Fiscal 2018 Earnings Briefing

Tonaru Ore Storage (Niihama City)
The ”Besshi Copper Mine,“ which was one of thethree major copper mines in Japan, has manyruins of old buildings which convey its history.
It is called the “Machu Picchu of the East”
because its appearance and surrounding
landscape are compared to the former Inca
Empire’s Machu Picchu, a World Heritage Site.

June 7, 2019

IndexⅠ. Summary of Earnings for Fiscal 2018

Pg

◎Profit and Loss Conditions in Fiscal 20183

◎Factors in Increase / Decrease in Core Business Gross Profit (Fiscal 2018)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

◎Progress in “Digital-Human-Digital Bank”

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

10

◎Plans for Loans, Deposits, and Assets in Custody◎[Consulting Strategy (Personal Banking)] Strengthen Comprehensive Proposal Capability for Each and Every
Customer◎[Consulting Strategy (Corporate Banking I)] Strengthen Ability to Offer Value through “Get to Know
Customers" Sales◎[Consulting Strategy (Corporate Banking II)] Strengthen Consulting Functions for Solving Management
Issues of Customers◎[Consulting Strategy (Corporate Banking III)] Strengthen Efforts in Maritime Business Cluster

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

16◎[ICT Strategy] Expansion and Improvement of Touch Point Utilizing Digital Technologies

17◎[Branch Strategy] Review Branch Functions Toward Realizing “D-H-D Bank”◎[BPR Strategy] Improvement of Productivity Through Utilization of Digital Technologies and Concentration on
Headquarters◎[Regional Revitalization Strategy] Revitalization of Regional Economies through Creation of “Business” and“Employment”◎[Market Strategy I] Strategic Asset Allocation Responding to Low Interest Environment

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

22◎[Personnel Strategy] Develop Organizational Culture of Proactive, Mutual Enhancement Toward Realizing “DH-D Bank”◎Efforts for ESG and SDGs

12
13
14
15

19
20
21

23
24

◎Efforts for ESG and SDGs

25

◎Profit / Loss Forecasts for Fiscal 201926

1

Ⅰ. Summary of Earnings
for Fiscal 2018

Gujo Observatory (Shikokuchuo City)
An industrial district and city lights are seenalong the Seto Inland Sea in this 180degree panoramic view, which is among thebiggest night view spot in Shikoku.
This location was registered as one of the“Top 100 Japanese Night Views” and a“night view inheritance of Japan” and is also
a popular attraction for lovers.

Profit and Loss Conditions in Fiscal 2018
 Although profit was down year-on-year at every income level, a certain level of profit was secured as core businessnet income and net income exceeded the earnings forecast.
Earnings for Fiscal 2018 (Nonconsolidated)
Fiscal 2018

(Units: Millions of yen)
Increase/
Decrease

YoY

Fiscal 2017

Core business gross profit (Note 1)

76,176(1,386)

Interest and dividend income

66,441(3,328)69,769Fees and commissions

7,063

+421

6,642

2,098

+172

1,926

Of which, revenue on assets incustody
Other operating income (Excluding
profit/loss associated with bonds
including JGBs, etc.)(1.8%)

77,562

2,671+1,521

1,150

Expenses ( - )50,357+1,246

Personnel expenses

26,334(41)

26,375Nonpersonnel expenses

21,079+1,27819,801+2.5%

49,111

Taxes

2,944

+10

Core business net income (Note 2)

25,818(2,632)Credit costs ( - ) ①+②-③

5,806+2,290

3,516

205

+893

(688)

6,130

+1,343

4,787

Recoveries of written off claims ③

528

(53)

581

Gain (loss) related to securities

4,155(1,888)

6,043

Gain (loss) related to bonds including
JGBs

206

(75)

281

Gain (loss) related to stock, etc.

3,949

(1,812)

5,761

Other temporary gain (loss)

2,181

+236

1,945

26,349(6,574)

Provision of reserve for general loan
losses ①
Amortization of non-performing loans②

Ordinary income

2,934(9.3%)

28,450(20.0%)

32,923Extraordinary income (loss)

(527)

(214)

(313)

Income before income taxes

25,821(6,789)32,610Net income

18,262(4,400)(19.4%)

22,662

Ordinary revenue

107,222+5,013+4.9%

102,209

Business net income

25,819(3,602)+12.2%

29,421

Key factors in increase / decrease, etc. (YoY)
Core business gross profit: Down ¥1,386 million YoY◎Interest and dividend income down due to a decrease in interest and dividends fromsecurities◎Fees and commissions up due to increases in revenue on assets in custody, solutionrelated commissions◎Other operating income up due to an increase in gain (loss) on foreign exchangetransactions, etc.

Expenses: Up ¥1,246 million YoY◎Nonpersonnel expenses up as strategic investments increased, etc.

Core business net income down as core business gross profit
decreased and expenses increased, down ¥2,632 million YoY
Credit costs: Up ¥2,290 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: Down ¥1,888 million YOY
Gain (loss) related to bonds including JGBs (Down ¥75 million YoY)
Gain (loss) related to stock, etc. (Down ¥1,812 million YoY)

◎Gain (loss) related to stock, etc., down due to a decrease in gains on sales of
securities, etc., and an increase in losses on devaluation of securities

Other temporary gain (loss): Up ¥236 million YoY◎Temporary retirement benefit expenses down

Due to a decrease in core business net income and an increase incredit costs and other factors, ordinary income decreased, down
¥6,574 million YoY
Extraordinary income (loss): Down ¥214 million YoY(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

As a result, net income was down ¥4,400 million YoY

3

Factors in Increase / Decrease in Core Business Gross Profit (Fiscal 2018)
 Interest and dividend income were down due to a decrease in gain on fund cancellation, etc., despite an increase in gain on loan management
 Fees and commissions were up due to higher solutions-related revenue and revenue on assets in custody, etc.

Year-on-year(Fiscal 2018 - Fiscal 2017)(Units: Billions of yen)
(Note) Differences in yield utilize
yield differences withdeposits, etc.
Interest anddividend income(¥66.4 billion)(3.33)
Core businessgross profit(¥76.1 billion)

Of which, domestic currency(¥40.8 billion)

Gain on loan
management(¥46.4 billion)(0.02)+0.96

Of which, domestic currency(¥17.9 billion)(3.33)(4.13)(1.39)Of which, foreign currency(¥2.6 billion)(0.80)

Other(-¥0.6 billion)(0.16)

Fees andcommissions(¥7.0 billion)

+0.42
Other
(¥2.6 billion)+1.52

Yield difference factors (2.24) (Yield difference down 0.06%)

Of which, foreign currency(¥5.6 billion)+0.98
Gain on securities
management(¥20.5 billion)

Volume factors +2.22 (Average loan balance up ¥207.2 billion)

Volume factors +1.11 (Average loan balance up ¥73.4 billion)
Yield difference factors (0.13) (Yield difference down 0.03%)
Volume factors (0.48) (Average securities balance down ¥29.1 billion)
Yield difference factors (0.13)
Gain on fund cancellation factors (2.72)(Decrease in gain on cancellation of foreign bond funds without hedges, etc.)
Volume factors (0.05) (Average securities balance down ¥2.9 billion)
Yield difference factors (0.75) (Yield difference down 0.36%)

Revenue on assets
in custody(¥2.0 billion)

+0.17

…

Insurance agency commissions +0.36 (including corporate insurance [solutions-related
revenue] +0.05), investment trust related commissions (0.13), etc.

Other(¥4.9 billion)+0.25… Solutions-related revenue +0.11, etc.

…+1.58 from gain (loss) on foreign exchange transactions(including solution-related revenues +0.33), etc.

4Conditions in Loans, Deposits, and Assets in Custody “Deposits, etc.” were up 3.0% year-on-year
 “Loans” were up 6.0% year-on-year. Loans and deposits both grew for the 22nd consecutive year

Balance of deposits, etc. by region

Fiscal2018

YoY

4,301.2
251.1
171.4
254.9
128.6
391.1
47.2
5,546.0

4,413.0
230.2
166.0
250.5
146.3
425.9
80.5
5,712.6+111.8(20.9)
(5.4)
(4.4)
+17.7
+34.8
+33.3
+166.6

Balance of assets in custody

Increase/
Decrease+2.6%(8.3)%(3.2)%(1.7)%+13.8%+8.9%+70.6%+3.0%

Share within Ehime Prefecture as of March 31, 2019(excluding Japan Post, agricultural cooperatives, etc.)
Deposits

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

Fiscal2017

Loans

Region(Units: Billions of yen)

The
Bank

(Units: Billions of yen)

Fiscal2017

Fiscal2018

YoY

Group assets in custody
Balance at the Bank

544.4
343.0

557.4
357.9

+13.0
+14.9

Increase/
Decrease
+2.4%
+4.3%

Balance at Shikoku Alliance Securities

201.4

199.5

(1.9)

(0.9)%

Sales of Group assets in custody

138.5

117.6

(20.9)(15.1)%

Sales at the Bank
Sales at Shikoku Alliance Securities
Securities

61.4

56.7

(4.7)

(7.7)%

77.0

60.8(16.2)(21.0)%

Balance of loans by region

Composition byregion for balance of
deposits, etc.

