NANTO BANK
Integrated Report 2021
Fiscal year ended March 2021

Management Philosophy
1. We conduct sound, efficient management.
2. We provide superior comprehensive financial services.
3. We pursue efforts to promote regional development.
4. W
 e seek an identity as a trustworthy bank with strong customer
appeal.

Management Vision“Vitality Creation Bank”
Our mission as a regional financial institution is to contribute to thegrowth and development of our region and customers. Maximizing
all our management and staff capabilities, and creating new value
unique to the Nanto Bank Group, we are reinforcing our position as
the banking group of choice for customers throughout our region.

Editorial Policy
Compiled in pursuit of a deeper understanding of the Nanto Bank Group’s strategies for creating sustainablevalue in the medium-to-long term, this Integrated Report was edited in compliance with the “International
Integrated Reporting Framework” of the Value Reporting Foundation (former IIRC).
The specific purpose of its creation was to illuminate the path to achievement of our Management Plan, “Nanto
Mission and Objectives for the Next 10 Years.”
For detailed financial information, please refer to the documents published in 2021 Disclosure, Nanto Bank
Report.

Range of coverage

Date issued

The Report presents key information about the Nanto
Bank Group’s management strategies, business model,
business conditions, stakeholders, primary risks andopportunities, performance and outlook, and governance.

July 2021

Period of coverage
April 1, 2020 ~ March 31, 2021

Precautions concerning future predictions
This report contains forecasts and statements concerning the future
prospects for the Nanto Bank Group’s business strategies andfinancial condition. These forecasts and statements involve risks anduncertainties stemming from their dependence on future events.
Please be aware that the actual results may differ materially from thoseforeseen by the Nanto Bank Group.

CONTENTS

Basis for creationand presentation

About the Nanto Bank Group
Information Highlights

Governance Enhancement

2

Target Image
President’s Message
Value Creation Process
Management Plan and Goals

36

Corporate Officers

36
38

Governance Reinforcement Strategies

4
10
12

14

14
Asset Formation
16
Commercialization
18
Special Feature Stakeholders’ Voices 22
Productivity Enhancement

40

Risk Management

Comprehensive Risk Management and Compliance 40

Nanto Bank Group Information

Increasing Nara Prefecture’s GDP
Nanto Method

Corporate Governance

42

Group Data

Consolidated Financial Statements
Consolidated Financial Statements
Independent Auditors’ Report
Capital Management

44
81
86

Management Base Reinforcement 28
Human Resources Procurement and Training 28
Raising business efficiency
30

Further Efforts Toward SDG Realization
Climate Change and Gender Equality 32
Social Contribution Activities
34

Compiling the Nanto Report
Icons representing the eight categories of content advocated by the Value Reporting Foundation’s International Integrated
Reporting Framework have been employed to strengthen understanding of the Nanto Bank Group’s corporate culture.
Risks and opportunities

The real risks and opportunities affecting our ability
to create value in the short, medium and long term,
and ways of dealing with them.

OutlookWhat is the nature of the operating environment, andhow is the Bank organized to respond?

Governance

Strategies and resources allocation

Basis for creation and presentation

Business model

Performance

Organizational overview and external environment

How does the governance structure ensure short-,
medium- and long-term value creation?

What is the business model, and how resilient is it?

What are our goals, and how do we plan to reachthem?

What are the challenges and uncertainties for
executing strategies, and how might they impact theBank’s business model and future performance?

How were the contents of the Report quantified andevaluated, and how were they selected?

To what extent is the Bank achieving its strategic
objectives, and what is the effect on capital?

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1

About the Nanto Bank Group

Information Highlights

Financial Highlights
Net Income(Consolidated)(Non-consolidated)

10.8 billion yen 10.6 billion yen
Consolidated(Billion yen)

Non-consolidated

Profit / loss oncustomer services(Non-consolidated)

300 million yen -900 million yen
Consolidated(Billion yen)

15

(Consolidated)

Non-consolidated

2.5

11.1 11.1

10.8 10.6

10

0

5

-2.5

0.3
-0.9

3.1 3.3

-2.3
-3.2

-3.8
0

FY2019FY2020-5.0

FY2021-4.4

FY2019FY2020

FY2021

Profit / loss on customer services = Profit from main businesses (loans / commission business)
Average loan balance x deposits / loan yield difference + profit from service transactions - expenses

Capital adequacy ratio(%)(Consolidated)

9.47 %

Consolidated

10.0(Non-consolidated)

9.15 %

ROE(Consolidated)

3.95 %(%)

Non-consolidated

Consolidated

6.0

9.75
9.47

9.39
9.40
9.0

9.15

9.06

3.0

(Non-consolidated)

4.03 %

Non-consolidated

4.01

4.03

3.89

3.95
1.27
1.16

0

Year ended
March 2019Year ended
March 2020

Year ended
March 2021

(Consolidated)(Non-consolidated)

ROA

0.27 %(%)

Consolidated

0.3

0.25 %

0

FY2019OHR

71.4 %

0.25

0

0.14

0.11

0.12

FY201975.0

0FY2021

Core business net income
ROA=
×100
Average balance of total assets - Average balance of payments received(Billion yen)

4,000
3,000
2,000

(Non-consolidated)

3,808.1 billion yen

SMEs

Housing loans

3,405.2
620.7

Municipal governments

3,477.1
646.7

594.5

608.2

983.0

993.3

1,000
1,206.902Year ended
March 2019

Nanto Report 2021, the integrated report of Nanto Bank

(Non-consolidated)

71.7 %

Non-consolidated

85.7

85.0

84.4

84.0

71.7
71.4

FY2020Loan balance

Consolidated

100.0

0.27

FY2021(Consolidated)（%）

Non-consolidated

0.13

FY2020Net income
ROE=
×100
[Starting net assets (excluding stock acquisition rights) +Ending net assets (excluding stock acquisition rights)] ÷ 2

1,228.7
Year ended
March 2020

Others3,808.1

FY2020

FY2021

Expenditures
OHR=
×100
Gross profit from core businesses

Balance of deposits(Billion yen)

Individuals(Non-consolidated)

5,452.6 billion yen
Corporations

6,000

4,917.5

723.0
629.1

FY2019Municipal government funds, etc.

5,042.1

4,000

202.5
912.6

187.6

2,000

3,802.4

3,885.8

968.7

5,452.6

231.1
1,093.0

1,042.4
4,128.4

1,413.5
Year ended
March 2021

0Year ended
March 2019Year ended
March 2020

Year ended
March 2021

Organizational overview
and external environment

PerformanceNon-financial Highlights (Nanto Bank)

Rate of CO2 emissions reduction
Environment(FY2013

FY2019)32.5%(FY2020)

Approx.

50,000tons CO2(Emissions for scopes 1 and 2)(Number of loans: 6: 530 million yen)

Percentage of female executives

Unconventional human resources
Certified personnel participatingin vitality creation

Society

14.5(End March 2021)%(+ 0.2% compared to end March 2020)

Board of Directors diversification
GovernanceCO2 reduction through renewableenergy-related loans

Members with employment experiencein other organizations

458(Percentage of employees 19.0%)(End March 2020: 422)
Percentage of employees 17.0%)

Ratio of outside directors(End June 2021)

2 6
ofinternal directors

3

directors =33%

Nanto Bank Profile (as of March 31, 2021)
Established:

June 1, 1934

Capitalization:¥37,924.15 million

Headquarters:

16 Hashimoto-cho, Nara, Japan

Homepage:https://www.nantobank.co.jp/

Nanto Bank Co., Ltd. was established on June 1, 1934 through a merger of Sixty-eight
Bank Co., Ltd., Yoshino Bank Co., Ltd., Yagi Bank Co., Ltd. and Gosho Bank Co., Ltd.
Today, Nanto Bank offers comprehensive financial services including leasing, trust banking,securities and consulting as the Nanto Bank Group and conducts the banking business(deposits, loans, exchange, etc.), with Nara Prefecture and the surrounding region as its
primary base of operations.

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3

Target Image

President’s Message

Establishing a bank group thatinspires regional vitality through stepby-step efforts to realize the future
described in the “Nanto Mission andObjectives for the Next 10 Years”

President (Representative Director)

Takashi Hashimoto

Joining forces with customers to overcome thecoronavirus pandemicFirst and foremost, I would like to extend our condolences to those who have passed away from thecoronavirus and to express our sympathy for those who continue to suffer from the disease and their families. I
also wish to express our deepest gratitude and express our admiration for all those who are striving to preventthe spread of the virus, including front-line medical personnel and governmental organizations.
The environment in which we operate has changed significantly in fiscal 2020 due to the spread of thecoronavirus pandemic all over the world.
A look back over the past year reveals that online remote meetings, Web-based information
dissemination, and remote work have become commonplace practices in our work.
We have also seen changes in our customers’ behavior. Many have realized that they can avoid leaving
home by accessing various financial services without actually visiting the bank. Transactions through non-faceto-face channels such as Internet banking have taken hold and accelerated worldwide as a result.
At the same time, however, Japan’s economic environment has been severely restricted due tostagnating movement of people and goods during the pandemic. While some companies have succeededin strengthening their business performance by responding to demand from the expanded home-centeredconsumer market, the outlook has become increasingly uncertain for the tourism and retail industries in
Nara prefecture as well as for service businesses such as restaurants and bars due to a sharp decline in thenumbers of inbound tourists.
In this environment, the Nanto Bank Group has facilitated financial transactions by such means asproviding special consultation counters and telephone support on weekends. We would like to maintain akey position in the social infrastructure, even as the coronavirus pandemic continues. We will also prioritize
expansion of our services to meet emerging customer needs as new channels open up for conducting
business without face-to-face contact.

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Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview
and external environment

GovernanceBusiness model

Risks andopportunities

Strategies andresources allocation

Performance

OutlookTargeting a 10% increase in Nara prefecture’s GDP in
pursuit of regional development
Commitment to our region
Fiscal 2020 saw the introduction of a new Management Plan designed to transform our business model.
The Plan defined a three-faceted Mission centered on pursuit of regional development, fostering ofvitality-creating human resources, and profitability enhancement. It established our “Objectives for the Next 10
Years” to serve as an index for implementation of the Management Plan. One of these objectives for realization
within 10 years is a “10% increase in Nara prefecture’s GDP.” Our stakeholders have responded positively tothe fact that the Nanto Bank Group, a private entity, has adopted the GDP of Nara prefecture as an index in its
Management Plan.
Allow me to explain our objective to increase Nara Prefecture’s GDP by 10% a little further.
The first issue our management team took up when formulating the Management Plan was, “Whatshould the Nanto Bank Group do to survive the next 10 years soundly?” For the past two decades, we hadgrown by strengthening our sales in Tokyo and Osaka and expanding our business domain to peripheralbusinesses such as trusts and securities. We have now concluded, however, that sustainable growth will not
be possible in the future in the absence of regional growth.
We realize that it would be difficult for us to achieve sustainable growth in profits by following our existing
business model alone. At the same time, local SMEs and municipal governments are facing various issues of
their own, including delays in IT implementation and shortages of management personnel. We have set oursights on revitalizing the local economy by constructing a business model that takes the initiative in solving
these issues as a means of resolving and eliminating the anxieties and worries of local customers. Our goal isto achieve growth of our Group in tandem with that of the community.
Since our Management Plan is devoted not only to our own growth but also to regional development, we
will seek to achieve enhanced growth and profitability along with a 10% increase in Nara prefecture’s GDP.
Efforts to enhance performance
I would like to say a few words here about our approaches to increasing GDP by 10%.
In the past, the Nanto Bank Group focused on providing financial products and services that met theneeds of our customers. Our adoption of GDP enhancement as a goal has changed the equation, however,making it necessary to consider mechanisms that can work throughout the region.
Creating a virtuous cycle of economic activities comprising the three aspects of GDP—production,
distribution, and expenditure—will require us to observe operations from three perspectives: productivity
improvement, asset formation, and commercialization. We will develop new strategies from these perspectives
to resolve issues facing our regional community and our customers.
We will start by finding solutions to the problems of individual customers. Going a step further to extend
economic effects throughout Nara prefecture will require involving people from various companies and local
governments. We believe it is possible to position ourselves at the core of a mechanism of this type based on
our long-standing relationship of trust with the community.
Another extremely important factor in raising GDP is to increase the number of people who come, work,and live in Nara prefecture. To this end, we will provide support for startups and new business development
while pursuing efforts to attract companies and promote employment in the region. We will also work to
stimulate the tourism industry by encouraging a conversion from day-trip tourism to multi-day tourism and bycreating new towns.
Thus, the Nanto Bank Group will seek to revitalize economic activity in Nara prefecture and realize growthof the prefecture’s GDP by identifying regional issues in the economic cycle and solving them independently.

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Target Image

President’s Message

Building a platform business through DX
Establishing a new sustainable business model will require deployment of digital technologies, reinforcementof local organizations’ ability to respond flexibly to environmental change, and acquisition and development of
human resources to support the new model.
These efforts will start with a digital transformation (DX). I do not believe the digitalization of the Nanto
Bank Group’s business operations and customer services is especially advanced at the current time. We canclassify the DX of the Nanto Bank Group into roughly three categories.
The first of these is “comprehensive introduction of IT into the Nanto Bank Group,” including its branchfunctions, operations, and paperless processes. The second is “maximizing customer convenience” withdigitized customer services such as cashless payments. We will begin by proceeding with these twotransformations simultaneously.
Digital technology can not only greatly reduce workloads that rely on such factors as manual labor,
experience, and intuition, but it can also provide a judiciousness enabling superior problem-solving utilizing
various assorted data. While meeting our obligation to play a public role as a cornerstone of the region’s
financial infrastructure, we must also allocate our limited management resources effectively as a private entity.
Digital technologies can be powerful tools for solving these seemingly contradictory issues.
We will deploy digital technologies to change our cost structures and develop a robust corporate
organization as well as to provide value-added information and services involving both face-to-face andremote interactions.
Our third DX category is “building a platform business” using AI and other digital technologies. It is only
when we have completed this stage that we can say we have achieved a true DX.
One idea still in the conceptual stage is the possibility of mechanisms that connect customers andfinancial institutions seamlessly in areas other than financial services. This might include mechanisms that
support seamless sharing of ideas, technologies, and human resources for creating new businesses with
open participation across industries. Realizing mechanisms of this kind will require all of us, both managers
and staff, to change our perceptions and preconceptions.
Promotion of DX

Full introduction of IT throughout the Nanto Bank Group
Reformation of offices, operations, and business practices,and conversion to paperless processes

Maximizing customer convenience
Reformation of payment systems / cash-free transactions,and refinement of various existing customer services

Building a platform business
Building of an IT platform employing AI, FinTech, digital technologies, etc.

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Realization of our digitaltransformation (DX)Organizational overview
and external environment

GovernanceBusiness model

Risks andopportunities

Strategies andresources allocation

Performance

Outlook

Realizing change by adopting new perspectives indeveloping human resources and creating organizations
Requisite image of human resources
I am proud that all members of the Nanto Bank Group’s management and staff are excellent human resources
with a strong desire to contribute to development of our region. We have been unable to eliminate theconventional image of banks as institutions that should build trust by maintaining order, respecting rules, andcompletely avoiding risks, however, and a culture that accepts failure in efforts to create new businesses,
products, and services has yet to take root.
The more experience people, myself included, accumulate
in banking, the more certain they feel that they have done above
average work that has produced positive results. The reason
for this may be that we are accustomed to making decisions on
the basis of our experience, intuition, and routines.
The problem is that this pride in our “positive results”
creates barriers to thoughtful acceptance of suggestions
and advice from third parties, which is detrimental to humanresources development.
It is said that “the essence of familiar objects can be
determined by viewing them from different angles.” Applying
this axiom repeatedly reveals areas that need reinforcement
and improvement, and repeated trial and error engenders an ability to respond flexibly to sudden change.
We intend to increase the number of staff with a capacity for this kind of self-reflection, and thus to develop athoroughly self-aware organization. We are convinced that continuing to grow in this way will produce a Nanto
Bank Group that can operate independently in any environment.
Developing human resources and reinforcing organizational strength
The roles played by business entities, and perhaps by other organizations as well, will change with the times
and operating environment, and the human resources employed by businesses will have to change with them.
If it is to achieve stable change, the Nanto Bank Group will require personnel who can recognize andrespond accurately to various issues that arise with support from administrators, managers, and colleagues
who can assess the appropriateness of their responses.
Our Management Plan identifies development of “unconventional human resources” as the corecomponent of our human resources strategy. Our efforts to identify and promote highly specialized personnel
and employees with superior reformation capabilities include recruitment and training outside the bounds ofthe conventional framework. The secondary business systems introduced in April 2021, and the creation ofopportunities for young employees they represent, are examples of concrete measures introduced to this end.
Our aim is not only to make use of our banking business, but also to leverage the diverse experience, skills
and expertise, personal connections, and networks acquired through ancillary activities for application in our
main business.
We are promoting introduction of a talent management system that employs fresh perceptions from new
perspectives to discover superior human resources, moreover, as we pursue efforts to enhance our personnel
evaluation capabilities.
While expanding our recruitment of human resources from outside the Group, moreover, we will also
work on adjusting our human resources development programs to raise the abilities of every member of ourmanagement and staff to upgrade their organizational capabilities. This development as a highly engaged
organization will enable us to complete the transformation required for sustainable growth.

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Target Image

President’s Message

Promoting a stable, efficient, sophisticated new business
modelThis transformation of our business model by deploying digital technologies and reinforcing our organizational
strength cannot be achieved overnight. It will require us to adopt a medium- to long-term perspective. While
gradually renovating the constitution and structure of our organization, we will pursue two objectives: cost
reduction through further improved business efficiency and sophistication and stabilization of our market
operations aimed at creating new revenue sources to supplement our core business revenues.
In the area of business efficiency, we continue to reform our office procedures and review our operations.
A reorganization of our office network has led to a decrease in the number of bases from 138 in March 2019
to 105 at the end of March 2021. Looking ahead, with maintaining a full-fledged banking system in every area
as our basic policy, we plan to implement the 30% reduction to a 95-base system we originally planned for2030 six years ahead of schedule in 2024.
As concerns the stabilization and sophistication of our market management, we recognize the difficultyof securing term-by-term profits while continuing to operate in the conventional buy-and-hold investment
style, in which bonds are held until maturity, in a years-long environment of low global interest rates. We haveadopted a basic policy of building and managing well-balanced portfolios combining stocks, bonds, and other
instruments that can assure stable yields of 1% or higher by identifying market trends, steadily accumulating
capital income, and covering declines in income.
Thus, while creating a virtuous financial cycle from the three perspectives of productivity improvement,
asset formation, and commercialization, we will pursue human resources development and organizational
reinforcement leading to construction of a new profit model. We expect these efforts to reduce costs while
improving and stabilizing our market operations.

Efforts to solve regional issues
and realize the SDGs
As regards efforts to address environmental and social
issues, realization of a carbon-free society is attracting
especially fast-growing attention today. We realizethat responding to these concerns will require not only
implementing measures to deal with environmental
problems, but also transformation of our industrial structures
to attain a sustainable society.
The Sustainable Development Goals (SDGs)
established by the UN for realizing a sustainable society
have gained universal recognition by now, and theEnvironmental, Social, and Governance (ESG) criteria have emerged as the accepted standards in asset
management.
Fully aware that sustainable growth of our region is indispensable to the Nanto Bank Group’s sustainablegrowth as well, we have made regional development a key element of our Management Plan, and we arecommitted to continuing our pursuit of solutions to regional issues.
As things currently stand, however, a number of our stakeholders have pointed out short-comings in theGroup’s efforts to realize the SDGs. We responded in April 2021 by appointing our Vice President to the newposition of Executive Officer in Charge of SDGs. Under his leadership, we continue to reinforce our activities inthis area.

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Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview
and external environment

GovernanceBusiness model

Risks andopportunities

Strategies andresources allocation

Performance

Outlook

We are especially concerned in 2021 with making up for our delays in responding to issues related togender and climate change. With respect to gender, to begin with, we recognize the disproportionately highratio of men among our managers and the relative lack of women in management as major issues.
It is essential that we not only pursue the advancement of female employees and their promotion to
managerial positions, but that we also respect different ways of thinking and workstyles. We must adopt
new thinking in our business by adapting to changes in the environment. Our reflection on the failure ofmanagement to tackle these matters seriously has increased our awareness of their importance as significant
issues that management must make serious efforts to correct.

Enhancing management efficiency in consideration of thecost of capital
We are on course to move our revenues from customer services into the black in the profit-and-loss column—
a goal we previously set as an interim target for the Bank in 2025—four years ahead of schedule in fiscal
2021. Every management index is showing steady improvement, with non-consolidated OHR at 71.7% and
ROA at 0.25% in fiscal 2020.
Encouraged by these results, we will continue to enhance efficiency through such measures as improving
the expense ratio and optimizing capital efficiency through risk asset control. We expect these efforts toincrease our corporate value further and meet the expectations of our stakeholders.
We are fully aware that strategically held stocks are currently viewed as problematic by domestic andforeign investors, moreover, due to fears that management will pay less attention to them, causing capitalefficiency to deteriorate.
Looking to the future, as part of our efforts to realize efficient management in consideration of the costof capital, we have set a goal of reducing our strategically held shares to about 20% of our consolidated net
assets on a market value basis by the end of March 2025.

Seeking a bright tomorrow with our stakeholders
The Nanto Bank Group boasts sizable shares of both the deposit and loan transactions performed in Naraprefecture—a reflection of the large numbers of customers who trust us, conduct business with us, andprovide us with valuable information. Determined to live up to this trust, we are engaged in constructing a new
business model that employs digital technologies and provides higher-value-added services.
If the management and staff of the Nanto Bank Group can all realize themselves as unconventional
human resources, and if each individual among them can maximize their performance, we are certain to sharea bright future with our stakeholders.
As the future unfolds, we will continue to work together to create regional vitality and to assure ourposition as a permanent presence in the region. We look forward to our readers’ continued understanding andsupport.

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9

Target Image

Value Creation Process

Value Creation Through Ongoing Pursuit of the Nanto Mission
The Nanto Bank Group is implementing its Management Plan with a view to 10 years from April 2020,
centered on its Management Vision as a “Vitality Creation Bank” engaged in regional revitalization. We are
seeking to realize the Plan’s goals in the course of 10 years by providing value to stakeholders througha three-faceted mission comprising pursuit of regional development, fostering of vitality-creating humanresources, and profitability enhancement.
External environment (Nanto Bank Group risks / opportunities)
Shrinking population / declining
birthrate and aging population

Continued low
interest rates

New coronavirus

Technological evolution

Increasing awarenessof climate change

Deregulation

Management capitalBusiness activity / business model

Customer baseCreation of a virtuous cycle of regional economic
activity by implementing the Nanto Method•Information-gatheringstrengths achieved
through relationships withcustomers•Affording trust and peaceof mind earned throughmany years of providing
financial services•Large share of deposits
and loans conducted in
Nara prefecture

Human resources•Human resources who
respond proactively tochange, think and act
independently•“Omoshiroi” (unique)human resources who
contribute to regional
growth and Nanto Bank’s
profitability•Sharing of a future image thatmanagement has defined•Identifying and supporting requisite
resources•Expansion of the incubation function•Collaboration with local companies
through corporate venture capital (CVC)
investment

Nanto Method
Asset formation•Support according to life stage /life planning•Passing down of assets to thenext generation

Nanto Lease

Nanto Capital Partners

Financial base
•Full capital adequacy

Productivity
improvement

Commercialization

Nanto Mahoroba Securities

Capital adequacy ratio

Reinforcement ofmanagement base
Securing and training of
human resources

Consolidated 9.47%

Non-consolidated 9.15%

Raising business efficiency(End March 2021)
Nanto Consulting

Refinement of governanceNanto Card Service
Nanto DC Card

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Nanto Report 2021, the integrated report of Nanto Bank

Nanto Computer
ServiceNara Mirai DesignOrganizational overview
and external environment

GovernancePeoplePeoplework

comeValues we provide to stakeholders as a“vitality creation bank”

Nanto Mission

Business model

Risks andopportunities

Strategies andresources allocation

Performance

Outlook

Peoplelive

Goals for achievementin 10 years (2030)

Customers
Supply of funds in accordance with theborrower’s business characteristics
Financial products and services tosupport affluent living
Provision of management personnel
Creation of new business
opportunities

Nara prefecture GDP*1

Increase of approx.
¥350 billion

Pursuit ofregional
development

Local community
Collaboration as a leader in regional
development with local governments,
businesses and educational
institutions
Lively town development andbusiness creation

Fostering ofvitality-creating
human resources

Management
personnel
cultivation*2

350

Employees
Realzing flexible workstyles
Providing opportunities for active
engagement outside the business ofbanking

Profitability
enhancement

ROA

0.35% or above
Shareholders
High market rating
Continuing stable dividends*1 Since Nara prefecture’s GDP will beannounced approximately two-and-a-halfyears after the fiscal year-end, we intend toachieve this goal by the end of fiscal 2026 forannouncement during 2029.
*2 Human resources who can share
management decision-making with local
customers

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11

Target ImageManagement Plan and Goals

Approaches to increasing Nara prefecture’s GDP
In April 2020, the Nanto Bank Group launched a new 10-year Management Plan entitled “Nanto Mission and Objectives for the Next 10
Years.” The Plan presents a three-faceted mission comprising pursuit of regional development, fostering of vitality-creating human resources,
and profitability enhancement to serve as an index for realizing the Management Plan’s objectives within 10 years. We have also set “goals
and interim goals to attain in 5 years.” One of the key goals set for achievement in 10 years is a 10% increase in GDP in Nara prefecture.
To achieve our goals, we will adopt the three perspectives of the Nanto Method*— productivity improvement, asset formation, andcommercialization—to approach the issues of production, distribution and expenditures, the three aspects of GDP with respect to our region
and customers. We expect these efforts to stimulate a virtuous cycle of economic
Manufacturing(added value)
activity, and to contribute to realization of an increase in Nara prefecture’s GDP
from multiple perspectives.
Productivity
Commercialization
improvement
By proactively solving various issues in our operating environment, we will
Nanto Method
promote productivity enhancement and increased corporate profits and, as aresult, raise the income of business owners and employees.
While still working to increase corporate profits and personal income,moreover, we will promote asset formation as a means of stimulating consumption
and new investment. In addition to these funding activities, we will contributeto creation of a vibrant regional economic cycle by facilitating new businessestablishment.
Thus, by identifying such regional issues as inefficiencies in the economic
cycle and providing solutions on our own initiative, we intend to create a virtuous
cycle of economic activity within Nara prefecture, and to realize an increase in Naraprefecture’s GDP.

Expenditures(consumption /investment)(income)Asset formation*Nanto Method
A structure for solving and monetizing the issues faced bycustomers (productivity improvement / business succession/ asset formation).

Intermediate goals
Nanto Mission
Pursuit of regional development
Provision of expertise, human resources, and funding to revitalize
our regional community and customers

Fostering of vitality-creating
human resources

Developing unconventional human resources for our region
and customers

Distribution

Profit and loss from customer
services*1 Return to profitability
OHR* Under 70%
2

ROA 0.25% or higher

Certification in fields related tovitality creation*3 Certified staff

Goals for achievement
Nara Prefecture GDP*4
10% increase(Up approx. 350 billion yen)Management
personnel cultivation*5

350
ROA

1,000

0.35% or above

2025

2030

Profitability enhancement
Revitalizing our region and customers, and maximizing profits
for the Nanto Bank Group2020*1 Profit from main businesses (loan / commission businesses) Profit from loan balance x Difference in interest rates on deposits and loans + Profit on service transactions - Expenses*2 Profit from funds comprising interest income from deposits, loans, securities, etc.; service transaction profit comprising the balance of fees, etc.; and profit from other businesses comprising thebalance of profits from other businesses after deducting the ratio of expenses to profit after deducting gains and losses on bonds such as government bonds*3 IT engineers, registered management consultants, licensed real estate brokers, FP level 1, bookkeeping level 2 equivalent or higher qualification*4 Since Nara prefecture’s GDP will be announced approximately two-and-a-half years after the fiscal year-end, we aim to achieve this goal by the end of fiscal 2026 for announcement during 2029.
*5 Human resources who can share management decision-making with local customers

12

Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview Business modeland external environment

Risks andopportunities

Strategies andresources allocation

OutlookBusiness plan and the SDGs
Our Management Plan, “Nanto Mission and Objectives for the Next 10 Years,” is aimed at helping to achieve a sustainableregional community by realizing the objectives of the Nanto Mission: regional development, vitality-creating human resources,
and profitability enhancement. These objectives are closely similar to the goals and orientations of the SDGs.

SDG objectives
17 goals and 169 targets

Nanto Mission

Solving
regional andsocial issues

Realization ofsustainablecommunities andsocieties

Pursuit of regional development
Fostering of vitality-creating human resources
Profitability enhancement

SDG policy
We will work proactively to realize a sustainable regional community and to solve social
problems facing our region by implementing the three facets of our Mission: regional
development, fostering of vitality-creating human resources, and improvement of profitability.
Priority action goals
Among the 17 SDGs, the Nanto Bank Group has identified seven priority goals that are
particularly relevant to our areas of operation and business strategies, and to our objectives
for sustainable preservation of our regional environment.

*What are the SDGs (Sustainable Development Goals)?
The SDGs are 17 goals elucidated in the 2030 Agenda for Sustainable Development adopted by the General Assembly of the United Nations in September 2015. The Nanto Bank Group aims
to contribute to realization of a sustainable society by implementing solutions to social issues such as poverty, hunger eradication, and gender equality as well as to environmental challenges inthe years leading up to 2030.

Nanto Report 2021, the integrated report of Nanto Bank

13

Increasing Nara Prefecture’s GDP

Nanto Method
Manufacturing

Productivity improvement(added value)

Productivity
improvement

Commercialization

Expenditures(consumption /investment)

Distribution(income)Asset formation

Basic Policy

Applying expertise as a Group to solve issues facing customers
We consider it our mission to develop and enrich the region in which we operate by increasing the added value of our
local customers. The starting point in our efforts to raise regional added value (GDP) is to help increase customers’
productivity throughout the prefecture. Since customers face a diverse range of issues, we seek to deepen our knowledgeof individual companies through activities that bring us face to face with their management to determine their actualissues and propose solutions as a Group. Solving customers’ issues and improving their productivity will lead to increased
personal income, including corporate profits and salaries.

Action Plan

Our customer productivity enhancement begins with acquiring an understandingof the client company’s target image through comprehensive dialogue with its
management, followed by efforts by our Group as a whole to overcome the problems
impeding its realization.
Improving customer productivity requires continuous pursuit of business possibilities from a wide range of perspectives
based on a relationship of trust with management. The members of the Nanto Bank Group communicate extensively withthe customer’s management to grasp the future image they envision, identify the resources lacking for its realization, suchas a need for management system reinforcement and reform, and work as a Group to resolve them.
The resources customers lack and the issues they face vary with the customer. If they lack sufficient sales channels,
we support their expansion through business matching; if they lack management expertise, we introduce appropriate
management personnel to promote growth and strengthen their management; and if they lack suitable businesssuccessors, we provide the requisite expertise in succession and M&A. Whatever their issues, we respond with a view toachieving regional development from a medium-to-long-term perspective.

14(Reinforce and reform management systems, etc.)

Identify required resources
Introduce superior human resources•Management personnel (to implement
executive decisions = provide leadership)•Highly productive human resources (experts /superior international human resources)

Introduction andtraining of
human resources

Business matching

M&A

Support for
IT introduction(BPO, etc.)

Business succession

Support for SDGs

Advanced technologies /overseas sales channels•Strategic alliance partners, etc.

Nanto Bank Group’s stance•Building long-term relationships of trust•Proactive solution of human andexpertise issues

Nanto Report 2021, the integrated report of Nanto Bank

Improving customer productivity

Conduct extensive dialogue
with management(to obtain detailed knowledge)

Grasp the future image
management envisions

Business model

Strategies andresources allocation

Performance

Initiatives in the recruitment business
The Nanto Bank Group supports regional SMEs by introducing management personnel, expert specialists, and highly
skilled international personnel imbued with the requisite expertise and technological know-how to solve their problems.
Our accompanying consulting extends to follow-up for an appropriate period of time after the new personnel join thecompany, moreover, as well as to further support to ensure the customer’s growth and systems improvement.
Basic flow of human resources introduction
Recruitment
needs

Recruitmentcompany

Partner staffing
agency(Customer)

STEP1
STEP2
STEP3
STEP4

Job
introduction

Information
linkagejob seeker

Employment

Application

Conduct detailed discussions of the customer’s management strategies and envisioned
future business structure and grasp the issues to resolve.
Define the requirements for the most suitable human resources, produce recruiting materials,
and provide the information to affiliated staffing agencies.
Receive recommendations of potential employees from employment agencies and maintainsupport until the client company secures the most suitable human resources.
Introduce management personnel (department head/administrator level) or highly skilledinternational human resources to promote corporate growth and improve management.

