23rd Results Briefing
The Juroku Bank, Ltd.

[The year ended March 2014]

Providing Wholehearted Services

Table of Contents
Part 1: Overview of results for FY3/14
Overview of results for FY3/14

Part 3: The 13th Medium-term Management Plan
4

Main factors behind change in gross core banking profit

Chubu region economic structure

20

Chubu region financial environment

21(non-consolidated)

5

Population forecasts for Gifu and Aichi prefectures

22

Outstanding balances for key items (deposits, loans)6

Share of deposits and lending

23

Overview of the 13th Medium-term Management Plan

24

Management plan initiatives

27

Outstanding balances for key items (marketable securities)
7
Credit-related costs and nonperforming loans

8

Equity/ subordinated financing / dividends

9Part 4: Basic Strategies

Total value at risk

10

Seven basic strategies

30

Group company structure

11

Explanation of each strategy

31

FY3/15 earnings forecasts (1)12Conclusion38

FY3/15 earnings forecasts (2)13Reference
Part 2: Overview of the 12th Medium-term Management
Plan
Overview of the 12th Medium-term Management Plan

15

◆ Earnings forecasts and other forward-looking statements in this document are based on management’s assumptions andbeliefs in light of information available at the time of publication. Actual results may different materially from forward-looking
statements due to a wide range of factors.
2

第１部 平成２６年３月期 決算概要

Part 1: Overview of results for FY3/14

Overview of results for FY3/14(Billion yen)

▼ Consolidated

FY3/14 Change
69.5
1.4
69.5
0.4
61.8
0.8
6.9
0.6
0.8
-0.9

FY3/14
75.9
75.9
61.9
10.6
3.4

▼Non-consolidated
Gross core banking profit
Gross banking profit
Net interest income
Fees and commissions
Other banking profit

Gains/losses on JGBs
and other securities

Expenses
Personnel expenses
Non-personnel expenses
Taxes
Provision for general loan-loss
reserves (1)Net core banking profit
Net banking profit
Extraordinary gains/losses

Write-dow ns of
nonperforming loans (2)Gain on reversal of loan loss
reserves (3)Gain on collection of w rittenoff loans (4)Gains/losses on equities
Other extraordinary
gains/losses

FY3/13
68.1
69.1
61.0
6.3
1.7
0.9

-0.0

-0.9

-0.0

51.5
27.7
21.4
2.3

51.5
29.0
20.3
2.1

0.0
1.3
-1.1
-0.2

54.7

-2.4

0.4

2.8

0.2

16.6
20.1
-9.2

18.0
17.4
0.9

1.4
-2.7
10.1

21.2
20.9
0.4

10.6

3.0

-7.6

3.3

<Breakdown of net interest income (non-consolidated)>
FY3/13
Net interest income
Domestic operations(Billion yen)
FY3/14

Change(Interest payments on yen deposits)

61.0
59.6
47.7
(52.4)
(4.6)

61.8
59.5
47.1
(51.4)
(4.2)

0.8
-0.1
-0.6
(-1.0)(-0.4)

Dividend income from yen-denominatedmarketable securities

12.3

12.6

0.3

1.4

2.2

0.8

Net interest income on yen deposits and loans(Interest income on yen loans)International operations<Breakdown of extraordinary gains/losses (non-consolidated)>
FY3/13Extraordinary gains/losses
Gain/loss on cancellation of cross-holding
shares*1
Gain on negative goodwill*2
Gain on disposal of fixed assets
Impairment losses(Billion yen)

FY3/14

Change

3.4

0.2

-3.2

2.1

-

-2.1

2.1
-0.2
0.5

0.3
0.0

-2.1
0.5
-0.5

*1 Gain of ¥2.1bn booked in FY3/13, as common equity from Gifu Bank (amount equivalent toequity in holding company) exceeded the book value of shares in Gifu Bank (cross-holding
shares) owned by Juroku Bank.

-

-

-

-

0.0

0.0

0.0

0.0

*2 Gain of ¥2.1bn booked in FY3/13, as the value of Juroku Bank shares exchanged as part ofthe merger with Gifu Bank was less than the decline in minority interests.

0.9

2.7

1.8

2.7

<Breakdown of total income taxes (non-consolidated)>

0.4

1.2

0.8

1.0

Ordinary income
Extraordinary gains/losses
Total income taxes
Net income

10.9
3.4
-9.4
23.8

18.4
0.2
6.3
12.3

7.5
-3.2
15.7
-11.5

21.3
4.5
8.4
16.8

<Credit-related costs (1+2-3-4)>

8.1

3.5

-4.6

3.6

* Gross core banking profit= Gross banking profit – gains/losses on JGBs andother securities (balances of five accounts)* Net core banking profit= Net banking profit + provision for general loan-loss
reserves – gains/losses on JGBs and other securities (balances of five accounts)

FY3/13
Total income taxes*1
Corporation tax, local tax and business tax
Income taxes deferred

-9.4
0.7
-10.1

(Billion yen)
FY3/146.3
1.0
5.2

Change
15.7
0.3
15.3

*1 Juroku Bank booked significant negative income taxes in FY3/13, as the merger with Gifu
Bank resulted in the transfer of tax loss carryforwards and other temporary accounting
differences.

