SURUGA bank, Ltd.
Financial Results for the 1st Half of FY3/23

November 25, 20220

■ Table of contents
Ⅰ Summary of Financial Results for the 1st Half of FY3/23
・Actual Results for 1H, FY3/23 (Comparison with 1H, FY3/22)

P.1

・Revised forecast for FY3/23

P.2

・Real Credit Costs, Share House-related Loans <Non-consolidated>

P.3

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

P.4

・New loan disbursements

P.5

Ⅱ Business strategy based on the Mid-term Management Plan・Situation of Real Estate Market

P.6

・Business policy

P.8

・Individual/Corporate solution sales

P.9

・Investment Real Estate Loans

P.10

・Housing Loans

P.11

・Structured Finance

P.12

・Unsecured Loans

P.13

・Securities Management

P.14

・Status of Single Building Apartment Loans

P.15

・Special efforts for investment real estate loans

P.16

・Major efforts to support repayment of investment real estate loans

P.17

Ⅲ SDGs/ESG initiatives for FY2022
・Environment

P.18

・SocialP.19

・Governance

P.23

Reference Materials© 2022SURUGA bank, Ltd. All rights reserved.

Ⅰ Summary of Financial Results for the 1st Half of FY3/23

Ⅱ Business strategy based on the Mid-term Management Plan

Ⅲ SDGs/ESG initiatives for FY2022

■ Actual Results for 1H, FY3/23 (Comparison with 1H, FY3/22)• Gross operating profit decreased 5 billion yen year-on-year to 28.5 billion yen, mainly due to a decrease in net interest income (1.9 billion yen) anda decrease in gains (losses) on bonds (3.3 billion yen).
• Net operating profit decreased by 3.5 billion yen year-on-year to 9.7 billion yen, as the decrease in gross operating profit exceeded the increase incost reduction (1.4 billion yen).
• Actual credit costs increased 1.4 billion yen year-on-year to -5.2 billion yen (see table below left for breakdown).
• Interim net income (non-consolidated) decreased by 1.4 billion yen year-on-year to 16.1 billion yen, due to the above factors as well as gains onsales of stocks and a decrease in total income taxes.
<Non-consolidated>

Factors causing variation in ordinary profit(comparison with previous year)(Billions of yen)
1H results
For FY3/22

1H results
For FY3/23

Main factors

（5.0)

28.5

33.5

Gross operating profit

Year-on-year

Net interest income

・ Decrease in interest on loans : -3.9
(average balance factors -2.4 billion yen, yield factor -1.5 billion yen)・Increase in interest and dividends on securities due mainly to
dividends from subsidiaries: +1.2 billion yen

Expenses

20.2

18.7

(1.4)

Core net operating profit

12.9

12.7

(0.1)

Net fees and commissions

・Decrease in group credit life insurance premiums: -0.8 billion yen

Net operating profit

13.3

9.7

(3.5)

Gains (losses) on bonds

・Loss on redemption of multi-asset funds: -3.3 billion yen

Ordinary profit

20.8

17.0

(3.8)

Expenses・Decrease in non-personnel expenses: -0.8 billion yen

Net income

17.5

16.1

(1.4)

Gains (losses) on stocks

・Gains (losses) on stocks mainly due to sales of foreign stocks: +1.8
billion yen

Actual credit costs

(6.6)

(5.2)

+1.4
Actual credit costs

・ Elimination of the impact of the real estate collateral valuation
review implemented in the previous year (+13 billion yen).
・Gain on reversal of provision of general allowance for loan losses
due to comprehensive transfer of share house loans and lower
expected loss ratio.

16.3

17.8

Consolidated net income(1.4)(Billions of yen)

[1st half results per assumption of actual credit costs](Billions of yen)
(3.8)

1st half
Forecast

1st half
results

20.0

(0.5)

(5.2)

Normal credit costs(a)

(2.0)

(3.2)

Share house-related loans(b)

(2.5)

(3.2)

4.0

11

Actual credit costs

Preventive allowance(c)

(1.9)

+0.3

PreviousYear
Results
20.8

+1.8
(3.3)

+1.4

Gains
(losses)on bonds

Expenses

(1.4)

(0.7)
ActualResults
17.0

0Net
Ordinary profit interest(FY9/21)
incomeNet fees andcommissions

Gains(losses)on Stocks

Actual credit
costs

Other

Ordinary profit(FY9/22)* Since the figures in the above graph are rounded to the nearest unit, they may differ from the numbers in the table on the left.

© 2022SURUGA bank, Ltd. All rights reserved.

1

■ Revised forecast for FY3/23• Minor revisions were made from the August 2022 announcement*, taking into account the results of the 1st half and forecasts for expenses and actual
credit costs.
• Expenses are estimated at 37.5 billion yen, down 500 million yen from the previous forecast, due to the steady progress of structural reforms set forthin the Mid-term Business Plan.
• Actual credit costs were revised downward by 500 million yen from the previous forecast to 10 billion yen (see table below), with the assumption of
the full-year forecast remaining unchanged and only the forecast for share house-related loans being revised.
• Net income (non-consolidated) was 9.5 billion yen, up 1 billion yen from the previous announcement. Net income (consolidated) is also expected toincrease by 1 billion yen from the previous announcement to 10 billion yen.
(*) “Announcement Regarding the Revision to the Earnings Forecast” disclosed on August 10, 2022 in a timely manner.

<Non-consolidated>(Billions of yen)<consolidated>
FY3/23 Forecast ofannouncement on
August 10 (A)FY3/23 Forecast ofannouncement on
November 7 (B)FY3/23 Forecast ofannouncement on
August 10 (C)FY3/23 Forecast ofannouncement on
November 7 (D)Ordinary income

77.0

77.0

±0.0

86.0

86.0

±0.0

Gross operating profit

56.0

56.0

±0.0

Expenses

38.0

37.5

(0.5)

Core net operating profit

21.0

22.0

+1.0

Net operating profit

17.0

17.5

+0.5

Ordinary profit

9.0

10.0

+1.0

10.5

11.0

+0.5

Net income

8.5

9.5

+1.0

9.0

10.0

+1.0

Actual credit costs

10.5

10.0

(0.5)

Change(B)-(A)

Change(D)-(C)(Billions of yen)<Premise Behind FY3/23 Actual Credit Cost Forecast>(a) Actual credit costs for non-special-factor receivables, such as share house-related borrowers and institutional negotiators, will remain unchanged
from the previous announcement at 3.5 billion yen, as there is no change in the precautionary provision assumption assumed for the current period
as described in (c) below, and the provision of general allowance for loan losses associated with a similar increase in expected loss ratio is still
factored in.
(b) Actual credit costs for share house-related borrowers are expected to be (3.0) billion yen, down 500 million yen from the previous announcement,
based on actual results through the 1st half of the fiscal year, since no special factors are expected in the second half of the fiscal year.
(c) As for the precautionary provision, as a result of close examination of trends among eligible borrowers, fewer borrowers have taken steps such assuspending repayments during the 1st half than was assumed at the beginning of the period, but provisions for the current period due to organizednegotiations and other actions remain unchanged from the previous announcement at 9.5 billion yen, maintaining the assumption that the samelevel of provisions will occur during the period as assumed at the beginning of the period.

