Resona : Corporate Governance Report

Last updated: December 6, 2021

CORPORATE GOVERNANCE

Resona Holdings, Inc.

Masahiro Minami President and Representative Executive Officer Inquiries: Corporate Governance Office TEL.: [phone] Securities Code No.: 8308 https://www.resona-gr.co.jp/

The corporate governance policies, structure, systems and initiatives of Resona Holdings, Inc. ("Resona Holdings" or "the Company") are presented as follows.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Fundamentals

1. Basic Views

Resona Holdings, Inc. (hereinafter the "Company") has established the Basic Corporate Governance Policy to clarify its basic approach to and framework and operation policy for corporate governance, with the aim of facilitating the sustained growth and improvement of the corporate value of the Resona Group (hereinafter the "Group") over the medium and long terms.

(Basic Approach to Corporate Governance)

The Company, as the holding company of the financial services group, including Resona Bank, Limited, Saitama Resona Bank, Limited and Kansai Mirai Financial Group, Inc. (hereinafter the "Group Banks"), shall maximize the corporate value of the Group.

The Company shall respect all stakeholders, including shareholders, and aim at achieving excellent corporate governance so that the Company can make decisions rapidly and decisively in response to environmental changes, including economic and social changes.

The Company shall establish the Corporate Mission (Resona Group Management Philosophy)," a general philosophy of management of the Group, and the "Resona Way (Resona Group Corporate Promises)," a specific form of the philosophy, under which the Group shall implement business operations in a concerted manner.

(The Company's Corporate Governance System)

Based on the above-mentioned basic approach to corporate governance, the Company shall clearly separate the management supervision function from the business execution function, and adopt the form of "company with a nominating committee, etc.," as a corporate governance system because the Company determines that this system can enhance the supervision and decision-making functions of the Board of Directors.

The Company shall fully utilize external views in its business management and secure transparency and fairness in management by ensuring the Board of Directors, on which highly independent outside directors constitute a majority, and the three committees (the Nominating Committee, the Compensation Committee and the Audit Committee) fulfill their functions.

The Company shall ensure the autonomy of its Group companies and instruct the Group companies to manage their business activities based on the above-mentioned basic approach to corporate governance so that the Group will grow together with local communities.

(The Resona Group Corporate Mission, the Resona Way (Resona Group Corporate Promises))

1. The Resona Group Corporate Mission

The Resona Group aims at becoming a true "financial services group full of creativity." Toward this goal, the Resona Group will:

• live up to customers' expectations
• renovate its organization

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1. • implement transparent management, and
   • develop further with regional societies
2. The Resona Way (Resona Group Corporate Promises)

1. Customers and "Resona"

Resona cherishes relationships with customers.

The Resona Group offers its customers services with integrity for their joy and happiness, placing the highest priority on winning their confidence in Resona.

The Resona Group makes every effort to respond fully to the needs of customers by offering high- quality services.

The Resona Group always welcomes customers with gratitude.

b. Shareholders and "Resona"

Resona cherishes relationships with shareholders.

The Resona Group aims at maximizing its corporate value by implementing sound management based on a long-term perspective.

The Resona Group returns an appropriate amount of sound profits to its shareholders.

The Resona Group leaves nothing unresolved in all situations, endeavors to create transparent management and actively upgrades its disclosure.

1. Society and "Resona"

Resona places importance on its ties with society.

The Resona Group makes every effort for an extensive number of citizens to acknowledge the significance of Resona's existence.

The Resona Group observes every rule of society.

The Resona Group contributes to regional societies as a good corporate citizen.

d. Employees and "Resona"

Resona highly regards each employee's dignity and personality.

The Resona Group creates a workplace where employees can take pride in being a member of Resona.

The Resona Group thinks highly of its employees' mind-set and endeavors to make the Group's business atmosphere challenging and creative.

The Resona Group cherishes each employee's dignity and personality and evaluates ability and achievement in a fair manner.

Please also visit the Company's website featuring its Basic Corporate Governance Policy. https://www.resona-gr.co.jp/holdings/english/about/governance/pdf/bcg_policy.pdf

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Reasons for Non-Compliance with the Principles of the Corporate Governance Code Update

This report is prepared in conformity with the revised Corporate Governance Code that came into effect in June 2021 while, in anticipation of Resona Holdings being listed in the Prime Market category with the introduction of new listing categories at the Tokyo Stock Exchange on April 4, 2022, voluntarily featuring statements applicable only to companies so listed.

The Company adopts all principles set forth by the Corporate Governance Code except for those listed

below.

