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Investor Presentaiton

What is not decreasing is the number of elderly people. 28.4% of Japan's population is older Sitting on a fortune Japan's financial assets held by generation (in percent) Up to 34 35-44 45-54 In 2020, 72% of assets will be held by those 55 and older 55-65 ... 65-75 rising to 79% in 2040 100 80 60 40 20 0 2015 '20 '25 '30 '35 '40 Numbers do not add up to 100 due to rounding; 2020-'40 are estimates Source: Keio University Financial Gerontology Research Center than 65 years, in the countryside this figure is remarkably higher: in Shimane it is nearly 33%. In | 75+ Japan 'aged' often relates to 'well-off'. Japan's personal financial assets are estimated at USD 17 trillion and when you link the two equations, you see that by far the biggest part of this USD 17 trillion is owned by elderly people. That creates another challenge: the Financial Services Agency predicts that by 2030 USD no less than USD 2 trillion in personal financial assets, or over 10% of the nation's total, will be in the hands of people with dementia. Financial fraud targeting the elderly has become so widespread that banks are increasingly nervous in dealing with older clients. For some executives at several major financial institutions the risk to their reputations and the cost and complexity of preventing problems far outweighs the value of elderly customers to the bottom line. "Aging Japan: banks turn to technology to tackle looming demographic crisis", headed the Nikkei in its January 1, 2020 paper. "A population that is both shrinking and aging - particularly in rural areas - has led to dwindling demand for bank loans, mortgages and brokerage services. The Bank of Japan's attempts to keep growth rates up through accommodative monetary policy has depressed margins. This has been particularly acute for regional banks, whose interest income is falling faster than they can cut costs, according to Moody's Investors Service." Some regional banks come up with different earning models, like the Kyoto Shinkin Bank that offers its aged clients custom-fit programs, including courses in flower arranging, knitting and storytelling. As many as 70% of the bank's customers are 65 or older, and the bank has invested in making its branches and staff welcoming for senior clients. All of the reception desk counters have been lowered so that customers can sit for their consultations, and all 1,700 of its managers and clerks are expected to go through extensive training programs to familiarize them with signs of dementia. "We want to be the platform for people's journey across their life, including childbirth, home and car purchase, planning for your children and planning for your legacy," said Toshiyuki Masuda, the bank's chairman. "Our rivals compete in cheap interest rates. We don't engage in price wars. We focus on creating value with customers because we believe people will ultimately choose a bank that serves them best in the long term." Some areas are trying to reverse the depopulation-trend by spending more money on child- rearing support. As a result, in Shimane Prefecture the number of children has increased in nine of some 20 municipalities. From a macro-perspective: Japan's population is ageing faster than its neighbors - Japan's senior surge Share of population aged 65 years or older (in percent) 30 20 20 10 0 1960 '70 '80 Source: World Bank '90 2000 '10 '18 Japan South Korea Singapore China East Asia and Pacific World which changes the balance of economies in East- Asia. A shrinking population and as a result: a smaller economy will make Japan's debt burden even harder to manage. At about 237%, the government's debt- to-GDP ratio is the highest in the world. As this debt is mainly held by Japanese banks and Japanese individuals the debt-per-capita is growing considerably; the cost of servicing Japan's public 5
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