Nanto Report
Integrated Report
Fiscal year ended March 2023

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

Management Vision“Vitality Creation Bank”

Our mission as a regional financial institution is
to contribute to the growth and development of
our region and customers. Maximizing all ourmanagement and staff capabilities, and creating
new value unique to the Nanto Bank Group, we arereinforcing our position as the banking group of
choice for customers throughout our region.
Editorial policy
Compiled in pursuit of further understanding among stakeholders of the Nanto Bank
Group’s strategies for creating sustainable value in the medium-to-long term, thisIntegrated Report was edited in compliance with the IFRS Foundation’s “International
Integrated Reporting Framework.”
The specific purpose of its creation is to illuminate the path to achievement of ourManagement Plan, “Nanto Mission and Objectives for the Next 10 Years.”
For detailed financial information, please refer to the separately published “Disclosure
Supplement.”

Scope of coverage
The Report presents key information concerning the Nanto Bank Group’s
management strategies, business model, business conditions, valued stakeholders,primary risks and opportunities, performance and outlook, and governance.

Covered period
April 1, 2022 ~ March 31, 2023

Date issued
July 2023

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

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Basis for creationand presentation

CONTENTS
About Nanto Bank

Stakeholder Voice

President’s Message
Progress under the Management PlanS

E

The Group’s Materialities
Value Creation Process

12
14
16

G

Cultivating “Unconventional” Human Resources
Roundtable Discussion with the Outside Directors

44
47

Furthering Sophisticated Market Management

Corporate Governance18
22

Value Creation by the Group’s Human Resources reparing for Increasingly Varied andP
Complex Risks
Reinforcing Risk Management

 ultivating a Healthy Corporate Culture withC
Participation of Diverse Human Resources

48
54
56
60

Corporate Governance
Executive Officers

Stakeholder Engagement
Overview of the Nanto Bank Group ealizing Sustainable Growth of Our
R
Regional Economy
Enhancement of Customers’ Corporate Value
Stakeholder Voice

Enhancement of Customers’ Corporate Value
Regional Business Creation

40

Governance Supporting Our Proactive Human Resources

Developing Human Resources for Value Creation

Support for Customers’ Asset Formation38

 esponses to the Effects of Accelerating
R
Climate Change
Initiatives Addressing Climate Change Issues

Nara Prefecture’s Potential and Issues to Be Addressed

S

Realizing a Convenient, Prosperous Society
Ensuring Greater Convenience

Our Shared Vision

S34

Regional Business Creation

2
4
10

Information Highlights

26

Consolidated Financial Statements

28
30
32

Consolidated Financial Statements
Independent Auditors’ Report
Capital Management

62
101
107

Compiling the Nanto Report
Icons representing the eight categories of content advocated by the IFRS Foundation’s “International Integrated Reporting Framework”
have been employed to further clarify understanding of the Nanto Bank Group’s corporate culture.
Organizational overview and external environment

Risks and opportunities

Outlook

Governance

Strategies and resources allocation

Basis for creation and presentation

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

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

Business model

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

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

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

What are the challenges and uncertainties for executing
strategies, and how might they impact the Bank’sbusiness model and future performance?

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

Performance

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

Nanto Bank Profile (as of March 31, 2023)
Established:
Headquarters:
Capitalization:

June 1, 1934
16 Hashimoto-cho, Nara, Japan
¥37,924.15 million

Nanto Bank Co., Ltd. was established on June 1, 1934 through amerger of Sixty-eight Bank Co., Ltd., Yoshino Bank Co., Ltd., Yagi
Bank Co., Ltd. and Gose Bank Co., Ltd.
Today, the Bank and its Group offer comprehensive financial
services, including leasing, trusts, securities and consulting, inaddition to the banking business (deposits, loans, exchange, etc.),with Nara prefecture and the surrounding region as its primarybase of operations.

Nanto Report 2023, the integrated report of Nanto Bank

1

About Nanto Bank

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

4.7 billion yen 4.7 billion yen

Non-consolidated(Billion yen)

Profit / loss on transactions (Consolidated) (Non-consolidated)
5.8 billion yen 4.3 billion yen
with customers
Consolidated

Non-consolidated

11.8 11.8

10.8 10.6(Billion yen)

5.8

4.3
1.8
0.6

0.3

4.7 4.7

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-0.9
FY2021

FY2022

FY2023

FY2021

FY2022

FY2023

Consolidated net income declined by 7.1 billion yen from the previous year to 4.7 billion
yen due to decreases in net interest income and profit/losses on bond transactions.

Consolidated net business profit earned through transactions with customers grew by 4.0
billion yen from the previous year to 5.8 billion yen, boosted by increases in commissions
and interest on loans and fees accompanied by a decrease in operating expenses.

Capital adequacy ratio

ROE

Consolidated(Consolidated)(Non-consolidated)

9.25 % 8.95 %Non-consolidated(%)(Consolidated)

Consolidated

9.60

9.47

9.25
9.29

9.15

(Non-consolidated)

1.72 % 1.79 %Non-consolidated

4.03

4.25

3.95

4.09

(%)

1.79

8.95
		
Net income
ROE=
×100
[Starting net assets (excluding stock acquisition rights) +Ending net assets (excluding stock acquisition rights)] ÷ 2

FY2021

FY2022ROA

FY2023(Consolidated)

Consolidated

FY2021(Non-consolidated)

0.21 % 0.20 %Non-consolidated

0.27

(%)

FY2022OHR

FY2023(Consolidated)

Consolidated

0.25

0.25

72.5% 72.5 %(%)

FY2022

72.5

68.1

71.4

67.8

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

FY2021

72.5

71.7

0.20

(Non-consolidated)

Non-consolidated

0.27
0.21

1.72

FY2023

OHR=

Expenditures
×100
Gross profit from core business

FY2021

FY2022

FY2023The consolidated and non-consolidated capital adequacy ratios fell to 9.25% and 8.95%, respectively, from the end of the previous fiscal year, due mainly to lower profits from the disposal of
losses in the market sector. ROE also turned downward from the previous year.
ROA and OHR both declined year-on-year in the wake of a downturn in core business profit. We are working to improve both these indicators in FY2023, building on the continued strength of
our core business division earnings and the promise of improved earnings in the market sector.

Loan balance
SMEs

Housing loans

3,808.1(Non-consolidated)

3,966.6 billion yen
Municipal governments

Others (Billion yen)

3,966.6

3,892.5

723.0

754.8

796.1

629.1

602.7

569.5

1,042.4

1,088.3

1,127.0

1,446.5

1,473.8

1,413.5
Year ended
March 2021

Year ended
March 2022

Year ended
March 2023

The balance of loans, comprising primarily loans to small and medium-sizedenterprises and housing loans, increased by 74.1 billion yen from the end of the same
period of the previous year to 3,966.6 billion yen.

2 Nanto Report 2023, the integrated report of Nanto Bank

Balance of deposits
Individuals

Corporations

5,452.6(Non-consolidated)

5,727.6 billion yen
Municipal government funds, etc.

5,659.5

231.1
1,093.0

306.5
1,102.0

4,128.4

4,250.8

Year ended
March 2021

Year ended
March 2022

(Billion yen)

5,727.6

297.4
1,102.7

4,327.4

Year ended
March 2023

Deposits, mainly retail deposits, totaled 5,727.6 billion yen, with an increase of 68.1
billion yen from the same period of the previous year.

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

Governance

PerformanceNon-financial Highlights (non-consolidated)
Environment

Rate of CO2 emissions
reduction(FY2013

CO2 reduction throughrenewable energy-related loans

FY2022)-49.0%(Emissions for scopes 1 and 2)(Decrease of 13 points
from the previous year)(FY2022)

Approx.

19,000tons CO2(Number of loan transactions/amount: 7 loans/6.1 billion yen)Society(End March 2023)

Percentage offemale executives(Section manager and above)

Number of certified personnel
participating in vitality creation*

601

14.8

%

Percentage of employees 26.4%(Increase of 0.5 point fromthe previous year)(Increase of 42 from the previous year)(Increase of 5.0 points)*Applied information engineer, SME management consultant,real estate consultant, FP level 1, bookkeeping level 2, andequivalent or higher qualifications

Governance

Number/ratio of outside
directors (End June 2023)

Cross-shareholdings
March 31, 2015

March 31, 2023

Percentage in net assets (market value)

In-house

Chairman

FemaleOutside5 (41.6 )%38.3 28.6%%

Book value

51.5 billion yen

33.3 billion yen

Number of issuers

129

88

Nanto Report 2023, the integrated report of Nanto Bank

3

About Nanto Bank

President’s Message

The Nanto Bank Group’s“unconventional” humanresources provide
support for issues facedby customers and theregion.

President (Representative Director)

Takashi Hashimoto

4 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

GovernanceBusinessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

OutlookIntroduction
The Japanese economy is currently showing signs of recovery, as economic
activity returns to normal following the downgrading of the new coronavirus
strands to category 5. Consumer spending is recovering steadily, boosted
by rising wages and a positive appetite for investment, including capital
investment in the corporate sector.
Downside risks to the economy are increasing at the same time, however,
due to proliferating geopolitical risks and rising prices of resources and raw
materials. In the financial markets, the environment surrounding financial
institutions remains uncertain due to financial system instability and prolonged
monetary tightening in the United States and Europe.
In Nara prefecture, which forms the primary business base of the
Nanto Bank Group, consumer spending and corporate activity are gradually
recovering, and demand for tourism, driven largely by foreign visitors toJapan, is picking up. On the other hand, structural social issues, such as
contraction of the regional economy due to a declining birthrate and aging
population and a shortage of successors to take over private companies,
are increasing in severity. As a regional financial institution, we consider it
our role and responsibility to continue contributing to regional development
by confronting these issues head-on. We are working together with ourcustomers and local communities to resolve them, attaining sustainablegrowth of the Group as a result.

Nanto Report 2023, the integrated report of Nanto Bank

5

About Nanto Bank

President’s Message

Progress of the Management Plan
Since April 2020, the Group has been working to implement the Nanto Mission: “Pursuit of regional
development, fostering of vitality-creating human resources, and enhancement of profitability,” in accordancewith our Management Plan, “Nanto Mission and the Group’s Goals for Achievement in 10 Years.”
In FY2021, we achieved the preliminary interim target stated in our Management Plan for nonconsolidated profit from transactions with customers by FY2024, three years ahead of schedule. We
then moved in December 2021 to establish a new interim target of 3 billion yen in non-consolidated
profit from transactions with customers aimed at achieving a higher level of profitability as a Group.
In the fiscal year ended March 31, 2023, consolidated
net profit from transactions with customers exceeded therevised interim target due to increased interest on loans andfees, profits on service transactions, and reduced expenses,
results underpinning a steady increase in net businessprofit. We credit the stable profitability of our customertransactions for facilitating construction of a “muscular”
management structure capable of supporting strategic
investment in IT fields such as smartphone banking from a
medium- to long-term perspective.
At the same time, however, our net income decreased
due to lower earnings in the market sector. This reflected
the sale of instruments such as fixed-rate foreign bonds, allof which saw their earnings reversed due to rising interest
rates in Europe and the United States. Going forward, we will stabilize our market sector earnings by
restructuring our portfolio to emphasize yen bonds.
The Nanto Bank Group will celebrate its 90th anniversary in June 2024. We are proud to attributeour long-term market presence to growth together with the regional community we serve, achieved
through a commitment to regional development based on the invisible assets of confidence and trust
granted us by our stakeholders. In this fiscal year, it will be important for us to finalize achievement of
our interim goals for FY2024. All the Group’s officers and employees share a commitment to working
together to realize the Nanto Mission with the aim of ensuring our ability to remain a bank that grows
together with the community.

Nanto Mission
Pursuit of regional
development
Fostering ofvitality-creating
human resources
Profitability
enhancement

FY20206 Nanto Report 2023, the integrated report of Nanto Bank

Early achievement of the Group’s
preliminary interim targets

Management Plan, The Nanto Mission and Goals for Achievement in 10 Years

FY2021

New interim targets (FY2024)
Profit / loss on customer transactions(Consolidated)
OHR (Consolidated)Reset

ROE (Consolidated)
ROA (Non-consolidated)
Employees with certification in fields
related to vitality creation

FY2022+3 billion yen
Under 70%

4.0% or higher
0.25% or higher
1,000

Current
fiscal year

90th Anniversary

FY2023

FY2024

Goals for achievemen (FY2029)
Nara prefecture GDP
Up approx. 350 billion yen
Management
personnel cultivation

350

ROA (Non-consolidated)
0.35% or above(June 2024)

FY2029About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

GovernanceBusinessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Outlook

Fostering human resources to realize sustainablegrowth for customers and the community
Do customers feel a strong desire to work on their issues with us?
Over the nine decades since its establishment, the Group has steadily built relationships of trust with its
customers by providing products and services that ensure their ability to conduct transactions with us
safely and securely. With changes in our operating environment, such as a contraction of the workingage population and rapid progress in digitalization, however, the challenges confronting customers are
becoming increasingly diverse and complex. Our ability to continue contributing to their sustainablegrowth under these circumstances will require seeking solutions to their various challenges from thecustomers’ perspective, rather than simply providing products and services generated in our traditional
deposit and loan business.
The first step toward achieving this ability will be to realize ourselves as a Group with whichcustomers feel a genuine desire to work closely. We are responding by fostering “unconventional”
human resources who meet this standard. When customers want to take on new challenges or solve
difficult problems, the Group will be the first institution they turn to for advice, and we will have earned
the right to claim that we have established true relationships of trust that enable us to grow together.
Not only in our relationships with customers but also within the Group itself, the presence ofmany human resources with whom customers express a desire to work and who are recognized by
the community as their “go-to experts” to consult with about issues will undoubtedly contribute toincreasing the Group’s corporate value.
At a time when the concept of human capital management is becoming increasingly prevalent,
the Group is investing actively in personnel recruitment based on a recognition that “human resources
are our most valuable management capital.”

An organization that pursues diversity and cultivates unconventional human resources
Inspiring customers and colleagues with a genuine desire to work in collaboration with us requires
our personnel to acquire specialized skills and accumulate a diverse range of experiences. We areresponding by providing growth opportunities such as secondment to outside organizations, dispatchof trainees, personnel exchanges among Group companies, and support for acquisition of qualifications
that contribute to problem-solving. We are also working to diversify our human resources by expanding
our career recruitment program and introducing a system to encourage participation in side jobs.
If every Group employee combines advanced expertise, varying values, and diverse experience
with a clear awareness of their personal goals for accomplishment in the Group, the growth direction
they wish to follow, and the ways in which they want to give back to the community, and if they
consistently draw on these attributes to find the best possible solutions from their own perspective,
new financial services and solutions will naturally emerge.
I consider it my most important mission to foster an organizational culture in which every single
employee’s ideas are respected, and in which each can continue to do what they want to and should
do with conviction.

Nanto Report 2023, the integrated report of Nanto Bank

7

About Nanto Bank

President’s Message

Value created by the Group’s human resources
We will deploy our human resources to achieve sustainable management that enables collaborative
development of the Group with its local communities by addressing and resolving issues faced by eachindividual customer, the regional communities and society as a whole.

Resolving customer issues
Since the introduction of the Management Plan, we have been devoting ourselves to maximizing efforts
to “know our customers.” Among these efforts, we not only propose financial products or services
but also endeavor to further deepen mutual understanding with our customers by tackling the real,
underlying problem causing the issues they face together..
Problems uncovered in these “know our customer” efforts involve various matters beyond theneed for cash flow support, such as management improvement, securing human resources, andbusiness succession. We not only work together as a Group to resolve such issues, but we also makethe utmost use of our external expert network to provide a variety of solutions that go beyond financial
activities in furtherance of our customers’ sustainable growth.
We continue to help individual customers achieve affluent lives with peace of mind bycooperating closely in their life planning and providing superior services and information in a timely
manner to meet their various needs and challenges, especially those emerging in today’s “era of 100year lifetimes.”

Responding to local issues
As concerns fostering the growth of the regional economy, there are challenges facing the region
that cannot be addressed merely by solving the issues of individual customers. For example, Nara’s
agricultural output is among the lowest in Japan, and its farming industry’s sustainability is becoming acommon concern due to the aging of farmers and increase in the number of abandoned farms.
As concerns tourism, despite Nara’s being one of the nation’s richest prefectures in terms of
tourism resources that include numerous World Heritage
sites and national treasures, the majority of tourists are
daytime visitors, and spending on tourism is relatively low
compared to that in neighboring prefectures.
The Group is responding directly to these various regional
issues, not only by meeting customers’ needs, but also by
taking the initiative proactively in establishing local businesses.
Specific examples of these efforts include our founding ofNara Mirai Design Co., Ltd., a regional revitalization company
organized to establish a profitable and sustainable agriculturalmodel by using the so-called “smart agriculture” technology,
as well as information and communication technologies (ICT).
Among its various efforts to promote excursions and longer-

8 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

GovernanceBusinessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Outlook

stay tourism, Nara Mirai Design has acquired an old private house in the town of Yoshino, which it plansto renovate as an attractive lodging and tourism facility over the next several years.
Another issue involves Nara prefecture’s forests, which account for approximately 77% of theprefectural land area and are recognized as one of Japan’s leading sources of high-quality timber. We
are seriously considering engagement in a platform project to improve productivity in the forestry andlumber industries.
In October 2022, our specialized investment subsidiary Nanto Capital Partners established asocial impact fund, the first of its kind among regional banks, to invest in startup companies that seek
solutions to such regional issues as the declining population and aging society of Nara prefecture andthe surrounding region.

Confronting issues facing society at large
Attaining sustainable growth of our regional community will also require society to tackle the challenges
facing it. These include the falling birthrate and aging and contraction of the population as well as
the exacerbation of natural disasters and reduction of biodiversity accompanying climate changethat have illuminated the urgency of dealing with environmental issues. In accordance with the TCFD
recommendations we endorsed in 2021, the Group has pursued decarbonization efforts aimed at
reducing its CO2 emissions by at least 50% from their fiscal 2013 level by fiscal 2030, while alsoendeavoring to reduce consumption of paper in its operations.
The Group supports customers’ efforts to address climate change and other issues related to the
SDGs through funding, including environment-related loans, sustainable finance, and other financial
instruments, to help them in organizing their sustainability initiatives. We also offer the Nanto SDGs
Introduction Consulting Service to facilitate our customers’ commitment to the SDGs.

In conclusion
Operating in this challenging environment surrounding Japan’s regional financial institutions today, we
will continue our efforts to enhance the corporate value of the Group by sharing our vision for the futurewith our stakeholders and by deepening our mutual understanding through close communication anddialogue at every opportunity.
Companies with price-to-book (P/B) ratios under 1.0 are recently exhibiting accelerating
momentum toward improvement. We realize that Nanto Bank’s weak P/B ratio results from both
structural problems faced by regional banks and the fact that our return on equity (ROE) is lower thanthe cost of capital anticipated by investors.
Banks, especially regional banks, bear an important responsibility as the backbone of the local
economy. While mindful of our P/B ratio, we are committed to supporting our customers in a mannerthat aligns with the unique characteristics of our region, and to doing so from a long-term perspective.
We are committed to making further efforts to achieve sustainable growth of the Group and thedevelopment of the local community. Your continued support would be much appreciated by every
member of our staff, each of whom is willing to respond to innovative ideas and challenging tasks.

Nanto Report 2023, the integrated report of Nanto Bank

9

About Nanto Bank

Progress under the Management Plan

Progress under the Management Plan
Management Plan overview
In December 2019, the Nanto Bank Group announced its management goals and mission for the period from April 2020 to March 2030
under the title “Nanto Mission and Goals for Achievement in 10 Years.”
The three tenets of the Nanto Mission are “pursuit of regional development,” “creation of vitality-creating human resources,” and“improvement of profitability.” All are aimed at contributing to achievement of Nanto Bank’s goals of increasing Nara prefecture’s GDP by
approximately 350 billion yen, cultivating 350 management personnel, and achieving non-consolidated ROA of 0.35% or above.
We followed this goal creation in December 2021 by formulating five new indicators as renewed interim targets for FY2024:
consolidated profit of 3 billion yen from customer transactions; OHR of less than 70%; ROE of at least 4.0%; non-consolidated ROA of atleast 0.25%; and cultivation of 1,000 qualified vitality creation personnel.

Earliest possible return to profitability of core businesses and progress toward interim targets
Interim targets (to March 2024) and status of achievement
FY2021
results
Profit from customer
1.8 billion yen
transactions (consolidated)

FY2022
results

FY2023plan

Interim target(FY2024)

5.8 billion yen

5.6 billion yen

30 billion yen

OHR (consolidated)

68.1%

72.5%

73.1%

Below 70%

ROE (consolidated)

4.09%

1.72%

4.18%

Above 4.0%

ROA (non-consolidated)

0.25%

0.20%

0.21%

0.25% orabove

Number of employeeswith qualifications related
to vitality creation

559

601

750

1,000

In FY2021, we succeeded three years ahead of schedule in surpassing
our initial interim target for non-consolidated profit from customertransactions, also referred to herein as “profit from core businesses
operations,” set for achievement by FY2024. Subsequent efforts to further
reinforce the Group’s ability to achieve its revised interim target led toconsolidated profit on customer transactions of 5.8 billion yen in FY2022,
exceeding the new interim target by 4.0 billion yen year on year. The same
period saw our OHR worsen and our ROE and ROA decline due to a
falloff in profit resulting from a disposal of losses in the market sector.
In FY2023, we plan to enhance our ROE and ROA indicators
through improved market sector earnings.

