(TSE code：8356)

27th Results Briefing
The Juroku Bank[The year ended March 2016]

May 31, 2016

Contents
Overview of Results for FY3/16
Overview of results for FY3/164

13th Medium-term Management Plan: Progress
13th Medium-term Management Plan: current position19

Factors affecting gross operating profit5
Key data (deposits, loans)6

Basic Strategies

Key data (loans)7

Aichi Prefecture Strategy 21

Key data (loans to individuals)8

Our initiatives as a regional financial institution 24

Key data (fees and commissions)10

Creating new businesses through joint investment 31

Key data (marketable securities) 11

Create an environment where employees can leverage
their skills 32

Credit costs and nonperforming loans 12
Total value at risk 13

Conclusion 33

Capital policy 14

FY3/17 Earnings Forecasts
FY3/17 earnings forecasts16
Forecasts of factors affecting gross operating profit17◆ Earnings forecasts and other forward-looking statements in this document are based on management’s
assumptions and beliefs in light of information available at the time of publication. Actual results may differ
materially from forward-looking statements due to a wide range of factors.
２

Overview of Results for FY3/16

Overview of results for FY3/16– Consolidated and Non-consolidated –Overviews of non-consolidated results
q Non-consolidated(Billion y en)

No

Calc. fomula1

Gross operating profit

2(Core gross operating profit)

FY3/14

FY3/15

Change(YoY14)

FY3/16

Change(YoY)

q Consolidated
FY3/16[3+4+5]

69.5

80.1

71.1

1.6

-9.0

77.9

[1-6]

(69.5)(70.0)(65.1)(-4.4)(-4.9)

72.0

3

Net interest income

61.8

61.4

57.2

-4.6

-4.2

57.3

4

Fees and commissions

6.9

7.6

6.8

-0.1

-0.8

11.0

5

Other operating profit

0.8

11.0

6.9

6.1

-4.1

9.5

-0.0

10.1

5.9

5.9

-4.2

5.9
55.2

6
7

Gain/losses on JGBs and other debt
securities

51.5

52.3

51.6

0.1

-0.7

8

Expenses
Personnel expenses

29.0

29.0

29.0

-0.0

-0.0

9

Non-personnel expenses

20.3

20.6

19.8

-0.5

-0.8

10

Taxes

2.1

2.6

2.7

0.6

0.1

11 Net business profit

[1-7]

17.9

27.8

19.4

1.5

-8.4

22.7

12 Net core operating profit

[2-7]

18.0

17.7

13.5

-4.5

-4.2

16.8

[11-15]

17.4

29.3

20.5

3.1

-8.8

24.0

[15+16-17-18-19]

3.5

2.8

2.8

-0.7

0.0

2.7

13 Net operating profit
14 Credit costs
15

Provision of general loan-loss reserves

0.4

-1.5

-1.1

-1.5

0.4

-1.2

16

Write-dow ns of nonperforming loans

3.0

4.3

3.9

0.9

-0.4

4.0

17

Gain on reversal of loan loss reserves

-

-

-

-

-

-

18

Gain on collection of w ritten-off loans

0.0

0.0

0.0

-0.0

-0.0

0.0

19

Gain on reversal of contingent loss

-

0.0

-

-

-0.0

-

20 Gains/losses on equities

2.7

7.6

0.1

-2.6

-7.5

0.0

21 Other extraordinary gains/losses

1.2

2.2

2.3

1.1

0.1

2.3

22 Investment trust financing expenses

0.0

0.0

0.0

-0.0

-0.0

0.0

23 Ordinary profit

18.4

34.9

19.0

0.6

-15.9

22.3

24 Extraordinary gains/losses

0.2

-0.1

-0.4

-0.6

-0.3

-0.4

25 Net income before taxes

18.6

34.7

18.6

-0.0

-16.1

21.8

26 Total income taxes

6.3

13.2

6.3

0.0

-6.9

7.4

12.3

21.4

12.2

-0.1

-9.2

*13.3

27 Net income[11-14+20+21-22][25-26]* Net income attributable to shareholders of the parent company

Gross operating profit

 Gross operating profit declined ¥9.0 billion YoY to¥71.1 billion due to a drop in gains on JGBs andother debt securities, which rose sharply in theprevious fiscal year.
Net business profit Non-personnel expenses fell ¥0.8 billion, but net
business profit dropped ¥8.4 billion YoY to ¥19.4
billion due to the decline in gross operating profit.
Ordinary profit Write-downs on nonperforming loans improved, but
ordinary profit declined ¥15.9 billion YoY to ¥19.0
billion due to a drop in gains on equities.
Net income
 The decline in ordinary profit weighed on net
income, which came in at ¥12.2 billion.

４

Factors affecting gross operating profit– Non-consolidated –Gross operating profit for FY3/16 totaled ¥71.1 billion; interest on deposits improved, but that was outweighedby declines in interest on loans and gains on JGBs and other debt securities.

(Billion yen)

B: Balance factors
Y: Yield factors

Gain/losses on
JGBs and otherdebt securities(+10.1)

69.5

Interest on
loans(-2.8)

B: +2.4
Y: -5.2

Interest on
deposits, etc.
(+0.0)
B: +0.1
Y: -0.2

Interest on
marketablesecurities(+2.3)

Other(+0.1)

Interest on
deposits, etc.
(+0.1)

80.1

Fees andcommissions(+0.7)

Interest on
loans(-3.0)
B: +1.3
Y: -4.4

B: +1.2
Y:+1.1

B: -0.1
Y: +0.3

Fees andcommissions(-0.8)
Interest on
marketablesecurities(-0.7)
B: -0.5
Y: -0.2

Other(-0.3)

