Hokuhoku Financial Group, Inc. · TSE:8377

Hokuhoku Financial — H1 FY2010 Earnings Presentation

52 slides from Hokuhoku Financial's earnings presentation, 2010

  1. Slide 1: Investor Meeting: Interim Results for FY 2010

    Hokuhoku Financial Group, Inc. Investor Meeting ～Interim Results for FY 2010～ (ended September 30, 2010)

  2. Slide 2: Table of Contents

    Table of Contents Hokuhoku Financial Group, Inc. 【Summary of Interim Results for FY 2010】 ・ Summary of Interim Results Ⅰ-① (P/L:consolidated) 2 ・ Interest Margins① 19 ・ Summary of Interim Results Ⅰ-② (P/L:each bank) 3 ・ Interest Margins② 20 ・ Summary of Interim Results Ⅱ-① (B/S:consolidated) 4 ・ Inv

  3. Slide 3: Summary of Interim Results for FY 2010

    Hokuhoku Financial Group, Inc. Summary of Interim Results for FY 2010 1

  4. Slide 4: Summary of Interim Results Ⅰ-① P/L: Consolidated and Total of Two Banks

    Summary of Interim Results Ⅰ-① Hokuhoku Financial Group, Inc. ＜P/L : Consolidated and Total of Two Banks＞ Released on 05/14/2010 〈Consolidated〉 (JPY Bn) 〔'10/09 Forecasts〕 FY10 1H change FY09 1H 〈Consolidated〉 Ordinary income 〔105.0〕 109.2 (5.0) 114.3 Net income: ¥10.0Bn Ordinary profits 〔14.0〕 18.0

  5. Slide 5: Summary of Interim Results Ⅰ-② P/L: Non-Consolidated, each bank

    Summary of Interim ResultsⅠ-② Hokuhoku Financial Group, Inc. <P/L : Non-Consolidated, each bank> 〈Hokuriku Bank〉 〈Hokkaido Bank〉 (JPY Bn) FY10 1H change FY09 1H FY10 1H change FY09 1H Core gross business profits 44.1 (1.2) 45.3 31.9 (2.3) 34.2 Net interest income 36.1 (0.3) 36.5 28.7 (0.0) 28.7 Dome

  6. Slide 6: Summary of Interim Results Ⅱ-① B/S: Consolidated and Total of two Banks

    Summary of Interim Results Ⅱ-① Hokuhoku Financial Group, Inc. <B/S : Consolidated and Total of two Banks> 〈 Total of two banks〉 (JPY Bn) Sep-10 change Sep-09 Loans 6,966.7 (34.8) 7,001.5 〈Total of two banks〉 Loans to SMEs & individuals 4,714.2 (229.8) 4,944.0 Loans: -¥34.8Bn compared to Sep-09 Housi

  7. Slide 7: Summary of Interim Results Ⅱ-② B/S: Non-Consolidated, each bank

    Summary of Interim Results Ⅱ-② Hokuhoku Financial Group, Inc. <B/S : Non-Consolidated, each bank> 〈 Hokuriku Bank〉 〈 Hokkaido Bank〉 (JPY Bn) Sep-10 change Sep-09 Sep-10 change Sep-09 Loans 4,109.2 (63.4) 4,172.6 2,857.4 28.5 2,828.9 Loans to SMEs & individuals 2,801.8 (118.8) 2,920.6 1,912.4 (111.0)

  8. Slide 8: Breakdown of Business Profits① Net interest income

    Breakdown of Business Profits① Hokuhoku Financial Group, Inc. <Net interest income> Demand for funding remained weak and competition continued to intensify ⇒ Net income on loans declined and profit margin shrank 【Breakdown of net interest income (domestic)】 FY2009 1H FY2010 1H change breakdown FY20

  9. Slide 9: Breakdown of Business Profits② Fee revenue

    Breakdown of Business Profits ② Hokuhoku Financial Group, Inc. <Fee revenue> 【Core gross business profits】  Remittance fees / commissions decreased 〈Total of two banks〉  Income from foreign exchange transactions and (JPY Bn） derivatives declined 23.59% Fee revenue ratio 250 20.72% 18.97% 17.93% 20

