SURUGA bank, Ltd.
Financial Results for FY3/22

May 27th, 20220

■ Table of contents
I Summary of Financial Results for FY3/22
・Actual Results for FY3/22;Comparison with FY3/21

P.１

・Real 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 and OHR <Non-consolidated>

P.５

・Trends in Capital Adequacy Ratio <Non-consolidated>

P.６

II Business Performance Plan for FY3/23
・Earnings Forecast for FY3/23 <Non-consolidated & Consolidated>

P.７

・Assumptions Underlying Earnings Forecasts for FY3/23< New Loan Assumptions >/< Reasons for Differences from the Previous Fiscal Year >P.８

・Earnings Forecast for FY3/23 <vs. KPI in Final Fiscal Year of Phase 1 of Mid-term Business Plan>

P.10

・Situation of Real Estate Market

P.11

・Business policy

P.13

・Creation of sales personnel and time by improving operational efficiency as well as solution sales

P.14

・Investment Real Estate Loans

P.15

・Housing Loans

P.16

・Structured Finance

P.17

・Unsecured Loans/Unsecured Loans - Financial Inclusion (FI) -P.18

・Securities Management

P.20

・Status of Single Building Apartment Loans / Response to Borrowers of Share House-related Loans

P.21

III TOPICS
・Fiscal 2021 SDGs Initiatives

P.23

Reference Materials© 2022 SURUGA bank, Ltd. All rights reserved.

I Summary of Financial Results for FY3/22

II Business Performance Plan for FY3/23

III TOPICS

■ Actual Results for FY3/22; Comparison with FY3/21• Gross operating profit decreased 7.2 billion yen to 65.3 billion yen, mainly due to a decrease in net interest income of 6.3 billion yen.
• Net operating profit decreased 13.9 billion yen to 36.1 billion yen due to a decrease of 7.3 billion yen in reversal of general reserve forpossible loan losses.
• Real credit costs increased by 3.7 billion yen from the previous fiscal year to 16 billion yen (see the left table below).
• Net income (non-consolidated) decreased by 11 billion yen year on year to 7.8 billion yen due to the above factors.
<Non-consolidated>(Billions of yen)
Actual resultsfor FY3/21

Actual resultsfor FY3/22

Gross operating profit

72.5

65.3

(7.2)

Expenses

40.3

39.7

(0.6)

Core net operating profit

31.1

25.0

(6.1)

Net operating profit

50.1

36.1

(13.9)

Ordinary profit

19.9

10.0

(9.8)

Net income

18.9

7.8

(11.0)

Real credit costs

12.2

16.0

+3.7

Factors causing variation in ordinary profit(comparison with previous year)

Year-on-year＜Real Credit Costs for Fiscal 2022＞

Main factors
Net interest income

・Decline in interest on loans(average balance factors -5.1 billion yen, yield factors -2.5 billion
yen)

Net other operating income

・Loss on sale of private REITs recorded in the previous fiscal year

Expenses・Decrease in personnel expenses

Real credit costs

・Additional provisions were made for investment real estate loans
other than share house loans as precautionary provisions (see thetable below left).

（Billions of yen）

20.0

（Billions of yen）
16.0

Real credit costs+0.0
Normal amount (a)Real credit costs arising from non-special-factor receivables
Real credit costs to share house borrowers

Comprehensive transfer ofshare house loans (c)Gain on reversal of reserve for possible loan losses due to theimplementation of the Group III share house loan transfer

Preventive allowances (d)Taking into account the situation in which some of our clients
who are using real estate loans for investment other than sharehouse loans are engaged in systematic negotiations, we madeadditional allowances ahead of schedule compared to ordinaryloans.

(9.9)

(0.6)
(6.3)

Share house-related loans
(b)

+0.6
(0.2)

(0.3)

3.9
(3.7)

Revised secured
mortgage collateral (e)We reviewed the categories based on our company's periodic
review rules.

PreviousYear
results
19.9(14.7)

Actualresults
10.0

40.4
０

(13.0)

Ordinary profit(FY3/21)

Net interest
incomeNet fees andcommissions

Other operating
income*Expenses

Gains onstocks/bonds/otherReal credit
costs

Ordinary profit(FY3/22)*Excludes gains/losses on bonds.

© 2022 SURUGA bank, Ltd. All rights reserved.

1

■ Real Credit Costs, Share House-related Loans <Non-consolidated>• The real credit cost of the share house-related borrowers decreased by 20.2 billion yen due to the collective transfer of loans by the thirdgroup in Q4.
• Real credit costs for real estate loans for investment other than those for share-house related loans amounted to 36.1 billion yen, mainly
due to the implementation of precautionary provisions for those who have suspended repayments to some of their clients throughsystematic negotiations (see page 1).
• As of the end of March 2022, the outstanding balance of share house-related borrowers was 53.6 billion yen, representing a 96.87%
preservation rate, as a result of the past 3 consolidated loan transfers.
・ Real credit costs/allowance for loan losses (FY3/22)
Item

１Q

（Billions of yen）

２Q

３Q

4Q

Real credit
costs for FY3/22

Allowance forloan losses

Share house-related loans

1.2

(8.0)

1.4

(14.8)(20.2)

25.7

Investment real estate loans*

1.9

(1.3)

11.2

24.4

36.1

91.9

Housing loans

(0)

(0.7)

0.2

(0.2)

(0.7)

3.1

Unsecured loans

0.1

(0)

0.1

0

0

3.4

Monetary claims bought

―

―

0.1

0

0.2

0.2

Business financing, etc.

0.1

0.1

0.3

0

0.5

8.6

Total

3.4

(10.1)

13.3

9.4

16.0

133.1

*Includes studio apartment loans, single building apartment loans, and other secured loans.

・ Coverage status on share house-related loans
Total credit balanceA

Share house-relatedloans

Mortgage collateral or

Unsecured portion

Allowance

Coverage ratio

guarantee B

CD(B＋D)/A

March 2019

250.3

201.9

91.4

158.8

139.3

92.20％March 2020

192.1

154.7

72.7

119.3

102.5

91.29％March 2021

135.7

107.2

52.5

83.1

76.7

95.24％March 2022

53.6

41.9

26.2

27.4

25.7

96.87％*Based on obligors of share house-related loans.
*Mortgage collateral or guarantee: Calculated by multiplying the estimated amount of collateral, etc. by a fixed rate (revised in first half of current fiscal year)*Total credit balance, share house-related loans: Loans and bills discounted, suspense payments equivalent to loans and bills discounted, and accrued interest on loans and bills discounted.

© 2022 SURUGA bank, Ltd. All rights reserved.

