Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ......

31
Bank of the Ryukyus Management Briefing for FY2016 Kakurenbo” (Hide and Seek), by Makoto Ariyama Winner of the 25th (fiscal 2016) Bingata Design Contest presented by the Bank of the Ryukyus

Transcript of Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ......

Page 1: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Bank of the Ryukyus Management Briefing

for FY2016

“Kakurenbo” (Hide and Seek), by Makoto Ariyama

Winner of the 25th (fiscal 2016) Bingata Design Contest presented by the Bank of the Ryukyus

Page 2: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

-60

-40

-20

0

20

40

60

Mar.'09 Mar.'10 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17

Bank of Japan Tankan

Japan Okinawa

■Overview of Okinawa Prefecture

(出所)沖縄県

Sources: Okinawa Prefecture, Cabinet Office, Ministry of Internal Affairs and Communications

1.07% (highest in Japan: 2007-2020 anticipated rate of

real economic growth (Japan Center for Economic

Research))

1

Favorable economic conditions in the prefecture are expected to continue.

+37

+10

Anticipated rate

of economic growth

Population growth rate

China: 1.3 billion people

Okinawa

Within a four-hour

traveling distance by air

ASEAN: 600 million people

Center of a massive market with

a population of about two billion people

3.0% (highest in Japan: 2015 National Census (compared

with the 2010 National Census))

Source: Okinawa Prefecture

Japan: 130 million people

Page 3: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

■Tourism (Visitors to Okinawa)

5,135 5,459

5,862 6,164 6,261

6,531

280 376

550

893 1,501

2,082

5,415 5,835

6,413

7,058

7,763

8,613

373.4 390.5

433.9

516.9

591.3

652.5

0

100

200

300

400

500

600

0

2,000

4,000

6,000

8,000

10,000

2011 2012 2013 2014 2015 2016

(Billions of yen)(Thousands of people)

Number of Visitors and Tourism Revenue

Visitors from overseas (Left scale)

Visitors from other parts of Japan (Left scale)

Revenues from tourism (Right scale)

Source: Okinawa Prefecture 2

Record-high visitor arrivals! Number of foreign tourists exceeded two million in 2016!

53 67 5680

115

193213

4952 65

73

84

95

175

55 1

3

13

86

104

112125 130

162

219

387

502

0

100

200

300

400

500

2011 2012 2013 2014 2015 2016 2017

Changes in Number of Cruise Ships Visiting Ports in Okinawa Prefecture

Naha

Ishigaki

Taira

Nakagusukuå

Others

Actual Expected(Times)

Page 4: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

3

■Financial Industry Trends

Financial industry conditions remain severe in stark contrast to the positive prefectural economy

BOJ adopts negative

interest rate policy

Intensifying competition

among financial institutions

Decrease in lending

interest margin

Decrease in marketable

securities–related profits

82 listed regional banks and financial groups

11% decrease in FY 2016

consolidated net income (YoY)

17% decrease in FY 2017

consolidated net income (forecast)*Expected to fall below ¥1 trillion for first time in five years

60.0

80.0

100.0

120.0

140.0

160.0

180.0

H25.4.1 H26.4.1 H27.4.1 H28.4.1 H29.4.1

Stock Price Comparison of Bank of Ryukyus, Nikkei Stock Average and Banking Sector

日経平均株価 当行株価 銀行セクター*Stock prices on April 1, 2013 indexed at 100

— Nikkei Stock Average — Bank of the Ryukyus — Banking Sector

April 1, 2017April 1, 2016April 1, 2015April 1, 2014April 1, 2013

Page 5: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

FY2016 FY2015

Year-on-year change

Ordinary revenue 41.1 +0.9 40.2

Business gross profit (a) 30.0 ▲1.7 31.7

Expenses (b) 23.6 +1.2 22.4

Real net business profit (c=a-b) 6.3 ▲3.0 9.3

Net credit costs (d) 0.8 ▲0.5 1.3

Other extraordinary gain/loss (e) 1.8 +1.5 0.3

Ordinary profit (f=c-d+e) 7.4 ▲0.9 8.3

Net income 5.0 ▲0.0 5.0

* Increase and decrease is presented on a financial statement basis.

