Information Meeting—The Year Ended March 2018—

THE NANTO BANK, LTD.

Table of Contents
2. Sales Reform

I. About the Nanto Bank, Ltd.
1. Profile of the Nanto Bank..................... 2

2. Operating Areas of the Bank..................... 3(1) Bolster Non-interest Income................... 19(i) Securities and Inheritance Business(ii) Corporate Solutions Business

3. Summary of Nara Prefecture(1) History and Tourism Resources ..................... 4(2) Increase Retail Loans................... 25(2) Three World Heritage Sites..................... 5(i) Retail Business Loans(3) Number of Tourists..................... 7(ii) Personal Loans(4) Geographical Location..................... 8(3) Channel and Sales Structure

4. Summary of the Local Economy..................... 9(4) Securities Investments Management ........... 30(5) Group Strategy

II. Financial Results for FY2017................... 28................... 31

3. Clerical Operations Reform................... 32

1. Summary of Profit and Loss....................11

4. Expenses Reform................... 33

2. Summary of Deposits and Loans................... 12

5. Regional Revitalization................... 34

3. Summary of Non-Performing Loans ................... 13
4. Capital Adequacy Ratio................... 14

III. Management Strategy
1. Progress of the Medium-Term
Management Plan....................16(1) Summary(2) Target Metrics(3) Transforming Our Earning Structureand Loans Portfolio

IV. Business Forecast for FY2018
1. Summary of Profit and Loss................... 37

2. Shareholder Returns................... 38

3. Target Metrics................... 39

表紙Ⅰ

I. About the Nanto Bank, Ltd.

1

1. Profile of the Nanto Bank(as of March 31, 2018)

1. Founded

June 1, 1934

2. Location of head office

16 Hashimoto-cho,Nara City

Corporate Philosophy(i) Pursue sound and efficient management(ii) Provide superior comprehensive financial services(iii) Contribute to regional prosperity(iv) Strive to become a highly reliable, friendly and attractive bank

3. Capital¥37,924 million

4. Number of employees

2,624

5. Number of offices

140 (Japan)
2 (representative offices in Hong Kong and Shanghai)

6. Total assets¥5,791.7 billion

7. Deposits outstanding¥4,850.9 billion

8. Outstanding loans¥3,340.8 billion

9. Capital adequacy ratio

Non-consolidated: 9.64%
Consolidated: 9.88%

10. Market share in Nara Prefecture

Loans: 49.7%
Deposits: 48.9%

11. External credit rating“A” (Stable) from JCR“A-” (Stable) from R&I(Head Office)22. Operating Areas of the Bank
Operating Areas of the Bank

Our Network of Branches<Map of Japan>･･･ Branch location
Kyoto Pref.

Hyogo Pref.
Osaka Pref.

Mie Pref.

Tokyo
Nara
Osaka

Number of branches
Headquarters
and branches

Subbranches

Agencies

70

20

Wakayama
Pref.

6

2

-

8

Kyoto Pref.

4
2

Tokyo

11
1
20
1
1

-

15
3
20
1
1

Total

110

Osaka Pref.
Hyogo Pref.

28

2

Total

Nara Pref.

Mie Pref.

Nara Pref.

(as of March 31, 2018)

2

92

140

Wakayama Pref.

33. Summary of Nara Prefecture (1) History and Tourism Resources
History of Nara Prefecture Following the unification of Japan in ancient times, Nara was the country’s capital up until the end of the
Nara Period (from 710 to 794). It was home to many of Japan’s existing cultural properties, such as Buddhistarchitecture.
 In Waka poems, Nara is referred to as the “Birthplace of Japan.”Abundant Tourism Resources Three World Heritage sites  Ranked top in Japan for the number of such sites(i) Historic Monuments of Ancient Nara(ii) Buddhist Monuments in the Horyu-ji Area(iii) Sacred Sites and Pilgrimage Routes in the Kii Mountain Range A total of 1,324 National Treasure and Important Cultural Property certifications (as of April 2018)* Ranked third in the country, only behind Tokyo and Kyoto
 In 2016, the annual number of foreign tourists visiting Nara was approximately 1.65 million.
 Origin of the name Nanto Bank The Bank was named Nanto Bank when it was established in 1934 because Nara had long been referred toas “Nanto” (the South Capital) in reference to Kyoto.
43. Summary of Nara Prefecture (2) Three World Heritage Sites
Expanded Map of Nara Prefecture(i)
Kyoto Pref.

Historic Monuments of Ancient Nara

Nara, Nara Pref.
Registered in 1998 as a world heritage site

Osaka Pref.

Nara Pref.

(ii) Buddhist Monuments in the Horyu-ji Area

Ikaruga-cho, Ikoma-gun, Nara Pref.
Registered in 1993 as a world heritage site(iii) Sacred Sites and Pilgrimage Routes in theKii Mountain Range

Nara Pref., Wakayama Pref. and Mie Pref.

Registered in 2004 as world heritage sites

53. Summary of Nara Prefecture (2) Three World Heritage Sites(i) Historic Monuments of Ancient Nara “Historic Monuments of Ancient Nara” are made up of the temples in Nara city.
(Tôdai-ji, Kôfuku-ji, Kasuga-Taisha, Kasugayama Primeval Forest, Gangô-ji, Yakushi-ji, Tôshôdai-ji and thesite of Heijô-kyo) During the Nara Period (from 710 to 794), many temples and shrines were built around the Heijô-kyo and thelocation served as the country’s capital. These “Historic Monuments of Ancient Nara” serve to illustrate thereligious activities and lifestyle of the Nara Period.

(ii) Buddhist Monuments in the Horyu-ji Area
 Wooden structures at the Horyu-ji and Hokki-ji Temples
 Built shortly after Buddhism arrived in Japan, these are among the nation’s oldest existing wooden structures.
Combined with the structures built thereafter, they reveal how Japanese Buddhist architecture changed overtime, and are thus praised as being masterpieces of Buddhist architecture.

(iii) Sacred Sites and Pilgrimage Routes in the Kii Mountain Range
 These World Heritage Sites span Nara Prefecture and the adjacent Mie and Wakayama Prefectures. The
location contains three sacred sites: Yoshino and Omine; Kumano Sanzan; and Koyasan, connected by thepilgrimage routes Omine Okugakemichi, the Kumano Pilgrimage Routes and the Koya Pilgrimage Routes.
It was here that nature worship-based religious practices from ancient Japan amalgamated with Buddhism,
arriving from the continent, and resulted in the creation of many different forms of religion.
6

3. Summary of Nara Prefecture (3) Number of Tourists
Number of Tourists Visiting Nara
(10,000 people)

Number of tourists

Number of foreign tourists visiting Nara (estimate)(10,000 people)

4,407

4,500

200

4,146
3,811
3,429

165.4

3,547
150

103.3
100
66.4
45.6

50

28.5

0

0
2012

2013

2014

2015

2016
[Source: Nara Prefecture]7

3. Summary of Nara Prefecture (4) Geographical Location■ It is easy to travel to Nara Prefecture as it borders Osaka, which has the country’s second largest economy,
as well as Kyoto.
* Nara City is about 30 kilometers from Osaka City, meaning a journey to the city from Osaka City takes approx. 30 to 40 minutes by railor highway.

