Tokyo Kiraboshi Financial Group

Results Briefing for the First Half of the Fiscal
Year Ending March 31, 2021

December 7, 2020

Contents

Tokyo Kiraboshi FG

Overview of the Group

Integration Effects and Improvement of Management
Efficiency

P.18

Overview of the GroupP.4

SDGs Initiatives

P.19

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

P.5

Group Strategy and Further Promotion of Partnership with
External Organizations

P.20

Evolution of Business Model Through Enhancement ofGroup Strategy

P.21

Profit Improvement Measures

P.22

Support at Diverse Stages

P.23

Enhancement of Overseas Strategy

P.24

Initiatives for Individual Customers

P.25
P.26

Summary of Business Results
Summary of Business Results for the First Half of the Fiscal
Year Ending March 31, 2021

P.7

Changes in Customer Business Profit (Kiraboshi Bank)

P.8

Loans（Kiraboshi Bank）

P.9

Deposits and Assets under Management (Kiraboshi Bank)

P.10

Deposits and Assets under Management (Kiraboshi Bank)

P.11

Securities (Kiraboshi Bank)

P.12

Productivity Improvement through Business Process Reengineering

Capital Ratio/Core OHR/ROE

P.13

Channel Strategy Geared to DX

P.27

Launch of Cashless Services Driven by Digitalization

P.28

Environmental Protection/Employees’ Work Style Reformand Promotion of Diversity

P.29

Contribution to Local Communities/Dialogue with
Shareholders and Investors

P.30

Action on COVID-19

P.31

Profit Plan and Strategy
Plan for the Fiscal Year Ending March 31, 2021

P.15

Medium-Term Business Plan Promotion Platform

P.16

Medium-Term Business Plan / Start Up ☆ Kiraboshi

P.17

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
2014

OctoberBusiness integration by The Tokyo Tomin Bank,
Limited and The Yachiyo Bank, Limited
Established Tokyo TY Financial Group, Inc.

Management policy

A bank that sparkles

2016

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

A bank that rises to the challenge

A bank that brings together ideas

2018

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

2020

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

Vision aimed for

Become the urban regional bank groupmost favored by customers in the Tokyo
metropolitan area.

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

Tokyo Kiraboshi FG(as of September 30, 2020)
Location ofhead office

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

Capital¥27.5 billion

Consolidated
total assets¥5,703.3 billion(Group companies)(as of September 30, 2020)(Group companies)

Location ofhead office

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

Capital¥43.7 billion

Total assets¥5,692.1 billion

Tokyo Kiraboshi Lease, Inc.

General leasing
business

Kiraboshi System, Inc.

System processing
outsourcing

Kiraboshi Credit Guarantee Co., Ltd.

Guarantee operations

Yachiyo Credit Guarantee Co., Ltd.

Guarantee operations

Kiraboshi Consulting Co., Ltd.

Consulting

Kiraboshi Service Co., Ltd.

Management ofadvertising equipment

Kiraboshi JCB Co., Ltd.

Credit card business

Kiraboshi Business Service Co., Ltd.

Centralizedadministrative services

Kiraboshi Credit Service Co., Ltd.

Collection agency
operations

Kiraboshi Capital Co., Ltd.

Structuring andadministration offunds

Kiraboshi Tech, Inc.

Fintech services

Kiraboshi Life Design Securities Co., Ltd.

Securities business

Kiraboshi Business Consulting Shanghai Co., Ltd

Consulting

KIRABOSHI BUSINESS CONSULTING
VIETNAM Co., Ltd.

Consulting

Kiraboshi Digital Bank Preparatory Co., Ltd.
[Established in Oct. 2020, scheduled to start
operation in FY2021]

Banking business

5

Summary of Business Results

6Summary of Business Results for the First Half of the Fiscal Year Ending March 31, 2021
Tokyo Kiraboshi FG(¥100 million)
Tokyo Kiraboshi FG(consolidated)

2019/9results

2020/9results

2020/9plan

Year-on-year

Full-year
achievement
rate

Ordinary profit

28

35

30

+24.7%

61.6%

Profit attributable toowners of parent

33

20

19

2019/9(39.2%)

2020/9

347

341

(6)

2

Net interest income

284

288

+4

3

Of which, interest on loans anddiscounts

219

229

+9

4

Of which, interest on securities

71

61

(10)

5

Of which, interest on deposits

(7)

(1)

+5

62

52

(10)

(258)

(264)

(6)

88

76

(12)

(36)

(48)

(11)

Expenses

8

Net core business income

9

Credit-related costs

(11)
(10)

10

Gains (losses) on bonds

4

20

+15

11

Gains (losses) on stocks and othersecurities

5

31

+26

12

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

(25)

(37)

(11)

13

Ordinary profit

35

42

+6

14

Income taxes

1

(15)

(17)

15

Net income

37

26

(10)

16

Merger and systems integration costs

(16)

(21)

Interest
on loansanddiscounts

Change17Decrease(17)
Other nonrecurring
profit (loss)

50.4%

Gross core business profit

Non-interest income

Increase(10)

Kiraboshi Bank (non-consolidated)

6【Factors affecting net income 】 (¥100 million)(4)

Interestonsecurities

Interest
ondeposits(6)
Noninterest
income(11)

