Suruga Bank

Financial Results for FY3/24

May 24, 2024

■ Table of contents
I Summary of Financial Results for FY3/24

page

III Initiatives to Achieve P/B Ratio Above 1.0

page・Actual Results for FY3/24: YoY Comparison

1・Framework and Main Initiatives to Achieve P/B Ratio Above 1.0

15

・Financial Highlights: Four Factors Supporting Sustainable Growth2

・Understanding Issues and Setting Targets

16

・New Loan Disbursements

3・Capital Policy

17・Earnings Forecast for FY3/25 (Consolidated & Non-consolidated)

4・Business Impact and Risk Assessment for a World with Interest Rates

18

・Environment

19・Social20

・Governance22

Conclusion

23

page

II Business Strategy
・New Business Gross Profit Forecast

5・Community Bank

6

・Direct Bank

7・Greater Tokyo/Regional Bank

8・Market Finance

9・Collaboration with Credit Saison

10

・Cost Structure Reform

11・Status of Single Building Income Loans

12・Investment Real Estate Loans (Status of Organizational Negotiation Partners)

13

・Pursuing Cloud Computing and DX in IT Platforms

14

Definition of terms in this document
Credit Saison Co., Ltd.

Reference Materials

page・Actual Results for FY3/24: YoY Comparison

24

・Actual Results for FY3/24: Forecast Comparison

25・Interest Margin

26

・Actual Credit Costs and Disclosed Claims Based on the Financial Reconstruction Law

27

・Loan Balance, Yield, and Delinquency Rate (YoY Comparison)

28

・Overview of Mid-Term Business Plan

29

・Mid-Term Business Plan Initiative Policies

30

・Management Strategies I. II. III

31

・Mid-Term Business Plan KPI Revisions

34

・Value Creation Process

35

Credit Saison, Saison© 2024 SURUGA bank, Ltd. All rights reserved.

I Summary of Financial Results for FY3/24

II Business Strategy

III Initiatives to Achieve P/B Ratio Above 1.0

■ Actual Results for FY3/24: YoY Comparison(Non-consolidated)(billion yen)

FY3/23(A)(billion yen)

YoYcomparison(B) - (A)FY3/24(B)

Core gross operating profit (excluding
gains/losses on cancellation of investment
trusts)

60.2

58.5

(1.7)

Of which, new business gross profit

7.7

11.3

+3.6

Expenses（－）

36.2

35.1

(1.0)

Actual credit costs（－）

(1.1)

(2.0)

(0.8)

Loss on securities(14.4)

(5.1)

+9.2

Ordinary profit

11.2

20.1

+8.8

Net income

9.5

15.0

+5.4

3.87％

5.67％

+1.80 pt

ROE (net income basis)(Consolidated)
FY3/23(A)

YoY
comparison(B) - (A)FY3/24(B)

Consolidated ordinary revenue

92.4

91.4

(0.9)

Consolidated ordinary profit

13.2

20.6

+7.3

Profit attributable to owners of parent

10.5

15.3

+4.7

Both consolidated and non-consolidated ordinary
profit and net income
up for second consecutive year
 FY3/24 actual results(Actual Credit Costs)
FY3/23

FY3/24

(1.1)

(2.0)

(7.3)

(5.0)

6.1

3.0

Allowance for new suspension of repayments by some investment realestate loan customers triggered by organizational negotiations

2.0

(0.1)

Allowance for claims for restructured loans that are unlikely to be
recovered in the future

4.1

3.1

Actual credit costs total
Normal amount

Actual credit costs arising from loans without special
factors (including share house-related loans)

Preventive
allowances

Eligible allowances as follows(non-consolidated YoY comparison)
Ordinary profit up 78%
Net income up 57%
ROE up 1.8 pt

 Dividend ￥21 (up ￥12)

© 2024 SURUGA bank, Ltd. All rights reserved.

1

■ Actual Results for FY3/24 (Financial Highlights: Four Factors Supporting Sustainable Growth)
Progress in strengthening earnings base and risk-taking capabilities that will lead to future sustainable growth＜ Loans and Bills Discounted Balance ＞＜ Credit Quality ＞
Ratio of disclosed claims based on the Financial Reconstruction Law
gradually decreased through steady efforts to improve quality

Reversed downward trend from FY3/24 H2 (up 32.7 billion yen)(billion yen)

2,080.1

2,066.7
2,034.0

Sep. 31, 2023

Mar. 31, 2023
Fair value(billion yen)Mar. 31, 2024

Unrealized
gains(losses)

Fair value

10.48％

9.88％(0.6 pt)

6.52％

5.95％

(0.57 pt)

Excludingorganizational
negotiation partners

Loans andCredit quality
bills
discounted
balance Stronger

Mar. 31, 2024

＜ Securities ＞

Mar. 31, 2024

Ratio of disclosed
claims to total credit+32.7 bnyenMar. 31, 2023

Mar. 31, 2023

Unrealized
gains(losses)revenuefoundation
and riskUnrealized taking
gains(losses) on
securities

Change＜ Capital Adequacy Ratio ＞(billion yen)

Capitaladequacy ratio

Mar. 31, 2023
Capital adequacy ratio

Mar. 31, 2024

13.04％

14.00％

251.8

258.6

1,930.4

1,846.2

Other securities

292.0

(1.2)

270.9

21.7

Shares

15.5

7.7

46.9

25.2

Bonds

154.7

(0.3)

159.0

(0.9)

Risk assets, etc.

Others

121.7

(8.6)

64.9

(2.6)

* Capital adequacy ratio after application of Basel III finalization (as of March 31, 2024): 11.87%

Progress in reducing unrealized losses and risk to rebuild a portfolio
centered on yen bonds, which are expected to provide stable income

Shareholder equity (core capital)

Secured capital buffer that enables necessary risktaking as we move towards a world with interest rates© 2024 SURUGA bank, Ltd. All rights reserved.

2

■ New Loan Disbursements
New loan disbursements in the Bank’s origination sector are steadily growing with a growth rate of 42% for FY3/24(billion yen)

FY3/22

FY3/23

FY3/24

FY3/26

FY3/25(Phase 2 final year)

Origination sector

103.8

156.2

222.7

185.0

195.0

Solutions business

19.9

36.4

51.7

55.0

65.0

Investment real estate loans

34.7

47.6

83.0

70.0

70.0

Structured finance

49.2

72.1

87.9

60.0

60.0

Collaboration loans, etc.

59.9

79.9

25.8

65.0

65.0

Total

163.8

236.2

248.6

250.0

260.0

Phase 1
FY3/20Phase 2
FY3/23

FY3/26* New loan disbursements (acquired) by portfolio area since mid-term business plan “Re:Start 2025”* Solutions business (housing loans, unsecured loans, etc.)* Investment real estate loans include those for corporate clients* Structured finance includes specified corporate bonds, etc., while collaboration loans include monetary claims bought, etc.
* Difference between forecast (structured finance: ¥77.0 bn) and actual results (¥87.9 bn) announced on April 4, 2024:
Recoveries from refinancing and use of available lines of credit such as commitment lines© 2024 SURUGA bank, Ltd. All rights reserved.

3■ Earnings Forecast for FY3/25 <Non-consolidated & Consolidated>
In FY2025, plan to steadily accumulate new business gross profit and take another step toward improving quality of loan portfolio
In the securities segment, related losses are expected to disappear as we move from restructuring to gradual accumulation stage(Non-consolidated)(billion yen)
FY3/25 forecastCore gross operating profit (excluding gains/losses
on cancellation of investment trusts)(billion yen)

FY3/25 forecast

FY3/24 results①(Consolidated)

Non/consolidated

YoY comparison
Full year②

1st half②-①

difference

Full year③

1st half(③ - ②)

58.5

28.5

56.0

(2.5)

11.3

7.9

16.0

＋4.6

Expenses（－）

35.1

18.0

35.5

+0.3

Actual credit costs（－）

(2.0)

2.5

3.0

+5.0

Loss on securities

(5.1)

0

0

+5.1

Ordinary profit

20.1

8.5

18.5

(1.6)

8.5

19.0

+0.5

Net income

15.0

7.0

14.5

(0.5)

7.0

14.5

±0

21 yen11 yen22 yen+1 yen

Of which, new business gross profit

Dividends per share (full year is cumulative)* Dividends per share of 22 yen = Interim dividend of 11 yen + Year-end dividend of 11 yen(billion yen)

(Assumptions Behind FY3/25 Actual Credit Cost Forecast)[Normal amount]
Actual credit costs for loans without special factors are expected to be close to zero for the full year, due inpart to lower than expected loss ratio[Preventive allowances]
We plan preventive allowances of 3.0 billion yen for the full year, taking into account additional provisions forclaims whose repayments are suspended due to organized negotiations by some customers with investment
real estate loans and for restructured loans for which normalization of recovery is unlikely.
© 2024 SURUGA bank, Ltd. All rights reserved.