 Strong human and communal ties since ancient times
Many Nara residents commute to Osaka. * It has the country’s highest cross-prefecture employment rate
Main transportation methods■ From Kansai International Airport
By JR train:
Approx. 60 minutes
By car:Approx. 60 minutes■ From Shin-Osaka Station on the
Shinkansen
By JR train:
Approx. 50 minutes■ From Kyoto Station
By JR train:
Approx. 45 minutes
By Kintetsu train:
Approx. 40 minutes

8

4. Summary of the Local Economy
Nara Prefecture:Osaka Prefecture:

Market Characteristics
A substantial retail business market
Second largest economy among all the country’s prefectures,substantial retail and corporate business markets<Key indicators>

Ranking is among the 47 prefectures of Japan

MetricNara Pref.

SourceOsaka Pref.

Rank

Rank

(Thousands ofpeople)

1,348

30th

Ministry of Internal Affairs and Communications, Population Estimates,
October 2017

Deposits balance(¥ trillion)

11.5

24th

Loan balance(¥ trillion)

3.6

Population

8,823

3rd

Kinyu Journal, Financial Map 2018

94.3

2nd

31st

Kinyu Journal, Financial Map 2018

45.6

2nd

Per-capita income(¥ thousand)

2,534

35th

Cabinet Office Economic and Social Research Institute (ESRI), fiscal 2014

3,013

13th

Balance of savings per household(¥ thousand)

17,816

1stMinistry of Internal Affairs and Communications, National Survey of Family
Income and Expenditure, November 2014

14,80118th

Housing starts(Thousands ofunits)

6

37th

Ministry of Land, Infrastructure, Transport and Tourism, Building Starts,
fiscal 2017

67

3rd

Percentage of people who enter post-secondary education

(%)

58.7

7th

Ministry of Education, Culture, Sports, Science and Technology, March
2017

59.7

6th

Percentage of people who answer correctly on the financial literacy
examination

(%)

60.5

1st

The Central Council for Financial Services Information, June 2016

54.1

38th

Cross-prefecture employment ratio

(%)

28.8

2nd

Ministry of Internal Affairs and Communications, National Census, October
2015

6.4

14th

(Thousands ofunits)

48

40th

Ministry of Internal Affairs and Communications, Economic Census, July
2014

413

2nd

(¥ trillion)

1.8

36th

Ministry of Economy, Trade and Industry, Census of Manufacturers,
December 2014

15.7

3rd

Sales value of wholesale goods(¥ trillion)

0.7

42nd

Ministry of Economy, Trade and Industry, Census of Commerce, July 2014

38.9

2nd

Sales value of retail goods(¥ trillion)

1.0

35th

Ministry of Economy, Trade and Industry, Census of Commerce, July 2014

8.4

2nd

Number of items designated as National Treasures and Important
Cultural Properties(Items)

1,324

3rd

Agency for Cultural Affairs, April 2018

676

5th

8.9

7th

Japan Tourism Agency, Consumption Trend Survey for Foreigners Visiting
Japan, 2017

44.1

1st

Number of private enterprises (offices)
Value of shipped manufactured goods(establishments employing at least 10 workers)

Ratio of visits by foreign tourists coming to Japan(sightseeing and leisure purposes)

(%)

9

表紙Ⅰ

II. Financial Results for FY201710

1. Summary of Profit and Loss(¥ billion)

FY2016
results

FY2017
results

22 Net income

53.9
49.6
5.3
-1.0
1.3
40.1
22.2
15.4
13.7
3.9
3.0
14.7
1.3
2.2
0.7
0.8
—
16.0
-0.1
15.9
3.8
12.1

52.4
47.2
5.3
-0.1
0.4
40.3
22.7
15.2
12.0
-1.4
—
10.6
6.5
3.5
0.3
0.5
3.0
17.1
-0.0
17.1
4.3
12.8

-1.5
-2.4
-0.0
+0.9
-0.8
+0.2
+0.4
-0.2
-1.7
-5.3
-3.0
-4.1
+5.2
+1.3
-0.3
-0.2
+3.0
+1.1
+0.0
+1.2
+0.5
+0.7

23 Credit cost (*2)

2.9

-3.2

-6.1

1 Core gross business profit
2

Interest income

3

Fees and commissions

4

Other operating income (*1)

5

Cost of derivative financial products

6 Expenses
7

Personnel expenses

8

Non-personnel expenses

9 Core net business profit
10 Gains/Losses on bonds (JGBs, etc.)
Net transf er to general prov ision f or

11 possible loan losses

12 Net business profit
13 Non-recurrent gains/losses
14

Gains/Losses on stocks

15

Disposal of non-perf orming loans

16

Bad debt recovered

17

Reversal of allowance for loan losses

18 Ordinary income
19 Extraordinary gains/losses
20 Net Income before income taxes
21 Income taxes

Y/Ychange*1 Excludes gains/losses on bonds (JGBs, etc.)*2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans) - Bad
debt recovered - Reversal of allowance for loan losses

Analysis of Change Factors
in Core Net Business Profit(¥ billion)

Core net business profit for FY2016

13.78

1) Average balance of loans(Average balance Y/Y change +¥44.1 billion)+0.442) Interest rate on loans(0.93%, Y/Y change -0.05 pt)-1.923) Average balance of deposits(Average balance Y/Y change +¥51.0 billion)-0.014) Interest rate on deposits(0.01%, Y/Y change -0.00 pt)+0.43

Deposits/loans sector total-1.05

5) Average balance of securities(Average balance Y/Y change -¥177.4 billion)-2.06

6) Yield on securities(1.24%, Y/Y change +0.07 pt)+1.247) Interest on fund management-0.05

8) Interest on fund procurement-0.50

Market sector total-1.38

9) Fees and commissions(investment trust revenues: Y/Y change +¥0.15 billion
life insurance revenues: Y/Y change -¥0.36 billion
corporate solutions business-related income: Y/Y change +¥0.34 billion)-0.0710) Others(Cost of derivative financial products: Y/Y change -¥0.82 billion)+0.9611) Expenses-0.20Core net business profit for FY2017

12.03

11

2. Summary of Deposits and Loans
Balance of Deposits

Balance of Loans<By sector><By sector>* Number in bracket denotes Y/Y change

50,0005,000.0(¥ billion)(¥ billion)

4,770.2
230.1
871.0

4,781.7
218.7
886.0

4,780.7
199.1
875.9

(+21.9)(-14.9)(-10.0)4,850.9
203.9
882.4

<Y/Y change>+70.1* Number in bracket denotes Y/Y change

3,500.0
35,000(¥(¥billion)
billion)Government/Banks(+4.8)
Corporate(+6.5)
Personal

3,601.2

3,625.4

3,672.6(+69.8)(+24.1)(+47.1)3,740.4(+67.8)Percentage
composition60%(-8.9)

67.7

51.5

33.0

24.0

March 31,2015

March 31,2016

March 31,2017

March 31,2018

3,088.7

3,198.1

3,262.3

494.4

543.6

591.4

603.9

730.7

743.7

669.3

668.5

+78.5
Local governments(+12.5)Wholesale(-0.8)
Retail business

Negotiable CD

0<Y/Y change>

3,340.8912.0 61%975.4 61% 1,007.0(-12.9)(+23.8)(+63.4)

975.3

998.7

1,026.0(+20.8)(+23.4)(+27.2)

March 31,2015

March 31,2016

March 31,2017

888.1 59%

1,061.3(+31.5)

Personal loans, etc.