<Consolidated net profits>
Main components of ¥4.5bn difference in parent and consolidated income- Impact of profits at consolidated subsidiaries+¥0.9bn-

Profit adjustment related to purchase of additional sharesin subsidiaries–¥0.7bn-

Negative goodwill related to purchase of additional sharesin subsidiaries, etc+¥4.3bn

4

Main factors behind change in gross core banking profit(non-consolidated)
Gross core banking profit increased ¥1.4bn YoY to ¥69.5bn
B: Balance factors
Y: Yield factors¥68.1bn

Fees andInterest on
commissions Other (+¥0.2bn)
marketable securities (¥0.6bn)(+¥1.1bn)

Interest on loans(–¥0.9bn)
Interest on deposits,
etc. (+¥0.4bn)

B: +2.3
Y: -3.2¥69.5bn

B: +2.7
Y: -1.6

B: -0.4
Y: +0.9

Net interest income

FY3/13

Fees and commissions,
otherFY3/145

Outstanding balances for key items (deposits, loans)▼Deposits (non-consolidated)▼Deposits by region (non-consolidated)(Billion yen)(Billion yen)

4,000
3,500

<Gifu>
No. of branches: 101
No. of loan service centers: 6

4,500
5,157.5

4,000

3,000

3,255.5

3,000

5,000

3,500

3,677.4

3,647.7

5,500

5,155.4

2,500
2,000

1,005.8

1,000

4,294.5

1,411.1

1,400.3

1,500

500
0

FY3/12

FY3/13

FY3/14

Gifu

Aichi, Mie
FY3/12▼Loans (non-consolidated)

Gifu

Aichi, Mie
FY3/13

Gifu

Aichi, Mie
FY3/14▼Loans by region (non-consolidated)(Billion yen)(Billion yen)

2,000

4,000

<Mie>
No. of branches: 1

1,715.8

1,500

3,000
3,657.3

3,751.5

3,304.0* No. of branches does notinclude three virtual branches
FY3/12

1,000

500

2,500

2,000

1,625.8

1,567.2
1,378.2

3,500<Aichi>No. of branches: 50
No. of loan service centers: 13

1,638.9

1,618.9

FY3/13

FY3/14

0

Gifu

Aichi
FY3/12

Gifu

Aichi, Mie
FY3/13

Gifu

Aichi, Mie
FY3/146

Outstanding balances for key items (marketable securities)▼Marketable securities (non-consolidated)(Billion yen)
2,000

1,500

1,000

(Billion yen)

1,757.3

129.8
107.6

1,264.4

99.8
100.1

250

215.8

1,470.9

315.6

123.5

200

483.8

150

259.0

100

306.5

287.9

611.2

538.8

FY3/12

FY3/13

FY3/14

Municipal bonds
Other securities

0▼Modified duration (non-consolidated) (Year)
Yen-denominated securities
Foreign currency-denominatedsecurities

Mar 2012 Mar 2013 Mar 2014
3.59
4.19
4.26
2.80

3.72

3.43

35.0

32.4
79.3

(%)
45.0

40.0

71.6

End-FY3/14
target level

68.6
30.0
29.4

FY3/12Equities balance: A

Corporate bonds

232.8

185.7

50

517.5

JGBs
Equities

221.2

42.7

395.2

500

0

▼Equities (including investment trusts)
and Tier 1 capital (non-consolidated)

FY3/13

FY3/14Tier 1 capital: B

Achieved
25.0
Ratio (= A/B)

* Equities balance excludes shares in subsidiaries and affiliates, but
includes the outstanding balance of investment trusts with main exposure
to equities (non-consolidated, before mark-to-market valuation)* Tier 1 capital used for FY3/12 and FY3/13, equity (based on full
implementation) used for FY3/14

・Achieved objective of reducing equities investment
balance to 30% of Tier 1 capital by end-FY3/14

7

Credit-related costs and nonperforming loans▼Credit-related costs (non-consolidated)(Billion yen)
FY2/12Credit-related costs (1+2-3-4)(1) Provision for general loan-loss reserves(gain on reversal)(2) Write-downs of nonperforming loans
Loans written off
Provisions for specific loan-loss
reserves
Losses on bulk sales
Other(3) Gain on reversal of loan loss reserves(4) Gain on collection of written-off loans

FY2/13▼Nonperforming loans (Financial
Revitalization Law basis; non-consolidated)

FY2/14

0.3

8.1

3.5

-

-2.4

0.4

0.6

10.6

3.0

0.0

0.0

-

-

7.7

2.0

0.2
0.3

2.0

0.4

0.7

0.5

0.2

-

-

0.0

0.0

0.0

▼Write-downs of nonperforming loans bysector (non-consolidated)

・Nonperforming loan ratio was 3.26% as of end-FY3/14
・Nonperforming loan ratio was 3.02% after partial direct
write-offs

