Practice ”Customer First” principle on the initiative of all employees to be the “First Call Bank” for entire local communities.

Overview of Financial Resultsin FY2015- IR Presentation -The Hiroshima Bank, Ltd.

June 1, 2016
President Koji Ikeda

Table of Contents
1. Highlights of FY2015

2

2. Overview of Financial Results in FY2015(1) Summary of business performance in FY2015(2) Net interest income(3) Net fees and commissions income(4) Expenses(5) Balance of loans, deposits, etc. (deposits + NCD)
(6) Loans to SMEs and personal loans(7) Securities(8) Credit costs and non-performing loans(9) Capital adequacy ratio and ROE

3. Progress of “Mid-term Plan 2015– Create the
Future with Local Communities”(1) Strategies in the Mid-term Plan
(2) Enhancement of approaches to the personal market 1

4
5
6
7
8
9
10
11
12

- Promotion of consumer loans -1415(3) Enhancement of approaches to the personal market 2- Promotion of the card business -16(4) Enhancement of approaches to the personal market 3- Expansion of customer base in collaboration with insurance companies -17(5) Enhancement of consulting sales- Promotions of business for elderly clients -18(6) Active efforts for regional development 1- Results of our efforts -19(7) Active efforts for regional development 2- Promotion of feasibility studies -20(8) Active efforts for regional development 3- Revitalization of tourism industry in the Setouchi region -(9) Realization of channel cooperation (Omni-channel retailing)(10) Development of a corporate culture in which a diverse range of people
can play active roles(11) Enhancement of profitability in collaboration with asset managementcompanies- Investment and dispatching of personnel to asset management companies -

21
22
23

24

4. Business Forecasts in FY2016(1) Forecast of business performance and dividend in FY2016

26

1

1. Highlights of FY2015

1

Net income increased for seven consecutive years on a parent company basis, setting
the historical high in three consecutive years on a consolidated basis.

2

Average balance of both loans and deposits, etc. (deposits + NCD) significantly
increased year-on-year.

3

Average balance of focused areas of loans to SMEs and personal loans significantly
increased year-on-year.

4

The non-performing loan ratio improved by 0.51 points year-on-year to 1.37% thanks tosupport for management improvement.

5

ROE, an indicator of management efficiency, reached 7%.

6

Net income increased more than initially expected and the year-end dividend is planned
to be ¥5.5 per share (initial projection + ¥1.0).
2Practice ”Customer First” principle on the initiative of all employees to be the “First Call Bank” for entire local communities.

2. Overview of Financial Results in FY20153

(1) Summary of business performance in FY2015
As for profit and loss in FY2015, ordinary profit increased by 5.4 billion yen (+13.6%) on a year-on-year basis to 45.1
billion yen thanks to an increase in gains on securities and a decrease in credit costs.
Net income was up by 6.1 billion yen (+25.6%) to 30.0 billion yen, and profit attributable to owners of the parent was up
by 4.8 billion yen (+18.0%) to 31.4 billion yen from the year earlier, both recording profit increases in sevenconsecutive years and setting the record high in three consecutive years on a both parent and consolidated basis.
(Billion yen)

Results in
FY2015
Net interest income
Net fees and commissions income

Core gross banking profit

74.7
18.8
93.5

YoY change(Change rate)

-0.8
-1.1

Difference from theannouncement in November

1.6
-1.0
0.6

53.7
39.8

-1.9 ( -1.9% )-0.5-1.4 ( -3.3% )Net income

5.0
1.7
45.1
.
30.0

4.4
-0.9
5.4 ( 13.6% )
6.1 ( 25.6% )

0.0
1.7
-0.9
-1.1

Consolidated net income

47.2

6.9 ( 17.1% )-0.6Profit attributable to owners ofparent31.4

4.8 ( 18.0% )-0.8- Expenses
Ｃ ｏｒｅ ｂａｎｋｉｎｇ ｐｒｏｆｉｔ
Gains/Losses on securities- Credit costs
Ordinary profit

0.5
0.1

4

(2) Net interest income
Net interest income was down by 800 million yen from the previous year, due to a decrease in loan interest, securities
interest, and dividends caused by the lower interest rate environment.
Expansion of loan volume and reductions in high-cost funding mitigated the decrease in income due to lowered interest
rates.