  10. Slide 10: Breakdown of Business Profits③ General and administrative expenses

    Breakdown of Business Profits ③ Hokuhoku Financial Group, Inc. <General and administrative expenses>  General and administrative expenses increased due to an increase in personnel and investment in IT system. OHR of regional banks Ave.63.96% ( as of Mar-10) 【G&A expenses ・ OHR】 【Breakdown of G&A ex

  11. Slide 11: Net Gains (Losses) related to Securities

    Net Gains (Losses) related to Securities Hokuhoku Financial Group, Inc.  Net gains (losses) related to bonds: +¥3.0Bn (+1.2Bn compared to FY09 1H)  Net gains (losses) related to stocks: -¥2.1Bn (-1.2Bn compared to FY09 1H) 【Net gains (losses) related to securities】 〈Total of two banks〉 〈Hokuriku b

  12. Slide 12: Credit Costs and Non-Performing Loan

    Credit Costs and Non-Performing Loan Hokuhoku Financial Group, Inc.  Total credit costs were ¥8.3Bn (-¥8.4Bn compared to FY09 1H）,Credit cost ratio was 0.24% (-0.24% compared to FY09 1H）  NPL ratio was 2.98% (+0.00% compared to Mar-10) 【Non-performing loan based on the FRA】 【Total credit costs】 〈T

  13. Slide 13: Capital Adequacy Ratio

    Capital Adequacy Ratio Hokuhoku Financial Group, Inc.  Capital adequacy ratio was 11.39% (+0.56% from Mar-10)  Tier 1 ratio was 7.49%(+0.44% from Mar-10) 【Capital adequacy ratio】 【Capital adequacy ratio and public funds】 (JPY Bn） 10.81% 10.83% 11.39% (JPY Bn) Sep-10 change Mar-09 800 10.44% 10.39%

  14. Slide 14: Deferred Tax Assets

    Deferred Tax Assets Hokuhoku Financial Group, Inc.  Net deferred tax assets : ¥62.1Bn (-¥12.7Bn compared to Mar-10)  Net deferred tax assets to tier1 capital : 16.94% (-4.09% compared to Mar-10) 【Breakdown of deferred tax assets】 【Deferred tax assets】 (JPY Bn） 〈Consolidated〉 (JPY Bn) Sep-10 change

  15. Slide 15: Forecasts

    Forecasts Hokuhoku Financial Group, Inc. 【Earnings Forecasts for FY 2010】 【Dividend Forecasts for FY 2010】 〈Consolidated〉 〈Non-consolidated〉 Previous Revised Interim Year-end Annual Change from Change (JPY Bn) Forecast Forecast FY2009 Ordinary income 210.0 215.0 4.0 Dividend per common share - ¥3.50

  16. Slide 16: Deposits

    Deposits Hokuhoku Financial Group, Inc.  Deposits +¥293.6Bn(+3.28%) compared to Sep-09  Liquidity +¥134.5Bn(+3.11%) compared to Sep-09  Individuals +¥185.6Bn(+2.95%) compared to Sep-09 【 Balance of deposits (including NCD） 】 〈Total of two banks 〉 (JPY Bn） (JPY Bn） 10,000 10,000 9,120.3 8,930.2 9,

  17. Slide 17: Loans

    Loans Hokuhoku Financial Group, Inc.  Loans -¥34.8Bn(-0.49%) compared to Sep-09  Loans to SMEs and individuals -¥229.8Bn(-4.64%) compared to Sep-09  Housing and consumer loans +¥40.9Bn(+2.11%) compared to Sep-09 (JPY Bn） 【Balance of loans】 〈Total of two banks +Hokugin Corp.〉 〈Hokuriku bank +Hokug

  18. Slide 18: Loan guaranteed by Credit Guarantee Corporations (Maruho Loan)

    Loan guaranteed by Credit Guarantee Corporations (CGCs) Hokuhoku Financial Group, Inc. (Maruho Loan)  Balance of loan guaranteed by CGCs : +¥13.2Bn(+1.9%) compared to Sep-09. 〈Hokuriku bank〉 (JPY Bn） 600 Private 【Balance of loans guaranteed by CGCs】 523.3 517.6 placement 485.4 507.0 bonds 〈Total of

