securities management,etc.
 Fees and commissions to increase due to increases in solutions-related commissions, etc.
 Net income to increase year-on-year as the level of profits is expected to exceed the initial earnings forecast(Units: Billions of yen)

Fiscal 2018
results

Fiscal 2019 forecast
Forecast

YoY

76.1

75.5

(0.7)

Of which, interest anddividend income

66.4

65.0

(1.4)

Of which, fees andcommissions

7.0

7.5

+0.4

Expenses ( - )

50.3

50.5

+0.1

Of which, personnel
expenses

26.3

26.0

(0.3)

Of which, nonpersonnel
expenses

21.0

21.5

+0.5

Core business net
income

25.8

25.0

(0.8)

Credit costs ( - )

5.8

6.0

+0.2

Gain (loss) related tosecurities

4.1

4.5

+0.3

Ordinary income

26.3

26.0

(0.3)

18.2

(Note) Differences in yield utilize yield
differences with deposits, etc.

(Units: Billions of yen)Core business grossprofit

Net income

Factors Contributing to Increase / Decrease inCore Business Gross Profit (Fiscal 2019 - Fiscal 2018)

18.5

+0.2

Gain on loan
management(¥46.5 billion)

Interest anddividend
income(¥65.0 billion)

Core businessgross profit(¥75.5 billion)

(1.4)

+0.1
Gain onsecurities
management(¥18.9 billion)

(1.6)
Other
(-¥0.3 billion)(0.7)
Fees andcommissions(¥7.5 billion)+0.4

Volume factors +2.5
(Average loan balance up¥220.4 billion)
Yield difference factors, etc. (2.4)(Yield difference down 0.04%)
Volume factors (0.2)(Average securities balance
down ¥30.0 billion)
Yield difference factors, etc. (0.7)
Gain on fund cancellation
factors (0.7)+0.1
Solutions-related commissions, etc. +0.3, etc.

Other(¥2.9 billion)+0.3

Gain (loss) on derivatives, +0.2, etc.

26Connecting hearts.
Connecting theregion.

<For inquiries regarding this document> Tachibana, General Planning Division, Iyo Bank TEL:089-941-1141/FAX:089-946-9104
Future business results contained in this document are based on information available as of announcement and assumptions regarding uncertain factors that may affect future businessresults. Future business results may differ due to changes in the management environment, etc.

Iyo Bank First Half of Fiscal 2019
Earnings Briefing:
Reference Materials

Bansuisou (Matsuyama City)
Bansuisou was built as a villa in 1922 by Count Sadakoto Hisamatsu,
a descendant of the lord of the former Matsuyama domain. As an
outstanding venue for social interaction at the time, members ofroyalty and prominent figures met together at this French-stylebuilding. It is the oldest reinforced concrete structure in Ehime
Prefecture.
The house was designated as a national Important Cultural Property
in 2011 and both domestic and overseas travelers enjoy this popular
tourist destination.

December 6, 2019

Index of Reference Materials

Overview of the Iyo Bank

Pg

Conditions in Loans and Deposits

Pg◎Iyo Bank Profile

2◎Breakdown of Balance of Loans and Deposits at End of Period

12◎Branch Network

3◎Balance and Composition of Loans by Industry

13◎Summary of the Iyo Bank Group

4◎Table of Changes in Borrower Classification

14

Environment Surrounding the Iyo Bank

Pg

Pg

◎Main Industries in Ehime Prefecture

5

Status of Securities Management and Risk
Management◎Manufacturing Industry in Ehime Prefecture◎Market Strategy: Management by Risk Category

15

6◎Industrial Structure of the Setouchi Region◎Status of Integrated Risk Management

16

7◎Economic Indicators of the Setouchi Region I◎Dividend Trends and Shareholder Benefit Program17

8◎Economic Indicators of the Setouchi Region II

9

Status of Ocean Transport-Related Market

Pg◎Shipbuilding Yards in Ehime Prefecture

10◎Outlook of Dry Bulk Market Conditions

11

1

Iyo Bank Profile
Head Office

Matsuyama, Ehime Prefecture

Year offoundation

March 15, 1878 (The 29th National Bank)

Capital¥20,900 million (Total number of issued shares: 323,775 thousand shares)

Number of
employees

12 Officers, 2,806 employees (excluding temporary staff)

Number of
branches

149 domestic (including 7 sub-branches), 1 overseas (Singapore)
2 overseas representative offices (Shanghai, Hong Kong)
A+: Rating and Investment (R&I)

External
credit ratings

A: Standard & Poor’s (S&P)
AA: Japan Credit Rating Agency (JCR)

Consolidated equity ratio (BIS standards)

14.89%

Consolidated subsidiaries

15 companies

Consolidated employees (excluding temporary staff)

