Company Briefings For the First Halfof the Fiscal Year Ending March 2024
November 2023

Continuing to be a part ofthe community

Daishi Hokuetsu Financial Group celebrates its 5th
anniversary
Daishi Hokuetsu Bank, a subsidiary, celebrates its
150th anniversary- It’s the oldest surviving bank in Japan*Daishi Hokuetsu Financial Group is referred to as “Daishi Hokuetsu FG” or “FG”

0

Table of Contents
Summary■ Enhancement of Human Capital Value
2

Practice of Human Capital Management

39

Financial Results for the First Half of the Fiscal Year Ending March 2024

Improve Employee Engagement and Human Resource Development

40

FG's Consolidated Interim Profit

4

Diversity and Health Management

41

Interim Profit by Division

5

FG Consolidated Change Factors

7

Bank Division■ Sustainability Initiatives
Daishi Hokuetsu FG Sustainability Initiative Policy

43

Daishi Hokuetsu FG Initiatives

44

Initiatives to Resolve Challenges of Regions and Customers

45

Bank Non-consolidated Change Factors

8Balance of Loans and Bills Discounted

9

Balance of Deposits, etc.

10

Governance Structure supporting Sustainable Growth49

Non-interest Income Area

11

Initiatives to Reduce Cross-shareholdings

50

Securities

12

Dividend Forecast for Fiscal Year Ending March 2024

51

Expenses14

Initiative to Improve PBR

52Non-performing Loan Ratio & Net Credit Cost

15

Appendix

FG’s Consolidated Capital Ratio

16

Management Indicators

55

Management Integration Synergy

17

Six Indicators for Deepening Transformation of Portfolios

56

Earnings Forecast for FYE2024/3

20

Indicators for Contribution to Communities

57

Second Medium-term Management Plan

Summary of Financial Results for 1H of FYE 2024/3

58■ Demonstration of Three Major Synergies

Loans and Bills Discounted Area

60

■ Governance & Capital Policy

Sustainable Growth Initiatives by Daishi Hokuetsu Financial Group

22

Balance of Deposits, etc. and Assets under Custody

62

Merger Synergy

23

Non-interest Income Area/Expenses

63Group Synergy

31

Securities Area

64

TSUBASA Partnership Synergy

35

Non-performing Loan Ratio & Net Credit Cost

66

Capital Allocation

67

Capital Ratio

68

Financial Position of Group Companies

69

1

Summary of the First Half of the Fiscal YearEnding March 2024
FY2023
Second Medium-term
After bank merger and birth of new bank Management Plan Final Year
A New Stage of Achieving Merger Results

Second Medium-term Management Plan

April
2021

March
2024

1H of FYE2024
FG Consolidated Interim Profit exceeded the initial forecasts andincreased year on year
Comprehensive organizational strengths steadily improved to maximize
the three synergies
Reallocation of dynamic management resources has been nearly completed,resulting in strengthening consulting capabilities
Group reorganization during the Second Medium-term Management Plan wasGroup Synergy
completed, and became 15-company framework
TSUBASA Partnership Synergy Further expansion of collaboration areas in both TSUBASA Alliance andGunma-Daishi Hokuetsu Alliance
Merger Synergy

The Second Medium-term Management Plan is on track for completion

 As the top financial and information services Group in Niigata Prefecture, all officers
and employees practiced the consulting business in “We are One!” to solve problems
for local communities and customers
2Financial Results for
the First Half of the
Fiscal Year Ending
March 20243

FG’s Consolidated Interim Profit
FG’sConsolidated(¥100M)

138

123

Year on Year+¥1.4B(+11.6%)100
Forecast(Announced in
May 2023)

Vs. Forecast+¥3.8B(+38.1%)
1H of FYE2023/3

1H of FYE2024/3

4

Interim Profit by Division
Bank Nonconsolidated(¥100M)

104

91

Year on Year+¥1.2B(+14.1%)71
Forecast(Announced in
May 2023)

Vs. Forecast+¥3.3B(+47.6%)
1H of FYE2023/3

1H of FYE2024/3

5

Interim Profit by Division
Group Company
Division(¥100M)* Total Interim Profit of Group companies
attributable to owners of parent (excluding
the holding company and the Bank)

18

Year on Year+¥0.5B(+45.4%)
Securities+¥0.17B yoy

12Commissions and fees by sales of stocks andinvestment trusts increased year on year due toconsulting services that captured market trends

Leasing+¥0.33B yoy
The balance of leased assets increased due to asteady increase in bank referral cases, while
credit costs were lower than the previous year

1H of FYE2023/3

1H of FYE2024/3

6

FG’s Consolidated Change Factors
Increase in both non-consolidated profit of the Bank andprofit of the Group Company Division

FG Consolidated Interim Profit increased(¥100M)

123

Bank Nonconsolidated+12

1H of FYE2023/3
FG’s Consolidated Interim
ProfitGroup
Companies+5

Consolidated
Adjustment, etc.
-4138Year on Year+¥1.4B

1H of FYE2024/3
FG’s Consolidated Interim
Profit7

Bank Division

Bank Non-consolidated Change Factors
Due to an increase in interest on loans and bills discounted and non-interest

income, the Bank’s non-consolidated interim profit increased(¥100M)

Gains orlosses on
securities+43

Foreigncurrency
funding
cost, etc.
(-)
+116

• Foreign currency funding cost (-): +108
of which, Market Management Division: +102,
Sales Division: +5, Interest on deposits: -7

Interest anddividends on
securities
Non+38interest
income91

NonInterest on
interestloans andincomebills(Sales Division)
discounted+5+11(MarketManagement
Division)+28

Extraordinary
Taxes, etc.
incomeExpenses Net credit(-)(losses)(-)+3

Total income of Market
Management Division: +6

cost (-)
+4

+16

+6

104
1.2B

+¥

yoy

Total income of Sales Division:+12

1H of FYE2023/3
Bank’s non-consolidated
interim profit

1H of FYE2024/3
Bank’s non-consolidated
interim profit

8

Bank DivisionEnd-balance of Loans and Bills Discounted
Business

Consumer(¥100M)

52,0379,400

14,13528,501

Public money

53,767
8,539

14,67230,554

Year on Year

Consumer+¥53.7B (+3.8%) yoy-

1H of FYE2024/3

Increased both mortgage and unsecured loans
due to utilization of non-face-to-face channels

Business+¥205.3B (+7.2%) yoy--

1H of FYE2023/3+¥173.0B(+3.3%)

Decreased in the prefecture due to postponementof capital investment resulting from uncertainty
over the future and soaring material prices in
addition to the prepayment of real interest-free
and unsecured loans (Zero-Zero Loans)
Increased outside the prefecture for large
companies with demand for funds
9Bank DivisionEnd-balance of Deposits, etc.
Individuals(¥100M)

84,237

Corporate

Others85,419

5,325

5,432

22,89923,13956,012

56,847

Year on Year+¥118.1B(+1.4%)

Corporate+¥24.0B (+1.0%) yoy

Individuals (including sole proprietors)+¥83.4B (+1.4%) yoy
The balance of deposits, including
negotiable certificates of deposit,
increased steadily for bothcompanies and individuals

1H of FYE2023/3

1H of FYE2024/3
10

Bank & Sales Division

Non-interest Income Area
OthersFinancial Solutions(¥100M)

128

Total amount of profit from other businesses, etc.,
excluding fees and commissions and other profit, andgains and losses on government bonds (excluding
Market Management Division income and foreign
currency funding costs)

Asset management advice

133
12Year on Year+¥0.5B(+4.3%)

16
Income from financial solutions

71

77+¥0.5B (+7.3%) yoy

Increase in foreign exchange derivativetransactions for customers, businesssuccession and M&A

Income from asset
management advice
39

44

1H of FYE2023/3

1H of FYE2024/3+¥0.4B (+11.6%) yoy

increase in inheritance services such as
will trusts in addition to insurance andinvestment trusts
11Bank & Market Management DivisionEnd-balance of Securities
Domestic bonds

Foreign securities

StocksOther securities(¥100M)

24,834
4,084

+¥
171.7
B
26,551 Year on Year (+6.9%)
3,945
1,606

1,288
4,689

14,772

Excluding trading securities

6,503

14,495

Foreign securities+¥181.4B (+38.6%) yoy-

Domestic bonds-¥27.7B (-1.8%) yoy-

1H of FYE2023/3

Increased due to asset swap transactions,which combine bond purchases with interest
rate swaps to earn revenue while controllinginterest rate risk

Decreased due to a reduction in bond purchases
in preparation for higher interest rates andselling at a profit in response to market trends

1H of FYE2024/3
12

Bank & Market Management Division

Valuation Gains or Losses on Securities
Domestic bonds

Foreign securities(¥100M)

StocksOther securities-110

Valuation Gains or Losses on Securities+¥9.9B vs. FYE2023/3

-210

-

Valuation gains or losses on securities
improved due to significant recovery ofvaluation gains and losses on equity
backed by the rise in domestic stock
prices though valuation gains and losses
on domestic bonds worsened affectedby the rise in domestic interest rates-

All domestic bonds with remaining
maturity of 14 years or more have been
hedged with interest rate swaps-

Of the balance of ¥650.3 billion inforeign securities, ¥314.2 billion was for
asset swaps, and ¥131.7 billion was for
Ginnie Mae MBS that has still earned
profit margins at this time

719
496
0
- 158

- 299

- 326
- 371
- 224
FYE2023/3

Net unrealized gains (losses)
on domestic bonds and foreign
securities after deferred hedge
by interest rate swaps

- 155
1H of
FYE2024/3

13

Bank Division

Expenses
Taxes

Non-personnel expenses(¥100M)

Personnel expenses

287
17

291
19

Year on Year

Non-personnel expenses+¥0.4B (+3.9%) yoy
-

117

121

+¥0.3B(+1.2%)-

Increased due to the establishment of a corporate
portal site for businesses, and response to newbanknotes and security enhancement
Active investments to strengthen consulting
functions and contribute to customer convenience
while continuing strict cost control

Personnel expenses
152

149

-¥0.3B (-2.3%) yoy--

1H of FYE2023/3

1H of FYE2024/3

Decreased due to optimization of headcountaccompanying reduced operations resulting fromoffice integration and operational reforms (natural
decrease due to mandatory retirement,
optimization of hiring, etc.)
Investment in human resource development
increases every year while promoting cost
reduction
14

Bank Division

Non-performing Loan Ratio & Net Credit Cost
Non-performing
loan ratio

(%)

2.29

Net credit cost

Non-performing loan ratio

2.23-0.06 pt yoy(¥100M)

Net credit cost

21+¥0.4B yoy

17
-

-

1H of FYE2023/3

1H of FYE2024/3

Net credit cost increased due to the downgradingof large business partners outside theprefecture, but decreased ¥0.2B compared with
the PlanContinued to focus on supporting business
improvement and revitalization for business
partners through cooperation between Sales andCredit Divisions while closely monitoring highprices, yen’s depreciation, and other factors
15

FG’s Consolidated Capital Ratio
FG’s
Consolidated

(%)

10.46

10.21

International
standard
8%-0.25pt- FG’s consolidated capitalratio was maintained at a
sufficient level, exceeding
the national standard of
4% and the international
standard of 8%

Domestic
standard4%

1H of FYE2023/3

Year on Year

1H of FYE2024/3

16

Management Integration
Synergy (single fiscal year)
Synergies from Management Integration in a single fiscal year areprogressing faster than the initial plan (formulated in October 2018)
Synergy effect(Vs. FYE 2018/3 before Management
Integration)

1H of FYE March 2024
(single FY)
Result+¥3.9B(+¥0.9B vs. plan)

ResultVs. Plan+39+9Top-line Synergy

+19

-1

Cost Synergy

+33

+2

Negative Synergy

-13

+8

Breakdown(¥100M)<Details of Each Synergy>
Top-line Synergy

Cost Synergy

 Loans and bills
discounted and financial
solutions Asset management
advice Commission area, etc.

