Information Meeting—The Year Ended March 2017—

THE NANTO BANK, LTD.

Table of Contents
I. About the Nanto Bank, Ltd.
1. Profile of the Nanto Bank

▪▪▪▪▪

2

2. Operating Areas of the Bank

▪▪▪▪▪

3

▪▪▪▪▪
▪▪▪▪▪

4
5-6
7

▪▪▪▪▪

8

3. Summary of Nara Prefecture(1) History and Tourism Resources(2) Three World Heritage Sites(3) Number of Tourists
4. Summary of the Local Economy▪▪▪▪▪

II. Financial Results for FY2016

1. Summary of Profit and Loss

▪▪▪▪▪

10

2. Summary of Deposits and Loans

▪▪▪▪▪

11

3. Summary of Non-Performing Loans

▪▪▪▪▪

12

4. Capital Adequacy Ratio

▪▪▪▪▪

13

▪▪▪▪▪

15

III. Reinforcement of Financial Platform
1. Raising Capital
IV. Management Strategy
1. Outline of the Medium-Term Management Plan
(1) Management Environment and Challenges(2) Business Model Reform(3) Our Management Vision and Significanceof the Medium-Term Management Plan
(4) Basic Philosophy(5) Priority Strategies
2. Pursuit of the Four Reforms(1) Awareness Reform (i) Human Resource andOrganizational Strategy

▪▪▪▪▪
▪▪▪▪▪

17
18

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▪▪▪▪▪
▪▪▪▪▪

19
20
21

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22

(2) Sales Reform(i) Platform and Market Strategy(ii) Retail Business Strategy—Personal Solutions Business—Asset Investment Services—Numerical Results and Plans Related
to Assets under Management—Personal Loans(iii) Corporate Business Strategy—Corporate Solutions Business—Numerical Results and Plans(iv) Osaka Strategy—Branch Deployment and Allocation of
Corporate Resources—Numerical Results and Plans(v) Market Investment Strategy(vi) Group Strategy

▪▪▪▪▪

23

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24
25

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26
27

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28
30

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31
32
33
34

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35

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36

3. Regional Revitalization(1) Creation of Regional Vitality▪▪▪▪▪
(2) Tourism Promotion and Local Industry Assistance ▪ ▪ ▪ ▪ ▪

37
38

▪▪▪▪▪

39

1. Summary of Profits and Losses, Shareholder Returns ▪ ▪ ▪ ▪ ▪

41

2. Transforming Our Earnings Structure andLoans Portfolio

▪▪▪▪▪

42

3. Profit and Loss Plan of the Medium-Term
Management Plan

▪▪▪▪▪

43

4. Target Metrics

▪▪▪▪▪

44

(3) Clerical Operations Reform(i) Clerical Operations Strategy(4) Expenses Reform(i) Expenses Strategy

4. Upgrading of Management and Controls
V. Business Forecasts for FY2017

表紙Ⅰ

I. About the Nanto Bank, Ltd.

1

1. Profile of the Nanto Bank(as of March 31, 2017)

1. Founded

June 1, 1934

2. Location of head office

16 Hashimoto-cho,Nara City

3. Capital¥29,249 million

4. Number of employees

2,615

5. Number of offices

139 (Japan)

Corporate Philosophy(i) Pursue sound and efficient management(ii) Provide superior comprehensive
financial services(iii) Contribute to regional prosperity(iv) Strive to become a highly reliable,
friendly and attractive bank

2 (representative offices in Hong Kong and Shanghai)

6. Total assets¥5,802.9 billion

7. Deposits outstanding¥4,780.7 billion

8. Outstanding loans¥3,262.3 billion

9. Capital adequacy ratio

Non-consolidated:
9.19%
Consolidated:
9.42%

10. Market share in Nara Prefecture

Loans: 48.8%
Deposits: 49.0%

11. External credit rating“A” (Stable) from JCR(Head Office)“A-” (Stable) from R&I
2

2. Operating Areas of the Bank
Operating Areas of the Bank

Our Network of Branches

Map of Japan･･･ Branch location

Kyoto Pref.

Hyogo Pref.
Osaka Pref.

Tokyo
Nara
Osaka

Mie Pref.

Number of branches(as of March 31, 2017)
Nara Pref.

Headquarters
and branches

Subbranches

Agencies

Nara Pref.

71

18

3

Wakayama
Pref.

6

2

-

8

Kyoto Pref.

11

4

-

15

Mie Pref.

1

2

-

3

Osaka Pref.

19

-

-

19

Hyogo Pref.

1

-

-

1

Tokyo

1

-

-

1

Total

110

26

3

Total

92

139

Wakayama Pref.

33. Summary of Nara Prefecture (1) History and Tourism Resources
History of Nara Prefecture Following the unification of Japan in ancient times, Nara was the country’s capital up until the endof the Nara Period (from 710 to 794). It was home to many of Japan’s existing cultural properties,
such as Buddhist architecture.
 In Waka poems, Nara is referred to as the “Birthplace of Japan.”Abundant Tourism Resources Three World Heritage sites  Ranked top in Japan for the number of such sites(i) Historic Monuments of Ancient Nara(ii) Buddhist Monuments in the Horyu-ji Area(iii) Sacred Sites and Pilgrimage Routes in the Kii Mountain Range A total of 1,525 National Treasure and Important Cultural Property certifications (as of June 1, 2017)* Ranked third in the country, only behind Tokyo and Kyoto
 In 2015, the annual number of foreign tourists visiting Nara exceeded the 1 million mark.

 Origin of the name Nanto Bank The Bank was named Nanto Bank when it was established in 1934 because Nara had long beenreferred to as “Nanto” (the South Capital) in reference to Kyoto.
43. Summary of Nara Prefecture (2) Three World Heritage Sites
Expanded Map of Nara Prefecture(i) Historic Monuments of Ancient
Nara
Kyoto Pref.

Nara, Nara Pref.

Registered in 1998 as a world
heritage site
Osaka Pref.

Nara Pref.

