SURUGA bank, Ltd.
Financial Results for the nine months ended
December 31，2020

February 12th, 20210 Actual Results for the nine months ended Dec.31,2020; Comparison with Forecast• The ordinary income represented progress of 79.0%, the gross operating income represented progress of 78.2%, and expenses
represented progress of 71.1%, toward the full-year forecasts.
• Actual credit costs in the third quarter were 10.9 billion yen, 54.5% progress toward the full-year forecasts.
• Net income (non-consolidated) in the third quarter was 7.5 billion yen, 151.8% progress toward the full-year forecasts.
• Net income (consolidated) in the third quarter was 9.4 billion yen, 156.9% progress toward the full-year forecasts.
<Consolidated><Non-consolidated>
FY3/21
1Q-3Q(2)

FY3/21(Forecast)

(1)

3Q

Progress(2)/(1)

Ordinary income

85.0

22.0

67.2

79.0％

Gross operating profit (A)

70.0

17.9

54.8

78.2％

Expenses (B)

43.0

10.0

30.5

71.1％

Core net operating profit

27.0

7.7

23.7

87.8％

Ordinary profit

7.0

4.9

13.6

Net income

5.0

3.3

Actual credit costs (C)20.0

RA gross operating profit(A – C)
OHR（B÷A）

Capital adequacy ratio

FY3/21(Forecast)(3)(Billions of yen)
FY3/21
1Q-3Q(4)Progress(3)/(4)

96.0

75.5

78.5％

195.1％

8.0

16.0

200.5％

7.5

151.8％

6.0

9.4

156.9％

3.1

10.9

54.5％

50.0

14.8

43.8

87.7％

61％

56.1％

55.8％

10.8％

11.4％

11.6％

(Note 1) RA (Risk Adjusted) Gross Operating Profit = Gross Operating Profit – Actual Credit Costs(Note 2) Figures of the full-year forecasts on the table are those announced on Nov.13, 2020. The forecast for the FY3/21 was revised, which was announced in “Announcement Regarding the Revision to the Earnings Forecast“
on Feb.12, 2021.

© 2020 SURUGA bank, Ltd. All rights reserved.

１ Forecast for FY3/21 <Non-consolidated & Consolidated>• The full-year forecast for FY2020 has been revised upward in view of the third quarter financial results.
• Ordinary income was revised upward to 87.0 billion yen, 2.0 billion yen above the full-year forecast, mainly due to the increase of interest on loans and discounts
compared to the full-year forecast before revision, as well as gains on the sale and redemption of government and other bonds which were not expected in thefull-year forecast before revision.
• Taking into consideration the factors below, actual credit costs remain conservatively unchanged at 20.0 billion yen
Trend regarding borrowers of share house-related loans: Increase of suspended repayments due to more requests for bulk transfer of loans, etc.
Impact from the prolonged spread of COVID-19, etc.: Impact on existing borrowers due to prolonged strain on the income-making environment(see Reference Materials: Reference 4)• Net income (non-consolidated) has been revised upward to 9.0 billion yen, an increase of 4.0 billion yen versus the full-year forecast before revision, due to theabove-mentioned increase of ordinary profit and decrease in expenses (-2.0 billion yen).
• Net income (consolidated) has been revised to 11.0 billion yen, an increase of 5.0 billion yen versus the full-year forecast before revision.

（Billions of yen）
Previous
forecast
FY3/21 (1)FY3/21
1Q-3Q

Current
forecast
FY3/21 (2)Change(2) – (1)Ordinary income

67.2

85.0

87.0+2.0

Gross operating profit (A)

54.8

70.0

72.0

+2.0

30.5

43.0

41.0(2.0)

Core net operating profit

23.7

27.0

30.0+3.0

Net operating profit

50.7

42.0

40.0(2.0)

Ordinary profit

13.6

7.0

11.0+4.0

Net income

7.5

5.0

9.0

+4.0

Actual credit costs (B)

10.9

20.0

20.0±0.0

RA gross operating profit (A – B)

43.8

50.0

52.0

+2.0

Profit attributable to owners of parent

9.4

6.0

11.0

+5.0Expenses© 2020 SURUGA bank, Ltd. All rights reserved.

2 Actual Credit Costs, Share House-related Loans <Non-consolidated>• Actual credit costs for borrowers of share house-related loans remained mostly unchanged from the interim period at 4.0 billion yen due to adecrease in debtor category downgrades associated with requests for bulk transfer of loans in the third quarter.
• The total coverage ratio for borrowers of share house-related loans increased 0.89% to 95.20% versus end of September 2020.
• Actual credit costs for borrowers other than those of share house-related loans were cumulatively 6.8 billion yen in the third quarter.

・ Actual credit costs and Allowance for loan losses
Item１Q(Billions of yen)

２Q

Actual creditcosts
FY3/21 1Q-3Q

３Q

Allowance

Share house-related loans

1.1

2.9(0.0)

4.0

106.1

Investment property loans (Note)

5.0(2.0)

3.1

6.1

58.0

Housing loans

0.8(0.7)

0.3

0.4

4.6

Unsecured loans

0.3

(0.1)

0.0

0.2

2.2

Business financing loans, etc.