Human resources introduction(cases)4

Contracts
signed6

Contracts
pending0
FY2019FY2020Support for smooth business succession and M&A.
The pressing issues for maintenance and development of the local economy include
challenges faced by many SMEs in their business succession as their owners age
amid a shortage of appropriate successors.
The number of customers who are worried about the future of their business dueto the prolonged coronavirus epidemic is growing, moreover, and their M&A-related
management needs are increasing from the standpoint of maintaining business
continuity and staff employment.
The Nanto Bank Group has established systems for solving problems collectively
as a Group in matters related to company succession and corporate owners’ assets,sharing in our customers’ futures through deep involvement with management, with
the Asset Management and Succession Office playing a leadership role supported by
specialized outside business partners.
We continue at the same time to reinforce our systems in such areas as businessmatching and support for IT introduction to improve our customers’ productivity.
Stabilization phase

Entrepreneurship

Establishment
phase(cases)

M&A
344
286

4
27

16
FY2019Contracts(purchasing)Contracts(sales)No. oftransactions

FY2020

SustainablegrowthStagnation
phase

Growthphase
Regeneration phase

Productivity improvement support...Sustainable business model construction for the coronavirus epidemic and beyond
Business establishment support•Business establishment support•Crowdfunding•Support for capital expenditures

Growth support•Business matching•Funding support•Equity financeBusiness stabilization support•Business succession / M&A•Support for IT introduction / BPO

Business revitalization /succession support•Capital lending•Management improvement support

Nanto Report 2021, the integrated report of Nanto Bank

15

Increasing Nara Prefecture’s GDP

Nanto Method
Manufacturing

Asset formation(added value)

Productivity
improvement

Commercialization

Expenditures(consumption /investment)

Distribution(income)Asset formation

Basic Policy

Asset Formation According to Life StageThe Nanto Bank Group helps customers achieve asset formation in a cyclical process in which higher incomes from
improved productivity are circulated through consumer spending and investment.
In an era in which people live a hundred years or longer, it is essential to extend the lifetime of their wealth as well.
Customers’ expectations of financial institutions are changing as their lifestyles and personal values diversify, moreover,and demand for instruments of a kind resembling individual life planning is emerging.
As a “companion for life” to our customers, we provide the best customer service under every circumstance, sharing
their life planning and goals with them through dialogue and employing goal-based approaches as a Group to conduct
the asset formation and asset management they require.

Future life planning

For your children’s future and your own retirement

Generation initiating asset formation

Generations pursuing asset formation

We plan to enhance convenience for our younger
customers by improving our apps’ functions andInternet banking procedures to enable them to conduct
a wide variety of transactions anytime, anywhere
according to their lifestyle.
We will also work on making our various payment
procedures more convenient by encouraging the useof debit cards and credit cards and employing APIs tocreate linkage with other industries.

Asset-formation from a medium-to-long-term perspective isessential for those who want to lead a prosperous life in the future.
From bank savings to asset formation, the Nanto Bank Groupsupports investment-centered asset formation by proposing
instruments with an emphasis on long-term planning, savings,
and diversification, and by leveraging systems such as NISA andiDeCo to match the investments to customers’ future life design.
Acquisition of homes or other real estate and movables suchas automobiles is another means of asset formation. We seek toimprove convenience by further enhancing our product lineup to
meet a wide range of asset formation needs, and by introducing
mechanisms for completing procedures on the Internet.

Nanto Bank smartphone app
The Nanto Bank smartphone app enables users to access a variety of services, from balanceand deposit-and-withdrawal statement inquiries to Nanto Bank Internet banking, remoteaccount opening, and ATM search result storage. The app is even equipped with asmartphone security verification function that affords users peace of mind when accessing
our banking services by smartphone.

Balance and deposit /withdrawal inquiries
Easy checking ofaccount balancesand deposit /withdrawal details
at any time!

Account opening
Users can open an
account by smartphone
anytime, anywhere.

Direct login(Cases)33.1%

Number of investment
trust reserve accounts

35,59136,894End of 2019

End of 2020

Ratio of number of investment
trust reserve accounts to numberof investment trust accounts

Branches / ATMs
Customers can search fornearby Nanto Bank
branches and ATMs fromtheir current location.

Personalized home
screenSecurity function assuring safe,
secure use!

App users can decorate theirhome screen with their own
favorite photos.

Activating this application provides users withaccess to various contents after automaticallychecking the security of their terminal andconfirming its safety.

Nanto Report 2021, the integrated report of Nanto Bank

32.4%

Nanto Direct facilitateseasy login to Internet
investment trusts.

* The Nanto Bank smartphone app can be downloaded from Google Play or
the App Store.

16

Number of investment trust reserve accounts(No. of loans)

Home loans
58.2%

57.6%

3,022

4,296

FY2019FY2020No. of new loans
Ratio of regular payroll transactions(overall)

Business model

Strategies andresources allocation

Performance

Action Plan

Establishing contacts
with young people

Expansion of inheritanceand trust services•Acceleration of digitalization,
including improving app andInternet banking functions•Strengthening employment
management•Improving card loan convenience•Reviewing advertising strategies•Enabling investment trust accountopening on the Internet

Strengthened cooperation with banks
and securities companies
Personal
assetsChange from home loan
to main account
Birth

Age 18Entering workforce

Asset succession
by heirs

Reinforcing and expanding functions to support asset formation from a medium-tolong-term perspective according to customers’ life stages

Retirement

Age 25Generation initiating asset formation

Generation pursuingasset formation

Generation drawing on assets Generations inheriting assets

For a comfortable retirement life

For customers’ precious families and grandchildren

Generation drawing on assets

Generations inheriting assets

In addition to long-term diversified investment, the ability
to lead a rich life in retirement requires asset management
matched to customers’ lifestyles. The Nanto Bank Grouphas developed a one-stop system to meet the needs ofwidely varied customers by providing highly specialized
hybrid bank/securities financial products in collaboration
with Nanto Mahoroba Securities.
We are preparing for the era of 100-year lifespans,moreover, by proposing insurance products that employ
guarantees and functions to meet the various needs ofour customers.

Passing down assets to the next generation is another important
aspect of asset formations. Its early entry into the trust businessamong Japan’s regional financial institutions positioned the
Nanto Bank Group to lead the way in developing systems thatassure peace of mind in matters of asset succession.
We are responding to the issue of dementia as well by
providing instruments such as our Tsukaete Anshin trust with aproxy withdrawal function that allows families to manage theirfunds without worries.
Providing these structures to assure asset succession withpeace of mind is a means of building relationships with bothelderly customers and members of the next generation.

Balance of assets under management
174.1
57.4

(Billion yen)

(Cases)Trust business

216.0

102

102

72.5

36

37

66

65

FY2019FY2020Inheritance settlement business

Nanto Mahoroba Securities

116.7
End of 2019

143.5
End of 2020

Nanto Bank (investment trusts)

Testamentary trusts

Nanto Report 2021, the integrated report of Nanto Bank

17

Increasing Nara Prefecture’s GDP

Nanto Method
Manufacturing

Commercialization(added value)

Productivity
improvement

Commercialization

Expenditures(consumption /investment)

Distribution(income)Asset formation

Basic Policy

Regional Revitalization Through Independent Business Development
Against the background of a declining population and aging society, sustainable development of Nara prefecture will
necessitate revitalization of the local economy by activating people x things x equity in addition to funding.
The Nanto Bank Group is striving to expand the incubation function designed to foster new industries in Naraprefecture, develop collaborative businesses in the prefecture through investment in venture companies, and spawn newcommercialized businesses by leveraging the strengths of regional revitalization companies.
Action Plan

Current approaches
to issuesSpecific initiatives for FY2021

Target image

Participation as a Group in regional projects and efforts to enhance and nurture theearning potential of the regional economy

18

Peoplelive
Town development
bringing people
togetherPeople NANTO People
come
work
Emphases of Nara Mirai Design(regional revitalization business company)

Expanded incubation function

Real estate / town development business•Increasing the Bank’s share of startup loans in Nara prefecture•Cooperation with local businesses and external organizations•Town development in collaboration
with local public organizations, others

Generating collaboration with local companies
through CVC investment

EC business•Creation of open innovation for investment recipientsand regional companies

Regional revitalization as a business•Nara Mirai Design startup (regional revitalization company)

Business establishment support

Nanto BankGroup

•Publicizing Nara’s attractions through EC
Agribusiness•Raising the brand power of agricultural productsin Nara Prefecture

EquityBusiness creation

Nanto Bank

Nanto Capital Partners

Nara Mirai Design<Nanto> Business establishment
support package<Nanto> Business establishment
support fundInvestment specialist subsidiary

Regional revitalization business

Established October 1, 2020

Established April 1, 2021

Nanto Report 2021, the integrated report of Nanto Bank

Founded October 1, 2020

Business model

Profile of Naraprefecture

Population / life

An inland prefecture,
Nara prefecture occupies
the southern part of amountainous region
called the “Roof of Kinki”
in the center of the Kii
Peninsula in the heart
Japan.

Strategies andresources allocation

Performance

Economy / industry•Population of Nara prefecture

1,331,330•Agricultural•Number of factory andresearch institute locations output

32 (FY2019)

Males / 626,977
Females / 704,353

40.7 billion yen•Number of businesses offices •Ratio of disused
cultivated land

49,823•Number of households•Number of employees

21.2%

486,777

596,741•Nara prefecture GDP (real)•Income per capita

3,611.7 billion yen

2.6 million yen

Source: Nara Prefecture 2020

Human resources [business establishment]
Although Nara prefecture boasts a superior pool of human resources with a high percentage of college-educated residents, its
employment rate is surprisingly low, and consumer spending in the prefecture tends to be restrained as a result. We believe the
Nanto Bank Group can provide leadership in promoting employment of our superior local human resources, with resulting higher
consumption, and in creating new added value by providing support for startups and new business development and inviting
companies to Nara prefecture.

Solutions

Current situation of Nara prefecture•Nara Prefecture
new business opening rate

•University / junior college
enrollment rate

4.3% 15th
place inJapan

59.4% 7thplace in
Japan

7

Males

55.9%

th
place inJapan

Females63.1%

thplace in
Japan

71.2%

th
place inJapan

•Female workers
in labor force

42.4%

th
place inJapan

•Percentage ofconsumer spending
within the prefecture4Create employment
through initiatives such assupport for startups / newbusiness development andattracting companies to theprefecture.

46•Prefectural
employment rate

47

84.8%

47

th
place inJapan

Promote regional
employment to increasesalaries and create new
added value.

Tourism resources [business establishment / tourism]
Our goal is to increase GDP by simulating higher tourist spending and regional revitalization by converting Nara prefecture from a
day-trip tourist destination to a multi-day tourist destination.
The Nanto Bank Group will promote excursions and multi-day tourism by establishing tourism bases with accompanying
accommodations in the central and southern areas of the prefecture.

Solutions

Current situation of Nara prefecture•Number of tourists•Number offoreign visitors

44.21 million

3.5 million•Historical scenic sitenatural monuments•Number ofannual visitors

5thplace inJapan

146 No.1

in Japan

2.73 million•National treasures andimportant cultural properties•World Heritage sites•Guest rooms atinns and hotels

1,327

3

9,426

3

rd
place in
Japan

No.1

in Japan47thplace inJapan reate local tourism basesCby utilizing and renewing
existing bases that are notfully utilized.
 reate busy districts toCserve as tourist bases.

•Per-capita tourist spending
Overnight
visitors

27,451 yen Day-trip
visitors 4,781 yen
Source: Nara Prefecture 2020

Nanto Report 2021, the integrated report of Nanto Bank

19

Increasing Nara Prefecture’s GDP

Nanto Method

New Business Establishment and Support<Nanto> Business Establishment Support Package
The <Nanto> Business Establishment Support Package, which bundles services and benefits for entrepreneurs, wasestablished in October 2020 to provide one-stop services that meet all their needs. As of end June 2021, 54 of the Bank’s
customers are using the package.

Benefits of the <Nanto> WebBusiness Banking app (domestic)

Cashless payment support
for corporations and sole proprietors

System installation support•Basic monthly fee
6 months free

•Corporate credit card enrollment
3,000-yen gift card for new customers•Cashless payment member stores
No initial introduction fees,
preferential payment fees

•Payroll services
10% discount on cost of
initial installation

Financing consultation

Management support

Membership services•Support for business plan /financial plan formulation•Credit Guarantee Association
application support•Equipment procurement support•Loan product information•Introduction of management
professionals•Business monitoring•Subsidies / subsidy information
provision•Business matching, etc.

•Invitations to management seminars•Package membership
Invitations to opinion exchange
meetings / social gatherings•Email newsletter distribution, etc.

<Nanto> Business Establishment Support FundIn October 2020, we joined the Nara branch of the Japan Finance Corporation in a co-financing project organized to
introduce the <Nanto> Business Establishment Support Fund aimed at helping entrepreneurs start new businesses in
Nara prefecture.
Nanto Bank and the Japan Finance Corporation’s Nara branch cooperate in responding promptly and flexibly tocustomer needs before and after they receive loans from the <Nanto> Business Establishment Support Fund. As of end
June 2021, loans had been extended to two business owners.

<Nanto> Success Road Business Plan Commercialization Support Project
Thirty winners of the 7th <Nanto> Success Road* Awards wereannounced in March 2021. In addition to awarding monetary
prizes, the Bank assigns specialists to take responsibility forfollowing up regularly and implementing efforts to realize earlycommercialization.
*<Nanto> Success Road is a commercialization support project aimed at realizationof a sustainable regional community in accordance with Nanto Bank’s SDG policy.

20

Nanto Report 2021, the integrated report of Nanto Bank

Business model

Strategies andresources allocation

Performance

Participation through the Regional Co-creation Promotion OfficePrompted by its commitment to solving regional issues,
Nanto Bank teamed up with the Nara Institute of Science andTechnology to establish the Regional Co-creation Promotion
Office. The Office’s aim is to build a “regional co-creation
platform” through collaboration among the industrial, academic,
and public sectors with “co-creation” as the keyword.
With the Office as a starting point, we will expand future
participation to companies and regional governments, andwork as a collaborative project involving industry, academia,
and government to overcome obstacles to the digitalization ofregional communities and creation of new industries.

EquityIn accordance with its mission of “adding new value to Nara through investment,” Nanto Capital Partners Co., Ltd. pursues
regional economic development by investing in venture companies as well as by working together with the Nanto Bank
Group, regional companies, and venture companies. In fiscal 2020, the company invested in nine projects valued at 965
million yen.

Business Creation
Nara Mirai Design was established by the Nanto Bank Group and NOTE Nara to solve regional issues throughcommercialization as a business operator.
Company profile
Company
nameNara Mirai Design Co., Ltd.

Location

43 Nishinoshinya-cho, Nara City,
Nara Prefecture

Date ofestablishment

April 1, 2021

Capital30 million yen[Town development business]

We will make use of vacant houses and stores in efforts to create lively
towns and active businesses.

Contents
of business[EC business]

We will create structures that motivate people to visit Nara bycommunicating producers’ perspectives and the stories behind the
products to consumers nationwide.

[Agribusiness]

We will contribute to regional revitalization through branding of Yamato
Vegetables grown on disused cultivated land.

Narawashi EC Mall established July 16, 2021

https://narawashi.jp/

Nara Mirai
Design has
opened the
Narawashi
EC Mall
Website, a
new platform
connecting
producers with consumers.
The number of items available on the site wasinitially about 40, but the company intends to offer 300
or so items in the future.

Nanto Report 2021, the integrated report of Nanto Bank

21

Increasing Nara Prefecture’s GDP
Special Feature

Stakeholders’ Voices

Targeting a 10% Increase in Nara Prefecture’s 2030 GDP
Nara Institute of Science and Technology, which established the Regional Co-creation Office to oversee regional
revitalization, and the Nanto Bank Group, which has set the goal of raising Nara prefecture’s GDP by 10% (approx.
350 billion yen) by 2030, share the common goals of revitalizing Nara prefecture and solving issues facing theregion.
The university’s Vice President Tsukasa Ogasawara, Director of the Co-creation Office, and Nanto Bank’sManaging Executive Director Ryuichiro Funaki recently discussed their respective hopes for mutual cooperationand their institutions’ roles in solving the issues concerned in regional economic revitalization.

22

The Nanto Bank, Ltd.
Director and Managing Executive Officer

Nara Institute of Science and Technology
Director / Vice President

Ryuichiro Funaki

Tsukasa Ogasawara

Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview
and external environment

GovernanceBusiness model

Risks andopportunities

Outlook

Regional Co-creation Promotion Office established with “co-creation” as
the keyword to coordinate collaboration among the industrial, academic,
and public sectors.
Ogasawara: The increasingly challenging environment surrounding the University
in recent years due to social changes such as a declining birthrate and aging
population has made cooperation with the regional community, businesses, andgovernment an important issue for us as well. About a year and a-half ago, ourformer President attended an ICT convention on the West Coast of the UnitedStates, where he was impressed by the highly productive cooperation between
academia and the community. This inspired our University to take the lead incollaborating with various regional organizations and promote a new programof regional collaboration. Our purpose in establishing the Regional Co-creation
Office was to encourage collaboration among regional financial institutions andthe industrial, academic, and public sectors, and to extend this collaboration
nationwide and around the globe.
In establishing the Office, we consciously incorporated the concept of a co-creation circle with othersegments of society. It is relatively easy for universities and businesses to collaborate, with universities providing
technical support. But when it comes to economic or social issues, universities cannot handle them alone. This will
require us to discuss challenges based on the concept of regional issue solution, and to continue to expand ourfield of activities involving corporations and local governments by creating a platform-type organization capable ofimpacting and changing systems.
Funaki: The Nanto Bank Group would like to discover ways of joining your university, a depository of knowledge
and expertise, in contributing to our region. We have been supporting entrepreneurial activities through our
original <Nanto> Success Road project, and promoting a program of new business establishment for purposes oftechnological innovation and human resources development. Without accelerating these efforts and implementing
measures to expand them, however, we will be unable to achieve our target of increasing Nara prefecture’s GDP
by 350 billion yen. For this reason, we would like to contribute to creation of an environment in which somestudents of your University establish businesses and develop them right here in Nara prefecture. I am sure ourbanking specialists would prove useful in providing education and practical applications in the fields of financeand business planning, which are not to our knowledge among the University’s strengths. We are also interested
in supporting startups by matching regional companies with students as potential human resources who possess
seeds and technologies that can contribute to the community.
Ogasawara: As I mentioned, the key is collaborative funding by the regional industrial, academic, and public
sectors. By co-creating an organization through cooperation between academia and finance, especially, we canidentify issues that the University and Bank can tackle together, and form a team to work toward solutions to theissues facing Nara prefecture. There are various challenges to overcome, including the issues of car-sharing, smart
cities, and tourism. We have a shortage of innovative human resources in Nara prefecture, however, and we would
like to nurture more of them in cooperation with Nanto Bank. We are promoting an entrepreneurship education
program, for example, to nurture students’ ability to sow seeds. This means fostering students with entrepreneurial
mindsets. We would like to support them in cooperation with the Bank to help them start businesses in Naraprefecture and contribute to solving our regional issues.
Funaki: We do seem to have a particularly notable shortage of human resources specializing in IT in Naraprefecture. We banks are among those struggling to secure human resources to handle our digital strategies. If
you have teachers and students working on FinTech at your university, I hope we can find ways to cooperate indeveloping cutting-edge services. At the same time, we would like to enable teachers and students to use us as a
stepping stone for taking entrepreneurial capabilities born in Nara out into the world.

Nanto Report 2021, the integrated report of Nanto Bank

23

Increasing Nara Prefecture’s GDP
Special Feature

Stakeholders’ Voices

Contributing to revitalization of the regional economy and problemsolving through collaboration between the Regional Co-creation Officeand the Nanto Bank Group
Ogasawara: Our University specializes in advanced technological research. Our graduates will play active roles
throughout the region, adding to the nation’s technological capabilities. There are many issues that technologies
can help to resolve including meeting the multiple future needs of society in places like Nara prefecture, where
the population is likely to contract by one-third in coming years, or overcoming challenges faced by areas withaging residents and inconvenient transportation. Supporting people who arefacing challenges may become one of our major concerns, but we cannot
overcome them alone. We must join forces with software development
companies, for example, various service companies, and municipal
governments. I believe we will need a body to oversee these efforts as well
as a venue where participants can meet for regular discussions. Universities
are thought to discourage public access. Establishing a place where
community residents can gather easily to talk and solve problems would
improve the community and create a virtuous cycle that brings people
together.
Funaki: The Bank views these efforts from two perspectives. First, since we conduct a financial businessourselves, we can deploy technologies developed by the University’s professors and students in collaboration with
the industrial, academic, and public sectors in our business. Second, as a regional financial institution, we havebuilt relationships with many regional companies. When it comes to funding for collaboration among these sectors,
we can find regional companies to participate in joint research. In our daily work, we pursue activities aimed atachieving a full understanding of our customers and their management issues. If we add an understanding of theuniversity’s research themes and technologies to this, we believe we can upgrade the corporate business modelthrough matching with appropriate regional companies depending on the theme. By linking research into such
issues as smart cities and MaaS (Mobility as a Service) with companies in the automotive sector, we should be
able to overcome such challenges as transportation inadequacies
in areas whose population is declining as society ages. Regional
companies could tackle these issues on their own, but the costs
involved would be very high. We think the University’s knowledge
and know-how can be employed here to create new industries
through collaboration among various companies, establishinga platform from which the possibilities for solving regional
issues will become apparent. Banks as such operate undercertain restrictions, but we feel certain that we can serve as anintermediary to connect local companies with local governments.
Ogasawara: It may be difficult for any of us to identify problems and consider solutions on our own, but we canrespond by increasing the number of participants such as venture companies, and by collaborating with multiple
universities, not only in technology but also in fields such as culture and economics. We can also divide theworkload further by assigning different roles to specialists in various fields.

Realizing untapped potential by taking advantage of the location
characteristics of Nara prefecture to develop an incubation organization
Ogasawara: I, for one, am convinced of Nara prefecture’s potential to create new businesses. Conditions may bebetter in Osaka and Kyoto at present, but if word gets out about an organization that supports entrepreneurs in

24

Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview
and external environment

GovernanceBusiness model

Risks andopportunities

OutlookNara, human resources will return. Nara is also an ideal place for experimenting with new businesses, a factor thatinterests me from an academic perspective.
Funaki: Nara may actually be better suited to experimentation than a metropolitan area. Conveniently locatedadjacent to Osaka and Kyoto, it offers easy airport and Shinkansen bullet train access. It is a particularly
suitable region for creative activities such as IT and design that fit easily into remote business structures. We areconsidering establishing an incubation organization and providing
infrastructure for the Nara of tomorrow. During the coronavirus
pandemic, online conferences have become ubiquitous, andwhen 5G networks are fully in place, this trend can be accelerated
further. We also intend to continue working with government
entities such as local governments and the Ministry of Economy,
Trade and Industry to encourage budding entrepreneurs to launch
their startups in Nara.
Ogasawara: We have many competitors in this. Our organizational
efforts will be futile if we do the same things as everyone else.
We want to set Nara prefecture apart by making the most of its
location near Osaka and Kyoto in a region where universities, companies, and research institutes are congregated.
We will invite people to come to Nara, stay for a time, and learn what an agreeable place it is to live. If these
newcomers team up with members of the local community, they can form a unique platform for co-creation in thecommunity. Our first step will be to bring these sorts of people to our region.
Funaki: There are many companies concentrated in Keihanna Science City, which straddles the borders of Osaka,
Kyoto, and Nara. We would like to make the most of our capabilities as a regional bank to establish a salon-likevenue where entrepreneurs can gather in Nara, and to create a mechanism for exchanging information.
Ogasawara: I have taken students from our Entrepreneurship Education Program to the U.S. West Coast, where
we visited a unique facility that supports organizations that are starting businesses. A number of support booths
were set up at the facility to assure participants of their ability to succeed. It will be important for us to establish
a support system of this kind, and I believe we should do so right away to provide entrepreneurs with virtual
consultations and a place to gather and discuss their challenges.
Funaki: There should be a place where entrepreneurs who encounter problems can meet with people withexperience and search for solutions with them. It would be wonderful if you could simply tell them to “come to ourlaboratory.”

Pursuing regional revitalization by researching ideal ways of conducting
regional finance that leverage advanced technologies and the evolution of DX
Ogasawara: The University’s classes have traditionally centered on face-to-face meetings. The coronavirus
pandemic made it clear, however, that this is now not always the case. Since biology experiments deal with livingorganisms, researchers cannot conduct them away from their lab, but scientists who experiment by shaking test
tubes can conduct their research remotely. Remote research activities will lead to advances in automation. Even
office work can be conducted remotely, meanwhile, by digitizing stacks of documents. I believe DX has evolved
from this. Anyone, even members of the general public in depopulated regions, can access and make effective
use of data that is uploaded by computer to the cloud. This capability will make office work increasingly efficient aslong as security measures can be fully implemented. Banks will operate without teller windows or ATMs, moreover,
and will handle information instead of money. Nevertheless, our economic activity will continue. Further activities
and services will be required to realize these changes, and we can employ our technical resources to pursue
them. I believe we have a lot to learn about services through cooperation with your Bank.

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25

Increasing Nara Prefecture’s GDP
Special Feature

Stakeholders’ Voices

Funaki: In the era to come, we will have to consider new approaches to regional finance. I would like to work withstudents on a project employing FinTech and blockchain technology to create forms of finance that are easy touse for the younger generation while remaining rooted in the community as a whole. Of course, not everything will
be virtual. If customers have a partner like Nanto Bank that can advise them with a view to the actual situations ofregional companies, they can invest with confidence. I want the Bank to play this role. I would like to join them instudying ways of combining Internet operations and real-life activities.
The financial world is entering an era of dramatic change, and I want to convey my fascination with this tostudents. We are in the midst of a paradigm shift to a world no one has ever before imagined. I certainly welcome
the opportunity to benefit from your knowledge in this time of change.
Ogasawara: IT is also contributing to agriculture, a development with special appeal for young people.
Funaki: Many of our customers are already employing ICT in their farming operations, but it is not yet being
applied in the forestry industry, where we are closely monitoring trends in carbon pricing. The closer you lookat Nara prefecture, the more challenges you see—and the more opportunities you see as well. I would liketo monetize our valuable forest assets. Developing a mechanism to measure the amount of CO2 that can beabsorbed by reforesting mountains will open up abundant opportunities for forestry in Nara prefecture. Many nextgeneration managers of local companies are aware of the problems, and of the possibilities for solving them.
Ogasawara: We can revitalize various areas of the region by bringing people like these young regional managers
together. This is one reason why I believe Nara prefecture has such great potential.

Collaborative efforts to create new systems by matching humanresources and companies with the University’s technologies
Ogasawara: Nanto Bank is currently engaged in promoting regional support projects and activities. If you
help us match human resources and companies with the University’s technologies, we can achieve something
really significant. We hope to work with your Bank to deepen the University’s ties with regional companies andgovernments. Developing new financial systems and promoting DX will require new mechanisms, and we lookforward to working with you toward these goals.
Funaki: Financial institutions are also in the process of refining their services and risk management, and to tell
the truth, we are keenly aware of our need for personnel with backgrounds in science. We can benefit from yourknowledge in the areas of finance and deep learning, for example, in rethinking what services would be mostbeneficial to the people of our region considered from a zero base. I hope to realize “co-creation” by drawing on
your expertise to supplement the knowledge and skills we lack ourselves. Thank you for taking time for us today.

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Organizational overview
and external environment

National University Corporation Nara Institute of
Science and Technology

GovernanceBusiness model

Risks andopportunities

Outlook

NARA INSTITUTE OFSCIENCE AND TECHNOLOGY- Outgrow your limits -History— Outgrow your limits —On the cutting edge of infinite possibilities
Nara Institute of Science and Technology, a Japanese
National University Corporation, offers an environmentthat enables the people who gather here to succeed intaking on and overcoming new challenges. In addition
to the students and faculty who make up the University,
everything from its academic fields to its organizational
structures is predicated on achieving unrestricted growthand development.

Oct. 1991 Nara Institute of Science and Technology established.
Graduate School of Information Science established.
University Library established.
Apr. 1992 Graduate School of Biological Sciences established.
Information Science Center established.
Apr. 1993 Research and Education Center for Genetic Information established.
Graduate School of Information Science (Master’s Program) accepts 1st-semester students.
Apr. 1994 Graduate School of Biological Sciences (Master’s Program) accepts 1st-semester students.
June1994 Research Center for Advanced Science and Technology established.
Apr. 1995 Graduate School of Information Science (Doctoral Program) accepts 1st-semester students.
Health Care Center established.
Apr. 1996 Graduate School of Biological Sciences (Doctoral Program) accepts 1st-semester students.
May 1996 Graduate School of Materials Science established.
Apr. 1998 Graduate School of Science and Technology (Master’s Program) accepts 1st-semester
students.
Research and Education Center for Materials Science established.
Apr. 2000 Graduate School of Science and Technology (Doctoral Program) accepts 1st-semester
students.
Apr. 2002 Graduate School of Information Science, Department of Information Science begins accepting
students.
Oct. 2003 Intellectual Property Division established.
Apr. 2004 Nara Institute of Science and Technology becomes a National University Corporation.
Intellectual Property Division closed. Industry-Government-Academia Collaboration Groupestablished.
Sep. 2009 Gender Equality Promotion Office established.
Dec. 2009 Center for International Cooperation established.
July 2010 Information Initiative Center established.
Aug. 2010 Center for Frontier Science and Technology established.
Apr. 2011 Graduate School of Information Science, Department of Information Science established /begins accepting students.
Graduate School of Biological Sciences, Department of Biological Sciences established /begins accepting students.
Apr. 2013 Career Services Office established.
Oct. 2013 Division for Research Strategy established.
Apr. 2015 Center for Strategy and Planning established.
Institute for Educational Initiatives established.
Institute for Research Initiatives established.
Apr. 2017 Data Science Center established.
Apr. 2018 Graduate School of Science and Technology, Department of Science and Technology
established / begins accepting students.
Jan. 2021 Center for Digital Green Innovation established.
Apr. 2021 Regional Co-creation Office established.

Regional Co-creation Office staff
We will realize a sustainable future society,not only through digitalization but also throughthe application of science and technology, byleveraging the advanced expertise of our many
stakeholders who are leaders in the regional
economy and society and co-creation of diversity.

Tsukasa Ogasawara
Director, Regional Co-creation Office (Executive Director / Vice President,
Nara Institute of Science and Technology)

Regional Co-creation Director

Regional Co-creation Advisor

Masato Miyake

Yoshihiro Furukawa(Associate Professor, Nara Instituteof Science and Technology,
Institute for Research Initiatives)(Deputy Director, Nanto Bank
Corporate Sales Department)

Regional Co-creation Coordinator

Regional Co-creation Advisor

Aya Nita

Katsutoshi Akagi(URA, Nara Institute of Science andTechnology, Institute for Research
Initiatives)(Deputy Director, Nanto Bank
Sales Support Department, Digital
Promotion Office)Regional Co-creation Coordinator

Regional Co-creation Advisor

Masahiro Nishizawa

Ryo Matsuyama(URA, Nara Institute of Science andTechnology, Institute for Research
Initiatives)(Investigator, Nanto Bank Regional
Business Creation Department)

Tetsuya Matsushita

Regional Co-creation Advisor(Nara Institute of Science andTechnology, Planning andAcademic Affairs Department,
Planning and General Affairs
Division)(Nanto Bank Sales Support
Department, Digital Promotion
Office)ProfileDr. Ogasawara graduated in 1978 from the University of Tokyo’s
Department of Numerical Engineering, Faculty of Engineering, from which
he also earned his doctorate in information engineering in 1983. He joined
the National Institute of Advanced Industrial Science and Technology of
the National Institute of Advanced Industrial Science and Technology thatsame year, and later spent a year from 1993-1994 as a visiting researcher
at Karlsruhe Institute of Technology in Germany. He has been a professorof Nara Institute of Science and Technology since 1998. His areas ofresearch include intelligent robot systems, human robot interactions andbiometrics, among others.

