Tokyo Kiraboshi Financial Group

Results Briefing for the Fiscal Year
Ended March 31, 2021

June 9, 2021

Contents

Tokyo Kiraboshi FG

Overview of the Group
Overview of the Group

P.4

Overview of Tokyo Kiraboshi Financial Group, Inc andKiraboshi Bank,Ltd.

P.5

Summary of Business Results

Example of Tokyo-based Platform

P.22

Overall Flow of ESG/SDG-Related Strategy of theMedium-Term Business Plan

P.23

Strategy of the Medium-Term Business Plan in
Relation to ESG/SDG Initiatives

P.24

Summary of Business Results for the Fiscal Year Ended
March 31, 2021

P.7

Efficiency Improvement and Concentration ofManagement Resources

P.25

Factors Affecting Net Income

P.8

Transformation of Resource Allocation

P.26

Loans (Kiraboshi Bank)

P.9

Branch Strategy / Changes in Productivity

P.27

Deposits and Assets under Management(Kiraboshi Bank)

P.10

Retail Customer Strategy

P.28

Securities (Kiraboshi Bank)

P.11

Life Plan Support Business

P.29

Livelihood Support for the Older Adult Segment

P.30

Corporate Customer Strategy

P.31

Activities to Address Customersʼ Business Succession
and Other Issues

P.32

Business Financing

P.33

Support for Medical Institutions

P.34

Group Collaboration Including Equity Financing

P.35

Digital Bank Business

P.36

Capital Policy

P.37

Development of Human Resources / Self-Fulfillment

P.38

Summary

P.39

Problem Assets Subject to Disclosure under the
Financial Reconstruction Law and Credit-Related Costs(Kiraboshi Bank)

P.12

Capital Ratio/Core OHR/ROE

P.13

Profit Plan and the New Medium-Term Business Plan
Plan for the Fiscal Year Ending March 31, 2022

P.15

Review of Previous Medium-Term Business Plan

P.16

Business Strategy of the New Medium-Term Business
Plan

P.17

Vision of the New Medium-Term Business Plan

P.18

Analysis of Business Environment and Financial
Targets, Capital Policy

P.19

Image of Income Growth over Three Years

P.20

Tokyo-based Platform

P.21

2

Overview of the Group3

Overview of the GroupManagement 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.

Tokyo Kiraboshi FG

Company history

October
2014

Business integration by The Tokyo Tomin
Bank, Limited and The Yachiyo Bank,
Limited, Inc.

Management policy

April
A group that sparkles

2016

A group that rises to the challenge
A group that brings together ideas

Business integration of “Tokyo TY Financial
Group, Inc.” with ShinGinko Tokyo, Limited

May
2018

Birth of Kiraboshi Bank (merger of 3banks)
Changed business name to Tokyo Kiraboshi
Financial Group, Inc.

Vision aiming for

Be a Tokyo-based platform owner thatcreates new values for customers~ From Tokyo to Japan and to Asia ~2020

May Systems integration
June Head Office relocation(Shinjuku ⇒ Aoyama)

4Overview of Tokyo Kiraboshi Financial Group, Inc
and Kiraboshi Bank,Ltd.

Tokyo Kiraboshi FG(as of March 31, 2021)(Group companies)

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

Capital¥43.7 billion

Total assets¥5,902.2 billion(as of April 1, 2021)

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

Capital¥27.5 billion

Consolidated
total assets¥5,921.9 billion(Group companies) (as of April 1, 2021)(as of March 31, 2021)
Location ofhead office

Location ofhead office

Tokyo Kiraboshi Lease, Inc.

General leasing
business

Kiraboshi System, Inc.

System processing
outsourcing

Kiraboshi Consulting Co., Ltd.

Consulting

Kiraboshi Credit Guarantee Co., Ltd.

Guarantee operations

Yachiyo Credit Guarantee Co., Ltd.

Guarantee operations

Kiraboshi business office service, Inc.

Payroll operations, etc.

Kiraboshi JCB Co., Ltd.

Credit card business

Kiraboshi Business Service Co., Ltd.

Centralizedadministrative
services

Kiraboshi Capital Co., Ltd.

Structuring andadministration offunds

Kiraboshi Tech, Inc.

Fintech services

Kiraboshi Insurance Agency CO., LTD.

Insurance agency
business

Kiraboshi Life Design Securities Co., Ltd.

Securities business

Kiraboshi Business Consulting Shanghai
Co., Ltd.

Consulting

Kiraboshi Digital Bank Preparatory Co.,
Ltd. [Scheduled to start operation in
FY2021]Banking business

KIRABOSHI BUSINESS CONSULTING
VIETNAM Co., Ltd.

Consulting

5Summary of Business Results

6Summary of Business Results for the Fiscal Year
Ended March 31, 2021

Tokyo Kiraboshi FG(¥100 million)
Kiraboshi Bank
(non-consolidated)

2020/32021/3

Change1

Gross core business profit

677

692

14

2

Net interest income

564

587

22

3

Of which, interest on loans anddiscounts

441

463

22

4

Of which, interest on securities

136

125

(10)

5

Of which, interest on deposits

(13)

(2)

11

6

Non-interest income

113

104

(8)

7

Expenses

(522)

(524)

(2)

8

Net core business income

155

167

12

9

Credit-related costs

(114)

(84)

10

Gains (losses) on bonds

62

11

Gains (losses) on stocks and othersecurities

(10)

12

Other non-recurring profit (loss)(including merger and systems
integration costs)

(45)

(54)

(8)

13

Ordinary profit

47

88

40

14

Extraordinary profit (loss)

45

(1)

(46)

15

Income taxes

(5)

(38)

(32)

16

Net income

86

48

(38)

17

Merger and systems integration
costs

(42)

(26)

16

(¥100 million)
Tokyo Kiraboshi FG(consolidated)

Full-year
achievementrate

2020/3
results

2021/3
results

2021/3plan

Year-onyear

Ordinary profit

23

82

57

256%

143%

Profit attributable toowners of parent

76

41

40

(46%)

102%

[Diff. b/w consolidated and non-consolidated](¥100 million)

Kiraboshi Bank (non-consolidated)
net income

48

Groupʼs consolidated net income[¥800 million of negative effects such as
startup deficit of newly-established Group
companies]

5

29Book value adjustment of bonds owned at
the time of business integration, etc.

(12)

14

(47)

Tokyo Kiraboshi FG (consolidated) net
income41

43

54[Yield] (％)
Loan yield
Yield difference

Deposit yield

1.193

1.187

1.170

1.173

0.026

0.023

19/3

20/3

0.014
21/3

1.183
1.157

* In calculating figures for 2020/3 and beyond, interest subsidies are added to interest
on loans and discounts.

7

Factors Affecting Net Income (Kiraboshi Bank)[Factors affecting net income](¥100 million)① Net interest income:An increase of ¥2.2 billion year-on-year reflecting increases in interest on loans and discounts and in interest subsidies
associated largely with COVID-19 related loans, offsetting a decrease in interest on securities attributable primarily to saleand redemption of Japanese government bonds.
② Non-interest income:A decrease of ¥0.8 billion year-on-year due in part to voluntary restraint of sales activities during the state of emergency.
③ Credit-related costs:
A decrease of ¥2.9 billion year-on-year notwithstanding provision made in consideration of the impact of COVID-19 on
restaurants and hotels, due in part to a reversal of additional provision that had been made in FY2019 for possible impact
of COVID-19.
④ Gains (losses) on bonds:
A decrease of ¥4.7 billion year-on-year reflecting sale of government bonds executed in FY2019 that was intended to beappropriated for the additional provision made.
⑤ Gains (losses) on stocks and other securities:
An increase of ¥5.4 billion year-on-year due largely to sale of stocks held for strategic purposes.
⑥ Extraordinary profit:
A decrease of ¥4.6 billion year-on-year reflecting recognition in FY2019 of the gain on transfer of the Shinjuku Office.
⑦ Income taxes:
An increase of ¥3.2 billion year-on-year due to a decrease in deferred tax assets in FY2020 resulting from sale of the
Shinjuku Office, etc. in FY2019 which led to reduction in tax loss carryforward.
Increase①

Interest on
loans anddiscounts①

Tokyo Kiraboshi FG①

Interest on Interest on
securities
deposits②③

Noninterest
incomeCreditrelated
costs

Decrease* [Breakdown of expenses] (¥100 million)

546

522

524

40

44

44

233

217

229

271

261

250

2020/32021/3

2019/3Taxes
Non-personnel expenses
Personnel expenses

Total

④

Gains
(losses) on
bonds

⑤

⑥

Gains
Extraordinary(losses) on profit (loss)
stocks andothersecurities⑦

Incometaxes

Others8

Loans（Kiraboshi Bank）

Tokyo Kiraboshi FG

Increase in loan balance (up ¥168.2 billion YoY) associated primarily with COVID-19-relatedloans and SME financing to support mainstay operations■ Loan balance by type of customer■ Loan balance by industry(¥100 million)(¥100 million)

YoY

36,961
1,532
4,746
22,1948,488
2019/337,698
1,423
4,692
23,892

7,689
2020/3■ Loan balance by region

36,961
434
5,579

39,380 +1,682
1,174
4,577

(249)
(115)

26,327 +2,435

7,300

37,69839,380

450
5,608

464
5,623

Local governments
Medium and large‐
sized companies
SMEs
Individuals

3,257
1,951
4,401
2,057
3,785

3,294
1,960
4,422
1,840
4,157

3,466
2,222
4,923
1,516
3,834

4,871

6,024

6,813

Real estate leasing

3,792

4,066

5,061

Services

8,488

7,689

7,300

4,356

4,241

4,241

2019/32020/32021/3(389)* Figures for the fiscal 2019 andbeyond are modified due tochanges in recognition standards
following systems integration.

