Mebuki Financial Group, Inc.

Annual Report
Year Ended March 31, 2023

Annual Report 2023

2023

About Mebuki
Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Contents

Mebuki Financial Group Philosophy

Together with local communities, we will continue tobuild a more prosperous future by providing high-quality,
comprehensive financial services.
The ingenuity of the entire Group will be combined to contribute to sustainablegrowth in communities.
We will build a better future together with local communities, seeking solutions
to challenges that affect these communities by providing high-quality,
comprehensive financial services.

Mebuki Financial Group Sustainability Policy
Based on the Mebuki Financial Group Philosophy “Together with local
communities, we will continue to build a more prosperous future by providing
high-quality comprehensive financial services,” Mebuki Financial Group andgroup companies will support solving issues in our regions, while contributing
to the achievement of sustainable growth of local communities as well as the
improvement of our corporate value.

About Mebuki Financial Group

Group Philosophy and Sustainability Policy ................................................................................ 1
Developments of Mebuki Financial Group ................................................................................... 3
Performance of Mebuki Financial Group ....................................................................................... 5
Strengths of Mebuki Financial Group .............................................................................................. 7
Mebuki Financial Group’s Value Creation
Value Creation Process of Mebuki Financial Group ................................................................ 9
A Message from the Management ................................................................................................. 11
Mebuki Financial Group’s Sustainability Initiatives ............................................................... 17
Long-Term Vision 2030 ........................................................................................................................ 21
Third Medium-Term Group Business Plan ................................................................................ 23
Management and Financial Strategies ........................................................................................ 25
Management Strategies for Value Creation
Value Creation Initiatives of Mebuki Financial Group
Revitalization of the Regional Economy and Local Communities ........................... 29
Response to Climate Change and Environment Conservation / Initiatives for TCFD Recommendations ... 41
Promotion of Digitalization and DX ........................................................................................... 49
Response to Aging Society .......................................................................................................... 57
Promotion of Diversity / Human Resources Management .......................................... 63
Roundtable Discussion on Diversity and Human Capital ............................................ 73
Management Base Supporting Value Creation
Governance of Mebuki Financial Group
Corporate Governance ................................................................................................................... 77
List of Directors ............................................................................................................................... 85
Roundtable Discussion of Outside Directors ................................................................. 87
Risk Management System ............................................................................................................ 91
Cyber Security ..................................................................................................................................... 93
Initiatives for Compliance .............................................................................................................. 94
Internal Audit ........................................................................................................................................ 96
Dialogue with Stakeholders ........................................................................................................... 97
Corporate Data
Group Non-financial Data ........................................................................................................... 101
Group Structure and Corporate Data .................................................................................. 103
Overseas Representative Offices ........................................................................................... 104
Organization / Stock Information ........................................................................................... 105
Financial Data .................................................................................................................................... 106

Disclaimer regarding forward-looking statements
The Japanese word mebuki, or “green shoots,” conveys an image of new leaves budding
on tree branches. This word is used in the Group’s name to express its approach of
drawing on the knowledge and creativity of each of its companies to create fresh ideas
and new value. The name Mebuki expresses our wish to create new energy and value inlocal communities and pursue sustainable growth along with these communities.

This Annual Report contains certain forward-looking statements, including estimates, forecasts, targets, and plans.
Such forward-looking statements are based on the information available and the assumptions deemed reasonable by
the management at the time of publication of the Annual Report, and do not represent any guarantee by the managementof future performance.
We are under no obligation, and disclaim any obligation, to update or alter our forward-looking statements, whether
as a result of new information, future events or otherwise.
Details on ESG information are available on our website: https://www.mebuki-fg.co.jp/eng/esg/esg.html

12

Mebuki Financial Group’s
Value Creation

About Mebuki
Financial Group

Developments of Mebuki Financial GroupManagement Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Under the Mebuki Financial Group Philosophy “Together with local communities, we will continue to build a more
prosperous future by providing high-quality comprehensive financial services,” the ingenuity of the entire Group will
be combined to contribute to the achievement of sustainable growth of local communities as well as the
improvement of our corporate value.

1935 Establishment of Joyo Bank

Establishment of Joyo Bank through themerger of the Tokiwa Bank and the Goju Bank

1974
Established Joyo Lease (currently Mebuki
Lease)
1995
Established Joyo Industrial Research Institutein commemoration of the Bank’s 60th
anniversary
1996
Opened Shanghai Representative Office1999
Established the “sound management,
collaboration, and partnership with the homeregion” philosophy

2006
Started operating new branches in areas along
the new Tsukuba Express line
Opened Joyo Tsukuba Building in 2008
2007
Established Joyo Securities (currently Mebuki
Securities)
2012
Launched Joyo’s reconstruction project “Kizuna(bond)” in hopes of the regional recovery andgrowth after the Great East Japan Earthquake
2013
Opened Representative Office Registered in
Singapore2014
Opened New York Representative Office
Launched “PLUS+” Project for the
Collaborative Creation of the Region’s Future
2015
Initiated study sessions and seminars fordevelopment of regional comprehensive
strategies

Established Mebuki Financial Group1895 Establishment of Ashikaga Bank

Established in Ashikaga town, Ashikaga county, Tochigi Prefecture

1897
Opened its first branch in Kiryu town, Yamadacounty, Gunma Prefecture
1967
Relocated the head office to Utsunomiya cityin Tochigi Prefecture

2017
Mebuki Lease and Mebuki
Securities became directly
and wholly-owned
subsidiaries
ki F
Mebu

1985
Established “Corporate Philosophy” incommemoration of its 90th anniversary
Established the Ashigin International
Exchange Foundation
2003
Decision made by the Japanese government to designate
Ashikaga Bank a bank under special crisis management
2008
Established Ashikaga Holdings
Special crisis management designation lifted2009
Established Ashigin Research Institute2014
Ashikaga Holdings listed on the first section of
the Tokyo Stock Exchange
2015
Opened Hong Kong Representative OfficeSigned agreements with 9 local organizations as part of its
efforts under the Comprehensive Strategy for Overcoming
Population Decline and Vitalizing Local Economy

1985

1997

2008

Plaza Accord

Japanese version of “Big Bang”
financial reforms
Asian currency crisis

Global financial crisis following
Lehman Brothers’ bankruptcy

2005

European debt crisis

1929

1991

Start ofthe Great Depression

Collapse of bubble
economySocial developments and history

in a n c

ia l G

2010

2022
Established regional
trading company
Colletochi

2018
Opened Hanoi
Representative Office2021
Established Wing CapitalPartners
Established Ashigin Money
Designro u p(From FY2028 to FY2030)

2020
Completed the system integration of JoyoBank and Ashikaga Bank
Reorganized the system departments
Mebuki Credit Guarantee became a directly
and wholly-owned subsidiary

Fourth Medium-TermBusiness Plan
(From FY2025 to FY2027)

Period for accelerating evolution
From FY2022 to FY2024

Third Medium-Term Business Plan

From FY2019 to FY2021
From 2H FY2016 to FY2018First Medium-Term Business Plan

Period for taking on challenges
for sustainable growthSecond Medium-Term Business Plan
Period for producing solid results andupshifting for the next stage of growth

Period for getting the new Groupon track for success2016

BOJ’s introduction of negative interest rate policy

2019Japan’s consumption tax rate hike to 10%

Full implementation of pay-off
system in Japan

1985

2011

2019

2022

Completion of Tohoku
Expressway within Tochigi
Prefecture

Holding of Tsukuba EXPO

Great East Japan Earthquake

Russia’s invasion into Ukraine

2005

2015

Suffered extensive damage by Typhoon Hagibis and otherdisasters

Opening of the Tsukuba
Express

SDGs adopted by the U.N.

2020

Spread of COVID-19
2021

Opening of Tohoku
Shinkansen

Tokyo Olympic and Paralympic Games3

2023
Joyo Credit Guarantee became awholly-owned subsidiary of Mebuki
Credit Guarantee

Period for realizing long-term vision

1974

1982

A Value Creation Group
Working Together with
Local Communities

Fifth Medium-TermBusiness Plan

End of the Pacific War
Tokyo Olympic andParalympic Games

Vision2022
Established Joyo Green
Energy1945
1964

Long-Term Vision
2030

2021
Established Joyo CapitalPartners

2017
Opened Bangkok Representative Office
Bank
Joyo
ank
aga B
A s h ik

2021
Joyo Credit and Ashigin Card weremerged to establish Mebuki Card
Declared support for TCFD
Recommendations

2016

2022
Formulated Long-Term Vision
2030 and Sustainability Policy

4Mebuki Financial Group’s
Value Creation

About Mebuki
Financial Group

Performance of Mebuki Financial GroupManagement Strategies
for Value Creation

Financial Highlights

ESG Highlights (Bank Total)

Mebuki FG (Consolidated)

SocialConsolidated net income (¥bn)
46.3

Consolidated ROE (%)

13.32
32.1

9.94

5.1

FY2018FY2019FY2020

FY2021

FY2022FY20184.0

3.8

FY2019FY2020Shareholder return (¥bn)
Dividends

Total return ratio

31.5
19.5

46.2%

52.2%

53.3%

Number of M&A consultation cases

FY2022

1,210 cases

March 31, March 31, March 31, March 31, March 31,
2019
2020
2021
2022
2023

(FY2021)3,506 cases

cases(FY2022)

3,985(FY2021)

cases(FY2022)

16.7
4.9
11.9

11.7

10.0

22.9%
20.0%

254.8
204.0

16.6%

229.1
191.9

150.9

Private placement bonds with donation scheme issued

2020

2021

2022

11.3

2023 (scheduled)

FY2018FY2019FY2020

FY2021

FY2022* Figures are strategic shareholdings (including listed or non-listed stocks) held
by Joyo Bank, which owns more than two-thirds stocks owned by Mebuki FG
a n d s u bs idia rie s . Th e y a re ba s e d on ma rke t v a lu e a n d in c lu de deem edholdings of shares.

Percentage of women in assistantmanager positions or higher(Cumulative total since the commencement of handling the bonds in FY2016)
Approx.

2019

698

Number of paid contracts ofbusiness matching

Ratio of strategic shareholdings to consolidated net assets

23.1%

21.3

16.8
12.7

10.92

27.7%

34.9%

12.8

FY2021

10.87

3.4

Strategic shareholdings*

73.3%

12.7

4.3

10.95

Strategic shareholdings (¥bn)

Share repurchase

3.9

Corporate Data

Capital adequacy ratio (%)

42.9
36.4

36.3

Management Base Supporting
Value Creation

178.0 million yen

Approx.

224.0

million yen(1,060 cases / Issue amount 90.4 billion yen)

(1,318 cases/Issue amount 113.5 billion yen)

(As of March 31, 2022)(As of March 31, 2023)

31.4%

33.3

%

(As of March 31, 2022) (As of March 31, 2023)

Environment

Bank Total** Joyo Bank + Ashikaga Bank

Gross business profit (¥bn)

Expenses/OHR (¥bn/%)
OHR*

185.6

186.3

180.1

187.0

Due to adecrease ingains onsecurities

112.8

Expenses

61.6

63.7

114.1

115.0

Cost reduction
due toadvancement ofstructural reforms

61.2
110.1

56.0

55.8

108.1

103.3

Amount of sustainable finance provided

CO2 emission reduction ratio(Cumulative total since FY2021)(compared with FY2013)153.5 billion yen(As of March 31, 2022)
FY2018FY2019FY2020

FY202184.2
66.0

FY2018FY2019FY2020Governance

60.0

69.4

FY2020

FY2021%

External evaluation

Board of Directors

89.6

42.1

FY201933.6(FY2022)(FY2021)* Total of the group companies(As of March 31, 2023)

FY2022

Net income* (¥bn)

35.8

FY2018FY2021

16.5%

billion yen* Based on core gross business profit (excluding gains/losses on cancellation of
investment trusts and gains/losses on futures and options)Due to the improvementof deference of interests
between loans anddeposits and the increaseof fees and commissions

Core net business income* (¥bn)

70.5

FY2022615.4

FY2022FY2018* Excludes gains/losses on cancellation of investment trusts

FY2019FY202040.0

FY2021

Due to adecrease ingains onsecurities

31.5*

12
members

5 outside directors(incl. 1 female
outside director)“Platinum Kurumin” certification
was granted as a company thatp ro v i d e s s u p e r i o r s u p p o r t f o rchildcare to its employees basedon the Act on Advancement ofM e a s u re s t o S u p p o r t R a i s i n g
Next-Generation Children.

FY2022* Excluding dividends receivable from subsidiaries

5

6

Recognized as an outstanding organization under the 2023 CertifiedHealth & Productivity Management
Outstanding Organizations Recognition Program (large enterprise
category)

About Mebuki
Financial GroupStrengths of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Market Potential of Ibaraki Prefecture and Tochigi Prefecture

Provision of Comprehensive Financial Services through the Group’s Network and Capabilities(1) Well-developed transportation network and high growth potential for establishing factories(1) Wide-area network based in Ibaraki and Tochigi Prefectures(2) Comprehensive financial services group

Mebuki Financial Group’s primary areas of business are Ibaraki Prefecture and Tochigi Prefecture, both adjacent to theTokyo metropolitan area, and have been high concentration areas of manufacturers of industries including automobile andaircraft. In addition, the area has a well-developed transportation network of airports, seaports, and highways, making it anextremely attractive location to set up factories. The total area of factory locations is among the largest in Japan.

The Group has two main banks, Joyo Bank andAshikaga Bank, both based in the region of highgrowth potential, and has also set up a wide networkof 318 branch offices in 9 prefectures. In addition, theGroup supports overseas business of its customers
through 6 representative offices.

Under the Group umbrella, there are a wide variety of
one-stop financial and non-financial services
provided, including leasing and securities
subsidiaries, think-tank functions, investment
subsidiaries, and new business companies that
support customers’ decarbonization efforts and have
local trading company functions.

Kan-Etsu Expressway

Tohoku Expressway

Total area of new factory locations

Joban Expressway

The full opening of the Kita-Kanto Expressway made it an ideal area to establish factories.
2nd

Port of Ibaraki

Kita-Kanto Expressway

2nd

7th

1st

1st

1st

2nd

2nd

1st

2nd 2nd

3rd

1st

3rd

3rd

13th

Planned toopen between
2025 and 2026

318 offices
Overseas: 6 offices (Representative Offices)
Domestic:

11th

Ibaraki Airport

Ken-O Expressway

1st

1st

10th

(As of March 31, 2023)(Joyo Bank + Ashikaga Bank)

Tochigi Prefecture

20th

2011

17th
2012

2013

2014

Ibaraki Prefecture

2015

2016

2017

2018

17th

18th
2019

2020

2021

(14 offices)

Fukushima Prefecture

Tochigi Prefecture

Saitama Prefecture

Population*

Tochigi Prefecture

2.87 million people

11th

1.94 million people

19th

Nominal prefectural gross product*1

14.0 trillion yen

11th

9.2 trillion yen

16thPrefectural income per capita*1

3.24 million yen

10th

3.35 million yen

4th128,000 establishments

13th

93,000 establishments

21st

Number of business establishments*2
Manufactured goods shipped*3

12.1 trillion yen

7th

8.2 trillion yen

12thAgricultural output*

441.7 billion yen

3rd287.5 billion yen

9th4*1 “Prefectural Accounts” by the Cabinet Office *2 “2019 Economic Census for Business Frame” by Statistics Bureau, Ministry of Internal Affairs and Communications*3 “2021 Economic Census for Business Activity” by Statistics Bureau, Ministry of Internal Affairs and Communications*4 “2020 Agricultural Production Income Statistics” by the Ministry of Agriculture, Forestry and Fisheries(3) Large market share backed by a solid customer base

Shares in Ibaraki and Tochigi Prefectures*

49.5%

Loans

Mebuki
Financial Group

50.5%

Other banks,
credit unions,credit associations,and others(incl. Japan Post Bank)

Osaka Prefecture

Chiba Prefecture(1 office)Tokyo Prefecture(7 offices)

Overseas Representative Offices

Hanoi

ShanghaiHong Kong
Bangkok(8 offices)

New York

The Joyo Credit Guarantee Co., Ltd.

Singapore

The Group not only provides high-quality comprehensive financial services but also addresses the challenges ofcommunities and customers through collaborations with diverse partners both at home and abroad beyond theexisting boundaries of industries and businesses.
Experts who help address social issues

Deposits

Mebuki
Financial Group

38.0%

62.0%

Local governments, universities, etc.
Arrangement of collaborations and streamlining ofmunicipal services

Gerontology service, digital transformation (DX), environment related services
such as decarbonization and environment conservation services, etc.

Intermediary organizations that support network expansion

Domestic financial institutions outside of the Group

Business matching, personnel placement,
M&A intermediary, etc.

Regional collaboration arrangements, collaboration in andsharing of operations, etc.

External expert teams that make services more sophisticated* The Company calculated the shares based on data from Kinyu Journal,
Special Issue, December 2022.

7

Ashigin Research Institute, Ltd.
Wing Capital Partners, Ltd.
Ashigin Money Design, Ltd.
Colletochi, Ltd.

(3) Collaboration with enterprises outside the GroupJoyo Bank and Ashikaga Bank are both leading banks in the region, and the Group’s market share in Ibaraki andTochigi Prefectures is over 50% in loans and nearly 40% in deposits.

Other banks,
credit unions,credit associations,and others

Ibaraki Prefecture(155 offices)

Being adjacent to the Tokyo metropolitan area, a major consumption center, and with the vast Kanto Plain as the
backdrop, agriculture is a big industry in both Ibaraki Prefecture and Tochigi Prefecture. The two prefectures are among
top 10 prefectures in Japan in terms of agricultural output.
Ibaraki Prefecture

Joyo Computer Service Co., Ltd.
Joyo Industrial Research Institute Ltd.
Joyo Equipment Management Co., Ltd.
The Joyo Capital Partners Co., Ltd.
Joyo Green Energy Co., Ltd.

(11 offices)(20 offices)(2) Thriving agriculture industry and a balanced industrial structure1(1 office)Gunma Prefecture2022

Note: The above ranks are those of the total area of new factory locations (eachyear) among 47 prefectures based on the “Survey of Factory Location
Trends” by the Ministry of Economy, Trade and Industry.

Economic data

Miyagi Prefecture(101 offices)

Higashi-Kanto Expressway(As of April 1, 2023)

Overseas financial institutions
Support for overseas business, expansion of sales channels

Consulting services by experts

8About Mebuki
Financial Group

Value Creation Process of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Based on the corporate philosophy of the Group, Mebuki Financial Group will provide high-quality, comprehensive financial services by taking advantage of its wide-area network, solid customer base and other strengths,
while contributing to the sustainable growth of local communities through improving the Group’s corporate value
and creating value for stakeholders.

External environment

Aging and Declining population

Key Issues

Industrial and work structure changes

Progress of digitalization

Revitalization of regional economy and society Response to climate change and environmental conservation

Input

and technology

Changes in lifestyle and value

Promoting digitalization

Shift to decarbonized and recycling-oriented society

Initiatives for an aging society

Promoting diversity

Activities
Group Philosophy

Together with local communities,
future by providing high-quality,

we will continue to build a more prosperous
comprehensive financial services.

Our Vision

Building the region’s future as

a comprehensive financial services group

Financial capitalNewbusinessareas
Human capital

Comprehensive
financialservices area

Intellectual capital

OutcomeTake on the challenge to solve
regional issues, going beyond theconventional framework

Strengthen our consulting andgroup functions and contribute tosolve more customers’ issues

Realize prosperous living
Support for sustainable corporate growth
Support for decarbonization/SDGs in local regions
Contribute to regional revitalization/urban
development

Consulting
Business succession/M&A
Trust/Inheritance/Asset Building
Leasing/Securities/Global Expansion

Local Communities and Customers

Prosperous
imaginationand problem
solving skills

Services that
continue to betrustedConvenient and secure financial services
Revitalization of regional
economy P29
Solving issues throughconsulting services P30
Safe, secure andprosperous life P57
Creating a recycling-oriented
society and reducing
environmental impact P41

P52

Shareholders P28,99
Corporate value
improvement
Stable and sustained
shareholder return
Transparent information
disclosure

Employees P63,98

Social capital

Traditional
Change the way of providingbanking
services and increase their value
services area

Promotion of diversity
Pleasant working
environment where
employees can grow
Implementing work-life balance

Deposits
Loans
Settlement/Money Transfer

Contributing to achievement of SDGs
Management basethat supports ourbusiness

Explanation ofeach capital

Financial capital

P25

Corporate GovernanceRisk Management

ComplianceInternal Audit

Human capital

P63

Sufficient capital

Diverse human resources

Sound assets

Enhancing training programs andspecialized human resources

Stable funding

9

Human resources rooted in local
communities

Intellectual capitalSocial capital

Brand strength and history P3Comprehensive capabilities with know-how in the

Wide-area networks based in Ibaraki and Tochigi Prefectures

Group

Network with domestic and international partners

P39,103

Advanced risk management

Solid customer base

P91

10

P7
P8, 35, 38

P7About Mebuki
Financial GroupA Message from the Management

We are going beyond
the financial services framework
to help solve regional issues through consultingthat integrates digital and face-to-face channels

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Renewable energy subsidiary and local
trading company are invigorating customers in local communities
Akino: We are also investing effort in financing that
supports our corporate customers’ sustainability-related
initiatives such as decarbonization, including sustainablefinance and structured finance provided by a specialized
department. In FY2022, loans of this type to corporate
entities from our two subsidiary banks combined
increased by ¥340.0 billion. We will continue to address
the emerging demand for funds to meet sustainabilityrelated aims by further stepping up our provision of thistype of financing.
Shimizu: When we formulated our Third Medium-Term
Group Business Plan, we also formulated our Group
Sustainability Policy. The policy states that Mebuki
Financial Group will support solving issues in our
regions, while contributing to the achievement ofsustainable growth of local communities as well as the
improvement of our corporate value.
Akino: We are contributing to this effort through ourcore business by creating a roadmap for the Group’s
own decarbonization and supporting regional
businesses in achieving carbon neutrality. Since FY2021,
we have provided a cumulative total of ¥615.4 billion insustainable finance promoting customers’ sustainability
initiatives. We are pulling together as an organization to
step up the pace of our efforts in this regard, with a viewto achieving our cumulative target for FY2030 of ¥3.0
trillion ahead of schedule.
Shimizu: Creating sustainable local communities
requires the invigoration of our customers in thosecommunities—our business support consulting services
have much to do in this regard.
We are therefore actively providing not only thefinancial support that is the traditional strength of banks,
but also non-financial support. We are doing so throughinvestment companies (funds) and consulting thatleverages Group companies’ functions, as well as
through collaboration with startups and other externalbusinesses, primarily through business matching.
Akino: We also moved beyond the framework of
conventional financial services to set up a renewableenergy subsidiary and a local trading company. These

Akino: Meanwhile, efforts targeting enhancement of ourconsulting services are proceeding steadily. In addition,
the structural reform we have been tackling since theSecond Medium-Term Group Business Plan (FY2019–
FY2021) contributed to enable sales activities to delivera ¥11.0 billion year-on-year increase in profit from
customer services,* which is our core source of businessprofit.
* Difference of interests between loans and deposits + Fees from Customers(Commissions) + Expenses (-)

Kazuyuki Shimizu

President and Director

Executive Vice President and Director

11

Corporate Data

Akino: As we work to enhance our consulting services,
we are currently focusing particularly on the corporateloan business. In FY2022, loans to corporate entities inour operating regions from our two subsidiary banks,
Joyo Bank and Ashikaga Bank combined, increased by¥120.0 billion.
Shimizu: Corporate deposits—the foundation uponwhich banking depends—have also increased. And they
are likely to increase further as a result of providing
convenient services that help our customers to digitalize
their operations, such as our corporate portal, a new
online service providing support for corporate internet
banking and digital transformation (DX).

Akino: If I were to sum up the year since our new teamof directors was appointed in June 2022, I would
describe it as a non-stop series of challenges. The
aftermath of Russia’s invasion of Ukraine and otherdevelopments disrupted supply chains, leading to higher
prices for resources and food, while the effects of the
COVID-19 pandemic still persisted.
Shimizu: And the situation was compounded by the
weak yen, which exacerbated the escalation in prices forimported goods, gradually damaging regional
economies. However, despite the corporate goods priceindex increasing by around 9%, the consumer priceindex rose by only 3%. This disparity was largely due toefforts on the part of business operators, although in thecase of regional SMEs, it proved impossible to pass thefull extent of price rises on to consumers, which madethe operating environment extremely challenging.
Akino: It was also a year in which interest rates in
Europe and the United States rose more dramaticallythan we had expected. Even though the prevailing trendof the capital markets did change as a result, we regretthat we ended up having to downgrade our full-year net
income forecast for the fiscal year ended March 31,
2023 as a result of losses recorded on bond sales anddecreased margins following bond-focused adjustments
to our securities portfolio. We will draw on the lessons
learned when managing risk in future.
Shimizu: Our efforts to control interest-rate risk by
selling fixed-rate bonds during FY2022 were also
intended to ensure investment capacity for when
Japanese interest rates rise. Our policy is to resume
investment in yen-denominated bonds when long-term
interest rates go up as a result of the Bank of Japanraising the cap on 10-year government bond yields oreventually terminating its yield curve control.

Profit from the core business of customer
services is highest since our businessintegration

Tetsuya Akino

Management Base Supporting
Value Creation

Shimizu: Our achievement of the highest profit from
customer services since our business integration in
October 2016 bears testament to our success in steadily
putting incremental efforts into practice during thisperiod. In fact, the recent adjustments to our securities
portfolio were possible only because we had madetangible progress in reinforcing our core business byimproving our management structure throughenhancement of our consulting services and structuralreform.
12

About Mebuki
Financial GroupA Message from the Management

We are increasing the types of support
we offer to help solve regional social
issues such as DX and sustainability
and create sustainable local
communities

continue improving our efforts to train personnel for workin the digital field and new business areas, while also
generating new value by diversifying our human capital.
Akino: What we aspire to in Long-Term Vision 2030 is
to be a value creation group working together with local
communities. There are in fact two forms of value we
aim to create: One is social value derived from solving
regional issues such as the depopulation resulting fromJapan’s low birthrate and aging society; labor shortages;
and changes affecting society and the structure ofindustry, most notably digitalization. The other is
economic value derived from growth in the Group’s own
profits as regional economies regain their vitality.
Of course, we cannot succeed in creating these twoforms of value entirely on our own. The words “working
together with local communities” express ourcommitment to a cooperative approach, while the threebasic strategies of the Third Medium-Term Group
Business Plan are also founded on the principle ofcreating value in collaboration with a wide range ofstakeholders including corporations and individuals inour operating regions. The three basic strategies are: (1)pursue a business model to support local communities,(2) build a sustainable management base, and (3)develop human resources and promote active
participation.
Shimizu: We are implementing a range of measures inline with the three basic strategies in order to generate
both social and economic value, thereby contributing to
the sustainability of local communities.

entities are not yet actually contributing to profits, but webelieve that they are starting to generate new value,
particularly as we are now receiving a large number ofinquiries relating to regional issues.

Pursuing three basic strategies
to generate social andeconomic value
Akino: With the business environment changing
substantially and uncertainties increasing, the Group
formulated its medium- to long-term vision and target
level in the form of Long-Term Vision 2030, in order totarget sustainable growth together with local
communities and customers. As part of the Long-Term
Vision, we set a goal of increasing our consolidated fee
income ratio to 50% or more, aiming to raise fee income
from provision of value to customers to the same level
as interest income from loans.
Shimizu: One of Mebuki Financial Group’s strengths is
the strong foundation of business relationships withcustomers that it has cultivated in its operating regions,and the importance of the traditional deposit- and loanrelated services we provide to these customers remains
unchanged. However, such customer relationships
cannot be maintained by means of conventional services
alone, and we are keenly aware of the threat this could
pose to our business. Our goal of achieving a high levelof fee-based income is intended to convey the message
that we will be providing more diverse forms of value tocustomers going forward.
This provision of more diverse forms of value will
require us to pursue a dual approach of expanding andimproving our traditional deposit- and loan-basedbanking services in conjunction with our comprehensive
financial services, while also taking on the challenge of
new business areas. In order to do so, we will of course
13

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

One of our strengths is the many points ofcontact and relationships cultivatedregionally over the years with customers
including corporations
we serve as a main bank and theiremployees, which account foraround 30,000 customers

DX. Having formulated our Groupwide DX Strategy
Roadmap, we have been implementing measures suchas improving the convenience of our digital channel;
cutting down on the use of personal seals, passbooks,
and paper; and making better use of data.
Akino: For business customers in particular, we are
implementing initiatives aimed at both improving
convenience from their perspective and providing highquality services, including offering DX-related
consultation services and introducing digitalized loan
agreement procedures.
Shimizu: We are also continuing to invest effort in ESG(Environmental, Social, and Governance)-related action.
To respond to climate change and contribute in otherways to creating sustainable local communities, wecreated a roadmap for reducing Mebuki Financial
Group’s CO2 (carbon dioxide) emissions to net-zero by2030 and started using renewable energy at five largescale business locations including our two subsidiarybanks’ head offices.

Following the Groupwide
roadmap for DX to make betteruse of data
Akino: We are pursuing the first of the three basic
strategies—pursue a business model to support local
communities—by proactively implementing several new
initiatives.
In corporate business, our two subsidiary banks aretaking the lead in increasing the services we offer, going
beyond financial support such as facilitating businesscustomers’ cash flows, to offer the type of assistance
relating to DX and sustainability that we mentioned
earlier—that is to say, support that aims to solve regionalsocial issues and create sustainable local communities,
often following a dialogue-based approach.
Shimizu: In our business targeting individual customers,
we added various new functions to our Banking App toprovide greater convenience, and the number of users
increased as a result, exceeding 850,000 two years after
the app’s release. In our asset management support
services, we are pursuing initiatives such as revamping
our sales setup to improve life plan consulting, extending
the hours of our helpdesks, and launching online
consultation services.
Akino: In addition to these initiatives, we are embarking
on new measures that draw on insights from the field offinancial gerontology to enable senior citizens in ouroperating regions to continue living their lives with peaceof mind as Japan’s society ages. To that end, we areoffering comprehensive support to help eliminate thedigital divide between seniors and the rest of society andenable them to engage more fully with the online world,
while also expanding our products and services
including non-financial offerings.
Shimizu: We are addressing our second basic
strategy—build a sustainable management base—by
pursuing a range of initiatives focused on the theme ofDriving DX forward at regional SMEs
through the efforts of 3,500 IT passport
holders
Akino: For some time, I have believed that a bank’s
greatest business asset is its human resources, andhave wanted to further improve the expertise of every
single one of our employees. Given that we aspire to bea value creation group working together with local
communities, we regard our third basic strategy—
develop human resources and promote active
participation—as indispensable to our survival as abusiness, and are pulling together as an organization to
implement a range of related measures.
The Diversity Promotion Office set up in our two
subsidiary banks have been leading the way in Group14

About Mebuki
Financial GroupA Message from the Management

recommendations by our existing employees, andre-hiring of former employees who left and gained
experience elsewhere.
Shimizu: Mebuki Financial Group also takes every
opportunity to promote communication among our
employees. About two years ago, Ashikaga Bank started
holding meetings at which around 10 attendees
comprising directors such as myself and young
employees share their thoughts with each other.
Similarly, Joyo Bank held a town hall meeting for
employees when the medium-term business plan was
launched, at which all directors were present andexchanged views with more than 2,000 employees.
The young employees give us feedback on what they
are thinking as a result of their day-to-day work, and I
tell our employees that I want them to always stop andthink about the type of product or service best suited tosolve each customer’s issues. I say that, if they havetrouble deciding, they should take a long-term
perspective. To maintain a lasting relationship with aparticular customer, I believe it is essential to avoid
focusing only on the usual recommendations found in
manuals, but also to think long-term about products andservices that could take maybe three years or more to
produce tangible results.

wide initiatives to create workplace environments wherea diverse range of human resources can participate evenmore actively. We are also expediting arrangements toenhance job satisfaction: One such initiative is theintroduction of a scheme enabling employees to takesecond jobs as a means of improving their skills,
achieving personal growth, and contributing in various
ways to local communities. In another initiative, weenhanced the existing scheme for supporting employees
who undergo fertility treatment whilst continuing to work.
Shimizu: To give a concrete example of our humanresources development, we are improving our training of
personnel who will drive DX forward at SMEs by offeringa training program based on the Japanese government’s
DX Certification initiative.
We believe that in order to address recent revisions toJapan’s Act concerning Preservation of Electronic Books,
as well as the Japanese National Tax Agency’s
introduction of a new invoice system for consumption tax,
we need to first of all prepare employees for dialogue withcustomers by improving their digital literacy. We havetherefore encouraged all employees to acquire IT
Passport qualification. The IT Passport is Japan’s national
qualification for data processing specialists and acquiring
it demands an appropriate amount of study. Our Third
Medium-Term Group Business Plan target for FY2024
was 3,000 IT Passport holders, and we achieved this in
the plan’s first year. As of March 2023, a total of 3,500
employees had acquired this qualification.
Akino: In addition to improving digital literacy, we are
seeking to secure highly skilled, diverse humanresources by launching new recruitment schemes
unfettered by conventional practices and ways of doing
things. They include hiring based on referrals or

Using digital means to enable quick,easy administration, while employing
a face-to-face approach to provide conscientious consultation services
Akino: There is no end to the worries business
managers face: They are worried not only about

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Corporate Datatime being, however, we are operating the parent
company and two subsidiary banks in an integrated
manner, which we believe enables prompt and efficientmanagement of the Group. This is possible because theGroup’s customer base remains focused on Joyo Bank
and Ashikaga Bank, which are its core business entities,
and the two banks’ presidents serve concurrently as
representative executives of the parent company.
Shimizu: Mebuki Financial Group’s shareholder return
policy targets a total return ratio of 30% or more; withthis in mind, we will continue to consider our dividendlevel from the three perspectives of growth investment,soundness, and shareholder return.
The Total Return Ratio for FY2022 is 52.2%, which
includes the effects of share repurchase. During FY2023,
we decided to repurchase own shares of up to ¥10.0
billion (maximum amount), and the Total Return Ratio isprojected to exceed 50%.
Akino: In light of the Tokyo Stock Exchange’s requestthat corporations respond to achieve cost of capital andstock price conscious management, we are now startingto analyze our current situation and consider concretemeasures in order to increase the Group’s corporate
value. We believe that improving capital efficiency will bea key consideration in this regard.
Shimizu: Mebuki Financial Group’s strengths include (1)many points of contact and relationships cultivatedregionally over the years with local communities andcustomers including corporations we serve as a mainbank and their employees, which account for around
30,000 customers, (2) physical and personal networks
extending throughout our operating regions, (3)creditworthiness and financial resources unique to thebanking business, and (4) accurate information anddata.
In order for us to remain an essential presence for
local communities and customers we need to offer
uniqueness that cannot be replicated by any otherfinancial institution or business. We will therefore
continue working to create and deliver forms of value
unique to Mebuki Financial Group going forward.
Akino: The Group’s name “Mebuki” (meaning “green
shoots”) expresses its approach of drawing on theknowledge and creativity of each of its companies tocreate fresh ideas and new value. The Group’s
uniqueness lies in enabling Joyo Bank and Ashikaga
Bank—which command advantages in Ibaraki andTochigi prefectures respectively—to jointly mobilize theirown knowledge and creativity in order to create forms ofvalue that promote sustained growth of local
communities. In doing so, the two banks seek to attain alevel of quality and speed that would be impossible ifthey acted individually.
As we seek to fulfill this aim, we will cooperate moreclosely than ever with our shareholders and otherstakeholders in our operating regions. We would like tothank you all for your continuing guidance andassistance.

revisions to the Act concerning Preservation of Electronic
Books and the new invoice system, but also all kinds ofother issues including escalating raw material prices,business succession, labor shortages, and how tocreate new businesses. As a banking group rooted inlocal communities, our starting point is to align ourselveswith business managers, listen carefully to what they
have to say, and share in their concerns.
Shimizu: Creating sustainable local communities
requires invigoration of the businesses in thosecommunities. This requires us to provide solutions thatavoid unnecessary reliance on collateral or personal
guarantees, empowering SME operators to take a bold
approach to developing their businesses, thereby
promoting business vitality and the invigoration ofregional economies.
Accordingly, in April 2023, we changed our policy sothat in principle we no longer require personal
guarantees by the managers of customer companies
covered by our Guidelines on Managers’ Guarantees.
Meanwhile, we will continue to offer a variety of funding
methods as a means of proactively supporting
businesses in our operating regions.
Akino: Having taken steps to optimize our branch
network during the Second Medium-Term Group
Business Plan, which ended in FY2021, we are planningno significant changes to our branch network during theThird Medium-Term Group Business Plan currently
under way. However, we will continue to improve
convenience by providing expanded services throughthe digital channel, and enhance expertise in face-toface services, combining the digital and face-to-facechannels to offer financial and non-financial services thatmeet various customer needs, thereby delivering better
experience value.
Shimizu: Our intention is to leverage both digital andface-to-face channels as appropriate, using digitalmeans to enable quick, easy administration, while
employing a face-to-face approach to provide
conscientious consultation services. In this way, we can
combine improved customer convenience with provisionof high-quality services. Face-to-face service is one of
our strengths; we have positioned our real branches aslocations for consultation where customers can seek
advice in a calm environment.

Total Return Ratio projected to exceed 50%
as a result of repurchasing own shares of up
to ¥10.0 billion (maximum amount)
Akino: During the Third Medium-Term Group Business
Plan we are strengthening Group companies’ functions
and new business areas, but the importance of ourbanking services rooted in local communities remains
unchanged.
Looking ahead, if our Group companies’ functions
and new business areas grow so that their operational
scale is comparable to our banking services, we mayneed a next-generation governance framework. For the
15

Management Base Supporting
Value Creation

16

Mebuki Financial Group’s Sustainability Initiatives

About Mebuki
Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Aiming for a Sustainable Society

Key Issues (Materiality)

Based on the Mebuki Financial Group Philosophy “Together with local communities, we will continue to build amore prosperous future by providing high-quality comprehensive financial services,” Mebuki Financial Group will
resolve a variety of issues with community members to create value for stakeholders, improve the Group’s
corporate value, and contribute to the sustainable growth of local communities.

In establishing the Group Sustainability Policy, Mebuki Financial Group has set five key issues (materiality) that itshould focus on in order to maximize our contribution to the realization of sustainable local communities as aregional financial group and as a corporate citizen. Based on such key issues (materiality), we are engaged invarious initiatives to solve issues in the region and achieve sustainable growth for the Group.

Sustainability Management
Recognizing issues about sustainability as important management agendas, Mebuki Financial Group has
formulated and been proactively engaged in the Group Sustainability Policy with the aim of achieving bothsustainable growth and corporate value enhancement of the Group while solving the issues of and realizing thesustainable growth of local communities.
In addition, to clarify our initiatives regarding Environment, Human Rights, and Diversity, the Group has
formulated the Group Environmental Policy, Group Human Rights Policy, Group Diversity Policy, Environmentallyand Socially Friendly Investments and Loans Policy, and Procurement and Purchasing Guidelines to operate its
business based on these policies.

Process of Identifying Key Issues (Materiality)
The external environment surrounding the Group’s management is becoming increasingly complex, and future
projections are becoming extremely difficult due to various factors such as industrial and work structure changes,
shift to decarbonized and recycling-oriented society, progress of digitalization and technology, aging anddeclining population, as well as changes in lifestyles and value. Given these uncertain and unpredictable times,
we have identified issues that need to be addressed and prioritized in order to achieve a sustainable society.
Key issues (materiality) were identified upon deliberation by the Sustainability Committee and approval of theBoard of Directors. The process is as follows:
The issues were selected from the perspectives of both “impact on and expectations for stakeholders” and “roles to be playedby the Group,” by looking into changes in the external environment in terms of the environment, society, and economy, as well
as long-term future projections and referring to international frameworks and guidelines such as the SDGs.

(1) Selecting issues

Mebuki Financial Group Sustainability Policy
Based on the Mebuki Financial Group Philosophy “Together with local communities, we willcontinue to build a more prosperous future by providing high-quality comprehensive
financial services, ” Mebuki Financial Group and group companies will support solving
issues in our regions, while contributing to the achievement of sustainable growth of local
communities as well as the improvement of our corporate value.

(2) Identifying priorities(3) Receiving approval

Key issues (materiality) were identified after the Sustainability Committee evaluated and reviewed the selected issues inlight of the Group Philosophy and management strategies.
Key issues (materiality) identified by the Sustainability Committee were reported to the Board of Directors for discussion
and ultimately met with the Board’s approval.
Key issues (materiality) will be reviewed as necessary to take into account changes in priority and new emerging issues asa result of changing environments and values.

Group Environmental Policy
Under the “Group Environmental Policy” to reduce the environmental impact of its own corporate activities, Mebuki
Financial Group recognizes that environmental issues, including climate change, are so critical that we have beenpromoting decarbonization and various other environmental conservation initiatives.

Group Human Rights Policy
Mebuki Financial Group has established the Group Human Rights Policy to respect the basic human rights of all
stakeholders and has pushed forward with the initiatives to respect human rights by paying attention to how thecorporate activities of our borrowers and suppliers (supply chain) negatively affect human rights.

Overview of Strategies and Promotion of Sustainability
The following five key issues (materiality) for sustainability were established through the identification process.
Based on such key issues (materiality), we are taking Group-wide initiatives for achieving both the sustainablegrowth of the Group and the resolution of environmental and social issues in local regions. In doing so, we havebeen working to organize issues and impacts so that they can be resolved through dialogue with our customers
and to clarify the impacts, including sustainable finance.

Group Diversity Policy
Mebuki Financial Group has established the Group Diversity Policy so that executives and employees with diverse
abilities and personalities can maximize their ability to think and act flexibly, and we have been strengthening andaccelerating our efforts to ensure diversity.

Environmentally and Socially Friendly Investments and Loans Policy
Concerning investments and loans to particular sectors that could have a negative impact on the environment andsociety, Mebuki Financial Group has established the Environmentally and Socially Friendly Investments and Loans Policy
and sought to reduce and prevent their impact on the environment and society.
For more information on the Environmentally and Socially Friendly Investments and Loans Policy, please visit:https://www.mebuki-fg.co.jp/eng/esg/kankyo/#env1-1

Procurement and Purchasing Guidelines
Aiming for a sustainable society, Mebuki Financial Group has established the group-wide Procurement and Purchasing
Guidelines to procure and purchase goods and services necessary for its business activities, and is engaged in
responsible purchasing activities in consideration of the environment and society. These guidelines will be publicly
available to ensure collaboration with our suppliers.

17

Key Issues (Materiality)

Examples of issues to be solved together with the communities

Examples of impact

Revitalization of the regional
economy and local
communities

Declining population and working generation
Lack of successors, aging of business owners
Changes in industrial structure, sustainment and development of core industries
Disaster response
Promotion of agriculture, forestry, and fisheries
Promotion of tourism
Aging of public infrastructure
Maintaining the transportation network
SDGs and sustainability response
Development of human resources to lead local communities and companies

Increase in the number of companies, population inflow, and job creation
Continuing business, maintaining and expanding employment
Continuing and developing business, maintaining and expanding employment
Resilience enhancement
Maintenance of the primary industry
Expansion of consumption and employment in the region
Conservation of a livable city
Expanding the non-resident population, securing transportation for the elderly
Promotion of initiatives for sustainability
Securing working population and highly skilled human resources in the region

Response to climate change
and environmental
conservation

Decarbonization
Response to increasingly severe and frequent natural disasters
Resource depletion and stable supply
Changes in the ecosystem

CO2 reduction
Resilience enhancement
Reduction of waste, recycling of resources, and conservation of water resources
Conservation of biodiversity

Promotion of digitalization

Enhance productivity
Lack of IT human resources

Transforming business operations and improving competitivenessPromotion of IT adoption

Response to aging society

Nursing care
Enhancement of the medical care system, healthand longevity
Empowerment of the elderly

Balancing work and nursing care, improving accessibility
Improvement of regional medical care, eliminating
regional gaps and maldistribution, and securing doctors
Passing down skills

Promotion of diversity

Balancing childcare and work, gender equality,
human rights

Empowerment of diverse human resource,
revitalization of organizations and companies

18

Targeted SDGs

About Mebuki
Financial Group

Mebuki Financial Group’s Sustainability Initiatives

Management Strategies
for Value Creation

Mebuki Financial Group’s
Value Creation

Management Base Supporting
Value Creation

Corporate Data

Governance and Promotion Structure for Sustainability

Long-term KPI for Sustainability

Recognizing sustainability issues as important management issues, the Group has established a governancestructure centered on the Sustainability Committee under the supervision of the Board of Directors, and also
uniformly manages the development and progress of initiatives to promote sustainability.

The Group aspires to realize sustainable local communities and enhance corporate value, and thus has set Longterm KPIs for sustainability in order to clearly define its basic stance and goals related to sustainability.
As the Group holding regional financial institutions, we will strengthen our efforts to solve the issues of local
communities and contribute to realizing sustainable local communities by achieving the long-term KPIs.

Mebuki Financial Group
Board of Directors

Supervise

Sustainability Committee

ReportChairman: President and Director
Members: All Executive Directors, Executive Officers and others

Sustainability Management GroupJoyo Bank.

Ashikaga Bank

Sustainability Promotion OfficeSustainability Promotion Office

Support customers’ sustainability initiatives
Reduce the Company’s CO2 emissions
Manage risks/screen investments and loans

EachGroup company

CO2 emission reduction goal
(Scope 1, 2)

Mebuki Financial Group will reduce its own CO2 emissions through its business activities and accelerate its
contribution to realizing a decarbonized society and regional sustainable growth.
CO2 emissions reduction target for FY2030: Net zero

Female employee ratio in positions equivalent
to assistant manager position or higher

Mebuki Financial Group strives to improve organizational productivity and support employees’ work-life balancein order to promote mutual understanding among employees and allow them to fully demonstrate their abilities.
One particularly important theme is accelerating the active participation of women in the workforce.
Target: Increase the female employee ratio in positions equivalent to assistant manager or higher to
35% or more by March 31, 2025

Business departments
General affairs departments

Risk management departments/loan & market departments

Promote diversity/human resources management

Mebuki Financial Group will promote sustainable finance in order to contribute to the realization of sustainablelocal communities through the provision of financial services to our customers.
Target amount: ¥3 trillion (of which, ¥2 trillion in environmental fields)
Period: FY2021–2030

Sustainable finance goals

Personnel departments

Support Customers’ Sustainability Initiatives
As a partner of its customers, Mebuki Financial Group is expanding its products and services and providing
customer-oriented support to facilitate their sustainability initiatives.

Supervision by the Board of Directors
The Board of Directors supervises sustainability-related agenda items (policy and target setting, progress of initiatives, and other items).
We have built a structure in which the Board of Directors can supervise the Group’s sustainability initiatives by discussing and reporting thedetails of deliberations at each meeting to the Board.

The Group’s Solutions Menu (Example)
Major companies

Sustainable finance

Roles of the management in sustainability
The President and Director is responsible for sustainability matters. As the chairman of the Sustainability Committee, the President andDirector also assesses the impact of sustainability issues and responses on the business, develops countermeasures, sets targets, andcontrols the achievement management.

Sustainability Committee
To uniformly manage the development and progress of initiatives related to sustainability issues and further accelerate the sustainability
initiatives, the Group has set up the Sustainability Committee and held committee meetings once every six months or more. The
Sustainability Committee, chaired by the President and Director, comprises all Executive Directors and Executive Officers, as well as theGeneral Managers of the Corporate Planning Department, Corporate Management Department, and Regional Revitalization Department.
When necessary, the presidents of subsidiaries and general managers of departments in charge of subsidiary banks are invited tocommittee meetings to deliberate and report on environmental issues such as climate change and biodiversity, as well as human capitaland other sustainability-related measures, policies, and progress of initiatives.

Sustainability-related sections
The Group has established organizations specializing in sustainability. The Sustainability Management Group has been set up within the
Company, as have the Sustainability Promotion Offices at Joyo Bank and Ashikaga Bank, which are subsidiaries of the Company, tosupervise and promote sustainability matters. The Sustainability Management Group acts as the secretariat of the Sustainability
Committee, planning, formulating, and managing functions for sustainability strategies. It also makes suggestions to the Sustainability
Committee on Company-wide sustainability matters.

Carbon neutrality
GHG emissions calculations

ESG finance

Organizing
management issues
Mid-sized
companies

GHG emissions reduction

Sustainability-linked loans
Positive Impact FinanceSelf-consumption solar power generation

Green Loans, Green Bonds, etc.

Offsite PPA

Understanding the

Financing with simple SDGs evaluation

Switching to EVs

status of initiatives

Financing for solar power generation projects

Switching to energy-efficient equipment

Private placement bonds with donation scheme

Purchase of J-Credit

Visualize the

Resilience Linemanagement vision
General SDGs matters and introduction of initiatives
SDGs awareness tools (seminars and brochures)Support for the planning of SDGs Declarations and communicating SDGs initiatives of our customers through the websites of subsidiary banks

SMEs

SDGs consulting

Setting priorities for approaches

Coordination and control within the GroupJoyo Bank and Ashikaga Bank, our core business companies, as well as other Group companies, utilize their respective functional meetingbodies to collaborate with the Sustainability Committee and Sustainability Management Group in order to ensure the overall control of theGroup companies.

Climate change
Resource issues, etc.

Human rights issues
Labor issues, etc.

Risk management
The Group has positioned risk management as an important initiative to enhance corporate value and has established an ALM/Risk
Management Committee. The ALM/Risk Management Committee and the Sustainability Committee work together with the Risk
Management Departments of the subsidiary banks to address sustainability issues, monitor and reassess sustainability risks, and narrow
down important risks, which are then reflected in the Group’s strategies.

19

20

Corporate governance,etc.

About Mebuki
Financial Group

Long-Term Vision 2030

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Long-Term Vision

Approach to Realization of Long-Term Vision

In order to achieve sustainable growth together with local communities amidst a drastically changing business

To realize our long-term vision, we will strengthen our core business areas such as traditional banking andenvironment, we have formulated a long-term vision targeting the year 2030 as a major direction for the Group tocomprehensive financial services, and take effort to expand our business areas by leveraging our strengths.

aim for.

We will create new value by taking on challenges to solve regional issues beyond the framework of“Long-Term Vision 2030” is based on our desire to “continue to create new value by working together with local

conventional financial services and returning the expertise obtained through these initiatives to our core business.

stakeholders to solve their various issues” and to “contribute to the realization of sustainable local communities
through value creation, and remain an essential presence in local communities.”

Strengthen core business/Develop new business areas by leveraging our strengths[New Business Areas]
Take on the challenge to solve regional issues, going beyond the conventional framework
Cultivating newcustomers

Together with local communities, we will continueGroupto build a more prosperous future by providing
Philosophy

high-quality, comprehensive financial services.

Long-Term
Vision 2030

[Vision]A Value Creation Group Working
Together with Local Communities

Deepening
relationships
with existingcustomers

We will contribute to realize sustainable local communities by taking on challenges to solve regional issues going beyond theconventional framework.
We will return the expertise obtained through our initiatives in new businesses to core business, which will lead to the growth of ourGroup and local communities.

[Comprehensive Financial Services Area]
Strengthen our consulting and group functions and contribute to solve morecustomers’ issues
We will expand the range of services to solve financial issues by strengthening consulting and groupcompanies’ functions.
We will contribute to solve diverse financial issues of more customers by collaborating with our groupcompanies and external institutions.

[Target Level]

Vision and target level in 2030
based on external environment

Consolidated Fee Income Ratio(*1): 50% or more

and future prospect

Consolidated Ordinary Profit: ¥100 billion or more

[Traditional Banking Services Area]
Change the way of providing services andincrease their value

DX

Consulting

Business
Succession/
M&A

Leasing

Securities

Trust/
Inheritance

Asset
Building

GlobalExpansion

We will realize thorough efficiency and services that
continue to be selected by customers, throughdigitalization and business innovation.

Third Medium-Term Group
Business Plan

[Plan Period]

Three-year plan (Phase 1) for realizing our

Period for Taking on Challenges for
Sustainable Growth

April 1, 2022–March 31, 2025

vision and target level in 2030

We will increase added value by providing integrated
financial services together with new business areas,
and maintain and expand our customer base.

[Position]
Deposit

Loan

Settlement/
Money Transfer

Securities
Management

etc.

(*1) Consolidated fee income ratio = Consolidated fee income(*2) ÷ Income from customers(*3)(*2) Consolidated fee income = Fee from customers of Banks + Gross profit from customers of other group companies(*3) Income from customers = Difference of interests between loans and deposits + Consolidated fee income * Excluding securities’ income

Return the expertise cultivated in new business areas to core business

21

22

ExpandingbusinessareasAbout Mebuki
Financial Group

Third Medium-Term Group Business Plan

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Position of the Third Medium-Term Group Business Plan

Basic Strategies

The Third Medium-Term Group Business Plan is positioned to be a “Period for Taking on Challenges forIn the Third Medium-Term Group Business Plan, we will pursue a business model to supports local communities,

Sustainable Growth.”aiming at contributing to them through new value creation.

While strengthening our management structure by innovating traditional banking services and deepening
comprehensive financial services, we will take effort to sow and nurture in “New Business Areas” and aim to

Toward new value creation, we will work to build a sustainable management base by promoting Digital
Transformation (DX), etc., and to develop human resources and promote their active participation.

contribute to local communities beyond the framework of conventional financial services.
Future (Up to 2030)

Third Medium-Term Group Business Plan (FY2022–FY2024)“Period for Taking on Challenges for
Sustainable Growth”(The Fourth Medium-Term Group Business Plan)
Period for accelerating evolution(The Fifth Medium-Term Group Business Plan)
Period for realizing long-term vision

1 Pursue a business model to support local communities
Basic
Strategies
P24

2

Basic Strategy 1
Pursue a business model tosupport local communities

Long-Term Vision 2030

Build a sustainable management base

New
BusinessAreas

3 Develop human resources and promote active participation

A Value Creation
Group Working
Together with Local
Communities
P21

Business
Objectives(FY2024)Comprehensive
Financial
Services Area

Consolidated net income (attributable to owners of the parent)¥52.0 billion or moreCore OHR (bank total)*1

Less than 58%[Specific Strategy 1-3]
Challenges to expand
business areas
Provide value beyond the conventionalframework utilizing the strengths of ourGroup and investments[Specific Strategy 1-2]
Deepening comprehensive
financial services(New Business Areas)(Comprehensive Financial
Services Area)

Expanding new businesses

ducts/services
Expansion of financial pro

ge

Increase customer usa

Strengthen consulting and groupfunctions and contribute to solve morecustomers’ issues

Provide new services
by utilizing digitaltechnology anddata, increase theadded value of
conventional services

Consolidated fee
income ratio
50% or more

(Traditional Banking
Services Area)

Thorough efficiency

Increasing added value by providing integrated services with solving issues

Enhance customers’ convenienceutilizing digital technology and nonface-to-face services

Expansion of businessarea and profit

Consolidated
ordinary profit¥100.0 billion
or more(target level in 2030)

Traditional
BankingServices
Area[Specific Strategy
2-1]
Promoting DX
P.49

P.49

Sowing and nurturing new businesses

P.41

P.30

[Specific Strategy 1-1]
Innovating traditionalbanking services

Increase the value of services bystrengthening consulting function andproviding integrated services forsolving issues

Accumulate, analyze
and utilize dataobtained throughdigital channel andface-to-face channel

Organizational
development related
to DX andsustainability

Developing and securing
human resources who cancreate value

Business management
responding to
expansion of businessareas

Trainee dispatch
About 120 people(3 year cumulative)

Shifting human resources
to focus area
200 people(3 year cumulative)
New digitalization
investments ¥7.0 billion(3 year cumulative)

Accelerate business
innovation
Expand nonface-to-face andremote procedures[Specific Strategy 1-4]
Diversification of securities
management/investments
and financing
P.27
Strengthen profitability with appropriate
risk-taking*1 Core OHR = Expenses ÷ Core gross business profit (Gross business profit*2 − gain/losses on bond transactions)*2 Excluding gains/losses on cancellation of investment trusts and remuneration from “Special Deposit Facility to enhance the resilience of the regional financial system” and “Special
Funds-applying Operations to facilitate financing in response to COVID-19” by Bank of Japan

23

Basic Strategy 3
Develop human resources
and promote
active participation[Specific Strategy
2-2]
Enhancing groupmanagement

P.39

Consolidated ROE (based on shareholders’ equity) 5.5% or more
Developing them into core businesses

Basic Strategy 2
Build a sustainable
management base

24

P.63

Developing employees’ digital skills
DX personnel:
400 people (end of Mar. 2025)
Basis of DX personnel: 3,000
people (end of Mar. 2025)(Number as of March 31, 2023:
Approx. 3,500 people)

Implementing diversity/
Initiatives forjob satisfaction
P.63

Generating management
resources by promoting
DX etc.
Reducing and reviewing
business operations
About 580 people(3 year cumulative)
Cost reduction: ¥3.0
billion (compared to
FY2021, the final year of
the Second MediumTerm Group
Business Plan)

Expanding working opportunities forfemale employees
Female employee ratio in assistantmanager position or higher
35% or more (end of Mar. 2025)(As of March 31, 2023: 33.3%)

About Mebuki
Financial GroupManagement and Financial Strategies

Financial Results for FY2022

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

The term-end balance for loans increased by ¥692.9

On the other hand, gains/losses on securities

Term-end balance (Bank total)

strengthen consulting functions and reduce costs, and as

decreased by ¥24.7 billion from the previous year due tobillion, or 5.8%, from the end of the previous fiscal year toa result, our main business of profit from customera ¥14.0 billion year-on-year decrease in security margin¥12,588.5 billion.

services* increased by ¥11.0 billion year on year to ¥44.3(securities income) resulting from a surge in foreign

billion, the highest since our business integration in FY2016.

currency funding costs, as well as the sale of securities,

to higher demand for working capital against a backdrop

Difference of interests between loans and deposits

mainly foreign and domestic bonds, for future periodicof rising prices of resources and goods, as well as aprofit improvement and risk control.

recovery in demand for equipment financing. In addition,

increased by ¥1.8 billion year on year due to higher yields
on foreign currency denominated loans resulting from

Credit costs decreased by ¥10.4 billion year on year

policy rate hikes overseas, and fees from customers

due to continued calm conditions, and ordinary profit

increased by ¥4.3 billion year on year due to our efforts

decreased by ¥15.2 billion year on year to ¥45.2 billion.

to provide adequate consulting service. Such efforts

As a result, consolidated net income attributable toincluded providing core business support to corporate

owners of the parent of Mebuki Financial Groupcustomers and asset management proposals to individual

amounted to ¥32.1 billion, which is ¥10.7 billion lower

customers to meet their needs. In addition, expenses

than the results for the previous year.

decreased by ¥4.8 billion year on year, mainly due to*1 Difference of interests between deposits and loans + Fees from customers +Expenses*2 Gains/losses on bond transactions + Gains/losses related to stocks + Gains/losses on cancellation of investment trusts + Gains/losses on futures andoptions
有価証券
関係損益*1steadily incorporating the results of structural reforms in
the previous Medium-Term Group Business Plan.

