Fukuoka Financial : Financial Presentation in November, 2022

Investor Meeting

November 22, 2022

Fukuoka Financial Group

Contents

Part I: Management Strategy

 Business Environment Surrounding FFG	3, 4
 Overview of Interim Financial Results and Full-Year Earnings Projections	5
 Full-Year Earnings Projections (Top Line and Bottom Line)	6
 From the 6th Medium-Term Management Plan to the 7th Medium-Term	7
Management Plan
 Sales Division	8, 9
 DX Strategy	10, 11
 Minna Bank	12, 13
 Market Operation	14
 Profit Trends / Capital Policy	15, 16
 Business Integration with the Fukuoka Chuo Bank	17
 References Building of Next-generation Mission Critical Systems	18
Domestic Interest Rate Sensitivity	19

Part II: Financial Results & Earnings Projections (Reference)

 Summary of Interim Financial Results for FY2022	21
 Transition of Top Line: Interim Results	22
 Transition of Bottom Line: Interim Results	23
 Earnings Projections for FY2022	24
 Transition of Top Line: FY2022 Revised Projection	25
 Transition of Bottom Line: FY2022 Revised Projection	26
 Net Interest Income	27
 Loans / Deposits + CDs	28, 29
 Securities / Non-Interest Income	30, 31
 Overhead Expenses / Credit Cost & Disclosed NPL Ratio	32, 33

Part III: FY2022 Interim Financial Results_Figures (Reference)

 Average Balance of Loans (by Bank)	35
 Average Balance of Loans (by Industry)	36
 Interest Rates on Loans (by Segment)	37
 Average Balance of Deposits & CDs (by Bank)	38
 Interest Rates on Loans and Deposits & CDs (by Bank)	39
 Breakdown of Loans and Deposits & CDs by Type	40
 Securities (by Bank)	41
 Non-Interest Income / Asset Management Product Sales (by Bank)	42
 Overhead Expenses / Credit Cost (by Bank)	43
 Non-Performing Loans / Capital Adequacy Ratio (by Bank)	44

Part IV: Kyushu Economy (Reference)

 Market Share	46
 Economic Trends	47
 Industrial Production Trends	48
 Capital Investment / Housing Investment	49
 Land Price Trends	50
 Corporate Bankruptcies	51
 Loans	52
 Deposits	53

1

Part I: Management Strategy

Fukuoka Financial Group

Business Environment Surrounding FFG (1)

• Overall, the Kyushu economy is recovering from the COVID-19 pandemic and is continuing to move toward a moderate recovery.
• Although there are risk factors ahead, such as protraction of the COVID-19 pandemic, a weaker yen, and rising prices, no significant increase in credit cost has been seen in the current period.

Bank of Japan Regional Economic Report, October (Kyushu-Okinawa)

• Corporate capital investment increased overall. In the manufacturing industry, production activity picked up as the effects of supply constraints eased.
• In the services industry, economic activity increased along with the movement of people as restrictions on activity eased. Private consumption also remained strong.

Component	Comparison to	Economic assessment
previous (Jul)
Public investment		Remains at a high level
Exports		Pause in signs of pick-up
Capital		Overall increase
investment
Private		Moderate recovery
consumption
Housing		Picking up
investment

Credit cost (3 banks total)

(¥ bil.)

8bp

Credit cost ratio

Credit cost / Loans

7.4

* Excluding loans to

Government, etc.

1bp

0bp

0bp

Credit cost

1.2

0.3

0.5

2H/FY20

1H/FY21

2H/F21

1H/FY22

Future outlook

Industrial	Pause in signs of pick-up
production
Employment and	Weak signs in both labor supply-demand and employee
income	income, but moderate improvement overall
Consumer prices	Higher than previous year
Corporate	Number of bankruptcies higher than previous year. Value
bankruptcies	of bankruptcies lower than previous year.
Financial	Both deposits and loans higher than previous year
conditions

Positive factors

• Signs of recovery for industries that were struggling during the COVID-19 pandemic
• Revitalized human flow due to nationwide travel assistance, etc.
• Expectations for inbound tourism

Future risk factors (concerns)

• 8th wave of COVID-19
• Rising prices (soaring energy prices, grain prices)
• Weakening yen against the dollar, rising interest rates
• Ukraine situation

3

Business Environment Surrounding FFG (2)

• In the area in Kumamoto Prefecture in which TSMC is expanding operations, demand for funds has increased across a wide range of industries, including real estate, semiconductors, logistics, and commercial facilities.
• In Nagasaki Prefecture, occupancy rates for accommodation in areas along the Nishi Kyushu Shinkansen line have increased in conjunction with the opening of the line. The number of international flights at Fukuoka Airport has also improved significantly.

Impact of expansion of TSMC (Kumamoto Pref.)

Koshi		Semicon			Ozu	Real
	TSMC
		ductors
					estate
Real estate

Kikuyo

Impact of the new Nishi Kyushu Shinkansen services (Nagasaki Pref.)

[Occupancy index for accommodation in nearby municipalities	Start of nationwide
travel assistance

	Oct. 2019	Sep. 2022	Oct. 2022	11th-31st
Nationwide	54.5	51.6	65.1	70.3
Takeo City	78.7	89.7	94.5	98.4
Ureshino City	56.7	69.5	79.3	90.3
Nagasaki City	68.8	69.9	76.3	83.1
	Source: Kyushu Economic Research Center (KERC DATASALAD)

[Consultations with Kumamoto Bank] Approx. 120 projects as of Sep. 30, 2022	Number of international flights at Fukuoka Airport
			Source: Fukuoka Airport (Fukuoka Airport International Passenger Flight Schedule)
12%		Real estate	Pre-COVID-19
		1,784 flights/month
9%		Semiconductors	969 flights
53%	Construction
8%		Logistics
18%		Other (medical/commercial
		facilities, etc.)	4