Tokyo and Nagoya

City banks /Trust banks

Secondregional banks

CreditunionsOverseas,
etc.

Kinki
Chugoku
KyushuWithin Ehime
Prefecture

Shikoku(Units: Billions of yen)

Composition byregion for balance ofloans

Fiscal2017

Fiscal2018

YoY

Within Ehime Prefecture

2,285.0

2,351.1

+66.1

+2.9%

Kinki

Shikoku (excluding Ehime)
KyushuChugoku
Kinki
Tokyo and Nagoya
Financial Market Business OfficeTotal (domestic branches)
Overseas, etc.
Total

273.0
281.9
377.7
328.3
596.0
85.4
4,227.5
65.1
4,292.6

294.3
295.1
410.7
361.2
625.8
109.8
4,448.4102.4
4,550.8

+21.3
+13.2
+33.0
+32.9
+29.8
+24.4
+220.9+37.3+258.2

+7.8%
+4.7%
+8.7%
+10.0%+5.0%+28.6%+5.2%+57.3%+6.0%

Chugoku

RegionRegional banksother than theBank

Increase/
Decrease*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.

Tokyo and Nagoya

Financial Market
Business Office
Overseas,etc.
Within 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 1.48%, remaining at a low level
Credit costs by factor(Units: Billions of yen)

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Credit costs total

1.8

0.6

3.5

5.8

+2.3

Provision of reserve for general loan

(1.3)

(0.8)

(0.6)

0.2

+0.9

Amortization of non-performing loans

4.5

2.4

4.7

6.1

+1.3

Bankruptcies

1.4

0.2

0.8

1.0

+0.2

Downgrades, etc.

5.9

5.0

6.3

6.9

+0.6

Upgrades and collections

(2.8)

(2.9)

(2.3)

(1.8)

+0.5

1.3

0.8

0.5

0.5

(0.1)

0.05%

0.02%

0.09%

0.13%

+0.05P

Recoveries of written off
claims ( - )Credit management
expense ratio (*)YoY(*) 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 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Loans to bankrupt or effectively
bankrupt borrowers

4.2

4.4

3.0

6.0

+3.0

Doubtful assets

45.5

39.8

44.1

46.6

+2.5

Credit subject to specific risk
management

16.9

18.1

18.0

18.6

+0.6

Total disclosed non-performing loans

66.7

62.4

65.2

71.3

+6.1

1.64%

1.48%

1.44%

1.48%

+0.04P

Ratio of disclosed non-performing
loans

YoY

6

Conditions in Evaluation Gain on Securities and Equity Ratio
Evaluation gain on securities was ¥227.6 billion, maintaining a top class level among regional banks
 Consolidated equity ratio (BIS standards) was 14.38%


Evaluation Gain on Securities (Nonconsolidated)(Hundreds ofMillions of Yen)

Consolidated Gross Equity Ratio

Nikkei Average (Yen)

March
March
March
2016
2014
2015
Gain / loss on securities(left axis)

March
March
2018
2017
Nikkei average(right axis)

March
2019

March
March
2015
2014
Tier 1 ratio for common
stock, etc.

March
March
2017
2016
Gross equity ratio

March
2018

March
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)

Mount Kamegamori (Saijo City)

As one of the “Three Hundred Famous Mountains ofJapan,” Mount Kamegamori is a popular climbing spot
for families.
Many mountain climbers are awestruck by Mount
Ishizuchi, one of the highest mountains in westernJapan, which can be seen in the distance. A gently
sloping prairie of bamboo grass and snag forests withbleached white trunks provides natural beauty thatmake it worthy of being called the “Panorama Dai,” orpanoramic viewing platform of Shikoku.

Progress in “Digital-Human-Digital Bank”
Digital touch point- Human consulting

Digital operation

Relationship with customers
through digitalization●July 2018 AI sales support system

Customer contact points(touch points)●July 2018 API linkage●December 2018 Insurance Robot Advisor●December 2018 Chatbot service●March 2019 J-Coin Pay●May 2019 Full website renewal-

Digitaltouch point

DigitaloperationCounseling for customers●August 2018 Establishment of“Consulting Business Division”●October 2018 Establishment of two“insurance plazas”●December 2018 Trial for“hybrid desk”●April 2018 Abolishment of the award systemand setting of targets at headquarters
Further promotion of “customer orientation”

Respond to each andevery customer
through humanityand digitalization

Human
consulting

Channels not dependingon time and place●April 2018 Shift to a “next-generation
branch” at all branches●June 2018 THEO + Iyo Bank
●January 2019 Trial for “HOME,” a new
digital service of home loans●February 2019 AGENT system●April 2019 AGENT for Business

Consulting●April 2018 ICT consulting business◆Establishment of branch operation respecting
independence using “policy management” as the
management method●May 2018 Natural disaster responsive financing●October 2018 Lease intermediary operations

9

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
Targets

Results

Fiscal 2020
Targets

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

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

ROE

3.0% or more

2.99%

3.0％ or moreCore OHR

70.0% or less66.10%

65.0％ or less

Equity ratio(BIS standard)

15.0％ or more

14.38%

15.0％ or more

2.0％ or less

1.48%

2.0％ or lessTarget items

Net income

Ratio ofnon-performing loans

10Plans for Loans, Deposits, and Assets in Custody Deposits, etc., are planned to be increased approx. ¥270.0 billion during the three years of the Medium-Term Management
Plan, with an average balance totaling ¥5,724.0 billion during fiscal 2020
 Loans are planned to be increased approx. ¥639.0 billion during the three years of the Medium-Term Management Plan,
with an average balance totaling ¥4,757.0 billion during fiscal 2020
Plans for average deposits, etc., balance and assets in custody balance(Units: Billions of yen)
Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal2017

Results

YoY

Plan

YoY

Plan

YoY

Average deposits, etc., balance

5,453.7

5,576.3+122.6

5,681.0+104.7

5,724.0+43.0+270.3

Of which, individual deposits
Group assets in custody balance

3,387.1

3,417.2+30.1

3,435.0+17.8

3,450.0

+15.0

+62.9

544.4

557.4

+13.0

579.0

+21.6

621.0

+42.0

+76.6

Of which, balance of assets in custody at the
Bank

343.0

357.9

+14.9

367.0

+9.1

391.0

+24.0

+48.0

Of which, balance at Shikoku Alliance

201.4

199.5

(1.9)

212.0

+12.5

230.0

+18.0

+28.6

(including Shikoku Alliance Securities)

Plans for average loan balance

Increase/decreaseduring the(Units: Billions of yen)

Fiscal2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

Results

YoY

Plan

YoY

Plan

YoY

Increase/decreaseduring the

Average loan balance

4,118.0

4,398.6+280.6

4,614.0+215.4

4,757.0+143.0+639.0

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

1,315.0+14.6

1,323.0

+8.0

+68.7

Individual loans

996.5

1,034.8+38.3

1,078.0+43.2

1,109.0+31.0+112.5

Municipal loans

236.8

241.5

+4.7

245.0

+3.5

249.0

+4.0

+12.2

Financial Market Business Office

74.4

98.8

+24.4

122.0

+23.2

144.0

+22.0

+69.6

Singapore Branch

25.5

83.2

+57.7

118.0

+34.8

140.0

+22.0

+114.5

11

[Consulting Strategy (Personal Banking)]

Strengthen Comprehensive Proposal Capability for
Each and Every Customer
 Support to realize the rich future of customers through consulting with a high level of expertiseComprehensive proposals responding to “life events” and “thoughts“
 Realize lifetime transactions with households by connecting

generations through finance Deployed 12 “insurance plazas” in Ehime Prefecture to respondto various customer needs
 Placed 93 “insurance consulting staff” members who are able toprovide consulting services similar to “insurance plazas”“Save andincrease”
assets Medical insurance sales results were 4,605 cases in fiscal 2018,

which is No. 1 among regional banks (survey by The Japan
Financial News)(Number of policies)

Level premium insurance sales andnumber of policies held

(Number of sales)

Number of policies (left axis)
Number of sales (right axis)”Prepare” forsickness and injuries
Medical insurance,
accident insurance,
etc.

Savings trusts,
iDeCo, etc.
Central Iyo
block
Insurance
consulting staff
41 persons

Fiscal 2017 Results Fiscal 2018 Results
Eastern Iyo
block
Insurance
consulting staff
27 persons

Fiscal 2019 Plan

Expansion of range of asset management
by investment education
Strengthen proposals for savings trusts as a method of “protecting andgrowing” assets
 Continue investment education via customer seminars led by Bank BranchManagers(Units: Millions of yen)

Annual premium paid of savings trusts

Insurance plaza“Prepare“ forinheritance
Testamentary
trust, inheritanceorganization, etc.

