Operational and Financial Highlights

The Juroku Bank

Akihide Ishiguro,President(Deputy President, Juroku Financial Group, Inc.)

Performance for FY2023

Summary of Consolidated Financial Results of theJuroku Financial Group(Billions of Yen)
Consolidated core gross operating profit(Year-on-year)

73.3

(1.2)

The Juroku Bank
Summary of Non-consolidated Results(Billions of Yen)

March 2024

(Year-on-year)

Core gross operating profit

64.2

(1.5)

52.8

1.7

Net interest income

54.0

2.2

Fees and commissions

18.5

(0.2)

Fees and commissions

12.5

(0.1)

1.8

(2.9)

Other operating profit (Excluding profit on
JGBs and other debt securities)

(2.3)

(3.4)

44.1

0.2

37.3

0.2

Personnel expenses

23.4

(0.1)

Personnel expenses

17.8

(0.3)

Non-personnel expenses

17.8

0.4

Non-personnel expenses

16.9

0.6

Expenses

15March 2024

automobiles, which has a broad base of related industries, as
the impact of shortages of materials such as semiconductors
mitigated. In the financial environment, the Bank of Japandecided to end its negative interest rate policy in March 2024
and took steps to normalize monetary policy, thus marking amajor turning point for the Japanese economy.
In both Gifu and Aichi prefectures, which make up theNet interest income

Other operating profit (Excluding profit onJGBs and other debt securities)

Juroku Financial Group
Consolidated Business Projection

Business Projections for FY2024

The Japanese economy in the current fiscal year saw progressin normalization of socioeconomic activities, as COVID-19
was reclassified as a Class 5 infectious disease under the lawand human flow recovered. This led to solid corporate
performance primarily owing to a recovery in consumption ofservices such as the lodging and dining, an increase in
inbound demand, as well as increased production ofExpenses

Consolidated core net operating profit

29.2(1.4)

Core net operating profit

26.8(1.7)

Profit on JGBs and other debt securities(14.2)(6.5)(14.2)(6.5)

Consolidated net business profit

14.9(8.0)

Profit on JGBs and otherdebt securities

Credit-related costs

0.9(0.7)

Net business profit

12.5(8.3)

Profit on equities

13.3

9.7

Credit-related costs

0.5(0.9)

Ordinary profit

27.90.7Profit on equities

13.3

9.7

Net income attributable to ownersof the parent

Ordinary profit

26.00.5

19.3

0.7

Net income

18.7

0.8

JUROKU Financial Group ANNUAL REPORT 2024

year on year to ¥27.9 billion and net income attributable toowners of the parent increased by ¥0.7 billion year on year to¥19.3 billion, both representing increases in profits for thesixth consecutive term.
The Juroku Bank, the core company of the Group,
reported core gross operating profit of ¥64.2 billion, adecrease of ¥1.5 billion year on year, mainly due to a decreasein other operating profit associated with increased foreign
currency funding costs, despite an increase in net interest
income caused by increases in loan interest and interest anddividends from securities. Expenses increased by ¥0.2 billion
year on year to ¥37.3 billion, and core net operating profit
decreased by ¥1.7 billion year on year to ¥26.8 billion. While
profit on JGBs and other debt securities decreased due towrite-offs of foreign bonds and investment trusts, profit onequities increased due to the sale of cross-shareholdings,resulting in ordinary profit of ¥26.0 billion, an increase of¥0.5 billion year on year, and net income of ¥18.7 billion, anincrease of ¥0.8 billion year on year, both representing
increases in profits for the seventh consecutive term.
As for major account balances, loan balance increased by¥145.4 billion year on year to ¥4,870.4 billion, and deposit
balance, etc. increased by ¥126.0 billion year on year to¥6,440.3 billion, both showing steady growth