71.1

Gain/losses on
JGBs and otherdebt securities(-4.2)P10

P11

Net interest income

FY3/14Other

Net interest income

FY3/16

FY3/15<FY3/15>

Other<FY3/16>５

Key data (deposits, loans)q Deposits

q Deposits by region
4,000.0

5,500.0(Billion yen)Normalizing fundprocurement
costs(Billion yen)
3,677.4

3,842.7

3,821.4

3,500.0+21.2

5,000.0
Negotiablecertificates of deposit-¥57.8 billion YoY-37.2
4,500.0
5,387.4

2,500.0

5,350.2

5,155.4

4,000.0

3,000.0

2,000.0
1,473.4

1,522.7
1,411.1

1,500.03,500.0
1,000.0
Gifu

Aichi
Mie

3,000.0
FY3/14

FY3/15

FY3/16

q Loans
4,000.0

Gifu

FY3/14

Aichi
Mie

FY3/15q Loans by region
2,000.0(Billion yen)

Gifu

Aichi
Mie

FY3/16+110.6(Billion yen)

1,857.4
1,746.8

3,500.0

1,638.9

1,625.8

1,640.4

Gifu

Aichi
Mie

Gifu

1,628.6+77.8
1,500.0

3,000.0
3,751.5

3,865.6

3,943.5

2,500.0
1,000.0

2,000.0

FY3/14

FY3/15

FY3/16

FY3/14

Aichi
Mie
FY3/15

Gifu

Aichi
Mie
FY3/16６

Key data (loans)
Loans to individuals steady, signs of a recovery in business loans to SMEs
q Loans by sector
4,500.0

q Business loans by company size (YoY change)(Billion yen)

4,000.0

3,751.5379.8

3,500.0

3,865.6

3,943.5

428.4

405.3

120.0

FY3/14100.0
80.0

3,000.0
1,115.1+79.9

1,195.1+101.1

1,296.2

2,500.0

94.5

79.9

First growthin threefiscal years

48.5

30.0

36.9

16.4

0.0

2,256.6

1,000.0-14.3

2,242.2-0.2

2,242.0
-20.0

-4.8

-9.5
-23.0

500.0

-40.0

0.0
FY3/14

FY3/15Business

Individual

FY3/16

(%)

7.00

8.00

7.31

-60.0
Large/mid-size
companies

-53.7
SMEs

Individual

Loans to municipal
bodiesq Capital investment loans to SMEs
590.0

(Billion yen)

6.95
6.30

6.00

-30.3

Municipal

q Loans by region (annualized growth)

3.63

578.7

580.0

570.0

1.95

2.00

0.09

-0.72

-2.00

555.5

560.0

0.08

0.00

-6.00

FY3/1660.0

20.0

1,500.0

-4.00

101.1

FY3/1540.0

2,000.0

4.00(Billion yen)

550.0

544.2

540.0

-2.25

-4.48

-3.35

530.0

FY3/14 1H FY3/14 FY3/15 1H FY3/15 FY3/16 1H FY3/16
Gifu

Aichi

520.0

FY3/14

FY3/15

FY3/16

７

Key data (loans to individuals)
q Number of housing starts

q Value of housing issued loans by region
120.0(Houses)(Billion yen)
Value of loans issued (Aichi Prefecture)

35,00032,347

31,62730,69727,75830,000100.0

29,659

Value of loans issued (Gifu Prefecture)

27,446Aichi

25,00080.0
Roughly six-foldrise in housing
starts

20,00015,00040.0

10,000

76.9

73.0
60.0

69.9

51.7

50.6

51.1

17.3

19.2

19.5

FY3/14
FY3/141H
1H

FY3/14
FY3/14

FY3/15
FY3/15
1H
1H

Gifu
20.0

5,000

6,450

5,674

5,002

5,329

5,354

5,064

FY3/14
FY3/14

FY3/15
FY3/151H

FY3/15
FY3/15

FY3/161H
FY3/16

FY3/16
FY3/16

0

28.2

25.2

26.9

FY3/15

FY3/16
FY3/161H
1H

FY3/16
FY3/160.0

FY3/14
FY3/14
1H
1H

1H

1H

q Housing loans by region

q Value of apartment loans issued(Billion yen)(Billion yen)

25.0

1,500.0

7.4

7.6

8.6

10.6

9.8

20.8
18.8

20.0

19.9

16.7

1,000.0

667.6

23.1

11.8

• Increase in specialist sales staff• Focusing on refinancing, as well as loans
for new properties

695.4

728.2

833.9

784.7

888.8

15.0
10.0

9.7

500.0

487.9

493.2

498.0

512.4

521.1

531.9

FY3/14 1H

FY3/14

FY3/15 1H

FY3/15

FY3/16 1H

FY3/16

0.0

5.0
0.0

Gifu Prefecture (period-end balance)

Aichi Prefecture (period-end balance)

Other (period-end balance)

FY3/141H
FY3/141H

FY3/14

FY3/151H
FY3/151H

FY3/15
FY3/15

FY3/16
FY3/161H
1H

FY3/16
FY3/16８

Key data (loans to individuals)
Stepping up efforts to promote high-margin unsecured term loans through virtual (low-cost) channels
q Number of applications for new credit card loans(Q-loans) through virtual channels

q Q-loans(No. of applications)(Billion yen)

600

7.0

FY3/15
FY3/16500

Advertising steppedup (from Oct 2015)

400

14.27％
6.8

6.4

6.5

3.5 x

300

6.1

4.4 x
200

2.3 x

6.0

3.5 x

2.8 x

5.8

2.7 x

100

5.5

0
OctoberNovember December

January

February

March

FY3/13q Unsecured term loan book
2,500

FY3/15

FY3/16<Q-loans>

Value of loans issued

1,400

No. of loans

1,200
1,000

1,500

800
1,000

600

No. of loans

2,000

FY3/14

q New applications by channel（No. of loans）
1,600(Million yen)

Value of loans issued

Averageinterest rate

Other
channels
45%<Unsecured term loans>
Other
Virtual channels
channels 30%

55%

Virtualchannels70%

Low-cost operations achieved with virtual channels

400

500

200
0

0
FY3/15 1H FY3/16 1H

FY3/15 2H FY3/16 2H

 Online media (virtual channels) mainly used for advertising Complete online approach introduced (loan application and contract
closure all carried out online) Considering new credit card loan products for specific customer
segments