Gains onstocks andothersecurities

ExpensesCreditCreditrelated
related
costs
costs

IncomeIncometaxes
taxes

Gains onbonds

2019/92020/9⑧ ¥1.0 billion decrease in net income① Net interest income: Increases were recorded in interest on loans and discounts and in interest subsidies
associated largely with COVID-19-related loans, while interest on securities decreased due largely to thesale and redemption of Japanese government bonds.
② Non-interest income: Down ¥1.0 billion YoY due in part to voluntary restraint of sales activities.
③ Expenses: Up ¥0.6 billion YoY as a result largely of increases in BIB (branch-in-branch) implementation
expenses and consumption tax associated with capitalization of Day-2 system.
④ Credit-related costs: Up ¥1.1 billion YoY due largely to an event of default caused by a customer’s
inappropriate accounting treatment, and deterioration of corporate performance resulting from economic
slowdown in the face of the COVID-19 pandemic.
⑤ Gains (losses) on bonds: Up ¥1.5 billion YoY due largely to the sale of bonds previously classified as
marketable bonds held to maturity.
⑥ Gains (losses) on stocks and other securities: Up ¥2.6 billion YoY due largely to the sale of stocks held forstrategic purposes.
⑦ Other non-recurring profit (loss): Down ¥1.1 billion YoY largely reflecting recognition of merger andsystems integration costs and fund costs (inclusive of loss on equity derivatives held for hedging purposes).
⑧ Net income: Down ¥1.0 billion YoY.
[Diff. b/w consolidated and (¥100 million)
non-consolidated]①

Kiraboshi Bank
[non-consolidated]
Net income
Tokyo Kiraboshi FG② [consolidated]
Net income

Reasons for the difference26• Group’s consolidated net income (includes ¥400
million of negative effects such as startup deficitof a newly-launched Group company)+120• Effects of amortization (adjustment of book valueof receivables owned at the time of businessintegration) and other adjustments(7)*In calculation of 2020/9 figures, interest subsidies from local governments in an amount equivalent to interest on certain loans such as effectively interest-free and unsecured loans that are received afterward are added to interest on loans and discounts.

7

Changes in Customer Business Profit (Kiraboshi Bank)Tokyo Kiraboshi FG

Profit from the customer business was sluggish in 2020/9 due to system integration and the impact of COVID-19, but a large increase is
projected notably on the back notably of improvements in yield difference and decrease in general and administrative expenses.
[Changes in customer business profit]

(30)
△
30

△(18)
18

7

[Income from fees and commissions / general andadministrative expenses](¥100 million)

6

2018/92019/3* Calculation method:[Yield]2019/92020/3

2019/3

2019/92020/32020/9

Income from fees
and commissions

54

106

61

111

41

2020/92021/3General andadministrative
expenses

285

565

267

542

269

(loan balance x loan and deposit rate margin) + income from fees and commissions– general and administrative expenses

（％）

1.184

[Loan balance]
1.183

1.186

1.185

Loan yield
Yield difference

2018/91【Forecast】(¥100 million)

1.178

39,271(¥100 million)

37,698
1.156

1.157

1.161

1.162

0.028

0.026

0.025

0.023

Deposit yield

2018/92019/3

2019/92020/3

1.164

36,53836,96136,7850.014
2020/92018/92019/3

2019/92020/32020/98

Loans（Kiraboshi Bank）

Tokyo Kiraboshi FG

Increase in loan balance (up ¥248.6 billion YoY) associated primarily with COVID-19-relatedloans and SME financing to support mainstay operations■ Loan balance by type of customer

36,96136,785

1,532
4,746

39,271

37,698

Local governments

1,201
4,622

1,423
4,692

1,472
4,577

■ Loan balance by industry(¥100 million)

36,961

Medium and largesized companies
SMEs
Individuals

22,1948,488
2019/3

7,740
2019/936,961

7,689
2020/3■ Loan balance by region

36,785

7,468
2020/9* Figures for the end of Sept.
2019 and beyond are modified
due to changes in recognition
standards following systems
integration.

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

3,590 Construction
2,211 Commerce
4,957 Banks and other financial
1,510 institutions
3,907 Real estate brokerage

6,024

6,669 Real estate leasing

3,803

4,066

4,736

8,488

7,740

7,689

7,468 Others

4,356

4,260

4,241

4,218

2019/3

2019/92020/330,802

31,63933,000

Manufacturing
OthersKanagawa
Tokyo

10.7

Individuals

Services

19.0

9.1

2020/9(%)

12.1

2019/92020/32020/9Construction

5.6
12.6
3.8
9.9

17.0
2019/32020/9* Figures for the end of Sept. 2019 andbeyond are modified due to changes inrecognition standards following systems
integration.

465
5,805

450
5,608

Services
Individuals

39,271

37,698Manufacturing

3,111
1,914
4,375
1,769
3,991
5,817

3,257
1,951
4,401
2,057
3,785
4,871
3,792

Others30,94839,271

37,698(¥100 million)

445
5,538

434
5,579

25,98023,892

22,99536,785(¥100 million)

Commerce

Banks and other financial
institutions
Real estate brokerage

Real estate leasing9

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

Increase of ¥1.1 billion YoY in credit-related costs due notably to an event of default caused bya customer’s inappropriate accounting treatment■ Value of problem assets subject to disclosure[After partial direct write-offs]
767
743
691
47
40

(¥100 million)

2018/9798
70

60

Substandard loans
Doubtful assets

651

675

631

593

■ Credit-related costs

Bankrupt and quasibankrupt assets(¥100 million)

2019/915

2020/936

2019/357
2019/952

51
2020/32020/9[Before partial direct write-offs]

2019/3

2019/9(¥100 million)

2020/9737

Reserve for possible loan losses

249

Collateral, guarantees, etc.

