First Half of Fiscal 2018
Earnings Briefing

Ozu Castle
Ozu City, which underwent significant damage during heavy rainfall inwestern Japan in July 2018, is referred to as the “Little Kyoto of Iyo,” andprovides a charming townscape.
Four sets of turrets remaining from the Edo Period are designated as
National Important Cultural Properties, and the entire castle complex is a
Designated Prefectural Historic Site.

December 7, 2018

IndexI. Summary of Earnings for the First Half of Fiscal 2018

Pg

◎Profit and Loss Conditions for the First Half of Fiscal 20183

◎Factors in Increase / Decrease in Core Business Gross Profit (First Half of 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 / Loss on Securities and Equity Ratio

7

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

Pg

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

9

◎Plans for Loans, Deposits, and Assets in Custody◎[Consulting Strategy (Personal Banking)] Strengthen Consulting Ability and Improve Regional
Awareness◎[Consulting Strategy (Corporate Banking I)] Strengthen Ability to Provide Value Responding toBusiness Stages

10◎[Consulting Strategy (Corporate Banking II)] Further Enrichment of Solutions Menu

13◎[Consulting Strategy (Corporate Banking III)] Strengthen Efforts in Maritime Business Cluster◎[Online Business Strategy] Efforts in Providing Value and Enriching Services through Direct
Channels◎[ICT Strategy] Structures and Foundation Building for Digital Transformation◎[Branch Strategy] Improve Productivity and Strengthen Sales Ability by Reviewing Branch
Functions◎[BPR Strategy] Improve Operational Efficiency by Utilizing Digital Technologies

14◎[Regional Revitalization Strategy] Efforts to Create Regional “Earnings Power” and “Employment”◎[Market Strategy I] Policies and Plans for Securities Investments Considering Correlations, etc. of
Assets◎[Market Strategy II] Ensure Stable Earnings from Market Investment; Stabilize and Diversify
Foreign Currency Procurement◎[Personnel Strategy] Efforts Toward Creating a “Company with Better Working Environment” and“Company with Job Satisfaction”◎Efforts for ESG (Environment and Society)19◎Efforts for ESG (Governance)

24◎Profit / Loss Forecasts for Fiscal 2018

25

11
12

15
16
17
18
20
21
22
23

1

I. Summary of Earnings for theFirst Half of Fiscal 2018

Uchikoza
Uchikoza, constructed in 1916 to celebrate Emperor Taishoʼs ascension to
the throne, was designated as a National Important Cultural Property in2015.
Even today, over 100 years since its construction, it hosts kabuki as well as
bunraku events, and plays a vital role as a base for artistic and culturalactivities.

Profit and Loss Conditions for the First Half of Fiscal 2018
 Although profit was down year-on-year at every income level, a high level of profit was
secured, exceeding the earnings forecast announced in May 2018
Earnings for the first half of Fiscal 2018 (Nonconsolidated) (Units: Millions of yen)First half of
Fiscal 2018

あYoY

Increase/
Decrease(0.3％)First half of
Fiscal 2017

Core business gross profit (Note 1)

38,845(117)

Interest and dividend income

34,244(1,163)35,407

3,613

+398

Of which, revenue on assets incustody

3,215

1,078

+185

893

Other operating income (Excluding
profit/loss associated with bonds
including JGBs, etc.)

986

+648

338

Expenses ( - )25,107+700

Personnel expenses

13,379+62

13,317

Nonpersonnel expenses

10,191

+578

9,613

1,536

+60

1,476

13,737

(817)

893

+259

634

Fees and commissions

Taxes
Core business net income (Note 2)
Credit costs ( - ) ①+②-③
Provision of reserve for general loan
losses ①
Amortization of non-performing loans
②

+2.9%

(5.6％)

38,962

24,407

14,554

(519)

(445)

(74)

1,702

+745

957

289

+41

248

2,488

(1,745)

4,233

116

(103)

219

Gain (loss) related to stock, etc.

2,371

(1,642)

4,013

Other temporary gain (loss)

1,214

+380

834

Recoveries of written off claims ③
Gain (loss) related to securities
Gain (loss) related to bonds including
JGBs

Ordinary income

16,546(2,441) (12.9％)

18,987Extraordinary income (loss)

(266)

(104)

(162)

Income before income taxes

16,279(2,545)

18,824

Net income

11,471(1,676) (12.7％)

13,147

Ordinary revenue

55,386+3,857+7.5％

51,529Business net income

14,373(475)(3.2％)

14,848(Note 1) Core business gross profit: “Business gross profit” excluding profit/loss related to bonds
including JGBs, etc.
(Note 2) Core business net income: Core business gross profit - Expenses

Key factors in increase / decrease, etc. (YoY)
Core business gross profit: Down ¥117 million YoY◎Interest and dividend income down due to a decrease in interest and dividends from securities◎ Fees and commissions up due to increases in revenue on assets in custody, solution-related
commissions◎Other operating income up due to an increase in gain (loss) on foreign exchange transactions, etc.

Expenses: Up ¥700 million YoY◎Nonpersonnel expenses up as system investments increased, etc.

Core business net income down as core business gross profit
decreased and expenses increased, down ¥817 million YoY

Credit costs: Up ¥259 million YoY◎Reversal of reserve for general loan losses increased due to decline of loan loss result◎Amortization of non-performing loans increased due to a decrease in upgrades, etc.

Gain (loss) related to securities: Down ¥1,745 million YoY
Gain (loss) related to bonds including JGBs (Down ¥103 million YoY)
Gain (loss) related to stock, etc. (Down ¥1,642 million YoY)
◎Gain (loss) related to stock, etc., down due to a decrease in gains on salesof securities, etc.

Other temporary gain (loss): Up ¥380 million YoY◎Temporary retirement benefit expenses down
Due to decreases in core business net income and gain (loss)
related to securities, ordinary income decreased, down ¥2,441
million YoY

Extraordinary income (loss): Down ¥104 million YoY
As a result, net income was down ¥1,676 million YoY

3

Factors in Increase / Decrease in Core Business Gross Profit(First Half of Fiscal 2018)
 Although interest and dividend income was down due to a decrease in gain on fund cancellation, gain on loan
management shifted positive
 Fees and commissions were up due to higher solutions-related commissions and revenue on assets in custody, etc.
Year-on-year(First(Half of Fiscal 2018 – First Half of Fiscal 2017))
Gain on loan
(Units: Billions of yen)management(Note) Differences in yield utilize(¥23.3 billion)
yield differences withdeposits, etc.
Interest anddividend income(¥34.2 billion)(1.16)
Core businessgross profit(¥38.8 billion)

Of which, domestic currency(¥20.4 billion)(0.01)

+0.68

+0.69
Gain onsecurities
management(¥11.4 billion)

Of which, domestic currency(¥9.6 billion)(1.71)Of which, foreign currency(¥1.7 billion)

Other(-¥0.5 billion)+0.01(0.14)
Fees andcommissions(¥3.6 billion)

+0.40
Other
(¥0.9 billion)+0.64

Yield difference factors, etc. (1.15) (Yield difference down 0.06%)

Of which, foreign currency(¥2.8 billion)(1.70)(0.12)

Volume factors +1.14 (Average loan balance up ¥208.4 billion)

Volume factors +0.43 (Average loan balance up ¥59.3 billion)
Yield difference factors, etc. +0.26 (Yield difference up 0.15%)
Volume factors +0.33 (Average securities balance up ¥37.5 billion)
Yield difference factors, etc. +0.20
Gain on fund cancellation factors (2.24)(Decrease in gain on cancellation of foreign bond funds without
hedges, etc.)
Volume factors +0.15 (Average securities balance up ¥17.6 billion)
Yield difference factors, etc. (0.14) (Yield difference down 0.12%)

Revenue on assets
in custody(¥1.0 billion)+0.19… Insurance agency commissions +0.23 (including corporate insurance +0.05), etc.

Other(¥2.5 billion)+0.21… Solutions-related commissions +0.11, etc.

… +0.57 from gain (loss) on foreign exchange transactions, etc.

