Tokyo TY Financial Group Business Plan

October 29, 2014

Management philosophy, business integration vision, and basic strategy
of business integration

Contribute to the development of local communities through the provision of integrated
financial services as a financial group for SMEs and individuals in the Tokyo area1).
Management philosophy
To be a financial group for small and medium-sized enterprise customers and individual customers in the Tokyo
metropolitan area that will contribute to the development of local communities through comprehensive financial services.

Business integration vision

Become the urban regional bank group most loved by customers in the Tokyo metropolitan area.

Basic strategy of business integration
 As one of the largest regional financial institutions headquartered in Tokyo, we will establish a new business model andincrease our competitive advantage in the urban-style regional banking market.
 As a financial institution serving small and medium-sized enterprises and individuals, we will increase our level ofcommunity contribution by demonstrating our high-level financial service functions such as consulting and our function ofproviding stable financing.
 Against a backdrop of high profitability and soundness, we will work to lift the motivation of our bank employees, andtake up the challenge of our growth strategies with a sense of unified purpose.
1) “Tokyo area” or “Tokyo metropolitan area:” refers to the area centered around the Tokyo Metropolis and the northeast of Kanagawa Prefecture.

1

The priorities of the Tokyo TYFG
We aim to safeguard our customers’ aspirations and connect them with reality.
The aspirations of SME and individual customers in the Tokyo area centered around the Tokyo
Metropolis and the northeast of Kanagawa Prefecture that we prioritize
In addition to financing, we want to
consult with a bank about thecreation of business plans.
We would like you to introduce
effective sales channels for increasing
the sales of these products.
When establishing business locations
overseas, we would like to know
information regarding matters suchas local markets and legal systems.

I suddenly need some money
before payday, and I want somehelp.

SMEs (micro-sized tosecond-tier enterprises)

I would like you to help us withbusiness succession so that mychildren can carry on the business.

Individuals

I have estate planning needs, and I
would like for you to explain things ina manner that is easy to understand.

I would like to consult with you
about building a home.
I would like to think about asset
management in anticipation ofold age.

By safeguarding the aspirations of our customers and connecting them with reality,
we would like to contribute to making the work and living of SME and individual customers
in the Tokyo area more abundant.
2

Business environment in the Tokyo area
Characteristics unique to the Tokyo area include business opportunities presented by the advance of population
aging, an increase in corporate partnership needs, market entry by regional companies and individuals, and changes
in the city such as those to be brought about by the upcoming Olympics
Advance of population aging

Market entry in the Tokyo area by
regional companies and individuals• Number of small and medium-sized manufacturers andservice providers concentrated in Tokyo Metropolis andKanagawa Prefecture: approximately 20% of Japan’s
manufacturers and service providers• Number of people in their 20s moving to Tokyo andKanagawa Prefecture:
About 250 thousand people per year Market entry in and transfer to (andestablishment in) the Tokyo area
expected to continue for SMEs andindividuals in the future

Expansion in business succession
needs among companies• Elderly population increasing by 1.5% per year,
and by 2040 approximately 30% of the population will
be elderly1)• Approximately 30%2) of companies have a president thatis 60 years old or above and no successor

 Population aging and the accompanying
expansion in business succession needs

Olympics and Paralympics

 Sustained growth in needs for partnerships
between SMEs and industry, government, andacademia partnerships
Growth through corporate/industry,
government, and academia
partnerships

1) Tokyo Metropolis and Kanagawa Prefecture 2) Nationwide 3) Tokyo Metropolis only

• Approximately 50,000 small and mediumsized manufacturers1) and 29,000 small andmedium-sized service providers1)
concentrated in the area
• Total number of industry, government, andacademia partnerships and ventures
established: over 2,0002)

 In preparations for the Olympics, the Tokyo
area is expected to undergo changes including
large-scale redevelopment projects• Economic effect of the Olympics:
Approx. 4 trillion yen3)• Government target for visitors to Japan:
20 million people in 20202)

3

Characteristics unique to both banks
As the number one regional financial group in Tokyo with diverse customers and external partners, both banks havestrengths that include specialized financial know-how for SMEs and cooperative relationships with local governments, etc.
Rich business opportunities due to base of diverse customers andexternal partners being located in the Tokyo area