South Iyo block
Insurance
consulting staff
25 persons“Leave” money tofamilyLife insurance, etc.

Fiscal 2015 Results

Fiscal 2016 Results

Fiscal 2017 Results

Fiscal 2018 Results

12[Consulting Strategy (Corporate Banking I)]
Strengthen Ability to Offer Value through “Get to Know Customers” Sales Share our customers' management issues through “get to know customers” sales based on business feasibility assessment
to offer smooth financing and solutions for issues
 Improve ability to offer value and strengthen the fee business through diversified support menus
Sharing of management issues and optimal offering of value throughbusiness feasibility assessment●Share customers’ management issues using “Mirai Support
Sheet” as a business feasibility assessment tool and the “businessfeasibility assessment investigation committee” held among theheadquarters and branches<Example> Company A (hotel business)
Ratings: Borrower requiring close monitoring(restructuring of lending terms)

Mirai Support Sheet <bank branch>
Remaining of restructured loans
Business succession plan not developed

Results and plans for solutions related revenue(Millionsof yen)[Fiscal 2018
Medium-Term Management Plan]

Other
Corporate life insurance
Business matching
Business succession and M&A
Private placement
bonds
Syndicated loans,
etc.

Business feasibility assessment investigation committee<headquarters and bank branch>

Review of repayment scheme
Support of business succession plan

NumberActions

AmountFee revenue

Execution of loans¥1.5billion¥45 million

Underwriting of private
bonds¥0.7 billion¥28 million

Advisory agreement on
business succession－¥1.2
millionNumber of business feasibility assessment conducted(accumulated)

NumberFiscal 2015
Results

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

Fiscal 2016
Results

Fiscal 2017
Results

Fiscal 2018
Plan

Fiscal 2018
Results

Fiscal 2019
Plan

Fiscal 2020
Plan

● Results for fiscal 2018 were steady, significantly exceeding the plan
● Improve menus and strengthen the structure further towardachieving the Fiscal 2018 Medium-Term Management Plan
target of ¥3,000 million
March 2017

September 2017

March 2018

September 2018

March 201913

[Consulting Strategy (Corporate Banking II)]
Strengthen Consulting Functions for Solving Management Issues of Customers
 Strengthen consulting functions which improve regional IT literacy
 Support customers’ business succession through M&A utilizing a broad network centered on the Setouchi region
Business succession through M&As

ICT Consulting Business●Started to provide advice on ICT utilization and support its introduction
from April 2018 for improving customers’ operational efficiency andstrengthening sales abilities[ICT consulting]

Apr.
2018

Number

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

synergy effects are expected based on customer information●Realize matching within a broad area utilizing a broad branch networkand diverse information network[M&A transactions concluded as an advisor]

Accumulated number of consulting provided

Number●Introduce an optimal transaction partner with which* Results from fiscal 2016 to fiscal 2018

Jan.
2019

Feb.

Mar.

Kyushu area
Transferer side: 2 cases
Acquirer side: 2 cases
Total 4 cases

Chugoku area
Transferer side: 7 cases
Acquirer side: 6 cases
Total 13 cases

Number of contracts concluded by term
Fiscal 2018
Actual revenues:¥22 million
First half of
Fiscal 2018 Results

Second half of
Fiscal 2018 Results[Example case] Visualization of internal information throughintroduction of groupware<Customers’ issues>●Leaving schedule control to each
person●Circulation of paper reports?

Shikoku area
Transferer side: 17 cases
Acquirer side: 13 cases
Total 30 cases<ICT consulting>●Sort out issues and ideal vision●Integration of information into
groupware●Implementation of employee training(Millions of Yen)
Revenue (left axis)
Number ofcontracts
concluded (rightaxis)

Kinki area
Transferer side: 1 caseAcquirer side: 1 caseTotal 2 cases

Number of contracts concluded
and consulting revenue(Number)<Effects of implementation forcustomers>●Speedy sharing andutilization of information●Enhancement of ability to respond to
customers

Fiscal 2016 Results

Fiscal 2017 Results

Fiscal 2018 Results

14

[Consulting Strategy (Corporate Banking III)]Strengthen Efforts in Maritime Business Cluster Further strengthen relationships with the maritime industry centered on Ehime Prefecture Contribute to further development of the maritime industry by supporting development of human resources who support the future of the
shipbuilding and shipping industries and technological research through industry-academia-public collaboration
Number of ocean-going vessels owned
by ship owners in Ehime

Construction Results for
Ehime Prefecture

No. 1 in Japan

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

Domestic
operators
1,051 ships

Ehime Ship
Owners
1,063 ships

China

Other

Japan

South Korea

Non-Ehime Ship Owners
1,459 ships
IRC survey (As of September 30, 2018)

Compiled by the Bank based on data from the
四国運輸局・日本造船工業会のデータを基に当ShikokuTransport & Tourism Bureau and The
行が作成(2017年基準)
Shipbuilders'
Association of Japan (As of 2017)

Consortium for Center for Naval Architecture andOcean Engineering,
Ehime University“Bari-Ship 2019” the biggest maritime event inWest Japan■ Transactions with 70% of Ehime ship owners, building strong relations
with ship owners■ Collect timely and high-quality information by increasing opportunities
to communicate with maritime related companies
at domestic and overseas bases and visiting
European operators regularly■ Conduct external dispatch to domestic
operators, trade companies, etc., and use
the trainee system at the Bank todevelop professional human resourcesin the maritime industry(Hundreds ofMillions of Yen)

Loan balance for the maritime industry
For other maritime industry and overseas
For domestic and overseas ocean transport● Local shipbuilding and ship equipment
manufacturers and financial institutions
participated as advisors● Started as a base of professional
education of shipbuilding and joint
research● Shipbuilding and ship equipment
manufacturers, operators, ship owners,
financial institutions, etc., gathered● Gathering of information such as thelatest maritime technologies andservices

Develop human resources to support future
shipbuilding and shipping industries

Collect worldwide industry information andstrengthen relationships with maritime
related companies

March 2017 Results

March 2018 Results

March 2019 Results

March 2020 Plan

15

[Online Business Strategy]
Efforts for Providing Value and Enriching Services through Direct Channels
 Started a trial of the new digital service of home loan “HOME” in January 2019 while expanding branches offering the service gradually Strengthen direct services in areas such as after-sales service and additional sales of insurance products and business transactions (BPR
and loans)
Introduction of “HOME,” the new digital service of home loan
● Realize the digital touch point (customer contact points) and digital
operation (channels not depending on time and place)

HOME TICKETHOMEWeb simulation for aloanable amount

Loan application anddigital loan contracts
through smartphone
applications

Strengthening of approach for personal insurance●Strengthen the after-sales service and additional sales of insurance
products by using DM(Plan to start in July 2019)●The details of the insurance contract and coverage
range are sent by DM● Follow-up call from an “insurance plaza”

Invite to an
insurance
plaza

Introduce theinsurance call canter

Support review of an
insurance contract with
Insurance Robot Advisor◆Consideration, consultation, and additional contracts are possible by any
channel depending on customers’ preferences◆Improve the follow-up rate by a combination of face-to-face channels andnon-face-to-face channels

Bank

Web

Improvement of Web services for businesses
Digital touch point
Loan simulation

Customers

Digital operation
Property selection

House acquisition●Started operation of “AGENT for Business” in April 2019
●Preparation of “receipt and disbursement slips,” “corporate IB application forms” andother forms on the Web and creation of the QR Codes●Simplification of application procedures for customers and bank
employees●Consider making it a portal site for corporations

Housingcompany●Started a trial operation in January 2019, selecting housing

companies and branches to validate normal operations of theservice and the handling and reception system●Aim to improve service functions while expanding branches
offering the service gradually in the summer of 2019 onward●Entirely web-based “Shobai Hanjo(prosperous business)” business loan
(Planned to launch in September 2019)●Improvement of customer convenience andenhancement of revenues

16

[ICT Strategy]
Expansion and Improvement of Touch Point Utilizing Digital Technologies
 Focus on expansion and improvement of digital touch points through efforts on channels, API linkage andpayment services
Renewal of Web channel
Improvement of the API linkage service●Started offering the chatbot service● Started offering a communication tool in January 2019 foranswering inquiries on products and services from
customers 24 hours a day●Expand linkage between the external PFM services andthe Bank’s app●Linkage with “Zaim” in December 2018 and “Moneytree” in May 2019
●Planning to improve services such as expansion of inquiry ranges by starting linkage
with the Bank’s “MoneyManager” app in August 2019
External services