 Decrease in personnel
expenses Decrease in systemadministration costs
 Decrease in outsourcing
expenses, etc.

Negative Synergy

 Management
Integration
expenses17

Management Integration Synergy(cumulative)
Vs. FYE2018/3 before Management Integration
3 years after
establishmentof FG

5 years
after Bank
MergerFirst Medium-termManagement Plan

October 2018 – March 2021

Negative Synergy prevailed until Bank
MergerSecond Medium-termManagement Plan

to March 2026

April 2021 – March 2024

Positive Synergy was demonstrated after
Bank Merger¥22B+a bit more
expected

Blue bar graph (light blue: initial plan)

Synergy Effects (¥100M)

Synergy effects for single FY¥5.0B+abit more
170

Orange line graph (dashed lines for 1H of
FYE2024/3 and thereafter are estimates)

Cumulative synergy effects

1H of FYE2024/3+¥3.9B

Gray line graphInitial plan for cumulative synergy effects(+¥0.9B vs. plan)+96
67 +57

80

60

8
0

100

Annual plan

-22
-75

-23

-75

-68

FYE2019/3
2019/3期

FYE2020/3
2020/3期

Cumulative synergies turned positivein the 5th fiscal year since theManagement Integration-90
FYE2021/3
2021/3期

FYE2022/3
2022/3期

FYE2023/3
2023/3期

1H of2023/9期
FYE2024/3

FYE2025/3
2025/3期

FYE2026/3
2026/3期

18

Future Outlook for Management
Integration Expenses<Single fiscal year> Management Integration expenses (Negative Synergy)
Second Medium-term Management Plan(¥100M)

0

April 2021 – March 2024

FYE2021/3

FYE2022/3

FYE2023/3– March 2027

FYE2025/3

FYE2026/3

FYE2027/3

of which,
depreciation

Result-¥2.9BFYE2024/3(Next Medium-term Management Plan)

Result-¥3.1B

Result-¥6.7B
Depreciation expenses
for Management
Integration expenses are
expected to decreasesignificantly in
FYE2027/3

19

Earnings Forecast for Fiscal Year Ending
March 2024
The interim period results exceeded initial forecasts and the progress of FG
consolidated profit was steady at 68%
However, due to increasing uncertainty with the global economic situation amid
the heightening tension of geopolitical risks and uncertainty about future domestic
economic and financial market developments such as the tightening of monetary
policy in the West to curb inflation, the full-year forecast will remain unchanged
from the initial published value
FG’s Consolidated(¥100M)FYE 2024/3
Forecast

Progress rate
1H of FYE2024/3
against forecasts
resultOrdinary profit(Interim) Profit** (Interim) Profit attributable to owners of parent

Bank Non-consolidated(¥100M)FYE 2024/3
Forecast

Progress rate
1H of FYE2024/3
against forecasts
resultCore business profit
Ordinary profit(Interim) Profit
20

Plan period: 2021/4 to 2024/3

Second Medium-termManagement Plan
Demonstration ofThree Major Synergies

21

Demonstration ofThree Major Synergies

Sustainable Growth Initiatives by Daishi
Hokuetsu Financial GroupFirst Medium-term Management Plan

Second Medium-term Management Plan

— Building a Foundation for Maximum Synergy—A New Stage of Achieving Merger Results

1Management
Integration

Top-priority Themes

through the Management➔ Created
Integration of Daishi Bank andHokuetsu Bank

October 2018

Management integration by
the regional banks with No.
1 and No. 2 market sharesin the same prefecture,
ahead of any other bank in
the country

January 2021
Bank merger, birthof a new bank,integration ofsystemadministration

Demonstration of Synergy Effects

1

Merger Synergy

OfficeIntegration

Into strategic
areas
Reassignment of
personnel

Operation
ReformStreamliningof HQ

Cost reduction
and investment
in strategic
areas

Sharing ofknow-how2
Relationship of trust withcustomers built over 140 years

Expansionof businessareas

Use ofGroupfunctions

Banks’➔ Regional
Collaboration Framework
October 2015–

3

Productivity
Improvement

December
2021–

Overwhelmingly
popular financial
and information
services Group
Creation of new value throughfinancial and informationintermediary functions

Strengthen
consulting
functions
Strengthen GroupManagement
Framework

TSUBASA Partnership
Synergy
Main engine toaccelerateinnovation

Vision ofDaishi Hokuetsu FG

Improvement ofmanagement efficiency

Group SynergyNewbusiness

2 TSUBASA Alliance

Strengthen
consulting
functions

Toward Sustainable
GrowthPursuit of Topline Synergy

A lastingcontribution to
the regional
development

Pursuit of costsynergy22

Demonstration ofThree Major Synergies

Generation of Workforce
and Reassignment

MergerSynergy

Strengthen sales capabilities throughreallocation of Group management resources[Second Medium-term Management Plan] Three-year cumulative planfor generation of workforce and reassignment
Cumulative total

Approx.

(Cumulative total from the time of bank merger inJanuary 2021 to FYE 2024/3)

880 people
Operation
Reform ofSales Offices
Approx. 240
peopleStreamlining of
HQ
Approx. 270
peopleOfficeIntegration
Approx. 370
peopleCumulative results for 1H of FYE2024/3<Second Medium-term Management Plan, 1H of Final Year>

Cumulative total

Optimizationof
workforce
Approx.
450 people

Reassignment
to strategic
areas
Cumulative total

Approx.

430 people
Personnel-matching,etc. with business
partner companies
Approx. 100 people
Group Company Division
Approx. 60 people

Bank Division
Approx. 280
peopleWorkforce
No. of reassigned
FYEFYE2024/3
2024/3Plan*personnel
generated
Plan**Due to fractions, the breakdown does not equal the total.

Progress
Approx.
800 people rate: 90%
Operation Reformof Sales Offices
Optimization
Approx. 250
of workforce
peopleApprox. 370
peopleStreamlining of
HQ
Approx. 200
peopleSteadyprogress
Cumulative total

Approx.
430 people
Personnel-matching,etc. with business
partner companies
Approx. 80 people
Group Company Division
Approx. 60 people

Bank
Division
Approx. 290
peopleOffice Integration
Approx. 350
peopleWorkforce
generated

1H of
FYE2024/3*

No. of reassigned
personnel

23

Strengthen Face-to-face Channel

Demonstration of Consulting
Function
Shift of Personnel to Sales Division to Fulfill
Consulting Function
Demonstration ofThree Major Synergies

Bank
Division

Changes in the number of
employees at sales offices(approximate numbers)

First Medium-termManagement Plan

(Persons)

2,480*(Including personnel stationed atsales offices affiliated with HQ)Second Medium-term Management Plan

Managers

Administrative
staff

Sales staff➔ Increased sales staff while optimizing headcount

400
(16%)

2,110
320
(15%)

1,230
(49%)

780
(37%)

2,050
320
(15%)
720
(35%)

Sales staff
increased

860
(34%)

January 2021 At thetime of Bank Merger

MergerSynergy

1,000
(47%)

1,000
(48%)

September 2023

March 2024 Plan

*Due to fractions, the breakdown does not equal the total.

Enhance the number of consulting
personnel
Assigned HQ specialists stationed atsales offices to main block offices

Total

75

Approx.
people(Pre-Merger + Approx.
45 people)

Senior Consultant(Branch Manager
level)
Individual
Corporate
CMCM
CM: Consultant Manager

Assigned consulting promotion
leaders at each branch

Sustainability
Promotion Officer(Newly establishedin FY2021)
Total of Approx.
220 people
New!
Sales Office
Corporate
Consultant
Consulting Leader
Manager(Newly established in(Expanded target
FY2023)
offices for FY2021)
Total of Approx.
Total of Approx.
110 people
100 people

24

Strengthen Face-to-face Channel

Demonstration of Consulting
Function

Demonstration ofThree Major Synergies

MergerSynergy

Development of bases for demonstration of consulting
functions
Strengthen consulting functions by consolidating
sales bases

Enhance cooperation by consolidating Group sales
bases

New!

Relocated and consolidated sales bases of Group
companies(Nagaoka City, Niigata Prefecture in July)

Expand functions of personal consultation bases

Enhancing the functions of Consulting Plaza
New!

Relocated and consolidated Niigata Consulting
Plaza(Niigata City, Niigata Prefecture in September) Relocated and consolidated two Consulting Plazas in Niigata andDekijima
 Established a new asset management consultation booth “Money
Plan Lab”
 Respond to a wide range of customer needs according to their life
eventsGroup companies that have been
relocated or consolidated

 Nagaoka Head OfficeBusiness Division, etc.
 Head Office and Main OfficeBusiness Division, etc.

 Nagaoka Branch Head OfficeStrengthen sales structure to reinforce comprehensive
consulting sales
New!