© 2022SURUGA bank, Ltd. All rights reserved.

Forecast (Full year)
Released
8/13
Actual credit costs

ChangeRevised

10.5

10.0

(0.5)

Normal credit costs(a)

3.5

3.5

±0.0

Share house-related loans(b)

(2.5)

(3.0)

(0.5)

Preventive allowance(c)

9.5

9.5

±0.0

2

■ Real Credit Costs, Share House-related Loans <Non-consolidated>• Actual credit costs for share house-related borrowers were -3.2 billion yen due to the reversal of provision of general allowance for loan losses
following the transfer of the fourth comprehensive transfer of share house loans in September 2022 (the transfer of the fourth batch of share houseloan receivables was completed).）• Actual credit costs other than for share house-related borrowers were -2 billion yen due to reversal of provision of general allowance for loan losses
resulting from lower expected loss ratios and other factors.

・ Actual credit costs / allowance for loan losses (FY3/23)
Item

１Q

２Q

(Billions of yen)
1st half
Actual credit costs

Allowance for loan
losses

(0.1)

(3.0)

(3.2)

14.1

Investment real estate loans *

0.9

(3.2)

(2.3)

87.5

Housing loans

0.1

(0.5)

(0.3)

2.6

Unsecured loans

0.0

(0.1)

(0.0)

3.2

Monetary claims bought

0.0

0.0

(0.0)

0.2

Business financing, etc.

0.2

0.4

(0.7)

9.1

Total

1.3

(6.5)

(5.2)

117.0

Share house-related loans* Includes studio apartment loans, single building apartment loans, and other secured loans.

・ Coverage status on share house-related loans
Total credit balanceA
March 2019
March 2020
March 2021
March 2022
September 2022

250.3
192.1
135.7
53.6
32.8

Share house-related
loans

201.9
154.7
107.2
41.9
24.0

Mortgage collateralor guarantee
B

Unsecured portion
C

91.4
72.7
52.5
26.2
16.7

158.8
119.3
83.1
27.4
16.0

Allowance
D

139.3
102.5
76.7
25.7
14.1

Coverage ratio(B + D)/A

92.20%
91.29%
95.24%
96.87%
94.30%*Based on obligors of share house-related loans.
*Mortgage collateral or guarantee: Calculated by multiplying the estimated amount of collateral, etc. by a fixed rate (revised in first half of current fiscal year)*Total credit balance, share house-related loans: Loans and bills discounted, suspense payments equivalent to loans and bills discounted, and accrued interest on loans and bills discounted.

© 2022SURUGA bank, Ltd. All rights reserved.

3

■ Outstanding Balance, Yield, and Delinquency Rate by Loan Category <Non-consolidated>• Based on the Mid-Term Business Plan, the loan yield for the entire region that promotes the “quality” conversion of assets to middle-risk and middlereturn, is 3.47% (total (E)).
• The delinquency rate for consumer loans was 6.36% (A), partly due to the fact that some customers with investment real estate loans havesuspended repayment triggered by organized negotiations, but excluding these special factors, the delinquency rate for loans was 1.50% (F).
• To improve the delinquency rate, we not only provide repayment support such as modification of terms and conditions, but also continue to provide
feedback to customers on information of concern such as damage to real estate discovered in our own periodic surveys, as well as consultation onchanges in management companies.
(Billions of yen)

June 2022

Loan category

Period-end balance

Secured loans
Housing loans
Studio apartment loans
Single building apartment loans(including share house loans)
Other secured loans
Unsecured loans
Card loans
Unsecured certificate loans, etc.
Consumer loans (A)Consumer loans(excluding organizational
negotiation partners) (F)Investment real estate loans for asset

Yield

September 2022
Delinquency rate

Period-end balance

1,659.4
449.7
136.0

3.08%
2.77%
3.37%

7.42%
0.27%
2.76%

1,606.0
441.8
130.0

3.08%
2.75%
3.36%

6.68%
0.28%
2.82%

1,040.7

3.13%

11.41%

1,001.2

3.14%

10.24%

32.8
139.6
95.0
44.6
1,799.1

4.51%
10.45%
11.78%
7.61%
3.65%

0.23%
2.44%
0.94%
5.63%
7.04%

32.8
135.5
92.8
42.6
1,741.5

4.41%
10.46%
11.78%
7.59%
3.65%

0.46%
2.51%
0.94%
5.94%
6.36%

2.48%

1,636.2

1,692.6

Yield

Delinquency rate

1.50%

35.3

1.82%

－

40.3

1.82%

－

Structured finance (C)

76.0

2.27%

－

82.7

2.24%

－

Monetary claims bought (D)

58.9

1.94%

－

97.0

1.95%

－

1,969.5

3.51%

6.43%

1,961.6

3.47%

5.65%

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 customers participating in collective bargaining default on scheduled repayments, the delinquency rate of other types of loans will be affected.
*Organizational negotiation partners are customers who have suspended repayment as a result of structured negotiations (excluding share house loans).

© 2022SURUGA bank, Ltd. All rights reserved.

4

■ New loan disbursements• The new loan disbursement plan for the full year ending March 31, 2023 is 190 billion yen, of which 92.4 billion yen was disbursed (Total: (A) + (B)).
• Disbursements of consumer loans and investment real estate loans to asset management companies remained at 31.9 billion yen, but including the
expected deals to be concluded this period as of the end of October, the total amount of disbursements reached approximately 55 billion yen. New
structured finance was 20.4 billion yen, a steady progress at 51% of the plan.
• As for new monetary claims bought, we purchased claims in July 2022 that meet our goal of middle-risk/middle-return (amount of claims: approx. 40
billion yen, estimated yield: 1.41%). We will continue sounding out suppliers and are considering additional purchases.
• With the prolonged spread of COVID-19, soaring material prices due to the situation in Ukraine, and the impact of the rapid depreciation of the yen, we
will continue to promote loans while keeping a close eye on the business environment and market trends.

・Trend in loan execution amount promoted in the Med-Term Business Plan

(Billions of yen)

1H,FY3/22

1H,FY3/23

Year-on-year

14.0

24.1

+10.1

Consumer loans

Forecasts
for FY3/23

110.0※

Investment real estate loans for asset
management companies

7.3

7.8

＋0.5

Subtotal

21.4

31.9

+10.5

110.0

Structured finance

20.1

20.4

+0.3

40.0

Total (A)

41.5

52.4

+10.9

150.0

ー

39.9

＋39.9

40.0

41.5

92.4

+50.9

190.0

Monetary claims bought (B)Total (A) + (B)*The planned amount of investment real estate loans for asset management companies is included in the 110.0 billion yen of consumers loans,because we conduct the same promotional activities as for investment real estate loans for individuals.

© 2022SURUGA bank, Ltd. All rights reserved.

