SURUGA bank, Ltd.
Financial Results for FY3/21

May 28th, 20210

■Table of contents
I Summary of Financial Results for FY3/21
・Actual Results for FY3/21;Comparison with FY3/20

P.1

・Actual Credit Costs, Share House-related Loans <Non-consolidated>

P.2

・Outstanding Balance, Yield, and Delinquency Rate by Loan Category <Non-consolidated>

P.3

・Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>

P.4

・Trends in Expenses, OHR, and Capital Adequacy Ratio <Non-consolidated>

P.5

II Business Performance Plan for FY3/22
・Assumptions for Earnings Forecast for FY3/22 (Comparison with FY3/21)

P.6

・Earnings Forecast for FY3/22 <Non-consolidated & Consolidated>

P.7

・Earnings Forecast for FY3/22 <vs. KPI in Final Fiscal Year of Phase 1 of Mid-term Business Plan>

P.8

・Situation of Real Estate Market

P.9

・Forecast of New Loans Disbursed

P.11

・Retail Banking (Sales Policy/Restructure of Area System and Branch Network/Investment Real Estate Loans/Housing Loans)

P.12・Structured Finance

P.16

・Securities Management

P.17

・Structural Reform

P.18

・Status of Receivables

P.19

・Reorganization of the Group

P.21

III TOPICS
・Initiatives for SDGs

P.22

・Community Contribution Activities - Cycling Project/Soccer -P.23

Reference Materials© 2021 SURUGA bank, Ltd. All rights reserved.

I Summary of Financial Results for FY3/21

II Business Performance Plan for FY3/22

III TOPICS

■ Actual Results for FY3/21;Comparison with FY3/20• Gross operating profit decreased 7.8 billion yen year-on-year to 72.5 billion yen, mainly due to a decline in net interest income.
• Actual credit costs increased by 9.8 billion yen year-on-year to 12.2 billion yen, mainly for share house-related borrowers and due to disappearanceof special factors that were in effect the previous fiscal year.
• Net operating profit increased by 13.5 billion yen year-on-year to 50.1 billion yen, mainly due to a reversal in general allowance for loan losses(transfer to specific allowance for loan losses) resulting from lowering the classification of borrowers of share house-related loans.
• Net income (non-consolidated) decreased by 5.5 billion yen year-on-year to 18.9 billion yen due to the above factors.
• Net income (consolidated) decreased by 3.8 billion yen year-on-year to 21.4 billion yen due to factors such as a decrease in non-consolidated net
income.

<Non-consolidated>

Factors causing variation in ordinary profit(comparison with previous year)(Billions of yen)
Actual resultsfor FY3/20

Actual resultsfor FY3/21

Main factors

Year-on-year
Net interest income

・Decline in interest on loans(average balance factors -7.9 billion yen, yield factors -1.9 billion yen)

Net fees andcommissions

・Reduction in commission expenses due to securitization

Net other operating
income・Reduction in profit on sales of debt securitized accounts receivable(-1.9 billion yen)

Gross operating profit

80.3

72.5

(7.8)

Expenses

43.7

40.3

(3.4)

Core net operating
profit

36.3

31.1

(5.1)

Expenses・Decrease in non-personnel expenses

Net operating profit

36.5

50.1

+13.5

Actual credit costs

・Degraded classification of borrowers of share house-related loans
・Reduction in reversal of allowance for loan losses due to full collectionof loans for founder-affiliated companies (-13.4 billion yen)

Ordinary profit

39.9

19.9

(20.0)Net income

24.4

18.9

(5.5)

Actual credit costs

2.4

12.2

+9.8

ROE (%)

11.3

7.9

(3.4)

(Net income basis)

Profit attributable to ownersof parent

25.3

21.4

(Billions of yen)

40.0
+2.5

Previousyear results
39.9

(1.1)

(9.1)

(20.0)

+3.4
(5.9)

(9.8)

Actualresults
19.9

(3.8)
0

Earnings per share(yen)(consolidated)

Ordinary profit(FY3/20)

109.3

92.5

(16.8)Net interest
incomeNet fees andcommissions

Net other
operatingincome(Note)

ExpensesGains(losses) on
stocks/other

Actual credit
costs

Ordinary
profit(FY3/21)(Note)Net Other operating income excluding gains(losses) on bonds© 2021 SURUGA bank, Ltd. All rights reserved.

1

■ Actual Credit Costs, Share House-related Loans <Non-consolidated>• Actual credit costs of borrowers of share house-related loans resulted in a 0.4 billion yen reversal of allowance for loan losses for the fiscal year
ended March 2021 accompanying the second bulk transfer of loans in the fourth quarter.
• The total coverage ratio for borrowers of share house-related loans increased 3.95% to 95.24% versus end of the previous fiscal year due to anincrease in allowance for loan losses.
• Actual credit costs for borrowers other than share house-related loans were 5.9 billion yen for the fourth quarter and 12.7 billion yen for the fiscal year
ended March 2021.

・Actual credit costs and Allowance for loan losses
Item

1Q

(Billions of yen)

2Q

3Q

Actual credit
costs for
FY3/21

4Q

Allowance

Share house-related loans

1.1

2.9

(0)

(4.5)

(0.4)

76.7

Investment property loans(Note)

5.0

(2.0)

3.1

5.8

12.0

59.5

Housing loans

0.8

(0.7)

0.3

(0.1)

0.2

4.3

Unsecured loans

0.3

(0.1)

0

(0)

0.1

2.7

0

0.4

(0.4)

0.2

0.3

8.3

7.3

0.4

3.1

1.3

12.2

151.8

Business financing, etc.
Total

(Note)Investment property loans: studio apartment loans, single building apartment loans, other secured loans

・Share house-related loans(Status of coverage)
Total credit
balanceA

Covered amount
Share house loan
receivables

B

UnsecuredportionC

Allowance

Coverage ratioD(B+D)/A

Mar.31,2020

192.1

154.7

72.7

119.3

102.5

91.29%

Sep.30,2020

189.1

153.5

71.8

117.3

106.5

94.31%

Mar.31,2021

135.7

107.2

52.5

83.1

76.7

95.24%(Note 1) Based on obligors of share house-related loans.
(Note 2) Covered amount: Estimated amount, calculated by multiplying the covered amount including collateral, etc. by a certain ratio.
(Note 3) Total credit balance, share house loan receivables: Loans and bills discounted, suspense payments equivalent to loans and bills discounted,
and accrued interest on loans and bills discounted.
© 2021 SURUGA bank, Ltd. All rights reserved.

