Fukuoka Financial Group, Inc. · TSE:8354

Fukuoka Financial — Investor Presentation (May 2019)

80 slides from Fukuoka Financial's investor presentation, May 2019

1. Slide 1: Investor Meeting - FFG Outline / Growth Strategies

   Investor Meeting － FFG Outline / Growth Strategies － M a y 2 0 1 9 0

2. Slide 2: Contents

   Contents Part Ⅰ Opening Presentation Part Ⅳ Financial Data FY2018  Company Overview・Group Management Structure  Financial results for FY2018 42 3～5 Group Network  Transition of Top Line & Bottom Line 43  History of FFG(scale of business/efficiency/profitability) 6～8  Net Interest Income 44  Su

3. Slide 3: Part I Opening Presentation

   Part Ⅰ Opening Presentation 2

4. Slide 4: Company Overview

   Company Overview  FFG is a total financial group featuring diverse financial functions and services, comprised of 4 banks based in Kyushu, plus a securities subsidiary, insurance subsidiary, consulting subsidiary, etc.  Integrated management with the Eighteenth Bank based in Nagasaki Prefecture in

5. Slide 5: Group Management Structure

   Group Management Structure  Established a management style unique to FFG called “Single Platform / Multiple Brands,” where internal aspects—administration, systems, products, services, etc.—are standardized, while maintaining the 4 bank brands.  Management style best suited to management integrati

6. Slide 6: Group Network

   Group Network  FFG is a broad area–based regional financial group, with an extensive network covering all of Kyushu, centering on Fukuoka, Kumamoto and Nagasaki prefectures, PLUS all the major cities in Japan, including Tokyo, Osaka and Nagoya.  With international offices in the main cities of Eas

7. Slide 7: History of FFG (scale of business)

   History of FFG (scale of business)  Expanded business base since FFG establishment, while progressing through the Run-up Phase, the Acceleration Phase, and the Significant Growth Phase.  Achieved steady growth, up 3.6 trillion yen in loans, up 4.0 trillion yen in deposits, over the 12 years since

8. Slide 8: History of FFG (efficiency)

   History of FFG (efficiency)  Strengthened earnings structure by improving management efficiency through fully utilizing the single platform. 68.0% OHR 62.5% 58.9% 57.8% 57.9% 58.3% 56.2% 55.8% 55.6% 57.3% 55.9% 118.1 117.7 53.4% 113.8 Overhead expenses 110.7 (¥ bil.) 107.8 100.9 100.8 99.8 100.0 10

9. Slide 9: History of FFG (profitability)

   History of FFG (profitability)  Amid a general decline in core business profit among regional banks, FFG has maintained a steady core business profit above 70 billion yen.  In FY2018, FFG recorded a new record-high consolidated net income, exceeding the 50-billion-yen level for first time since es

10. Slide 10: Summary of Fifth Mid-Term Management Plan

    Summary of Fifth Mid-Term Management Plan  Under the Fifth Mid-Term Management Plan, implemented various initiatives: In business, worked on refining core business and actively engaging in new initiatives. In management, strengthened human resources, improved risk management, and improved productiv

11. Slide 11: Awareness of Environment / Direction

    Awareness of Environment / Direction  Environmental changes—such as diversification of customer needs and entry of different sectors into banking—are an important chance to differentiate from competitors.  Achieve level of competitiveness that outstrips competitors, by fusing advanced digital tech

12. Slide 12: FFG's Growth Strategy

    FFG’s Growth Strategy  Two key points in FFG’s growth trajectory are: raising top line through structural reform and maximizing synergies through management integration with the Eighteenth Bank.  Achieve sustainable competitive and growth potential, by integrating results of two strategic options

13. Slide 13: Sixth Mid-Term Management Plan

    Sixth Mid-Term Management Plan  Under the Sixth Mid-Term Management Plan, FFG will put 5 basic strategies into motion as the 2nd phase of evolution, based on the fundamental principle of achieving a virtuous cycle of “contribution to regional economic development” and “improvement of FFG corporate

14. Slide 14: Structural Reform: Rebuilding of Business Processes

    STRUCTURAL REFORM Rebuilding of Business Processes  Drastically review business processes in customer support, and improve business efficiency for whole organization by about 20 percent, such as by promoting digitization and automation and by centralizing work into headquarters.  Commit freed-up r

