New Medium-Term Business PlanCommunication × Collaboration × Innovation 2024

1. About the Bank

1

1

1. Corporate Profile

Name The Hokkoku Bank, Ltd.

Stock code 8363(First Section, Tokyo Stock Exchange)

Location of

Headquarters

2-12-6 Hirooka, Kanazawa, Ishikawa

Founded December 18, 1943

Deposits(Including negotiable

certificate of deposit)

3,604.7 billion yen

RatingS&P : A- (Long term)R&I : A+ (Long term)

Total Assets 5,999.5 billion yen

Loans 2,556.3 billion yen

Total outstanding

shares

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.

Corporate Profile(FY2019 first half) Branch Network

2

2. Initiatives up to Nowand Circumstances pertaining to Revision of Medium-Term Business Plan

3

2-1. Initiatives up to Now

Business Environment for Banks� Falling population, negative interest rate policy and

cashless policy� Falling number of physical branch clients, transactions

concluded over the Internet

Deterioration in revenueenvironment

Change in revenue structureAccelerating evolution of IT

The Bank’s initiatives� Productivity enhancement and streamlining of business

processes・Promoting IT investments and paperless initiatives

� New revenue bases・Consultation services, bank cards and leasing

� Cost reduction・Streamlining branch network

We have been activelyworking to reform

business model

▶

▶

We aim to further evolve in a manner that facilitates our ongoing contribution to regional development while posting sound profits amid a

challenging environment.4

数値最終確認

FY1998 FY2008 FY2018Changes

(FY1998→FY2018)

Gross business profit 52.8 billion yen 49.8 billion yen 41.5 billion yen △11.3 billion yen

Net interest income 48.1 billion yen 43.1 billion yen 35.5 billion yen △12.6 billion yen

Fees & commissions 4.3 billion yen 6.3 billion yen 5.6 billion yen 1.2 billion yen

Expenses 35.0 billion yen 33.4 billion yen 28.2 billion yen △6.7 billion yen

Net business profit 17.8 billion yen 16.4 billion yen 13.2 billion yen △4.5 billion yen

Deposits 2,478.4 billion yen 2,794.0 billion yen 3,543.8 billion yen 1,065.4 billion yen

Loans 2,023.3 billion yen 2,162.3 billion yen 2,582.9 billion yen 559.6 billion yen

Yields of loans 2.28% 1.95% 1.06% △1.22%

Yields of securities 3.39% 1.44% 1.31% △2.08%

Yields of deposits 0.44% 0.28% 0.01% △0.43%

Expense ratio 1.47% 1.19% 0.81% △0.66%

Number of

branches149 branches 123 branches 100 branches △49 branches

5 brach in branch

Number of employees 2,436 2,029 1,787 △ 649

• Substantial changes in the earnings environment over the last 20 years

• Cost reduction to make up for decrease in the net interest income 5

2-2. Efforts to Improve Productivity

1

2-3. Circumstances pertaining to Revision of Medium-Term Business Plan

Financial institutions are facing an environment posing unprecedented challenges ⇒ Circumstances have furthermore changed substantially since the present Medium-Term Business Plan was drawn up (April 2018)

Prolonging of negative interest rates

■Negative interest rates prolonged across different dimensions⇒ Inexorable decrease in net interest income

Uncertainty over the global economy and deterioration in economicsentiment■Concerns of credit risk have become increasingly apparent

Accelerating evolution of information systems

■Critical need to develop an information system-centric strategy encompassing transition to cloud services, etc.