Details of each item in net interest income

Breakdown of net interest income(average balance and interest)
Loans
-0.9

(Billion yen)

Result for
FY2015(Billion yen)

YoY chnage

Interest on loans

63.9

-0.9

Interest and dividends on securities

16.7

-0.6

Averagebalance

Interest

-3.7

+2.8

Deposits + NCD interest (-)

3.8

0

Other interest expenses (-)

2.1

-0.7

Subordinated financing costs (-)

0.4

-0.5

Net interest income

74.7

-0.8

FY201475.5-0.8
FY2015
74.7
Otherinterest
expenses-0.7
Averagebalance-1.3

Average Interest
Interest balance
-0.2
＋0.7
+0.2
Deposits + NCD±0Interest anddividends on
securities-0.6

5

(3) Net fees and commissions income
Net fees and commissions income decreased by 1.1 billion yen on a year-on-year basis due mainly to a decrease incommissions related to sales of investment trusts.
The ratio of non-interest income to core gross banking profit maintained the level of around 30%.

Breakdown of net fees and commissions income

Trend of non-interest income and its ratio to core gross banking profit

500(Billion yen)

3.3

-0.5

Syndicated loans, etc.

1.8

-0.4

31.0%
450 Ratio of non-interest income tocore gross banking profit
30.0%
400
28.6%
29.0%
28.3%
350
28.0%

Sales of derivatives to customers

0.6

-0.2

300
27.0%

Result for
FY2015Investment banking

YoY change

Retail asset management

7.1

-1.0

Insurance products

3.6

-0.3

27.1

250

3.5

3.4

200

6.1

6.7

17.0

17.0

2.4

-0.7

Personal loan-related

-3.5

0.4

-2.0

0.4

Others

11.9

-0.1

50

Net fees and commissions income

18.8

-1.1

0

30.1%
29.5%

28.7
26.6

Investment trusts(Billion yen)

3.8
8.1

27.6
3.3

Investmentbanking

7.1
Retail asset
management

150Group insurance premiums

100
16.8

17.2
Domesticexchange

Core gross banking profit

FY2012FY2013

FY2014FY2015

93.9

94.9

95.4

93.5

6

(4) Expenses
Expenses were down by 500 million yen from the previous year thanks to a decrease in retirement benefit costs and deposit
insurance costs despite increases regarding expenses for the improvement of customer convenience and sales promotion.
Core OHR maintained the level of 50%.

Trend of expenses and core OHR

Breakdown of expenses(Billion yen)

800

63%

(Billion yen)

Non-personnel expenses
Core OHR

700
600

Major factors

58.6%

55.0

57.7%
-0.2

54.8

57.4%

56.8%
-0.6

54.2

-0.5

53%
25.7

25.9

25.4

25.2
Nonpersonnel
-0.2

300

Decrease in deposit insurance premiums: -1.5
Upgrade of personal internet banking and ATMs
(advertisement expenses, etc.): +0.2

53.7

500
400

58%

Change-0.2

Promotion of consumer loans, etc.: +0.2
Pro-forma standard taxation and consumer tax: +0.6

48%

Personnel expenses

Major factors

Change

200
29.3

28.9

28.8

28.5

43%

100

Decrease in retirement befefit costs: -1.0
Pay raise: +0.2

Personnel
-0.3

0

-0.3

Increase in bonuses, etc.: +0.4

38%
FY2012FY2013

FY2014FY2015* Core OHR= Expenses / Core gross banking profit7(5) Balance of loans, deposits, etc. (deposits + NCD)
Average balance of loans significantly increased in business, personal, and local public sectors, up by 217.3 billion yen (+4.4％ yoy).
Average balance of deposits significantly increased in both personal and corporate sectors, up by 347.0 billion yen (+5.3% yoy).

