Tokyo Kiraboshi Financial Group

Results Briefing for the First Half of the Fiscal
Year Ending March 31, 2020

December 10, 2019

Contents

Tokyo Kiraboshi FG

Overview of the Group

Medium-Term Business Plan Start Up☆Kiraboshi

P.17

Overview of the Group

p.4

Integration Effects and Improvement ofManagement Efficiency

P.18

Outline of the Birth of Kiraboshi Bank, Ltd.

P.5

Core Businesses Return to Profitability

P.19

Background of Core Businesses Returning toProfitability (1)P.20

Background of Core Businesses Returning toProfitability (2)P.21

Support at Diverse Stages

P.22

Summary of Business Results
Summary of Business Results for the First Half of the
Fiscal Year Ending March 31, 2020

P.7

Gross Business Profit

P.8

Loans and Yields

P.9

Enhancement of Overseas Strategy

P.23

Deposits and Assets under Management

P.10

Initiatives for Individual Customers

P.24

Securities

P.11

Digital Strategy

P.25

Problem Assets Subject to Disclosure under the
Financial Reconstruction Law and Credit-Related
Costs

P.12

Branch Strategy / Local Strategy

P.26

Group Strategy and Strengthening of Partnershipwith External Organizations

P.27

Capital ratio/Core OHR/ROE

P.13

Business Process Re-engineering to Strengthen
Contact with Customers

P.28

Developing Human Resources That Are Trusted andChosen for Their “Dialogue”

P.29

Initiatives to Strengthen Risk Management

P.30

SDGs Initiatives

P.31

Profit Plan and Strategy
Plan for the Fiscal Year Ending March 31, 2020
(announced on September 13, 2019)

P.15

Business Environment Surrounding the Group

P.16

2

Overview of the Group3

Overview of the Group■ 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■ 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■ Vision aimed for■ Company history
December 1924
December 1951
April 2004
October 2014
September 2015
June 2016
November 2016
January 2017
April 2017
November 2017
May 2018
September 2018
January 2019

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 in Tokyo with the Tokyo
metropolitan government
Business and capital tie-up with Sumitomo Mitsui Trust
Bank, Limited
Alliance with Jimoto Holdings, Inc.
Alliance with Senshu Ikeda Holdings, Inc.
Established Kiraboshi Consulting Co., Ltd.
Established Kiraboshi Tech, Inc.
Birth of Kiraboshi Bank (merger of 3 banks)
Changed business name to Tokyo Kiraboshi Financial
Group, Inc.
Established Kiraboshi Capital Co., Ltd.
Signed “Comprehensive collaboration agreement
concerning support for small and medium-sizedenterprises” with the Tokyo Chamber of Commerce andIndustry

July 2019 Business alliance with Shinhan Bank Japan…

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 presenceTokyo Kiraboshi FG

May 2020 Systems integration (scheduled)Become the urban regional bank group most favoredby customers in the Tokyo metropolitan area4

Outline of the Birth of Kiraboshi Bank, Ltd.
Bank after merger

Tokyo Kiraboshi FG

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.

Birth of Kiraboshi Bank

“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.”

Overview of Kiraboshi Bank, Ltd.

May 1, 2018

(Kiraboshi Bank, Ltd. non-consolidated as of September 30, 2019)

Location of head office

3-10-43 Minami Aoyama, Minato-ku, Tokyo

Capital¥43.7 billion

Total assets¥5,389.3 billion

Deposit balance¥4,608.2 billion

Loan balance¥3,678.5 billion

Tokyo Kiraboshi FG

Tokyo Tomin Bank

Yachiyo Bank

ShinGinko Tokyo

5

Summary of Business Results

6Summary of Business Results for the First Half of the Fiscal Year Ending March 31, 2020
Tokyo Kiraboshi FG(¥ billion)(¥ billion)
Item
No.

Kiraboshi Bank (non-consolidated)2018/92019/9Change1Ordinary income

39.4

39.1

(0.3)

2

Gross business profit

34.9

35.1

0.2

3

(Gross core business profit)

34.9

34.7

(0.2)

29.3

28.4

(0.9)

5.4

6.0

0.6

0.1

0.5

0.4

27.6

25.8

(1.8)

4

Of which, net interest income

5

Of which, net fees andcommissions
Of which, other businessincome6
7

Expenses

8

Of which personnel expenses

13.6

13.1

(0.5)

9

Of which non-personnel
expenses

11.6

10.4

(1.2)

7.2

8.8

1.6

7.2

8.7

1.5

0.2

0.7

0.5

10

Net core business income

12

Net core business income(Excluding gains (losses) on
cancellation of investment trusts)
Transfer to reserve for general possible
loan losses

13

Net business income

6.9

8.5

1.6

14

Non-recurring profit (loss)

(4.1)

(5.0)

(0.9)

－

－

－

11

15

Of which, reversal of allowance forloan losses

16

Of which, loss from write-off of
non-performing loans
Of which, gains (losses) on
stocks and other securities

17

1.2

2.9

1.7

0.2

0.5

0.3

(3.1)

(2.6)

0.5

2018/9results

2019/9results

2019/9plan

Year-onyear

Achievement
rate

Ordinary profit

2.6

2.8

2.7

5.6％

103％

Profit attributable toowners of parent

3.7

3.3

2.8

-9.9％

117％

Tokyo Kiraboshi FG(consolidated)Tokyo Kiraboshi FG
Tokyo Kiraboshi FG’s business results in the first half of the fiscal year ending March 31, 2020,
which reflected primarily the performance of Kiraboshi Bank, show ordinary profit of ¥2.8
billion, up ¥0.2 billion year-on-year and ¥0.1 billion above the plan, and profit attributable toowners of parent of ¥3.3 billion, down ¥0.4 billion year-on-year or ¥0.5 billion above the plan.
Kiraboshi Bank[Gross core business profit] ¥34.7 billion (down ¥0.2 billion year-on-year) *Details on p. 8.
[Expenses] ¥25.8 billion (down ¥1.8 billion year-on-year)
・ Cost reductions from the effects of the merger continued, resulting in a substantial
decrease year-on-year.
・ Recorded ¥0.3 billion (up ¥0.1 billion year-on-year) as merger and systems integration costs.
[Net core business income] ¥8.8 billion (up ¥1.6 billion year-on-year)
Recorded an increase of ¥1.6 billion year-on-year to ¥8.8 billion, reflecting increases ininterest on loans and discounts and in fees and commissions, coupled with cost reductions
from the effects of the merger.

