Overview of FY2019 First Half Financial Results
and the Next Management Plan

December 13, 2019
The NANTO BANK, LTD.
Takashi Hashimoto, President

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years

3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan

3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets-1-1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years

3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan

3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets-2-1. FY2019 First Half Financial Results

Summary of Profit and LossInterest income has been increased as securities investment stably contributed to profits, resulting in increase in core
net business profit and ordinary income.

First half net income has been decreased due to the impact of a temporary factor of 4.7 billion yen recorded as
extraordinary income in the previous fiscal year following the revision of the pension system.

[Interest Income](¥ billion)

24.0[Core Net Business Profit]

21.2

22.9

20.0

5.8
5.0

0.0

4.4

5.0

0.0

FY20171H

FY20181H

FY20191H[Ordinary Income](¥ billion)(¥ billion)

FY20181H

FY20191H[First Half Net Income]

7.8

7.8
4.0

5.0

FY20171H(¥ billion)

6.0

6.5

FY20171H

FY2018
1H

5.3

5.0

0.0

0.0

FY20171H

FY20181H

FY20191H

FY20191H-3-

1. FY2019 First Half Financial Results

Interest on Loans Interest on loans has been decreased slightly, as yield for loans did not reverse despite
an increase in balance of loans.
[Balance of Loans (Average Balance)][Interest on Loans](¥ billion)(¥ billion)

3,500.0

3,357.9

3,409.4
15.6

3,275.4

15.2

15.1

FY20181H

FY20191H

15.0
3,000.0
FY20171H

FY20181H

FY2019
1H

0.90

0.88

[Yield for Loans]
(%)

1.00

0.95

10.0

0.50
FY20171H

FY20181H

FY20191H

FY2017
1H-4-

1. FY2019 First Half Financial Results

Fees and Commissions


Corporate solutions business-related income has been increased because as a result of the efforts tofocus on consulting sales for resolving customers’ fundamental issues, while fees and commissions
have been decreased due to sluggish investment trust sales.

[Corporate Solutions Business-related Income]
0.59(¥ billion)

0.50[Fees and Commissions]0.65(¥ billion)

0.32

3.18

3.05

3.00

0.00
FY20171H

FY20181H

2.38

FY2019
1H[Sales Commission of Deposit Assets]
Securities intermediation
Life insurance (excluding corporate-owned life insurance)
Investment trusts

1.60(¥ billion)

0.99
1.00

(0.01)(0.26)(0.13)(0.62)

1.41(0.02)(0.67)

0.00(0.71)(0.84)(0.71)FY20171H

FY20181H

FY20191H

0.00

FY20171H

FY20181H

FY20191H-5-

1. FY2019 First Half Financial Results

Securities Investment Management
 Interest on securities has been increased due to improved yield as a result of rebalancing
investment trusts held to secure stable income.
[Balance of Securities (Average Balance)]
Yen bonds
Euro-denominated bonds
Investment trusts(¥ billion)

1,000.0

1,612.7(238.4)(64.9)(94.3)(239.7)(975.4)trust-related profit and loss figures are negative, it[Interest on Securities] * Ifwasinvestment
recorded as “Loss on redemption of bonds including nationalbonds,” not as “Interest and dividends on securities.”

US dollar-denominated bonds
Equities

Investment trust-related profit and loss
Stock dividends
Interest on bonds(¥ billion)

1,485.1

1,442.8(321.2)(77.3)(60.1)(163.4)(862.9)10.1(477.4)(76.5)(101.0)(79.2)

10.0

9.2
(2.1)

7.9

(708.7)

(1.6)

(3.0)
(1.8)

0.0

FY20171H

FY20181H

FY20191H(1.7)[Yield on Securities]
(6.4)

(%)
1.50

(6.1)
(4.4)

1.28

1.25
1.06

1.00

0.0

FY20171H

FY20181H

FY20191H

FY20171H

FY20181H

FY20191H-6-

1. FY2019 First Half Financial Results

Expenses Expenses have been increased by enlarging quota for bonuses as structural reform costs inadvance of the next management plan, toward boosting employee morale.
[Personnel Expenses][Expenses](¥ billion)(¥ billion)

20.5
20.3
12.0

20.0

19.6

11.5

11.4
11.0

10.0

18.0
FY20171H

FY20181H

FY20191H

FY20171H

FY20181H

FY20191H-7-

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years

3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan

3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets-8-2. FY2019 Business Forecasts for the Full Year and Dividends

FY2019 Business Forecasts for the Full Year and Dividends


Net income has been revised downward from the previously announced forecast of 9.0 billion yen to 5.4
billion yen due to an anticipated approx. 6.0 billion yen increase in the costs of the structural reform that
we need to work on this term for the future.



