Bank of the Ryukyus Management Briefing for FY2015

Transcription

1 Bank of the Ryukyus Management Briefing for FY215 By Masaru Mukaesato Winner of the 23nd (fiscal 214) Bingata Design Contest presented by the Bank of the Ryukyus

2 The Financial and Economic Environment of Okinawa Prefecture 1

3 Overview of Okinawa Prefecture From Japan s Southern Tip to the Heart of East Asia China 1.3 billion Forecast rate of economic growth 1.7% (highest in Japan: forecast rate of real economic growth (Japan Center for Economic Research)) Okinawa Japan 13 million Population growth rate.4% (Ranked second in Japan, 214) * No. 1 ranked Tokyo:.68% Center of a massive market with a population of 2. billion Within a four-hour traveling distance by air Prefectural Income (per person) 2.1 million (worst in Japan, 213) * National average: 2.84 million Tokyo: 4.5 million Savings per Household 5.19 million (worst in Japan, 215) * No. 1 ranked Tokyo Metropolitan Area: million National average: 18.5 million ASEAN 6 million Sources: Okinawa Prefecture Sources: Okinawa Prefecture, Cabinet Office, Ministry of Internal Affairs and Communications 2

4 Economic Trends (Bank of Japan Tankan) High Level Exceeding 4 Bank of Japan Tankan ( Business condition diffusion index : Strong-Week) Japan Okinawa 6 Mar Mar Feb.'92 Feb.'94 Feb.'96 Mar.'98 Mar.' Mar.'2 Mar.'4 Mar.'6 Mar.'8 Mar.'1 Mar.'12 Mar.'14 Mar.'16 * Drawn up using new base numerical values from December 214 Source: Bank of Japan, Naha Branch 3

5 Regional Economic Climate Chart (April 216) Fine HOKKAIDO AREA Fine, partly cloudy Cloudy Cloudy, rain in places TOHOKU AREA Rain HOKURIKU AREA CHUGOKU AREA KOSHINETSU AREA KYUSYU AREA KINKI AREA KANTO ARE Fine in Okinawa only OKINAWA PREFECTURE SHIKOKU AREA TOKAI AREA Fine since July 213 Source: Regional Banks Association of Japan 4

6 Population (Future Estimates, Birthrates) Okinawa Prefecture s population is projected to increase for the foreseeable future Projected Population (1995 年 =1) 12 Japan Okinawa Peak Okinawa Prefecture Population Seen in Relation to Age Groups (Thousands) 1, 3.% 2.5% % % % Youth population Elderly population % 2.31% % % Birthrate Trends % Working-age population Elderly population ratio (Right scale) 28.1% 3.3% (Source: Prepared from census figures provided by Japan s Ministry of Internal Affairs and Communications through to 21 as well as estimates for 215 and beyond provided by the National Institute of Population and Social Security Research) 415 Japan Okinawa Government Target(1.8%) 3% 2% 1% % 8 1 Years 2.% 1.5% 2.13% 1.91% 1.95% 1.87% 1.82% 1.87% 1.94% 1.72% 1.75% 1.76% (Source: Prepared from census figures provided by Japan s Ministry of Internal Affairs and Communications through to 21 as well as estimates for 215 and beyond provided by the National Institute of Population and Social Security Research) 1.% 1.54% 1.42% 1.37% 1.42% 1.29% Source: MHLW 5

7 Estimates of the Number of Households Continued increase in the number of households (1995 年 =1) Estimates of the Number of Households Japan Okinawa Peak (Source: Prepared from estimates as of March 214 provided by the National Institute of Population and Social Security Research) 6

