★

★ ★

Medium-term Business Plan
Start-up

Kiraboshi

May, 2018 – March, 2021

May 1, 2018

Contents
Branch structure

The birth of Tokyo Kiraboshi Financial Group, Inc.

P.17

1

Overview of the Groupp.3

2Outline after the three-bank merger

P.4

3

Synergistic effects from three-bank merger and merger consolidation costs

P.5

15-A Provision of consulting services

P.18

4

Strategic branch policy and optimization of personnel allocation

P.6

15-B Leveraging of consulting functions

P.19

5

The future image of the Group

P.7

15-B Leveraging financial intermediary functions based on evaluations of businessfeasibility

P.20

15-C Initiatives for individual customers and promotional structure

P.21- Towards a comprehensive service business that is also strong in finance -Tokyo Kiraboshi Financial Group Medium-Term Business Plan
Outline of medium-term business plan/essentials of the business model
6

Outline of medium-term business plan

7

Approach to achieving targets ( Kiraboshi KPI)
- Understanding the customer and aiming as a result to “Create shared value with thecustomer” -8A business model that takes “dialogue” as its starting point- Building a structure in which the customer gives us the first call -9Main measures/functions supporting measures

P.9
P.10
P.11
P.12

Human resources development
10

Developing human resources that are trusted and chosen for their“dialogue” - Kiraboshi People -P.13

Business process re-engineering to strengthen contact with customers andbuilding a digital innovation strategy

Main measures

Functions supporting main measures
16-a Strengthening collaboration with local governments, etc.

P.2216-b Initiatives to support start-ups

P.23- Working to make Kiraboshi Bank the natural partner for start-ups -16-c Strengthening support in the areas of medical/welfare and overseas expansion

P.24

16-d Strengthening solutions that make use of the trusts function

P.25

16-e Rising to the challenge of new business domains such as FinTech,by using Kiraboshi Tech

P.26

16-f Strengthening group strategy through “dialogue”

P.27

17

P.14

Regional headquarters structure/“dialogue” with regions
Regional headquarters structure to achieve effective customer contact

P.15

13

“Dialogue” with regions

P.16

Securities investment strategy

P.28

Approach to risk management
18

12- Promoting “Thorough support for mainstay operations” for regional customers -Building a branch structure that takes into account “dialogue” with each region

Market strategy

Business process re-engineering
11

14

Building strategic risk management approach

P.29

Governance
19

Strengthening governance

P.30

2

1. Company profile■ Major Group companies■ Management philosophy

To be a financial group for small and medium-sizedenterprise customers and individual customers in theTokyo metropolitan area that will contribute to thedevelopment of local communities throughcomprehensive financial services
Kiraboshi Consulting■ Company history
December 1924
December 1951
April 2004
October 2014
September 2015
April 2016
June 2016
August 2016

September 2016
November 2016
January 2017
April 2017
October 2017
November 2017
May 2018

Founded The Yachiyo Bank, Limited
Established The Tokyo Tomin Bank, Limited
Established ShinGinko Tokyo, Limited
Business integration by The Tokyo Tomin Bank, Limited and The Yachiyo Bank, Limited
Established Tokyo TY Financial Group, Inc.
Signed the Agreement on a Comprehensive Affiliation for Industrial Development inTokyo with the Tokyo metropolitan government
Business integration between Tokyo TY Financial Group, Inc., and ShinGinko Tokyo,
LimitedBusiness and capital tie-up with Sumitomo Mitsui Trust Bank, Limited
Conditional upon obtaining approval from the relevant authorities, it was resolved ata meeting of the board of directors that there would be a merger between the threebanks on May 1, 2018, in addition to which announcements were made concerning
future business policies and overall strategy.
Treated Sky Ocean Asset Management Co., Ltd. as a company accounted for using theequity method
Alliance with Jimoto Holdings, Inc.
Alliance with Senshu Ikeda Holdings, Inc.
Established Kiraboshi Consulting Co., Ltd.
Formation of ToKI Meki Oen Fund 1
Established Kiraboshi Tech, Inc.
Birth of Kiraboshi Bank
Change business name to Tokyo Kiraboshi Financial Group, Inc.

■ Management policy
A bank that sparkles
Achieve enduring existence as a local regional bank through theprovision of unique financial services
A bank that rises to the challenge
Leverage the special features of the Tokyo area to continue to meet
new challenges in order to contribute to the development of ourcustomers and of local economies
A bank that brings together ideas
We put great value on the “ideas” of customers, the region, and our
employees so as to become a necessary and always trusted presence■ Vision aimed for

Become the urban regional bank group most favoredby customers in the Tokyo metropolitan area3

2. Outline after the three-bank merger
Bank after merger

Holding company

The origin of the bank’s name

The ideas we wanted to put into the logo mark and color

Constellation. Twinkling stars.
We want to make the dreams of our customers glitter even brighterin the Tokyo area.
Into this name we put our desire for something clean-cut that alsofeels easy to get to know, that takes the customers’ ideas into
safekeeping and uses them to bridge the way to the next generation.

Merger schedule

Effective date of merger
May 1, 2018

Tokyo Kiraboshi FG

Tokyo Tomin Bank

Yachiyo Bank

ShinGinko Tokyo“Kiraboshi” is a design representing somebody facing forward and beginning to walk with head held
high, and represents our feeling of wanting to move forward with and contribute to the local
community, as a bank that rises to the challenge.
Expressing our desire to become a bank that places great value on the “ideas” of customers andemployees, and to become a gleaming presence in local communities, we used dark blue to symbolize“trustworthiness” and “sincerity,” while yellow represents “future promise” and “independence.”

Core systems to be consolidated
by the target date of the first half of FY2020○ At the point of merger on May 1, 2018
ShinGinko Tokyo’s systems will be consolidated with those of Tokyo Tomin
Bank and the systems of Yachiyo Bank and Tokyo Tomin Bank will beconnected via a relay system.
○ Unification of core systems
By the target date of the first half of FY2020, Yachiyo Bank systems to beconsolidated with those of Tokyo Tomin Bank to unify core systems

43. Synergistic effects from three-bank merger and merger consolidation costs■ With regard to streamlining measures implemented as part of the one-bank approach, we will commit ¥2.5 billion in additional measures to theinitial plans for ¥8.0 billion.
■ By implementing these in tandem with more than ¥2.0 billion in revenue expansion measures, we will work to expand net core business income.

