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Katsuya Kawashima

We would like to express our sincere gratitude for your continued patronage.

The Shinsei Bank Group ("the Group") became a member of the SBI Group in December 2021 and launched a new management structure in February 2022.

Since becoming the Representative Director, President and CEO, I have held repeated discussions with the Group executives and employees regarding the future direction and growth strategy of the Group, which has entered a new stage, and formulated the new medium-term management plan, namely the "Medium-Term Vision of the Shinsei Bank Group" (the "Medium-Term Vision").

The Medium-Term Vision covers the three-year period from fiscal 2022 to fiscal 2024. The Group aims to meet the expectations of stakeholders by achieving the three-year plan as outlined in the Medium-Term Vision, along with building a foundation that is capable of achieving sustainable growth to enhance corporate value.

First, I will explain the three "targets to be achieved in three years" as set forth in the Medium-Term Vision.

We would like to express our sincere gratitude for your continued patronage.

The Shinsei Bank Group ("the Group") became a member of the SBI Group in December 2021 and launched a new management structure in February 2022.

Since becoming the Representative Director, President and CEO, I have held repeated discussions with the Group executives and employees regarding the future direction and growth strategy of the Group, which has entered a new stage, and formulated the new medium-term management plan, namely the "Medium-Term Vision of the Shinsei Bank Group" (the "Medium-Term Vision").

The Medium-Term Vision covers the three-year period from fiscal 2022 to fiscal 2024. The Group aims to meet the expectations of stakeholders by achieving the three-year plan as outlined in the Medium-Term Vision, along with building a foundation that is capable of achieving sustainable growth to enhance corporate value.

First, I will explain the three "targets to be achieved in three years" as set forth in the Medium-Term Vision.

1. Achieve 70 billion yen of consolidated net income and establish a foundation for further growth

Our first target is to achieve consolidated net income of 70 billion yen and establish a foundation for further growth.

The new quantitative consolidated net income target of 70 billion yen for fiscal 2024 is a highly ambitious target, approximately 3.5 times compared with the result of 20.3 billion yen for fiscal 2021. However, if the executives and employees of the Group work together and realize synergies with the SBI Group, I believe that this can be achieved.

The key to achieving this target is increasing the number of customers, the scale of assets and transaction volume. As one of the new strategies, our financial targets under the Medium-Term Vision are to expand the number of customers, increase the balance of deposits to support growth and grow the operating assets balance, which are the foundation for sustainable revenue growth.

I believe that the growth in quantity, or the number of customers and transaction volume, in turn, improves the overall quality. In other words, we can improve the quality of our products and services by receiving and responding to a wide variety of requests from our growing customer base. Providing products and services that are better than those of other financial institutions by improving quality, is highly appreciated by customers and leads to deepening relationships with them. By building this cycle, we aim to establish a customer base that would be the catalyst for the further growth of the Group.

2. Evolve into a leading banking group providing pioneering and advanced finance

The second target is to be a leading banking group that provides pioneering and advanced finance.

This represents the ideal image of the Shinsei Bank Group from a medium- to long-term perspective. We aim to become a banking group that provides pioneering and advanced finance through providing our products and services with a sense of speed and entrepreneurial spirit ahead of others, and by aggressively using advanced technologies to achieve this target.

To realize this ideal image, we plan to thoroughly incorporate the customer base, expertise and know-how of the SBI Group's financial ecosystem into the Shinsei Bank Group's business operations.

3. Show the path toward repayment of public funds

The third target is to show the path toward repayment of public funds.

Regarding the repayment of public funds, which is one of the most important management issues for the Shinsei Bank Group, we will work together with the SBI Group to gain the understanding of the government and other stakeholders, premised on protecting minority shareholders, so that we can show the path and direction for the repayment of public funds over the next three years.

To achieve this target, we recognize that it is essential to improve profitability, which, in turn, becomes the source of public funds repayment and enhancement of corporate value. Therefore, in terms of our shareholder returns policy, we will give the highest priority to improving earning capacity by implementing our business strategies. Specifically, we place greater emphasis on using capital to expand our business foundation and strengthen earning capacity, as well as on accumulating retained earnings.

Next, I will explain the three core strategies for realizing the above targets.

Core Strategy 1 : Pursue value co-creation inside and outside the Group

Regarding "value co-creation," we have traditionally promoted collaboration with external partner companies. Going forward, we will expand the definition of "value co-creation" and promote it as an "open alliance" in a broad sense, including "co-creation of value with the SBI Group companies," "co-creation of value within the Shinsei Bank Group," "co-creation of value with companies outside the Group" and broadly defined nonorganic value co-creation via investments and M&As.

For co-creation of value with the SBI Group companies, we will promote mutual customer referrals, supplementation of functions and sharing of resources with the SBI Group companies. As an example, we will widely introduce the products and services of the Shinsei Bank Group to the SBI Group's customers. Through close collaboration between the Shinsei Bank Group and the SBI Group, the Group will be able to provide attractive products and services to a customer base of more than 40 million for both groups combined.

