SURUGA bank, Ltd.
Financial Results for FY3/23

May 26, 2023
0

■ Table of contents
I Summary of Financial Results for FY3/23
・Actual Results for FY3/23;Comparison with FY3/22

P.１

・Actual Credit Costs and Disclosed Claims Based on the Financial Reconstruction Law (Non-Consolidated)

P.２

・Outstanding Balance, Yield, and Delinquency Rate by Loan Category <Non-consolidated>

P.３

II Business Performance Plan and Strategy for FY3/24
・Earnings Forecast for FY3/24 <Non-consolidated & Consolidated>

P.４

・Assumptions Underlying Earnings Forecasts for FY3/24< New Loan Assumptions >P.５

・Assumptions Underlying Earnings Forecasts for FY3/23< Reasons for Differences from thePrevious Fiscal Year >P.６

・Situation of Real Estate Market

P.７

・Outlook for New Business Gross Profit: Four Autonomous Profit Centers

P.９

・Community Bank

P.10

・Direct Bank

P.11

・Greater Tokyo/Wide-Area Bank: Housing Loans/Investment Real Estate Loans

P.12

・Market Finance: Structured Finance/Securities Management

P.14

・Status of Single Building Income Loans

P.16

Ⅲ ESG/SDGs
・Environment

P.17

・SocialP.18

・Governance

P.20

Ⅳ TOPICS・Capital and Business Alliance with Credit Saison Co., Ltd.

Reference Materials© 2023SURUGA bank, Ltd. All rights reserved.

P.21

I Summary of Financial Results for FY3/23

II Business Performance Plan and Strategy for FY3/24

Ⅲ ESG/SDGs

Ⅳ TOPICS

■ Actual Results for FY3/23;Comparison with FY3/22••••

Gross operating profit decreased by 21.8 billion yen year-on-year to 43.4 billion yen, mainly due to a decrease in net interest income (4.7 billion yen) and a decrease ingains (losses) on bond transactions (17.3 billion yen).
Net operating profit decreased by 28.9 billion yen year-on-year to 7.2 billion yen, mainly due to a change in the accounting item for gain on reversal of allowance for loan
losses based on accounting standards*.
Actual credit costs decreased 17.2 billion yen year-on-year to -1.1 billion yen (see the bottom-left table for breakdown).
Net income (non-consolidated) increased 1.6 billion yen year-on-year to 9.5 billion yen, mainly due to the above factors.
*If the sum of the provisions of general allowance for loan losses, specific allowance for loan losses, and allowance for specific overseas claims is less than the sum of the reversals of the same, the amount of the provision of each allowance shall be left blank (indicate thisoutside the field) and the difference shall be recorded in "Gain on reversal of allowance for loan losses" under non-recurring income.

<Non-consolidated>(Billions of yen)

Actual resultsfor FY3/22

Year-on-year
resultsfor FY3/23

Factors causing variation in ordinary profit(comparison with previous year)

Year-on-year

Gross operating profit

65.3

43.4

(21.8)

Expenses

39.7

36.2

(3.5)

Core net operating profit

25.0

24.0

(1.0)

Net operating profit

36.1

7.2

(28.9)

Ordinary profit

10.0

11.2

+1.1

Net income

7.8

9.5

+1.6

Actual credit costs

16.0

(1.1)

(17.2)

Main factors
Net interest income

・Decrease in interest on loans and bills discounted(Flat balance factor: -4.6 billion yen, Yield factor: -2.1 billion yen)

Gains/losses on bonds/other・Loss on redemption mainly due to partial cancellation of multi-asset funds: -17.3
billion yen

Expenses・Decrease in property expenses due to progress in structural reforms: -2.6 billion
yen

Gains/losses on stocks/other・Net gains/losses on stock transactions, mainly due to sales of foreign stocks:+2.4 billion yen

Actual credit costs

・Lower expected loss ratio and reduced preventive allowance provisioning (seethe bottom-left table)(Billions of yen)
1.1

17.2

６yen

Dividends per share

９yen

+３yen

PreviousYear
Results
10.0（Billions of yen）

＜Actual Credit Costs for Fiscal 2023＞
Actual credit costs(1.1)
Actual credit costs arising from loans without special
factors(3.4)

Share house-related loans(b)Actual credit costs for share house-related loans(3.8)

Preventive allowances (c)Allowance for: (1) claims for restructuring of loan terms andconditions on a portion of investment real estate loan customers
who have newly suspended repayments triggered byorganizational negotiations, and for (2) claims for restructuringof loan terms and conditions from 3Q for which normalization ofrecovery is unlikely

Normal amount (a)

10.0
(0.1)

+0.2

Actualresults
11.2

(4.7)

０
2.4
3.5

(10.0)(17.3)

6.1

Ordinary profit(FY3/22)

Net
interest
incomeNet fees andcommissions

Gains/losses
on bonds/otherExpenses

Gains/losses
on stocks/otherActualcreditcosts

OthersOrdinary profit(FY3/23)*Figures in the graph above are rounded to the nearest unit and may differ from the figures in the table on the left.

© 2023SURUGA bank, Ltd. All rights reserved.

1

■ Actual Credit Costs and Non-Performing Loans Based on the Financial Reconstruction Law (Non-Consolidated)• Actual credit costs for share house-related loans were -3.8 billion yen, mainly due to the lump-sum transfer of the 4th group of loans implemented in September 2022.
• Actual credit costs for loans other than share house-related loans were 2.6 billion yen, mainly due to an increase in the allowance for loan losses resulting frompreventive allowance provisioning (see bottom-left on the previous page).
• As of March 31, 2023, the ratio of nonperforming claims to disclosed claims under the Financial Reconstruction Law was 10.4%, and the coverage ratio wasapproximately 82% based on collateral, guarantees, etc. and allowance for loan losses.
（Billions of yen）

Actual credit costs (FY3/23)
Actual credit
costs for FY3/23

Item
1H

2H

Allowance for loan
lossesShare house-related loans

(3.2)

(0.5)

(3.8)

13.6

Investment real estate loans*

(2.3)

4.8

2.5

91.0

Housing loans

(0.3)

0.2

(0.1)

2.3

Unsecured loans

(0)

0.1

0

2.8

Monetary claims bought

0

0

0

0.3

Business financing, etc.

0.7

(0.5)

0.2

8.6

(5.2)

4.0

(1.1)

118.9

Total

*Includes studio apartment loans, single building apartment loans, and other secured loans.

・Disclosed Claims under the Financial Reconstruction Law (as of March 31, 2023)
Total coverageamountBalance（Billions of yen）

Coverage amount bycollateral andguarantees, etc.

Allowance forloan losses

Coverage ratio

Claims against bankrupt and substantially bankrupt
obligors

118.8

118.8

44.8

73.9

100%

At-risk claims

48.2

31.9

20.8

11.0

67.5%

Claims for special attention

53.2

29.2

17.1

12.1

54.9%

Total

219.3

180.0

82.8

97.2

82.0%

Ratio of disclosed amount to total credit (non-performing
loan ratio)

10.4%© 2023SURUGA bank, Ltd. All rights reserved.