Synergistic effects from merger *Annual effects forecast to merge by FY2022
Previous
streamlining
measuresApprox.
¥8.0 billion

Additional
streamlining
measures¥2.5 billion
plus

Revenue expansion
measures, etc.

More than¥2.0 billion

Streamlining measures total① Improving headquarters efficiency:

Approx. ¥4.0 billion② Rebuilding existing branch network:

Approx. ¥1.5 billion③ System integration:

Approx. ¥2.5 billion① Improving headquarters efficiency:

Approx. ¥1.0 billion② Rebuilding existing branch network:

Approx. ¥1.5 billion③ Improving operating efficiency:

Several hundred
million yen① Improving headquarters efficiency
Approx. ¥5.0 billion② Rebuilding existing branch network
Approx. ¥3.0 billion③ System integration
Approx. ¥2.5 billion④ Improving operating efficiency
Several hundred million yen
Total more than ¥10.5 billion① Strengthening consulting functions to raise revenue② Customer-orientated problem-solving support (increasing loans to SMEs)③ Strengthening partnership promotion

Merger consolidation costs

Total investment in merger consolidation
FY2016¥1.1 billion of expenses posted

Approx. ¥20.0 billion (system integration, replacing signage, and handling customers, etc.)
FY2017¥3.0 billion of expenses
forecast to be posted

Remaining expenses forecast
to be posted in turn5

4. Strategic branch policy and optimization of personnel allocation■ Personnel engaged in overlapping headquarters operations will be reassigned to sales divisions, leading to a reduction in
total personnel of about 20% within 2 years after system integration■ Primarily review overlapping regional branches to result in reduction of about 30%

Optimizationof personnel

Strategic
branch policy

September 30, 2017

2 years after system integration

Total personnel

3,100

Approx. 20% reduction

Headquarters
personnel

700

Sales personnel

2,400Over half of headquarters
personnel to be switched tosales personnel

Offices

159

Approx. 30% reduction

Full banking branches

133

Specialized branches

26

Branch policies already implemented

Primarily overlapping
regional branches*Results since Tokyo TYFG established<Branch in branch> 10 branches to be consolidated to 5 offices<Specialized branches> 14 offices<Consolidation of headquarters functions into Aoyama/Shinjuku offices> <Shift to central operations center>
Branch policy scheduled to be implemented<Branch in branch> 20 branches to be consolidated to 9 offices (scheduled for August - October 2018)6

5. The future image of the Group- Towards a comprehensive service business that is also strong in finance -Three-bank merger

Roll out measuressimultaneously and in parallel

Streamlining measures
Synergistic Effects

Approx.
¥10.5 billion
Improving headquarters
efficiency
Total personnel
to be cut by approx. 20%

Strengthening of
consulting functions

Kiraboshi Bank
Thorough support formainstay operations
Establishment Kiraboshi
Consultingof
Kiraboshi Tech

Future image“A comprehensive service
business that is alsostrong in finance”

Main measures

Customer-orientatedsales structure

Consulting services

Rebuilding existing
branch network
Offices to be cut
by approx. 30%

Funding based on
business feasibility
evaluation

ImprovingOperating efficiency

Advice to individual
customers

FY2022
Target figures

ProblemSolving/
Mainstay
operations＜Tokyo Kiraboshi FG＞
Net income¥10.0 billion or
more＜Kiraboshi Bank＞
Net core business ¥16.0 billion or
incomemore
OHR
Less than 75%

Human resources
development

Developing “Kiraboshi People”

Business process
re-engineering

Increasing points ofcontact with customers

Group strategy

Enhance collective strength of the Group throughKiraboshi Tech and by investigating establishment of new companies

Digital strategy

7Tokyo Kiraboshi Financial Group
Medium-term Business Plan

8

6. Outline of medium-term business plan

Name

Start-up

Kiraboshi(Period)“A comprehensive service business that is
also strong in finance”○ Target for “first calls”① Creating “a new kind of urban regional bank for the
Tokyo area”② Commitment by the Group to contribute to thedevelopment of the Tokyo area
(having a tangible presence in the Tokyo area)

May 2018 - March 2021 (3 years)

Future image【Concept】③ Start-up spirit based on “Challenge & Speed”

7,000 annually

1. The consulting business ・・・・・ 7,000

Kiraboshi
basic strategy• Number of proposals made to support mainstay operations(corporates, owner managers)• Number of proposals made to support life plans (individuals)

2. Financing based on evaluationsof business feasibility ・・・・・ 600• Number of proposals made to resolve issues based on business feasibility
evaluations (corporation)

Numerical targets

FY2020<Tokyo Kiraboshi FG>
Net income¥6.0 billion<Kiraboshi Bank>
Net core business ¥12.5 billion
incomeOHR

80%

Through “dialogue”

The “Getting
the first call”
concept❶ Understand the customer deeply, and come to share their issues of concern❷ Provide proposals to resolve those issues❸ Gain their trust and become the bank they call first

Aiming as a result to “Create shared value with the customer”

97. Approach to achieving targets (Kiraboshi KPI)
- Understanding the customer and aiming as a result to “Create shared value with the customer” Through “dialogue”❶ Understand the customer deeply, and come to share their issues of concern❷ Provide proposals to resolve those issues ❸ Gain their trust and become the bank they call first[Basic strategy] Kiraboshi KPI （Think and Act process confirmation indicators)- Intermediate indicators that measure the process by which the final target figures are achieved① Understanding customers(corporates, ownermanagers)

Understanding oflife plan(individuals)

Kiraboshi KPI[Think and Act Process]

The consulting businessStep• Number of proposals made to support
mainstay operations (corporates, ownermanagers)• Number of proposals made to support
life plans (individuals)of which financing based on
evaluations of business feasibility

Final target

Creating shared value

Understanding ofbusiness feasibility

Basic strategy

Annually
7,000③ Increasing “first calls”

Number of customersof which anunderstanding has
been gained and issuesof concern shared② Making proposals
to customers

Number of proposals made to resolve
issues based on business feasibility
evaluations (corporation)
Support of sales offices
by headquarters

KGI
Customers

Improvements in corporate value
Improvements in satisfaction

Numerical targets
FY2020<Tokyo Kiraboshi FG>
Net income¥6.0 billion<Kiraboshi Bank>
Net core businessincome¥12.5 billion

