Suruga Bank Ltd.
Summary of Financial Results for Q1 of FY3/25

August 8, 2024

■ Highlights of Financial Results for Q1 of FY3/25
First-quarter performance saw steady progress: Steady progress is being made with the Three Arrows of the Mid-Term Business Plan
(First Arrow) Core gross operating profit (excluding gains/losses from investment trust cancellations),
which is the top line, increased by 0.4 billion yen year-on-year, reaching 28% of the full-year plan.
New business gross profit increased by 2.1 billion yen year-on-year.
•

New loan disbursements reached 67.2 billion yen,•reaching 26% progress of the full-year plan (an increase of 21.4 billion yen year-on-year).

(Balance of loans and bills discounted) (billion yen)

20,34020,426

20,667

Sept. 30, 23 Dec. 31, 23 Mar. 31, 24

20,721
Jun. 30, 24

As new loan disbursements continued to perform well, loans and bills discounted also remained steady.
(Second Arrow) Expenses decreased by 0.6 billion yen year-on-year due to steady progress in cost structure reforms,
reaching 25% of the full-year plan.
(Third Arrow) Improvement of credit quality: The ratio of disclosed claims based on the Financial Reconstruction Law decreased steadily.
•

The ratio of disclosed claims based on the Financial Reconstruction Law was 9.4%. (-0.8pt year-on-year) Excluding organizational
negotiation partners, the ratio was 5.5%. (-0.7pt year-on-year)•

Improvement of credit quality led to a year-on-year reduction in actual credit costs of 1.8 billion yen.

•

Progress in voluntary sales and other factors among organizational negotiation partners also contributed to the decrease in actual
credit costs.

As a result, quarterly net income (non-consolidated) increased year-on-year by 3.4 billion yen, reaching 46% of the full-year plan.
Capital policy: Plan for the repurchasing of treasury stock (disclosed Apr. 4, 2024)
A plan to implement part of the plan for repurchasing treasury stock through ToSTNeT-3 was announced on August 8, 2024. After the ToSTNeT-3
implementation, we will continue to aim to accomplish this plan.
© 2024SURUGA bank, Ltd. All rights reserved.

1

■ Q1 Results for FY3/25: YoY Comparison• Core gross operating profit (excluding gains on cancellation of investment trusts) increased by 0.4 billion yen year-on-year to 15.4 billion yen,mainly due to increases in net interest income and net fees and commissions.
• Expenses decreased by 0.6 billion yen year-on-year to 9 billion yen due to steady progress in cost structure reforms.
• Actual credit costs decreased by 1.8 billion yen year-on-year to -1.2 billion yen, mainly due to a reduction in additional provisions for restructuredloans for which normalization of recovery is unlikely and progress in voluntary sales and other factors among organizational negotiation partners.
• Quarterly net income (non-consolidated) increased by 3.4 billion yen year-on-year to 6.8 billion yen.
(Non-consolidated)(billion yen)

FY6/23(A)

FY6/24(B)

YoY(B) - (A)Core gross operating profit(excluding gains/losses frominvestment trust cancellations)

14.9

15.4

+0.4

Of which new businessgross profit

2.4

4.5

+2.1

Expenses (-)

9.6

9.0

(0.6)

Actual credit costs (-)

0.6

(1.2)

(1.8)

(0.01)(0)+0.01

Ordinary profit

4.6

7.5

+2.9

Quarterly net income

3.3

6.8

+3.4

Gain (loss) on securities(Consolidated)(Main factors for increase/decrease)
Core gross operating profit
 Increase in new business gross profit driven by growth in loans andbills discounted across four profit centers(Loan and bills discounted balance at the end of the year increased by
5.4 billion year-on-year) Increase in interest and dividends on securities
 Improvement in net fees and commissions due to an increase in loanrelated fees and a decrease in group credit life insurance premiums
Expenses Decrease in property expenses due to steady progress in cost
structure reforms(billion yen)

Actual credit costs
FY6/
23

Actual credit costs

FY6/
24

0.6

(1.2)

NormalamountActual credit costs arising from loans without
special factors

(1.6)

(0.6)

Preventive
allowances

The below are provisions for subject loans

2.2

(0.6)

Consolidated ordinary revenue

20.9

22.2

+1.3

Consolidated ordinary profit

4.7

7.5

+2.8

0.1

(0.6)

Quarterly net income
attributable to owners of parent

Provisions for some investment real estate loan customers who
newly stopped repayments following organizational negotiations

3.5

6.8

+3.3

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

2.1

0© 2024SURUGA bank, Ltd. All rights reserved.