1st half

Full year

2.5

3.0

Normal amount

1.0

0Preventive
allowances

1.5

3.0

Actual credit costs4I Summary of Financial Results for FY3/24

II Business Strategy

III Initiatives to Achieve P/B Ratio Above 1.0

■ New Business Gross Profit Forecast
Thanks to steady progress with the mid-term business plan, gross profit from new businesses in FY2025
is expected to grow by 4.6 billion yen year on year
New business gross profit (core gross operating profit, new portfolio)(billion yen)

FY3/24 results(A)

FY3/25 forecast(B)

Change(B) - (A)

1st half
Retail/Solution businesses

4.5

2.8

5.9

+1.4

Solution business*

1.7

1.0

2.3

+0.5

Investment real estate loans

2.7

1.7

3.6

+0.8

6.8

5.0

10.0

+3.1

Structured finance

3.9

2.2

4.7

+0.8

Market operations, etc.**

2.9

2.8

5.3

+2.3

New business gross profit (new portfolio) total

11.3

7.9

16.0

+4.6

Reference: Old portfolio gross profit

47.1

20.7

40.0

(7.1)

Market financeFour Autonomous Profit Centers

Community Bank

P6

Direct Bank

P7

Greater Tokyo/Regional Bank

P8

Market finance

P9* Solution business includes asset consulting, housing loans, unsecured loans, etc.
** Market operations, etc. include collaboration loans, etc.


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

© 2024 SURUGA bank, Ltd. All rights reserved.

5■ Community Bank
The community bank, which operates locally in Shizuoka and Kanagawa prefectures, made progress in both its personal solution businessand corporate solution business in fiscal 2023. In particular, inquiries were up for housing loans, personal loans,
and asset consulting, and we will continue to build account sales tailored to the specific area
Greater Solutions Proposals

Older people

Younger people

・Second home loans
・Renovation loans
・musu-bi—end of life
support service
・Testamentary trusts... etc.

・Salary transfers
・Smart accounts
・NISA, Regular
Investing NISA
・Car loans... etc.

Personal Solutions
business

Housing loan disbursement

Helping customers lead more affluent lives with a wide range of products including personal loans and finance,
insurance, and the new NISA

x1.5

First Time at Suruga Series 2024
Incentive program for new and existing customers. Building a business base by cultivating
deeper relationships with customers through new transactions
FY3/24

Transactions leading to opening main account
New NISA accounts opened

Families・Housing loans ・Education loans
・Mutual funds, NISA ・InsuranceContinuation
management

Pensionpayments

Salarypayments

Account
opening

NISA

x2.6... etc.

DirectdebitsManagement
support

Corporate Solutions
business

Personal Solutions business—Greater support for active seniors & asset-builders

FY3/23Creating outbound-based
customer contact points

・Support for SDG initiatives
・Business succession
・M&A support... etc.

FY2024 Policies

・Business financing
・Cashless payment support
・HR support
・Seminars for employees... etc.

FY3/23x2.1

Streamlining
・Internet Banking ・Cashless payment support
・Digital and IT support ・Equipment installation support

FY3/24

New investment trusts
and insurance

Expanding base by supporting
management issues
FY3/23Fixeddeposits

Corporate Solutions business—Expanding the base of local businesses
Dialogue with business partner companies, funding proposals, and astute support for sustainablegrowthTalent development—Continuing to put customer first, improving skills in all aspects
FY3/24Passes on older employees’ experience to younger employees and fosters a sense of unity by
sharing their knowledge for optimal proposals... etc.
© 2024 SURUGA bank, Ltd. All rights reserved.

6

■ Direct Bank
Expanding customer base by offering personal loans and accounts to suit customer lifestyles nationwide,with online and mobile banking as the main channels. We will continue to further strengthen our collaborationon the theme of financial inclusion (FI), including banking for non-Japanese customers
Personal Loans

Direct Banking and FI
Number of cumulative direct bankaccounts opened

Applications for FI-related products
from foreign customers
3,000

30,0002,000

20,000

Personal loan disbursement

・Key areas defined according to use of funds with both online
and in-branch promoted

2,500

25,000・In FY2023, the number of applications and disbursements
remained steady at more than 130% year on year

130％

1,500

15,000

FY2022
2022年度FY2023
2023年度

1,000

10,000Wide product lineup to meet customer financial needs

500

5,000

Dental loans

00

FY2022

Reskilling loans

FY2023* Excluding housing loans

Vet bill loans

Car loans

Money Laundering and Crime Prevention Measures
Detecting fraud when opening an account・Since 2021, Suruga Bank has been using ACSiON’s online identity verification service, proost. Withhighly accurate online ID verification we are able to detect unauthorized account opening by fraudsters
・In May 2024, ACSiON introduced its fraud detection platform, Detecker, to detect fraudulent informationfrom customers when opening mobile accounts

Main Products
Musical instrument/audio
equipment loans

Fertility treatment
support loans

Education loans

Customer management
・Being able to offer accounts to non-Japanese customers online has enabled the accurate and efficientmanagement of information such as residency and period of stay・Verifications required after any period of stay is renewed is also done on an individual customer basis© 2024 SURUGA bank, Ltd. All rights reserved.

7

■ Greater Tokyo/Regional Bank
Enhanced “one-to-one” consulting capabilities, growing presence in the Greater Tokyo and regional markets
Loans

Future Initiatives
New borrowers (FY2023)

New disbursements

 Supporting customers’ desired housing styles by continuing to provide consulting services that are
tailored to their needs
 Provide flexible loan products based on area characteristics

Housing loans

25%

30%

 Meet a wide range of needs with housing loans guaranteed by Credit Saison

Up 42% YoY

Loans tailored to the customer
FY2021


FY2022High-income earners

FY2023(Annual income over ￥10 m)

BusinessownersDialogue

Credit Saison guaranteed housing loans added to product lineup (from October 2023)
Proposals

Investment real estate loans￥83 bnEmerging
affluent andabove:
Approx. 60%

Creditexpertise

Enhanced consulting
 Passing on expertise to enableconsistent consulting to customers
 Cultivate highly specialized talentcapable of responding to a wide
range of customer needs

Consulting tailored toeach customer

New disbursements by client segment
 New disbursements up 74% YoY
 Emerging affluent and above: over 60%

One to One Support

Understa
nding
needs

Exploringissues Sales structure with a dedicated team
FY2020Mass

FY2021

Upper mass

FY2022

Emerging affluent

 Flexible product design to meet diverse needs

FY2023

 Expanding scope by developing new partner companies, expanding business through wider deals
and stronger relationships

Super affluent/affluent

Reference: Segments are based on NRI research and classified by financial assets held at the time of the research© 2024 SURUGA bank, Ltd. All rights reserved.

8

■ Market Finance
Building a high-quality asset portfolio with diversified risk to ensure resilience even in a world with interest rates
while investing further in human capital
Securities portfolio

Structured financeDomestic bonds

Loan balance/yield

Domestic stocks

OthersMulti-asset funds(billion yen)(billion yen)

466.2
Balance

300

2.28%

Yield

2.37%
2.27%

2.50%

2.32%

200

303.5

290.2

270.4

177.6

120.3

2.00%

126.4
100

119.5
6.7
25.0

68.9
33.5

0

4.7

8.4
23.9

119.0

143.5

Mar. 31 2021

Mar. 31 2022

23.6
154.7

281.6
7.1

60.4
55.0
159.0

Government
bonds: 21.4
Municipal bonds:
115.5
Corporate bonds:
22.1

1.50%
Mar. 31, 2021

Mar. 31, 2022

Mar. 31, 2023

Mar. 31, 2024

Mar. 31 2023

Mar. 31 2024

As of Mar. 31, 2024 (yen bonds): Duration: 5.94 years 100BPV: -9.2 bn yen

Talentdevelopment

 We are working to strengthen our ability to make decisions and respond byproviding practical experience, including negotiating with all stakeholders
 We are improving the skills of individuals through regular study sessions andsupport for acquiring qualifications such as bonuses (we rank first among local
banks in number of qualifications for real estate securitization*)* As of April 2024

 Training that incorporates knowledge of external experts, support for acquiring
qualifications, etc., including talent development programs using externalmanagement companies and dispatching young employees to external short-term
training programs
 Systematic job rotation within departments to provide employees with a wide range ofpractical experience and improve their skills© 2024 SURUGA bank, Ltd. All rights reserved.

