Annual Report

2023

The Bank of Iwate,Ltd. Annual ReportTop Message

1 Management Policy, Business Environment, and Issues to be Addressed

1. Management Policy
Since its establishment in May 1932, The Bank of Iwate, Ltd. (the “Bank”) has been maintaining its two basic
positions of contributing to the development of the regional community and ensuring financial soundness of the
Bank under all circumstances as its fundamental mission objectives.
2. Business Environment
The current business environment surrounding regional financial institutions is characterized by the decline of
traditional business models that depend on deposits and loans due to prolonged low interest rates, as well as theneed to respond to changes such as the entry of companies from other industries and the expansion of online
banking. In addition, the environment is changing at a dizzying pace and is difficult to predict, as efforts to address
climate change are becoming increasingly global, prices of food, fuel, materials, and other items are rising, and newtechnologies such as the cashless system and AI are developing.
In Iwate Prefecture, the Bank’s main base of operations, we are seeing an increase in business closures anddissolutions and a decline in business establishments because of population outflow to urban areas, shortage ofworkers, and lack of successors, and these challenges are manifesting and becoming even more serious.
On the other hand, Iwate Prefecture, in addition to its rich natural environment, is one of the few prefectures thatmaintain a food self-sufficiency rate of more than 100%, and its presence as a production and supply base for foodand energy is growing.
Moreover, in the southern part of the prefecture, industrial hubs of semiconductor and automobile industries
have been growing, while in the northern part of the prefecture, moves toward the realization of a regional recycling
and symbiosis zone utilizing regional energy, forests, and marine resources are accelerating. In this way, industrial
structural change and socioeconomic transformation is underway throughout the prefecture. In terms of tourism,
Iwate Prefecture has a great deal to offer, with three World Heritage sites registered, the most of any prefecture in
Japan, and Morioka City, the prefectural capital, selected by the New York Times as one of “52 Places to Visit in
2023.”
3. Issues to be Addressed(1) Long-term vision
Under these circumstances, the Bank has formulated its new long-term vision for the next 10 years, starting in
FY2023, as becoming “a company of value co-creation that will solve our customers’ issues and drive thesustainable growth of the local community.” This long-term vision is based on our picture of what an ideal
community should be for locals and our customers, in terms of liveliness and security, presence of attractive
companies, and a financial infrastructure that is both familiar and convenient, and embodies how the Group wishes
to be in order to realize this concept.
The Group, while coordinating with regional business operators and local governments, will not only seize
opportunities created by the industrial structural change, but will also leverage the strengths of Iwate’s uniqueregional resources, such as renewable energy, agriculture, forestry and fisheries, and tourism, to further draw out its
potential, thereby generating new value for the region and realizing a rich, vibrant, and sustainable regional society.
(2) New Medium-term Management Plan
Overview of the New Medium-term Management Plan
To realize our long-term vision, we launched the 21st Medium-Term Management Plan – Regional Value CoCreation Plan – (the “Plan”) covering the three years from April 2023. Adhering to the philosophy of CSV (creationof shared value), the Plan positions the next three years as a period to deepen the financial services domain and takeon the challenge of new business areas that go beyond the framework of finance, based on the managementfoundation that has been built up through the improvement of the Group’s foundation and business restructuringthat were undertaken in the previous medium-term management plan. As the first phase of achieving our long-termgoals of ¥10.0 billion in consolidated net income and 5% ROE, we will create a profit growth trajectory through theeffective use of our high level of equity capital and the transformation of our business portfolio.
― 1 ―Basic Policies of the Plan
As a period for creating an evolved form of finance that supports the community, the Plan consists of the following threebasic policies.
Basic Policy I: Advancement of social solution business
The Bank will build a system capable of leading the revitalization and development of local economies and providing acomprehensive range of solutions while maximizing our core business of the financial intermediary function.
Additionally, we will provide high value-added financial services through the use of high-quality data and cross-industry
collaboration, while expanding our business portfolio to include local decarbonization efforts and new business areas.
Basic Policy II: Establishment of a solid management foundation to support the region
We will strengthen our asset business by optimizing capital allocation, improve management efficiency through DX
promotion, and decisively implement business restructuring and cost structure reforms. In addition, based on the current
comprehensive financial group structure, we will form a new group of companies that will support the region’s cyclicaleconomy, emphasize dialogue with stakeholders, and establish a high level of corporate governance.
Basic Policy III: Create an organization in which diverse human resources can continue to work in a rewarding
environment
In addition to actively investing in human resources so that we may nurture professional human resources capable of solving
local issues and promote individual growth, we will strive to create an organization in which all employees can continue tohave pride and job satisfaction and work with peace of mind by instilling a corporate culture with motivating challenges.
Key Performance Indicators (New Medium-Term Management Plan, Long-term Targets)
As the first phase toward achieving our long-term targets, we have set the following major numerical targets and will
work on various measures.
FY2022
results

FY2025targets¥5.3 billion¥7.0 billion¥10.0 billion

3.0%Over 4.0%

Over 5.0%

Consolidated capital ratio

11.64%

Around 10%–

OHR (non-consolidated)

74.8%

60% levels–(¥900 million)

Over ¥1.0 billion–

Indicator
Consolidated net income
Consolidated ROE (based on shareholders’ equity)

Customer service business profit

Long-term targets(up to FY2032)

2 Our Stance on Sustainability and Initiatives Thereof

Below is a description of the Group’s stance on sustainability and the initiatives thereof.
1. Sustainability Policy
With the aim of realizing sustainable local communities, The Bank of Iwate Group (hereinafter referred to as “theGroup”) is committed to creating common environmental, social, and economic value with all stakeholders,
including local communities, customers, shareholders, investors, and the Group’s employees, through ourbusiness activities, while respecting the rights and positions of all.
1. Create a virtuous cycle of “regional economic development” and “enhancement of the corporate value of theGroup” through business activities that contribute to solving various issues faced by the community and ourbusiness partners.
2. Develop and provide high quality financial functions answering the needs of our customers and local
communities, and fulfill our Group’s mission of revitalizing local economies and enriching people’s lives.
3. A s a corporate group with its main base of operations in Iwate Prefecture, which has a rich naturalenvironment, we will practice environmentally-friendly management and aim to achieve both economic
growth and environmental preservation.
4. All employees shall perform their duties with high ethical standards, with the aim of establishing a higher levelof corporate governance system, such as improving management transparency and strengthening supervisory
functions.
5. Based on the recognition that human resources are the source of all value, we will create an environment inwhich each employee can maximize his/her abilities and realize a work style that respects diversity,
personality, and individuality.
6. We will strive to actively and fairly disclose management information and respond to the expectations andtrust of our stakeholders through continuous and constructive dialogue.
― 2 ―2. Materiality
In order to realize our new long-term vision toward the 100th anniversary of our founding in 2032, we haveidentified three growth areas as materiality: “regional development and support for the growth of regional
industries,” “providing services and value through the use of data,” and “leading and innovative responses toward
the realization of a decarbonized society.” We have also identified “building an organization that maximizes thevalue of human resources” and “enhancement our corporate governance structure” as the management foundations
that will support these areas.
3. Governance(1) Establishment of the Sustainability Promotion Committee
In August 2021, the Bank endorsed the TCFD (Task Force on Climate-related Financial Disclosures)
recommendations to analyze and assess the risks and opportunities that climate change poses to our customers andthe Bank, and to achieve carbon neutrality in our community. In August 2022, we established the Sustainability
Promotion Committee to facilitate our response to the TCFD recommendations and to contribute to the realizationof a sustainable community through discussion and progress management of basic policies and measures related to
ESG management.
(2) Sustainability-related meetings held by the Committee and the Board of Directors (August 2022 - March 2023)
Date

Meeting

Main Matters Discussed, Reported Matters, etc.

October 19

1st committee
meeting

Items related to sustainability management system, disclosure items
related to climate change response, scope and method of CO2 emissions
measurement, method of physical risk and transition risk scenario
analysis, proposed financing policy for specific sectors, policy forsustainable finance initiatives, and local decarbonization support
measures

January 23

2nd committee
meeting

Discussion items from each subcommittee regarding TCFD response,development of sustainability policy, response regarding human capital
disclosure, and roadmap for promotion

February 24

Board ofDirectors meeting

Status of Sustainability Promotion Committee meetings and discussion
content, sustainability policy draft, the Group’s greenhouse gas (GHG)
reduction policy, methodology and disclosure policy for climate change
risk analysis, draft policy for lending to specific sectors, policy forsustainable finance initiatives, measures to support decarbonization in
the region, and policy on response to the disclosure of human capital

March 23

Board ofDirectors meeting

Discussion and decision on the development of policies related tosustainability and the establishment of goals related to addressing
climate change―

Subcommittee

A total of 26 subcommittee meetings in assembly format have beenheld.

4. Environmental and social issues(1) Risk management
a. Transition risk
The Bank recognizes that there are risks related to the transition to a decarbonized society in all sectors, not justthose sectors of carbon-related assets that are generally considered to have relatively high direct or indirect GHG
emissions.
We believe that there are short-, medium-, and long-term risks affecting the financial aspects of the Bank andother companies in terms of policy, regulation, technology, markets, and reputation. For example, the occurrence or
increase of carbon taxes and other payments without a reduction in GHG emissions; capital investment and newtechnologies for decarbonization becoming necessary; and consumers no longer using conventional products andservices due to a higher awareness of how these may impact the environment and society.
― 3 ―Against this backdrop, we have calculated the risk amount for the electricity sector, which is expected to be mostaffected by decarbonization, based on the credit situation at the Bank. The Net Zero Emissions (NZE) by 2050:
1.5℃ Scenario developed by the IEA (International Energy Agency) was used for this calculation.
As a result of this analysis, the cumulative impact of transition risk on credit costs is expected to increase by¥700 million.
b. Physical risk
The Bank recognizes acute and chronic physical risks in line with global warming, including higher frequency of
extreme events such as floods, strong winds, heat waves, and snow damage, as well as an increase in averagetemperatures and rise in sea level. If these risks manifest, there is concern they will affect the financial aspects of
the Bank and other companies due to loss of real estate collateral and business suspensions.
Therefore, we calculated the amount of risk based on the IPCC 4°C scenario, which assumes that a once-in-acentury flood will occur within the next 25 years, assuming damage to mortgaged buildings located in Iwate
Prefecture and that corporations in Iwate Prefecture will be forced to suspend their business operations.
As a result of this analysis, the impact of physical risk on credit costs is expected to increase by up to ¥1.5
billion.
c. Response
The Bank plans to manage climate-related risks in an integrated manner, including setting up discussion topics in
the Sustainability Promotion Committee and ALM Committee based on the status of carbon-related assets, GHG
emissions (especially Scope 3 Category 15 “Investments and Loans”), transition risk, and physical risk.
(2) Calculation of indicators, etc. relating to GHG
a. Carbon-related assets
Carbon-related assets are generally defined as assets or organizations with relatively high direct or indirect GHG
emissions. Accordingly, the Bank considers assets associated with the following sectors to be carbon-related assets.
(Millions of yen)
SectorItem

FY2021

FY2022

Amount48,23357,655Percentage of loans
outstanding

2.47%

2.85%

Amount72,12562,327

Percentage of loans
outstanding

3.69%

3.08%

Amount261,928

277,099

Percentage of loans
outstanding

13.43%

13.73%

Amount64,29867,382

Percentage of loans
outstanding

3.29%

3.33%

Total carbon-related assets

446,584

464,465

Percentage of loans outstanding

22.90%

23.01%

EnergyTransportation

Materials, buildings andcapital goods
Agriculture, food andforest productsb. GHG emissions
In collaboration with the Sustainability Promotion Committee’s subcommittee on greenhouse gas control andZeroboard Inc., a company that provides a cloud service to calculate and visualize GHG emissions, the Bank has
conducted several studies in line with the GHG Protocol regarding the scope for GHG emissions calculation,
calculation method, etc. Accordingly, we have calculated and estimated GHG emissions this time as per below. All
greenhouse gases are converted to CO2 (carbon dioxide).

― 4 ―a) Scope 1, 2 (including consolidated subsidiaries, unit: t-CO2)
Category

FY2021

FY2022

Scope 1

1,082

1,113

Scope 2

4,166

3,547

Total

5,248

4,660

b) Scope 3 (Category 3 includes consolidated subsidiaries and all others are non-consolidated, Unit: t-CO2)
Category

FY2021

FY2022

1. Purchased products and services

8,773

7,909

2. Capital goods

5,563

1,502

3. Fuel and energy activities notincluded in Scope 1 and 2

746

710

4. Transportation, delivery(upstream)

249

218

5. Waste from business operations

46

43

6. Business trips

107

135

7. Employee commute

552

535

15. Investments and loans

1,434,777

1,513,178

Total

1,450,816

1,524,234(3) Sustainable Finance Indicators and Targets
While the Bank limits loans to specific sectors, we position a leading and innovative response, and green
transformation to achieve a decarbonized society in the region as some of our top priorities, and local financial
institutions are expected to encourage community initiatives regarding SDGs and ESG. Therefore, we have set
finance execution targets and are actively pushing ahead with these in order to help solve environmental and social
issues through loans and other forms of finance.
Item
Sustainable financeTarget amount
PeriodDescription
Investments, loans, and lease transactions that contribute to solving
environmental and social issues and realizing a sustainable society
Accumulated amount of execution, etc. ¥500.0 billion
FY2021-FY2030

5. Human Capital(1) Human Resources Policy
We have established a Human Resources Policy as our basic approach to people and the organization, and position
it as the foundation of our personnel system and various personnel measures to realize the “desired organizational
image” and “desired human resources.”
Human Resources Policy
・People are our most important asset and the source of all value.
・Each and every employee and the Bank will continue to grow together in order to live up to the trust andexpectations of our customers and pave the way for the future of the community.
Based on this policy, the Bank promotes individual as well as organizational growth from the following
perspectives, and strives to foster an environment and culture that supports such growth.

― 5 ―・Autonomy and challenge (growth as an individual)・Expect employees to think and act autonomously, and provide them with challenging opportunities
・Expect employees to enhance and demonstrate their capabilities and expertise, and provide them with anenvironment to do so・Maximize all human resources (growth as an organization)
・Emphasize dialogue to increase engagement and bring out the best in each individual
・Appropriately reward job performance and behavior, challenge and creativity
・Respect diverse personalities and values (environment and culture that support growth)・Respect diverse personalities and values to create new ideas
・Offer flexible work styles to suit individual wishes and circumstances(2) Policy on professional development and establishment of an internal environment
In order to realize our long-term vision toward the 100th anniversary of our founding of being “a company of value
co-creation that will solve our customers’ issues and drive the sustainable growth of the local community,” we will
focus on professional development and establishment of an internal environment based on the aforementioned
Human Resources Policy.
a. Professional development
Based on the recognition that people are the most important asset in our aim to become a company of value
co-creation, we will actively invest in the development of professionals who can solve local issues and promoteindividual growth, while emphasizing the values of our employees and the diversity of the workplace.
Indicator:
・Annual investment in professional development: ¥100 million (¥61 million invested in FY2022)(3) D&I promotion
The Bank has been implementing D&I initiatives with the aims of creating flexible ideas that embrace diverse
values and enhancing corporate value by improving the sense of management participation and productivity of
employees. In FY2022, we established our Corporate Vision as well as Indicators and Targets, as detailed below, inorder to further enhance our D&I initiatives.
1. Corporate Vision
    Create an organization in which every employee can grow and play an active role with peace of mind
2. Key Themes(1) Create opportunities for dialogue(2) Support career development(3) Active recruitment of human resources
3. Indicators and Targets for FY2030(1) Promotion of female employees to executive positions
Percentage of women in newly appointed executive positions: 30% or more
* 40% or more from FY2025 onwards(2) Childcare leave taken by male employees
Percentage of male employees taking childcare leave, etc.:
100% or more
* The original target was set at 80%, but this was revised to 100% in the Medium-term Management Plan
starting in FY2023.
a. Percentage of female workers in management positions
Number of management positions(persons)

Number of females in management
positions (persons)

676

101

― 6 ―

Female ratio (%)
14.9

b. Childcare leave usage ratio among male employees
Number of male workers whose
spouses gave birth (persons)

Number of male workers who tookchildcare leave, etc. (persons)Usage rate of childcare leave (%)

32

100.0

32
c. Differences in wages between male and female workers
Average wage for men(yen)

Average wage for women(yen)

Difference (%)

Full-time workers

7,466,172

4,255,357

57.0Part-time and fixed-term
workers

2,684,954

1,372,743

51.1

All workers

6,963,429

3,585,864

51.5(4) Initiatives for work style reforms (systems for leave/leave of absence, etc.)
Timing of introduction/
new establishment