Since January 2022, the Shinsei Bank Group has been engaging in joint projects to discuss and promote measures to create synergies with the SBI Group. In about 40 different fields relating to business and the management base, the Shinsei Bank Group and the SBI Group's personnel are discussing various joint business opportunities on a daily basis and launching a wide range of collaborative measures. We have positioned fiscal 2022 to fiscal 2023 as a preparation period for strengthening our earnings base, and through these initiatives we will build a foundation for sustainable growth.

Core Strategy 2 : Enhance the Group's strengths and realize a full range of service offerings

To deepen our strengths, we have been focusing on small-scale financing and business with institutional customers. In the future, we will add overseas business customers to this mix and enhance our expertise and deepen our experience as one of domains in which the Shinsei Bank Group possesses strengths.

Full range of service offerings will become a new concept in the Medium-Term Vision. In a rapidly changing business environment, customer needs are diverse and variable. Therefore, without a wide variety of offerings of products and services, we cannot make prompt and accurate proposals to meet customers' needs. By adding the products and services of the SBI Group and external partners to the offerings of products and services that the Shinsei Bank Group has long possessed, we will realize a full product offerings and maximize our ability to make proposals to customers and the added value that we provide to customers.

To bolster our strengths and provide a full range of services, the Group will utilize innovative technologies. Specifically, we will provide highly convenient services to customers by utilizing digital technologies, AI and big data. In addition, to strengthen our organizational capabilities for growth and transformation, we will recruit and train personnel, further strengthen governance, secure sound and appropriate equity capital and strategically inject and allocate management resources through cost reduction without exceptions.

Core Strategy 3 : Achieve sustainability through business activities

The demand from society for sustainability is high, as it is for the Shinsei Bank Group.

What is most expected of the Group and requested by society is to repay public funds, and in order to realize the repayment, we are reguired to strengthen the earnings base and increase corporate value. For this reason, we have set the goal of achieving sustainability through our businesses.

Within this context, we will put particular emphasis on our efforts to revitalize local communities. Through collaboration with the SBI Group, we will support local financial institutions in resolving their issues as the platformer of regional financial institutions. At the same time, we will provide financial services to local companies, residents, municipal governments, and other entities with the aim of revitalizing regional economies.

In addition to these efforts, we will support the resolution of environmental and social issues by providing advanced financial services such as sustainable finance. At the same time, we will also provide financial services that are trusted by our customers through the maintenance of robust and stable financial infrastructure.

Underlying these core strategies is the consistent pursuit of the Customer-centric Principle means thoroughly seeking services that are truly from the customer's point of view. This fundamental idea includes offering more competitive commissions, more favorable interest rates on products, more transparent customer cost services, as well as safe, reliable services and a wealth of high-quality financial products from a neutral position. Going forward, we will provide products and services that are in line with customer expectations by fully implementing the Customer-centric Principle within the Shinsei Bank Group.

Finally, I will explain the governance that is a prerequisite for realizing the Medium-Term Vision and the change of the corporate name, scheduled for January 2023.

Governance : Management of conflict of interest and protecting the interests of minority shareholders

The Shinsei Bank Group will fully manage conflicts of interest and protect the interests of minority shareholders so that the interests of Shinsei Bank's minority shareholders will not be compromised when realizing synergies with the SBI Group.

In March 2022, Shinsei Bank established the Parent Company Transaction Screening Committee to establish a management system to protect the interests of minority shareholders for transactions involving conflicts of interest or potential conflicts of interest between the parent company SBI Holdings and its group companies. The committee is composed of all independent outside directors, and Audit & Supervisory Board members can attend and express their opinions. The Committee has established a system to verify and monitor the conflicts of interest and fairness of transactions with the SBI Group and whether these transactions harm the interests of the Bank's minority shareholders. The final resolution is discussed and determined at the Board of Directors, with the opinions of the Committee taken under consideration, however, officers closely related to the SBI Group are not allowed to be involved in the resolution of the Board of Directors.

We will continue to promote initiatives to maximize the corporate value of the Shinsei Bank Group by comprehensively protecting the interests of minority shareholders.

SBI Shinsei Bank Group

At the Annual General Meeting of Shareholders on June 22, 2022, shareholders approved the change of our corporate name to "SBI Shinsei Bank Limited" to be effective from January 4, 2023. At the same time, we plan to change the Group name to the "SBI Shinsei Bank Group."

The new corporate name includes the advanced, innovative image of the SBI Group and the value as well as the existing culture and vision of the Shinsei Bank Group. It clearly demonstrates the true unity of the Shinsei Bank Group and the SBI Group, and the SBI Group's strong commitment to the Bank both internally and externally.

By changing our corporate name, we will ensure the realization of our Medium-Term Vision and improve corporate value at an early stage, which will lead to higher profits for all our shareholders.

The Shinsei Bank Group has entered a new growth stage as a member of the SBI Group. By thoroughly implementing the "Customer-centric Principle," we endeavor to achieve our Medium-Term Vision and sustainable growth.

July 2022
Katsuya Kawashima
President and Chief Executive Officer

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