We need to draw up a new Medium-Term Business Plan which will entail revising the current one with the aim of building a more

resilient operating structure .6

3. Our New Medium-Term Business Plan

7

3-1. Vision for Hokkoku BankAmid an adverse environment for regional economies, Hokkoku Bank will deepen its “commitment to customers”

Next Regional

Commercial Bank

Market contraction due

to falling population

Market contraction due

to falling population

Labor shortages due

to falling population

Labor shortages due

to falling population

Business environment surrounding regional economies

Diversifying valuesDiversifying valuesWorsening financial situation

at the national levelWorsening financial situation

at the national level

Negative interest

rates

Negative interest

rates

Vision for the Bank

② Realize a fee business

• Strengthen initiatives on finance

leases as well as credit card and affiliated store operations

③ Consulting (finance + added value)

• Headquarters consulting team of

100- members responses to needs of corporations at different life stages (enterprise start-up,

medical, nursing care, overseas expansion, ICT, M&A,

management improvement, business continuity, revitalization funds, etc.)

① Constructing a resilient operating

structure

• Achieve strategic streamlining

and productivity enhancement

(e.g.) Branch consolidation

Headquarters centralization

Mission to double our

productivity.

Transition to paperless environment

A main bank

that progresses with the regions,

resilient against the impacts of

the economy

A main bank

that progresses with the regions,

resilient against the impacts of

the economy

Comprehensive,

multifaceted solutions

Comprehensive,

multifaceted solutions

Resilience of a commercial bank able to weather economic

downturns (Revenue and costs)

8

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.

3-2. Basic Policy of New Medium-Term Business Plan

• The present Medium-Term Business Plan’s title and concept are to remain unchanged

• The duration of the present Medium-Term Business Plan is to be extended to 6 years until March 2024

9

1

Item FY2018Actual results

FY2020 Targets for

present MTBP

FY2023Targets for New MTBP

Ordinary profit (consolidated) ¥14.1 billion ¥12.5 billion ¥16.0 billion

Profit (consolidated) ¥8.5 billion ¥8.0 billion ¥10.0 billion

Income from new business (non-consolidated)<Bank cards, leasing, consultation services>

¥1.2 billion ¥2.5 billion ¥4.0 billion

ＯＨＲ(non-consolidated) 68.1% – Lower 60% range

ＲＯＥ(non-consolidated) 3.1% – 4.0%

3-3. Management Benchmarks and Targets

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 term 10

1

3-4. Strategy of New Medium-Term Business Plan

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)

11

3-5. Income from New Business– Consultation Services, Leasing Business and Bank Cards Business –

Consultation services• Shift to a framework that enables the entire workforce to

engage in sales of consultation services • Shift to consultation services that involve proposing

comprehensive solutions based on understanding of business feasibility

• Establish consultation services drawing on a subscription-based model

• Enhance consultation services leveraging overseas bases

Leasing business• Develop a stronger business framework that provides an

optimal mixture of financing and leasing services• Further strengthen alliances with Group company (The

Hokkoku General Leasing Co., Ltd.)

Bank cards business• Further increase in number of debit card members and

card affiliated stores[Card affiliated stores]• Contribute to greater convenience of card affiliated

stores by proposing comprehensive solutions including POS systems

• Provide support for expanding sales channels using the E-commerce website “COREZO”

[Debit card members]• Increase card utilization by effectively implementing

promotional campaigns• Bring about greater administrative efficiency through

more widespread use of corporate debit cards

Consultation servicesApprox. ¥0.4 billion

LeasingApprox. ¥0.3 billion

Bank cardsApprox. ¥0.5 billion

FY2018Actual results

Approx.¥1.2 billion

12

FY2023 Targets for New MTBP

¥4.0 billion

Consultation services

¥1.5 billion

Leasing¥0.5 billion

Bank cards¥2.0 billion

提言チャート3-6. Hokkoku Bank’s Aims InvolvingCashless Payments

Hokkoku Bank’s aims involving cashless paymentsPayment environment (now)

• Our cashless payment services will contribute to regional revitalization by improving corporate productivity, heightening consumer convenience and addressing credit card payment needs of foreign tourists.

• Use of a combination of the Bank’s solutions will help generate opportunities to gain new customers and reduce administrative workloads.