2021/3(¥100 million)

Manufacturing

31,63933,292

2020/32021/3Banks and other financial
institutions
Real estate brokerage

Others* Figures for the fiscal 2019 andbeyond are modified due tochanges in recognition
standards following systems
integration.

+1,682

Manufacturing+14

Others+15+1,653Kanagawa

Individuals

10.8
18.5

Tokyo
Services

2019/3

Commerce

Individuals

YoY

Others30,948Construction

Real estate leasing

8.8

5.6
12.5

2021/3
3.8
(%)
9.7

12.9
17.3

Construction

Commerce
Banks and otherfinancial institutions
Real estate
brokerage9

Deposits and Assets under Management(Kiraboshi Bank)Tokyo Kiraboshi FG

Increase in deposit balance, primarily due to increase in cash on hand notably of SMEs (up ¥343.0 billion YoY)
Increase in balance of assets under management on the back of customer-oriented sales approach becoming the norm (up¥64.0 billion YoY)
■ Deposit balance by client

45,585
1,258
14,09846,603
2,065
14,695(¥100 million)■ Balance of assets under management
YoY

50,033+3,430

1,885

(180)

17,547+2,852

4,920
359
OthersCorporate

30,228

2019/329,841

2020/3■ Deposit balance by region

45,58546,603

753
9,879

762
9,928

30,601+760(¥100 million)* KLD: Kiraboshi Life Design Securities Co., Ltd.

2,415

5,266
4,626
276

1,079

+1,079

342

+66

2,318

(123)

2,441

Individuals

YoY
+640

KLD
Public bonds
Insurance

2,146

1,908

1,525

2019/32020/32021/3(383)

2021/3(¥100 million)+696

Investment
trustsYoY

50,033+3,430827
10,606+65■ Loan-to-deposit ratio / Security-deposit ratio+678

Others

79.2%

80.4%

79.0%

25.8%

22.7%

19.0%

Loan‐to‐deposit
ratio

Kanagawa

34,95235,911

38,599+2,688Tokyo

Security‐deposit
ratio

2019/32020/32021/3

2019/32020/32021/310

Securities (Kiraboshi Bank)Tokyo Kiraboshi FG

Promotion in diversification of investment management and portfolio diversification while aiming
for risk diversification and stable profits■ Securities balance

10,892
2,697
310
4,033

(¥100 million)

10,204

9,491

3,700
539

3,901

+1,458

419

+149

3,155

(545)
+114

3,222

2,537

653
2,074

2019/32020/32021/3■ Valuation gain/loss on securities

353

Stock
Corporate bonds

3,901 +1,458
2,697
209

Municipal bonds
Government
bonds

(463)

(¥100 million)

In 2020/3, marketable bonds held to maturity
were reclassified to available-for-sale securities, aportion of which was subsequently sold.

1,766

191

138
50
40
70
2019/3102
47(11)
2020/3

+78

62

+73

54

(48)

100
2021/3+53

Held‐to‐maturity bonds
Available‐for‐salesecurities
Bonds

263

+28

2,273

+757

2,443
235

PE funds, etc.
Foreign securities
REITs

1,516

684

+247
+426

416
305

437
253

679

2019/32020/32021/3

Investment trusts■ Yield on securities

1.35%
1.30%

YoY

216

(¥100 million)
YoY

+713

Other securities

2,443
270

627

■ Breakdown of “available-for-sale securities”

YoY

19/3

20/3

■ Duration

1.33%
21/3
5.5 years

4.1years

3.8 years

2019/32020/3

Stocks2021/311

Problem Assets Subject to Disclosure under the Financial
Reconstruction Law and Credit-Related Costs (Kiraboshi Bank) Tokyo Kiraboshi FG
Increase in the value of problem assets subject to disclosure due to deterioration in borrowerclassification, etc. Decrease of ¥2.9 billion YoY in credit-related costs notwithstanding provision
made in consideration of the impact of COVID-19 on restaurants, etc., due in part to a reversal of
additional provision that had been made in FY2019 for possible impact of COVID-19■ Value of problem assets subject to disclosure(¥100 million)■ Credit-related costs
2019/3[After partial direct write-offs]

2020/3
43

767
47

1,002
68
743
60

(¥100 million)

114

Substandard loans

875
631

Change84(29)■ Coverage status of problem assets subject todisclosure under the Financial Reconstruction Law[Before partial direct write-offs]

Bankrupt and quasibankrupt assets(¥100 million)
2021/3

Doubtful assets

651

2021/3Covered amount844

Reserve for possible loan losses

245

Collaterals, guarantees, etc.

599

69

51

57

Problem assets

1,139

2019/32020/32021/3Coverage ratio

74.1％

Ratio of problem assets subject to disclosure[Value of problem assets subject to disclosure]
Value of problem assets subject to disclosure increased due in part to an
event of default caused by a customerʼs inappropriate accounting treatment
as well as deterioration in corporate performance attributable largely to
COVID-19 pandemic and the resulting slowdown in economic activities.

[After partial direct write-offs]

2.50%
2.03%

1.93%

2019/32020/32021/3[Credit-related costs]
Credit-related costs decreased by ¥2.9 billion year-on-year notwithstanding
provision made in consideration of the impact of COVID-19 on restaurants
and hotels, due in part to a reversal of additional provision that had been
made in FY2019 for possible impact of COVID-19.

12

Capital Ratio/Core OHR/ROETokyo Kiraboshi FG

Capital ratio rose by 0.09 points YoY, core OHR improved by 1.3 points YoY■ Consolidated capital ratio (Tokyo Kiraboshi FG)(¥100 million)■ ROE (Tokyo Kiraboshi FG)

2019/3

8.86%

8.65%

8.74%

2020/3
1.68* ROE (consolidated) =

2,813

2,852

(%)

2021/3
2.60

1.37

Profit attributable to owners of parent(Net assets at the beginning of the period + net assets
at the end of the period) ÷ 2

× 100

Capital

2,852■ Annual dividend per share, total shareholder return ratio(Tokyo Kiraboshi FG)

2019/32020/32021/3

39.0%

46.5%
Total shareholder
return ratio

24.5%■ Core OHR (Kiraboshi Bank)

80.7%

2019/3* CoreOHR ＝

77.0%

75.7%

2020/32021/3

Expenses
Gross core business profit

× 100

60 yen60 yen60 yen60 yen

2019/32020/32021/3 2022/3 (forecast)

Annualdividend* For total shareholder return ratio, medium-term target is set
at 20% - 30%.