4Conditions in Loans, Deposits, and Assets in Custody “Deposits, etc.,” were up mainly in Ehime Prefecture (+2.2% year-on-year)
 “Loans” were up in all regions (+7.2% year-on-year)
Balance of deposits, etc., by region

4,314.7
236.8
167.8
226.8
129.7
325.9
22.6
5,424.5

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

Balance of assets in custody

Balance at Shikoku Alliance Securities

Sales of Group assets in custody

Sales at the Bank
Sales at Shikoku Alliance Securities

533.5
340.7
192.7
56.0
24.7
31.2

560.3
351.9
208.3
61.8
28.9
32.8

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

+60.3
+1.8
(4.6)
+1.5
+8.7
+31.1
+18.7
+117.7

Increase/
Decrease

+1.4%
+0.8%
(2.7)%
+0.7%
+6.7%
+9.5%
+82.7%+2.2%(Units: Billions of yen)First half of First half of
Fiscal 2017 Fiscal 2018

Group assets in custody
Balance at the Bank

YoY

YoY

+26.8
+11.2
＋15.6
+5.8
＋4.2
＋1.6

Increase/
Decrease

Deposits

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

First half of First half of
Fiscal 2017 Fiscal 2018

Loans

RegionShare within Ehime Prefecture as of September 30, 2018(excluding Japan Post, agricultural cooperatives, etc.)(Units: Billions of yen)

The
Bank
Composition byregion for balance of
deposits, etc.

Regional banksother than the BankTokyo and Nagoya

City banks /Trust banks

Secondregional banks

CreditunionsOverseas,
etc.

Kinki

+5.0%
+3.3%
+8.1%
+10.4%+17.0%+5.1%

Chugoku
KyushuWithin Ehime
Prefecture

Shikoku(Units: Billions of yen)First half of First half of
Fiscal 2017 Fiscal 2018

2,253.4
259.7
274.7
369.1
296.6
574.3
76.8
4,105.0
27.4
4,132.4

2,322.9
280.4
283.8
388.8
335.7
629.8
104.2
4,345.985.5
4,431.5

YoY

Increase/
Decrease

+69.5
+20.7
+9.1
＋19.7
＋39.1
＋55.5
＋27.4
＋240.9＋58.1＋299.1

+3.1%
+8.0%
+3.3%
+5.3%
＋13.2%＋9.7%＋35.7%＋5.9%＋212.0%＋7.2%*Please refer to pages 11 and 12 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 remained at a low level Ratio of disclosed non-performing loans was 1.43%, falling to a record low
Credit costs by factor(Units: Billions of yen)First Half

Fiscal 2015

First Half

Fiscal 2016

First Half of

Fiscal 2017 Fiscal 2018

First Half

YoY

0.7

1.8

(0.2)

0.6

0.6

3.5

0.8

+0.2

Provision of reserve for generalloan losses

(0.6)

(1.3)

0.0

(0.8)

(0.0)

(0.6)

(0.5)

(0.4)

Amortization of non-performing
loans

2.3

4.5

(0.0)

2.4

0.9

4.7

1.7

+0.7

Bankruptcies

0.7

1.4

0.0

0.2

0.3

0.8

0.5

+0.2

Downgrades, etc.

3.6

5.9

2.1

5.0

1.9

6.3

2.3

+0.4

Upgrades and collections

(2.0)

(2.8)

(2.2)

(2.9)

(1.3)

(2.3)

(1.1)

+0.2

Recoveries of written off
claims ( - )

0.9

1.3

0.3

0.8

0.2

0.5

0.2

+0.0

0.05% (0.01%)

0.02%

0.02%

0.09%

0.02%

+0.00P

Credit costs total

Credit management
expense ratio (*)0.02%(*) 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
Loans to bankrupt or effectively bankrupt
borrowers

First Half of
Fiscal 2018

4.2

4.4

3.0

4.1

Doubtful assets

45.5

39.8

44.1

43.6

Credit subject to specific risk management

16.9

18.1

18.0

18.9

Total disclosed non-performing loans

66.7

62.4

65.2

66.7

Ratio of disclosed non-performing
loans

1.64%

1.48%

1.44%

1.43%

6

Conditions in Evaluation Gain on Securities and Equity Ratio Evaluation gain on securities was ¥254.4 billion, maintaining a top class level among regional banks
 Consolidated equity ratio (BIS standards) was 14.63%

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

March
2014

Consolidated Gross Equity Ratio

Nikkei Average (Yen)

March
2015

Gain / loss on
securities

March
March
2016
2017
Nikkei average(right axis)

March
2018

September
2018

March
2014

March
March
March
2015
2017
2016
Tier 1 ratio for common stock,
Gross equity ratio
etc.

March
2018

September
2018(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)

Sadamisaki Lighthouse
The Sadamisaki lighthouse is located at the tip of
the Sadamisaki Peninsula, which is the narrowest
peninsula in Japan. In April 2017, it celebrated its
100th anniversary since it commenced lighting.
Selected as one of the top 50 lighthouses in Japan,
it also serves as a popular attraction for visiting
couples.

Major Numerical Targets of the
Fiscal 2018 Medium-Term Management Plan
 Present progress is 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 2017
Results

Fiscal 2018
Targets

Fiscal 2020
Targets

Core business grossprofit\77.5 billion\75.0 billion\76.5 billion

Fees andcommissions\6.6 billion\7.0 billion\8.5 billion\22.6 billion\18.0 billion\20.5 billion

3.83%

3.0% or more

3.0% or moreCore OHR

63.31%

70.0% or less

65.0% or less

Equity ratio(BIS standard)

14.31% 15.0% or more

15.0% or more

Target Items

Net income
ROE

Ratio of nonperforming loans

1.44%

2.0% or less

2.0% or less9

Plans for Loans, Deposits, and Assets in Custody Deposits, etc., are planned to be increased approx. ¥132.0 billion during the three years of the Medium-Term
Management Plan, with an average balance totaling ¥5,586.0 billion during fiscal 2020
 Loans are planned to be increased approx. ¥499.0 billion during the three years of the Medium-Term
Management Plan, with an average balance totaling ¥4,617.0 billion during fiscal 2020

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

Fiscal2017
results

Forecast

Average deposits, etc., balance

5,453.7

Of which, individual deposits(Units: Billions of yen)

Fiscal 2019

Fiscal 2020
Increase/decrease during
the Plan

YoY

Plan

YoY

Plan

YoY

5,508.0+54.3

5,543.0+35.0

5,586.0+43.0+132.3

3,387.1

3,423.0+35.9

3,435.0+12.0

3,450.0

+15.0

+62.9

Group assets in custody balance(including Shikoku Alliance Securities)

544.4

585.0

+40.6

622.0

+37.0

669.0

+47.0

+124.6

Of which, balance of assets in custody at the Bank

343.0

366.0

+23.0

386.0

+20.0

415.0

+29.0

+72.0

Of which, balance at Shikoku Alliance Securities

201.4

219.0

+17.6

236.0

+17.0

254.0

+18.0

+52.6

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

Fiscal 2018

Fiscal2017
results

Forecast

Average loan balance

4,118.0

Corporate loans
Of which, within Ehime

Fiscal 2019

Fiscal 2020
Increase/decrease during
the Plan

YoY

Plan

YoY

Plan

YoY

4,378.0+260.04,474.0+96.0

4,617.0+143.0+499.02,784.6

2,925.0+140.4

2,948.0+23.0

3,012.0+64.0+227.4

1,254.3

1,292.0+37.7

1,293.0+1.0

1,301.0

+8.0

+46.7

Individual loans

996.5

1,030.0+33.5

1,046.0+16.0

1,077.0

+31.0

+80.5

Municipal loans

236.8

241.0

+4.2

246.0

+5.0

250.0

+4.0

+13.2

Financial Market Business Office

74.4

100.0

+25.6

125.0

+25.0

147.0

+22.0

+72.6

Singapore Branch

25.5

82.0

+56.5

109.0

+27.0

131.0

+22.0

+105.510

[Consulting Strategy (Personal Banking)]
Strengthen Consulting Ability and Improve Regional Awareness Provide services responding to life events and consulting with a high level of expertise in response to“100-Years Life Society”

Strengthening Consulting Structure
Providing services responding to life events

 Opened an “insurance plaza” in Yawatahama and Proposal structure to respond to variable life events
 Realize lifetime transactions that connect affluent

 Placed 77 “insurance consulting staffs” to provide

people with the next generations through financeBank
Insurance Plazas
Branches

Shikoku
Alliance
Securities

Saijo in October 2018, expanding to 12 storesinsurance consulting within Ehime Prefecture Bank Branches(Number of sales)

Level premium insurance sales

First Half of Second Half of First Half of Second Half of First Half of Second Half of
Fiscal 2016 Fiscal 2016 Fiscal 2017 Fiscal 2017 Fiscal 2018 Fiscal 2018
Results
Results
Results
Results
Results
Plan