TSUBASA
FinTech Common
Platform

Banks

TSUBASA
Alliance
Banks

App of the Bank

API

●Overall website renewal●Renewed the website system in May 2019
●Completely changed the design so the layout can be easily
operated from tablets and smartphones●Placed a menu and search function from which relevant
information is easily accessible

Strengthening of linkage with cashless payment services●Linkage with J-Coin Pay and external payment
services●Started linkage with “J-Coin Pay” in March 2019 andexpanding member stores●In other external payment services, account linkage started with
“Merpay” and “pring”

 営業支援AIシステム導入

17

[Branch Strategy]

Review Branch Functions Toward Realizing “D-H-D Bank”
 Shift to a “place where customers’ issues are solved” from a “place mainly for administrative tasks” to make “nextgeneration branches” those that are “required even after 10 years”
Next-generation branches
Image of the next-generation branch
Matsuyamakita Branch opened as a pilot next-generation branch in June 2017
Yogo Branch will open in February 2020 through new construction toward realizing a “D-H-D
Bank”

Aim to “shift to a branch centered on the zero line (lobby)”［History of the branch strategy and BPR strategy］‒Eliminate administrative tasks in Bank Branches‒
From February 2017
Call reception concentration andOperation Support Center introduced“Concentrating at headquarters”

From February 2018
Satto Madoguchi (Quick Counter)
introduced“Cashless processing”

Call reception center

Satto Madoguchi[Introduction status]
Completed in all branches in Ehime
Prefecture[Introduction status]
Completed in 47 branches (as of theend of May 2019)

From April 2018
Immediate concentration storage ofstored document started“Concentrating at headquarters”

Shigenobu Document Center[Introduction status]
Completed in all branches

From February 2019
The AGENT System introduced“Digitalization of administrative tasks”

AGENT System[Introduction status]
Completed in 31 branches (as of May 31, 2019)18

[BPR Strategy]

Improvement of Productivity through Utilization of Digital Technologies andConcentration on Headquarters

 Accelerate digitalization of administrative tasks to reduce Bank Branch administrative staff by half and improve
operational efficiency at headquarters
Improving branch administrative processing efficiency
Improving operational efficiency at headquarters◇Promotion of BPR (abolishment and review of operations) and
RPA combined●Digitalization of approx. 40% of administrative tasks at Bank Branches through the● Continue to improve operational efficiency at headquarters to“AGENT” System to become a “bank where procedures are the simplest in Japan”
reduce 5% of headquarters workload (approx. 120,000 hours/year)●Full-scale introduction started in February 2019 and introduction in all branches willcomplete by the end of March 2020
by March 2022
◇Digitalization of Branch’s administrative tasks“AGENT” Counter Reception Tablet(From February 2019)

120,000
hours/year

Web service for corporations(From April 2019)“AGENT for Business”
65,000hours/year

15,000hours/year

Bank Branch administrative staff reduction effectProjected to be about -150 persons◇Concentration of administrative tasks for loans at
headquarters ”Loan Operation Support Center”● Concentrate “administrative tasks” among loan procedures at Bank

Branches on the headquarters●Started trials at the Head Office, Business Department in the Head Officein April 2019 and aim to complete introduction by February 2022
Loan Operation Support Center

Bank
BranchBank
BranchBank
Branch◆Target procedures

16 types of procedures including “corporate
examination,” “self-assessment,” and “preparation ofcontracts”◆Person in charge
Gradual transfer of personnel from Bank Branches[Effects]
Reduction of 89 persons in charge of loans ⇔25 persons deployed at the Loan Operation Support
Center⇒ “Strategic redeployment of 64 persons”

September 2018
Results

23,000hours/year

March 2019
Results

March 2020
Plan

◇BPR+RPA at headquarters●Promote with a “person in charge of

operational efficiency” placed at eachdivision and office at headquarters●Arrange structures for developing RPA at
the Bank
Reduced approx. 23,000 hours/year of workat headquarters (as of March 31, 2019)

Aim for further
advancement byintroducing
server-type RPA

March 2022
Plan

◇Other efforts●Improved productivity byrenewing groupware (from
April 2019)

Workflow

Schedulemanagement

Mail

File sharing

Communication

Considering further workload
reduction plans in light of
response to work style reform

19

[Regional Revitalization Strategy]

Revitalization of Regional Economies through Creation of “Business” and“Employment”

 Support revitalization of the regional economy by utilizing new services and strengthening cooperation through the publicprivate partnership and Shikoku AllianceFoundation and Regional Revitalization Businesses Utilizing Crowdfunding●Contribute to creation of regional employment and promotion of140th anniversarycommemorative activity

For projects within Ehime Prefecture that reached target
amounts, the Bank will provide amounts equivalent to 1/2 ofcontract fees (maximum ¥250,000; total 140 projects)
Projects results◎22 projects were organized, among which, 18 projects achieved targets (as of April 30,
2019)◎Half of organized projects are related to the disaster due to torrential rain in WestJapan, contributing to recovery and restoration[Examples of projects and achievement rates to the target amount]
Project name

Achievement rate

Area

Opening of a store generating smiles with macaroons andchocolates

186%

New foundation

Whetstones in Tobe, Ehime are born from the Earth.
“SHOMA” is a calcinated whetstone that can be created
only by a whetstone mining company!

428%

New product andservice

Opening of an ume (plum) orchard for making Matsuno
Town in Ehime Prefecture an “ume town”!

141%

Regional
revitalization

Want to communicate attractiveness of wool of which
value has been reconfirmed at the occasion of torrential
rain in west Japan!

227%

Regional
revitalization(disaster
restoration)

Cymbidiums, which we are proud of. Restoration of aflower farm

141%

Regional
revitalization(disaster
restoration)

177%

Regional
revitalization(disaster
restoration)

A historic 97-year-old warehouse was flooded. We wantto continue making sake in Ozu, our hometown!

Ano-kono Ehime

migration through “Ano-kono Ehime,” a comprehensive job andmigration information website for Ehime utilizing IoT under apublic-private partnership
Certified as a “‘Unique effort’ made by financial
institutions, etc., contributing to regional revitalization”
by the Cabinet OfficeTransmit information about the latest job
and migration information and regional
life by utilizing IoT and the latest web
technologies

More than 3,000 cases of job matchingwere achieved per year

Shikoku Alliance(Comprehensive Cooperation Among
Four Regional Banks in Shikoku)●Hands-on investments have steadily increased underthe ”Shikoku Alliance Capital Co., Ltd” fund managementcompany, which was jointly established by four banks●The four banks’ affiliate think tanks are jointly conducting a“Survey of current status and issues of accommodation
facilities for Henro”●Demonstration tests utilizing AI began toward advancing
business matching and increasing success rates

20[Market Strategy I]
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 the market environment
 Ensure future investment capabilities by temporarily limiting balances according to the investment environment Plan ¥19.0 billion in gain on securities management by risk taking through foreign currency bonds (with/without forex hedges)

New Investment Policy by Risk Category(Risk category)(New investment policy)

Yen-denominated
bonds

Not
changeForeign bonds (withIncrease
forex hedges)
Foreign bonds(without forex

Gain on Securities Management and Yield●Gain on securities management (after deduction of procurement cost)

Increase

Keep a certain amount as assets inversely correlated with stocks, whilein view of interest trends.
In a continuing low interest environment in Japan, keep the balance as a bondincluding foreign bonds with hedges.
Consider investment with forex risk to secure profit from carry trading asdifference between short-term and long-term interest rates is shrinking (withstrategic re-balancing implemented as well).

Fiscal 2017
Results
Gain on securities
management●YieldFiscal 2019
Plan (vs. Medium-Term

Fiscal 2018
Results

25.1

Management Plan )20.8(Units: Billions of yen)

Fiscal 2020
Plan

19.0 (-1.0)

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

Domestic andoverseas
Assess and classify strategic equity holdings in terms of investment and policy,
stocksDecrease and sell off stocks if the necessity of holding is not recognized.
(including investment
trust)
Alternatives, etc.

NotchangeConsider investment to secure stable carrying and portfolio diversification.
March 2016 Results(Hundreds ofMillions of Yen)

Foreign bonds (with forex
hedges)Alternatives, etc.

