Suruga Bank, Ltd.

Summary of Financial Results for Q1 FY3/24

August 10, 2023
0

■ Actual Results for Q1 FY3/24; Comparison with Q1 FY3/23•••

Core gross operating profit (excluding gains on cancellation of investment trusts) decreased by 0.1 billion yen year-on-year to 14.9 billion yen,mainly due to a decrease in net interest income (0.2 billion yen).
Actual credit costs decreased by 0.6 billion yen YoY to 0.6 billion yen, mainly due to an increase in recoveries of written-off claims (0.6 billion yen).
Net income (non-consolidated) decreased 0.5 billion yen YoY to 3.3 billion yen due to a change in tax position and an increase in income taxes.

<Non-consolidated>(billion yen)
Actual resultsfor Q1 FY3/23

Actual resultsfor Q1 FY3/24

15.1

14.9

(hundredmillionyen) (0.1)

Expenses

9.5

9.6

+0.1

Gains (losses) on securities

(0)

(0)

(0)

Actual credit costs

1.3

0.6

(0.6)

Ordinary profit

4.1

4.6

+0.4

Net income

3.9

3.3

(0.5)

Profit attributable toowners of parent

4.0

3.5

(0.5)

Core net operating profit(excluding gains [losses] on cancellationof investment trusts)

Factors causing variation in ordinary profit (year-on-year)

Year-on-year

Main factors

Net interest income

・Decrease in interest on loans and bills discounted: -0.7 billion yen (Flatbalance factor: -0.3 billion yen, Yield factor: -0.3 billion yen)・Increase in other interest income due to increase in interest on monetaryclaims bought: +0.4 billion yen

Expenses

・Increase in property expenses: +0.1 billion yen

Actual credit costs

・Increase in recoveries of written-off claims: +0.6 billion yen

Unit: billion yen
5+0.7＜Actual Credit Costs for Q1 FY3/24＞(billion yen)
+0.5

0.6

Actual credit costs
NormalamountPreventive
allowances

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

+0.1

4

(1.6)

(0.2)

2.2

Allowances based on the following two assumptions

Allowance for investment real estate loan customers who have newly
suspended repayments triggered by organizational negotiations

Allowance for claims for restructuring of loan terms and conditions from Q3
for which normalization of recovery is unlikely

0.1
2.1

(0.1)

(0)

Last year
Actual results
4.1

Actual results
4.6

3
Ordinary profit(Period Ending
June 30, 2022)

Net
interest
incomeNet fees
andcommissions

Expenses

Gains
Actual credit(losses)costs
onsecurities

Ordinary profit(Period Ending
June 2023)*Figures in the graph above are rounded to the nearest unit and may differ from the figures in the table on the left.

© 2023Suruga Bank, Ltd. All rights reserved.

1

■ Actual Credit Costs and Non-Performing Loans Based on the Financial Reconstruction Law (Non-Consolidated)• 0.6 billion yen in overall actual credit costs for Q1 FY3/24 were recorded.
• 0.3 billion yen in actual credit costs for investment real estate loans were recorded. 0.3 billion yen in actual credit costs for purposes other thaninvestment real estate loans were recorded.
• As of June 30, 2023, the ratio of nonperforming claims to disclosed claims under the Financial Reconstruction Law was 10.2%, and the coverage ratio
was approximately 83.5% based on collateral, guarantees, etc. and allowance for loan losses.
・Actual credit costs (Period Ending June 30, 2023)
Item(billion yen)
Actual credit costs

Allowance for loan losses

Investment real estate loans*

0.3

103.6

Housing loans

0.1

2.4

Unsecured loans

0

3.3

Monetary claims bought

(0)

0.2

Business financing, etc.

0

8.7

0.6

118.4

Total

*Investment real estate loans ： Studio apartment loans, single building income loans, other secured loans

・Disclosed Claims under the Financial Reconstruction Law (as of June 30, 2023)
Total coverageamountBalance(billion yen)

Coverage amountby collateral andguarantees, etc.

