Integrated Report2022

Hokuhoku Financial Group, Inc.

Company outline (as of March 31, 2022)
Company name: Hokuhoku Financial Group, Inc.
Date of establishment: September 26, 2003
Location of head office: 1-2-26 Tsutsumicho-dori, Toyama City
Purpose of business: Management and control of subsidiaries and affiliates and ancillary and related business
Capital: ¥70,895 million
Shares issued and outstanding:Common stock…………………………

128,770,814

Preferred stock (Type 5)………………

75,212,000

Exchange listings: ‌Tokyo Stock Exchange (Prime Market)
Sapporo Securities ExchangeThis document contains forward-looking statements. Statements of this kind do not constitute guarantees of future performance, as factors such as changes in
the operating environment may cause actual performance to differ.
The figures stated in this document are, in principle, rounded down to the nearest whole unit.

CONTENTSPROFILE……………………………………………………………………… 1
MESSAGE FROM THE MANAGEMENT…………………………………… 2
OUR STRENGTHS ………………………………………………………… 3
CHARACTERISTICS OF OUR MAIN BUSINESS AREA………………… 4
PERFORMANCE HIGHLIGHTS…………………………………………… 6
TOP MESSAGE……………………………………………………………… 8
DEPUTY PRESIDENT MESSAGE………………………………………… 14
PROCESS FOR VALUE CREATION……………………………………… 16
HOKUHOKU FINANCIAL GROUP SDGs DECLARATION AND KEY CSR ACTIVITY THEMES…… 18
RESPONDING TO CLIMATE CHANGE…………………………………… 20
STAKEHOLDER COMMUNICATION……………………………………… 22
LONG-TERM VISION AND STRATEGY…………………………………… 23
MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3)…… 24
BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION…… 33
CORPORATE GOVERNANCE………………………………………… 33
MEASURES FOR RISK MANAGEMENT……………………………… 38
MEASURES FOR COMPLIANCE……………………………………… 41
CORPORATE INFORMATION……………………………………………… 44
OUTLINE OF SUBSIDIARIES — HOKURIKU BANK……………………… 45
OUTLINE OF SUBSIDIARIES — HOKKAIDO BANK……………………… 46
DIRECTORS………………………………………………………………… 47
北北金融控股集团简要…………………………………………………… 48

PROFILE
ProfileSince its establishment in 1877, Hokuriku Bank has

The operations of the Hokuhoku Financial Groupextend beyond the limits of a single district.

developed an extensive network of branches throughout

Our extensive network is outlined below.

the Hokuriku district. On account of trade through the

Hokuriku district……………………………… 151 branches
Toyama prefecture……………………………… 93 branches
Ishikawa prefecture…………………………… 36 branches
Fukui prefecture………………………………… 22 branches

Kitamae-bune or “Northbound Ships,” branches extended
to the major cities of Hokkaido, enabling the bank tomeet customers’ needs. The Hokkaido Bank, which wasestablished in 1951, has developed a network of branches

Hokkaido……………………………………… 161 branches

throughout Hokkaido, and built a firm business structure

Three major metropolitan areas…………… 16 branches
9 branches
Tokyo and Yokohama…………………………
Nagoya…………………………………………
3 branches
Osaka and Kyoto………………………………
4 branches

centered on individuals and small and medium-sizedenterprises.
The Hokuriku Bank, Ltd. and The Hokkaido Bank, Ltd.
underwent management integration in September 2004 toform the Hokuhoku Financial Group Inc., which today oper-

Others (Sendai, Niigata, Nagano, Takayama)……

ates a super-regional financial network that encompasses

Overseas………………………………………
9 offices
New York Representative Office (Hokuriku Bank)
Yuzhno-Sakhalinsk Representative Office (Hokkaido Bank)
Vladivostok Representative Office (Hokkaido Bank)
Singapore Representative Office (Hokuriku Bank)
Bangkok Representative Office (Hokuriku Bank)
Dalian Representative Office (Hokuriku Bank)
Shanghai Representative Office (Hokuriku Bank)
Shenyang Representative Office (Hokkaido Bank)
Ho Chi Minh Representative Office (Hokuriku Bank)

the Hokuriku region, Hokkaido, and Japan’s three major
metropolitan areas (Tokyo, Osaka, and Nagoya areas).

May 2002

Comprehensive business alliance
between
Hokuriku Bank and Hokkaido BankMay 2003

Agreement on full integration ofmanagement of Hokuriku Bank andHokkaido Bank

4 branches(As of June 30, 2022)

Vladivostok

September
2003

YuzhnoSakhalinsk

Shenyang
DalianHokugin Financial Group, Inc.
established

Shanghai

Hokuriku Bank Group comes undermanagement of Hokugin Financial
Group

Bangkok
Ho Chi Minh

Singapore

Management integration effected
through equity swap
September
2004

New York

Hokkaido

Hokuhoku Financial Group, Inc. wasborn.

Hokuriku district
Ishikawa

Toyama

Fukui

Tokyo
Osaka

NagoyaThree major metropolitan areas
Hokuhoku Financial Group, Inc. Integrated Report 2022

1

MESSAGE FROM THE MANAGEMENT

Left: Hiroshi Nakazawa

Right: Yuji Kanema

President(concurrently serving as president of
The Hokuriku Bank, Ltd.)

Deputy President(concurrently serving as president of
The Hokkaido Bank, Ltd.)We would like to express our sincere gratitude for your continued patronage of
Hokuhoku Financial Group and its subsidiaries.
Due to the implementation of various government policies and the recovery ofoverseas economies, economic activities are gradually returning to normal.
However, the future outlook remains still uncertain due to the destabilization of theinternational situation and the re-expand of the COVID-19.
Under these circumstances, the Group has launched the new medium-term
management plan "Go forward with Our Region" (FY2022～FY2024) in order toachieve the Group's long-term vision "Sustainable growth together with local
communities and customers through problem solving”. We will work to strengthen
our consulting functions and to improve productivity utilizing DX, as well as promote
our business in new business areas such as the environmental field.
All officers and employees will work together to contribute to the sustainable growthof the region by solving the problems of the local community and customers.
We would like to ask for your continued support and patronage.
July 2022

Hiroshi Nakazawa
President
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Hokuhoku Financial Group, Inc. Integrated Report 2022

Yuji Kanema
Deputy President

OUR STRENGTHSOur Strengths

We contribute to the regions with our strengths and strive to grow sustainably.

Our solid customer base built over our long history■ Hokuriku Bank and Hokkaido Bank were established in 1877 and 1951, respectively.
■ It has been 18 years since the Group was formed in 2004.
■ Our solid customer base in Hokuriku and Hokkaido has been built over our long history.
Market Share in Hokuriku (Toyama, Ishikawa, Fukui)Market Share in Hokkaido#1 in deposit and lending#2 in deposit and lending

29.6%

19.9%

27.9%

16.8%

DepositLending
23.3%

19.5%

■ Hokuhoku Financial Group■ Regional competitors■ Other banks

Lending

9.3%

10.0%

27.7%

23.4%

Deposit

32.0%

31.0%

22.8%

31.1%

35.9%

39.6%

■ Community banks*Market shares are as of September 2021. They were calculated by the Group based on statistical data from Bank of Japan, think tanks and others. They exclude Japan Post Bank.
*The market shares of regional competitors and other banks are our estimates.

Our competent people■ Our people have diligence and pioneering spirits, each of which represents key characteristics of Hokuriku and Hokkaido, respectively.
■ We believe diversity makes us stronger, and we are dedicated to building a diverse workforce.
■ Our people have industry-leading expertise in such areas as business succession, agriculture, and cross-border businesses.
Women in management roles

CFP and 1st level FP holders

331

282

306

236

(March 2021)(March 2022)(March 2021)(March 2022)

Extensive branch network across multiple regions■ Our branch network spreads extensively across multiple regions, including Hokuriku, Hokkaido, Tokyo, Osaka and Aichi. We also haveglobal offices in foreign countries.
■ Our extensive branch network gives us a unique advantage in the industry in promoting business matching for our customers.
■ We are constantly optimizing our branches in terms of number, size, functions and operating hours.
Number of branches (June 2022)

Business matching deals across Hokuriku and Hokkaido (FY2021)

332 branches in Japan

171

161

branches in Honshu(Hokuriku, Tokyo, Osaka, Aichi and others)341

branches in Hokkaido

Leads

96

closed deals

9 global offices outside of Japan
1. New York 2. Bangkok 3. Singapore 4. Shanghai 5. Dalian
6. Shenyang 7. Vladivostok 8. Yuzhno-Sakhalinsk 9. Ho Chi Minh City

Strategic partnerships with key players■ We help our clients find technology partners from universities in our operating areas.
■ We help our clients expand their businesses in foreign countries.
Number of partnerships with municipalities(March 2022)

48

Municipalities

Number of partnerships with government-sponsored banks and otherinternational banks outside of Japan (March 2022)

11

countries

14

partnerships

Hokuhoku Financial Group, Inc. Integrated Report 2022

3

CHARACTERISTICS OF OUR MAIN BUSINESS AREA
Population and Square Measure*1

Number of businesses*1

ToyamaPrefecture aIshikawa
Prefecture b

Fukui
Prefecture c

Total
a+b+c

1.03Mn(37th)

1.13Mn(33th)

0.77Mn(43rd)

2.93Mn4,248(33rd)

4,186(35th)

4,191(34th)

Population(Ranking)
Square Measure(Ranking) km2

Hokkaido—

5.22Mn(8th)
83,424(1st)Gross Prefectural Product*1,2

Hokkaido

259

Hokuriku

167

Toyama56

Ishikawa

65

Fukui

45

(JPY Bn)

ToyamaaIshikawa
b

Fukui
c

Total
a+b+c

4,910.2(0.85%)(28st)

4,768.7(0.82%)(30th)

3,694.6(0.64%)(40th)

13,373.5(2.31%)

GPP(Proportion)(Ranking)(Thousand)

Hokkaido
20,464.6(3.53%)(8th)

Industrial Structure*2
Primary
0.9%

Primary
3.9%
Secondary
34.0%

Primary
1.0%
Secondary
17.6%

Secondary
26.0%

Hokuriku

Hokkaido

All Japan

Tertiary
65.1%

Tertiary
78.5%

Tertiary
73.0%

Data source : *1 Ministry of Internal Affairs and Communications,*2 Cabinet Office

Hokkaido• ‌With vast expanses of land and ample fishing areas in the ocean surrounded on all sides, Hokkaido has thriving primary industries such as
agriculture and fisheries compared to the rest of Japan. As a result, Hokkaido is called the largest food supply base of Japan.
• Although the number of tourists has temporarily decreased due to the COVID-19, it is still one of the most popular tourist destinations in Japan.

Abundant Natural Resources
Hokkaido
26%

Hokkaido
14%

Hokkaido
23%

Agricultural
land

Agricultural
products

Fishery
products

74%

86%

77%

Wheat / Potato / Onion /Milk etc.

Tuna / Sardines / Scallops /Squid / Skipjack etc.

Data source : ‌Ministry of Agriculture, Forestry and Fisheries / Ministry of Land, Infrastructure, Transport and Tourism Hokkaido Regional Development Bureau /Department of Agriculture, Hokkaido Government

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Hokuhoku Financial Group, Inc. Integrated Report 2022

Increasing Numbers of Tourists Visiting Hokkaido

Renewable Energy
Hydroelectric power / Geothermal energy / Wind power / Solar power

Data source : ‌Bureau of Tourism, Department of Economic Affairs,
Hokkaido Government
Inbound tourists

(Mn)

9.2

8.8

8.4

8.2

2.3

2016

2.8

2017

Total tourists

3.1

2018

2.4

2.2

2019

2020

Hokuriku• ‌The Hokuriku region is bordered by the Sea of Japan and is equidistant from the three major metropolitan areas of Tokyo, Nagoya andOsaka.
• ‌It is located in the center of the Sea of Japan, and is an important region as a gateway to overseas countries including Asia.
• ‌With the extension of the Hokuriku Shinkansen to Tsuruga in the spring of 2024, convenience will further increase, and the importance ofthe Hokuriku region is expected to increase.
• ‌This region is surrounded by steep mountains such as the Tateyama mountain range, and has abundant snowmelt water. This water isused for hydroelectric power generation, and also plays a role in attracting manufacturing companies to the region.
• ‌This region has a highly educated and diligent labor force, and is also a region where women's social advancement is progressing.
• ‌The 3 prefectures of Hokuriku have each developed industries that match their distinctive characteristics

Toyama Prefecture’s Pharmaceutical Product Production
Data source: Ministry of Health, Labour and Welfare, Statistics of Production by Pharmaceutical Industry(¥ billion)

621.8

No. 4
in Japan
654.0

693.7
624.6

660.9

Many Global Niche Top Companies in Ishikawa Prefecture
Ishikawa Prefecture has developed industries centering on the
textile and machinery industry, and has several "global niche top
companies" selected by the Manufacturing Industries Bureau of the
Ministry of Economy, Trade and Industry. It is also a historic city
famous for traditional crafts such as Kaga Yuzen dyeing and
Wajima lacquerware.

Fukui Prefecture’s Eyeglasses Production
Fukui Prefecture (Sabae City in particular) has more than a 100-year
history as a manufacturing base for eyeglasses, and boasts the top
share in the eyeglasses manufacturing industry (including frames) inJapan. The prefecture is a global hub for frame manufacturing inparticular, on par with Italy and China.
2016

2017

2018

2019

2020

Toyama Prefecture, which forms the medicine capital known as
Medicine city Toyama, is home to a diverse range of pharmaceutical companies, from the allocated drug sales industry of the past,
to new drug developers, generic drug manufacturers, and over thecounter drug manufacturers. In addition, peripheral industries, suchas plastic container packaging and printing, are well developed in
the prefecture.

Hokuhoku Financial Group, Inc. Integrated Report 2022

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PERFORMANCE HIGHLIGHTS
Summary of Operations (Hokuhoku Financial Group, Inc.; on a consolidated basis)(¥ billion)

FY2021

FY2020Y-o-Y Change
1.8
(1.9)

Ordinary income
Ordinary profits
Net income attributable toowners of the parent

177.7
30.2

175.9
32.2

20.5

(0.8)

21.3

Capital adequacy ratio

9.54%

0.09%

9.45%

With regard to the Company’s operating performance in thefiscal year ended March 31, 2022, consolidated ordinary
income increased by ¥1.8 billion year-on-year to ¥177.7
billion.Net income attributable to owners of the parent fell by¥0.8 billion to ¥20.5 billion.
The capital adequacy ratio was 9.54% on a consolidated basis at the end of the fiscal year.
With regard to the payment of dividends for the fiscal
year ended March 31, 2022, dividends for common stock
were ¥35.00 per share, paid once as the year-end dividends, and dividends for preferred stock (Type 5) were thedesignated ¥7.50 per share (¥15 annually) paid respectively
as the interim and year-end dividends.

Summary of Operations (Hokuriku Bank and Hokkaido Bank) <Total of both banks>
Total of both banks

(¥ billion)

FY2021
Ordinary income
Core gross business profits
Expenses (excluding temporarily processed portion)
Core net business profits
Excluding gains (losses) on
cancellation of investment trusts
Credit costs
Ordinary profits
Net income

161.9
124.8

ROE

FY2020Y-o-Y Change
3.9
4.0

157.9
120.7

78.8

(3.5)

82.3

46.0

7.5

38.4

44.8

7.1

37.6

13.5
30.4
21.8

0.4
(1.5)
(0.6)

13.0
32.0
22.4

3.90%

(0.23%)

4.13%

Total ordinary income for both banks was increased by¥3.9billion year-on-year to ¥161.9 billion.Net income
attributable to owners of the parent fell by ¥0.6 billion to¥21.8 billion.

Ratings
Rating and Investment
Information, Inc.

R&I

A

“Ratings” are determined by ratings agencies, third-party institutions with no vested interest in the companies
they rate, and indicate a company’s creditworthiness and ability to fulfill obligations in concise signs.
Hokuhoku Financial Group Inc., Hokuriku Bank and Hokkaido Bank have obtained “A” ratings from Rating
and Investment Information, Inc. (R&I), and are considered as being highly creditworthy. Hokuriku Bank also
has obtained “A-” rating from Standard & Poor’s Ratings Japan K. K.

Deposits (Including negotiable certificates ofdeposit) <Total of both banks>

Loans and Bills Discouted <Total of both banks>‌¥13,233.3 billion (¥417.7 billion increased)
12,815.6‌¥9,211.1 billion (¥145.9 billion increased)

Total 13,233.3

Total

11,662.6

8,673.1
7,350.5

9,065.1
5,061.6

7,536.9

6,735.4

4,910.3

4,927.2

5,465.1

5,696.4

2019

2020

2021

9,211.1

5,033.3

3,762.7

4,031.7

2019

2020

4,949.5(¥ billion)
End of March

Hokuriku Bank

6

Hokkaido Bank

Hokuhoku Financial Group, Inc. Integrated Report 2022(¥ billion)
End of March

Hokuriku Bank

Hokkaido Bank

2021

Core Gross Business Profits <Total of both banks>‌¥124.8billion (¥4.0billion increased)

Net Income <Total of both banks>‌¥21.8billion (¥0.6 billion fell)

Total

22.4

124.8

20.8

66.7

68.4

11.2

56.3

54

56.4

9.5

2019

2020

2021

123.2

120.7

66.8

Total

21.8

14.2

13.1

8.1

8.7

2020

2021

(¥ billion)(¥ billion)
End of March

Hokuriku Bank

End of March

Hokuriku Bank

Hokkaido Bank

Expenses <Total of both banks>

Hokkaido Bank

Capital Adequacy Ratio <On a consolidated basis>‌OHR 63.15% (5.04% fell)
69.27%

2019‌Capital Adequancy Ratio 9.54％ (0.9％ increased)

68.19%

85.3

82.3

45.7

43.9

63.15%

Total

9.45%

9.54%

529.8

549.9

561.6

2019

2020

2021

8.94%

78.8

41.7

39.6

38.4

37.1

2019

2020

2021

(¥ billion)(¥ billion)
End of March

Hokuriku Bank

Hokkaido Bank

End of March

CapitalOHR

Disclosed Claims under the Financial Reconstruction Law <Total of both banks>‌NPL ratio 2.24% (0.31% increased)● ‌Disclosed Claims under the Financial Reconstruction Law: The bankclassifies both loans and other assets in line with the stipulations of the
Financial Reconstruction Law.
● ‌Claims subject to disclosure: loans, customers’ liabilities for acceptanceand guarantees, foreign exchanges, accrued interest, suspense
payments, securities loaned, private bonds with the Bank’s own
guarantees (regarding claims on obligors requiring caution, loans andprivate bonds with the Bank’s own guarantees only).

