Financial Results Briefing Session for the Year Ended ... · 1.26 1.17 1.04 1.09 1.15 1.18 0.92...

May 25, 2017

Financial Results Briefing Session for the Year Ended March 2017

By Kazuo Saito, President

Value for Tomorrow

The Gunma Bank, Ltd.


I. Summary of Financial Results1. Earnings Conditions …………………………………………P.2. Status of Net Interest Income …………………………………………P.3. Status of Loans(1) Breakdown of Loans …………………………………………P.(2) Status of Retail Loans by Region …………………………………………P.(3) Status of New Branch Offices …………………………………………P.(4) Status of Housing-related Loans …………………………………………P.(5) Status of Yield on Loans (Domestic Transactions) …………………………………P.4. Status of Securities …………………………………………P.5. Status of Fees and Commissions Income …………………………………………P.6. Efforts to Improve Business Efficiency …………………………………………P.7. Status of Credit Costs, etc. …………………………………………P.

II. Efforts to Provide Region-Based Relationship Banking1. Demonstration of Function for Customer Consulting Service ……………………… P.2. Efforts to Regional Regeneration …………………………………………P.

III. Business Forecast for the Year Ending March 2018 P.

IV. Status of Capital, etc. P.

V. Status of Per Share Indicators and Shareholder Return P.

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Contents

Value for Tomorrow

No.Compared to

announced figuresfor Nov. 2016

Year-on-year

Core business gross profit 1 91.6 88.6 0.7 -3.0 Net interest income 2 81.4 79.0 1.4 -2.4

International transactions 3 6.2 6.1 1.0 -0.1 Non-interest business profit 4 10.1 9.5 -0.6 -0.5

Net fees and commissions 5 9.3 8.7 -0.5 -0.5 Other operating profit (*1) 6 0.8 0.8 -0.1 -0.0

Expenses (-) 7 56.7 56.6 -0.6 -0.0 8 21.7 21.3 -0.7 -0.3

Core business net profit 9 34.9 31.9 1.4 -2.9 10 2.7 8.9 2.6 6.1 11 0.8 -3.2 -4.0 12 1.8 12.1 10.2

Credit cost (-) 13 -0.5 4.7 2.5 5.3 Others 14 1.5 -1.5 0.0 -3.1

Retirement benefits (-) 15 0.4 3.7 3.3 Ordinary profit 16 39.7 34.5 1.5 -5.2 Net income 17 26.6 25.2 0.2 -1.3

18 28.6 26.3 0.3 -2.3 Consolidated ROE (%) 19 5.6 5.1 -0.1 -0.5

3. All amounts are rounded down to the nearest 100 million yen.

Mar. 2016 Mar. 2017

(Note) 1. Gains and losses on government bonds, etc. are assigned under gain and loss on securities, etc.2. Net income attributable to owners of parent

Non-personnel expenses

Gain and loss on securities, etc.

Gain and loss on government bonds, etc.

Gain and loss on stocks, etc.

Consolidated net income (*2)

1. Earnings Conditions (Unit: billion yen)

-1- Value for Tomorrow

The main factor is the continuous low interest rate caused by the negative

interest rate policy.

Improving the loan structure・Retail loans・Unsecured consumer loans・Cross-border

Improving securities portfolios

I. Summary of Financial Results

Offset

Ensuring above 5% in consolidated ROE

<Measures>

Increase due to conservative provision for possible loan losses


Decrease in core business net profit+

Increase in retirement benefits

1.261.17 1.091.04

1.15 1.18

0.921.04 1.01

Profit margins of interest rateson domestic loans

Profit margins of interest rateson domestic securities

Profit margins of interest rateson international transactions

57.2 55.7 53.9

17.8 18.5 18.1

5.8 6.2 6.1

Loan interest income bydomestic transactions

Securities income bydomestic transactions

Internationaltransactions

Balance factor

Profit marginfactor

Profit marginfactor

Total

Balance factorTotal

+1.8

-3.7

-1.9-1.0

+0.6-0.4

Domestic loans Domestic securities

4,559.0 4,771.8 4,928.1

1,716.6 1,616.7 1,530.0

634.0 601.8 603.7

Loan by domestic

transactions

Securities by domestic

transactions

International

transactions

(+3.3)

(-5.4)

(+0.3)

(+4.7)

(-5.8)

(-5.1)

(+4.4)

(-0.8)

(+24.9)

Mar. 2015 Mar. 2016 Mar. 2017

(Unit: billion yen, %)

2. Status of Net Interest Income

Mar. 2015 Mar. 2016 Mar. 2017 Breakdown of changes in net

interest income

-0.1

-0.4

-1.9

-2-

Changes in net interest income

Changes in average balance Changes in profit margins

Mar. 2015 Mar. 2016 Mar. 2017

Number in brackets denotes percent change

+156.3

-86.6

+1.9


Value for Tomorrow

Amount ofchange

Rate ofchange

Amount ofchange

Rate ofchange

Loans 5,047.3 208.5 4.3 5,224.2 176.9 3.5

Retail 3,881.3 277.1 7.7 4,121.4 240.1 6.2

1,841.9 150.2 8.9 1,962.1 120.2 6.5

Individuals 2,039.4 126.9 6.6 2,159.3 119.9 5.9

Housing-related loans 1,972.2 121.8 6.6 2,087.6 115.4 5.9

1,285.1 34.5 2.8 1,300.5 15.4 1.2

491.9 50.9 11.6 546.9 55.0 11.2

195.1 36.3 22.9 240.1 44.9 23.0

38.6 6.9 21.9 44.8 6.1 16.0

Others 1,006.2 -65.8 -6.1 929.7 -76.4 -7.6

788.2 -65.3 -7.7 693.6 -94.6 -12.0

Cross-border 63.2 17.9 39.7 80.3 17.1 27.2

Overseas branches 53.2 -3.5 -6.3 48.2 -5.0 -9.5

Public entities 106.5 0.8 0.8 124.7 18.2 17.1SMEs do not include regional public corporations or Tokyo/Osaka Branches.Unsecured consumer loans do not include unsecured housing loans.*2

Housing loans

Apartment loans

Others

Unsecured consumerloans*2

*1

SMEs*1

Domestic large and second-tier enterprises

Compared to end of Mar. 2016End of

Mar.2016

End ofMar.2017

Compared to end of Mar. 2015


Value for Tomorrow-3-

We continued to maintain an upward trend

(1) Breakdown of Loans

Cross-border

SMEs

Individuals(Apartments)

Progress in structural

improvement

Decrease for three consecutive terms

3. Status of Loans

The figure contains a loan of 20.9 billion yen for the Ministry of Finance (MOF)(Short-term investment of the funds of redeemed government bonds)

Percentage of retail loans

78.9%<Year-on-year

increase of 5.4%>

(Unsecured consumer loans)


End of Mar.2015

End of Mar.2016

End of Mar.2017

（7.4）

（7.5）

（5.5）

（7.4）

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

（7.4）

（7.5）

（5.5）

（7.4）

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2015

End of Mar.2016

End of Mar.2017

(Unit: billion yen, %)* Number in brackets

denotes year-on-year rate of change.(All branches)

SMEs

(Gunma)

(Saitama)

Year-on-year as of Mar. 2017

Breakdown of increase

Gunma19.6

Saitama35.7

Tochigi17.4

Tokyo and Yokohama

45.5

Others1.8

Gunma13.7

Saitama27.8

Tochigi12.8

Tokyo, Yokohama, and Osaka

58.5

Others6.9

Year-on-year as of Mar. 2017

Breakdown of increase

(All branches)(Gunma)

(Saitama)(Tochigi) (Tokyo, Yokohama, and Osaka)

120.2

119.9

(2) Status of Retail Loans by Region

1,691.61,841.9

1,962.1

966.7 1,006.5 1,026.2

387.6 435.5471.3

165.1 188.7 206.1158.1 192.9

238.5

1,912.4 2,039.4 2,159.3

1,023.9 1,046.0 1,059.8

470.8 502.6 530.4

224.7 237.5 250.4

158.7213.2

271.7

(6.5)(8.9)

(6.5)(2.4) (4.1) (2.0)

(12.3) (12.4) (8.2)

(4.5)(14.3) (9.2)

(21.1) (22.0)(23.6)

(7.6)(6.6) (5.9)

(3.0) (2.2) (1.3)

(8.6) (6.7) (5.5)

(8.2) (5.7) (5.4)

(38.6)(34.3)

(27.4)

(Tochigi) (Tokyo and Yokohama)

Individuals

-4-


Value for Tomorrow

1.0 1.0 1.1 1.4 1.7

2.0 2.4

2.7 3.2

4.2

0.6 0.4 0.3 0.4 0.6 1.0

1.3 1.5 1.5 2.1

Mar.2008

Mar.2009

Mar.2010

Mar.2011

Mar.2012

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Business gross profit

Profit after the deduction ofcredit costs

82.0100.5 121.4

138.1 173.1

214.8 267.1

333.5

419.4

516.9

Mar.2008

Mar. 2009

Mar.2010

Mar.2011

Mar.2012

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Kasai (May 2016)

Kawasaki (Oct. 2015)

Ogikubo (Dec. 2014)

Sagamihara (Feb. 2013)

Matsudo (Oct. 2011)

Tachikawa (May 2011)

Ueda (Oct. 2007)

Koshigaya (Aug. 2007)

Tokorozawa (Oct. 2006)

Kawagoe (Nov. 2004)

Urawa (Feb. 2001)

(3) Status of New Branch Offices Continuing the strategy of expanding our

market into promising regions(Unit: billion yen)


* Adachi

* Adachi BranchTo be opened in July 2017

Making major contributions to an increase in retail loans

Pace of opening new branch offices:

1/year

Earnings conditions at new branch offices over the last 10 years

Loans at new branch offices (ending balance) over the last 10 years

(23.2%)

* Number in brackets denotes year-on-year rate of change.


Fukaya Kamishiba

Musashiurawa

Kamisato

Koshigaya

Kagohara

Kumagaya

HonjoMinami

Fukaya

Honjo

Gyoda

Kasukabe

Hanyu

Yono

Urawa

Toda

Kawaguchi

Konosu

Menuma

Tokorozawa

Kawagoe

Fukiage

TokyoYotsuya

UenoIkebukuro

Ageo

Omiya

Hachioji

Sagamihara

OgikuboKasai

Kawasaki

Tachikawa

Matsudo

Yokohama

Ueda

198.7 208.1 220.8 233.1 247.0

79.3 88.9 100.8 113.5 126.567.074.1

85.294.3

103.1

16.024.2

34.050.8

70.3

361.2395.4

440.9491.9

546.9

6,4777,219

8,047

9,00710,005

End ofMar.2013

End ofMar.2014

End ofMar.2015

End ofMar.2016

End ofMar.2017

Tokyo andYokohamaTochigi

Saitama

Gunma

FY2013 FY2014 FY2015The number of defaults 0.23 0.22 0.19

Amount 0.18 0.21 0.16

1.33 1.33 1.34 Remaining at a satisfactory level

Vacancy rate (%) 7.5 6.4 5.9 Remaining at a low level

Default percentage(%) Stable at a low level

DSCR (times) rental income/principal andinterest amount to be repaid

(4) Status of Housing-related Loans

-6-

(Unit: billion yen) The number and balance of

apartment loans

Status of apartment loan default percentage, the Debt Service Coverage Ratio (DSCR) and vacancy rate

The number of loans (cases)

* Default means borrowers requiring special attention and borrowers in lower classifications.