OHR

80%

Contributing to therevitalization of regions
Regional development

A business model that starts with understanding the customer, and in which being selected by them ultimately leads to profits for the bank
*KPI・・・・Key Performance Indicator (items that measure whether the Think and Act processes that lead to the final target are being implemented appropriately)

KGI・・・・Key Goal Indicator(the final target)

108. A business model that takes “dialogue” as its starting point- Building a structure in which the customer gives us the first call Building a customer-orientated sales structure○ By gaining high-quality time with the customer, understanding their real needs and offering information and advice, we will establish acustomer-orientated sales structure that will lead to enhanced customer satisfaction

Customers①

Understanding the customer(understanding of business feasibility)

Dialogue②

Support formainstay
operations③

Support for
finance(knowing the customer)

Grasping
the truesituation

Visit(appointment)

Understandingneeds

What we obtainas a result

Proposalbased sales

Customersatisfaction
enhanced

Provision of
information

Consultation on business/life plan
Consultation on financing
Consultation on management

Finance

AdviceLoans/Equity
Financial products
FA

Sales offices (Support from headquarters staff)
Employeesatisfaction
enhanced

The first call cycle

Unique “Kiraboshi” strengths

What is “dialogue”? ⇒ Sincere discussion as aform of communication aimed at understanding theother and building relationships of trust, with thegoal of “creating shared value.”
The Group is committing resources to its consulting
operations, which are strong in the area of financial
support and which take “dialogue” as the starting
point, and will build a sustainable business modelthat enables it to get the “first call.”

Depth of dialogue
Face-toface*Financing based on
evaluations of businessfeasibility support of their
Sales mainstay operations

offices

Support forstart-upsNonface-toface

IB
ATM

Privatebanking

Medical andWelfareStrengthening
consulting
functionsUtilization of collaborative functions (with Tokyo Metropolitan Government andlocal governments, with regional banks, with SMTB, SOAM)

Utilization ofsmartphone apps
Evolution ofMaekyu services

Open API
FinTechservices

Utilization oftrust functions

SpecializationHigh* Financing based on evaluations of business feasibility means financing based on an understandingof the feasibility of the business and that uses both financial and non-financial information.

119. Main measures/functions supporting measures“Main measures and functions”“Customer” and bankDialogue

Beliefs of regions/beliefs of customers
Dialogue

Results/SuccessCustomers
12

Regional
headquarters
structure

13“Dialogue” with
regions
Branchstructure

15

Regional
headquarters<Information sharing>

Headquarters(support staff)

Upgrading skills/growth11

Enrichment of consulting functions(Support of sales offices byheadquarters)

Branches/sales offices

Business process re-engineering (creating time)
16
Customer needs

Consulting division(proposal-based)
Coordinating staff
Consultation on business/life plan

Consulting service

B

Sales-related divisions(proposal-based)
Finance staff
Consultation on financing

Financing basedon businessfeasibility
evaluation

C

Sales-related divisions(proposal-based)
Private banking staff
Consultation on management

A
Main measures

Regional
Headquarters
structureBank
employees

Sympathy with values and beliefs

Experience/Training

Kiraboshi People

Advice toindividual
customers

Functions supporting main measures

14

Bank
employees

Becoming a presence that enables
visions for regions/customers

10aCollaboration with local
governments
Collaboration with relatedorganizations, etc.

b

Initiatives to support start-ups(Making Kiraboshi the natural
partner for start-ups)cMedical and Welfare
Expansion overseasdStrengthening trust operationseRising to the challenge of the“FinTech field”

fStrengthening“Group strategy”

1210. Developing human resources that are trusted and chosen for their “dialogue”- Kiraboshi People ■ In these rapidly and continuously changing times, we will use the occasion of the birth of Kiraboshi Bank to practice a new style of leadership, and to develop
human resources who embody the business philosophy and management policies of the Group

Dialogue
Results/successWho are “Kiraboshi People”?
People who are able to win the trust of customers, act as if
standing in their shoes, and experience success as a result

Upgrading skills/growth

Development platform for “Kiraboshi People”

Kiraboshi People

Dispatched to related Groups
Fundamental financial
competence
Obtaining financial knowledge
Upgrading skills(schooling)

Training specificto each business

Implement
programs, etc. todevelop new humanresources in linewith development
policies
Innovation board

OJT
Departments
related toheadquarters(Trainee)

Improvecharacter/practical skills

New development programs
Sales offices

Self-development

Assigned to
Kiraboshi Tech

Assigned to
Kiraboshi Consulting

People who shine

Assigned to Shanghai
local subsidiary

Proactively dispatch, etc. personnel to externalorganizations both in Japan and overseas
Local governments
Public bodies, etc.

Financial
institutions,
Fund companies ,and others

Overseas(Financial institutions/publicbodies)Medical

Exchanges
with otherbanks

Exchanges
with otherindustries

FinTechIncubation

Training specific to rank
Open seminars

Experience/
training

Kiraboshi People

By expanding our information and knowledge in eachdomain, we will increase the added value we provide tocustomers

People who rise to thechallenge
People who connect
to other people
People who are
excited bytheir work

People whobring emotion
to their work

People who cancreate business

People who
enable visions

People whovalue newmeetings

Visible bankers

Individuals who tackle issues with originality and ingenuity
and are always ready to take on challenges

Developing “Kiraboshi People”

1311. Business process re-engineering to strengthen contact with customers andbuild a digital innovation strategy
Basic concept of business process re-engineering○ Realizing styles of working that make tangible the meaningfulness of work and enable emotional fulfillment

Three basic policies for realizing business process re-engineering○ Realizing “business and workflow re-engineering” that uses “abandoning,” “spinning off,” and “discontinuing” to put in place a stress-free operational environment○ Realizing “reform of executive and employee awareness” that results in moving from “ordinary” operations to the pursuit of work that makes people “thankful”○ Realizing styles of working (behavior) that generate new value and resolve issues through dialogue and relationships with many people, both among customers and inside andoutside the company

Conceptual view of changes caused by business process
re-engineering - From “operations” to “work” -Value added by work

High Value added by work

High

<Current situation>

Creating time for “dialogue” with customers

Work that provides added value tocustomers

Standardized operations
Operations that are difficult to provide
tangible added value to customers
Period of operations

Keywords in finance<Visionaimed for>Work that provides tangible added value to customers
・ Dialogue and enriched mutual understanding withcustomer・ Providing optimal solutions for each customer byusing internal and external networks