19

Ordinary profit

2.8

3.5

0.7

20

Extraordinary profit (loss)

(0.0)

(0.0)

(0.0)

21

Income taxes

(1.1)

(0.1)

1.0

[Ordinary profit] ¥3.5 billion (up ¥0.7 billion year-on-year)○ Credit-related costs increased by ¥2.1 billion to ¥3.6 billion as a result of increase inprovision of allowance for loan losses due to customer default caused by inappropriate
accounting treatment and other events.
○ In non-recurring profit and loss, ¥1.3 billion of merger and systems integration costs wasrecorded as other non-recurring loss, a decrease of ¥0.6 billion year-on-year.

22

Net income

3.9

3.7

(0.2)

[Net income] ¥3.7 billion (down ¥0.2 billion year-on-year)

23

Credit-related costs （12＋16－15）

1.5

3.6

2.1

24

Merger and systems integration costs

2.2

1.6

(0.6)

18

Of which, other losses

7Gross Business Profit

Tokyo Kiraboshi FG

Gross business profit (Kiraboshi Bank) ¥35.1 billion (up ¥0.2 billion year-on-year)
Item. No.

(¥ billion)

Kiraboshi Bank

1

Gross business profit（3+7+8+9）2(Gross core business profit)

3

Of which, net interest
income（1-10）

2018/92019/9Change

34.9

35.1

0.2

34.9

34.7

(0.2)

29.3

28.4

(0.9)

4

Of which, interest on loans
and discounts

21.5

21.8

0.3

5

Of which, interest on
securities

8.9

7.1

(1.8)

6

Of which, interest on
deposits

0.6

0.5

(0.1)

7

Of which, net fees andcommissions

5.4

6.0

0.6

8

Of which, trust fees

0.0

0.0

0.0

9

Of which, other businessincome

0.1

0.5

0.4

10

Losses related to bonds(Government bonds, etc.)

(0.0)

0.4

0.4

[Net interest income] ¥28.4 billion (down ¥0.9 billion year-on-year)
・ With focused efforts on SME financing which led to growth in loan balance
as well as financing based on business feasibility evaluations which helped
to secure interest rates, ¥21.8 billion in interest on loans and discounts wasrecorded, up ¥0.3 billion year-on-year.
・ Despite continued efforts in yield improvement through portfolio
diversification, interest on securities decreased by ¥1.8 billion year-on-yearto ¥7.1 billion as a result largely of decrease in dividends from invested
funds which were recorded in the fiscal year ended March 31, 2018, anddecrease in securities balance due to redemption of Japanese government
bonds.
[Net fees and commissions] ¥6.0 billion (up ¥0.6 billion year-on-year)・ ¥1.7 billion (down ¥0.3 billion year-on-year) recorded from sale offinancial products.
・ ¥1.5 billion recorded from corporate customer business, up 0.5 billion
year-on-year, driven by consulting business based on dialogue with SME
customers.

8

Loans and Yields

Tokyo Kiraboshi FG

Financing to SMEs increased. Financing based on business feasibility evaluations
helped interest rates to bottom out.
■ SME financing increased through focused efforts in businessfeasibility evaluations and support of mainstay operations.
■ By beefing up SME financing which resulted in growth of loanbalance and by securing interest rates through financing basedon business feasibility evaluations, loan yields are showing signsof bottoming out.

■ Yields (Kiraboshi Bank)(Figures within brackets are year-on-year changes)

1.216(＋0.003pt)

Loan yield

1.184

1.183

1.186%

Yield
difference

1.181

1.156

1.157 (＋0.004pt)

1.161%

Deposit yield

0.035

0.028

0.026 (-0.001pt)

0.025%

18/3
2018/3

18/9
2018/9

19/3
2019/3

19/9
2019/9■ Loan balance by type of customer (Kiraboshi Bank)(The numbers in white are average balances for the term; figures withinbrackets are year-on-year changes; percentages are change rates.)

3,619.9

3,623.5

3,638.1(+40.1）
1.1%

3,678.2(+54.7）＋1.5%

3,676.2

3,653.8

3,696.1

3,678.5

166.7

160.4

153.2

（+24.7）＋0.6%（-13.2）
-8.2%

490.6

474.6

（-17.6）-0.4%（-6.0）-3.9%(¥ billion)
Local governments
Medium and largesized companies

SMEs

Individuals(Reference)year-on-yearchanges509.0

2,130.5

869.8
2018/3

2,144.0

858.6
2018/92,219.4

848.8
2019/3（-16.9）-3.5%（+13.4）
0.6%（-8.1）
-0.9%

147.2

457.7

2,232.8

840.7
2019/9（-32.9）-6.7%（+88.8）4.1%（-17.9）-2.0%■ Loan balance by industry (Kiraboshi Bank)(Figures within brackets are year-on-year changes; percentages are change rates.)

3,676.2

3,653.8

3,696.1

324.1
188.6
427.6
209.4
351.9

317.5
188.5
433.9
211.2
361.4

325.7
195.1
440.1
205.7
378.5

461.3

467.4

487.1

（+24.1）511.2（+43.8）

377.0

366.6

379.2

（+3.5）

382.7（+16.1） Services (10%)

869.8

858.6

848.8

（-8.1）

840.7（-17.9） Individuals (23%)

466.1

448.2

435.6

（-9.5）

426.1（-22.1）

2018/3

2018/92019/3(¥ billion)（-17.6）（-14.5）（-3.2）（-2.4）（-28.8）（+21.3）

3,678.5(Reference)year-on-yearchanges（+24.7）

311.2
191.9
437.7
176.9
399.8

2019/9（-6.3） Manufacturing (8%)（+3.4） Construction (5%)（+3.8） Commerce (12%)（-34.3） Banks and other financial
institutions (5%)（+38.4） Real estate brokerage (11%)

Real estate leasing (14%)

Other (12%)

9Deposits and Assets under Management

Tokyo Kiraboshi FG

Increase in balance of assets under management as a result of investment
management proposals tailored to customers’ life stages■ Reflecting such factors as branch relocations conducted during the fiscal year ended March 31, 2019 in conjunction with the consolidation of branch offices(branch-in-branch approach), balance of individual deposits decreased pushing down overall deposit balance by ¥9.0 billion year-on-year, despite increases inthe balance of corporate and other deposits.
■ Balance of assets under management increased as a result of investment management proposals tailored to customers’ life stages.