Allowance forloan losses

Coverage ratio

Claims against bankrupt and substantially bankrupt
obligors

120.4

120.4

44.6

75.7

100%

At-risk claims

43.9

30.1

19.8

10.3

68.7%

Claims for special attention

48.5

27.1

15.6

11.4

55.9%

Total

212.8

177.7

80.2

97.5

83.5%

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

10.2%© 2023Suruga Bank, Ltd. All rights reserved.

2

■ Outstanding Balance, Yield, and Delinquency Rate by Portfolio Area <Non-consolidated>•••

Portfolio areas in the mid-term business plan as a whole had a balance of 1,969.6 billion yen and a yield of 3.36% (total (E)) as of June 30, 2023.
The delinquency rate for consumer loans was 6.79% (A), due in part to the fact that some customers with investment real estate loans have suspended repayments
triggered by organized negotiations. The delinquency rate for loans excluding these special factors was 1.61% (F).
In order to improve the delinquency rate of investment real estate loans, we are not only supporting repayments by changing conditions, but we are also providing
feedback to customers on information of concerns such as damage and management conditions to real estate found in our own periodic surveys.
Our support also continues to include potentially changing management companies.
(billion yen)Mar. 2023

Loan category
Balance

Yield

Jun. 2023
Delinquency rate

Balance

Yield

Delinquency rate

1,542.6

3.05%

7.02%

1,509.0

3.04%

7.15%

Housing loans

430.5

2.69%

0.27%

426.0

2.67%

0.35%

Studio apartment loans

120.5

3.33%

2.97%

112.5

3.32%

2.94%

Single building apartment loans(including share house loans)

959.0

3.14%

10.79%

938.1

3.13%

10.98%

Other secured loans

32.4

4.26%

0.34%

32.2

4.19%

0.23%

Unsecured loans

127.8

10.47%

2.36%

123.8

10.47%

2.41%

Card loans

89.0

11.74%

0.88%

87.1

11.71%

0.90%

Unsecured certificate loans

38.7

7.54%

5.77%

36.7

7.52%

6.01%

Consumer loans (A)1,670.4

3.62%

6.66%

1,632.8

3.60%

6.79%

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

1.60%

1,533.7

Secured loans

1.61%

Corporate investment real estate loans (B)

57.4

1.77%

－

65.7

1.76%

－

Structured finance, etc. (C)

126.4

2.37%

－

143.3

2.34%

－

Monetary claims bought (D)

131.5

2.08%

－

127.6

2.23%

－

1,985.8

3.38%

5.60%

1,969.6

3.36%

5.62%

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.
*Classified by portfolio areas in the mid-term business plan "Re:Start 2025” and beyond
Corporate investment real estate loans includes investment real estate loans to asset management companies, etc. Structured finance includes specified corporate bonds, etc.
*Yield and delinquency rate of studio apartment loans, secured loans, consumer loans in March 2023 were calculated based on the original claims before securitization.
*”Organizational negotiation partners, etc.” refers to loans to borrowers who have submitted a request for suspension of repayments as a result of organizational negotiations(share house-related loans are excluded).

© 2023Suruga Bank, Ltd. All rights reserved.

3

■ Status of Loans, Etc.
•

In Q1 FY3/24, we disbursed a total of 45.8 billion yen (Total (A)+(B) ) in all of the portfolio areas, equivalent to around a two-fold increase YoY.
Of this, 25.1 billion yen was disbursed in consumer loans and corporate investment real estate loans, while 20.7 billion yen was disbursed in structured finance.
• As for the full-year plan for FY3/24, which is weighted toward 2H, accounting for past results and the seasonality of the market,
new disbursements with origination by the Company trended favorably in Q1, progressing at 28.6% against the plan (Total (A)).
• Monetary claims bought is an area where we aim for middle-risk/middle-return and where our credit decision skills can be leveraged.
We are continuously sounding out with suppliers about leads.
• In light of the monetary policy review, including the loosening of the YCC, etc., we will promote sales while keeping an even closer eye on trends in the financial andreal estate markets.