8 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.% Employment Conditions (Trends in the overall unemployment rate) Employment conditions on improving trend Trends in the Overall Unemployment Rate Male Unemployment Rate Trends 7.8% 7.9% 8.4% Japan Okinawa 7.4% 7.5% 7.1% 5.7% 5.% 5.3% 5.1% 5.1% 4.4% 4.6% 3.9% 4.% 3.4% 1% 8.5% 8.1% 8.4% 8% 6% 4% 2% % 1% 8% 6% 4% 2% 5.3% 4.6% 3.9% Okinawa Japan 7.9% 6.8% 5.9% 4.9% 4.3% 3.6% Female Unemployment Rate Trends Okinawa Japan 7.% 6.3% 6.6% 5.6% 4.7% 4.2% 4.8% 4.2% 4.2% 3.7% 3.7% 3.1%.% % (Source: Labor force survey by Japan s Ministry of Internal Affairs and Communications, Okinawa Prefecture) 7

9 Employment Conditions (Bank of Japan TANKAN, Actual Salary Amounts) Importance of Improving Labor Productivity 2 1 (Employee Surplus) (Employee Shortage) / % point Trends in Employment Conditions DI (Bank of Japan TANKAN) Japan Okinawa Employee Surplus Employee Shortage Mar.'11 Sep.'11 Mar.'12 Sep.'12 Mar.'13 Sep.'13 Mar.'14 Sep.'14 Mar.'15 Sep.'15 Mar.'16 (Source: Bank of Japan, Naha Branch Short -Term Economic Survey of Enterprises in Okinawa (Tankan) Business size of five or more employee Actual Salary Amounts (Comparison with Same Month in Previous Year) Japan Okinawa (Source: Okinawa Prefecture Department of Planning, Statistics Division Monthly Labor Statistics 8

10 Trends in Land Prices Both Commercial and Residential Land Prices in Okinawa Rising at More Than National Levels Commercial-use land (YoY) Residential-use land (YoY) 14.% Japan Okinawa 14.% Japan Okinawa 12.% 12.% 1.% 1.% 8.% 8.% 6.% 6.% 4.% 2.% +2.% 4.% 2.% +1.7%.% -2.%.9%.% -2.% -.2% -4.% -4.% -6.% -6.% -8.% -8.% -1.% -1.% -12.% -12.% Jan.'91 Jan.'96 Jan.'1 Jan.'6 Jan.'11 Jan.'16 Jan.'91 Jan.'96 Jan.'1 Jan.'6 Jan.'11 Jan.'16 (Source: Land prices published by Japan s Ministry of Land, Infrastructure, Transport and Tourism) 9

11 Tourism (Visitor Numbers to Okinawa) Visitor Numbers to Okinawa Breakdown of Foreign Travelers by Nationality (Thousands) 9, Visitors from other parts of Japan (Left scale) Visitors from overseas (Left scale) Revenues from tourism (Right scale) 516.9? Billions of Yen 215 Total: 1.5 million 8, 7, , 6, 5, 4, 3, ,415 (95.1%) 5, ,835 (94.8%) 5, ,413 (93.5%) 5,862 7,58 (91.4%) 6,164 (87.3%) 6, Chaina 29, 2% Others 24, 16% Hong Kong 18, 12% Taiwan 47, 32% Korea 29, 2% 2, 1, 893 1, (4.9%) (5.2%) (6.5%) (8.6%) (19.3%) * Figures inside ( ) show composition ratios (Source: Statistical overview of the number of tourists entering Okinawa Prefecture) 1 Chaina 11, 13% Others 15, 18% Hong Kong 12, 14% Korea 16, 17% Taiwan 34, 38% 214 Total:.89 million 1

12 Tourism (Overseas Visitors by Air/Sea Routes) (Thousands) 1,6 Scheduled Overseas Routes (Fiscal 215) 1,4 1,2 1, Okinawa Visitor Numbers by Air/Sea Routes Air Routes 1 Routes Sea Routes Number of Overseas Flights Operated from Naha Airport in a Week Fiscal21 Fiscal215 3Flights 153Flights Five-Fold Increase 892 1, (Times) Trends in Numbers of Cruise Ships Visiting Ports in Okinawa Prefecture Naha Port Ishigaki Port Taira Port Nakagusuku Port Others Topics In April 216, large cruise ship visited Port of Nakagusuku for first time in about 1 years Actual Needs survey of cruise ships visiting main ports in Okinawa being conducted Planned , (Source: Statistical overview of the number of tourists entering Okinawa Prefecture) (Source: Created by the Bank of the Ryukyus from documents drawn up by Okinawa General Bureau that were based on interviews with port operators (Okinawa Prefecture, Naha Port Authority, City of Miyakojima, City of Ishigaki).) 11

