Annual Report 2001

Profile
Driven by the same spirit that led to the founding of Suruga Bank, in hopes of meeting our customers’ expectations andearning their trust, we have made consistent efforts to maintain a sound business structure. We have proceeded with selfreliance and rugged independence with regard to capital, personnel, and sales policies. We readily recognize the public
responsibilities we bear as a financial institution. We have worked to ensure the smooth flow of funds and the fostering ofstrong industrial enterprises.
We intend to continue fulfilling our mission to contribute to the public good. Focusing exclusively on sound banking
operations, we aim to build a corporate structure that will endure through change. Moreover, we desire to provide goodquality financial services, as we stay close to our community, and quickly learn of our customers’ needs.
The environment that surrounds us is rapidly changing. We have devoted ourselves to the developing of newtechnological skills not yet found in other banks. Only through changing ourselves will we be able to keep up with theenvironment that is constantly changing around us. If we fear change, we will not be able to give birth to a bright future. Bybuilding a flexible organization that adjusts quickly to our customers’ needs, we will strive to become a chosen bank in thefinancial services industry.

Financial Highlights (Consolidated)
The Suruga Bank, Ltd. and consolidated subsidiaries
Thousands of
U.S. Dollars

Millions of Yen

Years ended March 31

2001

2000

1999

2001

For the year:
Total income .............................................................................................................
Total expenses...........................................................................................................
Income (loss) before income taxes ...........................................................................
Net income (loss) ......................................................................................................

¥ 120,680
104,736
15,9439,571¥ 110,705
94,095
16,6108,897¥ 140,742
160,083(19,340)(13,236)

Per share of common stock (in yen and dollars):
Net income (loss) ......................................................................................................

¥38.03¥35.57¥(52.75)$0.30

At the year end:
Deposits.....................................................................................................................
Loans and bills discounted........................................................................................
Securities...................................................................................................................
Shareholders’ equity .................................................................................................
Total assets................................................................................................................

¥2,720,425
1,938,745
381,319
127,633
2,914,972¥2,709,951
1,853,451
470,912122,187
2,903,792¥2,696,603
1,874,531
604,196
111,053
2,955,022$21,956,624
15,647,660
3,077,640
1,030,136
23,526,812

Capital adequacy ratio (%) .......................................................................................

8.86

8.77

8.10

$

974,011845,332
128,679
77,248Notes: 1. Yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts have been converted from Japanese yen, solely for convenience, at ¥123.90=US$1.00, the approximate rate of exchange prevailing on March 31, 2001.
3. Net income (loss) per share is calculated on the basis of the average number of shares of common stock outstanding during each year.
4. The capital adequacy ratio has been computed based on domestic standards since 1999.

Message from the President

A Concierge Makes the Customer’sDreams Come True
On the threshold of the 21st century, Suruga Bank has begun to transform itself
into a “Concierge.” Our aim is to extend our reach into every corner of theretail banking business, offering a full range of well thought-out, finely tailoredservices to meet all customer needs.
Suruga Bank aims to become a “Life & Business Concierge” for the 21st century. We
have already started down this road by becoming a “Concierge Bank.” “Concierge” isa term frequently used in the hotel industry, where customer satisfaction isparamount. We have adopted the term “concierge” as our catchphrase because it
accurately describes our vision of the role we aim to play.
The changes arising from market liberalization sparked by financial deregulation,
accelerated by the trend toward globalization and a borderless economy, have cast us
onto the stormy seas of fierce competition. We hear the crumbling of the walls thatstand between sectors of the financial industry. We see a succession of mergers andtakeovers, and business tie-ups among enterprises that were beyond imagining until
recently. It is no exaggeration to say that Suruga Bank is facing the most important
turning point in its history, and this has forced us to completely review our role. We
believe new business opportunities will arise in the process of role redefinition. We
are determined to become a truly reliable financial services company filled with the“customer-first” spirit, and we believe this is most appropriately expressed by theterm “concierge.”
Suruga’s adoption of the word “concierge,” however, was not prompted simply by
the desire to use a novel expression taken from a foreign language. On the contrary,
the underlying concept is deeply rooted in Japanese culture. It expresses, forinstance, the harmonious relationship between host and guest in the tea ceremony.
The essence of a concierge is the offering of the very best hospitality to guests. We at
Suruga Bank are striving to create innovative financial products and services to makethe dreams of each and every one of our customers come true. You can trust us tomake this ambition a reality.

Mitsuyoshi Okano,
Chairman &Chief Executive Officer

1

A Concierge is a Guide on the Journey of Life
From “Concierge Bank”
to “Financial Concierge” and thento “Life & Business Concierge”
Suruga pledges to guide its customers safely along the highway of life
Lifestyle and Business Support
People want to live their lives without worry and watch

2

In Step 1, Suruga will become a “concierge bank,”

services outside the financial sphere, assuring them of aaiming to realize the highest possible customer

more secure future. Being a concierge means acting as asatisfaction by providing essential banking services.

consultant who is always on hand to help both retailtheir businesses grow. These desires are perfectly

In Step 2, we will evolve into a “financial concierge,”

natural and basic to our approach to life and business.

becoming well-versed not only in conventional banking

This era of dynamic change that society has entered,functions, but also in the entire spectrum of financial

however, is creating problems. Rapid change continues

services. We will offer products and services best-suitedin a wide variety of fields, and the level of expertiseto each customer and the mostgrows ever higher at an accelerating pace. Under theseappropriate advice from a long-

conditions, both individuals and corporations mustterm perspective.

reconcile themselves to uncertainty and instability, andFinally, when as a result of

the importance of accountability is growing ever

the activities outlined above,

greater. The circumstances in which people find

we have achieved an eventhemselves today resemble, in some ways, those of ahigher level of trust andtraveler in an unknown place. How reassuring would it

expectation among the public,

be if the traveler’s hotel had a friendly concierge he

we will move to Step 3,

could consult.

comprising the transformation

Suruga Bank aims to become a “Life & Businessof Suruga into a “Life & BusinessConcierge” precisely because we see our mission as

Concierge.” In other words,

providing guidance and support at every stage of our

we will offer our customers ancustomers’ lives. We have drawn up three steps byadditional range of life- andwhich we plan to reach that goal.

lifestyle-planning support

and corporate customers anticipate and solve any
problems that may arise.

Individual customer
Operators of small and medium-sized business

People want tolive peaceful lives

LifestyleSupportServices

Business seeksdevelopment

Financial
SupportBusiness
SupportServicesThe French word concierge means “keeper of the keys.”
Hotel concierges provide a wide variety of ancillary services for guests, such as
reserving train tickets and providing guides to the city. As financial service
professionals, we at Suruga are starting down a new path of development as a“concierge bank.”

A familiar, sympathetic, and completely
reliable life and business partnerwith our customers.

The Evolution of Progress

The diagram below is a visual representation ofLife & BusinessConcierge

this process. The vertical axis of the graph represents
Suruga Bank has already begun to operate as a

the customer segments we serve. The horizontal axis

“concierge bank.” Our goal is to become an

represents geographical areas. The customer

indispensable presence in the lives of our customers –segments will remain the same – retail customers aseach and every one of whom has different views andwell as executives of small and medium-sizedways of life. We aim to become a familiar,

corporations. Accordingly, our focus should be

sympathetic, and completely reliable life and businessplaced on the upper part of the graph. Region A

partner to all our customers. Of course, we shallrepresents areas where we have branches, while

continue to offer our conventional, core banking

Region B represents areas where we do not haveservices with customary professionalism. But above

branches. In Region A, we will provide customers

and beyond that, we will ascertain the future goals ofwith superior services that best fit the needs of theAreas covered by concierge services

our customers and their plans for their private lives or

local residents. In Region B, we will provide services

business development. On the basis of thatutilizing the Internet and other telecommunication

Individuals and operators ofsmall and medium-sized businessknowledge, we will provide them with all the support

tools. Through our virtual branch strategy, we will

services they need. We will leave behind us themake the Suruga brand well-known all over Japan.

restricting confines of the traditional banking business

The word “concierge” originally meant “keeper ofmodel, and will approach our duties from thethe keys” or “caretaker.” Suruga aims to act as astandpoint of a service industry company, providing

caretaker in its customers’ lives, allowing them toconsultation and advice. Through the daily provision

look forward, with peace of mind, to a prosperousof such services, we will forge strong bonds of trust

future.

Financial
Concierge
Concierge
Bank
Bank

B

A
Local
areas

Expandedareas

Large companies

Concierge Bank Suruga
3

A Concierge is a Specialist in Guest Relations
Suruga Bank has announced its intention to specialize in retail banking, and thus
good relations with our customers are crucial to our success. Using our uniquecustomer relationship management system, we will meet each customer on a oneto-one basis.

A Thoroughly Customer-Focusedpressed, and when they do find someone tobanking service mix of “clicks and bricks,” Suruga

Approach to Banking

consult, they do not receive personal service.

is well on the way to reaching its goal of

Many customers feel this kind of dissatisfaction

becoming a true retail bank.