Foreign bonds(without forex hedges)

Initial plan

Plan

March 2018 Results

March 2019 Plan

Portfolio Risk Sensitivity and Duration

Balance of Securities at Market Value by Risk Category
Yen-denominated bonds
Domestic and overseas stocks(including investment trust)March 2017 Results●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¥3.5 billion● Foreign bond portfolio
10BPV¥1.4 billion● Stock portfolio
Nikkei Stock Average ¥1,000V ¥12.8 billion● Forex portfolio
USD/JPY ¥10V
¥4.0 billion(*As of March 31, 2019)●Duration
8 years

6 years
4 years
2 years

Balance atMarket Value

March 2017
Results

March 2018
Results

March 2019
Results

March 2020
Plan

March 2021
Plan

0 years

Yen-denominated bonds
Foreign bonds(with forex hedges)
March 2017 Results

March 2018 Results

March 2019 Results

March 2020 Plan

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

21

[Market Strategy II]
Ensure Earnings from Market Investment; Stabilize Foreign Currency Procurement
 The loan balance has steadily increased in growth areas including the Singapore Branch and Financial Market Business
Office, contributing to improvement in profitability
 Aim to stabilize the foreign currency portfolio by diversifying and stabilizing foreign currency procurement in response to
an increase in foreign currency loan amounts
Status of Foreign Currency Investment and Procurement(March 31, 2019)

Singapore Branch(Hundreds ofMillions of Yen)

(Millions of Yen)

Year-end balance (left axis)
Gain (right axis)● Increase stability through strengthening foreign currency deposits and leveling longterm procurement● Partially making short-term procurement from perspective of cost, paying attention
to liquidity● Primarily use repo procurement for securities related procurement

Procuremen Investment
t<Loans + Market Investment (Securities) >March 2018
Results

March 2019
Results

March 2020
Plan

Financial Market Business Office(Millions of Yen)

Long-term
procurement

Deposits, etc.

Repo
procurement

Strengthening anddiversification of foreign
currency procurement<Only Loans>

Procurement

Investment

Gain (right axis)

March 2019
Results

Short-term
procurement

Mainly assets with highliquidity

50% or more
●Sufficient liquidity is secured for loans through deposits, long-term procurement, andcommitment lines ⇒ Liquidity gap is negative (excessive procurement)●While the stability gap is positive (excessive investment), this is partially covered byshort-term procurement considering the characteristics that the majority of loans are
multi-currency loans (similar to short-term loans)

Year-end balance (left axis)

March 2018
Results

Securities, etc.

●Proportion of deposits and long-term procurement in total procurement maintained

March 2021
Plan

(Hundreds ofMillions of Yen)

Loans

March 2020
Plan

March 2021
Plan

Of which, multi-currency loans (Currencychange option granted)

Loans

Liquidity gap is negative(excessive procurement)

Stability gap is positive(excessive investment)
Deposits, etc.

Effectively short-term
Loans →Partially covered byshort-term procurement

Long-term
procurement

Commitment
line

Liquidity gap: Loans - (deposits, etc. + long-term procurement + commitment line)
Stability gap: Loans - (deposits, etc. + long-term procurement)22[Personnel Strategy]

Develop Organizational Culture of Proactive, Mutual Enhancement
 Develop organizational culture through implementation of “human resource development and work style reform ”
Development of human resources who can offer value to customers
Active support for“challenge” and “growth”● Support toward “skill upgrading and shifting”● Change to an “evaluation system fordeveloping human resources”● Revision of the “incentive systemfor obtaining official
certifications, etc.”● Reconstruction of thedevelopment process through“Revision of the training
system,” etc.

Development of
human
resources who
can offer value
to customers

Realization of flexible and productive working style
Realization offlexible working style●Expanded target personnel of the
flextime system to all divisions,
offices and branches

２● Smart Working Challenge (Whole bankactivity toward the work style reform)

Realization of both “flexible and productive working style”
and “optimal working hours”
Improvement of operational efficiency by utilizing digitaltechnologies

Building a diversified
organization●Domestic and overseas dispatch of
personnel● Recruitment of personnel from “digital” and“securities” industries●Recruitment of retired persons frommanufacturers

Promotion of work-life management●Introduced the work time interval system<Status of overtime work>
19.2
hours

Jan. to Dec. 2015

18.3
hours

13.8 hours

Jan. to Dec. 2016

Jan. to Dec. 2017

6.6 hours

Jan. to Dec. 2018

*Average values for non-management or supervisory employees for overtime worked under the Labor Standards Act◆Acquisition of highly specialized know-how<Status of paid leave utilization rate>◆Improvement of IT literacy in the Bank
◆Sharing of diversified knowledge

Exchange with external personnel through various alliances, etc.
TSUBASA Alliance“Diversity Mission”

Shikoku Alliance“Next Generation Leader
Training Session”

Jan. to Dec. 2015

Jan. to Dec. 2016

Jan. to Dec. 2017

Jan. to Dec. 2018

Promotion of Health and Productivity Management◆ Recognized under the 2019 Certified Health & Productivity
Management Outstanding Organizations Recognition Program (White
500) of Ministry of Economy, Trade and Industry(Two consecutive years)

23

Efforts for ESG and SDGs
 Announced ”TSUBASA Declaration on SDGs” under the
TSUBASA Alliance in May 2019
Chiba Bank

Chugoku Bank

Local
economyandcommunity

Financialservices

TSUBASA
Declaration
on SDGs

Iyo Bank Environment Foundation “Evergreen” (Public Trust) (established in
2008)●Supporting activities for restoration and development of the environment
while preserving the natural environment●Cumulative total of approx. ¥51 million granted to 139 recipients

Daishi Bank

HokuetsuBank
Aging
population“Iyo Bank Evergreen Forest” Activities (started in 2008)
The Toho
Bank, Ltd.

The Iyo Bank,Ltd
Environmental
protection

Environment
 Hand over a rich, beautiful nature to the next-generation through active
environmental preservation activities

Diversity

North PacificBank
Shiga Bank

Musashino
Bank“TSUBASA Declaration on SDGs”

In line with the Sustainable Development Goals (SDGs) adopted by the United Nations, the
TSUBASA Alliance hereby declares that it will utilize the knowledge it has gathered on thecommon local issues listed below, as mutually recognized by each member bank, to tackle
social and environmental issues in its respective localities in order to achieve sustainablegrowth in the region - which is one of the Alliance's main objectives.

●Conducted forest cultivating activities

under a partnership entered with Ehime
Prefecture, Ozu City, and Forest Fund of
Ehime.
●Contributed to maintaining the local
environment by working together with
the Shikoku Alliance banks

Social Realize a lively local community via locally-based measures rooted in theregionIyo Bank Social Welfare Fund (Public Interest Incorporated Foundation)(established in 1976)●Increased scholarships and scholarship
recipients as part of 140th anniversarycommemorative activity●Cumulative total of ¥632 million granted as
scholarship and welfare equipment
Iyo Bank Regional Cultural Activity Assistance Program (established in 1992)

1. Local economy andcommunity
2. Aging population
3. Financial services
4. Diversity
5. Environmental
protection

Contribute to the vitalization of local economy andcommunities
Support peace of mind and safe living for the elderly
Provide financial services for a better life
Promote diversity and work reforms
Contribute to the preservation of a sustainable
environment●Part of funds for carrying out “grassroots” cultural activities in Ehime
granted to the related parties●Cumulative total of ¥222 million granted to 1,168 groups24Efforts for ESG and SDGs
 Build structures that secure transparency and objectivity by strengthening corporate governance Conduct thorough examination and verification as well as strict risk management for contributing to countermeasuresagainst money laundering and terrorism funding

GovernanceCorporate governance structureManagement
Deliberation
Committee
Consult
Deliberation on the nomination ofand compensation for Directors,
etc., and important mattersregarding management

Countermeasures against money laundering and terrorism funding

Advisory Board
Report(Business Execution)
Directors

Evaluation and advice on the Bank’s
management strategy andgovernance

Board ofDirectors

Audit and Supervisory
Committee

Audit and Supervisory Committee●Screening of transaction parties based on approx. 3.8
million pieces of the latest profile information●Examination utilizing a database covering 70,000 listedcompanies and 300 million unlisted companies in 212
countries and regions◆ Examination of negative information reported overseas in thepast◆ Comprehensive examination of officers, shareholders andsubstantial controllers of overseas business associates
Strict risk management

Independent Outside
Directors
Independent Outside
Directors

Thorough examination andverification

Internal
Directors◆1/3 or more of Directors are Independent Outside Directors◆Appointment of female Directors◆Strengthening of audit and supervision functions and revitalization of
the Board of Directors●Conduct ship monitoring by utilizing more than 2,200
shore antennas and more than 50 satellites under ship
finance, the Bank’s strength◆Entrance into each sanction area monitored inreal time◆Strict risk management for ship financing

25

Profit / Loss Forecasts for Fiscal 2019 Interest and dividend income to decrease year-on-year due to decreases in gain on securities management despite anincrease in gain on loan management
 Fees and commissions to increase due to increases in revenue on assets in custody, etc.
 Net income to maintain at a certain level despite each income level is forecast to decrease year-on-year(Units: Billions of yen)

Fiscal 2018
results

Intermediate
results

Core businessgross profit

38.8

76.1

Fiscal 2019 forecast
Intermediate
results

YoY

37.0

(1.8)

Factors Contributing to Increase / Decrease inCore Business Gross Profit (Fiscal 2019 - Fiscal 2018)(Units: Billions of yen)

Gain on loan
management(¥47.5 billion)

