SURUGA bank, Ltd.
Financial Results for the Nine Months
Ended December 31, 2022

February 9, 20230■ Actual Results for 3Q of FY3/23; Comparison with 3Q, FY3/22• Gross operating profit decreased by 5.8 billion yen year-on-year to 43.0 billion yen, mainly due to a decrease in net interest income (2.9 billion yen) and a decrease ingains (losses) on bond transactions (3.2 billion yen).
• Net operating profit decreased by 22.5 billion yen year-on-year to 15.1 billion yen, mainly due to a change in the accounting item for provision of allowance for loan
losses based on accounting standards (*).
• Actual credit costs decreased 10.1 billion yen year-on-year to -3.5 billion yen.
• Quarterly net income (non-consolidated) increased 10.9 billion yen YoY to 20.3 billion yen, due to the above factors as well as gains on sales of stocks and adecrease in income taxes.
(*) In the recognition of general allowance for loan losses and individual allowance for loan losses for 3Q of FY3/22, there was an excess reversal, and the excess reversal amount was recorded as gain on
reversal of allowance for loan losses (non-recurring income).

<Non-consolidated>(Billions of yen)
3Q resultsfor FY3/22

４８.９

Gross operating profit

3Q resultsfor FY3/23

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

Year-on-year

４３.０

Main factors(５.８)

Expenses

２９.８

２７.９(１.９)

Core net operating profit

１８.６

１８.０(０.６)

Net operating profit

３７.７

１５.１(２２.５)

Ordinary profit

１３.６

２１.５

+７.９

Net income

９.４

２０.３

+１０.９

Actual credit costs

６.６(３.５)(１０.１)

Profit attributable to ownerof parent

９.５２０.８+１１.２

Net interest income

・Decrease in interest on loans and discount: -5.5 billion yen(flat balance factor: -3.6 billion yen, yield factor: -1.9 billion yen)
Increase in interest and dividends on securities due mainly to dividends fromsubsidiaries: +1.3 billion yen

Net fees and commissions

・Decrease in group credit life insurance premiums: -900 million yen

Gains on bonds/other・Loss on redemption mainly due to partial cancellation of multi-asset funds:-3.2 billion yen

Expenses・Decrease in property expenses -1.2 billion yen

Gains on stocks/other・Net gains/losses on stock transactions, mainly due to sales of foreign
stocks +2.5 billion yen

Actual credit costs

・Gain on reversal of allowance for loan losses due to lump-sum transfer ofshared loan receivables and lower expected loss ratio

200
(0.9)
+7.9

＜ 3Q results per assumption of actual credit costs ＞(Billions of yen)
Mid-term

3Q

(５.２)

(３.５)

Normal credit cost (a)

(３.２)

(４.３)

Share house-related loans (b)

(３.２)

(３.４)

１.１

４.１

Actual credit cost total

Preventive allowances (c)

+0.4
+1.9

100

PreviousYearResults

(2.9)

+10.1

ActualResults

+2.5

13.6

21.5

(3.2)

0
Ordinary profit(FY12/21)

Netinterest
incomeNet fees andcommissions

Gains onbonds/otherExpenses

Gains onstocks/otherActualcredit cost

Other

Ordinary profit(FY12/22)※Figures in the graph above are rounded to the nearest unit and may differ from those in the table on the left.

© 2023SURUGA bank, Ltd. All rights reserved.

１

■ Key Assumptions Underlying the Revised Earnings Forecasts for FY3/23• In light of 3Q results and the start of the next medium-term management plan (FY2023-FY2025), we have revised our forecast for FY2023, considering
the following factors.
A) Actual credit costs
Assumed to be 1.0 billion yen, a decrease of 9.0 billion yen from the previous forecast. A new precautionary provision will be adopted in 3Q(see (c) below).
B) Securities investment
In light of growing concerns of a global recession and the risk of high inflation, we will restructure our securities portfolio by reducing mainly multi-asset funds withvaluation losses (expected to record approximately 11.0 billion yen in redemption losses, etc.).