13 Tourism (Second Runway at Naha Airport, MICE) Second Runway at Naha Airport Additional construction of a 2,7m runway to address the increase in air travel demand Total project expenses Commencement of construction Completion of construction About 198 Billion January-214 December-219 Schematic Layout Diagram of Large-Scale MICE Facility Basic Functions of Facility Multi-purpose hall Approx. 7,5m2 Foyer, etc. Approx. 2,5m2 Exhibition hall 3,m2 Small- and medium-size conference rooms (second floor) Approx. 7,5m2 Airport name Number of service routes 1 Tokyo International 49 2 Naha 27 3 Fukuoka 26 4 New Chitose 26 5 Osaka International 24 (Source: Okinawa Prefecture) Takeoff and Landing Handling Capacity Current 135, /year After expansion 185, /year (Forecast) Layout diagram A schematic view that matches facility s functions and scale with site s shape, this diagram is designed to effectively position the facility s basic functions and its other necessary functions at fitting out stage. M Meetings, Incentive Travel Able to hold conferences, side meetings and linked exhibitions for 5, people at the same time Able to accommodate 4, people in seated dinner style Conventions, Events Capable of holding academic conferences that are increasing in size in Asia and elsewhere Enables integrated use of exhibition and multipurpose halls as an exhibition space covering approx. 4, m2 Can accommodate large-scale concerts for audiences of approx. 27, 12

14 Okinawa Promotion Budget Excerpt from a comment by Prime Minister Shinzo Abe on December 24, 213 ( Billions of Yen) 4 Secured an annual budget of more than 3 billion to help develop and promote Okinawa throughout the current Okinawa Development and Promotion Plan period (fiscal 212 to fiscal 221) (Source: Japan s Cabinet Office) 13

15 Projects in Okinawa Prefecture (Planned) Hotel Hotel Land adjustments Hotel Fishing harbor development project Kinser landfill development Hotel Naha Port Comprehensive Logistics Center Hotel Aircraft overhaul base upgrade project Hotel Sale of lots for Toyosaki Town/airport logistics use Itoman City/Itoman City Central Market upgrade projects Hotel Main island of Okinawa Hotel Hotel Hotel Hotel Hotel Private-sector businesses Hotel University of the Ryukyus Hospital Multipurpose arena Awase land readjustment project Okinawa Electric LNG Power Station Project to extend the Okinawa Municipal monorail Smart City development Project to develop the Naha City Agricultural Market disaster prevention district Redevelopment of vacant lot at former postal service s Furujima public housing complex Development of seven properties, including hotels, near Kokusai Street Land adjustment project in Taketomi district of Itoman City Public works Use of vacant lot at Gimbal Training Ground Miyako island / Shimoji island / Irabu island Hotel Hotel Shimoji-shima Airport utilization Ishigaki island / Taketomi island Okinawa Prefectural Yaeyama Hospital Hotel Hotel Hotel Hotel Hotel Hotel Hotel 14

16 Financial Results for FY215 15

17 Financial Highlights Profit/Loss Consolidated First final profit* broke through 1. billion barrier Non-consolidated Increased revenue and earnings for three consecutive periods Business Scope Total financing surpassed 2 trillion milestone Topics OCS, Ltd. made wholly owned subsidiary * Net income for the period attributable to the owners of parent company 16

18 Financial Summary (Non-Consolidated) Increased revenue and earnings for three consecutive periods (Billions of Yen) FY215 FY214 Year-on-year change Ordinary revenue Business gross profit (a) Expenses (b) Real net business profit (c=a-b) Net credit costs (d) Other extraordinary gain/loss (e) Ordinary profit (f=c-d+e) Net income * Increase and decrease is presented on a financial statement basis. 17