９Key data (fees and commissions)Individual client assets up ¥41.6 billion YoY to ¥4,277.3 billion as of end-Mar 2015, profits rise on efforts to promote comprehensive financial
relationships with clientsq No. of investment trust accounts and NISA accounts/ NISA usage ratioq Individual client assets+41.6(Billion yen)
4,500.0

4,277.3

4,235.7

4,098.4+3.6

4,000.0

65,00060,00055,00050,00045,00040,00035,00030,00025,00020,000

669.8

666.2

626.5
3,500.0
3,000.0+38.0

2,500.0

3,607.5

3,569.5

3,471.8

NISA account balance one of best in sector(No. of accounts)

2,000.0
1,500.0

60,33457,01553,454

FY3/14

FY3/15

Balance of individual deposits

30,31936,61033,995

40%
30%
20%

18.3%

10%
FY3/15

FY3/16

No. of NISA accounts

q Fees and commissions from Investment
trusts and insurance products

Balance of client assets

70%

50%

No. of investment trust accounts
NISA usage ratio

FY3/1659.9%

60%

FY3/141,000.0

80%

67.6%

Total potential
non-taxablesavings amount:roughly ¥44 billion(Million yen)q Other client assets(Billion yen)

3,000

FY3/14

FY3/15

FY3/16

YoY14

YoY

2,500

(A)

(B)

(C)

(C)-(A)(C)-(B)

2,000

Mutual fund

153.2

186.8

176.1

22.9

-10.7

1,500

Individual annuity
insurance

370.0

424.1

470.8

100.7

46.7

1,000

Public bond

103.2

55.2

22.8

-80.4

-32.4

500

Total

626.5

666.2

669.8

43.2

3.6

2,743

2,083

2,4352,558
2,048

1,829

FY3/14
FY3/15
FY3/160Investment trust fees andcommissions

Insurance product fees andcommissions

１０

Key data (marketable securities)
Flexibly adjusting asset class allocations in response to market trends
q Balance of marketable securities

q Valuation gains/losses(Billion yen)(Billion yen)

2,000.0

120.0

1,795.8

1,757.3

109.9

1,662.6
215.8

13.1

100.0

1,500.0

92.1

507.0

291.2

80.0

(debt
securities)

19.5

73.1

+7.5

1.5
1,000.0

60.0

1,417.9

1,220.3

1,155.1

27.1
Decrease indomestic
interest rates

24.3

40.0

77.1

(equity)
-20.6

500.0

47.3

20.0

0.0

123.5

151.0

133.7

FY3/14

FY3/15

FY3/16Equities

JGBs

Gain/losses on JGBs and other debt securities
Gains
LossesDepreciation

10,10911,073963-

FY3/16
5,906
7,643
1,628
108

Decline in
the stockmarketFY3/14

FY3/15

Valuation gains/losses on equities
Valuation gains/losses on other securities(Million yen)

FY3/15

Change-4,203-3,430
665
108

Gains
LossesDepreciation

7,681
7,864
153
30

112
1,717
1,541
63

-7,569-6,1471,388
33

FY3/16

Valuation gains/losses on bonds

q Cross-held shares (book value basis)95.0(Billion yen)

90.0

88.3

85.0

80.0
75.0
70.0
64.5

65.0

Gains/losses on equities

56.4

0.0

Other securities

q Related gains/losses

8.5

62.0

59.9

60.0

57.5

55.0
50.0
FY3/09…

FY3/13

FY3/14

FY3/15

FY3/16

１１

Credit costs and nonperforming loansq Credit costs(Billion yen)
FY3/14

FY3/15

FY3/16

3.5
0.4
3.0
2.0
0.4
0.5
0.0
-

2.8
-1.5
4.3
3.5
0.4
0.3
0.0
0.0

2.8
-1.1
3.9
2.9
0.4
0.6
0.0
-

Credit costs (1+2-3-4-5)(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(5) Gain on reversal of contingent loss reservesCredit costs remain low

Nonperforming loan ratio was 2.60% as of end-FY3/16

q Nonperforming loans(Financial Revitalization Law basis)(Billion yen)

(%)

200.0

4.00
3.26
2.86

150.0

q Write-downs of nonperforming loans by sector

2.60

124.3

112.2

17.1

(Million yen)

FY3/14

3,500

103.8

15.4

100.0

-8.4

FY3/15

3,000

3.00

14.7

2.00

83.7

1.00

5.5
FY3/160.00

FY3/16

2,380

2,500

50.0

2,141

95.1

86.7

2,000

1,500

1,509

1,309

1,000
500

0.0

999
726
109

256
157
193 118

26

517
316

12.1

10.1

FY3/14

FY3/15Loans to bankrupt単体
and quasi-bankruped borrowers
Doubtful loans

0Loans requiring monitoring

-500

-360
Manufacturing Construction

Retail/wholesaleRealestateServices/
other

Nonperforming loan ratio

１２

Total value at risk
 Total value at risk exposure is currently within the parameters of Juroku Bank’s management capacity (allocatable capital)
Total value at risk
<Buffer>
Credit risk stressMarket risk stress
Cross-held shares stress
Liquidity risk
Other risks
Total(Billion yen)

¥5.0bn¥2.1bn¥3.4bn¥1.1bn¥2.4bn¥14.0bn

Risk exposure to cross-held shares is zero,as valuation gains exceed VaR* Assuming valuation gains are ≥ 0
Risk exposure = VaR – valuation gains(minimum value is 0)
Assuming valuation gains are < 0
Risk exposure = VaR + valuation losses

250.0
General loans loss reserves: ¥6.5bn
Reserve for stress¥11.2bn

Unallocated capital: ¥11.2bn

Valuation
gains oncross-heldshares¥55.8bn¥13.5bn

Buffer: ¥14.0bn

200.0¥23.4bn¥10.0bn

Cross-heldshares VaR¥42.7bn

Operational risk
The standardized Approach¥20.0bn
Cross-held share risk
Holding period: 6 months
Confidence level: 99%