5

Ⅰ Summary of Financial Results for the 1st Half of FY3/23

Ⅱ Business strategy based on the Mid-term Management Plan

Ⅲ SDGs/ESG initiatives for FY2022

■ Situation of Real Estate Market• In terms of the market capitalization of REITs, despite a short-term risk-off trend due to monetary tightening in Europe and the U.S., the market hasremained firm.
• Logistics, in particular, has been strong on the back of increased use of e-commerce (EC) in the aftermath of the COVID-19 pandemic. Commercial andresidential also rose compared to pre-COVID-19 pandemic levels in anticipation of the post-COVID-19 period.
• In the hotel sector, the inflow of funds has gradually increased due to the growing number of inbound visitors, etc., and the hotel sector has generally
recovered to the level before the COVID-19 pandemic.
• In the office sector, rent continues to fall and vacancy rates remain high due to the advancement of remote work, etc., and have not yet reached thelevels seen before the COVID-19 pandemic. In addition, a large-scale supply of office space in central Tokyo is expected in 2023, and the impact on theoffice market needs to be closely monitored.
• As for domestic real estate, a certain amount of foreign investment funds are expected to continue to come from abroad due to the relatively low
geopolitical risk, the relatively high yield gap increasing the attractiveness of investment, and the sense of undervaluation backed by the rapid
depreciation of the yen.
(Jan 6, 2020 = 1)

Office Market

Unit︓Yen/Tsubo
23,500

REIT Market Capitalization

1.8

Unit︓％
13

Average rent in the central part ofTokyo (5 wards)
Vacancy rate - Tokyo

1.7
1.6

Vacancy rate - Osaka

1.5

10

Vacancy rate - Nagoya

1.4

21,000

1.3
1.2

7

1.1
1
0.9

18,500

0.8

4

0.7
0.6
Housing
HotelsCommerce

0.5
0.4

0.3
20/01

20/07

21/01

21/07

22/01

Healthcare
OfficeLogistics
22/07
Source: Bloomberg© 2022SURUGA bank, Ltd. All rights reserved.

16,000

16/04

1

17/04

18/04

19/04

20/04

21/04

22/04
Source: Miki Shoji6■ Situation of Real Estate Market• In the housing market, the number of new owner-occupied housing starts fell below the previous year's level for the 10th consecutive month due tosoaring housing prices and delays in the arrival of housing equipment, while the number of new rental housing starts exceeded the previous year's
level every month, leaving the overall number of housing starts unchanged from the previous year. In the condominium market in the Tokyo
metropolitan area, the number of contracts for existing condominiums, the number of condominiums sold in the metropolitan area, and the first monthcontract rate remained stagnant, as prices remained at a high level.
• For the time being, we will continue to monitor trends closely, as the price of laminated lumber for housing has been falling due to an oversupply ofimported lumber, while the price of materials in general has been rising due to global inflation and the weak yen.
• We will continue to carefully assess these market trends and individual project risks while promoting investment real estate loans, housing loans, andstructured finance.
Housing stats by use by 1st half of Financial year

Unit: 1,000 cases

600

Owner-occupied house

Houses for rent

SalaryTrends in the number of existing condominiums(metropolitan area)

Unit: 1,000 cases

50

Unit︓％

100

Condominium

500

50

25

400

0

300

0
FY2015
Unit︓1000
cases

FY2016FY2017FY2018FY2019FY2020

Number of condominiums sold in Tokyo metropolitan

8
7
6
5
4
3
2
1
0

Number of units sold

Sep.2021
2021年9月

FY2021

FY2022

Source: Ministry of Land, Infrastructure, Transport and Tourism

Dec.2021
2021年12月

Mar.2022
2022年3月

Unit︓times(YoY:right axis)

Jun.2022
2022年6月

90
2.1
1.9
1.7
1.5
1.3
1.1
0.9
0.7
0.5

Sep.2022
2022年9月

Source) Real Estate Economic Institute Co., Ltd.

© 2022SURUGA bank, Ltd. All rights reserved.

Unit︓％

22/9

22/8

22/7

22/6

22/5

22/4

22/3

22/2

22/1

21/12

21/11

21/9

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

21/10

21/8

21/7

21/6

21/5

21/4

21/3

21/2

21/1

20/12

100

20/11

20/9

-50
20/10

0

200

No.of contracts(bar graph)No.of contracts(YoY:right axis）
Inventory(YoY:right axis）
Source: Real Estate Information Network for East Japan

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

Unit︓％

40(YoY:right axis)

80

20

70

0

60

▲20

50
Sep.2021
2021年9月

Dec.2021
2021年12月

Mar.2022
2022年3月

Jun.2022
2022年6月▲40
Sep.2022
2022年9月

Source) Real Estate Economic Institute Co., Ltd.

7

■ Business policy• The first phase of the Mid-term Business Plan aims to build a sustainable business model through initiatives in the core retail banking business.
• In the Shizuoka & Kanagawa area, we will promote comprehensive proposals centered on customers, such as loans and asset consulting, througharea marketing practices.
• In the “metropolitan and regional areas,” the Group specializes in the promotion of secured loans mainly in the five major metropolitan areas with large
markets.
• In "Direct," we are using digital technology to expand customer contacts and digital marketing to create optimal proposals for customers.

Direction

Our understanding of the market■ Shizuoka and Kanagawa areas

Strengthening community-based services

Community-based development based on the branch network in
the local area

Eight-area system30-area system

Promotion of comprehensive proposals based onunderstanding of customers’ needs

Customer-based

Product-based

Staff for individual
customers

Loan staff

Shizuoka area
59 branches

Kanagawa area
35 branches

Population: 3.68 million
Private business locations: 190,000
New housing starts: 21,271

Regional
segmentation

Population: 9.22 million
Private business locations: 370,000
New housing starts: 63,864

Investment
trust staff■ Tokyo metropolitan area and other major urban areas
Development focused on secured loans in five metropolitan
areas
9 branches and three departments
New housing starts: 430,393(Share of nationwide statistics: 50.3%)*Total prefectures with branches(Metropolitan area)
Sales in Tokyo, Shibuya, Shinjuku,
Omiya, Chiba, and other urban
areas(Other major urban areas)
Sapporo, Nagoya, Osaka, Fukuoka■ Direct
Net development centered on collaboration with companies indifferent industries

Investment
trust staff

Concept of non-price competition

〇

×

Value
competition

Loans, investment trusts,
insurance, etc.

Development of niche markets

Pricecompetition

Diversity and carefulness

Uniformity and efficiency

Custom-madeservices

Ready-made services

Full product lineup

Limited product lineup

Expansion of customer contacts

Attribute
Segmentation oftargeting
Properties

Areas

Common to markets
Promotion of DX for customer relations

Customers
Notice11 branches(Major branches)
ANA branch, Recruit branch,T-point branch, D-bank branch,
Dream Direct branch

Companies in different
industries

CRM

Customer journey

Collaboration

Suruga bank

Population: as of January 1, 2022 (Ministry of Internal Affairs and Communications) / private business locations: as of June 1, 2019 (Economic Census for Business Activity) /New housing starts: FY2021 (Ministry of Land, Infrastructure, Transport and Tourism)© 2022SURUGA bank, Ltd. All rights reserved.