Description

April 2020

New establishment of flextime system

April 2021

Introduction of hourly-paid annual leave“

Introduction of an inclusive dress code
during working times

Abolished uniforms for female
employees at the same time

October 2022

New establishment of leave for
employees with partners who have given
birth

Leave system of up to 28 days within 8
weeks after the birth of a child“

New establishment of reserve leavesystem for peace of mind

Expanded the purpose of use of timelimited annual leave reserve system“

New establishment of life design leavesystemSystem for selecting leave of absence
when events such as career development
or family caregiving occur“

New establishment of remote work
systemInstitutionalization of a system that had
been in operation as a countermeasureagainst COVID-19 infection

Remarks

Toru Iwayama, President― 7 ―Analysis of the Financial Position and Business Performance of the Bank(on a consolidated basis)

Financial Position
Principal Accounts
Deposits (including negotiable certificate of deposit) and Asset Under Management
Deposits (including negotiable certificate of deposit) at the fiscal year-end decreased by ¥11.6 billion from theprevious fiscal year-end to ¥3,441.5 billion (US$25,773.2 million). This was due in part to a decrease in publicdeposit.
The fiscal year-end balance of assets under management posted a decrease of ¥300 million from the previous
fiscal year-end to ¥338.3 billion (US$2,533.5 million). This was due to a decrease in the balances of investment
trusts and public bonds despite an increase in insurance balance.
Loans
The fiscal year-end balance of loans increased by ¥68.2 billion from the previous fiscal year-end to ¥2,018.2 billion(US$15,114.2 million). This was due in part to an increase in SMEs loans and personal loans.
Securities
The value of total securities decreased by ¥76.9 billion from the previous fiscal year-end to ¥1,076.2 billion(US$8,058.9 million). This was due to a decrease in the balances of government bonds, municipal bonds, etc.
Cash Flow Analysis
Net cash used in operating activities was a net outflow of ¥111.7 billion (US$836.5 million) in the current fiscal
year, while net cash of ¥43.2 billion was provided in the previous fiscal year. This was because of a decrease infunds from the increase in loans and bills discounted and decrease in borrowed money, etc.
Net cash provided by investing activities was a net inflow of ¥58.9 billion (US$441.0 million) in the current
fiscal year, while net cash of ¥22.6 billion was provided in the previous fiscal year. This was due to proceeds fromsale and redemption of securities exceeding the acquisition of securities in both the previous fiscal year and thecurrent fiscal year.
Net cash used in financing activities was a net outflow of ¥1.7 billion (US$12.6 million) in the current fiscal
year, while net cash of ¥1.6 billion was used in the previous fiscal year. This was due to the payment of cash
dividends.
As a result of the above, the fiscal year-end balance of cash and cash equivalents decreased by ¥54.5 billion
from the previous fiscal year-end to ¥646.1 billion (US$4,838.6 million).
Business Performance
Earnings
Total income increased by ¥2.9 billion from the previous fiscal year to ¥42.1 billion (US$315.0 million). This wasdue to increases in gain on sale of bonds and gain on sale of stocks and other securities despite a decrease in interest
income including interest and dividends on securities.
Total expenses increased by ¥5.0 billion from the previous fiscal year to ¥36.0 billion (US$269.5 million). Thiswas mainly attributable to increases in loss on sale of bonds and loss on redemption of bonds.
As a result, ordinary profit decreased by ¥2.1 billion from the previous fiscal year to ¥6.1 billion (US$45.4
million). Despite this decrease in ordinary profit, net income increased by ¥1.7 billion from the previous fiscal year
to ¥5.1 billion (US$38.2 million) due to decreases in special losses and provision for income taxes.
Capital Ratio
The capital ratio increased 0.02 percentage points from the previous fiscal year-end to 11.64% on a consolidated
capital adequacy basis and by 0.03 percentage points from the previous fiscal year-end to 11.33% on a nonconsolidated capital adequacy basis, as a result of an increase in equity capital. Under its fundamental mission
objective of ensuring the financial soundness of the Bank under all circumstances, the Bank sees the consolidated
capital ratio as one of the key indicators of the Medium-term Management Plan and believes it is maintaining asufficient level. From FY2023 onwards, the Bank’s policy is to utilize capital for an accumulation of risk assets andstrategic investment in growth areas.

― 8 ―Corporate Governance■ Basic ApproachEver since its establishment, the management of the Bank has been based on the fundamental mission objectivesof contributing to the development of the regional community and ensuring the financial soundness of the Bank
under all circumstances. Even in today’s rapidly changing business environment, in order to fulfill the duties
expected of us as the leading bank in our region, by all stakeholders including our business partners andshareholders, we take complete responsibility for our management decisions and aim to establish the highest
standard of corporate governance that includes improved management transparency and strengthened oversightfunctions.
■ Corporate Governance Structure
The Bank, pursuant to the resolution on the partial amendments to the Articles of Incorporation at the General
Meeting of Shareholders held on June 22, 2018, transitioned to a company with Audit & Supervisory
Committee. By transitioning to a company with Audit & Supervisory Committee, the Bank shall strive tofurther improve its corporate value through the enhancement of its corporate governance system by installing
an Audit & Supervisory Committee, over half of whose members are Outside Directors, and strengthening
oversight functions through the voting rights on the Board of Directors and the right to voice opinions on
executive appointments and dismissals held by the Directors serving as Audit & Supervisory Committee
Members.
[Corporate governance structure]
General Meeting of Shareholders
Appointment/dismissal

Nomination andCompensation
Advisory
Committee

Involvement
and advice

Directors not serving as
Audit & Supervisory
Committee Members

Reports

Appointment/dismissal

Board of Directors

Audit andoversight

President

Appointment/dismissal

Audit & Supervisory Committee

Reports

Directors serving as Audit &Supervisory Committee Members

Coordination

References and reports
on important items

Directions

Reports

Reports

Credit Risk Committee

Compliance Committee

Directions

Reports
Coordination

Sustainability Promotion Committee
ALM Committee

Accounting
Auditors

Executive Committee

Operational Risk Committee

Audit Division

Visiting audit andmonitoring

Customer Interest Protection Committee

Business branches, Head Office, subsidiaries, etc.

■ Configuration of the Board of Directors and Audit & Supervisory Committee
From the viewpoint of ensuring the most effective and efficient functioning of the Board of Directors as well as
to revitalize of the Board, the Articles of Incorporation stipulate that the number of Directors, excluding Audit& Supervisory Committee Members, shall not exceed twelve, and the Board of Directors shall consist of a
combination of Directors who are familiar with the Group’s business operations and multiple Outside Directors
who have a wealth of experience and knowledge from outside the company. Outside Directors currently
account for 40.0% of the Board of Directors, while female Directors account for 13.3%. The Articles ofIncorporation stipulate that, in order to secure the effectiveness of auditing, the number of Directors on the
Audit & Supervisory Committee shall not exceed five, and as of June 23, 2023, the number of Audit &Supervisory Committee Members is five, three of whom are independent Outside Directors.

― 9 ―■ Role of the Board of Directors and Matters Deliberated
The Board of Directors makes important decisions on management plans, governance matters, and basic policies
on risk and compliance, etc., by defining the scope of matters to be resolved by the Board of Directors andclarifying the scope of delegation to the management meetings and management team, etc., in the Board of
Directors Regulations and other rules, as well as performs a more effective management oversight function.
Matters Discussed and Reported by the Board of Directors (FY2022)
1 Management Plan
2 Matters pertaining to sustainability
3 Matters pertaining to risk and compliance
4 Matters pertaining to corporate governance
5 Human resources
6 Sales
7 Market
8 Other・Board of Directors’ opinion pertaining to shareholder proposals
・Result of resolution on shareholders proposals
・Activist trends
・Progress of alliance with The Akita Bank, Ltd.
■ Nomination and Compensation Advisory Committee, Executive Committee and Compliance Committee
Nomination and Compensation Advisory Committee
The Nomination and Compensation Advisory Committee has been established as an advisory body to the Boardof Directors to improve the transparency and objectivity regarding decisions on the nomination and compensationof Directors. The Bank stipulates that the Nomination and Compensation Advisory Committee comprises Outside
Directors other than those serving as Representative Directors or Audit & Supervisory Committee Members, sothat the majority is made up of Outside Directors, and that the chairman of the Nomination and Compensation
Advisory Committee be chosen from Outside Directors by mutual election.
Executive Committee and Compliance Committee
The Bank has established the Executive Committee and the Compliance Committee as mechanisms that discussand decide the matters referred by the Board of Directors. In order to reinforce its organization with a greater
emphasis on compliance, the Bank has the Compliance Committee, rather than the Executive Committee, discuss
important matters relating to compliance.
■ Executive Committee and Compliance Committee
The Bank has established the Executive Committee and the Compliance Committee as mechanisms that discussand decide the matters referred by the Board of Directors. The Bank is planning to reinforce its organization
with a greater emphasis on compliance by having the Compliance Committee, rather than the Executive
Committee, discuss important matters relating to compliance.
■ Enrichment of information disclosure activities
In compliance with relevant laws and regulations, the Bank strives to disclose accurate management information
in a timely manner and to enrich the content of the information that it discloses so that valuable information canbe viewed in a timely manner via the Bank’s website.
The Bank also actively makes efforts on investor relations to earn the confidence of business partners and themarket and corporate responsibility aimed at customers of the community.

― 10 ―

· Board of Directors (As of July 1, 2023)
Inside Directors

Chairman

Sachio Taguchi

President

Toru Iwayama

Director / Senior Managing
Executive Officer

Kensei Ishikawa

Director / Managing
Executive Officer

Shinji Niisato

Director / Managing
Executive Officer

Shinei Kishi

Director / Managing
Executive Officer

Fumihiko Kikuchi

Director / Managing
Executive Officer

Kazuhiro Sugawara

Shuichi Fujisawa

Director serving as an Audit& Supervisory Committee
MemberDirector serving as an Audit& Supervisory Committee
MemberShinichi Matsumoto

Director (Outside Director)

Yutaka Takahashi

Outside Directors
Director (Outside Director)

Atsushi Miyanoya

Director (Outside Director)

Toshinori Abe

Director serving as an Audit& Supervisory Committee
Member (Outside Director)

Masakazu Watanabe

Managing Executive Officer /General Manager of Tokyo
OfficeJunya Sekimura

Executive Officer/General
Manager Head Office

Manabu Fujiwara

Executive Officer/General
Manager of Kitakami Branch

Katsumi Yamazaki

Executive Officer/General
Manager of System Division

Shinichi Sasaki

Executive Officer/General
Manager of Sendai office

Shohei Morita― 11 ―

Director serving as an Audit& Supervisory Committee
Member (Outside Director)
Director serving as an Audit& Supervisory Committee
Member (Outside Director)

Executive Officer/General
Manager of Regional Community
Contribution Division
Executive Officer/General
Manager of Business
Management Division
Executive Officer/General
Manager of General
Planning Division
Executive Officer/General
Manager of Audit Division

Etsuko Sugawara
Chikako Maeda

Toshiaki Nagase
Shigeo Takano
Toru Obara
Shuichi Yukikawa

· Organization (As of July 3, 2023)

General Meeting of Shareholders

Nomination and Compensation
Advisory Committee
Board of Directors
Audit & Supervisory Committee
Executive
Committee

General Planning Division
Public Relations Office
Tokyo Liaison Office
General Affairs Division
Personnel Division
Sales Strategy Division

Customer Response Center

Structured Finance Office
Regional Community Contribution Division
Public Affairs Office
Digital Promotion Division
Personal Loan Support Center
Direct Banking Center

Head Office
Local Office
Hachinohe OfficeSendai Office
Tokyo Office
Branches
Local Office

Iwagin Jigyo Souzou Capital
Co.,Ltd.

Iwagin Lease Co., Ltd.

Iwagin DC Card Co., Ltd.

Iwagin Credit Service Co.,Ltd.

Iwagin R&Consulting Co., Ltd.

manorda Iwate Co., Ltd.

Iwagin Mirai Investment Co.,Ltd.

― 12 ―

Credit Card Center
Loan Plaza
Financial Markets DivisionInternational Business Office
Loan Supervision DivisionCorporate Financial Support OfficeBusiness Management Division
Financial Products Management Office
Operations Concentration Center
Systems Division
Risk Management Division
Compliance Office
General Secretariat
Frontier Business Office
Audit Division

Affiliate
Subsidiaries

· The Bank of Iwate Group

Name/Address

Capital(Millions ofyen)

Main Business

Date of
Establishment

The
Bank’sVotingRightsVoting RightsofSubsidiaries,
etc. Other than
Said
Subsidiaries,
etc.

Iwagin Lease Co., Ltd.
1-2-5 Chuo Dori,Morioka City, Iwate
Prefecture30

Leasing, etc.

April 1, 1972

100%

0%

Iwagin DC Card Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture20

Credit cards
and credit
guarantee, etc.

August 1, 1989

100%

0%

Iwagin Credit Service
Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture20

Credit cards
and credit
guarantee, etc.

August 1, 1989

100%

0%

100

Consulting,regional
economic
surveys, etc.

April 1, 2020

100%

0%

70

Regional
tradingcompanybusiness, etc.

April 1, 2020

100%

0%

50

Investment
fundmanagement,etc.

July 3, 2023

100%

0%

50

Investment
fundmanagement,
etc.

April 1, 2015

40%

0%

Iwagin R & Consulting
Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecturemanorda Iwate Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture
Iwagin Mirai
Investment Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture
Iwagin Jigyo Souzou
Capital Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

Iwagin Lease Data Co., Ltd. changed its name to Iwagin Lease Co., Ltd. on July 1, 2023.

― 13 ―

Consolidated Balance Sheets

The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022

ASSETSCash and due from banks (Notes 3 and 6)
Call loans and bills bought (Note 6)
Monetary claims bought (Note 6)
Money held in trust (Notes 5 and 6)
Securities (Notes 4, 6, 8 and 15)
Loans and bills discounted (Notes 6, 7 and 9)
Foreign exchange assets
Premises and equipment (Notes 11 and 23)
Intangible assets (Notes 12 and 23)
Net defined benefit asset (Note 16)
Deferred tax assets (Note 17)
Customers’ liabilities for acceptances and guarantees (Note 15)
Other assets (Notes 6, 8 and 10)
Allowance for doubtful accounts (Note 6)
Total assets
LIABILITIES AND NET ASSETS
Liabilities:
Deposits (Notes 6, 8 and 13)
Payables under securities lending transactions (Notes 6 and 8)
Borrowed money (Notes 6 and 8)
Foreign exchange liabilities
Accrued bonuses for directors and corporate auditors
Net defined benefit liability (Note 16)
Retirement benefits for directors and corporate auditors
Provision for losses on reimbursement of dormant deposits
Provision for contingent losses
Deferred tax liabilities (Note 17)
Acceptances and guarantees (Note 15)
Other liabilities (Notes 6, 14 and 23)
Total liabilities
Net assets (Note 18):
Common stock:
Authorized — 49,450 thousand shares as at 31 March 2023 and 2022
Issued and outstanding —18,498 thousand shares as at 31 March 2023 and2022
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Net unrealized holding gains on available-for-sale securities (Note 4)
Net unrealized losses on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 16)
Total accumulated other comprehensive income
Stock acquisition rights (Note 19)
Total net assets
Total liabilities and net assets

Millions of yen
2023
2022
¥647,034¥701,403－
36,0005,122
5,832
10,701
10,571
1,073,192
1,149,998
2,010,807
1,943,178
2,860
3,947
14,80015,763
1,918
2,239
6,803
5,521
2,318
265
4,366
4,583
54,20556,535(13,991)(15,575)¥3,820,135¥3,920,260¥3,432,863

See accompanying notes.