■Financial Summary (Non-Consolidated)

(Billions of yen)

4

Net income for the fiscal year remained at roughly the same level as last year

Page 6: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

FY2016 FY2015

Year-on-year change

Ordinary revenue 60.7 +0.8 59.9

Ordinary expenses 51.0 +1.2 49.8

Ordinary profit 9.7 ▲0.3 10.0

Extraordinary gains or losses 0.0 ▲4.0 4.0

Gain on negative goodwill 0.0 ▲4.3 4.3

Net income for the period attributable

to the owners of parent company

(excluding gain from negative goodwill)

6.4

(6.4)

▲3.9

+0.5

10.3

(5.9)

5* Increase and decrease is presented on a financial statement basis.

Revenue and profit increased if special factors, namely, extraordinary gains from turning

OCS into subsidiary in the previous fiscal year, are excluded

■Financial Summary (Consolidated)

(Billions of yen)

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2.4

3.4

4.2

5.0 5.0

0

1

2

3

4

5

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

5,052 5,012

590

504

149

463 490

1,256

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

▲¥40million

6

■Factors Behind the Change in Net Income

Net income for the fiscal year remained at roughly the same level as last year despite a decrease

in net interest income on loans and deposits and an increase in business expenses

(Billions of yen) (Millions of yen)

Changes in Net Income Factors Behind the Change in FY2016 Net Income

March 2016 March 2017

Decrease in

net cred

it costs

Oth

ers

Increase in

expen

ses

Increase in

interest an

d

divid

end

inco

me o

n secu

rities

Decrease in

net in

terest inco

me

on

loan

s and

dep

osits

Page 8: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Loan interest decreased despite steady increases in lending to both individuals and businesses

775999

1,6181,320 1,321

▲ 1,358

▲ 1,884

▲ 1,452

▲ 1,042

▲ 2,303

▲ 583▲ 885

166365

▲ 982

▲ 2,500

▲ 1,500

▲ 500

500

1,500

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Earnings yield factors

Balance factors

Increase/decrease in loan interest compared with same period in previous year

2.29%2.14%

2.02% 1.94%1.78%

1.59%1.47% 1.38% 1.30% 1.21%

0.50%

1.00%

1.50%

2.00%

2.50%

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Loan Investment YieldsLoan investment yields

Loan investment yields (nationwide regional banks)

“Reference”End Sep.’16

7(Source: Regional Banks Association of Japan)

611.1 649.1 694.5 741.5 801.3

448.2 477.5

514.7 547.6

563.2 109.7

120.0

119.7

122.5

116.2

72.4

83.3

70.3

53.8 49.2

0

200

400

600

800

1,000

1,200

1,400

1,600

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Loans

Syndicated loans

Local public authorities and other (excluding syndicated loans)

Corporations (excluding syndicated loans)

Individuals

1,241.6

1,399.21,330.0

1,465.51,530.0

■Changes in Loans

(Billions of yen)

(Millions of yen)

Changes in Loans Interest Increase / Decrease

Page 9: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

146.6 160.1

184.8 188.1 189.1

222.9 227.3 224.2 225.9 209.6

100

150

200

250

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Equipment funds Working capital

Interest on loans decreased overall, with the exception of consumer loans

7.7 7.2 7.2 7.1 6.8

6.3 6.4 6.6 7.1 7.1

6.5 6.2 6.0 5.7

4.9

1.7 2.0 2.2 2.4

2.5

3.1 2.8 2.6 2.3

2.1

25.3 24.6 24.6 24.6

23.4

0

5

10

15

20

25

30

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Others

Consumer loans (excluding mortgage loans)

Mortgage loans

Residential leasing and real estate

General business

8

166 172

183

192

197 169 172

178

191

211

150

170

190

210

230

2012 2013 2014 2015 2016

Japan Okinawa

(Thousands of yen / ㎡)

(Source) Prepared by Ryugin Research Institute based on the Japan Construction

Starts Report of the Ministry of Land, Infrastructure, Transport and Tourism.