8Equity / subordinated financing / dividends▼Equity (domestic GAAP)●Equity ratio (non-consolidated) was 10.47% as of endFY3/14, or 8.66% on a full implementation basis▼Subordinated financing●Juroku Bank aims to repay subordinated loanson the first call date
¥58.0bnSep 7 2012: secured ¥8.0bn subordinated loan
Sep 18 2012: assumed ¥3.0bn subordinated loan

Subordinatedloan:¥43.0bn¥28.0bn¥39.0bn

Subordinatedloan:¥3.0bnSubordinatedloan:

Subordinatedloan:¥8.0bn¥28.0bnTwo ¥15.0bn tranches of subordinatedbonds redeemed on Mar 22, 2012 and
Sep 18, 2012 before maturity

Subordinatedbonds:¥30.0bn

Subordinatedbonds:

Mar 31 2012

Subordinate
d loan:¥29.0bn
Oct 1 2012: repaid ¥10.0bn subordinated loan
before due dateDec 21 2012: issued ¥10.0bn in subordinated bonds¥31.0bn
Oct 1 2014: repay ¥10.0bn
subordinated loan before due date(planned)

Subordinatedloan:¥21.0bn¥21.0bn

Subordinatedloan:¥11.0bn

Subordinatedloan:¥28.0bn

Subordinatedbonds:¥15.0bn

Apr 1 2011

Apr 1 2013: repaid ¥8.0bn
subordinated loan before due date

Sep 30 2012

Subordinatedbonds:

Subordinatedbonds:¥10.0bn¥10.0bn¥10.0bn

Mar 31 2013

Mar 31 2014

Mar 31 2015
(Planned)▼Dividends●Sustained and stable dividends
Annual dividend pershare (¥)

FY3/14(planned)

7.00

Net income(Million yen)

12,3539

Total value at risk
●Total value at risk exposure is currently within the parameters of Juroku Bank’s management capacity (allocatable capital)(Billion yen)

<Buffer>

250
General loan loss reserves:¥9.3bnCredit risk stress¥12.0bn
Market risk stress¥16.9bn
Cross-held shares stress ¥6.9bn
Other risks¥3.0bnTotal¥38.8bn

Risk exposure to cross-heldshares is zero, as valuation
gains exceed VaR* Assuming valuation gains are ≥ 0
Risk exposure = VaR – valuation gain
(minimum value is 0)
Assuming valuation gains are < 0Valuation
gains oncross-heldsharesRisk exposure = VaR + valuation gains

Unallocated capital: ¥6.0bn¥46.1bn¥16.0bn

Cross-heldshares VaR¥40.4bn

200¥28.9bn

150
Equity¥232.8bn
自己資本

Allocatable
capital(Equity–general loan
loss reserves)

Buffer: ¥38.8bn¥13.0bn¥22.0bn¥223.5bn

2,328億円

Unused risk capital:

Operational risk

¥125.6bn¥99.3bn

Basic approach

100

Cross-held share risk
Holding period: 6 months¥108.7bn

Confidence level: 99%*

Market risk
Holding period

50¥0.0bn¥10.8bn

Bonds, shares, etc: 6 months
Deposits and loan: 6 months¥49.1bn

Confidence level: 99%¥47.0bn¥35.0bn

Credit risk
Holding period: 1 year
Confidence level: 99%

EquityAllocatable capital¥223.5bn(excluding application of transitional measures)¥232.8bn(Mar 2014)(Mar 2014)

Stress scenario¥217.5bn

Risk capital¥178.7bn(Sep 2014)(Sep 2014)¥19.5bn

Risk exposure: ¥79.4bn(Mar 2014)10

Group company structure
Juroku Bank Group
Developments for over the past one year
Business support

Juroku Business Service

Juroku DC Card

Juroku Card
(merged, name changed)

Apr 2014
Juroku DC Card and Juroku JCB merged

CreditCreditCards
cards

Juroku JCB

Juroku Lease
Leasing
Venture capital

Apr 2013
Juroku Lease and Juroku Capital merged

Juroku Capital(merged)Computer

Juroku Computer Service

Credit guarantees

Juroku Credit Guarantee

Think tank

Juroku Research Institute

Gifugin Hosho Service

Jun 2013
Newly established11

FY3/15 earnings forecasts (1)(Billion yen) ▼Consolidated▼Non-consolidated

Gross core banking profit
Gross banking profit
Net interest income
Fees and commissions
Other banking profit

FY3/14
FY3/15(results) (forecast)
69.5
67.8
69.5
69.2
61.8
59.6
6.9
7.2
0.8
2.4

ChangeFY3/15(forecast)