14 ―
― 12

－

38,35880,1398,037,085
15,058,841
21,418110,837
14,36450,947
17,35932,697405,939(104,778)$28,608,814$25,708,552

172,529
14
21
842
13
200
271
18
4,366
23,7703,634,907¥3,444,092
10,054
236,935
48
20
799
20
286
174
3,071
4,583
26,613
3,726,695

12,09012,09090,541

5,667
165,224(4,200)178,781
8,762(1,146)(1,371)
6,245
202
185,228

5,667
161,506(4,354)
174,909
22,100(2,505)(1,232)
18,363
293
193,565

42,4401,237,355(31,454)
1,338,882
65,618(8,583)(10,267)
46,7681,513
1,387,163¥3,820,135¥3,920,260$28,608,814

2023

2022

U.S. dollars
2023¥10,664.55¥11,166.80－

Yen
Per share data:
Net assets (Note 25)

Thousands of
U.S. dollars(Note 1)2023
$4,845,608－

1,292,062
105
157
6,306
97
1,498
2,030
135
32,697
178,01227,221,651$79.87

Consolidated Statements of Income

The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022
Thousands of
U.S. dollars
Millions of yen(Note 1)

2023

2022

2023

¥17,381¥17,290$130,166

8,882

9,536

66,517

333

448

2,494

9,353

8,780

70,044

Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 20)

5,890

4,717

44,110

Other income (Note 22)

5,940

3,513

44,484

Total income

47,77944,284357,815Interest on deposits

125

246

936

Interest on borrowings

78

11

584

Expenses:
Interest expenses:

Other interest expenses
Fees and commissions

451

520

3,378

3,510

3,418

26,286

Other operating expenses (Note 20)

11,5985,220

86,857

General and administrative expenses (Note 21)

24,087

24,853

180,386

Other expenses (Note 22)

1,354

3,004

10,140Total expenses

41,20337,272308,567

6,576

7,012

49,248Current

1,103

2,369

8,260

Deferred

91

517

682

Income before income taxes
Provision for income taxes (Note 17)

1,194

2,886

8,942

Net income

5,382

4,126

40,306

Net income attributable to owners of parent¥5,382¥4,126$40,306

Yen

U.S. dollars

2023

2022

2023

Net income (Note 25)¥310.36¥235.91$2.32

Diluted net income (Note 25)308.90234.742.31

Cash dividends applicable to the year (Note 28)

90.00

80.00

0.67

Per share data:

See accompanying notes.

15 ―
― 13

Consolidated Statements of Comprehensive Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022
Thousands of
U.S. dollars

Net income

Millions of yen(Note 1)

2023

2022

2023

¥5,382¥4,126$40,306(99,888)

Other comprehensive losses (Note 24):
Net unrealized holding losses on available-for-sale securities(13,338)(10,759)

Net unrealized gains on hedging derivatives (Note 6)

1,359

799

10,177

Remeasurements of defined benefit plans (Note 16)

(139)

(744)

(1,041)(12,118)(10,704)(90,752)

Comprehensive losses

Total other comprehensive losses¥(6,736)¥(6,578)$(50,446)

Total comprehensive losses¥(6,736)¥(6,578)$(50,446)(6,736)(6,578)(50,446)

Attributable to:
Owners of parent

See accompanying notes.

16 ―
― 14

Consolidated Statements of Changes in Net Assets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022

Millions of yen
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2021
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulated

Stock

Total

of definedotheracquisition

net assets

benefit planscomprehensive

rightslosses¥12,090¥5,667¥158,440¥(3,885)¥172,312¥32,859¥(3,304)¥(488)¥29,067¥252¥201,631－－(1,056)－(1,056)

－

－

－

－

－

(1,056)

Disposal of treasury stock

－
－
－

－
－
－

4,126
－
(4)

－
(480)
11

4,126
(480)
7

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

4,126
(480)
7

Net changes in items other thanshareholders’ equity during the
year

－

－

－

－

－

(10,759)

799

(744)

(10,704)

41(10,663)－
12,090

－
5,667

3,066
161,506(469)(4,354)

2,597
174,909(10,759)
22,100799(2,505)(744)(1,232)(10,704)
18,36341
293(8,066)
193,565－－(1,646)－(1,646)

－

－

－

－

－

(1,646)

5,382

Total change during the year
BALANCE, 1 April 2022
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2023

5,382

－

－

－
－

－
－

－

－
(1)

(18)

155

137

－
－
¥12,090－－¥5,667－
3,718¥165,224－
154¥(4,200)－
3,872¥178,781

－

－

－

－

－

5,382

－
－

－
－

－
－

－
－

－
－

137

(13,338)

1,359

(139)

(12,118)(91)(12,209)(13,338)¥8,762

1,359¥(1,146)(139)¥(1,371)(12,118)¥6,245(91)¥202(8,337)¥185,228(1)(1)

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2022
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2023

$90,541

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulatedof definedotherbenefit planscomprehensive

StockacquisitionrightsTotal
net assets

losses$42,440 $1,209,511 $(32,607)$1,309,885$165,506$(18,760)$(9,226)$137,520$2,194$1,449,599－－(12,327)－(12,327)

－

－

－

－

－

(12,327)

－
－
－

－
－
－

40,306
－
(135)

－
(8)
1,161

40,306
(8)
1,026

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

40,306
(8)
1,026

－
－
－
－
1,153
27,844$42,440 $1,237,355 $(31,454)－(99,888)

10,177(1,041)(90,752)(681)(91,433)

28,997$1,338,882(99,888)

10,177(1,041)(90,752)(681)$65,618$(8,583)$(10,267)$46,768$1,513(62,436)$1,387,163－－$90,541

See accompanying notes.

17 ―
― 15

Consolidated Statements of Cash Flows
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022

Millions of yen
2023
2022

Thousands of
U.S. dollars(Note 1)
2023

Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash used in operating activities:
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for contingent losses
Increase (decrease) in accrued bonuses for directors and corporate auditors(Increase) decrease in net defined benefit asset
Increase (decrease) in net defined benefit liability
Increase (decrease) in retirement benefits for directors and corporate auditors
Increase (decrease) in provision for losses on reimbursement of dormant deposits
Interest income
Interest expenses
Investment securities (gains) losses, net(Increase) decrease in money held in trust
Foreign exchange (gains) losses, net(Gains) losses on sale of businesses(Gains) losses on disposal of premises and equipment
Net (increase) decrease in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money
Net (increase) decrease in due from banks, excluding the Bank of Japan
Net (increase) decrease in call loans and others
Net increase (decrease) in call money and others
Net increase (decrease) in payables under securities lending transactions
Net (increase) decrease in foreign exchange assets
Net increase (decrease) in foreign exchange liabilities
Interest received
Interest paid
Other, net
Subtotal
Income taxes paid
Income taxes refunded
Net cash provided by (used in) operating activities¥6,576¥7,012$49,2482,035
17(1,584)
97
0
(939)
(306)
(7)
(86)
(26,596)
654
474
(11)
(2,745)(87)(48)(67,629)
22,971(34,200)(64,406)(123)
36,711－(10,054)
1,087(33)
26,584(726)
2,545(109,829)(1,871)0(111,700)

2,004
645
504
(28)
(2)
(262)
(1,528)(0)(88)(27,274)
777(1,544)132(2,853)－
112(44,625)(40,688)
69,88064,997205(13,225)(7,750)10,054(1,873)33
27,489(835)
5,697
46,966(3,735)
4
43,235

15,240127(11,863)726
0(7,032)(2,292)(52)(644)(199,177)
4,898
3,550
(82)
(20,557)
(652)
(359)
(506,470)
172,029(256,122)(482,334)(921)
274,927－(75,294)
8,140
(247)
199,087(5,437)
19,059(822,504)(14,012)0(836,516)

Cash flows from investing activities:
Acquisition of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Increase in money held in trust
Decrease in money held in trust
Acquisition of premises and equipment
Proceeds from sale of premises and equipment
Payment for retirement of premises and equipment
Acquisition of intangible assets
Payment for asset retirement obligations
Payment for sale of businesses
Net cash provided by investing activities(445,755)
54,862450,854(3,000)
2,846
(603)
165
(34)
(387)
(11)
(52)
58,885(285,997)
22,688288,956－－(1,565)25(102)(1,306)(108)－
22,591(3,338,239)
410,859
3,376,425(22,467)
21,314(4,516)1,236(255)(2,898)(82)(390)
440,98718 ―― 16

Consolidated Statements of Cash Flows (Continued)
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022

Millions of yen
2023
2022
Cash flows from financing activities:
Repayments of lease obligations
Cash dividends paid
Payment for acquisition of treasury stock
Proceeds from sale of treasury stock
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year (Note 3)

See accompanying notes.

19 ―
― 17

Thousands of
U.S. dollars(Note 1)2023

(30)
(1,646)(1)
0(1,677)(30)(1,056)(480)
0(1,566)(224)(12,327)(8)
0(12,559)－(54,492)
700,592¥646,100

11
64,271
636,321¥700,592－(408,088)
5,246,701$4,838,613

Notes to Consolidated Financial Statements
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2023 and 2022
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Bank of Iwate, Ltd. (the “Bank”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan, its related
accounting regulations and the Banking Act of Japan, and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects, such as application and disclosure requirements, from International
Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some
supplementary information included in the statutory Japanese language consolidated financial statements, but not necessarily required
for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers, using the prevailingexchange rate as at 31 March 2023, which was ¥133.53 to U.S. $1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at thisor any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIESReporting entity
The consolidated financial statements include the accounts of the Bank and its significant subsidiaries. Japanese GAAP on
consolidated financial statements requires the consolidation of all significant investees that are controlled through substantial
ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances
are eliminated.
A non-consolidated subsidiary is excluded from the scope of consolidation because in terms of its total assets, ordinary income, net
income or loss (amount corresponding to equity), retained earnings (amount corresponding to equity) and accumulated othercomprehensive income or loss (amount corresponding to equity), it has minor impact on the consolidated financial statements even if
it is excluded from the scope of consolidation.
Investments in affiliates over which the Bank has the ability to exercise significant influence in terms of operating and financial
policies of the investees are accounted for by the equity method.
There are no investments in affiliates that are accounted for by the equity method.
A non-consolidated subsidiary and investments in affiliates that are not accounted for by the equity method are excluded from thescope of the equity method because in terms of their net income or loss (amount corresponding to equity), retained earnings (amountcorresponding to equity) and accumulated other comprehensive income or loss (amount corresponding to equity), they have minor
impact on the consolidated financial statements even if they are excluded from the scope of the equity method.

20 ―
― 18

Trading account securities and other securities
Securities are classified as follows based on the purpose: (a) securities held for trading purposes (“trading account securities”), (b)debt securities intended to be held to maturity (“held-to-maturity debt securities”), (c) equity securities issued by unconsolidated
subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the categories above (“available-forsale securities”).
(a) Trading account securities — National government bonds held for trading purpose are presented as trading account securities.
Trading account securities are stated at fair value (cost of securities sold is calculated using the moving-average method). Gains
and losses realized on disposal and unrealized gains and losses from fair value fluctuations are recognized as gains or losses in the
period of the change.
(b) Held-to-maturity debt securities are carried at amortized cost (straight-line method) using the moving-average method.
(c) Equity securities issued by subsidiaries and affiliated companies, which are not consolidated or accounted for by the equity method,
are carried at cost using the moving-average method.
(d) Available-for-sale securities with available fair values are primarily carried at the market prices (cost of securities sold is calculatedusing the moving-average method).
Shares, etc. that do not have a market price are stated at the moving-average cost.
Net unrealized holding gains (losses) on these securities, net of applicable income taxes, are reported in a separate component of
net assets.
Available-for-sale securities with available fair values are written down when a significant decline in fair value below the cost ofsuch securities is deemed to be other than temporary. The amount written down is accounted for as an impairment loss.

Money held in trust
Securities invested as part of trust assets in independently managed money trusts that invest primarily in securities are stated at fairvalue.

Derivatives and hedge accounting
The Bank employs forward exchange contracts, currency swaps and interest rate swaps to meet customers’ needs and mitigate interest
rate risks and foreign exchange risks. Derivative financial instruments are stated at fair value.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Bank defers recognition of gains orlosses resulting from changes in fair value of the derivative financial instruments until the related gains or losses on the hedged items
are recognized (deferral method).
Transactions to hedge against interest rate risks affecting the financial assets and liabilities of the Bank are accounted for using
deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing of Application of AccountingStandards for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public Accountants (“JICPA”) Industry
Committee Practical Guideline No. 24, 17 March 2022).
Regarding the effectiveness of a hedge, a hedge that is intended to offset the effects of market fluctuations is assessed based on agroup-by-group comparison of hedged items and hedging instruments. Both hedged items, including deposits and loans, and hedging
instruments, including interest rate swaps, are classified into groups by the remaining maturity period. The effectiveness of a cash

21 ―
― 19

flow hedge is assessed on the basis of the correlation between the base interest rate index of the hedged cash flow and that of thehedging instrument.
Among the hedging relationships above, those included in the scope of application of “Practical Solution on the Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No. 40, 17 March 2022) are subject to the special treatment
stipulated in the Practical Solution. The details of hedging relationships to which the Practical Solution is applied are as follows.
a. Method of hedge accounting: deferred hedging and special treatment of interest rate swaps
b. Hedging instruments: interest rate swaps
c. Hedged items: government bonds, municipal bonds and loans
d. Types of hedging transactions: those that offset market fluctuations
As for the hedging transactions against currency exchange risks arising from assets and liabilities in foreign currencies, the Bank
applies deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Committee Practical Guideline No. 25, 8
October 2020). The Bank assesses the effectiveness of currency swap and foreign exchange swap transactions executed for offsetting
the risks of changes in currency exchange rates by verifying that there exist foreign currency positions of the hedging instruments
corresponding to the foreign currency monetary claims and debts to be hedged.
Certain interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at fair value,
but the differential to be paid or received under the swap contracts is recognized as interest expense or income (exceptional method).
Depreciation and amortization methods(1)

Premises and equipment (excluding leased assets)

The Bank’s premises and equipment are stated at cost less accumulated depreciation. The Bank depreciates its premises and equipment
under the declining-balance method over their estimated useful lives. Depreciation of buildings acquired on and after 1 April 1998
(excluding installed facilities) and installed facilities and structures acquired on and after 1 April 2016 by the Bank is computed under
the straight-line method. Estimated useful lives are as follows:
Buildings: 3-30 years
Equipment and furniture: 2-20 years
Consolidated subsidiaries depreciate their premises and equipment primarily under the declining-balance method over theirestimated useful lives.
(2)

Intangible assets (excluding leased assets)

The Bank and its consolidated subsidiaries (the “Group”) amortize intangible assets under the straight-line method over their estimateduseful lives. Costs of computer software developed or obtained for internal use are amortized using the straight-line method overestimated useful lives of five years.
(3)

Leased assets

Depreciation and amortization of leased assets pertaining to finance lease transactions other than those that transfer the ownership ofthe leased assets to the Group, which are included in “Premises and equipment” and “Intangible assets,” are computed under thestraight-line method. The lease term is equal to the useful life and there is no residual value except where residual value guarantees
are stipulated in lease contracts.

22 ―
― 20

Depreciation of leased assets pertaining to finance lease transactions that transfer the ownership of the leased assets to the Groupis computed by the same method used for fixed assets owned by the Group.

Allowance for doubtful accounts
The reserve for loans to borrowers that are classified as legally bankrupt or substantially bankrupt is calculated by deducting theestimated disposal value of collateral and the amount deemed collectible from guarantees from the book value.
The Bank also provides specific reserves for potentially bankrupt borrowers by calculating the amount of loss expected during thethree-year period subsequent to the balance sheet date on the loan balance (“unsecured amount”), less expected collection from
disposal of collateral, guarantees and repayment on the uncovered portion of the loan from historical experiences. The amount of
expected loss is calculated based on the average loan loss ratio derived from the actual loan loss during the past three years or the
average loan loss ratio for the entire measurable period used as a lower limit in order to reflect long-term economic fluctuations, withnecessary amendments such as future prospects.
For loans to large borrowers whose unsecured amount exceeds a certain level, cash flows related to the collection of loan principal
and the receipt of interest are estimated using a reasonable method, and the difference between the amount of cash flows discounted
at the initial contracted interest rate and the book value of the loans is recorded as allowance for doubtful accounts (cash flow
estimation method [“DCF method”]).
The reserve for loans to borrowers that are classified as requiring supervision but are substantially equivalent to requiring attention
is calculated based on the amount of expected loss during the three-year period subsequent to the balance sheet date. The amount of
expected loss is calculated based on the average loan loss ratio derived from the actual loan loss during the past three years or the
average loan loss ratio for the entire measurable period used as a lower limit in order to reflect long-term economic fluctuations, withnecessary amendments such as future prospects.
For loans to large borrowers whose credit amount exceeds a certain level, cash flows related to the collection of loan principal andthe receipt of interest are estimated using a reasonable method, and the difference between the amount of cash flows discounted at theinitial contracted interest rate and the book value of the loans is recorded as allowance for doubtful accounts (cash flow estimation
method [“DCF method”]).
The reserve for loans to borrowers that are not classified as any of the above are calculated based on the amount of expected loss
during the one-year period subsequent to the balance sheet date. The amount of expected loss is calculated based on the average loan
loss ratio derived from the actual loan loss during the past year or the average loan loss ratio for the entire measurable period used asa lower limit in order to reflect long-term economic fluctuations, with necessary amendments such as future prospects.
Allowance for doubtful accounts mentioned above is made on the basis of the results of a strict assessment of the quality of all the
Bank’s loan assets, using its internally established rules for self-assessment.
Allowance for doubtful accounts recorded in consolidated subsidiaries is calculated as follows:
General reserves are provided at an amount deemed necessary, considering the historical ratio of loan losses. Specific reserves for
doubtful borrowers are provided at an amount expected to be uncollectable, considering collectability on an individual basis.