We are planning to continue a dividend of 80 yen per year.
-6.0

Net income

 Loss from sale of stocks forwhich price increases are unlikely Impairment loss associated with
office network reorganization

5.4
Other

FY2018

Approx. ¥1 billion
Approx. ¥2.5 billion(¥ billion)-7.2
Structuralreform costs

Revisedforecast

Other operating
income5.4100Interest income Increase in quota for bonus
to boost employee morale Conservative provision

Net income

Fees andcommissions

Structuralreform costs

11.1

Fees andcommissions

Net income

Interest income

Previous
forecast+0+4.2+2.8 +0.4

Other

-0.2
Structuralreform costs+0

Other operating
income9.0[Comparison with
Previous Fiscal Year](¥ billion)+2.5 -6.0
Net income

FY2019 Business Forecasts for the Full Year

[Comparison with
Previously Announced Forecast]

FY2019Approx. ¥1 billion

Approx. ¥1.5 billion

Posted 4.7 billion yen as temporary
extraordinary income for the previous fiscal
year following the revision of the pension plan(¥)

Dividend per share

80

70

70

70

80

70

 Our basic policy is to continue to pay stabledividends.
• Paid a commemorative dividend on the 140th
anniversary of our business in FY2018

60• Planning to continue to pay an ordinary dividendof 80 yen per year in FY2019

50
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019(plan)(plan)-9-

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years
3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan
3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets- 10 -

3-1. Review of the Current Medium-Term Management Plan

Position of this Plan in the Vitality Creation PlansThe Vitality Creation Plan was formulated in 2014 as a 10-year plan. The management environment
has changed more than expected since the time it was formulated due to the introduction of negativeinterest rates and other economic situation.

Considering those changes, we have formulated another plan for the next 10 years (2020–2030) while
maintaining our management vision, “Vitality Creation Bank,” as the core.
Vitality CreationPlan Aimed at boosting income by taking
a growth- and volume-based
approach to expand offices andsales representatives

Vitality Creation
Plan II Aimed at boosting profits byincreasing income from services andreducing spending through clericaloperations/expenses reforms, etc.

Theme

Creating income opportunities
through growth of scale

Theme

Key
targets

Balance of loans: ¥3.25 trillion
Balance of deposits: ¥5 trillion

Keytargets

OHR: less than 70%
Non-interest income ratio:
at the 20% level

Mainstrategies

Four Reforms(consciousness, sales, clericaloperations and expenses)

Main
strategies

Developing offices in Osaka densely
Introduce putting sales for individualsThis Plan

Transformation to a lean cooperate
structure

The “Nanto Missions” andOur Goal in
the Next 10 Years

Negative interest
rates introduced

Apr. 2014

Feb. 2016

Apr. 2017

Apr. 2020 Mar. 2024

Mar. 2030
10 years

Initial period

Extend constructively- 11 -

3-1. Review of the Current Medium-Term Management Plan

Review of Vitality Creation Plan II (Current Medium-Term Management Plan) As a result of implementing various action items under the “Four Reforms” (consciousness, sales, clericaloperations and expenses), the reforms of clerical operations and expenses are expected to achieve their targets.
Four reforms andmain action items
Consciousness

Sales

Initiatives

Results

Consciousness reform to think and act
on their own

Implement activities of the “Nanto
Bank Improvement Committee”

Awareness of behavioral changes

Re-establishing businesssystemIntroduce the “Block Area Business
System”

Transfer of responsibilities andauthority to forefront of business

Establish consulting subsidiaries

Strengthened consulting functions

Introduce an intermediate holding
company structure

Strengthened Group company
governanceReorganizing andstrengthening Group
companies

Clericaloperations/
Expenses

Streamlining clericaloperations

Reduce sales offices’ back-office
operations

Reducing personnel

30% reduction in sales offices’clerical work
Approx. 150 reduction
in clerical personnel

Issues Strengthening the top line in the management environment changing drastically requires further deepening
the four reforms with a clear view of medium- to long-term goals.
 Although certain effect has been achieved in terms of clerical operations and expenses, there remains room
for reduction of costs that are still high.
- 12 -

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years
3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan
3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets- 13 -

3-2. The “Nanto Missions” and Our Goals in this Management Plan

The “Nanto Missions”

The Nanto Bank Group initiatives to: Develop regions― We create the vitality of regions and customers
by providing knowledge, human resources, and money.