(+5.8%)(+692.9)(Billion yen)

Loans to corporate customers began to increase dueloans to individual customers remained strong, particularly
for housing loans.
We will continue to accurately identify customer trends

11,477.3

11,799.7

11,895.5

5,139.1

5,181.3

5,369.6

5,347.4

4,674.8

4,795.9

4,924.8

5,045.4

5,136.7

1,437.6

1,500.0

1,505.2

1,502.7

1,756.9

Difference ofinterests between
deposits and loans+1.8

Fee from
customers+4.3

Corporate Customers

and promote loan growth to further enhance theIndividual Customers

Public* Including borrowing from special account of MoF

Fees and Commissions
Fees from corporate customers increased ¥4.16 billion,

Fees from corporate customers (Bank total)

or 36.5%, year on year to ¥15.53 billion, reflecting our(Billion yen)focus on providing consulting functions that help solve

Profit from customer services*1+¥11.0 billion YoY

Securities
margin−14.0
Credit related
costs
−10.4

Factors
causingdecreasein income(+36.5%)(+4.16)

15.53

In particular, derivative transactions for hedging risks of

Expenses−4.8
Factors
causing
increasein income

5,694.8

As of March 31, 2019 As of March 31, 2020 As of March 31, 2021 As of March 31, 2022 As of March 31, 2023

the issues of customers.

(Billion yen)

12,588.5

11,251.7

profitability of our core business.

+49

Year-on-year change inordinary profit (Bank total)

Ordinary profit
60.4

Corporate Data

Loans

In FY2022, in addition to increasing loans, we worked to

1

Management Base Supporting
Value Creation

11.37

interest rate and foreign exchange fluctuations grewsignificantly.

9.59

9.65

9.44

2.02

1.44

1.88

7.57

8.20

7.55

8.08

FY2018FY2019FY2020

FY2021

3.72

3.29
11.81

Net non-recurrent Ordinary profit
45.2
gains/losses−15.2 year on year
+2.0

Business support related

FY2022Credit related

Status of Expenses/OHR
Gains/losses
on securities*2−24.7

Core net business income (excluding gains/losses oncancellation of investment trusts, futures and options)
YoY−3.0

FY2021

FY2022*1 Difference of interests between deposits and loans + Fees from customers + Expenses*2 Gains/losses on bond transactions + Gains/losses related to stocks + Gains/losses on cancellation of investment trusts + Gains/losses on futures and options（単位：億円）Change of Profit from customer services (Bank total)(Billion yen)(Billion yen)
44.3

Factors
causing
increasein income

33.2
28.9

28.3

28.3

24.6

Factors
causingdecreasein incomeDifference ofinterests between
deposits and loans−0.3

Expenses−10.8

44.3 (comparedwith FY2018)+15.9

Expenses/OHR (Bank total)

year on year to ¥103.3 billion due to steadily(Billion yen)
61.6%

incorporating the effects of structural reforms
under the Second Medium-Term Group
Business Plan (from FY2019 to FY2021) anda reduction in deposit insurance premiums. In

We plan to make positive investments in

Fee from
customers+5.4

DX and human capital and will work tocontrol OHR by raising the top line throughcapturing the effects of investments and by

56.0%

60.6

46.1

FY2019FY2020

FY2021FY2018FY2022

25

61.2

59.9

58.2

55.8%

OHR*1
(vs Core Gross Business Profit)

103.3

Personnel(−1.6%)(−0.9)

57.2

Non-personnel(−7.6%)(−3.3)

46.7

43.4

43.4

40.0

7.3

7.0

6.8

6.5

6.0

FY2018FY2019FY2020

FY2021

FY2022Taxes(−8.1%)(−0.5)*1 Based on core gross business profit (excluding gains/losses on cancellation of investment trusts
and futures and options)continuing to promote structural reforms.
FY201861.2%(+0.7%)(−4.2%)(−1.8%)(−4.4%)
114.1 (+0.8) 115.0 (−4.8)
110.1 (−1.9) 108.1 (−4.8)

addition, OHR has similarly improved to alevel of 55.8%.

63.7%

System integration

Profit from customer services (Bank total)

Expenses decreased by ¥4.8 billion, or 4.4%,

FY202226

About Mebuki
Financial GroupManagement and Financial Strategies

Securities
decrease of ¥1,019.9 billion year on year to ¥3,662.3

selling mainly foreign and domestic bonds for futurebillion. Going forward, we will work to restructure ourperiodic profit improvement and risk control, the balance

portfolio in light of the outlook for foreign and domesticof securities outstanding as of March 31, 2023 decreased

interest rates and other factors.

by ¥539.2 billion for domestic bonds and ¥344.5 billion

In addition, the Group’s valuation gains/losses were

for foreign bonds year on year, resulting in an overall¥24.9 billion as of March 31, 2023, remaining positive.

Balance (Carrying amount) (Mebuki FG)

Unrealized valuation gains/losses on available for sales securities (Mebuki FG)(Billion yen)(Billion yen)

799.8
280.2
829.6

2,436.8−1,019.9

210.7

4,682.3
4,333.2

4,076.1

715.5

597.2
265.8

658.9
226.0

959.5

831.6

2,510.6

2,359.4

254.1

3,662.3

967.3

622.2
211.3
622.8

174.9
7.2

Stocks

128.9
32.9

86.9
10.3
21.1

2,205.9

24.9

139.4

136.2

2,745.1

Foreign currency-denominated bonds

33.1
99.1

As of March 31, 2019 As of March 31, 2020 As of March 31, 2021 As of March 31, 2022 As of March 31, 2023
Investment trusts

Management Strategies
for Value Creation

Shareholder Returns and Capital Policy

With regard to securities management, as a result of

4,346.6

Mebuki Financial Group’s
Value Creation

131.5

24.3
9.2
−21.3

101.7

35.6
2.4

−21.3
−14.2

Reduction of Strategic Shareholdings

As of March 31, 2019 As of March 31, 2020 As of March 31, 2021 As of March 31, 2022 As of March 31, 2023

Investment trusts

StocksForeign currency-denominated bonds

Capital Adequacy Ratio (Mebuki FG consolidated)

The consolidated capital adequacy ratio increased by
2.40 percentage points year on year to 13.32% as of

10.95%March 31, 2023, mainly due to the early adoption of

10.87%

Yen-denominated bonds

Early adoption of Basel III(Domestic standard) by
March 31, 2023

13.32%

10.92%

9.94%

Basel III finalization and control of risk-weighted assets
with a focus on securities.
As of March 31, 2019 As of March 31, 2020 As of March 31, 2021 As of March 31, 2022 As of March 31, 2023

Forecast for FY2023 (earnings estimates)
lower income related to derivatives and investments forparent for FY2023 to increase by ¥7.8 billion year on year

future growth such as human capital. However, both theto ¥40.0 billion.

Group’s consolidated and subsidiary banks’ nonconsolidated total are expected to increase due to anloans is expected to grow due to increased loans, profit

improvement in gains/losses on securities.

from customer services is expected to decrease due toForecast (Mebuki FG consolidated)

Forecast (Bank total)(Billion yen)(Billion yen)

Forecast for
FY2023YoY

FY2022
Results

Ordinary profit

57.5

+10.8

46.6

Net income attributable toowners of the parent

40.0

+7.8

32.1

Forecast for
FY2023YoY

FY2022
Results

Ordinary profit

55.0

+9.7

45.2

Net Income*

38.5

+6.9

31.5

* Excluding Joyo Bank's dividends receivable of ¥12.0 bn from Joyo Credit Guarantee in FY2022

27(Billion yen)
73.3%

46.2%
34.9%
35.3%

53.3%

28.2%
36.7%

34.9%

Total return ratio

52.2%

Payout ratio

28.3%

31.5

19.5

16.8

21.3
16.7

10.0

3.9

12.7

12.8

12.7

11.9

11.7

11.3

FY2019FY2020

FY2021

FY2022

FY2023(scheduled)

Share repurchase

4.9

Dividends

Dividends per share
¥11.0

¥11.0

¥11.0

¥11.0

¥11.0

FY2019FY2020

FY2021

FY2022

FY2023(scheduled)

Dividends per share

Fair Value of strategic shareholdings*(Billion yen)

We are making efforts to reduce the balance of strategic
shareholdings, taking into consideration risk reduction and capitalefficiency based on its economic rationality.
The amount of reduction in FY2022 was approx. ¥41.0 billion.
The resulting balance of strategic shareholdings* amounted to¥150.9 billion as of March 31, 2023. The ratio of the balance ofstrategic shareholdings to consolidated capital decreased from
20.0% to 16.6%.
In addition, in May 2023, we set a target to reduce strategic
shareholdings in order to further increase ROE with the aim ofachieving the sound development of the capital market andmanagement that is conscious of stock prices. Going forward,
we will maintain sufficient dialogue with our business partners as
we continue to reduce strategic shareholdings.

23.1%
27.7%

22.9%

20.0%

16.6%

254.8
229.1
204.0

191.9

Reduction of ¥30.0 billion
by end of FY2027

150.9
120.9

As of March 31, As of March 31, As of March 31, As of March 31, As of March 31,
2019
2020
2021
2022
2023
Ratio to net assets

As of March 31,
2028

Fair Value* Figures are fair value of strategic shareholdings (including listed or non-listed stocks) held by Joyo Bank, which owns more than two-thirds stocks owned by Mebuki FG and
subsidiaries.

We expect net income attributable to owners of the

While the difference of interests between deposits andDividends and Shareholder Returns¥3.5 bn* Unrealized valuation gains/losses on interest rate swap to hedge
fluctuations in the fair value of domestic bonds

Capital adequacy ratio

Corporate Data

* Total return ratio = (Total amount of dividends + Total amount of acquisition of own shares)/Net
income attributable to owners of the parent

−34.4
−13.9
−28.4

(Reference) Deferred gains (losses) on hedges*¥0 bn−¥0.8 bn
¥1.5 bn¥3.3 bn

Yen-denominated bonds

We will target a total return ratio* of 30% or more while taking
into account both the maintenance of solid capital levels for our
future growth and the appropriate distribution of profits to ourshareholders.
We will continue to consider the total return ratio including thedividend level in light of market trends and business forecasts.
We maintained stable dividends and paid out ¥11 per share in
FY2022 (the same level as the previous year). We also
repurchased own shares in a flexible manner, achieving a total
return of 52.2%, above the target of 30%.
In FY2023, we plan to maintain a stable dividend of ¥11 pershare (the same level as the previous year), and in May 2023, weannounced a plan to purchase treasury stock with an upper limitof ¥10 billion, which is expected to result in a total return ratio of
approximately 53.3%.

Management Base Supporting
Value Creation

Assessing the rationality of holding individual stock by the Board of Directors, etc.
Our basic policy for strategic shareholdings is based on medium- to long-term economic rationality on the basis of risk
and returns and future outlook so we can secure sustainable growth, increase corporate value of the Group and issuing companies over the medium- to long-term, and build stable business relationships with those companies.
The economic rationality of strategic shareholdings is examined from the viewpoint of profitability, creditworthiness,regional characteristics (relevancy to principal base of operations), improvement of business relationship, etc., using
their overall business RORA* based on our ROE target.
As of March 31, 2023, the Board of Directors confirmed every strategic shareholding to be meaningful pursuant tothe basic policy to secure sustainable growth, increase corporate value of the Group and issuing companies over the
medium- to long-term, and build stable business relationships with those companies.
Regarding the profitability, we confirmed that their overall business RORA combining all listed companies of strategic
shareholdings exceeded the target value.
* RORA = (Net interest margin on loans and deposits - Expenses (including credit related costs) + Fees and commissions + Dividends) ÷ Risk-weighted assets (Loans and Stocks)

28About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Revitalization of the Regional Economy and Local Communities

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Deepening comprehensive financial services

Deepening Consulting Function for Business Companies

We are facing major trends such as a declining birthrate and aging population, changes in industrial andemployment structures due to digitalization, and the transition to a decarbonized and recycling-oriented society.
Furthermore, the prolonged COVID-19 crisis and the emergence of geopolitical risks have also intensified
uncertainties. As a result, local customers are forced more than ever before to respond to the diversifying and

We are developing consulting business at all stages of our corporate customers. Our branches and consulting section work
together to respond to customer issues and needs by providing highly specialized information and making proposals incooperation with the Group’s functions, business matching contractors, external experts, and public institutions.

mounting management challenges they have faced.
The Group will contribute to the realization of sustainable local communities by enhancing consulting services
and expanding the Group’s functions to improve the quality of services related to solving problems for local

Considerate consulting support tailored to each business stage

communities and customers and by taking advantage of the Group’s strengths to develop into new businessF o u n di n g pe r i o dareas.

G ro w i n g pe r i o dStable period

Maturation period

Escorted support for sustainable growth of regional companies
Startup support[Specific Strategy 1-2 Deepening comprehensive financial services] [Specific Strategy 1-3 Challenges to expand business areas]
We will enhance our consulting functions to solve customer concerns and business issues, including business continuity andexpansion, technology succession, human resources development, and global expansion. Through collaboration between the Group’sfunctions and external institutions, we will provide highly specialized and optimal solutions to strengthen our efforts to resolve issues
that truly satisfy our customers.

Expand sales
channels

Funding

Secure humanresources

Financial areas
Company nameBanking

The Ashikaga Bank, Ltd.

BankingCompany name(Business support)(Livelihood support)(Expanding sales channels)

Specific Strategy 1-2
Deepening comprehensive financial services

Business matching

Strengthen consulting and groupcompanies’ functions
Provide services for more customers[Comprehensive Financial
Services Area](Aging society)

Leasing(Healthcare)Business related to supporting sustainablegrowth of corporate customers[Traditional Banking
Services Area](Succession of skills and training)

Securities

Personnel introduction

Specific Strategy 1-3
Challenges to expand business areas
Take initiatives to new areas beyond theframework of financial services
Utilize our Group’s strengths andinvestments/collaboration

DepositMoney transfers

Loans

Securities management(Vacant homes)
Trust/nheritanceThink-tank

M&A/Business succession

M&A/Businesssuccession

Ashigin Money Design,
Ltd.

Financial instrument
intermediary service

Mebuki Lease Co., Ltd.

Leasing

Mebuki Credit Guarantee
Co., Ltd.

Credit guarantee

Main business

Joyo Computer Service
Co., Ltd.

Software development andcontracted computing services

Joyo Industrial ResearchInstitute Ltd.

Research and consulting
services

Joyo Equipment
Management Co., Ltd.

Real estate leasing

Ashigin Research Institute, Research, consulting services,Ltd.
and software development
Joyo Green Energy Co.,Ltd.

Renewable energy-related
business

Colletochi, Ltd.

Local trading businessBusiness related to the realization ofsafe, secure and prosperous living

Consulting(Labor shortage)

Wing Capital Partners, Ltd. Investment

The Joyo Credit Guarantee
Credit guarantee
Co., Ltd.

Credit card
Global business

Credit card

The Joyo Capital Partners
Investment
Co., Ltd.

Individual Customers

Support for improving andrestructuring business

Non-financial areas

Main business

The Joyo Bank, Ltd.

Mebuki Card Co., Ltd.

Corporate Customers

Support for global
business

Group companies’ functions + External partners

Mebuki Securities Co., Ltd. Securities[New Business Areas]

DX/Enhance
productivity

External partners

Positioning in the Medium-Term Group Business Plan

Escorted support for companies(Abandoned farmlands)(Job creation)

Business owners

Consulting section (collaboration with related
sections)(Startup support)

Key challenges

Escorted support for companies(DX)

Specific support(Enhancing productivity)(Population decline)

DX/IT support

Structured finance
Investment subsidiaries(Decarbonization/SDGs)

Securing of management
personnel
Stable funding(Aging of public infrastructure)
Regional
trading companies(Regional decline)
Business for contributing to regional
revitalization and urban development(Diffusion of renewable and green energies)(Advertising/Data marketing)Business related to supporting decarbonizationand SDGs in the local regions

Local Regions* Regional issues and needs are shown in parentheses of the figure.

29

Actionable planning

Regular discussions

Business succession(lack of successors anddispersed shareholdings)
Formulation ofbusiness plans

Introduction of external
strategic partners

30

Providing solutions throughintroduction and collaboration
with BM partners
Support for improving productivity
through the use of subsidies
Identifying management issues
through macro environment
analysis and other means
Growth strategy planning andfinancial restructuring
Highly specialized advice,including technical evaluations
by experts

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Consulting services for business restructuring

Deepening comprehensive financial services

Promoting Industries by Deepening Consulting Function for Business Companies
Supporting our corporate customers in SDGs initiatives（単位：万枚） （単位：億円）
SDGs declaration support service (Supporting the preparation of written SDGs declarations)
Number of cases of the SDGs declaration support service(Supporting the preparation of written SDGs declarations)
People’s sense of participation in SDGs initiatives has been growing worldwide.
Japanese companies are also expected to contribute to the realization of a
1,676
sustainable society through environmentally and socially friendly businesses.
Promoting SDGs initiatives helps enhance corporate value and create business
1,084
opportunities. We therefore work to support our corporate customers in SDGs
initiatives.
At the Group, we support our corporate customers in participating in SDGs
291
initiatives by giving feedback about the status of them being implemented byour corporate customers and assisting them in preparing written SDGs
declarations.
As of March 31,
As of Sept. 30,
As of March 31,* Joyo Bank and Ashikaga Bank post their corporate customers’ written SDGs declarations on their respective
dedicated web pages to support the customers in their PR activities.

2022

2022

subsidy program for sustaining businesses by thegovernment with a view to the post-COVID-19 era.
We are holding individual sessions each year toprovide our corporate customers with information andapplication support to receive subsidies, which includes
explaining specific requirements and preparing
application documents.

For small and medium-sized enterprises suffering fromsluggish demand and sales caused by the COVID-19
pandemic, we are working with them to analyze theirstrengths and weaknesses and formulate businessplans. We are also providing escorted support to theenterprises to change their business formats andsectors, develop into new domains, and restructure theirbusinesses through the use of subsidies under the

Number of subsidies granted under the subsidy program for sustaining businesses (since 2021)
Public call

1st

2nd

3rd

4th

5th

6th

7th

8th

9th

Cumulative
total

Total of two banking subsidiaries

73

53

91

83

106

78

75

74

49

682

Joyo Bank

44

30

49

46

67

50

48

44

25

403

Ashikaga Bank

29

23

42

37

39

28

27

30

24

279

2023

Uncovering regional industries and supporting new business creation
Support for SDGs initiatives
The Group endeavors to expand and enhance products and services that
support its corporate customers in participating in SDGs initiatives tocontribute to the realization of sustainable local communities.
The Group helps its corporate customers better understand the SDGs byholding seminars, conducting a simple evaluation, and using other means. The
Group also provides practical support by, for example, assisting its corporate
customers in preparing written SDGs declarations, providing SDGs consulting
services, and offering sustainable finance. Furthermore, the Group is
introducing examples of initiatives via media, for example, posting written
SDGs declarations on web page. This will lead to collaboration for the SDGs
among corporate customers.

Responding to changes in industrial structures and helping sustain and develop core industries
Responding to changes in the environment surrounding the manufacturing industry is an urgent task. Such changes in
the field of manufacturing include the risk of supply chain disruptions due to instability in international affairs, growing
global momentum toward the realization of a decarbonized society, a worsening labor shortage, and the increasing
importance of reducing production costs and implementing appropriate cost pass-through to cover soaring raw
material and energy prices.
We accurately understand these changes in the social structure and provide consulting services with high added
value for our corporate customers, thereby helping them solve their regional issues and management issues.

matching between the corporate customers of the twobanking subsidiaries. We also hold a Mebuki BusinessAward to discover innovative and creative business plansthat are latent in regions and to promote thecommercialization of such plans. Through the event, we
uncover regional industries and support new businesscreation.

We have the Regional Revitalization Department, and it
works with Joyo Bank and Ashikaga Bank to promote
regional industries.
The department and two banking subsidiaries jointly
hold business conferences related to manufacturing andfood for the purposes of offering our corporate
customers an opportunity to have business conferenceswith major companies and promoting new business
Manufacturing Business Forum

Mebuki Business Award

This forum offers an opportunity to have business conferencesthat may lead to finding new business partners throughexhibition panels and appointments to have business meetings.
We make business conferences more effective by using
technical propositions
prepared withparticipatingcompanies who
submit an entry inadvance (booklets
summarizing thecompanies’ distinctive
technologies andproducts).

Mebuki Business Award is held to call for and award innovativeand creative business plans in the regions.
We provide various types of support to winners tocommercialize their award-winning plans, for example, assisting
the winners inmaking technicalpropositions andexpanding sales
channels, andproviding financial
support using funds.

Initiatives for startup support
Initiatives in the automobile industry
The Group has many corporate customers related to the automobile industry in the Kita-Kanto area, our primary
operating base. The customers need constant information gathering and support in response to changes in theindustrial structure, such as the shift to EVs.
With the shift to EVs, the number of parts is expected to decrease significantly, and engine parts will no longer
be needed. While this requires the corporate customers to review their strategies, this is also an opportunity forthe customers to create new business.
To maximize the opportunity to create new business in the automobile industry, the Group has formed an“Automobile Industry Team” and established a system to support its corporate customers. The team identifies
trends in the automobile industry and understands technologies, products, and services owned by companies.
31

The Group makes full use of its internal and external networks composed of local governments, universities, business
partners, experts, etc., to support its customers in commercialization and help them to solve issues and meet needs
after the start of their business.
Outline of our main support
Advice and seminars on starting andplanning business
Legal and tax advice
Support for sales activities (e.g., introducing
distributors and suppliers)

Assistance in preparing application documents
Fund support by various means such as start-up
loans, various types of funds, and crowdfunding32

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Dealing with a lack of successors and aging of business owners

Initiatives to promote business attraction

Business succession/M&A
Business owners of local small and medium-sized enterprises have been rapidly aging, and there has been uncertainty
about the future due to the COVID-19 pandemic and soaring resource prices. These circumstances and other factors
have heightened the sense of urgency more than ever before among business companies regarding businesssuccession issues.
The Group considers business succession/M&A, which are major turning points for its corporate customers, to be
the key timing of providing escorted support, and assists them with the smooth succession of their businesses tosuccessors through the planned development of successors, transfer of company shares, consolidation of dispersed
shareholdings, etc. The Group also provides support according to its corporate customers’ circumstances and needs.
For example, the Group can provide support for third-party succession such as M&A in cooperation with an external
expert team and other organization. The Joyo Capital Partners Co., Ltd., an investment firm of the Group, and a fundmanaged by Wing Capital Partners, Ltd. can also temporarily hold all company shares.

Ibaraki Prefecture and Tochigi Prefecture are adjacent to
the Tokyo metropolitan area and have well-developed
high-speed transportation networks, including railroads
and highways, making the prefectures ranked among
the top prefectures in Japan in terms of the number of
new factory locations, the total area of factory locations,and the number of company locations from outside theprefectures. The prefectures are attractive to companies
as it is very convenient for their employees to commuteand for logistics. New business expansion into theprefectures is expected to create jobs and increasedemand for local companies’ products and services,
thereby stimulating the local economy.
Ibaraki Prefecture has been working diligently topromote business attraction. The prefecture has been
top-ranked in Japan for the past decade in terms of thetotal area of new company locations and the number of
new company locations from outside the prefecture.
Joyo Bank formed Bridge Business Team specialized inpromoting business attraction within the Consulting
Business Division. The team works with Ibaraki
Prefecture and its municipalities to attract companies.
Specifically, the team and prefecture collect andprovide information on supply chains, including factories
and logistics facilities, and introduce suitable locations tocompanies. The team and prefecture also provide
support and advice to solve various issues related tobusiness expansion into the prefecture, for example,
helping companies secure human resources, introducing
potential local business partners, and securing housing
for companies’ employees.

(Number of companies)

FY2018FY2019FY2020

FY2021

FY2022
839

2,728

949

1,031

820

Joyo Bank (support for M&A)

285

306

427

520

373

Ashikaga Bank (support for business succession)

918

920

1,279

954

1,415

Ashikaga Bank (support for M&A)

408

395

570

690

325

Joyo Bank (support for business succession)

Personnel introduction
Securing human resources is a common management issue for many
companies. We are committed to meeting our corporate customers’
human resource needs in a meticulous and prompt manner and strive
to help solve a wide range of recruitment issues in a variety ofindustries and sectors including manufacturing, service, and retail.
We also help our corporate customers secure senior management
members and specialized personnel needed to solve management
issues by using our job database and directly introducing candidates
for senior management members from our banks.

Lower employee
turnoverity
unort ewp
op e n san uir er
ff er acq stom
O to cu

Shop

Services
Payment ofconsideration

Of
fe
p rw
be rogr elf
ne am arefitsBenefitSupport
es

ic

v
er

ts

os

P

33

Tochigi Prefecture Ibaraki Prefecture
Number of new
factory locations

35 (ranked
7th in Japan)

60 (ranked
2nd in Japan)

Total area of new
factory locations

45 ha (ranked
11th in Japan)

115 ha (ranked
1st in Japan)

Number of new company locations
from outside the prefecture

17 (ranked
4th in Japan)

40 (ranked
1st in Japan)(in 2022)(in 2022)(in 2022)

Source: the “Survey of Factory Location Trends” by the Ministry of Economy, Tradeand Industry

The agriculture and food sector, one of the core industries in Ibaraki Prefecture and Tochigi Prefecture, is expected tocontinue to grow. The Group shares know-how that its two banking subsidiaries have and uses its internal and external
networks to provide optimal solutions for each of the production, processing and sales phases in the agriculture andfood sector. The Group also provides more support to its corporate customers in terms of sales channel expansion
and branding so that they can expand their business.

Offering “Benefit Support”, Joyo Bank’s welfare program

Benefit Support offers a wide variety
of benefits to eligible employees ofregional business companies andhelps enhance their welfare
programs. Eligible employees canaccess banks’ unique financial
products and services, regional perks
that help revitalize the regions, and awide range of perks that can be usednationwide. As options, eligible
employees can also attend various
types of seminars at discounted
prices, such as a financial education
seminar and an asset management
seminar for employees.

Ashikaga Bank participates as a member in the
Tochigi New Factory Locations Development Committee
to promote business attraction and the retention ofcompanies in Tochigi Prefecture. The bank introduces
industrial parks and provides other information to its
corporate customers located outside the prefecture. If a
corporate customer shows interest, staff of the bank andlocal government together visit the customer. In this way,
the bank and local government actively work together topromote business attraction. The bank also cooperates
with Tochigi Prefecture by encouraging corporate
customers to exhibit booths and participate in seminars
at the seminar held by Tochigi Prefecture twice a year inTokyo and Osaka to showcase how the prefecture issuitable for company locations and the prefecture’s
attractive features.

Promoting food and agriculture

Giving advice to individuals in a migration seminar

Improved employee
satisfaction

Corporate Data

Having an online interview to introduce personnel

Cooperating with Tochigi Prefecture and Gunma Prefecture tohave migration seminars
Securing a job is a major requirement for those who are moving toanother place to live. We cooperate with local governments inpromoting migration by introducing companies’ human resource
needs to those who want to move into the region.

Improved recruitment
capability

Management Base Supporting
Value Creation

Ap

pl

y

Information
about perksand benefits
Employees

fo

rb

en

Company that adopted
the programefi
ts

Welfare program
Retention andrecruitment

Mebuki Food Exhibition

Regional Banks’ Food Selection

We hold Mebuki Food Exhibition to help food-related business companies
expand their sales channels and procure foods and to encourageinteractions among participants.
A wide range of food-related business companies, including agricultural
producers, foodprocessors andwholesalers, retailers,
and restaurant operators,
take the opportunity topromote their products
and have individual
business meetings.

We jointly hold Regional Banks’ Food Selection, a food confab,
with regional banks across Japan to widely distribute local foods
and food products in the market.
The event offers a matching opportunity to directly promote
the tastes andattractiveness offood products tobuyers in the form ofan exhibition-cumbusiness confab.

Example of local products sold by Colletochi, Ltd. (local trading company)
Colletochi, Ltd. disseminates and monetizes
attractive local content and works to resolve
local social issues. The company supports
the nationwide distribution of local products
by selling them to a hotel chain as describedon the right.

Challenges for the hotel

Initiatives

Additional proposals

Collaborating with local companies
Gathering information on best local
products
Strengthening sales of goods to guests
Constantly accessing information

Promoted the attractiveness of
products through guided tours of
production sites and product tastings
Price negotiations led to the adoption of
three products, including aged cheese

Continued
making proposals
Proposed herbal tea was adopted at
13 of 25 locations nationwide
May expand to all locations

34

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Deepening comprehensive financial services

Support for global businessInitiatives to Support Global BusinessStarted providing collaborative support, “Global Business Support Package”

Doing business overseas requires know-how and information about the countries that companies plan to enter. The
Group provides meticulous support to cater to its corporate customers’ needs such as global business and expansion.
Specifically, the Group holds seminars on global business and uses the overseas representative offices of the twobanking subsidiaries, the financial institutions of its overseas business partners, and other related institutions andbusiness alliance partners at home and abroad to provide local information and assistance in visiting countries,
developing global sales channels, conducting trade transactions, etc.
Details of main support
Provision of local
information andresearch

Provide local information about the investment environment, local needs, taxation, infrastructure, logistics routes,
employment environment, regulations, offices, industrial parks, etc.
Regularly send reports prepared by our local representatives
Research import regulations of countries, local markets, local competitors, buyers, etc.

Use of partner banks

Help open an account, handle various financial services, overseas remittance, exchange money, etc.

Introduction of business
partners and specialized
institutions

Introduce business partners (e.g., local financial institutions, Nippon Export and Investment Insurance [NEXI],
insurance companies), local accounting and law firms (accountants and attorneys at law), local real estatecompanies, local temporary staffing agencies, etc.

Funding support

Offer cross-border loans, standby letters of credit, parent-subsidiary loans, etc.

Other support

Hold business conferences, seminars, and business networking meetings
Provide various support in cooperation with Japan External Trade Organization (JETRO) and local governments
such as Ibaraki Prefecture and Tochigi Prefecture
Introduce distributors and suppliers on an individual basis, M&A candidates, local buyers, and local importagencies, and provide assistance in developing cross-border e-commerce platforms, among others

Overseas network of Mebuki Financial GroupWe are expanding our overseas network mainly in East and Southeast Asia in which more than 80% of the Group’s
corporate customers doing business abroad account for. We are also assisting our corporate customers with global
expansion in cooperation with JETRO, Japan Bank for International Cooperation (JBIC), and Japan International
Cooperation Agency (JICA).

New York

ShanghaiHong Kong
Hanoi
Bangkok
Singapore

Corporate Data

Joyo Bank and Ashikaga Bank each started providing collaborative support, namely Global Business Support
Package, with Japan Finance Corporation, Organization for Small & Medium Enterprises and Regional Innovation,
JAPAN, and NEXI in May 2023 and June 2023, respectively.
Each of the banks and organizations will bring together support measures, ranging from global business matchingsupport to financial support, which take advantage of their respective features and strengths, and will constantly
provide appropriate support to respond to corporate customers’ issues and needs in global expansion.

Initiatives to support food-related business companies in expanding their sales channels abroad
Joyo Bank worked with the Ibaraki Global Business
Promotion Council (secretariat: Ibaraki Prefecture andothers) in the previous fiscal year to assist food-related
business companies in expanding their sales channels
into Singapore as part of support to expand overseas
sales channels.
The concept is to allow the participating companies tocollect real voices from local buyers and consumers inperson and to offer the participating companies anopportunity to use the voices for their future activities. In
November 2022, the bank and council held a business
conference where participants met local buyers, atasting event where general consumers were invited,
and a live commerce event (a livestream spot sales).
When food-related business companies do businessabroad, the bank will ask for cooperation from theOrganization for SME and Global Business Support,
IBARAKI and JETRO Ibaraki and continue to work withthe council to support the companies in expanding theirsales channels abroad.

Initiatives for JICA’s SMEs and SDGs business support projects
We are working to support our corporate customers inundertaking the SMEs and SDGs business support
projects* that JICA publicly calls for.
In February 2023, a needs confirmation survey was
adopted for selling and providing technical guidance to
Nepalese farmers growing shiitake mushrooms on logs
on fully colonized sawdust blocks on which low, medium
and high-temperature resistant shiitake mushrooms growusing the technology our corporate customer has.
In this project, Ashikaga Bank is providing support suchas formulating a business plan, conducting market
research, and carrying out marketing activities.
They are visiting Nepal.
* Projects aimed at improving the feasibility of SDGs business that both helps Japanese companies expand their businesses abroad and provides solutions to issues faced bydeveloping countries through researching and verifying the potential use of Japanese companies’ products and technologies in developing countries

Our six
overseas representative
offices cover the Americas, all of
East Asia, and ASEAN + India,
providing local information as wellas accepting various researchrequests.

Country and region Major business partners
Bank of China
China
Bank of Communications
TaiwanCTBC Bank
Kasikorn Bank
Thailand
Bangkok Bank
Bank Negara Indonesia
Indonesia
Bank CIMB Niaga

35

Country and region Major business partners
VietinBank
Vietnam
Vietcombank
Foreign Investment Agency of Vietnam
BDO Unibank
Philippines
Metrobank
India
State Bank of India
Banamex
MexicoAguascalientes State Government,
Jalisco State Government, etc.

36About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Support for improving business

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Deepening comprehensive financial services

Joyo Bank and Ashikaga Bank provide escorted support tocorporate customers according to their circumstances. For
example, the banks provide not only cash flow management
support but also advice and assistance in formulating
business improvement plans and improving financial
conditions in cooperation with the head office and branches,
external expert teams, government-owned financial
institutions, etc.
The banks follow up on the progress of the business
improvement plans as appropriate and provide long-term
support for improving business in order for corporate
customers to better manage their business.

Customers for which business improvement
plans were formulated (Bank total)(Customers)

236

FY2020262
208

FY2021

FY2022

Partnerships with Local Communities
Collaborating with local gover nments
Joyo Bank and Ashikaga Bank aim to achieve the objectives of (1) enhancing the growth potential of local
companies, (2) developing and supporting new industries and growth industries, and (3) promoting
business attraction and retention, among others. To these ends, the banks have signed collaboration
arrangements with many local governments to work together toward regional revitalization. To encourage
people to move and settle in local places, the banks also provide housing loans to support their settlement
in cooperation with local governments.
Main initiatives
Assisting local governments with DX
Support for zero-carbon initiatives
PFI businessSupport for the use of public property

Assist local governments in drawing up DX promotion plans and reforming their internal operations
Sign a comprehensive collaborative agreement on decarbonization, provide application support to regions that work at decarbonization ahead of others, sign a corporate PPA, and use J-Credit
Provide various types of support to encourage the utilization of closed schools

Initiatives to improve resilience of corporate customers

Collaborating with universities

In recent years, natural disasters of unprecedented scale caused partly by extreme weather conditions
have been increasing around the world, resulting in enormous damage. In addition, there are various
threats to corporate management, such as major fires, infectious diseases, pandemics, system failures,and cyber attacks.
Preparing for these threats will minimize damage to business assets and other assets in the event of an
emergency by reducing, avoiding or shifting damage and losses, and will enable the continuation or earlyrecovery of core business operations. Defining the activities to be carried out in normal times and themethods and means to be used for business continuity in the event of an emergency will protect corporate
activities and employees, and help enhance corporate value as a company resilient in times of emergency.
To support business companies in preparing for natural disasters and other emergencies, the Group is
working to expand and enhance BCP-related services in cooperation with non-life insurance companies, etc.

Joyo Bank and Ibaraki University use AI and machine learning in securities management
Joyo Bank has been conducting joint research with Ibaraki University, a national university of Japan, on theuse of machine learning and AI in securities management as an industry-academia collaborative initiative.
The bank and university have so far organized research topics, developed analysis tools, andimplemented programming. The students received from the bank the research hypotheses and trading
ideas that are based on past market conditions and empirical data, performed analyses using different
approaches, and presented their results and findings at a
meeting. Based on the presentation, the students andbank discussed how to upgrade and assess developed
systems and a future policy, taking into account thebank’s operational issues and interest.
As a result of these processes, the students are
expected to develop new analysis tools that could be used
for operations at Joyo Bank. In addition, the bank hired
one graduate of the Master’s Program of the Graduate
School of Science and Engineering who participated in the
joint research. Through the joint research and recruitment,
the bank is putting more effort into DX.

Main consulting services
Risk consulting services for corporate customers
Assistance in preparing earthquake first response manuals
Assistance in raising awareness among employees and providing education to them

Assistance in formulating BCPs and conducting business continuity drills
Seismic vulnerability evaluation on facilities
Earthquake, flood and wind damage risk assessment

Providing BCP-related loans to corporate customers
Our BCP-related loan will enable corporate customers to hedge earthquake risk in a way different from anearthquake insurance, and has the advantage of increasing the effects of public relations as a company
proactively preparing for disasters (earthquakes).

Collaborating with other financial institutions

Loan with the covenant of exempting the borrower from repaying the loan principal when an earthquake hits
This loan exempts the borrower from repaying borrowing outstanding at a predetermined rate (100% or50%), regardless of whether there are actual losses or not in the event of an earthquake of predeterminedseismic intensity or greater, which is measured at a predetermined observation site.

Tochimaru Cooperation Agreement
Ashikaga Bank signed cooperation agreements with six credit unions
and two credit associations located in Tochigi Prefecture to provide
them with a wide range of its specialized functions, aiming to help
more local customers solve their issues and to realize a sustainableregional society.
The bank held 26 workshops for staff of the credit unions and credit
associations and four seminars for customers.

Resilience LineIf an earthquake of predetermined seismic intensity or greater hits, which is measured at an observationsite designated by a customer who uses a loan (Loan A), the customer will take out another loan (Loan B)
at a rate of 20% of the initial borrowing amount of Loan A. The customer will be then exempted fromrepaying the principal of Loan B after a lapse of certain period of time. (Note that taking out Loan B andbeing exempted from repaying the principal of it will be allowed only once.)

Ryomo Area Revitalization PartnershipThis is a framework for the purpose of industrial revitalization, problem solution, and improvement ofservices in the overlapping service areas of Ashikaga Bank and Gunma Bank, mainly in Ryomo area.
The banks combine their resources and know-how, seamlessly offer them to customers, and promote
initiatives to solve regional issues, such as support for decarbonization, support for EV measures in theautomotive industry, and support for business succession/M&A, thereby contributing to the revitalizationof the area.

37

38

Details of cooperation
HR introduction
M&A/Business succession
Business planning support
Subsidy application support
Testamentary trusts/Estate planningAbout Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial GroupManagement Base Supporting
Value Creation

Management Strategies
for Value Creation

Corporate Data

Business expansion utilizing strategic investments and collaboration

Challenges to expand business areas

Developing New Business Areas by Leveraging the Group’s Strengths
In new business areas, we will take advantage of the Group’s strengths and alliances with externalorganizations in areas that could not be addressed with conventional services to solve local and customer
issues.
Based on the traditional banking services area, we will expand the range of comprehensive financial
services, take on new challenges, and solve regional issues from financial and non-financial perspectives.
We aim to achieve sustainable growth in local communities and enhance the Group’s corporate value.
Approach to New Businesses

Themes for New Business Area Expansion

High necessity to address as regional issues

Affinity with our Group’s strengths

Mebuki Financial Group’s
Value Creation

Providing services
for solving issues
including nonfinancial fields

Utilizing strategic investments and collaboration, etc.

Business related toBusiness related to the

supporting sustainable growthof corporate customers

realization of safe, secure
and prosperous living

Business related toBusiness related toregional revitalization andurban development

supporting decarbonizationand SDGs in local regions

We will create new value by taking on challenges to solve various regional issues.

Developing new business areas and acquiring new customers by leveraging the Group’s strengths
The company also started to supply power toYachiyo Town in Ibaraki Prefecture through a PPA
as an initiative to promote renewable energy withadditionality.
Furthermore, the company started to sell
J-Credit based on the CO 2 absorption effect offorests in Ibaraki Prefecture to support the region’s
initiatives to achieve carbon neutrality and the
SDGs.

Joyo Green Energy Co., Ltd. (established in July 2022)
Joyo Bank established Joyo Green Energy Co.,
Ltd. to contribute to the region’s carbon neutrality
by acquiring and generating renewable energy
power and their derived businesses.
The company made progress on acquiring renewableenergy power and acquired solar power generation
facilities with capacity of approximately 5 MW, which isthe equivalent amount of electricity consumed by
1,500 ordinary households (as of June 30, 2023).

Startup Co-creation Program 2022
This program is an open innovation initiative forstartup companies and others to create new
businesses by soliciting business ideas andcollaborative partners based on themes that ourGroup expects to address.
As a result of soliciting the ideas and partners
based on the themes of “Carbon neutrality” and“Responding to an aging society,” we received
entries from 39 startup companies and selected
three startup companies as candidates forcollaborative partners. We started demonstration
tests and examinations to create new businesses
and services.

Resources

Startup Co-creation
Program 2022
ThemesStartup companies
Collaboration ideas

01 Carbon neutrality

Our Group’sbusiness base02 Responding to an aging society

Co-creation

Advanced
technologies andservices

Create new businesses and services by combining the ideas, services,and other resources of our Group and startup companies

Candidates for collaborative partners

Strategic investments with corporate venture capital (CVC)
We made a total of five investments using CVC to consider collaboration for business expansion.
Collaboration with the investees
We collaborated with Trinity Technology Co., Ltd. that has strength in the area of family trusts*1 and started to provide “Smart
Family Trust,” which allows families to easily manage trust assets with an app.
(Investment execution in May 2022)(Investment execution in October 2022)*1 Family trust is a registered trademark of the Association for the Promotion of Family Trust and is designed to avoid the risk of asset freezing and cover the successionof inheritance by concluding a trust agreement between family members and transferring the right to manage assets to the children while the parents are still healthy.

We collaborated with Digital Securities Preparatory Co., Ltd., which is preparing a real estate STO business*2 with the aim ofproviding next-generation financial products, and provided non-recourse loans to professional real estate STO funds. We will
diversify funding menu for businesses such as asset securitization and aim to provide new financial products for the digital
generation.
*2 Real estate STOs are digital securities whose underlying assets are real estate and related rights, and are attracting attention as a next-generation
financial product that differs from conventional real estate securitized products.

Renewable Energy Power Acquisition and Generation Businesses

Biomass power generation
Wind power generation

Electric power companies

Joyo Green Energy Co., Ltd.

Solar power generation
Acquisition

Small hydro power generation, etc.

<Main businesses>
Renewable energy power generation and derived businesses<Businesses for which initiatives started>
Acquired solar power generation facilities with capacity of approx. 5 MW (as of June 30, 2023)
Launched the PPA project (in February 2023)
Started to sell J-Credit (in September 2022)

Sell
power

Corporate PPA*1

Supplygreen
electricity

Regional customers requiring
renewable energy power
Our group will use renewableenergy power*1 A system for installing solar panels on one’s own grounds and roofs (onsite) or adjacent(offsite) and supplying renewable energy power through retail power generation companies

Performance evaluation of
power generation andimproving efficiency

Maintenance and reuse of
power supply facilities*2 Carbon absorbed and fixed by living organisms inmarine ecosystems

Derived Businesses
Initiatives for carbon offset
using fallow land
J-Credit Green Power Certification
Issue of Non-Fossil Certificate

Colletochi, Ltd. (established in August 2022)
Ashikaga Bank established a regional trading
company, Colletochi, Ltd., to revitalize the local
economy by supporting businesses with their corebusinesses through sales of excellent local
products, goods, and services. To achieve thisobjective, the company was established throughjoint investment with three companies: THE
SHIMOTSUKE NEWSPAPERS CO., LTD, Suzuki
Print Co., Ltd., and Caters inc. to cooperate withthese local companies.
[Main businesses]
Sales of local products and support for new product development
EC operation business
Other businesses incidental or related to the above

39

Environmental value creation
using blue-carbon*2
ecosystem

Others(headquartered in Utsunomiya,Tochigi Prefecture)
Local bank operating in Tochigi,
Gunma, Ibaraki, Saitama,
Fukushima, and Tokyo(headquartered in Utsunomiya,Tochigi Prefecture)
Local newspaper company
publishing daily newspaper
Shimotsuke Shimbun(headquartered in Utsunomiya,Tochigi Prefecture)
Printing company publishing regional
information magazine Tochipe and engaging
in commercial and business printing(headquartered in Utsunomiya,Tochigi Prefecture)
Website production and systemdevelopment company engaging in creatinghome pages and building EC platforms

Initiatives to develop human resources for business expansion
New Business Creation Training Program
We implemented a human resource development
program*1 using Sony Group Corporation’s expertise
to develop human resources who will be charged
with business expansion, and to improve skill of
dialogue with corporate customers who are working
at business development, among other objectives.

Black

White

Outline of the program(November 2022–March 2023)
Improved understanding of new businesses
Creation of new business ideas
Training to turn ideas into businessIn this training, 50 employees experienced
business model building based on new businessideas in non-financial areas, such as the utilizationof vacant houses and advertising business.
Employees in training session
2*1 This program is implemented with the support “Sony Startup Acceleration Program* ” (“SSAP”) provided by Sony Group Corporation, which supports startup creation andbusiness operations.
*2 Sony Startup Acceleration Program https://sony-startup-acceleration-program.com (available in Japanese only)40

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Response to Climate Change and Environment
Conservation / Initiatives for TCFD Recommendations
Mebuki Financial Group, as a comprehensive financial services group working together with local communities, isengaged in environmental initiatives to maintain the bountiful and beautiful natural environment and pass on it in ahealthy state to the future. Specifically, the Group supports businesses related to greening and environmental
conservation, provides environmental related financial products, establishes environment-friendly branches, and makes
donation to forest protection funds. Its employees also have participated in forest development activities.
Enhancing group management

Initiatives for Environment Conservation
Mebuki Financial Group shows its stance on initiatives to address environmental issues in its Corporate Ethics,
the basic policy in conducting its business activities, and engages proactively in environmental conservation
activities through its group companies.
(Excerpt from Article 10 of Mebuki Financial Group’s Corporate Ethics)
The Group will act proactively to realize a sustainable environment and society that is highly resilient to changes
in the global environment and social conditions, and other trends.

Group Environmental Policy
biodiversity. Recognizing that addressing climatechange is a key issue for the global environment, wehave worked to reduce environmental burden in our
corporate activities and supported local communities
in making efforts toward decarbonization.

Mebuki Financial Group has a Group Environmental
Policy based on the belief that enhancing thesustainability of society requires revitalizing economies
through coexistence with nature while preserving the
global environment such as efforts to address climatechange and conserve and restore natural capital andEstablishment of Procurement and Purchasing Guidelines
Mebuki Financial Group established the Group-wide Procurement and Purchasing Guidelines in January 2023 toengage in responsible purchasing activities in consideration of the environment and society when procuring andpurchasing goods and services necessary for its business activities.
The Group also works together with suppliers to realize a sustainable society.
3. Basic Policy on Procurement and Purchasing
The Group will give due consideration to the necessity of procurement and procure products and services that are environmentally friendly orthat have as little environmental impact as possible, taking into consideration not only their quality and economic rationality, by preferentiallychoosing suppliers who are committed to reducing their environmental impact.

Enhancing group management

Response to Climate Change (Initiatives for TCFD Recommendations)provide loans to, and implementing initiatives to achieve
net-zero CO2 emissions at the Group, thereby
accelerating our contribution to realizing adecarbonized society and the sustainable growth of
local communities.
We will also enhance our disclosures based on the
Task Force’s recommended disclosures, namely
Governance, Strategy, Risk Management, and Metrics
and Targets, and proactively disclose these thematic
areas, thereby increasing stakeholder engagement.

Mebuki Financial Group considers responding to global
warming and climate change a key priority issue anddeclared support for the TCFD Recommendations inMarch 2021. The objective of the Paris Agreement is torealize a decarbonized society—to hold the increase in
the global average temperature to well below 2°C
above pre-industrial levels and to pursue efforts to limit
the temperature increase to 1.5°C. To this end, we will
put more effort into responding to climate change, forexample, reaching out to our supply chain, which
includes the entities that we make investments in andMebuki Financial Group’s
Value Creation

Corporate Data

Governance
Formulation of policies
To further reinforce its initiatives for sustainability
issues* including climate change, Mebuki Financial
Group has formulated Group Sustainability Policy,
Group Environmental Policy, Environmentally andSocially Friendly Investments and Loans Policy, andProcurement and Purchasing Guidelines. Positioning
the sustainability issues as important management
agendas, the Group has operated its business basedon these policies.

Mebuki Financial Group
Supervise

Board of Directors
Sustainability Committee

ReportChairman: President and Director
Members: All Executive Directors, Executive Officers and others* Initiatives for achieving both the sustainable growth of the Group and theresolution of environmental/social issues in local regions

Sustainability Management Group

Supervision by the Board of Directors
To establish a structure that uniformly manages thedevelopment and progress of initiatives related tosustainability issues, including climate change, we have
set up the Sustainability Committee chaired by the
President and Director and have held committee
meetings as frequently as once in six months or more.
We have also built a structure in which the Board of
Directors can supervise the Group’s sustainability
initiatives by having the Sustainability Committee report
the details of deliberations at each committee meeting
to the Board of Directors and giving instructions to thecommittee as necessary. Key sustainability issues areproposed to discuss at meetings of the Board of
Directors, and it makes decisions on them.

Joyo Bank

Ashikaga Bank

Sustainability Promotion OfficeSustainability Promotion Office

Main matters related to climate change discussed
by the Sustainability Committee and reported to theBoard of Directors in FY2022
Creation of a roadmap for reducing CO2 emitted by the Group
Establishment of Procurement and Purchasing Guidelines
Reporting of the results of the scenario analysis of climatechange* The Sustainability Committee met 7 times in FY2022.

Establishment of dedicated organizations
In April 2022, the Group newly established organizations dedicated to sustainability (Sustainability Management
Group within Mebuki Financial Group, Inc.; and Sustainability Promotion Office within subsidiary banks, JoyoBank and Ashikaga Bank). The Group will bring together its functions and knowledge to accelerate group-wide
initiatives toward realizing sustainable local communities.

Strategybusiness strategies. We have therefore stipulated in the
Economic development is dependent on social
Group Environmental Policy that the Group is committed
conditions such as livelihood and education, and society
to realizing a decarbonized society.
is supported by the natural environment. The
Mebuki Financial Group has identified climate changemaintenance and conservation of the environment is arelated opportunities and risks that are expected toprerequisite for realizing sustainable local communities
impact its business activities as shown below, andand achieving the sustainable growth of both local
assessed the financial impacts of the identified
communities and Mebuki Financial Group. For thisopportunities and risks. Based on the results of thereason, we recognize that addressing the issue of
assessment, the Group has been working to mitigate
climate change is a significant challenge for the global
the risks and seize the opportunities.
environment and also an important issue for our
1. Opportunities(1) Awareness of opportunities
We are aware of climate change-related opportunities as follows:

Increased business
opportunities

Cost reduction
Enhanced social
reputation

Details
Time frames
Increased demand for climate change-related businesses toward decarbonization (e.g., provisionof consulting services, products, and services)
Examples: support in measuring and drawing up plans for reducing CO2 emissions, support indrawing up BCPs (including risk reduction using insurance and other means), ESG investing
Short- to long-term
Increased sustainable finance and related transactions, including renewable energy-related loans
Increased demand for funds to invest in infrastructure and make other capital investments, bothof which aimed at minimizing damage from natural disasters triggered by abnormal weather(e.g., damage to offices and residences)
Reduced business costs at the Group through measures such as the saving of resources andShort- to long-term
energyEnhanced corporate value and social reputation through strengthened responses to climate
Medium- to long-termchange and proactive information disclosure* Short-term: approx. 5 years; Medium-term: approx. 10 years; Long-term: approx. 30 years

41

Management Base Supporting
Value Creation

Management Strategies
for Value Creation

42

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

(2) Efforts to seize the opportunities we are aware of
Provision of services that support climate change measures
With global warming, disasters have become more
Making efforts to achieve carbon neutrality is essential
severe and frequent. Preparing for such disasters is also
for business continuity and sustainable growth and hasessential for business continuity.
become an important management issue even for local
For these reasons, the Group actively supports its
small and medium-sized enterprises positioned in thecorporate customers in taking climate change measures
supply chains of listed and large companies that actively
by providing funds and consulting services.
engage in decarbonization management.

2. Risks
Using the scenario analysis approach, the Group has worked to better understand climate change-related risks
through its loans portfolio. In the ongoing scenario analysis, the Group has pursued the sophistication of analyticalmethods and expanded the scope of analysis.
We expanded the scope of analysis to assess physical risks from Ibaraki Prefecture and Tochigi Prefecture in
the previous fiscal year to nationwide. We added the Metals and Mining sector to the sectors subject to theanalysis of transition risks. We also increased the sectors subject to the analysis of carbon-related assets fromonly the energy sector to four sectors.

List of primary services(1) Awareness of risks
We are aware of climate change-related risks as follows:
Non-financial services

Financial services

Awareness raising

SDGs Declaration Support Service
Holding of SDGs and decarbonization forum

Loan with SDGs simple evaluation

GHG emissions
reduction

Service to measure GHG emissions (introduction of
external partners)
Carbon management consulting service
Introduction of net-zero CO 2 emissions electricity
providersSale / purchase support of J-Credit

ESG financePositive Impact Finance
Sustainability-linked loan, etc.
Loan to support solar power generation facilities
Electric car loan

Consulting service for disaster prevention measures

Loan with non-life insurance

Disaster prevention
measuresPhysical risks

Transition risks

Decarbonization and cost reduction through the promotion ofenergy saving
Establishment of environment-friendly new branch offices
We have been newly establishing environment-friendly branch offices by
installing solar power generation systems and switching lighting to LED
bulbs, for instance.
Adoption of environmentally friendly fuel-efficient cars
We have been gradually replacing our fleet used for sales activities withmore fuel-efficient models, as well as promoting the adoption of electricand fuel cell vehicles.