23 ―
― 21

Accrued bonuses for directors and corporate auditors
Accrued bonuses for directors and corporate auditors are provided in the amount of the estimated bonuses that are attributable to eachfiscal year.

Retirement benefits for directors and corporate auditors
Retirement benefits for directors and corporate auditors are provided for the future payments of directors’ and corporate auditors’
retirement benefits incurred up to the end of the fiscal year based on the approved internal rules.

Provision for losses on reimbursement of dormant deposits
Provision for losses on reimbursement of dormant deposits that were recorded as profit is provided for the future reimbursement basedon the historical reimbursement experience.

Provision for contingent losses
Provision for contingent losses is provided for estimated future payments related to a risk-sharing agreement with public credit
guarantee associations for the Bank’s loans guaranteed by the associations. The provision is calculated using the expected loss ratios
computed based on the historical foreclosure ratio of each borrower category.

Accounting for retirement benefits
Upon the calculation of projected benefit obligation, the estimated amount of all retirement benefits to be paid at future retirement
dates is allocated using the benefit formula. The Bank has also set up retirement benefit trusts.
Actuarial differences are amortized as income or expenses commencing from the following year under the straight-line method
over 10 years, which is determined as the amortization period within a range of estimated remaining service years of the eligible
employees at the time the actuarial differences occur.
The consolidated subsidiaries adopt a simplified method, as allowed for small companies, which is to record retirement benefit
liabilities for an amount assuming all employees would retire at the end of the fiscal year on a voluntary basis.

Income taxes
Income taxes consist of corporation, enterprise and inhabitant taxes. The provision for income taxes is computed based on the pretax
income of the Bank and each of its consolidated subsidiaries with certain adjustments required for tax purposes.
Deferred tax assets and liabilities are recorded based on the temporary differences between the financial statements and tax basesof assets and liabilities. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes andthe amounts used for income tax purposes.

Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at the end ofeach year.

24 ―
― 22

Revenue recognition
The Bank and its consolidated subsidiaries apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, 31
March 2020) and other standards, and recognize revenue when control of a promised good or service is transferred to a customer inan amount that reflects the consideration expected to be received in exchange for those good and services.

Appropriations of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given financial period is made by resolutionof the shareholders at a general meeting held subsequent to the close of the financial period. The accounts for that period, therefore,
do not reflect such appropriations. See Note 28.

Amounts per share
Net income per share of common stock is computed based on the weighted-average number of shares outstanding, excluding treasury
stock, during each year. Diluted net income per share reflects the potential dilution that could occur if stock options to issue common
stock were exercised. Cash dividends per share represent the amounts applicable to the corresponding years and consist of interim
dividends for the current year and year-end dividends declared after the end of the year.

Significant accounting estimates
Allowance for doubtful accounts(1) Carrying amounts in the consolidated financial statements for the current fiscal year
Allowance for doubtful accounts¥13,991 million ($104,778 thousand)(2) Information on the nature of significant accounting estimates for identified items
a. Calculation method
The calculation method of allowance for doubtful accounts is described in “Allowance for doubtful accounts” under “2.

SIGNIFICANT ACCOUNTING POLICIES.”
b. Key assumptions used in making accounting estimatesi. Categorization of receivables (self-assessment)
The Bank categorizes its outstanding receivables according to the degree of risk of recovery or impairment of value (“selfassessment”). The self-assessment is conducted by comprehensively considering the details of the use of funds and the statusof the collateral or guarantees in place, after determining the borrowers’ category based on the credit ratings in accordance with
their level of credit risk.
The borrowers’ category is determined based on their financial information and other quantitative information, in addition toqualitative factors. Specifically, the Bank assesses the borrowers’ solvency based on their substantive financial condition, cash
flows and profitability. The Bank also comprehensively takes into account the borrowers’ business sustainability, future
profitability, ability to repay debts based on their cash flows, the reasonableness and feasibility of their business improvement
plans and support from other financial institutions to determine the borrowers’ category in light of their industry/sector-specificcharacteristics. Such determination is made at the discretion of the management.
ii. Expected loss rate

25 ―
― 23

Allowance for doubtful accounts is provided for receivables classified according to the self-assessment based on the expected
loss rate for each classification. The expected loss rate is calculated based on the historical loan loss for each classification,with necessary adjustments made to account for future prospects and other factors.
iii. Future cash flows used in the discounted cash flow method (DCF method)
The expected loss under the discounted cash flow method (DCF method) is calculated by multiplying future cash flows basedon the debtor’s repayment plan, etc. by the probability of occurrence premised on the debtor’s rating transition forecasts, anddiscounting this at the contracted interest rate before the easing of loan terms.
The rating transition forecasts are based on the situation of the debtor in addition to the historical rating transition rate.
We do not expect a significant increase in bad debts due to the impact of COVID-19, on account of economic measures takenby the national and local governments and funding support provided by financial institutions.
c. Impact on the consolidated financial statements for the year ending 31 March 2024
If the assumption applied to the initial estimate changes due to changes in the business condition of individual borrowers or theactual loan loss rate, there is a possibility that there will be a significant impact on the allowance for doubtful accounts recordedin the consolidated financial statements for the year ending 31 March 2024.
Although the impact of COVID-19 is subsiding, there is a high degree of uncertainty in the assumption above and if there is achange in the circumstances of COVID-19 or its effects on the economic environment, there is a possibility that additional losses
may be incurred in the consolidated financial statements for the following fiscal year.

Changes in accounting policies
Application of the implementation guidance on accounting standard for fair value measurement
The Bank has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31,
17 June 2021; the “Fair Value Measurement Guidance”) from the beginning of the current fiscal year. In accordance with thetransitional treatment stipulated in Paragraph 27-2 of the Fair Value Measurement Guidance, the Bank will prospectively apply the
new accounting policy stipulated in the Fair Value Measurement Guidance. Accordingly, for investment trusts whose investment trust
assets are real estate, if there is no transaction price in the market and there are material restrictions that would require compensation
for the risk from market participants with respect to cancellation, etc., the acquisition cost had been previously used as the balance
sheet amount, but the Bank has changed to a method of fair value measurement in which the most recently available net asset value
is regarded as fair value.
In accordance with Paragraph 27-3 of the Fair Value Measurement Guidance, the Bank does not present the notes pertaining to theprevious fiscal year on investment trusts in fair value information by level within the fair value hierarchy under Note “6. FINANCIAL
INSTRUMENTS.”

Accounting standards that have not been applicable yet“Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, 28 October 2022)“Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, 28 October 2022)“Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, 28 October 2022)(1) Overview

26 ―
― 24

The above standards and guidance define the accounting classification of income taxes, etc. when other comprehensive income istaxable and the handling of tax effect regarding the sales of shares of subsidiaries, etc. when the group taxation regime is adopted.
(2) Application date
The Group will apply these accounting standards and guidance from the beginning of the fiscal year ending 31 March 2025.
(3) Effects of the application of the standards
The Group is currently assessing the effects of these standards.

3. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWSCash and cash equivalents
In preparing the consolidated statements of cash flows, cash and due from the Bank of Japan are considered to be cash and cash
equivalents. As at 31 March 2023 and 2022, the reconciliation of cash and cash equivalents in the consolidated statements of cash
flows with cash and due from banks in the consolidated balance sheets is as follows:
Thousands of
U.S. dollars
2023$4,845,608(6,995)$4,838,613

Millions of yen
2023
2022
¥647,034¥701,403
(934)
(811)
¥646,100¥700,592

Cash and due from banks
Less: Deposits in banks other than the Bank of Japan
Cash and cash equivalents

4. SECURITIESSecurities held by the Group as at 31 March 2023 and 2022 consisted of the following:Thousands of
U.S. dollars
2023$1,276,530
2,173,264
2,422,969
265,259
1,899,063$8,037,085

Millions of yen
2023
2022
¥170,455¥184,567
290,196
325,480
323,539
323,276
35,42037,384
253,582279,291¥1,073,192¥1,149,998

National government bonds
Local government bonds
Corporate bonds
Corporate stocks
Other securities

The securities placed under unsecured lending agreements, which borrowers have the right to sell or pledge in the amount of ¥54,100
million ($405,152 thousand) and ¥72,100 million as at 31 March 2023 and 2022, respectively, were included in national government
bonds.

A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values as at 31 March2023 and 2022:(a) Held-to-maturity debt securities
Millions of yen
As at 31 March 2023:

Book value¥21,974

Fair value¥24,412Difference¥2,438Gain¥2,438As at 31 March 2022:¥21,971¥24,966¥2,995¥2,995As at 31 March 2023:

Book value$164,562

Fair value$182,820

Loss
¥－
¥－

Thousands of U.S. dollars

27 ―
― 25

Difference$18,258

Gain$18,258Loss$－

(b) Available-for-sale securities
Securities below include negotiable certificates of deposit classified as cash and due from banks.
Millions of yen
Acquisition cost

Book value

Difference

Gain

Loss

As at 31 March 2023:
Corporate stocks¥14,831¥33,839¥19,008¥19,231¥(223)

Bonds

762,044762,215

171

8,296

(8,125)

Other249,361

242,476(6,885)

4,372(11,257)¥1,026,236¥1,038,530¥12,294¥31,899¥(19,605)

As at 31 March 2022:
Corporate stocks¥16,067¥35,876¥19,809¥20,117¥(308)

Bonds

800,873

811,352

10,47913,668(3,189)Other

264,442

265,426

984

9,105

(8,121)¥1,081,382¥1,112,654¥31,272¥42,890¥(11,618)

Thousands of U.S. dollars
Acquisition cost

Book value

Difference

Gain

Loss

As at 31 March 2023:
Corporate stocks$111,069$253,419$142,350$144,020$(1,670)

Bonds

5,706,912

5,708,193

1,281

62,128(60,847)

Other

1,867,453

1,815,891(51,562)

32,742(84,304)$7,685,434$7,777,503$92,069$238,890$(146,821)

B. There were no sales of held-to-maturity debt securities for the years ended 31 March 2023 and 2022.
Total sales of available-for-sale securities in the years ended 31 March 2023 and 2022 amounted to ¥54,862 million ($410,859
thousand) and ¥22,687 million, respectively. The related gains and losses amounted to ¥6,373 million ($47,727 thousand) and ¥1,846
million ($13,825 thousand), respectively, in the year ended 31 March 2023, and ¥3,180 million and ¥511 million, respectively, in theyear ended 31 March 2022.

C. Available-for-sale securities written down for the years ended 31 March 2023 and 2022 amounted to ¥33 million ($247 thousand)and ¥308 million, respectively.

D. Net unrealized holding gains on available-for-sale securities on the consolidated balance sheets as at 31 March 2023 and 2022
consisted of the following:Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Net unrealized holding gains before deferred tax on:¥12,446¥31,513$93,208

Deferred tax liabilities

Available-for-sale securities (Note)(3,683)(9,413)(27,582)

Net unrealized holding gains before interest adjustment

8,763

22,10065,626－－－¥8,763¥22,100$65,626

Amount equivalent to non-controlling interests
Net unrealized holding gains on available-for-sale securities

Note: The balance as at 31 March 2023 includes ¥152 million ($1,138 thousand) of net unrealized holding gains on available-for-salesecurities, which are component assets of investment limited partnerships classified as securities whose fair value is not stated on thebalance sheet. The balance as at 31 March 2022 includes ¥241 million of net unrealized holding gains on available-for-sale securities,

28 ―
― 26

which are component assets of investment limited partnerships classified as securities for which it is extremely difficult to determine
fair values.

E. Equity securities issued by unconsolidated subsidiaries and affiliated companies are as follows:
Thousands ofMillions of yen
2023
SharesInvestments

U.S. dollars

2022

2023

¥20

¥20

$150

1,263

1,375

9,459

5. MONEY HELD IN TRUST
Money held in trust as at 31 March 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2023

2022

2023

Money held in trust for trading purposes:
Carrying amount
Realized gains (losses) included in earnings¥10,701¥10,571$80,139

64

(80)

479

6. FINANCIAL INSTRUMENTS(1) Overview
a. Policy for financial instruments
The Group provides financial services, mainly focusing on banking businesses such as deposit-taking, grant of loans, trading of
securities and investment in securities, as well as lease operation and credit card operation.
For its main operations, the Group raises funds through deposits, call money, etc. and applies them to loans receivable andinvestment in securities. Therefore, the financial assets and liabilities of the Group tend to be affected by interest rate fluctuations, andare exposed to risks stemming from changes in financial market environments (interest rate risks and price fluctuation risks), as wellas to risks arising from fund shortage.
The Group manages those risks using the asset liability management (ALM) method in order to appropriately control the balance
between revenues and risks in consideration of the status of the financial assets and liabilities, trend of financial markets, policies forfund management and investment policies. The Group uses derivatives for the purpose of reducing risks, but not for speculative
purposes.

b. Types of financial instruments and related risks
The financial assets of the Bank consist mainly of loans for domestic enterprises and individuals and investment securities.
Loans are exposed to credit risks stemming from defaults of borrowers. The largest industrial category of loans as of the current fiscal
year end was individuals, followed by local governments, real estate industries, leasing industries, financial industries and insurance
industries, and loans are mostly distributed in each industry.
Securities fundamentally constitute bonds, stocks and investment trusts, which are held for investing purposes, held-to-maturity
purposes and maintaining business relationships, while trading account securities are held for trading purposes. These are exposed tocredit risks of issuers, interest rate risks and risks stemming from fluctuation of market prices.

29 ―
― 27

Liabilities, such as deposits, corporate bonds and call money, are exposed to risks arising from fluctuation of interest rates stemmingfrom mismatch between interests or periods of assets and liabilities. In addition, these are exposed to risks of fund shortage where the
Bank fails to control cash receipts and disbursement due to unexpected fund outflow and suffers losses from imposed unusual highinterest rates, as well as market liquidity risks where the Bank fails to raise funds owing to market shrinkage and is obliged to enter
into unusual unfavorable transactions.
Regarding derivative transactions, the Bank enters into interest rate swap contracts in terms of the ALM control and applies hedge
accounting to them as hedging instruments for interest rate risks on loans and bonds as hedged items. The Bank evaluates theeffectiveness of the hedge based on accumulated fluctuation of cash flows of hedging instruments and hedged items for the periods
beginning from the implementation of the hedging to the date of the evaluation and analysis on them.
Furthermore, there are other interest rate swap contracts (hedging instruments) and loans and bonds (hedged items), which aretreated under the exceptional method.

c. Monitoring of credit risks
In accordance with the internal policies of the Bank for managing credit risks arising from loans, each related division monitors credit
worthiness of its customers periodically and due dates and outstanding balances by individual customer. In addition, the Bank makes
efforts to identify and mitigate risks of bad debts from customers who face financial difficulties.
The results of the monitoring above are regularly reported to the board of directors, and the results of monitoring internal rating,loan portfolios and quantification of credit risks are reported to the credit risk committee on a quarterly basis. The Audit Divisionstrictly reviews the results to ensure that the monitoring procedures function properly.
Credit risks of issuers of securities and counterparty risks of derivative transactions are controlled through periodic reviews on
credit information and fair value of securities by the Financial Markets Division.

d. Monitoring of market risks(Interest rate risks)
The risks arising from fluctuations in interest rates are controlled using the ALM by the ALM committee, with reference to thediscussion at the fund management meeting and interest rate analysis group meeting, through monitoring and analysis of the executionof the ALM and the discussion of future actions. Concretely, the results of the monitoring above are reported on a monthly basis to
the ALM committee using gap analysis or interest rate sensitivity analysis such as BPV and VaR. Derivative instruments such as
interest rate swap contracts to hedge interest rate risks are used in terms of the ALM.
(Foreign currency exchange risks)Foreign currency swap contracts and foreign currency exchange swap contracts are used in order to control the foreign currency
exchange risks.
(Price fluctuation risks)
In accordance with the internal policies of the Bank on managing market related risks, the risks arising from fluctuation of market
price of investment securities are controlled through a daily VaR based on certain holding periods and confidence intervals byconfirming whether the quantities of the Bank’s risk fall under a certain portion of equity capital or not. Upper limits on losses on an
aggregate or a realization basis are defined to control losses on a daily basis. These results are reported by the Risk Management
Division to the management on a daily basis.