(ii) Buddhist Monuments in the
Horyu-ji Area

Ikaruga-cho, Ikoma-gun, Nara Pref.
Registered in 1993 as a world
heritage site(iii) Sacred Sites and Pilgrimage
Routes in the Kii Mountain Range

Nara Pref., Wakayama Pref. and
Mie Pref.
Registered in 2004 as world
heritage sites

53. Summary of Nara Prefecture (2) Three World Heritage Sites(i)

Historic Monuments of Ancient Nara “Historic Monuments of Ancient Nara” are made up of the temples in Nara city.
(Tôdai-ji, Kôfuku-ji, Kasuga-Taisha, Kasugayama Primeval Forest, Gangô-ji, Yakushi-ji, Tôshôdai-ji
and the site of Heijô-kyo) During the Nara Period (from 710 to 794), many temples and shrines were built around the Heijô-kyo
and the location served as the country’s capital. These “Historic Monuments of Ancient Nara” serve
to illustrate the religious activities and lifestyle of the Nara Period.
(ii)

Buddhist Monuments in the Horyu-ji Area

 Wooden structures at the Horyu-ji and Hokki-ji Temples
 Built shortly after Buddhism arrived in Japan, these are among the nation’s oldest existing wooden
structures. Combined with the structures built thereafter, they reveal how Japanese Buddhistarchitecture changed over time, and are thus praised as being masterpieces of Buddhistarchitecture.
(iii) Sacred Sites and Pilgrimage Routes in the Kii Mountain Range
 These World Heritage Sites span Nara Prefecture and the adjacent Mie and Wakayama Prefectures.
The location contains three sacred sites: Yoshino and Omine; Kumano Sanzan; and Koyasan,
connected by the pilgrimage routes Omine Okugakemichi, the Kumano Pilgrimage Routes and the
Koya Pilgrimage Routes.
It was here that nature worship-based religious practices from ancient Japan amalgamated with
Buddhism, arriving from the continent, and resulted in the creation of many different forms of
religion.
63. Summary of Nara Prefecture (3) Number of Tourists
Number of Tourists Visiting Nara
Number of tourists

Number of foreign tourists visiting Nara (estimate)

4,500

4,146

(10,000
people)165.4(10,000
people)

3,811
3,429

150

3,547

103.3
100

66.4
45.6

50

28.5

0

0
2012

2013

2014

2015

2016
[Source: Nara Prefecture]7

4. Summary of the Local Economy
Market Characteristics
Nara Prefecture: A substantial retail business market
Osaka Prefecture: Second largest economy among all the country’s prefectures,substantial retail and corporate business markets<Key indicators>

Ranking is among the 47 prefectures of Japan

MetricNara
Pref.

SourceRank(Thousands of people)

1,356

30th

Ministry of Internal Affairs and Communications,
Population Estimates, October 2016

Deposits balance(¥ trillion)

11.4

24th

Loan balance(¥ trillion)

3.5

Population

Osaka
Pref.

Rank

8,833

3rd

Kinyu Journal, Financial Map 2017

90.4

2nd

31st

Kinyu Journal, Financial Map 2017

45.1

2nd

Per-capita income(¥ thousand)

2,534

35th

Cabinet Office Economic and Social
Research Institute (ESRI), fiscal 2014

Balance of savings (households of 2 or more)(¥ thousand)

17,8496th

Ministry of Internal Affairs and Communications, National
Survey of Family Income and Expenditure, November 2014

(Thousands of units)

6

36th

Ministry of Land, Infrastructure, Transport andTourism, Building Starts, fiscal 2016

70

3rd

60.5

5th

54.1 38th

Housing starts

3,013 13th
15,017 24th

Percentage of people who enter post-secondary
education
Percentage of people who answer correctly on thefinancial literacy examination

(%)

58.9

7th

Ministry of Education, Culture, Sports, Scienceand Technology, March 2016

(%)

60.5

1st

The Central Council for Financial Services
Information, June 2016

Cross-prefecture employment ratio

(%)

29.9

1st

Ministry of Internal Affairs and Communications,
National Census, October 2010

5.8 15th413

2nd(Thousand of entities)

48

40th

Ministry of Internal Affairs and Communications,
Economic Census, July 2014(¥ trillion)

1.8

36th

Ministry of Economy, Trade and Industry,
Census of Manufacturers, December 2014

15.7

3rd

Sales value of wholesale goods(¥ trillion)

0.7 42nd Census of Commerce, July 2014

Ministry of Economy, Trade and Industry,

38.9

2nd

Sales value of retail goods(¥ trillion)

1.0

35th

Ministry of Economy, Trade and Industry,
Census of Commerce, July 2014

8.4

2nd

(Items)

1,525

3rd

Agency for Cultural Affairs, June 2017

736

5th

9th

Japan Tourism Agency, Consumption Trend
Survey for Foreigners Visiting Japan, 2016

44.7

1st

Number of private enterprises (offices)
Value of shipped manufactured goods(establishments employing at least 10 workers)

Number of items designated as National Treasuresand Important Cultural Properties
Ratio of visits by foreign tourists coming to Japan(sightseeing and leisure purposes)

(%)

8.4

8

表紙Ⅰ

II. Financial Results for FY2016

91. Summary of Profit and Loss(¥ billion)
FY2015
results

1

Core gross business profit

FY2016
results

Y/Y change

54.5

53.9

-0.6

49.6

49.6

+0.0

2

Interest income

3

Fees and commissions

6.1

5.3

-0.7

4

Other operating income (*1)

-1.2

-1.0

+0.1

1.4

1.3

-0.1

43.2

40.1

-3.1

5
6

Cost of derivative financial
products
Expenses7

Personnel expenses

25.5

22.2

-3.2

8

Non-personnel expenses

15.7

15.4

-0.2

11.2

13.7

+2.5

9

Core net business profit

10

Gains/Losses on bonds (JGBs, etc.)

0.8

3.9

+3.1

11

Net transfer to general provision forpossible loan losses

-3.7

3.0

+6.7

12

Net business profit

15.8

14.7

-1.0

13

Non-recurrent gains/losses

-2.7

1.3

+4.0

14

Gains/Losses on stocks

1.5

2.2

+0.7

15

Disposal of non-performing loans

5.0

0.7

-4.3

16

Bad debt recovered

0.2

0.8

+0.5

13.1

16.0

+2.9

0.4

-0.1

13.5

Analysis of Change Factors
in Core Net Business Profit(¥ billion)

Core net business profit for FY2015

11.28

1) Average balance of loans(Average balance Y/Y change +¥137.8 billion)+1.54

2) Interest rate on loans(0.99%, Y/Y change -0.12 pt)-3.91

3) Average balance of deposits(Average balance Y/Y change -¥71.9 billion)+0.034) Interest rate on deposits(0.02%, Y/Y change -0.02 pt)+1.17

Deposit/loans sector total-1.165) Average balance of securities(Average balance Y/Y change +¥68.5 billion)+0.736) Yield on securities(1.16%, Y/Y change +0.09 pt)+1.717) Interest on fund management-0.098) Interest on fund procurement(including cost of derivative financial products)-0.99

Market sector total

+1.35
-0.74

-0.6

9) Fees and commissions(investment trust revenues: Y/Y change -¥0.32 billion
life insurance revenues: Y/Y change -¥0.59 billion)

15.9

+2.3

10) Others-0.0311) Expenses

+3.10

17

Ordinary income

18

Extraordinary gains/losses

19

Income before taxes

20

Income taxes

1.8

3.8

+1.9

21

Net income

11.7

12.1

+0.4

22

Credit cost (*2)

1.0

2.9

+1.8

* 1 Excludes gains/losses on bonds (JGBs, etc.)* 2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) – (Bad debt recovered)Core net business profit for FY2016