9■ Collaboration with Credit Saison
Discussions underway on three themes to create a Neo Finance Solutions Company

Key Areas

Theme
Initiatives and ideas

Products and services collaboration

Sophisticated marketing

Joint use of management resources

Create new value by combining products andservices of both companies

Develop a marketing approach that leverages
digital skills and databases of both companies

Promote effective joint use of management
resources of both companies

 Provide support services for foreign
customers by combining expertise of bothcompanies with Credit Saison’s rent
guarantee as key
 Provide loans to SME business owners,
such as Saison lessees, and private
business owners

 Develop housing loans for Saison Card
members utilizing both companies’
databases* Banking agency business launched from March
25, 2024

 Joint development of digital marketing
schemes Joint use of IT tools and resources Improved efficiency through mutual use of
backyard functions
 Greater human resource exchange, andcollaboration between both Group
companies Develop new markets, including partners ofboth companies

Through full use of the retail expertise of both companies and seamless collaboration,
we will create a Neo Finance Solutions Company that starts by solving all kinds of problems
and customers’ disadvantages (anxiety, inconvenience, dissatisfaction).
© 2024 SURUGA bank, Ltd. All rights reserved.

10■ Cost Structure Reform
While continuing to push forward with cost structure reforms, we will aggressively invest in human capital,
the foundation for sustainable growth
Cost structure reform

Number of branches

Cost structure reform brings expenses down 27% compared to FY2018,
even with wider new investment in human capital

Expenses

Of which,personnel
expenses

Number of branch mergers andrelocations*Mar. 31, 2025
forecast

FY2018 results

FY2023 results

FY2024 forecast

FY2025 revised
projections

Mar. 31, 2024

￥46.8 bn

￥35.1 bn

￥35.5 bn￥34.0 bn

92

￥15.9 bn

￥13.4 bn￥14.0 bn￥14.0 bn

* Relocation refers to a branch-in-branch move and is counted as one location

Cutting down on head office staff
Digitalization and streamlining

Reorganizationof branch
network

2

4

Cashless branches

Shifting staff to the front office

Reorganization according toarea characteristics

H2
86

New streamlined branches* Underlined figures are revised values from “Revisions to Mid-term Business Plan KPIs” news release announced on
April 4, 2024

Sustainable location reorganization

H1

Smart
safes

Digitalreception

Staff placement

Loan plaza

ATM

Remotecustomer
servicesystemCounterfree
Checkrequirements onintercom

Streamlining

Three Pillarsof Cost
Structure
ReformStrategic IT
investment

IT costs

No dealing in cash

Digitaltransformation

Remote support via head office
Customers make branch appointments online
Reduce IT costs

Promotion in line with IT roadmap

Introduced at Numazu Station Branchand Shizuoka Minami Branch© 2024 SURUGA bank, Ltd. All rights reserved.

Introduced at Chiba Loan
Plaza

11

■ Single Building Income Loans
Continued efforts to improve credit quality and achieve mid-term business plan KPI of
an average actual credit cost ratio of 10 bps (from FY2026)
Disclosed claims under the Financial Reconstruction Law and coverage(as of March 31, 2024)
Disclosed claims under
Financial
Reconstruction Act (A)Efforts to improve credit quality(billion yen)

Coverage ratio

Appraisedcollateral*1 (B)Allowance/guaran
tee coverage (C)Coverage ratio(B + C) / A

87.3

34.0

52.9

99.5%

Non-organizational
negotiation partners*2

94.1

38.3

27.8

70.3%

Balance and delinquency by type of borrower(excluding organizational negotiation partners, etc.) (as of March 31, 2024)
Credit claims such asloans*4

Borrower classification(billion yen)

Single building incomeloans*5

Not delinquent

1,346.4

350.7

350.7

506.0

432.9

430.9

Clients requiring corrective action

47.6

39.3

38.9

Clients at high risk of bankruptcy

52.5

38.8

36.5

Virtual bankruptcy clients/bankruptcy

27.5

22.7

3.2

1,980.1

884.6

860.4

Normal clients
Clients requiring special attention*

Total

3

Improvement
suggestions*1 Normally, 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%.
*2 “Non-organizational negotiation partners” shows the total for single building income loans

On-siteevaluation

Organizational negotiation
partners

Aim to improve credit quality by communicating regularly with customers
based on periodic surveys, and collaborating with management companies,
real estate companies, experts and other partner companies

89.0%Bank employees visit to check property andsurrounding conditions(Examples of property damage discovered) Peeling exterior wall paint and ceiling panels
 Cracks in window glass
 Oversize garbage left on-site, etc.

••

Reporting condition of property, etc. to customers as
appropriate
Help in modifying loan terms and conditions to raise
funds for repairs, etc.

Occupancy rate of single building income loans

87.9%

88.0%
87.0%
86.0%
FY2020

FY2021

FY2022

FY2023

Survey content:*3 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*4 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*5 Including investment real estate loans for corporate clients© 2024 SURUGA bank, Ltd. All rights reserved.

• Covers customer properties with a single building income loan balance of
50 million yen or more
(approx. 8,200 properties, 90% of total outstanding balance)

12

■ Investment Real Estate Loans (Status of Organizational Negotiation Partners)
Status of efforts to dateUnder
negotiation/dispute

Organizational
negotiation
partners

Borrowers
continuing
repayment(including thoseagreeing to
repayment support)

After approximately five years of repayment support and consultation efforts,
more than 50% of the 37,907 properties surveyed have a loan balance of zero,and more than 40% are maintaining loan repayments.
However, organizational negotiations are being conducted with Suruga Bank on
841* properties (2.2% of 37,907), and we will continue to take appropriate
measures to resolve these issues.

Number of real estate
properties covered by
the Report on Surveyof All Properties
Concerning Investment
Real Estate Loans (May15, 2019)

37,907
No balance(paid in full, etc.)

Mar. 31 2024

* Due to voluntary sales and other factors, from the end of September 2022 to the end of
March 2024, 87 properties were no longer in organizational negotiations.

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 banks 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, and we believe it is necessary toconsider the unique circumstances of each case individually when determining whether and to what degree there is an obligation
to compensate for damages.
* For details of our response, please refer to the Status of Our Response to Loans for Investment Real Estate Other Than Shared Housing, released on April 4, 2024.
© 2024 SURUGA bank, Ltd. All rights reserved.

13

■ Pursuing Cloud Computing and DX in IT Platforms
Digital transformation with face-to-face and non-face-to-face channels to provide flexible and speedy services throughin-house development in strategic areas (customer digital contact points such as smartphone apps)
Strengthening face-to-face and non-face-to-face digital channels
Enhanced
Smartphone App

・Launch AI chatbot, foreign language support services
・View significantly more past transactions on the app, eliminating the need for bankbooks

More online
applications

・Shifting online branch account opening to advanced identity verification using eKYC
・Improved application process for card loans for better user experience

In-branch
digitalization

・Add more and more services to the tablet menu (SMA-Navi) for customers
・Cashless store operations centralized at sales office support center

Advanced data
analysis
infrastructure

・Build a flexible and agile next-generation IT infrastructure that utilizes cloud technology
・Greater sales support and communication functions

Areas and measures to be addressed in FY2024

Enhanced
Smartphone App

7.9 bnyen

7.5 bnyen

Operations andmaintenance

Strategic
investment

Approx.
20%

FY2019* Blue figures indicate
actual results

6.0 bnyen

Approx.
35%

Approx.
40%

60%

FY2022

FY2023

FY2027

Suruga Bank
SurugaCONNECTBank AppIn-branch
digitalization

・Expand self-service operations through the use oftablet terminals (SMA-Navi) for customers

Advanced data
analysis
infrastructure

・Investigate set up and plan for cloud accounts

Wider useof generative AI・Expanded use from limited number of employees at HQ andbranch offices to all employees
・Greater streamlining and automation through AI learning ofinternal business procedures, manuals, FAQs, etc.