Expand the area system at bank sales offices(Kashiwazaki City, Niigata Prefecture in October,
Joetsu City, Niigata Prefecture in November)

Kashiwazaki Area

Takada Sales
Department Area

Core officeCore office

24 areas

3 sales offices

4 sales offices(As of November 2023)

No. of area systems
implemented

Introduce a new type of office
New! Introduced cashless labor-saving offices(Joetsu City, Niigata Prefecture in November) Provide one-stop services including
administrative procedures andfinancial services as the office moved
to the municipal building Support for asset management
consultation through the installationof a web-based interview system
25

Strengthen Face-to-face Channel
Demonstration ofThree Major Synergies

Demonstration of Consulting
Function

MergerSynergy

Initiative Aimed at Maximizing Consulting Function-1
Enhance consulting functions through expansion ofsales and customer base

M&A and business succession income(¥1M)

Expand business domains by reallocating
management resources

Average balance of business loans*Before partial direct write-offs(¥100M)

512

Year on Year64%+

29,705

Year on Year28,121(Outside Niigata
Prefecture)5%+(Outside Niigata
Prefecture)

12,753

11,076311+201(Within Niigata
Prefecture)+1,58517,045

1H of FYE2023/3

1H of FYE2024/3

Utilization of FG network expanded throughmanagement integration➔ Established an equity business line
(April 2023)

Daishi Hokuetsu CapitalPartners➔ Originated “No. 2 Daishi Hokuetsu
Regional Revitalization Initiatives Fund”(April 2023)

Outside experts,
etc.

16,952

1H of FYE2023/3

1H of FYE2024/3

Reinforce collaboration within and outside theprefecture by strengthening HQ functions

Sales HQ, Tokyo Office➔ (Stationed at the Tokyo
Branch building)Niigata Regional
Finance M&A
Alliance (Secretariat:
the Bank)(Within Niigata
Prefecture)

Businessloan
financingsolutionsNo. of personnel: 10(5 HQ personnel stationed
at other branch offices
outside Niigata Prefecture)

Structured
Finance

TSUBASA
Partnership

etc

26

Strengthen Face-to-face Channel

Demonstration of Consulting
Function

Demonstration ofThree Major Synergies

MergerSynergy

Initiative Aimed at Maximizing Consulting
Function-2
Enhance asset management and succession consulting

Income from investment trust & insurance(¥1M)

Year on Year
3,568

4,104

15%

Number of cases of trust business handledWill trust, legacy services, living trust, etc.

(Cases)

35%

+

418

+535

1H of FYE2023/3+147

1H of FYE2023/3

1H of FYE2024/3

Launched “Selected NISA Plan”(July 2023)

No. of NISA
accounts(As of the end of June 2023)

New!

Regional banks
Ranked8th

Offering 10 carefully
selected products eligible
for the new NISA
program

Source: Nikkin Investment Trust information(as of September 4, 2023)

Launched “Online application for individual-typedefined contribution pension plan (iDeCo)”(November 2023)

1H of FYE2024/3

know-how sharing, and human asset
development aimed at improving skills

Expand products and services
New!

565

Year on Year+

(Major corresponding segments)(Corporate owners/Wealth

Skill Rank

(%)

Gold
segment)
Silver (Semi-wealth segment)
Bronze (Asset formation segment)

7

9

Beginning

49 of FY2023

Support is also
provided by HQ
specialists
Individual
CM

42

45

1H of
FY202346
27

Non-face-to-face Channel Enhancement

MergerSynergy

Promotion of DX

Demonstration ofThree Major Synergies(Digital Transformation)

Enhancing Customer Convenience and Consulting
through DX-1
Improve customer convenience by expanding services
and functions
Changes in the number of Daishi Hokuetsu IDs(individuals) (approximate)
Expanded customer bases via
Management Integration

Efficiency and consulting capabilities improvement throughDX

235,400

Web-basedinterview system
No. of applications

Smartphone app

Daishi Hokuetsu Little Bank
Started in January 2021

Expansion offunctionscases

Expansion offunctions(2023/11)(1H of FY2023)(2022/10)➔ Payment services➔ Borrowing/repay including bankment services for transfer +bank transfer +taxes/utilities
card loan

4,100
2019/3

3,880

New!

(Cases)2020/32021/12022/102023/9(Introduced in November 2022)

Web-based acceptance offormal mortgage loan
applications available
Trends in average balance of
housing loans(¥100M)- Key Features -1H of FYE2023/3 1H of FYE2024/3

Web-based interview
system➔ Increased the number of visits andnew disbursements due to therealization of integrated sales andfinancing operations

companies

13,289+487+3.8%(Consultation)
Personal loan
Inheritance andtrust business

Sales
officeIntroduced in all
branches except
satellite offices(March 2023)

Portal site for businesses
Launch of CONNECT-BIZ (April 2023)
Changes in the number ofsubscription companies(Cumulative total)
741➔

12,801

Specialist“LiNK” sales/loan
support system

Launch of “My Page” web services for individuals(April 2023)
Build web pages dedicatedto each customer

Remotereception

Service- Optional Features - started“Mikatano Series”

 Safety confirmation
 Benefits
 Internal bulletin board  Improving internal
operational efficiency
 Group messages
 Cash management
 Invoice management(2023/4)

April

September28

Demonstration ofThree Major Synergies

MergerSynergyNon-face-to-face Channel Enhancement

Promotion of DX(Digital Transformation)

Enhancing Customer Convenience and Consulting
through DX-2
Initiatives to promote DX of business partners
Implementing “DX All Branch Campaign” to promote
DX for customers
Productivity
No. of customer needs identified

Strengthen efforts to promote DX across the region(Period: 2022/10 to 2023/9)
Cumulative total of more

Niigata DX Promotion Platform

than

3,600

Of which, 2,200
contracts have beenconcluded in total

Improvement

Breakdown32
by need68(%)

Group companies
Cooperation

 GA & HR
 Accounting
 Sales Admin

Representative
agencyetc

 Promotion of electronicbanking (EB) Electronic payment

etc

Obtained “Certified DX Operator”
from the Ministry of Economy,
Trade and Industry (November 2022)

people(As of September 2023)

Industry

Academia

Financial

Government

Adopted for the Ministry of Economy, Trade and Industry“Project to Develop Regional DX Promotion
Environment” (Cyber Security Measures ExpansionType) (FY2022 amendment)(April 2023)
 Cybersecurity vulnerability diagnosis
 Advice for improving cybersecurity training

etc

Consigned by Niigata Prefecture (FY

New! 2023) for the “DX Promotion Awareness
Reform Support Operations” (July 2023)

AcquiredNew!
“Smart SME Supporter”
certification of the Ministry of
Economy, Trade and Industry(September 2023)

Targets of Second Mediumterm Management Plan
Cumulative total over
1,000

Cooperation

Each Daishi Hokuetsu
FG Group company

Digitalization(Cumulative total)

1,126

Members

Regional trading
company

Strengthen IT personnel development and promotion
systemNo. of IT Passportqualification holders

Bridge Niigata, a regional trading company

 Seminars and training for financial institution staff
and commercial and industrial organizations
etc

New!

Entered into a “Purchasing Service”
agreement with local governments in
Niigata Prefecture (September 2023)

Initiatives in
the Card
Business

 A service that promotes business efficiency byconsolidating payments for utility bills and expenses
into card settlement without issuing a card29

Demonstration of Cost Synergy

MergerSynergy

Cost Management &Optimization of Workforce

Demonstration ofThree Major Synergies

Strengthen management structure throughoptimization of management resources
Consolidated OHRFirst Medium-termManagement Plan(%)

Second Medium-term Management Plan

Post-Bank Merger
-16pt

84.7

68.5

Structural Reform & DX
Promotion Committee

1H of
FYE2024/3
65.2%
On track➔ Strict cost control + Strategic investment
Chairperson:
President

65.5

Structural Reform
Promotion Office71.2
Subcommittees & HQ departments
FYE2021/3

Bank
Division

FYE2022/3

Initiatives to integrate offices(changes in the number of offices)* No. of real offices (excluding in-office offices and Internet
branches, etc.)

First Medium-termManagement Plan

Second Medium-term Management Plan

(Office)

201

FYE2023/3

January 2021 At thetime of Bank Merger

Optimizing the number of personnel(changes in headcount)Bank
Division(Approximate)First Medium-termManagement Plan

(Persons)

Officeintegration in
50 bases wascompleted
Post-Bank
Merger25%
decrease

FYE2024/3 Plan

5,100

151

148

September 2023

March 2024 Plan

Second Medium-term Management Plan
Bank staff
Total no. of personnel (including staff, etc.)

Post-Bank
Merger
10% decrease 4,400

3,500January 2021 At thetime of Bank Merger

4,300

3,150

3,100

September 2023*
March 2024 Plan

* Excluding the impact of integrating Daishi Computer Service in October 2023

30

Demonstration ofThree Major Synergies

Transition to GroupManagement Framework

Group
SynergyGroup Reorganization and Business Domain
Expansion Initiatives
October 2023 to

October 2018 (when FG was established)
Daishi Hokuetsu FG
Daishi Bank

Subsidiaries

Hokuetsu Bank

Subsidiaries

Daishi Hokuetsu FG
New!

Bank

Daishi Hokuetsu Bank
Leasing

Securities

New!