In the hotel industry, a concierge works in theand need something more. Many banks aim to be

front line of a hotel’s guest relations. A concierge’s

major players on the world stage, distancingrole is to more firmly cement the ties of trust

themselves from their individual customers. In

between guests and hotel. To do this, concierges

contrast, we at Suruga Bank will do our best to

must thoroughly understand each customer’s likes

meet the individual needs of our customers.

and dislikes, allowing them to provide services

Suruga was one of the first banks in Japan tothat meet customers’ expectations. In line withrealize the possibilities of customer relationshipthis concept, Suruga Bank has rejected the

management (CRM), and was a pioneer in the

traditional way of thinking in the banking industry

banking industry in developing its own CRM

in favor of a completely customer-centric stance.

4

Financial services

Lifestyle Support
Services

system. Information on a customer’s needs and

The financial services industry is moving at anhopes gleaned from interviews conducted by one

increasingly fast pace and becoming ever more

Suruga employee is shared with all other staff: it

specialized. (This trend is represented by the four

becomes part of the Bank’s common data pool.

arrows in the graph at right.) Nonetheless, theThis enables us to create a “one-to-one”

majority of customers are not seeking what lies atrelationship with each customer, no matter which

the far end of those vectors. Instead, they needstaff member handles each consultation. Not only

help and guidance on a more basic level, as

does Suruga offer a completely customer-focused

represented by Region B on the graph. They doservice, we treat each customer as a unique

not know whom to approach for advice when

individual. Through the synergy created by ourAncillary services

Bank

B

A

C

Business Support
ServicesAs a “Concierge Bank,” we are closely involved in our customers’ lives
Suruga Bank lends a professional ear to customers’ requests. We then recommend
the most appropriate financial products and services by putting ourselves in thecustomer’s shoes.
Your “personal concierge” is waiting for you at your local branch.

A Lineup of Products and Services to
Meet Every Needgreeted at the reception desk?

e-Trade online securities trading settlement system,•Do customers feel easily able to drop by and ask
for advice whenever they need it?

and time deposits with free Jumbo Takarakuji lottery
tickets.

We have set up Concierge Desks at all our branches•Do we recommend the products and services

Breaking away from banks’ traditionally heavy

to handle every kind of consultation that may be

best-suited to each customer after having thought

dependence on deposits and loans, Suruga aims todesired by our customers concerning financial

carefully about them from the customer’s

expand into a broad area of new fields intimately

planning for the various stages of their lives. Personal

standpoint?

connected with customers’ lives and businesses,

Concierges, who are qualified financial planners, are•Do we offer the kind of support that furtherson hand to give advice over the telephone or face-to-the development of small and medium-sized

face. These Personal Concierges utilize both theircorporate customers?

specialist expertise and their concern for eachThis process of careful scrutiny of our businesscustomer’s welfare to recommend the mostapproach, characterized by verifying that ourappropriate products or services.

prosperity and security, forms the core of our ability

face to the customer – one who is sympathetic to theto offer the right products and services and thecustomer’s needs and on whom the customer can

optimum advice.

rely. Having thought long and hard about our future

Suruga Bank has designed and brought to market

social role, we at Suruga Bank have decided toa long list of unique and attractive new products.

transform ourselves into a Concierge Bank.

These include accumulation-type investment trusts,

questions:•Do customers feel at ease when they areoperations, and direct banking.

methods really contribute to the customer’s

The principle of the concierge is to be a familiar

We have asked ourselves many searching

including securities, insurance, trusts, internationalmortgage-linked long-term fire insurance, mortgage
loans for working women (rare in Japan hitherto), a
remittance tie-up with the Postal Savings system, theConcierge Bank Suruga
5

Fiscal 2000 Strategies and Results

In fiscal 2000, we implemented a range of measures related to our fourinnovation strategies: innovation in marketing, administration, use of
information technology, and corporate organization.

The year under review was the final year of our medium-launched My Suruga, through which we transmit

term management plan, entitled Together 2001. During

appropriate and timely information via the Internet to

the year, we implemented a range of measures related toeach and every customer. This is a “one-to-one” service

our four innovation strategies: innovation in marketing,that any customer can conveniently access via theadministration, use of information technology, andInternet. It represents a major step forward in realizing ourcorporate organization.

“Concierge Bank” concept, which emphasizes reinforced

In the area of corporate organization, we took

In addition to the above reforms, we receivedof a changing operating environment. Specifically, weinternational recognition for our environmental

created a new executive officer management systemmanagement and quality control systems. We became thecentering on the positions of chief executive officer, chief

first Japanese bank to simultaneously acquire ISO14000

operating officer, and chief financial officer. Under theseries certification for environmental management systems

new system, we transferred a large portion of authority

and ISO9000 series certification for quality control

from directors to executive officers and also increased thesystems.

number of executive officers, thereby speeding up
decision-making and execution of business. In addition,
after examining the Bank’s management from multiple
perspectives, we instituted an external director system
aimed at incorporating new concepts from non-financial
circles into the Bank’s operations.
Fiscal 2000 marked our full-scale entry into the Internet
banking field, as we opened six dedicated online
branches, partially through alliances with non-banking
entities. Through these network-based branches, Suruga
Bank began handling a number of original, high-valueadded products, including a time deposit with a special
gift for new depositors, an investment trust product thatenters the customer into a big-prize lottery, and amortgage loan targeted at female customers.
We also improved our services. Taking full advantage
of our Customer Relationship Management (CRM) systemdrawing on a database of customer information, we

6

ties with customers.

measures to speed up management processes in the faceReinforcing Retail Banking

We further reinforced our retail banking capabilities by focusing on
customer desires and effectively utilizing our CRM system.

Loans to individuals exceed 50% of total loans

actively pursuing alliances with enterprises in otherand bills discounted

business sectors. Such alliances offer synergistic benefits
that capitalize on the strengths and know-how of both

In fiscal 2000, Suruga Bank renewed its emphasis on aparties. They are also effective in stimulating thecustomer-first policy. Effectively utilizing CRM and otherdevelopment of new products, targeting customers of

information systems, we further reinforced our retailalliance partners, and in expanding sales channels.

banking capabilities, centering on individuals and small
and medium-sized businesses.

In fiscal 2000, Suruga Bank formed an alliance with
Softbank Finance Corporation, Orient Corporation, SE

Specifically, we upgraded our loan product lineup to

Bank (part of the CSK Group), and So-net (part of the Sonymeet customers’ diversified needs while improving

Group), opening a series of dedicated online branches that

services at branches and mortgage loan centers. In theseprovide the specialized services of each alliance party.

ways, we worked to maximize convenience to customers,

Since these “virtual” branches can be accessed fromboth through face-to-face contact and other means

anywhere and at any time, they have been very successful

including the Internet and mobile phones.

in attracting new customers from all over Japan.

As a result, the balance of loans and bills discounted

We will continue to actively pursue e-alliances withrose by ¥84.6 billion. Loans to individuals jumped byprominent companies in various industries as we work to¥144.5 billion and accounted for 51% of total loans anddevelop original products and upgrade services to earn thebills discounted at fiscal year-end, up from 45% a year

support of our customers.

earlier.
We will continue to develop products that truly matchthe needs of customers as we pursue our policy of
increasing loans to retail customers and small-lot financing
for small businesses.

Promoting e-business alliances
Consistent with its policy of expanding the retail banking
business, Suruga Bank devotes considerable energy to 24hour, year-round Internet banking services. Indeed, we
have built a prominent presence ahead of other Japanesefinancial institutions. In order to satisfy the diversified
needs of customers through Internet banking, we are

Concierge Bank Suruga
7Board of Directors and Auditors and Executive Officers

Chairman of the Board of Directors& Chief Executive Officer

Chairman of the Board of Officers& Chief Operating Officer

Senior Managing Director& Chief Financial Officer

Mitsuyoshi Okano

Kinosuke Okano

Seiji Inui

Managing Director Senior
Executive Advisor

Managing Director Senior
Executive Advisor

Managing Director Senior
Executive Advisor

Managing Director Senior
Executive Advisor

Yuzaburo Kamano

Hiroo Goto

Toshiki Hoshino

Atsushi Okamura

Director

Director

Director

Tatsuya Tamura

Tsuneo Yahagi

Makoto Naruke

Chairman of the Board of Directors& Chief Executive Officer

Mitsuyoshi Okano
Chairman of the Board of Officers& Chief Operating Officer

Kinosuke Okano
Senior Managing Director& Chief Financial Officer

Directors

Executive Officers

Tatsuya Tamura
Tsuneo Yahagi
Makoto Naruke

Shinji Ihara
Seiichiro Wakita
Sachio Takahata
Tetsu Ito
Kihachiro Nomura
Kiyokazu Masuda
Kazuya Mochizuki
Hideki Maruyama

Standing Auditors

Yoshinori Sano
Masataka Oiwa
Auditors

Seiji Inui

Yasumi Mochizuki
Takashi MimuraManaging Director Senior Executive
Advisors

Senior Executive Officers

Yuzaburo Kamano
Hiroo Goto
Toshiki Hoshino
Atsushi Okamura

Takehiko Katsumata
Ryozo Kinoshita

Officers

Yasuyuki Tanaka
Toshinaga Suzuki
Hiroshi Konagaya
Fumiaki Toyama
Osamu Kobayashi
Toru Fukada
Takashi Tsuchiya
Toshihisa Kubozono
Nobuo Mori
Yoshihiro Okazaki
Takahiro Aoki
(As of June 22, 2001)* Auditors Yasumi Mochizuki and Takashi Mimura have been appointed external auditors in compliance with the law pertaining to the special
ordinance to the Commercial Code concerning auditors of public limited companies as regulated in article 18, clause 1.
8

Financial Review
The Suruga Bank, Ltd. and Subsidiaries

March 31, 2001

Business Environment(US$21,956 million), while the loan balance at the term-end rose ¥85,294

During the first half of the term under review, a gradual recovery trend was

million to ¥1,938,745 million (US$15,647 million). The term-end balance ofseen in the Japanese economy, led by the private sector, notably IT-related

securities came to ¥381,319 million (US$3,077 million), down ¥89,593 million

industries. The main factors behind this were the series of economic stimulus

year-on-year.

measures implemented by the government in a continuation of the previous

Net income increased by ¥674 million to ¥9,571 million (US$77 million).

year’s policy, and the strength of the U.S. economy. From the autumn onward,

The Bank’s capital ratio was calculated at 8.97% on the basis of international

however, the supportive effect of the stimulus measures tapered off, while atstandards and at 8.86% on the basis of domestic standards.

the same time exports stagnated due to the slowdown in the United States. As
a result, economic recovery in the term as a whole came virtually to a halt.