Loan Plazas

Expand Range of Asset Management by Investment Education

Enrich time-diversified investment through use of savings trusts
Investment education via customer seminars led by Bank
Branch Managers(Number ofaccounts)

Respond to needs of affluent people by placing 136“personnel dedicated to assets in custody” within Ehime
Prefecture Utilize testamentary trusts as an inheritance consultation tool
to deal with issues such as “end of life preparations” and “aging”
in the future Respond to additional complex needs for securities throughbank-securities cooperation with Shikoku Alliance Securities

Trends in number of accounts with investment trust balances, etc. andaccounts at Shikoku Alliance Securities with balances

March 2017
Results

September 2017
Results

March 2018 Results September 2018 Results
The
Shikoku Alliance
Bank
Securities

11[Consulting Strategy (Corporate Banking I)]
Strengthen Ability to Provide Value Responding to Business Stages
 Improve ability to offer value and strengthen fee business through new establishment of “Consulting Business
Division”
 Share our customersʼ management issues through “get to know customers” sales based on business feasibility
assessment to offer smooth financing and solutions for issues

New Establishment of “Consulting Business Division”
Newly established “Consulting Business Division” with the aim ofstrengthening ability to offer value to customers based on the
consulting strategy
 Placed the “Mirai Support Team” within said Division to support
business feasibility assessments at Bank Branches and offer optimalvalue for customers

Results and Plans for Solutions Related RevenueCustomers
Bank Branches
Related Divisions
Credit Division, Corporate Consulting
Division, Ship Finance Division
Lending decisions, funding support(financing)
Management improvement support
International
Division

Overseasbusiness
supportConsulting
Business
Division(Millions of yen)
Other
Corporate life insurance
Business matching
Business succession/M&A
Private placement bonds
Syndicated loans, etc.

Specialist Teams
Business succession
M&A
Financing
Business matching
401k
Craftsmanship support
ICT consulting
Assets in custody
Corporate insurance
Trusts
Etc.

Regional Vitalization Division

Establishment ofbusiness, tourism
Primary sector ofindustry support

External Organizations
Business plan formulation support, etc.

Mirai Support Team
Business feasibility
assessment support

First Half of
Fiscal 2016
Results

Fiscal 2016
Results

First Half of
Fiscal 2017
Results

Fiscal 2017
Results

First Half of
Fiscal 2018
Results

Fiscal 2018
Plan

Fiscal 2020
Plan

 Results for the first half of Fiscal 2018 were steady, withsolutions related revenue at ¥1,125 million

 Strengthen fee business toward achieving the Fiscal 2018

Medium-Term Management Plan target of ¥3,000 million

12[Consulting Strategy (Corporate Banking II)]

Further Enrichment of Solutions Menu
 Diversify earnings power through further enrichment of solutions menu
 Flexibly develop solutions menu in accordance with regional economic conditions and events; reconstruction
support for heavy rainfall disaster in western Japan

Enrichment of Solutions Menu

[ICT Consulting]

To improve customersʼ productivity,
support introduction and use of ICT
toward increasing operational efficiency
and strengthening sales ability[Lease Intermediary Operations]
Provide compound proposals of banklending and lease products to realize
diversified fund procurement forcustomers[Natural Disaster Responsive Financing]

In May 2018, began handling productsthat forgive debt obligation for principalbalance of loans if a contractuallypredefined earthquake occurs[Results]

【実績】
契約年⽉

Contract date

Contract
amount
契約⾦額

2018年7⽉
July
2018¥1.212億円
billion2018年7⽉
July
2018¥1.313億円
billionIndustry

業種

Fund use

資⾦使途

Funds for medical
病院
Hospital 検診センター建設資⾦
examination center
construction
Funds related to
製造業 ⼯場建設関連資⾦
Manufacturing
plant construction

Efforts in Disaster Reconstruction Support
2018 Japan Floods Restoration Support Fund

[Handling Diverse Financing Products]
Began handling diverse financing products inaccordance with customersʼ damage andreconstruction methods, etc.

REVIC Capital“Iyogin Special Fund,” special financing to support
disaster relief“Disaster Related Countermeasure Funds” throughagreement with Ehime PrefectureGroup subsidy bridge loans[Investment in Reconstruction Support Fund]In October 2018, invested ¥0.5 billion in the “2018Japan Floods Restoration Support Fund Limited
Partnership for Investment” to provide human
support and required funds toward reconstruction

1st Close

Fund
schemeIyo Bank

Hiroshima Bank

Chugoku Bank

Ehime Bank

Development Bank of JapanLong Black Partners
Final Close
Financial
institutions inaffected
Prefectures

Targeting companies in affected 11 Prefectures

13

[Consulting Strategy (Corporate Banking III)]Strengthen Efforts in Maritime Business Cluster
 Strengthen ability to collect information in a maritime industrial center to provide timely and high quality information
 Ship Finance Division, domestic bases, and the Singapore Branch to work together to contribute to further developmentof the maritime industry
Construction Results for
Ehime Prefecture

No. 2 in Japan: 15.9%
Units: 10,000 gross tons
Other

Japan

Further Strengthen Relationship with
the Maritime Industry

Number of ocean-going vessels
owned by ship owners in Ehime

Ehime Pref.
211

China
South Korea

No. 1 in Japan: 30.5%

Ehime Ship
OwnersApprox.
1,100 ships



Domestic
operators
Approx.
1,100 ships

Non-Ehime Ship Owners
Approx. 1,400 ships

Compiled by the Bank based on data from the
Shikoku Transport & Tourism Bureau and The
Shipbuilders' Association of Japan (2016 basis)

Make transactions with over 60% of Ehime ship owners, including
global-leading owners of ocean-going vessels, creating strong relations
with local ship owners
Develop professional maritime industry personnel through training
assignments to operators and trading companies, etc.
Diversification of information sources through increased contact
with maritime related companies in the Ship Finance Divisionand domestic bases
Expand transactions with the overall
maritime industry, including the shipbuilding
industry, which boasts the largest shipbuilding
volume in Japan, and ship equipment
manufacturers

Compiled by the Bank based on IRC statistical
data (September 30, 2018 basis)

Ship
Owners

Shipbuilding
Yards

Ship
Equipment
Manufacturers(Hundreds ofMillions of Yen)

Loan balance for the maritime industry
For other maritime industry and overseas
For domestic ocean transport

Domestic andForeign
Operators

Iyo Bank
Provide timely and high quality
information in maritime industrial
centerMarch 2017
Results

September 2017
Results

March 2018
Results

September 2018
Results

March 2019
Plan

14

[Online Business Strategy]

Efforts in Providing Value and Enriching Services through Direct Channels
 Provide further value and enrich services while efficiently approaching customers difficult tomake contact and customers who prefer non-face-to-face transactions
Strengthen Direct Channels and Direct Marketing Plan trial of “Hybrid Desk” from December 2018
・Operate without face-to-face contact, targeting customers
who find it difficult to visit branches

Strengthen Individual Strategy
 Promotion of investment trust sales utilizing AI
・Quickly respond to latent management needs of customers
through the use of AI

Customer segment

Corporate owners

Digitalpreference Plan to introduce “Insurance Robot Advisor“ inDecember 2018

・Create personalized insurance just by completing a simple webbased profile
・Encouragement to visit Insurance Plaza by Robot Advisor

Affluent people

Near-affluent
peopleMasses“People”
respond“Digital” response Promotion of level premium insurance via callcenters

・ For affluent people andnear-affluent people
・ Uncover needs andencourage branch visits via
phone call and SMS・Approach customers unable to be contacted via face-to-face channels

Strengthen Office Strategy
 Effective use of EBM for Offices

 Direct Marketing Utilizing AI
・Use an AI sales support system to implement telemarketingand SMS・Propose optimal asset management through investment trust follow-up
・Recommend card loans by actively monitoring attribute information andaccount records

・Acquired corporate EBM patent (Make use of external DB for noncustomer entities)
・New distribution of EBM using sales channel information; expansionof corporate EBM menu

 Strengthen
promotion of corporate IB
 営業⽀援AIシステム導⼊・Introduction support via headquarters IT support team(Resolving problems upon introduction; proliferation andeducation of IB related services) Begin outbound calling for corporate

customers

・Corporate 401K, guaranteed financing

15

[ICT Strategy]
Structures and Foundation Building for Digital Transformation
 Strengthen structures toward digitization via headquarters structure changes to accelerate
efforts in API use and channel enrichment, etc.

