INTEGRATED REPORT 2023

ブランドマーク

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英文

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Group Management Philosophy
Aiming high and motivated by pride in our services, we are committed to becoming a leading financial group through our ability
to respond to change and to grow with our customers

Group Brand Slogan

Contents
Profile of the Company (Joint Holding Company)/Organization Chart������������������

02

Board of Directors of Nishi-Nippon Financial Holdings�������������������������

03

Outline of the Nishi-Nippon Financial Holdings Group�������������������������

04

Strengths of the Nishi-Nippon Financial Holdings Group������������������������

05

Providing Broader/Deeper Support for International Business���������������������

07

A Brief Sketch of Our Operating Base�������������������������������

08

Financial/Non-Financial Highlights���������������������������������

10

Message from the President�����������������������������������

12

Review of the Previous Medium-Term Business Plan “Leaping Forward 2023”��������������

18

Value Creation Process/Medium-Term Business Plan�������������������������

20

Basic strategyⅠ.Providing Customer-Oriented “One to One Solutions”������������������

22

Special Features: Efforts to Create Industries and Jobs in the Region������������������

26

Special Features: Initiatives for Improving Customer Satisfaction��������������������

30

Basic strategy Ⅱ.Sales Reform ����������������������������������

32

Basic strategy Ⅲ. Human Resource Reform�����������������������������

38

Nishi-Nippon Financial Holdings, Inc. (NNFH) has put together this Integrated Report 2023 in a bid to help investors andother stakeholders understand the initiatives by the NNFH Group to sustain business growth and create value. It has been
compiled with reference to the International Integrated Reporting Framework released in December 2013 by the International
Integrated Reporting Council (IIRC), bringing together financial and non-financial information, including management philosophy,
management plans, and ESG (environmental, social, and governance) information.
Scope of Report
Period covered: April 2022 to March 2023 (Some subsequent information is also included.)
Organizations covered: Nishi-Nippon Financial Holdings, Inc. and its subsidiaries and affiliates

Basic strategy Ⅳ.Sustainability Initiatives������������������������������

44

Corporate Governance��������������������������������������

56

Risk Management����������������������������������������

60

Compliance������������������������������������������

64

Communication with Shareholders and Investors���������������������������

66

Cautionary Statement Regarding Forward-Looking Statements

Financial Information���������������������������������������

68

The Report contains statements about the NNFH Group’s future operating results. These forward-looking statements are not aguarantee of future performance but involve risks and uncertainty. Please note that actual results could differ from those indicated
due to a variety of factors, including changes in the operating environment.

Outline of Banking Subsidiaries����������������������������������

72

Organization Chart of Banking Subsidiaries�����������������������������

73

Sincere Relationships, Best Solutions
Meaning behind Our Logo

英文

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Our logo uses the motif of the “Sun,” the energy which creates our future, and the vibrant image of “Wings.” The radiating wings
symbolize the infinite future. And the color gradation from light to dark orange expresses the Nishi-Nippon Financial HoldingsGroup’s commitment to evolving and transforming itself toward the future.

Editorial Policy

Notes
1. Amounts have been rounded down to the nearest unit in principle.
2. Conversion into U.S, dollars (solely for the convenience of readers outside Japan) has been made at the exchange rate of¥133.53 to $1.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

1

Profile of the Company (Joint Holding Company)

Board of Directors of Nishi-Nippon Financial Holdings

Name: Nishi-Nippon Financial Holdings, Inc.
Location

1-1, Hakata-ekimae 3-chome, Hakata-ku, Fukuoka, Japan

Business

Management and operation of banks and other companies that NNFH may have as
subsidiaries under the Banking Act and any all businesses incidental or related thereto.

Capital50 billion yen

Date of establishment

October 3rd, 2016

Fiscal year end

March 31st

Stock exchangeTokyo Stock Exchange Prime Market and Fukuoka Stock Exchange Main Board

Share-trading unit

100 shares

Credit Ratings

R&I: A (Stable)
JCR: A+ (Stable)(As of June 30th, 2023)

Chairman

Deputy Chairman

President

Isao Kubota

Hiromichi Tanigawa

Hideyuki Murakami

Chairman���������������������� Isao Kubota
Deputy Chairman������������������� Hiromichi Tanigawa
President���������������������� Hideyuki Murakami

Organization Chart

Directors����������������������� Hiroyuki Irie
Takashige Honda
Directors (Audit and Supervisory Committee Members)��� Kiyotaka Tomoike
Toshio Sakemi (outside)
Chiharu Kubo (outside)

Nishi-Nippon Financial Holdings, Inc.

Sachiko Miyamoto (outside)
General Shareholders’ Meeting

Nomination and Remuneration
Advisory Committee

Board of Directors(As of June 30th, 2023)

Audit and Supervisory
Committee
Audit and Supervisory
Committee Members Office* Directors (Audit and Supervisory Committee Members) Toshio Sakemi, Chiharu Kubo, and Sachiko Miyamoto are Outside Directors as prescribed in Article 2 (xv) of theCompanies Act of Japan.
* The name of Director (Audit and Supervisory Committee Member) Ms. Sachiko Miyamoto on the family register is Sachiko Miki.

Major Shareholders (Common Stock)
Name

Executive Committee

Group Strategy Planning
Division

Compliance & Risk
Management DivisionCorporate Planning
DivisionInternal Audit Division(As of June 30th, 2023)

Number of shares held
(Unit: 1,000 shares) (Note 1)

Ratio of shares held to total
number of shares issued(excluding treasury stock) (%) (Note 2)
11.86

The Master Trust Bank of Japan, Ltd. (Trust Account)

16,809Custody Bank of Japan, Ltd. (Trust Account)

12,976

9.16

Custody Bank of Japan, Ltd. (Trust Account No.4)

3,767

2.65

Aso Corporation

2,860

2.01

Nippon Life Insurance Company

2,780

1.96

Meiji Yasuda Life Insurance Company

2,765

1.95

The Nishi-Nippon City Bank Employee Shareholding Association

2,338

1.65

Resona Bank, Ltd.

2,200

1.55

JA Mitsui Leasing, Ltd.

2,017

1.42

Sumitomo Life Insurance Company

1,959

1.38

Total

50,47435.63(As of March 31st, 2023)

Notes: 1. In addition to the above, there are 6,960 thousand shares of treasury stock (4.68% of the total number of shares issued) in the name of Nishi-Nippon Financial
Holdings, Inc.
2. Treasury stock not counted within the total number of issued shares does not include the 121 thousand shares in NNFH held in trust accounts related to theBoard Benefit Trust (BBT).

2

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

3

Outline of the Nishi-Nippon Financial Holdings GroupStrengths of the Nishi-Nippon Financial Holdings GroupThe Group’s Collective Strengths

Group Structure

The NNFH Group has adopted a “parallel” structure whereby NNFH serves as a “control tower” to direct
and guide each Group company whilst also assuming a birds-eye perspective in order to oversee themacross the board, thereby building a management framework that allows this comprehensive financialgroup to best exploit its strengths.
Nishi-Nippon Financial Holdings, Inc.
100%

The Nishi-Nippon City Bank, Ltd.

100%

The Bank of Nagasaki, Ltd.

82%

The Kyushu Card Co., Ltd.

60%

Nishi-Nippon City Tokai Tokyo Securities Co., Ltd.

NCB Venture Capital Co., Ltd.
NTT Data NCB Corporation

In October 2016, the NNFH Group shifted to a holding company structure consisting of seven subsidiaries offering a diverse range ofdistinctive services in parallel, including banking, financial instruments exchange, and credit cards under its umbrella.
To further boost the Group’s collective strengths, City Ascom Co., Ltd., a top-class ICT company in Kyushu, and Kyushu Leasing
Service Co., Ltd., a leasing company with the largest business scale in Kyushu, joined the NNFH Group in October 2022, and Iijigen Group
Co., Ltd., which has expertise in DX consulting and service development using digital technologies, joined in December 2022.
The Group is evolving into a regional financial group that offers a diverse range of solutions beyond the scope of finance by implementing
matrix management, which oversees business activities by each Group company in an integrated manner.
The Group enjoys close ties with a group of influential companies with a diverse array of businesses, which allow us to respond to abroad spectrum of customer needs through alliances with such external partners, as well as our Group companies. We are also proactive
in forming open and innovative partnerships and alliances with external companies, local governments, universities, and others, with a view［ グループ経営理念 ］
toward providing diverse and advanced services
and revitalizing the local economy. お客さまと私たちは、高い志と誇りを持って時代の変化に適応し、ともに成長する総合力No.１の地域金融グループを目指します。
［ グループブランドスローガン ］

Japan Payment Service CO., LTD.

ココ ロ が あ る。コタエ が あ る 。
Banking

Credit cards

85%

City Ascom Co., Ltd.

50%NCB Research & Consulting Co., Ltd.

Securities［ シンボルマーク ］

Partnercompanies

6 subsidiaries

Cooperate

ICT

Research studies,
management consultancy,
staffing agency services

Cooperate

Externalorganizations

DX consultants

Leasing

このシンボルマークは、未来を拓くエネルギーである「太陽」と、躍動感あふれる「羽」をモチーフとしています。放射状に伸びる羽は、無限に広がる未来を表現しています。さらに、淡いオレンジから深い100%

Nishi-Nippon Credit Guarantee Co.

29%

Kyushu Leasing Service Co., Ltd.
Ijigen Group Co., Ltd.

49%

The Nishi-Nippon City Bank, Ltd.

KLS Credit guarantee Co., Ltd.
Subsidiaries
Affiliates(As of March 31st, 2023)

Banking* The percentage indicates the percentage of voting rights held(including indirect ownership by subsidiaries)

Group Management Strategy

We are ranked the top fifth regional bankin terms of loans, and the core of the
NNFH Group.
Aiming high and motivated by pride in
our services, we are committed to
becoming the leading bank in Kyushu
through our ability to respond to thechanging times and to grow together withour customers, with the firm belief that“without our customers and regional
development, there will be no growth for
the Nishi-Nippon City Bank.”

Total loans (billion yen)
7,855.6

7,716.4

8,100.0

March 31st, 2021 March 31st, 2022 March 31st, 2023
*Excluding loans to the Ministry of Finance

The Bank of Nagasaki, Ltd.
We are based in Nagasaki and ranked as
the second regional bank. We celebrated
our 110th anniversary in November 2022.
As a regional financial institution, weare committed to being closely tied to thecommunity and contributing to thedevelopment of the local community, andwe work hard to be worthy of community
support.

Under the holding company structure, we will promote two Group Management Strategies:“Development of comprehensive financial services that exceed the expectations of customers and hostcommunities (Realization of matrix management)” and “Advancement of a group management
framework and risk management system (Realization of a monitoring model).”City Ascom Co., Ltd.

ICT

Kyushu Servicer

Funds
Payment
service
オレンジへと変化を重ねる姿には、
西日本FHグループを未来に向けて進化・変革させていこうという
Credit
決意が込められています。 Servicer
guarantee

Total loans (billion yen)
268.2
263.0

267.3

March 31st, 2021 March 31st, 2022 March 31st, 2023
*Excluding loans to the Ministry of FinanceResearch studies, management
consultancy, staffing agency services

85%

Advancement of a group management
framework and risk management system(Realization of a monitoring model)

function over the subsidiaries
while continuously monitoring
their business execution.

4

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

451.2

363.1

FY2020398.3

FY2021

FY2022We are a securities company establishedin 2010 as a joint venture with Tokai
Tokyo Financial Holdings, Inc.
We aim to be the securities company
most chosen by customers by providing
consulting proposals and solutions thatmeet the investment needs of eachindividual customer. In April 2022, webecame the first regional bank-affiliatedsecurities company in Japan toparticipate in the lead-managing service
business.

9.9
9.6
9.3

FY2020

FY2021

FY2022

NCB Research & Consulting Co., Ltd.
In addition to providing economic and financial
information, our company’s main services
include support for resolving human resource
issues such as employee training, recruitment
and retention, and establishing personnel
systems, as well as overseas businessconsulting services such as establishingoverseas offices, developing business in thelocal area, developing overseas sales channels,
and supporting the use of foreign nationals.
We aim to be the best partner to our member
companies and other local corporate executives.

Number of members (accounts)
5,710

5,585

5,209

March 31st, 2021 March 31st, 2022 March 31st, 2023

Management of client assets (billion yen)

291.3

312.6

We are the leasing company with thelargest business scale in Kyushu. We arelisted on the Tokyo Stock ExchangeStandard Market and the Fukuoka Stock
Exchange Main Market, and we joined
the NNFH Group in October 2022.
Our strengths are in community-basedsa le s a nd c omp re he nsiv e f ina nc ia lservices, and we offer a broad range ofvalue-added solutions tailored to theneeds each customer.

Net sales (consolidated) (billion yen)
36.8
28.3

29.6

FY2020

FY2021

FY2022Ijigen Group Co., Ltd.

Nishi-Nippon City Tokai Tokyo Securities Co., Ltd.
Securities

customer needs, will develop
strategies thatembrace the entire group.

The holding company will
demonstrate its oversight

Net sales (billion yen)

Kyushu Leasing Service Co., Ltd.
Credit card transaction volume (billion yen)

Leasing

The holding company, from thestandpoint of meeting individual

Monitoring model

We are the top regional bank-affiliatedcredit card company in terms oftransaction volume.
Since our establishment in 1980, we
have been working to popularize credit
card services and provide local
customers with affluence, comfort, andpeace of mind.

327.5

DX consultants

Matrix management

Development of comprehensive financial
services that exceed the expectations ofcustomers and host communities(Realization of matrix management)

Credit cards

The Kyushu Card Co., Ltd.

We are one o f the top-class ICT companies
in Kyushu in terms of sales scale andnumber of engineers, and we joined the
NNFH Group in October 2022.
Based on our philosophy of being“an ICT partner that creates the futurewith our customers,” each and every
employee aims to ear n the trust of
our customers and contribute to thedevelopment of local communities by
providing high-quality technologies andservices.

We are a one-stop digital transformation(DX) support company, and we joined the
NNFH Group in December 2022.
We work to develop new businesses
and solve management issues forcompanies by leveraging ourtechnological and consulting capabilities.
Our strengths are in providing one-stops u p p o r t i n t h e a re a s o f b u s i n e s s ,technology, and creativity.

Number of DX support cases (cases)

March 31st, 2021 March 31st, 2022 March 31st, 2023

63
37
10
FY2020

Nishi-Nippon Financial Holdings GroupFY2021

FY2022

INTEGRATED REPORT 2023

5

Providing Broader/Deeper Support for International Business

Strengths of the Nishi-Nippon Financial Holdings GroupA Solid Customer Base Built upon Mutual Trust

Financial Service for the Benefit of Local Communities

Number of main customers (as of March 31st, 2023)% of loans by prefecture

The Nishi-Nippon City Bank

Kyushu24,705Since its foundation in October 2004, the Nishi-Nippon City
Bank, the primary subsidiary of NNFH, has continuously
expanded its scale of operations. It now boasts total assets of
12,676,700 million yen, a balance of deposits and negotiablecertificates of deposit (NCD) of 9,722,300 million yen, abalance of loans of 8,737,800 million yen, and 24,705 main
customers (as of March 31st, 2023).
The Kyushu Card, on the other hand, offers full brandsettlement services to support all major international credit
card brands, thus building one of the largest customer bases
among regional bank-affiliated credit card issuers. It has
953,000 cardmembers, 65,000 merchants, and a transaction
volume of 451,200 million yen (as of March 31st, 2023, except
the transaction volume, which is fiscal 2022).

The Nishi-Nippon
City Bank

Fukuoka Prefecture

87.1% 77.2%% of loans to SMEs, etc.
The Nishi-Nippon
City Bank

78.7%(as of March 31st, 2023, excluding loans to the Ministry of Finance, Japan)

Under the belief that “Without regional development, there will
be no growth of the Group,” the NNFH Group remains
committed to developing and supporting local businesses andindustries.
The Nishi-Nippon City Bank preferentially caters to its hostregion, with approximately 90% of its borrowers based in the
Kyushu region and 80% in Fukuoka Prefecture, andapproximately 80% of its borrowers are SMEs or individuals.
The Nishi-Nippon City Bank makes a fair assessment of thefeasibility of their businesses and growth potential and, if
needed, suggests solutions and provides support.

The NNFH Group supports local businesses by addressing their requirements for doing business in
Asia and other parts of the world. To this end, the Group offers consulting services that go beyond thedefinition of financial support, together with advanced products/services, through alliances with local
partners and specialists with experience in international business.
Multifaceted windows for international business support• International Business Support Office, International Business Div.
Support for international business provided by personnel with professional skills and know-how
The Nishi-Nippon• “NCB Forex Super Direct”, “NCB Direct Forward Exchange Contracts”
City Bank
A broad range of forex transactions, including foreign remittance and application for/inquiry on import letters ofcredit via the internet• International Consultation OfficeInternational business support by staff members with extensive international experience in coordination withlegal, accounting, and other experts in Japan and overseas
NCB Research &• “Door to Asia” (website)
Consulting
Provision of international business information for each country/region and area of support• Asia Business Seminars
Sponsorship of various seminars on international business
The Kyushu Card

• A variety of credit cards
Support for all major cards, including VISA, MasterCard, JCB, AMEX, and UnionPay

Broad area coverage by our overseas bases and partner institutions
Bank of China

Extensive Global Network

DNA of Developing SMEs

Shinhan BankN
 umber/amount of loans support
startups and second startups (FY2022)
The NishiNippon CityBank

3,567 cases / ¥117.0 billionR ecipients of the Excellent Executive Award(as of April 30th, 2023)

Total:

180 executives

Having started as a financial service catering exclusively tosmall- and medium-sized enterprises, the NNFH Group
maintains the unaltered DNA of developing SMEs. The NishiNippon City Bank remains committed to supporting businessstartups in a bid to create industries and jobs in the region;
listening carefully to the needs of many SMEs, including
fledgling businesses, they offer finely-tuned support. For
fiscal 2022, their support was extended to 3,567 startups
and second startups, with the total amount of loans reaching
117,000 million yen.
Since 1973, they have granted the Excellent Executive
Award to outstanding business managers who have provided
distinguished services to the development of the regional
economy via the Prize of Excellent Executive. A total of 180
executives have been commended thus far.

6

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Japan
The NishiNippon CityBank
The Bank ofNagasakiNishi-Nippon
City Tokai Tokyo
Securities

158
23
12

JBIC

Overseas
locations*

The Nishi-Nippon
City Bank’s
overseas operations

locations

Partnerfinancial
institutions

outlets

Partner
institutions* The number does not include online branches andin-store branches.

The Nishi-Nippon City
Bank app
Total :
(as of March 31st, 2023)

3
92

Shanghai Representative Officein Asia
Hong Kong Representative Officeinstitutions

registered accounts

The NNFH Group has built an extensive network that spansdomestic and international locations.
In Japan, we maintain a network of sales locations forbanking and brokerage services in Fukuoka, Kyushu, to offer
services with a “human touch” that can only be done throughphysical channels. Meanwhile, we are keen to enhance
convenience for customers by strengthening the functions ofour digital channels: the Nishi-Nippon City Bank app, asmartphone app for retail customers and the NCB Business
Station, a platform for corporate customers.
Overseas, we meet customers’ needs for their business in
Asia and elsewhere at the Nishi-Nippon City Bank’s threeoverseas operations in Shanghai, Hong Kong, and Singapore
and through collaboration with our partner institutions andexperts in respective regions.

TAITRA

HKTDC

institutions

Bangkok Bank(as of June 30th, 2023)

840,000

The Bank of Yokohama

OCB
BNP Paribas

The Nishi-Nippon City Bank’s overseas operations..........................................3 in Asia

Representative Office Registered in Singapore

Partner financial institutions...................................9 institutions

DBS Bank(7 foreign, JBIC, and the Bank of Yokohama)Bank Resona Perdania

Partner institutions...................................2 institutions(As of June 30th, 2023)* The Nishi-Nippon City Bank concluded Basic Agreement for Overseas Business Support Services with the Bank of Yokohama in September 2016.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

7

A Brief Sketch of Our Operating Base

- An Unmatched Potential of Fukuoka and Other Areas in the Kyushu Region -Fukuoka Prefecture

Fukuoka Prefecture accounts for 40+% of Kyushu’s GDP.
Fukuoka and other areas in the Kyushu Region, the NNFH Group’s main market, offer a number of favorable
business opportunities, including a strong economy, a series of large-scale urban redevelopment projects,

Of 370,000 SMEs based in the Kyushu region,

and a growing concentration of industries with a focus on semiconductors.

130,000 are in Fukuoka (2016).

Kyushu accounts
for 10% of Japan’s economy.

Source: The Small and Medium Enterprise Agency

KyushuKita-Kyushu City

A robust economy of a size (national share) smaller only than
the three major metropolitan areas
Population (2021)
Nominal GDP within
Number of businessthe region (2019)
offices (2021)

Kita-Kyushu City’s approach to create “harmony
between industry and environment” has been met
with great acclaim both in Japan and abroad.

¥48 trillion

Designated as an SDGs Model City by the OECD (2018)
Designated as an SDGs Future City and an Environmental Future City by the Japanese government (2018)12,884K

540K

8.3%

10.2%

10.6%

Kyushu maintains close mutual relationships
with fast-growing Asian countries.
Kyushu hosts a diverse range of industries.
Automobiles
Agriculture
Semiconductors

Unit production of automobiles in the Kyushu region
National market share: 14% (2022)
Agricultural production value in the Kyushu region
National market share: 20% (2021)
Production value of integrated circuits (ICs) in the Kyushu region
National market share: 44% (2022)

Increasing capital expenditures forsemiconductor-related facilities
Large-scale capital expenditures have been increasing in Kyushu toboost semiconductor production. Most notably, Taiwan Semiconductor
Manufacturing Company Limited (TSMC), a global semiconductor
manufacturer, established a subsidiary in Kumamoto Prefecture.

¥1,840.0 billion
1,000

Capital expenditures forsemiconductor-related facilities Over
Number of semiconductor-related
Aroundbusinesses in Kyushu

Source: Kyushu Bureau of Economy, Trade and Industry

Nagasaki Prefecture

Nagasaki Prefecture has a wealth of
tourism resources.
Nagasaki City is undergoing large-scale
redevelopment near Nagasaki Station and beyond.

18 cities and towns in the Kitakyushu metropolitan area have been selected as “Decarbonization Leading Area” (2022)

A high concentration of energy-related facilities, including
renewable energy and liquefied natural gas bases
One of Japan’s largest offshore wind farms is scheduled to begin operations in fiscal 2025
off the coast of Hibiki-nada.

Fukuoka City

Fukuoka City’s population growth rate (4.8%) is thehighest among government ordinance cities.
Source: Statistics Bureau of Japan

Growth between 2015 and 2020

Population growth is expected
to continue for Fukuoka City -8.1%
up to around 2035.

– Projected population (change between 2020 and 2035 [%]) –Japan

Fukuoka Pref. Fukuoka City

-5.7%

+4.0%

Source: Ministry of Internal Affairs and Communications, National
Institute of Population and Social Security Research

Fukuoka City ranks highest among 21 large city
areas in Japan at 6.3% in terms of the startup rate.
Source: Economy, Tourism & Culture Bureau, Fukuoka City

* FY2021. National average: 4.4%

Fukuoka City plays host
to many urban
redevelopment projects.