(+35.3)0<By prefecture>

March 31,2018

<By prefecture>* Numbers in brackets denote Y/Y change or percentage composition

5,000.0(¥ billion)* Numbers in brackets denote Y/Y change or percentage composition
Others(+4.7)

35,0003,500.0(¥ billion)(¥ billion)

Kyoto Pref.

(+8.5)(6%)(+7.3)(6%)(-8.8)(6%)(+4.7)

Nara Pref.

(+80.2)(80%)(+26.3)(80%)(+40.5)
(81%)

825.4

855.2

790.5

828.8

745.8

759.2

(+33.1)(24%)(+13.4)(23%)

1,517.4

1,583.7

1,658.7

1,713.1(+52.4)(49%)(+66.2)(49%)(+75.0)(50%)

March 31,2015

March 31,2016

March 31,2017

Osaka Pref., etc.

(+12.8)
(6%)

798.8

812.9

(+31.3)(24%)

Others(-14.1)

Osaka Pref., etc.

(+38.3)(24%)(+56.7)
Nara Pref.

(80%)
Negotiable CD(-8.9)(+54.4)(51%)

0March 31,201812

3. Summary of Non-Performing Loans
Credit Cost

Breakdown of Credit Cost(%)(¥ billion)

4.0

0.40
Credit cost
ratio

2.9
1.4
0.05

(¥ billion)
Net transfer to general provision
for possible loan losses

5.0

Disposal of non-performing
loans

5.0
1.0
0.03

0.09

3.0

1.7

0.3
-0.5

0.7
-0.8

0.3
-0.5
-3.7
-0.09

-0.2

Credit cost

-3.0

Bad debt
recovered

Reversal of
allowance for loan
losses

-5.0

-3.2

-4.0
FY2014FY2015FY2016FY2014-0.40

FY2017

Total
credit cost

1.4

FY2015FY2016FY2017

1.0

2.9

-3.2

* Credit cost ratio = Credit cost / Average balance of loans

Loans Based on the Financial Reconstruction
Law / Non-Performing Loans Ratio

Disposal of Non-Performing Loans by Region(¥ billion)

Nara Pref.

(¥ billion)

100.0

4.0

4.4

Non-performing
loans ratio

2.57
2.30

Osaka Pref., etc.

15.5

10.0

1.3
0.3

0.3

-0.0
-0.0

0.3
Others

FY2015

0.3

1.65
7.2

0.1

59.3

-0.9

-0.1
-0.4

0.0

FY2016FY2017Total-2.0
FY2014

Specialattention

2.08
11.5

(%)
3.00

58.0

48.6

5.1

5.8

8.3

March 31,2015

March 31,2016

March 31,
2017

80.0

73.9

68.4

Doubtful

44.4
4.0

0.00

March 31,
Bankrupt
2018

55.6

or de facto
bankrupt

13

4. Capital Adequacy Ratio
Capital Adequacy Ratio(¥ billion)<Non-consolidated>
March
31, 2016

March
31, 2017March
31, 2018

1) Capital adequacy ratio

9.11%

9.19%

9.64% +0.45%

2)Capital

198.9

211.5

236.6

3)

Risk assets

2,181.1 2,300.7 2,454.1 +153.3<Consolidated>(¥ billion)

Changefrom March 31,
2017<Capital adequacy ratio>
Consolidated

Non-consolidated

9.88(¥ billion)

9.36

9.42

(%)
10.00

9.64
9.11

9.19

<Implementation of public stock offerings andthird-party allocation of shares>
Capital raised: Approx. ¥17.3 billion

+25.1

March
31, 2016

March
31, 2017March
31, 2018

1) Capital adequacy ratio

9.36%

9.42%

9.88% +0.46%

2)

Capital

206.9

219.3

245.5

3)

Risk assets

Changefrom March 31,
2017

+26.2

2,209.7 2,327.7 2,482.6 +154.9

200.0
245.5

5.00

Increase retail loans

219.3

206.9
198.9

211.5

<Capital> Consolidated<Loans to small to medium-sized businesses, etc. (Period-end balance)>

236.6

March 31, 2017
¥2,035.0 billion

Non-consolidated

0.0

0.00
March 31,2016

March 31,2017

March 31,2018

March 31, 2018
¥2,130.5 billion

Change fromMarch 31, 2017+¥95.5 billion

 Establishment of the “Nanto Long-term Support”
Program (September 2017)
 Long-term (up to 20 years) loan program for small to
medium-sized businesses
 Total funds: ¥20.0 billion (estimate)⇒ Loans totaling ¥2.28 billion have been provided to 13
businesses (as of March 31, 2018)14

III. Management Strategy

15

1. Progress of the Medium-Term Management Plan (1) Summary
Plan period:

From April 2017 to March 2020

Positioning:

We have set the three years as a period in which to strive to change to arobust structure in consideration of the changing financial climate. For
the plan’s final year coinciding with our 85th anniversary, we will makesure to achieve good results in terms of earnings and the financial
position.

Vitality Creation Plan II—Changing and Taking
on Challenges

Business Model Reform<Awareness Reform> Build a new business model• Personal solutions business• Corporate solutions business• Osaka strategy
 Bolster our market investment skills

Improve salesquality Strengthen our group strategy<Clerical Operations Reform> Promote clerical operations BPR
 Build an organizational operation that enables the staff to
focus on sales activities<Expenses Reform>

Improve clericaloperations quality

Improve OHR

 Strengthen our retail strategy

Raise ROA and ROE<Sales Reform>

Improve humanresources quality

Raise our capital adequacy ratio Foster a spirit of taking on challenges among bankers

Build a robust structure

Regional Revitalization

 Ensure the permeation of improvement culture
and ethos that are unique to the Nanto Bank

 Shift in expense structure Revise expenses as a whole Make strategic investment for human resource development
and IT16

1. Progress of the Medium-Term Management Plan (2) Target Metrics◆ OHR fell short of the target by 1.37 percentage points since the core gross business profit was lower than the medium-term
management plan forecast.
Non-interest income ratio fell short of the target by 3.14 percentage points since the retail banking business results were lower
than the medium-term management plan forecasts.
◆ ROE has achieved the annual target since net income was higher than the medium-term management plan forecast.
Capital adequacy ratio has exceeded the annual target due to net income being higher than the medium-term management plan
forecast, and capital increase