Establishment of Digital Planning Department to Strengthen Efforts in Digitization(Until July 2018)(From August 2018)

Business Strategy Department,
General Planning Division

 Branch strategy
 BPR strategy
 ICT strategy

Increase
Personnel /Strengthen
structure

Digital Planning Department, General Planning Division ICT strategy keyword Frictionless Payment, Digital & Human Interface✔ Create new services through API use ✔ Enrich cashless settlement services✔ Enrich non-face-to-face channels ✔ Refined database marketing and collaboration among channels

Examples of Efforts●Began operation of “TSUBASA FinTech Common Platform”

 Began API linkage with “finbee” and “Money Forward” inJuly 2018
 Expanded cooperation with PFM businesses and plan for
linkage with the Bankʼs “Money Manager” smartphone app
 Development of updatable API with money transfer
functions, etc.

●Strengthen efforts toward promoting cashless transactions

 Continue to seek for new cashless settlement services
 Expand linkage between the Bankʼs accounts andexternal settlement services

All Bank

Customer

External settlement
services

User registration / login

Iyogin ID●Plan to introduce “Chatbot Service” in December 2018
 Communication tool available 24 hours a day
to questions from customers regarding
products and services

Account information linkage service
Safe linkage with multiple
services under one ID
Linked service

Linked service

The Bankʼs service*Planned for future
addition

16

[Branch Strategy]

Improve Productivity and Strengthen Sales Ability by Reviewing Branch Functions
 Review of customer contact points through introduction of next-generation branches and aggregation of Bank BranchfunctionsAggregation and Review of Branch Functions
Aggregation of Branch Functions
Introduction of Group Head System

Review of Branch Functions
Transition to Next-Generation Bank Branches
Single year
Cumulative

Number of
Branches

Number of
Branches

Single year
Cumulative

March 2015
Results

March 2016
Results

March 2017
Results

March 2018
Results

March 2019
Plan

Results Until
March 2018

Plan Until
March 2019

Plan Until
March 2020

Plan Until
March 2021

◇ Examples of Counter Refinement at Next-Generation Branches *Matsuyamakita Branch, Okada Branch
Matsuyamakita Branch

Okada Branch

200 persons/day serviced at counters(overall)

100 persons/day serviced at counters(overall)After renovation

Before renovation

Before renovation

Quick type

Persons serviced per teller
40 persons/120 persons/countercounter (max)After renovation

Persons serviced per teller
100 persons/
30 persons/counter (max)counterCounter 1
Counter 2-3 counters
Counter 1

Counter 3
Counter 4Counter 1

ReserveCounter 3

Counter 1

Counter 1

Counter 2

Counter 2

Counter 3

Counter 3
Counter 4+2 counters

Counter 5-2 counters

Consultation booth(For consultation)

Counter 2

Counter 2

Counter 5
Counter 6
Consultation type

Satto Madoguchi(Quick counter)

Counter 3
ReserveCounter 4Counter 1
Reserve

No consultation
counters

Counter 2

ReserveCounter 1
Counter 2+2 counters

Enriched consultation booths to
お客さまの相談ニーズに応える
respond to customersʼ consultation
べく相談ブースを拡充
needs

Improved counter productivity
Alongside the introduction of “Satto
Madoguchi (Quick Counter),”fundamentally reviewed the number ofquick counters to improve productivityof counter tellers
Realized transactions “not required
to complete a form” and “notrequired to handle cash”

Strengthened sales capabilities
Through introduction and enrichment ofcomparted “consultation booth,” createdan environment to respond to various
consultation needs from customers
Strengthened response abilities in“asset management consultations”
and “loans,” etc.

17[BPR Strategy]
Improve Operational Efficiency by Utilizing Digital Technologies
 Accelerate digitization of administrative work to reduce Bank Branch administrative staff by half and improve
operational efficiency at headquarters
Improving Branch Administrative Processing Efficiency

Improving Operational Efficiency at Headquarters●Transition from “paper form” to ”tablet” in operation atbranch counters●Digitization of approx. 40% of administrative work at a
Bank Branch, “fully from reception to processing”●Fundamental review of headquarters operations, using RPA,
etc., as an entry point●Aim for reduction of 5% of headquarters administrative
workload (approx. 120,000 hours/year, equivalent to65 persons) by the end of fiscal 2021
120,000“AGENT” Counter Reception Tablet

hours/year

15,000hours/year

September 2018
Results

AGENT System<Introduction Schedule>◇From October 2018
Began test operation at Honmachi Branch,
Minatomachi Branch, and Matsuyamakita Branch“Ordinary deposit account opening” and “Time deposit account opening”◇From February 2019
Full-scale operation to begin (Plan for rollout to all branches over a one-year
period)“Various notifications,” “Card issuance,” “Credit card issuance,” “Individual
IB,” “Corporate IB,” “Inheritance,” “Automated remittance,” “Ordinary
deposit account closing,” “Time deposit account closing,” and “Time deposit
account renewal”*Service menu planned to be consecutively expanded in February, April, andJuneBank Branch administrative staff reduction effect projected to be about 150 persons

30,000hours/year

March 2019
Plan

RPA
Began full-scale RPA operationin April 2018
Reduced approx. 15,000
hours/year of administrative
work at headquarters (as of
September 30, 2018)(including BPR effects)
Enrich promotion structure toachieve further gains

March 2022
Plan

Other efforts
Introduced smartphones forbusiness use(From June 2018)
Distributed mobile PCs forbusiness use and made theBankʼs LAN wireless (fromAugust 2018)

Plan to consider measures toreduce operational load in the
future, such as “Use of chatbot
within the Bank” and “AI-OCR”

18

[Regional Revitalization Strategy]
Efforts to Create Regional “Earnings Power” and “Employment”
“Tourism” and “Establishment of Business” support via public-private partnership and introduction of new services
Regional revitalization support by utilizing “Shikoku Alliance”
Participation in “West Shikoku Area Strategic Tourism
Service Creation Business”● A regional revitalization plan through the collaboration of the four
regions of Saijo City and Kumakogen Town of Ehime Prefecture and
Ino Town and Okawa Village of Kochi Prefecture, all located in the
Mount Ishizuchi area, was approved by the
Cabinet Office● The bank also made an investment inNovember 2018 to establish “Sorayama
Ishizuchi Co., Ltd.,” a third sector DMC

Municipalities
・Saijo City, Ehime Pref.
・Kumakogen Town,
・Ehime Pref.
・Ino Town, Kochi Pref.
・Okawa Village, Kochi
・Pref.

Private sector
・The Bank, Shikoku
Bank・Shikoku Electric, JR
Shikoku・Montbell・JTB, etc.

DMC
Sorayama Ishizuchi Co., Ltd.

Strategy
formulation

Foundation and Regional Revitalization Businesses Utilizing
Crowdfunding●In September 2018, entered business partnerships withtwo crowdfunding operators

140th anniversary commemorative businessFor 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)
First project

Suto Shuzo Co., Ltd. (Saijo City, Ehime Prefecture)

Project to create “sake for the last cup, which is made fromstandard rice rather than rice for sake-making”

Providinginformation

Shikoku Alliance(Comprehensive Cooperation Among
Four Regional Banks in Shikoku)

Tourism related
business●Shikoku Alliance Capital Co., Ltd. madeEstablish a highly attractive tourism region with highinternational competitiveness
Create a high added-value tourism industry*DMC (Destination Management / Marketing / Company）
A for-profit organization that seeks earnings via sales of regional travel
product and locally produced goods targeting tourists

investment in its first project for hands-on
support in the “Shikoku Revitalization Fund”●Launched a project team to accelerate efforts
toward “increasing additional values ofresources in the Shikoku region”●The four-bank think tanks jointly announced the“Survey for the Shikoku Regional Development
Scheme Utilizing the Bullet Train”
19[Market Strategy I]
Policies and Plans for Securities Investments Considering Correlations, etc. of Assets
 Continue to make diversified investments emphasizing liquidity to create a portfolio with superior risk versus
return Maintain ¥20.0 billion in gain on securities management by risk taking through foreign bonds (without forex
hedges) and alternative investments, in addition to traditional interest and stock risk

New Investment Policy by Risk Category(Risk category)
Yendenominatedbonds
Foreign bonds(with forex
hedges)Foreign bonds(without forex
hedges)(Units: Billions of yen)

(New investment policy)

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

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

Consider investment with forex risk to secure profit from carrytrading as difference between short-term and long-term
Increaseinterest rates is shrinking (with strategic re-balancing
implemented as well).