488

Problem assets

969

Coverage ratio

76.1％

Increased by ¥1.1 billion YoY to ¥4.8 billion due notably to an event of default
caused by a customer’s inappropriate accounting treatment and thedeterioration of corporate performance resulting from an economic slowdown
in the face of the COVID-19 pandemic.

[After partial direct write-offs]

1.84%

+11

[Credit-related costs]■ Ratio of problem assets subject to disclosure

2.03%

48

■ Coverage status of problem assets subject to disclosure under the Financial Reconstruction Law

Covered amount

69

Change

1.93%

2.00%

2020/32020/9The “Loan Management Dept.” was established in July 2020 to enhancemonitoring and support of customers with early warning signs. Focus continues
on providing financing as a regional financial institution to support customers
affected by COVID-19 and on bank-wide efforts to curb credit-related costs.

10

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 ¥394.3 billion YoY)
Balance of assets under management touching bottom with rebound in investment trusts, etc.
■ Deposit balance by client

45,58550,02546,60346,082
1,258

1,673

2,065

14,09814,396

14,69530,228■ Balance of assets under management(¥100 million)

30,012

359

302

2,415

2,459

2,184
17,33430,506

29,841Others2019/92020/3■ Deposit balance by region

45,58546,082

310

2,441

2,384

Investment trusts

2019/3

2,171

2019/9

2,093

1,908

2020/32020/9* 2020/9 figures include balance of assets under management of Kiraboshi Life Design Securities Co., Ltd.

50,025■ Loan-to-deposit ratio / security-deposit ratio

854
10,644

762
9,928

80.4%
Others

80.4%
79.7%

79.2%

Kanagawa
35,39834,952

2019/3

2019/938,525 Tokyo

35,911

2020/3Public bonds

Individuals(¥100 million)

760
9,922

753
9,879

276

Insurance

2020/946,6034,787

Corporate
2,146
2019/3

4,626

4,934

4,920

(¥100 million)

2020/925.8%

2019/3

23.0%

22.7%

19.5%

2019/92020/32020/9Loan-todeposit ratio

Securitydeposit ratio

11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

10,370

2,697

8,896
2,443
270

294

4,033

2,697

9,491

2,484

310

3,700

620

539

3,222

3,093

2,537

2019/92020/3■ Valuation gain/loss on securities

191

3,411

2,443

239

221

235

Other securities
Stock

1,766

Corporate bonds

1,601

1,733

1,516

Investment trusts

594
1,808
2020/9416
305
2019/3

2019/9

490

437
253

422
239
2020/3321
2020/9■ Yield on securities
1.35%

1.36%
1.30%

192

50
40

80

70

54

48

2019/9181

Held-to-maturity bonds
Available-for-sale securities

43
102

72

47
(11)

65

2020/3Foreign securities

Government bonds

In 2020/3, marketable bonds held tomaturity were reclassified to available-forsale securities, a portion of which was
subsequently sold.

138

PE funds, etc.

REITs

Municipal bonds(¥100 million)

376

353

2,785

(¥100 million)

2,785

2,484
209

296

3,877

627

2019/3

2019/3■ Breakdown of “available-for-sale securities”(¥100 million)

2020/92019/3

2019/92020/32020/9■ Duration

Bonds
Stocks1.27%

4.9 years

4.1 years

3.9 years

3.8 years

2019/3

2019/92020/32020/912

Capital Ratio/Core OHR/ROETokyo Kiraboshi FG

Capital ratio rose 0.26 points YoY
Core OHR deteriorated, down 3.1 points YoY■ Consolidated capital ratio (Tokyo Kiraboshi FG)(¥100 million)■ Core OHR (Kiraboshi Bank)
80.7%

8.86%

8.65%

8.65%

8.91%

2019/3
2,813

2,784

2,852

Capital2019/9
Expenses
Gross core business profit

2020/9* ROE (consolidated) =2020/9× 100（％）

2019/92.56

2020/32020/3■ ROE (Tokyo Kiraboshi FG, consolidated)2018/92019/9

77.4%

2,860
* Core OHR ＝

2019/3

77.0%
74.3%

2020/9
2.29

Profit attributable to owners of parent x 2

1.38

× 100

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

13

Profit Plan and Strategy

14Plan for the Fiscal Year Ending March 31, 2021 （announced on May 13, 2020）(* Impact of COVID-19 is not included (other than ¥2.2 billion which has been set aside as precautionary reserve))
Tokyo Kiraboshi FG■ 2021/3 plan（Kiraboshi Bank）(¥100 million)
2020/3 results
B

2021/3 plan
A

（B-A）

Gross business profit

740

675

(65)

2

Gross core business profit

677

654

(23)

3

Net interest income

564

536

(28)

4

Of which, interest on loans anddiscounts

438

443

5

5

Of which, interest on securities

136

97

(39)

6

Of which, foreign currency
funding costs

(12)

(1)

11

8
9
10

Net fees and commissions

Expenses
Net business income(before transfer to reserve forgeneral possible loan losses)
Of which, gains (losses) on bonds(Government bonds, etc.)