Improvement trend


Value for Tomorrow

Year-on-year Change Rate of

changeYear-on-

year

1,972.2 2,087.6 100.0% 115.4 5.9% 260.9 3.3

Housing loans 1,285.1 1,300.5 62.3% -2.9% 15.4 1.2% 111.3 -13.8 94,179

720.4 712.8 34.1% -2.4% -7.6 -1.1% 47.3 -7.9 58,472

320.0 323.8 15.5% -0.7% 3.8 1.2% 28.2 -4.5 20,964

119.9 118.1 5.7% -0.4% -1.8 -1.5% 7.3 -1.7 8,376

124.6 145.6 7.0% 0.7% 21.0 16.8% 28.5 0.3 6,367

Floating 839.0 922.8 71.0% 5.7% 83.7 10.0% 103.9 -15.6 61,529

Fixed 446.0 377.6 29.0% -5.7% -68.3 -15.3% 7.4 1.8 32,650

Apartment loans 491.9 546.9 26.2% 1.3% 55.0 11.2% 84.7 6.7 10,005

233.1 247.0 11.8% 0.0% 13.8 5.9% 29.4 2.1 4,781

113.5 126.5 6.1% 0.3% 12.9 11.4% 19.0 0.6 2,332

94.3 103.1 4.9% 0.2% 8.7 9.3% 14.3 0.1 1,721

50.8 70.3 3.4% 0.8% 19.4 38.2% 22.0 3.9 1,771

195.1 240.1 11.5% 1.6% 44.9 23.0% 64.9 10.4

Gunma

Saitama

Thenumber of

loans(cases)

Mar.2017

Mar.2016

Year-on-year Amount of new loansgrantedComposition rate

Housing-related loans

Tokyo and Yokohama

Tochigi

Tokyo and Yokohama

Other housing loans

Gunma

Saitama

Tochigi

Floating Fixed rate2:98

1.62 1.29 1.36

0.99

1.53 1.18 1.23

0.92

GunmaPrefecture

SaitamaPrefecture

TochigiPrefecture

Tokyo,Yokohama, and

Osaka

Mar. 2017Mar. 2016

Year-on-year

1.20 1.11 -0.09Retail 1.40 1.27 -0.13

1.33 1.19 -0.14

Individuals 1.45 1.34 -0.11

Housing-related loans 1.33 1.21 -0.12

Housing loans 1.33 1.23 -0.10

Apartment loans 1.33 1.16 -0.17

8.33 8.16 -0.17

0.44 0.35 -0.09

Public loans 1.03 0.90 -0.13

SMEs*2

Mar.2017

Mar.2016

Loan by domestic transactions*1

Large and second-tier enterprises

Unsecured consumer loans

1.35 1.29 1.18 1.46

1.21 1.18 1.04 1.31

GunmaPrefecture

SaitamaPrefecture

TochigiPrefecture

Tokyo andYokohama

Mar. 2017Mar. 2016

1.84 1.68

1.56 1.45

1.34

1.73 1.60

1.46 1.33

1.19

1.51 1.38

1.29 1.20

1.11

Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017

IndividualsSMEsTotal

(Unit: %)

(5) Status of Yield on Loans (Domestic Transactions)

Breakdown of yield on loans

*2 SMEs do not include those of the accounts of regional public corporations and Tokyo/Osaka Branches.

*1 The rates of yield on loans other than those marked with *1 do not include non-performing debt.


[Individuals][Corporate]

Apartment loans25.5

Floating Fixed rate69:31

* Average balance-based component ratio

( )

Housing loans59.7

Linked with market rate fluctuations

37.3Short-term(prime rate)

8.7

Long-term floating (long-term prime

rate)34.4

Long-term fixed19.6

General loans (housing, etc.)

12.7

Consumer loans 1.1Card loan 1.0

Effect ofstructural

improvement

Total -0.09

Retail -0.13


Changes in yield on loans (domestic transactions)

Yield of loans to SMEs (Mar. 2016–Mar. 2017)

Yield of loans to individuals(Mar. 2016–Mar. 2017)

Balance composition by interest type (end of Mar. 2017)

( )

Mar. 2016 Mar. 2017 Mar. 2016 Mar. 2017

3.25 3.57 3.03 3.70

0.82 0.78 1.51 1.78

-46.0 -44.6 -12.0 -15.9

(Domestic bonds) (Foreign bonds)

Modified duration (year)

Bond yield (%)

100 BPV (billion yen)

38.8%43.9%

36.1% 36.6%32.8%

End of Mar.2014

End of Mar.2015

End of Mar.2016

End of Mar.2017

End of Mar.2018

75.5 133.0

427.1453.2

93.9104.3

266.4272.0

555.0563.6

550.2 409.3

1,968.4 1,935.7

Mar. 2016 Mar. 2017

+40.3Sale -17.9

-163.3

+68.0Sale -

-59.4

+57.9 Sale -1.8

-50.4

+24.8 Sale -14.4

+286.2 Sale -211.6

-46.4

( (-2.0) )

+85.8 -28.2

Purchase

Purchase

Sale

Redemption,etc.

Subscription

Redemption,etc.

Purchase

Purchase

Redemption,etc.

Purchase

Foreign exchangef actor

+5.5

Stocks+10.4

Investment trust, etc.

+57.5

Foreign securities+26.0

Redemption,etc.

Government bonds

-140.9

Municipal bonds+8.6

Corporate bonds

Government bonds

Municipal bonds

Corporate bonds

Stocks

Foreign securities

Investment trust, etc.

-0.1

5.4 -4.1 5.08.5 2.1 1.0 3.1

2.1 -3.2 12.111.0

End ofMar. 2016

End ofMar. 2017

: Yen conversion foreign bonds

Grand total

4.0

Total

-8.1161.5

153.4

-11.1

+3.0

BondsGain on

cancellation Stocks

37.8

13.9-8.5-6.314.8

26.7

123.7 126.7

+17.9112.7

94.8

4. Status of Securities Breakdown of ending balance of

securities (On the basis of not including gain and loss from valuation)

-8-

(Unit: billion yen)

(Unit: billion yen)

Direction

Duration, yield, 100 BPV

◎ Changes in profit/loss from valuation of other securities

▲ Book value basis■ Market price basis

(Forecast)

(Unit: billion yen)

20.3%

17.8%16.7% 15.1% 13.6%

Operations for Mar. 2017(Gain and loss on

securities, etc.)

Bonds

Stocks

Foreign

Others

securities

155.0165.9152.6175.0140.1

70.4 64.070.7 68.373.5


Percentage of strategically held stocks for Tier 1

Value for Tomorrow

0.10 0.070.15 0.19 0.20

0.050.06

0.06 0.020.030.16

0.12

0.100.17

0.33

0.06

0.04

0.11

0.07

0.05

0.04

0.08

0.070.11

0.14

0.01

0.01

0.030.04

0.03

0.05

0.03

0.40.4

0.5

0.6

0.8

2nd halfended

Mar. 2015

1st halfended

Sep. 2015

2nd halfended

Mar. 2016

1st halfended

Sep. 2016

2nd halfended

Mar. 2017

Corporate business insuranceDefined contr ibution pensionsBusiness matchingM&ASyndicate loansCorporate f inancial instruments, etc.Private placement bonds

55.464.1

33.919.5

32.9

42.6 26.5

22.6

12.6

14.5

98.190.6

56.5

32.1

50.0

2nd halfended

Mar. 2015

1st halfended

Sep. 2015

2nd halfended

Mar. 2016

1st halfended

Sep. 2016

2nd halfended

Mar. 2017

Pension insurance, etc.Investment trusts

2.4 2.4 2.4 2.3 2.4

1.7 1.7 1.3 1.0 1.3

0.7 0.5 0.8 0.7 0.5

3.8 3.8 3.9 4.2 4.2

8.8 8.5 8.7 8.4 8.4

2nd halfended

Mar. 2015

1st halfended

Sep. 2015

2nd halfended

Mar. 2016

1st halfended

Sep. 2016

2nd halfended

Mar. 2017

Other commissionsCommissions for pension insurance, etc.Investment trust commissionsExchange commissions

0.5 1.74.6

6.28.5

13.5

905

1,730

2,5263,023

3,776

4,940

Oct.2016

Nov. Dec. Jan.2017

Feb. Mar.

Tota l sales amount

Tota l number ofaccounts opened

Year-on-year

Net fees and commissions 9.3 8.7 -0.5

(10.2) (9.9) (-0.3)

17.2 16.9 -0.2

4.4 3.6 -0.8

1.0 1.4 0.4

7.9 8.1 0.2

4.1 4.1 0.0Insurance prem iums for loans wi th l i fe insurance

Mar.2017

Mar.2016

(% of core business gross profit)

Fees and commissions income

Fees and commission expenses

Investment trusts and insurance commissions

Corporate fees and commissions

5. Status of Fees and Commissions Income Changes in fees and commissions income

Changes in corporate service fees income

(Unit: billion yen)

Changes in fees and commissions income

Changes in sales amounts for marketing capability for personal deposit financial assets


(Unit: billion yen)(Unit: billion yen) (Unit: billion yen)

47.4

Financial instruments intermediary service

2.6

(Unit: the number of accounts/billion yen)

Increasing trend

Turned to an increase due to the introduction of the bank brokerage

collaboration measure

◎ Changes in the total sales amount and the number of accounts opened at Gungin Securities

The number of accounts opened and the sales amount have been steadily increasing since the start of business in October 2016.