New possibilities by becoming the number one regional financialgroup in Tokyo

Customers

External partners

Loans[trillion yen]

AttorneysTaxaccountants

Deposits[trillion yen]Matching withspecialists

Assets under bankmanagement1)[10 billion yen]Matching opportunities/
expansion of variations...
Other specialists

Presence of many potential
customers

Tokyo Tomin Bank

Yachiyo Bank

Broad service lineup

Personalized sales
 Community-based, personalized sales

 Broad range of services including

M&As, business matching, and maekyu

Financial know-how for the
medical industry
 Advanced financing know-how throughour expert teamTakingadvantage ofeach other’s
strengths

style

Real estate financing know-how

Branches of both banks
Tokyo Tomin Bank
Yachiyo Bank

Branch network[branches]
Number ofbusiness partners2)[10,000s]

Tokyo Tomin Bank

Yachiyo Bank

1.8

1.4

3.2

2.3

2.1

4.4

2.9

1.9

4.8

77

84

161

71

89

160

Tokyo Tomin Bank

Yachiyo Bank

Cooperation witheconomic organizations
such as the Tokyo
Chamber of Commerce

Cooperation withmunicipalities such as
Machida City and
Sagamihara City

Further expanding
cooperation with local
governments, economic
organizations, etc.

 Advanced financing know-how

leveraging profound industry insightSpecialized financial know-how for SMEs and individuals within
the Tokyo area that requires personalized service
1) Investment trusts, public bonds, and insurance total 2) Totals are aggregate

Possibilities of networks and new relationship building withlocal governments, economic organizations, and industry groups
in the Tokyo area4

Providing value through business integration
We would like to redistribute new value to all of our stakeholders by securing a solid earnings base andproviding comprehensive financial services in line with the life cycles of customers

Yachiyo Bank

3

 In consideration of the business environment in the Tokyo area and thecharacteristics unique to both banks, we will provide all types of financial
services above and beyond financing throughout the significantly changing
life stages and life cycles of our customers.
 For SMEs:
Business plan formulation support, business/specialist
matching, business succession consultations, etc.
 For individuals: Asset management consultations, testamentary trusts,
reverse mortgages, etc.
 Providing the above services to customers in one stop

Evolve into a financial group with a solid earnings base by
expanding profits and minimizing costs over the near term Thoroughly strengthen profitability in order to evolve into a financial groupwith both adequate risk management and secure profits amidst a harsheconomic environment
 Strengthen existing services and expand profits by enhancing ouroperational base and our regional finance function
 Strengthen our business base and minimize costs by improving
management efficiency
 Redistribute the earning gained to stakeholders including customers,
shareholders, officers and employees, business partners, and local
communities

2
Strengthening profitability
in the near term

Tokyo Tomin Bank

1
Strengthening of service
as a financial partner

Returning value to all of our stakeholders through integration

Business
integration

Being a partner that provides all types of financial services
to SMEs and individual customers

Strengthening profitability through efforts at each bank5

Target for core business income
Through business integration, core business income of 16.5 billion yen is expected by 2016 as a resultof thoroughly securing profits over the near term. By achieving our vision by 2020, we will increase
core business income to 20.0 billion yen.
: 1

Providing value through business integration (direct synergies)

Strengthening profitability through efforts at each bank (including indirect synergies) :Core business income (FY 2013)3+ 2

Achieve corebusiness income of
20.0 billion yen
20.0 billion yen

16.5 billion yen
0.5

12.7 billion yen

2013

12.7

12.7

2016

2020

Medium-term business plan
(FY 2014 to 2016)6Breakdown of the increase in core business income
The breakdown of core business income of 20.0 billion yen aimed for in FY 2020 is as follows.
(Billion yen)

1

Strengthening of service as afinancial partner

2

Enhancing theoperational baseStrengthen
profitability
over the nearterm

3Enhancing theregional financefunction

Strengthen
profitability
through efforts ateach bank

Interest income

FY 2013

FY 2016

FY 2020－

0.1 billion yen

0.8 billion yen
0.1

1.1

Net fees andcommissions－－

0.3 billion yen

Interest income－

0.1 billion yen

0.7 billion yen

Net fees andcommissions－－

Interest income－－

Net fees andcommissions

0.5 billion
yen

0.1

(Synergy)－(Synergy)

