Hokuhoku Financial : Integrated Report 2022(FY2021)

Integrated Report

2022

Hokuhoku Financial Group, Inc.

Company outline (as of March 31, 2022)

Company name: Hokuhoku Financial Group, Inc.

Date of establishment: September 26, 2003

Location of head office: 1-2-26Tsutsumicho-dori, Toyama City

Purpose of business: Management and control of subsidiaries and affiliates and ancillary and related business

Capital: ¥70,895 million
Shares issued and outstanding:
Common stock…………………………	128,770,814
Preferred stock (Type 5)… ……………	75,212,000
Exchange listings: Tokyo‌	Stock Exchange (Prime Market)

Sapporo Securities Exchange

This document contains forward-looking statements. Statements of this kind do not constitute guarantees of future performance, as factors such as changes in the operating environment may cause actual performance to differ.

The figures stated in this document are, in principle, rounded down to the nearest whole unit.

CONTENTS
PROFILE……………………………………………………………………	1
MESSAGE FROM THE MANAGEMENT…………………………………	2
OUR STRENGTHS … ………………………………………………………	3
CHARACTERISTICS OF OUR MAIN BUSINESS AREA… ………………	4
PERFORMANCE HIGHLIGHTS… …………………………………………	6
TOP MESSAGE………………………………………………………………	8

DEPUTY PRESIDENT MESSAGE… ……………………………………… 14

PROCESS FOR VALUE CREATION… …………………………………… 16

HOKUHOKU FINANCIAL GROUP SDGs DECLARATION AND KEY CSR ACTIVITY THEMES…… 18

RESPONDING TO CLIMATE CHANGE… ………………………………… 20

STAKEHOLDER COMMUNICATION… …………………………………… 22

LONG-TERM VISION AND STRATEGY…………………………………… 23

MEDIUM-TERM MANAGEMENT PLAN"GO FORWARD WITH OUR REGION"(2022/4～2025/3)…… 24

BUILDING A SOUND AND RESILIENT MANAGEMENT FOUNDATION…… 33

CORPORATE GOVERNANCE… ……………………………………… 33

MEASURES FOR RISK MANAGEMENT… …………………………… 38

MEASURES FOR COMPLIANCE… …………………………………… 41

CORPORATE INFORMATION……………………………………………… 44

OUTLINE OF SUBSIDIARIES - HOKURIKU BANK……………………… 45

OUTLINE OF SUBSIDIARIES - HOKKAIDO BANK……………………… 46

DIRECTORS… ……………………………………………………………… 47

北北金融控股集团简要…………………………………………………… 48

PROFILE

Profile

Since its establishment in 1877, Hokuriku Bank has developed an extensive network of branches throughout the Hokuriku district. On account of trade through the Kitamae-bune or "Northbound Ships," branches extended to the major cities of Hokkaido, enabling the bank to meet customers' needs. The Hokkaido Bank, which was established in 1951, has developed a network of branches throughout Hokkaido, and built a firm business structure centered on individuals and small and medium-sized enterprises.

The Hokuriku Bank, Ltd. and The Hokkaido Bank, Ltd. underwent management integration in September 2004 to form the Hokuhoku Financial Group Inc., which today operates a super-regional financial network that encompasses the Hokuriku region, Hokkaido, and Japan's three major metropolitan areas (Tokyo, Osaka, and Nagoya areas).

Comprehensive business alliance

May 2002between

Hokuriku Bank and Hokkaido Bank

The operations of the Hokuhoku Financial Group extend beyond the limits of a single district.

Our extensive network is outlined below.

Hokuriku district……………………………… 151 branches

Toyama prefecture……………………………	93 branches
Ishikawa prefecture… …………………………	36 branches
Fukui prefecture………………………………	22 branches

Hokkaido… …………………………………… 161 branches

Three major metropolitan areas… …………	16 branches
Tokyo and Yokohama… ………………………	9 branches
Nagoya… ………………………………………	3 branches
Osaka and Kyoto… ……………………………	4 branches
Others (Sendai, Niigata, Nagano, Takayama)……	4 branches
Overseas… ……………………………………	9 offices

New York Representative Office (Hokuriku Bank) Yuzhno-Sakhalinsk Representative Office (Hokkaido Bank) Vladivostok Representative Office (Hokkaido Bank) Singapore Representative Office (Hokuriku Bank) Bangkok Representative Office (Hokuriku Bank)

Dalian Representative Office (Hokuriku Bank) Shanghai Representative Office (Hokuriku Bank) Shenyang Representative Office (Hokkaido Bank) Ho Chi Minh Representative Office (Hokuriku Bank)

	Agreement on full integration of
May 2003	management of Hokuriku Bank and
	Hokkaido Bank
September	Hokugin Financial Group, Inc.
2003	established
	Hokuriku Bank Group comes under
	management of Hokugin Financial
	Group
	Management integration effected
	through equity swap

September	Hokuhoku Financial Group, Inc. was
2004	born.