・Assumptions for securities investment

・ Assumptions for the actual credit cost outlook for FY3/22(Billions of yen)
3Q results

Full year forecast
announced on
November 11(Billions of yen)

<Valuation difference on available-for-sale securities>
End of March 2022

Full year forecast
announced on
February 9

End of September
2022

End of December
2022

Fair valueNet
unrealizedgains(losses)

Fair valueNet
unrealizedgains(losses)

Fair valueNet
unrealizedgains(losses)

(３.５)

１０.０

１.０

Normal credit cost (a)

(４.３)

３.５

(３.０)

Available for salesecurities

454.2

(1.4)

432.6

(15.8)

446.2(20.0)

Share house-related loans (b)

(３.４)

(３.０)

(３.５)

Shares

15.8

7.5

16.6

8.4

15.6

7.6

４.１

９.５

７.５

Bonds

143.5

(0.3)

171.3

(1.2)

187.0

(3.9)

Multi-asset fund*

290.2

(9.7)

242.4

(22.5)

241.6(23.3)

4.5

1.0

2.1

(0.4)

1.9

(0.4)

Actual credit costs

Preventive allowances (c)(a) Actual credit costs for loans without special factors such as share house-related loans and loans
subject to preventive allowances are assumed to be -3.0 billion yen, a decrease of 6.5 billion yen fromthe previous forecast, after taking into account the reversal of the general allowance for loan losses
due to a decrease in the expected loss ratio, as a result of careful examination of borrower trends,
including (b) and(c) below.
(b) Since no special factors are expected in the second half of the fiscal year, we assume that actual credit
costs for share house-related borrowers will decrease by 500 million yen from the previously
announced figure to -3.5 billion yen, based on the actual results through 3Q.
(c) As for the preventive allowances, after a close examination of trends among eligible borrowers, thenumber of borrowers who have taken measures such as suspending repayments is lower than
expected in the previous forecast, resulting in recording 2.0 billion yen in 3Q. In 4Q, we expect acertain amount of allowance for the current period to continue to accrue due to organizational
negotiations and other activities, and assume 3.0 billion yen for the full year. In addition, from 3Q, wehave increased the allowance for loan losses for borrowers, etc., for whom collection is difficult tonormalize in the future among restructured loans, to 2.1 billion yen in 3Q, and we estimate 4.5 billion
yen for the full year. Taking these factors into account, we estimate that the allowance will be 7.5billion yen, a decrease of 2.0 billion yen from the previous forecast.

© 2023SURUGA bank, Ltd. All rights reserved.

Other Duration of securities holdings as of December 31, 2022: 6.7 years
 Interest rate risk (10BPV) on securities held as of December 31, 2022: -1.2 billion yen

Risk reduction measures implemented (or planned) in the current fiscal year
in light of deteriorating market conditions, etc.
(First half）
 Reduction of risk amount by changing the allocation of multi-asset funds, which haverelatively high risk among securities portfolios, etc.
 Partial cancellation of multi-asset fund (approx. 35 billion yen).
 Distributions from the Multi-Asset Fund, which were projected in the initial earnings
plan, are now expected to be deferred.
 Sold high-risk foreign currency-denominated stocks (individual stocks).
(Second half) Plans to make reductions mainly in multi-asset funds with valuation losses.

２

■ Revised Earnings Forecasts for FY3/23• As a result of incorporating the factors on the previous page, gross operating profit decreased by 11.0 billion yen to 45.0 billion yen. Net operating income decreased
by 9.5 billion yen to 8.0 billion yen.
• Ordinary profit was unchanged at 10.0 billion yen.
• Net income (non-consolidated) decreased by 1.0 billion yen to 8.5 billion yen.
• Net income (consolidated) is projected to decrease by 1.0 billion yen to 9.0 billion yen.
(*) February 9, 2023 Tentative Disclosure: "Notice of Losses on Sales of Securities Holdings, etc. and Revision of Full-Year Earnings Forecasts for FY3/22"[Non-consolidated][Consolidated]
Full year forecast
announced on
November 11 (A)Full year forecast
announced on
February 9 (B)Ordinary income

７７.０

７７.０±０Gross operating profit５６.０４５.０(１１.０)

Expenses３７.５

３７.０(０.５)

Core net operating profit

２２.０

２２.５+０.５

Net operating profit

１７.５

８.０(９.５)

Ordinary profit

１０.０

１０.０

Net income

９.５

Actual credit costs
Normal credit cost (a)Share house-related loans (b)Preventive allowances (c)(Billions of yen)

Full year forecast
announced on
November 11(C)Full year forecast
announced on
February 9 (D)

８６.０

８６.０

±０±０

１１.０

１１.０

±０

８.５

(１.０)

１０.０

９.０(１.０)

１０.０

１.０(９.０)

３.５(３.０)

(６.５)

(３.０)

(３.５)

(０.５)

９.５

７.５(２.０)© 2023SURUGA bank, Ltd. All rights reserved.