30 ―
― 28

Investments in securities by the Financial Markets Division are executed in accordance with the investable items and investing
guidelines prescribed in the market business operation standards, the market risk management standards and the primary polices oninvesting, and controlled through continuous monitoring. The information related to the market environment and the investment statusis reported to the management on a regular basis.
(Derivative transactions)
In conducting derivative transactions, each division responsible for the execution of transactions, and evaluation of effectiveness ofthe hedging and related administration is clearly identified, following the hedge transaction guidelines, the market business operation
standards and the market risk management standards, with setting up segregation of duties and checking systems.
(Information on volume of market risk)
The Bank employs the variance-covariance method (confidence interval of 99%, observation period of one year) in calculating VaRof deposits, loans receivable and securities (investments in bond, investments in stock, shares held for policy reasons, investments intrust). The holding period used as a parameter for the calculation is set as six months for deposits, loans receivable and shares held forpolicy reasons, and three months for investments in bond, investments in stock and investments in trust.
The volume of market risk, which is supposed to be estimated losses, as at 31 March 2023 was ¥35,624 million ($266,786 thousand).
For securities, the Bank periodically verifies the effectiveness of risk measurement by a back-testing protocol that compares thevolume under VaR with the amount of actual gains or losses. As a result of conducting the back-testing protocol, the Group believes
that the method undertaken provides a reliable indicator of the market risks. The method of variance and covariance that the Bank
uses to measure the volume under VaR assumes that changes in the market follow a normal distribution. Accordingly, under conditions
subject to changes in the market exceeding the assumption, risks may be underestimated.

e. Monitoring of liquidity risks
The Bank adequately manages its liquidity risks based on various internal quantitative standards prescribed in liquidity risks
management regulations, monitoring its liquidity position on a daily basis with minimum fund reserve established twice a year.

f. Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are used in estimating the fair value of financial instruments, different assumptions and factors
could result in different fair values.

31 ―
― 29

(2) Fair value of financial instruments
The carrying amounts and the fair value of financial instruments as at 31 March 2023 and 2022 are as follows.
Millions of yen
2023
Carrying
amounts

Thousands of U.S. dollars
2022

2023

Carrying
Fair value

amounts

Carrying
Fair value

amounts

Fair value

Assets:Monetary claims bought¥5,122¥5,046¥5,832¥5,809$38,358$37,789

Money held in trust

10,701

10,701

10,571

10,57180,13980,139Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Allowance for doubtful accounts

21,974

24,412

21,971

24,965

164,562

182,820

1,038,530

1,038,530

1,112,654

1,112,654

7,777,503

7,777,503

2,010,807

1,943,178(12,673)(13,940)

15,058,841(94,908)

1,998,134

1,992,354

1,929,238

1,930,472

14,963,933

14,920,647

3,432,863

3,432,883

3,444,092

3,444,126

25,708,552

25,708,702

172,529

172,524

236,935

236,932

1,292,062

1,292,024

(492)

(492)

(1,073)(1,073)(3,685)(3,685)(1,647)(3,331)(3,600)(6,075)(12,334)(24,946)

Liabilities:
Deposits
Borrowed money
Derivative transactions:
Derivative instruments not
qualifying for hedge accounting
Derivative instruments qualifying
for hedge accounting

Note 1: Book values of shares, etc. that do not have a market price and investments in partnerships as at 31 March 2023 and 2022:
Thousands ofMillions of yen
2023
Available-for-sale securities

U.S. dollars

2022¥12,68832 ―― 30¥15,3732023$95,020

Note 2: Redemption schedule for monetary receivables and securities with maturity dates after the balance sheet date:Millions of yen
2023

Due from banks (*1)

Over one

Over three

Over sevenyear andyears andOver five years years andWithin one

within three

within five

and within

within ten

Over ten

year

years

years

seven years

years

years

¥604,299

¥－

¥－

¥－

¥－

Call loans and bills bought

－

－

－

－

－

¥－
－

Monetary claims bought

1,599

－

－

－

－

3,523

－

－

1,992

－

19,982－National bonds

－

－

1,992

－

19,982－

Corporate bonds

－

－

－

－

－

－

74,808165,177

277,798

178,708

217,151

92,75854,675

Securities
Held-to-maturity debt securities
Mainly consist of the following:

Available-for-sale securities
Mainly consist of the following:
National bonds

3,118

10,76424,037

29,79826,089－19,322

51,375109,531

109,323645

Corporate bonds

27,81886,584

88,16014,55071,07921,916Loans and bills discounted

281,733

468,029

337,881

167,294

163,358

406,8093,330,289

96,946

5,478

21

129

－

－

－

－

－

－

－

6

12

12

12

18

37

Over seven

Local government bonds

Deposits
Payables under securities lendingtransactions
Borrowed money (*2)

Millions of yen
2022

Due from banks (*1)

Over one

Over three

Over five

year andyears andyears andyears andWithin one

within three

within five

within seven

within ten

Over ten

year

years

years

years

years

years

¥598,475

¥－

¥－

¥－

¥－

Call loans and bills bought

36,000

－

－

－

－

¥－
－

Monetary claims bought

1,505

－

－

－

－

4,327

－

－

1,991

－

－

19,980National bonds

－

－

1,991

－

－

19,980

Corporate bonds

－

－

－

－

－

－

83,529166,273

152,495

218,002

290,869

108,189

Securities
Held-to-maturity debt securities
Mainly consist of the following:

Available-for-sale securities
Mainly consist of the following:
National bonds

6,063

10,587

9,055

18,04456,25862,589－12,47927,601

141,182

132,029

12,189Corporate bonds

43,60878,53367,06322,92175,331

21,965Loans and bills discounted

281,883

451,790354,267

146,838

158,671379,286

3,337,226

100,066

6,650

27

123

－

10,054

－

－

－

－

－

3

12

12

12

18

43

Local government bonds

Deposits
Payables under securities lendingtransactions
Borrowed money (*2)

33 ―
― 31

Thousands of U.S. dollars
2023

Due from banks (*1)

Over one

Over three

Over five

year andyears andyears andyears andWithin one

withinwithin five

withinwithin ten

Over tenyear

three years

years

seven years

years

years

Over seven$4,525,567

$－

$－

$－

$－

－

－

－

－

－

－

11,975－－－－

26,383－－

14,918－

149,644－

National bonds－－

14,918－

149,644－

Corporate bonds

－

－

－

－

－

－

560,234

1,237,003

1,705,969

1,338,336

1,626,234

694,660
409,459

Call loans and bills bought
Monetary claims bought$－

Securities
Held-to-maturity debt securities
Mainly consist of the following:

Available-for-sale securities
Mainly consist of the following:
National bonds

23,35180,611

180,012223,156

195,379－

144,701

384,745820,273

818,7154,830

Corporate bonds

208,328

648,424660,226

108,964

532,307

164,128

Loans and bills discounted

2,109,885

3,505,048

2,530,375

1,252,857

1,223,381

3,046,574

Deposits

24,940,380

726,024

41,025

157

966

－

－

－

－

－

－

－

45

90

90

90

135

277

Local government bonds

Payables under securities lendingtransactions
Borrowed money (*2)

Notes:*1 Due from banks with no maturity date is included in “Within one year.”*2 Borrowed money is stated for those that bear interest.

(3) Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of
inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or liabilities thatare the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its entirety
in the level of the lowest level input that is significant to the measurement.

34 ―
― 32

a. Financial instruments measured at fair value
Millions of yen
2023
Fair value
Level 1

Level 2

Level 3

Total

Monetary claims bought

¥－

¥－

¥－

¥－

Money held in trust－

10,701－

10,701

197,741

779,974

56,092

1,033,807

139,633

299,043－438,676
323,539

Securities
Available-for-sale securities
Mainly consist of the followings:－

National bonds and municipal bonds
Corporate bonds－

304,182

19,357

Corporate stocks

33,839－－33,839Other securities (*1 and *2)

24,269176,749

36,735

237,753

Forward foreign exchange

－

15

－

15

Others

－

－

12

12

Derivative transactions:

Derivative transactions:Interest rate

－

3,331

－

3,331

Forward foreign exchange

－

507

－

507

Others

－

－

13

13

Notes: *1 Securities do not include investment trusts that apply the treatment in which net asset value is regarded as fair value inaccordance with Paragraph 24-9 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, 17 June 2021). The consolidated balance sheet amount of investment trusts that apply thetreatment stipulated in Paragraph 24-9 is ¥4,724 million ($35,378 thousand).
*2 Reconciliation of the beginning balance to the ending balance of investment trusts that apply the treatment stipulated in
Paragraph 24-9

Millions of yen
2023
Profit/Loss or othercomprehensive income
for the period
Recorded in
Beginningbalance

Investment trusts¥3,926

Amount for

Valuation gains

Amount for

which the net(losses) on investment

Net amountwhich the net

asset value oftrusts held at the

Recorded inof purchase,

asset value ofinvestment

balance sheet dateothersales,

recognized ininvestment trusts trusts is notprofit/loss comprehensive issuances and is regarded as fair regarded as

Endingprofit/loss for thefair valuebalanceperiod (*1)

income (*2) redemptions

(*1)

¥－

¥498

¥300

35 ―
― 33

value

¥－

¥－

¥4,724¥－

Thousands of U.S. dollars
2023
Profit/Loss or othercomprehensive income
for the period
Recorded in
Beginning

Valuation gains

which the net(losses) on investment

Net amountwhich the net

asset value oftrusts held at the

Recorded inof purchase,

asset value ofinvestment

balance sheet dateothersales,

recognized ininvestment trusts trusts is notprofit/loss comprehensive issuances and is regarded as fair regarded as

Endingprofit/loss for thefair valuebalanceperiod (*1)

balance

Investment trusts

Amount for
Amount forincome (*2) redemptions(*1)$29,402$－$3,729$2,247

value

$－

$－

$35,378$－

Notes: *1 There is no amount recorded in profit or loss for the current period.
*2 Included in the “net unrealized holding losses on available-for-sale securities” under “other comprehensive losses” in the
consolidated statements of comprehensive income.

Millions of yen
2022
Fair value
Level 1

Level 2

Level 3

Total

Monetary claims bought

¥－

¥－

¥－

¥－

Money held in trust－

10,571－

10,571

198,741

711,672

48,345

958,758

154,030

334,046－

488,076
323,276

Securities
Available-for-sale securities
Mainly consist of the followings:
National bonds and municipal bonds－

Corporate bonds－

307,463

15,813

Corporate stocks

35,876－－35,876

Other securities (*1)

8,835

70,16332,532

111,530

Derivative transactions:
Forward foreign exchange

－

0

－

0

Others

－

－

21

21

Derivative transactions:Interest rate

－

6,075

－

6.075

Forward foreign exchange

－

1,072

－

1,072

Others

－

1

21

22

Note: *1 Investment trusts, etc. to which the transitional measures set forth in Article 5, Paragraph 6 of the Supplementary Provisionsof the “Cabinet Office Order Partially Amending the Regulation on the Terminology, Forms, and Preparation Methods ofFinancial Statements, etc.” (Cabinet Office Order No. 9, 6 March 2020), are applied are not included in the above table. The
amount of such investment trusts, etc. in the consolidated balance sheet is ¥153,897 million.

36 ―
― 34

Thousands of U.S. dollars
2023
Fair value
Level 1

Level 2

Level 3

Total

Monetary claims bought

$－

$－

$－

$－

Money held in trust－

80,139－80,1391,480,873

5,841,189

420,071

7,742,133

Securities
Available-for-sale securities
Mainly consist of the followings:
1,045,705

2,239,519－

3,285,224

Corporate bonds

National bonds and municipal bonds－

2,278,005

144,964

2,422,969

Corporate stocks

253,419－－

253,419

Other securities

181,749

1,323,665

275,107

1,780,521

Forward foreign exchange

－

112

－

112

Others

－

－

90

90

Derivative transactions:

Derivative transactions:Interest rate－

24,946－24,946

Forward foreign exchange

－

3,797

－

3,797

Others

－

－

97

97

b. Financial instruments other than those measured at fair value
Millions of yen
2023
Fair value
Level 1
Monetary claims bought

Level 2

Level 3

Total

¥－

¥－

¥5,046¥5,046

24,412－－

24,412

24,412－－

24,412－

8,972

1,983,382

1,992,354

Securities
Bonds held for maturity
Mainly consist of the followings:
National bonds and municipal bonds－

Loans and bills discounted
Deposits

3,432,883

Borrowed money－

3,432,883

172,524－

172,524

Millions of yen
2022
Fair value
Level 1
Monetary claims bought

Level 2

Level 3

Total

¥－

¥－

¥5,809¥5,80924,965－－24,96524,965－－24,965－

9,005

1,921,467

1,930,472

Securities
Bonds held for maturity
Mainly consist of the followings:
National bonds and municipal bonds
Loans and bills discounted－

Deposits
Borrowed money

3,444,126
－

37 ―
― 35

236,9323,444,126－

236,932

Thousands of U.S. dollars
2023
Fair value
Level 1
Monetary claims bought

Level 2

Level 3

Total

$－

$－

$37,789$37,789

182,820－－

182,820

182,820－－

182,820－

67,191

14,853,456

14,920,647

Securities
Bonds held for maturity
Mainly consist of the followings:－

National bonds and municipal bonds
Loans and bills discounted
Deposits

25,708,702

Borrowed money－

1,292,024

25,708,702－

1,292,024

Note 1: Description of the valuation techniques and inputs used in fair value measurements
a. Monetary claims bought
For securitized instruments within the monetary claims bought, the fair value is the price obtained from brokers and other sources andis classified as Level 3 fair value based on the input used. Fair value of other transactions with short remaining terms is assumed toapproximate book value, and therefore book value is used as fair value and classified as the Level 3 fair value.

b. Money held in trust
For money held in trust, in principle, the fair value is the amount of securities held in trust calculated by the same method as that for“securities” and is classified as Level 2 fair value.
Notes regarding money held in trust by purpose of holding are described in Note “5. MONEY HELD IN TRUST.”c. Held-to-maturity debt securities and available-for-sale securities
Securities for which unadjusted quoted market prices in active markets are available are classified as Level 1 fair value. This mainly
includes listed stocks and government bonds. Even if a quoted market price is used, if the market is not active, the item is classified
as Level 2 fair value. This mainly includes municipal bonds and corporate bonds. In addition, for investment trusts that do not have atransaction price in the market, if there is no material restrictions that would require compensation for the risk from market participants
with respect to cancellation or repurchase requests, the fair value is the net asset value and is classified as a level 2 fair value. For
corporate bonds, etc. for which the market price is not available, the fair value is the price obtained from the broker and other sources
and is classified as Level 3 fair value based on the input used.
For privately placed bonds without a market price, the fair value is calculated by discounting the total amount of principal andinterest at a discount rate reflecting market interest rates, which are adjusted for credit risk and other factors, for each category basedon the internal rating of the counterparty and the private placement period. However, for private-placement bonds of potentiallybankrupt borrowers, effectively bankrupt borrowers, and bankrupt borrowers, the fair value is the amount obtained by deducting theestimated amount of doubtful accounts from the book value, as with loans and bills discounted. These transactions are classified as
Level 3 fair value.

38 ―
― 36

d. Loans and bills discounted
The fair value of loans and bills discounted is calculated by discounting the total amount of principal and interest at a discount rate
reflecting market interest rates, which are adjusted for credit risk and other factors, for each category based on the type of loans andbills discounted, internal rating, and loan terms. For loans and bills with floating interest rates, which reflect market interest rates in ashort period of time, the book value is used as the fair value because they approximate each other as long as the borrower’s credit
status has not largely changed since the execution of the loan. As for loans and bills with short-term settlement (within a year), theircarrying amounts approximate the fair value.
The estimated uncollectable amount of loans to potentially bankrupt borrowers, effectively bankrupt borrowers, and bankrupt
borrowers is calculated based on the estimated disposal value of collateral, the amount deemed collectible from guarantees, or thepresent value of estimated future cash flows. Therefore, the fair value approximates the carrying amount less estimated bad debts atthe closing date, and such amount is used as the fair value. For loans containing credit derivatives, the fair value of such derivatives
is reflected. If the effect of unobservable inputs on fair value is significant, the fair value is classified as Level 3 fair value; otherwise,
the fair value is classified as Level 2 fair value.

e. Deposits
The fair value of demand deposits that are payable immediately on demand on the balance sheet date is based on the amount of suchdeposits. The fair value of deposits is based on the present value of the total of principal and interest discounted by an interest rate tobe applied if similar new deposits were entered into at the consolidated closing date. These transactions are classified as Level 2 fairvalue.

f. Borrowed money
Among borrowings, for transactions with variable interest rates and short-term remaining maturities, which reflect market interest
rates in a short period of time, the book value is used as the fair value because they approximate each other. For other transactions,the fair value is calculated based on the discounted present value discounted on the estimated future cash flow. As for the discountrate, the replacement rate up to the remaining period of the same kind of product in the market is used. These transactions are classified
as Level 2 fair value.

g. Derivative transactions
Since derivative transactions are mainly over-the-counter transactions and there is no quoted market price, the fair value is calculatedusing valuation methods such as present value techniques according to the type of transaction and the period until maturity. The main
inputs used in these valuation techniques are interest rates, exchange rates, etc., and if unobservable inputs are not used or their effects
are not significant, they are classified as Level 2 fair value (e.g., in cases of interest rate swap transactions, exchange contract
transactions, etc.). In addition, when important non-observable inputs are used, they are classified as Level 3 fair value (e.g., in casesof earthquake derivatives, etc.).