Project Names

Hakata ConnectedTenjin Big Bang

Construction investment

Knock-on effect/year¥260.0 billion ¥500.0 billion¥290.0 billion ¥850.0 billion
Source: Fukuoka City

The Nishi-Kyushu Shinkansen (between Takeo-onsen and Nagasaki) began service in 2022.
8

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

9

Financial/Non-Financial Highlights
Financial Highlights

Non-Financial Highlights

Ordinary income

Profit attributable to owners of parent

Balance of deposits/NCD(consolidated)(consolidated)(two banks combined)¥33.6 billion¥9,981.2 billion¥26.0 billion

37.8

9,502.4

24.2

9,854.6

18.0

FY2021

FY2022

FY2020

FY2021

FY2022The end of The end of The end of
March 2021 March 2022 March 2023

% of loans to SMEs*

Management of client assets(two banks combined)(two banks combined)(Group total)¥9,005.1 billion

78.8 %
79.1

8,512.0

78.8¥1,134.5 billion
1,046.7

1,116.9* excluding loans to the Ministry of Finance, JapanThe end of The end of The end of
March 2021 March 2022 March 2023

The end of The end of The end of
March 2021 March 2022 March 2023

The end of The end of The end of
March 2021 March 2022 March 2023

Number of corporate
customers

4,237

K

Nishi-Nippon City
Tokai Tokyo Securities

Balance of loans

8,581.8

Two banks
combined

The Kyushu Card
(membership)

26.7

FY2020

Number of private
customers

953
35

K
K

Two banks
combined

Core OHR*

Capital adequacy ratio(consolidated)(consolidated)(consolidated)

4.95 %
4.55

69.3

12.10 %

65.8 %
9.49*Core gross operating profit OHR, derived by dividing
expenses by the core gross operating profit

FY202010

FY2021

FY2022

Nishi-Nippon Financial Holdings GroupFY2020INTEGRATED REPORT 2023

FY2021

FY20229.28

FY2020

FY2021

FY202265
3
5

NCB Research &Consulting (membership)

K
K

Total:

840,000
registered accounts

K(As of March 31st, 2023)(As of March 31st, 2023)

Reduction of CO2 emissions*(Scope1 + Scope2)

Amount of sustainablefinance* offered

Number/amount of loans to support
startups and second startups

The Nishi-Nippon City Bank

VS. FY2013

-49.5

%

Two banks combined¥543.6The Nishi-Nippon City Bank

billion

3,567¥117.0cases
billion*As measured according to the standards on periodical
reports stipulated in the Act on the Rational Use of Energy*A new category of financing service designed to realize asustainable society(FY2022)(FY2021-FY2022)(FY2022)

Ratio of women in
managerial positions

Acquisition ratio ofchildcare leave

Ratio of outside directors

The Nishi-Nippon City Bank

The Nishi-Nippon City Bank

14.2
27.1

%

Femaleemployee%Male
employee(As of March 31st, 2023)

105.6
96.0

%
%

(FY2022)

33.3%

3 out of 9 directors(As of June 30th, 2023)

External assessment<Environment>
CDP Climate Change Questionnaire*Early application of Basel III finalization from fiscal 2022K

(As of March 31st, 2023)

64.6

3.46

141

The Kyushu Card
(member stores)
Nishi-Nippon City
Tokai Tokyo Securities

The Bank of Nagasaki
ROE

The Nishi-Nippon City
Bank app<DX>
Certified for “DX Certified Operator”(May 2023)<Framework for Customer-Oriented
Business Conduct>
Obtained R&I Customer-Oriented Investment
Trust Sales Company Evaluation (October 2022)

Nishi-Nippon Financial Holdings and the Nishi-Nippon City Bank

The Nishi-Nippon City Bank

B Score(FY2022)
Nishi-Nippon Financial Holdings

Nishi-Nippon Financial Holdings Group

Nishi-Nippon City
Tokai Tokyo Securities

INTEGRATED REPORT 2023

11

Message from the President

We Will Continue to Value
Connections as We Grow
Together with You

Introduction

The Previous MTBP in Review

It gives me great pleasure to report on the businessperformance of Nishi-Nippon Financial Holdings, Inc.
(NNFH) for the fiscal year ended March 31st, 2023
The business environment surrounding the NNFH
Group (hereinafter “the Group”) continues to undergo
significant changes as customer needs increase indiversity and sophistication against a backdrop ofsocial issues, including Japanese society’s low birthrate; the nation’s steadily declining and aging
population; developments in Sustainable
Development Goals (SDGs) and Environmental,
Social, and Governance (ESG) issues; andacceleration of digital transformation (DX). At thesame time, Fukuoka and other areas in the Kyushu
Region, the Group’s main market, offer a number offavorable business opportunities, including a strong
economy, large-scale redevelopment projects inurban areas, and a growing concentration ofindustries with a focus on semiconductors.
Against this backdrop, the Group has launched a
new Medium-Term Business Plan, “Leaping Forward
2026 - Connecting with Sincerity, Connecting the
Future -” (covering the period from April 2023 toMarch 2026; hereinafter, “the MTBP”).
By dynamically implementing the strategies andmeasures I describe hereafter, we will work toenhance our management of relationships to enable
us to fully leverage the Group’s wide range ofcapabilities in providing solutions to our customers,
thereby resolving social issues and enhancing theGroup’s enterprise value.

Roughly three years ago, when we launched ourprevious Medium-Term Business Plan, “Leaping
Forward 2023 - Creating Vibrancy to the Region
and Beyond -” (covering the period from April 2020
to March 2023; hereinafter “the previous MTBP”),
COVID-19 infections had just begun to spread, andthe entire Group unified in addressing the financing
needs of our customers. In addition, awareness of
SDGs and ESG was on the rise around the world,
and interest in the importance of promoting DX wasalso skyrocketing at the time. In terms of monetary
policies, these three years were in many ways aperiod of significant and comprehensive changes,
such as the U.S. and Europe changing theirconventional interest rate policies to curb inflation.
Despite the difficulties in navigating this businessenvironment, the previous MTBP led to three majorachievements. It reinforced the collective strength of
the Group, accelerated work reform, andaccelerated our digital strategy. In terms ofreinforcing the collective strength of the Group, we
have achieved a dramatic boost, especially over theprevious fiscal year, with the addition of three newcompanies to the Group: City Ascom Co., Ltd., aleading ICT company in Kyushu; IJGN Group Co.,
Ltd., which excels in DX consulting services; andKyushu Leasing Service Co., Ltd., one of the largest
leasing companies in Kyushu. In terms ofaccelerating work reform, we significantly improved
productivity at the Nishi-Nippon City Bank overthese three years, reducing the workloads of morethan 600 employees and achieving a 1.4-foldincrease in operating income* from services forcustomer per employee. In terms of accelerating
our digital strategy, we significantly increased theamount of contact we have with customers throughdigital channels by promoting the Nishi-Nippon City
Bank app and the NCB Business Station. These
measures enabled us to achieve all of our target
management indices.

Overview of the Japanese Economy and
the Kyushu Economy

Hideyuki Murakami
President
Nishi-Nippon Financial Holdings, Inc.
(Concurrently President of The Nishi-Nippon City Bank, Ltd.)

12

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

During fiscal 2022, Japan’s economy showedweakness in exports and production around the endof the fiscal year due to soaring resource prices andconcerns about the global economic slowdown.
However, the economy also showed a moderate
recovery as capital expenditures increased due to arecovery in corporate earnings, and consumers p e n d i n g a l s o i n c re a s e d t h a n k s t o g r a d u a limprovements in employment and income conditions.
The economy in our home territory of Kyushu
re c o v e re d a s s e m i c o n d u c t o r- re l a t e d c a p i t a lexpenditures and personal consumption increased.

*(Balance of loans and bills discounted × Loan-to-deposit spread + Net
fee and commission income − General and administrative expenses) ÷
Average number of employees during the fiscal year

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

13

Message from the President¥20.2
billion3rd year of
the previous
MTBP
FY2022
results

KPI in the
final yearof theprevious
MTBP

¥18.0
billion¥24.2
billion¥26.0
billion¥21.5
billion23.0%

Approx.
22%% of noninterestearnings

20.2%

18.5%

19.3%

Consolidated
OHR

69.8%

67.7%

64.2%

Consolidated
capitaladequacy ratio

9.36%

9.49%

9.28%

(Core OHR)

65.8%*1
12.10%*2

60–69%
Approx.
10%*1 Core base excluding net gains (losses) related to bonds*2 Early adoption of Basel III finalization

Medium-Term Business Plan, “Leaping
Forward 2026 - Connecting with Sincerity,
Connecting the Future -”In light of both internal and external circumstances,including enhancements to the Group’s managementfoundation, the diversification and sophistication ofcustomer needs, and the booming markets ofFukuoka and elsewhere in Kyushu, we recognize thepotential of diverse business opportunities emerging
in a broad range of financial and non-financial
domains.
Most of the basic strategies in the new MTBP areclosely linked with those of the previous MTBP. We
aim to make these three years a period of “leaping
forward” by further reinforcing the collective strengthof the Group, which was enhanced through initiatives
under our previous MTBP, and significantly improving
the quality of the solutions we provide to customers

Basic Strategy . Providing CustomerOriented “One to One Solutions” (See pages

22 to 31)
“Customer-oriented One to One Solutions” refers
to providing products and services that perfectly
match the needs and problems of individual
customers in order to enhance customer
satisfaction and build long-lasting business
relationships.
Inheriting this concept from the previous MTBP,
the new MTBP aims to fully utilize and enhance theoptimized setup that we have established.
 roviding Solutions to Corporate Customers (SeeP
pages 22 to 25)
Against the backdrop of accelerating environmental
changes, companies are facing a widening range ofmanagement challenges, from a financial perspective
as well as in terms of business succession, securing
human resources, and addressing digitalization anddecarbonization. We will work to provide hands-on
support for each of our corporate customers by fully
leveraging the now-enhanced collective strength of
the Group to provide financial and non-financial
solutions to overcome their management challenges.

14

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Basic strategy. Providing customer-oriented “One to One Solutions”

Priority measures
Basic strategy[Strengthening solution capabilities]( ) Providing solutions to corporate customers( ) Providing solutions to retail customers. Sales reform[Strengthening contact with customers]( ) Strengthening the sales system
Priority measures( ) Digital strategy

Basic strategy. Human resource reform( ) Work reform

Priority measures
Basic strategy[Strengthening human capital]( ) Human resource development( ) Greater job satisfaction. Sustainability initiatives

Priority measures[Strengthening sustainability]( ) Contributions to a sustainable local community( ) Efforts for sustainable growth of the NNFH Group

Target management indices
FY2022 results

Forecast for FY2025

Consolidated net income*Figures in parentheses indicate
the contributions made by Group
companies other than the NishiNippon City Bank.

Consolidated ROE¥26.0 billion¥32.0 billion(¥3.5 billion)(¥5.0 billion)

4.95%

Approx. 6%

The MTBP also focuses on the field of structured
finance, in addition to provision of solutions related tobusiness succession, SDGs, ESG, decarbonization,
digitalization, DX, the transition to cashlesstransactions, and human resource-related issues,
which are all important and high-priority
management challenges that companies now face.
P roviding Solutions to Retail Customers (Seepages 28 to 29)
While working to ensure thoroughly customeroriented business conduct, we will implement
consulting sales for a wide range of customers in amanner that considers their assets and liabilities as awhole, and support stable asset formation as well as
advanced asset management and succession inaccordance with each individual customer’s stage inlife.
In particular, in regard to consulting services forcustomers seeking to form assets, the new NISA
system will launch in January 2024, and the scope of
asset formation activities is expected to significantly
expand to include customers who have to this point
been relatively uninterested in investing. Under the
MTBP, NISA will serve as a starting point to raisecustomer awareness of the need to form assets, andwe will focus on long-term diversification proposals
tailored to each individual customer.

FY2022 results

Efficiency

Consolidated
net income

2nd year of
the previous
MTBP
FY2021
results

Deployment of four basic strategies to realize a leading financial groupSoundness

FY2019results

1st year of
the previous
MTBP
FY2020resultsin terms of both physical solutions (“human touch”)
and digitization, in a manner that leads to solutions
to social challenges and improves the Group’s
performance and enterprise value.
To achieve this, we are prioritizing efforts toenhance management of relationships in order tofirmly link customer needs together with the Group’s
capacity to provide solutions, and as specificmeasures to achieve this, the entire organization is
working toward “strengthening our sales structure”
and “strengthening our human capital.”
In addition, under the new MTBP, our belief that“without regional development, there will be no
growth for the Group” will remain unchanged, andwe will continue to strive to improve the sustainabilityof our host communities as well as ourselves by
increasing investments for future growth andenhancing shareholder returns, while also working toovercome the challenges faced by host communities
and customers, and engaging in a wide range ofcommunity contribution activities.
In addition, we have subtitled the MTBP
“Connecting with Sincerity, Connecting the Future” inrecognition of the fact that “connections” and“connecting” are common, important keywords
within each strategy, including in regard to interactingwith customers, enhancing Group cooperation, andsustainability.
The MTBP consists of four basic strategies andnine priority measures. Through the course of
deploying these basic strategies and priority
measures, we aim to achieve the targets set for eachmanagement index: profitability, efficiency, andsoundness.

ProfitabilityP erformance compared to the management indices targeted
under the previous MTBP

Consolidated core OHR

65.8%

Approx. 60%

12.10%Mid 11%
range

Consolidated capital
adequacy ratio*Figures in parentheses are
based on the full application

Forecast for FY2025(10.39%)of Basel III finalization.

(Lower 10%
range)

Basic Strategy . Sales Reform (See pages
32 to 37)
A key concept we pursued under the previous MTBP
was an optimal mix of human touch and digitalsolutions. We intend to carry on this concept under
the new MTBP and to further enhance the functionsof digital channels, while this time placing particularemphasis on the human touch elements as we
review the sales structure of the HQ and branches tostrengthen relationship management, and work toenhance Group cooperation.
Digital Strategy (See pages 33 to 35)
Our efforts to date in expanding the functions ofdigital channels for both corporate and retailcustomers have significantly increased the amount ofinteraction we have with customers through digitalchannels.
The number of transactions conducted throughthe Nishi-Nippon City Bank app, a digital channel for
retail customers, is increasing year by year, and as ofMarch 31st, 2023, there are now a total of 840,000
registered accounts. In addition, we see NCB
Business Station, a digital channel for corporate
customers, as a digital platform for all types ofbusinesses, and we are working to enhance its
functionality and increase the size of its user base.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

15

Message from the President

Under the MTBP, we will continue to enhance thefunctions of our digital channels and improve UI and
UX, while at the same time building a framework tocentralize and utilize customer information, including
introducing our next CRM/SFA system (a customer
relationship management and sales support system)
scheduled for fiscal 2025, and providing eachcustomer with optimal solutions through both
physical and digital channels.
Work Reform (See pages 36 to 37)
We recognize that the work reform activities
l a u n c h e d i n 2018 h a v e m a d e a s i g n i f i c a n t
contribution to improving Group productivity. We
intend to continue these work reform activities under
the new MTBP as well.
In the 2nd year of the MTBP, we plan to upgrade
to a new sales branch system at the Nishi-Nippon
City Bank. We expect this to drastically reduce andsimplify office work at branch offices. The focus of
the staff ’s duties will switch to face-to-faceconsultations, resulting in a fundamental change inthe role that branches play, from offices forprocessing paperwork to consultation-focusedvenues.
Through these efforts, we aim to further improve
productivity and to increase the profit from customer
service operations per employee to 1.6 times that of
the fiscal year ended March 31st, 2023 by the final
year of this MTBP.

Basic Strategy. Human Resource Reform(See pages 38 to 43)
S i n c e b e c o m i n g p re s i d e n t a t N N F H , I h a v e
constantly reiterated that I want the NNFH Group to
be a diverse and vibrant organization. In a time ofchange like this, for us to live up to our GroupManagement Philosophy and “respond to change
and grow with our customers,” it is indeed vital that
ours is a diverse and vibrant organization.
The role played by the personnel who directlyinteract with customers is extremely important inproviding access to the Group’s collective strengthand solution functions in a way that meetsincreasingly diverse and sophisticated customer
needs.
Under the MTBP, we will further strengthen our HR
development efforts to enhance our staff’s level ofexpertise and skills, while also increasing the degree
to which we invest in personnel, the source of ourbusiness competitiveness, to enable our diverse
human resources to engage in their duties with asense of satisfaction and pride.

Human Resource Development (See pages 38 to 41)
We use the term “strategic human resources”(personnel in charge of consulting, DX, and planning,as well as other specialized personnel) to describe
highly specialized human resources in each field that16

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

are essential in realizing the Group’s management
strategies, and we work to systematically develop
such human resources.
The Group operates an HR development facility
named Kokoro-Kan (photograph of the building on
page 12). Kokoro-Kan is a large-scale facility with 12
floors above ground and one below. It contains a
training center, a dormitory for single employees, anda gymnasium, and it stands as a symbol of theGroup’s commitment to investing in human capitaland developing the personnel who will build thefuture of the Group. We make full use of the facility,
and support the growth of each and every employee
through training programs categorized by job classand duties, as well as by expanding training
programs for reskilling.

Under the previous MTBP, we worked to establish afoundation for sustainability management, including
formulating the aforementioned declaration,
establishing the Sustainability Committee, expressing
support for the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD),
disclosing climate-related information in line with the
TCFD recommendations, as well as setting the targeta m o u n t o f s u s t a i n a b l e f i n a n c e a n d t h e C O2
emissions reduction target.
Under this MTBP, the Group will continue to makesincere efforts to address various environmental andsocial challenges, and contribute to the achievementof a sustainable society by working alongsidecustomers and host communities to solve thesechallenges.

Greater Job Satisfaction (See pages 42 to 43)
By reconstructing the Nishi-Nippon City Bank head
office main building (hereinafter “the new head officebuilding”), renovating branch locations, reviewing
employee compensation, and promoting diversity
and inclusion, we are working to create work
environments where each and every employee canwork with a sense of empowerment and to build anorganizational culture in which a diverse range ofhuman resources can thrive.
In March 2023, upon approval from Fukuoka Cityof our request for the reconstruction of the new head
office building to be covered under the Hakata
Connected Bonus (a relaxation of regulations
regarding the ratio of total floor area to site area), weannounced an outline of our plan. The new head
office building, scheduled for completion in January2026, is designed to provide spacious officeenvironments that enable a high degree of freedom inworking styles. We are also actively renovating ourother aging business locations.
In terms of improving employee compensation, in
fiscal 2023, we raised wage levels at the NishiNippon City Bank by an average of roughly 5%,
when converted into annual wages.
In our efforts to promote diversity and inclusion,
the Group has continued to focus on promoting
women’s empowerment and mid-career recruitment.
This has resulted in a year-by-year increase in theratio of women in management positions, and thenumber of mid-career recruits has also increased
considerably. We will continue these efforts under the
new MTBP as well.

E fforts for Sustainable Growth of the NNFH

Basic Strategy. Sustainability Initiatives(See pages 44 to 55)
Contributions to a Sustainable Local Community(See pages 44 to 53)
The Group prioritizes contributing to the realization ofa sustainable society in its management strategies,
and has committed to this in the Nishi-Nippon
Financial Holdings Group Sustainability Declaration.

leading financial group through our ability to respondto change and to grow with our customers,” all of
our officers and employees will continue to share thisunchanging conviction as we deploy the four basic
strategies set forth in the MTBP and strive to achieve
the sustainable development of our hostcommunities and improve our enterprise value.
I sincerely hope we can rely on your continued
support for and guidance in our future endeavors.

Group (See pages 54 to 55)
Under the MTBP, we will strive to achieve sustainablegrowth for the Group and improve our enterprisevalue by allocating capital in a manner that strikes abalance between securing a sufficient level of capitallevel, investing for future growth, and enhancing
returns to shareholders and investors.
In terms of ensuring a sufficient level of capital, we
aim to maintain a capital adequacy ratio in the low
10% range in the final fiscal year of this MTBP, evenwhen based on full application, excluding Basel III
transitional measures.
In terms of investing in growth, we will focus on
expanding strategic investments and strengthening
management of securities, in addition to theaforementioned investments in human capital. To
expand strategic investments, we intend to expand
strategic system investments, which contribute toimproving productivity, efficiency, and customer
convenience, beyond the scope of similar
investments under the previous MTBP. To strengthen
management of securities, we will enhance theincome earning capacity of our securities portfolio,
while also improving its operational framework
through focused allocation of human resources tomarket divisions and systematic training.
In addition, in order to enhance returns, we revised
our Shareholder Return Policy in fiscal 2023 to raise
the total return ratio standard from “roughly 30%” to“roughly 40%” of the profit attributable to the ownersof the parent company, in light of the Group’s
strengthened management foundation and theearnings forecast for the term of this MTBP.

In Conclusion
Amidst these drastically changing times, themanagement challenges and needs of ourcustomers continue to increase in diversity andsophistication. To realize our Group Management
Philosophy of “aiming high and motivated by pride in
our services, we are committed to becoming a

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

17

Review of the Previous Medium-Term Business Plan “Leaping Forward 2023”
With the combined effect of population decline, an aging population with a lower birth rate, accelerating digitalization, growing awarenessKey results of the measures under the previous MTBP

of sustainability, etc., the issues and needs of customers, both retail and corporate, are growing increasingly diverse and advanced.

The NNFH Group’s Business Environment

Reinforcement of the collective
strength of the Group

Accelerating work reform

The collective strength of the Group
improved drastically with the additionof two new functions, i.e., ICT / DX
solutions and leasing.

Productivity improved substantially fort h e e n t i re G ro u p t h ro u g h e ff o r t s
including downsizing operations andreallocation of human resources topriority fields.

Contact with customers through digitalchannels expanded significantly withthe expansion of app functions for retailc u s t o m e r s a n d i n t ro d u c t i o n o f aplatform for corporate customers.

Issues and needs of corporate customers

Issues and needs of retail customers— City Ascom became a subsidiary; Kyushu
Leasing Service and Ijigen Group became
affiliated companies— Reduced the work of more than 600 people inthree years— Operating income from services for customer
per employee increased to 1.4X

— Registered accounts of the Nishi-Nippon City
Bank app: 840,000— Number of the NCB Business Station
customers: 14,000

With the accelerating change in the environment, corporate
managerial issues are extending beyond financial performance,
including recruitment, business succession, and responding todigitalization and decarbonization.

Retail customers’ needs are growing increasingly diverse andadvanced, e.g., asset building in expectation of the era of 100-year
life, and preparation for inheritance.

Shrinking/aging population with a lower birth rate

Progress with target management indices

Consolidated net income

FY2019 results

1st year of the previous MTBPFY2020 results

2nd year of the previous MTBPFY2021 results

3rd year of the previous MTBPFY2022 results

KPI in the final year of
the previous MTBP

¥20.2 billion¥18.0 billion¥24.2 billion¥26.0 billion¥21.5 billion

20.2%

18.5%

19.3%

23.0%

Approx. 22%% of non-interestearnings
Consolidated OHR

69.8%

67.7%

64.2%

Consolidated capital
adequacy ratio

9.36%

9.49%

9.28%

ColumnKey social challenges and changes in the business environment

Accelerating digital strategy

The NNFH Group’s management foundation is being steadily enhanced (the optimized setup)(Core OHR)

60% range

65.8%*1

Approx. 10%

12.10%*2

Recruitment
HR development

Smooth business succession

Higher productivity with digitalization

Business expansion/conversion

Measures for carbon neutrality

Cost pass-throughGrowing awareness of sustainability

Asset building/ management in
anticipation of the era of 100-year lifeetc.