２

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>• The loan yield of the whole area promoted for the conversion of asset "quality" to middle risk/middle return is 3.54% (total (E)).
• The delinquency rate for individual loans remained high for share house-related lenders due to the suspension of repayment of loans
associated with the 4th Group's request for lump-sum transfer of loans, and some customers who are using investment real estate loans
have suspended repayment as a result of organized negotiations. In addition to these factors, the balance of personal loans, which is thedenominator, decreased, resulting in a 2.10% increase in the delinquency rate from the end of the previous period to 6.81% (A).
• In order to improve the delinquency rate of investment real estate loans, we not only provide repayment support such as modification ofterms and conditions, but we also carried out actions such as feedback to customers of information on real estate damage and otherconcerns discovered in our own periodic surveys and provided consultation on changes in management companies, etc. Significant
changes in the delinquency status of loans without special factors has not been observed.
（Billions of yen）
March 2021

Loan category
Period-end balance

Secured loans
Housing loans
Studio apartment loans
Single building apartment loans

Share house loans
Other secured loans
Unsecured loans
Card loans
Unsecured certificate loans
Consumer loans (A)Consumer loans(excluding share house-related loans)
Investment real estate loans for asset

1,905.4
497.9
167.8
1,096.0
107.1
36.4
170.0
112.8
57.1
2,075.5

Yield

March 2022
Delinquency rate

3.08％
2.83％
3.39％
3.24％
1.40％
4.73％
10.32％
11.69％
7.63％
3.66％

1,939.8

Period-end balance

4.93％
0.27％
1.58％
3.50％
49.06％
0.58％
2.17％
0.82％
4.83％
4.71％

1,693.1
457.6
142.3
1,017.7
41.8
33.4
145.4
98.0
47.4
1,838.5

2.14％

1,784.9

Yield

Delinquency rate

3.09％
2.79％
3.37％
3.21％
1.39％
4.57％
10.40％
11.77％
7.57％
3.67％

7.18％
0.31％
2.64％
8.96％
61.91％
0.38％
2.44％
0.89％
5.64％
6.81％
5.37％

15.1

1.95％

－

33.5

1.81％

－

Structured finance, etc. (C)

33.5

2.28％

－

68.9

2.27％

－

Monetary claims bought (D)

－

－

－

59.7

1.89％

－

2,124.1

3.63％

4.60％

2,000.8

3.54％

6.26％

management companies (B)Total (E︓A+B+C+D)*Delinquency rate = Loans past due for three months or more / loan balance. *Yield: Yield for customers (excluding guarantee fee and accrued interest), period-end balance basis.
*Yield and delinquency rate of studio apartment loans, secured loans, consumer loans, and the total (A+B+C+D) are calculated based on original claims before securitization.
*As the balance is aggregated by loan type, if borrowers of share house loans or customers participating in collective bargaining default on scheduled repayments, the delinquency rate of other types of loans will be affected.

© 2022 SURUGA bank, Ltd. All rights reserved.

３

■ Yield/Margins, Loans and Deposits Yield/Average Balance <Non-consolidated>• The interest rate on loans and deposits decreased by 0.04% to 1.77% from the previous fiscal year due to a decline in the loan yield (down 0.10%
from the previous fiscal year) caused by a decline in the loan execution rate compared to the previous fiscal year 2018 following the shift to abusiness model of medium-risk, middle-return that reduces risks, as well as the continuation of measures to reduce the loan execution rate associatedwith changes in conditions, which exceeded the decline in the expense ratio (down 0.06% from the previous fiscal year).
• Net interest margin fell 0.16% to 0.78%.
• The balance of outstanding loans decreased by 170.3 billion yen from the previous year to 2,244.3 billion yen, partly due to special factors(consolidated transfer of loans related to share houses).
• The balance of deposits increased by 97 billion yen to 3,291.5 billion yen.

Loans (average balance / yield)

Net interest margin
Loan-deposit
margin (overall)

3.52%

Loan-deposit margin(after deductionof expenses)

Net interest margin

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

3,229.7

3.27%

3.15%

<Special factors behind change in loans and bills
discounted＞

Mar ’20︓ Studio apartment loan securitization,collection of loans from founding families, 1sttransfer* (approx. -200 billion yen)

3,054.7
2,664.7

3.07%

2.97%

3.61%

Mar ’21︓2nd transfer * (approx. -44.2 billion yen)
Mar ’22︓3rd transfer * (approx. -60.5 billion yen)

2,414.7*Loans receivable related to share-houses

2,244.3

3.32%

3.19%

3.12%

3.02%

Mar‘19Mar ‘20Mar ‘21Mar ‘22

2.37%
1.93%
1.74%

1.81%

1.77%
Mar ’18

Deposits (average balance / yield)

1.68%
1.45%

4,047.0

1.14%

0.94%

3,504.2

Mar‘19Mar ‘20Mar ‘213,099.2

3,194.4

3,291.5

0.04%

0.04%

0.04%

0.04%

Mar‘19Mar ‘20Mar ‘21Mar ‘22

0.78%
0.08%

Mar ’18

Average deposit balance(Billions of yen)

Yield on deposits

Mar ‘22
Mar ’18© 2022 SURUGA bank, Ltd. All rights reserved.

４

■ Trends in Expenses and OHR <Non-consolidated>• OHR rose 5.2% to 60.8% due to a decline in gross operating profit despite steady progress in cost cutting.
• As part of the structural reforms set forth in the Mid-term Business Plan, in order to realize the optimization of the store network, store
consolidation and closure (13 stores) and store relocation (7 stores) are being promoted, taking into account such factors as thestrengthening of sales force and cost reduction through resource consolidation, the number of store visitors, and maintaining conveniencefor existing customers.
Trends in expenses & OHR
Personnel
expenses

Gross operating profit

Non-personnel
expenses◆Optimization of store networks for structural reforms
set out in the Mid-term Business Plan
Taxes

115.1

OHR

（Billions of yen）

＜Elimination and consolidation of branches＞
Consideration of consolidation and closure from the viewpoint of enhancing sales capabilities
and reducing costs through resource consolidation and proximity of stores

99.9
Areas

80.3

Target storesTokyo metropolitan area

・Futako Tamagawa Branch ・Kawasaki Branch・Tama Plaza Branch ・Midtown Branch

Other major urban areas

・Sendai Branch ・Hiroshima Branch ・Kyoto Branch

72.5
65.3
46.7
17.7

46.8
15.9

43.7
14.8

54.4%

55.6%
40.3
14.8

Kanagawa

・Keio University Branch Office

Shizuoka・Well-D Nagaizumi Branch Office ・Denmacho Branch・Numazu Shizuura Branch ・Izu Chuo Branch・Numazu Ashitaka Branch (Scheduled for Jun 2022）

60.8%
39.7
14.2

＜Store relocation＞

Relocate the following stores based on customer convenience and store maintenance costs

25.0

Areas

46.8%
40.5%

27.1

25.6

22.6

22.5

3.8

3.7

3.3

2.8

2.9

Mar ’18

Mar‘19Mar ‘20Mar ‘21Mar ‘22

Target stores

Other majorurban areas

・Fukuoka Branch ・ Nagoya Branch（Scheduled for Jul 2022）

Kanagawa

・Fujisawa Branch ・Atsugi Branch

Shizuoka・Shizuoka Branch ・Numazu Minami Branch・Fuji-Yoshiwara Branch© 2022 SURUGA bank, Ltd. All rights reserved.

