The Group’s Materialities

Changes in laws and regulations

G

Increased geopolitical risks

Governance

Risks and opportunities of concern for the Group

Risks

Deterioration of customers' business performance due to damage to their business infrastructure resulting from natural disasters spawned in large part by climate change

Higher credit costs due to impacts on customers' business and financial conditions of regulatory tightening, technological innovation, and market changes in support of decarbonization

Higher credit costs due to damages that have reduced the value of customers' real estate collateral

Risks

Increased numbers of non-performing loans and credit-related expenses due to deterioration of customers' business conditions induced by domestic and international economic trends, foreign exchange rates and related factors

Increased numbers of business closures precipitated by a lack of successors and a resulting decline in demand for funds

Changes in existing business and industrial structures

Risks

Changes in banking transactions in response to lifestyle changes and diversification and expansion of the digital native population

Growing concern about retirement savings accompanying the contraction of the working-age population and aging of the population

Risks

Organizational rigidity stemming from staff homogeneity and uniformity of thinking

Insufficient staff motivation and outflow of human resources due to delayed development of career paths that match individual staff members' work styles.

Risks

Loss of public trust due to leakage of customer information and system failures caused by more complex and sneakier cyber attacks

Increased difficulty of risk management due to a highly uncertain business environment

Decreased asset value attributable to deterioration of loan customers' financial condition, etc. Decreased asset value attributable to fluctuations in interest rates, exchange rates, stock prices, etc.

Materiality determination process

Besides such international frameworks as the United Nations Global Compact and the GRI, we referred to the Global Top 10 Risks announced by the World Economic Forum and the Japanese government's SDGs Action Plan and extracted the risks in consideration of the external and internal environments surrounding the Nanto Bank Group as well as of issues specific to the Bank.

Among the foregoing, we then identified issues that are of particular relevance to the Nanto Bank Group and analyzed and evaluated their importance from two perspectives: their impact on our stakeholders and their financial impact on our Group.

Based on the results of Step 2, the Management Committee and Board of Directors identified the materialities after discussing the opportunities, risks, and matters to be prioritized.

Opportunities

Increased demand for environment-related businesses and other activities aimed at decarbonization Cultivation of regional environmental awareness through proactive environmental conservation efforts

Increased demand for funds for investment in disaster prevention infrastructure

Growing need for protection against wind and/or flood disasters and other environmental changes, and resulting opportunities to provide insurance and other financial products and services to support environmental protection measures in preparation for disasters

Opportunities

Increased customer demand for non-financial services, including M&A, asset succession, and employee placement services

Increased number of business opportunities benefiting from the region's wealth of tourism resources

Increased number of business opportunities stemming from new job creation in cooperation with local governments and other external organizations

Increased demand for funds to support customers' cash management and core businesses, and greater number of opportunities to provide new services

Opportunities

Growing demand for asset-building services from members of the younger generation

Increased opportunities to provide services that meet customers' need for inheritance services and diversifying bequest and donation needs

Steady demand for products and services responding to homeowners' growing needs

Increased opportunities for provision of new products and services employing digital technologies

Opportunities

Expansion of the business territory through acquisition of highly specialized IT, risk management, and other personnel

Provision of high value-added services through utilization of diverse human resources

Provision of greater opportunities for women with potential for social advancement

Opportunities

Improved awareness of investors' needs obtained by creating more opportunities for constructive dialogue with shareholders and investors

Materialities (Priority Issues)

Responding to the Effects of Accelerating Climate Change

Realizing Sustainable

Growth of Our Regional

Economy

Realizing a Convenient,

Prosperous SocietyFiscal 2024

Action Plan

Cultivating a Healthy Corporate

Culture with Participation of

Diverse Human Resources

Preparing for Increasingly

Varied and Complex Risks