2

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>• Based on the Mid-Term Business Plan, the yield on loans and bills discounted for the entire region where we are promoting a switch of asset “quality” to middle-riskand middle-return, is 3.38% (total (E)).
• The delinquency rate for personal loans is 6.66% (A), partly since some customers with investment real estate loans have suspended repayment triggered byorganized negotiations. However, excluding these special factors, the delinquency rate is 1.60% (F).
• In order to improve the delinquency rate of investment real estate loans, we are not only supporting repayments by changing conditions, but we are also providing
feedback to customers on information of concerns such as damage and management conditions to real estate found in our own periodic surveys. Our support also
continues to include potentially changing management companies.
(Billions of yen)March 2022

Loan category
Period-end balance

Yield

March 2023
Delinquency rate

Period-end balance

Yield

Delinquency rate

1,693.1

3.09%

7.18%

1,542.6

3.05%

7.02%

Housing loans

457.6

2.79%

0.31%

430.5

2.69%

0.27%

Studio apartment loans

142.3

3.37%

2.64%

120.5

3.33%

2.97%

1,059.6

3.14%

11.05%

959.0

3.14%

10.79%

33.4

4.57%

0.38%

32.4

4.26%

0.34%

Unsecured loans

145.4

10.40%

2.44%

127.8

10.47%

2.36%

Card loans

98.0

11.77%

0.89%

89.0

11.74%

0.88%

Unsecured certificate loans

47.4

7.57%

5.64%

38.7

7.54%

5.77%

1,838.5

3.67%

6.81%

1,670.4

3.62%

6.66%

2.57%

1,569.3

Secured loans

Single building apartment loans (including
share house loans)
Other secured loans

Consumer loans (A)Personal loans (excluding organizational negotiation
partners, etc.) (F)Investment real estate loans for asset

1,733.1

1.60%

33.5

1.81%

－

57.4

1.77%

－

Structured finance, etc. (C)

68.9

2.27%

－

126.4

2.37%

－

Monetary claims bought (D)

59.7

1.89%

－

131.5

2.08%

－

2,000.8

3.54%

6.26%

1,985.8

3.38%

5.60%

management companies (B)Total (E︓A+B+C+D)*Delinquency rate = Loans past due for three months or more / loan balance. *Yield: Yield for customers (excluding guarantee fee and accrued interest), period-end balance basis.
*Yield and delinquency rate of studio apartment loans, secured loans, consumer loans, and the total (A+B+C+D) are calculated based on original claims before securitization.
*As the balance is aggregated by loan type, if borrowers of share house loans or customers participating in collective bargaining default on scheduled repayments, the delinquency rate of other types of loans will be affected.
*"Organizational negotiation partners, etc." refers to loans to borrowers who have submitted a request for suspension of repayments as a result of organizational negotiations (share house-related loans are excluded)© 2023SURUGA bank, Ltd. All rights reserved.

3

I Summary of Financial Results for FY3/23

II Business Performance Plan and Strategy for FY3/24

Ⅲ ESG/SDGs

Ⅳ TOPICS■ Earnings Forecast for FY3/24 <Non-consolidated & Consolidated>•

Gross operating profit is expected to increase by 10.5 billion yen to 54.0 billion yen, reflecting the absence of loss on disposal and loss on redemption of bonds,
despite the decrease in net interest income.
• Core net operating profit is expected to decrease by 6.0 billion yen to 18.0 billion yen, mainly due to a decrease in net interest income.
• Actual credit costs are expected to be 6.5 billion yen for the full year, mainly due to 8.5 billion yen in preventive allowance provisioning.
• Net income is expected to be 8.5 billion yen on both a non-consolidated and consolidated basis.

[Non-consolidated]（Billions of yen）

[Consolidated]
FY3/24 Forecast
FY3/23
results (1)FY3/24 Forecast

Full year(2)

1st halfYear-on-year(2)-(1)Cons-parent
differential

1st half

Full year
(3)

39.0

77.5

+8.5

(3)-(2)

Ordinary income

82.7

35.0

69.0

(13.7)

Gross operating profit

43.4

27.5

54.0

+10.5

Expenses

36.2

18.5

36.0

(0.2)

Core net operating profit

24.0

9.0

18.0

(6.0)

Ordinary profit

11.2

4.5

11.5

+0.2

4.5

12.0

+0.5

Net income

9.5

2.5

8.5

(1.0)

2.5

8.5

±0

Actual credit costs

(1.1)

4.5

6.5

+7.6

Dividends per share

9 yen

7 yen

14 yen*+5 yen*Dividends per share of 14 yen = Interim dividend of 7 yen + Year-end dividend of 7 yen（Billions of yen）

<Premise Behind FY3/24 Actual Credit Cost Forecast>[Normal amount]
Actual credit costs for loans without special factors (including share house-related loans) are expected to be -2.0
billion yen for the full year, taking into account a lower expected loss ratio.
[Preventive allowances]
We plan preventive allowances of 8.5 billion yen for the full year, taking into account additional provisions for
suspension of repayments by some investment real estate loan customers triggered by organized negotiations andfor claims for restructuring of loan terms and conditions from 3Q of the previous fiscal year for which normalization ofrecovery is unlikely.
© 2023SURUGA bank, Ltd. All rights reserved.

1st half
Actual credit costs
Normal amount
Preventive
allowances

Full
year

4.5

6.5

(1.5)

(2.0)

6.0

8.5

4

■ Assumptions Underlying Earnings Forecasts for FY3/24< New Loan Assumptions >• In the fiscal year ended March 2023, we implemented a total of 236.2 billion yen in all business areas we are promoting, up 72.4 billion yen year-on-year.
Of this total, 36.4 billion yen was disbursed by the solution business, 47.6 billion yen was disbursed for investment real estate loans, and 72.1 billion yen was
disbursed in structured finance, while 79.9 billion yen was acquired for monetary claims bought.
• In the fiscal year ending March 2024, we plan for a total of 210.0 billion yen in loans (160.0 billion yen in new loans and 50.0 billion yen acquired for monetaryclaims bought), as we expect solid growth in the retail and solutions business areas (see page 9) and will keep an eye on market conditions in market finance,
which is expected to fall below the previous year's levels.

Forecast of New Loan Disbursements, etc. *•Trends in the amount of disbursement by business area, which was projected to be promoted in the mid-term business plan
Solution business (Housing loans,
unsecured loans, etc.)
Investment real estate
loans

Structured finance（Billions of yen）

Four Autonomous Profit Centers

Claim purchases

240.0

236.2
210.0

500
50.0

Market Finance- Claim purchases -

50.0
500

163.8

60.0
600

Market Finance- Structured finance -

P14

70.0
700

Greater Tokyo/Wide-Area Bank
- Investment real estate loans -P13

Community Bank
Direct BankGreater Tokyo/Wide-Area Bank
- Housing loans -

P10
-12

550
55.0

67.9

60.0
600

45.0
450

FY3/21

FY3/22

FY3/23

FY3/24
Plan

600
60.0

FY3/26
Phase 2 Final Year© 2023SURUGA bank, Ltd. All rights reserved.

５

■ Assumptions Underlying Earnings Forecasts for FY3/24 <Reasons for Differences from the Previous Fiscal Year>•

Core gross operating profit is expected to decrease by 6.2 billion yen year-on-year, reflecting a decrease in net interest income due to a decrease ininterest on loans and bills discounted.
• Gain on securities is expected to increase by 14.4 billion yen year-on-year, reflecting the absence of loss on disposal and loss on redemption of bonds.
• Expenses are expected to decrease by 200 million yen year-on-year as a result of continued efforts to reduce expenses through structural reforms, while
also factoring in investments for growth.
• Actual credit costs are expected to increase by 7.6 billion yen year-on-year, taking into account normal amounts and preventive allowances (see page 4)
as well as the absence of the gain on reversal of allowance for loan losses resulting from the lump-sum transfer of share house claims.

[Earnings Forecast for FY3/24 and Factors for Differences with FY3/23 Results]+14.4（Billions of yen）

(5.0)

(2.6)

Year-on-year
＋0.3
(0.４)

(6.2)

１０.０
FY3/23Results
11.2

FY3/24
Forecast
11.5

０
Ordinary profit(FY3/23)Core net
operating profit

Gain (loss) on
securities(5-item/3-item)

Actual credit costs

Actual credit costs(Normal amount/preventive
allowances)(Lump-sum transfer of sharehouse claims)

Other

Ordinary profit(FY3/24)*Figures in the graph above are rounded to the nearest unit and may differ from the figures in the table on the left.