0.4 billion yen

0.4

0.1

1.9

0.6

－

0.1 billion yen

0.2 billion yen

Improving management efficiency－

0.2 billion yen

0.7 billion yen

Expanding profits－

1.6 billion yen

Minimizing costs－

1.7 billion yen

1.7 billion yen

12.7 billion yen

16.5 billion yen

20.0 billion yen

Core business income

3.0 billion
yen

0.7

2.6 billion yen
3.3 billionyen

4.3 billion
yen

We aim to expand core business income even further by considering and realizing initiatives that are not included in those described above.
7

1

Strengthening service as a financial partner

Provision of the financial platform service “Club TY”
We aim to listen even more closely to the voices of customers and provide various financial services in response to their needs in one
stop, including business matching, business succession consultations, asset management consultations, and testamentary trusts
SME customers: Establishment in the Tokyo area + new entrepreneurship/business foundation (+further expansion into the Tokyo area)
Growth throughcorporate partnerships

Entrepreneurship/business foundation

Business plan
formulation
supportGrowthOverseas
expansion
support

Universitylaunched
venture support

Maturity

Business/specialist
matching

M&A support

Expansion in businesssuccession needs
among companies

Succession/restoration

Business
succession
consultations

Financing for social
welfare facilities

Urban
revitalization
financing・・・

Financial platform service “Club TY”
By safeguarding the aspirations of our customers andconnecting them with reality, we provide one-stop
financial services that make the work and living of
SME and individual customers in the Tokyo area moreabundant.

Local
governments
Economicorganizations

Universities

Olympics andParalympics

Specialists

Entrepreneurship/business foundation
Unsecured loans
MaekyuForeign currency
deposits

Students

New professionals

Housing-relatedloans

Newlyweds

Asset management
consultations

Testamentary
trusts

Reverse mortgages

・・・
Advance of
population aging

Child-rearing
generation

Elderly

Individual customers: Living/working in the Tokyo area(+ moving to the Tokyo area in the future)8

1Strengthening service as a financial partner

Characteristics of the financial platform service “Club TY”“Club TY” is a platform that provides a more diverse and broader range of financial services in responseto the voices of customers, made possible through the integration of the two banks“Safeguarding your aspirations;connecting them with reality.”

Expansion of matching services
through growth in thecustomer base Doubling in the number of business partners

Financial services in responseto the voices of customers(Proposal-based service × responding
to the voices of customers)“Club TY”
A more diverse and broad
range of financial services(Added value in which one plus
one equals more than two)and information through the integration of
the customer base of both banks
 As a result, the opportunity and scope ofmatching service provision for micro to small
and medium-sized enterprises and secondtier enterprises will more than double

Expansion of the service menu by
mutually leveraging the strengths ofboth banks
 Mutual use of each other’s financial

products and know-how by Tokyo Tomin
Bank and Yachiyo Bank As a result, achieve expansion of the service

menu and business opportunities for abroad range of customers in stages fromfoundation to periods of transition

New financial platform service made possible through business integration
 Integrating the headquarters function of Increased presence in the Tokyo area withboth banks will make it possible to shift
human resources to sales departments

the expansion of scale through businessintegration

 As a result, our operational base will be As a result, it will be possible to expand

strengthened and opportunities forapproaching customers will increase

Strengthening of sales capabilities
through the optimal placement of
human resources

partnerships and networks with local
governments, economic organizations, etc.
and expand the range of services

Strengthening of business base by
expanding networks with external
partners
91Strengthening service as a financial partnerMarket potential of the Tokyo area (SMEs)
Provide services as a financial partner corresponding to the life stages of SMEs in the Tokyo area
Business establishment rate1) [%] (Tokyo Metropolis)

Number of successful business matches by regionalbanks [thousands] (nationwide)

10.0 % range

4.9%

4.7%

4.5%

4.6%

FY 2009

FY 2010

FY 2011

FY 20122024(Target of Tokyo Metropolis)

Annual average growth
rate: +13.1%

38.9

23.7

27.0

26.8

28.9

FY 2008

FY 2009

FY 2010

FY 2011

Source: Ministry of Health, Labour and Welfare

FY 2012Source: Financial Service Agency

Number of companies with overseas subsidiaries[thousands of companies] (nationwide)