13.78
10

2. Summary of Deposits and Loans
Balance of Deposits

Balance of Loans<By sector><By sector><Change fromMarch 31, 2016>* Number in bracket denotes Y/Y change

5,000.0

4,679.0 4,770.2 4,781.7 4,780.7(¥ billion)

216.6
849.0

(+70.0)

230.1
871.0

(+21.9)

218.7
886.0

(-14.9)

199.1
875.9

* Number in bracket denotes Y/Y change-1.0

3,300.0
Government/Banks(-19.5)(¥ billion)

Corporate(-10.0)3,531.4(+92.5)3,601.2

3,625.4(+69.8)(+24.1)

3,672.6

Personal(+47.1)

Percentage
composition
61%

NegotiableCD(-18.5)

0

81.9

67.7

51.5

33.0

March 31,2014

March 31,2015

March 31,2016

March 31,2017

<By prefecture>

443.1

494.4

543.6

591.4

711.1

730.7

743.7

669.3

912.0 61% 975.4
875.2 60% 888.1 59% (+23.8)(+10.0)(-12.9)(+15.6)(+20.8)(+23.4)998.7

1,026.0

March 31,2014

March 31,2015

March 31,2016

March 31,
2017

954.4

0

<Change fromMarch 31, 2016>

3,198.1 3,262.3 +64.1
3,088.7
2,983.9
Loans for local

975.3

governments(+47.7)Wholesaleloans(-74.3)Retailbusinessloans(+63.4)

Personal
loans(+27.2)<By prefecture>* Numbers in brackets denote Y/Y change or percentage composition* Numbers in brackets denote Y/Y change or percentage composition

5,000.0

3,300.0(¥ billion)

268.6
333.8
280.5

(+30.2)(6%)

3,714.0(+104.4)
(80%)

275.6
343.4
289.0
(+8.5)(6%)

3,794.2(+80.2)
(80%)

256.9
356.1
296.4
(+7.3)(6%)

3,820.6

255.2
343.6
287.5

3,861.2(+26.3)(80%)

Others(-1.7)(¥ billion)

Kyoto Pref.
(-12.4)
Osaka Pref.,etc.
(-8.8)(6%)
Nara Pref.
(+40.5)(81%)
NegotiableCD(-18.5)

0

81.9

67.7

51.5

33.0

March 31,2014

March 31,2015

March 31,2016

March 31,
2017

855.2

812.9

759.2

790.5

806.2

825.4

712.6

745.8

(+54.0)(23%)(+33.1)(24%)(+13.4)(23%)

1,464.9

1,517.4

1,583.7

1,658.7(-24.8)(49%)(+52.4)(49%)(+66.2)(49%)

March 31,2014

March 31,2015

March 31,2016

March 31,2017

Others(-42.2)

Osaka Pref.,etc.
(+31.3)(24%)
Nara Pref.
(+75.0)
(50%)

0

11

3. Summary of Non-Performing Loans
Credit Cost

Breakdown of Credit Cost(¥ billion)

(%)
0.30

8.0

Disposal of
non-performing
loans

6.0
(¥ billion)

Net transfer to generalprovision for possible
loan losses

Creditcost
ratio
Credit
cost
ratio

5.0

0.09
0.05

0.03

-0.01

1.1
-0.0
-1.4

2.9

1.4

1.0

3.0

1.7
0.3
-0.5

0.7
-0.8
-3.7

Bad debt
recovered-0.2

FY2013

FY2014FY2015FY2016

-0.3

1.4

1.0

2.9

-5.0

-0.3

Creditcost
Credit
cost

-2.0

-0.30

FY2013

FY2014FY2015Total
credit cost

FY2016* Credit cost ratio = Credit cost / Average balance of loans

Disposal of Non-Performing Loans by Region

Loans Based on the Financial Reconstruction
Law / Non-Performing Loans Ratio
150.0

5.0

(¥ billion)

Nara Pref.

4.4

0.3
-0.4
-0.4

2.77

Osaka Pref., etc.

0.9

-0.0
-0.0

0.3

1.3

14.5

0.3

63.0

FY20142.57

2.30

Others-0.9

0FY2015FY2016

Total

2.08

15.5

10.0

11.5

59.3

58.0

49.5

0.3

-2.0

FY2013

Nonperforming
loans ratio(¥ billion)

4.00
(%)

Specialattention

Doubtful

7.3

5.8

5.1

5.8

March 31,2014

March 31,2015

March 31,
2016

0.00
March 31,2017 Bankrupt

83.3

80.0

73.9

68.4

or de facto
bankrupt

12

4. Capital Adequacy Ratio
Capital Adequacy Ratio
400.0<Capital adequacy ratio>(¥ billion)

Consolidated

9.72
9.29

12.00

<Non-consolidated>(%)

Non-consolidated

9.36

9.42

March 31,2016

March 31,2017

Capital adequacy ratio

9.29%

9.11%

9.19%

2)

Capital

193.4

198.9

211.5

-

Subordinated loans<Capital>
Consolidated

March 31,
2015

1)

9.19

9.11

(¥ billion)-

Non-consolidated

3)

Risk assets

2,080.8

2,181.1

2,300.7<Consolidated>

206.9
204.3
198.9
193.4

219.3
211.5

(¥ billion)

March 31,2015

March 31,2016

March 31,20171)

Capital adequacy ratio

9.72%

9.36%

9.42%

2)

Capital

204.3

206.9

219.3

-

Subordinated loans
3)0March 31,2015-

March 31,2016

March 31,2017

Risk assets

2,101.7

2,209.7

2,327.7

0.00

13

表紙Ⅰ

III. Reinforcement of Financial Platform

14

1. Raising Capital○ In an effort to promote the regional banks’ mission of “regional revitalization,” theBank will further reinforce its financial platform and prepare for loan growth-driven
risk asset expansion in order to capture cash needs conducive to regional economic
growth and aggressive provision of funds.
Outline of Capital Increase
Through public offering

Class of stock

Common stock

Number of shares outstanding
Capital increase
Payment due dateThrough third-party allotment

5,000,000 shares

Capital raised
750,000 shares

Half of total amount paid in(Difference from total amount paid in takes the form ofcapital reserves)
June 7, 2017

Approx.
¥17.3 billion

July 4, 2017

 Enhance profitability and productivity for the future◆ Prepare for risk asset expansion○ Bolster retail loans○ Diversify securities investments
15

IV. Management Strategy

16

1. Outline of the Medium-Term Management Plan (1) Management Environment and Challenges
Management Challenges

Policy aspects

Management metrics◆ Continued quantitative and qualitative
monetary easing Decreasing interest income due to falling interest
on loans◆ Negative interest rate policy Improvement in management metrics(OHR and ROE, among others), etc.

◆ Corporate governance code
◆ Changes in financial regulations

Organization and system
Social and economic aspects◆ Declining population and shrinking
economies in rural regions

 Build a more productive organizational system◆ Falling birth rate and an aging society

 Enhance human resource development◆ Empowerment of women Promote diversity, etc.

