Financial Results for FY2016

May 12, 20170(This page is intentionally left blank)
1

Contents
Highlights

3

Forecast for FY2017

Financial Results for FY2016※Unless otherwise provided herein, the figures shown are those of eachbank on a non-consolidated basis.

 Forecast for FY201718

 Main Points of FY2016 Financial Results 4

 Capital Adequacy Ratio / Rating

19

 Core Gross Business Profit5

 Shareholder Return20

6

Progress of the Initiatives andMeasures of the Integration

 Key Change Factors
in Core Gross Business Profit Loans and Deposits

7(Average Balance / Average Yield)

 Loans (1)(2)(3)
 Deposits

8-10 Day 180 Plan (Results etc.)

21-26

 Step-up 180 Plan

27-28

11

 Financial Assets under Custody(1)(2) 12-13
 Securities

14

 Expenses / OHR

15

 Credit Related Costs /Non-performing Loans

16 [Reference] Gain on Negative Goodwill

172Highlights
Financial Results for FY2016 (Results for 1H of Joyo Bank + 2H of Mebuki)◎ Consolidated net income* of Mebuki surpassed the forecast mainly because gain on negative

goodwill of ¥119.2 bn associated with the business integration exceeded the initial estimate.
<Mebuki> Consolidated net income ¥158.4 bn / Forecast ¥155.0 bn ＊ attributable to owners of the parent◎ The business integration synergy for the second half of FY2016 was ¥0.9 bn.

Earnings Forecast for FY2017 (Changes : year-on-year basis)◎ Consolidated ordinary profit and consolidated net income* are forecasted to increase by ¥ 6.2
bn to ¥58.5 bn and decrease by ¥118.4 bn to ¥40.0 bn respectively. ＊ attributable to owners of the parent
Non-consolidated net income <Joyo> ¥23. 0bn （-¥1.4 bn） <Ashikaga> ¥21.0 bn （-¥5.4 bn）◎ Synergy effect of the business integration of ¥2.7 bn is expected for FY2017.

Dividend◎ Year-end dividend for FY2016 is ¥6.50 per share, including commemorative dividend (¥1.00) forthe business integration of the Joyo Bank and Ashikaga Holdings.
◎ For FY2016, in line with an earnings distribution policy*, annual dividend projection is ¥11.00,
interim dividend and year-end dividend of which are ¥5.50 each.
＊ Aim to continue the stable dividend returns while taking into account both the maintenance of solid capital levels for the future growth andthe appropriate distribution of profits to our shareholders.
3Main Points of FY2016 Financial Results◇ Consolidated net income* of Mebuki surpassed the forecast mainly because gain on negative goodwill
associated with the business integration, which is ¥119.2 bn, exceeded the initial estimate.
＊ attributable to owners of the parent●Mebuki FG (JPY Bn)<Reference> Results of Joyo and Ashikaga (JPY Bn)
Consolidated

FY2016

Progress[Progress against forecast]

Forecast

FY2016
J+A

Ordinary profit

52.2

98.5%

53.0

Net income attributableto owners of the parent

158.4

102.2%

155.0

ResultGross business profit

187.5

Net interest income

153.4

27.6
6.3
(o/w gains/losses on bond transactions) 5.6
Net fees and commissions(exc. gain on negative
goodwill)

39.2

98.0%

40.0

・ Mebuki FG’s consolidated financial results for

Net other business income and Net trading income

Expenses

115.0

Joyo

Ashikaga-8.3 105.2 -6.2 82.3 -2.0 96.1% 92.3%-4.4 85.1 -4.6 68.2 +0.1 102.3% 101.4%-2.7 14.3 -1.1 13.2 -1.6 84.3% 79.7%-1.0 5.6 -0.4 0.7 -0.5 51.6% 47.4%-2.8 5.8 -1.7 -0.2 -1.0 62.2% 64.8%-0.2 68.5 +0.2 46.4 -0.5 98.7% 100.7%+0.0 34.7 -0.2 25.7 +0.3
-1.3 29.5 -0.0 17.5 -1.3

101.6%-8.0 36.7

110.1%

Non-personnel expenses

60.4
47.0

first half and those of Mebuki for the second

Net business income(before general allowance for loan

72.5

half.

Core net business income

-5.1
+0.2
-8.2
-5.3
+4.8
+2.5
-13.6
-1.0
-7.7

Credit related costs (a)+(b)9.5 +5.0

・ Gain on negative goodwill due to thebusiness integration amounting to ¥119.2bn
was recorded as extraordinary income (refer top.17).

・The business integration synergy for FY2016
is ¥0.9 bn lift. Synergy effect of the businessintegration of ¥2.7 bn is expected for FY2017.

66.9
Net transfer to general allowance for loan losses (a) -0.4
Net business income
73.0
Net non-recurrent gains/losses-4.0
o/w Disposal of non-performing loans (b) 10.0
o/w Gains/losses related to stocks, etc
9.7
Ordinary profit
68.9
Extraordinary income/losses-2.1
Net Income
50.8

Ashikaga

YoY
YoY
YoY
ResultResultChangeChangeChangeFY2016 include those of Joyo Bank for the

Personnel expenses

Joyo-6.5 35.8

-1.5

J+A

92.4% 79.8%

103.4%
89.8%
177.5%
95.8%-

30.8 -4.7 36.0 -0.4 96.3% 83.4% 110.8%-0.6 +0.0 0.1 +0.1
37.3 -6.5 35.6 -1.7 92.9% 81.2% 109.5%-1.7 -0.4 -2.3 -4.8
5.4 -0.0 4.5 +4.8 133.5% 108.6% 183.4%
7.5 +2.8 2.1 -0.3 244.2% 189.7%
35.6 -7.0 33.2 -6.5 97.0% 88.0% 109.0%-0.8 -0.1 -1.3 -0.9
24.4 -3.3 26.4 -4.4 103.8% 87.3% 125.7%
4.7

-0.0

4.7 +5.0 127.3% 95.3%

191.4%

4

＊ Figures in parentheses are changes on a year-on-year basis

Core Gross Business Profit (Gross Business Profit excluding Gains/Losses on Bond Transaction)◇ Core gross business profit decreased by ¥5.4 bn, net interest income and net fees andcommissions of which decreased by ¥4.4 bn and ¥2.7 bn from the previous year respectively.
◇ The drop in the profit is mainly attributable to a decline in loan yields and a decrease in fees related
to financial assets under custody.
●Joyo + Ashikaga (JPY Bn)(-4.4）
●Joyo
16.2%
15.5%

