Mebuki Financial Group, Inc.

Annual Report
Year Ended March 31, 2022

Annual Report 2022

2022

Non-Consolidated Statement of Income (Unaudited)Year Ended March 31, 2022

Mebuki Financial Group Philosophy

The Ashikaga Bank, Ltd.

Contents
Millions of Yen
2022
2021

About Mebuki Financial Group

Together with local communities, we will continue to build amore prosperous future by providing high-quality
comprehensive financial services.
The ingenuity of the entire Group will be combined to contribute to sustainablegrowth in communities. We will build a better future together with local
communities, seeking solutions to challenges that affect these communities by
providing high-quality, comprehensive financial services.

Mebuki Financial Group Sustainability Policy
Based on the Mebuki Financial Group Philosophy “Together with local
communities, we will continue to build a more prosperous future by providing
high-quality comprehensive financial services,” Mebuki Financial Group andGroup companies will support solving issues in our regions, while contributing to
the achievement of sustainable growth of local communities as well as the
improvement of our corporate value.

Group Philosophy and Sustainability Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INCOME:Interest income:Developments of Mebuki Financial Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest on loans and bills discounted �����������������������������������������������������������������
¥46,9215
Performanceof Mebuki
Financial
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18,440
Interest and dividends
on securities��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
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7 0
Strengths of Mebuki Financial Group in Main Areas of Business
Interest on deposits with banks ��������������������������������������������������������������������������
3,285
A Message
fromthe����������������������������������������������������������������������������������������
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 71
Other interest
incomeTrust
Fees ��������������������������������������������������������������������������������������������������������������
Management
and Financial Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 13
Fees and commissions��������������������������������������������������������������������������������������������
21,731
Mebuki
Financial
Group’s
Value Creation
Other
operating income�������������������������������������������������������������������������������������������
1,189
Other
income���������������������������������������������������������������������������������������������������������
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172,595
Value Creation Process of Mebuki Financial Group
Total income ������������������������������������������������������������������������������������������������
94,248Sustainability at Mebuki Financial Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
EXPENSES:Interest
expenses:Long-Term
Vision 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Interest on deposits �������������������������������������������������������������������������������������������
148
Third
Medium-Term
Group Business
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 9Interest
on negotiable certificatesof deposit ��������������������������������������������������������
Interest on
call money andsoldCreation�������������������������������������������������������������������
(92)
Management
Strategies
for bills
Value
Interest on payables under repurchase agreements ���������������������������������������������
47
Value
Creation Initiatives of Mebuki Financial GroupInterest on payables under securities lending transactions �����������������������������������
437
Interest
on borrowed�������������������������������������������������������������������������������
Revitalizationof money
the Regional
Economy and Communities . . . . . . . . . . . . . 25 3Interest on interest swap ������������������������������������������������������������������������������������ . . . . .
24
Climate Change and Environment Conservation—Initiatives for TCFD Recommendations
32
Other interest expenses �������������������������������������������������������������������������������������
1,106
FeesPromotion
and commissions
payments ����������������������������������������������������������������������������
of Digitalization
and DX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397,186
Other operating expenses ���������������������������������������������������������������������������������������
2,703
Response of to Aging Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
General and administrative expenses �����������������������������������������������������������������������
48,110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Promotionof Diversity
Provisionof allowance
for loan losses����������������������������������������������������������������������
7,717
Other expenses �����������������������������������������������������������������������������������������������������
4,851
Management Base Supporting Value Creation
Total expenses ���������������������������������������������������������������������������������������������
72,254Governanceof Mebuki
Group
INCOMEBEFORE INCOME
TAXES Financial��������������������������������������������������������������������������������
21,993
INCOMECorporate
TAXES:
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49
Governance
Current ������������������������������������������������������������������������������������������������������������������
6,910
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55(351)DeferredList�����������������������������������������������������������������������������������������������������������������
Total
income taxes
Messagesfrom���������������������������������������������������������������������������������������
the Outside Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,558
NET INCOME ���������������������������������������������������������������������������������������������������������������
¥15,435
Risk Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Thousands of
U.S. Dollars
2022¥47,171
19,602
(2)
896
69
10
21,235
1,517
8,757
99,258$383,412
150,680
026,844
586
112
177,5719,717
21,208770,128

462
32
18
140
414
218
225
917
7,043
3,304
49,1599,427
4,442
75,80823,450

1,217
80
(755)
389
3,571
28
203
9,043
58,72222,089393,12163,064
39,639590,412
179,716

7,294(1,508)
5,785¥17,664

56,464(2,875)53,859$126,127

Cyber Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Initiatives for Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Internal Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Corporate Data
Group Structure and Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Overseas Representative Offices ......................................................... 67
Organization ....................................................................................... 68
Group Financial Data .......................................................................... 69

Disclaimer regarding forward-looking statements
The Japanese word mebuki, or “green shoots,” conveys an image of new leaves budding
on tree branches. This word is used in the Group’s name to express its approach of
drawing on the knowledge and creativity of each of its companies to create fresh ideas
and new value. The name Mebuki expresses our wish to create new energy and value inlocal communities and pursue sustainable growth along with these communities.

This Annual Report contains certain forward-looking statements, including estimates, forecasts, targets, and plans.
Such forward-looking statements are based on the information available and the assumptions deemed reasonable by
the management at the time of publication of the Annual Report, and do not represent any guarantee by the
management of future performance. We are under no obligation, and disclaim any obligation, to update or alter ourforward-looking statements, whether as a result of new information, future events or otherwise.
Details on ESG information are available on our website: https://www.mebuki-fg.co.jp/eng/esg/esg.html

1

2 110

Developments of Mebuki Financial Group

About Mebuki FG

Joyo Bank and Ashikaga Bank of Mebuki Financial Group (“the Group”), with their core markets in
Ibaraki and Tochigi Prefectures, have been meeting the needs of the times and growing together
with their customers and the region. In October 2016, Joyo Bank and Ashikaga Holdings enteredinto a business integration, and with the subsequent consolidation of Mebuki Lease, Mebuki
Securities, Mebuki Credit Guarantee, and Mebuki Card, the Group has built a structure capable ofmeeting the diverse needs of its customers more than ever before. The Company will continue tocommit to solving regional problems and realizing region’s sustainable growth as well as improving
the Company’s corporate value.
1935 Joyo Bank

Established Joyo Green Energy
Established Joyo Capital Partners
Reorganized the businessadministration department

Established Consulting
Business Division

Launched Joyo’s reconstruction
project “Kizuna (bond)” in hopes of
the regional recovery and growth
after the Great East Japan
Earthquake

1895 Ashikaga Bank

Joyo Industrial ResearchInstitute started offering
personnel placement
services
Opened Hanoi Representative
OfficeOpened Representative Office
Registered in Singapore

Establishment of Joyo Bank
through the merger of
the Tokiwa Bank and
the Goju Bank

Opened New York Representative
OfficeLaunched “PLUS+” Project for the
Collaborative Creation of theRegion’s Future

Established in Ashikaga town,
Ashikaga county, Tochigi
Prefecture
Establishment of Joyo Lease(currently Mebuki Lease)

Started operating new branches
in areas along the new Tsukuba
Express line
Opened Joyo Tsukuba Building in2008

Established Joyo Industrial ResearchInstitute in commemoration of theBank’s 60th anniversary

●

●

2009

1999

1996

●

nk k
n
o Ba
Joy aga Ba●
k
i
h
1935
As ●
●

●

1995

1985

1974

●

1967

Established “Corporate Philosophy” incommemoration of its 90th anniversary
Established the Ashigin International
Exchange Foundation

1897

1895

Established Ashigin
Research Institute

2003

●

●

2008

2007

2006

●

2012

●
●

●

2013

●

Decision made by theJapanese government todesignate Ashikaga Bank abank under special crisis
management

Established Ashikaga Holdings
Special crisis management
designation lifted

Meb
●

uki

F

cia
inan

l Gr

oup

●

Established regional trading company“Colletochi”

2020

2019

●

●

2018

2017

Reorganized the business administration department
Established Wing Capital Partners
Established Ashigin Money Design

Started offering human resources
introduction services
Started offering trust services

Opened Bangkok Representative Office

Established the BusinessSupport Office
Established the Block Retail
Business Division

Mebuki Lease and Mebuki Securities became
directly and wholly-owned subsidiaries

2015

2014

Formulated Long-Term Vision 2030 and
Sustainability Policy

Joyo Credit and Ashigin Card weremerged to establish Mebuki Card
Declared support for TCFD
Recommendations

Opened Hong Kong
Representative OfficeSigned agreements with 9
local governments as partof its efforts under theComprehensive Strategy
for Overcoming Population
Decline and Vitalizing
Local Economy (as of July
2021)
Ashikaga Holdings listed on thefirst section of the Tokyo Stock
Exchange

A Value Creation Group
Working
Together with Local
Communities

2021

●
●

Established the “soundmanagement, collaboration, andpartnership with the home region”
philosophy

2022

●

2016

Established Joyo Securities(currently Mebuki Securities)

Opened Shanghai
Representative Office●

Initiated study sessions
and seminars fordevelopment of regional
comprehensive
strategies

Vision●●Long-Term Vision
2030

Completed the system integration of Joyo Bank andAshikaga Bank
Reorganized the system departments
Mebuki Credit Guarantee became a directly andwholly-owned subsidiary

Established
Mebuki Financial Group

Relocated the head office to
Utsunomiya city in Tochigi Prefecture
Opened its first branch in Kiryu town,
Yamada county, Gunma Prefecture

Completion of Tohoku Expressway within Tochigi Prefecture

Financial and economic
developments and historyof the prefectures
●

1929

●

1945

●

1964

Holding of Tsukuba EXPO
●

1974

Tokyo Olympic GamesEnd of the Pacific War

Suffered extensive damage by Typhoon Hagibis and other disasters

Opening of Tohoku Shinkansen

●

1982

●

1985

●

Opening of the Tsukuba Express

●

1991

1997

●

2005

●

2008

Collapse of bubble
economy

●

2010

●

2011

European debt crisis
Global financial crisis following Lehman Brothers’ bankruptcy

Plaza Accord

Full implementation of pay-off system in Japan

Start of the Great Depression

Spread of COVID-19

Great East Japan Earthquake
●

2016

BOJ’s introduction of negative interest rate policy

●

2019

●

2020

Change in the era from Heisei to
Reiwa
Japan’s consumption tax rate hiketo 10%

●

2021

2022

Russia’s invasion into Ukraine
The age of adulthood lowered to 18 in JapanTokyo Olympic Games

Japanese version of “Big Bang”
financial reforms
Asian currency crisis

3

●

4

Performance of Mebuki Financial Group
Financial Highlights

About Mebuki FG

ESG Highlights (Bank Total)

P13

Mebuki FG (Consolidated)
Consolidated net income (Billion yen)
46.3

SocialConsolidated ROE (%)

Capital adequacy ratio (%)

42.9
36.3

36.4
9.94

5.1
4.0

10.95

10.92

10.87

4.3

3.8

Number of M&A consultation cases

Number of paid contracts of business matching

1,459

3,506

(FY2021)(FY2021)

Private placement bonds with donation scheme issued

Percentage of women in assistant manager positions or higher

cases

FY2018FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021cases

Bank Total**Joyo Bank + Ashikaga Bank

Gross business profit (Billion yen)
185.6

186.3

Ordinary expenses /OHR (Billion yen/%)
180.1

OHR*

187.0

Ordinary expenses

61.8

63.5

114.1

115.0

61.3

56.2

110.1

108.1

1,060

90.4

cases Issue amountbillion yen
Donation amount approx. 178.0 million yen(Cumulative total since the commencement of handling the bonds in FY2016)

31.4

％

(As of March 31, 2022)

Environment
FY2018FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021*Excludes gains/losses on cancellation of investment trustsCore net business income* (Billion yen)

Net income (Billion yen)Amount of sustainable finance provided

84.2
70.5

69.4

66.0

42.1
35.8

FY2018FY2019FY2020

FY2021FY2018FY2019CO2 emission reduction ratio

144.9

60.0

30.5

billion yen

40.0(FY2021)

FY2020

FY2021Governance％(compared with FY2013)

External evaluation*Excludes gains/losses on cancellation of investment trusts

Board of Directors
Average balance of loans (Billion yen)
10,698.5

FY2018

11,339.8

11,599.7

Average balance of deposits (Billion yen)

11,764.7
14,082.4

FY2019FY2020FY2018FY2021

5

14,408.8

FY201915,543.7

16,290.5

5 outside directors(incl. 1 female
outside director)

12
members

FY2020“Platinum Kurumin” certification
was granted as a company thatprovides superior support forchildcare to its employees basedon the Act to Advance Measures
to Support Next-Generation
Child-Rearing

FY2021

6

Recognized as an outstandingorganization under the 2022
Certified Health & Productivity
Management Outstanding
Organizations Recognition
Program (large enterprise
category)

Strengths of Mebuki Financial Group in Main

Areas of Business

About Mebuki FG

Market Environment and Scale of Ibaraki Prefecture and Tochigi Prefecture

Wide-Area Network Based in Ibaraki and Tochigi Prefectures

Mebuki Financial Group’s primary areas of business are Ibaraki Prefecture and Tochigi Prefecture, both adjacent to theTokyo metropolitan area, and have been high concentration areas of manufacturers. We also expect future economic
growth in these areas, with the further development of the transportation network and high attractiveness as to where
to set up factories. Additionally, their agricultural output also ranks top in the country, backed by the mass consumption
in the Tokyo metropolitan area. Both prefectures have balanced industrial structures.

The Group has set up 257 branch offices in the economic zones with significant potential including Ibaraki and Tochigi
Prefectures, and thereby boasts a top-ranking market share in this area.
In addition, the Group supports overseas business of its customers through 6 Representative Offices.

Connecting expressways developed wide-area networks
Kan-Etsu Expressway

Domestic:

319offices Overseas: 6offices (Representative Offices)
Overseas Representative Offices(As of March 31, 2022)(Joyo Bank + Ashikaga Bank)

Tochigi Prefecture

Tohoku Expressway
Joban Expressway

Joyo Bank: 8 offices
Ashikaga Bank: 93 offices

Miyagi Prefecture

Gunma Prefecture

Fukushima Prefecture

Joyo Bank: 1 office

Joyo Bank: 10 offices
Ashikaga Bank: 1 office

Ashikaga Bank: 14 offices

Kita-Kanto Expressway

Saitama Prefecture

Port of Ibaraki

Joyo Bank: 1 office

2nd
7th

1st

2nd

2nd

Mebuki Financial Group’s share in Ibaraki Prefecture and Tochigi Prefecture*

1st

1st

2nd

Other banks, credit
unions, credit
associations, and others

1st

1st

2nd

3rd

3rd

13th

2014

2015

2016

2017

2018

18th

2019

2020

2021

Potential in the main areas of businessTochigi Prefecture
1.94 million people 19th

Nominal prefectural gross product*

14.0 trillion yen 11th

9.3 trillion yen 15th

Prefectural income per capita*1

3.32 million yen 6th

Number of business establishments*2

3.47 million yen

3rd

118 thousand establishments 13th

88 thousand establishments 19th

Manufactured goods shipped*3

12.5 trillion yen 7th

8.9 trillion yen 13th

Agricultural output*4

430.2 billion yen 3rd285.9 billion yen*1 “Prefectural Accounts” by the Cabinet Office *2 “2016 Economic Census for Business Frame” by Statistics Bureau, Ministry of Internal Affairs and Communications*3 “Census of Manufactures” by Ibaraki Prefecture and Tochigi Prefecture *4 “2019 Agricultural Production Income Statistics” by the Ministry of Agriculture, Forestry and Fisheries

7

Mebuki Financial
Group

37.4%

62.6%

Municipal governments, administrative
agencies, universities, etc.

Experts who help address social issues

Arrangement of collaborations and streamlining of municipal services

Intermediary organizations that support network expansion

2.87 million people 11th
1

Deposits(incl. Japan Post Bank)

Gerontology service, digital transformation (DX), environment related services
such as decarbonization and environment conservation services, etc.

Ibaraki Prefecture

Population*1

Other banks, credit
unions, credit
associations, and others

The Group not only provides high-quality comprehensive financial services but also addresses the challenges of morecommunities and customers through collaborations with diverse partners both at home and abroad beyond theexisting boundaries of industries and businesses.

Note: The above ranks are those of the total area of new factory locations (each year) among 47 prefectures based on the “Survey of Factory Location Trends” by the Ministry of Economy, Trade and Industry.

Economic data

51.0%

Collaboration with Enterprises and Local Communities Beyond the Boundaries of the Group
17th

2013

Loans

*The Company calculated the shares based on data from Kinyu Journal, Special Issue, December 2021.

10th

20th

2012

Mebuki Financial
Group

49.0%

2nd

3rd

17th

2011

Joyo Bank: 7 offices

Joyo Bank: 6 offices
Ashikaga Bank: 2 offices

Kita-Kanto Expressway fully opened
1st

Chiba Prefecture

Tokyo Prefecture

Total area of new factory locations
Ibaraki Prefecture
Tochigi Prefecture

New York

Joyo Bank: 149 offices
Ashikaga Bank: 7 offices

Osaka Prefecture

Ken-O Expressway

ShanghaiHong Kong
Bangkok
Singapore

Ibaraki Prefecture

Joyo Bank: 3 offices
Ashikaga Bank: 17 offices

Ibaraki Airport

Hanoi

9th

Domestic financial institutions outside of the GroupRegional collaboration arrangements,
collaboration in and sharing of operations, etc.

Business matching, personnel placement, M&A intermediary, etc.

External expert teams that makeservices more sophisticated
Consulting services by experts

Overseas financial institutions

Delivering advanced services
through collaborations
Contributing to solving
regional issues
8

Support for overseas business, expansion of sales channels

A Message from the Management

About Mebuki FG

Toward Solutions to the Diversifying Issues ofLocal Communities and Customers

Tetsuya Akino,

Kazuyuki Shimizu,

President and Director

Executive Vice President and Director

customers over many years will pay great dividends inthis regard.
The needs and issues of customers go beyond thefield of finance; they span non-financial areas like
digitalization and decarbonization, so solutions to themrequire coordination among group functions and withoutside resources as well as the effective functioning ofa regional network rooted in local communities andcustomers.
This challenging business environment is expected tocontinue, but as we implement our Third Medium-Term
Group Business Plan, which was started in April 2022,
we will leverage the strengths of the Group to be a
driving force in resolving community and customer
issues, pursuing digital transformation, and promoting
the transition to a carbon-free, recycling-based society. I
think contributing to the growth and development oflocal communities and customers constitutes the raisond'être of Mebuki Financial Group.

In the business environment that surrounds us, changeis accelerating; changes in the social structure, including
lower birthrates, demographic aging, and population
declines, technological innovations such as digitalization,and new movements like the transition to a carbon-free,recycling-based society. Moreover, most recently,
uncertainties have mounted as the impact of the
COVID-19 pandemic has become protracted andgeopolitical risks have emerged with the Russia-Ukraine
problem.
At the same time, through the various issues emerging
with local communities and customers, such changes inexternal conditions can be seen as increasing theopportunities for us to play a more active role as afinancial institution.
Important to resolving diverse issues is consulting that
understands the customer in greater depth and thinks
together with them, and I think our strength in having
built up trust and confidence with local communities andResults and challenges of the Second Medium-Term Group Business Plan (previous Medium-Term Business Plan)
measures focused on structural reforms and strengthening
consulting functions.
Regarding structural reforms, with the integration ofcore systems in January 2020, we worked to optimize
branch networks, streamline administrative processes,

Under our Second Medium-Term Group Business Plan
(previous medium-term business plan), we positioned
the three years from fiscal 2019 to fiscal 2021 as aperiod for “producing solid results and upshifting forthe next stage of growth,” and carried out various

9

Under the Second Medium-Term Group Business
Plan, we were able to raise core business profitability
and generate other positive results, but with the advanceof technological innovations and accelerating changes inthe social structure, caused by lower birthrates,
demographic aging, and population declines as well as
the global spread of the COVID-19 pandemic, thesituation is becoming increasingly difficult for the
traditional banking services of deposits, loans, andmoney transfer.
In this environment, we recognize that the challenge
for Mebuki Financial Group will be to further increase theefficiency of traditional banking services, maintain andexpand the customer base, strengthen consulting
functions, enhance our solutions menu, expand ourbusiness domain to solve the diverse issues of local
communities and customers, and contribute to acarbon-free, recycling-based society. For the sustainablegrowth of local communities, customers, and the Group,
we will need to work to enhance and promotecomprehensive financial services and take on thechallenge of new business areas.

and reorganize division functions and group companies.
In optimizing our branch networks, we reduced realbranches by around 20% (62 branches) over three years
while improving customer convenience by launching abanking app and enhancing its functions, among othermeasures, and freed up 1,200 people fromadministrative areas, including departments primarily
involved in administrative processes.
With regard to strengthening consulting functions,among personnel freed up by structural reforms, wecommitted around 200 to strengthen sales capabilities,
expanded service offerings and external partners, andthereby built a system for resolving the diverse issues of
local communities and customers.
As a result, in fiscal 2021, the last fiscal year of theSecond Medium-Term Group Business Plan, core net
business income, which expresses core businessprofitability, exceeded both the planned target and theresult of the previous fiscal year, and, further, core OHR*1
declined to 54.5%, so we were able to make progress in
improving management efficiency. However, in light of the
protracted impact of the COVID-19 pandemic, we set
aside reserves as a preventative measure (increasing
credit related costs) and other steps were taken toprovide for the future, which led to consolidated net
income*2 falling short of the planned target.

*1 Excluding system integration expenses*2 Attributable to owners of the parent

Summary of the Second Medium-Term Group Business Plan, p.14

Sustainability issues recognized as important management issues
or higher, and we will more robustly promote a variety of
initiatives for them. For the CO2 emission reduction goalin particular, to further strengthen our initiatives, we haveraised our target for CO2 emission reduction by fiscal
2030 to net zero emissions, from the previous target of
reduction of 30% or more compared to fiscal 2013.
In order to be a resilient organization in support ofthese initiatives, we will promote diversity even more sothan in the past. Along with increasing opportunities fordiverse human resources to play an active role,enhancing job satisfaction is the key to survival as anorganization. When support is provided for the career
aspirations of employees, each individual raises theirlevel with goals and motivation, and as human resources
diversity is promoted, it generates innovation. Throughthis, we will provide new value to local communities andcustomers.

We formulated the Group Sustainability Policy in March2022 for the sustainable growth of both the Group andlocal communities and customers.
Within this Group Sustainability Policy, we havedefined five key issues (materiality) that will be ourparticular focus in contributing to the realization ofsustainable local communities.
Five Key Issues(1) Revitalization of regional economy andlocal communities(2) Climate change and environment conservation(3) Promotion of digitalization(4) Response to aging society(5) Promotion of diversity
To address these five key issues, we have set longterm KPIs that include a sustainable finance goal, a CO2
emission reduction goal, and a percentage of female
employees in positions equivalent to assistant manager

Sustainability at Mebuki Financial Group, p.19

Long-term vision targeting the year 2030
viewpoints, including those of outside directors, about
the added value Mebuki Financial Group may be able
to provide and what sort of company we wish to
become.
With a desire to “continue to create new value by
working together with local stakeholders to solve theirvarious issues” and to “contribute to the realization ofsustainable local communities through value creation,and remain an essential presence in local

With the business environment changing substantiallyand uncertainties increasing, we have formulated a
medium- to long-term vision, Long-Term Vision 2030,
in order to achieve sustainable growth together withlocal communities and customers, and as we work
toward its achievement, it will be necessary for us toevolve as a company.
From this medium- to long-term perspective, we held
many active discussions incorporating diverse

10About Mebuki FG

To realize this long-term vision, first, we will reinforce
our core businesses of traditional banking services andcomprehensive financial services and work to expand
business areas that leverage these strengths. In
expanding our business areas, we will work to resolve
local issues beyond the conventional framework offinancial services and reinvest know-how obtained
through these efforts into our core business. We believethat putting this cycle into motion will lead to the creationof new value by the Group.

communities,” we defined our vision for 2030 as “A
Value Creation Group Working Together with Local
Communities.”
We also defined target levels: a consolidated fee
income ratio of 50% or more and consolidated ordinary
profit of ¥100 billion or more. This clearly expresses ourintention, both internally and publicly, to create new
businesses and services in the comprehensive financial
services area—consulting and group functions,specifically—and in new business areas and develop
them into group revenue sources so that they approach
the same level as the traditional banking services area.

Long-Term Vision 2030, p. 21

Third Medium-Term Group Business Plan

local communities and customers to further promote DX
in the region as a whole. As for investments to this end,
under our Third Medium-Term Group Business Plan, weare planning digital investment of ¥7.0 billion for theGroup overall. We will also free up 580 personnel
throughout the Group through digitalization, streamlining
business processes, and other measures and commit
200 personnel to consulting, DX, new businesses, andother areas.

consulting and other services with high added value that
help build the trust and confidence of customers. At
branches, we will reduce administrative space andincrease the number of branches with dedicated booths
set up for customers to consult with us in greater detail.
In this way, we will transform the role of branches fromspace for administrative processing to space forcommunication and consultation with customers.
Moreover, utilizing information gathered through both
digital and face-to-face channels, we will improve thesophistication of marketing and reinvest knowledge andknow-know accumulated through digital initiatives into

Promotion of Digitalization and DX, p.39

Increasing opportunities for employees to fully demonstrate their abilities and more actively participate
For the first of these strategies, “Pursue a businessmodel to support local communities,” we will raise thequality of services related to solving community andcustomer issues and expand our business areas tocontribute to the realization of sustainable local
communities. In addition, by providing customers theconvenience of digital services along with the confidence
and advanced service of face-to-face interactions, wewill work to be an essential presence in local
communities.
With regard to the second basic strategy, “Build asustainable management base,” we will engage inbusiness model reforms and business innovation
through utilization of digital technologies and othermeasures and strengthen our management structure
while creating new value. Moreover, we will increase theefficiency of group management and work for its further
advancement by raising the efficiency of management
resource allocation through redeployment of personnel,
IT investment, and cost reductions.
For the third basic strategy, “Develop humanresources and promote active participation,” we willdevelop and secure human resources capable ofsupporting execution of these strategies and creating
value and will provide new value and peace of mind to
local communities and customers by being a group withdiversity and independence through enhanced job
satisfaction in order to thereby raise the engagement ofeach individual employee.

To achieve our long-term vision, we back-casted tocompile tasks for the first three years and create theThird Medium-Term Group Business Plan. The three
years of this plan, which is Phase 1, is positioned as the“Period for Taking on Challenges for Sustainable
Growth,” and there are three basic strategies for this.
(1) Pursue a business model to support local
communities(2) Build a sustainable management base(3) Develop human resources and promote active
participation

Third Medium-Term Group Business Plan, p. 23

manager or higher from the current level of 31.4% (as ofMarch 31, 2022) to 35% by 2025. Further, we will increase
opportunities for senior employees to play a more activerole and work to create an environment that makes gooduse of their many years of experience and skills.
We will maintain an environment that allows every
employee to work happily and energetically regardless of
position, age, gender, nationality, or disability, and weplan to increase opportunities for every employee toactively participate while fully demonstrating theirabilities.

We intend to further strengthen investment in humanresources to put into practice our Long-Term Vision
2030 and Third Medium-Term Group Business Plan andprovide new value not overly constrained by theframework of finance.
As for programs, we are enhancing training andon-the-job training programs to smooth the transition
from administration to sales and consulting and thereby
help numerous employees take on this challenge. In
addition, we are also reviewing our personnel system toensure appropriate compensation for employees playing
an active role regardless of age, gender, or otherpersonal attributes.
Regarding personnel involved in DX promotion inparticular, we have defined as “core DX personnel” those
employees in the head office who create new businesses
using digital technologies and who plan and lead businessprocess reforms for the Group as well as those
employees who provide DX support for customers. Under
the Third Medium-Term Group Business Plan, we areaiming to train at least 400 of these personnel. In addition,
to improve digital literacy among all employees, we havedefined as “base DX personnel” those employees who
have reached a certain level of IT knowledge, and we plan
to also train 3,000 or more of these personnel by the endof fiscal 2023.
We also recognize that diversity and inclusion are
extremely important, and with regard to gender diversity inparticular, we have set a long-term goal of raising thepercentage of women in positions equivalent to assistant

Promotion of Diversity, p.46

Providing new value to be a value creation group working together with local communities

Accelerating Digital Transformation (DX)procedures that require documents and seals from ourbusiness processes and have also led to improved
convenience for customers through introduction of abanking app, enhancement of online loan applications,and other measures. Going forward, we plan to further
increase contact points for customers with whom we
had minimal contact previously and for younger
customers, including those in Generation Z, and will
strive to further expand transactions with them.
We will thoroughly reduce administrative volume byutilizing digital technology and shift personnel to

For business model reforms, business innovation, andimproving convenience for local communities andcustomers, promoting digital transformation (DX) is
indispensable. Under the Third Medium-Term Group
Business Plan, we will continue to accelerate DX
initiatives. Regarding these initiatives, we will not only
utilize DX in the Group but also support the DX efforts oflocal communities and customers.
Business process reforms utilizing digital technologythat were implemented under the Second Medium-Term
Group Business Plan have reduced administrative11

to solve the diversifying issues of local communities andcustomers through leveraging our strengths to provide
new value. By doing so, we hope to continue being anessential, trusted member of local community.
We would like to thank local communities, customers,
shareholders, and all other stakeholders for your continuing
understanding and support.

We are committed to remaining an essential presence inlocal communities. This means continuing to be a trusted
presence for local communities and customers, and webelieve the Group’s strengths are geared precisely toward
this, the trust and confidence we have earned, a robust
customer base and financial foundation, and thecomprehensive capabilities of the Group.
Based on our vision for 2030 of being “A Value
Creation Group Working Together with Local
Communities,” the Group is taking steps forward toward
the realization of sustainable local communities.
The Group’s executives and employees are all united
in facing the difficult business environment and helping

July 2022

Tetsuya Akino, President and Director
Kazuyuki Shimizu, Executive Vice President and Director
12Management and Financial Strategies

About Mebuki FG

Summary of the Second Medium-Term Group Business Plan

Results for FY2021
We also steadfastly pushed forward with structuralreforms. As a result, expenses*1 decreased by 1.9 billion
yen year on year.
Meanwhile, as a precaution to the impact of the
COVID-19 pandemic and the Russo-Ukrainian situations
on our earnings, we had recognized allowance for potential
credit losses. As a result, credit costs*1 decreased by 2.8
billion yen year on year to 19.6 billion yen.
Further, ordinary profit*1 increased by 4.5 billion yen
year on year to 60.4 billion yen, with gains/losses on
securities*2 decreased by 12.4 billion yen year on year,
backed by flexible securities’ operations based onmarket conditions, future outlook, and other factors.
As a result, consolidated net income attributable toowners of the parent of Mebuki Financial Groupamounted to 42.9 billion yen, higher than the results forthe previous year of 6.4 billion yen.

In FY2021, amid a harsh external environment marked
by the COVID-19 pandemic and Russia’s aggression in
Ukraine, we worked proactively to enhance theconsulting function and bring about structural reforms,
and as a result, core net business income*1, an indicatorof the profitability of our main business, increased by
14.8 billion yen year on year to 84.2 billion yen.
Differences of interests between deposits and loans
decreased year on year for reasons such as thecompletion of a round of COVID-19 related loans. We,
however, made efforts to provide adequate consulting
service, and as a result, recorded a year-on-yearincrease in net fees and commissions.*1 Such efforts
included supporting corporate customers in their mainlines of business and strengthening collaborations
between the two banks and Mebuki Securities in ourgroup.

*1 Bank total (Core net business income excludes gains/losses on cancellation of investment trusts)(Bank total)
Credit related Gains/losses on
costs (-)
securities*2
-2.8
-12.4

(Billion yen)

Factors
Factors
causing
causing
increase decrease
in income in income

Net fees andcommissions+2.3

Net non-recurrent
gains/
losses Ordinary profit 60.4
-0.5*3 (+4.5 year on year)

Credit related costs +Gains and losses on sale of securities, etc.
-10.2 year on year

Customer assets undercustody related commissions

2.02

1.44

3.29

7.57

13.84

0.49
0.98

14.66

14.93

2.98

3.70

0.72
0.68
4.26

1.13
0.55

3.87
1.19
0.61

3.25

8.08

7.55

5.69

FY2019FY2020Business support related

FY2021Credit related(Billion yen)

FY20185.91

FY20196.22

FY2020

FY2021

Mebuki Securities
Financial instrument intermediary service
JGB, etc.
Foreign currency deposits
Insurance (excluding executive insurance)
Investment trusts (Sales commission + Trust fee)

13

61.3%

61.3%

(+0.7%)(+0.8)

114.1

115.0

56.2%
54.5%

(-4.2%)(-4.8)

61.2(vs. Core Gross
Business Profit*4)

59.6%

System integration

60.6
Secure andmaintaincontacts points
with customers
by leveraging
non-face-toface channels

OHR

63.5%

60.7%
Sales increased
backed bystrengthened
collaborations
among groupcompanies

3.25

7.93

FY2018(Bank total)

16.90

4.67
8.20

⿟ Enhanced the development of specialized human resourcesCore OHR (bank total)*2

Approx. 60%

54.5%

Improve revenue
through the provision of
consulting services

Invest in growth
Create a new
business model⿟ Established the system for promoting diversity

84.2<Shift in allocation of management resources through structural reforms>(Billion yen)

*The amount of expenses represents a comparison between FY2021 and FY2018.

Results
Initial plans

Human Invested areas (including consulting services): Approx. 200 people (as planned)
resources Saved areas (including the administrative area, and head office): Approx. 1,200

70.5

66.0

69.4

Enhanceproductivity
Reduce costs

Structural reforms

FY2018FY2019FY2020*3 Excluding gains/losses on cancellation of investment trusts

FY2021

Environmental Awareness

61.8%

1.94

1.88

Developing Human
Resources for Value
Creation

Consolidated net income*42.9 billion yen

Changes in core net business income*3*4 Excluding system integration expenses

Expenses(+13.1%)(+1.96)(Billion yen)

11.37

9.44

⿟ Revised personnel systems for the two subsidiary banks

4.3%

Approx. 47.0 billion yen*1 Net income attributable to owners of the parent*2 Excluding gains/losses on cancellation of investment trusts and system integration expenses

Money The amount of expenses*4: -7.2 billion yen (down 2.2 billion yen vs. the plan)
FY2021(Bank total + Mebuki Securities)

9.65

Basic Strategy 3

Results for FY2021

5.0% or more
1

Consolidation of branches: 62 locations (more than planned)

FY20209.59

Numerical targets
Consolidated ROE

Things Downsizing of branches: 152 locations*2 Gains/losses on cancellation of investment trusts + Gains/losses on bond transactions + Gains/losses related to stocks*3 Including (-)1.5 billion yen of costs related to liability for retirement benefits, and 0.9 billion yen of gains on equity options, etc.

(+20.4%)(+1.92)

⿟ Enhanced the ability to satisfy customers in need of support
for their main lines of business⿟ Enhanced consulting functions for individual customers
⿟ Enhanced non-face-to-face services

people (up 200 people vs. the plan)Core net business income(excluding gains/losses on cancellation of investment trusts)+14.8 year on year

(Billion yen)

Basic Strategy 1

The status of Progress in Achieving the Management Objectives

⿟ Reviewed branch networks
Structural Reform for ⿟ Implemented core system integration, and administrative
systems unification
Enhanced⿟ Established new subsidiaries, restructured existing
Productivity
subsidiaries, and strengthened governanceExpenses (-)-1.9

Net trading
income+0.7

Difference ofInterests
betweendeposits
Ordinary profit and loans
55.9
-0.9

(Bank total)

Major Accomplishments

Basic Strategy 2

Securities margin+10.7

Fees from corporate customers

The Second Medium-Term Group Business Plan (April 2019–March 2022)

Creating GrowthBusiness Models
with Local Regions

Year-on-year change in ordinary profit

of growth.” Under the plan, we implemented structuralreforms, such as optimizing our branch networks andreorganizing division functions, beginning with the
integration of the core systems in January 2020. We
also deployed a three-year cumulative total of 200
people to consulting services and the IT field. We have
put all our efforts into resolving issues faced by ourcustomers in the region, which are becoming
increasingly diverse, and have created business models
that grow with local communities.

Under the Second Medium-Term Group Business Planfor the three years from April 2019 through March 2021,
the Group took various measures based on its basic
strategies, namely “Create growth business models withlocal regions,” “Structural reforms for enhanced
productivity” and “Develop human resources for value
creation.”
We positioned the three-year period of the Second
Medium-Term Group Business Plan as a period for“producing solid results and upshifting for the next stage

110.1(-1.8%)(-1.9)

108.1

OHR(vs. Core Gross
Business Profit*5)

Personnel(-2.8%)(-1.6)

59.9

58.2

Although we noted that we improved the profitability of our main business as planned in the Second Medium-Term
Group Business Plan, the environment surrounding the traditional banking business has been increasingly difficult
for reasons such as accelerated changes in the social structure in the wake of population decline, the COVID-19
pandemic, and technological innovation.
To achieve the sustainable growth of both local communities and the Group, we need to enhance and expand ourcomprehensive financial services and tap into new business segments.
Issues in View of the Second Medium-Term Group Business Plan⿟ Further improving the efficiency of traditional banking services, and maintaining/
expanding customer base
⿟ Further enhancing consulting functions and a range of solutions to issues
⿟ Expanding business areas in a bid to solve diverse issues of local communities⿟ Contributing to realizing decarbonization and recycling-oriented society

External Environment
Declining birthrates
and aging population

Changing industrial
and employment structures

Changing social structure/lifestyle(New normal post the COVID-19 outbreak)Technological innovation(Digitalization/evolution of technology)

Transition to
decarbonization/recycling-oriented
society

Regulatory easing
and changing competitiveenvironment

Taxes

46.7

43.4

7.3
FY2018
1.9
billion yen

7.0
FY20193.9billion yen

6.8
FY2020
3.1
billion yen

43.4

Realize the sustainable growth of both
local communities and the Group
Enhance and expand comprehensive
financial services

Non-personnel(-0.0%)(-0.0)

46.1

Direction of initiatives(-4.3%)(-0.3)

System integration
6.5
expenses
FY2021 Personnel &non-personnel
3.1
billion yen expenses*4 Excluding gains/losses on cancellation of investment trusts*5 Excluding gains/losses on cancellation of investment trusts and system
integration expenses

14

Challenge of new business areas

About Mebuki FG

Reduction of Strategic Shareholdings

Forecast for FY2022 (earnings estimates)
We expect net income attributable to owners of thewith the Third Medium-Term Group Business Plan (P23),

parent for FY2022 to increase by 2.0 billion yen year on

which started in April this year, to further increase theyear to 45.0 billion yen. While the outlook remains

profitability of our main business.

uncertain in the wake of the COVID-19 pandemic andWe will inform as promptly as possible in cases we

Russia’s aggression in Ukraine, we will push forward

need to revise our earnings estimates.

Forecast (Mebuki FG consolidated)

Forecast (Bank total)(Billion yen)

Assessing the rationality of holding individual stock by the Board of Directors, etc.

(Billion yen)

Forecast for Year-on-year
FY2022changeOrdinary profit

65.0

+0.0

Net income attributable to ownersof the parent

45.0

+2.0

Forecast for
FY2022

Ordinary profit

62.5

Net income

43.0(Credit related costs)(11.0)

Shareholder Returns and Capital Policy
We will target a total return ratio of 30% or more while
taking into account both the maintenance of solid capitallevels for our future growth and the appropriate
distribution of profits to our shareholders.
We will continue to consider the total return ratio
including the dividend level in light of market trends andbusiness forecasts.
We maintained stable dividends and paid out 11 yen
per share in FY2021 (the same level as the previousyear). We also repurchased own shares in a flexible
manner, achieving a total return of 73.3%, well above
the target of 30%.
We plan to maintain stable dividends and pay out 11
yen per share also in FY2022 (the same level as theprevious fiscal year). Consolidated capital adequacy ratioof Mebuki Financial Group as of March 31, 2022
increased by 0.05 percentage points year on year to
10.92%.