Status of establishment of environmentfriendly branch offices (as of March 31, 2023)
Number of
branch offices

FY
2022

Joyo Bank

118

Ashikaga Bank

109

Risks

Details

Time frames

Increased severity of extreme natural disasters
such as typhoons and flooding and chronicchanges to the climate such as increased rainfall,
both of which are triggered by the progress ofglobal warming

Harmed customers’ earnings and collateralproperties, which result in increases in credit
related costs of the GroupIn the event of the Group’s business locations hit
by natural disasters, risk of being difficult tocontinue business and additional costs forcontinuing/restoring business operations

Short- to long-term

Tightening of laws and regulations, such as thesetting of stricter CO2 emissions reduction targets
and the introduction/hike of carbon taxes, andchanges in the industrial structure

Deteriorated earnings at customers and increased
credit related costs at the Group, which may lead
the Group to review/revise its operational
Medium- to long-term
strategies, including the Investments and Loans
Policy (a sector-specific policy)

Deteriorated Group’s reputation due to shortcomings,
including the failure to sufficiently address climatechange and disclose related information

Greater difficulty in funding for the Group* Short-term: approx. 5 years; Medium-term: approx. 10 years; Long-term: approx. 30 years(2) Scenario analysis
The Group has conducted the scenario analysis of physical risks and transition risks to assess the resilience of
the Group’s organizational strategy while taking into consideration climate change scenarios and enhancedialogue (engagement) with its corporate customers. Here is the overview of the scenario analysis in FY2022.
Physical risks
I. Qualitative analysis
We have analyzed the risks that customers could facefrom the perspective of physical risks.

Entry into renewable energy power generation business
Demand for renewable energy in local regions has been rapidly growing, and there has been a more apparent
need for renewable energy among not only large companies but also local companies for their internal use. In July
2022, Joyo Green Energy Co., Ltd. was established to contribute to the region’s carbon neutrality by acquiringand generating renewable energy (RE) power and their derived businesses. The company acquired approximately
5 MW from solar power generation facilities as of May 2023, which is the equivalent amount of electricity
consumed by 1,500 ordinary households, and supplied power. The company also started to sell J-Credit andsupply power in cooperation with local governments and through a PPA.
Support for and participation in initiatives
The Group considers cooperating with international organizations, the government, and other companies to beimportant for accelerating sustainability initiatives, including response to climate change. The Group therefore
endeavors to actively participate in initiatives.

Evaluation items

Major risks

Increased severity of
extreme weather events(acute risks)

Damage to continued business
operations as a consequence ofincreased severity of extreme weather
events (a decrease in sales)
Strengthening of disaster prevention
measures, and actual damage to property(an increase in operational costs)

II. Quantitative analysis
As to the impact of flooding damage caused by typhoons and other natural disasters, we conducted aquantitative analysis in the previous fiscal year through surveys on customers with their business locations in
Ibaraki Prefecture and Tochigi Prefecture, the Group’s core areas of business. In the current fiscal year, we
expanded the scope of analysis to nationwide and conducted the same analysis.
Specifically, we have analyzed how damage to collateral properties and the deteriorated earnings due to thediscontinued business operations by customers will affect the Group’s credit related costs over time. We madethe analysis based on materials published by the Ministry of Land, Infrastructure, Transport and Tourism and otherinformation, assuming the 4°C scenario in which the level of flood falling under the natural disasters on hazard
maps takes place.
[Procedures for analysis]
4°C scenario
A scenario assuming that thefrequency of flooding events will
Measure the flooded depths
quadruple from the present level,of collateral properties andand as a consequence, a flood with business locations
an intensity covered by hazard maps
will take place at least once by
2050.

43

Short- to long-term

Damage to collateral properties
Measure how damage to collateralproperties causes increases in the amountof credit to borrowers

Discontinued business operations for customers
Look into how deteriorated earnings
cause rating downgrades for borrowers

44

Credit related costs
Estimate the amount of increases incredit related costs based on theincreases in the amount of credit toborrowers and rating downgradesfor borrowers

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Risk events

Damage to collateral properties caused by flooding, and subsequent discontinuation of business anddeterioration of financial conditions for customers

Scenarios

RCP8.5 scenario* (4°C scenario)

Credit related costs (credit costs) that will likely increase

Risk amount

Increase in credit related costs: Up to ¥14.6 bn

Transition risks
I. Selection of sectors subject to the analysis
In view of transition risks (Policy and Legal, Industry and Market, Technology, and Reputation), we picked out four sectorsof Electricity, Petrochemical, Automobile, and Metals and Mining, which is the added sector from the previous fiscal year,
from our investments and loans portfolio as the sectors that will be affected most by transition risks, and have analyzed
the potential risks customers will face in these sectors.
* The Oil, Gas, and Coal sector, which is included in carbon-related assets, were excluded from the scope of the analysis, as the Group’s exposure to these sectors is limited(accounting for only about 0.6% of the total amount of credit as of March 31, 2022).

II. Qualitative analysis
Major evaluation items

Major risks

Carbon tax/price, reinforcement of
Policy and Legal greenhouse gas (GHG) emissions
control
Industry and Energy mix, etc.
MarketIntroduction/hike of carbon tax (an increase in operational costs, a decreasein assets value, a decrease in sales) and reinforcement of GHG emissions
control (an increase in operational costs, a decrease in assets value)
Diffusion of renewable energy (a decrease in profits, an increase in operationalcosts)
Transition to low-carbon technologies (a decrease in sales, an increase in
R&D spending, an increase in operational costs)
Enhanced environmental awareness (a decrease in sales, an increase inoperational costs)
Introduction/hike of carbon tax (an increase in operational costs)
Adoption of regulations on plastics (an increase in operational costs)

Technology

Diffusion of low-carbon technologies

Reputation

Changing customer behavior

Policy and Legal Carbon tax/price and response toregulations on plastics
Industry and Raw materials prices
Petrochemical Market
Technology Diffusion of renewable energy
Reputation Changing customer behavior
Policy and Legal Carbon tax/priceIndustry and Evolution of electric vehicles (EV)MarketAutomobile
Diffusion of EV (a next-generation
Technology technology)
Reputation Changing customer behavior
Policy and Legal Carbon tax/priceIndustry and Evolution of multi-materials
MarketMetals andMiningTechnology Transition to low-carbon steels
Reputation

Changing customer behavior

Rises in raw materials prices (an increase in operational costs)
Diffusion of renewable energy (an increase in operational costs)
Shifts in customer preferences (a decrease in sales)
Introduction/hike of carbon tax (an increase in operational costs)
A decrease in internal combustion engine vehicles (a decrease in sales)
Shift to EV (increases in capital investments)
Shifts in customer preferences (a decrease in sales)
Introduction/hike of carbon tax (an increase in operational costs)
Transition to lightweight materials (a decrease in sales, an increase inoperational costs)
Transition to low-carbon steels (a decrease in sales, increases in R&D
spending and capital investments, an increase in operational costs)
Enhanced environmental awareness (a decrease in sales, an increase inoperational costs)

III. Quantitative analysis
We have conducted quantitative analyses on the impacts of the Introduction of Carbon Tax, Customers’ Initiatives,
Changes in the Markets, and others, which are all aimed at the transition to a decarbonized society. Specifically, we
have analyzed how the deteriorated earnings of customers, as a consequence of the transition to a decarbonizedsociety, will affect the Group’s credit related costs over time based on the projections under the IEA’s Net Zero by2050 (NZE) scenario and the disclosure and other information provided by sample companies.
[Procedures for analysis]
Identifying sample companies andnecessary parameters

Understanding financial projections ofsample companies and their impact

Assessing the impact of earnings in
the sectors subject to analysis

Based on the qualitative analysis, we identified
sample companies for each of the sectors
subject to analysis as well as the parameters
necessary for assessing the impact.

We developed financial projections up to 2050
based on the IEA’s NZE scenario and thedisclosure and other information provided bysample companies to assess how theearnings of sample companies will deteriorate(the degree of their impact).

We have estimated an increase in credit
related costs by applying the degree of impactof sample companies across their sector,
while taking into account their lines ofbusiness and products/services.

45

NZE scenario*1 (1.5°C scenario), RCP2.6 scenario*2 (2°C scenario)
Electricity, Petrochemical, Automobile, and Metals and Mining sectors
Until 2050

Risk indicators

Credit related costs (credit costs) that will likely increase

Risk amount

Increase in credit related costs: Up to 18.0 billion yen*1 A scenario developed by International Energy Agency (the “IEA”)*2 A scenario developed by Intergovernmental Panel on Climate Change (the “IPCC”)* A scenario developed by Intergovernmental Panel on Climate Change (the “IPCC”)

Electricity

Deteriorated financial position for customers as a result of the transition to a decarbonized society

Scenarios
Period of analysis

Until 2050

Risk metrics

Sectors
subject tothe analysis

Corporate Data

Risk events
Subject of the analysis

Customers with their business locations in Japan

Period of analysis

Management Base Supporting
Value Creation

Management Strategies
for Value Creation[Overview of analysis][Overview of analysis]

Subject of the analysis

Mebuki Financial Group’s
Value Creation

IV. Status of carbon-related assets (as of March 31, 2023)
The amount of credit, which accounts for the total amount of credit*1, and the percentage of loans in each ofcarbon-related sectors*2 are as follows:¥177.1 billion¥465.1 billion

Materials andBuildings¥2,999.9 billion

1.5%

3.9%

25.0%

EnergyAmount of credit
Percentage

Transportation

Agriculture, Food,and Forest Products¥271.1 billion¥3,913.1 billion

2.3%

32.6%

Total

*1 The sum of loans, acceptances and guarantees, foreign exchanges, private placement bonds, unused portions of commitment lines, etc., excluding the water supply andrenewable energy power generation businesses*2 The sectors suggested in the TCFD recommendations are the Global Industry Classification Standard (GICS) sectors; however, the Company used the Bank of Japan’s sector
classification to calculate the amounts and percentages. Therefore, there may be some differences between those calculated based on the GICS sectors and those calculated
based on the BoJ’s sector classification.

(3) Results of the scenario analysis
This analysis approach found that both physical risks and transition risks have limited impacts on the Group. We
will continue to increase the sophistication of our analysis. We will use the results of the analysis for our customer
engagement and support our customers in making efforts to address climate change and toward decarbonization,
thereby maximizing opportunities and minimizing risks for the Group and customers.

Risk management
operational risks, and a broad range of complex
pathways over a variety of time frames. Therefore,
based on the results of the scenario analysis andqualitative analyses, we will deep-dive into how risks
permeate in what time frame for each risk category,increase the sophistication of the scenario analysis,
and manage risks in a comprehensive framework. We
will also develop and offer optimal solutions, such assupport for responses to climate change and thetransition to decarbonization and support for business
continuity measures, to solve the issues and needs
identified through customer engagement, aiming tocreate business opportunities and reduce and avoid
climate change risks.
Concerning investments and loans to sectors that
could have a negative impact on the environment andsociety, we have established the Environmentally andSocially Friendly Investments and Loans Policy andsought to reduce and prevent their impact on theenvironment and society. Based on the policy, we
have also monitored regularly if proper management isin place.
We will continue to deep-dive into how risks
permeate in what time frame for each risk category
and manage risks in a comprehensive framework.

The Group has worked to have a more sophisticatedrisk management system based on the recognition
that one of its most important management issues is
to appropriately control risks according to thecharacteristics of business operations and risks inorder to enhance its corporate value while ensuring its
sound and safe corporate management. The Groupconsiders climate change risks to be one type of thematerial risks that could have a significant impact on
not only the environment but also the economy andsociety and to be an important issue for its businessstrategies. The Group has therefore stipulated in theGroup Environmental Policy that the Group iscommitted to realizing a decarbonized society. To thisend, the Group aims to have and develop proper
climate change risk management.
The Group undertakes integrated risk management
which quantitatively measures various types of risk
including credit risk and market risk, using statisticalmethods, such as VaR, in order to individually manage
increasingly diversified and complicated types of risk
relevant to financial services, and at the same time, tocomprehensively capture said risks.
Climate change risks could permeate and materiallyaffect the Group’s business operations, strategies,
and financial planning by way of credit risks,46

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

1. Example of spreads of climate change risks
Physical risks

Transition risks

Creditrisks

Increases in credit risk due to damage to customers’ assets,
caused by the increased severity of natural disasters and thesubsequent impairment of collateral values, and to the slowdown/deteriorated earnings of customers’ businesses.

Marketrisks

Increase in market risks with the declining values of securities,
etc., caused by the increased severity of natural disasters

Deterioration in earnings and subsequent increases in credit risks of customers for reasons
including their insufficient responses to changes associated with the transition to a
decarbonized society, such as the changes in policies/regulations, markets, andtechnological development
Deterioration in earnings of investees on the back of the transition to a decarbonized society,increase in market risks coupled with a decline in the values of securities and other
instruments caused by changes in investor behavior

Liquidity
risks
Operationalrisks

Increase in liquidity risk coupled with increased outflow of funds Increase in liquidity risk coupled with increased funding costs on the back of a rating
due in part to the withdrawal of deposits by customers who were downgrade of the Group due in part to its insufficient response to climate change risks andaffected by the increased severity of natural disasters, and as a the outflow of deposits
consequence, are cash-strapped
Increase in tangible asset risk, discontinued business operations, Increase in reputational risk due to insufficient responses to the transition to a decarbonized
and increase in disaster prevention costs as a consequence of society (e.g., insufficient disclosure, holding of carbon-related assets)damage to the Group’s business locations by natural disasters

2. Establishment and announcement of loans policy to particular sectors
Concerning investments and loans to particular sectors that could cause a negative impact on the environment andsociety, we have established the Environmentally and Socially Friendly Investments and Loans Policy and sought toreduce and prevent their impact on the environment and society. Since March 2021 when we established theinvestments and loans policy, we have not engaged in investments and loans in conflict with the policy.
SectorInvestments and loans policy

We did not engage in investments and loans for newly
established coal-fired power plants in FY2022. We will
reduce the existing balance*2 to zero by FY2039.
We did not engage in investments and loans for
deforestation businesses.
We did not engage in investments and loans for palm oil
plantation development businesses.

We did not engage in investments and loans for cluster
munitions manufacturing businesses.
We did not engage in investments and loans for businesses
Human rights violations, We prohibit investments and loans for businesses that violate the principles of international that violate the principles of international human rights
forced labor, etc.
human rights standards*6 such as child labor and forced labor.
standards such as human rights violations and forced labor.

*1 Including the Arrangement on Officially Supported Export Credits set forth by the Organisation for Economic Co-operation and Development (the “OECD”)*2 The balance of existing investments and loans include only the projects in which the business operators had adopted the best technology available for the scale of power
generation of each project (BAT: Best Available Technology) when the investments were made.
*3 Forest Stewardship Council. A non-profit organization that operates an international forest certification system based on the principle of appropriate, socially beneficial, andeconomically sustainable forest management from the perspective of environmental protection*4 Forest certification program. An international umbrella organization that promotes examination of forest certification systems that have been individually developed in each country
based on the Intergovernmental Process for Sustainable Forest Management, which covers 85% of the world’s forests, and that promotes mutual recognition of these systems*5 Roundtable on Sustainable Palm Oil. An organization that develops globally trusted certification standards to promote sustainable palm oil production and use*6 Including Universal Declaration of Human Rights, and UN Guiding Principles on Business and Human Rights

Metrics and Targets
We regularly report the progress made toward thetargets and the use of metrics to the Sustainability
Committee and the Board of Directors, reflect them inthe strategy, and receive supervision.

The Group has set the targets below and created aroadmap for aligning with the Paris Agreement, realizing
a decarbonized society, and achieving net-zero CO2emissions, and monitored them with various metrics.
1. Sustainable finance
We have set targets to execute sustainable finance for a
cumulative total of ¥3 trillion, of which the environment
fields represent ¥2 trillion, over the period from FY2021
to FY2030.
During the period from FY2021 to FY2022, we
executed ¥615.4 billion of sustainable finance, including¥347.9 billion in environmental fields.

Sustainable finance
Of which, the environmental
related financeTargetResults(FY2021–FY2030)(FY2021–FY2022)

Progressrate¥3 trillion ¥615.4 billion

20.5%¥2 trillion ¥347.9 billion

17.4%

Definition of Sustainable Finance“Finance to support customers’ activities aiming to realize
a sustainable society through solving environmental andsocial issues,” as referenced in related external standards(the Green Loan Principles, the Green Bond Principles, theSocial Bond Principles, etc.)

Target sectors of the sustainable finance
Projects that help adapt to/mitigate climate change, such as renewable
Environment energy projects
related fields Capital investments that contribute to renewable energy, energy
saving, and carbon neutralitythat contribute to regional revitalization and recreation
Social fields Projects
Projects that contribute to fostering start-ups and job creation

47

Management Base Supporting
Value Creation

Management Strategies
for Value Creation

Corporate Data

2. CO2 emissions(1) CO2 emissions reduction target (Scope 1 and Scope 2)
As part of the efforts to strengthen our response to climate change, we started this fiscal year to measure CO2
emissions across the Group—all Group companies, in addition to Joyo Bank and Ashikaga Bank in the previous fiscal
year. We will continue to work at achieving the target by reviewing and revising the roadmap, as needed, in light offactors such as technological trends and changes in environment.
Substantive adoption of renewable energy
Target for FY2030 Net Zero

AdoptiontimingAdjusted emissions
FY2022 Results 33.6% reduction from FY2013 levels
Scope 1 emissions

Scope 2 emissions−13.3%(Unit: Tons of CO2)
−16.5%

22,45019,456

July 2022

Percentage change from FY2013 levels

16,615

Joyo Bank

15,92012,079

4,254

2,841

2,805

2,811

FY2013

FY2020

FY2021

FY2022

Total

Ashikaga Bank

Head Office
Tsukuba Building
Hitachinaka Building
Business Administration
CenterApril 2023

14,89018,195

Buildings that adopted renewable energy−33.6%

18,725

4 buildings

Estimated
reduction effect

Head Office4,293 tons of
CO2 per year*1

Utsunomiya Chuo
BranchTraining Center (locatedwithin Utsunomiya Chuo
Branch)Computer Center

1,710 tons of
CO2 per year*2

3 buildings

6,003 tons of
CO2 per year*3*1 Calculated based on the adjusted emission factors for FY2020 by TEPCO Energy
Partner, Incorporated*2 Calculated based on the adjusted emission factors for FY2021 by TEPCO Energy
Partner, Incorporated*3 Equivalent to approx. 32% of CO2 emissions (adjusted emissions) at the Group in
FY2021Results of monitoring in FY2022

In principle, we do not engage in investments and loans for newly established coal-fired power
plants. (However, exceptions may be considered after taking into account the background or
characteristics of each project such as its overall power generation efficiency, its impacts on
the environment and local communities, etc., based on international guidelines.*1)
Investment decisions for deforestation operations will be made after careful consideration
Deforestation business of the status of their acquisition of international certifications (FSC*3 or PEFC*4),
environmental considerations, and their conflicts with local communities.
Investment decisions for palm oil plantation development will be made after careful
Palm oil plantationconsideration of the status of their acquisition of an international certification (RSPO*5),
development business environmental
considerations, and their conflicts with local communities.
Cluster munitions
In view of the inhumane nature of cluster munitions, we prohibit investments and loans for
manufacturing business businesses that manufacture cluster munitions, regardless of the use of the funds.

Coal-fired power
generation business

Mebuki Financial Group’s
Value Creation(2) CO2 emissions (Scope 3)
The sum of Scope 3 emissions of Joyo Bank and Ashikaga Bank is as follows: We started to measure Scope 3
emissions for categories 1 through 5 and 15 from this fiscal year.
Category

Emissions (Tons of CO2)

Category 1

Products and services purchased

Category 2
Category 3
Category 4
Category 5
Category 6
Category 7
Category 15

Capital goods
Fuels and energy activities not included in Scope 1 and Scope 2
Transportation and delivery (upstream)
Waste generated through businessBusiness trip
Commuting of employees
Investments and loans
Total

6,267
8,146
2,237
534
29
1,128
3,398
20,498,197
20,519,939* No emissions were measured for categories 8 through 14.

[Category 15 (investments and loans)]
We measured Scope 3 emissions of all the businesses to which Joyo Bank and Ashikaga Bank provided loans, withreference to PCAF*1 standard measurement methods.
There are mainly two measurement processes. The bottom-up approach measures Scope 3 emissions from actual
CO2 emissions sourced from disclosed data and other information. The top-down approach estimates carbon
emissions using sector-specific carbon intensity. We used the bottom-up approach for businesses whose disclosures
were available to us and the top-down approach for the rest.
We will use the measurement results for our customer engagement to contribute to realizing a decarbonized society.
We will make our measurements more accurate and expand the scope of measurement.
[Emissions by sector (14 carbon-related sectors of TCFD)]
SectorCarbon intensity*2(tons of CO2 / Million yen)

Emissions*3(tons of CO2)

SectorAgriculture

5.89

1,458,252

Paper manufacturing and Forestry
Beverages and Foods
Metals and Mining
Chemicals
Oil and Gas
Construction materials and Capital goods

8.70
2.75
9.96
9.19
12.89
3.50

695,192
Electricity
17,463 Real estate management and development
1,743,079
Land transportation
1,046,476
Maritime transportation
813,025
Air transportation
5,047,827
Others
Total

Automobile

Carbon intensity*2(tons of CO2 / Million yen)

Emissions*3(tons of CO2)

4.64

596,757

34.15
0.71
3.80
20.03
9.73
2.72
—

991,046
284,740
930,120130,289
12,4306,731,495
20,498,197*1 Partnership for Carbon Accounting Financials, an international initiative to develop methods for measuring and disclosing GHG emissions through financial institutions’ investment and loan portfolios*2 Formula for calculating sector-specific carbon intensity:
Carbon intensity = Σ (CO2 emissions from businesses to which the banks provided loans / Sales of the businesses) / Number of the businesses*3 Formula for calculating emissions (top-down approach):
Emissions = Σ (Carbon intensity of each of the businesses to which the banks provided loans x Sales of the business) / Degree of contribution of loans provided by Joyo Bank and Ashikaga Bank
Note: The above calculations used the outstanding balance of loans provided to customers as of March 31, 2023 and their latest financial results that Joyo Bank and Ashikaga Bank had as of March 31, 2022.

48

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Promotion of Digitalization and DX

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

DX strategy story that the Group aims to realize
To share a common definition and understanding of the term DX as the Group, we have established a DX strategy
story as below and used it as a guide for our DX strategy.

To promote digital transformation (DX), we have been working to improve the convenience of services forcustomers and increase the efficiency of internal operations by digitalizing operations and utilizing digitaltechnology. We have leveraged know-how in promoting DX cultivated through our banking services and internal
operations to make proposals on DX consulting to local communities and corporate customers. By doing so, we
are accelerating our DX initiatives so that we, as a regional financial institution, can reinvest such know-how into
local communities as good practice cases or services.

Positioning in the Medium-Term Group Business Plan
[Specific Strategy 1-1: Innovating traditional banking services] [Specific Strategy 2-1: Promoting DX]
Traditional banking services involve a lot of paper forms, manual process, and confirmation work relies on human attention, and an
enormous volume of work has been done manually. We aim to remove the hassles for both customers and bank staff by increasing theefficiency of such work with digital technology. The hours and resources saved from increased efficiency will be utilized to strengthen
contact points with customers as well as to create sales structure that allows customers to take their time to thoroughly consult with ourbank staff, thereby driving operational structural reforms.
Through the utilization of digital technology, we will make our banking services available regardless of time or place by providing various
apps, online services, and digital contract services, among others. We will improve user interface and experience of these services so thatanyone can access them easily with peace of mind.
We will use data created through the digitalization of banking transactions in this way to better understand each individual customer. We are
currently working to establish a data utilization infrastructure to provide optimized information and make appropriate and timely proposals toeach customer.

Specific Strategy Promoting DX
Expand digital transactions

Accelerate business innovation

Enhance non-face-to-face services/self-service transactions
Pursue CX and UI/UXDigital channel

Abolition, drastic revision and simplification of administrative procedures
Digitalization of paperwork

Face-to-face channel

Back office operations[Expanding the scope of use of digitaltechnology]
RPA, AI-OCR, AI, image datatransmission, low-code development
tools

Integration
Expanding APP functions and services
with online completion scheme, linking
to external services, etc.

Enhancing digital operations,enhancing consulting function throughdialogue with customers

Data storage
Advancement of data analysis
and data utilization

Systemdevelopment for
promoting DX

Strengthening
infrastructure of IT/
DX

Internal data

Financial data

External data

Non-financial data

DX promotion system
Organizational development related to DX
Securing and developing DX personnel
DX personnel: 400 people
Basis personnel: 3,000 people(IT passport acquirers)
Establish a highly simple, flexible, scalable, and serviceable system infrastructure
Open source/cloud computing, using industry standard technology
Improve security

IT Investments
3 year cumulative ¥15.0 billion
o/w New digitalization
investments ¥7.0 billion

Shifting humanresources to high value
business areas
Value provided tocustomers(1) Easy, convenient andsafe services available
anytime, anywhere(2) Sophisticatedface-to-face consulting
services(3) Proposing products/
services to meetcustomers’ needs
For employees(1) Shifting to high value
business areas andpromoting active
participation(2) Improving productivity
through digital support(3) Efficient sales activities
used in conjunction
with face-to-face andnon-face-to-facechannels

The DX will free customers, employees and staff from hassles (business innovation/digital channel) and provide easy access to informationthat will inspire them to take a next action (data utilization), so that people can continue to provide new value to the local communities
through activities that are unique to them.
To this end, we will work to strengthen our DX infrastructure, including developing a digitally connected environment (developing anenvironment for paperless, cloud, etc.) and utilizing and transforming digital skills and mindsets (management’s commitment and humanresources; shifting our focus on human resources from quantity to quality) and leverage various knowledge and open networks(collaborations with other companies and incorporation of technologies) accumulated in the Group to provide DX support to corporate
customers and local regions.

Roadmap for DX
We have roughly broken down the DX strategy into five areas and defined what we aim for and main initiatives for eacharea. With these definitions as an overall direction that the Group is heading in, we apply them at the tactical level inconsideration of the reality of each group company and set a semi-annual operational plan and short-term goals to
promote the initiatives.
What we aim for (To-Be)
Most operations will be digitized, freeing fromcomplicated paperwork. Bank staff can focus on
Digitalization/innovation in
productive tasks that only humans can perform and AI
traditional banking
and other technologies are being used to enhance andbusiness
personalize business operations.

Development of paperless, seal-less, fax-lessmeasuresGroup-wide BPR, efficiency improvement of loan
operation
Renovation of branch office system(slip-less/innovation in OTC operations)Improvement of digitalchannels/expansion ofcontact points withcustomers

Customers can securely access various transactions
and procedures anytime, anywhere through a high UX
digital channel. These channels are in daily use by manycustomers and have broad penetration among various
segments of customers.

Promoting Banking app, portal for corporate
customers and digital contracts
Increasing digitalization penetration(percentage of digital channel usage)
Digitalization of identity authentication using eKYC

Strengthening datautilization

Various data is collected, aggregated, and accumulated
in the DB, and data necessary for business
management, planning, sales promotion, etc. can beutilized universally. This provides users with new insights
and values.

Rebuilding database infrastructure
Cloud computing of main business channels
Implementation/utilization of MA(marketing automation)

Enhanced DX
infrastructure

A large number of DX personnel have been trained, andtheir skills are regularly brushed up on. A main systeminfrastructure is flexible enough to cope with changes inthe external environment and highly secure enough to
support the diversification of working environment.

Developing DX personnel
Loosely coupled configuration of main systeminfrastructure, shift to cloud computing
Expansion of mobile PC and smartphone users forbusiness use

DX support/collaboration
with customers and local
regions

To enhance DX support, we are ready to promote DX
consulting in collaboration with group companies,business matching partners and external advanced
companies. We also provide appropriate financial
functions for regional DX projects.

Practice of DX consulting sales for customers
Expanding collaboration/alliances with DX service
providersInformation gathering and providing financial function
for regional DX

Certified as a DX Certified Business Operator by the Ministry of Economy, Trade and Industry
The Company was certified as a DX Certified Business Operator
on November 1, 2022. The DX Certification System is a national
certification system for businesses that meet the basic
requirements of the Digital Governance Code* established by the
Ministry of Economy, Trade and Industry under the Act on
Facilitation of Information Processing.
* A document complied by the Ministry of Economy, Trade and Industry that summarizes what actions
business managers are required to take, such as formulation and disclosure of management vision, toaccommodate social transformation driven by digital technology.

49

Main initiatives50About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Innovating traditional banking services

Mebuki Financial Group’s
Value Creation

Management Base Supporting
Value Creation

Management Strategies
for Value Creation

Corporate Data

Innovating traditional banking services

Digitalization/Innovation in Traditional Banking Business

Improvement of Digital Channels/Expansion of Contact Points with Customers

To streamline complicated operations caused by using
paper forms or affixing seals, we are taking various
measures such as paperless, seal-less, and fax-lessmeasures.
Specifically, we first implemented the visualization ofoperations so that their status can be monitored asdata. Then we have been promoting various
improvement measures, including promoting digitalcompletion processing, automating operations using
RPA, AI-OCR, etc., and driving digital workplacereforms in the offices (creating an environment whereoperations can be completed without printing out
paper copies) (listed in order of how much room they
have for improvement).
Such initiatives are taken not only by subsidiarybanks but also by group companies. For example, they
are working on digitalization by building a local area
network across companies and establishing a workflow
between group companies.

Services for individual customers

Joyo Bank’s progress in paperless operations(Million sheets)

46

−48%

18
34
41
FY2021

FY2022
Typed forms

Copier paper

Development and utilization of apps for business smartphone
Joyo Bank has distributed smartphones for business
use to all banks staff including part-timers. In order toincrease the efficiency of internal operations, the bankutilizes its proprietary business apps for operations
including over-the-counter operations and sales
support.
The bank has already developed 10 types ofbusiness apps. Among others, the Receipt App used in
the receipt of items from customers has been patented
as a business model in recognition of its advantages ofsophisticated UI/UX, a unique focus on using a single
photo of the received item as an evidence, and afunction capable of managing “when, from whom, towhom, and where the item was received” as digital
data using GPS.
These business apps were jointly developed with
Digital Serve Co., Ltd., an IT company based in Mito
City, and are available for sale to external companies.

Receipt App
Thoroughly simplified functions
Using a photo and an electronic
signature of the customer as theminimum necessary evidence for thereceipt of item
Using an NFC chip for the transfer ofreceived items between bank staff
Uniformly managing the return ofreceived items using a PC within thebankPatented

Obtained a businessmodel patentin 2020(JP Patent No. 2019-094482)

Automation of manual processes using AI
To improve the operational efficiency substantially, thebank has replaced the manual process with an AI-OCR
so that the only manual operation required is to checkthe recognized text.

Ashikaga Bank has introduced an AI-OCR as a system
to increase the efficiency of simple data entry work at
its concentrated back-office departments and some ofits branch offices.
In the past, staff manually input text and numbers on
machine-printed and handwritten forms into systems.

51* A service provided by Billing System Corporation. The account linking service isavailable at both subsidiary banks.

−90%
by FY2024

912

Designated forms

In addition, we have started accepting a smartphone
payment app PayB App*, through which users cancomplete the payment of taxes and public fees (local
taxes and public utility bills) at home in March 2023.

With Banking App (Joyo Banking App and Ashikaga
Bank App) positioned as a core channel that allows
individual customers to do their banking in the mostconvenient way, we provide an environment where evencustomers who have found it difficult to visit a bankbranch because they work during the day can accessour banking services anytime, anywhere, andconveniently.

Banking App that requires no application or manuals
This app is available for any customers who have an
ordinary savings account at the Company’s subsidiarybanks without having to apply to the bank.

Against a backdrop of a business alliance with Resona
Holdings, Inc. in the digital field, the Banking App has
been developed based on an app platform provided by
the Resona Group, being partially customized for theCompany.
Several new functions have been added to the app
almost every three months through agile development.
Collaborating with Resona Holdings, Inc. in thedevelopment and operation of the app allows us todevelop functions with speed and flexibility. We are alsocollaborating in cyber security.
Staff from teamLab Inc., a company engaged in theapp design, has participated in the agile development
team. With speed and design that cannot be achievedby a regional bank alone, the app is more customeroriented and easy to use, and it is so convenient that it
requires no manuals.

Simple Procedures

Not requiring contract like internet
banking
Simplified setup procedures

Ensuring security

Terminal and biometrics
authentication
Featuring other various security
mechanisms

Easy screen operations

API connection between app andbank’s accounting-related systems
System not depending onconventional internet banking

Continuous improvement

Agile development system withResona HD
Responsive to the external
environment and customer
feedback

Services for corporate customers, self-employed customers, schools, and other customers
Promoting digital contracts
A major change we experienced in fiscal 2022 was theincreasing prevalence of digital contracts. We provide
services for unsecured loans (car loans, card loans,etc.) under an online contract, where all theprocedures, from preliminary loan screening to final
contract, can be completed online without visiting abranch, and the online contract ratio has reached95.9%.
Besides that, we have also started to provide digital
contract services for housing, apartment and businessloans, expanding the scope of digitally available forms
sequentially. The digital contract ratios as of March 31,
2023 for housing loans and business loans wereapproximately 95% and 90%, respectively. In particular,
we have one of the highest digital contract ratio forbusiness loans in financial institutions (according to our
research based on information published by otherfinancial institutions).

Providing corporate portal services
We have started to provide corporate portal services(“Joyo Bank Mikatano Cash Management” and “Ashigin
BizLink”) to assist businesses in their cash management.
The services allow the visually appealing display ofcash flow status, which has been managed using
passbook/statement, Excel, packaged software, etc.
We are also providing an online application service
for bank account transfer for companies and municipal
governments that collect payments via bank transfers,
such as schools and gas companies. By allowing themto accept an application for bank account transfer on
the website, the service helps collection companies
substantially improve the efficiency of reception
management and clearing operations (confirming thecompletion of the account transfer procedures), while
making the application procedures much easier.

52

Value Creation Initiatives of Mebuki Financial Group

About Mebuki
Financial Group

Branch transformation — Aiming for all branches to serve as consulting stations

Promoting DX

eventually expanding such a format to all branches, wewill further increase the convenience for customers to
consult with us.
While actively promoting digitalization, we will build
sales structure that is rooted in local communities byplacing much value on providing customers withconfidence through thorough face-to-face consultationand ties with local communities that internet banking
services and Fintech companies cannot provide.

With an aim to transform our branches from a place forpaperwork to a place for consultation through thedigitalization of over-the-counter operations, oursubsidiary banks are having cross-sectoral discussions
on matters, including how the next-generation branchsystem should be and system requirements necessary
to realize such a system.
We are already making progress in transforming intoa branch format that does not handle cash transactions(transactions are completed via self-service). By
Illustration of branch layout[As is]Strongly promoting self- and semiself-service transactions
Self-counter terminal with navigation
Portal for corporate customers
Banking App
Lobby ATMs

[To be]Office space

Transforming a branch from a place
for paperwork to a place for
Self-counter terminal
Mobile PC
consultation
Mobile PC
Activating consulting
Semi-self counter
ATM in lobby
services
Mobile PC

Digitalizing action history andother information
Source of optimal proposals
Optimizing the allocation ofmanagement resources

consulting backed by rapidly aging population. In doing
so, as part of our financial gerontology initiatives, weare striving to respond to the diverse needs ofcustomers that change with the times.
We are offering a new form of communication using
digital technology by providing customers withconfidence and value-added services that only humans
can provide through face-to-face interactions without
visiting a branch.

53

Management Base Supporting
Value Creation

Corporate Data

Strengthening Data Utilization
We utilize various data accumulated through, among other things, the digitalization of internal operations and theprovision of apps and portal services to customers as basic information and marketing data to better understandeach individual customer and to highlight challenges lying in internal operations. To this end, we have set a goal torebuild data utilization infrastructure in fiscal 2022 and repeatedly discussed the policy for building the data
infrastructure and the direction of data utilization. While starting the development of individual systems and databasethat compose the data utilization infrastructure in fiscal 2023, we plan to launch various schemes based on the new
infrastructure in fiscal 2024.
Meanwhile, we have continued to work on initiatives that can be undertaken with the current systems anddatabase as well as on demonstration experiments for research and practical application of AI and other advanced
technologies, and already utilized some of such technologies in the fields of demand forecast and credit screening,as well as at markets divisions.

Labor saving of housing loan screening using AI
by estimating the risk of each loan application using an
enormous amount of historical data.
In parallel with such an initiative, we intend to review
the screening criteria and paperwork for housing loans
so as to provide customers with screening results
expeditiously and offer attractive product plans.

Utilizing supervised learning, which is a way of AI
utilization categorized as machine learning, we willautomate the housing loan screening process, which
has had to rely on experience and judgment skills ofstaff engaged in screening.
We will not fully automate the screening process for
all deals but automate the process mainly for highly
credible and highly doubtful deals through AI screening*We will launch the AI-based housing loan screening process in December 2023.

Joint research with a university

Providing online consulting service by dedicated staff
In March 2023, we launched the online consulting
service to provide advice to customers on life-planconsulting, such as asset building and asset
succession, and on housing loans by connecting acustomer’s smartphone or PC to dedicated staff.
We have also employed a similar scheme“inheritance consulting service by specialized
departments at the head offices” to meet the year-afteryear increasing need of customers for inheritance-related

Management Strategies
for Value Creation

Self-counter terminal

Mobile PC

Consulting space

Mebuki Financial Group’s
Value Creation

Joyo Bank has conducted joint research on theutilization of AI for market investment with Ibaraki
University. The research findings have been publishedexternally as appropriate and gained high acclaim.
Students (undergraduates and graduates) of Ibaraki
University have conducted research on the applicationof AI technology directly linked to practical operationsof the bank’s markets divisions, while experiencing andunderstanding such operations. By sharing the
research findings with bank staff engaged in market
investment and exchanging opinions and mutuallyproviding suggestions for improvement, the bank staff
can understand AI and the students can know a lot
about banking practice.
This initiative has helped students know about thebank better than usual internship, resulting in one of
the students joining Joyo Bank.

Photo provided by Ibaraki University

54About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Promoting DX

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Promoting DX

Enhanced DX Infrastructure

DX Support/Collaboration with Customers and Local Regions

In order to advance DX systematically, it is necessary to renovate system infrastructure and develop humanresources to support such advancement. The Group is considering the renovation of core system and the renewalof branch system from a long-term perspective. Meanwhile, from a medium-term perspective, the Group has beenworking to modernize individual systems set to expire for renewal in the near future (being updated to adapt to thecurrent business environment).
We have set three-stage criteria for developing DX personnel according to the level of DX literacy (leader
personnel, core personnel, and basis personnel). We have worked on a development target for each of the DX
personnel set forth in the Medium-Term Group Business Plan.
For the development of DX basis personnel, we have extensively encouraged employees to acquire IT Passport toimprove digital literacy across the organization and already achieved the target of training 3,000 DX basis personnel
set forth in the Medium-Term Group Business Plan ahead of schedule in the first year of the plan. We have also
already achieved the target of training 400 DX core personnel. Going forward, we will further strengthen personnel
development and update knowledge among employees to adapt to the ever-changing and fast-evolving digital
external environment.

We offer various seminars to provide various information and introduce our solutions to corporate customers andmunicipal governments. Joyo Bank holds online briefing sessions to introduce best DX practices twice a month. Asof March 2023, a total of 30 sessions have been held, attracting more than 8,000 attendees. Ashikaga Bank
organizes industry-based seminars on themes that match the time, such as cyber security seminar for medical
institutions.
In fiscal 2023, the bank will hold a seminar themed on problem solving through DX for the construction industry,
to which the Workstyle Reform will be applied from 2024.
In fiscal 2022 in particular, in line with the enforcement of the Revised Electronic Books Preservation Act and thestart of the consumption tax qualified invoice storage method (invoice system), we conducted a questionnaire survey
with corporate customers and local communities to gain an understanding of their response to these regulatorychanges at a regional level, and worked on activities to propose necessary solutions and provide support for
digitalization to them.
We are also providing DX consulting services and escorted support closely following management challenges that
individual corporate customers are facing. Such efforts made by Joyo Bank were published as a case study in thepractical guidebook for Digital Governance Code 2.0 (https://www.meti.go.jp/policy/it_policy/investment/dxchushoguidebook/contents.html (available in Japanese only)) issued by the Ministry of Economy, Trade and Industry.

Number of DX basis personnel (IT passport holders)(people)(Bank total)

Measures to develop DX personnel
Dispatching trainees to IT companies to absorb
up-to-date know-how
Openly recruiting trainees from internal digitaldepartments to find in-house talent
Offering training on a variety of subjects, such as IT
coordinators, data science, and low-code
development
Encouraging employees to acquire digital-related
qualifications and continuously providing a learning
environment

Target alreadyachieved
Target set forthin the
MTGBP
7,998

3,538

7,155

1,268

225
March 31,2021

March 31,2022

March 31,2023

March 31,2024

March 31,2025

Positioning the IT coordinator case training as a core training programof suggestions made and the number of closed deals
have increased substantially.

Joyo Bank has positioned the IT coordinator casetraining* organized by IT Coordinators Association(ITCA) as a core training program to train DX corepersonnel, and dozens of bank staff attend the training
every year.
These measures have stimulated DX consulting sales
for corporate customers, and as a result, the number* The case training is a training program required to attend to acquire the IT
Coordinator Qualification, a recommended qualification by the Ministry of
Economy, Trade and Industry. Attendees learn a systematic way of practicing IT
management that aligns with actual consulting activities, using a virtual company
as a case study.

Introducing practical training programs for DX personnel development
Ashikaga Bank provides practical training thatincorporate group work and hands-on activities todevelop DX personnel.
The bank offers practical programs, for example,
statistics for learning basic data analysis skills, data
preprocessing and data visualization as a basis for data
science, and low-code app development, to improve
operational productivity.

Making proposals on DX using a problem solving platform “busikul”
Joyo Bank has jointly developed and promoted aproblem solving platform busikul (provided byBusinessTech Co., Ltd.) since the early days of theprovider, and is utilizing the platform as a core DX
support tool. The number of annually commissioned
DX projects during fiscal 2022 amounted to more than
2,500.

We can operate the tool together with managementof corporate customers to identify their management
challenges in the form of navigation using its diagnosis
function. By doing so, we can make proposals on
optimum DX solutions provided by various companies
based on the best DX practices by other companies in
the form of business matching.

Understanding the need for digitalization by analyzing business challenges that customers
face from various angles
potential needs through dialogue with their
management.
We have confirmed that approximately 4,000
corporate customers have the need for digitalization
and worked to address such needs.

Ashikaga Bank provides corporate customers withsupport for digitalization starting from the evaluation of
their business feasibility by branch staff.
Using a predefined sheet to understand thechallenges and needs of corporate customers, we are
striving to visualize not only overt needs but also

Adoption of advanced technologies
While being quick off the mark in undertaking
research and studies to understand an advanced
technology, we are considering whether to adopt thetechnology by examining its benefits as a solution tocustomers’ needs and challenges, rather thanconsidering the adoption for its own sake.

We are working on the adoption of advanced
technologies, such as ChatGPT, Web3.0 andmetaverse, by comprehensively taking into account thebenefits and challenges of each technology and theiraffinity to banking and related businesses.

55

56About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Response to Aging Society

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Deepening comprehensive financial services

Enhance Our System to Provide Various Services related to Gerontology

Changes in the social situation, called “the 100-year life,” have diversified customers’ worries andconcerns. We have proactively worked to expand our financial services leveraging our knowledge ofgerontology and have also provided meticulous support to help solve problems and cater to diverse needs
in financial transactions of customers. These activities are aimed at ultimately creating local communities
in which people can continue to live their lives in comfort.
Deepening comprehensive financial services

Enhance Our Response to an Aging Society
Positioning in the Medium-Term Group Business Plan
[Specific Strategy 1-2: Deepening comprehensive financial services]
Our specialized staff has worked to provide one-stop solutions to concerns of elderly customers and their families in a manner they can feel
comfortable talking about such concerns. The Group will provide not only consulting on asset management and succession but also
services to help enhance and maintain customers’ quality of life (QOL). Such services include support for living environment andhousekeeping services in collaboration with players in other industries.

Strengthen connections with elderly families
To ease the anxiety of the elderly themselves and their families about the present and the future even a little, wehave put in place a structure to provide comprehensive support for their financial and non-financial concerns byplacing specialized staff at branches and setting up a specialized consulting salon to develop a system that allows
customers to take their time to thoroughly consult with our bank staff.
<Smileful Partner><Holiday Wealth Salon>

We have enhanced the placement of specialized staff who
responds to concerns of elderly customers and their families(Smileful Partner).
Respond to current and future concerns
Address a decline in cognitive function
Support smooth asset succession to the next generation
Cultivate measures to prevent financial crimes, etc.

An appointment-only salon providing inheritance consulting
services that are available only on Saturdays and Sundays inwhich specialized staff supports customers in an easy-tounderstand and careful manner.
The salon provides not only individual customers but also
couples, and families living separately from the customers
with opportunities to take time out to discuss families’ assets.

Enhance our system to provide various services related to gerontology
collaboration with communities and external
institutions, including watching over the elderly incollaboration with local governments and a security
company and preventing damages from fraudulent
phone calls in collaboration with the police.

We will strengthen our connections with customers bydeveloping systems, such as enriching specialized
staff and setting up a consulting salon, so that elderly
customers and their families can feel comfortable
talking about their concerns. We will also work toenhance comfort and safety of customers in

In addition to developing in-house bank systems, we have put in place a more comprehensive support systemthat allows the elderly to be watched over by the entire community by collaborating with a security company andother external partners and with each municipality.

One-stop services responding to problems of the elderly and their families
counters to increase revenues directly derived fromour core business such as those related to customer
assets under custody and asset succession, and takeon challenges to non-financial service areas such as
solving customers’ concerns about their housing anddaily life issues, thereby expanding our business areasand improving our corporate value.

We will work to provide one-stop solutions at ourbanks to solve problems of elderly customers andtheir families, including not only financial services suchas asset management and succession but also nonfinancial services such as support for living
environment and housekeeping services incollaboration with players in other industries. We will
provide consulting on any concerns at our bank

Worries aboutelderly family members
Worries as inheritors

Worries about living
Worries about
inheritanceStrengthen connection
with households
Consultation

Consultation

Solution

Solution

Strengthen
collaboration

Elderly

Experts

Administrative
organizations

57

FamilyExternal
partners

Strengthening collaboration with external institutions

Provision of a watching service for the elderly in collaboration
with a security company
Implementation of measures to prevent damages fromfraudulent phone calls in collaboration with the police
Placement of care-fitters at branches
Acquisition of qualifications as dementia supporter byexecutives and employees, etc.
Dementia supporters: Approx. 9,300 people

Watching over network in collaboration with relevant
institutions (conceptual illustration)

Regional comprehensive
support center

Government officeWelfare-related institution(As of March 31, 2023)

Collaboration with each municipality and regional
comprehensive support center
Watching over the elderly and other customers
We have strengthened our collaboration with relevant
institutions and watched over those who are in need ofsupport so that the elderly can live in their communities in
comfort.

Elderly

Financial institution

FamilyPoliceServices offered when inheritance occurs<Using a common inheritance notification form>
Joyo Bank and Ashikaga Bank have decided to use acommon inheritance notification form required to besubmitted by customers as part of the procedures forinheritance of deposits, etc. with other financial
institutions in Ibaraki Prefecture (Tsukuba Bank, Mito
Shinkin Bank, The Yuki Shinkin Bank, The Ibaraki-ken
Credit Cooperative).

<Remote reception of inheritance proceedings>
In the event of death of a customer, Joyo Bank andAshikaga Bank offer services not only at a branchcounter but also through multiple channels, such as
online, telephone, and mail, available at customers’
preference to improve their convenience. Specialized
staff in the head offices offer meticulous services
through online consultation.

58

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Deepening comprehensive financial services

One-Stop Services Responding to Problems of the Elderly and Their Families
Enhancing services/products for the elderly
To create local communities in which people can continue to live their lives in comfort, the Mebuki Financial Grouphas been working to provide financial products and services and enhance various services in collaboration withexternal institutions so as to prepare for the longer old age period associated with greater longevity.
Healthy life stage

Birth of thesecondgrandchild

67

69

70

Retiring fromwork(completeretirementfrom work)
Enjoying
hobbiesRenovation ofaged housing

Suffering fromsudden illness/
hospitalization

Going on an
overseas trip
to celebrate
the 77thbirthday/recovery from
illness

Meeting with aminor caraccident
Losingconfidence indriving

75

78

80

85

Losing a longtime spouseBeing
hospitalizedwith illness
Onset ofdementia

Becoming inneed ofcaregiving
Suffering fromadvanceddementia

Passing away

Data says one-fourth (25%) of women and 20% of
men suffer from dementia.
When dementia develops, customers can nolonger handle contract procedures and othervarious transactions by their own.
Asking for help (management of a house
where no one lives)

Transport (daily shopping, hospital visit, etc.)

Asking for help (shopping for necessary items)

Renovation
serviceprovider/money forrenovation

Information for hobbies
Place (community) formaking use of hobbies

Hospitalization
expenses
Guarantor andmonetary
guarantees
Necessary
items forhospitalization
Contact withan insurancecompany

Travelinformation
TravelagencyForeigncurrency
exchange
Credit card

In the event of a coma...
What is the customer’s wishes
for life-sustaining treatment?

Consulting on asset
maintenance (support forinvestment of retirementmoney and formulation of
future financial plan)
Proposing insurance andother products for inheritance

Referring a renovation service
provider (partner service
provider)Introducing a reverse
mortgage housing loan andleasebackRushed service for daily
trouble (partner service
provider)Introducing aguarantor
serviceInsurance
information
management( Anshin Note)

Introducing a
cruise trip
package(partner travel
agency)Mebuki Credit
Introducing aforeigncurrency
exchange
service

Contact withan insurancecompany
Car repair
Consideringsurrendering
driver’s
licenseSecuring a
new meansof transport

Arranging afuneral/funeral
cost
Preparing the
grave
Contact withan insurancecompany
Inheritancearrangement
Inheritanceproceedings

Hospitalization
procedures
Information oncare facilities
and day services
Acquiring theLong-term Care
Need
Certification
Costs for theabove nursing
care

Procedures
to enter acare facility
Co-signer/
suretyCosts
Othernecessary
official
documents,
etc.

What is the customer’s insurance?
What bank accounts does the customer have?
What should we do to avoid being stuck on
decision-making?
Consolidating bank accounts, organizing householdarticles, preparing an inventory of properties

What type of funeral does
the customer want toarrange, direct cremation?
or joint burial?
Does the customer have agrave to be buried in? Whowill look after the grave?

Introducing ameans oftransport(administrative
service)

Guarantor and voluntary guardianservices
Testamentary trust and testamentary
substitute trust services
Testamentary preparation support
service
Asset succession planning service
Information succession service(Anshin Note)
Agent card/family contact registration
systemFamily tree preparation service

Referring afuneral director
Referring a gravestone company
Inheritanceprocedure
supportInheritancearrangement
support services

Arranging afuneral/funeral cost
Contact withan insurancecompany
Inheritancearrangement
Inheritanceproceedings

What paperwork is needed after death?
Who will and how to pay the hospitalbills?
What procedures are required to cancel
utility bills, pensions, and healthinsurance?
Referring afuneral director
Referring agrave stonecompany
Inheritanceprocedure
supportInheritancearrangement
support services

Introducing a watching service (partner service provider) End-of-life planning support service
Introducing a housekeeping service (partner service provider) Information succession service ( Anshin Note)

Asset management
To be prepared for the worst, the Group provides
support for customers to make an arrangement toallow their families to manage the customers’ assets
on behalf of them or to entrust their asset
management to an expert while they are still in good
health.

Example of services

Supporting transactions byfamily members or otheragentsAgent card
Family contact registration
systemLeaseback1 Put up the house as collateral

1 Sell the house

2 Offer a loan (in a lump sum)

2 Pay the proceeds from the sale in a lump sum
3 Sign a lease contract

3 Repay interest only every month

Chores (housekeeping: cleaning, weeding a garden, pruning garden shrubs, etc.)

Considering how to spend retirement money
Future financial plan
Considering about money to be left to children
and grandchildren

Handling of reverse mortgage housing loans
Handling of leasebacks
Advice on relocation and renovation

Reverse 60

Guardianship support trust
Family trust
Asset succession planning
Individual pension insurance

Customer(age of 60 or above)

Corporate Data

Effective use of real estates

4 Repay the loan in a lump sum by selling the house (after the inheritance)Bank

CustomerLife support
To provide support for customers to enjoy their daily
lives and for their secure life, we provide referral to ourpartner service providers with whom customers canconsult in comfort.
Our banks relieve customers from the trouble andanxiety of finding life support services by themselvesby providing referral to the providers of a watching
service in collaboration with a security company, ahousekeeping service, a renovation service provider,and care facilities.
Watching service
The service includes those of a security
company rushing to the scene whenthe emergency button is pressed,
confirming the user’s safety by phoneor email, and checking the user’s
health.

4 Pay the rent every monthPartner realestate agent

Services that we can refer to (introduce)
Watching service
Housekeeping service
Rushed service for daily
troubleReferral to a renovation
service provider

Referral to care facilities
Family tree preparation
serviceEnd-of-life consulting service
Dementia support service
Digital device support service

Automatically report to a security company and family
ReportAsset succession
To ensure smooth succession of customers’ assets,
staff with specialized expertise of Joyo Bank andAshikaga Bank analyze the issues to be addressedand provide advice on the solutions. In collaboration
with partner service providers, we also offer services
including testamentary trust services that provide
comprehensive support ranging from consulting on
testamentary preparation to testamentary storage andexecution as well as testamentary substitute trust
services that allows families of customers to receive
money speedily. The services we offer also include
Digital Ending Note for succeeding financial, insurance
and medical information of the parent generation totheir family and the child generation via smartphone.

Security company

Hand off toambulance
crews

User’s home

FamilySecurity guard rushing to thescene to confirm the user’s safety

Operate the terminal
at emergencies

Hospital

Examples of products and services
Testamentary trust
Testamentary substitute trust
Life insurance (beneficiary
designation function)
Life insurance (gift during life)

Asset succession planning service
Information succession
service ( Anshin Note)
Testamentary preparation
support service

Closed testamentary trust deals (Bank total)(deals)411

388

FY2021

FY2022385

FY2020Information succession service (“ Anshin Note”)

Family contact registration system
When we cannot get in touch with a customer, we
will contact the pre-registered family member.

Family trust
In case of impairment in judgment, etc., customers
can entrust their asset management to a trusted
family member.

Agent card, agent notification
In case of difficulty in visiting a branch due tohospitalization or any other reason, customers candesignate an agent to entrust with certaintransactions.

Voluntary guardian services
In case of impairment in judgement, etc., customers
can entrust their asset management to an expert.

59

Parent generation
Register future intentions, etc.
via PC or smartphone
Financial institution transactions
Insurance and other property
information
Medical and nursing care, etc.

Family/child generation
Browsing

Retiring fromwork
Starting asecond career(second job)

65

Support for living environment
To meet the needs of customers who want to makeuse of their house and other real estate properties, we
handle loans and other products that can be used forrebuilding and renovation of their houses while
keeping cash on hand.

In need of support/caregiving

Management Base Supporting
Value Creation

Management Strategies
for Value Creation

Registration/sharing

Services we offer

Necessary things to do and prepare for

Daily life

Major life events

60

Impairment in judgment

Mebuki Financial Group’s
Value Creation

60

Able to confirm the intensionsof the parent generation while
they are alive
Able to share or succeed theinformation and intensions if
the worst comes to the worst

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Deepening comprehensive financial services

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Deepening comprehensive financial services

Initiatives for Maintaining and Enhancing Regional Medical andNursing Care and Welfare

Caring for the Elderly

As the aging population grows, regional medical and nursing care and welfare have become increasingly important.
The Group provides various supports for the enhancement of nursing and medical care delivery systems as wellas the promotion of activities of the healthy and longer-living elderly so that the elderly in the community and theirfamilies can live their lives in comfort.
Through the supports we offer from both financial and non-financial perspectives, we aim to enhance systems
related to medical care, welfare, and nursing care, thereby improving the health and quality of life of people in thecommunity, enhancing regional medical care, and creating a sustainable society.

Setting up dedicated teams for medical care
Through dialogue with business owners, we provide
comprehensive support for various management
issues, including not only equipment funds and othercash flow management but also securing of humanresources, business succession, and ICT utilization in
the health and medical fields.