2.24%
1.93%
1.71%

Substandard
claims

34.1
25.6
21.1

119.5

Doubtful claims
143.1

164.8
Bankrupt andsubstantiallybankrupt claims

12.8

End of March

2019

11.5

2020

Substandard claims
Bankrupt and substantially bankrupt claims

13.6

2021
Doubtful claims
NPL Ratio

Capital Adequancy Ratio(¥ billion)

This category is defined as claims on borrowers
requiring caution under asset self-assessment.
This category comprises past due loans (threemonths or more) and restructured loans underthe Banking Law.
This category is defined as claims on potentiallybankrupt borrowers under asset self-assessment.
The execution of contracts on repayment of theprincipal and payments of interest is highly
doubtful.
This category is defined as the sum of claims onbankrupt borrowers and effectively bankrupt
borrowers.

● ‌NPL ratio: Indicates NPLs (under the Financial Reconstruction Law) asa percentage of total credit. The lower the ratio, the sounder the credit
portfolio.

Hokuhoku Financial Group, Inc. Integrated Report 2022

7

TOP MESSAGE

We will strengthen the
Hokuhoku FG's ability to create
added value.
We will take on new challenges
in the environment field as well
as DX field in particular andrealize our management
philosophy“Progressive &Innovative Services”.
Hir o shi Nak a z a w a

Pr e sident and R epr e sent a tiv e Dir ec t or

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Hokuhoku Financial Group, Inc. Integrated Report 2022

Review of the previous medium-term management plan
During the three years of the previous medium-term
management plan "ALL for the Region," while we haveworked to solidify the firm base for building a sustainablebusiness model, we also have taken various measures tocover the decline in interest and dividend income fromloans and securities due to the continuing low interest
rate environment and the redemption of yen-denominatedbonds. Looking back, I think we have achieved significant
goals of the plan, although some initiatives remain
insufficient.
First of all, we gave top priority to supporting ourcustomers' core businesses and provided 450 billion yen
interest-free and unsecured loans in response to the
COVID-19 pandemic, which was not anticipated when theprevious medium-term management plan was formulated.
Through these efforts, I believe our group has been able
to meet the expectations of our customers and local
communities.
On the other hand, we could not fully respond to ourcustomers' investment needs for improving operational
efficiency and promoting measures on environmental
issues, as we could make less proposals for their businessrevolutions than expected.
Second, we have made remarkable progress in“strengthening consulting functions”and“improving
productivity”, which were key strategies in the previous
medium-term management plan.
By increasing the number of people in charge of customer
relations at headquarters, we have strengthened ourconsulting functions and made proposals which met thediversifying needs of our customers. As a result of our
proposal activities that matched to our customers’needs,
we have achieved a record high number of M&A deals.
In addition, we have added new solution menus such as IT
consulting, recruitment services and trust services, whichwere the driving force behind the increase in net fees andcommissions in the final year of the previous medium-term
management plan.
And then, we have reorganized our branch network, by
ways of relocation and consolidation, to improve
productivity as well as maintain and improve customer
convenience. Furthermore, we have reviewed our approach
to customer relations activities fundamentally so that we
can make high-quality proposals to our customers
efficiently.
As a result, we have built a system that allows us tomake as many proposals as possible in a limited amountof time, securing appropriate number of people dependingon the market environment and assigning them to the rightpositions based on the aptitude of each person.
Also, we have worked with the Hokugin Software, one ofour group companies, to promote the digitization andoptimization of internal operations of our group utilizing
RPA (Robotic Process Automation). We have reduced work
equivalent to ninety thousand working hours in aggregate
during the three years of the previous medium-term
management plan.

Expanding“the Hokuhoku collaboration”
A notable achievement in the previous medium-term
management plan was the significant expansion of“theHokuhoku collaboration”, initiative that the Hokuriku Bankand the Hokkaido Bank collaborate with each other tosupport customers.
The Hokuriku Bank was founded in 1877, and the Hokkaido
Bank was established in 1951. Both banks have long
histories and have been patronized by customers in theregion. Since the management integration of the two banks
in September 2004 and the establishment of the Hokuhoku
Financial Group, the two banks have worked together tosupport customers. As a result, we have expanded thescale of our group to 13 trillion yen in deposits and 9
trillion yen in loans.
On the other hand, in Hokkaido, the common businessbase of both banks, there was still room for expansion ofbusiness from the perspective that the two banks shouldcollaborate and work together to respond to theircustomers’needs which each bank could not meet byitself. In the three prefectures of Hokuriku and the threemajor metropolitan areas, which also have been the twobanks' operating bases, efforts to pursue synergy throughcollaboration between the two banks were not sufficient.
We recognized that there were problems not only inproviding high-quality services to customers, but also in
improving operational efficiency and productivity of ourgroup.
Under such circumstances, in June 2021, we haveestablished the Business Planning Department in order topromote collaboration between the two banks and create
new synergy effects. The two banks have worked
together to formulate sales strategies, plan sales
promotion measures and share their sales resources, andworked to build a system for making optimal proposals tocustomers. As a result, we have enriched our activities,
such as business matching proposals that utilize the twobanks' wide-area branch networks and customer
information that can differentiate us from our competitors,
who do not have such networks.

Hokuhoku Financial Group, Inc. Integrated Report 2022

9

TOP MESSAGE

Our thought incorporated in the long-term vision
Upon the announcement of the new medium-term
management plan "Go forward with Our Region (FY2022 to
FY2024)“, we have also announced our long-term vision,“sustainable growth together with local communities andcustomers through problem solving”.
In the process of creating the long-term vision, we
received many constructive opinions from the independent
outside directors as well as from the management
executives. We also set up a working group of younger
employees, who would be responsible for the future of
our group, to discuss the long-term vision. Before
considering the long-term vision, we tried to anticipate thepossible changes in our business environment and forecast
what our stakeholders would expect us in the future.

Some of you may find our long-term vision to be obvious.
In this rapidly changing world, however, it is not easy toaccomplish it. In order to accomplish our long-term vision,
it is vital for us to continue to take on new challenges,
innovate ourselves in accordance with changes of theworld, and pursue the optimal solutions which solve
problems surrounding our region and our group.
Our group upholds“Prospering together with the region”
as our management philosophy. Based on this philosophy,
we incorporate our thought“co-creation”in our long-term
vision, to express our idea that our group companies will
become more attractive by contributing to make ourregion more attractive.

Six key strategies to be implemented under the new medium-term management plan
The strengths of our group are the sales bases anddiverse human resources that we have cultivated over ourlong history, a wide-area branch network unparalleled byother regional banks, and close cooperation with local
communities. On the other hand, we may have aconservative way of thinking relying on our strong sales
bases, and may have problems with making prompt
decisions and processing duplicate business operations
effectively, as the core operating companies of our group,
the Hokuriku Bank and the Hokkaido Bank, operate inremote areas.
In order to solve such problems, I believe that initiatives inaccordance with the idea "Progressive & Innovative
Services" in our management philosophy will become more

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Hokuhoku Financial Group, Inc. Integrated Report 2022

important. I want to make our group to be a place where
officers and employees can think freely without beingbound by conservative ideas, actively express new ideas,
and work together to realize those ideas fully.
With the aspiration of making such group, we havepositioned the three years under the new medium-term
management plan as a period to challenge the priorstrategies toward the realization of our long-term visionand established six key strategies as follows. While all of
those strategies are important, I believe that improvementof comprehensive consulting ability in order to accurately
grasp the needs and concerns of our customers andpropose appropriate solutions to them will be vital in theimplementation of the new medium-term management plan.

Key Strategy 1 Improvement of comprehensive consulting ability
Our group has about 150 people in charge of corporate
customer relations and about 600 people in charge ofindividual customer relations. All of them are positioned at
the headquarters, and they work hard to improve theirskills on a daily basis.
As for consulting services for corporate customer, ourgroup's strength is our people’s capability to support
business succession and M&A. On the other hand, we haveroom to improve our services in the area of corporate
finance by expanding financing instruments menu andproposals. While our group has established funds tosupport business succession, we expect that demand for
new areas such as LBO finance and venture company
support will increase in the future. We would like tocontribute further to the growth and development of theregional economy by providing a wide variety of financing
methods including those for such new areas.
As for consulting services for individual customer, ourpeople have strengths in making optimal proposals

according to customers' life stage. For young customers,
we propose asset management methods, including savingstype investment products, in order to support their asset
formation. For wealthy and elderly customers, we propose
the use of trust products, taking into account their needs
and concerns regarding asset succession. The trust service
is currently provided by the Hokuriku Bank, but I would
like to consider working with both banks to create further
synergy.
In April 2022, the Hokuriku Bank has established the IT
Consulting Group within the Consulting Sales Department
and increased the number of people in charge, in order tosupport our customers to promote digitization in theirbusinesses. At the Hokkaido Bank, the Digital Strategy
Department has played a key role in promoting initiatives
to support customers. As our customers have great needof IT to improve the quality of their services and to
streamline their internal operations, we are striving to
improve the quality and quantity of our proposals to utilize
IT in their businesses.

Key Strategy 2 Initiatives in the environmental fieldThrough talking with customers, I have sensed that theirneeds for measures to address the environmental issues
have been growing significantly day by day. In order tomeet such needs, we provide services such as "SDGs
evaluation service" that helps customers to promote SDGs,“business matching service”that helps customers tovisualize their CO 2 emissions from their businesses with thesupport of specialized companies, and“Hokuhoku
Sustainability finance”, including "Sustainability Linked Loan","Green Loan" and "Hokuhoku Three Targets", that supports
customers to raise funds to promote SDGs initiatives.
In addition, we will lead decarbonization of the region by
tackling our issues, such as reduction of the greenhousegas emissions, one by one. The Hokuhoku Sapporo Building(the Hokkaido Bank Headquarters Building, the Hokuriku
Bank Sapporo Branch), being scheduled for completion in
January 2024, and the Hokuhoku FG Head office Building(the Hokuriku Bank Headquarters Building), being scheduled
for completion in 2026, will be designed to meet thelatest environmental standards.

In February 2021, we established the environment policy
and endorsed the TCFD recommendations. In addition, in
November 2021, in order to promote sustainability
management, we newly established the Sustainability
Promotion Committee which was consisted of executives
and general managers as well as the Sustainability
Promotion Team which was consisted of more than 40
people from both banks. Based on the four basic conceptsof "strengthening information disclosure in line with the
TCFD recommendations", "reducing CO 2 emissions of thetwo banks", "strengthening support of our customers forpromotion of decarbonization" and "strengthening
cooperation with local communities", members of the teamare working together to advance various measures toaddress sustainability issues. Furthermore, we are currently
dispatching our people to specialized institutions, including
the Ministry of the Environment, to accumulate various
know-how. Through these efforts, our group aims tobecome an environmentally advanced financial institutionthat leads the carbon neutrality of the region.

Key Strategy 3 Promotion of Digital Transformation
Efforts to get the most of DX in our business are crucial
to improve our services we provide to our customers andpromote the efficiency of internal operations of our groupcompanies. In order to grasp the needs and concerns of
our customers fully, we are trying to organize the vast
amount of customer information as a strategic database
under a robust security and information management
system. We aim to improve the quality of our services andenhance our customer relations activities as well as
improve the efficiency of our internal operations byutilizing that database.

In addition, we will expand the functions of our app for
individual customers to expand the scope of proceduresthat can be completed with the app and eliminate theneed to visit our branches. Furthermore, we will add newfunctions that enhance the convenience of customers invarious situations to our portal, which has approximately
600,000 individual customers of our group companies, sothat more customers can use those convenient functions.
For instance, we are considering to link our portal withpublic transportation service and other local services in
the future.

Hokuhoku Financial Group, Inc. Integrated Report 2022

11

TOP MESSAGE

As for the portal for corporate customers, in addition to
the current services such as remittance, balance inquiry
and viewing of electronic documents, we are considering
to add functions to reduce the burden of procedures
related to banking transactions, such as function to makeprior reservation for various transactions.
From the perspective of streamlining the internal
operations of our group companies, we will utilize IT tominimize the amount of simple clerical work that hashitherto been processed manually. We aim to reduce work
equivalent to three hundred and ten thousand working
hours during the three years of the new medium-term
management plan.

Cooperation with external parties is also important inpromoting DX. In November 2021, 5 banks including our
two banks that jointly use the system "MEJAR" haveestablished a working group to study measures to improvethe efficiency of system operation with 13 banks thatjointly use other system. Through discussing how toaddress common issues of each bank in the working group,
it has become possible to develop DX initiatives much
faster than before.
While recognizing the importance of utilizing DX, wecannot say that we have enough people to promote DX.
To address this issue, the two banks and the Hokugin
Software, a software development company in our group,
will work together to strengthen the recruitment of DX
talented people, including mid-career recruitment.

Key Strategy 4 Well-being work style
It is vital to create a work environment in which ourpeople can experience well-being to make ourorganization stronger so that it grows sustainably. In orderto realize such well-being, I believe that it is necessary toenhance job satisfaction of our people, provide good work
environment for them, and help them to improve theirbusiness skills”.
We have been promoting work-life balance and diversity,and building a fulfilling training system and learning
environment so far. As a result of our efforts, both banks
were selected by the Ministry of Economy, Trade andIndustry under“the 2022 Certified Health & Productivity
Management Outstanding Organizations Recognition
Program”.
Accelerating these initiatives, we will increase our efforts
to support our people who are willing to take onchallenges and thereby enhance their job satisfaction,
trying to understand wishes and concerns of each person.
We have built headquarters building in Tokyo in 2019. As
one of our initiatives to provide good work environment,
we will build new headquarters building in Sapporo in2024, and in Toyama in 2026. Consequently, we will have
our headquarters buildings in three districts, Hokkaido,
Hokuriku three prefectures, and three major metropolitan

areas, which are our main sales bases. These buildings,
which symbolize the Hokuhoku FG, will provide great work
environment to our people where they can experience
well-being.
I would like to proactively respond to changes in work
styles around the world. To that end, I would like toconsider further utilization of telework and the introductionof business casual attire.
From the perspective of ensuring stable operations of ourgroup companies, it is important to support our people toimprove their business skills. I believe that human resource
development will be a key point in implementing thevarious key strategies of the new medium-term
management plan. In addition to strengthening the support
system for acquiring specialized knowledge and gaining
new business experience, we will revitalize personnel
exchanges not only among our two banks but also among
our group companies such as software, securities, credit
cards and leasing. We are working to increase the numberof human resources with extensive specialized knowledge
and diverse work experience. By increasing the number ofsuch human resources, I expect that our group's uniquestrategies that are differentiated from those of othercompetitors will be created.

Key Strategy 5 Strengthening group comprehensive capabilities
I will accelerate further the Hokuhoku collaboration, in
which the Hokuriku Bank and the Hokkaido Bank work
together to support our customers. During the three yearsof the new medium-term management plan, we will work
hard to expand our aggregate share of transactions in
Hokkaido, the common sales base for both banks. We
have set the number of the Hokuhoku collaboration
initiatives, such as co-financing by both banks and widearea business matching between customers of both banks,
as the KPI for the new medium-term management plan.
As for headquarters operation, it is essential to unifyfunctions of headquarters of both banks as much as
possible in order to formulate optimal strategies for our

12

Hokuhoku Financial Group, Inc. Integrated Report 2022

group and realize rational operations in headquarters. We
are currently discussing this matter.
Our group companies are operating business in the fields
of software, securities, credit card and leasing. That is why
our group has comprehensive financial functions. We will
make further efforts to utilize these functions and provide
a wide range of comprehensive financial solutions to ourcustomers.

Key Strategy 6 Strengthening governance
Solid governance is extremely important in order toimplement fully the key strategies of the new mediumterm management plan. I will steadily instill the
management philosophy "Fair & Steady Management" in all
officers and employees, and make them take pride inworking for our group and serving our customers.
To that end, we are working hard to strengthen
compliance and anti-money laundering. In addition, withregard to responding to sophisticated cyber-attacks aswell as increasing disasters and climate change risks, eachgroup company places top priority on maintaining ourbusiness continuity as well as financial functions, and is
working on a daily basis.
In terms of internal control, the two banks conduct joint
and integrated audits under the direction of our Audit
Department, which oversees the audits of both banks,demonstrating mutual checking function. In addition, we
have increased the number of independent outside
directors in June 2022. By actively incorporating diverse
opinions from outside directors, we are working to create
an even more flexible and strong organization.

Realizing our long-term vision
The business environment surrounding our group ischanging dramatically due to the declining birthrate andaging population, depopulation in rural areas, and thediversification of financial services through IT andtechnological innovation. I believe that it will be difficult
for us to survive as a regional financial institution unless
we evolve ourselves according to such changes in thebusiness environment.
In order to respond fully to those changes and realize ourlong-term vision“sustainable growth together with local
communities and customers through problem solving”, it isvital for us to make prompt and optimal decisions toaddress problems surrounding us, with a willingness totake on challenges and ideas that are not bound bystereotypes.

create new“Hokuhoku FG”by working more proactively.
In the new medium-term management plan, we have set atarget for total return ratio of 50%, including theredemption and dividends of preferred stock. We will
promote measures to execute six key strategies I have
explained so far, produce solid results in our corebusiness, and work to enhance shareholder returns.as well
as secure internal reserves to realize sustainable growthof our group.
We look forward to your continued support andpatronage.

I myself will take the lead in tackling this initiative. I
believe that each and every officer and employee can

Hokuhoku Financial Group, Inc. Integrated Report 2022

13

DEPUTY PRESIDENT MESSAGE
We have launched the new medium-term
management plan "Go forward with Our
Region" starting from fiscal 2022.
By executing the plan, we will firmly
respond to the expectations and needs ofshareholders and investors as well as otherstakeholders, with strong desire to "moveinto the future together with the region."
Deput y Pr e sident

Yuji K anema

Fiscal 2021 performance

Previous medium-term management

Consolidated ordinary income for fiscal 2021 was¥30.2 billion, and net income attributable to owners

plan“ALL for the Region”

of the parent was ¥20.5 billion, exceeding theforecast by ¥500 million.

