Semi-Annual Report 2006

Corporate Data

As of October 31, 2006

Date of Establishment

October 19, 1895

Head Office

23, Tohriyoko-cho, Numazu, Shizuoka, Japan

Number of Branches and Offices

Domestic: 120

Paid-in Capital

30,043 million yen

Mt. Fuji

The Greater Tokyo Area

Kanagawa

Shizuoka
Numazu(Head Office)

Major markets
Shizuoka Prefecture
Kanagawa Prefecture
The Greater Tokyo Area

Contents
Review of Operations (Non-consolidated)
Gross Operating Income
Expenses & OHR (Overhead Ratio)
Net Operating Income & Core Net Operating Income
Ordinary Profit & Net Income
Loan Balance & Yield on Outstanding Domestic Loans
Consumer Loans
Deposits & Yield on Domestic Deposits
Interest Margin between Loans and Deposits & Net Interest Margin
Owned Capital & Capital Adequacy Ratio (Domestic Standard)
Status of Tier I and Deferred Tax Assets

1

Status of Non-Performing Loans
Balance and Ratio of Loans Disclosed under the Financial
Rehabilitation Law
Actual Credit Cost
Disclosure of Problem Assets

6

Financial Section (Preliminary figures)Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statement of Changes in Net Assets
Non-Consolidated Balance Sheets
Non-Consolidated Statements of Income
Non-Consolidated Statement of Changes in Net Assets

8

Net Branches

16

Review of Operations (Non-consolidated)
The Company’s results for this period are shown below.

Gross Operating Income

Gross Operating Income
36.2
33.4

33.7

1H 2003

1H 2004

37.8(¥ Billion)

1H 2005

1H 2006 (FY)Expenses & OHR (Overhead Ratio)

Expenses & OHR (Overhead Ratio)
Personnel
expensesNon-personnel
expenses

Taxes

OHR

Total 18.5
1.0

Total 18.3
1.2

Total 18.5
1.2

Total 18.9
1.3

10.2

10.1

10.4

10.8

55.5%

6.9
6.8

(¥ Billion)

1H 2003

Expenses increased by ¥400 million comparedwith the corresponding period of the previous
year, as a result of increased marketing activities.
The OHR, an indicator of efficiency, improved by
1.0 percentage point to 50.1%, as a result of anincrease in the gross operating income.

54.3%
51.1%

7.2

The gross operating income indicates the Bank’s
earnings from basic banking operations. This figure
comprises three elements: Net Interest Income,which is based on interest payments on loans; Net
Fees and Commissions; and Other Operating
Income, which includes proceeds from foreigntransactions. Thanks to an increase in net interest
income due to steady growth in consumer loans, aswell as the growth in sales of investment trusts asinvestment vehicles for individuals’ assets due toincreased marketing effort, Suruga Bank’s grossoperating income for the reporting six-month
period increased by ¥1.5 billion over the same
period of the previous year, to ¥37.8 billion.

1H 2004

1H 2005

50.1%
6.8
1H 2006 (FY)OHR (Overhead Ratio) = Expenses / Gross operating income

1Review of Operations

Net Operating Income & Core Net Operating Income
Net operating income

Core net operating income

18.7

18.5 18.3
14.1

14.5

15.3

16.3 16.9

Net Operating Income &Core Net Operating Income
Net operating income indicates what is referred to“operating profit” in the financial statements ofordinary companies. Core net operating income isnet operating income plus the general reserve forpossible loan losses, after deduction of net
proceeds from bond-related transactions.
Core net operating income for the reporting
period increased by ¥1.3 billion year-on-year,
principally as a result of an increase on core grossoperating income. Net operating income registereda year-on-year growth of ¥2.1 billion.

(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)Net operating income = Gross operating income - Expenses - Transfer to general reserve for possible loan losses
Core net operating income = Net operating income (before transfer to general reserve for possible loan losses)- Proceeds from bonds, including JGBs (5 accounts)

Ordinary Profit & Net Income

Ordinary Profit & Net Income
Ordinary profit

Net income

15.1

10.1
8.6

10.0

7.8
6.7
4.6

4.6

1H 2003

1H 2004(¥ Billion)

2

1H 2005

1H 2006 (FY)As a result of the abovementioned increase in net
operating income, as well as a decline in credit
costs, principally for the write-off of nonperforming loans, ordinary profit posted a year-onyear growth of ¥4.9 billion. Net income for the sixmonth period was up by ¥3.2 billion over the same
period of the previous year, as a result of thegrowth in ordinary profit and a ¥1.0 billion
improvement in the extraordinary gain/loss
account, among other factors.