* For mortgage and consumer loans, the interest amount excludes "creditor group

insurance premiums" and "loan guarantee fees" in service costs.

(Billions of yen) (Billions of yen)

■Changes in Interest on Loans

Changes in Interest on Loans by Major Category Changes in General Business Loan Balance by Objectives of Fund(excluding Syndicated Loans, Residential Leasing and Real Estate)

Changes in Unit Construction Cost / Price

Page 10: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

9

Pinpoint latent customer needs and provide high value-added services

Amid poor prospects for expanding lending business, we seek to cultivate new business fields

April 2017

Established Corporate Business Planning Department

Corporate Business Promotion Group

Commercial product planning

Business matching, etc.

Corporate Solution Group for

Evaluation of Business Viability

Solution proposals based on

business evaluations, etc.

Regional Revitalization Group

Top-line support

Start-up support, etc.

Business Succession and M&A Group

Business successions

M&As, etc.

Medical Sector Group

Loan support

Consulting, etc.

■Corporate Business Strategy (Establishment of the Corporate Business Planning Department)

Page 11: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Support growth of enterprises through programs that help expand sales channels and cultivate

entrepreneurial skills

Ryugin Startup Program

2017

New Project

1. Date : February 25, 2017 (Sat)

2. Venue : Okinawa Institute of Science and Technology (OIST)

B250 / Restaurant space

3. Participating startups (13 teams; 30 members)

10

Ryugin Startup Program Demo Day (Business plan presentations)

What is the "Ryugin Startup Program"?Program that utilizes Ryugin's resources and network to create and foster

innovative and competitive Okinawan venture companies (startups)

■Corporate Business Strategy (Top-line and Skill Development Support)

Fourth Business Forum on Okinawa’s

Culinary and Scenic Appeal

Page 12: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

We have products unlike anything offered by other regional banks and designed to meet diverse needs

11

“Sumairu-kun" residence purchase support loans

Effective utilization of reduced mortgage loan tax!

0.5% fixed interest rate for the entire loan term!*For customers with a deposit balance in the same amount as the loan.

"Cash Back Loan" savings-linked mortgage loans

Get cash back on interest payments based on deposit balance!*Maximum 50% of the mortgage loan balance.

Ryugin reverse collateralized mortgage loans for customers over 60

First among Japanese

regional banks

First regional

bank in Okinawa

First regional

bank in Okinawa

Large-amount, open-use loans for senior citizens!

⇒ Enables seniors to borrow money without having to sell the family home!

Repayment method can be selected even after contract signed!

■ Business Strategy: Individuals (Mortgage Loans)

“Yuh Yuh Jinsei 60"

Page 13: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Increase speed, convenience and product appeal to meet customer demands

Expand channel functions

Expand functions, increase staff

and increase outbound calls

Direct Banking Center

Customers

Product descriptions

Home and workplace visits

TEL

WEB

Apply using a tablet (accurate

and rapid reception operations)

System for completing procedures online

WEB Channel

Branch Loan Center

Visit a branch

New products for customers outside Okinawa

12

<Features>For customers all over

Japan who love Okinawa

Two Okinawa-themed card

designs are available

Our aim: Providing customer-centric services

Construction and purchase of real

estate for investment purposes

Second-stage loans

Card loans that do not require

a branch visit

■ Business Strategy: Individuals (Consumer Loans)

Page 14: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

0.15%

0.10%0.09% 0.09%

0.08%0.07%

0.06%0.05% 0.05%

0.04%

0.00%

0.03%

0.06%

0.09%

0.12%

0.15%

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Deposit yields Deposit yields (nationwide regional banks)