2

■ Outstanding Balance, Yield, and Delinquency Rate by Loan Category <Non-consolidated>• Loan yield on both consumer loans and corporate loans for property investment, which were planned to be promoted in the med-term business plan,
was 3.63%.
• The rise in the delinquency rate of consumer loans (0.78% increase from the end of March 2020) was mainly due to an increase in the number ofdelinquent borrowers of share house-related loans, who suspended their repayment because they wished their loans to be transferred. (Thedelinquency rate of whole consumer loans was pushed up in part by delinquent borrowers of share house loans also being delinquent on other loans.)• Excluding borrowers of share house-related loans, the delinquency rate for all consumer loans was 2.14% as of the end of March 2021.
(Billions of yen)
Mar.31,2020Loan category

Period-end
balanceYield

Mar.31,2021
Delinquency
rate

Period-end
balance

Yield

Delinquency
rate2,099.0

3.12%

4.14%

1,905.4

3.08%

4.93%

Housing loans

551.3

2.87%

0.59%

497.9

2.83%

0.27%

Studio apartment loans

195.6

3.41%

1.65%

167.8

3.39%

1.58%

1,156.1

3.33%

3.34%

1,096.0

3.24%

3.50%

Share house loans

154.6

1.47%

27.89%

107.1

1.40%

49.06%

Other secured loans

41.2

4.89%

1.05%

36.4

4.73%

0.58%

Unsecured loans

207.9

10.23%

1.76%

170.0

10.32%

2.17%

Card loans

138.4

11.52%

0.70%

112.8

11.69%

0.82%

Unsecured certificate loans

69.4

7.66%

3.88%

57.1

7.63%

4.83%

Consumer loans (A)2,307.0

3.74%

3.93%

2,075.5

3.66%

4.71%

Consumer loans (excluding share house-related loans)

2,115.0

2.07%

1,939.8

Secured loans

Single building apartment loans

2.14%

6.6

2.19%

-

48.6

2.18%

-

Loans for asset management companies

0.2

1.67%

-

15.1

1.95%

-

Structured finance, etc.

6.4

2.21%

-

33.5

2.28%

-

2,313.6

3.74%

3.92%

2,124.1

3.63%

4.60%

Corporate loans for property investment (B)Total <(A) plus (B)>

(Note 1) Delinquency rate = Loans past due 3 months or more / Loans(Note 2) Yield: Yield for customers (excluding guarantee fee, accrued interest), period-end balance basis(Note 3) Yield and the delinquency rate of studio apartment loans, secured loans and consumer loans are calculated based on original claims before securitization.
(Note 4) As the balance is aggregated by loan type, if obligors of share house loans default on scheduled repayment, the delinquency rate of other loan types will be affected.
© 2021 SURUGA bank, Ltd. All rights reserved.

3

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>• The loan-deposit margin increased by 0.07% year-on-year to 1.81% because the 0.14% decrease year-on-year in the expense ratio resulting from promoting
the structural reform set forth in the mid-term business plan exceeded the 0.07% decrease year-on-year in yield on loans and bills discounted resulting fromthe continued relaxation of loan repayment conditions such as lowered interest rates.
• The net interest margin shrank by 0.20% year-on-year to 0.94% because a fall in the return on investment stemming from an increase in deposits with the
Bank of Japan exceeded a decrease in funding costs resulting from a decrease in the expense ratio.
• The average loan balance decreased by 250.0 billion yen year-on-year to 2,414.7 billion yen due partly to the special factors (bulk transfer of share houserelated loans of approximately 44.2 billion yen).
• The average deposit balance increased by 95.2 billion yen year-on-year to 3,194.4 billion yen.

Loans (Average balance / Yield)

interest margin
Loan-deposit
marginLoan-deposit
margin (after
deduction of
expenses)

Net interest
margin3,136.0

2.35%

3.52%

3.27%

3.15%

3.61%

Average loan balance(Billions of yen)
Yield on loans and bills
discounted

3,054.7
2,664.7

3.62%

3.52%

3,229.7

2,414.7

3.32%

3.19%

3.12%

19/3

20/3

21/3

3.07%

2.37%
17/3

1.93%
1.74%

1.81%

18/3

(Note)In FY3/20, the balance decreased by approximately ¥200 billion due to factors such as
securitization of studio apartment loans, the collection of loans from the founder-affiliatedcompanies, and the transfer of share house-related loans. The factors of the decrease in FY3/21
are referred to the above.

Deposits (Average balance / Yield)
1.54%

1.68%

4,054.5

1.45%

3,504.2

1.14%

17/3

18/3

19/3

20/3

Average deposit balance(Billions of yen)
Yield on deposits

4,047.0
3,099.2

3,194.4

0.04%

0.04%

0.04%

19/3

20/3

21/3

0.94%

0.10%

0.08%

17/3

18/3

21/3

© 2021 SURUGA bank, Ltd. All rights reserved.

4

■ Trends in Expenses, OHR, and Capital Adequacy Ratio <Non-consolidated>• OHR increased by 1.2% year-on-year to 55.6% due to a decrease in gross operating profit despite efforts to reduce expenses based on the structuralreforms set forth in the mid-term business plan.
• Capital adequacy ratio (non-consolidated) rose by 1.85% year-on-year to 12.13%, due to an increase in own capital and a decrease in risk-weighted
assets. (12.39% on a consolidated basis)

Trends in Expenses & OHR
Nonpersonnel
expenses

Personnel
expenses

Gross operating
profitTaxes

Trends in Capital & Capital Adequacy Ratio
OHR

Capital adequacy
ratio

Own capital(Billions of yen)

110.8(Billions of yen)

11.96%

115.1

12.15%

12.13%
10.28%
8.80%

99.9

324.7
307.2
80.3
72.5
241.4

47.2

46.7

46.8

18.3

17.7

15.9

43.7

40.3

14.8

55.6%

54.4%
46.8%

258.8

213.7

14.8

42.6%

40.5%

25.1

25.0

27.1

25.6

22.6

3.7

3.8

3.7

3.3

2.8

17/3

18/3

19/3

20/3

21/3

© 2021 SURUGA bank, Ltd. All rights reserved.

17/3

18/3

19/3

20/3

21/3

5

I Summary of Financial Results for FY3/21

II Business Performance Plan for FY3/22

III TOPICS

■ Assumptions for Earnings Forecast for FY3/22 (Comparison with FY3/21)• Gross operating profit is expected to decline by 8.5 billion yen year-on-year, taking into account the following factors of interest on loans and discounts.
(1) Disbursement of new loans of 120.0 billion yen(2) Decline in interest rates of new loans in line with the aim to shift to medium-risk/medium-return business models where risk is lower than in the past.
(3) Decrease in yield on loans and bills discounted due to relaxation of loan repayment conditions such as lowered interest rates for existing borrowers.
• Expenses are expected to increase by 0.7 billion yen year-on-year, reflecting the temporary burden of expenses for such as branch relocation.
• Actual credit costs are expected to increase by 3.8 billion yen year-on-year to 16.0 billion yen, estimating additional provisions for share house loans andfor a bulk transfer of loans in the second half of the fiscal year, and additional provisions to prepare for future credit risks of single building apartment
loans.

[Earnings Forecast for FY3/22 and Factors for Differences with FY3/21 Results](Billions of yen)
FY3/22
Forecast
7.0

FY3/21Results
19.9

20.0

Year-on-year(12.9)
(8.5)

(0.7)

(3.8)

+0.1

0
Ordinary profit(FY3/21)

Gross operating
profitExpenses© 2021 SURUGA bank, Ltd. All rights reserved.