Loan Balance & Yield on Outstanding Domestic Loans
Loan balance

Yield on outstanding domestic loans

2,221.1

2,151.4

2,092.6

2,043.3

3.25%

Loan Balance & Yield on Outstanding
Domestic Loans
As a result of strong growth in consumer loans,the Bank’s term-end loan balance increased by¥69.6 billion to ¥2,221.1 billion. The yield on
outstanding domestic loans was 3.25%, up 0.05
percentage point year-on-year.

3.20%
3.17%
3.15%

(¥ Billion)

1H 2003

1H 2004

1H 2006 (FY)1H 2005

Consumer Loans

Consumer Loans
Consumer loans(

represents proportion of mortgage loans )Yield on consumer loans

1,524.8
1,329.0

1,418.7

1,159.0

1,616.0

1,343.6

1,405.3

The term-end balance of consumer loans
increased by ¥91.2 billion to ¥1,616.0 billion. The
proportion of consumer loans as a percentage of allloans was up 1.9 percentage points at 72.7%.

1,251.2
72.7%
70.8%
67.8%

65.0%
(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)3

Review of Operations

Deposits & Yield on Domestic Deposits
Deposits

2,687.7(

Deposits from individuals)

2,774.3

2,703.8

1,849.9

Yield on domestic deposits

1,893.8

2,802.6

1,948.2

0.08%

1,972.5

Deposits & Yield on Domestic Deposits
The balance of deposits at the end of the sixmonth period stood at ¥2,802.6 billion, a year-onyear increase of ¥28.2 billion. This rise was due
chiefly to an increase in deposits from individuals.
Deposits from individuals continued to growsmoothly and the balance of individuals’ deposits
came to ¥1,972.5 billion, representing a year-onyear growth of ¥24.2 billion.

0.08%
0.05%
0.04%

(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)Interest Margin between Loans and Deposits & Net Interest Margin
Interest margin
between loans and deposits

1.72%

Interest margin between loans
and deposits (Domestic)

1.80%

Net interest margin

1.86%

1.89%

1.83%

1.81%

1.01%

1.05%

1H 2005

1H 2006 (FY)

1.70%
1.59%

0.96%
0.80%

1H 20034

1H 2004

Interest Margin between Loans andDeposits & Net Interest Margin
The interest margin between loans and deposits is
calculated by subtracting the yield on deposits andthe expense ratio from the yield on outstandingloans. Despite a rise in the expense ratio due toincreased marketing activities, and a rise in theinterest payable on deposits (resulting from the Bankof Japan’s abandonment of its de facto zero interest
policy), an even larger rise in interest rates charged
on loans has pushed up the overall interest margin
between loans and deposits by 0.03 percentage
point, to 1.89%. The net interest margin (thedifference between the yield on total managed funds
and total procured funds) rose by 0.04 percentage
point, to 1.05%.

Owned Capital & Capital Adequacy Ratio (Domestic Standard)
Owned capital

Capital adequacy ratio

Tier I capital adequacy ratio

168.3
152.8
141.3
129.8

10.99%
10.32%
9.75%

8.93%

10.37%
9.70%

9.14%
8.32%

Owned Capital & Capital Adequacy Ratio(Domestic Standard)
The Bank’s owned capital comprises Tier I capital(including its capital stock, surpluses, and reserves)
and Tier II capital (including the general reserve forpossible loan losses). With an increase in internal
reserves, the Bank’s capital adequacy ratio at theend of this six-month period stood at 10.99%, up
0.67 percentage point year-on-year. Only the
maximum amount for the reserve for possible loan
losses is recorded as a Tier II item in ourstatements, with qualifying capital and gains on therevaluation of land not recorded.

(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)

Capital adequacy ratio = [Owned Capital (Basic items + Supplementary items) /Risk assets] X 100
Tier I capital adequacy ratio = [Owned Capital (Basic items: Tier I) /Risk assets] X 100

Status of Tier I and Deferred Tax Assets
Tier I

Deferred tax assets

Deferred tax assets/Tier I

159.0
143.8
36.9%
120.9

132.5

25.6%

Status of Tier I and Deferred Tax Assets
As a result of a ¥15.1 billion increase in Tier I
capital and a ¥8.1 billion decrease in deferred tax
assets, the ratio of deferred tax assets to Tier I
capital fell 6.8 points to 11.3%, showing qualitative
improvement in capital adequacy. A figure isrecorded for deferred tax assets that represents
anticipated future returns on taxes already paid.