© 2023SURUGA bank, Ltd. All rights reserved.

６

■ The Real Estate Market's Status
•
•
•
•
•

REIT market capitalization remained steady despite the risk-off trend due to monetary tightening in the U.S. and Europe and the Bank of Japan's expansion of long-term interest rate
volatility.
The logistics area was particularly strong on the back of expanded use of e-commerce (EC) amid the COVID-19 pandemic. Commercial and residential areas also grew compared to prepandemic levels, with a view to the post-COVID world.
Hotels are seeing a gradual inflow of funds as inbound tourism recovers, but there are also signs of weakness in the return of Chinese tourists, and levels are falling below pre-pandemic
levels.
For offices, rents continue to fall and vacancy rates remain high due to factors such as advancement in remote work, and have not yet reached pre-pandemic levels. Plus, a large supply
of office space in central Tokyo is coming in 2023, and its impact must be closely monitored.
For domestic real estate, there is relative attractiveness for investment due to low geopolitical risk and a yield gap maintained by the ongoing monetary easing policy, as well as a sense ofaffordability due to the weak yen. However, interest rate disparities require attention as interest rates in Europe and the U.S. rise.

Housing
住宅

Healthcare
ヘルスケア

Hotels
ホテル

Officeオフィス

Office Market

Unit: yen/tsubo
23,500

REIT Market Capitalization(Jan 6, 2020 = 1)

Commerce
商業

Logistics
物流

Unit: %
13

Average rent - Central Tokyo (Five Wards)

1.8

Vacancy rate - Tokyo

1.6

Vacancy rate - Osaka

10
Vacancy rate - Nagoya

1.4

21,000

1.2
7
1

0.8

18,500
4

0.6

0.4

0.2
20/01

16,000
20/07

21/01

21/07

22/01

22/07

23/01

16/04

1

17/04

Source: Bloomberg© 2023SURUGA bank, Ltd. All rights reserved.

18/04

19/04

20/04

21/04

22/04
Source: Miki Shoji７■ The Real Estate Market's Status•

In the housing market, housing starts overall were generally unchanged year-on-year. The number of new owner-occupied housing starts was sluggish, falling below theprevious year's level in all months due to soaring housing prices and delivery delays of housing equipment, while the number of new rental housing starts exceeded the previous
year's levels in all months. In the condominium market in the Tokyo metropolitan area, the number of contracts for existing condominiums, the number of condominiums sold in
the Tokyo metropolitan area, and the first month contract rate were all stagnant, as prices remained in a high range.
While the current oversupply of imported lumber and other materials has caused the price of laminated lumber for housing to decline, global inflation and a weak yen havecaused material prices in general to continue to rise, trends we will continue to monitor closely.
Our company will carefully assess these market trends and the risks associated with individual projects and promote investment real estate loans, housing loans, and structured
finance.

••

Unit: 1,000 cases

Housing starts by use by year

Owner-occupied house

1,000

Houses for rent

SalaryCondominium

Trends in the number of existing condominiums

Unit: 1,000
cases

Unit: %

(metropolitan area)

50

100
60

800

25

20

600

-20
400

0

-60

200
No.of inventory(area graph)No.of newly registered(ber graph）
No.of contracts(YoY:right axis）

0

FY2017FY2018FY2019FY2020

FY2021

FY2022

Source: Real Estate Information Network for East Japan

Source: Ministry of Land, Infrastructure, Transport and Tourism
Unit: 1,000 cases

8

Number of condominiums soldin Tokyo metropolitan
Number of units sold

Unit: times

1.5

4

1.0

2

0.5

Mar. 2022

Jun. 2022

Sep. 2022

Dec. 2022

Contract rate of condominiums in the first month of sales
in the Tokyo metropolitan area

2.0

6

0

Unit: %
90

(YoY:right axis)

0.0
Mar. 2023

No.of contracts(bar graph)
Inventory(YoY:right axis

Contract rate

Unit: %
40

(YoY:right axis)

80

20

70

0

60

▲20

50
Mar. 2022

Source) Real Estate Economic Institute Co., Ltd.

© 2023SURUGA bank, Ltd. All rights reserved.

Jun. 2022

Sep. 2022

Dec. 2022▲40
Mar. 2023

Source) Real Estate Economic Institute Co., Ltd.

８

■ Outlook for New Business Gross Profit: Four Autonomous Profit Centers•

Reorganized the four business areas in the second phase of our Mid-Term Business Plan into an organization in which each profit center takes theinitiative in promoting its own business.
• Core gross operating profit from the new portfolio areas for promotion is expected to increase by 2.1 billion yen year-on-year to 9.8 billion yen.
• In particular, the retail and solutions business is expected to increase 1.5 billion yen year-on-year to 3.9 billion yen (66% growth).
• Core gross operating income from old portfolio areas is expected to decrease by 8.2 billion yen year-on-year to 44.2 billion yen, mainly due todecreasing balances.
New Business Gross Profit(Core Gross Operating Profit, New Portfolio)

Four Autonomous Profit Centers(Billions of yen)

01

02

3/23
Results

3/24
Outlook

ChangeCommunity Bank1

Direct Bank

Retail/Solution Businesses

2.3

3.9

+1.5

Shizuoka, Kanagawa

Nationwide business utilizing digitaltechnologies

Solution Business1

0.8

1.5

+0.6

Investment real estate loans

1.5

2.4

+0.8

5.4

5.9

+0.5

Structured finance

2.3

3.5

+1.2

Market operations, etc.2

3.0

2.3

(0.6)

New Portfolio Total

7.7

9.8

+2.1

Old Portfolio

52.4

44.2

(8.2)

Mission in the four business areasfor growth of the new portfolio

03
Greater Tokyo/WideArea Bank2

04
Market FinanceMarket FinanceGreater Tokyo area and major
Japanese cities
1Community Bank: Sales organization including sales offices in the Shizuoka area
1Solution Business includes asset consulting, housing loans, unsecured loans, etc.

(58 branches) and Kanagawa area (35 branches)
2Greater Tokyo/Wide-Area Bank: Sales organizations including sales offices andpromotion departments in the five major metropolitan areas (Greater Tokyo
area [5 branches + 3 departments] and other metropolitan areas [4 branches])(Number of branches is as of March 31, 2023)

2Market operations, etc. includes claim purchases

 New Portfolio: Revenue from goods and services issued on or after April 2020
 Old Portfolio: Revenue from goods and services contracted on or before March 2020

© 2023SURUGA bank, Ltd. All rights reserved.

9■ Community Bank
• To establish account-based sales in the personal solution business while promoting human resource development to become a lifelong partner building highquality, long-term relationships and keeping close connections with customers. In the corporate solution business, the Group will continue to focus on
business matching to help local companies solve their management issues and revitalize the local community by leveraging partnerships with the Suruga
Bank Group, partner companies, experts, and other organizations.
• For each area, we will verify profitability commensurate with regional characteristics and fulfill the profit center role.

