#1Investor Presentation FFG Growth Strategies - To be your Bank of choice 2015 March Fukuoka Financial Group FFG Fukuoka Financial Group#2Contents - To be your Bank of choice Part I Main Presentation Part II About Fukuoka Financial Group Page Page 4. An Overview of FFG 20. Corporate Data 5. Positioning of FFG 21. Corporate History 6. Business Results 22. Network of FFG 7. Business Environment Facing Regional Banks 23. Stock Data 8. Strategies to be Taken by Regional Banks 24. Market Share of Subsidiary Banks 9. FFG's Management Strategy 25. Comparison with major Regional Banks 10. Fourth Mid-Term Management Plan ABC Plan I 11. FFG's Goal of Expanded Business Base 12. Targets & Strategies 13. Improving Business Productivity 14. Progress of ABC Plan II 15. Outlook for Net Interest Income 16. Credit Cost 17. Projections for FY2014 18. Dividend Policy FFG Fukuoka Financial Group FFG Head Office (Fukuoka City) 1#3Contents To be your Bank of choice Part III Financial Data Page Part IV Our Mother Market "Kyushu " Page 27. Financial results for FY2013 48. Feature of Kyushu Economy 28. Projections for FY2014 49. Financial Map of Kyushu 29. Transition of Core Business Profit 50. Business Conditions 30. Loans Growth 51. Capital Investment & Housing Investment 31. Loans (By Bank) 52. Land Price Trends 32. Loan Portfolio (Classified by Industry) 33. Deposits & CDs Growth 53. Corporate Bankruptcies 34. Deposits & CDs (By Bank) 54. Loans 35. Interest Rates (Domestic Loan) 55. Deposits 36. Interest Rates (By Bank) 56. Forward-Looking Statements 37. Rate 38. 39. Breakdown of Loans and Deposits & CDs By Interest Securities Non-Interest Income 40. Asset Management Products 41. Overhead Expenses 42. 43. 44. 45. 46. Status of Reserves & Coverage: Bank of Fukuoka Status of Reserves & Coverage: Kumamoto Bank Status of Reserves & Coverage: Shinwa Bank Capital Adequacy Ratio Consolidated Balance Sheets FFG Fukuoka Financial Group 2#4Part I Main Presentation Fukuoka Sasebo (Nagasaki) FFG Kumamoto Kyushu - To be your Bank of choice FFG Fukuoka Financial Group#5- To be your Bank of choice An Overview of FFG FFG is a total financial group that includes 3 regional banks based in Kyushu and a securities company. Established the "Multiple Brands/Single Platform” management style best suited to the integration of Japanese regional banks. ■Company Outline Company name (as of September 30, 2014) ■Multiple Brands/Single Platform Fukuoka Financial Group, Inc. Single platform Financial holding company Fukuoka City, Fukuoka Prefecture, Japan FFG Head office Established 2007 Shareholders' 592.7 billion yen equity Number of employees 7,026 Subsidiaries 18 companies <Main subsidiaries> 3 regional banks Securities company Credit card company Consulting firm 328 (including 321 in Kyushu) Branches in Japan Overseas 6 offices ATMs 2,059 FFG Fukuoka Financial Group Fukuoka Financial Group ▸ Integrated management system Shared management infrastructure Internal Risk management control Administration IT systems Governance Products Services 100% The Shinwa Bank Founded 1879 100% The Bank of Fukuoka Founded 1877 The Kumamoto 100% Bank Founded 1929 Sharing Product and Service Line-up Diversity in customer contact Commitment to the region Multiple brands Customers and local communities 4#6Positioning of FFG To be your Bank of choice Deposits as of September 30, 2014 (trillion yen) 14.0 12.4 11.6 12.0 10.6 10.5 8.9 8.8 7.6 7.1 6.5 6.5 Loans as of September 30, 2014 (trillion yen) 12.0 9.9 9.7 10.0 8.3 7.5 7.3 10.0 8.0 6.1 5.7 5.5 8.0 4.9 6.0 4.7 6.0 4.0 2.0 4.0 2.0 0.0 0.0 FFG Yokohama Chiba HokuhokuShizuoka YMFG Nishi- Joyo Hiroshima Gunma Nippon C FFG Yokohama Chiba HokuhokuShizuoka YMFG Joyo Nishi HachijuniHiroshima Nippon C OHR as of September 30, 2014 (%) Major regional banks MAP 75% FY2008 70% 68.0% 64.7% 64.8% 65.2% 63.7% 63.7% YMFG 65% 59.9% 58.9% 60% (Yamaguchi Momiji ⚫Kitakyushu) Hachijuni " Hiroshima 53.8% 55% 51.9% FFG 49.3% Kyoto 50% " 45% 40% 35% (Fukuoka Kumamoto ⚫ Shinwa) Nishi-Nippon City (Nishi-Nippon C Hokuhoku FG (Hokkaido Hokuriku) Joyo Chiba 30% " Nagasaki) Yokohama Shizuoka Chiba FFG Hiroshima Hokuhoku Gunma Nishi- Nippon C Hachijuni Joyo * Non-consolidated basis FFG Fukuoka Financial Group Yokohama Shizuoka Source: Financial Digests 5#7To be your Bank of choice Business Results Amid a tough business environment, FFG has strengthened profitability by improving efficiency through management integration and by expanding business. Core business profit at regional banks has decreased almost 20% over six years. One factor has been a decline in interest on loans and discounts. In contrast, FFG has recorded stable profits, setting a record high net income for the second consecutive period. Listed regional banks Core business profit (\10 bil.) FFG 174.9 -16% 162.7 152.5 146.8 143.3 146.1 141.3 -6% FFG Core business 79.5 73.4 75.4 73.3 75.5 76.9 74.9 profit (\bil.) 28.4 26.0 28.2 32.1 36.2 21.9 FFG Net income .3 (\bil.) FY07 FY08 FY09 FY10 FY11 FY12 FY13 Core business profit: 3 banks' total. Net income: FFG consolidated The profit for listed regional banks in FY13 includes the newly listed Ashikaga Holdings FFG Fukuoka Financial Group Bank of Fukuoka Kumamoto Bank Shinwa Bank (\bil.) Core business profit Net income 58.5 58.6 59.9 58.1 59.9 59.9 59.8 40.4 34.0 33.1 26.4 26.7 17.4 20.2 Core business profit Net income 8.2 6.4 6.6 6.0 6.4 6.6 6.0 6.0 5.0 2.4 1.6 0.7 0.4 -15.6 Core business profit Net income 16.7 12.8 8.7 9.1 8.6 9.6 11.0 9.1 8.8 6.1 5.0 5.4 -0.9 -102.4 FY07 FY08 FY09 FY10 FY11 FY12 FY13 6#8External environment To be your Bank of choice Business Environment Facing Regional Banks Declining birthrate in Japan is leading to a smaller and aging population. As a consequence, Japan's domestic market is expected to contract and change. At the same time, earnings are under pressure from monetary easing and from a war of attrition caused by excessive competition. To achieve sustainable growth, regional banks need management strategies that anticipate projected future changes. Contraction of domestic market due to a decreasing population and an aging society with a declining birthrate Macroeconomic environment Shift in population by age group 1.4 [2010 =1] 1.2 1 0.8 Working-age population is 0.6 already declining 0.4 2010 2020 2030 Elderly population will also decline in long term 65+ (Elderly population) Total population 15-64 (Working-age population) 0-14 (Juvenile population) 2040 2050 2060 (Source: National Institute of Population and Social Security Research (IPSS)) Increase in loans is nearing limit Increase in deposits will continue, and the deposit-loan gap will widen Deposits will also turn downward in long term Competitive environment Interest rate competition (war of attrition) due to excessive competition and quantitative expansion Shift in the number of financial institutions and the number of municipalities 1.20 [1991 = 1] 1.00 0.80 City banks 0.60 First-tier regional banks 0.40 --Shinkin banks 0.20 - Credit unions 0.00 1991 1996 Second-tier regional banks ✓ Number of municipalities Number of first-tier regional banks has remained level A A 0 A A A A A A A 0 ☐ 2001 2006 2011 ►Another underlying factor is the narrowing of the spread between short-term and long-term rates attributable to the monetary easing policy Decrease in interest rate on loans, and reduction in net interest margin Reductions in net interest income and core business profit Currently, performance is being propped up by the low level of credit cost FFG Fukuoka Financial Group 7#9To be your Bank of choice Strategies to be Taken by Regional Banks To achieve sustainable growth amid a tough business environment, each regional bank need to select an optimum strategy from among a variety of combinations based on its own unique factors. Although various options are available, it is important that the chosen strategy result in an improvement in the value of business base (foundation for growth). Analysis of present situation Key strategic options Development of new Stand- External environment Opportunities and Threats alone business Demographic trends Niche strategies Structural reforms ► Local economic trends Structure of industry ► Regulatory movements ▸ Market share Competitive situation Customer needs Internal environment Strengths and Weaknesses ► Customer base ► Products and services ► Channels ► Systems ▸ Organization, human resources Corporate culture FFG Fukuoka Financial Group Strategic business alliances ► Playing complementary roles Mutual cooperation Objectives O Differentiation from other banks O Breakaway from the interest rate competition O Diversification of revenue sources ○ Strengthening of competitiveness ○ Risk sharing [Goal] Improve value of business base (Franchise Value) Increase scale and activities of business (business base) || Increase number of customers + Economies of scale Elimination of Increase volume of business ▸ Merger ▸ Management integration via a holding company excessive system competition Alliance Inclusion as subsidiary 8#10To be your Bank of choice FFG's Management Strategy First, refine current business model. Then, work to significantly expand business base, by differentiating ourselves from other banks and reforming our earnings structure. New management integration is also an option. But in order to reap the benefits of integration, it is important to complete the three integration processes. Independent initiatives Refinement of the business model Differentiation from other banks (break away from the interest rate competition) Diversification of revenue sources, reform of earnings structure Expansion of business base (customer base x transaction base) View on management integration One of the options for survival For management integration to truly succeed, it is important to complete the three integration processes Establish FFG's “Multiple Brands/Single Platform" as a model for the integration of regional banks pursuing growth through broad-based regional development Basic concept ABC Plan II Significant expansion of the business base through structural reforms originating with our customers Structural reforms ►Perceptions, systems Marketing style ►Financial structure (B/S, P/L) <Specific initiatives> ►Owner consulting ▸ Expansion of new products and new business ►Regional revitalization network FFG Fukuoka Financial Group Significant expansion of the business base ➤ Expand target areas/segments ►Expand and deepen (cross- sell) transaction types and volume ►Increase number of FFG fans 3 integration processes Principles, Strategies Business management systems Operations, Infrastructure Human resources, Organization, Sales channels Perception, Motivation Management integration FFG Multiple Brands Single Platform Integrated group management based on robust governance Economies of scale Operations integration Close relations Perception integration customers maintained with local economies and 9#11Fourth Mid-Term Management Plan: ABC Plan II Commenced a new mid-term management plan in April 2013, positioned as a Significant Growth Phase. Goal is to be a total financial group with unwavering support from all over the Kyushu region. Fourth Mid-Term Management Plan: ABC Plan || Goal Basic concept Fundamental principles (April 2013 March 2016) - "ABC" Always Best for the Customer Total financial group with unwavering support from all over the Kyushu region Structural reforms originating with our customers and significant expansion of the business base ■Deepening relations with our customers ■Improving business productivity ■Strengthening group total power ■Polishing the FFG brand Target management indices Total loans (average balance) Total deposits and CDs (average balance) Net income Dividend payout ratio To be your Bank of choice FY2015 target 3 banks' total ¥10.1 trillion 3 banks' total ¥12.4 trillion Consolidated ¥33.0 billion Consolidated 30% level Target loans in the Kyushu region 長崎県 Balance: ¥7.8 trillion ⇒ ¥8.8 trillion Share: 23% 25% FFG Fukuoka Financial Group 10 10#12To be your Bank of choice FFG's Goal of Expanded Business Base The most important factor for sustaining growth potential is the expansion of a quality business base. FFG will continue to expand and deepen its business base in Kyushu (our mother market) by increasing customer numbers and cross-selling. Balance Types of transactions "Depth" of transaction base Meeting the needs of all corporations and individuals Expansion of quality business base Goal of ABC Plan II Business corporations General loans Syndicated loans Individuals Corporate insurance Settlement Housing loans Consumer loans Investment trusts Insurance New type of loan products Market development New type of loans Deposits Fund management Overseas business support Credit cards Settlement Business succession, M&A Inheritance "Breadth" of customer base Increase in the number of "main bank" relationships Perpetual transactions Total financial group with unwavering support from all over the Kyushu region As of March 31, Salary/pension accounts As of March 31, Housing loan customers As of March 31, Corporate loan customers 1,400,000 180,000 56,000 1,200,000 175,000 54,000 1,000,000 Salary transfers 170,000 52,000 800,000 165,000 50,000 600,000 160,000 400,000 48,000 Pensions 155,000 200,000 150,000 46,000 2013 2014 2016 2013 2014 2016 2013 2014 2016 FFG Fukuoka Financial Group Number of customers 11#13Targets & Strategies FFG's customer base Business corporations 210,000 Deposits only Large enterprises 160,000 Loans 50,000 Second-tier enterprises Individuals 5,400,000 Wealthy Wealthy 250,000 Housing loans 160,000 Owners Small and Business medium-sized Inheritance succession Semi-wealthy enterprises (SMEs) Micro enterprises, sole proprietors Target SMEs Owners Mass retail FFG Fukuoka Financial Group Mass retail To be your Bank of choice Consulting retail Proceed to expand and deepen business base, targeting all individual and corporate customers In particular, strengthen the core business of "owner consulting" for SME owners Also, incorporate the potential needs of customers by means of a new business model Priority initiatives Meet the needs of both corporate and individual customers, not just the lending needs Business succession, inheritance Business revitalization, M&A Stronger overseas business support Cultivate new customer needs New type of housing loans Wealth creation loans Small-lot loans collateralized real estate * GOALS Expansion of business base ➤ Expand areas/segments Revenue target ► Strengthen cross-selling + \2.0 billion* Revenue target +¥3.7 billion* Compared to 2012 Reform of earnings structure Break away from the interest rate competition ► Diversify revenue sources 12#14Improving Business Productivity Accelerate reform of marketing style, by utilizing sales support tools and new CRM system. Link to expansion of business base by raising business productivity. Sales support tools Tablets 手のひら静脈認証センサー内蔵 iPhone iPad ■タブレットとパソコンの1台2役 ■タッチペン対応 Touch screens WENY at FOR M 23.9 198 FFG Fukuoka Financial Group New CRM system Attributes Owners Asset Management products Finance Central management of customer information Loan cards Full utilization Due dates Negotiation history Proposals - To be your Bank of choice *CRM = Customer Relationship Management Steps Collect and accumulate customer information Deepen customer understanding Sense customer needs Make timely proposals suited to customer needs Support for business activities Shift to paperless processes Portfolio simulation Reform marketing style Coordinate customer information on maps ●地図の見方 Improve business productivity Increase time for business activities Reduce incidental administrative work *** 13#15Progress of ABC Plan II Loans Deposits + CDs Initial plan 10,160.0 9,380.8 8,989.1 (4.3%) 9,791.4 (4.4%) 8,659.4 (3.8%) (\bil.) International 113.3 Public sector 1,261.0 (-1.4%) 1,243.5(-4.2%) 192.2 Initial plan 9,700.0 153.7 1,191.2 Personal (5.0%)2,669.3 2,441.1 (4.1%) 2 2,541.6 10,880.2 11,271.0 (3.6%) 11,984.3 (6.3%) 674.2 (\bil.) 112.4 545.3 522.9 NCD International 517.0 105.2 466.7 99.0 440.8 Public sector 8,085.2 Personal 7,518.2(3.3%) 7,762.6 (4.2%) Large and second-tier 1,452.6 (5.7%) 1,535.0 (7.2%) 1,645.4 enterprises SMEs 3,391.4 (3.7%) 3,515.2 (4.8%) 3,682.6 FY11 FY12 FY13 P:FY14 FY15 FFG Fukuoka Financial Group Corporate 2,305.1 (3.7%) 2,391.1 (8.3%) 2,589.4 To be your Bank of choice 12,460.5 (4.0%) Initial plan 12,400.0 Initial plan 12,000.0 FY11 FY12 FY13 P:FY14 FY15 Initial plan 14#16To be your Bank of choice Outlook for Net Interest Income Outlook for interest on loans and discounts is for a turnaround in final year of ABC Plan II. Decreasing cost of financing debt externally is also supporting net interest income. Net interest income (3 banks' total) Domestic interest on loans and discounts (3 banks' total) (\bil.) Net interest (-1.9) income 162.9 161.0 160.1 155.5 (-0.9) (-4.7) 152.9 (-2.5) (-4.4) 148.6 International 6.5 5.1 20.2 4.9 5.0 Securities 22.2 24.1 5.7 7.0 22.2 * 22.5 20.4 Loan 161.2 152.2 (-9.0) 147.1 141.9 136.4 (-5.1) (-5.2) (-5.5) 132.7 (-3.7) Image Deposits -16.8 -10.2 -7.3 -6.6 -8.7 -8.3 -7.1 6.8 -4.8 -7.1 -4.5 -8.2 Other FY09 FY10 FY11 FY12 FY13 P:FY14 P:FY15 * Figure in parentheses ( ) is year-on-year change * Other is the external debt costs and swap costs * The ¥22.5 billion of interest on marketable securities in FY2013 includes ¥2.8 billion in gains on cancellation of investment trusts FFG Fukuoka Financial Group V: Factors relating to value R: Factors relating to rate (\bil.) +6.2-11.3 VR +5.3 -10.4 Year-on-year change moves upward VR +5.6 -11.2 VR +5.7 -9.3 VR V R 152.2 147.1 141.9 136.4 132.7 Image (-5.1) (-5.2) (-5.5) (-3.7) FY10 FY11 FY12 FY13 P:FY14 P:FY15 Domestic interest on loans and discounts 1.84 1.72 1.61 1.48 1.40 (12bp) (11bp) (13bp) (8bp) Rate of decline in interest on loans and discounts is decreasing due to turnover of stock, accumulation of consumer loans, etc. Cost of subordinated loans and other types of external debt is also decreasing Procurement cost FY12 FY13 Subordinated debt -3.1 -2.3 (+0.8) P:FY14 -1.1 (+1.2) P:FY15 -0.8 (+0.3) Preferred equity -2.5 -2.3 (+0.2) -1.2 (+1.1) -0.3 (+0.9) securities *In the 3 banks' total, the cost of preferred securities is recorded in the international segment 15#17To be your Bank of choice Credit Cost In FY2013, we strengthened reserve for obligors needing attention, maintaining a high level of reserve in accordance with conservative reserve policy. Initial planned credit cost in FY2014 was ¥8.0 billion, same level as FY2013. Based on the first half performance of FY2014, we revised the projection of the credit cost to reversal gain of ¥0.8 billion. Credit Cost (3 banks' total) Non-Performing Loans & Ratio (3 banks' total) (\bil.) As of March 31, 3 banks (Credit Cost ratio) * (\bil.) After partial write-off 20.9 (25bp) 24.2 (27bp) 15.5 Strengthened reserve for obligors with risk level ranked as needing attention or higher (Changed from 1-year to 3-year default rate) Impact = ¥13.8 billion Ratio 2.64% 2.96% 2.81% 2.49% 2.37% Shinwa 2.8 4.0 (18bp) 265.7 3.3 263.1 0.6 244.3 Initial Plan Total 226.9 236.2 Kumamoto 62.0 54.0 1.2 8.2 7.1 8.0 41.1 61.9 63.5 Substandard 20.6 Fukuoka (7bp) (8bp) 3Q actual 16.9 ↓ 13.7 0.5 -3.1 164.3 180.6 189.2 158.5 148.2 2.4 4.0 -0.8 Doubtful 3.0 4.1 (-0.8bp) 1.2 Bankrupt & Quasi-bankrupt 21.6 23.2 19.8 23.8 24.5 Mar.11 Mar.12 Mar. 13 Mar. 14 Sep.14 -2.5 FY09 FY10 FY11 FY12 FY13 P:FY14 Level of Reserves FY2013 Credit cost breakdown (\bil.) Reserve for 1.37% (\bil.) 3 banks YoY chg. BOF YOY chg. KMB YOY chg. SWB YoY chg. possible loan losses * New bankruptcies 0.5 -1.4 0.4 -1.1 0.1 +0.0 0.0 -0.3 / Total credits Non-consolidated basis * Downgrade 21.7 -2.9 14.5 -2.8 2.8 -1.4 4.3 +1.3 136.9 Sep. 30, 2014 Increasing factors Reserve for major factors 9.3 +3.4 7.0 +1.1 0.0 +0.0 2.3 +2.3 possible loan losses Collateral decline 1.3 -1.0 0.7 -1.3 0.1 +0.0 0.5 +0.3 0.70% Specific reserve for Other 14.3 +10.2 8.5 +5.3 0.3 +2.7 2.8 +2.2 Q.58% possible loan losses 65.2 Subtotal 37.8 +4.9 24.2 +0.1 6.1 +1.3 7.6 +3.5 0.44% factors Decreasing Upgrade -7.1 -2.1 -5.7 -2.3 -0.7 -0.1 -0.7 +0.3 57.3 51.7 Changes of default ratio -5.8 -3.8 -4.4 -2.7 -0.7 -0.4 -0.7 -0.7 General reserve for 36.9 Redemption, etc -16.8 +2.0 -12.9 +2.0 -1.7 -0.2 -2.2 +0.2 19.3 possible loan losses 71.8 42.7 Subtotal -29.6 -3.8 -23.0 -3.1 -3.1 -0.7 -3.6 -0.1 18.6 32.3 Total FFG Fukuoka Financial Group 8.2 +1.1 1.2 -2.9 3.0 +0.6 4.0 +3.5 14.6 18.2 *major factors is over 0.5billion yen FFG Yokohama Chiba Shizuoka 16#18Projections for FY2014 In FY2014, Core business profit is projected at ¥72.0 billion, and net income at ¥36.0 billion. 3Q results of FY2014 is progressing well, reaching 86% of projected net income. To be your Bank of choice Actual Planned Actual (\bil.) 3 banks' total FY2013 3 FY FY2014 YOY change <Key Points> 3Q/2014 Progress Gross business Profit 181.1 172.2 -9.0 Net interest income 152.9 148.6 -4.4 Domestic 147.2 141.6 -5.6 107.0 Non-interest income 28.2 23.6 -4.6 18.0 Net fees & commissions 18.5 19.9 1.4 15.5 130.5 75.8% 112.5 75.7% 75.6% 76.3% 77.9% In credit cost, a decrease in downgrades resulted in a gain on the reversal of allowance for loan losses Loans have grown at an annual rate of over 4% <Excluding public sector: +5.7%> (\bil.) 4.8% 4.9% 4.7% 4.5% 4.2% Overhead expenses 100.8 99.9 -0.9 77.1 77.2% Annual rate Business profit 66.8 72.3 5.4 53.4 73.9% 9,488 9,619 9,609 9,662 9,885 Core business profit 74.9 72.0 -2.9 53.2 73.6% International 195.3 197.7 196.2 200.6 229.3 1,117.3 1,134.6 Ordinary profit 66.6 69.5 2.9 54.4 78.3% 1,212.3 1,201.3 1,143.9 -6.4% Public sector Net income 50.1 50.0 -0.1 40.8 81.6% Large and second-tier 1,672.9 1,700.4 1,680.7 1,681.3 1,711.6 +2.3% Credit cost 8.2 -0.8 -9.0 -3.1 SMEs 3,715.7 3,797.3 3,806.2 3,864.3 3,967.9 +6.8% FFG consolidated Ordinary profit 57.0 59.5 2.5 47.1 Net income 36.2 36.0 -0.2 30.9 79.2% 85.8% Personal 2,691.7 2,722.2 2,781.9 2,798.7 2,841.2 +5.6% EPS (Yen) 41.82 41.60 -0.22 35.80 86.1% 13/3Q 13/4Q 14/1Q 14/2Q 14/3Q FFG Fukuoka Financial Group 3 banks' total Average balance 17#19To be your Bank of choice Dividend Policy Adopting a performance-based dividend formula, a dividend table has been set based on a dividend payout ratio of about 30%. Annual dividend for FY2014 expected to be 12 yen. 573.7% Dividend Policy ►Adopt a performance-based dividend formula Since FY13, a table has been set based on a dividend payout ratio of about 30% [Table of target dividends] (Common stock, yen) Dividend payout ratio 31.6% 28.7% 28.8% 26.7% 27.0% 24.4% 24.5% 12 12 10 8 8 8 8 7 FFG consolidated net income Target dividend Dividend payout ratio Over 40 billion yen 13 yen Up to 28% 35-40 billion yen 12 yen 26-30% FY07 FY08 FY09 FY10 FY11 FY12 FY13 P:FY14 30-35 billion yen 11 yen 27-32% Stock indexes (Yen) 25-30 billion yen 10 yen 29-34% EPS FY07 FY08 FY09 FY10 FY13 P:FY14 1.22 25.30 32.82 29.94 32.62 37.01 41.82 41.60 FY11 FY12 20-25 billion yen 9 yen 31-39% BPS 586 588 645 15-20 billion yen 8 yen 34-46% ROE 0.3% 4.3% 5.3% 658 712 774 4.6% 4.7% 4.9% 5.2% 5.1% 798 Below 15 billion yen 7 yen At least 40% ROTE 0.4% 6.7% 7.9% 6.5% 6.5% 6.5% 6.6% 6.2% *ROTE: Return on Tangible Equity 18 FFG Fukuoka Financial Group#20Part II About Fukuoka Financial Group - To be your Bank of choice FFG Fukuoka Financial Group#21Corporate Data Corporate Governance FFG Fukuoka Financial Group General Meeting of Shareholders Audit & Supervisory Board 4 (3 external members) Management Conference Board of Directors 14 (2 external director) SHINWA BANK FUKUOKA BANK Board of Directors 7 (1 external director) Board of Directors 12 (2 external director) Ratings To be your Bank of choice [Senior Management] Masaaki Tani FFG Chairman Bank of Fukuoka Chairman Takashige Shibato FFG President Bank of Fukuoka President Risk Management Committee KKUMAMOTO BANK Board of Directors 8 (1 external director) Takashi Yoshikai FFG Deputy President Bank of Fukuoka Deputy President Ei Takeshita FFG Director Kumamoto Bank President As of February 1, 2015 Syunsuke Yoshizawa FFG Director Shinwa Bank President *1 R&I JCR *2 Moody's *3 FFG Bank of Fukuoka A+ A AA- A+ Baa1 Kumamoto Bank A+ A Shinwa Bank A+ A Hitotsubashi Univ. Professor External Directors Ryuji Yasuda FFG, Bank of Fukuoka External Director Hideaki Takahashi FFG, Bank of Fukuoka External Director Keio Univ. Professor * 1 