15. Slide 15: Sophistication of Corporate Financial Services

    STRUCTURAL REFORM: Sophistication of Business Model Sophistication of Corporate Financial Services  Starting with the resolution of genuine management issues faced by customers, build a business model that incorporates consideration (equity / fees) for business growth (B/S & P/L improvements) along

16. Slide 16: Sophistication of Retail Financial Services

    STRUCTURAL REFORM: Sophistication of Business Model Sophistication of Retail Financial Services (investment trusts/insurance)  Establish business model that simultaneously achieves asset expansion for customers and stable earnings for FFG derived from this.  Realize tremendous growth, through stre

17. Slide 17: Sophistication of Market Operations

    STRUCTURAL REFORM: Sophistication of Business Model Sophistication of Market Operations  Build a risk-controlled portfolio with varied risk categories and investment timing, while raising the level of earnings through broader investment diversification.  Promote stronger operations and management

18. Slide 18: Promotion of Digital Transformation (DX)

    STRUCTURAL REFORM Promotion of Digital Transformation (DX)  Redefine actual banking business across entire Group—such as business processes, decision-making procedures, value offered to customers—and promote digital transformation to bring radical changes to FFG.  Achieve new growth not possible o

19. Slide 19: Promotion of DX: Open Innovation

    STRUCTURAL REFORM: Promotion of DX Open Innovation  Objectives in iBank business are to further expand multi-bank deployment and create new business areas.  Through digitization support, help customers improve productivity and business efficiency. Through venture support, further enhance initiativ

20. Slide 20: Earnings Effect of Structural Reform

    Earnings Effect of Structural Reform  Only limited effects in first year of new mid-term plan as systems are put in place, but those effects will increase during second and third years.  Achieve earnings effect of 18 billion yen in final fiscal year. (¥ bil.) 20 Earnings effect of structural refor

21. Slide 21: Management Integration and Merger with the Eighteenth Bank

    Management Integration and Merger with the Eighteenth Bank Overview  Effectively create synergies from the outset, by utilizing the existing single platform to streamline headquarters and consolidate affiliated companies, and through efficient sales activities and the mutual utilization of know-how

22. Slide 22: Integration: Synergistic Effects

    Management Integration and Merger with the Eighteenth Bank Synergistic Effects  Integration expenses—such as for unifying standards for loan loss reserve at the Eighteenth Bank and for changing the method of depreciation—will be incurred mostly during the first 2 years of the plan; Return to profit

23. Slide 23: Earnings Accumulation Plan

    Sixth Mid-Term Management Plan Earnings Accumulation Plan  Core business profit scheduled to reach 87.5 billion yen in final year of mid-term management plan (up 10.3 billion yen compared to FY18), thanks to buildup of earnings through structural reform and to effects of integration with the Eighte

24. Slide 24: Capital Policy & Shareholder Returns

    Sixth Mid-Term Management Plan Capital Policy & Shareholder Returns  Capital adequacy ratio is projected to be about 12% in final fiscal year of mid-term management plan, thanks to buildup of profits and more sophisticated risk management, etc.  Dividend payout ratio revised from about 30% to abou

25. Slide 25: Toward Sustainable Growth

    Toward Sustainable Growth  Sixth Mid-Term Management Plan will be a “period of endurance” aimed at future rapid growth, led by costs associated with management integration and strategic investments in areas of growth.  Achieve sustainable growth together with local communities, by actively engagin

26. Slide 26: Part II Corporate Data

    FFG) Fukuoka Financial Group Part I Corporate Data

27. Slide 27: Corporate Data

    Corporate Data Corporate Governance As of April 1, 2019 【Senior Management】 Takashige Shibato Yasuhiko Yoshida FFG Chairman, President FFG Deputy Bank of Fukuoka President President Bank of Fukuoka Deputy President Yuji Shirakawa Toshimi Nomura FFG Deputy FFG Director President Kumamoto Bank Bank o

28. Slide 28: Stock Data

    Stock Data （as of March 31, 2019） Share Information Major Shareholders （thousands of shares, %） Major Shareholders Shares Held Ratio* Common Stock The Master Trust Bank of Japan, Ltd.(Trust account) 15,636 9.09 Number of Japan Trustee Services Bank, Ltd.（Trust account) 13,097 7.61 authorized share