Work that “increases” and “enriches”
Simplification/
Standardization

Reducing the business burden of customers
by reviewing business procedures
Period of operations

Long

Keywords we should target

Long■ Establishing the business process re-engineering teamProject name: ZERO - Reforming work and the value of working -Spread of smartphones
AI (Artificial Intelligence)/RPA
Banking Act revision (Open API)*API = Application Programming Interface<Abandoning operations ⇒ Spinning off operations ⇒ Discontinuing operations>
Reforming awareness of “work”

Reforming the value of “work”■ Building a digital innovation strategy
・ Considering the formationof a digital strategy team・ Building a digital
innovation strategy for thegroup as a whole

Collaboration

Cashless
Passbook-lessSeal-less
PaperlessCard-less

Simplification
Greater efficiency
Concentration
Greater use ofoutsourcing
Digitalization
Automation

・ Collaboration with FinTech companies
by means of Open API
・ Business process re-engineering using
new technology (AI, RPA, etc.)
・ Open innovation with FinTech companies
and venture capital companies, etc.

14

12. Regional headquarters structure to achieve effective customer contact

Building omnidirectional
relationships
Our sales area is the whole of
the Tokyo Metropolitan area,
and we are aiming at an
omnidirectional sales style.

- Development of regional headquarters structure -with corporates◎Regional headquarters structure- Getting closer to the customer/region -Johoku/Nishi Tokyo

Josai
headquarters

with region
Tama> Knowledge regarding loans toreal estate> Community-based sales> Networking with local
governments, including

Sagamihara City and MachidaCity

headquarters

Tokyo ward area

“Dialogue”
Many micro-enterprises,
landlords, individuals
Sophisticated fund management
needs, consulting on
inheritances, etc.
Further regional collaboration

Joto

headquarters

Tokyo Mirai sales
department(Entire Tokyo
Metropolitan area)

CentralTokyo area
Sales
department
Large
branches

Jonan

headquarters“Dialogue”

headquarters

Small and medium-sizedenterprises are concentrated in
the Tokyo area.
Respond to corporate fundingneeds and business succession
issues.
> Management support for

M&A, business rehabilitation> Collaboration with Tokyo
Chamber of Commerce andIndustry> Knowledge regarding loans to

medical/welfare

Machida/Sagamihara,
suburban Tokyo areas
Sagamihara/
CentralKanagawa
headquarters

Machida/Yokohama/
KawasakiStrategic openingof new branches

headquarters

Introduce regional headquarters structure to devolve significant authority
to local offices to improve the sense of speed in responding to needs
specific to the special features of the region (market)

Strategic opening of new
branches(open territories)
Areas in which small andmedium-sized enterprises andindividuals are concentrated andthat we can expect to open up

15

13. “Dialogue” with region- Promoting “Thorough support for mainstay operations” for regional customers ■ With the regional headquarters at the center, we will develop close-knit multilayered “dialogue” with customers and regions, andtogether consider how to grow regional economies(We will strengthen our participation and cooperation with business activities conducted by public institutions, with local governments such as the Tokyo Metropolitan
Government and Kawasaki City as partners, and demonstrate initiatives aimed at the expansion of regional economies)<The role played by Kiraboshi Bank>① Develop new financial support menus, and provide
consulting and events that are helpful in the context of
supporting mainstay operations(Collaboration with local governments)

Chambers of commerce
and industry
Chamber ofcommerce andindustry② Support improvements in corporate value
Support for a richer lifestyle for customers

Improving corporate value for local small
and medium-sized enterprises
Grow regional economies/revitalize region as a whole

Corporation
associations

Beliefs of customers
Local communities

Dialogue

Dialogue

Johoku/Nishi Tokyo

RegionInvestigate beginning “dialogue”
with regions

Each regional
headquarters todevelop support
measures appropriate
to local circumstances

Residents'
associations
Neighborhood
associations
Beliefs of regions(Customers/small andmedium-sized enterprises, etc.)
DialogueSupport formainstay operations

headquarters

Consulting(Guiding support measures for local government
such as the Tokyo Metropolitan government)
Financial support

Dialogue

Machida/Yokohama/
Kawasaki

Shopping arcades

headquarters
Begin investigating “dialogue”
with regions

SupportTama
headquarters

Joto
Josai

③ Provide proposal activities, etc. to local governments aimed at
resolving issues and bringing to light the appeal of individual
regions, by taking a broad perspective on the revitalization of
the region as a whole

headquarters

Dialogue

Each regional
headquarters todevelop support
measures appropriate
to local circumstances

headquarters

Jonanheadquarters
Support measures

Kiraboshi Consulting
Voice of the customer
Proposal of measures

Sagamihara/
Central Kanagawa
headquarters

Dialogue

Local governments ofother regions, etc.

Support measures1614. Building a branch structure that takes into account “dialogue” with each region■Promote a branch-in-branch approach, primarily for overlapping branches, after the merger. Promote the switch from full banking branches toslimmed-down branches that match the special features of the region■Consolidate highly specialized personnel in full banking branches, create sales personnel, and build a sales structure that emphasizes“dialogue” with customers

Branchstrategy

Numberof offices

Contributing to the development of regional society
Supporting the growth of companies through“dialogue” with small and medium-sized enterprises
Diverse branch formats
Put into practice “key satellite” strategy
Branch in branch (BIB) strategy

Branch in branchlocations

Dialogue with[corporates]

OfficeFull banking branches

Areas where corporations
are concentrated

OfficeRegionRegionBy FY2022
Offices to be cut by approx. 30%
Combination of• Approx. 50 full banking branches
greater efficiency and• Approx. 50 slimmed-down branches

close regional
connections

SupportDialoguewith [region]

SupportSpecialized
branchesSpecialized
branchesSpecialized
branches

Full banking
branchesSpecialized
branches

Region Areas where micro-enterprises, landlords, Region

and individuals are concentrated

BranchformatBranch formats that are diverse and appropriate to thecharacteristics of the region/customers* Without being bound by the constraints of a full banking
branch, we will develop corporate offices, individual
branches (sub-offices), branches on higher floors ofbuildings, specialized branches, and mini-branches