3,167 persons(As of September 30, 2019)2

Branch Network
 Created the No. 1 regional bank in terms of broad regional coverage, in 13 prefectures centered on the Setouchi region
 Established a strong operating base by expanding outside of Ehime Prefecture from long ago
Number of
branches

Timing of opening key branches outside of Ehime
1909: Usuki (Oita); 1919: Nigata (currently Kure,
Hiroshima);
1947: Takamatsu (Kagawa), Kochi, Oita; 1950: Hiroshima;
1952: Osaka; 1954: Tokyo; 1958 Tokushima;
1963: Kitakyushu (Fukuoka); 1964: Okayama;
1965: Nagoya (Aichi); 1966: Kobe (Hyogo);
1971: Fukuoka; 1979: Tokuyama (Yamaguchi)

149 domestic
1 overseas

Chugoku region:
9 branches

Okayama

Hyogo

Hiroshima
Osaka

Yamaguchi
KagawaKinki region:
5 branches

Fukuoka

Within Ehime:
117 branches

Tokushima

Oita
Kochi

Kyushu region:
8 branches

Shikoku region, excluding
Ehime: 7 branches

11 prefectures in the
Setonaikai region

Tokai region: 1 branchTokyo region:
2 branches
Overseas: 1 branch
Representative offices:
2 offices(As of September 30, 2019)(Note) The Internet branch is included in the number of branches within Ehime Prefecture.

3

Summary of the Iyo Bank Group
Consolidated Earnings Summary(Units: Millions of Yen)

Ordinary revenue

64,203(728)(1.1)%

64,931

Consolidatednonconsolidated
Difference(Note)
9,723

Ordinary income

16,330(1,441)(8.1)%

17,771

1,341

Profit attributable to owners ofparent11,039(628)(5.4)%

11,667155[Consolidated]

First half of
Fiscal 2019

YoY

Increase/
Decrease

First half of
Fiscal 2018

(Note) The difference between
consolidated andnonconsolidated.

List of Iyo Bank Group Companies
Banking business

Head office and 142
branches,
7 sub-branches, and12 consolidated subsidiaries

The Iyogin Credit Guaranty Company Limited
The Iyogin Business Service Company Limited
Iyogin Capital Company Limited

Iyo Bank

Iyogin Venture Fund Corporation Limited IV
Iyogin Venture Fund Corporation Limited V

Investment business to venture firms

Iyogin Venture Fund Corporation Limited VI

Investment business to venture firms

Iyo Evergreen Sixtiary Industrialization Support Fund Investment Business
Limited Partnership

Iyo Evergreen Agriculture Support Fund Investment Business Limited Partnership
Iyo Evergreen Business Succession Support Fund Investment Business Limited Partnership
Iyogin Regional Economy Research Center, Inc.

Leasing business
Other

1 consolidated
subsidiary
2 consolidated
subsidiaries

2 non-equity method affiliates

Investment business to sixtiary industrialization bodies
Investment business to agricultural companies
Investment business to business succession targets
Investigation and research business regarding industry, economics,
finance, etc.

Iyogin DC Card Co., Ltd.

Credit card business, guarantee business, etc.

Iyogin Challenge & Smile Co., Ltd.

Manufacturing business for office supplies, etc.

Iyogin Leasing Company Limited
Iyogin Computer Service Company Limited
Shikoku Alliance Securities Co., Ltd.

1 non-consolidated non-equity method subsidiary

Credit guarantee business for housing loans and consumer loans,etc.
Cash organization and inspection business, maintenance and managementbusiness of automated cash facilities, etc.
Investment business for stocks and corporate bonds, etc., management ofinvestment funds, etc.
Investment business to venture firms

Iyogin-Ehime University Originated Venture Support Fund Investment Business Limited Partnership
Iyogin REVIC Investments Co., Ltd.
Shikoku Alliance Capital Co., Ltd.

Lease business, etc.
Consigned information processing business, software development
business, etc.
Securities business
Investment business in startup companies originating in Ehime
University
Investment fund management business
Investment fund management business(As of September 30, 2019)4

Main Industries in Ehime Prefecture Industries with top national share concentrated in each region
 Manufactured product shipments from Ehime Prefecture totaled ¥4.2 trillion (46% of Shikoku) in 2017

Imabari Region…Total national share of Ehime Prefecture

29.8%(1,063 ships)

Matsuyama Region
The Matsuyama region has companies
with large shares in products such as“small once-through steam boilers,”“farm machinery,” and “dried bonito
shavings.”