・Disbursement of Loans, Etc. by Portfolio Area

(billion yen)

Actual resultsfor Q1 FY3/23

Actual resultsfor Q1 FY3/24

Year-on-year

Consumer loans

9.8

16.4

+6.6

Corporate investment real estate loans

2.7

8.7

+6.0

Subtotal

12.5

25.1

Structured finance

9.6

Total (A)Monetary claims bought (B)Total (A) + (B)FY3/24Full-year Plan

Progress rate

+12.6

105.0

23.9%

20.7

+11.1

55.0

37.6%

22.1

45.8

+23.7

160.0

28.6%

－

－

－

50.0

－

22.1

45.8

+23.7

210.0

21.8%

*Planned values for corporate investment real estate loans (see note on previous page) are combined with those for consumer loans in the plan,as sales promotion activities for personal investment real estate loans will be conducted in the same manner.
*Structured finance includes specified corporate bonds, etc.
© 2023Suruga Bank, Ltd. All rights reserved.

4

Reference Materials

■ Interest Margin, etc. (Non-consolidated)

Finances

Interest Margin, etc.
Gross Loan-Deposit
Interest Margin

Earnings
Forecast

Loan-Deposit
Interest Margin

Net Interest Margin

Average Balance ofLoans and Bills
Discounted (billion yen)

2,476.7

3.11%

1.80%

1.79%

Yield of Loans and Bills Discounted<Special factors effecting loans and bills discounted (year-onyear)>
20/6 Recovery of start-up loans, transfer of share houseclaims (approx. -100 billion yen)
21/6 Transfer of share house claims (approx. -44.2 billion yen)
22/6 Transfer of share house claims (approx. -60.5 billion yen)
23/6 Transfer of share house claims (approx. -16.8 billion yen)
*State the periods in which the above factors have an impact.
(This differs from actual date of the procedures, etc.)

2,294.3

3.04%

2,125.3

2.89%

1.64%

Alliances

Yield and Average Balance of Loans and Bills Discounted

2,782.0

3.15%

MTP

1.74%

2,074.1

2.82%

1.67%

3.19%

3.16%

3.08%

2.93%

2.86%

19/6

20/6

21/6

22/6

23/6

Yield and Average Balance of Deposits
Average Balance of Deposits(billion yen)

1.21%
1.00%
0.81%

0.68%

0.71%
3,201.6

3,264.9

Yield of Deposits

3,325.9

3,350.1

3,069.0

19/6

20/6

21/6

22/6

0.03%

0.04%

0.04%

0.04%

0.03%

19/6

20/6

21/6

22/6

23/6

23/6

© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 1

■ Status of Securities, Expenses and OHR

Finances

Unrealized gains (losses) on securities

Fair
value

Core net operating profit

Other securities

Fair
value

Jul. 31, 2023

Net
unrealized
gains(losses)

Fair
value

(1.2)

316.2

0.6

337.6

3.0

Shares

15.5

7.7

17.6

9.8

37.2

13.9

Bonds

154.7

(0.3)

176.3

0

177.6

(1.6)

Multi-asset fund

120.3

(8.6)

119.8

(9.1)

119.7

(9.2)

1.3

(0)

2.3

(0)

2.9

(0)

・As part of our capital and business alliance with Credit Saison Co., Ltd., we acquired approximately 15.4 billion
yen in shares of said company on July 3, 2023 (see Reference Material 13).

Foreign stocks

Domestic stocks

Japanesegovernment
bonds, etc.

Fair value
119.8
Advanced bn yen
countries’
government
bonds, etc.

