Shinsei Bank : First QuarterFinancial Summary

Financial Summary

For the Three Months Ended June 30, 2022

Shinsei Bank, Limited

Contents	Page
1.Financial Highlights
Financial Highlights	1
2.Consolidated Information
Results of Operations (Consolidated)	3
Interest-Earning Assets and Interest-Bearing Liabilities (Consolidated)	4
Noninterest Income (Consolidated)	5
General and Administrative Expenses (Consolidated)	6
Net Credit Costs (Consolidated)	6
Other Gains (Consolidated)	6
Business Line Results (Consolidated)	7
Segment Information	8
Institutional Business (Consolidated)	9
Individual Business (Consolidated)	11
Overseas Business/Treasury/Other (Consolidated)	13
Loans by Borrower Industry (Consolidated)	14
Securities Being Held to Maturity (Consolidated)	14
Securities Available for Sale (Consolidated)	15
Unrealized Gain(Loss)on Available-for-Sale Securities (Consolidated)	15
Deposits (Consolidated)	16
Financial Ratios (Consolidated)	16
Capital Adequacy Related Information (Consolidated)	17
Per Share Data (Consolidated)	17
Consolidated Balance Sheets (Unaudited)	18
Consolidated Statements of Income (Unaudited)	19
Composition of Capital Disclosure (Consolidated)	20
(Reference) Results of Operations (Consolidated)	21

Contents	Page
3.Nonconsolidated Information
Results of Operations (Nonconsolidated)	22
Interest-Earning Assets and Interest-Bearing Liabilities (Nonconsolidated)	23
Margins (All, Domestic) (Nonconsolidated)	24
Gains (Losses) on Securities (Nonconsolidated)	24
Net Credit Costs (Nonconsolidated)	25
Loans by Borrower Industry (Nonconsolidated)	25
Claims Classified under the Financial Revitalization Law (Nonconsolidated)	26
Coverage Ratios for Nonperforming Claims Disclosed under the Financial Revitalization Law (Nonconsolidated)	26
Securities Being Held to Maturity (Nonconsolidated)	26
Securities Available for Sale (Nonconsolidated)	27
Unrealized Gain (Loss) on Available-for-Sale Securities (Nonconsolidated)	27
Capital Adequacy Related Information (Nonconsolidated)	28
Nonconsolidated Balance Sheets (Unaudited)	29
Nonconsolidated Statements of Income (Unaudited)	30
Composition of Capital Disclosure (Nonconsolidated)	31
(Reference) Results of Operations (Nonconsolidated)	32
(Reference) Interest-Earning Assets and Interest-Bearing Liabilities (Nonconsolidated)	33
4.Earnings Forecast
Earnings Forecast	34

• The following document should be read in conjunction with the consolidated and nonconsolidated financial statements prepared in accordance with generally accepted accounting principles in Japan for banks. Except as otherwise indicated, the financial information in the following discussion is based on the consolidated financial statements. Financial and operational figures that are stated in multiples of ¥0.1 billion have been truncated. All percentages unless otherwise noted have been rounded to the nearest 0.1%.
• Quarterly information is available in the Quarterly Data Book.

Financial Highlights1

							(Billions of yen, except percentages)
Results of operations	Q1 FY2022		Q1 FY2021		Change		FY2021
(Consolidated) [Page 3]	(3 months)	(3 months)		(Amount)		(12 months)
Net interest income	32.4			30.7		1.7		125.6
Noninterest income	10.2			25.3	-15.1	91.8
Total revenue	42.6			56.0		-13.3		217.5
General and administrative expenses	-38.3			-38.1		-0.1		-155.4
Net credit costs	-6.7			-3.1		-3.5		-31.1
Income before income taxes	-3.5			14.6		-18.2		28.4
Profit attributable to owners of the parent	-5.9			11.6		-17.5		20.3
											(Billions of yen)
Balance sheets
Jun 30			Mar 31		Change
(Consolidated) [Page 18]	2022			2022			(Amount)
Cash and due from banks	1,949.4			1,625.1			324.2
Securities	714.2			674.6			39.6
Loans and bills discounted	5,417.3			5,241.8			175.4
Total assets	10,944.3			10,311.4			632.8
Deposits and negotiable certificates of deposit	7,210.5			6,398.0			812.5
Total liabilities	10,007.2			9,387.1			620.1
Total equity	937.0			924.3			12.7
Financial ratios (Consolidated)
Q1 FY2022			Q1 FY2021		FY2021
[Page 4,16]	(3 months)			(3 months)	(12 months)
Net interest margin	2.49%			2.32%			2.35%
Expense-to-revenue ratio	89.8%			68.0%			71.5%
	Jun 30						Mar 31
	2022			2022
Capital adequacy ratio				11.33%					11.72%
(Basel Ⅲ, domestic standard)
NPL ratio based on Financial				0.49%					0.66%
Revitalization Law (nonconsolidated)
											(Billions of yen)
Results of operations
Q1 FY2022	Q1 FY2021		Change		FY2021
(Nonconsolidated) [Page 22]	(3 months)	(3 months)		(Amount)		(12 months)
Net interest income	31.4			22.6		8.7		121.7
Noninterest income	3.1			0.9	2.2	-7.5
Total revenue	34.5			23.5		10.9		114.2
General and administrative expenses	-16.5			-17.2		0.7		-72.0
Net credit costs	-0.2			0.7		-0.9		-8.8
Net income	-0.1			5.8		-6.0		30.3