-1.7
-0.3
-2.2
0.3
1.6

1.4

1.4

Expenses
Personnel expenses
Non-personnel expenses
Taxes

Ordinary income
Extraordinary gains/losses
Total income taxes
Net income

51.5
29.0
20.3
2.1
0.4
18.0
17.4
0.9
3.0
0.0
2.7
1.2
18.4
0.2
6.3
12.3

52.1
28.8
20.7
2.6
0.2
15.7
16.9
-3.3
5.2
0.0
0.7
1.2
13.6
-0.1
4.5
9.0

0.6
-0.2
0.4
0.5
-0.2
-2.3
-0.5
-4.2
2.2
0.0
-2.0
0.0
-4.8
-0.3
-1.8
-3.3

10.0

<Credit-related costs (1+2-3-4)>

3.5

5.4

1.9

6.0

Write-downs of nonperforming loans (2)Gain on reversal of loan loss reserves (3)Gain on collection of written-off loans (4)Gains/losses on equities
Other extraordinary gains/losses(Billion yen)
FY3/15(forecast)

Change

61.8

59.6

-2.2

59.5

57.0

-2.5

Net interest income on yen deposits
and loans

47.1

45.1

-2.0

(Interest income on yen loans)(51.4)(49.1)(-2.3)(Interest payments on yen deposits)

(4.2)

(3.9)

(-0.3)

Dividend income from yen-denominatedmarketable securities

12.6

11.9

-0.7

2.2

2.6

0.4

Domestic operations-0.0

Net core banking profit
Net banking profit
Extraordinary gains/losses

FY3/14(results)
Net interest income

Gains/losses on JGBs and othersecurities

Provision for general loan-loss reserves (1)<Breakdown of net interest income (non-consolidated)>

International operations* Net interest income likely to decline due to (1) drop in net interest income on yen deposits
and loans amid falling yields and (2) decline in dividend income from yen-denominatedmarketable securities

19.9<Breakdown of extraordinary gains/losses (non-consolidated)>
FY3/14(results)
Extraordinary gains/losses
Write-downs of nonperforming loans

16.0(Billion yen)

FY3/15(forecast)

Change

0.9

-3.3

-4.2

3.0

5.2

2.2

Gains/losses on equities

2.7

0.7

-2.0

Other extraordinary gains/losses

1.2

1.2

0.0

* Extraordinary gains likely to fall sharply due to (1) cautious stance on write-downs of
nonperforming loans and (2) decline in gains on equities* Gross core banking profit= Gross banking profit – gains/losses on JGBs and othersecurities (five types)* Net core banking profit= Net banking profit + provision for general loan-loss reserves– gains/losses on JGBs and other securities (five types)

12

FY3/15 earnings forecasts (2)Factors behind change in projected gross core banking profits (non-consolidated)

B: Balance factors
Y: Yield factors

13

第２部
総括
Part 2: 第１２次中期経営計画
Overview of the 12th Mediumterm Management Plan

Overview of the 12th Medium-term Management Plan (1)Start of plan
(FY3/11)

Targets

End of plan
(FY3/14)
Achieved

Deposits¥5,000bn¥4,069.4bn

Net core banking
profit¥25.0bn¥17.6bn¥18.0bn

OHR

Less than
67%

73.7%

74.1%

Tier 1 Capitalratio (Note)

7.5% and
over

7.58%

Credit cost ratioLess than
0.25%

0.04%

■Targets for deposits, Tier 1 capital ratio and credit cost ratio achieved

Achieved

Achieved¥5,037.2bn

8.70%

0.09%

Note: Basel II basis■Top-line growth weak due to narrower loan-deposit spread → increasing net core banking profit,
OHR now key issues

15

Overview of the 12th Medium-term Management Plan (2)I. Merger with Gifu Bank (Sep 18, 2012)▼ Integration of branch network andIT systems▼ Integration of human resources

Merger and closure of branches and integration of
IT systems has led to sharp improvement inefficiency
・Number of branches before merger (as of Sep 17, 2012)
Juroku Bank
Gifu Bank
Total
Closed or
integrated

Gifu
102
32
134

Aichi
42
14
56

- 32

-6

Mie

Tokyo Osaka
1
1
1
2
1

1
1
0

-1

0

Total
146
48
194
- 39

* Excluding virtual branches in Gifu Prefecture (Juroku Bank: 3, Gifu Bank: 1)

・Impartial and fair treatment of personnel
Three people from Gifu Bank appointed as
branch heads
・Alumni networks also integrated through mergerof former employee associations▼ Group company restructuring
Sep 2012: Gifugin Business Services integrated into Group

Business
services
・Number of branches after merger (as of Sep 18, 2012)
Juroku Bank

Gifu
Aichi
102
50

Mie

1

Tokyo

1

Osaka

* Excluding virtual branches in Gifu Prefecture (Juroku Bank: 3)

Steady progress with disposal offormer branch sites, including
Gifu Bank head office

1

Total
155

Juroku Business Service

Gifugin Business Service

Liquidated

Sep 2012: Credit card companies merged

Creditcards

Juroku DC Card

MergedGifugin Card
16

Overview of the 12th Medium-term Management Plan (3)▼ Rapidly realizing and maximizing merger cost synergies(1) Cost synergies(2) Financial synergies(3) Merger expertise(2) = ¥18.0bn

Total: ¥9.0bn

Goodwill:¥3.0bnMerger project overview“Bridge for Tomorrow” Project

Non-personnel
expenses¥4.5bn¥5.1bn in costsavings

December 21, 2014(2) - (1) = ¥10.7bn

Business merger
committee office

Process flow of the merger

Gifu Bank(1) = ¥7.3bn
System cost:¥1.0bnTax benefits:¥15.0bn

Other: ¥0.6bn

Total: ¥3.9bn
IT system depreciation
costs: ¥0.6bn

Personnel
expenses ¥4.5bn

Personnel
expenses ¥2.7bn

Juroku Bank

Other non-personnel
expenses ¥0.6bn

etc.