Katsutoshi Kaneda

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Increasing Nara Prefecture’s GDP

Management Base Reinforcement

Human Resources Procurement and Training

Reinforcement ofmanagement base
Securing and training of
human resources
Raising business efficiency
Refinement of governance

Basic Policy

Creation of unconventional human resources
Implementing its human resources strategies will require Nanto Bank to secure and imbue its personnel with highly
developed skills and capabilities. While pushing forward with our scheduled scaling back of human resources, we intend
to pursue recruitment and training outside the bounds of the usual frameworks, with the aim of discovering and promoting
highly specialized human resources with superior reformation capabilities.
In our awareness of the difficulty of securing superior human resources from various perspectives using conventional
personnel evaluation methods, moreover, we are constructing appropriate new evaluation mechanisms and pursuingenhancement of our human resources development program to secure suitable management personnel for the future.
Action Plan

Expansion of mid-career recruitment and upgrading of human resources development
programs, while constructing systems for appropriate evaluation of diverse human resources
Requisite skills and qualities
IT / risk management / M&A
Marketing (data scientists)
New business startups, etc.

Innovative thinking
Broad perspective
Communication skills, etc.

Fiscal 2021 initiatives•Expansion of mid-career personnel
recruitment•Implementation of a management
personnel development program•Appropriate evaluation andmanagement•Enhancement of appraisal staff•Collection of multidimensional HR information / use of
database for deployment•Creation of opportunities for young employees to beseconded to business firms, etc.
•Introduction of a side business policy•Promotion of personnel exchanges among young Group
company employees•Strategic aptitude-based personnel placement

Introduction of side business policy toencourage employee growth

Introduction of talent management system

Since April 2021, the Bank has been cultivating anenvironment that allows employees to engage inside businesses based on an awareness that diverse
experiences, advanced expertise and skills, personalconnections, and networks acquired not only in thebanking business but also in non-business activities areindispensable attributes. As of June 2021, 14 employees
were benefiting from this policy.

We plan to introduce a talent management system forcentralized collection, accumulation, and visualization of
personnel information, and implementation of strategic
data-based personnel measures (recruitment, training,
placement, promotion).
This new system will enable us to discern such factors
as employee qualifications, experience and capabilities, andto promote human resources optimization by placing theright person in the right position.

Overview[Target businesses]
Businesses without employment contracts with subsidiary companies*Side business application required in advance[Examples of target side business occupations]•Qualification-related…Lecturer with official qualification, translator /interpreter, career consultant, etc.
•Internet-related…Web designer, programmer, YouTuber, blogger,
etc.
•Others...Sale of personal handicrafts / artworks (decorations,paintings, photographs, etc.), musical activities, etc.

[Target personnel]•Nanto Bank employees Approx. 2,600(Scheduled for October 2021)

Current situation
HITKOT(Personnel information system)

Basic information
Personnel appraisal
Work experience
Transfer history

MS Excel, MS Word

Paper-based

Branch inspection reports
Goal-setting

Personnel management
information
Recruitment entry sheet,personal history

Independent management / collection (inefficient)

After introduction
Talent management system
Aptitudetest

1-on-1
information

Basic information
Personnel appraisal
Branch inspection
reports
Goal-settingWork experience
Transfer history
Personnel management
information
Recruitment entry
sheet, personal history

Centralized management +efficient new information collection system

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Nanto Report 2021, the integrated report of Nanto Bank

Questionnaire
information
Other
qualitative
information

Strategies andresources allocation

Unconventional human resources development activities

Tetsuya Sakamoto

Investigator, Personnel and General Affairs Department,
Nanto Bank
April 2021 Seconded to Kawakami Village
Work history
2005 Joined Nanto Bank Bojo branch2013	Corporate Sales Office, Sales Management Department(Hokusetsu)
2017 Esaka branch2019 Corporate Planning Division
2021 Personnel and General Affairs Divisions

Main qualifications•Registered management consultant •Securities analyst•Nissho bookkeeping (level 2) •FP level 2

Kawakami Village profile
Kawakami Village is located in
the mountains of southeastern
Nara prefecture, a region 95%
covered by forest. Its position at
the headwaters of the Yoshino
and Kinokawa rivers makes it
a “water resource village” thatprovides an enduring supply
of clean water to many of theprefecture’s municipalities.

Business activities in Kawakami Village
Kawakami Village is losing its vitality in an environment of rapid depopulation, with the population falling from over 8,000 at its
peak to about 1,300 today.
Organized in response to concerns that a continued contraction of the population would lead to a crisis threatening
the village’s very survival, a youth-centered migration and settlement project called the “Kawakami-ing Strategy” has beenin operation for several years as a notable example of efforts to keep the village alive. I am currently participating in the
Kawakami-ing Strategy.
Differences from banking and disorientation I experienced when seconded to another sector
It took time for me to get used to the change, because not only the business content, but the organizational culture andvalue system as well were completely different from the Bank’s. Looking back, I realize that my horizons have definitely beenbroadened by working in a context with a different perspective from the Bank’s and interacting with people I had never met
before.
Kawakami Village advocates the concept presented in the “Kawakami Declaration,” for example, calling for action
based on free ideas from a long-term perspective to protect its water sources and realize a rich life for its residents. This isquite different from the banking business, where we work with a constant awareness of profits.
Another difference is that bankers consider what they can do to address the issues of individual customers, but wecampaign workers devote ourselves to considering what we can do to address the overall social issues of Kawakami Village.
Rewards of working in Kawakami Village
I still feel the desire I had even when working at the Bank to help revitalize the Bank’s home region of Nara prefecture, and I
have learned how rewarding it can be to face local issues and think about
Village Mayor’s views
ways of solving them with my superiors and colleagues.
Utilizing this seconding experience when returning to the Bank
The benefit I can provide to the community
When I return to the Bank, I hope to make use of my experience inworking on a regional revitalization project from the perspective of a local
government by playing an active role as a human resource with fuller
knowledge than most of my colleagues.
In the future, the Bank will have to promote new initiatives with
unprecedented ideas aimed at realization of a vibrant regional society. I
am absolutely certain the insights and perspectives I have gained frommy seconding to Kawakami Village will prove useful.
Possibility of cooperation between regional governments andregional banks
Regional governments and banks are currently developing
measures to solve social issues such as the declining population
and aging of society from their respective points of view.
In the future, I believe that regional governments and banks,
the institutions with the deepest knowledge of the actual situationof their region, will cooperate in building relationships that allow
discussions across organizations, and collaborate to find optimalcomprehensive solutions to various social issues.

As its name suggests, Kawakami (“river head”) Village
is a water source village located at the headwaters of
the Yoshino River.*
I view Tetsuya Sakamoto’s seconding to
Kawakami Village as evidence that the village andNanto Bank have a shared a destiny. I am therefore
impressed by President Hashimoto’s preparedness
and willingness to take solution of regional issues
seriously with a sincere consciousness of thechallenges facing Nara prefecture. Mr. Sakamoto iscurrently involved in the “Kawakami-ing Strategy”
migration and settlement project. We hope he will
acquire a deep interest in the efforts of the village
as a water source that supports the region, andcollaborate with us to achieve regional development.
*The river’s official name is Kinokawa (“Kino River”), but the peopleof Nara prefecture still call it the Yoshinogawa due to its association
with the former Yoshino region where it originates.

Mayor of Kawakami Village

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Increasing Nara Prefecture’s GDP

Management Base Reinforcement

Raising business efficiency

Reinforcement ofmanagement base
Securing and training of
human resources
Raising business efficiency
Refinement of governance

Basic Policy

Optimizing Cost Resources to Raise Productivity
Improving the Nanto Bank Group’s profitability while increasing customer satisfaction in an environment of lifestyle
diversification and digitalization of society as a whole will be made possible only by optimizing business efficiency andallocating strategic staff to focus on high-value-added operations.
The Nanto Bank Group is responding with efforts toward branch network reorganization, administrative reform,
product discontinuation, and headquarters office work reduction as measures toward improved business efficiency.
Action Plan

Continuing to improve business efficiency in full consideration of customer convenience
Branch network reorganization (number of bases)
Advance from the initialschedule for fiscal 2030

Approximately 30% reduction(Comparison with February 2020)

138

February 2020
(before reorganization)

105

95

FY2020

FY2024(planned)*Excluding Mahoroba branch (Internet branch)

Branch network reorganization matched to the local
market environment
Pursuit of a joint branch structure where two or more branches andbranch offices conduct business in the same building has enabled
the Bank to reduce the number of its bases from 138 in fiscal 2019
to 105 in fiscal 2020. We will continue these efforts to reorganize ourbranch network going forward, with the aim of constructing a 95base system by the end of fiscal 2024, a reduction of approximately
30% compared to February 2020.

Administrative reform
Past achievements

Future efforts

56 branches

Sequential
introduction according
to branch type

ATM tellers

Increase in rate ofIntroduction to all
Reception
digitalization by
branchesdesk navigation(New account opening / expanding types ofsystempartial notification)
possible transactions
Back officecentralization

Trials at 6 branches

Construction ofa new systems
adoption frameworkby the Operations
Concentration Division

Administrative reform from a “3 lesses” perspective(cashless, paperless, back officeless)
We are working to simplify customer procedures and reduce
the administrative burden through digitalization of three types ofprocedures. These begin with the introduction of teller ATMs that
customers can operate to complete procedures themselves without
paper, and extend to paper-free and cash-free operations achievedby expanding our “reception desk navigation” function for opening
accounts and performing various notification procedures on tablets
instead of paper. The third factor is office space reduction achievedby centralizing these procedures along with those previously
conducted in the back office.

Product discontinuations (number of products handled)

Product discontinuations guided by a concept of remote, contactfree operation and conversion to Web-based procedures

Approximately 40% reduction
323
869
546

FY2019After fiscal 2021

*Discontinued / newly discontinued products

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Number of
reductions

To improve productivity, we are discontinuing many products as ameans of reducing our administrative and system cost burden. In
fiscal 2020, we decided to eliminate or cease new provision of 323
products, or approximately 40% of our 869 products, in order toreduce the number of personal interactions required. In future, wewill continue to eliminate products and discontinue new provision ofothers one after another to improve the Bank’s productivity.

Business model

Strategies andresources allocation

Performance

OutlookHeadquarters workload reduction (10,000 headquarters work hours)
Approximately 20%
reduction
13

57

54

FY2020After fiscal 2021

67

FY2020Working time
reduction

10

Workload reduction through a process of discontinuation,
centralization and outsourcing
Besides discontinuing products, our efforts to improve productivity
include working to achieve an approximately 20% reduction in theworkload shouldered by the Headquarters’ Planning, Operations
Concentration and Internal Audit divisions. In fiscal 2020, we succeedingin cutting employee working time by 100,000 hours, which represents
a little over 10% of the total working hours. We will continue theseworkload reduction efforts after fiscal 2021 as well, with the aim of
reducing working hours by 130,000 hours, or 20% of the former total.

Reformation of branch office work and our vision of the next-generation branch offices
In the future, we will continue to examine possibilities for digitalization of the next-generation certification infrastructure
and of all our paper forms as we move toward digitalization of office work at the Bank. Making use of leading-edge
technologies such as remote business channels and AI that equip anyone to conduct business anywhere, we will
promote a transformation to next-generation branch offices capable of solving regional issues.

Past

Lobby

An environment with heavy administrative
burdens on customers and staff•Customers

CenterBranch office
Customer service counter
High counter
Deposits andwithdrawals

Back office
Time-consuming
office work

•StaffComplicatedprocedures

Office work centeredon paper forms

Long waiting times

Procedures involving cash,
monetary instruments

Low counter
Account opening
documents

Terminal operation
Document circulation

Current

Lobby

Transformation to partial self-service
procedures

CenterBranch office
Customer service counter

Back officeHigh counter

Quick counter*1

QuickcounterApproximately 40% reduction in high counter
processing forms*1 Partial self-service teller window with integrated ATM
With both customers and staff handling ATM procedures together,payment and transfer slips are no longer necessary.

Low counter

Reception desk navigation*2

Reception
desk navigation

Up to 30% reduction in low counter reception time

Document circulation*2 Customer convenience has been improved by eliminating the need to fillin documents by hand and shortening processing times by changing
such processes as account opening and address change proceduresfrom paper to digital operation.

Next-generation

Lobby

CenterBranch officeHigh counter

Branch office value reform
Centralization of back office work

Elimination of branch office SBT terminals
through centralized consolidation

Use of surplus space

Low counter

OfficeScanner

Reduction of office space from 70% to 30%
Use for such purposes as consulting andlocal community activities

Digital data

*SBT: The SBT (super banking terminal) is a device used by the branch office tellers and back office staff of financial institutions.

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Further Efforts Toward SDG Realization

Climate Change and Gender Equality

Ongoing Efforts to Realize the SDGs
— Environmental and gender-conscious management strategies —The Nanto Bank Group is pursuing sustainable growth along with the regional community in fullconsideration of the environment.
As a regional financial institution, we are continuously engaged in activities concerning such challenges
as responding to climate change risk, environmental conservation, and gender equality in our own
operations and in collaboration with municipal governments and other stakeholders.
Environmental conservation efforts in our main businesses

Loan policy toward industries and sectors with a significant impact on theenvironment and society
In considering loans that may exert a negative impact on the environment and society, we seek to reduce or avoid
negative impacts by carefully judging their advisability. When serving customers who take environmental and social issues
seriously, meanwhile, we provide appropriate knowledge and support in our capacity as a regional financial institution.
Please note that we are especially cautious with respect to loans to the following industries and sectors that areconsidered to have a particularly deleterious impact on the environment and society.
1. Weapons manufacture
We do not lend to manufacturers of inhumane weapons, such as cluster munitions designed to kill or destroy in wars and other conflicts.
2. Coal-fired power generation
We do not engage, as a rule, in financing for new coal-fired power plant construction. When it comes to projects such as highefficiency power plant construction in response to national energy policies, however, we carefully consider the merits and demeritsof undertaking each individual project.
3. Deforestation
When asked to provide financing for development projects that involve deforestation, we investigate the legality and environmental
impact of the logging and carefully consider the propriety of providing funds.

Introduction of a syndicated loan product with TBM Co., Ltd., a unicorn
venture capital company concerned with environmental issues
The Nanto Bank compiled a syndicated loan totaling 2.4 billion yen for TBM Co.,
Ltd. as lead underwriter for 10 regional banks. TBM develops, manufactures, andmarkets LIMEX*, a new material that can be substituted for plastic and paper.
This loan has received the highest [Green 1] green loan certification from theJapan Credit Rating Agency (JCR).
*A product with limestone as its main raw material that serves as an alternative to plastic and paper.

Overview of TBM Co., Ltd.
Headquarters

2-7-17 Ginza 6F, Chuo-ku, Tokyo

Established2011

Capital23,429,930,000 yen (including capital reserve) / as of July 2021

Contents ofbusiness

Development, manufacture, and sales of environmentally friendly
materials and products

About LIMEX: An alternative to plastic and paper produced using limestone as
the main raw material.
Plastic alternative
Conventional

LIMEX

Paper alternative

100

Approx.
%petroleum-derived
resins•Reduces use of petroleum-derived resins•Reduces greenhouse gas emissions

Resources preservation,
climate change control

Wood

Water

Paper

•No use of forest resources•Highly limited use of water resources

Conservation of resources
at high risk of depletion

Besides the above, Nanto Bank devotes efforts to popularizing and promoting
such renewable energy sources as solar and biomass power generation in its
project financing activities.

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Governance

Strategies andresources allocation

Performance

Climate change initiatives

Compliance with TCFD recommendations
In this era of high international awareness of the need to respond to social
disruptions due to climate change, Nanto Bank has endorsed a proposal
introduced in July 2021 by the Task Force on Climate-related Financial
Disclosures (TCFD).*
We will continue to follow TCFD recommendations in order to strengthen our responses to climate change andenhance our information disclosure with respect to climate-related risks and opportunities.
*The Financial Stability Board (FSB) established the Task Force on Climate-related Financial Disclosures (TCFD) at the G20 London summit in April 2009 at the request of the G20
Finance Ministers and Central Bank Governors. In June 2017, the TCFD published a final report containing summary recommendations encouraging voluntary disclosure bycompanies, not only for the financial sector but for the corporate sector as a whole.

Efforts toward gender equality
The Nanto Bank Group is working to create an environment in which every employee can exhibit their individuality andmake full use of their capabilities. Efforts include enhancing our policies concerning such issues as a balance of work withchildrearing.

Promoting women’s advancement
With the goal of increasing the ratio of women in management positions (including section chiefs) to 15% or above byMarch 2023, we are implementing concerted efforts to assuring fairness in the availability of job opportunities for men andwomen, and to developing a new generation of female managers.
We are also working to establish a work environment in which women can participate actively, even after pregnancy
and childbirth, by implementing measures to support reinstatement of employees returning from childcare leave.
Changes in the number of female managers (employees (ratio of women))

Female managers(including section chiefs)

March 2017

March 2018

March 2019

March 2020

March 2021

118 (13.4%)

115 (13.4%)

113 (13.1%)

130 (14.3%)

132 (14.5%)

Pursuit of a balance of work / childrearing
Other provisions besides childcare leave (up to 2 years of age) include shorter working hours, exemption from overtime
work (until admission to elementary school) and nursing leave (until admission to elementary school). We also provide up
to five days of family support leave for employees with newborn children or grandchildren for up to six months after theirbirth. To date, 100% of the Bank’s employees whose spouse has given birth have taken this leave. We support realizationof a balance between work and childrearing by increasing the rate of male employees taking childcare leave.
We are proud to report that the Bank’s efforts
in support of a work / life balance have earned
it special Platinum Kurumin certification from
the Ministry of Health, Labor and Welfare inaccordance with the Act on Advancementof Measures to Support Raising the Next
Generation of Children.

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33

Further Efforts Toward SDG Realization

Social Contribution Activities

Ongoing Efforts to Realize the SDGs
— Strengthening contact points with the community through social
contribution activities —We engage in a variety of activities in a variety of fields with a view to contributing to our regional community.
We pursue these activities in the belief that the contacts with the community they provide are valuable
opportunities.
Use of vacant stores

Among these activities, we make active use of store vacancies that occur inconnection with the reorganization of our branch network.
[Former Shimoichi branch]
Our former Shimoichi branch reopened on April 5, 2021 as
the Nara Co-op Shimoichi Station operated by the Citizens’
Co-operative Nara Co-op for use as a base for business andcommunity development activities to support the lives ofregional residents.
Nara Co-op Shimoichi Station overview
Concept

Community life and food support, employment creation, regional
community building, renewable energy development, disaster
preparedness, and evacuation site provision

Facility
overview[1st floor] Daily food home delivery base, product sales, relaxation
space, Nanto Bank ATM, others[2nd floor] Meeting room, living consultation space, others[Rooftop] Solar panel installation[Former Oji branch]
Situated in a highly convenient location across from the train
station, the Bank’s former Oji branch will be converted for use
as the No. 2 Oji Station Nursery Center. This facility will help
to realize an environment the town of Oji is working actively toachieve in which parents can balance work and childrearing.
No. 2 Oji Station Nursery Center overview
Operatingcompany

Wakokai Social Welfare Corp.

Address

2-3-1 Kudo, Oji-cho, Kitakatsuragi-gun, Nara Prefecture (former
Oji branch, 2nd floor)

Capacity

19 infantsContent

Childcare facility for children up to 2 years of age

Operatinghours

Monday-Saturday 7: 00 a.m. - 10: 00 p.m.

[Former Takada Honmachi branch]
At present, the former Takada Honmachi branch is on loan at
no charge to Yamatotakada City for use as a vaccination venue.
Overview of facilities provided to Yamatotakada City
Name offacility

Former Nanto Bank Takada Honmachi branch

Address

167-2 Nishimachi, Yamatotakada City, Nara Prefecture

Area

Land area 1,994.39m2 Floor space 1,995.72m2

Yamatotakada City will conduct the vaccinations.

34

Nanto Report 2021, the integrated report of Nanto Bank

Governance

Strategies andresources allocation

Performance

Various donations / contributions

Magokoro no Issatsu (“books from true hearts”) project
Each year, Nanto Bank donates books contributed by its
executives and employees to the Nara Training School for
Juvenile Delinquents as Christmas gifts.
This activity has been carried out since 1987 as part of
the Magokoro no Issatsu project with the aim of contributing
to boys’ emotional education. The donated books include
dictionaries, reference books, and other practical educational
resources in addition to books on currently trending topics.

Contribution through <Nanto> Manba Charity Walk
Nanto Bank contributes to charity each year through the <Nanto> Manba Charity Walk, first organized in 2004 tocelebrate the 70th anniversary of the Bank’s founding with the aim of contributing to the regional community andimproving its citizens’ welfare. The charity walk was canceled in fiscal 2020 to prevent the spread of the new coronavirus,
but we nevertheless made our usual donation in the amount of 600,000 yen. The donations are used to help operate achildren’s cafeteria and to subsidize volunteer organizations.
Nanto Ikueikai Foundation
In accordance with the Bank’s commitment to development of regional human resources, the Nanto Ikueikai, Public
Interest Foundation provides scholarship support for financially disadvantaged high school and university students withexcellent characters and academic ability from Nara prefecture. From its establishment in 1964 to March 2021, theFoundation has supported 1,440 students through scholarships.
Participation in Yoshino Sakura cherry tree preservation campaign

Sports promotion

The Bank participates as a special member of a teamdedicated to protecting the famous Shiroyama Sakura
cherry trees of Mt. Yoshino (Yoshino-cho, Nara Prefecture)established through concerted efforts of governmental
and private organizations. The Shiroyama Sakura (about
30,000 trees) of Mt. Yoshino, a World Heritage Site, haveshown signs of remarkable deterioration in recent years,
We cooperate actively as a regional financial institutionin efforts to protect and develop the Yoshino Sakura bysuch means as dispatching volunteers and staff to various
events.

Two players from the Nanto Bank Hockey Club were selected to join
the 16-member Japanese Women’s Hockey Team at the Tokyo 2020
Olympics. This was the first time in nine years dating back to the 2012
London Olympics and Paralympics that players have been selectedfrom Nanto Bank’s team to represent Japan at the Olympic Games.
Nanto Bank Shooting Stars - notable results
All Japan Adult Hockey
Championship
All Japan Women's Hockey
ChampionshipPrince Takamado Cup Women’s
Hockey Japan League
All-Japan Business Team Hockey
ChampionshipWest Japan 6-Person Hockey
Championship

Victories 4
Victories 1—
Victories 3
Victories 5

2nd-placefinishes 13
2nd-placefinishes 6
2nd-placefinishes 1
2nd-placefinishes 6
2nd-placefinishes 7

3rd-placefinishes 5
3rd-placefinishes 6
3rd-placefinishes 15——

Nanto Report 2021, the integrated report of Nanto Bank

35

Governance Enhancement

Corporate GovernanceBank Officers

Reinforcement ofmanagement base
Securing and training of
human resources
Raising business efficiency
Refinement of governanceDirectors
President (Representative Director)

Vice President (Representative Director)

Takashi Hashimoto

Satoshi Ishida

Apr. 1977 Joined Nanto Bank
June 1999 Manager, Kamimaki branch
Apr. 2001 Manager, Kyoto Corporate Sales Office, Sales Management
Department
June 2002 Assistant Manager, Kyoto Sales Management Department;
Manager, Corporate Sales Office
June 2003 Manager, Kyoto branch
June 2005 General Manager, Nanto Bank Public Affairs Division
June 2007 Executive Officer and General Manager, Personnel Planning
Division
June 2010 Executive Officer and General Manager, Sales Management
Division
June 2011 Executive Officer and General Manager, Osaka District
Headquarters
June 2013 Executive Officer, Nanto Bank
June 2014 Senior Executive Officer
June 2015 President (current position)(Departments and Overall executive control, Corporate Planningresponsibilities) Division, Osaka Block Headquarters, responsibility
for special DX / SDGs missions

Director and Managing Executive Officer

Director and Managing Executive Officer

Kazuya Yokotani

Kazunobu Nishikawa(Departments and Personnel and General Affairs divisions, Risk
responsibilities) Management Division(Departments and IT Strategy Department, Administrative Support
responsibilities) Department, Nara Hokuwa Block Headquarters,
Kyoto Block Headquarters

Apr. 1985 Joined Nanto Bank
June 2007 Assistant Manager, General Planning Division
Apr. 2011 Manager, Higashi-Ikoma branchAug. 2012 Assistant General Manager, General Planning Department
June 2014 General Manager, General Planning Department
Apr. 2016 Executive Officer and General Manager, Corporate Planning
Division
Apr. 2018 Executive Officer and General Manager, Public Affairs andRegional Vitality Creation Department
Apr. 2019 Managing Executive Officer and General Manager, Financial
Market Headquarters
June 2019 Director and Managing Executive Officer, General Manager,
Operations Division
Apr. 2020 Director and Managing Executive Officer (current position)

Apr. 1986 Joined Nanto Bank
June 2008 Manager, Amagasaki Corporate Sales Office, SalesManagement Department
Sep. 2009 Manager, Amagasaki branchOct. 2010 Group Manager, Sales Management Department, Nanto Bank
Oct. 2012 Assistant General Manager, Sales Management Department
Apr. 2013 Manager, Takada Honmachi branch
Apr. 2015 General Manager, General Affairs Division
Apr. 2017 Executive Officer and General Manager, Business
Promotion Headquarters
Apr. 2019 Executive Officer and General Manager, Corporate Planning
Division
Apr. 2020 Executive Officer and General Manager, Nara Hokuwa
Block Headquarters
Apr. 2021 Managing Executive Officer
June 2021 Director and Managing Executive Officer (current position)

Director and Managing Executive Officer

Director and Managing Executive Officer

Tsuyoshi Sugiura

Ryuichiro Funaki(Departments and Financial Investment Division, Investigation
responsibilities) Department, Nara Chuwa Block Headquarters,
Nara Nanwa / Wakayama Block Headquarters(Departments and General Manager, Sales Promotion Headquarters,
responsibilities) Regional Business Creation Division, Tokyo Sales
Department

Apr. 1986 Joined Nanto Bank
June 2008 Manager, Kami-Koma branch
May 2010 Senior Analyst, Credit Analysis Division, Nanto Bank
June 2011 Manager, Unebi branch
Apr. 2013 Manager, Osaka branch
June 2014 Manager, Sakurai branch
Apr. 2017 Executive Officer and Manager, Sakurai branch
Apr. 2018 Executive Officer and Manager, Tokyo branch
Apr. 2019 Executive Officer and General Manager, Nara Chuwa Block
Headquarters
Apr. 2021 Managing Executive Officer
June 2021 Director and Managing Executive Officer (current position)

Apr. 1991 Joined Fuji Bank, Ltd. (current Mizuho Bank, Ltd.)
Apr. 2002 Investigator, Corporate Planning Department, Mizuho Bank, Ltd.
May 2004 ShinGinko Tokyo, Ltd. (current The Yachiyo Bank, Ltd.)
Senior Manager, Planning Group
Jan. 2009 Advisor, Industrial Growth Platform, Inc.
June 2009 Executive Officer, Howa Bank, Ltd.
July 2012 Principal, Industrial Growth Platform, Inc.
July 2012 Participant, Nuclear Damage Compensation andDecommissioning Facilitation Corporation
Nov. 2016 Specialist Investigator, Financial Services Agency
Apr. 2019 Advisor, Nanto Bank
July 2019 President, Nanto Consulting Co., Ltd.
Apr. 2021 Managing Executive Officer and General Manager, Sales
Promotion Division, Nanto Bank
June 2021 Director and Managing Executive Officer, General Manager,
Sales Promotion Division (current position)

Member (full-time), Audit and Supervisory Board

Member (full-time), Audit and Supervisory Board

Naoki Minowa

Takao Handa

Apr. 1979 Joined Nanto Bank
Feb. 2001 Assistant Section Chief, Credit Analysis Division
June 2004 Assistant Manager, Credit Analysis Division
June 2005 Assistant General Manager, Credit Analysis Division
June 2008 General Manager, General Planning Division
June 2009 Director and General Manager, General Planning Division
June 2010 Director and General Manager, Business Promotion
Headquarters
Apr. 2012 Director and General Manager, Credit Analysis Division
June 2013 Member (full-time), Audit and Supervisory Board
June 2015 Managing Director
Apr. 2017 Director and Senior Managing Executive Officer(Representative Director)
Apr. 2019 Director
June 2019 Member, Audit and Supervisory Board (current position)

Apr. 1981 Joined Nanbu Bank
June 2002 Manager, Keihanna Plaza branch
June 2004 Manager, Nabari branch
June 2006 Manager, Osaka North branch
Nov. 2008 Manager, Osaka Kita branch and Manager, Sales Office,Osaka West Corporate Sales Department
Jan. 2009 Assistant Manager, Osaka Central Sales Department
Oct. 2009 Manager, Takada BranchOct. 2011 General Manager, Management Administration
Headquarters
June 2013 Director and General Manager, Value Development Division
June 2014 Director and General Manager, Human Resources Division
Apr. 2016 Director and Executive Officer, General Manager, Human
Resources Division
June 2016 Member, Audit and Supervisory Board (current position)

Auditors

36

Apr. 1997 Joined Dai-Ichi Kangyo Bank, Ltd. (current Mizuho Bank, Ltd.)
July 2001 Chief of Management Guidance, Construction Industry
Division, General Policy Bureau, Ministry of Land,
Infrastructure, Transport and Tourism
Nov. 2003 Manager, Industrial Revitalization Corporation of Japan
July 2010 Director, Industrial Growth Platform Inc.
Aug. 2013 Supervisory Coordinator, General Affairs Division;
Supervisory Bureau, Financial Services Agency
July 2015 Policy Manager, Policy Division, General Affairs Planning
Bureau, Financial Services Agency
July 2016 Manager, Monitoring Planning Office, General Affairs
Division, Inspection Bureau, Financial Services Agency
July 2017 Director, Regional Financial Planning Office, Supervisory
Bureau, Financial Services Agency
Nov. 2018 Director, Industrial Growth Platform Inc.
Feb. 2019 Advisor, Nanto Bank
Apr. 2019 Senior Managing Executive Officer and General Manager,
Corporate Strategy Headquarters
June 2019 Vice President and Executive Officer, General Manager,
Corporate Strategy Headquarters
Apr. 2020 Vice President and Executive Officer (current position)

Nanto Report 2021, the integrated report of Nanto Bank

GovernanceDirector

Director

Matazaemon Kitamura

Hidetaka Matsuzaka(Main concurrent positions)
President, Kitamura Forestry Co., Ltd.

(Main concurrent positions)
Chairman, Board of Directors, Aussie Capital Co., Ltd.
Advisor, Osaka Gas Co., Ltd.
Director (outside), Hiroshima Gas Co., Ltd.

Apr. 1978 Joined Fuji Bank, Ltd. (current Mizuho Bank, Ltd.)
Feb. 1988 Director, Kitamura Forestry Co., Ltd.
Sep. 2005 President and CEO, Kitamura Forestry Co., Ltd. (current
position)
June 2016 Director (outside), Nanto Bank (current position)

Apr. 1980 Joined Osaka Gas Co., Ltd.
June 2009 Executive Officer and General Manager, Planning Department, Osaka Gas Co., Ltd.
Apr. 2011 Managing Executive Officer and General Manager,
Resources and Overseas Business Department
June 2011 Director and Managing Executive Officer, General Manager,
Resources and Overseas Business Division
Apr. 2014 Director and Managing Executive Officer, General Manager,
Corporate Planning Division
Apr. 2015 Vice President and Representative Director
Apr. 2019 Chairman, Board of Directors, Aussie Capital Co., Ltd.
(current position)
June 2019 Advisor, Osaka Gas Co., Ltd. (current position)
June 2020 Director (outside), Nanto Bank (current position)
June 2020 Director (outside), Hiroshima Gas Co., Ltd. (current position)

Director

Shuhei Aoki
(Main concurrent positions)Executive Strategist, Hitachi, Ltd.
Apr. 1981 Joined Bank of Japan
Nov. 2003 Manager, Yokohama branch
July 2005 Assistant Director, System Information Bureau
May 2008 Supervisor, U.S. Business Relations; Manager, New York
OfficeJune 2011 Director, Financial Markets Bureau
May 2013 Director, Bank Settlement Organization
July 2014 Director, Hitachi, Ltd.
Apr. 2020 Executive Strategist, Hitachi, Ltd. (current position)
June 2020 Director (outside), Nanto Bank (current position)(Note)	Directors Matazaemon Kitamura, Hidetaka Matsuzaka andShuhei Aoki are outside directors as stipulated in Article 2.15 of
the Companies Act, and Audit and Supervisory Board members
Takatoshi Kurahashi and Motoi Mitsuishi are outside auditors as
stipulated in Article 2.16 of the Companies Act.
All outside directors and outside corporate auditors meet the“Independence Judgment Criteria” established by Nanto Bank,and all are registered with the Tokyo Stock Exchange, Inc. as
independent officers of the Bank.