Regarding the breakdown of profit and loss on a

combined basis of two banks, core net bussiness

Net income

fiscal year to ¥46.0 billion, due to the increase in net(Consolidated)

well as the decrease in general and administrative(Core gross business profit basis)

profits increased by ¥7.5 billion from the previous

attributable to owners of the parent

interest income and net fees and commissions as

Capital Adequacy Ratio

expenses.

Net income was ¥21.8 billion, roughly in line with ourforecast, as gains and losses on securities decreasedby ¥8.9 billion from the previous fiscal year due tothe sale of some low-yielding foreign bonds for risk
control.

Factors contributed to the change in Net income

Total of two banks（JPY Bn）

Gains/losses
on bonds suchas goverment
bonds

75

(63)

Gains
Credit (losses)
costs related tostocks(4)

224

Core netbussines
proﬁtsIncome
taxes

39

(26)

Net
extraordinary
gains (losses)

FY202014

Main business profit＊

Hokuhoku Financial Group, Inc. Integrated Report 2022

(30)
3
Others218
FY2021OHR(JPY Bn)

FY2018FY2021

FY2021ResultTargetResultCompared
to FY201818

Over 22.0

27.7

9.7

24.3

Over 22.0

20.5

(3.8）

9.54%

0.45%

63.15%(5.70%)

9.09%
68.85%

Maintain
8% level
Maintain under
70% level＊We calculate main business profit in line with our own standard

I would like to explain the results of the previous
medium-term management plan "ALL for the Region"
spanning over three years from fiscal 2019 to fiscal
2021. Regarding the four key numerical targets,consolidated net income was slightly below thetarget due to the increase in credit costs, ¥7.5 billion
higher-than-expected, attributable to the significant
change in external environment from the initial
forecast including COVID-19.
On the other hand, we have achieved our target for
main business profit even after excluding the special
remuneration in the Special Deposit Facility of the
Bank of Japan, which was not assumed at the timeof formulating the plan. Our OHR has also improved
significantly. I believe that our greatest achievement
is that we have been able to steadily reinforce ourearnings base as a result of strengthening ourconsulting functions and streamlining our operations.
Our capital adequacy ratio also exceeded our initialexpectations, and we were able to strengthen ourmanagement base in preparation for thedeterioration of the external environment.

New medium-term management plan
“Go forward with Our Region”

Reduction of cross-shareholdings

In terms of the key indicators of the new medium-some or all of cross-held shares that are not deemedtargets for the next 10 years in addition to targets forwith the issuers in accordance with our policy onWith regard to cross-shareholdings, we are selling

term management plan, we have set long-term

to apporopriate to hold, after adequate dialogue

fiscal 2024, the final year of the plan.

cross-shareholdings. Through this effort, we have

FY2021

Key indicators

FY2024Long-term goals（Result）（3 years later） （10 years later）

Consolidated Net income¥20.5 Bn

Over ¥25 Bn Over ¥35 Bn

Consolidated Capital adequacy ratio

9.54%

In the higher 9％
range

Over 12％OHR*

63.15%In the lower 60％
range

50％ level

Non Interest Revenue ratio*(Non Interest Revenue)

15.14%(¥18.9 Bn)

16％ level(Over ¥20 Bn)

Over 18％(Over ¥25 Bn)

Environment related investment and loan＊＊Total of two Banks¥37.1 Bn

¥210 Bn¥700 Bn

reduced the number and book value of crossshareholdings steadily.

We aim to continue to reduce cross-shareholdings

through dialogue with counterparties, in accordancewith one of the ideas incorporated in our new midterm management plan, "enhancement of equity
capital and shareholder returns”.

Balance of cross-shareholdings (listed shares)

2019
2020
2021
2022
End of March End of March End of March End of MarchRegarding the profit, we have set a long-term taget
for consolidated net income of ¥35 billion or more

as well as a fiscal 2024 target of ¥25 billion or more.
We are planning to improve our profit, strving to

Total of two banks

Number of shares

223

211

203

176

Book value (¥billion)

919

853

842

758

※みなし保有株式を含む2行単純合算

reinfore further our earnings base by increasing salesof business loans and consulting services, as well as
cover the increase in expenses due to necessary

investment in human resources and DX by improving
our productivity through those investments.

The relationship between companies and theirCapital Allocation/Shareholder Return
We would like to reinforce our earnings base byimproving our profitability and productivity tostrengthen our management base as well as enhanceshareholder return. In the new medium-term

management plan, we have set a target for total
return ratio of 50%.

Total Return Ratio■ Redemption ofpreferred stock■ Dividends on

preferred stock■ Dividends oncommon stock

Dividend per share（JPY)examine non-financial information such assustainability initiatives as well as information on

business strategies and capital allocation policies.

Considering such change, we are striving to promote

we are working to enhance disclosure by way ofintegrated reports and other materials.

We will continue to actively engage in dialogue with

53.1%

shareholders and investors, incorporate their

30.3%

opinions into our management, and strive to improve

50

companies enhance their value sustainably, andinvestors as wel as individual investors. In addition,
69.6%

60.0%

15
10

Shareholders/investors are interested in how

proactively holding meetings with institutional（JPY Bn）

common stock

shareholders/investors has changed significantly.

constructive dialogue with shareholders, andShareholder Return■ Acquisition ofStrengthening dialogue withshareholders and investors

the corporate value of the Group.
FY2018FY2019FY2020

FY2021

44

40

35

35

Number of meetings with domestic institutional investors※‌Total Return Ratio:Includes redemption and dividends of preferred stock

Number ofcompanies

FY2017FY2018FY2019FY2020

FY2021

35

40

36

26

52

Hokuhoku Financial Group, Inc. Integrated Report 2022

15

PROCESS FOR VALUE CREATION

Create common values by providing service that respond to customer andIssues ofsustainablity of
the region
■

■

■

■

Change in the global
environment caused byclimate change
Destruction anddeterioration of theinfrastructure caused bynatural disasterCustomer issues■■■

Changes in industrial
structure■

Business succession
problem■

Correspondence todigitization

Bad influence on theindustries in the region
caused by change inecosystem
Shortage of humanresources that would leadregional economy

Asset formation
Assets succession to thenext generation

Management
Prospering together
Fair & Steadywith the region

Capital to utilize
Financial capital

Community issues

The 5th asset size among
regional banks

Manufactured capital■

Declining birthrate andaging population

Global branch network andleading-edge digital
infrastructure■

Population decrease
Concentration in urban
areas

Diligent and strong talent■■

Widening regional
disparities

Human capitalIntellectual capital
Top-class know-how among
regional banks and external
collaboration

Financial issues

Society capitalHigh regional share and wide
area network■

Long term low interest rate

Natural capital■

Entry from different industries

Rich nature of Hokkaido and
Hokuriku

Sustainability

Stable financial base, solid governance structure
16

Hokuhoku Financial Group, Inc. Integrated Report 2022

community issues

Value provided toeach stakeholder
Shareholder

philosophy
Management

Progressive &Innovative Services

6 crucial strategies

・Medium-to long-term
improvement of corporate value
・Enriching shareholder returns
・Highly transparent information
disclosure
・Practice of sustainability
management

Long-term vision
We will achieve sustainable growth
together with communities andcustomers through problem-solving.

Local communities and customers
To be attractive region
Regional economic and industrial development◦ Comfortable and prosperous life
◦ Sustainability◦

The Hokuhoku financial Group

Community

Consulting

Governance

Environmental
field

Contribution to theDigitallocal community transformation

Group
comprehensive
capabilities

Well-being

Practice of ESG
Regional Finance・‌H okuhoku Financial Group SDGs
Declaration
・‌The Environment Policy・‌E n d o r s e m e n t o f t h e T C F D
recommendations

To be attractive group・Contributing to development ofregional economy and industry
・Support for efforts to achieve SDGs
・Leading industry-academiagovernment collaboration
Customer・Providing highly convenient services
・Customer-oriented proposals
・Contribution to sustainablebusiness growth・Smooth business succession support
Employee

・Choosing the best work style
・A rewarding work environment
・Improvement of employment
conditions
・Support for skill improvement

Company being chosen and loved
Attractive and diverse human resources◦ Improvement of corporate value◦◦

Targets for 2030 toward therealization of a sustainable region
Sustainability-related loans※１¥1.5 trillion

Environment-related loans※１¥700 billion

CO2 emissions※2

Reduce 46%※1 : Cumulative loan execution amount for 10 years from FY2021 to FY2030※2 : CO2 emissions at domestic offices of Hokuriku Bank and Hokkaido Bank
compared to FY2013

Realization of sustainably developing community and our sustainable groth

Governanceand strong management system
Hokuhoku Financial Group, Inc. Integrated Report 2022

17

HOKUHOKU FINANCIAL GROUP SDGs DECLARATION AND KEY CSR ACTIVITY THEMESThe Hokuhoku Financial Group has established the Sustainability Promotion Committee.
At the Sustainability Promotion Committee, held twice a year, we discuss basic policies,
strategies, and risk management regarding matters related to sustainability.
We report important matters discussed at the committee to the Management Committee andthe Board of Directors.

Management philosophy

Key themes

Realization of sustainable community

Prospering
Together with theRegionE

S

G

Contribute to responsible investment and financing as a regional financial
institution by promoting constructive dialogue based on issues including
SDGs and ESG, stable job creation by actively supporting startup companies
and growth companies in the region, and the realization of sustainable local
communities by promoting collaboration with local governments andcustomers
Strive to reduce environmental burden, including promoting the use ofrenewable energy and reducing greenhouse gas emissions

Improving financial literacy in the region

S

Work to improve the financial literacy of customers and children throughfinancial and economic education and financial consulting, and support asset
formation and smooth business and asset succession for the future

Building a sound and resilient management foundation
Fair & SteadyManagement

Enhance transparency by promoting dialogue with stakeholders, build astronger management base by enhancing governance, thoroughly managing
various risks, and further strengthening compliance

Improving convenience for all customers

Progressive &Innovative
Services

S

Strive to further improve convenience by providing advanced financial
products and services that all customers can easily access and use withpeace of mind

Ensuring good work environment leading to better productivity
Work to create rewarding and fulfilling workplaces by promoting the active
participation of diverse personnel, promoting work style reform including abalance between work and childcare/nursing care, and developing
personnel who will lead the Group in the future

18

G

Hokuhoku Financial Group, Inc. Integrated Report 2022

S

Hokuhoku Financial Group SDGs Declaration
Based on our management philosophy of “Prospering Together with the Region”, “Fair& Steady Management”, and “Progressive & Innovative Services”, Hokuhoku Financial
Group aims to improve the sustainability of the regional economy and regional
communities by proactively engaging in CSR initiatives based on the SDGs advocatedby the United Nations.

FY2021 Initiative Topics

We have launched new financial products “Hokuhoku Sustainable Finance”.

In order to actively support our customers' effort to make their business sustainable, we havestarted to provide new financial products“Hokuhoku Sustainable Finance”.
We have launched "Sustainability Linked Loan" and "Green Loan" in September 2021 andstandardised loan product “Three Tagets" in April 2022.

We have introduced carbon neutral gas and green power.

In December 2021, we introduced "carbon-neutral city gas," which has virtually no CO2 emissions, for the
first time in Hokuriku, with the aim of reduce CO2 emissions by 46% (compared to FY2013) .
In April 2022, the Tokyo branch of Hokuriku Bank and Hokkaido Bank introduced green power thatmeets global standards such as RE100.

We have conducted financial education classes at high schools.

In Japan, the adult age has been reduced to 18 years since April 2022, and it is becoming more andmore important for students to receive financial education.
We have actively conducted financial education classes at high schools.

We have launched the “Regional Bank Joint Center / MEJAR System Working Group”.

In November 2021, due to the increasing importance of non-face-to-face transactions due to DX
and Covid-19, we have launched the "Regional Bank Joint Center / MEJAR System Working Group"with 16 regional banks and NTT Data to promote mutual use of applications, to reduce systemcosts, and to streamline system operation.

We launched two convenient Internet services.

We launched two services to improve customer convenience and satisfaction.
The "electronic document delivery service" enables our customers to view documentson the Internet for free.
The "Business Portal" enables to receive various financial services and consultations on
the Internet.

We started construction of "Hokuhoku Sapporo Building"

The new building, which is scheduled to be completed in January 2024, will have fewer walls on
the floor and will be equipped with energy-saving equipment. We are trying to further improve theproductivity of employees by supporting various work styles, and to make the building compliant
with BCP and environmentally friendly.

Hokuhoku Financial Group, Inc. Integrated Report 2022

19

Responding to climate change
Environment policy
The Hokuhoku Financial Group will actively work on its own carbon neutrality under the environment policy establishedin February 2021, and support the efforts of customers and communities to realize a decarbonized society.
The Hokuhoku Financial Group aims to realize one of our management philosophies, " Rrospering together with the region," throughenvironmentally friendly corporate activities.
1. We will comply with laws and regulations related to environmental conservation.
2. We will actively support customers who are working on environmental issues through the provision of financial products and services.
3.	‌We will promote resource conservation, energy conservation, and recycling activities to reduce environmental impact in all corporate
activities.
4. We will regularly verify the impact of our corporate activities on the environment and strive to actively disclose information.
5. We will promote environmental conservation activities ,actively cooperating with local communities.
6. We will make this policy known to our employees and disclose it externally.
We believe that it is important to collaborate with international organizations,
governments, local governments, companies, industry groups. We are actively
participating in a variety of initiatives with them.

Disclosure based on TCFD recommendations
The Hokuhoku Financial Group assumes that responding to climate change to "realize sustainable communities" isone of our material issues in the "Priority Themes for CSR Activities" established together with the "SDGs
Declaration". And we support the recommendations formulated by the TCFD in February 2021.
We are promoting information disclosure in line with the TCFD's recommendations for disclosure of "governance,""strategy," "risk management," and "metrics and targets" related to climate change-related risks and opportunities.

GovernanceWe disclose our organizational governance on climate-related risks and opportunities

Building a governance structure for supervision and execution centered on the Board of Directors<Supervision> The Board of Directors supervise matters reported and proposals submitted by executives.
<Execution> ‌Executives regularly discuss important matters related to climate change at the Management Committee and the Sustainability
Promotion Committee chaired by the President, and report such matters to the Board of Directors.
We have established “the environment policy", which was resolved by the Board of Directors in February 2021, in order to practiceenvironmental consideration in our corporate activities.
We established a cross-organizational sustainability promotion team in November 2021 to strengthen our promotion system.

Strategy

We disclose material information about the actual and potential impacts of climate-related risks
and opportunities on our business, strategy and financial planning.

Opportunities
We find our business opportunity in the initiatives to support our customers in developing their business models as well as in investing in newtechnologies to promote carbon-free.
We will strengthen cooperation with various partners and develop and provide new solutions with them in order to actively support ourcustomers in decarbonizing and responding to climate change.

20

Our solutions

Description

Hokuhoku Sustainable Finance “Sustainability Linked
Loan”

A loan instrument which incentivise our customers to achieve their predetermined sustainability
performance targets which are consistent to their strategy to promote sustainability. The terms ofloan including interest rates fluctuate according to the achievement status of the targets.
Our customers are required to obtain external review to confirm the alignment of their loan withthe principles prescribed by ICMA, etc.

Hokuhoku Sustainable Finance “Green Loan”

A loan instrument that enables our customers to use the proceeds to exclusively financetheir businesses and projects that contribute to environmental improvement.
Our customers are required to obtain external review to confirm the alignment of theirloan with the principles prescribed by ICMA, etc.

Hokuhoku Sustainable Finance “Standardised Loan
Product: Hokuhoku Three Targets"

A loan instrument that aims to improve corporate value of our customers and realize asustainable local community by incentivising our customers to achieve three targets
they have chosen in advance from the eleven SDGs-related targets we have set.

GHG emissions calculation/visualization cloud service(Business matching partner: Zeroboard Inc.)

A cloud service for calculating and visualizing GHG/CO2 emissions based on theinternational standard GHG protocol.

CO2 emissions visualization cloud service (Businessmatching partner: Asuene Inc.)

A cloud service to calculate and visualize GHG/CO2 emissions, to reduce GHG and toreport/disclose Scope 1,2 and 3 emissions.

Brokerage service for FIT non-fossil certificates(Business matching partner: Hokusan Co., Ltd.)A service that enables the acquisition of non-fossil certificates, the environmental valueof renewable electricity.

Hokuhoku Financial Group, Inc. Integrated Report 2022

RisksClimate-related risks are transition risks and physical risks resulting from climate change
Transition risks

Credit risks due to the negative impact on the business activities and financial conditions of our customers caused bystrengthened regulation such as the introduction of carbon tax and by the delay in responding to new technologies

Physical risks

Credit risks due to damage to customers’ assets and business stagnation caused by abnormal weather such as
typhoons, heavy rains, and floods

Scenario analysis
Type of risk

Transition risks

Physical risks (acute risk)

Scenario

NZE2050 Scenario by IEA (*1) /SDS Scenario/STEPSScenario

RCP8.5 (4℃Scenario) by IPCC(*2)

Analysis method

We identify the parameters to assess the impact of risks
and opportunities surrounding our customers.
We predict the impact on customers’ businessperformance and analyze changes in our group's credit
costs by examining the changes in those parameters
under the scenarios

By calculating the impact associated with flood, we predict
direct impact on our credit costs due to the damage to thecollateral asset and indirect impact due to the businessstagnation caused by the disaster

Analysis target"Electric power" "Real estate"

Customers who have pledged their real estate to the
Hokuriku Bank or the Hokkaido Bank

Credit cost

Up to ¥15.1 billion by 2050

Up to about ¥7.1 billion by 2050

*1:Abbreviation for International Energy Agency*2:Abbreviation for Intergovernment Panel on Climate Change

Risk management

We disclose how we identify, assess and manage climate-related risks.

We have recognized transition risks and physical risks caused by climate change and clearly defined how to deal with those risks in our risk
management policy.
We manage those risks within the framework of comprehensive risk management.
We are increasing our engagement with businesses which could harm the environment or community, such as fossil fuel power generation,arms manufacturing, oil palm plantation development and deforestation, based on the “Investment and Loan Policy for Specified Businesses”
We actively support the transition to a decarbonized society by increasing our engagement with carbon-related sectors.