2

■ New Loan Disbursements• In the first quarter of FY3/25, new loan disbursements were 67.2 billion yen, reaching 26% of the full-year plan.
• New loans in the origination segment were 56.0 billion yen, reaching 30% of the full-year plan.
• For collaboration loans, etc., there has been steady progress in our partnership with Credit Saison, which began in November 2023, with 11.1 billion
yen implemented.
• We recognize that the business environment, including the real estate market, remains uncertain. Therefore, we will carefully scrutinize and selectcases individually while promoting loan activities.
(billion yen)

FY6/23 (A)Origination segment

FY6/24(B)

Growth(B-A)/(A)Full-year
plan(C)

Progress
rate (B)/(C)

45.8

56.0

22%

185.0

30%

Solutions Business

10.5

16.1

53%

55.0

29%

Investment real estate loans

14.6

20.7

41%

70.0

29%

Structured finance

20.7

19.1

(7%)

60.0

31%

Collaboration loans, etc.

－

11.1

－

65.0

17%

45.8

67.2

46%

250.0

26%

Total

Note 1: Amount of new loans (acquisitions) in the areas for promotion following the Suruga Bank Mid-term Business Plan—“Re:Start 2025”
Note 2: Solution business = housing loans, unsecured loans, etc.
Note 3: Investment real estate loans include investment real estate loans for asset management companies
Note 4: Structured finance includes specified corporate bonds; Collaboration loans, etc. includes monetary claims bought© 2024SURUGA bank, Ltd. All rights reserved.

3

■ Loan Balance, Yield, and Delinquency Rate <YoY/Non-consolidated>• As of June 30, 2024, the balance was 1,964.4 billion yen, and the yield was 3.16% for all areas for promotion in the Mid-Term Business Plan [total (E)].
• Beyond just providing repayment support through loan modifications, we also offer assistance in property management, including providing feedback to customers on information ofconcerns such as damage and management conditions to real estate found in our own periodic surveys and consultations on changing management companies. As a result, thedelinquency rate for personal loans, excluding organizational negotiation partners, [F] decreased by 0.40 percentage points year-on-year, reaching 1.21%.
• However, the delinquency rate for personal loans, including those who have stopped repayments following negotiations for investment real estate loans of organizational negotiation
partners, [A] was 6.72%.
(billion yen)Jun. 2023
BalanceSecured loans
Of which housing loan
Of which investment real estateloans
Unsecured loans
Consumer loans (A)Personal loans (excluding organizational
negotiation partners, etc.) (F)Corporate investment real estate loans
(B)

Yield

Jun. 2024
Delinquency
rate

Balance

Yield

Delinquency
rate

1,509.0

3.04%

7.15%

1,402.0

2.91%

7.12%

426.0

2.67%

0.35%

422.2

2.52%

0.35%

1,050.7

3.15%

10.11%

948.9

3.05%

10.36%

123.8

10.47%

2.41%

110.0

10.48%

1.66%

1,632.8

3.60%

6.79%

1,512.0

3.46%

6.72%

1.61%

1,419.2

1,533.7

1.21%

65.7

1.76%

－

112.3

1.68%

－

Structured finance (C)

143.3

2.34%

－

193.5

2.39%

－

Collaboration loans, etc. (D)

127.6

2.23%

－

146.5

2.21%

0.03%

Total ([E]: [A]+[B]+[C]+[D])1,969.6

3.36%

5.62%

1,964.4

3.16%

5.18%

Note 1: Delinquency rate = Loans past due for three months or more / loan balance.
Note 2: Yield = Yield for customers (excluding guarantee fee and accrued interest), period-end balance basis.
Note 3: Segmented by the areas for promotion following the Suruga Bank Mid-term Business Plan—“Re:Start 2025”
Investment real estate loans include investment real estate loans for asset management companies, and structured finance includes specified corporate bonds
Collaboration loans are loans made jointly or in partnership with other companies (loan participations, purchases of corporate loans, etc.)
Note 4: Organizational negotiation partners, etc." refers to loans to borrowers who have submitted a request for suspension of repayments as a result of organizational negotiations© 2024SURUGA bank, Ltd. All rights reserved.