５

■ Trends in Adequacy Ratio <Non-consolidated>• The non-consolidated capital adequacy ratio rose 0.22% to 12.35% from the previous fiscal year (12.68% on a consolidated basis) evenafter the repurchase of treasury stock in March 2022 worth 17.6 billion yen.
• The figure is higher than the 10% target set for the final year of Phase 1 of the Mid-term Business Plan.
Trends in capital & capital adequacy ratio
Own capital

Capital adequacy ratio（Billions of yen）

12.15%

12.13%

12.35%
 Acquisition of treasury stock

10.28%
8.80%

18.7% of the outstanding shares (excluding treasury stock)324.7

before the share repurchase

258.8
241.4

Method of acquisition

︓ Off-floor purchase of treasury stock(ToSTNet -3)

Date of acquisition

︓ March 9, 2022

245.2

213.7

Total number of shares ︓ 43,414,000 shares
to be acquired
Total cost:

Mar ’18

Mar‘19Mar ‘20Mar ‘21︓ 17.6 billion yen

Mar ‘22© 2022 SURUGA bank, Ltd. All rights reserved.

６

I Summary of Financial Results for FY3/22

II Business Performance Plan for FY3/23

III TOPICS■ Earnings Forecast for FY3/23 <Non-consolidated & Consolidated>• Gross operating profit is expected to decrease by 6.3 billion yen to 59 billion yen, reflecting a decrease in net interest income.
• Core net operating profit is expected to decrease by 4 billion yen to 21 billion yen, mainly due to a decrease in gross operating profit,
despite a decrease in expenses.
• The real credit cost is projected to be 7.5 billion yen in the first half and 6 billion yen in the second half of the annual 13.5 billion yen.
• Net income is expected to be 6.5 billion yen on a non-consolidated basis and 7 billion yen on a consolidated basis.
[Non-consolidated]（Billions of yen）

[Consolidated]
FY3/23 Forecast
FY3/22 Results(1)

FY3/23 Forecast

Full year(2)

1st halfYear-on-year(2)-(1)Cons-parent

Full year(2)

differential

42.5

84.0

+8.0

1st half

Ordinary income

83.6

38.5

76.0

(7.6)

Gross operating profit

65.3

30.0

59.0

(6.3)

Expenses

39.7

19.5

38.0

(1.7)

Core net operating profit

25.0

10.5

21.0

(4.0)

Ordinary profit

10.0

3.0

7.5

(2.5)

3.0

8.0

+0.5

Net income

7.8

2.5

6.5

(1.3)

2.5

7.0

+0.5

Real credit costs

16.0

7.5

13.5

(2.5)

6.0 yen±0 yenDividends per share

6.0 yen（Billions of yen）

<Premise Behind FY3/23 Real Credit Cost Forecast>①②③(3)-(2)

Real credit costs for non-special-factor receivables, such as share-house-related borrowers and institutional negotiators, areexpected to be 5.5 billion yen for the full year, with provision for general reserve for possible loan losses due to a rise in the
expected loss ratio as a result of preventive provision made in the previous fiscal year.
The real credit cost to share house-related borrowers is assumed to be minus 2 billion yen for the full year, taking into account thegain on reversal of allowance for loan losses in the first half of the fiscal year due to the implementation of the lump-sum transferof share house loan claims by the fourth group.
As for the precautionary provision, we plan to make additional provision of 10 billion yen for the full year, taking into account thestate of systematic negotiations among some clients using real estate loans for investment other than share house loans.
(* Additional reserves for the previous fiscal year and the current fiscal year are expected to provide a certain level of benefits.)© 2022 SURUGA bank, Ltd. All rights reserved.

Full
year

1st half
7.5

13.5①Normal amount

3.5

5.5

②Share house-related loans

(2.0)

(2.0)

③Preventive allowances

6.0

10.0

Real credit costs７

■ Assumptions Underlying Earnings Forecasts for FY3/23< New Loan Assumptions >• In the fiscal year ended March 2022, we implemented a total of 163.8 billion yen in all business areas we are promoting, with the aim oftransforming "quality" into a middle-risk, middle-return approach. Of this total, 54.5 billion yen was disbursed for consumer loans andinvestment real estate loans for asset management companies, while 49.2 billion yen was disbursed in structured finance, and 59.9 billion
yen was acquired for monetary claims bought.
• In the fiscal year ending March 2023, we plan to extend new loans of 150 billion yen and acquire monetary claims bought of 40 billion yen,and promote sales by making effective use of non-face-to-face tools.

Forecast of New Loan Disbursements *Propulsion loan

（Billions of yen）

Monetary claims bought

190.0
163.8

（Billions of yen）

40.0

59.9
67.9

• Trends in the amount of disbursement by business area, which was
projected to be promoted in the mid-term business plan

150.0

FY3/21

FY3/22

FY3/23
forecast

Consumer loans

22.6

35.5

110.0

Loans for asset management companies
Investment real estate loans

14.9

19.0

※ ー

Subtotal

37.5

54.5

110.0

Structured
finance

30.3

49.2

40.0

Total (A)

67.9

103.8

150.0

ー

59.9

40.0

67.9

163.8

190.0

103.8

Monetary claims bought (B)

21/3

22/3

23/3
Forecast*Amount of new execution (acquisition) of business areas promoted by consumer loans,investment real estate loans for asset management companies, structured finance,monetary claims bought, etc.

Total total (A)+(B)* The projected amount of investment real estate loans for asset management companies is
included in 190 billion yen of consumers loans in the graph on the left, because we conduct thesame promotional activities as for investment real estate loans for individuals.

© 2022 SURUGA bank, Ltd. All rights reserved.

８

■ Assumptions Underlying Earnings Forecasts for FY3/23 <Reasons for Differences from the Previous Fiscal Year>• The new loan disbursement amount is projected to be 190 billion yen, and the new disbursement rate is assumed to be about 2% on the assumption of"quality" conversion to middle risk and middle return.
• Gross operating profit is expected to decreased by 6.3 billion yen from the previous year, reflecting a decrease in net interest income due to a decrease
in interest on loans.
• Expenditures are expected to decrease by 1.7 billion yen from the previous fiscal year as a result of ongoing structural reforms outlined in the Mid-term
Business Plan.
• Real credit costs are expected to decrease by 2.5 billion yen from the previous fiscal year, estimating additional provisions for the purpose of proactively
reflecting future credit risk, such as the fourth comprehensive transfer of share house loans and single building apartment loans.
（Billions of yen）

[Earnings Forecast for FY3/23 and Factors for Differences with FY3/22 Results]

FY3/23
Forecast
7.5

FY3/22
Results
10.0

10.0
Year-on-year
(2.5)

(0.4)

+2.5
(6.3)

+1.7

Gross operating
profitExpenses0
Ordinary profit(FY3/22)

Real credit costs© 2022 SURUGA bank, Ltd. All rights reserved.