■ Balance of assets under management (Kiraboshi Bank)■ Deposit balance by client (Kiraboshi Bank)(The numbers in white are average balances for the term; figures withinbrackets are year-on-year changes; percentages are change rates.)(Reference)Year-on-yearchanges

4,766.0

4,640.5

4,589.3（-18.8）-0.4%

4,570.5（-70.0）-1.5%(¥ billion)

4,715.9

4,617.2

4,558.5（＋49.7）+1.0%

4,608.2（-9.0）-0.1%

Others

147.2

131.7

125.8

（41.5）
32.9%

167.3

（+35.6）+27.0%（+29.8）+2.1%

1,439.6

Corporate

1,410.2

1,405.0

1,409.8（+34.6）+2.4%(Figures within brackets are year-on-year changes)(Reference)Year-on-yearchanges(¥ billion)
Public bonds

477.6

489.9

492.0

（+1.4）

493.4（+3.5）

43.8

41.0

35.9

（-5.7）

30.2（-10.8）

228.4

228.4

241.5

（+4.4）

245.9（+17.5）

205.3

220.4

214.6

（+2.5） 217.1（-3.3）

2018/3

2018/92019/3

2019/9Insurance
Individuals

3,158.3

3,080.5

3,022.8（-21.6）-0.7%

3,001.2（-79.3）-2.5%

Investment
trusts2018/3

2018/92019/3

2019/9* Balance of assets under management of the former Tokyo Tomin Bank and former
Yachiyo Bank for the fiscal year ended March 31, 2018.

10

Securities

Tokyo Kiraboshi FG

Promotion in diversification of investment management and portfolio diversification whileaiming for risk diversification and stable profits■ Amidst low interest rate environment, the outstanding balance of securities decreased by ¥182.6 billion year-on-year, a large proportion ofwhich was accounted for by government bonds.
■ As a result of efforts in portfolio diversification, yield on securities in the first half of the fiscal year ending March 31, 2020 stayed at 1.36%,
securing the level of the fiscal year ended March 31, 2019.
■ Ladder type portfolio was constructed to achieve risk diversification and stable profits, and hence avoid increase in duration.
■ Continued efforts were made in diversification of investment management and portfolio diversification while ensuring control of risk amount inorder to avoid excessive risk-taking.
■ Yield on securities ・ Duration (Kiraboshi Bank)■ Securities balance (Kiraboshi Bank)(The numbers in white are average balances for the term; figures withinbrackets are year-on-year changes; percentages are change rates.)(¥ billion)
Other
securities
Stock
Corporate
bonds
Municipal
bonds
Government
bonds

1,235.7

1,207.8

1,200.4

1,219.6

Yields(Reference)Year-on-yearchanges

Duration

1,187.4 （-134.9） 1,052.5 （-155.3）

4.5

2018/3-12.8%-11.3%

1.47
1.36

1.35 （＋0.01pt） 1.36％

4.2

4.1

2018/92019/3years
3.9年

2019/91,089.2（-52.2） 1,037.0 （-182.6）
268.1

303.9

40.4

42.6

397.1
54.1

408.3
64.7

-4.7%

-14.9%

269.7（-21.3）-7.8%（-55.5）-18.2%(¥ billion)

31.0（-1.6）-5.1%（-13.2）-30.9%

PE funds, etc.

248.4
29.4

403.3

（-15.6）
-3.8%

387.7

（-20.6）
-5.0%

62.7

（-0.7）-1.1%

62.0（-2.7）-4.1%（-12.9）
-4.0%

309.3

（-90.5）-22.6%

440.4

399.8

322.2

2018/3
18/3

2018/918/9

2019/3
19/3

2019/9
19/9

Breakdown and trend of “Other securities”

Foreign securities

REITs
Investment trusts

18.3
16.8

180.6

20.9
200.2

176.6

22.1

160.1

35.2

45.3

41.6

40.0

42.2

35.4

30.5

23.9

18/3
2018/3

18/9
2018/9

19/3
2019/3

19/9
2019/911

Problem Assets Subject to Disclosure under the Financial Reconstruction
Law and Credit-Related Costs
Tokyo Kiraboshi FG
Ratio of problem assets subject to disclosure under the Financial Reconstruction Law
declined by 0.23 points. Credit-related costs increased by ¥2.1 billion.
Value and ratio of problem assets subject to disclosure under the Financial Reconstruction Law (in the case of partial direct write-offs)■ The value of problem assets subject to disclosure under the Financial Reconstruction Law decreased by ¥7.8 billion year-on-year to¥69.1 billion reflecting in particular efforts made in corporate restructuring support, while the disclosure assets ratio declined by 0.23
points year-on-year due to increase in the overall loan balance.
Credit-related costs■ Credit-related costs in the first half of the fiscal year ending March 31, 2020 increased by ¥2.1 billion to ¥3.6 billion, as a result of
increase in provision of allowance for loan losses due to customer default caused by inappropriate accounting treatment and otherevents. A fundamental reform of credit control structure was implemented in order to prevent occurrence of any new credit-related
costs.
■ Value and ratio of problem assets subject to disclosure (Kiraboshi Bank)

2017/9[After partial direct write-offs]
2.07

2.03

Disclosure assets
ratio

1.84 ％（-0.23pt）（-0.19pt）(Reference)(¥ billion)
Substandard loans

Doubtful assets

Bankrupt and quasibankrupt assets

76.7
2.8
66.6

76.9
4.7
66.1

2018/9(0.2)(Figures within brackets are year-on-year changes.)

2.06■ Credit-related costs (Kiraboshi Bank)

Year-on-yearchanges76.7 （-7.6） 69.1 （-7.8）
4.7 （-0.7）
4.0 （-0.7）
65.1 （-5.8） 59.3（-6.8）（-1.2）（-0.3）

7.3

6.0

6.9

2018/3

2018/92019/3

5.7(¥ billion)

2019/91.5

Change

3.6

2.1■ Coverage status of problem assets subject to disclosure under the
Financial Reconstruction Law (Kiraboshi Bank)(¥ billion)[Before partial direct write-offs]
2019/9Covered amount

65.2

Reserve for possible loan losses

21.4

Collateral, guarantees, etc.

43.8

Problem assets

83.9

Coverage ratio

77.7％

2019/912

Capital ratio/Core OHR/ROETokyo Kiraboshi FG

Capital ratio stood at 8.65%, core OHR at 74.3%, ROE at 2.29%■ Consolidated capital ratio (Tokyo Kiraboshi FG)
（%）

9.05

9.18

8.86

8.65%

281.3

284.8

281.3

278.4

2018/3

2018/92019/3

2019/9

Capital ratio(¥ billion)
Net assets

Capital ratio◼ Consolidated capital ratio of Tokyo Kiraboshi FG declined to 8.65%
due to increase in risk assets as a result primarily of increase in
SME financing, and decrease in net assets reflecting repayment ofsubordinated loans.
Core OHR◼ With gross core business profit remaining flat year-on-year andcost reductions from the merger effect continuing, core OHR
improved by 4.8 points year-on-year to 74.3%.
ROE (consolidated)◼ ROE (consolidated) declined by 0.27 points year-on-year to 2.29%,
primarily as a result of a ¥0.4 billion decline in profit attributable toowners of parent.