Member (outside), Audit and Supervisory Board

Member (outside), Audit and Supervisory Board

Takatoshi Kurahashi

Motoi Mitsuishi(Main concurrent positions)Group Executive Officer, Kintetsu Group Holdings, Inc.
President, Kintetsu Real Estate Co., Ltd.

(Main concurrent positions)
Vice President and Representative Director, Mitsubishi UFJ Research &Consulting Co., Ltd.

Apr. 1980 Joined Kintetsu Railway Co., Ltd.
June 2012 Executive Officer, Kintetsu Railway Co., Ltd.
Apr. 2015 Executive Officer, Kintetsu Group Holdings, Inc.
June 2015 Director and Managing Executive Officer
June 2016 Director and Senior Managing Executive Officer
June 2017 Director, Senior Managing Executive Officer, Kintetsu
Railway Co., Ltd.
June 2019 Director, Kintetsu Group Holdings, Inc.
June 2019 President, Kintetsu Real Estate Co., Ltd. (current position)
June 2019 Member (outside), Nanto Bank Audit and Supervisory Board(current position)
June 2021 Group Executive Officer, Kintetsu Group Holdings, Inc.
(current position)

Apr. 1987 Joined The Bank of Tokyo-Mitsubishi, Ltd. (current The
Bank of Tokyo-Mitsubishi UFJ, Ltd.)May 2012 General Manager for Thailand and Manager, Bangkok
branch, Bank of Tokyo-Mitsubishi UFJ, Ltd.
June 2013 Executive Officer, General Manager for Thailand andManager, Bangkok branch
Jan. 2015 Executive Officer, dispatched to Bank of Ayudhya (VicePresident)
July 2015 Corporate Officer and Assistant General Manager, Asia &Oceania Headquarters (responsible for special missions);
Manager, Asia & Oceania Sales Department; Manager,
Singapore Branch
May 2017 Managing Executive Officer and General Manager,
Transaction Banking Division
July 2018 Managing Executive Officer and General Manager, Payment
Business Division; Assistant General Manager, Global
Commercial Banking Division
July 2018 Managing Executive Officer, General Manager, Settlement
Business Unit, Mitsubishi UFJ Financial Group, Inc.
June 2019 Vice President and Representative Director, Mitsubishi UFJ
Research & Consulting Co., Ltd. (current position)
June 2020 Member (outside), Nanto Bank Audit and Supervisory Board(current position)
Nanto Report 2021, the integrated report of Nanto Bank

37

Governance Enhancement

Governance Reinforcement Strategies

Governance Reinforcement Strategies

Reinforcement ofmanagement base
Securing and training of
human resources

We believe that the basis for governance is a constant pursuit of the best ways of
maximizing the value we provide stakeholders in our efforts to achieve the goalsof the Nanto Mission and to play an indispensable role in regional development.

Raising business efficiency
Refinement of governanceCorporate governance system
The core of Nanto Bank’s corporate governance system is the Board of Directors, which comprises nine directors (including
three outside directors). The Board is organized to achieve fast, efficient decision-making while strictly observing the rules
governing the Board of Directors.
The Board meets once a month, in principle, and on an extraordinary basis as necessary, to make decisions
concerning significant management matters and business operations, and to report on business performance and theactivities of various committees.
General Meeting of Shareholders
Board of Directors

Nomination andCompensation Committee

Audit and Supervisory Board

Members 9
Internal directors 6
Outside directors 3

5 members including 3 outside directors

Chairman(As of end March 2021)

Audit and Supervisory
Board members 4(Including 2 outside corporate auditors)

ChairmanOpinion-exchange session
Outside InternalManagement Meeting

Internal Audit Division

Divisions/Departments
Board of Directors Meeting

Chairman President

Times convened 12

Average meeting time Approx. 2 hours

General Meeting of Shareholders
Main subjects of discussion in fiscal 2020
Fiscal2020 initiatives•Action Plan for fiscal 2020 in accordance with the Management Plan and monitoring of its progress(As of end March 2021)<Board of Directors> Approx. 2 hours•Branchnetwork
reorganization
Nanto
Bank
has
implemented the following measuresBoard
to strengthen
the functions of the Board of Directors and establishof Directors
Decision-making
Opinion-exchange•Establishment ofNomination
an SDGs policy andand determination of priority action issues
Audit and Supervisory
Board
a governancesystemthatenables
prompt,timelyexecutionofimportantdecisions in today’s
uncertain
Reportinghighly
on issuessession business
Members 9
Compensation
Committee•Evaluationof Board of Directors’
effectiveness and follow-up initiatives
Audit and Supervisory
Internal directors 6
environment.
Board members 4
5 members including 3 outside directors

Opinion-exchange session

Chairman President

Outside3 meeting time Approx. 1 hourTimes convened
6 directors
Average(Including 2 outside corporate auditors)

1. Transitionof theBoard meetingfrom a forum for deliberation to a forum for debate
Main subjectsof discussionin fiscal 2020

•Efforts toChairman
Nara prefecture’s GDP •Future directions of DX
A system of explaining the details Chairmanof the Board’s agenda, including background information, to each
Provisionofincreaseadvance
information to outside participant at least a day before Board meetings has reduced the time required to introduce the agenda at
Opinion-exchange session
meetingsChairman
themselves,leavingKitamura
more time
for constructive
discussion.
directors and Compensationthe
Nomination
Committee
Matazaemon(Outside
Director) Timesconvened 7 Average meeting time Approx. 1 hour
Outside Internal
The
Board
of
Directors
has
added
an
opinion-exchange
segment
to its meetings as a forum for discussing
Main subjects
Additionof an of discussion in fiscal 2020
medium-to-long-term
themesafter
the mainbusinessofresolutions
and reports is completed. In fiscal•Proposals
totheGeneralMeetingof
Shareholders
concerningtheselectionofcandidates
forappointment
to
the
Board
of
Directors
Management
Meeting
opinion-exchangeInternal Audit Division
2020,
we
held
three
opinion-exchange
sessions
each
on
the
issuesof•Review oftotheBoard
system of determining directors’ remuneration, including possible introduction of performance-linked remunerationraising Nara prefecture’s GDP andsegment
thefuturedirection
of
DX.
The
sessions
wereparticularly
notablefortheopinionsfrom various perspectives•Policy on determining remuneration for individual directors
meetings
expressed by outside directorsDivisions/Departments
and the ensuing lively discussions.

Board of Directors Meeting

Chairman President

Times convened 12

Average meeting time Approx. 2 hours

Main subjects of discussion in fiscal 2020
•Action Plan for fiscal 2020 in accordance with the Management Plan and monitoring of its progress•Branch network reorganization•Establishment of an SDGs policy and determination of priority action issues•Evaluation of Board of Directors’ effectiveness and follow-up initiatives

Opinion-exchange session

Chairman President

Times convened 6<Board of Directors> Approx. 2 hours

Decision-making
Opinion-exchange
Reporting on issues session

Average meeting time Approx. 1 hour

Main subjects of discussion in fiscal 2020
•Efforts to increase Nara prefecture’s GDP •Future directions of DX

Nomination and Compensation Committee

Chairman Matazaemon Kitamura (Outside Director)

Times convened 7

Main subjects of discussion in fiscal 2020

38

•Proposals to the General Meeting of Shareholders concerning the selection of candidates for appointment to the Board of Directors•Review of the system of determining directors’ remuneration, including possible introduction of performance-linked remuneration•Policy on determining remuneration for individual directors
Nanto Report 2021, the integrated report of Nanto Bank

Average meeting time Approx. 1 hour

Management Meeting

Internal Audit Division

Divisions/Departments
Board of Directors Meeting

Chairman President

Times convened 12

Governance

Average meeting time Approx. 2 hours

Main subjects of discussion in fiscal 2020
•Action Plan for fiscal 2020 in accordance with the Management Plan and monitoring of its progress•Branch network reorganization
2. Establishmentof theNomination
andCompensation•Establishment of an SDGs
policyand determinationof priority
action issues Committee•Evaluation of Board of Directors’ effectiveness and follow-up initiatives<Board of Directors> Approx. 2 hours

Decision-making
Opinion-exchange
Reporting on issues session
The new Nomination and Compensation Committee was established under the auspices of the Board ofNomination andOpinion-exchange sessionDirectors
forPresident
the purposeTimesof enhancing
objectivity,
and transparency
in the appointment ofChairmanconvened 6independence,
Average meetingtime Approx.
1 hourCompensation
directors and the determination of remuneration. The Committee members include the President, Vice President,
Main subjects of discussion in fiscal 2020
Committee
and three outside directors - one of whom serves as Chairman. A lawyer from outside the Bank with expert•Efforts to increase Nara prefecture’s GDP •Future directions of DX
establishment
knowledge of committee operations participates as an observer and provides timely advice as appropriate.

Nomination and Compensation Committee

Chairman Matazaemon Kitamura (Outside Director)

Times convened 7

Average meeting time Approx. 1 hour

Main subjects of discussion in fiscal 2020
•Proposals to the General Meeting of Shareholders concerning the selection of candidates for appointment to the Board of Directors•Review of the system of determining directors’ remuneration, including possible introduction of performance-linked remuneration•Policy on determining remuneration for individual directors

Fiscal 2021 initiatives
1. Announcement of reduction targets for strategically held shares
Reduction to about
20% of net assets by
end March 2025

In its efforts to achieve efficient management in consideration of the cost of capital, the Bank set a goal of
reducing strategically held shares to about 20% of its consolidated net assets on a market value basis by
the end of March 2025. The decision was announced in the Bank’s “Report on Corporate Governance”
published on July 2, 2021.

2. Major issues for future consideration in accordance with the revised Corporate Governance Code
Sustainability initiatives

The Nanto Bank Group recognizes that responding to sustainability issues in accordance with such
recommendations as the SDGs and TCFD is an important issue for management that is closely linked torisk reduction and creation of profit opportunities. It is consequently pursuing efforts to achieve mediumto-long-term sustainability of the region, its customers, and the Group itself.

Diversification initiatives

Besides reconsidering its attitudes toward diversification activities such as promoting women and midcareer hires to managerial / core positions, Nanto Bank is reviewing its business goals, human resources
development policy, and internal environment maintenance policy.

Basic policy regarding
the business portfolio

Achieving sustainable growth in today’s rapidly changing business environment will require the Bank toallocate management resources to reinforcing its core businesses as well as to new businesses andgrowth businesses with higher returns on capital. The Board of Directors is considering creation of amechanism to review its business portfolio regularly to assure smooth transitions of resources.

Nanto Bank Group governance from the Audit and Supervisory
Committee members’ perspective
The focus of Japan’s corporate governance reforms in recent years has switched from the historical concern with preventing scandals toachieving sustainable corporate growth.
In this connection, for promoting sustainable growth and raising corporate value over the medium-to-long term, while improving suchfactors as profitability and capital efficiency, the Board of Directors is required to: (1) indicate the key directions of the corporate strategy; (2)create an environment that allows for an appropriate level of risk-taking by executives; and (3) provide highly effective supervision of executives
from an objective, independent perspective.
As concerns auditors and Audit and Supervisory Board members, meanwhile, it is becoming increasingly necessary to switchfrom conducting conventional defensive function-centered auditing to actively and proactively exercising their authority and expressing
appropriate opinions.
Efforts to strengthen the Nanto Bank Group’s governance by reforming the Board of Directors will focus on sharing problem awarenessand solutions, centered on the outside directors, with a positive attitude toward transparent, fair, swift, and bold decision-making, and withactive opinion exchange contributing to resolving issues and determining strategic directions.
Of particular note among major changes in line with the times, the Board of Directors has transitioned from a deliberative body focused on
agenda matters to a forum for exchanging opinions and discussing management issues, with the outside directors fully engaged in the opinion
exchanges. There can be no doubt that the reforms are making steady progress. Regular performance reviews of the Board of Directors havegiven its members a high evaluation, concluding that effective performance of the Board is assured. Rather than a simple divided structureof opposing internal and outside directors, moreover, the Board’s six internal directors include two who come from outside the organization,
another factor providing reason to believe that its effectiveness is not limited by a stereotypic management perspective as a banking group.
Major issues to be addressed in the future include efforts toward sustainability and diversity. We hope these issues will be resolved throughfurther reformation of the Board of Directors and other actions demonstrating its functional strengths.
Auditor (Full-time) Naoki Minowa

Auditor (Full-time) Takao Handa

Nanto Report 2021, the integrated report of Nanto Bank

39

Governance Enhancement

Risk Management

Comprehensive Risk Management
and Compliance Systems

Reinforcement ofmanagement base
Securing and training of
human resources
Raising business efficiency
Refinement of governanceThe business environment in which financial institutions operate has changed dramaticallyin recent years, and the risks they face have become increasingly diverse and complex asa result. Under these severe circumstances, the Nanto Bank Group is working to ensure customers’ ability to conductbusiness with confidence by positioning risk management as one of its most important management issues, andworking to optimize its risk management systems to maintain the soundness and appropriateness of its businesses.

Risk management systems
Integrated risk management
To reinforce its ability to manage the risks it faces in its banking business, Nanto Bank has assigned
responsibility for each risk to an appropriate department and established the Risk Management
Division to handle them in an integrated manner by determining the various risks’ individual
positioning and magnitude and responding to each promptly and accurately.
In our commitment to risk management, we have specified basic risk management policies
through various directives, including our “Integrated Risk Management Regulations.”
To realize integrated risk management in which risks are quantified on a unified scale and theamount of each is controlled to an appropriate level in relation to equity capital in consideration ofmanagement strength, moreover, we determine the risk capital allotment (capital allocation amount)for each type of risk semi-annually within the range of equity capital, and control each risk amount(VaR, or “value at risk”) to ensure it falls within the scope of capital. The ALM Committee evaluates
the status of each risk at its monthly meetings as part of efforts to achieve more efficient, effective
risk / return management, and systems are in place to exercise appropriate controls for ensuring
management stability and improving profitability from the perspective of effective use of capital.

Credit risk
management

Operational risk
management

Integrated risk management system
Market risk
management

Liquidity risk
management

Administrative risk management(Thorough, accurate office work)

System risk management(Response to system failures/prevention of unauthorized use)

Legal risk management(Observance of legal compliance)

Human risk management(Response to personnel and labor problems)

Tangible asset risk management(Response to impairment of tangible assets)

Rumor risk management(Response to false assertions circulating in the market
and among customers)[Credit risk]
Credit risk refers to the possibility of loss if an asset should decrease in value or cease to exist due to deterioration of a creditor’s financial condition.
Nanto Bank has established a Risk Management Division and Credit Analysis Division separately from the Business Promotion Headquarters toserve as credit risk management bodies with responsibility for securing and maintaining asset soundness.
The Risk Management Division plans and supervises the Bank’s credit risk management systems, analyzes its credit portfolio according to industry
segment and rating group, and evaluates current conditions by managing the credit concentration status of the Bank’s large credit partners. It assures
maintenance of a sound credit portfolio by applying statistical methods to measure credit risk and ascertain the amounts of possible future losses.
The Credit Analysis Division has created systems for flexible credit risk management that responds to the various challenges facing the Bank’sbusiness partners. These include establishing a Business Revitalization Support Office to support activities aimed at improving partners’ performanceas well as assigning examiners to conduct general and industry-specific examinations.
Among measures to improve our examination management, we employ credit-rating systems that are consistent with strict self-assessment andthe self-assessment debtor classification to grasp customers’ creditworthiness objectively and manage it effectively. We have introduced a credit ratingbased interest rate pricing policy, moreover, and we continue to implement operational measures to strengthen management and improve profitability.
Other efforts to reduce credit risk include executing strict controls, such as regular timely reviews of our transaction policies, and enforcing credit
limits for borrowers of more than set amounts.
[Market risk]
Market risk refers to the risk of losses due to changes in the value or revenues from Nanto Bank’s assets or to debts incurred through fluctuations ininterest rates, exchange rates, or stock prices.
Nanto Bank clearly separates the financial investment (front office) and office work (back office) functions to create a mutual checking system.
As the department responsible for risk management (middle office), meanwhile, the Risk Management Division develops management systems,
checks the compliance status of its risk management regulations in the market, and oversees the positions and profit-and-loss situations of the trading
departments. The Division also analyzes the risk associated with such assets and debts as deposits, loans, and securities from various perspectives
through application of such methods as the VaR and BPV (basis point value) methods and interest rate fluctuation simulation, and reports the results tomanagement in a timely manner.
The Nanto Bank ALM Committee determines the market risk limit by VaR every six months in consideration of equity capital and the market
environment, and strives to earn profits through its market operations while observing the risk limits. The ALM Committee considers the actual resultsin terms of risks and profits for each market operation at its monthly meetings, and considers appropriate risk control and efficient approaches toprofit-making in consideration of the market outlook. To understand the impact of market fluctuations beyond the range of VaR forecasts, moreover, it
conducts stress tests based on scenarios replicating the market environment and portfolio characteristics in preparation for unforeseen circumstances.

40

Nanto Report 2021, the integrated report of Nanto Bank

Governance

Risks andopportunities[Liquidity risk]
Liquidity risk is the “cash-flow risk” Nanto Bank faces of suffering losses that make it difficult to secure requisite funds or force it to raise money atsignificantly higher-than-usual interest rates due to mismatches between the investment and procurement periods or unexpected outflows of funds.
With the monthly financial plan formulated by the ALM Committee as a basis, the Nanto Bank’s Cash-flow Management Department(Market Operations Department) manages daily cash flows, and the Risk Management Division’s Liquidity Risk Management Section monitors their
management status. The ALM Committee provides comprehensive cash-flow risk management, moreover, in consideration of such factors as thefunds available for cashing procedures and the cash procurement status.
An appropriate management system is devised for each stage of the cash-flow situation — “normal”, “concerning”, or “crisis” — to facilitate agile
responsiveness.
[Operational risk]This is the risk of Nanto Bank suffering losses due to engagement in improper banking processes, systems, or activities by its officers or employees(including part-time or dispatched employees) or to extraneous events. Each of the Bank’s departments with responsibility for operational risk manages
risks such as administrative risk, system risk, legal risk, human risk, tangible asset risk, and reputation risk with professional acumen.
What is more, establishment of the Operational Risk Management Committee has created a forum for studying CSA STAR risk control analyses,
a method of managing potential risk, and the results of collection / analysis of information on losses such as those resulting from administrative
accidents. The Committee also manages each risk centrally and discusses countermeasures systematically. Its findings enable the Bank to prioritize its
responses to the most critical risks, minimize them, and establish a PDCA cycle.

Crisis management system
In addition to the risk management structures discussed above, Nanto Bank has systems in place to minimize the impact of crises on business byproviding guidance and giving orders in a unified manner.
It has formulated a Crisis Management Plan and compiled a “Crisis Management Plan Response Manual,” for example, to guide Nanto Bank
personnel in dealing appropriately with crises that exert a significant impact on business continuity, as exemplified by natural disasters such as powerfulearthquakes, infrastructure failures, or epidemics of infectious diseases such as the new coronavirus. Upon the occurrence and manifestation of crisesof any kind, the Emergency Response Meeting and Countermeasures Headquarters collect information, provide centralized guidance, and issue orders
to minimize the impact on business operations. As a cornerstone of the social infrastructure, moreover, the Bank continuously implements measuresin preparation for providing services to its customers, such as improving facilities so that it can continue to conduct business, even in the event of adisaster. We also strive to ensure the effectiveness of our crisis management systems, moreover, and to improve them continuously through annual
management training courses.

Commitment to strict compliance
Compliance systems reinforcement
Compliance is a matter of unswerving observance, not only of laws, government ordinances, and internal rules, but also of ethical and social norms. It
is imperative that banks fulfill their social responsibilities and public missions in good faith. At Nanto Bank, we are implementing the following measures
to ensure complete compliance.
•Fully aware of its public mission and social responsibility as a financial institution, Nanto Bank seeks to gain the trust of its stakeholders, including its
regional community and shareholders, by positioning compliance with laws and regulations as the most important issue for management. To this end, it has
formulated “Basic Guidelines” and a “Code of Conduct” as corporate policies with which all the Bank’s officers and employees are expected to comply.
•In order to define a basic framework for our compliance systems, we have clarified our stance toward compliance with laws and regulations, not only by
establishing compliance regulations but also by formulating disciplinary regulations that show the fairness and transparency of our disciplinary actions.
•We have established a Compliance Committee chaired by the President to serve as a cross-sectional organization within the Bank that discusses anddecides important matters related to compliance, as well as a supervisory department responsible for planning and supervising compliance.
•Each fiscal year, we prepare a compliance program as a concrete, practical plan for achieving compliance, after which we investigate the program’s
implementation status and make appropriate revisions.
•The Bank is pursuing efforts to optimize operation of its compliance hotline, a whistle-blower system established for purposes of prevention and early
detection and correction of violations of laws and regulations.
•We have compiled a “Compliance Handbook” to serve as a detailed guide to maintaining compliance, and we are following up with efforts to foster
a compliance mindset by distributing the handbook to all our management and general personnel, and by holding regular group training and study
sessions at every workplace.
•In accordance with our resolute attitude toward antisocial forces that threaten the order and safety of civil society, moreover, we have formulated a setof “Regulations for Dealing with Antisocial Forces, Etc.” and have terminated relationships with all such elements.

Money laundering and terrorist financing countermeasures
Demands from the international community for measures against money laundering and terrorist financing (hereinafter, “money laundering, etc.”) haveincreased quickly in recent years. Nanto Bank has responded by positioning measures to combat money laundering, etc., as one of its most importantmanagement issues, and formulating a basic “money laundering and terrorist financing countermeasures policy.” We continue our efforts to improve theeffectiveness and sophistication of our measures against money laundering, etc. In response to the increasing complexity and sophistication of financial
crimes, meanwhile, we are reinforcing our preventive measures designed to protect Nanto Bank customers from falling victim to financial crimes, while
continuing to maintain safe, convenient financial services.
Nanto Report 2021, the integrated report of Nanto Bank

41

Nanto Bank Group Information

Corporate Data (As of March 31, 2021)
Company profile
Name:

The Nanto Bank, Ltd.

Founded:June 1, 1934

Head Office:16, Hashimoto-cho, Nara City, Nara, Japan

Capital:37,924.15 million yen

Total assets:

6,542.5 billion yen

Deposit balance:

5,452.6 billion yen

Loan balance:

3,808.1 billion yen

Loans to small andmedium-sizedenterprises worth:

1,413,546 million yen

Domestic offices:

106 (67 in Nara Prefecture, including Internet branches, and 39 in other locations)
Overseas representative offices: 2*1 (1 each in Hong Kong and Shanghai)*1 Closed effective April 30, 2021

Employees:

2,398

Capital adequacy ratio: 9.47% (consolidated);
9.15% (non-consolidated)
URL:

https://www.nantobank.co.jp

Nanto Bank Group*2 member companies
Company name and location(As of July 31, 2021)

Main content of work

Nanto Management Service Co., Ltd.

Services offered by Nanto Management Service include management of subsidiaries, management and leasing ofcommercial real estate, outsourcing, and employee placement services.

Nanto Business Service Co., Ltd

Besides conducting centralized monitoring of Nanto Bank’s ATMs to support improvement of customer services,
Nanto Business Service provides restructuring/optimization of such routine operations as cash counting/sorting andDM mailing to optimize the efficiency of Nanto Bank operations.

Nanto Credit Guarantee Co., Ltd.

Nanto Credit Guarantee backs up customers’ borrowing activities by providing guarantee services related to various
personal loans, including Nanto Bank mortgages.

Nanto Lease Co., Ltd.

Nanto Lease contributes to development of regional business and industry by supporting the introduction of movables
ranging from OA equipment to large industrial equipment and automobiles to meet the diverse needs of its customers.

Nanto Computer Service Co., Ltd.

Established to support customers’ efforts to optimize their office procedures and IT environments, Nanto Computer
Service provides computer system development and sales, consultations on computer introduction and use, andoutsourcing of various calculation tasks.

Nanto DC Card Co., Ltd.

As a member of the DC Group, Nanto DC Card meets customers’ diverse needs in the credit card business. It also
guarantees consumer loans (credit card loans) extended by Nanto Bank.

Nanto Card Service Co., Ltd.

A member of the VJA group, Nanto Card Service engages in the credit card business, centered on the Nanto Cotoca,
and provides guarantees for consumer loans extended by Nanto Bank.

Nanto Consulting Co., Ltd.

As specialists in various areas of management, Nanto Consulting proposes solutions through consulting andbusiness-matching operations.

Nanto Challenged Co., Ltd.

Nanto Challenged helps to upgrade Nanto Bank’s administrative work efficiency as a special subsidiary with thenecessary certification to engage in employment of people with disabilities, and by centralizing and professionalizing
routine office work such as supply management and dispatching.

Nanto Mahoroba Securities Co., Ltd.

Nanto Mahoroba Securities leverages know-how cultivated over a long history in the securities business, supported by
its access to the Group’s regional management base, to contribute to customers’ asset formation through provision ofhigh-quality securities services.

Nanto Capital Partners Co., Ltd.

Nanto Capital Partners contributes to revitalization and development of the regional economy by investing in venturecompanies and business successor companies, and by pursuing solutions to problems facing its investee companies
and raising their corporate value.

Nara Mirai Design Co., Ltd.

Nara Mirai Design contributes to regional revitalization by engaging in community development projects such as
finding uses for vacant houses and stores, centered on restoration of old folk houses, and constructing and operating
an EC site that sells specialty products from Nara prefecture.
* 2 Consolidated subsidiary / equity-method affiliate

42

Nanto Report 2021, the integrated report of Nanto Bank

Organizational overview
and external environment

Stock situation
Total shares issued:

Performance

Stock distribution by owner category
33,025 thousand

Government and local public bodies

Financial institutions*3

0.03%
10 thousand shares

Number of shareholders: 15,489

35.06%
11,579 thousand shares

Individuals/others*4

30.06%
9,925 thousand shares

Financial productbrokerages

2.77%
916 thousand shares

Foreigners

Other domestic corporations

13.33%
4,402 thousand shares

18.74%
6,188 thousand shares*3 Total of banks, trust banks, life insurance companies, non-life insurance companies, others.
*4 Includes 407 thousand treasury shares

Total shareholder return (TSR)

Major shareholders (top 10)

Name

Ratio of number
Number of of shares owned
shares owned to total number(unit: 1,000)*5 of shares issued(%)*6

The Master Trust Bank of Japan, Ltd.
(trust account)

2,097

6.43

Custody Bank of Japan, Ltd. (trust account)

1,555

4.76

Nippon Life Insurance Company

1,053

3.22

Meiji Yasuda Life Insurance Company

1,043

3.19

Nanto Bank Employee Stock Ownership
Association

899

Sumitomo Life Insurance Company

Mar.
2019

Mar.
2020

Mar.
2021

Nanto Bank

74.9

82.6

76.8

TOPIX
(including dividend)

126.1

114.2

162.3

Dividends per share / Dividend payout ratio
Mar.
2019

Mar.
2020

Mar.
2021

Dividends per share(yen)

80.00*7

80.00

80.00

2.75

Payout ratio (%)

23.40

78.47

24.54

662

2.02

(Note) *6	10.00 yen of the 80.00 yen per share dividend for the year ending
March 31, 2019 was a 140th anniversary commemorative dividend.

Mitsubishi UFJ Bank, Ltd.

508

1.55

DMG Mori Seiki Co., Ltd.

476

1.46

Daiwa Gas Co., Ltd.

452

1.38

Custody Bank of Japan, Ltd. (5 trust accounts)

440

1.34

(Note) *5 The number of shares owned is rounded down to the nearest thousand.
*6	The ratio of the number of shares owned is calculated by deducting treasury stocks (407thousand shares) and is rounded down to two decimal places.

Stock price transitions
(JPY)
4,000

2,000

0

2018/3

2019/32020/32021/3

Nanto Report 2021, the integrated report of Nanto Bank

43

Financial Data

Consolidated Financial Statements• Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2021

2020

2021

Assets:Cash and due from banks (Notes 21 and 23)..................................................
¥ 1,191,207
Debt purchased (Note 23)...............................................................................		
1,827
Money held in trust (Notes 23 and 24).............................................................		
40,500
Securities (Notes 8, 10, 13, 23 and 24)...........................................................		 1,428,362
Loans and bills discounted (Notes 9, 10, 11 and 23).......................................		 3,786,878
Foreign exchanges (Note 9)............................................................................		
1,238
Lease receivables and lease investment assets...............................................		
25,180
Other assets (Note 10)....................................................................................		
55,126
Tangible fixed assets (Note 12)........................................................................		
38,106
Buildings.....................................................................................................		
10,978Land...........................................................................................................		
24,162
Construction in progress.............................................................................		
—Other tangible fixed assets..........................................................................		
2,965
Intangible fixed assets.....................................................................................		
5,297
Software.....................................................................................................		
4,846
Other intangible fixed assets (Note 10)........................................................		
450
Deferred tax assets (Note 28)..........................................................................		
1,103
Customers’ liabilities for acceptances and guarantees....................................		
7,172
Reserve for possible loan losses (Note 23)......................................................		 (21,768)
Total assets.................................................................................................
¥ 6,560,231¥
693,798
		
2,412
		
39,470		 1,340,346
		 3,457,276
		
1,114
		
25,072
		
67,424
		
39,183
		
11,485
		
24,596
		
1
		
3,099
		
6,413
		
5,961
		
451
		
12,611
		
6,615
		 (20,810)¥ 5,670,929$ 10,759,705
		
16,502
		 365,820
		12,901,833
		34,205,383
		
11,182
		 227,441
		 497,931
		 344,196
		
99,159		 218,245
		—		
26,781
		
47,845
		
43,772
		
4,064
		
9,962
		
64,781		 (196,621)$ 59,255,993

Liabilities and net assets:
Liabilities:
Deposits (Notes 10 and 23)............................................................................
¥ 5,439,967
Negotiable certificates of deposit (Note 23).....................................................		
4,040
Call money and bills sold (Note 23).................................................................		
—Payables under repurchase agreements (Notes 10 and 23).............................		
37,077
Payables under securities lending transactions (Notes 10 and 23)...................		 106,465
Borrowed money (Notes 10, 23 and 33).........................................................		 626,700
Foreign exchanges..........................................................................................		
578
Borrowed money from trust account...............................................................		
6,265
Other liabilities (Note 33).................................................................................		
24,893Liability for retirement benefits (Note 26)..........................................................		
11,872
Reserve for reimbursement of deposits...........................................................		
158
Reserve for contingent losses.........................................................................		
1,134
Reserve under special laws.............................................................................		
3
Deferred tax liabilities (Note 28).......................................................................		
454
7,172
Acceptances and guarantees.........................................................................		
Total liabilities..............................................................................................
¥ 6,266,784¥ 5,029,759
		
7,370
		
5,441
		
42,475
		 135,144
		 135,538
		
155
		
6,763
		
33,432
		
11,842
		
216
		
1,101
		
3
		
15
		
6,615
¥ 5,415,875$ 49,137,087
		36,491		—		 334,901
		 961,656
		 5,660,735
		
5,220
		
56,589		 224,848
		 107,235
		
1,427
		
10,242
		
27
		
4,100
		
64,781$ 56,605,401

Net assets (Note 6):
Common stock: Authorized 64,000 thousand shares in 2021 and 2020¥
37,924		Issued 33,025 thousand shares in 2021 and 2020................
Capital surplus................................................................................................		
34,749Retained earnings...........................................................................................		 189,861
Less treasury stock: Issued 407 thousand shares in 2021
		
(1,693)		and 418 thousand shares in 2020...................................
Total stockholders’ equity............................................................................		 260,842
Valuation difference on available-for-sale securities (Note 24)..........................		
31,221
Deferred gains or losses on hedges (Note 25).................................................		
2,008
Accumulated adjustments for retirement benefits (Note 26).............................		
(688)
Total accumulated other comprehensive income.......................................		
32,542
Stock acquisition rights................................................................................		
63
Total net assets...........................................................................................		 293,447
Total liabilities and net assets.......................................................................
¥ 6,560,231
See Notes to Consolidated Financial Statements.