Fiscal 2022 results and outlook for fiscal 2023
Profit from customer transactions
In the “income” column in our FY2022 results, interest on loans and bills discounted
increased by 2.1 billion yen from the previous fiscal year to 34.2 billion yen due to improved
loan yields stemming primarily from an increase in the balance of loans and bills discounted
5.8
5.6
as a result of comprehensive funding support for responses to the coronavirus pandemic.
Net profit on services and other transactions also grew by 0.6 billion yen from the previous
1.8
Planned0.3
fiscal year to 7.0 billion yen due to an increase in home loan-related fees and income from
corporate solutions.
-3.2
The “expenses” column, meanwhile, showed year-on-year downturns in both
2019
2020
2021
2022
2023 (Fiscal year)
personnel expenses and property and equipment expenses of 0.1 billion yen and 0.5 billion
yen, respectively, owing mainly to a decrease in deposit insurance premiums.
Consolidated net profit from customer services increased as a result, rising by 4.0 billion yen from the previous fiscal year to 5.8 billion yen due to an
improvement in the Bank’s non-consolidated net profit from customer services.
We expect to achieve higher income in FY2023 by raising interest on loans by 0.9 billion yen from the previous fiscal year to 35.1 billion yen through anincrease in the average balance of loans, and by raising net fees and commissions by 0.1 billion yen from the previous fiscal year to 7.1 billion yen throughan increase in fees and commissions. We expect to record higher revenues in the corporate solutions business as well.
As concerns expenses, meanwhile, although we will continue to implement our planned personnel reductions, our personnel expenses are expected
to remain almost unchanged due to such factors as higher basic salaries, while property expenses are expected to rise by 1.1 billion yen from the previous
fiscal year to 14.9 billion yen due to strategic investments in such IT instruments as smartphone banking applications.
In consideration of the above factors, we expect to record consolidated net profit from customer transactions of 5.6 billion yen in FY2023, a year-onyear decline of 0.2 billion yen.
Trends in profit from customer transactions (consolidated)(Billions of yen)

Credit-related expenses
Credit-related expenses slipped by 0.5 billion yen from the previous fiscal year to
1.4 billion yen in FY2022, as the occurrence of nonperforming loans fell in response
to our efforts to shore up our core businesses to cope with the effects of thepandemic.
The nonperforming loan balance rose by 5.5 billion yen from the end of theprevious fiscal year to 58.9 billion yen, leading to a nonperforming loan ratio of 1.46%.
While new accruals are expected to increase year on year in FY2023 due tosuch factors as higher prices and the start of full repayment of pandemic-relatedloans, we foresee a downturn in credit expenses of ¥0.4 billion year on year to ¥1.0
billion in response to an expected reversal of allowances for loan losses resulting
from improved business performance by customers of our business improvement
services.

10 Nanto Report 2023, the integrated report of Nanto Bank

Trends in credit-related expenses (non-consolidated)(Billions of yen)

6.9
2.9

2.0

1.4

1.0
Planned

2019

2020

2021

2022

2023 (Fiscal year)

Trends in non-performing loans outstanding and the NPL ratio(Billions of yen)

1.47%

1.35%

1.35%

1.46%

51.8

52.0

53.3

58.9

2019

2020

2021

2022 (Fiscal year)

About Nanto Bank

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Our Shared Vision

GovernanceBusiness
model

Strategies
and resources
allocation

Performance

OutlookMarket sector revenue
Market sector revenue trends (non-consolidated)(Billions of yen)

18.2

17.5

17.3

14.2
Planned

1.0
2019

2020

2021

2022

2023 (Fiscal year)

Income in the market sector fell sharply by 16.2 billion yen from the previous year
to 1.0 billion yen in FY2022 in response to the sale of all fixed-rate foreign bonds
whose positions had reversed in order to secure stable income from FY2023
forward. This result reflected ordinary income of 10.7 billion yen and capitalincome of -9.7 billion yen.
We are planning to increase our market sector earnings by 13.2 billion yen
from the previous fiscal year to 14.2 billion yen in FY2023 through improvements
in both capital income and earned income.

Net Income
Trends in net income (consolidated)(Billions of yen)

11.8

10.8

3.1
2019

2020

2021

11.0

4.7

Planned2022

2023 (Fiscal year)

Consolidated net income for FY2022 fell to 4.7 billion yen, a decrease of 7.1
billion yen from the previous year attributed to a significant downturn in market
sector income, while income from customer transactions increased and creditrelated expenses decreased. Our main business segment earnings excluding themarket segment remained steady owing to a restructuring of our portfolio.
We anticipate consolidated net income of 11.0 billion yen in FY2023, a yearon-year increase of 6.2 billion yen due to improved market sector earnings,
although profit from customer transactions will likely remain mostly unchanged.

Capital policy
Basic policy
While implementing comprehensive measures to ensure the Group’s financial soundness, we are also working to raise its medium- to longterm corporate value by realizing returns commensurate with the cost of shareholders’ equity through strategic investments for sustainablegrowth and stable, flexible returns to shareholders.

Capital adequacy ratio
Trends in the capital adequacy ratio (consolidated and non-consolidated)
(%)

9.75
9.40

2018

9.39

9.47

9.60

9.06

9.15

9.29

2019

2020

Consolidated

2021

9.25
8.95

The Group’s consolidated capital adequacy ratio decreased by 0.35 percentage
point to 9.25% and its non-consolidated capital adequacy ratio by 0.34
percentage point to 8.95% from the previous year in FY2022 due to an increase inrisk-weighted assets and a decrease in net income for the period.
The future will see us continue our efforts to maintain an appropriate capital
adequacy ratio and to manage capital efficiently.

2022 (Fiscal year)

Non-consolidated

Policy on returns to shareholders rends in dividends and the consolidated dividendTpayout ratio
(Yen)
81.7%
76.4%
%
30.1
%
30.2
24.0%
80

110

80

113

104
Forecast

2019
2020
Dividend per share

2021
2022
2023 (Fiscal year)
Consolidated dividend payout ratio

Although our FY2022 financial results recorded a significant decrease in net income,we paid the year-end dividend of 73 yen per share as announced in Septemberof last year. This action reflected the fact that our business performance, including
our profit from customer transactions and excluding the impact of the disposalof losses in the market sector, was generally in line with our plan. As a result, theannual dividend for the year, including an interim dividend of 40 yen, was 113
yen per share. The annual dividend planned for FY2023 is 104 yen per share inaccordance with the policy on returns to shareholders shown below.
Policy on returns to shareholders (announced February 2022)
Maintain a stable dividend of ¥80 per share, while aiming for a dividend payout ratioof 30% of net income payable to shareholders of the parent company.

Cross-shareholdingT rends in the market value of cross-shareholdings and theratio of cross-shareholdings to net assets
26.5%

26.1%

28.6%

77.9

74.7

75.2

(Billions of yen)
Approx. 20

Target2020
2021
Balance ofcross-shareholdings (market value)2022
2024 (Fiscal year)
Percentage in net assets(consolidated)

Nanto Bank engages in cross-shareholding when it contributes to ensuring theGroup’s sustainable growth and maintenance or enhancement of its corporate
value, and when it is considered necessary to the Group’s business strategy.
The ratio of the balance of cross-shareholdings to consolidated net assets on
a market value basis declined from 38.3% at March 31, 2015 to 28.6% at March
31, 2023. We have set a target of reducing this ratio to about 20% by end March2025 as part of efforts to maintain an awareness of capital efficiency in the Bank’s
management.

Nanto Report 2023, the integrated report of Nanto Bank

11

Our Shared Vision

Nara Prefecture’s Potential and Issues to Be Addressed

Development potential of Nara prefecture, the Nanto
Bank Group’s core business baseNara prefecture, the Group’s primary base of operations, is an inland prefecture situated in the middle of theKii Peninsula in central Japan and distinguished by a range of towering mountains known as the “roof of the
Kinki region” in the south. Although it has no airport or port facilities, the prefecture is characterized by strong
resistance to natural disasters.

Characteristics of Nara prefecture
Tourism resources
World Heritage sites
National Treasures/
Important Cultural Properties
Historic sites andnatural monuments

in Japan

1,328

rdplace in
Japan

148

Number of rooms
in Japanese inns and hotels
Number ofannual tourists

3

9,948

No.1

3

No.1

in Japan44thplace inJapan

26.23 million

Potential perceived by the Group

Blessed with numerous world-famous cultural andhistoric sites, including World Heritage sites and National
Treasures, Nara has the potential to attract many moretourists and travelers than it does now, thus generatingsuch economic benefits as revitalization of the local
economy and job creation.
Issues under consideration by the GroupThe region is currently attracting a relatively small numberof overnight visitors, an important segment of the tourism
industry. This raises the challenge of transforming theprefecture from a daytime tourist destination to a tourism
hub that visitors choose as a home base for visiting
various destinations in the region.

Economy and industry

GDP (real)

6

76.8%

th
place inJapan

3,892.3 billion yen

thplace inJapan

Ratio of forest area

Number ofprivate businesses

46 thousand

37

40

th
place inJapan

Potential perceived by the GroupThe prefecture has an abundance of forest resources,
which provide it with the potential to create new
economic value by leveraging its wealth of natural
resources, especially under current circumstances inwhich interest in its natural resources is growing.
Issues under consideration by the Group

Number of
employed residents

37th

434,135

place inJapan

Per capita
income2,728 thousand yenthplace inJapan

Agricultural
output39.5 billion yen

thplace inJapan

36

Nara prefecture’s economy remains among the smallest
in Japan. To improve this situation, job creation and local
economic revitalization by promoting local industries
and establishing new businesses and startups will be
required.

45

Sources: “FY2019 Prefectural Accounts,” Cabinet Office; “2016 Economic Census,” Ministry of Internal Affairs and Communications (MIC); “Nara Prefecture Today: 2022”;“2022 Basic School Survey,” Ministry of Education, Culture, Sports, Science and Technology (MEXT); “2019 National Household Survey,” MIC; “National Census for2015 and 2020,” MIC; “2022 Report on Survey of Construction Starts,” Ministry of Land, Infrastructure, Transport and Tourism (MLIT); “2020 National Census of
Employment and School Commuting Areas (Nara Prefecture)”

12 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

Businessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

OutlookHousehold finances and living conditions
Financial assets per household		

15,645 thousand yen

Ratio of owner-occupied
households

73.1%

 ercentage of consumer spendingP(purchasing) outside the prefecture
		

19.1%

2

nd
place in
Japan

8

th
place in
Japan

No.1

in JapanPotential perceived by the GroupThe standard of living in the prefecture is relatively high.
An affluent population with ample per-household financial
assets and a high percentage of owner-occupied homes
offers the potential to increase consumer spending andaccelerate the flow from savings to investment.
Issues under consideration by the Group

With consumer spending flowing out to neighboring
regions such as Osaka and Kyoto, Nara prefecture faces
the challenge of revitalizing personal consumption within
the prefecture.

Human resources
Percentage of high school
graduates obtaining
higher education

63.4%

7

th
place inJapan

Potential perceived by the Group

Nara prefecture’s overall
employment rate

72.7%

place inJapan

Ratio of womenin the labor force

46.8%

th
place in
Japan

45th

47

The prefecture’s high educational level provides richsoil for producing excellent human resources, thus
supporting the potential to diversify the region’s industrial
structure and increase its companies’ competitiveness.
Issues under consideration by the GroupIn addition to the problems raised by a shrinking
working-age population due to a declining birthrate
and aging population, a large number of Nara’s humanresources have been leaving for neighboring prefectures
such as Osaka and Kyoto. This makes the creation of
employment opportunities, improvement of the working
environment, and human resources development highpriority challenges for Nara prefecture.

Nanto Report 2023, the integrated report of Nanto Bank

13

Our Shared Vision

The Group’s Materialities

Materialities (Priority Issues)
Besides focusing on our core business of providing financial services to support our regional customers, theNanto Bank Group’s Board of Directors discusses sustainability issues that must be addressed globally andthe wide-ranging challenges facing local communities. It has now identified the following materialities to beprioritized along with specific themes to be addressed in consideration of their importance to our Group and its
stakeholders. The contents of the list will be revised periodically to reflect changes in the business environment.

Risks ( Most threatening risks; Threatening risks)
Opportunities ( : Most promising opportunities, : Promising opportunities)

External
Nara prefecture’s
environment surrounding environment

Risks and opportunities of concern for the Group
Risks

E
Environment

Global warming
Abundant forest
resources eterioration of customers’ business performance due to damage to their business infrastructureD
resulting from natural disasters spawned in large part by climate change Higher credit costs due to impacts on customers' business and financial conditions of regulatory tightening, technologicalinnovation, and market changes in support of decarbonization
 Higher credit costs due to damages that have reduced the value of customers’ real estate collateral

Risks
Slow economic growth
Accelerated transition todigital operations
Declining working-age
population, falling birthrate andaging population
Diversified lifestyles

S
SocietyIncreased numbers of non-performing loans and credit-related expenses due to deterioration ofcustomers’ business conditions induced by domestic and international economic trends, foreignexchange rates and related factors
Increased numbers of business closures precipitated by a lack of successors and a resulting
decline in demand for funds
 Changes in existing business and industrial structures

Risks

High ratio ofowner-occupied
houses hanges in banking transactions in response to lifestyle changes and diversification and expansion
Cof the digital native population

Wealth of
tourism
resources Growing concern about retirement savings accompanying the contraction of the working-age population and aging of the
population

Increased job mobility
Risks
Dissemination ofwork-style changes
Progress in diversification

Organizational rigidity stemming from staff homogeneity and uniformity of thinking Insufficient staff motivation and outflow of human resources due to delayed development of career paths that match
individual staff members’ work styles.

Risks
Changes in laws and regulations

G
Governance

Increased geopolitical risks

14 Nanto Report 2023, the integrated report of Nanto BankL oss of public trust due to leakage of customer information and system failures caused by more
complex and sneakier cyber attacks
Increased difficulty of risk management due to a highly uncertain business environment Decreased asset value attributable to deterioration of loan customers’ financial condition, etc.
 Decreased asset value attributable to fluctuations in interest rates, exchange rates, stock prices, etc.

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

Businessmodel

Risks andopportunities

Strategies
and resources
allocation

Materiality determination process
STEP

1

STEP

Identification of issues

2

In addition to the issues determined by international frameworks, including theUnited Nations Global Compact, ISO 26000, the Global Reporting Initiative, andthe SDGs, the Group identified an extensive range of environmental, social, andgovernance issues expected to arise in the future. Our basic sustainability policy
is developed in consideration of the Group’s operating environment with reference
to the Global Top 10 Risks announced by the World Economic Forum and theJapanese government’s SDGs Action Plan.

Analysis and evaluationof identified issues

STEP

3

Identification of mostsignificant issues

Based on the results of Step 2,
the Management Committee and
Board of Directors identified thematerialities after discussing theopportunities, risks, and matters tobe prioritized.

Among the foregoing, we then identified
issues that are of particular relevanceto the Nanto Bank Group and analyzed
and evaluated their importance fromtwo perspectives: their impact on our
stakeholders and their financial impact on
our Group.

Review in response to changes in the external environment

Materialities (Priority Issues)
Opportunities

Increased demand for environment-related businesses and other activities aimed at decarbonization
Cultivation of regional environmental awareness through proactive environmental conservation efforts

Responding to the Effectsof Accelerating Climate
Change Increased demand for funds for investment in disaster prevention infrastructure Growing need for protection against wind and/or flood disasters and other environmental changes, and resulting
opportunities to provide insurance and other financial products and services to support environmental protection
measures in preparation for disasters

Opportunities

Increased customer demand for non-financial services, including M&A, asset succession, andemployee placement services
Increased number of business opportunities benefiting from the region’s wealth of tourism resources

Realizing Sustainable
Growth of Our Regional
Economy Increased number of business opportunities stemming from new job creation in cooperation with local governments
and other external organizations Increased demand for funds to support customers’ cash management and core businesses, and greater number ofopportunities to provide new services
Opportunities

 rowing demand for asset-building services from members of the younger generationGIncreased opportunities to provide services that meet customers’ need for inheritance services anddiversifying bequest and donation needs
Steady demand for products and services responding to homeowners’ growing needs

Realizing a Convenient,
Prosperous Society

Fiscal 2023
Action Plan

Increased opportunities for provision of new products and services employing digital technologies

Opportunities

E xpansion of the business territory through acquisition of highly specialized IT, risk management, andother personnel
Provision of high value-added services through utilization of diverse human resources

Cultivating a Healthy Corporate
Culture with Participation ofDiverse Human Resources

Provision of greater opportunities for women with potential for social advancement

Opportunities

Improved awareness of investors’ needs obtained by creating more opportunities for constructive
dialogue with shareholders and investors

Preparing for Increasingly
Varied and Complex Risks

Nanto Report 2023, the integrated report of Nanto Bank

15

Our Shared Vision

Value Creation Process

Sustainable management developed together with the community
The Nanto Bank Group has been continuously implementing its Management Plan for the 10-year period that began in 2020
in pursuance of our declared missions to facilitate “pursuit of regional development,” “fostering of vitality-creating humanresources,” and “enhancement of profitability,” setting our "Dynamic Creative Bank” management vision as the pillar of Group
operations.
Realizing development of sustainable management in cooperation with the community requires the Group to deploy
its management capital, including “unconventional” human resources, to address the issues faced by our customers, thecommunity, and society at large.

Business activities

Materialities

Responding to the
Effects of Accelerating
Climate ChangeManagement capital

Customer base•Large share of deposits andloans in Nara prefecture
Deposits

Realizing Sustainable
Growth of Our Regional
Economy

Loans

50.0%
50.6%

Fiscal 2023 Action Plan

Enhancement of
Customers’
Corporate Value
P.26-29

Support for
Customers’ Asset
Formation
P.30-31
Regional
Business Creation
P.32-37•Chosen as the main bankby businesses operatingin Nara Prefecture

61.20%(Teikoku Databank National Corporate“Main Bank” Trend Survey 2022)

Realizing a Convenient,
Prosperous Society

Human resourcesbase•Number of employees
supporting the Bank’s
management philosophy

Cultivating a Healthy
Corporate Culture with
Participation of Diverse
Human Resources

P.18-25•Number of employeeswith qualifications related tovitality creation

601•Strong capital adequacy ratio
Capital adequacy ratio
Consolidated

9.25%
8.95%

Non-consolidated(End March 2023)

16 Nanto Report 2023, the integrated report of Nanto Bank

Ensuring Greater
Convenience
P.38-39

2,275

Financial base
Preparing for
Increasingly Varied
and Complex Risks

Cultivating
Unconventional
Human Resources

Furthering
SophisticatedMarketManagement
P.47

Advanced Risk
Management
and Governance
P.44-46
P.48-55

Initiatives
Addressing Climate
Change Issues
P.40-43

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Organizational
overview and external
environment

GovernanceBusinessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Our “unconventional” human resources resolve issues faced by our customers and the community, and tackle social
issues by commercialization and other means.
Through these problem-solving undertakings, we provide our stakeholders with added value and contribute todevelopment of our operating region. We believe that repetition of this cycle will eventually lead to achievement of Nanto
Bank’s goals for 2030: increasing Nara prefecture’s GDP by approximately 350 billion yen, cultivating 350 management
personnel, and achieving non-consolidated ROA of 0.35% or above.

Value we are offering all our stakeholders

Customers
Supply of funds in accordance with the borrower’s
business characteristics
Financial products and services to support affluent
livingProvision of management personnel
Creation of new business opportunities

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

Goals to be achieved by 2030

Nara prefecture GDP*1

Increase of approx.
¥350 billion

Management personnel
cultivation*2

350

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

Shareholders
High market rating
Continuing stable dividends

ROA (non-consolidated)

0.35% or above*1 To be achieved by the end of fiscal 2026,
so that the achievement will be announced
in 2029 (Nara prefecture’s GDP is usually
announced approximately two-and-a-halfyears after the relevant fiscal year-end).
*2 Human resources who can share
management decision-making with local
customers

Nanto Report 2023, the integrated report of Nanto Bank

17

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources

Cultivating “Unconventional” Human Resources
Basic Policy
Human resources are the Nanto Bank Group’s most valuable management capital. It isessential that we secure and develop highly skilled, well-qualified human resources torealize our Management Plan.
We are developing personal and professional growth opportunities by increasing
our external secondments, dispatching trainees, and promoting exchanges among
Group companies. We are also diversifying our human resources by introducing a side
job system and expanding our career recruitment.

What are “Unconventional”
human resources?
Employees who would be theircolleagues’ and our customers’
first choice as collaborating
partners.

Fiscal 2023 Action Plan
Competencies
required of staff

Goal to beachieved

Human resources creation cycle
New graduate
and career
recruitment

Evaluations to
optimize useof human
resources

Ability to engage
in management
decision-making
with customers
Business planningcapability
Ability to innovate

Philosophy sharing

Unconventional
human resources

Careerdevelopment
and training

Diversification ofhuman resources

Skill development
and growth opportunity
enhancement

Positive working
environment

Why do we need unconventional human resources?
About Nanto Bank

Our Shared Vision

Developing Human Resources
for Value Creation

Value Creation by the Group’s
Human Resources

Cultivation of
unconventional
human
resources

What kinds of personnel does the Group seek?