Metrics/Targets

We assess climate-related risks and opportunities and disclose material information about the
metrics and targets used to manage themMonitoring metrics

Taegets

Latest performance

Scope 1 and 2 emissions

Aim to reduce GHG emissions 46% by FY2030
compared with FY2013
Aim to achieve carbon neutrality by FY2050

Reduced GHG emissions 39.1% by FY2021
compared with FY2013
Scope1 4,869t-CO2
Scope2 13,620t-CO2

Sustainability-related loans(*2)¥1.5 trillion (cumulative loan execution amount for 10
years from FY2021 to FY2030)¥102.6 billion (cumulative amount executed by
FY2021)

Environment-related loans(*3)¥700 billion (cumulative loan execution amount for 10
years from FY2021 to FY2030)¥37.1 billion (cumulative amount executed by
FY2021)

Ratio of carbon-related loan assets(*4)－

1.11% as of FY2021(*1)*1:Reduction targets for CO2 emissions (based on the adjusted emission coefficients) at domestic offices of the Hokuriku Bank and the Hokkaido Bank
*2:‌Loans to business partners working to achieve SDGs, and loans to businesses such as medical care, health, education, fisheries, agriculture, business establishment,
business succession, resilience, environment, etc.
*3:Loans that support environmentally friendly initiatives such as projects to decrease the negative impact of climate change on environment*4:‌Ratio of carbon-related loan assets (loans to the energy sector excluding water supply and renewable energy projects) to total loans at the Hokuriku Bank and the Hokkaido
Bank

Hokuhoku Financial Group, Inc. Integrated Report 2022

21

STAKEHOLDER COMMUNICATION
Relationship with stakeholders<Shareholders and Investors>
The Hokuhoku Financial Group values dialogue with shareholders and investors.
In FY 2021, we hosted a conference call for institutional investors in May, online meetings for individual
investors in June, and an investor meeting while taking measures against Covid-19 in November.
We explained the Group’s profile, highlights of business performance and strategies in the conference
and meetings
In FY 2022, we hosted a conference call for institutional investors in May and online meetings forindividual investors in June.

<Environment>
The Hokuriku Bank and the Hokkaido Bank agreed with the“GX League Basic Concept”, believing that
our approach to climate change matches the purpose of the GX League announced by the Ministry of
Economy, Trade and Industry.
Through the GX league, We will work with various stakeholders to challenge the realization of carbon
neutrality in the region.

<Community>
The Hokkaido Bank established the "Hokkaido Bank Women's Curling Club" in December 2021 andstarted team activities.
In May 2022, we established the team nickname“Lilers”and logo mark so that many people support us.
We will contribute to regional revitalization through curling promotion activities.

<Municipalities, Educational Institutions and Industry Associations>
The Hokuriku Bank and the Hokkaido Bank proactively cooperate with municipalities, educational
institutions, and other various organizations to promote academia-industry collaboration and to improvefinancial and SDGs literacy in the region. By the end of FY 2021, the banks have concluded cooperationagreement with 48 municipalities.

<Customers>
The Hokuriku Bank and the Hokkaido Bank conducted surveys of customers engaging in asset management transactions with bothbanks to listen sincerely to the opinions of those customers, which were essential for proposing better services and products. The
survey utilizes the NPS® (Net Promoter Score®), which provides a score for“How likely is it that you would recommend ourcompany/product/service to a friend or colleague?,”measuring the level of interest that a customer has in a corporate brand,
product and person in charge. In FY 2021, as in FY 2019 and FY 2020, both banks received ratings that exceeded the average ofthe 50 regional banks that participated in the survey.

<Employees>
On the occasion of its 70th anniversary, the Hokkaido Bank held“Do Talk”where employees andmanagement could talk directly.
We are revitalizing communication by freely and openly exchanging opinions on matters such as job
satisfaction, thoughts on work, and headquarters policies.
We are planning to promote such dialogue with employees, utilizing video conference if needed, tohelp our employees deepen their understanding of the Group.

22

Hokuhoku Financial Group, Inc. Integrated Report 2022

LONG-TERM VISION AND STRATEGY

Hokuhoku Financial Group has formulated a new long-term vision based on the idea that “now is the time toclarify the future vision of the Group as the future is uncertain and difficult to predict.”
Based on the belief that "locally rooted activities are the starting point" for a regional financial group, we haveestablished a long-term vision of achieving both regional development and the Group's growth, starting withsolving the problems of local communities and customers.
In addition, in order to realize our long-term vision, we will promote three long-term strategies: “Solving morechallenges”, “Building a business base”, and “Developing a corporate culture”.

Long-term vision

Sustainable growth together with local communities and customers through problem solving

Local
communities andcustomers

Hokuhoku FG

To be attractive

To be attractive

Development of regional
economy and industry
Comfortable and prosperous life

Selected and loved company
Active and diverse human resources
Improving shareholder value
and corporate value

Sustainable societyLong-term strategy

Solving more challenges by
expanding business domain

Solving morechallenges
Strengthening
sales force

Developing a
corporate
cultureDeveloping a corporate
culture through the active
participation of employees
・Create a workplace where diverse humanresources can play an active role
・Increase work satisfaction and pride in work
・Creation of highly specialized personnel

・Providing the best consulting services in
the region
・Improving services utilizing digitaltechnologies
・Diversification of services by expanding
business domain

Strengthening
profitability

Long-term
visionInvesting inhuman resources

Building abusiness base

Building a management basethat supports sustainable growth・Realization of efficient group management
structure・Building a sales system with an eye on the future・Improve productivity through business reforms

Hokuhoku Financial Group, Inc. Integrated Report 2022

23

MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3）

Go forward with Our Region
A period to challenge priority strategies toward the realization of a long-term vision
Hokuhoku Financial Group is committed in order to meet the expectations and needs of our group (local
communities, customers, shareholders, employees, etc.), we will take on the challenge of strengthening
our probrem-solving capabilities and transforming our business model. we have formulated a mediumterm management plan with a strong desire to “move into the future together with the region”.
Crucial strategy
Improvement of comprehensive consulting ability・‌Sophistication and expansion of solution menu・‌Improvement of transaction profitability bysegment strategy
・Strengthening support for COVID-19
・Strengthening proposal capability

Initiatives in the environmental field

6 crucial strategies

Consulting・‌Strengthen cooperation with local governments
and various entities

Strengthening governanceContribution
to the local
community・‌Enhancement of equity capital andshareholder returns

Governance・‌Sophistication and diversification ofoperations

・Advanced risk management system

Strengthening group
comprehensive capabilities

・‌Expansion of resource sharing between
the two banks・‌Providing comprehensive financial
services in collaboration

・Response to TCFD recommendations

Environmental ・Reduce our company's CO2 emissions
・Strengthen solutions to business partners
field

Promotion of Digital Transformation
Digital・Strengthen digital banking function
Transformation ・Business reform utilizing digital technologies

Well-being work styleGroupcomprehensive
capabilities

Well-being

・Improvement of working environment
・Realization of diverse work styles
・‌Improving the skills of executives
and employees

Crucial index
Key indicators

FY2021 (Result)

FY2024 (3 years later)Long-term goals (10 years later)¥20.5 Bn

Over ¥25 Bn

Over ¥35 Bn

Consolidated Capital
adequacy ratio

9.54%

In the higher 9% range

Over 12%OHR*

63.15%In the lower 60% range

50% level

15.14% (¥18.9 Bn)

16% level (Over ¥20 Bn)

Over 18% (Over ¥25 Bn)¥37.1 Bn

¥210 Bn¥700 Bn

Consolidated Net income

Non Interest Revenue ratio*(Non Interest Revenue)
Environment related
investment and loan
*Total of two banks

Crucial strategy and counting plan
Well-being work style

Improvement of comprehensive
consulting ability
Initiatives in the environmental fieldHuman
resources investment
Net income

Improving profitability¥20.5Bn+Business loan interest+Fee revenue+Securities interest

Increased labor costs

Investment in digitalization Productivity improvement
Increased capital investment

Strengthening group comprehensive capabilities

FY202124

Hokuhoku Financial Group, Inc. Integrated Report 2022

Business innovation

Other

Net income¥25Bn

Promotion of Digital Transformation

Strengthening governance

FY2024

 Strengthening problem-solving capabilities by expanding and enhancing
solution menus
 Expanding customer base and improving transaction profitability by building
sales strategies according to customer segments
 Strengthening management improvement support customers impacted by
Improvement
COVID-19 of comprehensive consulting ability (Corporate Customers)◆Expansion
Strengthening
capabilities
by expanding
and enhancing
solution menus
Improvementof comprehensive
consulting
ability
andproblem-solving
sophisticationof solution
menu◆ Expanding customer base and improving transaction profitability by building
sales strategies according
Strengthening(Corporate
Customers)
Upgrading
Proposing
optimalsolutions
includingnonto customer segments
problem-solving

financial
fields improvement support customers impacted
capabilities◆ Strengthening
management
by COVID-19
 Strengthening problem-solving
capabilitiesbyexpandingand enhancing
Regional
trading
Temporarystaffing
DX・IT introduction
supportwe will jump beyond the solution area of the financial field and NonInsolution
corporatetransactions,strengthen non-financial
companybusinessmenus
financial
such as customer
DX and environmental
initiatives to
respond toprofitability
the diverse needsof business partners who are forced
 fields
Expandingbase and
improvingtransaction
by building
M＆A / Business
Overseas expansion
sectorManagement
tosales
respondtorapidchangesinthebusiness
environment.
/
Tradesupportsuccession
supportstrategies according to consulting
customer segments
Considering new
InStrengthening
improvement
supportcustomers
impactedby and various services utilizing
addition, we aremanagement
considering startingan advertisingbusiness,variousdata analysis,
services
Financial
COVID-19
Advertising businessrealestate as support for improving ＜Affiliatedthe top line of our sector
customers.
company＞
Securities
Corporate
Expansionand portal
sophistication of solution
Lease menu
Card
Upgrading
Proposingincluding nonFinancefunction optimal solutions
Capitalfinancial fields
Guarantee
DX・IT introduction support
M＆A / Business

Data analysis

Strengthening
Corporate solution revenue
Services for the elderly(JPY Bn)problem-solving
capabilities

Real estate services
Nonfinancial
Environment-related
sectorConsidering new consulting

Regional trading
Temporary staffing
company Sustainable businessfinance
Management

successionsolution
supportExisting
area consulting

Overseas expansion

Equity /business
Trade support

Financial＜Affiliatedsectorcompany＞
Securities
Corporate portal
Lease
Card
Corporate
solutionrevenue
Finance function
Capital （JPY Bn）
Guarantee

+1.0

4.6

Existing solution area

services

Business matching

Advertising business

Expansion

Data analysis

＋95

5.6

Real estate services

355
Environment-related

Equity businessconsulting

Business matching（JPY Bn）

5.6

4.6

Number of M＆A / Business
Servicesfor the elderly support FY2021
succession

Sustainable finance

FY2021
FY2024
Corporate solution revenue

+1.0

450

KPI of M＆A / Business
Numbersuccession support

Expansion

FY2021
Number of M＆A / Businesssuccession support

FY2024+95
FY2024450

355

Expanding customer
and improving transaction
profitability+1.0 base
＋95
5.6
355

4.6

Annual sales
Trading depth
FY2021

Area

Sales strategy
according tocustomersegment FY2021
FY2024450

Expandingcustomer base
Improving
FY2024transaction
profitability

FY2021

FY2024

Expanding customer base and improving transaction profitability
Expandingcustomer base
Sales strategy
supportfor COVID-19
COVID-19 Improving
Strengthening
supportforaccordingtoTrading depthtransaction
customer segment
Management
Area
profitability
Strengthening
monitoring
function
Strengthening
monitoring function
Annual sales

improvement ofofbusiness
partners
business partners

Deepening
evaluation
Deepeningbusinessbusiness evaluation

Improving the effectiveness ofStrengthening
support for
COVID-19business revitalization
supportStrengthening monitoring function
Deepening business evaluation

Controlling credit
costsManagement
improvement ofbusiness partners

Hokuhoku Financial Group, Inc. Integrated Report 2022

25

MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3）

Improvement of comprehensive consultingability (Private customer)◆ Deliver optimal proposals according to customer needs and life stages◆ Contribute to customer asset formation and portfolio construction by strengthening consulting functions
Hokuhoku Financial Group supports the life events of each and every customer in anticipation of an era of 100-year lifespans.
We will develop products in anticipation of changes in the environment surrounding our customers, expand non-face-to-faceservices that lead to improved convenience, and improve our consulting capabilities by establishing bases and systems.
Senior ・Wealthy classRetirement generation

Active generation
Asset

Life stage

Needs

PrepareIncreaseGive

Borrow

Protect

Use

Leave

DivideInitiatives◦Asset formation support based onlife planning◦Asset management support basedon retirement planning◦Fostering professional humanresources◦Establishing a consultation system
tailored to lifestyle◦Practice of portfolio proposals
according to risk tolerance◦Consulting utilizing trusts and reverse
mortgages◦Responding to diverse needs bycooperating with affiliated company◦Expansion of non-financial consulting
menu［ KPI ］［ KPIKPI］

Number of funded product contracts*［ KPIKPI］

Balance of assets under custody

Number of Trusts / One-time(JPY Bn)+42,505+117

161,800
532

119,295

305
227
FY2021

FY2024*Dollar-cost averaging mutual fund holders, and level
premium insurance contracts

26

Hokuhoku Financial Group, Inc. Integrated Report 2022

FY2021
Investment trustbalance+3,999650
350

10,3006,301

300
FY2024
Assets under custody byaffiliated company

FY2021

FY2024

Initiatives in the environmental field［ KPI ］
Reduce our company's CO2 emissions

Reduce our company's CO2 emissions（t-CO 2 ）・Aiming for early realization of the 2030 reduction target(46%)

・Introduction of LEDs and high-efficiency air conditioning
・Switch to energy-saving official vehicles

Toward carbon
neutrality
in 2050

Use of non-fossil energy
Energy savingof in-house facilities
Environmental Considerations for Newly
Established and Refurbished Stores

・Utilization of electricity
and gas using non-fossil certificates・Examination of power procurement by PPA・Stores that aim to acquire certification systems
such as ZEB

FY2013

FY2030*Scope 1 and 2 at domestic offices of Hokuriku
Bank and Hokkaido Bank

［ KPI ］

Number of participants infinancial economy / SDGs related education（名）+12,616

Strengthening cooperation with local governments and variousorganizations

20,0007,384

Contribute to the formation of a sustainable local community by actively developing“enlightenment activities for the region” and “educational support for schools aimed
at creating human resources who will lead the future”.
In addition, we will actively carry out collaborations that transcend regions and

FY2021

FY2024industries to support regional decarbonization.
Furthermore, in order to take on new challenges, we will utilize POC, etc., andproceed with the investigation of solutions using an agile method.

［ KPI ］
Amount of environmental financeand investment provided(JPY Bn)+490JPY Bn

Strengthen solutions for business partners

700

By developing a lineup of products that match status and needs and developing
210

solutions, we aim to make the region, business partners, and our group all threeway
good.

37
FY2021For corporate customers

FY2024FY2030StatusRecognizing andgrasping issues

Grasp CO2
emissions

Response study/
plan formulation

Implementation of
measures

SDGs /
environment-related
services

CO2 emissions
measurement
service

Planning
consultation

Sustainable finance

Human resource
introduction

CO2 emissions
measurement
consulting

Energy saving/
renewable energyBM

Utilization ofsubsidies andinterest subsidies

For individual customers
Promotion of ZEH housing loans

Enhanced product lineup of
SDGs-related investment trusts［ KPI ］

Number of SDGs /environment-related services used
800

+552

248

FY2021

FY2024

Hokuhoku Financial Group, Inc. Integrated Report 2022

27

MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3）

Promotion of Digital Transformation［ KPI ］
Number of IB / App subscribers

DX aimed at by Hokuhoku Financial GroupIn order to respond to the changes in customers and society that accompany the innovation ofdigital technology, we will provide new value and experiences to all stakeholders by utilizing
digital technology and radically transforming operations and services throughout the bank.
Safe and convenient procedure
for anyone, anytime, anywhere

Evolution of
personal appbanking

Transform business
communication and become acloser partner

Expansion of
corporate
portalTransform the roles of employees
by minimizing simple office work
and improve services

Reform of
store
reception+364,667
950,000
585,333

FY2021

FY2024［ KPI ］
Number of WEB accounts+248,801
Deepeningdata science

Capture customer's thoughts
and needs with data

Strategic
renewal of coresystem470,000

Renewal ofcustomermanagement
systemTaking on the challenge offurther cost reduction while
ensuring stability and reliability

221,199

Centralized and comprehensive
management and utilization of
information

FY2021

FY2024

Sophistication of digital banking functions
In addition to expanding the non-face-to-face handling menu, we will thoroughly pursue ease of use and ease of use by
speeding up the UI/UX improvement cycle.For customers who come to the store, we will introduce a solution that allows you
to complete various handwritten procedures on a tablet, so that both customers and staff can carry out simple, quick andaccurate procedures.

Sophistication of sales operations and reform of employee behavior
The CRM, which is scheduled to be renewed in 2024, will integrate the customer management function, sales support
function, and loan screening function, which were previously realized individually in multiple systems, into a single system. As aresult, it is possible to eliminate duplicate input of customer information, share various solution information including loan
projects, manage progress, and realize timely and optimal proposals.