13

Profit Plan for the Fiscal Year Ending
March 31, 2022 and the New MediumTerm Business Plan

14

Plan for the Fiscal Year Ending March 31, 2022
■ 2022/3 plan（Kiraboshi Bank）(¥100 million)
2021/3
resultsA

2022/3plan
B

Tokyo Kiraboshi FG■ 2022/3 plan (Tokyo Kiraboshi FG, consolidated)
2021/3
resultsA

Difference（B-A）

2022/3plan
B

Difference
（B-A）

1

Gross core business profit

692

745

53

Ordinary profit

82

152

70

2

Net interest income

587

606

18

Profit attributable to ownersof parent

41

100

58

463

488

24

[Factors affecting net income (Kiraboshi Bank)] (¥100 million)

3

Of which, interest on
loans and discounts

4

Of which, interest on
securities

125

5

Of which, interest on
deposits(2)

6

Non-interest income

Increase

120
(3)
139

34

(1)
34

7

Expenses

(524)

(499)

24

8

Net core business income

167

245

78

Total

24

(5)

24
104

Decrease

48

43
(11)

Expenses

Non-interest
incomeInterest on
loans anddiscounts
Net core business income+¥7.8 billion

Gains(losses) on
bonds

111
(17)

(34)

Other nonrecurring
Gains(losses) on profit (loss)
stocks andothersecurities

OthersOrdinary profit +¥7.2 billion

9

Credit-related costs

(84)

(86)

(1)

10

Gains (losses) on bonds

14

3

(11)

11

Gains (losses) on stocks andother securities

43

9

(34)

12

Other non-recurring profit(loss)

(54)

(10)

43

13

Ordinary profit

88

161

72

14

Income taxes

(38)

(49)

(10)

15

Net income

48

111

63

[Net core business income]Despite a decrease in interest on securities, an increase of ¥7.8 billion from the fiscal year
ended March 31, 2021 is projected to reflect increases in interest on loans and discounts
attributable to COVID-19 related loans and business financing activities, and in noninterest income led by commissions from corporate customers, in addition to a reduction
in costs through continued implementation of efficiency improvement measures, etc.
[Ordinary profit]
Despite a forecast of decreases in gains on bonds and gains on stocks and othersecurities, an increase of ¥7.2 billion from the fiscal year ended March 31, 2021 is
projected given that, from FY2021, there will no longer be merger and systems
integration costs which were recognized in other non-recurring profit (loss).
[Tokyo Kiraboshi FG]
A ¥1.1 billion difference between consolidated and non-consolidated net income to result
due to startup deficit of strategically launched subsidiaries, amortization in accounting forloss on redemption of securities and other factors

15

Review of Previous Medium-Term Business Plan

Tokyo Kiraboshi FG

 Actual results outperformed KPIs and KGIs (financial targets) set in the previous Medium-Term Business Plan, with the exception of “consolidated
net income”
 First calls substantially exceeded target number and have become entrenched in sales activities
 To demonstrate the Groupʼs presence in the Tokyo market, efforts were made to “improve management efficiency” and “enhance Groupcapabilities”, setting the stage for moving on to the new Medium-Term Business Plan

[Numerical Targets]
Item[Integration effects / Merger costs]¥6.0 billion¥4.1 billion

67¥16.7 billion

7
10
17

¥12.5 billion

OHR(Kiraboshi Bank）

44
5
10
7

75％

80％

[Number of first calls and impact on income]

11,2902020/3

14,870

0

21

28

21

15

2021/389+25

Other efficiency

18

Systems integration

43

32

(34)

(26)

(42)

Reconstruction of
branch network
headquarters efficiency
Merger and systems
integration costs[Changes in profit from customer business]
2019/315
11

improvement measures

Improvement of

17,738 (Contacts)

33

+63

8
19

2021/3

59
44

+10

22

0
2019/32020/3

Actual results

Net income(Tokyo Kiraboshi FG)
Net core businessincome(Kiraboshi Bank）

2019/3

Initial targets(¥100 million)

2020/3(¥100 million)

9
FY2020(¥100 million)

2021/314

0

FY2019FY2018(30)* Income generated from consulting sales to address customersʼ issues* Calculation method: (loan balance x loan and deposit rate margin) +income from fees and commissions - general and administrative expenses

16

Business Strategy of the New Medium-TermBusiness Plan

Tokyo Kiraboshi FG

 “First call” exercise set out in the previous Medium-Term Business Plan has taken hold. The new Medium-TermBusiness Plan seeks to strengthen proposal capabilities based on “first call” approach.
 Be a Tokyo-based platform owner and drive reform
FY2018 ~FY2021 ~3 years

New Medium-Term Business Plan

Previous Medium-Term Business Plan “Start-up ☆Kiraboshi”① Understand customers

Evolution of first calls and enhancement of problem-solving approaches

Understanding ofcustomersʼ life plan
(individuals)

Basic strategy
Consulting business・ Proposals to support
customersʼ mainstay
operations
・ Life plan support
proposals

Financing based on
business feasibility
evaluations
・ Problem-solving proposals
based on business feasibility
evaluations③ Increase first callcontacts② Deliver proposals tocustomers

Understanding ofbusiness feasibility(corporates,
business owners)

Be a Tokyo-based platform owner and drive reform

Headquarters
support ofsales offices

Construct structure to provide comprehensive
financial services as a unified Group● Kiraboshi Consulting (Apr. 2017)● Kiraboshi Tech (Nov. 2017)● Kiraboshi Capital (Sep. 2018)● Kiraboshi Vietnam (Jun. 2019)<Reform of management base>● Digital transformation (DX)
Fusion of face-to-face and non-face-to-face, financial
and non-financial services● Improvement of headquarters efficiency andenhancement of headquarters sales activities● Radical branch reorganization and strategic personnel
allocation● Human resources development and personnel system
reform<Reform of business structure>● Kiraboshi Life Design Securities (Aug. 2020) ● Digital Bank Preparatory Company (Oct. 2020)① Kiraboshi that supports the older generation② Provision of medium risk-taking and equity financing③ Demonstration of Group synergy effects

Group business strategy① Life plan support
business
Business tools for older
adults② Digital Bank
business
Cross-industrial collaboration
to respond to diverse life
scenes

FY2023

3 years➂ Start-up support
business
Support from early stage to
IPO

Act ascoordinator /provide hub
functions
Create customer
value
Createcustomersʼ social
value

Examples of platform functions④ Business succession
business
Unified support covering corporate
management, business succession,
asset management and overseas
business development⑤ Medical
institutions
support businessContribution to sustained
growth of community healthcare services⑥ Corporate
reconstruction(management
support) business

Management support package

17

Vision of the New Medium-Term Business Plan
(FY2021-FY2023)
Management
philosophy
Management
policyVision weare aiming
forTokyo Kiraboshi FG

To be a financial group for small and medium-sized enterprise customers and individual customers in
the Tokyo metropolitan area that contributes to the development of local communities throughcomprehensive financial services
A group that sparkles

A group that rises to the challenge

A group that brings together ideas

Achieve enduring existence as a local
regional financial group through theprovision of unique financial services

Leverage the special features of the Tokyo
area to continue to meet new challenges inorder to contribute to the development of ourcustomers and local economies

We put great value on the “thoughts” ofcustomers, the region, and our employees,
and seek to develop a presence that is always
in need and worthy of trust.

Previous Medium-Term Business Plan “Start-up ☆Kiraboshi”

New Medium-Term Business Plan

Be the urban regional bank group most favored bycustomers in the Tokyo metropolitan area

Be a Tokyo-based platform owner that creates newvalues for customers~ From Tokyo to Japan and to Asia ~Vision of the future: Comprehensive service business that is also strong in finance.

<Kiraboshi philosophy>

Guided by awareness, values and mindset that are to be shared by all officers andemployees, accomplish the goals of contributing to society, seeking growth of theorganization, achieving self-fulfillment and realizing oneʼs own happiness<Three principles of action
guideline for Kiraboshibito>〜Who are “Kiraboshibito” 〜
People who put “Kiraboshi
philosophy” into practicePrinciple/
sense ofmissionKiraboshibito

An individual with “high aspirations”

Ingenuity/perseverance

Responsibility/courage

An individual who always thinks “how it
can be done”

An individual who is committed to results,
who continuously takes on courageous
challenges

18

Analysis of Business Environment and
Financial Targets, Capital Policy
1. Strengths and weaknesses of the Company

Internal
environment

External
environment

Tokyo Kiraboshi FG

Positive factors

Negative factors

Strength

Weakness

Collective strength of the Groupʼs related companies thatcan respond to the diverse needs
Integration and merger processes completed ahead ofschedule, leading to efficiency improvements producing
further tangible effects in the coming period
Collaboration with administrative agencies and various otherexternal organizations

Quality of equity capital is an issue due to preferred stock
outstanding
Low productivity, high OHRFirst call exercise has taken hold but quality is an issue

Opportunity

ThreatFertile Tokyo market
Review of regulations on the scope of banking business
Creation of new businesses from ESG/SDGs initiatives

Continuation of negative interest rates
Entry of new players such as FinTech companies
Decrease in commission rates on assets under management

2. Financial targets / Capital policy① Financial targets (KGI)
FY2019 actual

FY2020 actual

FY2021 planned

FY2022 planned

FY 2023 planned

ROE <consolidated>

2.6%

1.3％

3.2％

5.0％

5.9%

Core OHR (note)

