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Explanatory Meeting of Financial Results
for the Fiscal Year Ending March 2020
1
Table of Contents１ About the Bank
Corporate Profile
２ Outline of Financial Statements1. Financial Statements for the Fiscal
Year Ending March 2019（Overall）2. Loans 〜Balance by Segment〜3. Loans 〜Yield by Segment〜4. Securities Investment5. Income from new business
〜Consultation services ・ Leasing ・Bank cards〜
6. Sales of Financial Instruments7. Expenses8. Credit Costs9. Forecast of Results for the Fiscal Year
Ending March 202110. Increasing Equity and Return of Profits
to Shareholders11. Response to Cross-shareholdings
（Financial Institution Shares）
３ Medium-Term Business Plan4
1. Trends in Business Reform and Productivity Improvement Efforts
2. Sales Strategy3. Consultation Services4. Overseas Business Support5. Leasing Business6. Initiatives toward Creating Cashless
Society7. Card Strategy8. Support for Business Revitalization
and Management Improvement9. System Strategy①
４ Management Strategy
6
789
10
11121314
15
16
1819
202122
1. Response to COVID-192. Basic Policy of Medium-Term Business
Plan3. Strategy of Medium-Term Business Plan4. Management Benchmarks and Targets5. Capital Adequacy Ratio / ROE
５ ESG Initiatives
1. ESG Initiatives2. ESG Initiatives（Ｅ）3. ESG Initiatives（Ｓ）4. ESG Initiatives（Ｇ）
6 Reference Material1. Changes in Key Figures①2. Changes in Key Figures②
24
2526272829
3031
32
36373839
4041
10. System Strategy②11. System Strategy③12. Personal Strategy
333435
2
1
１. About the Bank
1
Name The Hokkoku Bank, Ltd.
Stock code 8363（First Section, Tokyo Stock Exchange）
Location of
Headquaters
2-12-6 Hirooka,
Kanazawa, Ishikawa
Founded December 18, 1943
Total Assets 5,082.1 billion yen
Corporate Profile Branch Nework
Tokyo 1Osaka 1Nagoya 1Singapore 1
都市・海外支店
Overseas representative
office
Shanghai 1Bangkok 1
Deposits（Including negotiableCertificate of deposit）
3,712.6 billion yen
RatingS&P : A-（Long term）R&I : A+（Long term）
Loans 2,617.9 billion yen
Total outstandingshares
29,110
Thousand shares
Affiliates
The Hokkoku General Leasing Co., Ltd.The Hokkoku Credit Service Co., Ltd.
The Hokkoku Credit Guarantee Co., Ltd.
The Hokkoku Management, Ltd.The Hokkoku Servicer, Ltd
The Digital Value, Ltd
１. Corporate Profile
MoneyPlaza 9
Ishikawa 87
Toyama 11
Fukui 3
Naoya
Tokyo
Osaka
The number of bases
97The number of Branches
105(Including branch in branch 8)⇒ 4
1
２. Outline of Financial Statements
1
2-1. Financial Statements for the Fiscal Year Ending March 2020 (Overall)
16.6
13.2 12.114.7
12.7 11.99.4
8.0 6.6
Mar. 2018 Mar. 2019 Mar. 2020
(Billions of yen) Non-consolidated profit and loss
Net business profit Ordinary profit Profit
(1) Outline of profit and loss
[Non-consolidated] (Millions of yen)
FY2018 FY2019 Change Change (%)
Ordinary income 56,610 64,050 7,440 13.1%
Ordinary profit 12,780 11,977 △ 803 △ 6.2%
Profit 8,023 6,676 △ 1,347 △ 16.7%
Net business profit 13,253 12,162 △ 1,091 △ 8.2%
[Consolidated] (Millions of yen)
FY2018 FY2019 Change Change (%)
Ordinary income 67,114 74,740 7,626 11.3%
Ordinary profit 14,165 13,181 △ 984 △ 6.9%
Profit* 8,583 7,310 △ 1,273 △ 14.8%
(2) Capital adequacy ratio
End of
Mar. 2018
End of
Mar. 2019
End of
Mar. 2020Change
12.32% 11.78% 10.30% △ 1.48% Consolidated capital
adequacy ratio
12.32%
11.78% 10.30%
End of Mar. 2018 End of Mar. 2019 End of Mar. 2020
Capital adequacy ratio
* Profit attributable to owners of parent
(3) Non-consolidated results （Millions of yen）
FY2018 FY2019 Change
Gross business profit 41,509 41,584 75
Net interest income 35,556 34,876 △ 680
Interest on loans and discounts 26,302 26,260 △ 42
Interest and dividends on securities 13,263 10,326 △ 2,937
Interest on deposits, etc. (△) 351 310 △ 41
△ 3,658 △ 1,399 2,259
Fees & commissions 5,604 5,938 334
Other business profit (Excluding gain/loss on bonds) 349 769 420
(△) 28,256 29,422 1,166
Personnel cost (△) 14,372 14,261 △ 111
Non-personnel cost (△) 12,004 13,062 1,058
Net business profit 13,253 12,162 △ 1,091
Loss (gain) related to securities 2,681 9,929 7,248
Amount of credit costs (△) 3,195 9,759 6,564
Ordinary profit 12,780 11,977 △ 803
Extraordinary gain/loss △ 710 △ 1,154 △ 444
Income taxes (△) 4,047 4,147 100
8,023 6,676 △ 1,347
Interest associated with short-term
investment
Profit
Expenses
6
1
2-2. Loans 〜Balance by Segment〜
(billions of yen)End of Mar.
2018End of Mar.
2019End of Mar.