main business base of the Group, production and exports
picked up, mainly in transportation machinery, one of themain industries, despite temporary downward pressurecaused by quality fraud issues in automobiles. While personal
consumption continued to pick up as human flow recovered
to pre-COVID levels, there has been a growing tendency torefrain from consumption due to inflation exceeding wage
increases.
In such an economic environment, the Groupdemonstrated its comprehensive capabilities and made efforts
to provide a broad range of support to its customers,
including cash flow support and core business support, while
engaging in high-value-added consulting activities, amongothers.
As a result, consolidated core gross operating profit
decreased by ¥1.2 billion year on year to ¥73.3 billion due toa decrease in other operating profit associated with increased
foreign currency funding costs and other factors, despite anincrease in net interest income.
Consolidated core net operating profit decreased by ¥1.4
billion year on year to ¥29.2 billion, as expenses increased by¥0.2 billion year on year to ¥44.1 billion mainly due tostrategic DX investments.
Due to a decrease in credit-related costs and an increase inprofit on equities, ordinary profit increased by ¥0.7 billion(Billions of Yen)

March 2025(Projected) (Year-on-year)

In FY2024, we expect consolidated core gross operating
profit to increase by ¥2.5 billion year on year to ¥75.8billion, taking into consideration future trends inmonetary policy and foreign exchange rates following theBank of Japan’s lifting of negative interest rates andinterest rate hike in March 2024. Meanwhile, weconservatively estimate credit-related costs, and expect
ordinary profit of ¥27.5 billion, a decrease of ¥0.4 billion
year on year, and net income attributable to owners of theparent of ¥19.0 billion, a decrease of ¥0.3 billion year on
year, maintaining profit levels on par with last year.

Consolidated core gross operating profit

75.8

2.5

Net interest income

53.4

0.6

Fees and commissions

18.4(0.1)

Other operating profit (Excluding profit onJGBs and other debt securities)

4.0

2.2

Expenses

44.7

0.6

Consolidated core net operating profit

31.1

1.9

Ordinary profit

27.5(0.4)

Net income attributable to ownersof the parent

19.0(0.3)

Review of the 2nd Medium-Term Management Plan
As for the 2nd Medium-Term Management Plan, which began in April 2023, we engage in four basic strategies of “TransformationStrategy,” “Human Innovation Strategy,” “Customer-First Marketing Strategy,” and “Region-Producing Strategy.” under the theme of“Staying Ahead of the Curve to Always Serve the Region: First Stage.”
As a result of activities during the first year of the 2nd Medium-Term Management Plan, consolidated net income increased for thesixth consecutive term and consolidated capital adequacy ratio grew to 10.81%, both figures showing solid progress toward thenumerical targets for FY2027.
ProfitabilityEfficiency

Fiscal integrity

Consolidated net income

Consolidated ROE

Numerical target for FY2027¥20.0 billion or higher

5% or higher

50% range

11% or higher

Results for FY2023 (first year of the plan)¥19.3 billion

4.62%

60.20%

10.81%

Consolidated adjusted OHR Consolidated capital adequacy ratio

16

Shareholder Returns

Initiatives for Enhancing Corporate Value

In order to further enhance the return of profits to shareholders, we havechanged our shareholder return policy from a “total payout ratio of 25% orhigher” to a “dividend payout ratio of 30% or higher,” and since the March2024 term, the Company has determined that shareholder returns will aim toachieve a dividend payout ratio of 30% or higher.
In FY2023, based on this approach, the Company paid an annual dividend of¥160 per share, an increase of ¥30 from the previous fiscal year.

Trends in PBR and ROE
While PBR was low amid increasing headwinds in the financial
business environment since the introduction of negative interest
rates, the Company has been working to improve profitability andreform its cost structure through expansion of business areas,collaborations and joint ventures with different industries andother measures.
In addition to the recent improvement in ROE, PBR improved
significantly in FY2023, partially due to rising expectations ofimproved earnings for the financial industry.

Shareholder returns

Total payout ratio: 25% or higher

Beforechange(Total payout ratio: dividends + share buybacks)

Dividend payout ratiao: 30% or higher

Afterchange(Dividend payout ratio: dividends only)*Effective from the March 2024 term

Total dividends (Millions of Yen)

Total dividends (Millions of Yen)

Total payout ratio (%)

Acquisition of own shares (Millions of Yen)

Dividend payout ratio (%)

InterimEnd-of-year(Unit: Yen)

37.5

PBR

32.3

31.6

26.0

25.7

1,111

1,111

ROE(%)(Times)