77.0%

75.7％

67.0％

59.8％

57.3%

Profit attributable to owners of parent￥7.6 bn￥4.1 bn￥10.0 bn

￥16.0 bn

￥20.0 bn

Profit from customer business<Kiraboshi Bank non-consolidated>￥0.9 bn￥1.4 bn￥12.4 bn

￥20.5 bn

￥23.4 bn

Subsidiariesʼ contribution to
consolidated profit <consolidated>￥1.1 bn￥0.3 bn(￥0.4 bn)￥0.4 bn￥2.3 bn

8.6%

8.7％

8.6％

8.3％

8.3%

<Kiraboshi Bank non-consolidated><consolidated>

Capital ratio <consolidated>(Note) Core OHR: Expenses / Gross core business profit② Capital policy〇 Secure sufficient equity capital to fulfill the function to help smooth financing, seek to improve profitability and capitalefficiency, and secure financial strength to allow lump sum redemption of preferred shares

19

Image of Income Growth over Three Years
Incomefrom retailcustomers

Incomefrom
corporate
customers

Cost
reduction
related⑥＋2.5 bn(4.1 bn)

Profit attributable to owners of parent+¥15.9 bn

Increase in ordinary profit (non-consolidated)+¥17.2 bn

FY2023Plan

20.0 bn

Profit attributable to owners of parent

Profit attributable toowners of parent[Main positive factors]① Interest on loans and discounts +¥9.9 bn(p31-p34)② Commission income from corporate
customers +¥2.9 bn (p28-p34)③ Cost reduction +¥5.6 bn (p26)④ Merger costs, etc. +¥1.7 bn⑤ Group income +¥2.8 bn[Main negative factors]⑥ Securities (¥4.6 bn)⑦ Income taxes (¥4.1 bn)＋2.8 bn
Increase in Group companies,
profit, etc.

(0.4 bn)⑤

Other factors(4.6 bn)＋1.7 bn
Decrease inmerger costs

Increase in income from financial
instruments

Increase in interest on
loans and discounts

4.1 bnIncrease in intereston securities

FY2020 ＋0.9 bn
ActualIncrease in commission income
from corporate customers＋9.9 bn

Decrease in personnel expenses＋2.2 bn＋0.7 bn(1.3 bn)⑦

Increase inincome taxes＋3.2 bn

Decrease in non-personnel expenses①④
Increase incredit-related costs＋2.4 bn

Decrease in gain onsale of securities②

Other factors③

Tokyo Kiraboshi FG

Increase in net core business income (non-consolidated) +¥18.0 bn

20Tokyo-based Platform

Tokyo Kiraboshi FG

New Medium-Term Business Plan: Vision
To be worthy of customersʼ trust and contribute to the development of customers and local communities
Be a Tokyo-based platform owner that creates new values for customers[Enrichment of Tokyo-based Kiraboshi Platform]“Kiraboshi Platform” space① Trustworthiness / satisfaction•“Kiraboshi Platform” is a space for delivering, to various players and business
operators, the Groupʼs capabilities in creating new businesses and services
and its problem-solving abilities, to jointly create shared values and services.

•"Kiraboshi Platform” not only provides support in traditional businesses(such as financing, business restructuring and business succession), but also
gives active support from an ESG investing perspective, to creative activities
that seek to originate new profit-making businesses from solutions to thevarious social issues addressed in the SDGs.

•“Kiraboshi Platform” is a three-dimensional space built on the three pillars of① trustworthiness and satisfaction,② capabilities to create new businesses and services, and③ Problem③ problem-solving ability.
solving ability② Capabilities to create
new businesses andservices

The new Medium-Term Business Plan seeks to grow these three pillars evenly and thereby expand the “Kiraboshi Platform“ space.
① Enhancement of trustworthiness / satisfaction → Further promote first-call exercise, reinforce governance, risk-control and compliance structures② Enhancement of capabilities to create new businesses and services → Enhance Groupʼs collective capabilities, develop skills of officers andemployees③ Enhancement of problem-solving ability → Provide long-term support by taking risks such as underwriting subordinated loans and preferredshares, make use of trust scheme, etc.
In order to increase effectiveness of ①, ② and ③ above, the following initiatives will be implemented to ultimately respond to the expectations of all
stakeholders (customers, local communities, employees, shareholders)◇ Push forward with DX and improve customer convenience, review branch and headquarters functions, carry out strategic resource allocation thatis optimal for the entire Group・ Having leveraged merger and integration opportunities to improve efficiency such as through BIB operation, embark on further branchreorganization and strengthening of headquarter sales activities◇ Human resources development and personnel system reform:
Provide a place where each individual employee can grow as a professional, provide support for the realization of diverse work styles
Pursue penetration of corporate philosophy and implementation of SDG actions

21

Example of Tokyo-based Platform

Tokyo Kiraboshi FG

 Build a “Tokyo-based platform” for creating new values through collaboration with administrative organs and across industries(airports and other social infrastructure, companies in entertainment, art, sports and other similar industries) Be a coordinator connecting customers with companies in other industries, provide hub functions and contribute to the creation ofcustomer values and to solving social issues

Kiraboshi platform, concrete example of Tokyo-based ecosystem: Tokyo Kiraboshi FG acting as coordinator to provide
platform functions
Image of Tokyo-based
ecosystem

Concrete example ofTokyo-based ecosystem① Collaboration with administrative organs

Fusion of financial and non-financial services
Provision of financial services starting with non-financial services[Comprehensive collaboration with Tokyo Metropolitan
Government, Kawasaki City, etc.]
Mutual collaboration in implementation of initiatives for industrial
development, including support for SMEs, with the aim of achieving
sustained development of regional economies
Collaboration in infrastructure and financial areas in pursuit of theInternational Financial Center concept

Kiraboshi Consulting Co., Ltd.
Formation of CVC fund

Linking LaLaPay with Haneda Airport apps
Vitalization of airport terminals② Collaboration with Haneda Airport [Agreement signed on April 20, 2021]
A. [Comprehensive collaboration with Haneda Future
Research Institute Incorporated]
Development of local economies around Haneda Airport and promotion ofculture and arts
Matters related to initiatives aimed at achieving the SDGs
Digitalization of services to Haneda Airport users, etc.
Scheduled to separately conclude basic business alliance agreement withHaneda Future Research Institute→ customer marketing, development of new business domains, etc.

Employees and users ofHaneda Airport

Large corporations
Contribute to open innovation /regional revitalization business byconnecting startups with large
corporations

Startups

Ｂ. [Provision of Maekyu services to Haneda Airport facility
employees]

MedicalUse of “Maekyu” services and trial implementation for the use of
LaLaPay in airport facilities

Support in solving social issues with
SDGs in mind

Marketing support throughaccumulation and analysis ofdigital data

LaLaPay*
Digital BankSportsContribute to regional vitalization
through promotion of sports③ CVC funds formation [Structured on May 20, 2021]
Create funds through collaboration with startups and large corporations

Entertainment,
art, culture

Administration(Tokyo, Kawasaki, etc.)* LaLaPay: Name of digital money
functions, etc., provided by
Kiraboshi Tech, Inc.

22

Overall Flow of ESG/SDG-Related Strategy of theMedium-Term Business Plan

(Medium-term business strategy as it relates to ESG/SDGs) = Realization of corporate philosophy

Tokyo Kiraboshi FG

 The Company secures solid financial strength and enhances its competitive strength → serves to help customers achieve sustainable growthand contribute to the sustainable growth of local communities
 Leverage the Groupʼs collective strength to push forward SDG initiatives in the three priority areas of “support for the older generation”,“integrated support for business succession, corporate management and asset management” and “management support for medical
institutions”.
 Contribute to the sustainable growth of society while enhancing financial and competitive strengths of the Company
Reform of management base to enhance customer convenience andefficiency
Enhancement of financial and competitive strengths to contribute to thesustainable growth of society

Creation of new customer value and social value
Contribution to the sustainable growth of society<Increased focus on SDG
initiatives>
Strategy ⑤

Strategy ①・ Clarification of branchfunctions
Enhancement of proposal capabilities
for delivering high value-added face-toface services through branchreorganization

Strategy ②・ Business process re-engineering(sales offices, headquarters, work style)Freeing up management resources
through improved efficiency of businessprocesses to provide high value-added
face-to-face services

Strategy ③
・ Development of human resources/ self-fulfillment
Development of human resources andself-fulfillment for the delivery of highvalue-added face-to-face services

・ Livelihood support for the older
generation
Kiraboshi that supports the older generation

Reallocation ofmanagement resources
freed up throughimproved efficiency tooptimum areas