FY2016
Full year(results)

FY2017
Medium-Term
Management
Plan

Full year(results)

Y/Y change

Compared to theMedium-Term
Management Plan

FY2019target

OHR

74.45%

75.65%

77.03%+2.58%+1.37%

Less than 70%

Non-interest
income ratio

10.40%

13.98%

10.83%+0.43%-3.14%

20% level

Capital adequacy
ratio

9.19%

9.04%

9.64%

+0.45%+0.59%

Approx. 10%

ROA

0.24%

0.22%

0.20%

-0.03%-0.01%At least 0.3%

ROE

4.88%

3.86%

4.90%

+0.01%+1.03%At least 5%

17

1. Progress of the Medium-Term Management Plan (3) Transforming Our Earnings Structure and Loans Portfolio◆ We recognize the transformation of our earnings structure,⇒ Bolster non-interest
incomewhich is still underway, as our top priority.
◆ The change of loan portfolio has progressed almost in line with the plan.
We are focusing on securing yields on retail business loans and personal loans. ⇒ Increase retail loans
Earnings Structure(Core Gross Business Profit Basis)

Loans Portfolio

Bolster fee business
100%
10.4

13.9

10.8

(%)
+0.4%
from
FY2016

20

31.3

30

Deposits/
loans sector
income

54.7

57.5

16.5

18.0

20.5

21.5

20.0

29.8

29.9

30.1

19

61%

50
Personal
loans

33

66%

(+0.5%
from
FY2016)

61%

0%

15

Wholesaleloans

Retailbusiness
loans

57.8

18.1
Loans forlocal
governments

31.6

Marketsectorincome(%)

Increase retail loans

100%

Non-interest
income31.7

Bolster
profitability

31.7

31.4

31.9

FY2016
results

FY2017 FY2018(plan) results

33

0%
FY2016
results

FY2017 FY2017(plan)
results

FY2019(plan)

Medium-Term Management Plan

FY2019(plan)

Medium-Term Management Plan18

2. Sales Reform (1) Bolster Non-interest Income◆ Continuously bolster securities and inheritance business and corporate solutions business to achieve thetransformation of our earnings structure<Securities and inheritance business-related
income>+¥1.6 billion
from
FY2017◆Bolster securities and inheritance business:
pages 11–12

OthersLife
insurance

Investment
trust<Corporate solutions business-related income>(¥ billion)

1.2

1.0

0.84
0.49

0.36

0.0

FY2015FY2016

Medium-Term
ManagementPlan¥742 million

FY2017FY2018(forecast)+¥0.3 billion
from
FY2017* Total amount ofincome from M&A
advisory service,business succession
support, private
placement bonds,
lease intermediaryservice, syndicate
loans, foreignexchange-relatedtransactions,business matching
and corporate
insurance

Fees and commissions increased
by around 1.9 billion in total(excluding
corporate-owned
life insurance)◆In the substantial retail business market, we will
demonstrate an overwhelming presence byleveraging a solid business base in the territory
where our share of deposits exceeds around 50%.
◆Therefore, we will give top priority to allocating
management resources, including human resources,
into business such as trust business that we have
newly entered, in addition to a wholly-owned
securities subsidiary (planned), which we are
currently proceeding with.

◆Bolster corporate solutions business:
pages 13–15◆We will continue dialogue based on businesspracticality assessments and ensure accumulating
information on individual companies while focusing
on acquiring new customers.
◆Develop specialists in different sectors at theheadquarters

19

2. Sales Reform (1) Bolster Non-interest Income (i) Securities and Inheritance Business■ In the second half of FY2017, we have achieved certain results by revisiting the sales structure and activities.

■ We are developing securities and inheritance business by leveraging a wholly-owned securities subsidiary (planned) and our trust services
based on our customer base.

Assets under Management—Sales Results and Plans* FY2018: targets(¥ billion)

Investment trust sales

50.0

40.0

45.0

31.4
20.2

0.0

23.6

Fundedinvestment
trust

18.4

1st half of

2nd half of

1st half of

2nd half of

1st half of

2nd half of

FY2016FY2016FY2017FY2017FY2018FY2018(¥ billion)

Life insurance sales

18.0

20.0

20.0

15.0
12.7

8.7

0.0

(¥ billion)

6.5

1st half of

2nd half of

1st half of

2nd half of

1st half of

2nd half of

FY2016FY2016FY2017FY2017FY2018FY2018Financial products intermediation sales

10.0

10.0

4.1

3.7
1.3

1.1
0.0

15.0

1st half of

2nd half of

1st half of

2nd half of

1st half of

2nd half of

FY2016FY2016FY2017FY2017FY2018FY2018

Our Efforts in the Second Half of FY2017
Reallocation of sales staff in accordance with customer
hierarchies<Branches>◆ Change part of our sales promotion structure of
the retail sector and clarify the roles of employees
at branches◆ Appoint an officer in charge of retail customers at
each branch and reinforce initiatives<Headquarters>◆ After adding 3 members who have FA Office expertiseto headquarters, a total of 15 members will provide
support for the promotion of services for 2,000
wealthy customers at all branches.
◆ Newly allocate 5 employees for area support andestablish a follow-up system for employees atbranches

Activities◆ Focus on sales of products such as intermediation
services for insurance and other financial products to awide range of customers, in addition to potential
customers for investment trusts◆ Implement activities to discover the needs of all 80,000
retail customers◆ Reinforce initiatives targeted at corporate owners
through cooperation with corporate sales representatives20

2. Sales Reform (1) Bolster Non-interest Income (i) Securities and Inheritance Business
Develop Securities and Inheritance Business by Leveraging a Wholly-owned Securities Subsidiary and Our Trust Services
About 1.6 million customers in our individual customer base
Of which, more than 100,000 customers have total deposit assets of over 10 million yen
Total deposit assets: Over 30
million yen or more and lessthan 50 million yen

Customers who holdour investment trusts

Customers who don’t holdour investment trusts

Total deposit assets: Over 50
million yen or more

Customers who don’t holdour investment trusts
Investment
trusts balance

Depositsbalance

Customers who holdour investment trusts

Customers who holdour investment trusts[Probe our customer base] Propose a wide range offinancial products
including financial productintermediation, based on
the customer base we havebuilt up so far

Customers who don’t holdour investment trusts
Investment
trusts balance

Depositsbalance

Investment
trusts balance[Expand our customer base] Improve proposal
capabilities for competitive
customers
 Approach customers who
were not interested ininvestment

Depositsbalance

Promotion based on fiduciary duties

Our business transaction condition
for investment trusts
On a number of
On a balance basis
customers basis

Total deposit assets: Over 10
million yen or more and lessthan 30 million yen<Trust business results>
787¥2.61 billion
Number of testamentary trusts
32
Number of heritage arrangements
9* April 17, 2017–March 31, 2018
Testamentary
substitute trusts

Number of trusts

AmountAsset management services
leveraging complementary
trust services businesses

Leverage a wholly-owned
securities subsidiaryBusiness Tie-up with “Hoken No Madoguchi Group Inc.”