HR
expenses

Property
expensesTaxes(billion yen)

21.5
18.3
16.5
15.1

14.9

11.5
10.4

・Multi-asset fund investment asset classes
As of Jun. 30, 2023

Alliances

Based on OHR core business gross profit (excluding
gains [losses] on redemption of investment trusts)

Net
unrealized
gains(losses)292.0

Others(excluding gains [losses] onredemption of investment trusts)(billion yen)Jun. 30, 2023

Net
unrealized
gains(losses)

MTP

Changes in Expenses and OHR <Non-consolidated>

・Unrealized gains (losses) on available-for-sale securities
Mar. 31, 2023

Earnings
Forecast

3.6

53.7%

3.7

56.8%

10.1

9.5

9.6

3.6

3.5

3.4

61.4%

62.8%

64.1%

6.6

5.7

5.4

5.0

5.2

1.2

0.9

1.0

0.9

0.9

19/6

20/6

21/6

22/6

23/6

© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 2

■ Status of Shareholders' Equity, etc. and Shareholder Return Policy

Finances

12.54%
8.65%

12.81%•(billion yen)

•

•

249.1

241.1

Acquisition of treasury stock
We will flexibly implement shareholder return measures that
contribute to the improvement of capital efficiency, taking
into account business performance, capital conditions,
growth investment opportunities, and market conditions
including the stock price.

254.1

219.0

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

Returns

260.7

Basic Shareholder Returns Policy
Our policy is to strive to enhance shareholder returns after
considering
the optimal balance between capital soundness andinvestment for growth13.85%

10.49%

Alliances

We will return profits to stakeholders after taking into
consideration our Group's corporate philosophy and longterm vision.

Capital adequacy ratio

After application of finalized Basel III basis
12.03 % (End of 23/6)

MTP

Shareholder Returns Policy

Shareholder Equity and Capital Adequacy Ratio <Non-consolidated>

Shareholder equity

Earnings
Forecast•

Promotion of ESG/SDGs
We will promote them on a Group-wide basis, focusing on
the four themes set forth as materialities (see Reference
Material 12).

 Acquisition of treasury stock *Disclosed May 18, 2023

19/6

20/6

21/6

22/6

23/6

Type of shares acquired

Common stock

Total number of shares acquired

35,000 thousand shares (maximum)

Total acquisition cost

22 billion yen (maximum)

Acquisition period

July 4, 2023 to March 31, 2024

After the acquisition of treasury stock is completed, the Company expects to utilize
the shares for stock-based compensation plans, etc.
Treasury stock in excess of the number of shares will be retired, in principle.

© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 3

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

Earnings
Forecast

Finances[Non-consolidated]

Alliances(billion yen)[Consolidated]
Earnings Forecast for FY3/24

Earnings Forecast for FY3/24

FY3/23 Results

Year-on-year
Full year(2)(1)
1st half(2)-(1)
1st half

82.7

35.0

69.0

(13.7)(excluding gains [losses] onredemption of investment trusts)

60.2

27.5

54.0

(6.2)

Expenses

36.2

18.5

36.0

(0.2)

Gains (losses) on securities(14.4)

ー

ー

+14.4

Actual credit costs

(1.1)

4.5

6.5

+7.6

Ordinary profit

11.2

4.5

11.5

Net income

9.5

2.5

9 yen

7 yen

Ordinary income

MTP

Full year(3)

Cons-parent
differential(3)-(2)

39.0

77.5

+8.5

+0.2

4.5

12.0

+0.5

8.5

(1.0)

2.5

8.5

±0

14 yen*+5 yenCore net operating profit

Dividends per share*Dividends per share of 14 yen = Interim dividend of 7 yen + Year-end dividend of 7 yen(billion yen)<Premise Behind FY3/24 Actual Credit Cost Forecast>[Normal amount]
Actual credit costs for loans without special factors (including share house-related loans) are expected to be-2.0 billion yen for the full year, taking into account a lower expected loss ratio.
[Preventive allowances]
We plan preventive allowances of 8.5 billion yen for the full year, taking into account additional provisions for(a) suspension of repayments by some investment real estate loan customers triggered by organizednegotiations and for (b) claims for restructuring of loan terms and conditions from 3Q of the previous fiscal year
for which normalization of recovery is unlikely.
© 2023Suruga Bank, Ltd. All rights reserved.