2020Change(fromMar.2019)
Change(fromMar.2019)
Business loans 1,179.6 1,268.6 1,286.7 18.1 1.4%
Consumer loans 850.1 944.3 988.6 44.3 4.6%
Housing loans 807.1 901.8 948.0 46.2 5.1%
Other loans 43.0 42.5 40.5 △ 2.0 △ 4.7%Local governments andpublic corporations 383.1 369.9 342.5 △ 27.4 △ 7.4%
(billions of yen)End of
Mar. 2018End of
Mar. 2019End of
Mar. 2020Change (fromMar. 2019)
Change (fromMar. 2019)
Total of 3prefectures inHokuriku area
2,194.2 2,350.8 2,399.0 48.2 2.0%
Ishikawa 1,732.7 1,812.8 1,820.2 7.4 0.4%
Toyama 381.6 434.3 462.2 27.9 6.4%
Fukui 79.8 103.5 116.5 13.0 12.5%
Others 218.7 232.1 218.9 △ 13.2 △ 5.6%
Breakdown by company size
Breakdown by area
Breakdown by type
Yield of loans and loan balance at end of fiscal year
1,552 1,595 1,739 1,892 1,973
320 311 291 321 303 464 419 383 370 343
1.27%1.23%
1.13%1.06% 1.02%
End of Mar. 2016 End of Mar. 2017 End of Mar. 2018 End of Mar. 2019 End of Mar. 2020
billions of yen
Local governments and public corporations Middle market and large companies
SMEs, etc. Loan yields
7
End of Mar. 2018
End of Mar. 2019
End of Mar. 2020
Change(from Mar.
2019)
Change(from Mar.
2019)
Total Loans 2,412.9 2,582.9 2,617.9 35.0 1.3%
SMEs, etc. 1,738.7 1,892.1 1,972.8 80.7 4.2%
(Ratio SMEs, etc) 72.0% 73.2% 75.3% 2.1% －
Middle market and large companies, etc 291.1 320.9 302.6 △ 18.3 △ 5.7%
Local governments and public corporations 383.1 369.9 342.5 △ 27.4 △ 7.4%
(billions of yen)
• Total loan balance at the end of Mar. 2020 increased 35.0 billion yen YOY to 2,617.9 billion yen, reflecting efforts to
increase loans to SMEs and individuals in the Bank’s home area of Hokuriku.
• Loans to SMEs, etc. increased by 80.7 billion yen YOY and made up 75% of total loans.
1 8
2-3. Loans 〜Yield by Segment〜
(％)
FY2016 → FY2017 → FY2018 → FY2019Total of 3prefectures inHokuriku area
1.582 -0.070 1.512 -0.084 1.428 -0.063 1.365
Ishikawa 1.574 -0.077 1.497 -0.087 1.410 -0.059 1.351
Toyama 1.613 -0.038 1.575 -0.069 1.506 -0.076 1.430
Fukui 1.586 -0.102 1.484 -0.109 1.375 -0.088 1.287
Others 0.535 0.007 0.542 0.011 0.553 -0.001 0.552
Yield by area（Business loans）
Yield by Segment(％)
FY2016 → FY2017 → FY2018 → FY2019
Business loans 1.352 -0.029 1.323 -0.047 1.276 -0.039 1.237
Consumer loans 1.323 -0.247 1.076 -0.164 0.912 -0.058 0.854
secured 1.170 -0.245 0.925 -0.157 0.768 -0.044 0.724
unsecured 3.600 -0.207 3.393 -0.034 3.359 -0.054 3.305Local governmentsand publiccoroporations
0.716 -0.079 0.637 -0.056 0.581 -0.062 0.519
(％)
FY2016 FY2017 FY2018 FY2019
Business loans 1.428 1.275 1.157 1.127
Consumer loans 0.782 0.650 0.646 0.694
Average Contract Interest Rate
（％）
1.3521.323
1.2761.237
1.3231.076
0.9120.854
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
FY2016 FY2017 FY2018 FY2019
Yield by Segment
Business loans
Consumer loans
1
2-4. Securities Investment
Change in portfolio due to diversified investment strategy
<Reference>Loans to major corporations(syndicated loans) → Listed stocks
FY2013 FY2019
※Ratios are calculated on fair value basis
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
0
50,000
100,000
150,000
200,000
Mar.2014
Mar.2015
Mar.2016
Mar.2017
Mar.2018
Mar.2019
Mar.2020
Syndicated loans
Stocks for long-terminvestment
Dividend yield
（Millions of yen）
689 644 619 648 663
131 235 168 185 122
142 158
186 175 170
End of Mar.2016
End of Mar.2017
End of Mar.2018
End of Mar.2019
End of Mar.2020
Stocks and investment trusts Foreign bonds Yen-denominated bonds
961.9973.4 954.9
1,037.7 1,007.5
Balance of securities
54.6 64.5 84.0 78.4
33.5
End of Mar.2016
End of Mar.2017
End of Mar.2018
End of Mar.2019
End of Mar.2020
Valuation gain on securities（billions of yen） （billions of yen）
9
• Worked to increase profitability and quality through diversified investment strategy with a long-term perspective
• Respond flexibly to changes in the investment environment ⇒ Main focus on foreign bonds and investment trusts
1
2-5. Income from new business〜Consultation services, Leasing business, Bank cards business〜
Consultation services・Support customer’s management capability improvement from various aspects
Leasing business・Develop a stronger business frameworkthat provides an optimal mixture of financing and leasing services
Bank cards business・Increase in number of debit card members and card affiliated storesNumber of members : 212thousands（54thousands YOY）Number of merchant terminals:6thousands(2thousands YOY）
0.00
1.00
2.00
3.00
4.00
FY2015 FY2016 FY2017 FY2018 FY2019 FY2023Target
Income from new business
Bank cards businessLeasing businessConsultation services
（billions of yen）
FY2015 FY2016 FY2017 FY2018 FY2019 FY2023Target
Consultationservices 0.110 0.245 0.309 0.410 0.661 1.500
Leasingbusiness 0.026 0.088 0.203 0.275 0.332 0.500
Bank cards business 0.200 0.275 0.371 0.537 0.762 2.000
合計 0.336 0.608 0.884 1.224 1.756 4.000
（billions of yen）
10
1 11
※ Figures for major banks and
regional banks are quoted from
"January 14, 2020: Approaches to
customer-oriented business operations
of financial institutions."