Net cash used in operating activities came to ¥236,228 million (US$1,906
million), as a result of a substantial increase in cash outflow from loans
advanced and call loans and an inflow from a higher level of deposits received,

The economies of Shizuoka and Kanagawa prefectures, the Bank’sbusiness base, were adversely affected by sluggishness in exports andin addition to gains on the sale of trading securities. Net cash provided byproduction, which had been on an upward trend. The principal causes of thisinvesting activities amounted ¥93,108 million (US$751 million), mainly as adevelopment were the slowdown in the U.S. and East Asian economies, andresult of the sale of trading securities. Net cash used in financing activities

the increasingly cloudy future of prospects in Japan. Unemployment remained

amounted to ¥1,945 million (US$15 million), largely as a result of the outlay

high, and consumer spending as a whole was lackluster.

associated with the acquisition of the Bank’s own stock to allow for theoperation of the employee stock option plan.

Business Performance

Cash and cash equivalents at the term-end declined ¥145,046 million year-

Amid the circumstances described above, Suruga Bank and its 9 consolidated

on-year, to ¥63,514 million (US$512 million), thanks to more efficient fundsubsidiaries posted the following results.

management. The term “Cash and cash equivalents” as used here refers to

In the principal consolidated accounts, the term-end balance of deposits
increased by ¥10,474 million over the previous year, to ¥2,720,425 million

cash and cash equivalents in the consolidated balance sheets in addition todeposits with the Bank of Japan.

Five-year Summary (Non-Consolidated)Thousands of
U.S. Dollars

Millions of Yen
The Suruga Bank, Ltd.

Years ended March 31

2001

For the year:
Total income .................................................................. ¥ 112,936
Total expenses................................................................
97,515
Income (loss) before income taxes.................................
15,421
Net income (loss) ...........................................................
9,472
Per share of common stock (in yen and dollars):
Net income (loss) ...........................................................
Cash dividends applicable to the year............................

2000¥ 101,113
84,80916,304
9,077

1999

1998

¥ 130,526 ¥ 118,576
149,564
110,708(19,037)
7,868(13,169)
1,219

2001

1997
¥ 115,433
104,994
10,4391,274$

911,515
787,050
124,465
76,451¥35.755.00¥34.26
5.00¥(49.14)
5.00

¥4.53
5.00

¥4.73
5.00

$0.2880.040

At the year end:
Deposits.......................................................................... ¥2,725,467
Loans and bills discounted ............................................. 1,955,564
Investment securities......................................................
380,589
Shareholders’ equity ......................................................
140,480
Total assets ..................................................................... 2,910,809¥2,712,506
1,870,906
470,215
134,3142,897,270¥2,697,034
1,889,572
603,141
126,560
2,943,165¥2,702,079
2,014,085
490,930
125,078
2,976,435¥2,793,829
2,013,019
610,314125,2033,080,334$21,997,313
15,783,407
3,071,747
1,133,822
23,493,217

9.54
121
2,156

9.16
121
2,254

9.74
123
2,353

9.77
135
2,474

Capital adequacy ratio (%) ............................................
Number of offices ..........................................................
Number of employees ....................................................

9.60
126
2,068

Notes: 1. Yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts have been converted from Japanese yen, solely for convenience, at ¥123.90=US$1.00, the approximate rate of exchange prevailing on March
31, 2001.
3. Net income (loss) per share is calculated on the basis of the average number of shares of common stock outstanding during each year.
4. The capital adequacy ratio has been computed based on domestic standards since 1999.

9

Consolidated Balance Sheets
The Suruga Bank, Ltd. and Subsidiaries

Thousands of
U.S. dollars(Note 2)Millions of yen

As of March 31,

2001

2001

2000

Assets63,514¥ 208,560

Due from banks

89,172

105,755

719,715

Call loans, commercial paper and other debt purchased

316,560

138,024

2,554,969

Trading account securities

19,99722,996

161,404

Money trusts

2,794

3,000

22,554

Cash and cash equivalents

Investment securities
Loans and bills discounted (Note 3)¥$

512,628

381,319

470,9123,077,640

1,938,745

1,853,451

15,647,660

634

3,287

5,121

Other assets

19,832

17,889160,067

Premises and equipment (Note 4)

57,98960,026

468,034

Deferred tax assets (Note 11)

39,02340,997

314,957

Customers’ liabilities for acceptances and guarantees

18,17919,359146,727

Foreign exchangeLess reserve for possible loan losses
Total assets(32,792)(40,469)(264,670)¥2,914,972¥2,903,792$23,526,812

Liabilities, minority interests and shareholders’ equity
Liabilities¥2,720,425¥2,709,951$21,956,624

Call money

4,212

12,50434,000Borrowed money

14,737

13,896

118,946

Foreign exchange

14

28

113

24,271

21,163

195,892

—

3,874

—

Deposits

Other liabilities
Reserve for retirement allowances
Accrued pension and severance costs (Note 7)

4,711

—

38,024

Reserve for possible losses on sales of loans

296

477

2,389

18,17919,359146,727

2,786,847

2,781,254

22,492,717

490

350

3,958

Common stock

30,04330,043

242,479

Capital surplus

18,585

18,585150,006

Retained earnings

94,18885,936760,201

Net unrealized losses on securities, net of taxes(1,931)—(15,592)

Acceptances and guarantees
Total liabilities
Minority interests
Shareholders’ equity

Less treasury stock, at cost

(1,222)(536)(9,870)Less shares of common stock held by subsidiaries, at cost

(12,029)(11,841)(97,088)

127,633

122,187

1,030,136¥2,914,972¥2,903,792$23,526,812

Total shareholders’ equity
Total liabilities, minority interests and shareholders’ equity
10Consolidated Statements of Income
and Retained Earnings
The Suruga Bank, Ltd. and Subsidiaries

Thousands of
U.S. dollars(Note 2)Millions of yen

Years ended March 31,

2001

2000

2001

¥ 70,206¥ 72,504$566,636

7,028

6,174

56,727

IncomeInterest income (Note 9)
Fees and commissions
Other operating income

17,393

20,797140,386

Other income (Note 10)

26,051

11,228210,261

Total income

120,680

110,705

974,011

18,111

16,698146,177

Expenses
Interest expense (Note 9)
Fees and commissions

4,103

3,017

33,119Other operating expenses

15,254

17,932

123,116

General and administrative expenses

43,656

41,841

352,351

Other expenses (Note 10)

23,611

14,605

190,567

Total expenses

104,736

94,095845,332

15,943

16,610128,679

Current

2,881

6,168

23,257

Deferred

3,350

1,308

27,044

6,232

7,477

50,302

139

234

1,128

9,571

8,897

77,24885,93678,285693,598(1,258)(1,246)(10,161)

(60)

—

(484)

¥ 94,188¥ 85,936$760,201

Income before income taxes
Income taxes (Note 11):

Minority interests in earnings of consolidated subsidiaries
Net income
Retained earnings:
Balance at beginning of year
Deductions:
Dividends paid
Bonuses to directors and corporate auditors
Balance at end of year

11Consolidated Statements of Cash Flows
The Suruga Bank, Ltd. and Subsidiaries
Millions of yen

Years ended March 31,

Thousands of
U.S. dollars(Note 2)

2001

2000

2001

¥ 15,943
9,302(7,676)(181)(3,874)
4,711(3,347)5,624(60)(70,206)
18,111(9,746)203(5,955)¥ 16,610
9,049(6,513)
188
50
—
—
—
—
(72,504)
16,698(6,646)(16)800$ 128,679
75,080(61,961)(1,460)(31,269)
38,024(27,018)
45,391(484)(566,636)
146,177(78,667)
1,646(48,063)2,998(85,293)
10,474840
16,582(178,536)(8,291)2,653(14)
69,203(18,682)
3,574(231,642)(4,586)(236,228)(12,971)
21,07913,347(829)(23,928)(41,879)(12,027)(235)
1273,346(18,607)(4,314)(49,292)(16,514)(65,807)

24,201(688,403)
84,541
6,787
133,837(1,440,972)(66,923)
21,412(118)
558,541(150,786)
28,852(1,869,589)(37,020)(1,906,609)

Cash flows from investing activities
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of bonds
Increase in money trusts
Decrease in money trusts
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Net cash provided by investing activities(974,482)
847,823
221,075(14)
16(9,997)
8,687
93,108(315,744)
353,486
106,189(1,011)
3,527(11,302)
1,249
136,395(7,865,076)
6,842,807
1,784,308(116)
129(80,688)
70,115
751,480