YoY
74.5

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

(1.7)
Interest anddividend
income(¥64.5 billion)

Of which, interestand dividend
income

34.2

66.4

31.9

(2.3)

64.5

(1.9)

Of which, fees andcommissions

3.6

7.0

3.7

+0.1

7.5

+0.4

Expenses ( - )

25.1

50.3

26.0

+0.9

51.5

+1.1

Of which, personnel
expenses

13.3

26.3

13.1

(0.2)

26.4

+0.1

Of which,
nonpersonnel
expenses

10.1

21.0

11.1

+1.0

21.9

+0.9

Core business net
income

13.7

25.8

11.0

(2.7)

23.0

(2.8)

Fees andcommissions(¥7.5 billion)

Credit costs ( - )

0.8

5.8

2.8

+2.0

5.5

(0.3)

+0.4

Gain (loss) related
to securities

2.4

4.1

3.1

+0.7

5.6

+1.4

Ordinary income

16.5

26.3

12.5

(4.0)

25.0

(1.3)

Net (intermediate)
income

11.4

18.2

9.0

(2.5)

17.5

(0.8)

Core businessgross profit(¥74.5 billion)

(1.9)

(1.7)

+1.0
Gain onsecurities
management(¥17.7 billion)

(3.0)
Other
(-¥0.7 billion)

Volume factors +2.3
(Average loan balance up¥215.4 billion)
Yield difference factors, etc.
(1.3)
(Yield difference down 0.03%)
Volume factors (0.5)(Average securities balance
down ¥38.2 billion)
Yield difference factors, etc.
(1.7)
Gain on fund cancellation
factors (0.8)+0.1
Increase in revenue on assets in custody,
etc.

Other
(¥2.5 billion)

(0.2)
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 affectfuture business results. Future business results may differ due to changes in the management environment, etc.

Iyo Bank Fiscal 2018 Earnings Briefing:
Reference Materials

Niihama Taiko Festival
One of the three major festivals in Shikoku held in every
October deeply impresses spectators with luxuriously
decorated floats called “taiko-dai (taiko drum-shaped floats),”
which are shouldered and carried by festival participants.
It is also famous as one of the “three major Kenka festivals inJapan” and many tourists from inside and outside of Ehime
visit this festival.

June 7, 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

6◎Market Strategy: Management by Risk Category

15◎Industrial Structure of the Setouchi Region

7◎Status of Integrated Risk Management

16◎Economic Indicators of the Setouchi Region I

8◎Dividend Trends and Shareholder Benefit Program

17◎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, 2,798 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)

14.38%

Consolidated subsidiaries

15 companies

Consolidated employees (excluding temporary staff)

3,147 persons(As of March 31, 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

FukuokaOita

Within Ehime:
117 branches

Tokushima

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 March 31, 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[Consolidated](Units: Millions of Yen)

Fiscal2018

YoY

Increase/
Decrease

Fiscal2017

Consolidatednonconsolidate
Difference(Note)

Ordinary revenue

126,286

5,301

＋4.4%

120,985

19,064

Ordinary income

28,658(7,441)(20.6)%

36,0992,309

Profit attributable to owners ofparent18,527(5,112)(21.6)%

23,639265(Note) The difference between
consolidated and nonconsolidated.

List of Iyo Bank Group Companies
Banking business

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

Iyogin Venture Fund Corporation Limited IV

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

Iyogin Venture Fund Corporation Limited V

Investment business to venture firms

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

Iyo Bank

Iyogin Venture Fund Corporation Limited VI
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.

Iyogin DC Card Co., Ltd.

Iyogin Challenge & Smile Co., Ltd.

Leasing business1 consolidated
subsidiaryOther

2 consolidated
subsidiaries

1 non-consolidated non-equity method subsidiary
2 non-equity method affiliates

Iyogin Leasing Company Limited
Iyogin Computer Service Company Limited
Shikoku Alliance Securities Co., Ltd.
Iyogin-Ehime University Originated Venture Support Fund Investment Business
Limited Partnership

Investment business to venture firms (Established on July 2, 2018）
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.
Credit card business, guarantee business, etc.
Manufacturing business for office supplies, etc. (Establishedon April 2, 2018)
Lease business, etc.
Consigned information processing business, softwaredevelopment business, etc.
Securities business (Changed trade name on April 2, 2018 (former company
name: Iyogin Securities Co., Ltd.))
Investment business in startup companies originating in
Ehime University

Iyogin REVIC Investments Co., Ltd.

Investment fund management business

Shikoku Alliance Capital Co., Ltd.

Investment fund management business(As of March 31, 2019)4

Main Industries in Ehime Prefecture Industries with top national share concentrated in each region
 Manufactured product shipments from Ehime Prefecture totaled ¥3.8 trillion (45% of Shikoku) in 2016

Imabari Region…Total national share of Ehime Prefecture

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

29.8%

62.7%

(1,063 ships)(¥34.5 billion)

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)

Niihama and Saijo Region

No. 1 in Japan
Towels (2016)¥55.1 billion shipped in Japan

Shikokuchuo Region

Manufactured product shipments(2016)¥1,422.1 billion

Approx. 37% of shipments of manufactured
products in Ehime
Particularly in the Niihama area, as a corporate town
under the Sumitomo Group, nonferrous metal,
chemicals, steel, machinery and equipment areconcentrated(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)

7.9%(¥574.6 billion)

No. 2 in Japan
Pulp and paper industry (2016)¥7,273.1 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)

OthersGeneralpurpose
machineryTransportation
machineryMatsuyama
Coal and oil ¥371.4 billion Production
machinery

OthersImabari¥857.3 billion

Chemicals

FibersFood

Food
General-purpose
machinery

MetalsFibersOthersOthersPlastics
Production
machinery

Plastics
Saijo¥719.7 billion

Nonferrous
metal

Generalpurpose
machinery

Nonferrous
metal
Niihama¥702.4 billion

Beverages
and tobacco
Steel

OthersFood
Production
machinery

Electric
machinery

Chemicals(Note 1) Prepared by Iyogin Regional Economy Research Center, Inc. (IRC) based on the Census of Manufacture 2017 (2016 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.”

Plastics

Shikokuchuo¥668.0 billion
Pulp, paper, andpaper processing
products

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

Shikokuchuo

Citrus, food processing
Paper manufacturing
and processing

Ozu
Yawatahama
Oita

Chemicals, electronics,
nonferrous metal,
general machinery

UwajimaSteel, automotive,
electronics, tourism

Culture fishery7Economic Indicators of the Setouchi Region I
Total population
Total area
(Population(Geospatial Information
Authority of Japan)
estimate)
October 2018
(Persons)

2018
（ｋ㎡）

Number of offices

Number of employees(Private sector,
excludingpublic sector)(Private sector,
excludingpublic sector)

Prefecture total
production(Nominal)

2016(Offices)

2016(Persons)(Millions of yen)

Ehime
KagawaTokushima
Kochi
Oita
Fukuoka
Yamaguchi
Hiroshima
Okayama

1,351,783
962,032

5,676
1,877

735,970
706,126

4,147
7,104

1,143,585
5,107,267
1,370,424

6,341
4,987
6,113

2,817,157
1,898,237

8,480
7,114

61,385127,057
79,870Total of the above nine
prefectures (A)16,092,581

51,837(A)/(Ｃ)
Hyogo

12.7%
5,484,375

Total of ten prefectures (B)(B)/(Ｃ)
National total (Ｃ)Prefectural
incomeper capita
Fiscal 2015
(Thousands of yen)

46,774

566,761
429,167

4,915,526
3,777,955

＋ 1.1
＋ 0.2

2,535
2,925

35,85335,366

301,688279,196

3,083,714
2,399,735

＋ 0.5
＋ 1.4

2,921
2,532

52,973
212,649

483,206
2,236,269
577,791

4,378,232
18,861,095
5,870,248

(0.2)
＋ 2.1
(6.3)

2,619
2,724
2,774

1,302,074
820,656

11,941,081
7,787,894

＋ 2.8
＋ 2.9

3,074
2,744

715,237

6,996,808

63,015,480

13.7%
8,401

13.4%
214,16912.3%
2,203,102

11.5%
20,494,996

＋ 0.9

2,752

21,576,956
17.1%

60,23815.9%

929,406
17.4%

9,199,910
16.2%

83,510,476
15.3%

126,443,180

377,974

5,340,783

56,872,826

546,550,491

＋ 1.6

3,190

Total of ten
prefectures
17.1%

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

63,310Fiscal 2015

Prefectural
gross
product growthrate (Real)Fiscal 2015（％）

Total of nine
prefectures(excluding Hyogo)

12.7%

Total population(Population
estimate)(October 2018)

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
shipments
2017

Annual wholesale
sales amount

Annual retailsales amount

2016

2016

(Millions of yen) (Millions of yen) (Millions of yen)
3,814,248
2,511,264
1,528,554