Issuer rating *2 Senior long-term credit rating *3 Long-term deposit rating ➤ External Directors have been introduced in 2006. FFG Fukuoka Financial Group ➤ Mr. Yasuda had a career as a partner in McKinsey & Company. He is an expert on M&A. ➤ Mr. Takahashi had a career as a senior vice president in NCR Corporation. He is an expert on ICT. 20 20#22Corporate History To be your Bank of choice Main Event 2007 Apr. Establishment of FFG 2008 2009 2010 2011 Oct. Integration of Shinwa Bank management Sep. Collapse of Lehman Brothers Jan. Integration of Kumamoto Family Bank IT system Feb. Demerger Jan. Integration of Shinwa Bank IT system Mar. Great East Japan Earthquake Oct. Establishment of NY Rep. Office Dec. Establishment of SGP Rep. Office Stage Basic Concept / Theme New Growth Strategy Run-up Phase (Adjustment) Broad-Area based Preparation for growth Preparation of management infrastructure Acceleration Phase (Cruising Speed) Improvement of B/S Switch to a growth trend Thorough utilization of management infrastructure An expansion of business scale 2012 Mar. Establishment of BKK Rep. Office 2013 2014 2015 Apr. Integration of local securities company as subsidiary Apr. Kumamoto Family Bank changed its trade name to Kumamoto Bank Significant Growth We are Here Phase (High Speed) Switch to a stable earnings structure Structural reforms A significant expansion of business base FFG Fukuoka Financial Group 21 21#23Network of FFG To be your Bank of choice Domestic network Overwhelming network covers all of Kyushu Overseas network 6 overseas representative offices primarily in China and ASEAN Fukuoka Bank of Fukuoka Nagasaki Shinwa Bank Fukuoka 152 Other 220 Dalian Kyushu 12 Nagasaki 76 Oita Kyushu 11 Other 長崎県 Kumamoto Branch 328 Kumamoto Bank Fukuoka 161 Kumamoto 63 Bangkok Kyushu 7 Kumamoto 64 Nagasaki 78 Kagoshima Other 18 Singapore Kyushu Honshu & 7 other ATM 2,059 (As of September 1, 2014) Number of branch offices (as of November. 30, 2014) FFG Fukuoka Financial Group Hong Kong Shanghai New York 22 22#24Stock Data To be your Bank of choice as of September 30, 2014 Share Information Common stock Type1 preferred stock Major Shareholders Major Shareholders Number of 1,800,000,000 18,878,000 authorized shares Number of share Japan Trustee Services Bank, Ltd. (Trust account) The Master Trust Bank of Japan, Ltd. (Trust account) Nippon Life Insurance Company (thousands of shares) Shares held Ratio* 64,149 7.30% 51,441 5.85% 17,722 2.01% 859,761,868 18,742,000 Issued Number of 26,320 539 Shareholders Composition of Shareholders Overseas corporations, etc. Financial 31% institutions 44% Meiji Yasuda Life Insurance Company Sumitomo Life Insurance Company The Dai-Ichi Life Insurance Company, Limited Japan Trustee Services Bank, Ltd. (Trust account 4) BNYML-NON TREATY ACCOUNT Japan Trustee Services Bank, Ltd. (Trust account 9) STATE STREET BANK WEST CLIENT-TREATY *Ratio of shares held to issued number of shares 17,719 2.01% 17,419 1.98% 17,315 1.97% 13,201 1.50% 12,225 1.39% 10,984 1.25% 9,947 1.13% Others 3% Individuals 11% Other FFG Fukuoka Financial Group corporations 11% 23 23#25Market Share of Subsidiary Banks Share of loans 35% 30% Fukuoka Prefecture 50% Bank of Fukuoka 31.7% 45% 40% Kumamoto Prefecture 40% Higo bank 35% 30% To be your Bank of choice Nagasaki Prefecture 18 bank 33.6% 25% 35% Nishi-nippon City Bank 25% Shinwa bank 30% 20% Savings Unions Mega & Major 25% Savings Unions Kumamoto bank 22.5% 20% 15% 20% 15% 10% Savings Unions Share of deposit & CDs 15% 10% Mega & Major 5% 10% Mega & Major 5% 0% 0% 0% Mar.98 Mar.02 Mar.06 Mar.10 Mar. 14 Mar.98 Mar.02 Mar.06 Mar. 10 Mar. 14 Mar.98 Mar.02 Mar.06 Mar.10 Mar. 14 5% 35% 40% 40% Postal Savings 35% 35% Postal Savings Higo bank 18 bank 30% 25% Shinwa bank 24.6% Postal Savings 30% 25% Bank of Fukuoka 25.7% 30% 25% 20% Nishi-nippon City Bank 20% Savings Unions 20% 15% Savings Unions Savings Unions 15% 10% Kumamoto bank 15% 12.4% Mega & Major 10% 10% Mega & Major 5% 5% Mega & Major 0% 0% 0% Mar.98 Mar.02 Mar.06. Mar.10 Mar. 14 Mar.98 Mar.02 Mar.06 Mar. 10 Mar.98 Mar.01 Mar.04 Mar.07 Mar.10 Mar. 13 Mar.14 5% FFG Fukuoka Financial Group Source: Monthly Kinyu Journal (Including some estimates) 24 24#26To be your Bank of choice Net Income FY2013 (\bil.) 60.7 Before amortization of goodwill (¥9.2bil per year) 46.7 46.4 45.3 36.2 140 120 Comparison with major regional banks Core Business Profit FY2013 113.5 (\bil.) 70 60 50 100 50 50 74.9 65.6 80 62.8 40 40 60 30 34.7 40 20 20 20 0 Yokohama 100 EPS FY 2013 10 25.0 0 FFG Chiba Shizuoka Joyo Yokohama Shizuoka Chiba FFG Joyo (yen) ROE FY2013 10 (%) Left : ROE Right: ROTE 7.2 8 6.6 6.9 6.4 6.7 5.9 6.1 74.12 80 54.29 60 46.78 52.4 6 41.82 33.52 4 10 40 20 2 5.3 5.0 4.4 0 Joyo Yokohama Chiba Shizuoka Joyo FFG 0 Shizuoka Chiba Yokohama FFG FFG Fukuoka Financial Group Core business profit is 3 banks' total. Others are consolidated. 25 25#27Part III Financial Data - To be your Bank of choice FFG Fukuoka Financial Group#28Financial results for FY2013 Profit & Loss (3 banks' total) To be your Bank of choice Point1 Core Business Profit decreased in three accounting period, exceed the projection Net interest income decreased ¥2.5 billion due to a decline in return of interest, rate of diminution decreased from the previous period of ¥4.7 billion. Core business profit exceed the projection of ¥2.4 billion due to the refund of deposit insurance, profit distributions of fund, and decline in interest expense for subordinated loan Point2 Credit cost is on a low level Credit cost is on a low level while maintaining a conservative policy on reserve. Other operating loss is investment and expense for the future Prepare for Basel III, prepay a part of former raising capital (penalty amount ¥3.2 billion) ¥2.5 billion of system cost for renewal ATM and all that. Consolidated net income was a record high Consolidated net income stood at a record high in two consecutive years. In addition to above factors, extraordinary loss decreased as partial cancellation of retirement benefit trusts was recorded in the last accounting period. (\bil.) 3 banks non- consolidated total FY2013 YoY Chg. Bank of Fukuoka (non-consolidated) FY2013 YoY Chg. Kumamoto Bank Shinwa Bank (non-consolidated) (non-consolidated) FY2013 YoY Chg. FY2013 YoY Chg. Gross business profit 181.1 - 7.8 130.2 - 4.2 20.4 - 1.1 30.5 - 2.5 Net interest income 152.9 - 2.5 108.2 -0.0 18.6 -0.7 26.2 - 1.8 Domestic 147.2 - 3.3 102.4 - 1.0 18.6 - 0.6 26.2 - 1.7 International 5.7 + 0.8 5.8 +1.0 -0.1 -0.1 -0.0 -0.1 Non-interest income 28.2 - 5.3 22.0 - 4.1 1.8 -0.5 4.4 -0.7 Net fees and commissions 18.5 -0.5 Specified trade income 4.3 +0.9 Bond-related income 5.4 - 5.7 335 13.7 -0.5 1.4 +0.1 3.4 -0.0 3.3 + 0.6 0.4 + 0.2 0.6 +0.1 5.1 - 4.2 0.0 - 0.7 0.3 -0.8 Overhead expenses 100.8 -0.2 65.4 +0.2 14.3 - 0.5 21.1 +0.1 Actual Business Profit 80.3 - 7.7 64.9 - 4.4 6.0 -0.6 9.4 - 2.7 |Transfer to general reserve for 13.5 + 6.1 6.4 14.5 3.0 +1.8 4.1 + 4.6 possible loan losses Business profit 66.8 - 28.5 58.4 - 18.8 3.0 - 2.5 5.4 - 7.2 Core business profit Point3 74.9 - 1.9 59.8 -0.1 6.0 + 0.0 9.1 - 1.8 (except for market related profit [loss]) Other operating profit (loss) -0.2 +15.3 1.5 12.9 - 1.8 + 0.7 0.2 +1.7 Other operating profit(loss) - 5.5 - 4.5 - 3.8 - 4.5 - 1.8 -0.6 0.1 +0.6 Ordinary profit 66.6 - 13.2 59.9 - 5.9 1.2 - 1.8 5.5 - 5.5 Extraordinary profit (loss). -0.7 - 16.6 -0.4 +12.7 -0.1 +1.2 -0.2 +2.6 Income (loss) before income taxes 66.0 + 3.3 59.5 + 6.8 1.1 -0.6 5.3 - 2.9 Income taxes 15.9 - 2.0 19.1 - 0.5 - 3.9 +1.0 0.7 - 2.5 Net income 50.1 + 5.3 40.4 + 7.9 5.0 - 1.6 4.6 -0.4 Credit cost 8.2 +1.1 1.2 - 2.9 3.0 + 0.6 4.0 + 3.5 Point4 Profit & Loss (FFG consolidated) Gross business profit 193.1 -6.6 Actual business profit 71.9 - 7.6 Core business profit 65.9 - 2.1 Ordinary profit 57.0 - 11.8 Consolidated net income 36.2 + 4.1 FFG Fukuoka Financial Group adjustments Consolidation Net income (3 banks non-consolidated total) Amortization of goodwill 50.1 -9.2 Subsidiary income 0.7 FFG non-consolidated income,etc -6.2 Others 0.8 FFG consolidated net income 36.2 27#29Projections for FY2014 Profit & Loss (3 