Tokyo Kiraboshi Financial Group

Results Briefing for the
Fiscal Year Ended March 31, 2019

June 6, 2019

Contents

Tokyo Kiraboshi FG

Overview of the Group
Overview of the Group
Outline of the birth of Kiraboshi Bank, Ltd.

p.4
P.5

Summary of business results
Summary of business results for the fiscal year ended
March 31, 2019
Gross business profit (gross core business profit)
Loans and yields
Deposits and assets under management
Securities

P.7

P.8
P.9
P.10
P.11

Integration effects and improvement of management efficiency

P.17

Branch strategy / local strategy

P.18

Secure “first calls” through the business model that has“dialogue” as the starting point.

P.19

Enrichment of consulting functions (1) <Establishment of SF Div.
and improvement of its functionality>

P.20

Enrichment of consulting functions (2) <Support at diversestages>P.21

Enrichment of consulting functions (3) <Enhancement ofoverseas strategy>

P.22

Enrichment of consulting functions (4) <Use of trust functions>

P.23

Enrichment of consulting functions (5) <Initiatives for individual
customers>

P.24

Enrichment of consulting functions (6) <Initiatives in FinTech>

P.25

Enrichment of consulting functions (7) <Strengthening ofpartnership with external organizations>P.26

Problem assets subject to disclosure under the Financial
Reconstruction
Law and credit-related costs

P.12

Enrichment of consulting functions (8) <Enhancement of group
strategy>

P.27

Capital ratio/Core OHR/ROE

P.13

Developing human resources that are trusted and chosen for
their “dialogue”

P.28

Business process re-engineering to strengthen contact withcustomers

P.29

Profit plan and strategy
Plan for the fiscal year ending March 31, 2020

P.15

Initiatives to strengthen governance and risk management

P.30

Medium-term business plan Start up☆Kiraboshi

P.16

Specific examples of SDGs initiatives

P.31

2

Overview of the Group3

Overview of the GroupTokyo Kiraboshi FG■ Management philosophy■ Major Group companies

To be a financial group for small and medium-sizedenterprise customers and individual customers in theTokyo metropolitan area that will contribute to thedevelopment of local communities throughcomprehensive financial services
Kiraboshi Consulting Co., Ltd.

Kiraboshi Capital Co., Ltd.

■ Management policy■ Company history
December 1924
December 1951
April 2004
October 2014
September 2015
June 2016
November 2016
January 2017
April 2017
November 2017
May 2018
September 2018
January 2019

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

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

Become the urban regional bank group most favoredby customers in the Tokyo metropolitan area4

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

Tokyo Kiraboshi FG

Holding company

The origin of the bank’s name

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

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

Birth of Kiraboshi Bank

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

Overview of Kiraboshi Bank, Ltd.

May 1, 2018

(Kiraboshi Bank, Ltd. non-consolidated as of March 31, 2019)

Location of head office

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

Capital¥43.7 billion

Total assets¥5,376.4 billion

Deposit balance¥4,558.5 billion

Loan balance¥3,696.1 billion

Tokyo Kiraboshi FG

Tokyo Tomin Bank

Yachiyo Bank

ShinGinko Tokyo

5

Summary of business results

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

Following the merger of the three banks effective May 1, 2018, the former Tokyo Tomin Bank and theformer ShinGinko Tokyo were liquidated effective April 30, 2018. However, from the point of view ofappropriate period-over-period comparison of each item, the figures of “Kiraboshi Bank (nonconsolidated)” presented herein for the fiscal year ended March 31, 2019 are simple sums of
Kiraboshi Bank figures for May 2018 onward and figures of the former Tokyo Tomin Bank, the former
Yachiyo Bank, and the former ShinGinko Tokyo for the month of April 2018.

6

Summary of business results for the fiscal year ended March 31, 2019(¥ billion)
Kiraboshi Bank (non-consolidated)2018/3

2019/3

Change1Ordinary income

86.1

79.2

(6.9)

2

Gross business profit

70.2

67.3

(2.9)

3

(Gross core business profit)

71.5

67.6

(3.9)

Of which, net interest income

58.8

57.0

(1.8)

Of which, net fees and commissions

11.2

10.5

(0.7)

Of which, other business income

0.0

(0.3)

(0.3)

57.3

54.6

(2.7)

4
5
6
7

Expenses

8

Of which personnel expenses

28.4

27.1

(1.3)

9

Of which non-personnel expenses

24.3

23.3

(1.0)

10

Net core business income

14.1

13.0

(1.1)

11

Transfer to reserve for general possible loan
losses

(0.3)

0.5

0.8

12

Net business income

13.2

12.2

(1.0)

13

Non-recurring profit (loss)

(4.7)

(7.7)

(3.0)

14

Of which, reversal of allowance forloan losses

0.9

‐

(0.9)

15

Of which, loss from write-off of nonperforming loans

3.4

3.8

0.4

16

Of which, gains (losses) on stocks andother securities

2.8

1.8

(1.0)

17

Of which, other losses

(5.1)

(5.7)

(0.6)

18

Ordinary profit

8.4

4.4

(4.0)

19

Extraordinary profit (loss)

(0.0)

(0.1)

(0.1)

20

Income taxes

1.1

(1.3)

(2.4)

21

Net income

7.2

5.7

(1.5)

22

Credit-related costs (11+15-14）

2.1

4.3

2.2

23

Merger and systems integration costs

2.9

3.4

0.5

Tokyo Kiraboshi FG(*) Plan after revision of the operating performance forecast announced in Nov. 2018

Tokyo Kiraboshi FG(consolidated)2018/3

2019/3

2019/3

results

results

plan (*)

Ordinary profit

4.7

3.4

Profit attributable toowners of parent

3.6

4.9

(¥ billion)