Uwajima Region
12.3%(¥61.4 billion)

No. 1 in JapanSea culture industry (2017) (Note 2)¥497.9 billion total national
production

63.2%(¥36.7 billion)

No. 1 in Japan

No. 1 in Japan

Number of ocean-going vessels owned
by domestic ship owners (2018) (Note 1)
3,573 total vessels in Japan (including operators)

Towels (2017)¥58.0 billion shipped in Japan

Niihama Region
Manufactured product shipments(2017)¥1,622.5 billion

Approx. 39% of shipments of manufactured
products in Ehime
As a corporate town under the Sumitomo Group,
nonferrous metal, chemicals, steel, machinery andequipment are concentrated particularly in the
Niihama region.

(Note 1) Iyogin Regional Economy Research Center, Inc. (IRC) estimates; the ranking in Japan excludes operators.
(Note 2) Prepared based on the total fishery output for 2017 (Ministry of Agriculture, Forestry and Fisheries)

Shikokuchuo Region
7.8%(¥574.1 billion)

No. 2 in Japan
Pulp and paper industry (2017)¥7,383.7 billion shipped in Japan5

Manufacturing Industry in Ehime Prefecture
 Ehime Prefecture has manufacturing industries distinctive to each region

Composition of manufactured goods shipment by city (top five cities)
Production
machinery

OthersTransportation
machinery
Coal and oil

Matsuyama¥391.1 billion

OthersGeneralpurpose
machinery

Imabari¥1,009.2 billion

Chemicals

FibersFood products
MetalsCeramics andquarryingFood
products

Fibers
Production machinery
Food productsElectric
machineryTransportation
machinery

Production
machinery

OthersOthersGeneralpurpose
machinery
Saijo¥825.2 billion

Beverages andtobaccoSteel

OthersNonferrous
metal

Plastics

Plastics
Nonferrous
metal
Niihama¥797.4 billion

Shikokuchuo¥677.3 billion

Chemicals(Note 1) Prepared by Iyogin Regional Economy Research Center, Inc. (IRC) based on the Census of Manufacture 2018 (2017 results).
(Note 2) The shipment amount of “coal and oil” for Imabari City is a concealed value for statistical purposes, thus it is included in “others.”

Pulp, paper, andpaper processing

6Industrial Structure of the Setouchi Region
 The Setonaikai coastal region has established various industrial structures
Automotive, oil
refining, steel
Shipbuilding, oceantransport, oil, towels
and garments
Automotive,
shipbuilding, electronics

Okayama
Shipbuilding, textiles

Hiroshima
KagawaElectronics, farm machinery,
chemicals, tourism

ImabariNiihamaMatsuyama Saijo

Citrus, food processing

Shikokuchuo
Paper manufacturing
and processing

Ozu
Yawatahama
Oita
Steel, automotive,
electronics, tourism

Chemicals, electronics,
nonferrous metal,
general machinery

UwajimaCulture fishery7Economic Indicators of the Setouchi Region I
Total population(Population
estimate)

October 2018
(Persons)

Total area

(Geospatial Information
Authority of Japan)

Number of offices(Private sector,
excluding public sector)

Number of employees

2019
（ｋ㎡）

2016
(Offices)

2016(Persons)(Private sector,
excluding public sector)

Prefecture total
production(Nominal)

Fiscal 2015
(Millions of yen)Prefectural grossPrefectural
product growth
income per capita
rate (Real)Fiscal 2015(%)

Fiscal 2015
(Thousands of yen)Ehime

1,351,783

5,676

63,310566,761

4,915,526

+ 1.1

2,535

KagawaTokushima

962,032
735,970

1,877
4,147

429,167
301,688

3,777,955
3,083,714

+ 0.2
+ 0.5

2,925
2,921

Kochi
Oita

706,126
1,143,585

7,104
6,341

46,77435,853

279,196483,206

2,399,735
4,378,232

+ 1.4
(0.2)

2,532
2,619

Fukuoka
Yamaguchi

5,107,267
1,370,424

4,987
6,113

2,236,269
577,791

18,861,095
5,870,248

+ 2.1
(6.3)

2,724
2,774

Hiroshima
Okayama

Total of the above nine
prefectures (A)2,817,157
1,898,237

8,480
7,114

127,057
79,8701,302,074
820,656

11,941,081
7,787,894

+ 2.8
+ 2.9

3,074
2,744

16,092,581

51,837715,237

6,996,808

63,015,480(A)/(C)

12.7%

13.7%

13.4%

12.3%

11.5%

Hyogo

5,484,375
21,576,956

8,401
60,238214,169
929,406

2,203,102
9,199,910

20,494,996
83,510,476

＋ 0.9

2,752

17.1%

15.9%

17.4%

16.2%

15.3%

126,443,180

377,975

5,340,783

56,872,826

546,550,491

＋ 1.6

3,190

Total of ten prefectures (B)(B)/(C)
National total (C)Total of ten
prefectures
17.1%