Other

Ordinary profit(FY3/23)９

■ Earnings Forecast for FY3/22 <Comparison with KPI in Final Fiscal Year of Phase 1 of Mid-term Business Plan >• In the final year of the Mid-term Business Plan, the earnings forecast is that RA gross operating profit and OHR will be below KPI, but net
income (non-consolidated and consolidated) will be at the projected level. The capital adequacy ratio is assumed to be higher than the KPI.
• The new loan disbursement amount in the business area to be promoted is projected to be 190 billion yen as per the Mid-term Business
Plan.
• The company plans to spend 38 billion yen, down 2 billion yen from its Mid-term Business Plan, as it has advanced structural reforms.
(Billions of yen)
FY3/23
FY3/21 Results

Nonconsolidated

Other
indicators(Final Fiscal Year of Phase 1)[KPI]

RA gross operating profit (Note1)

49.3

45.5

49.0

OHR (Note2)

60％

64％

Less than 60%

Net income

7.8

6.5

6.0

12.3％

13.1％

More than 10%

7.9

7.0

7.0

New Loan (Note3)

163.8

190.0

190.0

Expenses

39.7

38.0

40.0

(10.6％)(11.3％)(8％)

Capital adequacy ratio

Consolidated

FY3/22 Forecast

Profit attributable to owners ofparentPersonnel expenses(reduction rate from FY 2018)(Note1) RA (Risk Adjusted) Gross Operating Profit = Gross Operating Profit – Real Credit Costs(Note2) OHR (Overhead Ratio) = Expenses / Gross Operating Profit(Note3) New loan︓ Amount of new execution (acquisition) of business areas promoted by consumer loans,investment real estate loans for asset management companies, structured finance, monetary claims bought, etc.
© 2022 SURUGA bank, Ltd. All rights reserved.

１０■ The Real Estate Market's Status• In terms of the market capitalization of REITs, investment capital inflows in the first half of fiscal 2021 were driven by the resumption of
economic activity under living with COVID-19, rising inflationary pressures, and the inclusion of Japanese REITs in overseas stock indexes.
In the second half of the year, although the market faced a severe environment with rising interest rates at home and abroad, the re-spreadof the COVID-19 caused by the Omicron variant, and geopolitical risks, it has kept rebound and recovery because of expectation forovercoming concerns for each risk from the beginning of March.
• In particular, the logistic REIT has been strong against the backdrop of increasing use of e-commerce in the COVID-19 pandemic. The
commercial REIT also rose higher than that before the COVID-19 pandemic with sights set on the post-COVID-19 era.
• In offices, although rents continue to fall due to the development of remote work and the vacancy rate remains high, the outflow ofinvestment funds is limited.
• Foreign investment funds are expected to remain at a certain level, partly because the yield gap in domestic real estate has become more
attractive to investors as a result of the shift in monetary policy around the world and the rise in interest rates in Europe and the UnitedStates, and partly because of a sense of undervalue against the backdrop of the weak yen.
(Apr
1, 2021 = 1)
(2021年4月1日=1)

1.4

REIT Market Capitalization
Housing

Healthcare

Hotels

OfficeCommerce

Logistics

Unit:
yen/tsubo
単位︓円/坪
23,500

Office Market

Unit: %
単位︓％
13

Average rent
Vacancy rate - Tokyo
Vacancy rate - Osaka

1.3

10

Vacancy rate - Nagoya

21,0001.2

71.1

18,500
4

1

0.9

21/04

21/07

21/10

22/01

16,000

16/04

1

17/04

18/04

19/04

20/04

21/04

22/04
Source: Miki Shoji

Source: Bloomberg© 2022 SURUGA bank, Ltd. All rights reserved.

１１

■ The Real Estate Market's Status• In the housing market, the number of housing starts has increased compared to the previous year, and the number of usedcondominiums in stock has also been on an upward trend, suggesting that supply will gradually recover. In terms of demand,
although there was a temporary decline due to the re-spread of COVID-19 caused by Omicron variant and other mutants,
there was a recovery trend in the number of condominiums sold in the Tokyo metropolitan area and the first-month contract
rate for condominiums in the Tokyo metropolitan area. However, because supply constraints under COVID-19 and impact
from the state of affairs at Ukraine, wood prices are rising, leading to concerns that demand will decline as rising material
prices are passed on to housing prices.
• Our company carefully assesses these market trends and the risks associated with individual projects and promotes
investment real estate loans, housing loans, and structured finance.

Owner-occupied house

1,000

Houses for rent

Trends in the number of existing
condominiums (metropolitan area)

Unit: 1,000 cases

Housing starts by use by year

Unit: 1,000 cases

SalaryCondominium

50

Unit: %

100
60

800

25

600

20
-20

FY2016FY2017FY2018FY2019FY2020

FY2021

Number of condominiums sold in Tokyo metropolitan

7
6
5
4
3
2
1
0
2021年3月
Mar.2021

Number of units sold2021年6月
Jun.2021

2021年9月
Sep.2021(YoY:right axis)

2021年12月
Dec.2021

Unit: times
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

2022年3月
Mar.2022

Unit: %

No.of contracts(bar graph)
Inventory(YoY:right axis）
No.of newly registered(YoY:right axis）
Source: Real Estate Information Network for East Japan

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

90

-60

22/3

22/2

22/1

21/12

21/11

21/10

21/9

21/8

21/7

21/6

21/5

21/4

21/3

21/2

21/1

20/12

20/11

20/9

20/8

No.of inventory(area graph)No.of newly registered(ber graph）
No.of contracts(YoY:right axis）

Source: Ministry of Land, Infrastructure, Transport and Tourism

Unit: 1,000
cases

20/10

0

20/7

20/6

20/5

20/4

0

200

20/3

400

Contract rate

Unit: %

40

(YoY:right axis)

80

20

70

0

60

▲20
▲40

50
Mar.2021
2021年3月

Source) Real Estate Economic Institute Co., Ltd.

© 2022 SURUGA bank, Ltd. All rights reserved.

Jun.2021
2021年6月

2021年9月
Sep.2021

Dec.2021
2021年12月

Mar.2022
2022年3月

Source) Real Estate Economic Institute Co., Ltd.

１２

■ Sales Policy• The first phase of the Mid-term Business Plan aims to build a sustainable business model through initiatives in the core retail banking
business.
• In the “Shizuoka and Kanagawa areas,” reorganization to a 30 area system was completed in fiscal 2021. Based on the characteristics ofthe area, we are promoting comprehensive customer proposals.
• In the “metropolitan and regional areas,” the Group specializes in the promotion of secured loans mainly in the five major metropolitan
areas with large markets.
• In "Direct," we are using digital technology to expand customer contacts and digital marketing to create optimal proposals for customers.

Direction

Our understanding of the market
Strengthening community-based services■ Shizuoka and Kanagawa areas
Community-based development based on the branch network in
the local area
Shizuoka area
Kanagawa area
61 branches
36 branches
Population: 3.68 million

Eight-area system30-area system

Customer-based

Product-based

Staff for individual
customers

Loan staff

Regional
segmentation

Population: 9.22 million
Private business locations: 370,000
New housing starts: 63,864

Private business locations: 190,000
New housing starts: 21,271

Promotion of comprehensive proposals based onunderstanding of customers’ needs

Investment
trust staff
Investment
trust staff

Loans, investment trusts,
insurance, etc.