※ Figures for major banks and
regional banks are quoted from
"January 14, 2020: Approaches to
customer-oriented business operations
of financial institutions."
・ Continue providing services and advice for customers to lead
"stable lives," "prosperous lives," and "happy lives."
・ The main premise for the sale of risky financial products is to
contribute to the formation of assets by customers in the medium to
long term.
・ Based on the above philosophy, we will continue to sell risky
financial products.
・ This has led to an increase in the average holding period of
investment trusts, the ratio of customers who conduct savings-type
investment trusts, and the number of contracts for savings-type
financial products.
2-6. Sales of financial instruments
21,125 24,580 25,343
5,2038,335 10,674
1,654
0
10,000
20,000
30,000
40,000
FY2017 FY2018 FY2019
Number of contracts of Funded financial products
Accumulated investment trust iDeCo Hokkoku omakase navi
(cases)
The Hokkoku Omakase Navi is
2019.10.
Commencement of operations
1
～
Updating the backbone
system
Introduction of cloud
banking
・ Aggressively invest in systems to improve services and operational efficiency.
Software
Wear depreciation costs are rising, but overall property costs are kept down.
・ Invested in the development of core systems from the 2,013.3 to 2015.3 phases.
・ Since the 2016.3 fiscal year, we have accelerated development to improve services.
(Individual corporation
Cloud banking)
・ Depreciation due to reduced outsourcing costs and improved efficiency through
paperless operations
Non-personnel expenses, excluding depreciation, have been reduced by about 30% in
2015 years.
・ On customer contact channels by improving the service level of cloud banking
Optimization and further progress in branch development are possible.
2-7. Trends in Non-personnel Expenses and Personnel Expenses
12
PaaS of mission-critical
systems
Cost reduction by using
xRM
Plan
Plan
Plan
1
<Credit costs> FY2016 FY2017 FY2018 FY2019 FY2020
Total credit costs (Billions of yen) 1.1 1.6 3.3 9.8 6.0
General reserve for possible loan
losses (billion yen)1.0 -0.5 0.2 2.7 1.0
Disposal of NPLs (Billions of
yen)0.1 2.1 3.1 7.1 5.0
<Breakdown of Credit Costs> FY2016 FY2017 FY2018 FY2019 FY2020
Commercial loans (Billions of
yen)0.1 0.3 2.0 8.3 4.5
Consumer loans (Billions of yen) 1.0 1.2 1.2 1.4 1.5
・ In March 2020, the amount of bad debts handled was drastically increased from
the previous period due to a downgrade in the ranks of the 4 major counterparties.
The increase in the general allowance for doubtful accounts was also greatly affected
by this downgrade (the overall impact was approximately JPY6.2 billion).
・ In the fiscal year ending March 2021, the company assumes that there is no major
rank-down impact as in the previous period, and it has taken into account a certain
increase in credit costs for small and medium-sized businesses affected by the new
corona virus infection.
・ In the fiscal year ending March 2020, credit costs increased due to the rank-down impact of some large-scale customers.
・ In the fiscal year ending March 2021, it is expected to be around JPY6 billion, taking into account the effect of the new type of
coronavirus infection to some extent.
・ We intend to maintain a high maintenance ratio and reduce the risk of future impact on profit and loss by implementing adequate
reserves in the future.
2-8. Developments in Credit Costs and Prospects
13
<Preservation
Status>FY2015 FY2016 FY2017 FY2018 FY2019
NPLs under the Financial
Reconstruction Act (Billions of yen)69.1 63.8 56.4 55.3 56.1
Amount of preservation (billions
of yen)65.4 59.7 53.4 52.4 53.4
Coverage ratio 94.6% 93.6% 94.7% 94.8% 95.2%
1
2-9. Forecast of Results for the Fiscal Year
Ending March 2021
○Forecast of Results for the Fiscal Year Ending March 2021 （Millions of yen）【Non-consolidated】（Full year） （Interim period）
FY2019result
FY2020forecast
FY2019iinterim result
FY2019interim result
FY2020interim
Ordinay profit 11,977 7,500 Ordinay profit 8,339 5,500 Profit 6,676 4,000 Interim net Profit 5,018 3,000 Net business profit 12,162 11,000 Net business profit 6,317 6,000 【Consolidated】（Full year） （Interim period）
FY2019result
FY2020forecast
FY2019interim result
FY2020interimforecast
Ordinay profit 13,181 8,500 Ordinay profit 8,746 6,000 Profit*1 7,310 4,500 Interim net profit*1 5,229 3,500
* 1:Profit attributable to owners of parent○Dividend per share （Forecast）
FY2016 FY2018 FY2019 FY2020Annual dividends 9.00 yen 80.00 yen 70.00 yen 60.00 yen Interim dividends 4.50 yen 40.00 yen 35.00 yen 30.00 yen Year-end dividends 4.50 yen 40.00 yen 35.00 yen 30.00 yen
* 2︓On October 1.2017, the Bank conducted consolidation of shares at the ratio of ten shares of its common stock into one share. The impact of this stock consolodation is taken into consideration in the amount presented for FY2017, and the amount for the annual dividend per share for the same fiscal year is shown as a dash.
FY2017*2
ー 4.00 yen
50.00 yen
・Profit is expected to decline, assuming the impact of the COVID-19 infection on the overall economy・Forecast of Annual dividends : 60.00yen per share（payout ratio: 41%）
14
1
2-10. Capital enhancement and stock return
〜Capital adequacy ratio and ROE〜
＜Consolidated＞Capital adequacy ratio
＜Non-consolidated＞Return on equity(ROE)
2,080 2,2562,503 2,521
2,216
241155
118 123148
12.98% 12.60% 12.32% 11.78%10.30%
11.62% 11.79% 11.76% 11.24%9.65%
End of Mar.2016
End of Mar.2017
End of Mar.2018
End of Mar.2019
End of Mar.2020
Tier1 Tier2 Capital adequacy ratio Tier1ratio
Amount of dividends, etc.