29. Slide 29: Market Share (1)

    Market Share (1) Fukuoka Number of Number of Population business Loans Deposits pref. Population business Loans Deposits pref. Oita establishments Kitakyushu Bank establishments 5,130,000 233,000 20.9 35.3 The Bank of 1.3 trillion yen 1,170,000 54,000 3.3 7.6 Fukuoka people Establishments trillion y

30. Slide 30: Market Share (2)

    Market Share (2) Fukuoka Prefecture Kumamoto Prefecture Nagasaki Prefecture 35% 50% 45% Bank of Fukuoka Higo bank Eighteenth bank 32.5% 45% 40% 38.5% 30% Shinwa 40% 35% Bank 25% 35% 31.9% Share of loans Nishi-nippon City Bank (※) 30% 30% 20% Mega & Major Savings Unions Kumamoto Bank 25% Savings Unio

31. Slide 31: Comparison with Major Regional Banks (1)

    Comparison with Major Regional Banks (1) ■ Loans as of September 30, 2018 ■ Deposits as of September 30, 2018 (¥ tril.) 15.9 (¥ tril.) 16.0 14.4 14.0 12.6 12.5 14.1 14.0 12.0 12.5 10.5 12.0 11.2 9.9 10.0 9.7 8.3 10.0 9.3 8.1 8.5 8.5 8.0 7.2 7.2 7.4 6.7 8.0 5.9 6.0 6.0 4.0 4.0 2.0 2.0 0.0 0.0 FFG Con

32. Slide 32: Comparison with Major Regional Banks (2)

    Comparison with Major Regional Banks (2) ■ Core Business Profit FY2017 (¥ bil.） ■ Net Income FY2017 (¥ bil.) 66.4 114.0 53.8 50.1 49.4 43.1 74.4 73.7 67.1 49.3 Concordia FFG Mebuki Chiba Shizuoka Concordia Chiba Shizuoka FFG Mebuki ■ OHR FY2017 ■ ROE FY2017 （円） （％） （％） 58.3 62.8 64.6 55.5 56.3 6.6 5

33. Slide 33: Comparison with Major Regional Banks (3)

    Comparison with Major Regional Banks (3) ■ NPL Ratio as of September 30, 2018 （％） ■ Reserve & Reserve/Total Credits as of September 30, 2018 0.8% (¥ bil.） 109.2 0.6% 1.6 1.7 1.4 0.4% 1.2 64.5 1.1 51.9 0.2% 0.2% 19.0 17.5 Shizuoka Chiba Concordia Mebuki FFG FFG Mebuki Concordia Chiba Shizuoka ■ Capit

34. Slide 34: Part III Projected Figures of Sixth Mid-Term Management Plan

    Part Ⅲ Projected Figures of Sixth Mid-Term Management Plan 33

35. Slide 35: Projected Figures (1)

    Projected Figures (1) （¥ bil.) FFG Bank of Fukuoka 800 65.0 67.2 70.2 158.5 64.5 52.9 600 50.3 49.0 50.4 1,600 Core business profit 400 （4 banks total） 200 1,400 0 Net income FY18 FY19(P) FY20(P) FY21(P) 1,200 (consolidated) Kumamoto Bank 100 87.5 1,000 83.9 78.0 81.5 50 5.5 3.8 4.7 4.7 5.1 3.1 800

36. Slide 36: Projected Figures (2)

    Projected Figures (2) Sixth Mid-Term Management Plan（Change in 3 years） (¥ bil.) 3 banks non- consolidated total Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank (non-consolidated) (non-consolidated) (non-consolidated) FY18 FY18 FY18 FY18 P:FY21 P:FY21 P:FY21 P:FY21 YoY YoY YoY YoY Gross business p

37. Slide 37: Earnings Accumulation Plan (4 Banks total)

    Earnings Accumulation Plan（4 Banks total）  Core business profit scheduled to reach 87.5 billion yen in final year of mid-term management plan (up 10.3 billion yen compared to FY18), thanks to buildup of earnings through structural reform and to effects of integration with the Eighteenth Bank. Core

38. Slide 38: Loans

    Loans Average balance of loans (Domestic + International) Average balance of loans by segment * Excluding loans to FFG, Government （¥ bil. ） * Excluding loans to FFG, Government （¥ bil. ） (Annual rate) (Annual rate) Increase in Sixth Mid-Term 3-year average annual rate Management Plan：＋991.3 SMEs：＋4