A workCommunication

Workflow

Management（Promotion・
Deadline・counting)Workflow

Management（Promotion・
Deadline・counting)Customer Information

division
individual
optimization

B workCommunication
Co-creation of new functions

overall
optimization

Management（Promotion・Deadline・counting)

SFA

28

Hokuhoku Financial Group, Inc. Integrated Report 2022

Customer Information
Single input
Multiple output

Communication

CRM

Customer
Information

One platform

Workflow

Loan business support

Well-being work style
Realize sustainable growth together with the local community and customers by building a work environment where
employees can experience “well-being” and maximizing the potential of each individual.
［ KPIKPI］
Female manager ratio

Improvement of working environment（％）■ Rebuilding personnel system■ Promotion of utilization of leave system■ Environment where seniors can play an active role
■ Eradication of harassment

20.0
or more

16.0

17.4

FY2020

FY2021■ Investing in employee healthRealization of diverse work styles

FY2024■ Supporting women's career development and flexible working styles■ Active recruitment of professional human resources［ KPI ］
Number of qualification holders■ Promote employment of people with disabilities■ Working environment anywhere+3,1253,300

Improving the skills of executives and employees■ Expansion of in-house certification system, training, teaching materials, etc.
■ Improvement of consulting ability and IT literacy■ Introduction of training system in other departments■ Development of highly-skilled human resources by secondment

282175490

FY2021

FY2024

CFP and 1st level FP holders
IT passport holders

Construction of the new headquarters building
We will build a new headquarters building in Sapporo and Toyama, which will be the symbol of our company, and create an
office environment that is easy to work in.
Improve productivity by responding to the diverse work styles of employees. In addition, we will respond to environmental
considerations by introducing energy-saving equipment.
“Hokuhoku Sapporo Building”
Hokkaido Bank Headquarters Building / Hokuriku Bank
Sapporo Branch
Location : Sapporo Scheduled to be completed in 2024

“Hokuhoku FG headquarters building”
Hokuriku Bank headquarters building
Location : Toyama
Scheduled to be completed in 2026

Hokuhoku Financial Group, Inc. Integrated Report 2022

29

MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3）

Strengthening group comprehensive capabilities
During the period of the previous medium-term management plan, the both banks strengthened the "Hokuhoku
Collaboration", which is an initiative for business matching and co-financing in which the both banks collaborated. Under the
new medium-term management plan, we will work to further strengthen cooperation and make maximum use of the resourcesof the two banks to solve the problems of local customers.
In addition to the both banks, by further strengthening cooperation with affiliated subsidiaries, we will strive to enhance thecomprehensive financial services we provide to our customers.

Contribute to solving the problems of our business partners by utilizing our sales base over a wide area
［ KPI ］

Expansion of food-rerlated sales channels
and suppliers
Introduction of systems and expansion ofsales channels
Introduction of consulting company
Acquisition and sale of real estate(via a
brokerage company)

In Hokkaido,
Expanding FG
market share

Hokkaido area loan balance(JPY Bn)

+168
3,272

3,441

FY2021

FY2024

Problem-solving ofbusiness partners

Further sharing of resources between the two banks［ KPI ］

International business

Consulting

Number of achievements*(overseas expansion, derivatives, etc.)(Management / IT)

+345
555

M & A / Business succession
supportFinance function
Joint use of funds

FY2021900

FY2024*Co-financing within the group, wide
area business matching, etc.

Providing Comprehensive Financial Services

Profit of related subsidiaries*
HokuginLease
HokuhokuCapital

Dogin Regional
Research InstituteHokuhoku Services［ KPIKPI］

Hokuhoku Tokai
Tokyo Securities

FG / Banking
subsidiary（JPY Bn）+9JPY Bn 3.6

Providingcomprehensive
financial services

2.7

Hokuriku Card
Dogin Card
FY2021

Hokugin Software

30

Hokuhoku Financial Group, Inc. Integrated Report 2022

Hokuriku Hosho
Services

FY2024*Total of related subsidiaries Net income(excluding credit costs), and Hokuhoku
Tokai Tokyo Securities Referral Fee

Group comprehensive capabilities  Outside Director Interview

Q
A

What do you think are the strengths
and weaknesses of the Hokuhoku
Financial Group?
The Hokuriku Bank and the Hokkaido Bank,
each of which has top-class market share in the
Hokuriku and Hokkaido regions respectively,
have established the Hokuhoku Financial Groupas the first regional financial group in Japan that
operates across regions. The Group's greatest
strength is its strong ties with the communities
and customers of both banks.
The diversity of the two banks operating indifferent regions is a strength of the Group, while
it has made through integration difficult.
In order to survive as regional financial groupaddressing to the rapidly changing businessenvironment, we should hurry to evolve
ourselves so that we improve our higher
expense ratio as well as lower capital adequacy
ratio compared to the top regional banks,
promote DX initiatives, and develop new
business.As an outside director, I will continue
deepening discussions.

Q

How do you evaluate the new
medium-term management plan?

A

The Hokuhoku Financial Group's new mediumterm management plan was formulated after
in-depth discussions at the Board of Directors
meetings, reflecting the opinions of outside
directors.
In order for us to grow together with ourcustomers and region addressing various issues
surrounding us, it is essential for us to expand
and upgrade our solution menu, including
strengthening our consulting capabilities.
Especially in Hokkaido, where the declining
birthrate and aging population are progressing,Directors serving as
Audit and Supervisory
Committee Member

Masaaki Manabe

improving the convenience of services for theelderly through DX will lead to solving regional
issues.
In addition, as KPIs of the new medium-term
management plan, we have set a target for thenumber of “the Hokuhoku collaboration”,
initiatives such as business matching and cofinancing of both banks, to promotecollaboration among our group companies aswell as the number of applicants for “thechallenge jobs”, opportunities to experienceother works, to motivate young employees.
On the other hand, in order to increase thefeasibility of the plan, it is crucial, I think, that all
employees understand and sympathize withideas incorporated in the plan. From that pointof view, I have been particularly interested in theway how the company announces the plan andhow the company makes the plan easier tounderstand. I think that the plan describes very
well what we shall challenge over the next three
years under our newly set long-term vision. I am
looking forward to seeing how the Group's
ideas, which are included in the plan, will be
spoken with enthusiasm by outside stakeholders
as well as by employees in various situations in
the future.

Hokuhoku Financial Group, Inc. Integrated Report 2022

31

MEDIUM-TERM MANAGEMENT PLAN“GO FORWARD WITH OUR REGION”(2022/4～2025/3）

Group comprehensive capabilities

QA

How do you evaluate theeffectiveness of the Board of
Directors?

should continue to take advantage of suchopportunities in the future.
At the Board of Directors meetings, we regularly
receive reports on the content of explanations
and Q&As at investor briefings, and I exchange
my opinions from the perspective of a chief
executive officer of a corporation. In a businessenvironment where the profitability of existing
business is expected to be lower and entry into
new business is expected, I would like to ask
the executive board members for their opinions
on DX initiatives, group reorganization, anddevelopment of new business.

At the Board of Directors meetings, I believe thatthe outside directors have been able to engage
in lively discussions from a wide range ofperspectives, making use of their experiences
and insights into corporate management,
finance, risk management, cybersecurity, etc.
Furthermore, the number of outside directors
has increased by five and a female member has
newly joined in 2022. I believe we directors will
be able to have deeper discussions than ever at
the Board of Directors meetings.
Every year, outside directors convey our various
opinions through questionnaires, and the Boardof Directors is making necessary improvements.
At the Board of Directors meetings, the opinionsof outside directors are respected. In addition,
one-on-one meetings with the president andvice president have been enriched, andcommunication between outside directors andmanagement executives has improved year byyear.
I believe that it is worthwhile sharing further
information on the business environment
surrounding us, such as strategic priorities ofsupervisory authority and trends in ourcompetitors. To do so will be useful tounderstand the intentions of executive directors
accurately.

32

Q

How do you respond to stakeholder
expectations?

A

The other day, at a company briefing for
institutional investors that I attended, the new
medium-term management plan was explainedin an easy-to-understand manner. Opportunities
to directly hear the voices of shareholders areimportant, and I believe that outside directors

Hokuhoku Financial Group, Inc. Integrated Report 2022

I will continue to work to strengthen engagementwith all stakeholders, including shareholders andinstitutional investors, as well as employees andcommunities.

Q

Please tell us what you expect fromthe newly appointed president.

A

In selecting the new president, we exchanged
opinions with the former president, who knew
the candidates well, and held various
discussions at the Nomination andCompensation Committee to find out who would
be most suitable in the current businessenvironment.

There is no perfect top executive at the time oftaking office. The most important thing is toenhance qualifications as a top executive after
taking office.
I would like President Nakazawa to demonstrate
his natural vitality and take the initiative for ourgroup to grow together with the region andcustomers, addressing various issues
surrounding them.

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATIONCORPORATE GOVERNANCE
Basic approach
The Company and all group companies regard strengthening and enhancing corporate governance as one of the mostimportant management priorities. We have drawn up a basic policy — our management philosophy — covering all our
activities including the formulation of management strategies and making management decisions. We share basic values anda sense of ethics through the Hokuhoku Financial Group Code of Conduct, and endeavor to increase corporate value andrealize solid management aimed at contributing to the development of the Hokuriku and Hokkaido regions.

Corporate governance
We have established a framework that enables quick decision-making, with the Shareholders’ Meeting and Board of
Directors at the top of the framework, and day-to-day
operational authority delegated in accordance with internal
rules. Bodies such as the Management Committee are able
to respond quickly to specific and expert matters based on
basic policies established by the Board of Directors. Furthermore, separate from the Management Committee, wehave established a Business Promotion Committee which
ensures that business policies are correctly carried out
among group companies.

We use a company with Audit and Supervisory Committee
system and also appoint outside Director. Additionally, inorder to bolster our group governance framework and, as aholding company, to ensure that operations are managed
appropriately, people from each of our principal subsidiaries,
Hokuriku Bank and Hokkaido Bank, are appointed as
Directors at the other bank to promote mutual understanding and mutual checks and balances.
In this way, in addition to having established this framework to cyclically enable effective decision-making, implementation, evaluation, and improvements, the Board of
Directors decides the basic policy on internal controls, tocreate an effective internal control system.

Overview of key bodies (times of meetings held during FY2021)
1. Board of Directors (13 times)
Responsible for decisions related to important policies for
management of the Group as a whole, and for overseeing thebusiness management, risk management and auditing carriedout by the holding company and its subsidiaries. Five Directors
are appointed and oversight is strengthened by incorporating
perspectives that are independent from management.
2. Audit and Supervisory Committee (11 times)
Determines matters related to auditing policies, plans andmethods, and matters related to the execution of duties of theappointed Director serving as Audit and Supervisory
Committee Member. Also, monitors the performance of duties
by Directors, and carries out determinations of opinions related
to the nomination, compensation, etc., of Directors who are
not serving as Audit and Supervisory Committee Members.
3. ‌Corporate Governance Committee (4 times, until October 2021)
Nomination and Compensation Committee (2 times, from
November 2021)
A majority of the committee members are selected fromoutside directors, and they provide appropriate advice andinvolvement in matters related to personnel affairs andremuneration for directors and senior management.
4. Management Committee (46 times)
Comprising full-time Directors of the Company, this bodymakes decisions — in accordance with the basic policies laid
down by the Board of Directors — on matters relating tobusiness execution policies for the entire Group and mattersrelated to the implementation of particularly important tasks by
specific divisions.
5. Business Promotion Committee (4 times)
Comprising full-time Directors of the Company and presidents
of subsidiaries, this body is responsible for making sure thatimportant issues and management policies for the entire Groupare widely known and understood, as well as for keeping trackof business results at each company to ensure that business iscarried out appropriately.
6.Sustainability Promotion Committee (1 time, from November 2021)
Consisting of full-time directors and departments in charge, it
considers the direction of sustainability management for theentire group.

Hokuhoku Financial Group, Inc.
Shareholders’ Meeting
Business Promotion Committee
Members: Full-time Hokuhoku FG Directors
and subsidiary presidents
Purpose: To ensure sound management
policy implementation, ascertain
the status of business and provide
instructions

Corporate Planning Dept.

Board of Directors
Executionof
PDCA

Audit and Supervisory
Committee

Appointment of 5 outside Directors

Nomination and Compensation Committee
Management Committee

Business Planning Dept.

Risk Management Dept.

Hokuriku Bank

Audit Dept.

Hokkaido Bank

Shareholders’ Meeting
Audit & Supervisory Board
Board of Directors

Shareholders’ Meeting
Other
Subsidiaries

Management Committee

Audit & Supervisory Board
Board of Directors
Management Committee

Each bank appoints a person from the other bank as its Director

Hokuhoku Financial Group, Inc. Integrated Report 2022

33

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION

Reason for appointment as outside Director
In the selection of candidates for outside Directors, in addition to the knowledge, experience and capabilities to perform therole, the Company places great importance on ensuring independence to meet the requirements for outside directors provided
by the Companies Act and to exercise the management supervisory function.
Name

Attendance at Board of Directors
meetings and Audit and Supervisory
Committee meetings for FY2021

Reason for appointment

Masaaki Manabe

He is well versed in management and local economies as a business manager and he is expected tostrengthen the supervisory function of the Company’s overall management, so he has been appointed an
outside Director.
In addition, he does not breach the criteria for independence prescribed in Securities Listing Regulations, etc.,
meets the “criteria for judging independence” prescribed by the Company, does not present any concern
about conflicts of interest with general shareholders, is judged to have adequate neutrality, and has been
designated an independent director.

Nobuya Suzuki

He has extensive experience in the management of financial institutions (life insurance) and he is expected tostrengthen the supervisory function of the Company’s overall management, so he has been appointed an
outside Director.
In addition, he does not breach the criteria for independence prescribed in Securities Listing Regulations, etc.,
meets the “criteria for judging independence” prescribed by the Company, does not present any concern
about conflicts of interest with general shareholders, is judged to have adequate neutrality, and has been
designated an independent director.

Kaoru Funamoto

Due to his extensive experience and broad insight at National Police Agency and The Resolution andCollection Corporation, he is expected to strengthen the supervisory function of the Company’s overallmanagement, so he has been appointed an outside Director.
In addition, he does not breach the criteria for independence prescribed in Securities Listing Regulations, etc.,
meets the “criteria for judging independence” prescribed by the Company, does not present any concern
about conflicts of interest with general shareholders, is judged to have adequate neutrality, and has been
designated an independent director.

Marie Ogawa

She has a wealth of experience and wide-ranging knowledge in the financial and legal fields at the Bank ofJapan, and was appointed as an outside Director as she is expected to strengthen the supervisory function of
the Company's overall management.
In addition, she does not breach the criteria for independence prescribed in Securities Listing Regulations,etc., meets the “criteria for judging independence” prescribed by the Company, does not present any concern
about conflicts of interest with general shareholders, is judged to have adequate neutrality, and has been
designated an independent director.

New appointment

Yutaka Yokoi

He was appointed as an outside director because he is expected to strengthen the supervisory function of theCompany's overall management based on his extensive international experience and wide-ranging knowledge
at the Ministry of Foreign Affairs.
In addition, he does not breach the criteria for independence prescribed in Securities Listing Regulations, etc.,
meets the “criteria for judging independence” prescribed by the Company, does not present any concern
about conflicts of interest with general shareholders, is judged to have adequate neutrality, and has been
designated an independent director.

New appointment

Board of Directors
meetings
12/13
Audit and Supervisory
Committee meetings
11/11
Board of Directors
meetings
13/13
Audit and Supervisory
Committee meetings
11/11
Board of Directors
meetings
9/9
Audit and Supervisory
Committee meetings
8/8

Internal director
Corporate Planning
Hiroshi Nakazawa

Risk management

Sales/Finance●HR management

●

IT

●

Yuji Kanema

●

●

●

Masahiko Kobayashi

●

●

●

Yoshimasa Takada

●

●

●

●

●

●

Yoshikazu Sakamoto●

Akira Sakai
Hirokuni Kitagawa

Financial market●●●
Outside director

Corporate management
Masaaki Manabe●

Suzuki Nobuya●

Finance

Legal affairs

Global affairs●

Kaoru Funamoto●●

Marie Ogawa●●

Yutaka Yokoi●●

Assessment of the effectiveness of the Board of Directors
The Company’s Board of Directors conducts analysis and assessment of the overall corporate governance system including
the overall effectiveness of the Board of Directors each year in light of the purpose of our Corporate Governance Guidelines,
discloses an overview of the results and aims to make the necessary improvements.
Overview of the analysis and assessment results concerning the effectiveness of the FY2020 Board of Directors
The assessment is that the composition and management of the Board of Directors and the Corporate Governance Committee, which isestablished with outside Directors as key members under the Board of Directors, are appropriate and the effectiveness of the Board of
Directors has been secured.
We will continue to take necessary measures to enhance information provided to directors, including outside directors, improve materials,
and further activate discussions on group management strategies.
Initiatives in FY2021
In order to further activate discussions at the Board of Directors, efforts were made to improve the provision of information and materials.
In particular, in formulating a long-term vision and a medium-term management plan based on our management philosophy, aiming to
improve the corporate value of the Group over the medium- to long-term, we held multiple discussions with independent outside directors
and were able to fully reflect their advice.
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Hokuhoku Financial Group, Inc. Integrated Report 2022

Overview of the analysis and assessment process concerning the effectiveness of the FY2021 Board of Directors
Assessment concerning the effectiveness was conducted at the Board of Directors meeting in May after registered self-assessment
survey was conducted for all directors and suggestions were put forward from the Corporate Governance Committee based on thesurvey results.
[Items in the self-assessment survey (headings)]
1) Composition of the Board of Directors2) Operation of the Board of Directors3) Operation of the Corporate Governance Committee (Nomination and Compensation Committee from 2021)
4) Role and responsibilities of Directors, support system of outside Director, etc.
5) Relationship with shareholders and investors
6) Corporate governance system and overall effectiveness of the Board of Directors
7) Status of improvements since the previous fiscal year
Overview of the analysis and assessment results concerning the effectiveness of the FY2021 Board of Directors
The assessment is that the composition and management of the Board of Directors and the Corporate Governance Committee (Nomination
and Compensation Committee from 2021), which is established with outside Directors as key members under the Board of Directors, isappropriate and the effectiveness of the Board of Directors has been secured.
Note that in the discussion about the assessment, opinions were shared about the need to fulfill information and to improve meeting
materials to provide the members of the Board of Directors further, as well as to enhance discussion about business strategies of theGroup and we plan to take the necessary action in the future.

Director training
In order for Directors to appropriately perform the roles and responsibilities expected of persons in charge of important governance bodies, the Company’s Board of Directors encourages and supervises efforts of Directors to study for the acquisition of
the necessary knowledge and appropriate updates to deepen their understanding of such roles and responsibilities.
(Key initiatives in FY2021)
We have created opportunities to provide explanations for newly appointed outside directors using detailed materials so thatthey can deepen their understanding of the Company and its subsidiary banks.