 Develop human resources who create vitality― We develop human resources who are “unique”
for regions and customers.
 “Unique” human resources are those whom customers “want to work with on something!”

 Improve profitability― We create the vitality of regions and customers and thereby maximize
the profit of our Group.

- 14 -

3-2. The “Nanto Missions” and Our Goals in this Management Plan

The Changing Management Environment and Future Action Plans
 To fulfill the “Nanto Missions” in a highly uncertain business environment, we mustclarify our goals and continuously implement the PDCA cycle.
Increasing uncertainty
in the business environment

Need to manage our business in line with changes
in the business environment

Our Goals

Technologicaladvancement

Diversified
lifestyles

Population
decline/low birthrate
and aging
population

Globalization/
Borderless

Time

?

Progress of businessContinued
negativeinterest rateTime

- 15 -

3-2. The “Nanto Missions” and Our Goals in this Management Plan

Our Goals and Interim Targets in this Management PlanOur Group will be the “No. 1 Group in terms of Vitality Creation” in the next 10 years.
 “No. 1 Group in terms of Vitality Creation” addresses the local customers’ concerns about theirbusiness and asset management to resolve them and to create vitality.

 To achieve this, we will turn revenue and expenditure deficits in customer services into surpluses in
the next five years as the interim target.

“Nanto Missions”

Develop regions

Interim targets (in 5 years)

Turn deficits of customer
services into surpluses

Our goals (in 10 years)
Gross prefectural product (Real)in Nara**:Up approx. ¥350 billion(up 10% compared to FY2016)

 OHR: Less than 70%

Develop humanresources who createvitality

Improve ourGroup’s profit
*
**
***

 ROA: 0.25% or more

Certified* personnel who
are involved in creatingvitality: 1,000 people

Number of management
personnel*** to be created: 350

ROA:
0.35% or more

Certification equivalent to Applied Information Technology Engineer, Small and Medium Enterprise Management Consultant, Registered Real-estate Broker,
Japanese Financial Planner Grade 1, and Nissho Bookkeeping Grade 2 or higher
The gross prefectural product is announced approximately two and a half years after the end of each fiscal year, and this goal will be achieved by FY2026,
which result will be announced during 2029.
Personnel able to make management decision together with customers in the regions.

- 16 -

3-2. The “Nanto Missions” and Our Goals in this Management Plan

<Reference> Results and Targets of Gross Prefectural Product (Real) in NaraAiming to increase the real gross prefectural product in Nara by 10%
 Mainly enhance the “wholesale and retail industry” that are related to the “accommodation and food services
industries” with high potential, “manufacturing industry,” and “health and social work industry (hospital andnursing facilities, etc.).”Results and Targets of Gross Prefectural Product (Real) in Nara

4＋¥350 billion¥3.6 trillion¥3.9 trillion¥3.5 trillion

32• Accommodation andfood services industries
1• Wholesale and retailindustries• Manufacturing industry

0
2006年 FY2006
2006年
度

度

2016年
2016年
FY2016
度

度

2026年
2026年
FY2026 (Target)
度• Health and social work
industries

度- 17 -

3-2. The “Nanto Missions” and Our Goals in this Management Plan

Continuous Implementation of the PDCA Cycle
 We will formulate an annual plan and announce it every term toward the interim
targets for 5 years after and our goals in 10 years, in order to implement the PDCA
continuously adjusting to the change of business environment.
Our goals
for the next
10 yearsInterimtargets
for the next
5 years

Ａction
(=P’)
Ｄo

Ｃheck

Ｐlan
PresentP

1 year later

Annual action plan

2 years later

D Activity forone year・・・

CCause analysis ofdeviation between
plan and actual

5 years later

A PNew annual
action plan

・・・D

10 years later

・・・

C

A

Achievementof our goals- 18 -

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years
3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan
3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets- 19 -