Year-on-year

Achievement rate

2.9

-26%

117%

4.2

+33%

116%

Tokyo Kiraboshi FG
Tokyo Kiraboshi FG’s business results in the fiscal year ended March 31, 2019, whichreflected primarily the performance of Kiraboshi Bank, show ordinary profit of ¥3.4 billion,
down ¥1.3 billion year-on-year and ¥0.5 billion above the plan, and profit attributable toowners of parent of ¥4.9 billion, up ¥1.3 billion year-on-year or ¥0.7 billion above the plan.
Kiraboshi Bank[Gross core business profit] ¥67.6 billion (down ¥3.9 billion year-on-year) *Details on p. 8.
[Expenses] ¥54.6 billion (down ¥2.7 billion year-on-year)
While recording ¥0.4 billion (up ¥0.4 billion year-on-year) in expenses as merger and systems
integration costs, overall expenses decreased due notably to further cost reductions from theeffects of the merger as well as the absence of costs related to the relocation of Aoyama
Head Office, which were recorded in the fiscal year ended March 31, 2018.
[Net core business income] ¥13.0 billion (down ¥1.1 billion year-on-year)
Despite a decrease in gross business profit, net core business income of ¥13.0 billion wasachieved as a result of cost-cutting efforts.
[Ordinary profit] ¥4.4 billion (down ¥4.0 billion year-on-year)○ Credit-related costs increased by ¥2.2 billion year-on-year to ¥4.3 billion, which included
approximately ¥0.7 billion provided in reserve for individual possible loan losses inconnection with a misconduct (embezzlement of cash) by a former bank employee.
○ Non-recurring profit and loss were as follows.
・ Gains on stocks and other securities decreased by ¥1.0 billion year-on-year to ¥1.8 billion
due largely to a decrease in the sale of strategic shareholdings as compared to the fiscal
year ended March 31, 2018.
・ In other non-recurring profit (loss), ¥3.0 billion was recorded as merger and systems
integration costs, an increase of 0.1 billion year-on-year.
[Net income] ¥5.7 billion (down ¥1.5 billion year-on-year)
Net income decreased by ¥1.5 billion year-on-year to ¥5.7 billion, reflecting tax effectaccounting.

7

Gross business profit (gross core business profit)

Tokyo Kiraboshi FG

Gross business profit (Kiraboshi Bank) ¥67.3 billion (down ¥2.9 billion year-on-year)
Gross core business profit (Kiraboshi Bank) ¥67.6 billion (down ¥3.9 billion year-on-year)(¥ billion)

Kiraboshi Bank

2018/3

2019/3

Change1

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

70.2

67.3

(2.9)

2

(Gross core business profit) (1-10)

71.5

67.6

(3.9)

3

Of which, net interest income

58.8

57.0

(1.8)

4

Of which, interest on loans anddiscounts

43.9

43.0

(0.9)

5

Of which, interest on securities

16.8

16.1

(0.7)

6

Of which, interest on deposits

1.6

1.1

(0.5)

7

Of which, net fees and commissions

11.2

10.5

(0.7)

8

Of which, trust fees

0.0

0.1

0.1

9

Of which, other business income

0.0

(0.3)

(0.3)

10

Losses related to bonds(Government bonds, etc.)

(1.2)

(0.2)

1.0

[Net interest income] ¥57.0 billion (down ¥1.8 billion year-on-year)
・ With increased shift of focus from low interest financing for large
corporations, etc. to lending for SMEs, ¥43.0 billion in interest on loans
and discounts was recorded, down ¥0.9 billion year-on-year, despite adecrease resulting notably from the effects of negative interest rate
policy.
・ Despite a decrease of ¥2.5 billion in dividends from Group companies
which were recorded in the fiscal year ended March 31, 2018, ¥16.1
billion in interest on securities were recorded, down ¥0.7 billion year-onyear, reflecting largely an increase in income distribution from invested
funds as well as continued efforts in yield improvement throughportfolio diversification.
[Net fees and commissions] ¥10.5 billion (down ¥0.7 billion year-on-year)・ ¥4.4 billion recorded from sale of financial products.
・ ¥2.3 billion recorded from corporate customer business as a result of
focused efforts on consulting business targeted at SME.
・ ¥3.9 billion recorded as foreign exchange commissions, etc.

8

Loans and yields

Tokyo Kiraboshi FG

Increase in loans to SMEs.
Decline in yields bottoming out due to efforts to curtail the decline.
■ Loans to SMEs increased through focused efforts in evaluationof business feasibility and support of mainstay operations.
■ While loan yields continued to decline partly from the effects of
the negative interest rate policy, signs of bottoming out were
emerging as a results of efforts made to curtail the fall in yields
by providing high value added services and flexible support, in
addition to increased efforts in financing based on evaluationsof business feasibility.

(Figures within brackets are year-on-year changes)
Loan yield

1.28

1.21

[-0.03 pt]

1.18

1.18 %

Yield
difference

1.24

1.18

[-0.02 pt]

1.16

1.15 %

Deposit yield

0.04

0.03

[-0.01 pt]

0.02

0.03 %

2017/3

2018/3

2019/32020/3 plan

■ Loan balance by type of customer (Kiraboshi Bank)■ Loan balance by industry (Kiraboshi Bank)(The numbers in white are average balances for the term; figures withinbrackets are year-on-year changes; percentages are change rates.)(¥ billion)
Local governments
Medium and largesized companies

SMEs

Individuals[Against theplan](Figures within brackets are year-on-year changes; percentages are change rates.)

3,570.7

3,611.9[+26.2]+0.7%

3,638.1[+3.0]

3,659.7

3,621.1

3,676.2

3,696.1[+20.6]

3,716.8

180.5

166.7

[+19.9]+0.5%[-13.5]
-8.0%

531.4

509.0

2,045.4

863.6
2017/32,130.5

869.8
2018/3[-34.4]-6.7%[+88.9]4.1%[-21.0]
-2.4%

153.2

474.6

2,219.4

848.8
2019/3

2019/3 plan (announced in Nov. 2018)
Loan yield
1.17％
Yield difference 1.15％
Deposit yield
0.02％■ Yields (Kiraboshi Bank)

2020/3 plan(¥ billion)

3,621.1

3,676.2[+19.9]3,696.1

325.6
186.6
419.1
209.0
329.9

324.1
188.6
427.6
209.4
351.9

[+1.6]

Manufacturing (9%)
Construction (5%)[+12.5]

325.7
195.1
440.1
205.7
378.5

435.8

461.3

[+25.8]487.1

Real estate leasing (13%)

371.9

377.0

[+2.2]

379.2

Services (10%)

863.6

869.8

[-21.0]848.8

Individuals (23%)

479.1

466.1

[-30.5]435.6

Other (12%)

2017/3

2018/3[+6.5][-3.7][+26.6]

2019/3

Commerce (12%)
Banks and other financial institutions (6%)
Real estate brokerage (10%)