39. Slide 39: Deposits & CDs

    Deposits & CDs Average balance of deposits & CDs Average balance of deposits & CDs by segment （¥ bil.） （¥ bil.） （Annual rate） （Annual rate） 3-year average annual rate New mid-term increase amount：＋1,361.1 Enterprises：＋2.9％ 3-year average annual rate：＋2.6％ Retail：＋2.8％ 18,253.1 17,772.6 18,253.1 17,7

40. Slide 40: Major Products

    Major Products （¥ bil.） Consumer loans balance （¥ bil.） Housing loans execution Increase in Sixth Mid-Term Management Plan ¥180.0 bil. Increase in Sixth Mid-Term Management Plan ¥59.5 bil. 3,160.0 3,227.7 370.1 Total 3,047.7 3,099.6 346.6 Total 310.7 327.3 Juhachi Shinwa 337.4 342.2 768.2 Juhachi 98

41. Slide 41: Capital Adequacy Ratio

    Capital Adequacy Ratio  Quality and level of capital have been steadily improving by retained earnings. Capital adequacy ratio based on Basel III domestic standard at the end of March 2019 was 10.23% (9.83% on a fully adopted basis).  We will continue to operate paying attention to the balance bet

42. Slide 42: Part IV Financial Data FY2018

    Part Ⅳ Financial Data FY2018 41

43. Slide 43: Financial results for FY2018

    Financial results for FY2018 Profit & Loss (3 banks total) (¥ bil.) 3 banks non- Bank of Fukuoka Kumamoto Bank Shinwa Bank Point1 Net interest income +3.7 billion yen (YoY) consolidated total (non-consolidated) (non-consolidated) (non-consolidated) 【Comparison to Projection of Nov.12,2018】 FY2018 Yo

44. Slide 44: Transition of Top Line & Bottom Line

    Transition of Top Line & Bottom Line  Core business profit increased 2.8 billion yen year-on-year to 77.2 billion yen, due to the accumulation of loans, a decrease in deposit costs and a reduction in overhead expenses.  Consolidated net income increased 2.3 billion yen year-on-year to 51.6 billion

45. Slide 45: Net Interest Income

    Net Interest Income  Net interest income increased 3.7 billion yen year-on-year due to an increase in interest rates on loans in domestic and international combined and improvement in deposit costs.  Decrease of domestic deposit loan gross margin is moderate due to lowering deposit interest rates.

46. Slide 46: Loans・Deposits & CDs

    Loans・Deposits & CDs  Regarding loans, while public funds decreased, “Small and Medium-sized enterprises” and “International” whose yields are high steadily increased.  Deposits & CDs maintained an increasing trend centering on “Retail” and “Corporate”. Loans by Customer Segment Deposits & CDs by

47. Slide 47: Securities

    Securities  Securities outstanding decreased due to bond redemption. Meanwhile, unrealized gains on securities remain high.  The domestic bond duration at the end of March 2019 remained flat at around 2.3 years. New standard outlier ratio is within the standard. Securities portfolio (3 banks total

48. Slide 48: Non-interest Income

    Non-interest Income  Non-interest Income decreased by 2.5 billion yen from the previous year due to a decrease in Investment Trust sales commissions and an increase in Loan Guarantee Fees and Group Credit Life Insurance Premium. Non-Interest Income (3 Banks & FFG Securities Total) Asset Management

49. Slide 49: Overhead Expenses

    Overhead Expenses  In FY 2018, while strategic investment increased, overhead expenses decreased by 1.2 billion yen from the previous year due to personnel cost reduction by work efficiency improvement. By Category / OHR (3 banks total) FY18 Factor of Increasing and Decreasing (YoY Chg.) 58.7% 57.7

50. Slide 50: Credit Cost & NPL

    Credit Cost & NPL  In FY 2018, we posted 3.8 billion yen credit cost due to major downgrades.  Non-performing loans & ratio remains low. Credit Cost (3 banks total) Non-Performing Loans & Ratio (3 banks total) （¥ bil.） * After partial write-off (¥ bil.) 2.17% 1.97% 1.73% 1.68% Ratio 3.8 ▲1.6 （2bp）