Strategy ④

Enhancement offinancial andcompetitive
strengths

・ Transformation of resource
allocation

・ Enhancement ofmanagement base

Personnel allocation forproviding high value-added
face-to-face services

Continuous provision of highvalue-added services,enhancement of financial andcompetitive strengths tocontribute to the sustainablegrowth of society

⼈員配置Digital transformation (DX)
Establishment of Digital Bank, improvement of customer
convenience
Fusion of face-to-face and non-face-to-face services, fusionof financial and non-financial services

Solving life issues such as watching over andcaringProperty management using trust functions
Property management using trust functions

Strategy ⑥

・ Activities to address customersʼ
business succession and otherissuesBusiness succession
Corporate management
Asset management for business owners

Strategy ⑦・ Support for medical
institutions
Management support / business succession
Contribution
to sustained growth of
地域医療の持続的成⻑に貢献
community health care services

23

Strategy of the Medium-Term Business Plan in Relation to
ESG/SDG Initiatives

Tokyo Kiraboshi FG

Branch reorganization and improvement of operational efficiency to free up management resources and improve customer convenience, human resources development and self-fulfillment
Specific action items and ESG classification

Description
Deliver customer-oriented services through a mix of face-to-face and nonface-to-face channels
・ Strengthen face-to-face in-person proposal and consulting services

Strategy (1)SClarification of
branch functions

S

E

Transformation of all branches to next-generation
branch setup

Strategy (2)SE

Efficiency improvement in branch sales operation

Deliver customer-oriented services through a mix of face-to-face and nonface-to-face channels

S

E

Improvement of headquarters efficiency

・ Free up personnel for allocation to high quality face-to-face services

S

Human resources development

Develop and make effective use of human resources for the delivery of highquality services and improvement of productivity

S

Personnel system reform / realization of diverse
work styles

・ Develop human resources, create happiness for all officers and employees

Business process
re-engineering

Strategy (3)Development of Human
Resources / SelfFulfillment

Function-specific branch: Life design station

・ Move to paperless, passbook-less and cashless

Focus items and SDG targets
Community
engagement

Shared value

Related indicators
Retail-focused branches
19 locations in FY2020 → 34 locations in FY2023

Next generation/ Women

Productivity improvement (gross core businessprofit per head)¥23 mn → ¥32 mn

Use of external talents
Increase in mid-career hires

Personnel allocation and enhancement of financial and competitive strengths for providing high-value-added services and contributing to the sustainable growth of society
Strategy (4)Transformation of
resource allocation

Digitaltransformation
(DX)

S
S
S
S

E

Personnel allocation to consulting and otherdivisions
Centralization of routine and strategic support
functions

Develop and make effective use of human resources, create new value

Establishment of Digital Bank, IT support for older
adults

Deliver customer-oriented services through a mix of face-to-face and nonface-to-face channels

Improvement of customer convenience・ Implement Group-wide optimal allocation of personnel freed up through efficiency improvement
・ Provide added value to local companies by offering back office and strategic support functions

Community
engagement

Shared value

Accountability / Transparency

ROE 5.9%, core OHR 57.3%
Capital ratio 8.3%
Net income ¥20.0 bn, profit from main line business¥23.4 bn
Internet users: 68,000 customers→ 400,000 customers
Support for improving financial literacy

・ “Fusion of face-to-face and non-face-to-face services”, “fusion of financial and non-financial
services”
・ Provide IT support for older adults, contribute to improving the societyʼs IT literacy, promote sports
activities

Provision of high-value-added services by enhancing financial strength and with invested management resources, contribution to the sustainable growth of society
Strategy (5)SLife plan support / asset management

Provide support in asset building and asset management that continue tothe next generation, support in inheritance and business succession

Livelihood support
for the older adultsegment

S

Business targeted at the older adult segment

・ Provide services aligned to life stage/plan through goal-based approach

S

Transactions with business owners, inheritance,
property management

・ Kiraboshi Package - services that match to all life scenes anytime, anywhere

Strategy (6)S

Business succession

Promote consulting services and provide financing based on businessfeasibility evaluations

S

Business financing

S

Support for overseas expansion, business
improvement, business startup

・ Provide combined services encompassing corporate management, businesssuccession (inheritance), asset management and overseas strategy
・ Build main bank relationship through business feasibility evaluation, take action
against climate change risks

Strategy (7)SCollaboration in administrative policy measures

Promote consulting services and provide financing based on businessfeasibility evaluations

Support for
medicalinstitutions

S

Responses to novel coronavirus

S

Local medical activities

・ Provide management support and financing to medical institutions, social
welfare corporations, etc. (use of funds)
・ Engage in regional revitalization activities at various locations, in collaboration
with administrative organs, etc.

G

Establishment of chief sustainability officer position

Improve the effectiveness of the board of directors to achieve sustainablegrowth and enhancement of corporate value

G

Revision of credit policyG

Support for TCFD recommendations (Feb.), establishment ofnecessary structure and disclosure

Activities to address
customersʼ businesssuccession andother issues

Enhancement ofcorporate
governanceCommunity
engagement

Shared value

Environmental
protection

Increase in the number of business ownercustomers with assets under management:
1,000 accounts
Increase in the outstanding balance of assets
under management of business ownercustomers: ¥50.0 bn
In the ¥0.3 to 10 bn annual sales zone
Number of loan customers with main bankrelationship: +600 customers
Financing to customers with main bankrelationship: +¥600 bn
Number of customers receiving startup financing(3 years): 6,000 customers
Kiraboshi Package: 60,000 customers
Business succession support:over 1,000 customers
Support to medical institutions:over 400 institutions

Accountability / Transparency

・ Enhance Group governance to respond to diverse customer needs

24Efficiency Improvement and Concentration ofManagement ResourcesTokyo Kiraboshi FG

 Improve customer convenience through digitalization, concentrate freed-up management resources on face-to-face sales and consulting functions
 Provide the functions of a Tokyo-based platform owner collectively as a Group. Act as local community coordinator in collaboration with different
industries and administrative organizations
 Tokyo-based platform is an open platform that allows collaboration with nationwide regional banks, and offers various sub-platforms for different
functionsIndividuals

Improvement of management resource efficiency

Customer segment

Young adult segment ~ older adult segment

Strategy

Improved convenience through digitalization offinancial business
Differentiation through non-financial services
Fusion of financial and non-financial services

Results

Effects of improved efficiency:
Branches ¥0.5 bn reduction
Effects of improved efficiency:
Personnel ¥0.5 bn reduction

SME business owners, affluent segment, older adultsegment, inheritors
Life plan consulting with goal-based approach
Fusion of face-to-face and non-face-to-face, financial
and non-financial services
Building main bank relationship in transactions withindividual customers
Net increase in investment trust per head
¥10 bn: 10 people, ¥0.5 bn: 150 people
Trust fees from investment trust balance outstanding:¥1 bn → ¥2 bn (sum of KLD)

Digitalization
Group functions (DB, FinTech, Bank)

People in charge of retail customers, people in chargeof older customers, enhancement of asset consultation
Group functions (DB, KLD, Bank)

Responsible party
Delivery of platformfunctions

Digital Bank businessLife plan support business

Customers of standard loans

Customers with main bank relationship, customers ofbusiness succession services, medical institutions,customers of start-up support

Strategy

Establishment of specialized division within theheadquarters
Loan application ~ Execution - On-line monitoring

Enhancement of face-to-face consulting: the Group tocollectively provide mezzanine and equity finance,
trust functions and other services

Results

Effects of improved efficiency:
Workforce ¥0.1 bn reduction ~Interest income (new initiatives in 2021-2023):
approx. ¥8 bn
Income from fees and commission (new initiatives in
2021-2023): approx. ¥2 bn

Responsible party

Group-wide collaboration
Use of older employees (real estate PJ, concentrationof small accounts to headquarters)

Corporate-focused branches, headquarters sales
operation
Group functions (consulting, capital, leasing, KLD, Bank)

Delivery of platformfunctions

Digital Bank businessBusiness succession, support for medical institutions,
support in corporate restructuring, start-up support

Customer segment

Corporates

Concentration of management resources25

Transformation of Resource Allocation

Tokyo Kiraboshi FG

Number of
offices

Personnel
expenses

Headcount Create time for “offensive actions” through business process re-engineering, branch reorganization and review of branch
operation. Reallocate freed-up personnel to sales and strategic areas
 Concentrate routine tasks and administrative work requiring expertise in a strategic support function department
 Maximize Group synergies jointly with all Group companies through reform of personnel system and strategic allocation (transfer)of personnel to Group companies, etc.

FY2019FY2023 planned

Changes(A)(B)(B)－(A)

2,888

2,526

￥21.8 bn

Sales offices(150) *

(209) *

Transfers, etc.