Trend of average balance of loans

Trend of average balance of deposits, etc. (deposits +NCD)+217.3(yoy+4.4%)+347.0(yoy+5.3%)(Billion yen)

6,881.1

5,205.1
4,987.8
4,746.9
4,549.5

520.5

471.3

2,055.0
1,911.2

Corporate
deposits+143.8(yoy +7.5%)

4,295.3

4,457.1

4,021.4

4,157.3

Personal
deposits+161.8(yoy +3.8%)

FY2012FY2013

FY2014FY2015

6,235.8
5,935.0

369.0

316.6

272.7

370.7
1,247.9
1,148.3

327.6

Local publicfinance deposits+41.4(yoy +12.6%)

6,534.1

Loans to local
governments+49.2(yoy+10.4%)420.4

1,305.9(Billion yen)

Personal loans+58.0(yoy+4.6%)

1,198.6

1,761.9
1,640.9

Business loans+110.1(yoy+3.4%)

3,268.6

3,378.7

3,030.5

3,127.9

FY2012FY2013

FY2014FY2015* Loans to local governments include public corporations

8(6) Loans to SMEs and personal loans
The average balance of loans to SMEs and the number of business loan borrowers significantly increased, supported by
active marketing using the area marketing system.
The balance of personal loans significantly increased by 56.5 billion yen (+4.3% yoy) as a result of bank-wide promotions.
Trend of loans to SMEs (average balance) and the number ofbusiness loan borrowers
Number of businessloan borrowers

The number of applications for Flat 35 and theamount of its loans executed in FY2015 ranked top
among all regional financial institutions.

(Number of borrowers)
29,254+666(yoy+ 2.3%)

28,58827,306

Trend of personal loans (average balance including Flat 35)

1,379.9

25,983

26,14625,4201,323.4+563(yoy+2.2%)

24,34023,2281,277.4
1,227.5

Number of retail clients(Less than 1 billion yen sales)+73.0(yoy+3.5%)

March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016+56.5
(yoy+4.3%)

6.4
50.2

6.8
54.1

5.3
58.1

6.5
63.3

Others＋1.2(yoy＋22.6%)
Consumer loans＋5.2(yoy＋9.0%)

342.2

Trend of loans to SMEs (average balance)

289.1

313.0

Real-estate loans＋29.2(yoy＋9.3%)

272.4

Flat 35

79.2

78.8

75.5

73.9

2,172.6

Housing loans

2,099.6＋22.5(yoy＋2.6%)

1,983.9
819.3

1,904.2

848.6

871.5

894.0

(Billion yen)

17,000FY2012FY2013

FY2014-1.6(yoy -2.1%)

FY2015(Billion yen)

FY2012FY2013

FY2014FY20159

(7) Securities
Average balance of securities decreased by 150.5 billion yen on a year-on-year basis due to the restraint in buying low-yield
government bonds reflecting lowered market interest rates.
Bond duration, whether yen bonds or foreign bonds, remained around 4 years.
Balance of cross-shareholdings reduced by 2.6 billion yen on a year-on-year basis through dialogues with issuing entities.

Trend of average balance of securities

Trend of bond duration(Billion yen)

1,886.7

1,905.3

1,962.6
270.9

295.1

298.4

96.6

85.5

79.5
191.0
151.6

229.5

331.6

-150.5(yoy -7.7%)

80.1

Foreign bonds

4.06

1,812.1
276.2(Year)

Others+5.3(yoy+2.0%)
Stocks+0.6(yoy+0.8%)

4.31
3.56

4.00
3.95

3.90
Yen bonds

3.51

3.12

318.4 Foreign bonds
146.7

-13.2
(yoy -4.0%)

141.6

March 31, 2013138.7 Municipal bonds

March 31, 2014

March 31, 2015

82.6
1,145.2

998.7

FY2012FY2013

FY2014(Billion yen)

78.6

1,139.0

FY2015

March 31, 2016

Trend of cross-shareholdings-2.9(yoy -2.0%)

1,152.4(*3.51)* After taking into accountbear type investment trust

Government
bonds-140.3(yoy -12.3%)

78.2

-2.6

75.6

March 31, 2013

March 31, 2014

March 31, 2015

March 31, 201610

(8) Credit costs and non-performing loans
Credit costs remain continuously low as a result of active support for management improvement of clients, including
business revitalization.
NPLs (term-end balance) significantly decreased to 73.5 billion yen on a year-on-year basis, with NPL ratio decreasing to 1.37%.

Trend of credit costs

Trend of NPLs (term-end balance) and NPL ratio
1400(Billion yen)

2.37%

0%

00

0.18%
90

1200

80

0%
1000

112.2
29.9

70
60

0% 800Credit cost ratio

NPL ratio (after partial directamortization)

1.90%

2%

97.7

1.37%

2%

18.8

-24.2

1%

92.8
73.5

34.9

25.1

600
40

0.04%

0.05%

0%

0.03%

30

3%

1.88%

50

8.3

(Billion yen)1%
Sub-standard

0%

65.3
-1%

70.0

400
45.9

-0.9

20
10

2.0

-2%

1.7
0%

FY2013-1%
Doubtful

200

2.6

0
FY201241.5

0%FY2014FY2015

0

17.1

12.0

8.9

7.0

March 31, 2013

March 31, 2014

March 31, 2015

March 31, 2016

Bankrupt, etc.