44

Nanto Report 2021, the integrated report of Nanto Bank¥

37,924$

342,552

		
34,749
		 181,640

		 313,874
		 1,714,939

				

(1,745)

		 252,569
		
3,357
		
(162)
		
(798)
		
2,395
		
88
		 255,053¥ 5,670,929(15,292)

		 2,356,083
		 282,007
		
18,137
		(6,214)
		 293,939
		569
		 2,650,591$ 59,255,993

• Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2021

2020

2021

Income:Interest income:Interest on loans and bills discounted..........................................................
¥
Interest and dividends on securities.............................................................		
Other interest income..................................................................................		
Trust fees........................................................................................................		
Fees and commissions...................................................................................		
Other operating income (Note 14)...................................................................		
Other income (Note 15)...................................................................................		
Total income............................................................................................		

31,956
15,528635
822,2284,597
6,306
81,262

¥
		
		
		
		
		
		
		

30,15913,482514
13
20,6438,071
8,200
81,087

$
		
		
		
		
		
		
		

Expenses:
Interest expense:
Interest on deposits.....................................................................................		
Interest on borrowings and rediscounts.......................................................		
Interest on payables under securities lending transactions..........................		
Other interest expense................................................................................		
Fees and commissions...................................................................................		
Other operating expenses (Note 16)................................................................		
General and administrative expenses (Note 17)...............................................		
Other expenses (Note 18)...............................................................................		
Total expenses........................................................................................		

423
320
48
463
11,935
3,869
41,622
7,245
65,931

		
		
		
		
		
		
		
		
		

541
768
422
1,380
10,736
4,112
42,98014,27075,215

		
3,820
		
2,890
		
433
		
4,182
		 107,804
		
34,947
		 375,955
		65,441
		 595,528

15,330		

5,872

		 138,469

4,606
(117)
4,488
10,841
10,841

		
		
		
		
¥

4,148
(1,455)
2,692
3,179
3,179

		
		
		
		
$

Income before income taxes.............................................................................		
Income taxes (Note 28):
Current...........................................................................................................		
Deferred..........................................................................................................		
Total income taxes......................................................................................		
Net income.........................................................................................................		
Net income attributable to owners of parent....................................................
¥

332.41
332.12
80.00

41,604(1,056)
40,53897,922
97,922

U.S. dollars(Note 1)Yen

Per share of common stock (Note 31):¥
Net income - basic..........................................................................................		
Net income - diluted.......................................................................................		
Dividends........................................................................................................

288,646
140,258
5,735
72
200,776
41,522
56,959734,007

¥
		
		

97.52
97.43
80.00

$
		
		

3.00
2.99
0.72

See Notes to Consolidated Financial Statements.

• Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2021

Net income..........................................................................................................
¥
Other comprehensive income (loss) (Note 20):
Valuation difference on available-for-sale securities..........................................		
Deferred gains (losses) on hedges...................................................................		
Adjustments for retirement benefits (Note 26)..................................................		
Total other comprehensive income (loss).....................................................		
Total comprehensive income for the year.............................................................		
Total comprehensive income attributable to:
Owners of parent............................................................................................		

2020

2021

10,841¥

3,179

27,8632,171
110
30,14640,988

		
		
		
		
		

(35,330)47(100)(35,382)(32,203)

		 251,675
		
19,609		993
		 272,296
		 370,228

40,988		(32,203)

		 370,228$

97,922

See Notes to Consolidated Financial Statements.

Nanto Report 2021, the integrated report of Nanto Bank

45

Financial Data

Consolidated Financial Statements• Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2021 and 2020
Millions of yen
Number ofshares ofcommonstock(thousands)

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2019......................... 		 33,025¥ 37,924¥ 34,749¥ 181,077

Less treasury
stock

Valuationdifferenceonavailablefor-salesecurities(1,776) ¥ 38,687¥

Deferred
gains orlosses on
hedge¥

Accumulated
adjustments
for retirement
benefits(210) ¥

Stockacquisitionrights(698) ¥

Total net
assets98¥ 289,852

Changes in items during period
Cash dividends...................................

		(2,608)		

(2,608)Net income attributable to ownersof parent.............................................

		

3,179

		

3,179

Purchase of treasury stock.................
Disposition of treasury stock...............

		

(8)

Transfer from retained earnings tocapital surplus.....................................

		

8 		

		

(5)

		

(5)

		

36

		

28

		

—

(8)

Net changes in items other thanstockholders’ equity.............................

		 (35,330) 		

Total changes in items during period........

		

Balance at April 1, 2020......................... 		 33,025¥ 37,924

— 		

— 		

¥ 34,749

563 		

¥ 181,64047 		

31 		 (35,330) 		

¥(1,745) ¥

3,357

¥

(100) 		

(10) 		 (35,393)

47 		(100) 		

(10) 		 (34,798)(162) ¥

(798) ¥

88

¥ 255,053

Changes in items during period
Cash dividends..................................

		Net income attributable to ownersof parent............................................

(2,609)

		 10,841

Purchase of treasury stock................
Disposition of treasury stock.............

		

(11)

Transfer from retained earnings tocapital surplus...................................

		

11 		

		

		 10,841
		

(1)

		

(1)

		

53

		

41

		

—

(11)

Net changes in items other thanstockholders’ equity............................

		 27,863 		

Total changes in items during period......

		

Balance at March 31, 2021 (Note 6)...... 		 33,025¥ 37,924

— 		

— 		

¥ 34,749

8,221 		

¥ 189,861(2,609)51 		 27,863 		

¥(1,693) ¥ 31,221¥

2,171 		110 		

(24) 		 30,121

2,171 		110 		

(24) 		 38,393

2,008(688) ¥

63¥

¥ 293,447

Thousands of U.S. dollars (Note 1)

Commonstock

Balance at April 1, 2020......................... $Capitalsurplus342,553 $Retainedearnings

Valuationdifference
on availablefor-salesecurities

Less treasurystock

313,874 $ 1,640,683 $(15,762) $30,322 $Deferred
gains orlosses on
hedge

Accumulated
adjustments
for retirement
benefits(1,463) $(7,208) $StockacquisitionrightsTotal net
assets795 $ 2,303,794

Changes in items during period
Cash dividends..................................

		(23,566)		

(23,566)

Net income attributable to ownersof parent............................................

		

97,922

		

97,922

Purchase of treasury stock................
Disposition of treasury stock.............

		

(99)

Transfer from retained earnings tocapital surplus...................................

		

99 		

		

(9)

		

(9)

		

478

		

370

993 		

(216) 		272,071(216) 		346,788(99)

Net changes in items other thanstockholders’ equity............................

See Notes to Consolidated Financial Statements.

46

Nanto Report 2021, the integrated report of Nanto Bank

251,675 		

19,609 		

74,257 		

460 		

251,675 		

19,609 		

993 		

313,874 $ 1,714,939 $(15,292) $282,007 $18,137 $(6,214) $		

Total changes in items during period......
Balance at March 31, 2021 (Note 6)...... $		

342,552 $569 $ 2,650,591

• Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2021

Cash flows from operating activities
Income before income taxes.......................................................................
¥
Depreciation................................................................................................		
Impairment loss...........................................................................................		
Increase (decrease) in reserve for possible loan losses................................		
Increase (decrease) in liability for retirement benefits....................................		
Increase (decrease) in reserve for reimbursement of deposits......................		
Increase (decrease) in reserve for contingent losses....................................		
Interest income...........................................................................................		
Interest expense..........................................................................................		
Loss (gain) on investment securities............................................................
Loss (gain) on money held in trust...............................................................
Foreign exchange losses (gains)..................................................................
Losses (gains) on sales of fixed assets........................................................
Net decrease (increase) in loans and bills discounted..................................
Net increase (decrease) in deposits.............................................................
Net increase (decrease) in negotiable certificates of deposit........................
Net increase (decrease) in borrowed money................................................
Net decrease (increase) in due from banks (excluding due from the Bank of Japan)....
Net decrease (increase) in call loans and bills bought..................................
Net increase (decrease) in call money..........................................................
Net increase (decrease) in payables under securities lending transactions...
Net decrease (increase) in foreign exchange assets.....................................
Net increase (decrease) in foreign exchange liabilities..................................
Net decrease (increase) in lease receivables and lease investment assets...
Net increase (decrease) in borrowed money from trust account..................
Interest received..........................................................................................
Interest paid................................................................................................
Other..........................................................................................................
Subtotal..................................................................................................
Income taxes paid.......................................................................................
Net cash provided by (used in) operating activities...................................

2020

5,872
3,788
1,822
2,428
546
(22)
247
(44,158)
3,114(6,741)
51
6,357
143
(64,955)
125,732(14,252)(75,110)
(932)
1,489
5,315
(144,435)
777(104)(5,314)316
45,568(3,331)
5,584(150,200)(3,089)(153,289)$
138,469
		32,282
		
3,513
		
8,644
		
1,698
		
(514)
		
298
		 (434,658)
		
11,363
		(9,005)
		(4,823)
		 (48,351)		
18
		(2,977,156)
		 3,705,247
		 (30,078)
		 4,436,473
		
(3,667)
		
5,275
		 (97,904)
		 (259,046)
		(1,111)
		
3,811
		
(1,634)		
(4,489)		 421,199
		 (14,145)
		 (27,946)
		 4,853,780
		 (47,719)
		 4,806,060

Cash flows from investing activities
Purchases of securities...............................................................................		 (847,735)
Proceeds from sales of securities................................................................		 655,200
Proceeds from maturities of securities.........................................................		 162,204
Increase in money held in trust....................................................................		
(1,104)
Decrease in money held in trust..................................................................		
608
Purchase of tangible fixed assets................................................................		
(1,194)
Proceeds from sales of tangible fixed assets...............................................		
261
Purchase of intangible fixed assets..............................................................		
(658)
Payments for asset retirement obligations...................................................		
(77)
24
Other..........................................................................................................		
Net cash provided by (used in) investing activities...........................................		 (32,470)

		 (643,774)
		 473,942
		 197,465
		
(5,652)
		
200
		
(1,395)
		143
		
(2,770)
		
(75)
		
(7)
		
18,075		(7,657,257)
		 5,918,164
		 1,465,125
		
(9,971)
		
5,491
		 (10,784)
		
2,357
		
(5,943)
		
(695)
		
216
		 (293,288)

Cash flows from financing activities
Dividends paid............................................................................................		
(2,607)Purchase of treasury stock..........................................................................		
(1)
0
Other..........................................................................................................		
Net cash used in financing activities........................................................		
(2,609)Effect of exchange rate changes on cash and cash equivalents...................		
3
Net increase (decrease) in cash and cash equivalents...................................		 497,002
Cash and cash equivalents at beginning of year............................................		 691,364
Cash and cash equivalents at end of year (Note 20)......................................
¥ 1,188,367

				
(2,607)
		
(5)
		
0
		
(2,612)		(2)
		 (137,829)
		 829,194¥
691,364		 (23,548)
		
(9)
		
0
		 (23,566)
		
27
		 4,489,224
		 6,244,819$ 10,734,052

15,330
3,574
389
957
188
(57)
33
(48,121)
1,258
(997)
(534)
(5,353)2(329,601)
410,208(3,330)491,162(406)
584(10,839)(28,679)
(123)
422
(181)
(497)
46,631(1,566)(3,094)537,362(5,283)532,079

¥
		
		
		
		
		
		
		
		

2021

See Notes to Consolidated Financial Statements.

Nanto Report 2021, the integrated report of Nanto Bank

47

Financial Data

Consolidated Financial Statements

Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2021 and 2020

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of The Nanto Bank, Ltd. (the “Bank”) and its consolidated subsidiaries (together, the “Group”)
have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting
regulations and the Ordinance for Enforcement of the Banking Law and in conformity with accounting principles generally accepted in Japan, which
are different in certain respects from the application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions, fromthe consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of
the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplemental information included in the statutory Japanese
language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial
statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts less than one million yen have been omitted. As a result, thetotals shown in the financial statements do not necessarily agree with the sum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2021, which was ¥110.71 to US$1.00. The translations should not be construed as representations that theJapanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Bank and its twelve subsidiaries at March 31, 2021.
(Change in scope of consolidation)
Nanto Capital Partners Co., Ltd. has been included in the scope of consolidation from the current consolidated fiscal year due to its new
establishment on October 1, 2020. In addition, Nangin Agency Co., Ltd. has been excluded from the scope of consolidation because the company
resolved to dissolute at the extraordinary general meeting of shareholders held on September 30, 2020, and its liquidation was completed on March
25, 2021.
The Bank had two (two in 2020) unconsolidated subsidiaries, Nanto Sixth Industry Support Investment Limited Partnership and Nanto Regional
Vitality Creation Support Investment Limited Partnership. The unconsolidated subsidiaries were excluded from the scope of consolidation because
the portion of their assets, net income (loss), retained earnings, accumulated other comprehensive income and others that correspond to the Bank’s
equity were immaterial to the extent that their exclusion from the scope of consolidation did not preclude reasonable judgment of the Group’s financial
position and results of operations.
The Bank had no affiliates over which it had the ability to exercise significant influence over operating and financial policies.
The Bank had two (two in 2020) unconsolidated subsidiaries not accounted for by the equity method, Nanto Sixth Industry Support Investment
Limited Partnership and Nanto Regional Vitality Creation Support Investment Limited Partnership, and two (one in 2020 ) affiliates not accounted for by
the equity method, Nanto CVC Investment Partnership and Nanto CVC No. 2 Investment Partnership. The unconsolidated subsidiaries and affiliates
not accounted for by the equity method were excluded from the scope of the equity method because the effect of their inclusion on the consolidated
financial statements would not have seen significant in terms of the portion of net income (loss), retained earnings, accumulated other comprehensive
income and others which correspond to the Bank’s equity. Nanto CVC Investment Partnership and Nanto CVC No. 2 Investment Partnership aretreated as affiliates not accounted for by the equity method from the current consolidated fiscal year due to the fact that Nanto Capital Partners, asubsidiary of the Bank, has become an unlimited liability partner of both partnerships jointly with another company.
Furthermore, the Nara Prefecture Tourism Revitalization Investment Limited Partnership was dissolved and its liquidation completed during thecurrent consolidated fiscal year.
Potager Co., Ltd., of which the Bank owns between 20% and 50% of the voting rights (execution rights), was not recognized as an affiliate forthe year ended March 31, 2021 because it is held by the Bank’s unconsolidated subsidiary for the purpose of incubating the investee and not for the
purpose of controlling the entity.
All consolidated subsidiaries have fiscal years ending on March 31.
All significant intercompany accounts, transactions and unrealized profits on transactions are eliminated.
b. Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash and cash equivalents represents cash and due from the Bank of Japan.
c. Finance leases
As lessor:
Finance leases are accounted for in a manner similar to that used for ordinary sale transactions. Revenue from finance lease transactions and related
costs are recognized upon receipt of the lease payments. Finance leases which transfer ownership of the lease assets to the lessee are recognized aslease receivables, and all finance leases which do not transfer ownership of the lease assets to the lessee are recognized as lease investment assets.
For finance leases which commenced before April 1, 2008 and do not transfer ownership of the lease assets to the lessee, the appropriate bookvalue (net of accumulated depreciation and amortization) in tangible and intangible fixed assets as of March 31, 2008 was recorded as the beginningbalance of “Lease receivables and lease investment assets,” and the total amount of interest equivalent for the remaining lease term after the adoptionof the “Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 13, issued on March 30, 2007)
has been allocated over the remaining lease term using the straightline method.
For the fiscal years ended March 31, 2021 and 2020, differences between income before income taxes and income before income taxes
calculated as if the accounting treatment for ordinary sale transactions had been applied to the finance leases which do not transfer ownership of theleased assets to the lessee were not material.

48

d. Securities
Trading securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations arerecognized as gains and losses in the period of the disposal or the change. Cost of sales for such securities is determined using the moving averagemethod. Held-to-maturity debt securities are stated at amortized cost on a straight-line method, cost of which is determined using the moving
average method. Stocks of unconsolidated subsidiaries and affiliates not accounted for by the equity method are stated at cost using the moving
average method. Available-for-sale securities with available fair values are stated at fair value in principle based on the market price as of the fiscal
year-end date. Unrealized gains and losses on available-for-sale securities are reported, net of applicable income taxes, as a separate component ofaccumulated other comprehensive income. Available-for-sale securities for which it is extremely difficult to determine the fair value are stated at moving
average cost.
If the fair value of held-to-maturity debt securities or available-for-sale securities declines significantly, the securities are stated at fair value, andthe difference between the fair value and the carrying amount is recognized as a loss in the period of the decline. In such a case, the fair value will be
the carrying amount of the securities at the beginning of the next fiscal year.
Securities managed as trust assets in the individually managed money held in trust primarily for securities management purposes are measured
at fair value.
e. Derivatives and hedge accounting
Derivatives are measured at fair value.
To account for hedging transactions in connection with interest rate risk arising from financial assets and liabilities, the Bank applies the deferredhedge accounting method stipulated in “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in
the Banking Industry” (JICPA Industry Audit Committee Report No. 24, October 8, 2020). The Bank assesses the effectiveness of such hedges in
offsetting movement in the fair value from changes in interest rates by classifying the hedged items, such as loans and deposits, and the hedging
instruments, such as interest rate swaps, by their maturity. The Bank assesses the effectiveness of cash flow hedges by verifying the correlation
between the hedged items and the hedging instruments.
In order to hedge risk arising from the volatility of exchange rates for available-for-sale securities (excluding bonds) denominated in foreign
currencies, the Bank applies fair value hedge accounting with the condition that the hedged available-for-sale securities are designated in advance andthat sufficient on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same
foreign currency.
f. Tangible fixed assets (except for leased assets)
Depreciation of tangible fixed assets of the Bank is computed by the declining balance method, except for buildings (excluding facilities attached tobuildings and structures acquired on or before March 31, 2016, which are depreciated by the declining balance method) which are depreciated by thestraight-line method. The estimated useful lives of major items are as follows:
Buildings
6 to 50 years
Others3 to 20 years
Depreciation of the assets of the consolidated subsidiaries is computed principally by the declining balance method over the estimated useful lifeof the asset.
g. Intangible fixed assets (except for leased assets)
Amortization of intangible fixed assets is computed by the straight-line method. Acquisition costs of software to be used internally are capitalized andamortized by the straight-line method primarily over a useful life of five years.
h. Lease assets
Lease assets with respect to finance leases that do not transfer ownership of tangible fixed assets and intangible fixed assets are depreciated oramortized using the straight-line method with the assumption that the term of the lease is the useful life. The residual value of lease assets is the value
guaranteed in the lease contract or zero for assets without such guaranteed value.
i. Reserve for possible loan losses
A reserve for possible loan losses is provided according to predetermined standards.
For loans to insolvent customers who are undergoing bankruptcy or other special liquidation (“bankrupt borrowers”) or who are in a similar
financial condition (“effectively bankrupt borrowers”), the reserve for possible loan losses is provided based on the amount of the claims net ofthe amount expected to be recovered from collateral and guarantees and net of the deducted amount mentioned below. For the unsecured andunguaranteed portions of loans to customers not presently in the above circumstances but for whom there is a high probability of so becoming (“likely
to become bankrupt borrowers”), the Bank deducts the estimated future cash flows and the amount expected to be recovered from collateral andguarantees from the loan amount and of that remainder reports the amount that it recognizes to be necessary after comprehensively judging thecustomer’s ability to pay.
For loans pertaining to customers other than the above, the Bank reports mainly the anticipated loss for the next one or three years. The
anticipated loss is calculated by region using the loss rate based on the average value in a fixed past period of the loan loss ratio with the actual loan
loss of one or three years as its foundation with necessary adjustments such as future prospects, etc.
All claims are assessed by the operating divisions based on the self-assessment criteria for asset quality, and the assessment results are auditedby the Asset Audit Division, which is independent from the operating divisions.
For claims against “bankrupt borrowers” and “effectively bankrupt borrowers,” the amount exceeding the estimated value of collateral andguarantees is deemed uncollectible and is deducted directly from those claims in principle. At March 31, 2021 and 2020, the deducted amounts were
¥7,689 million ($69,451 thousand) and ¥9,053 million, respectively. The reserve for possible loan losses of the consolidated subsidiaries is provided
for general claims by the amount deemed necessary based on the historical loan-loss ratio and for certain doubtful claims by the amount deemed
uncollectible based on an assessment of each claim.
j. Employee retirement benefits
In calculating projected benefit obligations, expected benefits are attributed to each period by the benefit formula basis.

Nanto Report 2021, the integrated report of Nanto Bank

49

Financial Data

Consolidated Financial Statements

Prior service costs are recognized as profit or loss at the time of occurrence.
Actuarial gains and losses are amortized from the fiscal year following the year in which the gains and losses are recognized by the straight-line
method over a fixed period (ten years) within the average remaining service years of the current employees.
Consolidated subsidiaries applied the simplified method where the amount to be required for voluntary termination at the fiscal year-end isrecorded as projected benefit obligations in the calculation of the liability for retirement benefits and retirement benefit costs.
k. Reserve for reimbursement of deposits
A reserve for the reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for possible losses on future
claims of withdrawal based on historical reimbursement experience.
l. Reserve for contingent losses
To pay its contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not covered by other reserves in an
amount deemed necessary based on estimated future losses.
m. Reserve under special laws
Reserve under the special laws represents Financial Instruments Transaction Liability Reserve prescribed in Article 46-5, Paragraph 1 of the Financial
Instruments Exchange Act. The amount is recorded as determined by the consolidated subsidiaries in accordance with the provisions of Article 175 of
the Cabinet Office Order on Financial Instruments Business, etc., in order to provide for losses arising from security related accidents.
n. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
o. Income taxes
Deferred income taxes are recorded to reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for tax andfinancial reporting purposes.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
p. Recognition criteria for lease income and costs for finance leases
Lease income and costs are recognized at the time of receiving lease fees.
q. Consumption taxes
Transactions subject to national and local consumption taxes are recorded at amounts exclusive of the consumption taxes.

3. SIGNIFICANT ACCOUNTING ESTIMATES
Those items whose amounts have been recognized in the consolidated financial statements for the current consolidated fiscal year based on
accounting estimates which could have a material impact on the consolidated financial statements for the next consolidated fiscal year are as follows.
1. Recognition of the reserve for possible loan losses
Loan operations is one of the major operations of the Group, and assets with credit risk, such as loans, occupy a very important place in consolidated
net assets on the consolidated balance sheet. So recognition of the reserve for possible loan losses has a large impact on the operating results andfinancial position and is judged to be material in the accounting estimates.
2. Amount recognized in the consolidated financial statements for the current consolidated fiscal year
The reserve for possible loan losses recognized in the consolidated balance sheet for the current consolidated fiscal year was ¥21,768 million ($196,621 thousand). The details concerning the accounting estimates adopted when making the calculation are set forth below.
3. Accounting estimates(1) Methods for calculating amounts
Calculation methods are stated in the Notes (SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES i. Reserve for possible loan losses).
The asset appraisals stated in the reserve for possible loan losses recognition standards refer to individually analyzing and considering the assets
held and classifying them based on the degree of nonrecovery risk and loss of value risk. Appropriate depreciation and reservation are implemented
based on the category of borrowers (normal borrowers, needs attention borrowers, likely to become bankrupt borrowers, effectively bankrupt
borrowers and bankrupt borrowers).
(2) Major assumptions used in the calculation of the amounts
Under the assumption that there is a relationship to some extent between the loan loss ratio for each past category of borrowers and the expected
future loss rate, for the claims equivalent to normal claims and claims which need attention, the Bank calculates the required reserve amount for eachregion using the expected loss rate taking into consideration the necessary adjustments to the average value of the loan loss ratio for a fixed period in
the past.
The determination of the borrower category is based on the credit rating determined by the rating models and the borrower’s repayment ability
based on their substantial financial position, financing capacities, and profitability, etc., and the terms and conditions of the loans and payment
status of the borrower. Also, the Company gives comprehensive consideration to the borrower’s sustainability, projected profitability, and ability to
pay obligations based on their annual repayable amount, appropriateness of their management improvement plans, and other factors in light of theborrower’s industry characteristics.
Furthermore, in the case that management reconstruction is thought to be proceeding in line with a drastic and highly feasible management
improvement plan and a reasonable and highly feasible management improvement plan, the loans shall be deemed not to qualify as claims
corresponding to restructured loans or claims likely to become bankrupt borrowers.
Note that, at the end of the current consolidated fiscal year, we anticipated that the impact of the new coronavirus would continue for a certain
period of time and that the determination of the individual category of borrowers would be implemented based on the available information after taking
into account the characteristics of the industrial sector, the possibility of recovery from the short-term business performance, cash flow status, etc.

50

Nanto Report 2021, the integrated report of Nanto Bank(3) The impact on the consolidated financial statements for the next consolidated fiscal year
The uncertainties of the material estimates are included in the major assumptions used for the calculation of the amount of the reserve for possible
loan losses, including the expected loss rate by region and by debt classification, the category of borrowers as of the end of the current consolidated
fiscal year, the amount expected to be recovered using collateral and guarantees and the impact of the new coronavirus, etc.
The major assumptions concerning the estimate of the reserve for possible loan losses are determined based on the available information.
However, if the business condition of a major customer worsens or the situation regarding the new coronavirus worsens or becomes prolonged, there
is a possibility that such events would have an impact on the operating results and financial position for the next consolidated fiscal year, such as anincrease in the reserve for possible loan losses becoming necessary.

4. STANDAEDS AND GUIDANCE NOT YET ADOPTED
For the year ended March 31, 2021
The following standard and guidance were issued but not yet adopted.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26, 2021)(1) Overview
The above standard and guidance provide comprehensive principles forrevenue recognition. Under the standard and guidance, revenue is recognized by applying the following five steps:
Step 1: Identify the contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Effective date
The Group is scheduled to apply the accounting standard and its guidance from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Bank and its consolidated domestic subsidiaries have determined that the effects of these new standards on the consolidated financial statements
are immaterial.
“Accounting Standards for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019)“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020)(1) Overview
In order to improve comparability with the provisions in international accounting standards, the “Accounting Standards for Fair Value Measurement”
and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (“fair value measurement accounting standards, etc.”) weredeveloped, and guides, etc., concerning the method of measuring fair value were stipulated. The fair value measurement accounting standards, etc.,
are applied to the fair value of the following items.
• Financial instruments in the “Accounting Standard for Financial Instruments”• Inventories held for trading purposes in the “Accounting Standard for Measurement of Inventories”
Furthermore, the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” was revised, and notes on the breakdown, etc.,
for each level of the fair value of financial instruments were stipulated.
(2) Effective date
The Group is scheduled to apply the standards and guidance from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Bank and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the
consolidated financial statements.

5. CHANGE IN PRESENTATION METHOD
Application of the “Accounting Standard for Disclosure of Accounting Estimates”
The Group has applied the “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) to theconsolidated financial statements for the current consolidated fiscal year, and therefore significant accounting estimates are disclosed in the Notes toConsolidated Financial Statements.
The Notes do not include information for the prior consolidated fiscal year in accordance with the transitional provision set out in Paragraph 11 of
the Accounting Standard.

Nanto Report 2021, the integrated report of Nanto Bank

51

Financial Data

Consolidated Financial Statements

6. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2021 and 2020 were as follows:(Thousands of shares)

April 1, 2020
Shares issued
Common stock......................................
Total...................................................
Treasury stock
Common stock......................................
Total...................................................

2021
Decrease

Increase

Remarks

March 31, 2021

33,02533,025————33,02533,025

418
418

1
1

12
12

407
407

Notes 1 & 2

Notes: 1. The increase of 1 thousand shares in common stock of treasury stock was due to the purchase of shares of less than one unit.
2. The decrease of 12 thousand shares in common stock of treasury stock is the decrease of 12 thousand shares due to the execution of stock options and the decrease of 0 shares due to saleof shares of less than one unit.

(Thousands of shares)

April 1, 2019
Shares issued
Common stock......................................
Total...................................................
Treasury stock
Common stock......................................
Total...................................................

2020
Decrease

Increase

Remarks

March 31, 2020

33,02533,025————33,02533,025

425
425

2
2

8
8

418
418

Notes 1 & 2

Notes: 1.	The increase of 2 thousand shares in common stock of treasury stock was due to the purchase of shares of less than one unit.
2. The decrease of 8 thousand shares in common stock of treasury stock was due to the execution of stock options.

(2) Matters concerning stock acquisition rights
For the fiscal year ended March 31, 2021
Shares expected to be acquired upon exercise of stock acquisition rights
March 31, 2021

Balance at end ofcurrent fiscal year
(Millions of yen)(Thousands of
U.S. dollars)

Number of sharesClassification

Breakdown

The Bank

Stock acquisitionrights granted as
stock options

April 1, 2020

Increase

Decrease

—

—

—

—

¥63

$569

—

—

—

—

¥63

$569

Shares expected to be acquired upon exercise of stock acquisition rights
March 31, 2020

Balance at end ofcurrent fiscal year
(Millions of yen)Total
For the fiscal year ended March 31, 2020

Number of sharesClassification

Breakdown

The Bank

Stock acquisitionrights granted as
stock options

April 1, 2019

Total

Increase

Decrease

—

—

—

—

¥88

—

—

—

—

¥88

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2021
Millions of yen (thousands of U.S. dollars), except per share amounts (yen (U.S. dollars))
Resolution

Annual stockholders’ meeting held on
June 26, 2020
Board of Directors’ meeting held on
November 12, 2020

52

Nanto Report 2021, the integrated report of Nanto Bank

Type of shares

Aggregate amount ofdividends

Cash dividends per
share

Record dateCommon stock¥1,304 ($11,778)¥40.00 ($0.36)

March 31, 2020

June 29, 2020

Common stock¥1,304 ($11,778)¥40.00 ($0.36)

September 30,
2020

December 7, 2020

Effective date(b) Dividends paid in the fiscal year ended March 31, 2020
Millions of yen, except per share amounts (yen)Resolution

Annual stockholders’ meeting held on
June 27, 2019
Board of Directors’ meeting held on
November 8, 2019

Type of shares

Aggregate amount ofdividends

Cash dividends per
share

Common stock¥1,303¥40.00March 31, 2019

June 28, 2019

Common stock¥1,304¥40.00

September 30,
2019

December 5, 2019

Record date

Effective date(c) Dividends to be paid in the fiscal year ending March 31, 2022
Millions of yen (thousands of U.S. dollars), except per share amounts (yen (U.S. dollars))
Resolution

Annual stockholders’ meeting held on
June 29, 2021

Aggregate amount ofdividends

Source ofdividends

Cash dividends per
share

Common stock ¥1,304 ($11,778)

Retainedearnings¥40.00 ($0.36) March 31, 2021 June 30, 2021

Type of shares

Record date

Effective date

7. STOCKHOLDERS’ EQUITY
Under the Banking Law of Japan and the Company Law, the entire amount of the issue price of shares is required to be accounted for as capital,
although the Bank may, by resolution of its Board of Directors, account for an amount not exceeding one half of the issue price of the new shares asadditional paid-in capital, which is included in capital surplus.
The Banking Law provides that an amount equal to at least 20% of cash dividends and other cash appropriations be appropriated and set
aside as legal earnings reserve until the total amount of legal earnings reserve and additional paid-in capital equals 100% of common stock. The total
amount of legal earnings reserve and additional paid-in capital of the Bank has reached 100% of common stock. Therefore, the Bank is not required
to provide additional legal earnings reserve.
The legal earnings reserve and additional paid-in capital may be used to eliminate or reduce a deficit by resolution of the stockholders’ meetingor may be capitalized by resolution of the Board of Directors. On condition that the total amount of legal earnings reserve and additional paid-in capitalremains equal to or more than 100% of common stock, they are available for distribution by resolution of the stockholders’ meeting. Legal earnings
reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the nonconsolidated financial statements of the Bank inaccordance with the Company Law.