Personal Solutions

Corporate Solutions

Direction

Providing solutions beyond overall management

First Pillar

Second Pillar

Third Pillar

Expanding sharewith customers

Securing originality
for target segments

Creating contact
points, mainly
outboundShifting to account sales

Strengthening targeting andproposal capabilities basedon area characteristics

・Enhancing loan officers
・Enhancing financial
advisors (FAs) Hundred Customer Program
We aim to increase our market share among customers,
which is the first pillar of our business, and to build long-term
relationships with customers in order to increase customer loyalty
and become a lifelong partner maintaining close connections withcustomers. To this end, FAs and FACs in each area will be assigned
to 100 customers under the "Hundred Customer Program" to deepen
their understanding of each customer's "AID" and make optimal
proposals to resolve them.
Understanding "AID"・Communication sheets
・Utilizing CRM
Eliminating "AID",
making optimal proposals

PA
Customers

FAs/FACsC

Financial Business financing with appropriate assessment
 Utilizing public institutional loans such as SDGs
guarantees
 Improving cash flow through factoring and leasing, etc.

Management
support Internet banking and other fund management services
 Cashless payment support
 Streamlining settlement operations with business cards,
etc.

Continuation
management

 Business succession, M&A
 Matching for human resources support anddevelopment Support for non-Japanese customers, etc.

 New Solutions via Partner Companies
Support for
SDG initiatives

Mitsui Sumitomo Insurance Company, Limited and MS&AD InterRisk
Research & Consulting, Inc. have started offering the "Suruga SDGs
Initiatives Support Service" for corporate and sole proprietor customers.

In December 2022, we began referrals of health promotion-

Health support related services provided by Meiji Yasuda Life Insurance
Company to our business partners.

Environment

D

In March 2023, we began referrals for our corporate and sole
proprietor customers to e-dash Co., Ltd., which provides a
CO2 emissions visualization and reduction service platform.

Proposal process© 2023SURUGA bank, Ltd. All rights reserved.

10

■ Direct Bank
• We will continue to strengthen expansion of web-based transactions, mainly through smart accounts, in order to expand the customer base. We provide
accounts usable for a wide range of transactions through returning value to customers and cross-selling proposals for bank transfer/balance charging/othertransactions.
• We will continue to strengthen our product design and promotion strategy to match various categories such as use of funds (auto/education/dental) and FI
target segments (non-Japanese).

Direct Bank Strategy

Number of Direct Bank Accounts Opened Over Timetransactions

accounts

Targeting

Unique Suruga Value Provided

Customers who have trouble accessing
finance or want to improve their wellbeing

Product lineup

Non-Japanese
residents

ElderlyYoungcustomers

Well-beingconscious
customers

etc.

Business Areas• Smart accounts• musu-bi• Accounts exclusively for non-Japanesecustomers without permanent residency• Auto loans for non-Japanese customers, etc.
Loans by purpose• Auto loans, educational loans, bridal loans• Dental loans, animal healthcare loans• Road bike purchase loans, golfer's loans
Musical instrument/audio equipment purchaseloans, etc.

18,000(Left axis) Number of cumulative direct bank accounts opened over time

16,000(Right axis) Number of smart account transfers and balance charges

14,00012,00010,000
8,000
6,000
4,000
2,000
0

Our strengths

Enhancing customer contact points throughthe use of digital technology, including
collaboration with companies in otherindustries

240,000
200,000
160,000
120,000
80,00040,0000*Cumulative number of main Internet branch accounts within the direct bank opened since April 2022

Smart account key points(Main branches)

11 branches

ANA Branch
Recruit Branch
T Point Branch
D Bank BranchDream Direct
Branch

CRM specialized for retail

Diverse communication
methodsMarketingUtilizing digital solutionsCan complete application on a cellphone/non-face-to-face in Japan, wheremore than 90% of cellphones are now smartphones
Addressing demand for payment-only accounts as cashless payments
become increasingly popular
Providing Suruga-unique return benefits for QR payment balance charging,etc.
Streamlining and tightening identity verification operations by utilizing eKYC
Transaction statement confirmation and other banking transactions provided
via mobile app© 2023SURUGA bank, Ltd. All rights reserved.

11

■ Greater Tokyo/Wide-Area Bank: Housing Loans• Due in part to growing needs for non-face-to-face interaction, the number of web-based housing loan applications increased by 130% year-on-year.
• By determining the characteristics of each area and providing products that meet the needs of key targets (high-income earners, business owners, nonJapanese residents, those changing residences, and those living in two locations), we aim to build long-term relationships originating in homes and toprovide personalized financial solutions.

Housing Loan Strategy

TargetingShare by number of loans

One to One Support

Targeting according to area
characteristics

Business owners

Consulting tailoredto each customer

High-income
earners

Change ofresidence

Business owners

Cross-regional
residents

Non-Japanese
residents

Share of Housing Loan by Customer Segment

Non-Japanese residents

27%

27%

Senior citizens (Age 50+)

29%

Dialogueetc.
Proposals

Understandingneeds*Segment selection period: April 1, 2022 to March 31, 2023

Business Areas
Nationwide business through a network oflocations across five major metropolitan
areas and direct services●

Direct housing
loan center＋9 locations

Exploring issues

Number of Web Applications
Credit expertise
Credit decisions based on longcultivated data and expertise+130%

Product lineup
●

●

●
●
●
●●

Full lineup from 0.5% to 3%●

FY3/22© 2023SURUGA bank, Ltd. All rights reserved.

FY3/2312

■ Greater Tokyo/Wide-Area Bank: Investment Real Estate Loans• In investment real estate loans, we expect to execute 60 billion yen in new loans in organic and inorganic areas in the fiscal year ending March 2024.
• We will continue to enhance our presence in the real estate market through product development and revisions and sales activities that meet theneeds of our customers and the market.
Share of Investment Real Estate Loans by Customer Segment(By Amount Disbursed)

Investment Real Estate Loan Strategy*Segment selection period: April 1, 2022 to March 31, 2023

Organic
areas• Polished, professional sales structure with a dedicated team• Flexible product development capabilities tailored to diverse
needs and property locations• Tailor-made support cultivated in the housing loan businessInorganicareas• Alliances through deepening transactions with partner companies• Expanding transaction volume through stronger relationships withpartner companies• Expanding scope by developing new partner companies• Providing optimal services based on a customer-oriented
approach• Proprietary screening system combining factors such as asset
background, property value, etc.
• Upgrading talent capabilities to improve solution skills

Unique value
proposition

By amount
Masssegment

By number of loans

Approx.
61%

Upper mass

Mass segment

Number of Web Applications+20%

Inorganic+10%
FY3/22

Emerging affluent

Emerging
affluent
28%

Reference: Segments are based on NRI research and classified by financial
assets held at the time of the research

Ratio of inorganic loans increased due to deepening relationships
with real estate partners

Organic

Upper mass

Emerging
affluent
25%

Loan Results by Promotion StructureSuper
affluent/affluent
24%
Approx.
52%

Upper mass

Super affluent/affluent

InorganicMasssegmentSuperaffluent/affluent
36%

Organic

FY3/23© 2023SURUGA bank, Ltd. All rights reserved.

FY3/22

FY3/2313

■ Market Finance: Structured Finance• In structured finance, we expect to execute 55 billion yen in new disbursements in the fiscal year ending March 2024.
• We will continue to carefully select high quality claims with controlled risk, paying attention to changes in the market environment, while
being conscious of overall portfolio diversification through diversification of asset class, position, location, etc.
Balance Composition by Category (as of March 31, 2023)

Disbursement Amount/Balance/Yield Over Time

Disbursement(Billions of yen)

Balance

Yield

1,500

21%

3.0%

Offices

44%

126.4
1,264

Residential
Logistics

1,200

2.28%

2.27%

2.37%

2.5%

24%

Renewables

6%4%

900

600

300

Non-RE (LBOs, etc.)

1%

689
68.9

721
72.1

2.0%

Composition by Property Region (as of March 31, 2023)*Total for real estate loans only

492
49.2
303
30.3

Business Use

7%

33.5
335

1.5%

2%

11%
Greater Tokyo area
Shizuoka/Kanagawa

14%
0

1.0%
FY3/21

FY3/22

3/202366%

Kansai area
Chubu area
Other

© 2023SURUGA bank, Ltd. All rights reserved.