Preparation for inheritance
Smooth asset succession

Convenient services
Personalized services

Considering the improvement/expansion of the Group’s management foundation along with the environment in Japan and abroad, fromthe diversification/sophistication of customer needs to the favorable market environments in Fukuoka and other areas in the Kyushu
Region, diverse business opportunities can be expected in various financial and non-financial areas.
*1: Core basis excluding
net gains (losses)
related to bonds*2: Early adoption of BaselIII finalization

Under the MTBP, we aim to boost the earning power of the NNFH Group while increasing support from customers by continuously
improving the Group’s enhanced collective strength and providing optimal physical (“human touch”) and digital solutions to ourcustomers.
The key theme for achieving this goal will be enhancing relationship management to align the Group’s solution functions with customer
needs. This will involve prioritizing specific measures such as strengthening the sales structure and human capital.

Overview of Financial Results for FY2022

Profit and Loss (Consolidated)
FY2022

Accelerating digitalization

Strategic Direction Considering the Internal and External Environment(Million yen)

FY2021

YoY

Under the belief that “without regional development, there will be no growth of the Group,” we remain committed to providing solutions
for the community and customers and engaging in diverse activities to contribute to the local community, and we will strive to improvesustainability of the community and the NNFH Group by reinforcing forward-looking growth investments and enhancing return toshareholders, etc.

1. Boosting earning power by providing solutions corresponding to social issues

Gross operating profit

108,159(13,481)

121,640(Core gross operating profit)

118,590(2,094)

120,684

Increase support from customers and boost the earning power of the NNFH Group by further enhancing the Group’s collective strength and

Net interest income

93,741(3,632)

97,373

providing solutions that address the increasingly diverse and sophisticated issues and needs of customers.

Fees and commissions

21,114

182

20,932

Trading income

1,369

(550)

1,919

Other operating income(8,066)(9,481)

1,415(10,431)(11,386)

955

78,039(37)

78,076

Net business profits

30,119(13,444)

43,563(Core net business profits)

40,551(2,057)42,608

Gains (losses) on equity securities

2,235

3,144

(909)

Cost of credit

3,949

(81)

4,030

(of which net gains (losses) related to bonds)
Expenses

Other extraordinary gains (losses)
Ordinary profit
Extraordinary profit (loss)
Income taxes
Profit attributable to non-controlling interests
Profit attributable to owners of parent

18

Medium-Term Business Plan, “Leaping Forward 2026 - Connecting with Sincerity, Connecting the Future -”Through enacting measures under the previous Medium-Term Business Plan, “Leaping Forward 2023 -Creating Vibrancy to the Region
and Beyond-” (the MTBP), NNFH has steadily firmed up the Group’s management foundation, including developing digital strategies andbusiness innovation measures, and strengthening Group functions. In addition, all of the target management indices set forth in theprevious MTBP were achieved.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

5,270

6,024

(754)

33,677(4,191)

37,868

434

1,148

(714)

7,678

(4,664)

12,342

368

(207)

575

26,064

1,828

24,236

Strengthening relationship management

2. Strengthening the sales structure

3. Strengthening human capital

Promote customer-oriented sales activity with a review ofthe sales system for HQ and branches, etc. along withenhancing digital channel functions and building a
structure for centralization and effective utilization of
information.

Build a corporate culture that promotes advancement ofdiverse human resources through efforts to strengthen HR
development for enhancing the expertise and skill sets of
employees and establishing an environment that improves
job satisfaction.

4. Improving sustainability of the community and the NNFH Group
Under the belief that “without regional development, there will be no growth of the Group,” provide solutions to local issues through core businessand actively contribute to the local community in a variety of ways along with aiming to improve sustainable growth and increase corporate value of
the NNFH Group by reinforcing forward-looking growth investments and enhancing return to shareholders, etc.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

19

Value Creation Process/Medium-Term Business Plan
The NNFH Group focuses on relationships with diverse stakeholders and provides customer-oriented “One to One Solutions” via physical (“human touch”) and digital contributions to the development of the host community and customers.

Management
Philosophy

Aiming high and motivated by pride in our services, we are committed to becoming a leading financial group through our ability to respond to change and to grow with our customers.
. Be closest to the customer. Create human resources that meet expectations. Contribute to the community“Connecting” is the essential common theme
for each strategy, such as contact withcustomers and enhancement of Group
collaboration

Leaping Forward 2026 -Connecting with Sincerity, Connecting the Future-

Host community
Creation and revitalizationof local industries

Support forbusiness
startups

Corporate customers

Creating greater vibrancy in Fukuoka
and other areas in the Kyushu Region

Lively and vibrant cities

Better corporate earnings

Higher income levels

More investments

Expanded consumption

Hands-on support for corporate customers

Consulting across the whole of assets and liabilities

Human touch

Collaboration
Partnercompanies

Credit cards

Leasing

Securities

Consultancy

ICT

Enhance return to shareholders

Invest in human capital

Shareholders and investors

Group employees¥26.0 billion¥32.0 billion(¥3.5 billion)(¥5.0 billion)

FY2022 results. Human resource reform[Strengthening human capital]( ) Human resource development( ) Greater job satisfaction. Sustainability initiatives( ) Contributions to a sustainable local community

Profitability

Basic strategy*Figures in parentheses indicate
the contributions made by Group
companies other than the NishiNippon City Bank.

Consolidated ROE[Strengthening sustainability]

4.95%

Approx. 6%

Efficiency[Strengthening contact with customers]( ) Work reform

20

Forecast for FY2025

Consolidated net income( ) Providing solutions to retail customers. Sales reform( ) Digital strategy

Priority measures

FY2022 results

Forecast for FY2025( ) Providing solutions to corporate customers

Priority measures

Basic strategy

Externalorganizations

Target management indices[Strengthening solution capabilities]( ) Strengthening the sales system

Priority measures

Collaboration

Soundness

Basic strategy. Providing customer-oriented “One to One Solutions”

Socialcontributions

DigitalBanking

Basic strategy and priority measures

Priority measures

Retail customers

Customer-oriented “One to One Solutions”

Solving
regional
issuesBasic strategy

Regional
development

Consolidated Core OHR

Consolidated capital
adequacy ratio*Figures in parentheses are basedon the full application of Basel III
finalization.

65.8%

Approx. 60%

12.10%

Mid-11%
range(10.39%)(Lower 10%
range)( ) Efforts for sustainable growth of the NNFH Group

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

21

Basic Strategy . Providing Customer-Oriented “One to One Solutions”
In an effort to meet increasingly diversified and advanced customer needs, the NNFH Group provides customer-oriented “One to One
Solutions” in the forms of human touch and digital solutions, thus contributing to the development of customers and the regional
community.
Given the ongoing digitalization of banking and the resultant decline in customer traffic, we will expand contact with customers byenhancing the functions of digital channels (PCs, smartphones, etc.), while at the same time strengthening our consulting function(discovering customers’ issues and true needs and providing solutions) through physical channels (clerks, branches).

Support for Business Succession/M&As
Support Business Succession for a Broad Range of Customers
The NNFH Group supports business succession for a broad range of customers using more specialized and sophisticated methods
including the use of MLBO schemes and funds.

Priority Measures ( ) Providing Solutions to Corporate Customers
The NNFH Group provides financial and non-financial solutions tailored to each corporate customer’s needs, which are becoming
increasingly diverse and sophisticated against the backdrop of social changes such as labor/successor shortage, DX, and carbon
neutrality, by fully applying the NNFH Group’s collective strength (hands-on support for corporate customers).

Valuation

M&As

FinancingUtilize MLBO
schemes andfunds, etc.

Increasingly diverse and advanced issues and needs of corporate customers

Labor shortage

Smooth businesssuccession

Higher productivity

Business expansion/
conversion

Measures for carbon
neutrality

Formulation ofbusiness plans

IPO
Utilize Nishi-Nippon City
Tokai Tokyo Securities’functions

Revitalization of theregional economy

etc.

etc.

Providing financial and non-financial solutions (hands-on support for corporate customers)

ブランドマーク

和文

Support for SDGs/ESG, Decarbonization
Provide Solutions that Match the Issues/Needs of Customers
The NNFH Group provides financial and non-financial solutions such as support for fundraising with sustainable financing and leasing,

英文Banking
最小使用サイズ

最小使用サイズ

6mm

6mm

Credit cards

Leasing

Securities

Consultancy

ICT

Support for business succession/M&As

Support for SDGs/ESG, decarbonization

Support for digitalization/DX

Support for cashless payment

Human resources-related support

Providing diverse fundraising methods

Providing financial and non-financial solutions

etc.

Regional development/support for business startups

Increase business loan balancealong with the establishment of action plans for SDGs management.

Sustainable financing

SDGs consulting service

Equipment lease financing, etc.

Decarbonization consulting

Increase corporate customer-related fee income
Number of SDGs management support projects

¥4.9T

¥4.3T

¥5.3T

(The Nishi- Nippon City Bank)

Total sustainable financing amount

¥7.5B

¥6.2B

¥2.0T

2,000 cases¥4.4B

1,862 cases

¥1.2T
¥0.5T

The end of
March 2020

22

The end of
March 2023

Nishi-Nippon Financial Holdings GroupThe end of
March 2026

INTEGRATED REPORT 2023

FY2019FY2022

FY2025Previous MTBP

Current MTBPFY2022

FY2025

Nishi-Nippon Financial Holdings GroupFY2030INTEGRATED REPORT 2023

23

Basic Strategy . Providing Customer-Oriented “One to One Solutions” | Priority Measures ( ) Providing Solutions to Corporate Customers

Support for Digitalization/DX

Providing Diverse Fundraising Methods

Optimal Support for Digitalization / DX for Each Customer

Enhance Structured Finance

The Nishi-Nippon City Bank, City Ascom, and Ijigen Group work in union to provide optimal solutions corresponding to the size and

The NNFH Group enhances structured finance to meet customers’ diverse financing needs.

issues of customers.
ブランドマークStart with consultation toprovide optimal solutions

Large

和文

Digitalservice development

Middle-ranking

最小使用サイズ

最小使用サイズ

6mm

6mm

Number of DX consultancy/
digitalization support projects

The Nishi-Nippon City Banketc.

development in Fukuoka, the number of projects outside Kyushu is increasing reasonably.

Project financing(Renewable energy, etc.)

Offshore wind projects in Kyushu are in Hibikinada, Nagasaki, and Karatsu. The number ofprojects is increasing with the decarbonization trend.

1,000 cases

City Ascom

Market expansion with the delisting and carving out of listed corporations, etc. Can be

MLBO financing

667 cases

Ijigen GroupSMEs

In addition to an increase in the number of projects in Kyushu such as the large

Real estate-related financing

英文used for business succession.

Support for digitalization
centering on regulatory
response

New products such as transition financing in addition to increased demand for positive

Sustainable financing

External partners

Electronic expense
settlement

Micro

Previous MTBP

etc.

impact finance and sustainability-linked loans.

Current MTBP

Ship and aircraft financing

Support for Cashless Payment

Capital expenditure for decarbonization is accelerating.

Support for Corporate Customers to Go Cashless with Payments
The Kyushu Card will leverage its strengths as the No. 1 regional-bank-affiliated credit card company to aid corporate customers in going

Credit-related fees

Structured financing balance

cashless by providing corporate cards and terminals compatible with multiple means of settlement.

¥2.5B¥510.0B
Volume of card transactions¥387.5B

65,00062,000

FY2022¥1.6B

70,000¥451.2B

FY2019¥350.0B

Number of member stores¥600.0B

FY2025The end of March 2023

The end of March 2020 The end of March 2023 The end of March 2026

The end of March 2026

FY2022

FY2025

Regional Development/Support for Business Startups

Human Resources-Related Support

Active Involvement in Development of the Regional Economy/Industries

Providing Group-Based HR-Related Solutions

The NNFH Group contributes to further development of Fukuoka and other areas in the Kyushu Region through active involvement in

By coordinating and utilizing the diverse human resource-related solution functions of each Group company, the NNFH Group continues

support for business startups, regional development, and growth industries such as semiconductors.

to provide solutions to meet the diverse range of needs and challenges faced by individual customers.

HR referrals
Full-time employee

Side business

NCB Research & Consulting

Concurrent position

Temporary staffing(contracting)

The Nishi-Nippon
City BankCity Career Service

Start side business HR referrals(FY2023-)

Start two-way referrals(FY2024-)

We handle staffing agency
services for extra employment
opportunities where workers canutilize specialized knowledge andexpertise, such as in SE, sales,planning, architecture, and more.

The NNFH Group itself conducts
interviews to ascertain clientneeds and select candidates(bi-lateral placement services) inorder to introduce the mostsui t a ble p er s onnel t o clien t
companies.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

HR consultancy

NCB Research & Consulting

Strengthen HR referral function

24

Training

Ijigen Group

Activeinvolvement inregional
development

Cases of HR-related solutions

1,000 cases
698 cases

Support for
growth industries
such assemiconductors

13,000 cases

15,000 cases

Contribute to thedevelopment of
Kyushu/Fukuoka
Support forbusiness
startups

Support for IPO
Support forinternational
business

Previous MTBP

Number of startups supported

Regional
decarbonization

Previous MTBP

Current MTBP

Current MTBP

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

25

Special Features: Efforts to Create Industries and Jobs in the Region
The NNFH Group started as a financial institution specializing in financial services for SMEs. The Group is making active contributions to

NCB Business Loans, Bank of Nagasaki Business Loansthe creation of industries and jobs in the region by providing funds and consulting services to venture businesses before and after

The Nishi-Nippon City Bank offers NCB Business Loans, which are designed to financially support businesses run by sole proprietors.

foundation by giving full play to the unaltered DNA of developing SMEs.

Everything from application to conclusion of a contract can be completed online anytime, anywhere without having to visit a physicalbranch.
Meanwhile, the Bank of Nagasaki offers Bank of Nagasaki Business Loans. Some of their advantages include a simple application
procedure that doesn’t require applicants to submit income verification documents and speedy screening that an application may be filed
via facsimile and responded to the following day.

Incubation facilities

Funds- NCB Venture Fund
- QB Fund- The Company DAIMYO

A full range ofstartup support functions

Financing- Loans to support startups- Business Loans- Support by business startup
consultants

Platforms for
Corporate customers- Leases to support startups- The NCB Business Station

NCB Startup Support Salons and Business Startup Consultants
At the NCB Startup Support Salons in Fukuoka City and Kita-Kyushu City (opened
in February 2016 and November 2017, respectively), the Nishi-Nippon City Bank
offers consultation services on everything to do with starting a business, including
support for pre-startup business plan formulation, financing at the time of startup,
post-startup management guidance/consultation, and organization of seminars. The
salons also provide entrepreneurs with opportunities to network with their peers.
At these salons, consultants offer one-stop and finely-tuned consultations related
to the startup. Given the spread of COVID-19, online consultation services are alsoavailable.

The Nishi-Nippon City Bank and the Bank of Nagasaki, in cooperation with Kyushu Leasing Service, provide individual business owners
who are considering installing startup-related equipment with business startup leasing support.

NNFH Business Competition —OPEN INNOVATION HUB—

NCB startup
Support SalonsLeasing

Finely-Tuned Startup Support

NCB Leasing Support for Business Startups and Nagasaki Leasing Support for Business Startups

The NNFH Group organized the third open innovation business competition for startups. In February 2023, a final selection committee
meeting was held for the seven companies that passed the first and second rounds of screening from among the 100 companies thatentered, and the first and second most outstanding contestants, as determined by the committee, were commended.

13,191 visitors in total(as of March 31st, 2023)

NCB Open Accelerator
In cooperation with KPMG Japan, the Nishi-Nippon City Bank in 2022 launched the NCB
Open Accelerator* program, which supports the creation of new businesses by localorganizations and companies, and contributes to the revitalization of local economies.
*The program aims to create new businesses by combining the technologies, expertise, sales channels, and other resources owned
by participating companies with the innovative business models, advanced technologies, and expertise of startup companies.

The final meeting to report the results of the NCB Open Accelerator@Fukuoka 2022

A Co-working Facility, The Company DAIMYO

program was held in January 2023. At the meeting, five of the companies thatIn May 2022, the Nishi-Nippon City Bank established a brand new co-working
facility, The Company DAIMYO, within its Daimyo Branch building.
There, our resident business startup consultants address a variety of issues that
customers may encounter before and after starting a business. Since its
establishment, the facility has handled a total of 107 consultation cases, as of March
31st, 2023. Also organized at the facility are periodic consultations by certified tax
accountants and other specialists and gatherings designed to allow the tenants tobuild a network.

participated companies in fiscal 2022 reported on the results of their efforts to create new
business in collaboration with startup companies, based on their respective themes.
In addition, the NCB Open Accelerator@Fukuoka 2023 program was launched in June
2023, as a continuation from the previous fiscal year. In fiscal 2023, four participatingcompanies will spend roughly eight months creating new business in collaboration withstartup companies.

Startup Support through Funds
The Nishi-Nippon City Bank makes capital commitments to a variety of funds forbusinesses in various stages, including support for startups and new businesses,
business growth, business succession, shift to “sixth-order industrialization,” andcommercialization of business seeds.

Number of investment

Total:

18 cases(FY2022)

26

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

27

Basic Strategy . Providing Customer-Oriented “One to One Solutions”

Priority Measures ( ) Providing Solutions to Retail Customers
The NNFH Group provides optimal solutions for each customer by enforcing customer-oriented business conduct and consulting on all
assets and liabilities for a broad range of customers.

Consulting on Asset Building
Asset Management Proposals with Clear Goals
The NNFH Group proposes optimal asset management for each customer with interviews/reviews of the amount of assets to be reservedby retirement and the period of withdrawal, etc.
STEP1

Confirm the three ages
Current age

STEP2

Confirm the cash flow in retirement

Retirement age

Issues and needs of retail customers

Identify the annual amount of

Share the necessary amount toshortfall in retirement

prepare by retirement, etc.

Expected age of death

Preparation for
inheritance

Asset building/management in
anticipation of theera of 100-year life

Convenient andpersonalized services

Smooth asset
succession

Set the goal

STEP3Long-term diversified investment proposals matching each customer

etc.

Enhance Lending Capacities Corresponding to the Life Stage of the Customer
The NNFH Group strengthens lending capacity by improving consulting capacities for retail customers, expanding the dedicated loan site
system, strengthening non-face-to face channel functions, etc.

Consulting on full range of assets and liabilities of customers

Housing loan balance

Number of installment-type investment
trust contracts/monthly withdrawal amount¥2.9B

Consulting on asset building
starting with NISA and iDeCo

Support asset building using
loan products

March
2020

Enhance functions for
non-face-to-face channels
and improve UI/UX¥1.9T¥300.0B

March
2023

The end of
March 2020

March
2026

The end of
March 2023

The end of
March 2026

The end of
March 2020

The end of
March 2023

The end of
March 2026

Providing Solutions for Wealthy Individuals
Provide Sophisticated Solutions with Bank and Securities Collaboration
The NNFH Group provides sophisticated solutions with mutual customer referral/collaboration between banks and securities
corresponding to the needs of each customer.
Number of active accounts for wealthy individuals
Wealthy customers(Nishi-Nippon City Tokai Tokyo Securities)

Sophisticated asset management/succession support

Increasingly diverse and sophisticated needs

Asset succession/inheritance
Effective use of real estate

Support asset management/
succession using loanfunctionsSupport asset succession/
inheritance using trusts¥1.8T¥330.4B

30,000etc.

Sophisticated asset
management consulting

103,000
65,000Support stable asset building¥360.0B

¥2.1T

¥1.9B
¥0.9B

Consumer loan balance

etc.

Enforce customer-oriented business conduct

The Nishi-Nippon City Bank

Sophisticated proposals on
asset management

Customerreferral/collaboration

More thandoubleetc.

Nishi-Nippon City Tokai Tokyo Securities
The end of March 2023 The end of March 2026

Asset Succession/Inheritance Initiatives
Asset Succession/Inheritance Initiatives Using Trust Functions

Expansion of assets under management

Expansion of individual loan balance

The NNFH Group supports smooth asset succession/inheritance for customers by enhancing trust business initiatives in preparation for
the “Great Inheritance Era.”
Number of trusts

¥0.9T

¥1.1T

¥1.4T
¥2.1T

¥2.3T

¥2.5T

Support asset succession/inheritance using the Group trust functions

1,623 cases
Will trust

The end of March 2020 The end of March 2023 The end of March 2026

2,000 cases

Inheritancemanagement

Seniors
support trust

Annualinstallment
gift trust

Trust as a
substitutefor a will

The end of March 2020 The end of March 2023 The end of March 2026
Previous MTBP

28

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings Group

Current MTBPINTEGRATED REPORT 2023

29

Special Feature: Initiatives for Improving Customer Satisfaction
Building a Framework for Customer-Oriented Business Conduct

Efforts with Consideration for Elderly People and Customers with Disabilities

Basic Policy for Management and Building of Customers’ Assets

Barrier-Free Facilities

Under the Group Management Philosophy, the NNFH Group rolls out comprehensive financial services that exceed the expectations of

The NNFH Group promotes universal design and barrier-free facilities at branches for valued customers.

customers and host communities. To appropriately manage and build customers’ assets, the NNFH Group has built a framework forcustomer-oriented business conduct by establishing the Basic Policy for Management and Building of Customers’ Assets (Basic Policy on
Fiduciary Duty).
The NNFH Group has set objective and specific KPIs to assess the status of customer-oriented business conduct based on the basic
policy. The status is disclosed regularly and reviewed as needed.
https://www.nnfh.co.jp/fiduciaryduty.html

Services Friendly to Persons with Disabilities
The Nishi-Nippon City Bank and the Bank of Nagasaki have installed a total of 916 and 45 ATMs (including those outside branches) for
visually-impaired persons, respectively, with at least one at every branch (as of March 31st, 2023). Customers are also welcome to ask
our staff to write/read for them.

Support for Telephone Relay Services

Basic Policy 1. Building a Framework for Customer-Oriented Business Conduct

The Nishi-Nippon City Bank supports telephone relay services as a form of public infrastructure aimed at improving convenience forcustomers with hearing or speech difficulties.

In accordance with the Group Management Philosophy, the NNFH Group strives to ensure thoroughly customer-oriented businessconduct, aiming to be a comprehensive financial group chosen by customers. Each and every officer and employee works in a way
sincere and fair for customers.

Initiatives for improving
customer satisfaction

Improving evaluation methods
for sales staff

Complying with laws and regulations,improving verification systems, etc.

Improving products and services based on
customer feedback

Appropriate management ofconflicts of interest

Entrance with no steps (slope)

Accessible Toilet

Customers can write here while seatedPriority ATM for visually-impaired persons

Using of third-party evaluations
Obtained R&I Customer-Oriented Investment
Trust Sales Company Evaluation (see p.11)

Basic Policy 2. Offering Optimal Products and Services for Customers

Initiatives for Security

Through dialogue with customers, the NNFH Group accurately understands customer needs and strives to offer optimal products

The Nishi-Nippon City Bank and the Bank of Nagasaki take measures to prevent financial crimes, such as illegal money transfer via

and services suited to customers’ asset status, experience, knowledge, and purpose of asset management.

internet banking and fake phone call fraud (bank transfer fraud).

Explaining the NNFH
Group’s basic policies

Identifying customer needs
and confirming suitability

Investment proposals tailored
to meet customer needs

Proposals forstable asset building

Initiatives for Enhancing Security of Internet Banking
Measures Taken for the Nishi-Nippon City Bank’s Systems
NCB Direct (for retail customers) requires additional secret phrase authentication when customers attempt to connect from unknown

Promoting digital andremote transactions

Improving sales staff expertise

Using of third-party productmonitoring and evaluations

computers. In particular, we strongly recommend the use of one-time passwords. Customers who have conventional cellular phones or
smartphones are provided with an app (soft token), and customers who do not with a keychain-type device to generate one-time
passwords (hard token).
NCB Business Direct (for corporate and sole proprietor customers) requires one-time passwords available from soft and hard tokens. In
addition, users can connect from registered computers only.
Measures Taken for the Bank of Nagasaki’s Systems
Nagasaki Internet Banking (for retail customers) aims to enhance security by requiring customers to use either one-time passwords or

Basic Policy 3. Providing Information to Customers in a Better Way
The NNFH Group strives to provide important information in a way easy to understand for customers, according to product andservice characteristics, customers’ experience and financial knowledge, and other factors. This helps customers select products
and services that meet their needs.