Fiscal 2017
Results
Gain on securities
management●YieldFiscal 2018
Results(First Half)

25.1

11.3

Plan

Fiscal 2019
Plan

Fiscal 2020
Plan

20.0

20.0

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 andAssess and classify strategic equity holdings in terms ofoverseas stocks
Decrease investment and policy, and sell off stocks if the necessity of(including
holding is not recognized.
investment trust)

Alternatives,
etc.

Increase*( ) indicate September
2018 results％

Consider investment to secure stable carrying and portfolio
diversification.

March 2015 Results

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

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 2016 Results

March 2017 Results

March 2018 Results

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)
related to securities● Yen bond portfolio
10BPV¥3.4 billion● Foreign bond portfolio
10BPV¥1.3 billion● Stock portfolio
Nikkei Stock Average ¥1,000V ¥12.8 billion● Forex portfolio
USD/JPY ¥10V
¥11.4 billion(*As of September 30, 2018)(Of which,
JGBs)

Expand newinvestment to secure
gain on securities
management of ¥20.0
billion●Duration
8 years
6 years
4 years
2 years

March 2018 Results

Balance atMarket Value

September 2018 Results

March 2019 Plan

March 2020 Plan

March 2021 Plan

0 years

Yen-denominated bonds
Foreign bonds(with forex hedges)
March 2015
Results

March 2016
Results

March 2017
Results

March 2018
Results

September 2018
Results

March 2019
Plan

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

20

[Market Strategy II]

Ensure Stable Earnings from Market Investment;
Stabilize and Diversify Foreign Currency Procurement
 Through strengthening ship-related loans and corporate loans, the Singapore Branch is targeting a year-end balance of¥91.0 billion for fiscal 2018
 Financial Market Business Office targets over ¥1.1 billion gain on investment in fiscal 2018
 Through effective use of commitment lines, etc., in recognition of the importance of foreign currency procurement,
establish systems that can respond to changes in the market environment
Status of Foreign Currency Investment and Procurement(September 30, 2018)

Singapore BranchYear-end (Hundreds ofbalancemillions of yen)

Gain (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 toliquidity●Primarily use repo procurement for securities related procurement
Investment<Loans + Market Investment (Securities) >Procurement

Loans

March 2015
Results

March 2016
Results

March 2017
Results

March 2018
Results

March 2019
Plan

Financial Market Business Office
Year-end (Hundreds ofbalancemillions of yen)

Gain (Millions of yen)

Year-end balance (left axis)Long-term
procurement

Deposits, etc.

Repo
procurement

Strengthening anddiversification of foreign
currency procurement<Only Loans>
Investment
Procurement

March 2016
Results

Short-term
procurement

Mainly assets with highliquidity●Proportion of deposits and long-term procurement in total procurement
maintained 50% or more
●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 partiallycovered by short-term procurement considering that the majority of loans
have the characteristic of being multi-currency loans (≒short-term loans)

Gain (right axis)

March 2015
Results

Securities, etc.

March 2017
Results

March 2018
Results

March 2019
Plan

Loans

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

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

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

Long-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 Toward Creating a “Company with Better Working Environment” and“Company with Job Satisfaction”

 Implement measures to realize true “working style reform”
Working Style Reform

Company with Better Working Environment

To enable each of the Bankʼs employees to provide optimal
services and earn customersʼ trust, the Bank will promotereviewing of work environments and structures to change itself
into a “company with better working environment and job
satisfaction”
Established Working Style Reform Team led by the President

Introduced flextime
systemFlexible working styles

Introduced work timeinterval system
Optimizing work hours<Status of Overtime Work>13.0 hours
4.5 hours

Management
Board of Directors (Chairman: President)

Average between April
and September 2017

Average between April
and September 2018

*Average values for non-management or supervisory employees for overtime worked under the Labor Standards Act

Responsible for Promotion“Promotion of Flexible Working Styles” and“Improving Productivity via Digitization”

Personnel Executives / CIO

２Introduced Windows
devices
Improved operational speed

Promotion Divisions

Made internal LAN
wireless
Realized nonterritorial officeCore Members
Human Resources
Division

Other Head
Office divisions

Systems
Development
Division

Cooperation

Sub-members
Operations
Management
Division

General Planning
Division

Cooperation /Coordination

CreditDivision

Company with Job Satisfaction●Abolished the general award system for branches
Established a branch operation structure with Bank BranchManagersʼ autonomy respected●Held first symposium with a female outside director andfemale employees

Corporate & Retail
Banking Planning
DivisionBank
Branches22Efforts for ESG (Environment and Society)
Creating asustainablebusiness model

Corporate Credo

Creating a bright and prosperous
future for the region

Contribution tocreation of asustainable society

SDGs

Sustainable development goals

ESG and SDGs Understanding and Awareness, etc.

Integration into Business Activities

 Promote lively regional creation via locally-based Realize a regional society that lives in harmony withmeasures rooted in the region
nature via active environmental preservation activities

Environment

Iyo Bank Environment Foundation“Evergreen” (Public Trust)●Established as apublic trust in
March 2008
●Cumulative total of
approx. ¥47
million granted to
128 recipients
Supportenvironmental
preservation
activities that passon the regionʼsnature to the next
generation

Society“Iyo Bank Evergreen
Forest” Activities●Entered partnershipwith Ozu City, Ehime
Prefecture, andForest Fund of Ehime.
●Conducted forest
creation activities
in four locations in
Ehime Prefecture

Having promoted
forest creation withthe regionʼsresidents, we
contributed to the
reduction of approx.
37 tons of CO2 over
five years

Iyo Bank Social Welfare Fund
(Public Interest Incorporated
Foundation)●Cumulative total of¥628 million granted
as scholarship andwelfare equipment●Doubled scholarships
and scholarship
recipients as part of140th anniversarycommemorative
business

Enriching social
welfare and aidingin the developmentof leaders for the
next generation

Iyogin Challenge ＆ Smile
Co., Ltd.
●Established a special
subsidiary company
with the aim ofpromoting employment
of disabled persons●Planning and productionof handmade goods

Offer a working
environment
where disabled
persons can workin a comfortable
and safe manner23

Efforts for ESG (Governance) Create structures that secure transparency and objectivity by strengthening governance

Governance■Strengthen governance functions to secure management transparency■Through diverse advice, secure management objectivity

Board of Directors(Business Execution)
Directors

Consult

Audit and Supervisory
Committee

ReportManagement
Deliberation Committee●Deliberation on thenomination of andcompensation for Directors,
etc., and important mattersregarding management

Independent Outside Directors● 1/3 or more of Directors are Independent Outside
Directors●Appointment of female Directors

Audit and Supervisory Committee
Advisory Board●Consists of several external
experts and members of theBoard of Directors●Further contribute to the
local community andstrengthen management
structure

Independent
Outside Directors

Internal
Directors

24Profit / Loss Forecasts for Fiscal 2018
 Interest and dividend income to decrease year-on-year due to decreases in gain on fund cancellation despite aturnaround of gain on loan management
 Fees and commissions to increase due to an increase in revenue on assets in custody, etc.
 Net income to maintain at a certain level compared to prior years despite each income level is forecast to
decrease year-on-year
Factors Contributing to Increase / Decrease in(Units: Billions of yen)Core Business Gross Profit (Fiscal 2018 - Fiscal 2017)
Fiscal 2017
Results

Fiscal 2018
Forecast(Units: Billions of yen) (Note) Differences in yield utilize yield differences with deposits, etc.

Gain on loan
management(¥46.9 billion)

YoY

Core business grossprofit

77.5

75.0

(2.6)

Of which, interest anddividend income

69.7

66.6

(3.2)

Of which, fees andcommissions

6.6

7.0

+0.4

Expenses ( - )

49.1

50.5

+1.4

Of which, personnel
expenses

26.3

26.3

(0.0)

Core businessgross profit(¥75.0 billion)

Of which, nonpersonnel
expenses

19.8

20.8

+1.0

(2.6)

Core business net
income

28.4

24.5

(4.0)

Credit costs ( - )

3.5

2.9

(0.6)

Fees andcommissions(¥7.0 billion)

Gain (loss) related tosecurities

6.0

2.2

(3.8)

+0.4

Ordinary income

32.9

27.0

(5.9)

Net income

22.6

18.0

(4.7)

Interest anddividend
income(¥66.6 billion)

(3.2)

+1.4
Gain onsecurities
management(¥21.3 billion)

(3.4)
Other
(-¥1.6 billion)

Volume factors +3.1
(Average loan balance up¥260.0 billion)
Yield difference factors (1.7)(Yield difference down 0.04%)
Volume factors (0.1)(Average securities
balance down ¥4.3 billion)
Yield difference factors (0.3)
Gain on fund cancellation factors(3.0)

Increase in foreign currency(1.1) procurement costs, etc.
Revenue on assets in custody＋0.3, etc.