-2%

11

(9) Capital adequacy ratio and ROE
Consolidated capital adequacy ratio was at a sufficient level of 11.33％.
ROE reached 7%, exceeding 6%, the target of the mid-term plan despite the consistent expansion in net
assets.
Breakdown of consolidated capital adequacy ratio
Basel II

Trend of ROE
4,400

Basel III

6.6%

Consolidated capital
adequacy ratio

3,900

7.1%
6.3%

(Billion yen)

5.4%
11.94%

8%

ROE

6%

3,400

12.06%
11.15%

11.33%

2,900
4%
Net asset

2,400

421.8
1,900
1,400

379.0
312.5

2%

341.4

900

0%

400

March 31, 2013

March 31, 2014

March 31, 2015

March 31, 2016

-100

FY2012FY2013

FY2014FY2015

Net asset＝〔total net asset at the beginning of FY (excluding stock acquisition rights) + total net asset at the end of FY (excluding the same)〕/2

-2%

12

Practice ”Customer First” principle on the initiative of all employees to be the “First Call Bank” for entire local communities.

3. Progress of “Mid-term Plan 2015 –Create the Future with Local Communities”

13(1) Strategies in the Mid-term Plan
Main points in each strategy(i) Enhance approaches to the personal market (Pg. 15-17)(1) Marketing strategy(ii) Enhance consulting sales (Pg. 18)(iii) Active efforts for regional development (Pg.19-21)(iv) Realize channel cooperation (omni-channel retailing) (Pg.22)(2) Human resource
strategy(3) ALM/Securities
strategy(4) Operational
streamlining
strategy(5) IT strategy(i) Nurture human resources that contribute to the development of local communities bycreating and providing new value(ii) Develop a corporate culture in which a diverse range of people can play active roles (Pg. 23)(i) Enhance profitability in collaboration with asset management companies (Pg. 24)(ii) Enhance profitability of the portfolio through proper risk taking(iii) Appropriate and effective practice of ALM(i) Drastic streamlining in preparation for an increase in the amount of activity(ii) Streamline the administrative sector(i) Study next generation systems while enhancing and nurturing IT personnel responsible forthe future(ii) Active utilization of IT to realize various strategies and measures(6) Group strategy(i) Maximize synergy effects by enhancing Group governance(ii) Expand business fields (challenge of new business)

Steady increase of internal reserves throughprofitability enhancement

Enhance the management foundation

14

(2) Enhancement of approaches to the personal market 1- Promotion of consumer loans Achieved an improvement in the loan yield by promoting consumer loans with a relatively high interest rate.
The amount of consumer loans executed increased by 25% on a year-on-year basis, reflecting the intensified PR activities.

Trend of average balance of consumer loans

Trend of the amount of consumer loans executed(Billion yen)(Billion yen)yoy+9.0%

yoy+24.7%

63.3
One-stop shop fordiverse financing
needs in your life

58.1

12.1
Others

54.1

9.7

49.6
Loans forspecified use

6.3

6.6

FY2012FY2013

FY2014Introduction of new products
Card loans

Loans on the website(from April 2016)

Card loans without
a repayment account(from June 2016)

FY2015
PR enhancement
TV commercials

15

(3) Enhancement of approaches to the personal market 2- Promotion of card business In 2015, the bank started handling the first local e-money (cards) “Premium coupons” across prefectures of Japan.
After FY2016, the bank has promoted the expansion of individual customer base by spreading the e-money “HIROCA.”
Outline of local e-money “HIROCA” (from April 11, 2016)

Outline of “e-money premium coupons (cards)”

The spread of local e-moneytype “HIROCA” can attract
deposits into settlement
accounts with our bank andexpand related transactions.