105.3
1.5
13.1

106.4
0.8
14.4

90.6

91.0

103.8
15.4

99.4
14.3

(-1.1)

89.8

85.1(-4.6)-1.4-0.1(+1.3)FY2015FY2016

15.2%

15.0%

(-5.4)

183.9

186.5

1.9

1.3

27.5

29.0

187.3
30.4

181.9
0.7

(＋1.8)

27.6(-2.7)Other

Net fees andcommissions
Net interest
income

154.4

156.1

157.9

153.4
(-4.4)-1.0

FY2013

FY2014FY2015FY2016

Net fees andcommissions/ Core grossbusiness
profit

FY2013

FY2014(＊) “Other” includes costs of interest rate swaps●Ashikaga(-0.9)

78.6
0.4
14.3

80.1
0.4
14.5

83.5
0.4
14.9

63.8

65.0

68.1

68.2

FY2013

FY2014FY2015FY2016

82.5
0.9
13.2

(+0.4)(-1.6)(+0.1)

5

Key Change Factors in Core Gross Business Profit
Net Interest Income,and Net Fees and Commissions (by Banking Subsidiary)

Key Change Factors (Joyo + Ashikaga)●Joyo + Ashikaga (JPY Bn)●Joyo
FY2014 FY2015 FY2016

+2.5
+1.4
+2.5

187.3

Net fees andcommissions
-2.7

-7.9

-5.4
+1.8

-3.0
+0.7

Ashikaga

FY2014 FY2015 FY2016
0.3
0.8
1.7
(-0.0)
(0.4)
(1.6)
1.1
3.7
3.6
(0.4)

YoY

Net interest income
Interest on loans and bills discounted
Interest and dividends on securities
Interest on deposits（-）
Other funding cost（-）

91.0
67.9
27.4
2.3
1.9

89.8
66.4
29.1
2.6
3.1

85.1
63.7
28.6
2.1
5.0

-4.6
-2.7
-0.5
-0.5
+1.8

Net fees and commissions
Fees related to investment trusts andinsurance
Fees related to loans
Fees on settlement-related businessInsurance premiums
Others

14.4

15.4

14.3

-1.1

6.9

6.4

4.6

-1.7

1.6
11.7
-5.0
-0.8

1.7
11.9
-4.0
-0.6

2.6
12.0
-4.2
-0.7

+0.8
+0.0
-0.2
-0.0

●Ashikaga
FY2016

Investment
Trust/Insurance
Other Net Fees
andCommissions
Other net
Business
IncomeOthersLoan Yields

Security
Interests

Deposits
Interests

Loan Volume

FY2015●Gains on Cancellation of Private Offering Investment Trusts among
Interests and Dividends on Securities(JPY Bn)

Annual(o/w 2H)
Annual(o/w 2H)

181.9

-3.5

Net interest income -4.4

Joyo

(JPY Bn)(JPY Bn)

FY2014 FY2015 FY2016

YoY

Net interest income
Interest on loans and bills discounted
Interest and dividends on securities
Interest on deposits（-）
Other funding cost（-）

65.0
55.0
12.4
2.5
-0.2

68.1
53.7
16.9
2.3
0.1

68.2
51.0
20.0
1.1
1.6

+0.1
-2.7
+3.1
-1.1
+1.0

Net fees and commissions
Fees related to investment trusts andinsurance
Fees related to loans
Fees on settlement-related businessInsurance premiums
Others

14.5

14.9

13.2

-1.6

7.4

7.5

5.7

-1.7

3.9
7.6
-3.4
-1.0

4.4
7.6
-3.5
-1.1

4.7
7.5
-3.9
-0.8

+0.3
-0.1
-0.4
+0.2

6

＊ Unless otherwise provided herein, the figures shown are the sums of domestic and international loans and deposits

Loans and Deposits (Average Balance / Average Yield) (Domestic and International）
Loans and Deposits (Average Balance)●Joyo + Ashikaga (JPY Bn)
12,218.1

9,107.1

12,542.3[Deposits]
YoY +365.8 bn（+2.8％)

13,242.9

12,877.1

Average Yields of Loans and Deposits
●Joyo
1.32%
1.21%

1.14%

1.29%

9,623.0

9,981.2

10,204.5[Loans]YoY +223.3 bn（+2.2％)

1.18%

1.11%

1.06%
1.04%

Yield spread
between loans
and deposits(1)-(2)

Deposits

Loans

Average yield on
loans (1)

0.03%

0.03%

0.03%

0.02%

FY2013

FY2014FY2015FY2016

Average yield on
deposits (2)●Ashikaga
1.45%

FY2013[Deposits]

FY2014FY2013

FY2015FY2014

1.40%

FY2016FY2015

1.35%
1.31%

1.28%
1.24%

1.20%
1.18%

FY2016

Joyo

7,450.1

7,599.3

7,834.1

8,063.8

Ashikaga

4,768.0

4,943.0

5,043.0

5,179.1[Loans]Joyo

5,274.9

5,577.5

5,808.2

5,958.9

Ashikaga

3,832.2

4,045.5

4,173.0

4,245.6

Average yield on
loans (1)

Yield spread
between loans
and deposits(1)-(2)

0.05%

0.04%

0.04%

0.02%

FY2013

FY2014FY2015FY2016

Average yield on
deposits (2)7＊Figures in parentheses are changes on a year-on-year basis

Loans (1)◇ Loans to individual customers increased by ¥247.2 bn (+6.1%) and housing related increased by¥241.8 bn from the previous year (refer to p.9).
◇ Loans to corporate customers decreased by ¥3.5 bn and those to local SMEs increased ¥61.7 bn
year-on-year (refer to p.10).
●Joyo + Ashikaga
9,406.6
1,282.7

4,692.7

9,845.8
1,327.3(JPY Bn)(+1.2％)

10,187.1

10,315.4●Joyo

1,232.9(-8.5％)

4,813.1

4,809.6(-0.0％)

3,746.2

807.3

843.4

758.3

(-10.0％)2,776.6

2,828.6

2,821.3

2,720.8(-0.2％)

Corporate

1,886.1

2,072.4

2,240.5

2,387.4(+6.5％)

