Review of Operations

Financial Condition
Analysis of Financial Condition, Operating Results, and Status of Cash Flows
Since the Company was established on October 3, 2022, comparative
information with the previous fiscal year is not presented. The Group’s
consolidated operating results, etc. are prepared by taking over the consolidated
operating results, etc. of the Chugoku Bank, Limited, which became a wholly
owned subsidiary of the Company through a sole share transfer.

Overview of Results, etc.
Results
Regarding the results for the fiscal year ended March 31, 2023, consolidated
ordinary income was ¥183,586 million, and consolidated ordinary expenses
were ¥153,993 million. As a result, consolidated ordinary profit was ¥29,593million, and net income attributable to owners of parent was ¥20,477 million.
With respect to the results by business segment, in the Banking business,ordinary income was ¥167,546 million, and ordinary profit was ¥30,360 million.
In the Leasing business, ordinary income was ¥17,461 million, and ordinary
profit was ¥3,640 million.
In the Securities business, ordinary income was ¥2,973 million, and ordinary
profit was ¥239 million.
In Other business, ordinary income was ¥14,769 million, and ordinary profit
was ¥11,970 million.

Consolidated Risk-managed Loans (Loans Disclosed under
the Financial Revitalization Act)The balance of consolidated risk-managed loans increased by ¥12.1 billion fromthe end of theprevious fiscal year to ¥109.1 billion.
Status of impaired loans(Milions of Yen)
End of March, 2023

Loans in Bankruptcy/rehabilitation or similar proceedings
Loans at risk
Loans past due three months or more but less than sixmonths
Restructured loans¥20,019
62,106Total¥109,146724
26,295Ratings
The Company has obtained the A credit rating from Rating and Investment,
Inc. (R&I). In addition, the Chugoku Bank, its subsidiary, has obtained the A2
credit rating from Moody’s as well as the A+ credit rating from R&I.

[Outlook for FY 2023]
As for financial performance forecasts for the fiscal year ending March 31,2024, the Group is expecting consolidated ordinary income of ¥167.2 billion,
consolidated ordinary profit of ¥21.5 billion, and net income attributable toowners of parent of ¥15.0 billion.

Cash FlowsThe status of cash flows is as follows.
Cash flows from operating activities
Net cash used in operating activities was ¥403.4 billion, due primarily to anincrease in loans and bills discounted and a decrease in borrowed money.
Cash flows from investing activities
Net cash provided by investing activities was ¥164.2 billion, due primarily toproceeds from sales and redemption of securities exceeding purchases ofsecurities.
Cash flows from financing activities
Net cash used in financing activities was ¥7.8 billion, due primarily to cash
dividends paid and purchases of treasury stock.
As a result of the above, cash and cash equivalents as of the end of the fiscal
year ended March 31, 2023 were ¥1,506.3 billion.

Dividend Policy
In light of the public nature and soundness of a holding company of a bank, theCompany makes it a basic policy to secure sufficient retained earnings while
maintaining shareholder returns in order to maintain a firm financial standing
capable of withstanding any challenging business environment.
For the fiscal year ended March 31, 2023, the Company have increased theyear-end dividend by ¥2 from the initial forecast of ¥14 (¥28 for the year) to¥16 per share (¥30 for the year).
With respect to the dividend policy for the fiscal year ending March 31, 2024,
we aim to achieve the total payout ratio of 40% or more of net income
attributable to owners of parent through the total of dividends and sharebuybacks, and we forecast an annual dividend of ¥30 (interim ¥15).

CHUGIN FINANCIAL GROUP, INC.

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