Strategic
opening of
new branches

OfficeOfficeNew locations inopen territories

Office17

Main measures

Corporate and individual strategy

15-A. Provision of consulting services■ Strengthening consulting operations support structure○ Understand the customer through dialogue, and seek to build relationships of trust by providing optimal proposals that utilize the consulting functions○ Various types of support provided by Kiraboshi Consulting Co., Ltd. (IPO, strengthening governance, business succession, M&A, etc.), in addition to collaboration with financial
institutions, etc.
Consulting operations support structure (corporations, owner managers)

Kiraboshi Consulting

Customer (corporates, owner managers)

Expand added value provided by offering highly specialized advice

Sales offices*Assignment of consulting
leaders

Kiraboshi FG

Cooperation

FY2017FY2018FY2019FY2020

FY2021

FY2022<Main business areas>
Consulting division（expert）

Overseas Strategy
Division

Partnership Promotion
OfficeCoordinator

Medical/Welfare
Division

Growth Support Group
Start-Up Support Group

Trust Division

Cooperation

Region Headquarters Support Group
Mainstay Operations Support Group

Cooperation

FY 2022 target¥1.0 billion in net sales

Net sales plan

Unit: million yen

Dialogue

Dialogue

Collaborate to help visualize, expand, and newly create“intellectual assets,” which is the source of thecustomer's competitivenessDiscover issues and latent needs, create optimal proposals

Business value assessment

Share price measures

M&A

Inheritance measures, etc.

Business
succession

Capital policy support

Creating
businessvalue

External specialists

Support for drawing up business plans

Support for overseas expansion

M&A

Support for IPO

Transformation of profit structure, etc.

Consulting operations support structure (individual customers)
Strengthening
governance

Customer (individual)

Cooperation

Dialogue

Asset formation, asset management, etc.

Dialogue

Dialogue
Sales Supervision Department
Private Banking Office

Sales offices*Assignment of consulting Cooperation Coordinator
leaders

Consulting Division
Expert staff

Support for human resources, labor

Building internal control system

Risk management

Restructuring of organization, businesses, etc.

Financial institution partners,
etc.
Cooperation

SUMITOMO MITSUI
TRUST BANKSKY OCEAN ASSETMANAGEMENT CO, LTD.

SENSHU IKEDA HOLDINGS,
INC.
THE SENSHU IKEDA BANK,
LTD.
Jimoto Holdings, Inc.
Kirayaka Bank, Ltd.

The Sendai Bank,
Ltd.

Inheritance, real estate-related, etc.

18

Main measures

Corporate strategy ①

15-B. Leveraging of consulting functions■ Understanding business feasibility (understanding the customer) to discover latent needs and issues, and create optimal proposals■ As a result, we discharge our mission and responsibility as a regional financial institution in the Tokyo area

Responding to the financing needs ofcorporate customers

Initiatives stemming from theenrichment of consulting functions<Dialogue>

Major corporations

Previoustransactions

Improving corporate value(Support for mainstay operations)
Partnerships with local governments/
Support for expanding sales channels/
Support for securing human resources・・・

Resolving management issues(Support for finance)
Short-term rollover loans/ABL/Syndicated loans・・・

Various kinds of highly specialized support
M&A/Capital policy/Business succession/IPO・・・

Initiatives for owner/family (employees)

Improving corporate value/
improving satisfaction

Small andmedium-sizedEnterprises

Zone in which responsibility and mission
as a regional financial institution
in the Tokyo area is discharged

Enrichment of consulting functions

Small and medium-sized
sizedenterprises

Understanding the situation/Understanding needs/
Understanding business feasibility ・・・

Approx. 1 million companies
in Tokyo metropolis andKanagawa Prefecture*

Assets under custody/inheritance/productive use of realestate・・・

Micro-enterprises

Outcomes achieved/improved employee satisfaction*Source: Economic Census*In particular the target group, which is oriented towards growth and improvement: small and medium-sizedenterprises with annual sales of between ¥300 million and ¥5 billion

19Corporate strategy ②Main measures

15-B. Leveraging financial intermediary functions based on evaluations of businessfeasibility
Initiatives forintellectual asset management support

Examples of strengthening initiatives for management supportof customers based on evaluations of business feasibility

Understanding needs

Advice/FinanceVision aimed for• Collaborate to help visualize and expand the intellectual assets that is the source of the competitiveness ofcorporate and owner manager customers.
• Put in place a structure that enables us to discover issues and latent needs, and create optimal proposals• Build a development/training program for the human resources who will be responsible for visualizing customers'
intellectual assets

CustomerIntellectual assets• Human assets, organizational capabilities, business philosophy, networks withcustomers, technical skills, etc., items not posted to the balance sheet
Intellectual property

Borrowings

Business
succession＞

・ Stabilize financing by restricting
annual repayments to within
the range of cash flow
・ Reduce administrative burden
by consolidating transactions
with banks

Liabilities
AssetsLiabilities

Creating shared value

AssetsIntellectual assets

Technology

Consulting fees

[Future corporate value]
Increase in customers’
corporate value

Human
resources

Increase in loan balance• Patents, utility models, copyrights, etc.

[Current corporate value]

CapitalNormalization of financials

Kiraboshi Bank

• Brands, sales secrets, know-how, etc.

Intellectual property rights
Capitalinvestment

Creating shared value

Businessfeasibility

Improvementsin performance

Repayment
amounts

Resolving the
gap between
cash flow andrepayment
amounts

Borrowings

・ Profit-generating mainstay
operations(positive cash flow)
・ Financial issues caused bypast over-investment, etc.

Use of ABL

Cash flow

Businessfeasibility

Repayment amounts

Cash flow＜

Evaluationof businessfeasibility

Intellectual assets

Understandingof business feasibility(intellectual asset
management)

Management
philosophy
Intellectual
property

Understanding
based on dialogue

Increased revenue
opportunities for Kiraboshi
Bank obtained as a result

CapitalVisualization of intellectual assets
Utilization of intellectual property

Intellectual assets

etc.
Support by Kiraboshi Bank
(intellectual asset management support)

20

Main measures

Individual customer strategy

15-C. Initiatives for individual customers and promotional structure■ Initiatives as “day-to-day financial advisor” in preparation for realizing a customer-oriented sales structure○ Strengthening structures based on strategy for each customer segment/development of highly specialized human resources (cooperative structure between regional headquarters and sales offices)○ Focus on main target groups, including owners of small and medium-sized enterprises with whom it is possible to meet face-to-face, their families, employees of our customers, local people ofproperty, etc. in the “middle-affluent group” and the “core retail group”○ Strengthen support for elderly people in the region

Promote investment trusts in preparation
for the shift from saving to asset formation

Strategy for each customer segment

Super-affluent group

SolutionsSuper-affluent
group

People of property (upper)(Estimated financial assets of more than
¥1 billion)

Asset management/
Health management/
Education of sonsMiddle-affluent
group(Face-to-facesales)

Owners of small and medium-sizedenterprises
Families of the same
Leading regional influencers/peopleof property(Estimated financial assets of morethan ¥100 million)

Asset management/asset
administration
Inheritance support
Business succession
Productive use of real estate, etc.