Concentration of routine
tasks

(362)

12%
down
（▲12％）(Number of people retiring at retirement age and leaving mid-careerin 2020/3 - 2023/3: (502); number of transferees, etc.: (227))(Number of new hires in 2020/3 - 2023/3: 367)

￥26.1 bn

Improvement of
headquarters efficiency

(62)

+59

* Number of sales personnel, including those in headquarters sales, is increasing(¥4.3 bn)16%
down（▲16％）* down ¥3.2 billion from FY2020

134 offices

116 offices(18 offices)13%
down（▲13％）

Corporate and retail branches,
specialized branches forcorporate customers: (53)Retail-focused branches: +20
Sub-branches, offices: +15

26

Branch Strategy / Changes in Productivity(Number of Sales Offices and Headcount)

Tokyo Kiraboshi FG

 Improve customer convenience and rationalize number of offices through fusion of face-to-face and non-face-to-face services
Consolidate offices engaged in corporate transactions for concentration of management resources: increase loan balance per office and per head Expand points of contact with customers through specialized branches, strengthen consulting functions
Increase offices specializing in retail transactions and interact with customers: increase investment trust balance per office and per head

Loan amount per
office/per head

Loan amount per office (left axis)
denominator: the number of offices
Loan amount per person (right axis)
denominator: the total number of bank employees

50 bn
1.7
1.3
30 bn

31.1
FY2019actual1.4

35.8
FY2020actualInvestment trust balance
per office and per person

1.7

39.1
FY2021planned45.5

FY2022planned51.0

1.0 bn1.5
FY2019actual

0.5

14
（10％）

104 offices（77％）

March 31, 2024

Investment trust balance per person (right axis)
denominator: the number of consultants

2.3

2.6

FY2020actualFY2021plannedFY2022planned4.3

FY2023plannedRetail-focused offices
Offices specializing in
corporate customers
Staffed sub-branches
and offices

1.0 bn0.6

3.4

134 offices13
3 （9％）

Offices for corporate
and retail customers

Investment trust balance per office (left axis)
denominator: the number of offices

0.7
0.4

1.5 bnMarch 31, 2020

FY2023planned0.8

2.0 bn2.0 bn1.5

4.0 bn3.0 bnChanges in the number of sales offices

0.5 bn116 offices
28（24％）46 offices（39％）
8(Down 18
officescompared toMarch 31,
2020)

34
（29％）

27

Retail Customer Strategy

Tokyo Kiraboshi FG

 Promote establishment of main bank relationship with individual customers through delivery of financial and non-financial services tailored to
specific customer segment
 Deliver financial services starting with non-financial services (comprehensive service business that is also strong in finance) Improve customer convenience by combining face-to-face and non-face-to-face channels. Optimize customer services aligned to individual needs
Financial services
Attributes

Life plan support businessPrimary division(persons) in charge

Asset management
FD marketing
Affluent
segment
Landlord
segment
Businessownersegment

Older adultsegment

Young adultsegment
Working
segment

Persons in charge
at KLD*
Financial consultant
Branch Manager
Persons in charge ofcorporate customers

Persons in charge ofretail customers
Persons in charge ofolder adult segment

Persons in charge ofretail customers
In branches

Non-face-to-face channel(all segments)

Internal targets, KPI, etc.

・ Collaboration with KLD
Securities: intermediary,referral・ Life plan support business(goal-based approach)・ Use of face-to-face no-loadfeatures・ Promotion of fund wrap
service

Housing and rental
property loan
Effective use of assets
・ Provision of rental property
loan in connection withpurchase, replacement anduse of real estate
・ Use of real estate
management trust
・ Enrichment of housing loansand “double” loans (expand
list of corporate and vendor
partners)
・ Proposal on reverse
mortgage loans

・ Single-premium, level
premium insurance

・ Enhancement ofaccumulation-type
investment trusts

・ Opening of web accounts,
electronic delivery
・ API connections with DB
and KLD Securities
・ Paperless operation
Assets under
KPI
management ofbusiness owner customers
Number of customers +1,000
Outstanding balance +¥50 bn* KLD: Kiraboshi Life Design Securities

Digital bank business
Property management
Property succession
・ Strengthen transactions
with heirs
・ Transactions with businessownersBusiness consultation /business succession(succession method, tax
support), asset management

・ Kiraboshi Package(property management trust,testamentary trust, living
trust, etc.)

・ Strengthen transactions
with heirs
・ Enrichment of housing loansand “double” loans (expand
list of corporate and vendor
partners)

・ Strengthen transactions
with heirs

・ Enrichment of non-face-toface functions (web-based
pre-screening)

・ Provision of Kiraboshi
Package through Digital
Bank (smartphone) andInternet banking (INB)

Kiraboshi Package
Users: 60,000

KPI

Non-financial services

Deposits / foreignexchange
Fund transfer

Provision of added value
through non-financial
services (cross-industry
collaboration)

・ Digital Bank
Establishment of scheme forcustomer transfer
Improvement of
convenience (UI/UX)・ Travel, leisure, vendor
introduction, postpartum
accommodation,
housekeeping service, etc.

・ Internet banking
Opening of web accounts,
notification of change, sealless, etc.
・ Next-generation branches
Use of tablets in the
branches, web-based
accounting forms

・ Provision of non-financial
contents through Kiraboshi
Package, etc.
Caregiving, health care,
medical examination,
housekeeping services, etc.
・ Travel, leisure, dining, etc.
・ Maekyu: use of LaLaPay(electronic money)

・ Digital Bank (smartphone)・ Internet banking (INB)・ Digital Bank (smartphone)

Individual Internet users: KPI
68,000 customers→ 400,000 customers
Effects of improved efficiency:
approx. ¥1 bn/yr

28

Life Plan Support Business: FD (fiduciary duty)

Tokyo Kiraboshi FG

 Commitment to customer-oriented business practice based on fiduciary duties
Measures related to customer-oriented business
operations
Provision of diverse
products

Kiraboshi Bank

Proposals with a highlevel of expertiseKLD Securities

Banking and securities business collaboration[The ideas that went into the company name]
Kiraboshi Life Design Securities Co., Ltd. (launched in Aug. 2020)

×Customer・ To realize customersʼ ultimate objectives in building their assets
・ To feel empathy with customersʼ enjoyment and happiness・ To be a bridge to the next generation

Measurement scheme in which customerʼs
enjoyment/happiness = evaluation of sales offices

FD-based marketing in practice
From “product proposal” to “proposal aiming together withcustomers to reach their goals”■ Abolished AuM profit target in all
branches

Intermediarycustomer
account

Referred customer
account● Referred customer account・ Target customers
Middle affluent group and above(Referral criteria) ¥100 mn or more in
assets under management with
Kiraboshi Bank
Individuals under the age of 80 andwith prospect for net increase in assets
・ Product offering
Investment trusts, fund wraps, foreign
bonds, structured bonds, equities, etc.
● Own customer account・ Target customers
Assuming referral from customers whothemselves had been referred, etc.

Accompanied by
KLD sales staff(for customers of securities subsidiarywith ¥10 million or more in assets undermanagement)

Own customer
account

Independent approach■ Waiving of sales commissions on
investment trusts

Existing Kiraboshi Bank customer(No transaction with
Kiraboshi Bank)

Independent approach■ Built sales structure designed to link
growth in AuM balance to growth inprofits

New customer

Kiraboshi Life Design Securities Co., Ltd.