3-3. Management Strategies toward Achieving Our Goals

Strategies for Achieving the Goal
 We will achieve the goal in the next 10 years through the three business strategies
and three supporting strategies.
Goal

The No. 1 Group in terms of Vitality Creation

Business Strategies

Strategy to upgrade methods toapproach customers

Strategy to cultivate relationships
with individual customers

Strategy to commercialize
solutions for regional issues

Creating points of contact withcustomers using digital technologies
and combining with non-financial
factors to provide services that meettheir needs

Deep understanding of customers andprovision of not only money, but also
solutions for knowledge and personnel

Commercializing regional issue
solutions that may not be solved
through the upgrading and cultivation
strategies

Supporting Strategies

Channel strategy

Creating the best channels that support the implementation of the business strategies

Personnel strategy

Developing human resources who are “unique” for regions and customers

Market management
strategy

Building a securities portfolio that offers stable yields in the medium- to long-term- 20 -

3-3. Management Strategies toward Achieving Our Goals

Strategy to Upgrade Methods to Approach Customers
 While analyzing the behavior of each individual customer and creating points of contact
with him/her by utilizing digital technologies, we will provide frictionless services thatreflect customers’ true needs through combining with non-financial factors.
Present
Providing services through face-to-facetransactions that are based on products
using offices and ATM as the main
channelPhase 1

Phase 2

Providing the best service whenever andwherever (face-to-face, non-face-to-face) byunderstanding the needs of individual
customer through information sharing
between channels

Providing a (financial) means to fulfill the(non-financial) purpose of customers byconnecting with non-financial business
operators via FinTech in a frictionlessmanner

Daily
life
Car

Interests

TravelLiving

HP
HP

HP

Education

HealthVarious FinTechbusiness
operators

Information sharing

Information sharing with non-financial sectors

Only between financial channels

Financial + Non-financial(ecosystem)- 21 -

3-3. Management Strategies toward Achieving Our Goals

Strategy to Cultivate Relationships with Individual Customers
 We will get deep understanding of customers to eliminate their concerns about theirbusinesses and assets, and provide not only money, but also solutions for knowledge andpersonnel as a one-stop service.
Customers’ concerns
Wish toincrease,protect, or
inherit

Provision of Solution

No person closeenough to talk to or no
management person

Businesses/
assets(Consulting sales)

Createvitality ofcustomers

Improved
ourprofitability“Deep Understanding” of customers
Process and mechanism to“Order-Taking” sales… respond to materialized
needs/sell individual productget deep understanding of customers

Process
Conduct preliminary
investigation/analysis(business feasibility
studies, etc.)↓
Develop a
hypothesis/consider
solutions for
fundamental issues↓
Have communication/
Verify↓Share

Mechanism

Previous“Proposal-Based” sales… respond to potential
needs/sell individual productConsulting by a Group of experts
A Group of experts from headquarters andGroup companies develops and verifies ahypothesis for issues and provides solution
support

Optimizing resources
Manage time for verifying a hypothesis for
issues and considering solutions by
optimizing the number of companies
managed by responsible person

Ideal
state

“Consulting sales”

Discover and share fundamental issues that evencustomers are not aware ofSolve customers’ issues by not only providing money, butalso combining solutions for knowledge and personnel- 22 -

3-3. Management Strategies toward Achieving Our Goals<Reference> Strengthening Cooperation with Our Group Companies

We will work on a highly specialized consulting business with our subsidiary offering consulting
services, which is difficult to do with only the Bank, and provide customers with knowledge, people,
and money by the entire Group including subsidiary securities company.
Corporate borrowers:

Individual debtors:

Approx. 16,000
companies

Approx. 70,000
households

Reorganizing/Strengthening Group companies

External affiliates (approx.
130 companies)Strengthening consulting sales through Nanto Consulting• We established Nanto Consulting in July 2019 to analyze the truecauses and solve the true issues of customers, which are required for
consulting sales, and to offer them as charged services, which werepreviously offered for free, by specializing skills, know-how, etc.

The Nanto Bank, Ltd.

• In the future, we will also initiative to dispatch the management
personnel.
Nanto Management
Services, Co., Ltd.



Nanto Card Services Co.,Ltd.