Steady increase, hinging on individual and corporate savings

1,199.6 1,226.2 1,258.5 1,274.2 1,317.0

468.8 494.6

529.2 580.8

586.1

129.3 161.9

179.4 183.3 144.2

1,797.8 1,882.8

1,967.2 2,038.4 2,047.4

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Deposit Balance

Individuals Corporations Public funds

* Including negotiable certificates of deposit

Reference: September 30, 2016

Sales of campaign products whenever needed

13

■Trends in Deposits (including Negotiable Certificates of Deposit)

(Billions of yen)

Changes in Deposit Yields

Page 15: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Higher balance thanks to increase in sales of single-premium insurance which offset a decline in sales

of JGBs and investment trusts

11.7 13.3 20.5 18.7 17.3

11.9

23.0

31.1 27.1

20.2 23.7

36.3

51.6 45.9

37.5

0

10

20

30

40

50

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Investment trusts Single-premium insurance

45.538

28.115 10.6

66.8

61.569.9

64.561.3

38.351.6

64.5

80.8 96.3

150.7 151.1

162.5 160.4 168.2

0

20

40

60

80

100

120

140

160

180

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Single-premium insurance Investment trusts JGBs

14

-0.50%

0.00%

0.50%

1.00%

5,000

10,000

15,000

20,000

Nikkei Stock Average Trends in long-term 10-year JGBs

20,8681.03%

8,295 -0.29%April 1, 2012 March 31, 2017

(Billions of yen)(Billions of yen)

■Trends in Sales of Assets in Custody

Changes in Balance of Assets in Custody Changes in Sales of Assets in Custody

Transition of Nikkei Stock Average and Long-term 10-year JGBs

(Yen)

Page 16: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Sales Branches and Outside Visits

15

Implement measures to support management of customer assetsFirst among Japanese

regional banks

Specialized staff at the head office may be at a distance from customers but can still provide direct support!

Enhance ability to maintain proper sales techniques in line with fiduciary duty by objectively confirming that

customers understand important matters regarding financial products with inherent risk before application!

Other efforts to support sales branch operations and provide training!

<Results>

First among Japanese

regional banks

Captures the audio of negotiation records

Fills in gaps in explanations about

important matters

Consultation

recordDirect Banking Center

■Strategy for Assets in Custody

August 2016

Add "Skype for Business" into tablet

terminals distributed to sales branches

October 2016

Start of "Skype Support"

*Consultation record audio recording system

Page 17: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

1,966 1,992 2,019 2,069 2,071

690 1,126 1,214 1,247 1,266

▲ 133

65314 308 235

1,139

1,122

1,180 1,224 1,320 3,664

4,306

4,729 4,849 4,893

-500

500

1,500

2,500

3,500

4,500

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Others ATM-related Assets in custody Domestic exchange and account transfers Service revenue

Diversification of service revenue to expand earnings

16

* Others includes online banking, Biz Net, convenience store collection service, VISA debit cards, merchant management, and ATM lottery.

■Trends in Service Revenue

Changes in Service Revenue (excluding Creditor Group Insurance Premiums and Loan Guarantee Fees)

(Millions of yen)

Page 18: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Leading the way among regional banks in Japan

Start of "Ryugin Card Merchant Services" for both VISA and MasterCard international brands

17

・Visitors to Okinawa increasing each year

(Okinawa goal: 12 million people annually)

・Ministry of Economy, Trade and Industry:

“Policy to Promote a Cashless Society”

・ Heightened credit card settlement needs

・Shortage of credit card merchants

Background and Issues

・ Shorter remittance cycle for credit sales

・ Low merchant fee rates

・ Provide multifunction terminals at a low price

Features※ "Ryugin Card Merchant Services"

Okinawa 10.9%

National average 13.9%

Tokyo (highest in Japan) 19.8%

Ratio of credit card sales in the annual product

sales of the retail industry (2014)