Dividends andShareholder Returns

Consolidated capital adequacy ratio(Billion yen)

Total return ratio
Payout ratio

Share repurchase
Dividends

(%)

73.3%

46.2%
34.9%
35.3%

34.9%

28.2%

26.3%

10.95%

19.5

10.87%

10.92%

9.94%

3.9
12.8

12.7

11.9

11.8

FY2019FY2020

FY2021

FY2022(scheduled)

As of March 31, As of March 31,
2019
2020*

As of March 31, As of March 31,
2021
2022

¥11.0

¥11.0

¥11.0

¥11.0

FY2019FY2020

FY2021

FY2022(scheduled)* RORA = (Net interest margin on loans and deposits – Expenses (including credit related costs)+ Fees and Commissions + Dividends) ÷ Risk-weighted Assets (Loans and Stocks)

Strategic shareholdings(bank total, listed companies only, based on acquisition cost)
Book-value balance(Billion yen)
25.5%

20.8%
221

20.1%
16.9%

204

119.1

Number of share issues
Ratio to the amount of consolidated net assets

184

106.8

160

92.0
70.7

As of March 31,
2019

As of March 31,
2020

As of March 31, As of March 31,
2021
2022

Dialogue with Shareholders and Investors
For FY2021, in consideration of the COVID-19 crisis,
we held hybrid IR sessions combining offline and online
results briefings, and also enhanced information
disclosure by other means, including online
videoconferencing and the distribution of video content.
We will continue to ensure impartial and fair
information disclosure and promote constructive
dialogue with shareholders and investors.

Our Group has endeavored to improve soundness andtransparency of our business management and ensure
timely and easy-to-understand information disclosure
and provision in order to earn trust from and improve ourGroup’s reputation among all stakeholders including
customers, shareholders and community residents.

Investor relations sessions
FY2018FY2019FY2020

FY2021IR sessions for individual investors

8 times,
845 participants(Cancelled)

Distribution of
explanatory video

Distribution of
explanatory video

IR sessions for institutional investors and analysts in Japan(including exclusive interviews)

79 times,
418 companies

68 times,
454 companies

58 times,
260 companies

57 times,
253 companies

IR sessions for overseas institutional investors andanalysts (including exclusive interviews)

3 times,
19 companies

2 times,
12 companies

8 times,
8 companies

6 times,
6 companies

90 times, 1,282
people (companies)

70 times,
466 companies

66 times,
268 companies

63 times,
259 companies

Total

15

Regarding the profitability, we confirmed that theiroverall business RORA combining all listed companies ofstrategic shareholdings exceeded the target value.

Our basic policy for strategic shareholdings is based on
medium- to long-term economic rationality on the basisof risk and returns and future outlook so we can securesustainable growth, increase corporate value of theGroup and issuing companies over the medium- to longterm, and build stable business relationships with thosecompanies.
The economic rationality of strategic shareholdings is
examined from the viewpoint of profitability,
creditworthiness, regional characteristics (relevancy toprincipal base of operations), improvement of business
relationship, etc., using their overall business RORA*
based on our ROE target.
As of March 31, 2022, the Board of Directors confirmed
every strategic shareholding to be meaningful pursuant tothe basic policy to secure sustainable growth, increase
corporate value of the Group and issuing companies overthe medium- to long-term, and build stable business
relationships with those companies.

*Ashikaga Bank started to calculate each risk-weighted asset according to the foundationinternal rating-based approach (FIRB) from the end of March 2020.

Dividends per share

The amount of reduction in FY2021 was approx. 21.2
billion yen (bank total, based on acquisition cost), andinvolved shares from 24 issuers. The resulting balance ofstrategic shareholdings (listed companies) amounted to70.7 billion yen as of March 31, 2021. The ratio of thebalance of strategic shareholdings to consolidated
capital decreased from 20.1% to 16.9%.

The subsidiary banks that hold strategic shareholdings
are making efforts to reduce the balance of strategic
shareholdings, taking into consideration risk reduction
and capital efficiency based on its economic rationality.
We have held sufficient dialogues with the issuing
companies upon sales of such shares.

16

Value Creation Process of Mebuki Financial Group

Mebuki Financial Group’s Value Creation

Based on the corporate philosophy of the Group, Mebuki Financial Group will resolve a variety of issues jointly with community residents by taking advantage of its wide-area network, solid customer
base and other strengths, and thereby create value for stakeholders, improve the Group’s corporate value, and contribute to the sustainable growth of local communities.
External Environment

Population decline and aging

Key Issues

Changing industrial and employment structures

Revitalization of the regional
economy and local communities

Digitalization/

evolution of technology

Climate change andenvironmental conservation

INPUT

Changing social structure and lifestyle

Promotion of digitalization

Transition to decarbonization/recycling-oriented society

Response to aging society

Activities
Group Philosophy
Long-Term Vision

A Value Creation Group Working Together with Local Communities

Newbusinessareas

Human capital

Comprehensive
financialservices
areaIntellectual capitalSocial capital

OUTCOME

Together with local communities, we will continue to build a more
prosperous future by providing high-quality comprehensive financial
services.

Financial capital

Traditionalbanking
servicesarea

Take on the challenge to solve
regional issues, going beyond theconventional framework

Strengthen our consulting andgroup functions and contribute tosolving more customers’ issues

Change the way of providing
services and increase their value

Promotion of diversity

Realize prosperous living
Support sustainable corporate growth
Support decarbonization/SDGs
initiatives in local regions
Contribute to regional revitalization/
urban development

Consulting
Business succession/M&A
Trust/inheritance/asset building
Leasing/securities/overseas
expansion

Local communities and customers
Convenient and secure financial services
Revitalization of regional economy
P25
Solving issues throughconsulting services P26
Safe, secure, and prosperous
life P44
Creating a recycling-oriented
society and reducing environmental
impact P32

Prosperous
imaginationand problem
solving skills

P29

Shareholders P15
Corporate value improvement
Stable and sustained
shareholder returns
Transparent information
disclosure

Services that
continue to betrustedEmployees P46
Promotion of diversity
Pleasant working environment
where employees can grow
Implementing work-lifebalance

Deposits
Loans
Settlement/money transfer

Contributing to achievement of SDGs
Management basethat supports ourbusiness

Details ofeach capital

Financial capital
Sufficient capitalSound loan assets
Stable funding

17

P13

Corporate GovernanceRisk management

ComplianceInternal Audit

Human capital

P46

Diverse and sufficient humanresources
Fulfilling training programs andspecialized human resources
Human resources rooted in local
communities

Intellectual capitalSocial capital
P3

Brand strength and history

Comprehensive abilities with strong
know-how of the Group

P66

Advanced risk management

Wide-area networks based in Ibaraki and Tochigi Prefectures
Solid customer base

P8

Network with domestic and international partners

P60

18

P8, 27

P8

Sustainability at Mebuki Financial Group

Mebuki Financial Group’s Value Creation

Setting of Key Issues (Materiality)

Formulation of Sustainability Policy
Recognizing issues about sustainability as important management agendas, Mebuki Financial Group has formulated

Mebuki Financial Group has set key issues (materiality) that it should focus on in order to contribute to realizing

the Group Sustainability Policy with the aim of achieving both the sustainable growth and the corporate value

sustainable local communities.

enhancement of the Group, while solving the issues of and realizing the sustainable growth of local communities.
In addition, we have formulated independent policies to clarify policies regarding Environment, Human Rights, andDiversity.

Mebuki Financial Group Sustainability Policy
Based on the Mebuki Financial Group Philosophy “Together with local communities, we willcontinue to build a more prosperous future by providing high-quality comprehensive financial
services,” Mebuki Financial Group and Group companies will support solving issues in our
regions, while contributing to the achievement of sustainable growth of local communities as wellas the improvement of our corporate value.

Structure for Promoting Sustainability

Key issues (materiality)

Main initiatives in the Third Medium-Term Group Business Plan

Revitalization of the regional
economy and local communities
P.25[Specific Strategy 1-2] Deepening comprehensive financial services• Enhance consulting function for corporate customers• Implement initiatives for regional revitalization/SDGs• Deepen life plan consulting[Specific Strategy 1-3] Challenges to expand business areas• Develop new business areas by leveraging the Group’s strengths• Make effective use of strategic investments, alliances, etc.

Climate change andenvironment conservation
P.32[Specific Strategy 1-2] Deepening comprehensive financial
services• Implement initiatives for regional revitalization/SDGs

Promotion of digitalization
P.39[Specific Strategy 1-1] Innovating traditional banking services• Enhance contact points with customers and non-face-to-faceservices through digitalization• Optimize channel network and enhance consulting function[Specific Strategy 2-1] Promoting DX

Response to aging society
P.44[Specific Strategy 1-2] Deepening comprehensive financial services• Enhance responses to an aging society

Promotion of diversity
P.46[Basic Strategy 3] Develop human resources and promote
active participation• Promote active participation / diversity among employees

To establish a structure that uniformly manages the development and progress of initiatives related to sustainability

Targeted SDGs

issues, including climate change, we have set up the Sustainability Committee chaired by the President and Director
and have held committee meetings once in six months or more. We have built a structure in which the Board of
Directors can supervise the Group’s sustainability initiatives by reporting the details of deliberations at each meeting to
the Board of Directors.
In April 2022, the Group newly established organizations dedicated to sustainability (Sustainability Management
Group within Mebuki Financial Group, Inc.; and Sustainability Promotion Office within bank subsidiary Joyo Bank andAshikaga Bank)

Mebuki Financial Group
Promoting initiatives
for sustainability
throughout theGroup

Board of Directors
Supervise
ReportSustainability Committee
Chairman: President and Director
Members: All Executive Directors, Executive Officers
and others
Purpose: To contribute to the achievement of SDGs,
the committee makes decisions on importantbusiness execution regarding both thesustainable growth of the Group and theresolution of environmental/ social issues inlocal regions and analyze, evaluate, improve
matters related to sustainability promotion.

Setting of Long-Term KPIs for Sustainability
The Group aspires to realize sustainable local communities and enhance corporate value, and thus, has set Long-term[Newly established in April 2022]

KPIs for sustainability in order to clearly define its basic stance and goals related to sustainability as shown below.

Sustainability
Management GroupAs the Group holding regional financial institutions, we will strengthen our efforts to solve the issues of local
communities, and contribute to realizing sustainable local communities by achieving the long-term KPIs.

[Newly established in April 2022]

Sustainability
Promotion Office(Joyo Bank/Ashikaga Bank)

Long-term KPIs for sustainability
Sustainable finance goals

CO2 emission reduction goal

Percentage of female employees in positions
equivalent to assistant manager or higher

FY2021–FY2030 (cumulative total)3 trillion yen(of which 2 trillion yen for environmental fields)

Net-zero CO2 emissions in FY2030

As of March 31, 2025 35% or more

Departments responsible for sustainability

Each Group company

1920

Long-Term Vision 2030

Mebuki Financial Group’s Value Creation

Long-Term Vision

Approach to Realization of Long-Term Vision

In the face of drastic changes in business environment, we have defined a long-term vision targeting the year 2030 (theTo realize our long-term vision, we will strengthen our core business areas such as traditional banking andvision and target level) so we can realize sustainable growth together with local communities.

comprehensive financial services, and take effort to expand our business areas by leveraging our strengths.

“Long-Term Vision 2030” is based on our desire to “continue to create new value by working together with local
stakeholders to solve their various issues” and to “contribute to the realization of sustainable local communities throughWe will create new value by taking on challenges to solve regional issues beyond the framework of conventional
financial services and returning the expertise obtained through these initiatives to our core business.

value creation, and remain an essential presence in local communities.”

Strengthen core business / Develop new business areas by leveraging our strengths[New business areas]
Take on the challenge to solve regional issues, going beyond the conventional framework
We will contribute to realize sustainable local communities by taking on challenges to solve regional issues

Together with local communities, we will continue

Cultivating
newcustomersGroupto build a more prosperous future by providing
Philosophy
high-quality comprehensive financial services.

[Vision]Long-Term
Vision 2030

A Value Creation Group Working
Together with Local Communities

Vision/target level for 2030 in viewof external environment and future
prospect

Deepening
relationships
with existingcustomers

going beyond the conventional framework.
We will return the expertise obtained through our initiatives in new businesses to core business, which willlead to the growth of our Group and local communities.

[Comprehensive financial services area]
Strengthen our consulting and group functions and contribute to solving
more customers’ issues
We will expand the range of solutions to financial issues by strengthening consulting
and group companies’ functions.
We will contribute to solving diverse financial issues of more customers bycollaborating with our group companies and external institutions.

[Target level]

Consolidated fee income ratio*1 :50% or more
Consolidated ordinary profit :100.0 billion yen or more

[Plan period]

Third Medium-Term
Group Business Plan

April 2022—March 2025

Three-year plan (Phase 1) for realizing our visionand target level in 2030

[Traditional banking services area]
Change the way of providing services
and increase their value
We will realize thorough efficiency andservices that continue to be selected bycustomers, through digitalization andbusiness innovation.
We will increase added value by providing
comprehensive financial services along withservices in new business areas, and maintainand expand our customer base.

DX

Consulting

Business
succession/
M&A

Leasing

Securities

Trust/
inheritanceAssetbuilding

Globalexpansion[Position]

Period for taking on challenges forsustainable growth

Deposits

Loans

Settlement/moneytransfer

Securities
managementetc.

*1 Consolidated fee income ratio = Consolidated fee income*2 ÷ Income from customers*3*2 Consolidated fee income = Fee from customers of Banks + Gross profit from customers of other group companies*3 Income from customers = Difference of interests between loans and deposits + Consolidated fee income, excluding securities’ income

Return the expertise cultivated in new businesses to core business.

21

22

ExpandingbusinessareasThird Medium-Term Group Business Plan
Positioning of the Third Medium-Term Group Business Plan

Mebuki Financial Group’s Value Creation

Basic Strategies

We have positioned the Third Medium-Term Group Business Plan as a period for taking on challenges for sustainable

In the Third Medium-Term Group Business Plan, we will pursue a business model that supports local communities so

growth.

we can contribute to them through new value creation.

While strengthening our management structure by innovating traditional banking services and deepening
comprehensive financial services, we will take effort to sow and nurture new business areas and aim to contribute to

Toward new value creation, we will work to build a sustainable management base by promoting Digital
Transformation (DX), etc., and to develop human resources and promote their active participation.

local communities beyond the framework of conventional financial services.
Future (–2030)

Third Medium-Term Group Business Plan
(FY2022–FY2024)(The Fourth Medium-Term
Group Business Plan)
Period for accelerating
evolution“Period for taking on challenges forsustainable growth”(The Fifth Medium-Term
Group Business Plan)
Period for realizing
long-term vision

Pursue a business model tosupport local communities
Basic
Strategies

Long-Term Vision
2030

Build a sustainable management
base

P.24

A Value Creation
Group Working
Together with Local
Communities

Develop human resources andpromote active participation

Basic Strategy 1
Pursue a business model tosupport local communities

P.21

Consolidated net income(attributable to owners of the parent)

52.0 billion yen or moreManagement(banktotal)*1 Less than 58%
Objectives Core OHR(FY2024)
Consolidated ROE

Newbusinessareas

Comprehensive
financialservicesarea[Specific Strategy 1-3]
Challenges to expand business
areas
P.25
Provide value beyond theconventional framework byleveraging the strengths of ourGroup and its investments[Specific Strategy 1-2]
Deepening comprehensive
financial services
P.25
Strengthen our consulting andgroup functions and contribute tosolving more customers’ issues(based on shareholders’ equity)

5.5% or more
Developing them tocore businesses(New business areas)(Comprehensive financial
services area)

Expanding
new businesses

Sowing and nurturing
new businesses/services

Expanding financial productsgeIncreasing customer usa

Expanding businessareas and revenues

Consolidated fee
income ratio
50% or more

(Traditional banking
services area)

Ensuring thorough efficiency

Increasing added value by providing services incombination with solutions to issues

Consolidated
ordinary profit
100.0 billion yen or
more(Desired level in 2030)

Traditionalbanking
servicesarea

Basic Strategy 2
Build a sustainable management base[Specific Strategy 1-1]
Innovating traditional banking
services
P.39
Enhance customers’ convenienceby leveraging digital technology
and non-face-to-face services
Increase the value of services bystrengthening consulting function
and providing integrated services
for solving issues[Specific Strategy
2-1]
Promoting DX
P.39
Provide newservices bymaking effective
use of digitaltechnology anddata, and increase
the added value of
conventional
services
Accumulate,analyze and utilize
data obtained
through digital andface-to-facechannels
Acceleratebusinessinnovation
Expand non-faceto-face andremoteprocedures[Specific Strategy 1-4]
Diversifying securities
management services/
investments and financing
P.16
Strengthen profitability withappropriate risk-taking*1 Expenses ÷ Core gross business profit (Gross business profit*2 - gains/losses on bond transactions)*2 Excluding gains/losses on cancellation of investment trusts and remuneration from “Special Deposit Facility to enhance the resilience of the regional financial system” and “Special Funds-applying
Operations to facilitate financing in response to COVID-19” by Bank of Japan

23

24[Specific Strategy
2-2]
Enhancing groupmanagement
P.39
Reorganize theGroup in thecontext of DX andsustainability
Adapt business
management toexpandedbusiness areas
Shifting human resources
to focus areas
200 people (3 year
cumulative)
New digitalization
investments7.0 billion yen(3 year cumulative)

Reduction and review ofoperations to savemanagement resources
through promotion of DX
etc.
About 580 people (3 year
cumulative)
Reduction in expenses:
3.0 billion yen(compared to FY2021,
the final year of theSecond Medium-Term
Group Business Plan)

Basic Strategy 3
Develop human resources
and promote active
participation.

Developing and securing
human resources whocreate value
P.46
Dispatch trainees
About 120 people(3 year cumulative)
DX personnel
400 people(as of March 31, 2025)
Basis of DX personnel 3,000
people(As of March 31, 2025)*Number as of March 31, 2022: Approx.
1,200 people

Implementing diversity/
initiatives for job satisfaction
P.47
Expanding working
opportunities for female
employees
Percentage of female
employees in positions
equivalent to assistantmanager or higher 35% orhigher (as of March 31, 2025)*Percentage as of March 31, 2022: 31.4%

Value Creation Initiatives of Mebuki Financial
Revitalization of the Regional Economy and local Communities

Group

Management Strategies for Value Creation

Deepening comprehensive financial services

We are facing major trends such as a declining birthrate and aging population, changes in industrial andemployment structures due to digitalization, and the transition to a decarbonized and recycling-oriented
society. Furthermore, the prolonged COVID-19 crisis and the emergence of geopolitical risks have also
intensified uncertainties. As a result, local customers are forced to respond to the ever-diversifying andmounting management challenges they have faced.
The Group will contribute to the realization of sustainable local communities by enhancing consulting
services and expanding the Group’s functions to improve the quality of services related to solving problems
for local communities and customers and by taking advantage of the Group’s strengths to develop into new
business areas.

Main initiatives in the Medium-Term Group Business Plan
[Specific Strategy 1-2 Deepening comprehensive financial services][Specific Strategy 1-3 Challenges to expand business areas]
We will enhance our consulting functions to solve customer concerns and business issues, including business
continuity and expansion, technology succession, human resources development, and global expansion. Throughcollaboration between the Group’s functions and external institutions, we will provide highly specialized andoptimal solutions to strengthen our efforts to resolve issues that truly satisfy our customers.

Deepening Consulting Function for Business Companies
We are developing solution business at all stages of our corporate customers.
Our branches and consulting section work together to respond to customer issues and needs by providing highly
specialized information and making proposals in cooperation with the Group’s functions, business matching
contractors, external experts, and public institutions.

Escorted support for sustainable growth of regional companies
Escorted support for companies

Business owners

Consulting section (collaboration with related sections)

Key challenges

Escorted support for companies

Securing of management
personnel
Actionable planning

Deepening comprehensive
financial services(Life support)[Comprehensive Financial
Services Area]

Considerate consulting support tailored to each business stage(Aging society)

Leasing(Healthcare)Founding period

Global business

Growing period

Stable period

Maturation period

Escorted support for sustainable growth of regional companies[Traditional Banking
Services Area]

Business related to supporting
sustainable growth ofcorporate customers

Business related to therealization of safe, secure, andprosperous living

Consulting

Securities(Labor shortage)(Succession of skills and training)

Specific Strategy 1-3• Utilizing our Group’s strengths andinvestments/collaboration

Highly specialized advice, including
technical evaluations by experts

Credit card

• Provide services for more customers• Take initiatives to new areas beyond theframework of financial services

Introduction of external
strategic partners

Individual
Customers• Strengthen consulting and groupcompanies’ functions

Challenges to expand business
areas

Identifying management issues
through macro environment
analysis and other means

Formulation ofbusiness plans(Business support)

Business matching

Support for improving productivity
through the use of subsidies

Regular discussions

Business succession (lack ofsuccessors and shareholder
diversification)

Growth strategy planning andfinancial restructuring(Expanding sales channels)

Specific Strategy 1-2

Providing solutions throughintroduction and collaboration with
BM partners

Stable funding[New business areas]
Corporate
Customers

Specific support(DX)

Personnel
introduction

Deposits

Money transfers

Loans

Securities
management(Abandoned farmlands)(Job creation)

Think-tank(Startup support)(Enhancing productivity)(Population decline)
Structured finance
Investment subsidiaries(Decarbonization/SDGs)

Regional
tradingcompanies(Diffusion of renewable and green energies)

Business related to supporting
decarbonization and SDGs in
the local regions(Aging of public infrastructure)(Regional decline)(Advertising/Data marketing)Business for contributing toregional revitalization andurban development

Local
Regions*Regional issues and needs are shown in parentheses of the figure.

25

Funding

Expand sales
channels

Secure humanresources

DX/Enhance
productivity

Support for
global business(Vacant homes)
Trust/Inheritance

M&A/Businesssuccession

DX/IT support

Support for improving
M&A/Businessand restructuring
succession
business
Group companies’ functions (Leasing, Investment companies, Securities, Credit card, Think-tank, IT) + External partners

Startup support[Founding period to growing period]• Support for new business creation and commercialization (Mebuki Business Award)• Start-up fund support• Holding various business conferences (Mebuki Financial Group Manufacturing Business Forum, Mebuki Food
Exhibition, and other conferences)• Holding various seminars (subsidy utilization seminar and other seminars)• Securing human resources (personnel introduction, utilization of personnel working side jobs, and support forhuman resources development)[Stable period to maturation period]• Support for efficiency improvement through IT/DX (provision of information and external collaboration)• Support for global business (seminars, business conferences, and business matching)• Support for business succession (external collaboration and utilization of funds)

26

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Deepening comprehensive financial services

Deepening comprehensive financial services

Support for Global BusinessInitiatives for Regional Revitalization and SDGs

Both banks have six overseas representative offices (Shanghai, Singapore, New York, Hong Kong, Bangkok, and Hanoi).

We are working to solve regional issues by playing various connecting roles.

Using our overseas representative offices, we provide customers with the local information they need, such as information
about the investment environment, infrastructure, local needs, taxation, logistics routes, and employment conditions.

Connect businesses

In addition, through business alliances with correspondent networks (overseas correspondent banks) and leading banks
worldwide, we offer support for local companies in trade transactions, global business, and global sales channel expansion.

Overseas network of Mebuki Financial Group

Maintain and enhance supply chain

Strengthen relations with regional corecompanies and establish an ecosystem
Providing consulting and support for thealliance of member companies in theecosystem( P67 )

Supplier A of the core company

Supplier C of the core company

Core company

New York

ShanghaiHong Kong
Hanoi
Bangkok

Supplier B of the core company

Connect to next generation

Connect regions

Enhance business succession/M&A andstrengthen our support system

Support initiatives for decarbonization/
SDGs in local regions and companies
Solve regional issues by collaboratingwith local governments, etc.

Increase our response capabilities for businesssuccession/M&A• Enhance initiatives based on characteristics of
the industry and regions• Provide support for companies utilizing the tax
system applied to business succession• Provide support for business consolidation
and restructuring
Aging ofbusiness owners

Supplier D of the core company

Our Group

Country and region Major business partners
Bank of China
China
Bank of Communications
TaiwanCTBC Bank
Kasikorn Bank
Thailand
Bangkok Bank
Bank Negara Indonesia
Indonesia
Bank CIMB Niaga

Country and region Major business partners
VietinBank
Vietnam
Vietcombank
Foreign Investment Agency of Vietnam
BDO Unibank
Philippines
Metrobank
India
State Bank of India
Banamex
MexicoAguascalientes State Government,
Jalisco State Government, etc.

Helping our customers expand their global business at various stages
Supporting the resumption of chicken egg
exports to Hong Kong
We helped suppliers resume chicken egg exportsthat had been suspended due to the nuclear
accident caused by the Great East Japan
Earthquake. We provided integrated support for
direct export operations, enabling export
resumption for the first time in about nine years.

Promote SDGs initiatives in local regions• Hold SDGs related seminars andconduct a simple evaluation
Practical support for SDGs in local regions• Consulting for SDGs (“SDGs Declaration
Support Service,” etc.)• Sustainable finance• Support to establish renewable energy facilities
Introduce case studies of SDGs initiatives in local regions

Business
consolidation andrestructuring

Lack ofsuccessors

Singapore

Our six overseas
representative offices cover theAmericas, all of East Asia, and
ASEAN + India, providing local
information as well as accepting
various research requests.

Support initiatives for decarbonization/SDGs
in local regions and corporate customers

Supporting the development of sales channels
for local sake
Holding online business conferences for Hong
Kong buyers
In cooperation with local governments (Ibaraki andTochigi Prefectures), we held online business
conferences to help local sake brewers meet withlocal buyers in Hong Kong. Our local representatives
provided cooperative support, such as guidance tosake brewers and invitation of buyers.

27

Supporting the expansion of overseas sales
channels for frozen baked sweet potatoes
We supported a customer engaged in the sweet
potato processing and wholesale business to
expand its sales channels in Hong Kong. It began
exporting frozen baked potatoes.
Since then, its sales channels have been
expanding, especially in Singapore and Europe.

• Media functions such as dissemination of
initiatives for SDGs by regional companies,
etc.

Initiatives to maintain and enhance regional
supply chains

Support for regional SDGs and decarbonization
initiatives

Build and enhance ecosystems through strengthening
relations with regional core companies
Provide consulting and support for the alliance ofmember companies in the ecosystem• Support for new business development• Open innovation• Support for technological collaboration among
companies in the region
Strengthen wide-area collaborative sales• Strengthening of collaborative sales activities related
to core business support
Enhance collaboration in finance and consulting fields

Support initiatives for decarbonization/SDGs in local
regions and corporate customers
Support visualization of CO2 emissions calculations
and provide CO2 reduction solutions in collaboration
with external experts
Exercise media functions, such as disseminating
examples of efforts by other companies
Provide products and services that raise theawareness of suppliers’ participation in SDGs
Provide support to activate SDGs initiatives within theregion (provide media and platform functions)Introduce sustainable finance such as Positive Impact
Finance and educate the public about SDGs
Provide support for the installation of renewableenergy facilities (related to decarbonization)
SDGs Declaration Support Service (Supporting the preparationof written SDGs declarations since November 2021)

Solving regional issues by collaborating withlocal governments
Solve regional issues in collaboration with local
governments and companies• Support for utilization of public property• Providing information on SDGs and supporting green
projects in collaboration with local governments• Promoting business attraction and community
development support• Response to vacant homes and aging infrastructure
Help local governments digitalize and improve
operational efficiency

Results as of March 31, 2022
Number of support cases:

289(Bank total)28

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Contributions to Local Communities

Deepening comprehensive financial services

Deepening Life Plan Consulting
Changes in the social situation, called “the 100-year life,” have diversified customers’ worries and concerns. We areworking to provide a system that enables us to provide prompt and appropriate proposals and advice to our customers
and channels that are easily accessible to all generations of customers, including the digital generation.

Asset building and management
We provide financial products and services tailored toour customers’ plans so that they can secure the funds
they need at various stages of their lives by considering
their life plans from a young age to lead a fulfilling life.

Consumption (Loans)
Housing, education, and retirement funds are the threesignificant funds in life. In addition to these funds, some
expenses are inevitably necessary for daily life, such as
marriage funds and car purchase expenses. We help ourcustomers fund their needs with well-managed loans
with explicit usage.

Amount and contracts of accumulated
investment trust

Security and insurance
We also offer products that are prepared for life risks,such as medical treatment expenses due to illness or
injury, reduced income, death of the head of thehousehold, and living expenses in old age for longer
average life expectancy.

Contracts

100,863

Amount87,463
69,271

69,84076,74421.7

FY201733.0

Asset management and succession
We have established a system capable of meeting thediverse needs of customers. We support customers’
asset management and smooth asset succession to thenext generation. Specifically, we began the dedicatedinheritance consulting service on Saturdays andSundays and dedicated specialized staff in offices toaddress the general troubles of the elderly.

25.8

26.3

FY201819.6

FY2019FY2020

responsibility to fulfill as a company in the relationship. We are actively engaged in social contribution activities
that we believe we should fulfill, such as financial education initiatives that leverage our core business,
employee volunteer participation in community events, and support through donations.

Support for children’s independence

Providing services tailored to life events(contracts: number, amount: billion yen)

As a regional financial institution, we always connect with society in our business area. Thus we have a

FY2021

Support for concerns of the elderly and their families
P.45

Improving our consulting system

Expanding services for the digital generation• Introduce regional life plan advisors• Establish a department specialized in consulting
services for individuals• Strengthen information collaboration between thebanks and Mebuki Securities• Train professional staff and provide adequate
education and guidance• Expand asset-building services using smartphones
and the web• Enhance functionality of banking apps
(advice distribution, mutual funds, insurance, etc.)• Expand the asset formation layer by proposing the
combined use of NISA and iDeCo• Expand the Robot advisors function• Contribute to society through support for mandatory
financial education

We conduct lessons on finance to teach the importance of money andthe role of banks to the next generation. We also provide financial
education seminars for high school and college students to help themlearn about the mechanism of the monetary economy and specificfinancial knowledge.
For high school students, we offer group work with lectures andsimulations on life planning, asset building, and asset management up
to 100. The group work includes cautions to avoid contract problems
and multiple debts due to lowering the age of majority and creating amoney plan that fits with the life plan.

Employees’ efforts to contribute to local communities
We support community activities through volunteer activities including
environment conservation activities, cleanup in the communities,
participating in events such as festivals, and collecting recyclable
resources.

Donation through private placement bonds with donation scheme
A portion of the commission received when issuing private placement
bonds for customers is used for donating goods to schools,
organizations engaged in SDGs initiatives, or healthcare institutions of
the customer’s choice, amounting to more than 170 million yen.

Issuance of private placement bonds withdonation scheme (Cumulative total)(Billion yen)
Issue amount

1,060

Examples of donation recipients
Nurseries, schools, and medical institutions
Local professional sports teams
Tochigi Prefecture and Ibaraki Prefecture (asoperating expenses for the National Athletic Meet),and local governments
Incorporated non-profit organizations (organizations
engaged in initiatives for SDGs, etc.)

Number of bonds

813
90.4

622
478
310

68.7
52.6

40.8

27.6

FY201729

FY2018FY2019FY2020

FY202130

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Challenges to expand business areas

Developing New Business Areas by Leveraging the Group’s Strength
In new business areas, we will take advantage of the Group’s strengths and alliances with external organizations inareas that could not be addressed with conventional services to solve local and customer issues.
Based on the traditional banking services area, we will expand the range of comprehensive financial services, takeon new challenges, and solve regional issues from financial and non-financial perspectives. We aim to achievesustainable growth in local communities and enhance the Group’s corporate value.

Climate Change and Environment Conservation—Initiatives for TCFD Recommendations—
Mebuki Financial Group, as a comprehensive financial services group working together with local communities, isengaged in environmental initiatives in a bid to maintain the natural environment in a healthy state and pass on thebountiful and beautiful environment to the future. Specifically, the Group supports businesses related to environmental
conservation, provides environmental related financial products, establishes environment-friendly branches, andmakes donation to forest protection funds. Its employees also have participated in forest development activities.
Positioning the response to global warming and climate change as a key priority issue, the Group will endeavor to
analyze and disclose risks associated with climate change and will also accelerate initiatives aimed at the sustainablegrowth of local communities, including climate change and environmental conservation initiatives.

Approach to new businesses

Business related to supporting
sustainable growth of corporate
customers

Providing services forsolving issues including
non-financial fields

Affinity with our Group’s strengths

Main initiatives in the Medium-Term Group Business Plan
[Specific Strategy 1-2 Deepening comprehensive financial services]

Themes for New Business Area Expansion

High necessity to address as regional issues

Business related to therealization of safe, secure, andprosperous living

Business for contributing toregional revitalization andurban development

Utilizing strategic investments and collaboration, etc.

Business related to supporting
decarbonization and SDGs in
the local regions

We will create new value by taking on challenges to solve various regional issues

Establishing Joyo Green Energy Co., Ltd.
Joyo Bank has established Joyo Green Energy Co., Ltd. to contribute to the region’s carbon neutrality by acquiring andgenerating renewable energy power and their derived businesses.
Renewable Energy Power Acquisition and Generation Businesses

Performance evaluation of
power generation andimproving efficiency

Electric powercompanies

Joyo Green Energy Co., Ltd.

Acquisition<Main businesses>
Renewable energy power generation and derived businesses

Sell
power
Supplygreen
electricity

Corporate PPA*1
Regional customers requiring
renewable energy power
Our group will use renewableenergy power*1 A system for installing solar panels on one’s own grounds and roofs (onsite) or adjacent(offsite) and supplying renewable energy power through retail power generation companies

Derived Businesses
Maintenance and reuse of
power supply facilities

Initiatives for carbon offset using
fallow land
• J-Credit • Green Power Certification• Issue of Non-Fossil Certificate

OthersEnvironmental value
creation using blue-carbon*2
ecosystem*2 Carbon absorbed and fixed by living organisms in marine ecosystems

Established a regional trading company Colletochi, Ltd.
Ashikaga Bank established a regional trading company, Colletochi, Ltd., to revitalize the local economy by supporting
businesses with their core businesses through sales of excellent local products, goods, and services. Based on the
belief that cooperation with local companies is essential to achieving this objective, we established the company
through joint investment with three companies: Shimotsuke Shimbun, Suzuki Print Co., Ltd., and Caters inc.
[Main businesses]• Sales of local products and support for new product development• EC operation business• Other businesses incidental or related to the above[Joint investment companies] • THE SHIMOTSUKE NEWS PAPERS CO., LTD (publication of the Shimotsuke
Newspaper, sponsorship of various projects, and planning and operation of events)• Suzuki Print Co., Ltd. (general printing and publication of regional information
magazine Tochipe)• Caters inc. (website production, web system development, and design creation)

31

Deepening comprehensive financial services

Initiatives for Climate Change and Environment Conservation

Developing new business areas by leveraging the Group’s strength

Solar power
generation
Biomass power
generation
Wind power
generation
Small hydro power
generation, etc.

Decarbonation is one of the imminent management issues we need to address together with our customers. It is
important that we address expeditiously to the issue through financing and consulting. To this end, we will provide
supports that meet entirely to customers’ needs, including a service to support the preparation of written SDGs
declarations (page 28) and a range of proposals on such as carbon management consulting (page 28).

Group Environmental Policy
Mebuki Financial Group, Inc. and its group companies will contribute to the sustainable growth of local communities
through its corporate activities. Specifically, the Group will endeavor to reduce environmental burden through the efficientuse of resources and the reduction of waste in its corporate activities, as well as address environmental issues through theprovision of financial services that help conserve the environment as part of its business activities.

Environment-friendly business activities
Promoting renewable energy businesses
We proactively support our customers’ initiatives towards
realizing a carbon-free society. Specifically, we provide
financial support to their renewable energy businesses.
Initiatives for reducing greenhouse gas emissions<Establishment of environment-friendly new branch offices>
We have been newly establishing environment-friendly
branch offices by installing solar power generation
systems and switching lighting to LED bulbs, forinstance.
<Adoption of environmentally friendly fuel-efficient cars>
We have been gradually replacing our fleet of businesscars used for sales activities with more fuel-efficientmodels, as well as promoting the adoption of electricand fuel cell vehicles.

Status of establishment of environment-friendly
branch offices (as of March 31, 2022)
FY
2021

Number of branch offices
Joyo Bank

105

Ashikaga Bank

78

Forest and environmental conservation activities
Tree-planting activities
We have conducted tree-planting and other activities inorder to pass our communities’ beautiful and soundforests on to the next generation.
We are also making efforts to protect limited natural
resources by promoting the use of smartphone apps
and online passbooks to save paper.

Subsidies/donations to environment conservation
organizations and groups
Using the mechanism of charitable trust, we grant
subsidies to organizations and groups working on
environment conservation.
[Track record of subsidies granted (cumulative total):
Number of subsidies made 1,571;
Subsidy amount 169.44 million yen]In addition, Ashikaga Bank supports the Nikko Cedar
Avenue Ownership System, working on beautification
activities, including participation in the cleanup at the
Avenue.
32

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Response to Climate Change (Initiatives for TCFD Recommendations)
The Group declared support for the TCFD Recommendations in March 2021 and strengthened its response to climatechange.
We have set CO2 emissions reduction and sustainable finance goals to accelerate our contribution to realizing adecarbonized society and regional sustainable growth.

Governance
We have also built a structure in which the Board of
Directors can supervise the Group’s sustainability
initiatives by reporting the details of deliberations at eachcommittee meeting to the Board of Directors. In April
2022, the Group newly established organizations
dedicated to sustainability (Sustainability Management
Group within Mebuki Financial Group, Inc.; andSustainability Promotion Office within subsidiary banks,
Joyo Bank and Ashikaga Bank). The Group will bring
together its functions and knowledge to accelerategroup-wide initiatives towards realizing sustainable local
communities.

To further reinforce its initiatives for sustainability issues*
including climate change, Mebuki Financial Group has
formulated Group Sustainability Policy, Group
Environmental Policy, and Environmentally and Socially
Friendly Investments and Loans Policy. Positioning thesustainability issues as important management agendas,
the Group has operated its business based on thesepolicies.
To establish a structure that uniformly manages thedevelopment and progress of initiatives related tosustainability issues, including climate change, we have
set up the Sustainability Committee chaired by the
President and Director and have held committee
meetings as frequently as once in six months or more.

*Initiatives for achieving both the sustainable growth of the Group and the resolution ofenvironmental/social issues in local regions

Mebuki Financial Group

ReportChairman: President and Director
Members: All Executive Directors, Executive Officers and others

Electricity

Sustainability Management GroupJoyo Bank

Ashikaga Bank

Sustainability Promotion OfficeSustainability Promotion Office

Petrochemical

Strategies
Group. As such, the Group may need to review/revise its
operational strategies, including the Environmentally andSocially Friendly Investments and Loans Policy (a sectorspecific policy).
In addition, while the Group is required to transformthe business model so that it better fits a decarbonizedsociety and make other related efforts such as the
reduction of carbon emissions, the demand for
information disclosure from stakeholders has been
rising. All these suggest that how a company addresses
climate change issues has increasingly become one of
the metrics to value the company (over the medium- tolong-term).

1. Awareness of risks and opportunities
We are aware of climate change-related risks andopportunities as follows:
Transition risks<Policy and Legal, Industry and Market, Technology>
Transition to a decarbonized society may entail thetightening of laws and regulations, such as the setting ofstricter CO2 emissions reduction targets, theintroduction/hike of carbon taxes, and changes in theindustrial structure.
As a consequence, the Group and its customers may
be exposed to risks, such as the deteriorated earnings
for customers and increased credit related costs for the<Reputation>
Shortcomings, including the failure to sufficiently address
climate change and disclose related information, could
harm the Group’s reputation. As a consequence, theGroup may be exposed to risks, such as the greaterdifficulty in funding (over the short- to long-term).

33

2. Scenario analysis
Here is the overview of the scenario analysis in FY2021.
(1) Qualitative analysis• In view of transition risks (Policy and Legal, Industry
and Market, Technology, and Reputation), we picked
out Electricity, Petrochemical, and Automobile from ourinvestments and loans portfolio as the sectors that will
be affected most by transition risks, and have analyzed
the potential risks customers will face in these sectors.