0.0

0.4(0.3)

0.0

8.2

Total

7.3

0.4

3.1

10.9

１79.3

(Note) Investment property loans: Studio apartment loans, Single building apartment loans, and other secured loans

・ Share house-related loans (Status of coverage)
Total creditbalance
AMar. 31, 2020
Sep. 30, 2020
Dec.31,2020

Share house loan
receivables

Covered amount

Unsecured portion

Allowance

Coverage ratio

BCD(B ＋ D) / A

192.1

154.7

72.7

119.3

102.5

91.29％

189.1
187.3

153.5
152.5

71.8
72.2

117.3
115.1

106.5
106.1

94.31％
95.20％(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.
© 2020 SURUGA bank, Ltd. All rights reserved.

3 Outstanding Balance, Yield, Delinquency Rate by Type of Loan<Non-consolidated>•••

Loan yield of both consumer loans and corporate loans for property investment, which were set forth for promotion in the mid-term business plan, was 3.59％.
The rise in the delinquency rate of consumer loans (0.82% increase from the end of September 2020) was mainly due to an increase in the number of delinquentborrowers of share house-related loans, who suspended their repayment because they wish their loans to be transferred.
(The delinquency rate of whole consumer loans was pushed up in part by the fact that delinquent borrowers of share house loans were also delinquent on other loans)Excluding borrowers of share house-related loans, the delinquency rate for all personal loans improved by 0.13% to 2.19% versus end of September 2020.
(Billions of yen)

Sep.30,2020

Type of Loan

Period-end
balanceYield

Dec.31,2020
Delinquency rate

Period-end
balance

Yield

Delinquency rate

2,025.4

3.07％

5.81％

1,989.2

3.05％

6.69％

Housing loans

522.7

2.85％

0.51％

509.9

2.84％

0.31％

Studio apartment loans

180.8

3.40％

1.79％

173.7

3.39％

1.71％

1,129.8

3.26％

3.80％

1,115.8

3.24％

3.69％

Share house loans

153.4

1.46％

45.87％

152.4

1.45％

58.52％

Other secured loans

38.54.81％

1.15％

37.2

4.80％

1.16％

Unsecured loans

185.4

10.26％

2.13％

176.7

10.29％

2.15％

Card loans

122.4

11.61％

0.83％

116.9

11.65％

0.84％

Unsecured certificate loans

63.0

7.64％

4.66％

59.8

7.64％

4.71％

Consumer loans (A)2,210.8

3.66％

5.51％

2,166.0

3.63％

6.33％

Consumer loans (Except for share house-related

2,021.8

2.32％

1,978.7

Secured loans

Single building apartment loans

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

2.19％

17.8

2.25％

－27.2

2.29％－2,228.7

3.63％

5.46％

2,193.3

3.59％

6.25％

(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.
(Note 5) Corporate loans for property investment: Asset management company loans for property investment and asset finance, defined as new business fields in the mid-term business plan.

© 2020 SURUGA bank, Ltd. All rights reserved.

4

■ Execution status of new loan
• In FY20, we conservatively planned to execute new loans of 70.0 billion yen for the full year, considering the impact of COVID-19.
In the first half, our top priority was to support customers who were affected by COVID-19. Since economic activity resumed after the lifting of the stateof emergency, new loans have gradually increased to 38.7 billion yen for the nine months ended Dec.31,2020.
• From January 8, 2021, we aim to achieve our new 70.0 billion yen loan strategy for the full year by continuing post-COVID-world sales activities thatincorporate remote working while continuing to focus on supporting customers affected by COVID-19 amid the reinstatement of state-of-emergency
measures in specific areas.

・ Changes in new loan execution amount promoted in the med-term business planFY3/21
1Q-3Q

1Q(Billions of yen)

2Q

3Q

Consumer loans

15.0

3.8

4.9

6.2

New asset management loans
for property investment

9.3

1.1

3.4

4.8

Subtotal

24.3

4.9

8.3

11.0

Asset finance

14.3

2.1

7.5

4.6

Total

38.7

7.0

15.9

15.7

© 2020 SURUGA bank, Ltd. All rights reserved.