System cost: ¥4.2bn

Acquired expertise to achievesmooth mergers (ways ofdealing with over 10,000 tasks,
etc.)

Other: ¥1.4bn

FY3/12 results

Position one year after merger(Gifu Bank expenses prior to merger)

Merger costs

Merger benefits

17Overview of the 12th Medium-term Management Plan (4)II. Progress with strategy for Aichi Prefecture
Established network of 50 branches
in Aichi Prefecture▼ Number of branches in Aichi Prefecture

Transferred human resources■Upgraded Nagoya Branch to Nagoya Main Office(Apr 2012)■Opened new branches in Nagoya: Moriyama Branch (Apr 2011),
Hoshigaoka Branch (Apr 2012), PLAZA JUROKU Nagoya Branch(Jul 2012)

60
50
40
30
20
10
0

39

Mar 2011

50

As of Dec 2013

■Rapidly expanded network in Aichi Prefecture using existing Gifu
Bank branches■After merger, strategically positioned employees at branches in Aichi
Prefecture(Moriyama Branch)(Hoshigaoka Branch)III. Deposits reach ¥5trn▼ Deposits(Billion yen)

5,500
5,000
4,500
4,000
3,500
3,000

5,034.0
4,069.4

Mar 2011

 Deposits totaled ¥5trn as of Dec 2013, an
increase of approximately ¥1trn, including¥580.0bn transferred from Gifu Bank,
compared with Mar 2011

Dec 2013
18

Part 3: The 13th Medium-termManagement PlanChubu region economic structure
FY95

←1.1

FY00

←1.0

30.0

FY05

←0.7

32.3

FY10

←0.7

South
Kanto

2.5

12.9

4.7

9.4

8.2

15.9

6.7

←1.4

17.2

7.1

←1.6

4.9 1.8

15.5

Transport
and postal
services
Constru Manufacturing
ction

13.2

Hotels andrestaurants
Healthc
are andwelfareEducationand learning
support

Other

18.8

6.2

12.8
12.7

15.6

7.3

Wholesaleand retail

11.4

7.9

9.0

15.8

9.1

11.7

8.1
9.0

17.3

4.7 1.8

3.9

12.3

16.3

Financeandinsurance(10 thousand people)←1.3

Producers ofprivate non-profit
services forhouseholds

765

7.0

Transport andcommunications

Tokai
area

17.0

16.3

1.9

←1.4

6.2

Real estate

13.5

FY10 ←0.3 12.1

5.4

6.5

9.9

Finance andinsurance

16.1

←1.2

4.3

1.9

2.0

13.9

6.9

5.9

14.0

Retail andwholesale

FY00 ←0.3
FY05 ←0.3

8.5
6.9

2.5
Electricity, gas
and waterIndustry

22.0
18.4

FY95 ←0.4

4.9

9.1

12.7

6.2

2.7

5.2

29.1

4.4

15.1

7.4

3.9

13.3

Producers ofgovernment
services

6.5

2.4

2.5

7.2

31.9

FY90 ←0.5▼Number andbreakdown of
employees bysector8.0

37.5

Agriculture,
forestry andfisheries

Tokyo area

←1.4

Construction

Tokai area

FY90

Services▼Breakdown ofregional GDP(nominal) bysector

7.0
6.6
12.4
12.9

19.7
23.4
18.7
20.2

6.0

←1.4

6.7

←1.7

6.7

←1.6

7.2

←1.7

7.4

←1.8

* Manufacturing, mainly
related to the auto sector, isconcentrated in the Tokai
region, accounting for a highshare of regional GDP

1,830* Based on “Tokai Economy
2013: Comparison with Three
Main Economic Areas,”
Chubu Bureau of Economy,
Trade and Industry

Kinki
977

* The number and ratio of
employees in the
manufacturing sector is alsohigh20

Chubu region financial environment▼ Share of national loans(Billion yen) ★Lending by Japan’s banks (year-end balance)
480,000
460,000(%)

55.5★Kanto’s share of bank loans

54.9%

55.0

440,000¥421,259.8bn

420,000

54.5
54.0

400,000

53.5

380,000

53.0

360,000

52.5

340,000

52.0

320,000
300,000* Based on “Tokai Economy 2013: Comparison with Three Main
Economic Areas,” Chubu Bureau of Economy, Trade andIndustry

51.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(%) ★Chubu’s share of bank loans