18.1%
44.6
34.0

11.3%
26.1

18.0

(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)5

Status of Non-Performing Loans

Balance and Ratio of Loans Disclosed under the Financial Rehabilitation Law
Substandard claims

Doubtful claims

Bankrupt and substantially bankrupt claims

Ratio of loans disclosed under the Financial Rehabilitation Law

Total 161.6
31.0

Total 152.8
28.5

7.84%

Total 118.1
19.1

7.23%
66.8

71.1

48.8

Total 102.6
15.2

46.8

5.44%
(¥ Billion)

63.6

53.0

50.1

4.57%
40.5

1H 2003

1H 2004

1H 2005

1H 2006 (FY)

Balance and Ratio of Loans Disclosed
under the Financial Rehabilitation Law
The non-consolidated balance of loans disclosed
in accordance with the disclosure standards
provided for under the Financial Rehabilitation Law
decreased ¥15.4 billion year-on-year to ¥102.6
billion. Of this total, bankrupt and substantiallybankrupt claims accounted for ¥15.2 billion,
doubtful claims accounted for ¥46.8 billion, andsubstandard claims amounted to ¥40.5 billion of
the total. The ratio of claims subject to mandatory
disclosure to total extended credit was down 0.87
of a percentage point year-on-year, at 4.57% at theend of the reporting period.

Ratio of loans disclosed under the Financial Rehabilitation Law = Balance of loans disclosed/Total extended credit

Actual Credit Cost

Actual Credit Cost
Actual credit cost

Ratio of actual credit cost to average loan balance

6.5

6.7

0.64%

0.64%

5.8

0.57%
2.4
0.22%
(¥ Billion)

1H 2003

1H 2004

1H 2005

1H 2006 (FY)

Actual credit cost = transfer to general reserve + amount for non-performing loan disposal - collection of claims written off
Ratio of actual credit cost to average loan balance = actual credit cost divided by average loan balance

6

Actual credit cost for first half of fiscal 2006
decreased by ¥4.2 billion from the same period of
the previous year, to stand at ¥2.4 billion. Credit
costs accounted for 0.22% of the average loanbalance, down 0.42 of a percentage point from thecorresponding period of the previous year.

(As of September 30, 2006)

Dis c lo sure of Problem Assets(Billions of yen)Classification under Self-Assessment
Target: Total balance of extended credit

Legally bankrupt borrowers

Problem Assets Based on the Financial Rehabilitation Law
Target: Total balance of extended credit, except substandard
claims(only loans are counted in.)

Borrowers requiring caution

Potentially bankrupt borrowers

15.2

46.8

Doubtful Claims

Substandard Claims

46.8

40.5

195.3

Sub-total

102.6

Normal borrowers

1,923.4

Normal assets

2,139.3

Total

2,241.9

Total

2,241.9

Total balance of extended credit: Loans, Customers’ Liabilities for Acceptances and Guarantees, Foreign exchange, Securities loaned, Suspense payments on loans, Accrued loan interests.

Classifications of Borrowers under Self-Assessment
Legally bankrupt borrowers:

Borrowers who have been legally or formally declared bankrupt.

Substantially bankrupt borrowers:

Borrowers who have not been legally or formally declared bankrupt, but
who are suffering from serious management difficulties with no prospectof revitalization, and are therefore substantially bankrupt.

Potentially bankrupt borrowers:

Borrowers who are not bankrupt, but who are suffering frommanagement difficulties, who have not made progress with business
improvement plans, and who are found to have a rather high risk ofbankruptcy in the future.

Borrowers requiring caution:

Borrowers with problematic lending conditions such as interest waivers
and the like, borrowers who are having problems fulfilling their
obligations and who are already in arrears for repayments of principal orinterest, borrowers facing poor or unstable business conditions, andborrowers with a problematic financial status are those that require
future caution.

Borrowers under supervision:

Those borrowers - within the category of borrowers requiring caution who are three or more months in arrears or have had loans restructured(Borrowers whose loans in part or in full constitute loans requiringsupervision under the Financial Rehabilitation Law.)