2,414 2,694 2,619 2,328 2,002
1,510 0
4,122
0
3,199 40.7%
26.6%
71.1%
29.0%
77.9%
0.0%
25.0%
50.0%
75.0%
0
2,000
4,000
6,000
8,000
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020Total amount of perchase of treasury stock Total amount of annual dividendsTotal return ratio
(Millions of yen)
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020 Mar.2021(forecast)
Annual dividends per share(yen) 8.00 9.00 90.00 80.00 70.00 60.00Purchase of treasury stock(thousandshares) 5000 - 850 ※ - 991 ※ -Cabcellation of treasurystock(thousand shares) 14700 - - 880 - 995
Yield of dividends(Dividends/Stockprice as of the end of the fiscal year) 2.70% 2.12% 2.17% 2.30% 2.07% -
Net assets per share(yen) 754.42 803.92 8,857.72 ※ 8,902.33 ※ 8,140.54 ※ -
Price book value ratio(PBR)(times) 0.39倍 0.52倍 0.46倍 0.41倍 0.35倍 -
4.17%4.33%
3.81%
3.12%
2.75%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
End of
Mar.2016
End of
Mar.2017
End of
Mar.2018
End of
Mar.2019
End of
Mar.2020ROE
Annual dividends per share
※As of October 1, 2017, the Bank has consolidated one share for each 10 shares of common stock. Performance presented for FY2017 and FY2018 is after consolidation.
Return on equity（ROE)・・・based on profit
・Goal of 25-30% payout ratio with stable dividend(60 yen p.a.)+performance-linked dividend
・Aim to reduce equity and increase ROE by acquiring treasury stock
15
1
Mar. 2009 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020
Trends in the number of cross-held shares(Financial institutions)
insurance companies Mega banks Regional banks
(Thousand shares）
1,414
1,296
110
Bank Vision partner banksThe Hyakugo Bank, Ltd.
FIT partner banksThe Fukui Bank, Ltd.,
The First Bank of Toyama, Ltd.
（Thousand shares）
OthersThe Bank of Toyama, Ltd～
26,538
2,820
2-11. Response to Cross-Shareholdings(Financial Institution Shares)
・We are already working to reduce cross-held shares and have finished selling shares of insurance companies
・Shareholdings of regional banks are mainly system partner banks
16* The above does not include securities companies.
1
3. Medium-Term Business Plan
1
3-1. Response to New Coronavirus Infections
I would like to express my heartfelt impressions to people affected by COVID-19, as well as to their families and stakeholders, as well as to people affected by the spread of the infectious disease.
The Company's policy is to firmly fulfill its role as a regional financial institution for the recovery and further development of society and the economy. The following initiatives are being implemented.
To employees
● Teleworking Split
・ Tablet PCs and mobile phones have been distributed to all banks since 2016, and the system has been established.
・ Use of online conferencing・ More than 400 employees, or about 70% of head office staff, participated
・ Flexible responses at branch offices through telework and split work
・ Telework implemented 100% for pregnant bank employees
・ Implemented online training for new employees from the first day
● Distribution of Inner Masks to All Employees
● Establishment of spill prevention partitions at branch offices
● Implementation of stress care for employees
To our customers
● Establishment of a Consultation Desk and a Dedicated Dial
● Dispatch of response personnel from each department of headquarters
● Thorough prior interviews with business operators about their financial position
● Quick response by simplifying financing operations
● To inform customers of transactions that do not require visits
(HP, digital signage, posters, etc.)
● Establishment of a spill prevention partition at the point of contact
● Establishment of a footprint sticker to avoid overcrowding ATM waiting time
● Donation of disruptive solutions to medical institutions
Online conference during telework
Online training session connecting the head office and home
18
1
3-2. Basic Policy of New Medium- Term Business Plan
Name Communication × Collaboration × Innovation 2024
Period April 2018 to March 2024
Concept
Aim to be “the next-generation regional commercial bank”
Contribute to attain region-wide innovation through customer-
oriented approach via extensive communication and collaboration, both within the Bank as well as with our community.
Basic policy
Contribute to regional development while establishing the Hokkoku
brand by taking steps to further advance our customer communications and relations.