EhimeKagawaTokushima
Kochi
Oita
Fukuoka
Yamaguchi
Hiroshima
Okayama

Industrial
production index(annual average)
2017

Number of new
housing starts
2018

2010=100
93.3(Homes)7,178

Jobs-toapplicants ratio(annual average)
2018

Overallunemployment
rate
2018

(Times)

（％）
1.61

1.7

2,462,495
1,700,234

2,619,010
904,487

1,169,352
757,121

99.7
108.2

5,913
4,335

1.79
1.45

2.2
1.9

567,796
3,694,883
9,250,306

874,256
1,344,689
16,970,699

753,371
1,235,257
5,864,032

100.5
94.1
115.4

3,288
7,549
40,704

1.27
1.54
1.60

2.5
2.0
2.9

5,609,000
9,941,466

1,641,957
9,166,762

1,488,895
3,309,726

96.2
110.5

8,369
18,434

1.58
2.05

1.8
2.3

7,091,936

3,543,971

2,093,111

93.4

13,118

1.95

2.3

44,132,364

39,577,095

18,199,419(A)/(Ｃ)
Hyogo

14.6%
15,105,350

9.1%
10,219,241

12.5%
5,726,476

1.43

2.6

Total of ten prefectures (B)(B)/(Ｃ)59,237,714
19.6%

49,796,336
11.4%

23,925,895
16.5%

National total (Ｃ)302,185,204

436,522,525

145,103,822

1.61

2.4

Total of the above nine
prefectures (A)Total of ten
prefectures
19.6%

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

Total of nine
prefectures(excluding Hyogo)

14.6%

Manufactured
product
shipments(2017)

108,888
101.4

11.6%
31,245140,133
14.9%

102.0

942,370

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 50m 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 of shipping
tonnage

19 yearaverage
2,345

Maximum value
11,793 (May 2008）

Minimum value
290（February 2016）
Recent value 692(March 2019)

Plan
Source: Clarkson Shipping Intelligence Weekly (April 2019)●Dry bulk transport demand and supply●Shipping tonnage of dry bulk vessels increased by 23.8 million tons or 2.9% in
2018, remaining at a similar level as in the previous year. The volume of cargo
movement was limited to a 2.7% increase due to US-China trade friction
despite steady growth at the start of the year.
●The forecast of the growth rate of shipping tonnage is approx. 4.3% in 2019 as
36.5 million tons of new ship construction is expected. However, cargo
movement is expected to grow at 2.1% due to the slower economy in China,
which indicates a divergence. Meanwhile, a market recovery is expected as
shipping tonnage self-adjusts, if scrapping of aging ships is accelerated due toenvironmental regulations beginning in 2020.

●Future market outlook●Cargo movement has slowed since the early fall of 2018. This is possibly owing
to growth in the volume of cargo movement slowing down due to US-China
trade friction, a decreasing rate of economic growth in China, expanding
domestic demand in China, and a lower volume of coal imports due toenvironmental concerns.
●In 2019, the capesize spot market recorded the lowest in the last two years,
affected by suspended operation of a mine owned by Vale (Brazil) due toburst of a dam and hurricanes in Australia.
●A market recovery is expected if ship scrapping is accelerated due to factors
such as sluggish market conditions and environmental regulations; however
there are some uncertainties such as the effects of protectionism in the US.
●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; however, it has been
unusually weak at an average of 673 during the most recent three months.

11

Breakdown of Balance of Loans and Deposits at End of Period
1.Breakdown of balance of loans at end of period(Units: Billions of Yen)

March 2014
Total loans

March 2015

March 2016

March 2017

March 2018

March 2019

Vs. March 2018

3,725.3

3,869.9

3,911.1

4,043.3

4,292.6

4,550.8

258.2

3,520.1

3,644.0

3,677.4

3,802.3

4,054.6

4,310.7

256.1

Corporate loans (incl. overseas, etc.)

2,601.7

2,712.6

2,717.0

2,807.4

3,030.6

3,238.2

207.6

Corporate loans (domestic branches)

2,601.7

2,712.6

2,717.0

2,806.0

2,965.5

3,135.8

170.3

918.3

931.4

960.3

994.9

1,024.0

1,072.4

48.4

672.6

681.8

700.0

723.8

742.6

781.0

38.4

157.5

161.7

173.3

184.0

191.3

202.2

10.9

27.9

28.3

28.6

29.6

29.6

28.3

(1.3)

205.3

225.9

233.8

241.0

238.1

240.1

2.0

General loans

Individual financing
Housing loans

Apartment and building loans

Card loans
Municipal loans, etc.

(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
March 2014

Total deposits, etc. + assets in custody A

Total deposits, etc.
Total deposits
Individual
General companies
PublicFinancial
Overseas / offshore
NCD
General companies
PublicGeneral company funds (incl. NCD)

Public funds (incl. NCD)

Foreign currency deposits (balance)
Individual deposits+individual assets in custody

Individual assets

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

Public bonds

Investment trusts

Single premium policies
Financial product intermediary
Shikoku Alliance Securities balance Ｃ

March 2015

(Units: Billions of Yen)

March 2016

March 2017

March 2018

March 2019

Vs. March 2018

5,590.5

5,639.4

5,676.5

5,789.1

5,889.0

6,070.6181.6

5,215.8

5,281.7

5,343.1

5,457.0

5,546.0

5,712.6

166.6

4,819.3

4,916.9

5,018.0

5,006.8

5,099.6

5,247.1

147.5

3,270.4

3,328.4

3,348.3

3,354.6

3,392.1

3,423.6

31.5

1,322.1

1,356.9

1,397.6

1,434.4

1,442.0

1,555.4

113.4

156.4

170.5

204.0

146.6

164.4

126.4

(38.0)

59.2

43.7

44.0

36.0

53.8

61.0

7.2

11.4

17.4

24.1

35.2

47.3

80.5

33.2

396.4

364.8

325.1

450.2

446.4

465.5

19.1

332.3

309.5

295.9

354.7

375.4

348.2

(27.2)

64.2

55.3

29.2

95.5

71.0

117.3

46.3

1,654.3

1,666.4

1,693.5

1,789.1

1,817.4

1,903.6

86.2

220.6

225.8

233.3

242.1

235.4

243.7

8.3

118.7

104.2

102.9

97.1

118.3

111.0

(7.3)

3,623.8

3,665.5

3,665.6

3,673.2

3,722.5

3,769.1

46.6

3,270.4

3,328.4

3,348.3

3,354.6

3,392.1

3,423.6

31.5

353.4

337.1

317.2

318.6

330.4

345.4

15.0

374.8

357.6

333.4

332.0

343.0

357.9

14.9

81.8

59.9

40.1

27.2

25.4

22.4

(3.0)
(3.0)

108.3

107.5

93.5

85.1

71.6

68.6

167.0

171.1

184.9

191.5

206.2

215.7

9.5

17.7

19.2

14.9

28.3

39.7

51.0

11.3

62.2

106.2

131.5

163.7

201.4

199.5

(1.9)

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

437.0

463.8

464.9

495.8

544.4

557.4

13.0

Assets in custody composition (Ｄ/Ａ+Ｃ)

7.7%

8.1%

8.0%

8.3%

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, %)March 2015

March 2016

Composition

Manufacturing

March 2017

Composition

March 2018

Composition

March 2019

Composition

Vs. March 2018

Composition

Balance

Rate of balance
increase/decrease

600.8

15.5

593.8

15.2

583.0

14.4

611.7

14.5

643.0

14.5

+ 31.3+ 5.1%

Agricultural

2.6

0.1

2.8

0.1

2.8

0.1

2.6

0.1

2.7

0.1

+ 0.1

+ 3.8%

Forestry

0.1

0.0

0.1

0.0

0.2

0.0

0.3

0.0

0.3

0.0

+ 0.0

+ 0.0%

Fishing

13.4

0.3

12.6

0.3

13.8

0.3

12.1

0.3

11.3

0.3

(0.8)

(6.6)%

Mining

3.3

0.1

9.0

0.2

8.8

0.2

8.7

0.2

8.6

0.2

(0.1)

(1.1)%

122.9

3.2

116.0

3.0

112.6

2.8

112.9

2.7

116.3

2.6

+ 3.4

+ 3.0%

Electricity, gas, heat provision, water

89.6

2.3

92.9

2.4

92.9

2.3

108.1

2.6

134.0

3.0

+ 25.9+ 24.0%Information communications

28.5

0.7

28.1

0.7

28.8

0.7

21.8

0.5

22.0

0.5

+ 0.2

+ 0.9%

Transportation

655.6

16.9

615.2

15.7

629.9

15.6

679.7

16.1

717.9

16.1

+ 38.2+ 5.6%

554.7

14.3

511.3

13.1

510.3

12.6

542.1

12.8

580.3

13.0

+ 38.2+ 7.0%

Wholesale and retail

485.6

12.5

466.7

11.9

471.2

11.7

469.4

11.1

511.6

11.5

+ 42.2+ 9.0%

Finance and insurance

160.7

4.2

170.5

4.4

192.7

4.8

205.7

4.9

200.2

4.5

(5.5)