Opportunities
With the increasing transition to a decarbonized society,we expect that the demand for climate change related
businesses (including the provision of consulting
services, products and services) will grow; andsustainable finance and related transactions, including
renewable energy related loans, will increase (over the
short- to long-term). In addition, we believe that financial
supports to finance investments in infrastructure andother capital investments, aimed at minimizing damages
from natural disasters triggered by abnormal weather

Sectors subject
to the analysis

Sustainability Committee

Recognizing that addressing the issue of climate change
is a significant challenge for the global environment, wehave stipulated in the Group Environmental Policy that
the Group is committed to realizing a decarbonizedsociety.

*Short-term: approx. 5 years; Medium-term: approx. 10 years; Long-term: approx. 30 years*The Oil, Gas, and Coal sectors, which are included in carbon-related assets, have been
excluded from the scope of this analysis, as the Group’s exposure to these sectors islimited (accounting for only about 0.6% of the total amount of credit as of March 31, 2022).

• We have analyzed the risks that customers could facein these sectors from the perspective of physical risks.

Transition risks

Board of Directors

Supervise(e.g. damages to offices and residences), will increase(over the short- to long-term).
We also believe that a reduction in business costs
through measures such as the saving of resources andenergy (over the short- to long-term), and theenhancement of corporate value and social reputation
through strengthened responses to climate change andproactive information disclosure will bring us
opportunities (over the medium- to long-term).

Physical risks
The progress of global warming could increase theseverity of extreme natural disasters such as typhoons
and flooding or bring about chronic changes to theclimate such as increased rainfall.
These risks could harm customers’ earnings andcollateral properties, and as a consequence, result inrisks such as increases in credit related costs.
Further, in the event the Group’s business locations
are hit by natural disasters, it may be exposed to risks,such as the difficulty of continuing business and theneed to incur additional costs for continuing/restoringbusiness operations (over the short- to long-term).

Automobile

Major evaluation items

Major risks

Policy and
Legal

Carbon tax/price, reinforcement ofgreenhouse gas (GHG) emissions
control• Introduction/hike of carbon tax (an increase in operational costs, a decrease in assets value, adecrease in sales)• Reinforcement of GHG emissions control (an increase in operational costs, a decrease in assets value)

Industry andMarketEnergy mix, etc.

• Diffusion of renewable energy (a decrease in profits, an increase in operational costs)

Technology

Diffusion of low-carbon technologies

Reputation
Policy andLegal
Industry andMarketTechnology
Reputation
Policy andLegal
MarketChanging customer behavior
Carbon tax/priceResponse to regulations on plastics• Transition to low-carbon technologies (a decrease in sales, an increase in R&D spending, anincrease in operational costs)• Enhanced environmental awareness (a decrease in sales, an increase in operational costs)• Introduction/hike of carbon tax (an increase in operational costs)• Adoption of regulations on plastics (an increase in operational costs)

Raw materials prices• Rises in raw materials prices (an increase in operational costs)

Diffusion of renewable energy
Changing customer behavior• Diffusion of renewable energy (an increase in operational costs)• Shifts in customer preferences (a decrease in sales)

Carbon tax/price• Introduction/hike of carbon tax (an increase in operational costs, a decrease in sales)

Evolution of electric vehicles (EV)
Diffusion of EV (a next-generation
technology)
Changing customer behavior• A decrease in internal combustion engine vehicles (a decrease in sales)

Technology
Reputation• Shift to EV (increases in capital investments)• Shifts in customer preferences (a decrease in sales)

Physical risks
Evaluation items
Acute risks

Increased severity of extreme
weather events

Major risks• Damage to continued business operation as a consequence of increased
severity of extreme weather events (a decrease in sales)• Strengthening of disaster prevention measures, and actual damages to property(an increase in operational costs)(2) Quantitative analysis
Transition risks
Risk events

Deteriorated financial position for customers as a result of the transition to a decarbonized society

Scenarios

NZE scenario*1 (1.5°C scenario), RCP2.6 scenario*2 (2°C scenario)

Subject of the analysis

Electricity, Petrochemical, and Automobile sectors

Period of analysis

Until 2050

Risk indicators

Credit related costs (credit costs) that will likely increase

Risk amount

Increase in credit related costs: Up to. 9.0 billion yen*1 A scenario developed by International Energy Agency (the “IEA”)*2 A scenario developed by Intergovernmental Panel on Climate Change (the “IPCC”)

34

Value Creation Initiatives of Mebuki Financial Group[Procedures for analysis]
We have conducted quantitative analyses on theimpacts of the Introduction of Carbon Tax, Customers’
Initiatives, Changes in the Markets, and others, which
are all aimed at the transition to a decarbonized society.
Specifically, we have analyzed how the deteriorated
earnings of customers, as a consequence of theManagement Strategies for Value Creationtransition to a decarbonized society, will affect theGroup’s credit related costs over time based on the
projections under the IEA’s Net Zero by 2050 (NZE)
scenario and the disclosure and other information
provided by sample companies.

Identifying sample companies andnecessary parameters

Understanding financial projections ofsample companies and their impact

Assessing the impact of earnings in the
sectors subject to analysis

Based on the qualitative analysis, we
identified sample companies for each of thesectors subject to analysis as well as theparameters necessary for assessing theimpact.

We developed financial projections up to
2050 based on the IEA’s NZE scenario andthe disclosure and other information
provided by sample companies to assess
how the earnings of sample companies will
deteriorate (the degree of their impact).

We have estimated an increase in credit
related costs by applying the degree of
impact of sample companies across theirsector, while taking into account their linesof business and products/services.

Physical risks
Risk events

Damage to collateral properties caused by flooding, and subsequent discontinuation of business and deteriorationof financial conditions for customers

Scenarios

RCP8.5 scenario* (4°C scenario)

Subject of the analysis

Customers with their business locations in Ibaraki Prefecture and/or Tochigi Prefecture

Period of analysis

Until 2050

Risk indicators

Credit related costs (credit costs) that will likely increase

Risk amount

Increase in credit related costs: Up to 6.0 billion yen[Example of spreads of climate change risks]Category

Definition of risks

Physical risks

Transition risks

Credit risks

Increases in credit risk due to damages
Credit risk refers to the risk of incurring
to customers’ assets, caused by thelosses as a result of customers becoming increased severity of natural disasters
unable to pay the principal and interest of and the subsequent impairment ofloans as promised due primarily to thecollateral values, and to the slow-down/
deterioration of their financial conditions. deteriorated earnings of customers’
businesses.

Deterioration in earnings and subsequent
increases in credit risks of customers forreasons including their insufficient
responses to changes associated withthe transition to a decarbonized society,such as the changes in policies/
regulations, markets, and technologicaldevelopment

Market risksMarket risk refers to the risk of incurring
losses due to changes in the value offinancial assets and liabilities of theGroup, which are caused by thefluctuation in interest rates, foreignexchange rates, and stock prices.

Increase in market risks with the
declining values of securities, etc.,
caused by the increased severity ofnatural disasters

Deterioration in earnings of investees on
the back of the transition to a
decarbonized society, increase in market
risks coupled with a decline in the valuesof securities and other instruments
caused by changes in investor behavior

Liquidity risks

Liquidity risk refers to the risk of incurring
losses due primarily to the difficulty
securing necessary funds, caused by an
unexpected outflow of funds or similar
events, or a sharp rise in funding costs.

Increase in liquidity risk coupled withincreased outflow of funds due in part to
the withdrawal of deposits by customers
who were affected by the increased
severity of natural disasters, and as aconsequence, are cash-strapped

Increase in liquidity risk coupled withincreased funding costs on the back of arating downgrade of the Group due inpart to its insufficient response to climatechange risks and the outflow of deposits

Operational risk refers to the risk of
incurring losses as caused by inappropriateness in the Group’s business
Operational risks
processes, activities of directors andemployees or, system operations, or byexternal events.

Increase in tangible asset risk,
discontinued business operations, andincrease in disaster prevention costs as aconsequence of damages to the Group’sbusiness locations by natural disasters

Increase in reputational risk due toinsufficient responses to the transition toa decarbonized society (e.g. insufficient
disclosure, holding of carbon-related
assets)* A scenario developed by Intergovernmental Panel on Climate Change (the “IPCC”)[Procedures for analysis]
As to the impact of flooding damages caused bytyphoons and other natural disasters, we haveconducted a quantitative analysis through surveys on
customers with their business locations in Ibaraki/Tochigi
Prefecture, the Group’s core areas of business.
Specifically, we have analyzed how damages tocollateral properties and the deteriorated earnings dueto the discontinued business operations by customers
will affect the Group’s credit related costs over time. We
made the analysis based on materials published by the
Ministry of Land, Infrastructure, Transport and Tourism
and other information, assuming the 4°C scenario in
which the level of flood falling under the natural disasters
on hazard maps takes place.

4°C scenario

Damages to collateral properties

Credit related costs

A scenario assuming that thefrequency of flooding events will
quadruple from the present level,
and as a consequence, a flood withan intensity covered by hazard
maps will take place at least onceby 2050.

Measure how damages to collateralproperties cause increases in the amountof credit to borrowers

Estimate the amount of increase incredit related cost based on an
increase in the amount of credit torisky borrowers and credit
downgrades including a downgradein the borrower classification

Measure the flooded
depths of collateralproperties andbusiness locations

Discontinued business operations for customers
Look into how deteriorated earnings
cause rating downgrades for borrowers<Status of carbon-related assets (as of March 31, 2022)>“Oil, Gas, and Coal” and “Electricity Utility” sectors
As for other carbon-related assets, we have carefully
account for 1.3% (167.2 billion yen)* of the total amountstudied which sectors should be analyzed and considerof credit.
disclosing related information in the future.
*The sum of loans, acceptances and guarantees, foreign exchanges, private placement bonds,
unused portions of commitment lines, etc., excluding the water supply and renewable energy
power generation businesses

Risk Management
operations, strategies, and financial planning by way ofcredit risks, operational risks, and a broad range ofcomplex pathways over a variety of time frames.
We will deep-dive into how risks permeate in whattime frame for each risk category and manage risks in acomprehensive framework.

The Group has established the Environmentally andSocially Friendly Investments and Loans Policy with theaim of maintaining its sound corporate management andenhancing its corporate value through appropriate efforts
to address climate change risks.
We are aware that climate change risks could
permeate and materially affect the Group’s business35<Announcement of loans policy to particular sectors>
Concerning investments and loans to particular sectorsthat could cause negative impact on the environmentand society, we have established the Environmentallyand Socially Friendly Investments and Loans Policy andhas sought to reduce and prevent their impact on theenvironment and society.

Since March 2021 when we established theinvestments and loans policy, we have not engaged ininvestments and loans in conflict with the policy.

SectorInvestments and loans policy

Details of findings in FY2021

Coal-fired power
generation businessIn principle, we do not engage in investments and loans for newly establishedcoal-fired power plants.
(However, exceptions may be considered after taking into account thebackground or characteristics of each project such as its overall power
generation efficiency, its impacts on the environment and local communities,
etc., based on international guidelines.*1)

We did not engage in investments andloans for newly established coal-fired
power plants in FY2021. We will reduce
the existing balance*2 to zero in FY2039.

Deforestation business

Investment decisions for deforestation operations will be made after careful
We did not engage in investments andconsideration of the status of their acquisition of international certifications(FSC*3 or PEFC*4), environmental considerations, and their conflicts with local loans for deforestation businesses.
communities.

Investment decisions for palm oil plantation development will be made after
Palm oil plantation
careful consideration of the status of their acquisition of an international
development business certification (RSPO*5), environmental considerations, and their conflicts withlocal communities.

We did not engage in investments andloans for palm oil plantation development
businesses.

In view of the inhumane nature of cluster munitions, we prohibit investments We did not engage in investments andCluster munitions
and loans for businesses that manufacture cluster munitions, regardless ofloans for cluster munitions manufacturing
manufacturing businessthe use of the funds.
businesses.
We did not engage in investments andloans for businesses that violate the
Human rights violations, We prohibit investments and loans for businesses that violate the principles ofprinciples of international human rights
forced labor, etc.
international human rights standards*6 such as child labor and forced labor.
standards such as human rights
violations and forced labor.
*1 Including the Arrangement on Officially Supported Export Credits set forth by the Organisation for Economic Co-operation and Development (the “OECD”)*2 The balance of existing investments and loans include only the projects in which the business operators had adopted the best technology available for the scale of power generation of eachproject (BAT: Best Available Technology) when the investments were made.
*3 Forest Stewardship Council. A non-profit organization that operates an international forest certification system based on the principle of appropriate, socially beneficial, and economicallysustainable forest management from the perspective of environmental protection*4 Forest certification program. An international umbrella organization that promotes examination of forest certification systems that have been individually developed in each country based on theIntergovernmental Process for Sustainable Forest Management, which covers 85% of the world’s forests, and that promotes mutual recognition of these systems*5 Roundtable on Sustainable Palm Oil. An organization that develops globally trusted certification standards to promote sustainable palm oil production and use*6 Including Universal Declaration of Human Rights, and UN Guiding Principles on Business and Human Rights

36

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Indicators and Targets

Roadmap to Net zero CO2 emissions

Sustainable finance goals
We have set goals to execute sustainable finance for a
cumulative total of 3 trillion yen, of which theenvironment fields represent 2 trillion yen, over theperiod from FY2021 to FY2030.

Roadmap to achieving the “CO2 emission reduction
target of Net zero in FY2030” is as shown below.
Since July 2022, Joyo Bank and Ashikaga Bank havestarted using electricity generated from renewableenergy sources at five large-scale business locations
including head office. This we believe will help reduce

During FY2021, we executed 144.9 billion yen ofsustainable finance, including 35.7 billion yen in
environmental fields.

Target amount of sustainable finance (FY2021—FY2030)

Net zero CO2emissionsTarget sectors of the sustainable finance3 trillion yen

Environment
related fields

Of which, the environmental
related financeSocial fields

2 trillion yen

Projects that help adapt to/mitigate climatechange, such as renewable energy projects
Capital investments that contribute to renewableenergy, energy saving, and carbon neutrality

FY

FY2020

FY2021

Projects that contribute to regional revitalization
and recreation
Projects that contribute to fostering start-ups andjob creation

Gasoline
Scope 1Results for FY2021*

26.2

Reduction of CO2 emissions

24.7

24.3

22.6

Switching of lighting
to LED bulbs
Scope 2

Electricity

21.8-20.5%

20.8-22.6%
20.2-26.2%
19.3

Offset2,665

All
facilities

Introduction of renewable energy to
all branch offices of bank subsidiaries

Trial use of
J-Credit

Full-fledged useof J-Credit

A range ofinitiatives
throughparticipation in
GX League

FY2030(Unit: Tons of CO2)

Commuting of employees

OthersEnhanced engagement (dialogue) with customers in decarbonization—Support for customers in their decarbonization efforts—
Continued tree-planting activities (Joyo Furusato no Mori, and Ashigin Forest)

37

All
vehiclesSurvey and research of reduction initiatives based on carbon offset/technological trends— implementation

18.2

CO2 emissions (Scope 3)776

FY2030Installation of solar power generation systems, PPA, studies on how the Group can make use of agreen energy power generation business — execution-30.5%FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

FY2029All
locationsIntroduction ofrenewable energy
to large-scalebusiness locations

Target for FY2030 Net zero

We commenced to measure CO2 emissions for Scope 3
in FY2021. We will seek to expand the range of Scope 3
categories subject to assessment in the years ahead.

FY2028Adoption of renewable energy

CO2 emissions (ktCO2) (bank total)
30.5% reduction
from FY2013 levels-16.7%FY2027Installation of energy-saving air conditioning facilities

CO2 emissions of the Group

-13.4%FY2026

Installation of energy-saving emergency power generation facilities

FY2013 levels*Total CO2 emissions of Scope 1 + Scope 2 of Joyo Bank + Ashikaga Bank based on thereporting standards stipulated in the Energy Efficiency Act, plus CO2 emissions from the use ofgasoline. We have revised the disclosure content since FY2021.
（契約者数：人、積立額：億円）-5.7% -7.1%

FY2025

Continued reduction of energy consumption (by adjusting temperatures of air conditioners,
encouraging employees to go off work early)

30.5% reduction from

Percentage reduction (compared with FY2013)

FY2024

Decarbonization of company cars (shift from internal combustion engine vehicles to environmentally friendly
vehicles; *Percentage of the vehicles shifted to environmentally friendly vehicles as of March 31, 2022: 63%)

Type-A heavy oil / gas

CO2 emission reduction target (Scope 1, 2)
As part of the efforts to strengthen our response to
climate change, at the meeting held in March 2022, theSustainability Committee raised the CO2 emissions
reduction target for FY2030 to Net zero from a reductionof 30% or more at domestic offices from FY2013 levels.
We have reduced CO2 emissions by 30.5% in FY2021
from FY2013 levels. In the years ahead, the Group will
accelerate its shift to renewable energy by making
effective use of electricity generated from renewal energy
sources, purchasing non-fossil fuel certificates, or byother efforts.

Business trip

FY2023[April 2022]• Established policies including the Group Sustainability Policy and the Group Environmental
Policy• Raised the CO2 emissions reduction target for FY2030 to Net zero
• Set sustainable finance goals: A cumulative total of 3 trillion yen for the period FY2021—
FY2030 (of which, 2 trillion yen for the environmental fields)• Declared support for GX League Basic Concept

Definition of “Sustainable Finance”“Finance to support customers’ activities aiming to realize asustainable society through solving environmental and social
issues,” as referenced in related external standards (the Green
Loan Principles, the Green Bond Principles, the Social Bond
Principles, etc.)

FY2021

FY2022[March 2021]• Declared support for TCFD Recommendations (March 2021)• Set a CO2 emissions reduction target (to reduce emissions by 30% or more in FY2030 from FY2013
levels)
Policies, targets, etc.

Category

4,293 tons of CO2 emissions annually. We will continue
to push forward with initiatives for saving energy andresources towards realizing a sustainable society.
We will review and revise the roadmap, as needed,taking into factors such as technological trends andchanges in environment.

38

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Promotion of Digitalization and DXInnovating traditional banking services

Using data and digital technologies, we will promote digital transformation (DX). We will develop a systemcapable of responding to the promotion of digitalization and DX to enhance convenience using non-faceto-face services. At the same time, we will provide new services such as proposals that lead to solutions
in line with our customers’ management strategies and work to add value to existing services.

Main initiatives in the Medium-Term Group Business Plan
[Specific Strategy 1-1 Innovating traditional banking services] [Specific Strategy 2-1 Promoting DX]
With the improvement of convenience by providing expanded services through the digital channel and enhancing theexpertise of face-to-face services, we will provide financial and non-financial services to meet various customers’ needs
and better experience value through both channels. Furthermore, we aim to transform our business model from five
perspectives: expanding digital transactions, accelerating business innovation, advancing data analysis and datautilization, developing a DX promotion system, and strengthening the infrastructure of IT/DX. Using digital technology
and data as a driving force, we will review our business processes to improve efficiency, such as eliminating paperwork,and strengthen our management structure by increasing the use of data and creating new value.

Enhancing Contact Points with Customers and Non-face-to-face Services through Digitalization
With the improvement of convenience by providing expanded services through the digital channel and enhancing theexpertise of face-to-face services, we will provide financial and non-financial services to meet various customers’
needs and better experience value through both channels. In response to the advancement of digitalization/technology
and the changes in value/lifestyle of our customers, we will make a new point of contact with them by providing
optimized channels.

Digital channel

Face-to-face channel

Operations utilizing digital technology (Providing convenience and simplicity)
Complete transactions anytime, anywhere in a safe, secure,and speedy way by enhancing functions and services
Expand contact points with customers and understand their needs

Improve linkage between digital and face-to-face channels

Integration

Data Centralization

Intended Purpose (1)Improvement of customer services

Digitalization of account transfer
procedures for local governments

Unsecured loans available online (WEBcompletion scheme) Digital contract

Analysis(AI utilization, etc.)

Datautilization
PDCA

Transaction
occurrence

WEB management
supportData collection and accumulation(Transaction data, action logs, etc.)

Remote reception
Self-counter terminal withnavigation

Speedy decision-making
AI data analysis
and marketing

Intended Purpose (2)Intended Purpose (3)Business efficiency

Data utilization

Enhance Smartphone/WEB

Making a new contact point with customers by using

Banking app
Passbook app

Receipt app and passbook
keeping system

Utilize transaction data obtained through an enhanced digital channel
Enhancing data storage and providing new value
Deliver advice to customers timely
Provide information aiming at improving the quality of life
for customers

PDCA by marketing mix
Furtheradvancement

Branch visit
reservation service

Operations of which only humans are capable (Providing peace of mind and added value)
Provide information for solving a wide range of issues, including
non-financial fields and highly specialized consultation
Enhance the quality of consultation by also utilizing digitaltechnology

Operating meetings under the direct control of the management level
Establishing a specialized DX department
Strengthening human capital investment in the IT field

digital technologies
Expand non-face-to-face services for individual customers• Continuous improvement of functions of the Banking App• Speedy funding support by providing loans available online(WEB)

Optimize Branches/ATMs

IT investment
For pursuing a business model supporting local
communities and accelerating our business innovation,
we will invest ¥15.0 bn in IT, of which ¥7.0 bn in new
digitalization, in the next three years.

Personnel relocation
By enhancing the efficiency of group management, weplan to establish an operational structure of 6,500 people
in FY2024 (total staff of 8,900 people, including part-timeworkers, etc.).
(People) Number of total employees in the Group (excluding part-time workers) Natural decline
Strategic
relocation
+200

6,870

¥15.0 bn (3-year cumulative)o/w New digitalization investments¥7.0 bn (same as above)

branch offices in response to regional characteristics/needs (service content,
business days/hours, utilizing idle properties, etc.)
Optimize the network of ATMs, taking into account the advancement of acashless society

by retirement, etc.
-380

Cost reduction
Through DX promotion and business innovation, we will
enhance cost reduction by ¥3.0 bn,* mainly in the
traditional banking area, and invest in digitalization andhuman resources development.

6,490
Reducing and reviewing
business operations
about -580

End of FY2021

Total amount of IT investments

Maintain and expand contact points with customers by flexible operations ofEnhance Cashless/Clearing Services

Provide businesses with diverse clearing functions
Expand service lineup and improve convenience by using a digital application(*) “Total expenses in FY2024” - “Total expenses in FY2021”

End of FY2024 (plan)

39

40

Joyo Banking
App

Ashikaga BankApp

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation[Practice of timely proposals through data utilization]

Innovating traditional banking services

We are working to improve efficiency through data utilization. We will continue to take on the challenge of utilizing data

Optimizing Channel Network and Enhancing Consulting Function

in various situations to create new value that has never been seen before.

Use Case (1): Identifying and distributing information on prospective investment trust investors<Effect><Evaluation and improvement>• Gaining new knowledge
by using AI• Confirming certain results
based on the prospect list
<Promoting accumulated
NISA><Building a data analysis infrastructure>
Accumulation oftransaction data

• Confirming certain
results from AI
analysis• Continuing verificationof other products

We are taking on the challenge of creating branches that meet the needs of the times. For example, we changed ourbranches to those specializing in consultation services, changed business days and hours (holidays and evening
reception available), and have been utilizing idle real estate, by adopting a cashless system and using mobile PCs andtablets.

Storage[Before efficiency improvement](4) Utilization andimprovement(1) Data collection
and accumulation

Utilization and expected effects
Distribution and effectiveness verification
Information on accumulated
NISA by push notification

Market and fundinformation and others

Review branch formats in response to regional characteristics and needs, and strengthen consultation functions

Data collection and accumulation
AI analysis and prospect identification(3) Effectivenessverification(2) AI analysis<Build a model to determine the prospect of closing a deal>
Contracts of accumulated investment trust (People)
Amount of accumulated investment trust (Billion yen)
100,863

Verifying effectiveness(compare results from AB testing)A

Customer data

76,74433.0

BProduce a list of prospects

19.6

FY2019FY2020

Determine prospects

FY2021

Use Case (2): Identifying prospective customer with funding needs and securing customer contacts quickly<Efficient sales practices>
Early proposals tocustomers

Self-counter terminal
with navigation

BTS : Banking teller station (teller terminal)
ADDS: Open teller system[After efficiency improvement (current)]<Building a data analysis infrastructure>

Improve the quality of conversations withAcquire trading
customers based on data analysis results opportunities with net depositors

Accumulation of transaction data

BTS

Self-counter terminal

Mobile PC

Self-counter terminal

Office space
Mobile PC
Semi-self counter

Sales staff

Customer(4) Utilization andimprovement(1) Data collection
and accumulation

Utilization and expected effects
Results and verification<Results>

Data collection and accumulation
AI analysis and prospect identification(3) Results andverification(2) AI analysis

ATM in lobby

Mobile PC<Build a model to predict demand for funds>
Deposit and withdrawal information

Mobile PC

Consulting space

Other transaction data

• Confirmation of certain effectiveness of accuracy inpredicting demand for funds<Evaluation and improvement>

Data input through statistical processing• Verifying effectiveness for actual operation(Effectiveness verification period: From April toAugust 2022)

Create a list of predicted scores

41

Predict demand for funds—Effects of adopting a cashless system and using mobile PCs and tablets—
Removal of open teller systems, drastic reduction of teller terminals => Reduction of office space, expansion of
consultation space, and branch operations by smaller number of staff
No cash safes => Reduction of administrative burden and outsourcing of ATM cash management
Reduced paper entry => Reduction of a burden on customers, paperless work, and reduction of administrative
burden, etc.
42

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Response to Aging Society

Promoting DX

Promoting DX
Through the utilization of digital technology and other means, we will work to reform our business model and innovate
operations to create new value and strengthen our management structure.

Expand digital transactions
Digital channel

Accelerate business innovationFace-to-face channel

Back office operations[Expanding the scope of use of digital technology]
RPA, AI-OCR, AI, Image datatransmission, Low-code
development tools

Integration

Expanding APP functions and services
with WEB completion scheme, linking
to external services, etc.

Enhancing digital operations,
Enhancing consulting function
through dialogue with customers

Data storage
Advancement of data analysis and data utilization

Internal data

Financial data

External data

Non-financial data

IT investment
3-year cumulative ¥15.0 bn
o/w New digitalization
investments ¥7.0 bn

Shifting human resources tohigh-value business areas
Value provided to customers(1) Easy, convenient, and safe
services available anytime,
anywhere(2) Sophisticated face-to-faceconsulting services(3) Proposing products/services tomeet customers’ needs
For employees(1) Shifting to high-value businessareas and promoting active
participation(2) Improving productivity throughdigital support(3) Efficient sales activities used inconjunction with face-to-faceand non-face-to-face channels

Changes in the social situation, called “the 100-year life,” have diversified customers’ worries and concerns.
We have proactively worked to expand our financial services leveraging our knowledge of gerontology andhave also provided meticulous support to help solve problems and cater to diverse needs in financialtransactions of customers. These activities are aimed at ultimately creating local communities in which people
can continue to live their lives in comfort.

Main initiatives in the Medium-Term Group Business Plan
[Specific Strategy 1-2 Deepening comprehensive financial services]

Our specialized staff has worked to provide one-stop solutions to concerns of elderly customers and their families in amanner they can feel comfortable talking about such concerns. The Group will provide not only consulting on asset
management and succession but also services to help enhance and maintain customers’ quality of life (QOL). Suchservices include support for living environment, and housekeeping services in collaboration with players in other industries.

Concerns about living
Concerns about inheritanceConcerns about elderly family members
Concerns as inheritors

Strengthen connections
with elderly households
Consultation

Consultation

Solution

Solution

Strengthen
collaboration

Elderly

Experts

Accelerate business innovation
Branch offices and business concentration

Head offices and group companies

departments• Secure human resources by digitalizing back office operations• Reduce low value-added, unprofitable, and inefficient operations• Implement cost reduction initiatives• Review products and services• Continue and thoroughly implement business process restructuring• Review administrative rules and business processes

based on the premise of paperless and seal-less operations

Administrative
organizations

FamilyExternal
partners

Deepening comprehensive financial services

Enhance Our Response to an Aging Society• Reduce required documents, returned materials, and stamps• Reduce and automate routine tasks

Enhance our system to provide various services related to gerontology• Expand functionality of the self-counter terminal with navigation• Expand the scope of use of RPA, AI, and other technologies

Strengthen connections with elderly families (households)• Response to tax public funds QR, etc.

• Digitalize the Group company operations<Smileful Partner><Holiday Wealth Salon>

We have enhanced the placement of specialized staff

An appointment-only salon providing inheritance

who responds to concerns of elderly customers andconsulting services that are available only on Saturdays

their families (Smileful Partner).

and Sundays in which specialized staff supports• Respond to current and future concerns

customers in an easy-to-understand and careful manner.

• Address a decline in cognitive function

The salon provides not only individual customers but also

Shifting human resources to high-value business areas
Through the digitalization and efficiency improvement of administrative procedures, we will reduce and review ourbusiness operations, equivalent to 580 people, and relocate 200 people to consulting, DX, new fields, etc.

43

• Support smooth asset succession to the next generation

couples, and families living separately from the customers• Cultivate measures to prevent financial crimes

with opportunities to take time out to discuss families’ assets.

44

Value Creation Initiatives of Mebuki Financial GroupManagement Strategies for Value Creation

Promotion of Diversity
Strengthen collaborations with external institutions/professionals (including external partners,
administrative organizations, and experts)• Provision of a watching service for the elderly incollaboration with a security company• Placement of care-fitters at branches• Acquisition of qualifications as dementia supporter byexecutives and employees• Implementation of measures to prevent damages fromfraudulent phone calls in collaboration with the police• Collaboration with each municipality and regional
comprehensive support center
Watching over the elderly and other customers
Enlightenment activities for community residents,
with a special page on our corporate website
Introduction to a daily life independence support program

The Group is committed to establishing a working environment that allows diverse human resources to actively
participate in workplace, irrespective of their age, gender, and other properties, as well as a system that
promote their self-motivated growth, to ultimately enhance their job satisfaction and engagement.

Main initiatives in the Medium-Term Group Business Plan
[Basic Strategy 3 Develop human resources and promote active participation]

Training for dementia supporters

We have endeavored to develop and secure human resources who live up to
the expectations and trust of customers. Specifically, we have made efforts
to establish an environment that allows diverse human resources toparticipate in workplace more actively, including the enhancement of training
programs and reskilling opportunities. In addition, we are aiming to improve
our working environment. To this end, we will expand the opportunities for
motivated human resources to actively participate in workplace by introducing
a new personnel system, and will help them achieve a better work-lifebalance so we can provide supports the workstyle of each of our employees
by enhancing related systems.

Develop andsecure humanresources capable of creating
valuesIncrease theengagement of
employees
Implement
diversity

Implement
initiatives forenhancing job
satisfaction

Invest in human resources

One-stop services responding to concerns of the elderly and their families
Develop human resources and promote active participation

Expanding services/products for the elderly

Implement Diversity

Asset management
Supporting transactions by family members or otheragents• Utilizing agent cards and passbook apps
• Transactions on behalf of individual customers
as an agent• Family contact registration system
Providing guarantor and voluntary guardian services
Providing services using trusts• Guardianship support trust• Family trust

Develop and secure human resources capable of creating values
We have endeavored to develop and secure human resources who live
up to the expectations and trust of customers. Specifically, we havemade efforts to develop and secure human resources with problem
solving skills and enhance training programs and reskilling opportunities.
Develop and secure human resources capable of creating values

Asset succession
Providing services using trusts• Testamentary trust• Testamentary substitute trust
Asset succession planning service
Provision of gift function using insurance products
Testamentary preparation support services

Theme

Main measures

Develop and secure humanresources with problem solving skills• Develop and secure specialized human resources responsible fordeepening comprehensive financial services and expanding business areas

Strengthen initiatives forraising the level of knowledge
and execution capability• Encourage the acquisition of qualifications• Develop human resources with a view to visualizing thestatus of their acquisition of execution capabilities

Enhance training programs/
reskilling opportunities• Enhance training programs with a view to shifting human resources tofront-office operations and in line with the progress of digitalization

Form adiverse andself-reliant
group

Provide value
and peace of mind
to customers
Increase theengagement of
employees

Develop and secure human resources responsible for deepening
comprehensive financial services and tapping new business areas

Support for living environmentNon-financial services in collaboration with other industries

Effective use of real estates

Collaboration with external institutions

Handling of reverse mortgage housing loans

Provision of referral to the providers of home security,

Handling of leasebacks

vacant house management, and other related services

Advice on relocation and renovation

Provision of referral to the providers of housekeeping, garden
management, home repair, and other related services

45

We have worked to develop consulting personnel with specialist
knowledge who are able to meet customer needs across all business andlife stages. We have dispatched trainees to the head offices and outside of
the banks. The trainees gain experience by visiting customers with bankers
who have a wealth of experience in consulting and by participating in
training sessions, for instance. They then give the knowledge they haveacquired back to branches they belong to, contributing to raising the levelof skills of other staff in the branches.
To expand business areas, we have dispatched trainees to both insideand outside of the banks in a bid to develop and secure IT/DX personnel.
We have also encouraged all the employees to acquire IT Passport, anational qualification.
46

DX personnel KPI
3,000
persons

1,200
persons

As of March 31, 2021

As of March 31, 2025

Value Creation Initiatives of Mebuki Financial Group

Enhance training programs / reskilling opportunities
We have cut clerical work by utilizing IT and digitaltechnologies, and have transferred the saved personnel tothe divisions providing consulting services that help solve
the issues of customers, such as consulting and IT
divisions.
In fact, we have worked to upgrade online training andtraining materials, in addition to providing OJT and roleplaying training programs. We have also endeavored tocreate an environment in which every and each employeeof the Group readily takes on challenges, such as filing anapplication for trainees. As a result, many of our employees
have participated actively in the fields new to them.

Management Strategies for Value Creation

Implement initiatives for enhancing job satisfaction
We have set forth policies regarding workstyle reform and the enhancement of working environment for employees in
its Corporate Ethics, the basic policies on corporate activities, to help the Group employees achieve an optimum
work-life balance.
(Excerpt from Article 8 of Mebuki Financial Group’s Corporate Ethics)
The Group will realize the work-style that respects the diversity, individuality and personality of its employees, and willsecure the workplace considering a healthy and safe environment for employees.

Case training for IT coordinators

Revision of personnel systemand put in place a system designed to promote highly
motivated and capable employees to higher positions
irrespective of their age and gender, to ultimately createa working environment that provides greater job
satisfaction.

Joyo Bank and Ashikaga Bank revised their personnel
systems for the first time in 10 years and 15 years
respectively. We will develop many specialists in finance
who can adequately cater to diverse customer needs.
Specifically, we develop these human resources bystrengthening the supports to improve bankers’ skills,

Implement diversity

Improvement in work-life balance

Promotion of Diversity
In October 2021, we established Diversity Promotion
Office, an organization supervising the initiatives forpromoting diversity, within the personnel division of the two
subsidiary banks. Also, in April 2022, we established Group
Diversity Policy to further strengthen and accelerate
initiatives aimed at ensuring diversity across the Group.

We have developed human resources so that ouremployees are able to equitably build their careers
irrespective of their age, gender, and other properties. In
addition, we have made efforts to establish an environmentthat allows employees to continue working for many years.
In fact, we have endeavored to empower women througha range of initiatives based on the Act on the Promotion of
Female Participation and Career Advancement in the
Workplace and the Workstyle Reform.

Create a pleasant working environment
We are establishing systems and working environments that allow
employees to work in line with their life stages, such as childcare andnursing care of family members, as well as their lifestyles.

Seminars for employees returning to workplace from childcare leave

Flexible work system

Expand active working opportunities for diverse human resources
Promote active participation in workplace by female and senior employees
equivalent to assistant manager or higher to 35% or
We have led the active participation of group-wide
higher.” Through these targets, we aim to expand thefemale employees and have continued to hold Mebuki
pool of female candidate for senior management andWomen’s Class, a class for fostering women leaders
continue to promote female employees to higher
who serve as role models for young female employees,
positions, thereby increasing the opportunities forwhile promoting highly motivated and capable female
women to actively participate in workplace. We will also
employees to higher managerial positions.
create an environment in which senior human resources
In the Third Medium-Term Group Business Plan, we
actively participate in workplace drawing on their long
have set female empowerment targets, such as
years of experience.
“increasing the ratio of female employees in positions
Percentage of woman in assistant manager orhigherWe have introduced a flexible working
system which doesn’t fix working hours per
day and permits employees to schedule
when to start and leave work on their own.

Working from home
We have helped our employees work
efficiently by leasing them mobile PCs sothey can work from home without
commuting.

Enhanced special paid holidays
reserve system
The system allows employees to takeholidays on a day-to-day basis when theyneed to see doctors regularly, provide nursing
and other care to family members or relatives.

Creating a workplace environment that makes it easy for employees to takechildcare and other leaves, and encouraging them to take such leaves

Seminars for employees returning toworkplace from childcare leave

Following the revision to the Act on Childcare Leave,
Caregiver Leave, and Other Measures for the Welfare ofWorkers Caring for Children or Other Family Members, wehave revised our related rules and institutions so bothmale and female employees can balance work and family,
to further improve the work-life balance of our employees.

We provide the seminars as the opportunities
for our employees to reduce their anxiety
about balancing work and parenting, and toraise employees’ motivation to return to worksmoothly.

Consideration to human rights
Group Human Rights Policy
The Group respect the basic human rights of all its stakeholders, including customers, executives, and employees.
Based on the Group Human Rights Policy, to respect the basic human rights of all stakeholders, we have pushedforward with the initiatives to respect human rights by paying attention to how the corporate activities of our borrowers
and suppliers (supply chain) negatively affect human rights.
For details, see our corporate website. https://www.mebuki-fg.co.jp/sustainability/sdgs/

35% or more
31.4％

External evaluation
Online Mebuki Women’s Class

As of March 31, 2022

As of March 31, 2025 (target)

47

The Group was awarded the 3rd level “Eruboshi” certification by
the Ministry of Health, Labour and Welfare, as a general employer
that conforms with the standards under the Act on the Promotionof Female Participation and Career Advancement in the Workplace“Platinum Kurumin” certification was granted as acompany that provides superior support for childcare toits employees based on the Act on Advancement of
Measures to Support Raising Next-Generation Children

48

Recognized as an outstanding organization
under the 2022 Certified Health & Productivity
Management Outstanding Organizations
Recognition Program (large enterprise category)Governance of Mebuki Financial GroupManagement Base Supporting Value Creation

Corporate Governance

Details of the Company’s organizations

Basic approach to corporate governance

Board of Directors• We disclose company information appropriately andensure transparency.
• We ensure the effectiveness of a transparent, fair,
prompt and decisive decision-making function andsupervisory function of the Board of Directors on
business operation by utilizing independent outside
directors.
• We work to communicate with shareholders
constructively about the continuous growth andimprovement of medium-to-long term corporate
values.

A commitment to management characterized byresponsibility, and sound, appropriate business operations
will earn greater trust for the Group from all
stakeholders—customers, shareholders, local
communities and employees—and boost corporate value.
By following the approaches listed below, we are working
to strengthen and improve corporate governance.
• We respect shareholders’ rights and ensure equality.
• We consider the benefits of stakeholders, including
shareholders, and cooperate appropriately withstakeholders.

Corporate governance structure

The Board of Directors decides basic corporate policies
and important business matters and supervises theexecution of duties by directors. We aim to realize
prompt and decisive decision-making and businessexecution by entrusting most decision-making
authorities relevant to business execution to directors asconstituent members of the Board of Directors in which
our Group’s knowledge and expertise are concentrated,while ensuring a transparent and fair decision-making
function and a solid supervisory function through theappointment of multiple outside directors that haveexperience as corporate managers, lawyers, andacademic experts.
The Board of Directors meets monthly in principle.

Board of Directors
5 outside directors(incl. 1 female
outside director)

12
members

Audit and Supervisory Committeeof the Board of Directors in which the Group’s knowledge
and expertise are concentrated, while ensuring thetransparent and fair decision-making function and thesolid audit and supervisory function through theappointment of multiple outside directors.

The Company has adopted a company with an Audit andSupervisory Committee as a corporate governancesystem, which allows us to realize prompt and decisivedecision-making and business execution by entrusting
many of the decision-making authorities relevant tobusiness execution to directors as constituent members

Audit and Supervisory Committee

The Audit and Supervisory Committee audits theexecution of duties by directors and determines thedetails of proposals related to the appointment,
dismissal, and non-reappointment of accounting
auditors to be submitted to the General Meeting of
Shareholders.
The Audit and Supervisory Committee meets monthly
in principle.