5

Reference Materials Actual Results for the nine months ended Dec.31,2020 (year-on-year basis)<Non-consolidated>
FY3/20
1Q-3Q

Gross operating profit

FY3/21
1Q-3Q

62.2

54.8(7.3)

32.9

30.5(2.3)

Core net operating profit

29.0

23.7

(5.3)

24.6

Main factors

Year-on-year
ChangeExpenses

Net operating profit

Factors that increase or decrease profit(year-on-year basis)(Billions of yen)

50.7

Net interest income

・ Decline in interest on loans(average balance factors –6.2 billion yen, yield factors–1.6 billion yen)

Net fees and commissions

・ Reduction in fees related to securitization

Net other operating income

・ Reduction in profit on sales of debt securitized accounts
receivable (–1.9 billion yen)・ Increase in profit and loss on government and otherbonds (+0.3 billion yen)

Expenses・ Decrease in non-personnel expenses

Gains(losses) on stocks

・ Gains on sale of strategic shareholdings for shares ofcross-owned holdings

Actual credit costs

・ Debtor category downgrades associated with suspended
repayments due to borrowers of share house-relatedloans requesting bulk transfer of loans＋26.1

Ordinary profit

27.4

13.6

(13.7)Net income

18.5

7.5

(10.9)

30.0(Billions of yen)
(5.6)

(13.7)(7.6)

Actual credit costs

7.8

10.9

(1.6)

＋2.3

(3.0)

+3.0

ROE (％)(Net income basis)

11.4

4.2

(7.1)

Profit attributable to ownersof parent

19.4

9.4(10.0)

Earnings per share(yen) (Consolidated)+1.8

Previousyear
results
27.4

Actualresults
13.60

83.9

40.6

(43.3)

Ordinary profit（9 months ended
Dec. 31, 2019）

Netinterest
incomeNet fees andcommissions

Net other
OperatingincomeExpenses

Gains(losses)
on stocks/
otherActualCreditcosts

Ordinary profit（9 months ended
Dec.31, 2020）(Note) Net other operating income excluding gains (losses) on bonds© 2020 SURUGA bank, Ltd. All rights reserved.

Reference Materials 1 Yield/Margins <Non-consolidated>
Interest margins (Non-consolidated)

Loans (Average balance/Yield)

Loan-deposit gross margin

Loans (Average balance)

Loan-deposit margin (after deduction of expenses)

3,120.6

3,228.7(Billions of yen)

3,093.7
2,700.7(Note1)2,436.2(Note2)

Net interest margin

3.50%

3.61%

3.51%
3.30%

2.32%

3.16%

3.60%

3.35%

3.20%

3.12%

18/12

19/12

20/12

3.07%

16/12

2.34%

17/12

(Note1) Factors contributing to the decline in the 9 months ended Dec.31,2020 included a decrease of approximately 108.0 billion
yen resulting from the securitization of studio apartment loans.
(Note2) Factors contributing to the decline in the 9 months ended Dec.31,2020 included a decrease of approximately 90.0 billion
yen associated with the collection of loans from founder-affiliated firms and the transfer of share house-related loans.

1.99%
1.74%

1.80%

Deposits (Average balance / Yield)
Deposits (Average balance)

1.68%
1.50%

4,048.9

1.49%(Billions of yen)

3,613.4

0.95%

0.10%

17/12

18/12

19/12

Yield on deposits

4,048.5

1.19%

16/12

Yield on loans and bills discounted

20/12© 2020 SURUGA bank, Ltd. All rights reserved.

16/12

3,086.7

3,186.2

0.09%

0.05%

0.04%

0.04%

17/12

18/12

19/12

20/12

Reference Materials 2 Expenses and OHR, Capital levels <Non-consolidated>
Trends of Expenses & OHR

Trends of Capital & Capital Adequacy Ratio

Personnel expenses

Gross operating profit

Non-personnel expenses
Taxes

OHR

83.4

Capital adequacy ratio

Own capital(Billions of yen)(Billions of yen)

87.2
339.1

78.2
307.6
62.254.8

36.1
13.8

43.2%

35.5
13.4

19.1

40.7%
18.9

3.0
16/12

35.4
12.1
45.2%

247.7
223.6

32.9
11.1
53.0%

30.5

12.76%

234.2

13.35%
11.40%

11.1
55.8%

20.3

19.0

17.0

3.1

2.9

2.8

2.4

17/12

18/12

19/12

20/12

© 2020 SURUGA bank, Ltd. All rights reserved.

16/12

17/12

9.05%

9.83%

18/12

19/12

20/12

Reference Materials 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-time conditionchanges for individuals

Number of first-time conditionchanges for corporations

793(cases)588

State ofemergency

Number of additional individuals/corporations

Number of new corporate
implementations

・ Number of consultations and responses (until January 31, 2021)
Number of first-time condition changes for individuals
2,044
Number of first-time condition changes for corporations
156
Number of new corporate implementations
748
Number of additional individuals/corporations
378343
235
49

Mar.

Apr.

State ofemergency

228

33May.

Jun.

203

136

11222Jul.

Aug.

Sep.

54

Oct.

103 105

Nov.

171
106

Dec.

99 72

Jan.

Expected impact of a protracted pandemic and the third wave of COVID-19
Main business
Impact on new loans

Expected impact••

Associated 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.

••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 mayincrease 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.

Impact on existing loans•© 2020 SURUGA bank, Ltd. All rights reserved.

Reference Materials 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 presentmaterial, due to unpredictable changes in the external business environment.

© 2020 SURUGA bank, Ltd. All rights reserved.