Shops and stores in

Available with about
650 shops and stores

Premium coupon “HIROCA”*

Name

the shopping streets* available as premium coupon (until February 28, 2016)

Pre-paid (charge)
Maximum amount

50,000 yen (per person)

Premium amount

25% of the charged amount  20% by other local governments

Stimulate

Number of applications

103,000

Available amount

4 billion yen

Covering
the entirety ofHiroshima Prefecture

consumption in
local communities
As of March 31, 201616

(4) Enhancement of approaches to the personal market 3- Expansion of customer base in collaboration with insurance companies Through the development of new channels in collaboration with insurance companies in addition to the existing sales channels,
the bank has expanded its customer base, which is indispensable for increasing the balance of personal retail assets.

Trend of end-term balance of personal deposit assets(Billion yen)

+84.2
(yoy+1.6%)

5,347.9
5,263.7
5,110.5
5,002.1

68.2

86.0

156.6

63.8
121.0

56.7
94.1

Promotion of level-premium insurance in collaboration with Aflac and Zurich
Insurance
Established Insurance call center (April 2015)

Collaboration

Collaboration

Foreign bonds andstructured bonds, etc.
Public bonds(government bonds, etc.)

Trend of the number of sales of level-premium insurance

297.2
Investment trust

293.4

170.9
287.0
284.6

Use of direct mail (from September 2014)

The number of our sales in FY2015

408.7
408.6

+13,836(yoy+42.5％)

46,407(for 9 months) ranked third
Insurance(Sales)among first-tier regional banks.

32,571

411.3
402.9

24,562
16,655
4,376.9

4,491.2

4,187.4
4,057.7
personal
deposits* accumulated number of sales

March 31, 2013

March 31, 2013

March 31, 2014

March 31, 2015

March 31, 2016

March 31, 2014

March 31, 2015

March 31, 201617

(5) Enhancement of consulting sales- Promotion of business for the elderly clients Seek to achieve further growth in business for the elderly by providing products that meet their needs as well as identify
underlying needs on a bank-wide basis.
Provide products that meet customer’s needs

Trend of contracts for the elderly (inheritance-related)(Contracts)

First case for aFirst case for a regional bank
Major target customers (in their 80s)

89

82

93

Sep.2014: Launched “<Hirogin> KAZOKUTSUNAGU Trust (Testamentary substitute trust)Jun. 2014: Launched a special money trust with special agreement <Hirogin> Asset Trust

Jan. 2014: Conducted a business tie-up with Yamada Escrow and Trust Co., Ltd.

Sep. 2013: Announced capital participation in Asahi Trust Co. Ltd.

regional bankJan. 2016: Launched calendar year gift trust “〈Hirogin〉 OMOITSUZUKU Trust”

1,008[an exclusive product offered by Private Banking Promoting Office (HQ) ]Property succession
Estate liquidation

Calendar year gift
trust

Apr. 2016: Launched “〈Hirogin〉 OMOITSUZUKU Trust” on a bankwide basis to identify underlying needs

Ｔｅｓｔａｍｅnｔａｒy ｔｒｕｓｔ

Relationship between the number of applications for financial products andthe balance of retail assets at our bank
8.0

The number of applications for financial products by wealthy people with the largest amountof retail assets is relatively small at present.⇒ Enough room to explore underlying needs

5000

4000

323

6.0

4.0

Testamentary
substitute trust

Wealthy prospected customers
with the largest amount ofretail assets
In their 80s

Main prospected customers
for the sales offinancial products
In their 60s to 74

3000

2000

2.0

1000

Average balance of retail asset per person
Number of application for financial products by age group

0.0

0

55‐59

60‐64

65‐69

70‐74

75‐79

80‐84

85‐89

90‐ (age)18

(6) Active efforts for regional development 1- Results of our efforts In FY2015, actively participated in panels of experts conducted by local governments and made proposals andrecommendations for their establishment of “Regional Comprehensive Strategies”
Actively provided solutions to “develop communities, people, and work”
April 2016

April 2015

National
government

Promotion of ”National Comprehensive Strategies (5 years)”

Local publicorganizations

Collaboration with local
governments

Formulate and announce “Regional Comprehensive Strategies (5 years)”

Execution of Regional Comprehensive Strategies

Participated as members in panels of experts of 20 local governments among 24 in Hiroshima prefecture and made proposals and recommendations
Hiroshima Bank Research Institute accepted the establishment of Regional Comprehensive strategies and population vision (Onomichi city and Seracho)
Made comprehensive cooperation agreements with Hiroshima city, Kure city, and Fuchu city (August 2015) Fukuyama city (April 2016)
Started dispatching personnel to Hiroshima city and Fukuyama city (October 2015)