Personalization

Application

Digital marketing
foundation

Omni channel

8

■Individual/Corporate solution sales• By centralizing the hub and satellite store systems and back-office operations, we will shift personnel to the front and expand customer service hours.
• In order to provide solutions to various issues faced by customers, we will promote human resource development and strengthen cooperation
between sales branches and the Headquarters Promotion Department as well as within the Group.
hub and satellite store systems

Personal Solution Sales

 We will clarify store functions and centralize back-office operations at theheadquarters in order to shift personnel to the front desk and increase
the amount of customer service time.

[Solutions examples]
Saving/Increasing

Hub branchSatellite branchSatellite branch

Customers

Preparing

Satellite branch

Provision of products andservices to resolve issues
 Business support
 Asset formation
support Service desks

BranchBranch Support Center• Deposits• Mutual funds• iDeCo• Personal pension plans,
etc.

FA

CollaborationFA
counters• Income security
insurance• Medical insurance,cancer insurance• Long-term careinsurance, dementia
insurance, etc.
Bequeathing

Corporate solution sales
 We will strengthen cooperation throughout the group to evolve the business of
local companies and propose a variety of solutions.
The Suruga
Bank Group

Local
businesscustomers

Proposing tailor-made solutions[Solutions examples]Fundprocurement

Cashmanagement

Loans,
leases, etc.

Payroll
processing,cashlesspayment, etc.

Business
succession/M&A
Business
succession,businessacquisition,businesstransfer, etc.

Digitalization
support
IT/DX, website
creation, etc.

Human
resource
support andtraining
Introduction ofhighly skilled
foreign humanresources,
Support forresources forforeigners living
in Japan, etc.

Headquarters
promotion system

Support

Implementation
team

Planning
team

Support team

Asset Consulting Office• Testamentary trusts• Estate liquidation
services• Testamentary agency
trusts, etc.
Borrowing• Housing loans• Purpose-specific loans,etc.

OthersIndustry
research,financialanalysis,
Support for
SDGs initiatives,etc.

© 2022SURUGA bank, Ltd. All rights reserved.

 We invite outside lecturers to conduct short-term intensive consulting
training for FA/FA counters to enable them to provide optimal solutions
tailored to each individual customer.
 Full product lineup for insurance/investment trusts Branches hold consumer consultation events on inheritance and wills

9■ Investment Real Estate Loans• We will work on outbound promotion by contacting real estate agents and building relationships with existing customers, and inbound promotion by
deepening relationships with affiliated real estate agents.
• During the period under review, we continued to steadily extend loans to affluent and semi-affluent customers, who accounted for 56% of our total loans
in terms of value.
• We are also working on promotion through online channels in collaboration with external companies to diversify our pipeline and increase the number ofdeals by raising awareness.

Promotion System for Investment Real Estate Loans
Outbound PromotionNew
customers

Sales

By number of cases

By amount

Existing
customers

New customers
Financial planningconsultation

Periodic
relations*Customer segments are classified based on their financial assets at the time of loan screening.
Period: April 1, 2022 to September 30, 2022

Inbound Promotion

Financial planningconsultation

Real estateagent

Amount ratio of investment real estate loans by customer segment

Financialplanning
consultation(property
repurchase)

Affiliated real estate agent
Relationshipbuilding

Customerreferral

CustomerreferralDivision
Specializing in
Investment Real
Estate Loans

Division Specializing in Investment
Real Estate Loans

Ultra-wealthy andwealthy customers
29%

Mass customers

Promotion ofpartnership

Headquarters
Promotion
Department

Mass customers

Ultra-wealthy andwealthy customers
23%

50%
56％

Upper mass

Upper mass
Semi-wealthy
customers
26%

Semi-wealthy
customers
27%

Semi-wealthy
Ultra-wealthy andUpper mass
Mass customers
customers
wealthy customers
Reference: NRI market classification is applied to segments (amount of net financial assets held)

Results by promotion system
Ratio of inbound projects increased due to deepening relationships
with partner real estate agents.

Inbound

Inbound
OutboundOutbound

Status of promotion through online channels
Number of online applications
Increase in online applications due to growing
recognition

+20％

+15%
First half of FY2021

First half of FY2022© 2022SURUGA bank, Ltd. All rights reserved.

First half of FY2021

We have been handling inquiries from
customers who wish to refinance theirinvestment real estate loans through
INVASE, an online platform operated by
MFS.

First half of FY2022

10

■ Housing Loans• We provide housing loans to various segments of customers based on the characteristics of their areas through our tailor-made response and screening
expertise accumulated over the years.
• We collaborated with external companies and established the “Direct Housing Loan Center,” a specialized department, to strengthen housing loan
promotion through direct channels.

Housing loan strategy

Segmentation based on recognition ofenvironment

etc.

Seniors
Women
Foreign workers

Diversecareerpaths

etc.

Entrepreneurs
Professional

Application
Long-accumulated
knowledge

Application
platform

One-to-One Response

Freelance

Diverselabor force

Customers

Screening

Contract/temp workers

Side/secondary job

We established the new "Direct Housing Loan Center"to strengthen promotion.

Direct promotion

Apply Suruga's strengths to establish
our domain

Customized products

Diversework
arrangeme
nts

Housing loan promotion through direct channels

External partners※

Online application

New
National metropolitan
area housing loancustomer database

In-house website

Non faceto-facecontract

Direct Housing Loan Center※External partners

etc.
We accept inquiries from customers considering a housing loan
through Mogecheck, an online home mortgage comparison site usedby more than 60,000 users.

Amount ratio of housing loans by customer segment*Segment sampling period: April 1, 2021 to September 30, 2022

By amountSelfemployedCompany
employees andcivil servants

Corporate
officers

Metropolitan

Selfemployed

About
36％
Company
employees andcivil servantsPensioners

Other
Local

We offer our housing loans through "Ieru Dandori," a housing loan
platform commissioned by more than 2,500 housing providers nationwide
to connect prospective housing loan applicants with financial institutions.

By number of
cases

About
34％

We participated in Sugohaya, an information site for housing loan
screening services operated by Recruit. We also expanded our
proposal opportunities and achieved efficient promotion.

Corporate
officers
Pensioners

Number of online applications

Other

Community-based measures for employees of our corporate customers in Shizuoka andKanagawa Prefectures, etc.
Measures for secured loans targeted at areas, segments, usage scenarios, etc.

© 2022SURUGA bank, Ltd. All rights reserved.

+170％
First half of FY2021

There was a significant year-on-yearincrease in the number of housing
loan applications submitted online,
due in part to growing demand fornon face-to-face services.

First half of FY2022

11

■ Structured Finance• For the period under review, new loans amounted to 20.4 billion yen, with a disbursement rate of 2.23%. In addition, the balance of loans
outstanding as of September 30, 2022 was 82.7 billion yen.
• We are working on LBOs and other non-real estate projects, paying attention to risk diversification and building a portfolio of middle risk and middle
return.