■ ROE (Tokyo Kiraboshi FG, consolidated)■ Core OHR (Kiraboshi Bank)（％）
2018/92019/3

2.56

80.2

79.1

80.7

2018/92019/3* Core OHR ＝

Expenses
Gross core business profit

× 100

1.68

2.29

74.3 ％* ROE (consolidated) =2018/3

2019/92019/9Profit attributable to owners of parent

× 100(Net assets at the beginning of the period + net
assets at the end of the period) ÷2

13

Profit Plan and Strategy

14Plan for the Fiscal Year Ending March 31, 2020
(announced on September 13, 2019)
Tokyo Kiraboshi FG■ 2020/3 plan
Tokyo Kiraboshi FG,
consolidated(¥ billion)
2019/3 results

2020/3
Initial planA

2020/3
Revised plan
B

Difference（B-A）

Ordinary profit

3.4

5.4

2.1

(3.3)

Profit attributable to owners ofparent

4.9

5.1

6.5

＋1.4

■ 2020/3 plan(¥ billion)
2020/3
Revised plan
B

Item
No.

2020/3
Initial planA

Kiraboshi Bank

1

Gross core business profit

67.6

65.6

66.9

＋1.3

2

Of which, net
interest income

57.0

55.1

56.1

＋1.0

2019/3 results

Difference（B-A)[Tokyo Kiraboshi FG]•

Consolidated profit attributable to owners of parent is
projected at ¥6.5 billion in the fiscal year ending March 31, 2020(up ¥1.4 billion from initial plan).

•

Consolidated profit attributable to owners of parent in
the first half ended September 2019 came to ¥3.3 billion(progress rate at 50% level)[Kiraboshi Bank]
•

•

•

3

Expenses

54.6

52.8

52.6

(0.2)

4

Net core business income

13.0

12.8

14.2

＋1.4

5

Credit-related costs

4.3

3.2

5.3

＋2.1

6

Merger and systems
integration costs

3.0

2.5

4.1

＋1.6

7

Ordinary profit

4.4

6.4

3.1

(3.3)

8

Extraordinary income
Gain on transfer ofShinjuku Office

－

－

5.4

＋5.4

9

Extraordinary loss
Restoration costs ofShinjuku Office

－

－

0.6

＋0.6

10

Income taxes

(1.3)

1.0

1.8

＋0.8

11

Net income

5.7

5.3

6.2

＋0.9

•

•

Net core business income: ¥66.9 billion(up ¥1.3 billion from initial plan)
Although interest on securities will likely decrease due partly
to decrease in securities balance resulting from redemptionof Japanese government bonds, an increase from the initialplan is projected as a result primarily of growth in loan balancefrom increased efforts in SME financing.
While income from sale of financial products is on the decline,
net fees and commissions from corporate customer businessare expected to grow, driven by consulting business based on
dialogue with SME customers.

Ordinary profit: ¥ 3.1 billion (down ¥3.3 billion from initial plan)
Credit-related costs increased by ¥2.1 billion from initial plandue in part to inappropriate accounting treatment by a customer.
Strategic investment to be implemented along with sale of
Shinjuku Office.
¥0.6 billion investment in efficiency improvement (non-personnel
expenses: groupware, paperless operation)¥1.3 billion of merger and systems integration costs foraccelerated implementation of measures initially planned for
FY2020 and beyond.
Above items to be recorded in 4Q, bringing ordinary profit to¥3.1 billion.

Shinjuku Office to be transferred to generate maximum
integration effects
With the transfer of Shinjuku Office which is owned by Kiraboshi Bank,
gain on transfer of ¥5.4 billion (after taxes) is projected. This will berecorded in 4Q together with restoration costs of ¥0.6 billion.
* Financial forecasts presented herein are prepared based on
information available as of the date of the announcement of thesebriefing materials. Actual results may vary due to various factors.

15

Business Environment Surrounding the GroupTokyo Kiraboshi FG

Provide support in the Tokyo area where a wide range of SMEs are concentrated○○

Secure first calls by providing tailored financial services to the large number of SMEs.
Initiatives implemented after the three-bank merger are steadily bearing fruit. Also, in line withgrowth of customers’ business, expansion of business opportunities can be expected.

Number ofEstablishments (June 2016)
Ranking

Prefecture（10,000)

1

Tokyo

69

4

Kanagawa

31

Tokyo and Kanagawa accountfor approx. 18% of total numberof establishments nationwide

Number of newly-establishedcorporations in Tokyo is increasing
year by year, and accounts forapprox. 30% of nationwide total.

Number of newly-establishedcorporations in Tokyo
Source: Tokyo Shoko Research, Ltd.

40,311

Saitama

40,926

Profitability: Low

Companies withannual sales of¥10 bn or more

Source: Economic Census
Chiba

37,25037,679Profitability: High

Tokyo

2015

Kanagawa

2016

2017

2018

Branch Network
・Tokyo124
・Kanagawa
36
・Saitama
3・Chiba1
Total

Total ¥139 tn

98.9%

Comparison of prefectural GDP (gross prefectural
domestic product) (FY2016）
Source: Prefectural Accounts

164¥39 tn¥38 tn¥22 tn164 branches 135 office(as of Sep. 30, 2019)¥20 tnPercentage of
SMEs in Tokyo

Companies withannual sales ofaround ¥0.5 to ¥10 bn¥20 tnSource: Industry and Employment in Tokyo 2019

Tokyo+Kanagawa

Aichi

Osaka

Saitama

Hyogo

Chiba

16

Medium-Term Business Plan Start Up

Kiraboshi From May 2018 to March 2021 (three years)
Tokyo Kiraboshi FG

Numerical targets

Concept(1) Creation of a “new kind of urban regional bank for the
Net income (FG), Net core business income (BK) and Progress status of OHRTokyo area”(2) Commitment by the Group to contribute to the
All items exceed numerical targets (final year) of Medium-Term Management Plan
development of the Tokyo area (with a tangible presencein the Tokyo area)
Net core business income （FG）
Net core business income（BK）(3) Start-up spirit based on “Challenge & Speed”
ResultMedium-Term Plan

Revised plan65

We aim at a management approach that, by maintaining “high-quality”
contacts with customers, local communities, investors and employees,
improves satisfaction for everybody.

60（2019/9）33（2019/9）
2019/3
19/3

2020/320/32021/321/32023/3
23/3

OHR
Result
80% ofMediumTerm Plan
numerical
target2019/3
19/3

2020/320/32021/321/32023/323/3※Changes in expenses
2018/3¥57.3 bn

80.7%

74.3%

(3) Business process re-engineering to strengthen contact

with customers
Realize work styles that make tangible the meaningfulness of work andenable emotional fulfillment through reform of awareness and valueof work.