150.0

Core capital¥243.4bn

100.0

Allocatable
Capital (Corecapital General loan
loss reserves)¥236.9bn*

Unusedrisk capital:¥109.0bn

Market risk

¥9.6bn¥148.8bn¥146.7bn¥0.0bnHolding period
Bonds, shares, etc: 6 months
Deposits and loan: 6 months
10 business days of trading
Confidence level: 99%＊¥78.0bn50.0¥40.0bn

Core capital(excluding application oftransitional measures)¥243.4bn(end-Mar 2016)

Credit risk

¥35.0bn

Allocatable capital¥236.9bn

Stress scenario¥225.7bn

Risk capital¥211.7bn(end-Mar 2016)(end-Sep 2016)(end-Sep 2016)

Holding period: 1 year
Confidence level: 99%¥15.1bn(Reference)

Risk exposure¥102.7bn(end-Mar 2016)

１３

Capital policyq Equity

q Improvement in quality of capital Equity ratio (consolidated) was 10.34% as of endFY3/16, or 8.83% on a full implementation basis

 Over four and a half years Juroku Bank has repaid a total of¥40 billion in subordinated loans and subordinated bonds
and retired ¥20 billion in Class 1 preferred shares(Billion yen)

(%)

500.0

12.00

450.0

10.63
9.99

9.93

10.70

10.34

9.65

11.00

(Billion yen)
300.0

Equity (non-consolidated)
278.5
252.5

250.0

239.3

400.0

58.0

9.00
350.0

8.70

8.62

8.59

8.86

8.95

8.83

300.0

200.0

6.00

200.0

5.00

278.2

271.0

273.9

305.2

4.00
300.0

3.00

100.0

2.00

50.0

1.00

0.0

0.00
FY3/15

FY3/161H

FY3/16(non-consolidated) (non-consolidated) (non-consolidated)

EquityEquity ratio

FY3/15

FY3/161H

FY3/16(consolidated)(consolidated)(consolidated)

Full implementation basis

20.0

43.0
255.9
250.0
230.4

7.00

297.0

18.0

21.0

20.0

8.00

250.0

150.0

273.9

271.0
31.0

39.0

10.00

281.4

150.0

194.5

196.3

219.5

Basel III

Basel II
100.0
End-Mar2011

End-Mar2012

Excluding preferred shares /subordinated financing

End-Mar2013

End-Mar2014

Preferred shares

End-Mar2015

End-Mar
2016

Subordinated financing

計

q Dividends

Dividend per share(full year)

FY3/14

FY3/15

FY3/16 (forecast)

¥7.0

¥8.0
(including ¥1.0
commemorative dividend)

¥7.0

１４

FY3/17 Earnings Forecasts

FY3/17 earnings forecasts– Consolidated and Non-consolidated –q Non-consolidated(Billion yen)No
1
2

Calc. formula[3+4+5]Gross operating profit

FY3/17(Forecast)
69.2

Change(YoY)-1.9(70.0)(65.1)(65.1)(-0.0)Net interest income

61.4

57.2

56.8

-0.4

4

Fees and commissions

7.6

6.8

7.3

0.5

5

Other operating profit

11.0

6.9

5.1

-1.8

10.1

5.9

4.1

-1.8
0.3

7

[1-6]

FY3/16(Results)
71.1

3

6

(Core gross operating profit)

FY3/15(Results)
80.1

Gain/losses on JGBs andother debt securities
Expenses

52.3

51.6

51.9

8

Personnel expenses

29.0

29.0

29.2

0.2

9

Non-personnel expenses

20.6

19.8

19.8

-0.0

10

Taxes

2.6

2.7

2.9

0.2

11 Net business profit

[1-7]

27.8

19.4

17.3

-2.1

12 Net core operating profit

[2-7]

17.7

13.5

13.2

-0.3

[11-15]

13 Net operating profit

29.3

20.5

16.6

-3.9

14 Credit costs [15+16-17-18-19]

2.8

2.8

4.2

1.4

15

Provision of general loan-loss reserves

-1.5

-1.1

0.7

1.8

16

Write-dow ns of nonperforming loans

4.3

3.9

3.5

-0.4

17

Gain on reversal of loan loss reserves

-

-

-

-

18

Gain on collection of w ritten-off

0.0

0.0

0.0

0.0

19

Gain on reversal of contingent loss

0.0

-

-

-

20 Gains/losses on equities

7.6

0.1

0.4

0.3

21 Other extraordinary gains/losses

2.2

2.3

1.0

-1.3

22 Investment trust financing expenses

0.0

0.0

0.0

0.0

23 Ordinary profit

34.9

19.0

14.5

-4.5

24 Extraordinary gains/losses

-0.1

-0.4

0.0

0.4

25 Net income before taxes

34.7

18.6

14.5

-4.1

26 Total income taxes

13.2

6.3

4.5

-1.8

21.4

12.2

10.0

-2.2

27 Net income[11-14+20+21-22][25-26]

q Consolidated
FY3/17(Forecast)

Forecasts for FY3/17

q Non-consolidated
Ordinary profit¥14.5 billion

Net income¥10.0 billion

q Consolidated
Ordinary profit¥17.0 billion

Net income attributable toshareholders of the parent
company¥10.8 billion

17.0

*10.8

* Net income attributable to shareholders of the parent company

１６Forecasts of factors affecting gross operating profit– Non-consolidated profit/loss –Gross operating profit for FY3/17 is projected to decrease ¥1.9 billion YoY to ¥69.2 billion

B: Balance factors
Y: Yield factors

Interest on
deposits, etc.
(+1.0)

71.1

B: +0.0
Y: +1.0

Interest on
loans(-2.1)

Interest on
marketablesecurities(+1.7)
B: +1.1
Y: +0.6

Fees andcommissions(+0.5)(Billion yen)

69.2
Gain/losses on
JGBs and otherdebt securities(-1.8)

Other(-1.1)

B: +1.2
Y: -3.3

FY3/16

FY3/17

Net interest income

Other

１７

13th Medium-term Management Plan:
Progress13th Medium-term Management Plan: current
positionq Numerical targets
Targets