Trends in financing amount / Forecast(Billions of yen)

60

Disbursed（1H）

40

20

0

Rate

Disbursed（2H）

2.32%

2.28%

Balance composition ratio by category (September 30, 2022)

2.23%

2.4%

2.0%

29.1

27%
35%

OfficeOffice82.7 billion

Residence
Residenceyen

Logistics
Logistics

1.6%

20.6

Businessuse
Business Use

20.4

20.1

9.7

1.2%

March 2021

March 2022

2%

5%
4%

27%

RenewableenergyNon-real estate(LBO etc)

September 2022

Composition ratio by property area (September 30, 2022)

Balance of loans receivable(Billions of yen)

100

82.7

69.4

80

38%

60
40

44%

首都圏
Tokyo metropolitan area
静岡・神奈川Shizuoka and Kanagawa

33.5

関西圏
Kansai area
中部圏
Chubu area

20
0March 2021

March 2022

September 2021

© 2022SURUGA bank, Ltd. All rights reserved.

3%

7%

Other
その他

9%

Non-real estate
非不動産(LBO・再エネ等）(LBO/Renewable energy etc)

12

■ Unsecured Loans• To expand our customer base, we are strengthening sales online, focusing on smartphone accounts, and we aim to increase the account utilization
rate through a system of refunds based on account usage, including account transfers and charges.
• In the area of loans for specific purposes, we are building a system to make loans for specific purposes available in major cities*, with the aim ofincreasing the number of partner locations where we can send customers.
*Major cities: Tokyo, Kanagawa, Chiba, Saitama, Shizuoka, Aichi, Osaka

Number of smartphone accounts opened

Dental loans* application trends*Dental loans are the main product in loans for specific purposes.

NumberNumber

1,600
8,000

1,200

6,000

800

4,000

400

2,000

0

0
21/10

22/01

22/04

22/07

© 2022SURUGA bank, Ltd. All rights reserved.

1H,FY3/20

2H,FY3/20

1H,FY3/21

2H,FY3/21

1H,FY3/22

13

■ Securities Management• In response to changes in the market environment, such as rising overseas interest rates, this current period, we sold a portion (35 billion yen) of ourmulti-asset fund, which has relatively high risk among our securities portfolio, to reduce risk during the current fiscal year. In addition, the multi-asset
fund is currently allocated in a risk-controlled manner.
• Our policy is to control the portfolio while taking into account the market environment and the status of surplus funds.

Securities portfolio
National
governme
nt bonds

Local government
bonds, etc.

Shares

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

Yield on securities

Mar.31 2022

0.46％

0.45％
444.4

413.2

Fair valueNet
unrealized
gains(losses)

Fair valueNet
unrealized
gains(losses)

Other securities

454.2

(1.4)

460.7

(14.6)

432.6(15.8)

Shares

15.8

7.5

16.3

8.0

16.6

8.4

Bonds

143.5

(0.3)

162.5

(0.7)

171.3

(1.2)

Multi-asset fund

290.2

(9.7)

277.1

(22.8)

242.4(22.5)

4.5

1.0

4.6

0.8

2.1

(0.4)

240.7

16.4
41.7

132.5
12.4

Domestic
stocks

25.5

11.6
60.2
23.4

25.1
140.0

89.0

94.5

114.4
2.1

18/9

19/9

20/9

24.7
159.6
11.7

21/9

Mar.31 2022

242.4

211.9
147.2

Other

・Portfolio of multi-asset fund

5.8

7.3

Sep,30 2022

Net
unrealized
gains(losses)

5.37％

0.86％

Jun,30 2022

Fair value(Billions of yen)

0.68％

(Billions of yen)

Sep.30 2022
ForeignstocksForeignstocksDomestic
stocksJapanesegovernment
bonds, etc

Fair value
290.2 billion
yen
Advanced countries’
government bonds, etc.

Advancedcountries’
Fair value
government 242.4 billion
bonds, etc.
yenJapanesegovernment
bonds, etc

22/9© 2022SURUGA bank, Ltd. All rights reserved.

14

■Status of Single Building Apartment Loans• Due to strict self-assessment based on the changes in the self-assessment standards*1 at the end of September 2018, non-delinquent loans ofapproximately 540 billion yen were classified as loans requiring special attention.
• The majority of loans requiring caution include loans that are not delinquent as of September 30, 2022.
• In FY2022, we plan to conduct periodic inspections of approximately 8,500 of the single building apartment loans, and as of the end of September
2022, we had completed inspections of approximately 4,000 properties (47% complete). We provide in-depth support in terms of property management,
including reporting to the borrower on the property management status, etc. identified in the survey, with the aim of maintaining and increasing the rankof the classification of obligor.
Loan balance of single building apartment loans by classification of borrowers and delinquency status (End of September 2022)（Billions of yen）
Borrowerclassification

Credit claims such as loans *2

Normal clients
Clients requiring special attention (*1)
Clients requiring corrective action
Clients at high risk of bankruptcy
Virtual bankruptcy clients/bankruptcy
Total

Portion of single building
apartment loans

1,197.9
650.1
80.3
46.6
115.3
2,090.4

Portion not delinquent

254.7
543.2
68.1
29.7
104.4
1,000.3

254.7
539.2
65.2
26.3
4.4
889.8

＊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

Occupancy rate of single building apartments (periodic survey)
Occupancy rate at the end of September 2022: 88.2%(Survey results for occupancy rate in fiscal 2021: 87.4%)<Survey>• In principle, the person in charge of bank loans visits the location of the property to check not only the occupancy status but also the physical condition of the property and management status.
• If any damage on the property or abnormal management is found, it will be reported to the borrower.
• Targets include investment real estate for borrowers with a single-building revenue loan balance of at least ¥50 million (number of properties eligible for single-building revenue loans:approximately 8,500, covering more than 90% of the properties based on balance).
• In FY 2022, measures to prevent the spread of COVID-19 were continued and the measures were carefully implemented.

© 2022SURUGA bank, Ltd. All rights reserved.

15

■ 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 ofloans 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 takea serious response according to each customer's individual circumstances.

Response to customers since FY2018

For details, please refer to the next page, "Major Efforts to Support Repayment of Investment Real Estate Loans".

 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 ofpart 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 for the 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

Applicable: Share house loans and other investment real estate 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 theloan, from the perspective of fair share of loss and in view of the difficulty in their loan
repayment, we calculate the loan repayment amount correspondent to the settlement
amount we are responsible for, which will be offset with their repayment amount upon
mutual consent.
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 primarycalculation notice of the exemption amount. For borrowers who request the next step, weare proceeding with a civil conciliation or authorized ADR procedure.

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

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

© 2022SURUGA bank, Ltd. All rights reserved.

16

■ Major efforts to support repayment of investment real estate loans• We have been providing various kinds of repayment support to customers using investment real estate loans since 2018, including rate reductions andchanges in principal repayment amounts, in addition to exemption for repayment of part of the principal of loans and the comprehensive transfer of loans.
• Of all properties surveyed (37,907), over 40% were fully repaid as of September 30, 2022, and over 50% are continuing repayment.

Major Initiatives

From the attachment of “Announcement Regarding Transfer of Share House-related Loan Receivables” disclosed on September 26, 2022.