MeasuresNEW

Establish local revitalization support loans
Handle premium coupons (paper-based) (19 local governments)
Handle premium coupons “HIROCA”

Contract an agreement on the Setouchi brand promotion system

Measures
Agreement on support services for elderly people (Fukuyama city, Onomichi city, Kumano-cho, Saka-cho, Sera-cho)
Establish support plan for vacant houses (family loans)
Establish a child-care facility in Hiroshima Prefectural OfficeStrengthen promotion system

Active efforts for feasibility studies to support local companies to growForm Destination Marketing/Management Organizations

Develop ”communities”
and “people”

HiroshimaBank

Develop “work”

Provide start-up support loans

Director responsible for

local revitalization(Director responsible for PublicServices Business Division)

NEW
統括

Staff in charge of local revitalization
責任者(atPublic Services Business Division)

Mission of staff
in charge of local
revitalization(1) Manage progress(2) Create new business models(3) Distribute effective information,
etc.

Child-care support campaign (child-care support loans, time deposit with a preferential interest rate for a new baby)

19(7) Active efforts for regional development 2– Promotion of feasibility studies –Actively provide solutions through business feasibility studies focusing on qualitative analyses.
Both the number and value of loans are on the increase thanks to the creation of trust among customers and the improvement ofconnoisseurship.
<Flow><Qualitative analyses>

Results of business feasibility studies focusing on qualitative analyses

Hearing survey

External environment(competitive environment) analysis

Qualitative aspect

Quantitative aspect
Understand thesituation

Internal environment analysis(No., Billion yen)Creation of

Hearing survey on 25 items<Sales capability>

Feed back to
management

Customer basecapability

Sales capability

138
11.9

<Manufacturing capability>
Products andservices

Manufacturing
capability

Share issues withmanagement〈〉〈of the corporate
group

understanding of
the actual situation

Information storage(shared by HQ and
Branches)

Organizational
management capability

Status diagram

DeeperTechnologicaldevelopment capability<Organizational capability>

Diagram ofthe saleschanneltrust

Number

Bird’s eye view〉〈

Differentiation〉of the businessmodel

from other banks

71

of loans

Promote loans
Provide solutions

Identification ofcustomers’ needs

29

FY2015: Conducted business feasibility studies focusing on
qualitative analyses for 634 customers

1.6

3.0
Further
improvement

Value ofloans
executedof connoisseurship(Mid-term plan ［FY2015 to FY2017］ progress rate: 35% of the target of 1,800 customers)
FY2013

FY2014FY2015(Result for 9 months)

20

(8) Active efforts for regional development 3– Revitalization of tourism industry in the Setouchi region –Aiming at revitalization of the tourism industry in the Setouchi region, public administration, tourism-related business operators and financial
institutions collaborated to establish “Setouchi DMO.”
The Bank cooperated in establishing and investing in “Setouchi Brand Corporation” and “Setouchi Tourism Revitalization Fund,” which
specialize in business support and funds provision for tourism-related business operators.
Trend in the number of foreign tourists in Hiroshima Prefecture and theamount of tourism consumption in seven prefectures in the Setouchi region

Attractive
markets

1,047

843
677

1,254.1487

1,365.3

1,456.4

1,776.7

Trend in the “total” amount of tourism consumption in seven prefectures in
the Setouchi region (billion yen)
(Hiroshima, Okayama, Yamaguchi, Ehime, Tokushima, Kagawa, Hyogo)

1,100

Aiming to increase attractivenessThe number of foreign tourists in
Hiroshima Prefecture (thousands)

Promotion system for Setouchi Brand (Setouchi DMO *1)
Customers

1,000

Promotion

Setouchi DMO

900Government
800(Cabinet office,Japan Tourism
Agency)700

Prefectures

600(7 prefectures in
the Setouchi
region)Collaboration

Setouchi
Tourism
Promotion
Committee *2

Collaboration

SetouchiBrand
Corporation

Financial
institutions
Collaboration(Executive
Office:Hiroshima
Bank)

Management
supportFunds provision

500

Tourism-related business operators

Management support,
funds provision

400

2011
11年

2012
12年

2013
13年

2014
14年

(Source: Tourism Agency, Hiroshima Prefecture The figure of tourism consumption in Hiroshima Prefecture in 2014 is the sum total of announced figureson the website of Hiroshima Prefecture, because of no announcement by Tourism Agency.