Full year
1st half

Actual credit costs total

4.5

6.5

Normal amount

(1.5)

(2.0)

Preventive
allowances subtotal

6.0

8.5

(a)

0.5

1.0

(b)

5.5

7.5

Reference Material 4

■ New Loan Assumptions

Finances

Earnings
Forecast

MTP

Alliances

Forecast of New Loan Disbursements, etc. *Solution business (Housing loans, unsecured loans, etc.)

Structured finance

Investment real estate loans

Claim purchases(billion yen)

<Four Autonomous Profit Centers>

240.0

236.2
210.0

50

Market Finance- Claim purchases -60

Market Finance- Structured finance -70

Greater Tokyo WideArea Bank
- Investment real estate loans -60

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

50

163.8

55

67.9

60

45

FY3/21

FY3/22

FY3/23

FY3/24Plan

FY3/26
Phase 2 Final Year© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 5

■ Mid-Term Business Plan Overview

Corporate
Philosophy

Earnings
Forecast

MTP

Alliances

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

Employee satisfaction

Contribution to society

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

Shared in Phase 1 & 2

Customer satisfaction

VisionFinances

I. Evolving the Retail and Solution Businesses
We will create sources of differentiation founded in resolving AID*1 for our customers, leading them to say“I’m glad you’re here... I’m glad we met.”*1 Anxiety, inconvenience, dissatisfaction, etc.

Phase2
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 structurewith three measures. Namely, growth of new business revenue through four autonomous profit centers, cost structurereform, 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 selectedareas, diversifying away from our traditional risk structure concentrated in specific real estate areas*2.
*2 Single building income properties (relatively high share of older properties and properties located in regional areas) executed prior to the full-scale rollout of Phase 1© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 6

■ Mid-Term Business Plan Initiative Policies

Phase2
Management
Strategy

Business
Structure

Finances

Earnings
Forecast

MTP

Alliances

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

1.

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

Completing Cost Structure Reform (Expenses: 46.8 billion yen in FY2018 ⇒ 32.5 billion yen planned in FY2025)

Priority Measures• Network Reorganization, Shifting Talent to the Front Office by Streamlining Headquarters Functions,
Revenue
Structure

IT Cost Structure Reform
3.

Minimizing and Stabilizing Actual Credit Costs Through Higher Credit Quality• Improvement of credit quality to a level where actual credit costs average less than 3.0 billion yen/year from FY2025
onward4.

Pursuing Cloud Computing and DX in IT Platforms

5.

Vector Alignment with Stakeholders

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

Phase2
Keywords

Agile

Kyo-soResilience

Speed, taking on challenges,
autonomous decentralization

Collaboration, dialogue, value creation

Recovery, flexibility,
risk diversification© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 7

■ Management strategy I: Evolving the retail and solution businesses

Finances

Earnings
Forecast

MTP

Alliances

From the past to the present, Suruga Bank has been providing solutions
from Suruga’s unique perspective that first looks at customers’ “AID.”
Digital Infrastructure that Supports the creation of difference(Examples)

More Dreams for Customers

Time Deposits with Jumbo
Lottery Tickets
Our concept is "a financial service filledwith the joy of growing dreams” in thisera of ultra-low interest rates. A first fora Japanese bank, this product is theresult of our employees' desire todeliver dreams to customers.

Backing up womens’ dream of home ownership

Housing Loans for Women
At a time when banks' screening
procedures were not keeping pacewith diversifying lifestyles andemployment patterns, we were
inspired by the passion of women tomarket Japan’s first housing loan for
women.