・ We established the “Share House-Related & Other Loan Customer Service Office” in June 2018 and have conducted interviews with approximately 90% of our share house ownercustomers to date. we changed interest rates, repayment methods, and other terms and conditions for more than 70% of them. Subsequently, as noted on the previous page, we
conducted a total of four subsequent batch transfers (total of 1,051 persons/1,339 properties) to our share house owner customers.
・ We announced in November 2018 that we would conduct a survey of all loans for investment real estate (including share house loans) and sent out questionnaires to customers
currently using investment real estate loans. In May 2019, along with the results of the full survey, we announced that we will provide more in-depth repayment support, including
partial principal cuts, to customers with difficulty repaying their loans. Customers using investment real estate loans at the time were also notified separately by mail (approximately
20,300 customers/34,000 properties).
 We received requests to partially cut principal for 3,088 properties.
 Of these, 1,676 properties were in the red*. A further 1,308 within these have already agreed to partial principal cuts, rate reductions, or principal repayment modifications to
support their repayment.
 Separate from the customers who requested this, we have provided repayment support through rate reductions and principal repayment modifications for 3,015 properties.
 As a result of these actions, together with the 1,339 properties from the share house receivables transfer, a total of 4,968 properties (excluding duplicates) have been addressed.
*One of the preconditions for considering principal reduction is that the property must be in a situation where loan repayment is difficult at the time of consultation (the property‘sbalance of income and expenditures, including loan repayment, must be in the red).
•Since November 2020, we have also established a system to support the management of properties financed by investment real estate loans. Based on information obtained by site
inspections on the occupancy status, damage, and other management conditions of properties financed, we provide customers with proactive proposals to improve their balance ofincome and expenditures.
In negotiation/dispute(incl. systematicnegotiation)

After approximately four years of repayment support and consultation efforts, more than 40%

Number of properties
surveyed by the report on allinvestigations into investment realestate loans, published May 15, 2019No balance(e.g. fully
repaid)of the 37,907 properties surveyed in all have a loan balance of zero, and more than 50% arecontinuing repayment.
However, approximately 3% of the other loans are either under negotiation or in dispute (i.e.,
those for which systematic negotiations are underway or repayment support agreements

37,907 properties

have not yet been reached), and we will continue to take appropriate measures to resolve
Continuing repayment(incl. those agreeing
to repayment support)these issues.

September 30, 2022
© 2022SURUGA bank, Ltd. All rights reserved.

17

Ⅰ Summary of Financial Results for the 1st Half of FY3/23

Ⅱ Business strategy based on the Mid-term Management Plan

Ⅲ SDGs/ESG initiatives for FY2022

■ SDGs/ESG initiatives for FY2022

Environment• To promote our contribution to environmental protection, we endorsed the TCFD recommendations and started to respond to climate change risks.
Contribution to environmental preservation - Suruga Group's Materiality■Endorsement and efforts in TCFD* recommendations*Task Force on Climate-related Financial Disclosures

We have expressed our endorsement of the December 2021 TCFD recommendations, andbased on the recommended framework, we are working to address climate change risks bydisclosing information on climate-related risks and opportunities.

[Scenario analysis]
Risk events

Occurrence of flooding (flood risk)

Scenario used

PCP 8.5 (4°C scenario) in the IPCC* report

Subject of analysis

Personal real estate-backed properties in Japan (approx. 40,000
properties)

Analysis method

We estimate the increase in credit costs due to collateral value damage
and business stagnation in the event of a major flood, etc., by
overlaying the location of the collateral property with hazard maps.

Analysis results

The maximum increase in credit costs by 2050 is about 2.7 billion yen,and the impact is considered to be limited.

 Governance We recognize contributions to environmental preservation, including addressing climatechange, as one of the materialities of our group, and promote SDGs/ESGs as our basic
policy for each of our materiality-related initiatives.
 The IR Office manages the progress of SDGs/ESG initiatives as key managementmonitoring item and reports regularly to the Executive Committee, while the Board of
Directors supervises the status of initiatives.
 The Integrated Risk Management Committee, chaired by the General Manager of the IR
Office and attended by the President and Vice President, manages the progress ofclimate-related risks and opportunities, reports and discusses their contents to the
Executive Committee on a regular basis, and supervises efforts at the Board of Directors'
meetings.

 Strategies
We have organized climate change-related risks and opportunities as follows, and haveprioritized scenario analysis with respect to physical risks, which have a particularly large
impact.

[Climate change risks]
Transition risks

We recognize the possibility of an increase in credit risk for ourcustomers due to the impact of climate-related policy and regulatory
tightening in the process of transitioning to a decarbonized society.
As of March 31, 2022, our carbon-related assets (electricity, gas,energy, etc.) accounted for less than 0.1% of our total credit
balance, so we recognize that the impact is limited.

※Intergovernmental Panel on Climate Change Risk management
 We regard climate change risk as one of the important risks that can significantly affect ourbusiness operations, strategies, and financial plans, and we will work to build a structure to
manage climate change risk within the framework of integrated risk management.
 We will work to build a structure to manage credit risk, risks associated with our tangible fixed
assets, operational risk, and other risks based on the impact of climate change risk on our loans.
 For investments and loans in sectors that have a high potential for environmental and social
impact, we have established an investment and loan policy (sector policy).
For details of the investment and loan policy (sector policy), please referto the following link.


HP/Company Info/Sustainability/Investment and Loan Policy(Sector Policy)

https://www.surugabank.co.jp/surugabank/corporate/sustainability/sector_policy.html

Physical risks

We recognize that natural disasters such as flooding caused byclimate change may increase credit risk due to deterioration ofbusiness performance or damage to collateral value resulting fromstagnation of customers' businesses.

[Opportunities]
We will create business opportunities by providing sustainable finance and transition
finance for customers to adapt to climate change, as well as solutions to support thetransition to a decarbonized society.

© 2022SURUGA bank, Ltd. All rights reserved.

 Indicators and targets

CO2 emissions target for FY2030 is a 46% reduction
compared to FY2013*Monitoring indicators: Scope 1 (direct) + Scope 2 (indirect) CO2 emissions

18

■ SDGs/ESG initiatives for FY2022

Social• In order to contribute to building sustainable local economies and societies, we will strengthen cooperation with local governments and privatecompanies, aiming to spread the SDGs to local companies.
■Launch of Suruga SDGs Initiative Support Service

Building Sustainable Local Economies and Societies- The Suruga Group's Materiality

In cooperation with Mitsui Sumitomo Insurance, and MS&AD InterRisk Research& Consulting, we have launched the Suruga SDGs Initiatives Support Service forcorporate and sole proprietor customers.

■Strengthening partnerships with local governments
We are utilizing the registration/certification systems introduced by local
governments to achieve the SDGs, and are working together with them to solve
local issues.

 Registration as an Oimachi SDGs Partner**This is a system to register companies and organizations that work
together with Oimachi, Kanagawa Prefecture, in activities topromote the SDGs for the achievement of the SDGs as Oimachi
SDGs Partners.

(Purpose)
Through this service, we provide feedback on the status of our clients' SDGs
initiatives and the degree to which they have achieved them, and work with themto find solutions to their issues, with the aim of enhancing their corporate value. In
addition, we also support the formulation of an SDGs Declaration and external PR
based on the customer's request.
 We are providing advanced support to local companies, NAC and Miroku, inthe formulation of their SDGs Declarations, which was announced on thesame day as the service launch.
Type of business

Address

NAC Inc.

