Transcript and Q&A in FY2025 Financial Results Presentation

categories

"Ordinary deposits for settlement purposes," "Term deposits," and "Ordinary deposits for investment." By fully demonstrating our bank's strengths according to these classifications, we aim to approach them and build up deposits. As shown on the right side, we believe there are broadly four strategies. First, acquiring accounts while performing multifaceted marketing through cooperation with the conventional Rakuten Ecosystem, next, growing the acquired accounts into main accounts where ordinary deposits for daily settlement, such as direct deposits of payroll and direct debits, providing term deposits as a safe investment vehicle with principal guarantees to places where surplus funds are generated in ordinary deposits to a certain extent, and finally, as the shift from savings to investment becomes inevitable, we will promote the use of our services as a destination for funds awaiting investment among customers with investment needs, in partnership with Rakuten Securities; by proceeding with account acquisition and subsequent nurturing in this form, we would like to aim for the maximization of the deposit balance.

【Summary of Consolidated Financial Results】

Next, regarding consolidated performance, due to an increase in interest income from the accumulation of assets and further improvement of management efficiency due to the expansion of business scale, we are able to realize high growth in all of consolidated ordinary income, ordinary profit, and net income. Also, ordinary income, ordinary profit, and net income attributable to owners of parent have all updated the record highs in full-year results.

【Consolidated Statements of Income】

Next, I will explain the status of consolidated statements of income. Consolidated ordinary income was ¥255.5 billion, an increase of 38.4% YoY. Gross operating profit was ¥165.7 billion, an increase of 35.0% YoY. Ordinary profit was ¥103.0 billion, an increase of 44.1% YoY, and profit attributable to owners of parent was ¥73.0 billion, an increase of 43.9% YoY. Regarding the income increase, in addition to the fact that assets increased steadily, the fact that interest income increased by 54.1% YoY due to the Bank of Japan's policy interest rate hike contributed.

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Regarding ordinary profit, although it was ¥71.5 billion last fiscal year, it increased to ¥103.0 billion in the full year of this fiscal year, but this is an increase of ¥31.5 billion after deduction, as the net interest income increased by ¥42.5 billion against an increase of ¥10.5 billion in general and administrative expenses. Out of the +¥42.5 billion in interest balance, the Bank of Japan's rate hike effect is +¥19.1 billion, and the subtracted +¥23.4 billion can be considered the result of the accumulation of assets and yield enhancement. This profit increase was achieved after firmly spending the G&A expenses necessary for the expansion of the customer base for future growth.

【Consolidated Forecast for FY2026】

Next, I will explain the consolidated performance forecast for the fiscal year 2026. As for how our bank sets performance forecasts, we have decided to formulate them without incorporating future additional rate hikes, and the policy interest rate is based on 0.75%. Based on that, we will disclose ordinary income as ¥314.6 billion, an increase of ¥59.0 billion YoY.

Ordinary profit was ¥115.6 billion, an increase of ¥12.5 billion YoY. Net income for the period was

¥81.3 billion, an increase of ¥8.2 billion YoY.

【Interest Income (Non-Consolidated)】

Regarding the interest income, interest on loans and interest on monetary claims bought increased steadily due to the quantitative expansion of risk-diversified assets. In addition, the

BOJ's policy interest rate hike contributed to the increase in investment yield. As a result, looking at interest income as a whole, the YoY growth totaled ¥68.8 billion. As a breakdown of the interest income increase, interest on loans was plus ¥21.0 billion, interest on monetary claims bought was plus ¥16.0 billion, and "Others," which is the positioning of surplus fund operations, was plus ¥31.8 billion.

【Loans and Monetary Claims Bought (Main Assets)】

Next, I will explain our main assets. I believe you can understand that as a whole, growing almost all asset categories in a well-balanced manner is progressing according to the strategy.

The basic strategies to increase interest income are continuing to grow diverse assets in a well- balanced manner, and at the same time, slightly increasing the ratio of middle-risk assets to gradually raise the yield. The loan balance is up 17.4% YoY. The monetary claims bought balance is up 13.0% YoY. The total of main asset balance is up 15.8% YoY, and the core assets balance, excluding loans to the Ministry of Finance, landed at an increase of 13.8%. Within this, assets that our bank considers to be middle-risk/middle-return assets realized high growth of 21.7%.