Governance Supporting Our
Proactive Human Resources

About Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human Resources
for Value Creation

Value Creation by the Group’s
Human Resources

Governance Supporting Our
Proactive Human Resources

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources

President’s Message
Organizational
overview and external
environment

GovernanceBusinessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Outlook

GovernanceBusiness
model

Strategies
and resources
allocation

OutlookRoundtable Discussion with the Outside Directors

The Nanto Bank Group’s“unconventional” humanresources provide
support for issues facedby customers and theregion.

Cultivating “unconventional human resources”
Three of Nanto Bank’s outside directors, Hidetaka Matsuzaka, Kozue Nakayama, and Shuhei Aoki, joined
Executive Vice President and Director Satoshi Ishida and Director and Senior Managing Executive Officer Kazuya
Yokoya in an exchange of opinions concerning their impressions and evaluations of the Group’s personnel, witha special focus on the actions the Group should take to cultivate unconventional human resources.

Introduction

Nakayama: I have been an outside director of Nanto Bankfor one year now, and I have found that most of the Board
members are serious, sensible people. I honestly find it
difficult to say whether creative, innovative personnel are
likely to emerge from within the Group immediately. On
the other hand, the love the executives and employees soclearly feel for their local region is one of the Bank’s mostcompelling features.

The Japanese economy is currently showing signs of recovery, as economic
activity returns to normal following the downgrading of the new coronavirus
strands to category 5. Consumer spending is recovering steadily, boosted
by rising wages and a positive appetite for investment, including capital
investment in the corporate sector.
Downside risks to the economy are increasing at the same time, however,
due to proliferating geopolitical risks and rising prices of resources and raw
materials. In the financial markets, the environment surrounding financial
institutions remains uncertain due to financial system instability and prolonged
monetary tightening in the United States and Europe.
In Nara Prefecture, which forms the primary business base of the
Nanto Bank Group, consumer spending and corporate activity are gradually
recovering, and demand for tourism, driven largely by foreign visitors toJapan, is picking up. On the other hand, structural social issues, such as
contraction of the regional economy due to a declining birthrate and aging
population and a shortage of successors to take over private companies,
are increasing in severity. As a regional financial institution, we consider it
our role and responsibility to continue contributing to regional development
by confronting these issues head-on. We are working together with ourcustomers and local communities to resolve them, attaining sustainablegrowth of the Group as a result.

Yokotani: Many of our Group employees were born inthis region and grew up with the Bank as part of theirenvironment. This makes them particularly eager tocontribute to community and regional development through their work.
It is clear that employees such as these have created the Bank’s image as a safe, secure local bank through their steady,conscientious work. They tend to value rules and avoid risk, however, and they exhibit a pronounced hesitancy to takeup new challenges.
Aoki: The Bank’s officers and employees are typical bankers. They are knowledgeable, rational, and imbued with astrong work ethic. At the same time, however, they lack the requisite assertiveness to take up new challenges proactively.
Thanks in large part to the Bank’s current management policy of nurturing “unconventional” staff, the younger employees
seem to be working with considerable freedom of thought. Since these reforms have only just begun, however, boththe new and the more experienced employees are wondering to what extent they can break out of their characteristic
banker shells. Or so it seems to me.
Matsuzaka: I should add without reservation, however, that I feel this reformation of human resources is moving too
slowly, although I do perceive clear signs of progress in the right direction from the perspectives of cost management
and IT introduction. Cultivation of unconventional human resources is the most pressing issue for management, and if
we fail to time it right, we stand to lose out in the competition with other banks. At the same time, I do not think that any
reform of human character will occur simply because management says it should. I believe that employees will change
and grow only when they acquire new awareness through a process in which management strategically allocates people
with unique personalities to positions requiring them to respond to various unfamiliar issues. The banner of reform may
have been raised, but I am not at all sure that every employee has fully embraced change yet.
Vice President

Outside Director

Outside Director

Satoshi Ishida

Hidetaka Matsuzaka

Kozue Nakayama

Outside Director
Member, Audit and Supervisory Board

Director and Senior
Managing Executive Officer

Shuhei Aoki

Kazuya Yokotani

What kind of human resources does the Bank require?
Yokotani: We believe that the Group will be further differentiated by cultivating personnel with the ability to realize
customers’ goals by consulting with them about the real concerns particular to their organization, cooperating with them

Nanto Bank’s human resources development from the outside directors’ perspective

in making decisions, and working with them toward a final resolution.
We also recognize a limitation in our management stemming from the fact that engaging in rule-based banking

Ishida: Four years have passed since I came to Nanto Bank. During early courtesy visits to local customers, I received aalone will not broaden employees’ perspectives beyond the banking business. The process of cultivating more

distinct impression that the Bank’s executives and employees had earned these customers’ genuine trust. I soon came

executives and employees with broad perspectives must

to view this trust as the single most important asset differentiating the Group from others, and as convincing proof thatbegin by systematically assigning personnel to branches

its executives and employees have consistently exhibited a sincere commitment to the community and its customers

outside the prefecture, conducting personnel exchanges

throughout its long history.

between branch offices and headquarters, and transferring

When I turned my attention to the Bank’s internal organization, on the other hand, it struck me that the officers andemployees had formed a homogeneous group, with a resulting rigidity in their organization. Considering today’s rapidly

President (Representative Director)

Takashi Hashimoto

employees to Group companies.
Some employees may no doubt wonder exactly whatchanging business environment, I was concerned that it would be difficult for a bank with a homogenous staff and a rigid

they should do to become unconventional, or to acquire theorganization of this kind to continue addressing the various issues confronting customers successfully in the future. We

requisite skills for consulting sales.

have responded by making cultivation of unconventional human resources the core issue of our business strategy andimplementing a range of other measures

I would like to ask you all what specific skills you think
we should expect our human resources to possess?

Human resources development does not take place overnight. Today, I would like to hear how you, as outside
directors, evaluate the Bank’s human resources?

4 Nanto Report 2023, the integrated report of Nanto Bank

Nanto Report 2023, the integrated report of Nanto Bank

President’s Message
See page 4 for details.

18 Nanto Report 2023, the integrated report of Nanto Bank

5

22 Nanto Report 2023, the integrated report of Nanto Bank

Nanto Report 2023, the integrated report of Nanto Bank

Roundtable Discussion with the Outside Directors
See page 22 for details.

23About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Strategies
and resources
allocation

Performance

New graduate/career recruitment Recruitment of human resources who share our Group’s Philosophy
Nanto Bank is committed to developing a working environment that adequately rewards employees with a passion for community
development and willingness to improve their capability and value. We seek to imbue our personnel with our Management
Philosophy and Vision, and to encourage them to play active roles in our various Group companies.
At the same time, we envision a reduction in employee workloads and a natural decrease in our employment rolls as we expand
the application of digital technologies and other new approaches. This makes it especially important for every individual staff member
to achieve a high performance level, and for all our Group companies to shift their human resources to high value-added operations
by adopting the so-called “smart work” style and digital technologies to improve their operating efficiency and productivity.
To meet the growing demand for more enhanced employee knowledge and skills in every field of business, the Bank is seeking
to reinforce recruitment of highly specialized personnel through new graduate and career hiring, as well as through Group-wide
human resources development and personnel exchanges.

New graduate recruitment
All our Group employees are growing
toward their goals and participating
actively in a variety of fields.

Frank roundtable discussion among young employees

Voices of 50 Nanto Bank personnel
Available on
our website.

Number of new graduates hired
Female

Male

85
55

123

(Persons)

95
60

80

30

35

43

2021

2022

2023 (Fiscal year)

Recruiting more mid-career hires

Number of mid-career hires

We are strengthening recruitment for mid-career positions
through the use of both recruitment agencies and direct
recruiting and by increasing the number of open positions.
Efforts to revitalize our organization include hiring promising
personnel with advanced expertise and an ability to make an
immediate impact in the sales arena.

3
2021

I intend to apply my experience andexpertise as an attorney fully in my work.

I intend to leverage my experience as
an alumnus of several companies.

In my previous position at a cooperative financial
institution, I worked in the corporate planningand general affairs departments, where I was
responsible for compliance system development
and personnel and labor affairs. The experienceand expertise I acquired there are extremely
useful in my current position, where my
responsibilities center mainly on legal andcompliance matters.
As a regional financial institution, Nanto
Bank feels a strong responsibility for pursuing
regional economic development. I find it highly
rewarding to work as a member of a bank like
this, which has earned the trust of regionalcustomers over its long history. I hope to
expand the scope of my work
gradually in the future withthe goal of playing the kindof role that is expected of afinancial institution, including
consulting and solution
provision, by drawing
on my expertise in thelegal, labor, tax, andCompliance Control Division
other fields.

After joining Nanto Bank upon graduation in
2009, I worked at other regional banks andcompanies before returning to the Bank lastyear.
I believe that my experience working
at multiple companies has broadened mythinking and perspectives by exposing me
to a varied range of values and corporate
cultures, and that the personal connections I
established through those experiences havebroadened the scope of information andadded value I bring to my work.
In my current position as a corporate
sales representative, I work closely withbusiness owners to share and solve theactual issues facing them. I plan
to continue making the mostof my experience to provide
a wide range of solutions.

Department Chief

Yoshihide Sawa

Previous jobs

10 (Persons)Osaka-chuo Branch

Yousuke Sakai

2022 (Fiscal year)

NumberRegional banks

4

Financial firms

1

General companies

4

Attorneys

1

I am committed to providing
management support based on myprevious experience.
My responsibilities in my previous position ata regional bank primarily involved providing
management and financial support for
distressed corporate clients. I am currently
expanding the scope of my work to include
preventative management support forcustomers whose businesses are deteriorating,while continuing to offer the types of initiatives
I provided in my previous work.
I also participate in a cross-organizational
project team for customers who are
considering business expansion or renewal,
while supporting their projects and engaging
with them in a companionable
manner.
In the future, our teamwill further deepen our
cooperation with others to
expand the range of added
value we can provide
and make greateruse of the Bank’s
consulting function Examination Department Business
Revitalization Officefor the benefit of
Department Chiefthe community.
Takeshi Morimoto

Nanto Report 2023, the integrated report of Nanto Bank

19

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources
Cultivating “Unconventional” Human Resources
Career development and training Helping employees improve their skills and build on their experience to provide added value to customers
Reinforcement and systemization of consulting sales
Individual customer sales

Overview

Corporate sales

Efforts to improve the rate of participation in transactions and breadth of transactions throughBranch managers
and executives practical training meetings
Reenforcement of sales structures to comply with FD and compliance requirements
General public sales Increase in total asset sales, including real estate sales
representatives Enhancement of sales skills conforming to FD and compliance requirements
Younger staff

Overview

Continuation of consultation training (for new branch
Branch managers managers)
Implementation of practical consulting training
Corporate sales Continuation of practical skills training
representatives Video distribution of consulting case studies

Acquisition of fuller knowledge of sales regulations and administrative procedures related toassets under custody
Upgrading of proposal capabilities through acquisition of home loan knowhow (L-Plaza training)

Younger staff

Early acquisition of corporate sales skills
Strengthening of cooperation with guarantee companies

Developing growth opportunities
Main
initiatives

Increased number of secondments
Dispatching trainees
Exchanges among (1Groupto a localcompanies
company, 1 to a regional government)

We promote the growth of young employees by dispatchingthem to external companies/institutions where they can acquire
management literacy and other skills.
We also actively promote secondments within the Group(5 domestically, 3 overseas)
to provide opportunities for acquiring specialized skills.
P ersonnel seconded to otherorganizations in their forties (2)Exchanges among Group companies (3)(1 to a local company, 1 to a regional government)(Seconded full-time directors, 3)

Main
initiatives

 upport for acquisition of qualifications thatS
contribute to problem-solving
Training to strengthen logical thinking skills, joint
training with other companies

We encourage the acquisition of qualifications that contribute toproblem-solving through the provision of learning opportunities
such as preparatory courses to help employees acquire specialized
knowledge to respond to customers’ diverse values (varied needs).
We offer a variety of training programs to help employees
improve their thinking skills, acquire new perspectives throughexposure to diverse cultures and values, and expand their horizons.
Number of personnel with qualifications related to vitality creation(1 to a local company, 1 to a regional government)

1,000Trainees dispatched (8)
458

559

601

2021

2022

(Persons)

Interimtarget(5 domestically, 3 overseas)(5 domestically, 3 overseas)(End March 2023)

2020

2024 (Fiscal year)

full-time directors,
3)
I find it rewarding to(Seconded
participate
in management
decisions in(Seconded full-time directors, 3)close cooperation with management.

Seeking growth as a venture capitalist contributing tocommunity revitalization.

My colleagues and I at Toyo Screen Kogyo Co., Ltd., to which I was
seconded from Nanto Bank, are working to establish a rewarding work
environment by focusing on "our people" as a management resource.
Most recently, we organized a management plan presentation designed
to unify the various vectors within the company. I now hope to apply
experience I acquired working for the Bank’s labor union to help
construct a personnel evaluation system here. My efforts at Toyo Screen
have a greater impact on the direction of the company than they would
at a large company. I am able to participate in management decisions inclose proximity to management, a situation I find extremely rewarding.
At the same time, I have observed major differences in thecorporate culture and scope of individual employees’ work here. The
general affairs work I am currently responsible for is a daily learning
experience.
When I return to the Bank, I plan to make use of
the knowledge and know-how I gained through mysecondment to develop as a banker who can relate
closely with regional customers by implementing
solutions to the problems and issues they face.

I am currently employed as a trainee at XTech Ventures, an independentventure capital firm that invests in seed funding and early-stage support
for startups.
My work as a venture capitalist, investing in newly establishedstartups and supporting their business growth following the investment,
requires me to view companies from a completely different perspectivefrom a banker’s. We refer to financial information when making
investment decisions, but because seed and early-stage startups have
limited track records in terms of sales and profits, we have to makeinvestment decisions based on our assessment of the entrepreneur's
character, the marketability of the business, its growth strategy, and its
superiority.
After returning to the Bank, I hope to employ my investment
expertise, my know-how in working cooperatively to support businessgrowth, and the network I have cultivatedduring my secondment to contribute to regional
revitalization by providing full-scale support forentrepreneurs who are considering starting abusiness in Nara Prefecture.

Section Chief, Management Division Takashi Kawasaki
Seconded to TOYO SCREEN KOGYO CO.,LTD.
Manager, General Affairs Department

20 Nanto Report 2023, the integrated report of Nanto Bank

Nanto Capital Partners Co., Ltd.

Naoya Yamamoto

Trainee dispatched to XTech Ventures, IncAbout Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

Strategies
and resources
allocation

Friendly work environment Initiatives to improve work styles and retain staff

PerformanceSee page 58 for details.

Full realization of a variety of leave programs

Expansion of childcare support systems

We are pursuing creation of an environmentthat incorporates various types of leave,
including paternity leave and family support
leave, so that employees can make fulluse of their planned leaves, consecutive
holidays, and summer and winter vacations.

We are expanding various childcare support systems
to make it easier for employees to seek careeradvancement while balancing work and child-rearing.

P ercentage of women in management
positions (above the rank of section chief)
(%)

20.0

Paternity leave system Expanded family support leave system
Fertility treatment leave system Expanded child nursing care leave system
Expanded period during which employees can benefit from childcare support
programs such as shorter working hours

14.3
2021

14.8
Target for 2028: 20%

2022

2028 (Fiscal year)

Diversification of human resources Responding to increasingly complex and varied customer issues by increasing the number of staff with diverse values
Promoting gender equality and other diversity initiatives
Nanto Bank is working to raise awareness and develop systems that enablea diverse range of human resources, including women, to play an active role.
We are pursuing initiatives to achieve a balance of work withchildcare, including the introduction of paternity leaves.

Promoting a subsidiary business system
Acting from a belief that diverse experience, advanced expertise and skills,
personal connections, and networks acquired through side-business activities
conducted in addition to employees’ banking responsibilities are indispensable, wehave established an environment that allows employees to engage in side jobs.
Eligible side jobs
Qualification-related: Lecturing,translation, interpreting, consulting, etc.
Internet-related: Web design,
programming, YouTuber, etc.
Others: Sales of handcrafted products(ornaments, paintings, etc.), musicalactivities, etc.

Participants in the side job program(Persons)

19

18

Contributing to regional revitalization through employee participationin second jobs employing their qualifications.
In my side job, I take advantage of my qualification as an SME diagnostician to undertake
preparation of various business plans and other projects introduced by other diagnosticians and
SME support companies in Japan.
This side job enables me to interact with people outside the Bank, and to work on projects
involving unique local industries in various regions of Japan. It is stimulating work providing
rewarding growth experience that introduces variety into my daily life and adds to my store ofknowledge.
I try to make use of this experience in my main business, not only from abanker’s point of view, but also as a means of adding a certain amount of depth
to financial services, such as by sharing and solving problems from the businessowner’s viewpoint.
I hope to continue this side business with the understanding andcooperation of everyone concerned, and to contribute to
Kouriyama Branch
Assistant Manager
revitalization of the region in any way I can.

Ryuta Doi

2021

2022 (Fiscal year)

Employment of personnel withdisabilities
In August 2018, Nanto Bank established
Nanto Challenged Co., Ltd. as a wholly
owned subsidiary committed to promoting
employment of people with disabilities bycreating environments in which they canenjoy safe, rewarding work experiences.
In February 2019, the new company
was certified as a special-purpose subsidiary.

I apply specialized skills in my work.
I have been employed since 2018 by my current company, where I am responsible for conducting data
entry and producing business cards for all Group employees. Since I have advanced computer skills, I
entered the Word Processing event in the National Skills Competition for the Disabled (associated with
the Abilympics) to test my skills against others. Last year, my fourth year of participation,
I took home the gold medal I had set my heart on. In preparing for the competition, I
had continued working hard to hone my skills after work in the evenings by attending
computer classes twice a week.
When I won the gold medal, everyone around me was as happy as if they had won
it themselves. I want to continue challenging myself in a variety Nanto Challenged Co., Ltd.
of fields by participating in friendly competitions.
Mei Antatsu

Evaluations to make the most of human resources Accept and evaluate staff with viewpoints and ideas different from your own.
Centralization of human resources information
Deployment of a talent management system
We have introduced a talent management system for purposes of centralizing theconsolidation, accumulation, and visualization of personnel data and implementing strategic
personnel policies (recruitment, training, assignment, and promotion) based on the data.
The system assesses the qualifications, experience, and abilities of employees
comprehensively, and optimizes our deployment of human resources by assigning the right
personnel to the right positions.

Current
situation

Personnel information system

MS Excel, MS Word

Basic information Work experience
Personnel appraisal Transfer history

Branch inspection reports
Goal-setting

Paper-based

Personnel management information
Recruitment entry sheet,personal history

Independent management / collection (inefficient)

Afterintroduction

Aptitude
test

Talent management system

1-on-1
information

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

Questionnaire
information
Other
qualitative
information

Centralized management + efficient new information collection system

Capable human resources recruiting system Revisions of various personnel systems currently under consideration (to be implemented in January 2024)
System revisions under consideration
Establishment of career paths to accommodate
varying work styles
Attainment of consistency in roles,
contributions, and compensation

Elimination of homogeneity and uniform
thinking among employees
Promotion of women's activities; job
development for older employees

Objectives of personnel system revisions
Realization of work styles and career paths suited to personnel with diverse values and skills
Diversification of human resources to include more women and older employees
Realization of role-, responsibility-, and contribution-based incentives and compensation

Nanto Report 2023, the integrated report of Nanto Bank

21

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources
Roundtable Discussion with the Outside Directors

Cultivating “Unconventional” human resources
Three of Nanto Bank’s outside directors, Hidetaka Matsuzaka, Kozue Nakayama, and Shuhei Aoki, joined
Executive Vice President and Director Satoshi Ishida and Director and Senior Managing Executive Officer Kazuya
Yokoya in an exchange of opinions concerning their impressions and evaluations of the Group’s personnel, with a
special focus on the actions the Group is considering taking to cultivate unconventional human resources.

Vice President

Outside Director

Outside Director

Satoshi Ishida

Hidetaka Matsuzaka

Kozue Nakayama

Outside Director
Member, Audit and Supervisory Board

Director and Senior
Managing Executive Officer

Shuhei Aoki

Kazuya Yokotani

Nanto Bank’s human resources development from the outside directors’ perspective
Ishida: Four years have passed since I came to Nanto Bank. During early courtesy visits to local customers, I received adistinct impression that the Bank’s executives and employees had earned these customers’ genuine trust. I soon cameto view this trust as the single most important asset differentiating the Group from others, and as convincing proof thatits executives and employees have consistently exhibited a sincere commitment to the community and its customers
throughout its long history.
When I turned my attention to the Bank’s internal organization, on the other hand, it struck me that the officers andemployees had formed a homogeneous group, with a resulting rigidity in their organization. Considering today’s rapidlychanging business environment, I was concerned that it would be difficult for a bank with a homogenous staff and a rigidorganization of this kind to continue addressing the various issues confronting customers successfully in the future. We
have responded by making cultivation of unconventional human resources the core issue of our business strategy andimplementing a range of other measures.
Human resources development does not take place overnight. Today, I would like to hear how you, as outside
directors, evaluate the Bank’s human resources.