14

■ Market Finance: Securities Management• In order to restructure our securities portfolio, a portion of multi-asset funds and bonds, which had been carrying valuation losses, were sold in the previous
fiscal year to reduce the balance. As a result, the valuation loss, which was 20 billion yen at Dec. 31, 2022, was reduced to 1.2 billion yen at Mar. 31, 2023.
In addition, we are maintaining a risk-controlled multi-asset fund portfolio.
• Aiming to build a more stable profit structure, we intend to progressively build a portfolio centered on yen bonds, taking into account the market
environment.

Securities portfolio

Unrealized gains (losses) on securities
・Valuation difference on available-for-sale securities

National
Government
bonds

Domestic
stocksMar.31 2022

Other

Multi-asset funds

290.2

119.5
12.2

137.7
22.2

6.7

Fair
value

Net
unrealized
gains(losses)

Fair
value

Net
unrealized
gains(losses)

Other securities

454.2

(1.4)

446.2

(20.0)

292.0

(1.2)

Shares

15.8

7.5

15.6

7.6

15.5

7.7

Bonds

143.5

(0.3)

187.0

(3.9)

154.7

(0.3)

Multi-asset fund

290.2

(9.7)

241.6

(23.3)

120.3

(8.6)

4.5

1.0

1.9

(0.4)

1.3

(0)

Other

・Multi-asset fund investment asset classes
As of Mar. 31, 2022

120.3
4.7

8.4
23.9

As of Mar. 31, 2023
Foreign
Domestic

23.6

Domestic

ForeignstocksstocksstocksstocksJapanese

25.0

government

119.0

143.5

154.7

103.1
FY3/20Net
unrealized
gains(losses)

303.5

270.4

Mar.31 2023

Fair
value

(Billions of yen)
466.2

Dec.31 2022

(Billions of yen)

FY3/21

FY3/22

FY3/23

Fair value bonds, etc
209.2 billion
yen

Fair value
120.3 billion
yen

Advanced countries’

Advanced countries’

government bonds, etc.

government bonds, etc.

© 2023SURUGA bank, Ltd. All rights reserved.

Japanesegovernment
bonds, etc.

15

■Status of Single Building Apartment Loans• Due to strict self-assessment based on the changes in the self-assessment standards1 in September 2018, non-delinquent loans of approximately 500 billion yen wereclassified as loans requiring special attention.
• Of loans requiring special attention, as of the end of March 2023, most loans were not delinquent.
• In fiscal 2022, we made regular examination of about 8,500 of single building income loan properties, confirming an 87.6% occupancy rate. We will provide our uniquesupport for property management, such as reporting to customers on the property management status, etc. identified in the survey, and referrals to specialists, withthe aim of maintaining or increasing the debtor's ranking in the borrower category.

Loan balance of single building apartment loans by classification of borrowers anddelinquency status (as of March 31, 2023)

Occupancy rate of single building
apartments (periodic survey)(Billions of yen)Occupancy rate in fiscal 2022: 87.6%
Borrower classification(Survey results for occupancy rate in fiscal 2021: 87.4%)
Credit claims such asloans *2

Balance of single
building apartment
loans

1,250.5

249.1

249.1

Clients at high risk of bankruptcy

608.8
65.4
47.2

512.4
55.4
32.5

509.0
53.7
30.2

Virtual bankruptcy
clients/bankruptcy

118.8

108.6

4.3

2,090.7

958.2

846.5

Normal clients
Clients requiring special attention＊1

Clients requiring corrective action

Total

Survey content:• Covers customer properties with a single building income
loan balance of 50 million yen or more
(Approx. 8,500 properties, 90% of total outstanding balance)• Fundamental procedure is for our staff to visit the subject
property to check not only occupancy status, but also for any
property damages and management status• For any discovery of property damage, abnormality inproperty management, etc.,
information is shared with customers and we consult withthem on how to respondNot delinquent＊1 Loans are classified as requiring special attention if tax return documents are not received or the loan property has negative cash flow even if not delinquent.
＊2 Credit claims such as loans: Loans and bills discounted, customers’ liabilities for acceptances and guarantees, foreign exchanges, securities lent, suspense
payments equivalent to loans and bills discounted, accrued interest on loans and bills discounted

Disclosed Claims Under the Financial Reconstruction Law and
Coverage Status (as of March 31, 2023)
Disclosed claims under the
Financial Reconstruction Act(A)(Billions of yen)
Coverage ratio

Appraised collateral value*3(B)

Allowances/guarantees (C)Coverage ratio(B+C)/A

Organizational negotiation
partners

89.4

34.5

53.9

98.9%

Non-organizational
negotiation partners*4

102.6

39.4

30.3

68.0%

*3Normally, 90% of the total valuation method amount is used for collateral valuation of loans and other credit-related claims, but figures here use 100% of the total valuation method amount.
Note that in the past, the ratio of the amount of claims transferred to the collateral valuation for income-producing properties for investment real estate loan financing has exceeded 200%.
*4"Non-organizational negotiation partners" shows the total for single building income loans© 2023SURUGA bank, Ltd. All rights reserved.

16

I Summary of Financial Results for FY3/23

II Business Performance Plan and Strategy for FY3/24

Ⅲ ESG/SDGs

Ⅳ TOPICS

■ SDGs/ESG initiatives: Environment• Through the introduction of CO2-free electricity and the promotion of eco-offices, we aim to realize a decarbonized society.

■Conversion of Shimizu Branch into an eco-officeContribution to environmental preservation- Suruga Group's Materiality■Introduction of CO2-free electricity
We have newly introduced electricity with zero CO2 emissions for use inbranches and other locations within the Tokyo Electric service area. As of May
2023, we have introduced three types of CO2-free electricity and expect toreduce annual CO2 emissions by about 2,500 tons.
*Electricity with zero CO2 emissions produced in Shizuoka Prefecture and provided
by Chubu Electric Power Miraiz Co., Inc.

In April 2023, the Shimizu Branch reopened as an eco-office. We also
used carbon offsets with its building materials, which in conjunction withenvironmentally friendly facilities such as the use of eco-glass and LED
lighting have achieved the CASBEE Shizuoka A rank.
We will continue to install environmentally friendly equipment during store
reopenings to contribute to environmental preservation.
* CASBEE (Comprehensive Assessment System for Built Environment Efficiency): A method toevaluate the environmental performance of buildings and the various environmental impacts
generated by construction, maintenance, management, etc. from a multifaceted and objective
perspective. CASBEE Shizuoka takes into account the regional characteristics of Shizuoka
Prefecture and related systems. In this system, the A rank is the second highest rating following the
S rank.

Shizuoka Green Electricity*

Kanagawa
Area
11 facilities

Central/Western
Shizuoka Area
10 facilities

Eastern
Shizuoka Area15
facilities

Exterior: Eco-glass

Carbon offset product shipping certificate

Green Basic Plan*
Uchicchi Electricity**Effectively CO2-free menu that utilizes environmental
value derived from renewable energy power plants
provided by TEPCO Energy Partner, Inc.

*Effectively CO2-free menu that utilizes environmental value derived fromhydroelectric power plants in Shizuoka Prefecture provided by TEPCO Energy
Partner, Inc.

Interior: LED lighting and ceiling fans
© 2023SURUGA bank, Ltd. All rights reserved.

17

■ SDGs/ESG initiatives: Social• In Phase 2 of the Mid-Term Business Plan, we are organizing management issues from the perspective of human capital and engaging in measures withthree focuses contributing to sustainable corporate value enhancement.
• We are taking various measures aimed at improving employee engagement, empowering employees over 55 years old, and recruiting human resources withdiverse values.