109

106

(3)

522

506

(16)

217

168

(49)

62

20

(42)

11

Net core business income

155

147

(8)

12

Credit-related costs (1)

92

64

(28)

13

Credit-related costs (2)

22

－

(22)

14

Other non-recurring profit (loss)

(46)

(43)

3

15

Ordinary profit

47

72

25

16

Extraordinary income

54

ー

(54)

17

Net income

86

54

(32)

18

Merger and systems integration costs

42

31

(11)

(COVID-19-related reserve)(Gain on transfer of Shinjuku Office)2020/3 results
B

Difference1

7■ 2021/3 plan (Tokyo Kiraboshi FG, consolidated))(¥100 million)

2021/3 planA

Difference（B-A)

vs Business
Plan

Ordinary profit

23

57

34

－

Profit attributable toowners of parent

76

40

(36)

(20)

Increase

Decrease[Factors affecting net income (Kiraboshi Bank)]
86

5

(39)

50
16

11
(３)
Interest on
loans anddiscounts
Interest on Foreign Net fees Expenses
securities currency
andfunding commissions
costs
2020/3(¥100 million)

(42)

(54)

28

24

54

22
Losses on
bonds

Creditrelated
costs

Gain ondisposal of
Shinjuku
OfficeOthers2021/3[Net core business income]• Decrease of ¥0.8 billion from the fiscal year ended March 31, 2020 is projected to reflect such positive
factors as increase in interest on loans and discounts as well as cost reductions, despite decrease ininterest on securities. (The projection is ¥2.2 billion above the target of ¥12.5 billion set in theMedium-Term Business Plan.)[Credit-related costs (1)(2)]• Reduction of ¥5.0 billion from the fiscal year ended March 31, 2020 is projected by enhancing
predictive risk management structure (establishment of a new division)• Precautionary reserve of ¥2.2 billion is already recorded in the fiscal year ended March 31, 2020 for
customers facing business deterioration due to COVID-19.
[Net income]• Decrease of ¥3.2 billion from the fiscal year ended March 31, 2020 reflects absence of ¥5.4 billion ingain on disposal of Shinjuku Office recorded in that fiscal year.
[Tokyo Kiraboshi FG]• Between consolidated and non-consolidated figures, a negative difference of ¥1.4 billion in net
income will result from such factors as income/loss at subsidiaries etc., and accounting treatment ofloss on redemption of securities.
• Decrease of ¥2.0 billion from the Medium-Term Business Plan target is projected due to impact
notably of changes in the market environment taking place since the formulation of the Business Plan.

15

Medium-Term Business Plan Promotion Platform

Tokyo Kiraboshi FG

Main market is “Tokyo area” where SMEs are concentrated
Number ofEstablishments (June 2016)■ Secure first calls by providing tailored financial services to the large number of SMEs.
■ Contribute to regional development through support of customers’ business expansion.

Ranking

Saitama

Chiba

Number of newlyestablishedcorporations in Tokyo

Prefecture

Source: Tokyo Shoko Research, Ltd.

40,311（10,000)

1

Tokyo

69

4

Kanagawa

31

No. 1 in Japan
40,926

Source: Economic Census

Number of corporations in Tokyo
which closed or discontinued theirbusiness
Source: Teikoku Databank, Ltd.

2,583

2,582

2018

2019

Tokyo

Kanagawa

Branch Network
・Tokyo124
・Kanagawa
36
・Saitama
3・Chiba
1
Total

164

164 branches 135 office(as of September 30, 2020)

2017

2018

Comparison of prefectural GDP (gross prefectural domestic product) (FY2017）¥141 tn

Total ¥141 tn

On par with
Australia

Australia

Source: Prefectural Accounts

Tokyo+Kanagawa¥40 tn¥40 tn¥23 tn¥21 tn¥21 tnPercentage of
SMEs in Tokyo

98.9%
Aichi

Osaka

Saitama

Hyogo

Chiba

Source: Industry and Employment in Tokyo 201916

Medium-Term Business Plan / Start Up
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”

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

Numerical targets
Net income (FG)76

2020/9 result

155

2020/9 result

60

130

147
125

49
40

“Building a business model that takes dialogue as its
starting point”(1) Enrichment of consulting functions(2) Human resources development focusing on dialogue
abilities for being chosen and trusted(3) Business process re-engineering to strengthen contact
with customers

Net core business income（BK） (¥100 million)(¥100 million)

Business models

Main measures*Numbers in red indicate numerical targets of the Business Plan

76

20
2019/32020/32021/3 plan

2019/32020/32021/3 plan

Number of first call contacts (BK)Core OHR (BK) （％）(count)80.7

14,87080％
11,290

Number of first call contacts
・ Number of contacts made with proposals to support theirmainstay operations (corporates, owner-managers)
・ Number of contacts made with proposals to support theirlife plans (individuals)

77.0

77.4

8,616
7,000
per year

2019/32020/32020/92019/32020/32020/917

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(Final year of the Business Plan)

Fiscal year ended Fiscal year ending
March 31, 2021
March 31, 2020
Initial targets
2021/3 targets
resultFiscal year ending
March 31, 2023
plan

Net income(Tokyo Kiraboshi FG)
Net core businessincome(Kiraboshi Bank)¥6.0
billion¥12.5
billion¥14.7
billion¥10.0 billion or
more¥16.0 billion or
more

OHR
(Kiraboshi Bank)

80％

77％

75% or less¥4.0 billion

Complete systems
integration

Severalhundredmillion yen

Other efficiency
measures

Completed in May 2020

¥2.5 billion

Systems
integration

Several hundred million yen¥0.7 billion¥1.0 billion¥0.5 billion¥1.0 billion¥0.7 billion¥2.5 billion¥2.0 billion

Synergy effects of
the integration
leveraging benefitsof the merger¥3.0 billion¥1.7 billion¥5.0 billion¥3.2 billion¥10.5 billion or more

Integration effects

Fiscal year ended
March 31, 2019
resultRebuilding of
branch network
Improvement of
headquarters
efficiency¥4.0 billion¥2.2 billion