Individual
customers

Mar-14Mar-15Mar-16

Mar-17

4,025.6

5,656.4

PublicsectorCorporate

Individual
customers

3,431.1

5,967.0

792.3
Publicsector

4,772.2

5,912.7

5,399.3
1,348.3(+0.9％)

4,272.8 (+6.1％)●Ashikaga(+1.7％)

Mar-14Mar-15Mar-16

Mar-17（＊） “Individual Customers” include sole proprietors(Reference) Foreign Currency Denominated Loans

45.6
40.4
5.1
Mar-14(JPY Bn)

128.3

91.9

104.5

86.3
5.5

98.8
5.7

12.2

Mar-15Mar-16

Mar-17116.0

4,007.3

4,189.4

4,274.4

4,348.4

490.3

519.9

504.8

474.6

(-5.9％)

1,971.9

1,995.6

1,984.5

1,988.2(+0.1％)

1,544.9

1,673.7

1,785.0

1,885.4 (+5.6％)

Mar-14Mar-15Mar-16

Mar-17

PublicsectorCorporate

Joyo
Ashikaga

Individual
customers8

＊Figures in parentheses are changes on a year-on-year basis

Loans (2) Housing related loans / Unsecured Loans
Housing Related Loans (Term-end Balance)●Joyo + Ashikaga (JPY Bn)
3,139.2
631.2

2,507.9

Mar-14

3,443.9

3,709.5
813.9

730.1

●Joyo

3,951.3(+6.5％)

900.3(+10.6％)(+7.3％)
Apartment
loans

2,713.6

Mar-153,050.9

2,895.4

Mar-16(+5.3％)●Ashikaga

Housingloans

Mar-17

1,714.1

496.9

1,897.0580.6

2,062.0

2,213.7

651.0

724.0

(+5.4％)(+11.2％)

1,425.1
134.3

1,546.9
149.5

1,647.5
162.9

1,737.6
176.3 (+8.1％)

1,217.1

1,316.3

1,410.9

1,489.6 (+5.5％)

1,290.8

1,397.4

1,484.5

1,561.3 (+5.1％)

Mar-14Mar-15Mar-16

Mar-17Mar-14Mar-15Mar-16

Mar-17＊”Apartment loans” include those to corporate customers

Unsecured Loans (Term-end balance)●Joyo + Ashikaga(JPY Bn)●Joyo

Employee-specific Website (Joyo) Ashikaga starts to make use of theemployee-specific website from Oct. 2017

●Ashikaga(+15.2％)

118.5
103.7

136.6
62.4

(+11.0％)(+16.8％)
Card loans

53.4
47.1
3.9
26.9
25.8

5.5
29.8
29.8

6.8

Free loans

67.8
23.7
0.8

32.6 (+9.3％)
Educational
loans

34.8 (+16.7％)

24.1

73.9
25.1
0.7
26.3

82.0
28.1
0.7

Mar-16

Mar-17

35.9

19.2

21.8

25.0

Mar-15Mar-16

Mar-17

Client companies

600

28.3
4.8
3.5
8.0

400

54.6

8,404

300

23.4
3.1
2.8
6.6

500

700

34.3

(As of Mar. 31, 2017)

Users of web-based 697 thousand people
service for client
employeeof which, Payroll
281 thousand people
account holder(+22.4％)

44.6

28.2

Car loans

Mar-15(Thousandpeople)

6.1
4.4
9.8

Mar-15 Mar-16 Mar-17

200
100
0
Oct-12Mar-13Mar-14Mar-15Mar-16

Mar-17

9

＊Figures in parentheses are changes on a year-on-year basis

Loans (3) Loans to corporate customers (by Area / Company Size)●Joyo + Ashikaga (JPY Bn)
Balance by Area

4,759.8 4,798.7 4,794.2●Ashikaga
Tokyo

Tokyo

2,776.6 2,828.6 2,821.3
Neighboring(-66.2) Prefectures

1,868.1 1,839.7 1,773.5

Tochigi

902.4

943.2

867.4

866.6

875.7

Local

3,020.3(+61.7)

Ibaraki

112.4
216.8
95.3

120.5
220.3
103.0

131.2
226.1
110.6
Local

1,020.0 1,037.6 1,025.3

1,493.2

4,759.8 4,798.7 4,794.2

Large(-50.9)1,696.2 1,610.4 1,559.5(-1.1)

206.9

Mid-sized●Joyo

1,166.0

1,133.9 (-32.0)

Saitama
Ibaraki

1,983.1 1,970.1 1,972.9
536.2
31.4
296.6
101.5
245.1

492.7
27.0
325.2
111.2
250.1

445.7
28.0
355.6
120.8
257.5

772.1

763.6

765.1

Gunma
Tochigi(-47.0)Local

1,527.0(+49.9)

Large

Large

Mid-sized

Mid-sized

SMEs

SMEs

114.3

Fukushima●Ashikaga

2,776.6 2,828.6 2,821.3

1,199.2

Tokyo

Mar-15 Mar-16 Mar-17

Mar-15 Mar-16 Mar-17●Joyo + Ashikaga (JPY Bn)

237.4

Chiba/
Saitama
Fukushima/
Miyagi
Tochigi＊The balance of Ashikaga doesn’t
include loans to financial
institutions, which is ¥15.3 bn.
(Mar-17)(+11.8)Mar-15 Mar-16 Mar-17

208.0

1,331.9 1,347.0 1,327.8 (-19.1)

Ibaraki

998.5

1,121.5 1,148.8 1,146.1

Balance by Company Size

●Joyo

103.3

99.1

(-4.2)

1,983.1 1,970.1 1,972.9

SMEs

425.6
107.8

(-18.7)(+3.1)

1,362.9 1,420.9 1,439.3(+18.4)

497.0
123.1

444.4
104.7

(+47.3)2,825.8 2,980.1 3,027.4

1,462.9 1,559.2 1,588.1 (+28.9)

Mar-15 Mar-16 Mar-17

Mar-15 Mar-16 Mar-17

Mar-15 Mar-16 Mar-17

10

＊Figures in parentheses are changes on a year-on-year basis

Deposits◇ Deposits of individual and corporate customers have been on the increase. (Individual
customers : YoY +2.7%, Corporate customers : YoY +1.3%)●Joyo + Ashikaga (JPY Bn)
12,448.8724.6
2,627.1

9,097.0

12,814.1

727.8
2,741.9

9,344.2

13,327.9
804.4

●Joyo

(+1.8％)