Tighter money
laundering
measures・Initiatives to strengthen and improve measures against money
laundering, etc.
・Strengthen measures to prevent fraud in online banking andaccount opening, etc.

Stronger cybersecurity
measures・Cloud-based security services for advanced security
・Investigate measures to comply with cybersecurity guidelines
・Secure and develop cybersecurity-literate human resources

IT cost reduction and strategic IT investment
9.5 bnyen

・Greater functionality on the app with changeof address and other functions© 2024 SURUGA bank, Ltd. All rights reserved.

SMA-Navi

14

I Summary of Financial Results for FY3/24

II Business Strategy

III Initiatives to Achieve P/B Ratio Above 1.0

■ Framework and Main Initiatives to Achieve P/B Ratio Above 1.0

Framework for a P/B Ratio Above 1.0

Impro
ved
ROE

Improved
shareholder
value

Set
ROE
targets

Main Initiatives

Building asustainable
revenuestructure Building a sustainable revenue structure in linewith mid-term plan
 KPIs: New business gross profit of at least￥19.0 bn, expenses within ￥34.0 bn, actual
credit cost ratio of about 10 bps

Capitalmanagement

 Planned capital policy in accordance withbasic shareholder returns policy
 KPI: Capital adequacy ratio 10%* orhigher (effective)(PBR above
1.0)• Driving growth in new business gross profit through four autonomous
profit centers• Completing cost structure reform• Minimizing and stabilizing actual credit costs through higher credit quality• Maintain stable dividends with dividend payout ratio of around 30%• Treasury stock acquisition: Flexibly implement shareholder returnmeasures that contribute to the improvement of capital efficiency, taking
into account business performance, capital conditions, growthinvestment opportunities, and market conditions including the stock priceImproved expected
growth rate

 Differentiation through “Creating a difference”
 Create unique value from customer’s
perspective with keywords of ‘Agile’ and‘Kyo-so’ unrestricted by conventional
regional bank model

Reduced capitalcosts

 Ensure resilience against business risks
 Along with repeating a cycle of active risktaking and verification in selected areas,
aim to diversify risks in line with RAF**• Provide solutions from Suruga’s unique perspective starting from what
our customers are unhappy with• Creating a Neo Finance Solution Company together by evolving theCredit Saison alliance• Business impact and risk inspection for a world with interest rates

Strategic investor relations/better disclosure• Securities: Transition to more stable revenue structure• Reduce ratio of cross-shareholdings• Promote ESG/SDGs initiatives* Finalized Basel III basis. Any unrealized loss on securities is deducted from core capital.
** Risk Appetite Framework© 2024 SURUGA bank, Ltd. All rights reserved.

15

■ Understanding Issues and Setting Targets to Achieve P/B Ratio Above 1.0

Updatedfigures

Greater investment in human capital and sustainability promotion,
while further solidifying foundation for growth to achieve a P/B ratio over 1.0
Current analysis
Suruga Bank ROE performanceand target

Comparison with listed regional banks
Mar. 31 2024

PBR

(Ratio / %)

PER

(%)

8

7.9

Capital cost estimations

Long-term goal 8%

ROE

6
Suruga Bank
Listed regionalbanks average

0.59

14.30

5.4

5.4

4
0.44

12.86

3.9

3.9

2

Source: QUICKPBR and PER are on a consolidated preferred basis
ROE is on a consolidated financial basis (TSE basis)

2.8

Note: On a consolidated financial basis(TSE basis)

0
21/3

22/3

23/3

24/3

Awareness of issues

Estimates based on CAPM

6% level

Estimates based on PBR
and ROE

7–9%•

Our perceived cost of capital at this time isabout 6–9%

FY26 orlater•

Our most important issue is to improve ROE to achieve a P/B ratio above 1.0•

ROE bottomed out at the end of FY2021 and is improving, but is still somewhat off target level•

While we believe that the minimum level of the cost of shareholders’ equity is 6%, we recognize the need to accelerate restructuring of the revenue
structure to reach 6% or higher as soon as possible

ROE target for P/B ratio above 1.0

ROE from FY2026 onwards (after rebuilding revenue structure under current medium-term plan)is on average 6% or more, aiming for over 8% in the long term
© 2024 SURUGA bank, Ltd. All rights reserved.

16

■ Capital Policy

Updatedfigures

Pushing forward with capital policy based on the basic shareholder return policy and policy
for reducing cross-shareholdings as set out in the mid-term business plan
Shareholder Returns
Basic
policyCross-Shareholdings

Our policy is to strive to enhance shareholder returns after considering the
optimal balance between capital soundness and investment for growth(billion yen)
Ratio to consolidated net assets(including deemed shareholdings, right axis)

Dividend Policy
Our basic policy is to maintain stable dividends, targeting a dividend payout ratio of around 30%
FY2022

Profit attributable to owners of parent

20%

21 yen22 yen￥10.5 bn

￥15.3 bn

￥14.5 bn

16％

27.8％

29.2％

Treasury stock acquisition policy
We will flexibly implement shareholder return measures that contribute to the improvement of
capital efficiency, taking into account business performance, capital conditions, growthinvestment opportunities, and market conditions including the stock price.
FY2023 results

FY2024 projection (limit)

Sharesacquired

30,660,000*

6,000,000

Acquisitioncost￥21.9 bn**￥7.0 bn

Acquisition
periodAugust 17, 2023 to March 1, 2024

May 13, 2024 to September 30, 2024

Ratio to consolidated net assets(Cross-shareholdings only, right axis)

Balance (actual value)

9 yen

Dividend payout ratio

600
60

FY2024 forecast

45
450

15%

30
300

10%

150
15

5%

0

* 35 million shares to be retired in April 2024 (including treasury stock held from before FY2023)** ￥4.8 bn return in FY2023 after deducting disposal of treasury stock through third-party allotment to Credit Saison(￥17.1 bn)

Reference: Mid-term plan KPIs: Capital adequacy ratio 10% or higher (effective)
Any unrealized loss on securities is deducted from core capital.

Ratio to consolidated net assets

Dividends per share

FY20230%
End of FY2022 Dec. 31, 2023 End of FY2023

Within the next
5 years

Credit Saison shares

Deemed shareholdings

Policy stocks other than listed on the left

Sales of cross-shareholdings during FY2023: ￥3.8 bn(including deemed shareholdings: ￥16.0 bn)© 2024 SURUGA bank, Ltd. All rights reserved.

17

■ Business Impact and Risk Assessment for a World with Interest Rates

Updatedfigures

Our loan portfolio is dominated by variable interest rates so when interest rates rise, we expect a positive impact on profits
Loans and bills discounted(Composition by base interest rate)
3%
1%

Balance sheet

Deposit

3,540.4 billion yen as of Mar. 31, 2024

Fixed deposit ratio

8%
Floating
interest rate
88％

15%

10%
(Fixed) < 6 months

73%
Short-term prime rate
Market-linked, etc.

Other

18%
16%

(Fixed) > 3 years
Floating deposit w/ interest* Yen-denominated. Fixed interest rate is byremaining period of interest rate renewal.

Of which insured
deposits
76％

Securities (Composition of yen bonds)

Floating deposit w/o interest

1%* Yen-denominated. Interest rate changes for
fixed deposits based on remaining period.

Balance by location

Securities 8％

14% 14%

Physicalbranches
84％

16%
JGB
Municipal bonds

72%

39%

16%

(Fixed) 1–3 years

Deposit92％(Fixed) Less than 3 years(Fixed) More than 3 years(Fixed) 6 months–1 year

Loans and bills
discounted
58％

Fixed
deposits
50％

Other yen bonds

3%

BOJ current
account
27％

Shizuoka Pref.
Other liabilities 1％

Kanagawa Pref.

As of Mar. 31, 2024 (yen bonds)
Duration: 5.94 years
100BPV: -9.2 bn yen

48%

Other assets 7％

Net assets 7％

Greater TokyoManagement

Procurement

Internet branches© 2024 SURUGA bank, Ltd. All rights reserved.