  19. Slide 19: Housing Loans

    Housing Loans Hokuhoku Financial Group, Inc.  Balance of housing loans increased by ¥7.4Bn compared to Mar-10. 〈Hokuriku bank〉 974.8 1,000 960.8  Sales amount of new housing loans grew at 849.4 913.2 107.5 114.2 113.5 Apartment loans 778.9 a sluggish pace due to competition. 800 70.4 90.8 600 Resi

  20. Slide 20: SME Support / Financial Facilitation

    SME Support / Financial Facilitation Hokuhoku Financial Group, Inc. 【The number of clients 【Support through the public SME package】 that could improve borrower category by our support】 <Total of two banks> From Dec.2009 to Sep.2010 （No. of companies） 446 715 declined withdrawn （2.9％） （4.6％） 150 SMEs

  21. Slide 21: Interest Margins①

    Interest Margins① Hokuhoku Financial Group, Inc.  Loan rate -0.09% compared to FY2009  Deposit rate -0.06% compared to FY2009  Net interest margin -0.01% compared to FY2009 【Interest margin between loans and deposits (Domestic operations)】 〈Total of two banks〉 (%) Loan rate 2.07 1.96 2.01 1.87 1.

  22. Slide 22: Interest Margins②

    Interest Margins② Hokuhoku Financial Group, Inc.  ’10/2Q Loan rate : 1.76% (-0.12% compared to ’09/2Q)  ’10/2Q Deposit rate : 0.15% (-0.07% compared to ’09/2Q) 【Interest rate of yen denominated loans and deposits】 【Interest rate of yen denominated loans】 〈Total of two banks〉 (%) Loan rate 〈Total o

  23. Slide 23: Investment Products

    Investment Products Hokuhoku Financial Group, Inc.  Investment products ¥743.1Bn -¥39.5Bn compared to Mar-10  Insurance products was strong 【Balance of investment products】 〈Total of two banks〉 Investment Products Ratio 〈Hokuriku bank〉 〈Hokkaido bank〉 (JPY Bn）12.82%12.85% (JPY Bn）14.98%14.72% (JPY

  24. Slide 24: Securities Portfolio

    Securities Portfolio Hokuhoku Financial Group, Inc.  Total balance of securities grew owing to increases in JGBs  Unrealized gains on available-for-sale securities substantially increased 【Balance of securities】 (JPY Bn） 【Balance of securities】 2,212.3 Other 〈Consolidated〉 (JPY Bn) Sep-10 change M

  25. Slide 25: Bond Portfolio (yen denominated bonds)

    Bond Portfolio (yen denominated bonds) Hokuhoku Financial Group, Inc. 【Bond portfolio; balance, yield, and Value at risk】 ※ Internal management base (term-end balance) 〈Hokuriku bank〉 (term-end balance) 〈Hokkaido bank〉 (JPY Bn) (JPY Bn) 1,100 Size of a circle = Interest rate risk (Value at Risk) 1,1

  26. Slide 26: Co-prosperity with the region

    Hokuhoku Financial Group, Inc. Co-prosperity with the region 24

  27. Slide 27: Close relationship with community

    Co-prosperity with the region Hokuhoku Financial Group, Inc. ～ Close relationship with community Following corporate philosophy,“Co-prosperity with the region”, we aspire growth with our local community by responding to their needs. Revitalization of central shopping areas in local cities Contributi

  28. Slide 28: Financial Education and Alliance with academic institutions

    Co-prosperity with the region Hokuhoku Financial Group, Inc. ～ Financial Education and Alliance with academic institutions Following corporate philosophy,“Co-prosperity with the region”, we aspire growth with our local community by responding to their needs. Offering occupation experience of Providi

  29. Slide 29: Environmental protection

    Co-prosperity with the region Hokuhoku Financial Group, Inc. ～ Environmental protection Following corporate philosophy,“Co-prosperity with the region”, we aspire growth with our local community by responding to their needs. Eco-friendly Branch equipment Afforestation for next generation Kanazawa Ton