Unique to Suruga

2000

We were the first to focus on the myriad nichemarkets within the housing loan market.
Our employees sensed customers' "AID” andquickly commercialized products to match.

Screening via Data Mining

Continuous provision of high quality services

Automated Screening System

Use of CRM

We used sophisticated methods toanalyze detailed data accumulated bylending to a wide variety of customers,
including data on screening andrepayment status. This sped up thescreening process.

By integrating our informational
data and accounting data, we
provided customers right services
at the right time.

Unique to Suruga

1999
Unique to Suruga
In the early days of the Internet, we opened Japan’s first
online bank branch. This allowed us to deliver dreams andpeace of mind to customers through the Internet, even asa regional bank, without building physical branches.
We were also the first Japanese financial institution towork on mobile banking.

1996

Unique to Suruga

We achieved the automation of screening
ahead of other banks by combining ourscreening know-how with a vast database
analyzed with our proprietary logic cultivatedover many years specializing in retail banking.

1999

This is the trump card of our retailstrategy. This allows continuous
relationships anytime, anywhere, at all
customer touchpoints. Our accumulated
data is the wellspring of not only ourentire organization’s retail mindset, butalso of improvements of our marketing
capabilities.

Earning miles for bank transactions

ANA Branch
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.

Products and Services
Developed from Suruga's
Unique Perspective (Examples)
Unique to Suruga

Translating current trends into products and services

Smart Account / Accounts for
non-Japanese Customers
We established payment-only accounts thatprovide more savings and peace of mind
when using cashless payments, which havebecome a part of daily life.
We established accounts exclusively for nonJapanese customers.

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 theconclusion to their lives that the truest to
the way they have lived.

2004

By combining ANA's diverse customer baseand marketing know-how with Suruga's retailbanking business, we created new markets andprovided unique high-quality value.

Unique to Suruga

2021/2022

Based on our desire to provide access tofinancial services to all, we will focus on
growth areas and non-Japanesecustomers, who have strong need forfinancial services.

© 2023Suruga Bank, Ltd. All rights reserved.

Unique to Suruga

2022

To prepare for “what if,” we provide asset
visualization, funeral insurance, introductions todifferent funeral styles, and other services thatturn anxiety into peace of mind. In this way, we
help customers live the rest of their lives inbrighter and more positive ways.

Reference Material 8

■ Management strategy II: Building a sustainable revenue structure

Finances

Earnings
Forecast

MTP

Alliances

New Business Gross Profit (Core Gross Operating Profit, New Portfolio)• We forecast that Management Strategy I (Evolving the retail andsolution business) will grow new business gross profit by around
two fold over FY2022.
Breakdown of new
business gross profit

FY2025 Plan

FY2022
Results

ChangeRetail/Solution Businesses

6.5

2.3

+4.2

Solution Business*1

3.0
3.5

0.8
1.5

+2.2
+2.0

9.5

5.4

+4.1

4.5
5.0

2.3
3.0

+2.2
+2.0

16.0

7.7

+8.3

Investment real estate loans

Market Finance
Structured financeMarket operations, etc.*2

New Portfolio Total

Approx. 2X

Building a Sustainable
Revenue Structure with the“Three Arrows”(Unit: billion yen)

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

Expenses

Decrease in core gross operating profit from old portfolio• Continuing from Phase 1, we plan to implement and complete cost structurereforms as part of Management Strategy II (building a sustainable revenue
structure).
*Expenses: 36.2 billion yen in FY2022 ⇒ 32.5 billion yen in FY2025)(Approx. -4.0 billion yen)

52.4 billion yen → 32.5 billion yen(FY2022 Actual)(FY2025)(Approx. -20.0 billion yen)

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 (othern thanthose for share houses).