banks' total) To be your Bank of choice 3 banks non- consolidated total Bank of Fukuoka (non-consolidated) Kumamoto Bank (non-consolidated) (\bil.) Shinwa Bank (non-consolidated) Profit & Loss (By bank) (\bil.) Bank of Fukuoka Core business profit P:FY14 YoY Chg. P:FY14 YoY Chg. P:FY14 YoY Chg. P:FY14 YoY Chg. ■Net income Gross business profit 172.2 - 9.0 122.6 - 7.6 20.2 -0.1 29.3 - 1.2 59.9 59.9 59.8 57.2 Net interest income 148.6 - 4.4 105.5 -2.7 18.3 -0.3 24.8 - 1.4 Domestic 141.6 - 5.6 98.6 - 3.8 18.2 - 0.4 24.7 40.4 -1.5 33.1 37.1 International 7.0 +1.2 6.9 + 1.1 0.0 + 0.1 0.0 + 0.0 20.2 Non-interest income 23.6 - 4.6 17.1 - 4.9 2.0 + 0.1 4.6 + 0.2 Net fees and commissions 19.9 +1.4 14.2 +0.4 1.6 + 0.2 4.1 + 0.7 Supecified trade income 3.5 -0.8 2.8 - 0.5 0.3 - 0.1 0.4 -0.3 FY11 FY12 FY13 P:FY14 Bond-related income 0.2 - 5.2 0.2 - 4.9 0.0 +0.0 0.0 -0.3 Overhead expenses 99.9 - 0.9 65.2 - 0.1 13.7 - 0.7 21.0 -0.1 Kumamoto Bank Core business profit Actual Business Profit 72.3 - 8.1 57.4 - 7.5 6.5 + 0.5 8.3 - 1.1 Net income Transfer to general reserve for 0.0 - 13.5 0.0 - 6.4 0.0 -3.0 0.0 - 4.1 possible loan losses 7.6 6.4 6.6 Business profit 72.3 + 5.4 57.4 - 1.0 6.5 + 3.5 8.3 + 3.0 6.0 6.0 6.5 5.0 Core business profit 72.0 - 2.9 57.2 - 2.6 6.5 + 0.5 8.3 - 0.8 Other operating profit (loss) - 2.7 - 2.5 - 1.5 - 2.9 - 1.2 + 0.6 -0.1 -0.2 1.6 Other operating profit(loss) 69.5 2.9 55.9 - 4.0 5.3 + 4.1 8.3 + 2.8 Ordinary profit - 2.6 - 1.9 - 1.7 - 1.3 -0.1 -0.0 -0.8 -0.6 FY11 FY12 FY13 P:FY14 Net income 50.0 - 0.1 37.1 - 3.3 7.6 + 2.6 5.3 + 0.7 Credit cost -0.8 -9.0 -0.6 -1.8 0.2 - 2.8 -0.4 - 4.4 Shinwa Bank * Refund of deposit insurance is included in Projections for FY2014 Core business profit Net income 16.7 Profit & Loss (FFG consolidated) Actual business profit 63.8 - 8.2 Core business profit 63.2 - 2.8 Ordinary profit 59.5 + 2.5 adjustments Consolidation Net income (3 banks non-consolidated total) Amortization of goodwill 11.0 5.0 FFG non-consolidated income Subsidiary income, etc. Consolidated net income 36.0 -0.2 FFG consolidated net income FFG Fukuoka Financial Group 50.0 9.1 -9.2 -6.3 1.4 36.0 FY11 FY12 FY13 P:FY14 28 9.1 8.3 4.6 5.3 88#30Transition of Core business profit To be your Bank of choice Core business profit -2.9 (\bil.) Cancellation profit in investment trust and increase in profit distributions of fund -3.0 ●Interest yen-denominated bond +0.9 ●International division+1.2, etc. Net interest income -4.4 Domestic loan -3.7 Decline in interest expense for subordinated loan +0.8 +5.7 -9.3 Interest on a deposit at the Bank of Japan +0.7, etc. Core business profit -1.9 Net interest income -2.5 Domestic loan -5.7 +5.3 -11.0 76.9 -0.8 +0.1 Domestic loans rates factor ●Domestic loans volume factor +1.0 +2.2 +0.4 +0.2 74.9 ●Domestic loans rates factor Domestic loans volume factor FY12 ⚫Other Overhead expenses Non-interest income, etc. International division ●Securities & FY13 (-12bp) ●Interest yen-denominated bond -4.1 ●Sale investment trust of REIT & Increase in profit distributions of fund +4.3 ●International division (A weak yen & Increase in foreign bond) +0.8 FFG Fukuoka Financial Group +0.6 +0.9 72.0 Other International division Securities & (-10bps) P:FY14 Overhead expenses Non-interest income, etc. AMPS +2.6 Fees related cooperate +0.3 Insurance of mortgage loan -0.7 Guarantee charge for consumer loan -0.6 ●Foreign exchange & Marketable product -0.8, etc. 29 29#31Loans Growth FFG +1.4 trillion yen 7,917.4 8,068.9 (1.9%) 8,228.8 (2.0%) 8,384.7 (1.9%) 8,659.5 (3.3%) 8,989.2 (3.8%) Run-up stage Average annual Acceleration stage rate : 1.4% Average annual rate : 3.1% 9,380.8 (4.4%) FY07 FY08 FY09 FY10 FY11 FY12 FY13 * 3 banks' total * Average loan balance * * ( ):Annual rate FFG Fukuoka Financial Group Bank of Fukuoka Kumamoto Bank Shinwa Bank 5,519.4 947.2 1,450.8 5,656.3 (2.5%) To be your Bank of choice Demerger 6.202.5 (9.7%) 6,546.7 6,783.1 (3.6%) 6,363.0 (2.6%) (2.9%) (\bil.) 7,029.3 (3.6%) 975.7 914.1 (-3.5%) 887.2 919.3 (6.1%) (3.6%) 846.1 (-7.4%) 848.7 (4.5%) (0.3%) 1,298.5 (-10.5%) 1,180.2 1,173.0 (-9.1%) (-0.6%) 1,225.6 (4.5%) 1,286.8 (5.0%) 1,375.9 (6.9%) FY07 FY08 FY09 FY10 FY11 FY12 FY13 30 30#32Loans (By Bank) * Bank of Fukuoka Excluding loans to FFG Kumamoto Bank Excluding subordinated beneficial interests To be your Bank of choice Shinwa Bank * Excluding subordinated beneficial interests 6,759.5 1,370.7 6,029.9 6,107.1 6,549.5 6,348.5 918.6 974.4 1,276.0 885 954 842.9 884.2 1,195.9 845.7 1,139.5 1,133.7 222 979 84 865 933 216 74 Public 35 67 216 47 183 1,900 207 1,636 1,687 1,736 1,805 349 421 Retail 282 289 302 323 405 320 373 347 by customer segment Average loan balance Corporate 3,529 3,487 3,634 3,791 3,975 728 525 509 515 522 542 637 581 607 656 (\bil.) FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 1,370.7 6,029.9 6,107.1 6,348.5 6,549.5 6,759.5 974.4 1,276.0 884.2 918.6 1,195.9 872 842.9 845.7 39 1,139.5 1,133.7 160 806 739 37 130 73 39 122 Honshu 710 704 353 63 330 318 87 40 39 127 112 298 299 92 97 57 107 100 103 98 45 51 121 112 106 & Other Kyushu Nagasaki Kumamoto 4,789 Average loan balance by region (\bil.) Fukuoka 931 898 875 760 768 807 844 752 821 773 4,891 5,088 5,224 5,351 43 39 39 37 38 216 197 196 207 207 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FFG Fukuoka Financial Group 31#33To be your Bank of choice Loan Portfolio (Classified by Industry) BOF Sep. 30, 2014 (\bil.) Change from Mar. 31, 2014 Classification by industry Manufacturing Agriculture and Forestry Fishery Total 9,861.0 100.0% 699.1 7.1% 23.0 0.2% 19.5 0.2% Mining, quarrying and gravel 10.7 0.1% Construction 252.7 2.6% Electricity, Gas, Heat Supply and Water 165.3 1.7% Information and Communications Transport and postal service Wholesale and retail trade Finance and Insurance Real Estate and leasing (Real Estate) Services (\bil.) Government, local public sector 66.8 0.7% 440.4 4.5% 1,068.9 10.8% 423.0 4.3% 1,807.2 18.3% 1,389.8 18.7% 1,615.2 16.4% 978.4 9.9% 1,079.2 10.9% 7,410.9 100.0% 522.1 7.0% 14.6 0.2% 12.8 0.2% 5.8 0.1% 157.4 2.1% 141.1 1.9% 51.9 0.7% 388.4 5.2% 857.6 11.6% 377.8 5.1% KMB 1,049.9 100.0% 55.1 5.2% 5.5 0.5% 1.9 0.2% SWB 1,400.1 100.0% 121.8 8.7% 2.8 0.2% 4.6 0.3% Total BOF KMB SWB 176.2 165.7 20.1 -9.7 -14.0 -8.0 0.3 -6.4 1.8 1.7 0.0 -0.0 1.6 1.4 0.3 -0.1 0.6 0.1% 43.5 4.1% 6.9 0.7% 4.2 51.6 0.3% -1.2 -0.3 -0.5 -0.4 3.7% -12.9 -4.6 -1.8 -6.7 17.1 1.2% -2.3 -1.6 0.7 -1.6 4.9 15.5 1.5% 89.1 8.5% 8.6 0.8% 0.5% 9.9 0.7% -4.2 -2.7 -0.7 -0.9 36.4 2.6% 10.3 11.8 -0.3 -1.2 199.7 19.0% 122.0 8.7% 36.4 217.5 15.6% 12.7 16.3 1.7 -5.4 2.6% 12.8 13.0 -1.0 0.6 98.1 86.6 0.8 10.6 1,242.0 16.8% 187.1 17.8% 186.1 13.3% 91.6 81.9 0.3 9.5 671.1 9.1% 144.6 13.8% 162.6 11.6% 24.1 22.9 -1.6 2.8 Others 2,826.3 28.7% 806.0 10.9% 2,013.7 27.2% 94.6 9.0% 378.6 36.1% 178.5 12.8% -0.2 -5.6 10.2 -4.8 433.9 31.0% 50.0 34.6 11.7 3.6 Sep. 30, 2014 Change from Mar. 31, 2014 classified by industry Risk monitored loans, Manufacturing Total 235.3 100.0% 27.9 11.9% Agriculture and Forestry 2.8 1.2% BOF 166.4 100.0% 19.9 12.0% 2.3 1.4% KMB SWB Total BOF KMB SWB 30.1 100.0% 2.1 7.2% 38.7 100.0% -7.9 -2.7 -0.6 -4.6 5.8 15.1% -1.7 -1.2 -0.3 -0.3 Fishery 0.8 0.4% Mining, quarrying and gravel 1.1 0.5% 0.4 0.7 0.4% 0.3% 0.1 0.4 1.4% 0.4% 0.0 0.3% 0.0 0.2% 0.0 -0.0 0.1 -0.1 0.0 0.1% -0.4 0.2 -00 -0.5 0.6 1.6% -0.0 -0.0 -0.0 -0.0 Construction 14.5 6.2% 8.8 5.3% 1.3 4.6% 4.2 11.0% -2.1 -0.9 -0.2 -1.1 Electricity, Gas, Heat Supply and Water 2.0 0.8% 2.0 1.2% 0.0 0.0% 0.0 0.0% -0.1 -0.1 -0.0 Information and Communications 1.2 0.5% 0.4 Transport and postal service 11.9 5.1% Wholesale and retail trade Finance and Insurance Real Estate and leasing 50.2 21.4% 4.4 1.9% 41.8 17.8% (Real Estate) 41.7 17.7% 0.3% 9.5 5.7% 35.2 21.2% 4.1 2.5% 28.9 17.4% 28.8 17.3% Services 54.3 23.1% (\bil.) Government, local public sector Others 21.7 0.0% 9.2% 13.4 40.3 24.2% 0.0% 8.1% 0.3 0.5 1.7% 6.4 21.4% 0.2 0.9% 7.4 24.7% 7.4 24.7% 7.2 24.1% 0.0% 1.2% 0.3 1.0% -1.0 -1.1 -0.0 -0.0 1.8 4.9% -0.7 -0.2 -0.0 -0.5 8.6 22.3% -1.1 0.7 -0.4 -1.4 0.0 0.0% -0.0 -0.0 -0.0 5.4 14.2% -2.3 -2.1 0.1 -0.3 5.4 14.2% -2.3 -2.1 0.1 -0.3 6.7 17.5% 1.9 1.9 0.3 -0.4 