Additional
costs¥1.0 billion¥3.4 billion¥4.2 billion¥3.1 billion

Merger / systems
integration costs
Total approx. ¥20.0 billion

18

SDGs Initiatives
Direction of SDGs initiatives
Reform of managementbase to enhancecustomer convenience

SDGs DeclarationEand efficiency

S
Seek to help customers’sustainable growth andcontribute to thesustainable growth of
local communities

Tokyo Kiraboshi FG

GEnvironmental protection

P.29

Contribution to local
communities

P.30

Creation of shared value withcustomers

P.20–28

Employees’ work style reformand promotion of diversity

P.29

Dialogue with shareholders andinvestors

P.30

SDGs Promotion Structure■In Oct. 2020, set up SDGs Promotion Team within FG’s Business Strategy DivisionTokyo Kiraboshi Financial Group

External Evaluation• Certified as“Eruboshi” (with thehighest rank) by the
Ministry of Health,Labour and Welfare• Excellent Company in HealthSilver rank
（Certification #940 Silver）

Business Strategy Division• Certified as “2019 Tokyo Sports Promotion
Company” and “2019 Sports Yell Company”
Newly setup

SDGs Promotion Team19

Group Strategy and Further Promotion of Partnershipwith External Organizations
Enhancement of functions within the Group andpromotion of partnership with external organizations
Group strategy
Oct.

Establishment of Tokyo TY Financial Group, Inc.

Apr.

Business integration with ShinGinko Tokyo

Apr.

Establishment of Kiraboshi Consulting Co., Ltd.

Nov.

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

May Merger of the three banks
Sept. Establishment of Kiraboshi Capital Co., Ltd.
⇒ to respond to the needs in mezzanine, funding (incl. IPOs)
Aug. Conversion of Tokyo Kiraboshi Lease, Inc., Kiraboshi System, Inc.
and Kiraboshi JCB Co., Ltd. to wholly-owned subsidiaries⇒ to strengthen the Group’s sales capabilities
Oct. Opening of subsidiary in Vietnam

Aug.

Launch of Kiraboshi Life Design Securities Co., Ltd.

Oct.

⇒ committed to customer-oriented business practice
Establishment of Kiraboshi Digital Bank Preparatory Co., Ltd.
⇒ to enhance non-face-to-face service that puts customer needs first

Tokyo Kiraboshi FG

Partnership with external organizations
2014
2015

Sept.

2016

June
Nov.

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

2017

Jan.
Aug.

Alliance with Senshu Ikeda Holdings, Inc.

2018

May

Alliance with ORIX

Jan.

Conclusion of Comprehensive Collaboration Agreement with

July

Alliance with Shinhan Bank Japan

2019

Tokyo Metropolitan Government

Alliance with Tokyo Metropolitan University

Tokyo Chamber of Commerce and Industry

Sept.

2020

Conclusion of Comprehensive Collaboration Agreement with

June
Nov.

⇒ to strengthen overseas support
Alliance with freee K.K.

Alliance with Nihon University College of Art
Alliance with Junior Chamber International Japan

Building a comprehensive service business that is also strong in finance20

Evolution of Business Model ThroughEnhancement 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 finance

Provision of solutions through Group-wide collaboration• Provide consulting services
to improve corporate value• Ensure commitment to customeroriented business practiceEnhancement of the Group’s
proposal capabilities

Customer’s Issues
Expansion ofsales channel• Serve the functions of a trading company
in the Tokyo metropolitan area

Group-wide sharing ofcustomers’ issues toprovide solution menu

Consulting

M&A

Proposal of Optimal Solution
LBO / MBO

Use of trusts

Matching

IPO

M&A

Syndicatedloans

Use of funds

Reorganization

Successor
development

Expert referral

Securities

Business
start-up

Asset building

Capitalinvestment

Business
succession

Shortage ofskilled workers

Management
improvement

Overseas
expansion

InheritanceBank
Variousservices

CapitalLeasing

External partnerorganizations

External specializedorganizations

Enhancement of the Group’s proposal capabilities

Continuous and stablepayment of dividends

Shareholder return

Shareholders

Improvement ofcorporate value

Improvement of Groupvalue by enhancing
Group functions

21

Profit Improvement Measures

Tokyo Kiraboshi FG

Promotion of “First call exercise” and “enhancement of Group’s proposal capabilities”
First call exercise

Beefing up Kiraboshi Consulting• Launch consulting activities with dialogue as the starting point, which is oneof the main measures of the Medium-Term Business Plan, and seek tobecome “the bank to which customers give the first call”• Diversify means of “dialogue” with customers, including non-face-to-facecontacts, in the context also of COVID-19• With the first call exercise taking hold, number of first call contacts has
substantially exceeded the target of 7,000 per year
• Profit increased from ¥2.1 billion in 2019/3 to ¥4.4 billion in 2020/3,
contributing to overall profit growth• Consolidate contact points for consulting services into Kiraboshi Consulting and strengthen
team structure by adding consulting personnel [65  82 persons (as of Oct. 1)]

Main targets(1) Business succession (incl. M&A)
(2) Management support(3) Personnel management (evaluation system) (4) IPO support(5) Back office optimization(6) Business DD / Development of medium-term business plan
Track record of contracts
concluded by type of services

Number of contacts, profit
2019/3
11,290 contacts⇒

2020/3
14,870 contacts⇒

2020/98,616 contacts

44

15

2019/32020/354

FY2019FY201811
7
6
2020/92021/3 plan

ICT

Personnel consultation
Business planning

FY202025

Business matching
Management improvement

8

FY in which contracts
were signed

21

OthersIPO(¥100 million)