(Gungin Securities)


Time

Cutover ofmajor systems

Mar. 2017 Sep. 2017 Sep. 2018Mar. 2018

Start of the operation of a new loan support

system

Start of the operation of a new CRM system

Start of the operation of a new front office compliance system

Start of the operation of a new system for sales branch offices

Trial operation will start in January 2018(To be implemented at all branches in one year)Fund transfer management system

To be implemented at all branches in six months starting from June 2017

Establishment of call centers To be established for all branches in six

months starting from April 2017

6. Efforts to Improve Business Efficiency By promoting BPR:

-10-

Schedule of the implementation of various measuresMay 2017

Implemented

Sales branch offices are converted from the location of clerical work to the location of sales

Effect of reduction in the workforce for 200 employees (for clerical work at sales branch offices)

Depreciation following the introduction of various systems(the cost increase is included in the mid-term business plan)

An increase of 0.6 billion yen for the second year and an increase of 1.2 billion yen for the third year of the mid-term business plan

To be utilized to enhance the sales force (a principal measure for the mid-term business plan): personnel and training systems have been revised

Deposit, money transfer and loan business

Business of assets in custody- Elimination of paper documents for clerical work for investment trusts, the automatic preparation of

order slips, etc.

- Centralization of correcting errors of money transfers and clerical work for inheritance and attachment to the head office and the preparation of pre-printed forms

- Systematization of preparing applications, streamlining of clerical work for making contracts and the execution thereof, etc.


Value for Tomorrow

Compared toMar. 2016

Normal borrowers Entire claimamount 1 yr 0.026 0.029 0.027 0.039 0.012

Borrowers without realistic,comprehensive business

reconstruction plansClassification 1

Entire claimamount 3 yrs 1.624 1.394 0.821 1.111 0.290

Borrowers with realistic,

comprehensive business

reconstruction plans

Entire non-coverage amount 3 yrs 42.715 42.140 42.016 39.488

Borrowers requiring specialattention

9.6803 yrsClassification 2

Classification III borrowers threatened withbankruptcy

0.228

Mar.2014

Mar.2015

Mar.2016

Entire claimamount 11.115

Mar.2017

7.878 8.106

Provisiontarget

Period

Borrowersrequiringattention otherthan specialattention

Credit costs 6.5 1.9 -0.5 4.7

-1.8 -1.9 -3.2 0.8

8.4 3.7 2.7 3.9

0.2 1.6 -1.4 -0.4

8.7 5.8 5.3 6.2

-0.5 -3.7 -1.3 -1.9Collection, upgrade, etc.

Mar. 2016Mar. 2014

DCF

Downgrade of borrowerrank

Mar. 2017

Other factors

Due to changes to the provision ratio

Mar. 2015

7. Status of Credit Costs, etc. Breakdown of credit costs

Provision ratios for possible loan losses


Remaining at a low level in real terms

Longer observation period for estimating the loss ratio

Loss ratio ↑ ⇒ Provision ratio ↑

Due to changes to the provision ratio: 0.8 billion yen

Others: -1.8 billion yen

Conservative provision for possible loan losses

Effect of review: +2.6 billion yen

If it had not been reviewedCredit costs: 2.1 billion yen

Value for Tomorrow

-2.528A credit cost of 2.0 billion

yen for Mar. 2018

-11-


Start-up Decline Phase/Business RejuvenationMaturityGrowth

II. Efforts to Provide Region-Based Relationship Banking

1. Demonstration of Function for Customer Consulting Service

SME Revitalization Support Service, “Gunma Bank Management Club,” Help Desk for Subsidies

Local community collaboration program

Funds for regional economic revitalization

Support for international operations

Business succession, M&A (merger and acquisition)

Business matching service

Syndicate loans, Support for corporate bonds issued by private placement bonds

Start-up support

Industry-academia-government collaborationGunma SME Rejuvenation

Support Fund,DDS (Debt for Debt Swap)

Collaboration with business innovation support institutions

Provision of optimal solutions based on evaluation of customers business potentials



117

7629

76Manufacturing

Services

Growing fields

Regionalrevitalization

Efforts to revitalize regional economies

Gunma Bank Business Support

AwardFunds

Help Desk for Subsidies

Assignment of dedicated persons for business succession and M&A

Business development utilizing buried regional resources

Improvement of productivity of service industry, etc.

Support for environment development, business succession, etc. toward a fresh start

Main support measuresSupport items according to the stage in the business’s life

SME Revitalization Support Service

Provision of optimal solutions based on

evaluation of customers business

potentials

Gunma Bank New Senior Leader

Exchange Meeting

Provision of optimal solutions based on evaluation of customers business potentials Evaluation of customers' business potentials: nine companies in the automobile related

industry, 297 corporate customers of sales branch offices Focusing on providing solutions for challenges to business management recognized

through evaluation of customers business potentials

Efforts to revitalize regional economiesContribution to communities through Gunma Bank

Management Club (since October 2012)

(Number of members: 1,092 (Mar. 2013) ⇒ 8,556 (Mar. 2017))

Opening Gunma Bank Management

School

Distribution and provision of business information

Holding seminars/

study sessions

Gunma Bank

Manage-ment Club

“Silk Heritage of Gunma” (Total amount of contribution: 2.9 million yen)“Oze Kiko” (Total amount of contribution: 11.7 million yen)Donation through the “Gunma Bank Private Placement Bond for the Revitalization of Regional Economies” (Total amount of contribution since January 2017: 4.5 million yen)

Donation efforts by contributing to community activities

Conclusion of comprehensive partnership agreements with municipalities: Gunma Prefecture, six other cities and one town (since June 2016)

2. Efforts to Regional Regeneration

Value for Tomorrow

Changes in the number of members of the Gunma Bank Management Club

Status (Number) of entries for the Gunma Bank Business Support Award

FY2013 FY2014 FY2015 FY2016

382

217258

298

Oct. Mar. Mar. Mar. Mar. Mar. 2012 2013 2014 2015 2016 2017

8,5566,925

5,361

3,5501,092409

-13-


<<Mar. 2017>> <<Mar. 2018>>-1.7

88.6(Year-on-year

decrease of 3.0)

87.7(Year-on-year

decrease of 0.8）

V: +2.2R: -3.9

V: -1.5R: +2.0

V: -0.2R: -1.9

+0.5-2.1

+2.4

Year-on-year

Rate ofchange

Year-on-year

Loans 5,285.3 213.1 4.2 1.06 -0.06

5,133.6 205.4 4.2 1.03 -0.08

Securities 1,819.5 -159.0 -8.0 1.53 0.18

1,398.1 -131.9 -8.6 1.34 0.14

Deposits 6,362.5 118.9 1.9 0.02 -

6,295.9 139.5 2.3 0.01 -

1.02 -0.08

Domestictransactions

Deposit and loan direct profit margin fordomestic transactions

Averagebalance Yields



No. Mar.2017

Mar.2018

Year-on-year

1 88.6 87.7 -0.8

2 79.0 75.6 -3.3Domestic transactions 3 72.9 71.7 -1.2International transactions 4 6.1 3.9 -2.1

5 9.5 12.0 2.4Expenses (-) 6 56.6 56.8 0.1Core business net profit 7 31.9 30.9 -1.0

8 8.9 11.6 2.6Gain and loss on stocks, etc. 9 12.1 11.6 -0.5

Credit costs (-) 10 4.7 2.0 -2.7Others 11 -1.5 -3.2 -1.7

12 3.7 3.3 -0.4Ordinary profit 13 34.5 37.2 2.6Net income 14 25.2 25.5 0.2

15 26.3 27.0 0.7

16 5.1 5.2 0.1

2. All amounts are rounded down to the nearest 100 million yen.

(Note)

Net interest income

Non-interest business profit

Retirement benefits

Consolidated ROE (% )

1. Net income attributable to owners of parent

Core business gross profit

Gain and loss on securities, etc.

Consolidated net income (Note)

Breakdown of changes in core business gross profits

Profit and Loss Average balance and yields (Mar. 2018)

(-3.3)


III. Business Forecast for the Year Ending March 2018


Investment trusts, insurance: +0.7Corporate service: +0.6Group credit life insurance: +1.2

Loans Securities International transactions

Non-interest businesses

Effect of the review in the year ended March 2017: +2.6

Domestic transactions

Corporate: -0.04Individuals: -0.08

Effect of the loan to the MOF: -0.02


11.5 12.58

13.3 13.5 13.9 14.5

16.3 16.6

20.6

A Gunma C D E F G H IOperational risk

13.1 13.1

Strategically held stocks

11.9 0.0

Market risk

105.0 73.1

Credit risk 111.5

100.1

Buffer98.1

339.6

Distribution source Distribution capital Mar. risk amount

Common equity and other Tier 1 capital adjusted

for valuation gain and loss

349.7 378.3 417.3 436.7 473.5

63.1 55.257.3 30.2

25.1

13.65% 13.46% 13.37% 12.62% 12.58%


Tier 1 capital Tier 2 capital Consolidated capital ratio

• The sufficiency of the buffer was verified by a stress test

• The capital level has been prepared assuming a risk

• Acceptable level in comparison to adequacy requirements and also based on a stress test

• However, its level is slightly inferior in comparison with banks that comply with international standards

3,022.8 3,220.93,548.5 3,698.3 3,962.8

9.3% 6.6%10.2% 4.2%

7.1%


Framework to assess capital adequacy based on risk status and adequacy requirement ratio

<<Assessment>>

<Status of risk (for the year ended Mar. 2017, non-consolidated)>

<<Assessment>>

<<Background on the short-term fall ratio>>

Steady increase in loans (for SMEs, etc.)

(Unit: billion yen)

(Unit: billion yen)

(Unit: billion yen)

<Status of adequacy requirement ratio (end of Mar. 2017, consolidated)>

(Unit: %)


Capital adequacy assessment Changes in consolidated capital ratio

Bolstering capital (Issuing subordinated bonds)

(%: year-on-year percentage increase)

412.8433.6 474.6 467.0

498.7

Changes in consolidated risks/assets

IV. Status of Capital, etc. The Gunma Bank, Ltd.

Means toincrease capital Term Amount Coupon Issue date

Effect ofincreasing

capital-to-assetratio

Basel III, Tier 2 capitalinstruments 10-year bond 0.40%

(For institutionalinv estors) (NC 5 years ) (L + 0.44% in the f if th y ear and

later)Basel III, Tier 2 capital

instruments 10-year bond 0.50%

(For indiv iduals) (NC 5 years ) (5 y ears SWAP + 0.43% in the f if thy ear and later)

10 billion yen 0.26%

10 billion yen 0.26%

Oct. 28,2016

Apr. 28,2017

776

1,188

Mar.2007

Mar.2008

Mar.2009

Mar.2010

Mar.2011

Mar.2012

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Mar.2018

■Amount of net assets per share (consolidated, year-end)

Forecast

1.5 times over 10 years

(Unit: yen)

38.4

59.5

Mar.2007

Mar.2008

Mar.2009

Mar.2010

Mar.2011

Mar.2012

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Mar.2018

■Net income per share (consolidated)

Forecast

(Unit: yen)

1.5 times over 10 years

18.9 18.2

21.6

26.625.2 25.5

20.6 19.8

25.9

28.626.3 27.0

5.04.4

5.35.6

5.1 5.2

Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018

Non-consolidatedConsolidatedConsolidated ROE (%)

(Unit: billion yen)

■Changes in profit levels

Fourth

Third

Second

Record-high profit

Forecast

4.9 4.4 5.0 5.4 5.3 5.2

2.0 2.2

9.55.5 4.6 5.0

10.5 9.511.0

12.0 12.0 12.0


Value for Tomorrow


Commemorative dividend of

1 yenAcquisition associated

with the issuance of convertible bonds: 6.5 40.0%

37.2% 37.0%

67.5%

41.0% 39.7%

Dividend per share (yen)Ratio of return to share holdersShare buy-backsDividends

-16-* Shareholder return policy: Targeting around 40% of non-consolidated net income ≈ (Total dividends + Amount of share buy-back) / Net income

Forecast

■ Status of shareholder return

V. Status of Per Share Indicators and Shareholder Return The Gunma Bank, Ltd.

If you have further inquiries, please contact:

This presentation contains forward-looking statementsconcerning Gunma Bank’s performance.However, such statements do not guarantee the Bank’sfuture performance and contain risks and uncertainties.Please note that the Bank’s future performance may bedifferent from the target figures due to fluctuations in theBank’s management environment and other factors.