212,649
61,385

Total of nine
prefectures(excluding Hyogo)
12.7%

Total population(Population
estimate)

Total population(Population
estimate)(October 2018)(October 2018)(Prepared based on various statistical data)

35,36652,973

Total of ten
prefectures
15.3%

Gross prefectural
product(Nominal)(Fiscal 2015)

Total of nine
prefectures(excluding Hyogo)
11.5%

Gross prefectural
product(Nominal)(Fiscal 2015)8

Economic Indicators of the Setouchi Region II
Manufactured product Annual wholesale sales
shipments

amountIndustrial

Annual retailsales amountJobs-to-(annual average)

Number of new
housing starts(annual average)

2018
2015＝100

2018(Homes)2018(Times)production index

Overall unemployment

applicants ratio

rate (annual average)

2017

2016

2016

(Millions of yen)

(Millions of yen)

(Millions of yen)

Ehime
Kagawa4,178,495
2,576,333

2,511,264
2,619,010

1,528,554
1,169,352

99.0
110.6

7,178
5,913

1.61
1.79

1.7
2.2

Tokushima
Kochi

1,780,840
580,975

904,487
874,256

757,121753,371

102.0
103.1

4,335
3,288

1.45
1.27

1.9
2.2

Oita
Fukuoka

4,094,974
9,738,415

1,344,689
16,970,699

1,235,257
5,864,032

95.4
107.4

7,549
40,704

1.54
1.60

2.2
2.9

Yamaguchi
Hiroshima

6,109,748
10,171,291

1,641,957
9,166,762

1,488,895
3,309,726

105.3
100.3

8,369
18,434

1.58
2.05

1.8
2.4

Okayama(Note) (97.9)

13,118

1.95

2.3

1.43

2.6

1.61

2.4

Total of the above nine
prefectures (A)7,603,182

3,543,971

2,093,111

46,834,253

39,577,095

18,199,419

Hyogo

15,665,881
62,500,134

10,219,241
49,796,336

5,726,476
23,925,895

19.6%

11.4%

16.5%

319,166,725

436,522,525

145,103,822(A)/(C)

Total of ten prefectures (B)

14.7%(B)/(C)
National total (C)

9.1%

12.5%

2018
(%)

108,888
104.7

11.6%
31,245140,133
14.9%
104.2

942,370(Note) 2010＝100 only for Okayama

Total of ten
prefectures
19.6%

Manufactured
product
shipments(2017)(Prepared based on various statistical data)

Total of nine
prefectures(excluding Hyogo)
14.7%

Manufactured
product
shipments(2017)

Total of ten
prefectures
14.9%

Number of new
housing starts(2018)

Total of nine
prefectures(excluding Hyogo)
11.6%

Number of new
housing starts(2018)

9

Shipbuilding Yards in Ehime Prefecture
Fujiwara Shipbuilding Co., Ltd.
I-S Shipyard Co., Ltd.
Yamanaka Shipbuilding Co., Ltd.
Namikata Shipbuilding Co., Ltd.
Okashima Zosen Co., Ltd.

Iwagi Zosen Co., Ltd.

Kadota Dock Yard Co., Ltd.
Kurinoura Dockyard Co., Ltd.
Shirahama Shipbuilding Co., Ltd.

Akamatsu Shipbuilding Co., Ltd.
Matsuda Shipbuilding Co., Ltd.
Miyoshi Shipbuilding Co., Ltd.

Hakata Shipbuilding Co., Ltd.
Murakami Hide Shipbuilding Co., Ltd.
Shimanami Shipyard Co., Ltd.

Onishi Shipyard, Shin Kurushima Dockyard Co., Ltd.

Asakawa Shipbuilding Co., Ltd.
Head Office and Shipyard, Imabari Shipbuilding
Co., Ltd.
Shin Kurushima Hashihama Dockyard Co., Ltd.
Higaki Shipbuilding Co., Ltd.
Yano Shipbuilding Co., Ltd.

Saijo Shipyard, Imabari Shipbuilding Co., Ltd.