Other borrowers requiring caution: Borrowers requiring caution other than those classified as substandard.
Normal borrowers:

11.3

3.8

Risk-Managed Loans
Target: Loans

Loans to bankrupt borrowers

2.4

Loans past due

58.7

Past due for 3 months or longer

1.2

Restructhred loans

39.2

Total

101.8

100%

12.4

Borrowers under supervision 61.0

Other borrowers
requiring caution

Covered byreserves Coverage ratio

2.8
Bankrupt and Substantially
Bankrupt Claims

Substantially bankrupt borrowers

Covered by collateraland guarantees

28.9

21.2

61.5

14.8

93.38%

7.3

70.51%

26.0

85.32%

Loans disclosed in accordance with the Financial
Rehabilitation Law ... 102.6 billion yen

Risk-managed loans to total loans ...101.8 billion yen

4.57%

85.32%

4.58%

85.21%

Ratio to total balance ofextended credit

Coverage ratio

Ratio of risk-managedloans to total loans

Coverage ratio

Overview of Write-offs and Reserves under Self-Assessment
Legally bankrupt borrowers andsubstantially bankrupt borrowers:

The amount remaining after the deduction of the amount of collateralconsidered to be disposable and the amount recoverable underguarantees from the loan balance is either written off or is recorded as areserve for bad debt.

Potentially bankrupt borrowers:

A portion of the reserve as deemed necessary is provided based on theamount remaining after deduction of the amount of collateral considered
to be disposable and the amount recoverable under guarantees after
giving full consideration to the percentage of actual defaults over a fixed
period in the past.

Borrowers requiring caution(Borrowers under supervision andother borrowers requiring caution):

Based on the predicted loss ratio where any necessary adjustments for
future expectations have been incorporated into an appropriate loan loss
ratio calculated for the average remaining period, the anticipated loss
over the next three years in the case of substandard borrowers, and overthe next one year in the case of other borrowers, are recorded as a
general reserve for possible loan losses.

Normal borrowers:

Based on the predicted loss ratio where any necessary adjustments for
future expectations have been incorporated into an appropriate loan loss
ratio calculated for the average remaining period, the anticipated loss
over the next one year is recorded as a general reserve for possible loan
losses.

Borrowers whose business results are favorable and who are found not
to have any particular problems in terms of their financial status.

7

Consolidated Balance Sheets (Unaudited)
Suruga Bank Ltd. and consolidated subsidiaries
Thousands of
U.S. dollars

Millions of yen

2006

2005

Change from
2005

2006

ASSETS:Cash and Due from Banks
Call Loans and Bills Bought
Monetary Claims Bought
Trading Account Securities
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Premises and Equipment
Property, Plant and Equipment
Intangible Fixed Assets
Deferred Tax Assets
Customers’ Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses

55,040180,967
396
237
2,122
479,471
2,216,793
3,313
31,426—42,457
11,30318,704
7,568(38,293)

67,742
230,770
405
399
2,218
442,248
2,146,628
2,049
26,03452,516——26,926
8,121(40,237)(12,702)(49,803)
(9)
(162)
(96)
37,22370,165
1,264
5,392
—
—
—
(8,222)
(553)
1,944

466,8441,534,923
3,359
2,013
18,001
4,066,760
18,802,316
28,107
266,552—
360,116
95,872
158,650
64,194(324,793)

Total Assets

3,011,510

2,965,824

45,68625,542,920

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY:
Liabilities
Deposits
2,801,755
Call Money and Bills Sold
2,358
Borrowed Money
9,117
Foreign Exchanges
21
Other Liabilities
22,861
Reserve for Employees’ Bonus
547
Reserve for Employee Retirement Benefits
222
Reserves under Special Laws
0
Acceptances and Guarantees
7,568

2,773,180—
9,024
923,026
542
395
0
8,121

28,575
2,358
93
12
(165)
5
(173)
—
(553)

23,763,825
20,00077,334
185
193,906
4,643
1,886
0
64,194

Total Liabilities

2,844,452

2,814,299

30,15324,125,975

Net Assets
Common Stock
Capital Surplus
Retained Earnings
Treasury Stock
Total Stockholders’ Equity
Net Unrealized Gains (Losses) on Securities, Net of Taxes
Gains on Deferred Hedge
Total Valuation and Translation Adjustments
Share Warrant
Minority Interests