39 ―
― 37

Note 2: Information about Level 3 fair value of financial instruments measured at fair value(1)

Quantitative information on significant unobservable inputs

The quantitative information on significant unobservable inputs at 31 March 2023 and 2022 is as follows.
Significant
Valuation

unobservable

techniques

inputs

Weighted average
Scope of inputs

of inputs

0.000% - 19.200%

0.373%

2023
Securities
Available-for-sale securities

Present value

Probability oftechniquebankruptcy

Valuation

unobservable

techniques

inputsSignificant
Weighted average
Scope of inputs

of inputs

0.000% - 17.647%

0.314%

2022
Securities
Available-for-sale securities(2)

Present value

Probability oftechniquebankruptcy

Reconciliation of beginning balance and ending balance and valuation gains/losses recognized in profit or loss for the year
A reconciliation of beginning balance and ending balance and valuation gains/losses recognized in profit or loss for the years
ended 31 March 2023 and 2022 are as follows.
Millions of yen
2023
Profit/Loss or othercomprehensive income
for the period
Recorded in
Beginningbalance

Valuation gains (losses) on
Net amountfinancial assets andRecorded inof purchase,financial liabilities held atothersales,

income (*2)(*1)

the balance sheet date

Transfer out

profit/loss comprehensive issuances and Transfer into
settlements

Level 3 (*3)

of Level 3

Endingrecognized in profit/loss(*4)

balancefor the period (*1)

Securities:
Other securities¥48,345¥－¥(376)¥8,123¥－

Other (assets)

21

(35)

－

26

－

Other (liabilities)

(21)

35

－

(26)

－

¥－ ¥56,092

¥－

－

12

(13)

－

(12)

13

Derivative transactions:

Notes: *1 Included in “other operating income” and “other operating expenses” in the consolidated statements of income.
*2 Included in “net unrealized holding losses on available-for-sale securities” under “other comprehensive income in the
consolidated statements of comprehensive income.
*3 There was no transfer from Level 2 fair value to Level 3 fair value.
*4 There was no transfer from Level 3 fair value to Level 2 fair value.

40 ―
― 38

Millions of yen
2022
Profit/Loss or othercomprehensive income
for the period
Recorded in

Valuation gains (losses) on
Net amountfinancial assets andRecorded inof purchase,financial liabilities held atothersales,

balance

income (*2)(*1)

the balance sheet date

Transfer out

Beginning profit/ loss comprehensive issuances and Transfer into
settlements

Level 3 (*3)

of Level 3

Endingrecognized in profit/loss(*4)

balancefor the period (*1)

Securities:
Other securities¥50,192¥8¥(185)¥(1,670)¥－¥－ ¥48,345¥－

Other (assets)

34

(47)

Other (liabilities)

(34)

47

－

34

－

－

21

(13)

－

(34)

－

－

(21)

13

Derivative transactions:

Notes: *1 Included in “other operating income” and “other operating expenses” in the consolidated statements of income.
*2 Included in “net unrealized holding losses on available-for-sale securities” under “other comprehensive income in the
consolidated statements of comprehensive income.
*3 There was no transfer from Level 2 fair value to Level 3 fair value.
*4 There was no transfer from Level 3 fair value to Level 2 fair value.
Thousands of U.S. dollars
2023
Profit/Loss or othercomprehensive income
for the period
Recorded in
Beginningbalance

Valuation gains (losses) on
Net amountfinancial assets andRecorded inof purchase,financial liabilities held atothersales,(*1)

income (*2)

settlements

the balance sheet date

Transfer out

profit/loss comprehensive issuances and Transfer into
Level 3 (*3)

of Level 3

Endingrecognized in profit/loss(*4)

balancefor the period (*1)

Securities:
Other securities$362,053$－

Other (assets)

157

(262)

Other (liabilities)

(157)

262

$(2,816) $(60,833)$－$－ $420,070

$－

－

195

－

－

90

(97)

－

(195)

－

－

(90)

97

Derivative transactions:(3)

Description of valuation process used for fair value measurements
The Risk Management Division of the Group has established policies and procedures for measuring fair value, and each divisionin charge measures fair value accordingly. An independent valuation division verifies whether the fair value obtained is measured
using valid valuation techniques and inputs as well as whether they are classified into an appropriate level of the fair value
hierarchy.
In the market valuation model, we make use of observable data as much as possible. When using quoted prices obtained fromthird parties, the Group verified whether the prices are valid comparing with the results of recalculation by the Group.

(4)

Description of sensitivity of the fair value measurement to changes in significant unobservable inputs
The bankruptcy probability indicates the possibility of bankruptcy occurring, and is an estimate calculated based on pastbankruptcy experience of borrowers. A significant increase (decrease) in the loss rate at the time of bankruptcy will cause asignificant decline (rise) in fair value.

41 ―
― 39

Derivatives
As stated under “2. SIGNIFICANT ACCOUNTING POLICIES,” the Bank deals in interest rate swaps, currency swaps, and forward
exchange contracts.
a. Derivative instruments not qualifying for hedge accounting
Notional amounts, fair value and unrealized gains (losses) as at 31 March 2023 and 2022 were as follows:(Currency-related transactions)
Millions of yen

Thousands of U.S. dollars

2023

2022

2023
gains

Notional

gains

Notional

gains

Notional

Unrealized

Unrealized

Unrealized
amounts Fair value (losses)

amounts Fair value (losses)

amounts Fair value (losses)

Sell¥21,171¥(492)¥(492)¥17,038 ¥(1,068) ¥(1,068)$158,549 $(3,685) $(3,685)

Buy

－

－

－

Forward foreign exchange:

Note:

616

(5)

(5)

－

－

－

Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.

(Credit derivative transactions)
Millions of yen

Thousands of U.S. dollars

2023

2022
Unrealized

Notional

Over

Fair

amounts

one year

value

Sell

¥－

¥－

¥－

Buy

－

－

－

2023
Unrealized

Notional

Over

Fair

amounts

one year

value

¥－

¥1,000

¥－

¥(0)

－

－

－

－

gains
(losses)

Unrealized

Notional

Over

Fair

amounts

one year

value

¥(0)

$－

$－

$－

$－

－

－

－

－

－

gains
(losses)

gains(losses)

Creditdefaultswap:

Notes:

1. Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.
2. “Sell” transaction represents undertaking of credit risk.

(Earthquake derivatives)
Millions of yen
2023

Thousands of U.S. dollars
2022

2023

amounts Fair value (losses)

gains

Notional

gains

Notional

gains

Notional

Unrealized

Unrealized

Unrealized

amounts Fair value (losses)

amounts Fair value (losses)

Earthquake derivatives:
Sell¥2,055¥(13)¥－¥2,680¥(21)¥－$15,390

$(97)

$－

Buy

2,055

13

－

2,680

21

－

15,390

97

－

42 ―
― 40

b. Derivative instruments qualifying for hedge accounting
Notional amounts and fair value as at 31 March 2023 and 2022 were as follows:(Interest-related transactions)
Millions of yen

Thousands of U.S. dollars

2023

2022

Notional
amounts2023

Notional
Fair value

Notional

amounts

Fair value

amounts

Fair value

Interest rate swap:
Receive floating rate/Pay fixed rate
(Deferral method)¥31,061¥(1,647)¥37,032¥(3,600)$232,614$(12,335)

22,000(1,684)22,048(2,475)

164,757(12,611)

Receive floating rate/Pay fixed rate
(Exceptional method)

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted as at 31 March 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2023

2022

2023

Bills discounted¥1,412¥1,643$10,574

Loans on notes

44,26243,311

331,476

Loans on deeds

1,779,566

1,728,119

13,327,088

185,567

170,105

1,389,703¥2,010,807¥1,943,178$15,058,841

Overdrafts

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Committee Practical Guideline No.
24. The Group has the right to sell or pledge commercial bills discounted without restrictions. The total face values as at 31 March2023 and 2022 were ¥1,412 million ($10,574 thousand) and ¥1,643 million, respectively.
The Group is required to disclose loans to customers who meet specific criteria in accordance with the Banking Act. Doubtful loans
as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Bankrupt and quasi-bankrupt loans¥6,617¥4,734$49,554

Doubtful loans

33,88837,127

253,786

72

1

539

5,658

4,285

42,373¥46,235¥46,147$346,252

Loans past due three months or more
Restructured loans, including loans to borrowers financiallyassisted by the Bank
Total

8. PLEDGED ASSETS
As at 31 March 2023, deposits of ¥11,929 million ($89,336 thousand) and borrowed money of ¥172,100 million ($1,288,849 thousand)were secured by a pledge of securities in the amount of ¥267,611 million ($2,004,126 thousand) and guarantee money deposits in theamount of ¥72 million ($539 thousand). As at 31 March 2022, deposits of ¥17,601 million, payables under securities lendingtransactions of ¥10,054 million and borrowed money of ¥236,500 million were secured by a pledge of securities in the amount of¥336,843 million and guarantee money deposits in the amount of ¥72 million. In addition to the abovementioned assets pledged ascollateral, the Group provided other assets in the amount of ¥30,000 million ($224,669 thousand) and ¥30,003 million as collateral
for transactions such as exchange settlement transactions as at 31 March 2023 and 2022, respectively.

43 ―
― 41

Other assets include cash collateral paid for financial instruments, guarantee deposits and lease deposits in the amount of ¥3,521
million ($26,369 thousand) and ¥6,758 million, ¥87 million ($652 thousand) and ¥88 million, and ¥113 million ($846 thousand) and¥123 million as at 31 March 2023 and 2022, respectively.

9. COMMITMENT LINE AGREEMENTS
Commitment line agreements are agreements to lend customers a prescribed amount when they apply for borrowing, unless there isviolation of the conditions of the agreements. The amounts of unused commitment line related to such agreements as at 31 March2023 and 2022 were ¥668,824 million ($5,008,792 thousand) and ¥693,736 million, respectively. The amounts of commitment line
agreements, having a condition that the original agreement period would be less than one year or unconditionally cancelable at any
time, were ¥623,425 million ($4,668,801 thousand) and ¥648,375 million as at 31 March 2023 and 2022, respectively. The amountof unused commitment line does not necessarily affect the future cash flows of the Group because most of such agreements were
terminated without being used. The majority of these agreements contain provisions that stipulate that the Group may refuse to makeloans or may decrease the commitment line for reasons including certain changes in financial conditions or security for the loans.
When entering into loan agreements with the customers, the Group requests pledges of collateral in the form of premises or securities
if necessary. After entering into loan agreements, the Bank periodically checks the financial condition of the customers based on its
internal rules and performs certain actions relating to the security of the loans if necessary.

10. OTHER ASSETS
Other assets as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Accrued income¥3,201¥3,110$23,972

Other

51,00453,425

381,967¥54,205¥56,535$405,939

11. PREMISES AND EQUIPMENT
Premises and equipment as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen

U.S. dollars

2023

2022

Land

¥8,318¥8,319$62,293

Buildings

35,39235,177265,049

Equipment

9,129

9,214

68,367

Leased assets

83

80

622

Other

420

542

3,145

53,34253,332399,476

38,542

37,569288,639¥14,800¥15,763$110,837

Accumulated depreciation

2023

To conform with the Companies Act of Japan, deferred gains on sale of real estate in the amount of ¥771 million ($5,774 thousand)and ¥788 million as at 31 March 2023 and 2022, respectively, were deducted from the acquisition cost of premises and equipment.

44 ―
― 42

12. INTANGIBLE ASSETS
Intangible assets as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023
Software

U.S. dollars

2022

2023

¥1,770¥2,077

Leased assets

27

44$13,256
202

Other

121

118

906

¥1,918¥2,239$14,364

13. DEPOSITS
Deposits as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen

U.S. dollars

2023

2022

Current deposits¥57,650¥55,812$431,738

Ordinary deposits

2,166,099

2,100,109

16,221,815

Deposits at noticeTime deposits

2023

917

1,179

6,867

924,018

960,939

6,919,928

Other deposits

35,853

43,527

268,502

Negotiable certificates of deposit

248,326

282,526

1,859,702¥3,432,863¥3,444,092$25,708,552

14. OTHER LIABILITIESOther liabilities as at 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Accrued income taxes

¥128

¥617

$958

Accrued expenses

1,791

1,771

13,413

Unearned income

654

657

4,898

Lease obligations

1,348

1,462

10,095

Other

19,84922,106

148,648¥23,770¥26,613$178,012

15. CONTINGENT LIABILITIES, ACCEPTANCES AND GUARANTEESAll contingent liabilities including letters of credit, acceptances and guarantees are reflected in acceptances and guarantees. As a contra
account, customers’ liabilities for acceptances and guarantees are shown on the asset side, which represent the Group’s right ofindemnity from customers.
The amount of guarantee obligation for privately placed bonds (Financial Instruments and Exchange Act, Article 2, Paragraph 3),
out of bonds included in securities, stood at ¥19,404 million ($145,316 thousand) as at 31 March 2023 compared with ¥15,807 million
as at 31 March 2022.

45 ―
― 43

16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe Group has adopted funded and unfunded defined benefit plans to prepare for the employees’ retirement benefits. In addition, asof 1 April 2016, the Bank transferred part of the defined benefit plans (excluding the portion for vested pensioners in a waiting period
and current pensioners) to defined contribution plans.
Under the defined benefit pension plan, which is a funded plan, employees receive lump-sum payments or pensions based onsalaries and service periods; additionally, under this plan, a cash balance plan has been introduced. Each beneficiary has a hypotheticalindividual account under the defined benefit pension plan, where contributions by the Bank and source of pension payments for eachbeneficiary are accumulated. In hypothetical individual accounts, interest credits based on trends in market interest rates and benefit
credits based on the salary level are accumulated. In addition, the Bank has set up retirement benefit trusts related to the defined
benefit pension plan.
Under the lump-sum retirement benefit plan (an unfunded plan that has become a funded plan as a result of setting up retirement
benefit trusts.), predetermined points based on years of service and ability-based grade / job title are given to each beneficiary annually,and employees receive lump-sum payments, which are calculated by multiplying the unit price of points with the accumulated points
at the time of retirement, as retirement benefits.
A consolidated subsidiary adopts the simplified method in calculating net defined benefit liability and retirement benefit expenses.

Defined benefit plans(i) Change in projected benefit obligation
Thousands ofMillions of yen
2023
Balance at the beginning of the year

U.S. dollars

2022

2023

¥25,030¥24,594$187,449

Service costs (including the amount of employee contributions)

700

683

5,242

Interest costs

109

106

816

Actuarial differences

(988)

864

(7,399)(1,457)(1,217)(10,911)(194)－(1,453)¥23,200¥25,030$173,744

Retirement benefits paid
Decrease due to sale of businesses
Balance at the end of the year

Note: Since the consolidated subsidiaries, which adopt the simplified method, are insignificant, the net defined benefit liability,
retirement benefit expenses, retirement benefits paid and decrease due to sale of businesses are included in the accounts above.
All retirement benefit expenses are included in service costs.

(ii) Change in plan assets
Thousands ofMillions of yen
2023
Balance at the beginning of the year

U.S. dollars

2022

2023

¥29,752¥28,594

756

732

5,661

Actuarial differences(1,381)(358)(10,342)

Employer contributions

782

1,512

5,856

Employee contributions

52

52

390

Retirement benefits paid

(800)

(780)

(5,991)

Balance at the end of the year

¥29,161¥29,752$218,385

Expected return on plan assets

46 ―
― 44

$222,811

(iii) Reconciliation of projected benefit obligation and plan assets with net defined benefit liability (asset)
Thousands ofMillions of yen
2023

U.S. dollars
2022

2023

Funded projected benefit obligation¥23,126¥24,746$173,190

Plan assets(29,161)(29,752)(218,385)(6,035)(5,006)(45,195)

74

284

554

¥(5,961)¥(4,722)$(44,641)

Unfunded projected benefit obligation
Net liability (asset) recognized in consolidated balance
sheetsNet defined benefit liability

842

799

6,306

(6,803)(5,521)(50,947)¥(5,961)¥(4,722)$(44,641)

Net defined benefit asset
Net liability (asset) recognized in consolidated balance
sheetsNote: The table above includes the plans to which the simplified method is applied.

(iv) Retirement benefit expenses and their breakdown
Thousands of
U.S. dollars

Millions of yen
2023

2022

2023

Service costs (excluding the amount of employee contributions)

¥648

¥631

Interest costs

109

106

$4,853816

Expected return on plan assets

(756)

(732)

(5,661)

Amortization of actuarial differences

193

154

1,445

Retirement benefit expenses

¥194

¥159

$1,453

Note: The retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are included in service costs.