33%* By branch location18

■ SDGs/ESG Initiatives: Environment
Contributions to Environmental Preservation—The Suruga Bank Group’s Materiality
Shizuoka Prefecture is rich with forests, marine resources and sightseeing spots, such as Mt. Fuji and Suruga Bay, but faces many environmental issues, including a fall in the use of forests for
public interest, a decline in marine resources as well as the problems of waste and marine plastic.
For the sustainable development of the region and our Group, we are actively promoting initiatives that help solve these issues.

Decarbonization initiatives■ Introduction of CO2-free electricity
・Shizuoka Green
Electricity
・Green Basic Plan・Uchicchi Electricity

Resetting of reduction targets for greenhouse gas (CO2) emissions

Changes in CO2 emissions at installedfacilities
Approx. 1/10

Based on progress in reducing greenhouse gas (CO2) emissions ahead of schedule,
we have increased our reduction target for FY2030(t-CO2)

FY2021 (before
introduction)

FY2022 (after
introduction)

Greenhouse gas (CO2) emissions (Scope 1 and 2)(t-CO2)

10,0007,500

Base year
7,478■ Reorganization of office network and move to eco-offices
5,000 Aim to optimize branch functions and network
 When renovating branches, we introduced environmentally friendly
equipment, and many new branches received CASBEE Shizuoka A
rank and CASBEE Kanagawa A rank

2,500

CO₂ emissions of total 24 renewed branches
since FY2013

Number of branches

4,051

Former FY2030
target -46.0％

New FY2030
target -75.0％

662.9

130

102

486.9

0
FY2013

FY2018-7.3 t-CO2/branch-28 branches
End of FY2023* Branch-in-branch counted as one location

Formerbranch total

New branch
total* Comparison of annual emissions before andafter conversion to eco-office

FY2020

FY2021

FY2022

Reduction target for FY2030(t-CO2)End of FY2013

FY2019Compared to FY2013© 2024 SURUGA bank, Ltd. All rights reserved.

-46.0％

Compared to FY2013-75.0％
19

■ SDGs/ESG Initiatives: Social
Creating an environment where employees can thrive and grow—The Suruga Bank Group’s Materiality
For Suruga Bank to grow further, a virtuous cycle of improving employee engagement and greater investment in human capital is essential.
To promote this virtuous cycle, we have been actively implementing a “listening ⇔ human capital investment” initiative since last year.

Employees’ wishes

TargetFY2025 overall satisfaction
60% or more

To improve employee motivation, a survey of all employees is conducted every fiscal year inorder to understand their current situation.
Overall satisfaction*
Not satisfied:
21%

FY2023
results
Undecided
24％

Satisfied:55%

Survey topics
・Overall satisfaction: 1 question
・Employee feelings and attitudes: 32 questions
・Awareness of actual conditions in the workplace:
20 questions
・Evaluation system / education and training:
16 questions
・Evaluation and awareness of the Bank:
16 questions
・Other: 24 questions* Overall satisfaction: In the question, “Overall, how satisfied are you with your current job/company/workplace?”,the percentage of respondents who answered “Satisfied” out of the options of “Satisfied,” “Undecided,” “Dissatisfied”

Awareness of issues through survey analysis
The results of the past year’s questionnaire showed that while “ease of working” in the organization
scored high, “satisfaction” with work and “motivation/pride” in work (sense of accomplishment, fulfillment,
and self-discretion) scored low. Based on the results of these questionnaires, we are looking at andimplementing measures to improve motivation.

Measures to increase motivation and pride

Employee motivationquestionnaire

Specific measures to improve the workplace environment

Fast promotion system

Career vision meetings

By relaxing the requirement for a certain level ofpractical experience for the recruitment exam
and allowing employees to take exams earlier,young employees are encouraged to go forpromotions.

Career groups have been set up based on skills
where employees are encouraged to engage indialogue with their department heads about
what part of the groups interests them, as anopportunity for employees to think about theircareers.

MIRAI-Management School
training program
Supporting the medium- to long-term
development of female leaders through internaland external training to acquire the skills,
knowledge, and experience necessary for careeradvancement.

Internal recruitment system
As part of their career development and in orderto support the challenge and growth of
employees, applicants are given roles primarily
in highly specialist departments.

Creation of an environment where employees can work until the age 70(activities to support older employees)
In order to share and participate in Suruga’s vision of expecting employees to work and contribute until
the age of 70, we provide opportunities and support systems for such participation, and develop
personnel policies for older employees.

Revision to human capital investment KPIThe amount of new human capital investment during the second phase of the mid-term business plan (3-year total) has beenrevised to incorporate further investments in human capital.
© 2024 SURUGA bank, Ltd. All rights reserved.

Before revision over ¥100 m

After revision over ¥250 m

20

■ SDGs/ESG Initiatives: Social
Building Sustainable Local Economies and Societies—The Suruga Group’s Materiality
We will help to create sustainable regional economies and society by concluding agreements with cities, towns, and private companies, working together and cooperating in various fields related
to regional revitalization to solve regional issues and revitalize regions.

■ Collaborating with local governments

🚴...... Partnership Agreement on Bicycle Promotion 🏠...... Agreement on Migration and Settlement 💛...... Agreements on Bequests

As of Apr. 30, 2024

🚩...... Other Agreements on Regional Revitalization, etc. New...... Partners since FY2023■ Collaboration with private companies, etc.

New
New

Chigasaki City🚴🏠

As of Apr. 30, 2024

Sagamihara City🚴
Agreements concluded with (in no particular order)

Oyama Town🚴

Izu Peninsula Geopark and Tourism Bureau;

HadanoCity🚴🚩

Daytona Corp.; Roots Sports Japan;

Fujisawa City🚴
New

Fujinomiya City🚩

Susono City🚩

Fujieda City🚴
Kakegawa City💛

Fukuroi City🚴 New

New

Mishima City💛

Cyclists; Izukyu Corporation; Kona Resort Inc.;🚴

Hiratsuka
City🚴🏠

Fuji City🚴🚩Conference in Shizuoka on the Creation of a Sanctuary for Sport

Yokosuka City🚴NewTEPCO Power Grid, Incorporated; Pleasure, Co., Ltd.;

Miura City🏠

Walkride Co., Ltd.; Tokyu Hotels & Resorts Co., Ltd.;Fuji-san Suruga Bay Ferry;

Izunokuni City🚩
Numazu City
🚩🚴💛

Tokinosumika Co., Ltd.;Sompo Japan Insurance Inc.;

Shonan Bicycle Tourism Promotion Council New

Izu City🚩

Minamiizu Town🚴

© 2024 SURUGA bank, Ltd. All rights reserved.

💛

Japanese Red Cross Society Shizuoka Branch, Shizuoka
University

🚩

Meiji Yasuda Life Insurance Company, Azul Claro Numazu

21

■ SDGs/ESG initiatives: Governance
Establishment of a Solid Governance Foundation—The Suruga Group’s Materiality
The Group is working to strengthen its governance with the materiality of establishing a solid governance foundation, and with the corporate philosophy of“I’m glad you’re here... I’m glad we met” at the heart of its business.

■ Director Election Policies and Procedures■ Corporate Governance Structure Chart
The Board of Directors is chaired by an independent outside director toensure sound and transparent decision-making by the Company.
Inside Directors

General Meeting of
Shareholders

Outside Directors

Directors
To ensure a high level of objectivity and transparency, we have adopted the following policies for the Board of Directors to select and/or dismiss senior
management and to nominate candidates for director. An arbitrary Nomination and Compensation Committee (chaired by an independent outside
director and composed of a majority of independent outside directors) will give full consideration to candidates based on their background, trackrecord, and evaluation, as well as to the current situation and performance of the Company, etc. The Committee will then make its recommendations
to the Board of Directors, and the Board will reach a resolution with due respect to the proposal. For directors who are also members of the Audit andSupervisory Committee, a decision will be made after approval is obtained from the Audit and Supervisory Committee.