[Card affiliated stores]

・Confusion over payment methods

[Debit card members]

・Many different terminals for payment

・Operation dependent on payment method

• Customer selection of merchandise

• Use of different payment methods

[Card affiliated stores]

・Simple lineup・Use throughout the world

• Single terminal handles payments involving multiple brands

• Various products provided through the Bank

• Use of reward points causes funds to circulate within a region

• Promotion of card affiliated stores through the Osaifu wallet application

・Unrelated

COREZOTabletPOSsystems

freee

Vending machineTicket machine

13

[Debit card members]

3-7. 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

14

xRM

3-8①. Information System Strategy: – System-led Strategy –

15

Cloud

Data

On-premises CloudOn-premises

Current general banking systems

Core banking systems

Erosion of business due to FinTech

Core banking systems New bank

(Specialized ininternet)

Sub-systems

Sub-systems

Increased productivity

Enhanced security

Lower operating and disaster preparedness costs

Results of implementing the information system strategy

Shift of information system costs to strategic development

CollaborativeInternet banking

Other options

The Bank’s strategy

Launch of a new bank from scratch using conventional

core banking systems

Strategic information system involving data links

using modern cloud services

Divide

BankVisionCloud

banking

Sub-systems(xRM)

AIBallooning outsourcing

costs

Develop-ment

Maintenance Development

Mainte-nance

3-8②. Information System Strategy– Transition to Cloud Services and In-house Development –

2019 2020 2021

Cloudbanking

Sub-systems

2022 2023Release forindividual customers

Release forcorporate customers

Progressive expansion of

features

Dramatically improved productivity, both customer and intra-bank

Digitize transactions using cloud banking

2024

Sub-systems unified into xRM Reduced maintenance/renewal investment costs

2025

Rapid in-house development of business applications based on the new CRM

xRM

Depreciation &amortization

Forecast/¥ billion

2019 2020 2021 2022 2023 2024 2025

2.6 2.7 3.1 3.1 3.0 2.3 1.6

� Unifying sub-systems will reduce costs associated with “system depreciation and amortization,” “renewal investment,” “operation/maintenance”

Sub-system unification and in-house development using xRM

� Shift to systems that facilitate in-house development of sub-systems based on strategies using xRM

Challenge: Securing experts who handle fast-paced in-house development

• Transition of strategic systems to cloud services – Enhancing sales and reducing costs using information technology –

16

提言チャート3-9. Next-generation Internet Banking

• We aim to provide customer experience extending beyond acting as a contact point, making it possible for customers to complete all over-the-counter transactions using Internet banking services.

Hokkoku Cloud Banking(for individuals)

■Features(1) Transfer funds immediately

24 hours a day(2) Zero fees for fund transfer

between Hokkoku Bank branches

(3) New smartphone application

■Features of smartphone app.・Accessible layout・Biometrics・One-tap transaction

approval

■New features (Planned)• Overdraft: capable of Online borrowing and

repayment• Enhanced security

(e-certificates, smartphone-based authentication, etc.)

• Greater flexibility with authority for approvals

For corporates (under development)

“Smartphone First” policy:branches available anytime, anywhere

Internet banking services handling everything and offering peace of mind for all

All transactions concluded without

having to visit a branch

All consultation completed online

Security enhancement,Design renewal

First phaseSecond phase

Third phase

Vision for the next-generation Internet banking

Launchedon Sept. 24

17

▸ Implement branch-within-a-branch approach▸ Balanced staffing assignments

3-10. Personnel Strategy

Optimize personnel structure

▸ Launch cloud banking services▸ Streamline administrative tasks using IT

tools

[Sales]▸ Spur evolution of sales approaches▸ Diversify points of customer contact

Ultimately there will be 430 fewer employees than in FY2018Aiming for workforce of 1,800 employees

Proportionally scale back roles of branches→ Implement branch-within-a-branch

approach (10 to 15 branches)