•November 7, 2019 hereby announces that it has partially revised its Medium-Term Business Plan•The duration of the previous Medium-Term Business Plan is to be extended to 6 years until March 2024
19
1
Enhance sales
■ Increase non-interest income (Bank cards, leasing and consultation services)
Augment management of credit risk
■ Assess credit based on understanding of business feasibility and appropriately recognize risks■ Improve management by strengthening consulting function of sales offices and headquarters
Further streamline operations
■ Branch-within-a-branch, balanced reassignment of staff and workforce downsizing
■ Reduce system operation and maintenance costs(Change cost allocation from a maintenance cost focus to strategic development)
Enhance human resources development
■ Develop professional talent(Develop highly productive talent that delivers high added-value in a manner that
meets increasingly diverse and sophisticated needs)
3-3. Strategy of New Medium-Term Business Plan
20
1
3-4. Management Benchmarks and Targets, Progress
Item FY2018Actual results
FY2019Actual results
FY2023Targets for New MTBP
Ordinary profit (consolidated) ¥14.1 billion ¥13.1 billion ¥16.0 billion
Profit (consolidated) ¥8.5 billion ¥7.3 billion ¥10.0 billion
Income from new business (non-consolidated)<Bank cards, leasing, consultation services>
¥1.2 billion ¥1.7 billion ¥4.0 billion
ＯＨＲ(non-consolidated) 68.1% 70.8% Lower 60% range
ＲＯＥ(non-consolidated) 3.1% 2.7% 4.0%
Benchmarks and targets over the medium to long term
■OHR (non-consolidated) Lower 60% range target under the new MTBP, and to the 50% range over medium-long term
■ROE (non-consolidated) 4.0% target under the new MTBP, and to at least 5% over medium-long term21
1
3-5. Capital Adequacy Ratio/ROE
• Curtail risk assets, reduce cross-shareholdings of financial institution shares, subordinated debts ⇒Maintain capital adequacy ratio in the 11% level
• Aim to reduce equity and increase ROE by acquiring treasury stock
22
� Channel smooth supply of funds to regions� Secure profits by appropriately taking risks
Increased risk assets and a lower capital adequacy ratio are inevitable within a certain
range
<Maintaining the capital adequacy ratio>(1) While curbing excessive increases in risk assets,
(2) we will reduce cross-shareholdings of financial institution shares, and
(3) issue subordinated debts
⇒ We will consequently hold the capital
adequacy ratio at the 11% level
<Furthermore>
Reducing the number of issued shares by repurchasing own sharesWe are repurchasing our own shares as follows:
・Aggregate number of shares to be repurchased: Up to 1,000,000 shares
・Repurchase period: October 1, 2019 – February 25, 2020991,400 shares （Up to 1,000,000 shares）
Toward increasing ROE
Aiming for FY2023 target of 4.0%, and at least 5% over medium-long term
1
4. Management Strategy
1
4-1. Trends in business reform and productivity improvement efforts
■ Efforts for Business Reform and Productivity Improvement
Environment Surrounding the Regional Economies
・ Shrinking market due to the shrinking population
・ Labor shortage・ Negative interest rate
・ Diversification of values
FY1997 FY2019 Changes(1997→2019）
Gross business profit 55.2 billion yen 41.5 billion yen △13.6 billion yen
Net interest income 50.7 billion yen 34.8 billion yen △15.8 billion yen
Fees & commissions 4.2 billion yen 5.9 billion yen 1.7 billion yen
Expenses 35.4 billion yen 29.4 billion yen △5.9 billion yen
Net business profit 19.8 billion yen 12.1 billion yen △7.6 billion yen
Deposits 2,376.6 billion yen 3,712.6 billion yen 1,336.0 billion yen
Loans 2,003.8 billion yen 2,617.9 billion yen 614.1.6 billion yen
Yields of loans 2.48% 1.02% △1.46%
Yields of securities 3.93% 1.09% △2.84%
Yields of deposits 0.53% 0.00% △0.53%
Expense ratio 1.50% 0.81% △0.69%
Number ofbranches 154 branches 97 branches △57 branches
8brach in branch
Number ofemployees 2,436 1,759 △ 737
・Substantial changes in the earnings environment over the last 20 years
・Cost reduction to make up for decrease in the net interest income
■ Efforts to Improve Productivity
24
1
4-2. Sales Strategy
Dramatically improved intra-bank productivity
More time for customer appointments
Spread of cloud banking
Supporting sales using data marketing
Offering regions professional consulting face-to-faceRetail banking Corporate banking
CA CorporateRM
Customer data collected into xRM
Customer data analyzed using AI Further heightened level of communication
Sales offices/Money plaza
Occupational sales
Collabo-ration
Online channels Cloud banking
Increase in client assets
Diversification of loan sales
Enhance online points of contact
Diversify points of contact in line with customer needs
Comprehensive banking for all business partners
Corporate RM
HQ sales
Collaboration/ Cooperation
Customer data
Data analysis
All employees to act as consultants who understand our customers
Maximize revenues of individual companies
Expand reach of business in Toyama
and Fukui
Seek advances with credit cards, leasing
and consultation
HQCA
AI
• Bring about more advanced and efficient analysis of customer data using information technology
• Establish balanced sales approaches that involve more diverse points of contact with customers
xRM
25
1
4-3. Consulting
Consulting income
Management StrategyBusiness succession and
capital strategyM&A
Operation streamingStrengthening of
managementICT
Business matching Real estateOverseas
development
Enterprise start-upMedical and nursing
careSubsides
Human resources
developmentHR systems
Retirement
bonus systems
Recruitment Consulting
Services← Started Ｊａｎ 2020
Main Consulting Menus
110
245
368 434
661
0100200300400500600700
FY2015 FY2016 FY2017 FY2018 FY2019
(Millions of yen)
～ Hokkoku Bank's Concept of Consulting ～
・ Supporting customers to improve their ability to resolve issues leads to "improving customers' management capabilities ⇒contributing to regional revitalization."
・ Emphasizing the sharing of issues through dialogue with customers, employees directly help resolve issues. (Don't throw money at partners)
・ Develop human resources to improve quality and build a consulting sales structure for all employees, including branch employees.
26
1
4-4. Overseas business support
＜Develop sales channels＞Business meeting
Strengthen customer support in Vietnam
C o n s u l t i n g
Overseas Business Strategy Department(11 staff members)
Singapore Branch(15staff menbers)
Shanghai Representative office(3 staff members)
Secondment at Bangkok Bank(1staff members)
Secondment at Joint Stock Commercial Bank for Investment and Development of Vietnam(1staff members)
Bangkok Representative office(2staff members)
Dispatch to Silicon Valley(Stanford University)(1 staff menbers)
Overseas business support by Hokkoku bankOverseas network of Hokkoku Bank
Established March 2016Performance of Overseas business support FY2019
From June 2019
Established January9, 2019
Ho Chi Minh Representative office(2staff menbers)
Scheduled to be established in 2020
ＢＣＰ planning
Inbound support
Expansion of consulting for Thailand
1 Increasing number of projects in Vietnam
２
Singapore Thailand Vietnam others
Developsales channels
4 2 ー 2
Establishoffice 1 2 3 1
others 1 3 1 3
Totalnumber 6 7 4 6
• Provide financial services that utilize the strengths of overseas bases and provide consulting for
opening sales channels overseas• In June 2019, trainees dispatched to Silicon Valley on the U.S. West Coast (Stanford University)
27
CustomersHokkoku Bank
Introduction phase Growth phase Mature phase
Formulation of overseas
expansion plan
Market survey
Establish office
Develop sales channels
Overseas procurement
Local subsidiary management
1
4-5. Leasing business
Hokkoku
Bank
Customers
Hokkoku General
Leasing(Affiliates)
On a 1-stop basis
Proclaimable• Loans
• Non-Transfer of Ownership
Finance leases
• Ownership transfer
Finance leases
• Residual value setting
lease
• Maintenance lease
11 4384 95 100
192 184190
208239
0
100
200
300
FY2015 FY2016 FY2017 FY2018 FY2019
(Billions of yen)
We canrealize the best mix proposal
26 88
203
274332
0
100
200
300
FY2015 FY2016 FY2017 FY2018 FY2019
(Millions of yen)
Initiatives in the Leasing Business Leasing Business Profit (Non-Consolidated)
Trends in lease investment assets (Group total)
・ Our staff can propose loans and leases on a 1-stop basis.