Also, securitized assets, which are the sum of ABL and monetary claims bought: others, increased by 25.4% YoY, both of which are results exceeding the growth of the total major asset balance. Regarding housing loans, as per our stance so far, we are waiting for the timing of

4 market normalization, and the housing loan balance is gradually decreasing. Regarding the trust beneficiary rights of Rakuten Card's credit card receivables, it remains at 3.4% YoY, but this is because Rakuten Card issued corporate bonds last fiscal year, and we see this as the funding demand utilizing our bank's securitization having slowed down.

【Expanding Middle-Risk Assets】

Next, I will explain the progress of middle-risk assets. Regarding middle-risk assets, there are the four asset categories you see. First, regarding personal loans, it is an increase of 2.8% YoY, and although it is slightly below the cruising speed of 3 to 5%, when compared to the YoY of the personal loan balance of the entire banking industry published by the Japanese Bankers

Association, which is in the low 2% range, it is progressing, exceeding the growth of the entire market. The second, investment property loans, is an increase of 21.1%, ABL is an increase of

12.8% YoY, and monetary claims bought: others is an increase of 51.5% YoY, and for securitized assets, we continue to firmly secure pipelines, mainly for projects backed by real estate.

Furthermore, since our capital has become substantial due to the accumulation of profits, for securitized assets, we have also begun trials of investments in mezzanine and equity portions for those arranged by other companies, and we would like to aim for the improvement of the interest spread while gradually accumulating achievements.

【Credit Costs (Non-Consolidated)】

Regarding our credit costs, we have explained that the majority is attributed to non- guaranteed personal loans, but in this term, in addition to that, as a result of assessing based on the performance results of some project cases in the securitization business, general loan loss provisions have increased. There is no particular trend of loan losses increasing due to factors that would extend to the entire securitization project, and as a result of forward-looking monitoring, it is what was accumulated in some projects. As a result of the balance of proper card loans steadily increasing, although the actual amount of credit costs is increasing, the credit cost ratio maintains a low level. In contrast, as the repayment of guaranteed personal loans progresses, payment guarantee fees are in a downward trend; as a result, as originally intended, even while the personal loan balance is increasing, the substantial credit cost, which is the sum of credit costs and payment guarantee fees, is decreasing, which is a decrease of

¥337 million YoY.

【Balance Sheet Summary】

Next, I will explain the outline of the balance sheet. Approximately 80% of our main assets are floating rate, with the majority linked to TIBOR. Also, deposits with the Bank of Japan, needless to say, are linked to the policy interest rate. Due to this, the December hike of the policy interest rate by the Bank of Japan to 75 basis point already generated a rate hike effect on the asset

5 side in this term in assets that refer to TIBOR among main assets, new execution portions of loans to the Ministry of Finance, and cash and due from banks, contributing to income increase.

On the other hand, regarding the deposit side, 84% of deposits are floating interest rates. We raised deposit interest rates by +10 basis point from February, and although funding costs increased in the fourth quarter, the follow-up rate to the policy interest rate remains at a level of about 50%, and in the deduction, a positive effect is being obtained on profit. The loan-to- deposit ratio is shown in the bottom left, but the adjusted loan-to-deposit ratio with main assets as the numerator is 69.5%, and the core loan-to-deposit ratio with core assets excluding loans to the Ministry of Finance as the numerator is 54.5%. As explained previously, while borrowing from the BOJ will decrease at the end of every quarter due to the termination of the scheme, we would like to aim for the expansion of the net interest income by continuing to advance deposit acquisition, while increasing the ratio of core assets and improving the interest spread.

【Status of Investment in Marketable Securities, etc.】

I will explain the status of surplus fund operations such as marketable securities. Regarding loans to the Ministry of Finance, since they are assets that can secure a yield exceeding deposits with the BOJ, we are actively participating in bidding, and in the fourth quarter, there was a net increase of ¥224.9 billion. Regarding these loans, in a situation where future interest rate hikes are expected, we will continue the policy of flexibly increasing them while considering interest rate trends. Regarding marketable securities, we executed new investments in corporate bonds of ¥76.3 billion in the fourth quarter. These marketable securities investments are basically held with the aim of enjoying the merits of the interest rate difference between long and short terms, while considering yield enhancement and redemption deadlines, on the premise of holding to maturity. Regarding the positioning of corporate bonds among marketable securities investments, since the ratio of credit to corporations is still small compared to our bank's Balance Sheet scale, it is done as a supplement to corporate loans, and it is what was invested selectively while controlling duration, with the policy of investing opportunistically if there is something available.