Actual credit costs

Other

Ordinary profit(FY3/22)6

■ Earnings Forecast for FY3/22 <Non-consolidated & Consolidated>• Core net operating profit is expected to decline 8.1 billion yen year-on-year to 23.0 billion yen, mainly due to a decrease in ordinary income and anincrease in expenses.
• Actual credit costs are expected to be 14.0 billion yen in the first half of FY3/22 out of 16.0 billion yen for the full year, including an additional provision forallowance for loan losses due to suspension of repayment of share house loans by more than half of borrowers who wish their loans to be transferred.
• Net income is expected to be 6.0 billion yen on a non-consolidated basis and 7.0 billion yen on a consolidated basis.

(Billions of yen)[Consolidated][Non-consolidated]
FY3/22 Forecast
FY3/21Results(1)

First half

Second half

FY3/22 Forecast
Full year(2)

Year-on-year(2)-(1)First half

Full year(3)

Cons-parent
differential(3)-(2)
Ordinary income

89.2

39.5

38.5

78.0

(11.2)

44.0

87.0

+9.0

Gross operating profit (A)

72.5

32.5

31.5

64.0

(8.5)

Expenses (B)

40.3

21.0

20.0

41.0

+0.7

Core net operating profit

31.1

11.5

11.5

23.0

(8.1)

Ordinary profit

19.9

(2.5)

9.5

7.0

(12.9)

(2.0)

8.0

+1.0

Net income

18.9

(3.0)

9.0

6.0

(12.9)

(2.5)

7.0

+1.0

Actual credit costs (C)

12.2

14.0

2.0

16.0

+3.8

RA gross operating profit
(A-C)

60.3

18.5

29.5

48.0

(12.3)OHR (B/A)

55%

64%

63%

64%

+9%

Capital adequacy ratio

12.13%

12.10%

12.56%+0.43%

Dividends per share

5.0 yen-

5.0 yen± 0 yen© 2021 SURUGA bank, Ltd. All rights reserved.

7

■ Earnings Forecast for FY3/22 <Comparison with KPI in Final Fiscal Year of Phase 1 of Mid-term Business Plan>• Although the FY3/22 plan will be lower than the KPI in terms of RA gross operating profit and OHR, we will aim to achieve the KPI in the final fiscal
year of the mid-term business plan by steadily disbursing new loans, providing finely-tuned response to existing borrowers, and reducing
expenses.

(Billions of yen)

FY3/23

Non-consolidated

FY3/21 Results(Final Fiscal Year of
Phase 1)[KPI]

RA gross operating profit (Note1)

60.3

48.0

49.0

OHR (Note2)

55%

64%

Less than 60%

Net income

18.9

6.0

6.0

12.1%

12.5%

More than 10%

21.4

7.0

7.0

Capital adequacy ratio

Consolidated

FY3/22 Forecast

Profit attributable to owners ofparent(Note1) RA (Risk Adjusted) Gross Operating Profit = Gross Operating Profit - Actual Credit Costs(Note2) OHR (Overhead Ratio) = Expenses / Gross Operating Profit© 2021 SURUGA bank, Ltd. All rights reserved.

8

■ Situation of Real Estate Market• The REIT market capitalization declined after February 2020 due to the COVID-19 pandemic and the issuance of declaration of a state of emergency, but recovered moderately after the
resumption of economic activities. Since then, investment funds have flowed into the Japanese REIT market as the risk-on market appears to be taking place due to the large-scale
additional economic measures in the United States and expectation for the expansion of COVID-19 vaccination.
• In particular, the logistic REIT has been strong against the backdrop of increasing use of e-commerce in the COVID19 pandemic. The commercial REIT also rose higher than that before the
COVID-19 pandemic with a view to the post-COVID-19 era.
• The office market capitalization has been on a recovery trend, in part due to a move to review communication work, although there have been signs of a decline in rent and an increase invacancy rates due to the progress of remote work and other factors.
• The impact of the COVID-19 pandemic will be limited as new investment funds from overseas investors have flowed into Japan’s relatively stable real estate market against the backdrop of
the expansion of global monetary easing.
(January 6,

1.5(2020年1月6日=1)2020 = 1)

REIT時価総額
REIT Market
Capitalization

Housing
住宅

Healthcare
ヘルスケア
ヘルスケア

Hotels
ホテル
ホテル

オフィス
Officeオフィス

オフィス市場
OfficeMarketUnit:
yen/tsubo
単位︓円/坪Commerce
商業
商業

Unit: %
単位︓％
13

Logistics
物流
物流

22,5001.4

平均賃料
Averagerent
平均賃料
空室率-東京空室率－東京Vacancyrate - Tokyo

1.3

空室率－大阪Vacancyrate - Osaka
空室率-大阪101.2

空室率－名古屋空室率-名古屋
Vacancyrate - Nagoya
1.1

20,000

1

7

0.9
0.8
0.7

17,500
4

0.6
0.5
0.4

20/01

1

15,000

0.3

20/04

20/07

20/10

21/01

21/04

16/01

17/01

18/01

19/01

20/01

21/01

Source) Miki Shoji Co., Ltd.

© 2021 SURUGA bank, Ltd. All rights reserved.

9

■ Situation of Real Estate Market• For actual demand in the housing market, although the supply level has been on a downward trend due to a decrease in the number of housing starts
and a decrease in the inventory for existing condominiums, demand has been strong and the market is firm, as shown by the number of condominiums
sold in the Tokyo metropolitan area, the number of existing condominiums contracted, and the contract rate in the first month of sales in the Tokyo
metropolitan area after the declaration of a state of emergency was lifted in May 2020.
• The Bank promotes each of investment real estate loans, housing loans, and structured finance while carefully monitoring market trends and individualtransaction risks.
Housing
starts by use
住宅着⼯件数_用途別

Unit: 1,000 cases
1,000

Owneroccupied
持家
house
Salary
給与Houses for
貸家
rent

Unit: 1,000 cases

Condominium
分譲

Trends in the number of existing condominiums
中古マンション件数の推移（首都圏）

Unit: %

(metropolitan area)

50

50

800

0

600

25
-50

400
200

0

0

FY20152015年度
2015年度FY20162016年度
2016年度FY20172017年度
2017年度FY20182018年度
2018年度FY20192019年度
2019年度Number of condominiums sold
首都圏マンション販売⼾数
in Tokyo metropolitan area

8

Numberof
販売⼾数
販売戸数
units sold(YoY:right axis)
前年同月⽐(右軸)
前年同月比（右軸）

20/3

20/5

20/6

20/7

20/8

20/9 20/10 20/11 20/12 21/1

No.
of contracts (bar graph)
成約件数（棒ｸﾞﾗﾌ）
成約件数（棒グラフ）

No.
of newly registered (bar graph)
新規登録件数（棒ｸﾞﾗﾌ）

成約件数（前年同月⽐︓右新規登録件数（前年同月⽐︓右軸）(YoY:
right axis)
Source: Real Estate Information Network for East Japan

成約件数(前年同月⽐:右軸)
No.
of contracts (YoY: right axis)軸）

90

Contract
契約率
rate

-100

21/2

No. of newly registered
新規登録件数(前年同月⽐:右軸)

Contract rate of condominiums in the first month ofsales in the Tokyo metropolitan area

Unit: times
Unit: %
2.0

6

20/4

No.
of inventory (area graph)
在庫件数(面ｸﾞﾗﾌ）
在庫件数（面グラフ）
在庫(前年同月⽐:右軸)
Inventory(YoY: right axis)
在庫（前年同月⽐︓右軸）

FY20202020年度
2020年度

Source: Ministry of Land, Infrastructure, Transport and Tourism

Unit: 1,000 cases

20/2

Unit: %

前年同月増減（右軸）(YoY:
right axis)
前年同月増減（右軸）

40

1.5

4

1.0

2

0.5

0

0.0
March
2020年3月
2020年3月
2020

June
2020年6月
2020年6月
2020

September
2020年9月
2020年9月
2020

December
2020年12月
2020年12月
2020

March
2021年3月
2021年3月
2021

Source) Real Estate Economic Institute Co., Ltd.