Number of M&As (nationwide)

Annual average growth
rate: +3.9%

Annual average growth
rate: +1.1%

4.9

4.9

5.1

5.4

5.7

1,957

FY 2008

FY 2009

FY 2010

FY 2011

FY 20122009

Source: Ministry of Economy, Trade and Industry

1) Number of newly opened offices /number of offices

1,707

1,687

1,848

2010

2011

2012

2,048

2013
Source: RECOF

10

1

Strengthening service as a financial partnerMarket potential of the Tokyo area (individuals)
Provide services as a financial partner corresponding to the life cycles of individuals
Current loan balance per household [ten thousand yen](Special wards of Tokyo)

Current investment trust1) balance per household [tenthousand yen] (Special wards of Tokyo )Annual average growth
rate: +2.6%

646

711

662

Annual average growth
rate: +2.4%

717

659

363

321

332
246

646

711

662

659

717

363

321

246

2009

2010

2011

2012

2013

2009

2010

2011

Source: Ministry of Internal Affairs and Communications

Elderly2) population [millions of people]
20%

4.5
1.8

23%

5.3

5.6

5.8

6.1

2.2

2.4

2.4

2.6

2.7

3.1

3.2

2010

2015

2020

Tokyo Metropolis
and Kanagawa
Prefecture

3.3

3.5

2025

2030

399

2012

2013

Number of wills held [thousands] (Nationwide)
Annual average growth
rate: +6.4%

to the28% people
population of the

26%

332

Source: Ministry of Internal Affairs and Communications

Ratio of elderly

25%

399

Kanagawa
Tokyo

69
6

72
6

76
6

81
6

88
6

63

66

70

76

83

2009

2010

2011

2012

2013

Storageonly
Executed

Forecast
Source: National Institute of Population and Social Security Research

1) Stocks, bonds, and public bond investment trusts 2) 65 years old or above

Source: Trust Companies Association of Japan11

1Strengthening service as a financial partner

Major efforts aimed at establishing a financial platform service
We aim to expand our sales network and promote initiatives by a headquarters task force team in orderto provide personalized and high-quality service to SME customers
Expand scope of business by establishing offices
specializing in corporate financeStrongly promote new initiatives through theestablishment of task force teams

In order to provide personalized service for SME customers, expand thesales network through efforts such as establishing five to ten offices
specializing in corporate finance by consolidation in important and/or
open areas

Centering around the headquarters task force team, promotepartnerships with external partners, the deployment of know-how andsales tools related to new initiatives to each branch, and the effective
use of customer needs
Branches

Customers

Promote partnerships withexternal partners

Open areas in the
23 wards of Tokyo

Local
governments

Tokyo TYFG
Specialists

Odakyu Line, Keio Line

Bay area inanticipation of the
Olympics

Task force team aimed at
establishing a financial
platform service
Economicorganizations

Approximately
50 members planned
by FY 2020

Expand service bylistening to thevoices of customers

Universities

External partners

Establishment planned from FY 2016

Incorporate this in customer
service by providing sales
tools and providing guidance
to branches

TF team with approximately 20 members to be formed by FY 201612

1

Strengthening service as a financial partner

Strengthening service as a financial partner to improve profitability
By strengthening service as a financial partner, increase core business income by 1.1 billion yen by FY
2020
Increase in loan balance(outstanding, compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients

Increase in net fees and commissions(compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients

Initiatives aimed at individual
clients

Increase in core business income(compared to FY 2013)(Billion yen)

Initiatives aimed at individual
clients

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

45.0

1.1

11.0

0.3
0.1
0.0

2016

2020

2016

2020

2016

2020
13

2

Strengthening profitability in the near term

Expanding profits and minimizing costs over the near term

By enhancing the operational base, enhancing the regional finance function, and improving management efficiency,
aim to thoroughly expand profits and minimize costs over the near term in order to build up a solid earnings base
2-1

2-2

Expanding theoperational baseEnhancing the regional
finance function

2-3

 Maximize the productivity of employees by sharing the unique sales

know-how of both banks and optimizing the sales structure in each area

 By thoroughly sharing the strength fields of both bank such as medicine

and real estate, provide service to even more customers

By expanding thecustomer baseand improving
productivity,
expand profits over thenear term Streamline headquarters personnel by consolidating headquarters