Accelerating evolution of information systems

Changes in work styles

[Administrative operations]▸ Make administrative centers more versatile▸ Eliminate back office operations at branches

IT toolsCloud banking

Falling number of physical branch clients

Reducing administrative workload

Branch-within-a-branch

Evolution of sales

Personnelenhancement

Personnelreduction

Consulting professionalsInformation system professionals

Administrative employeesBranch employees

• Implementation of branch-within-a-branch approach and optimization of personnel structure

18

1

3-11. Capital Adequacy Ratio/ROE

� 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 28, 2020・Progress of repurchase: 318,800 shares repurchased as of October 31, 2019 (approx. 31.8% rate of success in achieving target number of shares)

Toward increasing ROEAiming for FY2023 target of 4.0%, and at least 5% over medium-long term

• 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

19

4. Reference data

20

4-1. Financial Statements for the First Half of the Fiscal Year Ending March 2020 (Overall)

8.8

7.3 6.3

9.78.3 8.3

6.65.5 5

Sept. 2017 Sept. 2018 Sept. 2019

(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

first half

FY2019

first halfChange Change (%)

Ordinary income 29,308 34,391 5,083 17.3%

Ordinary profit 8,380 8,339 △ 41 △ 0.4%

Profit 5,569 5,018 △ 551 △ 9.8%

Net business profit 7,356 6,317 △ 1,039 △ 14.1%

[Consolidated] (Millions of yen)

FY2018

first half

FY2019

first halfChange Change (%)

Ordinary income 34,544 39,483 4,939 14.2%

Ordinary profit 9,088 8,746 △ 342 △ 3.7%

Profit* 5,814 5,229 △ 585 △ 10.0%

(2) Capital adequacy ratio

End of

Sept. 2018

End of

Mar. 2019

End of

Sept. 2019Change

12.56% 11.78% 11.92% 0.14% Consolidated capital

adequacy ratio

12.56%

11.78%11.92%

End of Sept. 2018 End of Mar. 2019 End of Sept. 2019

Capital adequacy ratio* Profit attributable to owners of parent

(3) Non-consolidated results （Millions of yen）FY2018

first half

FY2019

first halfChange

Gross business profit 21,446 20,704 △ 742

Net interest income 18,572 17,550 △ 1,022

Interest on loans and discounts 13,062 13,180 118

Interest and dividends on securities 7,161 5,565 △ 1,596

Interest on deposits, etc. (△) 195 156 △ 39

△ 1,456 △ 1,038 418

Fees & commissions 2,845 2,771 △ 74

Other business profit (Excluding gain/loss on bonds) 28 382 354

(△) 14,090 14,386 296

Personnel cost (△) 7,182 7,156 △ 26

Non-personnel cost (△) 5,865 6,165 300

Net business profit 7,356 6,317 △ 1,039

Loss (gain) related to securities 1,995 6,801 4,806

Amount of credit costs (△) 1,033 4,867 3,834

Ordinary profit 8,380 8,339 △ 41

Extraordinary gain/loss △ 85 △ 195 △ 110

Income taxes (△) 2,726 3,125 399

5,569 5,018 △ 551

Interest associated with short-term

investment

Profit

Expenses

21

4-2. Loans – Balance by Segment –

(Billions of yen)

End of Sept.

2018

End of Mar.

2019

End of Sept.

2019

Change(from Sept.

2018)

Change(from Sept.

2018)

Total loans 2,471.0 2,582.9 2,556.3 85.3 3.4%

SMEs, etc. 1,798.9 1,892.1 1,928.2 129.3 7.1%

(Ratio of SMEs, etc.) 72.7% 73.2% 75.4% 2.7% －

Middle market and large

companies, etc.298.2 320.9 284.8 △ 13.4 △ 4.4%

Local governments and

public corporations373.9 369.9 343.2 △ 30.7 △ 8.2%

1,738.7 1,798.9 1,892.1 1,928.2

291.1 298.2 320.9 284.8

383.1 373.9 369.9 343.2

1.13%1.08% 1.06% 1.03%

End of Mar. 2018 End of Sept. 2018 End of Mar. 2019 End of Sept. 2019

(Billions of yen)

Local governments and public corporations Middle market and large companies

SMEs, etc. Loan yields

(Billions of yen)

End of Sept.