13,572.9
Public751.0 (-6.6％) sector
Corporate

3,020.8

3,062.8(+1.3％)(+1.6％)

8,103.3

8,240.3
424.0
1,747.4

7,490.9

7,728.7372.0
1,471.0

390.8
1,542.1

458.1
1,738.2

5,647.8

5,795.7

5,906.8

6,068.9

Mar-14Mar-15Mar-16

Mar-175,224.5

5,332.5

Mar-15346.2
1,282.5323.9
1,315.4

9,502.6

9,762.1(+2.7％)

Mar-16

4,957.8

Mar-17352.5
1,156.0(Reference) Foreign Currency Deposits
165.6
127.7
76.7
58.3
18.4
Mar-14

71.1
54.6
16.4
Mar-15(-7.4％)

Individual
customers

111.4
16.3
Mar-16

140.7
24.8
Mar-17(+2.7％)(+2.0％)

5,085.3
337.0
1,199.8

Public sector(-6.4％)(+2.5％)

Corporate(+2.7％)

Individual
customers

Joyo
Ashikaga

Corporate(+0.5％)

Individual
customers●Ashikaga
Mar-14

Public sector

3,449.2

3,548.5

3,595.7

3,693.1

Mar-14Mar-15Mar-16

Mar-17※1 “Corporate” includes financial institutions.
※2 Foreign currency deposits include foreign currency deposits hedged by forward exchange contracts, offshore deposits, and so on.

11

Financial Assets under Custody (1) Sales Amount / Sales Commission◇ The sales amount of investment trusts and insurance products of each bank decreased due to theconcern over the unstable financial market.
◇ Both banks have been focusing on broadening its customer base (refer to p.13).

Sales Amount●Joyo + Ashikaga (JPY Bn)
731.8

759.2

59.0
86.9

74.8
57.1
106.8

136.9

737.9
88.0
32.4
182.4

677.7
110.8
31.7

125.2
132.2

106.6

320.2

●Joyo
Financial instrumentsintermediary service
JGB etc.

395.0

327.9

Sales Commission

FY2014FY2015Investment trusts

13.1
0.2 0.2
0.6

4.2

3.9

14.8
0.4 0.0
0.7
5.2

FY2013

FY20148.2

FY2015

84.7

124.4

95.0

21.4

187.4

244.9

94.7
24.7

0.6

16.7
12.5

168.2

49.1
61.3

83.1

208.1

204.0

222.9
1.8
16.4
11.8

42.7

198.0
3.3

11.0
14.2

45.3

290.1

162.2
16.1
7.0
30.1

24.9
129.2

31.2
74.6

FY2013●Joyo

11.7
JGB etc.
0.5
0.9 0.0

Foreign currency
deposits
Insurance

9.7

73.0
40.7

150.1

FY2014123.9

FY201583.9
FY2016●Ashikaga

Financial instrumentsintermediary service

3.4

8.1

58.4

515.5

FY2013 FY2014 FY2015 FY2016

FY2016●Joyo + Ashikaga (JPY Bn)
15.2
0.3
0.6 0.2

539.9

56.1
158.5

FY2013

536.3

82.5
Insurance

316.6

523.7
70.2
Foreign currency
deposits●Ashikaga

6.6

FY2016

Investment trusts

6.4
0.2
0.4

8.0
0.3
0.5
2.2

1.9

3.6

4.7

7.5
0.3
0.6

6.6
0.0

5.4
2.6

3.8

0.3
1.4

3.2

FY2013 FY2014 FY2015 FY2016

0.2

1.9

7.2
0.0

7.2
0.1

2.0

2.5

6.2
0.3
1.9

4.4

4.9

4.4

FY2013

FY2014FY2015

3.4
FY201612

＊ Foreign currency deposits include foreign currency deposits hedged by forward exchange contracts

Number of
NISA Account Openings

Financial Assets under Custody(Balance)

Financial Assets under Custody (2) Balance / NISA （Nippon Individual Savings Account Program）●Joyo + Ashikaga(JPN Bn)

340,848353,723

340,552●Joyo●Ashikaga

JGB etc.

191,616 190,950 197,224
1,815.9

1,869.2

478.7

1,784.9

1,789.7

366.7

273.8

225.8

70.1

94.8

76.7

718.4

667.9

757.5

Foreigncurrency
deposits
Insurance

156.0

298.1

781.3

592.3

713.8

658.6

626.3

Mar-14Mar-15Mar-16

Mar-17

Investment
trustsNumber ofcustomers●Joyo (Thousand)

58.3

388.7

239.2

186.2

155.3

53.7

78.5

131.2

423.3

445.5

454.1

771.9

780.2

180.6

127.5
16.4

18.4

749.2

753.7

87.6

70.5

16.3

24.8

279.2

295.1

312.0

327.2

298.8

372.7

325.4

295.2

293.5

341.1

333.2

331.1

Mar-14Mar-15Mar-16

Mar-17Mar-14Mar-15Mar-16

Mar-17●Ashikaga (Thousand)
68

53

148,936 149,898 156,499

1,044.0 1,089.0 1,035.7 1,036.0

69

74

75

57

45

Mar-14 Dec-14 Mar-15 Dec-15 Mar-16 Dec-16 Mar-17

55

58

Dec-14Mar-1565

67

Dec-15Mar-1672

73

Dec-16

Mar-1742

Mar-1413

Securities◇ Considering the interest rate of Japanese yen, suspended reinvestment of redemption payments of
JGBs, which results in a decrease of the amount of domestic bonds held.
◇ Continue to rebalance our portfolio through purchasing investment trusts and foreign bonds, while
paying attention to risk management.
Term-end Balance(Balance Sheet Amount)●Joyo + Ashikaga●Joyo(JPY Bn)

3,972.2

4,065.1

4,210.6

401.3

567.2

753.8

365.6

326.5

346.5

551.4

614.8

679.6

Investment
trusts etc.
Stocks●Ashikaga

2,735.4

2,739.5

2,793.5

250.7

301.5

339.0

248.9

266.7

441.7

456.5

280.6

382.7
Foreign bonds

2,653.7

2,556.5

2,430.6

1,821.2

1,747.1

1,731.1

Unrealized Valuation Gains (Losses)
on Available for Sale Securities

Domestic
bonds

Mar-15Mar-16

Mar-17●Joyo + Ashikaga
58.1

180.9

9.2
51.7
Mar-15

33.9

237.3
23.5

143.8
170.8

11.0
75.3
Mar-1645.6-2.6
Mar-1716-Mar17-Mar●Joyo(JPY Bn)

300.1
264.1

15-MarInvestment
trusts etc.