【Simple Simulation of Future Net Interest Income】

Next, let me explain about a simplified simulation of future interest income. The graph on the left shows the impact on the annualized net interest income related to a 25 basis point policy interest rate hike, but the calculation is performed on the premise of the BS at the end of March

2026. We see the impact on the annual Net interest income as +¥14.5 billion. The graph on the right is what is shown in a graph to explain the quarterly impact on the BS due to the decrease in the balance toward the scheme end in March 2028 regarding the ¥2.81 trillion of borrowings from the BOJ utilizing the loan support fund for increasing lending. The message here is that

6 while there is an effect that interest generated from the corresponding deposits will decrease if nothing is done as the borrowings gradually decrease, by promoting funding through deposits and other means, we can limit the shrinkage of the BS, and by improving the yield through the accumulation of core assets centered on middle-risk assets, it is possible to limit the impact of the borrowing repayment on the PL. Please note that regarding the explanation on the left side, since our bank is in a phase of balance sheet expansion, this is a calculation after accumulating simple and a certain degree of hypotheses.

【Non-Interest Income (Non-Consolidated)】

Next, I will explain the status of non-interest income. The full-year cumulative non-interest income was ¥54.8 billion, an increase of 2.4% YoY. Regarding other operating income, while

Japan is in a phase of interest rate hikes, the overseas markets is in a phase of interest rate declines, and in such a current macroeconomic environment, foreign currency deposits and structured term deposits are in a situation where they are relatively less attractive to customers, so transactions remained sluggish, resulting in a minus of ¥1.7 billion YoY. On the other hand, service transaction revenue increased by 6.6% YoY. Looking at the breakdown, exchange settlement increased by 10.5% YoY due to the increase in the total number of accounts and the number of main accounts, continuing to grow at a pace exceeding the increase in the number of accounts. Regarding direct debit, as a result of promoting main account conversion, fees related to daily life are steadily increasing at a pace exceeding account growth, but entertainment usage such as public racing has received the reaction of having had a temporary tailwind last fiscal year, and as a whole, it was an increase of +6.1%

YoY. Debit card-related fees had temporary income last fiscal year and were negative YoY until the previous quarter, but for the full year, it turned positive at +2.1% YoY. This is because the number of debit card transactions is growing at a pace exceeding the growth of the number of accounts, canceling out the impact of the temporary income loss. We would like to continue to maintain the YoY of total settlement shown at the bottom of the table at a pace exceeding account number growth.

【General and Administrative Expenses (Non-Consolidated)】

Next, regarding the status of G＆A expenses, although the actual amount of non-consolidated

G＆A expenses increased by 23.4% YoY, because gross operating profit expanded more than the increase in expenses against the background of the expansion of interest income, the G＆A expense ratio decreased by 3.2 percentage points YoY, and as a result, landed at 32.3%. As explained previously, we are strategically and actively investing in the three fields of marketing, technology, and human capital with the intention of medium- to long-term sustainable growth.

In the figure on the right, we show the breakdown of the full-year results of non-personal expenses, but we invested about 40% in marketing-related and about 40% in technology-

7 related such as systems and AI. Regarding marketing-related, it was utilized for the implementation of measures related to account acquisition and measures intended to promote usage after account opening, which led to the recovery and rise of the growth rate of accounts and settlement numbers in the second half. Regarding system and AI-related, in system expenses, although the increase in depreciation expenses accompanying the release of new services such as securities-backed Loas and credit-line type of reverse mortgages has a large impact, we invested in system design and function development intended for the promotion of

AI utilization, and also the expansion of some GPU servers. Regarding personnel expenses, in addition to the increase in the number of employees due to recruitment, while the salary level of the entire industry is rising, we have also raised the return to existing employees who support future growth. As I explained previously, we consider the G&A expense ratio to be a result figure to the end, and we are not thinking of suppressing strategic investment by making this figure itself a target.