30,04318,640114,699(3,746)
159,637
7,055
3
7,058
17
344

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

254,819
158,106
972,855(31,775)
1,354,006
59,84028
59,868145
2,924

Total Net Assets

167,057——

1,416,945

3,011,510——

25,542,920

Minority Interest

—

300

—

—

Stockholders’ Equity
Common Stock
Capital Surplus
Retained Earnings
Net Unrealized Gains (Losses) on Securities, Net of Taxes
Treasury Stock

—
—
—
—
—

30,043
18,58599,282
7,656(4,344)

—
—
—
—
—

—
—
—
—
—

Total Stockholders’ Equity—

151,223——

Total Liabilities, Minority Interest and Stockholders’ Equity—

2,965,824——

As of September 30,

Total Liabilities and Net Assets

Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

8

Consolidated Statements of Income (Unaudited)
Suruga Bank Ltd. and consolidated subsidiaries
Thousands of
U.S. dollars

Millions of yen

For the Six Months Ended September 30,

2006

2005

Change from
2005

2006

Ordinary Income
Interest Income
Interest on Loans and Discounts
Interest and Dividends on Securities
Fees and Commissions
Other Operating Income
Other Income

51,07639,92837,377
1,691
6,943
3,521
682

47,78636,95535,103
1,696
6,174
4,088
568

3,290
2,973
2,274
(5)
769
(567)
114

433,222338,662
317,023
14,34358,89629,871
5,791

Ordinary Expenses
Interest Expenses
Interest on Deposits
Fees and Commissions
Other Operating Expenses
General and Administrative Expenses
Other Expenses

35,505
4,732
1,815
3,549
2,533
19,506
5,183

37,380
3,153
786
3,206
2,676
19,184
9,159(1,875)
1,579
1,029
343
(143)
322
(3,976)

301,148
40,142
15,39830,103
21,485
165,451
43,966

Ordinary Profits

15,571

10,4065,165

132,073

Extraordinary Profits
Extraordinary Losses

1,388
82

771
547

617
(465)

11,777
698

Income before Income Taxes and Others
Provision for Income Taxes and Others
Deferred Income Taxes
Minority Interest

16,877
6,955
(343)
88

10,631
3,526
211
45

6,246
3,429
(554)
43

143,153
58,994(2,911)752

Net Income

10,176

6,848

3,328

86,316

Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

9

Consolidated Statement of Changes in Net Assets (Unaudited)
Suruga Bank Ltd. and consolidated subsidiaries

Millions of yen

Balance at March 31, 2006

CapitalStock

CapitalSurplus

Stockholders’ Equity
Retained
Earnings

30,04318,640105,886

Treasury
Stock

Total
Stockholders’ Equity(3,854)

150,716

Change in the Six Months
Cash Dividends(1,300)Bonus for Directors and Corporate Auditors
Net Income(1,300)

(50)

(50)

10,176

10,176

Repurchase of Own Shares
Disposal of Treasury Shares(13)

Changes in Own Shares Held byConsolidated Subsidiaries

(86)

(86)

169

156

24

24

Net Change in the Items Other than
Stockholder’s Equity in the Six Months
Total
Balance at September 30, 2006

—

—

8,813

107

8,921

30,04318,640114,699(3,746)

159,637

Millions of yen
Valuation and Translation Adjustments
Net Unrealized
Gains onTotal Valuation
Gains onDeferredand Translation
Other Securities
Hedge
Adjustments
Balance at March 31, 2006

7,306

—

7,306

Share
Warrant

Minority
Interests

Total
Net Assets—

306

158,329

Change in the Six Months
Cash Dividends(1,300)Bonus for Directors and Corporate Auditors(50)

Net Income

10,176

Repurchase of Own Shares(86)

Disposal of Treasury Shares

156

Changes in Own Shares Held byConsolidated Subsidiaries
Net Change in the Items Other than
Stockholder’s Equity in the Six Months

(251)

3

(248)

17

(24)

—

62

(168)

Total

(251)

3

(248)

17

38

8,727

Balance at September 30, 2006

7,055

3

7,058

17

344

167,057

Note: Figures less than 1 million yen are omitted.