8. SHARES OR INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
Shares or investments in capital of unconsolidated subsidiaries and affiliates at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Shares or investments in capital.................................................................................

¥

2020

2,446

¥

2021

282

$

22,093

9. NONPERFORMING LOANS
Nonperforming loans at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Loans to bankrupt borrowers..................................................................................... ¥Past due loans........................................................................................................... 		
Past due loans (three months or more)...................................................................... 		
Restructured loans.................................................................................................... 		
Total....................................................................................................................... ¥1,055
45,325167
5,361
51,910

2020

¥
		
		
		
¥

2,571
44,249494
4,333
51,648

2021

$
		
		
		
$

9,529
409,402
1,508
48,423468,882

Bills discounted are accounted for as financing transactions in accordance with “Treatment for Accounting and Auditing of Application of AccountingStandard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24, Octorber 8, 2020). This accounting treatment
gives the Bank the right to sell or pledge such bills without restrictions. The total face value of commercial bills and purchased foreign exchange bills
obtained as a result of discounting was ¥12,797 million ($115,590 thousand) and ¥16,378 million at March 31, 2021 and 2020, respectively.
 egarding loan participation, based on the “Accounting Treatment and Presentation of Loan Participation” (JICPA Accounting System Committee
R
Report No. 3, November 28, 2014), of the participating principal amount accounted for as loans and bills discounted with respect to the original
debtor, the amount recorded in the consolidated balance sheets is as follows.
¥3,104 million ($28,037 thousand) and ¥3,105 million at March31. 2021 and 2020, respectively.

Nanto Report 2021, the integrated report of Nanto Bank

53

Financial Data

Consolidated Financial Statements

10. PLEDGED ASSETSAt March 31, 2021 and 2020, securities of ¥503,578 million ($4,548,622 thousand) and ¥477,613 million, respectively, loans and other assetsof ¥401,289 million ($3,624,686 thousand) and ¥1,979 million, respectively, were pledged as collateral for deposits of ¥55,878 million ($504,724
thousand) and ¥32,755 million, respectively, call money and bills sold of ¥0 ($0) and ¥5,441 million, respectively, payables under repurchaseagreements of ¥37,077 million ($334,901 thousand) and ¥42,475 million, respectively, payables under securities lending transactions of ¥106,465
million ($961,656 thousand) and ¥135,144 million, respectively, and borrowed money of ¥620,012 million ($5,600,325 thousand) and ¥127,975 million,
respectively.
Securities of ¥0 ($0) and ¥210 million and other assets of ¥20,144 million ($181,952 thousand) and ¥20,018 million were pledged for transaction
guarantees at March 31, 2021 and 2020, respectively.
Unexpired lease contract claims of ¥3,752 million ($33,890 thousand) and ¥3,846 million were pledged as collateral for borrowed money of¥2,847 million ($25,715 thousand) and ¥3,086 million at March 31, 2021 and 2020, respectively.
At March 31, 2021 and 2020, other assets included initial margins of futures markets of ¥664 million ($5,997 thousand) and ¥168 million,
respectively, and security deposits of ¥968 million ($8,743 thousand) and ¥1,049 million, respectively, and other intangible fixed assets included key
money of ¥450 million ($4,064 thousand) and ¥451 million, respectively.

11. LOAN COMMITMENTS
Commitment line contracts on overdrafts and loans are agreements to lend to customers when they apply for borrowing up to a prescribed amountas long as there is no violation of any condition established in the contract. The amounts of unused commitments at March 31, 2021 and 2020
were ¥980,457 million ($8,856,083 thousand) and ¥978,728 million, respectively, and the amount of unused commitments whose original contract
terms were within one year or unconditionally cancelable at any time at March 31, 2021 and 2020 was ¥905,950 million ($8,183,090 thousand) and¥901,064 million, respectively.
Since many of these commitment line contracts are expected to expire without being drawn upon, the total amount of unused commitments
does not necessarily affect actual future cash flow.
Many of these commitments line contracts have clauses that allow the Group to reject the application from customers or reduce the contract
amounts if economic conditions change. In addition, the Group may request that customers pledge collateral such as real estate and securities or takeother necessary measures such as scrutinizing customers’ financial positions and revising contracts when the need to secure claims arises.

12. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥44,621 million ($403,043 thousand) and ¥45,231 million at March 31, 2021 and 2020,
respectively. Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥806 million ($7,280
thousand) and ¥783 million at March 31, 2021 and 2020, respectively. For the years ended March 31, 2021 and 2020, the capital gain offset fromacquisition costs was nil.

13. GUARANTEESThe amount guaranteed by the Bank for privately placed bonds (stipulated by Article 2, Paragraph 3 of the Financial Instruments Exchange Act)
included in “Bonds” of “Securities” was ¥36,586 million ($330,466 thousand) and ¥27,676 million at March 31, 2021 and 2020, respectively.

14. OTHER OPERATING INCOME
For the fiscal years ended March 31, 2021 and 2020, other operating income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Gains on sales of bonds............................................................................................ ¥Other......................................................................................................................... 		
Total....................................................................................................................... ¥

2020

3,861
736
4,597

¥
		
¥

7,506
565
8,071

2021

$
		
$

34,874
6,647
41,522

15. OTHER INCOME
For the fiscal years ended March 31, 2021 and 2020, other income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Gains on sales of stocks and other securities............................................................. ¥Recovery of written-off claims.................................................................................... 		
Other......................................................................................................................... 		
Total....................................................................................................................... ¥54

Nanto Report 2021, the integrated report of Nanto Bank

3,493
921
1,892
6,306

2020

¥
		
		
¥

6,750
356
1,094
8,200

2021

$
		
		
$

31,5508,319
17,08956,95916. OTHER OPERATING EXPENSES
For the fiscal years ended March 31, 2021 and 2020, other operating expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Losses on sales of bonds.......................................................................................... ¥Other......................................................................................................................... 		
Total....................................................................................................................... ¥

2020

3,866
3
3,869

¥
		
¥

2021

3,220
892
4,112

$
		
$

34,92027
34,947

17. GENERAL AND ADMINISTRATIVE EXPENSES
For the fiscal years ended March 31, 2021 and 2020, general and administrative expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Salaries and allowances............................................................................................. ¥Retirement benefit costs............................................................................................ 		
Other......................................................................................................................... 		
Total....................................................................................................................... ¥2020

19,8591,616
20,147
41,622

¥
		
		
¥

2021

20,3801,809
20,791
42,980$				$

179,378
14,596
181,979
375,955

18. OTHER EXPENSES
For the fiscal years ended March 31, 2021 and 2020, other expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Write-offs of loans...................................................................................................... ¥Provision for possible loan losses............................................................................... 		
Losses on sales of stocks and other securities.......................................................... 		
Other......................................................................................................................... 		
Total....................................................................................................................... ¥

938
2,599
2,457
1,251
7,245

2020

¥
		
		
		
¥

2021

3,683
3,185
3,167
4,235
14,270

$
		
		
		
$

8,472
23,47522,193
11,29965,441

19. IMPAIRMENT LOSSESThe Group reports impairment losses for the following asset groups.
Current consolidated fiscal year (from April 1, 2020 to March 31, 2021)
RegionInside Nara Prefecture

Principle use

10 business stores andHeadquarters, etc.
Total

Type

Land and buildings, etc.

Impairment loss
(Millions of yen)

Impairment loss
(Thousands of U.S. dollars)

389

3,513

389

3,513

Regarding the fixed assets above, due to the decline in operating cash flows, the reorganization of the store network and changes in the use of theassets, the Bank reduced the carrying amount to the recoverable amount and reported the decrease as an impairment loss (¥389 million).
The Bank uses the grouping method of area and business store units because it continuously determines income and expenditure for each areaand for each business store. For idle assets, the grouping is carried out using each asset as the unit. Furthermore, the head office, Administrative
Center, Training Center, etc. are assets that contribute to the generation of the future cash flows of multiple assets and asset groups, so they are
deemed to be corporate assets. Each subsidiary uses the grouping with each respective company as the unit.
The calculation of the recoverable amount uses the fair value less costs to sell or the value in use, whichever is higher. The fair value is calculated
based on Real Estate Appraisal Standards, etc., and the value in use is computed by discounting future cash flows by 1.8%.
Previous consolidated fiscal year (from April 1, 2019 to March 31, 2020)
RegionPrinciple use

Type

Inside Nara Prefecture
Outside Nara Prefecture

25 business stores, etc.
10 business stores, etc.
Total

Land and buildings, etc.
Land and buildings, etc.

Impairment loss (Millions of yen)

1,172
649
1,822

Regarding the fixed assets above, due to the decline in operating cash flows and the reorganization of the store network, the Bank reduced thecarrying amount to the recoverable amount and reported the decrease as an impairment loss (¥1,822 million).
The Bank uses the grouping method of area and business store units because it continuously determines income and expenditure for each areaand for each business store. For idle assets, the grouping is carried out using each asset as the unit. Furthermore, the head office, Administrative
Center, Training Center, etc. are assets that contribute to the generation of the future cash flows of multiple assets and asset groups, so they are
deemed to be corporate assets. Each subsidiary uses the grouping with each respective company as the unit.
The calculation of the recoverable amount uses the fair value less costs to sell or the value in use, whichever is higher. The fair value is calculated
based on Real Estate Appraisal Standards, etc., and the value in use is computed by discounting future cash flows by 1.9%.

Nanto Report 2021, the integrated report of Nanto Bank

55

Financial Data

Consolidated Financial Statements

20. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the fiscal years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Valuation difference on available-for-sale securities:
Gains (losses) incurred during the year................................................................... ¥Reclassification adjustments to net income............................................................ 		
Amount before tax effect.................................................................................... 		
Tax effect........................................................................................................... 		
Valuation difference on available-for-sale securities................................................. 		
Deferred gains or losses on hedges
Gains (losses) incurred during the year................................................................... 		
Reclassification adjustments to net income............................................................ 		
Amount before tax effect.................................................................................... 		
Tax effect........................................................................................................... 		
Deferred gains or losses on hedges....................................................................... 		
Adjustments for retirement benefits:
Gains (losses) incurred during the year................................................................... 		
Reclassification adjustments to net income............................................................ 		
Amount before tax effect.................................................................................... 		
Tax effect........................................................................................................... 		
Adjustments for retirement benefits........................................................................ 		
Total other comprehensive income (loss)................................................................ ¥

2020

2021

39,930(998)
38,931(11,067)
27,863

¥
		
		
		
		

(45,749)(3,747)(49,497)
14,167(35,330)

$
		
		
		
		

360,672(9,014)
351,648(99,963)
251,675

2,990
130
3,120
(948)
2,171

		
		
		
		
		

(28)
96
68
(20)
47

		
		
		
		
		

27,007
1,174
28,181(8,562)
19,609

(72)
230
158
(48)
110
30,146

		
		
		
		
		
¥

(325)
181
(143)
43
(100)
(35,382)

		
		
		
		
		
$

(650)
2,077
1,427
(433)
993
272,296

21. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2021 and 2020 and cash and cash equivalentsin the consolidated statements of cash flows for the fiscal years then ended was as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

Cash and due from banks on the consolidated balance sheets.................................. ¥ 1,191,207
Current deposits due from banks............................................................................... 		
(1,114)
Time deposits due from banks................................................................................... 		
(600)(1,126)
Other due from banks................................................................................................ 		
Cash and cash equivalents on the consolidated statements of cash flows................. ¥ 1,188,367

¥
		
		
		
¥

2021

693,798(1,251)(600)(582)
691,364$ 10,759,705
		(10,062)		
(5,419)		(10,170)$ 10,734,052

22. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Due within one year................................................................................................... ¥Due after one year..................................................................................................... 		
Total....................................................................................................................... ¥

158
873
1,031

2020

¥
		
¥

2021

87
845
932

$
		
$

1,427
7,885
9,312

As lessor:
There were no applicable matters to be noted regarding future minimum lease payments under operating leases which were not cancelable at March
31, 2021 and 2020.

56

Nanto Report 2021, the integrated report of Nanto Bank

23. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
a. Matters related to the status of financial instruments(1) Policy on financial instruments
The Group is composed of the Bank and its twelve consolidated subsidiaries and provides financial services such as banking, securities, leasing andcredit guarantee businesses.
The Group’s major banking business includes (i) the acceptance of deposits, lending services, bills discounting and remittance and (ii) theguarantee of debt, acceptance of bills and other services related to the banking business. The securities business includes underwriting and dealing
in securities, over-the-counter derivative transactions and other related services, including security index future transactions in accordance with the
Financial Instruments and Exchange Act.
The Bank, in addition to being a money lender and borrower in the interbank market to adjust its surplus and deficit of funds, raises funds byloans and bonds with consideration for the financial market conditions.
The Bank conducts asset and liability management (ALM), identifying various types of risk exposures associated with the banking business as
the Bank holds financial assets and liabilities exposed to the market risk associated with fluctuation in interest rates. As part of its risk management,
the Bank utilizes derivative transactions such as interest rate swaps. The Bank also enters into derivative transactions for trading purposes with certain
position limits.
(2) Contents and risk of financial instruments
Financial assets held by the Group are composed mainly of loans to corporate and individual customers that are exposed to credit risk arising from
customer nonperformance. In addition, loan balances are significantly concentrated in Nara prefecture, where the head office of the Bank is located.
Accordingly, changes in the economic circumstances of the region could have a great impact on the credit risk.
Securities consist principally of Japanese government bonds, Japanese local government bonds, equity securities, foreign securities, investment
trusts that are classified as other securities (available-for-sale), private bonds guaranteed by the Bank that are classified as held-to-maturity debt
securities and Japanese government bonds classified as trading purpose securities. These securities are exposed to the credit risk of issuers and themarket risk of fluctuation in interest rates and market prices. Since financial assets denominated in foreign currencies are exposed to exchange raterisk, currency related derivative transactions are used to balance the amount of funding and amount of operations for each currency to reduce the risk.
In the banking business, financial liabilities consist principally of deposits from retail clients in Japan and are exposed to interest rate risk. In
addition, foreign currency deposits are exposed to exchange rate risk. With respect to borrowed money, the Group may be forced to raise funds underunfavorable conditions and, accordingly, become significantly exposed to liquidity risk if the fund raising capacity of the Group significantly declined
and led to the inability to repay under circumstances such as the significant deterioration of the financial position of the Group. Furthermore, borrowed
money with floating interest rates is exposed to interest rate risk.
Derivative transactions include interest rate swaps for interest rate related transactions, currency swaps and forward foreign exchangetransactions for currency related transactions, and bond future transactions and bond option transactions for bond related transactions. In addition,certain credit derivatives are embedded in the financial instruments. The Bank utilizes those derivative transactions in order to hedge the position of
the customers as well as to capture various risks associated with transactions with customers and control those risks properly. The Bank also uses
derivatives for trading purposes with certain position limits.
The Bank applies the deferred hedge accounting method for derivative transactions when used as hedging instruments. Interest rate swaps
are used as hedging instruments to avoid interest rate risks of hedged items such as loans and deposits with fixed interest rates. Deferred hedge
accounting has been applied to derivatives used as hedging instruments.
The Bank assesses the effectiveness of hedges in offsetting movement in the fair value from changes in interest rates by classifying the hedged
items such as deposits and loans and the hedging instruments such as interest rate swaps by their maturity. For cash flow hedges, the Bank
assesses the effectiveness by verifying the correlation between the hedged items and the hedging instruments. Transactions which do not meetthe requirements of hedge accounting and derivative transactions for trading purposes are exposed to interest rate risk, foreign currency risk, pricefluctuation risk and credit risk.
(3) Risk management system for financial instruments
Credit risk management
The Group has established a framework for credit control which includes credit reviews for individual transactions, credit limits, credit information
management, internal credit ratings, guarantees and collateral and self-assessment in accordance with the Group’s “Rules on credit risk management”
and “Rules on self-assessment of assets.” These credit controls are performed by each branch and the Credit Analysis Division. The independent
Audit Department audits the status of credit risk controls and its results. The status of credit risk controls is periodically evaluated and reported to theManagement Directors’ Committee and board meeting.
Credit risks associated with the issuers of securities are managed by the Financial Investment Division and Risk Management Division. With
respect to the credit risks associated with the issuer of the securities and counterparty risk associated with derivative transactions, related credit
information and fair values of the securities are periodically checked to monitor those risks.
Market risk management(a) Interest rate risk
From the perspective of ALM, the Group manages market risk such as interest rate risk associated with assets and liabilities, including loans, deposits
and securities comprehensively. The Group’s “Rules on Market Risk Management” stipulates that the Bank makes efforts to manage the market sector
effectively, taking risk and reward into account as well as avoiding excessive risk taking by setting appropriate risk limits based on the Group’s ability totake risk and identifying market risk properly.
The ALM Committee, the decision making entity for the management of market risks, sets certain semiannual risk limits determined by VaR based
upon the Bank’s capital adequacy and market conditions. The Bank pursues profit opportunities within the risk limits. The Risk Management Divisionassesses interest rate risk by VaR, reports to the ALM Committee on a monthly basis and properly monitors its operations.
In addition to the VaR methodology, it utilizes a combination of the BPV (basis point value) methodology, simulations of interest rate fluctuations,and EVE (the decrease in economic value with respect to an interest rate shock), etc., to identify and analyze risk from a broader point of view.

Nanto Report 2021, the integrated report of Nanto Bank

57

Financial Data

Consolidated Financial Statements(b) Foreign currency risk
With regard to foreign currency risk associated with operations and procurement of financial instruments denominated in foreign currency, theGroup manages risk by balancing the amount of funding and amount of operations for each currency. In addition, as for foreign currency exchangetransactions for investment purposes, the Risk Management Division assesses the foreign currency risk by VaR, reports to the ALM committee on amonthly basis and properly monitors its operations.
(c) Price fluctuation risk
With regard to investments in securities, the Group prepares its asset management plan semiannually and makes investment decisions at the ALM
Committee based upon expected returns and correlations between investment items and related market fluctuation risk. The Solution Business
Division plays a part in investments for investment purposes, and the Corporate Business Division plays a part in investments for the purposeof business alliances and capital affiliation. Continuous monitoring of market conditions and restrictions on investments in riskier assets such as
securitized instruments help to avoid unnecessary price fluctuation risk.
The Risk Management Division assesses the price fluctuation risk of equity securities, etc., by VaR, reports monthly to the ALM Committee aboutcompliance with risk limits and properly manages the risk.
(d) Derivative transactions
With respect to derivative transactions for hedging purposes, the Group establishes internal rules defining the authority and hedge policies which
are governed by the Risk Management Division. With respect to derivative transactions for trading purposes, certain trading limits and loss limit rules
are set semiannually by the ALM Committee. The Risk Management Division, which serves as the middle office, monitors compliance and calculates
the total amount of risk. The Financial Investment Division, which serves as the back office, checks each derivative transaction, marked-to-market
position, and evaluates the profit and loss from the transactions on a daily basis. In addition to those functions, the related divisions check each otherso as not to exceed limits on loss.
The directors of the Bank are reported to from both the middle office and the back office and monitor the risks associated with the Bank’s
portfolio as a whole, including loans, deposits and securities at the ALM Committee.
(e) Quantitative information relating to market risk
The Group manages the quantity of market risk for financial instruments such as loans, deposits, securities and derivatives by VaR. To calculate VaR,
the Group has adopted the historical method (confidence level of 99%, observation period of 1,250 business days, holding period of 120 businessdays [holding period for equity securities other than purely for investment purposes are 240 business days] and the correlation of risk categories are
not considered.).
At March 31, 2021, the Group’s total market risk (decrease in estimated economic value) was ¥58,770 million ($530,846 thousand) (¥52,531
million in 2020). In addition, the Group conducted back tests comparing actual income with the VaR calculated by the model. However, VaR is astatistical measure of market risk based on past fluctuations in the market and certain probability of occurrence. It may not be possible to capture therisk if the market fluctuates rapidly under extraordinary circumstances.
Management of liquidity risk associated with financing activities
The Financial Investment Division manages the Bank’s cash position based upon the monthly funding plan designed by the ALM Committee, while theRisk Management Division monitors the situation. The ALM Committee manages financing risk comprehensively by understanding the amount of cash
for which the Bank can liquidate and also can raise from the market on a regular basis.
In addition, the Group categorizes its financing situation into “Regular Phase”, “Concern Phase” and “Crisis Phase” and prepares appropriate
management structures for each phase so that the Group can take proper action accordingly.
(4) Supplementary explanation on the fair value of financial instruments
The fair values of financial instruments comprise values based on quoted market prices and values calculated on a reasonable basis when no market
price is available. Certain assumptions are used for the calculation of such amounts, and, accordingly, the result of such calculations may vary if
different assumptions are used.

58

Nanto Report 2021, the integrated report of Nanto Bank

b. Fair value of financial instruments
The table below summarizes the carrying amounts, fair values and differences between the carrying amounts and fair values of financial instruments asof March 31, 2021 and 2020. Note that unlisted equity securities for which it is extremely difficult to identify the fair value and immaterial accounts are
not included in the table (see Note 2 below).
Millions of yen

2021
Carrying amount

Cash and due from banks.................................................................................... ¥Debt purchased.................................................................................................... 		
Money held in trust............................................................................................... 		
Securities
Held-to-maturity debt securities........................................................................ 		
Available-for-sale securities............................................................................... 		
Loans and bills discounted................................................................................... 		
Reserve for possible loan losses (*1)................................................................. 		
		
Total assets.......................................................................................................... ¥Deposits............................................................................................................... ¥Negotiable certificates of deposit.......................................................................... 		
Call money and bills sold...................................................................................... 		
Payables under repurchase agreements............................................................... 		
Payables under securities lending transactions..................................................... 		
Borrowed money.................................................................................................. 		
Total liabilities........................................................................................................ ¥Derivative transactions (*2)
Hedge accounting not applied.......................................................................... 		
Hedge accounting applied (*3).......................................................................... 		
Total derivative transactions.................................................................................. ¥Fair value

Difference

1,191,207
1,827
40,500¥ 1,191,207
		
1,827
		
40,500

¥
		
		

—
—
—

36,586
1,380,014
3,786,878(21,385)
3,765,493
6,415,629
5,439,967
4,040—
37,077
106,465
626,700
6,214,251		
36,634
		 1,380,014

		
		

48
—

		
¥
¥
		
		
		
		
		
¥

3,774,099
6,424,284
5,440,015
4,040—
37,077
106,465
626,651
6,214,249

		
¥
¥
		
		
		
		
		
¥

8,605
8,654
47
—
—
—
—
(48)
(1)

(1,264)
2,902
1,637

		
		
¥

(1,264)
2,902
1,637

		
		
¥

—
—
—

Millions of yen

2020
Carrying amount

Cash and due from banks.................................................................................... ¥Debt purchased.................................................................................................... 		
Money held in trust............................................................................................... 		
Securities
Held-to-maturity debt securities........................................................................ 		
Available-for-sale securities............................................................................... 		
Loans and bills discounted................................................................................... 		
Reserve for possible loan losses (*1)................................................................. 		
		
Total assets.......................................................................................................... ¥Deposits............................................................................................................... ¥Negotiable certificates of deposit.......................................................................... 		
Call money and bills sold...................................................................................... 		
Payables under repurchase agreements............................................................... 		
Payables under securities lending transactions..................................................... 		
Borrowed money.................................................................................................. 		
Total liabilities........................................................................................................ ¥Derivative transactions (*2)
Hedge accounting not applied.......................................................................... 		
Hedge accounting applied................................................................................ 		
Total derivative transactions.................................................................................. ¥693,798
2,412
39,470Fair value

¥
		
		

Difference

693,798
2,412
39,470

¥
		
		

—
—
—

27,6761,300,902
3,457,276(20,396)
3,436,880
5,501,140
5,029,759
7,370
5,441
42,475
135,144
135,538
5,355,729

		27,736
		 1,300,902

		
		

59
—

		
¥
¥
		
		
		
		
		
¥

3,448,083
5,512,404
5,029,768
7,370
5,441
42,475
135,144
135,513
5,355,713

		
¥
¥
		
		
		
		
		
¥

11,203
11,263
8
—
—
—
—
(24)
(16)

410
(172)
237

		
		
¥

410
(172)
237

		
		
¥

—
—
—

Nanto Report 2021, the integrated report of Nanto Bank

59

Financial Data

Consolidated Financial Statements

Thousands of U.S. dollars

2021
Carrying amount

Cash and due from banks.................................................................................... $ 10,759,705
Debt purchased.................................................................................................... 		
16,502
Money held in trust............................................................................................... 		
365,820
Securities
Held-to-maturity debt securities........................................................................ 		
330,466
Available-for-sale securities............................................................................... 		 12,465,125
Loans and bills discounted................................................................................... 		 34,205,383
Reserve for possible loan losses (*1)................................................................. 		 (193,162)
		 34,012,221
Total assets.......................................................................................................... $ 57,949,859
Deposits............................................................................................................... $ 49,137,087
Negotiable certificates of deposit.......................................................................... 		
36,491
Call money and bills sold...................................................................................... 		
—Payables under repurchase agreements............................................................... 		
334,901
Payables under securities lending transactions..................................................... 		
961,656
Borrowed money.................................................................................................. 		 5,660,735
Total liabilities........................................................................................................ $ 56,130,891
Derivative transactions (*2)
Hedge accounting not applied.......................................................................... 		
(11,417)
26,212Hedge accounting applied (*3).......................................................................... 		
Total derivative transactions.................................................................................. $14,786

Fair value

Difference$ 10,759,705
		
16,502
		
365,820

$
		
		

—
—
—

		
330,900
		 12,465,125

		
		

434
—

		 34,089,955$ 58,028,037$ 49,137,521
		
36,491
		—		
334,901		
961,656
		 5,660,292$ 56,130,873

		
$
$
		
		
		
		
		
$

77,72678,168
425
—
—
—
—
(434)
(9)

		
		
$

		
		
$

—
—
—

(11,417)
26,212
14,786(*1) General reserve for possible loan losses and specific reserve for possible loan losses corresponding to loans are deducted.
(*2) Assets and liabilities arising from derivative transactions are presented on a net basis, and net liabilities are presented in parentheses.
(*3) These are interest rate swaps, etc., designated as hedging instruments in order to fix the cash flow from loans, etc., which are the hedged items, and mainly deferred hedge accounting is applied.
The Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR (Practical Issues Task Force (PITF) No. 40, September 29, 2020) is applied to these
hedging relationships.

(Note 1) Computation method for fair value of financial instruments
AssetsCash and due from banks:
With respect to due from banks without maturities, the carrying amount is presented as the fair value as the fair value approximates the carrying
amount. With respect to due from banks with maturities, the fair value is calculated for each category of maturity by discounting the cash flow at theinterest rate assumed if the same due from banks were newly executed.
Debt purchased:
The carrying amount is presented as the fair value as the residual maturity is less than one year and the fair value approximates the carrying amount.
Money held in trust:
The fair value of securities managed as trust assets in individually managed money held in trust primarily for securities management purposes isdetermined based on the values presented by the trust bank. For additional information on money held in trust categorized by holding purposes, seeNote 24, “SECURITIES AND MONEY HELD IN TRUST.”
Securities:
The fair value of equity securities is determined using the market price on exchanges. The fair value of debt securities is determined based onmarket price or value calculated on a reasonable basis if no market price is available. The fair value of listed investment trusts is determined using
the market price on exchanges and the fair value of other investment trusts is determined using standard prices published by the Investment Trust
Association, Japan or presented from the financial institutions with which they are transacted. The fair value of the private bonds guaranteed by the
Bank is calculated by discounting the aggregate value of principle and interest at the interest rate assumed if the same bond were newly issued foreach category based on term, redemption method and guarantees. With respect to the private bonds guaranteed by the Bank issued by “bankrupt
borrowers,” “effectively bankrupt borrowers” and “likely to become bankrupt borrowers,” the amount of possible loan losses is computed based on
the present value of estimated future cash flows or the recoverable amounts from collateral and guarantees. Therefore, the fair value approximates the
carrying amount, net of reserve for possible loan losses, and such amount is presented as the fair value.
For additional information on securities categorized by the purposes for which they are held, see Note 24, “SECURITIES AND MONEY HELD IN
TRUST.”
Loans and bills discounted:
The fair value of loans with floating interest rates is presented using the carrying amount as the fair value approximates the carrying amount, as long as
the credit situation of the borrower does not vary significantly after the loan is executed, since they reflect market interest rates due to their short-term
nature. The fair value of loans with fixed rates is computed by discounting the aggregate value of principal and interest at the interest rate assumed
if the same loans were newly executed for each type of loan, internal rating and maturity. As for the loans whose maturity is less than one year, thecarrying amount is presented as the fair value as the fair value approximates the carrying amount.
With respect to receivables from “bankrupt borrowers,” “effectively bankrupt borrowers” and “likely to become bankrupt borrowers,” the amountof possible loan losses is computed based on the estimated future cash flow or the recoverable amounts from collateral and guarantees. Therefore,
the fair value approximates the carrying amount, net of reserve for possible loan losses, and this amount is presented as the fair value.

60

Nanto Report 2021, the integrated report of Nanto BankThe fair value of loans without a predetermined repayment date due to the lending amount being limited within the value of the applicable
collateral is presented using the carrying amount as the fair value is deemed to approximate the carrying amount considering the estimated repayment
term and interest rate. The fair value of embedded derivative loans is presented using market prices at financial institutions.
Liabilities
Deposits and negotiable certificates of deposits:
With respect to on-demand deposits, the payment obligation due when demanded at the balance sheet date, which is the carrying amount, isdeemed to be the fair value. The fair value of time deposits is computed using the present value by discounting future cash flows for each category ofa certain period. The interest rate to be applied when a new deposit is taken is used as the discount rate. For deposits whose residual maturity is lessthan one year, the carrying amount is presented as the fair value as the fair value approximates the carrying amount.
Call money and bills sold and payables under securities lending transactions:
The carrying amount is presented as the fair value as the residual maturity is less than one year and the fair value approximates the carrying amount.
Payables under repurchase agreements:
The carrying amount is presented as the fair value as the fair value is deemed to approximate the carrying amount since the interest rate is the floatinginterest rate which reflects the market interest rate due to the short-term nature.
Borrowed money:
The fair value of borrowed money with floating interest rates is presented using the carrying amount as the fair value approximates the carrying amountsince the interest rate reflects the market interest rate due to the short-term nature and the credit situation of the Group does not vary significantly after
executing the borrowing. The fair value of borrowed money with fixed interest rates is computed, by discounting the aggregate value of principal andinterest at the interest rate assumed if the same borrowing were newly executed, for each category of type of maturities. As for the borrowed money
whose maturity is less than one year, the carrying amount is presented as the fair value as the fair value approximates the carrying amount.
Derivative transactions
For derivative transactions, see Note 25, “DERIVATIVE TRANSACTIONS.”(Note 2) The table below summarizes financial instruments whose fair value is extremely difficult to estimate. Note that these instruments are notincluded in the above table regarding the fair value of financial instruments.
Carrying amountThousands of
U.S. dollars

Millions of yen

2021

Unlisted equity securities (*1) (*2)............................................................................... ¥Bonds denominated in foreign currencies (*1)............................................................ 		
Investment in partnerships (*3)................................................................................... 		
Total....................................................................................................................... ¥

2020

1,688
—
10,071
11,760

¥
		
		
¥

2021

1,690
1,088
8,988
11,767$				
$15,247—90,967106,223(*1) The fair value of unlisted equity securities and bonds denominated in foreign currencies is not disclosed, since there were no market prices and it was extremely difficult to estimate the fair values.
(*2) No impairment loss was recognized for the fiscal year ended March 31, 2020. In the current consolidated fiscal year, an impairment loss of ¥1 million ($9 thousand) has been recognized for unlisted
shares.
(*3) The fair value of unlisted equity securities among investment in partnerships is not disclosed since there were no market prices and it was extremely difficult to estimate the fair values.