19 Financial Summary (Consolidated) Besides Individual Contributory Factors, Making OCS into Subsidiary Increased Revenue and Earnings (Billions of Yen) FY215 FY214 Year-on-year change Ordinary revenue Ordinary expenses Ordinary profit Extraordinary gains or losses Gain on negative goodwill Net income for the period attributable to the owners of parent company * Due to revision under the Accounting Standard for Business Combinations consolidated net income has been revised to net income for the period attributable to the owners of parent company. * Increase and decrease is presented on a financial statement basis. 18

20 Factors Contributing to Non-consolidated /Consolidated Differences in Net Income for Current Fiscal Year Non-consolidated/Consolidated Scale Factor Attributable to Making OCS into Consolidated Subsidiary: 2.4 Times Factors Contributing to Non-consolidated / Consolidated Differences in Net Income for Current Fiscal Year (Millions of Yen) 4,374 Minority interest Others 5,52 1,193 Total profit from subsidiaries Gain on negative goodwill + 5,279 million 1,331 Non-consolidated Consolidated 19

21 Factors Behind the Change in Net Income (Non-Consolidated) Increase in Actual Business Net Income, Increase in Net Income due to Decreased Credit Limit Costs/Income Taxes (Billions of Yen) 6. Net Income Factors Behind the Change in Net Income (Millions of Yen) , Increase in real net business profit 279 Decrease in net credit costs Decrease in total income taxes Decrease in gains/losses on shares Others 5,52. End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar million End Mar. 16 2

22 Factors Behind the Change in Real Net Business Profit (Non-Consolidated) Increases for Three Consecutive Periods Due to Increased Loan Interest/Gain on Sale of Securities (Billions of Yen) Real Net Business Profit End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 Factors Behind the Change in Real Net Business Profit 9,167 End Mar Increase in interest on loans and bills discounted 359 Increase in interest on securities / Gain on sale of securities 18 Increase in interest on deposits million 163 Decrease in service profit 382 Increase in expenses (Millions of Yen) 25 Others 9,33 End Mar

23 Loans (Non-Consolidated) Favorable increases in both private and corporate businesses (Billions of Yen) 1,6 1,4 1,2 1, 8 1, , Loans (Non-Consolidated) Individuals Corporations Local public authorities and other Rate of increase (Compared with the end of the previous period:right scale) 7.1% 1, , % 1, % 8.% 7.% 6.% 6.3% in 5.% Okinawa Prefecture 4.% 6 3.% 4 2.1% 2.% % 1.% End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% 22

24 Loans (Business/Consumer Loans) Steady Increases in Business/Consumer Loans Business Loans Real estate, rental and leasing Wholesale and retail Construction Medical and welfare (Billions of Yen) Manufacturing Others Rate of increase (Right scale) % % % % -1.6% % 6.% 4.% 2.%.% -2.% Consumer Loans Other loans Mortgage loans Rate of increase (Right scale) (Billions of Yen) % % % 6.% 4.7% 4.7% 5.6% 3 4.% % 1 End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16-4.% End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% * Individual business loans are handled in a different manner and as such data does not reconcile with data for loans to corporations on page 22 * Individual business loans are handled in a different manner and as such data does not reconcile with data for loans to corporations on page 22 23

25 Trends in Earnings Yields (Non-Consolidated) 2, Increased Income for Two Consecutive Periods by Decreased Loan Investment Yields and Balance Increase Factors (Millions of Yen) Trends in Loan Interest Increases/Decreases Earnings yield factors Balance factors Increase/decrease in loan interest compared with same period in previous year 3.% Trends in Earnings Yields Loan investment yields Loan investment yields (nationwide regional banks) Deposit yields Securities yields 1,5 1, ,618 1, % 2.% 1.5% 2.5% 1.82% 2.41% 1.71% 2.29% 1.59% 2.14% 1.47% 2.2% 1.94% Reference End Sep % 1.31% -5-1, -1,5 1,79 1,358 1,884 1,452 1, %.5%.75%.6%.28%.26%.5%.15%.58%.55%.57%.1%.9%.9% -2, End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% End Mar.'11 End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 * Loan investment yields (nationwide regional banks) compiled from Regional Banks Association of Japan data 24