(As of June 30, 2022)

		Vladivostok
Shenyang						Yuzhno			New York
Dalian							Sakhalinsk
				Shanghai
				Bangkok
Singapore				Ho Chi Minh
									Hokkaido

Hokuriku district

Ishikawa

Fukui

Toyama

Tokyo

Osaka Nagoya

Three major metropolitan areas

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MESSAGE FROM THE MANAGEMENT

Left: Hiroshi Nakazawa

Right: Yuji Kanema

President

(concurrently serving as president of The Hokuriku Bank, Ltd.)

Deputy President

(concurrently serving as president of The Hokkaido Bank, Ltd.)

We would like to express our sincere gratitude for your continued patronage of Hokuhoku Financial Group and its subsidiaries.

Due to the implementation of various government policies and the recovery of overseas economies, economic activities are gradually returning to normal. However, the future outlook remains still uncertain due to the destabilization of the international situation and the re-expand of the COVID-19.

Under these circumstances, the Group has launched the new medium-term management plan "Go forward with Our Region" (FY2022～FY2024) in order to achieve the Group's long-term vision "Sustainable growth together with local communities and customers through problem solving". We will work to strengthen our consulting functions and to improve productivity utilizing DX, as well as promote our business in new business areas such as the environmental field.

All officers and employees will work together to contribute to the sustainable growth of the region by solving the problems of the local community and customers.

We would like to ask for your continued support and patronage.

July 2022

Hiroshi Nakazawa	Yuji Kanema
President	Deputy President

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OUR STRENGTHS

Our Strengths We contribute to the regions with our strengths and strive to grow sustainably.

Our solid customer base built over our long history

• Hokuriku Bank and Hokkaido Bank were established in 1877 and 1951, respectively.
• It has been 18 years since the Group was formed in 2004.
• Our solid customer base in Hokuriku and Hokkaido has been built over our long history.

Market Share in Hokuriku (Toyama, Ishikawa, Fukui)		Market Share in Hokkaido
#1 in deposit and lending		#2 in deposit and lending

19.9%	29.6%	16.8%	27.9%
	Deposit		Lending
31.0%		32.0%
19.5%		23.3%

31.1%	22.8%	23.4%	27.7%
	Deposit	9.3%	Lending
10.0%	35.9%		39.6%

■ Hokuhoku Financial Group ■ Regional competitors ■ Other banks ■ Community banks

*Market shares are as of September 2021. They were calculated by the Group based on statistical data from Bank of Japan, think tanks and others. They exclude Japan Post Bank. *The market shares of regional competitors and other banks are our estimates.

Our competent people

• Our people have diligence and pioneering spirits, each of which represents key characteristics of Hokuriku and Hokkaido, respectively.
• We believe diversity makes us stronger, and we are dedicated to building a diverse workforce.
• Our people have industry-leading expertise in such areas as business succession, agriculture, and cross-border businesses.

Women in management roles

CFP and 1st level FP holders

331

306

(March 2021)

(March 2022)

282

236

(March 2021)

(March 2022)

Extensive branch network across multiple regions

• Our branch network spreads extensively across multiple regions, including Hokuriku, Hokkaido, Tokyo, Osaka and Aichi. We also have global offices in foreign countries.
• Our extensive branch network gives us a unique advantage in the industry in promoting business matching for our customers.
• We are constantly optimizing our branches in terms of number, size, functions and operating hours.

Number of branches (June 2022)Business matching deals across Hokuriku and Hokkaido (FY2021)

		332 branches in Japan
	171	161	341	96
	branches in Honshu	branches in Hokkaido	Leads	closed deals
	(Hokuriku, Tokyo, Osaka, Aichi and others)
		9 global offices outside of Japan
1.	New York	2. Bangkok 3. Singapore	4. Shanghai 5. Dalian
6.	Shenyang	7. Vladivostok 8. Yuzhno-Sakhalinsk 9. Ho Chi Minh City

Strategic partnerships with key players

• We help our clients find technology partners from universities in our operating areas.
• We help our clients expand their businesses in foreign countries.

Number of partnerships with municipalities		Number of partnerships with government-sponsored banks and other
(March 2022)		international banks outside of Japan (March 2022)
48	11	14
Municipalities		countries	partnerships

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