4

■ Capital policy• We will continue to improve shareholder returns based on the Basic Shareholder Returns Policy in the Mid-Term Business Plan.
• As disclosed May 10, 2024, dividends are expected to increase for the fourth consecutive year, with dividends per share reaching 22 yen.
• Regarding the repurchasing of treasury stock, as per the plan disclosed on April 4, 2024, we disclosed on August 8, 2024, that we will implement part of the stock acquisition
through ToSTNeT-3.
We plan to continue share acquisition until the upper limit of the repurchase quota is reached, even after the ToSTNeT-3 implementation.

Basic Shareholder
Returns Policy

Our policy is to strive to enhance shareholder returns after considering the optimal balance between capital soundness andinvestment for growth.

(Reference) Mid-TermBusiness Plan KPI

Capital adequacy ratio 10% or higher (Basel III
endgame)

Note 1: Any unrealized loss on securities is deducted from core capital
Note 2: The actual capital adequacy ratio as of Jun. 30, 2024, was 11.95% (disclosed
value in the financial results report: 14.27%)(Dividend policy)(Repurchasing of treasury stock)

Our basic policy is to maintain stable dividends, targeting a dividend payout

・ We will flexibly implement shareholder return measures that contribute to the improvement of capitalratio of around 30%

FY2022

FY2023

FY2024
forecast

Dividends per share

9 yen

21 yen22 yenDividend payout ratio

16%

27.8%

29.2%

Change in dividends per share
21円

5円

2020年度

6円

2021年度

22円

9円

2022年度

2023年度

2024年度(見通し)

efficiency, taking into account business performance,
capital conditions, growth investment opportunities, and market conditions, including the stock price.

FY2024 plan
Disclosed April 4, 2024

Of which off-auction treasury stock
trading (ToSTNeT-3)
Disclosed August 8, 2024

Sharesrepurchased

6,000,000 shares (upper limit)

4,000,000 shares (upper limit)

Acquisitioncost

7.0 billion yen (upper limit)

Approx. 4.1 billion yen (upper limit)

RepurchaseperiodMay 13, 2024 to Sept. 30, 2024

Aug. 9, 2024 8:45

(Reference materials)• Disclosed April 4, 2024: Announcement Regarding the Establishment of a Quota for the Repurchase ofTreasury Stock (Repurchase of treasury stock pursuant to the provisions of Article 156, Paragraph 1 of theCompanies Act based on the provisions of the Articles of Incorporation pursuant to the provisions of Article
459, Paragraph 1, item (i) of the Companies Act)
• Disclosed August 8, 2024: Announcement regarding treasury stock repurchasing trading through offauction treasury stock repurchase trading (ToSTNeT-3)© 2024SURUGA bank, Ltd. All rights reserved.

5

Reference Materials

■ Actual Results for FY6/24: YoY Comparison(Non-consolidated)(billion yen)
FY6/23(A)

FY6/24(B)

YoY
comparison(B) - (A)Core gross operating profit(excluding gains/losses frominvestment trust cancellations)

14.9

Expenses (-)

9.6

9.0

(0.6)

Personnel expenses

3.4

3.3

(0)

Actual credit costs (-)

0.6

(1.2)

(1.8)

15.4

+0.4

Gain (loss) on securities(0.01)(0)+0.01

Other non-recurring gains(losses)

(0.1)

(0)

+0

4.6

7.5

+2.9

(0.4)

0.5

+1.0

3.3

6.8

+3.4

Ordinary profit
Extraordinary gains (losses)
Quarterly net income

Finances(Main factors contributing to changes [non-consolidated, YoY])・ Decrease in interest on loans and bills discounted: 1.0 billion yen
Net interest
incomeConsolidated ordinary revenue