Growthpotential(customerbase)

Earning
capability

Start of plan

FY3/16
Results

Final year
(end-Mar 2017)

Deposit balance¥5,155.4bn¥5,350.2bn¥5,600.0bn

Number of retailborrowers

97,780107,843

100,000 or more

Net income¥12.3bn¥12.2bn¥10.0bn

8.66%

8.59%

8.8% or more

0.09%

0.07%

Less than 0.2%

Core equity ratio(Full-implementation basis)

Financialsoundness

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)
capital ratio■ Core(full implementation basis)=

Core capital (before transitional arrangement)
Risk assets (before transitional arrangement)
Credit costs=
Average loan balance■Ratio of credit cost to total loans

Step up efforts in final year of
medium-term management planto achieve targets
１９

Basic Strategies

<Aichi Prefecture Strategy>

Conditions in Aichi Prefectureq National population census 2015: population by prefecture (preliminary data)
Japan’s population fell for the first time since the census began in 1920, however, Aichi Prefecture’s
population continued to increase
400,000
300,000
200,000
100,000
0

Okinawa

Kagoshima

Oita

Miyazaki

Kumamoto

Saga

Nagasaki

Kochi

Fukuoka

Ehime

KagawaTokushima

Yamaguchi

Okayama

Hiroshima

Tottori

ShimaneWakayama

Nara

Hyogo

Kyoto

Osaka

Mie

Shiga

Aichi

Shizuoka

Gifu

NaganoFukui

Yamanashi

Ishikawa

NiigataToyamaTokyo

Kanagawa

Chiba

SaitamaTochigi

Gunma

Ibaraki

Yamagata

Fukushima

Akita

Miyagi

Iwate

Aomori-200,000

Hokkaido-100,000

Source: Juroku Bank, based on data from Statistics Bureau, Ministry of Internal Affairs and Communications

q Change in official land prices in 2016 by prefecture
Residential and commercial land prices in the Nagoya area have risen for three consecutive years, with theincrease in commercial land prices accelerating from last year
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
-5.0

Residential

Source: Juroku Bank, based on Ministry of Land, Infrastructure, Transport and Tourism data

Okinawa

Kagoshima

Miyazaki

Oita

Kumamoto

NagasakiSaga

Fukuoka

Kochi

Ehime

KagawaTokushima

Hiroshima

Yamaguchi

Okayama

ShimaneTottoriWakayama

Nara

Hyogo

Osaka

Kyoto

Shiga

Mie

Aichi

Shizuoka

Gifu

NaganoYamanashi

Fukui

ToyamaIshikawa

Niigata

Kanagawa

Tokyo

Chiba

SaitamaGunma

Tochigi

Ibaraki

Fukushima

Yamagata

Akita

Miyagi

Iwate

Aomori

Hokkaido

Nationwide

Commercial

２１

<Aichi Prefecture Strategy>

Performance in Aichi Prefecture <impact of initiatives in Aichi>
q Total loans (term-end balance)q Housing loans (term-end balance)(Billion yen)(Billion yen)

1,900.0+226.3+192.8

900.0
800.0

1,800.0700.01,700.0600.01,600.0500.01,500.0400.0

1,400.0
FY3/14
FY3/14

FY3/151H
FY3/151H

FY3/15
FY3/15

FY3/161H
FY3/161H

FY3/16
FY3/16

q Total deposits excluding certificates of deposit(term-end balance)(Billion yen)

300.0
FY3/14
FY3/14

FY3/151H
FY3/151H

FY3/15
FY3/15

FY3/16
FY3/161H
1H

FY3/16
FY3/16q Individual deposits (term-end balance)(Billion yen)

1,500.0+66.7

1,000.0+37.1

1,400.0
Reduction of theinterest rate cost on
large time deposits

1,300.0900.0

1,200.0800.0

1,100.0700.0

1,000.0
FY3/14

FY3/151H
FY3/15

FY3/15

FY3/161H
FY3/16

FY3/16

FY3/14
FY3/14

FY3/151H
FY3/15

FY3/15

FY3/16
FY3/161H

FY3/16
FY3/16２２

<Aichi Prefecture Strategy>

Reinforcing the branch network <expanding our presence in the Mikawa region>
q First branch focused exclusively on individual customers opened in Aichi Prefecture; also open forbusiness on Saturdays

Okazaki Hane branch
Expanding our branch network to get closer to customers
Open on Saturdays

Flagship branch

New branch opened
March 10, 2016

Branch focused exclusively
on individual customers<Opening ceremony><Branch interior>

Opend March 10, 2016

Satellite branch<Our network in Okazaki city>

q Growth in our Aichi Prefecture
branch network
FY3/11(A)

FY3/16(B)

Change(B)-(A)

No. of branches

39

51

+12

No. of ATMs

125

178

+53
２３

<Our initiatives as a regional financial institution>

Revitalizing the regional economy
Country

Support for business creation / new businesses

Support for the tourism sector

Comprehensive Strategy for the Creation ofCommunities, People and Jobs

 Regeneration Support Project Team formed (June 2015)

 Currency exchange bureau opened

P28

 Ayu of the Nagara River System officially recognized as a globally
important agricultural heritage system (April 2016) Regeneration support fund NOBUNAGA First Stage established (July 2015)
 New business plan grants provided via NOBUNAGA 21 (February 2016)<No. of consultations and business startup funding provided>

No. ofNo. of loans
Amountconsultations provided48
19 ¥113 million

2015
1H
2H

97

37 ¥198 million

Full year

145

56 ¥311 million

Municipalities

Food sector

Comprehensive Regional Strategies

 Two specialist staff assigned to this sector
 Invested in an agricultural and food processing businesses
through the Juroku Business Transformation Fund P29
 Held the Regional Bank Food Selection 2015 Fair withpartners (November 2015)

Growth fields

Support for companies moving into
overseas markets

Revitalizing the regional economy

 Manufacturing sector (automotive, aerospace, medical equipment)
Supplier search services provided (reverse trade fair meetings)