Business Management Office (in charge of IR), Corporate Planning Department,The Gunma Bank, Ltd.

(Note) The numbers shown in this document are generally rounded down to the nearest number, or rounded off to the nearest number for the rates of changes.

Inquiries on this matter

HP: http://www.gunmabank.co.jp


May 25, 2017

Data

Value for Tomorrow

Financial Results Briefing Session for the Year Ended March 2017



Page Page

1 Economic Trends in Gunma Prefecture 1 19

2 Economic Trends in Gunma Prefecture 2 20 Changes in the Breakdown of Credit Cost

3 Economic Trends in Gunma Prefecture 3 21

4 Economic Trends in Gunma Prefecture 4 22 Breakdown of Other Securities

5 Changes in Av erage of Earning Assets and Funds Balance 23 Changes in Expenses

6 Changes in Av erage of Earning Assets and Funds Balance (Plan) 24 Capital Distribution

7 Changes in the Rate of Change for Loans (by Region and Type) 25 Branch Office Locations

8 Changes in the Rate of Change for Deposits (by Region and Type) 26 Status of Support for Ov erseas Expansion (Transactions)

9 27 Consolidated Capital Ratio

10 28 Changes in Consolidated Accounting

11 29 Status of Consolidated Subsidiaries

12 30 Rating

13 31 Framework of the Mid-Term Business Plan

14 32 Outline of the Mid-Term Business Plan

15 (1) Numerical Targets for the Plan's Final Year (FY2018)

16 33 (2) Focused Staff Deployment in Key Areas

17 34 (3) Structure of the VT-Plan Targets

18 Appendix Major economic indicators

Changes in the Outstanding Balances of Risk Management Loansand Breakdown of Risk Management Loans by Industry

Changes in the Outstanding Balances of Loans and Deposits (byRegion)Changes in Gunma Bank's Shares in Loans and Deposits in GunmaPrefecture

Category of Borrowers and Classification of Loans (Before Prov ision)

Transition in Borrower Categories

Status of Soundness

Changes in Marketing Capability for Personal Deposit FinancialAssets

Changes in Gunma Bank's Shares in Loans and Deposits in Saitamaand Tochigi Prefectures

Changes in Balances Div ided by Type and Size

Breakdown of Loans (Outstanding Loan by Industry)

Changes in the Rates of Yield and the Profit Margins of Interest Rates

Changes in the Rates of Yield and the Profit Margins of Interest Rates(Plan)

Contents

This material has been prepared to provide information, not to solicit the transactions of specific securities. Descriptions in this material are subject to change without notice. Description on future business performance is included in this material. However, future business results are not guaranteed for the securities, which involve risks and uncertainties. Please be advised that future achievements may be different from targets due to changes in business environment, etc.



-100

-80

-60

-40

-20

0

20

40

60

80

100

0

10,000

20,000

30,000

40,000

50,000

Mar.2015

Jun. Sep. Dec. Mar.2016


Common passenger cars Small passenger carsMinivans Year-on-year changeYear-on-year change (Nationwide)

-20

-10

0

10

20

0

20,000

40,000

60,000

80,000

Feb.2015

May Aug. Nov. Feb.2016


Sales at department stores and supermarkets (includes new stores)

Year-on-year change (includes new stores)

Year-on-year change (Nationwide, includes new stores)

-25.0

-15.0

-5.0

5.0

15.0

25.0

-25.0 -15.0 -5.0 5.0 15.0 25.0

Year-on-year change in shipments

%

%

-125

-100

-75

-50

-25

0

25

50

20

40

60

80

100

120

140

160

Feb.2015



Seasonally adjusted indexesYear-on-year change (Gunma: Original index)Year-on-year change (Nationwide: Original index)

%

Economic Trends in Gunma Prefecture 1■ Mining and manufacturing production index

(Year 2010 = 100)

Source: Gunma Prefecture, Ministry of Economy, Trade and Industry* The year-on-year changes of the quarterly figures were taken and plotted on a chart.

Data for Jan./Feb. 2017 are monthly figuresSource: Gunma Prefecture

■ Sales at department stores and supermarkets ■ Sales of passenger cars

Source: Ministry of Economy, Trade and IndustrySources: Japan Automobile Dealers Association, Japan Mini Vehicles Association,

Japan Automobile Dealers Association Gunma Branch, Japan Mini Vehicles Association Gunma Branch

No. of unitsMillion yen

■ Inventory cycle chart

Economic contraction

% %

27/I

25/IV

26/III

29/1

29/2

26/IIEconomic expansion

27/II

Year

-on-

year

cha

nge

in in

vent

ory

-1-


-100-80-60-40-20020406080100120

05,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,000

Mar.2015



Total contract value Year-on-year change

Year-on-year change (Nationwide)

-200.0

-100.0

0.0

100.0

200.0

300.0

400.0

0

50

100

150

200

250

300

Feb.2015



Total floor space (Gunma) Year-on-year changeYear-on-year change (Nationwide)

%

600

800

1,000

1,200

1,400

1,600

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

2014 2015 2016 2017

-160-140-120-100-80-60-40-200204060

0250500750

1,0001,2501,5001,7502,0002,2502,5002,750

Feb.2015



Owned houses Houses for rent Houses for installments sale

Year-on-year change Year-on-year change(Nationwide)

Economic Trends in Gunma Prefecture 2■ New housing starts ■ Monthly movements in new housing starts

Source: Ministry of Land, Infrastructure, Transport and TourismSource: Ministry of Land, Infrastructure, Transport and Tourism

■ Total floor space of construction starts (non-residential)

■ Value of public works contracts

Source: Ministry of Land, Infrastructure, Transport and Tourism Source: East Japan Construction Surety Co., Ltd., etc.

No. of houses

-2-

Thousand m2

%

%Million yen

No. of houses

Month

Feb. 2017


-200.0

0.0

200.0

0

10

20

30

40

Mar.2015



No. of Bankruptcies Year-on-year

Year-on-year (Nationwide)

98.0

99.0

100.0

101.0

102.0

103.0

Feb.2015



General index (Maebashi city) Excluding perishable food

General index (Nationwide)

-40

-20

0

20

40

0.00

0.50

1.00

1.50

2.00

Feb.2015



Effective demand-supply ratio of labor forceEffective demand-supply ratio of labor force (Nationwide)No. of new job openings (year-on-year)No. of new job applications (year-on-year)

Economic Trends in Gunma Prefecture 3■ Effective demand-supply ratio of labor force and

number of new job openings and new job applications■ Total overtime hours

Source: Gunma Labour Bureau

* All industries and offices with five employees or moreSources: Ministry of Health, Labour and Welfare, Gunma Prefecture

■ Consumer price index (Year 2015 = 100) ■ Number of bankruptcies

Source: Ministry of Internal Affairs and Communications Source: Teikoku Databank-3-

%Times %

No. of bankruptcies %

-10

0

10

Jan.2015

Apr. Jul. Oct. Jan.2016

Apr. Jul. Oct. Jan.2017

Year-on-year Year-on-year (Nationwide)

%


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Firsthalf of2014

Secondhalf of2014

Firsthalf of2015

Secondhalf of2015

Firsthalf of2016

Secondhalf of2016

Construction

Manufacturing

Wholesale/retail

Real estate

Transportation

Service andothers

10.7

4.7

8.3

5.9

9.7

10.8

69

46

57

53

43 41

First half of2014

Second half of2014

First half of2015

Second half of2015

First half of2016

Second half of2016

Total liabilities No. of bankruptcies

Economic Trends in Gunma Prefecture 4■ Number of bankruptcies of Gunma companies

and total liabilities■ Industry breakdown of bankruptcies in Gunma (%)

(*) Based on Teikoku Databank figures, includes only bankruptcies with liabilities of 10 million yen or more.Excludes voluntary liquidations (e.g., suspension of banking transactions) and includes only bankruptcies under the five bankruptcies laws (e.g., Corporate Rehabilitation Law).

(*) First half: April–September, Second half: October–March -4-

(Billion yen)(No. of bankruptcies)


Changes in Average of Earning Assets and Funds Balance(Unit: billion yen)

No. Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Comparisonwith Mar. 2016

1 4,216.1 4,438.3 4,667.7 4,905.6 5,072.1 166.5

2 691.9 751.4 776.9 771.9 685.2 -86.7

3 108.2 110.8 110.7 110.4 114.4 4.0

4 1,640.8 1,694.6 1,775.0 1,882.8 2,016.8 134.0

5 1,581.0 1,702.6 1,830.1 1,964.7 2,087.9 123.2

6 161.2 135.4 119.9 122.9 118.5 -4.4

7 2,002.1 2,053.2 2,119.1 2,053.6 1,978.5 -75.1

8 151.6 151.2 160.7 183.5 140.8 -42.7

9 6,370.0 6,642.8 6,947.6 7,142.9 7,191.6 48.7

No. Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Comparisonwith Mar. 2016

1 5,651.4 5,820.3 5,972.0 6,089.8 6,243.5 153.7

2 4,277.8 4,391.7 4,477.2 4,553.2 4,635.5 82.3

3 1,146.6 1,191.7 1,206.9 1,267.5 1,351.2 83.7

4 3,365.0 3,542.5 3,724.6 3,881.7 4,055.7 174.0

5 2,286.4 2,277.8 2,247.4 2,208.1 2,187.8 -20.3

6 98.7 111.6 95.1 66.1 72.9 6.7

7 375.4 457.2 620.3 743.0 872.6 129.5

8 6,125.6 6,389.2 6,687.4 6,899.1 7,189.2 290.1

*1 Average balances totaled from all domestic branches are shown as breakdowns. Loans to regional public corporations are included in public loans.*2 Average balances totaled from all domestic branches are shown as breakdowns.