1.Represents results based on management accounting basis.

1

Financial Highlights

Profit attributable to owners of the parent for the first quarter of the current fiscal year was a loss of 5.9 billion yen, decreased by 17.5 billion yen from the same period of the previous fiscal year.

Total revenue decreased substantially compared to the same period of the previous fiscal year due to recording of a loss on devaluation of securities resulting from impairment accounting, despite an increase in derivative-related income in the Institutional Business and recording of dividends in the Overseas Business.

General and administrative expenses were almost unchanged from the same period of the previous fiscal year.

Net credit costs increased compared to the same period of the previous fiscal year mainly due to a net increase in the loan balance in the first quarter of the current fiscal year, while there was a net decrease in the same period of the previous fiscal year, and also due to a decrease in written-off receivables which resulted from the government's cash handout program in the same period of the previous fiscal year in the unsecured loan business in the Individual Business.

As a result, profit attributable to owners of the parent for the first quarter of the current fiscal year decreased from the same period of the previous fiscal year.

Results of operations

Total revenuewas 42.6 billion yen, decreased by 13.3 billion yen from the same period of the previous fiscal year.

➢Net interest incomewas 32.4 billion yen, increased by 1.7 billion yen from 30.7 billion yen in the same period of the previous fiscal year. This was mainly due to the recording of dividends in the Overseas Business and an increase in interest income on assets such as loans resulting from an increase in overseas interest rates.

➢Noninterest incomewas 10.2 billion yen, decreased by 15.1 billion yen from 25.3 billion yen in the same period of the previous fiscal year. This was due to recording of a loss on devaluation of securities resulting from impairment accounting for securities classified as "other securities", as the market value declined significantly at the quarter-end, despite an increase in derivative-related income in the Institutional Business.

General and administrative expenseswere 38.3 billion yen, almost unchanged from the same period of the previous fiscal year. Expense to revenue ratio was 89.8%.

Net credit costswere 6.7 billion yen(expense), increased by 3.5 billion yen from the same period of the previous fiscal year. This was due to gain on recoveries of written-off receivables and the reversal of the provision for reserves for loan losses recorded in the same period of the previous fiscal year in the Institutional Business and the Overseas Business, and due to a net increase in the balance in the first quarter of the current fiscal year, while there was a net decrease in the same period of the previous fiscal year, and also due to a decrease in written-off receivables resulted from the government's cash handout program in the same period of the previous fiscal year in the unsecured card loan business in the Individual Business.

Nonconsolidated net incomewas a loss of 0.1 billion yen, decreased by 6.0 billion yen from the same period of the previous fiscal year, due to the recording of a loss on devaluation of securities resulting from impairment accounting as described above. Dividends received from subsidiaries for the first quarter of the current fiscal year was 10.0 billion yen (from Showa Leasing).

Balance sheet

Total assetswere 10,944.3 billion yen, increased by 632.8 billion yen from the end of March 2022.

Loans and bills discountedwere 5,417.3 billion yen, increased by 175.4 billion yen from the end of March 2022.

Deposits and negotiable certificates of depositwere 7,210.5 billion yen, increased by 812.5 billion yen from the end of March 2022.

Financial ratios

Net interest marginwas 2.49%, increased from 2.32% in the same period of the previous fiscal year. This was due to a rise in the yield on investment in securities resulting from the recording of dividends on securities.

The ratio of core capital under the Basel III domestic standards (grandfathering basis)was 11.33% at the end of June 2022, decreased from 11.72% at the end of March 2022. This was due to an increase in credit risk assets resulting from an increase in assets such as loans, in addition to a decrease in core capital resulting from a decrease in retained earnings.

The ratio of common equity Tier1 under the Basel III international standards (excluding grandfathering basis)was 11.3%, decreased from 11.6% at the end of March 2022. Capital ratios continue to be maintained at sufficient levels.

The amount of nonperforming loans disclosed under the Financial Revitalization Law (nonconsolidated basis)was 28.4 billion yen, decreased by 7.6 billion yen from the end of March 2022. Nonperforming loan ratio remained low at 0.49%, changed from 0.66% at the end of March 2022.

2