232.6

Stocks44.2

Foreign bonds

Domestic
bonds

144.7

1,236.8

1,325.7

1,417.1
414.8

150.5
85.0
168.7

265.6
173.0

223.0

832.5

809.3

699.5

Mar-15Mar-16

Mar-17

77.6

79.7●Ashikaga

192.5

186.0

25.1

22.9

114.4

7.0
36.6

8.5
44.3

Mar-15Mar-16

138.8

67.5

71.6

13.9

8.7

36.2

26.0
-1.8
Mar-172.1
15.1
Mar-15

29.4

2.4
30.9
Mar-16

51.3
0.5
31.9

19.5
-0.7
Mar-1714

Expenses / OHR◇ Despite the fact that taxes such as size-based business tax increased, expenses decreased (by ¥0.2
billion on Joyo-Ashikaga simple-sum basis) compared with the previous fiscal year, mainly due todecreases in non-personnel expenses centering on depreciation expenses.
●Joyo + Ashikaga (JPY Bn)

●Joyo
66.7%

65.1%

64.0%
61.2%

64.3%

62.1%
58.8%

119.6
5.2

117.9
5.8

61.3%
Taxes

51.5

69.8

68.2

68.5

3.0

3.4

3.7

4.2

32.3

31.8

29.5

29.5

35.1

34.5

34.9

34.7

FY2013

FY2014FY2015FY2016(-0.2)

115.3
6.5

115.0
7.4

(+0.9)(-1.3)

52.4

70.6

48.4

47.0

Nonpersonnel
expenses●Ashikaga
61.2%

Personnel
expenses(+0.0)

61.8

FY201360.5

FY201460.3

FY2015＊OHR ＝ Expenses / Core gross business profit

60.4

FY2016

59.6%

55.7%

56.4%

48.9

48.0

47.0

46.4

2.1

2.3

2.8

3.2

20.1

19.6

18.8

17.5

26.6

26.0

25.3

25.7

FY2013

FY2014FY2015FY2016＊The depreciation method
has been changed from thedeclining-balance method tothe straight-line method,which decreased
depreciation expenses by¥0.7 bn.

OHR

15

Credit Related Costs / Non-performing Loans◇ In the second half of FY2016, despite of the fact that credit related costs increased mainly due to an
extraordinary factor, number of bankruptcies of local businesses remains low level.

Credit Related Costs<Reference (1)> Credit Related Cost Ratio(JPY Bn)

FY2013

6.5

FY2014FY2015FY2016

Ashikaga
Joyo

3.2
3.2
2.3

2.1

1.4

1.2

0.9

0.9

1

14

2

14

3.0

1.2
1.1
2.6

1

15

1.5

2.1

2

15

0.032%

0.082%

0.079%

Ashikaga

0.193%

0.066%-0.006%

0.112%

1H14

1.4

1

16

2

16

Non-performing Loans

2H14

1H15

(Cases/JPY Bn)

2H15

1H16

2H16

IbarakiPrefecture

number

71

83

53

65

62

64

amount

17.1

32.0

18.3

12.6

10.4

9.0

Tochigi
Prefeture

number

62

86

71

59

66

78

amount

11.0

19.7

6.2

10.3

12.3

13.3

（＊） Numbers of bankruptcies of enterprises with 100 million yen or more in net debt

●Joyo (JPY Bn)
1.91%

0.120%<Reference (2)> Business Failures

3.3

-1.4

2.01%

Joyo

●Ashikaga (JPY Bn)
1.79%

1.74%

Bankrupt and substantiallybankrupt claims

2.31%

2.22%

1.61%

2.10%

2.04%

2.08%

Doubtful claims

115.0

111.6

7.0

5.6

81.1

77.2

107.0
6.0
74.8

104.5

98.2

7.0

7.0

71.3

69.7

Claims requiring monitoring

Non-performing loan ratio

98.4

94.9

91.4

88.7

92.4

6.8

5.3

72.5

72.0

4.9
66.1

6.0
65.4

7.5
69.1

26.8

28.7

26.1

26.0

21.3

19.0

17.5

20.3

17.1

15.7

Mar-15

Sep-15Mar-16

Sep-16

Mar-17Mar-15

Sep-15Mar-16

Sep-16

Mar-1716

Gain on Negative Goodwill (Reference)【Legal Form of the Business Combination】【Accounting for Business Combinations(Reverse Acquisition / Purchase Method)】

Share Exchange on October 1,2016

Gain on negative goodwill of ¥119.2bn is recorded in
extraordinary income

Ashikaga HD ： Parent company
Joyo Bank ： Wholly owned subsidiary

Joyo Bank ： Acquiring company
Ashikaga HD ： Acquired company【Image ( As of October 1, 2016)】

Mebuki FG

Joyo Bank

Total Net Assets (consolidated) : ¥824.7bn
Joyo Bank’s
Total Net Assets(Consolidated Basis)

Total Net Assets(Consolidated Basis)¥582.0bn＋

Ashikaga HD
Fair Value of Net Assets(Consolidated Basis) （※１)¥242.7bn＝¥582.0bn
Capital Surplus¥123.5bn
Retained Earnings¥119.2bn(※2) Acquisition Cost of Ashikaga HD(※3) Gain on negative Goodwill

The difference between the acquisition cost and the fair value of net assets of Ashikaga HD is gain on negative goodwill.
Fair Value of Net Assets(※1)
This figure is equivalent to the fair valueof assets and liabilities of Ashikaga HD(after deduction of Ashikaga HD’s positive
goodwill on the balance sheet).

Acquisition Cost of Ashikaga HD (※2)
The acquisition cost in the purchase method, which isequivalent to the market capitalization of Ashikaga HD, isrecorded in capital surplus.
◇Ashikaga HD’s number of shares after adjustment / Exchange Ratio(1.17) ×Closing price of Joyo’s stock at the final trading date.

Gain on Negative Goodwill (※3)
Gain on the negative goodwill is recorded
in extraordinary income on the
consolidated income statement and inretained earnings on the consolidated
17
balance sheet.