© 2021 SURUGA bank, Ltd. All rights reserved.

80

20

70

0

60

▲20

50

▲40

March
2020年3月
2020年3月
2020

June
2020年6月
2020年6月
2020

September
2020年9月
2020年9月
2020

December
2020年12月
2020年12月
2020

March
2021年3月
2021年3月
2021

Source) Real Estate Economic Institute Co., Ltd.

10

■ Forecast of New Loans Disbursed• In the fiscal year ended March 2021, loans of 67.9 billion yen were disbursed under the plan of 70.0 billion yen for the full fiscal year amid the severe impact of
the COVID-19 pandemic where a state of emergency was declared two times. Of the total, 37.5 billion yen was disbursed in consumer loans and investment
real estate loans for asset management companies, while 30.3 billion yen was disbursed in structured finance.
• In the fiscal year ending March 2022, we will promote sales by effectively using non-face-to-face tools, such as online interview, aiming to disburse a new targetof 120.0 billion yen.
• In addition to the 120.0 billion yen new loan disbursement plan, we will consider purchasing loans from the market, if their appropriate economic conditions are
secured, in order to strike a balance between the amount of new loans and the repayment of existing loans, excluding the decrease due to special factors suchas the transfer of share-house loans and exemption for repayment of part of the principal amount of investment real estate loans and other loans.

Forecast of the amount of new loans disbursed

Forecast of the amount of new loans disbursed• Trends in the amount of disbursement by business area, which wasplanned to be promoted in the mid-term business plan

(Billions of yen)(Billions of yen)

190.0(Note)
FY3/20120.0

FY3/21

FY3/22

Consumer loans

6.2

22.6

90.0

Loans for asset managementcompanies Investment realestate loans

0.2

14.9

(Note) -Subtotal

6.4

37.5

90.0

Structured finance

6.4

30.3

30.0

12.8

67.9

120.0

67.9

Total

21/3

22/3

23/3

(Note)Final fiscal year of Phase 1 of Mid-term Business Plan “Re: start 2025”(Note)The planned amount of investment real estate loans for asset managementcompanies is included in the 90.0 billion yen of consumers loans, because we
conduct the same promotional activities as for investment real estate loans forindividuals.

© 2021 SURUGA bank, Ltd. All rights reserved.

11

■ FY3/22 Sales Policy• Positioning “Shizuoka and Kanagawa areas,” “Metropolitan area and other major urban areas,” and “Direct” as key markets, we will aim to evolve into
our own model of “closer and more considerate to customers” in each market.
• In the “Shizuoka and Kanagawa areas,” we will reorganize all of our branches from the current eight-area system to the 30-area system with the aim ofestablishing closer relationships with local customers. Then we will promote sales activities, not based on products or focusing on one-size-fits-all
promotion, but the understanding of customers’ needs and comprehensive proposals from customers’ perspective based on area characteristics.

Direction

Our market■ Shizuoka and Kanagawa areas
Community-based development based on the branch
network in the local area
Shizuokaarea
65 branches

Strengthening community-based
services
Eight-area system30-area system

Promotion of comprehensive proposals basedon understanding of customers’ needs
Customer-based

Product-based

Staff for individual
customers

Loan staff

Kanagawa
area
35 branches

Regional
segmentation

Investment
trust staff
Insurance
staff■ Tokyo metropolitan area and other major urban areas
Development focused on secured loans in five
metropolitan areas

10 branches andfour departments(Metropolitan area)
Sales in Tokyo, Shibuya, Shinjuku,
Midtown, Omiya, Chiba, and otherurban areas(Other major urban areas)
Sapporo, Nagoya, Osaka, Fukuoka

Concept of non-price competition
Value〇 competition

×

Development of niche markets

Pricecompetition

Diversity andcarefulness
Custom-madeservices

Uniformity andefficiency
Ready-madeservices

Full product lineup

Limited productlineupAttributes
Segmentation oftargeting
Properties

Areas

Common to markets■ Direct
Net development centered on collaboration withcompanies in different industries

Expansion of customer contacts(Major branches)
ANA branch, Recruit branch,T-point branch, So-net branch,D-bank branch, Dream Direct branch

Promotion of DX for customer relations

Customers
CRM

Notice11 stores

Loans, investment
trusts, insurance, etc.

Companies in different
industries

Application

Personalization
Customer journey

Collaboration

Suruga bank

Digital marketing
foundation

Omni channel

12

■ (Shizuoka and Kanagawa Areas) Strengthening close ties with local communities by reforming the areasystem and branch network• The branch network was reorganized to the 30-area network by reforming the hub and satellite branch network, with the aim of developing further
community-based sales activities. Branches are categorized into hub and satellite branches, and their role of sales will be clarified.
• By centralizing branches’ back office operations into the headquarters, we aim to improve the efficiency of branch functions and achieve both the
expansion of customer contacts and the reduction of operational and branch management costs through a variety of sales styles.
Shizuoka

Sales

Kanagawa

Top line

Saving time toincreasecustomer
contacts

Eight-areasystem30-areasystem■ Further closer ties with local customers■ Developing solution sales based on area
characteristics
Customers

Customers

Hub

Customers

Satellite

Satellite

Satellite

Asset
Business formation
supportsupportCustomers

HubSatellite

Customers

Administration

Next-generation
branchBranchoperation
costs

Customers
Satellite

Hub branches
and satellite
branches
Branchintegration

Hub

BranchSupportCenterSatellite

Customers

HubSatellite

Satellite

Service desk

Customers

Branch-inbranch
Digitization ofoperations

IT
investment
Present

IT investment
DX promotion
FutureDigitization of operations

Review of branch development
and branch management

Promotion of self-service through tablet
terminals

Review of service functions at eachbranchPromotion ofdigital passbooks

Expansion of internet
banking functions

Review of ATM
locationsElimination andconsolidation of
branches13

■ Investment real estate Loans• We disbursed 66% (60% in the first half of the fiscal year) of the investment real estate loans in the full fiscal year to wealthy and semi-wealthy
customers, expanding transactions with the target groups specified in the mid-term business plan.
• The number of non-face-to-face applications received through our website, which started in the second half of the fiscal year, has increased, while thenumber of direct consultations with new individual customers has also been on the rise.