22 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

GovernanceBusiness
model

Strategies
and resources
allocation

Outlook

Nakayama: I have been an outside director of Nanto Bankfor one year now, and I have found that most of the Board
members are serious, sensible people. I honestly find it
difficult to say whether creative, innovative personnel are
likely to emerge from within the Group immediately. On
the other hand, the love the executives and employees soclearly feel for their local region is one of the Bank’s mostcompelling features.
Yokotani: Many of our Group employees were born inthis region and grew up with the Bank as part of theirenvironment. This makes them particularly eager tocontribute to the community and regional development through their work.
It is clear that employees such as these have created the Bank’s image as a safe, secure regional bank through theirsteady, conscientious work. At the same time, however, they tend to overly value rules and avoid risk, and they exhibit apronounced hesitancy to take up new challenges.
Aoki: The Bank’s officers and employees are typical bankers. They are knowledgeable, rational, and imbued with astrong work ethic. On the otherhand, they lack the requisite assertiveness to take up new challenges proactively. Thanks
in large part to the Bank’s current management policy of nurturing “unconventional” staff, the younger employees seemto be working with considerable freedom of thought. Since these reforms have only just begun, however, both the newand the more experienced employees are wondering to what extent they can break out of their characteristic banker
shells. Or so it seems to me.
Matsuzaka: I should add without reservation, however, that I feel this reformation of human resources is moving too
slowly, although I do perceive clear signs of progress in the right direction from the perspectives of cost management
and IT introduction. Cultivation of unconventional human resources is the most pressing issue for management, and if
we fail to time it right, we stand to lose out in the competition with other banks. At the same time, I do not think that any
reform of human character will occur simply because management says it should. I believe that employees will change
and grow only when they acquire new awareness through a process in which management strategically allocates people
with unique personalities to positions requiring them to respond to various unfamiliar issues. The banner of reform may
have been raised, but I am not at all sure that every employee has fully embraced change yet.

What kind of human resources does the Bank require?
Yokotani: We believe that the Group will be further differentiated by cultivating personnel with the ability to realize
customers’ goals by consulting with them about the real concerns particular to their organization, cooperating with themin making decisions, and working with them toward a final resolution.
We also recognize a limitation in our management stemming from the fact that engaging in rule-based banking
alone will not broaden employees’ perspectives beyond the banking business. The process of cultivating more
executives and employees with broad perspectives must
begin by systematically assigning personnel to branches
outside the prefecture, conducting personnel exchanges
between branch offices and headquarters, and transferring
employees to Group companies.
Some employees may no doubt wonder exactly what
they should do to become unconventional, or to acquire therequisite skills for consulting sales.
I would like to ask you all one important question: What
specific skills do you think we should expect our humanresources to possess?

Nanto Report 2023, the integrated report of Nanto Bank

23

Developing Human Resources for Value Creation

Cultivating a Healthy Corporate Culture with Participation of Diverse Human Resources
Roundtable Discussion with the Outside Directors

Aoki: Nanto Bank is embarking on a path of diversifying its
business beyond traditional core banking operations. Since
this will require various unknown and varied services, it might
appear at first glance that it would be sufficient to secure adiverse workforce. But this may not be enough. Of course,
we will in any case be required by society to diversify our
personnel in terms of gender, educational background, andage from the perspectives of fairness and justice. But I believethat the personnel who will be active in the Bank in the future
will be those with the courage to tackle unfamiliar tasks andthe intelligence to conceptualize solutions for which there is noprecedent.
Matsuzaka: I consider it important for both executives and employees to possess what I call a variety of “drawers.”
These can be constructed through such experiences as building a network of contacts with many people andparticipating in a variety of projects. Specifically, the quality of the solutions we propose to customers can be substantially
improved by knowledge of such things as “another banker who succeeded in organizing his staff in a certain way fora specific project,” “a person or company with particular strengths in one field or another,” or “a system that might beappropriate for a purpose under consideration.” In addition to interactions among personnel at the Bank’s branch offices
and headquarters, secondments to regional companies and local governments and traineeships at other companies
would have a decidedly positive effect on building an internal and external network of this kind.
Nakayama: I agree. My perspective may be a little different, but I believe, first of all, that the Bank’s departments andbranches should not have to suffer from the “not invented here syndrome” (self-sufficiency syndrome).
Only a few companies are equipped to solve today’s increasingly complex customer, community, and social issues
by depending on their own resources. Similarly, I consider it difficult for the individual departments and branches of the
Bank to find solutions on their own.
Although the roles of each department and branch may be considered necessary to conform to the Bank’s rules, I
feel that breaking down barriers between organizations, thus freeing employees to ask each other for advice and listen
to each other's opinions, is among possible changes that can help to diversify executives’ and employees’ values. This
will, in turn, strengthen the organization. This is why I believe the Bank’s new main building, which is currently underconstruction, will play a symbolic role, not only in DX and work-style reform, but also in eliminating the physical andpsychological barriers separating the Bank’s internal organizations.
Ishida: We need to recognize that the way we interact with customers is changing dramatically, and to rethink the kindsof added value we provide them.
People who can think through the processes required to solve customers’ problems and conduct regional
development are the ones who will shape the future of theGroup. Determining optimal solutions will require every
individual employee to improve their own professional skills
and accumulate a diverse fund of personal experience,accompanied by cooperation and collaboration among
employees throughout the organization.
As one means of cultivating these human resources, forexample, we will relocate and consolidate our Headquarters
Sales Department, various headquarters functions, and Group
companies in the new main building to the extent possible, tocreate an environment that encourages free, lively discussion,
thus deepening cooperation among our organizations.

24 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Resources for Value Creation Group’s Human Resources Proactive Human ResourcesStatements

GovernanceBusiness
model

Strategies
and resources
allocation

Outlook

Cultivating “unconventional” human resources
Yokotani: In our efforts to foster unconventional human resources, we have been working to diversify our employment
rolls by expanding our career recruitment program and introducing a side job system as well as offering such employee
growth opportunities as secondment to outside companies and dispatch of trainees.
We also believe that proper management leadership will be essential to creating unconventional human resources
naturally.
I am convinced that particular attention should be given to engaging the young employees who will be responsible
for the future of the Group. Communication from management will naturally be important here, but it is these young
people’s direct supervisors who will exert the greatest influence on their motivation. The degree to which supervisors canengage their subordinates will make all the difference.
Aoki: It is management’s responsibility to nurture unconventional human resources. Personnel gain character when
they are given the challenge of exciting work. To clarify, this means providing jobs that enable employees to respondaccurately to customers’ emerging needs by mobilizing all their strengths and knowledge, which leads in turn togratifying experiences. I believe that the number of unconventional human resources will increase if management andworkplace supervisors create more engaging jobs and make it easier for employees to obtain suitable assignments
through the Bank’s hiring, transfer, and performance evaluation practices.
Nakayama: Looking back on my own life, I believe that I
became the person I am today because someone always
forgave me when I went astray. I believe it is important for
management to encourage relationships of trust between
supervisors and subordinates in which the objectives are statedbut the process is determined by the subordinates. This will
promote dialogue between supervisors and subordinates andfacilitate a sharing of diverse ideas and values transcending
age, experience, and gender.
Matsuzaka: I think the solution is simple: Executives andemployees should approach each project with the attitude that
“this initiative will produce this benefit when viewed from theperspective of the Bank as a whole.” In other words, simply changing the beneficiary of the action from an organization
or department to Nanto Bank can alter employees’ awareness. I should also note that not every staff member needs
to possess fully balanced capabilities. It is important for supervisors to identify each individual employee’s particularstrengths. No one needs to be capable of handling everything, as long as we can solve customers’ issues with the
combined efforts of all our staff members.
As we continue to foster unconventional human resources, it is essential for every manager and employee to pay
greater attention to their surroundings, and for superiors and subordinates to continuously discuss such questions asthese: “What is going on in this organization?” “What is the structure of this business?” “Why is this customer telling us
these things?” and “What is the situation behind this news?”
Ishida: As I listened to everyone’s opinions, I realized once again that cultivation of unconventional human resources
begins with allowing others to think differently from us.
When explaining the objectives of a project, moreover, it is advisable to give personnel free rein to consider the
optimal approach and then discuss it with them. I believe that repeating these procedures will provide the key to inspiring
innovation. Human resources are our Group’s most valuable management capital. With everything you have said today inmind, I want to ensure that the Group remains an organization in which every employee can find fulfillment in their work.
Thank you all for sharing your time with us today.

Nanto Report 2023, the integrated report of Nanto Bank

25

Value Creation by the Group’s Human Resources

Realizing Sustainable Growth of Our Regional Economy

Enhancement of Customers’ Corporate Value
Basic Policy
Nanto Bank’s customers face a variety of challenges today, including a shrinking workingage population and a need to deal with the pandemic’s aftermath and high resources
prices. We uncover the real, underlying problems confronting our customers and commit
ourselves to resolving them.

Fiscal 2023 Action Plan
External environment
Low economic
growthDeclining workingage population
Accelerating
digitalization

Goal to beachieved

Fiscal 2023 Action Plan
Supporting sustainable corporate growth by ascertaining
and resolving the real issues confronting customers
Cash management support in thewake of the coronavirus pandemic

Guiding
customers’sustainablegrowthSupport for sustainable growth ofcustomers’ core businesses

Cash management support in the wake of the coronavirus pandemic
We are further enhancing the quality of our consulting functions to revitalize businesses in the post-pandemic era by proposing
ambitious management strategies designed by a cross-organizational project team that brings together our branch offices,
headquarters, and Group companies. We continue to accumulate a record of successes in handling these issues.
Cross-organizational project team
Examination Department(Business Revitalization Office)Branch officesBlockheadquarters

Corporate Solutions Dept.
Nanto Consulting Co., Ltd.

Cases handled (cumulative total)

76

Enhanced cooperation
with external organizations

SME Revitalization Council
REVIC, Business Succession
and Transition Support Center, etc.

Regional Business Creation Division

Strong Group-wide support for customers' renewed growth
We provide strong support for businesses that are struggling to achieve profitability in the wake of thecoronavirus pandemic, which caused a reduction in their scale of business, an increase in borrowings,
and soaring prices, among other factors. To achieve our objective, we launched a cross-organizational
project team in July 2021 that brought together personnel with specialized knowledge in various fields todiscuss a grand design for the renewed growth of our business partners. We are now engaging in strategy
discussions with our customers’ management to encourage them to adopt this grand design to build alarger and stronger earnings base than they enjoyed before the pandemic.
To support customers’ efforts to improve their management further, meanwhile, we have establishedthe Nanto Business Planning Support subsidy that provides up to 500,000 yen per customer to encourage
the growth of our business partners.

Managing Executive Officer Manager, Examination Department

Koushi Okamoto

26 Nanto Report 2023, the integrated report of Nanto Bank

31
2021

2022 (Fiscal year)(Cases)About Nanto Bank

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Our Shared Vision

Business
model

Strategies
and resources
allocation

Outlook

Support for sustainable growth of customers’ core businesses
As part of efforts to support the growth of our customers’ core businesses, we established a specialized IT introduction andsustainability support team in April 2023 to address their needs for the introduction of IT to raise their productivity and for sustainable
management to respond to the SDGs and related issues.
We also promote customers’ efforts toward sustainable growth by providing comprehensive support tailored to issues such as
HR sourcing, business succession, and M&A as well as to the need to hedge against risks such as exchange rate fluctuations.

Support for customers’ IT introduction and efforts toward sustainability
We support customers’ sustainable growth by providing in-depth consulting services to help them introduce IT and attainsustainable management.

Sustainability support system

Sustainability support process

Sustainability Support Team
Corporate Solutions Department

Cooperation

Branch office

Customer

STEP I

Nanto Consulting

External partners
Mitsui Group,
MS&AD InterRisk Research &Consulting, Inc., others

Establishment of Sustainability
Support Team

Business partners and sustainability consultants
Expanded loan offering• Our newly-established Sustainability Support
Team is responsible for assessing sustainability
issues such as climate change, andsubsequently coordinating optimal service
and/or consulting providers with customers.

• Collaboration with MS&AD, InterRisk Research& Consulting, Inc., and other new business
partners in addition to the Mitsui Group• Introduction of Positive Impact Finance inFebruary 2023.

Recognitionof a need

Knowledge acquisitionand ongoing dialogue

Understanding of the current
situation and visualizationof the issues

STEP IISTEP III

Consultation forproblem-solving

Solution provision

Consulting services
for SDGs
implementation

Study of solutions
Coordination ofsolution measures

Environmental
finance provision
Introduction of andcollaboration withexternal partners

Ongoing consultation through sustainability support

BranchofficeProactive partnership and support

Supportteam

Problem-solving support
Solution coordination

Nanto
Consulting

Planning and follow-up

Business succession and M&A

Human resources services

Business succession and M&A services for maintaining andexpanding local businesses and employment.

The Group is prepared to introduce optimal management
personnel, highly qualified experts, and skilled foreign
personnel with the necessary knowledge and knowhow tosolve the issues confronting our regional corporate customers.
We provide our consulting customers with follow-up services
for a certain time after a new employee has joined theircompany to ensure that the new employee is contributing
successful to the company’s growth and improvement of its
business structure.

Supported M&A projects

See page 28 for details.

Number of successful staff introductions(Cases)925

981(Cases)

1,116

19
14

4
2020

2021

2022

(Fiscal year)

2020

2021

2022

(Fiscal year)

Nanto Report 2023, the integrated report of Nanto Bank

27

Value Creation by the Group’s Human Resources

Stakeholder Voice
Enhancement of Customers’ Corporate Value
Basic flow of human resources introduction
Conduct detailed discussions concerning the customer’s

Recruitment
needs

Job offers& referrals

Collaboration

STEP1 management strategies and envisioned future businessstructure to grasp the issues that require resolution.

determining the customer’s requirements for suitable
STEP2 After
personnel, Nanto Consulting prepares a job description.
It then identifies promising candidates who are seeking

Recruitmentcompany

Employment request(Customer)
Employment

Nanto
Consulting
Job seeker
Co., Ltd. Application

STEP3 employment and conducts the necessary procedures tosecure the most suitable human resources.

Introduce management personnel (department head/administrator

STEP4 level) or highly skilled international human resources to promote
corporate growth and improve management.

Recruitment service initiatives
Example 1
Client company profile
Established in 1963, Ohura Precious Metal Industry initiated sales as well as refining and processing of
precious metal bullion. Today, it trades in precious metal ingots such as gold, silver, and platinum, refines
precious metals, and manufactures and markets chemicals made from precious metals. It provides
products for use as components in many precision devices requiring advanced technologies, including
smartphones and other communication devices, various electronic equipment, and automobiles.

Ohura Precious Metal Industry Co., Ltd.
President and Representative Director Yoshiyuki Ohura (right)
Managing Director Soichiro Ohura (left)

Recruitment is of particular significance among the services provided by regional banks.
Q. Why did you decide to employ a recruitment service?
President: I had thought for some time that our company needed someone with strong management skills to serve as the right hand of my son, our Executive
Director, in the future. Since our hiring process was not progressing as successfully as I had hoped, it crossed my mind that someone from Nanto Bank, which
had been our main bank for years, might be interested in coming to work for us.
Managing Director: Since the time I joined the company, my work has focused on HR and labor-related matters, including development of our hiring andpersonnel evaluation systems. We had long recognized improvement of our personnel and labor management as pressing needs for corporate growth, but thatwas just one of a wide variety of tasks awaiting our attention. We found the solution by approaching Nanto Consulting through its parent Nanto Bank, and asking
them to introduce a prospective employee with management skills and expertise in labor management, especially in establishing HR evaluation systems.

Q. What specific issues have you solved with Nanto Consulting’s cooperation?

Managing Director: We have succeeded in building a solid personnel system with the help of their referrals. In our hiring of new graduates, their support
extends to conducting regular post-employment interviews. These efforts have enabled us to retain the human resources we need, while also supporting ouractive efforts to encourage male employees to take the paternity leave we make available, which has been an issue for management in recent years. In Aprilof this year, this led to our receipt of “Kurumin Certification,” which is recognized by the Ministry of Health, Labor and Welfare, as a company that provides
particularly strong support for child-rearing.
In another example of our successful collaboration, we manufacture and sell a variety of industrial products besides precious metals, primarily precious
metal chemical products that require strict quality control. This work has long presented us with challenges. If a foreign material is mixed in, we need toinvestigate the cause and report the results in order to implement countermeasures. Since our in-house knowledge was insufficient, we felt a need to acquire
expertise in new areas from outside the company so that we could serve customers with a more advanced management system. Nanto Consulting introduced
several new personnel who have strengthened our Quality Assurance Department.

Q. Evolution of Nanto Bank

President: Nanto Bank’s core business is the deposit-and-loan business, which I believe they should continue to prioritize. I have become aware, however,that they are also equipped to provide exceptional consulting on various matters besides finance.
We have had a long relationship with the Bank, and I am satisfied that their sales staff has a detailed understanding of our business. This connection
clearly distinguishes Nanto Consulting from other recruitment agencies. We can consult with them without any concern because of the relationship of trust we
have built with their parent organization over the years. We are currently also working with Nanto Consulting to optimize our business succession.
I consider recruiting to be an important service that can contribute to regional banks’ ability to grow together with companies in their local region. I hope
Nanto Bank will continue to value efforts of this kind in the future.

28 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

Example 2
Client company profile
Founded in 1948, Ogawa Iriki has engaged in the import, manufacture, and sales of nursing and medical facility
equipment for over 70 years. Since every medical facility has different requirements, our role is to provide
customized products for individual customers, and to improve the hospitality of the medical environment throughnursing and medical equipment supply. We also publish Nest, a medical information journal.

Ogawa Iriki Co., Ltd.
President and Representative Director Yuki Ogawa

We need a bank that offers excellent in-person communication skills to clarify customers’ management issues successfully.
Q. Why did you decide to employ a recruitment service?
A staff member of Nanto Bank assigned to our business visited us frequently and listened attentively to other issues facing us besides our financing needs.
Since our business involves equipment for nursing, medical, and institutional use, we have to train technicians to provide equipment maintenance inspection andservices, particularly in the wholesale business of equipment cleaning. We had a pressing need for highly skilled people to handle these functions, most notably a manager
to organize our technical team.
When I mentioned in the course of conversation that our most urgent challenge at the time was in the area of human resources, especially engineers, we were
informed of available recruiting services offered by the Nanto Bank Group. After I expressed interest in trying them, a member of the Nanto Consulting staff visited ouroffice repeatedly to discuss our human resources needs.

Q. What specific issues have you solved as a result?

Thanks to the efforts of the consultant responsible for our project, we began marketing maintenance services in April of this year. We have succeeded in expanding ourbusiness, which was formerly limited to wholesale operations, by adding a proposal business with maintenance services to our mainstay equipment supply operations,and, as a result, we have successfully established a new business scheme that obtains profits from technology sales.

Q. What results have you observed?

Since the beginning of our relationship, Nanto Consulting has introduced human resources across a wide range of fields. Among these, a new foreign engineer has
joined our company. Being an assertive, highly energetic person, he has learned Japanese quickly since joining us. This is the first time we have hired a foreigner, anddoing so now has motivated our staff to take up new challenges more decisively. One of my primary goals was to add diversity and vitality to the company, and we havebeen extremely successful in doing that. Today, we have employees from diverse
backgrounds, including staff from Hokkaido to Kagoshima and female employeeswith young children who are making full use of our shorter working hour system
We work cooperatively with customers to identify and solve
to continue working. My hope is that these efforts will eventually lead to a working
their challenges at the source.
environment that encourages employees to stay with us for a long time.
In our “know your customer” efforts, we make it a point to approach eachWith the introduction of people who can manage manufacturing and sales
step in the process with blank minds.
positively for the purpose of strengthening our sales department, we have achieved
We draw on our knowledge and experience to engage in dialogue withthe kind of leadership we need in technology and sales, and our maintenancecompanies in a variety of industries. Even presidents and companies in the
proposal business is growing steadily as well. The ability to sell technologies has
same industry prioritize different policies and corporate identities, and webelieve that learning and sharing their individual approaches will equip us
solved a major challenge faced by the company, which is now transformed to a
to provide solutions no one else can offer.
business that can profit from technology sales. No such success would have been
Our placement services have enabled us to acquireachievable without all the efforts made by the Nanto Consulting staff assigned todeeper knowledge than ever about the strengths,
challenges, and future visions of our corporate clients. We
our account.
will continue to work with customers to solve their variousFrankly speaking, we sometimes feel reluctant to openly discuss someissues with the aim of becoming a bank that grows
matters concerning recruitment. In this case, however, Nanto Consulting wastogether with its community.
willing to speak with us face-to-face many times in order to “visualize” ourUjiookubo Branch
concerns. This inspired our confidence in their ability to solve our recruiting needs.
Keisuke Ohnishi(Sales representative responsible
I am convinced that this kind of dialogue provides the best basis for banks’ sales
for the Bank’s business with Ogawa Iriki Co., Ltd.)
representatives to visualize their client companies’ various issues clearly.