Representative Director
Audit and Supervisory
Committee

Board of Directors

Nomination andCompensation Committee

Given that the appointment and dismissal of the Representative Director is the most important strategic decision of the Company, the arbitrary
Nomination and Compensation Committee (chaired by an independent outside director and composed of a majority of independent outside
directors), in response to a request from the Board of Directors, spends sufficient time and resources deliberating on the background, performance,
evaluation, and suitability of the candidates. The Committee will then make its recommendations to the Board of Directors, and the Board will reacha resolution with due respect to the proposal in an objective, timely, and transparent manner.

■ Composition of Directors(Chairperson)

Compliance
Committee
Internal Audit
Department

Corporate Philosophy
Promotion Committee10％(1 of 10)

(Committee chair)40％(4 of 10)President
Sustainability Promotion
Committee

Business Execution
Committee

Each Risk
Committee

Each Department (11 Divisions)* Based on the management structure to be proposed atthe 213th Annual General Meeting of Shareholders.

Ratio of independent
outside directors

Ratio of female
directors* Based on the management structure to be
proposed at the 213th Annual General
Meeting of Shareholders.

■ Establishment of a whistleblowing system
To centrally manage internal reports from employees and risk information received from external sources, a specialized department, the Internal
Whistleblowing Office, has been established.
Additionally, an Audit and Supervisory Committee Reporting Desk that handles reports regarding directors and executive officers, as a point of contact
independent from senior management, has also been established.
Internal reports, including whistleblowing, customer complaints and feedback, as well as risk information received from external sources, such as theJapanese Bankers Association, are centrally managed by the Internal Whistleblowing Office to create a workplace environment where employees canwork with peace of mind.

© 2024 SURUGA bank, Ltd. All rights reserved.

22

■ Conclusion
Toward FY2025 (the final year of the mid-term business plan): Accelerate the mid-term business plan strategy (restructuring of the profit
structure based on the three arrows) and aggressively invest in human capital and business infrastructure for the next stage (future growth)(billion yen)

FY3/24
Core gross operating profit (excluding
gains/losses on cancellation of investment
trusts)Of which, new business grossprofit58.5

FY3/25
forecast

FY3/26
projection

56.0

16.0

19.0

Expenses（－）

35.1

35.5

34.0

Actual credit costs（－）

(2.0)

3.0

－

Ordinary profit
Net income

(5.1)
20.1
15.0

0
18.5
14.5

－

Amount of new loans
originating from Suruga Bank

FY3/23

FY3/26
projection

Retail/Solution businesses￥2.3 bn￥7.5 bn

Market finance￥5.4 bn￥11.5 bn

156.2

195.0

Total new business gross profit￥7.7 bn￥19.0 bn

FY3/23

FY3/26(billion yen)Arrow 2:Completing cost structure reform
Completed cost structure reform with expenses down 27% compared to FY2018, while factoringin greater investment in new human capital

17.0－* Sub-KPIs in the mid-term business plan

Driven by steady progress in the Credit Saison alliance and growth in new loan disbursements

－

11.3

Loss on securities

Arrow 1: New business gross profit growth

Expenses

FY2018results

FY2022
results

FY2025
revisedprojections

Phase 2
reductionamount￥46.8 bn

￥36.2 bn￥34.0 bn(￥2.2 bn)

-27％
Profit attributable to owners of parent

15.3

14.5

13.5

－

10% or over(effective)

Arrow 3: Stabilizing actual credit costs at low levels
Efforts to improve credit quality

Capital adequacy ratio(Finalized Basel III basis)*11.87%* Intended pace for FY2025 and beyond = Actual credit cost ratio of about 10 bps(about ¥2 bn/year)

Blue outlines indicate KPIs in the mid-term business plan
© 2024 SURUGA bank, Ltd. All rights reserved.

23

Reference Materials

■ Actual Results for FY3/24: YoY Comparison(Non-consolidated)

Finances(billion yen)

FY3/23
results(A)

FY3/24
results(B)

YoY
comparison(B) ‐ (A)Core gross operating profit (excluding
gains/losses on cancellation of investment
trusts)60.2

Expenses（－）

36.2

35.1

(1.0)

13.6

13.4

(0.2)

(1.1)

(2.0)

(0.8)

Personnel expenses
Actual credit costs（－）
Loss on securities
Other non-recurring gains (losses)

MTP

58.5

Main factors contributing to changes (non-consolidated, YoY)
・Decrease in interest on loans and bills discounted: -3.4 billion yen(decrease in average balance: -1.0 billion yen, decrease in yield: -(1.7)
Net interest income(14.4)

(5.1)

+9.2

0.2

(0.1)

(0.3)

2.4 billion yen)・Decrease in interest and dividends on securities: -1.3 billion yen
・Increase in interest on monetary receivables purchased: +1.3
billion yen

Expenses・Decrease in personnel expenses: -0.2 billion yen
・Decrease in property expenses: -1.0 billion yen

・Loss on reversal of allowance for loan losses resulting from theOrdinary profit

11.2

20.1

+8.8

Extraordinary gains (losses)

(1.2)

(1.1)

+0

lump-sum transfer of share house loans: +2.5 billion yen
・Allowance for new suspension of repayments by some investment
Actual credit costs

Net income

9.5

15.0

+5.4

real estate loan customers triggered by organizational negotiations:-2.1 billion yen
・Precautionary allowance for claims for restructured loans that are(Consolidated)
Consolidated ordinary revenue

unlikely to be recovered in the future: -1.0 billion yen

92.4

91.4

(0.9)

Consolidated ordinary profit

13.2

20.6

+7.3

Profit attributable to owners of parent

10.5

15.3

+4.7

Loss on securities

・Decrease in gains (losses) on bond transactions: +9.4 billion yen

Extraordinary gains(losses)・Partial reversal of impairment loss on fixed assets: +0.3 billion yen© 2024 SURUGA bank, Ltd. All rights reserved.

24

■ Actual Results for FY3/24: Forecast Comparison

Finances(billion yen)(Non-consolidated)

Factors causing difference between forecast and actual resultsCore net operating profit

Earnings forecast
Results

Beginning ofterm

Announced
Feb. 9Core gross operating profit (excluding
gains/losses on cancellation of
investment trusts)

54.0

57.5

58.5

Expenses（－）

36.0

36.0

35.1

Actual credit costs（－）

6.5

(1.0)

(2.0)

0

(6.0)

(5.1)

Ordinary profit

11.5

17.0

20.1

Net income

8.5

11.5

15.0

Loss on securities

MTP Increase in interest on loans and bills discounted, mainly due to the accumulation ofloans and bills discounted primarily in the four profit centers Improved net fees and commissions due to increase in loan-related fees anddecrease in group credit life insurance

Expenses Decrease in property expenses due to steady progress in cost structure reform

Actual credit costs
Earnings forecast

Consolidated ordinary revenue

77.5

87.5

91.4

Consolidated ordinary profit

12.0

17.5

20.6

Profit attributable to owners of parent

8.5

12.0

15.3

Results

Beginningof term

Announce
d Feb. 9

6.5

(1.0)

(2.0)

Normal amount

(2.0)

(5.0)

(5.0)

Preventive allowances

8.5

4.0

3.0

Actual credit costs(Consolidated)(billion yen)

Loss on securities
 Decrease in gains (losses) on bond transactions mainly due to reduced appraised
loss on bonds and multi-asset funds, which, in an attempt to improve the quality ofthe securities portfolio were not expected at the beginning of the term

© 2024 SURUGA bank, Ltd. All rights reserved.

25

■ Interest Margin

Finances

Yield and Average Balance of Loans and Bills Discounted

Interest Margin, etc.

Gross LoanDeposit Interest
MarginLoan-Deposit
Interest
MarginNet Interest
MarginYield of Loans andBills Discounted

Average Balance ofLoans and Bills
Discounted (billion yen)(Special factors effecting loans
and bills discounted (year-onyear))

2,664.7
2,414.7
2,244.3

3.15%

2,085.5

3.07%

2.97%

MTP

2.88%

2,049.0

Mar. 2021: Transfer of share houseclaims (approx. -44.2 billion yen)Mar. 2022: Transfer of share houseclaims (approx. -60.5 billion yen)

2.77%

Mar. 2023: Transfer of share houseclaims (approx. -16.8 billion yen)

1.74%

1.81%

1.77%

1.80%

3.19%

3.12%

3.02%

2.92%

2.80%

20/3

21/3

22/3

23/3

24/3

1.70%

* State the periods in which theabove factors have an impact. (Thisdiffers from actual date of theprocedures, etc.)