Creating an environment where employees can thrive and grow Suruga Group's Materiality

 Introducing a share remuneration plan for executives•■ Human capital•

Basic Policies in Phase 2 of the Mid-Term Business Plan (Vectors with Employees)

In Phase 2 of our Mid-Term Business Plan, we will continue to regard our
employees as valued assets and invest more than ever in human capital.

 Introducing a Meister System to support
the activities of veteran employees•

Three Focuses of Measures for Sustainable Corporate Value Enhancement••

Changes in roles required of
employees•••

Raising motivation/awareness of all
employees and expanding their circle ofactivity
Diversifying work styles and options
Support options for reskilling
Visualizing career paths••

Career support encouraging talentdevelopment in specialized fields
Remuneration in consideration of thetalent market

•

•
•
•

Providing a forum to expand scope ofthought/discussion
Rewards for enhancing corporate value
Rewards for taking on challenges

Preferential treatment to former employees who left due tomarriage/childcare/nursing care/etc. in mid-career hiring selection process
Aiming to hire talent with diverse values

 Preferential treatment encouraging
new graduate candidates declining
our offer to change jobs•

Taking on the challenge ofdifferentiation

Introduced with the aim of strategically allocating
human resources and motivating veteranemployees over 55 years old
Employees with sufficient skills and experience intheir respective fields are recognized as Meisters
and paid according to the salary scale applicablefor employees 54 or younger

 Introducing rehiring program for preferential treatment offormer employees in mid-career hiring•

Expanding specializedbusiness areas

Introduced to increase employee engagement, share interests with shareholders,
and raise awareness of the need to contribute to increasing corporate value from along-term perspective
Already introduced for directors/executive officers and expanding the scope toinclude senior management, consisting of heads of sales offices and divisions, etc.

•

Introduced with the aim of expanding therecruitment of human resources with knowledge
and experience in other industries and companies,
as well as new ideas not found among our
employees
Preferential treatment for new graduates who
declined our job offer if they wish to be considered
for mid-career recruitment within 3 years ofgraduation. Candidates are fast-tracked to thefinal interview© 2023SURUGA bank, Ltd. All rights reserved.

18

■ SDGs/ESG initiatives: Social• Through the Partnership Agreement on Bicycle Promotion with municipalities and companies, we will contribute to building a foundation for further
regional cooperation.
Building Sustainable Local Economies and Societies- The Suruga Group's Materiality■Suruga Bank Cycling Project
The Suruga Bank Cycling Project aims to create new tourism value by promoting
cycle tourism in coordination with local tourism resources, and supports the local
service and tourism industries by providing detailed tourism information that takes
advantage of the mobility of bicycles.

 Agreement signed with Minamiizu Town, Shizuoka Prefecture
We held events connecting the KANO BASE Cycle Station* and Minamiizu Town topropose new cycling options to people. In addition, we are promoting the town
through various themed cycling courses, with a focus on the Geopark and otherunexplored tourist spots, using social media for messaging.
*An activity base for cycling promotion in the Izu Peninsula, established by Suruga Bank in Izu City in
September 2021.

Collaborating with municipalities/companies
In the second half of fiscal 2022, we signed the Partnership Agreements on Bicycle
Promotion with three new municipalities/companies.

 Signed agreement with Tokyu Hotels Co., Ltd.

Cycling event: JU-ZA Minamiizu RIDE

Working with Tokyu Hotels, which owns several facilities highly-suited to cycling, toincrease the number of people interacting with the city through cycling. A cycling
event to journey around Izu Peninsula and city promotions to communicate theregion's attractions are planned. Tokyu Hotels will also continue to enhanceservices for cyclists at the hotels it manages.

City Promotion: Minamiizu㊙Puttering Signed agreement with Fujieda City, Shizuoka Prefecture
We will work on three agreed projects in cooperation with Fujieda City, which promotes theuse of bicycles as secondary transportation and a share cycle service.
(1) Conduct city promotions to disseminate information on Fujieda City's tourism resources(2) Organize cycling events to promote Fujieda City's cycling environment(3) Formulate a model cycling course for Fujieda City

City Promotion: Tokyu Hotel bicycle travel
Cycling Event: Tour de SURUGA Fujieda Stage, 100 km© 2023SURUGA bank, Ltd. All rights reserved.

City Promotion: Edapota

19

■ SDGs/ESG initiatives: Governance• In fiscal 2023, we will add two new outside directors (including one independent outside director) to our governance structure, aiming for a high level of transparency
and further improvement of governance.
• The Sustainability Promotion Committee was established with the aim of realizing sustainable, long-term value creation through the promotion of the retail andsolutions businesses.

Establishment of a Solid Governance Foundation- The Suruga Group's Materiality■Composition of Directors

8％(1 of 12)■Basic Philosophy of Corporate GovernanceIn order to realize our corporate philosophy, “I’m glad you’re here... I’m glad wemet...,” we have established and put into practice a Compliance Charter as astandard of conduct for our officers and employees. By putting this into practice, we
strive to achieve thorough compliance and customer-oriented business operations,foster a sound organizational climate and corporate culture, and enhance ourcorporate value.

■Corporate Governance Structure Chart
General Meeting of
Shareholders
Audit Committee

Board of Directors

Independent membersof the Board of Directors
5 of 12Nomination andCompensation Committee

Compliance Committee
Internal Audit
Department

President

Corporate Philosophy
Promotion Committee

Business Execution
Committee*This is based on the management structure to be proposedat the 212th Annual General Meeting of Shareholders.

Sustainability
Promotion Committee
Each Risk Committee*

41%(5 of 12)

Ratio of independent
outside directors

Ratio of female directors■Compensation for directors
 Introduction of post-issuancestock compensation system

Basic composition

In 2020, we introduced a post-issuance stockcompensation plan for directors (excluding outside
directors and Audit Committee members) to clarify
the connection between their compensation and theCompany's performance and stock value, and toraise their awareness of the need to contribute toimproving the company's performance andincreasing its corporate value over the medium tolong term.

[Standard model]

Stock
Compensation
20%
Bonus
20%

Base
Compensation
60%

From the viewpoint of preventing excessive risk-taking and appropriately supervising directors,
compensation for outside directors and Audit Committee members is not linked to businessperformance, and consists only of base compensation.

[Forfeiture of stock compensation (Clawback and Malus clauses)]
Each Department (11 Divisions)Internal
Directors

OutsideDirectors

OutsideDirector/Chairperson/Chairman

We have established clauses (Clawback and Malus clauses) in our stock issuance rules that
require forfeiture of all or part of the stock compensation in order to curb excessive risk-taking,ensure sound management, and prevent serious misconduct such as accounting fraud or largescalecorrection of past fiscal years' financial results.

Sustainability Promotion System

Each Risk Committee*

ALM Committee

Credit Risk Committee

Integrated Risk
Management Committee

Business Risk
Committee

Supervision

Board ofDirectors

System Risk Committee© 2023SURUGA bank, Ltd. All rights reserved.

Reporting*See also: Announcement Regarding the Establishment of
the Sustainability Promotion Committee (March 17, 2023)

Sustainability
Promotion
Committee

P

A
C

D

Sustainability
PromotionCouncil20

I Summary of Financial Results for FY3/23

II Business Performance Plan and Strategy for FY3/24

Ⅲ ESG/SDGs

Ⅳ TOPICS■ Capital and Business Alliance with Credit Saison Co., Ltd.
Mutual Vision

Through full use of the retail expertise of both companies and seamless collaboration, creating a"Neo Finance Solution Company" transcending conventional financial institution archetypes andstarting from resolution of troubles and other "AID."