51.0
00

01

02

03

04

05

06

07

08

09

10

11

12

13

(%) ★Kinki’s share of bank loans

9.2

18.0
17.5

9.0

17.0

8.8

8.6%

8.6

16.5
16.0
15.5
15.0

8.4

14.5

13.7%

14.0

8.2

13.5
8.0

00

01

02

03

04

05

06

07

08

09

10

11

12

13

13.0

00

01

02

03

04

05

06

07

08

09

10

11

* Lending by banks in the Chubu region has remained largely flat after recovering slightly following thecollapse of Lehman Brothers

12

13

21

Population forecasts for Gifu and Aichi prefectures
Based on population trends for Gifu and Aichi prefectures,
the Aichi market is likely to be relatively more important<Rate of population decline>
Gifu > Aichi<Ratio of working age population>
Gifu < Aichi

Population forecasts

Working age population forecasts(Thousand people, %)(Thousand people)

Gifu
2010

2025
2040

Aichi

National

2,081

7,411

128,057（100.0）（100.0）（100.0）

1,908

7,348

120,659（91.7）（99.2）（94.2）

1,660

6,856

107,276（79.8）（92.5）（83.8）* Figures in brackets show change in population indexed to 2010

Gifu
2010

2025
2040

Aichi

National

1,289

4,839

81,735（62.0）（65.3）（63.8）

1,093

4,504

70,845（57.3）（61.3）（58.7）

883

3,861

57,866（53.2）（56.3）（53.9）*Figures in brackets show ratio of working age population

Source: Regional Population Projections for Japan: 2010-2040 (March 2013), National Institute of Population and Social Security Research

22Share of deposits and lending▼Gifu
Prefecture(FY3/13)

Share of lending

(%)

10.1

29.7

Juroku Bank
Megabanks, etc
JA▼AichiPrefecture(FY3/13)(%)

Source: Juroku Bank, based on “Financial Map 2014,” Japan Financial News

7.2

3.6

(%)

29.1

20.3
Eight other regional banks
Shinkin banks
Other

(%)

23

Overview of the 13th Medium-term Management Plan (1)Name:

13th Medium-term Management Plan
All For Your Smile – Providing Wholehearted Services

Period:April 2014 – March 2017 (three years)

Vision:Aim to become a truly dependable regional financial institution withthe ability to grow continually

Key themes:

Reform our awareness and actions to ensure an uncompromising focus on thecustomer
Return to our roots as a regional financial institution
Implement a growth strategy focused on our Aichi Prefecture Strategy

24

Overview of the 13th Medium-term Management Plan (2)▼ Overview
Reinforce the bank’s
financial position
Implement our regionspecific strategies(Gifu Prefecture Strategy /Aichi Prefecture Strategy)

Ensure anuncompromising
focus on thecustomer
Return to ourroots as a regional
financial
institution

Improve the quality ofservices by focusing on thecustomer
Optimize the allocation ofbusiness resources
Adopt a more advanced
business stance

Maintain thestability of thefinancial system
Ensure smoothfinancingProtect depositorsand otherstakeholders

Aim to becomea trulydependable
regional
financial
institution withthe ability to
growcontinually

Further promote
community-based financial
services
Reinforce investment
capabilities
Utilize and develop humanresources25

Overview of the 13th Medium-term Management Plan (3)▼Numerical targets
Targets

Growthpotential（customerbase）
Earning
capability

Start of plan(end-FY3/14)

Deposit balance¥5,155.4bn¥5,600.0bn

Number of retailborrowers

97,780100,000 or more

Net income¥12.3bn¥10.0bn

8.66%

8.8% or more

0.09%

Less than 0.2%

Core capital ratio

Financialsoundness

Final fiscal year

(full implementation basis)

Ratio of credit cost
to total loans■ Number of retail borrowers SME borrowers (including proprietors) + Number of housing loans and apartment loans(based on the Bank’s standards)
Core capital (before transitional arrangement)■ Core capital ratio ＝(full implementation basis)
Risk assets (before transitional arrangement)■ Ratio of Credit cost to total loans ＝Credit costs
Average loan balance26

Management plan initiatives (1)▼Head office organization reforms
 Established new Customer Service Promotion
Division
Customer Service Promotion Division(new)

Customer Service Promotion Group Reinforcing sales promotion structurein Aichi Prefecture
Secretariat

Customer Service Support Office◇ Established new Customer Service Promotion Division◇ Assess and analyze customer satisfaction and needs, respond to and use
complaints and feedback to ensure an uncompromising focus on
customers

Nagoya Office(new)◇ Nagoya Office established to strengthen the bank's base for managing
directors in Nagoya◇ Customer support team established, under direct control of managing
directors in Nagoya

 ICT Planning Group and Business
Efficiency Promotion Group established in
the Corporate Planning Division

 Reinforce the sales structure
Business Planning DivisionCorporate Planning Division

Personal Business Division

Planning Group
Financing Group

Corporate Business Division
Global Business DivisionTokyo Office(new)◇ Business Planning Division brings together the Personal Business
Division, Corporate Business Division and the Global Business Division(reinforcing cooperation with sales divisions)◇ Global Business Division established to enhance support for customers
moving into overseas markets

 Credit Supervision Division name changed to Lending Division to
refocus operations on the customer

Brand Strategy Office
ICT Planning Group(new)

Business Efficiency
Promotion Group(new)◇ ICT Planning Group established to strengthen medium- and long-term
ICT strategy◇ Business Efficiency Promotion Group established to create a low-cost
operating structure using BPR and other approaches

27Management plan initiatives (2)Clear KPI targets set for each division to ensure steady implementation of medium-term
management plan=>Targets set every six months; progress versus targets to be reviewed regularly▼ Target examples
No.