Wholesale of general packaging materials

Shimizu-cho, Sunto-gun,Shizuoka Prefecture

Miroku Corporation

Planning, development, manufacturing andsales of hand tool products

Mishima City, Shizuoka
Prefecture

Oimatsuda Branch Registration as an Odawara SDGs Partner**This is a system to register companies, universities,
organizations, etc. that are working together with
Odawara City toward sustainable urban
development and the achievement of the SDGs as
Odawara SDGs Partners.

Please see below for each company's SDGs declaration and our support achievements.
Odawara Branch

OdawaraEast Branch

HP/Corporate Customers/Products & Services/Suruga SDGs Initiatives
Support Service

https://www.surugabank.co.jp/surugabank/houjin/service/sdgs/corp.html

 We provide preferential services for businesses certified under the Yokohama City
SDGs Certification System Y-SDGs.
Businesses certified under the Yokohama SDGs Certification System Y-SDGs will begiven preferential treatment when they use our business matching service byreturning the commissions we receive.
I.

Lifestyle support services for foreigners provided by KUROFUNE (incentive for the first
year's usage fee)ii. Recruitment (preferential hiring costs) of highly skilled foreign human resources(engineers) provided by One Terrace© 2022SURUGA bank, Ltd. All rights reserved.

SDGs Awareness Pamphlet

19

■ SDGs/ESG initiatives for FY2022
Building Sustainable Local Economies and Societies- The Suruga Group's Materiality■Initiatives to achieve financial inclusion
In response to the growing need for financial inclusion that provides financial
knowledge, expertise, and access to financial services so that all people can enjoy
financial stability throughout their lives, we have considered and launched various
initiatives through the establishment of the FI Planning Office/Promotion Office withthe mission of providing reassurance to customers who are do not have access tofinancial services.

SocialReassuring consulting in the age of 100 years of life, converting
customers' anxiety into peace of mind
[Musu-bi services]As part of our asset consulting services,
we have begun offering "musu-bi,"
a support service for end-of-life planning.
We will help you to think about how totie up your life in your own way alongwith your life planning in the age of 100 years of life.

Visualization of your assets
Assistance in creating asset lists
Storage and organization ofimportant documents

Preparing your final days

 Expansion of products/services

Funeral insurance information

Designated account for foreign customers
Through the use of smartphone accounts, we have launched the first savings account at aregional bank* that allows foreign customers to open an account with a smartphone at our
exclusive online branch, D-Bank Branch. For foreign customers who were previously unable toopen an account due to residency status or other reasons, we offer an ordinary savings accountthat can be used for salary transfers, utility bill payments, etc., in which everything can be done
onlineSaying farewell in your own
mannerFuneral styles*According to our own researchAuto loans for foreign customers without permanent residency

Pamphlet

We have begun offering the "Foreigner Support Plan," an auto loan for foreign nationals who do
not have permanent residency. Applications can be made online, and the loan can be repaid atconvenience store ATMs with a special card issued after signing the contract, making it available
to foreign nationals living throughout Japan.

Multilingual support to improve convenience for foreign customers✓We have introduced Phone Interpretation Services, a telephone interpretation service
provided by Polyglot Link, so that customers can consult with us in languages other thanJapanese when contacting our call center.
✓WOVN.io, a website language conversion solution from Wovn Technologies, has been
introduced to provide multilingual support for a portion of the D-Bank branch website, theonline account opening system, and the auto loan page for foreign customers.

© 2022SURUGA bank, Ltd. All rights reserved.

■Future direction and goals
 We will enhance the financial wellbeing of our foreign customers by providing themwith living accounts and meeting their borrowing needs that lead to financial andemotional stability in Japan.
 We aim to develop and expand products and services to solve financial problems
faced by not only foreign customers but also the elderly and the young.

20

■ SDGs/ESG initiatives for FY2022
Building Sustainable Local Economies and Societies- The Suruga Group's Materiality

Social Signed agreement with Hadano, Kanagawa Prefecture (June 17, 2022)
Sharing footage of bicyclists touring courses set for each theme, focusing on historical sites
and spring water spots in Hadano, also known as Meisui no Sato (Village of Famous Water).

■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.

Cooperation with municipalities and general associations
In the first period of FY2022, we signed partnership Agreements for Promoting Bicycles withfive new municipalities and general incorporated associations, contributing to building afoundation for further regional cooperation as a driving force for cycle tourism.

 We signed an agreement with Mt. Fuji Suruga Ferry General
Incorporated Association (April 11, 2022).

City promotion: Hadakuru

 Signed an agreement with Fuji, Shizuoka Prefecture (July 26, 2022)
Holding cycling events that take advantage of the topography of Fuji, which covers an areafrom 0 m above sea level to Mt. Fuji, and sharing footage of bicyclists touring courses set foreach theme, focusing on sightseeing spots such as historical sites and famous places in Fuji.

We conduct PR activities for cycling routes incorporating Prefectural Route 223 (Fujisan), theonly sea route in Japan certified as a specialized route for tourism.

Cycling event: Fujiyama Power-line Trail Ride

City promotion: Suruichi

View from the photo spot on the ship

 Signed agreement with Fujisawa, Kanagawa Prefecture (May 19, 2022)
Sharing footage of bicyclists touring courses set for each theme focusing Fujisawa'ssightseeing spots, including historical sites and famous landmarks.

Fujisawa Mayor Suzuki and Fujikyun ♡City Promotion: Fujisawa Kyun♡Pota© 2022SURUGA bank, Ltd. All rights reserved.

City promotion: Logo mark

 Signed an agreement with Numazu City, Shizuoka Prefecture(August 30, 2022)
Sharing footage of bicyclists touring courses set for each theme, focusing on sightseeing
spots in Numazu, including historical sites and places of interest, as part of the agreement
project, and plans to hold a cycling event.

City Promotion: #Numachari Stamp Point puttering

21

■ SDGs/ESG initiatives for FY2022
Building Sustainable Local Economies and Societies- The Suruga Group's Materiality

Social Financial classes (for junior high school and high school students)
With the aim of improving financial literacy, our employees gave financial lessons to local
junior high school and high school students on the theme of money, while sharing their own
experiences as lecturers.

■Financial education
 Tour of Suruga Bank (for elementary school students)[Kitago Junior High School (Oyama, Shizuoka Prefecture)]

As part of the Summer Vacation Independent Study Course sponsored by the East Shizuoka
Regional Office, fifth- and sixth-grade elementary school students and their parents wereinvited to Suruga Bank's Head Office for a classroom lecture on the role of money and themain jobs of banks, as well as to gain hands-on experience as lobby personnel and otherwork-related activities.

[Gotemba Nishi High School (Gotemba City, Shizuoka Prefecture)]
Hands-on lecture:“Let's hold a bundle of cash!”Classroom lecture:“What is Money?”“ What is a bank?”