15 Groups, 22 Offices

Source: Prepared by the Bank based on “Documents for Shipbuilding Under Jurisdiction” published by the Shikoku Land Transport Office*Shipbuilding facilities currently in operation either constructing or repairing steel vessels of at least 500 gross tons or 50 m or longer

10Outlook of Dry Bulk Market Conditions
Dry Bulk Transport Demand and Supply

Future Market Outlook●Volume of cargo movement and shipping tonnage●Baltic Dry Index (BDI) trends

Growth rate of cargo
movement
Growth rate ofshipping tonnage

20 yearaverage
2,345

Maximum value
11,793 (May 2008）

Minimum value
290 (February 2016)
1,823(September 2019)

Source: Clarkson Shipping Intelligence Weekly (October 2019)(Plan)(Plan)●Dry bulk transport demand and supply●Shipping tonnage of dry bulk vessels is expected to see a significant
increase of 39.7 million tons, or 4.5%, in 2019 mainly due to construction oflarge vessels. The volume of cargo movement is expected to be limited toa 1.5% increase, as it has been weak since the start of the year due to USChina trade friction, etc.
●The forecast of the growth rate of shipping tonnage is approx. 5.5% in 2020
as 51.3 million tons of new ship construction is expected. However, cargo
movement is expected to grow at 2.0%, which indicates a divergence.
Meanwhile, a market boost is expected as shipping tonnage self-adjusts, if
scrapping of aging ships is accelerated due to environmental regulations
beginning in 2020.

●Future market outlook●In early 2019, the capesize spot market recorded the lowest level in thelast two years, affected by suspended operation of a mine owned by
Brazilian steel major Vale due to burst of a dam and hurricanes inAustralia.
●Thereafter, the spot market has recovered as market sentiment improvedby additional economic policies indicated by China and more ships
entered docks owing to factors such as environmental regulations.
●Moving forward, demand for shipping tonnage will be secured at a certain
volume due to environmental regulations and changes in trade. However,caution must be observed regarding effects on market conditions aheadof completion of many shipbuilding projects.
●The BDI showed a recovery trend as it gradually rose from a record low of
290 in February 2016 to an average of 1,341 in 2018. It has been at ahigher level than the previous year at an average of 2,023 during the most 11
recent three months.

Breakdown of Balance of Loans and Deposits at End of Period
1. Breakdown of balance of loans at end of period
March 2016
Total loans
General loans

3,911.1

September
2016
3,936.3

March 2017
4,043.3

September
2017
4,132.4

March 2018
4,292.6

September
2018
4,431.5

March 2019
4,550.8(Units: Billions of Yen)
September
Vs. Sep. 20182019
4,617.5
186.0

3,677.4

3,705.5

3,802.3

3,899.0

4,054.6

4,192.2

4,310.7

4,387.7

195.5

Corporate loans (incl. overseas, etc.)

2,717.0

2,729.5

2,807.4

2,891.8

3,030.6

3,146.0

3,238.2

3,291.1

145.1

Corporate loans (domestic branches)

2,717.0

2,729.5

2,806.0

2,864.4

2,965.5

3,060.4

3,135.8

3,158.3

97.9

960.3

976.0

994.9

1,007.1

1,024.0

1,046.2

1,072.4

1,096.5

50.3
47.1

Individual financing
Housing loans

700.0

710.6

723.8

731.2

742.6

758.2

781.0

805.3

Apartment and building loans

173.3

179.1

184.0

186.3

191.3

198.0

202.2

203.1

5.1

Card loans

28.6

29.2

29.6

30.0

29.6

29.1

28.3

27.9

(1.2)

Municipal loans, etc.

233.8

230.7

241.0

233.4

238.1

239.2

240.1

229.7

(9.5)

(Note) The figures shown for apartment and building loans are the total of the "institutional finance" portion.
2. Breakdown of balance of assets in custody such as deposits, etc. at end of period
SeptemberMarch 2016
March 20172016
Total deposits, etc. + assets in custody A
5,676.5
5,644.4
5,789.1

September
2017
5,765.3

March 2018
5,889.0

September
2018
5,894.2

March 2019
6,070.6(Units: Billions of Yen)
September
Vs. Sep. 20182019
6,174.5
280.3

Total deposits, etc.

5,343.1

5,317.8

5,457.0

5,424.5

5,546.0

5,542.2

5,712.6

5,817.3

275.1

Total deposits

5,018.0

4,892.9

5,006.8

4,987.1

5,099.6

5,057.7

5,247.1

5,288.5

230.8

Individual

3,348.3

3,343.4

3,354.6

3,376.3

3,392.1

3,412.0

3,423.6

3,450.2

38.2

General companies

1,397.6

1,392.1

1,434.4

1,429.1

1,442.0

1,455.4

1,555.4

1,553.7

98.3

Public

204.0

117.1

146.6

135.8

164.4

111.4

126.4

113.2

1.8

Financial

44.0

31.3

36.0

23.1

53.8

37.4

61.0

31.9

(5.5)

Overseas / offshore
NCD

24.1

8.7

35.2

22.6

47.3

41.3

80.5

139.4

98.1

325.1

424.9

450.2

437.4

446.4

484.4

465.5

528.8

44.4

General companies

295.9

293.5

354.7

319.6

375.4

345.1

348.2

390.0

44.9

Public

29.2

131.4

95.5

117.7

71.0

139.2

117.3

138.7

(0.5)
143.2

1,693.5

1,685.7

1,789.1

1,748.8

1,817.4

1,800.6

1,903.6

1,943.8

Public funds (incl. NCD)