Cash flows from financing activities
Dividends paid
Dividends paid to minority interests
Purchases of treasury stock
Proceeds from sales of treasury stock
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 at beginning of year
Cash and cash equivalents at end of year

(1,258)
(0)
(950)
264
(1,945)19(145,046)
208,560¥ 63,514(1,246)(0)(1,272)738(1,780)(15)
68,792
139,768¥208,560(10,161)(2)(7,674)
2,137(15,700)
157(1,170,672)
1,683,300$ 512,628

Cash flows from operating activities
Income before income taxes and other adjustments
Depreciation and amortization
Change in reserve for possible loan losses
Change in reserve for possible losses on sales of loans
Decrease in reserve for retirement allowances
Increase in accrued pension and severance costs
Gain on contribution of securities to employee retirement benefit trusts
Loss on establishment of employee retirement benefit trusts
Bonuses to directors and corporate auditors
Interest income
Interest expense
Gain on investment securities, net
Loss (gain) on money trust investments, net(Gain) loss on sales of premises and equipment, net
Change in operating assets and liabilities:
Trading securities
Loans
Deposits
Borrowings excluding subordinated debt
Due from banks other than BOJ
Call loans
Call money
Foreign exchange assets
Foreign exchange liabilities
Interest received
Interest paid
Other, net
Subtotal
Income taxes paid
Net cash used in operating activities

12Notes to Consolidated Financial Statements
The Suruga Bank, Ltd. and Subsidiaries

March 31, 2001 and 2000

1. Summary of Significant Accounting Policies(a) Basis of Preparation
The accompanying consolidated financial statements of Suruga
Bank, Ltd. (the “Bank”) and its subsidiaries have been prepared on
the basis of accounting principles and practices generally accepted
and applied in Japan and have been compiled from the consolidated
financial statements filed with the Minister of Finance as requiredby the Banking Law of Japan and the Securities and Exchange Law
of Japan. Accordingly, the accompanying consolidated financial
statements are not intended to present the consolidated financial
position, results of operations and cash flows in accordance withaccounting principles and practices generally accepted and appliedin countries and jurisdictions other than Japan. In addition, thenotes to the consolidated financial statements include information
which is not required under accounting principles generally
accepted in Japan but is presented herein as additional information.
For the convenience of readers outside Japan, certain items presented in the original statements have been reclassified andrearranged.

(b) Principles of Consolidation
The accompanying consolidated financial statements include theaccounts of the Bank and its subsidiaries and certain associatedcompanies, which are as follows:
Suruga Business Service Co., Ltd.
Suruga Staff Service Co., Ltd.

Other securities (available-for-sale securities) whose current
value can be estimated are stated at their market value as of the
fiscal year end and other non-marketable securities are stated atcost or amortized cost computed by the moving-average method.
Unrealized gains and losses on securities available for sale areincluded in shareholders’ equity, net of income taxes.

(e) Securities in Money Trusts
Securities included in money trusts are stated by the same method as
those described in (c). and (d). above.

(f) Derivatives
Derivative positions are stated at their market value as of the fiscal
year end.

(g) Premises and Equipment
Depreciation of premises and equipment of the Bank is computedby the declining-balance method at rates principally based on thefollowing estimated useful lives:
Buildings

15 years to 50 years

Equipment and furniture

5 years to 20 years

Costs of software developed or obtained for internal use areamortized by the straight-line method over an estimated useful lifeof 5 years.
Certain subsidiaries apply the straight-line method for the depreciation of premises and equipment.

A.P.I. Co., Ltd.
Suruga General Lease Co., Ltd.

(h) Foreign Currency Items

Suruga Capital Co., Ltd.

Assets and liabilities which are payable or receivable in foreign
currencies are converted into Japanese yen at the rates prevailingat each fiscal year end.

Suruga Computer Service Co., Ltd.
Suruga Investment Finance Co., Ltd.
Suruga Card Co., Ltd.
Suruga Credit Service Co., Ltd.
All significant intercompany accounts and transactions havebeen eliminated in consolidation.

(c) Trading Account Securities
Trading account securities are stated at their market value as of the
fiscal year end.

(d) Investment Securities
Debt securities being held to maturity are stated at amortized costcomputed by the moving-average method.

(i) Reserve for Possible Loan Losses
The reserve for possible loan losses of the Bank is provided inaccordance with the policies regarding write-offs and reserve standards stipulated in “Auditing of Write-offs and Loan Loss Provisions”
issued as part of the “Fourth Report of the Auditing Subcommittee
for Banks and Other Financial Institutions” of the Japanese Instituteof Certified Public Accountants. The reserve for loans to borrowers
who are classified as substantially bankrupt or who are bankrupt in
the formal legal sense is provided based on the amount remaining
after deduction of the amount of their collateral considered to bedisposable and of the amounts recoverable under guarantees.
In addition, a reserve is provided for loans to borrowers who,
although not actually bankrupt in the legal sense, are experiencing
13serious management difficulties and whose failure is imminent. In
such cases, a portion of the reserve is provided based on the amountremaining after deduction of the amount of their collateral considered to be disposable and of the amounts recoverable under guarantees, and the balance of this reserve is provided after giving fullconsideration to the amount the borrower is capable of repaying. In
the case of all other loans, the amount provided as a reserve is basedon the ratio of actual defaults over a fixed period in the past.
For claims of “substantial bankruptcy” and “legal bankruptcy,”
an amount exceeding the estimated value of collateral or guarantees
deemed uncollectible is deducted, directly from those claims. For
the years ended March 31, 2001 and 2000, the amounts deducted
were ¥9,510 million (US$76,758 thousand) and ¥11,627 million,
respectively.

(m) Method of Hedge Accounting
The method of hedge accounting adopted is a “macro hedge”
under which the Bank manages its interest rate risk arising fromvarious assets and liabilities as a whole with derivatives. The Bank
applies the risk adjustment approach based on a report issued by
the Japanese Institute of Certified Public Accountants entitled“Tentative Treatments in Accounting and Auditing for Banks on
the Application of Accounting Standard for Financial
Instruments.”
The effectiveness of the macro hedge is reviewed for a reduction in interest rate risk exposure and for the actual risk on derivatives within the permitted risk limits established under the Bank’s
risk control policies.

Provisions for possible loan losses at the consolidated subsidiaries have been made as deemed necessary with reference to thehistorical loan loss experience of these companies.

In addition to macro hedge accounting, the Bank and its consolidated subsidiaries have adopted deferral hedge accounting or
certain exceptional treatments permitted under interest rate swaps
for a portion of their assets and liabilities.

(j) Reserve for Possible Losses on Sales of Loans(n) Consumption Tax

The reserve for possible losses on sales of loans provides for contingent losses arising from any decline in the market value of thecollateral posted on corporate mortgage loans sold to the
Cooperative Credit Purchasing Company, Ltd.

Consumption tax and local consumption tax of the Bank and its
domestic consolidated subsidiaries are excluded from the transaction amounts presented. The portions of consumption tax and the
local consumption tax which were paid on the purchase ofpremises and equipment and which are not deductible as tax credits have been included in other assets and are being amortized overa five-year period.

(k) Pension and Severance Costs
Accrued pension and severance costs is provided for the future payment of employees’ retirement benefits based on estimated amountsof the actuarially calculated retirement benefit obligation and thepension plan assets. Prior service cost is amortized by the straightline method over 5 years. Net actuarial gain (loss) is amortized by
the declining-balance method over 13 years commencing year following the year of incurrence. The unrecognized net retirement benefit obligation at the adoption of new accounting standard was¥11,221 million (US$90,564 thousand) at April 1, 2000. Of this difference, ¥5,001 million (US$40,363 thousand) has been treated as a
lump-sum expense which is covered through the establishment ofan employee retirement benefit trusts and the remainder is being
amortized by the straight-line method over a period of 5 years.

(l) Equipment Held under Finance Leases
The equipment of the Bank and its domestic consolidated subsidiaries held under finance leases is accounted for as equipment
leased under operating leases, except for those leases which transfer the ownership of the leased equipment to the lessee, in whichcase the equipment is capitalized.

14(o) New Accounting Standards(1) New accounting standard for employees’ retirement benefits
Effective April 1, 2000, the Bank and its domestic subsidiaries
had adopted a new accounting standard for employees’ retirement benefit in accordance with “Opinion Concerning theEstablishment of Accounting Standards for Retirement
Benefits” issued by the Business Accounting Deliberation
Council on June 16, 1998. As a result, income before income
taxes decreased by ¥1,359 million (US$10,974 thousand) fromthe corresponding results which would have been recorded if
the method of accounting referred to above had not been
adopted. In addition, the Bank contributed own marketablesecurities to a employee retirement benefit trusts during theyear ended March 31, 2001, which resulted in a decrease inincome before income taxes of ¥1,654 million (US$13,349
thousand).

(2) New accounting standard for financial instruments
Effective April 1, 2000, the Bank and its domestic subsidiaries
had adopted a new accounting standard for financial instruments in accordance with “Opinion Concerning theEstablishment of Accounting Standards for Financial
Instruments” issued by the Business Accounting Deliberation
Council on January 22, 1999, and revised their methods of valuation of trading account and investment securities, money
trusts, and derivatives and their hedge accounting method,
accordingly. As a result, income before income taxes
decreased by ¥1,621 million (US$13,089 thousand) from thecorresponding results which would have been recorded if themethods of accounting referred to above had not been adopted.
Unrealized gains and losses on available-for-sale securities
and money trusts are presented as “Unrealized losses on securities” in shareholders’ equity, net of taxes.