  30. Slide 30: Management Strategy

    Hokuhoku Financial Group, Inc. Management Strategy 28

  31. Slide 31: Strengthening Marketing Capabilities: Building a solid customer base

    Strengthening Marketing Capabilities Hokuhoku Financial Group, Inc. ～Building a solid customer base Expanding a customer base to establish a stable loan portfolio for a long term Building up mechanism which enables to increase deposits and large-account clients Number of salary deposits Number of

  32. Slide 32: Strengthening Marketing Capabilities: Overseas Business Support

    Strengthening Market Capabilities Hokuhoku Financial Group, Inc. ～Overseas Business Support Revitalizing regional economy by taking advantage of growth in Asia and Fareast Russia Fully capitalizing on the geographic advantage and a top-level extensive network among regional banks Bolstering Informa

  33. Slide 33: Expanding business with growing industries

    Strengthening Market Capabilities Hokuhoku Financial Group, Inc. ～Expanding business with growing industries Aggressive approach to industries related to agriculture, medicine and environment Products ・“Agri-challenge”（Max. 20Years） ・Funds Provision to Help Strengthening the Foundations for Economi

  34. Slide 34: Strengthening Marketing Capabilities: Branches & Human Resources

    Strengthening Marketing Capabilities Hokuhoku Financial Group, Inc. ～Branches & Human Resources Reconsidering branch network focusing on market Establishing employee training programs fit for the career stage Strategic reorganization of branch network Enhancement of Human Resources Redefining the

  35. Slide 35: Increasing Management Efficiency

    Increasing Management Efficiency Hokuhoku Financial Group, Inc. Smooth migration and strategic utilization of joint banking system Migration to start in May 2011 ～ Migration Test started in Nov. Use of identical operation process 2010 in workplace and client computers Shared administrative manuals

  36. Slide 36: Consideration of return to stockholders

    Consideration of return to stockholders Hokuhoku Financial Group, Inc. Dividends per common stock have been increased step by step. We will adopt optimal capital policy flexibly, taking Basel Ⅲ and IFRS under consideration. FY2010 FY 2006 FY 2007 FY 2008 FY 2009 Forecast Net profits ¥40.6Bn ¥ 38.6

  37. Slide 37: Appendix

    Hokuhoku Financial Group, Inc. Appendix 35

  38. Slide 38: About Hokuhoku FG ①: Outline of Hokuhoku FG and Two Banks

    About Hokuhoku FG ① Hokuhoku Financial Group, Inc. Outline of Hokuhoku FG and Two Banks (As of September 30, 2010） Hokuhoku FG Hokuriku Bank Hokkaido Bank Date of establishment September 26, 2003 July 31, 1943 March 5, 1951 （Started business in 1877） Location of headoffice 1-2-26 T sutsumicho-dori,

  39. Slide 39: About Hokuhoku FG ②: History of Hokuhoku FG

    About Hokuhoku FG ② Hokuhoku Financial Group, Inc. History of Hokuhoku FG Hokuriku area Hokkaido area 1877 Established in Ishikawa prefecture Ishikawa 1878 Fukui Trade between Hokkaido and Hokuriku area Established in Fukui prefecture flourished in the 19th century, and A lot of people immigrated fr

  40. Slide 40: Goals and Strategy of the Management Integration

    About Hokuhoku FG ③ Hokuhoku Financial Group, Inc. Goals and Strategy of the Management Integration Three key strategies for management integration Strengthening Increasing Cementing Marketing Capabilities Management Efficiency Customer Loyalty Capitalizing our extensive network in We will establish

  41. Slide 41: Historical Data (Hokuhoku FG)

    About Hokuhoku FG ④ Hokuhoku Financial Group, Inc. Historical Data (Hokuhoku FG ) （JPY Bn） FY2005 FY2006 FY2006 FY2007 FY2007 FY2008 FY2008 FY2009 FY2009 FY2010 <Consolidated> Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 240.9 117.5 242.2

  42. Slide 42: Historical Data (Hokuriku Bank)

    About Hokuhoku FG ⑤ Hokuhoku Financial Group, Inc. Historical Data (Hokuriku Bank ) （JPY Bn） FY2005 FY2006 FY2006 FY2007 FY2007 FY2008 FY2008 FY2009 FY2009 FY2010 Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 132.0 62.7 130.1 66.8 141.2 65.