125

88(2) Human resources development focusing on dialogue
Developing “Kiraboshi People”“Kiraboshi People” are able to win the trust of customers, think andact by putting themselves in their shoes, and experience success as aresultRevised plan
142

49

Main measuresabilities for being chosen and trusted¥16 bn yen or more

130

“Building a business model that takes dialogue as its
starting point”

Through enrichment of consulting functions, aim to be a bank to whichcustomers will give the first call.

Medium-Term Plan

¥10 bn or more

Business models(1) Enrichment of consulting functions

Result

19/3
2019/3

19/9
2019/9-4.7％
2019/3¥54.6 bn

-3.6％
2020/3 planned¥52.6 bn

In the Financial System Report published by the Bank ofJapan on Oct. 24, 2019, an annual rate of 1% reduction
in overhead costs is indicated in the assumption relating
to operating efficiency for measuring sustainability ofregional banks. Kiraboshi Bank has achieved cost
reduction of over 3% per year since the merger.

17

Integration Effects and Improvement of Management Efficiency

Tokyo Kiraboshi FG

Plan to achieve net core business income of ¥16.0 billion or more, net income of ¥10.0
billion or more
Fiscal year ending
Fiscal year ending
Fiscal year ending
March 31, 2021
March 31, 2020
March 31, 2022
(Medium-Term
Business
Plan)
Plan
Plan

Fiscal year ending
March 31, 2022
Plan

¥6.0 billion¥10.0 billion or more

¥12.5 billion

80％

Integration effects

Complete systems
integration
May 2020¥2.5 billion¥16.0 billion or more

Net core businessincome(Kiraboshi Bank)

75% or less

OHR
(Kiraboshi Bank)

Severalhundredmillion yen

Other efficiency
measures¥2.5 billion

Systems
integration¥3.0 billion¥2.5 billion¥2.5 billion¥1.0 billion¥1.0 billion¥2.2 billion¥3.4 billion¥2.0 billion¥1.8 billion¥0.7 billion

Additional costs

Synergy effects of
the integration
leveraging benefitsof the merger¥2.7 billion
Initial Plan
¥3.0 billion¥3.0 billion¥4.0 billion

Net income(Tokyo Kiraboshi FG)¥5.0 billion¥3.2 billion¥1.0 billion¥1.0 billion¥0.8 billion¥0.5 billion¥0.5 billion¥10.5 billion or more

Fiscal year ended
March 31, 2019
ResultRebuilding of
branch network

Improvement of
headquarters
efficiency

Merger / systems
integration costs¥1.8 billion

accelerated
implementation etc.

Total approx. ¥20.0 billion

18

Core Businesses Return to Profitability

Tokyo Kiraboshi FG

Core businesses return to profitability in the first half ended September 2019
Pre-merger

Post-merger

Trend in core profitability

10

Income fromcore businesses- ¥3.6 billion

Income fromcore businesses- ¥4.9 billion

Income fromcore businesses- ¥3.0 billion-10

2017/3

2018/3

2019/3

Income fromcore businesses+ ¥0.7 billion

2019/9-30-50
Income from core businesses = average loan balance x (loan yield – yield on deposits etc.) +income from fees and commissions –general and operating expenses

Issues pre-merger (FY2014-FY2017)

Achievements post-merger

Deterioration in financial market and decline ofcore profitability

Improvement of core profitability throughdevelopment of sustainable businesses

Decrease in loan margin due to decline in loan yields

Increase in interest on loans and discounts as a result of first call exercise andfinancing based on business feasibility evaluations. Steady growth also in fee
and commission income from corporate customers.

Income from fees and commissions dependent on sales of financial products

Transformation to a customer-oriented business without resorting
excessively to sales of financial products

Heavy costs attributed notably to rents of branches of regional banks in theTokyo metropolitan area, overlap of headquarters personnel

Cost reduction at an annual rate of over 3% from the merger effect19Background of Core Businesses Returning to Profitability (1)Tokyo Kiraboshi FG

Securing first calls x establishment of SF Div.：Provision of comprehensive financial services
SF Div.’s comprehensive financial services

First call exercise• With a business model that takes dialogue as its starting point, provided support for customers’
mainstay operations and financing based on business feasibility evaluations• In 2019/3, proposals were made to 11,290 contacts during the year (of which 6,035 deals were closed,
a success rate of 53%)
• In 2019/9, proposals were made to 6,147 contacts in just the 6 months (of which 4,428 deals wereclosed, a success rate of 72%)

Success rate of first calls is going up!
Number of contacts (count)
Achieved result
1.6 times the plan 11,290
7,000

Plan

• “SF Division” was set up in Jan. 2019 to offer proposals in highly specialized financial services (about 90
personnel)• The three functions of financing based on business feasibility evaluations, structured finance andmedial/welfare fields were consolidated• Loan yields improved with provision of fine-tuned financial services• By giving a push to the first call exercise, steady growth is achieved in fee and commission income from
corporate customers

Amount of loans extended and average interest rate

Result1.661%

Growing at a faster rate
than the 2018/9 period

1,000

1.569%

1.620%

1,100
LBO

900

700

6,147

(in ¥100 million, %)Non-recourse loans

500

ABL

Loans that led to main

2019/3

Profit2019/9bank relationship0
2018/9(¥ billion)

Approx. ¥1.8 billion in contribution to profit in 2019/9

Fee income

2019/3(¥ million)

1,200
2.0

1.8

First half result already closing in on
the roughly ¥2.0 bn recorded in 2019/3
2019/32020/3*Number of first call contacts• Number of contacts to which mainstay business support proposals were made(corporates and owner-managers)• Number of contacts to which life plan support proposals were made (individuals)

2019/9
1,050
LBO

900
600

Non-recourse loans

600

Syndicated loans

410

ABL

300

Loans that led to main bank0

relationship2018/92019/3

2019/920

Background of Core Businesses Returning to Profitability (2)Tokyo Kiraboshi FG

Securing first calls x establishment of SF Div.：Improvement in loan yields
（%）

1.30

1.287

Average loan yield

1.25

1.226

Yield bottoms out and resumes
uptrend in 2019/9

1.216

1.20

1.184

1.183

1.186 ％

2018/92019/3

2019/91.15
2017/32017/9Number of customers receiving loans based on
business feasibility evaluations (cumulative)

5,356

2018/3

Outstanding balance of loans based on business feasibility
evaluations (cumulative) (¥ billion)

10,991

637.6

9,826

370.3
2018/3

2019/3

2019/9

11,163

813.6

4,478

2017/3

Number is increasing

936.2

6,101

1,775

Number of customers whose mainbank is Kiraboshi (cumulative)