Progress towards Making Nara Securities Co., Ltd.
a Wholly Owned Subsidiary◆ Concluded a business alliance agreement with Hoken No Madoguchi Group Inc.
in January 2018. Two stores will be opened in July.
◆ Establish a system to operate business on weekends and attract potential
customers who are either wealthy or building up assets, and not available formeetings during weekdays◆ Currently in discussion with shareholders of Nara Securities Co., Ltd.
◆ An agreement to buy all shares of Nara Securities is scheduled to beconcluded in August 201821

2. Sales Reform (1) Bolster Non-interest Income (ii) Corporate Solutions Business◆ The number of newly-acquired retail business customers has not reached the target of 3,000 but the number of business partners istrending upward.
◆ The number of loan programs based on business practicality assessment has increased up to approximately 50% of loan borrowers as aresult of focusing on dialogue with business partners.
◆ We will bolster our corporate solutions business and increase retail business loans by expanding our trading base and accumulating
information of business partners as above.

Increase the number of business loancustomers

Bolster our corporate solutions business

Increase the number of business loans basedon business practicality assessment

Increase retail business loans<Number of newly-acquired retailbusiness customers >4,000(Entities)

2,000

Number of business loancustomers

1,642 1,674

1,918<Number of business loans based on
business practicality assessment>

17,00010,000(Entities)(Entities)

15,000

5,000

8,000

3,000

2,238

5,030
5,030

3,038
3,038

0

FY2014FY2015FY2016FY2017FY2018(forecast)

13,0000March 31, 2016

March 31, 2017

March 31, 2018
Preliminary figures22

2. Sales Reform (1) Bolster Non-interest Income (ii) Corporate Solutions Business<Corporate solutions business-related income><Lease intermediary service>843

FY2017◆ Regarding finance leases that do not transfer
ownership of the lease assets to the lessee,
the staff in charge make proposals directlyfrom April.

Medium-Term
Management Plan 742

FY2018(forecast)

1,200
0

◆ In response to customer needs for facility
funding, we offer one-stop solutions for bothloans and leases.

(¥ million)

1,000⇒ Offer higher quality financial solutions

Bolster businesses of M&A advisory service, business succession support, private
placement bonds, lease intermediary service, syndicate loans, foreign exchangerelated transactions, business matching and corporate insurance<Private placement bonds><M&A advisory, business succession>◆ Increase the number of specialists in M&A
advisory service and business succession
support◆ Continuously increase customers to support
through dialogue based on businesspracticality assessments

Support services results⇒ Increase the share rate of leasetransactions with Nanto Lease Co., Ltd.
among our corporate clients(Currently the rate is around 14% and morethan 20% with other banks on average)◆ Bolster promoting CSR Private Placement
Bonds where the Bank makes a donation to
public primary and junior high schools after
buying goods that assist children andstudents in their growth and studies basedon the issue price(¥ billion)

Number and amount of bonds
underwritten

97

10.0
Business
succession⇒ The target revenue from intermediation andreferral fees for FY2018
150 million yen

New lease customers of Nanto Lease Co., Ltd.
(Cases)100
Number ofbonds
underwritten

5.0
M&A
advisory

32
18

0.0

0.9
FY2014

50

40
7.5
4.7

Amount ofbonds
underwritten

2.7
FY2015FY2016FY2017023

2. Sales Reform (1) Bolster Non-interest Income (ii) Corporate Solutions Business◆ Support company creation and development of new businesses utilizing newly formed investment funds
Utilization of investment funds

Fund name
Time established
Guaranteedamount of funds
Investment
target/purpose

Nanto CVC Limited
Liability Investment Partnership
June 2017

Nanto Regional Vitality Creation Support Limited
Liability Investment Partnership
September 2017¥1.0 billion¥0.5 billion◆ Assist core enterprises that will contribute to the economic, industrial
and regional revitalization of Japan in the future⇒ Assist customers in sales-target areas of the Bank in cooperation withinvestee companies◆ Discover and provide support for future core enterprises in the target
areas of the Bank and to supply funds to the region<Investment results>★ Joyz, Inc.: Provides an AI-based English-learning application in an effort to assist incoming travelers in local areas★ One Tap BUY Co., Ltd.: A securities firm dedicated to trading on smartphones★ Alarmbox, Inc.: A FinTech company that provides credit management services
Assist company and new business creation◆Business Plan Commercialization Assistance Project:“Nanto Success Road”○ A total of 36 plans were chosen⇒ 13 plans have been commercialized◆“Nanto Commercialization Assistance Fund 80”○ A loan program for creating companies and new businesses
May 31, 2018 (planned)
Business plans received
Loans provided

41 plans
27 plans/¥457 million

Investment through investment funds◆ Sozo Ventures II-S, L. P.
○ Invested in overseas venture funds managed by a U.S. venture capital
firm Sozo Ventures⇒ Aim to create new global business opportunities by promoting
cooperation between investee venture companies and Japanesecompanies◆ SBI AI & Blockchain Fund
○ In addition to applying new technologies and services through businesscollaboration with investee companies to our business operations, we willproceed with business matching between investee companies and ourbusiness partners, and make investments in cooperation with Nanto CVC
fund.

24

2. Sales Reform (2) Increase Retail Loans (i) Retail Business Loans◆ Balance of retail business loans exceeded 1 trillion yen as of March 31, 2018.
◆ Focus on rebuilding the portfolio by rating, based on business practicality assessments, to improve
profitability<Portfolios by rating><Balance of retail business loans>
200.0

2,000

(¥ billion)(¥ billion)

FY2016FY2017

1,007.0

1,000.0

Promote tobuild up
loans

975.4
100.0

912.0

Reversal ofyields

1,000

888.1

800.0
March 31,2015

March 31,2016

2March 31,
20170March 31,
2018

0

1

2

3

4

5-1

6-1

6-2

7

8-1

8-2

Loan programs based on business practicality assessments◆ “Nanto Long-term Support”
 Long-term loan program (10 to 20 year loan period) forsmall to medium-sized businesses Purpose of loan: Rescheduling of existing loans, funds
for equipment◆“Nanto Vitality Creation Support Fund”
 Provide loans to higher risk customers, etc. without
excessively relying on financial data or collaterals andguarantees<Results><Results>

Number signed

13

Number signed

323

Amount signed¥2.28 billion

Amount signed¥6.06 billion

Average interest rate

2.94%

*September 2017-March 2018

Average interest rate

2.55%

*October 2015-March 201825

2. Sales Reform (2) Increase Retail Loans (i) Retail Business Loans —Osaka Strategy—◆ In the previous fiscal year, we opened the Hirano and Esaka Branches, for a total of 21 branches in the Osaka area.
◆ While focusing on acquiring new corporate customers, bolster our ability to provide solutions by leveraging relationships we havedeveloped<Number of newly-acquired retailbusiness customers><Branch layout (21 in total)>
Esaka Branch