(Source) Ministry of Economy, Trade and Industry: 2014 Commercial

Statistics Report

Enhance convenience to tourists by helping to establish environment for use of our own credit card

Contribute to revitalization of regional economy and secure new sources of revenue (merchant fees)

■Expand Credit Card Merchant Services

Page 19: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Pioneering efforts among regional banks in Japan

October 2015 Launched VISA Debit Card

More than

50,000

cards issued

18

February 2017 Began ATM-based lottery sales

Immediate settlement with no need for cash⇒Zero time spent waiting in line at ATMs and zero after-hours

handling charges

Local currency withdrawals at overseas ATMs⇒Convenient, effortless currency exchange

NO worries about exceeding deposit account credit limit⇒Targeted at individual customers aged 15 and over

Cash back 0.2% of amount spent!!

■Diversify Fee Business for Individuals

Launched on February 13, 2017

Started Lottery Ticket

Sales at ATM Machines

Page 20: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

July 2016

October 2016

January 2017

January 2017

February 2017

March 2017

Tabaru Branch

Chatan Branch

Chatan Loan Center

Wakasa Branch

Itoman Branch

Gushikawa Branch

Tsuboya Branch

List of renovated branches (FY2016)

19

Chatan Branch Gushikawa Branch Wakasa Branch

Concepts

Building branches that customers will want to

visit again

Branch layout designed to accommodate the

future cashless society

⇒Eliminate counters, significantly reduce

workspace and use lobby to full advantage.

■Develop Branches that Make Customers Feel at Home

Page 21: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

251.5 279.2 262.9 207.5

164.4

176.5

204.0 187.5

151.8

109.6

12.6

13.1 19.4

15.0

14.0

15.3

29.0 107.7

96.7

137.6

456.1

525.5

577.6

471.3

425.7

2.45

3.44

2.90 2.79 2.82

0.00

1.00

2.00

3.00

0

100

200

300

400

500

600

700

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Balance of Securities

JGBs Bonds

Local government bonds Other (foreign bonds, etc.)

Yen bond duration (Right scale)

Higher earnings through diversification of portfolios despite a lower balance due to JGB redemptions

0.50% 0.58% 0.55% 0.57%0.76%

1.00% 1.05% 1.06% 1.13% 1.14%

0.00%

0.50%

1.00%

1.50%

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Securities YieldsSecurities yields

Securities yields (nationwide regional banks) “Reference”End Sep.’16

20

■Trends in Securities Operations

(Billions of yen) (Years)

2.4 2.8

3.2 3.1 3.3

0.7

▲ 0.6▲ 0.2

0.1

▲ 0.1

1.2

2.2

2.9 3.3

3.7 3.9

▲ 1

0

1

2

3

4

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Interest and dividends Class 5 bonds

Share 3 balance of account Total

Changes in Securities-Related Payments

(Billions of yen)

Page 22: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Expenses increased due to prior investment in equipment and systems

10.1 10.1 9.9 9.8 10.5

10.1 10.4 10.7 1111.4

1.1 1.1 1.3 1.5

1.721.4 21.7 22 22.4

23.6

0

5

10

15

20

25

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Changes in Expenses

Personnel expenses

Non-personnel expenses

Taxes

3.6 4.0 4.4 4.5

2.0 1.9 2.2 2.2

1.3 1.4 1.5 1.4 1.3 1.2 1.2 1.4 1.1 1.2 0.7 0.8 0.8 0.7 0.8 0.8 10.4 10.7 11.0 11.4

0

2

4

6

8

10

12

End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Others Deposit insurance premiumsSG&A expenses Services outsourcing fee Outsourcing feesEquipment and system costs

Equipment and system costs surged ¥900 million compared with the figure posted in fiscal 2014

<Key investments (since fiscal 2015)> Applied to new branches (six branches, one loan center)

Expanded Direct Banking Center functions

Launched new products, including "I Love Okinawa!"