2017/3

2018/3

2019/3

2019/92017/3

10,361

2018/3

2019/3

2019/921

Support at Diverse Stages

Tokyo Kiraboshi FG

Support at diverse stages, from start-up to growth phase and maturity phase⃝ With the aim of making Kiraboshi Bank the natural partner for start-ups, provide support to founders and entrepreneurs in partnership with external organizations
as appropriate.
⃝ Established “Kiraboshi Capital” in Sep. 2018. Made active use of equity mezzanine finance by structuring “Yume Kagayaki Fund 1” and “Yume Habataki Fund 1” torespond to customer needs in business succession, etc.
⃝ Provide support in business restructuring, using “Tokyo Revitalization Fund”, “Tokyo SME Support Fund”.
Number of start-up support cases

Support from early stage to pre-IPO stage
5,322

IPO

4,851

3,012
288

Business
succession
Structured in Oct. 2017
(1) ToKI Meki
Oen Fund 1

Business
start-up

Structured in Mar. 2019(3) Yume Habataki
Fund 1

Buyout investment

・ Growth capital investment
・ Expansion investment

Tokyo Revitalization
Fund

Business
restructuring

Tokyo SME
Support Fund

2017/32017/3Structured in Nov. 20182019/3

2019/9Number of M&A support cases

48(2) Yume Kagayaki
Fund 1

2018/397

111

2018/3

2019/348
2019/9Number of business succession support cases

・ Venture investment

Stage

460
Start-up phase

Growth phase

Maturity phase

672

760
377

Decline phase2017/3

2018/3

2019/3

2019/922

Enhancement of Overseas Strategy

Tokyo Kiraboshi FG

Enhance overseas strategy through expansion of overseas networks and use of offshore funds
Kiraboshi Bank’s new overseas strategy

Successful example of overseas support

Asian business support in Japan and overseas

Case of time machine model<Southeast Asia market>➢ Issue:⚫ High economic growth, market expansion,
population growth⚫ Market that can, now and in the future, takein technologies and services which in Japan
are in their maturity stage⚫ Time machine model

Needs of SMEs

Intermediation by
Kiraboshi Bank

⚫ Overseas expansion⚫ Business development of own products andservices in overseas markets⚫ Local information⚫ Alliance with local companies, etc.

Aug. 2009
Consulting subsidiary in Shanghai, China
Kiraboshi Business Consulting Shanghai Co., Ltd.

Oct. 2019
Opening of consulting subsidiary in
Ho Chi Minh, Vietnam
Personnel
dispatch to
local banks

VietnamThailand

Sep. 2019Conclusion of businessmatching agreementwith HIS

Market maturation
Asian markets as anextension of thedomestic market

China➢ Action taken: Business matching by Kiraboshi Bank’s Vietnamese subsidiarysucceeded in identifying a local company B that matched theneeds of Company A.
Discussions developed into Company B envisaging that “Company
A’s technologies have high added value in Vietnam and can open
sales channels to large local corporations which traditionally were
not targets for Company B”.
➢ Results: Company A was able to find a new revenue opportunity withpotential for expanding distribution of its products in the
Vietnamese market.

July 2019
Business alliance with Shinhan BankJapan (Shinhan Financial Group)

Southeast Asia

Singapore
Hub of information
related to Asia

Manufacturing company A is faced with a challenging outlook in
expanding sales of its products due to such factors as the
products’ already high penetration of domestic market in Japan,
pricing pressure from intensifying competition, and market
saturation.

119 offices

・・・ Shinhan Financial Group
locations(as of July 2019)

Capital injection andpersonnel dispatch to
local funds[Signing ceremony withShinhan Bank Japan][Opening ceremony ofsubsidiary in Vietnam

23

Initiatives for Individual Customers

Tokyo Kiraboshi FG

Development of high quality consulting services to meet customer needs
Strengthen customer-oriented marketing structure for individual customers
Headquarters

Super-affluentgroup

PB teamMain target group

Financial advisor
Middle-affluent
group

Collaboration /support“Dialogue”

Sales officeCore retail group
Proposal-based
marketing ofdeposits andfinancial products

Mass retail group

With the objective of deepening customer-oriented business operations,pushed forward with the development of securities business as well asactivities that would bring “enjoyment/happiness to customers”
as measurement for “evaluation of sales offices”.
Gradual abolishment of profit target related to sales of financial products, startingwith specialized branches catering to individual customers(Expanded from 3 branches in Apr. 2019 to 24 branches in Oct. 2019)）
Gradual implementation of evaluation system based on contribution tocustomers’ benefits and customer satisfaction, starting withspecialized branches catering to individual customers
Establishment of securities subsidiary, subject to regulatory approval(operations scheduled to be launched in August 2020)

Asset consultant

Staff in charge of retailcustomers

Expansion of asset management options by providing a one-stop shop throughKiraboshi Bank for offering various financial products and services.
Securities account opening/product introduction

Staff in charge of asset
management
Encourage visit
to branch offices

Loan plaza / center

Measures related to customer-oriented business operations

Customer

Housing loan/mortgage loan proposal marketing

Application for sale/purchase of products
and various related procedures
Contract related processes

Kiraboshi BankIntermediation insecurities
transactions, send
documents, etc.

Entrustoperations

Securities subsidiary

Initiatives using trust functions
Proposals on property management geared to an aging society. The first trust product for individuals.

Launch of “Longevity Support Trust”（scheduled for Jan. 2020）

Product
features(1) Necessary fund can be withdrawn with the consent of a close
relative designated in advance(2) Necessary living expenses are deposited into
[Bank engaged in trust
an account at fixed time and fixed amountbusiness activities](3) Swindlers trying to approach are shut out.
Second largest among(1) “Contrust”, a public construction cost credit trust

Conventional(2) “One Trust”, a real estate management trust
products

regional banksin trust property value(as of Mar. 2019)

Kiraboshi Life Design Securities Co., Ltd. (scheduled)【The ideas we wanted to put into the company name】
Seek to be an organization that thinks together with the customers, runs alongside
the customers to help them feel enjoyment and happiness, can earn the trust also
from customers’ family members and be a bridge to the next generation, andthereby supports customers realize their ultimate objectives in building their assets.