9Deposits and assets under management

Tokyo Kiraboshi FG

Increase in investment trust balance
as a result of customer oriented business operations■ The deposit balance in the fiscal year ended March 31, 2019 decreased by ¥157.4 billion year-on-year due to several factors including
a decrease resulting notably from time deposits with premium interest rate reaching maturity, a merger-related decrease of
approximately ¥40.0 billion in the balance of Group deposits that had been held by the three predecessor banks, and effects ofbranch relocations associated with the implementation of branch-in-branch approach for consolidation of branch offices.
■ Promoted accumulation of investment trust balance primarily in core assets.
■ Achieved steady accumulation of insurance products centering on foreign currency-denominated products.
■ Balance of assets under management (Kiraboshi Bank)■ Deposit balance by client (Kiraboshi Bank)(The numbers in white are average balances for the term; figures within brackets are
year-on-year changes; percentages are change rates.)(Figures within brackets are year-on-year changes)[Against theplan](¥ billion)
OthersCorporate

4,794.4

4,766.0

4,784.4

4,715.9

183.0

147.2

1,355.7

1,410.2[-176.7]-3.7%

4,589.3[-157.4]-3.3%

4,558.5[-16.3]4,529.7(¥ billion)[-21.4]-14.5%

125.8[-0.4]-0.0%

1,409.8[-70.2]

4,568.6
Public bonds

480.5

477.6

(+14.4)

492.0

51.0

43.8

(-7.9)

35.9

212.8

228.4

(+13.1)

241.5

216.6

205.3

(+9.3)

214.6

2017/3

2018/3

Insurance

Individuals

3,245.6

2017/3

3,158.3

2018/3[-135.5]-4.2%

Investment
trusts3,022.8

2019/32020/3 plan

2019/3* Balance of assets under management of the former Tokyo Tomin Bank and former Yachiyo
Bank for the fiscal year ended March 31, 2017 and for the fiscal year ended March 31, 2018.

10

Securities

Tokyo Kiraboshi FG

Efforts made in diversification of investment management and portfolio diversification whileaiming for risk diversification and stable profits■ Amidst low interest rate environment, the outstanding balance of securities decreased by ¥111.2 billion year-on-year, a large
proportion of which was accounted for by government bonds.
■ Yield on securities in the fiscal year ended March 31, 2019 stayed at 1.35%, securing the preceding fiscal year level, reflecting in part
increase in income distribution from invested funds.
■ Ladder type portfolio was constructed to achieve risk diversification and stable profits, and hence avoid increase in duration.
■ Continued efforts were made in diversification of investment management and portfolio diversification while ensuring control of risk
amount in order to avoid excessive risk-taking.
■ Yield on securities ・ Duration (Kiraboshi Bank)■ Securities balance (Kiraboshi Bank)(The numbers in white are average balances for the term; figures withinbrackets are year-on-year changes; percentages are change rates.)

YieldsDuration

1,358.7(¥ billion)

1,271.0

Other
securities

254.1

Stock

39.3

Corporate
bonds

429.8

Municipal
bonds

71.6

Government
bonds

1.36

1.21

[-0.01 pt]

1,200.4
268.1
40.4
397.1
54.1

476.0

440.4

2017/3

2018/32017/3[-48.3]-3.9%

1,187.4[-111.2]-9.2%

1,089.2[+1.6]
+0.5%

269.7

(¥ billion)[-9.4]-23.2%

31.0

PE funds, etc.

[+6.2]
+1.5%

403.3

[+8.6]+15.8%

62.7[-118.2]-26.8%

322.2

4.1 years

2018/3

2019/3

Breakdown and trend of “Other securities”

Foreign securities

2019/3%4.9
4.5

1,235.7

1.35

16.8

20.9

171.2

180.6

176.6

34.7

35.2

41.6

35.2

35.4

30.5

2017/3

2018/3

2019/3

12.8

REITs
Investment trusts

11Problem assets subject to disclosure under the Financial Reconstruction
Law and credit-related costs
Tokyo Kiraboshi FG
Ratio of problem assets subject to disclosure under the Financial Reconstruction Law
declined by 0.03 points. Credit-related costs increased by ¥2.2 billion.
Value and ratio of problem assets subject to disclosure under the Financial Reconstruction Law (in the case of partial direct write-offs)■ The value of problem assets subject to disclosure under the Financial Reconstruction Law remained flat year-on-year at ¥76.7 billion,
reflecting in particular efforts made in corporate restructuring support, while the disclosure assets ratio declined by 0.03 points yearon-year due to the increase in the overall loan balance.
Credit-related costs■ Credit-related costs in the fiscal year ended March 31, 2019 increased by ¥2.2 billion year-on-year to ¥4.3 billion, attributableprimarily to approximately ¥0.7 billion provided in reserve for individual possible loan losses in connection with misconduct(embezzlement of cash) by a former employee.
■ Value and ratio of problem assets subject to disclosure (Kiraboshi Bank)[After partial direct write-offs]

2017/32.27

2.06[-0.03 pt]

2.03 ％

83.2
3.4

76.7
2.8

[±0]

76.7
4.7

(¥ billion)
Substandard loans

Doubtful assets

Bankrupt and quasibankrupt assets

2018/3

2.9(Figures within brackets are year-on-year changes.)
Disclosure assets
ratio■ Credit-related costs (Kiraboshi Bank)

[+19]

72.0

66.6

[-15]

7.7

7.3

[-0.4]

2017/3

2018/365.1
6.9(¥ billion)

2019/3

2.1

Change＋2.2

4.3■ Coverage status of problem assets subject to disclosure under the
Financial Reconstruction Law (Kiraboshi Bank)[Before partial direct write-offs](¥ billion)
2019/3Covered amount

69.7

Reserve for possible loan losses

19.8

Collateral, guarantees, etc.

49.8

Problem assets

88.0

Coverage ratio

79.2％

2019/312

Capital ratio/Core OHR/ROETokyo Kiraboshi FG

Capital ratio decreased by 0.19 points. Core OHR remained flat. ROE improved by 0.40 points.
■ Consolidated capital ratio (Tokyo Kiraboshi FG)(Figures within brackets are year-on-year changes.)

9.54

9.05

[-0.19 pt]

284.2

281.3

[±0]

2017/3

2018/3

Capital ratio

8.86 %(¥ billion)
Net assets

281.3

2019/3

Capital ratio■ Consolidated capital ratio of Tokyo Kiraboshi FG fell by 0.19
points year-on-year to 8.86% mainly as a result of increased
SME loans, while consolidated net assets stood at ¥281.3
billion.
Core OHR■ Despite the decrease in gross core business profit, core
OHR remained flat year-on-year due to the effects of cost
reduction.
ROE (consolidated)■ ROE (consolidated) improved by 0.40 points year-on-year
as a result of an increase in profit attributable to owners ofparent.
■ ROE (Tokyo Kiraboshi FG, consolidated)■ Core OHR (Kiraboshi Bank)(%)(Figures within brackets are year-on-year changes.)