Improving management efficiency

Improving efficiency ofheadquarters

Efficient stationing of
branches

functions of both banks(reassignment of approximately 100 employees to sales departments by
FY 2020)
 Consolidation of neighboring banks(Consolidation of five to ten branches by FY 2020 assumed throughmeasures such as branches within branches and branch consolidation)

Consolidation andintegration ofadministrative expenses

 Consolidation and integration of administrative expenses including theConsolidation andintegration ofadministrative centers Integration of the administrative centers of both banks (scheduled for FY

Integration ofsubsystems

optimization of delivery and transportation

By seeking to improve
management
efficiency,
minimize costs2017), internalization and integration of administrative work subsidiaries
 Integration of subsystems such as risk management systems

14

2Strengthening profitability in the near term

Enhancing the operational base and enhancing the regional finance function
By sharing the sales know-how and strengths of both banks, expand the customer base and improve
productivity to expand profits in the near term
2-1

Expanding the operational base Maximize the productivity of employees by sharing theunique sales know-how of both banks and optimizing thesales structure in each area
 Increase the number of finance clients marketed to by
sharing scale-base finance know-how• Tokyo Tomin Bank’s SME to second-tier enterprisefinance know-how• Yachiyo Bank’s micro business to SME finance knowhow
 Improve operating efficiency by clarifying the division of
branch roles (corporate-focused, individual-focused, etc.)
within the same area

Division of branch roles(corporate-focused, individualfocused, etc.)

Sharing financeknow-how

2-2

Enhancing the regional finance function

 By thoroughly sharing the strengths fields of both bank such as

medicine and real estate, provide service to even morecustomers
Tokyo Tomin Bank

Yachiyo Bank

Financial know-how for the
medical industry

Real estate financing know-how All members of the Medical andWelfare Division have theManagement Specialist, Third
Grade qualifications and conductbusiness activities that takeadvantage of this specialized
knowledge
 Develop finance customers with afocus on medium-sized or larger
medical institutions

 Bank employees have profoundindustry insight in areas such as realestate-related finance and project
finance Build up a strong track record
focused on local real estate by
Takingadvantage ofutilizing local networks
each other’s
strengths

By sharing this know-how through means such as personnel
exchanges, provide the services of both banks to the customersof both banks
15

2-1

Expanding the operational baseEnhancing the operational base to improve profitability
By enhancing the operational base, increase core business income by 0.7 billion yen by FY 2020

Increase in loan balance(outstanding, compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

Increase in net fees and commissions(compared to FY 2013)(Billion yen)

Increase in core business income(compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

44.0

0.7

11.0

2016

2020

(Not applicable)(Not applicable)

2016

2020

0.1

2016

2020
16

2-2

Enhancing the regional finance function

Enhancing the regional finance function to improve profitability
By enhancing the regional finance function, increase core business income by 0.6 billion yen by FY 2020

Increase in loan balance(outstanding, compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

Increase in net fees and commissions(compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

Increase in core business income(compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

25.0

0.6

0.2

3.0

2016

0.1
2020

2016

2020

0.1

2016

2020
17

2-3

Improving management efficiency

Improving management efficiency

Seek to improve management efficiency and aim to minimize costs by improving the efficiency ofheadquarters, efficient stationing of branches, and the integration of administrative expenses, etc.
(Administration-related)

Headquarters

Consolidation and integration ofadministrative expenses
Tokyo Tomin Bank

Yachiyo Bank

Consolidation of
headquartersfunctions

Administrative expenses including the optimization ofdelivery and transportation

Integration of subsystems

Improving efficiency ofheadquarters
Reassignment to thesales division(Approximately 100
members planned by
FY 2020)

Integration of subsystems such as risk management
systems

Branches・・・

Efficient stationing of branches
Gradually implement from FY 2016, and achieve consolidation
with neighboring branches for five to ten branches by FY 2020

Consolidation and integration ofadministrative centers

Integration of the administrative centers of both banks(scheduled for FY 2017), internalization and integrationof administrative work subsidiaries

18

2-3

Improving management efficiency

Improving management efficiency by reducing expenses
Reduce expenses by a total of 0.7 billion yen by FY 2020 by improving management efficiency
Consolidation and integration ofadministrative centers