Nanto Lease Co., Ltd.

Nanto Computer Service
Co., Ltd.

Nanto Mahoroba Securities
Co., Ltd.

Nanto Consulting Co., Ltd.

・・・

Strengthening the securities business through Nanto Mahoroba
Securities•

A subsidiary engaged in the securities business has started operationsin March 2019.

•

We will form customers’ assets by meeting sophisticated asset
management needs.
Strengthening Group governance through Nanto Management
Services• We established an intermediate holding company in September 2019.
• We will maximize the Group profits by streamlining the management ofGroup companies and strengthening the governance.

- 23 -

3-3. Management Strategies toward Achieving Our Goals

Strategy to Commercialize Solutions for Regional Issues
 We will address regional issues that may not be resolved by individual customers,
and commercializing them on our own initiative.
Regional issues
Need to create business
opportunities
Need to increase
employment

No person close enoughto talk to or no
management personnel

Provision of Solution(We will commercialize
solutions on our own initiative)

Improved
ourprofitability

Createvitality ofregions

Tourism

Business creation

Take the lead in improving the attractiveness of
tourist spots to increase the amount of tourism
consumption in Nara

Create businesses in Nara and thereby create employment
to improve the employment rate in Nara

[Changes in the Number of Tourists
in Nara](unit: 10,000 people)
4,420(unit: yen per person times)

13,680
6,140
6,655

3,547

2013

[Unit Price of Tourism Consumption]

2017

Nara

Kyoto

 Although the number of visitors to Nara is growing, many of them are notstaying in the prefecture and the unit price of tourism consumption is low.

 Increasing the amount of tourism consumption through initiatives that takeadvantage of the prefecture’s rich tourism resources is necessary.

[Employment Rate in Nara]
National average
Nara

91.7%

91.2%

91.0%

70.7%

70.1%

71.2%

(47th)(47th)(46th)

2005

2010

2015

 Nara potentially has rich human resources, as it has a high college-going
rate, while being ranked the lowest in the country for the female
employment rate.
 Currently, people are being hired and tourism resources consumed outside
Nara so creating attractive businesses is an immediate issue.

Source: “Report on Dynamic Research of Tourists Visiting Nara Prefecture” (Nara Prefecture), “Report on Research of Tourist Visitors to Kyoto Prefecture” (Kyoto Prefecture), “Basic Research on School” (MEXT),“Population Census” (Ministry of Internal Affairs and Communications)- 24 -

3-3. Management Strategies toward Achieving Our Goals

Channel Strategy

We will create the optimal channels that meet customer needs and support the implementation of
our business strategies that reflect the changes in the internal and external environments.
Strategy

Action item

Non-faceto-faceFace-to-face

Optimization of office functionality

Aggressively invest
in IT for enhanced
digital channel

Take an omni-channel
approach
Combine with FinTech

Provide services
according tochanges in lifestyle

Increase consultation
bases/hours

Optimally allocate
functions among
officesCreate bases
focused on
revitalizing regions

Reorganize office
network

Implement clericaloperations reform

Utilize offices, including
cross-sectoral
cooperation

Increase the points of contact with customers
by providing digital platforms

Increase consultation bases in the form of in-store
branches and extend office hours
Number of
officesVolume ofclericalwork atsales
offices

Reduce byapprox.
30%

Reduce byapprox.
50%

Open information offices serving as the centers for tourist information,
hold seminars for business startup/entrepreneurship school, etc.

- 25 -

3-3. Management Strategies toward Achieving Our Goals<Reference> Reorganizing Our Office NetworkWe will launch a full-scale re-distribution of management resources through office network
reorganization to continue to provide the best services according to customer needs.



We will strive to ensure the convenience of customers as much as possible through initiatives suchas installation of joint windows at Post Offices.