2017/3

2018/3

2.50

80.0

80.2

[+0.5 pt]

* Core OHR ＝

2018/3
Expenses
Consolidated gross corebusiness profit

1.28

1.68

80.7 ％* ROE (consolidated) =2017/3

2019/3

2019/3

Profit attributable to owners of parent

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

× 100

13

Profit plan and strategy

14Plan for the fiscal year ending March 31, 2020
■ 2020/3 plan (Tokyo Kiraboshi FG, consolidated)
2019/3
results(¥ billion)

2020/3
plan

Change2021/3Mid-term Plan

Main factors of the profit plan

Ordinary profit

3.4

5.4

+2.0

-

Profit attributable to owners of parent

4.9

5.1

+0.2

6.0

■ 2020/3 plan (Kiraboshi Bank)(¥ billion)

2019/3
results
1
2

Gross core business profit
Of which, net interest income

Tokyo Kiraboshi FG

2020/3
plan

Change2021/3Mid-term Plan

67.6

65.6

-2.0

-

57.0

55.1

-1.9

-

3

Expenses

54.6

52.8

-1.8

-

4

Net core business income

13.0

12.8

-0.2

12.5

5

Credit-related costs

4.3

3.2

-1.1

-

6

Ordinary profit

4.4

6.4

+2.0

-

7

Net income

5.7

5.3

-0.4

-

Consolidated profit of Tokyo Kiraboshi FG is plannedat ¥5.1 billion in terms of profit attributable toowners of parent (up ¥0.2 billion year-on-year).
Net interest income is planned at ¥55.1 billion(down ¥1.9 billion year-on-year).
・ Interest on loans and discounts is planned at¥43.2 billion (up ¥ 0.2 billion year-on-year) to reflectincrease in loans to SMEs.
・ Interest on securities is forecast at ¥14.8 billion(down ¥1.3 billion year-on-year).

Expenses are planned at ¥52.8 billion (down ¥1.8
billion) in anticipation that measures implemented
in fiscal 2018, including branch rearrangement andstreamlining, and improvement of headquarters
efficiency, will take full effect.
Credit-related costs are planned at ¥3.2 billion(down ¥1.1 billion year-on-year) largely because
there will no longer be the need to include theimpact of the misconduct by a former employee.
Net income is planned at ¥5.3 billion (down ¥0.4
billion year-on-year), to reflect a decrease in tax
effect in addition to factors mentioned above.

15

Medium-term business plan Start up

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

Numerical targets
Tokyo Kiraboshi FG Net income¥6.0 billion

Kiraboshi Bank Net core business income¥12.5 billion

OHR<Fiscal year ending March 31, 2021><Fiscal year ending March 31, 2021>

80%

Progress status

Number of “first call” contacts* 7,000 per year
“First call” contacts

Consulting businessof which, financing
based on businessfeasibility evaluations

2019/3 results

11,2901,153

Rate ofachievement(*) “First call” contacts
・Number of proposals made to support mainstay operations (corporates, owner-managers)
・Number of proposals made to support life plans (individuals)

2019/3
results

2020/3 plan

2021/3 target

Net income(Tokyo Kiraboshi FG)¥4.9 billion¥5.1 billion¥6.0 billion

Net core business income(Kiraboshi Bank)¥13.0 billion¥12.8 billion¥12.5 billion

OHR (Kiraboshi Bank)

80.7％

80.4％

80％

Annual targets

161.2%

192.1%

7,000

600

Concept(1) Creation of a “new kind of urban regional bank for the
Tokyo area”(2) Commitment by the Group to contribute to thedevelopment of the Tokyo area (with a tangible presencein the Tokyo area)(3) Start-up spirit based on “Challenge & Speed”

Business models“Building Business models with dialogue”
Aiming for a management approach that leads to enhancement ofcustomer satisfaction through high quality contacts with customers,
community, investors and employees.

Main measures(1) Enrichment of consulting functions
Through enrichment of consulting functions, aim to be a bank that customers would
give the first call.

(2) Human resources development focusing on dialogue for being

chosen and trusted
Developing “Kiraboshi People”“Kiraboshi People” are able to win the trust of customers, act as if standing in their
shoes, and experience success as a result(3) Business process re-engineering to strengthen contact withcustomers
Realize work styles that make tangible the meaningfulness of work and enableemotional fulfillment through reform of awareness and value of work.

16

Integration effects and improvement of management efficiency

Tokyo Kiraboshi FG

Plan to achieve net core business income of ¥16.0 billion or more, net income of ¥10.0
billion or more
Fiscal year ending
March 31, 2020

Total headcount decreased
by approximately 300
compared to Sept. 2017
(3,100 -> 2,800)
A further decrease ofaround 20% compared to
Sept. 2017 is planned forthe fiscal year ending
March 31, 2023.

Additional costs

Integration effects

Rebuilding of branch
network
Branch consolidation in
25 locations
implemented

Improvement of
headquarters efficiency
Headquarters
administration personnel
reduced by approx. 110
people compared to Sept.
2017 (700 -> 590)

Fiscal year ending
March 31, 2021
(Medium -Term Business Plan)

Fiscal year ending
March 31, 2023

¥6.0 billion¥10.0 billion or more

Net income(Tokyo Kiraboshi FG)¥12.5 billion¥16.0 billion or more

Net core businessincome (Kiraboshi Bank)80％

75% or less

OHR
(Kiraboshi Bank)

Several hundred
million yen

Other efficiency
measures

Complete systems
integration

May 2020

Synergy effects of theintegration
leveraging benefits ofthe merger¥2.5 billion¥3.0 billion¥2.5 billion¥1.0 billion¥1.0 billion¥0.7 billion¥1.8 billion¥2.2 billion¥2.7 billion¥3.4 billion¥3.0 billion¥2.0 billion¥5.0 billion¥3.0 billion¥1.5 billion¥4.0 billion¥10.5 billion or more

Fiscal year ended
March 31, 2019

Systems integration

Rebuilding of branch
network

Improvement of
headquarters efficiency

Merger / systems
integration costs

Total approx. ¥20.0 billion

17Branch strategy / local strategy

Tokyo Kiraboshi FG

Build a new branch network to meet the market needs of the Tokyo area
September 2017

March 2019

Number of offices

Number of offices

159

134

April 2019
Kawasaki Corporate Business
Office opened
with a small but talented team,to strengthen promotion of
corporate lending business in
Kawasaki, a city with aconcentration of businessestablishments

March 2023•

Number of offices
Compared to Sept. 2017•

Approx. 30% reduction

Full service bankbranches

Full service bankbranches

133

110

Specialized branches

Specialized branches

Approx. 50

24Specialized branches

26

Number of offices
Around100

Full service bank branches

Approx. 50

Regional headquarters
structure

Key satellite strategy

Following branch consolidation in central and suburban areas ofTokyo where many branches are tenant branches, “key satellite
strategy” has been launched in the northeast section of Kanagawa
Prefecture

Transfer of
personnel in chargeof corporate
customers

Satellite branches(branches focused on individual customers)
Branches focused on individual customers to devote to
making proposals on asset management, etc.