Making information easy
to understand

Providing information
through applications, etc.

Providing information
through seminars, etc.

email notifications passwords.
Nagasaki Business Direct (for corporate and sole proprietor customers) has introduced a system to which users can connect fromregistered computers only. In addition, the system requires one-time passwords available from a keychain-type generator (hard token).

Measures Taken for Customers’ Computers
Free software to tackle illegal money transfer is distributed on the Nishi-Nippon City Bank’s and the Bank of Nagasaki’s websites. The
software prevents users from being directed to fake websites (phishing) and having their passwords and other information stolen by

Providing information
to schools, etc.

Follow-up services

viruses (spyware).

Initiatives for Preventing Fake Phone Call Fraud (Bank Transfer Fraud) and Other Financial Crimes
The Nishi-Nippon City Bank’s and the Bank of Nagasaki’s employees strive to prevent financial crimes by speaking to customers who areusing cellular phones at an ATM or a counter.

30

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

31

Basic Strategy . Sales Reform
The NNFH Group will carry on the concept of ‘pursuing the best mix of physical (human touch) and digital solutions,’ as set forth in theprevious MTBP, and further enhance the functions of digital channels, while this time placing particular emphasis on the human touch
elements as we work to strengthen relationship management.

Establish asales system
matching
customers

Pursue best mix of physical (human touch) and digital

Expanddigital channel
functions forretailcustomers

Priority Measures ( ) Digital Strategy
The Nishi-Nippon City Bank expands digital channel functions for corporate and retail customers and improve UI/UX in addition tobuilding a system for centralizing/utilizing customer information. Provide optimal solutions for each customer in physical and digitalchannels.

Retail digital channel (the Nishi-Nippon City Bank App)

Corporate digital channel (the NCB Business Station)

Equip the app with variety range of banking functions and pursue
simple, user-friendly UI/UX for wide-ranging generations ofcustomers.

Position the NCB Business Station as the digital platform for all
business entities and provide convenient financial and non-financial
services.

Enhance theGroup’scollective
strength

Number of registered accounts

Number of corporate digital channel users

1,300,000

Strengthen
HQ support
structure

840,000

Expanddigital channel
functions forcorporate
customers

Centralize/utilize information
Providing customer-oriented “One to One Solutions”

Priority Measures ( ) Strengthening the Sales System
Enhance the Group Collaboration System
The NNFH Group practices matrix management, in which NNFH (the holding company) develops group-wide strategies based on theneeds of each customer.
Under the current MTBP, we aim to increase the number of officers who hold concurrent positions at NNFH and other companies, andestablish a system that enables the formulation of Group strategies with a more cross-functional perspective through the Group Strategy
Council, comprised of eight Group companies.

70,00050,000Business Station
only
Corporate IB

The end of March 2023

The end of March 2026

The end of March 2023

The end of March 2026

Support asset building, etc. via the app

Improve convenience by expanding functions

Provide better operability for each generation

Improve quality of information delivery to customers

Provide more optimized information

Seamless linkage of corporate digital channels

Expand the Nishi-Nippon City Bank app functions

Expand the NCB Business Station functions

Investment trust account opening

Investment trust purchase/ cancellation

Housing loan inquiries/repayment

Business loans

Child account opening

FactoringForeign currency deposit account opening/real time FX transactions

Corporate credit

Corporate account opening

Electronic delivery service

Various notices

Confirmation at time of transaction

etc.

etc.

Nishi-Nippon Financial HoldingsGroup Strategy Council

Digital channels
Increase concurrent
position holders

The Nishi-Nippon City Bank

The Bank of Nagasaki

Nishi-Nippon Tokai Tokyo Securities

The Kyushu Card

NCB Research & Consulting

City Ascom

Kyushu Leasing Service

Ijigen Group

Digitalization / DX

SDGs/ESG

HR-related

Prepare Group-based strategies

Datelinking
Hands-on support for corporate
customers by demonstrating theGroup’s collective strength

Next version
CRM/SFA systems(To be introduced in
FY2025)Datelinking
Optimal communication using
telephone/chat/SMS
Full cloud-type contact center system(introduced in May 2022)

Corporate
Consulting Supporter

HQ department withsolutions function
Cooperate

Branch offices

Needs

Issuesusing Group functions

Provide optimal solutions

Corporate/retail customers

In order to strengthen the nexus connecting our customers’ challenges/needs with the Group’s solution functions, the NNFH Group has
set up specialized HQ units for both corporate and retail customers to establish a system capable of providing each customers with
optimal Group solutions.
Strengthen the “hub” by establishing specialist teams in HQ

Nishi-Nippon Financial Holdings Group

Contact center

etc.

Strengthen the HQ Support System

32

Date
linking

Branch offces

Retail
Wealth Manager
Group companies
Chief Financial Advisor

INTEGRATED REPORT 2023

Centralize customer information / Prepare data-based strategies

Utilize information(example)

Marketing starting with the customer’s interests

Providing “One to One Solutions”
based on understanding of customers
Optimize recommendations using online activity dataetc.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

33

Basic Strategy . Sales Reform | Priority Measures ( ) Digital Strategy

Services for Corporate Customers
Introducing the “NCB Business Station,” a Platform for Corporate Customers
In December 2020, the Nishi-Nippon City Bank opened the “NCB Business Station,” a platform for corporate customers. The online
platform aims for a one-stop service providing financial and non-financial transactions, under the concept of “24/7 access to an online
counter!” The unique system was jointly developed with NTT DATA Corporation and is the first of its kind launched by a regional bank in
Kyushu.

Services for Retail Customers
Expanding Functions of the Nishi-Nippon City Bank App
Since its March 2015 launch, the Nishi-Nippon City Bank app, a smartphone app offered by the Nishi-Nippon City Bank, has continued
to expand its functions and the number of service procedures that can be completed through the app, such as opening savings
accounts, conducting card loan and mutual fund transactions, and using smartphone ATM.
The app is popular among customers, evidenced by a total of 1.41 million downloads with 840,000 account registrations as of March
31st, 2023.
Going forward, we will continue to provide convenient services and expand contact points with retail customers under the concept of“Have a bank in your smartphone!”

Major functions to be added in FY2023
Provision began in May 2023

Electronic form issuance services● Services that enable customers to view and obtain various documents

in electronic form (PDF format)
Paperless

Have a bank in your smartphone!

24/7 Access to an
Online Counter!

· Deposit balance/transaction history· Card loan balance, investment trust profit and loss

Inquire· App-to-app transfer · Small amount transfer COTRA· Smartphone ATM· Payment of taxes and public funds (NCB App Pay, COTRA)

Pay
Save
Increase· Special purpose savings accounts· Opening investment trust and NISA accounts· Investment trust transactions· Online securities (CHEER Securities Inc.)

Borrow· App loan application· Borrowing and repayment of card loans

Other· Opening accounts· Various procedures (address changes,
reissuance of lost items)

Viewable at any time

Secure information management and security*Provision began of 19 electronic forms, including reconciliation statements for
current accounts and repayment schedules, with even more forms planned
for the future.

1,410,000 downloads

Integration with online corporate banking

Financial service

840,000

registered accounts

Non-financial service● Single transfer● Business matching● Bundle transfer, salary transfer● Provision of subsidy and grant information● Deposit balance and account● Provision of seminar andactivity inquiries● Other banks online inquiry services● Online loan functionsetc.

● Unification of corporate IB login screen with NCB Business Station

Graphical fund management

management information● Employee benefits services● Electronic form issuance services

Consolidated display of balances for multiple accounts

Access to various services and information on Group company services

etc.

Digital Solutions
The end of
March 2015

The end of
March 2016

The end of
March 2017

The end of
March 2018

The end of
March 2019

The end of
March 2020

~ Number of app accounts opened (savings accounts) ~App loan balance

The end of
March 2021

The end of
March 2022

The end of
March 2023

them increase operational efficiency, as well as works to support DX of customers’ businesses for reform.

Number of transfers from app, etc.

2,429K

11,396
15.4B

DX Support
In cooperation with Group companies and external partners with specialized knowledge, the Nishi-Nippon City Bank offers hands-on
support throughout the five steps necessary for the implementation of DX, as well as for the acquisition and development of the personnel

1,603K

6,562

8.2B

The Nishi-Nippon City Bank established the Digital Solutions Team in October 2020. The team supports digitalization of customers to helpthat serve as the foundation.

5 Steps
The end of March 2022

The end of March 2023

FY2021

FY2022

FY2021

FY2022for DX

Step 1

Step 2Conception

DesignIdea conception,
vision formulation,
etc.

Idea design, strategy
development, etc.

Step 3

Verification

Step 4

Step 5

Implementation

Operation

Research, interviews,
etc.

System development
and design, etc.

KPI management,
customer support,etc.

HR development/Promote corporate manager’s understanding of DX
Asset Building Services via the Nishi-Nippon City Bank App
DX Support System
Renewal of investment trust functionality

Coordination with an online securities company (CHEER Securities Inc.)

Additional functions for
opening investment trust
and NISA accounts

Investments in Japaneseand U.S. stocks from as
little as 500 yen

The ability to complete investment trust
purchases and cancellations, as well as
applications for installment-type investment trusts

The ability to makedeposits and withdrawals
in real-time

Investment profit/loss
screen that displays details

Seamless login from the
Nishi-Nippon City Bankapp

The Nishi-Nippon City Bank, City Ascom, and the Ijigen Group have established a cross-group sales force to provide appropriate
solutions to the various issues faced by our customers in implementing digital transformation.

DX consulting teamCity Ascom

City Ascom The Nishi-Nippon City
personnel
Bank personnel

Development ofcore systems

RPA/AI-OCR

Security measures

Office systems foreducational institutions

Data utilization

Contracted system
operation

Ijigen Group
personnel

Analyzes customer issues and considers solutions

Establishment of a cross-group sales force

Ijigen GroupNew businessdevelopment
Software development

Design/production(apps, web services, etc.)(webpages, flyers, videos, etc.)

DX personnel development(seminars, training, etc.)

etc.

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Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Human resource systemestablishment

Back office support
etc.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

35

Basic Strategy . Sales Reform

ColumnPriority Measures ( ) Work Reform
The Nishi-Nippon City Bank redefines branch offices as “business locations focused on consulting” considering the progress indigitalization and fundamental reduction of branch administration with the branch system upgrades. We aim to improve productivity byreallocating personnel selected based on improved efficiency, etc. to focus areas such as front office, etc.

Review of the Last Five Years of Business Innovation

In April 2018, the Nishi-Nippon City Bank embarked on a series of work reforms, comprising the three pillars of work flow
innovation, digital innovation, and resource innovation. These attempts to carry out work reform had helped reduce theamount of paperwork and expenses, and brought about qualitative changes in the entire organization on a scale that isarguably the largest in the company’s history by a wide margin.

Recognition of Issues

Redefine the Role of Branch Offices
Outdated workflow

Mismatch between workload
and personnel

Paper-based workflow

Significantly reduce/simplify branch administration by realizing the three “less” with branch system upgrades.
Slip/ledger-lessCash handling-less

Account calculation-less

A General Picture of Work Reform
Three pillars of work reform
Branch administration will be mainly handled by part-time staff, with full-time employees shifting to face-to-face consulting operations.

Work flow innovation

Digital innovation

Resource innovation

Branch offices to become focused on consulting

Reviewing the configuration of branches according to market needs
Thoroughly streamlining
work flow

After branch system upgrading

Utilizing ICT(RPA, tablet computers, etc.)

Streamlining labor at branch offices
Re-allocating personnel to priority fields

DigitalTransactions completed by tablet entries andcash deposit/withdrawal using dedicatedMajor achievements from five years of business innovation (April 2018 to March 2023)

devices by the customer

Procedures using
tablets, etc.

Human touch

Reducing the amount of paperwork, branch offices, expenses, etc.

Face-to-face consulting

Volume of office
work at HQ andbranches

Employees to focus on face-to-face consulting

Number of
branches

Number of
ATMs

-20

-322

-1,215

Branch offices to become focusedon consulting

Reducing expenses(approximately 2.4 billion yen was cut due to work reform)

Volume of office work reduced at HQ andbranches (aggregated)
FY2022

FY2025Reallocating personnel to priority fields
Allocate secured personnel and mid-careerhires to focus areas such as front office, etc.

(Unit: person
equivalent)-1.4
Labor costs

-2.6

-1.0

80

-2.3

65.1

Non-personnel expenses and taxes
IT/digital

-3.3

1.4X

30

FY201772.2%

MarketMTBP-285

divisions-1,21510-1,500FY2019FY2022

FY2025FY2019FY2022More thanCore OHR-6.6pt335

Otherfactors

Front office-578

the end of March 2023

163

Work reform-1.2

MTBP KPI
1.6X

Group
companies,
etc.

doubleOther
factors

Operating income from services forcustomer per employee*

Marketoperationfield

the end of March 2018

Benefits ofwork reform: −2.4 billion yen

71.0 Work reform

Secure Personnel by Improving HQ Operation Efficiency

Corporate
solutions
field

Headcount for the priority fields above

Factors for a reduction in expenses(The Nishi-Nippon City Bank)

FY2019Re-allocating personnel to priority fields

Digital field(sample image on the right)

FY2017

Building an organization with a trend of increasing productivity

FY2022

65.6%

Operating income from services for customer per employee(The Nishi-Nippon City Bank)
Approx.

¥4.9

1.4 times
more

¥6.9
millionmillion

FY2017

FY2022

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

FY2025*(Balance of loans and bills discounted × Loan-to-deposit spread+ Net fee and commission income − General and administrative
expenses) ÷ Average number of employees during the fiscal year

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37

Basic Strategy . Human Resource Reform
We at the NNFH Group will further strengthen our HR development efforts to enhance our staff’s level of expertise and skills, while also
increasing the degree to which we invest in personnel, the source of our business competitiveness, such as working to create rewarding
workplaces, in order to enable our diverse human resources to engage in their duties with a sense of satisfaction and pride.

Priority Measure ( ) Human Resource Development

Our approach to strategic
human resources

Development of Strategic Human Resources
The NNFH Group uses the term “strategic human resources” (consulting, DX, planning,and specialized personnel) to describe highly specialized human resources in each field

Increasing investment in personnel

Development ofstrategic humanresources

Expansion oftraining programsby job class anddutiesEnvironmental
improvement (rebuilding
head offices and branches,
improving benefits, etc.)that are essential in realizing the Group’s management strategies, and we work tosystematically develop such human resources.

Core human resources(Improvement of expertise and skill levels)*The categories of specialists, core human resources, and base human resources arerecognized internally based on the acquisition of specialized qualifications, work
experience, and other requirements.

Greater job satisfaction

Consulting personnel
Human resources with knowledge of tax planning, businesssuccession, asset management, real estate, etc., and whoare able to propose solutions (one to one solutions) to adiverse range of client issues in line with their respective
needs

Health andproductively
management

Reskilling
etc.

etc.

Addressing the issues of local customers

Sustainable growth of the NNFH Group

Expansion of the program to support the acquisitionof various advanced qualifications

Realization of employee well-being

Program to supportacquisition of the Small andMedium EnterpriseManagement Consultant
certification

HR Strategy Framework
Enhancing earning power by providing solutions to social issues
Linking management strategies with HR strategies

DX personnel

Planning
personnel

Consulting personnel

Development of human resources

who drive forward DX

who have high consulting sales skills

Development of human resources
who drive forward management
and sales strategies

Program to supportacquisition of 1st-grade
Certiﬁed Skilled
Professional of Financial
Planning certiﬁcation

Core human resources

Specialists

300

30
18

105
March 31st, 2023 March 31st, 2026

March 31st, 2023 March 31st, 2026

Core human resources

Specialists

etc.

DX personnel

Enhancing relationship management

Development of human resources

Acquisition of thebasic skills in eachfield that all employees
should learn

Base human resources

Diversity &Inclusion
HR development

Each employee
pursues expertise andfurther develops theirskills according to theirown career vision andaptitudes

Specialists

Human resources who are able to respond to changes inthe business environment and take charge of in-houseorganizational and business transformation through the useof advanced data and the introduction of digital technologies

Specialized
personnel

Development through collaboration between three
Group companies with strengths in the DX field
The NishiNippon CityBank

Development of human resourcesable to play a central role in eachspecialized department

Ideal human resources portfolio

Ijigen
Group

City
Ascom

1,100

90

501

To a group-wide scale13

of 2,800 employees(including base human resources)

March 31st, 2023 March 31st, 2026

March 31st, 2023 March 31st, 2026

Planning personnel

Development platform*

Human resources who are able to perceive the external environment and the issues facing the NNFH Group from abird’s eye view based on objective data, and able to formulate and implement cross-organizational plans thattranscend the boundaries between departments in order for the NNFH Group to achieve further growth

Recommendations for training contents to

Dispatch to business schools, and expansion of qualification examinations, self-development contents, etc.

enhance expertise and assignment of personnel
System of special training programs
Uniform training of employees in accordance with the training curriculum

Recruitment
Fortifying and upgrading new graduate and mid-career recruitment
Environmental improvement
Initiatives to promote diversity & inclusion and realize well-being

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Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Specialized personnel*A f r a m e w o r k f o r
recommending
developmental
content (e.g., training,
external secondment)
suited to each
employee in order tohelp them realize theircareer vision.

Human resources who play core roles in highly specialized departments

Development through on-the-job training in specialized departments in the IT, market, and international sectors, etc.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

39

Basic Strategy. Human Resource Reform | Priority Measure ( ) Human Resource Development

Training by Job Class and Duties
Training System by Job Class

Career Support Contents

The Nishi-Nippon City Bank provides seamless training by job class in accordance with the roles required in each position, from new

The Nishi-Nippon City Bank has established systems and provides opportunities to help each employee clarify and realize their career vision.

graduates to general managers.

1st year
Initial in-service training for new graduates(for the first month of employment)

Follow-up training(up to the fifth year of employment)
Employees learn how to foster a sense ofunity between colleagues recruited at thesame time, develop their careers, andcommunicate better.

Following recruitment, new graduates
undergo a one-month training course
in which they learn professional
etiquette and the basic knowledge
and skills of a banker. They also
foster a sense of unity between
colleagues recruited at the sametime.

1st year

2nd year

General manager training(general managers)

3rd year

4th year

5th year…

AssistantmanagerTraining encourages new insights
and growth as a branch manager
through 360° feedback (selfassessments and evaluations bysubordinates).

Manager

Deputygeneralmanager

2nd year

Coach system and buddy system

3rd year

4th year

5th year…

Assistantmanager

DeputygeneralmanagerManager

GeneralmanagerFirst two years of employment

A coach (in charge of providing professional guidance) and a buddy (who assists them in acquiring the knowledge they need to pursue their career and gives
them advice on their private life) are appointed to provide guidance.

From the third year, mainly for employees up to the assistantmanager level

Training for younger employees

Conducted within each block, etc., to improve communication skills and pass on sales expertise.

HQ trainee (Corporate Business Solution Division, Credit Supervision Division)

Generalmanager

From the third year, mainly for employees up to the assistantmanager level

Employees learn high-level financing operations, solution proposal methods, etc.

Strategic external secondment

From the fourth year, mainly for employees
up to the manager level

Improves employees’ level of expertise by enabling them to acquire external know-how.

Special training program for
new recruits (for the first year
and a half of employment)

Next-generation leader
development training(assistant managers)

Management skills
development training(deputy)

Selective training for general manager
candidates(deputy managers)

An intensive course in which
employees learn the basic
knowledge of banking, businessfinancing, and management ofclient assets needed to be acompetent sales representative.

Employees learn aboutownership, time management,
etc.

Employees learn aboutcoaching, team management,
etc.

Employees refine their qualities as generalmanagers through aptitude tests, in-basket
exercises, interviews, etc. in preparation for
promotion to general manager.

Free agent (FA) system and in-bank internships
Career development program for women

Reskilling
The Nishi-Nippon City Bank is expanding its sales and HQ reskill training programs in order to keep experienced employees motivatedand boost activity. To assist employees seeking advanced qualifications, the bank has introduced a special program to support theacquisition of specialized qualifications, under which the bank pays technical school entrance and tuition fees.

Training System by Duties
Expansion of reskill training
Outside sales representatives

Sales representatives for retail customers and over-the-counter service clerks

In addition to the methods of proposing loans and business

Employees learn the asset formation and asset proposal methods

succession that are necessary in corporate consulting, employees

necessary in providing retail customers with consulting services.

Special program to support theacquisition of specialized qualifications

also learn how to provide DX support along with a broad range ofother methods to be able to respond to various customer
challenges.

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41

Basic Strategy. Human Resource Reform

Priority Measures ( ) Greater Job Satisfaction

Column History of Diversity & Inclusion Initiatives at the Nishi-Nippon City Bank

Maintenance of Work Environment
The NNFH Group builds a corporate culture that promotes advancement of diverse human resources by establishing an environment that
improves job satisfaction through head office main building revamp/branch office renovations, review of treatment for employees, promotion ofdiversity and inclusion, etc.

Improve treatment of employees(The Nishi-Nippon City Bank)

Head office main building revamp/branch office renovations
Provide an office environment thatallows free workstyles with the new

Introductionof SeniorProfessionals
SystemIncreasesalary levels

head office main building revamp
and accelerate renovation of aging

Average of roughly 5.0%

branch offices(based on annual wage conversion)

Consolidate
part-time staff
employment
systemApril 2008
Assigned dedicated personnel to the Human Resources Division and began actively promoting
women in the head office’s planning and administration department and sales department
FY2008
Newly established training programs for female employees, including women’s management training
and holiday seminars

Ratio of women at the assistantmanager level
34.5 (%)
28.8
24.3

April 2009
Significant expansion of work-life balance support system• Expansion of childcare leave period (from up until one year of age to up until four years of age)• Establishment of a new system for shorter working hours to aid in childcare (enabling working time tobe shortened by up to two hours)• E xpansion of measures to facilitate parenting (significant extension of restrictions on overtime workand the staggered working hours system to apply until the child starts school)• E xpanded provision of information during childcare leave (pre-leave interviews, establishment of a
new information support desk)• Creation of a work-life balance support guidebook

22.8 22.5

0.8
March 31st, March 31st, March 31st, March 31st, March 31st, March 31st,
2008
2011
2014
2017
2020
2023

Establishment of new regional career-track positions• Enabled promotion to the position of branch manager without having to relocate

Diversity & Inclusion

Establishment of a new reemployment system

The NNFH Group is committed to creating a diverse and dynamic organization.
In particular, in addition to recruiting professional human resources (mid-career recruitment) as well as training and promoting female
managers, the Nishi-Nippon City Bank actively encourages male employees to take childcare leave as part of a work-life balance support
system.

November 2013
Formation of a project team to promote women’s empowerment• Rehiring of employees who retired due to marriage, childbirth, childcare, etc.

Number of mid-career hires(under the previous MTBP)

43

The target
under the current
MTBP is more thandoubleDX
personnel

Number of female officers(as of June 30th, 2023)
NNFH
Director
Executive officers

1
1(Outside)(In-house)

The Nishi-Nippon City Bank

Examples of recruitment
Lawyers

September 2009
Received the Equal Opportunity andWork-Life Balance Promotion Company
Award (Equal Opportunity Promotion
Company Category) Fukuoka Labor
Bureau Director’s Award for Excellencefrom the Ministry of Health, Labor andWelfare

Certified public
accountantsetc.