Change(B)-(A)Change(D)-(C)３

■ Actual Credit Costs, Disclosed Claims under the Financial Reconstruction Law＜Non-consolidated＞• Actual credit costs for share house related loans were -3.4 billion yen, mainly due to the lump-sum transfer of the 4th group of loans implemented in September 2022.
• Actual credit costs for loans other than share house-related loans were -100 million yen, partly due to a reversal of the allowance for loan losses resulting from adecrease in the expected loss ratio and other factors.
• As of December 31, 2022, the ratio of nonperforming claims to disclosed claims under the Financial Reconstruction Law was 10.8%, and the coverage ratio wasapproximately 80% based on collateral, guarantees, etc. and allowance for loan losses.

・Actual Credit Costs (3Q, FY3/23)
Item(Billions of yen)
１Q

２Q

3Q actual creditcosts

３Q

Allowance for loanlosses

Share house-related loans

(０.１)

(３.０)

(０.２)

(３.４)

１３.９

Investment real estate loans *０.９

(３.２)

１.６(０.６)

８８.８

Housing loans

０.１(０.５)

０.２(０.１)

２.６

Unsecured loans０(０.１)０(０)３.０Monetary claims bought

００(０)

００.２

Business financing, etc.

０.２

０.４

０

0.８

９.２

Total

１.３(６.５)+１.７(３.５)

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

・Disclosed Claims under the Financial Reconstruction Law (as of December 31, 2022)
Balance

Total coverageamount(Billions of yen)

Coverage amount bycollateral and guarantees,etc.

Allowance for loan losses

Coverage ratio

１１６.６

１１６.６

４４.３

７２.３

１００％

At-risk claims

５０.６

３３.２

２２.２

１１.０

６５.６％

Claims requiring special attention

５７.７

３０.１

１８.１

１２.０

５２.１％

Total

２２５.０

１８０.０

８４.６

９５.３

７９.９％

Ratio of disclosed amount as a percentage of total credit( Non-performing loan ratio)

１０.８％

Bankruptcy reorganization claims and similar claims© 2023SURUGA bank, Ltd. All rights reserved.

４

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>• Based on the Med-Term Business Plan, the loan yield for the entire region that promotes the “quality” conversion of assets to middle-risk and middle-return, is 3.44%(total (E)).
• The delinquency rate for personal loans is 6.49% (A), partly since some customers with investment real estate loans have suspended repayment triggered byorganized negotiations. However, excluding these special factors, the delinquency rate is 1.52% (F).
• In order to improve the delinquency rate of investment real estate loans, we are not only supporting repayments by changing conditions, but is also providing feedback
to customers on information of concerns such as damage to real estate found in our own periodic surveys. We are also discussing changing the managementcompanies.
(Billions of yen)

September 2022
Loan category

Period-end balance

Yield

December 2022
Delinquency rate

Period-end balance

Yield

Delinquency rate

１,６０６.０

３.０８％

６.６８％

１,５７１.５

３.０６％

６.８２％

Housing loans

４４１.８

２.７５％

０.２８％

４３５.０

２.７３％

０.３２％

Studio apartment loans

１３０.０

３.３６％

２.８２％

１２４.５

３.３５％

２.９１％

１,００１.２

３.１４％

１０.２４％

９７９.３

３.１４％

１０.４４％

３２.８

４.４１％

０.４６％

３２.５

４.３３％

０.２１％

Unsecured loans

１３５.５

１０.４６％

２.５１％

１３１.０

１０.４６％

２.４５％

Card loans

９２.８

１１.７８％

０.９４％

９０.２

１１.７７％

０.８４％

Unsecured certificate loans, etc.

４２.６

７.５９％

５.９４％

４０.７

７.５６％

６.０２％

Consumer loans (A)１,７４１.５

３.６５％

６.３６％

１,７０２.５

３.６３％

６.４９％

Personal loans (excluding organizationally negotiated loans, etc.) (F)１,６３６.２

１.５０％

１,５９８.６

Secured loans

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

１.５２％

Investment real estate loans for asset management companies (B)

４０.３

１.８２％

－

４５.０

１.８１％

－

Structured finance (C)

８２.７

２.２４％

－

９７.３

２.２４％

－

Monetary claims bought (D)

９７.０

１.９５％

－

９４.３

２.０６％

－

１,９６１.６

３.４７％

５.６５％

１,９３９.２

３.４４％

５.６９％

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

© 2023SURUGA bank, Ltd. All rights reserved.