51. Slide 51: Projections for FY2019

    Projections for FY2019  The projection for Core Business Profit is 78 billion yen, an increase of 0.8 billion yen year-on-year (a decrease of 5.9 billion yen from 4 banks simple total year-on-year) .  The projection for Consolidated Net Income is 158.5 billion yen, an increase of 106.9 billion yen

52. Slide 52: Projections for FY2019 (reference)

    Projections for FY2019（reference） (¥ bil.) 4Banks non- Consolidated total Bank of Fukuoka Kumamoto Bank Shinwa Bank Eighteenth Bank （non-consolidated） （non-consolidated） （non-consolidated） （non-consolidated） P:FY19 YoY Chg. P:FY19 YoY Chg. P:FY19 YoY Chg. P:FY19 YoY Chg. P:FY19 YoY Chg. Gross busine

53. Slide 53: Part V Figures FY2018

    cFF@ Fukuoka Financial Group Part V Figures FY2018

54. Slide 54: Loans (By Bank)

    Loans (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG, Government *※劣後受益権除く Excluding subordinated beneficial interests * Excluding subordinated beneficial interests ※劣後受益権除く 8,193.7 8,350.1 1,189.3 7,898.4 1,161.4 1,463.0 1,480.2 1,458.0 7,576.8 1,117.4 1,439.4 Average

55. Slide 55: Loan Portfolio (Classified by Industry)

    Loan Portfolio (Classified by Industry) Mar. 31, 2019 Change from Mar. 31, 2018 Total Fukuoka(BOF) Kumamoto(KMB) Shinwa(SWB) Total BOF KMB SWB Domestic Loans 13,152.3 100.0% 9,897.8 100.0% 1,534.4 100.0% 1,720.0 100.0% 775.0 385.8 219.8 169.3 Classification by industry Manufacturing 800.8 6.1% 652.4

56. Slide 56: Balance of Apartment Loans

    Balance of Apartment Loans Balance of apartment loans State of apartment loans (loans not involving guarantee companies) (loans not involving guarantee companies) Figures in brackets [ ] represent annual rates (¥ bil.) Screening stance 1,362.4  Assessed comprehensively, verifying both debtor attrib

57. Slide 57: Deposits & CDs (By Bank)

    Deposits & CDs (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 9,973.3 10,268.8 Average deposit balance 1,465.1 1,453.7 2,249.5 2,245.1 2,297.9 2,324.2 2,311.2 9,440.3 1,429.7 by customer segment 9,175.9 705.6 1,329.4 8,764.9 682.1 1,320.0 55.9 44.7 45.3 278.9 259.1 498.7 566.7 317.1 285.7 293.1

58. Slide 58: Interest Rates (By Segment)

    Interest Rates (By Segment) 3 banks total * Excluding loans to FFG, Government （％） 1.83 1.80 1.78 1.79 1.78 1.78 1.79 1.78 Retail 1.77 1.75 1.41 Loan 1.37 1.31 Overall 1.29 1.24 1.22 Corporate 1.18 1.17 1.28 1.14 1.13 1.22 1.16 1.12 Public 1.06 1.02 1.02 0.97 0.99 0.97 0.95 0.93 0.92 0.88 0.81 0.78

59. Slide 59: Interest Rates (By Bank)

    Interest Rates (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG, Government * Excluding loans to Government * Excluding loans to Government 1.80 1.78 1.77 1.78 1.76 1.74 1.69 1.97 1.93 1.95 1.95 1.91 Interest rates on loans 1.67 1.64 Retail 1.72 1.61 1.66 1.62 1.48 1.33 1

60. Slide 60: Breakdown of Loans and Deposits & CDs by Interest Rate

    Breakdown of Loans and Deposits & CDs by Interest Rate Domestic Loans (As of Mar. 31, 2019) Domestic Deposits (As of Mar. 31, 2019) 3 banks Bank of Kumamoto total Shinwa Bank 3 banks Fukuoka Bank Bank of Kumamoto total Shinwa Bank Fukuoka Bank Based on short- 17.1% 14.2% 28.2% 23.1% term prime rate

61. Slide 61: Securities (By Bank)

    Securities (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank ※Consolidated15年まで理論値採用 ※15年変国は、12/9末まで理論値採用 ※15年変国は、12/9末まで理論値採用 Unrealized 169.7 33.2 156.1 10.1 28.3 27.5 gain 133.8 129.7 8.4 25.4 119.6 7.0 6.9 20.8 5.7 Securities Balance 2,258.9 2,291.8 2,281.6 289.6 281.4 748.2 751.0 746.3 2,077.