28

74

35

Developing into operation that can be
expected to generate continuous profit

21

69

2018/1H

2018/2H

2019/1H

2019/2H

2020/1HBusiness
succession/Reorganization

SF Div.’s comprehensive financial services• “SF Division” was established in January 2019 for offering proposals in highly
specialized financial services (currently with a team of around 80)• The Division consolidates the three functions of financing based on businessfeasibility evaluations, structured finance and medical/welfare fields• With the Division also supporting the first call exercise, steady growth wasachieved in fee and commission income from corporate customers• Loan yield declined due to COVID-19-related effectively interest-free andunsecured loans, but recently, it has been improving as a result of tailoredfinancial services

22Support at Diverse Stages

Tokyo Kiraboshi FG

Support at diverse stages, from start-up to growth and maturity phases
Investment
ratio

Yume Kagayaki
Fund 1(structured inAug. 2018)

Distressed
investment/
Business
restructuring

Buyout investment

Yume Habataki
Fund 1(structured in Mar.
2019)

Growthinvestment

Ventureinvestment

Start-up phase(business start-up)

Number of start-up support cases

Kiraboshi Capital Tokyo
Sparkle Investment
Limited Partnership(structured in Nov. 2020)

ToKI Meki Oen
Fund 1(structured in Oct.
2017)

Growth phase(IPO)

Number of M&A support cases

97

10,652

Decline phase(business
restructuring)Number of business succession support cases

111

880
78

74

5,996

5,322

Yume Yorisoi
Fund 1(structured inAug. 2020)Engagement
investing

672

760
555

3,012

2018/3

2019/32020/32020/92018/3

2019/32020/32020/92018/3

2019/3

Kiraboshi Capital structuring funds
for the different stages● Established ”Kiraboshi Capital” in Sept. 2018
● Providing support for business restructuring with funds
including “Tokyo SME Support Fund”

Tokyo SME Support
Fund 2 (structured inAug. 2018)

Mezzanineinvestment

Maturity phase(business
succession)

Tokyo
Revitalization
Fund (structured
in Sept. 2014)2020/32020/9Yume Kagayaki Fund 1

Involvement in the management of portfolio
companies to support smooth business succession
and growth strategy

Yume Habataki Fund 1

Provision of initial funding or financing for growthinvestment, provision of management support

Yume Yorisoi Fund 1

Provision of diverse financing means aimed atstrengthening financial foundation, or for such
purposes as business growth, business succession andrestructuring

Kiraboshi Capital Tokyo
Sparkle Investment
Limited Partnership

Reconstruction of business model through dialogue,
enhancement of corporate value through support forbusiness reorganization or other means• Support to business operators formainstay operations• Management support to
medical institutions, etc.
• Support for business succession• Support for business start-ups

Tokyo Venture• Started handling SDGs private
placement bonds, etc., in June 2020 Championship 2019(32 cases/¥2.8 bn as of the end of Oct. 2020)• Selected by the Ministry of the Environment for
its “ESG Regional Finance Promotion Program”* The selected initiative relates to Kiraboshi Bank’s operation “to achieve a newunderstanding of feasibility that takes into consideration ESG factors for its
customers of the intellectual asset management implementation project”.

23Enhancement of Overseas Strategy

Tokyo Kiraboshi FG

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

Serve the functions of a trading company
・・・Shinhan Financial
Group locations(as of September 2020)

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

Southeast Asia

South Korea

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

Other areas

Sept. 2019Conclusion ofbusiness matching
agreement with HIS

Asian markets as an extensionof the domestic market
China
Personnel
dispatch to local
banks

Thailand Vietnam

Singapore

122 offices
804 offices
43 offices

Asian markets as an extensionof the domestic market
Oct. 2019
Opening of consulting
subsidiary in
Ho Chi Minh, Vietnam

Make active proposals to support
customers stepping out of Japan where“market saturation” and “market
shrinkage” are predicted, and expanding
into Southeast Asia where “higheconomic growth” and “market
expansion” are expected.

Challenges for SMEs

[Time machine model]⚫ Maturation of domestic market⚫ Expansion of marketing channels for
products and services⚫ Collection of local (overseas) information⚫ Alliance with companies overseas, etc.

Number of customers receiving support inoverseas expansion, etc.

Hub of information
related to Asia

Asian business support in Japan and overseas

622

530

Alliance advice

472

Profitgrowth2018/3

2019/3

Supply Japan’s high leveltechnical capabilities andquality services to theSoutheast Asian markets
and receive dividends, etc.

Southeast Asia market⚫ High economic growth, market expansion, population growth⚫ Workforce with low average age and filled with vitality⚫ Technical capabilities of SMEs are still at low levels

755
Capital injection andpersonnel dispatch to
local funds

Connect “people, goods,
money and thoughts”,
and respond to
customers’ diverse needs

2020/32020/9CustomerBusiness negotiation
supportSelection of Vietnamesealliance candidates

Technical training
RoyaltySales
growthPeer Vietnamesecompany24

Initiatives for Individual Customers

Tokyo Kiraboshi FG

Commitment to customer-oriented business practice based on fiduciary duties
Measures related to customer-oriented business operations
Banking and securities business collaboration
Provision of diverse products

Customer

Kiraboshi Bank

Kiraboshi Life Design
Securities Co., Ltd.
(started operation in Aug. 2020)

A one stop solution to asset management needs!