Forecast for FY2017◇ For FY2017, the projection of consolidated ordinary profit and that of consolidated net income* are¥58.5 bn (YoY +6.2 bn) and ¥40.0 bn (YoY -¥118.4 bn) respectively.
◇ Synergy effect of the business integration of ¥2.7 bn is expected for FY2017 (The businessintegration synergy for the second half of FY2016 was ¥0.9 bn).
＊ Attributable to owners of the parent●Joyo + Ashikaga + Non-banking Subsidiaries●Mebuki FG（JPY Bn)[Consolidated]
Items
Interim

Items

AnnualOrdinary Profit

32.0

58.5

Net income attributable toowners of the parent

22.0

40.0

Net income[non-consolidated]
YoY
Interim
AnnualchangeAnnual27.5●Joyo (non-consolidated)●Joyo + Ashikaga
Items

Interim48.0●Ashikaga (non-consolidated)[non-consolidated]

Items

Interim

Annual[non-consolidated]

YoY
Change

Items

Interim

AnnualYoY
ChangeCore net businss
income

33.5

63.0

-3.9

Core net businss
income

17.0

32.5

+1.6

Core net businss
income

16.5

30.5

-5.5

Ordinary profit

37.0

64.0

-4.9

Ordinary profit

19.5

33.5

-2.1

Ordinary profit

17.5

30.5

-2.7

Net income

25.5

44.0

-6.8

Net income

13.5

23.0

-1.4

Net income

12.0

21.0

-5.4

18

Capital Adequacy Ratio / Rating
Capital Adequacy Ratio● JoyoCapital adequacy
ratio
1,400.0

12.60%

12.40%

12.00%

11.86%

9.01%

9.17%

14.00%

1０.６２％(consolidated)

1,200.0● Ashikaga
1,000.0
Capital adequacy
ratio(consolidated)

8.96%

261.0

250.2

299.0

274.7

6.00%

789.0

4.00% ■ Mebuki FG

440.0

435.8

451.5

457.5

Mar-14Mar-15Mar-16

Mar-17

Capital (consolidated)

2.00%

0.0

(JPY Bn)● Mebuki FG
Capital adequacy ratio(consolidated)

8.00%

400.0

■ Joyo200.0
Capital (consolidated)

12.00%
10.00%

800.0■ Ashikaga
600.0
Capital (consolidated)(JPY Bn)

9.01%(JPY Bn)

0.00%
Mar-17<Reference> Capital Adequacy Ratio without Temporary Measure (consolidated)※Calculation method of risk weighted assets
Mebuki FG ： The fundamental internal rating based approach
Joyo ： The fundamental internal rating based approach
Ashikaga ： The standardized approachMar-14Mar-15Mar-16

-

-

-

9.49%

Joyo

11.35%

11.51%

11.17%

11.52%

Ashikaga

8.67%

8.64%

8.77%

9.00%

Mebuki FG

RatingMar-17○ Moody’s○ R&I (Rating and Investment Information, Inc.)

Mebuki FG

Joyo

Ashikaga

Joyo

A

A+

A+

A2
19

Shareholder Return －Mebuki Conducts a Shareholder Benefit Plan－
Dividend Policy[ Earnings Dividend Policy ]Aim to continue stable dividend returns while taking into
account of both the maintenance of solid capital levels forthe future growth and the appropriate distribution of profits
to our shareholders○ For FY2016, year-end dividend is ¥6.50 per share,including a commemorative dividend of ¥1.00 for thebusiness integration(Reference) Dividend payout ratio (FY2016) : 7.6%
Dividend payout ratio excluding an extraordinary factor * : 26.9%＊The later ratio is calculated as shown below:
Dividend (Interim dividend of Joyo and Ashikaga HD + Year-end dividend of Mebuki)
Consolidated net income (1st half of Joyo and Ashikaga HD+ 2nd half of Mebuki FG [ exc. Gain on negative goodwill ])○ For FY2017, annual dividend projection is ¥11.00 per
share in line with the earnings dividend policy (Dividend
payout ratio estimate : 32.3%).

[ Dividends per Share ]FY2016Year-end Dividend¥6.50(Incl. commemorative
dividend of \1.00)[ Contents of the Plan ]Depending on the number of shares held,
shareholders can choose items from a dedicatedcatalog that lists local specialties and so forth.

AnnualDividend

Interim
Dividend

Year-end
Dividend¥11.00

¥5.50

¥5.50

[ Contents of the Shareholder Benefit Plan ]Number of shares held

Items that can be selected

1,000 shares or more but
less than 5,000 shares

Equivalent to2,500 yen

5,000 shares or more but
less than 10,000 shares

Equivalent to4,000 yen

10,000 shares or more

Equivalent to6,000 yen

Shareholder Benefit Plan
[ Shareholders Eligible ]Shareholders recorded in the register ofshareholders as of March 31 of every year andholding 1,000 shares or more at the record date.

FY2017

Approx. 490 items
centered on
specialty products
fromIbaraki Prefecture andTochigi Prefecture*＊The number of items listed on the FY2016 Joyo Bank's shareholder benefit catalog is 316.

20

Progress of the Initiatives and Measures of the Integration－Results of the Day 180 Plan－Group
Companies
Individual
Customers
Corporate
Customers

Campaign

Assetsunder
Custody

Action Plan

ChannelItems
Lowering transfer fee
between both banks
to the inter-branch rate
Shared use of ATMs
for deposits
Securities
Leasing

Joint fundDetails
Lower the fee for transfer between the two banks to theinter-branch rate for teller transactions, ATM transactions,and internet banking transactions.
Make it possible to deposit money using a cash card
issued by either bank at the other bank's ATMs.
Start to intermediate financial products carried by Joyo
Securities at 13 branches of Ashikaga Bank to which fulltime financial consultants belong.
Ashikaga Bank begins to offer Joyo Lease’s auto leaseproducts.
Commemorating the business combination, establish andsell an investment trust named "Two Dreams" whichinvests in companies related to Ibaraki and Tochigi
Prefectures.

Investment product campaign

All customers have a chance to win local specialty items
by lottery if they obtain investment products worth at least
200,000 yen or start to accumulate investment trusts.

Car loans andeducational loans campaign

Preferential Interest Rates

Internet banking campaign
for corpotrate customers

Exemption of activation fee and three months of monthly
fees for new subscribers.

Business seminar

Members of either bank’s reserch institute can takeseminars of the other reserch institute at preferential
rates.