 Expanding our overseas network<Number of fairs held between FY3/12 and FY3/16>

 Signed partnership agreement with the Hong Kong Trade
Development Council (January 2016)

Meetings: 134 Consultations: 2,012

P30

 Held overseas local information briefings (October 2015, April 2016) Medical sector (healthcare, nursing care) Hired international students based in Japan for our comprehensive
workers – a first for Juroku Bank

Develop livablecommunities

Medical sector support team (4 staff) worked<No. of loans>

Declining population

Create jobs

FY3/15: ¥10.3 billion FY3/16: ¥12.1 billion

Aging population

Roughly 200 consultations each year

Business matching

Regional financial
institutions(2 partners)

 Using our intelligence gathering network to
support the needs of businesses, such as
helping to expand sales channels and markets

FY3/15: ¥88 million FY3/16: ¥68 million

 Private banking desk provides one-stop consulting services for businesssuccession and asset inheritance<No. of consultations>

Municipalities(14 partners)

Business
community

Mass media(1 partner)

Figures in brackets show
number of partners
that had signed
partnership agreementswith Juroku Bank as ofApril 22, 2016

Promoting the use of vacant housing,
immigration and long-term residency
 Signed a partnership with Gifu Prefecture to promote immigration andlong-term residency(June 2015)
 Started offering loans to help people renovate or demolish vacant homes(June 2015)

FY3/15: 376 FY3/16: 569
 Juroku Bank wins top Bank of the Year award from Nihon M&A Center(June 2015)

Our role

Chambers of commerce
and trade associations(23 partners)

Cooperation

Business succession / M&A

Support for marriage
and parenting

P25

Universities/
research bodies(1 partner)<Fees and commissions received>

Local people Joined up with the Japan Housing Finance Agency to offer reverse mortgage type housing loans(November 2015)

Help to revitalize the region by driving a positive growth cycle in the regional economy

２４

<Our initiatives as a regional financial institution>

Cooperating with other financial institutions regardless ofbusiness categories
q Transportation links set to improve in the Chuno
and Tono areas of Gifu PrefectureFirst partnership agreement with a credit
union for a regional bank in the Tokai area

<Comprehensive partnership agreement signed withThe Tono Shinkin Bank to revitalize the local area>

Scheduled for completionin 2020
Tokai-Kanjo Expressway(westbound)

Tokai-Hokuriku
Expressway

Chuno area
Tokai-Kanjo Expressway(eastbound)

Tono area

Planned route of Chuo
Shinkansen Maglev Line

Scheduled to open
in 2027

Juroku Bank and the Tono Shinkin Bank signed acomprehensive partnership agreement on March 7,2016 aimed at revitalizing the local economy. Under
the agreement, the partners will work to resolve issues
faced by communities in the Tono area of Gifu
Prefecture and regenerate the local economy bybringing together the Tono Shinkin Bank's support
network at the grass-roots level with Juroku Bank's
branch network in Gifu and Aichi prefectures and its
overseas network.
Ref: Juroku Bank press release, March 7, 2016

First partnership agreement with JA
for a regional bank in the Tokai area

<Partnership agreement signed with JA Megumino
to strengthen regional regeneration through support
for agriculture>
Juroku Bank and JA Megumino signed a partnershipagreement on March 24, 2016 aimed at reenergizing theregional economy through support for agriculture. Under
the agreement, the partners will work to tackle issues
faced by the agricultural sector in the Chuno area of Gifu
Prefecture, in line with the Comprehensive Strategy for
the Creation ＜地域別立地件数割合（2015年）＞
of Communities, People and Jobs.

地域別立地件数では中濃地域がトップ！

Ref: Juroku Bank press release, March 24, 2016

<Mino Ware from the Tono area><Agriculture is the ultimate local industry>(出典)経済産業省「工場立地動向調査」

２５

<Our initiatives as a regional financial institution>

Helping to strengthen local brands<The new standard in Cool Biz clothing – Gifu shirts made from 100% Mino washi – a project to change Japanese summers>
Mino washi (Japanese paper) has
been recognized
as an intangible cultural heritageof humanity by UNESCO

Helping local industry accesscloud funding

Gifu Chamber of Commerce and Industry and Juroku Bank launched a new
project on the Makuake cloud funding site operated by CyberAgent Crowd
Funding, Inc., which became a Juroku Bank business partner in March
2016.
<Organizer> Gifu Shirt Project (four Juroku Bank corporate customers)

Ref: Juroku Bank press release, April 21, 20162017 marks the 450 anniversaryof Oda Nobunaga’s entry into
Inabayama Castle and his
renaming of the castle and area
as Gifu.

<Mino washi is crafted using handmade
techniques><Gifu Cool Biz shirt made from 100% Mino washi thread><Oda Nobunaga’s battle coat is used as the design motif>

Supporting community development
through cloud funding<Cloud funding project to open Nagaragawa Department Store
Minatomachi – specialty store in 100-year old town house in
Kawaramachi, Gifu>
This project aims to secure funds to renovate an
old townhouse in the traditional quarter of
Kawaramachi, Gifu. Once completed, the store
will mainly sell local products from the Gifu andNagaragawa area.
Juroku Bank is working to diversify fundprocurement sources, promoting the opening of
the store and implementing initiatives that will
attract people to the store while also boosting
local tourism.