  43. Slide 43: Historical Data (Hokkaido Bank)

    About Hokuhoku FG ⑥ Hokuhoku Financial Group, Inc. Historical Data (Hokkaido Bank ) （JPY Bn） FY2005 FY2006 FY2006 FY2007 FY2007 FY2008 FY2008 FY2009 FY2009 FY2009 Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 88.2 42.8 88.4 46.6 96.0 47.7 9

  44. Slide 44: Market Share in Our Home Market (Loans, Mar-10)

    About Hokuhoku FG ⑦ Hokuhoku Financial Group, Inc. Market Share in Our Home Market (Loans, Mar-10) Hokuriku Area Hokkaido Area Shinkin Banks HFG 27.6% Shinkin Banks HFG 25.1% 20.8% 25.1% Other Banks O ther Banks Main 9.3% Main Competitor 21.2％ 30.4% Competitor 40.5% S.B 45.5% S.B HFG 18.5% S.B HFG 1

  45. Slide 45: Market Share in Our Home Market (Deposits, Mar-10)

    About Hokuhoku FG ⑧ Hokuhoku Financial Group, Inc. Market Share in Our Home Market (Deposits, Mar-10) Hokuriku Area Hokkaido Area Shinkin Banks HFG 27.6% HFG 21.9% Shinkin Banks 23.7％ 31.6% 30.3% O the r Banks Main Other Banks Main Competitor 18.4% 12.4% Competitor 34.1% S.B 49.3％ S.B HFG 15.4% S.B

  46. Slide 46: Lending in the Region by Industry (Sep-10)

    About Hokuhoku FG ⑨ Hokuhoku Financial Group, Inc. Lending in the Region by Industry (Sep-10) Hokuriku Bank Hokkaido Bank Others Manufacturing Manufacturing Others 0.6% 7.7% 14.8% 0.5% Construction 4.1% Construction Communications & Transportation Individual 5.7% Individual 3.7% 35.4% Wholesale & Co

  47. Slide 47: Financial Institutions in Japan

    About Japanese Regional Banks ① Hokuhoku Financial Group, Inc. Financial Institutions in Japan Source: Home page of Regional Banks Association of Japan (as of April-09) 1 Central Bank - Bank of Japan Hokuhoku Financial Group, Inc. 2 Private Financial Institutions (Hokuriku Bank, Hokkaido Bank) City

  48. Slide 48: Overview of Regional Banks

    About Japanese Regional Banks ② Hokuhoku Financial Group, Inc. Overview of Regional Banks Overview of Regional Banks Leading Banks in the Regions The 63 regional banks in Japan consistently The regional banks have formed a dense enjoy wide patronage as banks that develop branch network in the region

  49. Slide 49: Characteristics of Our Main Business Area

    The Present Condition of the Regional Economy ① Hokuhoku Financial Group, Inc. Characteristics of Our Main Business Area Data from Ministry of Internal Affairs and Communications Population and Square Measure Same as Osaka, Toyama Ishikawa Fukui Total Hokkaido Total Kanagawa! Prefecture a Prefecture

  50. Slide 50: Economic Conditions

    The Present Condition of the Regional Economy ② Hokuhoku Financial Group, Inc. Economic Conditions Monthly Economic Report Regional Economic Report (By the Cabinet Office) (By Bank of Japan) All Japan Hokuriku Area Hokkaido Area October-10 October-10 October-10 Economic Appear to be pausing and Has

  51. Slide 51: Big Projects in Hokuriku and Hokkaido Area

    The Present Condition of the Regional Economy ③ Hokuhoku Financial Group, Inc. Big Projects in Hokuriku and Hokkaido Area Hokkaido ◎Construction of the Hokkaido Bullet Train Constructing a 360 KM line from Shin-Aomori Station to Sapporo Station. Expected to be completed in FY 2015 （Shin-Aomori Stati

  52. Slide 52: Inquiries: Planning Group

    Inquiries related to this presentation should be addressed to Hokuhoku Financial Group, Inc. Planning Group TEL(81)76-423-7331 FAX(81)76-423-9545 E-MAIL:honsha2@hokuhoku-fg.co.jp http://www.hokuhoku-fg.co.jp/ This document may not be reproduced or distributed to any third party without prior approva

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