20.9

22.2

+1.3

Consolidated ordinary profit

4.7

7.5

+2.8

Quarterly net income
attributable to owners of parent

3.5

6.8

+3.3

0.8 billion yen)・ Increase in interest and dividends on securities: +1.1

+0.1 billion yen

Net fees andcommissions+0.3 billion yen

Expenses-0.6 billion yen

billion yen
・ Increase in loan-related fees: +0.2 billion yen
・ Decrease in group credit life insurance premiums: 0.1 billion yen

・ Decrease in property expenses: -0.5 billion yen

・ Normal amount: +1.0 billion yen
Actual credit costs-1.8 billion yen(Consolidated)(Average balance factor: -0.1 billion yen, Yield factor: -・ Preventive allowances: -2.8 billion yen(For more details, refer to the table on the bottom right of page 2)・ Recording profit from fixed asset disposal: 0.7 billion
Extraordinary gains(losses)+1.0 billion yen

yen
・ Partial drop off in impairment losses on fixed assets:-0.3 billion yen

Note: All figures in green are YoY© 2024SURUGA bank, Ltd. All rights reserved.

6

■ Interest Margin

Finances

Yield and average balance of loans and bills discounted

Interest margin, etc.

Average balance ofloans and bills
discounted (billion yen)

Gross loan-deposit interest margin
Loan-deposit interest margin
Net interest margin

3.11%

3.04%

2,476.7

2.89%

2.82%

1.79%

1.74%

1.67%

2,125.3 2,074.1

2,059.1

2.93%

2.69%

2.65%
3.16%

1.80%

2,294.3

Yield of loans
and bills
discounted

1.52%

3.08%

6/2020 6/2021

2.86%

6/2022 6/2023 6/2024(Special factors affecting loans
and bills discounted [year-onyear])Jun. 2021 Transfer of sharehouse claims (approx. -44.2
billion yen)Jun. 2022 Transfer of sharehouse claims (approx. -60.5
billion yen)Jun. 2023 Transfer of sharehouse claims (approx. -16.8
billion yen)
Note: The periods in which
the above factors have an
impact are listed.
(The above differs from theactual date of the procedures,
etc.)

Yield and average balance of deposits

1.00%

0.81%

Average balance of deposits (billion yen)

0.68%

0.71%

0.73%

3,201.6

3,264.9 3,325.9 3,350.1

0.04% 0.04%

6/20206/20216/2022

6/2023

Yield of deposits

3,223.7

0.04% 0.03% 0.04%

6/20246/2020 6/2021 6/2022 6/2023 6/2024© 2024SURUGA bank, Ltd. All rights reserved.

7

■ Actual Credit Costs and Actual Credit Costs and Disclosed Claims Based on the Financial Reconstruction Law(Non-consolidated)(billion yen)・ Actual credit costs (FY6/24)
Item
Investment real estate loans*1

Actual credit
costs

Allowance forloan losses

(1.3)

91.6

Housing loans

0.1

1.8

Unsecured loans

(0)

1.9

Collaboration loans, etc.*2

00.2

Business financing, etc.

0

7.0

(1.2)

102.7

Total

Finances*1: Investment real estate loans include studio apartment loans, single building income loans, other secured loans*2: Collaboration loans are loans made jointly or in partnership with other companies (loan participations, purchases of corporate loans, etc.)

・ Disclosed Claims based on the Financial Reconstruction Law (as of June 30, 2024)
Total coverageamountBalance(billion yen)

Coverage amountby collateral andguarantees, etc.

Allowance for loan
lossesCoverage ratio

Claims against bankrupt and substantiallybankrupt operability

109.3

109.3

41.9

67.3

100%

At-risk claims

52.7

34.3

22.2

12.1

65.0%

Claims for special attention

34.6

21.2

12.9

8.2

61.1%

Total

196.7

164.8

77.2

87.6

83.7%

Ratio of disclosed amount to total credit(disclosed claims ratio)

9.4%

Note: Ratio of disclosed claims based on the Financial Reconstruction Law excluding organizational negotiation partners = 5.5%
© 2024SURUGA bank, Ltd. All rights reserved.