Joyo Bank and Ashikaga Bank have establisheddedicated teams for medical care to provide attentive
consulting to business owners to solve their issues in
the fields of medical and nursing care and welfare incollaboration between branches and the head offices
as well as with the Group and external institutions.
– Example of support menu –<Information provision>
Medical and nursing care-related seminars held four times<Financial support>
Loans in the medical and welfare fields(Bank total)(Bank total in FY2023)(Billion yen)Support for management and business succession

Aiming for easy-to-access branches
Initiatives for facilitating barrier-free accessWith the aim of achieving barrier-free access at all
branches, we are working to install and ready withvarious tools including slopes, parking spaces
dedicated for wheelchair access, wheelchairs, as wellas hearing aids, writing boards, reading glasses,“comuoon” speaker for the hearing impaired.

Wheelchair

We also provide the Inquiry Desk Service Dedicatedfor Hearing- and Speech-Impaired Customers that
accepts inquiries from hearing- and speech-impaired
customers via email and fax and the Sign Language
Interpreter Relay Service that receives notifications of
the loss or theft of a passbook, seal or cash card.

Writing board

Cane holder

Training of employees
We provide customer service training for customer
service (CS) staff at each branch with a lecturer invitedfrom the steering body of “Care-Fitter” so that they
can serve elderly and disabled customers attentively
and appropriately. We are also developing Dementia
Supporters who can serve customers with dementia

73.7
63.6

Startup support
Support for building a business succession scheme
Support for formulating a hospital reconstruction plan
Support for market analysis for hospital relocation
Support for entering into the nursing care business
FY2021Aiming to become banks providing secure and friendly services to many customers, including the elderly, theGroup is continuing to work on the enhancement of facilities, such as barrier-free access of all branches, as wellas the enrichment of services and the training of employees.

“comuoon” speaker

and their families with the correct knowledge andunderstanding. We provide training to CS staff and all
entry-level bank staff. So far, approximately 7,700
bank staff of Joyo Bank and approximately 1,500
bank staff of Ashikaga Bank have been certified as“Dementia Supporters,” respectively.

FY2022

Initiatives for protecting financial assets of the elderly

Support for medical institutions
We provided financial support to medical institutions
fighting against COVID-19 on the front line through“bond aimed at supporting medical institutions” fromMay 2020 to March 2023. We donated part of issuecommission paid by customers as operating
expenses.
We have continued the support by handling thebond as a normal private placement bond withdonation scheme since April 2023.

Donation amount of the bond aimed
at supporting medical institutions(Cumulative total from May 2020)
Approx.

(¥29.0 million
112 cases,

issue amount ¥10.5 billion(As of March 31, 2023))

transfers. In addition, we set a limit on the maximum
amount to be paid into or drawn out of a bankaccount using a cash card at an ATM for customers
of a certain age and above. While apologizing for any
inconvenience this may have caused customers, we
ask for their cooperation and understanding by
explaining the reasons in detail.

There is no end to fraud cases scamming the elderly
out of their assets and cash cards with smooth talk.
We as financial institutions strive to prevent frauds incooperation with the police from the standpoint ofprotecting customers’ assets.
For instance, we call out to customers at bankcounters and ATMs and ask for the details of bank

Response to digital divide
Initiatives for securing doctors
intended to reduce the financial burden borne by
students who want to be doctors and their families bymaking the interest rate practically zero, thereby
supporting the development of human resources whowill be engaged in regional medical care in the future.

In collaboration with the Ibaraki Prefectural
Government, we provide an educational loan thatmeets the requirements of the government’s interest
subsidy program to support students who want tobecome doctors. The loan has an interest rate lower
than normal and a maximum grace period of six years.
The government’s interest subsidy program is61

counters while getting their business done. The videos
are 15 to 20 minutes long and contain useful
information ranging from the basic operation ofsmartphones like tapping and swiping to tips on how
to deal with suspicious emails.

Smartphones and web services have become an
inseparable part of our daily lives. However, many ofthe elderly customers are not used to using
smartphones. Against this backdrop, we offer the Mini
Lesson on Smartphone Utilization (how-to video
service) available for customers to watch at our bank62

About Mebuki
Financial Group

Value Creation Initiatives of Mebuki Financial Group

Promotion of Diversity/
Human Resources Management
We have defined our vision in the Long-Term Vision 2030 as “A Value Creation Group Working Together with Local
Communities.” We will strengthen our core business areas such as traditional banking and comprehensive
financial services and take effort to expand our business areas by leveraging our strengths. At the same time, wewill create new value by taking on challenges to solve regional issues beyond the framework of conventional
financial services and reinvesting the expertise obtained through these initiatives to our core business.
In order to realize this goal, human resources are an important factor in the evolution of the Group’s businessand the execution of these business strategies. Therefore, through increasing the engagement of each employee,
developing and securing human resources capable of creating value, and enhancing job satisfaction, we will form
a diverse and self-reliant group that can provide local communities and customers with new value and a peace ofmind.

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Example of human skills required to realize our vision
Providing opportunities to work actively while
demonstrating individual skills

Communication skills to elicit the needs and challenges of customers
Analytical skills to solve the needs and challenges of customers andconceptual skills such as digital and design thinking

Growth opportunities
Active working opportunities for diverse human resources
Drawing on and demonstrate experience
Physical and mental health, etc.

Coordination skills and other specialized skills required to provide
various consulting services
Creativity and planning ability to achieve innovation
Motivation and leadership to take on new challenges[Human Resources Development Policy]
To improve problem-solving skills among employees to live up to the expectations and trust of customers, we will work to secure anddevelop human resources capable of creating new value by developing human resources with specialized skills and meeting the diversified
needs of customers.
We will also enhance human resources capable of continuing to adapt to changes in the business environment in the future by enhancing
opportunities for reskilling.

Develop human resources and promote active participation

Initiatives for Human Resources Management
System to promote human resources management (Governance)
promoting diversity, within the personnel division of
the two subsidiary banks. Also, in April 2022, weestablished Group Diversity Policy to further
strengthen and accelerate initiatives aimed at ensuring
diversity across the Group. (For details of Governance,
please refer to “Structure for Promoting Sustainability”
on page 19.)
In fiscal 2022, the Sustainability Committee
deliberated and reported on matters including theapproach to human resources development, approach
to internal environment development, risk
management, and indicators and targets.

We have developed human resources so that ouremployees are able to equitably build their careers
irrespective of their age, gender, and other properties
In addition, we have made efforts to establish anenvironment that allows employees to continue
working for many years. In fact, we have endeavored
to empower women through a range of initiatives
based on the Act on the Promotion of Female
Participation and Career Advancement in the
Workplace and through the workstyle reform. In
October 2021, we established “Diversity Promotion
Office,” an organization supervising the initiatives for[Internal Environment Development Policy]
We will develop our internal environment based on the following policies so that each individual human resource with diverse knowledge andskills can fully demonstrate their abilities.
Organizational culture to encourage autonomous growth
To promote autonomous growth and a motivation to take on challenges among employees, we will cultivate an organizational culture
where employees have a sense that their performance and contributions are properly valued and can feel their own growth and where
employees continue to create new value by autonomously carving out their careers. Furthermore, we will create an environment where
motivated and skilled employees can work actively and shine in a higher field.
Diversity and inclusion
In order to remain a corporate group where each individual employee can work actively and grow sustainably, we will form a diverse andself-reliant group to strengthen our organizational power by leveraging diverse views and experience of individual employees irrespective of
their age, gender, and other properties.
In order that diverse human resources can work actively in the long term in the Group, we will work to develop a pleasant working
environment and develop related systems, while taking into account changes in lifestyles and attitude toward work.
Health Management
We recognize that it is essential that employees are healthy both physically and mentally in order to contribute to the development of local
communities and regional economy. Based on this recognition, we provide support for employees to maintain and improve their health sothat every employee can work energetically in good health and thus can fully demonstrate their abilities.

(Long-term vision and Human capital)

Practice of human resources management (Strategies)
Long-term vision

Initiatives for human resources management
By embodying the Group Philosophy “Together with local communities, we will continue to build a more
prosperous future by providing high-quality, comprehensive financial services,” we have been working to develop
human resources and internal environment based on the concept of regarding human resources as the mostimportant management resource to improve our corporate value.
Approach to the formulation of Human Resources Development Policy and Internal Environment
Development Policy
With the Group’s vision set forth as “A Value Creation Group Working Together with Local Communities” (theLong-Term Vision 2030 formulated in April 2022), we intend to surely follow through on initiatives to realize thisvision. To this end, the Group believes it is necessary to work on the development and enhancement of humanresources not only with deep thoughts on and understanding of the community and financial knowledge but also
capable of taking actions to identify and solve challenges faced by the local communities and customers frommultiple angles.
Human capital for achieving the long-term vision
We will enhance our human capital to realize the Group’s long-term vision by developing and enhancing humanresources with the following skills and by creating an internal environment where diverse human resources withsuch skills can work actively while fully demonstrating their abilities.

63

Initiatives for realizing
the long-term vision

Human resources
requirements

A Value Creation Group Working Together with Local Communities

Create new value by taking on challenges to solve
regional issues beyond the framework of
conventional financial services and reinvesting theexpertise obtained through these initiatives to ourcore business

Strengthen our core business areas such as
traditional banking and comprehensive financial
services and take effort to expand our businessareas by leveraging our strengths

Communication skills

Coordination skills

Planning ability

Analytical skills

Professional skills

Mental strength to take onchallenges

Conceptual skills such as digital anddesign thinking

Creativity

Leadership

Human Resources
Development Policy

Human resources withprofessional skills

Human resources capable ofcreating new value

Human resources capable ofcontinuing to adapt to changes inthe business environment

Internal Environment
Development Policy

Organizational culture toencourage autonomous growthDiversity and inclusion

Health Management64About Mebuki
Financial Group[Current status of initiatives]
Develop andsecure humanresources
capable ofcreating value

Main initiatives in the Medium-Term Group Business Plan
[Basic Strategy 3: Develop human resources and promote
active participation]
We have endeavored to develop and secure human resources who live up to the
expectations and trust of customers. Specifically, we have made efforts to establish anenvironment that allows diverse human resources to participate in workplace more
actively, including the enhancement of training programs and reskilling opportunities.
In addition, we are aiming to develop our working environment. To this end, we will
expand the opportunities for motivated human resources to actively participate inworkplace by introducing a new personnel system, and will help them achieve a
better work-life balance so we can provide support for the workstyle of each of ouremployees by enhancing related systems.

1. Status of initiatives for human resources development
We are working to develop highly skilled human resources withproblem-solving skills by enhancing opportunities for internaland external training and by dispatching trainees and accepting
secondees from outside the Group. At the same time, we are
striving to secure external work-ready human resources bysuch means as mid-career hiring. We are also working toundertake reskilling measures to cope with the advancement ofdigitalization and DX and provide common training programs at
the Group’s subsidiary banks.
To give an example of the progress that has been made in
the “promoting digitalization” set as one of the key issues(materiality) for the Group Sustainability Policy, as a result of ourefforts to encourage and train employees to acquire IT Passportwith the target of achieving 3,000 acquirers by the end of
March 2024 to early develop and secure DX basis personnel (ITPassport holders) who will act as the basis for providing
support for local communities and customers with their DX andpromoting the Group’s DX, we have already achieved the targetof 3,000 acquirers more than one year ahead of schedule atthe end of December 2022.
2. Status of initiatives for internal environment development(1) Organizational culture to encourage autonomous growth
We are endeavoring to create an environment to provide
employees with support for self-motivated career building andpromote their motivation to take on challenges. Such initiatives
include implementing a measure to clarify skills required to beacquired by employees in each field and department toevaluate and certify their acquired skills; introducing a programthat allows employees to volunteer to serve as trainees
dispatched to inside and outside the banks* or participate intraining; assigning to certain departments by open recruitment;
holding various holiday lecturers and workshops; andenhancing e-learning programs.
In addition to the above, we are seeking to cultivate anorganizational culture where employees can feel enhanced job
satisfaction by developing related systems to improve theirwork-life balance.

Increase theengagement of
employees

Implementationof diversity

Initiatives forenhancing job
satisfaction

Investment in
human resources
Number of DX basis personnel (IT passport holders)(people)(Bank total)
Target alreadyachieved
Target set forthin the
MTGBP
7,998

3,538

7,155

1,268

225
March 31,2021

March 31,2022

March 31,2023

March 31,2024

March 31,2025

Number of newly dispatched trainees to insideand outside the banks(people)Three times

60

that of FY2020

FY2022

FY202334

FY2021

FY2024

Target set for the
MTGBP period
Cumulative total:
120 people* Trainees dispatched to inside and outside the banks: trainees who are dispatched
for a more than one month with the aim of developing human resourcesChildcare leave at birth system

We have helped our employees work efficiently byleasing them mobile PCs so they can work from home.

Following the revision to the Act on Childcare Leave,
Caregiver Leave, and Other Measures for the Welfare ofWorkers Caring for Children or Other Family Members, wehave newly established a childcare leave at birth system toencourage male employees to take childcare leave.

Fertility treatment leave system

Second job system

Work in casual clothes

We have newly established a system that allows
employees to continue to work with a sense of security
while receiving fertility treatments. Employees cantake leave for two years at maximum.

We have introduced a second job system for all
employees with the aim of improving their own skills,
achieving their personal growth, and contributing tolocal communities in various aspects.

We have introduced a system that allows employees
to work in casual clothes in the head offices on
condition that they choose what to wear according to
the time, the place, and the occasion as well as thebusiness settings.

65

Management Base Supporting
Value Creation

Corporate Data

(2) Diversity and inclusion
We have led the active participation of group-wide female employees and strengthened initiatives for enhancing
opportunities for female employees to actively participate in workplace and for promoting them to higher managerial
positions, including holding “Mebuki Women’s Class,” a class for fostering women leaders who serve as role models
for young female employees. In addition, we have been working to develop related systems, such as paid holidays
and leave systems and shorter working hours, and deepen company-wide understanding of these systems so that
employees can select their workstyles in tune with life events and balance work and family.
Also, we are making efforts to encourage all employees to achieve early personal growth while giving utmost
consideration to diversifying individual lifestyles and sense ofvalue and provide fair opportunities for career advancement. In
the meantime, both of our subsidiary banks have revised theirpersonnel systems designed to promote highly motivated andcapable employees to higher positions irrespective of their age,gender, and nationality, etc. The systems have been put in place
to realize a highly convincing and fair pay scheme to pay
employees commensurate with the difficulty of and contributions
made by their assigned tasks so that all employees can fully
demonstrate their abilities.
In conjunction with the revisions to the personnel systems, weare also working to enhance opportunities for ever increasing
senior human resources to actively participate in workplace,drawing on their skills and experience.
Mebuki Women’s Class(3) Health Management
In accordance with the Health Management
Declaration, we have been making efforts to detect
diseases at early stage and prevent disease
aggravation and development of lifestyle diseases
among employees by such means as offering complete
medical checkup and periodic health checkup
programs, from the perspective of maintaining andimproving their physical health. Amid the COVID-19
pandemic, we have been taking various measures toprevent the spread of infection among employees.
Such measures include speeding up vaccination byoffering workplace vaccination to help as many
applicants as possible get vaccinated early.
At the same time, we are also working to improvephysical and mental health among employees by
undertaking initiatives for mental health promotion,such as conducting a stress check and setting up
counselling desks for all employees, as well as those
for achieving a better work-life balance.

We believe that realizing a better life of employees interms of asset building has a positive effect on their
physical and mental health and is imperative for theGroup and employees to grow together. Based on thisbelief, we are working to enhance our welfare program,including a shareholder association and defined
contribution pension plan, to support their asset
building.

Our health promotion measures
Recognized as a Certified Health & Productivity Management
Outstanding Organization
Taking infection preventive measures
Taking measures to prevent the development of lifestyle diseases
Taking mental health promotion measures (conducting a stresscheck, setting up internal and external counselling desks, etc.)
Supporting employees to return to work and helping them balance
work and medical treatment
Improving work-life balance, etc.

External evaluation
FY2020Working from home

We have introduced a flexible working system that
permits employees to schedule when to start andleave work on working days on their own.

Management Strategies
for Value Creation

20[Systems employed to improve work-life balance/develop a pleasant and attractive working environment]
Flextime work system

Mebuki Financial Group’s
Value Creation

The Group was awarded the 3rd level“Eruboshi” certification as a general employer
that conforms with the standards under the
Act on the Promotion of Female Participation
and Career Advancement in the Workplace.

“Platinum Kurumin” certification was granted
as a company that provides superior support
for childcare to its employees based on the Act
on Advancement of Measures to Support
Raising Next-Generation Children.

The Group was recognized as an
outstanding organization under the 2023
Certified Health & Productivity Management
Outstanding Organizations Recognition
Program (large enterprise category).

[Initiatives for financial wellness]
The Group offers various systems designed to support asset building of our employees. Meantime, we provide
various menus and financial education also from the perspective of supporting asset building of corporate
customers’ employees.
For the Group’s employees

For corporate customers

Property accumulation system (general property accumulation, property
accumulation housing, property accumulation pension)
Loan system (housing loan, general loan)
Employee Shareholder Association
Employee group insurance
Corporate pension, defined contribution pension plan
Various welfare menusLife planning training, etc.

Property accumulation system (general property accumulation, property
accumulation housing, property accumulation pension)
Affiliated loans
Asset building seminar/life planning seminar
Financial seminars, etc.

66About Mebuki
Financial Group

Risks and opportunities associated with human resources management (risk management)
We acknowledge the need for strengthening ourinvestment in human capital, while addressing risks
and opportunities associated with human capital
based on the recognition described below.

Regarding human resources as an important factor in
the evolution of the Group’s business and theexecution of business strategies, we address risks
associated with human capital based on ourrecognition that such risks can be either risks andopportunities depending on how we address them.

Direction of our response to risks and opportunities based on environmental awareness, etc.
The speed of environmental changes is becoming faster and the environment is likely to continue to change
drastically. Also, there is an increasing awareness among individuals of social issues, such as sharing economy,increased experiential consumption, decarbonization, and SDGs.
We recognize that, amid increasing uncertainty in our surrounding environment, our stakeholders expect the Groupto contribute to realizing sustainable local communities and it is necessary for us to transform the Group’s businessby developing and securing human resources capable of creating value as well as through the radiance of ouremployees.

Risks

Delays in adaptation to changes in the external environment and a failure to meet the diversifying needs ofcustomers due to the lack of securing and developing human resources will result in:
Stagnation in the Group’s overall growth
Decline in competitiveness within the industry
Intensifying competition with other industries
Customer defection (deterioration in business performance)
Decline in motivation among and increase in turnover of employees (collapse of management base)Opportunities

Direction of initiatives

Adapting to changes in the external environment and enhancing human resources capable of meeting the needs ofcustomers will lead to:Growth of the Group
Expansion of business areas
Enhancement of revenue base
Improvement of customer satisfaction
Improvement and diversification of employees’ skills (organizational activation)
Secure human resources
In addition to new graduate and semi-recent graduate hiring, we hire mid-career professionals throughout the year
to secure work-ready human resources.
To secure highly skilled, diverse human resources, our subsidiary banks have been working to secure humanresources capable of creating value by such means as referral hiring and comeback hiring of human resources
who have once left the banks and built their careers outside, without being constrained by conventional practices
or operations.
We have diversified our means of hiring, such as accepting human resources who work for us as their second
jobs. By doing so, we will secure human resources necessary to execute our business strategies in accordancewith progress in the strategies.
Develop human resources
In order to develop human resources capable of meeting the diversifying needs of customers, we are striving to
improve skills of employees through an internal certification system and trainee dispatch to inside and outside theGroup. We are also working to obtain new knowledge and know-how by accepting secondees from outside theGroup.
To support self-motivated career building and promote a motivation to take on challenges among employees, wehave increased opportunities for trainee dispatch by open recruitment. Going forward, we expect that the
introduction of the second job system will lead employees to make self-motivated efforts to improve their skills by
gaining experience and building a network that cannot be obtained through their main jobs.

Changes in social andeconomic trends andenvironmental
awareness

Risks

Opportunities

Direction of initiatives

Changes in social andeconomic trends andenvironmental
awareness

The promotion of the active participation of not only women but also diverse human resources in workplace is
attracting the attention of society. There is also a growing trend in corporate innovation through the mobilization ofhuman resources, such as second job and mid-career hiring, and the utilization of human resources with different
corporate cultures.
Due also to the COVID-19 pandemic, various workstyles that do not require a commute to an office, including
working from home and teleworking, have been spreading rapidly and become popular. These workstyles are
expected to continue to be adopted and take root even after the COVID-19 pandemic is over.

Risks

Failing to enable diverse human resources to fully demonstrate their abilities and to adapt to changes in workstyles
and attitude toward work will result in:
Decline in competitivenessInferiority in competition to acquire human resources
Outflow of talented human resources/increase in turnover of employees
Decline in morale and performance of employees

Opportunities

Enhancing diversity measures, creating a workplace without gender disparities, and reviewing ways of working willlead to:Transformation of corporate culture and growth of the Group Creation of innovations
Broadening of the scope of consulting services and improvement in quality
Securing and retention of talented human resources
Improvement in performance
Improvement of work-life balance and enhancement of motivation/engagement of employees

Direction of initiatives

We are working to further enhance opportunities for female employees to actively participate in workplace byundertaking various measures to promote their active participation. We have set and managed the ratio of female
employees in assistant manager positions or higher as a KPI.
In addition to strengthening our initiatives for mid-career hiring, all group companies have introduced a second job
system with the aim of improving employees’ own skills, achieving their personal growth, and contributing to local
communities in various aspects.
We have been developing related systems to realize more flexible workstyles by introducing the flextime work
system and teleworking.
In order to activate our organization, including improvements in the vitality and productivity of employees, we willcontinue initiatives for Health Management, such as health investment and development of an environment where
employees can work in good health mentally and physically.

67

Management Base Supporting
Value Creation

Corporate Data

Amid concerns over the declining vitality of local communities resulting from the accelerating regional imbalance of
population, we recognize that it is necessary for us to develop an environment where employees in the middle ofchild-rearing and those in the senior years can work with a sense of security and where employees and their families
can lead a better life.
Declining working population will result in:
Difficulty in securing the necessary number of human resources for business continuity
Increase in recruitment costs due to the staffing shortage
An increasing need for nursing care of parents, etc. will result in:
Increases in employees on administrative leave and turnover of employees
Securing diverse workers and ensuring diverse workstyles will lead to:
Passing down of skills
Utilization of know-how of seniors
Improvement in work-life balance
Provision of personnel know-how to local communities
We are working to promote the active participation of diverse human resources in workplace by developing young
and female employees and utilizing senior employees through various opportunities. In particular, it will be more
important for the Group to promote contributions from senior employees to our organization by utilizing theirknowledge and experience as we expect the number of the Group’s employees at age of 60 and above to increasein the future. We will take necessary measures to improve systems, such as extending retirement age and reviewing
the treatment of senior employees, so that they can actively participate in workplace with enhanced motivation.
We are endeavoring to enhance support systems for better work-life balance by encouraging employees to takechildcare and nursing care leave as well as paid leaves and to create an environment that allows employees towork flexibly according to their life stages.

(4) Advancement of DX and digitalization
Changes in social andeconomic trends andenvironmental
awareness

The prolonged COVID-19 pandemic has further amplified and spurred the wave of digitalization. We recognize that itis necessary for the Group to promote DX by drastically reviewing how its business and operations should be andthat the speed and methods of response to ever-accelerating digitalization are risks that affect the growth of theentire Group.

Risks

Delays in response to DX and digitalization due to the shortage of highly specialized human resources will result in:
Stagnation in the Group’s overall growth
Decline in competitiveness

Opportunities

Direction of initiatives

Advancing DX and digitalization by enhancing highly specialized human resources will lead to:
Improvement of customer experience (CX)
Expansion of business areas
Improvement in labor productivity and reduction in costs
To create added value by leveraging the Group’s strengths, we are promoting the utilization of digital technology tomaximize the value of customer experience, enhance non-face-to-face channels, and improve their convenience. To
this end, we are also working to develop human resources who will promote DX.
The advancement of digitalization is believed to increase the value of connecting with people more than ever. By
enhancing human resources, we will sophisticate our communications and provide safety, security and added value
through both face-to-face advisement/consulting and digital technology.

(5) Ensuring compliance
Changes in social andeconomic trends andenvironmental
awareness
Risks(2) Diversity and changes in workstyles

Management Strategies
for Value Creation(3) Declining birth rate and growing aging population(1) Rapid changes in the external environment and diversifying lifestyles and sense of value
Changes in social andeconomic trends andenvironmental
awareness

Mebuki Financial Group’s
Value Creation

Opportunities

Direction of initiatives

When it comes to compliance, it is much more important to make a judgment from the perspective of whether theaction is socially acceptable than just comply with laws, regulations and other rules. We recognize that having sucha perspective is an important theme to realize sustainable corporate activities, and expectations and demand forcorporate social responsibility are expected to grow further.
A decline in moral among employees will result in:
Loss of credibility and damage to brand image
Administrative penalty as a result of a legal violation
The occurrence of mental health problems, harassments, long working hours will result in:
Employee defection
Difficulty in securing human resources
Decline in public esteem
Raising the ethical standards and integrity of employees will lead to:
Cultivation of a healthy corporate culture
Improvement in the trust of customers (corporate group that continues to be trusted by local communities)
The Group is working to ensure compliance by providing rank-based training on issues including harassment andother human rights issues and prevention of corruption and other misconduct to foster compliance awareness andensure employees act with top priority on compliance.
We will strive to instill corporate ethics, ensure the effectiveness of the whistle-blowing system, and comprehend thecurrent state of compliance through such means as employee opinion survey and employee engagement, thereby
raising ethical standards and integrity of individuals and the organization.

68About Mebuki
Financial Group

Indicators and targets for human resources management
1. Indicators and targets for the approach to human resources development(1) Human resources development
As the scope of consulting services is broad, non
The Group regards the development and securing of
DX-related indicators could be an option. However, weconsulting personnel capable of taking actions tohave set the numbers of advanced qualification holders
identify and solve challenges faced by local(total number of 1st grade Certified Skilled Workers ofcommunities and customers from multiple angles as an
Financial Planning (1st grade FP), Small and Medium
initiative that we should focus on for the time being.
Enterprise Management Consultants (SME
We have set forth targets for developing DX
Management Consultants), and Securities Analysts)
personnel and DX basis personnel in the Third Mediumand 2nd grade Certified Skilled Workers of Financial
Term Group Business Plan and worked to achieve thePlanning (2nd grade FP) as indicators as the Group’s
targets from the perspective of urgently developing andcore business is finance. In addition, we are working on
securing personnel who will adapt to the recent
the development and securing of specialized humanadvancement of DX and digitalization and act as theresources by encouraging employees to acquirebasis for reforming the Group’s business model andqualifications specific to their areas of expertise.
providing support for customers with their DX anddigitalization.
Targets: Results of developing DX personnel and DX basis personnel
March 31, 2021
March 31, 2022
March 31, 2023
Target date ofachievement Number of people Ratio to total employees Number of people Ratio to total employees Number of people Ratio to total employees

Target

—

—

—

—

551

—

—

—

—

—

—

—

—

225

3.8%

1,268

146

4.5%

79

2.9%

DX personnel
o/w Joyo Bank

400 people

o/w Ashikaga Bank

March 31,2025

DX basis personnel (IT passport acquirers)
o/w Joyo Banko/w Ashikaga Bank

3,000 people

March 31,2024

Progressrate

2. Indicators and targets for the approach to internal environment development(1) Organizational culture to encourage autonomous growthdispatched and assigned under these programs as
The Group believes that self-motivated efforts madeindicators.
by individual employees to improve their skills andIn addition, based on a recognition that it isbuild their careers will lead to individual andnecessary for employees to have a certain level oforganizational growth as well as organizational
skills in a broad range of operations in order to berevitalization and building of a strong organization andobservant and draw on their expertise in a variety oftherefore enable us to realize our management
contexts and from multiple angles, we have set thestrategies. It is essential for the Group to provide
number of people attended training in multiple fields
continuous support for employees to acquire
as an indicator.
specialized skills and draw on their expertise in a
In addition to efforts made for these indicators andvariety of contexts and from multiple angles. We
targets, we are undertaking initiatives to create an
therefore set the number of trainees dispatched toenvironment to provide employees with support for
inside and outside the Group to have an opportunity
self-motivated career building and promote theirto grow by volunteering to absorb knowledge frommotivation to take on challenges, including holding
inside and outside the Group as a target, and thevarious holiday lecturers and workshops andnumbers of applicants for open recruitment of trainees
enhancing e-learning programs.
and the post challenge program and people
Target: Actual number of trainees dispatched to inside and outside the Group
TargetFY2020
FY2021
FY2022
Implementation
Number of Ratio to total Number of Ratio to total Number of Ratio to total
periodpeopleemployees
peopleemployees
peopleemployees

8.2%—

Number of trainees dispatched to inside and outside the Group

20

11.9%

—

o/w Joyo Bank

0.4%

23

0.7%

46

1.5%

—

3,538

63.3%

117.9%

April 2022 to
120 people March 2025

13

21.7%

7

0.3%

11

0.4%

14

0.6%

—

1,057

32.9%

1,911

61.9%

—

211

8.1%

1,627

65.2%

—

7,998
433

433

7.3%

470

8.1%

476

8.5%

83

o/w Joyo Bank

246

7.5%

257

8.0%

263

8.5%

47

o/w Ashikaga Bank

187

6.9%

213

8.1%

213

8.5%

Number of 2nd grade FP

3,359

56.3%

3,511

60.2%

3,638

65.1%

o/w Joyo Bank

2,066

63.2%

2,144

66.7%

2,185

70.6%

1,293

47.9%

1,367

52.2%

1,453

58.2%

303

Number of advanced qualification holders: total number of 1st grade FP, SME Management Consultants, and Securities Analysts

470

476

87

86

51

48

332

March 31,2021

March 31,2022

1st grade FP

SME Management Consultants

342

March 31,2023
Securities Analysts

strategies as there is an imbalance in the age
structure of the Group’s human resources portfolio.
As part of such efforts, we will strengthen the midcareer recruiting of highly skilled and specialized,
work-ready human resources. Therefore, we have set
the number of mid-career recruitment as an indicator.

0.3%

34

FY2020Indicator
Number of applicants for open recruitment of trainees
and the post challenge program*1

Number ofpeopleRatio ofmid-career

Number ofpeopleRatio ofmid-career

Number ofpeopleRatio ofmid-career

Number of mid-career

32

11.1%

23

8.8%

30

14.4%

o/w Joyo Bank

13

8.3%

9

6.7%

12

11.7%

o/w Ashikaga Bank

19

14.6%

14

11.2%

18

17.0%

50.0%

Number ofpeopleFY2022

Ratio to total
employees

Number ofpeopleRatio to total
employees

0.4%

49

0.8%

74

1.3%

o/w Joyo Bank

25

0.8%

28

0.9%

52

1.7%

o/w Ashikaga Bank

1

0.0%

21

0.8%

22

0.9%

6

0.1%

10

0.2%

32

0.6%

o/w Joyo Bank

6

0.2%

6

0.2%

28

0.9%

o/w Ashikaga Bank

0

0.0%

4

0.2%

4

0.2%

720

12.1%

1,491

25.6%

1,593

28.5%

o/w Joyo Bank

329

10.1%

779

24.2%

519

16.8%

o/w Ashikaga Bank

391

14.5%

712

27.2%

1,074

43.0%

Number of people dispatched and assigned under the open
recruitment of trainees and the post challenge program*1

Number of people attended training in multiple fields*2*1 Number and ratio to the total of employees who volunteered to apply for and be dispatched as trainees or assigned to certain positions*2 Number and ratio to the total of employees who attended training in a variety of categories (excluding part-timers and holiday lecturers)

Ratio of mid-career: Number of mid-career ÷ Number of annual

69

1.1%

26

FY2022

Number ofpeople60

FY2021

Ratio to total
employees

Indicator: Actual number of mid-career recruitment
FY2021

0.6%

Indicators: Actual numbers of applicants for open recruitment of trainees and the post challenge program,and people dispatched and assigned under these programs and the number of people attended training in
multiple fields(people)March 31, 2023

o/w Ashikaga Banko/w Ashikaga Bank

Breakdown of advanced qualification holders

Number of people Ratio to total employees Number of people Ratio to total employees Number of people Ratio to total employees

FY2020Progressrate

298

Number of advanced qualification holders

Indicator

Corporate Data

253

March 31, 2022

(2) Securing of human resources
We recognize that, in order to achieve sustainablegrowth, it is important to work not only on stable newgraduate and semi-recent graduate hiring but also on
securing human resources with skills necessary to
execute our business strategies in accordance withthe expansion of business areas, deepening of
consulting functions, and progress in the business

Management Base Supporting
Value Creation

137.8%

Indicators: Actual numbers of advanced qualification holders and 2nd grade FP
March 31, 2021

Management Strategies
for Value Creation

9.9%

DX personnel: head office staff certified as personnel who plan and drive new business creation and business innovation using digital technology, and personnel who can provide
DX support to customers under requirements set by each subsidiary bank

Indicator

Mebuki Financial Group’s
Value Creation

70

About Mebuki
Financial Groupand shorter working hours, and deepen companywide understanding of these systems so that
employees can select their workstyles in tune with life
events and balance work and family. We have set theratio of female employees in assistant manager
positions or higher as a target, while setting thenumber and ratio of female employees returned fromchildcare leave as an indicator for the state of securing
the pool of future management candidates, in addition
to the other two indicators set under the Act on the
Promotion of Female Participation and Career
Advancement in the Workplace, the ratio of female
employees in manager positions or higher and genderwage gap.
We will create new value and innovations bybuilding an organization that can leverage diverse
views and experience, where diverse human resources
can feel job satisfaction, thereby achieving sustainablegrowth.

(2) Diversity and inclusion
Based on the Group’s human resources portfolio, we
recognized that, in order to embody the corporate
philosophy and improve corporate value by adapting
to rapid changes in the external environment andcreating value, it is imperative for the Group to utilize
diverse human resources, including women, seniors,and specialized mid-career hires with various
experience and to continuously create an environment
where they can fully demonstrate their characteristics
and abilities.
As part of measures to leverage diverse views andexperience and increase candidates for the positions
responsible for organizational management anddecision-making, we have strengthened initiatives forenhancing opportunities for female employees toactively participate in workplace and for promoting
them to higher managerial positions. In addition, we
have been working to develop and enhance related
systems, such as paid holidays and leave systems

Target date ofachievement

Ratio of female employees in assistantmanager positions or higher
o/w Joyo Bank
35% orMarch 31,higher2025
o/w Ashikaga BankManagement Base Supporting
Value Creation

Management Strategies
for Value Creation

There is no gender wage gap for employees in the same
courses, the same positions, or the same lines of work.
As shown in the table below, there is a gender wage
gap in the aggregate. The reasons behind the genderwage gap for different employment status are as
follows.
For regular workers, the gender wage gap is due tothe personnel composition and age distribution of
the Group’s human resources portfolio as well as toa lower ratio of female employees in higher
managerial positions.

End of FY2020
Number of Ratio of female
peopleemployees

End of FY2021
Number of Ratio of female
peopleemployees

End of FY2022
Number of Ratio of female
peopleemployees

Progress
rate

1,132

30.0%

1,174

31.4%

1,238

33.3%

95.1%

442
690

24.2%
35.4%

490
684

26.5%
36.1%

550
688

29.5%
37.1%

—
—

Corporate Data

For part-time and fixed-term workers, the genderwage gap is due to the fact that male employees
make up more of the employment status withrelatively high salary levels, such as contract bankstaff, an employment status adopted for the reemployment of retired employees who used to be inmanagerial or higher positions.
Going forward, we will work to eliminate the genderwage gap by actively promoting female employees tohigher managerial positions.

Indicator: Actual gender wage gap
Indicator

FY2020

FY2021

FY2022

51.6%

52.2%

54.8%

o/w Joyo Bank

50.3%

52.1%

54.5%

o/w Ashikaga Bank

53.1%

52.3%

55.0%

Gender wage gap (regular workers)

36.5%

36.5%

34.7%

o/w Joyo Bank

43.0%

43.2%

41.9%

o/w Ashikaga Bank

31.2%

32.0%

31.2%

Gender wage gap (part-time/fixed-term workers)

Target: Actual ratio of female employees in assistant manager positions or higher
TargetMebuki Financial Group’s
Value Creation

Personnel composition of regular workers by
position
Male

FemaleNon-managerial

Non-managerial

18%

53%

Personnel composition of part-time/fixed-term
workers by employment status
Male

FemaleManageror higher

Part-time

SeniorContract

19%

5%

5%

2%

Assistantmanager

Contract

Indicators: Actual ratio of female employees in manager positions or higher and the number and ratio of
female employees returned from childcare leave
Indicator
Ratio of female employees in manager positions or higher
o/w Joyo Banko/w Ashikaga Bank

Indicator
Number(*1) and ratio(*2) of female employees returned from childcare leave
o/w Joyo Banko/w Ashikaga Bank

End of FY2020
Number of Ratio of female
peopleemployees
390
15.2%
143
11.5%
247
18.7%

End of FY2021
Number of Ratio of female
peopleemployees
428
16.9%
170
13.6%
258
20.1%

End of FY2022
Number of Ratio of female
peopleemployees
492
19.3%
212
16.5%
280
22.3%

FY2020
Number of Ratio of female employees
returned to work
people
134
95.0%
91
96.8%
43
91.5%

FY2021
Number of Ratio of female employees
peoplereturned to work
151
95.5%
91
94.8%
60
96.8%

FY2022
Number of Ratio of female employees
peoplereturned to work
132
95.7%
78
96.3%
54
94.7%

*1 Number of female employees returned from maternity leave and childcare leave (“Childcare Leave, etc.”)*2 Total number of female employees returned from Childcare Leave, etc. ÷ Total number of female employees supposed to have returned from Childcare Leave, etc. × 100

Changes in the ratio and number of female employees
in assistant manager positions or higher

Changes in the ratio and number of female employees
in manager positions or higher(people)(people)

27.9%

1,080

28.9%

1,121

30.0%

1,132

31.4%

1,174

14%

Target set forthin the MTGBP
1,238

35% or higher
19.3%

329
March 31, March 31, March 31, March 31, March 31,
2019
2020
2021
2022
2023

March 31,
2025

13.9%
369

15.2%

390

492

March 31, March 31, March 31, March 31, March 31,
2019
2020
2021
2022
2023

Ratio of female employees

Number of people

71

68%

Senior
Part-time93%

with physical and mental health issues, while providingthem with health guidance.
We have set the average number of paid leave days
taken, ratio of employees who had health checkups,
and ratio of employees subject to specific healthguidance, as indicators for the state of Health &Productivity Management.

Indicators: Actual average number of paid leave days taken; ratio of employees who had health checkups;
and ratio of employees subject to specific health guidance
Indicator

FY2020

FY2021

FY2022Average number of paid leave days taken

11.4 days

11.9 days

13.0 days

o/w Joyo Bank

12.4 days

12.4 days

13.3 days

o/w Ashikaga Bank

10.2 days

11.4 days

12.6 days

99.6%

99.9%

99.6%

o/w Joyo Bank

99.5%

99.9%

99.5%

o/w Ashikaga Bank

99.6%

99.8%

99.8%

8.9%

8.6%

8.7%

o/w Joyo Bank

8.5%

7.7%

8.7%

o/w Ashikaga Bank

9.4%

9.6%

8.7%

Ratio of employees subject to specific health guidance
March 31,
2025

44%

51%

28%

Ratio of employees who had health checkups (incl. people who had a complete medical checkup)

16.9%

428

Manageror higher(3) Health Management
The Group recognizes that, in order for a company tostay healthy, it is essential that each and every
employee is healthy both physically and mentally. We
provide employees with health guidance andconsultation with an industrial physician to maintainand improve their health and offer a counselling service
to address their mental health issues. Through suchmeasures, we are striving to early detect employees

33.3%

12.7%

Number of people

Assistantmanager

Ratio of female employees

72About Mebuki
Financial Group

Roundtable Discussion on Diversity and Human Capital

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

our value lies directly in human resources with the ability
to help resolve local issues and be the people thecommunity needs. Our medium-term business plan laysthat idea out, too, by making efforts to foster humancapital a pillar of the Group’s strategy. We work toensure that the whole Mebuki family is aware of that.
—— Could you tell us about some of the concrete steps
you’re taking in the effort to create value?

Nobuhiro Doi

Masako Nagayama

Yoko Akiba

Satoshi Hayakawa

General Manager in charge of
the Personnel Division
General Manager, Diversity
Promotion Office, Joyo Bank

General Manager of the Personnel Division,
Joyo Bank
General Manager in charge of the Personnel Group,
Corporate Management Department, Mebuki FG

General Manager, Diversity
Promotion Office
Personnel Division, Ashikaga Bank

Executive Officer and General Manager of
the Personnel Division, Ashikaga Bank
General Manager in charge of the Personnel
Group,Corporate Management Department,
Mebuki FG

Hayakawa One thing the Ashikaga Bank is doing istransitioning our consulting business for individual
customers into a team setup. Up to this point,
consultants at branch locations dealt with customers
within the scope of their own individual abilities. But thatwasn’t an optimal approach; having people develop theirskills on a person-to-person basis made the growth
process slower for not just the consultants themselves
but also the organization as a whole. By switching over
to a team approach, with a group of around sevenemployees at each location, we’ve created a systemthat allows consultants to share their experience witheach other and, as a result, enables us to provide
customers with higher-quality consulting.
Nagayama The Group is making serious, far-reachingefforts to cultivate DX personnel. One example is the IT
Passport, which establishes a basis for employees’knowledge of the digital realm. More than 3,000
employees from the banks have already obtained their IT
Passports, pushing the Group closer to its acquisition
targets. Taking steps like these to streamline operations
through digital technologies and capabilities shouldmake it easier for employees to put more emphasis on
finding solutions to customers’ needs through face-to-

Masako Nagayama

General Manager of the Personnel Division, Joyo Bank
General Manager in charge of the Personnel Group,
Corporate Management Department, Mebuki FG
Joined Joyo Bank in 1991. Served in positions at branch locations and thehead office. After forging a long career on the management side at the head
office, worked in the Audit Department and Corporate Planning Department.
Became the inaugural general manager of the Diversity Promotion Officeupon the organization’s founding in 2021 and assumed her current positionin April 2023.

face interaction. The two banks have also collaborated
on training programs geared toward creating new
businesses as part of an effort to expand their domains.
I’m looking forward to seeing how these initiatives
formulate innovative ideas for addressing regional issues
and needs.
Hayakawa Knowing how crucial it is to create newvalue, we recently accepted submissions of papers on
the theme of “management strategies for driving
sustainable growth in the local community and theGroup.” Submissions came in from employees of all ages,
ranging from new recruits to the ranks of branch generalmanagers, and across regional lines. First prize went to afirst-year employee—and seeing that definitely made me
sit up and take notice. Embracing a diversity of values willbe essential to the future of banking, I think. The ongoingreforms and improvements to the organizational culture
will also soon take a new step forward with the “Project toFoster New Business,” a distinctive effort with thepotential to propel change further.
Nagayama We’re also working to create anenvironment that opens easy pathways to enhancing
skillsets through training workshops, a trainee systemwith job assignments both inside and outside the bank,and other programs to help individual employees expand
their lines of work. At Joyo Bank, a female employee
who started out in work areas like customer assets
under custody took the next step in her career by joining
a trainee program on the corporate side, accompanying
corporate employees on customer visits, and learning
the skills she needed to broaden her professional range.
All our employees, regardless of gender, have great
opportunities to gain practical expertise in DX andconsulting through cooperative work with head-officebankers and outside partners.

People are a company’s capital: Creating organizational culture that breathe life into new value
One of the basic strategies of the medium-term business plan is to “develop human resources and promote active participation,”a goal that puts efforts to cultivate human capital at the core of the Group’s overall vision.
In this roundtable discussion, the general managers of the Personnel Divisions and general managers of the Diversity Promotion
Offices at Joyo Bank and Ashikaga Bank—both at the forefront of Mebuki Financial Group’s efforts to promote human capital—
sat down to talk about human-resource development, diversity, and pleasant workplace environments.

Developing human resources to provide
high-value-added services

intermediation by aligning our offerings to the needs of
our individual customers. To provide these kinds of highvalue-added services, we have to help every one of ouremployees take their consulting capabilities to the nextlevel and build an organization where personal
development can thrive.
Nagayama Even before the term “human capital”
came along, the banking industry knew that people were
capital. It’s hard for banks, which all share the same
basic business structure, to differentiate themselvesfrom each other on the strength of their products
alone—so what ultimately determines a bank’s value is
its human-resource ability. At Mebuki Financial Group,—— Why is “developing and securing human resources
who create value” so important?
Hayakawa Population decline and an aging society are
two of the many factors currently making it challenging
for regional economies to maintain sustainable growth.
That’s where we need to come in as a regional financial
institution, filling a critical support position that goesbeyond the traditional approach of financial
73

Satoshi Hayakawa

Executive Officer and General Manager of the Personnel Division,
Ashikaga Bank
General Manager in charge of the Personnel Group,
Corporate Management Department, Mebuki FG
Joined Ashikaga Bank in 1992. Served in positions at branch locations andthe head office. On the planning side, was involved in the bank’s temporary
nationalization, relisting, and business integration with Joyo Bank. Also
served on a temporary assignment to Joyo Bank, where he worked in thedepartment overseeing sales of customer assets under custody for individual
customers before taking his current position.

74

About Mebuki
Financial Group

Discussion on Human Capital

Giving people opportunities to untangle
their stereotypes and broaden theirperspectives—— The Group is driving efforts to take action on thediversity front.
Nagayama What we’re trying to do by bringing people
from different backgrounds together is help employees
learn how to connect with customers from different
points of view and perspectives. In that sense, theprocess of having employees from Ashikaga Bank andJoyo Bank meet and engage with each other is like alitmus test for diversity. Of course, that interaction does
run the risk of certain value systems extending theirreach. That’s what makes it so vital for every employee
to first respect their own identity and, at the same time,never reject or attack the values of others. Inclusion
comes after that. While there are many issues we haveto tackle, our first focus is on promoting the active
participation of women—an area where banking iscurrently lagging considerably behind other industries.
Akiba One of the group’s most distinctive efforts topromote active participation among female employees isthe Mebuki Women’s Class, a one-year training program
for women approaching management-level positions.
The Class gives participants with different perspectives
and experiences to come together, exchange
information on their jobs, and share their views. It’s anenvironment that lets them come into contact with avariety of perspectives, gain exposure to different values,
and untangle the stereotypes they’ve formed over theyears—all in all, it opens their horizons. Having time totake inventory of their careers and reflect on where
they’ve been so far can also inspire them to think about
where they want to go in the future. The impact of the

Yoko Akiba

General Manager, Diversity Promotion Office
Personnel Division, Ashikaga Bank
Joined Ashikaga Bank in 1998. Has served in positions at branch locations,working as a life plan advisor, and the head office, dealing with individual
customers as part of the Consulting Business Division. Has also been active
in human-resource development on the personnel side. Assumed her
position as the general manager of the Diversity Promotion Office upon theorganization’s founding in 2021.

program goes beyond just the program, too; when theparticipants go back to their respective organizations,the things they’ve gained also make a positive impact on
their colleagues.
Doi Since the first Mebuki Women’s Class in 2018, a
total of around 100 employees have taken part in the
program. It’s a status marker, in a way, with an average
yearly cohort of only eight women from each bank. In
2022, we doubled the enrollment slots to 16 participantsfrom each bank and started choosing participants via
open applications instead of the old nomination system.
Some of the women who weren’t selected are obviously
disappointed that they didn’t get into the program, so I’dlike to find ways to offer as many opportunities as
possible to try new things. Many of the women who
completed their year in the Mebuki Women’s Class
maintain contact with each other, nurturing personal
networks that transcend the boundaries between banks,
communities, and cohorts. They’re also earning
reputations as mentors that others looking to take bigger
leadership roles in the organization can rely on for help
and support.

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Generating a virtuous cycle where people
have a positive impact on each other—— How do you want to see Mebuki Financial Groupenhance its human capital?
Hayakawa Sustainable, long-term relationships withcustomers hinge on bonds where the two sides share
their sense of purpose with each other. On top of that, acompany also needs to share the individual visions of its
employees. Every organization is a composite collectionof its individual members’ values systems, after all, so I
want to help develop frameworks that create a virtuous
cycle where people maximize their well-being and havea positive impact on each other.
Nagayama As career designs continue to diversify,
especially among the younger generations, I’ve started
to put a stronger focus on providing individual,
independent career support. The importance of humanresources isn’t a new revelation in the banking industry,of course, and we know that better engagement is anextension of better organizational development. If we
can solidify a culture that elevates ambition, creativity,and integrity, I know we’ll be able to make the company
one that people will be even prouder to work for.

—— What do you focus on in developing systems thatmake it easier for employees to find a more fruitfulwork-life balance?
Doi One element we’ve received a lot of input on is our
system defining work hours for people coming backfrom childcare leave. We used to have an hour-reduction
system with only a handful of set patterns. Now, though,the framework allows for fine-tuning in 15-minutesegments. The changes have helped establish a working
environment where people have the flexibility to aligntheir work activities with their home situations and theirindividual careers, but there’s still room for improvement.
We’re currently looking into implementing a flextime
system, for example, which has been gaining interest
among employees.

—— Having a fulfilling job must lead to a more rewarding
career.
Hayakawa In addition to the job-oriented personnel
systems they’ve installed, both banks are also
experimenting with allowing individual branches totailor-make and implement their own job-evaluation
frameworks instead of using the head office’s system.
The way I see it, the transition isn’t so much just an

General Manager in charge of the Personnel Division
General Manager, Diversity Promotion Office, Joyo Bank
Joined Joyo Bank in 1995. After working at branches in Ibaraki and Fukushima Prefectures, transitioned to the Personnel Division, where he hasserved for roughly 19 years. Assumed his current position, where he helps
lead efforts to establish and optimize measures to enhance work-life balance, in 2023.

75

Corporate Data

Akiba Two important focus areas are giving people
more workstyle options and creating a culture where
systems can take root. As we’ve taken steps to gather
input from female employees and give our systems amore lifestyle-focused emphasis, the reform process has
shown me that systems that are good for women tend
to be good for men, too. There are definitely men whowant to be an active part of raising their children, andthere are definitely times when women want to put astronger priority on work. Everyone has a different idealbalance between work and life outside work. Everyone’s
ideal balance changes according to what life stage
they’re at, too. I’m excited to keep laying the roots for a
corporate culture that both encourages a healthy worklife balance but also facilitates career advancement.

operational adjustment to the evaluation framework but
rather more of a step toward reforming the corporate
culture in general. Ideally, employees who take stronger
ownership of their own work put themselves on track togrow independently. Corporate culture doesn’t change
overnight, I know, but I think reviewing and revising theexisting systems one by one will help drive progress.
Nagayama Work-life balance is an integral part ofevery personnel-system reform. Since no two people are
the same, every employee theoretically needs their own
personnel system. That’s obviously not a realistic
approach, but I think it’s worth building the reform
process around the effort to bring that ideal as close as
possible to fruition. Coming back to the Personnel
Division after 20 years away, I can’t help but be amazedat how fast things move. We used to offer leave for
fertility treatment on an employee-to-employee basis, forexample. When more people started expressing interestin that kind of leave, the organization responded byturning it into a full-fledged system in just about threemonths. It’s so inspiring to hear about women who’ve
made use of the system and had children, the kinds ofstories that make working in the Personnel Division so
rewarding on a personal level.

Every employee needs
their own personnel system

Nobuhiro Doi

Management Base Supporting
Value Creation76

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Corporate Governance

Board of Directors

Basic approach to corporate governance

Composition of the Board of Directors
The Board of Directors decides basic corporate policies andimportant business matters and supervises the execution ofduties by directors. We aim to realize prompt and decisivedecision-making and business execution by entrusting mostdecision-making authorities relevant to business execution to
directors as constituent members of the Board of Directors inwhich our Group’s knowledge and expertise are concentrated,while ensuring a transparent and fair decision-making function
and a solid supervisory function through the appointment ofmultiple outside directors that have experience as corporate
managers, lawyers, and academic experts.

A commitment to management characterized by responsibility, and sound, appropriate business operations will earn
greater trust for the Group from all stakeholders—customers, shareholders, local communities and employees—andboost corporate value. By following the approaches listed below, we are working to strengthen and improve corporate
governance.
We respect shareholders’ rights and ensure equality.
We consider the benefits of stakeholders, including shareholders, and cooperate appropriately with stakeholders.
We disclose company information appropriately and ensure transparency.
We ensure the effectiveness of a transparent, fair, prompt and decisive decision-making function and supervisory function of the Board of
Directors on business operation by utilizing independent outside directors.
We work to communicate with shareholders constructively about the continuous growth and improvement of medium-to-long term
corporate values.
For the basic corporate governance policy, please refer to the Company’s website at https://www.mebuki-fg.co.jp/eng/company/governance/governance.html.

Management Base Supporting
Value Creation

Corporate Data

Composition of the Board of Directors

12
members

5 outside directors(incl. 1 female
outside director)

Ensuring
independence
and diversity

Activities of the Board of Directors and FY2022 Achievements
The Board of Directors meets monthly in principle.

Corporate governance structure

In FY2022, the Board of Directors met twelve times (*) and attendance of each director was as follows.

The Company has adopted a company with an Audit and Supervisory Committee as a corporate governance system,
which allows us to realize prompt and decisive decision-making and business execution by entrusting many of thedecision-making authorities relevant to business execution to directors as constituent members of the Board of Directors
in which the Group’s knowledge and expertise are concentrated, while ensuring the transparent and fair decision-making
function and the solid audit and supervisory function through the appointment of multiple outside directors.
General Meeting of Shareholders
Appoint/Dismiss

Appoint/Dismiss

Board of Directors

Corporate Governance Committee
Cooperate

Audit and Supervisory
Committee
Audit andSupervisory
Committee OfficeCompliance
Committee

ALM/RiskManagement
Committee

Management
Meeting

Sustainability
Committee

Group Strategy
Committee

Cooperate

Audit

Guide/Manage/Supervise

Audit

Indirectly-owned
subsidiaries

Directly-owned
subsidiaries

Report/Request consultation

Joyo Bank(Company with Audit andSupervisory Committee)

Ashikaga Bank Mebuki Lease(Company with Audit andSupervisory Committee)(Company with Auditors)(Company with Auditors)

Guide/Manage/
Guide/Manage/
Supervise
Supervise
Report/Request
Report/Request
consultation
consultation

5 subsidiaries

Mebuki Credit
Guarantee(Company with Auditors)

The main matters deliberated on and reported by the Board of Directors in FY2022 were as follows:

4 subsidiaries

Progress of the initiatives based on the Medium-Term Group Business Plan, comprehensive budget and business operation
policy for FY2022
Formulation of comprehensive budget for FY2023
Establishment of a local trading company as a company to contribute to the advancement of banking business by a subsidiary bank
Revision of the operating rules for executive compensation, etc.
Reorganization of credit guarantee companies within the Group
Revision of full-year earnings forecast for FY2022

Mebuki Card

Evaluation of the effectiveness of the Board of Directors as a whole(Company with Auditors)

Guide/Manage/
Supervise
Report/Request
consultation

Hiromichi Ono (outside director)
Yoshimi Shu (outside director)

attended all 12 meetings
attended all 10 meetings
after appointment
Satoru Kawamata (outside director) attended all 12 meetings
Toru Nagasawa (outside director)
attended all 12 meetings
Takashi Shimizu (outside director)
attended 11 meetingsout of 12 meetings

Main matters deliberated on and reported

Appoint/Dismiss

Mebuki
Securities

Eiji Murashima
Yoshinori Tasaki

attended all 12 meetings
attended all 12 meetings
attended all 12 meetings
attended all 12 meetings
attended all 10 meetings
after appointment
attended all 12 meetings
attended all 12 meetingsmaterials and provide advance explanations of agenda items prior to each Board meeting.

Audit

Internal audit
section

System Management Regional Revitalization
Department
Department

Tetsuya Akino
Kazuyuki Shimizu
Kiyoshi Nozaki
Yoshihiro Naito
Toshihiko Ono

As part of our commitment to enhancing the activities and deliberations of the Board of Directors, we distribute(Audit Department)

Corporate Planning Corporate Management Business Management
Department
Department
Department

Directors (Audit and Supervisory Committee Members)(*) Other than the above, the Company adopted three written resolutions, which were deemed to be adopted at meetings of the Board of Directors.