0.0% - 3.6 12.1% 4.6 12.1% -0.4 -0.0 -0.2 -0.2 FFG Fukuoka Financial Group 32 32#34Deposits & CDs Growth FFG +1.7 trillion yen 10,242.9 10,218.5 (-0.2%) 10,299.9 (0.8%) 10,651.5 10,880.3 (2.1%) (3.4%) 11,271.1 (3.6%) * Run-up phase Average annual rate : 0.5% Acceleration phase Average annual rate : 3.0% 11,984.3 (6.3%) FY09 FY10 FY11 FY12 FY13 FY07 FY08 3 banks' total of Deposit & CD * Average loan balance * ( ):Annual rate FFG Fukuoka Financial Group Bank of Fukuoka Kumamoto Bank Shinwa Bank To be your Bank of choice (\bil.) 7,648 7,794 6,993 7,189 7,334 (2.8%) (2.0%) (4.3%) (1.9%) 8,073 (3.6%) 8,537 (5.8%) 1,257.1 1,169.5 (7.9%) 1,165.1 1,126.6 1,102.1 1,099.1 1,080.1 (-5.8%) (-2.0%) (1.8%) (2.5%) (3.4%) 2,080.9 2,189.7 (7.7%) 2,033.4 1,927.1 (-7.4%) 1,904.3 1,885.5 (-2.2%) (1.0%) 1,960.2 (2.9%) (3.7%) FY07 FY08 FY09 FY10 FY11 FY12 FY13 383 33#35Deposits & CDs (By Bank) Bank of Fukuoka Kumamoto Bank To be your Bank of choice Shinwa Bank 8,456.6 7,583.8 7,724.3 8,004.2 1,244.1 2,171.2 539.8 7,278.7 484.7 552.3 494.4 1,067.9 1,085.9 1.112.6 1.149.5 2,012.1 76.8 1,878.1 1,891.7 1,944.4 322.9 41.6 Public 480.9 2,079.5 1,701.9 1,796.6 1,824.5 1,915.2 27.5 203.7 36.9 218.8 41.1 229.6 259.6 191.5 237.1 256.2 274.9 241.0 508.0 388.3 390.2 417.2 445.8 Corporate by customer segment Average deposit balance (\bil.) Retail 5,095.9 5,234.8 5,405.4 5,604.3 5,837.3 836.7 830.2 841.9 866.9 907.7 1,298.3 1,264.4 1,271.0 1,291.4 1,340.3 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 CDs 7,278.7 267.1 7,583.8 435.5 7,724.3 377.7 8,004.2 385.6 8,456.6 454.2 1,067.9 4.7 1,085.9 1.112.6 1.149.5 1,244.1 66.0 29.5 15.9 17.6 1,878.1 1,891.7 72.5 102.5 1,944.4 121.8 2,012.1 130.1 2,171.2 154.1 2,912.8 2,827.8 Time 2,809.3 2,807.2 2,790.8 Average deposit balance by deposit type Demand 4,202.3 4,341.1 4,555.9 4,790.7 5,089.6 979.5 671.0 648.2 900.6 840.4 859.7 895.2 649.3 659.6 647.9 403.7 422.1 445.7 471.8 507.1 905.0 948.8 962.7 986.8 1,037.7 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FFG Fukuoka Financial Group 34 (\bil.)#36Interest Rate (Domestic loan) 3 banks' total To be your Bank of choice 2.65 (%) Retail 2.01 Loan Overall 1.96 1.88 1.80 Corporate 1.91 1.75 2.58 2.48 2.39 2.30 2.22 2.13 2.04 1.97 1.90 1.83 1.79 1.85 1.69 1.79 1.63 1.59 1.72 1.52 1.65 1.46 1.59 1.41 1.38 1.53 Public 1.38 1.32 1.31 1.25 1.24 1.20 1.20 1.14 1.11 1.07 1.02 1.03 1.45 1.40 1.32 1.28 1.24 1H/FY09 2H/FY09 1H/FY10 2H/FY10 1H/FY11 2H/FY11 1H/FY12 2H/FY12 1H/FY13 2H/FY13 1H/FY14 2H/FY14 (Plan) FFG Fukuoka Financial Group 35 35#37Interest Rates (By Bank) Bank of Fukuoka Kumamoto Bank To be your Bank of choice Shinwa Bank 2.54 2.86 Interest rates on loans 2.39 2.72 2.64 Retail 2.23 2.48 2.46 2.06 2.49 2.21 2.14 2.28 1.88 1.91 2.11 2.53 2.35 1.97 Overall 1.75 1.64 2.35 2.18 198 1.85 1.82 1.79 1.53 Corporate 1.42 2.12 2.02 1.61 1.76 1.95 1.87 2.04 1.92 1.64 1.80 1.76 1.52 1.71 1.63 Public 1.38 1.54 1.38 1.27 1.53 1.47 1.42 1.44 1.33 1.22 (%) 1.17 1.13 1.35 1.22 1.05 1.26 1.14 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Interest rates on deposits 0.32 0.34 0.33 Time & CDs 0.23 0.24 0.19 0.18 0.16 0.17 0.15 0.16 0.14 0.13 0.11 0.11 0.13 0.11 0.12 0.12 Overall 0.09 0.10 0.09 0.09 0.08 0.06 0.07 0.07 0.07 0.05 0.03 0.05 0.03 0.02 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 Demand (%) FY08 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 FFG Fukuoka Financial Group 36 36#38To be your Bank of choice Breakdown of Loans and Deposits & CDs By Interest Rate Domestic Loans (As of Sep. 30, 2014) Domestic Deposits (As of Sep. 30, 2014) 3 banks' total Bank of Fukuoka Kumamoto Bank Shinwa 3 banks' total Bank Bank of Fukuoka Kumamoto Shinwa Bank Bank Based on short- 8.0% 7.5% 10.5% 8.9% Interest 46.2% 50.1% 36.1% 37.1% term prime rate Non-interest 10.3% 10.9% 5.7% 11.0% Short-term 8.5% 9.9% 3.1% 5.2% spread Floating deposit 56.5% 60.9% 41.8% 48.1% Short-term loan 16.5% 17.4% 13.5% 14.1% Core deposit 29.4% 27.3% 42.4% 29.3% Based on flexible prime 25.9% 23.7% 42.4% 24.6% Large 8.4% 6.4% 8.5% 16.3% rate deposit Money Time and 13.9% 15.9% 3.9% 10.9% 37.8% 33.8% 50.9% 45.6% market loan savings deposit Long-term Negotiable 39.8% 39.6% 46.3% 35.4% 5.7% 5.3% 7.3% 6.3% fluctuation deposit fixed-rate Time and saving mortgage 9.7% 9.7% 7.0% 11.7% deposit & 43.5% 39.1% 58.2% 51.9% loan Negotiable deposit Long-term fixed 43.8% 43.0% 40.2% 50.5% Total 100.0% 100.0% 100.0% 100.0% Long-term loan 83.5% 82.6% 86.5% 85.9% Total 100.0% 100.0% 100.0% 100.0% FFG Fukuoka Financial Group 37 37#39Securities Securities portfolio (3 banks total) (\bil.) Bond duration To be your Bank of choice (years) Valuation difference 131.1 116.2 109.1 102.6 Domestic Bonds 4.67 4.52 4.04 3.98 3.73 3 Banks Total (YoY Change) 2,566.7 (-98.3) Foreign bonds and Others 244.8 2,659.9 (+432.4) 2,825.6 (+165.7) 2.98 2.93 3.00 3.07 3.15 252.4 251.0 2,227.5 (-339.2) Foreign Bonds 753.8 771.3 632.1 *Regarding 3 banks, after considering hedges 728.1 SWB 241.9 Corporate bonds 661.3 600.1 Mar.11 Mar. 12 Mar.13 51.3 281.7 Mar. 14 Sep.14 680.6 Local govt bonds 40.7 220.2 445.5 KMB 49.0 268.5 Securities-related profit & loss 38.5 218.6 * 3 bank's total BOF Govt bonds 1,591.7 1,618.4 1,620.2 1,790.0 1,581.8 1,769.1 1,328.4 1,382.2 14.2 2.7 6.2 6.2 8.5 3.1 Bonds 11.5 9.7 7.6 5.4 0.3 Stocks -1.4 Stocks 89.6 119.4 Mar.13 Sep.13 116.8 Mar. 14 120.7 -3.5 Sep.14 FFG Fukuoka Financial Group (\bil.) FY10 FY11 FY12 FY13 P:FY14 38#40Non-interest Income Non-interest income (3 banks & Fukuoka Securities total) To be your Bank of choice Factor of increasing and decreasing for FY2013 (YoY change) (\bil.) Excluding profit(loss) on bond and marketable product Item * Fukuoka Securities: Fees-related income after becoming wholly owned subsidiary Foreign exchange Factor of increasing and decreasing Foreign exchange trading profit YOY change +0.6 & derivatives (+1.0) Derivatives(coupon swap and Foreign fixed account with exchange agreement) +0.4 FFG total (YoY change) 24.6 23.5 23.1 23.9 25.4 26.3 (-1.1) (-0.4) (+0.8) (+1.5) (+0.9) Domestic exchange interbank fees Decreasing in expense of interbank +0.2 transaction fee(increasing in profit) Fukuoka Securities 3.1 & commissions (+0.2) 2.8 1.9 Increase in ATM fee for after-hours use +0.3 Other 4.6 2.3 4.0 Other 4.4 2.9 3.2 Decreasing in outsourcing expense of system (Increasing in profit) +1.0 ( +0.3) Corporate-related fee (syndicated loan and non-recourse loan, etc) -0.2 Domestic exchange interbank fees & commissions 7.0 8.8 8.1 7.0 7.2 7.5 Profit from investment trusts & annuity insurance (\bil.) 3 banks total 3.4 3 banks total (YoY change) 8.2 8.7 8.7 9.1 8.2 10.6 (+0.5) (±0) (+0.4) (-0.9) (+2.4) 3.0 Foreign exchange 3.1 2.8 2.5 3.9 & derivatives 4.5 Sales commission 3.4 3.8 for insurance 3.3 3.9 2.5 10.6 2.3 Investment trusts 8.2 8.7 8.7 9.1 8.2 Custodian fee 2.1 2.2 2.1 2.2 2.1 & insurance for investment trusts Sales commission 2.8 3.1 2.8 3.3 3.5 3.8 for investment trusts FY09 FY10 FY11 FY12 FY13 P:FY14 FY09 FY10 FY11 FY12 FY13 P:FY14 FFG Fukuoka Financial Group 39 39#41Asset Management Products Number of NISA account and active account ratio To be your Bank of choice Sales of asset management products (accounts,%) (\bil.) FFG total 104,356 123,504 149,000 3 banks total 340.9 (YoY change) 37% 388.1 395.7 401.4 478.1 528.7 (+47.2) (+7.7) (+5.6) (+76.7) (+50.6) 39.7 -37.8 NISA account 19% active ratio 105.8 20,000 20.9 Government 54.5 133.1 62.0 71.8 Fukuoka 17,277 bonds 23,500 58.3 47.8 Securities 45.3 Shinwa 16,370 19,628 18,000 Foreign currency 28.2 139.6 Time deposits 135.7 113.1 Bank 16,954 15,916 134.8 157.8 Annuity 128.1 Kumamoto 13,591 insurance Bank 85,000 214.4 193.9 Bank of 70,683 57,441 Fukuoka Investment trusts 126.3 145.9 173.0 135.6 Mar. 14 FY09 FY10 FY11 FY12 FY13 P:FY14 Sep.14 Mar.15 Plan NISA account: The number of applications Active account ratio : Account of positive balance All account Linkages between banking and securities Referral service Introducing customers from the bank to the securities firm Asset of Investment trust in custody (\bil.) Expanding 77 branch FFG total 424.5 404.1 446.4 423.6 443.7 【Total number of referral) 【Assets in custody