Customer segments specified in the mid-term business plan

Amount ratio of investment real estate loans by customer segment

Target customers

The share of transactions with wealthy customers, including ultra-wealthy
customers, who are positioned as key customers, has been growing.
Customer segments are classified based on their financial assets at the time of loan screening.
Period: April 1, 2020 to March 31, 2021

Marketsegmentation

Past<Amount of financial assets
held> *

FutureBy amount

Ultra-wealthy
customers

By number of cases

Masscustomers<500 million yen or more>
84,000 households

Wealthycustomers

Upper masscustomers<100 million to 500 million yen>
1,183,000 households

Ultra-wealthy andwealthy customers
39%
(28%)

Mass
customers

51%
(50%)

66%

Semi-wealthy
customers

Semi-wealthy
customers
27% (32%)<50 million to 100 million yen>
3,222,000 households

Customers

Upper masscustomers

Customers

Upper masscustomers(60%)

Semi-wealthy
customers
30%
(34%)

Figures in parentheses are from data as of the end of the first half of fiscal 2020.

<30 million to 50 million yen>
7,203,000 households

Ultra-wealthy and wealthy customers: have financial
assets worth 100 million yen or more

Mass customers<Less than 30 million yen>
42,031,000 households

Semi-wealthy customers: have financial assets worth 50
million yen or more but less than 100 million yen

Upper mass customers: have financial assets worth 30 million
yen or more but less than 50 million yen(Quote) NRI estimates

Ultra-wealthy andwealthy customers
21%
(16%)

Mass customers: have financial assets worth
less than 30 million yen(Note)Investment real estate loans include studio apartment loans, single building apartment loans, other secured loans.

Status of receiving consultations on our investment real estate loans
Status ofreceiving
consultations

With deepened understanding of the Bank’s investment
real estate loans, especially among major listed realestate agents, the number of our customer referrals has
increased.

The launch of notification of our financial products and non-face-to-facereception of consultations on real estate portal sites in December 2020
has resulted in an increase in direct consultations from new individual
customers.

14

■ Housing Loans• We developed Suruga’s own housing loan strategy through our long-standing strength of customized services and loan screening know-how based on a
database accumulated over a long term.
• Focusing on the introduction of customers from real estate agents, we have received an increasing number of direct consultations from new individual
customers as our housing loans gains more and more publicity.
• We revised existing financial instruments to meet new lifestyles and senses of values and customers’ needs, and provided loans to self-employed andfreelance customers.

Initiatives to increase housing loans

Amount ratio of housing loans by customer segment

Collaboration with external companies (MFS and iYell) started in May 2021.

We provide various customer segments with housing loans by area in different
measures.(Ratios of loans for customers other than company employees and civil
servants have been on an upward trend.)
Segment sampling period:
October 1, 2020 to March 31, 2021

By numberof cases

By amount

MFS operates an online platform“MOGE CHECK” used by morethan a total of 60,000 applicantsfor housing/real estate investment
loans.
MFS develops a data matching
service that introduces to housing
loan applicants the most suitablefinancial institution according totheir annual income and otherattributes.

iYell operates a housing loan
platform that introduces housing
loan applicants to financial
institutions through a smartphone
application “iYell Dandori” from
more than 2,500 housing
operators nationwide.

SelfemployedCompany
employees andcivil servants

About
47%

Corporate
officers

Contract and Pensioners
agency temp
Local

Through collaboration with the aforementioned external companies, we canprovide loan applicants with appropriate loans, which will lead to an increasein the number of consultations and proposals.

Metropolitan

About
49%

SelfemployedCompany
employees andcivil servants

Corporate
officers

Contract and Pensioners
agency temp

Community-based measures for employees of our corporate customers in
Shizuoka and Kanagawa Prefectures, etc.
Measures for secured loans targeted at areas, segments, usage scenarios, etc.

New measures and promotion of housing loans■ Reinforcement of support for the purchase ofvillas and second houses in local areas■ Web-based application for preliminary
examination■ Increase in direct consultations from new individual
customers

The features of “Second house and resort loan” were revisedand enhanced to enable flexible response (December 2020).

We established a system to complete applications
for preliminary examination of secured loans on our
website. (December 2020)

Among the number of consultations received via website andinbound calls, the percentage of direct consultations from individual
customers without real estate agents: 58% in Q3 → 67% in Q4

15

■ Structured Finance• In the fiscal year ended March 2021, new disbursements totaled 30.3 billion yen at the rate of 2.28%. The outstanding balance as of the end of March
2021 was 33.5 billion yen.
• We have gradually expanded our management resources in terms of both sales and management and have built a medium-risk and medium-return
portfolio while diversifying property types and areas.

Balance composition ratio (as of Mar.31,2021)

Trends in financing amount / Forecast(Billions of
yen)

40

Financing
実⾏額
amountFinancing
実⾏レート
rate

2.4%

2.28%

2.21%

17%

30

30.3

30.0

10

6.4
FY3/20 (Note)
2020年3月期

1.6%

FY3/212021年3月期
2021年3月期

700
70

Renewableenergy再生エネルギー
再生ｴﾈﾙｷﾞｰ
7%

25%

63.5
17%

500
50
400
40

38%

33.5
12%

300
30
200
20
00

Other
than real
不動産以外
不動産以外
estateProperty area composition ratio (Mar.31,2021)

600
60

100
10

Business
事業用
事業用 useyen

FY3/22
2022年3月期
2022年3月期

Trends in balance / Forecast

Residence
レジデンス
レジデンス
Logistics
物流
物流

33.5 billion
14%

1.2%

(Note)Started in October 2019
(Billions of
yen)

32%

5%

20

0

オフィス
Office

2.0%

その他
その他
Other
12%

FY3/202020年3月期
2020年3月期

中部圏area
Chubu
中部圏

4%

6.4
FY3/212021年3月期
2021年3月期

FY3/22
2022年3月期
2022年3月期© 2021 SURUGA bank, Ltd. All rights reserved.

Tokyo
首都圏
首都圏
metropolitan area
Shizuoka
and静岡・神奈川静岡・神奈川Kanagawa
Kansai関⻄圏
関西圏area17%

Otherthan real
不動産以外
不動産以外
estate16

■ Securities Management• We started investment in multi-asset funds in the first half of the fiscal year ended March 2021 (outstanding balance as of March 31, 2021 was 119.5
billion yen). Even at the end of the fiscal year when the yield on U.S. treasuries rose sharply, net total losses remained at -0.1 billion yen, including
unrealized losses of -0.4 billion yen and realized gains of 0.3 billion yen, thanks to effective portfolio management.
• Under the policy to invest in highly liquid assets to diversify risks and stabilize earnings, we have set a target yield of 0.7%.
• We will establish an ALM and risk management system to ensure stable operations with limited downside risks.

Securities portfolio
National
government
bonds

Local government
bonds, etc.