５

■ New Loan Execution Status• 132.0 billion yen in new loans by 3Q, compared to the 190.0 billion yen planned for the full year of FY3/23 (Total: (A) + (B)).
• The amount of personal loans and investment real estate loans to asset management companies remained at 52.2 billion yen, but including the loans expected to beconcluded in the current fiscal year, the amount of executed loans progressed to approximately 75.0 billion yen as of the end of January. The amount of structured
finance transactions amounted to 39.8 billion yen, reaching the planned level in 3Q.
• In terms of monetary claims purchased, we purchased claims in July 2022 that meet our goal of middle-risk/middle-return (amount of claims: approx. 40 billion yen,estimated yield: 1.41%). We will continue sounding out suppliers and are considering additional purchases within the fiscal year.
• We will work to promote loans while closely monitoring the business environment and market trends, including the prolonged spread of COVID-19, concerns about theglobal economic recession, and material price trends.

・Trend in loan execution amount promoted in the Med-Term Business Plan
3Q, FY3/22

3Q, FY3/23(Billions of yen)
Year-on-year

Full year
projection for
FY3/23

Consumer loans

２３.６

３９.２

+１５.６

１１０.０

Investment real estate loans for asset
management companies

１２.９

１２.９+０※ ーSubtotal

３６.５５２.２+１５.７

１１０.０

Structured finance

３２.５

３９.８+７.３

４０.０

Total (A)

６９.０

９２.０

+２３.０

１５０.０

Monetary claims bought (B)２９.９

３９.９＋１０.０

４０.０

Total (A) + (B)

９９.０

１３２.０

+３３.０

１９０.０

*The planned amount of investment real estate loans for asset management companies is included in the 110.0 billion yen of consumers loans, because we conduct the same promotional
activities as for investment real estate loans for individuals.

© 2023SURUGA bank, Ltd. All rights reserved.

６Reference Materials■ Yield/Margins＜Non-consolidated＞
Loans (average balance / yield)
Net Interest Margin
Loan-deposit
margin (overall)

Average loan balance(Billions of yen)

Loan-deposit margin(after deduction of expenses)

Net interest margin

Yield on loans and bills
discounted

3,093.7
2,700.7

3.30%

3.16%

1.99%
1.74%

3.07%

2.98%

2.87%

1.80%

1.77%

1.76%

<Special factors of loan increase/decrease>
Dec 2019: Securitization of studio apartment loans (approx. -100.0 billion yen)
Dec 2020: Recovery of loans to entrepreneurs and lump-sum transfer ofshared house loans (approx. -100.0 billion yen)
Dec 2021: Transfer of share house loan receivables (approx. -44.2 billion yen)
Dec 2022: Transfer of share house loan receivables (approx. -77.3 billion yen)

2,436.2

18/12

2,095.0

3.35%

3.20%

3.12%

3.02%

2.91%

18/12

19/12

20/12

21/12

22/12

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

1.49%

2,262.2

Yield on deposits

3,613.4

1.19%

19/12

0.95%

20/12

3,086.7

0.78%

21/12

3,339.4
3,186.2 3,286.80.75%

0.05%

0.04%

0.04%

0.04%

0.03%

18/12

19/12

20/12

21/12

22/12

22/12

© 2023SURUGA bank, Ltd. All rights reserved.

Reference Material 1

■ Trends in Expenses, OHR, and Capital
Trend in Expenses and OHR
Gross Operating
ProfitPersonnel
expensesTrends in Capital & Capital Adequacy Ratio

Non-personnel
expenses

Equity capital

Capital adequacy ratio

ＯＨＲTaxes(Billions of yen)(Billions of yen)

78.2
13.24%

14.06%

266.8

265.6

21/12

22/12

11.40%

62.2
9.05%

54.8

9.83%

48.9
43.0
35.4
12.1

32.9
11.1

20.3

30.529.8

27.9

11.1

10.7

10.3

55.8%

247.7

64.8%

61.0%

53.0%
19.0

17.0

16.3

15.1

2.9

2.8

2.4

2.7

2.4

18/12

19/12

20/12

21/12

22/12

45.2%

223.6

234.2

© 2023SURUGA bank, Ltd. All rights reserved.

18/12

19/12

20/12

Reference Material 2

<Inquiries>
IR Office, SURUGA bank, Ltd.
Tel: +81-3-3279-5536
e-mail: ir.koho@surugabank.co.jp
The foregoing material contains statements regarding future business performance. These statements
are not intended as guarantees of any specific future performance, which is subject to a variety of risks
and uncertainties. Actual future business results may differ from the targets contained in the present
material, due to unpredictable changes in the external business environment.
© 2023SURUGA bank, Ltd. All rights reserved.