General company funds (incl. NCD)

233.3

248.5

242.1

253.5

235.4

250.7

243.7

252.0

1.3

Foreign currency deposits (balance)

102.9

115.6

97.1

104.1

118.3

111.0

111.0

101.6

(9.4)

3,665.6

3,654.9

3,673.2

3,703.7

3,722.5

3,751.4

3,769.1

3,795.6

44.2

3,348.3

3,343.4

3,354.6

3,376.3

3,392.1

3,412.0

3,423.6

3,450.2

38.2

317.2

311.5

318.6

327.3

330.4

339.3

345.4

345.4

6.1

333.4

326.5

332.0

340.7

343.0

351.9

357.9

357.1

5.2

40.1

32.5

27.2

25.0

25.4

24.0

22.4

20.3

(3.7)
(4.8)

Individual deposits+individual assets in custody
Individual deposits
Individual assets in custody<Assets in custody (Term-end basis)>
Assets in custody at the Bank (excl. deposits, etc.) B

JGBs
Investment trusts

93.5

85.9

85.1

81.0

71.6

71.5

68.6

66.7

Personal pension insurance

184.9

187.8

191.5

202.1

206.2

210.8

215.7

216.4

5.6

Financial product intermediary

14.9

20.3

28.3

32.5

39.7

45.5

51.0

53.6

8.1

Shikoku Alliance Securities balance Ｃ

131.5

140.1

163.7

192.7

201.4

208.3

199.5

207.8

(0.5)

Balance of Group's assets in custodyＢ+Ｃ＝Ｄ

464.9

466.6

495.8

533.5

544.4

560.3

557.4

565.0

4.7

Assets in custody composition (Ｄ/Ａ+Ｃ)

8.0%

8.1%

8.3%

9.0%

8.9%

9.2%

8.9%

8.9%

(Note) The figures shown for foreign currency deposits (balance) are the total excluding overseas / offshore.

－

12Balance and Composition of Loans by Industry
 There are no major changes in the composition of loans by industry, and the loans are well-balanced(Units: Billions of Yen, %)Manufacturing

September 2014

September 2015

September 2016

September 2017

September 2018

September 2019

Vs. Sep. 2018

Composition

Composition

Composition

Composition

Composition

Composition

Balance increase/decrease
Rate of balance

606.4

16.1

599.0

15.4

592.0

15.0

589.4

14.4

629.8

14.5

646.9

14.4

+17.1 + 2.7%

Agricultural

2.0

0.1

2.6

0.1

2.6

0.1

2.5

0.1

2.8

0.1

2.8

0.1

+0.0 + 0.0%

Forestry

0.2

0.0

0.2

0.0

0.1

0.0

0.2

0.0

0.2

0.0

0.3

0.0

+0.1 + 50.0%

Fishing

11.8

0.3

12.7

0.3

11.8

0.3

12.3

0.3

11.1

0.3

11.2

0.2

+0.1 + 0.9%

Mining

3.6

0.1

3.6

0.1

8.8

0.2

8.9

0.2

8.5

0.2

8.1

0.2

(0.4)

(4.7%)

117.7

3.1

113.5

2.9

110.0

2.8

105.0

2.6

111.2

2.6

108.9

2.4

(2.3)

(2.1%)

Electricity, gas, heat provision, water

87.9

2.3

91.1

2.3

89.2

2.3

97.5

2.4

122.5

2.8

141.3

3.2

+18.8 + 15.3%

Information communications

22.4

0.6

27.6

0.7

27.2

0.7

28.5

0.7

21.7

0.5

20.0

0.4

(1.7)

642.0

17.1

647.2

16.6

603.3

15.3

649.2

15.8

703.3

16.2

728.8

16.3

+25.5 + 3.6%

549.4

14.6

544.7

14.0

489.9

12.4

526.6

12.8

566.5

13.0

593.6

13.2

+27.1 + 4.8%

Wholesale and retail

459.5

12.2

477.2

12.2

466.9

11.9

465.4

11.3

500.3

11.5

499.5

11.1

(0.8)

(0.2%)

Finance and insurance

145.6

3.9

165.6

4.3

180.3

4.6

198.7

4.8

208.9

4.8

190.1

4.2

(18.8)(9.0%)