8

■ Portfolio Structure

Finances

We plan to increase interest rates for saving accounts (+8 basis points) and short-term prime lending rates (+15 basis points)(base rate increase date: Sept. 2)
Loans and bills discounted(Composition by base interest rate)
1% 3%Balance sheet

Balance by location

7%
Floating
interest rate
89%

16%
73%

3%

Market-linked, etc.

48%
Deposit91%
Of which
insured deposits
75%

Note: Yen-denominated. Fixed interest
rate is categorized by the remaining
period of interest rate renewal.

Securities (Composition of yen bonds)

Securities 9%

13% 18%JGB
Municipal bonds

69%

Shizuoka Pref.
Kanagawa Pref.

33%

Greater Tokyo(Fixed) Less than 3 years

Other

Physicalbranches
84%

16%
Loans and bills
discounted
59%

Short-term prime rate

(Fixed) More than 3 years

Deposit

3,508.4 billion yen as of Jun. 30, 2024

Other yen bonds

As of Jun. 30, 2024 (yen bonds)
Duration: 6.39 years
100BPV: -11.5 billion yen

Internet branches*By branch location

Impact of rising yen interest rates
on net interest income

Repo
sting

Policy interest rate Policy interest rate
0.25%
0.5%

BOJ current
account
24%

Net interest
Income Approx.
+1.5 billion yen
Other liabilities 1%

Other assets
8%

Net assets 8%

Management

Procurement© 2024SURUGA bank, Ltd. All rights reserved.

Net interest
incomeApprox.+5.0
billionROE
improvementof 1%
or moreReference: Main assumptions
Unsecured calls O/N 0.25%
0.50%
JGB 2Y
0.35%
0.70%
JGB 5Y
0.50%
0.90%
JGB 10Y
1.00%
1.40%
Portfolio As of end Dec 2023
Note: Impact amounts are compared respectively with those
before the yen interest rate rise9

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

Reposting

Finances

For FY3/25, we plan to steadily increase new business gross profit while making further progressin improving the quality of the loan portfolio. Additionally, as the securities portfolio transitions
from a restructuring phase to a progressive accumulation phase, we expect to see a drop in related losses.
(billion yen)(billion yen)(Non-consolidated)(Consolidated)
FY3/24
Results①

Core gross operating profit(excluding gains/losses frominvestment trust cancellations)
Of which new businessgross profit

FY3/25 forecast

YoY
comparison②-①

Full-year②

First half

FY3/25 forecast
First half

Cons-parent
differential(③ - ②)Full-year
③

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

Gain (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

Dividends per share (full-year
21 yen11 yen22 yentotal)
Note: Dividends per share of 22 yen = Interim dividend of 11 yen + Year-end dividend of 11 yen(billion yen)

+1 yen(Premise Behind FY3/25 Actual Credit Cost Forecast [Non-consolidated])[Normal amount]
Actual credit costs for loans without special factors are expected to be minimal for the full year, due to reasons
such as a lower expected loss ratio.
[Preventive allowances]
We anticipate preventive allowances to be 3.0 billion yen for the full year. This is in consideration of loans
under repayment suspension following negotiations for investment real estate loans of organizational negotiation partners
and for restructured loans for which normalization of recovery is unlikely.
© 2024SURUGA bank, Ltd. All rights reserved.

First half

Full-year

Actual credit costs

2.5

3.0

Normal amount

1.0

0Preventive
allowances

1.5

3.0

10

■ Mid-Term Business Plan Overview

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 tosociety

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

MTP

Shared in Phase 1 & 2

CorporatePhilosophy

Reposting

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
ManagementStrategyII. 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, andminimizing 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-scale rollout of Phase 1© 2024SURUGA bank, Ltd. All rights reserved.

11

■ Mid-Term Business Plan Initiative Policies
Phase 2
Manageme
nt Strategy

Business
structure

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).
•

Priority measures

2.

Revenuestructure

RepostingCommunity Bank, Direct Bank, Greater Tokyo/Wide-Area Bank, Market FinanceCompleting cost structure reform (Expenses: 46.8 billion yen in FY2018 ⇒ 34.0 billion yen planned in FY2025)•
3.