 Upgrade our management and controls framework

Technology aspects◆ Rise of FinTech

Competitive environment◆ Raising of maximum amount of deposits
with Japan Post Bank
◆ Intensifying competition with rival banks andnon-bank competitors◆ Accelerating realignment of regional
financial institutions

Sales Vitalize the Nara Prefecture economy
 Maintain our deposits and loans market sharesin Nara Prefecture Build a sales platform suitable for the markets
 Consider new sales channels and services
 Improve our solution skills, etc.

It is essential to reform our business model.

Management Environment17

1. Outline of the Medium-Term Management Plan (2) Business Model Reform
Business Model Reform<Human resources and organizational aspects>•

Personal solutions business•Corporate solutions business• Osaka strategy
 Bolster our market investment skills

Improve salesquality Strengthen our group strategy<Clerical operations aspects>
 Promote clerical operations BPR
 Build an organizational operation that enables thestaff to focus on sales activities<Expenses aspects>

Improve clericaloperations quality

Raise ROA and ROE

 Build a new business model Strengthen our retail strategy

Improve OHR

Regional Revitalization<Sales aspects>

Build a robust structure

Improve humanresources quality

 Foster a spirit of taking on challenges
among bankers

Raise our capital adequacy ratio Ensure the permeation of improvement
culture and ethos that are unique to the
Nanto Bank

 Shift in expense structure Revise expenses as a whole Make strategic investment for human resource
development and IT

18

1. Outline of the Medium-Term Management Plan
(3) Our Management Vision and Significance of the Medium-Term Management Plan

Management Vision“A Vitality Creating Bank”(from 2014 to 2024)
 We aim to become a bank that creates vitality for itself and for its local communities through i) delivering high-quality
financial and consultation functions as a regional financial institution and ii) cultivating a corporate culture full of dreams
and pride.

Significance of the Medium-Term Management Plan

“Vitality Creation Plan II—Changing and Taking on Challenges”(from April 2017 to March 2020)
 We have set the three years as a period in which to strive to change to a robust
structure in consideration of the changing financial climate. For the plan’s final
year coinciding with our 85th anniversary, we will make sure to achieve goodresults in terms of earnings and the financial position.

The 90th anniversary(2024)The 85th
anniversary(June 2019)
The 80th anniversary(FY2014)

Vitality Creation Plan(from April 2014
to March 2017)

Vitality Creation Plan II—
Changing and Taking on
Challenges19

1. Outline of the Medium-Term Management Plan (4) Basic Philosophy
Basic Philosophy
Create regional economic vitality
 Make utmost efforts to revitalize our salestarget areas in pursuit of co-creation withlocal communities

Deliver customer-centric services

Improve productivity and profitability
through reviewing operations

 Deliver optimum and sophisticated services bypromptly meeting the increasingly diverse
needs of customers

 Improve productivity and profitability through enhancing thequality of sales, clerical operations, and human resources,
based on the Four Reforms (to awareness, sales, clericaloperations and expenses)

Upgrade the management andcontrols framework
 Bolster risk control and earnings management, thusbuilding a management and controls framework
capable of responding to the changing environment
in a flexible manner201. Outline of the Medium-Term Management Plan (5) Priority Strategies
Priority Strategies(Initiatives policy)(1) Regional Revitalization■ Create regional vitality by playing a leading role in local community, people and job areas

Awareness
reformHuman resource andorganizational strategy■ Vitalize our human resources and organization by i) fostering the spirit of taking on challenges among
the bankers, ii) bolstering the human resource development system and iii) realizing a work-life balance

Platform and market
strategy■ Revise the framework of our branches and sales, bolster points-of-contact with customers, anddeliver high-quality services

Retail businessstrategy(2) Pursuit of theFour Reforms

Sales
reformCorporate businessstrategy■ Aim to become the true main bank for the customer through exercising the consultation function
and delivering solutions according to the company’s growth stage

Osaka strategy■ Raise the Bank’s presence by actively allocating or reallocating our corporate resources, basedon branch continuity

Municipality
strategy■ Seek to develop relationships with individual municipalities by delivering financing and consulting
functions to themMarket investment
strategyGroup strategy
Clericaloperations
reformClerical operations
strategy

ExpensesreformExpensesstrategy(3) Upgrading of Management
and Controls■ Serve as the closest possible consultant for customers of all generations by paying proper
attention to their life stages■ Expand profits by diversifying our investment methods while taking risks appropriately■ Grow consolidated profits through delivering comprehensive financial services by tapping into
our Group’s capabilities■ Fundamentally overhaul the clerical operations of branches and the headquarters, thustransforming the organization into a more efficient one■ Revise expenses as a whole to transform our expenses structure■ Upgrade our management and controls to firmly support the business model and to obtain evengreater trust from customers

 The Business Reform Headquarters are to oversee the reform
efforts across the organization
 Make sure to manage the progress of significant measuresand verify their effectiveness

Urgency

Simultaneity
Rigor
21

2. Pursuit of the Four Reforms (1) Awareness Reform (i) Human Resource and Organizational Strategy
 Vitalize our human resources and organization by i) fostering the spirit of taking on challenges
among the bankers, ii) bolstering the human resource development system and iii) realizing a worklife balance

Foster the spirit of taking on challenges among the bankers
Conducting a “Staff Award Program”

Nanto Improvement Committee
 Utilize the consulting services of a leading manufactureraffiliated vendor and establish an improvement culture
and ethos unique to Nanto Bank
 Begin “improvement activities” in advance for all
branches, before promptly standardizing the operations
established through such activities for all
offices/branches

 Not only sales staff, but clerical staff (including parttime employees) and headquarters staff are also
eligible for the award Evaluate employees’ awareness reform-based
efforts on sales and clerical work reforms, andencourage them to take on new challenges“Improvement activities”: Execution status and plan

Jul. 2017
Number ofactivity areas
and blocks(cumulative) 3 blocks and27 branches

1H
FY20172H
FY20171H
FY2018All-branchengagement

6 blocks

9 blocks

13 blocks

Detect issues, think and act independently
Pursue a reform of the Bank’s fundamental
awareness

Implementing Organizational Change Implement name changes by removing the word
“Management” from division names, thus defining
the system where headquarters support thebranches Awareness reform by headquarters and branchstaff members

 Amend the systems into ones that are more impartial and convincing

Revise personnel affairs systems

 Improve employees’ motivation and productivity and empower female andsenior-age employees, etc.