Target (example)

No.

Target (example)

1

Average loan balance

6

Forex transactions

2

Gross loan-deposit spread

7

Gains / losses on marketablesecurities

3

Fee and commission income

8

Number of cases of positive
customer support

4

Personal deposits

9

Number of borrower classification
upgrades5

Number of SME borrowers(including sole proprietors)

10

Non-personnel expenses

28

Part 4: Basic Strategies

Seven basic strategies
I

Improve the quality of services by focusing on the customer PICK UP=> P. 31-

II

Implement our region-specific strategies

PICK UP=> P. 33-

III

Further promote community-based financial services

PICK UP=> P. 35-

IV

Reinforce investment capabilities

V

Optimize the allocation of business resources

PICK UP=> P. 37-

VI

Utilize and develop human resourcesVII

Reinforce the bank’s financial position and adopt a more advanced business stance30

<Basic strategy I>

Improve the quality of services by focusing on the customer (1)Enhance contact with customers
Physical channels
 Start trial of extended branch hours in
response to customer needs Tap into customer needs by using
public relations activities to increase
communication opportunities

Virtual channels■Upgrade online banking
・Expand service menu (foreign currency
deposits, etc)
・Smartphone compatibility

Trial of extended branch opening hours
Gifu Ekimae Sub-branch

Hongo Branch

Number of personal online banking users(Cases)160,000

Aim to double
number of users

140,000
120,000
100,000
80,000JR Gifu Station Front

Hongo Station,
Higashiyama Subway Line▼ Weekday opening hours extended to 7:00 pm

60,00040,00020,000Look into extending hours
at other branches after assessing results of trial

0
Mar 2011

Mar 2012

Mar 2013

Dec 2013

Mar 2017(Planned)31<Basic strategy I>

Improve the quality of services by focusing on the customer (2)Strengthen Retail Division
Offer products and services tailored to various needs based on asset portfolio and life stage

 Promote comprehensive approach to asset builders
 Enhance consulting services related to asset inheritance Around 30,000

NISA accounts
set up(PLAZA JUROKU at the Tajimi Branch)Business reforms with a focus on the customer
Promoting BPR
 Established Business Efficiency PromotionGroup Create a low-cost operating structure by
rethinking business approaches and promoting
efficiency
 Improve customer service levels and quality ofback office work

- Enhance businessefficiency- Upgrade infrastructure- Improve customer service- Increase sales opportunities

Business
業務改革
processreforms

Top-line
growthComplaints, feedback etc
32

<Basic strategy II>

Implement our region-specific strategies (1)Gifu Prefecture Strategy – build stronger customer relationships –Provision of high-quality solutions

Secure a dominate share of the Gifu market

 Enhance the bank’s position as a life-long partner
for customers by offering a wider range of services▼ Gifu Prefecture Main Bank Survey (2013)

 Appropriate and timely provision of funding tohelp customers develop their businesses
 Use our position as one of the leading banks
in the region to access local information andprovide business customers support forbusiness matching

Targeting share ofover 40%(NOBUNAGA 21 Gifu Venture Business Support Network
Award Ceremony for 9th New Business Plan Grant)
Source: Juroku Bank, based on “2013 Gifu Prefecture Main Bank Survey,” Teikoku Databank33

<Basic strategy II>

Implement our region-specific strategies (2)Aichi Prefecture Strategy – continue to build our presence as a local institution –Reinforcing sales promotion structure

Expanding our branch network

 Established Nagoya Office to strengthen
the bank's base for managing directors

 Opening new branches at a pace of 1–2 each year, mainly in Nagoya
and the Mikawa region aim is to create a branch network on par with
our network in Gifu Prefecture Customer support team established,
under direct control of managing directors
in Nagoya Planning to double number of ATMs in Nagoya and Mikawa region by
installing more machines in non-branch locations

Nagoya Office opened
Key branches
in the region◆

Kariya Branch to be moved to
new building- Opened in Oct 1965
- Kariya population: 145,000
Chubu International Airport

Okazaki Branch to be moved
to new building- Opened in Nov 1966
- Okazaki population: 372,000