Development of “next generation type”
branches• Cashless• Paperless• Efficiency improvement throughcentralized back office processing, etc.

Johoku / Nishi Tokyo
headquarters

Tokyo Mirai Sales Division(entire Tokyo Metropolitan area)

Key branches (full-line branches)
Consolidation of
corporate transactions

Corporate sales offices that are aligned withthe special features of the area
Establishment of presence, such as
specialized branches catering to individual
customers, in areas that are currently notcoveredTokyo ward area
Central Tokyo areaJosai
headquarters
Tama
headquarters

Jonanheadquarters

Machida/Sagamihara, suburban
Tokyo area
Machida/Yokohama/
Kawasaki
Sagamihara/
headquarters
Central Kanagawa
headquarters

Joto
headquarters

Head Office Sales
Division
Large branches■Substantial delegation of authority to the sevenregional headquarters■Community-based sales activities■Flexible deployment of personnel amongst theregional headquarters
Respond to the needs specific to the special
features of the area (market) with a sense of speed
and through “dialogue” with the community andcustomers.

18

Secure “first calls” through the business model that has “dialogue” as the starting point.
Tokyo Kiraboshi FG

Against the annual target of 7,000, result was 11,290.

161.2% achieved!

ProposalFirst callFirst call exercise is starting to produce actual results!

More sophisticated proposals

Financing based on businessfeasibility evaluations
Financial services
Consulting

Customer

Accompanying
achievements
Interest on loans and discounts
Consulting fees
Commissions on financial products,
etc.

First call contacts

Annual target

2019/3 results

Rate ofachievement

Consulting business

7,000

11,290161.2%of which, financing based on
business feasibility evaluations

600

1,153

192.1%⃝ Accumulation of potential contacts in the next fiscal year and beyond⃝ Positive evaluations received in the surveys

Approx. ¥2.0 billion in contribution to profit from this exercise
Improve the skills and awareness of “Kiraboshi People”

Results of first call surveys (approx. 5,000 respondents)“Overall satisfaction five star rating” about 70%, “4 star rating” or higher about 97%
Questions

Examples of “customer feedback”

Ratings
５

４

３

２

１

(1) Satisfaction level with respect to bank
employees’ customer service

78.4％

18.8％

2.7％

0.1％

0.0％

(2) Satisfaction level with respect to proposals

66.8％

27.4％

5.5％

0.3％

0.0％

(3) Would you consider consulting on other mattersin the future

63.6％

25.2％

10.1％

0.7％

0.4％

(4) Would you like to recommend Kiraboshi Bank toyour friends and acquaintances

53.6％

28.5％

15.8％

0.9％

1.2％

(5) Overall satisfaction

67.6％

29.3％

3.0％

0.1％

0.0％

 Feel reassured by kind response and customer-oriented advice
 Response was prompt and accurate. Have been using the bank since its inception.
 We ask that Mr. (Ms.) xxx remains in charge of our company.
 Compared to other banks, bank staff are all empathetic and make you feel you would
like to continue using their services.
 I would like to see that customers’ perspective will be reflected even further incustomer interaction.
 I hope that you will be a bank that thinks of its customers proactively.
 I think it would be good if there were free consultations with specialists on merits offinancial transactions.

19Enrichment of consulting functions (1) <Establishment of SF Div. and improvement of its functionality>
Tokyo Kiraboshi FG

Set up the SF Div. in charge of providing financial support requiring highly professional expertise,
to enhance drive to secure first calls
Financing based on businessfeasibility evaluations

Tokyo Metropolitan Government

SF Div.
(established in Jan. 2019)

Consolidationof functions

Structured finance⃝ Share know-how⃝ Accompany visits to and liaise withcustomers⃝ Prepare complex contract documents, etc.

Medical/welfare fields

Sales office<Origin of the name SF Division>“SF” encompasses a variety of meanings,
including“Structured Finance”“Specialty Finance”“Strategy Finance”

BenchmarkSME

2018/3

2019/3

27*

88

74

* 2017/3 result represents number of deals during the 6 month period from Oct. 2016, when data collection was started, to Mar. 2017.
Benchmark2016/32017/3

2018/3

2019/3

Number of customers receiving loans based on evaluation of businessfeasibility

525

1,775

4,478

5,356

Above numbers as a percent of the total number of borrowers

1.9％

6.3％

16.1％

20.3％

Outstanding balance of loans based on evaluation of businessfeasibility¥90.0 billion¥370.3 billion¥637.6 billion¥813.6 billion

3.8%

15.5％

25.8%

31.6％

Above numbers as a percent of the outstanding balance of loans to
the relevant borrowers

Collaboration
Japan Finance Corporation
Capital subordinated loans

Initiatives for becoming customers’ main bank

First call2017/3

Number of consulting support deals with medical andnursing care businesses

ABL

Actively support companies which may have financial challenges
but are engaged in businesses with growth potential
Seek enhancement of corporate value, including improvement
in financial position by reviewing borrowings in their entirety
and repayment method, etc.

Case example of support through evaluation of business feasibility- Apparel related company(has dealings with about 10 financial institutions) – Started doing business a year and a half ago as a latecomer Issues: Burden of inventory management and debt repayment

 Action: Proposed use of ABL from Tokyo Metropolitan Government, collaborated with
Kiraboshi Consulting in obtaining “capital subordinated loan” provided by Japan FinanceCorporation based on the customer’s business plan
For the proposal on ABL, the bank staff in charge actually visited the customer’s
warehouse to see the site and have a good grasp of the contents
 Evaluation: A favorable evaluation was received from the president who noted that“you have addressed our issues with a good understanding of our company and helped
us improve our financial position”
Going forward, business expansion can be expected in such areas as fx-related deals.