◆ Improve human resource quality◆ Improve organization productivity
22

2. Pursuit of the Four Reforms (2) Sales Reform (i) Platform and Market Strategy
 Revise the framework of our branches and sales, bolster points-of-contact with customers, anddeliver high-quality services
Rebuilding Our Existing Branch Network

Bolstering Our Sales Structure
Expanding our sales staff

Revising branch formats<Branch sales staff staffing plan>(People)

620

600

553
500

April
2016

580
April
2017

The plan from
the MediumTerm
Management
Plan inDecember 2016at the time of
publication: 610
employees

March 2020
(plan)

Enhancing our unit-based sales structure Improve specialisms while remaining friendly Deliver high-quality service through challenge-solution
sales activities
Currently in use in 6 units and 23 branches(About a third of all areas, with the exception of
Yoshino-gun, is being considered for implementation)
 Further expansion is planned

 FY2016 results
Converted one branch into a sub-branch, twobranches into in-branch outlets, abolished one
branch and revised two other branches Reduced the number of staff members by 16
 FY2017 plan (finalized portion)
Convert one branch into a sub-branch, one branch
into an in-branch outlet and revise six otherbranches Reduce the number of staff members by 14

Expanding non-face-to-face channels
Introducing account opening application (March 2017)

Adding functions to our smartphone applications
Introducing an online branch (within FY2017)◆ Operate branches according to the market ◆ Improve customer convenience◆ Acquire new customer segments23

2. Pursuit of the Four Reforms (2) Sales Reform (ii) Retail Business Strategy—Personal Solutions Business Serve as the closest possible consultant for customers of all generations by paying proper
attention to their life stages

Products and services<Products and services> Shift to one-stop solutions

Life stageYoungcustomers

Asset-building
customers

Elderlycustomers◆ Investment trust ◆ Life insurance ◆ Credit cards, etc.
Products
andservices◆ Card loan ◆ Personal car loan
◆ Housing mortgage loan
◆ Education loan ◆ Salary remittance◆ Defined contribution pension◆ Deposit product, etc.

◆ Pension remittance◆ Apartment loan
◆ Inheritance-related
service, etc.

Channel◆ Face-to-face channels (branch, consultation contact pointand group company)
ChannelSales
systemDecember 2016: Expanded the scope of financial product intermediation
services to include all branches
January 2017: Personal DC pension plan “Nanto DC Personal Plan”
Money loading service for e-money Rakuten Edy
February 2017: Product revision for Nanto Card Loan “E-PACK”
March 2017:
Female-only medical insurance plan
April 2017:
Trust products (will substitution trust, will trust andinheritance arrangement services)Group credit cancer life insurance plan (a home loan
scheme based on a guarantee by Nanto Credit
Guarantee Co., Ltd.)May 2017:“Nanto Robinson,” a term-specified investment trust◆ Non-face-to-face channels (smartphone application,
website, online banking, direct service center and ATM)

January 2017: Online application for life insurance policies
March 2017: Account-opening application
Processing of online applications for Nanto
Cotoca, a type of credit card that doubles as asmart bank card

◆ Increase the number of sales staff ◆ Improve specialisms<Sales system><Channel> Improve
specialisms

 Shift to an omnichannel format
24

2. Pursuit of the Four Reforms (2) Sales Reform (ii) Retail Business Strategy—Asset Investment Services
Bolster Securities Business and Inheritance Business
Increasing the number of sales staff for retailcustomers

 Introduce additional counter staff dedicated to asset investment
consultation
62 persons (November 2016) → 71 persons (April 2017)<Retail sales staff staffing plan>

Expanded the scope of financial product intermediation
services to include all branches (December 2016)

210(People)200

Introduced the Money Advisor (MA)scheme and increased staffing

Established the “Private Banking Department”(March 2017)

176
153

150
April
2016

April
2017

Launched a “trust service”(April 2017)

March 2020
(plan)

Launched “Nanto Robinson,” a term-specified
investment trust (May 2017)

The first for Kinki
regional banks

 Mitigate investment risk with spaced out purchases
 Choose terms from one year, two years, three years, or a flexible term(from at least one year and in monthly increments)
 Shift from a flow-centric service to an accumulation-centric service

 Obtained approval for a trust service in addition
to banking services (December 2016) The service was launched offering will substitution trusts, will trusts andinheritance arrangements<Cumulative results of will substitution trusts>(from April 17, 2017)(¥ million)(Cases)Number ofcases

0

Number of investment trust customers(end of May 2017): 63,000(¥ billion) *Compared to the end of May 2016: +800

10.0

118

5.7
100

500
Value

<Investment trust fund sales results (cumulative fiscal year results)>

36

2.8

April 30,
2016

April 30,
2017

3.3
Term-specified
investment trust

606

165
April 30,
2017

2.9

9.3

May 31,
20170

0

May 31,
2016

May 31,
2017*Sales results for term-specified investment trusts (from May 22, 2017) were calculated asa cumulative accumulation value for the agreement term

Abundant retail customer market
 Greater fees and commissions25

2. Pursuit of the Four Reforms (2) Sales Reform (ii) Retail Business Strategy—Numerical Results and Plans Related to Assets under Management

Numerical Results and Plans Related to Assets under Management<Sales results and plans><Actual and planned profits>
8.0(¥ billion)

234.0

7.50

(¥ billion)

OthersFinancial
product
intermediation

200.0

164.0

Life
insuranceLifeinsurance

4.66
4.0

96.3
100.0

3.71

0.04

2.82

2.9
35.6

57.6

70.2
4.8
21.5

1.78

Investment
trust

1.18

1.88

43.8

0

0.07
Investment
trust

1.55

0
FY2015 FY2016 FY2017(forecast)

FY2019(plan)FY2015 FY2016 FY2017(forecast)

FY2019(plan)* Others: Financial product intermediation and trust services, etc.

26

2. Pursuit of the Four Reforms (2) Sales Reform (ii) Retail Business Strategy—Personal Loans
Bolster Consumer Loans

Bolster Housing Mortgage Loans

Advance purpose-specific loan products

Step up promotion via L Plaza,a specialized department

 Offer female-only loan schemes (August 2016)
 Hold a promotional campaign for purpose-specific loans(July 2017) 12 outposts staffed by 65 staff (March 31, 2017)
 Enhancement of our holiday sales system Pursuit of activities targeting mainly leading housingbusiness operators and major local players
 Pursuit of collaborations with branches in the form ofcondominium housing sales projects, etc.

Continue to utilize direct channels
 Expand the scope of direct service center operations(loan service concentration)
 Step up online advertising and promotion-call services<Consumer loans balance plan (average balance)>(¥ billion)

32.0

Launch group credit cancer life insurance
plans (April 2017)<Housing mortgage loans balance plan
(average balance)>

980.0

1,000.0(¥ billion)

931.4

30.0

20.7

22.0

900.0

23.8

20.0

10.0

898.8
865.8

800.0

FY2015 FY2016 FY2017(forecast)

FY2019(plan)* Balance of card loans as of the end of March 2017 (period-end balance): ¥13.5 billion

700.0

FY2015 FY2016 FY2017

FY2019(forecast)(plan)

27

2. Pursuit of the Four Reforms (2) Sales Reform (iii) Corporate Business Strategy—Corporate Solutions Business Aim to become the true main bank for the customer through exercising the consultation function
and delivering solutions according to the company’s growth stage
Deliver Solutions According to the Growth Stage
Founding
periodGrowthperiodMaturity
period◆ Assistance for start-ups andnew business deployment◆ Business matching◆ Crowd funding, etc.