We fully examine our customers’ management issues from their perspective and introduce highly qualified personnel with theknowhow and skills best suited to solving them.
Our mission is to “support the growth of local companies and contribute to revitalization of the regional economy.” Based on our understanding that an
ability to secure high-quality human resources is always a matter of great importance for regional companies, we work closely with the Bank to introduce
promising candidates, with a primary focus on managerial staff and highly qualified foreign students studying in Japan. We look for and introduce
candidates based on in-depth discussions with management concerning their company’s issues, business environment, future vision, and personnel needs.
We seek to provide services that satisfy both our customers and job seekers by covering
Nanto Consulting Co., Ltd.
various types of needs for new employees.
Managing Director Tomoyuki Kawanishi

Nanto Report 2023, the integrated report of Nanto Bank

29

Value Creation by the Group’s Human Resources

Realizing Sustainable Growth of Our Regional Economy

Support for Customers’ Asset Formation
Basic Policy
Nanto Bank is firmly committed to helping individual customers conduct successful asset
formation efforts as part of their life planning to assure their future prosperity, which is
becoming increasingly important in this “era of 100-year lifetimes.”

Fiscal 2023 Action Plan
External environment

Goal to beachieved

Fiscal 2023 Action Plan
Realizing prosperous customer lifestyles by helping them realize
acquisition and growth of various types of assets, including financial
and real estate assets, tailored to their personal life planning.

Low birthrate andaging population
Lifestylediversification

Provision of products
and services for every
stage of life

Creation ofopportunities for asset
formation beginning at
a younger age

Realizationof affluent
customerlifestyles

Provision of consulting
services to solve
issues facing highnet-worth individuals

Provision of products and services for every stage of life
We help customers realize affluent lifestyles while expanding our customer base by formulating asset-formation plans for every stageof life: the generation that initiates asset formation, the generation that conducts asset growth, and the generation that benefits fromand passes on assets.

Younger generation
BirthsOlder generation
Employment

Channels

Transactions

Generation initiating asset formation

Home purchases

Retirement

Generation pursuing asset formation

Generation that benefits from and passes on assets

Payroll transfer/cashless transactions

Pensions

Loans

TrustsAsset entrusting

Offering convenience basedon digital technologies

Expansion of holiday andnighttime banking channels

Face-to-face consulting

Optimizing clients’ profitability through repeated dialogue
To ensure that clients fully understand the proposals we present for diversified medium- to long-term investments, we explain each
investment in easily understandable detail.
Customers who are new to investment management, in particular, may experience considerable anxiety, even though they are
attracted to the idea of investment. Dialogue with customers is indispensable to dispelling this anxiety. I consider it to be the first step
toward acquiring an accurate grasp of customers’ needs and working with them toward the most appropriate solutions.
I have many opportunities to interact with customers in various stages of life, through which I often find that I have much to learn
from them. I want to polish my customer dialogue capabilities in order to accumulate knowledge and experience a step at a time foruse in constructing optimal proposals tailored to their individual life plans.
Kouriyama Branch

Ayako Katou

30 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

OutlookCreation of opportunities for asset formation beginning at a younger age Establishing connections with tomorrow’s customer base
We are feeling increasingly anxious that
our younger customers’ connection
with the Group may be diminishing due
to the spread of online and cashlessbanking.
Transactions with younger people
are crucial for sustainable growth of theGroup, and we recognize the necessityof constructing a solid customer basewith an eye to the future.

NISA and iDeCo programs
NISA and iDeCo create asset-building opportunities for young people.
Ideal systems for investment novices!

724

925

2020

2021

Click for details!

Number of applications for NISA, etc.
Junior NISA
NISA(Thousand cases)(Cumulative
total)(Cumulative
total)

1

3
2020

56

54

52
1

Number of applications for iDeCo

Benefits of installment NISA (Thousand cases)(Million yen)2022 (Fiscal year)

 ll premiums are tax-deductible!
AGains on investment are tax-free!
Tax benefits are also available when
the customer accesses
benefits!

Click for details!

55
1,097

Three tax benefitsS teady monthly asset accumulation
Customers can save as much as¥400,000 per year for up to 20
years!
Customers keep all
the profits!

(Thousand cases)

49(Individual defined contribution
pension plan)

Benefits of installment NISA

 onthly amount and number of transfers to mutualMfund savings accounts

44

Support for asset building toward retirement!

4

1

2021

7.4

7.8

2020

2021

8.7

8
2022 (Fiscal year)

2022 (Fiscal year)

Apply with your smartphone! Mutual fund and NISA account-opening services
Account opening is completed as soon as the next business day following the date of application!
Apply by smartphone anytime, anywhere!

Quick and easy!

Enroll in NISA and installment NISA at the same time!

24 hours a day, 365 days a year
Make a speedy application
without coming to the Bank!

3 application steps
Your investment trust account is opened assoon as the next business day after application!

If you already have a mutual fund account, you can also
open a NISA or installment NISA* account and apply for a
Nanto investment trust online!
*NISA and installment NISA cannot be used in combination (selection on an annual basis)

Customers who are Individual customers between the ages of 18 and 70 who have a Nanto Bank savings account (includes ordinary savings accounts)
eligible for these * Business accounts (accounts under trade names or organization names, etc.) not accepted.
services* We reserve the right to refuse to open an account due to our own considerations.

Easy application fromyour smart phone!

Provision of consulting services to solve issues facing high-net-worth individuals Support for issues such as asset inheritance by the next generation
We also provide consulting services aimed at solving issues
faced by high-net-worth individuals.
The Group members work as a team to resolve issues
related to inheritance and succession. We are pursuingefforts to solve issues facing a wide range of customers,from the young to the elderly, and are currently expanding
available services in this area to include services that help
customers prepare for risks posed by factors relating tolonger lifetimes, such as dementia or nursing care.

Available services

Testamentary trusts (preparation, custody, and execution of wills)
Testamentary trusts in lieu of wills
Calendar-year-gift trusts
Trusts allowing on-behalf withdrawals
Insurance products, etc.

Estate liquidation

Number of inheritances and trusts
Testamentary trusts

102
65
37
2020

Estate liquidation

131

138

80

83

(Cases)

51

55

2021

2022 (Fiscal year)

We seek to cultivate more human resources who are equipped to resolve customers’ concerns and issues.
As part of our “know your customer” efforts, we hold meetings to train employees in visualizing the transaction status of individual
customers and of customer information gathered through past transactions. Personnel of different ages and varied experience, including
branch managers, share opinions from various perspectives and formulate hypotheses based on an image of the customer generated
with the aim of proposing an optimal investment plan reflecting the customer’s personal life planning and concerns. These activities also
help inexperienced staff members improve their consulting and other skills as part of ongoing efforts to cultivate staff who can earncustomers’ trust.
Going forward, we will continue to support asset building by regional customers as a reliable bank to which they can entrust
their valuable assets.
Asset Consulting Department
Vice Manager Etsuko Yamaguchi

Nanto Report 2023, the integrated report of Nanto Bank

31

Value Creation by the Group’s Human Resources

Realizing Sustainable Growth of Our Regional Economy

Regional Business Creation
Basic Policy
At the Nanto Bank Group, we are convinced that the best way for us to contribute tosustainable growth of the regional economy is not only by generating regional earning
power, but also by promoting Nara prefecture’s revitalization through communication of
its immense appeal to attract more visitors to the region.
Besides supporting customers and the regional community, the Group, which isitself a business entity, promises to work proactively to resolve local issues and contributeto regional development.

Fiscal 2023 Action Plan
External environment

Goal to beachieved

Fiscal 2023 Action Plan
The Nanto Bank Group will continue its concerted efforts to add
value to local assets and resources, while collaborating with local
governments and external organizations to support customers’ startups and new businesses.

Low economic
growthRich tourism
resources
Acceleration ofdigital shift

Initiatives for startups
and new businesses

Initiatives forsustainableagriculture

Sustainablegrowth ofregional
economyInitiatives for tourism
and regional growth

Initiatives for startups and new businesses

Universities andtechnical colleges

 Support for entrepreneurs and business developers
The Nanto Bank Group members will work in unison to facilitate commercializationof our customers’ businesses and expand their customer bases.

 Stronger collaboration with the industrial, governmental, and academic sectors
We are restructuring our support systems for start-ups to strengthen cooperation
with external support organizations and extend support to larger numbers ofstart-ups.

BANK

YorozuSupport Center

Japan FinanceCorporation

Cooperation withoutside support bodies

 Providing more effective support for business incubation
We will consider operating business incubation facilities designed to fostera climate that makes it easier for entrepreneurs to start businesses in Naraprefecture.

Chamber ofCommerce andIndustry

Credit guarantee
associations
Prefectural andmunicipal governments

Nanto Success Road Awards

Startup support package

The Group has organized a total of nine “Nanto Success Road”
Encouragement Awards for business plans formulated by individuals
and companies seeking to develop or launch new businesses that arelikely to contribute to the regional economy and society.
In addition to monetary awards, winners receive regular personal
visits from representatives of Nanto Bank, which provides full support forearly realization of their business plan, with its various types of available
support often provided in collaboration with external institutions.

We offer startup support packages designed either forbusinesses or for individual business operators planning tobuild (or operating for a period of less than three years) a
new business enterprise.
These packages are all tailored to the needs ofentrepreneurs, and all offer six types of supporting services,
including consultation on financing. The packages provide
one-stop support for the period from pre- to post-startup.
Number of applicants (cumulative)

Total number of award-winning plans to date (cumulative)

116(Cases)146

214(Cases)

86
43
2020

32 Nanto Report 2023, the integrated report of Nanto Bank

2021

2022

(Fiscal year)

2020

57
2021

2022 (Fiscal year)

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

Outlook

Initiatives for sustainable agriculture Our goal is to establish profitable and sustainable agriculture, reduce the amount of abandoned farmland, and increase thenumber of newcomers to the industry.

Initiatives for smart farming and sixth-sector industrialization
The Bank has been providing support tomaximize the value of agricultural products
by introducing organic farming techniquesand so-called “sixth-sector industrialization”
and to implement smart farming, whichmakes the process of agriculture more
efficient while reducing production costs by
utilizing robotics and ICT.

I am working to achieve sustainable agriculture
by applying the knowledge and knowhow I
acquired at the Bank.

“Aigamorobo” automatic
weed inhibitor robot
Inhibits weed germination inrice paddies

Cultivation of Yamato vegetables
Yamato Sanjaku cucumbers arecultivated for use in making Narapickles

Securing new workers by combining agriculture and welfare
Besides providing opportunities for people with disabilities to work
energetically, we find new work for them in the agricultural sector, where theworking population is aging and declining.
Agribusiness

Provision of employment opportunities

Related population growth
Administrative support, etc.

Welfare facilities, etc.

Provision of workers

Provision of employment information

Local governments

Initiatives for tourism and regional growth

My family are small-scale rice farmers, and I have helped themwith their work since I was a student. I often wondered about the
profit and expense balance of this business, and felt doubts about
the prospects for my carrying on their work. My participation in
local festivals made me aware that revitalization of agriculture
and training of successors would be essential for maintaining
our community and the original landscape of the region. This
experience made me want to work full-time to improve small
farmers’ profitability and train a new generation of farmers.
I have put the communication and problem analysis skills
I developed at the Bank to good use in building relationships,
not only with local farmers, but also with local governments,
agricultural equipment manufacturers, and research institutes.
I hope to continue trying new techniques, freefrom the restrictions of conventional practices, forthe purpose of establishing a model case thatallows newcomers to enter the farming industry
without worries. My goal is to make agriculture an
attractive industry and contribute to regional
revitalization.
Nara Mirai Design Co., Ltd.
Department Chief Hiroshi Yoshimura We are pursuing Nara prefecture’s transformation from a “daytrip” tourist destination to a longer-stay destination, with theaim of increasing the prefecture’s GDP by raising spending on tourism.

Transformation to a longer-stay tourism destination
We are developing tourism hubs that provide lodgings throughout Nara prefecture to make it easier for travelers to stay longer andtour the prefecture from north to south.

Nipponia Hotel Nara Naramachi

Nipponia Tawaramoto Maruto Soy Sauce
The town of Tawaramoto-cho in Isogi-gun, Nara prefecture, retains
the original rural landscape of ancient Japan. Established here in
1689 by Maruto Co., Ltd., Maruto Soy Sauce is Nara prefecture’s
oldest soy sauce brewery. In its heyday, the company extended its
sales channels nationwide, but its success ended when raw
materials supply problems in the postwar years forced it to close in1949. Almost 70 years later in 2020, the brewery was renovatedand reopened as an old private residence hotel, Nipponia
Tawaramoto Soy Sauce. The warehouse, brewery, living quarters,
and many of the old tools have been retained and renovated tocreate unique accommodation and restaurant facilities.

HokuwaExcursion
tourism
Nara City

Chuwa

The Nipponia Hotel Nara Naramachi opened for business in November 2018 in arenovated 130-year-old sake brewery formerly operated by long-established sake maker
Nara Toyosawa in the historic township of Naramachi. The hotel restaurant wasrenovated using the original building materials in both the exterior and interior
construction to involve the brewery’s beams and ceilings in its retro atmosphere.

Tawaramoto-cho
Excursion Gose City
tourism
Yoshino-cho

Excursion
tourism

Nanwa
Excursion
tourism

Gose Sento Hotel
We have revived an abandoned public bathhouse in the town of Gose-machi
as a bathhouse and renovated a nearby traditional private house into a
facility that can be used for lodging, working vacations and dining.

Sakamoto Ryumon Library
In 2021, the Nanto Bank Group acquired an old private house in Yoshino, a town insouthern Nara prefecture. The house was formerly the primary residence of Senji
Sakamoto, the founder and one-time president of the Yoshino Zaimoku Bank, which has
special significance for Nanto Bank as one of the institutions from which it was formed.
We are planning to transform this library into a tourist accommodation facility over the
next few years to create a regional tourism hub.

Efforts toward tourism DX
We are digitalizing information on tourist attractions to improve convenience for travelers and to promote excursion tours by providing timely
recommendations and eliminating visitors’ dissatisfaction caused by a shortage of available information. We are introducing this initiative first in Nara
City, which already attracts large numbers of tourists, with the intention of extending it throughout the prefecture after verifying its effectiveness.

Nanto Report 2023, the integrated report of Nanto Bank

33

Value Creation by the Group’s Human Resources

Stakeholder Voice

Nanto Bank Group’s strategy of creating social
value through the “Yamato Social Impact Fund”
In October 2022, the Group established the “Yamato Social Impact Fund” to address social issues in
Nara Prefecture and the surrounding region. The following three top executives of the Bank and relatedcompanies met recently to discuss their reasons for establishing the Fund, the first by a regional bank, andthe effects it has had on efforts to solve issues facing the Yamato region: President Takeshi Aoki of Capital
Medica Ventures, Co., Ltd., an investor in the Fund; Nanto Bank Director and Managing Executive Officer
Takeshi Sugiura; and President Atuyuki Sakai of Nanto Capital Partners Co., Ltd.

Nanto Capital Partners Co., Ltd.
President (Representative Director)

Atuyuki Sakai

The Nanto Bank, Ltd.
Director and Managing Executive

Takeshi Sugiura

Capital Medica Ventures, Co., Ltd.
President (Representative Director)

Takeshi Aoki

Group’s commitment to regional business creation
Sugiura:	We introduced our Management Plan in 2020 and set goals for contributing to regional development in accordancewith the Nanto Mission by increasing Nara Prefecture’s GDP by 10% by 2030. We established Nanto CapitalPartners in 2020 and began working to accelerate realization of the Nanto Mission from an investment perspectivein accordance with our commitment to developing the region through investment. Furthermore, in recent years,
as impact investing aimed at addressing social challenges has garnered significant attention, we established the“Yamato Social Impact Fund” in October 2022 with support from Capital Medica Ventures, which has extensive
expertise in impact investment, to pursue further development of the region through investment financing.
Sakai:	
The Fund invests in companies that can help solve social issues in the Yamato region, the Group’s main area of
business. This approach is often referred to as “impact investment.” Our aim is not only to pursue financial returns,
but also to support entrepreneurs who are seeking to solve regional issues, and to make the members of the Fundteam, who are expected to work closely with such entrepreneurs, feel more directly engaged in the process ofsolving the targeted regional issue.
Our mission at Nanto Capital Partners is to “add new value to Nara through investment.” An enterprise that applies
an investment strategy to realization of the Nanto Mission, we act as a hub connecting our portfolio companies with

34 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

various local businesses. To go one step further from investment toworking with entrepreneurs to promote commercialization, moreover,
we have decided to work with Mr. Aoki to solve local issues. The
Fund has been selected for the Regional Impact Fund Establishment
and Operation Support Program designated by the Foundation forSocial Change, which is an asset-distribution institution organizedunder the “Law for Utilization of Dormant Deposits, Etc.,” and whichis certified as the first fund in Japan to put dormant deposits to use.
Aoki:	Impact investment involves investing in potentially profit-making
companies that engage in business contributing to society. We
focus on the following three steps when making an investment:	First, we set a goal to be achieved after clarifying the issues to be solved, an approach referred to as the Theory of
Change (ToC).
	
Second, we construct a logic model to organize a logical roadmap (hypothesis) for realization of the ideal results
and establish KPIs by setting small successes (outcomes) to be achieved during the course of ToC as milestones.
We then annually review the target issues and the logic model along with the achieved KPIs to clarify the createdsocial impact.
	
Third, we announce the status of achievement publicly through an impact report.
	
The Group’s fund management team follows these key steps as elements of the management system central topromotion of each project.

What effect will it have on the community and what difference will it make?
Sakai:	
The Fund’s target areas for investment are specified as health capital, cultural capital, and natural capital.
	
As concerns health capital, with the birthrate declining and the population aging, the field of nursing and medicalcare has become an important growth industry for Nara prefecture. At the same time, we recognize the need forthese services as the most important issue for local residents to solve.

Overview of the FundProfile of the Fund administrators

Name

Yamato Social Impact Investment Limited Partnership

Company name

Nanto Capital Partners Co., Ltd.

Unlimited liability partner

Nanto Capital Partners Co., Ltd.; Capital Medica Ventures Co., Ltd.

Establishment

October 2020

Limited liability partners

Nanto Bank, Ltd.

Location

16 Hashimoto-cho, Nara City, Nara Prefecture

Investment commitment

500 million yen or above

CapitalInvestment target

Startup companies that can contribute to solving issues facing the Yamato region

100 million yen (wholly owned subsidiary of Nanto
Bank)

Investment period

10 years (possible investment period 5 years)

President(Representative
Director)

Atuyuki Sakai

Field of business

Investment businessCompany name

Capital Medica Ventures, Co., Ltd.

Establishment

November 2016

Location

3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo
Kasumigaseki Building, 19th Fl.

Capital

100 million yen

President(Representative
Director)Takeshi Aoki

Field of businessStartup investment and development business, study
sessions, seminar administration, etc.

Investment targets

The targets of the Fund are startup companies that can solve issues facing the Yamato
region. Specifically, the project focuses on the following three areas with the aim ofenriching the Yamato region: (1) “health capital (healthcare)” in the area of health care; (2)“natural capital (nature),” including agriculture, forestry, and fishing; and (3) “cultural capital(culture),” including education, crafts, cultural assets, tourism, and sports.

Healthcapital(healthcare)
CraftsProcessed goods
Sightseeing &entertainment
Education
Sports, etc.

Culturalcapital(culture)

Pursuit of Yamato
regional enrichment
Resolving issues
in the Yamato region

Medical care
Nursing care
Health, etc.

Naturalcapital(nature)Forestry
Agriculture
Dairy farming
Fishery, etc.

Nanto Report 2023, the integrated report of Nanto Bank

35

Value Creation by the Group’s Human Resources

Stakeholder Voice	
When it comes to natural capital, forests cover some 77% of the prefecture's total land area, and we believe thatissues related to forests, agriculture, and undeveloped woodlands near populated areas demand steady resolution.
	
As for cultural capital, meanwhile, sightseers who come to Nara are primarily interested in visiting Buddhist temples
and Shinto shrines, which is perfectly appropriate to Nara, by the way. If these resources were lost, Nara’s regional
value would be significantly diminished.
	In this region, we want to employ the Impact Fund to identify where the issues lie and where to begin our
response, and to use our findings to create concrete initiatives.
Aoki:	I find the phrase “business is people” to be deeply meaningful. When planning this project, we first considered theconcept that would best suit it. The concept we chose overlaps with the Bank’s Management Strategy of “fostering
unconventional human resources,” and we have incorporated this concept into the Fund to increase the numberof qualified staff with problem-solving capabilities.
We need to develop human resources who fill the gap between employees
who think of actions and those who actually put such actions into practice. It
is certainly vital that we nurture “unconventional human resources.” Membersof the Fund and Nanto Bank employees accompany and support those whoare seeking solutions to issues, which contributes further to finding practicalsolutions. We are fully aware of the need to increase the number of qualified
staff who can tackle the issues the customers we invest in are struggling
with and help them determine the direction they want to take with a sense ofownership. That is how our value-creation process works.

Fund scheme
Unlimited liability partners (co-GP)

GP commitment

Nanto Capital Partners Co., Ltd.
Capital Medica Ventures, Co., Ltd.
Subsidies for dormant deposits

Management fee
Success fee

Yamato Social Impact Investment
Limited Partnership

Limited liability partner (LP)Startup companies, etc.,
dedicated to solving issuesof the Yamato region*

Investment Policy

Focus on seed and early stage companies

SIIF
Partnership

Portfolio
Investment execution

Visualizing impact through IM practices
Investments range from 30 to 200 million yen.