■ Tokyo metropolitan area and other major urban areas
Development focused on secured loans in five metropolitan
areas
9 branches and three departments
New housing starts: 430,393(Share of nationwide statistics: 50.3%)*Total prefectures with branches(Metropolitan area)
Sales in Tokyo, Shibuya, Shinjuku,
Omiya, Chiba, and other urban
areas(Other major urban areas)
Sapporo, Nagoya, Osaka, Fukuoka■ Direct

Concept of non-price competition

〇

×

Value
competition

Development of niche markets

Pricecompetition

Diversity and carefulness

Uniformity and efficiency

Custom-madeservices

Ready-made services

Full product lineup

Limited product lineup

Attribute
Segmentation oftargeting
Properties

Common to markets

Net development centered on collaboration with companies indifferent industries

Expansion of customer contacts

Promotion of DX for customer relations

Customers
Notice11 branches

Areas(Major branches)
ANA branch, Recruit branch,T-point branch, D-bank branch,
Dream Direct branch

Companies in different
industries

CRM

Personalization

Application

Customer journey

Collaboration

Suruga bank
Population: as of January 1, 2022 (Ministry of Internal Affairs and Communications) / private business locations: as of June 1, 2019 (Economic Census for Business Activity) /New housing starts: FY2021 (Ministry of Land, Infrastructure, Transport and Tourism)© 2022 SURUGA bank, Ltd. All rights reserved.

Digital marketing
foundation

Omni channel

１３

■ Creation of sales personnel and time by improving operational efficiency as well as solution sales• By centralizing the hub and satellite store systems and back-office operations, the company will shift personnel to the front desk andexpand customer service hours.
• Establishing a system to provide solutions to customers' various problems by being close to them and opening up communication more.
Expansion of hub and satellite store systems

Solution Sales

 Generating personnel and time to expand contact with customers
through the development of hub and satellite systems, which will serveas the pivot for reviewing store functions, and the concentration of
back-office operations at headquarters

Branch Support Center

Consider supporting
independent stores in the
futureindependent
stores Business support
 Asset formation
support Service desks<Operations and verification support concentrated
at headquarters〉
・Seizure operation・Money laundering prevention and identity verification
system registration
・Support for opening new accounts and operation tochange various notifications・Electronic form checking ・Online consultation on
satellite store operations, etc.

By the end of March 2022, we had expanded our hub
and satellite store network to 65 stores.
Created approximately 5,500 hours/month(equivalent to approximately 36 full-time employees）*Calculated from actual figures from December 2021 to March 2022
after expansion of 65 stores© 2022 SURUGA bank, Ltd. All rights reserved.

＜Promotion system＞*1) Specialized in asset consulting business (45 as of March 31, 2022)*2) Engaged in both sales branch and asset consulting services(150 as of the end of March 2022)

Asset Consulting Office

Support teamNEW

Support

Implementationteam

FA
counters

Customers

FA

Planning team

Deliver the rightsolution with highexpertise

Satellite branch

Personal Solution Sales

Satellite branchSatellite branchStarted handling the end-of-life support service "musu-bi"< Visualize your assets >●Creating Asset Lists●Safe deposit box service

Corporate solution sales

Hub branch

Expanding customer contact by utilizing personnel
and time saved

hub and satellite store systems

 FA * 1 (Financial Advisor) in Shizuoka and Kanagawa
 FA counters * 2 installed at each store< Prepare for the day >●Funeral insurance< My style "farewell" >●Introduction of funeral style Establish a system that enables the entire Suruga Bank Group tocooperate to solve problems faced by businesses in Shizuoka
and Kanagawa, which are its main bases.
 Cooperate with local tax accountant corporations and actively
utilize outside knowledge
Corporate
Consulting Dept.
・Stationed at major
bases・Sharing of
knowledge and knowhow

Branch office・Understanding
customer issues
・Service delivery
contact
・Storage andutilization of
information

Group/External
Company・Expert knowledge
・Consulting
・Provision of various
services

１４

■ Investment Real Estate Loans• The Division Specializing in Investment Real Estate Loans was reorganized into two divisions: the Outbound Promotion Division and theInbound Promotion Division establishing an efficient and effective business management system.
• In outbound promotion, we will increase the number of projects through regular relationships with existing customers as well as realestate agents.
• We will continue to focus on transactions with high-net-worth customers, which are positioned as priority targets in our Mid-term
Business Plan.
Promotion System for Investment Real Estate Loans
Outbound Promotion

Amount ratio of investment real estate loans by customer segment
・We will continue to focus on transactions with wealthy customers, including the super wealthy.

We will strengthen contact with a wide range of real estate agents, including
brokerage firms and condominium developers, and strengthen our approach
to existing wealthy and semi-wealthy customers.
Sales

Division Specializing
in Investment Real
Estate Loans(Outbound)
Real estate agent

Customer referral

Real estate
agent

Financial planningconsultationNew
customers*Customer segments are classified based on their financial assets at the time of loan screening.
Period: April 1, 2021 to March 31, 2022

By amount

Mass customers

Periodic relations

Mass customers

Existing
customers
Financial planning consultation(property repurchase)

Upper mass

Semi-wealthy
customers
19%

The Division Specializing in Investment Real Estate Loans and Headquarters
Promotion Department will work together to further deepen relationships withaffiliated real estate agents and increase the number of inbound projects whileaiming to secure stable projects.

Headquarters
Promotion
Department

51%

64％

Ultra-wealthy andwealthy customers

Relationshipbuilding

Ultra-wealthy andwealthy customers
25%

Ultra-wealthy andwealthy customers
45%

Inbound Promotion

Division Specializing
in Investment Real
Estate Loans(Inbound)By number of cases

Upper mass

Semi-wealthy
customers

Semi-wealthy
customers
26%

Upper mass

Mass customers

Reference: NRI market classification is applied to segments (amount of net financial assets held)
Customer referral

Promotion ofpartnership

Affiliated realestate agent

Financialplanning
consultationNew
customers

Marketclassification

Ultra-wealthy and
WealthySemi-wealthy(Amount of
Financial AssetsHeld)*(100 million JPY or
more)(50 million to 100
million JPY)

© 2022 SURUGA bank, Ltd. All rights reserved.

Upper mass
(30 to 50 million JPY)

Mass
(Less than 30 million
JPY)

１５

■ Housing Loans• We offer a full lineup of housing loans tailored to customers and areas in various segments, using our custom-made services andexamination know-how accumulated over many years.
• We work with local governments and external companies to increase inbound projects.
• In response to changes in lifestyles caused by the COVID-19, we will continue to improve customer convenience and operational
efficiency through contract procedures, etc.
Housing loan strategy
Apply Suruga's strengths to establish
our domain

Customized products
Segmentation based on recognition ofenvironment
Freelance
Contract/temp workers

Side/secondary job

etc.

Seniors

Diverselabor force

Women
Foreign workers

Diversecareerpaths

etc.

Entrepreneurs
Professional

Screening

One-to-One Response

Diversework
arrangeme
nts

Amount ratio of housing loans by customer segment



By number ofcases

SelfemployedCompany
employees andcivil servants
National metropolitan
area housing loancustomer database

Corporate
officers

Other

Residential Mortgage Loans for Migrants and Residents

Local
Metropolitan

A housing loan exclusively for users of the migration and settlement support system
implemented by local governments in Shizuoka and Kanagawa Prefectures. In April
2022, we concluded a Partnership Agreement with Chigasaki City, Kanagawa
Prefecture to Promote Migration and Settlement for Regional Revitalization.