Core retail group(Face-to-facesales)

Customer employees
General customers(Estimated financial assets of morethan ¥10 million)

Asset formation(core funds)
Various loans, etc.

Mass retail group(Non face-to-facesales)

General customers(Young group)

Asset formation
Various loans
Transactional lending, etc.

Implement consulting that begins with dialogue (day-to-day financial advisor)<Asset management/asset administration needs>
・ Strengthen initiatives aimed at shift from deposits to core funds. Towards “the shift from saving to asset
formation”
・ Expand number of highly specialized human resources and product line-up. Strengthen sophisticatedconsulting sales.
<Financing (loan) needs>
・ Speedy response to projects/demonstrate dominance in W loans/strengthen activities within area of
responsibility(Unit: ¥100 million)

Specialization

Mass retail group

TargetInvestment trust balances (plan)

High

Core retailgroup

Main target group

Middleaffluent
group

Customer group○ In preparation for “the shift from saving to asset formation,” accumulate investment trust balances◆ Strengthen proposals for long-term management

FY2018FY2019FY2020

FY2021○In preparation for “the shift from saving to asset formation,”
accumulate investment trust balances◆ Strengthen proposals for long-term management◆ Review evaluation of sales offices for core fund initiatives
eview evaluation of sales offices for core fund initiatives

Approach young group◆ Utilize the “Maekyu” platform of Kiraboshi Tech
◆ Collaboration with FinTech companies by utilizing Open API strategy

Build a support structure for elderly people in the region- Kiraboshi Bank's goal is to be a bank that supports the active seniorsof the region ・ Consider allocating partners to act asconsultants for active seniors in ways
appropriate to local characteristics
・ Support for senior founders

Strengthen
supportfor seniors

21

16-a. Strengthening collaboration with local governments, etc.
Strengthening partnerships with local governments, such as the Tokyo Metropolitan Government and related organizations

SME customers
Tokyo Metropolitan Governmentand related organizations

Results for collaboration with local governmentorganizations, etc. (benchmark)(Consultation)
Understanding
the voices anddesires of
SMEs

September 25, 2015 “Agreement on a Comprehensive Affiliation for
Industrial Development in Tokyo” concluded

・Support for small and medium enterprises (support
for commercial and industrial organizations, finance),
support for tourism trade associations, agriculture
and fisheries trade organizations, hiring andemployment support, etc.
Overall management support

Support for hiring and securing human resources

FY2016(Guidance
activities)

Introducing
variety of
supportofferings

Conveying the voices
and desires of SMEs.
Implementing policy
proposals, etc.

Number of start-ups supported in partnerships withlocal government organizations

52

Number of companies to which support for mainstay
operations has been provided in partnership with local
government organizations, etc.

648

Number of cases in which information has been
exchanged with local government organizations, etc.,with regard to support for mainstay operations

1,006• Kanagawa Prefecture and affiliatedorganizations / Kawasaki City
Public interest incorporated foundation
Kanagawa Institute of Industrial Science andTechnology
Partnership,collaboration

Partnership,collaboration

・ Support for resolving management issues and businessexpansion for SMEs and micro-enterprises

Local independent administrative agency
Yokohama Industrial Development Corporation
Technology support

Partnership, collaboration

Partnerships between industry and academia
Support for work style reforms/securing of human resources

・ Support work style reforms and securing of human resources for the
next word for small and medium-sized enterprises(matching of human resources using grants and Hello Work)・ Support problem-solving and opening of sales routes,
etc., by offering consulting functions to SMEs andmicro-enterprises
・ Supporting management issues of SMEs
(financing support, support for exchange of intellectual
property, support for start-ups, support for overseas
expansion, and support in areas such as hiring,
employment, and securing human resources)* Display those with which an “Agreement on aComprehensive Affiliation” have been concluded22

16-b. Initiatives to support start-ups- Working to make Kiraboshi Bank the natural partner for start-ups ■ Collaborate with Tokyo Metropolitan Government and external networks, and strengthen support structure for start-ups○ Provide a variety of solutions from the public, private, and banking sectors.
○ We will respond to the various needs of founders with a fusion of direct and indirect finance.
○ With the aim of making Kiraboshi Bank recognized among founders, entrepreneurs, and stakeholders as the natural partner for start-ups, we willreinforce our structures while developing various related measures.
<External start-up support agencies>
Preparation/
investigation

Drawing
up plans

Local governments, including the Tokyo Metropolitan
Government, and affiliated organizations

Cooperation,etc.

Venture capital

Various kindsof support

Start-up companies
Rapidly growing
companies andorganizations facing thechallenge of creating
markets and businessmodels from scratch

Kiraboshi Consulting Co., Ltd.
Consulting

Cooperation

Collaboration

Founders,
entrepreneurs

Various incubation facilities
・Machida Business Development Agency
・Sagamihara Incubation Center, etc.

Various specialists
Tokyo Startup Station
Crowdfunding operations businessJapan Finance Corporation “Kiraboshi Start-up Support”
Tokyo Chamber of Commerce and Industry

Start-Up Support Group/Sales offices
Investment

Investment Limited Liability Partnership“ToKI Meki Oen Fund 1”
Total value ¥1.0 billion

Equity investment

Venture fundTokyo Kanagawa Innovation Support Fund 1

Start-up support basedon cooperation between
headquarters andbranches

Building networks withincubators, etc.

Active participation inpitch events (sprout, etc.)