10Consolidated Statement of Changes in Net Assets (Unaudited)
Suruga Bank Ltd. and consolidated subsidiaries

Thousands of U.S. dollars

Balance at March 31, 2006

CapitalStock

CapitalSurplus

Stockholders’ Equity
Retained
Earnings

Treasury
Stock

Total
Stockholders’ Equity

254,819

158,106

898,103(32,690)

1,278,339

Change in the Six Months
Cash Dividends(11,027)

Bonus for Directors and Corporate Auditors
Net Income(11,027)

(424)

(424)

86,31686,316

Repurchase of Own Shares
Disposal of Treasury Shares

(112)

(731)

(731)

1,440

1,327

206

206

Changes in Own Shares Held byConsolidated Subsidiaries
Net Change in the Items Other than
Stockholder’s Equity in the Six Months
Total
Balance at September 30, 2006——

74,752915

75,667

254,819

158,106

972,855(31,775)

1,354,006

Thousands of U.S. dollars
Valuation and Translation Adjustments
Net Unrealized
Gains onTotal Valuation
Gains onDeferredand Translation
Other Securities
Hedge
Adjustments
Balance at March 31, 2006

61,975—61,975

Share
Warrant

Minority
Interests

Total
Net Assets

—

2,602

1,342,917

Change in the Six Months
Cash Dividends(11,027)

Bonus for Directors and Corporate Auditors(424)

Net Income

86,316

Repurchase of Own Shares(731)

Disposal of Treasury Shares

1,327

Changes in Own Shares Held byConsolidated Subsidiaries
Net Change in the Items Other than
Stockholder’s Equity in the Six Months(2,135)28

Total(2,135)

Balance at September 30, 2006

59,840

(206)

—

528

(1,432)(2,106)145

28(2,106)145

322

74,02828

59,868145

2,924

1,416,945

Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

11

Non-Consolidated Balance Sheets (Unaudited)
Suruga Bank Ltd.
Thousands of
U.S. dollars

Millions of yen

2006

2005

Change from
2005

2006

ASSETS:Cash and Due from Banks
Call Loans
Monetary Claims Bought
Trading Account Securities
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Premises and Equipment
Property, Plant and Equipment
Intangible Fixed Assets
Deferred Tax Assets
Customers’ Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses

54,796
180,967
396
237
2,122
478,787
2,221,138
3,313
23,142—33,261
10,08018,044
7,574(36,074)

66,937
230,770
405
399
2,218
441,430
2,151,454
2,049
19,06941,735——
26,156
8,127(38,254)(12,141)(49,803)
(9)
(162)
(96)
37,357
69,684
1,264
4,073
—
—
—
(8,112)
(553)
2,180

464,768
1,534,923
3,359
2,013
18,001
4,060,960
18,839,174
28,107
196,290—
282,11285,497
153,052
64,245(305,972)

Total Assets

2,997,788

2,952,499

45,28925,426,535

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities
Deposits
Call Money
Foreign Exchanges
Other Liabilities
Reserve for Employees’ Bonus
Reserve for Employee Retirement Benefits
Reserves under Special Laws
Acceptances and Guarantees

2,802,610
2,358
21
17,274
499
79
0
7,574

2,774,360—
9
17,035
508
263
0
8,127

28,250
2,358
12
239
(9)
(184)
—
(553)

23,771,081
20,000185
146,5204,239
673
0
64,245

Total Liabilities

2,830,419

2,800,305

30,11424,006,946

30,043
18,585
18,585
113,638
30,04383,595840
70,032
12,723(1,960)160,307
6,996
48
7,045
17

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

254,819
157,640
157,640
963,855
254,819709,036
7,124
593,996
107,914(16,629)
1,359,687
59,343412
59,755145

As of September 30,

Net Assets
Common Stock
Capital Surplus
Capital Surplus Reserve
Retained Earnings
Earned Surplus Reserve
Other Earned Surplus Reserve
Reserve for Employee Retirement Benefits
Other Reserve
Balance of Profit to be Carried Forward
Treasury Stock
Total Stockholders’ Equity
Net Unrealized Gains on Other Securities
Gains on Deferred Hedge
Total Valuation and Translation Adjustments
Share Warrant
Total Net Assets

167,369——

1,419,588

2,997,788——

25,426,535

Stockholders’ Equity
Common Stock
Capital Surplus
Capital Surplus Reserve
Retained Earnings
Earned Surplus Reserve
Voluntary Reserves
Unappropriated Profits at the End of the Term
Net Unrealized Gains (Losses) on Securities, Net of Taxes
Treasury Stock