Independent
approach or withaccompaniment of
PB team

OTC
customer
account● OTC customer account・ Target customers
Core customers to be individuals withestimated financial assets of less than
¥10 million
・ Product offering
Investment trusts, accumulation-type
investment trusts, foreign currency
deposits, public bonds, etc.
● Intermediary customer account・ Target customers
Core retail group and above (estimatedfinancial assets of ¥10 million or more)
・ Product offering
Investment trusts, fund wraps

29Livelihood Support for the Older Adult Segment~ business tools for the older adult segment (Kiraboshi Package) ~Tokyo Kiraboshi FG

With focus on middle affluent group, give full personal support to the older adult segment from both financial and nonfinancial aspects (construction of a comprehensive package/platform)○ Leverage the relationship of trust with the older adult segment, which accounts for a large proportion of Kiraboshi Bankʼs deposit
transactions, to build trust with the next generation (heirs)
Financial

Proposals for property management and succession
with focus on trust and insurance

Non-financial

Proposals for relieving anxieties of the older adults by partneringwith vendors

Direction of business with the older adult segment
Provide financial services only, such as
asset management
Product orientation

Main targets

2025 problem = diversification of needs
FD requirement (customer-oriented
approach)

Respond to the overall needs of theolder adult segment, including nonfinancial services
Market orientation

Older adult segment (60 years of age and above) (1) Deposit + AuM of ¥5~10mn 60,000 individuals, ¥460bn (@¥7m)(2) ¥10mn ~ 80,000 individuals, ¥1,760.0bn (@¥21m)
Sum of (1) + (2) 140,000 individuals, ¥2,220.0bn

Responsible
party/structure(1) Persons in charge of retail business and older adult segment approx. 100 people (relations)(2) Financial consultants/KLD Securities/PB staff 350 people (consulting)

Financial
contents

Non-financial
contents

Kiraboshi Package

Realize the thoughts of caring for older adult segment
customers and their family members

KPI

Needs in property management

Needs in property succession○ Property management
trust
・Trust product withrestrictions on cancellation・Trust product with proxy
withdrawal functions
・Inheritance-type trust
product○ Life insurance○ Testamentary trust○ Inheritance arrangement
operation○ Living trust○ Successive beneficiary
trust (Living trusts for realestate)○ KLD services for heirs
receiving assets

60,000 users

Eliminate “inconvenience” felt by the older adult segment andtheir family members, realize a prosperous post-retirement life

Creation of a web page for advice on
solving post-retirement life problems
I want to improveinconvenience in xxx
I want to participate in xxx

Aiming for fusion of rich andinnovative contents
Health care/ medical
examination

Travel/leisure
CultureSecurity

Care

Housekeeping services

MovingI want to know about xxx
Staff in charge of the older
adult segment listenedcarefully to the various
challenges facing the older
adult customers

Community

Repairs
Employment support

・ Partnering with vendors for the contents ofthe various genres on the menu
・ The menu was partly developed jointly withstartups

30

Corporate Customer Strategy

Tokyo Kiraboshi FG

 Leverage the collective strength of the Group to enhance problem-solving capabilities aligned to thechanges in social structure, and contribute to creation of customer value and to solving social issues[Provide hub functions as a platform owner]〇 Examples of platform to respond to customerʼs management issues:
Support for business start-up, business succession, support for corporate
restructuring, support for medical institutions

Tokyo Kiraboshi FG
Financing (senior, mezzanine, equity)
Customer(manufacturing)

Customer(logistics)

Cross-industry
collaboration

Customer(distribution)〇 Coordinate value chain and contribute to creation of customerʼs new
businesses

Matching with “customerʼs customer”
Collaboration with other companies and other industries

Number of corporate
borrowers, loan amount

KPI
Business investment (equity etc.),
personnel dispatch,developing into compoundtransactions

Number of business establishments
in Tokyo and Kanagawa
908,000 (Note 1)
Of which, annual sales of ¥0.3 ¥10 bn
70,000 (Note 2)
Of which, loan customers
11,000 customers,
16% sharein 3 years(compared toMarch 31, 2020)○ In the ¥0.3-¥10 bn annual sales zone
Number of loan customers with main bankrelationship: + 600
Lending to customers with main bankrelationship: +¥600 bn○ Collaboration with over 1,000 customers inbusiness succession○ Collaboration with over 400 customers inmedical transactions(Notes 1, 2) Teikoku Databank survey

31Activities to Address Customersʼ
Business Succession and Other Issues

Tokyo Kiraboshi FG

 Combining Group-wide resources to promote activities in business succession, establishment of main bank relationship,transactions with business owners, corporate management, overseas expansion, etc.
 Business succession by matching the businesses of SME customers with those of other operators
Collaboration between sales offices and
SF Division
KPI

Business succession balance and yield
Figures in [ ] indicatecomparison with FY2020

 Collaboration with over 1,000 customers in businesssuccession business (44,000 corporate customers)
 Establishment of main bank relationship, capital funding incollaboration with funds, deepening of transactions withbusiness owners
 Use of business tools with patterned approaches

Collaboration among Group companies
 Tax support and management consulting in collaboration
with Kiraboshi Consulting
 Mezzanine and equity financing in collaboration with
Kiraboshi Capital Asset management and asset building in collaboration withKLD Securities(¥100 mn)

1.84

1,000

2.00

2.00

500

430

680

(％）

2.00

930

2.00

[804]

126

0
FY2019actualFY2020actual1.00

0.00
FY2021plannedFY2022plannedFY2023plannedInterest on loans / Commission income

Risk management system
 Strict credit control and identification of proper risk andreturn balance Improvement both in profitability by office andcomprehensive profitability by taking into consideration the
RAF perspective

Human resources development
 Development of professionals in collaboration with external
funds

Figures in [ ] indicatecomparison with FY2020(¥100 mn)

19.1 [17.9]

20Interest on loans
Commission income
10

1.2
0

0.7
FY2019actualFY2020actual

14.1
9.6

6.6

11.1

16.1

3.0

3.0

3.0

FY2021plannedFY2022plannedFY2023planned32

Business Financing(Structured and mezzanine financing such as LBO loans, non-recourse loans and mezzanine loans)

Tokyo Kiraboshi FG

 Enhance problem-solving capabilities to address customersʼ diverse challenges, establish a specialized structured
finance team within SF Division Strengthen due diligence and screening/risk management structures for speedy deal processing
Collaboration between sales offices and
SF Division
 Reduce sales officesʼ burden on referrals from sales offices
 Centralize contact point for negotiations on terms andconditions, etc., in SF Division Project members to identify and examine issues associatedwith a deal Officers to take part from an early stage and decide thedirection to follow

Collaboration among Group companies

Business loan balance / Yield(¥100 mn)

6,000

1.77

5,318 [4,107]

5,000
LBO finance, etc.
Non‐recourse loans
Mezzanine finance

4,000
3,000

697
215
472

1,000
0

FY2019actual

Risk management system
 Establish the guidelines (such as for handling LBO finance)
 Establish a dedicated structured finance screening team (3to 4 people)
 Set up a system for ongoing monitoring of covenants,budget control, etc.
 Designate a responsible department (SF Division) to perform
integrated risk management

1,211
645
525
FY2020actual

4,011
3,089
2,613

2,342

1,515
868
230
FY2021planned

1,239

630

FY2022plannedFY2023planned(¥100 mn)

Interest on loans
80
60.4

20.7
10.6
10.1
FY2019actual28.2
12.2[90.8]

91.9

Commission income

0

Figures in [ ]indicate comparison
with FY2020

119.0

120

Human resources development

1,599

430

Interest on loans / commission income40 Enhance expertise by bringing in outside talents
 Develop professionals with competitive edge

1.87

1.52

2,000

 Industry and market surveys conducted in collaboration with
Kiraboshi Consulting
 Mezzanine finance structured in collaboration with Kiraboshi
Capital

1.84

Figures in [ ]indicate comparison
with FY2020
1.91 (%)

89.4
62.3

38.2

16.0

22.2

29.6

29.6

FY2020actualFY2021plannedFY2022plannedFY2023planned33

Support for Medical Institutions

Tokyo Kiraboshi FG

 Support medical institutions in business succession and management, provide support in asset management, contribute to thesustainable growth of community healthcare and solving social issues
 Enhance problem-solving ability to strengthen management support
Balance and yield of mezzanine loans, capital loans, etc.,
handled by Medical and Welfare Business Division
Figures in [ ] indicatecomparison with FY2020

Support for medical institutions
1.57

1.57

Collaboration between sales offices and
SF Division
KPI Collaboration with over 400 customers in medicaltransactions (1,200 customers in medical transactions) Promptly execute capital financing to institutions in a state ofinsolvency
 Seek to establish main bank relationship with medical
institutions for stable cash flow(¥100 mn)

300

260
Senior loans
Mezzanine loans
Capital loans

250
200

95
58

50

 Healthcare consulting in collaboration with Kiraboshi
Consulting
 Mezzanine and equity financing in collaboration with
Kiraboshi Capital

0

30
30

37

FY2019actualFY2020actual

(％)

268

135

14

14

14

119

119

119

FY2021plannedFY2022plannedFY2023planned[173]

Interest on loans / Commission income(¥100 mn)5

 Build new financing scheme in collaboration withadministrative organs

285

1.39

* Aside from the above, the Medical and Welfare Business Division had an
outstanding loan balance of ¥85.7 billion as of March 31, 2021.