26 Deposits (Non-Consolidated) Significant Increases in Private/Public Money, Including Corporations, Surpassed Two Trillion Yen (Billions of Yen) Deposits (Non-Consolidated) 2,2 2, 1,8 1,6 1,4 1,2 7.2% 1, Individuals Corporations Public funds Rate of increase (Right scale) 1, , , % 4.5% 2, % 7.% 6.% 5.% 1, 3.6% 4.% 8 6 1, % 1, , , , % 2.% % End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% 25

27 Assets in Custody (Non-Consolidated) Increased Single-Premium Insurance but Decreased Investment Trust, JGB Balances (Billions of Yen) Aggregation method for single-premium insurance 2 Cumulative sales total Balance Assets in Custody JGBs Investment trusts Single-premium insurance End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 * Single-premium insurance: Contract value of single-premium individual pension insurance, single-premium whole life insurance, and single-premium medical care insurance * Not simply comparable as the aggregation method for single-premium insurance up to and including March 31, 212, was different to that from March 31, 213, onward

28 Securities (Non-Consolidated) Balance Decrease by Redemption of JGBs, Steady Increase in Revenue (Billions of Yen) Securities (Non-Consolidated) JGBs Bonds Local government bonds Other (foreign bonds, etc.) Yen bond duration (Right scale) 3.44 (Years) Trends in Securities-Related Payments Interest and dividends Class 5 bonds (Billions of Yen) Share 3 balance of account Total End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.' End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 27

29 Expenses (Non-Consolidated) Increase, Due to Increases in Non-Personnel Expenses and Taxes ; OHR Flat Trends in Expenses and OHR (Billions of Yen) % 73.13% Personnel expenses Taxes 71.72% 1.4 Non-personnel expenses OHR(Right scale) 7.64% 7.69% % 75% 7% % End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 6% 28

30 Credit Limit Costs/Written-off Loans (Non-Consolidated) Credit Limit Costs/Written-off Loans on Downward Trend (Billions of Yen) Trends in Net Credit Limit Costs Gain on amortized loans Other amounts Loan amortization Specific allowance for credit losses General provision for credit losses Total Reserve ratio for risk management loans (Right scalr) 5 (Billions of Yen) Substandard loans Claims in bankruptcy Trends in Written-off Loans Loans in danger of default Written-off loan ratio (Right scale) 3.% % % % % % % 16.% 14.% 12.% 1.% 8.% 6.% 4.% 2.% % % % 2.18% 2.9% % 2.% 1.5% 1.%.5% -2.5 End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% 29

31 Capital Ratio (Non-Consolidated) Capital Adequacy Ratio Declines as Subordinated Debt Redemption Causes Capital Amount Decrease Capital Ratio Risk Assets (Billions of Yen) Regulatory capital Capital ratio (Right scale) (Billions of Yen) % 9.68% % 9.15% % % 8% 1,4 1,2 1, ,17.7 1, , % 8 6 4% % 2 End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 % End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 * Calculated by Basel III national standard from March 31, 214 3

32 Earnings Forecasts for FY216 (Non-Consolidated) Decrease of 7 Million Expected in Current Period Net Income (Billions of Yen) FY216 (Forecasts) Year-on-year change FY215 Ordinary revenue Ordinary profit Net income * Increase and decrease is presented on a financial statement basis 31

33 Earnings Forecasts for FY216 (Consolidated) Profit Decline Expected Due to Recoil from Gain on Negative Goodwill and Other Factors (Billions of Yen) FY216 (Forecasts) Year-on-year change FY215 Ordinary revenue Ordinary profit Net income for the period attributable to the owners of parent company (Yen) Annual dividend per share * Due to revision under the Accounting Standard for Business Combinations consolidated net income has been revised to net income for the period attributable to the owners of parent company. * Increase and decrease is presented on a financial statement basis 32