Efficient stationing of branches(Billion yen)(Billion yen)

0.2
0.1

2016

2020

2016

Consolidation and integration ofadministrative expenses(Billion yen)

2020

Integration of subsystems(Billion yen)

2016

2020

2016

2020
19

3

Strengthening profitability through efforts at each bankInitiatives by Tokyo Tomin Bank
In addition to synergies from integration, Tokyo Tomin Bank will continually work to expand profits andminimize costs through the following initiatives
 Develop new business partners centered around the team dedicated to developing new corporate

Expanding profits

Initiatives aimed atcorporate clients

Financing

Commissions
business

Initiatives aimed at
individual clients

Minimizing
costs

Non-personnel
expenses reduction
measures
Personnel expenses
reduction measurescustomers (currently 4 locations) Utilize the consulting function for M&As and measures to deal with business succession issues
 Strengthen support for growth areas such as the health and welfare business and overseas
expansion focused on Asia
 Strengthen proposal-based sales to corporate clients, including business matching, businesssuccession measures, and M&A and overseas expansion support
 Strengthen forex transactions, interest-rate swap loans, and privately placed bonds
 Strengthen mortgages with a focus on mortgage specialist centers (5 locations) Provide products in response to environmental changes and the changing needs of customers,such as reverse mortgages
 Strengthen sales of financial products for individuals through means such as holding asset
management consultation meetings and seminars on holidays
 Optimal installation of office equipment based on the work load and visitor numbers
 Conduct cost-effective systems investments
 Thorough personnel management (headcount reduction of 20 to 30 employees planned)

As a general rule, implement all initiatives by FY 2016. Aim to promptly achieve profitability20

3Strengthening profitability through efforts at each bankInitiatives by Yachiyo Bank
Yachiyo Bank will continually work to expand profits and minimize costs through the following initiatives
 Deploy a collaborative full banking system through corporate business offices (ten offices) and the

Expanding profits

Initiatives aimed atcorporate clients

Financing

division of branch roles such as corporate-focused, individual-focused, etc.
 Provide prompt funding utilizing financial products aimed at customers able to take risks
 Strengthen financial intermediary function through active cooperation with the government with afocus on industrial development
 Strengthen sales of financial risk products and work more aggressively in privately placed bonds

Commissions
business

and forex services
 Strengthen assets under custody sales to corporate clients
 Establish systems for pursuing results among all branches in an aim to increase the investment

Minimizing
costs

Initiatives aimed at
individual clientstrust balance Promote inheritance-related services such as testamentary trusts and estate settlement services
 Strengthen sales to businesses with a focus on four loan centers

Non-personnel
expenses reduction
measures Reduce depreciation and thoroughly reduce management costs through means such as reducing

Personnel expenses
reduction measures

rents through branch relocation
 Thorough personnel management (headcount reduction of 60 to 70 employees planned)

As a general rule, implement all initiatives by FY 2016. Aim to promptly achieve profitability
21

3Strengthening profitability through efforts at each bank

Effect of efforts at each bank (total)
Through initiatives at each bank, profits expected to increase by 2.6 billion yen and costs to decreaseby 1.7 billion yen by FY 2020
Increase in loan balance(outstanding, compared to FY 2013)(Billion yen)

Initiatives aimed at corporateclients
Initiatives aimed at individual
clients

Increase in net fees and commissions
and other profits(compared to FY 2013)(Billion yen)

Increase in core business income(compared to FY 2013)(Billion yen)

Expanding profits
Minimizing costs

127.3
4.3
3.3
66.3

2016

2020

2016

2020

2016

2020
22

Schedule
Achieve sufficient results in expanding profits in the near term in two years. Over the medium to longterm, work to establish platform service as a financial partner and achieve further growth.
Medium-termbusiness plan

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

Maximize profits by strengthening
profitability over the near term

Establish new financial services while
continuously working to strengthen profits

Expand profits and move to a new stageof growth by establishing services

Maximize the current financial
services of both banks to establish abase for platform development

Establish platform service as afinancial partner by developing theservices of both banks into a platform

Acquire new profit opportunities
through cooperation with local
governments and support of entry in
the Tokyo area