Definition of New/Old Portfolios• New Portfolio: Revenue from goods and services contracted in orafter April 2020
Old Portfolio: Revenue from goods and services contracted in or
before March 2020

*Actual credit costs: approx. 9.0 billion yen (average of FY2020-2022 results )→ Average under 3.0 billion yen per year from FY2025(Approx. -6.0 billion yen)
© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 9

■ Management strategy III: Risk-taking and risk diversification

Finances

Earnings
Forecast

MTP

Alliances

Change in composition of assets undermanagement from FY2018 to FY2025
100%
90%

Securities Investment

80%

Structured finance (Non-RE)

Non-Real EstateBusiness financing

70%

Unsecured loans

60%

Housing loans

50%

Monetary claims bought (RE)
Structured finance (RE)40%

Balance of single building apartment loans *1

Approx.
60%

30%
20%

(New Portfolio Total)

Approx.
40%

10%

Approx.
30%

Real EstateSpecified real estate area loans*2(Old Portfolio)

0%

Assets undermanagement

End of FY2018
Results

End of FY2022
Results

End of FY2025
Plan

3,035.0 billion yen

2,519.7 billion yen

2,500.0 billion yen*1: Single building income loans + studio apartment loans + other secured loans + loans for asset managementcompany executed after the full-scale rollout of Phase 1 of the mid-term business plan
*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

The ratio of conventional specified real estate areas to total assets under management is planned to decrease fromapprox. 60% (end of FY 2018) to approx. 40% (end of FY 2022) and to approximately 30% (end of FY 2025).

© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 10

Main KPIs

■ Phase 2 KPIs

FY2022 Results

FY2025 Plan

Ordinary profit

11.2 billion yen

13.0 billion yen

Net income

10.5 billion yen

11.0 billion yen

11.39%

10% or more
(effective)(Consolidated)

Capital adequacy ratio

Key action indicators
for achieving main KPIs

(Finalized Basel III basis)

Secondary KPIs

Finances

New business gross profit

7.7 billion yen

Expenses

36.2 billion yen

Actual credit cost ratio-5 bps

16.0 billion yen
or moreEarnings
Forecast

MTP

Alliances

Notes

・Profit attributable to owners of parent

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

32.5 billion yen
or less

Approx. 15 bps

・Intended cruising speed for FY2025 and beyond
・Actual credit costs / Loans and bills discounted(average balance) × 10,000*Figures/indicators without "consolidated" are for Suruga Bank (non-consolidated)© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 11

■ Vector Alignment with Stakeholders

Finances

Earnings
Forecast

MTP

Alliances

We will realize the creation of value for stakeholders through the provision of services that
address the challenges of customers and communities.
Corporate
Philosophy
We want to be a company
that makes customers feel,“I’m glad you’re here... I’m glad we met.”
External Environment(Social Issues)
Structural Changes
in Japanese Society Polarization of thesocial structure Increased numbers of
single seniors

Global Structural Changes
 Increased geopolitical risk
 Revise and restructure theglobal supply chain

Management ResourcesGroup Strengths

Financial Capital

Human Capital

Digitalization

・Strong customer base・Nationwide networkIntellectual capital Lifestyle and behavioral
changes due toadvancement of DX

・Unique retail banking
know-how cultivated throughdecades of experience

Accelerating ESG Trends

Natural capital Climate change problem
 Importance of reskilling・Rich nature of the region
・Abundant tourism
resources

Realizing a sustainable
society

Corporate Value Enhancement
and Sustainable Growth of theGroup Diversifying work styles

Establishment ofa solid governancefoundation

・Highly skilled
professionals

Social and relational
capitalShift to customeroriented business model

Materialities
Recognized by
the Group

Business Model / Activities
Customers

 Provision of solutions
 Helping them live richer lives

・High capital adequacy Increased instability anduncertainty in interest ratesValue Provided to Stakeholders

Building sustainablelocal economies andsocieties

Phase 2 of the Mid-Term Business Plan
“Re:Start 2025” (FY2023-FY2025)