Yield and Average Balance of Deposits

1.14%
0.94%

Average Balance of
Deposits (billion yen)

0.78%

0.77%

0.73%

3,194.4

3,291.5

Yield of Deposits

3,339.4

3,278.4

3,099.2

20/3

21/3

22/3

23/3

0.04%

0.04%

0.04%

0.03%

0.03%

20/3

21/3

22/3

23/3

24/3

24/3

© 2024 SURUGA bank, Ltd. All rights reserved.

26

■ Actual Credit Costs and Disclosed Claims Based on the Financial Reconstruction Law (Non-consolidated)
・Actual credit costs (FY3/24)
Item

Finances

MTP(billion yen)

Actual credit
costs

Allowance forloan losses

Investment real estate loans*

(0.6)

96.0

Housing loans

(0.1)

1.8

Unsecured loans

0.1

2.2

Collaboration loans, etc.*

(0)

0.2

Business financing, etc.

(1.3)

7.2

Total

(2.0)

107.6

* Investment real estate loans: Studio apartment loans, single building income loans, other secured loans* Collaboration loans are loans made jointly or in partnership with other companies (loan participations, purchases of corporate loans, etc.)

・Disclosed Claims under the Financial Reconstruction Law (as of March 31, 2024)
Total coverageamountBalance(billion yen)

Coverage amountby collateral andguarantees, etc.

Allowance for loan
lossesCoverage ratio

Claims against bankrupt and substantiallybankrupt obligors

113.9

113.9

43.2

70.6

100％

At-risk claims

53.3

34.6

22.4

12.2

65.0％

Claims for special attention

37.9

22.7

13.6

9.1

59.9％

Total

205.2

171.3

79.3

91.9

83.5％

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

9.8％© 2024 SURUGA bank, Ltd. All rights reserved.

27

■ Loan Balance, Yield, and Delinquency Rate (YoY Comparison) (Non-consolidated)

Finances

MTP(billion yen)Mar. 2023
Balance

Yield

Mar. 2024
Delinquency rate

Balance

Yield

Delinquency rate

1,542.6

3.05％

7.02％

1,424.3

2.94％

7.21％

430.5

2.69％

0.27％

420.8

2.56％

0.29％

1,079.6

3.16％

9.91％

972.1

3.07％

10.44％

32.4

4.26％

0.34％

31.4

4.06％

0.23％

Unsecured loans

127.8

10.47％

2.36％

113.5

10.50％

1.78％

Card loans

89.0

11.74％

0.88％

82.6

11.63％

0.63％

Unsecured certificate loans

38.7

7.54％

5.77％

30.8

7.47％

4.88％

1,670.4

3.62％

6.66％

1,537.9

3.50％

6.81％

1.60％

1,442.4

Secured loans
Housing loans
Investment real estate loans
Other secured loans

Personal loans (A)Personal loans (excluding organizational
negotiation partners, etc.) (F)1,569.3

1.38％

Corporate investment real estate loans (B)

57.4

1.77％

－

101.8

1.69％

－

Structured finance, etc. (C)

126.4

2.37％

－

177.6

2.32％

－

Collaboration loans, etc. (D)

131.5

2.08％

－

141.1

2.15％

0.03％

Total (E = A + B + C + D)

1,985.8

3.38％

5.60％

1,958.6

3.20％

5.35％

* Delinquency rate = Loans past due for three months or more / loan balance.
* Yield: Yield to customers (before guarantee fees and accrued interest), end-of-year balance basis* Classified by portfolio area in the mid-term business plan Re:Start 2025
Corporate investment real estate loans include those to asset management companies, etc. Structured finance includes specified corporate bonds, etc.
Collaboration loans are loans made jointly or in partnership with other companies (loan participations, purchases of corporate loans, etc.)* Organizational negotiation partners, etc. refers to loans to borrowers who have submitted a request for suspension of repayments as a result of organizational negotiations© 2024 SURUGA bank, Ltd. All rights reserved.

28

■ Overview of Mid-Term Business Plan
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 andensures that staff feel their work is meaningful. We will achieve this through a commitment to carrying out customeroriented business, initiatives in our core business of retail banking, and by creating unique value in ways that are
distinct to our bank.

MTP

Shared in Phase 1 & 2

Corporate
Philosophy

Finances

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

I. Evolving the Retail and Solutions Businesses
We will create sources of differentiation founded in resolving customers’ worries, inconveniences, dissatisfactions, etc.,
leading them to say “I’m glad you’re here... I’m glad we met.”

Phase 2
Management
Strategy

II. Building a Sustainable Revenue Structure
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. Namely, 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*1.
*1 Single building income properties (relatively high share of older properties and properties located in regional areas) executed prior to the full-scalerollout of Phase 1© 2024 SURUGA bank, Ltd. All rights reserved.

29

■ Mid-Term Business Plan Initiative Policies
Phase 2
Management
Strategy

Business
Structure

Priority Measures

Phase 2
Keywords

MTP

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

1.

Reorganizing from a Sales Division System to Four Autonomous Profit Centers(x2.5 new business revenue)• Community Bank, Direct Bank, Greater Tokyo/Regional Bank, Market Finance2.

Completing Cost Structure Reform(Expenses: 46.8 billion yen in FY2018 ⇒ 34.0 billion yen planned in FY2025)• Network Reorganization, Shifting Talent to the Front Office by Streamlining Division 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 2.0 billion yen/year
from FY2025 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 behindmanagement strategies

Revenue
Structure

Infrastructure

Finances

Agile

Kyo-soResilience

Speed, taking on challenges,
autonomous decentralization

Collaboration, dialogue,
value creation

Recovery, flexibility,
risk diversification* The above KPIs, etc. are based on the revised mid-term business plan KPIs announced on April 4, 2024
© 2024 SURUGA bank, Ltd. All rights reserved.

30

■ Management Strategy I. Evolving the Retail and Solutions Businesses

Finances

From the past to the present, Suruga Bank has been providing solutions from
Suruga’s unique perspective starting from what customers are unhappy with.

Digital infrastructure that supports the creation ofdifference (examples)

More dreams for customers

Backing up womens’ dream of homeownership

Housing Loans for Women
At a time when banks’ screening
procedures were not keeping pace withdiversifying lifestyles and employment
patterns, we were inspired by thepassion of women to market Japan’s
first housing loan for women.

Time Deposits with Jumbo
Lottery Tickets

Screening via data mining

Continuous provision of high quality services

Automated Screening System

Use of CRM

Our concept is “a financial service filledwith the joy of growing dreams” in this eraof ultra-low interest rates. A first for a
Japanese bank, this product is the resultof our employees’ desire to deliver
dreams to customers.

We used sophisticated methods to analyze
detailed data accumulated by lending to awide range of customers, including data on
screening and repayment status. This
sped up the screening process.

By integrating our informational data
and accounting systems, we provided
customers with the most appropriate
products and services at the right time.

Unique to Suruga

In the early days of the Internet, we opened Japan’s
first online bank branch. This allowed us to deliver
dreams and peace of mind to customers through theInternet, even as a regional bank, without building
physical branches. We were also the first Japanesefinancial institutions to offer mobile banking.

2000

We were the first to focus on the myriad
niche markets that exist within the housing
market. Our employees sensed customers’
disadvantages and quickly commercialized
products to match.

Products and Services
Developed from Suruga’s
Unique Perspective(examples)

Earning miles for bank transactions

ANA Branch

Unique to Suruga

Translating current trends into
products and services

Smart Account / Accounts for
non-Japanese Customers

We developed the world’s first card that integrates
cash card, mileage, and e-money functions.
We offer a unique product that lets customers
earn miles for bank transactions.

We established payment-only accounts that provide
more savings and peace of mind when using
cashless payments, which have become widely usedin daily life. We established accounts exclusively for
non-Japanese customers.

2004

By combining ANA’s diverse customer
base and marketing know-how with
Suruga’s retail banking business, wecreated new markets and provided uniquehigh-quality value.

Unique to Suruga

1996

Unique to Suruga

We achieved the automation of
screening ahead of other banks bycombining our screening know-how
with a vast database analyzed with ourproprietary logic cultivated over many
years specializing in retail.