Investment(1) “Health capital” operatingin the healthcare area(2) “Natural capital,” such as
agriculture, forestry
and fisheries(3) “Cultural capital,” such as
the three target areas ofeducation, crafts andcultural assets; tourism;and sports

Investor valueenhancement

Exit strategy: IPO, M&A
Personnel
secondment

Distribution

Several companies operating in Naraand the surrounding region

Features

Regional sourcing network
Acceleration programs
Impact management
Impact reporting

Exit revenue(IPO, M&A)

*Nara prefecture and surrounding region

Profile of SIIF
Organization name Japan Social Innovation and Investment Foundation (SIIF)
Established

September 2018

Location

6F, 1-11-28 Akasaka, Minato-ku, Tokyo

Chairman of theBoard of Directors

Shuichi Ohno

Business content

Projects that contribute to realization of major changes in society (social innovation) by building a socialand economic resources circulation system to solve social issues

The Yamato Social Impact Fund has been selected by SIIF to conduct a project supporting
establishment and operation of a regional impact fund focusing on “social impact evaluationand management” to visualize changes and effects on society and the environment. It has been
allocated a subsidy based on the Dormant Deposits Utilization Act.

36 Nanto Report 2023, the integrated report of Nanto Bank

SIIF comments
The Yamato Social Impact Fund is Japan’s first
funding project to utilize “dormant deposits.” It isa rare initiative in which local financial institutions
are collaborating for the first time in this form ofinvestment. We hope that the pioneering Yamato
Social Impact Fund project will solve issues in Naraand the surrounding region, and that it will provide
a model for regional impact funds nationwide in
the future.

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

Sugiura:	Although deposits and loans remain the primary focus of theBank’s business, we feel we can contribute increasingly to local
community development by placing new importance on creatingsocial value through investment and taking risks proactively outside
the traditional framework of the banking business. I also believethat the awareness of our Group employees will be elevated to newheights by experiencing the process of investment as a financing
method, and that this will make them better equipped to takepersonal responsibility for addressing regional issues.

Objectives of the Nanto Bank Group and the Fund
Sakai:	This Regional Impact Fund is a model initiative for solving regional issues. We are conducting crowdfunding
for shrines and temples in the region in cooperation with our investment partner READYFOR Corporation, forexample, and we implemented a particularly successful project with Horyuji Temple in June 2022, which attracted
nationwide attention and raised funds far exceeding the target amount. At Nanto Capital Partners, we haveconnected various startups to other local businesses, deepening interest and leading to formation of the Impact
Fund. We consider it our ultimate goal not only to solve problems, but also to create various businesses in theregion. I believe that using the networks we have cultivated to date to collaborate with many people is vital for thesustainable growth of Nanto Bank. It is through such efforts that we hope to establish a framework or scheme tocreate more business projects in the community.
Aoki:	As a matter of fact, I am from Ikaruga Town in Nara Prefecture, and the Horyuji Temple project renewed my pridein my hometown, which drew support from so many people throughout Japan.
	The mission of the Yamato Social Impact Fund is not only to nurture qualified staff but also to generate solid
returns. We would be more than happy if we could contribute to increasing Nara’s affluence by pursuing thismission and helping to resolve issues in the Yamato region, even to only a limited degree. I might add that it is theregional banks with the deepest knowledge of the region that will be responsible for revitalizing it through impact
investment, and the region would never be revitalized without them playing an active role.
	
If Nanto Bank can take the lead in expanding this model horizontally in the future, I am convinced that the results
will be excellent.
Sugiura:	We intend to continue providing optimal financial services and solutions to realize sustainable management incooperation with our local communities. With the entry of other industries into the banking business, however,and the emergence of new payment services, we need to take a hard look at the ways in which we demonstrate
our value as a Group. I consider the Yamato Social Impact Fund to be one of the unique strengths we retain as aregional financial institution. I also believe that our Group employees will realize solutions to various issues throughdeployment of the Fund and engender a new raison d’etre and new value for the Bank as a regional financial
institution, a process that will ultimately lead to human resources development. I feel certain that the Fund willcontribute to sustainable growth of the Nanto Bank Group by winning acceptance among customers and thecommunity and by supporting the growth of the regional economy.

Nanto Report 2023, the integrated report of Nanto Bank

37

Value Creation by the Group’s Human Resources

Realizing a Convenient, Prosperous Society

Ensuring Greater Convenience
IT and other digital technologies have become indispensable for thesustainable growth of the Group as our role has changed dramaticallyfrom “supporting business” to “transforming companies and the way
they do business.”
To ensure an accurate grasp of customers’ increasingly diverseand sophisticated needs, the Group organizes and deploys a broad
range of information obtained through “Know Your Customer” activities
conducted under a robust security and information management systemwith the aim of improving the customer experience (CX), enhancing ourown operating efficiency, and increasing the sophistication of our sales
Director in charge, Digital Innovation Office, IT Strategy Department
activities.
Director and Managing Executive Officer Kouji Honda
We are currently developing a new banking application thatenables customers to conduct banking transactions “as if over the counter anytime, anywhere.” In the future, we will enhance ouroffering of non-financial functions to add convenience to various aspects of customers’ daily lives.
We will continue to make both “offensive” and “defensive” efforts to enhance our banking services to give customers newexperiences in a reliable, secure environment.

Basic Policy
With our customer interface undergoing dramatic change, as seen in the spread of digital technology and decline in the number ofcustomers visiting our branches, we are creating an environment that allows customers to access our Group companies seamlessly
regardless of time or location.

Fiscal 2023 Action Plan
External environment

Acceleration oftransition to digital
Diversification oflifestyles

Goal to beachieved

Fiscal 2023 Action Plan
Establishment of an environment in which customers can accessGroup members seamlessly, regardless of time or place, and asystem to raise the Group's productivity.
Improvement of sales efficiency
and visualization of activities

Sustainablegrowth ofregional
economyExpansion and improvement of noninterpersonal tools to create contacts
with customers for asset accumulation

Improvement of sales efficiency and visualization of activities
Improving Group productivity through the use of IT
We are creating an environment that facilitates efficientbusiness operation by deploying business applications
and seamless system integration, not only at branches orduring customer visits, but also away from the office, suchas when confirming plans for customer visits and routes andconducting voice input of daily activity logs on a smartphone.
We will also make use of digital technologies topromote the efficiency of such traditionally paper-based
procedures as property transfers to/from customers andproperty management in our branch offices, with the useof smartphones as a starting point, and concentrate ourresources on solving customer issues.

38 Nanto Report 2023, the integrated report of Nanto Bank

Improving productivity through the use of IT in marketing activities (Image of the envisioned future)
When visiting customers

Gaps in travel and visits

Establishment of a system that enables employees
to concentrate on customer services

Creates more time to address customers’ issues

More sophisticated and efficientteam-based visits
Reduction of clerical workat the reception counter
More efficient
property transfer
Sequential expansion of functions from FY2023

Stress-free work environmentMore efficient operations

Sequential expansion of functions from FY2023

In a branch office (before and after visits)
Enables more sophisticated preparation for solving customers’ issues
Under consideration for introduction in FY2024

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Strategies
and resources
allocation

Outlook xpansion and improvement of non-interpersonal tools that enable interactionEwith asset-forming customers
Banking application development
In order to provide customers with a new experience in a secure environment, we are developing an application that enables themto conduct banking transactions “as if over the counter anytime, anywhere” in pursuit of maximum convenience.

Phase I Introduction planned during FY2023

Key functions

Provides applications with botha superior CX and high security• Account opening (eKYC)

Deposits and• Switch to ledger-free accounts
foreign exchange• Kotora remittance

Various loans

Etc.

• Loan balance inquiries• Card loan borrowing/repayment

Variousnotifications• Suspension/resumption of
cash card use• Change in cash card limit

Smartphone ATM• Cash card-free ATM
deposits/withdrawals

Security• Advanced authentication forstrict ID/password-free
identity verification

Etc.

Etc.

Assets undercustody• Investment trust,
NISA account opening• iDeCo

Etc.

Phase II Under consideration for introduction after 2024

Expansion of non-financial functions... Reinforcement of customer contact points by implementing functions closely connected with customers’
daily lives and communities, and provision of services that are more in tune with today’s needs and lifestyles

Creating banking apps more customers would love to use
We are developing banking applications based on the concept of “providing superior CX” by offering frictionless transactions that resemble over-the-countertransactions, irrespective of the time or place.
We are designing applications to provide “simple, easy operability,” allowing convenient use by a wide range of customers andoffering “high security for safety and peace of mind” to protect their valuable assets.
We plan to start with the launch of applications permitting banking transactions only and then gradually expand their functionality toinclude non-financial services that are closely related to customers' future lives.
We will continue to draw on our ingenuity to develop new banking applications designed to revolutionize the way our customers
interact with the Bank that will eventually become the “face” of the Bank and a familiar communication channel customers will love.
Digital Innovation Office, IT Strategy Department
Section Chief Akihiro Okuda

Expanded Mortgage Loan Web Service functions
In December 2022, we introduced a new “Mortgage
Loan Web Service” employing digital technology to satisfy
diversifying customer needs by enabling customers
to complete the entire mortgage loan process, fromapplication to screening, online. Customers use it to
apply for mortgage loans online from their smartphone or
PC anytime they want.
By seamlessly linking the Bank’s host systemwith IT4 Corporation’s front-end system and IBM
Japan’s digital service platform, the Bank has achieved
a paperless application process that reduces the timerequired for processing by approximately 70%, including
application acceptance, screening, and execution. Thishas significantly shortened the time it takes for customers
to complete the necessary procedures.

Mortgage Loan
Web Service

Web-based
reception desk

Contractor portal

Major functions

Application from anywhere,
24 hours a day, by
smartphone or PC

A dedicated portal site tosupport the businessefficiency of homebuilders(already made available)

Electronic
contracting process

AI-OCR

Automatic execution

No need to fill out a contract
form, affix a personal seal orpurchase revenue stamps

A highly accurate scanningsystem that enables swifter
processing of paper-based
applications

Achieves reduced customer
waiting time through smooth,
operation-free execution

Functions to be added in FY2023
System linkage to the Web for paper applications• Further labor-saving and improved convenience of paperwork and execution
Linkage with banking applications• Improved convenience of application processes, loan payments, account opening, balance inquiries, etc.

Nanto Report 2023, the integrated report of Nanto Bank

39

Value Creation by the Group’s Human Resources

Responses to the Effects of Accelerating Climate Change

Initiatives Addressing Climate Change Issues
Basic Policy
Efforts to achieve carbon neutrality are accelerating worldwide today, as natural disasters
become increasingly frequent and more severe against the background of global
warming, and the impact of climate change on society as a whole intensifies by the day.
Seeking to realize “sustainable management supporting growth together with
its local communities,” the Group is committed to decarbonizing its operations while
contributing to realization of sustainable regional growth by supporting customers’ efforts
to decarbonize their operations and respond to the SDGs.

Fiscal 2023 Action Plan
External environment

Goal to beachieved

Fiscal 2023 Action Plan
Realizing sustainable local communities bymaking efforts to address various climate change issues, including
reduction of CO2 emissions

Globalwarming

Support for customers’
efforts to pursue
decarbonizationand the SDGs

Group
initiatives for
decarbonization

Enhancement of
information disclosure inaccordance with the TCFD
recommendations

Sustainablelocal
communities

Support for customers’ efforts to pursue decarbonization and the SDGs
We support our customers’ efforts to decarbonize their business operations and to pursue the SDGs by acting proactively to develop
environment-related loans and solution products as well as by working with local customers to solve their business challenges.

Strengthening sustainable finance initiatives
We are actively making use of financing instruments, including “positive impact finance,” to provide financial support for customers’sustainability initiatives.
Green businessSocial projects

External evaluation required

Targets for climate change operations
Green loans

Social loans

Sustainability loans

Transition loans
Sustainability-linked loans (SLL)
ESG-responsive private placement bonds (externally evaluated)
Positive impact financing (PIF)
Investments and loans forenvironment-related businesses

Loans with social significanceSubject to TCFD

Sustainable finance disbursement targets
We have set the the following targets as the amounts ofsustainable finance the Bank should provide to support
activities aimed at resolving the sustainability challenges facedby our customers and communities.

TargetamountPeriod In February 2023, Nanto Bank
formulated the “Positive Impact
Finance Framework,” which enables
it to engage proactively in “positive
impact finance.”Positive impact finance is a financing
instrument that involves assessing
the positive environmental, social,and economic impacts of a projectand supports customers’ from afinancial perspective with suchsustainability initiatives as our “GreenLoan” and “Sustainability-linked
Loan.”

1 trillion yen (cumulative total investments and loans executed)
8 years (FY2023-FY2030)
Financing that contributes to solving issues in the environmental andsocial fields

Scope• Environmental: Renewable energy, energy conservation, ZEB, ZEV, etc.
• Social: Regional revitalization, local development, startups, business succession,
BCP measures, etc.

Financing to support and promote customers’ SDG initiatives

40 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Businessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Outlook

Structured finance reinforcement initiatives
We will strengthen our efforts in the area of structured finance forrenewable energy-related projects, etc., which are expected to proliferatesignificantly in the future.
Although the market for solar and biomass power generation iscontracting, onshore and offshore wind power and other renewableenergy-related projects continue to be structured in response to thegovernment's Basic Energy Plan and today’s growing momentum toward
carbon neutrality initiatives.
In June 2022, we arranged a syndicated loan for a new biomass power
plant to be built by a local company, which was a first for the Bank.
In response to the TCFD recommendations, all banks are strengthening
their environmental financing initiatives. We will continue to work with our
specialized teams to acquire new projects in this area.

Power source composition
Approx.
1,024 billion kWh
RenewableenergyNuclearpower

LNG

Approx.
18%

Approx.
934 billion kWh

Non-fossil
Approx. 24%

Approx.
6%

Approx.
1% Hydrogen, ammonia

Non-fossil
Approx. 59%

Approx.
37%
Approx.
20-22%Petroleum,etc.

Approx.
32%

Approx.
22-24%
Non-fossil
Approx. 44%

Approx.
36-38%

FossilApprox. 76%

Coal

Approx.
1,065 billion kWhApprox.
20-22%

Approx.
27%
FossilApprox. 56%

Approx.
20%

Approx.
7%

Approx.
19%
Approx.
2%

FY2019FY2030Approx.
FossilApprox. 41% 26%
Approx.
3%

FY2030(At the time of H27 formulation)

Source: “Cabinet Decision on the Sixth Strategic Energy Plan,” Agency for Natural
Resources and Energy

Resolution of environmental and social issues through financing
The Group’s outward-bound efforts to address climate change issues consist of two main categories:
First, we support the introduction of sustainable management that contributes to enhancing corporate value for local customers and provide sustainablefinance as a means of achieving it. In the past, the Group has focused on solution of issues confronting companies and “managers/owners” of corporate clients.
In recent years, however, the importance of sustainable management that takes into consideration various other stakeholders as well, including employees, local
communities, and supply chains, has attracted increased attention, including among SMEs. Starting in FY2023, therefore, we have been striving to enhance
the sophistication of our consulting sales activities by offering “IT-enabled sustainable support” to help
customers improve their productivity, decarbonize their businesses, and expand their benefit packages.
The essence of our sustainability support for customers is involvement in the upstream of decisionmaking and “collaborative thinking about the kind of management we aim for” from the perspective of the
SDGs. Our engagement in these activities stems from a recognition that the process itself is importantto the fostering of “unconventional” human resources while also providing customers with added value
through resolution of management issues.
Second, we provide structured financing for renewable energy and other projects throughout Japan,
with the aim of fulfilling the Group’s social mission by addressing climate change issues and generating
income. The majority of our participation in solar, wind, and other renewable energy projects is outside theregion, but we continue to contribute to sustainable regional power source development in both our own
and other regions through provision of structured finance, including arrangement of Green Loans for new
biomass power plants. We will continue to contribute actively to sustainable local community development
inside and outside the region through provision of structured finance.
Corporate Solutions Department
Manager Yutaka Sasai

Group initiatives for decarbonization
Besides promoting reduction of Group-wide CO2 emissions, we participate in efforts to reduce paper resources consumption andother environmental activities.

Promoting use of LED lighting in stores and other venues
Another way we seek to reduce CO2 emissions is by promoting the replacement of fluorescent lighting with LED lighting in our branch
offices and other facilities. In FY2022, we replaced lighting equipment in nine of our branch offices with LED lighting (with a resulting
455,000 kWh reduction in electricity consumption), and in FY2023, we plan to do the same in 24 more branches, at which point thelighting in approximately 70% of our branches will have been converted. (Planned electricity reduction in FY2023: 609,000 kWh).

Paper resources reduction (elimination of cash envelopes)
We are participating in efforts to conserve forest resources and reduce waste by such means as discontinuing the installation of
cash envelopes at ATM corners (inside and outside the branches) as of May 31, 2023.

Nanto Report 2023, the integrated report of Nanto Bank

41

Value Creation by the Group’s Human Resources

Responses to the Effects of Accelerating Climate Change
Initiatives Addressing Climate Change Issues
 nhancement of information disclosure inEaccordance with the TCFD recommendations* The Task Force on Climate-related Financial Disclosures(TCFD) was established in December 2015 by the
Financial Stability Board (FSB) at the request of the G20
finance ministers and the central bank governors. The
TCFD published its final report offering recommendations
to encourage voluntary disclosure by companies in June
2017. These recommendations targeted not only financial
companies but the corporate sector as a whole.

Governance
The Group has formulated a “Basic Sustainability Policy" as a foundation for addressing sustainability issues, and the Board of
Directors is discussing matters to be prioritized contained in the Policy. The Board has identified “addressing the escalating problem
of climate change” as one of the Group’s top materialities (priority issues).
The Board of Directors examines the conclusions reached at the semi-annual meetings of the Executive Committee todetermine their appropriateness in light of the Group’s Management Strategy.

Strategy
The Group is committed to acting in unison to address climate change issues as a means of providing value to our stakeholders
through fulfillment of the three objectives defining our Mission: “pursuit of regional development,” “fostering of vitality-creating humanresources,” and “enhancing profitability.” As a member of the community, we will actively support both the Bank’s decarbonization
efforts and those of our customers. In our own efforts to this end, we have set targets for reducing CO2 emissions and begun
promoting such initiatives as upgrading our air-conditioning systems, switching to LED lighting, and introducing eco-cars.
In our efforts to help regional customers pursue decarbonization and the SDGs, meanwhile, we actively propose environmentrelated loans and solution-related products and work with them to solve their business challenges.

Risks and opportunities
We assessed the risks and opportunities associated with climate change based on several public scenarios,* including the 1.5°C
and 4°C scenarios. The timeline is analyzed for the short term (5 years), medium term (10 years), and long term (30 years).
Temporalperspective

PhysicalTransition risk
risk

Opportunity

Risk

Contents
Increase in credit costs (credit risk) resulting from negative effects of tighter climate change regulations and changes in the tax system on customers’
business and financial conditions, as well as damage to the value of real estate collateral due to non-compliance with environmental regulations.

Short- to long-term

Increase in credit costs (credit risk) due to the impact of technological innovations and market changes focusing on decarbonization on customers’ businessand financial conditions

Short- to long-term

Decrease in the Bank’s corporate value due to insufficient responses to climate change (operational risk related to damaging rumors)

Short- to long-term

Increase in credit costs (credit risk) due to damage to real estate collateral resulting from large-scale windstorms, floods, or other natural disasters, as well as
suspension of business and/or adverse effects on business stemming from damage to customers’ operating bases, etc.

Medium- tolong-term

Increase in restoration costs (operational risk related to tangible assets) stemming from damage to the Bank’s bases by large-scale windstorms, flood
disasters, or other natural disasters.

Medium- tolong-term

Increase in customer demand for capital investment in decarbonization projects

Short- to long-term

Increase in demand for funds for infrastructure investment in disaster-prevention measures

Short- to long-term

Increase in opportunities to offer disaster preparedness insurance products and financial products and services related to environmental protection stemmingfrom growing numbers of windstorms and flood disasters that lead to increasingly environmentally conscious customer behavior

Short- to long-term

Increase in business opportunities for services such as solution provision to support customers' decarbonization efforts

Short- to long-term* Referenced public scenarios
1.5°C scenario with progressive decarbonization: IEA NZE2050, IEA APS, NGFS Net Zero2050, IPCC SSP1-1.9, SSP1-2.6
4°C scenario with warming exceeding 4°C: IEA STEPS, current NGFS policies, IPCC SSP5-8.5

Scenario analysis
A scenario analysis was conducted for the risks and opportunities shown below.
Our assessment of the analysis results suggested that there was only a limited financial impact of transition risk and physicalrisk. Since the analysis is based on certain assumptions, however, we will continue to upgrade our analysis methods and expand
the scope of coverage.
Transition risk

Physical risk

Risks to be analyzed

Increase in credit costs due to impacts on customers' business and financial
conditions of tightened regulations, changes in taxation systems, and other suchfactors.