—
—
—
—
—
—
—
—
—

30,043
18,585
18,58598,34230,04359,8728,427
7,585(2,362)

—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—

Total Stockholders’ Equity—

152,194——

Total Liabilities and Stockholders’ Equity—

2,952,499——

Total Liabilities and Net Assets

Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

12

Non-Consolidated Statements of Income (Unaudited)
Suruga Bank Ltd.
Thousands of
U.S. dollars

Millions of yen

For the Six Months Ended September 30,

2006

2005

Change from
2005

2006

Ordinary Income
Interest Income
Interest on Loans and Discounts
Interest and Dividends on Securities
Fees and Commissions
Other Operating Income
Other Income

47,214
39,232
36,683
1,688
6,574
726
680

43,56936,221
34,372
1,693
5,878
900
568

3,645
3,011
2,311
(5)
696
(174)
112

400,462
332,759
311,144
14,32555,766
6,164
5,771

Ordinary Expenses
Interest Expenses
Interest on Deposits
Fees and Commissions
Other Operating Expenses
General and Administrative Expenses
Other Expenses

32,065
4,766
1,815
3,822
113
18,9894,374

33,394
3,147
786
3,541
66
18,544
8,095(1,329)
1,619
1,029
281
47
445
(3,721)

271,976
40,425
15,39832,417964
161,067
37,101

Ordinary Profits

15,148

10,174

4,974

128,486

Extraordinary Profits
Extraordinary Losses

1,383
81

755
536

628
(455)

11,735689

Income before Income Taxes and Others
Provision for Income Taxes and Others
Deferred Income Taxes
Net Income

16,4506,854(407)
10,003

10,393
3,193
401
6,799

6,057
3,661
(808)
3,204

139,531
58,135(3,452)
84,848Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

13

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
Suruga Bank Ltd.

Millions of yen

CapitalStock

CapitalSurplusReserve

Stockholders’ Equity
Retained Earnings
Other Capital Surplus
EarnedReserve for
Retained Earnings
SurplusRetirement
Reserve
Benefits
Reserve
Brought Forward

30,043

18,58530,043

Capital Surplus

Balance at March 31, 2006

840

59,032

Total
Retained
Earnings

15,097105,013(1,314)(1,314)

(50)

(50)

Change in the Six Months
Cash Dividends
Bonus for Directors andCorporate Auditors
Net Income
Provision to Voluntary Reserves

11,00010,003

10,003(11,000)

—

(13)

(13)

Repurchase of Own Shares
Disposal of Treasury Shares
Net Change in the Items Other
than Stockholder’s Equity
in the Six Months
Total
Balance at September 30, 2006

—

—

—

—

11,000(2,374)

8,625

30,043

18,58530,043840

70,032

12,723

113,638

Share
Warrant

Total
Net Assets—

158,800

Millions of yen
Stockholders’ Equity

Treasury
Stock
Balance at March 31, 2006

(2,044)

Valuation and Translation Adjustments
Net Unrealized Gains (Losses) Total Valuation
Total
Gains (Losses) ononandStockholders’ Available-for-sale
DeferredTranslation
EquitySecurities
Hedge
Adjustments
151,598

7,202

—

7,202

Change in the Six Months
Cash Dividends
Bonus for Directors andCorporate Auditors
Net Income
Provision to Voluntary Reserves(1,314)(1,314)

(50)

(50)

10,003

10,003——

Repurchase of Own Shares

(86)

(86)

(86)

Disposal of Treasury Shares

169

156

156

(205)

48

(156)

17

(139)

83

8,709

(205)

48

(156)

17

8,569

(1,960)160,307

6,996

48

7,045

17

167,369

Net Change in the Items Other
than Stockholder’s Equity
in the Six Months
Total
Balance at September 30, 2006
Note: Figures less than 1 million yen are omitted.

14Non-Consolidated Statement of Changes in Net Assets (Unaudited)
Suruga Bank Ltd.