34 ROE/PBR (Consolidated) Net Income/ROE per Share Net Assets/PBR per Share (Yen) 3 Net Income per Share Net Income per Share (excluding negative goodwill, etc.) ROE ROE (excluding negative goodwill, etc.) 12.% (Yen) 3, Net Assets per Share PBR (Right scale) * Calculated on share price at March 31 each year 2,78 (Magnification) % 1.% 2,5 2,216 2,29 2,368 2, % 5.9% % 6.% 2, 1, % % % % 5.3% % 2.% 1, End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16.% End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16. 33

35 Bank of the Ryukyus Strategy 34

36 Long-Term Vision The Bank of the Ryukyus Group that is our customers bank of preference and enjoys the overwhelming support of the local community. Speed Providing zero lead-time services Providing Our Customers with the Three S s (Value) Solution Sympathy Unique solutions from a bank that possesses local knowledge A partner that sympathizes with customers thoughts and feelings 35

37 New Medium-Term Management Plan (April 215 to March 218) Shared Value 215 -Establishing value provided to customers by displaying the Group s comprehensive capabilities- Corporate Business Strategy Provide growth-field support and comprehensive solutions Growth Strategies Promote comprehensive trading by building solid customer relations Individual Business Strategy Establish life-plan sales stance by omni-channel processes Group Strategy Provide one-stop services that leverage Group capabilities- Boost growth strategies Create business opportunities that utilize information Review BPR/organizations from perspectives that maximize customer relations Organizational / Business Process Reengineering (BPR) Strategy IT/Sales Information Strategy Capability Strategy Rebuild value creation capabilities by strengthening IT/human resources, etc. Strategic rebuilding of human resources and promotion of diversity Human Resource Strategy 36

38 Priority Issues for Fiscal 216 in Consideration of Negative Interest Rate Dealing with Negative Impact of Different Dimension in Quantitative Easing while Aiming to Improve Profitability by Boosting Policies! Ahead of Schedule Realization of Medium-Term Measures Priority Issue Ⅰ Stimulation of Demand for Finance Based on understanding of customer businesses, steadily supply financing linked to customer growth Priority Issue Ⅱ Encourage Flow from Savings to Investment Sales branches/headquarters functions to cooperate and propose most suitable portfolios in accordance with customer life plans Priority Issue Ⅲ Diversification of Revenue Sources Expand bank business fields by targeting innovative businesses, traditional and different demographics, etc. Priority Issue Ⅳ Strengthening of Field Capabilities Provide the Ryugin Group s transaction value through the highest number of sales channels in Okinawa 37

39 (Persons) 12 Corporate Business Strategy (Medical/Welfare Field) Based on declining birth rate and growing proportion of elderly people, strengthen support systems geared toward medical/welfare field Medical Managers and Trends in Loan Balances Grade 2 Medical Managers Grade 3 Medical Managers Loans (Right scale) Medical and Welfare Promotion Group established December (Billions of Yen) 8 Development of Human Resources Familiar with Medical Management Number of Successful Applicants for Medical Manager Exam Surpasses 1! Triumphal celebration jointly held with those from Okinawan medical institutions who passed exam 7 Holding of Medical Seminars End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 38

40 Corporate Business Strategy (Sales Channel Expansion Support ) Overseas Sales Channel Development Backup by Holding Joint Meetings Third Business Forum to Convey Okinawa s Culinary and Visual Charms Held Hong Kong Gourmet Food Business Meeting ~ Yamagata Bank, Hachijuni Bank, Musashino Bank, Bank of the Ryukyus ~ Other Joint Sponsorship Nagano Prefectural, Nagano Prefectural SME Promotion Center, Yamagata International Economic Development Support Organization 215 Japanese Foods Premium Trade Fair Sponsor: JTB East Japan Taiwan October 215 Singapore December 215 Hong Kong February