◆ Corporate insurance◆ M&A advisory service◆ Private placement bonds◆ Asset management

Transformation
period◆ Business succession
support◆ Syndicate loan
◆ Assistance for theacquisition of certificationfor various subsidies, etc.

Growthperiod◆ Assistance for the formulation ofoperational improvement plans◆ M&A advisory service, etc.

◆ Overseas businesssupport

Provide solutions as a true main bank
Bolster relationships by utilizing business practicality assessments and local benchmarks◆ Improve the specialisms of sales
staff
・Enhance the unit-based sales
structure◆ Set up the Business
Revitalization Support Office・Established in July 2016
・Bolster the functions of theCredit Analysis Division◆ Bolster activities for the Bank to
expand the sales of companies
having the top annual sales in
Nara Prefecture
・Collaboration between theheadquarters and branches28

2. Pursuit of the Four Reforms (2) Sales Reform (iii) Corporate Business Strategy—Corporate Solutions Business

Assist Company and New Business Creation“Nanto Commercialization Assistance Fund 80”

Business Plan Commercialization Assistance
Project: “Nanto Success Road”
 Seek business plans that will contribute to the local economy andcommunity Provide prize money and commercialization assistance for chosen businessplans In FY2016 (the third round for the project), nine plans were chosen, with a
total of 25 plans 11 plans have been commercialized A loan program for creatingcompanies and new businesses Business plans received: 32 plans
Total loans provided: 23 loans worth¥383 million (as of May 31, 2017)

 Establishing a fund to further bolster assistance(i) Established the “Nanto CVC Investment Limited Partnership” (June 2017)
This partnership assists, beyond our operational boundaries, core enterprises that will contribute to the economic, industrial
and regional revitalization of the entire country in the future→ Assist customers in our sales-target area in collaboration with investee companies(ii) Discover and support companies that would potentially become core enterprises in our sales-target area (to be launched in thefirst half of FY2017)

Initiatives to Provide Other Solutions
Nanto Vitality Creation Support Fund

Bolster business support for Mexico (September 2016)

 Assist and develop local companies through loans based on businessviability assessments
 Total loans provided: 286 loans worth ¥5.4 billion (from October 2015 to
the end of May 2017)(FY2015: 57 loans worth ¥1.1 billion / FY2016: 210 loans worth ¥3.9 billion)
Average interest rate contracted: 2.57%

 A business collaboration scheme using the framework set by theJapan Bank for International Cooperation

Usage of the “Nanto 6th Industrialization Support Fund”
 Determine the entities for the first capital investment (February 2017)

Form the “Investment Limited Partnership for TM
Japan Renewable Energy Fund 2017” (January 2017)
 Joint capital contribution by four regional banks(fund size: ¥4.0 billion) Promote investments in infrastructure, such as renewable energy
sources, and utilize regional resources effectively

29

2. Pursuit of the Four Reforms (2) Sales Reform (iii) Corporate Business Strategy—Numerical Results and Plans
Corporate Numerical Results and Plans<Actual and planned number of newly-acquired retailbusiness customers><Actual and planned profits for the
corporate solutions business>(cumulative number from FY2015)

12,592(Entities)(¥ million)

1,500

1,500

12,000* A combined total amount offoreign exchange-related
income, syndicate loans,private placement bonds,
business mediation service,merger and acquisition deals,
business succession
support service andcorporate insurance service

10,000 9,000
customers inthree years

8,000

1,000

742

6,000

3,592

4,000

2,000

1,674

499

500

366

1,918
customers

00
FY2015 FY2016

FY2019(plan)FY2015 FY2016

FY2017(forecast)

FY2019(plan)

30

2. Pursuit of the Four Reforms (2) Sales Reform (iv) Osaka Strategy —Branch Deployment and Allocation of Corporate Resources Raise the Bank’s presence by actively allocating or reallocating our corporate resources, based onbranch continuity

Branch Deployment

Osaka Staffing Plan Esaka Branch,
the 21st branch

Reallocate corporate resources appropriately
 Expand and reallocate staff according to the market

Opened in July 2017

Shin-Osaka Branch
Daito Branch

Amagasaki Branch
Osaka Kita Branch
Osaka Chuo Office
MetricOsaka Pref.

National
ranking

Total population

8,833 thousand persons

3rd

Number of private
enterprises

413 thousand entities

2nd

Balance of deposits¥90.4 trillion

2nd

Balance of loans¥45.1 trillion

2ndOsaka Higashi
Branch<Staffing plan of sales staff>

190(People)Ishikiri Branch

155

161

162

April
2016

April
2017

180

YoshidaBranchOsaka
BranchTezukayama
BranchEiwa
BranchHiranoBranchWakaeiwata
BranchYao Branch

Opened after constructionin July 2017

Sakai Branch
Hatsushiba Branch

Habikino Branch

140
April
2015

March
2020 (plan)

Bolster the Osaka Regional
Headquarters’ Functions
Share information by consolidating corporate
information
Bolster retail customer sales strategy that caters toregional characteristics
Bolster and develop the sales business capacity

Izumi Branch
Kawachinagano Branch

Izumisano BranchUpgrade and expand our corporate
25
and retail transaction platform
31

2. Pursuit of the Four Reforms (2) Sales Reform (iv) Osaka Strategy —Numerical Results and Plans
Numerical Targets in Osaka Area
<Actual and planned number of newly-acquired retailbusiness customers> (cumulative number from FY2015)(Entities)

400.0

3,988

4,000

<Actual and planned balance of retail business loans(average balance)>390.0(¥ billion)¥17.7 billion
transferred to thewholesale side of the
Bank on April 3, 2017

350.0

3,000

328.8

 3,000
customers inthree years

313.4
300.0

2,000

988

1,000

284.7

250.0
590
customers

398
0

200.0
FY2015 FY2016

FY2019(plan)FY2015 FY2016 FY2017(forecast)

FY2019(plan)

32

2. Pursuit of the Four Reforms (2) Sales Reform (v) Market Investment Strategy
 Expand profits by diversifying our investment methods while taking risks appropriately
Investment Policy for FY2017<Target for market-sector core gross business profit> “Portfolio rebalancing” and “diversificationand sophistication of investment techniques”○ Reduce the balance of foreign bonds inconsideration of outlier regulations○ Flexibly manage portfolios with potentiallyrising interest rates in mind (buy and sell)

18.0

17.0

16.9

17.0

FY2015 FY2016 FY2017

FY2019(plan)(plan)(¥ billion)