Director
Executive officers

21(In-house)

Ratio of women in managerial
positions (as of March 31st, 2023)

Percentage of male
employees that tookchildcare leave (FY2022)

The Nishi-Nippon City Bank

14.2%

The Nishi-Nippon City Bank

96.0%

The Bank of Nagasaki

27.1%(In-house)

April 2014
Establishment of a new NCB women’s training program• Opportunities for female employees to consider their careers and deepen exchange (held five times
between 2014 and 2020, with a total of 286 participants)

October 2016
Encourage for male employees to take childcare leave
Expansion of work-life balance support system• The first five days of childcare and the entire period of maternity leave (eight weeks) deemed to be
paid leave, and extension of the period of access to the work-life balance support system (from before
starting school up to the second grade of elementary school)

October 2018
Extension of the period of access to the work-life balance support system• From up until the second grade of elementary school to up until the fourth grade

Seminars held for employees on childcare leave

Ratio of women• Testimonials from employees who are experienced mothers, mini-study sessions, and lunch
gatherings

Ratio of women in
managerial positions

April 2020
Abolition of region-specific clerical positions

Workplaces with greater
job satisfaction

December 2021
Expansion of work-life balance support system• Introduction of a leave system that enables leave to be taken in one-hour increments (nursing careleave and nursing care leave for children)

Launch of the Nishi-Nippon City Women’s Initiatives Network

HealthMental health

Physical health• A network of female employees at the assistant manager and manager
level who work to build awareness of career advancement, foster aleadership mindset, acquire problem-solving skills, and build networks(13 members in fiscal 2021 and 12 in fiscal 2022, for total of 25 members)

May 2022
Acquired Tomonin certification, which symbolizes workplaceenvironments that enable employees to balance work andnursing care, as stipulated by the Ministry of Health, Labour andWelfareJuly 2022
Acquired (Kurumin) certification from the Minister of Health,Labour and Welfare as a company that supports childcare,based on the Act on Advancement of Measures to Support
Raising Next-Generation Children
October 2022
Expansion of paid leave period at the start of childcare leave

Ratio of women in positions
just prior to management(assistant manager level)

14.2%• Conversion to regional career-track positions with no restrictions on job descriptions and job class to
expand the scope of activities of female employees

Health and Productively Management
The NNFH Group promotes health and productivity management
based on the understanding that promoting officers’ andemployees’ mental and physical health and creation of workplaces
with greater job satisfaction will lead to better services forcustomers.
In addition, under the leadership of the president and theofficers in charge of the Human Resources Division, the NishiNippon City Bank has established a Health Management
Promotion Council in cooperation with the Human Resources
Division, Health Insurance Union, Employee Union, industrial
physicians, and public health nurses, to formulate, implement,
evaluate, and improve measures to maintain and promote thehealth of employees.

January 2016
Received the 2014 Governor’s Award for
Companies and Offices Declaring
Support for Childcare from Fukuoka
Prefecture

56.2%

Roughlyquintuple
20.0%
2.9%

March 31st, March 31st, March 31st, March 31st,
2023
2023
2008
2008

Expansion of career development program for womenNEW
Career training

Nishi-Nippon City
Women’s Initiatives
Network

NEW
Managerial training for women(General employees andassistant managers)
Curriculum forautonomously considering
mid- to long-term careers(Assistant managers andmanagers)
Curriculum to foster awarenessof career development and aleadership mindset(Managers and deputy generalmanager)Curriculum to learn how to takeleadership and how specificallyto develop subordinates• From 5 business days to 10 business days

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43

. Sustainability Initiatives

Basic Strategy

Priority Measures ( ) Contributions to a Sustainable Local Community
With the firm belief that “Without regional development, there will be no growth of the Group,” the NNFH Group has dedicated itself towide-ranging community activities as we offer solutions that address regional challenges through our primary services of support forstartups and funding environmental projects.
The NNFH Group considers addressing sustainability issues to be an important part of our management strategy, and under the current
MTBP as well, we will continue to contribute to the realization of a sustainable society by bolstering our SDGs/ESG initiatives via means
only available to a regional financial group.
Milestones in the NNFH Group’s SDGs/ESG Initiatives

Selected measures
Fulfillment of the TCFD recommendations

Initiatives for the Environment
and Climate Change

Eco-friendly branches
Switch to eco-friendly vehicles
Participation in external initiatives

2022

2021
 raws up the NNFH Group-D
Sustainability Declaration-D eclares support for the
TCFD Recommendations

2020

Priority theme-E stablishes the specializedorganization to promote theSDGs-D etermines the NNFH’spriority SDGs

 ets the target amount of-Ssustainable finance ets the CO2 emissions-S
reduction target stablishes the Sustainability-E
Committee
 raws up the Nishi-Nippon-D
Financial Holdings Group
Health and Productivity
Management Declaration-D raws up the Policies on
Investment in and Lending toSpecific Sectors, Etc.

For corporate customers
Provision of solutions to social issues (hands-on support for corporate customers)

Supporting Customers’
SDGs/ESG Initiatives

Initiatives for sustainable financeFor retail customers
Consulting on asset building
Asset succession/inheritance initiatives

Efforts to Create Industries andJobs in the Region

Finely-tuned startup support
Business support through funds
NNFH business competition for startups
Creation of new business by local companies

Group Management Philosophy

Partnership with the Local Community

Active involvement in regional development

Aiming high and motivated by pride in our services, we arecommitted to becoming a leading financial group through ourability to respond to change and to grow with our customers.

Collaborating with local governments
Collaborating with universities

Commendation

The Nishi-Nippon Financial Holdings Group Sustainability Declaration

Multifaceted Programs
Benefitting the Local Community

Provision of economic/financial information and finance education
Support for customers’ efforts to achieve the SDGs

Guided by the Group Management Philosophy, we at
the NNFH Group aim to develop the regional economy
and enhance our enterprise value, while at the same time
contributing to the realization of a sustainable society.

Regional contributions by employees
Cultural/artistic activities

Development of strategic human resources

NNFH’s priority SDGs

Training by job class and duties

Human Resource Strategy

Environmental improvement
Diversity & Inclusion
Health and productively management

The Nishi-Nippon Financial Holdings Group Health and Productivity Management Declaration
To realize the Group Management Philosophy and
the Nishi-Nippon Financial Holdings Group Sustainability Declaration,
we the Nishi-Nippon Financial Holdings Group maintain and enhance the healthof our officers and clerks, who are our customers’ partners.
Target amount of sustainable finance2 trillion from FY2021 to FY2030

Total ¥

CO2 emissions reduction target
Achieve carbon neutrality by FY2030* Covers Scope 1 (direct emissions) and Scope 2 (indirect emissions generated
from purchased electricity, etc.) emissions

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Participation in Environmental Initiatives

The Nishi-Nippon City Bank

Nishi-Nippon Financial Holdings

Nishi-Nippon Financial Holdings

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Basic Strategy. Sustainability Initiatives | Priority Measures ( ) Contributions to a Sustainable Local Community

Initiatives for the Environment and Climate Change
In recent years, the effects of climate change (defined as long-term changes in temperature and weather patterns) have frequently caused
enormous amounts of damage around the world, including rising temperatures, droughts, and rising sea levels. Fukuoka and other areasin the Kyushu Region as well, our main markets, have experienced a series of record-breaking rainfall disasters, and addressing climatechange has become a major challenge in realizing sustainable local communities.
Having included initiatives to address climate change in its priority issues in the management strategies, the NNFH Group declared its
support for the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)* in April 2021, and has sincedisclosed relevant information, while supporting its customers in dealing with the challenges posed by climate change.
* A set of recommendations that the TCFD, created by the Financial Stability Board (FSB), published in June 2017 to help public companies and other organizations disclose the impact of climate-related risks andopportunities to investors and other stakeholders.

Scenario Analysis
NNFH analyzes multiple future scenarios by assuming certain factors for anticipated natural disasters and an object of analysis for the
Nishi-Nippon City Bank, which is presumably most susceptible to the impacts of climate change risks once they emerge, and estimates
the quantity of anticipated risks.
For the object of analysis chosen and under the assumed scenarios, in terms of the additional credit costs that could be incurred by
2050, transition risks are estimated to cumulatively total approximately 22.0 billion yen and physical risks are estimated to come to a
maximum of around 4.0 billion yen on a single-year basis. We assessed that the impact that transition risks and physical risks might haveon our financial position is limited for the object of this scenario analysis.

Transition risks

Physical risks

The electricity, oil & gas, coal, railway transportation, trucking
services, automobiles & parts sectors

Degradation of the value of collaterals by floods (of collaterals forbusiness loans, buildings located within Fukuoka City, Kitakyushu
City, and Kurume City)

Analyze for each scenario the impact that a rise in carbon prices
due to the introduction of a carbon tax, etc. and changes in themarket environment, etc. might have on corporate earnings

Based on a hazard map, calculate the amount of damage due tofloods for each collateral

Scenarios used

International Energy Agency (IEA) 1.5°C scenario

UN Intergovernmental Panel on Climate Change (IPCC) 2°C and
4°C scenarios

Analysis results

Additional credit costs that may be incurred up to 2050:
approximately 22.0 billion yen

Additional credit costs that may be incurred up to 2050:
approximately 4.0 billion yen on a single-year basis

Object ofAnalysis

Fulfillment of the TCFD Recommendations

Sustainability management structure

GovernanceAnalysis

Board of Directors

NNFH discusses policies of the NNFH Group and important mattersconcerning sustainability, including climate change, at its
Sustainability Committee chaired by the president in order to monitor
the status of relevant initiatives. Discussions at the Sustainability
Committee are reflected in its management strategies and risk
management measures and reported to the Board of Directors, after
deliberations and decisions are made by the Executive Committee.
Day-to-day operations are left to central supervision by the
specialized organization to promote the SDGs of the NNFH Corporate
Planning Division, which monitors the status of the measures taken by
the Group companies and follows up on such efforts.

methods

Executive Committee
Sustainability Committee
Secretariat: the specializedorganization to promote theSDGs of the NNFH Corporate
Planning Division

The specialized organization to promote the SDGsof the NNFH Corporate Planning Division
The Group companies

Matters discussed with the Sustainability
Committee (FY2022)
Status of sustainability management-related measures
Fulfillment of the TCFD Recommendations
Disclosure of sustainability information in securities reports
Status of CO2 emissions
Status of sustainable finance amountThe ratio of carbon-related assets, based on the definition in the TCFD Recommendations Annex (revised 2021), to the total credit

Strategies
The NNFH Group has made it clear that it “aims to develop the regional economy and enhance its enterprise value while contributing to
the realization of a sustainable society” in its Group Sustainability Declaration, which describes its policies on its initiatives for the SDGs
and ESG. Furthermore, the Group has selected “Goal 13: Take urgent action to combat climate change and its impacts” as one of its
priority SDGs, thus including initiatives to address climate change in its priority issues for its management strategies and deploying avariety of environment-related measures based on risks and opportunities associated with climate change.

NNFH recognizes major risks associated with climate change as follows.

Physicalrisks

Descriptions of risks

Timeline*

Risk category

Tightening ofenvironmental
regulations

Losses generated by changes in policies/regulations, such as
introduction of a carbon tax and tightening of greenhouse gas(GHG) emissions regulations, on the part of investees/borrowers

Medium tolong term

Credit risk

Development ofinnovativetechnologies

Degradation of asset value and/or loss generated on the part ofinvestees/borrowers due to technological innovation and rapid structuralchanges associated with the transition to a carbon neutral society

Medium tolong term

Credit risk

Reputation changes

Loss of the NNFH Group’s enterprise value due todiscrepancies between the Group’s responses to climatechange and stakeholders’ expectations

Short tolong term

Operational risk
(Reputation risk)

Damage to the NNFH Group’ sales offices

Short tolong term

Operational risk
(Tangible asset risk)

Degradation of the value of assets pledged byinvestees/borrowers

Short tolong term

Credit risk

Loss generated by the shutdown of operations byinvestees/borrowers

Short tolong term

Credit risk

Confusion in the financial market due to serious/
extensive damage

Short tolong termMarket Risk

Impact on business activities, etc. of the NNFH Groupand its investees/borrowers brought on by the chronic
climate change such as temperature variation andchanges in weather patterns

Long termWind and flood
damage due totyphoons, torrential
rains, etc.

Temperature variation
and rising sea levels

balance of the Nishi-Nippon City Bank is 34.02%.

EnergyTransportation

2.34%

3.16%

Materials & building products Agriculture, food, and forestry products
26.81%

1.71%

Total
34.02%*Selected and compiled based on the Bank of Japan’s industry classifications.
*The term “energy” excludes renewable energy power generation projects.
*Calculated based on the total value of loans and bills discounted as well as acceptances and guarantees (excluding open commitment lines) as of March 31st, 2023.

Risks Associated with Climate Change

Transition
risks

Carbon-related Assets

Opportunities Concerning Climate Changes
NNFH recognizes the following key opportunities related to climate change, and provides both financial and non-financial solutions to aid

Credit risk

our customers in addressing climate change, including the transition to a decarbonized society.

Descriptions of opportunities

Timeline*

An increase in sustainable finance accompanying the transition to a decarbonized society

Short to long term

An increase in consulting services related to supporting the visualization and reduction of CO2 emissions accompanying thetransition to a decarbonized society

Short to long term

An increase in demand for financing for infrastructure investments to prepare against intensifying natural disasters

Short to long term

* Short term: Less than 3 years, medium term: 3–10 years, long-term: more than 10 years

Operational risk
(Tangible asset risk)* Short term: Less than 3 years, medium term: 3–10 years, long-term: more than 10 years

46

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

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Basic Strategy. Sustainability Initiatives | Priority Measures ( ) Contributions to a Sustainable Local Community

Risk Management

Roadmap toward carbon neutrality (including those to be determined)

NNFH is aware of the fact that physical risks and transition risks attributable to climate change will have an impact on the NNFH Group’sbusiness administration and financial position, and we will continue to expand the scope of sectors subject to scenario analysis andupgrade our analytical methods. In addition, we will strive to build a framework for controlling climate change-related risks within theframework of integrated risk management.
For investment in and lending to specific sectors, etc. that are highly likely to have a major impact on the environment and society, we
appropriately deal with them in accordance with the following policies.

FY2021CO2 emissions reduction target
Target amount of sustainable finance

When we consider offering investments or funds to projects that develop palm oil farms, we will make the most careful
decision individually after taking into account the acquisition status of international certifications, impacts on biodiversity andecosystem, environmental and societal considerations, etc.

.P
 roduction of cluster
bombs and otherinhumane weapons

We will not offer investments or funds to projects whose involvement in production of cluster bombs and other weapons we
consider to be inhumane, regardless of their intended purpose.

. I nfringement of humanrights

We will not offer investments or funds to projects that involve human trafficking, child labor, forced labor, and other humanrights violations, regardless of their intended purpose.

Metrics and Targets
CO2 Emissions
The NNFH Group drew up its CO2 emissions reduction target of “achieving carbon neutrality by FY2030.” In order to achieve this target,
we will monitor CO2 emissions from business activities and launch concrete initiatives that reduce CO2 emissions.
CO2 Emissions(The Nishi-Nippon City Bank)

Environment-related Data

TargetFY2020

FY2021

FY2022

15,000

Scope1
t-CO2(Direct emissions)

605

599

563

10,000

Scope2t-CO2(Indirect emissions)

9,064

10,931

8,592

Scope1+Scope2 t-CO2

9,670

11,5309,156

249,497

236,814226,5825,000
0FY2013-49.5％

9,670

11,5309,156

FY2020

FY2021

FY2022-52.0％FY2025

FY2027

FY2028FY2029FY2030

Achieve carbon neutrality by FY2030 (Scope 1 + Scope 2)
Total ¥2 trillion from FY2021 to FY2030

FY2030

Energyconsumption

GJ

Switch to eco-friendly vehicles
Switch to electricity derived from renewable energy, etc. (Start date to be determined)

Implement offsetting (start date to be determined)
Promote sustainable finance (support customer decarbonization efforts via financing)
Promote decarbonization consulting (support customer decarbonization efforts via non-financial means)

Eco-Friendly Branches
The Nishi-Nippon City Bank is renovating its branches to make them fully
equipped with eco-friendly features, such as solar power generation,
rainwater utilization, LED lighting, and energy-saving air-conditioning (27branches renovated as of March 31st, 2023).
The Ito Branch, which is scheduled to open in October 2023 as thebank’s first new branch, is scheduled to acquire Nearly ZEB and BELS
(max rating of five stars), environmental certification for buildings, byintroducing ‘horizontal eaves’ to increase solar radiation shielding, solar
panels, and highly efficient energy-saving equipment.
Switch to Eco-friendly Vehicles

Unit-36.4%

In-house.D evelopment of palm oil
farms-46.6%FY2026

Survey and research on carbon offsetting methods

Local

.D
 eforestation business

When we consider offering investments or funds to projects that involve deforestation, we will make the most careful decisionindividually after taking into account the acquisition status of international certifications, impacts on biodiversity andecosystem, environmental and societal considerations, etc.

18,138FY2025

Relocated to the Nishi-Nippon City Bank’s Shin-Honten Building (tentative name)Specific efforts.C oal-fired power generation

InterimtargetFY2024

Renovating to eco-friendly blanches (equipped with eco-friendly features such as LED lighting, air-conditioning, etc.)

We will not, in principle, offer investments or funds whose application is the construction of new coal-fired power plants or the
expansion of existing coal-fired power plants. Should we consider offering one as an exception, we will make the mostcareful decision for each proposed project individually after taking into account energy policies and situations of hostcountries, power generation efficiency, impacts on the environment and society, etc.

20,000

FY2023

Targets

Policies on Investment in and Lending to Specific Sectors, Etc.

(t-CO2)

FY2022The Nishi-Nippon City Bank has been switching its business vehicles tohybrids and EVs (a total of 111 hybrids and EVs as of March 31st, 2023).
We have also been working with Ubiden, Inc. to install chargers that areaccessible 24 hours a day in the customer parking lots of our sales
offices in order to support the proliferation of EVs in the region (fiveoffices as of March 31st, 2023).

Column The Nishi-Nippon City Bank Head Office Building Reconstruction Project* As measured according to the standards on periodical reports stipulated in the Act on the Rational Use of Energy

Column Efforts to Calculate Scope 3 Category 15( t- C O 2 )NNFH is working to calculate Scope 3 (indirect emissions other than Scope 1 and 2). In collaboration with an outside
consulting firm, we have begun trial calculations to determine Category 15 (investments and loans), which accounts for the
majority of our Scope 3 emissions due to the nature of the banking business. We will continue to work on expanding andrefining the scope of our calculations to make use of them in dialog with our customers and to aid in reducing emissions.
<Target and methods of trial calculation>∙ The calculations are based on business loans (group credit of 300 million yen or more) at the Nishi-Nippon City Bank.
∙ Trial calculations are conducted in accordance with the PCAF Global GHG Accounting and Reporting Standard, using data publicly released under the calculation, reporting, andpublication system based on the Act on Promotion of Global Warming Countermeasures.

Number of applicable accounts (%)

Amount loaned to applicable accounts (%)

GHG emissions by applicable accounts

Approx. 5,000 accounts (11.3%)

Approx. 3,700 billion yen (59.5%)

Approx. 1.7 million t-CO2

The Nishi-Nippon City Bank’s Shin-Honten Building( t e n t a t i v e n a m e ), c ur re n t l y un d e r c o n s t r u c t i o n,incorporates a sophisticated design befitting its status asa landmark facing Hakata Station, and aims to acquire
ZEB Ready certification through the adoption of superior
eco-friendly technologies. It will also be a high-grade officebuilding that is BCP and infectious disease compliant.
The building entrance area will feature Connected Core,a large-scale multi-story plaza capable of accommodatinga broad range of events and that will make the Hakata
Station area easier to get around in. The area around thebuilding will also feature a continuous verdant space filledwith flowers and greenery. In addition, the basement willcontain meeting halls that can be used for a variety of
purposes by local residents.
Construction of the Shin-Honten Building is scheduled
to complete around January 2026.

*The percentage represents the ratio to the total amount of business loans at the Nishi-Nippon City Bank.
*The GHG emissions by applicable accounts represents the total of Scope 1 and 2.

48

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

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Basic Strategy. Sustainability Initiatives | Priority Measures ( ) Contributions to a Sustainable Local Community

The Amount of Sustainable Finance Extended
NNFH sets up “sustainable finance,” a new category of financing service designed to realize a sustainable society by way of funding
environmental projects, supporting startups, etc., with its target amount being a total of two trillion yen from fiscal 2021 to fiscal 2030. We
aim to achieve the target by assisting customers in resolving their environmental and social challenges including addressing climatechange.
Amount of sustainable finance offered (two banks combined)

Target¥2,000.0B

2,000

Tenjin Big Bang

*The Nishi-Nippon City Bank: Tenjin Branch, Tenjinkita Branch, NCB Alpha Tenjin Branch; Nishi-Nippon City Tokai Tokyo Securities: Headquarters and Tenjin BranchInterim target

Hakata Connected¥1,200.0B

Reconstruction of the head office main building as the first step in a series of redevelopment of buildings owned by the Nishi-Nippon City Bank (scheduled
to be completed in January 2026)

Redevelopment project around JR Kyudai Gakkentoshi Station¥543.6B

Opening of the Nishi-Nippon City Bank’s Ito Branch (scheduled for October 2023)¥209.3B
FY2021

FY2022

FY2025Collaborating with Local Governments

FY2030

Expansion of a Lineup of Sustainable Finance Offering
The Nishi-Nippon City Bank has launched the following products to meet the increasingly diversified business challenges faced by ourcustomers.

Positive impact finance(First account financed in December 2022)

Private placement bonds to support
next-generation workstyles“Mirai eno Michi”(First bond underwritten in October 2022)

Financing to set and support the achievement of KPIs through themonitoring by a financial institution through comprehensive
analyses of the environmental, social, and economic impact of thecustomer’s corporate activities in order to improve the identified
positive impact (positive contribution) and mitigate or reduce theidentified negative impact (negative influence)
Corporate bonds for which the Nishi-Nippon City Bank and the
Fukuoka Labor and Social Security Attorney’s Association support
the issuing company’s KPIs targeting efforts to reform work styles
from the formulation stage, with a three-year follow-up
mechanism to ensure that the KPIs are achieved

Financing records

12

¥4.3

cases /
billion(as of March 31st, 2023)

Underwriting records

25

¥1.7

cases /
billion(as of March 31st, 2023)

Investment records

As part of its investment activities designed to ameliorate environmental and social challenges, the¥68.2

billion(FY2022)

Column Provision of Solutions to Customer’s Business Challenges (Hands-on Support for Corporate Customers)
The NNFH Group collects and shares information on SDGs/ESG issues and initiatives through dialog with customers,
and provides a wide range of both financial and non-financial solutions in line with our customers’ management
challenges and needs.
Understanding customer challenges andneeds through feasibility studies, etc.

Providing solutions to the issues

Utilization of tools for dialogue and understanding customer challenges

Financial Services

Conducting interviews with customers on
the state of their initiatives for the SDGs

Sustainable finance
Leasing (equipment, etc.)

The SDGs report
CO2 emissions measuring tools

etc.

INTEGRATED REPORT 2023

etc.

Solution tosocial issues

etc.