Directors’ remuneration
The Company has established the Corporate Governance Guidelines at the Board of Directors and the Company prescribes
the policy concerning the determination of amounts such as Directors’ remuneration, etc. and its calculation method, and themethod and procedures for determining such policy in the Guidelines as follows.
ⅰ	‌The Company determines the level and composition of Directors’ remuneration to function as an incentive for the Group’s
sustained growth and the medium to long-term improvement in corporate value.
ⅱ	‌The remuneration, etc. of Directors excluding Directors serving as Audit and Supervisory Committee Members shall comprise the following basic remuneration and share remuneration, with the respective amounts within the upper limits of theannual remuneration approved at the General Meeting of Shareholders, and be determined by the Board of Directors in an
objective and transparent manner upon the recommendation from the Corporate Governance Committee concerning theappropriateness and validation of the amounts calculated in accordance with separately prescribed Directors’ remuneration
provisions and share remuneration-type stock option provisions.
(a) Basic remuneration
Basic remuneration shall be a fixed amount of remuneration prescribed for each position.
(b) Share remuneration‌Share remuneration shall be share remuneration-type stock options equivalent to amounts prescribed for each position.
ⅲ	‌The remuneration, etc. of Directors serving as Audit and Supervisory Committee Members shall comprise only basic remuneration in light of the role to direct and audit the execution of business from a neutral and independent perspective, and be
determined by discussion of Directors serving as Audit and Supervisory Committee Members in accordance with the separately prescribed Directors’ remuneration provisions, within the upper limits of the annual remuneration approved at theGeneral Meeting of Shareholders.
The details of resolutions concerning Directors’ remunerations, etc. at the General Meeting of Shareholders are as follows.
ⅰ	‌Resolution was made at the Ordinary General Meeting of Shareholders held on June 27, 2017.

ⅱ	‌The amount of remuneration including bonuses for Directors (excluding Directors serving as Audit and Supervisory Committee Members) shall be an amount not exceeding 250 million yen per year (not including the salaries of employees serving
concurrently as Directors).
ⅲ	‌The amount of remuneration for Directors serving as Audit and Supervisory Committee Members shall be an amount notexceeding 80 million yen per year.
ⅳ	‌In addition to the upper limit of the amount of remuneration for Directors (excluding Directors serving as Audit and Supervisory Committee Members) there shall be a separate allocation of stock acquisition rights as share remuneration-type stock
options for Directors (excluding Directors serving as Audit and Supervisory Committee Members and outside Directors) for
an amount not exceeding 45 million yen per year (not including the salaries of employees serving concurrently as Directors).
Hokuhoku Financial Group, Inc. Integrated Report 2022

35

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION

Total amounts of remuneration (FY2021)
Category of executives

Total amountsof remuneration(millions of yen)

Directors (excluding Directors
serving as Audit & Supervisory
Committee Members)(excluding Outside Directors)
Directors serving as Audit &Supervisory Committee Members(excluding Outside Directors)
Outside Directors

Total amounts by category of remuneration (millions of yen)
Share
Fixed
remuneration-type
remuneration
Variablestock-options(Basicremuneration(Share remuneration)
remuneration)

Number of
eligible
executives

141

118

–

22

9

25

25

–

–

1

18

18

–

–

5

Response to cross-shareholdings
The Company and its core subsidiaries (Hokuriku Bank and Hokkaido Bank) have prescribed the policy concerning crossshareholdings of listed companies and standards for exercising voting rights as follows. With regard to issues that are notdeemed appropriate to hold, we will proceed with the sale after adequate dialogue with the business partners. In addition, we
may sell cross-held shares even if it is deemed appropriate to hold them, taking into consideration market environments, management and financial strategies, etc.

Policy on cross-shareholdings(1) Cross-shareholdings are held on a limited basis in cases where it is judged that such cross-shareholdings will contributeto the enhancement of the corporate value of the subject company and the Group by maintaining and strengthening along-term and stable relationship with the subject company and enjoying advantages in terms of business strategy.
(2) For cross-shareholdings, the risk/return associated with holding is measured for each individual issue based on an index that takes into account the cost of capital. In addition, the Company shall conduct a comprehensive review of the
purpose of holding such shares at the Board of Directors, etc. each year, to determine whether or not to hold them inlight of their economic rationality based on future prospects, business strategies such as business relationships andbusiness alliances, and relevance to the regional economy.

Standards on exercising voting rights
When exercising voting rights for cross-shareholdings, the following points shall be confirmed for each agenda item, and if
necessary, a comprehensive decision for approval or disapproval shall be made through dialogue with the business partner.
(1) Will it contribute to increasing the medium to long-term corporate value and sustainable growth of the partner company?
(2) Will it contribute to increasing the medium to long-term economic benefits of the Group?

Basic policy on internal controls
1. ‌System to ensure that executives and employees of theCompany and group companies perform their duties inconformity with laws and regulations, as well as in conformity with our articles of incorporation‌In addition to setting matters pertaining to laws and regulations, or the articles of incorporation, the Board of Directors
decides on basic management policies and important issues
related to the execution of operations, establishes organizations and systems, and supervises performance of duties byDirectors.
‌The Board of Directors selects multiple outside Directors inpositions independent from the Group in the selection ofcandidates for the Board of Directors, working to boost themutual checks and balances function.
‌The Board of Directors establishes the Corporate GovernanceCommittee, creating a system to provide the appropriate
advice and involvement in important items to the Company
through coordination with the outside Directors.
‌The Board of Directors, positioning compliance as one of themost important management issues, draws up both basic
compliance policy and the compliance charter.
	‌It furthermore establishes control departments to maintain andenhance the compliance system of the Company and groupcompanies.

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Hokuhoku Financial Group, Inc. Integrated Report 2022

‌The
Board of Directors draws up a Compliance Program as
each fiscal year’s action plan, thoroughly implementing honest
and fair corporate activities, rejecting all relationships with
antisocial forces, and preventing money laundering, etc.
‌The Board of Directors establishes a whistleblower system
whereby an executive or an employee who discovers illegal orinappropriate actions can report to a whistleblower contact
point established in advance.
‌Every fiscal year the Board of Directors draws up an Audit
Policy and has the internal audit department, in accordancewith this, conduct audits of the state of compliance to laws
and regulations, etc. of the Company and group companies,
and report these results to the Board of Directors and the
Audit and Supervisory Committee, etc.
2. ‌System related to the storage and management of information related to the performance of duties by Directors‌Based on the Board of Directors rules as well as document
management rules and other regulations, the Board of Directors creates systems for the storage and management of information related to performance of duties by Directors.
Directors can access the documents at any time.

3. ‌Rules and other systems related to the management of riskof losses of the Company and group companies‌Recognizing the existence of various risks surrounding theCompany and group companies, and fully aware of theimportance of controlling such risks, the Board of Directors
formulates the basic risk management policies and risk management rules.
	‌It furthermore establishes control departments, establishing asystem to accurately recognize and gauge individual risk
associated with Group company management, and to ensure
the soundness of Group management through appropriate
management and operations.
‌The Board of Directors have formulated contingency plans,
etc. and established a crisis management system to prepare
for unexpected events and risks such as natural disasters.
‌Each group company carries out appropriate risk management in close partnership with each group company’s risk
management department, following the Group’s basic policy.
‌Every fiscal year the Board of Directors draws up an Audit
Policy and has the internal audit department, in accordancewith this, conduct audits of the state of risk management of
the Company and group companies, and report these results
to the Board of Directors and the Audit and Supervisory
Committee, etc.
4. ‌System to ensure that Directors, etc. of the Company andgroup companies perform duties efficiently‌The Board of Directors draws up a management plan to clarify
the Group’s desired vision and its performance goals.
‌The Board of Directors sets overall organizational standards
for basic tasks, operational entities, and assignment of duties,
and establishes a system in which the Company and all groupcompanies perform well-organized and efficient business
operations.
‌The Management Committee executes business operations
promptly and efficiently, based on the delegation of authority
by the Board of Directors with regard to the execution ofbusiness operations, and on the predetermined assignment of
duties.
5. ‌System to ensure the appropriateness of financial reporting‌The Board of Directors draws up a basic policy related to theinternal control evaluation of financial reporting, establishing asystem to ensure the suitability of financial reporting and toprovide true and clear reporting on both financial conditions
and management results.
6. ‌System to ensure the appropriateness of operations within
the corporate group which consists of the Company andgroup companies‌The Board of Directors is responsible for overall group management. It establishes the group management rules, prepares frameworks for agenda-setting and reporting to theCompany for each group company with regard to importantmatters, and receives reports from internal audit departmentson the findings of audits into the state of compliance to laws
and regulations, etc., risk management, and the appropriateness and effectiveness of business operations.
‌The Board of Directors draws up Regulations for Intra-Group
Transactions with the aims of clarifying the control system for
intra-group transactions, etc. and of carefully maintaining thesoundness of management practices for the Group as awhole. The Board of Directors performs its duties of management and administration based on these regulations.

7. ‌Matters related to employees required to assist with dutiesof the Audit and Supervisory Committee‌In order to assist the Audit and Supervisory Committee in the
conduct of their duties, the Board of Directors shall place
employees who carry out this work only and to whom Audit
and Supervisory Committee Members may directly give
directions and orders based on their independence andeffectiveness etc.
‌The Board of Directors requires prior consent from the Audit
and Supervisory Committee for personnel transfers anddisciplinary measures regarding such employees.
8. ‌System for the Company and group company executives
and employees to report to the Audit and Supervisory
Committee and other systems related to reporting to the
Audit and Supervisory Committee‌If executives and employees of the Company or group companies discover matters that could cause significant losses to theCompany or group companies, they shall directly or indirectly
report such matters to the Audit and Supervisory Committee.
‌The Board of Directors establishes a system to report to theappointed Directors serving as Audit and Supervisory Committee Members for reports carried out in accordance with rules,
including such reports within the Company and such reports
from group companies to the Company.
‌Either the Audit and Supervisory Committee or appointed
Director serving as Audit and Supervisory Committee Member
may request reports from executives and employees of theCompany or group companies as needed.
‌The Board of Directors shall establish a system to ensure that
executives and employees of the Company or group companies are not mistreated as a result of having reported to,
consulted or investigated with the Audit and Supervisory
Committee.
9. ‌Other systems to ensure effective auditing by the Audit andSupervisory Committee‌The Board of Directors shall give due acknowledgement to theimportance and usefulness of auditing by the Audit and Supervisory Committee, and shall discuss and take responsive
action appropriately if the Audit and Supervisory Committee
requests creation of a system for smoother and more effective
performance of auditing duties.
‌The appointed Director serving as Audit and Supervisory
Committee Member may attend important meetings such as
the Management Committee.
‌Furthermore, either the Audit and Supervisory Committee or
appointed Director serving as Audit and Supervisory Committee Member shall regularly meet with the representative
Directors and outside accounting auditors, in addition to which
it shall maintain close collaboration and cooperative relations
with internal audit departments and other departments withinternal control functions, receiving reports both on a regularbasis and as required, and requesting explanations as andwhen necessary.
‌Directors serving as Audit and Supervisory Committee Members may invoice the Company for any expenses deemednecessary in order to perform duties of the Audit and Supervisory Committee.

Hokuhoku Financial Group, Inc. Integrated Report 2022

37

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATIONInternal auditing mechanisms
Basic approach
The Group believes that establishment of internal auditing mechanisms that effectively meet requirements according to thescale and nature of operations, laws and regulations applied to the Group’s businesses and categories of risk, is
indispensable for enabling due legal and regulatory compliance by the Group, customer protection and risk management.
Based on this conviction, the Company and its subsidiary banks, Hokuriku Bank and Hokkaido Bank have establishedinternal auditing departments.
The internal auditing departments of each Group company develop mechanisms of checks and balances, which thereby
ensure that those departments function independently of other departments.

Group-wide measures
The Company has established the Audit Dept., which is
expected to verify the appropriateness and effectiveness ofinternal management mechanisms of the subsidiaries andto oversee the internal audit function of those companies. Inline with basic policy and rules on internal audits compiledby the Board of Directors, the Audit Dept. carries out internal audits on the Company and its non-banking subsidiaries
and affiliates, and also receives reports from Hokuriku Bankand Hokkaido Bank that include results of internal audits
and progress made on matters requiring improvement.
Furthermore, when necessary, the Audit Dept. centrally
assesses and manages the implementation of internal
audits within Group companies through on-site bank investigations, guidance and reports.
Results of internal audits at Group companies are
periodically reported to the Board of Directors promptly

when needed. In particular, mechanisms have been put inplace for prompt reporting to the Board of Directors withrespect to events that could significantly impact management of the Group.
Also at Hokuriku Bank and Hokkaido Bank, operational
and asset audits are performed involving head offices,branches and subsidiaries of each bank, based on thepolicy and rules for internal audits of the respective banks.
Conducting these audits involves assessing legal andregulatory compliance, customer protection, and risk
management at each entity subject to audit, and thenmaking efficient and effective internal audit plans taking into
account factors such as the frequency and extent of suchaudits.
When necessary, the audit departments of both banks
and the Audit Dept. of the Company conduct joint audits inorder to strengthen and streamline overall Group auditing.

MEASURES FOR RISK MANAGEMENT
General risk management systems
The Group has created basic risk management policies that address various risks and is working to upgrade general risk
management systems to ensure proper resource allocation and risk taking in balance with earnings targets while keeping
overall levels of risk within the Group’s managerial capacity to address such risk and in order to protect customer deposits
and earn the trust of our shareholders and creditors.
In addition, the Group has established a general risk management department to integrate and manage the various risks
while also conducting internal audits by an independent audit department with a structure to verify the appropriateness andeffectiveness of the risk management system.
Hokuhoku Financial Group, Inc.

Board of Directors
Audit and Supervisory
Committee

Management Committee

Hokuriku Bank

Hokkaido Bank

Risk Management Dept.

Audit Dept.

Board of Directors

Audit & Supervisory Board Members,
Audit & Supervisory Board

Management Committee
ALM Risk Management Committee

Market risk
38

Hokuhoku Financial Group, Inc. Integrated Report 2022

Liquidity risk

Credit risk

Operational risk

Other
Subsidiaries

Allocation of risk capitalthrough initiatives that include checking risk allocation plans

The Group’s risk management practices involve taking aunified approach to the extent possible in terms of quantifying
the various risks that emerge with respect to its operations,and then taking steps to ensure that overall levels of risk are
kept within the Group’s capacity to take on such risk.
The subsidiary banks control and manage risk with theaim of ensuring that levels of risk remain within a range
permissible for banking operations. To that end, they
estimate maximum potential loss through a process thatinvolves quantifying credit risk, market risk and operationalrisk. They then allocate risk capital by using core capital as
allocation source, with the aim of making effective use ofcapital resources.

of subsidiary banks, verifying that amounts in excess of risk

Meanwhile, the Company ensures that excessively large

capital allocations are sufficient to cover risk conceivably
affecting subsidiaries other than the subsidiary banks aswell as risk not included in the risk assumptions, and monitoring actual levels of risk.
In addition, we perform stress tests to calculate theextent of potential losses that would be anticipated in thecase of normally inconceivable deterioration of businessconditions, excessive market fluctuations and other such
scenarios. In this way, we periodically examine the substantiality of our capital position against risk that cannot beeasily perceived.

risks are not taken relative to capital on a Group-wide basis,

Credit risk management
Basic approach
Credit risk involves, for instance, the threat that deterioration of a customer’s financial health might make it impossible torecover principal or receive interest of loans and bills discounted, etc. as initially contracted. Although this is an unavoidable
risk when it comes to banks whose role is to act as financial intermediaries, the Group endeavors to maintain and enhance
asset soundness by developing and strengthening its credit risk management systems.

Credit risk management systems
To maintain and enhance asset integrity, the Group applies
its internal ratings system and asset self-assessment,
promptly and accurately appraises credit risk, and performs
write-offs and provisions to reserves for possible loan losses
as appropriate.
When making individual judgements on granting credit,
rigorous screening is carried out in accordance with standards and principles stated in our credit policy.

of large borrowers based on the Group-wide management
rules for credit limits and manage so that no excessive credit
concentration risk materializes.

Asset self-assessment standards
Self-assessments are strictly performed by the asset assessment departments in the subsidiary banks according to theasset self-assessment standards and the appropriateness isverified by the risk management department and independentinternal management department.

Internal ratings systems

Corporate rehabilitation

To enable objective appraisal of credit risk of loans and bills
discounted, etc., our subsidiary banks have introduced
internal ratings systems. Using 15 credit ratings based on
financial data and qualitative information regarding borrower
creditworthiness, the system enables ongoing monitoring ofchanges in ratings.
In addition, we monitor the credit concentration status

After making a loan to a corporate customer, we endeavor toprevent such loans from becoming designated as bad debt byassessing business conditions faced by our borrowers andperforming follow-up reviews of the borrower’s business plans.
Meanwhile, we strive to ensure asset integrity through creationof a framework for dedicated management of bad debt andenhanced support for corporate rehabilitation.

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BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION

Market risk management
Basic approach
Market risk involves the threat of incurring losses due to fluctuations in the value of assets and liabilities held by the Group, orin the earnings generated by the Group, such that may be caused by fluctuations in various market risk factors, such as
interest rates, stock prices, and foreign exchange rates.
The Group endeavors to properly control market risk and manage operations in a manner that ensures stable earnings.
To that end, at the subsidiary banks that mainly handle transactions involving market risk, we have created regulations formarket risk management and comprehensively manage assets and liabilities by employing asset-liability management (ALM)
practices.

Liquidity risk management
Liquidity risk refers to fund procurement risk involving the threat of losses that may be incurred due to a fall in creditworthiness or the like diminishing an entity’s financing availability and forcing it to procure funds at significantly higher interest rates
than normal. Liquidity risk also refers to market liquidity risk involving the threat of losses that may be incurred due to market
disruptions or the like preventing an entity from engaging in transactions and forcing it to engage in transactions on considerably less favorable terms than normal.
The subsidiary banks, which account for a majority of the Group’s liquidity risk, stipulate regulations on liquidity risk
management and maintain adequate levels of government bonds and other payment reserve assets that are readily convertible into cash. They also set various control indices pertaining to liquidity risk and monitor those on a daily basis. Developments regarding liquidity risk are regularly reported in meetings of the ALM Risk Management Committees and other suchbodies, and discussions are held in that regard, to ensure that we will be able to take action to address any crisis, should
one emerge, appropriate to the stage of the particular situation.
By precisely assessing management and procurement levels at subsidiary banks, we ensure that fund procurement canproceed smoothly.

Operational risk management
Basic approach
Operational risk refers to the threat of losses arising from inappropriate operational processes, improper conduct of executive
officers and employees, unsuitable computer systems, or adverse external events.
The Group categorizes operational risk into seven categories as prescribed in the “Rules for management of operationalrisk”: 1) Administrative risk, 2) System risk, 3) Legal risk, 4) Personnel risk, 5) Tangible asset risk, 6) Reputational risk, and 7)
Other risks. The status of these risks is monitored at the Operational Risk Specialist Committee, which convenes monthly at
the subsidiary banks, and we strive to establish Plan, Do, Check and Act (PDCA) cycle frameworks by grasping potential
risks through risk assessments, etc. and the evaluation of preventative measures.