・In April 2020, in order to strengthen the Group‘s integrated sales structure, the Leasing Business Section was established to supervise the leasing business of Group companies.
28
1
•Creating a new base in order to move toward a cashless society in the Hokuriku region and contributing to revitalize the region by facilitating the flow of funds•Making fast business development possible by providing both terminals to member shops and debit cards
4-6. Hokkoku Bank's Aims Involving Cashless Payments
TabletPOS systems
Apps
PointsVending machines
Ticket machines
Visa Debit
(Contactless Payment)
Card
Member shops
Visa Debit and points are usable even if not face to face
Productivity enhancement (streamlining)
Revitalize the region by facilitating the flow of funds
5 million stores in Japan
54 million stores worldwide
※ Stores accepting Visa cardsBuilding an environment where cards can be used to pay anywhere
29
Cloud-basedaccounting software
1
4-7. Card business
400
1,753 2,751
4,078
6,113
01,0002,0003,0004,0005,0006,000
FY2015 FY2016 FY2017 FY2018 FY2019
(Number of stores)
200 275
371
537
762
0
200
400
600
800
FY2015 FY2016 FY2017 FY2018 FY2019
Number of debit cards issued (aggregate) Number of card affiliated stores (aggregate)
Operating Profit from Card Business
(Millions of
yen)
3358
109
154
206
0
50
100
150
200
250
FY2015 FY2016 FY2017 FY2018 FY2019
(Thousands of sheets)
E-commerce malls (COREZO)
・By undertaking card affiliate store services, the Bank can offer small businesses cost benefits and will steadily expand the local cashless environment
(Millions of yen)
30
Launched on May 20, 2019Managed by subsidiary The Hokkoku Management,Ltd.
1
4-8. Support for business revitalization and management improvement
First fund Second fund Fund No. 3
established May 31, 2010 May 31, 2016 April 30, 2020
Investment
limitsJPY3 billion JPY2 billion JPY2 billion
Term 10 years 10 years 10 years
Investee
Hot spring inns, manufacturing industries,
restaurants, electric power industries, etc.
Hot spring inns, manufacturing, liquor,
services, etc.
-
Investment
results
13 companies
(Completion of
Rehabilitation
Proceedings)
4 companies
(of which 1 company
completed
rehabilitation
proceedings)
-
Investment
effect
・ Continuation of key industries that support local communities
・ Continuing employment of employees and securing employment opportunities
・ Maintain business with business partners and subcontractors
-
・ Continuous support from startups to business revitalization and closure support through consulting functions.
・ The Hokkoku Bank Group manages a revitalization fund in order to actively participate in revitalization support for regional enterprises from a long-term perspective.Additional structuring was implemented in April 2020.
Support for growth
Method
Support for
startups
Business
planning
Subsidy
consulting
ICT・BPR・M&ABusiness
Succession and
Personnel System
Support for
Customers Starting
Overseas
Operations
Business due
diligence
Establishment of
improvement plans
Implementation
support
Exit M&A
Asset sales
support
Means
Opening of a
settlement
account
Startup loans
Growth fund loan
Company Type
401K
Payment Solutions
Rescheduling
DDS
Credit cut
Bulk sale
Debt Collection
Revitalization support
Business closure support
Support for startups
[Performance of the First and Second Funds]
31
1
To the development of local communities by generating profits despite a challenging
business environmentAiming for Further Evolution to Contribute Continuously
4-9. System Strategy ① -Target Direction-
Japan's financial environment
● Population decline, the negative interest rate policy, and the cashless policy
● Recession associated with the expansion of the new coronaviral infections
● Decline in customer visits and the completion of Internet transactions
Deterioration of profit environment
Changes in profit structureIT's accelerated evolution
▶
Direction
• Implementation of management strategies triggered by the system• IT investments not only within the bank but also in customer systems
Final goals
• Construction of an ecosystem for data linkage involving regions
• Creating highly convenient new services through the provision of BaaS(Banking as a Service)
Our Direction▶
32
1
4-10. System Strategy ② -New Initiatives-
・ November 2019 Established Digital Value, Ltd. to strengthen the system development capabilities of the Hokkoku Bank Group and secure advanced IT human resources.
• Promotion of IaaS and PaaS of accounting systems
• Promoting the construction of data utilization infrastructure
• Upgrading API linkage functions (interactive)
• Support for in-house production of new Internet
banking system
• Expansion of functions such as Web interviews
Digital Value, Ltd
・ In order to reduce total system costs, we have begun to integrate and internalize more than 100 subsystems.
Maintenance and
operation, etc.
Strategic
developmentTotal costReduction
For strategic development
Promotion
Strategic
development
Maintenance and
operation, etc.