15.0
14.0

<Balance of securities>
10.0

2,000.0(¥ billion)

1,500.0

1,612.1 1,719.9

1,629.9

19.1
58.9
36.4
301.0

226.2
63.6
66.3

330.6

265.9

73.1
18.0
197.1

123.0
64.4
107.0
322.8

1,540.3

1,000.0

500.0

1,196.4 1,102.5

1,007.7<Bond duration>
Investment
trustsEquities

March 31, March 31, March 31,
2015
2016
2017

6

Eurodenominatedbonds
US dollardenominatedbonds

March 31,2018 (plan)

Total

Foreign bonds

5.3
4.5

3.4
4.2
3.4
3.2 Yen bonds

4.9
4.4
4.2

4.2
3.9
3.8

2

921.4
Yen bonds

0(Years)March 31,2015

March 31,2016

March 31,2017

March 31,2018 (plan)<Sell policy investment-based shareholdings>
Reduce the balance continually each fiscal year33

2. Pursuit of the Four Reforms (2) Sales Reform (vi) Group Strategy
 Grow consolidated profits through delivering comprehensive financial services by tapping into ourGroup’s capabilities
Bolster Our Group’s Capabilities
Banking
operations

Creditguarantee
operations

Lease
operations
 Improve our staff’s ability toform lease transactions

Deliver comprehensive financial services
 Grow consolidated profits

Softwareoperations

Other
operations
 Consider working on new business domains

Increase in capital adequacy of
Nanto Lease Co., Ltd.

<Nanto Lease contract value><Value of Nanto Service Cards used>
Number of card
program members

93

20.0
(Cases)2,700
2,261 11.5
2,019 2,024
10.5
10.0
2,000
Contract
8.1
value
7.3

(¥ billion)

5.0

 Raise usage ratio and hikemembership fees for member
merchants
 Increase the number of corporate
credit card plan members

Results of Nanto Card Services Co., Ltd.

 Value for the increase in capital adequacy: ¥1.0 billion
 All of which was contributed by the Bank

Number of customers

Credit card
operations

1,000
FY2014 FY2015 FY2016 FY2017 (plan)(¥ billion)

16.8

65

Value
of use

101

108
17.8

110
(Thousandsof users)

14.0
11.4

10.0

0
FY2014 FY2015 FY2016 FY2017 (plan)34

2. Pursuit of the Four Reforms (3) Clerical Operations Reform (i) Clerical Operations Strategy
 Fundamentally overhaul the clerical operations of branches and the headquarters, thustransforming the organization into a more efficient one
Rebuilding of Our Clerical Operations Structure
Abolition, simplification, machine usage, labor saving and concentration

Branches

Become a more efficient organization
 Improve productivity<Number of clerical operations staff at branches>

Reduce clerical workload by 30%(People) Consolidate back office clerical operations into theheadquarters
 Revise authority and procedures
 Eliminate pointless administrative duties and reduce
inefficient administrative duties

350

Establish next-generation branches

200 Consider using tablets and increase the number ofseal-free procedures

150

Headquarters
Activities of operations support team
 Currently, back office duties are consolidated at 11 branches Achieve standardization and consolidation at all branches by
the end of FY2017

Conducted an organizational realignment program(April 2017)
 Established a “Branch Strategy Group” in “Sales Support” andan “Administrative Operations Innovation Group” in“Administrative Operations Support”  Build a structure to
vigorously push forward with administrative BPR and IT shift

Consider introducing RPA

349
316

300
250

230

March 31,2016

March 31,2017

March 31,2022
(plan)<Number of “High Counter” Staff Members>(People)

121

100

80

50

Shift to parttimer worker
format0March 31,2016
Total numberof employees

2,669

March 31,2017

March 31,2022
(plan)

2,608

2,300
35

2. Pursuit of the Four Reforms (4) Expenses Reform (i) Expenses Strategy
 Revise expenses as a whole to transform our expenses structure
Transform Our Expenses Structure

Allocate personnel expenses effectively
 Revisions to the personnel affairs and pension
systems are now under consideration<Personnel expenses plan>(¥ billion)

25.5
25.0

22.2
Invest strategically in IT and FinTech

22.6

21.5

20.0

 Make investments to deliver higher customer
convenience and improve the Bank’s productivity
15.0
FY2015 FY2016 FY2017

FY2019(forecast)(plan)

Invest on human resource development
 Make investments toward fostering specialists andimproving skills<Non-personnel expenses plan>(¥ billion)

16.0
Reduce non-personnel expenses
 Continue to rigorously lower non-personnel expenses○ Make sure that employees change their awareness about
expenses by imposing rules on spending○ Headquarters should lead expense saving
 Introduce new power suppliers and reduce internal
network cost

15.7
15.4

15.5

15.0

15.0

14.0

FY2015 FY2016 FY2017

FY2019(forecast)(plan)

36

3. Regional Revitalization (1) Creation of Regional Vitality
 Create regional vitality by playing a leading role in local community, people and job areas
Regional Revitalization Initiative
Conclude a collaboration agreement with municipalities* Results: conclusion with the Nara Prefecture and 18 local municipalities in the prefecture

Get involved in the Japanese government’s Regional Comprehensive
Strategy in an aggressive and proactive manner Analyze the current state and conditions of the region by using the Regional Economy Society
Analyzing System (RESAS)
 Provide hands-on assistance in collaboration with the Kinki Bureau of Economy, Trade and Industry
 Use the regional economy recycling and creation project subsidy (Regional Round Table)

Community
building Participate in community-building projects
 Bolster PPP/PFI initiatives, etc.

Creation of regional vitality
Generate flows ofpeople Tourism promotion, etc.

Create jobs
 Strive to attract companies Strengthen assistance for start-ups and new
business deployment
 Revitalize the forest product business Provide assistance on herbal medicine andagricultural vitalization, etc.

37

3. Regional Revitalization (2) Tourism Promotion and Local Industry AssistanceTourism Promotion
Utilize tourism revitalization fund
 Developed the accommodation and tour environment, tapping into local
resources Carried out investment project 2 (¥20 million, March 2017)* A business to run the first-ever microbrewery and restaurant in Nara City

Stimulate tours and excursions
 Developed a bus tour in collaboration with a major travel agency
 The second tour was conducted from April to June 2017
(in the Yoshino area, etc.)