Enhance the
NNFH Group’s
earnings
power

Consultation on the SDGs
Decarbonization consulting

Nishi-Nippon Financial Holdings Group

Solutions tomanagement
issues facedby customers

Non-financial Services

The NNFH Group has signed the comprehensive agreement on regional revitalization with 14 local governments and an individual
agreement on solutions to issues facing each region with nine local governments (the SDGs, promotion of immigration and settlement,
tourism promotion, etc.) as part of its commitment to regional revitalization.

Comprehensive agreement partners (14 local governments)
Fukuoka Prefecture
Itoshima City
Kurume City
Tagawa City
Nakagawa City
Itoda Town
Sue Town
Fukuchi Town
Miyako Town
Karatsu City
Tosu City

Nakama City
Hita City

Fukutsu City

Individual agreement partners (9 local governments)
Iizuka City

Investment in SDGs Bonds
Nishi-Nippon City Bank invests in various SDGs bonds, such as green bonds and social bonds.

50

The NNFH Group is actively involved in redevelopment projects throughout Kyushu, including Tenjin Big Bang and Hakata Connected incentral Fukuoka City. In addition to proactive involvement, the Group contributes to the revitalization of the local economy throughmultifaceted support for companies expanding into the region, including financial assistance, various forms of collaboration in businessdevelopment, and support for employee asset formation.

Provision of development funds for the first project, Tenjin Business Center (construction to be completed in September 2021), as well as relocation and

1,000

0

Active involvement in Regional Development

opening of NNFH Group company offices*

1,500

500

Partnering with the Local Community

Keisen Town

Itoshima City

Ukiha City

Kama City

Kita-Kyushu City

Munakata City

Yanagawa City

Beppu City

Collaboration to attract international financial functions (Fukuoka City, Fukuoka Prefecture)
In November 2022, the Nishi-Nippon City Bank, in collaboration with Fukuoka City, Fukuoka Prefecture, and Deloitte Tohmatsu Venture Support Co., Ltd.,
held “F CUBE Innovation Fukuoka×Finance×Future,” an event to assist in matching local companies with Fin-Tech companies in Japan and overseas inorder to accelerate the efforts of TEAM FUKUOKA*.
*An industry-academia-government organization established in September 2020 to attract international financial functions to Fukuoka. Taking advantage of Fukuoka’s proximity to other major
Asian cities as well as its rich living environment, the organization aims to attract international asset management companies, financial ventures, and other foreign companies and promote
the migration and settlement of foreign human resources.

Collaborating with Universities
The NNFH Group concluded the agreement on industry-university collaboration and cooperation with ten local universities to organize
various programs that contribute to the regional development and the advancement of learning.

Industry-university collaboration agreement partners (10 universities)
Kyushu University
Kyushu Institute of Technology
Kyushu Sangyo University
Kurume Institute of Technology
Seinan Gakuin University
Nakamura Gakuen University, Nakamura Gakuen University Junior College
Nishinippon Institute of Technology
Fukuoka University
Fukuoka Institute of Technology
College of Healthcare Management

Publication of a ‘collection of patent business seeds’ in collaboration with universities and local companies
In January 2023, the Nishi-Nippon City Bank published The Nishi-Nippon City Bank’s Collection of Patent Business Seeds, which
compiles intellectual property and patent information from six universities (Kyushu University, Kyushu Institute of Technology, Kyushu
Sangyo University, Fukuoka University, Fukuoka Institute of Technology, and Kurume University) and 21 local companies.

Organization of seminars in collaboration with Kyushu University
In February 2023, the Nishi-Nippon City Bank held an Intellectual Property Open Innovation Seminar in collaboration with Kyushu University. On the day ofthe seminar, individual consultation meetings also were held between the visiting companies and Kyushu University.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

51

Basic Strategy. Sustainability Initiatives | Priority Measures ( ) Contributions to a Sustainable Local Community

Multifaceted Programs Benefitting the Local Community
Commendation
The Excellent Executive Award

Make Fukuoka SDGs

Since January 1973, the Prize of Excellent Executive (Chairman: Isao Kubota) has commended
excellent executives who have made outstanding achievements in the management and/or
technology of SMEs in the Kyushu region and Yamaguchi Prefecture, thus contributing to thedevelopment of the regional economy. A total of 180 executives have been commended as ofApril 30th, 2023.

In September 2022, the Nishi-Nippon City Bank, together with the Nishinippon Shimbun Co.,
Ltd., RKB Mainichi Broadcasting Corporation, and Dentsu Kyushu Inc., launched a project tosupport activities to publicize the SDGs initiatives of local companies, with the aim of increasing
the momentum of local Fukuoka SDGs initiatives.
The project aims to create opportunities for local Fukuoka children and companies to interact in amanner that leads both to mid-to-long-term growth for businesses as well as to the further
development of children, who will play leading roles in the future.

The Asian Contribution Award/The Asian Youth Award
In order to facilitate international mutual understanding, the Nishi-Nippon Foundation (Chairman:
Isao Kubota) has annually commended groups, individuals, elementary and junior high schools,
and regional groups of children who are working toward the development of Asian countries andthe international exchange among them. Those to be commended are picked from the Kyushu
region and Okinawa and Yamaguchi Prefectures, and the winners of the awards receive either
The Asian Contribution Award (held 24 times as of March 31st, 2023) or The Asian Youth Award(held 18 times as of March 31st, 2023).

Sales of Original Character Goods and Donation Activities
In June 2022, the Nishi-Nippon City Bank released original goods featuring its mascot Onek soldat general retail stores and via the Onek Shop website as a for-profit business, and a portion of
the proceeds are donated to social welfare organizations. This marks the first time in Japan that abank has sold character goods as a for-profit business.
*In commemoration, January 19th was registered as Onek Day.

Provision of Economic/Financial Information and Finance Education
Lectures on Economic Matters

Solutions to Diverse Challenges Facing Local Companies

Since January 2008, the Nishi-Nippon City Bank has hosted this popular annual talk by the
NNFH’s Chairman Isao Kubota, to share the latest financial and economic information that
customers may find useful in steering their businesses or developing a business outlook for the
new year. A total of 16 sessions have been held as of March 31st, 2023.

Food Drives

Finance Literacy Education
Since August 2006, the Nishi-Nippon City Bank has supported finance literacy education by, forexample, organizing a series of workshops on the topic for young citizens, who will lead the next
generation. A total of 18 sessions have been held as of March 31st, 2023.

The Nishi-Nippon City Bank (in August 2021) and the Bank of Nagasaki (in August 2022)
commenced food drives to donate food that they could not consume at home to children’s
cafeterias, in an effort to support children in the region in leading a healthy and meaningful life
(provision of a cumulative total of approx. 2.5 tons of food at roughly 100 locations, including
headquarters and sales branches, as of March 31st, 2023).

Cultural/Artistic Activities

Providing Information to Schools, etc.

Japanese Traditional Culture “Kagura and Kamimai”

Given the proposed expansion of the curriculum on finance and economics in high schools, the
NNFH Group works to provide information on financial knowledge by holding seminars for faculty
and staff members. We also send our officers and employees to universities to provide students
with opportunities to gain practical financial knowledge through lectures.

Since November 2015, the Nishi-Nippon City Bank and the Fukuoka Cultural Foundation(Chairman: Isao Kubota) have co-hosted “Kagura and Kamimai,” an annual event based on local
Shinto music and dances (held eight times as of March 31st, 2023).

Support for Customer’s Efforts to Achieve the SDGs
colabora
The Nishi-Nippon City Bank runs “colabora,” a website focusing on the SDGs for regional
revitalization, which features articles on the initiatives by local companies to achieve their SDGs
and by local governments to revitalize the region. A total of 27 articles have been uploaded ofMarch 31st, 2023.
Workshop-style Consulting Service
The Nishi-Nippon City Bank and Kyushu Hakuhodo Inc. agreed on a business alliance, and in
April 2021 launched a workshop-style consulting service. Up to March 31st, 2023, a total of 16
companies have availed themselves of this service, which supports companies who seek tocreate ideas for businesses that contribute to the achievement of the SDGs and regional
revitalization and work out solutions to social issues.

Music Festival
Since December 2014, the Nishi-Nippon City Bank and the Fukuoka Cultural Foundation(Chairman: Isao Kubota) have co-hosted the Music Festival, an annual event designed toempower people in Fukuoka and Hakata with music. This year-end music celebration has been
held eight times as of March 31st, 2023.
Promenade Concerts
In May 2020, the Nishi-Nippon City Bank began co-hosting the monthly Fukuoka Renaissance
NCB Promenade Concerts together with the Fukuoka Cultural Foundation (Chairman: Isao
Kubota) to provide customers with program featuring local musicians spanning a variety ofgenres (43 concerts held as of March 31st, 2023).

Machi-1 Grand Prix
The Nishi-Nippon City Bank and the Bank of Nagasaki hold Machi-1 Grand Prix, an event to raiseawareness of the SDGs among 3rd to 6th graders in elementary schools. The event provides
students with opportunities to learn about the SDGs in a fun way and to generate ideas using an
original card game (held twice in Fukuoka and once in Nagasaki as of March 31st, 2023).

52

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

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53

Basic Strategy. Sustainability Initiatives

Priority Measures ( ) Efforts for Sustainable Growth of the NNFH GroupNNFH actively makes forward-looking growth investments while securing sufficient levels of capital for sustainable growth and improving

Strengthen Management of Securities
Increasing Securities Portfolio Earning PowerThe NNFH Group enhances investment-income earning power by increasing balances and improving portfolio returns with rebalancing
transactions.
(21/下期~)
Balance of securities¥2.4T

the corporate value of the Group, and also increases returns of profits to shareholders and investors.

¥1.8T

Drive growth investment¥1.2T

Active forward-looking growth investments

Human capital
investment

Strategic investment

The end of March 2020

Securities investment
etc.

Strengthen the Investment System of the Market Divisions

Secure sufficient levels of capital

Enhance returns to shareholders

Capital adequacy ratio is expected to hoverin the low 10% range during the period of
this plan

Review the Shareholder Return Policy and

The NNFH Group continues to prioritize focus allocation of HR to market divisions and systematically develop specialist personnel withexternal assignments, etc.
Enhance Market Division headcount/HR development

raise the total return ratio to approx. 40%

Sustainable growth/
increased corporate valueof the NNFH Group

Consolidated capital adequacy ratio(based on the full application of Basel III finalization)

The end of March 2023 The end of March 2026

Total returns ratio to the profit attributableto owners of the parent company

FY2022

Forecast for FY2025

Before review (to FY2022)

After review

10.39%

Low 10%range

Approx. 30%

Approx.
40%13-person
team

20-personteam

To 30-person
team

The end of March 2020

The end of March 2023

The end of March 2026

Basic Policy on Shareholder Returns
Considering the enhancement of the Group’s management foundation and the earnings forecasts for the period of the MTBP, NNFH

Ensuring an Adequate Level of Capitalincreased the ratio of total return from “around 30%” to “around 40%.”

Capital adequacy ratio

10.39%
Amount of profit

Return toshareholders~ Illustration of fluctuations in risk assets ~Low 10% range

Increased risk assets,
investments for
growth, etc.

Personal Loans
Risk assets
Business loans

FY2022

FY2025

Shareholder Return Policy

Risk assets

Securities

In light of the public nature of a bank holding company and the importance of maintaining its sound management, we strive to strengthen our
financial resilience by retaining an appropriate level of internal reserves and providing stable dividend payments to our shareholders.
Specifically, with roughly 40% of the ratio of total return to profit attributable to owners of parent as rough guidance for the time being, we decide
what and how much to each term by taking into account the current economic circumstances, financial conditions, earnings forecasts, and otherparameters.

Other

Structured
finance

FY2022

FY2025

Dividends
Acquisition of treasury stock
Total return ratio
30.5%

Expand Strategic Investment
Expand Strategic Systems Investments

Approx. 40%
31.0%

32.2%

30.2%

33.5%

25.6%

¥8.92B¥8.11BThe NNFH Group expands strategic investments in systems that improve productivity and efficiency and maximize customers’
convenience.

¥6.55B¥5.68B

Increase strategic systems investments

Key strategic systems investments

34.2%¥1.90B¥7.10B¥2.50B¥6.52B¥2.00B¥1.00B¥2.50B¥3.00B¥5.47B¥1.00B

¥8.0B
¥6.0B

Previous MTBP

54

Previous MTBP

Upgrade to new ATMs

Introduce the next version of branch systems

Fully upgrade outside sales devices

Introduce the next version CRM/SFA systems

Expand digital channel functions

Expand digital channel functions

Current MTBP

Nishi-Nippon Financial Holdings Group

Current MTBPINTEGRATED REPORT 2023

etc.

¥4.68B¥4.65B¥4.60B¥4.52B¥4.47B¥5.11BFY2016FY2017FY2018FY2019FY2020

FY2021¥6.42BFY2022etc.

Nishi-Nippon Financial Holdings Group

Current
MTBP

INTEGRATED REPORT 2023

55

Corporate Governance
Basic Approaches

Descriptions of the Organs of the Company

At the NNFH Group, enhancement of corporate governance is deemed to be a managerial issue of prime importance. Accordingly, every
possible effort is being made to “enhance the soundness and transparency of management,” “accelerate decision-making,” and “perform
duties smoothly.”
By establishing an Audit and Supervisory Committee under NNFH, we not only enhance corporate governance, but we have also built
a system for prompt and efficient decision-making by delegating authority over performance of important duties. With NNFH specializing
in management oversight and Group companies focusing on the performance of day-to-day duties, we maintain an advanced level ofbusiness administration for the Group.

Board of Directors

Nishi-Nippon Financial Holdings, Inc.
General Shareholders’ Meeting
Audit and Supervisory Committee

Nomination and Remuneration Advisory Committee

Board of Directors
Executive Committee

Audit and Supervisory Committee

PL A N

NNFH monitors the statusof business execution byeach company

NNFH draws up Groupstrategies

PDCA cycle for
the Group’sbusiness
administrationDO

A C T I ON

Group strategies arereviewed

Each Group company
conducts business according
to Group strategies

C HEC K

Efforts to Strengthen Corporate Governance

Composition of directors(as of June 30th, 2023)
June 2022
Introduced a stockcompensation system

Female director:

1

December 2018
Established the Nomination and Remuneration Advisory Committee,
the majority of whose members are outside directors, etc.

Outside directors:

Directors:

3

Established Nishi-Nippon Financial Holdings, Inc.
Became a Company with an Audit and Supervisory Committee
Appointed three outside directors (one female outside director)

9

Ratio of outside
directors:

33.3%

Overview of the Corporate Governance Structure

General Shareholders’ Meeting
Elect/Dismiss

Elect/Dismiss

Elect/Dismiss
Cooperate

Audit/Supervise

Audit and Supervisory
Committee
Directors who are Audit and Supervisory Committee members,
the majority of whose members are outside directors

Audit and Supervisory
Committee Members Office

Board of Directors
Consult

Directors(excluding Audit and Supervisory Committee members)

Cooperate

ReportNomination andRemuneration
Advisory
Committee

Comprised of four directors who are Audit and Supervisory Committee members (including three outside directors, as of June 30th,2023), the Audit and Supervisory Committee audits the performance of the duties by directors and compiles audit reports. Audit andSupervisory Committee members shall, in accordance with an audit plan drawn up by the Audit and Supervisory Committee, attend
important meetings, inspect important documents, and investigate the status of the operations and the financial status of NNFH, in order
to audit the performance of the duties by directors.
The Audit and Supervisory Committee is also partially responsible for overseeing directors by electing directors (excluding those who
are Audit and Supervisory Committee members) and stating opinions on the remunerations to directors. The Audit and Supervisory
Committee meets at least once every three months, in principle.

The Nomination and Remuneration Advisory Committee
The Nomination and Remuneration Advisory Committee consists of four directors (including two outside directors) and one outside expert(as of June 30th, 2023), ensuring independence as the majority are outside directors, etc. The committee was established with a view
toward ensuring objectivity, timeliness, and transparency concerning the election and dismissal of a representative director and senior
management members (directors with special titles), assuring objectivity and transparency concerning remunerations for directors, anddeveloping successors in a systematic manner. The committee meets at least once each year.
Most recently, the committee held a meeting in February 2023, at which the members discussed matters relating to the election anddismissal of the president and senior management members (directors with special titles), executive compensation, and potential
successors to the position of CEO.

Group companies

October 2016

Comprised of nine directors (including four directors who are Audit and Supervisory Committee members, as of June 30th, 2023), theBoard of Directors of NNFH makes decisions about the performance of important duties concerning the Group’s management andoversees the performance of the duties by directors.
NNFH has elected three independent outside directors (as of June 30th, 2023) in order to ensure that independent and objective
perspectives augment the highly effective management oversight function by the Board of Directors. To adapt to rapid changes in theoperating environment and clearly determine responsibilities of directors in attaining business results for each fiscal year, the term of officefor directors (excluding those who are Audit and Supervisory Committee members) shall be one year, thus keeping the Board of Directors
actively engaged.
In addition, by introducing the executive officer system, we have separated management decision-making and oversight from theadministration of business operations in order to enhance the oversight function and promote rapid decision-making. The Board of
Directors meets once a month, in principle. The Board of Directors held a total of 13 meetings in fiscal 2022.
In fiscal 2022, the Board of Directors mainly discussed the MTBP, annual policies, the operational status of internal control systems,
capital policy (the Shareholder Return Policy, acquisition of treasury stock, etc.), and the status of business execution.

Members of the Nomination and Remuneration Advisory Committee (as of June 30th, 2023)
Name

Position, etc.

Isao Kubota

Chairman (Representative Director)

Hideyuki Murakami

President (Representative Director)

Remarks
Committee Chairman

Hiroshi Fujioka

Outside Expert

Outside Director of the Nishi-Nippon City Bank

Chiharu Kubo

Director (Audit and Supervisory Committee Member)

Independent Outside Director

Sachiko Miyamoto

Director (Audit and Supervisory Committee Member)

Independent Outside Director

Accounting auditors

The Executive Committee
Accounting Audit

Comprised of the president, two directors and nine executive officers appointed by the president (as of June 30th, 2023), the Executive
Committee deliberates on and makes decisions on important matters concerning management in accordance with management policies

Audit Report

determined by the Board of Directors. One full-time Audit and Supervisory Committee member is invited to the Executive Committee
Executive Committee

Internal Audit Division

meeting to provide pertinent advice. The Executive Committee meets whenever necessary.
Sustainability Committee

Internal Audit

Corporate Planning Division

Compliance & Risk Management Division
Discuss/Report

The Nishi-Nippon
City Bank, Ltd.

The Bank ofNagasaki, Ltd.

The Kyushu Card
Co., Ltd.

NCB Venture CapitalCo., Ltd.

NTT Data NCB
Corporation

Japan Payment
Service CO., LTD.

Nishi-Nippon City Tokai
Tokyo Securities Co., Ltd.

Sustainability Committee

Group Strategy Planning Division

Comprised of the president, two directors and nine executive officers appointed by the president (as of June 30th, 2023), theSustainability Committee discusses policies and other important matters pertaining to the Group’s sustainability, collects information on

Business Management

City Ascom Co., Ltd.

NCB Research &Consulting Co., Ltd.

the status of initiatives, and provides advice. In principle, the Sustainability Committee meets once every six months.
Kyushu Servicer

Nishi-Nippon Credit
Guarantee Co.

Group Financial Crime Prevention Committee
Comprised of the president, two directors and nine executive officers appointed by the president (as of June 30th, 2023), the Group

6 subsidiaries

Financial Crime Prevention Committee discusses policies relating to group-wide anti-money laundering and countermeasures against
financing terrorism (hereinafter, “AML/CFT”), collects information on the status of AML/CFT initiatives by Group companies, and provides
advice. In principle, the Group Financial Crime Prevention Committee meets once every six months.

56

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

57

Corporate GovernanceStatus of Internal Audit, Audit by the Audit and Supervisory Committee, and Accounting Audit
Internal Audit
NNFH has established the Internal Audit Division, which conducts internal audits independent from all operations divisions and has 39
members as of June 30th, 2023. The Internal Audit Division, in accordance with the Internal Audit Regulations, verifies and assesses theadequacy and effectiveness of internal control systems of the NNTH Group, including a compliance structure and a risk management
structure, suggests improvements to problems, etc. to audited divisions, and reports audit findings, etc. to the Board of Directors andAudit and Supervisory Committee (members) every month. By exchanging information with accounting auditors, the division ensures thatinternal audits are conducted both objectively and efficiently.

Audit by the Audit and Supervisory Committee
The Audit and Supervisory Committee comprises four members, including three outside directors and one full-time director. Every
member of the Audit and Supervisory Committee has considerable knowledge on finance and accounting through many years’ hands-on
experience, etc.
The Audit and Supervisory Committee audits the performance of directors’ duties by having directors and others report on the status ofexecution of their business, as well as their development and implementation of an internal control system, and by attending important
meetings, consulting documents on important managerial decisions, and investigating the status of directors’ business execution andproperties, in accordance with the audit policy and division of business as stipulated by the Audit and Supervisory Committee. The Audit
and Supervisory Committee also verifies the appropriateness of the methods and findings of audits conducted by accounting auditors byhaving them report on the status of business execution and by witnessing audits by accounting auditors.

Accounting Audit

We determine the independence of our outside directors based on whether or not we can expect them to proactively offer suggestions
and raise questions on the NNFH Group’s business challenges, assuming that the independence standards stipulated by the Tokyo Stock
Exchange, Inc. are fulfilled.
For instance, we take special care to determine if the independence of a person who has any of the following relationships with theGroup is compromised because of such relationships, and disclose to shareholders the relationships between the Group and said person
to the extent necessary.
A person who was an executing person of NNFH or any of its subsidiaries
A person for whom NNFH or any of its subsidiaries is his/her major counterparty*1(If he/she belongs to a company, an executing person of said company now or in the past)A major counterparty of NNFH or any of its subsidiaries*2(If he/she belongs to a company, an executing person of said company now or in the past)
A person who is a consultant, accounting professional or legal professional who has received a large amount of money or other compensation*3,
excluding remuneration for directors from NNFH or any of its subsidiaries, within the last three years(If he/she belongs to a company or other form of organization, an executing person of said company or organization now or in the past)
A person who is a major shareholder*4 of NNFH
(If he/she belongs to a company, an executing person of said company)
A person who has kinship status with a person outlined in 1-5 above

The NNFH’s accounting audit business is executed by certified accountants affiliated with Ernst & Young ShinNihon LLC.

An executing person of a company where an officer or a clerk of NNFH or any of its subsidiaries is an outside officer
An executing person of a company or other form of organization who has received a large sum of donations*5 from NNFH or any of its subsidiaries
within the last three years

Appointment of Directors
Policy and Procedures for Nomination of Candidates for Directors
For the Board of Directors to effectively fulfill its roles and responsibilities, we believe it important to ensure that its members have adiverse range of knowledge, experience, skills, career backgrounds, and ages, on top of knowledge of the business and challenges of the
NNFH Group. Our basic policy is to ensure that the Board of Directors is well balanced overall by appointing those with diverse expertiseand backgrounds as candidates for outside directors.
From this perspective, we appoint those well-versed in the NNFH Group’s business and challenges as candidates for directors. We also
ensure the objectivity and transparency of the decision-making process of the Board of Directors by allowing each Audit and Supervisory
Committee member to exercise his/her voting right held by the directors at the board meeting and the Audit and Supervisory Committee
to exercise the statutory right to state its opinion at the general shareholders’ meeting in relation to appointment/dismissal andremuneration of directors who are not Audit and Supervisory Committee members.
Our articles of incorporation prescribe that the number of directors should be no more than twenty and that the number of directors
who are Audit and Supervisory Committee members should be three or more. Accordingly, we have appointed nine directors, four ofwhom are Audit and Supervisory Committee members (as of June 30th, 2023).