July 2017: New branch
September 2017: Relocation
and re-opening

Osaka Kita Branch

Osaka Chuo OfficeOsaka Higashi
Branch

1,000

1,000

YoshidaBranchYao Branch

261

580

Wakaeiwata Branch

Hirano Branch

500

338

398

200

114

Opened after construction in
July 2017

Sakai Branch

Hatsushiba Branch

400

400

825

Ishikiri Branch

Eiwa Branch
Osaka Branch

Tezukayama Branch(¥ m illion)(Entities)

Shin-Osaka
BranchDaito Branch

Amagasaki Branch<Corporate solutions businessrelated income>Habikino Branch

0

FY2014FY2015FY2016FY2017FY2018(forecast)

0

FY2016FY2017FY2018(forecast)Izumi BranchTeam promoting transactions withcorporate owners<Balance of retail business loans>
Kawachinagano Branch¥17.7 billion transferred to thewholesale side of the Bank
(April 3, 2017)

350.0

299

Corporate sales office3

L Plaza (housing loans)

17

Total

319

300.0

250.0

◆ Cooperate with headquarters staff
and tax accountants to develop
activities to meet the needs ofbusiness succession, inheritancecountermeasures, asset
management, etc.

350.5

327.4

<Number of staff allocated>
Sale branches (21)382.9(¥ billion)

Izumisano Branch

281.1

FY2014293.2

FY2015FY2016FY2017FY2018(forecast)★ Bolster marketing strategies
for individual customers
geared to regional market
characteristics

26

2. Sales Reform (2) Increase Retail Loans (ii) Personal Loans
Secure profitability<Housing mortgage loans balance(average balance)>

1,000.0(¥ billion)

934.4+¥31.8 billion
from FY2017

966.2◆ With strictly controlled interest rates and strengthening
covering insurance of high-value-added group credit life
insurance, fixed mortgage rates bottomed out in the second
half of FY2017

898.7
865.8

700.0

FY2015

Improve efficiency of business operations

FY2016FY2017FY2018(forecast)<Consumer loans balance (average balance)>+¥1.2 billion
from FY2017(¥ billion)

20.0

20.7

22.0

22.8

24.1

◆ Consolidate sales bases of housing loans and streamline
operations◆ In the second half of FY2018, housing loans examination
support systems will be deployed, reducing the time spent on
administrative processing by 40% (which is the equivalent of
reducing staff by 25 employees)

Launch and expand comprehensive Internet banking
services◆ Launch comprehensive Internet banking services where theentire process from application to contract is conducted on theInternet (from April 2018)◆ At the same time, deploy examination support systems, andcentralize examination work to a specialized department at
headquarters

Application
for web
services

10.0

FY2015FY2016FY2017FY2018(forecast)

Examination
supportsystems

Electronic
agreement

No need to visit a bank office◆ Internet services are also applied to types of loans for a specificpurpose in addition to credit card loans (planned for June 2018)* Balance of card loans as of the end of March 2018 (period-end balance): ¥13.6 billion

27

2. Sales Reform (3) Channel and Sales Structure◆ Promote elimination/consolidation and restructuring of branches on an ongoing basis, aiming for more efficient operation of
branches◆ Bolster our solution business by raising the level of expertise of personnel responsible for external communications forindividual customers and corporate customers<Elimination/Consolidation of branches,
revision of branch format><Branch personnel responsible for external
communications staffing plan>(People)FY2019(Plan)

6 branches

14 branches

Approx. 30
branches

16

30

Approx. 90

 Introduction of mobile ATM
vehicles (July 2017)
Conversion to a private
retail client branch

5

Conversion to a subbranch

1

Conversion to an inbranch outlet

1

Business hour change
Total

1
8

 Improvement of productivity through more
efficient operation of branches

620
580

600

553

571

500

400

April
2015

April
2016

April
2017

April
2018

The plan from theMedium-Term
Management Plan in
December 2016 at
the time of
publication:
610 people

March
2020
(plan)<Number of staff at headquarters> * As of March 31, 2018
Individual
customers

Elimination/
Consolidation of
branches, revision of
branch format(cumulative results)
Number of staff
members reduced

FY2017

Corporate
customers

FY2016

FA Office14

Area support

5

Trust Consulting Office

12

L Plaza (housing loans)

60

Corporate Sales Office in Nara

6

Solutions-related

39

28

2. Sales Reform (3) Channel and Sales Structure■ Deploy unsecured loan comprehensive Internet banking services and full-scale network business by launching new
applications■ Expand customer base by promotional calls by direct centers and utilizing SMS

Initiatives toward the establishment of an
online branch◆ Aim for early establishments to acquire transactions
from fans of Nara throughout Japan◆ Plan to leverage the initiative for regional revitalization,
including invitations for visits to the prefecture

Bolster distribution channels using
smartphones

Smartphone application

Develop new channel◆ Distribute regional information andcampaign information by LINE @official account◆ Plan to start distributing information
by SMS (Short Message Service)

Bolster
approaches

Enhance promotional calls bydirect centers◆ Launch a team dedicated to Cash Quick(Card Loan) and start promotional calls◆ Start accepting applications for unsecuredloans by telephone

Expandcustomer
contacts, boost
customerconvenience◆ Add functions such as applying toopen an account and various loan
applications◆ Deploy a payment service via
smartphone, "Nanto Smart Pay"

Expandservices

Unsecured loan comprehensive
Internet banking services◆ The entire process from application toagreement is completed without
visiting a bank office29

2. Sales Reform (4) Securities Investments Management◆ Aim for stable earnings through diversified and sophisticated management approaches◆ Flexible portfolio management taking into consideration the possibility of higher interest rates<Market-sector core grossbusiness profit><Balance of Securities>* Investment trusts: Bond investment trusts, equity
investment trusts, J-REITs, multi-assets, market
neutral, bear funds, etc.

(¥ billion)

2,000.0

1,719.9
123.0
64.4
107.0

1,500.0

1,621.1

1,629.9
226.2
63.6
66.3
265.9

322.8

1,479.3

1,000.0500.0

1,102.5

1,007.7

493.5

271.1
77.7
63.8
167.1

+¥141.7 billion
from March 31,
2018
Investment trusts(+¥222.3 billion)

83.6
77.2
173.5

17.3

FY2016

899.3

793.3

Number of stocks

Yen bonds(-¥106.0 billion)

Total

4.2
Yen bonds

March 31,2016

March 31,
2017

51.7

7.0
6.0

4.9
4.4
4.2

45.0

4.1

4.0

3.6

3.1

March 31,
2018

187

180

March 31,2019(plan)March 31,
2016

176

(Stocks)

Book
value

50.0

<Bond duration>

5.3
4.5

FY2018(plan)<Balance of cross-shareholding stocks>

US dollar-denominatedbonds(+¥6.3 billion)(plan)

Foreignbonds

FY2017Euro-denominatedbonds(+¥13.3 billion)

March 31, March 31, March 31, March 31,
2016
2017
2018
2019

8

16.6

10.0

(¥ billion)(Years)

16.7

15.0

Equities(+¥5.8 billion)

0.0

2(¥ billion)-¥0.1 billion
from
FY2017

150

49.0

46.4

March 31,2017

March 31,
2018

100

<Sell cross-shareholding stocks>
Reduce the balance continually each fiscal year30

2. Sales Reform (5) Group Strategy◆ We aim to increase consolidated profits by providing comprehensive financial services in each of the corporate and individual
sectors with lease intermediation business that started this fiscal year and the consolidation of Nara Securities Co., Ltd. that
we are currently proceeding with.
<Results of Nanto Lease>
Nara Securities
Co, Ltd.