20Enrichment of consulting functions (2) <Support at diverse stages>

Tokyo Kiraboshi FG

Support at diverse stages, from start-up to growth phase and maturity phase⃝ With the aim of making Kiraboshi Bank the natural partner for start-ups, provide support to founders and entrepreneurs in partnership with external organizations
as appropriate, including structuring of “ToKI Meki Oen Fund 1”.
⃝ Established “Kiraboshi Capital” in Sept. 2018. Made active use of equity mezzanine finance in structuring “Yume Kagayaki Fund 1” and “Yume Habataki Fund 1”.
⃝ In Mar. 2019, “Yume Habataki Fund 1” executed its first investment in a growth company that possesses advanced technical capabilities.
⃝ “Management Solution Group” collaborated with sales offices to provide support in business restructuring, using “Tokyo Revitalization Fund”, “Tokyo SME Support
Fund”.
Support from early stage to pre-IPO stage

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

Business
start-up

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

Buyout investment

・ Growth capital investment
・ Expansion investment

Tokyo Revitalization
Fund

Business
restructuring

Tokyo SME
Support FundBenchmark2017/3

2018/3

2019/3

Number of start-up support cases involving
financial institutions

288

3,012

5,322

Support for drawing up start-up plans

41

1,529

687

Financing to customers during start-up
period

190

1,058

1,173

Introducing financial agencies affiliatedwith the government and institutions
supporting start-up

53

276

1,192

Subsidies, financing and investment inventure businesses

4

149

2,270

(2) Yume Kagayaki
Fund 1
Structured in Nov. 2018

・ Venture investment

Stage

Start-up phase

Growth phase

Maturity phase

Decline phase

July 2018“Venture Pitch”
Feb. 2019
Founder presentation at“Start-up support seminar”

21Enrichment of consulting functions (3) <Enhancement of overseas strategy>
Tokyo Kiraboshi FG

Enhance overseas strategy through expansion of overseas networks and use of offshore funds
Support through offshore funds

Kiraboshi Bank’s new overseas strategy

Support for Asia business in and outside of Japan

Planning to invest in LP or send bank personnel to GP of offshore funds in order to respond to
customers’ needs in overseas buyouts and alliances. At the same time, information gathering andhuman resources development will be pursued.

<Southeast Asia market>◇ High economic growth◇ Market expansion◇ Market that can, now and in the future, take in technologies
and services which in Japan are in their maturity stage (timemachine model)

Customer

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

Dispatch of humanresources<Domestic market>◇ Market saturation◇ Maturation of products and services◇ Shrinking market / shortage ofsuccessors

May 2019
Invested in “Exacta Asia investment II
LP”, a private equity fund
Provision of local information
Proposal on investment in and alliance withlocal companies

VietnamIncrease in Japanesecompanies
expanding theiroperations

Investment / capital
injection(business succession)

Alliance
・Business matching・Business alliance,

Asian markets as anextension of thedomestic market

Thailand

Oct. 2019Local consulting subsidiary to beestablished in Ho Chi Minh, Vietnam
Application for local approval filed

Investment proposal to local
companies
Alliance with local companies
Proposalfranchise agreement, etc.

Kiraboshi Bank
Needs of SMEs
⃝ Overseas expansion⃝ Business development of own products
and services in overseas markets⃝ Local information⃝ Alliance with local companies, etc.

Partnership

Local companies
in Southeast Asia

Investment
Personnel
dispatch

Collection of information regarding
local companies in Southeast Asia

Singapore

Hub of information
related to Asia

Kiraboshi’s track record in terms of trade transactions handled is one of the best of all
regional banks nationwide (results for the fiscal year ended March 31, 2019)
Import transactions (outward remittances/import settlements):
Approx. 39,000

Export transactions (inward remittances/purchase of export bills):
Approx. 11,000

Offshore fundInvestment

Local company
Interested in Japanese technologies
and services (Japan angle)

Number of Kiraboshi Bank’s counterparties in foreign exchange transactions(corporates and owner-managers) (as of March 31, 2019): 3,000 (up by about 100 year-on-year)

22Enrichment of consulting functions (4) <Use of trust functions>Tokyo Kiraboshi FG

Support SMEs using trust products as a bank engaged in trust business activities“Contrust”, a public construction cost credit trust
Unit: ¥ billion

Contrust credit trust contact value“One Trust” contract value (sum)Unit: ¥ billion

36.6

36.3

23.2

“One Trust”, a real estate management trust

11.0

7.0
0.5

2018/1
2018/3

2019/1
2019/3(Plan)
2020/1(plan)
2020/3

 Unique trust products handled from before the merger
 Merger resulting in more offices capable of making proposals,enhanced sales capabilities

Increase in contract value and profitability

2018/1
2018/3

2019/1
2019/32020/1
2020/3(Plan)⃝ Reduction in real estate operators’ the burden of clerical work associated with ownership of property⃝ Improvement of financial indicators can be expected by converting real estate into a trust beneficiaryright and removing it from the balance sheet.
⃝ Diversification of financing options[Case example of a customer who owns a tenant occupied building and places it in trust]Real estate management trust agreement

Off-balance sheet effects of
securitization
No requirement to submit financial
reports, speedy screening(2) Signing of trust agreement

KiraboshiBank(4) Request formonetization

Real estate owner(trustor cum beneficiary)

Financial report, trust dividend
Rent payment (through PM)(1) Construction contract

Customer(5) Procurement of fund according toscreening results(3) Agreement on assignment of claims (application/approval)

Issue of trust
beneficiary rightTrustregistration

Lease
contract

Tenant (lessor)

Party placing
public workordersApril 2019
Kawasaki City Housing Supply
Corporation joins
Total of 49 municipalities, etc.