(Note 3) Redemption schedule of monetary claims and securities with maturities
Millions of yen

2021
Due within one
year or lessDue after one
year throughthree years

Due from banks....................................................... ¥ 1,137,792 ¥Debt purchased.......................................................		
1,827 		Securities................................................................		
64,148 		
Held-to-maturity debt securities...........................		
7,912 		Bonds..............................................................		
7,912 		Available-for-sale securities with contractual		
56,236 		maturities.............................................................
Japanese government bonds...........................		
31,500 		
Japanese local government bonds..................		
18,215 		
Corporate bonds.............................................		
3,405 		Other...............................................................		
3,115 		Loans and bills discounted (*)..................................		 437,805 		
Total ........................................................................ ¥ 1,641,574 ¥——
128,542
17,82017,820Due after three
years throughfive years

¥
		
		
		
		

—
—
62,5259,917
9,917

Due after five
years throughseven years

¥
		
		
		
		

—
—
18,069936
936

Due after sevenyears through ten
years

¥
		
		
		
		

—
—
207,673——

Due after ten
years

¥
		
		
		
		

—
—
227,102——
227,102110,721 		

52,608 		

17,133 		

207,673 		

27,00026,63843,794
13,288715,438
843,980

40,000
6,282
6,326
—
622,734
685,260

—
1,062
5,000
11,071
406,843424,9135,000
134,183
3,000
65,490400,465
608,139

		
		
		
		
		
¥

		
		
		
		
		
¥

		
		
		
		
		
¥

		
33,500		
2,647
		 156,859
		
34,095
		 860,514¥ 1,087,616

Nanto Report 2021, the integrated report of Nanto Bank

61

Financial Data

Consolidated Financial Statements

Millions of yen

2020
Due within one
year or lessDue after one
year throughthree years

Due from banks....................................................... ¥ 693,798 ¥Debt purchased.......................................................		
2,412 		Securities................................................................		 143,151 		
Held-to-maturity debt securities...........................		
5,129 		Bonds..............................................................		
5,129 		Available-for-sale securities with contractual
		 138,021 		
maturities.............................................................
Japanese government bonds...........................		
57,500 		
Japanese local government bonds..................		
15,123 		
Corporate bonds.............................................		
29,310 		
Other...............................................................		
36,088 		
Loans and bills discounted (*)..................................		 448,640 		
Total ........................................................................ ¥ 1,288,003 ¥——122,343
12,612
12,612

Due after three
years throughfive years

¥
		
		
		
		

—
—
113,255
8,354
8,354

Due after five
years throughseven years

¥
		
		
		
		

109,730 		

104,900 		

44,00022,411
38,296
5,023
644,659
767,00254,50024,597
14,425
11,377
519,682
632,938

		
		
		
		
		
¥

		
		
		
		
		
¥

—
—
7,963
1,579
1,579

Due after sevenyears through ten
years

¥
		
		
		
		

6,383 		
—
4,544
404
1,434
356,700
364,663

		
		
		
		
		
¥

—
—
179,072——

Due after ten
years

¥
		
		
		
		

—
—
191,618——

179,072 		

191,618

5,000 		
—104,157 		
3,088
7,700 		 147,788
62,215 		
40,741
331,142 		 814,900
510,214 ¥ 1,006,518

Thousands of U.S. dollars

2021
Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years

Due from banks....................................................... $ 10,277,228 $
— $
— $
— $
— $
—
Debt purchased.......................................................		
16,502 		
— 		
— 		
— 		
— 		
—
Securities................................................................		 579,423 		 1,161,069 		 564,763 		 163,210 		 1,875,828 		 2,051,323
Held-to-maturity debt securities...........................		
71,465 		 160,961 		
89,576 		
8,454 		— 		
—Bonds..............................................................		
71,465 		 160,961 		
89,576 		
8,454 		— 		
—Available-for-sale securities with contractual
		 507,957 		 1,000,099 		 475,187 		 154,755 		 1,875,828 		 2,051,323
maturities.............................................................
Japanese government bonds...........................		 284,527 		 243,880 		 361,304 		— 		
45,163 		 302,592
Japanese local government bonds..................		 164,528 		 240,610 		
56,742 		
9,592 		 1,212,022 		
23,909Corporate bonds.............................................		
30,756 		 395,574 		
57,140 		
45,163 		
27,097 		 1,416,845
Other...............................................................		
28,136 		 120,025 		— 		 100,000 		 591,545 		 307,966
Loans and bills discounted (*)..................................		 3,954,520 		 6,462,270 		 5,624,911 		 3,674,853 		 3,617,243 		 7,772,685
Total ........................................................................ $ 14,827,693 $ 7,623,340 $ 6,189,684 $ 3,838,072 $ 5,493,081 $ 9,824,008(*)	Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, which are not expected to be repaid, amounting to ¥36,696 million ($331,461 thousand) and ¥27,421
million at March 31, 2021 and 2020, respectively, are not included.
Loans whose payment terms were not determined amounting to ¥306,379 million ($2,767,401 thousand) and ¥304,129 million at March 31, 2021 and 2020, respectively, are not included.

(Note 4) Redemption schedule of bonds payable, borrowed money and interest bearing liabilities
Millions of yen

2021
Due within one
year or less

Deposits (*).............................................................. ¥ 5,023,510
Negotiable certificates of deposits...........................		
4,040
Call money and bills sold.........................................		
—Payables under repurchase agreements..................		
37,077
Payables under securities lending transactions........		 106,465
Borrowed money.....................................................		 415,634
Total........................................................................ ¥ 5,586,727

62

Nanto Report 2021, the integrated report of Nanto Bank

Due after one
year throughthree years

¥
		
		
		
		
		
¥

366,353————
22,861
389,215

Due after three
years throughfive years

¥
		
		
		
		
		
¥

50,104————
185,965
236,069

Due after five
years throughseven years

¥
		
		
		
		
		
¥

—
—
—
—
—
25
25

Due after sevenyears through ten
years

¥
		
		
		
		
		
¥

—
—
—
—
—
2,214
2,214

Due after ten
years

¥
		
		
		
		
		
¥

—
—
—
—
—
—
—

Millions of yen

2020
Due within one
year or less

Deposits (*).............................................................. ¥ 4,576,383
Negotiable certificates of deposits...........................		
7,370
Call money and bills sold.........................................		
5,441
Payables under repurchase agreements..................		
14,146
Payables under securities lending transactions........		 135,144
71,103
Borrowed money.....................................................		
Total........................................................................ ¥ 4,809,589

Due after one
year throughthree years

¥
		
		
		
		
		
¥

412,539——
28,328—63,385504,253

Due after three
years throughfive years

¥
		
		
		
		
		
¥

40,837————973
41,810Due after five
years throughseven years

¥
		
		
		
		
		
¥

—
—
—
—
—
76
76

Due after sevenyears through ten
years

¥
		
		
		
		
		
¥

—
—
—
—
—
—
—

Due after ten
years

¥
		
		
		
		
		
¥

—
—
—
—
—
—
—

Thousands of U.S. dollars

2021
Due within one
year or lessDue after one
year throughthree years

Deposits (*).............................................................. $ 45,375,395 $Negotiable certificates of deposits...........................		
36,491 		
Call money and bills sold.........................................		
— 		
Payables under repurchase agreements..................		
334,901 		
Payables under securities lending transactions........		
961,656 		
Borrowed money.....................................................		 3,754,258 		
Total........................................................................ $ 50,462,713 $Due after three
years throughfive years

3,309,122 $
— 		
— 		
— 		
— 		
206,494 		
3,515,626 $Due after five
years throughseven years

452,569 $
— 		
— 		
— 		
— 		
1,679,748 		
2,132,318 $Due after sevenyears through ten
years

— $
— 		
— 		
— 		
— 		
225 		
225 $Due after ten
years

— $
— 		
— 		
— 		
— 		
19,998 		
19,998 $

—
—
—
—
—
—
—

(*) Demand deposits are included in “Due within one year or less.”

24. SECURITIES AND MONEY HELD IN TRUSTThe securities in this note include “Trading account securities” and beneficial trust interests under “Debt purchased,” in addition to “Securities”
classified on the consolidated balance sheets.
(1) Information on trading account securities and securities with available fair values at March 31, 2021 and 2020 was as follows:(a) Trading securities
Not applicable for the years ended March 31, 2021 and 2020(b) Held-to-maturity debt securities
Millions of yen

2021
Carrying amount

Fair value

Unrealized gains (losses)

Fair value exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................

¥¥

33,12833,128¥¥33,19133,191¥¥

62
62

Fair value not exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................
Total ...............................................................................................

¥
¥
¥

3,458
3,458
36,586

¥
¥
¥

3,443
3,443
36,634

¥
¥
¥

(14)
(14)
48

Millions of yen

2020
Carrying amount

Fair value

Unrealized gains (losses)

Fair value exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................

¥¥

25,26825,268¥¥25,34325,343¥¥74
74

Fair value not exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................
Total ...............................................................................................

¥
¥
¥

2,408
2,408
27,676

¥
¥
¥

2,392
2,392
27,736

¥
¥
¥

(15)
(15)
59

Nanto Report 2021, the integrated report of Nanto Bank

63

Financial Data

Consolidated Financial Statements

Thousands of U.S. dollars

2021
Carrying amount

Fair value

Unrealized gains (losses)

Fair value exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................

$$

299,232
299,232$$

299,801
299,801

$
$

560
560

Fair value not exceeding carrying amount:
Corporate bonds............................................................................
Subtotal..........................................................................................
Total ...............................................................................................

$$$

31,234
31,234
330,466$$$

31,09931,099330,900

$
$
$

(126)
(126)
433

(c) Available-for-sale securities
Millions of yen

2021
Carrying amount

Acquisition cost

Carrying amount exceeding acquisition cost:
Stocks............................................................................................
¥
79,031
Bonds............................................................................................		330,549
Japanese government bonds.....................................................		100,423
Japanese local government bonds.............................................		101,588
Japanese corporate bonds.........................................................		128,538
Others............................................................................................		500,188
Foreign securities included..........................................................		 62,643
Subtotal..........................................................................................
¥
909,769

Unrealized gains (losses)¥
36,336
		326,506
		 98,672
		100,662
		127,171
		491,264
		 60,797¥
854,107¥42,695
		 4,042
		 1,750
		
925
		 1,366
		 8,924
		 1,846¥
55,662Carrying amount not exceeding acquisition cost:
Stocks............................................................................................
¥
1,202
Bonds............................................................................................		218,746
Japanese government bonds.....................................................		 38,038
Japanese local government bonds.............................................		 88,092
Japanese corporate bonds.........................................................		 92,616
Others............................................................................................		250,296
Foreign securities included..........................................................		 73,980
Subtotal..........................................................................................
¥
470,245
Total ...............................................................................................
¥ 1,380,014¥
1,302
		219,728
		 38,401
		 88,384
		 92,942
		263,444
		 79,644¥
484,476¥ 1,338,583¥(100)
		 (982)		 (363)		 (292)		 (325)
		(13,148)
		 (5,664)¥(14,230)¥
41,431Millions of yen

2020

64

Carrying amount

Acquisition cost

Carrying amount exceeding acquisition cost:
Stocks............................................................................................
¥
50,294
Bonds............................................................................................		467,090
Japanese government bonds.....................................................		164,170
Japanese local government bonds.............................................		109,391
Japanese corporate bonds.........................................................		193,528
Others............................................................................................		232,377
Foreign securities included..........................................................		108,771
Subtotal..........................................................................................
¥
749,762¥
26,240		460,897
		161,253
		107,953
		191,690
		227,605
		105,648¥
714,743¥
24,053
		 6,193
		 2,916
		 1,437
		 1,838
		 4,772
		 3,123¥
35,019Carrying amount not exceeding acquisition cost:
Stocks............................................................................................
¥
10,387
Bonds............................................................................................		111,972
Japanese government bonds.....................................................		
—Japanese local government bonds.............................................		 65,722
Japanese corporate bonds.........................................................		 46,250
Others............................................................................................		428,779
Foreign securities included..........................................................		 66,596
Subtotal..........................................................................................
¥
551,139
Total ...............................................................................................
¥ 1,300,902¥
11,894
		112,577
		—		 65,987
		 46,589
		459,187
		 72,962¥
583,659¥ 1,298,402¥(1,507)
		 (604)		—		 (265)		 (339)
		(30,407)
		 (6,366)¥(32,519)¥
2,499

Nanto Report 2021, the integrated report of Nanto Bank

Unrealized gains (losses)

Thousands of U.S. dollars

2021
Carrying amount

Acquisition cost

Carrying amount exceeding acquisition cost:
Stocks............................................................................................
$
713,856
Bonds............................................................................................		2,985,719
Japanese government bonds.....................................................		907,081
Japanese local government bonds.............................................		917,604
Japanese corporate bonds.........................................................		1,161,033
Others............................................................................................		4,518,001
Foreign securities included..........................................................		565,829
Subtotal..........................................................................................
$ 8,217,586

Unrealized gains (losses)$
328,208
		2,949,200
		891,265
		909,240
		1,148,685
		4,437,394
		549,155$ 7,714,813$
385,647
		 36,509
		 15,807
		 8,355
		 12,338
		 80,606
		 16,674$
502,773

Carrying amount not exceeding acquisition cost:
Stocks............................................................................................
$
10,857
Bonds............................................................................................		1,975,846
Japanese government bonds.....................................................		343,582
Japanese local government bonds.............................................		795,700
Japanese corporate bonds.........................................................		836,563
Others............................................................................................		2,260,825
Foreign securities included..........................................................		668,232
Subtotal..........................................................................................
$ 4,247,538
Total ...............................................................................................
$ 12,465,125$
11,760		1,984,716
		346,861
		798,338
		839,508
		2,379,586
		719,393$ 4,376,081$ 12,090,895$(903)
		 (8,870)
		 (3,278)
		 (2,637)
		 (2,935)
		(118,760)
		(51,160)$(128,534)$
374,229

The securities loaned under unsecured securities lending transactions are included in Japanese government bonds under “Securities” in the amount of¥40,582 million ($366,561 thousand) and ¥39,567 at March 31, 2021 and 2020, respectively.
(2) Held-to-maturity debt securities sold for the fiscal years ended March 31, 2021 and 2020
Millions of yen

2021
Sales amount

Bonds............................................................................................
¥
Japanese corporate bonds.........................................................		
Total ...............................................................................................
¥

175
175
175

Gains on sales

¥
		
¥

0
0
0

Losses on sales

¥
		
¥

—
—
—

Millions of yen

2020
Sales amount

Bonds............................................................................................
¥
Japanese corporate bonds.........................................................		
Total ...............................................................................................
¥

107
107
107

Gains on sales

¥
		
¥

0
0
0

Losses on sales

¥
		
¥

—
—
—

Thousands of U.S. dollars

2021
Sales amount

Bonds............................................................................................
$
1,580
Japanese corporate bonds.........................................................		 1,580
Total ...............................................................................................
$
1,580

Gains on sales

$
		
$

0
0
0

Losses on sales

$
		
$

—
—
—

(Reason for sale) Sales of Japanese corporate bonds comprise retirement by purchase of private bonds.
(3) Available-for-sale securities sold for the fiscal years ended March 31, 2021 and 2020
Millions of yen

2021
Sales amount

Gains on sales

Losses on sales

Stocks............................................................................................
¥
5,790
Bonds............................................................................................		 82,968
Japanese government bonds.....................................................		 82,681
Japanese local government bonds.............................................		
179
Japanese corporate bonds.........................................................		
107
Others............................................................................................		291,086
Foreign securities included..........................................................		241,444
Total ...............................................................................................
¥
379,845

¥
1,399
		
219
		
219
		
—
		
—
		 5,735
		 4,787
¥
7,354

¥
128
		
0
		
—
		
0
		
0
		 6,195
		
629
¥
6,324

Nanto Report 2021, the integrated report of Nanto Bank

65

Financial Data

Consolidated Financial Statements

Millions of yen

2020
Sales amount

Gains on sales

Losses on sales

Stocks............................................................................................
¥
26,126
Bonds............................................................................................		 71,936
Japanese government bonds.....................................................		 71,559
Japanese local government bonds.............................................		
179
Japanese corporate bonds.........................................................		
196
Others............................................................................................		200,975
Foreign securities included..........................................................		147,661
Total ...............................................................................................
¥
299,038

¥
6,319
		
174
		
174
		
—
		
0
		 7,762
		 5,025¥
14,256

¥
1,961
		
0
		
—
		
0
		
0
		 4,427
		
265
¥
6,388

Thousands of U.S. dollars

2021
Sales amount

Gains on sales

Losses on sales

Stocks............................................................................................
$
52,298
Bonds............................................................................................		749,417
Japanese government bonds.....................................................		746,825
Japanese local government bonds.............................................		 1,616
Japanese corporate bonds.........................................................		
966
Others............................................................................................		2,629,265
Foreign securities included..........................................................		2,180,868
Total ...............................................................................................
$ 3,430,990$
12,636
		 1,978		 1,978		—		—		 51,802
		 43,239$
66,425

$
1,156
		
0
		
—
		
0
		
0
		 55,957
		 5,681$
57,122(4) Information on money held in trust at March 31, 2021 and 2020 was as follows:
Money held in trust for trading purposes
Thousands of
U.S. dollars

Millions of yen

2021

Carrying amount (fair value)........................................................................................ ¥Amount of net unrealized gains (losses) included in the statements of income........... 		

2020

38,000(58)¥
		

38,000
71

2021

$
		

343,239(523)

Other money held in trust for purposes other than investment or holding to maturity
Thousands of
U.S. dollars

Millions of yen

2021

Carrying amount........................................................................................................ ¥Acquisition cost......................................................................................................... 		
Difference.................................................................................................................. 		
Unrealized gain...................................................................................................... 		
Unrealized loss....................................................................................................... 		

2020

2,500
2,500
—
—
—

¥
		
		
		
		

1,470
1,470
—
—
—

2021

$
		
		
		
		

22,581
22,581———The principal amount in trust with contracts to compensate losses on the principal was as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Money in trust............................................................................................................

¥

2020

6,265

¥

6,763

2021

$

56,589(5) The components of the valuation difference on available-for-sale securities recorded under net assets at March 31, 2021 and 2020 wereas follows:
Thousands of
U.S. dollars

Millions of yen

2021

Valuation difference.................................................................................................... ¥Deferred tax assets or deferred tax liabilities............................................................... 		
Amounts equivalent to difference on available-for-sale securities................................ ¥Noncontrolling interests adjustment........................................................................... 		
Valuation difference on available-for-sale securities.................................................... ¥(6) Securities reclassified for the fiscal years ended March 31, 2021 and 2020
Not applicable.

66

Nanto Report 2021, the integrated report of Nanto Bank

41,431(10,209)31,221—
31,221

2020

¥
		
¥
		
¥

2,499
857
3,357
—
3,357

2021

$
		
$
		
$

374,229(92,213)282,007—
282,007

(7) Impairment loss on securities
In the event that the fair value of securities, except trading securities, with available fair values declines significantly from the acquisition cost and the fairvalue is not expected to recover, such securities are stated at fair value and the difference between the fair value and the acquisition cost is recognized
as loss in the period of the decline (“impairment loss”). The fair value is regarded as “significantly declined” when (i) the fair value as of the end of the
fiscal year has declined by more than 50% of the acquisition cost or (ii) the fair value as of the end of the fiscal year has declined by more than 30%
but less than 50% of the acquisition cost and is not expected to recover within one year. The Bank recognized impairment loss of ¥33 million ($298
thousand) on stocks for the fiscal year ended March 31, 2021. The Bank recognized impairment loss of ¥1,126 million on stocks for the fiscal year
ended March 31, 2020.

25. DERIVATIVE TRANSACTIONS(1) Derivative contracts to which hedge accounting is not appliedWith respect to derivatives to which hedge accounting is not applied, the contract amount or notional principal amount defined in the contract, fairvalue, unrealized gains (losses) and the method used to calculate fair value by transaction type as of March 31, 2021 and 2020 were as follows.
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.
(a) Interest rate related transactions
Millions of yen

2021

Category

Transaction type
Contract amountInterest rate futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Over-the-counter Forward rate agreements
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate swaps
Receive fixed rate/pay floating rate..................
¥
25,445
Receive floating rate/pay fixed rate..................		 28,084
Receive floating rate/pay floating rate...............		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
¥—

Contract amount due
after one year

Unrealized gains(losses)

Fair value

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

¥
25,445
		 27,758
		
—

¥
		
		

257
¥
(102) 		
— 		

257
(102)
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		
¥

—
—
—

		
		
¥

—
—
154

		
		
¥

—
—
154

Millions of yen

2020

Category

Transaction type
Contract amountInterest rate futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Over-the-counter Forward rate agreements
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate swaps
Receive fixed rate/pay floating rate..................
¥
9,123
Receive floating rate/pay fixed rate..................		 10,426
Receive floating rate/pay floating rate...............		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
¥—

Contract amount due
after one year

Unrealized gains(losses)

Fair value

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

¥
9,123
		 10,426
		
—

¥
		
		

127
¥
(96) 		
— 		

127
(96)
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		
¥

—
—
—

		
		
¥

—
—
30

		
		
¥

—
—
30

Nanto Report 2021, the integrated report of Nanto Bank

67

Financial Data

Consolidated Financial Statements

Thousands of U.S. dollars

2021

Category

Transaction type
Contract amountInterest rate futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Over-the-counter Forward rate agreements
Sold.................................................................		
—transactions
Bought............................................................		
—Interest rate swaps
Receive fixed rate/pay floating rate..................
$ 229,834
Receive floating rate/pay fixed rate..................		253,671
Receive floating rate/pay floating rate...............		
—Interest rate options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
$—

Contract amount due
after one year

Unrealized gains(losses)

Fair value

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

$ 229,834
		250,727
		
—

$
		
		

2,321
$
(921) 		
— 		

2,321
(921)
—

		
		

—
—

		
		

—
—

		
		

—
—

		
		
$

—
—
—

		
		
$

—
—
1,391

		
		
$

—
—
1,391

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses), except as in Note 3, are recognized in the consolidated statements of income.
2. The fair values of exchange transactions are based on the closing prices on the Tokyo Financial Exchange Inc., etc.
		 The fair values of over-the-counter transactions are based on the discounted cash flow method, option pricing model, etc.
3.	As of March 31, 2021 and 2020, “Receive floating rate/pay fixed rate” of interest rate swaps included the contract amount of ¥2,638 million ($23,828 thousand) and ¥1,303 million, fair value of¥(87) million ($(786) thousand) and ¥(46) million and unrealized gains (losses) of ¥(87) million ($(785) thousand) and ¥(46) million, respectively, for which the application of hedge accounting wascancelled since the requirements for hedge accounting were not met. Unrealized gains (losses) on “Receive floating rate/pay fixed rate” of ¥(118) million ($(1,065) thousand) and ¥(71) million atMarch 31, 2021 and 2020, respectively, were deferred over the hedge period due to the cancellation.

(b) Currency related transactions
Millions of yen

2021

Category

Transaction type
Contract amountCurrency futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Currency options
Sold.................................................................		
—Bought............................................................		
—¥ 514,988
Over-the-counter Currency swaps..................................................
Forward foreign exchange contracts
transactions
Sold.................................................................		 19,079
Bought............................................................		 11,421
Currency options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
¥—

68

Nanto Report 2021, the integrated report of Nanto Bank

Contract amount due
after one year

		
		

—
—

Unrealized gains(losses)

Fair value

		
		

—
—

		
		

—
—

		
—
		
—
¥ 348,172

		
— 		
—
		
— 		
—
¥
(1,148)¥(1,148)

		
		

8,801
8,026

		
		

		
		

—
—

		
		

		
		
¥

—
—
—

		
— 		
—
		
— 		
—
¥
(1,419)¥(1,419)(418) 		147 		
—
—

		
		

(418)
147
—
—

Millions of yen

2020

Category

Transaction type
Contract amountCurrency futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Currency options
Sold.................................................................		
—Bought............................................................		
—¥ 444,048
Over-the-counter Currency swaps..................................................
Forward foreign exchange contracts
transactions
Sold.................................................................		 20,702
Bought............................................................		 24,994
Currency options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
¥—

Contract amount due
after one year				

Unrealized gains(losses)

Fair value

—
—

		
		

—
—

		
		

—
—

		
—
		
—
¥ 337,581

		
		
¥

—
—
263

		
		
¥

—
—
263

		
		

9,576
7,889

		
		

(472) 		588 		

(472)
588

		
		

—
—

		
		

—
—

		
		

—
—

		
		
¥

—
—
—

		
		
¥

—
—
379

		
		
¥

—
—
379

Thousands of U.S. dollars

2021

Category

Transaction type
Contract amountCurrency futures
Exchange
Sold.................................................................		
—transactions
Bought............................................................		
—Currency options
Sold.................................................................		
—Bought............................................................		
—$ 4,651,684
Over-the-counter Currency swaps..................................................
Forward foreign exchange contracts
transactions
Sold.................................................................		172,333
Bought............................................................		103,161
Currency options
Sold.................................................................		
—Bought............................................................		
—Other
Sold.................................................................		
——Bought............................................................		
Total .................................................................................................
$—

Contract amount due
after one year

		
		

—
—

Unrealized gains(losses)

Fair value

		
		

—
—

		
		

—
—

		
—
		
—
$ 3,144,901

		
— 		
—
		
— 		
—
$
(10,369)$(10,369)

		 79,495
		 72,495

		 (3,775) 		 (3,775)
		 1,327 		 1,327

		
		

—
—

		
		

		
		
$

—
—
—

		
— 		
—
		
— 		
—
$
(12,817)$(12,817)

—
—

		
		

—
—

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses) are recognized in the consolidated statements of income.
2. The fair values are based on the discounted present value, etc.

(c) Stock related transactions
None(d) Bond related transactions
None(e) Commodity related transactions
None(f) Credit derivative transactions
None

Nanto Report 2021, the integrated report of Nanto Bank

69

Financial Data

Consolidated Financial Statements(2) Derivative contracts to which hedge accounting is appliedWith respect to derivatives to which hedge accounting is applied, the contract amount or notional principal amount defined in the contract, fair value
and the method used to calculate fair value by transaction type and by hedge accounting method as of March 31, 2021 and 2020 were as follows. Notethat the contract amount does not represent the market risk exposure of the derivative transactions themselves.
(a) Interest rate related transactions
Millions of yen

2021

Hedge accounting method
Fundamental method

Exceptional accounting
method for interest rate
swaps
Total

Transaction typeInterest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate
Interest rate futures
Interest rate options
Other
Interest rate swaps
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Major hedged items
Interest bearing
assets and liabilities
such as loans
and deposits
and securities
denominated inforeign currencies

Contract amount		¥—
17,971

Contract amount due
after one year		¥—
17,971

Fair value

		
¥

—
2,902

		
		
		

—
—
—

		
		
		

—
—
—

		
		
		

—
—
—

		

—

		

—

		

—

		

—

		

—

		

¥

—

¥

—

¥

—

—

—
2,902

Millions of yen

2020

Hedge accounting method
Fundamental method

Exceptional accounting
method for interest rate
swaps
Total

Transaction typeInterest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate
Interest rate futures
Interest rate options
Other
Interest rate swaps
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Major hedged items
Interest bearing
assets and liabilities
such as loans anddeposits

Contract amount

		
¥

—
4,807

Contract amount due
after one year

		
¥

—
4,218

Fair value

		

—

¥

(172)

		
		
		

—
—
—

		
		
		

—
—
—

		
		
		

—
—
—

		

—

		

—

		

—

		

—

		

—

		

—

¥

—

¥

—

¥

(172)

—

—

Thousands of U.S. dollars

2021

Hedge accounting method
Fundamental method

Exceptional accounting
method for interest rate
swaps
Total

Transaction typeInterest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate
Interest rate futures
Interest rate options
Other
Interest rate swaps
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Major hedged items
Interest bearing
assets and liabilities
such as loans
and deposits
and securities
denominated inforeign currencies

Contract amount

		
$

—

162,324

Contract amount due
after one year

		
$

—

162,324

Fair value		$—26,212

		
		
		

—
—
—

		
		
		

—
—
—

		
		
		

—
—
—

		

—

		

—

		

—

		

—

		

—

		

$

—

$

—

$

—

—

—
26,212

Notes: 1.	Gain/loss on the above contracts is deferred until maturity of the hedged items under the fundamental method in accordance with the “Treatment for Accounting and Auditing of Application of
Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002).
2. The fair values of exchange transactions are based on the closing prices on the Tokyo Financial Exchange Inc., etc.
		 The fair values of over-the-counter transactions are based on the discounted cash flow method, option pricing model, etc.

70

Nanto Report 2021, the integrated report of Nanto Bank(b) Currency related transactions
None(c) Stock related transactions
None(d) Bond related transactions
None

26. PROJECTED BENEFIT OBLIGATIONS(1) Outline of employees’ retirement allowance
The Bank provides a non-contributory unfunded lump-sum retirement allowance plan, a funded defined benefit pension plan, and a funded defined
contribution pension plan for employees.
On April 1, 2018, the Bank transferred its defined benefit pension plans to risk sharing pension plans and defined contribution pension plansclassified as a defined contribution plan provided in Paragraph 4 of “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, December
16, 2016). In addition, a plan similar to a cash balance plan has been introduced to some of the employees subject to the risk sharing pension plans.
In addition to the amounts that are equivalent to standard contributions, the Bank makes contributions to risk sharing pension plans that arecommensurate with risks as prescribed in the plan terms. Benefits from the risk sharing pension plans increase or decrease each fiscal year based on
the assets of the pension plan.
Under the plan similar to a cash balance plan, a virtual individual account balance corresponding to the funded amounts and source of pension
funds will be set up for each participant, and after retirement, interest principally based on market interest rate trends will be credited to the balance.
Twelve consolidated subsidiaries have non-contributory unfunded lump-sum retirement allowance plans as defined benefit plans and apply thesimplified method in the calculation of their liability for retirement benefits and retirement benefit costs using the method in which the necessary amounts
to be paid for retirement benefits on a voluntary basis is regarded as the retirement benefit obligations.
Certain consolidated subsidiaries participate in the Smaller Enterprise Retirement Allowance Mutual Aid Scheme (the “SERAMA Scheme”).
(2) Defined benefit plans(a) Movement in projected benefit obligations
Thousands of
U.S. dollars

Millions of yen

2021

Balance at the beginning of the fiscal year................................................................. ¥Service cost........................................................................................................... 		
Interest cost........................................................................................................... 		
Actuarial (gain) loss................................................................................................ 		
Benefits paid.......................................................................................................... 		
Past service cost................................................................................................... 		
Increase due to new consolidation......................................................................... 		
Balance at the end of the fiscal year........................................................................... ¥2020

12,028
645
80
72
(754)
—
—
12,072

¥
		
		
		
		
		
		
¥

11,324
671
77
325
(603)
232
—
12,028

2021

$
		
		
		
		
		
		
$

108,644
5,826
722
650
(6,810)——109,041

Note: Plans based on the simplified method have been included in the above.

(b) Movements in plan assets
The previous consolidated fiscal year (from April 1, 2019 to March 31, 2020)
Not applicable.
The current consolidated fiscal year (from April 1, 2020 to March 31, 2021)
Not applicable.
(c) Reconciliation from projected benefit obligations and plan assets to liability (asset) for retirement benefits
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Funded projected benefit obligations......................................................................... ¥Plan assets................................................................................................................ 		
Funded assets under the SERAMA Scheme.............................................................. 		
		
Unfunded projected benefit obligations...................................................................... 		
Net liability for retirement benefits recorded on the consolidated balance sheet.......... ¥

415
—
(199)
216
11,656
11,872

¥
		
		
		
		
¥

380
—
(185)
195
11,647
11,842

$
		
		
		
		
$

3,748
—
(1,797)
1,951
105,284
107,235

Liability for retirement benefits.................................................................................... ¥Asset for retirement benefits...................................................................................... 		
Net liability for retirement benefits recorded on the consolidated balance sheet.......... ¥11,872—
11,872¥
		
¥

11,842—
11,842$
		
$107,235—
107,235

Note: Plans based on the simplified method have been included in the above.

Nanto Report 2021, the integrated report of Nanto Bank

71

Financial Data

Consolidated Financial Statements(d) Retirement benefit costs
Thousands of
U.S. dollars

Millions of yen

2021

Service cost............................................................................................................... ¥Interest cost............................................................................................................... 		
Expected return on plan assets.................................................................................. 		
Net actuarial loss amortization................................................................................... 		
Amortization of past service cost............................................................................... 		
Total retirement benefit costs..................................................................................... ¥

2020

645
80
—
230
—
956

¥
		
		
		
		
¥

2021

671
77
—
181
232
1,163

$
		
		
		
		
$

5,826
722
—
2,077
—
8,635

Note: Retirement benefit costs of consolidated subsidiaries which have applied the simplified method are included in “Service cost.”(e) Adjustments for retirement benefits
The components of adjustments for retirement benefits (before tax effect) were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Actuarial gain (loss)....................................................................................................
Total..........................................................................................................................