(v) Remeasurements of defined benefit plans in other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in other comprehensive income was asfollows:
Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Actuarial differences¥(200)¥(1,068)$(1,498)

Total¥(200)¥(1,068)$(1,498)(vi) Remeasurements of defined benefit plans in accumulated other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in accumulated other comprehensive income
was as follows:
Thousands ofMillions of yen

U.S. dollars

2023

2022

Unrecognized actuarial differences¥ (1,970)¥ (1,770)$(14,753)

Total¥ (1,970)¥ (1,770)$(14,753)

47 ―
― 45

2023

(vii) Plan assets(a) Percentage by major category of plan assets are as follows:
2023

2022

Bonds

22%

Equities

18%

56%
17%

General account

12%

13%

Cash and deposits

48%

14%

Total

100%

100%

Retirement benefit trusts set up for defined benefit pension plans accounted for 18% and 19% of total plan assets for the years
ended 31 March 2023 and 2022, respectively. In addition, retirement benefit trusts set up for the lump-sum retirement benefit
plans accounted for 27% and 27% of total plan assets for the years ended 31 March 2023 and 2022, respectively.
(b) Procedure for determining long-term expected rate of return on plan assets
In determining a long-term expected rate of return on plan assets, the Bank considers the current and projected asset
allocations, as well as a current and future long-term expected rate of return for various categories of the plan assets.

(viii) Basis for calculation of actuarial assumptions
The basis for calculation of actuarial assumptions (presented as a weighted-average rate for discount rate and long-term expected rateof return on plan assets) for the years ended 31 March 2023 and 2022 is as follows:
2023

2022

Discount rate

0.8%

0.4%

Long-term expected rate of return on plan assets

2.5%

2.5%

3.9%

3.9%

7.8%

7.8%

Expected salary increase rate in defined benefit
plans
Expected salary increase rate in lump-sum
retirement benefit plans

The contributions made by the Bank to defined contribution plans were ¥123 million ($921 thousand) and ¥124 million for theyears ended 31 March 2023 and 2022, respectively.

48 ―
― 46

17. INCOME TAXESThe Group is subject to a number of taxes based on income such as corporation, inhabitant and enterprise taxes, which, in the aggregate,
indicated a statutory tax rate in Japan of approximately 30.4% and 30.4% for the years ended 31 March 2023 and 2022, respectively.
Significant components of the Group’s deferred tax assets and liabilities as at 31 March 2023 and 2022 are as follows:

Thousands of U.S.
Millions of yen
2023

dollars
2022

2023

Deferred tax assets:
Allowance for doubtful accounts¥4,039¥4,402$30,248

Net defined benefit liability

2,164

2,495

16,206

Accumulated depreciation

1,254

1,248

9,391

346

424

2,591

Securities
Deferred hedge
Other
Subtotal
Valuation allowance (*)
Total deferred tax assets

501

1,094

3,752

1,304

1,410

9,766

9,608

11,073

71,954(3,132)(3,964)(23,456)

6,476

7,109

48,498(3,784)(9,514)(28,338)

(391)

(395)

(2,928)

(1)

(6)

(8)

(4,176)(9,915)(31,274)¥2,300¥(2,806)$17,224Deferred tax liabilities:
Net unrealized holding gains on available-for-sale securities
Deferred gains on sale of real estate
Other
Total deferred tax liabilities
Net deferred tax liabilities(*) Valuation allowance decreased by ¥832 million ($6,231 thousand) in the year ended 31 March 2023. The main reason of thisdecrease is the recognition of tax deductible expenses against a portion of valuation allowance for doubtful accounts provided inprevious fiscal years.

The following summarizes the significant difference between the statutory tax rate and the Bank’s effective tax rate for the years
ended 31 March 2023 and 2022.
2023
Statutory tax rate

2022

30.4%

30.4%

Non-deductible expenses

0.4

0.3

Non-taxable income

(1.2)

(1.0)

Per capita inhabitant taxes

0.6

0.6

(12.6)

10.9

0.6

0.0

18.2%

41.2%

Valuation allowance
Other, net
Effective tax rate

49 ―
― 47

18. NET ASSETS
Under the Companies Act and the Banking Act of Japan, the entire amount of the issue price of shares is required to be accounted for
as capital, although a company may, by a resolution of its board of directors, account for an amount not exceeding one-half of theissue price of the new shares as additional paid-in capital, which is included in capital surplus.
The Companies Act and the Banking Act provide that an amount equal to at least 20% of cash dividends and other cash
appropriations shall be appropriated and set aside as a legal earnings reserve until the total amount of legal earnings reserve andadditional paid-in capital equals 100% of common stock. The legal earnings reserve and additional paid-in capital may be used toeliminate or reduce a deficit by a resolution of the shareholders’ meeting or may be capitalized by a resolution of the board of directors.
On the condition that the total amount of legal earnings reserve and additional paid-in capital remains equal to or exceeds 100% ofcommon stock, it is available for distribution by a resolution of the shareholders’ meeting. Legal earnings reserve is included inretained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the non-consolidated financial statementsof the Bank in accordance with the Companies Act.
The number of treasury stock held by the Group was 1,148 thousand shares as at 31 March 2023 and 1,190 thousand shares as at
31 March 2022.

19. STOCK OPTIONS
1. Share-based compensation expenses accounted for as general and administrative expenses
The balances of stock acquisition rights granted for the stock option plan were ¥202 million ($1,513 thousand) and ¥293 million as at
31 March 2023 and 2022, respectively.
Share-based compensation expenses accounted for as general and administrative expenses for the years ended 31 March 2023 and2022 amounted to ¥46 million ($344 thousand) and ¥47 million, respectively.

50 ―
― 48

2. Details of stock options, volume and activity(a) Details of stock options
Title and number ofgrantees
Number of stock
options by type of2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Directors of the Bank:

Directors of the Bank:

Directors of the Bank:

Directors of the Bank:

9

9

9

9

Common stock:

Common stock:

Common stock:

Common stock:

13,400 shares

10,400 shares

9,100 shares

12,100 sharessharesGrant date24 July 201324 July 2014

23 July 2015

25 July 2016

Condition for vesting

Not applicableNot applicableNot applicableNot applicable

Requisite service period

Not applicableNot applicableNot applicableNot applicable

From 25 July 2013 to

From 25 July 2014 to

From 24 July 2015 to

From 26 July 2016 to

24 July 2043

24 July 2044

23 July 2045

25 July 2046

Exercise period

Title and number ofgrantees
Number of stock
options by type of2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

Directors of the Bank:

Directors of the Bank:

Directors of the Bank:

Directors of the Bank:

9

7

7

7

Common stock:

Common stock:

Common stock:

Common stock:

11,100 shares

10,200 shares

14,500 shares

18,600 sharessharesGrant date

26 July 201725 July 201825 July 201927 July 2020

Condition for vesting

Not applicableNot applicableNot applicableNot applicable

Requisite service period

Not applicableNot applicableNot applicableNot applicable

From 27 July 2017 to

From 26 July 2018 to

From 26 July 2019 to

From 28 July 2020 to

26 July 2047

25 July 2048

25 July 2049

27 July 2050

Exercise period

Title and number ofgrantees
Number of stock
options by type of2021 stock option plan

2022 stock option plan

Directors of the Bank:

Directors of the Bank:

7

7

Common stock:

Common stock:

28,000 shares

26,800 sharessharesGrant date

27 July 2021

25 July 2022

Condition for vesting

Not applicableNot applicable

Requisite service period

Not applicableNot applicable

From 28 July 2021 to

From 26 July 2022 to

27 July 2051

25 July 2052

Exercise period

Note: Reported in terms of shares of stock.
(b) Volume and activity
The following describes volume and activity that existed during the year ended 31 March 2023. The number of stock options isreported in terms of shares of stock.

51 ―
― 49

(i) Number of stock options
2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Before vesting (shares):
6,400

5,600

4,800

7,200

Granted

－

－

－

－

Forfeited

－

－

－

－

Vested

4,200

2,800

2,400

3,600

Outstanding

2,200

2,800

2,400

3,600

As at 31 March 2022

After vesting (shares):
As at 31 March 2022

－

－

－

－

Vested

4,200

2,800

2,400

3,600

Exercised

4,200

2,800

2,400

3,600

Forfeited

－

－

－

－

Outstanding

－

－

－

－

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

Before vesting (shares):
6,800

7,800

12,30017,300Granted

－

－

－

－

Forfeited

－

－

－

－

Vested

3,400

3,900

5,600

6,600

Outstanding

3,400

3,900

6,700

10,700As at 31 March 2022

After vesting (shares):
As at 31 March 2022

－

－

－

－

Vested

3,400

3,900

5,600

6,600

Exercised

3,400

3,900

5,600

6,600

Forfeited

－

－

－

－

Outstanding

－

－

－

－

2021 stock option plan

2022 stock option plan

Before vesting (shares):28,000－－26,800Forfeited－－

Vested9,900－

Outstanding

18,10026,800As at 31 March 2022
GrantedAfter vesting (shares):
As at 31 March 2022－－

Vested9,900－

Exercised

9,900

－

Forfeited－－

Outstanding－－

2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

¥1 ($0.01)¥1,994 ($14.93)¥4,119 ($30.85)¥1 ($0.01)¥1,994 ($14.93)¥4,437 ($33.23)¥1 ($0.01)¥1,994 ($14.93)¥5,287 ($39.59)¥1 ($0.01)¥1,994 ($14.93)¥4,032 ($30.20)

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

¥1 ($0.01)¥1,994 ($14.93)¥4,178 ($31.29)¥1 ($0.01)¥1,994 ($14.93)¥4,439 ($33.24)¥1 ($0.01)¥1,994 ($14.93)¥2,693 ($20.17)¥1 ($0.01)¥1,994 ($14.93)¥2,578 ($19.31)(ii) Price information
Exercise price
Average exercise price
Fair value at the grant

Exercise price
Average exercise price
Fair value at the grant

52 ―
― 50

2021 stock option plan

2022 stock option plan

¥1 ($0.01)¥1,994 ($14.93)¥1,664 ($12.46)¥1 ($0.01)¥－($－)¥1,720 ($12.88)

Exercise price
Average exercise price
Fair value at the grant

3. Valuation method for fair value of stock options
The valuation methods for fair value of stock options granted in the year ended 31 March 2023 were as follows:(a) Valuation method: Black-Scholes formula(b) Major basic numerical values and valuation method2022 stock option plan
Stock price volatility (*1)

33.7%

Expected years to expiration (*2)

3.5 years

Expected dividends (*3)

¥80 ($0.60) per share

Risk-free interest rate (*4)(0.08)%

Notes:*1. Stock price volatility is calculated based on the actual stock prices from 14 January 2019 to 18 July 2022.
*2. As a rational estimation is difficult due to the insufficient amount of historical data, expected years to expiration aredetermined by the estimated average remaining service period.
*3. Expected dividends are determined based on actual dividends for the year ended 31 March 2022.
*4. Risk-free interest rate is the Japanese government bond yield corresponding to the expected years to expiration.
4. Estimation method for the number of vested stock options
Since it is difficult to make a reasonable estimate on the number of stock options that will be forfeited in the future, the actual
number of forfeited stock options is reflected in the estimation.

20. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 March 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2023

2022

2023

Other operating income:Gain on trading account securities transactions
Gain on sale of bonds

¥0

¥0

$0

1,181

39

8,844

Gain on financial instruments
Other

0

21

0

4,709

4,657

35,266¥5,890¥4,717$44,110

Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Other operating expenses:
Loss on sale of foreign bills of exchange

¥688

¥－

Loss on sale of bonds

1,662

¥185

12,447

Loss on redemption of bonds

4,967

817

37,198

Other

53 ―
― 51

$5,152

4,281

4,218

32,060¥11,598¥5,220$86,857

21. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023
Salaries and allowances

U.S. dollars

2022

2023

¥10,281¥10,476$76,994

Fringe benefits and welfare

2,868

2,861

21,478Retirement benefit expenses

317

283

2,374

2,030

1,992

15,203

Depreciation for premises and equipment
Rental expenses
Taxes other than income taxes
Deposit insurance premium

686

748

5,137

1,242

1,316

9,301

458

917

3,430

6,205

6,260

46,469¥24,087¥24,853$180,386

Other expenses

22. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended 31 March 2023 and 2022 consisted of the following:Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Other income:Gain on sale of stocks and other securities¥5,191¥3,141Gain on disposal of premises and equipment

100

4$38,875
749

Other

649

368

4,860

¥5,940¥3,513$44,484

Thousands ofMillions of yen
2023

U.S. dollars

2022

2023

Other expenses:
Provision for allowance for doubtful accounts¥742¥1,187$5,557

Loss on disposal of premises and equipment

52

116

390

Loss on devaluation of stocks and other securities

33

308

247

Loss on sale of stocks and other securities

185

326

1,385

Impairment losses

17

645

127

Loss on money held in trust

23

132

172

Loss on transfer of receivables

21

212

157

Other

281

78

2,105

¥1,354¥3,004$10,140

23. LEASE TRANSACTIONS
A. Finance leases(a) As lessee(1) Finance leases that transfer the ownership(i) Details of leased assets
Premises and equipment:
Not applicable

54 ―
― 52

Intangible assets:
Mainly consist of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.

(2) Finance leases other than those that transfer the ownership(i) Details of leased assets
Premises and equipment:
Mainly consist of equipment for the branch operating system
Intangible assets:
Mainly consists of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.

(3) Current portion of lease obligations and lease obligations (excluding current portion) as at 31 March 2023 and 2022 consisted of
the following:
Millions of yen
2023

2022

Thousands of

Average interest

U.S. dollars

rate (%)

2023

2023

Current portion of lease obligations

¥502

¥499

$3,7592.40%

Lease obligations (excluding current portion)

846

963

6,336

2.43%

¥1,348¥1,462$10,095

Note: The average interest rate represents the weighted-average rate applicable to the year-end balance.

The aggregate annual maturities of lease obligations are summarized as follows:Year ending 31 MarchMillions ofThousands ofyen

U.S. dollars

2023

2023

2024

¥502

$3,759

2025

351

2,629

2026

232

1,737

2027

148

1,108

2028 and thereafter

115

862

Millions ofYear ending 31 March

yen
2022

2023

¥499

2024

383

2025

273

2026

170

2027 and thereafter

137

55 ―
― 53

B. Operating leases(a) As lessee
There were no future lease payments under non-cancelable operating leases as at 31 March 2023 and 2022.

(b) As lessor
Future lease receivables under non-cancelable operating leases as at 31 March 2023 were ¥228 million ($1,707 thousand) including¥20 million ($150 thousand) due within one year.
Future lease receivables under non-cancelable operating leases as at 31 March 2022 were ¥230 million including ¥24 million due
within one year.

24. COMPREHENSIVE INCOME
Reclassification adjustments and tax effect amounts of other comprehensive losses for the years ended 31 March 2023 and 2022 wereas follows:
Thousands of U.S.
Millions of yen
2023

dollars
2022

2023¥(18,535)¥(13,028)$(138,808)(533)(2,408)(3,992)(19,068)(15,436)(142,800)

5,730

4,677

42,912(13,338)(10,759)(99,888)

1,505

631

11,271

447

516

3,347

1,952

1,147

14,618Tax effect amount

(593)

(348)

(4,441)

Net unrealized gains on hedging derivatives

1,359

799

10,177

Amount for the year(393)

(1,222)(2,943)

Reclassification adjustment

193

154

1,445

(200)

(1,068)(1,498)

61

324

457

(139)

(744)

(1,041)¥ (12,118)¥ (10,704)$(90,752)

Net unrealized holding losses on available-for-sale securities:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amountNet unrealized holding losses on available-for-salesecurities
Net unrealized gains on hedging derivatives:
Amount for the year
Reclassification adjustment
Amount before tax effectRemeasurements of defined benefit plans:

Amount before tax effectTax effect amountRemeasurements of defined benefit plans
Total other comprehensive losses

56 ―
― 54

25. PER SHARE DATA
Amounts per share as at 31 March 2023 and 2022 and for the years then ended are as follows:
Yen

U.S. dollars

2023

2022

2023

Net assets per share¥10,664.55¥11,166.80$79.87

Net income per share

310.36235.91

2.32

Diluted net income per share

308.90234.742.31

Amounts per share were calculated based on the following:
Millions of yen or

Thousands ofthousands of shares

U.S. dollars

2023

2022

2023

Net assets per share:
Total net assets
Amount to be deducted from total net assets
Stock acquisition rights
Net assets at the end of the fiscal year attributed to common stock¥185,228¥193,565$1,387,163

202

293

1,513

202

293

1,513

185,026

193,272

1,385,650

17,35017,308

5,382

4,126

40,30640,306

Number of shares of common stock at the end of the fiscal year
used in computing net assets per share attributed to common
stock
Net income per share:
Net income attributable to owners of parent
Net income attributable to owners of parent attributed to common
stock

5,382

4,126

17,34017,490net income per share

82

88

Compensation-type stock options

82

88

Average number of shares of common stock during the year
Diluted net income per share:
Number of increased common stock used in computing diluted

26. SEGMENT INFORMATION(1) Reportable segment information
a. Description of reportable segments
The Group’s reportable segments are those components of the Group for which separate financial information is available andwhose operating results are regularly reviewed by the board of directors to decide on the allocation of resources and assess businessperformance.
The principal business of the Group is financial services primarily focused on domestic commercial banking business. The
Group has three reportable segments — “Commercial banking business,” “Leasing business” and “Credit card and credit guarantee
business” — classified by type of financial services.
“Commercial banking business” consists of deposits, loans, securities investment and foreign exchange operations.
“Leasing business” consists of leasing and computer processing contracted business. (The computer processing contracted
business was transferred effective 1 January 2023.)“Credit card and credit guarantee business” consists of credit card and guarantee business.