Kiraboshi Bank
(trustee)

Tenant management
Building management

Instruction
Property Manager (PM)Property management

ReportAsset Manager (AM)
Asset management

Real estate management contract

Monetization (securitization)according to publicconstruction results

Management/investment instructions

23

Enrichment of consulting functions (5) <Initiatives for individual customers>
Tokyo Kiraboshi FG

Development of high quality consulting services to meet customer needs
Customer-oriented asset formation activities• High quality customer-oriented consulting marketing
Customer-oriented • Development of product line-up to satisfy diverse customer needs
business operation • Enhancement of information provided to customers• Setting up of structure to realize customers’ objectives

Strengthen customer-oriented marketing structure for individual customers*Percentage of the total sales amount in parentheses

15.5(14.3%)

29.5(22.5%)

2017/342736

44.2(45.2%)

43101
2018/343466
2019/3

Headquarters

Super-affluentgroup

PB teamFinancial advisor

Main target group

Unit: ¥ billion

Sales amount of investment trust core funds

Middle-affluent
group“Dialogue”

Collaboration /supportDevelopment of securities business■ Challenges vis-a-vis peer companies• Further enhancement of capability for
information provision• Pursuit of consulting capabilities• Expansion of product line-up• Construction of feasible business model thatis based on balance of assets undermanagement

Market potential of the Tokyo area
<Massive balance of financial assets held byindividuals>

Potential of our target customers

Sales officeCore retail group
Proposal-based
marketing ofdeposits andfinancial products

Mass retail group
Encourage visit
to branch offices

Loan plaza / center

Asset consultant
Staff in charge of retailcustomers
Staff in charge of asset
management

Housing loan/mortgage loan
proposal marketing

Push forward with initiatives to deepen customer-oriented business operations, including
securities business and activities aimed at “customers’ enjoyment/happiness” that leadto “evaluation of sales office”.
Gradually abolish profit target related to sales of financial products set on Kiraboshi
Bank’s sales offices, starting with specialized branches catering to individual customers.
Gradually introduce evaluation system for Kiraboshi Bank’s sales offices based oncontribution to customers’ benefits and customer satisfaction, starting withspecialized branches catering to individual customers.
Start study on establishment of securities subsidiary, subject to regulatory approval.

24

Enrichment of consulting functions (6) <Initiatives in FinTech>
Tokyo Kiraboshi FG

Expansion of user base through improved convenience and enhanced support for customer
companies in securing human resources and employee benefits

Expansion of services using “Maekyu” platform<Changes in external environment and needs>
Transaction
lending

Spread of smartphones
Apps and technology innovation

Travel andeducation
services

Progress toward a cashless society
Overseas
remittance(Spread of e-money, possible law revisions, etc.)

Study new initiatives for
improving user convenience“Maekyu” services through use ofelectronic money
E-wallet top-up function
Use of users’ consumption data
Provision of new settlement functions
for employees of customer companies“Maekyu” service
Electronic
settlement

Number of companies signing:More than 700 (aggregate, as of Mar. 2019)
Number of uses per year:
Approx. 1,110,000 (Apr. 2018 – Mar. 2019)

Use of accumulated data
Affinity with e-money“Maekyu” app

Growth of income through licensing of “Maekyu” services“Maekyu”
platform
Started handling inJan. 2019

Regional
financial
institutions

Regional
financial
institutions

Regional
financial
institutions

 Further growth of “Maekyu” users
 Tool for securing human resources
and improving employee benefits for
Maekyu customer companies
 Expansion of collaboration with
regional financial institutions
 Development of new data utilization
business

Negotiating for possible partnershipwith multiple financial institutions

25

Enrichment of consulting functions (7) <Strengthening of partnership with external organizations>Tokyo Kiraboshi FG

Strengthening partnerships with local governments, such as the Tokyo Metropolitan
Government, related organizations, financial institutions, etc.
Tokyo Metropolitan Governmentand related organizations

Results for collaboration withlocal government organizations, etc. (benchmark)SME customers

2017/3

2018/3

2019/3

Number of start-ups supported inpartnership with local governmentorganizations

52

194

1,053

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

648

1,472

2,093

Number of cases in which information
was exchanged with local governmentorganizations, etc. with regard to
support for mainstay operations

1,006

2,448

3,470

Agreement on a Comprehensive Affiliation for
Industrial Development in Tokyo(Consultation)
Understanding
the voices anddesires of SMEs

Overall management support(Guidance
activities)

Support for hiring and securing human resources

Technology support

Introducing
variety of
supportofferings

Kanagawa Prefecture and affiliatedorganizations / Kawasaki City

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

Partnership,collaboration

Partnerships between industry and academia

Partnership,collaboration

Local independent administrative agency
Kanagawa Institute of Industrial Science andTechnology
Public interest incorporated foundation
Yokohama Industrial Development Corporation

Support for work style reforms/securing of human resources

Financial institution partners, etc.

Comprehensive collaboration agreement concerning support for small andmedium-sized enterprises

Jan. 2019
The first private sector financial institution
to sign “Comprehensive collaborationagreement concerning support for small
and medium-sized enterprises”

SUMITOMO MITSUI
TRUST BANKSENSHU IKEDA HOLDINGS, INC.
THE SENSHU IKEDA BANK, LTD.

SKY OCEAN ASSETMANAGEMENT CO., LTD.

Kirayaka Bank, Ltd. The Sendai Bank, Ltd.

Jimoto Holdings, Inc.

26

Enrichment of consulting functions (8) <Enhancement of group strategy>
Tokyo Kiraboshi FG

Leverage the collective strength of the Group with the aim of developing

a comprehensive service business that is also strong in financeComprehensive service business that is alsostrong in finance(Domestic equity-method affiliate)

Tokyo Kiraboshi
Lease[Fund structuring / administration](Locally incorporated overseas subsidiary)

Kiraboshi Business
Consulting Shanghai

China plus one
support in Asia

Kiraboshi Capital☆
Capital(* = beefing up after birth of Kiraboshi Bank)☆
Leasing☆

☆
Securities
business

Overseas
consulting

Ho Chi Minh local
subsidiary in Vietnam

Started leasereferral businessNew challenges inundertaking
securities business in
the Tokyo area

(May 2019)

Sky Ocean AssetManagement(Domestic equity-method affiliate)☆
Consulting

Kiraboshi
Consulting[FinTech business]

Kiraboshi Tech

CustomerBank
Kiraboshi Bank☆

IT

Credit card

[Computer system development, etc.]