*1 An organization mainly seen in USA and Europe that comprehensively implements strategy development, various surveys, marketing, product creation,
promotion, etc.
*2 A general incorporated association whose directors are seven prefectures, represented by a private citizen set up for the purpose of the establishment of the
Setouchi Brand

Our active efforts to revitalize the tourism industry in the Setouchi region

Establishment of Setouchi Brand Corporation (Invested)
Name

Setouchi Brand Corporation (located in Hiroshima Prefecture)

Established

April 2016

Paid-in capital 450 million yen (25 million yen invested by our bank)Investors

Our bank and 18 other financial institutions and 27 business operators

Lines ofbusiness• Business support necessary for commercialization, businessexpansion, and development of new businesses• Funds provision necessary for commercialization and businessgrowth, etc.

Establishment of Setouchi Tourism Revitalization Fund (invested)
Name

Setouchi Tourism Revitalization Investment Limited Partnership(located in Hiroshima Prefecture)

Organized

April 2016

Fund amount

9 billion yen (1 billion yen invested by our bank)

Unlimited partner Setouchi Tourism Partners Co., Ltd.
Limited partners

Our bank, 6 regional banks in the Setouchi region, Development
Bank of Japan, Cool Japan Fund, Inc.

21

(9) Realization of channel cooperation (Omni-channel retailing)
To become a reliable bank for customers, providing any channel that “they want to use” at “any time” and “any place” for their businessand consultation, the Bank promotes to expand points of contact with customers by strengthening cooperation with face-to-face channels(branch network) and non-face-to-face channels (IB, ATM, Call Center, etc.)

Implemented measures
One to one distribution of information on
the website and personal Internet(1)banking(Launched in July 2015)

Enclose individual customers in the middle-mass class throughrealization of “channel cooperation”

Website /Personal IB

ATM
Visit website
IB transactions

One to one distribution of information by(2) ATM

Grasp customers’ needs by CRM at(3) sales branches to use for sales(Launched in July 2015)

Telemarketing leveraging customer(4) response via individual IB/ATM, etc.
(Launched in September 2015)<Measures under consideration>
Enhancement of Call Center• Strengthening of channel cooperation• Strengthening of one to one sales
leveraging points of contact withcustomers
Strengthening of points of contact withcustomers leveraging new channels(SNS, smartphone applications)

Deposits andwithdrawals

Smartphone
applications
SNS

DM / e-Mail

Headquarters

Consultation andtransactions

Communication

Measure(3)
Distribution of
information

Customers

Measure(4)
Approach(Marketing system)

Measure(2)

Measure(1)(Launched in January 2016)＋

Enhancement ofmarketing and mutual
complementation

Approach

Launched in July 2015
Anticipate needs
and distributeinformation

Strategic usage of
information

Sales branch(CRM)
Mutualcomplementationof information

Attribute information(age, sex, etc.)

Transactional information(deposits and withdrawals, card usage, etc.)

Approach
Inquiries

Response

Reply
Transactions
procedures

Toll-free dial
Telemarketing

Telephone banking

Obtain behavior
information

Behavior information(Access history, customer response, etc.)

Call Center

Provide information on products and services that customers expect at the optimal channel timing

22

(10) Development of a corporate culture in which a diverse range of
people can play active roles
As an effort toward diversity, the Bank has actively promoted female workers to managers and supervisory officers.
In addition to active employment of experienced workers, the personnel system was revised to target specialists with expertise.
Trend in number of female managers and supervisory officers

150

Mid-term target(persons)

Number of female
managers and supervisory
officers: 150

Active employment of experienced workers

Fiscal year

No. ofemployees

FY201417 employees

including lawyers, IT personnel

FY201599
80

81

Actively employ experienced experts

15 employees

103

Female supervisory
officers

Revision of the personnel system to target specialists with expertise
Establish S* course (effective from July 2016)

Purpose of
the revision* S means “special”

To stablish career paths where human resources with high expertise
can improve their specialties and demonstrate their abilities.