Accounting Auditor

Mebuki Financial Group

Consult/Report

Directors (excluding Audit and Supervisory Committee Members)

Response in the event of online system failures
Audit

Details of deliberations and reporting at the decision-making bodies (Management Meeting, ALM/Risk Management Committee,
Compliance Committee, and Sustainability Committee)

1 subsidiary77

78

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Evaluation of the Effectiveness of the Board of Directors
The Board of Directors of the Company conducts analysis and evaluation of its effectiveness as a whole each year, inorder to utilize the results of such evaluation to improve the operations of the Board of Directors, by confirming theopinions of each director on such matters as the composition and operation of the Board of Directors.
Evaluation method
Regarding the FY2022 evaluation, opinions were exchanged on the evaluation method and thecontents of the questionnaire at the executive session comprising all outside directors of theCompany and its subsidiary banks, as was the case in the previous fiscal year.
Based on this discussion, questionnaires on the composition and operations of the Board of
Directors and other matters were distributed to all directors, and replies and comments wereobtained. With regard to the results of the evaluations based on these replies and comments, theBoard of Directors of the Company, upon deliberation by the Corporate Governance Committee(with outside directors accounting for the majority of its members), finalized and determined theresults of analysis and evaluation of the effectiveness of the Board of Directors as a whole.

Main items of questionnaire
1. Roles and responsibilities of the (Boardof) directors
2. Composition or other qualities of theBoard of Directors
3. Operation or other matters of the Boardof Directors
4. Execution of functions of the Board of
Directors

Evaluation results
The Board of Directors of the Company has confirmed that directors with diverse knowledge and experience have been elected and thecomposition is well balanced; all directors, upon sharing the roles and responsibilities of the Board of Directors, have successfully fulfilled bothdecision-making and supervising functions while taking advantage of the perspective of independent outside directors; and thus the effectivenessof the Board of Directors as a whole has been mostly assured.
Future measures
The operation of the Board of Director throughout the year resulted incontinued improvements in the issues identified by the previous
evaluation, specifically in “Enhancement of exchange of opinions among
directors” and “Further utilization of the perspectives of independent
outside directors”. However, based on each director’s assessment andopinions, we recognized the necessity of continuous working on thefollowing matters for further improvement.
By implementing necessary measures to ensure the sustainablegrowth of the Group and further increase its corporate value in themedium- to long-term, the Group will strive to enhance the effectivenessof its corporate governance structure.

Matters to be addressed for continuous improvement
1. Enhancement of discussions regarding medium-to long-term
management issues
Further enhancement of discussions regarding various mediumto long-term management issues and providing value tostakeholders
Enrichment of discussions for the advancement of business
management
2. Strengthened efforts to share and solve issues among Group
companies
Expansion of opportunities to share management informationand issues of Group companies with outside directors

Corporate Governance Committee

Composition of the Audit and Supervisory Committee
3 outside
directors
3 outside
directors

5
members5
members

Outsidedirectors forma majority.

Composition of the Corporate Governance Committee
We have established the Corporate Governance Committee as
an advisory board to the Board of Directors to ensure theobjectivity and transparency of matters regarding the
5 outsidecompensation for and the appointment of directors. Matters
1 outside director
directorsof Joyo Bank andregarding the nomination of director candidates and the
9 5 outside
1 outside director
1 outside director
compensation for directors are decided by the Board ofof Ashikaga Bank
membersdirectorsof Joyo Bank andDirectors upon deliberation by the Corporate Governance9
1 outside director
Committee.
An outsideof Ashikaga Bank
members
The Corporate Governance Committee is chaired by an outside
director serves
director, and the majority of its members are also outside directors
as chairman.
including the outside directors of subsidiary banks.
In FY2022, the Committee held five meetings, one of which
was in writing, with the following main matters deliberated on
and reported:
Main matters deliberated on and reported
Matters regarding total amount of directors’ bonuses, and indicatorsfor calculating directors’ bonuses for FY2022 and beyond
Matter regarding the amount of compensation for each director(excluding Audit and Supervisory Committee Members)

79

Status of dialogue with shareholders and analysis of opinions of shareholders
Matter regarding election of director candidates
Matter regarding evaluation of the effectiveness of the Board of
Directors as a whole

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Decision-Making Bodies
We have established the Management Meeting, the ALM/Risk Management Committee, the Compliance Committee
and the Sustainability Committee as bodies to discuss and decide important matters regarding business execution
based on the decisions made by the Board of Directors. Each decision-making body reports the status of deliberationand decisions regarding business execution to the Board of Directors, and is supervised by the Board of Directors.
Overview

Main matters deliberated on and reported

The Management Meeting is responsible formaking decisions on business execution to
the extent of the authorities delegated by the
Board of Directors, as well as discussion on
important matters regarding businessexecution.

Progress of the initiatives based on the Medium-Term Group Business Plan, comprehensive
budget and business operation policy for FY2022
Formulation of comprehensive budget for FY2023
Status of consideration on the establishment of a local trading company to contribute to theadvancement of banking business by a subsidiary bankStatus of consideration on the next core system
DX roadmap formulation and DX personnel development initiatives
Measures concerning the sale of structured bonds at Mebuki Securities Co., Ltd., The Joyo
Bank, Ltd. and The Ashikaga Bank, Ltd.
Status of the customer-oriented business activities at directly-owned subsidiaries
Formulation of system development projects and monitoring of IT investment projects

Decision-Making Bodies

Management
Meeting

ALM/RiskManagement
Committee

The ALM/Risk Management Committee is
responsible for making decisions on businessexecution relevant to group risk management
and ALM to the extent of the authorities
delegated by the Board of Directors and forconsidering and discussing importantmatters on business execution.

Management of yen bonds and the exceeding of loss limits by the Company and its
subsidiary banks
Additional foreign bonds to the transactions subject to loss limits
Action on finalization of Basel
Loan policy for customers who have exceeded credit limits
Verification results of internal credit rating system

Compliance
Committee

The Compliance Committee is responsible formaking decisions on business execution regarding
compliance to the extent of the authorities
delegated by the Board of Directors, andconsidering and discussing important mattersrelevant to the practice of compliance.

Status of AML/CFL system
Status of management of compliance, complaints, etc.
FY2023 Basic Policy on Group Compliance Program and Group’s Basic Policy for AntiMoney Laundering
Review of internal rules in light of legal revisions, etc.

Sustainability
Committee

The Sustainability Committee is responsible
for making decisions on business execution
regarding promotion of sustainability to theextent of the authorities delegated by the
Board of Directors, and considering anddiscussing important matters relevant to thepromotion of sustainability.

Formulation of roadmap to Net zero CO2 emissions
Establishment of procurement and purchasing guidelines
Trial introduction of Internal Carbon Pricing (ICP) system
Future actions based on TCFD recommendations
Approach to human capital disclosure (human resources development policy, internal
environment development, policy risk management, indicators and targets, etc.)

Audit and Supervisory Committee
The Audit and Supervisory Committee audits the execution ofduties by directors and determines the details of proposals
related to the appointment, dismissal, and non-reappointmentof accounting auditors to be submitted to the General Meetingof Shareholders.
The Audit and Supervisory Committee meets monthly inprinciple. In FY2022, the Audit and Supervisory Committee met
twelve times.

Mebuki Financial Group’s
Value Creation

Attendance of members of bodies

Number of meetings held (FY2022)

Board ofDirectors

Corporate
GovernanceCommittee

Management
Meeting

ALM/RiskManagement
Committee

Compliance
Committee

Sustainability
Committee

12

4

12

12

11

6

Members( represents Chairman)
President and Director
Executive Vice President and Director
Directors (Inside)
Outside Directors
Executive Officers(Corporate Planning(Corporate Planning(Corporate Planning Department,
Department, Corporate
Department, Corporate
Corporate Management
Management Department, Management Department,
Department, Regional
Basel Unit)
Audit Department)
Revitalization Department)

General Managers

Outside Director, The Joyo
Bank, Ltd.

(Audit and Supervisory
Committee Member)

Outside Director, The
Ashikaga Bank, Ltd.

(Audit and Supervisory
Committee Member)

Attendance rate of all members

99%

89%

99%

100%

100%

100%

Attendance rate of outside directors

98%

85%

—

—

—

—

80

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Selection criteria for directors

Selection criteria for outside directors

The Board of Directors selects candidates for directors who
satisfy the selection criteria for directors based on the
deliberation at the Corporate Governance Committee.
(1) Shall have high knowledge and expertise about theCompany’s business activities.
(2) Shall have superior ability of managerial decision-making
and execution.
(3) Shall have superior leadership, decisiveness, foresightand creativity.
(4) Shall have high integrity and deep insight to be suitable
for a director.
(5) Shall have no health problems in performing the duties asa director.

The Board of Directors selects candidates for outside
directors who meet the following selection criteria, in
addition to meeting the legal requisites for outside directors.
Two or more of such outside directors shall be the persons
who fulfill the independence standards for outside directorsof the Company.
1. Shall have extensive experience in overall management or
be in positions as professionals in laws, accounting,finance, and others to be suitable as a supervisor that has
high knowledge and experience similarly.
2. Shall have high integrity and deep insight as an outside
director.
3. Shall have the sufficient time for performing his/her duties
as a director.
4. Shall have no health or job-related problems in performing
the duties as an outside director.

Reasons for Selection as Outside Directors
Reasons for being selected as an outside director, concurrent positions and other statuses for each outside director
are as follows. The Group registered all of the five directors with the Tokyo Stock Exchange as independent directors
who do not have conflicts of interest with general shareholders.
Name

Reasons for selection

Concurrent positions and other statuses

Hiromichi
Ono

Mr. Hiromichi Ono has accumulated a broad range of insight and abundant experience as amanager of a major food company. He has been appointed as an Outside Director to provide
appropriate guidance and advice for the overall business operation of the Company byutilizing his insight and experience as a corporate manager.

YoshimiShu

Ms. Yoshimi Shu has accumulated abundant work experience as well as experience andachievements as a senior manager at a global financial institution. She also has insight andexperience in various aspects towards the development corporate leaders. She has been
appointed as an Outside Director to provide appropriate guidance and advice for the overallbusiness operation of the Company from a professional perspective.

Hiromichi
Yoshitake

Mr. Hiromichi Yoshitake has abundant work experience at a major company withachievements as a senior executive and also has academic expertise and management
experience as well as a broad insight through his career at multiple universities. He has
been appointed as an Outside Director who is an Audit and Supervisory Committee
Member to provide appropriate guidance and advice for the overall business operationof the Company by utilizing his broad insight, academic expertise, and management
experience at universities.

Chairperson of the Board of Trustees,
Tokyo Kasei Gakuin University

Toru
Nagasawa

Mr. Toru Nagasawa has specialized knowledge and experience in corporate legal affairs as
an attorney. He has been appointed as an Outside Director who is an Audit and Supervisory
Committee Member to provide appropriate guidance and advice from a specialist’s
perspective, especially corporate legal affairs in relation to the overall business managementof the Company.

Representative Attorney, Nagasawa Law Offices
Outside Corporate Auditor, LANCERS, INC.
Outside Director, Weins Toyota Kanagawa Co., Ltd.

Takashi
Shimizu

Mr. Takashi Shimizu has academic experience as well as specialized knowledge andextensive experience in accounting. He has been appointed as an Outside Director who is
an Audit and Supervisory Committee Member to provide appropriate guidance and advice
from a specialist’s perspective, especially accounting in relation to the overall business
management of the Company.

Professor, Graduate School of Accountancy,
Waseda University

81

Outside Director, Tokyo Gas Co., Ltd.

Name

OutsideDirector

Corporate Data

Expertise and Experience
Independent Corporate
Business
Finance/
Sales/
OfficerManagement/ Management/ Accounting
Consulting
Marketing
Strategy
LawMarketInvestment/
GlobalIT/DX

Tetsuya Akino
Kazuyuki Shimizu
Kiyoshi Nozaki
Yoshihiro Naito
Toshihiko Ono
Hiromichi Ono
Yoshimi Shu
Eiji Murashima
Yoshinori Tasaki
Hiromichi Yoshitake
Toru Nagasawa
Takashi Shimizu
Yuji Gorai
Koichi Yamakawa

Details of Expertise and Experience

Corporate Management/Strategy

Experience in corporate management, expertise in planning of corporate strategy and execution

Business Management/Law

Expertise in business management including personnel and labor management, risk management, etc. and law

Finance/Accounting
President & Representative Director,
Core Value Management, Co., Ltd.

Management Base Supporting
Value Creation

Expertise and Experience of Directors and Executive Officers (Skills Matrix)

Directors who are not Audit andSupervisory Committee Members

Appointment of Directors
In appointing directors, the Board of Directors ensures a balanced composition that provides a wealth of knowledge
and expertise in wide range of fields and appoints two or more independent outside directors, and the Company has
appointed five independent outside directors (Independent outside director ratio of all directors: 41.7%).
Furthermore, the Company has introduced an executive officer system to enhance the decision-making and supervisory functions of the Board of Directors and to reinforce the business execution function.
The selection criteria for directors are set forth in the Corporate Governance Policy as follows:

Management Strategies
for Value Creation

Areas in Which Directors Are Expected to Fulfill Their RolesThe expertise and experience the Company expects from its directors are Corporate Management/Strategy and
Finance/Accounting, which are essential for corporate management; Market Investment/Global and IT/DX, which
demand a high level of expertise to navigate changes in the business environment; and Sales/Marketing andConsulting, which are indispensable for promoting the Group’s philosophy to deliver comprehensive financial services.
The skills matrix, which contains a list of expertise and experience that each director and executive officer possesses,
is presented below.

Executive Directors who are Audit andOfficers Supervisory Committee Members

Directors

Mebuki Financial Group’s
Value Creation

Sales/Marketing
Consulting
Market Investment/Global
IT/DX

Expertise in finance and accounting
Expertise in business planning, marketing and new business development
Expertise in consulting business, SDGs/ESG, environmental field, regional revitalization and corporate restructuring/support
Expertise in the field of market investment and global businesses
Expertise in IT and DX (digital transformation)

Succession Plan
In order for the Group to achieve sustainable growth and enhance corporate value over the medium to long term, theCorporate Governance Committee of the Company, chaired by an outside director and composed of a majority ofoutside directors, including those from subsidiary banks, deliberates on matters regarding the nomination of president
and director candidates, reappointment and dismissal of directors, as well as succession plans and the development
of director candidates.
The Corporate Governance Committee deliberates on the qualities, abilities, and career backgrounds required forcorporate managers, as well as on an ideal candidate profile that aligns with the Group’s management environment
and future strategic direction. The election of president and director candidates follows a process where theRepresentative Director proposes candidates, the Corporate Governance Committee deliberates on their consistency
with the desired candidate profile and other relevant factors, and subsequently, the Board of Directors approves them.

82About Mebuki
Financial Group

Governance of Mebuki Financial Group

Compensation system for directors

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Directors’ Compensation System
Executive Directors among the Directors (excluding Audit and Supervisory Committee Members)

Policy for Determining Directors’ Compensation
Under the Corporate Governance Policy set by the Boardof Directors, the director’s compensation amount isdetermined separately for “directors (excluding Audit andSupervisory Committee Members)” and “directors (who are
Audit and Supervisory Committee Members)” as follows.
Furthermore, the Company resolved the maximum
amount of compensation for directors (excluding Audit

and Supervisory Committee Members) at 200 million yen
per year (the number of eligible directors: 7 persons) andfor Audit and Supervisory Committee Members at 80
million yen per year (the number of eligible directors: 5
persons), at the Ordinary General Meeting of the
Shareholders held on June 28, 2016.

(1) Composition of compensation
The compensation comprises a monthly compensation
as a basic compensation, bonuses as a performancelinked compensation and a restricted stockcompensation plan as a non-monetary compensation.
The compensation comprises 86% of basecompensation, 7% of bonus and 7% of restricted
stock compensation plan (if the standard amount ofbonuses is paid).

Directors (excluding Audit and Supervisory Committee Members)

Directors (Audit and Supervisory Committee Members)

The compensation for directors (excluding Audit and Supervisory
Committee Members) is determined appropriately in consideration
to their transparency, fairness, objectivity and incentives toward
improving results by enhancing the linkage of compensation with
the Group’s performance and shareholders’ benefits.
The amount for each director (excluding Audit and Supervisory
Committee Members) is determined by the Board of Directors
within the maximum amount of compensation per year resolved
at the General Meeting of the Shareholders, while ensuring theobjectivity and transparency after deliberation regarding theiradequacy and validity in the Corporate Governance Committee.

The compensation for directors (who are Audit and Supervisory
Committee Members) is determined without the factor of incentive
to ensure the transparency of their duties as auditor andsupervisor.
The amount for each director (the Audit and Supervisory
Committee Member) is determined through discussion among all
Audit Committee Members and within the maximum amount ofcompensation per year resolved at the General Meeting of the
Shareholders.

(2) Details of each compensation
Monthly compensation
The basic amount of monthly compensation isdetermined by the director’s position.

Procedure for Determining Directors’ Compensation
reason for the delegation is that he or she is in a position
to judge the degree of contribution to the performanceby each director from a company-wide perspective.
Regarding this decision, the Corporate GovernanceCommittee shall deliberate including the confirmation of
the integrity with the above policy and the validity.
Therefore, the Board of Directors shall in general respect
his proposal and judge it to be in line with policy.
In addition, as of June 24, 2022, the Company revised
the directors’ compensation system after it reviewed theindicators and ratios for calculating directors’ bonuses,
and revised the definition of consolidated ROE, in orderto sustainably increase corporate value of the Group andto further share value with our shareholders.

In order to ensure the objectivity and transparency of
directors’ compensation, the compensation for directors(excluding Audit and Supervisory Committee Members)
is determined by the Board of Directors, and thecompensation for directors (who are Audit andSupervisory Committee Members) is determined by the
Audit and Supervisory Committee upon deliberation by
the Corporate Governance Committee.
In determining the details of compensation for eachdirector, the decision of the specific amount for eachdirector is delegated to the President and Director(Representative Director) by resolution of the Board of
Directors. This authority is the decision regarding specificamount of bonuses distributed to each director. The

Matters discussed by the Corporate Governance Committee and the Board of Directors in determining directors’ compensation (FY2022)(Corporate Governance Committee)
Matters regarding total amount of directors’ bonuses, and indicators for calculating directors’ bonuses for FY2022 and beyond
April 25, 2022
May 10, 2022
Matter regarding the amount of compensation for each director (excluding Audit and Supervisory Committee Members)(Board of Directors)
May 13, 2022
Matter regarding directors’ bonuses
Matters regarding determining monthly compensation amount, provision of monetary compensation claims andJune 24, 2022
disposition of treasury shares for the restricted stock, and revising the operating rules for executive compensation, etc.
In addition, activities in FY2021 related to the revision of the directors’ compensation system as of June 24, 2022, were as follows.
(Corporate Governance Committee)
Details of revisions
July 26, 2021
Matter regarding directors’ compensation
Before revision
After revision
September 27, 2021 Considering directors’ compensation
Calculation
Indicator based onTarget achievement
December 20, 2021 Revising directors’ compensation system of
index
ROE
rate*1
the Company and subsidiary banks
Net income
Consolidated
Net income(Board of Directors)
total shareholders’
ROE*2
net assets
February 21, 2022
Matter regarding revising directors’
equitycompensation system

83

Restricted
stockcompensationplan
7%

Monthly
compensation
86%

Compositionofcompensation

Bonuses
7%80%
linked to theCompany’s
consolidated
targetachievement
rate*120%
linked toconsolidated
ROE*2

Rationale for the indicators and results (FY2022)*1 Target achievement rate
This indicator has been adopted in order to give stronger
incentives to achieve an annual business plan. In FY2022, thetargets were set at 65.3 billion yen of ordinary profit and 45.0
billion yen of net income, and the achievement rates of eachindicator, weighted by the ratio of ordinary profit: net income
70% : 30%, was 71.4%.
*2 Consolidated ROE (Net income ÷ total shareholders’ equity)
The indicator has been adopted in order to give stronger
incentives to the directors to improve the Group’s corporate
value. Under the Third Medium-Term Group Business Plan(period: April 1, 2022 to March 31, 2025), the Company’s
consolidated ROE (net income ÷ total shareholders’ equity) of
5.5% or more was targeted, and in FY2022, the ROE of 3.7%
was achieved.

Bonuses
The basic amount of bonuses is determined inaccordance with the director’s position and the total
amount of bonus payment is determined within amaximum amount which fluctuates each year in therange of 0% to 150% according to the Company’s
consolidated target achievement rate and consolidated
ROE (net income ÷ total shareholders’ equity). The
amount for each executive director is determined basedon the basic amount for the director’s position, which isadjusted according to the degree of contribution tobusiness performance by each executive director.
The percentage of the total bonuses is composed of
80% linked to the Company’s consolidated target
achievement rate and 20% linked to consolidated
ROE, each of which increases or decreases in therange of 0% to 150%, depending on the fiscal year’s
performance.

Restricted stock compensation plan
Under this plan, the Company’s Directors (excluding Audit and Supervisory Committee members; the “Eligible
Directors”) shall make payments in kind as contributed assets using all of the monetary compensation claims
provided to them by the Company and receive the issuance or disposal of the Company’s common shares and theCompany and each of the Eligible Directors shall enter into a restricted stock allocation agreement. The
compensation to be paid to the Eligible Directors for the granting of restricted stock is monetary compensation
claims and the total amount of such claims is set at 20 million yen or less per year within the amount ofcompensation for the Company’s Directors (excluding Audit and Supervisory Committee Members), and the total
number of common shares newly issued by the Company is set at 200 thousand shares or less per year, as resolved
at the Ordinary General Meeting of the Shareholders held on June 24, 2020. The allocation of payment to each
Eligible Director is determined by the director’s position.
Outside Directors among the Directors(excluding Audit and Supervisory Committee Members)

Directors(Audit and Supervisory Committee Members)(1) Composition of compensation
The compensation for outside directors (excluding
Audit and Supervisory Committee Members) iscomprised only of a monthly compensation, which is abasic compensation.
(2) Details of each compensation
Monthly compensation
The amount of monthly compensation as a basic
compensation is fixed by the director’s position.

(1) Composition of compensation
The compensation for directors (who are Audit andSupervisory Committee Members) is comprised only ofa monthly compensation, which is a basic
compensation.
(2) Details of each compensation
Monthly compensation
The amount of monthly compensation is determined
separately for full time and part time directors.
84About Mebuki
Financial Group

Governance of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

List of Directors
Director(Audit and Supervisory Committee Member)President and Director (Representative Director)

Executive Vice President and Director (Representative Director)

Director (Audit and Supervisory Committee Member)

Director (Audit and Supervisory Committee Member)

Tetsuya Akino

Kazuyuki Shimizu

Eiji Murashima

Yoshinori Tasaki

June 2016

Executive Officer and General Manager, Personnel
Division, The Joyo Bank, Ltd.
October 2016 General Manager, Corporate Management Department,
the Company
June 2017 General Manager, Corporate Planning Department, theCompany
Executive Officer and General Manager, Corporate
Planning Division, The Joyo Bank, Ltd.
June 2018 Director, in charge of Corporate Planning, theCompany
Managing Director, The Joyo Bank, Ltd.
June 2020 Director and Managing Executive Officer,
The Joyo Bank, Ltd.
April 2022
President, The Joyo Bank, Ltd. (current position)
June 2022 President, the Company (current position)

April 2012
April 2014

Executive Officer, The Ashikaga Bank, Ltd.
Executive Officer, Ashikaga Holdings Co., Ltd.,
Executive Officer, The Ashikaga Bank, Ltd.
April 2015
Managing Executive Officer, The Ashikaga Bank, Ltd.
June 2016 Managing Director, The Ashikaga Bank, Ltd.
October 2016 Director, the Company
June 2018 Senior Managing Director, The Ashikaga Bank, Ltd.
June 2019 Executive Officer, the Company
June 2020 Executive Vice President, the Company (current
position)
President, The Ashikaga Bank, Ltd. (current position)

June 2010

Executive Officer and General Manager, Business
Administration Division, The Joyo Bank, Ltd.
Executive Officer and General Manager, Business
Promotion Division, The Joyo Bank, Ltd.
June 2012 Managing Executive Officer and Vice Director-Generalof Business Headquarters, The Joyo Bank, Ltd.
June 2013 Managing Director, The Joyo Bank, Ltd.
October 2016 Director in charge of Corporate Management (Basel),the Company
June 2018 Senior Managing Director, The Joyo Bank, Ltd.
June 2020 Retired from the position as Senior Managing Director,
The Joyo Bank, Ltd.
Director (Audit and Supervisory Committee Member),the Company (current position)
Auditor, Mebuki Securities Co., Ltd. (current position)
April 2021
Corporate Auditor, Mebuki Card Co., Ltd.
(current position)

October 2012 General Manager, in charge of Business Planning
Division, The Ashikaga Bank, Ltd.
April 2013
General Manager, Karasuyama Branch, The Ashikaga Bank, Ltd.
April 2015
General Manager, Kumagaya Branch, The Ashikaga Bank, Ltd.
October 2016 General Manager, Moka Branch, The Ashikaga Bank, Ltd.
June 2019 General Manager, Audit Department, the Company
Executive Officer, General Manager, Auditing
Department, The Ashikaga Bank, Ltd.
June 2020 Executive Officer, Chief Officer, Saitama Area Hub, The Ashikaga Bank, Ltd.
April 2021
Executive Officer, Chief Officer, Ryomo/Gunma Area
Hub, The Ashikaga Bank, Ltd.
April 2022
Executive Officer, attached to Audit and Supervisory
Committee, The Ashikaga Bank, Ltd.
June 2022 Director (Audit and Supervisory Committee Member), theCompany (current position)
Corporate Auditor, Mebuki Lease Co., Ltd. (current position)
Corporate Auditor, Mebuki Credit Guarantee Co., Ltd.
(current position)

Director

Director

Outside Director (Audit and Supervisory Committee Member)

Outside Director (Audit and Supervisory Committee Member)

Kiyoshi Nozaki

Yoshihiro Naito

Hiromichi Yoshitake

Toru Nagasawa

June 2016

April 2016
June 2019
June 2020

April 1977
June 2000

April 1984
April 1995

Executive Officer and General Manager, Corporate
Planning Division, The Joyo Bank, Ltd.
October 2016 General Manager, Corporate Planning Department, theCompany
June 2017 Executive Officer and General Manager, Business
Promotion Division, The Joyo Bank, Ltd.
June 2018 Managing Executive Officer and General Manager,
Business Promotion Division, The Joyo Bank, Ltd.
Director (part-time), The Ashikaga Bank, Ltd.
June 2020 Director, Managing Executive Officer, The Joyo Bank,
Ltd. (current position)
June 2021 Director, the Company (current position)

Executive Officer, The Ashikaga Bank, Ltd.
Managing Director, The Ashikaga Bank, Ltd.
Directorin charge of Corporate Management, Risk
Management and Information Security, the Company(current position)
Director, Managing Executive Officer, The Ashikaga
Bank, Ltd. (current position)

June 2011

April 2003
April 2006
April 2009
April 2017
July 2020
June 2023

Director

Outside Director (Audit and Supervisory Committee Member)

Toshihiko Ono

Takashi Shimizu

June 2016

April 1995
Lecturer, School of Commerce, Waseda University
April 1997
Associate Professor
September 2000 Received Ph.D. in Commerce (Waseda University)
April 2002
Professor, School of Commerce, Waseda University
August 2002 Visiting Researcher, University of California, Berkeley(until August 2003)
April 2005
Professor, Graduate School of Accountancy,
Waseda University (current position)
October 2016 Outside Director (Audit and Supervisory Committee
Member), the Company (current position)

Senior Deputy General Manager, Corporate Planning
Division, The Joyo Bank, Ltd.
October 2016 General Manager, in charge of Corporate Planning
Department, the Company
June 2018 General Manager, Corporate Planning Department, theCompany
General Manager, Corporate Planning Division, The
Joyo Bank, Ltd.
June 2020 Executive Officer and General Manager, Business
Planning Division, The Joyo Bank, Ltd.
Director (part-time), The Ashikaga Bank, Ltd.
April 2022
Managing Executive Officer, The Joyo Bank, Ltd.
June 2022 Director, in charge of Corporate Planning, theCompany (current position)
Director, Managing Executive Officer, The Joyo Bank,
Ltd. (current position)

Outside Director

Outside Director

Hiromichi Ono

Yoshimi Shu

April 1979
March 2004
June 2007
June 2011

August 2000 Joined JPMorgan Securities Japan Co., Ltd.
June 2006 Head of Tokyo Control Room, Compliance Department
May 2012
Managing Director
October 2012 Head of Japan Controls & Oversight Department
January 2014 Resigned from JPMorgan Securities Japan Co., Ltd.
February 2014 Joined Core Value Management, Co., Ltd.
November 2016 Deputy President & Representative Director
June 2019 Outside Director, the Company (current position)
March 2022 President & Representative Director, Core ValueManagement, Co., Ltd. (current position)

June 2017
June 2019
June 2020
June 2021

Joined Ajinomoto Co., Inc.
General Manager, Finance Department
Corporate Executive Officer
Member of the Board & Corporate Vice President,
in charge of finance and procurement
Retired from Member of the Board & Corporate Vice
President, Ajinomoto Co., Inc.
Outside Director, the Company (current position)
Outside Audit & Supervisory Board Member,Tokyo Gas Co., Ltd.
Outside Director (current position)

85

Registered as an attorney
Nagasawa Law Office (currently, Nagasawa Law
Offices) opened,
Representative Attorney (current position)
October 2014 Outside Corporate Auditor, LANCERS, INC. (current
position)
June 2016 Outside Director, Ashikaga Holdings Co., Ltd.
October 2016 Outside Director (Audit and Supervisory Committee
Member), the Company (current position)
June 2022 Outside Director, Weins Toyota Kanagawa Co., Ltd.
(current position)

Joined Nippon Steel Corporation
General Manager, Administration Department,
Hikari Works, Stainless Steel Division
Professor and Researcher, Institute of Policy andPlanning Sciences, University of Tsukuba
Executive Director and Vice President
Professor, Graduate School of Business Sciences,
Director, Research Center for University Studies,
University of Tsukuba (until Mar. 2015)
Professor Emeritus (current position)
Trustee, Public University Corporation Tokyo Metropolitan University(Currently, Tokyo Metropolitan Public University Corporation) (until Mar. 2021)
Chairperson of the Board of Trustees, Tokyo Kasei
Gakuin University (current position)
Outside Director (Audit and Supervisory Committee
Member), the Company (current position)

Executive Officers
Yuji Gorai (In charge of systems)
Koichi Yamakawa (In charge of administration)

86About Mebuki
Financial Group

Roundtable Discussion of Outside Directors

Making governance more transparent and effective to ensuresustainable improvements in corporate value

Satoru Kawamata*Outside Director(Audit and Supervisory Committee
Member)

Hiromichi Ono

Yoshimi Shu

Outside Director

Outside Director

Takashi Shimizu

Toru Nagasawa

Outside Director(Audit and Supervisory Committee
Member)Outside Director(Audit and Supervisory Committee
Member)Mebuki Financial Group’s outside directors, coming from a wide variety of backgrounds, draw on their individual
experience and expertise to guide the Group’s corporate governance. In this roundtable discussion, the outside
directors exchanged their views on the operations of the Board of Directors and other topics.
* Satoru Kawamata retired from his outside director post as of June 22, 2023.

Business initiatives in new areas hinge onleveraging the Group’s strengths andemphasizing speed

shareholdings. In terms of sales of structured bonds,
however, there are risk factors that the holding company
will also need to keep an eye on—customer-oriented
business operations on the sales front, for example.
Diversity is another element that will need close
attention. As the Group promotes diversity to enable awider variety of human resources to thrive professionally,measures geared toward mid-career recruitment andinitiatives along other lines are starting to take shape.
The Group will have to work to keep that momentum
going, I think.
Nagasawa I think the Group planted some good seeds
this past year, even if the seeds do take some time tobear fruit. The establishment of a renewable energy
subsidiary, creation of a regional trading company, andpush to promote DX are three great examples. For me,
the year was a reminder of how the networks and credit
standing that both banks have cultivated over the years
are vital strengths in pushing new efforts forward. There
was also active, constructive discussion on issues likethe dividend policy and share repurchasing.
Shimizu I would echo a lot of what Mr. Nagasawa
said; I remember the discussions about share—— It has now been just over a year since the current
director structure took effect in June 2022. From an
outside perspective, what are your thoughts on how thepast year went?
Ono Inflation on a global scale and a flurry of interestrate hikes in the US hurt the Group’s foreign-bondholdings, but quick, decisive action enabled the Groupto avoid significant losses. Another positive development
over the last year was the Group’s rapid progress inaddressing climate change and taking other measures
to enhance its sustainable management. We’ve now
managed to catch up to the leaders of the regional bankmix.
Shu As Mr. Ono said, I think the Group did well inquickly moving to revise its securities portfolio. There
was also good progress in efforts to bolster fee-based
businesses, cut costs, and sell off strategic
87

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

repurchasing well, along with conversations about topics
like the budget and sales of securities. We also talked
about efforts to enhance human capital and contributeto the community, which both tie closely into myresearch area. Moving forward, I think one key will befinding ways to get more out of businesses in new fields.
The Group’s deep, extensive knowledge of Ibaraki andTochigi Prefectures is definitely a strength, but the sheer
scale of the deposits and loans business at the core of
the banks’ operations suggests plenty of profit potentialthat businesses in new fields have yet to tap.
Kawamata As a resident of Ibaraki Prefecture, I’ve
used Joyo Bank for years and years. I feel like the bankis really part of the community; local people have a real,
close connection with it. Given that attachment, I hopethe bank makes sure not to let its DX initiatives, branch
consolidation, and other projects come at the cost of
convenience for its older clientele. The bank isembarking on plenty of new challenges, but from what
I’ve seen across my background in manufacturing, I
think it could accelerate progress even more.

Management Base Supporting
Value Creation

Corporate Data

directors from other industries appointed to the Board is
probably going to go up, it might be a good idea torethink the approach to reference materials.
Ono The Board shares the necessary information inadvance, and the discussions are highly transparent.
While those are both obvious positives, I think Board
meetings should be more open-ended and not simply
follow a set agenda of items that the members have toreach conclusions on. Considering the diversity of theBoard makeup, home to outside directors from so many
divergent backgrounds, the members need to haveopportunities for free exchanges of ideas. If meetings
opened up the floor to everyone to touch on different
themes, like diversity and changes in the local industrial
structure, they might be able to get people’s ideas goingand generate more discussions that could benefit dayto-day business on the execution side.
Shu I agree. When informal, relaxed discussions pick up
momentum, I think the people in the room feel more
comfortable voicing their views—even on timely or urgent
topics. This past year saw securities management andcustomer-oriented business operations emerge assignificant topics for the Board, and the issues at hand
had some fast-changing elements. From my standpoint, it
was frustrating knowing that we had to talk about timesensitive issues but could only gather for Board meetings
once a month. To make sure we can take full advantageof the opportunities we have for constructive discussion, I
think the agenda decisions need to put the focus on
speed and also incorporate items that have yet to firm up
internally.

Robust information sharing andhigh-transparency discussions—— How would you assess the operations of Mebuki
Financial Group’s Board of Directors in terms ofeffectiveness?
Nagasawa It’s great to have outside directors from adiverse mix of backgrounds enhancing discussions on
the Board of Directors with unique perspectives.
Questions that come up almost always get answers
from people on the business-execution side by the timethe meeting wraps up, which means that the overall
responsiveness is solid. Still, the fact that the Board only
meets once a month keeps the discussions from reallyprobing the issues; the talks end up having a broad,sweeping scope. I think it would be good for the Board
to have more opportunities to delve deeper into specificissues on an ongoing basis. I’d like to see the Board
make more time to engage with long-term issues, likeredefining what banking is and exploring how it wants toapproach human resources in the coming years.
Shimizu The discussions on the Board aren’t justformalities. They’re lively, substantive exchanges ofideas, and I give the Board a lot of credit for that.
Kawamata I think the Board of Directors is even more
active than it used to be, especially with not only thepresident and executive vice president taking part but
also a variety of different directors making their voices
heard. The Board also provides thorough, detailed
lectures in advance for people from other industries, likeme, so that we can understand the issues up for
discussion. The materials we need to read can be longand technical, however, so understanding theinformation takes time. Since the number of outside

Paying careful, balanced attention to
stakeholder needs—— What do you concentrate on to help make theBoard of Directors a fair, transparent group?
Shimizu Our mission is to “develop and grow with local
communities and contribute to them.” That requires a
two-way framework, one where we provide communities
with opportunities for development and growth while thecorresponding compensation enables us to develop andgrow. We’ll need to keep measuring that dynamic of88About Mebuki
Financial Group

Roundtable Discussion of Outside Directors

mutual interrelation in numerical terms. I’m looking
forward to drawing on related existing research to givethe Board helpful, informed advice.
Shu The key is to always say what needs to be said,
holding true to the ideals of objectivity and integrity.
Dialogues with shareholders and employees are valuable
sources of primary information for reflecting the views ofshareholders and customers, which makes every
opportunity for conversation something I really value. I
also learn a lot hearing what people are thinking andfeeling when I take part in meetings with institutional
investors and visits to branches.
Ono To me, that ideal of integrity means paying
balanced attention not just to the shareholders, who
appointed us to be in our roles, but also to otherstakeholders across the board: customers, local
communities, and society in the broad sense of the word.
Kawamata I work with the execution side to make surethat everyone is on the same page about how to handle
any scandals that might come up: releasing information
as quickly as possible without ever attempting to hide
anything. I see myself as speaking for all the members of
the local community. I want Mebuki Financial Group to
be a kind of financial “primary-care doctor” for the area,
and I think human-resources development is a corecomponent of any corporation. As a member of the
Audit and Supervisory Committee, I also visit branchlocations to talk with as many people as I can—from thebranch general manager to new employees. Everyone isso positive and enthusiastic, and seeing things firsthandmakes me confident that women will be serving in moremanagerial-level positions going forward.
Nagasawa I think my fellow members have a better
sense of balance than I do. To me, my job is to makemy voice heard on the Board without hesitating or
guessing at how other people might be feeling. The best
way I can contribute is just saying exactly what I think.

Nagasawa The discussions on the Corporate
Governance Committee are great, thanks to Mr.
Kawamata’s excellent leadership as chair. Not only do
the talks lead to concrete conclusions, but the processof getting there is full of opportunities for members tocome forward with their thoughts.
Ono With outside directors forming a majority, theCorporate Governance Committee plays a crucial role in
the event that a governance-related crisis emerges.
That’s why it’s so important to sustain exchanges ofviews on governance issues on a constant, consistentbasis.
Shu I feel the same as both of you. The best time tobolster the committee is when things are proceeding as
normal, before something happens.
Shimizu It’s important to have a setup that facilitates
ongoing, substantive discussions, and the committee
has that. It’s also important for outside directors to listen
as much as possible to the opinions of employees, who
represent one segment of the Group’s stakeholders, justas it is for the Board of Directors. In FY2022, we got theopportunity to do just that through interviews with
branch employees—and the insights we gleaned
through those conversations have proven to be a basis
for making decisions.
Kawamata I think the organization is effective in termsof director compensation and nomination. If I had to pickan area for improvement, I’d say that we could use more
information on director candidates who aren’t up for
top-level positions. Although the current directors canlead the way in assessing appointees for higher-echelon
positions, outside directors need to be more involved infinding successors for directors who aren’t part of top
management.

The Corporate Governance Committee,
fulfilling its role whenever a crisis emerges—— As outside directors, you’re also members of the
Corporate Governance Committee. How would you
assess the committee’s function within the Group?

Imagining potential risks—— Could you tell us more about what you’re expectingout of Mebuki Financial Group and what kinds of roles
you’re hoping to play?
Kawamata When I step down from my position in June
2023, my standpoint will change—my hopes for the89

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Group will be from the perspective of a community
resident. Regional banks play a big role in energizing
local communities, so I hope the Group drives growth bystaying actively involved in new business endeavors andefforts to propel industry forward from an investor
perspective.
Ono Coming from my previous position, where I
worked in financial affairs, I’ll always remember how
banks came to the rescue in major economic crises likethe collapse of Japan’s asset-inflation economic bubble,
the 1997 Asian financial crisis, and the 2008 financial
crisis. I hope the Group continues to make contributions
from the corporate-customer viewpoint. I also want to
see the Group work together with industry, academia,
and government to do whatever it can to help boost
income levels across Ibaraki and Tochigi Prefectures,
serving as a kind of “regional trading company,” which I
think will boost the value of the Group in turn.
Shimizu I want the Group to dialogue with investors to
get their candid, honest takes on how they honestly see
the company rather than simply as a company talking
with investors. Companies and investors are basically all
in the same boat, and I want to do what I can do convey

Management Base Supporting
Value Creation

Corporate Data

that investor standpoint to the directors on the board asaccurately as possible.
Nagasawa In my work as a lawyer, dealing
considerably with corporate legal affairs, I often get looks
at governance at other companies—and sometimes, I
also work on revitalizing businesses from the debtor
perspective as a trustee for companies that have gonebankrupt due to governance issues. I want to make apositive impact on governance from my standpoint
outside the Group’s internal operations.
Shu There are two areas where I think I can contribute.
One is diversity; I want to do what I can to help makewomen play even more active roles. The other is risk
management. Corporate management and businessmodels have inextricable connections with amanagement team’s basic approach and the culture
shaping the organization as a whole. Since every
company has its own distinct characteristics, it’s
important to imagine what kinds of risks could emerge.
In my supervisory role, I’m partly responsible for that.
Keeping a watchful eye out for risks, I’m committed toworking with other everybody in the Group to enhance
management overall.

A message from the Group’s newly appointed outside director
Greetings! My name is Hiromichi Yoshitake. I was recently appointed a directorand Audit and Supervisory Committee Member with the approval of Mebuki
Financial Group’s shareholders at their General Meeting on June 22, 2023.
I began my career at Nippon Steel Corporation, where my work included
management reforms, organization reforms, and other efforts, before then shifting
my focus to the university sector. In addition to engaging in educational andresearch-related activities at the University of Tsukuba and Tokyo Metropolitan
Public University Corporation, I also worked on a variety of reforms at theinstitutions. The need for universities to make meaningful contributions to society
is more salient than ever before—and I have seen firsthand how making financial
institutions a part of that process can lead to dramatic improvements in industryacademia partnerships and the effectiveness of initiatives to better the community.
With the financial environment undergoing dramatic shifts both at home andoverseas, along with local communities facing the need to ensure sustainability forthe future, regional banks are confronting important questions. What kinds of roles
should they play? How should they enhance their management capabilities sothat they can fulfill those roles? As a director, I’m looking forward to tackling thesekey questions and working to benefit the Group.

90

Outside Director (Audit andSupervisory Committee Member)

Hiromichi Yoshitake

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Risk Management System

Risk Management Systemcoordination between risk management and profit
management while controlling risks appropriately, andfacilitates prompt and efficient decision-making bymanagement.
Furthermore, we have organized the integrated risk
management section responsible for the supervision andintegrated management of various risks, and at thesame time, established the framework under which theaudit section independent from business executionsections performs internal auditing and validates theappropriateness and effectiveness of the respective risk
management status.

The Group undertakes its risk management based on
the Basic Rules on Group Risk Management determinedby the Board of Directors of the Company.
In order to perform the matters set forth in the Basic
Rules on Group Risk Management, the Company has
established the ALM/Risk Management Committee,
which makes decisions on important business execution
regarding the Group’s risk management and performs
analysis, assessment and improvement of the mattersrelevant to the risk management of the overall Group.
The said committee ensures corporate management
emphasizing the risk and return relationship throughconsideration and discussion focused on closer(As of March 31, 2023)

Board of Directors

Decide on important business execution

ALM/Risk Management Committee Analysis, assessment and deliberation
on matters for improvement

Audit

Integrated risk
Capturing, measurement, assessment,
management section
and reporting of risk as a group(Corporate Management Department)
Type of risk

Operational Risk

Market Risk Liquidity Risk

Corporate Management Department

Corporate
Management
Department

Business
Management
Department

SystemManagement
Department

Corporate
Planning
Department

Internal audit section (Audit Department)

Validate appropriatenessand effectiveness ofrisk management system

Audit and Supervisory Committee

Strategic Risk Credit Risk

Instruct (establishment of risk management system)
Report/Consult (risk status, response policies)

Mebuki Financial Group’s Audit Division conducts internal
audits as well as audits of companies within the Group.

Ashikaga Bank

Mebuki Lease Mebuki Securities

Important meeting bodies for risk management<Joyo Bank><Ashikaga Bank>

1.ALM Committee

1. Management Meeting

2.Risk Management 2. ALM Meeting
Committee,
etc. 3.Credit Portfolio Meeting,etc.

Board of Directors
Audit and Supervisory Committee

Mebuki Credit
Guarantee
Board ofDirectors

Integrated risk management section(Risk Management Department)

Type of risk

Strategic Risk

Mebuki Card
Corporate
AuditorIntegrated
risk management
section

Audit

Type of risk

Credit Risk

Market Risk

Management Base Supporting
Value Creation

Corporate Data

Liquidity Risk Operational Risk

Sections in charge of respective risk categories
Branches, head offices and group companies

91

Strategic Risk,
Credit Risk, Market Risk,
Liquidity Risk,
Operational Risk
Sections in charge ofrespective risk categories

Audit

reserves and monitor whether the amount of each risk
quantified (risk capital used) stays within the extent ofallocated capital. Upon the allocation of capital, we securea risk buffer to cover losses larger than those expected in
the statistical methods or risks unable to be captured by
the statistical methods. We confirm the sufficiency of ourcapital reserves, including the capital to cover the
aforementioned risks, by performing stress tests by which
we capture the impact on our capital reserves underassumed scenarios such as a sudden economic
downturn. Furthermore, we confirm the reasonablenessand effectiveness of the statistical methods through backtests in which the risk amount calculated by VaR (value atrisk) is compared with actual profit or loss.

The Group undertakes “integrated risk management”
which quantitatively measures various types of risk
including credit risk and market risk, using statisticalmethods, such as VaR (value at risk), in order toindividually manage increasingly diversified andcomplicated types of risk relevant to financial services,
and at the same time, to comprehensively capture said
risks. We aim at maintaining an appropriate level of ourcapital reserves by comparing and contrasting the total
amount of risk with our financial soundness (our capitalreserves).
Specifically, we allocate capital to each type of risk(credit risk, interest rate risk, price fluctuation risk andoperational risk) in advance to the extent of our capital

Credit risk management
Credit risk refers to the risk of incurring losses as a result of customers becoming unable to pay the principal andinterest of loans as promised primarily due to the deterioration of their financial conditions.
Recognizing credit risk as a material risk in our business operations, the Group aims to enhance the management
system to prevent the emergence of new non-performing loans and to improve asset soundness.
Credit risk management system
The Group has established the Group Guidelines for Credit Risk
Management, which set forth, as our basic policy of credit risk
management, the appropriate management of credit risk on
individual loans and the management of the credit portfolio
focusing on risk diversification.
The section in charge of credit risk management, which isorganizationally and functionally independent from the businesspromotion sections, is responsible for the planning andoperational management of the internal credit rating system,
self-assessment systems, write-offs and provisions to thereserve for loan losses, as well as for the monitoring of loan
assets as the specialized organization for the comprehensive
supervision and management of the credit portfolio.

Asset self-assessment systems
Companies within the Group strictly implement asset selfassessment systems based on common standards and provide
appropriate reserves or write down problem loans based onsuch assessment. In addition, the reasonableness of suchassessment is validated and audited by the sections in chargeof validation and auditing, respectively, and is also subject toexternal audits by accounting auditors.
Quantification of credit risk
The quantification of credit risk refers to the statistical
forecasting of future losses (amount of credit risk) that can be
expected due to bankruptcies or the deterioration of financial
conditions of customers. The Group calculates the amount ofcredit risk for each customer based on “internal credit ratings”
with collateral and other factors taken into account.

Management of credit risk on individual loans
We separate the credit-screening sections of companies within
the Group from the business promotion sections to ensure
strict screening while also focusing on credit management
during repayment to prevent the status of a claim fromdeteriorating.

Credit portfolio management
We capture loan assets in their entirety as a single portfolio andconduct credit risk management from a macro perspective.
Based on the quantification of credit risk, we carry out periodic
monitoring such as whether the credit risk is concentrated in
specific sectors or corporate groups, and analysis andevaluation of credit situations by rating and region, or based oncomposition by industry.

Internal credit ratings
We categorize our customers into 12-grade rating levels byadding qualitative assessment to the data on their financial
condition and cash flow status. In addition to serving as thebasis for self-assessment systems, internal credit ratings areused across the full range of credit risk management, including
the capturing of credit risk exposure, the setting of lending rates
and the allocation of lending authority.

Internal audit section

Joyo BankManagement Strategies
for Value Creation

Integrated risk management

The Group aims to enhance the risk management system by positioning it as an important management task from theperspective of the maintenance and improvement of sound corporate management.

Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Market risk management
For the appropriate control of market risk, we also
perform and report to the ALM/Risk Management
Committee of the Company held periodically thequantitative management and measurement under the
ALM (asset and liability management) framework to takeaction according to the situation.

Market risk refers to the risk of incurring losses due tochanges in the value of financial assets and liabilities of
the Group caused by fluctuation in interest rates, foreignexchange rates, and stock prices.
Our subsidiaries are engaged in investment activities
based on their understanding of risk supported bysufficient advance research and analysis of market
transactions.
92About Mebuki
Financial Group

Governance of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Initiatives for Compliance

Liquidity risk management
Specifically, under cash flow management in a normal
situation, we manage indicators such as the trend of
deposit/loan balances and funding limits in addition toprimary indicators (funding gap and liquid asset balance)
to avoid an increase of liquidity risk. Furthermore, we
define and perform periodical drills for action plans upona liquidity crisis to enhance the effectiveness in a crisis.

Liquidity risk refers to the risk of incurring losses primarily
due to difficulty in securing necessary funds caused byan unexpected outflow of funds or similar events, or a
sharp rise in funding costs.
The Group has established the Group Liquidity Risk
Management Rules to set up the framework underwhich action plans according to respective situations
ranging from a normal state to urgent cases are defined
to promptly respond thereto.

(As of March 31, 2023)
Mebuki Financial Group

Board of Directors
Audit and Supervisory Committee
Compliance Committee

Corporate Planning Department

Corporate Management Department

System Management Department

Business Management Department

Mebuki Lease Mebuki Securities Mebuki Credit Guarantee

Ashikaga Bank
Board of Directors
Audit and Supervisory Committee

Operational risk refers to the risk of incurring losses caused by inappropriateness in the Group’s business processes,
activities of directors and employees or system operations, or by external events. The Group classifies and manages
such risk according to the following six categories: administrative risk, system risk, compliance (legal) risk, personnel
management risk, tangible asset risk, and reputational risk.
Furthermore, the Group designates the sections responsible for each of the aforementioned six categories, and also
has the comprehensive risk management section manage overall operational risk.
response exercises aiming to establish the framework for earlyrecovery from system failure, in addition to sufficient advance
testing upon the development or operation of systems, thecontinuous monitoring of operational status and duplexing
facilities.

Administrative risk
Administrative risk refers to the risk of incurring losses due to
directors, employees or external contractors neglecting precise
administration, causing incidents, or committing acts of fraud.
In the Group, the sections responsible for administrative risk
and the comprehensive risk management section responsible
for operational risk gather information on and analyze thecauses of administrative incidents occurring inside or outside
the Group to establish or revise administrative rules or enhancethe efficiency of administrative processes through theinformation system based on the results of such analysis. In
addition, the Group has the internal audit section validate theeffectiveness of the risk management system to establish theframework to detect or prevent administrative incidents.

Compliance (legal) risk, personnel management risk,
tangible asset risk and reputational risk
We also identify and assess risk through methods in line withrisk characteristics and take appropriate actions for: compliance(legal) risk, the risk of incurring losses mainly due to an illegal
act committed by directors and employees; personnel
management risk, the risk of incurring losses mainly due to an
act in violation of laws, regulations or agreements relevant toemployment, health or safety; tangible asset risk, the risk of
incurring losses due to damage to tangible assets caused bydisasters or defective management of buildings; andreputational risk, the risk of incurring losses due to thedeterioration of credit worthiness mainly attributable to
reputational damage caused by inappropriate actions taken by
the Group or the circulation of unfounded rumors.

System risk
System risk is the risk of incurring losses primarily due to thefailure of computer systems, erroneous computer operation, or
inappropriate computer use.
The Group has taken necessary measures to ensure thesafety and reliability of computer systems including failure

Crisis management and business continuity management
Upon the occurrence of a crisis, we will establish
emergency response headquarters at the Company anddirectly-owned subsidiaries to respond to such
emergencies in cooperation with each other. Furthermore,
we continuously perform crisis management exercises
and review the business continuity plan to enhance theeffectiveness thereof upon facing a crisis.

We have established the framework for the continuity or
early recovery of important business operations including
the repayment of deposits, fund transfer and remittanceupon facing a crisis such as a natural disaster, system
failure or pandemic, as well as limiting human andphysical damage to the minimum extent possible.

Cyber Security
internet, the team has implemented some measures
including a system that detects early unauthorizedaccess and a periodic diagnosis of vulnerabilities in theservices.
In addition, we share precautionary information forcustomers on our website, such as methods of illegal
remittance, spoofed emails or false social media posts
impersonating financial institutions, and other frauds.

The Group has been strengthening cyber security
measures to protect customers from damage caused byincreasingly advanced and sophisticated cyber attacks.
Both subsidiary banks have a dedicated teamestablished for taking cyber security measures. The
team collects cyber-related information and regularly
conducts security training. To strengthen security
controls for services provided for customers on the
93

Audit Department

Consult/Report

Joyo Bank

Operational risk management

Regional Revitalization Department

Guide/Manage/Supervise

Board of Directors

Key bodies in compliance<Joyo Bank> Compliance Committee<Ashikaga Bank> Compliance Meeting
Managing section<Joyo Bank> Corporate Risk Management Division<Ashikaga Bank> Compliance Management Division
Supervise

Head Office and branches
Officer and staff in charge of management and compliance

Mebuki Card

Corporate Auditor

Key bodies in compliance
Compliance Committee

Group company management<Joyo Bank> Corporate Planning Division<Ashikaga Bank> Management Planning Division
Supervise

Managing section<Mebuki Lease / Mebuki Credit Guarantee / Mebuki Card> General Affairs Division<Mebuki Securities> Administrative Compliance Division
Supervise

Head Office and business units/branches
Officer and staff in charge of management and complianceGroup companies

The Company has established a management system aimed at group-wide comprehensive management which enables the Group to perform business operations under the appropriate compliance framework. We aim to enhance thecompliance framework by positioning compliance as one of the most material management tasks.

Organization and structure
Compliance Group of the Corporate Management
Department as the managing and supervising section in
charge of group-wide compliance, the designation of theofficer responsible for the Corporate Management
Department, and the assignment of compliance staff ateach management organization within the Group.
Important matters regarding compliance at directlyowned subsidiaries are consulted on and reported to the
Corporate Management Department, which is
responsible for the guidance, management andsupervision thereof, pursuant to the Rules forManagement of Companies within the Group.

We have established the Basic Rules on Group
Compliance as the Group’s highest standards forcompliance, and thereunder, other relevant rules andregulations systematically.
The Compliance Committee established within the
Company is responsible for decisions on compliancerelated important business execution of the Company
and the Group, and for analysis, assessment anddeliberation on matters for improvement relevant togroup-wide compliance.
Furthermore, we put compliance into practice through,among other factors, the establishment of the Legal andCompliance program
The status of the compliance program performed bycompanies within the Group is reported to and validated
by the Compliance Committee quarterly, and is also
subject to the annual overall assessment which isreflected in the next year’s program.

The Group establishes a compliance program as theaction plan to realize compliance. The companies within
the Group establish a program based on the Basic
Policy on Group Compliance Program developed
annually by the Company.

Measures for anti-money laundering, etc.
companies within the Group appoints, among thedirectors, the head AML/CFT officer who is in charge ofrisk management of AML/CFT.
The companies within the Group formulate “AML/CFT
Programs” as an annual plan to enhance the risk
management of AML/CFT, based on the “Group’s Basic
Policy for Anti-Money Laundering” formulated by theCompany for each fiscal year. We verify the effectivenessand status of implementation of the programs toenhance the management system.