Ryugin VISA debit card

Credit card merchant management

ATM lottery21

■Expenses

(Billions of yen)

Changes in Property Cost Breakdown

(Billions of yen)

Page 23: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Aiming to become a comprehensive financial services group providing new value to customers

22

法人情報共有化

Ryukyu Leasing Co., Ltd.

April 2014, made consolidated subsidiary

July 2017, made wholly owned subsidiary (Tentative)

Ryugin Hosho Co., Ltd.

April 2014, made wholly owned subsidiary

Okinawa Credit Service Co., Ltd.

April 2015, made wholly owned subsidiary

Ryugin DC Co., Ltd.

Ryugin Research Institute., Ltd.

Ryugin Business Service Co., Ltd.

<Other initiatives> June 2016 Brought operations of Ryugin Office Service Co., Ltd. in-house

December 2016 Launched efforts to share corporate information with Ryukyu Leasing Co., Ltd.

January 2017 Initiated efforts to provide merchant services in collaboration with Okinawa Credit Service Co., Ltd.

■Group Strategy

Page 24: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

Nurture human resources capable of providing diverse value that touches the "hearts of customers”

38 45 57 67 6920 24 23 25 25

35

39

106139

4547

49

56

61

106121

168

254

294

0

50

100

150

200

250

300

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

FP1 ClassSmall/Medium Enterprise ConsultantsMedical Management ConsultantsPoint of contact financial services

23Holding “Medical Manager Seminars" and “Medical Manager Qualification Certificates" award ceremonies and parties

Medical ManagersProducing certified Medical Managers from top-class financial institutions nationwide

Hu

man

resou

rce develo

pm

ent an

d system

reform

Work Style Reform

Cu

ltivate pro

fession

al skills

■Human Resource Development and System Reform

Changes in Numbers of Professionally Qualified Personnel

(Staff)

Enhance productivity and diversity

Corporate finance personnel and

specified sector consultants who

work to increase the corporate

value of our partners by

leveraging sophisticated,

specialized skills

Managers who energize the organization

Relationship managers who

stimulate customers with keen

personal skills

Financial planners who work to

bring abundance and fulfillment

in the lives of customers

Divisional planners with the

analytical and creative skills

necessary to deal with changes in

the managerial environment

Evolution into high-level performers with

skills that underpin enhanced productivity

Page 25: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

24

Proactive involvement in local society

Bingata (traditional dyed cloth) design contest

Run Ryugin Kids School program and provide funds

to The Children's Cafeteria for food purchases

Supporting RYUKYU GOLDEN KINGS, FC

RYUKYU and RYUKYU CORAZON

Naha Marathon sponsorship/volunteers

Sports

promotion

Local

event

support

Passing on

traditional

culture

■Local Contribution Activities

Human

resource

development

support

activities

Page 26: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

0.4

▲ 0.2

0.7

0.2

1.2

2.5

1.5 0.7

0.5

1.3

0.9

0.6 0.4

0.5

0.3

0.2

0.1

▲ 0.5

▲ 1.0

▲ 0.5▲ 0.7 ▲ 0.7

2.8

2.5

1.5 1.3

0.8

▲ 1.5

▲ 0.5

0.5

1.5

2.5

3.5

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

General provision for credit losses Specific allowance for credit losses

Loan amortization Other amounts

Gain on amortized loans Total

10.2

2.4 2.9 3.1 3.7

13.8

20.4 19.4 18.9 19.0

8.2 8.0 8.4 8.7 7.5

32.2 31.0 30.7 30.8 30.3

2.57%

2.31%2.18%

2.09%1.97%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

0

5

10

15

20

25

30

35

40

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Claims in bankruptcy

Loans in danger of default

Substandard loans

Written-off loan ratio (Right scale)

Downward trend in cost of credit and disclosed claims under favorable economic conditions