Conducting all kinds ofseminars for founders
and entrepreneurs

FY2016 results

Number of start-up support cases annually288

Financing to customers during start-up period

190

Support for drawing up start-up plans

41

Introducing financial agencies affiliated withthe government and institutions supporting
start-ups

53

Subsidies, financing, and investment inventure businesses

423

16-c. Strengthening support in the areas of medical/welfare and overseas expansion■ In the specialized department for the medical/welfare
field, we will provide not only finance, but also
multifaceted assistance by supporting mainstay operations
Medical corporations, private practitioners,
and business operators in areas related tocaregiving■ We will also utilize alliances with
Tomin Business Consulting Shanghai Co., Ltd,and the overseas branches of public bodies

We have business tie-ups with the Bank of Beijing, the Bank of Dalian, the Bank ofNingbo, Ping An Bank, and the Bank of Jiangsu (Wuxi Branch)

The number of counterparties forTokyo Kiraboshi FG foreignexchange-related transactions(corporates, owner managers) wasapproximately 2,900
Cooperation with Group
companies, etc.

Financing activities(FY2017 first half)

Our customers’
Chinese offices
Shanghai local subsidiary

Specialized medical/
Welfare department

Bank for Investment and Development of Vietnam

State Bank of India

Thailand Kasikornbank

Collaboration with Medical andWelfare Administrative
Structure K.K.

Business mediation
activities

Our customers’
other Asian offices

The Philippines Metropolitan Bank and Trust Company

Bank Negara Indonesia

Loan balance in medical/welfare field (result/plan)

Unit: ¥100 million

Our track record in terms of tradetransactions handled is one of the best of
all regional banks nationwide.
(Results of the fiscal year ending March 31,
2017)
Import transactions (outward
remittances/import settlements)
Approx. 39,000
Export Transactions (incoming
remittances/purchase of export bills)
Approx. 10,800

Further enhance our track record in the top class of regional banks for tradetransactions by strengthening export transactions

Export value

Unit: million dollars

Number of exports

Unit: number

Planned annual
increase of approx. 5%

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3

FY2016FY2020FY2016FY202024

16-d. Strengthening solutions that make use of the trusts function■ Utilize strength/know-how in trust functions within the Kiraboshi Bank branch network○ Strive to strengthen structural aspects, and further reinforce the products that differentiate us from other banks (Contrust)○ Expand revenue opportunities in real estate management trusts and create new revenue opportunities by developing new products“Contrust,” a public construction cost credit trust

Real estate management trust

Differentiation from and dominance over other banks

Expanded revenue opportunities■ This is a trust product that is backed by the credit strength of the entity
placing orders for public works, enabling contract payments for public
works to be converted into funds quickly and with agility■ Enhance real estate-related solutions menu of Kiraboshi Bank
(expand revenue opportunities)■ On April 1, 2017, ordering entities covered by this product wereexpanded to allow it to be used with public works construction orders
placed by Taito Ward, Meguro Ward, Nakano Ward (all part of Tokyo)
and Kawasaki City (Kanagawa Prefecture.)(as of April 1, 2017, 48 local governments, etc.)■ Due to the merger, it becomes possible to develop services within the
Kiraboshi Bank network (increasing our dominance in the product thatdifferentiates us from other banks)
Value of Contrust investment trust agreements

355

Unit: ¥100 million

Real estate management trust agreements (cumulative)

366

227

2018/3
2018/3FY■ Advantages of real estate trusts① Because the real estate can be converted to a trust beneficiaryright and transferred to a third party, the off-balance sheet effectimproves financial indicators② Converting the real estate to a trust beneficiary right enables
diversification of funding measures③ By outsourcing administration related to possession of real estate,
the burden of clerical work is reduced

5

2019/3FY
2019/32020/32020/3FY

FY3/2018
2018/3115
115

FY3/2019
2019/3

Unit: ¥100 million

215
215

FY3/2020
2020/325

16-e. Rising to the challenge of new business domains such as FinTech,by using Kiraboshi Tech
■ Strengthening the functionality of the Maekyu platform / utilizing it to challenge new business areas.
〇Kiraboshi Tech, Inc., established in November, 2017
〇Partnership with SBI Securities• The Maekyu business is a service that allows part-time and temporary staff working at companies to fulfill their various funding needs before payday*. Against the backdrop ofrecent labor shortages, it is being deployed by an increasing number of companies aiming to secure staff and improve retention ratios through offering generous benefits, and has
grown into an important source of income for the Group.

Previous business model for “Maekyu” operations
Approx.

Operatingcompany

1.08 million people

Deductions
from wages

Continuous
turnoverimplemented

Personnel

Wages

Part-timers, temporary staff, etc.

Paying inApplication
for use“Maekyu”-use
deductions data

Attendance
management data

Basic user data

After subtracting“Maekyu” usage amountTokyo Tomin Bank
“Maekyu System”■Employee data is continuously being updated with new data.
■The special feature is the function that enables direct settlement(deductions from wages).

“Maekyu” business, number of contracts,
number of employees registered
700

599

550

544
108

501

500

459

450

415

45

55

65

80

α

+
Shift
management
apps“Maekyu”apps

App development based ongathering and analysis
Number ofof needs

employees registeredwith “Maekyu”

1.08
million people

Operatingcompany100“Maekyu” system

80

Kiraboshi Bank

60
40
20

35

350

2012/3
2016/32017/3
12/3
FY 2013/3
13/3 FY 2014/3
14/3 FY 2015/3
15/3 FY 16/3
FY 17/3
FY

Number of employees registered(10,000 people)

Number of contracted companies

600

400

654

Number of companies contracted

Selecting services basedon gathering and analysisof needs

Kiraboshi Tech, Inc.

120

Number of employees registered

650

Towards new business domains

654 companies+

αTransaction
lending
Prepaidservices+αTravel/Education
services
Potential from accounts set up
with the intention of accessing
services other than “Maekyu”

Increase in “Maekyu” users, andpotential new accounts that could be
set up to access applications forservices other than “Maekyu”

From BtoB to BtoBtoC
Business alliances

Provides investment opportunities to the morethan 1 million registered users of “Maekyu” thatmatch their own investment plans0* A service whereby, even if an employee does not have an account with the Group, provided that the operating company at which they are employed has a contract with Kiraboshi Bank, if the employee submits an application, funds will be paid into
the account into which the employee's wages are paid as soon as the next working day.

26

16-f. Strengthening group strategy through “dialogue”■Restructuring and rebuilding of Group companies in preparation for “A comprehensive service business that is also strong in
finance,” as well as establishing the Group brand○ With the goal of providing solutions appropriate to the customer's life cycle, we seek to strengthen consulting functions, and to utilize the humanresources of all Group companies to improve service (human resource development by transfers within the group).
○ Accelerating the restructuring of Group companies with the aim of expanding and diversifying Group revenue streams.