Completion of Group
Restructuring under Second
Medium-term Management Plan
(October 2023)

FG and consolidated subsidiaries
including bank subsidiaries

15-company
framework

Creditguarantee

October 2023
Integrated into the
Bank (succession)

SystemHokuetsu Lease

Daishi Computer
Service

Daishi Guaranty/ Hokuetsu
Credit Guarantee

Daishi Hokuetsu Securities

LeasingEnhance IT
personnel in thebanking sector
to strengthen inhouse systemmanufacturing
capabilities

Daishi Hokuetsu Lease

Fund Management

Daishi Hokuetsu Capital Partners
Card
Daishi JCB Card/Daishi DC Card/Hokuetsu Card
Staffing

Daishi Hokuetsu Career Bridge
Consulting &research

Daishi Hokuetsu Research & Consulting

Non-financial
area

Daishi Hokuetsu IT Solutions
Regional trading
company

Bridge Niigata➔

Financial area

System➔Business areas

April 2023
Became 100% subsidiary of FG
April 2023
Became an FG
consolidated subsidiary31

Demonstration ofThree Major Synergies

Strengthen collaboration in
the GroupStrengthen collaboration to exert
Consulting Functions

Strengthen “double-track” collaboration

Group
Companies(Persons)

Banking as a hub forcollaboration
Collaboration among
Group Companies<Reassignment of personnel>

Bank

Bank & Corporate Sales Staff(FY2022 to)No. of skill level holders

Develop and strengthen human resources capable ofmaking complex proposals by utilizing Group functions

Group
companies
cooperate witheach otherGroup
Companies

172

Qualification
holders
+244

25
451

(September 2023)

Customers

Intragroup sharing
Group
Companies

Services

Informationsharing

FG HQ

173

695

474

60

Launched the Toss-Up System of Customer
New!
Needs Information

Needs

48

254

Personnel
reassigned:
Strategic Approx.
personnel

Develop a
Group-widesystem to
identify andshare customer
needs

Develop human resources tostrengthen Group collaboration
Personnel for Group
collaboration

Full utilization of GroupfunctionsGroup
Companies

Group
SynergyGroup
Companies

September 2023

September 2022
Level 1
Sufficientunderstanding of the
products and servicesof each Group
company

Level 2Able to properly
introduce Groupfunctions tocustomers’ emerging
needs

Level 3Able to properly
introduce Groupfunctions to customers’potential needs

Measures to improve the skill level

 Long- and short-term trainee system (from the Bank togroup companies)
 Various training sessions, video training, andetc
e-learning

32

Demonstration ofThree Major Synergies

Strengthen collaboration in
the GroupGroup
Synergy

Initiatives to exert Group Synergy
Securities Balance of assets undercustody(¥100M)

Securities

Number of customers
subscribing to investment trusts(Client)(¥100M)

4,580
3,933

+646
+16%

1H of FYE2023/3
SystemBusiness+2,085+49%

4,184

1H of FYE2024/3

1H of FYE2023/3

System division profit

Card
Business580

1H of FYE2024/3

Accumulated number offranchisees acquired(Franchisees) *FY2021 to date(¥1M)
Daishi Hokuetsu IT
Solutions
Became 100% subsidiaryof FG (2023/4)

12

104

Increased due+91
to inclusion of+758% a consolidated
subsidiary

1H of FYE2023/3

1H of FYE2024/3

629

6,269

Balanceincreased
steadilyInterim Profit attributable toowners of parent

Balance of leased
assets

Leasing+48+8%

1H of FYE2023/3
Consulting
Business

1H of FYE2024/3

Consulting fee by Daishi Hokuetsu
Research & Consulting

(¥1M)

1,646
+647
+64%

Balanceincreased
steadily

70

+3
+4%

73

999

1H of FYE2023/3

1H of FYE2024/3

1H of FYE2023/3

1H of FYE2024/3 33

Regional Trading Company
and Staffing Agency

Demonstration ofThree Major Synergies
Regional trading
company

Bridge Niigata(Established in 2019)

Personnel-matching business

Sales channel development business

Bridge Niigata

Daishi Hokuetsu Career Bridge

Staffing(Established in 2019)

Antenna ShopGroup
Synergy

Own EC site

Online Shopping Staffing agency business Personnel-matching support
 Personnel-matching support
for dual/side jobs

No. of decisions
No. ofconsultations
Cumulative total Cumulative total

1,612(Period: October 2019
to September 2023)

Personnel development
solution business Cumulative total number of companies offering products: 599(+67 yoy) Sales of Antenna Shop increased 8.2% yoy (1H of FYE 2024/3)

TopicsNew!

Consigned by Niigata Prefecture for the“Support Operations for Prefectural ProductMarketing Channel Development in Vietnam”(FY2023) (June 2023)– Organized sales channel development seminars,
exhibitions, matching, etc.
Tourism promotion business Provision of multilingual translation tools
 Proposal and joint implementation of tourism promotion
measures for various organizations, etc.
Productivity enhancement☞ See page 29 (described inbusiness
DX support)

415

 Seminar on personnel development forcompanies in the prefecture held jointlywith FG Group companies
Total number of No. of individual training
participants in HR
sessions tailored todevelopment
issues unique to eachsupport program
company
Exceeded

1,300 people

Exceeded 40
sessions

1H of FYE2024/3

1H of FYE2024/3

TopicsNew!

Consigned by Niigata Prefecture for the“Project for Development of Women and Next
Generation General Managers” (FY2023)(August 2023)– Corporate management and women who
are active in promoting women's careers
Organized manager training

34

Demonstration ofThree Major Synergies

TSUBASA Partnership
Synergy

Regional Banks’ Collaboration
Framework

Fly with the region into the
futureSynergies from Daishi
Hokuetsu Bank
Collaboration
2015/10 to 2023/9

Cumulative total¥

Number ofparticipating banks

Total asset balance ofparticipating banks

10 banks

Exceeded
trillion yen(As of September
2023)

12.1B

96

(Consolidated basis for
1H of FYE 2024/3)

Head Officelocations
Office locations

Leveraging the strengths in economies
of scale and information-sharing
through the largest wide-area alliance ofregional banks

Top-line
Synergy

Cost
Synergy

Informationsharing...And others

35

Demonstration ofThree Major Synergies

TSUBASA Partnership
Measures

TSUBASA
Partnership
Synergy

Expansion of new business domains
2015
2016

Launch of TSUBASA Alliance (October 2015)
 Inaugurated by three banks (our bank, Chiba,
and Chugoku) Establishment of T&I Innovation Center Inheritance-related business alliance2017

 Sharing of mission-critical systems

2018 Agreed to share administrative divisions (ourbank, Chiba) Launch of TSUBASA FinTech common platform Introduction of TSUBASA Smile

2019
2020

2021
2022
2023

 SDGs Declaration
 M&A comprehensive collaboration
 Business alliance in the field of foreign exchange
derivatives (our bank, Toho) Establishment of TSUBASA Alliance Co., Ltd. andAnti-Money Laundering Center in the company
 Establishment of Business Strategy Dept. in
TSUBASA Alliance Co., Ltd.
 Gunma-Daishi Hokuetsu Alliance launched(December 2021)
 Establishment and start of operation of ONAD Co.,
Ltd. (our bank, Chiba, Chugoku) Establishment of Diversity & Inclusion Declaration
 Opened Website of
TSUBASA Alliance Co.,
Ltd. (October)New!
You can see
it here.

New!

Introduced TSUBASA general-purpose
paperless system(September 2023)

 Realization of digitalized, paperless processing after receivingon the counter reception system “TSUBASA Smile”

Transportation,
storage, etc.

After reception
Beforeintroduction

Reception

Transport ofpaper
Safekeepingof paperApproved andrecorded withpaper and seal

After
introduction▲ TSUBASA Smilededicated terminals
allow for seal-less andpaperless procedures

Makes itpossible tosave data
and work
remotely

On-screen
approval andrecordingNew!
Established TSUBASA-AML Center Co., Ltd.

(November 2023)

 Established a joint venture for the joint operationof anti-money laundering and anti-terrorist
financing measures (scheduled to commence
operations in the second half of FY2024)

NomuraResearch
Institute

Joint implementation of important themescommon to each bank

 Joint structuring of Sustainability-linked Loan

36

Demonstration ofThree Major Synergies

Gunma-Daishi
Hokuetsu Alliance

TSUBASA
Partnership
Synergy

Collaboration leveraging geographicalcharacteristics of adjacent business areas
Joint use of offices

New!

Relocation of Daishi Hokuetsu Bank offices toGunma Bank offices[Part 1] Takasaki

 Ikebukuro Branch of the
Branch of the Bank
moved to Gunma
Bank will move to Gunma
Bank offices in January 2024 Bank offices inMarch 2023

Key Partnership Areas
Regional
revitalization& tourismpromotion

Corporate
solutionsAssetmanagement

Personnel
development

Effective useof real estate

Ikebukuro Relocation
BranchThe Bank
will moveto the 8th
floor

Ikebukuro
Building

etc
Collaboration effect (Synergies)
Aggregate of the twobanks
Cumulative basis

Alliance launched in
December 2021

57(¥100M)

Estimated
122

Joint planning of products and services New!
SDGs Private Placement Bond “Green & Food Support
Private Placement Bond 2”

67

Cumulative 5year total+¥10B
exceeded(July 2023 to March 2024)

Financially support private
placement issuers
Provided food and monetary donations
to Niigata and Gunma prefecturesusing a portion of commission received
from the issuing companies

15
December2020 to FYEMarch 2022

▲ Appearance of the building

FYE2023/3

1H of
FYE2024/3

FYE2027/3

 Contributing to theachievement of SDGs

37

Plan period: 2021/4 to 2024/3

Second Medium-termManagement Plan
Enhancement of
Human Capital
Value

38

Enhancementof Human
Capital Value

Practice of Human Capital Management
Initiatives to Enhance Human Capital ValueFirst Medium-termManagement Plan

Second Medium-term Management Plan

January 2021
Started a new personnel
system in conjunction withBank Merger
Basic policy of the new personnel
system(1) Fair evaluation(2) Clarify evaluation criteria andsupport for growth(3) Build a diverse humanresource base(4) Promote organizational
harmony(5) Optimize personnel expenses

toFY2020

FY2021

Basic
Strategy III

April 2023

Changed to “Practice ofhuman capital management”
October 2021

Established “Expert System”(Professional humanresources)
March 2023

(Trust-type Employee Shareholding
Incentive Plan)

Introduced “Sidejob/Dual-employment
Program”

FY2022

New!

November 2023
Introduced “E-Ship(R)”July 2023

Raised wages

FY2023
New! June 2023

April 2021
Since 2009, we havefocused on humanresource strategies, using
the Chinese character ”財(zai, wealth)” in humanresources instead of “材 (zai,material).”Established “Human Resource
Development Policy” and “Internal
Environment Development Policy”

Established Harmony
November 2022
Promotion Office
Introduced “Flextime System”

Integration

Initiatives to strengthen
Enhancehumanresource
management

May 2023

Established “Human
Capital Strategy Office”

Ensurediversity andpromoteactiveparticipation
Strengthen
engagement

Improveconsulting
capabilities
Reinforce
HealthManagement
Framework

39

Enhancementof Human
Capital Value

Improve Employee Engagement andHuman Resource Development

HR development aimed atdemonstration of consulting functions

Initiatives to improve employee
engagement
Dialogue & exchange between management
and staff
Dialogue and exchange
meetings with officers

Briefing for managers by
the President

Participated in by approx.
14,000 people at a totalof approx. 580
venuesParticipated in byapprox. 1,100 people
at a total of approx. 26
sessions

Cross-organizational projects
2030 Project“Isshi Koryukai”

Briefing for young employeesby the President“Isshi Koryukai Next”
Approx. 60 people
participated in a
total of 2 sessions

 Promoting the “2030 Project,” in which young

employees are leading the study of what the Company
will look like in 2030 (from FY2021)

20 new participants inyear 3(Cumulative total ofparticipants)
71◀ View of theworkshop

Project Team for Human Capital
Value Enhancementetc Organized a cross-organizational project team consisting
18 staff areparticipatingof HQ and sales staff to improve practical skills andexpertise (August 2023)➔ Aims at improving capabilities through initiatives forregional revitalization

Securing and developing professional human resources▲View of “Isshi Koryukai Next”

Realizing theManagement
Philosophy➔

Second Medium-term Management Plan
Slogan for All Officers and Employees of
the Group

The slogan, “We Are One,”
implies that all officers andemployees are committed tomaking a lasting contribution
to the communities by uniting
their “aspirations,” a strong
desire to realize ourManagement Philosophy.