Reorganize office network

Living environment
 Increase in twoincome households
 Diversifying/sophisticating
lifestyles

Financialenvironment
 Establishment ofATMs inconvenience stores Diversifying payment
methods

 Decrease in numberof customers visitingbank window Decrease in numberof in-office ATM
users

 Convert 30 offices into jointly
operated offices(Converted gradually from March toJune 2020)
Number of offices in Japan:
137  107
 Introduction of operations onalternate days: 4 offices
 Change of business hours: 4 offices
Install joint windows at Post
Offices Improved
consulting
capabilities throughconsolidation of
personnel
 The convenience ofcustomers is
ensured as muchas possible

Provisionof the best
services fitting
to customerneeds Tie-up with JAPAN POST Co.,
Ltd. and ATM Japan, Ltd.
 Installation of joint windows
and our ATMs in Post Offices- 26 -

3-3. Management Strategies toward Achieving Our Goals<Reference> Clerical Operations Reform (Discontinuing SBT Terminals in Offices) We will discontinue SBT terminals installed in offices with the aim of achieving paperlessand cashless operations and eliminating back-office operations in offices.
Current situation/Issues of offices
 Environment where our employees cannot concentrate on solving
issues that customers are facing• Due to the high burden of machine operations centered on SBT terminals in offices and thehandling of cash, slips, etc., employees cannot concentrate on solving customers’ issues.

Clerical work space• Customer procedures, such as filling out paper and putting seals, are also complex.

Discontinuing SBT terminals in officesCreating space for consulting, local community initiatives, etc., as a result of
discontinuing SBT terminals in offices and eliminating back-office operations
Establishing an environment where employees can concentrate on cultivation
activities by reducing the burden of clerical work through paperless andcashless operations and eliminating back-office operations
Current
Management Plan

<Schedule>

Back-office
operations

Continue

Front-end
administrative
processes

FY2019

OfficeThis Management Plan
FY2020

FY2021

Paperless, cashless(Quick Counter/Reception Navigator)

Trial

Free space

Concentration
Complete backoffice-less

FY2022SBT
terminals nolonger used
in offices

Clericalwork space

Clerical work space:Occupying Approx. 70%of the entire space⇒ 30%- 27 -

3-3. Management Strategies toward Achieving Our Goals

Personnel Strategy
 We will develop human resources who are “unique” for regions and customers (personnel who
create vitality).
 Clarify the image of the “Ideal Personnel” and the elements required for it.
 Implement action items to improve “Motivation”, acquire “Ability”, and establish “Actions”.

Elements required for people who create vitality
Motivation

Continue to workon regional
development andone’s own growth

ActionAbility×

Basic skills
Knowledge andskills that serve as
the base fordemonstratingproblem-solving
skillsProblem-solving
skillsAbility to solve
complex andsophisticatedissues withexpertise

Creativity

×Performance

Have a free way of Produce a result by
thinking from ancarrying out
unprecedented
without giving up
viewpoint

Action items to develop people who create vitality
Organization culture

Fostering

Arrangement

Evaluation/Treatment

Create an organizational
culture where all employees
can play an active part
regardless of age or gender

Establish an environment thatallows each employee to think
about their purpose and themeaning of things and to grow

Assign the right personnel to theright positions in accordance withthe management strategy toaccelerate growth, andencourage them to demonstrate
their abilities

Perform highly convincing
evaluations by providing
thorough training toevaluators- 28 -

3-3. Management Strategies toward Achieving Our Goals

Market Management Strategy

We will strive to establish a securities portfolio composition that enables a stable yield of 1% or more to
be secured in the medium- to long-term.
Dynamically rebalancing the portfolio according to changes in the market environmentSecuring stable revenue by combining a good balance of self-management and outsourcing
management** Outsourcing management: Management of portfolios using the sophisticated management know-how ofthird parties that we do not possess

Basic policyDiversifying core revenue sources by utilizing new assets to be managed and new management
methods



Thoroughly distributing assets, regions, and time to diversify and reduce risks

Asset composition
End of March 2020
Outsourcing
management

FutureWhile investing redeemed proceeds of yen
bonds and foreign currency bonds mainly inoutsourcing management, we will maintain abond-centered portfolio based on an
approach in which assets are decomposed
and added-up together.

Outsourcing
management
19%

¥1.5
trillion20%

Portfolio
composition

32%

33%

¥1.5
trillion

42%8%

Decompose assets
and add them
together

21%

13%
2%

4%

4%
3%

2%
5%

8%

Risk
balance

8%

4%

5%
9%

4%

6%
49%

10%

22%

Bonds:
71%

Risk
balance25%

42%

Bonds:
67%

Yen bonds

Bonds in foreign currencies

Japanese stocks

Foreign stocks

Investment trust

Outsourcing management

REIT

Foreign exchange

Other- 29 -

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years
3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan
3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets- 30 -

3-4. Management System for Sustainable Growth

Governance SystemIn order to become the “No. 1 Group in terms of Vitality Creation”, we will establish a governancesystem to quickly adjust the business strategy in a timely manner based on the voices of investors,
customers and our employees.