Collaboration with housing loan platform operators MFS and iYell enables us tomatch with our core customer base.

 SUUMO-affiliated housing loan
Introducing SUUMO Affiliated Housing Loan of Recruit Branch and sending
customers through Sugosoku, a housing loan information site operated by Recruit.

About
37%

Selfemployed

About
40%

Pensioners

etc.

 Collaboration with MFS and iYell
External
companies

By amountLong-accumulated
knowledge

Cooperation with local governments and external companies

Local
government

We provide various customer segments with housing loans by area in*Segment sampling period:
different measures.
April 1, 2021 to Mach 31, 2022

Company
employees andcivil servants

Corporate
officers

Pensioners
Other

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.

Improving customer convenience in contract proceduresWith the strengthening of Direct (see page 13) housing loan promotion and theincrease in non-face-to-face needs due to the COVID-19 pandemic, we will
improve customer convenience by utilizing the web conference system andintroducing postal mail contracts.

© 2022 SURUGA bank, Ltd. All rights reserved.

１６

■ Structured Finance• In the fiscal year ended March 2022, new disbursements amounted to 49.2 billion yen, at a disbursement rate of 2.27%. As of the end of
March 2022, there were outstanding loans of 68.9 billion yen.
• We will continuously improve our ability to assess real estate properties, and we will also work on LBOs and other non-real estate projects tobuild a portfolio of middle risk and middle return.
• By expanding and developing human resources, accumulating organizational knowledge, collaborating with the audit department andexternal experts, and other measures, we are promoting the development of a framework for risk management and governance while
maintaining mobility.
Trends in financing amount / Forecast（Billions of yen）

* Started in October 2019

Disbursed(1H)

500

2.21%

Balance composition ratio by category (March 31, 2022)

Disbursed(2H)

2.28%

Rate

2.27%

2.4%

28%

36%

OfficeResidence

2.2%

Logistics

400

29.1

2.0%

7%

300

1.8%

2%

20.6

200

Business Use

27%

Non-real estate(LBO/Renewable energy etc)

1.6%

Composition ratio by property area (March 31, 2022)

20.1

100

0

6.4

9.7

FY3/20FY3/211.4%

1.2%

FY3/2236%

43%＜Changes in the number of employees＞

March 2020
6 people

Tokyo metropolitan area
Shizuoka and Kanagawa
Kansai area

March 2021
13 people

Chubu area

March 2022
21 people© 2022 SURUGA bank, Ltd. All rights reserved.

2%
2%

8% 9%

Other
Non-real estate(LBO/Renewable energy etc)

１７

■ Unsecured Loans• In order to expand our company's customer base, we are promoting smartphone accounts on the Internet and at stores. We are making
proposals for other transactions based on transaction data such as QR settlement and account transfer.
• Purpose-based loans are being promoted in major cities with the aim of increasing the number of customers (e.g. dental clinics).
• In order to effectively enhance/cross-sell transactions, our data, including account data, is constantly updated and provided in real-timeand MA tools are used to share information in a timely manner.
• In addition to the above unsecured loan promotion activities, we are taking on initiatives that lead to the development of new markets
based on the theme of cooperative measures with existing alliance partners and FI.
Unsecured Loan Promotion Strategy by Segment
Strengthen contact with new customers on theWeb

Promoting transactions with potential
customers for unsecured loans to meetthe needs of loans in the process oftransactions

Prompt response to loan needs bycreating effective contact points withexisting customers with unsecuredloans leading to increasedtransactions

Points ofappeal/enhancement ofawareness

Improve UX + engagement
rates

Enhancing transactions✔Subaccount✔Charge benefits such
as QR settlement✔Product Referrals↑✔Increase in the numberof D2C consultations
by use promotion✔Via smartphone✔eKYC identity
verification

Additional quota
Loans by purpose✔Non-face-to-facereception✔Shortest overnight
response to theexamination results

Iterative use

Responding to other usage needs

Our company Alliance × Expansion of non-face-to-face business

Smartphone account, etc

Development of new markets■Utilization and expansion of non-face-to-face sales■ Alliance strategy with external companies
Establish and promote new collaborative models with other companies (finance/other industries)
Collaboration with companies aiming to enter
the financial business based on the theme ofFI

Cross selling

Promotion of utilization

Smartphone
account

Appealing
product

Loans bypurposeTarget Customer Segment

Enhancing transactions/cross-selling

Improvement and expansion of products andservices provided with existing alliancepartners© 2022 SURUGA bank, Ltd. All rights reserved.

Plan and implement digitization of customer contacts and our company business flow
Expansion of products and services thatenable "online consultation/application - >contract" to be handled in a non-face-to-facemannerWorking with tech companies to improve
UI/UX and improve sales and operational
efficiency

１８

■ Loans/Unsecured Loans - Financial Inclusion (FI) Direction of FI Promotion Office Activities【Development of our company products for each target customer with the aim of solving social issues】[Environment recognition]

There are people
who have trouble
talking about theirfinancial concerns.

[Key Target Customers]
Workers with foreign nationality(regardless of whether they have permanent residency or not)・ Increasing year by year
(1,000 people)

Number of foreign workers in Japan

2,000

Solving financial
worries leads to amore peace of mind.

1,084

1,279

1,460

1,659

1,724

1,727

1,000

0

More opportunities
and choices in life.

[Exclusive merchandise]
Account exclusively forforeign nationals
・Customers with foreign nationality
who do not have permanent
residency can open accounts fromtheir smartphones.
・Cash card with Visa debit function
can be selected.

Auto loans for those offoreign nationalities

2016

2017

2018

2019

2020

2021

Source: Ministry of Health, Labour and Welfare

People who have difficulty getting a loan

【Expanding tie-ups to enhance product development,
improvement, notification, cooperation, etc.】【Multilingual services as target customers diversify】

Introduction of multilingual
website solutions (WOVN)

Announcing our company exclusive products to networks andcustomers of each partner© 2022 SURUGA bank, Ltd. All rights reserved.

・Foreign nationals can apply is they
have a visa with no restrictions on
employment.
・It can be used not only for cars, butalso for various purposes such as
motorcycles, licenses, and vehicle
inspection fees.

Launching interpretation
services at our call centers(Polyglot Link)

１９

■ Securities Management• The balance of investment in the multi-asset fund, which started investing in fiscal 2020, stood at 290.2 billion yen at the end of March 2022.
• In 2022, overseas interest rates rose sharply, the crisis in Ukraine happened, and stock prices adjusted. As a result, the multi-asset fund had avaluation loss of 9.7 billion yen, and after taking into account realized gains, the overall loss was 8.2 billion yen.
• The target yield is 1.3% (net of costs) under a policy of diversifying risks and stabilizing profits by investing in highly liquid assets.
• We will control our portfolio while closely monitoring the market environment.

Unrealized gains (losses) on securities

Securities portfolio
National
governme
nt bonds

3.63％

Local government
bonds, etc.