Results (Oct. 2016 - Mar. 2017)(Figures in parentheses are YoY changes)
Sales amount of the whole group
Sales amount\78.2bn (+41.6bn)
o/w Foreign bonds\62.3bn (+36.5bn)
Number of referrals to Joyo Lease
3,258(+1,401)
Results of the whole group
Sales amount\20.2bn(Attained 101.3% of our target of \20bn)
Number of sales
9,117
Sales amount (Campaign performance)
Investment trust\28.2bn(+3.6bn)
Foreign currency deposits \2.3bn(+1.4bn)
Accumulation service
4,206(-394)
Preliminary application
Car loans\20.3bn / 10,958 loans
Educational loans \11.4bn / 4,309 loans
Amount of loans madeCar loans\7.7bn / 4,515loans
Educational loans\5.5bn / 1,990loans
New contracts of the whole group
New subscribers
3,642(+781)
Optional services
1,417
Mutual participants 52 from 33 companies

Framework

Others【As of the end of Jan. 2017】

Deploy "liaison officers" at both banks' headquarters andestablish "Regional Collaboration Meeting" at 10 areas
in order to enhance the collaboration between Joyo Bank
Regional collaboration meeting and Ashikaga Bank on introducing customers and cofinancing
Liaison officer

Co-financing\2,349mil /13borrowers
Syndicate loans\4,405mil /25borrowers
Number of referrals \1,760mil /24borrowers
Total\8,514mil /62borrowers

21Day180 Plan ／ Other Initiatives and Measures【Regional Revitalization】
Food Exhibition
In Mito City

Food BusinessMeetingin Utsunomiya City

• Product development• Sales channel cultivation• Test marketing• Sales channel development＜refer to p.23＞＜refer to p.23＞

Conducted on Oct. 12, 2016

Conducted on Nov. 22, 2016

MebukiMebuki Financial Group

Business Award

Manufacturing
Business Forum2017＜refer to p.24＞

Regional
Revitalization Fund＜refer to p.25＞• Support business meetings
through technical proposal
booklet and panel exhibition＜refer to p.26＞
Conducted on Feb. 22, 2017

【Regional Interaction】【Organizational Integration (Personnel Exchange)】
Joint-Training

Economic Lecture (held 8 times in the 2H FY2016)
Introduced Mebuki FG in the main cities for both banks at the time of
the lectures (Presidents of both banks took part in the lectures in theunderlined cities below).

•【Venue】 Tochigi Pref.: Utsunomiya, Ashikaga
Ibaraki Pref.: Mito, Tsukuba, Hitachi, Kashima, Shimodate
Fukushima Pref.: Koriyama•

Regional Collaboration Meeting

Held rank-based trainings inEstablished “Regional Collaboration

which 1,000 employees

Meeting” at 10 areas to enhance

participated.

collaboration between Joyo Bank andShared each other’s training

Ashikaga Bank on introducing

program.

customers and co-financing.

【Other Initiatives and Measures】○Integration of overlapping branches： Integrate four of Joyo’s branches into two in Ustunomiya city and Moka city
(on Apr. 3, 2017)○Operational efficiency improvement: Shared card issuing process, which reduces cost by approx. ¥18 mil per year
○Business alliance with crowd funding service “Makuake”(Ashikaga) First deal completed (Joyo) Developed affiliated loan

22

Initiatives of Day 180 Plan －Local Products Support Project－ Held “Food Exhibition in Mito City” and “Food Business Meeting in Utsunomiya City” for food related business
operators.
 Dividing the value chain of local products from development to sales into four stages below, provided seamlesssupport through appropriate measures depending on the stage.
1.Product Development

2.Test Marketing(Improvement of Products)

3.Sales Channel Cultivation

Food Exhibition in Mito City

Food Business Meeting in Utsunomiya City

Date

October 12, 2016

Place

Mito Plaza Hotel (Mito, Ibaraki Pref.)Exhibitors

100 companies

Evaluators

505＜Contents＞• Food related business operators exhibited their products and international
students and housewives experienced the products and evaluated them.
• Evaluation based on taste, price, package and so forth.
• Support food related operators’ future product development and test marketing.

Venue

Evaluators

4.Sales Channel Development

Awards
Ceremony

Date

November 22, 2016

Place

Marronnier Plaza (Utsunomiya, Tochigi Pref.)Exhibitors

327 companies (Tochigi: 142, Ibaraki: 94)

Visitors

Approx. 3,000

Meetings Held

451

＜Contents＞• Exhibition where selling enterprises promote their products• Business meetings which require reservation• Support food related business operators’ sales channel expansion• Number of buyer enterprises that participated: 148

Exhibition of Prize-winning Productsof the Food Exhibition

Venue

Business
Meeting23

Initiatives of Day 180 Plan －Mebuki Business Award－ In commemoration of the establishment of Mebuki Financial Group, each bank’s business award was integrated
together and the first “Mebuki Business Award” is being held.
 Ingenious business ideas latent in both banks’ vast business territory are gathered and the best entries will bepresented with awards.
 After the award, consistent support is provided, including financial support such as formulating business plans andlaunching new businesses through financing and so forth.
Preliminary Judging○Each bank collects and evaluates plans（Document Screening / External Evaluation）

Final Judging

Final Judging Ceremony (May 15, 2017)○Grand Prix, Excellence Award, and Special Award（Presentation / External Evaluation）
TargetBusiness
Categories

1.Manufacturing 2.Agriculrure / 6th Industrialization 3.Environment / Energy 4.Medical/ Nursing Care 5. Advanced Technologies 6.Overseas Expansion 7.Regional
Revitalization, etc. 8.New Business, etc.