【ROE Performance】

The ROE for the fiscal year ended March 2026 was 21.7%, an increase of 3.7 points YoY. From the perspective of ROE indicators, we believe that it is important to strengthen ROA on the two axes of growth of non-interest income and growth of interest income through yield enhancement of assets, while paying attention to risk control, make use of a sufficient capital base to pursue returns by applying more leverage, and balance appropriate investment for medium- to long-term growth and the goodness of cost efficiency, which is the advantage of a digital bank. Regarding the ROE target, since our bank is in a business growth phase and relies on future interest rate trends, we have not set a specific numerical target as this time. While utilizing the characteristics of the digital bank business model, we would like to aim for the optimal balance of sustainable growth and capital efficiency.

【Sufficient Capital Adequacy with Disciplined Management】

Next, I will explain the capital adequacy ratio. The consolidated capital adequacy ratio was

10.7%, and even after actively accumulating risk assets, it rose by 0.1 percentage points from the previous term, continuing to maintain a sound level. From now on, while maintaining the capital adequacy ratio at a sound level, we would like to actively grow core assets centered on middle-risk assets to aim for both the expansion of business scale and the improvement of profitability.

【Our Dividend Policy】

Finally, regarding dividends, there is no change from the conventional policy. There is no change in the idea that we can continue to effectively utilize the capital entrusted to us by our shareholders, actively and in a well-balanced manner increase major assets, and at the same

8 time, significantly increase interest income by slightly raising the ratio of middle-risk assets.

Since we would like to provide returns to our investors in the form of expansion of business scale, the accompanying improvement of corporate value, and the resulting rise in stock price, we would like to ask for your continued understanding that we intend to maintain our policy of not paying dividends for the time being. With this, this concludes the overview of the Rakuten

Bank’s financial results briefing for the fiscal year ended March 2026.

Thank you for your attention.

(Continue to Summary of Q&A at FY2025 Financial Results Presentation)

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Rakuten Bank, Ltd.

Summary of Q&A at FY2025 Financial Results Presentation

(May 12, 2026)

Q01. Please explain the structure of the earnings forecast for the fiscal year ending March

31, 2027.

A01. Regarding the earnings forecast for the fiscal year ending March 31, 2027, the figures take into account the repayment of approximately ¥1.5 trillion in borrowings from the Bank of Japan.

This forecast assumes no increase in the policy interest rate, and thus, it remains subject to changes in the interest rate environment.

Q02. Regarding your deposit acquisition policy, you mentioned that deposits are viewed in three layers. How do you see these growing in the future?

A02. While we discuss deposits as being conceptually divided into three layers, it is difficult to categorize them strictly, as both funds needed for daily life and waiting funds for investment are essentially ordinary deposits. Considering macroeconomic fund trends, we have entered a world with interest rates, and as depositors' interest rate sensitivity increases, a shift toward term deposits is emerging as a trend. We aim to grow our deposits by addressing this shift.

Q03. Regarding the earnings forecast, I understand that the increase in expenses includes nearly ¥3 billion for restructuring costs, but will other expenses stabilize going forward?

Also, what is your outlook for the deposit beta?

A03. In terms of the pace of increase, we expect it to become more moderate going forward.

On the other hand, we intend to continue active investment for future growth. In that sense, we do not expect the expense ratio to rise sharply, nor do we believe this is a phase where we should control expenses by setting a cap on the expense ratio. We plan to implement various measures to achieve double-digit growth in deposits. We are forecasting the deposit beta somewhat conservatively.

Q04. While your performance is strong, the stock price seems to be underperforming due to the announcement regarding the reorganization of the FinTech business. What is your view on this? Do you believe the solid performance is reflected in the fundamentals?

A04. The reorganization of the FinTech business is currently under discussion, and we will disclose information carefully once any decisions are made. As for the stock price, it is

10 determined by the market, so I am not in a position to comment. I believe the previous consideration of reorganization of the FinTech business was disliked due to the long deliberation period and the lack of clarity in the structure. This time, I believe one factor for the market's reaction is that the rise in the policy interest rate has been pushed further out due to the overseas situation.

Q05. You mentioned that Rakuten Card's funding methods have changed. Will this continue in the future? Please let us know if this will have an impact on the pipeline.