5
members5
members

3 outside
directors
3 outside
directors

Mebuki Financial Group’s corporate governance structure (As of April 1, 2022)
Corporate Governance Committee

General Meeting of Shareholders
Appoint/Dismiss

Appoint/Dismiss

Board of Directors

Corporate Governance Committee

Audit and Supervisory
Committee

Cooperate
Audit and Supervisory
Committee Office

Management
Meeting

Compliance
Committee

ALM/Risk Management
Committee

Cooperate

Sustainability
Committee

Group Strategy
Committee

Audit

Internal audit
section(Audit Department)

Corporate Planning Corporate Management Business Management System Management Regional Revitalization
Department
Department
Department
Department
Department
Guide/Manage/Supervise

Audit

Accounting Auditor

Mebuki Financial Group

Consult/ Report

Audit

Appoint/Dismiss

Directly-owned
subsidiaries

Report/ Request consultation

Joyo Bank

Guide/Manage/
Supervise

Indirectly-owned
subsidiaries

Ashikaga Bank Mebuki Lease(Company with Audit andSupervisory Committee)(Company with Audit andSupervisory Committee)

Mebuki
Securities(Company with Auditors)

Guide/Manage/
Supervise

Report/ Request
consultation

5 subsidiaries(Company with Auditors)

Corporate Governance Committee

We have established the Corporate GovernanceCommittee as an advisory board to the Board of
Directors to ensure the objectivity and transparency ofmatters regarding the compensation for and theappointment of directors. Matters regarding thenomination of director candidates and the compensation
for directors are decided by the Board of Directors upondeliberation by the Corporate Governance Committee.
The Corporate Governance Committee is chaired byan outside director, and the majority of its members arealso outside directors including the outside directors ofsubsidiary banks. In FY2021, the meetings of the
Corporate Governance Committee were held eighttimes.

9members9
members

1 outside director of Joyo Bank and1 outside director of Ashikaga Bank
1 outside director of Joyo Bank and1 outside director of Ashikaga Bank

[Main matters for deliberation]• Compensation for directors• Evaluation of the effectiveness of the Board of Directors• Status of dialogue with shareholders• Election of director candidates, etc.

Mebuki Credit
Card
Guarantee Mebuki(Company with Auditors)(Company with Auditors)

Audit

Report/ Request
consultation

3 subsidiaries

49

5 outside
directors
5 outside
directors

50

Management Base Supporting Value Creation

Decision-Making Bodies

We have established the Management Meeting, the
ALM/Risk Management Committee, the Compliance
Committee and the Sustainability Committee as bodies
to discuss and decide important matters regarding
business execution based on the decisions made by theDecisionMaking Bodies

Board of Directors. Each decision-making body reports
the status of deliberation and decisions regarding business execution to the Board of Directors, and is supervised by the Board of Directors.

Appointment of Directors
Directors

Selection criteria for candidates for directors

The Board of Directors selects candidates for directors(1) Shall have high knowledge and expertise about the Company’sbusiness activities.
(2) Shall have superior ability of managerial decision-making andexecution.
(3) Shall have superior leadership, decisiveness, foresight andcreativity.
(4) Shall have high integrity and deep insight to be suitable for a
director.
(5) Shall have no health problems in performing the duties as adirector.

who satisfy the selection criteria for directors based on

Overview

Composition

Management
Meeting

The Management Meeting is responsible for making decisions
on business execution to the extent of the authorities
All 5 Executive Directors
delegated by the Board of Directors, as well as discussion on Both Executive Officers, a total of 7 members
important matters regarding business execution.

ALM/RiskManagement
Committee

The ALM/Risk Management Committee is responsible formaking decisions on business execution relevant to grouprisk management and ALM to the extent of the authorities
delegated by the Board of Directors and for considering anddiscussing important matters on business execution.

All 5 Executive Directors
Both Executive Officers
General Manager, Corporate Planning Department
General Manager, Corporate Management Department
General Manager, Basel Unit, Corporate Management
Department, a total of 10 members

Compliance
Committee

The Compliance Committee is responsible for making
decisions on business execution regarding compliance to theextent of the authorities delegated by the Board of Directors,
and considering and discussing important matters relevant to
the practice of compliance.

All 5 Executive Directors
Both Executive Officers
General Manager, Corporate Planning Department
General Manager, Corporate Management Department
General Manager, Audit Department, a total of 10
members

Sustainability
Committee

The Sustainability Committee is responsible for making
decisions on business execution regarding promotion ofsustainability to the extent of the authorities delegated by the
Board of Directors, and considering and discussing importantmatters relevant to the promotion of sustainability. The
Sustainability Committee meets semi-annually and asneeded.

All 5 Executive Directors
Both Executive Officers
General Manager, Corporate Planning Department
General Manager, Corporate Management Department
General Manager, Regional Revitalization Department,a total of 10 members

Evaluation of the effectiveness of the Board of Directors
The Board of Directors of the Company conducts analysis and evaluation of its effectiveness as a whole each year, inorder to utilize the results of such evaluation to improve the operations of the Board of Directors, by confirming theopinions of each director on such matters as the composition and operation of the Board of Directors.

<Evaluation method>
Regarding the FY2021 evaluation, opinions were exchanged on the evaluation
method and the contents of the questionnaire at the executive session comprising
all outside directors of the Company and its subsidiary banks, as was the case in
the previous fiscal year.
Based on this discussion, questionnaires on the composition and operations of
the Board of Directors and other matters were distributed to all directors, andreplies and comments were obtained. With regard to the results of the evaluations
based on these replies and comments, the Board of Directors of the Company,
upon deliberation by the Corporate Governance Committee (with outside directors
accounting for the majority of its members), finalized and determined the results ofanalysis and evaluation of the effectiveness of the Board of Directors as a whole.

[Main items of questionaire]
1. Roles and responsibilities of the(Board of) directors
2. Composition or other qualities of
the Board of Directors
3. Operation or other matters of theBoard of Directors
4. Execution of functions of theBoard of Directors<Evaluation results>
The Board of Directors of the Company has confirmed that directors with diverse knowledge and experience havebeen elected and the composition is well balanced; all directors, upon sharing the roles and responsibilities of theBoard of Directors, have successfully fulfilled both decision-making and supervising functions while taking advantage ofthe perspective of independent outside directors; and thus the effectiveness of the Board of Directors as a whole has
been mostly assured.

<Future measures>
The operation of the Board of Director throughout the year
resulted in continued improvements in the issues identified
by the previous evaluation, specifically in “Improvement of
the discussions by the Board of Directors” and “Utilizationof the perspectives of independent outside directors”.
However, based on each director’s assessment andopinions, we recognized the necessity of continuousworking on these matters for further improvement.

51

1. Enhancement of exchange of opinions among directors• Further enhancement of discussions regarding medium-tolong term management issues and providing value tostakeholders• Devising management of the Board of Directors for more
revitalization of discussions
2. Further utilization of the perspectives of independent
outside directors• Enhancement of discussions among outside directors, andexpansion and diversification of opportunities for information
provision to outside directors

the deliberation at the Corporate GovernanceCommittee.

Outside Director

Selection criteria for candidates for outside directors

The Board of Directors selects candidates for outside(1) Shall have extensive experience in overall management or bein positions as professionals in laws, accounting, finance, andothers to be suitable as a supervisor that has high knowledge
and experience similarly.
(2) Shall have high integrity and deep insight as an outside
director.
(3) Shall have the sufficient time for performing his/her duties asa director.
(4) Shall have no health or job-related problems in performing theduties as an outside director.

directors who meet the following selection criteria, in
addition to meeting the legal requisites for outside
directors. Two or more of such outside directors shall be
the persons who fulfill the independence standards foroutside directors of the Company.

Reasons for being selected as an outside director, concurrent positions and other statuses for each outside director are as
follows. The Group registered all of the five directors with the Tokyo Stock Exchange as independent directors who do nothave conflicts of interest with general shareholders.
Name

Reasons for selection

Concurrent positions and other statuses

Hiromichi
Ono

Mr. Hiromichi Ono has accumulated a broad range of insight andabundant experience as a manager of a major food company. He
has been appointed as an Outside Director to provide appropriate
guidance and advice for the overall business operation of theCompany by utilizing his insight and experience as a corporate
manager.

Outside Director, Tokyo Gas Co., Ltd.

YoshimiShu

Ms. Yoshimi Shu has accumulated abundant work experience aswell as experience and achievements as a senior manager at a
global financial institution. She also has insight and experience invarious aspects towards the development corporate leaders. She
has been appointed as an Outside Director to provide appropriate
guidance and advice for the overall business operation of theCompany from a professional perspective.

President & Representative Director, Core ValueManagement, Co., Ltd.

SatoruKawamata

Mr. Satoru Kawamata has accumulated abundant insight andexperience as a corporate manager. He has been appointed as
an Outside Director who is an Audit and Supervisory Committee
Member to utilize his insight and experience as corporate
manager to provide appropriate guidance and advice in relation
to the overall business management of the Company.

—

Toru
Nagasawa

Mr. Toru Nagasawa has specialized knowledge and experience incorporate legal affairs as an attorney. He has been appointed as an
Outside Director who is an Audit and Supervisory Committee
Member to provide appropriate guidance and advice from a
specialist’s perspective, especially corporate legal affairs in relation
to the overall business management of the Company.

Representative Attorney, Nagasawa Law Offices
Outside Audit & Supervisory Board Member,
Lancers, Inc.

Takashi
Shimizu

Mr. Takashi Shimizu has academic experience as well as specialized
knowledge and extensive experience in accounting. He has been
appointed as an Outside Director who is an Audit and Supervisory
Committee Member to provide appropriate guidance and advice
from a specialist’s perspective, especially accounting in relation tothe overall business management of the Company.

Professor, Graduate School of Accountancy,
Waseda University
President, Japan Association of Graduate
Schools for Professional Accountancy

52

Management Base Supporting Value Creation

Compensation for Directors

Compensation System for Each Director

Policy for Determining Directors’ Compensation[Executive Directors](a) Composition of compensation

Under the Corporate Governance Policy set by the Board of Directors, the director’s compensation amount isdetermined separately for “directors (excluding Audit and Supervisory Committee Members)” and “directors (who are
Audit and Supervisory Committee Members)” as follows.
[Directors (who are Audit and Supervisory
Committee Members)]• The compensation for directors (who are Audit andSupervisory Committee Members) is determined
without the factor of incentive to ensure thetransparency of their duties as auditor and supervisor.
• The amount for each director (the Audit andSupervisory Committee Member) is determinedthrough discussion among all Audit Committee
Members and within the maximum amount ofcompensation per year resolved at the General
Meeting of the Shareholders.

[Directors (excluding Audit and Supervisory
Committee Members)]• The compensation for directors (excluding Audit andSupervisory Committee Members) is determined
appropriately in consideration to their transparency,
fairness, objectivity and incentives toward improving
results by enhancing the linkage of compensation with
the Group’s performance and shareholders’ benefits.
• The amount for each director (excluding Audit andSupervisory Committee Members) is determined by
the Board of Directors within the maximum amount ofcompensation per year resolved at the General
Meeting of the Shareholders, while ensuring theobjectivity and transparency after deliberation
regarding their adequacy and validity in the Corporate
Governance Committee.
The Company resolved the maximum amount ofcompensation for directors (excluding Audit andSupervisory Committee Members) at ¥200 million peryear (the number of eligible directors: 7 persons) andfor Audit and Supervisory Committee Members at ¥80
million per year (the number of eligible directors: 5
persons), at the Ordinary General Meeting of the
Shareholders held on June 28, 2016.

Procedure for Determining Directors’ Compensation
The decision of the specific amount for each director
is delegated to the President and Director(Representative Director) by resolution of the Board of
Directors. This authority is the decision regarding specificamount of bonuses distributed to each director. The
reason for the delegation is that he or she is in a position
to judge the degree of contribution to the performanceby each director from a company-wide perspective.
Regarding this decision, the Corporate GovernanceCommittee shall deliberate including the confirmation of
the integrity with the above policy and the validity.
Therefore, the Board of Directors shall in general respect
his proposal and judge it to be in line with policy.

In order to ensure the objectivity and transparency of
directors’ compensation, the compensation for directors(excluding Audit and Supervisory Committee Members)
is determined by the Board of Directors, and thecompensation for directors (who are Audit andSupervisory Committee Members) is determined by the
Audit and Supervisory Committee upon deliberation by
the Corporate Governance Committee.
Regarding determining the details of compensation foreach director, the Corporate Governance Committee
shall deliberate including the confirmation of the integrity
with the above policy and the related regulations.
Therefore, the Board of Directors shall in general respect
their proposals and judge them to be in line with policy.

Restricted stock compensation plan
7%
Bonuses
7%

The compensation for executive directors among thedirectors (excluding Audit and Supervisory Committee
Members) comprises a monthly compensation as abasic compensation, bonuses as a performancelinked compensation and a restricted stockcompensation plan as a non-monetary compensation.
The compensation comprises 86% of monthly
compensation, 7% of bonus and 7% of restricted
stock compensation plan (Case in which the standard
amount of bonuses is paid).

Monthly
compensation
86%(b) Details of each compensation• Restricted stock compensation plan
Under this plan, the Company’s Directors (excluding
Audit and Supervisory Committee members; the“Eligible Directors”) shall make payments in kind as
contributed assets using all of the monetarycompensation claims provided to them by theCompany and receive the issuance or disposal of theCompany’s common shares and the Company andeach of the Eligible Directors shall enter into a
restricted stock allocation agreement. The
compensation to be paid to the Eligible Directors forthe granting of restricted stock is monetarycompensation claims and the total amount of suchclaims is set at 20 million yen or less per year within
the amount of compensation for the Company’s
Directors (excluding Audit and Supervisory Committee
Members), and the total number of common shares
newly issued by the Company is set at 200 thousand
shares or less per year, as resolved at the Ordinary
General Meeting of the Shareholders held on June24, 2020. The allocation of payment to each Eligible
Director is determined by the director’s position.

• Monthly compensation
The basic amount of monthly compensation isdetermined by the director’s position.
• Bonuses
The basic amount of bonuses is determined inaccordance with the director’s position and the total
amount of bonus payment is determined within amaximum amount which fluctuates each year in therange of 0% to 150% according to consolidated
profit level (indicator based on ROE). The amount foreach executive director is determined based on thebasic amount for the director’s position, which isadjusted according to the degree of contribution tobusiness performance by each executive director.
The indicator based on ROE has been adopted as aperformance indicator in order to give stronger
incentives to the directors to improve the Group’s
corporate value.

[Outside Directors]
The compensation for outside directors (excluding Audit
and Supervisory Committee Members) is comprised onlyof a monthly compensation, which is a basic
compensation, and the amount is determined by the
director’s position.
[Directors(who are Audit and Supervisory Committee Members)]

Matters discussed by the Corporate Governance Committee and the Board of Directors indetermining directors’ compensation (FY2021)(Corporate Governance Committee)• April 26, 2021: Matter regarding total amount of directors’ bonuses• May 12, 2021: Matters regarding individual distribution of directors’ bonuses and monthly compensation for directors(Board of Directors)• May 12, 2021: Matter regarding directors’ bonuses• June 24, 2021: Matters regarding determining monthly compensation amount, and provision of monetarycompensation claims and disposition of treasury shares for the restricted stock53

The compensation for directors (who are Audit andSupervisory Committee Members) is comprised only ofa monthly compensation, which is a basic
compensation, and the amount is determined separately
for full time and part time directors.

54

Management Base Supporting Value Creation

List of Directors

Director(Outside Directors)
Hiromichi Ono
Yoshimi Shu
Satoru Kawamata(Audit and Supervisory Committee Member)
Toru Nagasawa(Audit and Supervisory Committee Member)
Takashi Shimizu(Audit and Supervisory Committee Member)(Executive Officers)
President and Director
Tetsuya Akino

Executive Vice President and Director
Kazuyuki Shimizu

June 2016

Executive Officer and General Manager,
Personnel Division, The Joyo Bank, Ltd.
October 2016 General Manager, Corporate Management
Department, the Company
June 2017 General Manager, Corporate Planning
Department, the Company
Executive Officer and General Manager,
Corporate Planning Division, The Joyo Bank, Ltd.
June 2018 Director, in charge of Corporate Planning, theCompany
Managing Director, The Joyo Bank, Ltd.
June 2020 Director and Managing Executive Officer, The
Joyo Bank, Ltd.
April 2022 President, The Joyo Bank, Ltd. (current position)
June 2022 President, the Company (current position)

April 2012
April 2014

Executive Officer, The Ashikaga Bank, Ltd.
Executive Officer, Ashikaga Holdings Co., Ltd.
Executive Officer, The Ashikaga Bank, Ltd.
April 2015 Managing Executive Officer, The Ashikaga Bank,
Ltd.
June 2016 Managing Director, The Ashikaga Bank, Ltd.
October 2016 Director, the Company
June 2018 Senior Managing Director, The Ashikaga Bank,
Ltd.
June 2019 Executive Officer, the Company
June 2020 Executive Vice President, the Company (current
position)
President, The Ashikaga Bank, Ltd. (current
position)

The company has introduced an executive officer
system to enhance the decision-making andsupervisory functions of the Board of Directors
and to reinforce the business execution function.

Director (Audit and Supervisory
Committee Member)
Eiji Murashima

Director (Audit and Supervisory
Committee Member)
Yoshinori Tasaki

June 2010

October 2012 General Manager, in charge of Business Planning
Division, The Ashikaga Bank, Ltd.
April 2013 General Manager, Karasuyama Branch, The Ashikaga Bank, Ltd.
April 2015 General Manager, Kumagaya Branch, The Ashikaga Bank, Ltd.
October 2016 General Manager, Moka Branch, The Ashikaga Bank, Ltd.
June 2019 General Manager, Audit Department, the Company
Executive Officer, General Manager, Auditing
Department, The Ashikaga Bank, Ltd.
June 2020 Executive Officer, Chief Officer, Saitama Area Hub, The
Ashikaga Bank, Ltd.
April 2021 Executive Officer, Chief Officer, Ryomo/Gunma Area Hub,
The Ashikaga Bank, Ltd.
April 2022 Executive Officer, attached to Audit and Supervisory
Committee, The Ashikaga Bank, Ltd.
June 2022 Director (Audit and Supervisory Committee Member), the Company(current position)
Corporate Auditor, Mebuki Lease Co., Ltd. (current position)
Corporate Auditor, Mebuki Credit Guarantee Co., Ltd. (current position)

Executive Officer and General Manager, Business
Administration Division, The Joyo Bank, Ltd.
June 2011 Executive Officer and General Manager, Business
Promotion Division, The Joyo Bank, Ltd.
June 2012 Managing Executive Officer and Vice Director-Generalof Business Headquarters, The Joyo Bank, Ltd.
June 2013 Managing Director, The Joyo Bank, Ltd.
October 2016 Director in charge of Corporate Management (Basel),the Company
June 2018 Senior Managing Director, The Joyo Bank, Ltd.
June 2020 Retired from the position as Senior Managing
Director, The Joyo Bank, Ltd.
Director (Audit and Supervisory Committee Member),the Company (current position)
Auditor, Mebuki Securities Co., Ltd. (current position)
April 2021 Corporate Auditor, Mebuki Card Co., Ltd. (current
position)

Yuji Gorai (In charge of systems)
Koichi Yamakawa (In charge of administration)

Expertise and Experience of Directors and Executive Officers (Skills Matrix)
Name

OutsideDirector

Independent
Corporate
Business
OfficerManagement/ Management/

Director
Kiyoshi Nozaki
June 2016

Executive Officer and General Manager,
Corporate Planning Division, The Joyo Bank, Ltd.
October 2016 General Manager, Corporate Planning
Department, the Company
June 2017 Executive Officer and General Manager,
Business Promotion Division, The Joyo Bank,
Ltd.
June 2018 Managing Executive Officer and General
Manager, Business Promotion Division, The Joyo
Bank, Ltd.
Director (part-time), The Ashikaga Bank, Ltd.
June 2020 Director, Managing Executive Officer, The Joyo
Bank, Ltd. (current position)
June 2021 Director, the Company (current position)

Director
Yoshihiro Naito
April 2016
June 2019
June 2020

Executive Officer, The Ashikaga Bank, Ltd.
Managing Director, The Ashikaga Bank, Ltd.
Director in charge of Corporate Management,
Risk Management and Information Security, theCompany (current position)
Director, Managing Executive Officer, The
Ashikaga Bank, Ltd. (current position)

Director
Toshihiko Ono
June 2016

Senior Deputy General Manager, Corporate
Planning Division, The Joyo Bank, Ltd.
October 2016 General Manager, in charge of Corporate
Planning Department, the Company
June 2018 General Manager, Corporate Planning
Department, the Company
General Manager, Corporate Planning Division,
The Joyo Bank, Ltd.
June 2020 Executive Officer and General Manager,
Business Planning Division, The Joyo Bank, Ltd.
Director (part-time), The Ashikaga Bank, Ltd.
April 2022 Managing Executive Officer, The Joyo Bank, Ltd.
June 2022 Director, in charge of Corporate Planning, theCompany (current position)
Director, Managing Executive Officer, The Joyo
Bank, Ltd. (current position)

Directors who are Audit Directors who are not Audit
Executive and Supervisory
and Supervisory Committee
Officers Committee Members
Members

Strategy

Finance/
Accounting

Sales/
MarketingConsulting

MarketInvestment/
GlobalIT/DX

Tetsuya Akino
Kazuyuki Shimizu
Kiyoshi Nozaki
Yoshihiro Naito
Toshihiko Ono
Hiromichi Ono
Yoshimi Shu
Eiji Murashima
Yoshinori Tasaki
Satoru Kawamata
Toru Nagasawa
Takashi Shimizu
Yuji Gorai
Koichi Yamakawa

Details of Expertise and Experience
Corporate Management/Strategy

Experience in corporate management, expertise in planning of corporate strategy and execution

Business Management/Law

Expertise in business management including personnel and labor management, risk management, etc. and law

Finance/Accounting
Sales/Marketing
Consulting
Market Investment/Global
IT/DX

55

Law

Expertise and Experience

Expertise in finance and accounting
Expertise in business planning, marketing and new business development
Expertise in consulting business, SDGs/ESG, environmental field, regional revitalization and corporate restructuring/support
Expertise in the field of market investment and global businesses
Expertise in IT and DX (digital transformation)

56

Management Base Supporting Value Creation

Messages from the Outside Directors

Outside Director
Hiromichi Ono
Apr. 1979 Joined Ajinomoto Co., Inc.
Mar. 2004 General Manager, Finance
Department
Jun. 2007 Corporate Executive Officer
Jun. 2011 Member of the Board & Corporate
Vice President, in charge of financeand procurement
Jun. 2017 Retired from Member of the Board& Corporate Vice President,
Ajinomoto Co., Inc.
Jun. 2019 Outside Director, the Company(current position)
Jun. 2020 Outside Audit & Supervisory Board
Member, Tokyo Gas Co., Ltd.
Jun. 2021 Outside Director (current position)

Outside Director
Yoshimi Shu
Aug. 2000 Joined JPMorgan Securities Japan
Co., Ltd.
Jun. 2006 Head of Tokyo Control Room,Compliance Department
May 2012 Managing Director
Oct. 2012 Head of Japan Controls &Oversight Department
Jan. 2014 Resigned from JPMorgan
Securities Japan Co., Ltd.
Feb. 2014 Joined Core Value Management,
Co., Ltd.
Nov. 2016 Deputy President & Representative
Director
Jun. 2019 Outside Director, the Company(current position)
Mar. 2022 President & Representative
Director, Core Value Management,
Co., Ltd. (current position)

With continuing low interest rates, Japan’s
declining birthrate and aging population, andthe COVID-19 pandemic, along with theimpact of the situation in Ukraine and otherdevelopments, the business environment
continues to be extremely challenging. In thisenvironment, under its Second Medium-Term
Group Business Plan, the Group generated
successful results across a broad range,
which is highly laudable. Specifically, its
initiatives to increase business efficiency andproductivity, starting with core system
integration and branch consolidation, haveachieved results that everyone can be satisfied
with. Regarding the Group’s Long-Term Vision
2030 as well, lively discussions utilizing roleplaying were held at monthly meetings of theBoard of Directors, with diverse opinions being
passed back and forth, and, as a result, theboard was able to create a vision with a longtimespan and a view to the future that included
the area of comprehensive financial services
and new businesses.
The Company’s outside directors arediverse in makeup; the members have avariety of backgrounds and include
professionals in specialty fields andexperienced business executives. I think theCompany has been very deliberate in selecting

this group. Drawing on my own corporate
experience in financial affairs and sustainability,
I intend to contribute to the Group’s efforts tocreate value while taking the perspective ofshareholders and those on the receiving sideof financial institution services.
At the same time, for outside directors toadequately fulfill their roles, the transparency
and fairness of governance areindispensable. I firmly believe that thesehave been resolutely ensured from the start,
and I have a strong sense that this a good,
positive tradition of the Company.
Regarding sustainability initiatives, whichhave been drawing attention in recent years,
the Group is engaged with a sense of driveand speed, with the President leading the
Sustainability Committee, for example, andthe challenge going forward will be how toachieve specific numerical targets. For aregional financial institution to continue its
operations and develop them further, newbusinesses that transcend conventionalframeworks need to be established andexpanded. Moreover, contributing to regional
revitalization and value creation, including
the realization of a sustainable society,through its businesses should no doubt
constitutes the Company’s raison d'être.

These past three years, the Group has
worked to achieve the goals of its Second
Medium-Term Group Business Plan, and,seeking to reform the financial services it
provides, it has promoted the establishmentof system infrastructure, personnel systems,
and other systems designed to support
these reforms. There is a real feeling that the
management team has engaged in thereforms with a strong, uncompromising will
and sense of responsibility, and the resultsof their efforts can clearly be seen in thenumbers, specifically, in the higher
profitability of its core business. The Third
Medium-Term Group Business Plan clarifies
a vision for the Group’s future, the LongTerm Vision 2030, and calculating back from
this, it lays out what needs to be done now,which is to carry out major changes as aGroup. The fact the Company is expressing
such a strong will to assuredly change isworthy of praise. In reaching this point, there
have been lively, highly transparent
discussions, and I have the strong sensethat support systems and an environment
have been established that allow for diverse
proposals to be made.
In Japan, there are some examples ofregional financial institutions having success inmanagement reforms, but drawing on myexperience at a multinational financial
institution, I intend to contribute to fostering a

corporate and organizational culture forrealizing the vision by sharing observations
and insights derived from relooking at theCompany’s initiatives from not only a domestic
perspective but a global one as well.
Moreover, the importance of initiatives forsustainability and diversity and the strong
need to accelerate initiatives are widely
shared within the organization. Currently,
while working for consistency with thelong-term vision, multifaceted discussions
are taking place on issues in need ofresolution, their priority, the format ofreporting at board meetings, and otherrelated topics. For this reason, it can be said
that systems are being established for thedual pursuit of business development andsocial contributions, including the SDGs.
I have had the opportunity to lecture at
the Mebuki Women’s Class on theimportance of management philosophy andorganizational culture for corporate value
creation, and last year a woman was
promoted to lead one of the Diversity
Promotion Office, which is highly laudable.
There are still many things that need to bedone related to promoting diversity, but thisexample will serve as a source of hope for
employees and others involved, and I firmly
believe that promoting diversity and fostering
a diverse organizational culture will makefurther progress going forward.

57

Outside Director (Audit and Supervisory
Committee Member)
Satoru Kawamata
Apr. 1968 Joined Hitachi, Ltd.
Jun. 1995 Deputy Head, Hitachi Works
Apr. 1999 Head, Power and Electricity Group,
Hitachi Works
Jun. 1999 Director, Head, Power andElectricity Group, Hitachi Works
Jun. 2001 Representative Director andPresident, Hitachi Life, Ltd.
Jun. 2009 Advisor, Hitachi Life, Ltd.
Jun. 2011 Honorary Advisor, Hitachi Life, Ltd.
Mar. 2013 Retired from position as Honorary
Advisor, Hitachi Life, Ltd.
Jun. 2018 Outside Director, The Joyo Bank,
Ltd. (Audit and Supervisory
Committee Member)
Jun. 2020 Outside Director (Audit andSupervisory Committee Member),the Company (current position)

Outside Director (Audit and Supervisory
Committee Member)
Toru Nagasawa
Apr. 1984 Registered as an attorney
Apr. 1995 Nagasawa Law Office (currently,
Nagasawa Law Offices) opened,
Representative Attorney (current
position)
Oct. 2014 Outside Corporate Auditor,
LANCERS, INC. (current position)
Jun. 2015 Outside Director, TOHO HOLDINGS
CO., LTD.
Jun. 2016 Outside Director, Ashikaga Holdings
Co., Ltd.
Oct. 2016 Outside Director (Audit andSupervisory Committee Member),the Company (current position)

The business environment is becoming
increasingly challenging due to external
factors, and, under such conditions, theCompany should be applauded for thesubstantial achievements it generated bypromoting its Second Medium-Term Group
Business Plan, which included increasing
revenues from services such as consulting
alongside regular banking operations andreducing costs through consolidating
branches and other measures. During thisprocess, I advised the Company to prevent
negative effects on customer convenience
when working to increase businessefficiency through branch consolidation, andI strongly feel that the Company has beenable to continue initiatives aimed atachieving its goals while gaining theunderstanding of local customers.
In formulating and promoting the LongTerm Vision 2030 and the Third Medium-Term
Group Business Plan as well, the members,
who were appointed from diverse fields andpossess specialized knowledge in areas likemanagement studies and corporate law,engaged in lively discussions while receiving
adequate support, which has always been
the case, and amid such governance withtransparency and fairness ensured, I think
there is the opportunity for us to educate
and enlighten one another. Going forward,

I am recommending that the Company draw
near to the region’s small and medium-sizedenterprises and, even more so than before,
focus on business that plays an investor-likerole in supporting their growth. We are
currently involved in discussions to this end.
Through such operations, I firmly believethat the Company will be able to contributeto regional revitalization and the creation of
new value while, at the same time, creating
a positive cycle whereby new value isgenerated internally.
Policies related to sustainability havealso been decided in specific terms, andnow the Company is at the stage ofsteadily moving toward their realization. I
will be watching to ensure that results areproduced through initiatives that areembedded by all employees into their daily
activities so that goals set for asustainable society do not exist as empty
slogans. To solve the issues communities
face, from aging to population declines,
coordination with other local companies isessential. I am proud to represent thecommunity as a member, and drawing on
my experience in related projects toaddress aging, I intend to continue
providing recommendations on
successfully contributing to the community
through the creation of new value.

Regarding the creation of the Long-Term
Vision 2030, a series of open-minded
conversations were held about the ideal fora regional financial institution in 2030, withinformation being shared from a fairly earlystage. I rate highly not only the policies forachieving the goal of being “A Value Creation
Group Working Together with Local
Communities” but also the deep
commitment shown to the process ofestablishing
the goal itself, which I very
A2much appreciate.
In promoting the plan to achieve thisvision amid very challenging external
conditions, there needs to be initiatives thatlook 20 and 30 years into the future; itshouldn’t be a matter of simply assessing
the relative achievement of numericaltargets. While continuing to place
importance on its traditional core business, I
think the Company should create newfee-based businesses like consulting andhave the perspective of evaluating how
much they contribute to value creation for
the region, including in its Third MediumTerm Group Business Plan. Discussions forthis are currently underway.
Being able to hold such meaningful,all-encompassing discussions is a direct
result of having appointed outside directors
with a variety of backgrounds. I have thestrong sense that open, constructive
discussions are taking place, with opinions
being expressed from a variety of different
perspectives for each issue. As a part of thisprocess, I will draw on my experience as an
attorney and as someone who has worked
as an outside auditor and director atcompanies in various business areas toprovide advice that contributes to thecreation of new value.
Even before the term “sustainability” wasin widespread use, regional financial
institutions would not have been able toexist without sustainability initiatives.
Engaging sincerely in business in order tocontribute to local customers is directly
connected to vitalizing the local economy
and society, preserving the environment,
and other positive outcomes. The Company,
too, is further strengthening its sustainability
initiatives, including diversity promotion andmeasures it has already been involved in foraging and digitalization. The Company has
set numerical targets that include net zeroCO2 emissions by fiscal 2030, and there
needs to be a policy of actively and publicly
communicating this target going forward sothat it serves as a guideline for local
companies. I firmly believe that sustainability
initiatives will make steady progress toward
the creation of new value.

58

Management Base Supporting Value Creation

Risk Management System

Apr. 1995 Lecturer, School of Commerce,
Waseda University
Apr. 1997 Associate Professor
Sep. 2000 Received Ph.D. in Commerce(Waseda University)
Apr. 2002 Professor, School of Commerce,
Waseda University
Aug. 2002 Visiting Researcher, University ofCalifornia, Berkeley (until August
2003)
Apr. 2005 Professor, Graduate School of
Accountancy, Waseda University(current position)
Oct. 2016 Outside Director (Audit andSupervisory Committee Member),the Company (current position)
May 2020 President, Japan Association of
Graduate Schools for Professional
Accountancy (current position)at branches of the Company’s banking
subsidiaries as well, and once the COVID-19
pandemic subsides, and I plan to do so.
ESG management, or sustainability
management, is a major challenge forcompanies today. Differing from corporatesocial responsibility (CSR), it presses
companies to reconsider what they should
do within their main businesses to generatevalue that is shared by all stakeholders andnot just shareholders. That is to say, it asks
companies how to raise value forstakeholders and themselves through theirbusinesses and not necessarily throughdonations and charitable activities as isemphasized by CSR.
However, the goals of ESG management
and sustainability management are almost
all qualitative. How to convert qualitative
goals into financial and quantitative resultsthat raise corporate value while achieving
them through business is an extremely
difficult problem.
This is one of my areas of research:
management that links qualitative goals andactions to financial results. Going forward, I
will continue actively participating in
discussions so that the knowledge I haveaccumulated through this research is utilizedin actual operations, and I hope tocontribute both to the Company’s
management and the communities it serves.

The Group aims to enhance the risk management system by positioning it as an important management task fromthe perspective of the maintenance and improvement of sound corporate management.

Risk management system
The Group undertakes its risk management based on
the Basic Rules on Group Risk Management determinedby the Board of Directors of the Company.
In order to perform the matters set forth in the Basic
Rules on Group Risk Management, the Company has
established the ALM/Risk Management Committee,
which makes decisions on important business execution
regarding the Group’s risk management and performs
analysis, assessment and improvement of the mattersrelevant to the risk management of the overall Group.
The said committee ensures corporate management
emphasizing the risk and return relationship throughconsideration and discussion focused on closer
Mebuki Financial Group

coordination between risk management and profit
management while controlling risks appropriately, andfacilitates prompt and efficient decision-making bymanagement.
Furthermore, we have organized the integrated risk
management section responsible for the supervision andintegrated management of various risks, and at thesame time, established the framework under which theaudit section independent from business executionsections performs internal auditing and validates theappropriateness and effectiveness of the respective risk
management status.

Board of Directors

Validateappropriatenessand effectivenessof risk management
systemAudit and Supervisory Committee
on important business execution
ALM/Risk Management Decide
Analysis, assessment and deliberation
Committee
on matters for improvement

Integrated risk
Capturing, measurement,
management section
assessment, and reporting of risk as a group(Corporate Management Department)

Audit

Type of risk

Strategic Risk Credit Risk

Market Risk Liquidity Risk

The Company’s outside directors are assigned the role of strengthening management decision-making functions andCorporate Management Department

supervisory functions by drawing on their extensive experience and specialized knowledge based on their respective careerbackgrounds in order to incorporate outside perspectives and sufficient considerations for the interests of regular
In appointing outside directors, based on the functions and roles of outside officers in corporate governance, thein light of the Company’s own Independence Standards for Outside Directors.

Corporate Management Business Management System Management Corporate Planning
Department
Department
Department
Department

Instruct (establishment of Mebuki Financial Group,s Audit Division conducts
risk management system) internal audits as well as audits of companies
within the Group.
Report/Consult (risk status, response policies)

shareholders into the decision-making of management.
Company puts emphasis on independence, and there is the assumption that there are no doubts about their independence

Operational Risk

Joyo Bank Ashikaga Bank

Mebuki Lease
Board of Directors

Important meeting bodies forrisk management

Audit and Supervisory Committee<Joyo Bank><Ashikaga Bank>(1) ALM Committee(1) Management Meeting(2) Risk Management (2) ALM Meeting
Committee, etc.
(3) Credit Portfolio Meeting, etc.
Type of risk

Strategic Risk

59

Mebuki Credit Mebuki Card
Guarantee
Board ofDirectors

Integrated risk
management section(Risk Management Department)

Mebuki
Securities

Corporate
AuditorIntegrated
risk management section

Audit

Type of risk

Credit Risk

Market Risk

Liquidity Risk Operational Risk

Sections in charge of respective risk categories

Strategic Risk, Credit Risk,
Market Risk, Liquidity Risk,
Operational Risk

Branches, head offices and group companies

Sections in charge ofrespective risk categories

60

Audit

Internal audit section

Policy on the functions and roles of outside directors in corporate governance and their appointment

Internal audit section (Audit Department)

Outside Director (Audit and Supervisory
Committee Member)
Takashi Shimizu

Today, companies are exposed to not only
economic risk but a variety of risks, including
geopolitical risk, so creating a medium-termbusiness plan is very difficult. The Company
has set a long-term vision of “A Value
Creation Group Working Together with Local
Communities” based on its corporate
philosophy. In order to achieve this longterm vision, discussions have taken place
on a whole range of policies, and specificgoals and basic strategies have been
decided. In this process, strategies havebeen considered with a degree of flexibility
based on multiple scenarios to allow the
Company to adapt to change, andappropriate strategies have been decided.
Outside directors on the Company’s
Board of Directors have a variety ofbackgrounds. The Board of Directors
discusses questions of management frombroad perspectives not limited to theconventional wisdom of the financial
industry, and very constructive opinions arepresented. In addition, in order for theoutside directors to understand the current
situation of the financial industry, various
outside training programs are available, andthe board also provides explanations aheadof time in order for us to verify actual
operations at the Company. As an Audit andSupervisory Committee Member, I haveexpressed the desire to perform interviews

Management Base Supporting Value Creation

Integrated risk management

Liquidity risk management
reserves and monitor whether the amount of each risk
quantified (risk capital used) stays within the extent ofallocated capital. Upon the allocation of capital, we securea risk buffer to cover losses larger than those expected in
the statistical methods or risks unable to be captured by
the statistical methods. We confirm the sufficiency of ourcapital reserves, including the capital to cover the
aforementioned risks, by performing stress tests by which
we capture the impact on our capital reserves underassumed scenarios such as a sudden economic
downturn. Furthermore, we confirm the reasonablenessand effectiveness of the statistical methods through backtests in which the risk amount calculated by VaR (value atrisk) is compared with actual profit or loss.

The Group undertakes “integrated risk management”
which quantitatively measures various types of risk
including credit risk and market risk, using statisticalmethods, such as VaR (value at risk), in order toindividually manage increasingly diversified andcomplicated types of risk relevant to financial services,
and at the same time, to comprehensively capture said
risks. We aim at maintaining an appropriate level of ourcapital reserves by comparing and contrasting the total
amount of risk with our financial soundness (our capitalreserves).
Specifically, we allocate capital to each type of risk(credit risk, interest rate risk, price fluctuation risk andoperational risk) in advance to the extent of our capital

Credit risk management
Credit risk refers to the risk of incurring losses as a result of customers becoming unable to pay the principal andinterest of loans as promised primarily due to the deterioration of their financial conditions.
Recognizing credit risk as a material risk in our business operations, the Group aims to enhance the management
system to prevent the emergence of new non-performing loans and to improve asset soundness.
the capturing of credit risk exposure, the setting of lending rates
and the allocation of lending authority.

• Credit risk management system
The Group has established the Group Guidelines for Credit Risk
Management, which set forth, as our basic policy of credit risk
management, the appropriate management of credit risk on
individual loans and the management of the credit portfolio
focusing on risk diversification.
The section in charge of credit risk management, which isorganizationally and functionally independent from the businesspromotion sections, is responsible for the planning andoperational management of the internal credit rating system,
self-assessment systems, write-offs and provisions to thereserve for loan losses, as well as for the monitoring of loan
assets as the specialized organization for the comprehensive
supervision and management of the credit portfolio.