Promote the utilization of traditional houses
 “The Nanto Using Traditional Houses for Business Loan”
Launched “the Nanto Using Traditional Houses for Business Loan in
Naramachi” (starting from September 2016)
 Business funds to utilize traditional houses, which have high historicvalue
 Conducted a tour of vacant houses and traditional houses in the areaaround the town of Nara (March 2017)
 A matching program for “owners of traditional houses” and “business
operators” in collaboration with the Nara City Government (participatedby 28 professionals from 19 business operators)

The tourism website, run by the Bank, was completely
rebuilt (July 2016)
Hold “Seminars to Create Tourism”(September 2016, January 2017)
 Conducted recently by the joint sponsorship of the Nara Prefectural
Government and with assistance from the Kinki Local Finance Bureau(July 2017)

Increase the number of inbound tourists
Grow tourism-based consumption

Revitalization of Forestry Business
Collaborate with forestry and timber businessassociations
Encourage and publicize the use of
Nara-made forest products
 Engaged in public relations activities at business matching fair
events (January 2017) It promoted the forestry industry by featuring the JWMarriot Hotel Nara (to be opened in spring 2020)* Promoted the use of Nara-made lumber for interiors

Bolster our seminar and training programs Launched a training program designed to revitalize the forestry andtimber industry (January 2017)

Assistance in Pharmaceuticaland Herbal Medicine Sectors
Collaborate with Nara Prefecture and associations
 Organized an opinion exchange meeting with the Nara Prefecture
Pharmaceutical Association (August 2016)
 Began to provide Nara-based pharmaceutical companies with
non-principal repayment loans for up to three years, usable forcapital spending (February 2017)
 Participated in a Nara Prefecture Herbal Medicine Mecca Promotion
Council event
 Engaged in public relations activities at a business matching fair
event

Expand the market for local industries38

4. Upgrading of Management and Controls
 Upgrade our management and controls to firmly support the business model and to obtain evengreater trust from customers
Upgrading of Management and Controls
Bolster our risk control Bolster our market risk control Detect risks for increasingly diverse investment
assets in a more rigorous manner Measure interest risk amounts precisely and perform
interest controls

Bolster internal auditing framework Appointed a director solely in charge of the Audit
Division (June 2017)
 Turned the Audit Division into a unit directly reporting to
the Board of Directors (April 2017)

Practice fiduciary duty Upgrade our credit risk controls
 Began efforts to obtain FIRB approval in July 2016

 Aggressively practice fiduciary duties in order to gain
greater confidence from customers(announced in July 2017)

Build a more solid management and control frameworkthat supports our business model
39

表紙Ⅰ

V. Business Forecasts for FY201740

1. Summary of Profit and Loss, Shareholder Returns
Business Forecasts for FY2017 (Released on May 12, 2017)

FY2015 FY2016

FY2016 FY2017
results forecasts(¥ billion)

Compared to

Y/Y the MediumTermchange Management
Plan

Core net business1 profit

13.7

2

49.6

Interest income

13.5
48.0

-0.2

4

5

Financing cost

3.7

4.0 +0.2

6

Fees andcommissions

5.3

7.2 +1.8

7

Expenses

40.1

40.5 +0.3

8 Net business profit

14.7

15.0 +0.2

32.4
20.3

30.7

(1)

Consolidated
net income¥ billion(2)

Dividend per
share

¥

(3)

Total
dividends¥ billion(4)

Payout ratio((3) / (1))

%

+0.4

-1.6

Interest on
loans
Interest on
securities

3

Shareholder Returns-1.6

20.7 +0.3(5)(6)¥ billion

%

12.1

12.5

(10.7)

*1

70

70

(70)

1.8

1.8

15.4% 15.0%

*2

(1.8)

*2

(17.5%)

0.01－

15.5% 15.1%

－

0.00

*1 Adjusted to post stock-merger standard*2 Does not factor in the capital increase

Promote Dialogue with Shareholders

9 Ordinary income

16.0

14.5

-1.5

+0.4

10 Net income

12.1

10.5

-1.5

+0.5

11 Credit cost (*)

2.9

1.4

-1.5

* (Net transfer to general provision for possible loan losses + Disposal of non-performing loans)– (Bad debt recovered)Amount oftreasury stockacquired
Total ratio ofreturn((3) + (5)) / (1))

FY2017(forecast) Individual shareholders
 Planning to hold a shareholders forum in
September 2017 (the second of its kind following
the one from 2016)

 Institutional investors
 Improve information meetings (twice a year) andindividual investor relations41

2. Transforming Our Earnings Structure and Loans Portfolio
Earnings Structure(Core Gross Business Profit Basis)

Bolster fee
business

Loans Portfolio
(%)

100%
Noninterest
incomeMarketsectorincome

100%

11.7

10.4

28.9

31.7

14.1

20

30.7

30

Deposits/
loans
sectorincome(%)

Expand retailloans

Loans forlocal
governments

Wholesaleloans

Retailbusiness
loans

59.3

57.8

55.1

15

16.9 18.1 17.1

19

23.2 20.5 20.4

33

28.5 29.8 30.5

66%

62%

59%

50
Personalloans

0%31.2 31.4 31.8

33FY2015 FY2016 FY2017(forecast)

FY2019(plan)

0%
FY2015 FY2016 FY2017(forecast)

FY2019(plan)* Non-interest income = Fees and commissions + Other operating income(excluding gains/losses on bonds (JGBs, etc.))42

3. Profit and Loss Plan of the Medium-Term Management Plan
Profit and Loss Plan
<Core gross business profit>

60.0(¥ billion)<Core net business profit>

20.0

57.8

56.5

17.0

(¥ billion)

53.9

12.8

50.0

13.7

10.0

40.0

0
FY2013

FY2016FY2019(plan)FY2013<Expenses>

FY2016FY2019(plan)<Net income>

50.0

20.0

(¥ billion)(¥ billion)

14.5

44.9

12.1
40.1
40.0

39.5

30.0

10.0

8.8

0
FY2013

FY2016FY2019(plan)FY2013

FY2016FY2019(plan)
43

4. Target Metrics
Target Metrics

FY2016
result

FY2017
forecast *Compared to theMedium-Term
Management Plan

FY2019target

OHR

74.45%

74.88%-0.77%

Less than70%

Non-interest
income ratio

10.40%

14.10%+0.12%At least 20%

Capitaladequacy ratio

9.19%

9.00%

-0.04%

Approx. 10%

ROA

0.24%

0.23%

+0.00%At least 0.3%

ROE

4.88%

4.21%

+0.35%At least 5%* Does not factor in the capital increase* Calculation formulae for the metrics• OHR:
Expenses / Core gross business profit• Non-interest income ratio:(Fees and commissions + Other operating income (excluding
gains/losses on bonds (JGBs, etc.)) / Core gross business profit• Capital adequacy ratio:
Core capital / Risk assets• ROA:
Core net business profit / Total assets• ROE:Net income / Net assets

44

In this material, we refer to the future performance of the bank.
However, please be aware that these contents do not guarantee our future
performance and it may change due to the unexpected risks and uncertainties in
the operating environment.

[Contact, if any:]
The NANTO BANK, LTD. Corporate Planning DivisionTEL:0742-27-1552

FAX:

0742-20-3614

E-mail: ir-souki@nantobank.co.jp

URL:

http://www.nantobank.co.jp/

Nanto Bank is a supporter of the Yoshino Heart Project and the Kizukai Drive.