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Hokuhoku Financial Group, Inc. Integrated Report 2022

Risk management systems by major category

Crisis management• Administrative risk management
Through the analysis of the causes of administrative errors
and other incidents, the Group discusses measures toprevent reoccurrence, while advancing improved efficiencies
and centralization of headquarter administrative operations
from the perspective of consolidation and mutual checks
and endeavoring to implement initiatives that will reduce
administrative risk.
• System risk management
The Group has formulated “rules for system risk management” as well as “a basic policy on ensuring the safety of
information assets (security policy)”, has established arobust management and operating structure, and implements a variety of security management measures, including backup systems. In addition, the Group is working tostrengthen its security management system in order topromptly address cyberattacks which have been on the risein recent years.

To minimize the impact of any large-scale disaster or otheremergency, should one occur, the Group has compiled acrisis management manual with contingency plans andother such content, and has also established a contingency
framework that includes mechanisms for information-gathering as well as centralized crisis instruction and command.
In particular, at our subsidiary banks, we have drawn up
a Business Continuity Plan (BCP), which enables us tocontinue to perform our settlement functions and otheroperations required of financial institutions in the event of anearthquake, outbreak of a new strain of influenza or othersuch crisis, and have otherwise established a frameworkthat enables a full-scale response to crisis situations.

MEASURES FOR COMPLIANCE
Basic policy
At Hokuhoku Financial Group, we regard compliance as one of our most important management priorities, thereby fullyrecognizing that shortfalls with respect to compliance could weaken our business foundations. Therefore, the Board of
Directors has established basic compliance policies which underpin our efforts to engage in business activities in a fair andhonest manner.

Basic compliance policy

5. Ensuring management transparency

1. ‌Recognition of the Group’s basic mission and social
responsibilities	‌The Group aims to achieve a highly transparent management
and organizational culture through accurate and swift
disclosure and decision making.

	‌As a regional financial institution, the Group recognizes its
public duties and social responsibilities, and accordingly
strives to gain greater trust through the conduct of soundbusiness operations.

2. Providing quality financial services
	‌By providing high-quality, integrated financial services, theGroup will contribute to enabling stable economic and social
development of its operating regions, while facilitating better
lives for its customers.

3. Strict observance of laws, regulations and rules	‌The Group strictly observes all relevant laws, regulations andrules, and conducts business in a fair and prudent manner, in
adherence with its own standards of corporate ethics andsocial norms.

4. Rejection of all ties with anti-social elements	‌The Group contributes to a healthy society by resolutely
refusing to associate or work with anti-social elements thatthreaten social peace and security.

Systems
To establish compliance systems, the Group has established acompliance charter, put in place organizational structures andarranged joint measures by involving the Company and eachGroup company.
The Risk Management Dept. acts as the Compliance General
Department responsible for overseeing compliance within theGroup, and the head of the Risk Management Dept. acts as theofficer in charge of compliance.
Compliance officers and other such managers are deployed
to each branch of subsidiary banks and each Group company inorder to aggressively implement training and awareness-raising
initiatives regarding compliance in the workplace. Subsidiarybanks have established Compliance General Departments andCompliance Committees, which work to assess progress incompliance measures and make improvements.

Hokuhoku Financial Group, Inc. Integrated Report 2022

41

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION

Hokuhoku Financial Group, Inc.

Board of Directors
Audit and Supervisory
Committee

Management Committee

Risk Management Dept.

Compliance General Department

Subsidiaries, etc.

Board of Directors

Audit Dept.

Audit & Supervisory Board Members,
Audit & Supervisory Board

President

Management Committee

Compliance Committee

Compliance Committee
Compliance Department

Compliance General Department

Compliance Department

Compliance officers, etc.

Compliance officers, etc.

Compliance manager

Hokuriku Bank

Other Subsidiaries, etc.

Hokkaido Bank

Compliance manual and compliance programs
To ensure rigorous compliance, we have formulated acompliance manual (code of conduct) compiling all fundamental
considerations which executive officers and employees need toobserve. The manual is distributed to all executive officers andemployees, and in-house seminars and training sessions are
conducted to ensure thorough familiarity with its content.

Measures for better customer protection andgreater customer convenience
To protect customer assets, information and other interests, theGroup has established policies for management of customer
protection within its basic rules for management of customer
protection.
Furthermore, we have formulated protocols and appropriate
response structures based on five separate considerations, inorder to provide pertinent explanations to our customers inaccordance with the Japanese Financial Instruments andExchange Act and other laws, and to properly handle customer
grievances and inquiries through a customer consultation office
set up to serve as a point of customer contact.
Moreover, the Compliance General Departments of respective Group companies act as offices responsible for overallcustomer protection management, and in partnership with eachdepartment in charge, they operate through a framework that

Basic rules for management ofcustomer protection

In addition, every year the Board of Directors decides on the
Compliance Program which acts as a detailed action plan
implemented to maintain the compliance structure. The Board
also receives regular reports on the state of the Program’s
execution, and ensures that compliance procedures are put into
practice.

enables them to draft and implement various improvement
measures through efforts that involve ongoing review geared
toward ensuring proper functioning of management systems,
problem resolution and data analysis.

Measures for protection of personal information
In the financial industry, ensuring the safety of information assets
is of utmost importance in terms of gaining customer trust. As
such, we are committed to rigorously protecting and using any
and all customer information in our custody and preventing its
leakage.
Especially in the area of personal information, the Group has
formulated a personal information protection declaration, which
is disclosed on our website, in order to comply with the
Personal Information Protection Act and other laws, and to gain
the full trust of our customers in acting as a financial institutionthat contributes to local communities.

Policies for management of customer protection

Explaining to the customer

In line with laws and regulations, we will adequately and sufficiently explain financial products
and provide information when carrying out transactions with our customers.

Customer service support

We will listen carefully to customer grievances and give advice in an appropriate manner.

Protection of customer data

We will lawfully acquire and securely manage all information concerning our customers.

Outsourcing
Conflict of interest

42

Management Committee

Hokuhoku Financial Group, Inc. Integrated Report 2022

When outsourcing operations relating to transactions with customers, we will duly supervise
service providers to protect customer information and interests.
We will appropriately manage transactions involving customers where conflict of interest could
be an issue so as to prevent customer interests from becoming unduly impaired.

Measures for dealing with anti-social elements
The Group has established basic policies for dealing with
anti-social elements, with the aim of earning the public’s trust
and maintaining appropriate and sound financial services.
Our initiatives in this regard also involve deploying officers to
respective Group companies in order to address issues
regarding organized crime syndicates, coordinating with law
enforcement, implementing firm measures for dealing with
anti-social elements, and severing all relations with anti-social
elements that threaten the peace and security of social order.

Internal notification system
The Group has set up a whistleblower and consultation hot line
and developed a framework for strengthening the compliancesystem by incorporating checks and balances in order topromptly detect and counteract any unlawful and wrongful
behavior.

Anti-money laundering and measures to deal
with financial crime
In recent years, bank card theft, exploitation and “Furikome”
fraud (bank transfer scams) have been on the rise. As such, oursubsidiary banks have bolstered security measures to prevent
such occurrences, while taking proper action with respect tovictims of such scams, such that includes reimbursing them inaccordance with Japan’s Furikome Fraud Relief Act.

The Group regards its pursuit of measures for preventing
money laundering and other financial crimes as an importantmanagement challenge. Accordingly, we have been working toclarify divisions of internal roles on the basis of our anti-money
laundering policy, while building a control system that enables us
to implement effective measures at the right time with regard toverifying transactions, reporting suspicious transactions andmanaging correspondent relationships. Moreover, we have been
educating our executive officers and employees through training, and striving to improve relevant mechanisms throughinitiatives that include performing audits to evaluate complianceof our anti-money laundering policies.

Measures for financial alternative dispute
resolution (ADR) system
In order to promptly and properly respond to customer feedback
and grievances, our subsidiary banks have concluded agreements with the Japanese Bankers Association, which is a
designated dispute resolution organization that works to resolve
disputes from a fair and impartial position.
Banking
Name of designated dispute resolution organization:
Japanese Bankers Association
Inquiries:
Japanese Bankers Association Customer Relations Center
Financial instruments business
Name of designated dispute resolution organization:
Financial Instruments Mediation Assistance Center

Hokuhoku Financial Group, Inc. Integrated Report 2022

43

CORPORATEINFORMATIONINFORMATIONCORPORATE(asof March
March 31,
(as of31, 2018)
2022)

Business activities
The Hokuhoku Financial Group is composed of the holding company and 12 consolidated subsidiaries and one affiliate. Our corebusiness is banking, and we also provide a wider range of financial services including leases, credit cards, loan guarantees and venture
capital. The following is a diagram of our business.

Business diagram

Hokuhoku Financial Group, Inc.
The Hokuriku Bank, Ltd.
Hokugin Business Services Co., Ltd.
(Document management,
concentrated business processing)

Hokuhoku Tokai Tokyo Securities Co., Ltd.
(Financial instruments business)

The Hokkaido Bank, Ltd.

Hokugin Lease Co., Ltd.
(Leasing)

Dogin Business Service, Ltd.
(Document management, cash management,
concentrated business processing)

Hokuriku Card Co., Ltd.
(Credit card operations)

Dogin Card Co., Ltd.
(Credit card operations, loan guarantees)

Hokuriku Hosho Services Co., Ltd.
(Loan guarantees)

Dogin Regional Research Institute Co., Ltd.
(Research on regional economy,
survey research services, consulting)

Hokugin Software Co., Ltd.
(Software development)
Hokuhoku Services Co., Ltd.
(Servicer)* Equity method-affiliated company

Hokuhoku Capital Co., Ltd.*(Venture capital)

Major subsidiaries
Company name

Address

Main business activities(units: millions of yen, %)FG’s share of Dividend
voting rights

1-2-26 Tsutsumicho-dori, Toyama City Banking

July 31, 1943

140,409100.007,144

The Hokkaido Bank, Ltd.

4-1 Odori Nishi, Chuo-ku, Sapporo City Banking

March 5, 1951

93,524100.00—

Hokuhoku Tokai Tokyo
Securities Co., Ltd.

1-8-10 Marunouchi, Toyama City Financial instruments business April 21, 2016

1,250

60.00

—

July 21, 1983

100

70.25

—

March 2, 1983

36

87.39

3

December 12, 1978

50

100.00—

Hokugin Lease Co., Ltd.

2-21 Aramachi, Toyama City

Hokuriku Card Co., Ltd.

1-2-1 Shintomi-cho, Toyama City Credit card operations

Leasing

Hokugin Software Co., Ltd.

1-5-25 Higashidenjigata, Toyama City

Software development

May 1, 198630

100.00—

Hokuhoku Services Co., Ltd.

1-6-8 Chuo-dori, Toyama City

Servicer

December 5, 2003

500

100.00—Document management,
concentrated business processing
Document management, cash
management, concentrated
business processing
Credit card operations, loan
guarantees
Research on regional economy,
survey research services,
consulting
Venture capital

March 25, 195330

(100.00)—

June 8, 1979

50

(100.00)—

June 13, 1977

120

(100.00)—

August 8, 2002

100

(100.00)—

January 11, 1985

250

5.00
(38.75)—

Hokugin Business Services Co., Ltd. 1883 Hiyodorijima, Toyama City
Dogin Business Service, Ltd.
Dogin Card Co., Ltd.

Higashisapporo Dogin Building,Higashisapporo 3-1-2-33,
Shiroishi-ku, Sapporo City
2-2-14 Chuo-ku Minami, Sapporo City

Dogin Regional Research Institute Dogin Annex Building, 4-1
Co., Ltd.
Odori Nishi, Chuo-ku, Sapporo City
Hokuhoku Capital Co., Ltd.

1-6-8 Chuo-dori, Toyama City( ) Indicates voting rights involving shares held by subsidiaries

64

CapitalThe Hokuriku Bank, Ltd.

Hokuriku Hosho Services Co., Ltd. 1-2-26 Tsutsumicho-dori, Toyama City Loan guarantees

44

Established

Hokuhoku Financial Group, Inc. Annual Report 2018
Hokuhoku Financial Group, Inc. Integrated Report 2022

OUTLINE
HOKURIKU BANK,BANK, LTD.
LTD.
OUTLINE OF
OF SUBSIDIARIESSUBSIDIARIES - THE HOKURIKUThe Hokuriku Bank, Ltd.
https://www.hokugin.co.jp/

Establishment

History

The Hokuriku Bank has its origins as the Kanazawa 12th
National Bank, which was established on August 26, 1877, with
the House of Kaga-Maeda providing 70% of the capital. The
bank was the creation of the family established by Maeda
Toshiie, the founder of the Kaga clan.
Since its founding, the bank has worked hand-in-hand withcustomers in the region, and grown into a bank with a wide
branch network covering Hokuriku, Hokkaido, as well asJapan’s three major metropolitan areas. Based on the bank’s
management philosophy of “Prospering Together with theRegion,” “Fair & Steady Management”, and “Progressive &Innovative Services,” Hokuriku Bank draws fully on its
management resources to provide high-quality comprehensive
financial services, aiming to become the bank preferred andrelied on by local communities.

August 1877
February 1879
January 1884
July 1897
July 1943
January 1950
September 1961
November 1961
January 1971
November 1973
March 1974
July 1978

Company outline (as of March 31, 2022)
Company name:
The Hokuriku Bank, Ltd.
Business:
Banking
Incorporation:
July 31, 1943 (founded in 1877)
Location of headquarters:
1-2-26 Tsutsumicho-dori, Toyama City, Toyama
Total assets:¥10,178.1 billion
Deposits (including NCDs): ¥7,536.9 billion
Loans and bills discounted: ¥5,061.6 billion
Issued shares:
Common stock:
1,047,542,335
Capital adequacy ratio(non-consolidated):
9.31%
Employees:
2,265
Branches (as of June 30, 2021)
188 (145 branches, 43 sub-branches)
Domestic:
Overseas:
6 representative offices

October 1979
November 1981
January 1984
May 1987
August 1990
November 1993
December 1998
June 2000
July 2000
January 2001
April 2001
February 2002
February 2002
October 2002
March 2003
September 2003
September 2004
December 2004
March 2006
May 2011
December 2013
October 2015
April 2019
July 2019

Kanazawa 12th National Bank foundedToyama 123rd National Bank founded
Kanazawa 12th National Bank and Toyama 123rd
National Bank merged to form Toyama 12th
National Bank with headquarters in Toyama City
Toyama 12th National Bank changed nameto 12th Bank
Four banks, 12th, Takaoka, Chuetsu, andToyama Bank, merged to form Hokuriku Bank
Launched foreign exchange operations (firstregional bank to do so)
Listed on the Tokyo Stock Exchange
Completed present head office
Received blanket approval to engage incorrespondent banking services
Launched first online system
Received blanket approval to engage in
foreign exchange business
Received blanket approval to handle yendenominated and foreign-denominatedsyndicated loans
Launched second online system
Launched online foreign exchange system
Launched firm banking service
Introduced VI (visual identity)
Launched third online system
Launched investment trust agent operations
Launched over-the-counter sales of
securities investment trusts
Launched Internet and mobile banking services
Completed new computer center (Alps building)Launched new computer system
Launched over-the-counter sales of casualty
insurance
Third-party allocation worth ¥39.1 billion,
brought new capital to ¥140.4 billion
Launched convenience store ATM service
Launched over-the-counter sales of life insurance
Took over part of the Ishikawa Bank’s operations
Established Hokugin Financial Group, Inc.
through share transfer, then became a subsidiaryof the Hokugin Financial Group, Inc.
Integrated management with HokkaidoBank, name of parent company changed to
Hokuhoku Financial Group, Inc.
Launched securities agency operations
Entered into a contract on joint system use with
Hokkaido Bank and the Bank of Yokohama
Commenced use of joint IT system with
Hokkaido Bank and the Bank of Yokohama
The head office building was registered as aTangible Cultural Property (structures)
Opened an individual consulting base“Hokugin Plaza”
Launched Trust Business Service
Launched Recruitment Service
Hokuhoku
Report2018
HokuhokuFinancial
FinancialGroup,Group,Inc.
Inc. Annual
Integrated
Report20226545

OUTLINE OF
OF SUBSIDIARIESSUBSIDIARIES - THE HOKKAIDOHOKKAIDO BANK,OUTLINE
BANK,LTD.
LTD.
The Hokkaido Bank, Ltd.
https://www.hokkaidobank.co.jp/

Establishment

History

Hokkaido Bank was established on March 5, 1951, in responseto the strong demand for financing from small and mediumsized corporations in Hokkaido accompanying the sudden
increase in population and development of new industries in
Hokkaido during the post-war recovery period.
Based on this background, and as a bank deeply rooted in
Hokkaido, Hokkaido Bank considers it its mission to contributeto regional economic growth by smoothly providing financing
and quality financial services to its customers in Hokkaido.
Going forward, Hokkaido Bank will never abandon the spirit withwhich it was created, and will continue to move forward together
with its customers in Hokkaido.