33
1
4-11. System Strategy ③-Future Development-
2019 2020 2021
Cloud
Banking
Account system
Cloud computing
2022 2023Release for
Individual
customers
Dramatically improved productivity, both customer and intra-bank
Strengthening Digital with Cloud Banking
2024
Aggregate data to cloudTransforming the Quality of Sales into a Professional
Field through Data Utilization
2025
IaaS
Depreciation&
amortizationForecast/
¥ billion
2019 2020 2021 2022 2023 2024 2025
2.5 2.7 3.1 3.1 3.0 2.3 1.6
� Reduction of system depreciation, investment in renewal, and operation and maintenance costs through sub-
systems integration and in-house production
Sub-systems unification and
in-house development
・ Transition of strategic systems to cloud services - Enhancing sales and reducing costs using information technology -
Sub-
Systems In-house production of su-systems Reduced maintenance / renewal investment costs
Rapid in-house development of business applications based on new
CRM
In-house
production
PaaS
Systematically enhancementRelease for
Corporate
customers
34
1
Realizing corporate ideals
Realizing corporate ideals
Shared values - a common
philosophy
Shared values - a common
philosophy
Systems of skill improvement
Systems of skill improvement
Ideal working environmentIdeal working environment
Organization that makes the most
of human resources
Organization that makes the most
of human resources
Early recruitment of young employees
Wages that emphasize skills and
work content
Diverse and rewarding ways of working
Placement according to career plan
Empathy with management
philosophy and brand
Motivation-oriented recruitment
Environment in which employees can
continue to learn autonomously
Effectively utilizing advanced external
knowledge
・ Develop professional human resources who can contribute to the creation of value in the region ⇒ Transform all employees into professional human resources
Creating Value
for the Region
・ Improving Quality
4-12. Human Resources Strategy
[Background]
・Age of rapid ▸ change and uncertain future
・Diversification and sophistication of ▸ customers' needs
・With high customer-centric added value
Need to provide
Human Resources Strategy of the Hokkoku Bank
� Training professional staff
Be essential
φHigh value-added, high productivity
Creating ▸ Value ▸ Autonomous ▸Recurrence
※ What is the professional human resources considered by Hokkoku Bank?
・Enabling a large number of projects with a high
level of difficulty in ▸ with a high level of productivity
・Creating new value from the perspective of ▸management
・Continue to learn ▸35
1
5. ESG Initiatives
1
5-1. ESG Initiatives
Basic CSR Policies Theme SDGs goals
Financial services in harmony with the timesProvision of services that create
shared value with local communities
・ Providing consulting functions
・ Contribute to creation of a cashless society
・ Life planning support・ Contribute to Sustainable Growth of Regional Economies
Toward a supportive existence for tomorrow
Developing a Flexible Organizational
System and Corporate Culture That Responds to Changes in the Times
・ Diversity management
・ Enhancement of the work-life balance
・ Corporate Governance System.
For the local communitySupporting the environment, education,
culture, sports, etc. for future generations Strengthening contact
with local communities
・ Support for Improving Financial Literacy
・ Environmentally Conscious Initiatives
・ Strengthening contact points through social contribution
・ Our business activities contribute to resolving ESG issues with the aim of realizing our corporate philosophy of "a bridge to a fruitful regional future. Enrich interactions and build up growth in the region”.
・ Contribute to the achievement of SDGs by addressing ESG-related issues based on the Basic CSR Policy.
37
1
5-2. ESG Initiatives (E)
23 23 28 40 454.6 4.7
5.2
7.5
8.5
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10
15
20
25
30
35
40
45
50
2015 2016 2017 2018 2019
【Occupy of EV・HV-vehicles in owned vehicles】
EV・HV
Occupy of EV・HV
0
500,000
1,000,000
1,500,000
2,000,000
2014 2015 2016 2017 2018 2019
【Transition of paper usage】
total
(sheet)
Sales
branch Head
Office
● Contributing to raising awareness of environmental conservation in local communities
● Contributing to local environmental conservation by responding to customers' energy-saving needs
● Contributing to Customer Cost Reduction through Consulting
・ Disbursements of Loans Utilizing Interest Subsidy Program for Capital Investment in Energy Conservation
FY2019: JPY369 million for 4 projects(1 company) a system based on the Environmental Co-Creation Initiative, which has been designated as a designated financial institution since FY2019.)
・ Business alliance with “Ishikawa Institute of Energy Management “(IEMA) (2019)
Response to diversifying needs for energy conservation by fiscal year(The only energy conservation consultation district platform operator in Ishikawa Prefecture and energy conservation support project)
・ ICT Consulting FY2019 : 63 (contract basis)
・ Stimulating needs and raising awareness of environmental conservation through energy conservation-related seminars, etc.
(Units)(%)
38
1
・ Shortened working hours for childcare (up to the third year of elementary school)
・ Extension of childcare leave (2 years allowed)
・ Recommendation of staggered hours system
・ Training for returning to work
・ Enhancement of home learning tools
5-3. ESG Initiatives (S)
9 1625
3241
49
2.9% 5.2% 7.3% 9.2% 11.7% 13.9%
35.3% 37.0% 38.4% 39.6% 41.5% 42.5%
58.1% 61.7%51.6% 49.1%
64.9%
46.9%
0%
20%
40%
60%
80%
0
10
20
30
40
50
60
15.4 16.4 17.4 18.4 19.4 20.4Number of female managersRatio of female managersRatio of female employeesRatio of women among pool of newly recruited graduates
Diversity management
・ Contribute to resolving ESG issues through business activities aimed at becoming a next generation of integrated regional companies.
・ Develop an organizational structure capable of responding flexibly to changes in the times, cultivate a corporate culture, and respond to various work styles.
