Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS

Balance Sheets （as of March 31, 2009）(Unit: millions of yen)
2009

2009

AssetsLiabilities

Cash and due from banks

239,218

Cash

0

Borrowed money

4,019,847

Borrowings

4,019,847

Due from banks

239,218

Bonds payable

2,093,214

Securities

10,920

Other liabilities

35,448Other securities

10,920Accrued expenses

28,175Loans and bills discounted

7,243,068

Unearned revenue

5,250

Loans on deeds

7,243,068

Derivatives other than for

1,477

trading-liabilities
Other assets

698,794

Lease obligations

463

Other

80
581

Prepaid expenses

253

Accrued income

44,979Provision for bonuses

633,638

Provision for directors’ bonuses

7

Other

19,923

Provision for retirement benefits

11,611

Property, plant and equipment

38,307

Provision for directors’ retirement

Derivatives

other

than

for

trading-assets

5

benefits
Buildings

3,798

Acceptances and guarantees

1,650,329

Land

33,881

Total liabilities

7,811,046

Lease assets

97

Net assets

Construction in progress

123

Capital stock

Other

405

Retained earnings

739,430

1,035,500

Intangible assets

2,821

Legal retained earnings

712,592

Software

2,330

Other retained earnings

26,838

Lease assets

343

Retained earnings brought forward

26,838

Other

147

Customers’

liabilitiesfor

1,650,329

acceptances and guarantees
Allowance for loan losses

Total shareholders’ equity
Valuation

1,774,930

differenceon(1,064)

available-for-sale securities(126,500)

Deferred gains or losses on hedges

172,049

Total

170,984

valuationandtranslation

adjustments

Total assets

9,756,961

Total net assets

1,945,915

Total liabilities and net assets

9,756,961

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONSStatements of Income （Six months ended March 31, 2009）(Unit: millions of yen)
2009
Ordinary income

97,740Interest income

93,554

Interest on loans and discounts

93,512

Interest on deposits with banks

42

Fees and commissions

3,697

Other fees and commissions

3,697

Other ordinary income

259

Income from derivatives other than for trading or hedging

259

Other income

229

Other

229

Ordinary expenses

77,810Interest expenses

66,011

Interest on borrowings and rediscounts

24,392

Interest on bonds

28,806

Interest on interest swaps

12,812Fees and commissions payments

578

Other fees and commissions

578

Other ordinary expenses

2,852

Loss on foreign exchange transactions

2,738

Other
General and administrative expenses

114
8,145

Other expenses

222

Provision of allowance for loan losses

195

Losses on devaluation of stocks and other securities

12

Other

14

Ordinary income

19,929Extraordinary income

6,947

Gain on disposal of noncurrent assets

0

Recoveries of written-off claims

2,372

Gain on debt assumption agreement

4,575

Extraordinary losses
Loss on disposal of noncurrent assets
Net income

39
39
26,838

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONSStatements of Changes in Net Assets （Six months ended March 31, 2009）(Unit: millions of yen)
2009

2009

Shareholders’ equity

Deferred gains or losses on hedges

Capital stock

Balance at the beginning of current―

periodBalance at the beginning of current period―

Changes of items during the period
Issuance of new shares

30,000Changes of items during the period
Succeeded based on the JFC Law

54,235

Net changes of items other than

117,814shareholders’ equity
Capital injection based on the JFC Law

1,005,500

Total changes of items during the period

172,049

Total changes of items during the period

1,035,500

Balance at the end of current period

172,049

Balance at the end of current period

1,035,500

Totalvaluationandtranslation

adjustments
Balance at the beginning of current

Retained earnings―

periodLegal retained earnings
Balance at the beginning of current

Changes of items during the period―

Succeeded based on the JFC Law

54,235

Net changes of items other than

116,749

periodChanges of items during the period

shareholders' equity
Succeeded based on the JFC Law

712,592

Total changes of items during the period

170,984

Total changes of items during the period

712,592

Balance at the end of current period

170,984

Balance at the end of current period

712,592

Total net assets

Other retained earnings

Balance at the beginning of current period

Retained earnings brought forward

Changes of items during the period

Balance at the beginning of current――

Issuance of new shares

30,000Net income

26,838

periodChanges of items during the period
Net income

26,838

Capital injection based on the JFC Law

Total changes of items during the

26,838Succeeded based on the JFC Law

26,838

Net

1,005,500
766,827

periodBalance at the end of current period

than116,749

Total changes of items during the period

1,945,915

Balance at the end of current period

1,945,915

changes

of

items

other

shareholders’ equity
Total retained earnings
Balance at the beginning of current―

periodChanges of items during the period
Net income

26,838

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS
Succeeded based on the JFC Law