62. Slide 62: Non-Interest Income・Asset Management Products Sales (By Bank)

    Non-Interest Income・Asset Management Products Sales (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank ※Excluding profit(loss) on bond and on marketable products ※Excluding profit(loss) on bond and on marketable products ※Excluding profit(loss) on bond and on marketable products 17.9 18.0 4.7 17.3

63. Slide 63: Overhead Expenses / Credit Cost (By Bank)

    Overhead Expenses / Credit Cost (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 52.9% 53.4% 52.4% 72.7% 73.6% 72.6% 74.7% 51.8% 50.7% 71.4% 71.6% 69.7% 71.4% 67.1% 66.7% Expenses Core OHR 65.8 66.1 67.7 67.6 66.8 13.6 13.8 13.9 13.9 13.9 20.4 20.1 19.9 20.0 19.7 4.9 5.4 6.1 6.4 6.3 1.1 1.1 1.4 T

64. Slide 64: Non-Performing Loans・Capital Adequacy Ratio (By Bank)

    Non-Performing Loans・ Capital Adequacy Ratio (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * After partial write-off * After partial write-off * After partial write-off Non-Performing Loans & Ratio Ratio 2.24% 2.90% 2.02% 2.69% 2.70% 2.61% 2.65% 2.48% 1.77% 2.32% 1.61% 1.58% 2.14% 1.96% 1.83%

65. Slide 65: The Eighteenth Bank: Financial results for FY2018

    The Eighteenth Bank : Financial results for FY2018 Profit & Loss（Eighteenth Bank : non-consolidated） Eighteenth Bank (¥ bil.) (non-consolidated) Point1 Net interest income is ▲0.5 billion yen (YoY) 【Comparison to Projection of Nov.7,2018】 FY18 YoY Chg. Gross business profit 28.2 ▲1.5  Although lowe

66. Slide 66: The Eighteenth Bank: Transition of Top Line & Bottom Line

    The Eighteenth Bank : Transition of Top Line & Bottom Line  Although Net interest income fell below the previous year, Core Business Profit increased 2 million yen year-on -year to 6.7 billion yen due to cost reduction.  Although Core Business Profit increased, Consolidated net income increased 0.

67. Slide 67: The Eighteenth Bank Figures

    The Eighteenth Bank Figures ※Calculated based on the disclosure criteria of the eighteenth bank Average loan balance Average deposit balance Interest Rates (Domestic Loan) by customer segment by customer segment * Excluding loans to FFG, Government * Excluding loans to Government 2,624.3 2,658.1 2.1

68. Slide 68: The Eighteenth Bank Figures

    The Eighteenth Bank Figures Expenses ・Core OHR Non-Performing Loans & Ratio Capital adequacy ratio 3.22% 77.4% 78.7% 77.5% 75.5% 76.3% 3.00% 11.94% Ratio 2.88% Core OHR 11.39% 11.36% 11.32% 11.26% 2.51% Capital 2.33% Adequacy 24.4 ratio 23.6 23.4 47.4 46.3 Tax 1.4 22.2 44.3 44.3 1.4 1.6 21.5 42.2 1.

69. Slide 69: Part VI Our Mother Market Kyushu

    Part Ⅵ Our Mother Market “Kyushu” 68

70. Slide 70: Potential of Our Local Kyushu (1)

    Potential of Our Local “Kyushu” (1) Potential for Economy in Kyushu Global GDP Ranking (2018) ($ bil.) Thailand 407  GDP ¥ 41.1 trillion (9%) Nigeria 405 Same economic size  Population: 13.07 million (10%) Austria 391 as Norway KYUSHU KYUSHU 374  Businesses: Approx. 580,000 (10%) Norway 371  20%

71. Slide 71: Potential of Our Local Kyushu (2)

    Potential of Our Local “Kyushu” (2) Well-Balanced Industry Grouping Industries in Kyushu (thousand vehicles) Passenger Car North 1,450 1,400 (Share in Japan ％) 16% 15% 1,350 Center of “ Car Island ” 14% 1,300  Number of Passenger Cars produced in 1,250 13% Kyushu is 1,430 thousand vehicles in 2018.