Real estate

180.1

4.8

191.1

4.9

213.4

5.4

238.4

5.8

259.0

6.0

284.1

6.3

+25.1 + 9.7%

Various services

338.3

9.0

368.2

9.5

390.9

9.9

426.2

10.4

425.5

9.8

459.2

10.2

+33.7 + 7.9%

159.2

4.2

167.5

4.3

173.5

4.4

187.6

4.6

191.5

4.4

194.2

4.3

+2.7 + 1.4%

Regional public entities

215.5

5.7

227.8

5.8

230.0

5.8

232.6

5.7

233.9

5.4

224.4

5.0

(9.5)

Other

923.1

24.6

968.8

24.9 1,009.4

25.6 1,049.7

25.6 1,106.5

25.5 1,158.1

25.8+51.6 + 4.7%

100.0 3,896.2

100.0 3,936.3

100.0 4,105.0

100.0 4,345.9

100.0 4,484.6

100.0 +138.7 + 3.2%

Construction

Transportation
Of which, ocean transport

Of which, medical-related

Total

3,755.9(7.8%)(4.1%)(For domestic branches, excludes special international transactions account)* “Goods rental” is included in “real estate” from the six months ended September 30, 2009.
“Real estate” for the six months ended September 30, 2019, excluding “goods rental,” was ¥265.6 billion, which is an increase of ¥24.2 billion (+10.0%) compared with thesix months ended September 30, 2018. In addition, “other” includes “home renting by individuals” (¥211.7 billion for the six months ended September 30, 2019).
* As “ocean transport” displays balances applicable to the “ocean transport industry” according to Japan Standard Industrial Classification, this figure does not match “Loanbalance for the maritime industry” on page 14 of the Earnings Briefing.

13

Table of Changes in Borrower Classification
 Activities for supporting enhancement of corporate value are conducted through business feasibility assessments of customers
 Corporate revitalization support is provided mainly by the Corporate Consulting Division
Use of various types of revitalization schemes, such as reconstruction funds and the SME Business Rehabilitation Support Co-operative, as
well as solution sales[Changes in borrower classification for business borrowers] (one year)
Upper row: Number of borrowers
Lower row: Credit amount (Hundreds ofmillions of yen)

Rate of degradation

September 30, 2019
Total

Normalborrowers

19,801

17,924

17,362

499

22

24

32,384

31,996

31,209

744

18

1,939

1,835

397

1,365

3,532

3,496

552

150

132

observation

252

Borrwers at
risk ofto at risk of

Improvement

Degradation

Bankrupt
borrowers

bankruptcy or

12

5

0.21%

562

23

2

1

0.08%

788

22

49

1

1

2.63%

397

73

2,762

102

80

0

0

2.27%

552

182

18

9

83

14

7

1

14.67%

27

22

235

44

10

164

16

2

0

6.96%

54

18

277

243

15

16

10

188

8

6

41

14

bankruptcy

425

387

4

16

21

317

4

26

41

29

Substantiallybankrupt

98

75

1

0

0

0

67

7

1

7

25

15

0

0

0

0

12

3

0

3

31

15

0

0

0

0

0

15

0

12

8

0

0

0

0

0

8

0

22,296

20,224

17,793

1,889

137

275

95

35

466

678

36,63036,13931,996

3,496

235

389

15

8

647

1,020

Normalborrowers
Borrowers
requiringclose
monitoring

September 30, 2018

Borrowers
under strictborrowers
Bankrupt
borrowers

Borrowers requiring

Borrowers under strict

Borrowers at risk of

Substantiallyclose monitoring

observation

bankruptcy

bankrupt borrowers(Note 1) The chart displays the changes in the borrower classification from September 30, 2018 to September 30, 2019.
(Note 2) The balances after changes are the balances after write-offs as of September 30, 2019.

below

14

Market Strategy: Management by Risk Category(Units: Billions of yen)Six months ended September 30, 2019
Risk Category(*1)

Yen-denominated bonds
Of which, JGBs
Of which, 15-year variable

Book

Evaluation

Marketbalancegain / loss

balanceComposition

Vs. March
2019

Total

Interest and dividend income

profit /Interest
received

loss (*2)(*3)

Procurement

Profit / loss frompurchase, sale,and amortization

cost

Increase/decrease on gain /Source of main revenue and profit

loss on evaluation
vs. March 2019

791.2

+19.4

810.5

47.9%

(6.2%)

2.1

3.5

3.5

0.0

0.2

(1.7) Difference in long and short term interest on yen interest

374.2

+9.2

383.5

22.7%

(5.4%)

0.4

1.9

1.9

0.0

0.2

(1.7)

2.9

+0.0

2.9

0.2%

(2.2%)

(0.1)

0.0

0.0

0.0

0.2

(0.3) Steepening yield curve

69.9

+0.5

70.4

4.2%

(0.3%)

0.0

(0.1)

(0.1)

0.0

0.0

+0.1 Rise in expected inflation rate

Foreign currency bonds (with hedges)

299.8

+18.3

318.1

18.8%

+3.0%

16.6

1.4

3.0

1.5

2.0

+13.2 Difference in long and short term interest on overseas interest

Foreign currency bonds (without hedges)

143.8

+3.8

147.5

8.7%

+5.7%

4.5

0.8

0.8

0.0

0.0

+3.7 Gain on foreign exchange / interest revenue

Domestic and overseas stocks (incl. stock trusts)

119.9+186.4

306.2

18.1%

(2.5%)

(1.2)

3.2

3.2

0.0

1.5

(5.8) Growth in domestic companies centered on transaction partners

Alternatives, etc.