41 Overseas Networks Building frameworks capable of responding to various overseas development needs Tokio Marine & Nichido Fire Insurance Co., Ltd. Overseas development support Mitsui Sumitomo Insurance Company, Limited Halal Japan Business Association Halal business support Brand Research Institute, Inc. Aioi Nissay Dowa Insurance Co.,Ltd DBJ Asia Financial Support Center MHC Co., Ltd. Nippon Export and Investment Insurance Nippon Asia Halal Association J-Will International (Thailand) Co., Ltd. Kasikornbank PCL. (Thailand) Asia Creative Works Pte Ltd Bank of the Ryukyus Metropolitan Bank and Trust Company (Philippines) Okinawa Prefectural Government Hong Kong Representative Office Joint Stock Commercial Bank for Foreign Trade of Vietnam Employee dispatch Okinawa Prefecture Department of Commerce, Industry and Labor, Asia Economic Strategy Division Chinatrust Financial Holding Co.,Ltd (Taiwan) Foreign bank partners

42 Corporate Business Strategy (Regional Regeneration [1]) Collaboration with Naha City Partnership Agreement with Aozora Bank Naha City/Bank of the Ryukyus Joint Sponsorship Establishment Support Seminar Agreement signed January 26, 216 Collaboration with Yonabaru Town Main Business Alliance Areas Business matching Interregional cooperation Industry, government, academia financial cooperation Human resource development Increased sophistication of financing Entrepreneur Support/Training Implemented Specialty Product Development Support Agreement signed February 26, 216 Student Category Team name Let s begin!!(chubu Agricultural High School) Plan name Establishment of highly nutritious vegetable cultivation utilizing ocean s untapped resources General Category Team name Ryukyu Diet Chickens Plan name Activation of Okinawa poultry industry by accumulating poultry-related technologies 41

43 Corporate Business Strategy (Regional Regeneration [2]) Providing a Variety of Finance Procurement Means <Schematic Diagram> Finance Procurement by Crowd-Funding First Project Project Overview Turning tuna into raw ham!? Raw ham from the sea, smoked Okinawa-farmed tuna for which no additives at all are used Supporters (Cyber agent/crowd funding) Posted on Makuake site, sponsor recruitment Provision of financing Provision of financing Bank of the Ryukyus Customers Cooperation Introduction of users wishing to buy products Bank of the Ryukyus Introduction of Makuake In Return (Provision of Premium Goods and Services) 42

44 Industry-Academia Collaboration (Corporate Business Strategy) Utilizing Bank of the Ryukyus networks to match University of the Ryukyus with local companies Industry-Academia-Government Partnership Agreement with University of the Ryukyus First Project in Okinawa Zero-emission Technology Okinawa Areas of joint research: Research Results Composition (mixing) of concrete repair material made with fly ash (coal ash) and performance-related research, including resistance to salt damage Fukumaru Nojo Farming Corporation Areas of joint research: Preferential examination with regard to other Kibimaruton pork meats Kamiya Sangyo Co., Ltd. Areas of joint research: Quality comparison of lettuces produced in plant factories and grown outdoors 43

45 Corporate Business Strategy (Expansion of Product/Service Lineups) Expansion of product/service lineups in tune with customers varying life plans Housing-Related Loans Meeting Diverse Needs An Okinawan Bank First! An Okinawan Bank First! Sales launched February 215 Sales launched March 216 An Okinawan Bank First! An Okinawan Bank First! Sales launched March 215 Sales launched September 215 Target area widened May

46 Corporate Business Strategy (Credit Card Business) Efforts to Become Pioneer Even among Other Banks in Japan Launched VISA debit card October 215 More than 2, cards issued Immediate Settlement with no Need for Cash Zero time spent waiting in line at ATMs and zero out-ofhours handling charges Local Currency Withdrawals at Overseas ATMs Convenient, effortless currency exchange NO Worries of exceeding your deposit account credit limit Targeted at private customers aged 15 and over Cash Back.2% of Amount Spent 45