6

Solving social issues in collaboration withadministrative organs

1.40

152

128

150
100

Collaboration among Group companies

1.78

Interest on loans
Commission income

2.9

3
2
0

4.9

0.9
0.2
0.7

1.4
0.4
0.9

2.0

FY2019actualFY2020actualFY2021planned4.7

Figures in [ ] indicatecomparison with FY2020

3.7

[2.3]

3.7
3.7
1.0
FY2022plannedFY2023planned34

Group Collaboration Including Equity Financing

Tokyo Kiraboshi FG

 Kiraboshi Bank, Kiraboshi Consulting and Kiraboshi Capital collaborating to provide support at diverse stages, from start-up to
growth phase and to maturity phase
Investment track record
33 investments / ¥4.18 billion

Tokyo Kiraboshi FG
Kiraboshi Bank

Buyout investment

Yume Kagayaki Fund 1(Nov. 2018)

Kiraboshi Capital

Mezzanine financeYume Yorisoi Fund 1(Aug. 2020)

Kiraboshi Consulting

Engagement investing

Growth capital investment
Yume Habataki Fund 1(Mar. 2019)

Venture investment

Medical FundTokyo Sparkle(Nov. 2020)

Mezzanine
EquityA&KC Medical No. 1(Scheduled to be launched
Fund connectingin July 2021)

large corporations
with start-up firms

ToKI Meki Oen Fund 1(Oct. 2017)

Stage
Start-up phase

Collaboration withexternal funds
Over 80 LP investees

Growth phase

Kiraboshi Consulting
Headcount of approx. 75

Maturity phase

Kiraboshi BankSF Division
headcount:
35

MF Division
headcount:
25

Mezzanine
LBO loan

35

Digital Bank Business:
Features and Business Concept

Tokyo Kiraboshi FG[Features]① Reduce initial investment and development period to the minimum to minimize costs and respond with speed
Build infrastructure based on cloud banking system of SBJ*
* Shinhan Bank Japan: subsidiary in Japan of Shinhan Financial Group which has at its core Shinhan Bank, a leading bank in Korea.
② Initially specialize in deposit and foreign exchange functions, lending out all investment operations to other banks within the Group
From the second year onward, collaborate on API with Kiraboshi Techʼs wallet and other services to develop lending functions etc.; build platforms byleveraging the Groupʼs collective strength and collaboration with external parties➂ Seek improved convenience for existing customers of Kiraboshi Bank (option for existing customers to switch to Digital Bank)[Overview of services to be provided]
Step 1

Interest income

Core value

Kiraboshi Bank

② High completion rateusing PCs andsmartphones

Account opening, use

e-kyc

UI/UX

Step 1④ Preferential
charges

Main
Base in Tokyo
metropolitan
area,
Kiraboshi
Bank, existingcustomers,
employees ofbusiness
partners

Between Kiraboshi
Bank accounts - freeof charge, to otherbanks - under review① Interest levelthat meets asset
management needs

TargetNationwide
scale,
customers ofalliance
partners,
asset building
segment

Moneytransfercharges

Securing profit

Convenience
Seven Bankʼs ATM
fees [under review]ATM
withdrawal(Number of accounts in 3 years: approx. 400,000]
Electronic payment service provider(budgeting apps, etc.)

OPEN
API

High
interestrate

QR Pay (LINE Pay etc.)

Cashless

Main
AccountTimedepositSports lottery etc.

Entertainment
content

Pocketloan

Kiraboshi
Group

Securities③ Affiliated services
offering high level ofconvenience

Tech (Maekyu,
LaLaPay)

Other
companies

WalletExperience* Launch account acquisition
marketing activities atcommencement ofoperations

Step 1 & 2High value added to accounts, improved convenience

Expansion of connected
infrastructure services

Expansion of
procurement

Individual internet users:
68,000 customers → 400,000 customers

KPI

Customer acquisition

Card

SBJ

Asset management
LIFE Platform

Step 3 andongoing
Expansion of cross selling

LIFE Platform
Credit loan

Foreign currency
exchange

Asset building, promotion of sound consumption

Step 2 & 3
Platform connection36Capital Policy

Tokyo Kiraboshi FG

Basic concept
Accumulation of equity capital

Capital ratio

Secure financial strength to be able to make lump sum repaymentof preferred shares
Maintain financial soundness while accumulating internal reserves andrisk assets

Enhance quality ofcapitalin the 8% range

Improve profit level by strengthening financing functions through risk taking
Capital ratio x ROE (net income/risk-weighted assets)

RORA 0.5％

Strategic investment

Improve capitalefficiency

ROE

Improve Group income based on RAF

Approx. 6%

Improve profit level using assets from risk-taking activities
Shareholder return in line with profit and net asset levels

Appropriate return ofprofits to shareholders

Dividend in principle / Share buy-backs where necessary

Consolidated ROE

Consolidated capital ratio
Consolidated capital ratio (right axis) (％)(trillion yen)
4

3

Total shareholder
return ratio
20〜30％

Increase return rate that can respond to shareholder expectations

8.8

3.1

8.6

3.2

8.7

Risk-weighted assets, etc. (left axis)

8.6

3.2

3.4

3.7
8.3

9

5.0％

3.9
3.2％

8.3
2.6％

2

8

FY2018actual5.9％

FY2019actualFY2020actualFY2021plannedFY2022plannedFY2023planned1.6％

FY2018actual

1.3％

FY2019actualFY2020actualFY2021plannedFY2022plannedFY2023planned37

Development of Human Resources /Self-Fulfillment

Tokyo Kiraboshi FG By linking reform of human resources development program with reform of personnel system, develop “Kiraboshibito” whocan put into practice commitment to the growth of customers, the growth of the Group and contribution to society
An individual with “high aspirations”(Principle / Sense of mission)

An individual who always thinks “howit can be done”(Ingenuity / Perseverance)

An individual who is committed toresults, who continuously takes oncourageous challenges(Responsibility / Courage)

Development of “Kiraboshibito”
Growth of the Group

Reform of humanresources development
programDevelop professionals

Promote diversity /develop personnel
who think forthemselves and takeon challenges
Increase engagement

Contribution to society

Growth of customers

Personnel system
reform○ Revamp training system○ Foster self-motivation○ Support self-improvement

Link
Create customer value

Realize management visionand self-fulfillment○ Improve oneself on oneʼs
own accord anddemonstrate oneʼs potential
to the utmost○ Have everyone look in thesame direction
Build a “winning team”

Foster human resources withhigh market value

Personnel Dept. changed to HR Dept. ⇒ “human resources development” +“organizational development”

Make full use of older
workers
Actively assign mid-level
and younger workers
through abolition ofseniority system
Enhance mid-career
hires
Make use of externaltalents
Build diverse career paths
and work styles

Develop human resources committed to the realization of management
philosophy and management strategy
Cultivate a new corporate culture and invigorate the organization throughincreased engagement

38

Summary

Tokyo Kiraboshi FG[Initiatives of the previous Medium-Term Business Plan]
・ Vision: “Be the urban regional bank group most favored by customers in the Tokyo
metropolitan area”
・ Placed top priority on “improving management efficiency” with achievement in sight forannual cost reduction in excess of ¥10.0 billion.
・ Implemented initiatives to build “new business models” such as 1) structured finance, 2)
securities business, 3) consulting business, and 4) capital business.
[Initiatives of the new Medium-Term Business Plan]
・ Vision: “Be a Tokyo-based platform owner that creates new values for customers”
・ Collaboration between Kiraboshi Group and its customers to open a new horizon of businessdevelopment through use of their respective platforms and contents
・ Challenging targets set at a level that will demonstrate the Groupʼs presence in the Tokyo
market (planning to achieve profit of ¥20 billion in the fiscal year ending March 31, 2024).
・ Capital policy (improvement of capital efficiency, etc.)[Kiraboshi philosophy]
・ Accomplish the goals of contributing to society, seeking growth of the organization, achieving
self-fulfillment and realizing oneʼs own happiness[Three principles of action guideline for Kiraboshibito (people who put the Kiraboshi philosophy
into practice)] An individual with “high aspirations”
 An individual who always thinks “how it can be done”
 An individual who is committed to results, who continuously takes on courageous
challenges

39

Figures in this document are calculated in units of a million yen, but are presented
in units of 100 million yen. The total amount therefore may not match the total foreach item.



Please note that some of the figures in this document are taken from preliminary
reports.

This document contains forward-looking statements on the Groupʼs results. Thesestatements are not intended to guarantee future results, as they are subject torisks and contain uncertainties. Please keep in mind that future results may differ
due to factors including changes in the business environment.

■ Please direct any comments orquestions about these briefing
materials or other IR topics to the IR
office at the right.

Tokyo Kiraboshi Financial Group, Inc.
Corporate Planning Division
TEL : +81-3-6447-5799
MAIL : ir@kiraboshibank.co.jp

40