FP Grade 1

Number of
major
qualification
holders(September 2023)

194

Small and Medium
Enterprises Management Sustainability
proficiency test
Consultant

48

1,157

Securities
AnalystIT Coordinator

Information
Security
Management

49

15

107
etc 40Diversity and HealthManagement
Initiatives to ensure
diversity

Enhancementof Human
Capital Value

Daishi
Hokuetsu Bank

Increase the ratio of women in management
positions (deputy level and above)

Promote the creation of a work environment thatenables employees to exert their full potential
Certified for “Health and productivity
Management Outstanding Organization
2023” (March 2023)

Daishi Hokuetsu FG
Daishi Hokuetsu
Bank

Six consecutive years

25.3%

26.0%

2023/92024/3 Planof accreditation➔ The Bank is the only
accredited company in
Niigata Prefecture

Improvement in the acquisition rate of Childcare Leave

Certified for “Platinum KuruminPlus” and “Platinum L-boshi”(May 2023)

Daishi
Hokuetsu Bank

* Proportion of the “Number of employees who took childcare leave” to the “Number of
employees who gave birth and their spouses” in each fiscal year

All

97.3%

Acquired bothcertifications➔ The Bank is the only
accredited company
in Niigata Prefecture

Overall:
100% ormore

2024/3 Plan
2023/9Promotion of active roles played by diverse humanresources
No. of users of the Side
Number of experienced
job/Dual-employment Program
hires(March 2023–)
Sports
Deputy class
instructors forand above
schools, etc.,
54.7%
business support

53(As of the end of September 2023)

18

in total

for local
companies, etc.

(As of the end of September 2023)

Certified for “Sports Yell
Company 2023”(February 2023)

Daishi
Hokuetsu Bank

Providing athletic
opportunities to
employees
Health awarenessraising support for
employees

41Plan period: 2021/4 to 2024/3

Second Medium-termManagement Plan
Sustainability
Initiatives

42

Daishi Hokuetsu FG Sustainability
Initiative Policy■

Based on the Sustainability Basic Policy, we will aggressively and proactively tackle Four Priority Tasks andcontribute to the realization of a sustainable society“Daishi Hokuetsu Financial Group Sustainability Basic Policy”
Four Priority
Tasks

Address
1
Regional Issues

2

Address
Environmental
Issues3

Build Trust ofSociety

Maximize financial andinformation intermediaryfunctions leveraging Group’s
comprehensive strengths

Support forresolving
regional andcustomers’
challenges

Practicing Sustainability
Management

FG’s own
Sustainability
Initiatives,
including CO2
reduction

Further promote
initiatives across regions
by returning know-how andexpertise gained throughour own initiatives to local
communities

4

Develop Talented
People and Improve
Workplace
Environment

Maintain and improve
environment and society
as basis of our businessEconomic and sustainablegrowth of corporate
activities

Aggressive and proactive
Group-wide initiatives
H1

Second Medium-term Management Plan
Major Efforts to Strengthen Initiative Policy and Structure

H1

 Endorsement of TCFD Recommendations
 Establishment of “Sustainability Promotion Committee” and“Sustainability Promotion Office”
 Initiatives on Ministry of the Environment “FY2021 ESG Community
Finance Promotion Project”

H2
 Formulation of the “Sustainability Basic Policy”
 Initiatives on the Ministry of the Environment“Support Project for Scenario Analysis Pilot
Program on Climate Risks and Opportunities inline with TCFD Recommendations”

FY2021

FY2022

 Added “Practicing Sustainability Management” to the basic strategy of theMedium-Term Management Plan Formulation of “Investment & Financing Policies that consider Environment andSociety”
 “Sustainable Finance Targets” and “CO2 Emissions Reduction Target” established President appointed to the Board of “SDGs Niigata”
 “Declaration on Building Partnerships” announced
 Initiatives on Ministry of the Environment “FY2022 ESG Community Finance
Promotion Project”
 Introduction of environmentally friendly offices
 Introduction of carbon-neutral city gas
H2 Announcement of the “2050 Carbon Neutral
Declaration”

FY202343

Daishi Hokuetsu FG Initiatives
Daishi Hokuetsu FG’s own initiatives to achievesustainability
PDCA through Sustainability Promotion
Committee

 The Sustainability
Promotion Committee,
which is chaired by FG
President and consists ofGroup companies, runs
PDCA across organizations

The Committee
has five
subcommittees

Sustainability Promotion
Committee
Chairperson: FG President

CO2 emissions reduction targets &achievements( t-CO2 )CO2 emissions*(Vs. FY2013)

16,797-34.9%

Regional Business Promotion
Subcommittee

Annual forecasts
reflecting theinterim results

CO2 Reduction Subcommittee

Reduction of mid50% level-65%
10,937

BCM* Subcommittee

Initiatives for
TCFD
Recommendations

Development ofsustainability
strategies

etc

Geopolitical Risk Management
Subcommittee
Human Capital Value
Enhancement Subcommittee

Carbonneutral* Business Continuity Management

Participation in the GX League (May 2023)
 Joining the “GX League,” whichaims to transform the entire
socioeconomic system toachieve carbon neutrality

FY2013

FY2021

FY2022

FY2030 Target

FG’s initiatives to reduce CO2 emissions
Energy-saving
efforts in offices

Introduction of
EVs

Vs. FY2013

Introduction ofrenewableenergy-derived
CO2-free electricity

etc

65% reduction(Scopes 1&2)

FY2023

FY2030FY2050FY2050 Target

Realization ofcarbonneutrality* Figures are revised retrospectively in line with the inclusionof Daishi Hokuetsu IT Solutions and Bridge Niigata in FG’s
consolidated subsidiaries (April 2023)

44

Initiatives to Resolve Challenges ofRegions and Customers
Initiatives to promote sustainability and SDGs-1
Sustainable finance targets &achievements(¥100M)

Cumulative total of executedamounts for Sustainable Finance

FY2030 Target
FY2021 Cumulative total of
executed amounts

Absorption of knowledge & know-how

15,000of which, forenvironment

Adopted for the Ministry of the Environment“FY2023 Practical Engagement Program Basedon TCFD for Regional Financial Institutions”(July 2023)

New!

 Achieve regional decarbonization by
returning knowledge and know-how gained
through participation in programs to customers¥1.0 trillion¥1.5 Trillion<Program details>
Developmentof
engagement
strategies

3,172

Engagement

Preparationof proposals
forcompanies toengage with

2,446

Expansion of product lineup

901
FY2021

FY2022

1H of
FY2023

FY2030
Expanding to

Cumulative total by 1H of FY2023
Finance toresolveenvironmen
tal andsocial issues

Total¥317.2B

Loan¥300.3B

Investment¥13.7B

Leasing¥3.2B

6 sustainable financeproducts








Positive Impact Finance
Sustainability Linked FinanceSDGs-linked Finance
SDGs Support Loan
Sustainability Finance
SDGs Green Finance

New!
Adopted for the third
consecutive year

Adopted as a designated leasing
company for Ministry of theEnvironment “FY2023 ESG Lease
Promotion Project” (June 2023)

45

Initiatives to Resolve Challenges ofRegions and Customers
Initiatives to promote sustainability and SDGs-2
Provide products and services that
contribute to local communities
Return profits to local communities through donationbased products and services

Strengthen cooperation with local
communities
Entered into comprehensive partnershipagreement with local government (June 2023)


Initiatives for donation-based
private placement bonds(2013 -)

 Continuing to work on
donation-based private
Accumulated donations
placement bonds in whichsome of the commissions
987 organizations in total
received from the issuing
Approx. ¥203M
companies are donated to
Niigata Prefecture,(Period: September 2013
municipalities and educational
to September 2023)
institutions

Initiatives for donation-based
investment trusts(2019 -)
 Continuing to work on
donation-based investment
trusts in which part of theinvestment and management
costs borne by customers is
donated to Niigata Prefecture
and welfare organizations

Target products
Niigata Future Japan StockFund (nicknamed Niigata no
Kakehashi (Bridge to Niigata))( May 2019 -)We entered into a comprehensive partnership agreement withthe aim of realizing a sustainable community by multiplying
mutual strengths with the cooperation of industry, academia,
government and finance in the Sanjo area of Niigata Prefecture

Industry

Sanjo Chamber ofCommerce and Industry

Government

Sanjo City

Academia

Sanjo City University

Financial

Daishi Hokuetsu FG▲ At the conclusion of thepartnership agreement

Initiatives to develop and support local communities
Donations to Niigata University, aNational University Corporation,
Celebrating its 75th Anniversary
for the development of the next
generation of human resources

Accumulated
donations
Approx. ¥New!

(February 2023)

72M

Donation to Niigata
Prefecture as support to New!
recover from severe
drought damage(September 2023)(Period: May 2019 to September 2023)
Niigata Future Global Stock Fund(nicknamed Glocal Niigata)

New!