47 Private Business Strategies (Non-Face-to-Face Sales Channels) Transition from a mere Back Office to Profit Center Sales Capability Strengthening for Non-Face-to-Face Channels Proactive Service Proposals to Customers by Outbound Promotions Increase in the Number of Seats <36seats 5seats> In order to enhance customer support in keeping with the increasing number of loan applications Installation of Refreshment Rooms Providing a comfortable workplace for employees 46

48 IT/Sales Information Strategy Evolution of One-to-One marketing Transformation in Work Styles Mobile April 216 Prepared approx. 1, iphones for employees PC May 215 Ryugin Azukari Archive fully operational DBC November 215 Extended functions From February 214 Distribution of 6 ipad devices Sales support systems Home visits Range of workplaces From May 217 Launch of occupationrelated website May 214 BankNeo sales support system fully operational April 215 Introduction of mobile printers Seminar Branch / Loan Center 47

49 Group Strategy Provide comprehensive services that leverage Group capabilities Ryugin DC Co., Ltd. Ryugin Research Institute., Ltd. Ryugin Business Service Co., Ltd. Ryugin Hosho Co., Ltd. April 214 Ryugin Hosho Co., Ltd. made wholly owned subsidiary June 216 Plan to Bring Ryugin Office Service Co., Ltd. In-House April 214 Ryukyu Leasing Co., Ltd. made consolidated subsidiary Ryugin Office Service Co., Ltd.* Ryukyu Leasing Co., Ltd. April 215 Okinawa Credit Service Co., Ltd. made wholly owned subsidiary Okinawa Credit Service Co., Ltd. 48

50 Human Resource Strategy Diversity Promotion (Staff) FP1 Class Small/Medium Enterprise Consultants Medical Management Consultants Point of contact financial services End Mar.'12 End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 Recruitment of Mid-Career Professionals Lawyers 2 Certified Public Accountants 1 Human Resource Training Trends in Numbers of Professionally Qualified Personnel Grade 1 Architects 1 and others *Others actively employed include systems engineers, former megabank employees 25 Further Improvements in Employment Environment for Women to Excel as Managers To increase number of female employees occupying management positions to 2 or more (planned timeframe: 5 years) Introduction of Chief System Round-table discussion with external instructor (Instructor: Ms.Miura from Resona Bank) Reinstatement Assistance Career Support Reinstatement Support Work Style Reform Sending employees to Women Leader Committee Sponsor: Okinawa Prefectural Management Association Recommendation for Yukatsu,working earlier in the morning Sending female employees to information exchange meetings to promote the advancement of women Sponsor: Juudankai 49

51 Local Responsibility Activities Proactive Involvement in Local Society Sports Promotion Welfare Activity Support Sponsor of Ryukyu Golden Kings basketball team Local Event Support Nice Heart Bazaar * Winning of Prefectural Governor s Award at Okinawa Prefecture Welfare Community Planning Awards Strong Support for Traditional Culture Naha Marathon sponsorship/volunteers Traditional dyed cloth design contest 5

52 About This Presentation All enquiries regarding this presentation should be addressed to: Bank of the Ryukyus,Limited General Planning Department Telephone: Fax: The information in this presentation is on a non-consolidated basis unless otherwise specified. Information is based on summaries of published data, and some totals presented in this presentation may not add up due to rounding. This material contains information about the future(forward-looking information)such as forecasts, outlooks, objectives and plans concerning the Bank. The forward-looking information was created based on information available as of June 3,216 and does not represent a guarantee of future performance. Certain assumptions and hypotheses are used for the description of forward-looking information, but these assumptions and hypotheses could be inaccurate from an objective perspective and may not materialize in the future. Forward-looking information involves risks and uncertainties, and we ask readers to refer to the brief notes on the settlement of accounts and securities report of the Bank for more details. The Bank will not update the forward-looking information contained in this material.