1999
Unique to Suruga

Unique to Suruga

MTP

2021/2022

Based on our desire2021/2022
to provide
access to financial services to all, we
focused on growth areas and nonJapanese customers who require
financial services.

© 2024 SURUGA bank, Ltd. All rights reserved.

1999

This is the trump card of our retailstrategy. This allows continuous
relationships anywhere, anytime, at
all customer touchpoints.
Our accumulated data is the sourceof not only our entire organization’s
retail mindset, but also of our
improved marketing capabilities.

Peace of mind consulting for the
100-year life era

musu-bi(end of life support services)As part of our asset consulting services,
we help customers think about how theywould like to see out their remaining days.

2022
To prepare for “what if,” we provide asset
visualization, funeral insurance,
introductions to different types of funeral,and other services that turn anxiety into peace ofmind. In this way, we help customers live the rest of
their lives in brighter and more positive ways.

31

■ Management Strategy II. Building a Sustainable Revenue Structure (Revised Projections)

Finances

MTP

New business gross profit (core gross operating profit, new portfolio)• Through Management Strategy I (Evolving the Retail and Solutions
Businesses), new business gross profit is projected to grow by 2.5
times compared to FY2022
Breakdown of new
business gross profit

FY2025 revised
FY2022 results
projections

ChangeRetail/Solution Businesses

7.5

2.3

+5.2

Solution Business*1

3.0

0.8

+2.2

Investment real estate loans

4.5

1.5

+3.0

11.5

5.4

+6.1

5.0

2.3

+2.7

6.5

3.0

+3.5

19.0

7.7

+11.3

Market Finance
Structured financeMarket operations, etc.

New Portfolio Total*2

2.5 times

Building a Sustainable
Revenue Structure withthe “Three Arrows”(billions of yen)

*1 Solution Business includes asset consulting, housing loans, unsecured loans, etc.
*2 Market operations, etc. include collaboration loans, etc.

Decrease in core gross operating profit from old portfolio

Expenses

52.5 billion yen → 33.5 billion yen(FY2022)• As part of Management Strategy II (Building a Sustainable Revenue
Structure), we plan to complete cost structure reforms and increase humancapital investment* Expenses: ￥36.2 bn (FY2022) ⇒ ￥34.0 bn (FY2025)(-2.2 billion yen)(-19.0 billion yen)
Definition of New/Old Portfolios• New Portfolio: Revenue from goods and services contracted
in or after April 2020
Old Portfolio: Revenue from goods and services contracted
in or before March 2020

Actual credit costs• We plan to stabilize actual credit costs at a low level by proactively taking
measures to improve credit quality of single building income loans (other thanthose for share houses).
* Actual credit costs: Approx. ￥9.0 bn (FY2020–2022 average)→ Average under 2.0 billion yen per year from FY2025(Approx. -7.0 billion yen)

(FY2025)• The turning point towards a sustainable revenue
structure is fast approaching due to accelerated
growth in new business gross profit, etc.

© 2024 SURUGA bank, Ltd. All rights reserved.

32

■ Management Strategy III. Risk-Taking and Risk Diversification

Finances

MTP

Change in composition of assets under managementfrom FY2018 to FY2025
100%
90%

Securities portfolio

80%

Structured finance (other than real estate)

Non-real estate related

Business financing
70%

Unsecured loans

60%

Housing loans

50%

Collaboration loans, etc. (in real estate)
Structured finance (in real estate)

40%
30%

Approx.
60%

20%Single building income loans*1(new portfolio)

Approx.
40%
Approx.
30%

10%Real estate related

Specified real estate area loans*2(old portfolio)

0%

Assets undermanagement

End of FY2018
results

End of FY2022
results

End of FY2025
projection*1 Single building income loans + studio apartment loans + other secured loans + loans for asset
management companies executed after the full-scale rollout of Phase 1 of the mid-term business plan

￥3,035.0 bn￥2,519.7 bn￥2,500.0 bn*2 Single building income loans (relatively high share of older properties and properties located in regional
areas) executed prior to the full-scale rollout of Phase 1 of the mid-term business plan

The ratio of conventional specified real estate areas to total assets under management is planned
to decrease to approx. 30% (end of FY2025) after falling from approx. 60% (end of FY2018) toapprox. 40% (end of FY2022)© 2024 SURUGA bank, Ltd. All rights reserved.

33

■ Mid-Term Business Plan KPI Revisions

Finances

Initial Projections

MTP

Actual/Revised Projections*

Main KPIs

Notes

FY2023

FY2025

FY2023

Ordinary profit￥11.5 bn￥13.0 bn

￥20.1 bn￥17.0 bn

Net income￥8.5 bn￥11.0 bn

￥15.3 bn

￥13.5 bn―

10% or more
(effective)

11.87%

10% or more
(effective)

・Any unrealized loss on securities is deducted fromcore capital

New businessgross profit￥9.8 bn￥16.0 bn ormore￥11.3 bn

￥19.0 bn or
more

・Revenue from goods and services issued on orafter April 2020・Based on core business gross profit (excluding
gains on cancellation of investment trusts)

Expenses￥36.0 bn

￥32.5 bn or
less￥35.1 bn￥34.0 bn or
less(Consolidated)

Capital adequacy
ratio

Key action indicators forachieving main KPIs

Secondary KPIs

(Finalized Basel III basis)

Actual credit costratio

30 bpsApprox. 15bps-9 bps

FY2025

Approx. 10
bps

・ Profit attributable to owners of parent

・Intended pace for FY2025 and beyond
・Actual credit costs / Average loans and bills
discounted × 10,000(Loans and bills discounted = Loans + Monetaryclaims bought)* Figures for FY2023 are actual results announced on May 10, 2024. FY2025 figures are revised medium-term business plan KPIs announced on April 4, 2024.
Note: All figures and indicators are Suruga Bank non-consolidated unless otherwise stated© 2024 SURUGA bank, Ltd. All rights reserved.

34

■ Value Creation Process

Finances

MTP

We will realize the creation of value for stakeholders through the provision of services that address the challenges of customers and communities.
External Environment(Social Issues)

Structural Changes
in Japanese Society Polarization of thesocial structure Increased numbers of
single seniors

Global Structural Changes
 Increased geopolitical risk

Management ResourcesGroup Strengths

Financial Capital

Materialities
Recognized by theGroup

Human Capital

Establishment of a solid
governance foundation

・Highly skilled professionals

Social and relational
capitalDigitalization

・Strong customer base・Nationwide network

Accelerating ESG Trends Climate change problem
 Diversifying work styles
 Importance of reskilling

Realizing a sustainable
society

Customers

 Provision of solutions
 Helping them live richer lives

Shareholders Sustainable corporate valueenhancement
 Stable and sustainable
shareholder returns
 High capital adequacy andsoundness

Employees Job satisfaction
 Diversity promotion, work
style reforms
 Reskilling support

Society Community revitalization
 Realizing environmental andsocial sustainability
 Sound corporate climate andcultureBusiness Model / Activities

 Increased instability anduncertainty in interest rates

 Lifestyle and behavioral
changes due to digitaltransformation

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

・High capital adequacy

 Revise and restructure theglobal supply chain

 Shift to customeroriented business model

Value Provided to Stakeholders

Corporate Philosophy

Intellectual capital・Unique retail banking
know-how cultivated throughdecades of experience

Natural capital
・Rich nature of the region
・Abundant tourism resources

Corporate value enhancement andsustainable growth of the Group

Building sustainable local
economies and societies

Phase 2 of the Mid-Term Business Plan
“Re:Start 2025” (FY2023–FY2025)■ Deliver unique value through our core business of retail banking■ Establish measures for appropriately controlling risk/return

Agile

I. Evolving the Retailand Solutions
Businesses

Contribute toenvironmental
conservation

Kyo-soCreate an environment
where employees canplay an active role andgrow

Resilience

Corporate
governance

II. Building a
Sustainable
Revenue
Structure

Risk
management© 2024 SURUGA bank, Ltd. All rights reserved.

III. Risk-Taking
and Risk
Diversification

Contribution to the SDGs

Compliance35

<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 anduncertainties. Actual future business results may differ from the targets contained in the present material,
due to unpredictable changes in the external business environment.
© 2024 SURUGA bank, Ltd. All rights reserved.