92.5

+15.6

108.1

6.4%

(0.0%)

7.1

0.9

0.9

0.0

0.4

+5.8

Hedge funds

35.2

+0.3

35.5

2.1%

(0.3%)

0.3

(0.1)

(0.1)

0.0

0.0

+0.4 Strategic diversification by external consigned management

Real estate-related

42.5

+15.6

58.1

3.4%

+0.3%

6.8

0.9

0.9

0.0

0.4

+5.6 Revenue from real estate rentals and profit from price increase

Private equity

7.5

+0.0

7.5

0.4%

+0.0%

(0.0)

0.1

0.1

0.0

0.0

(0.1) Rise in enterprise value due to management improvement of unlisted stocks, etc.

Emerging stocks

4.3

(0.3)

3.9

0.2%

(0.0%)

(0.1)

0.0

0.0

0.0

0.0

(0.1) Growth and foreign exchange gains in emerging markets

Other (corporate management, etc.)

3.0

+0.0

3.0

0.2%

(0.0%)

(0.0)

(0.0)

(0.0)

0.0

0.0

+0.0 Seeking short-term profits due to market views

1,447.1+243.4

1,690.5

100.0%

ー

29.1

9.8

11.4

1.5

4.1

+15.2

interest JGBs
Of which, inflation-indexed
JGBs

Total

*1 Assets invested by the Financial Market Division calculated based on primary risk, regardless of accounting item (on the basis of including money held in trust, unsecured repurchase agreement, etc.)*2 "Total profit / loss" and "interest and dividend income" eliminate three-month LIBOR interest, etc., as procurement costs, but this differs from actual procurement costs.
*3 Interest received includes gain / loss on cancellation of funds, etc., recorded in asset management revenue.

<Of yen-denominated bonds and foreign currency bonds, investment conditions in credit risk and securitized products, etc.>
Credit risk
Securitized products
Subtotal

229.5

+3.9

4.7

+0.0

234.1

+3.9

233.4

13.8%

+0.7%

2.6

1.0

1.5

0.5

0.0

+1.5 Business continuity of domestic and foreign companies

4.7

0.3%

(0.1%)

0.0

0.0

0.0

0.0

0.0

+0.0 Loan interest revenue from housing loans, etc.

238.0

14.1%

+0.6%

2.6

1.0

1.5

0.5

0.0

+1.5

15

Status of Integrated Risk Management(Units:Hundreds ofmillions of yen)

[Status of integrated risk management (September 30,2019)]○ Operational risk

・Calculated by The Standardized Approach○ Market risk (holding period of six
months, 99.9%)

BufferCommon stock, etc.
Tier 1(Nonconsolidated)

Operationalrisk
Not utilized

・Take into account correlation between
different risks
・Core deposits: Use an internal model・Stock VaR: Includes strategic equity
holdings○ Credit risk (holding period of one
year, 99.9%)

Market risk

・Business loans, etc.: Monte Carlo method
・Loans for individuals: Analysis method
Credit risk

Risk capital(¥589.6 billion)

Risk limit
Second half of fiscal
2019(¥305.0 billion)

Risk limit
First half of fiscal
2019(¥322.0 billion)

Risk amount
September 2019
results(¥195.6 billion)

16

Dividend Trends and Shareholder Benefit Program
Dividend Trends

Shareholder Benefit Program●Strive to maintain the business base and stable dividends bystrengthening the financial position with internal reserves(Yen)

Ordinary
dividend

Shareholders holding 100 or more
but less than 1,000 shares● Grant shareholder benefits

Commemorative
dividend(Imabari towel)

Shareholders holding
1,000 shares or more

* Image for illustrative purposes.

Select one of thefollowing three choices● Goods made in Ehime Prefecture andspecial goods jointly designed by the
TSUBASA Alliance● Preferential time deposit accounts forshareholders● Donation to the Japanese Red Cross
Society

March
2010

March
2011

March
2012

March
2013

March
2014

March
2015

March
2016

March
2017

March
2018

March
2019

March
2020
(Plan)

17