Consumer

Consumer● Card loans● Loans by purpose● Housing loans● Investment real estate loans● Mutual funds● Testamentary trusts● Insurance● Business for non-Japanese customers

Regional Bank

Neo
Finance
Solution
Company

Non-Bank

Corporate● Credit cards● Flat 35 loans● Asset-building loans● Renovation loans● Real estate-secured loans● Banking agency business● Sales of real estate trust beneficiary interests● Guarantees (rent/security deposits/housing
loans/etc.)

Corporate● Corporate cards● Real estate-secured loans● Loan for condominium management
associations● Medical fee factoring● Structured finance● Leasing● Business loans● Business matching (support for
management issues, etc.)● Advisory services(Business succession/M&A support)● Structured finance

New Customers

Overview of the Capital and Business Alliance
1. Capital Alliance Details(1) Suruga Bank acquires Credit Saison shares: 8,224,700 shares of common stock (5.0% of voting rights) for approximately 15.5 billion yen(2) Credit Saison acquires Suruga Bank shares: 35,089,000 shares of common stock (15.72% of voting rights) for approximately 17.1 billion yen
In both *(1) and (2), each party allots common shares to the counterparty by way of treasury stock disposal via third-party allotment, and the counterparty acquires such shares.

2. Business Alliance Details
Implementing the following:(1) Establishment of Saison Branch and acquisition of bank agency business by Credit Saison; (2) Joint commercialization of Saison Platinum Business Card; (3) Collaboration in housing loan business;(4) Joint development of real estate finance
The two companies will also consider collaboration in areas other than those mentioned above.
3. Mutual Director Dispatch
In order to further deepen the cooperation between the two companies and strengthen their respective governance systems, each company may nominate one candidate for outside director of the othercompany.
Requirements for Agreement Effectiveness:(1) A proposal to elect the director candidate recommended by the counterparty as a director is approved at the ordinary general meetings of shareholders of both companies to be held in June 2023
(2) Credit Saison obtains approval as a major bank shareholder in accordance with Article 52-9(1) of the Banking Act(3) The Securities Registration Statement based on the Financial Instruments and Exchange Act for the disposal of common stock of both companies becomes effective, and the necessary permissions and approvals,
etc. from the relevant authorities are obtained for carrying out the disposal of treasury stock© 2023SURUGA bank, Ltd. All rights reserved.

21

■ Current Areas of Business Partnership Suruga Bank establishes the Saison Branch andCredit Saison acquires banking agency business Joint commercialization of the Saison Platinum
American Express® Card

Suruga Bank establishes an Internet-only branch (tentative
name: Saison Branch) for Credit Saison's Saison members,offering products and services unique to the branch jointly
developed by the two companies. (Specific details to be
discussed by both companies) Providing the Saison Platinum Business American
Express® Card issued by Credit Saison, allowing
Suruga Bank's affluent customers and SME owners
to enjoy the special benefits of various
supplementary privileges in addition to thebusiness benefits offered to them.

An initiative to provide branch accounts for Saison members,
subject to Credit Saison's permission to engage in thebanking agency business with Suruga Bank as the affiliated
bank.



An initiative in which Credit Saison guarantees loans
provided at the Saison Branch.

* "American Express" is a registered trademark of American Express.
Credit Saison Co., Ltd. uses this under license from American Express.

 Collaboration in the housing loan business Suruga Bank sells new Credit Saison-guaranteedhousing loans, expanding both Suruga Bank's
housing loan business and Credit Saison's credit
guarantee business.

Suruga Bank
Saisonmembers

SaisonBranchCredit Saison

Resolvingtroubles/"AID"

Taking on the creationof new value

Achieving synergies in
the retail domain

 Joint development of the real estate financebusiness
 The two companies will combine their expertiseand resources in real estate finance to enhancetheir presence in the market.

© 2023SURUGA bank, Ltd. All rights reserved.

22

Reference Materials

■ Corporate Philosophy“I’m glad you’re here...
I’m glad we met...”This perception is our goal.

No matter how much the times change ortime passes, we are committed to providing
service from the customer’s perspective,
staying closely in tune with their everyday
lives providing value, and helping ourcustomers lead more prosperous lives.

<Our Ambition>
We aim to serve as a bank that always thinks of customers first in any situation.
By genuinely listening to our customers and providing added value that only Suruga Bank can deliver, we aim to be the kind of bank thatmakes customers feel “I’m glad you’re here...I’m glad we met.”
To provide customers with truly satisfying service, it is vital for staff members who provide these services to find their work meaningful.
Thus, we also strive to be a company that makes not customers, but also staff members feel “I’m glad you’re here... I’m glad we met.”© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 1

■ Suruga Bank Mid-term Business Plan—“Re:Start 2025”
We want to be a company that makes customers feel,“I’m glad you’re here... I’m glad we met.”
Customer satisfaction

VisionShareholder value

Employee satisfaction

Contribution to society

・To realize our corporate philosophy, we will create a “new Suruga Bank” that delivers customer satisfaction and ensuresthat staff feel their work is meaningful. We will achieve this through a commitment to carrying out customer-oriented
business, initiatives in our core business of retail banking, and by creating unique value in ways that are distinct to ourbank.

Shared in Phase 1 & 2

Corporate
Philosophy

・We will also establish measures for thorough compliance and controlling appropriate risk/return, and develop a “newsustainable business model” as a public financial institution that benefits the public.

I. Evolving the Retail and Solution Businesses
We will create sources of differentiation founded in resolving AID (Worries, inconveniences, dissatisfactions, etc) for ourcustomers, leading them to say “we are happy to have you” or “we are happy to meet you.”II. Building a Sustainable Revenue Structure
Phase 2Strategic
Management

We will counteract the decline in the top line due to the collection of existing loans and pivot to a sustainable revenue
structure with three measures: growth of new business revenue through four autonomous profit centers, cost
structure reform, and minimizing and stabilizing actual credit costs through higher credit quality

III. Risk-Taking and Risk Diversification
In accordance with the Risk Appetite Framework (RAF), we will repeat a cycle of active risk-taking and verification in
selected areas, diversifying away from our traditional risk structure concentrated in specific real estate areas 2
2Single building income properties (relatively high share of older properties and properties located in regional areas) executed prior to the full-scalerollout of Phase 1© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 2

■ Initiative Policies in the "Re:Start 2025 Phase 2" Mid-Term Business Plan
Phase 2Strategic
Management

Business
Structure

I. Evolving the Retail and Solution Businesses
II. Building a Sustainable Revenue Structure
III. Risk-Taking and Risk Diversification

Priority Measures

1.

Reorganizing from a Sales Headquarters System to Four Autonomous Profit Centers (2.2x new businessrevenue)• Community Bank, Direct Bank, Greater Tokyo/Wide-Area Bank, Market Finance2.

Completing Cost Structure Reform (Expenses: 46.8 billion yen in FY2018 ⇒ 32.5 billion yen planned in
FY2025)• Network Reorganization, Shifting Talent to the Front Office by Streamlining Headquarters Functions, IT Cost
Structure Reform

3.

Minimizing and Stabilizing Actual Credit Costs Through Higher Credit Quality• Improvement of credit quality to a level where actual credit costs average less than 3 billion yen/year fromFY2025 onward

4.

Pursuing Cloud Computing and DX in IT Platforms

5.