Number ofcustomers

The Nanto Bank(¥ billion)★ Basic agreement aiming
to buy a 100% stake in
Nara Securities

15.0

3,400

(Cases)

3,000

2,593
2,261

Contract value

A wholly-owned securities
subsidiary

Nanto Lease Co., Ltd.

★ Bolster securities business★ Launch lease intermediation business

10.0
10.5
5.0

FY201 612.4

FY201 714.0

FY201 8
plan

2,000

1,000

<Results of Nanto Card Services>
Bolster personal solutions business

Bolster corporate solutions business

Number of card
program members(¥ billion)

Nanto Credit Guarantee
Co., Ltd.

Nanto DC Card Co., Ltd.

Nanto Card Services Co., Ltd.

Nanto Computer Service
Co., Ltd.

Nanto Investment
Management Co., Ltd.

101

104

108

20.0

100

Value ofuse

16.8

★ Provide comprehensive financial services⇒ Increase consolidated profits

10.0(Thousandsof users)

FY201 618.4

FY201 719.2

FY201 8
plan

50
31

3. Clerical Operations Reform■ Plan to complete centralization of back-end administrative processes of sales branches into headquarters in June 2018, aiming
to improve efficiency including front-end administrative processes■ Drastically review administrative processes at headquarters utilizing RPA

Clerical Operations of Branches

Measures

Front-end
administrative
processes

FY2017FY2018

Deploy ATMs
at banking
windows

Finished deploying at investment trust business (from 2015)

Back-end
administrative
processes

Document
control center Make branches a place where thestaff are able to focus on sales

Scheduled tobe utilized invariousregistrations

Reduce clerical staff

Start
deployment attrial branches

Utilize tablets

Centralizationtoheadquarters

FY2019Completed rollout at all the
branches

Deployed
at 84
branches

Centralization of
documents of all
sales offices

Start
operations

Start responding to document inspection requests
from tax offices, etc.

◆ Sales office clerk/bank teller(People)

March
2016

March
2017

March
2018

March
2022
plan

470

396

371

230

YoY

-74

-25

-141

Clerical Operations at Headquarters◆ Expanding the scope of business applicable to RPA (introduced in
October 2017), significantly reducing business operating hours◆ Carry out radical overhauls aimed at reducing various meetings andregular reports◆ Promote faster decision-making by deploying electronic approvalsystems

 Transformation to a more productive
organization

32

4. Expenses Reform◆ Reduction in personnel due to improved work efficiency is progressing as planned◆ Maintain a stable level of expenses at below 40 billion yen while aggressively making investments for improving service andoperational efficiency<Expenses>(¥ billion)

43.2

40.0
Tax

15.7

Non-personnel
expenses

40.1
15.4

40.3
15.2

<Breakdown of non-personnel expenses>

39.9
15.4

0.0

25.5
FY2015(People)22.2
FY201622.7
FY201721.9
FY2018(forecast)

2,550

Medium-Term
Management Plan
2,620 employees

2,400

2,000

2,615 2,624

March 31,201 6

March 31,201 7

March 31,201 8

March 31,201 9
(forecast)

2,460
2,300

March 31,202 0
(plan)

15.4

15.2

15.4

10.9

10.5

10.3

10.4

IT-related
expenses

4.7

4.8

4.8

5.0

0.0

FY2015FY2016FY2017FY2018(forecast)◆ While suppressing the total non-personnel
expenses, aggressively make IT-related investments<Staffing plan>

2,800

2,669

15.7
Other nonpersonnel
expenses

10.0

20.0
Personnel
expenses(¥ billion)

March 31,202 2
(plan)◆ Major IT investment projects going forwardｏ Establish Internet branchesｏ Shift from over-the-counter sales to the Internet forlife insuranceｏ Update groupware and add new functionsｏ Integrate intranet base and tablet infrastructureｏ Expand intranet features(Usage outside the Bank, use of Internet mail andwebsite)33

5. Regional Revitalization■ Provide support for measures and policies of local public entities by leveraging the Bank’s expertise as a local financial
institution■ Establish a new business model through promoting tourism

Collaborating with Local Public Entities★ Concluded partnership agreements with 20 local governments and are working on specific measures
Local governments the Bank has concluded partnership agreements with (date of signing agreement)
Nara Prefecture (October 2008), Nabari City (September 2015), Sakurai City (March 2016), Oji Town (March 2016),
Gose City (April 2016), Kashiba City (July 2016), Kawakami Village (August 2016), Ando Town (August 2016),
Heguri Town (August 2016), Koryo Town (October 2016), Ikaruga Town (October 2016),
Yoshino Town (November 2016), Shimoichi Town (February 2017), Yamatokoriyama City (March 2017),
Tenri City (March 2017), Gojo City (April 2017), Kanmaki Town (April 2017), Shimokitayama Village (June 2017),
Kamikitayama Village (June 2017), Ikoma City (August 2017)<Main initiatives in FY2017>
Partner

PeriodDetails

Tenri City

March 2017 ◆ Received a contract for the Local Human Resources Department Strategy Formulation Project (collaboration with Nanto Economic
February
Research Institute)2018◆ Received a contract for investigative research on the feasibility of deploying "Town of lifetime active lifestyle" (same as above)

Sakurai CityMay 2017◆ Invested (5%) in the urban renewal promotion corporation, Sakurai Machizukuri Co., Ltd.
⇒ Contributed to the revitalization of the area around the south gate of Sakurai Station

Ikoma City

July 2017◆ Invested (5%) in the local energy company Ikoma Civic Power ⇒ Provided financial support for their operations

Nara Prefecture

July 2017◆ Participated in a training program for employees of the Nara Prefectural Government and local municipalities hosted by Nara Prefecture
September⇒ Provided support and guidance to the employees towards leveraging the RESAS (Regional Economy Analysis System)
2017

Yamatokoriyama
City

July 2017◆ Held an informal networking event for young employees⇒ Held a total of three events and the outcome was reported to the mayor of Yamatokoriyama regarding measures for tourism inJanuary 2018

Kawakami Village

December2017◆ Held a workshop on the RESAS (Regional Economy Analysis System)★ Creating regional vitality by proactive and subjective involvement in a regional version of
the comprehensive strategy
34

5. Regional Revitalization
Tourism Promotion★ Create Nara fans and aim for tourism from which the entire prefecture can generate revenue
Start providing business matching
opportunities in tourism industries

Utilize tourism revitalization fund
Fund nameNara Prefecture Tourism Revitalization Investment Limited
Business Partnership

Total amount¥1.0 billion

Objective

Stimulate demand for accommodation in the prefecture by
improving the accommodation environment in the tourism
industry and increase tourism consumption by revitalizing
tourism utilizing attractive local resources, etc.