712,592

Total changes of items during the period

739,430

Balance at the end of current period

739,430

Total shareholders’ equity
Balance at the beginning of current period―

Changes of items during the period
Issuance of new shares

30,000Net income

26,838

Capital injection based on the JFC Law

1,005,500
712,592

Succeeded based on the JFC Law
Total changes of items during the period

1,774,930

Balance at the end of current period

1,774,930

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Balance at the beginning of current period―

Changes of items during the periodNetchanges

of

items

other

than

(1,064)

shareholders’ equity
Total changes of items during the period(1,064)

Balance at the end of current period(1,064)

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS
Notes to Financial Statements
ACCOUNT FOR JBIC OPERATIONS
Amounts presented are rounded down to the nearest million yen.

1. Significant accounting policies(a) Securities
Held-to-maturity securities are carried at amortized cost based on the moving average method.
Investments in affiliates are carried at cost based on the moving average method.
Available-for-sale securities, which have readily determinable fair value are stated at fair value
with changes in net unrealized gains or losses, included directly in Net assets.
Available-for-sale securities without a readily determinable fair value are carried at cost basedon the moving average method or amortized cost method.

(b) Valuation method for derivative financial instruments
Derivative financial instruments are carried at fair value.

(c) Depreciation basis for fixed assets(i) Property, plant and equipment (except for lease assets)
Tangible fixed assets are depreciated under the declining balance method over their useful
economic lives except for buildings (excluding installed facilities) which are depreciatedunder the straight-line method.
Amortization is based on the following range of estimated useful lives:
Buildings: 2 years to 50 years
Other: 2 years to 20 years(ii) Intangible assets (except for lease assets)
Amortization of intangible fixed assets is computed by the straight-line method. Software usedby JFC is amortized over its useful life (5 years).
(iii) Lease Assets
Lease assets in “property, plant and equipment” or “intangible assets,” under finance leases
that do not involve transfer of ownership to the lessee are amortized under the straight-line
method over the lease term. Depreciation for lease assets is calculated with zero residual value
being assigned to the asset.

(d) Method of amortization for deferred charges(i) Bond issuance costs
Bond issuance costs are expensed as incurred.
(ii) Organization expenses
Organization expenses are expensed as incurred.

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS(e) Foreign currency translation and revaluation method
JFC maintains its accounting records in Japanese yen. Assets and liabilities denominated inforeign currencies are mostly translated into Japanese yen at the market exchange rate
prevailing at the fiscal year end.

(f) Allowance for loan losses
The allowance for loan losses is maintained in accordance with internally established standards.
The allowance for claims on debtors who are legally bankrupt (“Bankrupt borrowers”) or
substantially bankrupt (“Substantially bankrupt borrowers”) is provided based on theoutstanding balance after the write-offs described in Note 3.(g) and the deductions of theamount expected to be collected through the disposal of collateral and execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt but are likely to becomebankrupt (“Potentially bankrupt borrowers”) is provided based on an assessment of the overall
solvency of the debtors after deducting the amount expected to be collected through thedisposal of collateral and the execution of guarantees.
The allowance for claims on debtors other than Bankrupt borrowers, Substantially bankrupt
borrowers and Potentially bankrupt borrowers is provided primarily based on the default rate,
which is calculated based on the actual defaults during a certain period in the past.
The allowance for possible losses on specific overseas loans is provided based on the
expected loss amount taking into consideration the political and economic situations of thesecountries.
All claims are assessed initially by the operational departments and subsequently by risk
evaluation departments based on internal rules for self-assessment of asset quality. The internal
audit department, which is independent from the operational departments, reviews theseself-assessments, and the allowance is provided based on the results of the assessments.

(g) Provision for bonuses
The “provision for bonuses” is calculated and provided for based on the estimated amounts offuture payments attributable to the services that have been rendered by employees to the date of
the balance sheet.

(h) Provision for directors’ bonuses
The “provision for directors’ bonuses” is calculated and provided for based on the estimatedamounts of future payments attributable to the services that have been rendered by directors to
the date of the balance sheet.

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS(i) Provision for retirement benefits
The “provision for retirement benefits” represents the future payment for pension andretirement benefits to employees, and is accrued based on the projected benefit obligations andthe estimated pension plan assets at the fiscal period end.
Unrecognized actuarial differences are recognized as income or expense from the following
fiscal year under the straight-line method over a period up to a maximum of 10 years within the
average remaining service period of employees of the respective fiscal year.