Vector Alignment with Stakeholders• Aligning vectors with shareholders, employees, and society to strengthen driving force behind management
strategies

Revenue
Structure

Infrastructure

Phase 2
Keywords

Agile

Kyo-soResilience

Speed, taking on challenges,
autonomous decentralization

Collaboration, dialogue, value creation

Recovery, flexibility, risk
diversification© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 3

Main KPIs

■ Phase 2 KPIs

FY2022
Results

FY2025
Plan

Ordinary income

11.2 billion yen

13.0 billion yen

Net income

10.5 billion yen

11.0 billion yen

11.39%

10%+(effective)

New businessgross profit

7.7 billion yen

16.0+
billion yen

Expenses

36.2 billion yen

Less than
32.5 billion yen(Consolidated)

Capital adequacy
ratio

Key action indicators
for achieving main KPIs

Secondary KPIs

(Based on finalized Basel III)

Actual credit costratio

-5 bpsApprox.
15 bpsNotes

・ Profit attributable to owners of parent

・ Any unrealized loss on securities is deducted fromcore capital・ Revenue from goods and services issued on or after
April 2020
・ Based on core business gross profit (excluding gains
on cancellation of investment trusts)

・ Intended cruising speed for FY2025 and beyond
・ Actual credit costs / Loans and bills discounted(average balance) × 10000(Loans and bills discounted = Loans + Purchased monetaryclaims)*Figures/indicators without "consolidated" are for Suruga Bank (non-consolidated)© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 4

■ Initiatives for SDGs
• Taking into account the social responsibilities requested by stakeholders and diversifying social and environmental issues, we have identified priority• issues that must be addressed by the Group in light of its business opportunities and risks, and also formulated important issues (materiality) to realize a sustainable
society and maintain and improve its corporate value.

Identification ofmateriality issues

Selection anddetermination ofmateriality issues

We identified materiality issues
by referring to the four pillars of“stakeholder capitalism metric/measurement standards”
proposed by the World Economic
Forum in 2020.

We analyzed and evaluated elemental
information on both what our Groupvalues and what stakeholders do, andformulated “materiality” issues that areimportant to both sides.

Principles ofgovernanceSelection and determination ofmateriality issues
Relevant SDGs

What Suruga Bank
Group values

Establish a solid foundation
for governanceCorporate Philosophy
Compliance Charter
Mid-term Business Plan
“Re:Start2025”
History

Create an environment where
employees can play an activerole and grow✕PeopleOur Group’s materiality are the following four issues.
Each materiality issue, which is not independent but
organically linked with the other issues, is an integral
part of fulfilling our responsibilities to all stakeholders.

What stakeholders value
and expect from the
Suruga Bank Group

Building sustainable local
economies and societies

Prosperity

PlanetEmployees

Customers

Regional
community

Shareholders

Regulatory
authorities

Globalenvironment

Contribute to environmental
conservation© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 5

■ Special efforts for investment real estate loans• In order to finally solve the share house-related loan problem, which is one of the priority issues in the first phase of the Mid-term Business Plan, we arecontinuing to respond to each customer‘s individual circumstances, focusing on unprecedented initiatives such as “the partial cut in principal” and “thecomprehensive transfer of loans”.
• The fourth and final comprehensive transfer of shared housing loans were transferred in September 2022,thus completing all comprehensive transfer of loans
to customers who filed for mediation as a group at the end of August 2021.
• For customers who are using investment real estate loans, etc., other than share house loans, in addition to a partial cut in principal, the policy is to take aserious response according to each customer's individual circumstances.

Response to customers since FY2018

For details, please refer to the next page, "Status of Investment Real Estate Loans and Organizational Negotiation Partners"

 We established the “Office to Support Customer Owners of Share Houses and Others” whereby we have carefully responded based on each customer’s circumstances, including
lowering the loan interest rate and deferred repayment of the principal amount for a certain period. At the same time, we have considered taking all possible options as a financial
institution, including exemption for repayment of part of the principal amount of the loan using ADR.
 We adopt the DC method for calculation of allowance for possible losses for share house-related loans. If the loan is delinquent for more than a month, we provide 100% allowance forthe unsecured amount.
Exemption for repayment of part ofthe principal amount of the loan
<Repayment support scheme>

Details: “Exemption for repayment of part ofthe principal amount of loans for share houses
and other investment real estate loans” issued
on May 15, 2019

Comprehensive transfer ofloans <subrogation scheme>

Ref.: “Announcement Regarding Transfer of ShareHouse-related Loan Receivables” issued on Mar 25,
2020 and Mar 1, 2021, Mar 25 2022, Sep 26 2022

Applicable: Share house loans and other investment real estate loans

Target: share house loans

Content: If the borrower has a rental loss on the property, including loan repayment,
when they individually requested exemption for repayment of part of the principal
amount of the loan, from the perspective of fair share of loss and in view of the
difficulty in their loan repayment, we calculate the loan repayment amountcorrespondent to the settlement amount we are responsible for, which will be
offset with their repayment amount upon mutual consent.

Content: Before we executed share house loans, we did not sufficiently analyze sharehouse-specific risks associated with general investment real estate loans, including
inappropriate action such as ignoring impracticability of business plans. Given thatthe conciliation committee of the court recognized that we have an obligation tocompensate for damages, based on typical unlawful behaviors, we agreed to carry
the obligation to pay the petitioners the settlement amount based on the
conciliation recommendation. After offsetting our claims with our obligation to pay
the settlement amount, we will make a comprehensive transfer of share houseloans.

Status: The acceptance of applications was closed on November 30, 2019. By the end of
February 2021, we completed sending to the borrowers who applied for the
exemption a primary calculation notice of the exemption amount. For borrowers
who request the next step, we are proceeding with a civil conciliation or
authorized ADR procedure.

Status: The first transfer was carried out in March 2020. (257 debtors, 44.0 billion yen in claims)
The second transfer was carried out in March 2021. (285 debtors, 44.2 billion yen in claims)
The third transfer was carried out in March 2022. (404 debtors, 60.5 billion yen in claims)
The fourth transfer was carried out September 2022. (105 debtors, 16.8 billion yen in claims)
Total (1,051 debtors, 165.5 billion yen in claims)

The fourth comprehensive transfer of loans was completed on September 26, 2022.

© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 6

■ Status of Investment Real Estate Loans and Organizational Negotiation Partners

Status of efforts to dateUnder
negotiation/dispute

Party to collective
bargaining

Released May 15, 2019
"Report on Survey of All Properties Concerning
Investment Real Estate Loans"
Real estate properties covered by survey

Borrowers continuing
repayment(Including repayment support
agreement partners)

37,907
No balance(paid, etc.)

After approximately four years of repayment support
and consultation efforts, more than 40% of the 37,907
properties surveyed have a loan balance of zero, andmore than 50% are maintaining loan repayment.
However, approximately 3% of the loans other thanthose are under negotiation or pending (i.e., those forwhich organizational negotiations are underway or
repayment support agreements have not beenreached), and we will continue to take appropriate
measures to resolve these issues.

As of Dec. 31, 2022

Basic approach to future action

1

From the viewpoint of striking early settlements, we are actively cooperating in clarifying loan
circumstances in certain types of cases where the bank is likely to be found liable in tort in a lawsuit.

2

In addition, there have been several cases in which the sale of investment real estate has led to full
repayment, and we are also moving forward with proposals to consider voluntary sales of real estate.

3

With regard to investment real estate loan cases, each case has its own very individual qualities, andwe believe it is necessary to consider the unique circumstances of each case individually when
determining whether and to what degree there is an obligation to compensate for damages.

© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 7

<Inquiries>
IR Office, SURUGA bank, Ltd.
Tel: +81-3-3279-5536
e-mail: ir.koho@surugabank.co.jp
The foregoing material contains statements regarding future business performance. These statements are notintended as guarantees of any specific future performance, which is subject to a variety of risks anduncertainties. Actual future business results may differ from the targets contained in the present material, due
to unpredictable changes in the external business environment.

© 2023SURUGA bank, Ltd. All rights reserved.