SharesOther

・Valuation difference on available-for-sale securities

Multi-asset fund

Yield on securities

3.13％
0.62％

0.52％

136.1

137.7

22.6
51.3

15.2
34.2

12.2
22.2

62.7

86.6

100.6

18/3

19/3

20/3

6.7
119.5
25.0

2.5

119.0
21/3

Net unrealized
gains (losses)

Fair value

Net unrealized
gains (losses)

Other securities

258.4

9.5

454.2

(1.4)

+195.7

Shares

16.9

8.6

15.8

7.5

(1.0)

Bonds

119.0

0.3

143.5

(0.3)

+24.4

Multi-asset fund*

119.5

(0.4)

290.2

(9.7)

+170.7

2.8

0.9

4.5

1.0

+1.6

Other

290.2

Fair value*New investment started under the securities management policy specified in the Mid-term Business Plan.

8.4
270.4

Y on Y

Mar.31 2022

Fair value

0.51％
466.2

136.8

Mar.31 2021

(Billions of yen)(Billions of yen)

・Portfolio of multi-asset fundTarget yield 1.3％ (after costs)

Mar.31 2021
Domestic
stocks

23.9
143.5
22/3

© 2022 SURUGA bank, Ltd. All rights reserved.

Mar.31 2022
ForeignstocksJapanesegovernment
bonds, etc

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

Foreign
Domestic stocks
stocksJapanesegovernment
bonds, etc

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

２０

■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*1 at the end of September 2018, non-delinquentloans of approximately 560 billion yen were classified as loans requiring special attention.
• As of the end of March 2022, 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 reporting to them the management status of the property.
Loan balance of single building apartment loans by classification of borrowers and delinquency status (End of March 2022)（Billions of yen）
Borrowerclassification

Credit claims such as loans *2

Portion of single building apartmentloans(excluding share house cases）

Portion not delinquent

1,167.4

239.9

239.9

Clients requiring special attention (*1)

693.3

568.1

565.7

Clients requiring corrective action

90.5

66.6

64.0

Clients at high risk of bankruptcy

65.8

39.7

37.0

134.1

93.3

4.4

2,151.3

1,007.7

911.2

Normal clients

Virtual bankruptcy clients/bankruptcy
Total＊1 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.
＊2 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 2021: 87.4%(Survey results for occupancy rate in fiscal 2020: 87.4%)<Survey>• In principle, the person in charge of bank loans visits the location of the property to check 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 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 more than 90% of the loan balance)• In FY 2022, measures to prevent the spread of COVID-19 were continued and the measures were carefully implemented.

© 2022 SURUGA bank, Ltd. All rights reserved.

２１

■ Response to Borrowers of Share House-related Loans• In order to finally solve the share house-related loan problem, which is one of the priority issues in the first phase of the Mid-term Business
Plan, we are continuing to respond to each customer's individual circumstances, focusing on unprecedented initiatives such as “the partial
cut in principal” and “the comprehensive transfer of loans”.
• We implemented comprehensive transfer of share house loans 3 times, in March 2020, 2021, and 2022. The fourth is scheduled to be
implemented in the first half of fiscal 2022, and, by the end of August 2021, we plan to complete all procedures for customers who have
filed for collective arbitration, as well as to complete the comprehensive transfer of loans.
• For customers who are using investment real estate loans, etc., other than share house loans, in addition to a partial cut in principal, thepolicy is to take a serious response according to each customer's individual circumstances.
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 part ofthe principal amount of loans for share houses
and other investment real estate loans” 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. By the end of
February 2021, we completed sending to the borrowers who applied for the
exemption a primary calculation notice of the exemption amount. For borrowers
who request the next step, we are proceeding with a civil conciliation or authorized
ADR procedure.

Comprehensive transfer of loans<subrogation scheme>

Ref.: “Announcement Regarding Transfer of ShareHouse-related Loan Receivables” issued on March
25, 2020 and March 1, 2021, March 25 2022

Target: share house loans
Content: Before we executed share house loans, we did not sufficiently analyze share house-specificrisks associated with general investment real estate loans, including inappropriate action
such as ignoring impracticability of business plans. Given that the conciliation committee ofthe court recognized that we have an obligation to compensate for damages, based on
typical unlawful behaviors, we agreed to carry the obligation to pay the petitioners thesettlement amount based on the conciliation recommendation. After offsetting our claims with
our obligation to pay the settlement amount, we will make a comprehensive transfer of sharehouse loans.
Status: The first transfer was carried out in March 2020. (257 borrowers for 44.0 billion yen)
The second transfer was carried out in March 2021. (285 borrowers for 44.2 billion yen)
The third was implemented in March 2022 (404 debtors, 60.5 billion yen in claims).
It is scheduled to be completed by the fourth implementation in the first half of fiscal 2022.

Reflection in and progress of the business forecasts
 In the first half of fiscal 2022, it is expected that the forth comprehensive transfer of loans will be implemented. By the end of August 2021, we plan tocomplete all actions of comprehensive transfer of loans for customers who have requested the comprehensive transfer of loans and have filed forcollective arbitration for this matter.
© 2022 SURUGA bank, Ltd. All rights reserved.

２２

I Summary of Financial Results for FY3/22

II Business Performance Plan for FY3/23

III TOPICS

■ Fiscal 2021 SDGs Initiatives• We support the recommendations of the TCFD to further contribute to environmental conservation. We established an investment andloan policy (sector policy).
• We aim to create an environment in which employees can play an active role, to achieve a work-life balance, and to increase employee
motivation.
• We are contributing to regional revitalization through close cooperation with companies and local governments on bicycle promotion andthe development of city promotions.
Contributing to Environmental Conservation- The Suruga Group's Materiality ■Supporting TCFD * Recommendations

Development of an environment where employees can play anactive role and grow - Materiality of the Suruga Group ■Promoting Diversity

In December 2021, we expressed our support for the recommendations of the TCFD anddisclosed information on climate-related risks and opportunities based on the recommended
framework in four areas: Governance, Strategy, Risk Management, and Indicators and Targets.
In the future, we will further analyze and improve the disclosure of information on climatechange.
*Climate Financial Disclosure Task Force
The target for CO2 emissions in FY 2030 is a 46% reduction from FY 2013 levels.
*Monitoring Indicator: Scope 1 (Direct) + Scope 2 (Indirect) CO2 Emissions■Establishment of investment and loan policy (Sector Policy)•

As an employer conforming to the standards set forth in the Act
on Promotion of Women's Participation and Advancement, we
received the highest rank of "Eruboshi" (the third level).

With the aim of creating a workplace in which female employees play an active role, our company has actively
promoted female employees to management positions, provided support for long-term career development, andexpanded its maternity and paternity leave systems. We will continue to respond to the increasing diversity ofsociety and strive to create a workplace environment where each and every employee, regardless of gender orage, can work energetically and demonstrate their abilities to the fullest.

•

The Kakegawa Branch was certified as AAA, the highest level ofthe Kakegawa City Child-Raising Friendly Business Office *.

In order to clarify policies for specific sectors that have a significant impact on theenvironment and society through transactions, we have established and announced policies(Sector Policies) concerning investments and loans in specific sectors as responsible providersof funds.