Partnership with local
university<Highlighting the appeal of the Gifu
area to help develop local businesses and human resources>

Juroku Bank and the President of Gifu
University, Hisataka Moriwaki, held a wideranging discussion on April 24, 2016 about
initiatives to revitalize the region. Discussions
focused on ways of creating local companies
that appeal to young people who want to work in
the area, promoting exciting local companies,and cultivating human resources that can
flexibly adapt to change.
Ref: Juroku Bank press release, April 21, 2016

Source: Gifu University website

２６

<Our initiatives as a regional financial institution>

Creating branches at the heart of local communities
q Branch in Branch system introduced – first in Gifu
Prefecture

店舗の新設

Takayama branch and Takayama Station branch

Merits for Juroku Bank
Integration of bank staff can create a highly efficient and productive sales system
Merits for customers
Customers can continue to use existing bank books, IDs and cards, as there is nochange to branch numbers, names or account numbers due to the relocation of theformer branches

Relocated and opened Apr 11, 2016

New branch

Miyagawa River

JR
Takayama
StationFormer Takayama Station branch

Former Takayama branch(temporary location)<New Takayama branch/Takayama Station branch>
New branch located near
Takayama tourist spots<Opening ceremony><Branch interior><Statue of Saru-bobo (monkey baby) dollin front of the branch><Old town directly to the southof the relocated branch>

２７

<Our initiatives as a regional financial institution>

Support for the tourism sector
q Money exchange bureau and relocated Takayama branch/Takayama Station branch opened
A first for regional banks in
the Tokai area

A first for regional banks in
the Tokai area
Shirakawago

Located in Active G retailfacility, JR Gifu Station

Money exchange bureau in front of
Takayama Station
Money exchange bureau

Money exchange bureau

Opened April 11

Takayama
Festival

Opened April 7

400,000

No. of overseas visitors stayed/ing
in Takayama by year

350,000
300,000

280,000

250,000
200,000

364,000

225,000
187,000
151,000

150,000
95,000100,000
50,000Currencies handled02010
US dollar

Euro

Australian dollar

Canadian dollar

British pound

Swiss franc

New Zealand dollar

Swedish krona

Danish krone

Chinese yuan

South Korean won

Taiwanese dollar

Hong Kong dollar

Singaporean dollar

Thai baht

Indonesian rupiah

Malaysian ringgit

Filippine peso

Vietnamese dong

Cormorant
fishing

2011

2012

2013

2014

2015

Buy-sell ratio for foreign currency (April)

Gero Hot
Springs

Takayama
Station

JR Gifu Station

0%

20%

40%

Foreign currency sold

60%

80%

100%

Foreign currency bought

２８<Our initiatives as a regional financial institution>

Support for the food sector
q Solving management issues through business transformation
What is the Juroku Business Transformation Fund?

■ Fund overview
Name:
Juroku Business Transformation Fund Investment Business Limited Partnership
Target:Business entities transforming their operations
Manager: Juroku Lease
Business entities transforming their operations

Borrowings

Required business
funds

Equity structure with voting rights

CapitalInvestment by agriculture,
forestry and fisheries
companies (main manager)(A%)

Growth funds + supply of produce
Agriculture, forestry andfisheries companies• High-quality production

1. Major business projects possible with small
amount of own funds

Investment by partnercompanies (B%)

2. Mitigates business risk

Investment by sub funds (maximum of 50%)

Investment

Investment
Growth funds + provision of integrated business support
Municipal
governments,
When sub funds are involved
Investment
agricultural(local funds or theme funds)
collectives, financial
institutions, local
companies, etc.

etc.

Growth funds + sales channels,
provision of expertise

4. Stable and strategic shareholder baseBusiness transformation
Partner companies

5. Improvement in business creditworthiness• Sales network• Marketing power

Investment• Traceable products• Ability to form groups of producers

3. Creates long-term partnerships with companies inother industries

Investment

Private sector, etc.

• Large-scale supply capacity

 Merits of using the fundCreate strategic partnerships• Logistics know-how(No more than 50%)
Agriculture, Forestry and Fisheries Fund
Corporation for Innovation, Value-chain andExpansion Japan (A-Five)

• IT
etc.

Third investment project

MICHINARU Co., Ltd. aims to help revitalize the local
economy by expanding sales channels and raising thebrand visibility of local agricultural produce in the Hida
area. Specifically, the company is working to stabilize
income from agriculture and to recruit and develop
personnel who get engaged in agriculture through more
efficient farming methods that prevent waste, such as
finding commercial uses for B-grade spinach and offcuts that would usually be thrown away.

Ref: Juroku Bank press release, March 28, 2016

Country

PrivatesectorInvestment

Investment

Agriculture, Forestry and Fisheries Fund Corporation for
Innovation, Value-chain and Expansion Japan (A-Five)(Investors)<Investment in MICHINARU Co., Ltd.>

Juroku Bank

Investment(Conventional
company)

Juroku Lease

Yamaichi Shoji
Co., Ltd.

Investment

Investment

Juroku BusinessTransformation Fund
Limited Partnership
Investment Business(Partner companies)• ICHIBIKI Co., Ltd.
• MARUSHIN SEIKA Co., Ltd.
• Maruto Mizutani Corporation• Nagoya Small and Medium
Business Investment &Consultation Co., Ltd.

Investment

Business entity transforming
its operation

Investment

MICHINARU Co., Ltd.
Capital: ¥90 million

Management
supportBusiness
execution
SupportLocal farmers
Business manager
Juroku Lease

JA HidaTakayama City

Lending

Juroku Bank
Shoko Chukin BankFirst Bank of Toyama
Hokuriku BankJapan Finance Corporation
A-Five (subordinated loan)

２９<Our initiatives as a regional financial institution>

Support for companies moving into overseas markets▼ Juroku Bank’s network covers thewhole ASEAN region
Country Responsible for
Surrounding Area

Strengthening support for customers
moving into Asia

<Juroku Bank and Hong Kong Trade Development Council sign partnership>
In January 2016, Juroku Bank signed a memorandum of
understanding with the Hong Kong Trade Development Council tohelp corporate customers expand their overseas sales channels
and provide them with trade and investment information.
This agreement will allow Juroku Bank to help its customers create
new businesses overseas and support the revitalization of theregional economy.

Shanghai
Representative Office

Laos
Vietnam
MyanmarHong Kong
Representative Office

Bangkok
Representative Office
Ref: Juroku Bank press release, January 18, 2016

Philippines

ThailandCambodia

India

Providing the latest information about
overseas markets

Malaysia<Overseas local information briefings>
BruneiSingapore

Singapore
Representative
OfficeIn April 2016, the heads of our representative offices inShanghai, Hong Kong, Singapore and Thailand attended
a briefing to pass on the latest information gleaned fromtheir contacts with numerous local customers andbusiness associates. Based on this intelligence, theytalked about the challenges of doing business in overseas
markets, overseas strategies for Japanese companies
and ways of expanding sales channels in local markets.