Other(¥1.4 billion)

+0.2
25

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 First Half of Fiscal 2018
Earnings Briefing:
Reference Materials

Shimanami Kaido

Along the Shimanami Kaido, which runs over 70km,
lies the first bicycle path in Japan that runs across achannelIn October 2018, the “International Cycling Event
Cycling Shimanami 2018“ was held, with avid
cyclists from both Japan and overseas in attendanceDecember 7, 2018

Index of Reference Materials

Overview of the Iyo Bank

Pg

Conditions in Loans and Deposits◎Iyo Bank Profile

2◎Breakdown of Balance of Loans and Deposits at End of
12
Period◎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 andRisk 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

Pg

1

Iyo Bank Profile
Head Office

Matsuyama, Ehime Prefecture

Foundation

March 15, 1878 (The 29th National Bank)

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

13 Officers, 2,865 employees (excluding temporary staff)

Number of
branches

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

External
credit ratings

A: Standard & Poorʼs (S&P)
AA: Japan Credit Rating Agency (JCR)

Consolidated equity ratio (BIS standards)

14.63%

Consolidated subsidiaries

15 companies

Consolidated employees (excluding temporary staff)

3,220 persons(As of September 30, 2018)

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
149 domestic

Timing of opening key branches outside of Ehime

Chugoku region:
9 branches

1909: Usuki (Oita); 1919: Nigata (currently Kure, Hiroshima);
1947: Takamatsu (Kagawa), Kochi, Oita; 1950: Hiroshima;

1 overseas

1952: Osaka; 1954: Tokyo; 1958 Tokushima;
1963: Kitakyushu (Fukuoka); 1964: Okayama;
1965: Nagoya (Aichi); 1966: Kobe (Hyogo);
1971: Fukuoka; 1979: Tokuyama (Yamaguchi)

Okayama
Hiroshima

Hyogo

Osaka

Yamaguchi
KagawaFukuokaOita

Within Ehime:
117 branches

Tokushima

Kinki region:
5 branches

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, 2018)(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)First half of
Fiscal 2018

YoY

Increase/
Decrease

First half of
Fiscal 2017

Consolidatednonconsolidated
difference(Note)

Ordinary revenue

64,931

4,174

+6.9%

60,757

9,545

Ordinary income

17,771(2,827)(13.7%)

20,598

1,225

Profit attributable to owners of parent

11,667(1,993)(14.6%)

13,660196(Note) The difference between
consolidated and nonconsolidated.

List of Iyo Bank Group Companies
Head office and 142
branches,
7 sub-branches, and12 consolidated subsidiaries

Iyo Bank

Banking businessIyogin 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

Iyogin Venture Fund Corporation Limited VI

Investment business to venture firms (Established on July 2, 2018）

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

Iyo Evergreen Sixtiary Industrialization Support Fund Investment Business
Limited Partnership

Iyo Evergreen Agriculture Support Fund Investment Business Limited Partnership

Investment business to agricultural companies

Iyo Evergreen Business Succession Support Fund Investment Business Limited Partnership

Investment business to business succession targets

Iyogin Regional Economy Research Center, Inc.

Iyogin DC Card Co., Ltd.
Iyogin Challenge & Smile Co., Ltd.

Leasing business
Other

1 consolidated
subsidiary
2 consolidated
subsidiaries

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

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

Investment business to sixtiary industrialization bodies

Iyogin-Ehime University Originated Venture Support Fund Investment Business
Limited Partnership

Investigation and research business regarding industry,
economics, finance, etc.
Credit card business, guarantee business, etc.
Manufacturing business for office supplies, etc. (Established on 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 September 30, 2018)

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
12.8%(¥65.5 billion)

No. 1 in JapanSea culture industry (2016)¥509.7 billion total national
production

29.8%(1,063 ships)

16.9%(2.11 million gross tons)

62.7%(¥34.5 billion)

No. 2 in Japan

No. 2 in Japan

No. 1 in Japan

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

New vessels completed in Japan(2016)
12.51 million gross tons in Japan

Towels (2016)¥55.1 billion shipped in Japan

Niihama and Saijo Region
Manufactured product shipments(2016)¥1,370.4 billion
Approx. 36% of shipments ofmanufactured products in Ehime

As a corporate town under the Sumitomo
Group, nonferrous metal, chemicals, steel,machinery and equipment are concentrated
in the Niihama region

Shikokuchuo Region
7.9%(¥574.6 billion)

No. 2 in Japan
Pulp and paper industry (2016)¥7,273.1 billion shipped in Japan(Note 1) Number of ocean-going vessels owned by domestic ship owners (2018) is an Iyogin Regional Economy Research Center, Inc. (IRC) estimate.

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

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

OthersTransportation
machinery
OthersCoal and oil

Matsuyama¥371.4 billion Production
machinery

Imabari¥857.3 billion
FibersFood products
General-purpose
machinery
MetalsChemicals
Foodproducts

Electric
machinery
OthersOthersPlastics

Production
machinery

Beverages
and tobacco
Steel

OthersPlastics
Nonferrous
metal

Plastics
Nonferrous
metal
Saijo
¥719.7 billion

FibersFood products
Production
machinery

Generalpurpose
machineryNiihama¥702.4 billion

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

Shikokuchuo¥668.0 billion

Pulp

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

ImabariNiihama
Saijo
Matsuyama

Citrus, food processing

Shikokuchuo
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(Population
estimate)(Geospatial Information
Authority of Japan)

October 20172017

(Persons)

Total area

Number of offices

2016

（ｋ㎡）

Number of employees(Private sector, excluding (Private sector, excluding
public sector)
public sector)(Offices)

Prefecture total
production(Nominal)

Prefectural grossPrefectural income
product growth
per capita
rate (Real)2016

Fiscal 2015

Fiscal 2015

Fiscal 2015

(Persons)(Millions of yen)(%)(Thousands of yen)Ehime

1,364,071

5,676

63,310566,761

4,915,526

+1.1

2,535

Kagawa967,445

1,877

46,774429,167

3,777,955

+0.2

2,925

Tokushima

743,323

4,147

35,853

301,688

3,083,714

+0.5

2,921

Kochi
Oita

713,688
1,152,257

7,104
6,341

35,36652,973

279,196483,206

2,399,735
4,378,232

+1.4
(0.2)

2,532
2,619

Fukuoka

5,106,669

4,987

212,649

2,236,269

18,861,095

+2.1

2,724

Yamaguchi

1,382,901

6,113

61,385

577,791

5,870,248

(6.3)

2,774

Hiroshima

2,828,733

8,480

11,941,081

+2.8

3,074

1,907,140

7,114

127,057
79,8701,302,074

Okayama

820,656

7,787,894

+2.9

2,744

Total of the above nine
prefectures (A)16,166,227

51,837715,237

6,996,808

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

12.8%

13.7%

13.4%

12.3%

11.5%

Hyogo

5,503,111

8,401

214,169

2,203,102

20,494,996

+0.9

2,752

Total of ten prefectures (B)(B)/(C)

21,669,338
17.1%

60,23815.9%

929,406
17.4%

9,199,910
16.2%

83,510,476
15.3%

National total (C)126,706,210

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 2017)(Prepared based on various statistical data)

Total of nine
prefectures(excluding Hyogo)

12.8%

Total population(Population
estimate)(October 2017)

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
sales amount

Annual retailsales amount

2016

2016

Manufactured

Annual wholesale

product shipments

2017(Millions of yen) (Millions of yen) (Millions of yen)

Industrial

Jobs-to-Overallapplicants ratio

unemployment rate(annual average)

Number of new
housing starts(annual average)(annual average)

2017

2017

2017

2017

(Homes)(Times)production index

2010＝100

(%)