( July 2023 -)▲ Presentation ceremony▲ Presentation ceremony46

Initiatives to Resolve Challenges ofRegions and Customers
Communication with Local Communities to Contributeto the Community
Scholarship benefits provided by the Daishi Hokuetsu
Scholarship Association

Volunteer activities by the Daishi Hokuetsu Magokoro
Association“Daishi Hokuetsu Scholarship
Association”

Organization operated through voluntary
participation and donations fromexecutives and employees“Daishi Hokuetsu Magokoro Association”(1962 -)➔ Offers non-repayable scholarships
to young people with outstanding
academic records who are unable
to attend university for financial
reasons Number of students
granted scholarships(Cumulative total)(1993 -)➔ Participates in volunteer activities fornature conservation in Niigata
Prefecture and donates toenvironmental protection and social
welfare organizations

 Weeding volunteer of the“Rice Terrace Future Support
Team” in Niigata Prefecture Participated in the “Ibis
Conservation Volunteer
Program” in Niigata
Prefecture

1,276 people(Period: FY1962 to 1H
of FY2023)▲ Student meeting Support for the release of
crested ibises into the wild

➔ Donation of goods to the

Sado Japanese Crested Ibis
Conservation Center for the
release of crested ibises into
the wild since 1968

▲ Presentation ceremony

47

Plan period: 2021/4 to 2024/3

Second Medium-termManagement Plan
Governance &Capital Policy

48

Governance Structure supporting
Sustainable Growth
Percentage of Outside Officers on the
Board of Directors

Diversity Initiatives
Appointment of women officers➔ June 2023

35.7%

30.7%

First female director was
appointed in the Bankof the end of September 2023
➔ As
[Bank Division]
Female branch managers: 14[Group Company Division] Female President andRepresentative Director: 1
Female executive officer: 1

2018/10(when FG was established)

2021/6 –Expertise of independent Outside Directors
Corporate
management

Training programs for women to bepromoted to management positions

Management
theoryRegional
administration

 Promoting “Empowerment
Program for Women” for thepromotion of female
employees to officer andmanager positions (FY2021 -)Cumulative
14 new
total ofparticipants
participants

27

in year 2

fiscal 2023, the Program is➔ Since(As of the end ofmoving forward by expanding

New!
Financial &Accounting IT &SystemLaweligible persons from the Bank
staff to female employees
throughout the Group

September 2023)

TSUBASA Partnership for developmentof female executive candidates

 Promoting the “Cross-Mentor System,” across-bank mentoring program aimed at
career development and leadershipenhancement for female bankers (started inAugust 2022)

2 newparticipantsin year 2

49

Initiatives to Reduce Cross-shareholdings
Changes in carrying amountof cross-shareholdings(¥100M)(Vs. March 31, 2021)

-69
-3

678

-100

666

Reduction targets
for crossshareholdings

Reduce cross-shareholdings by
10 billion yen over 5 years fromthe end of March 2021
(carrying amount of cross-shareholdings
held by Daishi Hokuetsu Bank)

1H of FY2023

Reduction of 0.3 billion yen (6issues) compared with the end of
March 2023
Reduction of 6.9 billion yen
compared with the end of March
2021

➔
612

Reference: Cross-shareholdings Policy

609
578

Numberof issues

3/31/2021

3/31/2022

3/31/2023

257

246

236
clients

clients

clients-6

9/30/2023

3/31/2026

230(Target)clients

 Our company and Daishi Hokuetsu Bank will hold only alimited number of cross-shareholdings when it is judgedthat such holdings will contribute to the maintenance andimprovement of the medium- to long-term corporate valueof the Company’s business partners and the Group, and will
reduce cross-shareholdings after sufficient dialogue withbusiness partners to control shareholding risks, capitalefficiency, and other factors.
 For individual cross-shareholdings, the “Basic Policy, etc.
related to Owning of Cross-shareholdings” is formulated.
And the Board of Directors will periodically review theappropriateness of individual cross-shareholdings from theperspectives of medium- to long-term economic rationality.
It will do this based on return and risk, growth potential,
future outlook, or revitalization of business partners,
relevance of business partners to the regional economy, andbusiness alliances and other strategies, and will make acomprehensive judgment on the suitability of shareholdings.

50

Dividend Forecast for Fiscal YearEnding March 2024
Shareholder Return Policy

Dividend forecast for FEY March 2024
The total annual dividend pershare of the ordinary andcommemorative dividends is
expected to be 140 yen(+20 yen yoy)

Considering the public nature of the financial group, our basic
policy shall be to continue providing stable returns toshareholders while enhancing retained earnings to strengthen ourbase. Our aim is to continue meeting the expectations ofshareholders in the future■ We aim to return 40% in total as dividends and treasury shares toshareholders■ Focusing on boosting profit, our basic policy is to improve ROE as we aim
to achieve at least 5% over the medium to long term

Past result of shareholder return

Annual dividend per share
Details of
Dividends
FYE 2024/3(forecast)Interimdividend
70.00 yen

Ordinary
dividend
Commemorati
ve dividend

Year-end
dividend(forecast)

Total

Fiscal term

Cash Dividends per
Share (annual amount)

Dividend
Payout Ratio

Shareholder
Return Ratio

70.00 yen

140.00 yen(up 20 yen yoy)FYE2019/3

Year-end: 60 yen
Interim Daishi Bank: 45 yen
Hokuetsu Bank: 30 yen

35.0%*1 42.0%

FYE2020/3

120 yen

42.5%

42.5%

FYE2021/3

120 yen

50.7%

50.7%

FYE March 2022

120 yen

36.1%

36.1%

FYE2023/3

120 yen30.6%*2 39.2％

FYE 2024/3(forecast)

140 yen31.2%-

65.00 yen

65.00 yen

5.00 yen

5.00 yen

130.00 yen(up 10 yen yoy)
10.00 yen(up 10 yen yoy)

Acquisition of 1.5 billion yen oftreasury shares

New!

<Details of major matters related to acquisition>*1:

Shares to be acquired

Common stock of our company*2:

Total number of sharesthat could be acquired

Up to 600,000

Total acquisition cost

Up to 1.5 billion yen

Acquisition period

November 15, 2023, to March 22, 2024
The acquisition of shares will start after E-Ship
Trust* has completed its acquisition of theCompany shares (total of approximately 2.7
billion yen)

* Daishi Hokuetsu FG Employee Shareholding Association Exclusive Trust (E-Ship Trust)(%)

Calculated using consolidated profit of two banks as a denominator. Completed
acquiring treasury shares between February and March 2019 (acquisition cost:
999,689,000 yen)Completed acquiring treasury shares from February to March 2023 (acquisition
cost: 1,499,887,200 yen)42.0

2019/3

Shareholder Return Ratio

42.5

2020/350.7
36.1

2021/32022/339.2 Average
42.1%

2023/351

Initiative to Improve PBR
Changes in ROE and PBR

Toward improving PBRFirst Medium-termManagement Plan

➔ Steady

ROE(Return on equity)

execution of theManagement
Plan

Second Medium-term Management Plan Demonstration of three major synergies(☞ pp. 21 to 37)

PBR

MergerSynergy(Price book-value
ratio)Group
Synergy

TSUBASA
Partnership
Synergy Reduction of cross-shareholdings(☞ p. 50)

ROE (%)
Average of regionalbanks*

2.6(2021/1)
Bank merger
Birth of newbank

Third Medium-termManagement Plan
(April 2024 -)4.9+0.7pt

3.5

3.4

3.3

Steadyimprovement
in ROE due to
Synergies

2.5➔ Fostering growth
expectations(Price earnings ratio)
 Achieve sustainable growth with theregion Enhancement of Human Capital Value Enhancing information disclosure Strengthen engagement withshareholders and investors

Next!

4.2

Daishi Hokuetsu FG Shareholder return policy (☞ p. 51)

PER

Second Medium-term Management Plan

➔ Further increasein corporatevalue

2021年3月期
FYE2021/3

PBR

2022年3月期
FYE2022/3

2023年3月期
FYE2023/3

2024年3月期
計画

FYE2024/3 Plan

(Times)+0.08

Daishi
Hokuetsu FG

0.28

0.25

0.33

Average ofregionalbanks*

0.26

0.23

0.29

End of
September
2023

0.38

* Average of regional banks: Average of regional banks listed on theTokyo Stock Exchange (estimated by our company)
52

Appendix

53Top-priority Theme of Second Medium-term Management Plan

Demonstration of Three Major Synergies

After bank merger and birth of new bank
A fresh stage of harvesting results

Second Medium-term Management Plan

FY2023
Second Medium-termManagement Plan Final Year

April
2021

March
2024

Top-priority Themes

Demonstration of Synergy Effects
Maximization ofMerger Synergy

Maximization ofGroup Synergy

Maximization of
TSUBASA
Partnership Synergy

Sharing of know-howofSales Consolidation
force enhancement
overlapping functions
Productivity
Improvement
Reallocationofmanagement resources

Sales
force enhancement
Maximizing
the use of
Productivity
Improvement
FG’s company
functions

Leveraging
the largest
Sales
force enhancement
economiesImprovementof scale ofProductivity
regional banks

54

Management Indicators
1H of
FYE2023/3
ResultManagement Indicators
Strengthening
profitability

Growth of theGroup

Improvementofmanagement
efficiency
Maintenance &improvementof businesshealth

1H of
FYE2024/3
Result¥12.3B¥13.8B

Growth rate for average balanceof SME loans*2

1.0%

Average balance of SME loans¥1,925.2B

Growth rate for average balanceof consumer loans*2

2.2%

Average balance of consumer
loans¥1,397.5B

0.5%¥1,951.8B
2.8%¥1,453.3B

Consolidated (Interim) Profit*1

OHR (consolidated)

61.3%

ROE (consolidated)

2.9%

4.3%
¥13.3B
45.4%
¥1.8B
65.2%
3.2%

10.46%

10.21%

Growth rate of non-interest
income*3

22.3%

Non-interest income¥12.8B

Growth rate of Group company
income*4-33.5%

Group company income¥1.2B

Consolidated capital ratio

Year on Year

FYE2024/3
Plan

¥1.4B

¥20.1B-

5.0%¥26.6B-¥2,038.4B
3.6%¥55.7B¥1,463.9B

-

11.1%

¥0.5B

¥29.1B

-

24.2%

¥0.5B

¥3.5B

3.9pt

65.5%

0.3pt

4.9%

-0.25pt

9.8%*1: (Interim) Profit attributable to owners of parent; *2: Average annual balance before partial/direct write-offs;*3: Total amount of profit from other businesses, etc.,
excluding fees and commissions and other profit, and gains and losses on government bonds (excluding Market Management income and foreign currency funding costs)(accompanying the change in calculation method, figures are compared with the retroactively changed counts in light of comparison with previous years)
55*4: Total (Interim) Profit of Group companies attributable to owners of parent, excluding the holding company and the bankSix Indicators for Deepening
Transformation of Portfolios<Bank Division>
Raise the ratio of “interest on loans andbills discounted” and “non-interest
income” in core gross business profits

Six Indicators for Deepening
Transformation of Portfolios

1H of
FYE2023/3
Result<Group Company Division>
Raise the ratio of “Group company
income” in consolidated profit

1H of
FYE2024/3
ResultYear on YearFYE 2024/3
Target(1) Ratio of SME loans in total loans

37.1%

36.7%

-0.4pt38.2%(2) Ratio of consumer loans in total
loans

27.0%

27.3%

0.4pt

27.4%

(3) Ratio of unsecured loans in
consumer loans

8.4%

8.6%

0.2pt

8.3%

(4) Ratio of income for asset
management advice in core grossbusiness profits

8.0%

9.6%

1.6pt

13.0%

(5) Income ratio of financial solution incore gross business profits

14.5%

16.7%

2.3pt

16.4%

1.34 times

1.31 times-0.03 times *1.30 times(6) Consolidated/non-consolidated ratio
FG consolidated (interim) profit ÷ Bank nonconsolidated (interim) profit* Consolidated/non-consolidated ratio declined year on year due to a significant increase in the Bank income (“denominator”),
despite an increase in Group company income excluding the Bank

56

Indicators for Contribution
to Communities
Indicators for Contribution to Communities
Top-priority target tomeasure our contribution
to the region
Maintain and increase
drivers of regional
economy*1

14,477-797

15,400No. of startups and secondary startups involved

938

203

1,850

No. of clients supporting business succession

939

69

1,740

6,912

772

6,400

¥1,519.5B¥0.5B¥1,600.0B

No. of clients using Guidelines for Management
Guarantee

7,656-1,3849,500

No. of clients with improved business indicators,
etc.