2018

End of Mar.

2019

End of Sept.

2019

Change(from Sept.

2018)

Change(from Sept.

2018)

Business loans 1,198.7 1,268.6 1,240.6 41.9 3.4%

Consumer loans 898.4 944.3 972.5 74.1 8.2%

　Housing loans 855.3 901.8 930.8 75.5 8.8%

　Other loans 43.1 42.5 41.6 △ 1.5 △ 3.4%

Local governments and

public corporations373.9 369.9 343.2 △ 30.7 △ 8.2%

(Billions of yen)

End of Sept.

2018

End of Mar.

2019

End of Sept.

2019

Change(from Sept.

2018)

Change(from Sept.

2018)

Total of 3 prefectures

in Hokuriku area2,242.3 2,350.8 2,329.6 87.3 3.8%

Ishikawa 1,743.4 1,812.8 1,769.1 25.7 1.4%

Toyama 407.8 434.3 448.8 41.0 10.0%

Fukui 91.0 103.5 111.6 20.6 22.6%

Others 228.7 232.1 226.7 △ 2.0 △ 0.8%

Yield of loans and loan balance at end of fiscal year

Breakdown by company size

Breakdown by area

Breakdown by type

22

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

0

50,000

100,000

150,000

200,000

Mar. 2014Mar. 2015Mar. 2016Mar. 2017Mar. 2018Mar. 2019

Syndicated loans

Stocks for long-term investment

Dividend yield

4-3. Securities Investment – Balance, Gain and Loss / Initiatives and

Policy to Date –• Worked to increase profitability and quality through diversified investment strategy with a long-term perspective

• Respond flexibly to changes in the investment environment

Change in portfolio due to diversified

investment strategy

16%

44%

17%

16%

7%

Government bonds Other domestic bonds Foreign bondsStocks Investment trusts

<Reference> Loans to major corporations

(syndicated loans) → Listed stocks

FY2013 FY2018

・Diversified investment strategy・Low-spread lending⇒ Stocks and local lending・Flexible response* Ratios are calculated on

fair value basis

(Millions of yen)

618.7 633.4 648.1 647.7

168.3 198.4 184.8

96.7

186.3 179.8 174.6

176.7

End of Mar.2018

End of Sept.2018

End of Mar.2019

End of Sep.2019

Billions of yen

Yen-denominated bonds Foreign bonds Stocks and investment trusts

1,011.8 921.2973.4 1,007.5

Balance of securities

84.0 89.5 78.4 78.2

End of Mar. 2018 End of Sept. 2018 End of Mar. 2019 End of Sep. 2019

Billions of yen

Valuation gain on securities

23

1

4-4. Forecast of Results for the Fiscal Year Ending March 2020

• Forecast results announced in May 2019 (the “initial forecast”) have been revised considering the first half results.

• We estimate interim dividend of 35 yen per share and year-end dividend of 35 yen per share.

[Non-consolidated] (Full year) （Millions of yen)

FY2019

revised forecast

FY2019

initial forecastDifference

(Reference)

FY2018 actual result

Ordinary profit 12,000 10,500 1,500 12,780

Profit 7,000 7,000 8,023

Net business profit 11,500 10,500 1,000 13,253

[Consolidated] (Full year)

FY2019

revised forecast

FY2019

initial forecastDifference

(Reference)

FY2018 actual result

Ordinary profit 13,000 11,500 1,500 14,165

Profit *1 7,500 7,500 8,583

○ Dividend per share (Forecast)