Enhance communication withinvestors by disclosing plans
every term

Evaluate the implementation ofstrategies by incorporating andunderstanding the voices ofcustomers and our employees

Verify its own activities and implement the PDCA cycle continuously
in line with the change in the business environment
Strengthen the functionality of the board of directors
Continue to develop and appoint candidate
directors who are capable of responding tochanging business environmentMonitoring by external directors
from an objective view

Provide incentives based on the evaluationof activities toward achieving the goals

Quickly adjust the business strategy in a timely manner

Flexibly revise the strategy based on each term’s results and changes in the
management environment
Structure to formulate strategies by the entire Group through an intermediateholding company system- 31 -

3-4. Management System for Sustainable Growth

The Risk Management and Compliance System
 While building a system to detect and prevent risks and problematic events based onan accurate understanding of changes in the environment, we will create a
supporting organizational culture that will not cause misconducts.

Changes in social
environment
through innovation

Sophistication ofmoney laundering andfinancial crimes

System to take preventive measures based onchanges in the environment

Changes in economic
situation such as
market trends

System to detect and prevent risks
Build a system to foresee risks in a forward-looking manner andthereby minimize the chance they will materialize Analyze and verify risks in plans and action items in the development
stage
 Take cross-sectional preventive measures by establishing a system tocomprehensively identify risks
 Prevent money laundering and financial crimes at the point of entry bystrengthening the functionality of operations at the business frontline
Organizational culture that will not cause misconducts
Achieve an open workplace environment through smoothcommunication

 Conduct employee surveys and enhance the follow-up system
 Carry out training and legal reviews with an awareness of conduct risk
 Demonstrate a self-policing approach by promoting the use of thewhistle-blowing system- 32 -

3-4. Management System for Sustainable Growth

Our Policy for SDG Initiatives
 Our Group will work to resolve regional issues throughout this plan and thereby
achieve the SDGs.
SDGs
17 goals and 169 targets

Achievesustainableregions andsociety

Solve regionaland social issues

The Nanto Missions
Develop regions, develop personnel,
and improve profitability

Pursuit of the “Nanto Missions” and Achievement of the SDGs

Commercialization
strategy

Channel strategy

Upgrading strategy

Urban

Regional development

Poverty

Hunger

Water/Sanitation

Education development

GenderInnovation

Health/Welfare

Personnel
strategy

Consumption/
Production

EnergyEconomic growth
Employment

ClimatechangeLand
resource

Cultivation strategy

Profitability improvement- 33 -

1. FY2019 First Half Financial Results
2. FY2019 Business Forecasts for the Full Year and Dividends
3. The Next Management Plan:
The “Nanto Missions” and Our Goals in the Next 10 Years
3-1. Review of the Current Medium-Term Management Plan
3-2. The “Nanto Missions” and Our Goals in this Management Plan
3-3. Management Strategies toward Achieving Our Goals
3-4. Management System for Sustainable Growth
3-5. Numerical Plan for the Interim Targets- 34 -

3-5. Numerical Plan for the Interim Targets

Expected Profit/Loss from Customer Services in FY2024
 By implementing various action items based on this plan, we will turn the deficits ofcustomer services into surpluses in five years and aim to build a solid financial structure.
Non-consolidated(unit: ¥ billion)

Consolidated(unit: ¥ billion)

+1.9
+0.4
+4.4
-2.5
+4.7

-3.8

-4.5

+1

-5.4

-1.6
Increase inbonus, IT
investment, etc.
FY2018resultPersonnel
expenses,+1.1
nonpersonnel
expenses,
Interest income,etc.
fees and commission
income, etc.
FY2019forecast

5 years later

+0.8

-0.4
Increase inbonus, IT
investment,
etc.

FY2024plan

FY2018result

-0.3

+1.1

-1.6

Personnel
expenses,non-personnel
expenses, etc.

Interest income,fees andcommission
income, etc.

Subsidiaries

FY2019forecast

FY2024plan

5 years later- 35 -

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/