Fixed deposits

Call money

Others

Funds in total

(Breakdown: public loans)

(Breakdown: individuals)

(Breakdown: corporations)

Earning assets in total

Liquid deposits

Loans

(Breakdown: large enterprises)

(Breakdown: second-tier enterprises)

*1(Breakdown: SMEs)


*2

Deposits

Securities

Others

-5-


(Unit: billion yen)

No. Mar. 2017 Mar. 2018 Comparison withMar. 2017

1 5,072.1 5,285.3 213.2

2 685.2 624.5 -60.7

3 114.4 110.0 -4.4

4 2,016.8 2,111.4 94.6

5 2,087.9 2,185.0 97.1

6 118.5 203.4 84.9

7 1,978.5 1,819.5 -159.0

8 140.8 133.5 -7.3

9 7,191.6 7,238.4 46.8

No. Mar. 2017 Mar. 2018 Comparison withMar. 2017

1 6,243.5 6,362.5 119.0

2 4,635.5 4,738.7 103.2

3 1,351.2 1,397.5 46.3

4 4,055.7 4,186.1 130.4

5 2,187.8 2,176.4 -11.4

6 72.9 79.1 6.2

7 872.6 940.9 68.3

8 7,189.2 7,382.6 193.4

*2 Average balances totaled from all domestic branches are shown as breakdowns.

*1 Average balances totaled from all domestic branches are shown as breakdowns. Loans to regional public corporations are included in public loans.

Loans

Liquid deposits

Fixed deposits

Call money

Others

Funds in total

*1

*2

(Breakdown: large enterprises)

(Breakdown: second-tier enterprises)

(Breakdown: SMEs)


(Breakdown: public loans)

Securities

Others

Earning assets in total

Deposits


(Breakdown: corporations)

Changes in Average of Earning Assets and Funds Balance (Plan)

-6-


* Totaled from all domestic branches

[All branches]End of

Mar. 2015End of

Sep. 2015End of

Mar. 2016End of

Sep. 2016End of

Mar. 2017[Tochigi

Prefecture]End of

Mar. 2015End of

Sep. 2015End of

Mar. 2016End of

Sep. 2016End of

Mar. 2017

Total loans 5.4 5.0 4.4 3.3 3.6 Total loans 6.0 8.1 9.0 7.9 6.4

Loans toindividuals 7.6 7.5 6.6 6.4 5.9


Loans tocorporations 4.4 4.3 3.1 1.5 1.5


[GunmaPrefecture]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

[Tokyo, Yokohama,and Osaka]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

Total loans 2.4 2.2 2.5 1.8 1.3 Total loans 4.6 3.5 0.9 -0.6 0.7




Loans tocorporations 0.7 -1.1 -4.3 -6.5 -5.2

[SaitamaPrefecture]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

[New branchoffices]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

Total loans 10.1 9.4 9.1 8.2 7.0 Total loans 24.8 25.0 25.8 27.5 23.2





(Unit: %)

Changes in the Rate of Change for Loans (by Region and Type)

-7-



[All branches]End of

Mar. 2015End of

Sep. 2015End of

Mar. 2016End of

Sep. 2016End of

Mar. 2017[Tochigi

Prefecture]End of

Mar. 2015End of

Sep. 2015End of

Mar. 2016End of

Sep. 2016End of

Mar. 2017

Total deposit 2.3 1.9 2.5 1.8 3.5 Total deposit -0.6 -1.5 -0.7 -0.7 1.1

Deposit toindividuals 1.8 1.8 1.4 1.7 2.9

Deposit toindividuals -0.7 -1.2 -1.3 -0.6 0.7

Deposit tocorporations 6.2 3.1 6.5 5.9 6.1

Deposit tocorporations 0.0 -2.5 1.3 -0.9 2.0

[GunmaPrefecture]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

[Tokyo, Yokohama,and Osaka]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

Total deposit 1.9 2.3 2.4 1.6 3.3 Total deposit 7.0 -3.7 21.9 22.9 10.3




Deposit tocorporations 6.6 -11.1 39.2 40.8 11.6

[SaitamaPrefecture]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

[New branchoffices]

End ofMar. 2015

End ofSep. 2015

End ofMar. 2016

End ofSep. 2016

End ofMar. 2017

Total deposit 3.4 2.6 1.6 1.7 4.0 Total deposit 17.4 25.3 24.7 26.0 26.4





(Unit: %)

Changes in the Rate of Change for Deposits (by Region and Type)

-8-


Balance Compositionratio






Gunma 2,210.7 46.2% 2,242.4 45.8% 2,265.8 45.4% 2,282.0 45.1% 2,294.9 44.4% 29.0 -1.0%

Saitama 901.9 18.9% 939.7 19.2% 983.7 19.7% 1,016.8 20.1% 1,053.0 20.3% 69.3 0.6%

Tochigi 406.3 8.5% 422.8 8.6% 443.0 8.9% 456.5 9.0% 471.4 9.1% 28.3 0.2%

Tokyo,Yokohama,and Osaka

1,166.9 24.4% 1,179.3 24.1% 1,177.7 23.6% 1,171.7 23.2% 1,186.1 22.9% 8.3 -0.7%

Head Office,etc.

96.0 2.0% 109.9 2.3% 123.6 2.4% 130.7 2.6% 170.5 3.3% 46.8 0.9%

Total 4,781.9 100.0% 4,894.4 100.0% 4,994.0 100.0% 5,057.8 100.0% 5,176.0 100.0% 181.9 -








Gunma 4,964.7 81.6% 4,929.6 81.3% 5,083.9 81.5% 5,010.6 81.2% 5,253.6 81.4% 169.6 -0.1%

Saitama 595.5 9.8% 603.3 10.0% 605.3 9.7% 613.6 10.0% 629.3 9.8% 23.9 0.1%

Tochigi 355.1 5.8% 354.2 5.8% 352.6 5.7% 351.5 5.7% 356.3 5.5% 3.7 -0.2%

Tokyo,Yokohama,and Osaka

131.5 2.2% 137.8 2.3% 160.3 2.6% 169.3 2.7% 176.9 2.7% 16.5 0.1%

Head Office,etc.

35.5 0.6% 37.1 0.6% 33.0 0.5% 23.3 0.4% 39.7 0.6% 6.6 0.1%

Total 6,082.5 100.0% 6,062.2 100.0% 6,235.2 100.0% 6,168.4 100.0% 6,455.8 100.0% 220.6 -


(Unit: billion yen)

DepositsEnd of Mar. 2015 End of Sep. 2015 End of Mar. 2016 End of Sep. 2016 End of Mar. 2017 Compared with Mar.

2016

(Unit: billion yen)

LoansEnd of Mar. 2015 End of Sep. 2015 End of Mar. 2016 End of Sep. 2016 End of Mar. 2017 Compared with Mar.

2016

Changes in the Outstanding Balances of Loans and Deposits (by Region)

-9-


33.9% 34.0% 34.3%

3.8% 3.8% 3.9%4.8% 4.7% 4.7%5.7% 5.8% 5.8%

16.6% 16.9% 16.8%

4.5% 4.5% 4.5%3.2% 3.2% 3.3%

9.8% 9.9% 10.0%

17.5% 17.1% 16.7%

Mar. 2014 Mar. 2015 Mar. 2016

Japan PostBank

Agriculturalcooperatives

Rokin banks

Creditassociations

Shinkin banks

Second-tierregional banks

Major banks

Other regionalbanks

Gunma Bank

37.0% 36.9% 36.8%

9.6% 10.5% 13.3%

7.2% 7.4% 5.2%

8.9% 8.8% 8.8%

22.8% 22.3% 22.0%

5.3% 5.1% 5.0%5.1% 5.0% 5.0%4.1% 4.0% 3.9%

Mar. 2014 Mar. 2015 Mar. 2016

Agriculturalcooperatives

Rokin banks

Creditassociations

Shinkin banks

Second-tierregional banks

Major banks

Other regionalbanks

Gunma Bank

Changes in Gunma Bank’s Shares in Loans and Deposits in Gunma Prefecture

Loans Deposits

(Note) Source: "Financial Map" from an extra number of the "Financial Journal" 2017 edition-10-


Changes in Gunma Bank’s Shares in Loans and Deposits in Saitama and Tochigi Prefectures

Change in Gunma Bank’s Shares in Loans and Deposits in Saitama Prefecture

Change in Gunma Bank’s Shares in Loans and Deposits in Tochigi Prefecture

Loans Deposits

Loans Deposits

4.3%

4.6%

4.9%

26/3 27/3 28/3

1.2% 1.2% 1.2%

26/3 27/3 28/3

7.0%7.2%

7.7%

26/3 27/3 28/3

2.7%

2.6% 2.6%

26/3 27/3 28/3-11-


Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2014 Mar. 2015 Mar. 2016(Note) Source: "Financial Map" from an extra number of the

"Financial Journal" 2017 edition


(Unit: billion yen)

End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Sep. 2016 End of Mar. 2017