FY2016 FY2017*2 FY2018 FY2019

Annual dividends 9.00 yen － 80.00 yen 70.00 yen

Interim dividends 4.50 yen 4.00 yen 40.00 yen 35.00 yen

Year-end dividends 4.50 yen 50.00 yen 40.00 yen 35.00 yen

*1: Profit attributable to owners of parent

*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 consolidation 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. 24

4-5. Corporate Governance – Response to Cross-Shareholdings (Financial Institution Shares) –

Mar. 2009 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019

Trends in the number of cross-held shares (Financial institutions)

Insurance companies Mega banks Regional banks

Regional banks

Mega banksSold

Insurance companiesSold

(Thousand shares)

3,941

3,381

1,296

110

Breakdown of regional banks

BankVision partner banksKyushu Financial Group, Inc., The Hyakugo Bank, Ltd., The

Eighteenth Bank, Ltd, Suruga Bank Ltd.,

TSUBASA partner banksThe Iyo Bank, Ltd., The Toho Bank, Ltd., The Daishi Bank,

Ltd.

FIT partner banksThe Fukui Bank, Ltd., The First

Bank of Toyama, Ltd.

(Thousand shares)Others

The Bank of Toyama, Ltd.

* The above does not include securities companies.

• 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

～

26,538

8,728

(Mar. 2009)

26,538 thousand shares

(Mar. 2019)

8,728 thousand shares

⇒

25

1

4-6. Corporate Governance – Corporategovernance structure and remuneration plan for Directors –

• 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 29.4%.

• Selected a system that further clarifies the link between the share value of the Bank and the remuneration for Directors.

Directors and Executive Officers who are not Audit and Supervisory Committee Members

Corporate governance structure

(Executive)Directors

Board of Directors

Audit and

supervise

Voluntary Nomination and Compensation

Committee

Discuss

election of

Directors

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

Directors (# of people) 16 16 17 17 17

Outside Directors (# of people) ４ 4 4 4 5

Independent Outside Directors (# of people) 3 3 3 3 5

Ratio of Independent Outside Directors (%) 18.7 18.7 17.6 17.6 29.4

11 Directors

Audit andSupervisory Committee6 Directors

（5 Outside Directors）

Audit Department

Instruction

and

direction

Discuss

remuneration

Directors who are Audit and Supervisory Committee Members

Base salary + performance-linked payment + stock distribution trust*Current executive remuneration ratio (6:2.2:1.8)

Only base salary

Remuneration plan for Directors

16

Directors

Of which,3 Independent Outside Directors

Ratio of Independent Outside

Directors (2015)

Ratio of Independent Outside

Directors (2019)

17

Directors

Of which,5 Independent Outside Directors

26

2,414 2,694 2,619 2,328

1,510 0

4,122

0

40.7%

26.6%

71.1%

29.0%

0.0%

25.0%

50.0%

75.0%

0

2,000

4,000

6,000

8,000

Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019Total amount of annual dividends Total amount of perchase of treasury stock

Total retum ratio

4-7. Increasing Equity and Return of Profits to Shareholders - Capital Adequacy Ratio and ROE -

• Aim to increase ROE while placing emphasis on striking a balance with the capital adequacy ratios.

• Goal of 25-30% payout ratio with stable dividend (60 yen p.a.) + performance-linked dividend

• Continual assessment of purchase and cancellation of treasury stock

(Millions of yen)

* 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.

Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020(forecast)

Annual dividends per share (yen) 8.00 9.00 90.00 80.00* 70Purchase of treasury stock (thousandshares) 5,000 - 850 * -

Yield of dividends(Dividends/Stockprice as of the end of the fiscal year) 2.70% 2.12% 2.17% 2.30%

Net assets per share (yen) 754.42 803.92 8,857.72* 8,902.33* -Price book value ratio (PBR) (times) 0.39 0.52 0.46 0.38 -Stock price as of the end of the fiscalyear (yen) 296 423 4,135 3,470 -

2,364 2,503 2,521

204118 123

12.84%12.32% 11.78%

11.82% 11.76%11.24%

End of Sept. 2017 End of Mar. 2018 End of Mar.2019

Tier1 Tier2

Capital adequacy ratio Tier1 ratio

3.32%

4.17%4.33%

3.81%

3.12%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2018

End of Mar.2019

<Consolidated> Capital adequacy ratio <Non-consolidated> Return on equity (ROE)

Return on equity (ROE)・・・based on profit

Amount of dividends, etc.

27

4-8. Initiatives on SDGs – Basic CSR Policies–

916

2532

41

2.9%5.2% 7.3% 9.2%

11.7%

35.3% 37.0% 38.4% 39.6% 41.5%

58.1%61.7%

51.6%49.1%

64.9%

0.0%

20.0%

40.0%

60.0%

80.0%

0

10

20

30

40

50

Apr. 15 Apr. 16 Apr. 17 Apr. 18 Apr. 19

Number of female managers Ratio of female managers

Ratio of female employees Ratio of women among pool of newly recruited graduates

Diversity management

‣Support improved financial literacy of the region‣Eco-friendly initiatives‣Strengthen contact with the region through

social contribution‣Contribute to the region through sports and art

別ファイルから最後に貼り付け

（スライド全選択→拡張メ

タファイル形式を選択して貼り付けてください）

Basic CSR Policies1) Financial services that meet the needs of the times

• Provide financial services that lead to the creation of shared value with local communities

2) Able to provide support into the future• Cultivate an organizational stance and

corporate culture that can respond flexibly to changes in the times

‣Corporate governance‣Diversity management‣Work-life balance

3) Committed to local communities• Support the environment and education and culture for

the next generation• Strengthen contact points with the local community

‣Make full use of consulting function‣Contribute to creation of a cashless society‣Contribute to sustainable growth of local

economy

Contribute to the sustainable development of local communities through various business activities including our main

business based on our basic CSR policies ⇒ Achievement of SDGs (sustainable development goals)

28

4-9. Changes in Key Figures of Hokkoku Bank ①

YOY Change

52,403 48,043 44,004 43,911 42,882 △ 1,029

(47,162) (46,414) (43,949) (45,041) (41,509) △ 3,532

40,887 40,881 38,457 39,197 35,556 △ 3,641

Fees & commissions 5,957 5,186 5,071 5,332 5,604 272

5,558 1,975 475 △ 618 1,722 2,340

Gain/loss on bonds 5,240 1,628 55 △ 1,129 1,372 2,501

（△） 30,306 28,439 28,806 28,346 28,256 △ 90

14,748 14,445 14,284 14,441 14,372 △ 69

13,376 12,131 12,702 11,958 12,004 46

2,181 1,862 1,819 1,946 1,879 △ 67

16,856 17,974 15,142 16,694 13,253 △ 3,441

（△） 2,871 335 1,037 △ 469 203 672

19,225 19,267 14,160 16,034 14,422 △ 1,612

△ 2,070 △ 2,628 △ 140 △ 1,293 △ 1,642 △ 349

2,841 2,841 378 1,636 1,309 △ 327

（△） 5,995 5,949 754 2,095 3,062 967

1,216 555 692 63 69 6

17,155 16,638 14,020 14,741 12,780 △ 1,961

△ 2,764 △ 770 △ 333 △ 629 △ 710 △ 81

14,390 15,868 13,687 14,112 12,070 △ 2,042

7,459 9,629 10,107 9,479 8,023 △ 1,456

FY2018

Net interest income

Gross profit

〈Excluding gain/loss on bonds〉

FY2017FY2014 FY2015 FY2016Changes in gain/loss (Non-consolidated)

Net business profit (after reserve)