72. Slide 72: Potential of Our Local Kyushu (3)

    Potential of Our Local “Kyushu” (3) Number of Foreign Nationals Entering Kyushu Land Price in Fukuoka Metropolitan Area  The number of foreign people entering Japan through Kyushu has  Fukuoka city's land price increase rate greatly exceeds the nationwide and three major （thousand people）increased

73. Slide 73: Economic Trend

    Economic Trend 30 The Bank of Japan’s Tankan Business Sentiment Index 20 Fukuoka region※ Fukuoka 10 Kitakyushu 0 Projection 30 ▲ 10 ▲ 20 Japan ▲ 30 20 Kyushu ▲ 40 ▲ 50 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 ※Fukuoka region: Adding Saga prefecture to Fukuoka prefecture, 10 excluding K

74. Slide 74: Industrial Production Trends

    Industrial Production Trends Industrial Production Index（FY15＝100） 【Kyushu】 Main Industry Trends 120 （million pieces） Integrated Circuits （%） 1,000 50 Quantity YoY Chg. 40 800 30 20 Japan 600 110 10 400 0 ▲ 10 200 ▲ 20 0 ▲ 30 15/3 16/3 17/3 18/3 19/3 100 （thousand vehicles） Passenger Car （%） 140 50

75. Slide 75: Capital Investment · Housing Investment

    Capital Investment · Housing Investment Capital Investment: Bank of Japan’s Tankan Housing Starts Survey (YoY Chg.) 40 （thousand） （%） 1,200 Unit 20 YoY Chg. Projection 1,000 10 30 800 0 Japan 600 ▲ 10 20 400 ▲ 20 200 Feb. 19 ▲ 30 10 0 ▲ 40 09 10 11 12 13 14 15 16 17 18 19 （thousand） （%） 0 120 Unit 2

76. Slide 76: Land Price Trends

    Land Price Trends Volatility of Standard Land Prices （Unit：％） ＜ Ministry of Land, Infrastructure and Transport: 2019 Outline of results of land prices survey ＞ Volatility of standard land prices in major cities in Fukuoka Pref. ○ Japan：Residential areas have risen for two consecutive years, all uses

77. Slide 77: Corporate Bankruptcies

    Corporate Bankruptcies Number of Bankruptcies and Total Liabilities (¥ bil.) (Number) Left Axis ：Total debts / Bar graph 20 50 (¥ bil.) Right Axis：Number of bankruptcies / Line graph （Number） 40 Fukuoka 15 1,600 1,000 30 1,400 Takata 10 Corporation 20 900 1,200 5 10 1,000 Japan 800 0 0 800 14/3 15/3

78. Slide 78: Loans

    Loans （％） 8 Rate of Increase of Bank Loans （YoY Change, Monthly) 6 Fukuoka （％） 4 6 2.7 2 0 ▲2 4 ▲4 Japan 09/3 11/3 13/3 15/3 17/3 19/3 2.8 8 2.7 Kumamoto 2 5.7 6 4 2 0 0 ▲2 ▲4 09/3 11/3 13/3 15/3 17/3 19/3 ▲2 Kyushu 8 6 Nagasaki 4 ▲4 2 0 ▲2 ▲0.2 ▲4 ▲6 ▲6 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3

79. Slide 79: Deposits

    Deposits Rate of Increase of Bank Deposits （YoY Change, Monthly) 6 Fukuoka 5 （％） 4 10 3 2 9 1.4 1 Japan 8 0 09/3 11/3 13/3 15/3 17/3 19/3 7 12 Kumamoto 10 6 8 6 5 4 2 0.4 4 0 ▲2 3 09/3 11/3 13/3 15/3 17/3 19/3 Kyushu 6 2 5 1.4 Nagasaki 4 1 1.3 3 2 1 0 0 ▲1 0.2 ▲1 ▲2 09/3 10/3 11/3 12/3 13/3 14/3 15/

80. Slide 80: Contact for further inquiries

    Contact for further inquiries: Fukuoka Financial Group, Corporate Planning Division, Public Relations Group  TEL ： 092 － 723 － 2255  E-mail ： ffg-ir@fukuoka-fg.com  HP ： https://www.fukuoka-fg.com  Thank you for your time today for our presentation. 本資料は情報提供のみを目的として作成されたものであり、特定の証券の売買を勧誘するものではあり

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