0.40

0.40

4.73
4.36

24.5

23.2

4.69

22.8

30.1

3.65
0.23

0.26
0.20

0.21

3.00

0.22

2.94

3.05

2,615

2,989

3,363

19/3

20/3

21/3

4,453

22/3

70
5,839

4,783

23/3

24/3

(*) Paid by The Juroku Bank before the interim dividends of the March 2022 term

17/3

18/3

19/3

20/3

21/3

22/3

23/3

24/3

17/3

18/3

19/3

20/3

21/3

22/3

23/3

120

1,422

3.98

0.31

160

90

80

13090
70

70

35

45

55

35

35

35

50

60

70

19/3

20/3

21/3

22/3

23/3

24/3

(*) Paid by The Juroku Bank before the interim dividends of the March 2022 term

24/3(*) Figures prior to the second quarter of the March 2022 term are based on the consolidated financial results of The Juroku Bank Group, the parent company of which is Juroku Bank

Reduction Policy of Cross-shareholdings
Approach to Improving PBRAiming to further increase corporate value, the Group is implementing initiatives to improve PBR, leading to “sustainableprofit growth,” “increasing ROE,” and “reduction of cost of equity” based on the logic tree.
Sustainableprofit growth

Achieving Long-TermVision /Medium-Term Management Plan

Improve PBR (Enhance corporate value)

Top-line growthInterest income/expenses on loans and deposits increased by ¥0.5 billion year on year
Individual-related and corporate-related revenues increased ¥0.3 billion year on year

Cost control

Strongly promoted DX within the Company by introducing GWS, etc.
Ratio of non-performing loans at 1.27%, a record low

Optimal asset
allocation

Increase in loan balance
Reduced cross-shareholdings by ¥2.7 billion

Optimal capital
allocation

Implemented aggressive DX investment and human capital investment(including wage increases)
Achieved profit increase through improvement of Group profitability

Enhanced
shareholder returns

Changed dividend policy to a dividend payout ratio of 30% or higher
Increased dividends for the fifth consecutive term and implemented
share buybacks for the third consecutive term

Lower performancevolatility

Established NOBUNAGA Succession
New Collaboration with Resona Group

Enhancing profitability(RORA improvement)

Net income
Increase ROE
Net income
Shareholders’ equity

Cross-shareholdings (book value basis and market value basis)

Risk assets

Controlling capital
adequacy levels

Risk assets
Shareholders’ equity

Enhancing information
disclosure including
non-fiscal information

Reduction of
cost of equity
Promoting enhanced IR activities

17

Steady progress in the 2nd Medium-Term Management Plan,
with improving profitability, efficiency, and fiscal integrity

The Group’s reduction policy of cross-shareholdings is to aim to reduce the book value of cross-shareholdings by approx. 25%
in five years from the end of September 2022 as base point.
The book value of cross-shareholdings steadily decreased to \42.1 billion as of March 31, 2024, a reduction of \4.2 billion
on a cumulative basis from the base point, representing a progress rate of 36.7%.
Going forward, we will continue to promote dialogue with all customers who hold listed cross-shareholdings, aligning withthe purpose of the Corporate Governance Code, and will continue to reduce our cross-shareholdings, taking into consideration
the environment surrounding each of them.

Advanced sustainabilitymanagement

Steady progress on sustainability KPIs thanks to collaboration among
Group companies through working group meetings and other means

Enhanced quality/
quantity of dialogues withshareholders and investors

Enhanced disclosure of non-fiscal information on sustainability,
human capital investment, etc.

Proactive messages fromtop management

Held briefings by top management to disseminate management
strategies in June 2023 (66 participants), December 2023
(75 participants), and May 2024 (92 participants)

JUROKU Financial Group ANNUAL REPORT 2024

8171

1,711
68

Book value basis (Billions of Yen)
*Excluding deemed holdings of equity securities

Market value basis (Billions of Yen)
*Excluding deemed holdings of equity securities

Number of listed shares

1,202

1,154
464

22/9
Base point

448

23/3

¥4.2 billion
reduction fromthe base point

421

24/3

Reduction policy

25% reduction fromthe end of September 2022

349

Reduction policy
Aiming to reduce thebook value ofcross-shareholdings byapprox. 25% in five years
from the end of September
2022 as base point

28/3
Forecast18