Damage to real estate collateral due to flooding, and increased credit costs due
to suspension or stagnation of business operations resulting from damage tocustomers' sales offices

Scenarios

IEA*1 / NZE (1.5°C scenario), SDS (2°C scenario)

IPCC*2 / RCP8.5 (4°C scenario), RCP2.6 (2°C scenario)

Portfolio to be analyzed Electricity and gas sectors

Business loans in the Bank's operating region

Analysis methodology

Projected future financial impacts and estimated additional credit costs based ontransition scenarios

Additional credit costs due to damage to collateral and reduced sales, estimatedby determining inundation risk based on collateral property and customer location

Analysis results

Increased credit costs to 2050, cumulative total up to approx. 2.1 billion yen

Increased credit costs to 2050, cumulative total up to approx. 6 billion yen*1 IEA (International Energy Agency) *2 IPCC (Intergovernmental Panel on Climate Change)

42 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Businessmodel

Risks andopportunities

Strategies
and resources
allocation

Performance

Outlook

Carbon emissions-related assets
The electricity and energy sector (excluding renewable energy power generation projects) accounts for approximately 2.1% of theBank’s loans. The percentage of carbon emissions-related assets* based on the 2021 TCFD Revised Supplement is approximately
24.4%. (As of March 31, 2023)*	Carbon emissions-related assets were redefined as the “Energy,” “Transportation,” “Materials and Building Products,” and “Agriculture, Food and Forest Products” sectors
in the October 2021 Revised TCFD Proposals. The Bank’s calculations are based on the Bank of Japan’s industry classifications.

Risk Management
The Group recognizes that addressing climate change is a central issue for sustainable regional development. The Bank’s
climate change risk is classified into two categories, credit risk and operational risk, each of which is incorporated into the items
for monitoring by the ALM Committee and Operational Risk Management Committee, respectively, to enhance appropriate risk
management.
Furthermore, in October 2020, the Group established a financing policy which clearly states that it will not, in principle, engage
in financing for the construction of new coal-fired power plants. It also states that it will provide financing for projects involving
deforestation only after carefully considering whether or not its engagement is proper based on the intended project's lawfulness
and its potential environmental impacts.

Indicators and Targets
Group’s CO2 emissions (Scopes 1 and 2) and reduction targets
The Group is striving to reduce CO2 emissions, aiming to achieve a reduction target set for FY2030 of at least 50% below the
FY2013 level. CO2 emissions in FY2022 were 5,091t- CO2, a reduction of 49% from FY2013.
CO2 emissions and reduction targets for fiscal 2030
2)
(t-CO
(t-CO
2)

–35%

–49%

–50%

9,925
6,427

2013

2021

5,091

4,962

2022

2030 (Fiscal year)(Target)Group’s CO2 emissions (Scope 3)
The Group began calculating Scope 3 emissions in FY2022.
We plan to consider calculation methods for extending thescope of calculation to more categories in the future.

(t-CO2)Item
Contents
Scope 1City gas, LP gas, gasoline,
Direct emissions heavy oil
Scope 2
Electricity
Indirect emissions
Total

FY2013

FY2021

FY2022

1,584

1,509

1,517

8,341

4,918

3,574

9,925

6,427

5,091

Scope 3(t-CO2)

FY202290

Category 6: Business travel
Category 7: Commuting

2,222

Total

2,311

(Reference) FY2022 Capital investment in renewable energy- and energy conservation-related facilities and number of solution product-related contracts
Capital investment in renewable energy and energy conservation*1
Total loans executed: 8.4 billion yen

Solution-related products for SDGs and decarbonization
Consulting services for <Nanto> SDG introduction
Declaration recipients 355
e-dash*2 Number of contracts 3*1 Capital investment related to energy conservation: Limited to projects conducted under the interest subsidy program*2 e-dash: CO2 emissions visualization and reduction service

Nanto Report 2023, the integrated report of Nanto Bank

43

Governance Supporting Our Proactive Human Resources

Preparing for Increasingly Varied and Complex Risks

Reinforcing Risk Management
Basic Policy
In the areas of “strengthening credit risk management” and “market risk control,” we seek
to enhance our risk/return management and to assure appropriate returns commensuratewith risk.
In the area of “anti-money laundering and anti-terrorist financing,” we have reinforced ourefforts to protect against risk by establishing a “Countermeasures Policy” to prevent serious
violations that could occur in the absence of effective internal control systems, thus avoiding
potential loss of public confidence and significant damage to our corporate value.

Fiscal 2023 Action Plan
External environment
Increased
geopoliticalrisks
Changesin laws andregulations

Fiscal 2023 Action Plan
We are directing efforts to reinforcing the soundness of the Group’s
management and the appropriateness of its operations through adequate
risk management and flexible decision-making in today highly uncertain
business environment.
Measures to combat money
laundering and terrorist financing

Strengthening credit risk
management

Goal to beachievedAnorganization
that
controls risk
appropriately

Measures to combat money laundering and terrorist financing
Recent years have brought increasing demand from the international community for measures to combat money laundering andprevent financing of terrorism. In this context, we have positioned money laundering prevention as one of our most importantmanagement issues. We have appointed the officer in charge of the department responsible for overseeing measures to preventmoney laundering as the AML General Bank Manager. We also aim to improve the effectiveness and sophistication of our money
laundering prevention by, for example, establishing the “Policy Against Money Laundering and Terrorist Financing” as a fundamental
Group policy.
In response to the emerging financial crimes that are becoming more complex and sneakier, meanwhile, we are also striving tomaintain safe, highly convenient financial services by enhancing our preventive measures to prevent our customers from accidentally
becoming involved in any financial crimes.
Policy Against Money Laundering and Terrorist Financing
1. Organizational structure(1)	The Bank shall position money laundering prevention as one of its most important
issues for management and shall endeavor to implement all possible anti-money
laundering measures.
(2)	The Bank shall establish a centralized management system by designating a person
responsible and a supervisory department for money laundering prevention and shall
respond to the relevant issues in a cross-organizational manner through coordinatedefforts of the departments involved.

4. Reporting of suspicious transactions
The Bank shall confirm and determine whether transactions reported by its branch offices
or detected through transaction monitoring are suspicious and shall notify the authorities
immediately if it determines that the transactions are suspicious.

2. Risk-based approach
The Bank shall employ a risk-based approach to appropriately identify and assess money
laundering and other risks and shall implement mitigation measures commensurate withthe risks.

6. Management and employee training
The Bank shall conduct ongoing training programs to educate its officers and employees
fully with respect to money laundering to raise their levels of expertise and assure proper
responses.

3. Customer management policy
The Bank shall establish a system for conducting confirmation appropriately at the time oftransactions and other customer management measures in accordance with the applicablelegal and regulatory requirements. It shall also examine and analyze customer transaction
records periodically and implement necessary customer management measures.

7. Compliance auditing
The independent Internal Audit Department shall conduct regular audits of the Bank’s
money-laundering prevention and related systems, and the Bank shall draw on the resultsof the audits to improve its systems further.

5. Correspondent bank management
The Bank shall collect information on correspondent banks, assess it in an adequate
manner, and take proper measures in response to the risks associated with it. It shalleliminate any relationships with spurious banks that have no actual business operations.

Strengthening credit risk management
Credit risk is the risk of incurring losses due to a decrease or loss of the value of assets stemming from deterioration of the financial
condition of the creditor. We contribute to our customers’ development through solutions based on our “know your customer”
efforts, offering thorough financial and/or core business support to improve the quality of the Group’s assets at the same time.

44 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Our Shared Vision

Consolidated Financial
Statements

GovernanceRisk management systems

Credit risk
management

Integrated risk management

Risks andopportunities

Performance

Operational risk
management

Integrated risk management system

To reinforce our ability to manage the risks we face in our banking business, Nanto Bank has
Market risk
Liquidity risk
management
management
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’Administrative risk management
individual positioning and magnitude and responding to each promptly and accurately.
(Thorough, accurate office work)
In our commitment to risk management, we have specified basic risk management
System risk management(Response to system failures/prevention ofpolicies through various directives, including our “Integrated Risk Management Regulations.”
unauthorized use)
Legal risk management
To realize integrated risk management in which risks are quantified on a unified scale(Monitoring of legal compliance)
and the amount of each is controlled to an appropriate level in relation to equity capital in
Human risk management(Response to personnel and labor problems)consideration of management strength, we determine the risk capital allotment (capital
Tangible asset risk management
allocation amount) for each type of risk semi-annually within the range of equity capital, and(Response to impairment of tangible assets)
Rumor risk management
control each risk amount (value at risk = VaR, etc.) to ensure that it falls within the scope of(Response to false assertions circulating in thecapital. The ALM Committee evaluates the status of each risk at its monthly meetings as partmarket and among customers)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.
Risk management organization(As of June 30, 2023)

Audit and Supervisory Committee

Board of Directors

Emergency countermeasures meetings

Various management meetings(Alert countermeasures meetings)

Committees

ALM Committee

Operational Risk Management Committee(ALM Subcommittee)(Operational Risk Management Subcommittee)

Compliance Committee(Compliance Subcommittee)

SystemRisk management system

Compliance structure

Supervisorydepartments

Risk Management Division

Compliance Control Department

Classification(department
in charge)

Credit risk

(Risk Management
Division)

Market risk

(Risk Management
Division)

Liquidity risk

(Risk Management
Division)

Operational risk (Risk Management Division)
Administrative risk
(Business Support
Department)

System risk
(IT Strategy
Department)

Legal risk

(Compliance Control
Department)

Human resources risk Tangible asset risk
(Personnel andGeneral Affairs
Departments)(Personnel and General
Affairs Departments)

Compliance
Reputation risk

(Corporate Planning
Department)

Operations
departments

Headquarters departments, sales branches, consolidated subsidiaries

Internal
Audit DivisionInternal Audit Division(ComplianceControl Department)

External audits and auditors

Internal auditing system
Enhancing and reinforcing our risk management require implementing the PDCA cycle to ensure its effective functioning forautonomous improvement, with the Risk Management Division and the operations departments, including the individual offices andbranches, checking and balancing each other for various risks.
The Internal Audit Division responsible for internal auditing seeks to ensure sound management and appropriate operations
by monitoring the occurrence of risks in each business, verifying its PDCA cycle functions, and recommending improvements asnecessary to promote better, stronger risk management.

Crisis management system
The Bank’s risk management systems discussed here are further augmented by its Crisis Management Plan, which is accompanied by a responsemanual for each type of crisis compiled to facilitate appropriate responses to crises that may impact our business, including natural disasters such aslarge-scale earthquakes, system failures, and epidemics of infectious diseases. In the event of a crisis, the Emergency Countermeasures Committee orCountermeasures Headquarters gathers information depending on the degree of the crisis, and issues centralized guidance and orders to minimize its
impact on operations.
We also implement measures to ensure the Bank’s ability to continue providing customer services as one of the service providers playing an essential
role in maintaining social functions. These include such measures as enhancing our facilities to enable continued operation, even in the event of a disaster,and ensuring the effectiveness and continuous improvement of our Crisis Management System through crisis management drills and other measures.

Nanto Report 2023, the integrated report of Nanto Bank

45

Governance Supporting Our Proactive Human Resources

Preparing for Increasingly Varied and Complex Risks

Commitment to strict compliance
Compliance systems reinforcement
Compliance must always be ensured in observance of not only laws, government ordinances, and internal rules, but also of ethicaland 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 our full compliance with any and all applicable rules:	Being fully aware of our 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 mostimportant issue for management. To this end, we have formulated “Basic Guidelines” and a “Code of Conduct” as corporate policies,
with which all the Bank’s officers and employees must comply.
	In order to define a basic framework for our compliance systems, we have clarified our stance toward compliance with laws andregulations, not only by establishing compliance regulations but also by formulating disciplinary regulations that show the fairness andtransparency 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 and decides important matters related to compliance, as well as a supervisory department responsible for planning andsupervising 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 withefforts 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, we have formulated
a set of “Regulations for Dealing with Antisocial Forces, Etc.” to establish and maintain a system that eliminates any relationships with
antisocial forces.

Cyber security initiatives
The Bank has compiled a policy on cyber security initiatives to reinforce its protection against cyber-attacks and other such threats.
Action Initiatives
With cyber-attacks threatening to become increasingly serious in the future, we recognize optimizing our cyber security to ensure the safety of our customers and assets as an important
issue for management. Nanto Bank’s CSIRT* plays a central role in ongoing Bank-wide efforts to implement effective cyber security related to the mid-term “road map” as well as to enhance
our readiness to respond promptly to cyber-attacks.
*CSIRT: A security organization designed to respond to incidents related to computer security

Management involvement
Our Information Asset Management Regulations stipulate that the executive in charge of the IT Strategy Department shall be thegeneral manager of CSIRT. We have been prioritizing development of a cyber security framework under the leadership of theBank’s management in a proactive manner. Participants in the Bank’s CSIRT meetings discuss our progress in realizing our midterm roadmap and annual plan for cyber security, as well as conditions in the surrounding environment and other issues. Amongother precautions, the number of confirmed cyber-attacks and content of all internal and external trends are reported to the CSIRT
General Manager and the Operational Risk Management Committee.

Outsourcing management
We use cloud services or external information systems that meet our information system security standards only after examining thesecurity measures they employ. In addition, we routinely review such introduced services as a follow-up regimen.

Audit structure
The Audit Department and a major consulting firm conduct joint cyber security audits to facilitate advanced audits meeting recent
trends in possible threats to financial institutions. Issues identified in such auditing processes will then be constantly dealt with inaccordance with the Nanto Bank CSIRT’s annual schedule, and the Audit Department monitors the status of efforts to strengthen
cyber security management systems throughout the Bank’s organizations.

46 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Consolidated Financial
Statements

Governance

Risks andopportunities

Performance

Furthering Sophisticated Market Management
The market has remained extremely unstable due to the sharp risein interest rates, mainly in Europe and the U.S., in response to theprogression of global inflation, the resulting depreciation of the yen, andthe increase in geopolitical risks. In response to these conditions, we soldall foreign currency-denominated bonds that were in reversal at the endof the previous fiscal year, and also disposed of investment trusts whosebook value is expected to take time to recover.
In FY2023, European and U.S. markets continue to be unstable dueto the risk of rising interest rates and concerns of falling stock prices
accompanying economic recession, while changes in monetary policy arealso being discussed in Japan. Under the uncertain market environment
Executive in Charge of Market Operations Department
both in Japan and overseas, the Bank will work to restructure its portfolio
Director, Managing Executive Officer Ryuichiro Funaki
to minimize the risk of incurring losses when prices of bonds and stocks
fall, while at the same time enjoying stable fund profits when domestic long-term interest rates rise.
One notable feature of the Bank's market management is the outsourcing of investment management to leading external
asset management firms. This arrangement offers two major advantages: First, it facilitates improvement of the Market Operations
Department’s skills by ascertaining these firms’ operations knowhow; and, second, it gives us the ability to gather real-time
information concerning indicators of changes in global markets. We seek to employ these advantages to improve our risk
management techniques and the returns from our own investment management operations as we strive to enhance the overallsophistication of the Bank's Market Operations Department.

Fiscal 2023 Action Plan
External environment
Slow
economic
growthIncreased
geopoliticalrisk

Goal to beachieved

Fiscal 2023 Action Plan
Controlling the impact of increased market risk andconstructing a portfolio that earns a stable yield

Stable,sustainable
operations

Accumulation of stable periodic income through portfolio restructuring

Accumulation of stable periodic income through portfolio restructuring
Securing stable income
Accumulating capital gains through flexible trading
Employing hedging techniques to minimize the risk of rising interest rates and falling stock prices
Market sector earnings
1.21
17.3

Investment balance (unpaid balance basis)
(%)

1.01
0.07

(Billion yen)

14,759
888
851

14.2

1.0

Market sector yield

11.3

17.0

2.8

2022

911
1,049
4,756

2023 (Fiscal year)

Equities
Foreign currency bonds

Capital income

–9.7
2021

13,259

Income

10.7
0.3

6,145

Market sector earnings(Billions of yen)

6,874

6,541

(Outsourced)(Outsourced)

5,827

5,548

2021

2022

Yen bonds
Investment trusts, etc.

(Fiscal year)(Planned)

Nanto Report 2023, the integrated report of Nanto Bank

47

Governance Supporting Our Proactive Human Resources

Corporate GovernanceCorporate GovernanceWe believe that the basis for governance is a constant pursuit of the best possible way to maximize
the value we offer all our stakeholders in order to achieve the Nanto Mission’s goals and to play an
indispensable role in regional development.

Corporate Governance Structure
The Bank’s Board of Directors comprises 12 members, seven corporate directors (of which, one Audit and Supervisory Board
member) who are familiar with the Group’s operations and five outside directors (of which, two Audit and Supervisory Board
members) who have extensive experience and knowledge outside the Bank. This structure was adopted to separate supervisionfrom execution and to ensure that the Board comprises members with diverse knowledge, experience, and capabilities.
In addition, the supervisory function of the Board of Directors has been strengthened by establishing the Nomination andCompensation Advisory Committee. The Committee comprising the President, Vice President and five outside directors is chairedby an outside director, and includes knowledgeable outside experts as observers to enhance the independence, objectivity, andtransparency of its decision-making.

Transition to a bank with an Audit and Supervisory Committee
By transitioning to a bank with an Audit and Supervisory Committee, we have strengthened our auditing and supervisory functions andaccelerated our decision-making, while seeking to achieve sustainable growth and enhance our corporate value over the medium to long term.
Structure

General Meeting of Shareholders

Audit andSupervisory Committee

Board of Directors

Nomination andCompensation Committee

Directors other than Audit andSupervisory Board members

5 outside directors
including the Chairperson(As of end June 2023)

Directors who are Audit andSupervisory Board members

Opinion-exchange session

Management Meeting

Internal Audit Division

Divisions/Departments

History of Corporate Governance

2023
2022

Transition to a bank with an Audit andSupervisory Committee structure

Ratio of outside directors 40%
Appointment of female outside directors promoted

2021
Director Skills Matrix formulated and disclosed
Sustainability Policy established
Target for strategic shareholding reduction announced
Plan using stock options as stock-based compensation discontinued
Performance-linked stock compensation plan introduced

2020
Nomination and Compensation Advisory Committee established2016
Executive Officer System introduced
Evaluations of Board of Directors’ effectiveness initiated48 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Consolidated Financial
Statements

Governance

PerformanceDirector Skills Matrix

Director and Managing Executive Officer

Kouji Honda

Director and Managing Executive Officer

Takao Handa

Director and Audit and Supervisory Board Member

Experience inother industries

Ryuichiro Funaki

Human resources
development

Takeshi Sugiura

Director and Senior Managing
Executive Officer
Director and Managing Executive Officer, General
Manager, Sales Promotion Headquarters

Human resources
planning

Kazuya Yokotani

Sales promotion

Vice President (Representative Director)

Sales planning

Satoshi IshidaMarket operations

President (Representative Director)

IT & digital

Takashi Hashimoto

Examination

Current position in the Bank

Finance &accounting

Name

Risk management

Management
strategy[Full-time directors][Outside directors]
Name

Current position in the Bank

Hidetaka Matsuzaka

Outside Director

Kozue Nakayama

Outside Director

Takashi Nishimura

Outside Director

Shuhei Aoki

Outside Director
Audit and Supervisory Committee Member
Outside Director
Audit and Supervisory Committee Member

Yoshihiko Kasuya

Regional economy

Economic andfinancial environment

Organization &governance

Finance & AccountingSelection of outside directors
Reasons for appointment and expected contributions

Outside Director

Hidetaka Matsuzaka

Outside Director

Kozue Nakayama

Outside Director

Takashi Nishimura

Outside Director
Audit and Supervisory
Board Member

Shuhei Aoki
Outside Director
Audit and Supervisory
Board Member

Yoshihiko Kasuya

Mr. Matsuzaka was appointed to the position of outside director because of his extensive experience and broad
knowledge of corporate management and organizational operations as well as for his large fund of knowledge thatenables him to supervise management accurately and fairly, and to express his opinions on management froma broad perspective. We expect him to draw on his diverse management experience in corporate operations tosupervise the Bank’s management from an independent perspective, free from the conventional boundaries of afinancial institution.
In addition to her extensive experience as a corporate executive, Ms. Nakayama currently serves as outside director
and outside corporate auditor for three listed companies. She was appointed to the position of independent
outside director owning to her wealth of knowledge and deep insight. She is expected to apply her diverse range
of knowledge and experience to contribute to regional development and to provide advice on the Bank’s efforts topromote diversity, as well as to supervise the Bank's management from an independent, objective standpoint.
Mr. Nishimura was appointed to the position of outside director based on his extensive corporate management
experience in the railroad, real estate, and hotel industries, as well as on his broad knowledge and profound insight
into the issues of corporate organizational management and governance. The Bank expects him to utilize his extensive
management experience in and expansive knowledge of non-financial business entities to provide advice that contributes
to regional development and to supervise the Bank’s management from an independent, objective standpoint.
Mr. Aoki has a wealth of knowledge and experience in every aspect of the financial industry, which has prepared him
to supervise management accurately and fairly in such ways as by sharing his opinions with management from a
broad perspective. We expect him to fulfill his duties as an outside director by drawing on his extensive knowledge
and experience in the financial field to provide accurate advice, and to supervise the Bank’s management from an
independent, objective standpoint.
Mr. Kasuya’s appointment to the positions of outside director and Audit and Supervisory Board member was made dueto the wide-ranging knowledge and superior insight he has acquired through his experience in both financial institutions
and non-financial business enterprises. He is expected to use his diverse experience and knowledge to supervise theBank’s management from an independent, objective standpoint as a member of the Audit and Supervisory Board.