Network reorganization, shifting talent to the front office by streamlining division functions, IT cost structure reform
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 per year fromFY2025 onward.

Infrastruc
ture

4.

Pursuing cloud computing and DX in IT platforms

5.

Vector alignment with stakeholders•

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

Phase 2
Keywords

Agile
Speed, taking onchallenges, autonomous
decentralization

Kyo-soResilience

Collaboration, dialogue, value
creation

Recovery, flexibility, risk
diversification

Note: The above KPIs, etc., are based on the revised mid-term business plan KPIs announced on April 4, 2024.
© 2024SURUGA bank, Ltd. All rights reserved.

12

■ Management strategy I. Evolving the Retail and Solutions Businesses
From the past to the present
Sugurga Bank has been providing
solutions from Suruga's uniqueperspective starting from what ourcustomers are unhappy with.
Backing up women’s dream ofhome 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
to market Japan’s first housing
loan for women.

2000
Unique to Suruga
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)

Reposting

MTP

Digital infrastructure that supports creating
sources of differentiation (examples)
More dreams for customers
Time Depostis with Jumbo Lottery
Tickets
Our concept is “a financial service
filled with the joy of growing
dreams” in this era of ultra-low
interest rates. A first for a Japanesebank, this product is the result of
our employees’ desire to deliver
dreams to customers.

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
and peace of mind to customers through the Internet,
even as a regional bank,without building physical branches.
We were also the first Japanese financial institution
to offer mobile banking.
Earning miles for bank transactions

ANA Branch
We developed the world’s first card that
integrates cash card, mileage, and emoney functions. We offer a uniqueproduct that lets customers earn miles
for bank transactions.

Screening via data mining

Providing high-quality, continuous service

Automated Screening System

Use of CRM

We used sophisticated methods toanalyze detailed data accumulated
by lending to a wide range ofcustomers, including data on
screening and repayment status.
This sped up the screening process.

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

1996

1999

Unique to Suruga
We achieved the automation of
screening ahead of other banks bycombining our screening know-how
with a vast database analyzed with
proprietary logic cultivated overmany
years specializing in retail.

Translating current trends into products
and services
Smart Account / Accounts for nonJapanese Customers
We established payment-only accounts thatprovide more savings and peace of mind
when using
cashless payments, which have become
widely used in daily life.
We established accounts exclusively for
non-Japanese customers.

2004
Unique to Suruga
By combining ANA’s diverse
customer base and marketing knowhow with Suruga’s retail banking
business,
we created new markets andprovided unique, high-quality value.

Unique to Suruga

2021/2022
2021/2022

Based on our desire to provide
access to financial services to all,
we focused on growth areas andnon-Japanese customers who
require financial services.

© 2024SURUGA bank, Ltd. All rights reserved.

Unique to Suruga
This is the trump card of ourretail strategy. This allows
continuous relationships
anywhere, anytime,at all customer touchpoints.
Our accumulated data is thesource of 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 they would 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 of mind.
In this way, we help customers live the rest of their lives
in brighter and more positive ways.

13

■ Management strategy II. Building a Sustainable Revenue Structure

Reposting

MTP

New business gross profit (core gross operating profit, newportfolio)• Through Management Strategy I (Evolving the Retail andSolutions Businesses), new business gross profit is projected to
grow by 2.5 times compared to FY2022.
FY2025
RevisedFY2022
Breakdown of new
Changeprojection Results
business gross profitsRetail/Solution
Businesses
Solutions Business*1
Investment real estateloansMarket Finance
Structured financeMarket operations, etc. *2

New Portfolio Total

7.5

2.3

+5.2

3.0

0.8

+2.2

4.5

1.5

+3.0

11.5

5.4

+6.1

5.0
6.5

2.3
3.0

+2.7
+3.5

19.0
7.7
2.5 times+11.3

Building a
Sustainable
Revenue Structurewith the “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 increasehuman capital investment• Note: Expenses: ￥36.2 bn (FY2022) → ￥34.0 bn (FY2025)(-2.2 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 incomeloans (other than those for share houses).
• Note: Actual credit costs = Approx. 9.0bn (FY2020-2022 average)→ Average under 2.0 billion yen per year from FY2025(Approx.
-7.0 billion yen)

(FY2025)(-19.0 billion yen)

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

© 2024SURUGA bank, Ltd. All rights reserved.