2. Japanese Yen and U.S. Dollar Amounts
The Japanese yen amounts in the accompanying consolidated
financial statements are presented in millions, with fractions
omitted.
Amounts stated in U.S. dollars are translated from Japanese yen,solely for convenience, at ¥123.90 = U.S.$1.00, the exchange rate
prevailing on March 31, 2001. The translation should not be construed as a representation that Japanese yen could be converted into
U.S. dollars at the above or any other rate.

3. Loans and Bills Discounted
Loans and bills discounted at March 31, 2001 and 2000 included
the following:...............................................

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Loans to companies underbankruptcy procedures¥ 8,976¥ 10,200$ 72,446

Delinquent loans
Loans past due 3 months or more
Restructured loans
Total

46,948831
22,150¥ 78,906

44,217
1,355
23,007¥ 78,780

378,926
6,710
178,775$ 636,858

Loans to companies under bankruptcy procedures consist of
non-accrual loans on which the payment of principal or interest is
well past due or there is no prospect of recovery of the principal orinterest from the borrower or from a third party guaranteeing theloan (the balance does not include the written-down portions of theloans). These loans hereafter are referred to as “non-accrualloans.” This category also includes the loans cited in Article 96-13 and 1-4 of the Corporation Tax Law (Government Ordinance
No. 97 of 1965).
Delinquent loans are defined as loans which are past due andnot accruing interest, but which are categorized neither as “Loansto companies under bankruptcy procedures” nor as “Restructuredloans” as defined below.
Loans past due for 3 months or more are classified as such when
3 months or more have elapsed since the due date without the payment of principal or interest. The balance of loans to companies
under bankruptcy procedures and the balance of delinquent loans
are not included in this category.
Restructured loans include loans which have been restructured
to support the rehabilitation of certain borrowers who are encountering financial difficulties, with the intention of ensuring the recoveryof the loans by providing easier repayment terms for the borrowers(such as by reducing the rate of interest or by providing a grace
period for the payment of principal/interest, etc.). Excluded fromthis balance are the balance of loans to companies under bankruptcy
procedures, the balance of delinquent loans and the balance of loans
past due for 3 months or more.

4. Accumulated Depreciation
Accumulated depreciation on premises and equipment at March 31,
2001 and 2000 totaled ¥55,187 million (US$445,418 thousand) and¥53,233 million, respectively.

15

5. Assets Pledged

7. Employees’ Retirement Benefits

Assets pledged as collateral at March 31, 2001 and 2000 were as
follows:

The funded status and amounts recognized in the consolidatedbalance sheet as of March 31, 2001 were as follows:...............................................

Investment securities
Due from banks
Common stock held by subsidiaries
Customers’ notes and others

Millions of yen
2001
2000

¥ 3,002100
1,788
11,605¥2,993
360
1,788
459

Thousands of
U.S. dollars
2001$24,232
808
14,431
93,666

Liabilities related to the above pledged assets were as follows:...............................................

Call money
Borrowed money
Deposits

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001¥ 1,115
13,175619$ 9,000
106,335
5,000¥2,123
2,820—

Projected benefit obligation
Fair value of plan assets
Projected benefit obligationin excess of plan assets
Unrecognized net obligation at transition
Unrecognized net actuarial loss
Unrecognized prior service cost
Net liability recognizedPrepaid pension costAccrued pension and severance costs

Millions of yen
2001

Thousands of
U.S. dollars
2001¥(33,896)
23,266$(273,581)
187,781(10,630)
4,976
1,806
(862)
(4,711)—(4,711)(85,799)
40,161
14,577(6,964)(38,024)—(38,024)

8. Amounts per Share
In addition, investment securities totaling ¥148,803 million(US$1,200,998 thousand) and ¥131,115 million at March 31, 2001
and 2000, respectively, were pledged as collateral for the settlementof exchange and short selling transactions or as margin.

The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each year, less treasury stock and common stock held bysubsidiaries.

6. Loan Commitments

Amounts per share of net assets are computed based on the numberof shares of common stock outstanding at each balance sheet date, lesstreasury stock and shares of common stock held by the subsidiaries.

Contracts for overdraft facilities and loan commitments refer tocontracts under which the Bank and its consolidated subsidiaries
lend to their customers funds up to certain prescribed limits in
response to their customers’ loan applications as long as there isno violation of any of the conditions stipulated in the contracts.
The unused portion within the set limits of such contracts totaled¥727,256 million (US$5,869,708 thousand) at March 31, 2001.
Since many of these commitments expire without being drawn
down, the unused amount does not necessarily represent a future
cash requirement. Most of these contracts have conditions that the
Bank and its consolidated subsidiaries can refuse customers’ loan
applications or decrease the contract limits for appropriate reasons(e.g., a change in their financial situation, deterioration in the customers’ creditworthiness, etc.). At the inception of the contracts,
the Bank and its consolidated subsidiaries obtain real estate andsecurities, etc. as collateral if deemed necessary. Subsequently, theBank and its consolidated subsidiaries perform periodic reviews of
the customers’ business results based on their internal rules, andtake the necessary measures to reconsider the conditions stipulated
in the contracts and/or require additional collateral and guarantees.

16

Yen
March 31

2000

U.S. dollars
2001¥ 38.03 ¥ 35.57
507.41484.77$0.306
4.095

2001

Net income
Net assets

9. Interest Income and Expense
Interest income and expense for the years ended March 31, 2001
and 2000 were as follows:
Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Interest income:Interest on loans and discounts
Interest and dividends on securities
Interest on deposited money
Other
Total

¥60,918
8,400
208
679
¥70,206¥53,745
16,89553
1,809¥72,504$491,676
67,797
1,681
5,481$566,636Interest expense:
Interest on deposits
Interest on borrowings and other
Other
Total

¥ 7,005
984
10,121¥18,111¥ 8,198
1,433
7,067¥16,698$ 56,538
7,948
81,690$146,17710. Other Income and Expenses

11. Income Taxes

Other income and expenses for the years ended March 31, 2001
and 2000 were as follows:

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2001 and 2000 are summarized as follows:

Millions of yen
2001
2000

Other income:Gain on sales of stocks and othersecurities
Gain on disposition of premises andequipment
Gain on securities contributed to
employees’ retirement benefit trusts
Other
Total
Other expenses:
Provision for possible loan losses
Loss on devaluation of stocks andother securities
Write-offs of loans
Loss on sales of corporate mortgage
loans to the Resolution andCollection Company, Ltd. and others
Loss on disposition of premises andequipment
Loss on sales of stocks and othersecurities
Loss on financial assistance tosupported companies
Cost of amortization ofdifferences resulting fromchanges in accounting standards
Other
Total

Thousands of
U.S. dollars
2001

Millions of yen
2001
2000

¥13,427¥10,086$108,371

6,385

178

51,5393,347
2,890¥26,051—963¥11,228

27,01823,331$210,261¥

490¥ 2,029

$

3,821
4,787

3,887
4,636

30,846
38,639Deferred tax assets:
Reserve for possible loan losses
Accrued enterprise tax
Depreciation
Accrued pension and severance
costs and other
Reserve for retirement allowances
Loss on write-offs of securities
Net unrealized losses on securities
Other
Deferred tax assets
Less: valuation allowance
Deferred tax liabilities
Net deferred tax assets

556

2,103

4,492

12. Leases

430

978

3,476

39

54

318

6,405

—

51,694

3,959

—
915
¥14,605

50,4086,731$190,567¥32,035150
716¥37,290334
891$258,563
1,211
5,779

2,589
—
1,036
1,376
1,263
39,167(144)—¥39,023

—
1,103
—
—
1,378
40,997——¥40,997

20,896—
8,367
11,108
10,194
316,120(1,162)—$314,957

The pro forma information such as acquisition costs, accumulated
depreciation and obligations on property leased under financeleases which do not transfer the ownership of leased property to
the lessee on an “as if capitalized” basis is summarized as follows:
March 316,245
834
¥23,611

Thousands of
U.S. dollars
2001

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Equipment:
Acquisition costs
Less accumulated depreciation
Leased property, net¥38,626
25,466¥13,159¥39,190 $311,758
25,272 205,543¥13,917 $106,214

Obligations under finance leases:
Due within one year
Due after one year
Total

¥ 5,734
9,566¥15,300¥ 5,527 $ 46,282
11,39877,210¥16,925 $123,492

Lease revenue
Depreciation expense¥ 6,169
5,022¥ 6,534 $ 49,795
5,402
40,53317

13. Segment Information
Information regarding the business segments and total income of the Bank and its consolidated subsidiaries for the years ended March 31,
2001 and 2000 is summarized as follows:(a) Business segment information
Millions of yen
Year ended March 31, 2001
Total income and recurring profits:
Total income from outside customers
Total income from intersegment transactions
Total
Total expenses
Income before income taxes

Banking
operations

Other
operations

Total¥ 110,440
1,226
111,666
96,037¥ 15,628¥10,2392,640
12,87912,470¥ 409¥ 120,680
3,866
124,546
108,507¥ 16,038

Total assets
Depreciation and amortization
Capital expenditures¥2,904,455
3,320
5,770