Resolve issues such as improving local productivity by creating a cashless
environment
[Yamanaka lacquerware productivity improvement project using ICT]
[Initiatives for Ishikawa PPP/PFI Regional
Platforms]
[Creation of a cashless environment centered
on the card business][Platform for regional revitalization (EC mall)]
Efforts to create an environment where women can play active roles
Main Initiatives
39
1
Remuneration plan for Directors
Directors who are Audit and Supervisory Committee Members
Directors and Executive Officers who are not Audit and Supervisory Committee Members
Base salary + performance-linked payment + stock distribution trust*Current executive remuneration ratio (6:2:2)
Only base salary
Corporate Governance Structure
6 directors(5 outside directors)
Board of Directors
Audit Department
Instruction
and
direction
Audit and Supervision
9 directors
Voluntary Nomination and Compensation
Committee
Discuss
election of
Directors
Discuss
remuneration
Some business execution decision-making
assigned to directors➡ Aim for constructive discussion of management strategy at
the Board of Directors
2015 2016 2017 2018 2019 2020
Directors (# of people) 16 16 17 17 17 15
Outside Directors (# of people)
4 4 4 4 5 5
Independent Outside Directors (# of people)
3 3 3 3 5 5
Ratio of independent Outside directors (%)
18.7 18.7 17.6 17.6 29.4 33.3
16
Directors
Ratio of independent Outside directors(2020)
15Directors
Of which, 5 independentOutside Directors
5-4. ESG Initiatives (G)
Fiscal year
Main Initiatives
2006Introduced a system of executive officers
2009Introduction of stock compensation-type stock option plan
2015Transition to a company with an audit and supervisory committee
Outside directors are elected
Appointment of 1 female director (outside)
Set up Voluntary Nomination and Compensation Committee
2016Introduction of a system for evaluating the effectiveness of the Board of
Directors
2017 Introduction of stock distribution trust
2019 Appointed 2 female directors (outside)
Increased from 3 independent outside directors to 5
2020Ratio of independent outside directors to 33%
・The Bank has improved the transparency of the business decision-making process as a result of the participation in management by outside directors. The ratio of Independent Outside Directors is 33.3%.
・Selected a system that further clarifies the link between the share value of the Bank and the remuneration for Directors
Ratio of independent Outside Directors(2015)
Of which, 3 independent Outside Directors
40
(Executive)Directors
Audit andSupervisory Committee
1
6. Reference Data
1
6-1. Changes in Key Figures ①
YOY Change48,043 44,004 43,911 42,882 47,538 4,656
(46,414) (43,949) (45,041) (41,509) (41,584) 7540,881 38,457 39,197 35,556 34,876 △ 680
Fees & commissions 5,186 5,071 5,332 5,604 5,938 3341,975 475 △ 618 1,722 6,723 5,001
Gain/loss on bonds 1,628 55 △ 1,129 1,372 5,953 4,581（△） 28,439 28,806 28,346 28,256 29,422 1,166
14,445 14,284 14,441 14,372 14,261 △ 11112,131 12,702 11,958 12,004 13,062 1,0581,862 1,819 1,946 1,879 2,098 219
17,974 15,142 16,694 13,253 12,162 △ 1,091（△） 335 1,037 △ 469 203 2,674 2,471
19,267 14,160 16,034 14,422 15,441 1,019△ 2,628 △ 140 △ 1,293 △ 1,642 △ 3,464 △ 1,822
2,841 378 1,636 1,309 3,975 2,666（△） 5,949 754 2,095 3,062 7,103 4,041
555 692 63 69 17 △ 5216,638 14,020 14,741 12,780 11,977 △ 803△ 770 △ 333 △ 629 △ 710 △ 1,154 △ 44415,868 13,687 14,112 12,070 10,823 △ 1,2479,629 10,107 9,479 8,023 6,676 △ 1,347
FY2019
Net interest income
Gross profit(Excluding gain/loss on bonds
FY2018FY2017FY2016FY2015Changes in gain/loss(Non-consolidated)
Net business profit(after reserve)
Other business profit
Expenses
TaxesNet business profit
Personnel costNon-personnel cost
Provision of reserve for possible loan losses①
Profit
Expenses related to portfolio problems
Gain/loss on equityAmount of credit costs②Recoveries of written off claims③
Profit before income taxes
Ordinary profitExtraordinary gain/loss
（Millions of yen）
42
1
6-2. Changes in Key Figures ②
Average balance Yield Average balance Yield Average balance Yield Average balance Yield Average balance Yield Average balance YieldLoans 23,208 1.27 22,867 1.23 23,456 1.13 24,655 1.06 25,577 1.02 922 △ 0.04Securities 10,299 1.21 9,899 1.19 9,803 1.52 10,080 1.31 9,389 1.09 △ 691 △ 0.22Call loans, etc. 5,090 5,441 7,752 10,676 11,058 382
38,597 1.10 38,208 1.06 41,012 1.03 45,412 0.88 46,025 0.80 613 △ 0.08Deposits 30,326 0.02 31,135 0.01 32,507 0.01 33,833 0.01 35,077 0.00 1,244 △ 0.01Negotiable certificates of deposit 1,189 0.04 1,031 0.02 1,036 0.02 919 0.01 1,164 0.00 245 △ 0.01Call money, etc. 5,971 5,161 7,528 10,704 9,883 △ 821
37,486 0.05 37,327 0.05 41,071 0.07 45,458 0.10 46,126 0.04 668 △ 0.06
Total interest-earning assets
Total interest-bearing liabilities
Averagebalance, yield,etc.
FY2019YOY Change
FY2018FY2015 FY2016 FY2017
YOY ChangeInterest margin for total fundinterest rate 0.30 0.24 0.27 0.16 0.12 △ 0.04Gap on yields of deposits andloans 1.25 1.22 1.12 1.05 1.01 △ 0.04
Expense ratio 0.90 0.89 0.84 0.81 0.81 0.00
OHR 61.27 65.54 62.93 68.07 70.75 2.68ROA (based on net businessprofit) 0.23 0.24 0.20 0.16 0.13 △ 0.03
ROE (based on profit) 4.17 4.33 3.81 3.12 2.75 △ 0.37
FY2019FY2018FY2015 FY2016 FY2017
（Billions of yen:%）
（%）
43
1
About This Material
44