NagoyaToyota Branch

Kasugai- Opened in Jun 1970

Owariasahi
Nagakute- Toyota population: 421,000

NisshinTogo
Toyoake◆MiyoshiObuTokai◆ Chiryu
KariyaTakahamaAnjo

◆

Handa
Taketoyo

NishioToyotaMikawa region
OkazakiKota

Toyohashi Branch
MikawaPort◆

Toyohashi- Opened in Jun 1989
- Toyohashi population:
376,000
34

<Basic strategy III>

Further promote community-based financial services (1)Reverse Trade Fair Meetings▼ B2B matching in the manufacturing sector is particularly challenging because it
requires specialist engineering expertise
Juroku Bank’s unique scheme is based on the needs of buyers
Supplier company(seller)

Juroku Bank・Set up meeting timeand date
・Search for suppliers
that meet buyer’s
requirements

Entry

Request for meeting

Target companies:
leading local firms

Display parts they wantto purchase

Buyer companies

Award presented to Juroku Bankby the Tokai Local Finance Bureau

Supplier company(seller)
Supplier company(seller) Our employees’ lack of specialist engineering expertise is not an issue, as buyers
set out their needs in documents for potential suppliers Under our scheme, around 20% of meetings result in a request for quote,compared with only 3-5% of contacts at normal business meetings that ultimately
lead to contracts

Track record- Number of reverse trade fairs: 27- Total no. of business consultations:
399 (FY3/14)

Future plans

Expand the business matching area by working with other local financial institutions
Extend scheme to food sector
35

<Basic strategy III>

Further promote community-based financial services (2)▼ Established Global Business Division to enhance support for companies moving
overseas to tap growth in Asia
Expanding overseas network

Looking into possibility of opening offices in Singapore and Bangkok

Juroku overseas support network and services<South Korea>
Partner: SBJ Bank (part of the
Shinhan Bank group)<China>Partners: Bank of Communications, Bank of China,
Industrial and Commercial Bank of China<China>Juroku Bank:
Shanghai Representative Office<India>Partner: State Bank of India<Hong Kong>
Juroku Bank:
Hong Kong Representative
Office<Philippines>
Partner: BDO Unibank<Myanmar>Partner: Ayeyarwady Bank

<Vietnam>Partners: BIDV, Australia and New
Zealand Banking Group<Thailand>Two Juroku Bank
employees based locally,
Partner: Kasikorn Bank

<Malaysia>
Partners: CIMB Bank,CIMB Investment Bank

<Indonesia> One Juroku Bank
employee based locally, Partner:
Bank Negara Indonesia(As of end of Apr 2014)= Overseas offices<Japan>Juroku Bank: Global Business
Division (established Apr 2014)= Trainee locations= Partner financial institutions

No. of overseas businessprojects

Country
China
Hong Kong
ThailandIndonesia
Vietnam
Malaysia
Philippines
Singapore
South Korea
Myanmar
India
Total

Total
478
68
198
71
56
32
12
22
25
7
17
986
36

<Basic strategy V>

Optimize the allocation of management resources
Using cost management systems to ensure effective cost control
Established ICT Planning Group to reinforce medium- and long-term ICT strategy
and reduce ICT costs
Further optimizing deployment of human resources
Cost Management

Cost Management Committee
General Affairs
Subcommittee(Controlling all
non-personnel expenses)

IT Subcommittee

After the merger with Gifu
Bank, around 140 employees
were strategically redeployed topositions in Aichi Prefecture(Controlling ICT costs)

Cost optimization

Business Efficiency
Promotion Group

Strategic redeployment of human resources

ICT Planning Group

Corporate Planning Division

Personnel redeployments to sales divisions are now
planned, as post-merger reorganization has almost
been completed and Juroku Bank is targeting further
efficiency gains through BPR and other approaches

Aiming to improve top-line
performance by optimizing
the allocation of business resources
37

Conclusion▼ Feedback received through our IR activities from individual investors around Japan○“I’ll be watching to see how Juroku Bank uses its branch network in Aichi Prefecture.”○“Juroku Bank is building up its presence in Nagoya. I'm focusing on the president's
leadership qualities and prospects for further business growth and development.”○“I learnt a lot about Juroku Bank; it has a long history and strong roots in the Tokai region andthe merger with Gifu Bank has reinforced its business base. Deposits are also growing
strongly. I hope it remains a well-liked financial institution in the region and continues tocontribute to the local economy.”○“The merger with Gifu has been a success, helping Juroku Bank grow strongly. The bank isalso highly respected by customers. I hope it continues to upgrade its services and contributeto the local economy.”▼ Summary●Amid signs of restructuring in the financial sector, Juroku Bank is going back to its roots asregional bank in order to continue providing products and services that meet the needs ofcustomers and local communities.
●Juroku Bank will steadily implement its 13th Medium-term Management Plan, which clearlysets out measures to realize its vision for the bank and overcome the negative economic
impact of Japan’s shrinking population and other structural factors. Our ultimate goal is tobecome the most trusted bank in the Tokai Region.
●All our directors and employees will work together towards the same goal – making ourcustomers smile – proof that our customers are satisfied.
38

I would like to thank you all for your attention

Providing Wholehearted Services

39