Ehime

3,814,248

2,511,264

1,528,554

93.3

7,696

1.51

2.3

Kagawa2,462,495

2,619,010

1,169,352

99.7

7,063

1.73

2.4

Tokushima

1,700,234

904,487

757,121

108.2

4,859

1.40

2.5

Kochi

567,796874,256

753,371

100.5

3,326

1.18

3.0

Oita
Fukuoka

3,694,883
9,250,306

1,344,689
16,970,699

1,235,257
5,864,032

94.1
115.4

6,889
42,557

1.42
1.50

2.4
3.4

Yamaguchi

5,609,000

1,641,957

1,488,895

96.2

7,532

1.49

2.1

Hiroshima

9,941,466

9,166,762

3,309,726

110.5

20,944

1.81

2.3

Okayama

7,091,936

3,543,971

2,093,111

93.4

13,327

1.78

2.4

Total of the above nine
prefectures (A)44,132,364

39,577,095

18,199,419

1.28

2.8

1.50

2.8

114,193(A)/(C)

14.6%

9.1%

12.5%

Hyogo

15,105,350

10,219,241

5,726,476

Total of ten prefectures (B)59,237,714

49,796,336

23,925,895

149,096

19.6%

11.4%

16.5%

15.5%

302,035,590

436,522,525

145,103,822(B)/(C)
National total (C)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)

11.8%
101.4

102.0

34,903

964,641

Total of ten
prefectures

15.5％

Number of new
housing starts(2017)

Total of nine
prefectures(excluding Hyogo)

11.8％

Number of new
housing starts(2017)

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●Volume of cargo movement and shipping tonnage
Growth rate of cargo
movement
Growth rate ofshipping tonnage

Future Market Outlook●Baltic Dry Index (BDI) trends

18 yearaverage
2,380

Maximum value
11,793 (May 2008)

Minimum value 290(February 2016)
September 2018
1,540

Plan
Source: Clarkson Shipping Intelligence Weekly (October 2018)●Dry bulk transport demand and supply
 Trade volume is increasing by approx. 3.5% in 2018
amid the expanding world economy. Transport demandfor dry bulk cargoes is increasing by approx. 3% yearon-year.
 Although dry bulk scrapping in 2018 is at low levels anddown by 73% year-on-year at about 3.1 million tons,
cargo movement increase and delivery of dry bulk ships
is expected to be below 35 million tons for next two
years and thus ship supply is estimated to remain at alow level.

●Future market outlook

 Demand for freight transport is expected to increase for the nearterm and shipping tonnage of dry bulk vessels is expected to growsluggishly for a few years; therefore the ocean transportation
market is expected to recover.
 Further market recovery is expected if ship scrapping is accelerated
due to factors such as environmental regulations; however there aresome uncertainties such as effects by protectionism in the US.
 The BDI is showing a recovery trend as it rose from a record low of
290 in February 2016 to 693 on average in 2016, 1,150 on averagein 2017, 1,344 on average in 2018, and most recently, 1,540 at theend of September.

11

Breakdown of Balance of Loans and Deposits at End of Period
1. Breakdown of balance of loans at end of period

March

September

March

September

March

September

March(Units: Billions of yen)
September

2015
3,869.9

2015
3,896.2

2016
3,911.1

2016
3,936.3

2017
4,043.3

2017
4,132.4

2018
4,292.6

2018
4,431.5

Vs. Sep. 2017

3,644.0

3,667.5

3,677.4

3,705.5

3,802.3

3,899.0

4,054.6

4,192.2

293.2

Corporate loans (incl. overseas, etc.)

2,712.6

2,721.4

2,717.0

2,729.5

2,807.4

2,891.8

3,030.6

3,146.0

254.2

Corporate loans (domestic branches)

2,712.6

2,721.4

2,717.0

2,729.5

2,806.0

2,864.4

2,965.5

3,060.4

196.0

931.4

946.0

960.3

976.0

994.9

1,007.1

1,024.0

1,046.2

39.1

681.8

690.5

700.0

710.6

723.8

731.2

742.6

758.2

27.0

161.7

168.2

173.3

179.1

184.0

186.3

191.3

198.0

11.7

28.3

29.0

28.6

29.2

29.6

30.0

29.6

29.1

(0.9)

225.9

228.7

233.8

230.7

241.0

233.4

238.1

239.2

5.8

Total loans
General loans

Individual financing
Housing loans
Apartment and building loans

Card loans
Municipal loans, etc.

299.1

(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
September
March

March

September

March

September

March(Units: Billions of yen)
September

2015
5,639.4

2015
5,684.7

2016
5,676.5

2016
5,644.4

2017
5,789.1

2017
5,765.3

20185,889.0

2018
5,894.2

Vs. Sep. 2017

5,281.7

5,348.5

5,343.1

5,317.8

5,457.0

5,424.5

5,546.0

5,542.2

117.7

4,916.9

4,968.0

5,018.0

4,892.9

5,006.8

4,987.1

5,099.6

5,057.7

70.6

3,328.4

3,341.6

3,348.3

3,343.4

3,354.6

3,376.3

3,392.1

3,412.0

35.7

1,356.9

1,392.9

1,397.6

1,392.1

1,434.4

1,429.1

1,442.0

1,455.4

26.3

170.5

177.9

204.0

117.1

146.6

135.8

164.4

111.4

(24.4)

43.7

34.6

44.0

31.3

36.0

23.1

53.8

37.4

14.3

17.4

20.9

24.1

8.7

35.2

22.6

47.3

41.3

18.7

364.8

380.5

325.1

424.9

450.2

437.4

446.4

484.4

47.0

309.5

302.4

295.9

293.5

354.7

319.6

375.4

345.1

25.5

55.3

78.0

29.2

131.4

95.5

117.7

71.0

139.2

21.5

1,666.4

1,695.4

1,693.5

1,685.7

1,789.1

1,748.8

1,817.4

1,800.6

51.8

225.8

256.0

233.3

248.5

242.1

253.5

235.4

250.7

(2.8)

Foreign currency deposits (balance)

104.2

107.9

102.9

115.6

97.1

104.1

118.3

111.0

6.9

Individual deposits+individual assets in custody

3,665.5

3,659.0

3,665.6

3,654.9

3,673.2

3,703.7

3,722.5

3,751.4

47.7

3,328.4

3,341.6

3,348.3

3,343.4

3,354.6

3,376.3

3,392.1

3,412.0

35.7

337.1

317.4

317.2

311.5

318.6

327.3

330.4

339.3

12.0

357.6

336.1

333.4

326.5

332.0

340.7

343.0

351.9

11.2

59.9

47.0

40.1

32.5

27.2

25.0

25.4

24.0

(1.0)

107.5

94.3

93.5

85.9

85.1

81.0

71.6

71.5

(9.5)

171.1

176.8

184.9

187.8

191.5

202.1

206.2

210.8

8.7

19.2

18.1

14.9

20.3

28.3

32.5

39.7

45.5

13.0

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)

Individual assets

Individual assets in custody

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

JGBs
Investment trusts
Personal pension insurance

Financial product intermediary

Shikoku Alliance Securities balance Ｃ

106.2

125.7

131.5

140.1

163.7

192.7

201.4

208.3

15.6

Balance of Group's assets in custody B + C = D

463.8

461.8

464.9

466.6

495.8

533.5

544.4

560.3

26.8

8.1%

7.9%

8.0%

8.1%

8.3%

9.0%

8.9%

9.2%

Assets in custody composition (D / A + C)

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, %)September 2014

September 2015

Composition

Manufacturing

September 2016

Composition

September 2017

Composition

September 2018

Composition

Vs. Sep. 2017

Composition

Balance

Rate of balance
increase/decrease

606.4

16.1

599.0

15.4

592.0

15.0

589.4

14.4

629.8

14.5

+40.4

+6.9%

Agricultural

2.0

0.1

2.6

0.1

2.6

0.1

2.5

0.1

2.8

0.1

+0.3

+11.4%

Forestry

0.2

0.0

0.2

0.0

0.1

0.0

0.2

0.0

0.2

0.0

+0.0

+0.0%

Fishing

11.8

0.3

12.7

0.3

11.8

0.3

12.3

0.3

11.1

0.3

(1.2)

(9.8%)

Mining

3.6

0.1

3.6

0.1

8.8

0.2

8.9

0.2

8.5

0.2

(0.4)

(4.5%)

117.7

3.1

113.5

2.9

110.0

2.8

105.0

2.6

111.2

2.6

+6.2

+5.9%

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

+25.0

+25.6%

Information communications

22.4

0.6

27.6

0.7

27.2

0.7

28.5

0.7

21.7

0.5

(6.8)