Supplementary Principle 2.4.1: Ensuring Diversity in the Promotion of Core Human Resources

Having positioned diversity management as a cornerstone of its human resource management, the Resona Group is striving to empower all employees, regardless of gender, age or nationality, to realize their full potential and achieve career success in line with its policy of promoting diversity & inclusion. The Group also considers it essential to incorporate global perspectives and appreciate diverse value systems in the course of these endeavors in order to address a variety of issues customers are now confronting. In sum, the Group believes that diversity is key to advancing its efforts to become the "Retail No. 1" financial service group and accomplish a sustainable improvement in corporate value.

At present, the Resona Group has not formulated a separate policy regarding the promotion of foreign nationals to managerial positions to support the abovementioned goals. However, the Group intends to push ahead with in-depth discussions to determine how to promote human resources equipped with global perspectives, including foreign nationals, in order to execute its future growth strategies.

In addition, a number of locally hired employees are playing key roles at the Group's overseas locations. For example, the number of foreign national (non-Japanese) managers at Bank Resona Perdania in Indonesia totals 56, representing approximately 94% of the overall number of said bank's managerial positions. Meanwhile, eight (80%) of the managers at Resona Merchant Bank Asia in Malaysia are foreign nationals.

For other details regarding the Group's status vis-à-vis this principle, please also refer to the corresponding article presented below as part of "Disclosure Based on the Principles of Corporate Governance Code."

Supplementary Principle 3.1.3: Initiatives on Sustainability and Investments in Human Capital and Intellectual Properties

The Resona Group is pursuing digital transformation (DX) on an ongoing basis to establish an unprecedented business model. To this end, the Group intends to promote the further development of businesses via ongoing investment in and the utilization of intellectual capital while maintaining in-depth discussions regarding how to establish a business model capable of serving as a new source of income. Moreover, the Group will build a robust structure for formulating and verifying strategies based on conclusions reached through these discussions.

For other details regarding the Group's status vis-à-vis this principle, please also refer to the corresponding article presented below as part of "Disclosure Based on the Principles of Corporate Governance Code."

Disclosure Based on the Principles of Corporate Governance Code Update

The status of the implementation of the Company's measures based on the principles set forth in the Corporate Governance Code is presented in the "Basic Corporate Governance Policy" and this report.

Principle 1.3: Basic Strategy for Capital Policy

With regard to capital policy, the Company is striving to strike an optimal balance between financial soundness, profitability and shareholder returns in a way that improves corporate value.

1. Financial soundness

The Company aims to raise its equity ratio and, to this end, is working to secure a sufficient level of capital vis-à-vis currently applicable domestic standards in a way that meets the below listed three objectives. Further, in light of internationally unified standards, the Company will also strive to achieve a Common Equity Tier 1 capital ratio (excluding unrealized gain on available-for-sale securities; based on regulations to be effective upon the enforcement of the finalized Basel 3) of 10% by the end of the final year of the medium-term management plan.

1. Contributing even more to regional societies and to sound economic development via such means as the provision of stable funding and other services
2. Securing sufficient capital to ensure our continued existence as a trustworthy financial institution operating in the global financial industry and realizing sustainable growth

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1. Maintaining strategic flexibility and thus safeguarding our ability to seize investment opportunities and take steps in response to changes in financial regulations

2. Profitability

The Company will aim for an ROE surpassing 8% by maintaining financial management conscious of capital efficiency, risk, cost and returns.

3. Shareholder returns

While maintaining a stable stream of dividends, the Company will strive to enhance shareholder returns in a way that gives due consideration to a balance between financial soundness and profitability as well as opportunities for growth investment.

Specifically, the Company will aim to achieve a total shareholder return ratio in the mid-40% range over the medium term.

Principle 1.4: Cross-Shareholdings

The Company has established the Policy for Holding Policy-Oriented Stocks and the Policy for the Voting Right Exercise Standards of Holding Policy-Oriented Stocks in relation to such stocks. These policies and standards are disclosed through the following media.

Outline of Policy for Holding Policy-Oriented Stocks

Outline of Policy for the Voting Right Exercise Standards of Holding Policy-Oriented Stocks Outline of Process for verifying the appropriateness of the holdings of policy-oriented stocks https://www.resona-gr.co.jp/holdings/english/about/governance/pdf/related_policies2.pdf

Status of Initiatives

Since the massive infusion of public funds aimed at reinforcing the Company's capital, Resona Holdings has engaged in ongoing negotiations with its corporate clients to steadily reduce the volume of policy-oriented stocks held by Group entities, thereby mitigating its exposure to price fluctuation risks. Going forward, the Company will maintain a basic policy of reducing the balance of such stocks in light of environmental changes, such as changes to the Corporate Governance Code.