* From FY 2017, the city and certified social insurance and labor consultants havebeen examining offices and other facilities in Kakegawa City that are actively
working to create an environment in which employees can balance work andchild raising, and have certified them in three levels (AAA, AA, A).

■Introduction of Shizuoka Green Denki * CO2-freeelectricity from Shizuoka Prefecture< Initiatives for Child Care Support > Online return to work program during childcare leave so that
employees can return to work smoothly after childcare leave When employees return to work, they are transferred to work
locations near their homes or daycare centers at the request of
employees.
 Review of working hours system
Shorter working hours︓
Maximum extension until preschool age
Exemption from overtime work:
Extension until elementary school age

As part of our efforts to realize a decarbonized society, we havechanged the electricity used at stores and other facilities in Shizuoka
Prefecture to "Shizuoka Green Denki" electricity, which emits no CO2emissions. This project is expected to reduce annual CO2 emissions
by approximately 215 tons.
Facilities
introduced(10 facilities)

Shimizu Branch, Miho Branch Office, Shizuoka Branch, Shizuoka Minami Branch,
Shizuoka Higashi Branch, Shimada Branch, Fukuroi Branch, Haibara Branch, Sagara
Branch, employee dormitory* Chubu Electric Mirize Co., Ltd. supplies electricity produced in Shizuoka Prefecturewith zero CO2 emissions. We have achieved zero CO2 emissions by utilizing theenvironmental value and local production value derived from renewable energy
sources such as hydroelectric power plants utilizing the abundant water resourcesof the Oigawa, Tenryugawa, Fujigawa and Abegawa rivers located in Shizuoka
Prefecture.

Eruboshicertification
mark(the third level)

Certified Logo Mark＜Certification Issuance Ceremony＞

At the same time, we are fostering a corporate culture to promote the system, deploying
personnel with consideration for health during pregnancy, and providing after-sales care until
returning to work.

© 2022 SURUGA bank, Ltd. All rights reserved.

２３

■ Fiscal 2021 SDGs Initiatives
Building a Sustainable Local Economy and Society:
The Suruga Group's Materiality

City promotion (information on sightseeing spots in each area by
bicycle is sent via SNS and Web)

■Suruga Bank Cycling Project・Hiratsuka LaLa POTA *(Hiratsuka City, Kanagawa Prefecture)・Miyapota *(Fujinomiya City, Shizuoka Prefecture)・Izunokuni Marugoto Pottering(Izunokuni City, Shizuoka Prefecture)

・Shizuchari Touring(Shizuoka City, Shizuoka Prefecture)

The Suruga Bank Cycling Project was launched in 2010. We have developed the initial
purpose of “to promote the enjoyment of road bicycles” and we aim to create new tourism
value by promoting cycling tourism in cooperation with local tourism resources, and support
local service and tourism industries by providing detailed tourism information utilizing themobility of bicycles.

Cooperation with local governments and private companies
In FY 2021, we signed partnership agreements for promoting bicycles with 13 local
governments and private companies, including 4 new private companies. As a leader in cycle
tourism, we will continue to contribute to building the foundation for regional cooperation.
＜Partners as of the end of March 2022＞
Contract area
Utsukushi Izu Sozo Center
Koyama-cho, Shizuoka Prefecture

Subjected area
Izu Peninsula Area, Shizuoka Prefecture
Koyama-cho, Shizuoka Prefecture

Roots Sports Japan

Shizuoka Prefecture

Shizuoka Prefecture Cycle Sports Area Creation Council

Shizuoka Prefecture

Hiratsuka City, Kanagawa Prefecture

Hiratsuka City, Kanagawa Prefecture

Daytona Corporation

Shizuoka and Kanagawa Prefectures

IZUKYU CORPORATION

Izu Peninsula Area, Shizuoka Prefecture

Kona Resort

Izu Peninsula Area, Shizuoka Prefecture

Tokinosumika

Gotemba Area, Shizuoka Prefecture

Sompo Japan Insurance Inc New

Shizuoka and Kanagawa Prefectures

TEPCO Power Grid New*Short for "pottering". Pottering refers to a light bike ride, like a walk, in the suburbs.

Cycling event
With the spread of COVID-19, many premium rides are held in small groups that are not
crowded with people.

Shizuoka Prefecture

WALKRIDE New

Shizuoka and Kanagawa Prefectures

PLEASURE New

Izu Peninsula Area, Shizuoka Prefecture

Nagaizumi-cho Ride Ashitaka Sansui-jinja
Shrine Hillclimb 30 km© 2022 SURUGA bank, Ltd. All rights reserved.

One Lap Cycling Around Mount Fuji: Fuji-ichi

２４

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.”© 2022 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 institutionthat 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 - Real Credit Costs© 2022 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

Addressing
priority issues
Share houserelated loans
Promptly dissolve
relationship withfounding family

RetailbankingPhase 2✔ 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

Optimizing allocation of management resources
Reform of branch
operations

Reallocation ofhuman resources

Revision of Groupcapabilities© 2022 SURUGA bank, Ltd. All rights reserved.

Cost reduction

FY2023 FY2025

Establish new positioning

Phase 1 (FY2019 - FY2022)

Reference Material 3

■ 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 ofgovernanceSelection anddetermination ofmateriality issues

Suruga Bank group’s materiality
issuesWe 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.

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

PeopleRelevant SDGs

Establish a solid foundation
for governance

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© 2022 SURUGA bank, Ltd. All rights reserved.

Reference Material 4

■ State of Response to Customers of Investment Real Estate Loans
•
•
•

•

We continue our sincere response to customers of investment real estate loans through special measures such as exemption for repayment of part of the principal
amount of loans and the comprehensive transfer of loans for share houses.
In about three years, around 40% of property owners have an outstanding loan balance of 0, while around 50% are continuing to repay without having requested an
exemption for repayment of part of the principal amount of loans or comprehensive transfer of loans, or having engaged in collective bargaining.
While around 10% of property owners with an outstanding loan balance have not requested an exemption for repayment of part of the principal amount of loans orcomprehensive transfer of loans, and have not participated in collective bargaining, around two-thirds of those have responded or are expected to respond, such as
by consenting with the Bank to procedures for an exemption for repayment of part of the principal amount of loans or requesting a comprehensive transfer of sharehouse loans including future scheduled amounts.
The remaining property owners other than this group have not requested an exemption for repayment of part of the principal amount of loans, reached an agreementwith the Bank, or engaged in collective bargaining such as by entrusting a law firm or other entity. The Bank continues to respond sincerely toward a resolution withthese property owners.

Agreed to or expected to

No agreement to exemption, etc. orparty to collective bargaining, etc.

agree to exemption, etc.

No balance
Released May 15, 2019

(paid, etc.)"Report on Survey of All Properties Concerning
Investment Real Estate Loans"
Real estate properties covered by survey

37,907
Continuing repayments(no application for exemptions, etc.)(As of end of March 2022)© 2022 SURUGA bank, Ltd. All rights reserved.

Reference Material 5

<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 notintended as guarantees of any specific future performance, which is subject to a variety of risks anduncertainties. Actual future business results may differ from the targets contained in the present material, due
to unpredictable changes in the external business environment.
© 2022 SURUGA bank, Ltd. All rights reserved.