14

■ Management strategy III. Risk-Taking and Risk Diversification

Reposting

MTP

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

Securities portfolio

80%

Structured finance (other than real estate)
Business financing

70%

Unsecured loans

60%

Housing loans

50%

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

40%
30%

Non-real estate
relatedApprox.
60%

20%Single building apartment loans*1(New portfolio)

Approx.
40%

10%

Approx.
30%

Real estate related

Specified real estate area loans*2 (oldportfolio)

0%
Assets
under
manag
ement

End of FY2018
results¥ 3,035.0 bn

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-termbusiness plan

¥ 2,519.7 bn¥ 2,500.0 bn*2 Single building income loans (relatively high share of older properties and properties located inregional 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)© 2024SURUGA bank, Ltd. All rights reserved.

15

■ Mid-Term Business Plan KPI Revisions

Main KPIs

Initial Projections

Actual/Revised
projections*

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―

10% ormore(Consolidated)

Capitaladequacyratio(effective)(Finalized Basel III
basis)

Secondary KPIs Key
action indicators forachieving main KPIs

Reposting

New businessgross profit¥ 9.8 bn

Expenses¥ 36.0 bn

Actual credit
cost
ratio

30 bps¥ 16.0 bn
or more¥ 32.5 bn
or less

Approx. 15
bps

MTP

Notes

FY2025¥ 15.3 bn ¥ 13.5 bn ・ Profit attributable to owners of parent

11.87%

10% ormore(effe
ctive)・ Any unrealized loss on securities
is deducted from core capital・ Revenue from goods and services issued on orafter April 2020
¥ 19.0 bn¥ 11.3 bn
・ Based on core business gross profit (excluding
or moregains on cancellation of investment trusts)¥ 35.1 bn¥ 34.0 bn
or less・ Intended pace for
FY2025 and beyond-9bps• 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© 2024SURUGA bank, Ltd. All rights reserved.

Approx.
10 bps・ Actual credit costs / Loans and bills

discounted (average balance) ×
10,000(Loans and bills discounted = Loans +Purchased monetary claims)

16

■Status of Investment Real Estate Loans and Organizational Negotiation Partners
Status of efforts todate

Figures
updatedAfter approximately five years of repayment support and consultation

Undernegotiation/di
spute

Organizational
negotiation
partners

Repostingefforts, more than approximately 60% of the 37,907 properties surveyedhave a loan balance of zero, and more than 40% are ,maintaining loan
repayment.

Disclosed May 15, 2019
Report on Survey of All Properties

However, organizational negotiations are being conducted with Suruga

Concerning Investment Real Estate Loans

Bank on 819* (2.2% of 37,907), and we will continue to take

Number of real estate properties
covered by the

Borrowers
continuing
repayment(including thoseagreeing to
repayment support)

37,907

appropriate measures to resolve these issues.
No balance(paid in full, etc.)* Due to voluntary sales and other factors, from the end of September 2022 to theend of June this year, 109 properties were no longer in organizational negotiations.

Jun. 30, 2024

Basic approach to future action

1

From the viewpoint of striking early settlements, we are actively cooperating in clarifying loan circumstancesin certain types of cases where the banks are 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, andwe are also moving forward with proposals to consider voluntary sales of real estate.
With regard to investment real estate loan cases, each case has its own very individual qualities, and we believe it is3

necessary to consider the unique circumstances of each case individually when determining whether and to what
degree there is an obligation to compensate for damages.

Note: For details of our response, please refer to the Status of Our Response to Loans for Investment Real Estate Other Than Shared Housing (Updated), released on August 8, 2024.
© 2024SURUGA bank, Ltd. All rights reserved.

17

<Inquiries>
IR Office, SURUGA Bank, Ltd.
Tel:
03-3279-5536
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 containedin the present material due to unpredictable changes in the external business environment.
This document has been translated from the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original,
the original shall prevail.
© 2024SURUGA bank, Ltd. All rights reserved.