Policy and Procedures for Appointment/Dismissal of Senior Management
Our Board of Directors appoints a representative director and senior managements (directors with special titles) after taking into
consideration reports by the Nomination and Remuneration Advisory Committee and, in the event that the performance of any
representative director or member of senior management (director with special titles) falls under the standards of removal as stipulated by
the Board of Directors, deliberates on his/her removal, thereby ensuring objective, timely, and transparent procedures for appointment/
removal of senior management.

Skill Matrix

NNFH has identified corporate management, finance and economy, financial affairs and accounting, and legal affairs and risk
management, as being the four areas of specialty for members of the Board of Directors. Shown on the matrix below are the areas of
specialty we expect from each member of the Board of Directors.
Name

Position

Attribute

Isao Kubota

Chairman(Representative Director)

Hiromichi Tanigawa

Deputy Chairman(Representative Director)

Hideyuki Murakami

President(Representative Director)

Hiroyuki Irie

Director

Takashige Honda

Director

Kiyotaka Tomoike

Director(Audit and Supervisory
Committee Member)

Toshio Sakemi

Director(Audit and Supervisory
Committee Member)

OutsideIndependent

Chiharu Kubo

Director(Audit and Supervisory
Committee Member)

OutsideIndependent

Sachiko Miyamoto

Director(Audit and Supervisory
Committee Member)

OutsideIndependent

Corporate
management* The above areas of specialty do not represent all of the knowledge and experience that directors possess.

58

Independence Standards for Outside Directors

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Specialty
Financial affairs andFinance and economy
accounting*1 A counterparty that has received 2% or more of its consolidated net sales in the latest fiscal year from NNFH or any of its subsidiaries*2 A counterparty from which NNFH or any of its subsidiaries have received 2% or more of their consolidated gross profit in the latest fiscal year
*3 A total of 30 million yen or more in cash or other compensations over the last three years*4 A shareholder who holds 10% or more of the shares outstanding*5 A donation of 15 million yen or more in total received over the past three years

Analysis and Evaluation of Board Effectiveness
Every year, we analyze and evaluate the effectiveness of our Board of Directors at the board meeting.
At the board meeting held in June 2023, we analyzed and evaluated the effectiveness of our Board of Directors based on the findingsof a self-evaluation questionnaire distributed to all directors to verify that effectiveness is largely ensured.
Going forward, we will seek every opportunity available to provide directors with pertinent information by, for example, making referencematerials for board meetings clearer and to the point, in order to further stimulate discussions among directors.

Support for Outside Directors
We make it a rule to fully explain the business, financial position, organizations, and other matters of the NNFH Group to our outside
directors upon the assumption of their position. We are also taking appropriate measures to develop an environment in which outside
directors can fulfill their roles and responsibilities effectively by, for example, providing prior explanations of the agenda for the board
meeting and briefings on their duties, and organizing on-site visits.
We also appoint full-time Audit and Supervisory Committee members, who support outside Audit and Supervisory Committee
members, and we have established the Audit and Supervisory Committee Members Office, which is directly managed by the Audit andSupervisory Committee. Full-time members of the Office assist all Audit and Supervisory Committee members, including outside
members, and the Audit and Supervisory Committee in performing their duties.

Directors’ Remuneration System
Legal affairs andrisk management

Policy and Procedures for Decisions on the Content of Remuneration, Etc. of Individual Directors
We established the Nomination and Remuneration Advisory Committee, the majority of whose members are outside directors of thecompany and its consolidated subsidiaries, in order to enhance the objectivity and transparency of decisions on remuneration, etc. of
directors (excluding directors who are Audit and Supervisory Committee members).
Remuneration of directors (excluding directors who are Audit and Supervisory Committee members) shall comprise the monthly fixedprice remuneration, and the stock-based remuneration, which is provided with the aim of incentivizing directors to improve corporate
value over the medium to long term, and the total amount of the remuneration, etc. shall be no more than 300 million yen per year, which
was approved at the general shareholders’ meeting held on June 29th, 2022.
i) Fixed price remuneration (cash remuneration)
The amount of the remuneration, etc. for each individual director shall be determined according to the duty of the director by aresolution of the Board of Directors and in consideration of reports from the Nomination and Remuneration Advisory Committee, andshall be paid on a monthly basis.
ii) Stock-based remuneration (non-cash remuneration)
With respect to the stock-based remuneration, each individual director shall, at a designated time of each fiscal year, be granted points
determined according to the duty of the director (with one point corresponding to one share) based on the Director Stock Benefit
Regulations established by NNFH and shall, at the time of retirement, be provided with the number of shares of NNFH’s common
stock (hereinafter “Company Shares”) that corresponds to the cumulative number of those points granted to the director (if the director
retires at the expiration of his or her term of office, 30% of those Company Shares shall be replaced by the amount of cash that isequivalent to the market value of that 30% of those Company Shares). The stock-based remuneration shall be determined so as toaccount for approximately 10% of the total amount of the remuneration, etc., which is the sum of the fixed price remuneration (cashremuneration) and the stock-based remuneration.
Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

59

Risk Management
Basic Approaches

Risk Appetite Framework

The NNFH Group’s business environment continues to undergo significant changes against a backdrop of increasingly diversified andadvanced customer needs due to factors such as accelerated digitization and a heightened awareness of sustainability. Under thesecircumstances, risk management is becoming increasingly important in ensuring stable earnings and a sound management foundation asa regional financial group.
The Group places risk management as one of its top priority issues in the management. Accordingly, we make concerted efforts toadvance our risk management structure in accordance with our Basic Policy on Risk Management, which serves as a set of sharednorms for the Group.

The NNFH Group works to optimize risks and returns through integrated management of business strategies and risk management inaccordance with the risk appetite framework (RAF).
Specifically, in drawing up business plans (management plans and mid-term business plans), we verify management policies, earnings
plans, and risk capital allocation in an integrated manner to ensure appropriate risk-taking aimed at improving profitability (e.g., ROE) while
maintaining a certain level of soundness (capital adequacy ratio). In addition, we check on the degree of progress by regularly monitoring
the status of earnings relative to risk and other factors.

Risk Management System

How RAF works

At NNFH, the Compliance & Risk Management Division manages risk for the entire Group under one umbrella, and the officers in charge
issue reports to the Board of Directors on the status of risks so that the management team can discuss and provide instructions on
improvement. In addition, the Internal Audit Division, which conducts internal audits independent from all operations divisions, assesses
the adequacy and effectiveness of Group companies’ risk management structures through internal audits.
Each Group company establishes a consultative body, such as an ALM Committee and Operational Risk Committee, and deliberates
on and periodically assesses matters concerning risk management.

Audit/Supervise
directors

Instruct

Audit and Supervisory Committee

Liquidity risk

Operational risk
Administrative risk

Operatingdepartment

System risk

Legal risk

Human error risk Tangible asset risk Reputational risk

Internal
audit

Divisions
Discuss/Report

The Nishi-Nippon
City Bank, Ltd.

The Bank ofNagasaki, Ltd.

The Kyushu Card
Co., Ltd.

NCB Venture CapitalCo., Ltd.

NTT Data NCB
Corporation

Japan Payment
Service CO., LTD.

Nishi-Nippon City Tokai
Tokyo Securities Co., Ltd.

CapitalCapital adequacy ratio

Compliance & Risk Management DivisionMarket risk

Risks

ReportExecutive Committee

Credit risk

ROE
Returns

Cooperate

Internal Audit Division

Discuss/Report

Categories
of risk

InstructRisk
management
supervisingorganization

Discuss/Report

Board of Directors

RORA

RORA

Capital adequacy ratio

ROE

Returns

Shareholders’ equity

Returns

Risk assets

Risk assets

Shareholders’ equity

How much of what risks should betaken to achieve earnings targets
If returns commensurate with risks
are generated

If capital sufficiency is ensured
under stress scenarios

If returns commensurate withcapital are generated

Instruct/Monitor policies, etc.

City Ascom Co., Ltd.

NCB Research &Consulting Co., Ltd.

Kyushu Servicer

Nishi-Nippon Credit
Guarantee Co.

6 subsidiaries

Risk Management by Category
The NNFH Group categorizes the risks we face into credit risks, market risks, liquidity risks, and operational risks, and has established

The Group’s approach

management policies for each category as a means of strengthening our management framework.

60

Credit risk

The risk of loss resulting from a reduction or complete loss of the value of assets due to a deterioration in the financial
situation of borrowers or other factors. The Group quantitatively assesses and manages credit risk on a group-widebasis.

Market risk

The risk of loss due to fluctuations in the value of assets/liabilities in response to movements in interest rates, forex
market, stock prices, and other parameters, and a loss due to fluctuations in earnings generated from such assets/
liabilities. The Group works to secure stable earnings while controlling risk through setting limits and other measures.

Liquidity risk

The risk of loss due to a difficulty in securing necessary funds or being obliged to procure funds at an interest rate
significantly higher than usual because of a timing mismatch between management and procurement or an unexpected
outflow of funds. The Group maintains the soundness of its assets so that it can ensure market liquidity and stabilize
cash flows.

Operational risk

The risk of loss due to inappropriate administrative operations, systemic deficiencies, legal violations, natural disasters,
or other factors. We classify operational risks into six categories: 1. Administrative risk, 2. System risk, 3. Legal risk, 4.
Human error risk, 5. Tangible asset risk, and 6. Reputational risk, and our Compliance & Risk Management Divisionmonitors and manages the operational risks faced by the Group as a whole, while working to preventively manage risk
and minimize the impact of any risks that emerge.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Allocating risk capital based on management policy andearnings plan

Conducting business operations based on the
management policy, earnings plan, and risk capital
allocation (risk taking policy)

Verifying/reviewing the risk taking policy and risk
management structure

Grasping/assessing the status of risk taking bycomparing/verifying the quantity of risk, risk assets,
earnings, and shareholders’ equity

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

61

Risk Management

Allocating Risk Capital

Cyber Security Efforts

Based on the RAF framework, we use consolidated shareholders’ equity to allocate risk capital to each Group company in each category

Cyber Security Management Structureof credit risk, market risk, and operational risk. We also monitor the quantity of risk and earnings results at each Group company to

The NNFH Group fully recognizes that the proper and smooth operation of computer systems is extremely important for the stability offinancial systems, which are critical elements of infrastructure, and for providing customers with high quality services, and we work to
fortify our cyber security management structure.
In order to respond to increasingly sophisticated and grievous cyber-attacks, the Compliance & Risk Management Division and the
Nishi-Nippon City Bank Cyber Security Incident Response Team (NCB-CSIRT) work together to collect, analyze, and investigate threat
intelligence related to cyber-attacks. Once threat intelligence has been obtained or identified, the personnel in charge promptly coordinate
with Group companies to prevent or minimize damage through early responses.
The Group has also established a 24-hour-a-day, 365-day-a-year monitoring system that incorporates multilayered technical measures,
including detection systems and intrusion prevention in a manner that makes full use of external experts as well as an SOC* (anorganization that monitors networks and servers to detect cyber-attacks and conduct correlation analyses), and we prepared to takeaction at a moment’s notice.
In response to the threat of cyber-attacks, which are becoming more sophisticated with each passing day, we will continue to
implement these types of initiatives under the leadership of senior management in order to enhance our cyber-security management
structure.

ensure that risk is taken appropriately through the use of the allocated risk capital.

Credit risk

Allocaterisk capital

Consolidated
shareholders’equity(source ofrisk capital
allocation)

BufferVerify sufficiency of shareholders’ equity

BufferCredit risk

The Nishi-Nippon
City Bank

Market risk
Market risk
Operational risk

The Bank ofNagasakiCredit risk
Market risk
Operational risk

Other Group
companies

Credit risk
Market risk
Operational risk

Shareholders’equityThe Nishi-Nippon
City Bank

Credit risk

Risk capital for allocation*SOC: Security Operations Center

StressOperational risk

Operational risk

Board of Directors

Credit risk
Market risk
Operational risk

The Bank ofNagasakiCredit risk
Market risk
Operational risk

Other Group
companies

Quantity of risk

Market risk

Credit risk
Market risk
Operational risk

Information
sharing

Executive Committee

Credit risk
Market risk

Instruct

ReportOperational risk

Quantity of risk
(when under stress)

InstructCompliance &Risk Management Division
ReportStress Tests
As the economic and market environments continue to change dramatically, the NNFH Group makes use of stress tests in drawing up
business plans and allocating risk capital.
When conducting stress tests, we set stress scenarios shared throughout the Group, taking into account past rapid economic

CooperateGroupcompanies

External organizations
Information
sharing(government agencies,
industry associations,security vendors, etc.)

The Nishi-Nippon City Bank
NCB-CSIRT

downturns and potential future risks, and estimate the quantity of risk and earnings in the event that the risk emerges to identify the
impact of stress events on our capital adequacy ratio, the sufficiency of shareholder equity, and the appropriateness of risk-taking.

Crisis Management

Incident Response

NNFH has compiled the Business Continuity Regulations, which serve as a basic policy on the development of arrangements needed tocontinue with minimal operations required to maintain the functions of the financial system in the face of a large-scale disaster, system
failure, or other unforeseen contingency. In compliance with this basic policy, each Group company has established a business continuity
plan (BCP) and, by conducting various training, is working to improve the effectiveness of the business continuity arrangement.

Our Response to Natural Disasters
The NNFH Group assesses the potential risks of natural disasters such as earthquakes, tsunamis, typhoons, and floods, for each location
and reinforces the equipment, stockpiles emergency food and other supplies, and conducts routine safety drills, etc., so as to ensurebusiness continuity in the wake of a natural disaster.

Our Response to System Failures, Etc.
The NNFH Group is actively working to enhance safety measures for its systems and its backup systems in an effort to ensure that every
possible precaution has been taken toward safe and uninterrupted operations. In addition, we conduct safety drills on a regular basis toensure business continuity in the event of a system failure, cyber attack, etc.

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Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

In the event of a cyber-attack with the NNFH Group, the Compliance & Risk Management Division and NCB-CSIRT take the lead inpromptly sharing information, and depending on the circumstances and under the guidance of senior management, a countermeasures
headquarters will be established to take emergency action against cyber-attacks.
In addition to collecting threat intelligence on a daily basis, and investigating and responding to attacks when detected, the Compliance& Risk Management Division and NCB-CSIRT actively participate in training sessions organized by the Financial Services Agency, theFinancials ISAC Japan, and the National Center of Incident Readiness and Strategy for Cybersecurity (NISC), and regularly conduct
management-led cyber-attack response training in order to continuously improve the effectiveness of our incident response system inpreparation for emergencies.

Education and Awareness Raising
To improve overall cyber security literacy among officers and employees, the NNFH Group provides ongoing educational and awarenessraising activities, including e-learning-style cyber security training, warnings based on domestic and international cyber-attacks, training
on handling suspicious emails, and sharing information on the latest security incidents.

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

63

Compliance
Initiatives for Compliance
Effective compliance is one of the overriding management issues for the NNFH Group. As such, we have established the Basic Policy forCompliance for the Group to follow and, based on the recognition that the compliance framework is a key infrastructure upon which tobuild a relationship of mutual trust with our local communities and business partners, and our management has announced to all
employees the resolution to ensure compliance in an effort to foster a corporate culture that considers compliance to be of critical import.

Compliance Management Structure
Unified Management by the Compliance Supervising Organization
Officers in charge of the Compliance & Risk Management Division are responsible for compliance, and supervise matters pertaining to theGroup’s compliance with laws and regulations.
In addition, the Compliance & Risk Management Division, which centrally manages compliance-related matters, regularly monitors thestatus of compliance initiatives within the NNFH Group, and strives to ensure effectiveness by issuing instructions for improvement whennecessary.
Compliance Committee
Each Group company has established a Compliance Committee to conduct concrete and substantial discussions and assessments ofmatters regarding compliance that carry weight on their management on a regular basis.
Compliance Program
Pursuant to the Basic Policy for Compliance of the NNFH Group, each Group company draws up a compliance program, an annual planfor practicing compliance, thus enhancing and reinforcing the compliance risk management framework.
The NNFH Group’s Compliance Management Structure

Audit and Supervisory Committee

Board of Directors
Executive Committee
Discuss/Report

Instruct
ReportA Group Financial Crime Prevention Committee

InstructCompliance & Risk Management DivisionInternal audit

A Group Financial Crime
Prevention Office
Discuss/Report

The Bank ofNagasaki, Ltd.

The Kyushu Card
Co., Ltd.

NCB Venture CapitalCo., Ltd.

NTT Data NCB
Corporation

Japan Payment
Service CO., LTD.

-	In order to put these initiatives into practice, the NNFH Group identifies and assesses the risks associated with the products and services that it offers based on thecontent of the National Risk Assessment of Money Laundering and Terrorist Financing released by the National Public Safety Commission, and compiles its measures
to reduce such risks in a Risk Assessment Report.
3. Transaction Policy-	The NNFH Group takes management measures commensurate with the risk with the customers or transactions in question, and implements continued management inorder to keep their information updated.
-	The NNFH Group takes appropriate measures as dictated by relevant laws and regulations with regard to declining/eliminating business relationships with financial
criminals, those penalized for financial crimes, and the like, with whom developing or continuing a relationship is deemed inappropriate.

Severing Relations with Antisocial Forces
Strongly recognizing its social responsibility, the NNFH Group is working to block its relationships with antisocial forces that threaten theorder and security of civil society.
In concrete terms, we designate a department that deals with antisocial forces and, through cooperation with police, lawyers, and otherexternal professional bodies, firmly decline undue claims and interventions from antisocial forces, involving the entire organization in doing
so. Also, we ensure that we include an article to the effect that organized crime groups and other antisocial forces should be eliminated invarious application forms and contracts of the Group, in order to prevent transactions and relationships with such groups.

Nishi-Nippon City Tokai
Tokyo Securities Co., Ltd.

Cooperate

Initiatives to Prevent Bribery and Corruption

Divisions

Offering and accepting entertainment against laws and regulations, other rules, or social customs and practices, as well as giving andreceiving gifts, needs to be prevented. To this end, the NNFH Group sets out its stance and approaches in the Compliance Standards.
The Group keeps its officers and clerks informed of the standards, thereby working to prevent bribery and corruption.

Discuss/Report

Instruct/Monitor policies, etc.

City Ascom Co., Ltd.

In consideration of the purpose of the Whistleblower Protection Act, the NNFH Group has established the Whistle-Blowing Regulations
and a whistle-blowing desk at each Group company, with a view toward the early discovery and correction of acts in violation of relevantlaws and regulations by the Group and strengthening compliance-oriented management. We have also established a whistle-blowing
desk where employees of each Group company may directly report to or seek consultation from without going through their company
within NNFH and external law firms, in a bid to improve the effectiveness of the whistle-blowing system.

(Secretariat: Group Financial Crime Prevention Office)(Compliance supervising organization)

The Nishi-Nippon
City Bank, Ltd.

-	The NNFH Group identifies and assesses the risks that it faces in a timely and appropriate manner and takes measures to reduce such risks in accordance with therisk-based approach, in an effort to implement effective measures to prevent money laundering and other illegal financial transactions.

Whistle-Blowing System

Audit/Supervise
directors

Cooperate

Internal Audit Division

2. Initiatives for Reducing Risks

NCB Research &Consulting Co., Ltd.

Framework for Customer Protection
Kyushu Servicer

Nishi-Nippon Credit
Guarantee Co.

6 subsidiaries

Measures against Money Laundering and Terrorism Financing
As threats of proliferation of weapons of mass destruction and terrorism increase globally, Japan and the international community mustcome together to prevent funds from being distributed to criminals or terrorist organizations, making efforts to prevent money launderingand terrorism financing more important than ever.
The NNFH Group has established the Basic Policy for Measures against Money Laundering and Terrorism Financing, under which theentire Group commits itself to prevent money laundering and terrorism financing.
https://www.nnfh.co.jp/money_laundering.html

For the sake of customer protection, enhanced convenience, and facilitation of financing, the NNFH Group makes constant efforts toestablish a framework for customer protection by, for example, providing explanations to customers, responding to consultation andcomplaints from customers, managing customer information, supervising third-parties to whom it outsources part of its operations, andappropriately managing conflicts of interest that may arise from transactions with customers.
To develop a framework for the safe management of customer information, we have established the Privacy Policy for publicannouncements and put it to appropriate use pursuant to applicable laws and regulations.

Initiatives for the Financial ADR System
When a customer has a dispute with a financial institution that they find difficult to resolve, no matter how much they consult with eachother, they can avail themselves of the financial alternative dispute resolution* (ADR) system. Upon application by a customer or a financial
institution, banking business dispute resolution organizations and dispute resolution organizations that have been designated by thegovernment for ensuring neutrality will attempt to solve complaints and problems.
* A procedure for bringing about a flexible solution to daily troubles through the involvement of a neutral and fair third-party, rather than by a court.

Basic Policy for Measures against Money Laundering and Terrorism Financing (Excerpts)
1. Organizational Structure-	The NNFH Group’s management recognizes the importance of measures to prevent money laundering and other illegal financial transactions and is actively committed
to the prevention of such activities by appointing an officer* in charge of measures to prevent money laundering and other illegal financial transactions, while at the sametime ensuring that all officers and clerks are dedicated to prevention in this regard, thus reinforcing a framework for their management.
-	The NNFH Group establishes a framework for unified management of money laundering and other illegal financial transactions by appointing persons and departments
responsible for preventing such illegal financial transactions and has them draw up and manage policies on our responses, so that we can deal with them crosssectionally. The concrete content of such policies will be determined after taking into account specific circumstances, for example, whether or not a Group company
falls under “specified business operators” as stipulated in Article 2, Paragraph 2, Act on Prevention of Transfer of Criminal Proceeds.
-	The NNFH Group assesses risks that involve the entire Group and develops a framework needed to share information within the Group to ensure the effectiveness ofthe measures to prevent money laundering and other illegal financial transactions.
-	The NNFH Group makes a confirmation at times of transaction or takes other measures appropriately pursuant to relevant laws and regulations of Japan and othercountries and strives to make constant verifications and advance its responses in this regard, in order to prevent customers or officers and clerks of the Group fromcommitting or being involved in money laundering and other illegal financial transactions.
*An officer in charge of the Compliance & Risk Management Division is appointed to supervise all measures to prevent money laundering, etc.

64

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

65

Communication with Shareholders and Investors
Investor Relations
For Institutional Investors and Analysts

NNFH is engaged in the following to promote constructive dialogue with shareholders and investors.

We organize financial results briefings for institutional investors, analysts, and others, with the president making the presentation after.

Appointing responsible persons

A director in charge of the Corporate Planning Division is responsible for ensuring that constructive
dialogue occurs at financial results briefings and other opportunities to engage with shareholders andinvestors and for providing as many of such opportunities as possible.

.

A framework for promoting
constructive dialogue

Through cooperation with each division and Group company, the Corporate Planning Division develops aframework under which varying management information is gathered, analyzed, and offered toshareholders and investors in an appropriate form.

.

Measures to promote
opportunities for dialogue

As part of dialogues with shareholders and investors, financial results briefings and other events areorganized.

announcing the full-year results and interim results. In addition, the officers in charge of the Corporate Planning Division and others
actively hold one-on-one meetings to explain the Group’s financial status and forecast, management strategies, and capital policies, andto collect opinions and comments from institutional investors, analysts, and other stakeholders.
https://www.nnfh.co.jp/shareholder/ir/presentation.html

For Private Investors
To help deepen understanding of the NNFH Group, we organize informational meetings for private investors in the host community as we
see fit.

Feeding back shareholders’.
opinions

https://www.nnfh.co.jp/shareholder/ir/presentation_for_individual_investors.html

Opinions presented in dialogues with shareholders and investors are appropriately fed back to the
management team by persons participating in the dialogues.