Indonesia

Country Responsible for
Surrounding Area

Ref: Juroku Bank press release, April 11, 2016

Overseas offices
Partner financial institutions
Trainee locations

q No. of clients with presence in overseas
markets – by country(as of end-Mar 2016)
Country
China
Hong Kong
India
ThailandIndonesia
VietnamNo. ofclients
Country
532 Malaysia
71 Philippines
32 Singapore
240 Myanmar
94 ASEAN (other countries)
114 Subtotal for ASEAN countries
Total

No. ofclients
44
42
44
11
13
602
1,237

Hiring more international
graduates<First hired international students as comprehensive workers>
In April 2016, Juroku Bank hired its first ever international
students based in Japan for our comprehensive workers. We
hope these graduates will provide support for our customers
moving into overseas markets and work in other areas such asaddressing inbound demand.

Ref: Juroku Bank press release, April 1, 2016

３０

<Strengthening earnings>

Creating new businesses through joint investment
q Seven regional banks have invested in an asset management company

Development Bank of Japan

Tokai Tokyo FH

JurokuBank

Yamaguchi
FG

Nishi-Nippon
City Bank

Yamagata
Bank

HiroshimaBank

San-in GodoBank Expected benefits
1. Increase investment scale and strengthen earnings bypooling surplus funds from all partner banks
2. Share product development and management
expertise

Akita Bank

3. Train specialist staff
Investment

Investment

Benefits

All Nippon Asset Management
Ref: Juroku Bank website news updates, March 18, 2016

(Asset management company)

q With Itochu and Aozora Bank, five regional banks formed capital alliance to develop consortium
RegionJuroku Bank has taken a 3.3% stake in GL Connect Co., Ltd. (GCL)
through a private placement. GCL is a wholly owned subsidiary of Itochu
Corporation operating in the field of corporate finance.
By organically combining the functions, expertise and intelligence offinancial institutions (Aozora, Kagoshima, Shonai, Toho, Iyo and Juroku
banks) and the trading company (Itochu), the partners created aconsortium (platform) capable of offering hybrid finance and businesssolution development functions.
Specifically, the consortium will enable us to provide our corporate
customers with consulting services to expand their sales channels andbusinesses in Japan and overseas, finance related to commercial
distribution, and strengthened support.
Ref: Juroku Bank website news updates, March 31, 2016

GlocalLocal+
globalBusiness solutions

Financial solutions

Large urban
markets

Overseas

GL Connect Co., Ltd. – consortium (platform)
Features: Local

Features: Global• Solid management base
 Network of superior local customers, links with local
governments• Financing functions (lending expertise / capabilities offinancing)• Overseas network (CITIC Limited, CP Group, etc.)• Creation of finance schemes related to commercial
distribution, proposal capabilities• Business expertise in Japan and overseas(financial sector / market intelligence gathering capabilities)

IssuesComplementaryfunctionsIssues• Strengthen earnings capabilities / secure earnings sources• Address and improve response to advanced efforts torevitalize the regional economy• Respond to diversifying customer needs and globalization• Weak local networks with regional financial institutions• Limited financial functions
 Lack of financing know-how and funds for lending

Juroku Bank and other regional financial institutions

Itochu Corporation (trading company)

３１

<Employee>

Create an environment where employees can leverage their skills
q Shine Nadeshiko Project ideas became a reality* Juroku Bank’s Shine Nadeshiko Project was launched by the female project team in December 2014. The project aims to create aworking environment where women can reach their full potential and formulate a unique Juroku Bank action plan to support women in
the workplace.

Opened April 21
Parenting leave support program

Introduced March 2016

Half-day annual holiday scheme

Introduced April 2016

Retiree rehiring system

Introduced April 2016

Onsite childcare facilities

Opened April 2016

A first for regional banks
in the Tokai area

<Onsite childcare facilities: Juroku Smile Room>

Act on Promotion of Women’s Participation and Advancement in the Workplace:First regional bank in the Tokai area to be awarded Eruboshi certification
Under a new system introduced on April 1, 2016, the Minister of Health, Labour and Welfare
awards certification to companies that develop action plans to promote the active involvementof female employees in their workplaces, in line with the goals of the Act on Promotion of
Women’s Participation and Advancement in the Workplace.
Eruboshi certification has three levels based on criteria such as average length of service andthe ratio of women in management positions. Juroku Bank’s efforts to improve its performancein all evaluation criteria helped it secure level-three certification, the highest level.

Ref: Juroku Bank website news updates, April 15, 2016

３２

Conclusion
q Enhancing engagement between customers and us
13th Medium-term Management Plan
Long-term vision Reform our awareness and actions to ensure an uncompromising focus on the customer
 Return to our roots as a regional financial institution

Next Medium-termManagement Plan Implement a growth strategy focused on our Aichi Prefecture Strategy

Truly reliable regional
financial institution withsustainable growthpotential

Final year of
medium-term plan
FY3/15 1H

FY3/15 2H

FY3/16 1H

FY3/16 2H

FY3/17 1H

FY3/17 2H

FY3/18 1H

FY3/18 2H

 Engagement First Business reforms
140th anniversaryof Juroku Bank

Enhancing on-site

Awareness
reformstrength

Action reform

Enhancingorganizational
strength

Insight
Issues to be addressed<New executive officer system introduced>

2. Individual executive officers appointed from among
managing executive officers to take responsibility forspecific regions in order to strengthen contact withlocal customers

February 2016

• Narrowing loan-deposit spread• Reduce operating costs further• Address intensifying competition(October 1, 2017)

1. New system introduced, managing executive officer
newly establishedBank of Japan introduced
negative interest rate policy

Changes in regional bank businessenvironment• Risk of contraction inregional economy• Changing business model３３

We would like to thank you allfor your attention.