Application
PeriodFrom December 1, 2016 to January 31, 2017

Judging
Process

Preliminary Judging： Document Screening
Final Judging: Presentation

AwardsGrand Prix：1 plan（¥3mil）, Excellence Award：Several（¥1mil）,
Special Award： Mebuki Award, Hitachi Award, Encouragement Award： Several

Sponsors

Sponsors： Mebuki Financial Group, Joyo Bank, Ashikaga Bank
Co-sponsors： Joyo Industrial Research, Ashigin Research Institute

Number ofApplicants

646*
Joyo 344
Ashikaga 302＊Record high24Initiatives of Day 180 Plan －Mebuki Regional Revitalization Fund－【Invest】【Invest】

Mebuki Regional
Revitalization Fund
Sompo Japan Nippon
Insurance

Fund Size: ¥2 bn【Management Support】【Invest / Manage】

Outline of the Fund
Establishment: November 14, 2016

Joyo Industrial
Research

Ashigin ResearchInstitute

Its investment limit
is planed to be increased
based on the possibilities of investment
in new businesses

Investment Period: 10 years
Methods: Capital Contribution, etc.
Structure: Investment Business Limited
Partnerships

Businesses operators
who contribute toindustrial developmentin
food, agriculture,and tourism sectors

Food

Agriculture

TourismAmount / Number of deals¥1.2 bn / 4 deals (as of May12, 2017)(Completed Deals)
1. World Farm (Tsukuba city)
Date: Jan. 31, 2017 / Amount： ¥100 million
2. HATAKE Company (Tsukuba city)
Date: May. 31, 2017 / Amount： ¥200 million
3. SS Food International (Ichikawa city)
Date: Apr. 25, 2017 / Amount: ¥200 million
4. Hayakawa Holdings (Ashikaga city)
Date: Apr. 28, 2017 / Amount: ¥700 million＜Investment Target＞
・Operators who contribute to industrial development in food, agriculture, and tourism sectors(including agricultural corporations)・Prize winners of Mebuki Business Award etc.
25

Initiatives of Day 180 Plan －Manufacturing Business Forum－ A record number of 314 companies, including Ashikaga Bank’s 72 customers, exhibited at this year’s forum （including 11 overseas
companies）
 Distributed English version of the technical proposal booklet for the first time and coordinated business meetings with overseas
companies.
 With the full cooperation of SUBARU CORPORATION

・ Exhibitors: 314 companies(Gunma Manufacturing Division), set up exhibition booth of・ Visitors: 850 companies / Approx. 2,000 people

seven Tier 1 manufacturers.

・ Business meetings based on technical proposal

Conducted demonstrations which can offer clues to manufacturing→ Sango Co., Ltd. and Sango Kanto Co., Ltd. exhibited laborsaving machines which are used in the companies’ factories.

booklet: 390 meetings
・ Business meetings between Joyo Bank’s customers
and Ashikaga Bank’s customers: 90 meetings→ A venture company spun off from The Industrial Technology
Research Institute of Taiwan demonstrated a walking support robot.
 Three prize-winners of Joyo Business Award conducted presentations.

＜Technical proposal booklet (English Ver.)＞＜SUBARU CORPORATION’s booth＞＜Labor Saving Machines＞
26

Step-up 180 Plan －For Individual Customers－
Support Customers’ Asset Building<For the First Investment> First Investment Campaign (Jun.-Dec. / under planning)
Reward customers who open a new account, andpurchase financial products (¥100,000 or more) or start anaccumulation service for investment trusts (¥10,000 per
month or more) with prizes.

Support Customers’ Housing Acquisition<Housing Loans> Housing Loan for Women (Apr.-) A maximum two-year grace period of principal payment

during maternity and child care leave period Exemption of prepayment fee
 Exemption of group credit life insurance premium Online Application Housing Loan (May-)<For Additional Investment>
 Mebuki Securities (Apr.-)Ashikaga Bank started to intermediate financial products
carried by Joyo Securities at its all branches.

 Foreign Bond Campaign (Apr.-Jun.)
Reward customers who purchase foreign bonds directlyfrom Mebuki Securities or from the securities company
through any of Mebuki’s banking subsidiaries with gift
certificate or local specialties.

<Others>
 Mebuki FG Founding Commemoration Seminar(Apr.-Jun.)

 Foreign Currency Deposit Campaign(Jun.- Sept. / under planning) Preferential interest rates

 Exemption of prepayment fee
 Exemption of group credit life insurance premium

Unsecured Loans Motivates students to go to universities
located in Ibaraki and Tochigi Prefecture
Prevent student drain and increase student migration fromother prefectures as measures against population decline One-year Anniversary of Mebuki FG(Sept. 2017-Apr. 2018 / under planning)

Preferential interest rates for housing/educational loans
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Step-up 180 Plan －For Corporate Customers－<Support for Manufacturers>
 Manufacturer Training Workshop (Aug.-Sept.)
 Inform KAIZEN activities conducted by large companies
to our customers for productivity improvement.
 Achieve SMEs’ improvement of production managementand development of human resources through theworkshop.

 R&D Meet-up in Utsunomiya and Mito (May-Jun.)
 Provide opportunities for applicants to have discussions
with researchers of universities and research institute,concerning certain themes.
 Promote information exchange among the participants.

 Rebuild support structures for start-ups andsecond start-ups
 Construct a support structure for university-originatedventure businesses.
 Support Mebuki Business Award applicants to launch new
businesses. Investment limit of Mebuki Regional
Revitalization Fund is planed to be increased based on
the possibilities of investment in their businesses.

<Support for Agricultural Producers> Collaboration on Agri-Food Matching (Sept.) Joyo conducted a business matching event in Tsukuba
city to match agricultural producers and food processing
operators on a trial basis (Feb.)
 Another matching event is being planned, broadening its
area, which newly includes Tochigi Prefecture, andextending its scope to producer associations andmunicipalities.

<Support for Overseas Expansion>
 Cooperation on export support services (Mar.-) Cooperation with Japan Halal Business Association(Apr.-) Overseas business convention, businessnetworking, seminar (Jun.-) South East Asia Investment Seminar （Jun./ under planning ）(Present Investment limit : ¥2.0 bn / Investment amount : ¥1.2 bn)<Matching Event for Experienced Retirees and Local Businesses>
・Under the cooperation of Kanto Bureau of Economy, Trade and Industry and regional financial institutions, conduct matching
events to match companies experiencing various management issues, and retirees and those who are just before their retirement.
・Through matching companies experiencing management issues, such as development of new products, sales channel expansion,and experienced retirees, help the companies resolve management challenges.

28Inquiries :Mebuki Financial Group, Inc. Corporate Planning Department
TEL+81-29-300-2869 or +81-29-300-2603

E-mailir@mebuki-fg.co.jp

URL

http://www.mebuki-fg.co.jp/

This document has been prepared for information purposes only and does not form part of a solicitation to sell or purchase any securities.
Information contained herein may be changed or revised without prior notice. This document may contain forward-looking statements as tofuture results of operations. No forward-looking statement can be guaranteed and actual results of operations may differ from those projected.

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