⇒ Infinite expansion
Business model patents

Kiraboshi Tech
Develop “Maekyu” app andoffer to financial institutions
Develop license businessfor Kiraboshi BankTokyo Kiraboshi
Financial Group
Guaranty
company

Kiraboshi Bank

Tomin Shinyo Hosho(business name scheduled tochange to Kiraboshi Shinyo
Hosho on October 1)

Cards

Business
services

Kiraboshi JCB
Kiraboshi Credit
Service

Kiraboshi Business
Service+αYachiyo Shinyo Hosho

Kiraboshi Consulting'sStrengthening the foundations of the Kiraboshi Grouphorizontal activities
Overseas consulting(Shanghai local
subsidiary)

IT

Lease

Building
management
and cleaning

Tokyo Kiraboshi Lease

Kiraboshi Service

Tomin Computer System(business name scheduled
to change to Kiraboshi System
on October 1)27

17. Securities investment strategy■[Basic strategy]

・ Deal with high volumes of yen-bond redemptions by practising flexible buying and selling, and diversified
investing across a variety of assets
・ More sophisticated portfolio management by revenue management, based on comprehensive income

Assets under management to expand
as a result of the three-bank merger

Practice diversified investment
by reinvesting redeemed yen bonds
Yen bonds redemption value (¥100 million)

Value of securities
managed by Kiraboshi
Bank: ¥1,251.0 billion

1,606(Three-bank total,
first half of FY2017 base)

Management policy PDCA cycle

Three-bank total portfolio,
end of September 2017 base
9,339

SharesInvestment trusts &
other

1,941
382
847

FY2019FY2020Drawing up of
management
policyMajor measures
Unit: ¥100 million

Foreign-currency
denominated bonds

Introduction of portfolio management system
conforming to risk appetite framework
Strengthened ability to respond to market
fluctuations by using predictive management system
Prompt drawing-up of action plans in times ofvolatile markets
Thorough revenue management based oncomprehensive income

623
FY2018

Yen-denominatedbonds, etc.

1,366

More sophisticated portfolio management

Committing funds to risk assets with volatile
prices(Diversified investments in shares, REITs,
alternative instruments)
Promotion of portfolio dealing (swing trades inJapanese, US, and European government bonds)
Development of specialized human resources(reinforcing employees working on the front deskby means of the merger, dispatching trainees
externally)

Implementationof action plan

Implementation ofasset allocation

Monitoring
Predictive
management28

18. Building strategic risk management approach■[Basic strategy] Build a strategic approach to risk management aimed at enabling a sustainable business model/Thoroughgoing
review of compliance
Building Kiraboshi Bank's integrated risk management approach

Approach to risk management that can
respond to fluctuations in the market
environment

Risk management
Risk/Return analysis

Credit risk

Revenue

Credit risk management approach
matched to medium-risk strategy

Management

Operational risk
Liquidity risk

Unified management
for entire Company

Balance check

Sales department

Risk management approach suited tobranch strategy

Markets department

Risk
Understanding risk profiles
Precisely measuring the amountof risk
Establishing and managing risk
management methods

Risk department

Verifying appropriateness of risks taken to achieve
management strategy
Stress tests that take into account forward-looking scenarios,
and actions that take into account the results of the analysis
IRRBB

Money launderingcountermeasures

Building Kiraboshi Bank's compliance approach

Thoroughgoing review of compliance

CapitalReconfiguration of risk profile based on risk return analysis,
and optimized allocation between assets, liabilities, and capital

Risk management approach
suited to the scale andcharacteristics of each risk

Building risk management approach that takes
into account the need to comply with various regulations

Corporate planningdepartment

Stable funding ratio
Review of fund capitalrequirements

Building an approach inpreparation for Basel III

Expansion to risk appetite framework

Market risk

Towards moresophistication

More sophisticated risk management approach

Initiatives taken in preparation
for shift to internal credit
rating methods

Management
strategy

Risk taking
policyRevenueplan

Riskmanagement

Analysis/review

Basel III

Unified risk-compliance management approach matched to new risk profile, in accordance withGroup strategy/business expansion into FinTech, etc.

Nurturing a genuine customer-oriented mindset

2919. Strengthening governance
Issues for the Company

・ Early demonstration of synergies post merger
・ appropriate response to changes in management environment
・ strengthening of holding company business management approach

Strengthening of group management approach and prompt execution of duties

Strengthen internal control/internal audit functions, etc.

○ Prompt execution of duties as holding company, based on groupbusiness management approach centered around the bank
○ Plan, do, check, act (PDCA) for each kind of measure○ Strengthen functions of internal control/audit/risk management
departments
Tokyo Kiraboshi FG organization chart

Revitalizing Board of Directors, utilization of external experts○ Increase effectiveness of Board of Directors by securing sufficient time
to deliberate important resolutions○ Utilization of “Business Strategy Committee,” etc. that includes external
officers and external experts○ Management that takes into account diverse viewpoints by utilizing theknowledge of external officers

General Shareholders Meeting
Board ofCorporate
Auditors

Board ofDirectors

Strengthening
internal control,
audit, and risk
management
approachUtilization of Nomination/Remuneration Committee○ External officers make up a majority○ Considering introduction of performance-based remuneration for
executives in FY2018○ Ensuring transparency of director HR decisions/executive remuneration
decisions

Business Strategy Committee

Nomination/
Remuneration Committee

Utilization of knowledge ofexternal officers, etc.

Ensuring transparency andobjectivity

Promotion of dialogue with stakeholders

Kiraboshi Bank

○ Dialogue with stakeholders by means of timely and appropriate
information disclosure○ Gain understanding of issues and resolve them by implementing
surveys among customers and employees

Subsidiaries
Affiliatedcompanies, etc.

Kiraboshi
Consulting

Equity method
affiliate30

■ Please direct any comments or questions about these briefing

materials or other IR topics to the IR office below.

Tokyo Kiraboshi Financial Group, Inc.
Corporate Planning Division
TEL

03-5341-4301

FAX

03-3352-2296

This document contains forward-looking statements on
the Group’s results. These statements are not intended
to guarantee future results, as they are subject to risks
and contain uncertainties. Please keep in mind that
future results may differ due to factors includingchanges in the business environment.

31