(23.9%)

Transportation

642.0

17.1

647.2

16.6

603.3

15.3

649.2

15.8

703.3

16.2

+54.1

+8.3%

549.4

14.6

544.7

14.0

489.9

12.4

526.6

12.8

566.5

13.0

+39.9

+7.6%

Wholesale and retail

459.5

12.2

477.2

12.2

466.9

11.9

465.4

11.3

500.3

11.5

+34.9

+7.5%

Finance and insurance

145.6

3.9

165.6

4.3

180.3

4.6

198.7

4.8

208.9

4.8

+10.2

+5.1%

Real estate

180.1

4.8

191.1

4.9

213.4

5.4

238.4

5.8

259.0

6.0

+20.6

+8.6%

Various services

338.3

9.0

368.2

9.5

390.9

9.9

426.2

10.4

425.5

9.8

(0.7)

(0.2%)

159.2

4.2

167.5

4.3

173.5

4.4

187.6

4.6

191.5

4.4

+3.9

+2.1%

Regional public entities

215.5

5.7

227.8

5.8

230.0

5.8

232.6

5.7

233.9

5.4

+1.3

+0.6%

Other

923.1

24.6

968.8

24.9

1,009.4

25.6

1,049.7

25.6

1,106.5

25.5

+56.8

+5.4%

3,755.9

100.0

3,896.2

100.0

3,936.3

100.0

4,105.0

100.0

4,345.9100.0+240.9+5.9%

Construction

Of which, ocean transport

Of which, medical-related

Total(For domestic branches, excludes special international transactions account)* “Goods rental” is included in “real estate.”“Real estate” for the six months ended September 30, 2018, excluding “goods rental,” was ¥241.3 billion, which is an increase of ¥18.0 billion(+8.1%) compared with the six months ended September 30, 2017.
In addition, “other” includes “home renting by individuals” (¥207.0 billion for the six months ended September 30, 2018).
* As “ocean transport” displays balances applicable to the “ocean transport industry” according to Japan Standard Industrial Classification, this figure
does not match “Loan balance 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
上段：債務者数
Lower row:
Credit amount(Hundreds of millionsof yen)Rate ofSeptember 30, 2018

下段：与信額（億円）

Normalborrowers

Total

degradation to

Borrowers

Borrowers

Borrowers at

Substantiallyrequiring close

under strictrisk ofbankrupt

monitoring

observation

bankruptcy

borrowers

Bankrupt
borrowers

at risk of

Improvement

Degradation

bankruptcy or
below

20,18018,271

17,708

496

27

16

18

6

0.20%

563

29,03329,45728,669

768

12

4

2

1

0.02%

788

Borrowers
requiringclose
monitoring

1,917

1,801

455

1,281

23

36

4

2

2.19%

455

65

4,004

3,868

1,188

2,544

30

93

8

6

2.67%

1,188

137

Borrowers

152

132

18

11

94

7

2

0

5.92%

29

9

301

275

26

26

204

17

2

0

6.07%

52

18

308

276

13

30

6

214

8

5

49

13

bankruptcy

384

347

4

25

5

308

3

1

35

4

Substantiallybankrupt

99

70

4

0

0

0

64

2

4

2

borrowers

16

11

1

0

0

0

10

0

1

0

Bankrupt

33

14

0

0

0

0

0

14

0

13

5

0

0

0

0

0

5

0

22,68920,564

18,198

1,818

150

273

96

29

537

652

33,75033,96329,887

3,364

252

422

25

12

1,275

947

Normalborrowers

September 30, 2017

under strict
observation
Borrowers at
risk ofborrowers(Note 1) The chart displays the changes in the borrower classification from September 30, 2017 to September 30, 2018.
(Note 2) The balances after changes are the balances after write-offs as of September 30, 2018.

14

Market Strategy: Management by Risk Category(Units: Billions of yen)Six months ended September 30, 2018
Risk Category
(*1)

Book

Evaluation

balancegain / loss

839.6
438.6

Total

MarketVs. March

Interest and dividend income
Interest

profit /received

Increase/

Source of main revenue and profit

Procurement Profit / loss from decrease on gain /balanceComposition

+19.0

858.6

49.9%

(5.4%)

(1.6)

4.4

4.4

0.0

0.1

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

+11.9

450.5

26.2%

(5.8%)

(1.4)

2.7

2.7

0.0

0.2

(4.3)

38.4

+0.4

38.8

2.3%

(0.2%)

(0.0)

0.1

0.1

0.0

0.0

(0.1) Steepening yield curve

70.2

+0.2

70.4

4.1%

+0.2%

(0.8)

0.0

0.0

0.0

0.0

(0.8) Rise in expected inflation rate

Foreign currency bonds (with hedges)

240.2

(4.8)

235.4

13.7%

(3.2%)

(3.3)

0.9

2.7

1.8

0.0

(4.2) Difference in long and short term interest on overseas interest

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

2018

loss (*2)(*3)

purchase, sale,

cost

and amortization

loss on evaluation
vs. March 2018

Foreign currency bonds (without hedges)

128.3

+1.5

129.8

7.5%

+3.1%

2.6

(0.4)

(0.4)

0.0

0.0

+2.9 Gain on foreign exchange / interest revenue

Domestic and overseas stocks (incl. stock trusts)

149.2+232.4

381.6

22.2%

+2.9%

32.8

4.8

4.8

0.0

2.4

+25.6 Growth in domestic companies centered on transaction partners

Alternatives, etc.

108.2

+6.7

114.9

6.7%

+2.5%

2.6

1.4

1.4

0.0

0.0

+1.2

Hedge funds

48.3

+0.2

48.5

2.8%

+1.7%

(0.3)

0.1

0.1

0.0

0.0

(0.4) Strategic diversification by external consigned management

10.0

+0.2

10.2

0.6%

+0.0%

0.0

0.1

0.1

0.0

0.0

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

Real estate-related

45.7

+6.6

52.3

3.0%

+0.7%

3.1

1.0

1.0

0.0

0.0

+2.0 Revenue from real estate rentals and profit from price increase

Private equity

4.9

+0.1

5.0

0.3%

+0.1%

0.2

0.2

0.2

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

0.2%

(0.0%)

(0.4)

0.0

0.0

0.0

0.0

(0.4) Growth and foreign exchange gains in emerging markets

Cat bond

2.0

(0.0)

2.0

0.1%

+0.0%

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

1,465.4+254.81,720.3

100.0%

-

32.9

11.1

12.9

1.8

2.4

+19.4

Of which, currency swaps

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

211.2

(0.6)

210.6

12.2%

+0.8%

(0.3)

0.7

1.4

0.8

(0.1)

(0.9) Business continuity of domestic and foreign companies

Securitized products

6.0

+0.0

6.0

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

217.2

(0.6)

216.6

12.6%

+0.4%

(0.3)

0.7

1.4

0.8

(0.1)

(0.9)

Subtotal

15

Status of Integrated Risk Management[Status of integrated risk management (September 30, 2018)](Hundreds ofmillions of yen)

○ Operational risk・ Calculated by The Standardized
Approach○ Market risk (holding period of six
months, 99.9%)・ Take into account correlation
between different risks

BufferCommon stock,etc.
Tier 1(Nonconsolidated)

・ Core deposits: Use an internal model

Operationalrisk
Not utilized

・ Stock VaR: Includes strategic equity
holdings(Note) The holding period changed to six
months from the first half of 2018

○ Credit risk (holding period of one
year, 99.9%)

Market risk・ Business loans, etc.: Monte Carlo
methodCredit risk
Risk capital(¥581.1 billion)

Risk limit
Second half offiscal 2018(¥310.0 billion)

Risk limit
First half of fiscal
2018(¥298.0 billion)

Risk amount
September 2018
results(¥217.9 billion)

・ Loans for individuals: Analysis
method16

Dividend Trends and Shareholder Benefit Program
Dividend Trends

Shareholder Benefit Program

By working to maintain and improve business results, aim for stable
returns
At the same time, strengthen financial standing to withstand unexpectedchanges in the management environment

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

Ordinary
dividend●Grant ashareholder benefit(Imabari towel)

Commemorative
dividend

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 forshareholders●Donation

March
2009

March
2010

March
2011

March
2012

March
2013

March
2014

March
2015

March
2016

March
2017

March
2018

March
2019
(Plan)

17