¥
¥

2020

158
158

¥
¥

2021

(143)
(143)

$
$

1,427
1,427

(f) Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Unrecognized actuarial gain (loss)..............................................................................
Total..........................................................................................................................

¥
¥

2020

(988)
(988)

¥
¥

(1,147)(1,147)2021$$(8,924)(8,924)(g) Matters concerning pension assets
The previous consolidated fiscal year (from April 1, 2019 to March 31, 2020)
Not applicable.
The current consolidated fiscal year (from April 1, 2020 to March 31, 2021)
Not applicable.
(h) Actuarial assumptions
The principal actuarial assumptions for the fiscal years ended March 31, 2021 and 2020 were as follows:
Discount rate.............................................................................................................................................
Long-term expected rate of return.............................................................................................................
Estimated rate of increase in salary............................................................................................................

2021

2020

0.70%
—%
2.50%

0.70%
—%
2.50%

(3) Defined contribution plans(a) Retirement benefit costs for defined contribution plans
The Bank’s required contributions to the defined contribution plans were ¥648 million in the previous consolidated fiscal year and ¥661 million ($5,970
thousand) in the current consolidated fiscal year.
(b) The amounts equivalent to contributions commensurate with risks
The contributions that are commensurate with risks required to be contributed from the next consolidated fiscal year onwards are ¥1,300 million($11,742 thousand), and the number of years remaining for contributions equivalent to the contributions that are commensurate with risks is eight anda half years.

72

Nanto Report 2021, the integrated report of Nanto Bank

27. STOCK OPTIONS(a) Items and amounts expensed related to stock options
Thousands of
U.S. dollars

Millions of yen

2021

General and administrative expenses.........................................................................

¥

2020

16

¥

2021

18

$

144

(b) Stock options outstanding at March 31, 2021
a. Outline of stock options
Beneficiaries qualifying for stock option rights are entitled to acquire shares of common stock upon the exercise of their rights. The following tablesummarizes the number of shares upon exercise of the stock option rights granted by the Bank outstanding at March 31, 2021:

Stock options

Persons granted

Number ofoptions granted(Note)

2010
Stock Options

15 directorsof the Bank

2011
Stock Options

Date of
grant

Exercise
price

ExerciseperiodVesting
conditions

Target ofservice period

Common stock
9,440 shares

July 29, 2010¥1($0.00)From July 30, 2010
to July 29, 2040

Not definedNot defined

14 directorsof the Bank

Common stock
10,940 shares

July 29, 2011¥1($0.00)From July 30, 2011
to July 29, 2041

Not definedNot defined2012
Stock Options

15 directorsof the Bank

Common stock
13,620 shares

July 27, 2012¥1($0.00)From July 28, 2012
to July 27, 2042

Not definedNot defined2013
Stock Options

15 directorsof the Bank

Common stock
11,950 shares

July 26, 2013¥1($0.00)From July 27, 2013
to July 26, 2043

Not definedNot defined2014
Stock Options

14 directors(excluding
outside directors)of the Bank

Common stock
9,970 shares

July 25, 2014¥1($0.00)From July 26, 2014
to July 25, 2044

Not definedNot defined2015
Stock Options

13 directors(excluding
outside directors)of the Bank

Common stock
8,400 shares

July 24, 2015

¥1($0.00)From July 25, 2015
to July 24, 2045

Not definedNot defined2016
Stock Options

7 directors(excluding
outside directors)of the Bank

Common stock
6,560 shares

July 29, 2016¥1($0.00)From July 30, 2016
to July 29, 2046

Not definedNot defined2017
Stock Options

7 directors(excluding
outside directors)of the Bank

Common stock
6,910 shares

July 28, 2017¥1($0.00)From July 29, 2017
to July 28, 2047

Not definedNot defined2018
Stock Options

7 directors(excluding
outside directors)of the Bank

Common stock
7,800 shares

July 27, 2018¥1($0.00)From July 28, 2018
to July 27, 2048

Not definedNot defined2019
Stock Options

6 directors(excluding
outside directors)of the Bank

Common stock
10,170 shares

July 26, 2019¥1($0.00)From July 27, 2019
to July 26, 2049

Not definedNot defined2020
Stock Options

6 directors(excluding
outside directors)of the Bank

Common stock
10,410 shares

July 22, 2020

¥1($0.00)From July 23, 2020
to July 22, 2050

Not definedNot definedNote: The number of stock options has been converted to the number of shares after the one-for-ten reverse stock split implemented on October 1, 2016.

Nanto Report 2021, the integrated report of Nanto Bank

73

Financial Data

Consolidated Financial Statementsb. Stock option activity:
1) Number of stock options
Number of shares

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

Nonvested
March 31, 2020 – Outstanding......
Granted....................................
Forfeited...................................
Vested......................................
March 31, 2021 – Outstanding......
VestedMarch 31, 2020 – Outstanding......
Vested......................................
Exercised.................................
Forfeited...................................
March 31, 2021 – Outstanding......

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

2,543
—
—
2,543
—

—
10,410
—
7,807
2,603

1,520
—
930
—
590

1,950
—
1,210
—
740

2,290
—
1,420
—
870

2,030
—
1,260
—
770

1,840
—
1,090
—
750

2,030
—
980
—
1,050

2,430
—
1,170
—
1,260

3,250
—
1,240
—
2,010

4,580
—
1,400
—
3,180

7,627
2,543
1,970
—
8,200

—
7,807
—
—
7,807

Note: The number of stock options has been converted to the number of shares after the one-for-ten reverse stock split implemented on October 1, 2016.

2) Price information
Yen

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

Exercise price............................
Average stock price at exercise date.....
Fair value price at grant date......

¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1 ¥
1
		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		 2,116 		—
		 4,410 		 3,860 		 3,030 		 3,720 		 4,010 		 3,970 		 3,660 		 2,861 		 2,663 		 1,787 		 1,485
U.S. dollars

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

Exercise price............................
Average stock price at exercise date.....
Fair value price at grant date......

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		 19.11 		—		 39.83 		 34.87 		 27.37 		 33.60 		 36.22 		 35.86 		 33.06 		 25.84 		 24.05 		 16.14 		 13.41

Note: “Average stock price at exercise date” and “Fair value price at grant date” have been calculated after the one-for-ten reverse stock split implemented on October 1, 2016.

(c) Assumptions used to measure the fair value of stock options
The assumptions used to measure the fair value of 2020 Stock Options granted in the fiscal year ended March 31, 2021 were as follows:
1) The Black-Scholes option pricing model was used as a measurement method.
2) Assumptions used for the Black-Scholes option pricing model:
1. Volatility of stock price: 29.46% calculated using the market price of the Bank’s stock from November 2011 to July 2020.
2.	Estimated remaining outstanding period: 8.7 years, which was the average remaining tenure of directors at the date of issue, determined by
the average time from appointment to retirement and from appointment to the date of issue.
3. Estimated dividend: ¥80 per share, which was calculated based on the actual amount of dividends for the fiscal year ended March 31, 2020.
4. Risk-free interest rate: (0.05) %, determined using the yield of national bonds equivalent to the estimated remaining outstanding period.
(d) Estimation method for the total number of vested stock option rights
The total number of stock option rights issued is deemed to reflect the actual number of stock option rights expired due to difficulties in estimating
reasonably the number of stock option rights that will expire in the future.

74

Nanto Report 2021, the integrated report of Nanto Bank

28. INCOME TAXESThe Group is subject to a number of taxes based on income, including corporation tax, inhabitants tax and enterprise tax, which, in the aggregate,
indicate a statutory tax rate in Japan of approximately 30.4 % for the fiscal years ended March 31, 2021 and 2020.
(1) Significant components of deferred tax assets and liabilities as of March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Deferred tax assets:
Excess reserve for possible loan losses.................................................................. ¥Liability for retirement benefits................................................................................ 		
Depreciation.......................................................................................................... 		
Write-down of land................................................................................................ 		
Loss on impairment of fixed assets........................................................................ 		
Valuation loss on securities.................................................................................... 		
Valuation difference on available-for-sale securities................................................. 		
Tax loss carryforwards........................................................................................... 		
Deferred agains or losses on hedges..................................................................... 		
Other..................................................................................................................... 		
Subtotal deferred tax assets:.................................................................................. 		
Valuation allowance pertaining to the tax loss carryforwards (Note 2)..................... 		
Valuation allowance pertaining to the total of the deductible temporary		difference, etc........................................................................................................
Subtotal valuation allowance...................................................................................... 		
Total deferred tax assets......................................................................................... 		
Deferred tax liabilities:.............................................................................................
Valuation difference on available-for-sale securities................................................. 		
Deferred gains or losses on hedges....................................................................... 		
Other..................................................................................................................... 		
Total deferred tax liabilities:.................................................................................... 		
Net deferred tax liabilities (Note 1)......................................................................... ¥

2020

2021

7,252
3,619
737
872
1,430
2,757
—
428
—
2,371
19,471
(425)

¥
		
		
		
		
		
		
		
		
		
		
		

7,020
3,609
812
872
1,644
2,792
857
296
71
2,577
20,554
(293)

$
		
		
		
		
		
		
		
		
		
		
		

65,50432,6896,657
7,876
12,916
24,902—
3,865—
21,416
175,873(3,838)(7,245)

		(7,595)

		

(65,441)(7,671)
11,800				

(7,889)12,664				

(69,289)
106,584(10,209)(877)(63)(11,151)
649

		
		
		
		
¥

—
—
(68)
(68)
12,596

		
		
		
		
$

(92,213)(7,921)(569)(100,722)
5,862

Note 1: Net deferred tax assets (liabilities) as of March 31, 2021 and 2020 are included in the following accounts in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen

2021

Deferred tax assets.................................................................................................... ¥Deferred tax liabilities................................................................................................. 		

1,103
454

2020

¥
		

2021

12,611
15

$
		

9,962
4,100

Note 2: Amount of tax loss carryforwards and their deferred tax assets by the carryforward periods

Current consolidated fiscal year (March 31, 2021)
Millions of yen

One year or lessTax loss carryforwards (*)¥
Valuation allowance		Deferred tax assets		After one year
After two years
After three years
through two years through three years through four years

—
¥
— 		
— 		

—
—
—

¥
		
		

—
—
—

¥
		
		

—
—
—

After four years
through five years

¥
		
		

—
—
—

After five years

¥
		
		

428
¥
(425) 		
3 		

Total

428
(425)
3

(*) The tax loss carryforwards are the amounts multiplied by the statutory effective tax rate.

Previous consolidated fiscal year (March 31, 2020)
Millions of yen

One year or lessTax loss carryforwards (*)¥
Valuation allowance		Deferred tax assets		After one year
After two years
After three years
through two years through three years through four years

—
¥
— 		
— 		

—
—
—

¥
		
		

—
—
—

¥
		
		

2
—
2

After four years
through five years

¥
		
		

—
—
—

After five years

¥
		
		

293
¥
(293) 		
— 		

Total

296
(293)
2

(*) The tax loss carryforwards are the amounts multiplied by the statutory effective tax rate.

Current consolidated fiscal year (March 31, 2021)
Thousands of U.S. dollars

One year or lessTax loss carryforwards (*)$
Valuation allowance		Deferred tax assets		After one year
After two years
After three years
through two years through three years through four years

—
$
— 		
— 		

—
—
—

$
		
		

—
—
—

$
		
		

—
—
—

After four years
through five years

$
		
		

—
—
—

After five years

$
		
		

3,865
$
(3,838) 		
27 		

Total

3,865
(3,838)27(*) The tax loss carryforwards are the amounts multiplied by the statutory effective tax rate.

Nanto Report 2021, the integrated report of Nanto Bank

75

Financial Data

Consolidated Financial Statements(2) The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial statement purposes
for the fiscal years ended March 31, 2021 and 2020:
2021

2020

30.4%
(1.4)%
0.1%(0.7)%
0.4%
0.3%
29.2%

30.4%
14.4%
0.8%
(2.4)%
1.3%
1.2%
45.8%

Statutory tax rate.......................................................................................................................................
Valuation allowance................................................................................................................................
Non-deductible expenses......................................................................................................................
Non-taxable income...............................................................................................................................
Inhabitants tax on per capita basis, etc..................................................................................................
Other.....................................................................................................................................................
Effective tax rate........................................................................................................................................

29. SEGMENT AND RELATED INFORMATION(1) Overview of the reportable segments
The Bank’s reportable segments are determined on the basis that separate financial information for such segments is available and examined
periodically by the Board of Directors to make decisions regarding the allocation of management resources and assess the business performance ofthe segments within the Group. The Group’s main operations are banking services. The Bank also provides leasing services and operates securities
services, credit card services, and consulting services. The Group has divided its business operations into the two reportable segments of “Banking”
and “Leasing.”(2) Basis of measurement for reported segment profit (loss), segment assets, segment liabilities and other material items
The accounting methods used for reportable business segments are presented in accordance with Note 2, “SUMMARY OF SIGNIFICANTACCOUNTING POLICIES.” The reportable segment profit figures are based on operating profit. Income arising from intersegment transactions isbased on arm’s length prices.
(3) Information about reportable segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the fiscal years ended March 31, 2021 and 2020 is summarized as follows:
Millions of yen

2021
Reportable segments
Banking

Ordinary income:Outside customers.......................................... ¥ 69,680 ¥Intersegment income....................................... 		
1,127 		Total............................................................. 		 70,808 		
Segment profit..................................................... 		 14,967 		
Segment assets................................................... 		6,542,567 		
Segment liabilities................................................ 		6,260,077 		
Others:Depreciation.................................................... 		
3,383 		Interest income................................................ 		 48,645 		Interest expense.............................................. 		
1,264 		Extraordinary gain............................................ 		
92 		
Extraordinary loss............................................ 		
444 		Tax expense.................................................... 		
3,984 		1,778 		Increase in tangible and intangible fixed assets....... 		

Leasing

Total

8,458 ¥ 78,138 ¥
788 		
1,915 		9,246 		 80,054 		
382 		 15,350 		
38,249 		6,580,816 		
33,573 		6,293,651 		
98 		
5 		
84 		
— 		
0 		
121 		
51 		3,481 		48,650 		
1,348 		92 		444 		
4,105 		1,830 		

Other

Total

Adjustment

Consolidated

2,960 ¥ 81,099 ¥98 ¥ 81,198
2,664 		4,580 		 (4,580) 		
—5,625 		 85,680 		 (4,481) 		 81,198
1,294 		 16,644 		(928) 		 15,715
31,767 		6,612,583 		 (52,351) 		6,560,231
13,357 		6,307,008 		 (40,224) 		6,266,784
113 		
547 		
7 		
0 		
4 		
355 		
66 		3,595 		49,198 		
1,355 		93 		449 		
4,461 		1,896 		

(20) 		
(1,077) 		
(96) 		
(28) 		
— 		27 		(44) 		

3,57448,121
1,258
64
449
4,488
1,852

Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operating companies of otherindustry groups.
2.	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, software development, credit
cards and securities.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥98 million is mainly the recovery of written-off claims included in “Others.”		 (2) Adjustment of segment profit of negative ¥928 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥52,351 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥40,224 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of negative ¥20 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥1,077 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥96 million is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of negative ¥28 million is the elimination of intersegment transactions.
		 (9) Adjustment of tax expense of ¥27 million is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of negative ¥44 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss included in “Other
expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before income taxes” through the addition/
deduction of extraordinary gain/loss, net.

76

Nanto Report 2021, the integrated report of Nanto Bank

Millions of yen

2020
Reportable segments
Banking

Leasing

Ordinary income:Outside customers.......................................... ¥ 70,972 ¥Intersegment income....................................... 		
1,103 		Total............................................................. 		 72,075 		
Segment profit..................................................... 		
7,446 		Segment assets................................................... 		5,653,885 		
Segment liabilities................................................ 		5,409,452 		
Others:Depreciation.................................................... 		
3,485 		Interest income................................................ 		 44,681 		Interest expense.............................................. 		
3,129 		Extraordinary gain............................................ 		
21 		
Extraordinary loss............................................ 		
1,862 		Tax expense.................................................... 		
2,282 		4,121 		Increase in tangible and intangible fixed assets....... 		

Total

Other

7,266 ¥ 78,238 ¥873 		
1,976 		8,139 		 80,215 		
220 		
7,666 		37,711 		5,691,597 		
33,246 		5,442,698 		
122 		
5 		
85 		
— 		
0 		
69 		
57 		

3,608 		44,687 		
3,214 		21 		1,862 		2,351 		4,179 		TotalAdjustment

Consolidated

2,757 ¥ 80,996 ¥70 ¥ 81,066
2,112 		4,089 		(4,089) 		
—4,869 		 85,085 		
(4,018) 		 81,066
661 		
8,328 		(494) 		7,83329,906 		5,721,504 		 (50,574) 		5,670,929
11,509 		5,454,208 		 (38,333) 		5,415,875
134 		
39 		
7 		
— 		
121 		
341 		
67 		3,742 		44,727 		
3,222 		21 		1,983 		2,692 		4,246 		46 		(568) 		(107) 		— 		(0) 		
(0) 		
(80) 		

3,78844,158
3,114
21
1,982
2,692
4,166

Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operating companies of otherindustry groups.
2.	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, software development, credit
cards and securities.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥70 million is mainly the recovery of written-off claims included in “Others.”		 (2) Adjustment of segment profit of negative ¥494 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥50,574 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥38,333 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of ¥46 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥568 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥107 million is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary loss of negative ¥0 million is the elimination of intersegment transactions.
		 (9) Adjustment of tax expense of negative ¥0 million is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of negative ¥80 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss included in “Other
expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before income taxes” through the addition/
deduction of extraordinary gain/loss, net.
Thousands of U.S. dollars

2021
Reportable segments
Banking

Leasing

Total

Other

Total

Adjustment

Consolidated

Ordinary income:Outside customers.......................................... $ 629,392 $ 76,397 $ 705,789 $ 26,736 $ 732,535 $885 $ 733,429
Intersegment income....................................... 		 10,179 		
7,117 		 17,297 		 24,062 		 41,369 		 (41,369) 		
—Total............................................................. 		 639,580 		 83,515 		 723,096 		 50,808 		 773,913 		 (40,475) 		 733,429
Segment profit..................................................... 		 135,191 		
3,450 		 138,650 		 11,688 		 150,338 		 (8,382) 		 141,947
Segment assets................................................... 59,096,441 		 345,488 		59,441,929 		 286,938 59,728,868 		 (472,866) 		59,255,993
Segment liabilities................................................ 56,544,819 		 303,251 		56,848,080 		 120,648 56,968,729 		 (363,327) 56,605,401
Others:Depreciation.................................................... 		 30,557 		
885 		 31,442 		
1,020 		 32,472 		(180) 		 32,282
Interest income................................................ 		 439,391 		
45 		 439,436 		
4,940 		 444,386 		 (9,728) 		 434,658
Interest expense.............................................. 		 11,417 		
758 		 12,175 		
63 		 12,239 		(867) 		 11,363
Extraordinary gain............................................ 		
830 		
— 		
830 		
0 		
840 		
(252) 		578Extraordinary loss............................................ 		
4,010 		0 		4,010 		36 		4,055 		— 		4,055Tax expense.................................................... 		 35,985 		
1,092 		 37,078 		
3,206 		 40,294 		
243 		 40,538
Increase in tangible
		 16,059 		
460 		 16,529 		
596 		 17,125 		(397) 		 16,728
and intangible fixed assets...............................
Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operating companies of otherindustry groups.
2.	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, software development, credit
cards and securities.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of $885 thousand is mainly the recovery of written-off claims included in “Others.”		 (2) Adjustment of segment profit of negative $8,382 thousand is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative $472,866 thousand is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative $363,327 thousand million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of negative $180 thousand is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative $9,728 thousand is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative $867 thousand is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of negative $252 thousand is the elimination of intersegment transactions.
		 (9) Adjustment of tax expense of $243 thousand is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of negative $397 thousand is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss included in “Other
expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before income taxes” through the addition/
deduction of extraordinary gain/loss, net.

Nanto Report 2021, the integrated report of Nanto Bank

77

Financial Data

Consolidated Financial Statements(4) Information about services
Millions of yen

2021
Securities andinvestments

Lending

Ordinary income from outside customers................

¥

32,018¥

Leasing

23,964

¥

Other

8,458

¥

Total

16,757¥

81,198Millions of yen

2020
Securities andinvestments

Lending

Ordinary income from outside customers................

¥

30,242¥

Leasing

28,405

¥

Other

7,266

¥

Total

15,152¥

81,066

Thousands of U.S. dollars

2021
Securities andinvestments

Lending

Ordinary income from outside customers................

$

289,206$

Leasing

216,457$

Other

76,397$

Total

151,359$

733,429

Note: Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.

(5) Information about geographic areasa. Ordinary income
The ratio of ordinary income from outside customers within Japan to the total ordinary income in the consolidated statements of income exceeded
90% for both fiscal years ended March 31, 2021 and 2020; therefore, no information about geographic areas is required to be disclosed.
b. Tangible fixed assets
The ratio of tangible fixed assets located in Japan to the total tangible fixed assets in the consolidated balance sheets exceeded 90% for both fiscal
years ended March 31, 2021 and 2020; therefore, no information about geographic areas is required to be disclosed.
(6) Information about major customers
There was no ordinary income from a specific customer exceeding 10% of the total consolidated ordinary income for either the fiscal year ended
March 31, 2021 or 2020. Therefore, information about major customers is not required to be disclosed.
(7) Information on impairment loss on fixed assets for each reportable segment
Millions of yen

2021
Reportable segments
Banking

Impairment loss............................................................

¥

385

Leasing

¥

Other

—

¥

Total

4

¥

92

¥

36

$

389

Millions of yen

2020
Reportable segments
Banking

Impairment loss............................................................

¥

1,730

Leasing

¥

Other

—

¥

Total

1,822

Note: “Other” comprises financial product transactions.
Thousands of U.S. dollars

2021
Reportable segments
Banking

Impairment loss............................................................

$

3,477

Leasing

$

Other

—

Note: “Other” comprises financial product transactions.

(8) Information on amortization of goodwill and its remaining balance for each reportable segment
There is no information to be reported on amortization of goodwill and its remaining balance.
(9) Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill for each reportable segment.

78

Nanto Report 2021, the integrated report of Nanto Bank

$

Total

3,513

30. RELATED PARTY TRANSACTIONS
For the fiscal year ended March 31, 2021, related party transactions were as follows:
Relationshipwith the Bank
Relatives ofofficers of the
Bank

Name

Masato Ibi

Location

VotingPaid-inOccuparights
capitaltion/
ownership(millions
Business(%)
of yen)Relationship ofrelated parties

Details oftransactions——

Officeworker—Son-in-law ofSatoru Wada
(Executive Officer)
Loans

Lending of money*2
Interest receivable

—
0

—
0

Loans
—

24
—

216
—

32

Forestry

Direct1.28

Loans

Lending of money
Interest receivable

200
2

1,806
18

Loans
—

200
—

1,806
—

10

Metal
processing

—

Loans

Lending of money
Interest receivable

60
0

541
0

Loans
—

90
—

812
—

10

Sales ofchemicals

—

Loans

Lending of money
Interest receivable

77
0

695
0

Loans
—

80
—

722
—

Kitamura
Osaka City
Forestry Co.,
A company in
Osakawhich a majority Ltd.*3
of voting rights NIKKEN
Daito City
are held by
BLAST CO.,Osaka
relatives ofLTD. *4
officers of the
Kyowa Shokai
Kizugawa
Bank
Yakuhin K.K.
City, Kyoto*5

Transaction Transaction
Year-end
Year-end
amountamountAccounting balancebalance(millions of (thousands of
title(millions of (thousands ofyen)
U.S. dollars)
yen)
U.S. dollars)

Policies regarding and terms and conditions of the transactions
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as collateral for loan transactions.
3. Matazaemon Kitamura (Director of the Bank) and his relatives owned 6% and 94% of the voting rights, respectively, of this company directly.
4. Relatives of Naoki Minowa (Corporate Auditor of the Bank) owned 62.5% of the voting rights of this company directly.
5. Relatives of Hisayoshi Tahara (Executive Officer of the Bank) owned 62.5% of the voting rights of this company directly.
6. Mr. Yasuo Ueno resigned as a Director of the Bank on June 26, 2020, and the loan balance to Mr. Kohei Ueno, his second son, was ¥20 million ($180 thousand) as of that date.
7. Mr. Masashi Hashimoto resigned as an Executive Officer of the Bank on March 31, 2021, and the loan balance to Mr. Kazuyuki Hashimoto, his younger brother, was ¥11 million ($99 thousand)as of that date.

For the fiscal year ended March 31, 2020, related party transactions were as follows:
Relationshipwith the Bank

Relatives ofofficers of the
Bank

Name

Location

VotingPaid-inOccuparights
capitaltion/
ownership(millions
Business(%)
of yen)Kohei Ueno——

Officeworker—Masato Ibi——

Officeworker—KazuyukiHashimoto——Publicofficer—

32

Forestry

Direct
1.28

10

Metal
processing—

A company inKitamura
Osaka City
which a majority Forestry Co.,Osaka
of voting rights Ltd.*3
are held by
NIKKEN
relatives of
Daito City
BLAST CO.,
officers of the
Osaka
LTD. *4
Bank

Relationship ofrelated parties
Second son of
Yasuo Ueno
(Director &Chairmanof the Bank)
Loans
Son-in-law ofSatoru Wada
(Executive Officer)
Loans
Younger brother ofMasashi Hashimoto(Executive Officer)
Loans

Transaction
Year-end
amount Accounting balance(millions of
title(millions of
yen)
yen)

Details oftransactions

Lending of money*2
Interest receivable

—
0

Loans
—

21
—

Lending of money*2
Interest receivable

—
0

Loans
—

25
—

Lending of money*2
Interest receivable

—
0

Loans
—

12
—

Loans

Lending of money
Interest receivable

200
2

Loans
—

200
—

Loans

Lending of money
Interest receivable

—
0

Loans
—

46
—

Policies regarding and terms and conditions of the transactions
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as collateral for loan transactions.
3. Matazaemon Kitamura (Director of the Bank) and his relatives owned 6% and 94% of the voting rights, respectively, of this company directly.
4. Relatives of Naoki Minowa (Corporate Auditor of the Bank) owned 62.5% of the voting rights of this company directly.
5.	Mr. Masaaki Hashimoto resigned as a Corporate Auditor of the Bank on June 27, 2019. The loan balance to Mr. Atsuto Hashomoto, his eldest son, was ¥17 million as of that day.

31. PER SHARE INFORMATION
Net assets per share at March 31, 2021 and 2020 and net income per share for the fiscal years then ended were as follows:
Yen

2021

Net assets per share.................................................................................................. ¥Net income per share – basic.................................................................................... 		
Net income per share – diluted.................................................................................. 		

8,994.43
332.41
332.12

U.S. dollars

2020

¥
		
		

7,819.42
97.52
97.43

2021

$
		
		

812.4
3.00
2.99

Nanto Report 2021, the integrated report of Nanto Bank

79

Financial Data

Consolidated Financial Statements

Basic information in computing the above per share data was as follows:
Thousands of
U.S. dollars

Millions of yen

2021(Net assets per share)
Net assets................................................................................................................. ¥Amounts to be deducted from net assets:................................................................. 		
Stock acquisition rights.......................................................................................... 		
Net assets attributed to common stock..................................................................... 		
Outstanding number of shares of common stock at end of year		(unit: thousands of shares).......................................................................................
(Basic and diluted net income per share)
Net income attributable to owners of parent.............................................................. ¥Net income attributable to common stockholders of parent....................................... 		
Average outstanding number of shares during the year (unit: thousands of shares).... 		
Adjustment to net income attributable to owners of parent........................................ 		
Increase in number of shares of common stock: (unit: thousands of shares).............. 		
Stock acquisition rights (unit: thousands of shares)................................................ 		
Convertible securities not diluting net income per share............................................. 		

2020

2021

293,447
63(63)
293,384

¥
		
		
		

255,053
88(88)
254,965$ 2,650,591
		
569
		
(569)
		 2,650,022

32,618

		

32,606

		

294,625

10,841
10,841
32,615
—
28
(28)
—

¥
		
		
		
		
		
		

3,179
3,179
32,605
—
29
(29)
—

$
		
		
		
		
		
		

97,922
97,922
294,598
—
252
(252)
—

32. SUBSEQUENT EVENTS(Introduction of performance-based stock compensation plan)
At the Board of Director’s meeting held on May 14, 2021, the Bank resolved to submit the “Abolition of the system of stock options granted as stockbased compensation” and the “Introduction of a performance-based stock compensation plan,” a compensation plan for the directors of the Bank
(excluding outside directors and directors not residents of Japan), as proposals to the 133rd Annual stockholders’ meeting to be held on June 29,
2021. These proposals were approved and passed at that Annual stockholders’ meeting.

33. BORROWED MONEY AND LEASE OBLIGATIONS
a. The details of borrowed money as of March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Borrowed money
Due from April 2020 through Nov. 2026
Average interest rate: 0.42% p.a............................................................................

¥

626,700

2020

¥

2021

135,538$

5,660,735

Annual maturities of borrowed money as of March 31, 2021 were as follows:
Thousands of
U.S. dollars

Millions of yen

2022.......................................................................................................................................................... ¥2023.......................................................................................................................................................... 		
2024.......................................................................................................................................................... 		
2025.......................................................................................................................................................... 		
2026.......................................................................................................................................................... 		
2027 and thereafter................................................................................................................................... 		
Total.......................................................................................................................................................... ¥415,634
21,732
1,129
185,684281
2,240
626,700$ 3,754,258
		
196,296		
10,197
		 1,677,210
		
2,538
		
20,233$ 5,660,735

b. Lease obligations
Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheets.
Annual maturities of lease obligation as of March 31, 2021 were as follows:
Thousands of
U.S. dollars

Millions of yen

2022.......................................................................................................................................................... ¥2023 and thereafter................................................................................................................................... 		
Total.......................................................................................................................................................... ¥

0
—
0

$
		
$

0
—
0

Average interest rates are omitted since the interest equivalent amount included in total lease charges is allocated over the related period using thestraightline method.
c. Other
The Group has not issued commercial paper by way of promissory notes to fund for operating activities.

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Independent Auditors’ Report

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81

Financial Data

Independent Auditors’ Report

82

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83

Financial Data

Independent Auditors’ Report

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Financial Data

Capital Management• Consolidated Capital Adequacy Ratio
As of March 31, 2021 and 2020
Millions of yen

2021

2020

(1) Capital adequacy ratio ((2)/(3))..................................................................................................................		
9.47%(2) Capital..................................................................................................................................................... ¥264,565(3) Risk-weighted assets...............................................................................................................................		 2,793,490(4) Requisite capital.......................................................................................................................................		
111,739		
9.39%¥
254,319
		 2,706,983
		108,279

Note: The capital adequacy ratio was calculated on the basis of the formula provided by the Ministry of Finance under Provision 14, Clause 2 of the Banking Law.

• Nonconsolidated Capital Adequacy Ratio
As of March 31, 2021 and 2020
Millions of yen

2021(1) Capital adequacy ratio ((2)/(3))..................................................................................................................		
9.15%(2) Capital..................................................................................................................................................... ¥253,354(3) Risk-weighted assets...............................................................................................................................		 2,768,260(4) Requisite capital.......................................................................................................................................		
110,730
Note: The capital adequacy ratio was calculated on the basis of the formula provided by the Ministry of Finance under Provision 14, Clause 2 of the Banking Law.

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2020

		
9.06%
¥
243,278
		 2,682,686
		
107,307

Nanto Report 2021, the integrated report of Nanto Bank87

B-(3)-080031

This publication uses Yoshino 3.9 paper, which supports the use of thinned trees in the Yoshino region of Nara Prefecture,contributing to increased CO2 absorption by the forests in the region.
Nanto Bank is a supporter of the “Kizukai Movement” organized to promote use of wood from Japan’s domestic forests.
Issued: October 2021
Nanto Bank, Ltd. Corporate Planning Department
16, Hashimoto-cho, Nara City, Nara Prefecture 630-8677, Japan
Tel.: +81-742-27-1599