PDCA of FDbased marketing
From “product proposal”
to “proposal aiming
together with customers toreach their goals”[The ideas that went into thecompany name]• To realize customers’ ultimate objectives inbuilding their assets• To feel empathy with customers’ enjoyment
and happiness• To be a bridge to the next generation
Changes in business volume of
Kiraboshi Life Design Securities(1) Customer understanding

402億円¥40.2 bn

AUM
Cumulative number of accounts(5) Follow-up¥23.9 bn
239億円

(2) Information provision/confirmation of customer’s goals

4,946
4,235

¥2.1 bn

21億円(4) Problem-solving
proposals

2,310(3) Consultation

20/8
2020/820/9
2020/92020/10
20/10

Initiatives using trust functions
・ Proposals on property management geared to an aging society.
・ The first trust product for individuals. Launch of [Longevity Support Trust “MAMORIBOSHI”]（Jan. 2020）25

Productivity Improvement throughBusiness Process Re-engineering

Tokyo Kiraboshi FG

Seek productivity improvement through increased efficiency of existing
operations and business process re-engineering
Productivity improvement through business process re-engineering

Promotion of Project “ZERO”
・Simplification of back-officeprocesses (such as deposit seal slips,
address change procedure, loss
related work, inheritance work)

Use of tablet computers and smartphones• Phased distribution of mobile PCs andsmartphones to sales personnel• Development of Groupware• Promotion of paperless office“Goal”
Seal-less, cashless andpaperless bankInitiatives toward next generation branches• Development of next generation branch structure: trial started
in July 2020
• Concentration of operations in Contact Operations Center: trial
started in Oct. 2020
• Digitalization of branch back-office operations: trial scheduledin Jan. 2021
◼ Branch visitor reception machines◼ Production of web vouchers◼ QR code scanning with sales officeterminals◼ Semi self-service functionality for auto
cashiers◼ Customer-operated type tablets for
installation at branches

Trial implementation of teleworking andfree address• Strengthen flexibility to ensurebusiness continuity through use ofvideo conferencing, teleworking, etc.

Acceleration of DX with establishment of Digital Bank,
leading to fusion of face-to-face and non-face-to-face services

26

Channel Strategy Geared to DX

Tokyo Kiraboshi FG

Realize fusion of face-to-face and non-face-to-face services
through establishment of Digital Bank and construction of new branch network
Face-to-faceservices

Aim of establishing Digital Bank

Non face-to-faceservices[during FY2021]

Virtual services
Comprehensive services with human touch,Comprehensive services
both financial and non-financial
in the virtual space
Bank branch /downtown consultation
boothsLIFE
NaviAsset formation/asset management

Comprehensive services through AI
Concierge, both financial and non-financial
At customers’
homes, etc.

AIconcierge

Loans
Insurance / securities

Consultation /provision of services

Comprehensive
Comprehensive
financial services by services through crossGroup companies industry collaboration
Deposits/FX/Loans

Retail/Distribution

Securities

Electricity/Gas

MaekyuCommunication/Media

Insurance

Healthcare/Long-term care/
Watching service

Credit cards

Administrative services

Career consulting / placement
Housing information

Provision of services/automatic processing…etc.

Reconstructionof branch
network<Changes in
number of offices>

2017/92020/32023/3 (plan)

Number of offices

159

135

around 100 (*)

Full-line bankbranches

133

108

around 50

Specialized
branches

26

27

around 50* Number of offices to be reduced by about 30%
compared to 2017/9 number.

• As our customers’ partnerin life, stay close to theireveryday life and thoughts,
and provide services that
fulfill their diverse life
styles and life plans• Build a platform forproviding new services
through collaboration withadministrative organs andacross industries…etc.

• Branch consolidation through
BIB (branch in branch)

FY2018 25 locations implemented
FY2020 17 locations planned• Establishment of new
corporate sales offices that arealigned with special featuresof the area

Apr. 2019 Kawasaki Corporate Business OfficeNov. 2020 Shimokitazawa Office
Dec. 2020 Kasai Office (scheduled）• Construction of nextgeneration branch structure

Clarify branch sales division’s roles
Improve efficiency of process for receiving
branch visitors(to be deployed in all branches by July 2021)

Respond to customers’
needs through fusion of
face-to-face and nonface-to-face services

27

Launch of Cashless Services Driven
by Digitalization

Tokyo Kiraboshi FG

Maekyu service moving to a new stage（development of Maekyu smartphone app with digital wallet functionality)■App name and logo decided from co-creation with Nihon University College of Art“Maekyu” service

2nd stage

Number of subscribers: over 700 companies (as of Mar. 2020)
Usage per year: around 1,070,000 uses (Apr. 2019-Mar. 2020)“Co-creation”
with staff
1st stage

Money transfer intouser’s account by“Maekyu”<Name of digital wallet functionality>“LalaPay”

Start of service scheduledduring FY2020

 LalaPay
 “Maekyu” service Coupon Other services

Remittance of “LalaPay”
balance between apps

Direct payment at stores with “LalaPay”
using QR code or bar code

[Contents of LalaQ]

ATM

Validation ofdemonstration
experiment with
LINEPay

Start of service scheduled during FY2020<App name>“LalaQ”

Top up with cashusing ATM

“Co-creation” withpartner firm

App that combines “Co-creation”
and “non-face-to-face”“Co-creation”
with students

Naming and productionof logo for the new app

Top up in “LalaQ” withpayment from “Maekyu”

New smartphone appthat uses “Maekyu”

3rd stage(screen image)

Conversion of "LalaPay"balance to other operators'
payment balance
Cash withdrawal from ATM