(j) Provision for directors’ retirement benefits
The “provision for directors’ retirement benefits”, which provides for future retirement pension
payment to directors, corporate auditors and executive officers, is recognized at the amountaccrued at the end of the respective fiscal year.

(k) Accounting for hedges of interest rate risk(i) Hedge accounting
JBIC accounts for derivatives used for interest rate risk hedging purposes under the deferral
method.
(ii) Hedging instruments and hedged items
Hedging instruments: interest rate swaps
Hedged items: loans, borrowings, bonds and notes(iii) Hedging policy
JBIC enters into hedging transactions up to the amount of the underlying hedged assets andliabilities.
(iv) Assessment of hedge effectiveness
JBIC assesses the effectiveness of designated hedges by measuring and comparing the change
of fair value or cumulative change of cash flows of both hedging instruments andcorresponding hedged items from the date of inception of the hedges to the assessment date.

(ｌ) Accounting for hedges of foreign exchange risks
Hedge instruments used to hedge foreign exchange risks associated with various foreign
currency denominated monetary assets and liabilities are accounted for using the deferral
method, in accordance with the standard treatment of The Japanese Institute of Certified
Public Accountants (JICPA) Industry Audit Committee Report No. 25.
The effectiveness of the hedging instruments described above, such as currency-swaps,
forward contracts and similar transactions, hedging the foreign exchange risks of monetaryJapan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS

assets and liabilities denominated in foreign currencies, is assessed by comparing the foreign
currency position of the hedged monetary assets and liabilities with that of the hedging
instruments.

(m) Consumption and other taxes
Consumption taxes and local consumption taxes (“consumption taxes”) are excluded fromtransaction amounts. Amounts of nondeductible consumption taxes related to property, plantand equipment are expensed as incurred.

2. Affiliated company shares and capital stock
Affiliated company capital stock amounted to ¥763 million.

3. Loans
All of loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2009
include the following:(In millions of yen)
As of March 31, 2009
Account for JBIC Operations

Bankrupt loans

26,908Non-accrual loans

110,674

Loans with interest or principal repayments more―than three months on arrears
Restructured loans

92,894

Total

230,477(Notes)(a) “Bankrupt loans” are loans, defined in Article 96, Paragraph 1, Item 3 and 4 of the corporate Tax Law Enforcement
Ordinance (Government Ordinance No.97), on which accrued interest income is not recognized as there is substantial
uncertainty over the ultimate collectability of either principal or interest because they have been in arrears for a considerable
period of time or for another reason.
(b) “Non-accrual loans” are loans on which accrued interest income is not recognized, although this excludes loans on whichinterest payments are deferred in order to support the borrowers’ recovery from financial difficulties.
(c) “Loans with interest or principal repayments more than three months in arrears” are loans whose principal or interest payment
is more than three months in arrears, and which do not fall under category of “Bankrupt loans” and “Non-accrual loans”.
(d) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g.
reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repaymentsor renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall underJapan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS

the category of “Bankrupt loans”, “Non-accrual loans”, and “Loans with interest or principal payments more than threemonths in arrears”.
(e) The amounts of loans indicated in the table above are the gross amounts prior to the deduction of allowance for possible loan
losses.

JFC, as a policy, does not pay down loans in part or in full immediately after the execution of theloan agreements, but instead makes disbursement, in accordance with the progress of theunderlying projects. These undisbursed amounts are not included in the loans on deed in the
Balance Sheets. The balance of unpaid amounts as of March 31, 2009 is ¥1,290,735 million.
With respect to claims with collateral or guarantees on debtors who are legally or substantiallybankrupt (“Bankrupt borrowers and substantially bankrupt borrowers”), the residual booked
amount of the claims after deduction of the amount which is deemed collectable through thedisposal of collateral or the execution of guarantees is written off as at March 31, 2009. The
amount of accumulated write-offs is ¥10 million.

4. Assets pledged as collateral
Pursuant to Article 52 of the JFC LAW, assets of JFC are pledged as general collateral for all
bonds issued by JFC (which includes JBIC Operating Account bonds issued to a total amount of¥2,093,214 million).

5. Accumulated depreciation of fixed assets
Accumulated depreciation of fixed assets as of March 31, 2009 amounted to ¥335 million.