¥52,099
5,981
4,226

¥2,956,555
9,302
9,997

Banking
operations

Other
operations

Total

99,131726
99,85883,50816,349¥11,573
2,429
14,003
12,915¥ 1,088¥ 110,705
3,156
113,861
96,424¥ 17,437¥2,893,455
2,804
5,020

¥46,985
6,244
6,281

¥2,940,441
9,049
11,302

Banking
operations

Other
operations

Eliminations

Consolidated¥—(3,866)(3,866)(3,771)¥(95)¥ 120,680—
120,680
104,736¥ 15,943¥(41,583)——¥2,914,972
9,302
9,997

Eliminations

Consolidated¥—(3,156)(3,156)(2,328)¥ (827)¥ 110,705—
110,705
94,095¥ 16,610¥(36,648)——¥2,903,792
9,049
11,302Millions of yen
Year ended March 31, 2000
Total income and recurring profits:
Total income from outside customers
Total income from intersegment transactions
Total
Total expenses
Income before income taxes¥¥

Total assets
Depreciation and amortization
Capital expenditures

Thousands of U.S. dollars
Year ended March 31, 2001
Total income and recurring profits:
Total income from outside customers
Total income from intersegment transactions
Total
Total expenses
Income before income taxes$

891,368
9,897
901,265
775,124
126,141$ 82,643
21,308103,952
100,645$ 3,306

974,011
31,206
1,005,218
875,770$ 129,447—(31,206)(31,206)(30,438)
$
(768)

$

Total assets
Depreciation and amortization
Capital expenditures$23,441,934
26,80046,572$420,499
48,27934,115$23,862,433
75,08080,688$(335,621)——$23,526,812
75,08080,688

18

$

Total

$

Eliminations

Consolidated$$

974,011—
974,011845,332
128,679

(b) Income from international operations

Period:Year ended March 31, 2000:
Millions of yen
Year ended March 31, 2001:
Millions of yen
Thousands of U.S. dollars

Income frominternational
operations

Total
consolidated
incomePercentage ofincome frominternational
operations to total
consolidated
income¥ 12,178¥110,705

11.0%¥ 14,231$114,865¥120,680$974,011

11.8%

14. Market Value of Securities(a) The market value and the valuation difference on available-for-sale marketable securities at March 31, 2001 are summarized
as follows:
Millions of yen
Cost

Corresponding
amount in thebalance sheet

Stocks
Bonds
Government bonds
Municipal bonds
Corporate bonds
Other¥ 45,355
216,745
189,444
7,205
20,096
106,634¥ 53,547
218,119
190,213
7,272
20,63393,760¥ 8,191
1,373
769
67
537
(12,873)¥ 9,581
1,425
810
75
539
654

¥ 1,39051
41
7
2
13,528

Total¥368,735¥365,427¥ (3,308)¥11,661¥14,970

Cost

Corresponding
amount in thebalance sheet

Valuationdifference

Gain

Loss

Thousands of U.S. dollars
Valuationdifference

Gain

Loss

Stocks
Bonds
Government bonds
Municipal bonds
Corporate bonds
Other$ 366,068 $ 432,184
1,749,360 1,760,447
1,529,007 1,535,214
58,15458,697
162,199
166,534
860,646756,743$ 66,115
11,086
6,207
543
4,335
(103,902)$77,334
11,505
6,541
607
4,357
5,282

$ 11,219
419
333
63
21
109,185

Total$2,976,076 $2,949,374$ (26,701)$94,123$120,824

The valuation difference, net of ¥1,376 million (US$11,107 thousand) of related tax assets, resulted in a loss of ¥1,932 million(US$15,593 thousand). The net valuation difference excluding minority interests resulted in a loss of ¥1,931 million (US$15,592 thousand) which has been included in Net unrealized losses on securities available for sale.

(b) Available-for-sale securities sold during the year ended March 31, 2001 were as follows:
March 31, 2001

Proceeds from sales
Gain
Loss

Millions of yen

Thousands of
U.S. dollars¥847,679
22,666
6,990$6,841,642
182,944
56,42219

15. Repayment Schedule for Bonds HeldThe repayment schedule for bonds classified as available-for-sale securities which are being held to maturity is as follows:
Millions of yen
March 31, 2001
Bonds
Government bonds
Municipal bonds
Corporate bonds
Other

Due within
1 year or lessDue in 1 to
5 years

Due in 5 to
10 years

Due after
10 years¥41,718
35,172
2,118
4,426
5,210

¥174,595
155,008
5,117
14,46954,985¥ 2,53831
362,470
21,961

¥

—
—
—
—
—

¥46,928¥229,581¥24,499

¥

—

Total

Thousands of U.S. dollars
March 31, 2001
Bonds
Government bonds
Municipal bonds
Corporate bonds
Other
Total

Due within
1 year or lessDue in 1 to
5 years

Due in 5 to
10 years

Due after
10 years$336,709
283,881
17,10235,72542,053$1,409,166
1,251,079
41,301
116,785443,790$ 20,485
253
293
19,938177,253

$

—
—
—
—
—

$378,762$1,852,957$197,738$—

16. Money Trusts
Classification of money trusts by purpose is as follows:
Millions of yen
Amount in thebalance sheet

March 31, 2001
Money trusts for trading
Other money trusts

Thousands of U.S. dollars

Valuationdifference¥1,7931,000

Amount in thebalance sheet¥(206)—

Valuationdifference$14,476
8,078$(1,665)—

The valuation loss on money trusts for trading has been included in income before income taxes and other.

17. Derivatives
The contract or notional amount and the market value of derivatives at March 31, 2001 and 2000 were as follows:
Millions of yen
March 31, 2000
Listed:Over the counter:
Interest rate swaps
Currency swaps

Contract ornotional
amount¥—¥ 70,264
235,105

Market Value¥—¥(2,461)
971

Unrealized
gain (loss)¥—¥(2,461)
971

Millions of yen
March 31, 2001
Listed:Over the counter:
Interest rate swaps
Currency swaps

Contract ornotional
amount

¥

—

¥

1,239
357,385

Market Value¥—¥ (19)(3,451)Thousands of U.S. dollars
Unrealized
gain (loss)

Contract ornotional
amount¥—$—¥ (19)(3,451)$

10,0002,884,464

The derivatives to which hedge accounting has been applied are excluded from the above table.

20

Market Value$

Unrealized
gain (loss)

—

$

—

$ (156)(27,853)$(156)(27,853)

Report of Independent Certified Public Accountants

The Board of Directors
The Suruga Bank, Ltd.

We have examined the consolidated balance sheets of The Suruga Bank, Ltd. and consolidated subsidiaries
as of March 31, 2001 and 2000, and the related consolidated statements of income and retained earnings,
and cash flows for the years then ended, all expressed in Japanese yen. Our examinations were made inaccordance with auditing standards, procedures and practices generally accepted and applied in Japan and,accordingly, included such tests of the accounting records and such other auditing procedures as we
considered necessary in the circumstances.
In our opinion, the accompanying consolidated financial statements, expressed in Japanese yen,present fairly the consolidated financial position of The Suruga Bank, Ltd. and consolidated
subsidiaries at March 31, 2001 and 2000, and the consolidated results of their operations and their cash
flows for the years then ended in conformity with accounting principles and practices generally
accepted in Japan applied on a consistent basis.
As described in Note 1 to the consolidated financial statements, The Suruga Bank, Ltd. andconsolidated subsidiaries have adopted new accounting standards for employees’ retirement benefits
and financial instruments in the preparation of their consolidated financial statements for the year
ended March 31, 2001.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2001 are presented solely for convenience. Our examination also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 2 to the consolidated financial statements.

June 22, 2001
See Note 1 to the consolidated financial statements which explains the basis of preparation of the consolidated
financial statements of The Suruga Bank, Ltd. and consolidated subsidiaries under Japanese accounting
principles and practices.

21

Non-Consolidated Statements of Income
and Retained Earnings
The Suruga Bank, Ltd.

Thousands of
U.S. dollars(Note 2)Millions of yen

Years ended March 31,

2001

2000

2001

¥ 61,772¥ 54,819$498,568

IncomeInterest income:Interest on loans and discounts

8,392

16,88667,733

Other (Note 15)

885

1,410

7,145

Fees and commissions

6,235

5,889

50,326

Other operating income (Note 16)

9,682

12,24378,151

Interest and dividends on securities

Other income (Note 18)

25,968

9,864

209,589

Total income

112,936

101,113

911,515

7,005

8,200

56,545

624

1,075

5,038

Other (Note 15)

11,297

8,025

91,183

Fees and commissions

4,496

3,249

36,290

Other operating expenses (Note 16)

9,339

11,51075,381

General and administrative expenses (Note 17)

41,99840,190338,970

Other expenses (Note 18)

22,753

12,557

183,640

Total expenses

97,51584,809787,050

15,421

16,304

124,465

Current

2,728

5,649

22,025

Deferred

3,220

1,577

25,988

5,948

7,226

48,014

9,472

9,077

76,451

9,931

2,509

80,159Transfer to legal reserve(4,461)(332)(36,008)

Dividends paid

(1,320)(1,323)(10,659)

(60)

—

(484)

9,931

$109,458

Expenses
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts

Income before income taxes
Income taxes (Note 19):

Net income
Retained earnings:
Balance at beginning of year
Deductions:

Bonuses to directors and corporate auditors
Balance at end of year

¥ 13,561¥

23

Non-Consolidated Balance Sheets
The Suruga Bank, Ltd.