March 1951
April 1961
May 1962
August 1964
June 1971
July 1976
December 1980

Company outline (as of March 31, 2022)
Company name:
The Hokkaido Bank, Ltd.
Business:
Banking
Incorporation:
March 5, 1951
Location of headquarters:
4-1 Odori Nishi, Chuo-ku, Sapporo City
Total assets:¥7,065.2 billion
Deposits (including NCDs): ¥5,696.4 billion
Loans and bills discounted: ¥4,149.5 billion
Issued shares:
Common stock:486,634,512
Preferred stock (Type 2): 75,212,000
Capital adequacy ratio(non-consolidated):
8.94%
Employees:
2,118
Branches (as of June 30, 2021)
Domestic:
144 (136 branches, 8 sub-branches)
Overseas:
3 representative offices

April 1981
June 1986
September 1987
October 1990
March 1991
October 1991
November 1991
January 1993
April 1994
December 1998
July 1999
November 1999
June 2000
April 2001
October 2002
December 2003
April 2004
September 2004
April 2005
March 2006

April 2019

Launched securities agency operations
Entered into a contract on joint system use
with Hokuriku Bank and the Bank of
Yokohama
Opened representative office in Shenyang, China
Opened representative office in YuzhnoSakhalinsk, Russia
Taiwan ATM/SmartPay Debit Service started
Commenced use of joint IT system with
Hokuriku Bank and the Bank of Yokohama
Opened representative office in Vladivostok,
RussiaOpened Account Opening Plaza“Odori Subway Station Sub-Branch”
Opened the NISEKO Sub-Branch

June 2021

Opened Corporate Sales Department

August 2006
March 2009
January 2010
May 2011
March 2014
March 2019

Hokuhoku
Financial
Group,
AnnualReport
Report2022
2018
Financial
Group,
Inc. Inc.
Integrated
4666Hokuhoku

Hokkaido Bank establishedLaunched foreign exchange operations
Listed on the Sapporo Stock Exchange
Completed present head office
Launched first online system
Launched second online system
Received blanket approval to engage incorrespondent banking services
Hokkaido Small and Medium Corporation Human
Resource Development Fund establishedLaunched online foreign exchange system
Listed on the first section of the Tokyo Stock
Exchange
Completed the Higashi Sapporo Dogin Building
Established Dogin Cultural Foundation
Launched a new foreign exchange online system
Completed Dogin Building Annex
Launched third online system
Launched investment trust agent operations
Launched over-the-counter sales of
securities investment trusts
Issued preferred stock (Type 2) (issuanceamount was ¥53.716 billion)
Launched telephone banking service
Launched Internet mobile banking
Launched over-the-counter sales of casualty
insurance
Launched over-the-counter sales of life insurance
Opened Business Loan Plaza
Launched convenience store ATM service
Came under management of Hokugin Financial
Group, Inc., parent of Hokuriku Bank; Hokuhoku
Financial Group, Inc. launchedDIRECTORSDIRECTORS

Hokuhoku Financial Group, Inc.

Addresses

President:
Hiroshi Nakazawa

Hokuhoku Financial Group, Inc.

The Hokkaido Bank, Ltd.

1-2-26, Tsutsumicho-dori Toyama
City, Toyama 930-8637, Japan
Telephone: +81-76-423-7331
https://www.hokuhoku-fg.co.jp/
E-mail: info@hokuhoku-fg.co.jp

International Department
1, Nishi 4-chome, Odori, Chuo-ku,
Sapporo City, Hokkaido 060-8676,
Japan
Telephone: +81-11-233-1093
Facsimile: +81-11-231-3133
E-mail: sckikaku@cello.ocn.ne.jp

Deputy President:
Yuji Kanema

Directors:
Masahiko Kobayashi
Yoshimasa Takada
Yoshikazu Sakamoto
Akira Sakai
Yutaka Yokoi
Directors serving as
Audit and Supervisory
Committee Members:
Hirokuni Kitagawa
Masaaki Manabe
Nobuya Suzuki
Kaoru Funamoto
Marie Ogawa

The Hokuriku Bank, Ltd.
Chairman:
Eishin Ihori
President:
Hiroshi Nakazawa
Managing Directors:
Masahiko Kobayashi
Yoshikazu Sakamoto
Tsuyoshi Tatsushima

Directors:
Shigeru Urasaki
Akira Sakai
Audit & Supervisory
Board Members:
Masahiro Numada
Koetsu Yamazaki
Katsusuke Watanuki
Seiichiro Yagi

The Hokkaido Bank, Ltd.
Chairman:
Masahiro Sasahara
President:
Yuji Kanema
Deputy President:
Masaru Saito
Managing Directors:
Tsuyoshi Sasaki
Yoshimasa Takada

Directors:
Tetsuya Yamazaki
Takuya Hatakeyama
Audit & Supervisory
Board Members:
Takashi Ogura
Ken Ebina
Shuji Iwamura
Satoshi Chiba

The Hokuriku Bank, Ltd.
International Department
1-2-26, Tsutsumicho-dori Toyama
City, Toyama 930-8637, Japan
Telephone: +81-76-423-7815
Facsimile: +81-76-423-7561
E-mail: kokusaibu@hokugin.co.jp
International Operations Center
Kanda Higashinippon bldg
5F 2, Kandatomiyamacho
Chiyoda-ku, Tokyo 101-0043, Japan
Telephone: +81-3-3252-8350
Facsimile: +81-3-3252-8360
E-mail: b.office@hokugin.co.jp
SWIFT Address: RIKBJPJTTreasury and Securities Department
14F, Nihonbashi Muromachi
Mitsui Tower, 2-1, 3-chome,
Nihonbashi Muromachi,
Chuo-ku, Tokyo 103-0022, Japan
Telephone: +81-3-3231-7360
Facsimile: +81-3-3246-1255
E-mail: shikintky@hokugin.co.jp
Overseas Offices (Hokuriku Bank)• New York Representative Office
780 Third Avenue, 28th Floor,
New York, NY 10017, U.S.A.
Telephone: +1-212-355-3883
Facsimile: +1-212-355-3204
E-mail: newyork@hokugin.com• Shanghai Representative Office
Shanghai International Trade
Center, 602, Yan’an West Road
2201,
Changning, Shanghai 200336,
P.R. of China
Telephone: +86-21-6270-8108
Facsimile: +86-21-6270-8338
E-mail: shanghai@hokugin.net• Dalian Representative Office
7F Shenmao Building 147 Zhongshan
Road, Xigang District, Dalian,
Liaoning, 116011 P.R. of China
Telephone: +86-411-3960-8018
Facsimile: +86-411-3960-8019
E-mail: dalian@hokugin-zg.com

Markets and International
Administration Center
2-33, Higashisapporo 3-jo
1-chome, Shiroishi-ku,
Sapporo City, Hokkaido 003-0003,
Japan
Telephone: +81-11-815-1315
Facsimile: +81-11-815-2237
SWIFT Address: HKDBJPJTTreasury and Securities Department
14F, Nihonbashi Muromachi
Mitsui Tower, 2-1, 3-chome,
Nihonbashi Muromachi,
Chuo-ku, Tokyo 103-0022, Japan
Telephone: +81-3-3241-3457
Facsimile: +81-3-3242-3588
Overseas Offices (Hokkaido Bank)• Shenyang Representative Office
Room 1118, Office Tower 1,
Forum 66, No. 1-1 Qingnian
Da jie, Shenhe District,
Shenyang 110063, China
Telephone: +86-24-3185-7008
Facsimile: +86-24-3185-7018
E-mail: dogin_shenyang@yahoo.co.jp• Yuzhno-Sakhalinsk
Representative Office
Office 44,18 Kommunisticheskiy Av.,
Yuzhno-Sakhalinsk
693000, Russia
Telephone: +7-4242-45-7523
Facsimile: +7-4242-45-7524
E-mail: tateyama@hbkys.ru• Vladivostok Representative Office
Room 613,Fresh Plaza,17Okeanskiy Pr., Vladivostok
690091, Russia
Telephone: +7-4232-65-8851
Facsimile: +7-4232-65-8852
E-mail: nakagawa@hbvl.ru• Representative Office
Registered in Singapore
6 Battery Road # 15-02 Singapore
049909
Telephone: +65-6534-0010
Facsimile: +65-6534-0070
E-mail: hokuriku@singnet.com.sg• Bangkok Representative Office
23rd Floor Unit 2314, Bhiraj Tower
at EmQuartier, 689 Sukhumvit
Road, North Klongton, Wattana
Bangkok 10110, Thailand
Telephone: +66-2-261-8495
Facsimile: +66-2-261-8497
E-mail: bangkok@hokugin.asia• Ho Chi Minh Representative Office
Suite 1709,17th Floor, Saigon Tower,
29 Le Duan Street, Ben Nghe Ward,
District 1, Ho Chi Minh City, Vietnam
Telephone: +84-28-7300-1015
E-mail: hochiminh-city@hokugin.co.jp
Hokuhoku Financial Group, Inc. Integrated Report 2022

47

北北金融控股集团简要设立日期∶2003年9月26日

北北金融集团的经营活动范围不是限于一个地域，而是在广泛的地域内展开着。

总行地址∶富山县富山市堤町通1丁目2番26号

我们广泛的营业网点分布在下列地区范围里 ：经营目的∶集团伞下的子公司的经营管理，以及连带的相关业务

北陆地区.................................................... 151分行（或支行）资本金∶708亿9,500万日元

富山县 ....................................................... 93分行（或支行）企业名称∶北北金融控股集团股份有限公司发行股份∶ 普通股 ...........................

132,163,014股

石川县 ....................................................... 36分行（或支行）第一次第5种优先股 ..........

85,955,000股福井县 ....................................................... 22分行（或支行）

上市交易所∶ 东京证券交易所（主板）札幌证券交易所简介自从1877年北陆银行成立以来已经在北陆地区设立了广域性的经营网点。

三大都市圈 ................................................ 16分行（或支行）东京、横滨 ................................................

9分行（或支行）

名古屋 .......................................................

3分行（或支行）

大阪、京都 ................................................

4分行（或支行）其他地区（仙台、新泻、长野、高山）..........

4分行（或支行）

海外............................................................

9代表处纽约代表处 （北陆银行）从“北前船”或者说“北航船（北上的经济圈）”的交易关
系和客户的需要出发还在北海道各个主要城市内设立了自己的经营网点。
北海道银行成立于1951年，以支援中小企业和个人业务为中心在北海道道内的各个地区都设有营业网点。
北陆银行和北海道银行于2004年9月进行了经营统合，成立了（控股公司）北北金融控股集团股份有限公司。现在，北北金融控股集团已经形成了覆盖日本北陆地区北海道以及日本三大都市圈（东京，名古屋，大阪）的巨大的地方金融网络。

2002年5月

北海道地区 ................................................ 161分行（或支行）（北海道银行）南萨哈林斯克代表处符拉迪沃斯托克代表处 （北海道银行）新加坡代表处（北陆银行）
曼谷代表处 （北陆银行）大连代表处 （北陆银行）
上海代表处 （北陆银行）沈阳代表处 （北海道银行）
胡志明代表处（北陆银行）（2022年6月30日）
符拉迪沃斯托克北陆银行和北海道银行缔结了全面业务协助协议南萨哈林斯克沈阳大连

2003年5月

北陆银行和北海道银行对经营统合取得一致意见

上海
曼谷
胡志明

新加坡

2003年9月

纽约设立北银金融控股集团股份有限公司
北陆银行成为北银金融控股集团伞下的银行
北海道

通过股份交换实现经营统合

2004年9月

北北金融控股集团股份有限公司诞生

注：北银金融控股集团股份有限公司改名为北北金融控股集团
股份有限公司。
北陆地区
石川

富山

福井

东京
大阪

名古屋

三大都市圈

48

Hokuhoku Financial Group, Inc. Integrated Report 2022

北北金融控股集团 董事致辞

（相片左边）董事长

中泽宏（北陆银行 总行长）

（右边）
董事副社长

兼间 祐二（北海道银行 总行长）大家好！承蒙各位平时对北北金融控股集团以及本集团公司的厚爱，在此表示深深的感谢！
本集团所处的环境，在各种政策发挥效果以及海外经济恢复的影响下，社会经济活动正在缓慢恢复正常。
但是，由于国际形势不稳定，各地新冠疫情的反复感染和扩大，前景依然不明朗。
在此环境下，本集团于 2022 年 4 月启动为期三年的中期经营计划【Go forward with Our

Region】，通过解决课题，与地方（客户）携手实现集团的持续成长。
采用强化咨询功能、实现数字化转型等提高效率的方式，挑战环境领域等新兴事业领域，作为地方金融集团迈上一个新台阶。
本着【以地方为立足点开展活动】的理念，从促进地域社会发展、帮助客户解决课题出发，全体职工上下团结一致为地方经济的持续成长做贡献，请大家继续关注并惠顾，谢谢！

董事长

中泽

宏

2022年7月

Hokuhoku Financial Group, Inc. Integrated Report 202249长期愿景和长期战略
北北金融控股集团认为
“在前景不透明、未来难以预测的今日，应该明确本公司集团的未来目标”，
并制定了新的长期愿景。
对于地域金融集团来说，从“扎根于地域的活动才是原点”的考虑出发，以解决地域社会和客户的课题为起点，提出
了兼顾地域发展和本公司集团成长的长期愿景。
同时，为了实现长期愿景推进“进化课题解决力”“构筑经营基础”“成熟企业风土（企业价值观）”的3个长期战略。

通过解决课题，与地域、客户一起实现持续增长长期愿景

地域 / 客户成为有魅力的地域

北北金融控股集团股份有限公司实现持续成长

成为有魅力的企业

地域经济/产业发展

成为被选择、被爱的存在舒适富足的生活

富有魅力，各种各样的人财活跃的企业可持续发展的社会

提高股东价值和企业价值实现长期愿景的长期战略

通过金融·非金融的融合，进化课题解决力
·提供地域NO.1的咨询服务（包括环境、DX对应支援）·利用数字提高面对面、非面对面服务进化课题解决力

强化营业力

·通过扩大业务领域实现服务多样化

增强盈利能力实现长期愿景成熟企业风土（企业价值观）凝聚各种各样的人财，
成熟充满活力的企业风土（企业价值观）50构筑经营基础

人财投资构筑支撑持续成长的经营基础·营造一个能够让多样化人财活跃的职场·实现高效的集团经营体制·提高工作价值和敬业度·构筑面向未来市场的店铺·营业体制·培养专业人财·通过业务改革提高生产效率Hokuhoku Financial Group, Inc. Integrated Report 2022

中期经营计划（2022年4月～2025年3月）
为了充分满足各利益相关者（地域社会、客户、股东、员工等）对本公司集团的期待和需求，北北金融控股集团将挑战强化课题解决力和变革商业模式。
怀着“与地域一起向前（未来）前进”的强烈愿望，制定了第5次中期经营计划“Go forward with Our Region”。

中期经营计划
（2022 年 4 月～ 2025 年 3 月）

Go forward with Our Region为了实现长期愿景，在致力于提高咨询对应力和推进DX等提高生产率的同时，挑战环境领域等新事业
领域的期间

定位

重点战略
提高综合咨询应对能力

环境领域的努力·提高、扩充解决方案菜单·通过分段战略提高交易利润·对应支援新型冠状病毒·强化咨询提案力

六项重点战略咨询加强集团治理·充实自有资本和股东还原（把利润返还给股东）·运用的高度化·多样化·风险管理态势的高度化·支持TCFD建议·削减本公司的CO2排放量·强化环境商务·加强与自治体和各种团体的合作

环境

向地域社会
贡献

企业治理

DX的推进

DX

·强化数字银行功能·利用数字改革业务实现健康·幸福的工作方式

强化集团综合力量·进一步推进北北金融控股集团内部合作·通过强化与关联子公司、关系密切公司的合作，提供综合金融服务集团综合实力健康·幸福·工作环境/制度的完善·实现多种工作方式·强化技能提升支持重点指标
2024年度（中期经营计划最后年度）

2021年度重点指标205亿日元250亿日元以上

350亿日元以上

9.54％

9.5～9.9%

12%以上

63.15％

60～64%

50～59%

15.14%（189亿日元）

16.0～16.9%（200亿日元以上）

18%以上（250亿日元以上）

371亿日元2,100亿日元

7,000亿日元

合并本期净利润合并资本比率OHR
非利息收入比率（非利息收入额）长期目标（10年后）

环境相关投融资执行额（累计）重点战略和计数计划实现健康·幸福的工作方式

提高综合咨询应对能力
环境领域的努力人财投资
通过人财投资
增加人工费

本期净利润

提高盈利能力205 亿日元＋事业性贷款利息
＋法人个人咨询收益＋强化有价证券运用提高生产效率通过业务改革提高生产效率

其他

本期净利润

205 亿日元DX的推进强化集团综合力量
2021年度数字投资机械化相关费用的增加

加强集团治理2024 年度
最終
Hokuhoku Financial Group, Inc. Integrated Report 2022

51

业绩精粹
营业概况（北北金融控股集团联结）（单位：亿日元）

2021年度

2020年度
变动

经常收益

1,777

18

1,759

经常利润

302

－19

322

205

－8

213

9.54％

0.09％

9.45％

归属于母公司股东的净利润
资本充足率本公司2022年3月期的业绩，联合结算的经常
收益与上一期相比增加18亿日元为1，777亿日元；联合结算的利益比上一期减少19亿日元为302亿
日元。归母公司的本期纯利益减少8亿日元为205
亿日元。
联合结算的自有资本比例为9.54%
2022 年 3 月期的分红 : 普通股票期末 1 股为 35
日元 ；第一回5种优先股的中期·末期为1股7.5日
元（一年为15日元）。

营业概况（北陆银行，北海道银行）（单位：亿日元）

2家银行合算2021年度

2020年度
变动

经常收益

1,619

39

1,579

主营业务毛利润

1,248

40

1,207

经费（临时处理部分除外）

788

－35

823

主营业务净利润

460

75

384

扣除投资信托解约损益后

448

71

376

信贷相关成本

135

4

130

经常利润

304

－15

320

本期净利润

218

－6

224

3.90％

－0.23％

4.13％

ROE

北陆银行，北海道银行（2行合算）
2行合算 ：经常收益比上一期增加39亿日元为
1，619亿日元，本期纯利益比上一期减少6亿日元
为218亿日元。
北陆银行 ：经常收益比上一期增加25亿日元
为889亿日元，本期纯利益比上一期减少 11亿日元为131亿日元。
北海道银行 ：经常收益比上一期增加14亿日元为729亿日元，本期纯利益比上一期增加5亿日
元为87亿日元。

（单位：亿日元）（单位：亿日元）北陆银行

2021年度北海道银行

2020年度

2021年度

25

864

729

667

变动

52

变动

经常收益

889

主营业务毛利润

684

17

经费（临时处理部分除外）

417

－22

主营业务净利润

267

39

扣除投资信托解约损益后

255

信贷相关成本

85

经常利润

209

3

本期净利润

131

－11

资本充足率

9.31％

0.17％

ROE

3.47％

－0.39％

Hokuhoku Financial Group, Inc. Integrated Report 2022

2020年度
14

715

564

23

540

439

371

－13

384

228

192

36

156

40

215

192

31

161

1

84

49

3

46

205

95

－19

115

142

87

5

81

9.14％

8.94％

0.06％

8.88％

3.86％

4.80％

0.12％

4.68％

Hokuhoku Financial Group, Inc.

Hokuhoku Financial Group, Inc.

Integrated Report 2022