SharesOther

Unrealized gains (losses) on securities
・Valuation difference on available-for-sale securities

Multi-asset fund

Yield on securities
Mar.31,2020

3.63%(Billions of yen)
Fair value

Fair valueNet
unrealized
gains(losses)

Other securities

118.6

6.7

258.4

9.5

+139.7

Shares

14.1

5.8

16.9

8.6

+2.7

Bonds

103.1

0.2

119.0

0.3

+15.9

-

-

119.5

(0.4)

+119.5

1.4

0.6

2.8

0.9

+1.4

Multi-asset fund*

0.62%

Other

0.52%
270.4 6.7

Year-onyear

Mar.31,2021

Net
unrealized
gains(losses)

3.13%

1.26%

(Billions of yen)

Fair value(Note)New investment started under the securities management policy specified in the midterm business plan.

・Portfolio of multi-asset fund(As of the end of March 2021)
154.3
21.0
57.4

119.5
22.6

136.1
15.2

137.7
12.2

51.3

34.2

22.2

86.6

100.6

136.8

30.8
45.0
17/3

62.7

18/3

25.0
119.0
2.5

19/3

20/3

Domestic
stocksTarget yield 0.7%

ForeignstocksJapanesegovernment
bonds

Fair value
119.5 billion
yen
Advanced countries’
government bonds, etc.

21/3

© 2021 SURUGA bank, Ltd. All rights reserved.

17

■ Structural Reform: Restructuring the Branch Network• In the Tokyo metropolitan and other major urban areas, we consolidated six branches to centralize management resources, and promote sales with theaim of strengthening sales capabilities and thorough compliance management.
• In the Shizuoka and Kanagawa areas, we streamlined operations by consolidating three branches, including planned branches, as of May 28, 2021,
taking into account regional contribution and convenience for existing customers, such as the proximity between branches, the number of visiting
customers, and relationships with local governments.

・Branch network (as of April 30, 2021)
Actual branches:
111 branches in total
Shizuoka:
64 branches
Kanagawa:
36 branches
Tokyo metropolitan area:
7 branches
Other major urban areas:
4 branches

・Elimination and consolidation of branches
Areas

Tokyo
metropolitan
areaInternet branches: 11 branches
Total:
122 branches

Other majorurban areas

Kanagawa

Applicable branches

Integration month

Futakotamagawa Branch

July 2020

Kawasaki Branch

August 2020

Tamaplaza Branch

January 2021

Sendai Branch

June 2020

Hiroshima Branch

October 2020

Kyoto Branch

November 2020

Keio University Sub-Branch

June 2020

Well-D Nagaizumi Sub-Branch

April 2021

Tenmacho Branch

June 2021(scheduled)

Shizuoka© 2021 SURUGA bank, Ltd. All rights reserved.

18

■ Response to Borrowers of Share House-related Loans• In order to finally resolve the share house-related loan issue, which is one of the priority issues in the first phase of the mid-term business plan, we have been taking
measures tailored to their individual circumstances, focusing on the unprecedented exemption for repayment of part of the principal amount of loans as well as bulk
transfer of loans.
• For the exemption for repayment of part of the principal amount, we completed sending the primary calculation notice of exemption amount by the end of February 2021.
• We completed a second comprehensive transfer of share house loans in March 2021, following March 2020.
• In March 2021, we informed our applicable borrowers that those who request the above scheme will be required to file a petition for civil conciliation by the end of August2021.
• For borrowers of investment real estate loans other than share house loans, we will respond in good faith in accordance with their individual circumstances, including
exemption for repayment of part of the principal amount.

Response to customers since FY2018
 We established the “Office to Support Customer Owners of Share Houses and Others” whereby we have carefully responded based on each customer’s circumstances, including
lowering the loan interest rate and deferred repayment of the principal amount for a certain period. At the same time, we have considered taking all possible options as a financial
institution, including exemption for repayment of part of the principal amount of the loan using ADR.
 At present, we have not taken legal action if the share house-related loan has become delinquent.
 We adopt the DC method for calculation of allowance for possible losses for share house-related loans. If the loan is delinquent for more than a month, we provide 100% allowance forthe unsecured amount.

Exemption for repayment of part of theprincipal amount of the loan
<Repayment support scheme>

Details: “Exemption for repayment of partof the principal amount of loans for sharehouses and other investment real estateloans” issued on May 15, 2019

Applicable: Share house loans and other investment real estate loans
Content: If the borrower has a rental loss on the property, including loan repayment,
when they individually requested exemption for repayment of part of the principal
amount of the loan, from the perspective of fair share of loss and in view of the
difficulty in their loan repayment, we calculate the loan repayment amountcorrespondent to the settlement amount we are responsible for, which will be offset
with their repayment amount upon mutual consent.
Status: The acceptance of applications was closed on November 30, 2019. We
completed sending to the borrowers who applied for the exemption a primarycalculation notice of the exemption amount, by the end of February 2021.
For borrowers who request the next step, we will take a civil conciliation or
authorized ADR procedure (deadline for petition: August 31, 2021).

Comprehensive transfer of loans<subrogation scheme>

Ref.: “Announcement Regarding Transfer of ShareHouse-related Loan Receivables” issued on March
25, 2020 and March 1, 2021

Target: share house loans
Content: Before we executed share house loans, we did not sufficiently analyze share housespecific risks associated with general investment real estate loans, including inappropriate
action such as ignoring impracticability of business plans. Given that the conciliationcommittee of the court recognized that we have an obligation to compensate for damages,
based on typical unlawful behaviors, we agreed to carry the obligation to pay thepetitioners the settlement amount based on the conciliation recommendation. After
offsetting our claims with our obligation to pay the settlement amount, we will make acomprehensive transfer of share house loans.
Status: The first transfer was implemented in March 2020. (257 borrowers for 44.0 billion yen)
The second transfer was implemented in March 2021. (285 borrowers for 44.2 billion yen)
For the remaining customers, we have recommended that they file a group petition for civil
conciliation by the end of August 2021.

Reflection in and progress of the business forecasts
 We expect to implement the third and subsequent comprehensive transfers in the fiscal year ending March 2022. According to the intention of the remaining borrowers, most of themwished for a comprehensive transfer of their loans, and we expect an increase in credit costs on the assumption of the occurrence of repayment suspension associated with thetransfer. <4.0 billion yen for full fiscal year (including 3.0 billion yen in the 1st half of the fiscal year)> The third comprehensive transfer is expected to be implemented in the second half of the fiscal year. As many more borrowers than before wish for a comprehensive transfer before
the deadline for filing a petition in August, the scale of transfer is expected to expand, where the level of the transfer value is expected to be the same as that of the second transfer
conducted in March 2021. We expect a reversal of allowance for loan losses. <Full fiscal year (2nd half of the fiscal year) -13.0 billion yen>
© 2021 SURUGA bank, Ltd. All rights reserved.

19

■ Status of Single Building Apartment Loans (Except for Share House-related Loans)• Due to strict self-assessment based on the changes in the self-assessment standards at the end of September 2018, non-delinquent loans ofapproximately 700.0 billion yen were classified as loans requiring special attention.
• As of the end of March 2021, most loans were not delinquent.
• We made regular examination of about 9,000 properties out of those for single building apartment loans and confirmed the occupancy status.
We will aim to maintain or upgrade the classification of borrowers by providing them with in-depth support for property management, including reportingto them the management status of the property.
• In fiscal year ending March 2022, we will expect additional provisions to prepare for future credit risks.