Loans 4,382.6 4,582.2 4,838.8 5,047.3 5,100.0 5,224.2

4,343.7 4,536.7 4,781.9 4,994.0 5,057.8 5,176.0

Corporate 2,571.8 2,628.0 2,715.5 2,781.8 2,776.3 2,808.6

Large enterprises 732.8 750.7 742.7 680.2 611.3 579.1

Second-tier enterprises 108.0 111.6 110.8 108.0 115.4 114.4

SMEs 1,730.9 1,765.6 1,861.9 1,993.6 2,049.5 2,115.0

1,553.2 1,588.7 1,691.6 1,841.9 1,892.8 1,962.1

Public entities 121.3 113.3 108.6 109.5 114.5 106.7

3.2 3.1 2.9 3.0 1.9 2.9

118.1 110.1 105.7 106.5 112.6 103.8

Central government - - - - - 20.9

Individuals 1,650.4 1,777.8 1,912.4 2,039.4 2,100.7 2,159.3

Housing loans 1,596.5 1,720.8 1,850.3 1,972.2 2,031.2 2,087.6

1,105.1 1,185.9 1,250.5 1,285.1 1,293.6 1,300.5

130.2 139.4 158.8 195.1 217.7 240.1

Apartment loans 361.2 395.4 440.9 491.9 519.8 546.9

22.9 26.0 31.6 38.6 41.6 44.8

30.9 30.9 30.4 28.5 27.8 26.8

Cross-border 0.0 17.7 45.2 63.2 66.1 80.3

Overseas branches 38.9 45.4 56.8 53.2 42.2 48.2

Domestic branches

Regional public corporations

Municipal authorities

Housing loan products

Housing-related loans

Unsecured consumer loans

Other loans to individuals

* Excluding strategic branches

Changes in Balances Divided by Type and Size

-12-



Year-on-year

Of which region total Change Of which region totalComposition

ratio Gunma Saitama Tochigi Gunma Saitama Tochigi

676.4 13.1 450.2 295.6 98.3 56.2 -34.6 0.4 -3.9 2.8 1.5

8.1 0.2 8.1 6.5 0.7 0.8 0.1 0.1 0.1 -0.0 0.0

1.9 0.0 0.0 0.0 - - 0.0 0.0 0.0 - -

3.2 0.1 2.9 1.8 0.5 0.5 -0.3 -0.3 -0.2 -0.0 -0.1

177.9 3.5 156.0 109.4 30.5 16.0 3.3 6.1 0.6 3.6 1.8

47.8 0.9 28.0 19.6 2.7 5.6 5.9 5.0 3.2 0.3 1.5

23.2 0.5 10.6 8.4 1.6 0.6 -1.3 -0.4 -0.6 0.1 0.0

150.7 2.9 108.1 61.9 35.7 10.4 2.4 9.0 4.3 3.6 1.0

438.2 8.5 335.8 205.4 90.4 39.8 -15.8 -4.3 -7.7 4.6 -1.1

158.4 3.1 5.8 3.8 1.0 0.9 -20.7 0.4 0.3 -0.0 0.1

632.5 12.3 356.5 167.6 139.2 49.7 56.6 40.5 16.5 17.1 6.8

264.6 5.1 207.7 125.6 66.9 15.0 21.9 9.7 4.3 6.2 -0.8

228.6 4.4 203.4 132.4 49.2 21.6 9.8 8.5 0.6 2.5 5.3

103.8 2.0 103.8 95.2 5.2 3.2 -2.7 -2.7 -2.3 0.4 -0.7

2,239.1 43.4 1,841.9 1,060.9 530.4 250.4 136.2 54.5 13.8 27.8 12.8

5,155.0 100.0 3,819.3 2,294.9 1,053.0 471.4 160.9 126.7 29.0 69.3 28.3


Real estate and goods rental

March 31,2017

(domesticbranches)

Manufacturing

Agriculture and forestry

Fishery

Mining, quarrying, and gravel-digging

Construction

Healthcare and public w elfare

Other services

Municipal authorities

Others

Total

Electricity , gas, heat supply , and waterworks

Information communications

Transport and postal services

Wholesaling and retailing

Finance and insurance

Breakdown of Loans (Outstanding Loan by Industry)

-13-


Changes in the Rates of Yield and the Profit Margins of Interest Rates

-14-

(Unit: %)

No.

1 1.28 1.23 1.20 1.18 -0.02

(Breakdown: domestic earning assets yield) 2 ( 1.26 ) ( 1.19 ) ( 1.15 ) ( 1.10 ) ( -0.05 )

Loans yield 3 1.38 1.28 1.20 1.12 -0.08

4 ( 1.38 ) ( 1.29 ) ( 1.20 ) ( 1.11 ) ( -0.09 )

Securities yield 5 1.12 1.14 1.25 1.35 0.10

6 ( 1.07 ) ( 1.07 ) ( 1.18 ) ( 1.20 ) ( 0.02 )

Deposit cost 7 0.03 0.03 0.03 0.02 -0.01

(Breakdown: domestic deposit cost) 8 ( 0.03 ) ( 0.03 ) ( 0.03 ) ( 0.01 ) ( -0.02 )

Funding cost 9 0.05 0.05 0.06 0.08 0.02

(Breakdown: domestic funding cost) 10 ( 0.03 ) ( 0.03 ) ( 0.03 ) ( 0.01 ) ( -0.02 )

Ratio of expenses 11 0.97 0.94 0.89 0.86 -0.03

3-7 12 1.35 1.25 1.17 1.10 -0.07(Breakdown: domestic deposit andloan direct profit margin) 4-8 13 ( 1.35 ) ( 1.26 ) ( 1.17 ) ( 1.10 ) ( -0.07 )

Overall direct profit margin 1-9 14 # 1.23 # 1.18 # 1.14 # 1.10 -0.04(Breakdown: overall domestic directprofit margin) 2-10 15 ( 1.23 ) ( 1.16 ) ( 1.12 ) ( 1.09 ) ( -0.03 )

Overall profit margin 16 0.33 0.31 0.32 0.32 -

17 ( 0.30 ) ( 0.26 ) ( 0.27 ) ( 0.27 ) ( - )

* Domestic: domestic operation division. Profit margins and changes are calculated on the table.

(Breakdown: domestic loans yield)

Deposit and loan direct profit margin

(Breakdown: overall domestic profit margin)

Compared withMar. 2016Change

Mar. 2016Mar. 2015Mar. 2014 Mar. 2017

Earning assets yield

(Breakdown: domestic securities yield)


No.

Earning assets yield 1 1.18 1.17 -0.01

(Breakdown: domestic earning assets yield) 2 ( 1.10 ) ( 1.07 ) ( -0.03 )

Loans yield 3 1.12 1.06 -0.06

(Breakdown: domestic loans yield) 4 ( 1.11 ) ( 1.03 ) ( -0.08 )

Securities yield 5 1.35 1.53 0.18

(Breakdown: domestic securities yield) 6 ( 1.20 ) ( 1.34 ) ( 0.14 )

Deposit cost 7 0.02 0.02 -

(Breakdown: domestic deposit cost) 8 ( 0.01 ) ( 0.01 ) ( - )

Funding cost 9 0.08 0.12 0.04

(Breakdown: domestic funding cost) 10 ( 0.01 ) ( 0.01 ) ( - )

Ratio of expenses 11 0.86 0.85 -0.01

Deposit and loan direct profit margin 3-7 12 1.10 1.04 -0.06(Breakdown: domestic deposit and loandirect profit margin)

4-8 13 ( 1.10 ) ( 1.02 ) ( -0.08 )

Overall direct profit margin 1-9 14 1.10 1.05 -0.05(Breakdown: overall domestic directprofit margin)

2-10 15 ( 1.09 ) ( 1.06 ) ( -0.03 )

Overall profit margin 16 0.32 0.27 -0.05

17 ( 0.27 ) ( 0.26 ) ( -0.01 )

* Domestic: domestic operation division. Profit margins and changes are calculated on the table.

Mar. 2017 Mar. 2018(Projection)

Compared with Mar. 2017Change

(Unit: %)

(Breakdown: overall domestic profit margin)

Changes in the Rates of Yield and the Profit Margins of Interest Rates (Plan)

-15-


(Unit: billion yen)

Classification

Not classified Classification II Classification III Classification IV

Bankrupt borrowers

4.4 5.1 6.5 1.6 12.9

Virtually bankrupt borrowers (1.6) (12.9)

21.715.8 7.4 10.9

34.2 (4.5)

12.0 35.5

47.6

92.6 178.4

271.0

4,916.7 4,916.7(1.8)

Total Not classified Classification II Classification III Classification IV

* The Gunma Bank does not apply the partial direct write-off method.

12.5 12.9

(3.8)

(9.3)

5,295.8 5,042.3 228.0

Borrowers threatened with bankruptcy

Borrowers requiring special attention

Borrowers requiring attention other thanborrowers requiring special attention

Normal borrowers

Specific provision for possible loan losses are shown in parentheses.

Borrower categories employed in self-

assessment

Borr

ow

ers

requ

irin

g

atte

ntion

General provision for possible loan losses are shown in parentheses.

Category of Borrowers and Classification of Loans (Before Provision)

-16-


(21,531) (19,326) (993) (53) (24) (18) (8) (1,109) (1,102) (7) - (1,096)

2,610.6 2,506.1 35.2 8.2 1.9 3.5 0.6 55.0 54.8 0.1 - 49.5

(5,825) (967) (4,303) (43) (60) (44) (16) (392) (386) (6) (967) (163)

202.4 36.5 151.1 5.8 2.2 1.1 0.5 5.0 4.9 0.0 36.5 9.7

(505) (22) (45) (369) (40) (8) (1) (20) (20) - (67) (49)

94.2 8.4 5.0 74.4 4.1 1.2 0.0 0.8 0.8 - 13.4 5.4

(725) - (35) (16) (555) (43) (5) (71) (60) (11)

30.1 - 1.3 2.5 22.2 2.3 0.3 1.3 1.1 0.1

(376) - (2) (1) (7) (213) (13) (140) (90) (50) (54) -

18.0 - 0.0 0.8 0.4 11.8 1.3 3.4 1.4 1.9 4.7 -

(76) - - - - - (35) (41) (11) (30)

5.0 - - - - - 3.0 1.9 0.5 1.4

(29,038) (20,315) (5,378) (482) (686) (326) (78) (1,773) (1,669) (104) (1,088) (1,308)

2,960.6 2,551.0 192.9 91.8 31.0 20.0 5.9 67.7 63.8 3.8 54.8 64.7(Note 1. What is show n here is transition in borrow er categories from the end of March 2016 to the end of March 2017.

　 Borrow ers w ith no outstanding balances at the end of March 2017 are not included.

　

　

　

(Below borrowers threatenedwith bankruptcy)

Breakdown:full

Recovery/repayment

Breakdown:sale and

write-off ofloans

Mar

ch 2

016

Normalborrow ers

Expected loss①

Expected loss②

Borrowersthreatened with

bankruptcy

(The numbers of borrowers are shown in parentheses in the upper columns, and the amounts are shown in billions of yen in the lower columns.)

2. Outstanding balances are calculated based on self-assessments, including loans, acceptances and guarantees, and foreign exchanges (excluding overseas balances, government/municipal authorities, and individual borrow ers).

Virtuallybankruptborrowers

Bankruptborrow ers

Total

March 2017 Total

Normalborrowers

Down-grade

Those w ith outstanding balances not calculated based on self-assessments are aggregated into the "Normal" category.3. "Others" are borrow ers w ho have resolved outstanding balances in FY2016 by full collection or repayment, f inal disposal (such as sale of loans), or other means.

4. Expected loss classif ication ① consists of borrow ers requiring attention other than special attention, excluding those w ith realistic, comprehensive business reconstruction plans. Expected loss classif ication ② consists of borrow ers requiring attention other than special attention w ho have realistic, comprehensive business reconstruction plans and borrow ers requiring special attention.