In addition, as of March 31, 2020, the Company verified the appropriateness of the holdings of policy- oriented stocks and concluded that the purpose of all the policy-oriented stock holding is in compliance with the Policy for Holding Policy-Oriented Stocks.

The stockholding verification process involved assessments of each investee's stock performance that examined profitability versus capital costs alongside medium- to long-term credit risk. In these assessments, the investee must satisfy certain profitability criteria and secure profitability in excess of capital costs even after the deduction of credit costs from profit.

Profitability:

Profitability is calculated as profit less credit costs minus capital costs ((the sum of loans and stock-related risk weighted assets × targeted capital adequacy ratio + impairment VaR) × capital cost ratio)

These assessments revealed that the overall profitability of the Company's transactions with listed investees was in excess of capital costs and that the same applies to unlisted investees.

Taking a look at each investee, the Company confirmed that investees whose profitability surpasses capital costs account for approximately 70% of total investees. Currently, the Company is engaged in negotiations with investees failing to meet this profitability standard and other investees deemed to be in need of measures to improve profitability. Hereafter, the Company's decision whether or not to maintain a stockholding will depend on whether that investee is deemed likely to improve said profitability. At the same time, the Company will negotiate its divestment of their stock with those judged to be incapable of improving profitability.

Also, the Company regularly monitors the status of investees whose stock performance falls short of this standard while periodically checking on the progress of negotiations aimed at selling the stocks of underperforming investees.

In addition, as a result of the verification, there are instances when the Company sells stocks that are considered to be held fairly in consideration of market conditions and the Company's business and financial

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strategies.

As a result of the aforementioned activities, in fiscal 2020 the Company sold listed stock totaling ¥11.6 billion on an acquisition-cost basis.

Principle 1.7: Related Party Transactions

The Company has set forth procedures that should be followed prior to engaging in business transactions with related parties and presented said procedures in Article 5 of the Basic Corporate Governance Policy (Approval of Transactions with Parties Concerned).

Supplementary Principle 2.4.1: Ensuring Diversity in the Promotion of Core Human Resources

Concepts on ensuring diversity

Having experienced a management crisis ("Resona Shock") immediately after its inauguration in 2003, the Resona Group has positioned diversity management as a cornerstone for human resource management, striving to empower all employees, regardless of gender, age or nationality, to realize their full potential and achieve career success.

In recent years, the business environment has been evolving radically due to the ongoing globalization of economies and rapid advances in AI and other technologies, with new operational models quickly becoming obsolete and being superseded by another. Accordingly, businesses are being called upon to constantly take on the challenge of transformation in ways that defy past experience or prevailing norms.

To secure its ability to continuously deliver new value supporting its customers' happiness, the Resona Group continuously strives to transform itself into a financial service group rich with creativity. This striving involves securing diverse human resources and encouraging mutual respect among them so that they are better positioned to learn different ways of thinking and discover new ideas which, in turn, lead to innovation.

Furthermore, the Group expects its human resources to become true professionals equipped with strong specialist skills enabling the resolution of issues customers are confronting and with a personal dedication to enhancing the customers' happiness. When it comes to promoting employees, the Group is focused on appreciating the personalities of candidates and their aspirations toward self-motivated career goals, no matter their gender or years of service.

Based on the concepts discussed above, the Group is promoting diversity & inclusion to help diverse human resources realize their potential and take full advantage of input from for differing value systems.

Current status of and targets for diversity

The Resona Group is striving to secure workforce diversity as outlined below to achieve value creation supported by diverse employees who strive to understand each other's differences in ways of thinking, respect and inspire one another and proactively incorporate new ideas from their peers.

a. Women

The Group is proactively empowering women to achieve ambitious career paths, and its ratio of female line managers*1 surpassed 30% (sum of Resona Bank and Saitama Resona Bank) in April 2020. Also, the Group announced its targets for the empowerment and promotion of women as part of Long-Term Sustainability Targets disclosed in June 2021. Specifically, the Group aims to achieve the below presented ratios for the representation of women in various positions, an increase of 10% or more from the current levels, by the end of fiscal 2030.

Ratio of female Directors and Executive Officers at Resona Holdings: 30% or more

Ratio of female senior managers at six Group companies: 20% or more*2 Ratio of female line managers at six Group companies: 40% or more*2

*1 Those in managerial positions or above charged with overseeing staff

*2 Sum of Resona Holdings, Resona Bank, Saitama Resona Bank, Kansai Mirai Financial Group, Kansai Mirai Bank and Minato Bank

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