Loan balance of single building apartment loans by classification of borrowers and delinquency status (as of March 31, 2021)(Billions of yen)

1,112.2

Portion of single building
apartment loans(excluding share house cases)
192.8

Clients requiring special attention(Note1)

856.9

700.6

696.5

Clients requiring corrective action

164.1

101.7

98.3

Clients at high risk of bankruptcy

91.2

39.8

37.6

Virtual bankruptcy clients/bankruptcy

100.4

38.9

3.6

2,325.0

1,074.1

1,028.9

Credit claims such asloans(Note2)

Borrower classification
Normal clients

Total

Portion not delinquent
192.8(Note1)Loans are classified as requiring special attention if tax return documents are not received or the loan property has negative cash flow even if not delinquent.
(Note2)Credit claims such as loans: Loans and bills discounted, customers’ liabilities for acceptances and guarantees, foreign exchanges, securities lent, suspense
payments equivalent to loans and bills discounted, accrued interest on loans and bills discounted

Occupancy rate of single building apartments (periodic survey)

Occupancy rate in fiscal 2020: 87.3%(Survey results for occupancy rate in fiscal 2019: 86.7%)<Survey>• In principle, the person in charge of bank loans visits the location of property tocheck not only the occupancy status but also the physical condition of the property
and management status.
• If any damage on the property or abnormal management is found, it will be reported
to the borrower.
• The survey is to be conducted on investment properties owned by borrowers where
each borrower’s loan balance is 50 million yen or more.
(the number of targeted single building apartments: about 9,000, accounting for morethan 90% of the loan balance)

For preparation for future credit risks
For financial forecast for fiscal year ending March 2022, we expect
additional provision of 19.0 billion yen to prepare for future credit risks.
 With respect to the single building apartment loans, we carefully examine the status ofeach borrower to review the criteria of borrower classification and consider changing
the method of provision.
(At present, we have no plan to adopt forward looking provisions.) We are considering taking a more conservative estimation method for allowance from aperspective of preparing for anticipated future risks, even if loans are not delinquent atpresent.

© 2021 SURUGA bank, Ltd. All rights reserved.

20

■Reorganization of the Group• In order to review and consolidate group functions and optimize management resources, we have restructured the companies within the Group.
• We reviewed the guarantee business, which was duplicated among three subsidiaries within the Group, and integrated it into DIRECTONE Co., Ltd. At
the same time, we integrate the leasing business to enhance synergistic effects.

・Suruga Bank Group (as of the end of March 2021)
Company name・Review of credit guarantee function

Main business

Suruga Bank

Banking and credit card

Suruga Staff Service Co., Ltd.

Temporary workers dispatching services

DIRECTONE Co., Ltd.

Moneylending, leasing, and guarantee operations
Printing

Suruga Card Co., Ltd.

Credit card

Suruga Capital Co., Ltd.

Investment
Clerical agency services and system engineering

Survivingbusiness
Absorbedbusiness

Money
Creditlending guarantee

A.P.I.

Suruga Computer Service Co.,
Ltd.

Consolidation of
three companies

Absorptiontype merger

Succeededbusiness

Leasing

Surviving company
succeeding in theabsorption-type split

Absorptiontype split

・Clearing company
Company name
LNP
CHUBU SERVICER Co.,Ltd.

Liquidation month andyear
November 2020
March 2021

Main businessInsurance policy
solicitation

Creditguarantee

Defunct company

Leasing

Creditguarantee

Investment

Company split

Servicer(Note)LNP transferred its insurance policy solicitation business in May 2020.
© 2021 SURUGA bank, Ltd. All rights reserved.

21

I Summary of Financial Results for FY3/21

II Business Performance Plan for FY3/22

III TOPICS

■ Initiatives for SDGs
• Taking into account the social responsibilities requested by stakeholders and diversifying social and environmental issues, we have identified priority
issues that must be addressed by the Group in light of its business opportunities and risks, and also formulated important issues (materiality) to realize
a sustainable society and maintain and improve its corporate value.
Identification ofmateriality issues
We identified materiality
issues by referring to thefour pillars of “stakeholder
capitalism metric/measurement standards”
proposed by the World
Economic Forum in 2020.

Principles ofgovernancePeopleSelection anddetermination ofmateriality issues

Suruga Bank group’s materiality
issuesSuruga Bank group’s initiatives

We analyzed and evaluatedelemental information on bothwhat our Group values and whatstakeholders do, and formulated“materiality” issues that areimportant to both sides.

Our Group’s materiality are the following four
issues.
Each materiality issue, which is notindependent but organically linked with theother issues, is an integral part of fulfilling our
responsibilities to all stakeholders.

We promote the following initiatives in order to solveinternal and external issues of each of the four themes
listed as materiality. Each initiative, which is linked to theSDGs, will contribute to the achievement of sustainable
development goals. We will continue to improve andenhance their effectiveness.

Establish a solid foundation
for governancePenetration of the corporate philosophy
Enhancement of corporate governanceEstablishment of a solid compliance system
Realization of customer-oriented business operations
Strengthening of measures to prevent financial crimes

What Suruga Bank
Group values
Corporate Philosophy
Compliance Charter
Mid-term Business Plan
“Re:Start2025”
HistoryX

Create an environment where
employees can play an activerole and grow

What stakeholders value
and expect from the
Suruga Bank Group

Building sustainable local
economies and societies

Prosperity

PlanetEmployees

Customers

Regional
community

Shareholders

Regulatory
authorities

Globalenvironment

Contribute to environmental
conservation

Relevant
SDGs

Human resource development system to support
employees to growEnhancement of work-life balance measures
Promotion of diversity and employment of people withdisabilities
Initiatives to improve the mental and physical health of
employees
Initiatives to increase the motivation of employees
Responding to diverse customer needs through retailbanking
Providing solutions to local companies and businesses
Contributing to regional revitalization throughpartnerships with local governments
Initiatives for Business Continuity Plan (BCP)Supporting culture, art, and sports for children who will
be future leadersParticipation and cooperation in local environmental
conservation activities
Reducing environmental impact by promoting
digitization of business procedures and operations
Promotion of environmental measures for branchfacilities

22■ Community Contribution Activities —Cycling Project/Soccer—• We contribute to the revitalization of local communities through the promotion of bicycle tourism in collaboration with local tourism resources as well as
the dissemination of detailed tourist information by taking advantage of the mobility of bicycles.
• We conducted a disaster drill with the cooperation of local resident associations and municipalities based on “Partnership Agreement for the Promotionof Social Cooperation Activities” with Azul Claro Numazu.