The Group acknowledges anti-money laundering andcombating the financing of terrorism (hereinafter “AML/
CFT”) as an important responsibility and one of theimportant management tasks based on calls made by
the international communities. Thus, we formulated the“Anti-Money Laundering and Combating Financing ofTerrorism Policy” to take measures for AML/CFT.
To ensure the effective implementation of AML/CFT forthe companies within the Group, we appoint the director
in charge of Corporate Management Department as theGroup head AML/CFT officer. In addition, each of the94About Mebuki
Financial Group

Governance of Mebuki Financial Group

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Management Base Supporting
Value Creation

Corporate Data

Internal Audit

Severing connections with antisocial forces
The Group has established the basic policy against antisocial forces to stand firmly against and sever any connections with
antisocial forces which threaten the order and safety of civil society and hinder sound economic and social development.
Regarding severing connections with antisocial forces
Mebuki Financial Group, Inc. and its group companies will take the following initiatives to sever all connections with antisocial forces.
1. We will respond to antisocial forces as an organization with a strong recognition of our social responsibility.
2. We will maintain close relationships with the police, the Center for Removal of Criminal Organizations and external expert organizations
including lawyers.
3. We will sever all connections with antisocial forces, including any transactions therewith.
4. We will decisively reject any and all unreasonable demands from antisocial forces and take legal action from both civil and criminal
perspectives.
5. We will never provide any funding or benefits to antisocial forces.

Whistle-blowing system
has been established in the full-time Audit andSupervisory Committee of the Company, Joyo Bank,
and Ashikaga Bank, and an external contact in an
attorney’s office. These contacts are available for the
directors and employees in the Group even after they
resign or retire. For accessibility to these contacts by
eligible users, we will gather opinions from them andstrive to improve the operation of the system.

For compliance-oriented management to be achievedby early detection and correction of violations of laws
and regulations, the Group has established a whistleblowing system that is compliant with the revised
Whistleblower Protection Act. An internal contact officehas been established in the Compliance Management
Division of Joyo Bank and Ashikaga Bank. In addition, awhistle-blowing contact independent of management

Our customer protection management system (Measures for Customer Protection)
for dispute resolution with customers through the
involvement of third parties.
The Company has defined the Declaration on Personal
Information Protection and various regulations withregard to handling of personal information, individual
numbers and specific personal information received from
customers (“Personal Information, etc.”) and thereby
takes proper measures for security control of Personal
Information, etc. The Company, Joyo Bank andAshikaga Bank have also set up customer inquiry
windows for consultation and complaints regarding
Personal Information, etc. in their custody. In addition,
they are members of the All Banks Personal Data
Protection Council, an authorized organization for theprotection of personal information under the Act on theProtection of Personal Information. The Council also
accepts complaints, and provides consultation on thehandling of Personal Information, etc.

Our Group has established the Group Management
Policy for Customer Protection to organize and ensure
the appropriate management system for customer
protection from the perspective of the protection andimprovement of convenience for all existing and future
customers of the Group, as well as for facilitating
finance.
Joyo Bank and Ashikaga Bank have established asupervising section in charge of consultation, complaints
and other communication from customers, and havealso entered into a basic contract for the implementationof dispute resolution procedures with the Japanese
Bankers Association, the designated dispute resolution
organization under the Banking Act, and with the Trust
Companies Association of Japan, the designateddispute resolution organization under the Trust BusinessAct and the Act on Engagement in Trust Business by
Financial Institutions, to utilize the financial ADR system

Status of internal audit
monthly, and to the Board of Directors every threemonths. In order to conduct appropriate audits, theGroup is making efforts to strengthen the cooperation
among the Audit and Supervisory Committee (including
corporate auditors of companies within the Group), theInternal Audit Section of the Company, and theaccounting auditor through close exchanges of views.
The Group strives to further improve its audit methods
by conducting risk-based audits in accordance with theinternational standards of internal audit (of IIA), improving
the expertise of auditors by encouraging them to acquire
an international qualification of internal audit, andundergoing quality assessment of audit by external
institutions.

The Company has established the Audit Department as
the section in charge of internal audits under the Boardof Directors, independent of the business execution andrisk management departments.
The Audit Department supervises internal audit
functions across the Group. In order to ensure theappropriateness of the Group’s business operations andthe health of assets, the Audit Department inspects theappropriateness and effectiveness of the internal audit
system by conducting internal audits on the Group inaccordance with the Internal Audit Rules and theGroup’s Audit Plans defined by the Board of Directors.
The audit results are reported to the Audit andSupervisory Committee and the Representative Director

Status of cooperation among the internal audit section, the Audit and Supervisory
Committee, and the accounting auditor
Cooperation between the internal audit section and
the Audit and Supervisory Committee
Full-time members of the Audit and Supervisory
Committee are expected to exchange opinions with the
Audit Department that functions as the internal audit
section regarding the audit system and policy (internal
audit plan). During the internal audit planning phase, themembers express their views on behalf of the Audit andSupervisory Committee. The audit results, along withmonthly reports from the business execution section, aredirectly reported from the Audit Department to the Audit
and Supervisory Committee. Through this dual reporting
system, the Committee aims to strengthen mutual
cooperation.

Cooperation between the Audit and Supervisory
Committee and the accounting auditor
The Audit and Supervisory Committee receives the audit
plan with explanation about significant matters, given by
the accounting auditor. And also, the full-time membersof the Committee hold opinion exchange sessions(several times a year together with the full-time membersof the Audit and Supervisory Committees of subsidiarybanks) and are reported on the status of audit regularly.
By this, the Audit and Supervisory Committee exercises
effective and efficient audit through a close cooperation
with the accounting auditor.
Furthermore, the Committee discussed the rationalityof debtor classification determination for debtors withsignificant unsecured amounts as a key audit matter(KAM) and received a briefing on the progress of theaudit implementation.

Details of cooperation between the Audit and Supervisory Committee and the accounting auditor
Details of cooperation

Number of sessions held

Overview

Audit briefings(year-end, interim and quarterly review results)

5 times

Explanations of audit status, response to key audit matters,
etc.

Audit plan briefings

2 times

Explanations of audit plan, timeline and compensation
proposalOpinion exchange sessions

6 times(including 2 three-pillar audits)

Sharing of audit activities, exchange of opinions, etc.

Cooperation between the internal audit section andthe accounting auditor
The Audit Department engages in exchanging opinions with theaccounting auditor regarding audit policy (internal audit plan)
and audit system as necessary, for securing the effectiveness ofinternal audit system.

95

96

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Dialogue with Stakeholders
that we believe our Group should fulfill, such as financial
education initiatives, employee volunteer participation incommunity events, and support through donations.

Employees’ efforts to contribute to local communities
We support community activities through volunteer
activities including cleanup in the communities,
participating in events such as sports meets andfestivals, and collecting recyclable resources. In addition,
we have conducted tree-planting and other activities inorder to pass our communities’ beautiful and soundforests on to the next generation. In our commitment toParticipation in community events

protecting and nurturing the greenery, Joyo Bank actively
engages in forest thinning and tree-planting activities inwoodlands called Joyo Furusato no Mori in Naka City
and at Mt. Tsukuba in Ibaraki Prefecture, whereas
Ashikaga Bank focuses on the development of walkways
and the removal of obstructive underbrush in Ashigin
Forest situated in Yaita City, Tochigi Prefecture.

Local volunteer activities

Tree-planting activities

Empowering Local SDG Projects with ESG Funds
Through the Global ESG Balance Fund, an investment
trust handled by Joyo Bank and Ashikaga Bank, part of
the trust fees received by Nomura Asset Management
Co., Ltd., the investment trust management company,

Underbrush clearing

Dedication from the Donation Course of Shareholder
Benefit Program
Funds from the Donation Course of the Shareholder
Benefit Program are dedicated to environmental
protection organizations. The donations support global
environmental conservation activities, greening
promotion in Ibaraki Prefecture, and environmental
conservation projects in Tochigi Prefecture.

Issuance of private placement bonds with donation scheme(Cumulative total: Bank Total)(Billion yen)
Issue amount

1,318

Number of bonds

1,060
813
622
310

113.5

90.4

68.7

478
52.6
40.8

27.6

FY2017

97

Management Base Supporting
Value Creation

Corporate Data

FY2018FY2019FY2020

FY2021

Our Group conducts regular customer surveys toassess customer satisfaction. Additionally, we collectvaluable feedback from customers through phone
calls and customer feedback postcards available atbank counters. Incorporating feedback from ourcustomers, we endeavor to enhance our products,
services, and storefront environment, in order to makeour group more comfortable and convenient for ourcustomers.

<Examples of improvements guided by customer feedback>
To better assist visually impaired customers in recognizing our bank’s cash card, we have introduced Braille letters on the IC-mounted card,
representing the abbreviation “JB” for JOYO BANK. (Joyo Bank)
We have designated priority seats in the lobby to ensure that elderly customers, customers with disabilities, pregnant women, and othersocially vulnerable individuals receive seating preference, especially during crowded lobby conditions (Joyo Bank)Free Wi-Fi has been installed in 70 branches for customer usage. Customers can now utilize their waiting time to set up the Ashigin app.
(Ashikaga Bank)
Considering customer feedback regarding the difficulty in hearing tellers at the counter due to COVID-19 protective measures, such as masks
and acrylic boards, we have implemented a noteworthy change. Instead of a teller’s physical voice, we have adopted a mechanical sound(EQ system) to call out customers once their paperwork is processed. (Ashikaga Bank)[Basic Policy on Customer-Oriented Business Operations]to prioritize the best interests of our customers. We
Our Group has formulated and announced the Basicrelease the status of our Group's achievements in
Policy on Customer-Oriented Business Operations toJune of each year. We monitor the progress ofrealize the Group’s philosophy, “Together with local
initiatives aligned with this policy. Through regularcommunities, we will continue to build a morereviews on the policy, we ensure the realization andprosperous future by providing high-quality,
strengthening of our customer-oriented businesscomprehensive financial services.”
operations.
Each Group company upholds this policy,
dedicating itself to honest and fair business operations

is contributed in the form of a corporate version ofHometown Tax Donations. The donations are utilized tosupport SDGs-related local businesses in Ibaraki
Prefecture and Tochigi Prefecture.

Donation through private placement bonds withdonation scheme
A portion of the commission received when issuing private
placement bonds for customers is used for donating
goods to schools, organizations engaged in SDGs
initiatives, or healthcare institutions of the customer’s
choice, amounting to more than 220 million yen.

Management Strategies
for Value Creation

Dialogue with customers

Dialogue with local communities
As a regional financial institution, we prioritize connectingwith local communities in our business area,
acknowledging the responsibility we have as a company.
We are actively engaged in social contribution activities

Mebuki Financial Group’s
Value Creation

FY2022

Dialogue with employees
Concurrent with the rollout of our Third Medium-Term
Group Business Plan, we conducted meetings,
facilitating open discussions between employees anddirectors to foster a deeper understanding of ourlong-term vision and the Medium-Term Business Plan.
At Joyo Bank, directors personally visited various
locations and engaged in dialogues with a total of over
2,000 employees. During these face-to-faceinteractions, management communicated their goals,
corresponding strategies and perspectives, as well as
their expectations of employees. In return, employees
shared their feedback on the challenges theyencountered on the frontline while pursuing thestrategies, support for our customers, and otherspecific matters. Meanwhile, Ashikaga Bank organized
the “Wing Meeting,” where directors and 10 young
employees engaged in open dialogue, expressing theirviews. Over the course of two years, these meetings
provided opportunities for interactions withapproximately 1,000 employees.
<Improvement examples>
We have established a checklist of documents to besubmitted by customers for the remote acceptanceof application for inheritance procedures. The
checklist not only aids inexperienced staff inremembering to request necessary documents but
also facilitates the seamless transfer of information to
successors in case of personnel changes ortransfers. This, in turn, alleviates the burden on
customers and enhances the business efficiency at
the Bank.

Improvements driven by employee feedback
Our Group is always open to suggestions for
operational improvements and business models fromour employees, including part-timers, responsible for
operations in their respective sections.
By collecting feedback from employees who directlyinteract with customers and engage in practicaloperations, we can identify a wide range of issues andimprovements that might not be apparent to planningstaff at the head office.

98

About Mebuki
Financial Group

Governance of Mebuki Financial Group

Dialogue with shareholders and investors

Dialogue partner

business performance, conditions, strategies, andother pertinent factors to provide shareholders andinvestors with a deeper understanding of theCompany.
Besides conducting face-to-face meetings, we haveintroduced web-based platforms and a hybrid
dialogue format in our efforts to enhance conveniencefor shareholders and investors and to encourage
active participation in dialogue.

Information disclosure to shareholders and investors
As a basic principle, we disseminate information to allshareholders in a fair and equal manner. Upon
approval by the Board of Directors and other bodies,
we promptly present details of our Medium-TermBusiness Plans and financial results on TDnet and theCompany’s website.

Furthermore, we take a proactive approach to
information disclosure through publishing integrated
reports, conducting various briefings, and employing
other means to foster a deeper understanding of ourphilosophy, long-term vision, sustainability initiatives,
business activities and models, among other aspects.

Measures for invigorating general meeting of shareholders and facilitating exercise of voting rights
rights through the internet and cell phones (including
We send out the convocation notice of the ordinary
smartphones), as well as utilizing the electronic voting
general meeting of shareholders that is held in Junerights exercise platform.
every year as early as possible. Additionally, we post
After the conclusion of the meeting, we post a video
the convocation notice (including the English version)of the meeting on our website for shareholders whoon the Tokyo Stock Exchange and the Company’s
could not attend the meeting. We also promptly
websites prior to the mailing of the convocation
announce the notice of resolutions and the results ofnotice.
the voting rights exercise on our website.
Furthermore, we are committed to enhancing theenvironment for shareholders to exercise their voting

Individual investors
Individual
shareholders

Institutional
investors andanalysts in Japan

Foreign investors
and foreign
shareholders

Total

Dialogue meeting

FY2020

FY2021

FY2022360 participants*1

86 participants*1

144 participantsfor one session*2

Large meetings

176 participants
for two sessions

172 participants
for two sessions

232 participants
for two sessions

Small meetings

29 participants
for two sessions

28 participants
for two sessions

39 participants
for two sessions

Theme-based meetings——

21 participantsfor one session

One-on-one meetings

56 companies

52 companies

50 companies

Conferences

1 company
for one session—

5 companies
for one session

4 companies

7 companies

10 companies

Individual investors and shareholders

One-on-one meetings

360 participants

86 participants

144 participantsInstitutional investors andanalysts in Japan

205 participants,
56 companies

200 participants,
52 companies

292 participants,
50 companies

5 companies

7 companies

15 companies*1 Distribution of explanatory video (view count)*2 Online live streaming (participants) + archived video distribution (view count)Primary dialogue themes and details (April 2022 onward)
Main contents

Management
strategies

Aiming for a consolidated fee income ratio of 50% or more as envisioned in the Long-Term Vision 2030
Feasibility of achieving a consolidated net income of 52.0 billion yen or more, a key business objective in the MediumTerm Business Plan
Initiatives for new business areas
Background of the Company’s entry into the renewable energy business and future outlook
Review of branch networks and digitalization of branches

Financial andbusiness results

Factors behind the increase in loan balance for corporate customers and yield changes
Sustainability of loan demand for capital investment
The Bank of Japan’s monetary policy review and the potential impact of higher domestic interest rates
Impact of rising prices and other factors on credit related costs
Growth drivers in service revenues
Status and effectiveness of support for customers’ and suppliers’ digital transformation (DX) and sustainability initiatives
Changes in the number of the banking app users and its effectivenessTarget for reducing strategic shareholdings
Verification of the recording of losses on sale of securities in FY2022
Securities portfolio restructuring
Projections for personnel and other expenses
Levels of earnings estimates for FY2023

Representative Director (President, Executive Vice President)

Corporate value
improvement

Status of CO2 Emission Reduction Initiatives
Human resources management

Representative Director (President, Executive Vice President), Outside Director(Attend meetings according to the theme)

Capital policy andcapital efficiency

Request from Tokyo Stock Exchange, Inc., “Action to Implement Management that is Conscious of Cost of Capital andStock Price”
Approach to policy on dividends and shareholder returns
Capital adequacy ratio levels

Primary participants

Corporate information
Director in charge of Corporate Planningsessions for individual
shareholders and investors
One-on-one meetings

Corporate Data

Corporate information
sessions for individual
shareholders and investors

Foreign investors andshareholders

Primary dialogues and participants (past engagements)

Theme-based meetings

Management Base Supporting
Value Creation

Category

Primary participants in dialogue with shareholders and investors
The IR staff in the Corporate Planning Department
Participants are selected based on the specificserves as the contact point for dialogue with
dialogue theme, to ensure appropriate individuals,
shareholders and investors.
such as Representative Director and Director in
charge of Corporate Planning, participate accordingly.

Small meetings

Management Strategies
for Value Creation

Overview of shareholders and investors in past dialogues

We endeavor to disclose corporate information in atimely and appropriate manner. Our focus extends toensuring highly transparent corporate management
through proactive IR activities and constructive
dialogues with shareholders and investors in Japanand overseas.
Specifically, in addition to disclosing corporate
information in a timely, fair, and accurate manner, ourtop management actively holds briefings on ourLarge meetings

Mebuki Financial Group’s
Value Creation

OthersPossibility of further business integration and other business agreements with neighboring banks

General Manager in charge of Corporate Planning Department, Senior Manager, IR staff* Large meetings: Twice a year (May and November), Small meetings: Twice a year (August and February), One-on-one meetings: Quarterly

Status of feedback to management and the Board of Directors on shareholder and investor opinions andinsights from dialogues
The status of dialogues with investors is regularly
We actively relay the opinions of shareholders andreported to the Management Meeting, the Board ofother stakeholders collected from each dialogue to
Directors, and the Corporate Governance Committee.
directors and executive officers.
Actions taken based on input and subsequent feedback from dialogue
easily understandable business forecasts andDuring dialogues with shareholders and otherbreakdown of securities portfolios in our financial
stakeholders in FY2022, we received requests forresults presentation materials for the three months
detailed information on earnings estimates, securities
ended June 30, 2022 onward.
management and the portfolio. In response, we havemade improvements, including providing a detailed and

99

100

About Mebuki
Financial Group

Group Non-financial Data

Group Non-financial Data

As of End of FY2020

Data on Energy Consumption (Joyo Bank + Ashikaga Bank)FY2021

FY2022

Total oftwo banking
subsidiaries

The JoyoBank, Ltd.

Target: Energy consumption per 1 square meter: Total energy consumption (KL)/Area(square meter)

0.02640.0257

Energy consumption per 1 square meter: Total energy
consumption (KL)/Area (square meter)

0.02690.02610.02800.02670.0266

0.02670.02500.02510.0249

2

2

0

0

0

0

0

0

0

Light Oil (KL)

0

0

0

0

0

0

0

0

0

Heavy Oil (KL)

142

5

137

140

10

130

116

4

112

LPG (t)

43

38

5

27

23

4

35

31

4

City Gas (thousand cubic
meter)

104

71

33

107

74

33

120

89

31

Electric Power (MWh)36,47820,793

15,68534,733

19,97914,75432,00518,446

13,559Steam (Gj)

1,921

1,921

0

2,050

2,050

0

2,074

2,074

0

Hot Water (Gj)

0

0

0

0

0

0

0

0

0

Cold Water (Gj)

0

0

0

0

0

0

0

0

0

358,170

209,700

148,470

343,826

197,700

146,126

338,909

195,012

143,897

9,629

5,475

4,154

9,168

5,260

3,908

8,477

4,893

3,584

Indirect Energy
Consumption

Area (square meter: m2)
Total energy consumption (KL)Total of
The Ashikaga
two banking
Bank, Ltd. subsidiaries

The JoyoBank, Ltd.

0.02660.02580.0272

Total of
The Ashikaga
two banking
Bank, Ltd. subsidiaries

The JoyoBank, Ltd.

The Ashikaga
Bank, Ltd.

0.02640.02630.02650.0277

Corporate Data

The JoyoBank, Ltd.

Number of employees

people

5,965

3,267

2,698

5,832

3,213

2,619

Number of female employees

people

2,759

1,548

1,211

2,716

1,518

(Ratio of female employees)

%

46.3

47.4

44.9

46.6

GHG emission Scope 1 (Direct emission)

t-CO2

2,841

2,805

2,811

GHG emission Scope 2 (Indirect emission)

t-CO2

16,615

15,92012,079GHG emission Scope 3 (Category 1 - 15)

t-CO2

Not measured

3,441

20,519,939

o/w Category 1 (products/services purchased)

t-CO2

Not measured

Not measured

6,267

o/w Category 2 (capital goods)

t-CO2

Not measured

Not measured

8,146

o/w Category 3 (fuels and energy-related activities not included in Scope 1 and 2)

t-CO2

Not measured

Not measured

2,237

o/w Category 4 (transportation, delivery/upstream)

t-CO2

Not measured

Not measured

534

o/w Category 5 (wastes generated through business)

t-CO2

Not measured

Not measured

29

o/w Category 6 (business trip)

t-CO2

Not measured

776

1,128

o/w Category 7 (commuting)t-CO2

Not measured

2,665

3,398

o/w Category 8 (lease assets/upstream)

t-CO2

Not measured

Not measured

0

o/w Category 9 (transportation, delivery/downstream)

t-CO2

Not measured

Not measured

0

o/w Category 10 (processing of products sold)t-CO2

Not measured

Not measured

0

o/w Category 11 (use of products sold)t-CO2

Not measured

Not measured

0

o/w Category 12 (disposal of products sold)t-CO2

Not measured

Not measured

0

o/w Category 13 (lease assets/downstream)

t-CO2

Not measured

Not measured

0

o/w Category 14 (franchise)t-CO2

Not measured

Not measured

0

o/w Category 15 (investment and loan)

20,498,197

t-CO2

Not measured

Not measured

Total GHG emission (Scope 1 and 2)

t-CO2

19,456

18,725

14,890Total GHG emission (Scope 1, 2, and 3)

t-CO2

Not measured

22,166*

20,534,830* For Scope 3, only Category 6 and 7

3,093

2,496

1,198

2,629

1,474

1,155

47.2

45.7

47.0

47.7

46.3

40.6

40.5

40.6

40.4

40.6

40.9

40.0

43.0

43.8

42.2

43.1

43.9

42.2

43.0

44.0

41.8

(Average age of women)

years old

37.5

36.6

38.6

37.5

37.0

38.3

38.0

37.5

38.7

years

17.0

17.3

16.8

17.1

17.4

16.7

17.2

17.7

16.6

(Average service years of men)

years

19.7

20.7

18.7

19.8

20.7

18.7

19.7

20.8

18.3

(Average service years of women)

years

13.9

13.5

14.5

14.0

13.8

14.3

14.5

14.3

14.7

New graduate recruitment

people

234

123

111

238

127

111

178

90

88

o/w Number of womenpeople

139

76

63

145

73

72

88

49

39

(Ratio of women)

%

59.4

61.8

56.8

60.9

57.5

64.9

49.4

54.4

44.3

Mid-career recruitment

people

32

13

19

23

9

14

30

12

18

people

25

8

17

14

6

8

19

9

10

%

78.1

61.5

89.5

60.9

66.7

57.1

63.3

75.0

55.6

19

5

14

10

3

7

10

2

8

8

7

1

6

5

1

5

4

1

2.23

2.30

2.16

2.21

2.14

2.30

2.34

2.40

2.28

214

152

62

211

128

83

286

155

131

Average service years

people%o/w Number of men

people

57

53

4

75

51

24

146

69

77

o/w Number of womenpeople

157

99

58

136

77

59

140

86

54

Childcare leave taking ratio

%

76.7

98.1

50.0

85.4

94.8

74.1

112.6

110.0

115.9

%

46.0

85.5

6.5

64.1

91.1

39.3

130.4

130.2

130.5

(The ratio for men)

%

101.3

106.5

93.5

104.6

97.5

115.7

98.6

97.7

100.0

%

96.0

95.9

96.1

96.6

96.4

96.7

96.7

97.0

96.4

%

97.2

97.5

96.9

97.7

97.7

97.8

97.7

97.8

97.7

%

94.5

93.9

95.1

95.2

94.9

95.5

95.5

96.0

95.0

Number of employees who had health checkups*

people

9,369

5,022

4,347

9,128

4,888

4,240

8,650

4,731

3,919

Rate of employees who had health checkups

%

99.6

99.5

99.6

99.9

99.9

99.8

99.6

99.5

99.8

839

427

412

784

376

408

754

414

340

8.9

8.5

9.4

8.6

7.7

9.6

8.7

8.7

8.7

(The ratio for women)
Retention rate*1(Retention rate for men)
(Retention rate for women)
2

Number of employees subject to specific health guidance people
Rate of employees subject to specific health guidance%*1 Retention Rate: (No. of employees at the beginning of fiscal year [Apr. 1] - No. of voluntary retired employees during fiscal year)/No. of employees as of Apr. 1
The number of voluntary retired employees is the number of retired employees during a fiscal year from which retirement due to involuntary reasons such as mandatory
retirement is excluded.
*2 Number of employees who had health checkups: including people who had a complete medical checkup

Governance
Items
Number of directors
o/w Number of outside directors
Number of female directors
Female ratio in the Board of Directors

101

5,589

40.4

Number of employees who took childcare leave people

FY2022The Ashikaga
Bank, Ltd.

40.5

Employment rate for persons with disabilities

Diversity

FY2021The JoyoBank, Ltd.

years old

o/w Employees promoted from part-timer people

Engagement

FY2020

The JoyoBank, Ltd.

years old

(Ratio of women)

Health and Safety

Unit

Total of
The Ashikaga two banking
Bank, Ltd. subsidiaries(Average age of men)

Number of foreign employees

Items

Total of
The Ashikaga two banking
Bank, Ltd. subsidiaries

As of End of FY2022

Total oftwo banking
subsidiaries

o/w Number of women

Greenhouse Gas (GHG) Emission (from the entire Group, but for Scope 3, total of two banking subsidiaries)

As of End of FY2021

Unit

Average age

Basic Information

FY2020

Direct Energy
Consumption

Management Base Supporting
Value Creation

Index

Category

Kerosene (KL)Management Strategies
for Value Creation

Social (Human Capital)

Environment

Items (unit)

Mebuki Financial Group’s
Value Creation

Unit

FY2020

FY2021

FY2022

people121212people555people

1

1

1

%

8.3

8.3

8.3

102

About Mebuki
Financial Group

Corporate Data

Group Structure and Corporate Data

Mebuki Financial Group’s
Value Creation

Management Strategies
for Value Creation

Overseas Representative Offices

Management Base Supporting
Value Creation

Corporate Data(as of March 31, 2023)

Mebuki Financial Group is committed to financial services-related businesses, including leases, securities, credit
guarantees, and credit cards. The businesses are conducted primarily by The Joyo Bank, Ltd. and The Ashikaga Bank,
Ltd., which are engaged in the banking business.
Making full use of a variety of expertise in our group, we provide comprehensive, quality financial services.

Shanghai Representative Office,Joyo Bank
Address(as of March 31,2023)

Phone

New York Representative Office,Joyo Bank

Room 1901, Shanghai International Trade
Centre, 2201 Yan An Road (West),
Shanghai 200336
P. R. China+86-21-6209-0258

AddressPhone

712 Fifth Avenue, 8th Floor
New York, NY 10019
U. S. A.
+1-347-686-8420

Mebuki Financial Group, Inc.
Address
Head Office address

2-1-1, Nihonbashi Muromachi, Chuo-ku, Tokyo(Mito Head Office) 5-5, Minami-machi 2-chome, Mito, Ibaraki Prefecture(Utsunomiya Head Office) 1-25, Sakura 4-chome, Utsunomiya, Tochigi
Prefecture
Paid in capital
117.4 billion yen
Establishment
April 1, 2008 (Change of tradename: October 1, 2016)
Stock exchange listing Tokyo Stock Exchange
Credit ratings
A (R&I)

Hanoi Representative Office,Joyo Bank
FoundedJuly 30, 1935

Founded

October 1, 1895

Head Office5-5, Minami-machi 2-chome, Mito, Ibaraki Prefecture

Head Office

1-25, Sakura 4-chome, Utsunomiya, Tochigi Prefecture

Paid in capital

85.1 billion yen

Paid in capital

135 billion yen

Network

Domestic: 184 offices (153 branches, 31 sub-branches)
Overseas: 4 Representative Offices(Shanghai, Singapore, New York, Hanoi)

Network

Domestic: 134 offices (107 branches, 27 sub-branches)
Overseas: 2 Representative Offices (Hong Kong, Bangkok)

Credit ratings

A+ (R&I)

September 25, 1974

FoundedNovember 30, 2007

4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture

Head Office

4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture

Paid in capital

100 million yen

Paid in capital

3 billion yen

Network

11 offices (Head Office, 10 branches)

Network

8 offices (Head Office, 3 branches, 4 resident offices)

A+ (R&I)
A3 (Moody’s)

FoundedHead Office

Phone

Number of employees* 2,497

Number of employees* 3,089
Credit ratings

Address

Number of employees 62

Number of employees 70

December 21, 1978

FoundedAugust 30, 1982

Head Office

1-25, Sakura 4-chome, Utsunomiya, Tochigi Prefecture

Head Office

4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture

Paid in capital

50 million yen

Paid in capital

100 million yen

Network

Network

2 offices (Head Office and Mito Office)Number of employees 20

2 offices (Head Office, 1 branch)

5th Floor, Sun Red River,
23 Phan Chu Trinh Street,
Hoan Kiem District,Hanoi Vietnam+84-24-3218-1668

Address

Phone

Bangkok Representative Office,Ashikaga Bank
Address

FoundedRepresentative Office Registeredin Singapore, Joyo Bank

Phone

Hong Kong Representative Office,Ashikaga Bank

689, Bhiraj Tower at EmQuartier, 27th Floor,
Room No.2714, Sukhumvit Road,
Klongton-nue, Wattana,
Bangkok 10110 Thailand+66-2-261-2852

Address

Phone

Number of employees 43

Other businesses 10 consolidated subsidiaries (Research, consulting, investment, real estate leasing, renewable energy-related, and regional trading, etc.)*Number of employees excludes employees seconded.

103

10 Collyer Quay, #09-07A,
Ocean Financial Centre,
Singapore, 049315+65-6225-6543

104

Suite 1601, 16th Floor, Tower2,
The Gateway, Harbour City, Kowloon,
Hong Kong+852-2251-9475

Financial Data

Corporate Data

Consolidated Balance Sheet
March 31, 2023

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Organization (as of March 31, 2023)

Millions of Yen
2023
2022

General Meeting of Shareholders
Accounting Auditors
Corporate GovernanceCommittee

Compliance Committee

Cooperate
Consult/
ReportBoard of Directors
Audit and Supervisory Committee

Audit and Supervisory Committee Office

Management Meeting ALM/Risk Management Committee Sustainability Committee
Group Strategy Committee(Business plan)(Audit)Audit Department
Oversight GroupOperational Audit Group(Corporate management) (Business management)(System management)(Regional revitalization)

Corporate Management
Department

Business Management
Department

System Management
Department

Regional Revitalization
Department

Management GroupManagement Group

Corporate Planning
Department
Planning GroupDX Management Group
Sustainability Management GroupAccounting Group
Executive Secretariat GroupTokyo OfficePublic Relations Office

Risk Management Group
Compliance and Legal Group
Personnel Group
General Affairs Group
Basel Unit

Regional Revitalization Group

Stock Information (as of March 31, 2023)
Capital and number of issued shares
Common stock

117,495,550,000 yen

Number of issued stock

1,089,055,218 sharesof which, common stock

1,089,055,218 shares

Major shareholders
Mebuki Financial GroupName

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
STATE STREET BANK AND TRUST COMPANY 505223
Nomura Securities Co., Ltd.
Nippon Life Insurance Company
Sompo Japan Insurance Inc.
Sumitomo Life Insurance Company
JP MORGAN CHASE BANK 380055
THE BANK OF NEW YORK MELLON 140044
Meiji Yasuda Life Insurance Company
Total

Joyo Bank
Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

144,051
70,702
37,69228,60827,59022,66021,65918,42016,955
15,864404,204

Name

Mebuki Financial Group, Inc.

13.53
6.64
3.54
2.68
2.59
2.12
2.03
1.73
1.59
1.49
37.97

Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

722,910100.00Ashikaga Bank
Name

Mebuki Financial Group, Inc.

Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

1,340,520

100.00ASSETSCash and due from banks (Note 3) ........................................................................... ¥ 4,818,749
Call loans and bills bought ......................................................................................
24,115
Monetary claims bought .........................................................................................
10,341
Trading assets (Note 4) ...........................................................................................
3,962
Money held in trust (Note 5) ....................................................................................
3,010
Securities (Notes 4, 10, 11, and 22) ........................................................................
3,662,309
Loans and bills discounted (Notes 7, 11, 22, and 26) ............................................... 12,436,196
Foreign exchanges (Note 7) .....................................................................................
17,216
Lease receivables and investments in lease (Note 21) ...............................................
60,454
Other assets (Notes 11 and 23) ...............................................................................
247,636
Tangible fixed assets (Note 8) ..................................................................................
101,567
Intangible fixed assets (Note 9) ................................................................................
13,523
Asset for retirement benefits (Note 13) .....................................................................
40,791
Deferred tax assets (Note 20) ..................................................................................
20,027
Customers’ liabilities for acceptances and guarantees (Note 10) ................................
19,448
Allowance for loan losses ........................................................................................
(91,859)
Allowance for investment losses ..............................................................................
(8)
TOTAL .............................................................................................................. ¥21,387,481¥ 7,270,668
6,507
10,6114,589
2,027
4,682,301
11,737,377
17,22065,325
243,257
102,802
15,89632,462
2,237
26,044(93,800)(8)¥24,125,520$ 36,141,524
180,870
77,562
29,716
22,58027,468,011
93,273,807
129,123
453,4211,857,318
761,773
101,427
305,943
150,212145,865(688,961)(66)$160,410,125

LIABILITIES AND EQUITY
LIABILITIES:
Deposits (Notes 11 and 22) ..................................................................................... ¥17,137,285
Negotiable certificates of deposit (Note 22)...............................................................
371,289
Call money and bills sold ........................................................................................
555,552
Payables under repurchase agreements (Note 11) ....................................................
112,902
Payables under securities lending transactions (Note 11) ..........................................
111,887
Trading liabilities.....................................................................................................
1,122
Borrowed money (Notes 11, 12, and 22) ..................................................................
2,000,858
Foreign exchanges..................................................................................................
8,350
Due to trust account ...............................................................................................
2,983
Other liabilities .......................................................................................................
147,695
Provision for bonuses for directors ...........................................................................
183
Liability for retirement benefits (Note 13) ..................................................................
—
Provision for retirement benefits for directors............................................................
29
Provision for reimbursement of deposits ...................................................................
1,954
Provision for contingent losses ................................................................................
2,103
Provision for point card certificates ..........................................................................
564
Provision for losses on interest repayments ..............................................................
4
Reserves under special laws....................................................................................
2
Deferred tax liabilities (Note 20) ...............................................................................
0
Deferred tax liabilities for land revaluation (Note 8) ....................................................
7,929
Negative goodwill....................................................................................................
553
Acceptances and guarantees (Note 10) ....................................................................
19,448
Total liabilities ................................................................................................... 20,482,702¥16,825,736
310,724
1,044,954
148,165
826,826343
3,795,700
4,390
3,046
154,855
281
324
24
2,183
2,349
508
8
2
11,3397,936
711
26,044
23,166,457$128,532,855
2,784,739
4,166,749
846,787
839,174
8,421
15,006,817
62,632
22,3791,107,746
1,379
—
222
14,656
15,776
4,237
34
19
2
59,4694,148
145,865
153,624,107

117,495
125,692130
602,694(2,357)881,239
942,813467
4,671,459(53,864)

91,5506,734
11,944
5,177
115,407—959,063¥24,125,520

140,198
55,767
90,66857,035
343,668236
6,786,017$160,410,125

EQUITY (Notes 14 and 15):
Common stock .......................................................................................................
117,495
Capital surplus .......................................................................................................
125,705
Stock acquisition rights ...........................................................................................
62
Retained earnings ...................................................................................................
622,845
Treasury stock ........................................................................................................
(7,181)
Accumulated other comprehensive income:..............................................................
Unrealized gains on available-for-sale securities (Note 6) .....................................
18,692
Deferred gains on derivatives under hedge accounting (Note 23) ..........................
7,435
Land revaluation surplus (Note 8) .......................................................................
12,088
Defined retirement benefit plans (Note 13) ..........................................................
7,604
Total accumulated other comprehensive income ............................................
45,821
Non-controlling interests .........................................................................................
31
Total equity.............................................................................................
904,779
TOTAL......................................................................................................................... ¥21,387,481
See notes to consolidated financial statements.

105

Thousands of
U.S. Dollars(Note 1)2023

106

Consolidated Statement of Income
Year Ended March 31, 2023

Consolidated Statement of Changes in Equity

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Year Ended March 31, 2023

Millions of Yen
2023
2022

INCOME:Interest income:Interest on loans and discounts ��������������������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust fees���������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Trading income ������������������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income (Note 17) �������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowing and rediscounts ����������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating expenses����������������������������������������������������������������������������������������
General and administrative expenses (Note 18)���������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses (Note 19) ����������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ���������������������������������������������������������������������������������
INCOME TAXES (Note 20):���������������������������������������������������������������������������������������������
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS ��������������������������������������NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT �������������������������������������������

Thousands of
U.S. Dollars(Note 1)
2023

¥110,018
55,491
397
4,817
399
27
56,943
1,890
16,456
83,256329,698¥106,411
44,994
8
6,634
412
45
54,4984,532
3,190
47,623
268,351$ 825,162
416,196
2,982
36,1302,993
204
427,086
14,182
123,426
624,4422,472,802

2,524
13
1,883
3,591
3,361
1,601
9,233
14,266
91,616
107,016
8,045
40,587283,743
45,955

772
15
(192)
(80)
488
173
2,235
14,235
8,517
114,624
18,61948,189207,597
60,754

18,93399
14,13026,94025,21512,011
69,254
107,005
687,142
802,646
60,341
304,4122,128,129
344,673

12,421
1,357
13,77932,176(0)¥ 32,176

21,581(3,786)
17,79542,958—¥ 42,958
Yen

PER SHARE OF COMMON STOCK (Note 16):
Basic EPS���������������������������������������������������������������������������������������������������������������
Diluted EPS ������������������������������������������������������������������������������������������������������������Cash dividends applicable to the year (Note 14) ��������������������������������������������������������

¥29.9029.89
11.00

93,161
10,185
103,346
241,326(4)$ 241,330

$0.22
0.22
0.08

¥38�9638�95
11�00

Consolidated Statement of Comprehensive Income
Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Millions of Yen
2023
2022

NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) (Note 24):
Unrealized losses on available-for-sale securities �����������������������������������������������������
Deferred gains on derivatives under hedge accounting ����������������������������������������������
Defined retirement benefit plans ����������������������������������������������������������������������������
Total other comprehensive loss �������������������������������������������������������������������������������COMPREHENSIVE LOSS �����������������������������������������������������������������������������������������������
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:
Owners of the parent ����������������������������������������������������������������������������������������������
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:
Non-controlling interests �����������������������������������������������������������������������������������������

Thousands of
U.S. Dollars(Note 1)2023

¥ 32,176¥ 42,958$ 241,326(72,857)
700
2,426(69,730)¥(37,554)(56,463)
6,346
(444)
(50,561)¥ (7,603)(546,447)
5,254
18,200(522,992)$(281,666)¥(37,553)¥ (7,603)$(281,662)¥(0)Millions of Yen

BALANCE, APRIL 1, 2021�������������������������
Cumulative effects of changes inaccounting policies ��������������������������
Restated balance �������������������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Retirement of treasury stock����������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2022 ��������������������

CommonStock(Note 14)

CapitalSurplus¥117,495¥148,531

117,495

148,531

Stock
Acquisition
Rights—$Treasury
Stock

¥161

¥570,981¥ (5,785)¥148,013¥ 388¥13,497

161(366)
570,614(12,431)(5,785)148,013388

13,497

Total

Total
Equity¥5,622¥167,522¥998,906

5,622

167,522(366)
998,539(12,431)42,95842,958(19,520)110(19,520)121
22,828(10)(22,828)
1,553—¥117,495(22,838)¥125,692

(31)
(31)
¥130

32,079¥602,694

3,428¥ (2,357)(56,463)(56,463)¥ 91,550

6,346
6,346
¥6,734(1,553)(1,553)¥11,944

(444)
(444)
¥5,177(52,114)(52,114)¥115,407

1,553(52,145)(39,476)¥959,063

Total

Noncontrollinginterests

Total
EquityMillions of Yen

BALANCE, APRIL 1, 2022�������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2023 ��������������������

CommonStock(Note 14)

CapitalSurplus¥117,495¥125,692

Stock
Acquisition
Rights¥130

Retained
Earnings¥602,694(11,881)

TreasuryStock¥(2,357)

Accumulated Other Comprehensive Income
Deferred
Unrealized
Gains onGains onDefinedLand
Available-for- Derivatives
under Hedge Revaluation Retirement
Sale
Benefit Plans
SurplusSecurities Accounting¥ 91,550¥6,734¥11,944¥5,177¥115,407¥—

32,176(5,000)
176

13
(144)
—
¥117,495

13¥125,705

(68)
(68)
¥ 62

20,151¥622,845(4,824)¥(7,181)(72,857)(72,857)¥ 18,692700
700¥7,435144
144¥12,088

2,426
2,426
¥7,604(69,586)(69,586)¥ 45,821

31
31
¥31

¥959,063(11,881)
32,176(5,000)189(144)(69,623)(54,283)¥904,779

Thousands of U.S. Dollar

BALANCE, APRIL 1, 2022�������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2023 ��������������������

CommonStock(Note 14)

CapitalSurplus$881,239$942,715

Stock
Acquisition
RightsRetained
Earnings$ 981 $4,520,320(89,111)

TreasuryStock

Accumulated Other Comprehensive Income
Deferred
Unrealized
Gains onGains onDefinedLand
Available-for- Derivatives
under Hedge Revaluation Retirement
Sale
Benefit Plans
SurplusSecurities Accounting$(17,680) $ 686,645$50,513$89,586$38,835

Total$ 865,579

241,330(37,507)
1,323

99

—
$881,239

99$942,813(1,081)(514)(514)
151,138$ 467 $4,671,459(546,447)(36,184) (546,447)$(53,864) $ 140,198

See notes to consolidated financial statements�

(4)

See notes to consolidated financial statements�

107

Accumulated Other Comprehensive Income
Unrealized Deferred Gains
DefinedLand
Gains on on Derivatives
Available-for- under Hedge Revaluation Retirement
Benefit Plans
SurplusSale Securities Accounting

Retained
Earnings

U.S. Dollars

See notes to consolidated financial statements�

Year Ended March 31, 2023

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

108

5,254
5,254
$55,767

1,081
1,081
$90,668

18,20018,200$57,035(521,911)(521,911)$ 343,668

Noncontrollinginterests

Total
Equity$ — $7,193,154(89,111)
241,330(37,507)
1,421(1,081)
236(522,189)
236(407,137)$236 $6,786,017

Consolidated Statement of Cash Flows
Year Ended March 31, 2023

Notes to Consolidated Financial Statements

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

OPERATING ACTIVITIES:
Income before income taxes ������������������������������������������������������������������������������������������������
Adjustments for:
Income taxes paid �������������������������������������������������������������������������������������������������������
Depreciation and amortization �����������������������������������������������������������������������������������������
Impairment loss ����������������������������������������������������������������������������������������������������������
Amortization of negative goodwill �������������������������������������������������������������������������������������
Increase (decrease) in allowance for loan losses �������������������������������������������������������������������
Decrease in allowance for investment loss ��������������������������������������������������������������������������
Increase (decrease) in provision for bonuses for directors ��������������������������������������������������������
Increase in asset for retirement benefits�����������������������������������������������������������������������������
Decrease in liability for retirement benefits��������������������������������������������������������������������������
Increase (decrease) in provision for retirement benefits for directors �������������������������������������������
Decrease in provision for reimbursement of deposits �������������������������������������������������������������
Increase (decrease) in provision for contingent losses ������������������������������������������������������������
Increase in provision for point card certificates ���������������������������������������������������������������������
Decrease in provision for interest repayments ����������������������������������������������������������������������
Gains on fund management �������������������������������������������������������������������������������������������
Financing expenses �����������������������������������������������������������������������������������������������������
Losses related to securities ��������������������������������������������������������������������������������������������
Losses (gains) on money held in trust��������������������������������������������������������������������������������
Foreign exchange gains ������������������������������������������������������������������������������������������������
Losses on disposal of fixed assets ������������������������������������������������������������������������������������
Net decrease in trading assets ����������������������������������������������������������������������������������������
Net increase (decrease) in trading liabilities�������������������������������������������������������������������������
Net increase in loans and bills discounted ��������������������������������������������������������������������������
Net increase in deposits ������������������������������������������������������������������������������������������������
Net increase in negotiable certificates of deposit ������������������������������������������������������������������
Net increase (decrease) in borrowed money (excluding subordinated borrowings) ���������������������������
Net increase in due from banks (excluding cash equivalents)����������������������������������������������������
Net decrease (increase) in call loans ���������������������������������������������������������������������������������
Net increase (decrease) in call money �������������������������������������������������������������������������������
Net increase (decrease) in payables under securities lending transactions ������������������������������������
Net decrease (increase) in foreign exchanges - assets �����������������������������������������������������������
Net increase in foreign exchanges - liabilities ����������������������������������������������������������������������
Net decrease in lease receivables and investments in lease �����������������������������������������������������
Net increase (decrease) in due to trust account ��������������������������������������������������������������������
Proceeds from fund management ������������������������������������������������������������������������������������
Payments for finance ���������������������������������������������������������������������������������������������������
Other-net������������������������������������������������������������������������������������������������������������������
Total adjustments��������������������������������������������������������������������������������������������������������
Net cash provided by (used in) operating activities ����������������������������������������������������������������������INVESTING ACTIVITIES:
Purchases of securities �������������������������������������������������������������������������������������������������
Proceeds from sales of securities�������������������������������������������������������������������������������������
Proceeds from redemption of securities �����������������������������������������������������������������������������
Increase in money held in trust����������������������������������������������������������������������������������������
Purchases of tangible fixed assets������������������������������������������������������������������������������������
Proceeds from sales of tangible fixed assets �����������������������������������������������������������������������
Purchases of intangible fixed assets ���������������������������������������������������������������������������������
Other-net������������������������������������������������������������������������������������������������������������������
Net cash provided by (used in) investing activities �����������������������������������������������������������������
FINANCING ACTIVITIES:
Purchase of treasury stocks �������������������������������������������������������������������������������������������
Proceeds from sales of treasury stocks ������������������������������������������������������������������������������Cash dividends paid �����������������������������������������������������������������������������������������������������
Payments from non-controlling shareholders ������������������������������������������������������������������������
Net cash used in financing activities ���������������������������������������������������������������������������������
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS �������������������������������������NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS �����������������������������������������������������
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ����������������������������������������������������������������
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 3) ��������������������������������������������������������������
NONCASH INVESTING AND FINANCING ACTIVITIES:
Not applicable�

¥Year Ended March 31, 2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)
2023

45,955$¥60,754

344,673(16,709)
9,113
438
(158)
(1,941)—(97)(4,245)
(361)
5
(229)
(245)
56
(3)
(171,124)
22,21045,44618(63,146)
237
627
779
(698,819)
311,549
60,564(1,794,841)(10,399)(17,338)(524,665)(714,939)
4
3,960
4,870
(63)
172,506(20,090)(7,023)(3,414,052)¥(3,368,097)(19,893)
9,531
3,814
(158)
11,807(0)
25(1,082)(2,916)
(0)
(276)
354
41
(2)
(158,462)
3,412
10,122(57)(81,124)
423
7,836
(681)
(99,000)
602,083
19,306401,650(3,349)1,340
109,947
206,076(7,626)
3,484
1,827
739
159,240(3,551)(3,498)1,171,384¥1,232,138(125,328)
68,3503,290(1,185)(14,563)—(729)(31,839)(2,714)40(1,721)(1,845)422(30)(1,283,462)
166,582
340,854140(473,610)
1,785
4,706
5,848
(5,241,277)
2,336,678
454,247(13,461,647)(77,996)(130,039)(3,935,086)(5,362,177)
36
29,70536,531(473)
1,293,831(150,681)(52,678)(25,606,033)$(25,261,361)¥ (785,895)
1,323,150
392,058(1,002)(3,640)426(2,363)(303)
922,430¥(1,136,395)
444,060
340,041—(3,824)672(2,900)(162)(358,507)$ (5,894,363)
9,923,877
2,940,515(7,515)(27,305)
3,197(17,728)(2,276)
6,918,402(5,000)180(11,881)32(16,669)
16(2,462,319)
7,264,647¥ 4,802,328(19,520)105(12,431)—(31,846)(220)
841,563
6,423,084¥ 7,264,647(37,507)
1,355(89,111)240(125,023)
125(18,467,857)
54,486,222$ 36,018,365

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

All significant intercompany balances and transactions have been eliminatedon consolidation� All material unrealized profit included in assets resulting fromtransactions within the Group is also eliminated�
Negative goodwill represents the difference between the cost of an
acquisition and the fair value of the net assets of the acquired subsidiary at thedate of acquisition� Negative goodwill incurred before March 31, 2010, isamortized using the straight-line method over 20 years�

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of Mebuki Financial Group,
Inc� (the “Company”) and its consolidated subsidiaries (together, the “Group”)
have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related accounting regulations, inaccordance with the Enforcement Regulation for the Banking Act, and inaccordance with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards�
In preparing these consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements
issued domestically in order to present them in a form which is more familiar toreaders outside Japan� In addition, certain reclassifications have been made in
the 2022 consolidated financial statements to conform to the classifications usedin 2023�
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which the Company is incorporated and operates� The
translations of Japanese yen amounts into U�S� dollar amounts are included
solely for the convenience of readers outside Japan and have been made at therate of ¥133�33 to $1, the approximate rate of exchange at March 31, 2023�
Such translations should not be construed as representations that the Japanese
yen amounts could be converted into U�S� dollars at that or any other rate�

b. Business Combinations — Business combinations are accounted for using
the purchase method� Acquisition-related costs, such as advisory fees orprofessional fees, are accounted for as expenses in the periods in which thecosts are incurred� If the initial accounting for a business combination isincomplete by the end of the reporting period in which the business combination
occurs, an acquirer shall report in its financial statements provisional amounts forthe items for which the accounting is incomplete� During the measurement
period, which shall not exceed one year from the acquisition, the acquirer shallretrospectively adjust the provisional amounts recognized at the acquisition date
to reflect new information obtained about facts and circumstances that existed
as of the acquisition date and that would have affected the measurement of theamounts recognized as of that date� Such adjustments shall be recognized as if
the accounting for the business combination had been completed at theacquisition date� The acquirer recognizes any bargain purchase gain in profit orloss immediately on the acquisition date after reassessing and confirming that allof the assets acquired and all of the liabilities assumed have been identified after
a review of the procedures used in the purchase price allocation� A parent’s
ownership interest in a subsidiary might change if the parent purchases or sells
ownership interests in its subsidiary� The carrying amount of noncontrollinginterest is adjusted to reflect the change in the parent’s ownership interest in its
subsidiary while the parent retains its controlling interest in its subsidiary� Any
difference between the fair value of the consideration received or paid and theamount by which the noncontrolling interest is adjusted is accounted for as
capital surplus as long as the parent retains control over its subsidiary�

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidatio — The consolidated financial statements as of March 31, 2023,
include the accounts of the Company and its 16 significant subsidiaries�
Joyo Green Energy Co�, Ltd� was included in the scope of consolidation
since The Joyo Capital Partners Co�, Ltd (wholly owned subsidiaries of The Joyo
Bank,Ltd�) established the wholly owned subsidiary on July 28, 2022�
Colletochi, Ltd� was included in the scope of consolidation since The
Ashikaga Bank, Ltd� established on August 2, 2022 through joint investment bycompanies in the Tochigi prefecture�
Under the control and influence concepts, those companies in which theCompany, directly or indirectly, is able to exercise control over operations are
fully consolidated�All consolidated subsidiaries have a fiscal year ending on March 31, whichis the same as the fiscal year of the Company�
The consolidated financial statements as of March 31, 2023, do not include
the accounts of 10 subsidiaries because the total assets, total income, net
income, retained earnings, and accumulated other comprehensive income ofthose entities would not have had a material effect on the consolidated financial
statements�
The following Four companies are not treated as a subsidiary even though
the Group owns more than 50% of its voting rights because the Company’s
unconsolidated subsidiary in the investment business held its shares for the
purpose of growing the investee’s business and not for the purpose of controllingthe entity�
Ibaraki Soko Co�,Ltd�
Hitachiya Honpo Co�, Ltd�
Kamejirushi Seika Co�,Ltd�
Miraie HD�,Ltd
The consolidated financial statements as of March 31, 2023, do not apply
to the equity method of accounting of 10 unconsolidated subsidiaries and 4
associated companies because the net income, retained earnings, andaccumulated other comprehensive income of those entities would not have had amaterial effect on the consolidated financial statements�
KIUCHI BREWERY 1823 Inc� is not treated as an associated company eventhough the Group owns 20% or more and less than 50% of its voting rights
because the Company’s unconsolidated subsidiary in the investment businessheld its shares for the purpose of growing the investee’s business, and not forthe purpose of controlling the entity�

c. Trading Assets and Trading Liabilities — Transactions for “trading
purposes” (seeking to capture gains arising from short-term changes in interest
rates, currency exchange rates, market prices of securities, and other marketrelated indices or from arbitrage between markets) are valued at market or fairvalue and have been included in trading assets and trading liabilities on a tradedate basis� Gains or losses on such trading transactions are reflected as trading
income or trading expenses in the consolidated statement of income�Among the trading assets and liabilities, securities and monetary claims arecarried at market value as of the consolidated balance sheet date� Derivatives,
including swaps, futures, and options, are valued assuming settlement on the
consolidated balance sheet date�Trading income or trading expenses include interest received or paid during
the fiscal year� The year-on-year valuation differences of securities and monetaryclaims are also recorded in the above-mentioned accounts� As for the derivatives,
assuming that the settlement will be made in cash, the year-on-year valuationdifferences are also recorded in the above-mentioned accounts�
d. Securities — Securities are classified and accounted for, depending on
management’s intent, as follows:(1) Held-to-maturity debt securities, which are expected to be held to maturity
with the positive intent and ability to hold to maturity, are stated at amortizedcost using the straight-line method�
(2) Investments in unconsolidated subsidiaries that are not accounted for by theequity method are stated at cost determined by the moving-average method�
(3) Available-for-sale securities are stated at fair value with unrealized gains
and losses, net of applicable taxes, reported in a separate component ofequity� Securities without readily available market prices are stated at cost
determined by the moving-average cost method�For other-than-temporary declines in fair value, securities are reduced to
net realizable value by a charge to income�See notes to consolidated financial statements�

109

110

e. Tangible Fixed Assets — Tangible fixed assets (except for leased assets) arestated at cost, less accumulated depreciation� Depreciation of tangible fixed
assets owned by the consolidated banking subsidiaries is computed by thestraight-line method�The range of useful lives is from 3 to 50 years for buildings and from 3 to
20 years for other tangible fixed assets�
Depreciation of tangible fixed assets owned by other subsidiaries is mainlycomputed by the declining-balance method in estimated useful lives�
Depreciation of leased assets from finance lease transactions that do notdeem to transfer ownership of the leased property to the lessee is computed using
the straight-line method over the respective lease periods� The residual value ofleased assets is determined using the guaranteed residual value indicated on thelease contracts where provided; otherwise, they have a nil residual value�f. Intangible Fixed Assets — Amortization of intangible fixed assets iscomputed by the straight-line method� The cost of computer software obtainedfor internal use is amortized principally using the straight-line method over theestimated useful lives of mainly five years�
g. Long-Lived Assets — The Group reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate the carrying amount of anasset or asset group may not be recoverable� An impairment loss is recognized if
the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group� The impairment loss would bemeasured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at
disposition�

For other claims, an allowance is provided, mainly based on expected loan
losses for the next three years for claims requiring special caution (“requiring
monitoring”) in whole or in part among claims against borrowers requiringcaution in future management, such as borrowers with unreasonable loan terms,
borrowers with questionable performance, borrowers with weak or unstablebusiness conditions, or borrowers with unfavorable financial conditions(“requiring caution”), and expected loan losses for the next one year for claims
against borrowers other than requiring monitoring and claims against borrowers
with good business conditions and no particular financial problems (“normal”)�
Expected loan losses are computed using the average historical loan loss ratio of
the past one year to three years� Where necessary, the expected loan losses are
modified for possible future scenarios�For collateralized or guaranteed claims of borrowers who are in “virtual
bankruptcy” or “legal bankruptcy,” the amount exceeding the estimated value ofcollateral or guarantees has been deducted as deemed uncollectible directly fromthose claims� As of March 31, 2023 and 2022, the deducted amounts were¥22,723 million ($170,434 thousand) and ¥23,953 million, respectively�
Other consolidated subsidiaries determine allowances for loan losses thatare provided for general claims at an amount based on the actual historical rateof loan losses and for specific claims (from potentially bankrupt customers andother) at an estimate of the amounts deemed uncollectible based on therespective assessments�

p. Provision for Losses on Interest Repayments — Certain consolidated
subsidiaries provide a provision for losses on interest repayments in an amountdeemed necessary based on estimated amounts to be repaid, taking into accounthistorical records of interest repayments on the portion of loans whose interest
rates exceeded the maximum interest rate stipulated by the Interest Limitation
Law�

i. Allowance for Investment Losses — Allowance for investment losses isprovided at the amount deemed necessary to cover estimated possible losses oncertain type of nonmarketable investments�

t. Leases — As a lessor, finance leases that are not deemed to transfer
ownership of the leased property to the lessee are recognized as investments inleases�
Income and expenses are recognized when lease receivables are collected
for finance lease transactions that do not transfer ownership of the property�
As for finance lease transactions that do not transfer ownership of theleased property and which commenced prior to April 1, 2008, in line with thestipulations of Item 81 of the Guidance on Accounting Standard for Lease
Transactions (Accounting Standards Board of Japan(ASBJ) Guidance No� 16,
March 25, 2011), book value (after deduction of accumulated depreciation) of
lease assets included in tangible fixed assets and intangible assets as of theprevious consolidated balance sheet date (March 31, 2008) was recorded as theinitial balance of “Lease receivables and investments in lease�”j. Provision for Bonuses for Directors — Provision for bonuses for directors(including executive officers) is provided in the amount of the estimated bonuses
that are attributable to each fiscal year�

h. Allowance for Loan Losses — The consolidated banking subsidiaries haveprovided an allowance for loan losses, which is determined based on
management’s judgment and assessment of future losses based on the writeoffs and provisions standards� These systems reflect the past experience ofcredit losses; possible credit losses; business and economic conditions; thecharacter, quality, and performance of the portfolio; the value of collateral or
guarantees; and other pertinent indicators�
The quality of all loans performed by the business offices is reviewed by thecredit-related divisions in the headquarters and then independently examined by
the internal audit division based on the self-assessment of asset quality
standards�
The classification of borrowers (six categories: normal borrowers; borrowers
requiring caution excluding borrowers requiring monitoring; borrowers requiring
monitoring; possible bankruptcy; virtual bankruptcy; and legal bankruptcy) is
determined in accordance with self-assessment standards prescribed by theGroup to evaluate the credit losses on loans�For claims on borrowers that have entered into bankruptcy, special
liquidation proceedings, or similar legal proceedings (“legal bankruptcy”), or
borrowers that are not legally or formally insolvent but are regarded as
substantially in the same situation (“virtual bankruptcy”), an allowance is provided
based on the amount of claims, after the write-offs as stated below, net of the
expected amount of recoveries from collateral and guarantees�For claims on borrowers that are not currently bankrupt, but are likely to
become bankrupt in the future (“possible bankruptcy”), an allowance is provided
in the amount deemed necessary based on an overall solvency assessment of
the claims, net of the expected amount of recoveries from collateral andguarantees�For claims on borrowers whose loans are classified as “restructured loans”
over a certain amount, for which future cash flows from the collection of principal
and interest are reasonably estimated, an allowance is provided for the difference
between the present value of expected future cash flows discounted at thecontracted interest rate and the carrying value of the claims based on the
discounted cash flow method�

k. Retirement Benefits for Employees — The Group accounts for the liability
for retirement benefits based on the projected benefit obligations and the fairvalue of plan assets at the consolidated balance sheet date� The projected
benefit obligations are attributed to periods on a benefit formula basis� Actuarial
gains and losses and past service costs that are yet to be recognized in profit orloss are recognized within equity (accumulated other comprehensive income)after adjusting for tax effects and are recognized in profit or loss from the next
year of incurrence and the year of incurrence, respectively, by the straight-line
method over a period (mainly 10 years) no longer than the expected averageremaining service period of the employees�
l. Provision for Retirement Benefits for Directors — Provision for retirement
benefits for directors, which is provided for payments of retirement benefits todirectors, is recorded in the amount deemed accrued at the fiscal year end datebased on the estimated amount of benefits�
m. Provision for Reimbursement of Deposits — Provision for reimbursementof deposits, which were derecognized as liabilities under certain conditions, isprovided for possible losses on future claims and is calculated based on thehistorical reimbursement experience�n. Provision for Contingent Losses — Provision for contingent losses isprovided for possible loan losses guaranteed by the credit guarantee corporationsin an amount deemed necessary based on estimated losses in the future,
calculated using historical default rates after exclusion of contingent losses
covered by other reserves�
o. Provision for Point Card Certificates — Provision for point card certificates,
which is provided for the future use of points granted to customers under thecredit card points program, is calculated by converting the outstanding points
into a monetary amount and rationally estimating and recognizing the amountthat will be redeemed in the future�

111

measured at fair value, with gains or losses on derivative transactions recognizedin the consolidated statement of income and the fair value is calculated on agroup basis for the financial assets and financial liabilities on the net amountafter offsetting the financial assets and financial liabilities, taking into accountspecific market risks or specific credit risks, or (b) for derivatives used forhedging purposes, if the derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments and the hedged
items, gains or losses on the derivatives are deferred until maturity of the hedgedtransactions (deferral hedge accounting)�
The consolidated banking subsidiaries apply deferral hedge accounting
based on the rules of the Japanese Institute of Certified Public Accountants(JICPA) Industry Audit Committee Report No� 24, March 17, 2022,“Accounting
and Auditing Treatments on the Application of Accounting Standards for Financial
Instruments in the Banking Industry,” for interest rate derivatives to manageinterest rate risk from various financial assets and liabilities, as a whole� Under
these rules, the effectiveness of a fair value hedge is assessed by an identified
group of hedge items, such as loans and by a corresponding group of hedging
instruments, such as interest rate swaps in the same maturity category� Also,
under these rules, the effectiveness of cash flow hedges is assessed based on
the correlation between a base interest rate index of the hedged cash flow andthat of the hedging instrument�
The consolidated banking subsidiaries apply deferral hedge accounting
based on the rules of the JICPA Industry Audit Committee Report No� 25, October
8, 2020, “Accounting and Auditing Treatments for Foreign Currency Transactionsin the Banking Industry,” to currency swaps and funding swaps used for the
purpose of currency exchange� Under deferral hedge accounting, hedged items
are identified by grouping the foreign currency-denominated financial assets andliabilities by currencies and designating derivative transactions, such as currency
swap transactions and foreign exchange swaps, as hedging instruments�
Effectiveness of derivative transactions, such as currency swap transactions andforeign exchange swap transactions, is reviewed by comparing the total foreign
currency position of the hedged items and the hedging instrument by currency�
One consolidated banking subsidiary applies individual deferral hedge
accounting to offset the price fluctuation of the strategic shares that are classified
under available-for-sale securities, using stock forward contracts as hedged
items� The hedge effectiveness of derivative transactions is reviewed bycomparing the changes in the value of the hedged item and hedging instruments�
The consolidated banking subsidiaries apply individual deferral hedge
accounting and exceptional accrual method for interest rate swap to some assets
and liabilities�

q. Reserves under Special Laws — Reserves under special laws are provided
for contingent liabilities incurred by an accident in relation to the sales andpurchase or other transactions of securities, which amounted to ¥2 million ($19
thousand) and ¥2 million as of March 31, 2023 and 2022, respectively, pursuant
to Article 46-5-1 of the Financial Instruments and Exchange Act and Item 175 of
the related cabinet order�
r. Stock Options — Compensation expense for employee stock options is
recognized based on the fair value at the date of grant and over the vesting
period as consideration for receiving goods or services� In the consolidatedbalance sheet, the stock option is presented as a stock acquisition right as aseparate component of equity until exercised�s. Stock Issuance Costs — Stock issuance costs are charged to income as
incurred�u. Income Taxes — The provision for income taxes is computed based on thepretax income included in the consolidated statement of income� The asset andliability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities� Deferred taxes are measured
by applying currently enacted income tax rates to the temporary differences�
The Group files a tax return under the group tax sharing system, whichallows companies to base tax payments on the combined profits or losses of theparent company and its wholly owned subsidiaries�
The Company and some subsidiaries transferred from the consolidated
taxation system to the group tax-sharing system from the beginning of the year
ended March31, 2023� The Group adopted “Practical Solution on the Accounting
and Disclosure under the Group Tax Sharing System” (ASBJ Guidance No� 42,
August 12, 2021) regarding to the accounting treatment and disclosure ofcorporate tax and local corporate tax as well as tax-effect accounting� In
accordance with Paragraph 32 (1) of ASBJ Guidance No� 42, The Groupconsidered that changes in accounting policies to apply ASBJ Guidance No� 42
had no impact on consolidated financial statements�

x. Cash and Cash Equivalents — Cash and cash equivalents in the
consolidated statement of cash flows represent cash and due from banks in the
consolidated balance sheet, excluding deposits with banks other than the Bankof Japan, of the consolidated banking subsidiaries and exclude the time depositsof the Company and the other consolidated subsidiaries�
y. Consumption Taxes — Consumption tax is excluded from transactions
reported by the Group� However, nondeductible consumption tax on tangible
fixed assets is charged to income as incurred�z. Per Share Information — Basic net earnings per share (EPS) of common
stocks is computed by dividing net income attributable to common shareholders
by the weighted-average number of shares of common stock outstanding for theperiod, retroactively adjusted for stock splits�
Diluted EPS reflects the potential dilution that could occur if securities were
exercised or converted into common stock� Diluted EPS of common stock
assumes full conversion of the outstanding convertible notes and bonds at the
beginning of the year (or at the time of issuance) with an applicable adjustment
for related interest expense, net of tax, and full exercise of outstanding warrants�
Cash dividends per share presented in the accompanying consolidated
statement of income are dividends applicable to the respective years, including
dividends to be paid after the end of the year�

v. Translation of Foreign Currencies — Assets and liabilities denominated inforeign currencies are translated at exchange rates prevailing as of theconsolidated balance sheet date�w. Derivatives and Hedging Activities — Derivative financial instruments areclassified and accounted for as follows: (a) all derivatives, except those enteredinto for hedging purposes, are recognized as either assets or liabilities and112

Accounting Change(Implementation Guidance on Accounting Standard for Fair Value Measurement)“Guidance on Accounting Standard for Fair Value Measurement” (ASBJ GuidanceNo� 31, June 17, 2021) has been applied from the beginning of the year ended
March31, 2023� In accordance with the transitional measures set forth inParagraph 27-2 of Guidance on Accounting Standard for Fair Value
Measurement, The Group applied new accounting policies prospectively from the
beginning of the period� This change has no impact on the consolidated financial
statements�
In accordance with the Paragraph 27-3, notes of investment trusts related
to breakdown by level of the fair value hierarchy of financial instruments in “22�
FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES” are not shown for theprevious year�

(c) Impact on the consolidated financial statements for the following fiscal year:
The assumptions used in determining the classification of borrowers are
uncertain, and changes in the financial and economic environment,
including resource prices, commodity prices, and foreign exchange rates,
as well as the external environment, including the impact of COVID-19 that
may affect the borrower’s future performance, could increase or decrease
the amount of loss and have a material impact on the consolidated financial
statements�

3. CASH AND CASH EQUIVALENTS
The reconciliation of “Cash and cash equivalents” in the consolidated statementof cash flows and “Cash and due from banks” in the consolidated balance sheet
as of March 31, 2023 and 2022, were as follows:Significant Accounting Estimates
Accounting estimates recorded in the consolidated financial statements for thecurrent fiscal year that may have a material impact on the consolidated financial
statements for the following fiscal year are as follows:

Millions of Yen
2023
2022

Cash and due from banks������������������� ¥4,818,749 ¥7,270,668
Deposits with banks of the consolidatedbanking subsidiaries other than the
Bank of Japan �����������������������������������
(16,420)(6,020)Cash and cash equivalents ����������������� ¥4,802,328 ¥7,264,647

Allowance for loan losses
As the ratio of loans, etc� recorded by the consolidated banking subsidiaries isrelatively high in the consolidated balance sheet, the accounting estimate ofallowance for loan losses has a significant impact on the results of businessperformance and financial position�

Allowance for loan losses ���������������������

¥91,859¥93,800$36,141,524(123,159)$36,018,365

March 31, 2023

Cost

The amounts shown in the following tables include “Securities,” trading securities
in “Trading assets,” and negotiable certificates of deposit in “Cash and due frombanks,” as described in the consolidated balance sheet�
Valuation differences recognized as income and expenses as of March 31,
2023 and 2022, were as follows:

Thousands of
U.S. Dollars
2023$688,961

Millions of Yen
2023
2022

(ii) Information on the consolidated financial statements with regard to theaccounting estimates

Trading securities ��������������������������������

¥3

Thousands of
U.S. Dollars
2023

$27

¥(14)

Securities as of March 31, 2023 and 2022, consisted of the following:(a) Calculating method
As the calculation method is stated on “h� Allowance for loan losses” in
NOTE “2� SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” theclassification of borrowers (six categories: normal borrowers, borrowers
requiring caution excluding borrowers requiring monitoring, borrowers
requiring monitoring, possible bankruptcy; virtual bankruptcy; and legal
bankruptcy) are determined in accordance with self-assessment standards
prescribed by the Group to prepare for credit losses on loans� In determining
the classification of borrowers, the Group considers the projections forchanges in the performance of the borrowers that are expected to beaffected by changes in the financial and economic environment, including
resource prices, commodity prices, and foreign exchange rates, as well as
the impact of COVID-19� Allowance for loan losses is estimated inaccordance with the credit risk by estimating the expected loss amountbased on the actual historical rate of loan losses for each classification of
the borrowers determined as above�

Millions of Yen
2023
2022

Japanese national government bonds ���� ¥ 396,943 ¥ 811,822
Japanese local government bonds ������ 1,024,386 1,066,241
Japanese corporate bonds������������������
784,578
867,118
Japanese corporate stocks �����������������
215,695
258,262
Other securities ��������������������������������� 1,240,706 1,678,855
Total ������������������������������������������������� ¥3,662,309 ¥4,682,301

Thousands of
U.S. Dollars
2023$ 2,977,151
7,683,090
5,884,484
1,617,756
9,305,530$27,468,011

Millions of Yen
Unrealized Unrealized
Gains
LossesSecurities classified as:
Available-for-sale: ���������������� ¥3,437,365 ¥121,541
Equity securities ��������������� 109,574 103,286
Debt securities: ���������������� 2,078,460
1,870Japanese national
government bonds ����� 353,287
758Japanese local
government bonds ����� 1,031,448
466Japanese corporate
bonds ������������������������ 693,725
646
Others: ���������������������������� 1,249,330 16,383
Foreign bonds ������������� 636,729
2,062
Others������������������������� 612,601 14,321
Held-to-maturity: ������������������ 161,861
148Japanese national
government bonds ����������
56,791—
Japanese local
government bonds ����������
599
0Japanese corporate
bonds ���������������������������� 104,470
148

4. TRADING SECURITIES AND SECURITIES(i) Amounts recorded in the consolidated financial statements as of March 31,
2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

The cost and aggregate fair value of available-for-sale securities and heldto-maturity securities as of March 31, 2023 and 2022, were as follows:

March 31, 2022

Cost

¥96,547 ¥3,462,358
1,515
211,344
36,284 2,044,046
340,152

8,127

1,023,786

14,26358,747
15,96442,783966

680,108
1,206,966
622,827
584,139
161,043518

56,272

0

599

446

104,172

Millions of Yen
Unrealized Unrealized
Gains
LossesFair Value

754,006

2,849

1,065,641

6,012
29,66818,896
10,771
695

766,620
1,640,886
967,355
673,530
158,410366

57,450

0

599

328

100,360

104,201

2,551,207

60,9607,678,589

106,976
440,620
119,735
320,886
7,246

5,100,939
9,052,478
4,671,324
4,381,154
1,207,860

3,890

422,054

6

4,494

3,350

781,311

Millions of Yen
March 31, 2023

Proceeds

Available-for-sale:
Equity securities ���������������������������������¥ 65,104
Debt securities: ���������������������������������� 511,566
Japanese national government bonds ���� 509,481
Japanese corporate bonds��������������
2,085
Others: ���������������������������������������������� 722,654
Foreign bonds �������������������������������� 621,444
Others ������������������������������������������� 101,210
Total ������������������������������������������������������¥1,299,325

Realized Gains

Realized
Losses¥39,809
57
51
5
8,661
—
8,661
¥48,528¥ 429
36,22836,228—56,39150,063
6,327¥93,049

Millions of Yen
March 31, 2022

Proceeds

Available-for-sale:
Equity securities ��������������������������������� ¥ 18,138
Debt securities: ���������������������������������� 144,027
Japanese national government bonds ���� 143,623
Japanese corporate bonds��������������
404
Others: ���������������������������������������������� 237,810
Foreign bonds �������������������������������� 103,710
Others ������������������������������������������� 134,099
Total ������������������������������������������������������ ¥399,976

March 31, 2023

114

Realized Gains

Realized
Losses¥6,354
609
607
2
1,384
418
966
¥8,348¥ 1,266
1,275
1,275
—
9,332
2,705
6,626
¥11,873

Thousands of U.S. Dollars
Realized
Proceeds Realized Gains Losses

Available-for-sale:
Equity securities ��������������������������������� $ 488,295
Debt securities: ���������������������������������� 3,836,847
Japanese national government bonds ���� 3,821,207
Japanese corporate bonds��������������
15,640
Others: ���������������������������������������������� 5,420,046
Foreign bonds �������������������������������� 4,660,952
Others ������������������������������������������� 759,094
Total ������������������������������������������������������ $9,745,187(b) Significant assumptions
The classification of borrowers is determined by comprehensively
considering various information such as the borrower’s past financial
condition, repayment history, future forecasts, and other qualitative
information of the borrowers�
Since the future forecast information includes changes in the financial
and economic environment, including resource prices, commodity prices,and foreign exchange rates, as well as the impact of COVID-19 and they
can be significantly affected by changes in the external environment, theGroup evaluates the information based on certain assumptions�

113$724,127 $25,968,340
11,3701,585,126
272,137 15,330,735

Information for available-for-sale securities, which were sold during theyears ended March 31, 2023 and 2022, is as follows:¥56,058 ¥4,481,342
2,160
254,187
24,229 2,586,268
15,366

Cost

Securities classified as: �������������
Available-for-sale: ���������������� $25,780,886 $911,581
Equity securities ���������������
821,828 774,668
Debt securities: ���������������� 15,588,842
14,030Japanese national
government bonds ����� 2,649,720
5,689Japanese local
government bonds ����� 7,736,054
3,496
Japanese corporate
bonds ������������������������ 5,203,069
4,846
Others: ���������������������������� 9,370,216 122,882
Foreign bonds ������������� 4,775,587
15,471Others������������������������� 4,594,629 107,411
Held-to-maturity: ������������������ 1,213,989
1,116Japanese national
government bonds ����������
425,944—
Japanese local
government bonds ����������
4,500
0Japanese corporate
bonds ����������������������������
783,545
1,116

Fair Value

13,893

Securities classified as:
Available-for-sale: ���������������� ¥4,352,411 ¥184,989
Equity securities ��������������� 122,610 133,737
Debt securities: ���������������� 2,607,580
2,917Japanese national
government bonds ����� 768,689
683
Japanese local
government bonds ����� 1,067,204
1,286Japanese corporate
bonds ������������������������ 771,686
946
Others: ���������������������������� 1,622,220 48,334
Foreign bonds ������������� 981,627
4,625
Others������������������������� 640,593 43,709
Held-to-maturity: ������������������ 158,914
191
Japanese national
government bonds ����������
57,816—
Japanese local
government bonds ����������
599
0Japanese corporate
bonds ���������������������������� 100,497
191

March 31, 2023

Thousands of U.S. Dollars
Unrealized Unrealized
Gains
LossesFair Value$298,581
428
388
40
64,965—64,965$363,973$ 3,223
271,724
271,724—
422,944375,488
47,456$697,891

Marketable available-for-sale securities, whose fair value significantly
declined in comparison with the acquisition cost and whose fair value is notconsidered likely to recover to their acquisition cost, are written down andrecognized as impairment losses�
The impairment losses on marketable available-for-sale securities for theyears ended March 31, 2023 and 2022, were ¥172 million ($1,292thousand)and ¥286 million, respectively�
Pursuant to “Practical Guidelines for Accounting for Financial Instruments”(JICPA Accounting Committee Report No� 14, April 14, 2015), the criteria for
determining whether the fair value is “significantly declined” defined that
securities whose fair value has declined by 30% or more of the acquisition cost
are deemed to be impaired�
As of March 31, 2023 and 2022, securities included capital subscriptionsof ¥5,912 million ($44,342 thousand) and ¥4,630 million, respectively�

7. LOANS AND BILLS DISCOUNTED
Claims based on the Banking Act and the Act on Emergency Measures for the
Revitalization of Financial Functions as of March 31, 2023 and 2022, are as
follows:
The claims consist of those included in the accounts of bonds included in“Securities” (its principal’s redemption and interest payments are guaranteed, inwhole or in part, and the corporate bonds issue is limited to a private placementof the securities (Article 2, Item 3 of the Financial Instruments and ExchangeAct); “Loans,” “foreign exchanges assets,” accrued interest, and suspense
payment in “Other assets” and “Customers’ liabilities for acceptances andguarantees” in the consolidated balance sheet, and securities in the notes(limited to those under a loan for use or lease agreement) that are in case ofloan�
Millions of Yen
2023
2022

Bankrupt and substantiallybankrupt claims�������������������������������� ¥ 12,577
Doubtful claims ���������������������������������� 153,013
Claims past due for three months
or more��������������������������������������������
211
Restructured claims ���������������������������
31,311
Total ������������������������������������������������� ¥197,114

5. MONEY HELD IN TRUST
Money held in trust for trading purposes as of March 31, 2023 and 2022,
consisted of the following:
Millions of Yen
2023
2022

Amounts recorded in the consolidatedbalance sheet�����������������������������������
Valuation gain (loss) included in the
consolidated statement of income �����

Thousands of
U.S. Dollars
2023¥3,010¥2,027$22,580

(17)

57

(132)

Unrealized gains on available-for-sale securities as of March 31, 2023 and2022, consisted of the following:

Unrealized gains: ������������������������������� ¥25,794
Available-for-sale securities ����������� 25,794
Deferred tax liabilities: ������������������������
7,102
Unrealized gains on available-for-salesecurities before adjustments byownership share ������������������������������� 18,692
Noncontrolling interests ����������������������
—Unrealized gains on available-for-salesecurities ����������������������������������������� ¥18,692

Thousands of
U.S. Dollars
2023¥130,642
130,642
39,091$193,465
193,465
53,26791,550—140,198—¥ 91,550$140,198¥ 13,816
151,196$

94,334
1,147,633

83
27,523¥192,619

1,587
234,844$1,478,398

The amounts above are stated before the deduction of the allowance forloan losses�
Bankrupt and substantially bankrupt claims” are claims against debtors inbankruptcy due to the commencement of bankruptcy procedures, thecommencement of reorganization proceedings, the petition for thecommencement of rehabilitation proceedings, and claims equivalent to these�
“Doubtful claims” are claims that the debtor is not yet in a state ofbankruptcy, but its financial position and business performance havedeteriorated, and it is highly probable that the principal’s collection and intereston claims in accordance with the terms of the contract will not be received�
These claims do not fall under the category of “Bankrupt and substantiallybankrupt claims�”“Loans past due for three months or more” include accruing loans forwhich principal or interest is past due three months or more�“Restructured loans” are loans to borrowers in financial difficulty to whom
the Group has provided financial support through modification of the lending
terms to be more favorable to the borrower, including reduction of interest rates,
suspension of repayment of principal and interest, and debt forgiveness�
Contracts of overdraft facilities and loan commitment limits are contracts
under which the consolidated banking subsidiaries and certain consolidated
subsidiaries lend to customers up to the prescribed limits in response tocustomer applications for loans as long as there is no violation of any condition in
the contracts� As of March 31, 2023 and 2022, the amounts of unused
commitments were ¥2,836,748 million ($21,276,147 thousand) and¥2,894,178 million, respectively� As of March 31, 2023 and 2022, the amounts
of unused commitments whose remaining contract terms were within one year
were ¥1,896,251 million ($14,222,244 thousand) and ¥1,935,400 million,
respectively�
As many of these commitments expire without being drawn down, theunused amount does not necessarily represent a future cash requirement� Mostof these contracts have conditions whereby the consolidated banking subsidiaries
and certain consolidated subsidiaries can refuse customer applications for loans
or decrease the contract limits for certain reasons (e�g�, changes in a financial
situation and deterioration in customers’ creditworthiness)� At the inception of thecontracts, the consolidated banking subsidiaries and certain consolidated
subsidiaries obtain real estate, securities, or other assets as collateral if
considered to be necessary� Subsequently, the consolidated banking subsidiaries
and certain consolidated subsidiaries perform periodic reviews of the customers’
business results based on the internal rules and take necessary measures toreconsider conditions in the contracts and/or require additional collateral andguarantees�

6. UNREALIZED GAINS ON AVAILABLE-FOR-SALE SECURITIESMillions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

As of March 31, 2023 and 2022, the total unrealized gains include an
unrealized gain of ¥801 million ($6,012 thousand) and ¥1,711 million,
respectively, on available-for-sale securities contained in certain fund�

115

Discounting bills are treated as secured lending transactions� As of March
31, 2023 and 2022, consolidated banking subsidiaries have the right to sell or
repledge bills discounted and foreign exchange bills bought and their total facevalue was ¥25,645 million ($192,342 thousand) and ¥27,118 million,
respectively�

10. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEESAll contingent liabilities arising from acceptances and guarantees are reflected in
acceptances and guarantees in the consolidated balance sheet� As a contra
account, customers’ liabilities for acceptances and guarantees are presented asassets, representing the consolidated banking subsidiaries’ and certain
consolidated subsidiaries’ rights of indemnity from the applicants�
Guarantee obligations for private placement bonds included in “Securities”(provided in accordance with Article 2-3 of the “Financial Instruments andExchange Act”) as of March 31, 2023 and 2022, were ¥177,813 million($1,333,632 thousand) and ¥184,934 million, respectively�

8. TANGIBLE FIXED ASSETS
Tangible fixed assets as of March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022

Buildings ������������������������������������������� ¥ 36,459
Land ������������������������������������������������� 52,657
Leased assets������������������������������������
31
Construction in progress���������������������
170
Other ������������������������������������������������ 12,248
Total ������������������������������������������������� ¥101,567¥ 37,076
52,66631622
12,405¥102,802

Thousands of
U.S. Dollars
2023$273,450
394,941
238
1,279
91,864$761,773

11. ASSETS PLEDGED AS COLLATERAL
Assets pledged as collateral and the related liabilities as of March 31, 2023 and2022, were as follows:
Millions of Yen
2023
2022

The accumulated depreciation of tangible fixed assets as of March 31,
2023 and 2022, amounted to ¥123,603 million ($927,049 thousand) and¥124,260 million, respectively�
Under certain conditions, such as exchanges of fixed assets of similar kinds
and sales and purchases resulting from expropriation, Japanese tax laws permit
companies to defer the profit arising from such transactions by reducing the costof the assets acquired or by providing a special reserve in the Equity section� As
of March 31, 2023 and 2022, such deferred profit amounted to ¥9,661 million($72,463 thousand) and ¥9,720 million, respectively, and the amount of thedeferred profit recorded for the year ended March 31, 2023 was ¥95 million($715 thousand) �
Under the “Law of Land Revaluation,” one banking subsidiary elected a onetime revaluation of its own-use land to a value based on real estate appraisal
information as of March 31, 1998� The resulting revaluation reserve for land
represents an unrealized appreciation of land and is stated, net of income taxes,
as a component of equity� There was no effect on the consolidated statement ofincome� Continuous readjustment is not permitted, unless the land value
subsequently declines significantly such that the amount of the decline in value
should be removed from the revaluation reserve for land account and related
deferred tax liabilities� As of March 31, 2023 and 2022, the carrying amount of
the land after the above one-time revaluation exceeded the market value by¥21,040 million ($157,806 thousand) and ¥21,060 million, respectively�

Assets pledged as collateral:
Securities �������������������������������������� ¥2,099,040 ¥2,818,331
Loans and bills discounted ������������� 576,813 2,632,593
Total ��������������������������������������������� ¥2,675,854 ¥5,450,924
Related liabilities to above assets:
Deposits ��������������������������������������� ¥ 186,281 ¥ 208,950
Payables under repurchaseagreements ��������������������������������� 112,902
148,165
Payables under securities lendingtransactions ��������������������������������� 111,887
826,826
Borrowed money ��������������������������� 1,997,698 3,789,901

Millions of Yen
2023
2022

Deposits for central counterparty��������� ¥102,611
Cash collateral paid for financial
instruments �������������������������������������� 24,855
Cash collateral paid for transactions
involving public funds �����������������������
2,078
Guarantee deposits ����������������������������
1,378

Intangible fixed assets as of March 31, 2023 and 2022, consisted of thefollowing:

Software�������������������������������������������� ¥10,272
Other ������������������������������������������������
3,250
Total ������������������������������������������������� ¥13,523¥12,628
3,267¥15,896$15,743,200
4,326,209$20,069,410$ 1,397,144
846,787
839,174
14,983,114

Additionally, securities amounting to ¥5,328 million ($39,962 thousand)and ¥5,380 million as of March 31, 2023 and 2022, respectively, were pledged
as collateral for settlements of exchange or as substitute securities for margins
on futures transactions�Moreover, other assets included the following:

9. INTANGIBLE FIXED ASSETS

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Thousands of
U.S. Dollars
2023¥107,721$769,607

26,935

186,423

2,101
1,427

15,587
10,33912. BORROWED MONEY
Borrowed money as of March 31, 2023 and 2022, consisted of the following:Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

$ 77,045
24,381$101,427

Borrowed money of which theweighted-average annual interest
rates were 0�15%, due from April
2023 to June 2035 �������������������������� ¥2,000,858 ¥3,795,700

Thousands of
U.S. Dollars
2023$15,006,817

Annual maturities of borrowed money as of March 31, 2023, for the next
five years were as follows:

116

Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2024�������������������������������������������������
2025�������������������������������������������������
2026�������������������������������������������������
2027�������������������������������������������������
2028�������������������������������������������������

¥1,790,685
30,35093,75486,052
1$13,430,476
227,638
703,175
645,41014

(b) The changes in plan assets for the years ended March 31, 2023 and 2022,
were as follows:

13. RETIREMENT AND PENSION PLANS(1) Outline of the adopted retirement benefit plans
The Company’s banking subsidiary, The Joyo Bank, Ltd� (“Joyo”), and its
consolidated subsidiaries have adopted defined employees’ retirement benefit
plans, i�e�, the employees’ welfare pension fund supplemented by the employees’
public pension system and lump-sum retirement benefits�In addition, extra benefits that are excluded from the projected benefit
obligation in employees’ retirement benefits accounting may be paid on a caseby-case basis� Joyo has established an employees’ retirement benefit trust�
The Company’s banking subsidiary, Ashikaga Bank, Ltd� (“Ashikaga”), andits consolidated subsidiaries have adopted funded and unfunded defined benefit
plans, as well as defined contribution plans to provide for the employees’
retirement benefits� All of the retirement benefit plans are managed in an
integrated manner through retirement benefit points that are determined basedon years of service and capabilities of employees, as well as employee
performance evaluation� The determined points are then allocated to each plan�The defined benefit pension plans (funded plans) have introduced pension
plans similar to cash balance plan-type pension plans� Under the plan, eachparticipant will set up a virtual individual account where pension or lump-sum
payments will be made based on the accumulated retirement benefit points
allocated� A retirement benefit trust is established for this defined benefit pension
plan�
Under the lump-sum retirement benefit plans (unfunded plans that havebecome funded plans due to the establishment of a retirement benefit trust),
lump-sum payments are made based on the accumulated retirement benefit
points allocated� In some cases, premium severance payments may be made to
employees in conjunction with the employees’ retirement and other�
Under the defined contribution plans, the contribution amount is decided
based on the accumulated retirement benefit points allocated�
The Company’s consolidated subsidiaries are members of the defined
benefit pension funds under the multiemployer plans, and as the amount of plan
assets corresponding to the contribution of each subsidiary may be reasonably
calculated, such information is included in the notes to defined benefit plans�
Regarding the lump-sum retirement benefit plans adopted by certain
consolidated subsidiaries, liability for retirement benefits and retirement benefit
expenses are calculated by the simplified method�

Millions of Yen
2023
2022

Balance at beginning of year��������������� ¥157,015 ¥153,167
Expected return on plan assets �������
3,163
2,967
Actuarial gains (losses) ������������������
(1,204)
1,167
Contributions from the employer �����
3,238
3,335
Benefits paid ���������������������������������
(3,736)(3,657)
Others ������������������������������������������
32
34
Balance at end of year������������������������ ¥158,508 ¥157,015

Balance at beginning of year��������������� ¥123,728 ¥121,046
Current service cost �����������������������
3,054
3,427
Interest cost ����������������������������������
712
510
Actuarial gains (losses) ������������������
(5,086)
1,012
Benefits paid ���������������������������������
(6,584)(6,112)
Prior service cost ���������������������������
—315
Others ������������������������������������������
765
3,530
Balance at end of year������������������������ ¥116,588 ¥123,728$1,177,644
23,725(9,032)
24,291(28,027)245$1,188,846*Figures above exclude retirement and benefit plans calculated by the simplified method�(c) The changes in liabilities for retirement benefits adopting the simplified
method for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Balance at beginning of year���������������
Retirement benefit expense ������������
Benefits paid ���������������������������������
Contribution to the defined benefit
pension plan ��������������������������������
Other ��������������������������������������������
Balance at end of year������������������������

Thousands of
U.S. Dollars
2023¥1,133284(104)¥1,181
301(148)$ 8,499
2,134
(782)

(200)
—
¥1,113(198)(3)¥1,133(1,502)—$ 8,350(d) Reconciliation between the liabilities recorded in the consolidated balance
sheet and the balances of defined benefit obligation and plan assets was asfollows:
Millions of Yen
2023
2022

Funded defined benefit obligation�������� ¥ 120,134 ¥ 127,315
Plan assets ���������������������������������������� (162,039) (160,586)
Total ������������������������������������������������� (41,904) (33,271)
Unfunded defined benefit obligation ����
1,113
1,133
Net asset arising from defined benefit
obligation ����������������������������������������� ¥ (40,791) ¥ (32,137)(2) Defined benefit plans(a) The changes in defined benefit obligation for the years ended March 31, 2023
and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Liability for retirement benefits ������������ ¥— ¥ 324
Asset for retirement benefits ��������������� (40,791) (32,462)
Net asset arising from defined benefit
obligation ����������������������������������������� ¥(40,791) ¥(32,137)$927,988
22,908
5,341(38,151)(49,388)—5,740$874,438

Thousands of
U.S. Dollars
2023

117

Thousands of
U.S. Dollars
2023

¥(31)
(3,454)¥(3,485)$(236)(25,906)$(26,142)

¥291
350
¥641

Millions of Yen
2023
2022

Unrecognized prior service cost �����������
¥260
Unrecognized actuarial gains ��������������� (11,199)
Total ������������������������������������������������� ¥(10,939)¥291(7,745)¥(7,453)$(305,943)

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023¥ 3,054712(3,163)(428)
31¥ 3,427510(2,967)(487)
23$ 22,908
5,341(23,725)(3,212)
236

284
718
¥ 1,209301
3,476¥ 4,284

2,134
5,387
$ 9,069

a. Dividends
Under the Companies Act, companies can pay dividends at any time during the
fiscal year in addition to the year-end dividend upon resolution at theshareholders’ meeting� Additionally, for companies that meet certain criteria,
including (1) having a Board of Directors, (2) having independent auditors, (3)having an Audit & Supervisory Board, and (4) the term of service of thedirectors being prescribed as one year rather than the normal two-year term by
its articles of incorporation, the Board of Directors may declare dividends(except for dividends in kind) at any time during the fiscal year if the company
has prescribed so in its articles of incorporation� With respect to the third
condition above, the Board of Directors of companies with (a) board
committees (namely, appointment committee, compensation committee, andaudit committee) or (b) an audit and supervisory committee (as implemented
under the Companies Act effective May 1, 2015) may also declare dividends at
any time because such companies, by nature, meet the criteria under theCompanies Act� The Company is organized as a company with an audit andsupervisory committee� The Company meets all the above criteria, andaccordingly, the Board of Directors may declare dividends (except for dividends
in kind) at any time during the fiscal year�
The Companies Act permits companies to distribute dividends in kind(noncash assets) to shareholders subject to certain limitations and additional
requirements�
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate� The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock� The
limitation is defined as the amount available for distribution to theshareholders, but the amount of equity after dividends must be maintained at
no less than ¥3 million�

$1,951(83,997)$(82,046)(h) Plan assetsa� Components of plan assets
Plan assets as of March 31, 2023 and 2022, consisted of the following:
Debt investments �������������������������������������������������������
Equity investments �����������������������������������������������������
General accounts ������������������������������������������������������
Others �����������������������������������������������������������������������
Total �������������������������������������������������������������������������

2023

2022

42.2%
41.3%
9.4%
7.0%
100.0%

40�7%
41�7%
9�4%
8�2%
100�0%* As of March 31, 2023 and 2022, total plan assets that were set up on corporate pension
plans include a retirement benefit trust of 34�3% and 33�2%, respectively�(i) Assumptions used for the years ended March 31, 2023 and 2022, were set
forth as follows:$—(305,943)

Japanese companies are subject to the Companies Act� The significant provisions
in the Companies Act that affect financial and accounting matters are
summarized below:

Thousands of
U.S. Dollars2023$ (305,943)
Thousands of
U.S. Dollars
2023

14. EQUITY(g) Amounts recognized in accumulated other comprehensive income (before
income tax effect) in respect of defined retirement benefit plans as of March
31, 2023 and 2022, were as follows:b� Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the longterm rates of return, which are expected currently and in the future from thevarious components of the plan assets�(e) The components of net periodic benefit costs for the years ended March 31,
2023 and 2022, were as follows:

Service cost ���������������������������������������
Interest cost���������������������������������������
Expected return on plan assets �����������
Recognized actuarial losses ����������������
Amortization of prior service cost ��������
Retirement benefit expense calculatedby the simplified method �������������������
Others �����������������������������������������������
Net periodic benefit costs �������������������

Prior service cost �������������������������������
Actuarial losses (gains) �����������������������
Total �������������������������������������������������

Millions of Yen
2023
2022

$ 901,031(1,215,324)(314,293)
8,350*Figures above include retirement and benefit plans calculated by the simplified method�*Figures above exclude retirement and benefit plans calculated by the simplified method�(f) Amounts recognized in other comprehensive income (before income tax effect)
in respect of defined retirement benefit plans for the years ended March 31,
2023 and 2022, were as follows:2023

b. Increases/Decreases and Transfer of Common Stock, Reserve, andSurplus
The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on theequity account that was charged upon the payment of such dividends until theaggregate amount of the legal reserve and additional paid-in capital equals
25% of capital stock� Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation� The
Companies Act also provides that capital stock, legal reserve, additional paidin capital, other capital surplus, and retained earnings can be transferredamong the accounts within equity under certain conditions upon resolution of
the shareholders�2022

Discount rate ���������������������������������������� 0.60% — 1.10% 0�30% — 0�60%
Expected rate of return on plan assets����
2.50% 2�50%
Expected rate of increase in salary ��������� 4. 29% — 9.00% 4� 36% — 9�00%(3) Defined contribution plans
The amounts of the required contribution to the defined contribution plans ofcertain consolidated subsidiaries were ¥684 million ($5,136 thousand) and ¥689
million as of March 31, 2023 and 2022, respectively�

c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors� The
amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders, which is determined by a specific formula�
Under the Companies Act, stock acquisition rights are presented as a separate
component of equity� The Companies Act also provides that companies canpurchase both treasury stock acquisition rights and treasury stock� Suchtreasury stock acquisition rights are presented as a separate component ofequity or deducted directly from stock acquisition rights�

118

(1) Capital Stock Changes during the YearThe changes in the number and class of issued stock and treasury stock for the year ended March 31, 2023, were as follows:

As of April 1, 2022

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total

15. STOCK OPTIONS

Shares in Thousands
Changes During the Year
Increase
Decrease

1,089,055
1,089,055

—

9,299
9,299

The Company’s stock option plans grant options to directors and others to purchase certain shares of the Company’s common stock in the respective exercise periods�
The stock options outstanding as of March 31, 2023, were as follows:
As of March 31, 2023———

1,089,055
1,089,055

16,017*1
16,017695*2
695

24,621
24,621*1 The number of shares of treasury stock increased by 16,015 thousand shares due to purchase of the Company’s own shares and 2 thousand shares due to purchases of shares less than the
trading unit�
*2 The number of shares of treasury stock decreased by 0 thousand shares due to sales to shareholders in response to their demand to buy additional shares up to the trading unit, by 458
thousand shares due to the disposal of the Company’s own shares as restricted stocks, and by 236 thousand shares due to exercise of the stock acquisition rights�

The changes in the number and class of issued stock and treasury stock for the year ended March 31, 2022, were as follows:

As of April 1, 2021

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total

Shares in Thousands
Changes During the Year
Increase
Decrease

As of March 31, 2022

1,179,055
1,179,055——

90,000*1
90,0001,089,055
1,089,055

19,143
19,14380,609*2
80,60990,453*3
90,453

9,299
9,299

*1 The number of issued stock decreased due to retirement of treasury stock in accordance with Article 178 of the Companies Act�
*2 The number of shares of treasury stock increased by 80,601 thousand shares due to purchase of the Company’s own shares, 2 thousand shares due to purchases of shares less than the
trading unit, and 6 thousand shares due to acquisitions of restricted stocks without charge�*3 The number of shares of treasury stock decreased by 1 thousand shares due to sales to shareholders in response to their demand to buy additional shares up to the trading unit, 338 thousand
shares due to the disposal of the Company’s own shares as restricted stocks, 113 thousand shares due to exercise of the stock acquisition rights, and 90,000 thousand shares due toretirement of treasury stock�(2) Cash Dividends Per Share
Cash dividends per share for the years ended March 31, 2023 and 2022, were as follows:Year ended March 31, 2023
Dividends paid in the fiscal year ended March 31, 2023
Total Amount(Millions of Yen/
Thousands of
U.S. Dollars)

Cash dividends approved at the Board of Directors’ meeting held on May 13, 2022:

Common stock¥5,938($44,541)
Total Amount(Millions of Yen/Thousands of
U.S. Dollars)

Cash dividends approved at the Board of Directors’ meeting held on Nov� 11, 2022:

Common stock¥5,942($44,570)

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date¥5�50($0�04)

Mar� 31, 2022

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date¥5�50($0�04)

Sep� 30, 2022

Effective Date

Jun� 2, 2022

Effective Date

Dec� 2, 2022

Cash dividends approved at the Board of Directors’ meeting held on May 12, 2023:

Common stock¥5,854($43,909)

Mebuki Financial Group, Inc�
1st Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
2nd Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
3rd Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
5th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
7th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
9th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
11th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
13th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
14th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
15th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
16th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
17th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
18th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
19th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
20th Series of Stock
Acquisition Rights

Number of Options
Granted (Shares)

Date of Grant

Exercise Price

Exercise Period

10 directors of Joyo*2

16,833

August 24, 2009*3¥1

From October 1, 2016,
to August 24, 2039

10 directors of Joyo*2

23,634

July 21, 2010*3¥1

From October 1, 2016,
to July 21, 2040

10 directors of Joyo*2

43,430July 20, 2011*3¥1

From October 1, 2016,
to July 20, 2041

10 directors of Joyo*2

42,024

July 19, 2012*3¥1

From October 1, 2016,
to July 19, 2042

10 directors of Joyo*2

39,241

July 18, 2013*3¥1

From October 1, 2016,
to July 18, 2043

10 directors of Joyo*2

40,656

July 18, 2014*3¥1

From October 1, 2016,
to July 18, 2044

10 directors of Joyo*2

40,041

July 17, 2015*3¥1

From October 1, 2016,
to July 17, 2045

29 directors of
the Company, Joyo and Ashikaga

142,176

December 6, 2016

¥1

From December 7, 2016,
to December 6, 2046

16 executive officers of Joyo

63,910December 6, 2016

¥1

From December 7, 2016,
to December 6, 2046

29 directors of
the Company, Joyo and Ashikaga

135,990

August 9, 2017

¥1

From August 10, 2017,
to August 9, 2047

16 executive officers of Joyo

62,024

August 9, 2017

¥1

From August 10, 2017,
to August 9, 2047

24 directors of
the Company, Joyo and Ashikaga

127,508

August 14, 2018¥1

From August 15, 2018,
to August 14, 2048

34 executive officers of Joyo and Ashikaga

147,282

August 14, 2018¥1

From August 15, 2018,
to August 14, 2048

23 executive officers of Joyo and Ashikaga

201,104

August 20, 2019¥1

From August 21, 2019,
to August 20, 2049

29 executive officers of Joyo and Ashikaga

193,295

August 20, 2019¥1

From August 21, 2019,
to August 20, 2049

Persons Granted*1 As a result of the share exchange conducted between the Company and Joyo on October 1, 2016, stock acquisition rights of the Company were allotted to the holders of stock acquisitionrights of Joyo based on the share exchange ratio�
*2 The number is initially granted by Joyo�
*3 The date is initially granted by Joyo�Dividends to be paid after March 31, 2023
Total Amount(Millions of Yen/Thousands of
U.S. Dollars)

Stock Options

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date¥5�50($0�04)

Mar� 31, 2023

Effective Date

Jun� 2, 2023

Year ended March 31, 2022:
Dividends paid in the fiscal year ended March 31, 2022
Total Amount(Millions of Yen)

Cash dividends approved at the Board of Directors’ meeting held on May 12, 2021:

Common stock¥6,379Total Amount(Millions of Yen)

Cash dividends approved at the Board of Directors’ meeting held on Nov� 12, 2021:

Common stock¥6,051Per Share Amount(Yen)
Dividend Record Date

¥5�50Mar� 31, 2021

Per Share Amount(Yen)
Dividend Record Date

¥5�50

Sep� 30, 2021

Effective Date

Jun� 2, 2021
Effective Date

Dec� 2, 2021

Dividends to be paid after March 31, 2022
Total Amount(Millions of Yen)

Cash dividends approved at the Board of Directors’ meeting held on May 13, 2022:

Common stock¥5,938119

Per Share Amount(Yen)
Dividend Record Date

¥5�50Mar� 31, 2022

Effective Date

Jun� 2, 2022

120

The stock option activity was as follows:Year ended March 31, 2023

Mebuki FG
14th
Mebuki FG
1st

Non-vested (shares):
April 1, 2022 — Outstanding
GrantedCanceled
VestedMarch 31, 2023 — Outstanding

Mebuki FG
2nd

—
—
—
—
—

Mebuki FG
3rd

—
—
—
—
—

Mebuki FG
5th

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2022 — Outstanding
VestedExercised
Canceled
March 31, 2023 — Outstanding

6,733
—
6,733
—
—

9,453
—
9,453
—
—

14,040—14,040——13,586—
13,586——

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
¥262
$1�97
¥417
$3�13

¥1
$0�01
¥262
$1�97
¥297
$2�23

¥1
$0�01
¥262
$1�97
¥300
$2�25

¥1
$0�01
¥262
$1�97
¥310
$2�33

Mebuki FG
7th

Non-vested (shares):
April 1, 2022 — Outstanding
GrantedCanceled
VestedMarch 31, 2023 — Outstanding

Mebuki FG
9th

—
—
—
—
—

Mebuki FG
11th

—
—
—
—
—

Mebuki FG
13th

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2022 — Outstanding
VestedExercised
Canceled
March 31, 2023— Outstanding

12,466
—
8,130
—
4,336

12,916
—
8,424
—
4,492

9,495
—
6,193
—
3,302

27,440—8,208—
19,232

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
¥262
$1�97
¥518
$3�89

¥1
$0�01
¥262
$1�97
¥500
$3�75

¥1
$0�01
¥262
$1�97
¥680
$5�10

¥1
$0�01
¥262
$1�97
¥345
$2�59

121

Mebuki FG
15th

Mebuki FG
16th

Mebuki FG
17th

Non-vested (shares):
April 1, 2022 — Outstanding
GrantedCanceled
VestedMarch 31, 2023 — Outstanding

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2022 — Outstanding
VestedExercised
Canceled
March 31, 2023 — Outstanding

7,700
—
7,700
—
—

32,964—
13,199—19,765

14,768
—
7,384
—
7,384

58,226—
19,710—38,516

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
¥258
$1�94
¥374
$2�81

¥1
$0�01
¥262
$1�97
¥360
$2�70

¥1
$0�01
¥258
$1�94
¥390
$2�93

¥1
$0�01
¥262
$1�97
¥319
$2�39

Mebuki FG
18th

Mebuki FG
19th

Mebuki FG
20th

Non-vested (shares):
April 1, 2022 — Outstanding
GrantedCanceled
VestedMarch 31, 2023 — Outstanding

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2022 — Outstanding
VestedExercised
Canceled
March 31, 2023 — Outstanding

41,370—24,822—
16,548102,225—
32,998—69,227102,102—56,287—45,815

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
¥259
$1�94
¥348
$2�61

¥1
$0�01
¥262
$1�97
¥179
$1�34

¥1
$0�01
¥259
$1�94
¥206
$1�55

The Method Used to Estimate the Number of Stock Options Expected to Vest
Since it is difficult to rationally estimate the number of unexercised options in the future, a method of only reflecting actual unexercised options is adopted�

122

16. PER SHARE OF COMMON STOCK

18. GENERAL AND ADMINISTRATIVE EXPENSES

20. INCOME TAXES

22. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) EPS
Reconciliation of the differences between basic and diluted EPS for the years
ended March 31, 2023 and 2022, was as follows:

General and administrative expenses for the years ended March 31, 2023 and2022, consisted of the following:

The Group is subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of 30�62% for theyears ended March 31, 2023 and 2022�
The tax effects of significant temporary differences and tax loss
carryforwards, which result in deferred tax assets and liabilities, as of March 31,
2023 and 2022, were as follows:

Matters Relating to the Conditions of Financial Instruments(1) Group Policies for Financial Instruments
The Group provides comprehensive financial services, such as lease andsecurities centering on banking� As the central business operation of the Group,
the consolidated banking subsidiaries raise funds by deposits as its basic
function as a bank; the consolidated banking subsidiaries also procure funds bycall money transactions from short-term markets to maintain an adequate degreeof liquidity� The consolidated banking subsidiaries manage those funds throughlending to corporate customers and individuals, such as housing loans; investingin securities, mainly bonds; and investing in money markets�
The Group utilizes Asset Liability Management (ALM) to avoid unfavorable
floating interest rate fluctuation of the financial assets and liabilities it holds� As apart of ALM, the Group has entered into derivative transactions�

Millions of Thousands ofYen
SharesNet Income
WeightedAttributable
Averageto Owners of
Sharesthe Parent

Year Ended March 31, 2023
Basic EPS —Net income available
to common shareholders��������
Effect of dilutive securities:
Warrants ��������������������������������
Diluted EPS —Net income
for computation ���������������������
Year Ended March 31, 2022
Basic EPS —Net income available
to common shareholders��������
Effect of dilutive securities
Warrants �������������������������������
Diluted EPS —Net income
for computation ���������������������Yen

U.S. Dollars

Salaries and allowances ��������������������� ¥ 50,832
Periodic benefit costs �������������������������
1,796
Other ������������������������������������������������ 54,388
Total �������������������������������������������������� ¥107,016

EPS¥32,176

1,075,922¥29.90

$0.22

—

267

—

—

¥32,176

1,076,190¥29.89$0.22¥42,958

1,102,355¥38�96—466—¥42,958

1,102,822¥38�952023

Total equity per share������������������������� ¥849.92

2022¥888�10$6.37

Total equity���������������������������������������� ¥904,779
Deductions from total equity ���������������
93
Stock acquisition rights ���������������������
62
Non-controlling interests �������������������
31
Total equity attributable
to common shareholders������������������� ¥904,685$6,786,017
703
467
236

¥958,932$6,785,314$ 10,843
32,221
3,290
3,594
254,463$304,412

Thousands of
U.S. Dollars

Millions of Yen

2022

2023

Buildings ����������������������������������������������

¥207

¥ 371

$1,555Land ���������������������������������������������������

51

2,757

384

Equipment ��������������������������������������������

109

313

819

Software ����������������������������������������������

17

372

129

2023

Water supply subscription rights ������������������

0

0

0

Leasehold interests in land�������������������������

53

—

402

As for the operating assets of the Company, consolidated banking
subsidiaries and the others, business branches are grouped into a certain region
based on the complementarity of cash flows� As for the idle assets, each asset istreated as separate units� In addition, headquarters, administrative centers,
dormitories, corporate housings, and welfare facilities are treated as a corporate
assets because they do not generate independent cash flows� The recoverable
amount is mainly calculated based on the net sale value by deducting theestimated disposal cost from the real estate appraisal value, etc�

Number of Shares in Thousands
2023
2022

Number of shares of common stock used incomputing total equity pershare at year-end ������������������������������������������������� 1,064,433¥ 3,474
5,368
3,814
684
34,846¥48,189* Impairment losses on long-lived assets were recognized mainly on the properties of theBank’s branches in the Tochigi and Ibaraki prefectures, whose operations werediscontinued because the Company believed the investment would not be recoverable� The
components of impairment losses on fixed assets for the years ended March 31, 2023 and2022, were as follows:

Thousands of
U.S. Dollars
2023¥959,063
130
130—

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Total equity per share as of March 31, 2023 and 2022, is calculated based on
the following:
Millions of Yen
2023
2022

$381,252
13,472407,922$802,646

Other expenses for the years ended March 31, 2023 and 2022, consisted of thefollowing:

Loss on sales of stocks and othersecurities ����������������������������������������� ¥ 1,445
Write-off of loans �������������������������������
4,296
Impairment on fixed assets*����������������
438
Loss on disposal of fixed assets ����������
479
Other ������������������������������������������������ 33,927
Total �������������������������������������������������� ¥40,587

U.S. Dollars
2023¥ 51,227
4,870
58,526¥114,624

19. OTHER EXPENSES(2) Total equity per share
Total equity per share as of March 31, 2023 and 2022, was as follows:
Yen

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Millions of Yen
2023
2022

Deferred tax assets:
Allowance for loan losses ��������������� ¥ 32,987 ¥ 33,750
Write-offs of securities �������������������
8,968
8,964
Unrealized losses on available-forsale securities������������������������������
3,250—
Liability for retirement benefits �������
2,922
4,895
Provision for employee bonuses �����
1,879
1,904
Tax loss carryforwards �������������������
1,397
1,441
Depreciation ����������������������������������
677
872
Provision for reimbursement ofdeposits ��������������������������������������
594
664
Other ��������������������������������������������
9,826
10,596
Subtotal deferred tax assets������� 62,503
63,088Less valuation allowance���������������� (13,048) (13,261)
Total deferred tax assets ����������� 49,454
49,827
Deferred tax liabilities:
Unrealized gains on available-forsale securities������������������������������ (15,218) (45,139)
Retirement benefit trust �����������������
(3,937)(4,467)
Other �������������������������������������������� (10,271)(9,322)
Total deferred tax liabilities �������� (29,427) (58,929)
Net deferred tax assets (liabilities) ������� ¥ 20,027 ¥ (9,102)(2) Nature and Extent of Risks Arising from Financial Instruments
The Group’s financial assets are mainly loans made by the consolidated banking
subsidiaries to domestic corporations and individuals in Japan, which areexposed not only to interest rate fluctuation risks but also to customers’ credit
risks� Securities and investment securities, such as bonds, stocks, andinvestment trusts, are possessed to trade, to hold to maturity dates to generate
stable interest income, and to promote business relationships with the issuers�
These securities are exposed to the issuers’ credit risks, interest rate fluctuation
risks, and market price fluctuation risks�
The Group’s main financial liabilities are deposits received by the
consolidated banking subsidiaries, which are exposed to interest rate fluctuation
risks and liquidity risks� Borrowed money and bonds are exposed to the risks that
the Group may not be able to repay them on their maturity dates if, under certain
circumstances, the Group is not able to access a capital market�
The consolidated banking subsidiaries utilize derivative transactions tohedge the customers’ interest and currency risks and to control the interest rate
fluctuation risks in ALM� Derivatives transactions are utilized to hedge interest
rate fluctuation risks, foreign currency exchange rate fluctuation risks, andmarket price fluctuation risks on the Group’s financial assets and liabilities�
Derivatives mainly include interest rate swaps, currency swaps, and bond futures
and are exposed to the interest rate fluctuation risks, market price fluctuation
risks, foreign currency exchange rate fluctuation risks, and credit risks�
Hedge accounting is applied to certain derivatives�
In hedge transactions against foreign currency fluctuation risks, mainly
currency swaps and foreign exchange swaps, the effectiveness of hedging isdetermined by confirming that the amount of the hedging instruments is generally
consistent with that of the hedged items� Regarding an exceptional accounting
treatment in interest rate swaps, post testing is conducted to confirm that
requirements for the treatment are satisfied�
Derivatives transactions to which hedge accounting is not applied are
exposed to interest rate fluctuation risks, foreign currency exchange rate
fluctuation risks, price fluctuation risks, and credit risks�

4,457
73,702
468,786(97,867)
370,919(114,141)(29,533)(77,035)(220,709)$ 150,210

Future minimum payments under noncancelable operating leases as of March
31, 2023 and 2022, were as follows:
Lessee1,079,755

Due within one year ������������������������
Due after one year ��������������������������
Total ����������������������������������������������

Other income for the years ended March 31, 2023 and 2022, consisted of thefollowing:¥ 7,320
3,863
261
36,177¥47,623

24,37821,917
14,100
10,4805,080

21. LEASES

17. OTHER INCOME

Gain on sales of stock andother securities �������������������������������� ¥45,495
Recoveries of write-off of claims ���������
2,662
Gain on disposal of fixed assets ����������
241
Other ������������������������������������������������ 34,856
Total ������������������������������������������������� ¥83,256$ 247,410
67,262Since the difference between the legally effective tax rate and the actual
effective tax rate after applying tax effect accounting is equal to or less than 5%of the legally effective tax rate, a reconciliation between the normal effective
statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statement of income for the years ended March 31, 2023 and2022, is omitted�
As the Company and some subsidiaries have adopted the group tax sharing
system since the current fiscal year, the accounting treatment and disclosure ofcorporate tax and local corporate tax as well as tax-effect accounting relating tothese taxes are in accordance with the “Practical Solution on the Accounting andDisclosure under the Group Tax Sharing System” (ASBJ Guidance No� 42, August
12, 2021)�

Millions of Yen
2023
2022

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Thousands of
U.S. Dollars
2023

¥ 94
46
¥140

(3) Risk Management for Financial Instruments(a) Integrated Risk Management
The Group conducts integrated risk management to holistically control risks fromvarious financial assets and liabilities and risks related to the banking business�More specifically, the periodically quantified risks of the Group are controlled so
as to not exceed Tier 1 capital allocated by each risk category� The bankassesses unquantifiable risks using stress tests and other measures�

Thousands of
U.S. Dollars
2023

¥ 82
54
¥137

$ 706
347
$1,053

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Lessor$341,227
19,972
1,809
261,433$624,442

Due within one year ������������������������
Due after one year ��������������������������
Total ����������������������������������������������

123

¥ 7
8
¥15

¥ 8
12
¥20

$ 53
63
$117

124

(b) Credit Risk Management
The Group has enacted “Group Guidelines for Credit Risk Management,” which
provides for basic policies comprising appropriate credit exposure management
on individual and portfolio bases� The portfolio-based credit exposure
management involves diversification of risks�Credit risk management divisions have been segregated from the divisions
under business headquarters to achieve rigorous credit review and conduct
monitoring of borrowers’ financial condition to prevent deterioration of loans�In the self-assessments that evaluate the quality of assets, the Group
designs and operates controls over self-assessment of the quality of assets
which is performed in multiple steps� The assessment of the quality of assets
performed by the business offices is reviewed by the credit-related divisions in
the headquarters and then independently examined by the internal audit division�
As for credit risks of the issuers of securities and the counterparties ofderivatives transactions, global markets and market operation divisions monitor
credit information and market prices and give the issuers and counterparties
credit ratings, as well as carry out assessments of the issuers and counterparties
as general borrowers�(iii) Validity of VaR
The Group performs backtesting to compare VaR calculated by its internalmeasurement model with the actual profit and loss to confirm whether the model
captures market risks with sufficient accuracy� However, there could be cases inwhich VaR cannot capture risks under sudden and dramatic changes in market
conditions beyond normal circumstances since VaR is statistically calculated
based on historical market fluctuation�(d) Liquidity Risk Management
Under “Group Liquidity Risk Management Rules,” the Group conducts financing
activities after fully analyzing its cash flows and strives to maintain the diversity
and stability of funding sources while paying continuous attention to theconsolidated balance sheet structure, lines of credit provided to the Group,
collateral management, and costs to maintain the liquidity�(4) Supplementary Explanation on Fair Values of Financial Instruments
The fair values of financial instruments are based on their market prices and, incases where market prices are not readily available, reasonably calculated
prices� Such prices have been calculated using certain assumptions and may
differ if calculated based on different assumptions�(c) Market Risk Management① Market Risk Management Measures
The Group manages market risks by ALM� Risk management policies andprocedures are prescribed in relevant ALM rules and manuals, and these policies
decided in ALM/Risk Management Committee and so forth, are closely monitored
and regularly discussed� Market risk is measured by using Value at Risk(VaR)� In
order not to exceed the limit, the ALM/Risk Management Committee monitors thestatus of conflicts and compliance with the limit on a monthly basis by setting thealarm points�

Matters Relating to Fair Value of Financial Instruments and Others
The carrying amounts in the consolidated balance sheet and the fair values offinancial instruments, and unrealized gains or losses on them were as below asof March 31, 2023 and 2022� The table below does not include equity securities
and other securities without readily available market prices or investments inpartnerships and other investments� Notes to cash and due from banks, callloans and bills bought, foreign exchanges (assets and liabilities), call money andbills sold, payables under repurchase agreements, and payables under securities
lending transactions are omitted because these are settled in the short term andtheir fair values approximate their carrying amounts� Immaterial line items arealso omitted�

② Market Risk Quantitative information(i) Banking Accounta� Interest Rate Risk
The Group adopts the variance-covariance method as the measurement method(a holding period of six months, a confidence interval of 99%, and an observation
period of one year) for calculating VaR related to interest rate risk of loans andbills discounted, domestic bonds, deposits, borrowed money, corporate bonds,
and derivatives, such as interest rate swaps� The Group uses the historicalsimulation method (a holding period of six months, a confidence interval of 99%,
and an observation period of five years) for the calculation of VaR related tointerest rate risk of foreign bonds, trust beneficiary right, market fund transaction,and derivatives like interest rate swaps and currency swaps�
As of March 31, 2023 and 2022, the Group’s VaR related to interest raterisks, which is a simple sum of its consolidated banking subsidiaries’ VaR, were¥145,046 million ($1,087,876 thousand) and ¥85,008 million, respectively�

Millions of Yen
2023
Carrying
Amount(1) Securities:
Held-to-maturity securities ���������������������� ¥ 161,861
Available-for-sale securities��������������������� 3,452,358(2) Loans and bills discounted���������������������� 12,436,196
Allowance for loan losses*1 ���������������������
(86,669)
Net ���������������������������������������������������� 12,349,527
Total assets ������������������������������������������������ ¥15,963,747(1) Deposits ������������������������������������������������ ¥17,137,285(2) Negotiable certificates of deposit�������������
371,289(3) Borrowed money ������������������������������������ 2,000,858
Total liabilities¥19,509,433
Derivative instruments*2 :Hedge accounting is not applied �������������� ¥1,158
Hedge accounting is applied*3 �����������������
(20,779)
Total derivative instruments ������������������������� ¥ (19,621)

Fair Value¥

Thousands of U.S. Dollars
2023
Carrying
Unrealized
AmountFair Value Gains/Losses

2022
Unrealized
Gains/Losses

161,043¥ (817)3,452,358—

Carrying
Amount¥Unrealized
Gains/Losses

Fair Value

158,914¥

158,410

4,481,342¥

4,481,342(503)$ 1,213,989$ 1,207,860$ (6,129)—

25,893,338

25,893,338—

93,273,807

11,737,377(650,036)(87,958)
12,356,898

7,371

11,649,418

11,707,670

58,252

92,623,770

92,679,055

55,284¥15,970,301¥6,553¥16,289,675¥16,347,424¥57,748$119,731,097$119,780,252$49,155¥17,137,335¥ (49)¥16,825,736¥16,825,818

¥

(82)

$128,532,855$128,533,229$

371,289—

310,724

310,724—

2,784,739

2,784,739

2,000,857

1

3,795,700

3,795,696

3

15,006,817

15,006,808¥19,509,482¥ (48)¥20,932,161¥20,932,239

¥

(78)

$146,324,412$146,324,776

$

¥

¥

¥

¥

¥

—

$

$

$

1,158
(20,779)

¥

—

2,020

—

(19,621)

¥

—

¥

2,020

(18,762)(18,762)(16,741) ¥(16,741)

8,688

—
¥

—

$

—
9

8,688

(155,854)(155,854)(147,166) $(147,166)

(374)

(364)
—
—

$

—

*1 Allowances for loan losses relevant to loans and bills discounted have been deducted�
*2 Derivative instruments recorded as trading assets, trading liabilities, other assets, and other liabilities include derivative transactions� Derivative instruments are presented as net of assets andliabilities associated with derivative transactions�*3 Interest rate swaps, currency swaps, and other derivative contracts have been designated as hedging instruments to fix cash flows of financial assets, including loans and bills discounted andsecurities, and financial liabilities being hedged, offset changes in fair values, or reduce or eliminate foreign currency exchange rate fluctuation risks� Deferral hedge accounting and exceptional
accrual method have been applied to these swaps� The “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (Practical Solution No� 40, March 17, 2022) has been
applied to these hedging relationships�

(a) The table below shows the carrying amounts of equity securities and other securities without readily available market prices and investments in partnerships and otherinvestments in the consolidated balance sheet� These line items are not included in “Available-for-sale securities” stated in information on fair values of financial
instruments�
Millions of Yen

Equity securities without readily available market price*1*2 ������������������������������
Investments in partnerships*3 �����������������������������������������������������������������������

2023

2022

Thousands of U.S. Dollars
2023¥ 4,350
43,739¥ 4,075
37,968$ 32,631
328,053*1 Based on Item 5 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No� 19, March 31, 2020), equity securities without readily
available market prices are out of the scope of the fair value disclosure�*2 During the year ended March 31, 2023, impairment losses on equity securities without readily available market price of ¥20 million ($152) were recognized�
*3 Based on Item 24-16 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No� 31, June 17, 2021; hereinafter the “Fair Value Measurement
Guidance”), investments in partnerships and other investments are out of the scope of the fair value disclosure�(b) The scheduled redemption amounts of monetary claims and securities with contractual maturities after the consolidated balance sheet date

March 31, 2023

Securities:
Held-to-maturity securities �����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Available-for-sale securities
with contractual maturities����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Foreign currency bonds �����������������������������
Other��������������������������������������������������������
Loans and bills discounted*1 �������������������������������
Total �����������������������������������������������������������������

b� Price Fluctuation Risk
The Group adopts the historical simulation method (a holding period of six
months, a confidence interval of 99%, and an observation period of five years)
for calculating VaR related to price fluctuation risk of listed equities andinvestment trust�
As of March 31, 2023 and 2022, the Group’s VaR related to pricefluctuation risk, which is a simple sum of its consolidated banking subsidiaries’
VaR, were ¥146,050 million ($1,095,404 thousand) and ¥142,684 million,
respectively� Correlation between interest rate risk and price fluctuation risk has
not been considered�Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years

¥

¥

¥

¥

¥

27,941—150
27,791

253,270—
156,20742,972
41,032
13,057
3,063,510¥3,344,722

45,295—300
44,995472,169
35,228272,824
108,772
32,177
23,166
1,990,579¥2,508,044(ii) Trading Account
The Group adopts the historical simulation method (a holding period of 10 days,
a confidence interval of 99%, and an observation period of five years) for
calculating VaR related to trading securities; trading purpose foreign exchangetransactions; and trading purpose derivatives, such as forward transactions andoption transactions� As of March 31, 2023 and 2022, the Group’s VaR related to
trading account, which is simple sum of its consolidated banking subsidiaries’
VaR, were ¥11 million ($87 thousand) and ¥7 million, respectively�

125

126

26,581—150
26,431

551,095—
288,539
50,498148,198
63,858
1,548,104¥2,125,780¥

54,11350,000—4,113

271,345
41,150100,629
27,91357,17644,476
1,033,859¥1,359,319

151
—
—
151

565,854—
125,672
25,882
134,795
279,504
1,121,934¥1,687,939

1,000
—
—
1,000

1,038,765
267,243
79,802428,097
228,512
35,1093,263,101¥4,302,866

March 31, 2022

Securities:
Held-to-maturity securities �����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Available-for-sale securities
with contractual maturities����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Foreign currency bonds �����������������������������
Other��������������������������������������������������������
Loans and bills discounted*2 �������������������������������
Total �����������������������������������������������������������������

March 31, 2023

Matters Relating to Breakdown by Level of the Fair Value Hierarchy of Financial Instruments

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years

¥

¥

¥

¥

¥

27,788—150
27,638308,295
25,000124,605
114,339
42,767
1,582
2,774,168¥3,110,252

Due in 1 Yearor Less

Securities:
Held-to-maturity securities ����������������������������� $ 209,568
Japanese national government bonds���������
—Japanese local government bonds �������������
1,125Japanese corporate bonds�������������������������
208,443
Available-for-sale securities
with contractual maturities����������������������������
1,899,575
Japanese national government bonds���������
—Japanese local government bonds �������������
1,171,589
Japanese corporate bonds�������������������������
322,305
Foreign currency bonds �����������������������������
307,748
Other��������������������������������������������������������
97,933Loans and bills discounted*1 ������������������������������� 22,976,901
Total ����������������������������������������������������������������� $25,086,043

42,108—300
41,808620,618
35,000307,222
103,425
126,839
48,132
1,892,049¥2,554,776

24,832—150
24,682¥471,895—
232,353
59,399129,035
51,107
1,458,429¥1,955,158

5,158
—
—
5,158

670,656
41,150188,829
23,087
348,916
68,673
990,559¥1,666,374

50,21950,000—219

621,013—
136,272
44,260178,659
261,821
1,074,932¥1,746,165

1,000
—
—
1,000

1,362,174
654,300
72,464
420,639
149,867
64,903
3,156,713¥4,519,887

Due after 1 Yearthrough 3 Years

Thousands of U.S. Dollars
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years

$

$

$

$

339,723—2,250
337,473

3,541,362
264,217
2,046,236
815,818
241,341
173,751
14,929,718$18,810,803

199,363—
1,125
198,238

4,133,317—
2,164,099
378,750
1,111,516
478,952
11,611,071$15,943,751$

405,863
375,009—30,8542,035,144
308,633
754,741
209,353
428,832
333,5857,754,144$10,195,150

1,133
—
—
1,133

4,244,016—
942,564
194,126
1,010,993
2,096,333
8,414,716$12,659,865

7,500
—
—
7,500

7,790,933
2,004,373
598,532
3,210,812
1,713,885
263,331
24,473,876$32,272,309*1 As of March 31, 2023, loans and bills discounted with no contractual maturities amounting to ¥250,733 million ($1,880,551 thousand) and loans and bills discounted whose cash flow cannot
be estimated, such as “legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans, amounting to ¥164,373 million ($1,232,831 thousand) are not included�*2 As of March 31, 2022, loans and bills discounted with no contractual maturities amounting to ¥226,801 million and loans and bills discounted whose cash flow cannot be estimated, such as“legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans, amounting to ¥163,722 million are not included�The fair values of financial instruments are classified into the following three levels according to the observability and significance of the inputs used for fair value
measurement�
Level 1 fair value:
Level 2 fair value:
Level 3 fair value:

Fair value measured by quoted prices of the assets or liabilities being measured that are developed in active markets among the observable
inputs for fair value measurement
Fair value measured by inputs for fair value measurement other than the Level 1 inputs among the observable inputs for fair value measurement
Fair value measured by unobservable inputs for fair value measurement

If multiple inputs that significantly impact the fair value measurement are used, the fair value is classified into the level with the lowest priority in the fair value
measurement among the levels to which those inputs belong�(1) Financial instruments recorded at fair value in the consolidated balance sheet
Millions of Yen
Fair Value
March 31, 2023

Level 1

Securities:
Available-for-sale securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Equity securities ��������������������������������������������
Foreign currency bonds����������������������������������
Other ������������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Other ������������������������������������������������������������
Total assets �������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Bond-related �������������������������������������������������
Other ������������������������������������������������������������
Total liabilities ����������������������������������������������������

Level 2

Level 3

Total

¥340,152——
194,286
55,370125,473¥—
1,023,786
599,546
17,057447,829
448,365¥——
80,561—
119,627—¥ 340,152
1,023,786
680,108
211,344622,827
573,839———¥715,283

9,726
12,820—¥2,559,132——
59¥200,248

9,726
12,82059¥3,474,665

¥

¥

¥

¥

¥

—
—
7
—
7

¥

4,273
37,887——42,160

—
—
—
59
59

¥

¥

4,273
37,8877
5942,227

Thousands of U.S. Dollars
Fair Value(c) The scheduled repayment amounts of borrowed money and other interest-bearing liabilities after the consolidated balance sheet date

March 31, 2023

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 ��������������������������������������������������������
Negotiable certificates of deposit�������������������������
Borrowed money ������������������������������������������������
Total �����������������������������������������������������������������

¥16,146,991
371,289
1,790,685¥18,308,965¥829,824—
124,105¥953,929

March 31, 2022

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 ��������������������������������������������������������
Negotiable certificates of deposit�������������������������
Borrowed money ������������������������������������������������
Total �����������������������������������������������������������������

¥15,818,465
310,724
3,584,657¥19,713,847¥879,596—
117,123¥996,720

March 31, 2023

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 �������������������������������������������������������� $121,105,461
Negotiable certificates of deposit�������������������������
2,784,739
Borrowed money ������������������������������������������������
13,430,476
Total ����������������������������������������������������������������� $137,320,677$6,223,838—
930,813$7,154,651

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

March 31, 2023

Due after 7 Years
through 10 Years

Due after 10 Years¥22,463—3¥22,467¥25,615—
5¥25,620

¥—
—
4
¥ 4

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years¥6,050—3¥6,054¥24,863—5¥24,869

¥—
—
6
¥ 6

Thousands of U.S. Dollars
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years$192,117—
42$192,159

$—
—
35
$35

¥112,391—
86,054¥198,446¥ 96,758—
93,903¥190,662$ 842,959—
645,424$1,488,383$168,479—
28$168,507

Securities:
Available-for-sale securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Equity securities ��������������������������������������������
Foreign currency bonds����������������������������������
Other ������������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Other ������������������������������������������������������������
Total assets �������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Bond-related �������������������������������������������������
Other ������������������������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

$2,551,207——
1,457,189
415,289
941,077$———$5,364,762
$

$

—
—
54
—
54

72,94996,154—$19,193,974——
448$1,501,904

72,94996,154448$26,060,640

$

$

$

—
—
—
449
449

$

$32,049
284,16654449
316,717

The table above does not include the investment trusts and other securities to which the measures of net asset value of investment trusts as fair value have been
applied, which are set forth in Item 24-9 of the Fair Value Measurement Guidance� The amount of the investment trusts and other securities in the consolidated balance
sheet is ¥300 million ($2,250 thousand)�

*1 In deposits, the cash flow of demand deposits is included in “Due in one year or less�”127$ 2,551,207
7,678,589
5,100,939
1,585,126
4,671,324
4,303,902

32,049284,166——
316,215

$

Total

—
—
604,225—
897,230—$—
7,678,589
4,496,714
127,938
3,358,804
3,362,825

Level 3

128

Millions of Yen
Fair Value
March 31, 2022

Securities:
Available-for-sale securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Equity securities ��������������������������������������������
Foreign currency bonds����������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Equity-related ������������������������������������������������
Bond-related �������������������������������������������������
Other ������������������������������������������������������������
Total assets �������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Other ������������������������������������������������������������
Total liabilities ����������������������������������������������������

Level 1Millions of Yen
Fair Value

Level 2

Level 3

Total

¥ 754,006——
240,860
100,105¥—
1,065,641
676,378
13,326803,878¥——
90,242—
63,371¥ 754,006
1,065,641
766,620
254,187
967,355———
2—¥1,094,975

6,988
7,475
1,136
—
—
¥2,574,826

—
—
—
—
63
¥153,676

6,988
7,475
1,136
2
63
¥3,823,478

¥

¥

¥

¥

—
—
—
—

¥

¥

1,710
30,635—32,345

¥

—
—
63
63

¥

1,710
30,63563
32,408*The table above does not include the investment trusts and other securities to which the transitional measures have been applied, which are set forth in Item 26 of the Fair Value Measurement
Guidance� The amount of the investment trusts and other securities in the consolidated balance sheet is ¥673,530 million�

(2) Financial instruments other than those recorded at fair value in the consolidated balance sheet
Millions of Yen
Fair Value
March 31, 2023

Securities:
Held-to-maturity securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Loans and bills discounted �����������������������������
Total assets �������������������������������������������������������
Deposits
Deposits �������������������������������������������������������
Negotiable certificates of deposit ��������������������
Borrowed money �������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

Level 3

Total

¥ 56,272———¥ 56,272

¥

—
599
2,586
—
3,185

¥

—
—
101,585
12,356,898¥12,458,484¥¥¥17,137,335
371,2892,000,857¥19,509,482¥¥17,137,335
371,2892,000,857¥19,509,482

¥

¥

—
—
—
—

56,272
599
104,172
12,356,898¥12,517,942

—
—
—
—

¥

Thousands of U.S. Dollars
Fair Value
March 31, 2023

Securities:
Held-to-maturity securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Loans and bills discounted �����������������������������
Total assets �������������������������������������������������������
Deposits
Deposits �������������������������������������������������������
Negotiable certificates of deposit ��������������������
Borrowed money �������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2$422,054———$422,054
$

$

—
—
—
—

$

$

—
4,494
19,399—23,893$128,533,229
2,784,739
15,006,808$146,324,776

129

Level 3

Total

$

—
—
761,91392,679,055$93,440,967

422,0544,494
781,31192,679,055$ 93,886,914$$128,533,229
2,784,739
15,006,808$146,324,776

$

—
—
—
—

$

March 31, 2022

Securities:
Held-to-maturity securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Loans and bills discounted �����������������������������
Total assets �������������������������������������������������������
Deposits
Deposits �������������������������������������������������������
Negotiable certificates of deposit ��������������������
Borrowed money �������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

Level 3

Total

¥ 57,450———¥ 57,450

¥

—
599
997
—
1,597

¥

—
—
99,363
11,707,670¥11,807,034¥¥¥16,825,818
310,724
3,795,696¥20,932,239¥¥16,825,818
310,724
3,795,696¥20,932,239

¥

¥

—
—
—
—

¥

—
—
—
—

57,450599
100,360
11,707,670¥11,866,081(a) Explanation of valuation techniques and inputs used for fair value measurement
AssetsSecurities
The fair values of securities for which unadjusted quoted prices in active markets
are available are classified as Level 1, which mainly includes listed equities andJapanese national government bonds�
In case the markets are inactive even if the quoted prices are available, thefair values are classified as Level 2, which mainly includes Japanese local
government bonds and Japanese corporate bonds�
The fair values of investment trusts for which there are no market
transaction price are classified as Level 2 based on the net asset values if there
are no significant restrictions on the level at which market participants are
required to pay for the risk in relation to cancellation or repurchase requests�
In case the quoted prices are not available, the fair values are the prices
valued by an information vendor, a broker or other sources of market information,or the prices determined by valuation techniques such as the discounted cash
flow method� In valuing these prices, observable inputs are used to the
maximum, which include market rates, government bond yields, credit spreads,
default rates, and recovery rates� When the fair values are measured bysignificant unobservable inputs, they are classified as Level 3�
The fair values of private placement bonds are measured by reflecting
default rates and other credit risk factors in the discounted present value
determined by a discount rate adjusted for a market rate� As the discount rateand default rates are unobservable, the fair values are classified as Level 3�
The fair values of securitized products are based on valuations obtained
from an information vendor, a broker or other sources of market information�
These fair values are classified as Level 3 when significant unobservable inputs
are used and as Level 2 when other inputs are used�The carrying amounts of loans and bills discounted that do not have fixedmaturities due to loan characteristics, such as limited loan amounts within thevalue of pledged assets, approximate fair value due to their expected repayment
periods and interest rate conditions� These fair values are classified as Level 3�
Liabilities
Deposits and negotiable certificates of deposit
The fair values of demand deposits are the amounts paid immediately according
to the demands on the consolidated balance sheet date� The fair values of time
deposits are determined by discounting the contractual cash flows grouped by
the remaining duration at the rates that would be applied for similar new
contracts�
The carrying amounts of time deposits whose deposit terms are one year orless approximate fair value because of their short deposit terms� These fairvalues are classified as Level 2�
Borrowed money
The fair value of borrowed money is determined by discounting the principal andinterest amount of the borrowed money grouped by the remaining duration at therate that would be applied for similar new contracts� The carrying amount ofborrowed money with a floating-interest rate is considered to approximate fairvalue because the market rate is promptly reflected in the floating-interest rate
and the credit risks of the Company and its consolidated subsidiaries have notchanged significantly after lending� The carrying amount of borrowed money withmaturity of one year or less approximates fair value because of its short maturity
period� This fair value is classified as Level 2�
Derivatives
The fair values of derivatives for which unadjusted quoted prices in active
markets are available are classified as Level 1, which mainly includes bondfutures�However, since most derivatives are over-the-counter transactions andthere are no quoted prices, the fair values of derivatives are measured using
valuation techniques, such as the discounted cash flow method and the BlackScholes model, depending on the type of transaction and the maturity period�The main inputs used in those valuation techniques include interest rates,
currency rates, stock prices, and volatility� Price adjustments are also madebased on the credit risk of counterparties and the credit risk of the consolidatedbanking subsidiaries themselves� When unobservable inputs are not used or the
impact of unobservable inputs is not material, the fair values are classified as
Level 2, which includes such transactions as plain vanilla interest rate swaps andforward exchange contracts� When significant unobservable inputs are used, thefair values are classified as Level 3�

Loans and bills discounted
The fair values of loans and bills discounted are determined by discounting theprincipal and interest amount at the discount rate reflecting credit risk and otherrisks in market rates by categories according to the types, internal ratings andterms of the loans and bills discounted� The carrying amounts of loans and bills
discounted with floating-interest rates approximate fair value when customers’
credit risks have not changed significantly after lending because the market rates
are promptly reflected in the floating-interest rates� The carrying amounts ofloans and bills discounted with maturity less than one year approximate fair value
because of their short maturities�
For loans to obligors classified as “legal bankruptcy,” “virtual bankruptcy,”and “possible bankruptcy,” an allowance is provided based on the discounted
cash flow method or based on amounts expected to be collected through thedisposal of collateral or execution of guarantees� The carrying value, net of theallowance as of the consolidated balance sheet date, is a reasonable estimate of
the fair values of those loans�

130(b) Information on Level 3 fair value of financial instruments recorded at fair value in the consolidated balance sheet(1) Quantitative information on significant unobservable inputs
March 31, 2023

Securities:
Available-for-sale securities
Japanese corporate bonds

March 31, 2022

Securities:
Available-for-sale securities
Japanese corporate bonds

Valuation TechniqueSignificant Unobservable Input

Input Range

Weighted-Average Input

Discounted cash flow method

Discount rate
Default rate

0.445% — 0.852%
0.030% — 8.306%

0. 535%
0. 202%

Valuation TechniqueSignificant Unobservable Input

Input Range

Weighted-Average Input

Discount rate
Default rate

0�206% — 0�332%
0�030% — 8�306%

0�230%
0�238%

Discounted cash flow method(3) Explanation of the fair value measurement process
In the Group, the middle and back offices at the consolidated banking
subsidiaries have established a fair value measurement policy and procedures�
The Group verifies the reasonableness of the valuation techniques and inputs
used for fair value measurement and the appropriateness of the fair value-levelclassification for the measured fair values and level classification�
The Group uses valuation models that most appropriately reflect the nature,
characteristics and risks of individual assets to measure their fair values� Whenusing quoted prices obtained from third parties, the Group also verifies thereasonableness of the prices in an appropriate way; for example, examining
valuation techniques and inputs used and comparing the prices with the fairvalues of similar financial instruments�

(4) Explanation of the impact on fair value when changing significant
unobservable inputs
The significant unobservable inputs used to measure the fair values of private
placement bonds are the discount rate and default rates� In general, a significant
increase or decrease in these inputs causes a significant decrease or increase inthese fair values�(2) Changes from the beginning balance to the ending balance, and unrealized gains or losses recognized in income or loss
Millions of Yen
Income/Loss or
Other Comprehensive Income for the Year

March 31, 2023

Securities:
Available-for-sale securities
Japanese corporate bonds��������
Equity securities �����������������������
Derivative transactions: �����������������
Other���������������������������������������Net ofPurchase, Sale,
Issuance andSettlement

Transfer toLevel 3 Fair
Value

Transfer fromLevel 3 Fair
Value

Unrealized Gains/Losses on
Financial Assets andFinancial Liabilities Held asof the Consolidated Balance
Sheet Date, Which are
Recorded in Income/Loss
Ending Balance
for the Year

Beginning
Balance

Recorded in
Income/Loss*1

Recorded in Other
Comprehensive
Income*2¥90,242
63,371¥
1
4,958¥(280)(955)¥ (9,401)
52,253¥——¥——¥ 80,561
119,627

(0)

(0)

—

—

—

—

(0)

¥

—
4,987
—

Millions of Yen
Income/Loss or
Other Comprehensive Income for the Year

March 31, 2022

Securities:
Available-for-sale securities
Japanese corporate bonds��������
Equity securities �����������������������
Derivative transactions: �����������������
Other���������������������������������������

Beginning
Balance

Recorded in
Income/Loss*1

Recorded in Other
Comprehensive
Income*2

Net ofPurchase, Sale,
Issuance andSettlement

Transfer toLevel 3 Fair
Value

Transfer fromLevel 3 Fair
Value

Unrealized Gains/Losses on
Financial Assets andFinancial Liabilities Held asof the Consolidated Balance
Sheet Date, Which are
Recorded in Income/Loss
Ending Balance
for the Year

(1) Derivative Transactions to Which Hedge Accounting Is Not Applied as of March 31, 2023 and 2022
With respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fair value, and the related valuation gains (losses) at the fiscal
year end date by transaction type and valuation method of fair value are described below� Note that contract amounts do not represent the market risk exposure
associated with derivatives�
Consolidated banking subsidiaries had the following derivative contracts, which were quoted on listed exchanges, outstanding as of March 31, 2023 and 2022, as
follows:

March 31, 2023

Bond-related transactions
Bond futures:
Sold ����������������������������������������������
Bought ������������������������������������������
Total ���������������������������������������������������

March 31, 2022

¥93,499
56,484

¥ (0)
6,155

¥(418)(219)¥(2,838)
951

¥—
—

¥—
—

¥90,242
63,371

(0)

0

—

—

—

—

(0)

¥

—
6,205
—

Thousands of U.S. Dollars
Income/Loss or
Other Comprehensive Income for the Year

Unrealized Gains/Losses on
Financial Assets andFinancial Liabilities Held asof the Consolidated Balance
Sheet Date, Which are
Recorded in Income/Loss
Ending Balance
for the Year

Beginning
Balance

Recorded in
Income/Loss*1

Recorded in Other
Comprehensive
Income*2

Net ofPurchase, Sale,
Issuance andSettlement

Transfer toLevel 3 Fair
Value

Transfer fromLevel 3 Fair
Value

Securities:
Available-for-sale securities
Japanese corporate bonds�������� $676,834
Equity securities ����������������������� 475,299
Derivative transactions: �����������������
Other���������������������������������������
(0)$
8
37,188$(2,104)(7,165)$ (70,513)
391,908

$—
—

$—
—

$604,225
897,230

(0)

—

—

—

—

(0)

March 31, 2023

23. DERIVATIVES$

Bond-related transactions
Bond futures:
Sold ���������������������������������������������
Bought �����������������������������������������
Total ���������������������������������������������������

Contract
AmountMillions of Yen
Contract AmountDue afterFair
One Year
Value

Contract
AmountUnrealized
Gains/Losses

¥437

—

¥(7)

¥(7)

$3,279

—

$(54)

—

—

—

—

—

—

—

¥(7)

¥(7)

—
—

$(54)

$(54)

—

Contract
Amount

¥601
—
—

—

Millions of Yen
Contract AmountDue afterFair
One Year
Value

—
—
—

¥2
—
¥2

—

Unrealized
Gains/Losses

¥2
—
¥2

Note: 1 The above transactions are stated at fair value, and the related valuation gains (losses) are reported in the consolidated statement of income�2 Fair values of above transactions are determined based on closing prices at the Osaka Exchange or other relevant exchanges�

—37,404—*1 The amounts are included in “Interest and dividends on securities,” “Other operating income,” and “Other operating expenses” in the consolidated statement of income�*2 The amounts are included in “Unrealized gains (losses) on available-for-sale securities” in the consolidated statement of comprehensive income�

131

Unrealized
Gains/Losses

Thousands of U.S. Dollars
Contract AmountDue afterFair
One Year
Value

132

$(54)

Consolidated banking subsidiaries had the following derivative contracts, which were not quoted on listed exchanges, outstanding as of March 31, 2023 and 2022, are as
follows:

March 31, 2023

Contract
AmountMillions of Yen
Contract AmountDue afterFair
One Year
Value*1*2

Unrealized
Gains/Losses

Contract
Amount¥(2,348)
4,257$1,743,921
1,743,921

Thousands of U.S. Dollars
Contract AmountDue afterFair
One Year
Value*1*2

Unrealized
Gains/Losses$1,636,492
1,636,492$ (17,618)
31,931

Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating �����
Receive floating and pay fixed �����
Cap transactions:¥232,517
232,517¥218,193
218,193¥(2,348)
4,257$ (17,618)
31,931

Sold ������������������������������������������
Bought ��������������������������������������
Swaption:����������������������������������������

1,633
1,633

958
958

(10)
11

17
(1)

12,24912,249

7,192
7,192

(82)
84

133
(12)

Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Currency-related transactions

58,17058,170—58,17058,170—(512)
512¥ 1,908227
512¥2,664436,286
436,286—

436,286
436,286—(3,841)
3,842$ 14,316

1,706
3,842
$ 19,982

Currency swaps�������������������������������
Forward exchange contracts:¥201,889¥153,021

¥ 136

¥ 136

$1,514,206$1,147,686$ 1,024$ 1,024

Sold ������������������������������������������
Bought ��������������������������������������
Currency option contracts:

20,441
15,980

4,487
4,231

136
70

136
70

153,313
119,860

33,65931,734

1,027
525

1,027
525

Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Other transactions

272,241
272,241—

212,153
212,153—(9,824)8,737¥ (743)(3,772)
5,747¥2,3182,041,862
2,041,862—

1,591,190
1,591,190—(73,683)
65,533$ (5,574)(28,296)
43,109$ 17,389¥ 5,900
5,900——

44,251
44,251——

Earthquake derivatives: ��������������������
Sold ������������������������������������������
Bought ��������������������������������������

—March 31, 2022

Contract
Amount

—

¥

(59)
59

—
—

¥

(0)

—

Millions of Yen
Contract AmountDue afterFair
One Year
Value*1*2$——

Unrealized
Gains/Losses

Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating ����Receive floating and pay fixed �����
Receive floating and pay floating ���
Cap transactions
Sold ������������������������������������������
Bought ��������������������������������������
Swaption:
Sold ������������������������������������������
Bought ��������������������������������������
Total
Currency-related transactions
Currency swaps:������������������������������
Forward exchange contracts:
Sold ������������������������������������������
Bought ��������������������������������������
Currency option contracts:
Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Other transactions
Earthquake derivatives:
Sold ������������������������������������������
Bought ��������������������������������������

¥189,153
189,153
1,323¥182,728
182,728
—

¥ 708
1,254
(2)

¥ 708
1,254
(2)

1,147
1,147

792
792

(3)
3

12
(3)

26,22026,220—26,22026,220—(234)
234¥ 1,959(0)234¥ 2,202¥161,773¥149,929

¥ 140

¥ 140

73,99460,856

4,292
4,095

(3,545)
3,576(3,545)
3,576

63,47063,470—41,954
41,954—(1,456)
1,334
¥49

(184)
654
¥ 642

¥ 6,000
6,000

—
—

¥

(63)
63

—
—

¥

(0)

—

—

—

$

(449)
449

—
—

$

(0)

—

(2) Derivative Transactions to Which Hedge Accounting is Applied as of March 31, 2023 and 2022
With respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fair value at the fiscal year end date by transaction type andhedge accounting method and valuation method of fair value are as follows� Note that contract amounts do not represent the market risk exposure associated with
derivatives�
Consolidated banking subsidiaries had the following derivative contracts, which were accounted for based on the principle method, outstanding as of March 31,
2023 and 2022, as follows:

March 31, 2023

Hedged Item

Interest rate-related transactions*1*4
Interest rate swaps:
Receive floating and pay fixed ������Securities
Total �����������������������������������������������
Currency-related transactions*2*5
Loans, securities, deposits,
Currency swaps������������������������������� foreign exchanges, etc�, which
Forward exchange contracts ������������ are denominated in foreign
Foreign exchange swap ������������������� currencies
Total �����������������������������������������������

March 31, 2022

Hedged Item

Contract
AmountMillions of Yen
Contract AmountDue after
One Year¥119,999—¥119,999—¥ 3,544¥ 3,544$ 900,019—$900,019—$ 26,584$ 26,584¥131,084—
269,697—¥ 2,965—
90,531—¥ (2,658)—(21,665)¥(24,324)$ 983,155—
2,022,785—$ 22,241—
679,000—$ (19,942)—(162,496)$(182,438)

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Fair
Value

¥160,000
30,000¥160,000—¥ 3,334(15)——¥ 3,318

165—
125,726¥ (4,330)—(18,887)—¥(23,218)

Interest rate-related transactions*1*4
Interest rate swaps:
Receive floating and pay fixed �����
Receive floating and pay floating ����Securities
Total �����������������������������������������������
Currency-related transactions*2*5
Loans, securities, deposits,
Currency swaps������������������������������� foreign exchanges, etc�, which
Forward exchange contracts ������������ are denominated in foreign
Foreign exchange swap ������������������� currencies
Total �����������������������������������������������
Equity-related transactions*3*6
Stock forward contracts �������������������Available-for-sale securities¥ 66,366—
231,309—

Sold �������������������������������������������

¥ 3,036

Total �����������������������������������������������

—

¥

—
—

¥ 1,136¥ 1,136

Note: 1� Interest rate-related transactions are primarily accounted for using the deferral method in accordance with “Accounting and Auditing Treatment relating to the Adoption of ‘Accounting
for Financial Instruments’ for Banks” (JICPA Industry Audit Committee Report No� 24, February 13, 2002)�
2� Currency-related transactions are primarily accounted for using the deferral method in accordance with “Accounting and Auditing Treatment relating to Accounting for Foreign Currency
Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No� 25, July 29, 2002)�
3� Equity-related transactions are accounted for using the deferral method�
4� Fair values of exchange-traded transactions are determined based on closing prices at the Tokyo Financial Exchange or other relevant exchanges� Fair values of over-the-countertraded transactions are determined based on a discounted cash flow model, an option-pricing model, or other models, as appropriate�5� Fair value is determined based on a discounted cash flow model�
6� Fair value is determined based on prices provided by correspondent financial institutions�Note: *1 The above transactions are stated at fair value and the related valuation gains (losses) are reported in the consolidated statement of income�*2 Fair values of above transactions are determined based on a discounted cash flow model, an option-pricing model, or other models as appropriate�*3 Acquisition costs are regarded as fair value, as it is extremely difficult to determine the fair appraised value�

133

Fair
Value

Thousands of U.S. Dollars
Contract AmountDue after
Fair
Contract
One YearValue
Amount134

Consolidated banking subsidiaries had the following derivative contracts, which were accounted for by the exceptional accrual method, outstanding as of March 31,
2023:

March 31, 2023

Hedged Item

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Fair
Value

Thousands of U.S. Dollars
Contract AmountDue after
Fair
Contract
One YearValue
AmountInterest rate-related transactions
Interest rate swaps:
¥

—
5,199

¥

—
5,199

¥ —
456

—

—

¥456

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Receive fixed and pay floating ������Loans and borrowed money
Receive floating and pay fixed ������
Total �����������������������������������������������

March 31, 2022

Hedged Item$—
39,000—$—39,000

$

—
3,421

—

$3,421Fair
Value

Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating ������Loans and borrowed money
Receive floating and pay fixed ������
Total �����������������������������������������������

¥—11,489

¥

—
4,772

¥ —
182

—

—

¥182

The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with the hedged items as a whole so that the fair value is included in thefair value of borrowed money and loans and bills discounted (“Note 22� FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES (5) Fair Values of Financial Instruments”)�

24. OTHER COMPREHENSIVE INCOME (LOSS)

25. SEGMENT INFORMATIONThe components of other comprehensive income (loss) for the years ended
March 31, 2023 and 2022, were as follows:

Under ASBJ Statement No� 17, “Accounting Standard for Segment Information
Disclosures,” and ASBJ Guidance No� 20, “Guidance on Accounting Standard for
Segment Information Disclosures,” an entity is required to report financial anddescriptive information about its reportable segments� Reportable segments areoperating segments or aggregations of operating segments that meet specified
criteria� Operating segments are components of an entity about which separate
financial information is available, and such information is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and inassessing performance� Generally, segment information is required to bereported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments�
The Group engages in banking and other related activities, such as leasing,securities, and credit card services� Segment information is not disclosed as theoperations other than banking are immaterial�

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Unrealized gains (losses)
on available-for-sale securities:
Losses arising during the year �������� ¥(142,434)
Reclassification adjustments
to profit or loss�����������������������������
37,587
Amount before
income tax effect ��������������������� (104,847)
Income tax effect ����������������������
31,989Total ������������������������������������������������� ¥ (72,857)
Deferred gains (losses) on derivatives
under hedge:
Gains arising during the year ���������� ¥ 3,472
Reclassification adjustments
to profit or loss�����������������������������
(2,460)
Amount before
income tax effect ���������������������
1,012
Income tax effect ����������������������
(311)
Total ������������������������������������������������� ¥700
Defined retirement benefit plans:
Gains (Losses) arising during theyear �������������������������������������������� ¥ 3,882
Reclassification adjustments
to profit or loss�����������������������������
(396)
Amount before
income tax effect ���������������������
3,485
Income tax effect ����������������������
(1,058)
Total ������������������������������������������������� ¥ 2,426
Total other comprehensive loss ����������� ¥ (69,730)¥(82,725) $(1,068,288)
281,913

1,774(80,950)(786,375)
24,487
239,928¥(56,463) $ (546,447)¥ 9,106$

26,042

14(18,451)

9,121(2,774)¥ 6,346 $

7,591(2,336)5,254(154) $

29,118¥(487)

Other segment-related information:(1) Information by services

March 31, 2023

Millions of Yen (Thousands of U.S. Dollars)
Lending
Investment
Operations
Operations
Other
Total

Total income
from external¥110,018
customers �������������� ($825,162)(2,976)(641)
26,142
197(7,942)¥ (444) $ 18,200¥(50,561) $ (522,992)

March 31, 2022

Lending
Operations

Total income
from externalcustomers ��������������

¥106,411¥104,020($780,172)¥115,418¥329,457($865,658) ($2,470,992)

Millions of Yen
Investment
Operations
Other¥53,342¥108,335

Total¥268,090(2) Information by geographic region
Since the ordinary income and total tangible fixed assets attributable to the“Japan” segment account for more than 90% of the total of all geographic
segments, geographical segment information has not been presented�
(3) Information by major customers
Since there has been no specific customer to whom the Group sells more than
10% of total ordinary income on the consolidated statement of income,information on major customers has not been presented�
(4) Information on loss on impairment of fixed assets by reportable segment
Information on loss on impairment of fixed assets is not disclosed as it isimmaterial, except for the banking business�(5) Information on amortization and unamortized balance of goodwill by reportablesegment
Information on amortization and unamortized balance of goodwill is not disclosed
as it is immaterial, except for the banking business�(6) Information on gain on negative goodwill by reportable segment
Information on gain on negative goodwill is not disclosed as it is immaterial,
except for the banking business�

135

136

26. RELATED-PARTY TRANSACTIONS
Related-party transactions of consolidated subsidiaries of the Company with its directors or major individual shareholders for the years ended March 31, 2023 and 2022,
were as follows:Year ended March 31, 2023
There was none of material information to be stated.
Year ended March 31, 2022
There was none of material information to be stated.

27. SUBSEQUENT EVENTS
Acquisition of treasury stock
At the board of directors’ meeting held on May 12, 2023, the Company resolved to acquire treasury stock for the purpose of enhancement of shareholder returns andimproving capital efficiency, pursuant to the provisions of the Articles of Incorporation in accordance with the provision of Article 459, paragraph 1, of the Companies Act.
Through the following acquisition, the acquisition of treasury stock was completed on the basis of the resolution of its board of directors at the meeting held on May 12,
2023.
Contents of acquisition of treasury stock(1) Class of shares to be acquired:

Common stock(2) Total number of shares to be acquired: 19,384,000 shares(3) Total acquisition cost:

7,485,247,825 yen ($56,140 thousand)(4) Period of acquisition:

From May 15, 2023, to August 28, 2023

(5) Method of acquisition:

Market purchases on the Tokyo Stock Exchange

137

138

139

140

141

142

Non-Consolidated Balance Sheet (Unaudited)

Non-Consolidated Statement of Income (Unaudited)

March 31, 2023 The Joyo Bank, Ltd.

Millions of Yen
2023
2022

Year Ended March 31, 2023

Thousands of
U.S. Dollars
2023

ASSETSCash and due from banks ��������������������������������������������������������������������������������������� ¥ 3,594,163
Call loans and bills bought ��������������������������������������������������������������������������������������
15,662
Monetary claims bought ����������������������������������������������������������������������������������������
4,104
Trading assets �������������������������������������������������������������������������������������������������������
2,853
Securities ���������������������������������������������������������������������������������������������������������������
2,343,178
Loans and bills discounted ��������������������������������������������������������������������������������������
7,222,981
Foreign exchanges �������������������������������������������������������������������������������������������������
13,503
Other assets ����������������������������������������������������������������������������������������������������������
99,534
Tangible fixed assets ���������������������������������������������������������������������������������������������
66,389Intangible fixed assets ��������������������������������������������������������������������������������������������
6,796
Prepaid pension cost ����������������������������������������������������������������������������������������������
5,818
Deferred tax assets �������������������������������������������������������������������������������������������������
5,726
Customers’ liabilities for acceptances and guarantees ���������������������������������������������
10,972
Allowance for loan losses ����������������������������������������������������������������������������������������
(42,734)
Allowance for investment losses ������������������������������������������������������������������������������
(8)
TOTAL �������������������������������������������������������������������������������������������������������������� ¥13,348,942¥ 4,619,865
6,507
4,994
2,405
3,267,322
6,767,416
12,400109,050
67,502
7,287
4,775
—
17,726(44,835)(8)¥14,842,410$ 26,956,903
117,470
30,781
21,404
17,574,279
54,173,714
101,278746,528
497,937
50,97343,642
42,94982,297(320,518)(66)$100,119,570

LIABILITIES AND EQUITY
LIABILITIES:
Deposits ���������������������������������������������������������������������������������������������������������������� ¥10,251,286
Negotiable certificates of deposit �����������������������������������������������������������������������������
202,733
Call money and bills sold ����������������������������������������������������������������������������������������
555,552
Payables under repurchase agreement ��������������������������������������������������������������������
60,359
Payables under securities lending transactions ���������������������������������������������������������
37,072
Trading liabilities�����������������������������������������������������������������������������������������������������
1,122
Borrowed money ����������������������������������������������������������������������������������������������������
1,569,130
Foreign exchanges��������������������������������������������������������������������������������������������������
7,870
Due to trust account �����������������������������������������������������������������������������������������������
1,508
Other liabilities��������������������������������������������������������������������������������������������������������
50,251
Provision for bonuses for directors ���������������������������������������������������������������������������
93
Provision for retirement benefits ������������������������������������������������������������������������������
4,116
Provision for reimbursement of deposits �������������������������������������������������������������������
1,251
Provision for point card certificates ��������������������������������������������������������������������������
207
Provision for contingent losses���������������������������������������������������������������������������������
1,128
Deferred tax liabilities����������������������������������������������������������������������������������������������
—Deferred tax liabilities for land revaluation ����������������������������������������������������������������
7,249
Acceptances and guarantees�����������������������������������������������������������������������������������
10,972
Total liabilities ��������������������������������������������������������������������������������������������������� ¥12,761,907¥10,053,985
170,107
1,036,020
143,407582,134343
2,120,602
4,013
1,525
63,878
132
5,644
1,404
173
1,421
16,018
7,256
17,726¥14,225,796$ 76,886,572
1,520,541
4,166,749
452,710
278,047
8,421
11,768,776
59,027
11,314
376,899700
30,871
9,388
1,555
8,464
—
54,37082,297$ 95,716,700¥$

EQUITY:
Common stock ������������������������������������������������������������������������������������������������������� ¥85,113
Capital surplus �������������������������������������������������������������������������������������������������������
58,574Retained earnings ���������������������������������������������������������������������������������������������������
395,653
Valuation adjustments: �������������������������������������������������������������������������������������������
47,693
Unrealized gains on available-for-sale securities ��������������������������������������������������
36,569Deferred losses on derivatives under hedge accounting ���������������������������������������
593
Land revaluation surplus �����������������������������������������������������������������������������������
10,531
Total equity ��������������������������������������������������������������������������������������������������
587,034
TOTAL������������������������������������������������������������������������������������������������������������������������� ¥13,348,942

143

85,11358,574
371,581
101,344
86,5064,450
10,387
616,613¥14,842,410

The Joyo Bank, Ltd.

Millions of Yen
2023
2022

INCOME:Interest income:Interest on loans and bills discounted �����������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust Fees �������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Trading income �����������������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income ��������������������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowed money �������������������������������������������������������������������������������
Interest on interest swap ������������������������������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating expenses ���������������������������������������������������������������������������������������
General and administrative expenses �����������������������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses �����������������������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ��������������������������������������������������������������������������������
INCOME TAXES:
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������

638,364
439,316
2,967,477
357,714274,278
4,448
78,987
4,402,870$100,119,570

144

Thousands of
U.S. Dollars
2023¥ 62,210
35,217
334
2,760
351
22
28,977335
14,69057,948202,848¥ 58,436
30,287
8
3,349
365
31
28,074566
2,072
10,515
133,708$ 466,591
264,137
2,506
20,7052,639
171
217,339
2,515
110,178434,624
1,521,404

2,225
5
1,635
1,036
49
1,592
4,069
1,508
8,856
75,43757,967
4,269
3,044
161,699
41,149

623
6
(99)
(127)
51
154
485
612
8,873
5,655
63,6949,996
9,500
99,42534,282

16,69542
12,267
7,776
370
11,94030,52011,314
66,429565,799434,764
32,02522,8381,212,778
308,626

6,559
1,773
8,332
¥ 32,816

11,943(2,273)
9,669¥ 24,612

49,19813,29862,497$ 246,129

Non-Consolidated Balance Sheet (Unaudited)

Non-Consolidated Statement of Income (Unaudited)

March 31, 2023 The Ashikaga Bank, Ltd.

Millions of Yen
2023
2022

Year Ended March 31, 2023

Thousands of
U.S. Dollars
2023

ASSETSCash and due from banks ���������������������������������������������������������������������������������������
Call loans and bills bought ��������������������������������������������������������������������������������������
Monetary claims bought ����������������������������������������������������������������������������������������
Trading account securities ��������������������������������������������������������������������������������������
Money held in trust �������������������������������������������������������������������������������������������������
Securities ���������������������������������������������������������������������������������������������������������������
Loans and bills discounted ��������������������������������������������������������������������������������������
Foreign exchanges �������������������������������������������������������������������������������������������������
Other assets �����������������������������������������������������������������������������������������������������������
Tangible fixed assets ���������������������������������������������������������������������������������������������
Intangible fixed assets ��������������������������������������������������������������������������������������������
Prepaid pension cost ����������������������������������������������������������������������������������������������
Deferred tax assets �������������������������������������������������������������������������������������������������
Customers’ liabilities for acceptances and guarantees ���������������������������������������������
Allowance for loan losses ����������������������������������������������������������������������������������������
TOTAL ��������������������������������������������������������������������������������������������������������������

¥1,222,945
8,453
6,237
1,108
3,010
1,312,722
5,365,536
3,712
100,961
27,3706,200
30,151
15,355
8,475(39,435)¥8,072,804¥2,649,158
—
5,616
2,184
2,027
1,408,803
5,128,137
4,820
84,36628,146
8,098
27,736
7,223
8,318(39,458)¥9,325,179$ 9,172,318
63,40046,7808,312
22,5809,845,662
40,242,528
27,845757,229205,286
46,508226,143
115,166
63,568(295,775)$60,547,549

LIABILITIES AND EQUITY
LIABILITIES:
Deposits ����������������������������������������������������������������������������������������������������������������
Negotiable certificates of deposit �����������������������������������������������������������������������������
Call money and bills sold ����������������������������������������������������������������������������������������
Payables under repurchase agreement ��������������������������������������������������������������������
Payables under securities lending transactions ���������������������������������������������������������
Borrowed money ����������������������������������������������������������������������������������������������������
Foreign exchanges��������������������������������������������������������������������������������������������������
Due to trust account �����������������������������������������������������������������������������������������������
Other liabilities��������������������������������������������������������������������������������������������������������
Provision for bonuses for directors ���������������������������������������������������������������������������
Provision for reimbursement of deposits �������������������������������������������������������������������
Provision for contingent losses���������������������������������������������������������������������������������
Provision for point card certificates ��������������������������������������������������������������������������
Acceptances and guarantees�����������������������������������������������������������������������������������
Total liabilities ���������������������������������������������������������������������������������������������������

¥6,911,891
209,555—
52,54274,815428,800
480
1,475
41,700
88
702
974
280
8,475
¥7,731,783¥6,803,383
189,666
8,933
4,757
244,691
1,669,600
376
1,521
33,993
139
779
928
262
8,318
¥8,967,353$51,840,486
1,571,706—
394,077
561,127
3,216,080
3,605
11,065
312,762
661
5,268
7,312
2,107
63,568$57,989,825

EQUITY:
Common stock �������������������������������������������������������������������������������������������������������
Retained earnings: ��������������������������������������������������������������������������������������������������
Valuation adjustments: ��������������������������������������������������������������������������������������������
Unrealized gains on available-for-sale securities �������������������������������������������������
Deferred losses on derivatives under hedge accounting ��������������������������������������
Total equity ��������������������������������������������������������������������������������������������������
TOTAL�������������������������������������������������������������������������������������������������������������������������

¥ 135,000
203,457
2,563(4,278)6,842
341,021¥8,072,804¥ 135,000
198,707
24,117
21,8332,284
357,825¥9,325,179$ 1,012,525
1,525,969
19,229(32,090)
51,3192,557,724$60,547,549

145

The Ashikaga Bank, Ltd.

Millions of Yen
2023
2022

INCOME:Interest income:Interest on loans and bills discounted �����������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust Fees ��������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income ��������������������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowed money �������������������������������������������������������������������������������
Interest on interest swap ������������������������������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating expenses ���������������������������������������������������������������������������������������
General and administrative expenses �����������������������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses �����������������������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ��������������������������������������������������������������������������������
INCOME TAXES:
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������

146

Thousands of
U.S. Dollars
2023¥ 46,759
23,334
63
2,056
72
4
22,564
1,774
4,343
100,973¥46,921
18,440
0
3,285
71
13
21,731
1,189
2,595
94,248$350,703
175,013476
15,426542
33
169,239
13,31032,574757,317

298
8
248
2,555
3,312
0
532
3,117
7,218
14,952
46,116
3,053
4,095
85,50915,463

148
9
(92)
47
437
3
24
1,106
7,186
2,703
48,1107,717
4,851
72,254
21,993

2,242
64
1,862
19,164
24,845
1
3,996
23,37954,139112,147
345,880
22,90030,718641,339
115,979

3,497
1,216
4,713
¥ 10,749

6,910
(351)
6,558
¥15,435

26,2299,126
35,355$ 80,624