FY2022 Results.

Control of insider information

To manage important corporate information appropriately and prevent insider trading, we establish andkeep everyone informed of relevant in-house regulations. We will not include matters that have yet to bemade publicly available in handouts for investors or make any comment on issues that may be deemedmaterial facts.

Full-year financial results briefings for
institutional investors and analysts

One-on-one meetings for institutional
investors and analysts

Company briefings for individual
investors

2 sessions (hybrid)
IR Calendar

1 session (online)

39 sessions

May 2022 Participants: 79

March 2023 Participants: 69

November 2022 Participants: 73

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Status of Cross-Shareholdings

Financial results
announcement,
Financial Results releasesT hird-quarter financial
settlementF ull-year financial
settlementF irst-quarter
financial settlementS econd-quarter
financial settlement

Securities report

Securities report andquarterly reports
submission

Third-quarter report

Disclosure materials
issuance

Interim Disclosure ReportSecondquarter
reportFirst-quarter report

Integrated Report (Disclosure Report)
Mini Disclosure Report
Interim Mini Disclosure Report
FINANCIAL REPORT

English disclosurematerials issuance

From the perspective of ensuring the stability of relationships with business partners, etc. of the NNFH Group, the Group has a policy ofholding cross-shareholdings only to the extent that it is recognized as contributing to the realization of “maintaining and strengthening
good business relationships and cooperative relationships with the Group”, “improving the medium- to long-term corporate value of theGroup and issuing companies” and “contributing to the local economy by the issuing companies”.
The Board of Directors comprehensively verifies every year, with regard to cross-shareholdings, whether it is appropriate to continue
holding them in accordance with the above policy and whether the risks and returns are economically rational. As a result, if it isdetermined that improvement is necessary, dialogue with the partner company shall be held. Nonetheless, if there is no signs ofimprovement, reducing the cross-shareholdings that do not show improvement shall be considered.
(billion yen)

Balance Sheet Amount

Number of stocks(Number of stocks)

200

380

INTEGRATED REPORTGeneral Meeting of
Shareholders

Annual General Meetingof Shareholders

Briefing for
institutional investors
and analysts

Full-year financial
results briefing

150

149.6

155.1
127.0

125.6

350

Second-quarter financial results briefing

360

111.5

102.3
100

320

321

At Annual General Meetings of Shareholders held every June, we report our business performance to shareholders in the most digestible

311

50

310
300

304

viewing by shareholders.
We make it a rule to send a convocation notice to shareholders well before the meeting and disclose the notice on our and stock292

exchanges’ websites prior to the dispatch. For the convenience of international shareholders and other parties, we disclose an English
version of the convocation notice alongside its Japanese original on the websites of stock exchanges and NNFH.
We also make it easy for our shareholders to exercise their voting rights by allowing them to vote on the internet or otherwise andparticipating in the electronic voting platform for institutional investors operated by ICJ, Inc.

340

332

General Shareholder’s Meeting
way possible, using videos and other tools. In addition, video recordings of General Meetings of Shareholders are available for later

116.9

0

The end of
The end of
March 2017 March 2018

The end of
March 2019

The end of
March 2020

The end of
March 2021

The end of
March 2022

The end of
March 2023

280

*The figure shows changes in cross-shareholdings of the Nishi-Nippon City Bank, and the company with the largest amount of investment shares on the balance sheet of the NNFH Group.

The 7th Annual General Meeting of Shareholders held on June 29th, 2023 was attended by 106 shareholders.

66

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

67

Financial Information
Nishi-Nippon Financial Holdings Consolidated Financial Settlement Summary

Nishi-Nippon Financial Holdings Summary of Consolidated Financial Statements

Results Summary(Million yen)

FY2018FY2019FY2020

FY2021

FY2022

Ordinary income

143,740

141,698

134,949

138,484

160,448

Gross operating profit

116,939

115,234

116,032

121,640

108,159

Net interest income

96,753

91,27592,026

97,37393,741Fees and commissions

20,844

20,264

19,046

20,932

21,114

Trading income

1,433

1,382

1,842

1,919

1,369

Other operating income(2,092)

2,310

3,117

1,415

(8,066)

(758)

2,579

2,751

955

(10,431)

Expenses

80,71080,47978,60378,07678,039Net business profits

36,22834,75437,42943,56330,119Gains (losses) on equity securities

3,650

2,205

1,946

(909)

2,235

Cost of credit

5,519

6,445

9,452

4,030

3,949

52

(1,797)(3,160)

(754)

5,270

34,412

28,716

26,76337,86833,677

(358)

431

(864)

(714)

434

10,910

8,771

7,272

12,342

7,678

244

154

537

575

368

22,89920,222

18,08824,236

26,064of which net gains (losses) related to bonds

Other extraordinary gains (losses)
Ordinary profit
Extraordinary profit (loss)
Income taxes
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Balance Sheet Summary(Million yen)March 31st, 2019 March 31st, 2020 March 31st, 2021 March 31st, 2022 March 31st, 2023
AssetsCash and due from banks

1,474,517

1,714,664

1,738,761

2,614,747

1,946,575

Loans and bills discounted

7,341,204

7,554,143

8,543,946

8,470,861

8,955,399

Securities

1,372,367

1,297,874

1,506,834

1,773,344

1,792,650

Total assets

10,449,051

10,822,765

12,075,567

13,127,906

12,985,181

8,092,534

8,481,571

9,295,489

9,570,343

9,791,772

416,232

349,475

188,520

264,293

167,423

9,939,317

10,314,007

11,524,660

12,597,181

12,445,737

Liabilities
Deposits
Negotiable certificates of deposit
Total liabilities
Net assets

Consolidated Balance Sheet Summary

March 31st, 2022 March 31st, 2023
Cash and due from banks
2,614,747
1,946,575
Call loans and bills bought–
8,011
Monetary claims bought
39,62142,733
Money held in trust
11,682
11,609Securities
1,773,344
1,792,650
Loans and bills discounted
8,470,861
8,955,399
Foreign exchanges
22,757
17,311Other assets
90,311
99,071
Tangible fixed assets
116,172
116,854
Buildings, net
32,542
31,622
Land
74,27375,659Leased assets, net
324
361
Construction in progress
55
530
Other tangible fixed assets
8,977
8,680
Intangible fixed assets
4,160
5,204
Software
3,748
4,787
Other intangible fixed assets
411
416
Retirement benefit assets
7,548
8,038
Deferred tax assets
2,109
6,367
Customers’ liabilities for acceptances and guarantees
17,63916,372
Allowance for loan losses(42,473)(40,455)
Allowance for investment losses
(577)
(562)
Total assets
13,127,906
12,985,181
March 31st, 2022 March 31st, 2023
9,570,343
9,791,772
264,293
167,423510,000
512,491
251,120
265,881
87,188
293,853
Borrowed money
1,755,240
1,249,709
Foreign exchanges
201
504
Borrowed money from trust account
4,794
5,233
Other liabilities
113,952
120,171
Provision for share-based remuneration for directors–
4
Retirement benefit liability
4,773
4,647
Provision for retirement benefits for directors (and other officers)
201
200
Provision for reimbursement of deposits
825
545
Provision for contingent losses
1,096
1,194
Reserves under special laws
12
12
Deferred tax liabilities
844
1,070
Deferred tax liabilities for land revaluation
14,652
14,646
Acceptances and guarantees
17,63916,372
Total liabilities
12,597,181
12,445,737
Liabilities and net assets

Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under repurchase agreements
Cash collateral received for securities lent

Capital stock
Capital surplus
Treasury stock

426,843

440,563

453,140

469,837

488,468

255,229

270,954284,535

304,236

325,460

Valuation difference on available-for-sale securities

Accumulated other comprehensive income

75,40060,65089,651

52,332

41,355

Deferred gains or losses on hedges

Non-controlling interests

7,490

7,544

8,114

8,555

9,620

Remeasurements of defined benefit plans

509,734

508,758

550,906

530,724

539,444of which retained earnings

Total net assets
Total liabilities and net assets

10,449,051

10,822,765

12,075,567

13,127,906

12,985,181

Total shareholders’ equity

Revaluation reserve for land
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

68

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Consolidated Statement of Income

AssetsRetained earnings

Shareholders’ equity(Million yen)

50,000121,123
304,236(5,522)469,837
38,616(8)
29,438(15,715)
52,332
8,555

50,000118,706
325,460(5,698)488,468
25,757
1,015
29,425(14,843)
41,355
9,620

530,724

539,444

13,127,906

12,985,181

Ordinary income
Interest income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans and bills boughtInterest on deposits with banks
Other interest income
Trust fees
Fees and commissions
Trading income
Other operating income
Other ordinary income
Recoveries of written-off claims
Other
Ordinary expenses
Interest expenses
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money and bills soldInterest expenses on securities sold under repurchase agreements
Interest expenses on cash collateral received for securities lentInterest on borrowings
Other interest expenses
Fees and commissions payments
Other operating expenses
General and administrative expenses
Other ordinary expenses
Provision of allowance for loan losses
Other
Ordinary profit
Extraordinary income
Gains on disposition of fixed assets
Gain on negative goodwill
Gain on step acquisition
Extraordinary losses
Losses on disposition of tangible fixed assets
Impairment losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Million yen)

FY2021
138,484
98,228
81,10912,893
0
2,852
1,372
0
32,468
1,919
3,069
2,799
378
2,421
100,616
855
416
26
(113)
383
13
52
75
11,536
1,654
79,173
7,397
1,939
5,457
37,868
142
142
–
–
856
390
465
37,154
10,824
1,518
12,342
24,811
575
24,236FY2022
160,448
106,142
81,24221,012
28
2,398
1,459
0
33,136
1,369
8,064
11,735251
11,483
126,770
12,401
432
19
319
7,627
22
589
3,390
12,021
16,13080,634
5,583
1,984
3,598
33,677
869
32
564
272
435
36.8
66
34,111
6,513
1,164
7,678
26,433368
26,064

Consolidated Statement of Comprehensive Income(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Retirement benefits liability adjustments
Share of other comprehensive income of affiliates accounted for by the equity method
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

FY2021
24,811(37,104)(26,560)
1,419(11,963)–(12,293)

FY2022
26,433(11,009)(12,962)
1,023
872
56
15,423(12,928)635

15,087336

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

69

Financial Information

The Nishi-Nippon City Bank, Ltd. Summary of Financial Statements
Balance Sheet
Assets1,911,245
39,011

11,682

11,609Securities

1,753,670

1,757,285

Loans and bills discounted

8,236,035

8,737,883

Foreign exchanges

22,757

17,311Other assets

78,11081,623

Call loans and bills bought
Money held in trust

Tangible fixed assets

111,825

110,891

Buildings, net

31,59130,227

Land

71,47871,782

Leased assets, net

160

131

Construction in progress

55

530

8,540

8,219

3,706

4,646

Other tangible fixed assets
Intangible fixed assets
Software

3,341

4,295

364

350

Prepaid pension cost

25,862

26,730

Customers’ liabilities for acceptances and guarantees

15,84914,737

Allowance for loan losses(36,995)(458)(35,799)(440)

12,821,711

12,676,735

Other intangible fixed assets

Allowance for investment losses
Total assets
Liabilities and net assets

March 31st, 2022 March 31st, 2023
9,334,993
256,964

9,555,156
167,176

Payables under repurchase agreements

510,000
251,120

512,491
265,881

Cash collateral received for securities lent

87,188

293,853

Deposits
Negotiable certificates of deposit
Call money and bills sold1,732,473

1,242,152

201

504

Borrowed money from trust account

4,794

5,233

Other liabilities

79,13880,485Reserve for employee retirement benefits

192

214

Provision for reimbursement of deposits

775

531

Provision for contingent losses

1,082

1,172

Deferred tax liabilities

5,938

1,600

Deferred tax liabilities for land revaluation

14,381
15,84914,376
14,737

Total liabilities

12,295,093

12,155,568

Capital stock
Capital surplus

85,74585,68485,74585,684Retained earnings

289,932

296,420

461,362
35,824

467,849
22,874

Borrowed money
Foreign exchanges

Acceptances and guarantees

Total shareholders’ equity
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

Nishi-Nippon Financial Holdings Group

Non-Consolidated Statement of Income

March 31st, 2022 March 31st, 2023
2,559,666
40,000Cash and due from banks

70(Million yen)

(8)

1,015

29,43865,25529,42753,317

526,617
12,821,711

521,167
12,676,735

INTEGRATED REPORT 2023

The Bank of Nagasaki, Ltd. Summary of Financial Statements

Ordinary income
Interest income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans
Interest on deposits with banks
Other interest income
Trust fees
Fees and commissions
Fees and commissions on domestic and foreign exchanges received
Other
Trading income
Gains on trading account securities transactions
Other operating income
Gains on foreign exchange transactions
Gains on sale of bonds
Gains on redemption of bonds
Other
Other ordinary income
Recoveries of written-off claims
Gains on sale of stock and other securities
Gains on money held in trust
Other
Ordinary expenses
Interest expenses
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money and bills soldInterest expenses on securities sold under repurchase agreements
Interest expenses on cash collateral received for securities lentInterest on borrowings
Other interest expenses
Fees and commissions payments
Fees and commissions on domestic and foreign exchanges
Other
Other ordinary expenses
Losses on sale of bonds
Losses on redemption of bonds
Losses on devaluation of bonds
Expenses for derivatives other than trading derivatives
General and administrative expenses
Other ordinary expenses
Provision of allowance for loan losses
Losses on write-offs of claims
Losses on sale of stock and other securities
Losses on devaluation of stock and other securities
Losses on money held in trust
Other
Ordinary profit
Extraordinary income
Gains on disposition of fixed assets
Extraordinary losses
Losses on disposition of fixed assets
Impairment losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitFY2021
122,344
92,46877,121
12,546
(23)
2,801
21
0
24,817
7,301
17,515
0
0
2,373
674
1,670
26
2
2,685
345
1,448
10
880
90,313
859
432
23
(113)
383
13
47
72
14,694
1,345
13,349
1,653
417
272
51
912
67,084
6,021
2,101
1,308
0
2,116
15
478
32,031
142
142
806
362
443
31,367
9,056
1,267
10,324
21,043(Million yen)

FY2022132,094
100,250
77,31020,51792,368
43
025,384
6,967
18,416
3
3
2,811
1,260
1,482
37
31
3,644
236
2,554
14
838
111,726
12,350
389
18
319
7,627
22
585
3,386
15,135925
14,20912,155
11,737213–
205
67,648
4,436
2,587
299
64
10
89
1,385
20,367
32
32
385
345
40
20,014
4,570
949
5,520
14,493

Balance Sheet
Assets(Million yen)

Non-Consolidated Statement of Income

March 31st, 2022 March 31st, 2023

FY2021(Million yen)

FY2022

Cash and due from banks

52,92132,095

Ordinary income

4,638

4,648

Securities

9,029

11,560Interest income

3,880

3,853

275,993

267,312Interest on loans and discounts

3,525

3,492

Other assets

1,834

1,837

Interest and dividends on securities

239

332

Tangible fixed assets

4,490

4,364

Interest on deposits with banks

115

28

Buildings, net

543

471

Other interest income

0

–

3,597

3,597

Fees and commissions

Leased assets, net

160

122

Other tangible fixed assets

189

173

285

174

Software257

155

Other intangible fixed assets

28

18

–

86

Deferred tax assets

132–

Customers’ liabilities for acceptances and guarantees

12

10

Allowance for loan losses

(396)

(318)

Allowance for investment losses

(43)

(43)

344,261

317,080

Loans and bills discounted

Land

Intangible fixed assets

Prepaid pension cost

Total assets
Liabilities and net assets

March 31st, 2022 March 31st, 2023

676

93

84

Other

607

591

57

118

Reversal of reserve for possible loan losses–

75

Recoveries of written-off claims

27

14

Other

29

28

Ordinary expenses

4,301

4,242

Interest expenses

Other ordinary income

3527Interest on deposits

51

43Interest on negotiable certificates of deposit

30Interest on call money and bills sold

(23)

(18)

Interest on borrowings

0–

Other interest expenses

3

1

Deposits

250,099

Negotiable certificates of deposit

12,8785,797

Call money and bills sold

40,00031,000Borrowed money

20,9006,200

Other liabilities

1,184

1,313

0

0

Reserve for employee retirement benefits

149Losses on redemption of bonds

00Provision for retirement benefits for directors (and other officers)

100

76

General and administrative expenses

3,262

3,184

Provision for reimbursement of deposits

50

14

Other ordinary expenses

33

54

Provision for contingent losses

14

21

17

–

–

11

Losses on write-offs of claims

015

Deferred tax liabilities for land revaluation

509

508

Other

15

38

Acceptances and guarantees

Ordinary profit

336

406

Extraordinary losses

Deferred tax liabilities

253,271

700

Fees and commissions on domestic and foreign exchanges received

12

10

Total liabilities

325,763

298,235

Capital stock

7,621

7,621

Capital surplus

5,963

5,963

Retained earnings

3,590

3,772

17,176

17,357

169

337

1,151

1,150

1,321

1,487

Total net assets

18,497

18,845

Total liabilities and net assets

344,261

317,080

Total shareholders’ equity
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments

969

975

Fees and commissions on domestic and foreign exchanges

12

6

Other

957

968

Fees and commissions payments

Other ordinary expenses

Provision of allowance for loan losses

26

36

Losses on disposition of fixed assets

1

14

Impairment losses

24

21

Profit before income taxes

310

369

Income taxes - current

32

49

Income taxes - deferred

45

70

Total income taxes

77

119

Profit232

249

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

71

Outline of Banking Subsidiaries

Organization Chart of Banking Subsidiaries

The Nishi-Nippon City Bank, Ltd.

International Network of

The Nishi-Nippon City Bank, Ltd.

Business

Banking

Established

December 1st, 1944

Headquarters

1-1, Hakata-ekimae 3-chome, Hakata-ku, Fukuoka 812-0011, Japan

Number of Employees

3,380

Number of Domestic Offices

175

Number of Correspondent Banks

71

Parent Company

Nishi-Nippon Financial Holdings, Inc. (NNFH’s share of voting rights 100%)

GeneralShareholders’ Meeting

The Nishi-Nippon City Bank, Ltd. Internal Audit DivisionCorporate Planning DivisionCorporate Risk Management Division

INTERNATIONAL BUSINESSDIVISION

Compliance Risk Supervisory Division
Audit and Supervisory
Committee

IT Planning & Management Division

3-6, Hakata-ekimae 1-chome,
Hakata-ku, Fukuoka 812-0011, Japan
Phone: +81-92-476-2481
SWIFT: NISIJPJTFKK
Fax: +81-92-476-2488

Public Relations Division
Executive Secretariat

Audit and Supervisory
Committee
Members Office(As of March 31st, 2023)

Human Resources DivisionCorporate Administration Division
Operations Planning & Management Division
Treasury & Portfolio Investment Division

Board of Directors

TREASURY & PORTFOLIOINVESTMENT DIVISION

Treasury & Securities Transaction Division
Board of Directors

Chairman�������������������� Hiromichi Tanigawa
President�������������������� Hideyuki Murakami
Deputy Presidents����������������� Hiroyuki Irie
Hiroyuki Takeo
Exective Director����������������� Takeshi Kurihara
Masaru Ikeda
Managing Directors���������������� Takashige Honda
Kenichi Ozaki
Kenji Morimoto
Kazuhito Shigiyama
Keitaro Yaji
Hiroyuki Izumihara
Yasuhiko Togawa
Mami Kominato
Directors (Audit and Supervisory Committee Members)� Tomoko Ito
Michiaki Uriu (outside)
Hiroshi Fujioka (outside)

Credit Risk Management Division

4th Fl., Nittetsu Nihonbashi Bldg,
13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo
103-0027, Japan
Phone: +81-3-6262-7957
SWIFT: NISIJPJTFax: +81-3-3273-2255

Branches
Credit Supervision Division
Business Planning Division
Executive Committee

Digital Strategy Division
Business Support Division
Retail Business DivisionInternational Business Division

TREASURY & SECURITIESTRANSACTION DIVISION

Overseas Representative Offices
Hong Kong Representative Office

3-6, Hakata-ekimae 1-chome,
Hakata-ku, Fukuoka 812-0011, Japan
Phone: +81-92-476-2540, +81-92-476-2484
SWIFT: NISIJPJT, NISIJPJTFKK
Fax: +81-92-441-6106

Shanghai Representative Office
Representative Office
Registered in Singapore
Personal Loan Transaction DivisionCorporate Business Solution Division
Regional Relationship Management Headquarters

HONG KONG REPRESENTATIVEOFFICE

Kita-Kyushu General Headquarters(As of June 30th, 2023)

Chikuho Regional Headquarters*Directors (Audit and Supervisory Committee Members) Michiaki Uriu and Hiroshi Fujioka are Outside Directors as prescribed in Article 2 (xv) of the Companies Act ofJapan.

Chikugo Regional Headquarters
Kyushu Regional Headquarters
Tokyo Headquarters

The Bank of Nagasaki, Ltd.

(As of June 30th, 2023)

Business

Banking

Established

November 11th, 1912

Headquarters

3-14, Sakaemachi, Nagasaki 850-8666, Japan

Number of Employees

199

Number of Domestic Offices

23

Parent Company

Nishi-Nippon Financial Holdings, Inc. (NNFH’s share of voting rights 100%)

Room No. 2209 Shanghai International Trade
Center, 2201 Yan-An Road (West), Chang
Ning District,Shanghai, People’s Republic of
China
Phone: +86-21-6219-0600
Fax: +86-21-6278-5940

General Shareholder’s Meeting
Board of Auditors

Board of Directors and Audit and Supervisory Board Members

President�������������������� Ryutaro KaichiManaging Directors���������������� Yasuyuki Shigetomi
Kiyotaka Imamura
Hiroshi Akiyama
Directors��������������������� Hiroji MochidaToshihiro Takaki
Takashige Honda
Audit and Supervisory Board Members�������� Kenji Miyata
Mitsuru Kawatani (outside)
Junichi Sakaguchi (outside)

SHANGHAI REPRESENTATIVEOFFICE

The Bank of Nagasaki, Ltd.

Internal Audit DivisionCorporate Planning Division(As of March 31st, 2023)

Suite 3112, Tower 6, The Gateway, Harbour
City, 9 Canton Road,
Tsim Sha Tsui, Kowloon, Hong Kong
Phone: +852-2526-2259
Fax: +852-2845-9264

Board of Directors

Human Resource & Corporate
Administration Division

Executive Committee

Credit Supervision Division

REPRESENTATIVE OFFICEREGISTERED IN SINGAPORE

Branches

1 Marina Boulevard Unit#25-07
One Marina Boulevard,
Singapore 018989
Phone: +65-6222-0115
Fax: +65-6222-0171

Business Management Division
Operations Planning &Management Division(As of June 30th, 2023)(As of June 30th, 2023)*Audit and Supervisory Board Members Mitsuru Kawatani and Junichi Sakaguchi are Outside Audit and Supervisory Board Members as prescribed in Article 2 (xvi) of theCompanies Act of Japan.

72

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

Nishi-Nippon Financial Holdings GroupINTEGRATED REPORT 2023

73

英文

最小使用サイズ

最小使用サイズ

6mm

6mm

1-1, Hakata-ekimae 3-chome, Hakata-ku,
Fukuoka, 812-0011, Japan
Phone: +81-92-461-1867

This brochure is printed on "Kininaru Kami" paper using vegetable oil ink.
"Kininaru Kami" is made from timber thinned from forests in Fukuoka andother parts of the Kyushu Region.

Printed in Japan