Cooperation with municipalities and local
companies• In fiscal 2020, we signed the “Partnership Agreement on Bicycle
Promotion” with the following municipalities and local companies.
Month ofagreement

Regional revitalization through bicycles
City Promotion

Disseminating information about sightseeing spots invarious areas during bike touring via SNS and the Web

・Hiratsuka LaLa Pota (Hiratsuka, Kanagawa
Prefecture)・Izu Pota (IZUKYU CORPORATION)

・RIDE Oigawa(Oigawa Basin Cycle Tourism Council)

・ Izu for Adults (Beautiful Izu Creation Center)

PartnerJune 2020

Shizuoka Creation of Sacred Place for Cycle Sports
Conference(Chairperson: Governor Heita Kawakatsu)

June 2020

Hiratsuka, Kanagawa

December 2020 Daytona Co., Ltd. (Mori-machi, Shizuoka Prefecture)
December 2020 IZUKYU CORPORATION (Ito, Shizuoka Prefecture)
January 2021

Kona Resort Co., Ltd. (Numazu, Shizuoka Prefecture)

March 2021

Tokinosumika Co., Ltd. (Gotenba, Shizuoka Prefecture)• To co-create new regional value, we signed “Partnership Agreement
for the Promotion of Social Cooperation Activities” with Azul Claro
Numazu.
Cycling event

Soccer players of Azul Claro
NumazuIn view of the spread of the COVID-19 pandemic, we
provided special support for divided cycling events.

Mount Fuji One-Round Cycling Fuji-ichi

Izu Peninsula One -Round Cycling Izu-ichi

23

Reference Materials

■ Corporate Philosophy“I’m glad you’re here...
I’m glad we met...”This perception is our goal.

No matter how much the times change ortime passes, we are committed to providing
service from the customer’s perspective,
staying closely in tune with their everyday
lives providing value, and helping ourcustomers lead more prosperous lives.

<Our Ambition>
We aim to serve as a bank that always thinks of customers first in any situation.
By genuinely listening to our customers and providing added value that only Suruga Bank can deliver, we aim to be the kind of bankthat makes customers feel “I’m glad you’re here...I’m glad we met.”
To provide customers with truly satisfying service, it is vital for staff members who provide these services to find their work meaningful.
Thus, we also strive to be a company that makes not customers, but also staff members feel “I’m glad you’re here... I’m glad we met.”© 2021 SURUGA bank, Ltd. All rights reserved.

Reference Material 1

■ Suruga Bank Mid-Term Business Plan —“Re:Start 2025” (Period: FY2019-FY2025)
Corporate
Philosophy

We want to be a company that makes customers feel,“I’m glad you’re here... I’m glad we met.”
Customer satisfaction

Shareholder value

Employee satisfaction

Contribution to society

Providing value

New Vision for Suruga Bank

Vision・To realize our corporate philosophy, we will create a “new Suruga Bank” that delivers
customer satisfaction and ensures that staff feel their work is meaningful. We will achieve thisthrough a commitment to carrying out customer-oriented business, initiatives in our corebusiness of retail banking, and by creating unique value in ways that are distinct to our bank.
・We will also establish measures for thorough compliance and controlling appropriate
risk/return, and develop a “new sustainable business model” as a public financial
institution that benefits the public.

Strategic
Management

Restructure the core business of “retail banking”
while promoting “marketable activities” to diversify
risks and stabilize profits.
 Establish a revenue base that balance risk andreturn by controlling RA gross operating
profit*.

Promote existing businesses with controlled risk
capital, pursue new business, and prepare forrisks that surface in high-stress environments.
 Even after Basel III is revised, we will maintain acapital adequacy ratio of at least 8% to realize
our business strategy.

* RA (Risk Adjusted) Gross Operating Profit = Gross Operating Profit - Actual Credit Costs© 2021 SURUGA bank, Ltd. All rights reserved.

Reference Material 2

■ Basic Strategy for Phase 1
Environment recognition
Compliance withregulations

Continued negativeinterest rates

 Basel III revision
 Reassess businessboundaries based onmarket entry ofdifferent industries

 Cost reduction andstaff review
 Focus on noninterest-rate-based
business

FinTech support

Social change

Consumer change

 Systemization andlabor-saving
investment
 Platform creation
throughcollaboration withdifferent industries

 Declining
birthrate/aging
population
 Population
concentrating incities Improve awarenessaround inheritanceand asset building Diversification oflabor force, work
styles, and service
needs

Strategy
Phase 2

Addressing
priority issues
Share houserelated loans
Promptly dissolve
relationship withfounding family

Retailbanking Retarget investment real estate loans and improvetheir quality
 Evolve toward a solution-based sales model Expand based on area characteristics

Marketable  Shift away from a credit risk-centric portfolio
activities  Aim for stable operation with contained downside riskNew Partner with external companies
business  Utilize the API collaboration platform

FY2023 FY2025

Establish new
positioning

Phase 1 (FY2019 - FY2022)

Optimizing allocation of management resources
Reform of branch
operations

Reallocation ofhuman resources

Revision of Groupcapabilities© 2021 SURUGA bank, Ltd. All rights reserved.

Cost reduction

Reference Material 3

■ COVID-19 Pandemic Response
Placing the highest priority on the lives and health of customers, employees, and their family members, we will
provide necessary financial services as financial infrastructures essential for maintaining social functions.
[Number of consultations related to COVID-19 and loan responses]
Number of first changes inrepayment conditions ofconsumer loans

Number of first changes inrepayment conditions ofcorporate loans

Number of new
corporate loans

Number of additional responses for
consumer and corporate loans(Cases)・ Number of consultations and responses (by the end of April 2021)
Number of first changes in repayment conditions of consumer
loans:
2,240 cases
Number of first changes in repayment conditions of corporateloans:
164 cases
Number of new corporate loans:
928 cases
Number of additional responses for consumer and corporateloans:
621 cases

793
Declarationof state of
emergency

588

343

Declarationof state of
emergency

235

228

203

172

136
49
March 2020

1

3
April

May

June

July

12
August22
September

Declarationof state of
emergency

54
October

106 101

106

90 72

110

65

November December January 2021 February

171
108 108

March

77

April

Expected impact of a protracted pandemic and the fourth wave of COVID-19
Main businesses

Expected impact

Impact on new loans• In association with economic stagnation or contraction, new loans may be stagnant.
• As it becomes difficult to examine the property for loan execution, which also makes it difficult to screen the loan, new loans
may be stagnant.

Impact on existingloans• Declines in the price of land and properties may increase actual credit costs.
• As borrowers’ repayment sources such as rent income and other income may decrease, actual credit costs may increase
because of our support for borrowers with relaxation of repayment conditions.
• Associated with economic stagnation or contraction, actual credit costs may increase due to worsening corporate earnings.
© 2021 SURUGA bank, Ltd. All rights reserved.

Reference Material 4

〈 Inquiries 〉
IR Office, SURUGA bank, Ltd.
Tel: +81-3-3279-5536
e-mail: ir.koho@surugabank.co.jp

The foregoing material contains statements regarding future business performance. These statements
are not intended as guarantees of any specific future performance, which is subject to a variety of risks
and uncertainties. Actual future business results may differ from the targets contained in the present
material, due to unpredictable changes in the external business environment.

© 2021 SURUGA bank, Ltd. All rights reserved.