Hands-on lecture:“Let's hold a bundle of cash!” Occupational discussions (for junior high school students)
As a participating partner of the "Canvas for the Future☆" initiative of TEPCO Power Grid,
our employees held occupational discussions at Kannami Higashi Junior High School and
Susono Higashi Junior High School as part of activities to nurture the next generation who
will lead Shizuoka in the future.

Kannami Higashi Junior High School

Susono Higashi Junior High School© 2022SURUGA bank, Ltd. All rights reserved.

 Lectures (for local business owners and local government officials)
We co-sponsored the Shizuoka University Eastern Satellite Seminar Series at KANO Base,
where we are also a tenant, and gave a lecture on our role in case studies of financial
inclusion and a concept leading to solutions for vacant houses in rural areas, which is aregional issue.

LectureDiscussion22

■ SDGs/ESG initiatives for FY2022

Governance• In order to embody our Corporate Philosophy and Compliance Charter, we aim to further improve our governance.
■Composition of Directors

Establishment of a Solid Governance Foundation

10％(1 people/10 people)- The Suruga Group's Materiality
40％(4 people/10 people)■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

Board of Directors

Nomination andCompensation Committee

Compliance Committee
Internal Audit
Department

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

September 30, 2022

General Meeting of
Shareholders
Audit Committee

Ratio of independent outside directors

President

In 2020, we introduced a post-issuance stock compensation plan for directors (excluding
outside directors and Audit Committee members) to clarify the connection between theircompensation and the Company's performance and stock value, and to raise their awarenessof the need to contribute to improving the Company's performance and increasing its corporate
value over the medium to long term.

[Basic structure]
Compensation for directors (excluding outside directors and Audit Committee members)consists of three parts. The three parts include the base compensation (cash) based on the roleand position of each director, the bonus (cash) as short-term incentive compensation, and stockcompensation (stock) as medium- to long-term incentive compensation. Depending on the roleand position of each director, the compensation structure is designed to encourage medium- tolong-term improvement of corporate value by increasing the ratio of incentive compensationfrom the viewpoint of increasing commitment to improving corporate performance and corporate
value.
Stock[Standard model]

Corporate Philosophy
Promotion Committee

Business Execution
Committee

compensation
20％
Each Risk Committee*
Bonus
20％

Base
compensation
60％

Each Department (8 Divisions)Internal
Directors

OutsideDirectors

OutsideDirector/Chairperson/Chairman

Each Risk Committee*
ALM Committee

Credit Risk Committee

Integrated Risk
Management Committee

Business Risk
Committee
System Risk Committee© 2022SURUGA bank, Ltd. All rights reserved.

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)]
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 largescale correction of past fiscal years' financial results.

23

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.”© 2022SURUGA bank, Ltd. All rights reserved.

Reference Material 1

■ Suruga Bank Mid-term Business Plan—“Re:Start 2025” (Period: FY2019-FY2025)
Corporate
Philosophy

We want to be a company that makes customers feel,“I’m glad you’re here... I’m glad we met.”
Customer satisfaction

Shareholder value

Employee satisfaction

Contribution to society

Providing value

New Vision for Suruga Bank

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

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

Strategic
Management

Restructure the core business of “retail banking”
while promoting “marketable activities” to diversify
risks and stabilize profits.
✔ Establish a revenue base that balance risk andreturn by controlling RA gross operating
profit*.

Promote existing businesses with controlled risk
capital, pursue new business, and prepare forrisks that surface in high-stress environments.
✔ Even after Basel III is revised, we will maintain acapital adequacy ratio of at least 8% to realize
our business strategy.

* RA (Risk Adjusted) Gross Operating Profit = Gross Operating Profit - Real Credit Costs© 2022SURUGA bank, Ltd. All rights reserved.

Reference Material 2

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

Principles ofgovernanceSelection anddetermination ofmateriality issues

Suruga Bank group’s materiality
issuesWe analyzed and evaluatedelemental information on bothwhat our Group values and whatstakeholders do, and formulated“materiality” issues that areimportant to both sides.

Our Group’s materiality are the following four
issues.
Each materiality issue, which is notindependent but organically linked with theother issues, is an integral part of fulfilling our
responsibilities to all stakeholders.

What Suruga Bank
Group values
Corporate Philosophy
Compliance Charter
Mid-term Business Plan
“Re:Start2025”
HistoryX

PeopleRelevant SDGs

Establish a solid foundation
for governance

Create an environment where
employees can play an activerole and grow

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© 2022SURUGA bank, Ltd. All rights reserved.

Contribute to environmental
conservation

Reference Material 3

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>
Net interest margin
Loan-deposit margin(after deductionof expenses)

Loan-deposit
margin (overall)

Loans (average balance / yield)
Average loan balance (Billions of yen)
Net interest margin

Yield on loans and bills discounted

3,134.8<Special factors behind change in loans and bills discounted＞
Sep‘19 Studio apartment loan securitization(Approx. -100 billion yen)Sep‘20 Collection of loans from founding families, share houses
transfer of claims (Approx. -100 billion yen)Sep‘21 Transfer of share house claims (Approx. -44.2 billion yen)Sep‘22 Transfer of share house claims (Approx. -77.3 billion yen)

2,739.3
2,457.0

3.31%

3.17%

3.36%

3.07%

3.01%

1.72%

1.78%

2,112.9

3.12%

3.05%

2.91%

Sep‘20

Sep‘21

Sep‘22

2.87%

2.06%
1.79%

3.21%

2,277.8

Sep‘18

1.76%

Sep’19Deposits (average balance / yield)
Average deposit balance(Billions of yen)

Yield on deposits

37,9131.51%

32,846

0.05%

0.03%

0.04%

0.04%

0.04%

Sep‘18

Sep’19Sep‘20

Sep‘21

Sep‘22

1.21%
0.96%

Sep‘1831,89733,46630,789Sep’19Sep‘200.81%

Sep‘21

0.78%

Sep‘22© 2022SURUGA bank, Ltd. All rights reserved.

Reference Material 4

■Trends in Expenses, OHR, and Capital
Trend in Expenses and OHR <non-consolidated>
Non-personnel
expenses

Personnel
expenses

Gross Operating
ProfitTrends in Capital & Capital Adequacy Ratio

Taxes

Capital adequacy ratio

Equity capital

OHR（Billions of yen）

（Billions of yen）

53.9
13.54%
42.4

11.04%
8.65%

36.8

9.23%

33.5

275.2
28.5

23.8
8.5

44.1%
13.1

22.4
7.4

52.8%
12.9

13.59%

219.7
20.5

20.2

7.4

7.2

18.7
65.7%

60.2%

6.9

11.3

11.0

10.2

55.6%

228.9

261.7

245.3

2.0

2.0

1.7

1.9

1.5

Sep‘18

Sep’19Sep‘20

Sep‘21

Sep‘22© 2022SURUGA bank, Ltd. All rights reserved.

Sep‘18

Sep’19Sep‘20

Sep‘21

Sep‘22

Reference Material 5

<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 not intended
as guarantees of any specific future performance, which is subject to a variety of risks and uncertainties. Actual futurebusiness results may differ from the targets contained in the present material, due to unpredictable changes in theexternal business environment.
© 2022SURUGA bank, Ltd. All rights reserved.