9,679

29

7,700

No. of cases of business support

1,815

369

2,850

288

38

480

No. of clients supported in sales
channel development (cumulative
total)

599

19

600

No. of FG collaboration activities
to support productivity
improvement (cumulative total)

227

4

270

No. of personnel-matching casesthat lead to solutions to corporate
issues (cumulative total)

206

27

210

Loan balance based on feasibility assessment

No. of cases of support for formulation ofmanagement improvement plan

Providing new value
through expansion ofbusiness domains

FYE 2024/3
TargetVs. 1H of
FYE2024/3
TargetNo. of companies with Daishi Hokuetsu Bank as
their main bank

No. of borrowers based on feasibility assessment

Support for enhancementof corporate value

1H of FYE2024/3
ResultActivities
through a
regional
tradingcompany

Activities
through a
staffing agency*1: Impacts of a decrease in the number of business places within theprefecture and the prepayment of Zero-Zero Loans*2*2: Effects of the decline in the number of business partners (*1),
COVID-19 pandemic, and higher prices

57Summary of Financial Results for the First Half of
the Fiscal Year Ending March 2024 (Profit/Loss) Both FG consolidated ordinary profit and interim profit exceeded the forecasts announced in May 2023 and theresults of the previous year
FG’s
Consolidated(¥100M)

1 Ordinary profit
2 Interim Profit
*1:

*1

176
138

Forecast(Announced
Year on Year in May 2023) Vs. Forecast
3

126

14

50

100

38

Interim Profit attributable to owners of parent

Group
Companies(¥100M)

3 Interim Profit*2
*2:

1H of
FYE2024/3
Financial
Results

1H of
FYE2024/3
Financial
Results

Year on Year

1H of
FYE2023/3
Financial
Results

5

12

123

1H of FYE2023/3[FG Consolidated]
Interim Profit

428

- 18

446

5

(Core gross profit)

460

- 35

496

6

Net interest income

316

- 52

369

7

(Of which, interest on loans and bills discounts)

242

11

230

8

(Of which, interest and dividends on securities)

185

38

147

9

(Of which, financing expenses) (-)

161

132

28

10

Fees and commissions

74

3

71

11

Profit from other businesses

36

31

5

68

13

55

- 31

17

- 49

14 Expenses

291

3

287

15 Substantial business profit

137

- 21

159

16

169

- 39

209

169

5

164

18 Business profit

138

- 23

162

19 Temporary loss (income)

10

26

- 16

20 Ordinary profit

149

3

145

21 Extraordinary income (losses)

-0

16

- 17

22 Interim Profit

104

12

91

23 <Net credit cost> (-)

21

4

17

24 <Gains or losses on securities>

-9

43

- 53

25 <Management Integration expenses (overall)> (-)*3

13

-1

14

13

<FG Consolidated> Change Factors
Bank Nonconsolidated
+12

Group
Consolidated
Companies Adjustment, etc.
+5-4

1H of FYE2023/3: ¥1.9B→ Adjustment of profit or loss on fixed
assets due to sales and revaluation ofreal estate owned by the Bank, etc.
(profit and loss adjustment forManagement Integration)
1H of FYE2024/3: ¥1.4B→ Gains on negative goodwill incurredarising from the inclusion of Daishi
Hokuetsu IT Solutions and Bridge
Niigata in FG’s consolidated subsidiaries

138

1H of FYE2024/3[FG Consolidated]
Interim Profit(¥100M)

1H of
1H of
FYE2024/3
FYE2023/3
Financial Results Year on Year Financial Results

4 Gross profit

12
18

Total Interim Profit of Group companies attributable to owners of parent(excluding the holding company and the Bank)(¥100M)

Bank Nonconsolidated

17(Excluding gains (losses) from government bonds
and other bonds)(Of which, Gains (losses) from government bonds
and other bonds)

Core business profit(Excluding gains (losses) from cancellation of
investment trust)*3: Management Integration expenses recorded in “Expenses”
and “Non-recurrent income and losses”

58Summary of Financial Results for the First Half of
the Fiscal Year Ending March 2024 (Profit/Loss)<Bank Non-consolidated> Change Factors
Gains and losses on government
bonds: +17
Equity related profit or loss: +25(¥100M)

Securities interest dividends : +38(of which, gains (losses) fromcancellation of investment trust: -44)

Foreign
Securities
currency
related profit funding cost,or lossetc. (-)+43+116• Foreign currency funding cost (-): +108
of which, Market Management Division: +102,
Sales Division: +5• Interest on deposits: -7

Bond derivatives: +28
Financial solutions: +5
Asset management advice: +4
Others: -4

91

Interest on Non-interest
loans andincomebills(Sales Division)
discounted+5+11(Year on Year)
Balance factor: +5
Yield factor: +5(Vs. Plan)
Balance factor: +1
Yield factor: +0
1H of FYE2023/3
Bank non-consolidated
interim profit

Securities
interest
dividends
Non-interest+38
income(MarketManagement
Division)

Personnel
expenses: -3
Non-personnel
expenses: +4
Taxes: +2+28

Expenses(-)+3

Total income of Market
Management Division: +6

Impairment loss on fixed assets (-): -25
Gain (loss) on sale of fixed assets: -9

Extraordinary
incomeTaxes, etc.
(losses)(-)
Net credit+16+6
cost (-)+4

104
Year onYear+

Total income of Sales Division:
+12

¥1.2B

1H of FYE2024/3
Bank non-consolidated
interim profit

59

Bank Division

Loans and Bills Discounted Area
End-balance of Loans and Bills Discounted(¥100M)

Business

49,596
8,822

13,481

Consumer

51,3059,484

13,85052,881
8,543

14,428Public Money & Finance+1,730+3.3%
53,76752,3079,400

Interest on business loans and bills discounted & yield* Before non-accrued interest

Interest (¥100M)
0.90

Yield (％)

0.89

0.89

244

256

0.88

0.90

8,539

14,672248

14,135125
FYE2021/3

FYE2022/3

FYE2023/3

134

1H of FYE2023/3 1H of FYE2024/3

Interest on consumer loans and bills discounted & yield* Before non-accrued interest

27,292

27,97029,90828,50230,554

Interest (¥100M)
1.42

FYE2021/3[Reference]
Averagebalance 49,764
Gross yieldon loans and
0.92%
bills
discounted

FYE2022/3

FYE2023/3

1H of
1H of
FYE2023/3
FYE2024/3+1,334+2.57%

50,32952,00451,73853,073

0.90%

0.90%

0.88%

0.91%

189

1.40

191

Yield (％)
1.37

1.38

194

96
FYE2021/3

FYE2022/3

1.36

FYE2023/3

99

1H of FYE2023/3 1H of FYE2024/3

60

Bank Division

Loans and Bills Discounted Area
Composition of overall Loans and bills discounted(1H of FYE2024/3)

Status of initiatives on real interest-free and unsecuredloans (Zero-Zero Loans) (1H of FYE2024/3)

Repayment
starting fromFY2024

Fixed interest rate ≤ 1 year

6.8%
Marketfloating
rate

Fixed interest rate
> 1 year ≤ 3 years

10.5%
Fixed interest rate
> 3 years≤ 5 years

17.8%

17.6%
Start ofrepayment
between
October 2023
and March 2024

Repayment
started

13.9%

68.5%

9.6%
Short-term
prime-ratelinked type

34.3%

Fixed interest
exceeding
5 years

21.0%(Note) Based on thenumber of loans

Balance and delinquency ratio ofreal interest-free and unsecured loans
%

6,346

-

984

-

Performing
loan

6,260

98.6%

978

99.3%

Delinquent
loan

86

1.4%

6

0.7%

All
Note: Excluding nonperforming loans(¥100M)

No. ofloans

Type of loans

Outstanding
loans

%

61

Bank Division

Balance of Deposits, etc. and Assets under CustodyEnd-balance of deposits, etc.
(including negotiable deposit)(¥100M)

Individuals

82,234
6,112

22,512

Corporate

End-balance of assets under custody

Other (public funds, others)

84,785

86,161+1,181+1.4%
85,41984,237

6,854

7,009

5,325

22,644

22,83322,899*(¥100M)

Insurance

5,432
8,155
863

23,139

1,788[Reference]
Averagebalance56,84753,60955,28656,317FYE2021/3

FYE2022/3

FYE2023/3

1H of FYE2023/3 1H of FYE2024/3

84,777+1,035+1.2%
85,104
86,13979,67982,74956,0125,503

FYE2021/3[Reference]
Total endbalance of
deposits, etc.
and assets undercustody*

90,390Investment trust

Public bonds

8,536

8,624

+577
+6.7% 9,194
8,616
697

783

716

750
1,768

1,757

1,717

5,917

6,150

6,148

FYE2022/3

FYE2023/3

1H of FYE2023/3

1,835

93,322

94,786

6,728

1H of FYE2024/3+1,759+1.8%
92,854
94,613

Insurance balance is compared with figures that were changed retroactively fromthe viewpoint of comparison with the previous fiscal years, since the calculation
method was integrated due to the merger of bank subsidiaries.