6. Net assets per share
Net assets per share are ¥1.87.

7. Receivable from affiliates
The receivable balance from affiliates as at March 31, 2009 is ¥19,646 million.

8. Restriction in dividend distribution
JFC is restricted in its dividend distribution pursuant to Article 47 of the JFC Law. In the eventthat the amount of the retained earnings brought forward in the balance sheet exceeds zero in eachaccount related to the operations listed in each Item of Article 41 hereof, JFC shall accumulate, asa reserve, the amount calculated in accordance with the standards prescribed by a Cabinet Order tothe extent that it reaches the certain amount, and if there is still a surplus, JFC shall pay suchsurplus into the National Treasury within 3 months after closing date.

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONSIn the event that the amount of the retained earning brought forward falls below zero in eachaccount set forth in the preceding Paragraph, Legal capital surplus and legal retained earnings shallbe transferred to retained earnings brought forward to the extent that the amount of retained
earnings brought forward becomes zero.

9. Net income per share
Net income per share is ¥0.02.

10. Issued shares
Types and number of issued shares are as follows:(Unit: shares)
The number of stocks
Types

at beginning of the

Increase during the
fiscal year

fiscal year

Commonstocks—1,035,500,000,000

Decrease

The number of stocks

during theat end of the fiscal

fiscal year

year

—

1,035,500,000,000(Note) Increases are due to the issuance of 30,000,000,000 shares and the contribution of 1,005,500,000,000 shares based on the
JFC Law.

11. Market value of securities
The market value of securities at March 31, 2009 is as follows:
Held-to maturity debt securities and available-for-sale securities whose fair value is notreadily determinable were as follows:
March 31, 2009
(In millions of yen)

Equity Securities of, or investment in subsidiaries and affiliates

763

Available-for-sale securities
Unlisted foreign stocks

8,729

Other unlisted Japanese securities

200

Other unlisted foreign securities

1,227

12. Deferred tax accounting
JFC does not apply deferred tax accounting since JFC is a nontaxable entity classified in the
Article 2 (5) of the Corporation Tax Act.

Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS

13. Retirement benefits
JFC has a defined benefit pension plan comprising of a welfare pension fund plan and a lump-sum
severance indemnity plan.
(a)The funded status of the pension plans
Disposition

March 31, 2009
(In millions of yen)

Projected benefit obligation (A)(16,329)

Fair value of plans’ assets (B)3,459

Unfunded pension obligation (C) = (A) + (B)(12,870)

Unrecognized net obligation at transition (D)1,259

Net amount recognized on the balance sheet (E) = (C) + (D)(11,611)

Prepaid pension cost (F)—Provision for retirement benefits (G) = (E) – (F)(11,611)(b)Component of pension cost
Disposition

March 31, 2009
(In millions of yen)

Service cost

279

Interest cost

160

Expected return on plans’ assets—

Unrecognized net obligation at transition—

Other costs—

Net pension cost

439

(Note) Employee contributions to pension funds have been deducted from the Service cost.

(c)Principal assumptions madeMarch 31, 2009

Discount rate

2.0%

Expected rate of return on plan assets

0.0%

Method of attributing the projected benefits to periods of services

Straight-line basis

Amortization period of net obligation at transition

10 years

14. Related party transaction
Related party transactions in the fiscal year ended March 31, 2009 are as follows:Japan Finance Corporation
ACCOUNT FOR JBIC OPERATIONS(a) Transactions with parent company and major shareholder companies(In millions of yen)
Ratio toRelation
Balance as of

Total
Amounts ofwith

Corporate
Business

Transactions

Voting

Items

March 31,transactions

related

name

2009

Rightsparties(%)
Underwritingof capitalincrease

30,000——(Note i)

Receipt ofMinistry

Administr

of Financeation for

(Minister

policyPrincipal
shareholder

100(Direct)

of

based

Finance)financing

Receiptof funds
etc.

funds(Note ii)

1,092,360

4,016,735
Borrowings

Repaymentof borrowing

528,549

Payment ofinterest on

24,261

Accruedexpenses

8,900

borrowings
Guarantee
for corporate

993,457—

bonds(Note iii)
(Notes)(i) The underwriting of capital increase represents the increase in capital through shareholder allocation by JFC at an allocation
amount of ¥1 per share. The amount does not include investments as stipulated under Article 8 of the Supplementary Provision
to the JFC Law.
(ii) The receipts of funds represents borrowing under the Fiscal Investment and Loan Program (“FILP”), and for this borrowing,
the interest rates are applied under the FILP agreement.
(iii) No guarantee fee has been paid for the guarantee of bonds.
(iv) Figures in the table above do not include consumption taxes.

15. Subsequent events
None—