Thousands of
U.S. dollars(Note 2)Millions of yen

As of March 31,

2001

2001

2000

Assets63,499¥ 208,551

Due from banks

87,492

100,984

706,157

Call loans

166,553

88,783

1,344,253

Commercial paper and other debt purchased

150,00749,2401,210,716

Trading account securities

19,99722,996

161,404

Money trusts

2,794

3,000

22,554

Cash and cash equivalents

Investment securities (Note 3)Loans and bills discounted (Note 4)¥$

512,507

380,589

470,215

3,071,747

1,955,564

1,870,906

15,783,407

634

3,287

5,121

Other assets (Note 6)

12,85810,451

103,779

Premises and equipment (Note 7)

42,40242,423342,232

Deferred tax assets (Note 19)

38,491

40,340310,668

Foreign exchange (Note 5)

Customers’ liabilities for acceptances and guarantees

18,18819,368146,801

Less reserve for possible loan losses(28,266)(33,280)(228,135)¥2,910,809¥2,897,270$23,493,217¥2,725,467
4,212
54
14
17,467—
4,628
296
18,188¥2,712,506
12,504147
28
14,142
3,780—
477
19,368$21,997,313
34,000439
113
140,982—
37,354
2,389
146,8012,770,329

2,762,955

22,359,394

Common stock (Note 11)30,04330,043

242,479

Capital surplus

18,585

18,585150,006

Legal reserve

30,04325,581

242,479

Voluntary reserves

50,17250,172404,941

Retained earnings

13,561

9,931

109,458

Net unrealized losses on securities, net of taxes (Note 13)(1,925)—(15,543)

140,480

134,314

1,133,822¥2,910,809¥2,897,270$23,493,217

Total assets
Liabilities and shareholders’ equity
Liabilities
Deposits (Note 8)
Call money
Borrowed money
Foreign exchange (Note 5)
Other liabilities (Note 9)
Reserve for retirement allowances
Accrued pension and severance costs
Reserve for possible losses on sales of loans
Acceptances and guarantees
Total liabilities
Shareholders’ equity

Total shareholders’ equity
Total liabilities and shareholders’ equity

22Notes to Non-Consolidated Financial Statements
The Suruga Bank, Ltd.

1. Summary of Significant Accounting Policies(2) New accounting standard for financial instruments(a) Basis of Preparation

Effective April 1, 2000, the Bank had adopted a new accounting
standard for financial instruments in accordance with “Opinion
Concerning the Establishment of Accounting Standards for
Financial Instruments” issued by the Business Accounting
Deliberation Council on January 22, 1999, and revised their methods of valuation of trading account and investment securities,
money trusts, and derivatives and their hedge accounting method,
accordingly. As a result, income before income taxes decreased by¥1,621 million (US$13,089 thousand) from the corresponding
results which would have been recorded if the methods of accounting referred to above had not been adopted.

The Suruga Bank, Ltd. (the “Bank”) maintains its accounting
records and prepares its financial statements in accordance withaccounting principles and practices generally accepted and appliedin Japan, the Commercial Code of Japan and the Banking Law ofJapan. The accompanying non-consolidated financial statements
have been compiled from the non-consolidated financial statements
filed with the Minister of Finance as required by the Banking Law
of Japan and the Securities and Exchange Law of Japan.
Accordingly, the accompanying non-consolidated financial statements are not intended to present the non-consolidated financial
position and results of operations in accordance with accounting
principles and practices generally accepted and applied in countries
and jurisdictions other than Japan. In addition, the notes to the nonconsolidated financial statements include information which is not
required under accounting principles generally accepted in Japanbut is presented herein as additional information.
Certain amounts previously reported have been reclassified toconform to the current year’s presentation.

(b) Accounting Principles and Practices
Notes concerning the accounting principles and practices followedin the preparation of the accompanying non-consolidated financial
information for the years ended March 31, 2001 and 2000 have notbeen prepared for all items. The accompanying non-consolidated
financial statements should be read in conjunction with Notes toConsolidated Financial Statements.

(c) New Accounting Standards(1) New accounting standard for employees’ retirement benefits
Effective April 1, 2000, the Bank had adopted a new accounting
standard for employees’ retirement benefits in accordance with
“Opinion Concerning the Establishment of Accounting Standards
for Retirement Benefits” issued by the Business Accounting
Deliberation Council on June 16, 1998. As a result, income before
income taxes decreased by ¥1,359 million (US$10,974 thousand)from the corresponding results which would have been recorded if
the method of accounting referred to above had not been adopted.
In addition, the Bank contributed own marketable securities to an
employee retirement benefit trusts during the year ended March
31, 2001, which resulted in a decrease in income before income
taxes of ¥1,654 million (US$13,349 thousand).

24

Unrealized gains and losses on available-for-sale securities andmoney trusts are presented as “Unrealized losses on securities” inshareholders’ equity, net of taxes.

2. Japanese Yen and U.S. Dollar Amounts
The Japanese yen amounts in the accompanying non-consolidated
financial statements are presented in millions, with fractions omitted.
Amounts stated in U.S. dollars are translated from Japanese yen,solely for convenience, at ¥123.90 = U.S.$1.00, the exchange rate
prevailing on March 31, 2001. The translation should not be
construed as a representation that Japanese yen could be converted
into U.S. dollars at the above or any other rate.

3. Investment Securities
Investment securities at March 31, 2001 and 2000 were as follows:......................................................
......................................................
......................................................

Japanese government bonds
Local government bonds
Corporate bonds
Corporate stock
Other securities
Total
Shares of subsidiaries
included in corporate stock
Treasury stock included incorporate stockThousands of
U.S. dollars
2001

Millions of yen
2001
2000

¥ 190,213
7,272
21,242
57,573
104,288¥216,540
10,21067,75367,420108,290$ 1,535,214
58,697
171,445464,676
841,712¥ 380,589¥470,215$ 3,071,747

¥

98

¥

98

$

794

¥

1,222

¥

536

$

9,870

4. Loans and Bills Discounted

5. Foreign Exchange(a) Loans and bills discounted at March 31, 2001 and 2000
were as follows:

Foreign exchange assets and liabilities at March 31, 2001 and 2000
were as follows:

Millions of yen
2001
2000

Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Total

¥

Thousands of
U.S. dollars
2001

13,848281,732
1,450,620
209,363¥

15,682
232,189
1,393,598
229,437$

111,772
2,273,868
11,707,992
1,689,774¥1,955,564¥1,870,906$15,783,407(b) Loans and bills discounted at March 31, 2001 and 2000
included the following items:
Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Loans to companies underbankruptcy procedures¥ 5,611¥ 4,683$ 45,293

Delinquent loans

44,67041,295360,538

Loans past due
3 months or more

767

1,290

6,193

Restructured loans

22,02922,927

177,798¥73,079¥70,197$589,823

Total

Loans to companies under bankruptcy procedures consist of nonaccrual loans on which the payment of principal or interest is wellpast due or there is no prospect of recovery of the principal or interest from the borrower or from a third party guaranteeing the loan(the balance does not include the written-down portions of the loans).
These loans hereafter are referred to as “non-accrual loans.” This
category also includes the loans cited in Article 96-1-3 and 1-4 of the
Corporation Tax Law (Government Ordinance No. 97 of 1965).
Delinquent loans are defined as loans which are past due and notaccruing interest, but which are categorized neither as “Loans tocompanies under bankruptcy procedures” nor as “Restructuredloans” as defined below.
Loans past due for 3 months or more are classified as such when
3 months or more have elapsed since the due date without thepayment of principal or interest. The balance of loans to companies
under bankruptcy procedures and the balance of delinquent loans are
not included in this category.

Millions of yen
2001
2000

Assets:Due from foreign banks
Foreign bills of exchangeboughtForeign bills of exchange
receivable
Total
Liabilities:
Due to foreign banks
Foreign bills of exchange sold
Foreign bills of exchange payable
Total

Thousands of
U.S. dollars
2001

¥326

¥ 296

$2,631

55

199

448

252
¥634

2,791
¥3,287

2,041$5,121

¥

¥

$

5
7
0
¥ 14

¥

5
14
9
28

43
64
4
$ 113

6. Other Assets
Other assets at March 31, 2001 and 2000 were as follows:
Millions of yen
2001
2000

Accrued income
Deferred hedge losses
Other
Total

¥ 4,7882,363
5,706¥12,858¥ 4,089—
6,361¥10,451

Thousands of
U.S. dollars
2001$ 38,646
19,07746,054$103,779

7. Premises and Equipment
Premises and equipment at March 31, 2001 and 2000 were as
follows:...............................................

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Land
Buildings
Furniture and equipment
Construction in progress
Guarantee money, net
Software, net¥ 14,668
23,02922,445
—
5,543
3,946

¥ 15,110
24,761
21,714
279
5,060
2,447

$118,386
185,872
181,160—
44,74531,848Less: accumulated depreciation

69,633(27,230)

69,374(26,950)

562,013(219,780)

Premises and equipment, net¥ 42,402¥ 42,423$342,232

Restructured loans include loans which have been restructured tosupport the rehabilitation of certain borrowers who are encountering
financial difficulties, with the intention of ensuring the recovery of
the loans by providing easier repayment terms for the borrowers(such as by reducing the rate of interest or by providing a grace
period for the payment of principal/interest, etc.). Excluded fromthis balance are the balance of loans to companies under bankruptcy
procedures, the balance of delinquent loans and the balance of loans
past due for 3 months or more.