of agreement customers】 28.7 37.8 (\bil.) Fukuoka 81.5 19.2 34.9 74.9 Securities 73.6 Sep 30, 71.9 71.2 Mar 31, 2012 2014 Change (B-A) Shinwa 58.1 63.8 63.9 59.0 61.8 (A) (B) Bank 5,242 Fukuoka 0.1 18.2 +18.0 Kumamoto Securities 1 3,817 1,861 Bank of Fukuoka 2 63.4 68.1 +4.7 Bank Bank of 284.9 254.0 279.1 255.6 268.4 87 Fukuoka Total 63.6 86.3 +22.7 Sep'12 Mar'13 Sep'13 Mar'14 Securities transactions including share 2 Total asset in custody including liquid deposit FFG Fukuoka Financial Group Mar. 11 Mar. 12 Mar. 13 Mar. 14 Sep.14 40 40#42Overhead Expenses FFG 68.0% 62.5% OHR Overhead 118.1 117.7 58.9% 57.8% 55.8% 55.6% 53.4% 113.8 Expenses 110.7 107.8 7,920 100.9 100.8 Employees Run-up Phase Acceleration Phase Bank of Fukuoka 6,390 FY07 FY08 FY09 FY10 FY11 FY12 FY13 * 3 banks non-consolidated total * OHR = overhead expenses / gross business profit FFG Fukuoka Financial Group To be your Bank of choice (\bil.) 61.3% 57.8% 53.8% 53.6% 51.0% 50.2% 48.5% 74.1 72.8 73.1 71.1 69.2 65.1 65.4 Kumamoto Bank Shinwa Bank 73.6% 68.6% 70.1% 68.7% 70.8% 69.0% 70.4% 17.9 17.4 16.9 16.0 15.6 14.8 14.3 91.9% 73.9% 71.6% 66.7% 65.0% 69.1% 63.4% 27.5 26.1 23.8 23.5 23.0 21.0 21.1 FY07 FY08 FY09 FY10 FY11 FY12 FY13 41#43Status of reserves & coverage: Bank of Fukuoka Under Watch Obligors To be your Bank of choice ●Covered ratio for claims disclosed pursuant to the Financial Reconstruction Act: 76.8% Sep 30, 2014 ( ) March 31, 2014 Claims Collateral Uncovered Guarantee C Reserved ratio for claims Reserved ratio for uncovered claims (\bil.) Covered ratio Borrower's status A Reserves D B+D B =A-B DCF DCF D/A D/C A Bankrupt 3.4 (38.9%) 10.8 7.1 7.1 39.7% (100%) 100% (100%) 100% Quasi-bankrupt 14.5 (40.8%) (76.3%) (76.9%) (95.8%) (87.8%) Doubtful 98.1 46.5 51.6 40.3 41.0% 78.6% (23.8%) Substandard 50.9 13.1 37.9 10.6 20.8% (35.9%) 30.6% (35.7%) (61.2%) Disclosed claims 166.9 70.3 96.6 58.0 34.7% 59.8% Watch obligors except substandard (4.9%) (17.5%) 806.5 386.9 419.6 37.8 4.7% Watch obligors 857.4 399.9 457.5 48.4 (6.0%) 5.6% 16.6% (20.4%) 18.8% 27.9% (60.7%) 60.0% 74.1% (9.6%) (33.4%) 9.0% 30.8% (11.4%) (35.3%) 10.6% 32.6% 78.0% 96.1% (30.7%) (41.3%) 38.7% (74.2%) (76.9%) 76.8% 88.4% (46.4%) 46.4% (53.7%) 52.7% (53.3%) 52.3% Under watch obligors 973.4 457.2 516.2 95.7 (10.2%) 9.8% (32.1%) 30.8% (19.5%) (51.4%) 18.5% 49.2% (57.7%) 56.8% FFG Fukuoka Financial Group 42 44#44Status of reserves & coverage: Kumamoto Bank Under Watch Obligors To be your Bank of choice ●Covered ratio for claims disclosed pursuant to the Financial Reconstruction Act: 77.0% Sep 30, 2014 ( ) March 31, 2014 Claims Collateral Uncovered Guarantee C Borrower's status A Reserves D Reserved ratio for claims Reserved ratio for uncovered claims (\bil.) Covered ratio B+D B =A-B DCF DCF D/A D/C A Bankrupt 0.5 95 (21.5%) (100%) (100%) 2.3 0.6 0.6 21.2% 100% 100% Quasi-bankrupt 2.4 (26.4%) (57.7%) (61.9%) (95.3%) (83.7%) Doubtful 20.3 11.3 9.0 5.7 27.9% (19.5%) 57.6% (41.7%) Substandard 7.1 2.1 5.0 1.3 18.9% 42.7% 63.0% 95.3% (28.3%) 27.0% 48.9% 83.6% (50.1%) (50.5%) 48.9% (24.4%) (54.6%) (51.8%) (83.9%) (77.3%) Disclosed claims 30.3 15.7 14.6 7.6 25.2% 55.0% 52.3% 84.3% 77.0% Watch obligors except (5.5%) (25.5%) (12.4%) (39.4%) (60.7%) 155.7 83.5 72.2 8.1 substandard 5.2% 26.2% (6.2%) Watch obligors 162.8 85.6 77.2 9.5 5.8% (27.1%) 27.9% 11.3% (13.4%) (40.7%) 38.8% 58.9% (60.2%) 12.3% 40.1% 58.4% Under watch obligors 186.0 99.2 86.8 15.8 (8.6%) 8.5% (35.6%) 37.4% (19.1%) (54.9%) 18.2% 56.2% (63.4%) 61.8% FFG Fukuoka Financial Group 43#45To be your Bank of choice Status of reserves & coverage: Shinwa Bank Under Watch Obligors ●Covered ratio for claims disclosed pursuant to the Financial Reconstruction Act: 83.2% Sep 30, 2014 ( ) March 31, 2014 Claims Borrower's status A B Collateral Uncovered Guarantee C =A-B Reserved ratio for claims Reserved ratio for uncovered claims (\bil.) Covered ratio Reserves D B+D DCF DCF D/A D/C A Bankrupt 0.9 (32.9%) 2.9 0.7 0.7 19.9% (100%) 100% (100%) 100% Quasi-bankrupt 2.7 (35.4%) (74.0%) (74.1%) (96.0%) (87.6%) Doubtful 29.8 16.1 13.7 10.2 34.2% (18.9%) 70.2% (27.9%) 74.5% (26.1%) 95.7% 88.3% (41.1%) (46.4%) Substandard 5.5 1.4 4.0 1.0 17.8% 26.6% 24.2% 39.4% 44.1% (33.2%) (66.3%) (67.4%) (87.7%) (83.9%) Disclosed claims 38.9 20.5 18.4 11.9 30.5% 62.3% 64.5% 86.2% 83.2% Watch obligors (4.9%) (25.2%) 181.1 89.2 91.9 8.7 except substandard 4.8% (5.3%) Watch obligors 186.6 90.6 95.9 9.7 5.2% 26.9% (25.7%) 26.9% (9.8%) (35.8%) (55.1%) 9.5% 38.0% 54.1% (10.5%) (36.7%) (54.9%) 10.1% 38.3% 53.8% Under watch obligors 220.0 109.7 110.3 20.6 (10.5%) 9.4% (48.6%) 46.7% (21.1%) (66.2%) 18.6% 65.2% (60.8%) 59.2% FFG Fukuoka Financial Group 44#46Capital Adequacy Ratio To be your Bank of choice Capital adequacy ratio (FFG consolidated) Breakdown of the capital (FFG consolidated) (\bil.) (\ bil. %) Items Sep.14 Basel II Basel III Fundamental items 759.0 800 700 Capital adequacy ratio Capital stock (Common stock) 577.5 Reserves 14.7 600 12.26 Transitional measure 10.84 10.98 Preferred stock (Bond type) 9.4 Preferred securities Former 25.0 Capital Subordinated debt 92.5 10.28 Revaluation reserve for land 33.6 9.84 500 High-9% Others 6.3 Tier II Adjusting items -117.7 8.36 400 Tier I ratio 6.92 300 6.70 Goodwill -111.7 Fully adopted Deferred tax assets (-4.5) 6.30 6.48 Assets related to retirement benefits X(-13.4) Mid-6% A Core Capital 641.3 200 Risk Asset 6,511.3 Excluded due to transitional measure 100 0 Tier I Mar.11 Mar.12 Domestic Standard Mar.13 Credit risk measurement: Foundation IRB * Operational risk measurement: Standardized approach FFG Fukuoka Financial Group Core Capital Mar. 14 Sep.14 Mar.15 Plan 【Reference】 Basel International Standard (Sep.14) Common Equity Tier1 ratio X Preliminary calculation as fully adopted 8.6% 45 55#47Consolidated Balance Sheets To be your Bank of choice (\billion) Mar-14 Sep-14 Comparison Mar-14 Sep-14 Comparison Loans and bills 9,596 9,762 +166 Deposits and NCD 12,238 12,382 +144 discounted Domestic floating Domestic short-term loan 1,581 1,589 +7 6,856 6,853 ▲ 3 deposits Domestic time and saving Domestic lomg-term loan 7,897 8,044 +146 4,588 4,683 +95 deposits Foreign currency loan 58 79 +20 Foreign currency deposits 117 101 ▲ 16 Securities 2,812 2,979 +167 Borrowed money 667 1,013 +346 JGB 1,582 1,769 +187 Subordinated loan 25 25 +0 Borrowed money from Foreign bonds and others 251 254 +3 638 984 +346 BOJ Tangible fixed assets 191 191 0 Bonds payable 118 98 ▲ 20 Intangible fixed assets 133 128 5 Others 358 597 +239 Goodwill 122 118 ▲ 5 Total liabirities 13,380 14,089 +709 Others 1,394 1,774 +380 Total net assets 746 744 Δ1 Total assets 14,126 14,834 +708 Total liabirities and net assets 14,126 14,834 +708 FFG Fukuoka Financial Group 46 46#48Part IV Our Mother Market "Kyushu❞ Russian Federation Mongolia People's Republic of China Democratic People's Republic of Korea Japan Sea Republic of Korea Japan Taiwan Hong Kong Tokyo TH Kyushu - To be your Bank of choice Pacific Ocean FFG Fukuoka Financial Group Repubilc of the Philippines#49Feature of Kyushu Economy 10% of Japan's Economy (): share in Japan GDP Population Number of Businesses ¥43.8 trillion 13.3 million (9%) (10%) 600,157 (10%) Economic Scale of Kyushu is equivalent to 22th in the Global GDP Ranking Kyushu's Place in the world 20 Switzerland 21 Iran 22 Sweden Kyushu 23 Norway (US$ bil.) 631 552 524 523 500 To be your Bank of choice Well-Balanced Industry Grouping North Center of "Car Island " Number of Passenger Cars produced in Kyushu are 1,340 thousand vehicles in 2013. ►13.9% share in Japan Middle Center of "Silicon Island " Amount of Integrated Circuits produced in Kyushu are 606 billion yen in 2013. 31.2% share in Japan Convenient Transport Hub ■A high-speed transportation network developed with Fukuoka at its center ■The Gateway to Asia South Center of "Food Island " Amount of Agricultural Output produced in Kyushu are 1.66trillion in 2012. 