24

Digital Strategy

Tokyo Kiraboshi FG

Development and provision of Maekyu service using FinTech
Toward the goal of realizing a comprehensive service business that is also strong in finance■Actively engage in discussions with regional banks for collaboration in Maekyu service for wide-area expansion of the business■Planning to add payment processing service during FY2020, by developing electronic money, digital wallet and other functions

e-money“Maekyu”

Collaboration
with regionalbanks

WalletLending

Payment

Use of data

『前給』New services
Foreignworkers

Digitalbank

Creation ofshared value
withcustomers“Maekyu” service Number of subscribers: over 700 companies (as of Mar. 2019)
Usage per year: around 1,110,000 uses (Apr. 2018-Mar. 2019)25

Branch Strategy / Local Strategy

Tokyo Kiraboshi FG

Build a new branch network to meet the market needs of the Tokyo area
September 2019

September 2017

March 2023

April 2019
Number of
offices

Kawasaki Corporate
Business Officeopened159

to strengthen promotion of
corporate lending business in
Kawasaki, a city with aconcentration of businessestablishments

Full service bankbranches

133

Number of offices

135
Full service bankbranchesSpecialized branches

26

25

Regional headquarters
structure(entire Tokyo metropolitan area)

Cashless

Specialized branches•

Paperlessapprox. 50•

Efficiency improvement throughcentralized back office processing, etc.

headquarters

Tokyo ward area
Josai

Central Tokyo area

headquarters

Head Office
Sales Division

Tama

◼
◼
◼

Substantial delegation of authority to theseven regional headquarters
Community-based sales activities
Flexible deployment of personnel amongst
the regional headquarters

Large branches

headquarters

Jonan
Machida/Sagamihara,
headquarters
suburban Tokyo area
Machida/Yokohama/
Sagamihara/
KawasakiCentral Kanagawa
headquarters

•

Joto

headquarters

Corporate sales offices that are alignedwith the special features of the area
Establishment of presence, such as
specialized branches catering to individual
customers, in areas that are currently notcoveredDevelopment of “next generation type”
branches

approx. 50

Johoku / Nishi Tokyo
Tokyo Mirai Sales Division•

Full service bankbranches

110

Specialized branches•

Number of offices reduced
by about 30%
from Sep. 2017
Number of offices
around 100

headquarters

Respond to the needs specific to thespecial features of the area (market)
with a sense of speed and through“dialogue” with the community andcustomers

26

Group Strategy and Strengthening of Partnership with External Organizations
Tokyo Kiraboshi FG

Enhancement of functions within the Group andstrengthening of partnerships with external organizations
Group strategy
Oct. Establishment of Tokyo FY Financial Group, Inc.

Partnerships with external organizations
2014
2015

Sep. Conclusion of Comprehensive Collaboration Agreementwith Tokyo Metropolitan Government

Apr. Business integration with ShinGinko Tokyo
Aug. Investment in Sky Ocean Asset Management Co., Ltd.

2016

June Business and capital tie-up with Sumitomo Mitsui Trust Bank, Ltd.
Nov. Alliance with Jimoto Holdings, Inc.

Apr. Establishment of Kiraboshi Consulting Co., Ltd.
⇒to strengthen consulting functions aimed at enhancing
comprehensive financial services
Nov. Establishment of Kiraboshi Tech, Inc.
⇒to expand into the FinTech area

2017

Jan. Alliance with Senshu Ikeda Holdings, Inc.
Aug. Alliance with Tokyo Metropolitan University

May Merger of the three banks
Sep. Establishment of Kiraboshi Capital Co., Ltd.
⇒to respond to the needs in mezzanine, funding (including IPOs)

2018

May Alliance with Orix

May Launch of leasing brokerage business
Oct. Opening of subsidiary in Vietnam
Dec. Establishment of securities subsidiary (scheduled)⇒to embrace a new challenge of developing securities businessin the Tokyo area

Jan

2019

Conclusion of Comprehensive Collaboration Agreement with

Tokyo Chamber of Commerce and Industry
May Conclusion of agreement for investment in ASEAN Region Funds
July Alliance with Shinhan Bank Japan ⇒to strengthen overseas support
Sep. Alliance with freee

Building a comprehensive service business that is also strong in finance27

Business Process Re-engineering to Strengthen Contact with Customers
Tokyo Kiraboshi FG

Improve operational efficiency and increase ”dialogue” with customers(2) IT/Digital Strategy Project Team

(1) Promotion Project “ZERO”
Conducted a survey on sales offices to identify timeconsuming or burdensome processes, based on
which re-engineering measures were implemented.
Implemented measures to simplify and streamline
processes such as deposit seal slip, address change
procedure, loss related work, real estate related
work, inheritance work. The exercise is still ongoing.

“Goal”
Seal-less, cashless,and paperless bank

Piloting business process re-engineering program
Conducted trial exercises in Setagaya Branch andKanda Central Branch, to review deposit, loan andother office forms, with a view to achieving asignificant reduction in document storage.
Also conducted trial exercises in Kanda Central Bankand Shinjuku Head Office Sales Division, to review
office forms related to loans and sales operations.
Going forward, it is planned to introduce paperless
operation in all sales offices.

(3) Trial implementation of teleworking andfree address

Administrative work volume reduced or
streamlined

Prepared an environment enabling officers, regional
general managers, head office sales personnel, etc.
to work while on the move, visiting sales offices orout of their office by using tablet computers, tocreate time for “dialogue” with customers.

Changes in volume of administrative work reduced (hours per year)(1) (2) (3) (4)105,000

An expense settlement system was introduced in all
branches in order to improve operational efficiency. A
trial deployment of RPA tool etc. in head office
operations will be carried out to identify issues, which
will then be reviewed for phased application to branch
operation.

(4) Improvement of operational efficiency• With the sale of Shinjuku Office, ¥0.6 billion to be recorded
in FY ending March 2020, for strategic investment inconstruction of groupware and implementation of paperless
operation in order to achieve further improvement ofoperational efficiency.
• Plan to arrange about 1,000 PCs and 1,900 smartphones for
distribution to sales personnel.

(1)
5,000

8,500

2019/32020/3
Projection

2022/3 Plan28

Developing Human Resources That Are Trusted and Chosen for Their “Dialogue”
Tokyo Kiraboshi FG

Aiming to develop Kiraboshi People who can think and act
Concept of human resources development

Realizations and behavior modification

Development platform for Kiraboshi People[Who are Kiraboshi People]
People who are able to win the trust of customers,
think and act by putting themselves in their shoes, andexperience success as a result

Dispatch to externalorganizations in andoutside of Japan⃝⃝

Improve attributes/practicalskillsFundamental financial
competence◼
◼
◼

Obtaining financial knowledge
OJT
Self-development

◼

⃝
⃝
⃝
⃝
⃝
⃝

Implement new programs for humanresources development in line with
HR development policies
Kiraboshi report
First penguin program
New leadership program
Innovation board
Training specific to rankTraining camp for mid-career staff
jointly with officers

⃝
⃝
⃝
⃝

Administrative organizations/economic
organizations
Financial institutions, fund companies,
and others
Graduate schools
Overseas related (finance/public)
Medical related
FinTech related, etc.

