Resona : Corporate Governance Report

Last updated: June 25, 2021

CORPORATE GOVERNANCE

Resona Holdings, Inc.

Masahiro Minami President and Representative Executive Officer Inquiries: Corporate Governance Office TEL.: +81-3-6704-3111 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.

Resona cherishes relationships with shareholders.

1. • 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.
2. Society and "Resona"

Resona places importance on its ties with society.

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

Not applicable, since the Company adopts all principles set forth by the 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
3. 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.

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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 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).

Principle 2.6: Roles of Corporate Pension Funds as Asset Owners

The Group established a fund-based corporate pension system. Resona Bank and Saitama Resona Bank have established Resona Corporate Pension Fund while Kansai Mirai Bank has established Kansai Mirai Corporate Pension Fund and the Minato Bank has established Minato Bank Corporate Pension Fund (hereinafter the "Funds"). The Funds are charged with the management of pension assets associated with defined benefit pension plans, the payment of pensions and other pension-related administrative tasks. The Group Banks are systematically allocating to their respective Funds human resources who are appropriate for managing assets. For example, Resona Holdings assigns to the Resona Corporate Pension Fund human resources who have worked for such subsidiaries as Resona Bank and who are equipped with experience in securities management and pension trusts. In this way, the Group Banks are ensuring that their respective Funds are capable of independently determining asset management methodologies as well as undertaking proactive risk management and thus fulfilling specialist roles as asset owners. In addition, the Resona Corporate Pension Fund has announced its adherence to Japan's Stewardship Code.

The Funds mandate that such important matters as making changes to their constitutions, drafting annual budgets, business reporting, announcing financial results and managing pension assets must be approved by their respective boards of representatives. The Funds also mandate that one half of the membership of the Group Banks' boards of representatives consists of those appointed by their respective companies, with the other half consisting of those elected from among pension beneficiaries via mutual election. Moreover, directors elected from among the members of a board of representatives and the Group Banks' personnel in charge of human resources, financial affairs, market-related operations and other key operations attend periodic Asset Management Committee meetings to engage in discussions aimed at formulating and reviewing basic policies for asset management. In these ways, the Group Banks are ensuring the proper management of conflicts of interest between corporate pension beneficiaries

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and themselves.

Principle 3.1: Full Disclosure

1. Company objectives (e.g., business principles), business strategies and business plans

The Company formulated 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. These are presented under I. 1. "Basic Views" of this report.

In addition, the Company announced its "New Medium-term Management Plan" in May 2020. https://www.resona-gr.co.jp/holdings/english/about/strategy/plan.html

1. Basic views and guidelines on corporate governance
   Presented under I. 1. "Basic Views" of this report.
2. Board policies and procedures in determining the remuneration of the senior management and

directors

Policies and procedures adopted by the Company's Compensation Committee to determine the remuneration of the Company's directors and executive officers are presented under II. 1. "Remuneration for Directors and Executive Officers, Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" of this report and Articles 13 (Compensation Committee) and 14 (Compensation System) of the Basic Corporate Governance Policy.

4. Board policies and procedures in the appointment and dismissal of the senior management and the nomination of directors

Policies and procedures adopted by the Company's Nominating Committee to appoint candidates for the Company's directors and those adopted by the Board of Directors to appoint candidates for executive officers (including Representative Executive Officer) are presented under II. 1. "Independent Directors, Matters Relating to Independent Directors, Outline of the 'Standards for Electing Director Candidates'" of this report and Articles 11 (Election of Executive Officers, etc.) and 12 (Nominating Committee) of the Basic Corporate Governance Policy. In addition, the Company is striving to ensure the effectiveness of its policies and procedures through the following measures, with the aim of systematically securing objectivity, timeliness and transparency in the dismissal of executive officers. Specifically, the Board of Directors, whose majority is accounted for by outside directors, is authorized to dismiss executive officers, including the President, if, for example, their accomplishments have been deemed insufficient. Also, members of the Nominating Committee are kept informed about evaluation results for each executive officer's performance while regularly deliberating on the suitability of key individuals serving as executive team members and President.

5. Reasons for the election of director candidates, including those who will concurrently serve as Representative Executive Officers

Reasons for the election of such director candidates are presented in reference documents attached to the Notice of Convention of the 20th Ordinary General Meeting of Shareholders.

https://www.resona-gr.co.jp/holdings/english/investors/stock/meeting/pdf/notice20210526.pdf

Supplementary Principle 4.1.1: The Scope and Content of Matters Delegated to the Management The scope of matters delegated to Executive Officers is defined by the Company's Board of Directors and presented under Article 3 (System and Role of the Board of Directors) of the Basic Corporate Governance Policy.

Supplementary Principle 4.1.3: The Succession Plan for Management Personnel

Aiming for sustained improvements in corporate value, the Group introduced a succession plan in June 2007 that serves as a mechanism to ensure the successions of management roles and responsibilities to be borne by presidents and other officers at Resona Holdings, Kansai Mirai Financial Group and Group subsidiary banks in a way that secures the transparency of the process of selecting and nurturing officers.

The scope of the succession plan covers various candidates, from those nominated to the position of

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