57 ―
― 55

b. Methods of measurement of the amounts of income, profit (loss), assets, liabilities and other items for each reportable segment
The accounting policies for each reportable segment are consistent with those disclosed under “2. SIGNIFICANT ACCOUNTINGPOLICIES.”
Segment profit is adjusted with ordinary profit. Ordinary profit is profit derived from regular business activities, including
wages, dividends and interest.
Intersegment income is based on the prevailing market price.
c. Revenue recognition
Information on disaggregation of revenue from contracts with customers is as presented in the table in d. below.
d. Information about income, profit (loss), assets, liabilities and other items, and information on disaggregation of revenue for eachreportable segment
2023
Millions of yen
Reportable segment
Credit cardand credit

Commercial
bankingguarantee

Leasing

Total

Others

Total

Adjustments

Consolidated

Ordinary income:Revenue from contracts
with customers
Revenue from othersources
Income from externalcustomers¥7,249¥335¥94¥7,678¥470¥8,148¥－¥8,14834,205

4,698

816

39,71944

39,763(320)

39,44341,454

5,033

910

47,397514

47,911(320)

47,591

604

80

400

1,084

107

1,191

(1,191)－42,058

5,113

1,310

48,481

621

49,102(1,511)47,591

Intersegment income
Total
Segment profit

6,069

336

415

6,820

152

6,972

(514)

6,458

Segment assets

3,817,982

13,782

9,384

3,841,148

393

3,841,541(21,406)

3,820,135

Segment liabilities

3,637,410

10,0033,452

3,650,865

102

3,650,967(16,060)

3,634,907

Depreciation

2,029

5

0

2,034

1

2,035

－

2,035

Interest income

27,1210

37

27,158027,158(562)

26,596

Interest expense

654

48

0

702

－

702

(48)

654

992

4

145

1,141

53

1,194

－

1,194

815

94

7

916

5

921

6

927

Other items:

Provision for income
taxes
Increase in premises
and equipment andintangible assets

Notes 1. Ordinary income is stated instead of net sales of non-banking industries. Ordinary income other than revenue arising fromcontracts with customers includes revenue based on the “Accounting Standards for Financial Instruments” (ASBJ
Statement No. 10), such as loans and securities investment operations.
2. “Others” are business segments not included in the reportable segments, and include the consulting business and regional
trading company business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers are primarily adjustments for provision for allowance for
doubtful accounts.
(2) The adjustments for segment profit are primarily elimination of intersegment transactions.

58 ―
― 56

(3) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments for net
defined benefit assets.
(4) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments fornet defined benefit liability.
(5) The adjustments for interest income are primarily elimination of intersegment transactions.
4. Segment profit is adjusted with ordinary profit in the consolidated statements of income.
2022
Millions of yen
Reportable segment
Credit cardand credit

Commercial
bankingguarantee

Leasing

Total

Others

Total

Adjustments

Consolidated

Ordinary income:Revenue from contracts
with customers
Revenue from othersources
Income from externalcustomers¥6,958¥420¥103¥7,481¥277¥7,758¥－¥7,75831,430

4,225

1,015

36,6703736,707(186)

36,52138,388

4,645

1,118

44,151

314

44,465(186)

44,279

736

94

440

1,270

64

1,334

(1,334)－

39,124

4,739

1,558

45,421378

45,799(1,520)44,279Intersegment income
Total

8,124

(463)

716

8,377

43

8,420

(651)

7,769

Segment assets

3,918,950

13,307

9,697

3,941,954

246

3,942,200(21,940)

3,920,260

Segment liabilities

3,729,841

9,947

3,585

3,743,373

54

3,743,427(16,732)

3,726,695

Depreciation

1,987

15

1

2,003

1

2,004

－

2,004

Interest income

27,9290

40

27,969027,969(695)

27,274

Interest expense

777

42

1

820

－

820

(43)

777

2,673

2

192

2,867

19

2,886

－

2,886

2,951

0

1

2,952

3

2,955

1

2,956

Segment profit (loss)

Other items:

Provision for income
taxes
Increase in premises
and equipment andintangible assets

Notes 1. Ordinary income is stated instead of net sales of non-banking industries. Ordinary income other than revenue arising fromcontracts with customers includes revenue based on the “Accounting Standards for Financial Instruments” (ASBJ
Statement No. 10), such as loans and securities investment operations.
2. “Others” are business segments not included in the reportable segments, and include the consulting business and regional
trading company business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers are primarily adjustments for provision for allowance for
doubtful accounts.
(2) The adjustments for segment profit (loss) are primarily elimination of intersegment transactions.
(3) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments for net
defined benefit assets.
(4) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments fornet defined benefit liability.
(5) The adjustments for interest income are primarily elimination of intersegment transactions.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.

59 ―
― 57

2023
Thousands of U.S. dollars
Reportable segment
Creditcard andcreditCommercial
banking

Leasingguarantee$54,287$2,509256,160
310,447

Total

Others

Total

Adjustments

Consolidated$704$57,500$3,520$61,020$－$61,020

35,183

6,111

297,454329

297,783(2,396)295,387

37,692

6,815

354,9543,849

358,803(2,396)356,407

Ordinary income:Revenue from contracts
with customers
Revenue from othersources
Income from externalcustomers

4,523

599

2,996

8,118

801

8,919

(8,919)－314,970

38,291

9,811

363,072

4,650

367,722(11,315)

356,407

Intersegment income
Total
Segment profit

45,451

2,516

3,108

51,075

1,138

52,213(3,849)48,364

Segment assets

28,592,691

103,21370,27628,766,180

2,943

28,769,123(160,309)

28,608,814

Segment liabilities

27,240,395

74,91225,852

27,341,159

764

27,341,923(120,272)

27,221,651

Depreciation

15,19538

015,233

7

15,240－15,240Interest income

203,1080277

203,3850203,385(4,209)199,176

Interest expense

4,898

359

0

5,257

－

5,257

(359)

4,898

7,429

30

1,086

8,545

397

8,942

－

8,942

6,104

704

52

6,860

37

6,897

45

6,942

Other items:

Provision for income
taxes
Increase in premises
and equipment andintangible assets(2) Other segment-related informationa. Information by service
Information by service for the years ended 31 March 2023 and 2022 is as follows:
2023
Millions of yen
Securities
Ordinary income from external customers

Banking

investment

Other

Total

¥17,341¥15,254¥14,996¥47,591

2022
Millions of yen
Securities
Ordinary income from external customers

Banking

investment

Other

Total

¥17,259¥12,715¥14,305¥44,279

2023
Thousands of U.S. dollars
Securities
Ordinary income from external customers

Banking

investment

Other

Total

$129,866$114,237$112,304$356,407

Note: Ordinary income is stated instead of net sales of non-banking industries.

60 ―
― 58

b. Information by geographic regioni. Ordinary income
Information on ordinary income from domestic customers for the years ended 31 March 2023 and 2022 was omitted, because theamount of ordinary income from domestic customers was more than 90% of consolidated ordinary income.
ii. Premises and equipment
Information on premises and equipment for the years ended 31 March 2023 and 2022 was omitted, because there were no premises
and equipment located abroad.

c. Major customers’ segment information
Segment information on major customers was not shown for the years ended 31 March 2023 and 2022, since no customer accounted
for more than 10% of ordinary income in the consolidated statements of income.

d. Information on impairment of fixed assets for each reportable segment
2023
Millions of yen
Reportable segment
Credit card

Commercial
banking
Impairment losses

and credit

Leasing¥17

guarantee

¥－

Total

¥－

¥17

Others
¥－

Total
¥17

2022
Millions of yen
Reportable segment
Credit card

Commercial
Impairment losses

and credit

Leasingbanking¥485

guarantee

¥154

¥6

Total
¥645

Others
¥－

Total
¥645

2023
Thousands of U.S. dollars
Reportable segment
Credit card

Commercial

and creditbanking
Impairment losses

Leasing$127$－

guarantee

$－

Total
$127

Others
$－

Total
$127

e. Segment information on amortization of goodwill and its remaining balance
There is no information to be reported on amortization of goodwill and its remaining balance for the years ended 31 March 2023 and2022.

f. Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill for the years ended 31 March 2023 and 2022.

61 ―
― 59

27. RELATED PARTY TRANSACTIONS(1) Related party transactions
a. Transactions between the Bank and related parties
Transactions with executive officers of the Bank and major shareholders (limited to individuals) and others
There is no significant transaction with executive officers of the Bank and major shareholders to be disclosed for the years ended 31
March 2023 and 2022.

b. Transactions between the Bank’s consolidated subsidiaries and related parties
There is no significant transaction to be disclosed between the Bank’s consolidated subsidiaries and related parties for the years ended
31 March 2023 and 2022.

(2) Notes to the Bank’s parent company and significant affiliates
There is no information to be reported on the notes to the Bank’s parent company and significant affiliates for the years ended 31
March 2023 and 2022.

28. SUBSEQUENT EVENTS
Cash dividends
On 23 June 2023, the shareholders of the Bank authorized the following appropriation of retained earnings as at 31 March 2023:
Thousands ofMillions of yen
Cash dividends (¥45 ($0.34) per share for year end)

U.S. dollars¥781$5,849Establishment of a subsidiary
The Bank resolved at the board of directors’ meeting held on 12 May 2023 to establish a wholly owned investment subsidiary, andestablished the subsidiary on 3 July 2023.

(1)

Purpose of establishment

In April 2023, the Bank launched the “21st Medium-term Management Plan – Regional Value Co-creation Plan” covering the threeyear period until FY2025. In this plan, the Bank aims to build on the solid management foundation, which was established under theprevious medium-term management plan through upgrading the Group’s infrastructure and promoting business restructuring, andcontinue with its policy of “Creating Shared Value (CSV).” The Bank sees this as a period to not only further deepen the financial
services domain, but to also take on the challenge of entering new businesses beyond the framework of finance.
Aiming to both deepen the existing business by further enhancing financial intermediary functions and embark on a new challengeof entering new business domains beyond the framework of finance, the Bank believes that the speed and expertise that open
innovation brings will be the key to achieving these goals. In light of this, the Bank has decided to establish an investment subsidiaryand further strengthen its partnership and collaboration with external partners through investment and other means.
The Group will utilize the investment subsidiary it has established to support companies that revitalize local communities throughthe active provision of equity, and will create innovation through collaboration between investees and the Group, thereby contributing
to solving regional issues and making social impact.

62 ―
― 60

(2)

Outline of the subsidiarya. Company nameb. Head office location

Iwagin Mirai Investment Co., Ltd.
1-2-3 Chuo Dori, Morioka City, Iwate Prefecture (inside Iwate Bank
Head Office)c. Main business activities

Fund formation and operation, management consulting services, and allother operations incidental or related to the above

d. Capital¥50 million ($374 thousand)e. Shareholder composition

The Bank of Iwate, Ltd., 100%

f. Date of establishment

3 July 2023

g. Scheduled opening

October 2023

63 ―
― 61

Independent auditor’s report
To the Board of Directors of The Bank of Iwate, Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of The Bank of Iwate, Ltd. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprisethe consolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2023 and 2022, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the determination of the borrower category of corporate customers and thereasonableness of the estimate of cash flows used in the DCF method
The key audit matter

How the matter was addressed in our audit

The Group recognized loans and bills
discounted of ¥2,010,807 million (52.6% of
total assets) and allowance for doubtful
accounts of ¥13,991 million in the current
consolidated balance sheet. Of theseamounts, loans and bills discounted of¥2,018,201 million and allowance for

The primary procedures we performed to assess theappropriateness of the determination of the borrower
category of corporate customers and the reasonablenessof the estimate of cash flows used in the DCF method
included the following:― 64 ―

doubtful accounts of ¥10,592 million (bothinclude intra-group loans to consolidated
subsidiaries and allowance for doubtful
accounts for consolidated subsidiaries) wererecognized by the Company, the parent
company. The majority of the allowance for
doubtful accounts was for loans to corporate
customers.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Allowance for
doubtful accounts” to the consolidated
financial statements, the Company reviews
the loan assets based on its internallyestablished rules for self-assessment ofassets, and recognizes an allowance for
doubtful accounts based on the category ofborrowers determined in accordance with its
criteria for write-offs and reserves, which
include the estimate using the discounted
cash flow (DCF) method.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Significant
accounting estimates” the corporate
customers of the Company are categorizedbased on quantitative information such as theborrowers’ financial information andqualitative factors. Specifically, theCompany assesses the borrowers’ solvency
based on their substantive financial
condition, cash flows and profitability. The
Company also comprehensively takes into
account the borrowers’ businesssustainability, future profitability, ability to
repay debts based on their cash flows, thereasonableness and feasibility of theirbusiness improvement plans and support
from other financial institutions, among
others, to determine the category ofborrowers in light of their industry/sector
specific characteristics. Accordingly, thedetermination requires management’s
judgment.
A change in the category of a large borrower,in particular, may have a material effect on
the amount of allowance for doubtful
accounts to be recognized in the consolidated
financial statements. Therefore, a heightenedlevel of judgment is required for large
borrowers whose credit risk could possibly
change significantly, should their internal orexternal economic environment, including(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevant to
the process of recognizing allowance for doubtful
accounts, with a particular focus on the following:

Determination of the category of borrowers
considering qualitative factors



Estimate of cash flows used in the DCF method(2) Assessment of the appropriateness ofdetermination of the category of borrowers
In order to assess whether borrowers wereappropriately categorized, we selected certain
borrowers to test individually, based on quantitative
information and qualitative factors. While quantitative
factors included the possible effect on the amount ofallowance for doubtful accounts from inappropriate
categorization, qualitative factors included thedetermination of whether a significant change to their
credit risk rating is expected, should their internal orexternal economic environment, including the impact
of COVID-19, change.
In order to assess whether the corporate customers
selected through the process above were categorized
appropriately, we:inspected the results of the analysis performed by
the Company on the borrowers’ financial
information and others, as well as documents usedin the categorization of the borrowers, including
qualitative information;inquired of personnel in the relevant departments(business branches, the Loan Supervision
Department, and the Risk Management Division)of the Company regarding the current situationand future outlook of the borrowers, among
others; and

assessed the appropriateness of significant
assumptions used in their business improvement
plans and the feasibility of key measures, taking
into account past results, external environment
factors, and their businesses, and checked theprogress of the plans.

(3) Assessment of the reasonableness of theestimate of cash flows used in the DCF method
In order to assess whether the estimate of cash flows
used in the DCF method was reasonable, we assessed― 65 ―

the impact of COVID-19, change.
In addition, as described in Note 2,“SIGNIFICANT ACCOUNTINGPOLICIES, Significant accounting
estimates” to the consolidated financial
statements, the Company recognized anallowance for doubtful accounts using the
DCF method for loans related to large
potentially bankrupt borrowers whose
unsecured amount exceeded a certain level.
The estimate of cash flows used in the DCF
method highly relies on management’s
assessment of the repayment plans ofborrowers, among others, and involves a highdegree of uncertainty.

the solvency of borrowers to which the DCF method
was applied by comparing their future cash flows withrepayment histories and taking into account their
repayment resources and schedules.

We, therefore, determined that ourassessment of the appropriateness of thedetermination of the borrower category ofcorporate customers and the reasonablenessof the estimate of cash flows used in the DCF
method were of most significance in our
audit of the consolidated financial statements
for the current fiscal year, and accordingly, a
key audit matter.

Other Information
The other information comprises the information included in the Annual Report, but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
Management is responsible for the preparation and presentation of the other information. The audit andsupervisory committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the reporting process for the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial― 66 ―

statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

― 67 ―

We communicate with the audit and supervisory committee regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the audit and supervisory committee, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2023 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Miyata Seiki
Designated Engagement Partner
Certified Public Accountant
Jingu Atsuhiko
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Sendai Office, Japan
September 27, 2023
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

― 68 ―