A05. We do not believe there will be a change in the fundamental funding methods of Rakuten

Card, and we expect the balance to grow in line with Rakuten Card's growth pace.

Q06. While deposits are seeing double-digit growth, the number of accounts is only growing in the single digits. Are campaigns for increasing the number of accounts incorporated into the earnings forecast? Also, given the Rakuten Ecosystem, I believe your customer acquisition costs (CAC) are lower than other banks; have there been any changes in the efficiency of account acquisition?

A06. We have built our budget on the premise that we will engage in active marketing activities, with the understanding that increasing the number of accounts is not easy given the intensifying competitive environment. We are seeing positive results from the campaigns currently underway to acquire accounts, and we intend to continue them. We believe we can maintain a lower CAC compared to other banks. On the other hand, LTV (Lifetime Value) is also rising along with interest rates; taking this reality into account, we expect the absolute amount of CAC to increase slightly.

Q07. As we are now in a world with interest rates, you have gained experience in running term deposit campaigns. How is the retention of deposits? If you have any figures regarding stickiness, please share them.

A07. In a world with interest rates, it is necessary to be mindful of changes in customer behavior. We have accumulated data on the retention of term deposits after maturity, and we believe they are reasonably well-retained. We will refrain from disclosing specific figures.

Q08. I believe the balance of assets related to securitized products has grown. Have there been any changes in the breakdown of underlying assets or your risk control policy?

A08. Our stance on securitized products remains unchanged. While there may be temporary

11 imbalances, our policy of investing in a diversified portfolio remains the same.

Q09. There was no disclosure today regarding the reorganization of the FinTech business.

Will the effective date of October be met? Should we understand that no agenda regarding the reorganization will be submitted to the Annual General Meeting of Shareholders? Or are you anticipating an Extraordinary General Meeting of Shareholders? Furthermore, is the current structure one that requires a shareholders' meeting at all?

A09. We will refrain from providing any information beyond what has already been disclosed.

The resolution to convene the Annual General Meeting of Shareholders has yet to be decided.

Q10. Should we assume that the increase in expenses will be around ¥10 billion, and should we expect a deposit beta of around 60%?

A10. We are considering expenses to be at a similar level to the fiscal year ended March 31,

2026, but as we cannot predict what changes may occur in the future, we will respond flexibly.

Our forecast for the deposit beta incorporates a slight increase from the current 50%, so it does not deviate significantly from the figures you mentioned.

Q11. Regarding investment in marketable securities, what is your appetite for purchasing government bonds and similar instruments?

A11. Regarding investment in marketable securities, we operate opportunistically; the increase in corporate bond investment in the fourth quarter was because we were able to pick up attractive instruments in the market. At present, we aim for yield enhancement without extending duration, so we find government-guaranteed bonds or corporate bonds more attractive than government bonds. While we anticipate a rise in the policy interest rate in the future, we may consider operating in a way that extends duration as we approach what we consider to be the terminal rate. At that point in time, we will consider investing incorporating

JGBs into the portfolio. However, we believe it is not yet the time for such moves for the next few quarters.

Q12. You mentioned that the net impact of AI investment on earnings is ¥5.8 billion. Could you break this down into revenue and costs, and tell us in which areas AI investment effects are emerging, as well as your outlook for the impact amount?

A12. It is not that AI operated on its own and automatically earned ¥5.8 billion; rather, we have shown as a reference how much profit contribution was made by operations utilizing AI. To

12 increase this figure further, we intend to utilize AI in areas where it is not yet being used, and by further refining the areas where it is currently in use, we aim to increase the amount of profit contribution.

Q13. Regarding BaaS, JR West has partnered with the Resona Group. Could you tell us about your current pipeline?

A13. Regarding BaaS, we are not pursuing partnerships just to increase the number of deals; we are looking into partnerships that create substantive value. With this strategy, it is difficult to announce new deals frequently, but we are in earnest negotiations regarding those in the pipeline, and there is nothing we can disclose at this time.

Q14. Please explain the reason for the increase in credit costs.

A14. We believe that credit costs are under control. As explained in the financial results presentation, regarding securitized assets, we have set aside provisions for loan losses in advance for cases with certain special circumstances, but we do not see any significant changes occurring in the underlying trend.

(end)

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