• Asset self-assessment systems
Companies within the Group strictly implement asset selfassessment systems based on common standards and provide
appropriate reserves or write down problem loans based onsuch assessment. In addition, the reasonableness of suchassessment is validated and audited by the sections in chargeof validation and auditing, respectively, and is also subject toexternal audits by accounting auditors.
• Quantification of credit risk
The quantification of credit risk refers to the statistical
forecasting of future losses (amount of credit risk) that can be
expected due to bankruptcies or the deterioration of financial
conditions of customers. The Group calculates the amount ofcredit risk for each customer based on “internal credit ratings”
with collateral and other factors taken into account.

• Management of credit risk on individual loans
We separate the credit-screening sections of companies within
the Group from the business promotion sections to ensure
strict screening while also focusing on credit management
during repayment to prevent the status of a claim fromdeteriorating.

• Credit portfolio management
We capture loan assets in their entirety as a single portfolio
and conduct credit risk management from a macro
perspective. Based on the quantification of credit risk, we
carry out periodic monitoring such as whether the credit risk
is concentrated in specific sectors or corporate groups, andanalysis and evaluation of credit situations by rating andregion, or based on composition by industry.

• Internal credit ratings
We categorize our customers into 12-grade rating levels byadding qualitative assessment to the data on their financial
condition and cash flow status. In addition to serving as thebasis for self-assessment systems, internal credit ratings areused across the full range of credit risk management, includingSpecifically, under cash flow management in a normal
situation, we manage indicators such as the trend of
deposit/loan balances and funding limits in addition toprimary indicators (funding gap and liquid asset balance)
to avoid an increase of liquidity risk. Furthermore, we
define and perform periodical drills for action plans upona liquidity crisis to enhance the effectiveness in a crisis.

Liquidity risk refers to the risk of incurring losses primarily
due to difficulty in securing necessary funds caused byan unexpected outflow of funds or similar events, or a
sharp rise in funding costs.
The Group has established the Group Liquidity Risk
Management Rules to set up the framework underwhich action plans according to respective situations
ranging from a normal state to urgent cases are defined
to promptly respond thereto.

Operational risk management
Operational risk refers to the risk of incurring losses caused by inappropriateness in the Group’s business processes,
activities of directors and employees or system operations, or by external events. The Group classifies and manages
such risk according to the following six categories: administrative risk, system risk, compliance (legal) risk, personnel
management risk, tangible asset risk, and reputational risk.
Furthermore, the Group designates the sections responsible for each of the aforementioned six categories, and also
has the comprehensive risk management section manage overall operational risk.
response exercises aiming to establish the framework for earlyrecovery from system failure, in addition to sufficient advance
testing upon the development or operation of systems, thecontinuous monitoring of operational status and duplexing
facilities.

• Administrative risk
Administrative risk refers to the risk of incurring losses due to
directors, employees or external contractors neglecting precise
administration, causing incidents, or committing acts of fraud.
In the Group, the sections responsible for administrative risk
and the comprehensive risk management section responsible
for operational risk gather information on and analyze thecauses of administrative incidents occurring inside or outside
the Group to establish or revise administrative rules or enhancethe efficiency of administrative processes through theinformation system based on the results of such analysis. In
addition, the Group has the internal audit section validate theeffectiveness of the risk management system to establish theframework to detect or prevent administrative incidents.

• Compliance (legal) risk, personnel management risk,
tangible asset risk and reputational risk
We also identify and assess risk through methods in line withrisk characteristics and take appropriate actions for: compliance(legal) risk, the risk of incurring losses mainly due to an illegal
act committed by directors and employees; personnel
management risk, the risk of incurring losses mainly due to an
act in violation of laws, regulations or agreements relevant toemployment, health or safety; tangible asset risk, the risk of
incurring losses due to damage to tangible assets caused bydisasters or defective management of buildings; andreputational risk, the risk of incurring losses due to thedeterioration of credit worthiness mainly attributable to
reputational damage caused by inappropriate actions taken by
the Group or the circulation of unfounded rumors.

• System risk
System risk is the risk of incurring losses primarily due to thefailure of computer systems, erroneous computer operation, or
inappropriate computer use.
The Group has taken necessary measures to ensure thesafety and reliability of computer systems including failure

Crisis management and business continuity management
emergency response headquarters at the Company anddirectly-owned subsidiaries to respond to such
emergencies in cooperation with each other.
Furthermore, we continuously perform crisis
management exercises and review the business
continuity plan to enhance the effectiveness thereof
upon facing a crisis.

We have established the framework for the continuity or
early recovery of important business operations including
the repayment of deposits, fund transfer and remittanceupon facing a crisis such as a natural disaster, system
failure or pandemic, as well as limiting human andphysical damage to the minimum extent possible.
Upon the occurrence of a crisis, we will establish

Cyber Security

Market risk management
Market risk refers to the risk of incurring losses due tochanges in the value of financial assets and liabilities of
the Group caused by fluctuation in interest rates, foreignexchange rates, and stock prices.
Our subsidiaries are engaged in investment activities
based on their understanding of risk supported by sufficientadvance research and analysis of market transactions.

For the appropriate control of market risk, we also
perform and report to the ALM/Risk Management
Committee of the Company held periodically thequantitative management and measurement under the
ALM (asset and liability management) framework to takeaction according to the situation.
61

The Group has been strengthening cyber security
measures to protect customers from damage caused byincreasingly advanced and sophisticated cyber attacks.
Both subsidiary banks have a dedicated teamestablished for taking cyber security measures. The
team collects cyber-related information and regularly
conducts security training. To strengthen security
controls for services provided for customers on the62internet, the team has implemented some measures
including a system that detects early unauthorizedaccess and a periodic diagnosis of vulnerabilities in theservices.
In addition, we share precautionary information forcustomers on our website, such as methods of illegal
remittance, spoofed emails or false social media posts
impersonating financial institutions, and other frauds.

Management Base Supporting Value Creation

Initiatives for Compliance
Mebuki Financial Group

Compliance program
The status of the compliance program performed bycompanies within the Group is reported to and validated
by the Compliance Committee quarterly, and is also
subject to the annual overall assessment which isreflected in the next year’s program.

The Group establishes a compliance program as theaction plan to realize compliance. The companies within
the Group establish a program based on the Basic
Policy on Group Compliance Program developed
annually by the Company.

Board of Directors
Audit and Supervisory Committee

Compliance Committee
Corporate Planning
Department

Corporate Management
Department

System Management
Department

Business Management
Department

Regional Revitalization
Department

Whistle-blowing system
Audit Department

Guide/Manage/Supervise
Consult/Report
Joyo Bank

Ashikaga
Bank

Mebuki Lease

Board of Directors

Board of Directors

Audit and Supervisory Committee

Supervise
Head Office and branches
Officer and staff in change ofmanagement and compliance

Mebuki Credit Mebuki Card
Guarantee

Corporate Auditor

Measures for anti-money laundering, etc.

Key bodies in compliance<Joyo Bank>
Compliance Committee<Ashikaga Bank>
Compliance Meeting
Managing section<Joyo Bank>
Corporate Risk Management Division<Ashikaga Bank>
Compliance Management Division

Mebuki
Securities

has been established in the full-time Audit andSupervisory Committee of the Company, Joyo Bank,
and Ashikaga Bank, and an external contact in an
attorney’s office. These contacts are available for the
directors and employees in the Group even after they
resign or retire. For accessibility to these contacts by
eligible users, we will gather opinions from them andstrive to improve the operation of the system.

For compliance-oriented management to be achievedby early detection and correction of violations of laws
and regulations, the Group has established a whistleblowing system that is compliant with the revised
Whistleblower Protection Act. An internal contact officehas been established in the Compliance Management
Division of Joyo Bank and Ashikaga Bank. In addition, awhistle-blowing contact independent of management

Key bodies in compliance
Compliance Committee

Group company management<Joyo Bank>
Corporate Planning Division<Ashikaga Bank>Management Planning Division
SuperviseGroup companies

Managing section<Mebuki Lease / Mebuki Credit Guarantee / Mebuki Card>
General Affairs Division<Mebuki Securities>
Administrative Compliance Division
Supervise
Head Office and business units/branches
Officer and staff in change ofmanagement and compliancecompanies within the Group appoints, among thedirectors, the head AML/CFT officer who is in charge ofrisk management of AML/CFT.
The companies within the Group formulate “AML/CFT
Programs” as an annual plan to enhance the risk
management of AML/CFT, based on the “Group’s Basic
Policy for Anti-Money Laundering” formulated by theCompany for each fiscal year. We verify the effectivenessand status of implementation of the programs toenhance the management system.

The Group acknowledges anti-money laundering andcombating the financing of terrorism (hereinafter “AML/
CFT”) as an important responsibility and one of theimportant management tasks based on calls made by
the international communities. Thus, we formulated the“Anti-Money Laundering and Combating Financing ofTerrorism Policy” to take measures for AML/CFT.
To ensure the effective implementation of AML/CFT forthe companies within the Group, we appoint the director
in charge of Corporate Management Department as theGroup head AML/CFT officer. In addition, each of the

Severing connections with antisocial forces
The Company has established a management system aimed at group-wide comprehensive management whichenables the Group to perform business operations under the appropriate compliance framework. We aim toenhance the compliance framework by positioning compliance as one of the most material management tasks.

The Group has established the basic policy against antisocial forces to stand firmly against and sever any connections
with antisocial forces which threaten the order and safety of civil society and hinder sound economic and social
development.
Regarding severing connections with antisocial forces

Organization and structure
Compliance Group of the Corporate Management
Department as the managing and supervising section in
charge of group-wide compliance, the designation of theofficer responsible for the Corporate Management
Department, and the assignment of compliance staff ateach management organization within the Group.
Important matters regarding compliance at directlyowned subsidiaries are consulted on and reported to the
Corporate Management Department, which is
responsible for the guidance, management andsupervision thereof, pursuant to the Rules forManagement of Companies within the Group.

We have established the Basic Rules on Group
Compliance as the Group’s highest standards forcompliance, and thereunder, other relevant rules andregulations systematically.
The Compliance Committee established within the
Company is responsible for decisions on compliancerelated important business execution of the Company
and the Group, and for analysis, assessment anddeliberation on matters for improvement relevant togroup-wide compliance.
Furthermore, we put compliance into practice through,among other factors, the establishment of the Legal and63

Mebuki Financial Group, Inc. and its group companies will take the following initiatives to sever all connections with
antisocial forces.
1. We will respond to antisocial forces as an organization with a strong recognition of our social responsibility.
2. We will maintain close relationships with the police, the Center for Removal of Criminal Organizations and external expert
organizations including lawyers.
3. We will sever all connections with antisocial forces, including any transactions therewith.
4. We will decisively reject any and all unreasonable demands from antisocial forces and take legal action from both civil
and criminal perspectives.
5. We will never provide any funding or benefits to antisocial forces.

64

Group Structure and Corporate Data
Our customer protection management system (Measures for Customer Protection)
for dispute resolution with customers through the
involvement of third parties.
The Company has defined the Declaration on Personal
Information Protection and various regulations withregard to handling of personal information, individual
numbers and specific personal information received from
customers (“Personal Information, etc.”) and thereby
takes proper measures for security control of Personal
Information, etc. The Company, Joyo Bank andAshikaga Bank have also set up customer inquiry
windows for consultation and complaints regarding
Personal Information, etc. in their custody. In addition,
they are members of the All Banks Personal Data
Protection Council, an authorized organization for theprotection of personal information under the Act on theProtection of Personal Information. The Council also
accepts complaints, and provides consultation on thehandling of Personal Information, etc.

Our Group has established the Group Management
Policy for Customer Protection to organize and ensure
the appropriate management system for customer
protection from the perspective of the protection andimprovement of convenience for all existing and future
customers of the Group, as well as for facilitating
finance.
Joyo Bank and Ashikaga Bank have established asupervising section in charge of consultation, complaints
and other communication from customers, and havealso entered into a basic contract for the implementationof dispute resolution procedures with the Japanese
Bankers Association, the designated dispute resolution
organization under the Banking Act, and with the Trust
Companies Association of Japan, the designateddispute resolution organization under the Trust BusinessAct and the Act on Engagement in Trust Business by
Financial Institutions, to utilize the financial ADR system

Corporate Data

Mebuki Financial Group is committed to financial services-related businesses, including leases, securities, credit guarantees, and credit cards. The businesses are conducted primarily by The Joyo Bank, Ltd. and The Ashikaga Bank,
Ltd., which are engaged in the banking business.
Making full use of a variety of expertise in our group, we provide comprehensive, quality financial services.
(as of March 31,2022)

Mebuki Financial Group, Inc.
Address

2-1-1, Nihonbashi Muromachi, Chuo-ku, Tokyo

Head Office address(Mito Head Office)5-5, Minami-machi 2-chome, Mito, Ibaraki Prefecture(Utsunomiya Head Office)1-25, Sakura 4-chome, Utsunomiya, Tochigi Prefecture

Paid in capital

117.4 billion yen

Establishment

April 1, 2008 (Change of tradename: October 1, 2016)

Stock exchange listing Tokyo Stock Exchange
Number of employees

183

Credit ratings

A (R&I)

Internal Audit
monthly, and to the Board of Directors every threemonths. In order to conduct appropriate audits, theGroup is making efforts to strengthen the cooperation
among the Audit and Supervisory Committee (including
corporate auditors of companies within the Group), theInternal Audit Section of the Company, and theaccounting auditor through close exchanges of views.
The Group strives to further improve its audit methods
by conducting risk-based audits in accordance with theinternational standards of internal audit (of IIA), improving
the expertise of auditors by encouraging them to acquire
an international qualification of internal audit, andundergoing quality assessment of audit by external
institutions.

The Company has established an audit department as
the section in charge of internal audits under the Boardof Directors, independent of the business execution andrisk management departments.
The audit department supervises internal audit
functions across the Group. In order to ensure theappropriateness of the Group’s business operations andthe health of assets, the audit department inspects theappropriateness and effectiveness of the internal audit
system by conducting internal audits on the Group inaccordance with the Internal Audit Rules and theGroup’s Audit Plans defined by the Board of Directors.
The audit results are reported to the Audit andSupervisory Committee and the Representative Director

The Joyo Bank, Ltd.

The Ashikaga Bank, Ltd.

FoundedJuly 30, 1935
Head Office 5-5, Minami-machi 2-chome, Mito, Ibaraki Prefecture
Paid in capital 85.1 billion yen
Network
Domestic: 185 offices (153 branches, 32 sub-branches)
Overseas: 4 Representative Offices(Shanghai, Singapore, New York, Hanoi)
Number of
3,213
employees*
Credit ratings A+ (R&I)
A3 (Moody’s)

Founded
October 1, 1895
Head Office 1-25, Sakura 4-chome, Utsunomiya, Tochigi Prefecture
Paid in capital 135 billion yen
Network
Domestic: 134 offices (107 branches, 27 sub-branches)
Overseas: 2 Representative Offices(Hong Kong, Bangkok)
Number of
2,619
employees*
Credit ratings A+ (R&I)

Mebuki Lease Co., Ltd.

Mebuki Securities Co., Ltd.

Founded
September 25, 1974
Head Office 4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture
Paid in capital 100 million yen
Network
11 offices (Head Office, 10 branches)
Number of64
employees

FoundedNovember 30, 2007
Head Office 4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture
Paid in capital 3 billion yen
Network
7 offices (Head Office, 3 branches, 3 resident offices)
Number of71
employees

Mebuki Credit Guarantee Co., Ltd.

Mebuki Card Co., Ltd.

FoundedDecember 21, 1978
Head Office 1-25, Sakura 4-chome, Utsunomiya, Tochigi Prefecture
Paid in capital 50 million yen
Network
2 offices (Head Office and Mito Office)Number of
22
employees

FoundedAugust 30, 1982
Head Office 4-12, Minami-machi 3-chome, Mito, Ibaraki Prefecture
Paid in capital 100 million yen
Network
2 offices (Head Office, 1 branch)
Number of41
employees

Other businesses 8 consolidated subsidiaries (Research, consulting, investment, real estate leasing, etc.)*Number of employees excludes employees seconded.

65

66

Overseas Representative Offices

Organization

Corporate Data(as of July 4, 2022)

Shanghai Representative Office,Joyo Bank
AddressPhone(as of April 1, 2022)

New York Representative Office,Joyo Bank

Room 1901, Shanghai International Trade
Centre, 2201 Yan An Road (West),
Shanghai 200336
P. R. China+86-21-6209-0258

AddressPhone

712 Fifth Avenue, 8th Floor
New York, NY 10019
U. S. A.
+1-347-686-8420

General Meeting of Shareholders
Accounting Auditors
Corporate GovernanceCommittee

Compliance Committee

Cooperate
Consult/
ReportBoard of Directors
Audit and Supervisory Committee

Audit and Supervisory Committee Office

Management Meeting ALM/Risk Management Committee Sustainability Committee
Group Strategy Committee(Business plan)

Address

Phone

Representative Office Registeredin Singapore, Joyo Bank

5th Floor, Sun Red River,
23 Phan Chu Trinh Street,
Hoan Kiem District,Hanoi Vietnam+84-24-3218-1668

AddressPhone

10 Collyer Quay, #09-07A,
Ocean Financial Centre,
Singapore, 049315+65-6225-6543

Audit Department
Oversight GroupOperational Audit Group(Corporate management) (Business management)(System management)(Regional revitalization)

Corporate Management
Department

Business Management
Department

System Management
Department

Regional Revitalization
Department

Management GroupManagement Group

Corporate Planning
Department

Hanoi Representative Office,Joyo Bank(Audit)Planning GroupDX Management Group
Sustainability Management GroupAccounting Group
Executive Secretariat GroupTokyo OfficePublic Relations Office

Risk Management Group
Compliance and Legal Group
Personnel Group
General Affairs Group
Basel Unit

Regional Revitalization Group

Stock Information (as of March 31, 2022)
Capital and number of issued shares
Common stock

117,495,550,000 yen

Number of issued stock

1,089,055,218 sharesof which, common stock

1,089,055,218 shares

Major shareholders
Mebuki Financial Group
Name

Bangkok Representative Office,Ashikaga Bank
Address

Phone

Hong Kong Representative Office,Ashikaga Bank

689, Bhiraj Tower at EmQuartier, 27th Floor,
Room No.2714, Sukhumvit Road,
Klongton-nua, Wattana,
Bangkok 10110 Thailand+66-2-261-2852

AddressPhone

67

Suite 1601, 16th Floor, Tower2,
The Gateway, Harbour City, Kowloon,
Hong Kong+852-2251-9475

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Nomura Securities Co., Ltd.
Nippon Life Insurance Company
STATE STREET BANK AND TRUST COMPANY 505223
Sompo Japan Insurance Inc.
Sumitomo Life Insurance Company
The Dai-ichi Life Insurance Company, Limited
Meiji Yasuda Life Insurance Company
STATE STREET BANK WEST CLIENT–TREATY 505234
Total

Joyo Bank
Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

164,043
60,24046,574
27,59025,65822,66021,65915,95815,864
12,324
412,574

Name

Mebuki Financial Group, Inc.

15.19
5.57
4.31
2.55
2.37
2.09
2.00
1.47
1.46
1.14
38.20

Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

722,910100.00Ashikaga Bank
Name

Mebuki Financial Group, Inc.

68

Number of Shareholding ratio toshares held the total number of(thousand shares) issued stock (%)

1,340,520

100.00Financial Data

Consolidated Balance Sheet
March 31, 2022

Consolidated Statement of Income

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Year Ended March 31, 2022

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)
2022

ASSETSCash and due from banks (Note 3) ��������������������������������������������������������������������������� ¥ 7,270,668
Call loans and bills bought ��������������������������������������������������������������������������������������
6,507
Monetary claims bought �����������������������������������������������������������������������������������������
10,611
Trading assets (Note 4) �������������������������������������������������������������������������������������������
4,589
Money held in trust (Note 5) ������������������������������������������������������������������������������������
2,027
Securities (Notes 4, 10, 11, and 22) ������������������������������������������������������������������������
4,682,301
Loans and bills discounted (Notes 7, 11, 22, and 26) ����������������������������������������������� 11,737,377
Foreign exchanges (Note 7) �������������������������������������������������������������������������������������
17,220
Lease receivables and investments in lease (Note 21) �����������������������������������������������
65,325
Other assets (Notes 11 and 23) �������������������������������������������������������������������������������
243,257
Tangible fixed assets (Note 8) ����������������������������������������������������������������������������������
102,802
Intangible fixed assets (Note 9) ��������������������������������������������������������������������������������
15,896
Asset for retirement benefits (Note 13) ���������������������������������������������������������������������
32,462
Deferred tax assets (Note 20) ����������������������������������������������������������������������������������
2,237
Customers’ liabilities for acceptances and guarantees (Note 10) ��������������������������������
26,044
Allowance for loan losses ����������������������������������������������������������������������������������������
(93,800)
Allowance for investment losses ������������������������������������������������������������������������������
(8)
TOTAL �������������������������������������������������������������������������������������������������������������� ¥24,125,520¥ 6,425,755
6,809
11,64912,425
1,970
4,333,243
11,638,376
9,594
67,153225,854
107,41218,12731,1891,269
26,340(81,993)(9)¥22,835,169$ 59,410,591
53,171
86,71037,502
16,56538,260,352
95,909,275
140,716
533,791
1,987,726
840,026
129,897
265,261
18,280212,817(766,472)(72)$197,136,137

LIABILITIES AND EQUITY
LIABILITIES:
Deposits (Notes 11 and 22) ������������������������������������������������������������������������������������� ¥16,825,736
Negotiable certificates of deposit (Note 22)���������������������������������������������������������������
310,724
Call money and bills sold ����������������������������������������������������������������������������������������
1,044,954
Payables under repurchase agreements (Note 11) ����������������������������������������������������
148,165
Payables under securities lending transactions (Note 11) ������������������������������������������
826,826
Trading liabilities�����������������������������������������������������������������������������������������������������
343
Borrowed money (Notes 11, 12, and 22) ������������������������������������������������������������������
3,795,700
Foreign exchanges��������������������������������������������������������������������������������������������������
4,390
Due to trust account �����������������������������������������������������������������������������������������������
3,046
Other liabilities �������������������������������������������������������������������������������������������������������
154,855
Provision for bonuses for directors ���������������������������������������������������������������������������
281
Liability for retirement benefits (Note 13) ������������������������������������������������������������������
324
Provision for retirement benefits for directors������������������������������������������������������������
24
Provision for reimbursement of deposits �������������������������������������������������������������������
2,183
Provision for contingent losses ��������������������������������������������������������������������������������
2,349
Provision for point card certificates ��������������������������������������������������������������������������
508
Provision for losses on interest repayments ��������������������������������������������������������������
8
Reserves under special laws������������������������������������������������������������������������������������
2
Deferred tax liabilities (Note 20) �������������������������������������������������������������������������������
11,339Deferred tax liabilities for land revaluation (Note 8) ����������������������������������������������������
7,936
Negative goodwill����������������������������������������������������������������������������������������������������
711
Acceptances and guarantees (Note 10) ��������������������������������������������������������������������
26,044
Total liabilities ��������������������������������������������������������������������������������������������������� 23,166,457¥16,223,652
291,417
952,917130,255
620,749
1,024
3,394,050
905
2,307
142,277
255
249
25
2,460
1,994
466
11
2
35,4038,626
869
26,34021,836,262$137,487,631
2,539,014
8,538,606
1,210,697
6,756,219
2,803
31,015,692
35,87324,8971,265,368
2,297
2,654
198
17,842
19,1974,156
70
2192,65764,853
5,811
212,817
189,299,372

Millions of Yen
2022
2021

INCOME:Interest income:Interest on loans and discounts ��������������������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust fees���������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Trading income ������������������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income (Note 17) �������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowing and rediscounts ����������������������������������������������������������������
Interest on bonds�����������������������������������������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating expenses����������������������������������������������������������������������������������������
General and administrative expenses (Note 18)���������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses (Note 19) ����������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ���������������������������������������������������������������������������������
INCOME TAXES (Note 20):
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT �������������������������������������������

117,495
148,531161
570,981(5,785)960,088
1,027,064
1,069
4,924,778(19,262)

148,013388
13,497
5,622
167,522998,906¥22,835,169

748,083
55,032
97,602
42,310943,027
7,836,764$197,136,137

69¥108,277
45,864
16
1,558
426
38
52,833
4,252
2,254
59,347
274,870$ 869,521
367,66367
54,2163,372
371
445,32137,035
26,066389,141
2,192,773

772
15
(192)
(80)
488
173
—
2,235
14,235
8,517
114,624
18,61948,189207,597
60,754

1,600
40
(36)
166
445
1,414
18
2,325
14,1797,322
115,763
19,11660,314
222,670
52,1996,310
123(1,572)
(654)
3,993
1,417
—
18,264
116,318
69,597
936,627
152,147
393,766
1,696,336
496,438

21,581(3,786)
17,79542,958¥ 42,958

21,527(5,806)
15,72036,478¥ 36,478

176,352(30,937)
145,415
351,023$ 351,023

Yen¥38.96
38.95
11.00

U.S. Dollars¥31�45
31�43
11�00

$0.32
0.32
0.09

See notes to consolidated financial statements�

Consolidated Statement of Comprehensive Income
Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Millions of Yen
2022
2021

NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) (Note 24):
Unrealized gains (losses) on available-for-sale securities �������������������������������������������
Deferred gains on derivatives under hedge accounting ����������������������������������������������
Defined retirement benefit plans ����������������������������������������������������������������������������
Total other comprehensive income (loss) ������������������������������������������������������������������COMPREHENSIVE INCOME (LOSS) ��������������������������������������������������������������������������������
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
Owners of the parent ����������������������������������������������������������������������������������������������
See notes to consolidated financial statements�

See notes to consolidated financial statements�

Thousands of
U.S. Dollars(Note 1)
2022

¥106,411
44,994
8
6,634
412
45
54,4984,532
3,190
47,623
268,351

PER SHARE OF COMMON STOCK (Note 16):
Basic EPS���������������������������������������������������������������������������������������������������������������
Diluted EPS ������������������������������������������������������������������������������������������������������������Cash dividends applicable to the year (Note 14) ��������������������������������������������������������

Year Ended March 31, 2022

EQUITY (Notes 14 and 15):
Common stock �������������������������������������������������������������������������������������������������������
117,495
Capital surplus �������������������������������������������������������������������������������������������������������
125,692
Stock acquisition rights �������������������������������������������������������������������������������������������
130
Retained earnings ���������������������������������������������������������������������������������������������������
602,694
Treasury stock ��������������������������������������������������������������������������������������������������������
(2,357)
Accumulated other comprehensive income:��������������������������������������������������������������
Unrealized gains on available-for-sale securities (Note 6) �������������������������������������
91,550
Deferred gains on derivatives under hedge accounting (Note 23) ��������������������������
6,734
Land revaluation surplus (Note 8) �����������������������������������������������������������������������
11,944
Defined retirement benefit plans (Note 13) ����������������������������������������������������������
5,177
Total accumulated other comprehensive income ��������������������������������������������
115,407
Total equity���������������������������������������������������������������������������������������������
959,063
TOTAL ������������������������������������������������������������������������������������������������������������������������� ¥24,125,520

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

70

Thousands of
U.S. Dollars(Note 1)2022

¥ 42,958¥ 36,478$ 351,023(56,463)
6,346
(444)
(50,561)¥ (7,603)

78,192
1,457
13,21992,869¥129,347(461,380)
51,860(3,633)(413,153)$ (62,130)¥ (7,603)¥129,347$ (62,130)

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity
Year Ended March 31, 2022

Year Ended March 31, 2022

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

Millions of Yen

BALANCE, APRIL 1, 2020�������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Decrease due to change in scope of
consideration �����������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2021 ��������������������

CommonStock(Note 14)

CapitalSurplus¥117,495¥148,549

Stock
Acquisition
Rights¥248

Retained
Earnings

TreasuryStock¥547,270(12,755)¥(5,970)

Accumulated Other Comprehensive Income
Unrealized Deferred Gains
Gains (Losses) (Losses) on
DefinedLand
on Available- Derivatives
under Hedge Revaluation Retirement
for-Sale
Benefit Plans
Surplus
Accounting
Securities¥ 69,821¥(1,068)¥13,485¥ (7,597)

Total¥ 74,641(0)92,88092,880¥167,522

(0)
(0)
166
(11)
92,794
116,671¥998,906

Total

Total
Equity

(0)
185

(18)
(11)

¥117,495(18)¥148,531¥882,235(12,755)
36,47836,478

(86)
(86)
¥161

Total
Equity23,710¥570,981

184¥(5,785)

78,192
78,192¥148,013

1,457
1,457
¥ 388

11
11
¥13,497

13,21913,219¥ 5,622

Millions of Yen

BALANCE, APRIL 1, 2021�������������������������
Cumulative effects of changes inaccounting policies ��������������������������
Restated balance �������������������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Retirement of treasury stock����������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2022 ��������������������

CommonStock(Note 14)

CapitalSurplus¥117,495¥148,531

117,495

148,531

Stock
Acquisition
Rights

Accumulated Other Comprehensive Income
Unrealized Deferred Gains
Gains (Losses) (Losses) on
DefinedLand
on Available- Derivatives
under Hedge Revaluation Retirement
for-Sale
Benefit Plans
Surplus
Accounting
Securities

Retained
Earnings

Treasury
Stock

¥161

¥570,981¥ (5,785)¥148,013¥ 388¥13,497¥5,622¥167,522¥998,906

161

(366)
570,614(12,431)(5,785)148,013388

13,497

5,622

167,522(366)
998,539(12,431)42,95842,958(19,520)110(19,520)121
22,828(10)(22,828)
1,553¥117,495(22,838)¥125,692

(31)
(31)
¥130

32,079¥602,694

3,428¥ (2,357)(56,463)(56,463)¥ 91,550

6,346
6,346
¥6,734(1,553)(1,553)¥11,944

(444)
(444)
¥5,177(52,114)(52,114)¥115,407

1,553(52,145)(39,476)¥959,063

Total

Total
EquityThousands of U.S. Dollar

BALANCE, APRIL 1, 2021�������������������������
Cumulative effects of changes inaccounting policies ��������������������������
Restated balance �������������������������������������Cash dividends �����������������������������������
Net income attributable to owners of
the parent ����������������������������������������
Purchase of treasury stock ������������������
Disposal of treasury stock �������������������
Retirement of treasury stock����������������
Reversal of land revaluation surplus �����
Net changes during the fiscal year �������
Total changes during the fiscal year ����������
BALANCE, MARCH 31, 2022 ��������������������

CommonStock(Note 14)

CapitalSurplus$960,088$1,213,688

960,088

1,213,688

Stock
Acquisition
Rights

Accumulated Other Comprehensive Income
Unrealized Deferred Gains
Gains (Losses) (Losses) on
DefinedLand
on Available- Derivatives
under Hedge Revaluation Retirement
for-Sale
Benefit Plans
Surplus
Accounting
Securities

Retained
Earnings

TreasuryStock$1,323$4,665,642$ (47,279) $1,209,462

1,323(2,997)
4,662,645(101,581)

47,2791,209,462$ 3,173$110,293$45,943$1,368,871$8,162,334

3,173

110,293

45,943

1,368,871(2,997)
8,159,336(101,581)

351,023$960,088(186,624)$1,027,064

351,023(159,508)
901(159,508)
989
186,536(88)(186,536)
12,691(254)(254)
262,133$1,069 $4,924,778(461,380)
28,017(461,380)$ (19,262) $ 748,083

OPERATING ACTIVITIES:
Income before income taxes ������������������������������������������������������������������������������������������������
Adjustments for:
Income taxes paid �������������������������������������������������������������������������������������������������������
Depreciation and amortization �����������������������������������������������������������������������������������������
Impairment loss ����������������������������������������������������������������������������������������������������������
Amortization of negative goodwill �������������������������������������������������������������������������������������
Increase in allowance for loan losses ��������������������������������������������������������������������������������
Decrease in allowance for investment loss ��������������������������������������������������������������������������
Increase in provision for bonuses for directors ���������������������������������������������������������������������
Increase in asset for retirement benefits�����������������������������������������������������������������������������
Decrease in liability for retirement benefits��������������������������������������������������������������������������
Decrease in provision for retirement benefits for directors �������������������������������������������������������
Decrease in provision for reimbursement of deposits �������������������������������������������������������������
Increase (decrease) in provision for contingent losses ������������������������������������������������������������
Increase in provision for point card certificates ���������������������������������������������������������������������
Decrease in provision for interest repayments ����������������������������������������������������������������������
Gains on fund management �������������������������������������������������������������������������������������������
Financing expenses �����������������������������������������������������������������������������������������������������
Losses related to securities ��������������������������������������������������������������������������������������������
Losses (gains) on money held in trust��������������������������������������������������������������������������������
Foreign exchange gains ������������������������������������������������������������������������������������������������
Losses on disposal of fixed assets ������������������������������������������������������������������������������������
Net decrease in trading assets ����������������������������������������������������������������������������������������
Net decrease in trading liabilities �������������������������������������������������������������������������������������
Net increase in loans and bills discounted ��������������������������������������������������������������������������
Net increase in deposits ������������������������������������������������������������������������������������������������
Net increase in negotiable certificates of deposit ������������������������������������������������������������������
Net increase in borrowed money (excluding subordinated borrowings) ����������������������������������������
Net decrease (increase) in due from banks (excluding cash equivalents) ��������������������������������������
Net decrease in call loans ����������������������������������������������������������������������������������������������
Net increase in call money ���������������������������������������������������������������������������������������������
Net increase in payables under securities lending transactions �������������������������������������������������
Net decrease (increase) in foreign exchanges - assets �����������������������������������������������������������
Net increase (decrease) in foreign exchanges - liabilities ���������������������������������������������������������
Net decrease in lease receivables and investments in lease �����������������������������������������������������
Decrease in straight bonds - issuance and redemption �����������������������������������������������������������
Net increase in due to trust account ���������������������������������������������������������������������������������
Proceeds from fund management ������������������������������������������������������������������������������������
Payments for finance ���������������������������������������������������������������������������������������������������
Other-net������������������������������������������������������������������������������������������������������������������
Total adjustments��������������������������������������������������������������������������������������������������������
Net cash provided by operating activities ���������������������������������������������������������������������������������

51,86051,860$55,032(12,691)(12,691)$ 97,602

12,691(3,633)(425,844)(426,098)(3,633)(425,844)(322,572)$42,310 $ 943,027 $7,836,764

See notes to consolidated financial statements�

71

72

¥

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)2022

60,754$(19,893)
9,531
3,814
(158)
11,807(0)
25(1,082)(2,916)
(0)
(276)
354
41
(2)
(158,462)
3,412
10,122(57)(81,124)
423
7,836
(681)
(99,000)
602,083
19,306401,650(3,349)1,340
109,947
206,076(7,626)
3,484
1,827
—
739
159,240(3,551)(3,498)1,171,384¥1,232,138¥

52,199(14,023)
9,544
1,562
(158)
12,334(283)
18(1,697)(3,524)
(12)
(414)
(147)
14
(1)
(156,143)
5,975
6,588
0
(37,917)
346
3,207
(746)
(295,835)
1,466,994
8,286
2,171,248
16,01012,144
843,231405,201
6,555(1,035)556(5,000)734
158,380(7,785)
4,984
4,609,195¥4,661,394

496,438(162,556)
77,88531,169(1,291)
96,485(2)
206(8,847)(23,835)(8)(2,260)
2,899
342
(21)
(1,294,838)
27,881
82,712(467)(662,887)
3,462
64,030(5,569)(808,961)
4,919,786
157,760
3,281,992(27,368)
10,954
898,407
1,683,907(62,318)
28,475
14,936—6,044
1,301,201(29,019)(28,587)
9,571,699$10,068,137

Notes to Consolidated Financial Statements
Year Ended March 31, 2022

Millions of Yen
2022
2021
INVESTING ACTIVITIES:
Purchases of securities �������������������������������������������������������������������������������������������������
Proceeds from sales of securities�������������������������������������������������������������������������������������
Proceeds from redemption of securities �����������������������������������������������������������������������������
Increase in money held in trust����������������������������������������������������������������������������������������
Purchases of tangible fixed assets������������������������������������������������������������������������������������
Proceeds from sales of tangible fixed assets �����������������������������������������������������������������������
Purchases of intangible fixed assets ���������������������������������������������������������������������������������
Other-net������������������������������������������������������������������������������������������������������������������
Net cash used in investing activities����������������������������������������������������������������������������������
FINANCING ACTIVITIES:
Repayments of subordinated borrowings ����������������������������������������������������������������������������
Purchase of treasury stocks �������������������������������������������������������������������������������������������
Proceeds from sales of treasury stocks ������������������������������������������������������������������������������Cash dividends paid �����������������������������������������������������������������������������������������������������
Net cash used in financing activities ���������������������������������������������������������������������������������
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS �������������������������������������NET INCREASE IN CASH AND CASH EQUIVALENTS ���������������������������������������������������������������������
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ����������������������������������������������������������������
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 3) ��������������������������������������������������������������
NONCASH INVESTING AND FINANCING ACTIVITIES:
Not applicable�

Thousands of
U.S. Dollars(Note 1)2022¥(1,136,395)
444,060
340,041—(3,824)672(2,900)(162)(358,507)¥(1,104,133)
486,668
514,238(2,002)(3,857)429(3,571)(161)(112,389)$ (9,285,795)
3,628,542
2,778,574—(31,251)
5,497(23,701)(1,326)(2,929,460)—(19,520)105(12,431)(31,846)(220)
841,563
6,423,084¥ 7,264,647(30,000)(0)
152(12,755)(42,603)22
4,506,424
1,916,659¥ 6,423,084—(159,508)
860(101,581)(260,228)(1,804)
6,876,645
52,484,754$59,361,399

Mebuki Financial Group, Inc. and Consolidated Subsidiaries

b. Business Combinations — Business combinations are accounted for using
the purchase method� Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the periods in which the costs are
incurred� If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items forwhich the accounting is incomplete� During the measurement period, which shallnot exceed one year from the acquisition, the acquirer shall retrospectively adjust
the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition
date and that would have affected the measurement of the amounts recognized
as of that date� Such adjustments shall be recognized as if the accounting for thebusiness combination had been completed at the acquisition date� The acquirer
recognizes any bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and allof the liabilities assumed have been identified after a review of the procedures
used in the purchase price allocation� A parent’s ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary� The carrying amount of noncontrolling interest is adjusted to reflect thechange in the parent’s ownership interest in its subsidiary, while the parent retains its controlling interest in its subsidiary� Any difference between the fair value of the consideration received or paid and the amount by which thenoncontrolling interest is adjusted is accounted for as capital surplus as long as
the parent retains control over its subsidiary�

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of Mebuki Financial Group,
Inc� (the “Company”) and its consolidated subsidiaries (together, the “Group”)
have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related accounting regulations, inaccordance with the Enforcement Regulation for the Banking Act, and in accordance with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards�
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is morefamiliar to readers outside Japan� In addition, certain reclassifications have been
made in the 2021 consolidated financial statements to conform to the classifications used in 2022�
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates� The
translations of Japanese yen amounts into U�S� dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rateof ¥122�38 to $1, the approximate rate of exchange at March 31, 2022� Suchtranslations should not be construed as representations that the Japanese yenamounts could be converted into U�S� dollars at that or any other rate�

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSee notes to consolidated financial statements�

a. Consolidation — The consolidated financial statements as of March 31,
2022, include the accounts of the Company and its 14 significant subsidiaries�
Ashigin Money Design Ltd� was included in the scope of consolidation since
The Ashikaga Bank, Ltd� established the wholly owned subsidiary on July 15,
2021�
The Company acquired all shares of Joyo Credit Co�, Ltd� from The Joyo
Bank, Ltd� and all shares of Ashigin Card Co�, Ltd� from The Ashikaga Bank, Ltd�through a dividend in kind, and Joyo Credit and Ashigin Card merged andchanged the surviving company’s trade name to Mebuki Card Co�, Ltd� on April
1, 2021�
Under the control and influence concepts, those companies in which theCompany, directly or indirectly, is able to exercise control over operations are fully consolidated�All consolidated subsidiaries have a fiscal year ending on March 31, whichis the same as the fiscal year of the Company�
The consolidated financial statements as of March 31, 2022, do not include
the accounts of 11 subsidiaries because the total assets, total income, net income, retained earnings, and accumulated other comprehensive income of thoseentities would not have had a material effect on the consolidated financial statements�
Ibaraki Warehouse Ltd� is not treated as a subsidiary even though the Groupowns more than 50% of its voting rights, because the Company’s unconsolidated
subsidiary in the investment business held its shares for the purpose of growing
the investee’s business, and not for the purpose of controlling the entity�
The consolidated financial statements as of March 31, 2022, do not apply
to the equity method of accounting of 11 unconsolidated subsidiaries and four
associated companies because the net income, retained earnings, and accumulated other comprehensive income of those entities would not have had a material effect on the consolidated financial statements�
All significant intercompany balances and transactions have been eliminatedon consolidation� All material unrealized profit included in assets resulting fromtransactions within the Group is also eliminated�
Negative goodwill represents the difference between the cost of an acquisition and the fair value of the net assets of the acquired subsidiary at the date ofacquisition� Negative goodwill incurred before March 31, 2010, is amortized using the straight-line method over 20 years�

73

c. Trading Assets and Trading Liabilities — Transactions for “trading purposes” (seeking to capture gains arising from short-term changes in interest rates,
currency exchange rates, market prices of securities, and other market-related
indices or from arbitrage between markets) are valued at market or fair value andhave been included in trading assets and trading liabilities on a trade-date basis�
Gains or losses on such trading transactions are reflected as trading income or
trading expenses in the consolidated statement of income�Among the trading assets and liabilities, securities and monetary claims arecarried at market value as of the consolidated balance sheet date� Derivatives,
including swaps, futures, and options, are valued assuming settlement on the
consolidated balance sheet date�Trading income or trading expenses include interest received or paid during
the fiscal year� The year-on-year valuation differences of securities and monetaryclaims are also recorded in the above-mentioned accounts� As for the derivatives, assuming that the settlement will be made in cash, the year-on-year valuation differences are also recorded in the above-mentioned accounts�
d. Securities — Securities are classified and accounted for, depending on management’s intent, as follows:(1) Held-to-maturity debt securities, which are expected to be held to maturity
with the positive intent and ability to hold to maturity, are stated at amortizedcost using the straight-line method�
(2) Investments in unconsolidated subsidiaries that are not accounted for by
the equity method are stated at cost determined by the moving-average method�
(3) Available-for-sale securities are stated at fair value with unrealized gains
and losses, net of applicable taxes, reported in a separate component of equity� Securities without readily available market prices are stated at cost determined by the moving-average cost method�For other-than-temporary declines in fair value, securities are reduced to
net realizable value by a charge to income�e. Tangible Fixed Assets — Tangible fixed assets (except for leased assets) arestated at cost, less accumulated depreciation� Depreciation of tangible fixed assets owned by the consolidated banking subsidiaries is computed by the straightline method�

74

The range of useful lives is from 3 to 50 years for buildings and from 3 to
20 years for other tangible fixed assets�
Depreciation of tangible fixed assets owned by other subsidiaries is mainlycomputed by the declining-balance method in estimated useful lives�
Depreciation of leased assets from finance lease transactions that do notdeem to transfer ownership of the leased property to the lessee is computed using the straight-line method over the respective lease periods� The residual valueof leased assets is determined using the guaranteed residual value indicated on
the lease contracts where provided; otherwise, they have a nil residual value�

borrowers with questionable performance, borrowers with weak or unstable business conditions, or borrowers with unfavorable financial conditions (“requiringcaution”), and expected loan losses for the next one year for claims against borrowers other than requiring monitoring and claims against borrowers with goodbusiness conditions and no particular financial problems (“normal”)� Expectedloan losses are computed using the average historical loan loss ratio of the past
one year to three years� Where necessary, the expected loan losses are modified
for possible future scenarios�For collateralized or guaranteed claims of borrowers who are in “virtual
bankruptcy” or “legal bankruptcy,” the amount exceeding the estimated value ofcollateral or guarantees has been deducted as deemed uncollectible directly fromthose claims� As of March 31, 2022 and 2021, the deducted amounts were¥23,953 million ($195,727 thousand) and ¥29,627 million, respectively�
Other consolidated subsidiaries determine allowances for loan losses thatare provided for general claims at an amount based on the actual historical rateof loan losses and for specific claims (from potentially bankrupt customers andother) at an estimate of the amounts deemed uncollectible based on the respective assessments�

f. Intangible Fixed Assets — Amortization of intangible fixed assets is computed by the straight-line method� The cost of computer software obtained for internal use is amortized principally using the straight-line method over the estimateduseful lives of mainly five years�
g. Long-Lived Assets — The Group reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate the carrying amount of anasset or asset group may not be recoverable� An impairment loss is recognized if
the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group� The impairment loss would bemeasured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition�

i. Allowance for Investment Losses — Allowance for investment losses is provided at the amount deemed necessary to cover estimated possible losses oncertain type of nonmarketable investments�
j. Provision for Bonuses for Directors — Provision for bonuses for directors(including executive officers) is provided in the amount of the estimated bonuses
that are attributable to each fiscal year�

h. Allowance for Loan Losses — The consolidated banking subsidiaries haveprovided an allowance for loan losses, which is determined based on management’s judgment and assessment of future losses based on the write-offs andprovisions standards� These systems reflect past experience of credit losses;
possible credit losses; business and economic conditions; the character, quality,and performance of the portfolio; value of collateral or guarantees; and otherpertinent indicators�
The quality of all loans performed by the business offices is reviewed by thecredit-related divisions in the headquarters and then independently examined by
the Internal Audit division based on the self-assessment of asset quality standards�
The classification of borrowers (six categories: normal borrowers; borrowers
requiring caution excluding borrowers requiring monitoring; borrowers requiring
monitoring; possible bankruptcy; virtual bankruptcy; and legal bankruptcy) is determined in accordance with self-assessment standards prescribed by the Groupto evaluate the credit losses on loans�For claims on borrowers that have entered into bankruptcy, special liquidation proceedings, or similar legal proceedings (“legal bankruptcy”), or borrowersthat are not legally or formally insolvent but are regarded as substantially in thesame situation (“virtual bankruptcy”), an allowance is provided based on theamount of claims, after the write-offs as stated below, net of the expectedamount of recoveries from collateral and guarantees�For claims on borrowers that are not currently bankrupt, but are likely to become bankrupt in the future (“possible bankruptcy”), an allowance is provided in
the amount deemed necessary based on an overall solvency assessment of theclaims, net of the expected amount of recoveries from collateral and guarantees�For claims on borrowers whose loans are classified as “restructured loans”
over a certain amount, for which future cash flows from the collection of principal
and interest are reasonably estimated, an allowance is provided for the difference
between the present value of expected future cash flows discounted at the contracted interest rate and the carrying value of the claims based on the discounted
cash flow method�For other claims, an allowance is provided, mainly based on expected loan
losses for the next three years for claims requiring special caution (“requiring
monitoring”) in whole or in part among claims against borrowers requiring caution in future management, such as borrowers with unreasonable loan terms,

k. Retirement Benefits for Employees — The Group accounts for the liability
for retirement benefits based on the projected benefit obligations and the fair value of plan assets at the consolidated balance sheet date� The projected benefit
obligations are attributed to periods on a benefit formula basis� Actuarial gains
and losses and past service costs that are yet to be recognized in profit or loss
are recognized within equity (accumulated other comprehensive income) after
adjusting for tax effects and are recognized in profit or loss from the next year of
incurrence and the year of incurrence, respectively, by the straight-line method
over a period (mainly 10 years) no longer than the expected average remaining
service period of the employees�
l. Provision for Retirement Benefits for Directors — Provision for retirement
benefits for directors, which is provided for payments of retirement benefits to directors, is recorded in the amount deemed accrued at the fiscal year end datebased on the estimated amount of benefits�
m. Provision for Reimbursement of Deposits — Provision for reimbursementof deposits, which were derecognized as liabilities under certain conditions, isprovided for possible losses on future claims and is calculated based on the historical reimbursement experience�n. Provision for Contingent Losses — Provision for contingent losses is provided for possible loan losses guaranteed by the credit guarantee corporations in
an amount deemed necessary based on estimated losses in the future, calculated using historical default rates after exclusion of contingent losses covered byother reserves�
o. Provision for Point Card Certificates — Provision for point card certificates,
which is provided for the future use of points granted to customers under credit
card points program, is calculated by converting the outstanding points into amonetary amount and rationally estimating and recognizing the amount that will
be redeemed in the future�

75

p. Provision for Losses on Interest Repayments — Certain consolidated subsidiaries provide a provision for losses on interest repayments in an amountdeemed necessary based on estimated amounts to be repaid, taking into accounthistorical records of interest repayments on the portion of loans whose interest
rates exceeded the maximum interest rate stipulated by the Interest LimitationLaw�

w. Derivatives and Hedging Activities — Derivative financial instruments areclassified and accounted for as follows: (a) all derivatives, except those enteredinto for hedging purposes, are recognized as either assets or liabilities and measured at fair value, with gains or losses on derivative transactions recognized in
the consolidated statement of income, or (b) for derivatives used for hedging purposes, if the derivatives qualify for hedge accounting because of high correlationand effectiveness between the hedging instruments and the hedged items, gains
or losses on the derivatives are deferred until maturity of the hedged transactions(deferral hedge accounting)�
The consolidated banking subsidiaries apply deferral hedge accounting
based on the rules of the Japanese Institute of Certified Public Accountants (JICPA) Industry Audit Committee Report No� 24, “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in
the Banking Industry,” for interest rate derivatives to manage interest rate risk
from various financial assets and liabilities, as a whole� Under these rules, the effectiveness of a fair value hedge is assessed by an identified group of hedge deposits, loans, and similar instruments and by a corresponding group of hedging
instruments, such as interest rate swaps in the same maturity category� Also,
under these rules, the effectiveness of cash flow hedges is assessed based on
the correlation between a base interest rate index of the hedged cash flow andthat of the hedging instrument�
The consolidated banking subsidiaries apply deferral hedge accounting
based on the rules of the JICPA Industry Audit Committee Report No� 25, “Accounting and Auditing Treatments for Foreign Currency Transactions in the Banking Industry,” to currency swaps and funding swaps used for the purpose ofcurrency exchange� Under the deferral hedge accounting, hedged items are
identified by grouping the foreign currency-denominated financial assets and liabilities by currencies and designating derivative transactions, such as currency
swap transactions and foreign exchange swaps, as hedging instruments� Effectiveness of derivative transactions, such as currency swap transactions and foreign exchange swap transactions, is reviewed by comparing the total foreign
currency position of the hedged items and the hedging instrument by currency�
One consolidated banking subsidiary applies individual deferral hedge accounting to offset the price fluctuation of the strategic shares that are classified
under available-for-sale securities, using stock forward contracts as hedged
items� The hedge effectiveness of derivative transactions is reviewed by comparing the changes in value of the hedged item and hedging instruments�
The consolidated banking subsidiaries apply individual deferral hedge accounting and exceptional accrual method for interest rate swap to some assets
and liabilities�

q. Reserves under Special Laws — Reserves under special laws are provided
for contingent liabilities incurred by an accident in relation to the sales and purchase or other transactions of securities, which are amounted to ¥2 million ($21
thousand) and ¥2 million as of March 31, 2022 and 2021, respectively, pursuant
to Article 46-5-1 of the Financial Instruments and Exchange Act and Item 175 of
the related cabinet order�
r. Stock Options — Compensation expense for employee stock options is recognized based on the fair value at the date of grant and over the vesting period
as consideration for receiving goods or services� In the consolidated balance
sheet, the stock option is presented as a stock acquisition right as a separate
component of equity until exercised�s. Stock Issuance Costs — Stock issuance costs are charged to income as incurred�t. Leases — As a lessor, finance leases that are not deemed to transfer ownership of the leased property to the lessee are recognized as investments in leases�
Income and expenses are recognized when lease receivables are collected
as for finance lease transactions that do not transfer ownership of the property�
As for finance lease transactions that do not transfer ownership of theleased property and which commenced prior to April 1, 2008, in line with thestipulations of Item 81 of the Guidance on Accounting Standard for Lease Transactions (Accounting Standards Board of Japan(ASBJ) Guidance No� 16, March
25, 2011), book value (after deduction of accumulated depreciation) of lease assets included in tangible fixed assets and intangible assets as of the previous
consolidated balance sheet date (March 31, 2008) was recorded as the initialbalance of “Lease receivables and investments in lease�”u. Income Taxes — The provision for income taxes is computed based on thepretax income included in the consolidated statement of income� The asset andliability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities� Deferred taxes are measured
by applying currently enacted income tax rates to the temporary differences�
The Group files a tax return under the consolidated taxation system, whichallows companies to base tax payments on the combined profits or losses of theparent company and its wholly owned subsidiaries�Pursuant to the transitional treatment of the Item 3 of “Practical Solution on
the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ Practical Issues Task
Force (PITF) No� 39, March 31, 2020), which is prescribed after the institution of
the “Act on Partial Revision of the Income Tax Act” (Act No� 8 of 2020) which is
the law revising the nonconsolidated tax system, the Group records the amountsof deferred tax assets and deferred tax liabilities on the related items in accordance with the provisions of the previous tax law, not applying 44 of “Partial
Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No� 28, February 16, 2018)�

x. Cash and Cash Equivalents — Cash and cash equivalents in the consolidated statements of cash flows represent cash and due from banks in the consolidated balance sheets, excluding deposits with banks other than the Bank ofJapan, of the consolidated banking subsidiaries and exclude the time deposits of
the Company and the other consolidated subsidiaries�
y. Consumption Taxes — Consumption tax is excluded from transactions reported by the Group� However, nondeductible consumption tax on tangible fixed
assets is charged to income as incurred�z. Per Share Information — Basic net earnings per share (EPS) of common
stocks is computed by dividing net income attributable to common shareholders
by the weighted-average number of shares of common stock outstanding for theperiod, retroactively adjusted for stock splits�
Diluted EPS reflects the potential dilution that could occur if securities were
exercised or converted into common stock� Diluted EPS of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for
related interest expense, net of tax, and full exercise of outstanding warrants�

v. Translation of Foreign Currencies — Assets and liabilities denominated inforeign currencies are translated at exchange rates prevailing as of the consolidated balance sheet date�

76

Cash dividends per share presented in the accompanying consolidated
statement of income are dividends applicable to the respective years, including
dividends to be paid after the end of the year�

(a) Calculating method
As calculation method is stated on “h. Allowance for loan losses” in NOTE
“2� SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” the classificationof borrowers (six categories: normal borrowers, borrowers requiring caution
excluding borrowers requiring monitoring, borrowers requiring monitoring,
possible bankruptcy; virtual bankruptcy; and legal bankruptcy) are determined in accordance with self-assessment standards prescribed by theGroup to prepare for credit losses on loans� In determining the classificationof borrowers, the Group considers the projections for changes in the performance of the borrowers that are expected to be affected by COVID-19
spread and other factors� Allowance for loan losses is estimated in accordance with the credit risk by estimating the expected loss amount based on
the actual historical rate of loan losses for each classification of the borrowers determined as above�

Accounting Change(Accounting Standard for Fair Value Measurement)
ASBJ Statement No� 30, “Accounting Standard for Fair Value Measurement”(ASBJ, July 4, 2019; hereinafter “Accounting Standard for Fair Value Measurement”)
and related guidance have been applied from the beginning of the period ended
March 31, 2022� In accordance with Item 8 of the Accounting Standard for Fair
Value Measurement, the fair value adjustment method applied to determine thefair value of derivatives was modified to use as much as possible observable inputs estimated by reference to derivatives and other instruments traded in themarket� This modification was made due to the application of the AccountingStandard for Fair Value Measurement� In accordance with the transitional measures set forth in Item 20 of the Accounting Standard for Fair Value Measurement, the cumulative effect of retroactively applying the new accounting policy
prior to the beginning of the previous fiscal year was recognized as adjustments
to retained earnings at the beginning of the period ended March 31, 2022�
As a result, “Retained earnings” decreased by ¥366 million ($2,997 thousand), “Trading assets” decreased by ¥234 million ($1,914 thousand), “Other
assets” decreased by ¥476 million ($3,897 thousand), “Trading liabilities” decreased by¥25 million ($208 thousand), “Other liabilities” decreased by ¥158
million ($1,296 thousand), “Deferred tax assets” increased by ¥160 million($1,310 thousand), and “Total equity per share” decreased by ¥0�32 ($0 thousand) at the beginning of the period ended March 31, 2022�
In accordance with transitional treatment stipulated in Item 19 of “AccountingStandards for Fair Value Measurement” and Item 44-2 of “Accounting Standard
for Financial Instrument,” (ASBJ Statement No�10, July 4, 2019), new accounting policies have been applied from the beginning of the period ended March 31,2022� Due to the application, the measurement of the fair value of domestic
stocks and investment trusts in available-for-sale securities are changed fromthe fair value method based on their average prices during the final month of fiscal year to the fair value method based on the market prices as of the consolidated balance sheet date�
Other than the above, breakdown by level of the fair value hierarchy of financial instruments has been disclosed� However, in accordance with the transitional treatment set forth in Item 7-4 of “Implementation Guidance on Disclosuresabout Fair Value of Financial Instruments” (ASBJ Statement No� 19, July 4,2021), that notes of the previous consolidated fiscal year were not disclosed�(b) Significant assumptions
The classification of borrowers is determined by comprehensively considering various information such as the borrower’s past financial condition, therepayment history, the future forecasts, and other qualitative information of
the borrowers�
Since the future forecast information includes the impact of COVID-19
and can be significantly affected by changes in the external environment,
the Group evaluates the information based on certain assumptions�(c) Impact on the consolidated financial statements for the following fiscal year:
The assumptions used in determining the classification of borrowers are
uncertain, and changes in the situation of COVID-19 spread and the external environment that may affect the borrower’s future performance could
increase or decrease the amount of loss and have a material impact on the
consolidated financial statements�
New Accounting Pronouncements
Accounting Standards for Fair Value Measurement“Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No� 31, June 17, 2021)(i) Overview
Guidance for fair value measurement and disclosure of investment trusts, andfair value disclosure of investments in partnership the net amount of which isrecorded in the consolidated balance sheets, have been introduced�

Significant Accounting Estimates
Accounting estimates recorded in the consolidated financial statements for thecurrent fiscal year that may have a material impact on the consolidated financial
statements for the following fiscal year are as follows:(ii) Scheduled date of application
The Group applies these accounting standards from the beginning of the
fiscal year ending March 31, 2023�
(iii) Effects of application
The effect of applying these accounting standards is currently being examined�

Allowance for loan losses(i) Amounts recorded in the consolidated financial statements as of March 31,
2022 and 2021, were as follows:
Millions of Yen
2022
2021

Allowance for loan losses ���������������������

¥93,800¥81,993“Practical Solution on the Accounting and Disclosure under the Group Tax
Sharing Systems”(PITF No� 42, August 12, 2021)

Thousands of
U.S. Dollars
2022$766,472(i) Overview
Accounting treatment and disclosure regarding corporation tax and local
corporation tax as well as tax effect accounting under the group tax sharing
system have been introduced�(ii) Information of the consolidated financial statements with regard to the accounting estimates(ii) Scheduled date of application
The Group applies these accounting standards from the beginning of the
fiscal year ending March 31, 2023�

77(iii) Effects of application
The effect of applying these accounting standards is currently being examined�

3. CASH AND CASH EQUIVALENTS
The reconciliation of “Cash and cash equivalents” in the consolidated statementsof cash flows and “Cash and due from banks” in the consolidated balance sheets
as of March 31, 2022 and 2021, were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Cash and due from banks������������������� ¥7,270,668 ¥6,425,755
Deposits with banks of the consolidatedbanking subsidiaries other than the
Bank of Japan �����������������������������������
(6,020)(2,671)
Cash and cash equivalents ����������������� ¥7,264,647 ¥6,423,084$59,410,591(49,192)$59,361,399

4. TRADING SECURITIES AND SECURITIESThe amounts shown in the following tables include “Securities,” trading securities in “Trading assets,” and trust beneficiary right in “Monetary claims bought,”
as described in the consolidated balance sheet�
Valuation differences recognized as income and expenses as of March 31,
2022 and 2021, were as follows:¥(14)$(120)¥(8)

Securities as of March 31, 2022 and 2021, consisted of the following:Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Japanese national government bonds ���� ¥ 811,822 ¥ 656,315
Japanese local government bonds ������ 1,066,241 1,027,789
Japanese corporate bonds������������������
867,118
826,572
Japanese corporate stocks �����������������
258,262
269,909
Other securities ��������������������������������� 1,678,855 1,552,657
Total ������������������������������������������������� ¥4,682,301 ¥4,333,243$ 6,633,620
8,712,551
7,085,461
2,110,336
13,718,384$38,260,352

The cost and aggregate fair value of available-for-sale securities andheld-to-maturity securities as of March 31, 2022 and 2021, were as follows:

March 31, 2022

Cost

Millions of Yen
Unrealized Unrealized
Gains
LossesSecurities classified as:
Available-for-sale: ���������������� ¥4,352,411 ¥184,989
Equity securities ��������������� 122,610 133,737
Debt securities: ���������������� 2,607,580
2,917Japanese national
government bonds ����� 768,689
683
Japanese local
government bonds ����� 1,067,204
1,286Japanese corporate
bonds ������������������������ 771,686
946
Others: ���������������������������� 1,622,220 48,334
Foreign bonds ������������� 981,627
4,625
Others������������������������� 640,593 43,709
Held-to-maturity: ������������������ 158,914
191
Japanese national
government bonds ����������
57,816—
Japanese local
government bonds ����������
599
0Japanese corporate
bonds ���������������������������� 100,497
191

Fair Value

March 31, 2022

754,006

2,849

1,065,641

6,012
29,66818,896
10,771
695

766,620
1,640,886
967,355
673,530
158,410366

57,450

0

599

328

100,360

Cost

78

Fair Value¥18,944 ¥4,147,056
3,032
265,8075,424 2,357,413
3,239

597,473373

1,027,189

1,811
10,487
5,130
5,357
150

732,749
1,523,835
959,530
564,304
154,076

958,835

—

600

140

94,640Thousands of U.S. Dollars
Unrealized Unrealized
Gains
LossesFair Value

Securities classified as:
Available-for-sale: ���������������� $35,564,732 $1,511,599
Equity securities ��������������� 1,001,882 1,092,808
Debt securities: ���������������� 21,307,247
23,837
Japanese national
government bonds ����� 6,281,166
5,586
Japanese local
government bonds ����� 8,720,419
10,514
Japanese corporate
bonds ������������������������ 6,305,661
7,737
Others: ���������������������������� 13,255,603 394,954
Foreign bonds ������������� 8,021,142
37,793
Others������������������������� 5,234,461 357,161
Held-to-maturity: ������������������ 1,298,531
1,565Japanese national
government bonds ����������
472,432—
Japanese local
government bonds ����������
4,903
0Japanese corporate
bonds ����������������������������
821,196
1,565¥56,058 ¥4,481,342
2,160
254,187
24,229 2,586,268
15,366

Cost

Securities classified as:
Available-for-sale: ���������������� ¥3,936,277 ¥229,723
Equity securities ��������������� 126,326 142,514
Debt securities: ���������������� 2,354,930
7,906Japanese national
government bonds ����� 599,043
1,670Japanese local
government bonds ����� 1,024,117
3,444Japanese corporate
bonds ������������������������ 731,770
2,791
Others: ���������������������������� 1,455,020 79,302
Foreign bonds ������������� 923,848 40,812
Others������������������������� 531,172 38,489
Held-to-maturity: ������������������ 153,263
963
Japanese national
government bonds ����������
58,841
3
Japanese local
government bonds ����������
599
0Japanese corporate
bonds ����������������������������
93,822
959

Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Trading securities ��������������������������������

March 31, 2021

Millions of Yen
Unrealized Unrealized
Gains
Losses$458,069 $36,618,262
17,6572,077,034
197,983 21,133,101
125,565

6,161,188

23,284

8,707,648

49,134242,429
154,41088,0195,683

6,264,265
13,408,128
7,904,526
5,503,602
1,294,414

2,993

469,439

2

4,900

2,687

820,074

Information for available-for-sale securities, which were sold during theyears ended March 31, 2022 and 2021, is as follows:

March 31, 2022

¥6,354
609
607
—
2
1,384
418
966
¥8,348Millions of Yen
2022
2021

¥ 1,266
1,275
1,275
—
—
9,332
2,705
6,626
¥11,873

Amounts recorded in the consolidatedbalance sheets ���������������������������������
Valuation gain (loss) included in the
consolidated statements of income ����¥13,763
19
12
3
4
8,958
229
8,728
¥22,741$51,922
4,981
4,964
—
17
11,312
3,416
7,896$68,215¥2,027¥1,970$16,565

57

(32)

473

Unrealized gains on available-for-sale securities as of March 31, 2022 and
2021, consisted of the following:
Millions of Yen
2022
2021

Unrealized gains: ������������������������������� ¥130,642
Available-for-sale securities
130,642
Deferred tax liabilities:
39,091
Unrealized gains on available-for-salesecurities before adjustments byownership share ������������������������������� 91,550
Noncontrolling interests ����������������������
—Unrealized gains on available-for-salesecurities ����������������������������������������� ¥91,550

¥

464
2,024
2,012
12
—
16,9391,821
15,117¥19,429¥211,592
211,592
63,578

Thousands of
U.S. Dollars
2022$1,067,512
1,067,512
319,429

148,013—748,083—¥148,013$748,083

As of March 31, 2022 and 2021, the total unrealized gains include an unrealized gain of ¥1,711 million ($13,981 thousand) and ¥814 million, respectively, on available-for-sale securities contained in certain fund�Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesAvailable-for-sale:
Equity securities ������������������������������������� $ 148,217
Debt securities: �������������������������������������� 1,176,891
Japanese national government bonds ���� 1,173,587
Japanese local government bonds ������
—Japanese corporate bonds������������������
3,304
Others: �������������������������������������������������� 1,943,211
Foreign bonds ������������������������������������ 847,449
Others ����������������������������������������������� 1,095,762
Total ���������������������������������������������������������� $3,268,319

Thousands of
U.S. Dollars
2022

6. UNREALIZED GAINS ON AVAILABLE-FOR-SALE SECURITIESMillions of Yen
Realized
Realized
Proceeds
Gains
LossesAvailable-for-sale:
Equity securities ������������������������������������� ¥ 24,696
Debt securities: �������������������������������������� 133,905
Japanese national government bonds ���� 115,242
Japanese local government bonds ������ 16,685
Japanese corporate bonds������������������
1,977
Others: �������������������������������������������������� 265,981
Foreign bonds ������������������������������������ 43,832
Others ����������������������������������������������� 222,148
Total ���������������������������������������������������������� ¥424,582

March 31, 2022

Money held in trust for trading purposes as of March 31, 2022 and 2021,
consisted of the following:

Millions of Yen
Realized
Realized
Proceeds
Gains
LossesAvailable-for-sale:
Equity securities ������������������������������������� ¥ 18,138
Debt securities: �������������������������������������� 144,027
Japanese national government bonds ���� 143,623
Japanese local government bonds ������
—Japanese corporate bonds������������������
404
Others: �������������������������������������������������� 237,810
Foreign bonds ������������������������������������ 103,710
Others ����������������������������������������������� 134,099
Total ���������������������������������������������������������� ¥399,976

March 31, 2021

5. MONEY HELD IN TRUST

7. LOANS AND BILLS DISCOUNTED
Claims based on Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions as of March 31, 2022 and 2021 are as follows:
The claims consist of those included in the accounts of bonds included in“Securities” (its principal’s redemption and interest payments are guaranteed, inwhole or in part, and the corporate bonds issue is limited to a private placementof the securities (Article 2, Item 3 of the Financial Instruments and ExchangeAct); “Loans,” “foreign exchanges assets,” accrued interest, and suspense payment in “Other assets” and “Customers’ liabilities for acceptances and guarantees” in the consolidated balance sheet, and securities in the notes (limited tothose under a loan for use or lease agreement) that are in case of loan�

$10,349
10,42010,420——76,256
22,10554,151$97,025

Marketable available-for-sale securities, whose fair value significantly declined in comparison with the acquisition cost and whose fair value is not considered likely to recover to their acquisition cost, are written down and recognized
as impairment losses�
The impairment losses on marketable available-for-sale securities for theyears ended March 31, 2022 and 2021, were ¥286 million ($2,340thousand)and ¥6,253 million, respectively�
Pursuant to “Practical Guidelines for Accounting for Financial Instruments”(JICPA Accounting Committee Report No� 14, April 14, 2015), the criteria for determining whether the fair value is “significantly declined” defined that securities
whose fair value has declined by 30% or more of the acquisition cost are
deemed to be impaired�
As of March 31, 2022 and 2021, securities included equity investments inunconsolidated subsidiaries and associated companies of ¥0 million ($0 thousand) and ¥9 million and capital subscriptions of ¥4,630 million ($37,838 thousand) and ¥3,417 million, respectively�

Millions of Yen
2022
2021

Bankrupt and substantiallybankrupt claims�������������������������������� ¥ 13,816
Doubtful claims ���������������������������������� 151,196
Claims past due for three months
or more��������������������������������������������
83
Restructured claims ���������������������������
27,523
Total ������������������������������������������������� ¥192,619¥ 10,328
143,245
110
27,382¥181,068

Thousands of
U.S. Dollars
2022$ 112,896
1,235,470
681
224,900$1,573,945

The amounts above are stated before the deduction of the allowance forloan losses�
Bankrupt and substantially bankrupt claims” are claims against debtors inbankruptcy due to the commencement of bankruptcy procedures, the commencement of reorganization proceedings, the petition for the commencement of
rehabilitation proceedings, and claims equivalent these�
“Doubtful claims” are claims that the debtor is not yet in a state of bankruptcy, but its financial position and business performance have deteriorated,
and it is highly probable that principal’s collection and interest on claims in accordance with the terms of the contract will not be received� These claims do not
fall under the category of “Bankrupt and substantially bankrupt claims�”79“Loans past due for three months or more” include accruing loans for whichprincipal or interest is past due three months or more�“Restructured loans” are loans to borrowers in financial difficulty to whom
the Group has provided financial support through modification of the lending
terms to be more favorable to the borrower, including reduction of interest rates,
suspension of repayment of principal and interest, and debt forgiveness�

Under certain conditions, such as exchanges of fixed assets of similar kinds
and sales and purchases resulting from expropriation, Japanese tax laws permit
companies to defer the profit arising from such transactions by reducing the costof the assets acquired or by providing a special reserve in the equity section� As
of March 31, 2022 and 2021, such deferred profit amounted to ¥9,720 million($79,432 thousand) and ¥9,955 million, respectively�
Under the “Law of Land Revaluation,” one banking subsidiary elected a
onetime revaluation of its own-use land to a value based on real estate appraisal
information as of March 31, 1998� The resulting revaluation reserve for land represents unrealized appreciation of land and is stated, net of income taxes, as acomponent of equity� There was no effect on the consolidated statement of income� Continuous readjustment is not permitted, unless the land value subsequently declines significantly such that the amount of the decline in value should
be removed from the revaluation reserve for land account and related deferred
tax liabilities� As of March 31, 2022 and 2021, the carrying amount of the land
after the above onetime revaluation exceeded the market value by ¥21,060 million ($172,090 thousand) and ¥23,355 million, respectively�

Change to Presentation of Financial Information(Change in Presentation according to enforcement “Cabinet Office Ordinance forPartial Revision of the Ordinance for Enforcement of the Banking Act, etc�”)With the enforcement of the “Cabinet Office Ordinance for Partial Revision of theOrdinance for Enforcement of the Banking Act, etc�” (Cabinet Office OrdinanceNo� 3 of January 24, 2020) on March 31, 2022, the classification of therisk-monitored loans has been shown in accordance with the classification of
disclosure receivables based on the Act on Emergency Measures for the Revitalization of Financial Functions, etc�Contracts of overdraft facilities and loan commitment limits are contracts
under which the consolidated banking subsidiaries and certain consolidated subsidiaries lend to customers up to the prescribed limits in response to customer
applications for loans as long as there is no violation of any condition in the contracts� As of March 31, 2022 and 2021, the amounts of unused commitments
were ¥2,894,178 million ($23,649,111 thousand) and ¥2,969,415 million, respectively� As of March 31, 2022 and 2021, the amounts of unused commitments whose remaining contract terms were within one year were ¥1,935,400
million ($15,814,681 thousand) and ¥1,935,453 million, respectively�
As many of these commitments expire without being drawn down, the unused amount does not necessarily represent a future cash requirement� Most ofthese contracts have conditions, whereby the consolidated banking subsidiaries
and certain consolidated subsidiaries can refuse customer applications for loans
or decrease the contract limits for certain reason (e�g�, changes in financial situation and deterioration in customers’ creditworthiness)� At the inception of thecontracts, the consolidated banking subsidiaries and certain consolidated subsidiaries obtain real estate, securities, or other assets as collateral if considered tobe necessary� Subsequently, the consolidated banking subsidiaries and certain
consolidated subsidiaries perform periodic reviews of the customers’ businessresults based on the internal rules and take necessary measures to reconsider
conditions in the contracts and/or require additional collateral and guarantees�
Discounting bills are treated as secured lending transactions� As of March
31, 2022 and 2021, consolidated banking subsidiaries have the right to sell or
repledge bills discounted and foreign exchange bills bought and their total facevalue was ¥27,118 million ($221,589 thousand) and ¥25,158 million, respectively�

9. INTANGIBLE FIXED ASSETS
Intangible fixed assets as of March 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Software�������������������������������������������� ¥12,628
Other ������������������������������������������������
3,267
Total ������������������������������������������������� ¥15,896¥14,705
3,422¥18,127

Thousands of
U.S. Dollars
2022$103,194
26,703$129,897

10. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEESAll contingent liabilities arising from acceptances and guarantees are reflected in
acceptances and guarantees in the consolidated balance sheet� As a contra account, customers’ liabilities for acceptances and guarantees are presented asassets, representing the consolidated banking subsidiaries’ and certain consolidated subsidiaries’ rights of indemnity from the applicants�
Guarantee obligations for private placement bonds included in “Securities”(provided in accordance with the Article 2-3 of the “Financial Instruments andExchange Act”) as of March 31, 2022 and 2021, were ¥184,934 million($1,511,147 thousand) and ¥181,095 million, respectively�

11. ASSETS PLEDGED AS COLLATERAL
Assets pledged as collateral and the related liabilities as of March 31, 2022 and
2021, were as follows:

8. TANGIBLE FIXED ASSETS
Tangible fixed assets as of March 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Buildings ������������������������������������������� ¥ 37,076
Land ������������������������������������������������� 52,666
Leased assets������������������������������������
31
Construction in progress���������������������
622
Other ������������������������������������������������ 12,405
Total ������������������������������������������������� ¥102,802¥ 37,717
55,44243511
13,697¥107,412

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Assets pledged as collateral:
Securities �������������������������������������� ¥2,818,331 ¥2,521,026
Loans and bills discounted ������������� 2,632,593 2,474,394
Total ��������������������������������������������� ¥5,450,924 ¥4,995,420
Related liabilities to above assets:
Deposits ��������������������������������������� ¥ 208,950 ¥ 198,809
Payables under repurchaseagreements ��������������������������������� 148,165
130,255
Payables under securities lendingtransactions ��������������������������������� 826,826
620,749
Borrowed money ��������������������������� 3,789,901 3,387,158$302,963
430,356
254
5,089
101,365$840,026

The accumulated depreciation of tangible fixed assets as of March 31,
2022 and 2021, amounted to ¥124,260 million ($1,015,368 thousand) and¥126,085 million, respectively�

Thousands of
U.S. Dollars
2022$23,029,344
21,511,630$44,540,974$ 1,707,388
1,210,697
6,756,219
30,968,307

Additionally, securities amounting to ¥5,380 million ($43,966 thousand)and ¥5,436 million as of March 31, 2022 and 2021, respectively, were pledged
as collateral for settlements of exchange or as substitute securities for margins
on futures transactions�80Regarding the lump-sum retirement benefit plans adopted by certain consolidated subsidiaries, liability for retirement benefits and retirement benefit expenses are calculated by the simplified method�

Moreover, other assets included the following:
Millions of Yen
2022
2021

Deposits for central counterparty��������� ¥107,721
Cash collateral paid for financial
instruments �������������������������������������� 26,935
Cash collateral paid for transactions
involving public funds �����������������������
2,101
Guarantee deposits ����������������������������
1,427

Thousands of
U.S. Dollars
2022¥94,710$880,220

9,155

220,093

2,063
1,759

17,174
11,664(2) Defined benefit plans(a) The changes in defined benefit obligation for the years ended March 31, 2022
and 2021, were as follows:
Millions of Yen
2022
2021

Balance at beginning of year��������������� ¥121,046 ¥120,372
Current service cost �����������������������
3,427
3,649
Interest cost ����������������������������������
510
432
Actuarial losses �����������������������������
1,012
2,775
Benefits paid ���������������������������������
(6,112)(6,301)
Prior service cost ���������������������������
315—
Others ������������������������������������������
3,530
117
Balance at end of year������������������������ ¥123,728 ¥121,046

12. BORROWED MONEY
Borrowed money as of March 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Borrowed money of which theweighted-average annual interest
rates were 0�01%, due from April
2022 to June 2035 �������������������������� ¥3,795,700 ¥3,394,050

Thousands of
U.S. Dollars
2022$31,015,692

Year Ending March 31

Millions of Yen

2023�������������������������������������������������
2024�������������������������������������������������
2025�������������������������������������������������
2026�������������������������������������������������
2027�������������������������������������������������

¥3,584,657
86,77930,34493,751
152$29,291,201
709,098
247,953
766,068
1,243$ 989,101
28,003
4,169
8,275(49,950)
2,576
28,846$1,011,021*Figures above exclude retirement and benefit plans calculated by the simplified method�

Annual maturities of borrowed money as of March 31, 2022, for the next
five years were as follows:
Thousands of
U.S. Dollars

Thousands of
U.S. Dollars
2022(b) The changes in plan assets for the years ended March 31, 2022 and 2021,
were as follows:
Millions of Yen
2022
2021

Balance at beginning of year��������������� ¥153,167 ¥130,723
Expected return on plan assets �������
2,967
2,527
Actuarial gains ������������������������������
1,167
20,158Contributions from the employer �����
3,335
3,435
Benefits paid ���������������������������������
(3,657)(3,713)
Others ������������������������������������������
34
36
Balance at end of year������������������������ ¥157,015 ¥153,167

13. RETIREMENT AND PENSION PLANS(1) Outline of the adopted retirement benefit plans
The Company’s banking subsidiary, The Joyo Bank, Ltd� (“Joyo”), and its consolidated subsidiaries have adopted defined employees’ retirement benefit plans,i�e�, the employees’ welfare pension fund supplemented by the employees’ public pension system and lump-sum retirement benefits�In addition, extra benefits that are excluded from the projected benefit obligation in employees’ retirement benefits accounting may be paid on a case-bycase basis� Joyo has established an employees’ retirement benefit trust�
The Company’s banking subsidiary, Ashikaga Bank, Ltd� (“Ashikaga”), andits consolidated subsidiaries have adopted funded and unfunded defined benefit
plans, as well as defined contribution plans to provide for the employees’ retirement benefits� All of the retirement benefit plans are managed in an integrated
manner through retirement benefit points that are determined based on years ofservice and capabilities of employees, as well as employee performance evaluation� The determined points are then allocated to each plan�The defined benefit pension plans (funded plans) have introduced pension
plans similar to cash balance plan-type pension plans� Under the plan, each participant will set up a virtual individual account where pension or lump-sum payments will be made based on the accumulated retirement benefit points
allocated� A retirement benefit trust is established for this defined benefit pension
plan�
Under the lump-sum retirement benefit plans (unfunded plans that have become funded plans due to the establishment of a retirement benefit trust), lumpsum payments are made based on the accumulated retirement benefit points
allocated� In some cases, premium severance payments may be made to employees in conjunction with the employees’ retirement and other�
Under the defined contribution plans, the contribution amount is decided
based on the accumulated retirement benefit points allocated�
The Company’s consolidated subsidiaries are members of the defined benefit pension funds under the multiemployer plans, and as the amount of plan assets corresponding to the contribution of each subsidiary may be reasonably
calculated, such information is included in the notes to defined benefit plans�

Thousands of
U.S. Dollars
2022$1,251,577
24,251
9,538
27,253(29,884)280$1,283,015

Millions of Yen
2022
2021

Liability for retirement benefits ������������ ¥ 324 ¥ 249
Asset for retirement benefits ��������������� (32,462) (31,189)
Net asset arising from defined benefit
obligation ����������������������������������������� ¥(32,137) ¥(30,940)b� Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the longterm rates of return, which are expected currently and in the future from the various components of the plan assets�

Thousands of
U.S. Dollars
2022$ 2,654(265,261)(i) Assumptions used for the years ended March 31, 2022 and 2021, were set
forth as follows:$(262,607)*Figures above include retirement and benefit plans calculated by the simplified method�2022(e) The components of net periodic benefit costs for the years ended March 31,
2022 and 2021, were as follows:

Service cost ���������������������������������������
Interest cost���������������������������������������
Expected return on plan assets �����������
Recognized actuarial losses (gains) �����
Amortization of prior service cost ��������
Retirement benefit expense calculatedby the simplified method �������������������
Others �����������������������������������������������
Net periodic benefit costs �������������������

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022¥ 3,427510(2,967)(487)
23¥ 3,649432(2,527)
1,611—$ 28,003
4,169(24,251)(3,980)
193

301
3,476
¥ 4,284326(14)¥ 3,478

2,465
28,410$ 35,010(3) Defined contribution plans
The amounts of the required contribution to the defined contribution plans of certain consolidated subsidiaries were ¥689 million ($5,637 thousand) and ¥702
million as of March 31, 2022 and 2021, respectively�

14. EQUITY
Japanese companies are subject to the Companies Act� The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the
fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting� Additionally, for companies that meet certain criteria, including (1) having a Board of Directors, (2) having independent auditors, (3) having
an Audit & Supervisory Board, and (4) the term of service of the directors beingprescribed as one year rather than the normal two-year term by its articles ofincorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribedso in its articles of incorporation� With respect to the third condition above, theBoard of Directors of companies with (a) board committees (namely, appointment committee, compensation committee, and audit committee) or (b) an audit and supervisory committee (as implemented under the Companies Act
effective May 1, 2015) may also declare dividends at any time because suchcompanies, by nature, meet the criteria under the Companies Act� The Company is organized as a company with an audit and supervisory committee� The
Company meets all the above criteria and, accordingly, the Board of Directors
may declare dividends (except for dividends in kind) at any time during the fiscal year�
The Companies Act permits companies to distribute dividends in kind(noncash assets) to shareholders subject to certain limitations and additional
requirements�
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company sostipulate� The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock� The limitation is definedas the amount available for distribution to the shareholders, but the amount ofequity after dividends must be maintained at no less than ¥3 million�

(f) Amounts recognized in other comprehensive income (before income tax effect)
in respect of defined retirement benefit plans for the years ended March 31,
2022 and 2021, were as follows:
Millions of Yen
2022
2021

Prior service cost �������������������������������
Actuarial losses (gains) �����������������������
Total �������������������������������������������������

291
350
¥641

—
(18,994)¥(18,994)

Thousands of
U.S. Dollars
2022

2,383
2,860
$5,243*Figures above exclude retirement and benefit plans calculated by the simplified method�(c) The changes in liabilities for retirement benefits adopting the simplified method for the years ended March 31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

Balance at beginning of year���������������
Retirement benefit expense ������������
Benefits paid ���������������������������������
Contribution to the defined benefit
pension plan ��������������������������������
Other ��������������������������������������������
Balance at end of year������������������������

Thousands of
U.S. Dollars
2022¥1,181301(148)¥1,261326(121)$ 9,655
2,465(1,211)(198)(3)¥1,133(204)(80)¥1,181(1,620)(31)$ 9,259(d) Reconciliation between the liabilities recorded in the consolidated balance
sheets and the balances of defined benefit obligation and plan assets was asfollows:
Millions of Yen
2022
2021

Funded defined benefit obligation�������� ¥ 127,315 ¥ 124,735
Plan assets ���������������������������������������� (160,586) (156,858)
Total ������������������������������������������������� (33,271) (32,122)
Unfunded defined benefit obligation ����
1,133
1,181
Net asset arising from defined benefit
obligation ����������������������������������������� ¥ (32,137) ¥ (30,940)

81

Thousands of
U.S. Dollars
2022$ 1,040,330(1,312,197)(271,867)
9,259(g) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March
31, 2022 and 2021, were as follows:

Unrecognized prior service cost ������������
Unrecognized actuarial gains ���������������
Total �������������������������������������������������

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

291
(7,745)¥(7,453)

2,383(63,288)$(60,905)—(8,077)¥(8,077)(h) Plan assetsa� Components of plan assets
Plan assets as of March 31, 2022 and 2021, consisted of the following:
Debt investments �������������������������������������������������������
Equity investments �����������������������������������������������������
General accounts �������������������������������������������������������
Others �����������������������������������������������������������������������
Total �������������������������������������������������������������������������

2022

2021

40.7%
41.7%
9.4%
8.2%
100.0%

43�6%
41�5%
9�5%
5�4%
100�0%

2021

Discount rate ������������������������������������������� 0.30% — 0.60% 0�20% — 0�50%
Expected rate of return on plan assets�������
2.50% 2�50%
Expected rate of increase in salary ������������ 4.36% — 9.00% 4�49% — 9�00%* As of March 31, 2022 and 2021, total plan assets that were set up on corporate pension
plans include a retirement benefit trust of 33�2% and 33�5%, respectively�

$ (262,607)

82

b. Increases/Decreases and Transfer of Common Stock, Reserve, andSurplus
The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on theequity account that was charged upon the payment of such dividends until theaggregate amount of the legal reserve and additional paid-in capital equals
25% of capital stock� Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation� The Companies Act also provides that capital stock, legal reserve, additional paid-in
capital, other capital surplus, and retained earnings can be transferred among
the accounts within equity under certain conditions upon resolution of theshareholders�c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors� The
amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders, which is determined by a specific formula� Under the Companies Act, stock acquisition rights are presented as a separate
component of equity� The Companies Act also provides that companies canpurchase both treasury stock acquisition rights and treasury stock� Such treasury stock acquisition rights are presented as a separate component of equity
or deducted directly from stock acquisition rights�

(2) Cash Dividends Per Share
Cash dividends per share for the years ended March 31, 2022 and 2021, were as follows:Year ended March 31, 2022
Dividends paid in the fiscal year ended March 31, 2022
Total Amount(Millions of Yen/Thousands of
U.S. Dollars)

Cash dividends approved at the Board of Directors’ meeting held on May 12, 2021:

Common stock¥6,379($52,129)
Total Amount(Millions of Yen/Thousands of
U.S. Dollars)

Cash dividends approved at the Board of Directors’ meeting held on Nov� 12, 2021:

Common stock

As of April 1, 2021

Shares in Thousands
Changes During the Year
Increase
Decrease

As of March 31, 2022

1,179,055
1,179,055

1
90,000*—90,00019,143
19,14380,609*80,60990,453*90,453

3

1,089,055
1,089,055
9,299
9,299

*1 The number of issued stock decreased due to retirement of treasury stock in accordance with Article 178 of the Companies Act�
*2 The number of shares of treasury stock increased by 80,601 thousand shares due to purchase of the Company’s own shares, 2 thousand shares due to purchases of shares less than the
trading unit, and 6 thousand shares due to acquisitions of restricted stocks without charge�*3 The number of shares of treasury stock decreased by 1 thousand shares due to sales to shareholders in response to their demand to buy additional shares up to the trading unit, 338 thousand
shares due to the disposal of the Company’s own shares as restricted stocks, 113 thousand shares due to exercise of the stock acquisition rights, and 90,000 thousand shares due to retirement of treasury stock�As of April 1, 2020——

19,74519,74511*
11¥5,938($48,526)

Total Amount(Millions of Yen)

Cash dividends approved at the Board of Directors’ meeting held on May 13, 2020:

Common stock¥6,376
Total Amount(Millions of Yen)

Cash dividends approved at the Board of Directors’ meeting held on Nov� 9, 2020:

Common stock¥6,379¥5�50($0�04)

Sep� 30, 2021

Effective Date

Dec� 2, 2021

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date¥5�50($0�04)

Mar� 31, 2022

Effective Date

Jun� 2, 2022

Per Share Amount(Yen)
Dividend Record Date

¥5�50*

Mar� 31, 2020

Per Share Amount(Yen)
Dividend Record Date

¥5�50

Sep� 30, 2020

Effective Date

Jun� 2, 2020
Effective Date

Dec� 2, 2020

*Of the per share amount above, ¥1�00 is the amount of a commemorative dividend for the business integration�

Total Amount(Millions of Yen)

¥6,379As of March 31, 2021

1,179,055
1,179,055

612*
612

2

19,143
19,143*1 The number of shares of treasury stock increased by 2 thousand shares due to purchases of shares less than the trading unit and by 8 thousand shares due to acquisitions of restricted stocks
without charge�*2 The number of shares of treasury stock decreased by 1 thousand shares due to sales to shareholders in response to their demand to buy additional shares up to the trading unit, by 312 thousand shares due to the disposal of the Company’s own shares as restricted stocks, and by 298 thousand shares due to exercise of the stock acquisition rights�

83

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date

Jun� 2, 2021

Year ended March 31, 2021:
Dividends paid in the fiscal year ended March 31, 2021

Common stock——1

Common stock

Cash dividends approved at the Board of Directors’ meeting held on May 13, 2021:

Shares in Thousands
Changes During the Year
Increase
Decrease

1,179,055
1,179,055

Mar� 31, 2021

Effective Date

Dividends to be paid after March 31, 2021

The changes in the number and class of issued stock and treasury stock for the year ended March 31, 2021, were as follows:

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total

Total Amount(Millions of Yen/Thousands of
U.S. Dollars)

Cash dividends approved at the Board of Directors’ meeting held on May 13, 2022:

—

2

¥5�50
($0�04)

Dividends to be paid after March 31, 2022

(1) Capital Stock Changes during the YearThe changes in the number and class of issued stock and treasury stock for the year ended March 31, 2022, were as follows:

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total¥6,051($49,453)

Per Share Amount(Yen /U.S. Dollars) Dividend Record Date84

Per Share Amount(Yen)
Dividend Record Date

¥5�50Mar� 31, 2021

Effective Date

Jun� 2, 2021

The stock option activity was as follows:

15. STOCK OPTIONSThe Company’s stock option plans grant options to directors and others to purchase certain shares of the Company’s common stock in the respective exercise periods�
The stock options outstanding as of March 31, 2022, were as follows:
Stock Options

Mebuki Financial Group, Inc�
1st Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
2nd Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
3rd Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
5th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
7th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
9th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
11th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
12th Series of Stock
Acquisition Rights*1
Mebuki Financial Group, Inc�
13th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
14th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
15th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
16th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
17th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
18th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
19th Series of Stock
Acquisition Rights
Mebuki Financial Group, Inc�
20th Series of Stock
Acquisition Rights

Number of Options
Granted (Shares)

Date of Grant

ExercisePrice

10 directors of Joyo*2

16,833

August 24, 2009*3¥1

From October 1, 2016,
to August 24, 2039

10 directors of Joyo*2

23,634

July 21, 2010*3¥1

From October 1, 2016,
to July 21, 2040

10 directors of Joyo*2

43,430July 20, 2011*3¥1

From October 1, 2016,
to July 20, 2041

Persons Granted

Exercise Period

10 directors of Joyo*2

42,024

July 19, 2012*3¥1

From October 1, 2016,
to July 19, 2042

10 directors of Joyo*2

39,241

July 18, 2013*3¥1

From October 1, 2016,
to July 18, 2043

10 directors of Joyo*2

40,656

July 18, 2014*3¥1

From October 1, 2016,
to July 18, 2044

10 directors of Joyo*2

40,041

July 17, 2015*3¥1

From October 1, 2016,
to July 17, 2045

13 executive officers of Joyo*2

22,830July 17, 2015*3¥1

From October 1, 2016,
to July 17, 2045

29 directors of
the Company, Joyo and Ashikaga

142,176

December 6, 2016

¥1

From December 7, 2016,
to December 6, 2046

16 executive officers of Joyo

63,910December 6, 2016

¥1

From December 7, 2016,
to December 6, 2046

29 directors of
the Company, Joyo and Ashikaga

135,990

August 9, 2017

¥1

From August 10, 2017,
to August 9, 2047

16 executive officers of Joyo

62,024

August 9, 2017

¥1

From August 10, 2017,
to August 9, 2047

24 directors of
the Company, Joyo and Ashikaga

127,508

August 14, 2018¥1

From August 15, 2018,
to August 14, 2048

34 executive officers of Joyo and Ashikaga

147,282

August 14, 2018¥1

From August 15, 2018,
to August 14, 2048

23 executive officers of Joyo and Ashikaga

201,104

August 20, 2019¥1

From August 21, 2019,
to August 20, 2049

29 executive officers of Joyo and Ashikaga

193,295

August 20, 2019¥1

From August 21, 2019,
to August 20, 2049

*1 As a result of the share exchange conducted between the Company and Joyo on October 1, 2016, stock acquisition rights of the Company were allotted to the holders of stock acquisitionrights of Joyo based on the share exchange ratio�
*2 The number is initially granted by Joyo�
*3 The date is initially granted by Joyo�

85

Mebuki FG
1st

Mebuki FG
2nd

Mebuki FG
3rd

Mebuki FG
5thYear ended March 31, 2022
Non-vested (shares):
April 1, 2021 — Outstanding
GrantedCanceled
VestedMarch 31, 2022 — Outstanding

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2021 — Outstanding
VestedExercised
Canceled
March 31, 2022 — Outstanding

6,733
—
—
—
6,733

9,453
—
—
—
9,453

14,040———14,04013,586———
13,586

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
—
—
¥417
$3�41

¥1
$0�01
—
—
¥297
$2�43

¥1
$0�01
—
—
¥300
$2�45

¥1
$0�01
—
—
¥310
$2�53

Mebuki FG
7th

Mebuki FG
9th

Mebuki FG
11th

Mebuki FG
12thYear ended March 31, 2022
Non-vested (shares):
April 1, 2021 — Outstanding
GrantedCanceled
VestedMarch 31, 2022 — Outstanding

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2021 — Outstanding
VestedExercised
Canceled
March 31, 2022 — Outstanding

12,466———
12,466

12,916———
12,916

12,797
—
3,302
—
9,495

2,378
—
2,378
—
—

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
—
—
¥518
$4�23

¥1
$0�01
—
—
¥500
$4�09

¥1
$0�01
¥258
$2�11
¥680
$5�56

¥1
$0�01
¥258
$2�11
¥708
$5�79

86

Mebuki FG
13thYear ended March 31, 2022
Non-vested (shares):
April 1, 2021 — Outstanding
GrantedCanceled
VestedMarch 31, 2022 — Outstanding
Vested (shares):
April 1, 2021 — Outstanding
VestedExercised
Canceled
March 31, 2022 — Outstanding
Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

Mebuki FG
14th

—
—
—
—
—

—
—
—
—
—

33,005—
5,565—
27,44011,550
—
3,850
—
7,700

¥1
$0�01
¥258
$2�11
¥345
$2�82
Mebuki FG
17th

Mebuki FG
15th

¥1
$0�01
¥258
$2�11
¥374
$3�06
Mebuki FG
18th

Mebuki FG
16th

—
—
—
—
—

—
—
—
—
—

38,297—
5,333—
32,96419,198—4,430—
14,768

¥1
$0�01
¥258
$2�11
¥360
$2�94
Mebuki FG
19th

¥1
$0�01
¥258
$2�11
¥390
$3�19
Mebuki FG
20thYear ended March 31, 2022
Non-vested (shares):
April 1, 2021 — Outstanding
GrantedCanceled
VestedMarch 31, 2022 — Outstanding

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Vested (shares):
April 1, 2021 — Outstanding
VestedExercised
Canceled
March 31, 2022 — Outstanding

65,749—7,523—
58,22658,746—
17,376—
41,370130,377—
28,152—102,225

137,445—
35,343—102,102

Exercise price(Yen/US Dollars)
Average stock price at exercise(Yen/US Dollars)
Fair value price at grant date
(Yen/US Dollars)

¥1
$0�01
¥258
$2�11
¥319
$2�61

¥1
$0�01
¥252
$2�06
¥348
$2�84

¥1
$0�01
¥258
$2�11
¥179
$1�46

¥1
$0�01
¥253
$2�07
¥206
$1�68

16. PER SHARE OF COMMON STOCK

17. OTHER INCOME(1) EPS
Reconciliation of the differences between basic and diluted EPS for the years
ended March 31, 2022 and 2021, was as follows:

Other income for the years ended March 31, 2022 and 2021, consisted of thefollowing:

Millions of Thousands ofYen
SharesNet Income
WeightedAttributable
Averageto Owners of
Sharesthe Parent

Year Ended March 31, 2022
Basic EPS —Net income available
to common shareholders��������
Effect of dilutive securities:
Warrants ��������������������������������
Diluted EPS —Net income
for computation ���������������������
Year Ended March 31, 2021
Basic EPS —Net income available
to common shareholders��������
Effect of dilutive securities
Warrants �������������������������������
Diluted EPS —Net income
for computation ���������������������Yen

Millions of Yen
2022
2021

U.S. Dollars

Gain on sales of stock andother securities �������������������������������� ¥ 7,320
Recoveries of write-off of claims ���������
3,863
Gain on disposal of fixed assets ����������
261
Other ������������������������������������������������ 36,177
Total ������������������������������������������������� ¥47,623

EPS¥42,958

1,102,355¥38.96

$0.32

—

466

—

—

¥42,958

1,102,822¥38.95$0.32

General and administrative expenses for the years ended March 31, 2022 and
2021, consisted of the following:
Millions of Yen
2022
2021

¥36,478

1,159,757¥31�45—642—¥36,478

1,160,400¥31�43

Salaries and allowances ��������������������� ¥ 51,227
Periodic benefit costs �������������������������
4,870
Other ������������������������������������������������ 58,526
Total �������������������������������������������������� ¥114,624

2022

Total equity per share������������������������� ¥888.10

2021

U.S. Dollars
2022¥861�05$7.26

Total equity���������������������������������������� ¥959,063
Deductions from total equity ���������������
130
Total equity attributable
to common shareholders������������������� ¥958,932

Millions of Yen
2022
2021

Loss on sales of stocks and othersecurities ����������������������������������������� ¥ 3,474
Write-off of loans ������������������������������
5,368
Impairment on fixed assets*����������������
3,814
Loss on disposal of fixed assets ����������
684
Other ������������������������������������������������ 34,846
Total �������������������������������������������������� ¥48,189

Thousands of
U.S. Dollars
2022¥998,906
161$7,836,764
1,069¥998,744$7,835,695¥12,107
5,291
1,562
490
40,862¥60,314

Thousands of
U.S. Dollars
2022$ 28,392
43,871
31,1695,596
284,738$393,766* Impairment losses on long-lived assets were recognized mainly on the properties of theBank’s branches in the Tochigi and Ibaraki prefectures, whose operations were discontinued because the Company believed the investment would not be recoverable� The components of impairment losses on fixed assets for the years ended March 31, 2022 and 2021,
were as follows:

Number of Shares in Thousands
2022
2021

Number of shares of common stock used incomputing total equity pershare at year-end �������������������������������������������������� 1,079,755$418,592
39,798478,237$936,627

Other expenses for the years ended March 31, 2022 and 2021, consisted of thefollowing:

Total equity per share as of March 31, 2022 and 2021, is calculated based on
the following:
Millions of Yen
2022
2021

¥ 51,971
4,062
59,730¥115,763

Thousands of
U.S. Dollars
2022

19. OTHER EXPENSES(2) Total equity per share
Total equity per share as of March 31, 2022 and 2021, was as follows:Yen$ 59,818
31,5702,134
295,619$389,141

18. GENERAL AND ADMINISTRATIVE EXPENSES

Thousands of
U.S. Dollars

Millions of Yen

2022
Buildings ��������������������������������������������������������
Land ��������������������������������������������������������������
Equipment ������������������������������������������������������
Software���������������������������������������������������������
Water supply subscription rights ����������������������
Telephone subscription rights ��������������������������
Leasehold improvements ���������������������������������
Guarantee and lease deposits ��������������������������

1,159,911

The Method Used to Estimate the Number of Stock Options Expected to Vest
Since it is difficult to rationally estimate the number of unexercised options in the future, a method of only reflecting actual unexercised options is adopted�

87¥21,905
2,435
144
34,862¥59,347

Thousands of
U.S. Dollars
2022

88

¥ 371
2,757
313
372
0
—
—
—

2021
¥689
540
147
—
—
130
34
19

2022
$ 3,036
22,533
2,558
3,041
1
—
—
—

20. INCOME TAXES

22. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESThe Group is subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of 30�62% for theyears ended March 31, 2022 and 2021�
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities, as of March 31, 2022
and 2021, were as follows:

Matters Relating to the Conditions of Financial Instruments(1) Group Policies for Financial Instruments
The Group provides comprehensive financial services, such as lease and securities centering on banking� As the central business operation of the Group, theconsolidated banking subsidiaries raise funds by deposits as its basic function asa bank; the consolidated banking subsidiaries also procure funds by call moneytransactions from short-term markets to maintain an adequate degree of liquidity� The consolidated banking subsidiaries manage those funds through lending tocorporate customers and individuals, such as housing loans; investing in securities, mainly bonds; and investing in money markets�
The Group utilizes Asset Liability Management (ALM) to avoid unfavorable
floating interest rate fluctuation of the financial assets and liabilities it holds� As apart of ALM, the Group has entered into derivative transactions�

Millions of Yen
2022
2021

Deferred tax assets:
Allowance for loan losses ��������������� ¥ 33,750 ¥ 31,416
Write-offs of securities �������������������
8,129
8,652
Liability for retirement benefits �������
4,895
4,967
Provision for employee bonuses �����
1,904
1,885
Tax loss carryforwards �������������������
1,441
1,621
Depreciation ����������������������������������
872
833
Provision for reimbursement ofdeposits ��������������������������������������
664
748
Other �������������������������������������������� 10,596
10,642
Subtotal deferred tax assets������� 62,254
60,767Less valuation allowance���������������� (12,426) (13,328)
Total deferred tax assets ����������� 49,827
47,439Deferred tax liabilities:
Unrealized gains on availablefor-sale securities ������������������������ (45,139) (70,365)
Retirement benefit trust �����������������
(4,467)(4,467)
Other ��������������������������������������������
(9,322)(6,739)Total deferred tax liabilities �������� (58,929) (81,573)
Net deferred tax liabilities ������������������� ¥ (9,102) ¥(34,134)

Thousands of
U.S. Dollars
2022$ 275,787
66,42640,004
15,56011,7767,128(2) Nature and Extent of Risks Arising from Financial Instruments
The Group’s financial assets are mainly loans made by the consolidated banking
subsidiaries to domestic corporations and individuals in Japan, which are exposed not only to interest rate fluctuation risks but also to customers’ credit risks�
Securities and investment securities, such as bonds, stocks, and investment
trusts, are possessed to trade, to hold to maturity dates to generate stable interest income, and to promote business relationships with the issuers� These securities are exposed to the issuers’ credit risks, interest rate fluctuation risks, andmarket price fluctuation risks�
The Group’s main financial liabilities are deposits received by the consolidated banking subsidiaries, which are exposed to interest rate fluctuation risks
and liquidity risks� Borrowed money and bonds are exposed to the risks that theGroup may not be able to repay them on their maturity dates if, under certain circumstances, the Group is not able to access a capital market�
The consolidated banking subsidiaries utilize derivative transactions tohedge the customers’ interest and currency risks and to control the interest rate
fluctuation risks in ALM� Derivatives transactions are utilized to hedge interest
rate fluctuation risks, foreign currency exchange rate fluctuation risks, and market price fluctuation risks on the Group’s financial assets and liabilities� Derivatives mainly include interest rate swaps, currency swaps, and bond futures andare exposed to the interest rate fluctuation risks, market price fluctuation risks,
foreign currency exchange rate fluctuation risks, and credit risks�
Hedge accounting is applied to certain derivatives�
In hedge transactions against foreign currency fluctuation risks, mainly currency swaps and foreign exchange swaps, the effectiveness of hedging is determined by confirming that the amount of the hedging instruments is generally
consistent with that of the hedged items� Regarding an exceptional accounting
treatment in interest rate swaps, post testing is conducted to confirm that requirements for the treatment are satisfied�
Derivatives transactions to which hedge accounting is not applied are exposed to interest rate fluctuation risks, foreign currency exchange rate fluctuation
risks, price fluctuation risks, and credit risks�

5,426
86,588508,696(101,541)
407,154(368,846)(36,506)(76,178)(481,531)$ (74,377)

Since the difference between the legally effective tax rate and the actual effective tax rate after applying tax effect accounting is equal to or less than 5% of
the legally effective tax rate, a reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, 2022 and 2021,
is omitted�

21. LEASES
Future minimum payments under noncancelable operating leases as of March
31, 2022 and 2021, were as follows:
LesseeMillions of Yen
2022
2021

Due within one year ������������������������
Due after one year ��������������������������
Total ����������������������������������������������

¥ 82
54
¥137

Thousands of
U.S. Dollars
2022

¥108
91
¥200

$ 678
445
$1,123

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

LessorDue within one year ������������������������
Due after one year ��������������������������
Total ����������������������������������������������

¥ 8
12
¥20

¥2
2
¥5

(3) Risk Management for Financial Instruments(a) Integrated Risk Management
The Group conducts integrated risk management to holistically control risks fromvarious financial assets and liabilities and risks related to the banking business�More specifically, the periodically quantified risks of the Group are controlled so
as to not exceed Tier 1 capital allocated by each risk category� The bank assesses unquantifiable risks using stress tests and other measures�

$ 66
99
$165

89

(b) Credit Risk Management
The Group has enacted “Group Guidelines for Credit Risk Management,” which
provides for basic policies comprising appropriate credit exposure management
on individual and portfolio bases� The portfolio-based credit exposure management involves diversification of risks�Credit risk management divisions have been segregated from the divisions
under business headquarters to achieve rigorous credit review and conduct monitoring of borrowers’ financial condition to prevent deterioration of loans�In the self-assessments that evaluate the quality of assets, the Group designs and operates controls over self-assessment of the quality of assets whichis performed in multiple steps� The assessment of the quality of assets performedby the business offices is reviewed by the credit-related divisions in the headquarters, and then independently examined by the Internal Audit division�
As for credit risks of the issuers of securities and the counterparties of derivatives transactions, global markets and market operation divisions monitor
credit information and market prices and give the issuers and counterparties
credit ratings, as well as carrying out assessments of the issuers and counterparties as general borrowers�(iii) Validity of VaR
The Group performs back testing to compare VaR calculated by its internal measurement model with the actual profit and loss to confirm whether the model
captures market risks with sufficient accuracy� However, there could be cases inwhich VaR cannot capture risks under sudden and dramatic changes in market
conditions beyond normal circumstances since VaR is statistically calculated
based on historical market fluctuation�(d) Liquidity Risk Management
Under “Group Liquidity Risk Management Rules,” the Group conducts financing
activities after fully analyzing its cash flows and strives to maintain the diversity
and stability of funding sources, while paying continuous attention to the consolidated balance sheet structure, lines of credit provided to the Group, collateralmanagement, and costs to maintain the liquidity�(4) Supplementary Explanation on Fair Values of Financial Instruments
The fair values of financial instruments are based on their market prices and, incases where market prices are not readily available, reasonably calculated prices� Such prices have been calculated using certain assumptions and may differ if
calculated based on different assumptions�(c) Market Risk Management① Market Risk Management Measures
The Group manages market risks by ALM� Risk management policies and procedures are prescribed in relevant ALM rules and manuals, and these policies, decided in ALM/Risk Management Committee and so forth, are closely monitored
and regularly discussed�

Matters Relating to Fair Value of Financial Instruments and Others
The carrying amounts in the consolidated balance sheet and the fair values of financial instruments, and unrealized gains or losses on them were as below as ofMarch 31, 2022 and 2021� The table below does not include equity securities
and other securities without readily available market prices or investments inpartnerships and other investments� Notes to cash and due from banks, callloans and bills bought, foreign exchanges (assets and liabilities), call money andbills sold, payables under repurchase agreements, and payables under securities
lending transactions are omitted because these are settled in the short term andtheir fair values approximate their carrying amounts� Immaterial line items arealso omitted�

② Market Risk Quantitative information(i) Banking Accounta� Interest Rate Risk
The Group adopts the variance-covariance method as the measurement method(a holding period of six months, a confidence interval of 99%, and an observation
period of one year) for calculating Value at Risk (VaR) related to interest rate riskof loans and bills discounted, domestic bonds, deposits, borrowed money, corporate bonds, and derivatives, such as interest rate swaps� The Group uses the historical simulation method (a holding period of six months, a confidence interval of
99%, and an observation period of five years) for the calculation of VaR related tointerest rate risk of foreign bonds, trust beneficiary right, market fund transaction, and derivatives like interest rate swaps and currency swaps�
As of March 31, 2022 and 2021, the Group’s VaR related to interest raterisks, which is a simple sum of its consolidated banking subsidiaries’ VaR, were¥85,008 million ($694,629 thousand) and ¥74,521 million, respectively�

Millions of Yen
March 31, 2022

Carrying
AmountUnrealized
Fair Value Gains/Losses(1) Securities:
Held-to-maturity securities ����������������������
158,914
158,410
Available-for-sale securities��������������������� 4,481,342 4,481,342(2) Loans and bills discounted���������������������� 11,737,377
Allowance for loan losses*1 ���������������������
(87,958)
Net���������������������������������������������������� 11,649,418 11,707,670
Total assets ������������������������������������������������ ¥16,289,675 ¥16,347,424(1) Deposits ������������������������������������������������ ¥16,825,736 ¥16,825,818(2) Negotiable certificates of deposit�������������
310,724
310,724(3) Borrowed money ������������������������������������ 3,795,700 3,795,696
Total liabilities ��������������������������������������������� ¥20,932,161 ¥20,932,239
Derivative instruments*2 :Hedge accounting is not applied �������������� ¥2,020 ¥
2,020
Hedge accounting is applied*3 �����������������
(18,762)(18,762)
Total derivative instruments ������������������������� ¥ (16,741) ¥ (16,741)b� Price Fluctuation Risk
The Group adopts the historical simulation method (a holding period of six
months, a confidence interval of 99%, and an observation period of five years)
for calculating VaR related to price fluctuation risk of listed equities and investment trust�
As of March 31, 2022 and 2021, the Group’s VaR related to price fluctuation risk, which is a simple sum of its consolidated banking subsidiaries’ VaR,
were ¥142,684 million ($1,165,917 thousand) and ¥149,801 million, respectively� Correlation between interest rate risk and price fluctuation risk has notbeen considered�(ii) Trading Account
The Group adopts the historical simulation method (a holding period of 10 days,
a confidence interval of 99%, and an observation period of five years) for calculating VaR related to trading securities; trading purpose foreign exchange transactions; and trading purpose derivatives, such as forward transactions and option
transactions� As of March 31, 2022 and 2021, the Group’s VaR related to trading account, which is simple sum of its consolidated banking subsidiaries’ VaR,
were ¥7 million ($58 thousand) and ¥9 million, respectively�

90

(503)
—

58,252¥ 57,748
¥

(82)
—
3

¥

(78)

¥

—
—

¥

—

Millions of Yen
March 31, 2021

Carrying
AmountUnrealized
Fair Value Gains/Losses(1) Securities:
Held-to-maturity securities ����������������������
153,263
154,076
Available-for-sale securities��������������������� 4,147,034 4,147,034(2) Loans and bills discounted���������������������� 11,638,376
Allowance for loan losses*1 ���������������������
(76,632)
Net���������������������������������������������������� 11,561,744 11,649,315
Total assets ������������������������������������������������ ¥15,862,041 ¥15,950,426(1) Deposits ������������������������������������������������ ¥16,223,652 ¥16,223,944(2) Negotiable certificates of deposit�������������
291,417
291,426(3) Borrowed money ������������������������������������ 3,394,050 3,394,045
Total liabilities ��������������������������������������������� ¥19,909,120 ¥19,909,416
Derivative instruments*2 :Hedge accounting is not applied �������������� ¥2,318 ¥
2,318
Hedge accounting is applied��������������������
(6,708)(6,708)
Total derivative instruments ������������������������� ¥(4,390) ¥(4,390)March 31, 2022

(1) Securities:
Held-to-maturity securities ���������������������� $ 1,298,531 $ 1,294,414
Available-for-sale securities��������������������� 36,618,262 36,618,262(2) Loans and bills discounted���������������������� 95,909,275
Allowance for loan losses*1 ���������������������
(718,736)
Net���������������������������������������������������� 95,190,540 95,666,538
Total assets ������������������������������������������������ $133,107,333 $133,579,214(1) Deposits ������������������������������������������������ $137,487,631 $137,488,303(2) Negotiable certificates of deposit������������� 2,539,014 2,539,014(3) Borrowed money ������������������������������������ 31,015,692 31,015,664
Total liabilities ��������������������������������������������� $171,042,337 $171,042,980
Derivative instruments*2 :Hedge accounting is not applied �������������� $16,513 $16,513Hedge accounting is applied*1 �����������������
(153,314)(153,314)
Total derivative instruments ������������������������� $ (136,802) $ (136,802)

812—

87,571¥ 88,384
¥

(291)
(8)
5

¥

(295)

¥

—
—

¥

Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value Gains/Losses—$ (4,117)—

475,998$471,881
$

(672)
—
28

$

(644)

$

—
—

$

(a) The table below shows the carrying amounts of equity securities and other securities without readily available market prices and investments in partnerships and otherinvestments in the consolidated balance sheet� These line items are not included in “Available-for-sale securities” stated in information on fair values of financial instruments�
Millions of Yen

Equity securities without readily available market price*1*2 ������������������������������
Investments in partnerships*3 �����������������������������������������������������������������������

2021

Thousands of U.S. Dollars
2022¥ 4,075
37,968¥ 4,101
27,988$ 33,304
310,254*1 Based on Item 5 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No� 19 (revised 2020), March 31, 2020), equity securities without
readily available market prices are out of the scope of the fair value disclosure�*2 During the year ended March 31, 2022, impairment losses on equity securities without readily available market price of ¥17 million ($140) were recognized�
*3 Based on Item 27 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No� 31, July 4, 2019; hereinafter the “Fair Value Measurement Guidance”), investments in partnerships and other investments are out of the scope of the fair value disclosure�(b) The scheduled redemption amounts of monetary claims and securities with contractual maturities after the consolidated balance sheet date

March 31, 2022

Securities:
Held-to-maturity securities �����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Available-for-sale securities
with contractual maturities����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Foreign currency bonds �����������������������������
Other��������������������������������������������������������
Loans and bills discounted*1 �������������������������������
Total �����������������������������������������������������������������

Due in 1 Yearor Less¥

27,788—150
27,638308,295
25,000124,605
114,339
42,767
1,582
2,774,168¥3,110,252

Due after 1 Yearthrough 3 Years¥

42,108—300
41,808620,618
35,000307,222
103,425
126,839
48,132
1,892,049¥2,554,776

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years¥

24,832—150
24,682471,895—
232,353
59,399129,035
51,107
1,458,429¥1,955,158

¥

5,158
—
—
5,158

670,656
41,150188,829
23,087
348,916
68,673
990,559¥1,666,374

Due after 7 Years
through 10 Years¥

50,21950,000—219

621,013—
136,272
44,260178,659
261,821
1,074,932¥1,746,165

Securities:
Held-to-maturity securities �����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Available-for-sale securities
with contractual maturities����������������������������
Japanese national government bonds���������
Japanese local government bonds �������������
Japanese corporate bonds�������������������������
Foreign currency bonds �����������������������������
Other��������������������������������������������������������
Loans and bills discounted*2 �������������������������������
Total �����������������������������������������������������������������

Due after 1 Yearthrough 3 Years

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years

¥

¥

¥

¥

¥

23,411——
23,411

42,837—300
42,537232,387
55,00072,644
66,52433,624
4,593
2,716,174¥2,971,974

562,166
25,000272,091
141,671
93,38930,014
1,831,213¥2,436,217

539,141
35,000257,164
94,83588,752
63,388
1,522,769¥2,084,336

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

March 31, 2022$

Securities:
Held-to-maturity securities ����������������������������� $ 227,068
Japanese national government bonds���������
—Japanese local government bonds �������������
1,226
Japanese corporate bonds�������������������������
225,842
Available-for-sale securities
with contractual maturities����������������������������
2,519,165
Japanese national government bonds���������
204,282
Japanese local government bonds �������������
1,018,184
Japanese corporate bonds�������������������������
934,297
Foreign currency bonds �����������������������������
349,468
Other��������������������������������������������������������
12,935Loans and bills discounted*1 ������������������������������� 22,668,482
Total ����������������������������������������������������������������� $25,414,714

344,076—
2,451
341,624

5,071,239
285,9942,510,394
845,114
1,036,438
393,300
15,460,450$20,875,765

¥

4,546
—
—
4,546

600,128—225,084
28,580247,732
98,731
990,737¥1,595,412

50,20950,000
—
209

1,000
—
—
1,000

682,068
41,150156,571
30,926
279,797
173,623
1,064,918¥1,797,196

1,044,538
422,800
34,496362,680
171,786
52,773
3,091,878¥4,137,416

Thousands of U.S. Dollars
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years

$

$

$

202,912—1,226
201,687

3,855,989—
1,898,619
485,372
1,054,383
417,614
11,917,224$15,976,124$

42,154——42,154

5,480,112
336,248
1,542,979
188,650
2,851,090
561,146
8,094,127$13,616,393

410,353
408,563—1,790

5,074,473—
1,113,521
361,660
1,459,875
2,139,417
8,783,561$14,268,387

8,171
—
—
8,171

11,130,695
5,346,462
592,125
3,437,159
1,224,607
530,342
25,794,355$36,933,222*1 As of March 31, 2022, loans and bills discounted with no contractual maturities amounting to ¥226,801 million ($1,853,254 thousand) and loans and bills discounted whose cash flow cannot
be estimated, such as “legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans, amounting to ¥163,722 million ($1,337,823 thousand) are not included�*2 As of March 31, 2021, loans and bills discounted with no contractual maturities amounting to ¥268,417 million and loans and bills discounted whose cash flow cannot be estimated, such as“legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans, amounting to ¥152,266 million are not included�(c) The scheduled repayment amounts of borrowed money and other interest-bearing liabilities after the consolidated balance sheet date
Due after 10 Years

¥

1,000
—
—
1,000

1,362,174
654,300
72,464
420,639
149,867
64,903
3,156,713¥4,519,887

March 31, 2022

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 ��������������������������������������������������������
Negotiable certificates of deposit�������������������������
Borrowed money ������������������������������������������������
Total �����������������������������������������������������������������

¥15,818,465
310,724
3,584,657¥19,713,847¥879,596—
117,123¥996,720

March 31, 2021

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 ��������������������������������������������������������
Negotiable certificates of deposit�������������������������
Borrowed money ������������������������������������������������
Total �����������������������������������������������������������������

¥15,241,415
291,117
3,195,212¥18,727,745¥ 848,914
300
168,103¥1,017,318

March 31, 2022

Due in 1 Yearor Less

Due after 1 Yearthrough 3 Years

Deposits *1 �������������������������������������������������������� $129,256,953
Negotiable certificates of deposit�������������������������
2,539,014
Borrowed money ������������������������������������������������
29,291,201
Total ����������������������������������������������������������������� $161,087,167$7,187,423—
957,051$8,144,474*1 In deposits, the cash flow of demand deposits is included in “Due in one year or less�”91

22,425—300
22,125—*1 Allowances for loan losses relevant to loans and bills discounted have been deducted�
*2 Derivative instruments recorded as trading assets, trading liabilities, other assets, and other liabilities include derivative transactions� Derivative instruments are presented as net of assets andliabilities associated with derivative transactions�*3 Interest rate swaps, currency swaps, and other derivative contracts have been designated as hedging instruments to fix cash flows of financial assets, including loans and bills discounted andsecurities, and financial liabilities being hedged, offset changes in fair values, or reduce or eliminate foreign currency exchange rate fluctuation risks� Deferral hedge accounting and exceptional
accrual method have been applied to these swaps� The “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (Practical Solution No� 40 (revised 2022), March 17,2022) has been applied to these hedging relationships�

2022

March 31, 2021

Due in 1 Yearor Less

92

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years¥6,050—3¥6,054¥24,863—5¥24,869

¥—
—
6
¥ 6

Millions of Yen
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years¥1,230—149¥1,380¥22,153—
5¥22,158

¥—
—
8
¥ 8

Thousands of U.S. Dollars
Due after 3 Years
Due after 5 Years
through 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10 Years$203,168—45$203,214

$—
—
53
$53

¥ 96,758—
93,903¥190,662¥109,939—
30,570¥140,510$ 790,644—
767,311$1,557,955$49,444—30$49,474

Matters Relating to Breakdown by Level of the Fair Value Hierarchy of Financial Instruments(2) Financial instruments other than those recorded at fair value in the consolidated balance sheet

The fair values of financial instruments are classified into the following three levels according to the observability and significance of the inputs used for fair value measurement�
Level 1 fair value:
Level 2 fair value:
Level 3 fair value:

Fair value measured by quoted prices of the assets or liabilities being measured that are developed in active markets among the observable inputs for fair value measurement
Fair value measured by inputs for fair value measurement other than the Level 1 inputs among the observable inputs for fair value measurement
Fair value measured by unobservable inputs for fair value measurement

If multiple inputs that significantly impact the fair value measurement are used, the fair value is classified into the level with the lowest priority in the fair value measurement among the levels to which those inputs belong�(1) Financial instruments recorded at fair value in the consolidated balance sheet
Millions of Yen
Fair Value
March 31, 2022

Securities:
Available-for-sale securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Equity securities ��������������������������������������������
Foreign currency bonds����������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Equity-related ������������������������������������������������
Bond-related �������������������������������������������������
Other ������������������������������������������������������������
Total assets �������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Other ������������������������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

Level 3

March 31, 2022

Securities:
Held-to-maturity securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Loans and bills discounted �����������������������������
Total assets �������������������������������������������������������
Deposits
Deposits �������������������������������������������������������
Negotiable certificates of deposit ��������������������
Borrowed money �������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

¥ 57,450———¥ 57,450

¥
¥

¥

¥

—
—
—
—

Level 3

—
599
997
—
1,597

Total

¥

—
—
99,363
11,707,670¥11,807,034

3,795,696
16,825,818
310,724¥20,932,239

Total

¥

57,450599
100,360
11,707,670¥11,866,081

—
—
—
—

¥
¥

3,795,696
16,825,818
310,724¥20,932,239

Thousands of U.S. Dollars
Fair Value¥ 754,006——
240,860
100,105¥—
1,065,641
676,378
13,326803,878¥——
90,242—
63,371¥ 754,006
1,065,641
766,620
254,187
967,355———
2—¥1,094,975

6,988
7,475
1,136
—
—
¥2,574,826

—
—
—
—
63
¥153,676

6,988
7,475
1,136
2
63
¥3,823,478

¥

¥

¥

¥

—
—
—
—

¥

¥

1,710
30,635—32,345

—
—
63
63

¥

¥

1,710
30,63563
32,408

Thousands of U.S. Dollars
Fair Value
March 31, 2022

Securities:
Available-for-sale securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Equity securities ��������������������������������������������
Foreign currency bonds����������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Equity-related ������������������������������������������������
Bond-related �������������������������������������������������
Other ������������������������������������������������������������
Total assets �������������������������������������������������������
Derivative transactions:Interest rate-related ���������������������������������������
Currency-related �������������������������������������������
Other ������������������������������������������������������������
Total liabilities ����������������������������������������������������

Millions of Yen
Fair Value

Level 1

Level 2

$6,161,188——
1,968,136
817,991

$

—
—
—
22
—
$8,947,337
$

$

—
—
—
—

$ 6,161,188
8,707,648
6,264,265
2,077,034
7,904,526

57,10661,0839,289——$ 21,039,604

—
—
—
—
515
$1,255,736

57,10661,0839,289
22515$ 31,242,676

$

$

$

13,974
250,329—
264,302

$

Total

—
—
737,394—
517,827$—
8,707,648
5,526,871
108,897
6,568,708

Level 3

$

—
—
515
515

$

13,974
250,329515
264,818

The table above does not include the investment trusts and other securities to which the transitional measures have been applied, which are set forth in Item 26 of
the Fair Value Measurement Guidance� The amount of the investment trusts and other securities in the consolidated balance sheet is ¥673,530 million ($5,503,602 thousand)�

93

March 31, 2022

Securities:
Held-to-maturity securities
Japanese national government bonds �������������
Japanese local government bonds ������������������
Japanese corporate bonds �����������������������������
Loans and bills discounted �����������������������������
Total assets �������������������������������������������������������
Deposits
Deposits �������������������������������������������������������
Negotiable certificates of deposit ��������������������
Borrowed money �������������������������������������������
Total liabilities ����������������������������������������������������

Level 1

Level 2

$469,439———$469,439

$
$

$

$

—
—
—
—

—
4,900
8,151
—
13,05131,015,664$ 137,488,303
2,539,014$ 171,042,980

Level 3

Total

$

—
—
811,923
95,666,538$96,478,461

$
$

—
—
—
—

$

469,4394,900
820,074
95,666,538$ 96,960,952
31,015,664
137,488,303
2,539,014$ 171,042,980(a) Explanation of valuation techniques and inputs used for fair value measurement
AssetsSecurities
The fair values of securities for which unadjusted quoted prices in active markets
are available are classified as Level 1, which mainly includes listed equities andJapanese national government bonds�
In case the markets are inactive even if the quoted prices are available, thefair values are classified as Level 2, which mainly includes Japanese local government bonds and Japanese corporate bonds�
In case the quoted prices are not available, the fair values are the prices
valued by an information vendor, a broker or other sources of market information,or the prices determined by valuation techniques such as the discounted cash
flow method� In valuing these prices, observable inputs are used to the maximum, which include market rates, government bond yields, credit spreads, default rates, and recovery rates� When the fair values are measured by significant
unobservable inputs, they are classified as Level 3�
The fair values of private placement bonds are measured by reflecting default rates and other credit risk factors in the discounted present value determined by a discount rate adjusted for a market rate� As the discount rate anddefault rates are unobservable, the fair values are classified as Level 3�
The fair values of securitized products are based on valuations obtained
from an information vendor, a broker or other sources of market information�
These fair values are classified as Level 3 when significant unobservable inputs
are used and as Level 2 when other inputs are used�The fair values of investment trusts are measured at the disclosed net asset
value and others� These fair values are not classified into any level by applying
the transitional measures set forth in Item 26 of the Fair Value Measurement
Guidance�

Loans and bills discounted
The fair values of loans and bills discounted are determined by discounting theprincipal and interest amount at the discount rate reflecting credit risk and otherrisks in market rates by categories according to the types, internal ratings andterms of the loans and bills discounted� The carrying amounts of loans and bills
discounted with floating-interest rates approximate fair value when customers’
credit risks have not changed significantly after lending because the market rates
are promptly reflected in the floating-interest rates� The carrying amounts ofloans and bills discounted with maturity less than one year approximate fair value
because of their short maturities�
For loans to obligors classified as “legal bankruptcy,” “virtual bankruptcy,”and “possible bankruptcy,” an allowance is provided based on the discounted
cash flow method or based on amounts expected to be collected through thedisposal of collateral or execution of guarantees� The carrying value, net of theallowance as of the consolidated balance sheet date, is a reasonable estimate of
the fair values of those loans�
The carrying amounts of loans and bills discounted that do not have fixedmaturities due to loan characteristics, such as limited loan amounts within thevalue of pledged assets, approximate fair value due to their expected repayment
periods and interest rate conditions� These fair values are classified as Level 3�

94

Liabilities
Deposits and negotiable certificates of deposit
The fair values of demand deposits are the amounts paid immediately according
to the demands on the consolidated balance sheet date� The fair values of time
deposits are determined by discounting the contractual cash flows grouped by
the remaining duration at the rates that would be applied for similar new contracts�
The carrying amounts of time deposits whose deposit terms are one year or lessapproximate fair value because of their short deposit terms� These fair values areclassified as Level 2�

Derivatives
The fair values of derivatives for which unadjusted quoted prices in active markets are available are classified as Level 1, which mainly includes bond futures�However, since most derivatives are over-the-counter transactions and there are
no quoted prices, the fair values of derivatives are measured using valuation
techniques such as the discounted cash flow method and the Black-Scholesmodel, depending on the type of transaction and the maturity period� The main
inputs used in those valuation techniques include interest rates, currency rates,
stock prices and volatility� Price adjustments are also made based on the credit
risk of counterparties and the credit risk of the consolidated banking subsidiaries
themselves� When unobservable inputs are not used or the impact of unobservable inputs is not material, the fair values are classified as Level 2, which includes such transactions as plain vanilla interest rate swaps and forward
exchange contracts� When significant unobservable inputs are used, the fair values are classified as Level 3�

Borrowed money
The fair value of borrowed money is determined by discounting the principal andinterest amount of the borrowed money grouped by the remaining duration at therate that would be applied for similar new contracts� The carrying amount of borrowed money with a floating-interest rate is considered to approximate fair value
because the market rate is promptly reflected in the floating-interest rate and thecredit risks of the Company and its consolidated subsidiaries have not changed
significantly after lending� The carrying amount of borrowed money with maturityof one year or less approximates fair value because of its short maturity period�
This fair value is classified as Level 2�

Securities:
Available-for-sale securities
Japanese corporate bonds

Valuation TechniqueSignificant Unobservable Input

Discounted cash flow method

Discount rate
Default rate

March 31, 2022

Input Range

Weighted-average Input

0.206% — 0.332%
0.030% — 8.306%

0.230%
0.238%

Millions of Yen
Income/Loss or
Other Comprehensive Income for the Year

March 31, 2022

Securities:
Available-for-sale securities
Japanese corporate bonds��������
Equity securities �����������������������
Derivative transactions: �����������������
Other���������������������������������������

¥93,499
56,484¥(0)Unrealized Gains/Losses on
Financial Assets andFinancial Liabilities Held asof the Consolidated Balance
Sheet Date, which are
Recorded in Income/Loss
Ending Balance
for the Year

Recorded in Other
Comprehensive
Income*2

Net ofPurchase, Sale,
Issuance andSettlement

Transfer toLevel 3 Fair
Value

Transfer fromLevel 3 Fair
Value

(0)
6,155

¥(418)(219)¥(2,838)
951

¥—
—

¥—
—

¥90,242
63,371

0

—

—

—

—

(0)

Recorded in
Income/Loss*1

The significant unobservable inputs used to measure the fair values of private
placement bonds are the discount rate and default rates� In general, a significant
increase or decrease in these inputs causes a significant decrease or increase inthese fair values�

23. DERIVATIVES

Bond-related transactions
Bond futures:
Sold ����������������������������������������������
Bought ������������������������������������������
Total ���������������������������������������������������

Contract
Amount¥601——(2) Changes from the beginning balance to the ending balance, and unrealized gains or losses recognized in income or loss

Beginning
Balance(4) Explanation of the impact on fair value when changing significant unobservable inputs(1) Derivative Transactions to Which Hedge Accounting Is Not Applied as of March 31, 2022 and 2021
With respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fair value, and the related valuation gains (losses) at the fiscal
year end date by transaction type and valuation method of fair value are described below� Note that contract amounts do not represent the market risk exposure associated with derivatives�
Consolidated banking subsidiaries had the following derivative contracts, which were quoted on listed exchanges, outstanding as of March 31, 2022 and 2021, as
follows:(b) Information on Level 3 fair value of financial instruments recorded at fair value in the consolidated balance sheet(1) Quantitative information on significant unobservable inputs
March 31, 2022

(3) Explanation of the fair value measurement process
In the Group, the middle and back offices at the consolidated banking subsidiaries have established a fair value measurement policy and procedures� The Group
verifies the reasonableness of the valuation techniques and inputs used for fairvalue measurement and the appropriateness of the fair value level classification
for the measured fair values and level classification�
The Group uses valuation models that most appropriately reflect the nature,
characteristics and risks of individual assets to measure their fair values� Whenusing quoted prices obtained from third parties, the Group also verifies the reasonableness of the prices in an appropriate way, for example, examining valuation techniques and inputs used and comparing the prices with the fair values ofsimilar financial instruments�

¥

—
6,205

March 31, 2021

Bond-related transactions
Bond futures:
Sold ���������������������������������������������
Bought �����������������������������������������
Total ���������������������������������������������������

Contract
Amount¥905——

Millions of Yen
Contract AmountDue afterFair
One Year
Value

—
—
—

Unrealized
Gains/Losses

¥2
—
¥2

Millions of Yen
Contract AmountDue afterFair
One Year
Value

—
—
—

¥(1)
—
¥(1)

March 31, 2022

Beginning
BalanceSecurities:
Available-for-sale securities
Japanese corporate bonds�������� $764,011
Equity securities ����������������������� 461,549
Derivative transactions: �����������������
Other���������������������������������������
(1)

Net ofPurchase, Sale,
Issuance andSettlement

Transfer toLevel 3 Fair
Value

Transfer fromLevel 3 Fair
Value

(0)
50,297$(3,419)(1,795)$(23,198)
7,776

$—
—

$—
—

$737,394
517,827

0

—

—

—

—

(0)

Recorded in
Income/Loss*1

$

—

$

—
50,706—*1 The amounts are included in “Interest and dividends on securities,” “Other operating income,” and “Other operating expenses” in the consolidated statement of income�*2 The amounts are included in “Unrealized gains (losses) on available-for-sale securities” in the consolidated statement of comprehensive income�

95

—
—
—

¥(1)
—
¥(1)

Note: 1 The above transactions are stated at fair value, and the related valuation gains (losses) are reported in the consolidated statement of income�2 Fair values of above transactions are determined based on closing prices at the Osaka Exchange or other relevant exchanges�

Unrealized Gains/Losses on
Financial Assets andFinancial Liabilities Held asof the Consolidated Balance
Sheet Date, which are
Recorded in Income/Loss
Ending Balance
for the Year

Recorded in Other
Comprehensive
Income*2$4,915——

Unrealized
Gains/Losses

Thousands of U.S. Dollars
Income/Loss or
Other Comprehensive Income for the Year

¥2
—
¥2

Contract
AmountThousands of U.S. Dollars
Contract AmountDue afterFair
One Year
Value

96

$22
—
$22

Unrealized
Gains/Losses

$22
—
$22

Consolidated banking subsidiaries had the following derivative contracts, which were not quoted on listed exchanges, outstanding as of March 31, 2022 and 2021, as follows:

March 31, 2022

Contract
AmountMillions of Yen
Contract AmountDue afterFair
One Year
Value*1*2

Unrealized
Gains/Losses

Contract
AmountThousands of U.S. Dollars
Contract AmountDue afterFair
One Year
Value*1*2

Unrealized
Gains/Losses

Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating �����
Receive floating and pay fixed �����
Receive floating and pay floating �����
Cap transactions:¥189,153
189,153
1,323¥182,728
182,728
—

¥ 708
1,254
(2)

¥ 708
1,254
(2)

$1,545,627
1,545,627
10,812$1,493,122
1,493,122—$ 5,786
10,251(22)$ 5,786
10,251(22)

Sold ������������������������������������������
Bought ��������������������������������������
Swaption:

1,147
1,147

792
792

(3)
3

12
(3)

9,376
9,376

6,474
6,474

(26)
26

100
(30)

Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Currency-related transactions

26,22026,220—26,22026,220—(234)
234¥ 1,959(0)234¥ 2,202214,251
214,251—

214,251
214,251—(1,920)1,920$ 16,014(7)
1,920$ 17,997

Currency swaps�������������������������������
Forward exchange contracts:¥161,773¥149,929

¥ 140

¥ 140

$1,321,899$1,225,116$ 1,152$ 1,152

Sold ������������������������������������������
Bought ��������������������������������������
Currency option contracts:

73,99460,856

4,292
4,095

(3,545)
3,576(3,545)
3,576

604,630
497,271

35,07833,465(28,968)
29,221(28,968)
29,221

Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Other transactions

63,47063,470—41,954
41,954—(1,456)
1,334
¥ 49

(184)
654
¥ 642

518,635
518,635—

342,824
342,824—(11,899)
10,901$407(1,506)
5,349$ 5,248¥ 6,000
6,000—

March 31, 2021

Contract
Amount

—
—

¥

(63)
63

—
—

¥

(0)

—

Millions of Yen
Contract AmountDue afterFair
One Year
Value*1*2

Unrealized
Gains/Losses—$

49,02849,028————Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating �����
Receive floating and pay fixed �����
Cap transactions
Sold ������������������������������������������
Bought ��������������������������������������
Swaption:
Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Currency-related transactions
Currency swaps:������������������������������
Forward exchange contracts:
Sold ������������������������������������������
Bought ��������������������������������������
Currency option contracts:
Sold ������������������������������������������
Bought ��������������������������������������
Total ����������������������������������������������������
Other transactions
Earthquake derivatives:
Sold ������������������������������������������
Bought ��������������������������������������

March 31, 2022

Hedged Item

Interest rate-related transactions*1*4
Interest rate swaps:
Receive floating and pay fixed ������
Securities
Receive floating and pay floating ����Total �����������������������������������������������
Currency-related transactions*2*5
Loans, securities, deposits,
Currency swaps������������������������������� foreign exchanges, etc�, which
Forward exchange contracts ������������ are denominated in foreign
Foreign exchange swap ������������������� currencies
Total �����������������������������������������������
Equity-related transactions*3*6
Stock forward contracts
Available-for-sale securities
Sold �������������������������������������������
Total �����������������������������������������������

March 31, 2021

Earthquake derivatives:
Sold ������������������������������������������
Bought ��������������������������������������

(2) Derivative Transactions to Which Hedge Accounting Is Applied as of March 31, 2022 and 2021
With respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fair value at the fiscal year end date by transaction type andhedge accounting method and valuation method of fair value are as follows� Note that contract amounts do not represent the market risk exposure associated with derivatives�
Consolidated banking subsidiaries had the following derivative contracts, which were accounted for based on the principle method, outstanding as of March 31,
2022 and 2021, as follows:

$

(516)
515

—
—

$

(0)

—

Hedged Item

¥154,105
154,105¥ 3,268(1,289)¥ 3,268(1,289)

656
656

587
587

(0)
0

7
(4)

19,02019,020—19,02019,020—(96)
96¥ 1,97945
96¥ 2,123¥169,976¥142,733

¥ 209

¥ 209

64,32062,319118,154
118,149
—
—

4,210
4,145
76,594
76,594——(2,222)
2,346(2,937)
2,945
—
¥ 340

(2,222)
2,346
375
1,767
—
¥ 2,476¥ 5,600
5,600

—
—

—

—

¥

(97)
97
—

Fair
Value

¥160,000
30,000—¥160,000——¥ 3,334(15)¥ 3,318$1,307,403
245,138—$1,307,403——$ 27,243(125)$ 27,118¥ 66,366—
231,309—¥165—
125,726—¥ (4,330)—(18,887)¥(23,218)$ 542,300—
1,890,096—$$ (35,385)—(154,337)$(189,722)—¥ 1,136¥ 1,136$¥ 3,036——

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Fair
Value

¥ 85,000¥50,000¥ 1,519——¥ 1,519

270—
70,121¥(4,060)—(4,440)—¥(8,500)

Receive floating and pay fixed ������Securities
Total �����������������������������������������������
Currency-related transactions*2*5
Loans, securities, deposits,
Currency swaps������������������������������� foreign exchanges, etc�, which
Forward exchange contracts ������������ are denominated in foreign
Foreign exchange swap ������������������� currencies

Stock forward contracts¥ 85,055—
130,733—

24,809—1,348—
1,027,345
—

—
—

$
$

9,289
9,289

¥

Available-for-sale securities

Sold �������������������������������������������

¥ 6,946

Total �����������������������������������������������

—

—
—

¥ 272
¥ 272

Note: 1� Interest rate-related transactions are primarily accounted for using the deferral method in accordance with “Accounting and Auditing Treatment relating to the Adoption of ‘Accounting
for Financial Instruments’ for Banks” (JICPA Industry Audit Committee Report No� 24, February 13, 2002)�
2� Currency-related transactions are primarily accounted for using the deferral method in accordance with “Accounting and Auditing Treatment relating to Accounting for Foreign Currency
Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No� 25, July 29, 2002)�
3� Equity-related transactions are accounted for using the deferral method�
4� Fair values of exchange-traded transactions are determined based on closing prices at the Tokyo Financial Exchange or other relevant exchanges� Fair values of over-the-counter-traded transactions are determined based on a discounted cash flow model, an option-pricing model, or other models, as appropriate�5� Fair value is determined based on a discounted cash flow model�
6� Fair value is determined based on prices provided by correspondent financial institutions�———Note: *1 The above transactions are stated at fair value and the related valuation gains (losses) are reported in the consolidated statement of income�*2 Fair values of above transactions are determined based on a discounted cash flow model, an option-pricing model, or other models as appropriate�*3 Acquisition costs are regarded as fair value as it is extremely difficult to determine the fair appraised value�

97

Thousands of U.S. Dollars
Contract AmountDue after
Fair
Contract
One YearValue
AmountInterest rate-related transactions*1*4
Interest rate swaps:

Total �����������������������������������������������
Equity-related transactions*3*6¥164,294
164,294

Contract
AmountMillions of Yen
Contract AmountDue after
One Year98Consolidated banking subsidiaries had the following derivative contracts, which were accounted for by the exceptional accrual method, outstanding as of March 31,
2022:

March 31, 2022

Hedged Item

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Fair
Value

Thousands of U.S. Dollars
Contract AmountDue after
Fair
Contract
One YearValue
AmountInterest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating ������Loans and borrowed money
Receive floating and pay fixed ������
Total �����������������������������������������������

March 31, 2021

Hedged Item¥—
11,489

¥

—
4,772

¥ —
182

—

—

¥182

Contract
AmountMillions of Yen
Contract AmountDue after
One Year

Fair
Value

$

—
93,882—$—39,000

$

—
1,495

—

$1,495Interest rate-related transactions
Interest rate swaps:
Receive fixed and pay floating ������Loans and borrowed money
Receive floating and pay fixed ������
Total �����������������������������������������������

¥—10,309

¥

—
9,687

¥ —
(179)

—

—

¥(179)

Note: The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with the hedged items as a whole so that the fair value is included in
the fair value of borrowed money and loans and bills discounted (“Note 22� FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES (5) Fair Values of Financial Instruments”)�

24.OTHER COMPREHENSIVE INCOME (LOSS)

25. SEGMENT INFORMATIONThe components of other comprehensive income (loss) for the years ended
March 31, 2022 and 2021, were as follows:

Under ASBJ Statement No� 17, “Accounting Standard for Segment Information
Disclosures,” and ASBJ Guidance No� 20, “Guidance on Accounting Standard for
Segment Information Disclosures,” an entity is required to report financial anddescriptive information about its reportable segments� Reportable segments areoperating segments or aggregations of operating segments that meet specified
criteria� Operating segments are components of an entity about which separate
financial information is available, and such information is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and inassessing performance� Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments�
The Group engages in banking and other related activities, such as leasing,securities, and credit card services� Segment information is not disclosed due tothe immateriality of operations other than banking�Millions of Yen
2022
2021

Unrealized gains (losses)
on available-for-sale securities:(Losses) gains arising during theyear �������������������������������������������� ¥(82,725)
Reclassification adjustments
to profit or loss�����������������������������
1,774
Amount before
income tax effect ��������������������� (80,950)
Income tax effect ���������������������� 24,487
Total ������������������������������������������������� ¥(56,463)
Deferred gains (losses) on derivatives
under hedge:
Gains arising during the year ���������� ¥ 9,106
Reclassification adjustments
to profit or loss�����������������������������
14
Amount before income tax
effect ��������������������������������������
9,121
Income tax effect ����������������������
(2,774)
Total ������������������������������������������������� ¥ 6,346
Defined retirement benefit plans:(Losses) gains arising during theyear �������������������������������������������� ¥ (154)
Reclassification adjustments toprofit or loss ��������������������������������
(487)
Amount before income tax
effect ��������������������������������������
(641)
Income tax effect ����������������������
197
Total ������������������������������������������������� ¥ (444)
Total other comprehensive (loss)
income �������������������������������������������� ¥(50,561)

Thousands of
U.S. Dollars
2022¥115,932$(675,970)(3,731)

14,500112,201(34,009)¥ 78,192(661,470)
200,090$(461,380)¥ 2,118$ 74,410

(25)

121

2,093
(636)
¥ 1,457

74,531(22,671)$ 51,860¥ 17,382$ (1,264)

1,611(3,980)18,994(5,774)¥ 13,219(5,243)1,610$ (3,633)¥ 92,869$(413,153)

Other segment-related information:(1) Information by services

March 31, 2022

Millions of Yen (Thousands of U.S. Dollars)
Lending
Investment
Operations
Operations
Other
Total

Total income
from external¥106,411
customers �������������� ($869,521)

March 31, 2021

Lending
Operations

Total income
from externalcustomers ��������������

¥108,277¥53,342($435,877)¥108,335¥268,090($885,241) ($2,190,639)

Millions of Yen
Investment
Operations
Other¥68,606¥97,841

Total¥274,726(2) Information by geographic region
Since the ordinary income and total tangible fixed assets attributable to the “Japan” segment account for more than 90% of the total of all geographic segments, geographical segment information has not been presented�
(3) Information by major customers
Since there has been no specific customer to whom the Group sells more than
10% of total ordinary income on the consolidated statement of income, information on major customers has not been presented�
(4) Information on loss on impairment of fixed assets by reportable segment
Information on loss on impairment of fixed assets is not disclosed due to immateriality, except for the banking business�(5) Information on amortization and unamortized balance of goodwill by reportable segment
Information on amortization and unamortized balance of goodwill is not disclosed
due to immateriality, except for the banking business�(6) Information on gain on negative goodwill by reportable segment
Information on gain on negative goodwill is not disclosed due to immateriality,
except for the banking business�

99

100

26. RELATED-PARTY TRANSACTIONS
Related-party transactions of consolidated subsidiaries of the Company with its directors or major individual shareholders for the years ended March 31, 2022 and 2021
were as follows:Year ended March 31, 2022
There was none of material information to be stated�Year ended March 31, 2021

Name

Location

Capital(Millions of Yen/Thousands of
U.S. Dollars)

Kinichi Suzuki

—

—

Type

A director or
director’s close relative

Business

Ownerships

Relationship

—

—

—

Transactions(Millions of Yen)

Loan

Outstanding Balance(Millions of Yen)

¥99

Loans andbills
discounted¥99

Terms and conditions on transactions and transaction policy:
The interest rate on loans is reasonably determined considering the market rate�27. SUBSEQUENT EVENTS
Establishment of subsidiary
Not applicable�

101

102

103

104

105

106

Non-Consolidated Balance Sheet (Unaudited)

Non-Consolidated Statement of Income (Unaudited)

March 31, 2022 The Joyo Bank, Ltd.

Millions of Yen
2022
2021

Year Ended March 31, 2022

Thousands of
U.S. Dollars
2022

ASSETSCash and due from banks ��������������������������������������������������������������������������������������� ¥ 4,619,865
Call loans and bills bought ��������������������������������������������������������������������������������������
6,507
Monetary claims bought �����������������������������������������������������������������������������������������
4,994
Trading assets �������������������������������������������������������������������������������������������������������
2,405
Securities ���������������������������������������������������������������������������������������������������������������
3,267,322
Loans and bills discounted ��������������������������������������������������������������������������������������
6,767,416
Foreign exchanges �������������������������������������������������������������������������������������������������
12,400
Other assets ����������������������������������������������������������������������������������������������������������
109,050
Tangible fixed assets ���������������������������������������������������������������������������������������������
67,502Intangible fixed assets ��������������������������������������������������������������������������������������������
7,287
Prepaid pension cost ����������������������������������������������������������������������������������������������
4,775
Customers’ liabilities for acceptances and guarantees ����������������������������������������������
17,726
Allowance for loan losses ����������������������������������������������������������������������������������������
(44,835)
Allowance for investment losses ������������������������������������������������������������������������������
(8)
TOTAL �������������������������������������������������������������������������������������������������������������� ¥14,842,410¥ 3,977,233
2,160
5,601
10,113
3,024,670
6,856,163
5,269
83,67471,875
7,735
6,961
17,084(37,734)(9)¥14,030,800$ 37,750,165
53,17140,812
19,653
26,698,176
55,298,388
101,330
891,080
551,579
59,55239,022
144,847(366,366)(72)$121,281,337

LIABILITIES AND EQUITY
LIABILITIES:
Deposits ���������������������������������������������������������������������������������������������������������������� ¥10,053,985
Negotiable certificates of deposit �����������������������������������������������������������������������������
170,107
Call money and bills sold ����������������������������������������������������������������������������������������
1,036,020
Payables under repurchase agreement ��������������������������������������������������������������������
143,407
Payables under securities lending transactions ���������������������������������������������������������
582,134
Trading liabilities�����������������������������������������������������������������������������������������������������
343
Borrowed money ����������������������������������������������������������������������������������������������������
2,120,602
Foreign exchanges��������������������������������������������������������������������������������������������������
4,013
Due to trust account �����������������������������������������������������������������������������������������������
1,525
Other liabilities��������������������������������������������������������������������������������������������������������
63,878Provision for bonuses for directors ���������������������������������������������������������������������������
132
Provision for retirement benefits ������������������������������������������������������������������������������
5,644
Provision for reimbursement of deposits �������������������������������������������������������������������
1,404
Provision for point card certificates ��������������������������������������������������������������������������
173
Provision for contingent losses���������������������������������������������������������������������������������
1,421
Deferred tax liabilities����������������������������������������������������������������������������������������������
16,018Deferred tax liabilities for land revaluation ����������������������������������������������������������������
7,256
Acceptances and guarantees�����������������������������������������������������������������������������������
17,726
Total liabilities ��������������������������������������������������������������������������������������������������� ¥14,225,796¥ 9,705,556
143,702911,314
127,201
378,015
1,024
2,007,229
672
1,432
43,422
124
6,999
1,621
120
1,094
30,921
7,946
17,084¥13,385,486$ 82,153,828
1,389,996
8,465,606
1,171,822
4,756,782
2,803
17,328,014
32,796
12,461
521,968
1,082
46,127
11,474
1,420
11,613130,889
59,298144,847$116,242,825¥$

EQUITY:
Common stock ������������������������������������������������������������������������������������������������������� ¥85,113
Capital surplus �������������������������������������������������������������������������������������������������������
58,574Retained earnings ���������������������������������������������������������������������������������������������������
371,581
Valuation adjustments: �������������������������������������������������������������������������������������������
101,344
Unrealized gains on available-for-sale securities ��������������������������������������������������
86,506
Deferred losses on derivatives under hedge accounting ���������������������������������������
4,450
Land revaluation surplus �����������������������������������������������������������������������������������
10,387
Total equity ��������������������������������������������������������������������������������������������������
616,613TOTAL������������������������������������������������������������������������������������������������������������������������� ¥14,842,410

107

85,11358,574
367,837
133,789
120,713
1,135
11,940645,314¥14,030,800

The Joyo Bank, Ltd.

Millions of Yen
2022
2021

INCOME:Interest income:Interest on loans and bills discounted �����������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust Fees �������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Trading income �����������������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income ��������������������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowed money �������������������������������������������������������������������������������
Interest on bonds�����������������������������������������������������������������������������������������������
Interest on interest swap ������������������������������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating expenses����������������������������������������������������������������������������������������
General and administrative expenses �����������������������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses ������������������������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ���������������������������������������������������������������������������������
INCOME TAXES:
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������

695,482478,624
3,036,292
828,115
706,870
36,36884,877
5,038,513$121,281,337

108

Thousands of
U.S. Dollars
2022¥ 58,436
30,287
8
3,349
365
31
28,074566
2,072
10,515
133,708¥ 59,980
29,756
16
662
374
28
26,242365
1,056
21,973
140,457$ 477,498
247,484
67
27,372
2,988
260
229,406
4,631
16,93885,922
1,092,567

623
6
(99)
(127)
51
154
—
485
612
8,873
5,655
63,6949,996
9,500
99,42534,282

1,138
10
(57)
25
31
662
18
641
534
8,983
4,046
63,218
9,509
16,958105,720
34,736

5,097
52
(817)
(1,043)
422
1,261
—
3,964
5,007
72,512
46,209520,463
81,682
77,630812,436
280,131

11,943(2,273)
9,669¥ 24,612

11,740(1,515)
10,255¥ 24,511

97,595(18,581)
79,014$ 201,117

Non-Consolidated Balance Sheet (Unaudited)

Non-Consolidated Statement of Income (Unaudited)

March 31, 2022 The Ashikaga Bank, Ltd.

Mebuki Financial Group Philosophy
Millions of Yen
2022
2021

Year Ended March 31, 2022

Thousands of
U.S. Dollars
2022

ASSETSCash and due from banks ��������������������������������������������������������������������������������������� ¥2,649,158¥2,447,722$21,646,988
Call loans and bills bought���������������������������������������������������������������������������������������
—
4,649
—
Monetary claims bought ������������������������������������������������������������������������������������������
5,616
6,048
45,898
Trading account securities���������������������������������������������������������������������������������������
2,184
2,312
17,849
Money held in trust �������������������������������������������������������������������������������������������������
2,027
1,970
16,565
Securities ���������������������������������������������������������������������������������������������������������������
1,408,803
1,301,546
11,511,717
Loans and bills discounted ��������������������������������������������������������������������������������������
5,128,137
4,943,603
41,903,393
Foreign exchanges��������������������������������������������������������������������������������������������������
4,820
4,324
39,387The ingenuityof the entire Group will be combined to84,366
contributeto sustainable
Other assets �����������������������������������������������������������������������������������������������������������
81,652
689,383
Tangible fixed assets ����������������������������������������������������������������������������������������������
28,14628,485229,990
growthIntangible
in communities.
We will build a better future together
withfixed assets ���������������������������������������������������������������������������������������������
8,098
9,922local
66,178Prepaid pension cost�����������������������������������������������������������������������������������������������
27,73625,358226,640
communities,
seeking solutions to challenges that affectthese communities
byDeferred tax assets �������������������������������������������������������������������������������������������������
7,223—
59,022Customers’
liabilities for acceptancesand guarantees ����������������������������������������������
8,318
9,256
67,970providinghigh-quality,
comprehensive
financial services.
Allowance for loan losses ����������������������������������������������������������������������������������������
(39,458)(35,153)(322,422)
TOTAL �������������������������������������������������������������������������������������������������������������� ¥9,325,179¥8,831,699$76,198,557

Together with local communities, we will continue to build amore prosperous future by providing high-quality
comprehensive financial services.

LIABILITIES AND EQUITY
LIABILITIES:
Deposits ���������������������������������������������������������������������������������������������������������������� ¥6,803,383¥6,551,940$55,592,285
Negotiable certificates of deposit �����������������������������������������������������������������������������
189,666
196,765
1,549,819
Call money and bills sold ����������������������������������������������������������������������������������������
8,933
41,60373,000
Payables under repurchase agreement ��������������������������������������������������������������������
4,757
3,053
38,876
BasedPayables
on undertheMebuki Financial Group Philosophy“Together
with
local
securities lending transactions ���������������������������������������������������������
244,691
242,733
1,999,437
Borrowed money ����������������������������������������������������������������������������������������������������
1,669,600
1,380,253
13,642,752
communities,
we will continue to build a more prosperous
futureby providing
Foreign exchanges��������������������������������������������������������������������������������������������������
376
232
3,078
Due to trust account �����������������������������������������������������������������������������������������������
1,521
874
12,435high-quality
comprehensive financial services,” Mebuki
FinancialGroupandOther liabilities��������������������������������������������������������������������������������������������������������
33,99330,725
277,774
Provision for bonuses for directors ���������������������������������������������������������������������������
139
122
1,140
GroupProvisioncompanies
will
supportsolving issues in our regions,
while
for reimbursementof deposits�������������������������������������������������������������������
779
838 contributing
6,368 toProvision for contingent losses���������������������������������������������������������������������������������
928
899
7,584
the achievementof sustainablegrowth of local communities
theProvision for point card certificates��������������������������������������������������������������������������
262
260 as well as
2,147
Deferred tax liabilities����������������������������������������������������������������������������������������������
—
2,406
—
improvement
ofguarantees
our corporate
value.
Acceptances and�����������������������������������������������������������������������������������
8,318
9,256
67,970Total liabilities ��������������������������������������������������������������������������������������������������� ¥8,967,353¥8,461,966$73,274,665

Mebuki Financial Group Sustainability Policy

EQUITY:
Common stock �������������������������������������������������������������������������������������������������������
Retained earnings: ��������������������������������������������������������������������������������������������������
Valuation adjustments: ��������������������������������������������������������������������������������������������
Unrealized gains on available-for-sale securities ��������������������������������������������������
Deferred losses on derivatives under hedge accounting ���������������������������������������
Total equity ��������������������������������������������������������������������������������������������������
TOTAL�������������������������������������������������������������������������������������������������������������������������

¥ 135,000
198,707
24,117
21,8332,284
357,825¥9,325,179¥ 135,000
189,385
45,34746,094(747)
369,732¥8,831,699

The Ashikaga Bank, Ltd.

Millions of Yen
2022
2021

INCOME:Interest income:Interest on loans and bills discounted �����������������������������������������������������������������
Interest and dividends on securities ��������������������������������������������������������������������
Interest on call loans and bills bought �����������������������������������������������������������������
Interest on deposits with banks ��������������������������������������������������������������������������
Other interest income ����������������������������������������������������������������������������������������
Trust Fees ��������������������������������������������������������������������������������������������������������������
Fees and commissions��������������������������������������������������������������������������������������������
Other operating income�������������������������������������������������������������������������������������������
Other income ���������������������������������������������������������������������������������������������������������
Total income ������������������������������������������������������������������������������������������������
EXPENSES:Interest expenses:
Interest on deposits �������������������������������������������������������������������������������������������
Interest on negotiable certificates of deposit ��������������������������������������������������������
Interest on call money and bills sold �������������������������������������������������������������������
Interest on payables under repurchase agreements ���������������������������������������������
Interest on payables under securities lending transactions �����������������������������������
Interest on borrowed money �������������������������������������������������������������������������������
Interest on interest swap ������������������������������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions payments ����������������������������������������������������������������������������
Other operating expenses ���������������������������������������������������������������������������������������
General and administrative expenses �����������������������������������������������������������������������
Provision of allowance for loan losses ����������������������������������������������������������������������
Other expenses �����������������������������������������������������������������������������������������������������
Total expenses ���������������������������������������������������������������������������������������������
INCOME BEFORE INCOME TAXES ��������������������������������������������������������������������������������
INCOME TAXES:
Current ������������������������������������������������������������������������������������������������������������������
Deferred�����������������������������������������������������������������������������������������������������������������
Total income taxes ���������������������������������������������������������������������������������������NET INCOME ���������������������������������������������������������������������������������������������������������������

$ 1,103,121
1,623,696
197,074
178,40918,6652,923,892$76,198,557

The Japanese word mebuki, or “green shoots,” conveys an image of new leaves budding
on tree branches. This word is used in the Group’s name to express its approach of
drawing on the knowledge and creativity of each of its companies to create fresh ideas
and new value. The name Mebuki expresses our wish to create new energy and value inlocal communities and pursue sustainable growth along with these communities.

1 109

110

Thousands of
U.S. Dollars
2022¥46,921
18,440
0
3,285
71
13
21,731
1,189
2,595
94,248¥47,171
19,602
(2)
896
69
10
21,235
1,517
8,757
99,258$383,412
150,680
026,844
586
112
177,5719,717
21,208770,128

148
9
(92)
47
437
3
24
1,106
7,186
2,703
48,1107,717
4,851
72,254
21,993

462
32
18
140
414
218
225
917
7,043
3,304
49,1599,427
4,442
75,80823,450

1,217
80
(755)
389
3,571
28
203
9,043
58,72222,089393,12163,064
39,639590,412
179,716

6,910
(351)
6,558
¥15,435

7,294(1,508)
5,785¥17,664

56,464(2,875)53,859$126,127