Expectedloss②

Borrowersthreatened

withbankruptcy

Virtuallybankruptborrowers

Bankruptborrowers

Expectedloss①

Others Upgrade

Transition in Borrower Categories

-17-


2.17 2.27 2.03

1.90 1.81

1.72 1.89

1.75 1.62 1.56


Prior-application of partial direct write-off

Post-application of partial direct write-off

0.32

0.23 0.22 0.19

0.17 0.10 0.05 0.05 0.05

0.05


Ratio of housing loan borrowers delayed in repayments

Ratio of housing loans repaid in substitution

〇 Changes in ratio of risk management loans

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Prior-application of partialdirect write-off

2.17 2.27 2.03 1.90 1.81

Post-application of partialdirect write-off

1.72 1.89 1.75 1.62 1.56

(Unit: %)

* The Gunma Bank does not apply the partial direct write-off method.

Mar.2013

Mar.2014

Mar.2015

Mar.2016

Mar.2017

Ratio of housing loan borrow ersdelayed in repayments 0.32 0.23 0.22 0.19 0.17

Ratio of housing loans repaid insubstitution 0.10 0.05 0.05 0.05 0.05

(Unit: %)

〇 Changes in ratio of housing loan borrowers delayed in repayments and the ratio of housing loans repaid in substitution

Status of Soundness

-18-


24.9

15.3

12.311.3

11.1

25.1

Manufacturing industryWholesaling industry and retailing industryOther service industryHealthcare and public welfareReal estate industry, goods rental industryOthers

31.9 34.8 33.7 31.9 32.8

0.7 0.7 1.0 1.0 1.5

59.9 60.7 55.7 53.9 55.9

5.5 5.15.3 5.3 4.4

98.3 101.595.9 92.2 94.7

Mar. 2015 Sep. 2015 Mar. 2016 Sep. 2016 Mar. 2017

Loans to borrowers under bankruptcy proceduresDelinquent loansLoans past due three months or moreRestructured loans (with eased lending terms and conditions)

Changes in the Outstanding Balances of Risk Management Loans and Breakdown of Risk Management Loans by Industry

Change in outstanding balances of risk management loans

(Unit: billion yen)

Breakdown of risk management loans by industry (March 2017)

(Unit: %)

* The ratio of risk management loans to total loans is 1.81%.

The Gunma Bank does not apply the partial direct write-off method.

-19-


1.0 -2.9 0.2

-4.6 0.4

4.6 9.5

1.6 4.1 4.3

5.7 6.5

1.9

-0.5

4.7


Transfer to general provision for possible loan losses Others Credit cost (Unit: billion yen)



Credit cost 5.7 6.5 1.9 -0.5 4.7

1.0 -2.9 0.2 -4.6 0.4

Others 4.6 9.5 1.6 4.1 4.3

Write-off of loans 0.0 0.0 0.1 0.3 0.0 Transfer to specif ic provision for possible loan losses 3.7 7.7 0.9 3.1 3.5 Transfer to reserve for contingent losses 0.1 0.5 -0.0 -0.1 -0.0

Loss on sales of loans 0.4 0.8 0.3 0.4 0.4 Burden charges, etc. under the Responsibility-sharing System of Credit Guarantee Corporations

0.2 0.3 0.2 0.2 0.2

0.0 0.0 0.0 0.0 0.0

4,382.6 4,582.2 4,838.8 5,047.3 5,224.2

0.13 0.14 0.04 - 0.09 Credit cost ratio

Transfer to general provision for possible loan losses

Gain on the collection of claims written-off (-)

Loans

Changes in the Breakdown of Credit Cost

-20-


○ Balance (Unit: billion yen)

End of Mar. 2015 End of Sep. 2015 End of Mar. 2016 End of Sep. 2016 End of Mar. 2017

871.2 842.7 852.6 821.9 812.3

Investment trust 265.7 254.9 259.6 244.6 253.3

Pension insurance, etc. 483.0 483.3 499.7 495.8 489.7

Public bonds (JGBs) 122.4 104.4 93.3 81.5 69.2

- - - - 2.8

○ Sales amounts (Unit: billion yen)

Mar. 2015

Second half First half Second half First half Second half

98.1 90.6 56.5 32.1 47.4

Investment trust 55.4 64.1 33.9 19.5 32.9

Pension insurance, etc. 42.6 26.5 22.6 12.6 14.5

- - - - 2.6Intermediation by Gungin Securities

Mar. 2016 Mar. 2017

Balance of marketing capability fordeposit financial assets

Sales amount for marketing capabilityfor deposit financial assets

Intermediation by Gungin Securities

Changes in Marketing Capability for Personal Deposit Financial Assets

-21-


Mar. 2016 Mar. 2017 Mar. 2016 Mar. 2017

Other securities 1,956.5 1,922.2 -34.2 161.5 153.4 -8.1

Domestic transactions 1,532.6 1,472.2 -60.3 147.5 148.0 0.4

Government bonds 550.2 409.3 -140.9 16.9 11.4 -5.5

Municipal bonds 555.0 563.6 8.6 17.9 13.5 -4.4

Corporate bonds 264.9 269.3 4.3 2.9 1.7 -1.2

Stocks 86.5 96.8 10.3 94.8 112.7 17.9

Investment trusts 74.9 132.1 57.2 14.8 8.5 -6.3

International transactions 423.9 450.0 26.0 13.9 5.4 -8.5

378.9 401.9 23.0 14.0 4.9 -9.0

Other yen-denominated securities 21.1 14.1 -6.9 0.1 0.0 -0.0

Other Euroyen securities 11.8 10.0 -1.8 0.0 0.0 -0.0

Foreign-currency government bonds 219.3 212.3 -6.9 5.4 1.3 -4.1

Other foreign-currency securities 106.0 149.4 43.4 0.8 0.5 -0.2

Foreign-currency investment trusts 20.6 15.9 -4.7 7.5 2.9 -4.5

45.0 48.0 3.0 -0.0 0.4 0.4

Other foreign-currency securities 45.0 48.0 3.0 -0.0 0.4 0.4

Foreign securities (NY Branch)

Amortized cost (book v alue afteramortization) Change

Valuation difference (profit/lossfrom v aluation) Change

(Unit: billion yen)

Foreign securities (domestic branches)

Breakdown of Other Securities

-22-


58.9 57.8 58.3 56.7 56.6

93.2 91.5 92.2 91.6 88.6

63.3 63.2 63.2 61.9 64.0


Expenses Core business gross profit OHR



58.9 57.8 58.3 56.7 56.6Personnel expense 32.3 32.7 32.4 32.4 32.0Non-personnel expense 24.4 22.9 23.5 21.7 21.3Tax 2.1 2.1 2.3 2.5 3.2

93.2 91.5 92.2 91.6 88.663.3 63.2 63.2 61.9 64.0

①Expenses

②Core business gross profit

OHR （①/②）

Changes in Expenses

-23-


(Unit: billion yen)Change

Forecast riskamount

Capital to bedistributed A

Compositionratio

Capital to bedistributed B

Compositionratio A-B

Credit risk 97.2 116.3 32.8% 111.5 32.8% 4.8

Total market risks 79.9 101.3 28.6% 105.0 30.9% -3.7

28.8 39.8 11.2% 40.9 12.0% -1.1

Market risk (trading) 0.6 0.6 0.2% 0.7 0.2% -0.1

50.5 60.9 17.2% 63.4 18.7% -2.5

0.0 4.4 1.2% 11.9 3.5% -7.5

13.1 13.1 3.7% 13.1 3.9% 0.0

Total capital distribution ･･･ (a) 190.2 235.1 66.3% 241.5 71.1% -6.4

Distribution source ･･･ (b) - 354.6 100.0% 339.6 100.0% 15.0

Buffer (b) - (a) - 119.5 33.7% 98.1 28.9% 21.4

Risk categoriesFirst half 2017 Second half 2016

Market risk (investment securities shares,investment trusts, etc.)

Market risk (loans and deposits, bonds,etc.)

Operational risk

Strategically held stocks

Capital DistributionThe distribution source for the first half of 2017 is "Common equity and other Tier 1 capital adjusted for valuation gain and loss" as of the end of September 2016.

A sufficient buffer is secured in preparation for unexpected economic environment changes, disaster risk, etc. (33.7%)

-24-


103branches

23

10

18

1 3 1 1GunmaSaitamaTochigiNaganoTokyoChibaKanagawaOsakaOverseas

Branch office Branch office

Branch Sub branch Branch Sub branch

Gunma 103 87 16 103 87 16

Saitama 23 23 0 23 23 0

Tochigi 10 9 1 10 9 1

Nagano 1 1 0 1 1 0

Tokyo 7 7 0 8 8 0

Chiba 1 1 0 1 1 0

Kanagawa 3 3 0 3 3 0

Osaka 1 1 0 1 1 0

Overseas 1 1 0 1 1 0

Total 150 133 17 151 134 17

Conv enience storesATMs

(Unit: location)

End of Mar. 2016 End of Mar. 2017

47,18445,441

Branch Office Locations〇Extensive branch network—151 branches including overseas

The Adachi Branch (Tokyo) will be opened in July 2017.

-25-


General banking transactions

Financial and security services

Provision of information

Provision of information

New York Branch

Gunma Finance (Hong Kong) Limited

Shanghai Representative Office

Bangkok Representative Office

Overseas Business Support OfficeSupport for international operations (trade transactions,support for overseas expansion, proposal for hedgingexchange risks, etc.)