25

8. Deposits

13. Net Unrealized Losses on Securities Available for Sale

Deposits at March 31, 2001 and 2000 were as follows:
Millions of yen
2001
2000

...............................................

Current deposits
Ordinary deposits
Deposits at noticeTime deposits
Other deposits
Subtotal
Negotiable certificates ofdeposit
Total

Thousands of
U.S. dollars
2001¥

62,187546,573
44,966
1,829,432
242,3072,725,467¥

55,189502,891
36,7081,930,014
187,7022,712,506$

501,913
4,411,408
362,928
14,765,394
1,955,668
21,997,313

—

—

—

¥ 2,725,467¥2,712,506$21,997,313

9. Other Liabilities
Other liabilities at March 31, 2001 and 2000 were as follows:...............................................

Income taxes payable
Accrued expenses
Unearned income
Deposits from employees
Derivatives
Other
Total

Millions of yen
2001
2000

¥ 1,293
5,635
571
1,316
2,383
6,267
¥ 17,467¥ 2,619
6,415
1,003
1,424
—
2,679
¥14,142

Thousands of
U.S. dollars
2001$ 10,437
45,482
4,616
10,62819,23650,581$140,982

10. Acceptances and Guarantees
The Bank provides guarantees for the liabilities of its customers
for the payment of loans from other financial institutions. As acontra account, “Customers’ liabilities for acceptances andguarantees” is presented on the assets side of the balance sheet,
indicating the Bank’s right of indemnity from the customers.

11. Common Stock
Common stock was as follows:(1) Par value: ¥50 per share(2) Authorized: 396,029,983 shares at March 31, 2001 and 2000
(3) Issued andoutstanding: 264,939,248 shares at March 31, 2001 and 2000

12. Legal Reserve
Under the Banking Law of Japan, an amount equivalent to at least
20 percent of cash dividends paid and other cash outflows fromretained earnings must be appropriated to the legal reserve until
such reserve equals 100 percent of the Bank’s stated capital. This
reserve is not available for dividends but may be used to reduce a
deficit or may be transferred to common stock.

26

Net unrealized losses on securities available for sale at March 31,
2001 were as follows:
Millions of yen
2001

Thousands of
U.S. dollars
2001¥(3,297)
1,371$(26,615)
11,072(1,925)(15,543)

Unrealized losses on securities
available for sale
Deferred tax assets
Net unrealized losses on securities
available for sale

14. Amounts per Share
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each year.
Amounts per share of net assets are computed based on the number ofshares of common stock outstanding at each balance sheet date.
2001

Yen
2000

U.S. dollars
2001¥ 35.75
530.24¥ 34.26506.96$0.2884.279

March 31

Net income
Net assets

15. Other Interest Income and Expense
Other interest income and expense for the years ended
March 31, 2001 and 2000 were as follows:
Millions of yen
2001
2000

...............................................

Thousands of
U.S. dollars
2001

Other interest income:Interest on deposited money
Interest on interest-rate swaps
Other
Total

¥

¥

206
—
679
885

52
13
1,343
¥1,410$ 1,663—
5,481$ 7,145

Other interest expense:
Interest on interest-rate swaps
Other
Total

¥ 1,071
10,225¥11,297¥1,4056,619¥8,025$ 8,650
82,533$91,183¥

16. Other Operating Income and Expenses
Other operating income and expenses for the years ended
March 31, 2001 and 2000 were as follows:...............................................

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001

Other operating income:Gain on foreign exchange transactions
Gain on trading account securities
Gain on sales of bonds
Gain on redemption of bonds
Total

¥ 171
81
9,301
128
¥ 9,682¥

182
48
10,144
1,868¥12,243$ 1,382658
75,071
1,039$78,151

Other operating expenses:
Loss on sales of bonds
Loss on redemption of bonds
Other
Total

¥ 6,951
2,297
90¥ 9,339¥ 8,293
3,217—¥11,510$56,103
18,545732$75,38117. General and Administrative Expenses

19. Income Taxes

General and administrative expenses for the years ended
March 31, 2001 and 2000 were as follows:

The tax effects of significant temporary differences and loss
carryforwards which resulted in deferred tax assets and liabilities
at March 31, 2001 and 2000 are summarized as follows:...............................................

Salaries and allowances
Depreciation
Taxes
Other
Total

Thousands of
U.S. dollars
2001

Millions of yen
2001
2000

¥17,351
3,314
2,038
19,294¥41,998¥17,662
2,797
2,124
17,606¥40,190$140,042
26,74916,451
155,726$338,970

18. Other Income and Expenses
Other income and expenses for the years ended March 31, 2001 and2000 were as follows:...............................................

Other income:Gain on sales of stockand other securities
Gain on disposition of premises
and equipment
Reversal of reserve for possible
loan losses
Gain on securities contributed to
employees’ retirement benefit trusts
Other
Total

Thousands of
U.S. dollars
2001

Millions of yen
2001
2000

...............................................

Deferred tax assets:
Reserve for possible loan losses
Accrued enterprise tax
Depreciation
Accrued pension and severance costs
and otherReserve for retirement allowances
Loss on write-offs of securities
Unrealized losses on securities
Other
Deferred tax assets
Less: valuation allowance
Deferred tax liabilities
Net deferred tax assets

Loss on devaluation of stockand other securities
Write-offs of loans
Loss on disposition of premises
and equipment
Loss on sales of corporate mortgage
loans to the Resolution and Collection
Company, Ltd. and others
Loss on sales of stockand other securities¥36,732299
890$ 254,342
1,170
5,778

2,565
—
1,035
1,371
1,203
38,549(57)—¥38,491

—
1,075
—
—
1,344
40,340——¥40,340

20,702—
8,353
11,072
9,709
311,128(460)—$ 310,668$107,873

6,385

178

51,53920. Leases (Lessee)

168

—

1,357

3,347
2,701

—
898

27,01821,801The pro forma information on property leased under finance leases
which do not transfer ownership of the leased property to thelessee on an “as if capitalized” basis is summarized as follows:¥25,968¥9,864$209,589

¥

—

¥

730

$

—

3,785

3,899

30,556

4,674

4,250

37,729

386

771

3,118

420

2,103

3,397

9

57

76

6,405

—

51,694

Cost of amortization of differences
resulting from changes inaccounting standards

6,245

—

50,408

824

744

6,658

¥22,753¥12,557$183,640

Total¥31,513145
716¥8,787

Loss on financial assistanceto supported companies

Other

Thousands of
U.S. dollars
2001¥13,365...............................................

Other expenses:
Provision for possible loan losses

Millions of yen
2001
2000

Equipment:
Acquisition costs
Less accumulated depreciation
Leased property, net
Due within one year
Due after one year
Total
Lease payments
Depreciation expense

Millions of yen
2001
2000

Thousands of
U.S. dollars
2001¥3,4001,627¥1,773¥3,9371,513¥2,424$27,442
13,132$14,310

¥ 592
1,180
¥1,773¥ 658
1,765¥2,424$ 4,782
9,527$14,310

¥ 634
634

¥ 613
613

$ 5,121
5,121

Depreciation expense which has not been reflected in the accompanying non-consolidated statements of income and retained earnings has been computed by the straight-line method over theperiods of the respective lease agreements.

21. Subsequent Event
At a shareholders’ meeting held on June 22, 2001, the Bank’s
shareholders duly approved the following year-end appropriationsof retained earnings, which have not been reflected in the accompanying non-consolidated financial statements for the year ended
March 31, 2001:
Year-end cash dividends(¥2.5 = US$0.020 per share)
Transfer to voluntary reserve

Millions of yen

Thousands of
U.S. dollars

¥ 659
8,000

$ 5,325
64,56827

Report of Independent Certified Public Accountants

The Board of Directors
The Suruga Bank, Ltd.

We have examined the non-consolidated balance sheets of The Suruga Bank, Ltd. as of March 31,
2001 and 2000, and the related non-consolidated statements of income and retained earnings for theyears then ended, all expressed in Japanese yen. Our examinations were made in accordance withauditing standards, procedures and practices generally accepted and applied in Japan and, accordingly,
included such tests of the accounting records and such other auditing procedures as we considerednecessary in the circumstances.
In our opinion, the accompanying non-consolidated financial statements, expressed in Japanese yen,present fairly the financial position of The Suruga Bank, Ltd. at March 31, 2001 and 2000, and theresults of its operations for the years then ended in conformity with accounting principles andpractices generally accepted in Japan applied on a consistent basis.
As described in Note 1 to the non-consolidated financial statements, The Suruga Bank, Ltd. has
adopted new accounting standards for employees’ retirement benefits and financial instruments in the
preparation of its non-consolidated financial statements for the year ended March 31, 2001.
The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect tothe year ended March 31, 2001 are presented solely for convenience. Our examination also included
the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 2 to the non-consolidated financial statements.

June 22, 2001
See Note 1 to the non-consolidated financial statements which explains the basis of preparation of the nonconsolidated financial statements of The Suruga Bank, Ltd. under Japanese accounting principles and practices.

28

Corporate Directory(as of April 1, 2001)

Reference
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Phone: (03) 3279-5531
Fax: (03) 3242-3284
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