Other business profit

Expenses

Taxes

Net business profit

Personnel cost

Non-personnel cost

Provision of reserve for possible loan losses ①

Profit

Expenses related to portfolio problems

Gain/loss on equity

Amount of credit costs ②

Recoveries of written off claims ③

Profit before income taxes

Ordinary profit

Extraordinary gain/loss

(Millions of yen）

29

Average

balanceYield

Average

balanceYield

Average

balanceYield

Average

balanceYield

Average

balanceYield

Average

balanceYield

Loans 23,599 1.28 23,208 1.27 22,867 1.23 23,456 1.13 24,655 1.06 1,199 △ 0.07

Securities 10,224 1.15 10,299 1.21 9,899 1.19 9,803 1.52 10,080 1.31 277 △ 0.21

Call loans, etc. 837 5,090 5,441 7,752 10,676 2,924

34,660 1.22 38,597 1.10 38,208 1.06 41,012 1.03 45,412 0.88 4,400 △ 0.15

Deposits 30,325 0.02 30,326 0.02 31,135 0.01 32,507 0.01 33,833 0.01 1,326 0.00

Negotiable certificates of

deposit1,296 0.05 1,189 0.04 1,031 0.02 1,036 0.02 919 0.01 △ 117 △ 0.01

Call money, etc. 3,182 5,971 5,161 7,528 10,704 3,176

34,803 0.04 37,486 0.05 37,327 0.05 41,071 0.07 45,458 0.10 4,387 0.03

Total interest-earning

assets

Total interest-bearing liabilities

Average balance, yield,

etc.

FY2018YOY Change

FY2017FY2014 FY2015 FY2016

YOY Change

Interest margin for total fund

interest rate0.31 0.30 0.24 0.27 0.16 △ 0.11

Gap on yields of deposits and

loans1.26 1.25 1.22 1.12 1.05 △ 0.07

Expense ratio 0.95 0.90 0.89 0.84 0.81 △ 0.03

OHR 64.25 61.27 65.54 62.93 68.07 5.14

ROA (based on net business

profit)0.44 0.44 0.36 0.36 0.26 △ 0.10

ROE (based on profit) 3.32 4.17 4.33 3.81 3.12 △ 0.69

FY2018FY2017FY2014 FY2015 FY2016

(Billions of yen: ％）

(％）

30

4-10. Changes in Key Figures of Hokkoku Bank ②

4-11. Integrated Risk Management

190.8

115.2

67.0

47.9

37.8

7.7

6.8

6.9

1.0

0

50

100

150

Upper allocationlimit

Allocated capital Amount used(VaR)

(Billions of yen)

Integrated Value at Risk (As of the end of March 2019)

Upper allocation limit Market risk Credit risk Operational risk Other risk

Allocated

capital

Amount used

(VaR)Use rate

Market risk

115.2

67.0

58%

Interest rate risk 17.4

Share price

fluctuation risk57.8

Investment trust

price fluctuation risk15.2

Correlation effect ▲23.4

Credit risk 47.9 37.8 79%

Operational risk 14.6 7.8

Total risk subject to

allocation177.7 112.6 64%

【Calculation of Value at Risk (VaR)】•Interest rate risk: 6 month holding period, 99.9% confidence interval (liquid deposits use an internal model method)

•Share price fluctuation risk: 6 month holding period, 99.9% confidence interval

•Investment trust price fluctuation risk: 6 month holding period, 99.9% confidence interval

•Credit risk: 1 year holding period, 99.9% confidence interval

•Operational risk: Basic indicator approach

【Other indicators (As of March 31, 2019)】・Consolidated liquidity coverage ratio 135.1% (100% or higher required)

* Upper allocation limit: Tier 1 capital such as common stock after deducting

valuation gain on securities, etc.

【Ratio to interest risk on banking accounts (As of March 31, 2019)】

Amount of interest risk on banking accounts ① 35.9 billion yen

Tier 1 capital ② 246.2 billion yen

Ratio to IRRBB ① / ② 14.61%

31

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