Status of Support for Overseas Expansion (Transactions)Seminars, overseas inspection tours, business

conventions (Second half 2016)

<In Japan>December 2016 Conducting a Seminar on the Latest Currency MovementJanuary 2017 Conducting a Seminar on Overseas M&A<Outside Japan>December 2016 Conducting a 2016 Regional Bank Joint Seminar and Networking

Event in Guangzhou, ChinaFebruary 2017 Dispatching an Observation Group for the Investment

Environment in Ho Chi Minh, Vietnam Conducting a Business Talks and Networking Event in Hong

Kong Conducting a China Business Seminar and Networking Event by

Three Regional Banks in the Kanto Region Conducting a 2017 FBC Hanoi Manufacturing Business Fair

Increased number of business alliances (FY 2016)

May 2016 Alliance with Japan International Training Cooperation

Organization (JITCO)September 2016 Alliance with the State of Guanajuato of Mexico Alliance with the State of Nuevo León of Mexico Alliance with Banamex Bank of MexicoNovember 2016 Alliance with Japan International Cooperation Agency (JICA)

<U.S.>New York Branch (12 employees)

Overseas offices

Business partners(Excerpts)

Shanghai Representative Office (2 persons)

Gunma Finance (Hong Kong) Limited(5 persons)

<China>Hong Kong and Shanghai Banking

Corporation (HSBC), andIndustrial and Commercial Bank of

China

<Indonesia>Bank Negara Indonesia (Persero) Tbk. (1 person)

<Hong Kong>Hong Kong Trade

Development Council

Overseas Business Support Office (8 persons)

<India>State Bank of India

<Vietnam>Vietnam Export-Import

Commercial Joint-Stock BankBank for Investment and Development of Vietnam

<Philippines>Metrobank

<Singapore>United Overseas Bank Limited

Japan Bank for International Cooperation (JBIC)

Japan International Training Cooperation Organization (JITCO)

Japan International Cooperation Agency (JICA)

Gunma Prefecture

Bangkok Representative Office (2 persons)

<Thailand>Kasikorn Bank (1 person)

Bangkok Bank

Ceremony for opening the Bangkok Representative Office in August 2016

<Mexico>Banamex Bank

State of AguascalientesState of Jalisco, State of

Guanajuato, State of Nuevo León

-26-

The Bangkok Representative Office is located on the 16th floor of the Bhiraj Tower in Thailand

Value for Tomorrow

Overseas expansion support system


(Unit: billion yen)

Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017

433.6 474.6 467.0 498.7

378.3 417.3 436.7 472.7

19.5 59.9 69.0 93.3

- - - 0.7

55.2 57.3 30.2 25.1

57.5 60.3 33.1 15.8

3,220.9 3,548.5 3,698.3 3,962.8

Consolidated total capital ratio 13.46% 13.37% 12.62% 12.58%11.74% 11.76% 11.81% 11.94%

11.74% 11.76% 11.81% 11.93%

Total capital

Consolidated Tier 1 ratio

Consolidated common Equity and other Tier 1 ratio

Basel III (Interim measures considered)

Common Equity and other Tier 1 capitalCumulative amounts of othercomprehensive income

Other Tier 1 capital

Tier 2 capitalCumulative amounts of othercomprehensive income

Risk weighted assets

Consolidated Capital Ratio

-27-

378.3 417.3 436.7

472.7

11.74% 11.76%11.81%

11.93%

Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017

Common Equity and other Tier 1 capital Consolidated common Equity and other Tier 1 ratio



Ordinary income Billion yen 128.8 130.5 130.2 136.2 144.1

Ordinary profit Billion yen 33.4 35.7 39.0 43.6 36.5

Net income attributableto owners of parent

Billion yen 20.6 19.8 25.9 28.6 26.3

Comprehensive income Billion yen 58.1 33.4 79.3 -5.3 27.9

Amount of net assets Billion yen 445.7 467.7 523.5 507.7 526.1

Total assets Billion yen 6,844.8 7,141.6 7,550.9 7,631.5 7,986.5

Amount of net assetsper share

Yen 935.59 988.84 1,146.98 1,126.44 1,187.51

Net income per share Yen 43.37 42.58 56.37 63.78 59.46

Diluted net income pershare

Yen 43.35 42.53 56.30 63.68 59.36

Changes in Consolidated Accounting

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(For the year ended March 2017)

Gunma Chuo Kogyo Co., Ltd.

Transportation, collection and delivery ofgoods, and the maintenance, operation andmanagement services for automatic tellermachines

735 -11 22 -19 14 -14

Gungin Securities Co., Ltd. Security services 292 - -214 -182 -216 -183

Gunma Finance (Hong Kong)Limited

Deposits, loans, foreign exchange services,fund transfer transactions, securities andother finance-related services

179 -10 38 16 36 14

Gungin Leasing Co., Ltd. Acquisition and leasing of movable property 23,144 1,099 385 -1,235 156 -925

Gunma Credit Guarantee Co.,Ltd.

Guarantee services 2,521 -20 1,836 -248 1,194 -142

* Gungin Securities Co., Ltd. started business in October 2016.

Year-on-year

Ordinaryprofit

Netincome

(Unit: million yen)

Company name Main business Sales Year-on-year

Year-on-year

Status of Consolidated Subsidiaries

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(As of May 2017)

Rating Agency

Name of Bank

Gunma Bank

Bank of Yokohama

Chiba Bank

Shizuoka Bank

Bank of Fukuoka

Joyo Bank

77 Bank

Nishi-Nippon City Bank

Bank of Kyoto

Hiroshima Bank

Hachijuni Bank

* Long-term ratings by Moody's Corp. indicate those for deposits.

AA-

A- A+ AA

A+

A+

A+

AA

AA-

A+

A+

A+

A+

AA

A

A3

A2

A A-1

A-1

P-2

A

A-2

A-2

A-1

A-1

A

A+

A-

P-1

P-1

P-1

R&I

P-1

AA-

AA-

AA

JCRShort-term

Moody's

Long-term

S&P

Long-term Short-term

A2 P-1

Baa1

A1

A1

A1

P-2

Rating

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We will face squarely the diverse needs of the regional community and customers and provide truly helpful financial solutions, thereby aiming to become a regional financial group that takes a step forward together with them to the next stage.

We will continue with our growth strategy centering on bolstering retail loans and will further develop value-added proposal actions, thereby helping the regional community and customers to grow.

Further development New endeavors <Continuation of the growth strategy and

further development of value-added proposals>

<Expansion of business domains and deployment of group capabilities>

Through the reinforcement of fee-based businesses by way of bank-brokerage collaborations, the overhaul of the consulting-based sales structure, and the strategic use of Fin-tech, we will aim to secure diverse revenue sources as a regional financial group.

Inheriting "value-added proposals," which is the basic concept of 2013 Mid-term Business Plan "V Plan," we are aiming to construct a sustainable business model for tomorrow by creating new revenue opportunities, and have named the plan "Value for Tomorrow." Taking the first letters, the plan will be internally called the "VT-Plan."

: 2016 Mid-term Business Plan "Value for Tomorrow," or value-added proposals for tomorrow

Name

Plan period

What we aspire to be

Strategic themes

: April 2016 to March 2019 (three years)

: A regional financial group that helps the regional community and customers look forward to tomorrow and to grow together with them

Internal name: VT-Plan

Framework of the Mid-Term Business Plan

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(1) Numerical Targets for the Plan’s Final Year (FY2018)

(*) The retail loans outstanding at year-end is the total sum of loans to SMEs (excl. loans to regional public corporations and Tokyo/Osaka Branch accounts) and to individuals.

Reference: Interest scenario at the time of the formulation of the mid-term business plan(Unit: %)

Outlook for domestic rates• ST rates to remain low. No increase in ST prime rate.• LT rates to rise moderately in response to stimulus

measures.

Outlook for US dollar rates• Moderate increases in both ST and LT rates.

Outline of the Mid-Term Business Plan

-32-

Feb. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Apr. 2019 Compared toFeb. 2016

Policy rate (overnight) 0.000 0.250 0.250

10-year JGB 0.040 0.190 0.395 0.595 0.825 0.785

ST prime rate 1.975 2.225 0.250

US dollar policy rate 0.500 0.750 1.250 1.500 1.000

Growth potential index

Mar. 2017

Status of soundnessindex 12 % level 11.9 %

Efficiency index 65 % level 62.0 %

Profitability indices 28.0 bil yen 26.3

bil yen

5 % level 5.1 %

bil yen

18.0 bil yen 14.1 bil yen

Item Target

4,350.0 bil yen 4,121.4Retail loans outstanding at year-end (*)

Non-interest business profit (consolidated)

Net income (consolidated)

ROE (consolidated)

OHR (consolidated)

Common equity Tier 1 ratio (consolidated)


Loans to SMEs

Loans to individuals

Unsecured consumerloans

Marketing capability fordeposit financial assets

(consolidated)

Retail loans outstanding at

year-end4,350 bil yen

(Plan's final year)

Non-interest business profit(consolidated)

18 bil yen(Plan's final year)

Bolstering corporate service fees

Boosting foreign exchange service revenues

Promoting protection-oriented insurance

Boosting base service commissions

○ Setting branch offices that promoteretail loans

○ Overhaul of sales structure based onregional strategy

○ Efficient promotion of housing loansat loan stations

○ Bolstering of the team to promoteapartment loans

○ Improvement of products

○ Enhancement of non-face-to-faceservices

○ Bolstering asset management-oriented sales

○ Establishment of Gungin Securitiesand bank-brokerage collaboration

○ Establishment of the team to promotecorporate customer consulting

○ Provision of optimal solutions based on evaluation of customers' businesspotentials

○ Establishment of loan/insurance consulting plaza

○ Fostering core customer relationships

○ Streamlining existingbranches

○ Overhaul of HQ organization

○ Promotion of BPR

○ Revamping HR systems

○ Promotion of diversifiedpersonnel

○ Development and deployment of personnelwith expert knowledge

Organizational/operational efficiency

Enhancing staff capabilities by supporting and promoting their

activities

Numerical targets and key measuresMeasures for focused staff deployment

Approx. 100 employees




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Outline of the Mid-Term Business Plan(2) Focused Staff Deployment in Key Areas


96.0

-1.5

0.7Core business

gross profit

Core businessgross profit

-0.5 -0.9

-3.5

-3.0

Transactions Domestic loans Domestic securities Internationaltransactions Non-interest businesses Total

Change 1.0 -3.0 -4.0 3.0

1.7

-3.71.8-2.3

1.3

1.1

0.5

28.0Net income

28.6Net income

93.01.5

0.2

0.2

0.2

0.2

Large/second-tier enterprises

SMEs Housing loansHousing f und

Apartment loans

Unsecured loans Bonds

Equity inv estment trusts Loans

Securities

Base serv ice commissions

Corporate serv ice f ees

Deriv ativ es

Marketing capability f or deposit f inancial assets

Gungin Securities

Gunma Credit Guarantee

Gungin Leasing

Serv ice expenses(Guarantee f ees)

(3) Structure of the VT-Plan Targets(Unit: billion yen)

(Structure of consolidated core business gross profit)

<<March 2019>>

<< March 2016>>

OHR (65%)

Core business net profit (32.5)

Other profit/loss (7.5)

↓

↓

+

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Outline of the Mid-Term Business Plan

If you have further inquiries, please contact:

This presentation contains forward-looking statementsconcerning Gunma Bank’s performance.However, such statements do not guarantee the Bank’sfuture performance and contain risks and uncertainties.Please note that the Bank’s future performance may bedifferent from the target figures due to fluctuations in theBank’s management environment and other factors.

Business Management Office (in charge of IR), Corporate Planning Department,The Gunma Bank, Ltd.

(Note) The numbers shown in this document are generally rounded down to the nearest number, or rounded off to the nearest number for the rates of changes.

Inquiries on this matter

HP: http://www.gunmabank.co.jp

Financial Results Briefing Session for the Year Ended ... · 1.26 1.17 1.04 1.09 1.15 1.18 0.92...

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