28

Environmental Protection/Employees’ Work Style
Reform and Promotion of Diversity

Tokyo Kiraboshi FG

Environmental protection
・Support for activities to grow low pollen forests• Investment in Tokyo Green Bond andgreen finance (Green Jointly Operated
Designated Money Trust)Cooperating in “Corporate Forests”, a forest
preservation project, organized planting activity
at “Kiraboshi Forest”

Photo credit: courtesy of the Tokyo Metropolitan Government

Employees’ work style reform and promotion of diversity
People who are able to win the trust ofcustomers, think and act from customers’
perspective, and experience success as a result◼ Aiming to develop Kiraboshi People who can think and act◼ Positioning “work style reform” as one of the priority issues for the management,
promoted “’Kiraboshi style’ work style reform”.
◼ Set up “Project team for the promotion of work style reform”, encouraged both male andfemale employees to take childcare leave.
◼ 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”.
◼ Recruited foreign nationals“Kiraboshi style” work style reform
Respect for diverse human resources• Promote women’s active participation and advancement,utilize human resources regardless of disability or nationality
Support for self-determined career design• Establish female career path and raise the rate ofpromotion of women to management roles• Start study on career design support and training systems
Communication reform• Reform internal communication and visualize personnel
information by initiating trial of 1-on-1 meetings

Work-life
balanceRaisemotivation

Increaseproductivity to
reduce long
working hours

Proportion of women inMar. 2019

Mar. 2020

Sept. 2020

deputy section chief position or
higher

21.0％

21.3％

22.2%

management position(section chief level or higher)

14.1％

14.4％

15.4%

*Number of women branch managers (incl. representative offices) : 14
Support for flexible work styles• Introduce mobile work and launch a work from home and flex
time system trial
Support for balancing work and home
• Enrich system for supporting balance between work andchildcare/caregiving• Encourage male employees to take childcare leave
Health and productivity management• Acquired “Silver rank” under the “Declaration of Health andProductivity Management”
Business process re-engineering at sales offices andheadquarters• Promote reform of work and the value of work (Project ZERO)• Reform awareness to facilitate appropriate time management
and resolve long working hours

29

Contribution to Local Communities/Dialogue with
Shareholders and Investors

Tokyo Kiraboshi FG

Contribution to local communities• Made donation to Tokyo
Metropolitan Hospital
Association to endorse its“Support frontline
medical workers” project• Educational support forchildren [“Dream Class”]
Dream-Teacher:Ms. Honami Tsuboi[rhythmic gymnast]• Made donation to the
Bureau of Social
Welfare and Public
Health of the Tokyo
Metropolitan
Government• Training of“Dementia Supporters”• Conclusion of cooperation agreement with
the Nihon University College of Art• Hiring of 2 top athletes(short track, pole vault)

Dialogue with shareholders and investors
Briefing sessions for institutional investors for 2020/3 period were conducted by video streaming

Dividend policy

Status of corporate governance
Percentage of independent outside officers

Percentage of female officers

42％

Inside

25％

Male

5/12

Outside3/12

Femaleofficers

officers

Make continuous and stable payment of dividends

¥60

¥60

¥60

¥60

FY2017FY2018FY2019FY2020 (plan)

Dividend History
Dividend per share of Tokyo Kiraboshi FG (consolidated)

30

Action on COVID-19

Tokyo Kiraboshi FG

Providing full support to customers in the “fight against COVID-19”[Consultation support menu]■ Financial support menu

Kiraboshi support package
Effectively interest-free loans, unsecured loans• Original COVID-19 relief fund
• Consultation on funding problems (procurement, change in terms
and conditions, etc.)

Funding
Subsidies/grants(information andguidance)
Support ofmainstay
operations(business matching,etc.)• Ministry of Health, Labour and Welfare • Kanagawa Prefecture• Ministry of Economy, Trade and Industry • Saitama Prefecture• Tokyo Metropolitan Government• Chiba Prefecture
and others• Development of business plan, management plan
• Cost reduction (rent, electricity, communication, other expenses)• HR support• Accounts receivables guarantee• Subcontracting receivables protection (construction industry)• ICT implementation support• Equipment procurement / leasing■ COVID-19-related loans (number and amount of loans executed(number)No. of loans(～ Sept.)

No. of loan
requests
received

No. of loans
executed

Amt of loans(～ Sept.)

Amt of loan
requests
received

Amt ofloans
executed

877

687

1,394

1,188

Proper*Creditassociation

13,117

11,586

Creditassociation

3,605

3,151

Total

14,511

12,774

Total

4,482

3,838

2,411

Of which,
new customers

606

477

2,820

Mezzanine・Emergency loans (2020/2)
・COVID-19 fund (2020/3)

・Yume Yorisoi Fund 1 (2020/8)

エクイティ

Financing as capital loans and preferred
equity investment

Equity・ Kiraboshi Capital Tokyo Sparkle Investment
Limited Partnership （2020/11）
Financing as equity with engagement
investing(¥ 100 million)

Proper*Of which,
new customers

Debt*Loan program provided by the bank without involvement of guarantee association.

Ongoing support has been provided through the launch of the“Management Support Group” within “Loan Administration Division” inJuly 2020 to strengthen the management support system for customers
whose business activities are affected by the COVID-19 pandemic orother factors.

31



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 for each item.



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

This document contains forward-looking statements on the Group’s results. These statements are notintended to guarantee future results, as they are subject to risks and contain uncertainties. Please keep inmind that future results may differ due to factors including changes in the business environment.

■ Please direct any comments or questions about

these briefing materials or other IR topics to the
IR office below.

Tokyo Kiraboshi Financial Group, Inc. Corporate Planning Division
TEL : 03-6447-5799
MAIL : ir@kiraboshibank.co.jp

32