Membershipcomposition

The Nanto Bank, Ltd.
Tourism Revitalization Mother Fund Investment Business
Limited Partnership
Nanto DC Card Co., Ltd.
RD Tourism Solutions Co., Ltd.

★ Three results for investments in tourismrelated companies◆ Introduce our business partners to tourism-related
business operators such as DMOs and travel agencies
and receive referral fees when a match is madeThe first partnership agreement was made with: Nara
Prefecture Visitors' Bureau★ Boost profitability by building collaborative
relationships among the Bank, our business
partners and tourism-related business operators★ Excavate hidden tourism resources in the area

Revitalization of Forestry Business★ Promote utilizing materials produced in Nara Prefecture and support expanding sales channels<Main initiatives in FY2017>
Held sessions to convey the attractiveness of Nara’s trees (in July 2017 and March 2018)◆ Promoted materials from Nara prefecture to business partners of the Tokyo branch(collaboration with Nara prefecture and Nara prefectural timber cooperative association)and business partners in the Osaka area

Held a seminar for developing overseas sales channels for timber from Nara Prefecture◆ Gave lectures and shared case studies for forestry and timber industry-related(in July 2017)business operators(collaboration with Nara prefecture)
Held new recruit training programs in the Yoshino area (in April 2017 and April 2018)(Kawakami Village, Shimoichi Town, Kurotaki Village)◆ In order to deepen the understanding of forestry and timber-related industries,
incorporated a forestry training program in the curriculum and gave lectures onand conducted study tours to see thinning work, etc.

In February 2018, we won the Excellence Awards for the 8th Regional Revitalization Award—we were the first bank in Japan to win this award—
35

表紙Ⅰ

IV. Business Forecasts for FY2018

36

1. Summary of Profit and Loss
Business Forecasts for FY2018
Factors Causing Core Net Business Profit to Differ between FY2018
Forecasts and the Medium-Term Management Plan

FY2017 FY2018(¥ billion)

results

forecasts

Y/Y
ChangeCompared to
the MediumTerm
Management
Plan

1Core net business profit

12.0

13.2

+1.2

-0.9

2

Interest income

47.2

46.4

-0.7

-1.0

30.9

29.9

-0.9

+0.3

19.5

20.2

+0.7

-2.2

3

Interest on loans

4Interest on securities

5

Financing cost

3.8

4.3

+0.5

-0.8

6

Fees and commissions

5.3

7.4

+2.1

-1.5

7

Other operating income (*1)

-0.1

-0.7

-0.5

+1.5

8

Expenses

40.3

39.9

-0.3

-0.0

9

Net business profit

10.6

11.4

+0.8

-2.9

◆Interest income⇒ The steadily accumulated loan balance mainly in theretail sector has led to higher-than-expected loanrates
In order to avoid the risk of interest rate rising, wereduced the balance of foreign bonds, thus interest
paid on securities was lower than expected.

◆Fees and commissions⇒ Sales of investment trusts and life insurance are
expected to be lower than the forecasts

On Revision of Our Pension Plan
★ The Bank’s pension plan has been transitioned to risk
sharing corporate pension and defined benefit
corporate pension plan from the defined benefit
corporate pension plan on April 1, 2018.
<Expected effects of the transition>

10

Ordinary income

17.1

12.9

-4.2

-2.6

◆ An extraordinary gain of 4.7 billion yen is expected in
FY2018.

11

Net income

12.8

12.9

+0.1

+1.5

◆ Retirement benefit expenses are expected to trend
downward after FY2018

12

Credit cost (*2)

-3.2

1.2

+4.5

-0.2

* A year-on-year decrease of 1.3 billion is projected
for FY2018*1 Excludes gains/losses on bonds (JGBs, etc.)*2 (Net transfer to general provision for possible loan losses + Disposal of non-performing loans)- Bad debt recovered - Reversal of allowance for loan losses

37

2. Shareholder Returns
Shareholder Returns<Dividend per share>
FY2016(1)

Consolidated net
income(2) Dividend per share

FY2017FY2018(forecasts)¥billion

12.5

13.1

(13.2)

¥

70

70

(80)

(3)

Total dividends¥
billion

1.8

2.2

(2.6)

(4)

Payout ratio((3) / (1))

%

15.0%

16.7%

(19.7%)

0.01

0.00

–

(5)

Amount of treasury¥
stock acquired
billion100(yen)

A commemorative dividend isplanned in recognition of the 140th
anniversary of the Bank’s founding

80
70

70

70

70

60
50

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018(6)

Total ratio of return(((3) + (5)) / (1))

%

15.1%

17.3%

Promote Dialogue with Shareholders★Individual shareholders⇒ Hold a shareholders forum once a year
(conduct a survey at the same time)⇒ Hold IR events for individual investors(Nara and Osaka)(forecasts)–★ The 68th National Bank (RokujuhachiBank) was founded in January 1879

★Institutional investors⇒ Hold information meetings⇒ Hold small meetings⇒ Increase one on one meetings⇒ Hold IR meetings for overseas
institutional investors
38

3. Target Metrics
Medium-Term Management Plan
“Vitality Creation Plan II—Changing and Taking on Challenges”
FY2017Full Year(results)

FY2018
Medium-Term
Management
Plan

Full Year(forecasts)
Y/Y change

Compared to theMedium-Term
Management Plan

FY2019targetOHR

77.03%

73.83%

75.11%-1.91%+1.27%

Less than 70%

Non-interest
income ratio

10.83%

17.25%

14.70%+3.86%-2.55%

20% level

Capital adequacy
ratio

9.64%

9.18%

9.26%

-0.38%+0.07%

Approx. 10%

ROA

0.20%

0.23%

0.22%

+0.01%-0.01%At least 0.3%

ROE

4.90%

4.21%

4.59%

-0.30%+0.37%At least 5%* Calculation formulae for the metrics• OHR:• Non-interest income ratio:• Capital adequacy ratio:• ROA:• ROE:

Expenses / Core gross business profit(Fees and commissions + Other operating income (excluding
gains/Losses on bonds (JGBs, etc.))) / Core gross business profit
Core capital / Risk assets
Core net business profit / Total assets
Net income / Net assets

39

In this material, we refer to the future performance of the Bank.
However, please be aware that these contents do not guarantee our future performanceand it may change due to the unexpected risks and uncertainties in the operating
environment.

[Contact, if any:]
The NANTO BANK, LTD. Corporate Planning DivisionTEL:0742-27-1552

FAX:

0742-20-3614

E-mail:ir-souki@nantobank.co.jp

URL:

http://www.nantobank.co.jp/

THE NANTO BANK, LTD.