19.3% share in Japan Source: Kyushu Bureau of Economy, Trade and Industry FFG Fukuoka Financial Group 48#50Financial Map of Kyushu (Regional Bank & Regional Bank II) To be your Bank of choice Number of Fukuoka pref. Population business establishments deposits 5,050,000 225,000 31.0 people establishments trillion yen Loans 31 25 66 16 16 Deposits 25 19 7 10 11 28 0% 20% 40% 60% 80% 100% Fukuoka Nishi-Nippon C Credit unions Labor credit unions City banks Others Fukuoka Chuo Bank 0.5 trillion yen The Bank of Fukuoka 10.7 trillion yen Nishi-Nippon City Bank 8.1 trillion yen Number of Kumamoto Population business deposits establishments Bank of Saga 2.2 trillion yen Chikuho Bank 0.7 trillion yen pref. 1,820,000 79,000 People 9.7 establishments trillion yen & Saga Kyoei Bank 0.2 trillion yen Loans 22 45 11 10 5 7 Shinwa Bank 2.6 trillion yen Deposits 11 37 8 12 6 26 0% 20% Kumamoto Higo 40% 60% 80% Credit unions Labor credit unions 100% City banks Others Eighteenth Bank 2.7 trillion yen Nagasaki Bank 0.3 trillion yen Higo Bank 4.4 trillion yen Kumamoto Bank 1.5 trillion yen Number of business establishments deposits O ita pref. Population 1,190,000 56,000 7.0 people establishments trillion yen 12 16 13 5 13 Loans 35 7 13 14 3 28 Deposits 0% 20% 40% 60% Oita Howa Credit unions Labor credit unions 80% City banks. 100% Others Oita Bank 3.0 trillion yen Miyazaki pref. Population Howa Bank 1,140,000 people Number of business establishments 55,000 deposits 5.3 establishments trillion yen 0.6 trillion yen Loans 45 16 9 15 2 13 Deposits 35 10 9 18 2 26 0% Miyazaki 20% 40% Miyazaki-Taiyo Credit unions 60% Labor credit unions 80% 100% City banks Others Number of Number of Nagasaki pref. Population business establishments deposits 1,420,000 People 65,000 7.6 Miyazaki Bank Kagoshima pref. Population establishments trillion yen 2.5 trillion yen 1,700,000 people business establishments 80,000 deposits 8.6 establishments trillion yen T Loans 32 36 7 91 15 Miyazaki Taiyo Bank Loans 44 11 17 13 5 10 1 0.6 trillion yen Deposits 23 29 5 11 3 29 35 7 13 16 4 25 Deposits 0% 20% Shinwa Eighteenth 40% Credit unions 60% 80% 100% Labor credit unions City banks Others Kagoshima Bank 3.9 trillion yen 0% 20% 40% 60% Kagoshima Minami-Nihon Credit unions 100% Labor credit unions City banks Others 80% Number of Saga pref. Population business establishments deposits 850,000 People 39,000 4.7 establishments trillion yen Loans 37 8 14 19 6 16 Deposits 32 10 21 3 30 0% 20% 40% 60% 80% Saga Saga-Kyoei Credit unions Labor credit unions 100% City banks Others FFG Fukuoka Financial Group Minami-Nippon Bank 0.7 trillion yen XX Bank XX trillion yen Kyushu Population Number of business establishments deposits as a Whole 13,160,000 people 74.0 600,157 establishments trillion yen Consolidated Total assets Source: 2012 Economic Census for Business Activity, Ministry of Economy, Trade and Industry Source: Monthly Kinyu Journal 49 49#51Business Conditions Japan 20 10 -10 Kyushu -20 Tankan (Short-Term Economic Survey in Japan) 30 -30 -40 Fukuoka -10 ㅎㅇㅎ To be your Bank of choice Forecast -20 -30 -40 -50 08/3 09/3 09/9 10/03 10/09 11/03 11/09 12/3 12/9 13/3 13/9 14/3 14/9 15/3 Forecast 20 Kumamoto 10 0 -10 -20 -30 -40 -50 08/3 08/9 -50 2 2 2 28 42 -10 -20 -30 Nagasaki -50 -40 08/3 08/9 09/3 09/9 10/03 10/09 11/03 11/09 12/03 12/09 13/3 13/9 14/3 14/9 15/3 FFG Fukuoka Financial Group Forecast 09/3 09/9 10/03 10/09 11/03 11/09 12/03 12/09 13/3 13/9 14/3 14/9 15/3 Forecast I 08/3 08/9 09/3 09/9 10/03 10/09 11/03 11/09 12/03 12/09 13/3 13/9 14/3 14/9 15/3 Source: Bank of Japan 50#52Capital Investment & Housing Investment To be your Bank of choice Capital Investment (Tankan Bank of Japan) Housing Investment (Housing starts) (YoY Chg.,% ) 50 50 40 40 30 30 1,200,000 1,000,000 800,000 600,000 (%) 15 10 250 52102 -5 the number of houses YoY Chg. -25 0 -30 08 09 10 11 12 13 14 20 20 10 0 -10 -20 M 400,000 200,000 120,000 100,000 80,000 60,000 40,000 20,000 20 10 10 0 -10 -20 the number of houses YoY Chg. -30 * A number of 2014 is total from January to November -30 0 -40 09/1H 09/2H 10/1H 10/2H 11/1H 11/2H 12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 08 09 10 11 12 13 14 (Plan) FFG Fukuoka Financial Group Source: Bank of Japan Source: Ministry of Land, Infrastructure, Transport and Tourism 51#53Land Price Trends To be your Bank of choice Volatility of standard land prices in major cities in Fukuoka Pref. Volatility of standard land prices <Published Land Prices for 2014> Residential land Commercial land 2013 2014 2013 2014 (Unit: %) Residential land Commercial land Fukuoka City Kitakyushu City 0.7 1.8 2.3 3.4 - 1.6 - 1.2 - 2.5 - 1.8 2013 2014 Change 2013 2014 Change Japan - 1.8 - 1.2 0.6 -2.1 - 1.1 1.0 Volatility of standard land prices in major cities in Kumamoto Pref. 3 major metropolitan areas -0.1 0.5 0.6 0.6 1.7 1.1 Local areas - 2.5 - 1.8 0.7 - 3.1 - 2.2 0.9 Residential land Fukuoka - 1.4 -0.8 0.6 - 1.7 - 1.0 0.7 2013 2014 Kumamoto City -0.2 0.4 Commercial land 2014 2013 - 1.2 -0.3 Saga - 3.5 - 2.8 0.7 - 4.6 - 3.4 1.2 Nagasaki - 3.1 - 2.5 0.6 - 3.2 - 2.4 0.8 Kumamoto - 1.7 - 1.1 0.6 - 2.6 - 1.8 0.8 Volatility of standard land prices in major cities in Nagasaki Pref. Oita -2.4 - 1.7 0.7 - 3.3 - 2.5 0.8 Miyazaki - 1.6 - 1.3 0.3 - 3.2 - 2.8 0.4 Residential land Commercial land Kagoshima - 3.1 - 2.9 0.2 -4.2 - 3.8 0.4 2013 2014 2013 2014 Yamaguchi - 3.8 - 3.0 0.8 - 4.9 - 3.8 1.1 Nagasaki City - 2.7 - 2.0 - 0.9 0.2 Sasebo City - 3.0 - 2.1 - 3.8 - 2.8 FFG Fukuoka Financial Group Source: Ministry of Land, Infrastructure, Transport and Tourism 52 54#54Corporate Bankruptcies Left Axis The total debts / Bar graph Right Axis The number of bankruptcies / Line graph Japan (¥bil.) 1000 800 600 400 200 (Number) 1200 1100 Fukuoka (¥bil.) 30 20 20 10 To be your Bank of choice (Number) 50 ១ ៣៩៦ ៨៩ ៩៦៦ 8 35 30 25 20 15 45 40 سلساليسيلا 5 0 14/1 14/7 1000 0 900 12/1 12/7 13/1 13/7 800 (¥bil.) 4 700 0 600 12/1 12/7 13/1 13/7 14/1 14/7 (¥bil.) 50 45 40 35 30 25 20 15 10 5 0 12/1 (Number) 120 (Number) 30 25 20 15 AL 10 5 0 0 12/1 12/7 13/1 13/7 14/1 14/7 100 (¥bil.) 80 12 10 60 8 6 40 4 20 2 0 0 12/1 12/7 13/1 13/7 12/7 13/1 13/7 14/1 14/7 FFG Fukuoka Financial Group 14/1 (Number) 20 15 10 5 0 14/7 Source: Tokyo Shoko Research 53#55Loans (%) 6.0 Japan 6.0 Rate of increase of Bank Loans (YoY Change, Monthly) 4.0 Fukuoka 2.0 ма 0.0 -2.0 4.0 2.0 0.0 -2.0 Kyushu -4.0 -6.0 To be your Bank of choice т 3.0 -4.0 3.3 -6.0 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 1.9 6.0 Kumamoto 40 4.0 2.0 20 0.0 -2.0 -4.0 -6.0 -8.0 8.0 Nagasaki 2.6 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 6.0 4.0 20 2.0 0.0 -2.0 -4.0 2.4 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 -8.0 -6.0 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 FFG Fukuoka Financial Group Source Bank of Japan 54#56Deposits 6.0 (%) Rate of increase of Bank Deposits (YoY Change, Monthly) 5.0 4.0 5.0 Japan 4.0 3.0 Kyushu 2.0 1.0 0.0 0.0 -1.0 -2.0 Fukuoka 3.0 2.0 To be your Bank of choice причини 2.9 1.0 0.0 -1.0 -2.0 2.4 08/1 08/7 09/1 09/7 10/1 10/7 11/1 5.0 Kumamoto 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 11/7 12/1 12/7 13/1 13/7 14/1 14/7 мило 0.8 -3.0 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 ин www -3.0 -2.0 08/1 08/7 09/1 FFG Fukuoka Financial Group 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 08/1 08/7 09/1 09/7 10/1 10/7 11/1 2.9 11/7 12/1 12/7 13/1 13/7 14/1 14/7 Source: Bank of Japan 55 559#57To be your Bank of choice Forward-Looking Statements We need to remind you of the risks involved in forward-looking statements as a legal requirement. The statements in this presentation, including certain statements made in response to questions, regarding FFG's projected financials, operational figures, and other matters that are not historical facts are forward-looking statements. You should be aware that our actual results may differ materially from those projected in the forward-looking statements on the future performance of FFG. Those statements are based on management's expectations, assumptions, estimates, projections and beliefs in light of information currently available to us. Contact for further inquiries: Atsushi KOCHAKU : Assistant General Manager, Corporate Planning Division E-mail: [email protected] URL : http://www.fukuoka-fg.com E-mail: [email protected] FFG Fukuoka Financial Group 56 99