Dispatch to affiliatedGroup companies⃝⃝⃝⃝

Kiraboshi Consulting
Kiraboshi Tech
Kiraboshi Capital
Shanghai subsidiary and Ho
Chi Minh subsidiary

Personnel reform◼ Initiated measures for reforming corporate culture and employees’ awarenessunder the banner of “visualization of HR information”, “promotion of internal
communication” and “support for employees’ individual career design”.
◼ Introduced talent management system, conducted an assessment of personal
attributes on all officers and employees, organized a trial workshop for
deepening self-understanding and mutual understanding. Used the functionsof the system to initiate actions for disseminating information on internal
community activities, voluntary conversation and study sessions.
◼ In conjunction with “visualization of HR information”, started trial
implementation of 1-on-1 meetings, communication surveys and 360 degree
evaluation as measures aimed at promoting internal communication.

[First Penguin Program (FPP Training)]◼ Implementing original training program that ensures “psychologicalsafety” based on self-understanding, mutual understanding and selfreflection. The program runs over a three year period and is intended
for young, mid-career and leader level employees.
◼ For the leader level program, an overnight camp of dialogue training
session was organized, in which President Ajioka, President Watanabe
and other members of the top management participated. This is also
an ongoing program.

[From training to self-action]◼ Participants who completed FPP training launched a community teamcalled “KI-BANG”, and are engaged in diverse voluntary activities.
◼ For instance, they have arranged “conversation session between thepresident and young employees”, “conversation session among midcareer and young bank employees from various sales offices”, “SDGs
game study session”, “trade game study session”, and “complaints
contest for new bank employees”.

Work style reform / diversity◼ Positioning “work style reform” as one of the priority issues for the management, promoted“’Kiraboshi style’ work style reform” through such activities as promotion of women’s active
participation and advancement, and “lifestyle reform” that attaches importance not only to work but
also to private lifestyle.
◼ Set up “Diversity Promotion Section” and “Project team for the promotion of work style reform”,
encouraged both male and female employees to take childcare leave, organized events such as“Kiraboshi Women’s Inclusion Network” with the intention particularly to promote women’s active
participation and advancement.
◼ Abolished performance target for first and second year employees. This period is to be used as“development period” to cultivate
their ability to have “dialogue”◼ Introduced flex-time system◼ Recruited foreign nationals◼ Conducted joint training sessions
Networking of employees who tookwith SBJ personnel
Kiraboshi Women’s Inclusion
childcare leave

29

Initiatives to Strengthen Risk Management

Tokyo Kiraboshi FG

Ensure full commitment to compliance, strengthen risk management
Credit risk management

Compliance◼

◼

To prevent misconduct, implemented radical measures aimed at
establishing a corporate culture that gives top priority to compliance,with advice and support from outside directors and external experts
Implemented measures to strengthen compliance functions, including
an exhaustive examination of possible occasions for misconduct andoccurrence of administrative risks, review of operational processes,
and reconstruction of the three lines of defense◼

Conducted compliance awareness survey to understand the actual
situation, and implemented measures to address the issues◼

Reemphasized the availability of the whistle-blowing system which
serves as a point of contact for Group personnel to discuss or reporttheir problems◼

Strengthened measures for anti-money laundering and combating thefinancing of terrorism. (In Oct. 2018, established AML/CFT groupwithin the Compliance Section of Risk Management Department, useof external experts.)◼

Strengthened credit risk management functions in anticipation of
economic slowdown, etc.

◼

Made available allocation methods in line with diverse financing
methods◼

Conducted study on introduction of basic internal credit ratingprocess as part of a more sophisticated risk management

Market risk management◼

With respect to the materiality test of the new interest rate risk in thebanking book (IRRBB), provisionally started trial calculation since June2018 (on a quarterly basis)

Internal audit◼

Strengthened audit processes in line with risk profile based on
business model, business strategy and organizational structure◼

Put in place an operational structure by drawing on the insights andperspectives of audit corporations, outside auditors and otherexternal experts.
Implemented initiatives to transform from compliance audit to
management audit
Use of a third party evaluation organization may be considered.

◼
◼

30

SDGs Initiatives

Tokyo Kiraboshi FG

Create “social value”, contribute to the development of local communities■In May 2019, the Group adopted the SDGs declaration, the main themes ofwhich are “environmental protection”, “contributing to local communities”,“creation of shared value with customers”, “employees’ work style reform andpromotion of diversity”, and “dialogue with shareholders and investors”, withthe objective of creating “social values” through provision of a variety of
products and services, and turn them into “economic values” of the Group.

Return to shareholders◼ Recognizing the public nature of its role as a bankholding company, the Group strives to ensure
financial soundness by maintaining appropriate
internal reserves, and adopts a basic policy of
implementing consistent and stable dividends as
it regards returning profits to shareholders as a
key management priority.

Major activities•Blood donation activity

Kiraboshi Bank Day© F.C.TOKYO•Dementia supporter initiative• Support for activities to grow low pollen forests(Cooperating in “Corporate Forests”, a forest
preservation project, organized planting activity
at “Kiraboshi Forest”)•Certified as“Eruboshi” (withthe highest rank)by the Ministry of
Health, Labourand Welfare

・Excellent Company in HealthSilver rank
（Certification #940 Silver）• Investment in Tokyo Green
Bond and green finance(Green Jointly Operated
Designated Money Trust)

Photo credit: courtesy of the Tokyo
Metropolitan Government• Aoyama Office(use of rainwater/solar power generation),(Temporary stay facilities for people having ・Aoyama Officedifficulties returning home)31

Figures of “Kiraboshi Bank” for the periods up to the fiscal year ended March 31, 2018 are sums of
the pre-merger figures of the former Tokyo Tomin Bank, the former Yachiyo Bank and the former
ShinGinko Tokyo.

In conjunction with the merger of the three banks effective May 1, 2018, the former Tokyo Tomin
Bank and the former ShinGinko Tokyo were liquidated effective April 30, 2018. However, from thepoint of view of appropriate period-over-period comparison of each item, the figures of “Kiraboshi
Bank (non-consolidated)” presented herein for the first half of the fiscal year ended March 31, 2019are simple sums of Kiraboshi Bank figures for May 2018 onward and figures of the former Tokyo
Tomin Bank, the former Yachiyo Bank and the former ShinGinko Tokyo for the month of April 2018.



Please note that some of the figures in the “Profit plan and strategy” section are taken frompreliminary reports.

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 including changes in the businessenvironment.

■ 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
MAIL

ir@kiraboshibank.co.jp

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