(2.7)%

Real estate

183.5

4.7

198.0

5.1

221.4

5.5

255.6

6.0

270.5

6.1

+ 14.9+ 5.8%

Various services

353.7

9.1

382.5

9.8

412.7

10.2

435.1

10.3

438.5

9.9

+ 3.4

+ 0.8%

166.4

4.3

169.6

4.3

181.3

4.5

193.7

4.6

192.2

4.3

(1.5)

(0.8)%

Construction

Of which, ocean transport

Of which, medical-related
Regional public entities

224.8

5.8

232.9

6.0

240.2

5.9

232.7

5.5

234.8

5.3

+ 2.1

+ 0.9%

Other

944.7

24.4

989.3

25.3

1,030.8

25.5

1,071.2

25.3

1,136.1

25.5+ 64.9+ 6.1%

3,869.9

100.0

3,911.1

100.0

4,041.8

100.0

4,227.5

100.0

4,448.4

100.0+ 220.9+ 5.2%

Total(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 year ended March 31, 2019, excluding “goods rental,” was ¥251.6 billion, which is an increase of ¥13.5 billion (+5.7%) compared with theyear ended March 31, 2018.
In addition, “other” includes “home renting by individuals” (¥210.8 billion for the year ended March 31, 2019).
* As “ocean transport” displays balances applicable to the “ocean transport industry” according to Japan Standard Industrial
13
Classification, this figure does not match “Loan balance for the maritime industry” on page 15 of the Earnings Briefing.

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
上段:債務者数
Lower row: Credit amountMarch 31, 20192019/3月末(Hundreds of millions
下段:与信額（億円）
of yen)March 31, 2018
0
1
8
/

3

月
末

Borrowers
要管理先
under
strictobservation

Borrowers at
risk of
破綻懸念先
bankruptcy

Substantially
実質破綻先
bankrupt
borrowers

Bankrupt
破綻先borrowers

Improvement
好転

Degradation
劣化

below

20,015

18,175

17,604

503

21

27

14

6

0.23%

571

31,052

31,37030,472

861

12

23

1

1

0.08%

897

Borrowers
その他
requiring
close
要注意先
monitoring

1,913

1,829

454

1,300

19

48

3

5

2.93%

454

75

3,650

3,597

846

2,611

45

88

0

7

2.61%

846

140

Borrowers
understrict
要管理先
observation

134

123

12

11

91

6

3

0

6.72%

23

9

246

238

16

8

202

10

1

0

4.46%

25

11

Borrowers at
破綻懸念先
risk ofbankruptcy

288

253

12

20

8

196

9

8

40

17

429

393

4

20

8

332

21

7

32

28

Substantially
実質破綻先
bankrupt
borrowers

98

76

2

0

0

0

68

6

2

6

19

14

0

0

0

0

13

1

0

1

31

16

1

0

0

0

0

15

1

9

4

0

0

0

0

0

3

0

22,47920,472

18,085

1,834

139

277

97

40

520

678

35,40435,61531,339

3,500

267

453

37

19

904

1,078

Normal正常先
borrowers

2

Borrowers
Normalrequiring close
正常先その他要注意先borrowers
monitoring

Total
合計

Rate ofdegradation to
破綻懸念以下at risk ofへの劣化率orbankruptcy

Bankrupt
破綻先borrowers（注１）2018年3月末において各債務者区分に属していた債務者が、2019年3月末においてどの債務者区分に遷移したかを表示している。
(Note 1) The chart displays the changes in the borrower classification from March 31, 2018 to March 31, 2019.
(Note 2) The balances after changes are the balances after write-offs as of March 31, 2019.
（注２）遷移後の残高は、2019年3月末における償却後の残高である。

14

Market Strategy: Management by Risk Category(Units: Billions of yen)
Year ended March 31, 2019
Risk Category
(*1)

Book

Evaluation

MarketTotal
Vs. Fiscal

profit /Interest and dividend income

Profit / loss

Interest

from purchase,

Procurement

Increase/decrease on

Source of main revenue and profit

balanceComposition

+21.0

857.5

54.1%

(1.2%)

2.6

9.2

9.2

0.0

0.0

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

433.5

+10.9

444.4

28.0%

(3.9%)

(0.3)

4.8

4.8

0.0

0.2

(5.3)

36.5

+0.3

36.8

2.3%

(0.1%)

(0.0)

0.2

0.2

0.0

0.0

(0.2) Steepening yield curve

70.1

+0.3

70.4

4.4%

+0.5%

(0.8)

(0.1)

(0.1)

0.0

0.0

(0.7) Rise in expected inflation rate

Foreign currency bonds (with hedges)

245.3

+5.1

250.4

15.8%

(1.0%)

7.5

1.7

5.3

3.6

(0.1)

+5.8 Difference in long and short term interest on overseas interest

Foreign currency bonds (without hedges)

47.3

+0.1

47.4

3.0%

(1.5%)

2.4

0.9

0.9

0.0

0.0

+1.5 Gain on foreign exchange / interest revenue

135.2+192.2

327.4

20.7%

+1.4%

(3.3)

7.3

7.3

0.0

3.9

(14.6) Growth in domestic companies centered on transaction partners

Alternatives, etc.

92.3

+9.7

102.1

6.4%

+2.3%

6.8

2.5

2.5

0.0

0.2

+4.2

Hedge funds

38.3

(0.1)

38.2

2.4%

+1.3%

(0.4)

0.3

0.3

0.0

0.0

(0.7) Strategic diversification by external consigned management

0.0

+0.0

0.0

0.0%

(0.6%)

0.0

0.3

0.3

0.0

0.0

(0.3) Difference in long and short basis for currency swaps

Real estate-related

40.5

+10.0

50.4

3.2%

+0.9%

7.4

1.9

1.9

0.0

0.2

+5.3 Revenue from real estate rentals and profit from price increase

Private equity

6.3

+0.1

6.4

0.4%

+0.2%

0.3

0.3

0.3

0.0

0.0

+0.0 Rise in enterprise value due to management improvement of unlisted stocks, etc.

Emerging stocks

4.3

(0.2)

4.1

0.3%

+0.0%

(0.4)

0.0

0.0

0.0

0.0

(0.4) Growth and foreign exchange gains in emerging markets

Cat bond

0.0

+0.0

0.0

0.0%

(0.1%)

0.0

(0.0)

0.0

0.0

0.0

+0.0 Revenue from casualty insurance premium

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

1,356.5+228.1

1,584.7

100.0%

-

17.4

20.5

24.1

3.6

4.1

(7.2)

Yen-denominated bonds
Of which, JGBs
Of which, 15-year variableinterest JGBs
Of which, inflation-indexed
JGBs

Domestic and overseas stocks (incl. stock trusts)

Of which, currency swaps

Totalbalancegain / loss

836.4

2017

received

loss (*2)

(*3)

cost

sale, andamortization

gain / loss on
evaluation vs.
Fiscal 2017

*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

206.1

+2.4

208.5

13.2%

+1.8%

3.5

1.4

2.8

1.4

0.3

+2.1 Business continuity of domestic and foreign companies

Securitized products

5.3

+0.0

5.3

0.3%

(0.1%)

0.0

0.0

0.0

0.0

0.0

+0.0 Loan interest revenue from housing loans, etc.

Structured bonds

0.0

+0.0

0.0

0.0%

(0.3%)

0.0

0.0

0.0

0.0

0.0

+0.0 Arbitrage between JGBs and derivatives

211.3

+2.4

213.7

13.5%

+1.3%

3.5

1.4

2.8

1.4

0.3

+2.1

Subtotal

15

Status of Integrated Risk Management[Status of integrated risk management (March 31, 2019)]○ Operational risk
・Calculated by The Standardized
Approach

BufferCommon stock,etc.
Tier 1(Nonconsolidated)○ Market risk (holding period of six
months, 99.9%)

Operationalrisk

Not utilized
Market risk

・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%)
・Business loans, etc.: Monte Carlo
method・Loans for individuals: Analysis method

Credit risk
Risk capital(¥567.7 billion)

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

Risk limit
Second half offiscal 2018(¥310.0 billion)

Risk amountMarch 2019
results(¥191.9 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

Shareholders holding 100 or more but less than 1,000 shares(Yen)

Ordinary
dividend● Grant shareholder

Commemorative
dividend

benefits (Imabari towel)

Shareholders holding 1,000 shares or more

Select one of the following three choices● Goods made in Ehime Prefecture and special goods jointly
designed by the TSUBASA Alliance● Preferential time deposit accounts for shareholders● 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