[S course qualifications]Female managers

Business field

Required qualifications

IT

Successful examinees of Applied Information Technology Engineer Examination

PB

In addition to 1st grade Certified Skilled Worker of Financial Planning, one of thefollowing qualifications is required:
Enhance Registered Real-estate Broker
preparations to Small and Medium Enterprise Management Consultant
receive experts
 Chartered Member of the Securities Analysts Association of Japan

Market-related

Chartered Member of the Securities Analysts Association of Japan

23

(11) Enhancement of profitability in collaboration with asset management companies– Investment and dispatching of personnel to asset management companies –Aiming to maintain enhanced funds management know-how, develop unique products that meet customers’ needs, and develop
personnel in the capital market sector, the Bank invested and dispatched personnel to “All Nippon Asset Management Co., Ltd. (ANAM).”

Decline in yields on funds
management in financial institutions

Easy money flowing into financial andasset markets
Concerns over higher market volatility《Customers》 Aspect of assets management
Declining birth rate and aging population

Lowered market interest rates

Objectives

External environment(background)《Bank》 Aspect of funds management

Increase in safety-oriented customers(senior customers)

Forward-looking market
analysis
Improved importance of
flexible asset allocation

Maintenance of enhanced funds management know-how(Securing stable profits in funds management)

Diversified life plans

Uncertainty for social welfare
Increasing needs for asset formation forlife after retirement

Increasing needs forfinancial products andservices in accordancewith life cycle

Development of unique products that meet customers’ needs

Invested and dispatched personnel to “All Nippon Asset Management Co., Ltd. (ANAM)”
Name

All Nippon Asset Management Co., Ltd. (Location: Tokyo)

Established

December 2015

Investors

Our bank and 6 other regional banks, Tokai-Tokyo FH, Development Bank ofJapan

Paid in capital

1.25 billion yen (0.1 billion yen invested by our Bank)

Lines ofbusiness

Investment management, investment advisory and agency business,
Type II financial instruments business, etc.

Commencement April 2016

Development Bankof Japan
Our Bank and 6 other regional banks
Tokai Tokyo FH

Funds management
Product development
Development of experts

Investment
Personnel dispatch

Investment

All Nippon Asset Management24

Practice ”Customer First” principle on the initiative of all employees to be the “First Call Bank” for entire local communities.

4. Business Forecast in FY201625

(1) Forecast of business performance and dividend in FY2016
Parent net income is expected to be 28.2 billion yen and profit attributable to owners of parent is expected to be 29.2 billion yen.
The dividend this fiscal year is expected to be 10 yen per year in accordance with the Payout Table.

Business forecast in FY2016

Payout Table and estimated dividend in FY2016(Billion yen)

Forecast in
FY2016

Dividend per share
Consolidated net income
attributable to owners of parent

YoY

Net interest income

67.8

-6.9

Net fees and commissions income

19.4

0.6

Core gross banking profit

Consolidated payout ratio(1) Fixed(2) performance based(1) + (2)Over 33 billion yen

6 yen

6 yen

12 yenLess than 22.7%

Over 30 -33 billion yen

6 yen

5 yen

11 yen

20.8% - less than 22.9%

Over 27 - 30 billion yen

6 yen

4 yen

10 yen

20.8% - less than 23.2%

Over 24 - 27 billion yen

6 yen

3 yen

9 yen

20.8% - less than 23.4%

87.2

-6.3

- Expenses

55.9

2.2

Net banking profit

31.3

-8.5

- Gains/losses on securities

11.7

6.7

Over 21 - 24 billion yen

6 yen

2 yen

8 yen

20.8% - less than 23.8%- Credit costs

2.0

0.3

Over 18 - 21 billion yen

6 yen

1 yen

7 yen

20.8% - less than 24.3%

Ordinary profit

40.7

-4.4

18 billion yen and less

6 yen

0 yen

6 yen

20.8% and over

Net income

28.2

-1.8

Consolidated ordinary profit

42.1

-5.1

Profit attributable to owners ofparent

29.2

-2.2

26

Reference for this material

This material contains statements about future business performance.
These statements do not guarantee future business performance and are subject touncertainties.
Please note that actual future business performance may differ from our goals depending
on changes in the business environment and other factors.

Management Planning Division, The Hiroshima Bank, Ltd.
(Persons in charge of IR: Kato and Yashiki)
Phone: 082-504-3823
FAX: 082-504-0171
URL: http://www.hirogin.co.jp/

27