Thousands of U.S. dollars

CapitalStock

CapitalSurplusReserve

Stockholders’ Equity
Retained Earnings
Other Capital Surplus
EarnedReserve for
Retained Earnings
SurplusRetirement
Reserve
Benefits
Reserve
Brought Forward

254,819

157,640

254,819

Capital Surplus

Balance at March 31, 2006

7,124

500,697

Total
Retained
Earnings

128,055

890,696(11,152)(11,152)

(424)

(424)

Change in the Six Months
Cash Dividends
Bonus for Directors andCorporate Auditors
Net Income
Provision to Voluntary Reserves

93,29984,84884,848(93,299)

—

(112)

(112)

Repurchase of Own Shares
Disposal of Treasury Shares
Net Change in the Items Other
than Stockholder’s Equity
in the Six Months
Total
Balance at September 30, 2006

—

—

—

—

93,299(20,140)

73,158254,819

157,640

254,819

7,124

593,996

107,914

963,855

Share
Warrant

Total
Net Assets—

1,346,905

Thousands of U.S. dollars
Stockholders’ Equity

Balance at March 31, 2006

Treasury
Stock

Valuation and Translation Adjustments
Net Unrealized Gains (Losses) Total Valuation
Total
Gains (Losses) ononandStockholders’ Available-for-sale
DeferredTranslation
EquitySecurities
Hedge
Adjustments(17,337)

1,285,819

61,086—61,086

Change in the Six Months
Cash Dividends
Bonus for Directors andCorporate Auditors
Net Income
Provision to Voluntary Reserves(11,152)(11,152)

(424)

(424)

84,84884,848——

Repurchase of Own Shares

(731)

(731)

(731)

Disposal of Treasury Shares

1,440

1,327

1,327

(1,742)412(1,330)145(1,185)708

73,867(1,742)412(1,330)145

72,682(16,629)

1,359,687

59,343412

59,755145

1,419,588

Net Change in the Items Other
than Stockholder’s Equity
in the Six Months
Total
Balance at September 30, 2006

Notes: 1. Figures less than 1 million yen are omitted.
2. Figures stated in U.S. dollars in this report are translated from Japanese yen, solely for convenience, at the rate of ¥117.90 per 1 U.S. dollar,
the rate prevailing at September 30, 2006.

15

Net Branches

An all-new mileage + banking service that lets users accrue mileage points through bank transactions.

ANA Branch
http://www.surugabank.co.jp/ana/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-029-589(From overseas: 055-98-02988)
Telephone reception hours

9:30 am - 5:00 pm Monday - Friday(excluding holidays)
Providing access to leading Internet-based financial services

Softbank Branch
http://www.surugabank.co.jp/softbank/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-708-807
Telephone reception hours

9:00 am - 7:00 pm Monday - Friday(excluding holidays)

9:00 am - 5:00 pm Saturday

Branch exclusively for system engineers (SEs)

SE Bank Branch
http://www.surugabank.co.jp/sebank/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-803-689
Telephone reception hours

9:00 am - 7:00 pm Monday - Friday(excluding holidays)

9:00 am - 5:00 pm Saturday

A banking site tailored to women

So-net Branch
http://www.surugabank.co.jp/so-net/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-50-2189
Telephone reception hours

9:00 am - 7:00 pm Monday - Friday(excluding holidays)

9:00 am - 5:00 pm Saturday

Japan’s first direct branchDream Direct Branch
http://www.surugabank.co.jp/dream/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-89-1016
Telephone reception hours

9:00 am - 7:00 pm Monday - Friday(excluding holidays)

9:00 am - 5:00 pm Saturday

Direct banking specializing in loans

Direct One Branch
http://www.surugabank.co.jp/directone/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-60-1616
Telephone reception hours

10:00 am - 8:00 pm Monday - Friday(excluding holidays)

10:00 am - 5:00 pm Saturday

Providing access to high value-added business loan services

e-Business Direct Branch
http://www.surugabank.co.jp/ebusinessdirect/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-185-285
Telephone reception hours

10:00 am - 8:00 pm Monday - Friday(excluding holidays)
Catering to B-to-B and B-to-C needs

NetBank Branch
http://www.surugabank.co.jp/sofmap/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-89-5189
Telephone reception hours

9:00 am - 5:00 pm Monday - Friday(excluding holidays)
http://www.surugabank.co.jp/axa-direct/(24 hours a day, 365 days a year)
Toll free (from within Japan only): 0120-788-017

16

Telephone reception hours

9:00 am - 7:00 pm Monday - Friday(excluding holidays)

9:00 am - 5:00 pm SaturdayPrinted in Japan