Kiraboshi System
Kiraboshi Credit
Guarantee

Creditguarantee

Yachiyo Credit
Guarantee

Variousservices

Kiraboshi JCB
Kiraboshi Credit
Service

Kiraboshi Business
Service

Kiraboshi Service

Centralized Group companies’ back office operations in Tokyo Kiraboshi FG with the aim of improving the operational efficiency of the whole Group27

Developing human resources that are trusted and chosen for their “dialogue”
Tokyo Kiraboshi FG

Aiming to develop Kiraboshi People who can think and act
From harmony to integration

Human resources development

 Operation of headquarters departments of the 3 banks was integrated ahead of themerger to promote organizational harmony

Development platform for Kiraboshi People Promoted harmony through networking amongst branch managers from before themerger[Who are Kiraboshi People]
People who are able to win the trust of customers,
think and act by putting themselves in their shoes, andexperience success as a result

After the merger, carried out branch manager assignments beyond the frameworkof the predecessor banks, in 34 offices or one fourth of a total of 135 offices (as ofApr. 1, 2019)
 Organized a commemorative event (participated in by employees and their families,
and employees of Group companies)Obtaining financial knowledge
OJT
Self-development⃝

Improve attributes/practicalskillsFundamental financial
competence


⃝
⃝
⃝
⃝
⃝
⃝

Dispatch to externalorganizations in andoutside of Japan

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

⃝
⃝
⃝
⃝
⃝

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

Dispatch to affiliatedGroup companies⃝⃝⃝⃝

Kiraboshi Consulting
Kiraboshi Tech
Kiraboshi Capital
Shanghai subsidiary

Work style reform / diversity

Personnel system
 Moved to a personnel structure that would enable junior staff to have a better
sense of their career advancement

 Positioning “work style reform” as one of the priority issues for the management, promoted “’Kiraboshi
style’ work style reform” through such activities as promotion of women’s active participation andadvancement, and “lifestyle reform” that attaches importance not only to work but also to private lifestyle.
 In Oct. 2018, “Diversity Promotion Section” was established in Kiraboshi Bank along with the launch of“Project team for the promotion of work style reform”. Various other initiatives were taken such as study on
measures to encourage both male and female employees to take childcare leave, as well as “Kiraboshi
Women’s Inclusion Network”, the aims of which include promotion of women’s active participation andadvancement.

 Introduced performance evaluation system allocating 50% to process evaluationand 50% to quantitative evaluation
 Abolished performance target for first and second year employees. This period is to
be used as “development period” to cultivate their ability to have “dialogue”.

 Developed personnel data infrastructure

Networking of employees who took childcare leave

Kiraboshi Women’s Inclusion

28

Business process re-engineering to strengthen contact with customers
Tokyo Kiraboshi FG

Improve operational efficiency and increase “dialogue” with customers
IT/Digital Strategy Project Team

Promotion of Project “ZERO”

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

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

Piloting business process re-engineering
program in Setagaya Branch
In Setagaya Branch, conducted a trial exercise of reviewing
office forms such as for deposits and loans, with a view toachieving a significant reduction in document storage
volume in sales offices. Going forward, it is planned toperform a review of business processes and introduce
paperless operation in all sales offices.

“Goal”
Seal-less, cashless , andpaperless bank
[Setagaya Branch / lobby]

Integration effects

Fiscal year ending March 31, 2023
Several hundred
million yen

Other efficiency
measures¥2.5 billion

Systems
integration¥3.0 billion

Rebuilding of
branch network¥5.0 billion

Headquarters
efficiency

Following systems integration in May 2020, investment will be made in initiatives that will lead tocustomer convenience through digital strategy, etc.

Simplification andstandardization ofroutine work
Business process
re-engineering
Promotion of Project “ZERO”

Create time for “dialogue”
with customers

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

Expand services thatprovide tangible
added value tocustomers

 Dialogue and enrichedmutual understanding withcustomer Provision of optimal
solutions specific to eachcustomer, etc.

29

Initiatives to strengthen governance and risk management

Tokyo Kiraboshi FG

Ensure commitment to compliance and risk management
Compliance

Credit risk management

 Strengthened monitoring aimed at full commitment to compliance andestablishment of corporate ethics while delivering clear messages from the
management, with a view to preventing misconduct Reemphasized the availability of the whistle-blowing system which serves as apoint of contact for employees to discuss their problems or report to.
 Conducted compliance awareness survey to understand the actual situation, andimplemented measures to address the issues
 Strengthened measures for anti-money laundering and combating the financing
of terrorism. (In Oct. 2018, established AML/CFT group within the Compliance
Section of Risk Management Department, use of external experts.)

Risk appetite
 Started trial implementation of Risk Appetite Framework (RAF) for the
purpose of achieving sustainable growth with a good balance of income, risk
and capital

Construction of
overall RAF

Risk appetite policy

Stress test of medium to long-term
simulation based on the MediumTerm Business Plan(“forward-looking”)

Stress test of risk capital
allocation management(“backward-looking”)

 Ensured early warning signal monitoring against the background of economic
slowdown
 Made available allocation methods in line with diverse financing methods
 Conducted study on introduction of basic internal credit rating process as
part of a more sophisticated risk management

Market risk management
 With respect to the materiality test of the new interest rate risk in thebanking book (IRRBB), provisionally started trial calculation since June 2018
(on a quarterly basis)

Internal audit Audit Div. was established, independent from the rest of the Group,
reporting directly to the Group head. It performs internal audit based on the“Medium-Term Internal Audit Plan” and “Annual Internal Audit Plan”
approved by the Board of Directors
 External experts form part of the structure set up to manage the operations.

 Verify allocation of management resources
 Verify sustainability of business model, monitor early warning risk signals

 Use of a third party evaluation organization may be considered.

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Specific examples of SDGs initiatives

Tokyo Kiraboshi FG

Create “social value”, contribute to the development local community
The Group believes that contribution to the formation of a sustainable local community is one of the top priority
management issues, and is actively engaged in CSR activities along the action guidelines defined for three action areas,
which are contribution to the local economy, contribution to the local community, and environmental initiatives.
•To achieve the SDGs, the Group recognizes that an important challenge for the Group is to “create social value” andconnect this to the Group’s “economic value” through the various products and services it offers and CSR activities thatit undertakes, guided by the main themes of “environmental protection”, “contribution to the local community”,“creation of shared value with the customer”, “employees’ work style reform and promotion of diversity”, and“dialogue with shareholders and investors”.

Major activities•Blood donation activity•Dementia supporter initiative• Presentation ofpromotional funds
for children's
athletics© F.C.TOKYO•Support for activities to grow low pollen forests(“Grow low pollen forest” time deposit, “Kigyo no mori”(company forest) that cooperates in forest preservation activities)•Certified as “Eruboshi”(with the highest rank)by the Ministry of
Health, Labour and •Participation in TOKYOWork Style Reform
WelfareDeclaration program•Investment in Tokyo Green
Bond and green finance(Green Jointly Operated
Designated Money Trust)

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

■ Please direct any comments or questions about these briefing

materials or other IR topics to the IR office below.

Tokyo Kiraboshi Financial Group, Inc.
Corporate Planning Division
TEL
Email

03-5341-4301

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

IR@kiraboshibank.co.jp

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