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

Shareholders ■ Deliver unique value through our core business ofretail banking■ Establish measures for appropriately controllingrisk/return
Employees

 Job satisfaction
 Diversity promotion, work stylereforms Reskilling support

I. Evolving the Retail andSolution Businesses

Contribute toenvironmental
conservation

Society
II. Buildinga Sustainable
Revenue Structure

III. Risk-Taking and
Risk Diversification

 Community revitalization
 Realizing environmental andsocial sustainability
 Sound corporate climate andcultureCreate an environment
where employees can play
an active role and grow

Agile

Corporate
GovernanceKyo-soRiskmanagement© 2023Suruga Bank, Ltd. All rights reserved.

Contribution to the SDGs
Resilience

Compliance

Reference Material 12

■ Capital and Business Alliance with Credit Saison Co., Ltd.

Finances

Earnings
Forecast

MTP

Alliances

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

Mutual Vision

Consumer

Consumer● Card loans● Loans by purpose● Housing loans● Investment real estate loans● Testamentary trusts● Insurance● Business for non-Japanesecustomers

Neo
Finance
Solution
Company

Regional Bank

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

Corporate

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

New Customer
Overview of the Capital andBusiness Alliance
1. Capital Alliance Details(1) Suruga Bank acquires Credit Saison shares:(2) Credit Saison acquires Suruga Bank shares:

8,224,700 shares of common stock
35,089,000 shares of common stock(5.0% of voting rights)(15.72% of voting rights)

for approximately 15.4 billion yen
for approximately 17.1 billion yen

2. Business Alliance Details
Implementing the following:(1) Establishment of Saison Branch and acquisition of bank agency business by Credit Saison; (2) Joint commercialization of Saison Platinum Business Card;(3) Collaboration in the housing loan business; (4) Joint development of real estate financeIn addition to the above measures, discussions are underway regarding collaboration in other areas.
3. Mutual Director Dispatch
In order to further deepen the cooperation between the two companies and strengthen their respective governance systems, each company will dispatch one director to the other company.
(Dispatched directors: Kosuke Kato, President of the Company, and Naoki Takahashi, Vice President of Credit Saison)© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 13

■ Areas of Business Partnership

Finances

Earnings
Forecast

MTP

Alliances Suruga Bank establishes the Saison Branch andCredit Saison acquires banking agency business Joint commercialization of the Saison Platinum
American Express® Card









Suruga Bank establishes an Internet-only branch (tentative
name: Saison Branch) for Credit Saison's Saison members,offering products and services unique to the branch jointly
developed by the two companies.
(Specific details to be discussed by both companies)
An initiative to provide branch accounts for Saison members,
subject to Credit Saison's permission to engage in thebanking agency business with Suruga Bank as the affiliatedbank.
An initiative in which Credit Saison guarantees loans
provided at the Saison Branch.

Providing the Saison Platinum Business American Express®
Card issued by Credit Saison, allowing Suruga Bank's affluent
customers and SME owners to enjoy the special benefits ofvarious supplementary privileges in addition to the businessbenefits offered to them.
* "American Express" is a registered trademark of American Express.
Credit Saison Co., Ltd. uses this under license from American Express.

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

Suruga Bank
Saisonmembers

SaisonBranch
Credit Saison

Resolvingtroubles/"AID"

Taking on the creationof new value

Achieving synergies in
the retail domain

Joint development of the real estate finance business
The two companies will combine their expertise andresources in real estate finance to enhance their presencein the market.

© 2023Suruga Bank, Ltd. All rights reserved.

Reference Material 14

<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. Thesestatements are not intended as guarantees of any specific future performance, which is subject
to a variety of risks and uncertainties. Actual future business results may differ from forecast
values contained in the present material, due to unpredictable changes in the external businessenvironment.
© 2023Suruga Bank, Ltd. All rights reserved.