25

■Cost of Credit/Disclosed Claims

Changes in Net Cost of Credit

(Billions of yen) (Billions of yen)

Changes in Disclosed Claims

Page 27: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

92.3

106.9 106.8 102.2 104.6

10.08%

10.84%

9.56% 9.52%9.22%

9.68%

10.50%

9.15%8.75%

8.42%

0%

2%

4%

6%

8%

10%

0

20

40

60

80

100

120

140

160

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

Regulatory capital

Consolidated Capital ratio (Right scale)

Non-Consolidated Capital ratio (Right scale)

Secured consolidated capital adequacy ratio in 9% range, even as risk assets increased

953.5 1,017.7

1,167.1 1,168.5

1,241.3

0

200

400

600

800

1,000

1,200

1,400

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17

* Calculated by Basel III national standard since March 31, 2014 26

■Capital Adequacy Ratio

Changes in Capital Ratio

(Billions of yen)

Changes in Risk Assets

(Billions of yen)

Page 28: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

FY2017 FY2016

(Forecast) Year-on-year change (Actual results)

Ordinary revenue 38.0 ▲3.1 41.1

Ordinary profit 6.0 ▲1.4 7.4

Net income 4.0 ▲1.0 5.0

(Billions of yen)

* Increase and decrease are presented on a financial statement basis 27

FY2017 FY2016

(Forecast) Year-on-year change (Actual results)

Ordinary revenue 57.0 ▲3.7 60.7

Ordinary profit 7.0 ▲2.7 9.7

Net income for the period attributable

to the owners of parent company4.8 ▲1.6 6.4

<Non-Consolidated>

<Consolidated>

Anticipate lower revenue and profit, on both non-consolidated and consolidated bases, principally due

to a decrease in parent results.

■Performance Forecast for FY2017

(Billions of yen)

Page 29: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

75%

10%

4%10%

1%2014

66%9%

7%

3%12%

3%

Deposit and loan income and expenditures

Marketable securities income and expenditures

Assets in custody fee income and expenditures

Credit card business fee income andexpendituresOther service profit incomez and expenditures

Other income and expenditures

28

7.8 8.5

9.1 9.3

6.3 5.6 5.8

6.5

2

4

6

8

10

End Mar.'13 End Mar.'14 End Mar.'15 End Mar.'16 End Mar.'17 End Mar.'18 End Mar.'19 End Mar.'20

Medium-term management plan

Strengthen service revenues and strive to achieve stable earnings

Changes in Key Revenue Ratios

70%

12%

4%12%

2%

2017

Diversification of earnings

■Revenue Outlook in Medium-Term Business Plan

(Billions of yen)Changes in Real Net Business Profit

Years ended March 31

2020

Page 30: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

29

Page 31: Bank of the Ryukyus Management Briefing for FY2016 · 2018. 3. 6. · 1,320 1,321 1,358 1,884 ... B250 / Restaurant space 3. Participating startups (13 teams; 30 members) 10 Ryugin

All enquiries regarding this presentation should be addressed to:

Bank of the Ryukyus,Limited

General Planning Department

Telephone: +81-98-860-3787

Fax: +81-98-862-3672

E-mail: [email protected]

The information in this presentation is on a non-consolidated basis unless otherwise specified.

Information is based on summaries of published data, and some totals presented in this presentation may not add

up due to rounding.

This material contains information about the future(forward-looking information)such as forecasts, outlooks,

objectives and plans concerning the Bank. The forward-looking information was created based on information

available as of May 26,2017 and does not represent a guarantee of future performance. Certain assumptions and

hypotheses are used for the description of forward-looking information, but these assumptions and hypotheses

could be inaccurate from an objective perspective and may not materialize in the future. Forward-looking

information involves risks and uncertainties, and we ask readers to refer to the brief notes on the settlement of

accounts and securities report of the Bank for more details. The Bank will not update the forward-looking

information contained in this material.

■About This Presentation