Increase profitability by sharing thestrengths and sales know-how of bothbanks

Expand profits by promoting further sharing of strengths and sales know-how

Improving
management
efficiency

Improve the efficiency of headquarters,
thorough integration of administrative
expenses and subsystems

Integration and optimization of branches and administrative centers
Consider additional measures such as integration of accounting systems

Strengthen
profitability throughefforts at each bankThoroughly strengthen the profitability
achievable by each bank

Implement ongoing measures aimed at strengthening profitability

1Strengthen service
as a financial
partner3Strengthen profitability
over the near term

2

Expanding theoperational baseEnhancing theregional financefunction23

Overview of management targets
We aim for the following management targets by FY 2020

FY 2013

FY 2016

FY 2020

Tokyo TYFG

Tokyo TYFG

Tokyo Tomin Bank Yachiyo Bank

Simple totals

Deposit balance(outstanding)

2,368.7 billion yen

2,079.1 billion yen

4,447.8 billion yen

4,550.0 billion yen

4,700.0 billion yen

Loan balance(outstanding)

1,831.5 billion yen

1,427.2 billion yen

3,258.7 billion yen

3,350.0 billion yen

3,500.0 billion yen

Gross core businessincome37.0 billion yen

31.4 billion yen

68.4 billion yen

70.5 billion yen

73.0 billion yen

Expenses

29.4 billion yen

26.2 billion yen

55.7 billion yen

54.0 billion yen

53.0 billion yen

Core business income

7.5 billion yen

5.1 billion yen

12.7 billion yen

16.5 billion yen

20.0 billion yen

Synergy---

0.5 billion yen

3.0 billion yen

Credit costs

3.2 billion yen

1.3 billion yen

4.5 billion yen

4.0 billion yen

4.0 billion yen

Net income

4.2 billion yen

6.1 billion yen

10.3 billion yen

10.0 billion yen

12.5 billion yen

OHR

79%

83%

81%

76%

72%

Deposit-loan ratio

77%

68%

73%

73%

74%

24

Reference: OHR/loan-deposit ratio trends

The background and trends for OHR/loan-deposit ratio improvements aimed at FY 2020 are as follows
OHR(Billion yen)

Loan-deposit ratio
OHR

Personnel expenses

Loan-deposit ratio

Non-personnel expenses

Improvement in OHR throughimprovements in gross corebusiness income andreductions in expenses

Loan balance

Taxes

Seek to expand profits byincreasing the loan balance
while securing stable deposits

81%
76%

72%

55.7

Expenses

FY 2013

54.0

Gross corebusiness
incomeExpenses

FY 2016

53.0

Gross corebusiness
income73%

73%

3,258.7 billion
yen74%
4,700.0 billion
yen

4,550.0 billion
yen4,447.8 billion
yenGross corebusiness
incomeDeposit balance

3,350.0 billion
yen

3,500.0 billion
yen

Expenses

FY 2013

FY 2016

FY 2020

FY 2020

25

Reference: Business management structure
Develop a business management structure and conduct business as Tokyo TYFG
PolicyOrganization chart
Holding Company

 By granting the business management function for the entire

group to the holding company and granting independent
business implementation functions to each subsidiary bank,establish both business management and business
implementation throughout the group.

Auditors

Board ofCorporate
Auditors

 Clarify the role of the holding company and develop an effective

management system based on the business management system
for the entire group.

GeneralShareholders
Meeting

Board ofDirectors

Accounting
Auditors

Management
CouncilCommittees[Holding company]
 Grant the business management function for the entire group to

the holding company and develop systems that enable theadequate performance and operation of that function.
• In addition to the governance function and functions including

the formulation and progress management of group business
management plans and business strategy, conduct operations
that involve the entire group (such as risk management,compliance, finance, auditing, etc.).
[Subsidiary banks]

 Compliance Committee Risk Management Committee Group Strategy Committee

Internal Auditing
Division

Corporate
Planning Division

Group Strategy
Division

Reporting

Risk Management
Division
Discussions

Subsidiarybanks
Tokyo Tomin Bank

Yachiyo Bank

Subsidiaries

Subsidiaries

 In accordance with the group management policy andmanagement plans formulated by the holding company, maintainlocal brand strength and independently implement business incoordination within the group.

26