62

Bank Division

Non-interest Income Area/Expenses
Expenses

Non-interest income*
Asset management advice(¥100M)

Financial Solutions

Non-personnel expenses

Others

Taxes

262

659
45

40

39

48

600
32

208
184

Personnel expenses(¥100M)

292
+5
+4.3%

141
128
101

16

252

575
33

237

133
12

287

61
71

77
321

75

68

*

FYE2022/3

17

291
19

117

121

152

149

303

81
39

FYE2021/3

314

+3
+1.2%

FYE2023/3

44

1H of FYE2023/3 1H of FYE2024/3

FYE2021/3

FYE2022/3

FYE2023/3

1H of FYE2023/3 1H of FYE2024/3

Total amount of profit from other businesses, etc., excluding fees and commissions and other profit, and gains and losses on government bonds(excluding foreign currency funding costs and Market Management Division income and)63

Bank Division

Securities Area

* Excluding trading securities

Interest and dividends on
securities

End-balance of Securities
Domestic bonds
StocksForeign securities
Other securities(¥100M)
28,59524,416
3,768
1,372

4,052

24,930
4,042

4,522

-2,044-7.1%

Domestic bonds

Foreign securities

Domestic bonds

Foreign securities

StocksOther securities

StocksOther securities(¥100M)

26,551
3,945

182

1,432

173
44

6,503

FYE2021/3

Yield

0.78%

Duration[Yen bonds]
5.74 years[Foreign bonds]
4.41 years

FYE2022/3

16,046FYE2023/3

-210

96

6,594

4,080

15,484+99+47.4% -110

284

38

15,222(¥100M)

1,606
1,323

Valuation gains or losses

37

101

1.09%

1.33%

5.82 years

5.67 years

4.50 years

5.11 years

2.94 years

2.91 years* Duration is calculated after considering interest rate
swaps for hedging purposes

Vs. Plan

147

35

69

20

14,495

0.70%

185

23

45

1H of FYE2024/3+38+26.1%

45

48

FYE2022/3

FYE2023/3

+10

+57

423

496

- 78
- 141
- 21

- 158

- 371

104

- 224
- 155

21

1H of FYE2023/3 1H of FYE2024/3+59* Vs. Plan is after considering foreign
currency financing and other costs

- 299

- 326

34
22

719

+10

FYE2022/3

FYE2023/3

1H of FYE2024/3-11.0 billion yen, an increase of 9.9 billion
yen from the end of the previous year, mainly
due to a rise in domestic stock prices* Net unrealized gains (losses) on
domestic bonds and foreign
securities after deferred hedge byinterest rate swaps

64Bank Division

Securities Area

* Excluding trading securities

Breakdown of changes in
end-balance of Securities

Trends in end-balance of Securities(Vs. March 31, 2023)(¥100M)(¥100M)
FYE2021/3

FYE2022/3

FYE2023/3

1H of
FYE2024/3

Domestic bonds (yield: 0.28%)
Purchase

Government
bonds
Local
government
bonds
Publiccorporatebonds
Financialbonds
Business
bonds

5,728

5,536

6,030

4,592

Sale

6,433

7,247

7,682

7,766

Other (redemption, market
value factors, etc.)
Stocks (yield: 5.26%)- 1,551
1,940- 2,645
- 845
174

769

713

654

609

Purchase

66

27

20

10

Sale

2,225

1,958

1,658

1,516

Stocks

1,372

1,323

1,432

1,606

Foreignsecurities
Other
securities

4,052

4,080

6,594

6,503

Sale

3,768

4,042

4,522

3,945

Other (redemption, market
value factors, etc.)

11

Total

24,41624,93028,59526,551Other securities (yield: 1.65%)

- 576

66

- 113

Other (depreciation, market
value factors, etc.)

221

Foreign securities (yield: 2.96%)- 90

Purchase

Purchase
Sale
Other (redemption, market
value factors, etc.)

824
- 926

2,659
- 3,534298
65

Bank Division

Non-performing Loan Ratio & Net Credit Cost
Non-performing loan ratio and amount
Distressed Receivables

Doubtful Claims

Substandard Claims

Non-performing loan ratio

Net credit cost
Provision of general allowance for loan losses

Disposal of non-performing loans

Reversal of allowance for loan losses (-)

Reversal of provision for contingent loss (-)

Recoveries of written off receivables (-)

Net credit cost

(%)

1.79

(¥100M)

2.20

2.32

2.29

2.23

69
41

38

1,165
39

1,261
47

1,229
31

1,232
54

17

21

23

25

-3
-3

-1
-3

1H of
FYE2023/3

1H of
FYE2024/3(¥100M)

917
41
71
1,071

1,150

1,143

810

0

64

54

63

54

61

FYE2021/3

FYE2022/3

FYE2023/3

1H
1H of
of…
FYE2023/3

1H of…
of
1H
FYE2024/3

55

36

1,117

11
-9

FYE2021/3

2
-4

- 10
-4

FYE2022/3

FYE2023/3

66

Bank Division

Capital Allocation(¥100M)

Allocated capitalamount

Allocated capital

1H of FYE2024/3

2H of FYE2024/3(plan)

Risk amount(actual)

Allocated capitalamountUtilization

3,335

1,514

45.4%

3,071

430

277

64.4%

430

2,200

1,085

49.3%

2,150

Cross-shareholding risk

145

26

17.9%

40

Operational risk

130

125

96.2%

130

Stress-event capital(Capital held assuming a suddenchange in the environment)

430

0

0.0%

321

Risk buffer (unallocated capital)

226

0

0.0%

551

Allocation resources, net ofallowance for doubtful accounts

3,561

Credit risk (loans and bills
discounted)
Market risk

-

-

3,622

Risk calculation method
 Market Risk, Credit Risk, Cross-shareholding Risk
 Confidence interval: 99% for all Holding period: 1 year for loans, 6 months for
non-loans For Cross-shareholding, Risk
amount = (VaR − Loss (gain) on
valuation), but ≥ 0

 Operational risk
 Gross profit distribution
method67

Capital Ratio
FG’s Consolidated

Daishi Hokuetsu Bank

Consolidated

Consolidated(%)

Non-consolidated

(%)

10.35

FYE2021/3

10.51

FYE2022/3

10.23

FYE2023/3

10.46

10.21

1H of

1H of

FYE2023/3

FYE2024/3

10.00

9.63

FYE2021/3

9.77

9.52

FYE2022/3

9.35 9.15

FYE2023/3

9.70

9.43

9.29

9.08

1H of

1H of

FYE2023/3

FYE2024/3

68

Financial Position of Group Companies-1
Bank

Securities

Leasing

Daishi Hokuetsu
Securities

Daishi Hokuetsu
Bank

Daishi Hokuetsu
Lease

FG 100% subsidiary

FG 100% subsidiary

FG 100% subsidiary

Hokuetsu Lease

Fund Management

Bank subsidiary

Card

Daishi Hokuetsu
Capital Partners

Daishi JCB Card
Daishi DC Card
Hokuetsu Card

FG 100% subsidiary

FG 100% subsidiary

Consulting & research

Credit guarantee

Financial area

Daishi Guaranty
Hokuetsu Credit
Guarantee

Daishi Hokuetsu
Research & Consulting

Non-financial area

FG 100% subsidiary

Staffing

Bank subsidiary

SystemDaishi Hokuetsu
IT Solutions
FG 100% subsidiary

Regional trading
company

Bridge Niigata

Daishi Hokuetsu
Career Bridge
FG 100% subsidiary

FG consolidated subsidiary69

Financial Position of Group Companies-2(¥1M)
Company

Core Business

Daishi Hokuetsu Bank, Ltd. Banking

Sharecapital

Net sales (ordinary profit)
1H of
FYE2023/3

32,776

Ordinary profit

FYE2023/3

1H of
FYE2024/3

1H of
FYE2023/3

62,541

122,639

79,029

600

2,426

4,183

ProfitFYE2023/3

1H of
FYE2024/3

1H of
FYE2023/3

FYE2023/3

1H of
FYE2024/3

14,58722,56814,902

9,188

14,847

10,484

2,545

985

1,268

943

487

670

666

Daishi Hokuetsu Securities
Co., Ltd.

Securities

Daishi Hokuetsu Career
Bridge Co., Ltd.

Staffing agency business andconsulting business related tocorporate human resources

30

88

199

106

21

67

37

17

51

24

Daishi Guaranty Co., Ltd.

Credit guarantee business

50

911

1,843

941

674

1,538

498

443

1,011

327

Hokuetsu Credit Guarantee
Credit guarantee businessCo., Ltd.

210

284

655

263

214

588

235

147

421

164

Daishi Hokuetsu CapitalPartners Co., Ltd.

Venture capital business

20

19

35

29

4

4

7

3

3

5

Consulting business and research/study,
information provision services related to

30

208

389

211

24

25

35

16

16

22

Leasing business

100

8,344

16,604

8,727

- 187

118

377

- 115

96

250

Hokuetsu Leasing Co., Ltd. Leasing business

100

2,072

3,896

1,604

149

248

106

98

164

70

Daishi Computer Service
Co., Ltd.

Computer-related services

15

488

1,014

537

62

103

36

41

152

21

Daishi JCB Card Co., Ltd.

Credit card and credit guarantee
services

30

792

1,579

830

240

454

250

160

300

163

Daishi DC Card Co., Ltd.

Credit card services

30

442

876

463

26

46

16

17

31

10

Hokuetsu Card Co., Ltd.

Credit card and credit guarantee
services

20

375

732

348

85

162

33

56

107

21

Daishi Hokuetsu IT
Solutions Co., Ltd.

Computer-related services

100

1,449

3,177

1,679

113

240

127

74

152

82

Bridge Niigata, Ltd.

Regional trading company business

70

86

248

126

- 12

10

-4

- 12

8

-4

Daishi Hokuetsu Research& Consulting Co., Ltd.
Daishi Hokuetsu Leasing
Co., Ltd.

economy and society

April 2023: Daishi Hokuetsu IT Solutions Co., Ltd. became a 100% FG subsidiary and Bridge Niigata Co., Ltd. became aconsolidated FG subsidiary70

Contact for Inquiries
Daishi Hokuetsu Financial Group
Corporate Planning Dept.
TEL 025-224-7111
E-mail g113001@dhbk.co.jp

This document contains forward-looking statements. Such statements are not guarantees of future performance andinvolve risks and uncertainties. Please note that future results may differ from our targets due to changes in the businessenvironment and other factors.

71