Nanto Report 2023, the integrated report of Nanto Bank

49

Governance Supporting Our Proactive Human Resources

Corporate GovernanceCorporate GovernanceOperational status of the Board of Directors
The Board of Directors is responsible for making important decisions promptly in a highly uncertain management environment aswell as for supervising management. To enhance the effectiveness of these functions, the Board seeks to improve its deliberations
by explaining the matters to be deliberated, particularly to outside directors, in advance of meetings of the Board of Directors.
In addition, the Board of Directors holds opinion exchange meetings to discuss important management issues and mediumto long-term themes after resolutions are made and reports compiled. The directors engage in lively discussions at these meetings,
especially the outside directors, who offer their opinions from various perspectives.

Number of Board of Directors meetings and main subjects of discussion (April 2022 - March 2023)
Board of Directors Meeting Chairman President

Times convened 13

Main items for deliberation• Transition to a bank with an Audit and Supervisory Committee• Review of strategic shareholdings• Action plan for the current fiscal year based on the Management Plan
• Progress in construction of the new main building
and monitoring of progress• Other matters required by laws and regulations (closing of accounts, convening of the Ordinary
General Meeting of Shareholders, selection of representative directors and directors with special titles)• Initiatives to address sustainability issues (e.g., addressing climate change)

Opinion-exchange session

Chairman President

Times convened 5

Main issues discussed• Action Plan for FY2023• Initiatives to revitalize local industry in Nara Prefecture• Bank’s issues from the perspective of industry trends andits policies with respect to the future

Number of Nomination and Compensation Advisory Committee meetings and main advisory matters (April 2022 - March 2023)
Nomination and Compensation Committee

Times convened 7

Main consultation contents• Consideration of the Bank’s governance structure• Placing selection of candidates for the
Board of Directors on the agenda• Consideration of the qualities and capabilities required of directors and updating of the skills matrix table• Setting of targets for executive compensation and performance-linked stock compensation for the current fiscal year

Outside directors’ support system•	We provide outside directors with various types of information they need to perform their duties and contribute to discussions at Board meetings. The Bank also arranges timely training andseminars to share relevant knowledge.
•	The full-time Audit and Supervisory Board members provide the outside Audit and Supervisory Board members with information concerning the status of the Bank, including reports fromthe Internal Audit Department and Risk Management Department, to facilitate communication and cooperation with members of the Audit and Supervisory Board.

Compensation for directors
The Bank has established the following policy for determining the content of compensation, etc., for each individual director(“determination policy” hereinafter).

Basic policy he compensation system is designed to encourage directors (excluding directors who are members of the Audit and Supervisory
T
Board. Same hereafter) to conduct management from a medium- to long-term perspective, and to enhance their awareness of
their duty to contribute to improving the Bank’s performance and increasing its corporate value over the medium to long term. As
a basic policy, compensation for each director shall be set at an appropriate level determined by the Board of Directors once a
year following deliberation and reporting by the Nomination and Compensation Advisory Committee.
More specifically directors’ compensation comprises fixed monthly compensation and performance-linked, stock-based
compensation, while compensation for outside directors, whose responsibility is limited to a supervisory function, comprises only
monthly compensation determined in consideration of their duties.

Policy on determination of individual monthly remuneration (monetary) he monthly remuneration for the Bank’s directors shall be a fixed monthly amount, which shall be determined comprehensively inTaccordance with the “Remuneration Regulations for Directors and Corporate Auditors,” taking into consideration their position, thelevel of other companies’ compensation, the Bank’s performance, and the level of employees’ salaries.
The total remuneration shall be no more than 400 million yen per year (including the amount of not more than 80 million yen foroutside directors), subject to approval by the General Meeting of Shareholders.

50 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Consolidated Financial
Statements

Governance

Performance ompensation for directors who are also Audit and Supervisory Board members shall be “monthly compensation” paid as fixedC
remuneration according to their duties from the perspectives of increasing their independence and further strengthening corporate
governance. The monthly remuneration shall be determined through discussions by the Audit and Supervisory Committee inaccordance with the “Remuneration Regulations for Directors.” The total amount shall be no more than 100 million yen per year,
subject to approval by the General Meeting of Shareholders.

Policy on determination of the details and methods of calculating the amount and number of
performance-linked stock compensation (non-monetary compensation)
 he purpose of performance-linked, stock-based compensation is to clarify the linkage between directors’ compensation and the Bank’sTbusiness performance and stock value, and to increase the directors’ awareness of the need to contribute to improving the Bank’sbusiness performance and increasing its corporate value over the medium to long term.
The Bank will adopt a structure known as a “Board Incentive Plan (BIP) Trust” (“BIP Trust” hereinafter) as performance-linked, stock-based
compensation for the three terms from the fiscal year ended March 31, 2022 to the fiscal year ended March 31, 2024.
The BIP Trust is an incentive plan for directors under which shares of the Bank and an amount equivalent to the cash proceeds from theconversion of the Bank's shares are delivered or paid to directors in accordance with their position and the degree to which indicatorssuch as performance targets have been achieved.
In accordance with the “Officer Compensation Regulations” and the “Share Delivery Regulations Concerning the Officer Compensation
BIP Trust” established by the Board of Directors, “fixed points” corresponding to the directors’ positions and “performance-linked points”
ranging from 0% to 200%, depending on the achievement of the Bank’s performance targets for each fiscal year, are assigned at a set
time each year.
Points are accumulated annually, and one point is allocated as one share of the Bank’s stock in proportion to the accumulated points atthe time of retirement (including cases in which a director who is not a member of the Audit and Supervisory Board retires and is later
appointed as a director who is a member of the Audit and Supervisory Board).
“Performance-linked points” for each fiscal year are based on a target value for profit from customer services (consolidated basis) for theyear in question as a means of motivating the recipients to achieve the Bank’s goals of “securing stable, positive profit from customer
services” and “maximizing the Group’s earnings” as stipulated in the Management Plan.
The maximum amount contributed by the Bank is a total of 100 million yen (the total number of the Bank’s shares issued is 84,000
shares) for three fiscal years.
< Formula for calculation of allotted points>
Fixed points = Base amount of stock-based compensation by position (*1) × 2/3 ÷ Assumed stock price (*2)
Performance-linked points = Base amount of stock-based compensation by position × 1/3 ÷ Assumed stock price x Performance-linked coefficient*1 Total amount of compensation for each position to be paid under the scheme when the performance achievement rate is 100%.
*2 Average acquisition unit price of the Bank's shares initially acquired by the BIP Trust (rounded down to the nearest whole number)Standard amount of stock compensation by rank
Position (*3)
President (Representative Director)
Vice President (Representative Director)
Director and Senior Executive Officer
Director and Managing Executive Officer(Unit: thousand yen)Standard amount of stock-based
compensation by position (*1)
6,156
5,472
4,275
3,762

Breakdown
Fixed portion
4,104
3,648
2,850
2,508

Performance-linked portion
2,052
1,824
1,425
1,254

*3 The position at the beginning of the period subject to payment (from the day following the Annual General Meeting of Shareholders of the previous year to the date of the Annual General
Meeting of Shareholders of the current year) is applied.

Target value
Profit from customer transactions (consolidated): 5.6 billion yen

Performance-linked coefficient(Unit: thousand yen)-0.2 billion yen to -0.1 billion yen

Performancelinked coefficient80%+0.9 billion yen to +1 billion yen

190%+0.3 billion yen to +0.4 billion yen

130%-0.3 billion yen to -0.2 billion yen

70%+0.8 billion yen to +0.9 billion yen

180%+0.2 billion yen to +0.3 billion yen

120%-0.4 billion yen to -0.3 billion yen

60%+0.7 billion yen to +0.8 billion yen

170%+0.1 billion yen to +0.2 billion yen

110%- 0.5 billion yen to -0.4 billion yen

50%+0.6 billion yen to +0.7 billion yen

160%

0.0 billion yen to +0.1 billion yen

100%

0.5 billion yen or less0%+0.5 billion yen to +0.6 billion yen

150%- 0.1 billion yen to -0.0 billion yen

90%

Deviation from target+1 billion yen

Performancelinked coefficient200%

PerformanceDeviation from target
linked coefficient+0.4 billion yen to +0.5 billion yen
140%

Deviation from target

Nanto Report 2023, the integrated report of Nanto Bank

51

Governance Supporting Our Proactive Human Resources

Corporate GovernanceCorporate Governance
Policy on monthly remuneration and performance-linked stock compensation as a percentageof remuneration, etc., for individual directors
 he Bank shall determine the ratio of remuneration according to each individual director’s classification to ensure that the level ofT
remuneration encourages directors to conduct management from a medium- to long-term perspective and with heightened awarenessof the need to contribute to improving the Bank’s performance and to increasing its corporate value for the foreseeable future.
Specifically, monthly remuneration shall be fixed remuneration, and the ratio of performance-linked stock compensation shall be 10% to
20% of the annual total monthly remuneration, depending on the degree to which target values are achieved.

Matters concerning determination of individual directors’ remuneration, etc.
In its efforts to ensure objectivity and transparency in the procedures employed to determine remuneration and enhance corporate value,
the Bank has established the Nomination and Remuneration Advisory Committee, of which the Chair and a majority of the members areoutside directors.
Individual directors’ compensation is determined by the Board of Directors in accordance with the “Regulations on Directors’Compensation,” based on deliberations and reports of the Nomination and Compensation Advisory Committee.

 otal compensation by executive officer category, total compensation by type ofTcompensation, and number of executive officers eligible for compensation, etc.
Current fiscal year (April 1, 2022 to March 31, 2023)

Executive officer classifications

Number of
executive
officers

Total remuneration, etc.
(million yen)

Directors (excluding outside directors)

6

216

181

35

Corporate auditors (excluding outside
corporate auditors)

2

38

38

—

Outside directors and outside auditors

6

39

39

—

Performance-linked compensation(non-monetary compensation)

Fixed remuneration(Notes) 1. The Bank has introduced performance-linked stock compensation for directors. Performance-linked remuneration in this table is theamount recorded as expenses for the fiscal year under review.
2. The Bank’s consolidated business profit from customer transactions, which is the basis for calculating performance-linked remuneration,
was 5.89 billion yen (an increase of 3.19 billion yen compared to the target) for the fiscal year under review, compared to the target of 2.7
billion yen.
3. No employee salaries were paid to directors who also serve as employees.
4. There is no director whose total amount of remuneration, etc., on a consolidated basis is 100 million yen or more.
5. The above compensation is for the fiscal year under review, and the Bank has transitioned to a bank with an Audit and Supervisory
Committee system following the resolution to amend the Bank’s Articles of Incorporation at the Annual General Meeting of Shareholders
held on June 29, 2023.

52 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Consolidated Financial
Statements

Governance

Performance

Evaluation of the Board of Directors’ effectivenessSince fiscal 2016, the Bank has followed a policy of conducting an annual analysis and evaluation of the effectiveness of the Boardof Directors.
The table shows the progress made in addressing issues identified in the previous year, as well as the methods and results ofthe evaluation of the Board of Directors’ effectiveness in fiscal 2022.
Progress in addressing issues identified in the previous year’s evaluation of theeffectiveness of the Board of Directors(1)	Deeper discussions at Board of Directors meetings on strategies that willcontribute to medium- to long-term improvement of corporate value
Action plans, new businesses, etc., were discussed at several Board of
Directors meetings as well as at opinion-exchange meetings.
(2)	Further review of the operation of the Board of Directors meetings to deepen
discussion
Representatives of the divisions responsible are also present at the
preliminary explanatory meetings for outside directors to explain theexecutives’ views, which provide the basis for discussion at Board of
Directors meetings, and also the reasons for their proposals.
(3) Enhancement of executives’ training to revitalize the Board of Directors
In accordance with the Annual Plan, theme-based study sessions suchas “Diversity and Promotion of Women’s Activities” and “Trends in Cyber
Security” were extended to the general manager level.
Evaluation method
In fiscal 2022, the Bank conducted an evaluation of the effectiveness of the Bank’s
Board of Directors as discussed below based on the results of a questionnaire
compiled and analyzed by an external consultant.
(1)	In February 2023, a questionnaire was sent to all the directors (10) and all the
corporate auditors (4) regarding the composition, operation, and deliberationsof the Board of Directors (“FY2022 Questionnaire”).
(2)	At a Board of Directors Meeting on May 12, 2023, the results of thequestionnaire and the external consultant’s analysis were reported.
(3)	At a Board of Directors meeting on June 17, 2023, the Bank finalized its
evaluation of the effectiveness of the Board of Directors for fiscal 2022 upon
discussion of the Bank’s issues and further initiatives.
The main items included in the FY2022 Questionnaire are as follows. Each questionin the questionnaire is designed to be rated on a 5-point scale. Starting in thecurrent fiscal year, comments must be included for each main item.

I. Composition and operation of theBoard of Directors (5 questions)II. Management and sales strategies(10 questions)III. Corporate ethics and risk
management (3 questions)IV. Dialogue with shareholders (4questions)
V. Nomination and compensation ofmanagement (3 questions)VI. Improvement of previous year’s
issues (1 question)

Summary of FY2022 Questionnaire analysis and evaluation results
The Board of Directors shared and discussed the results of the external consultant's
analysis of the FY2022 Questionnaire, and confirmed that, on the whole, the Bank's
Board of Directors operates appropriately and ensures effectiveness, with examples
including mention of certain issues that had been addressed in the previous year.
We recognize, however, that there is room for further improvement, including
addressing the issues raised in the previous year.
<Issues identified in the Questionnaire results>
Formulation and monitoring of management strategies
Promotion of DX and the SDGs
Investment in human capital and development and execution of humanresources strategies based on the Management Plan
Atmosphere of Board meetings and multifaceted discussions
Director training

Future Initiatives
As a result of discussions held by the Board of Directors concerning issues identified
from the results of the FY2022 Questionnaire, the following initiatives will be
implemented in fiscal 2023 to enhance the effectiveness of the Board of Directors
further.
<Initiatives for fiscal 2023>
 iscussion at Board of Directors’ meetings about strategies and other mattersDsupporting sustainable management
Further improvement of Board of Directors’ operations to deepen discussions
Enhanced training for Board members to revitalize the Board of Directors

Message from the Audit and Supervisory Committee Chairman
With the transition to a bank with an Audit and Supervisory Committee, I will have voting rights at Boardof Directors meetings as an Audit and Supervisory Board Member as well as the right to comment on
the appropriateness of management in the area of auditing. This structure will strengthen the Bank’s
supervisory functions and enhance its corporate governance while also contributing to further soundnessof its management and corporate value.
Director and Audit and Supervisory
Board Member
Since audits by the Audit and Supervisory Committee are conducted systematically based on an
Takao Handa
internal control system, the Audit and Supervisory Committee will actively support the Audit Department toenhance its sophistication, and the Audit and Supervisory Committee will review and discuss from various angles the issues that haveemerged across the Bank and other issues identified through various monitoring activities. The Audit and Supervisory Committee also
recognizes that it is responsible for contributing to the operation of the Board of Directors by examining and discussing issues fromvarious perspectives and making recommendations to the Board of Directors to encourage discussion of the conclusions reached.
Considering today’s trend toward “aggressive” governance, we intend to pay particular attention to the progress of the Action
Plan in realizing the Management Plan. With regard to investment in human capital, which is a key factor in sustainable growth, weare deepening our discussions of human resources strategies, including the creation of “unconventional” human resources. We will
examine the manner in which this human resources strategy fits in and functions with the Bank’s overall corporate strategy, including
its Management Strategy, as well as the implementation status of various measures in the field required by the human resources
strategy and the appropriateness of monitoring the results. We will then make suitable recommendations concerning these measures.
We will do our utmost to ensure that our recommendations contribute to the steady progress of human resources development withrespect to all the Bank’s executives and employees, while producing unconventional human resources.

Nanto Report 2023, the integrated report of Nanto Bank

53

Governance Supporting Our Proactive Human Resources

Corporate Governance
Executive Officers
Directors
President (Representative Director)

Vice President (Representative Director)

Takashi Hashimoto

Satoshi Ishida

Apr. 1977 Joined Nanto Bank
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 (Representative Director) (current position)

Director and Senior Managing Executive Officer

Kazuya Yokotani(Departments) Management Division, Risk Management Division,
Compliance Control Division(Departments) Overall executive control, Secretary’s Office, Corporate
Planning Division, Responsibility for special DX / SDG
strategies
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 (Representative Director)
Apr. 2020 Vice President and Executive Officer (Representative Director)(current position)

Director and Managing Executive Officer,
General Manager, Sales Promotion Headquarters

Takeshi Sugiura(Departments) Sales Support Department, Corporate Solutions
Department, Asset Consulting Department

Apr. 1985 Joined Nanto Bank
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
Apr. 2022 Director and Senior Managing Executive Officer (current position)

Apr. 1986 Joined Nanto Bank
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
Apr. 2022 Director, Managing Executive Officer and General Manager,
Sales Promotion Headquarters (current position)

Director and Managing Executive Officer

Director and Managing Executive Officer

Ryuichiro Funaki

Kouji Honda(Departments) Market Operations Department, Regional Business
Creation Division, Tokyo Sales Department(Departments) IT Strategy Department, Business Support Division,
Examination Department

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. (Director, Sales
Administration Department)
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
Apr. 2022 Director and Managing Executive Officer (current position)

Apr. 1987 Joined Nanto Bank
Apr. 2018 Executive Officer and General Manager, Osaka Chuo Sales
Department
Apr. 2019 Executive Officer and General Manager, Osaka Block
Headquarters
Apr. 2021 Executive Officer and General Manager, Nara-Kitawa Block
Headquarters
Apr. 2022 Executive Officer and Deputy General Manager, Sales
Promotion Division, General Manager, Nara-Kitawa
Block Headquarters and General Manager, Kyoto Block
Headquarters
Apr. 2023 Managing Executive Officer, Nanto Bank
June 2023 Director and Managing Executive Officer, Nanto Bank
(current position)

Directors and Audit and Supervisory Board Members
Director (full-time) and Audit and Supervisory
Board Member

Outside Director
Audit and Supervisory Board Member

Takao Handa

Shuhei Aoki

Apr. 1981 Joined Nanto Bank
Oct. 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)
June 2023 Outside Director, Audit and Supervisory Board Member,
Nanto Bank (current position)

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.
June 2020 Outside Director, Nanto Bank (current position)
June 2023 Outside Director, Audit and Supervisory Board Member,
Nanto Bank (current position)

54 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Governance Supporting Our
Developing Human
Value Creation by the
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Consolidated Financial
Statements

GovernanceOutside Director

Outside Director

Hidetaka Matsuzaka

Kozue Nakayama(Main concurrent positions)
Chairman, Board of Directors, Aussie Capital Co., Ltd.
Advisor, Osaka Gas Co., Ltd.
Outside Director, Hiroshima Gas Co., Ltd.
Outside Director, Nishimatsu Construction Co., Ltd.

(Main concurrent positions)
Outside Director, TDK Corporation
Outside Director, Isuzu Motors Limited
Outside Auditor, Imperial Hotel, Ltd.

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 Outside Director, Nanto Bank (current position)
June 2020 Outside Director, Hiroshima Gas Co., Ltd. (current position)
June 2022 Outside Director, Nishimatsu Construction Co., Ltd. (current
position)

Apr. 1982 Joined Nissan Motor Co.
Apr. 2005 General Manager, Planning Department
Apr. 2008 General Manager, Brand Management Office
Sep. 2010 Deputy General Manager, Brand Coordination Division
Apr. 2011 Joined Yokohama City Hall
Apr. 2012 Director, City of Yokohama Culture and Tourism Bureau
June 2018 President and Representative Director, PACIFICO YokohamaInternational Peace Conference Center
June 2019 Outside Corporate Auditor, Imperial Hotel, Ltd.
June 2020 Outside Director, TDK Corporation (current position)
June 2020 Outside Director, Isuzu Motors Ltd. (current position)
June 2022 Outside Director, Nanto Bank (current position)

Outside Director

Takashi Nishimura(Main concurrent positions)
President and Representative Director, Kintetsu Miyako Hotels International, Inc.
Group Executive Officer, Kintetsu Group Holdings Co., Ltd.
Apr. 1979 Joined Kinki Nippon Railway Co., Ltd. (current KintetsuGroup Holdings Co., Ltd.)
Sep. 1979 Seconded to Kintetsu Real Estate Co., Ltd.
Nov. 2000 General Manager, General Planning Office, Kintetsu Real
Estate Co., Ltd.
Dec. 2002 Director, Kintetsu Real Estate Co., Ltd.
June 2010 Executive Officer in Charge, General Planning Department,
Kintetsu Railway Co., Ltd.
June 2011 Executive Officer, Deputy General Manager, Real EstateBusiness Division, Kintetsu Railway Co., Ltd.
June 2012 Executive Officer, General Manager, Distribution Business
Management Department, Lifestyle Business Division,
Kintetsu Railway Co., Ltd.
June 2013 Director and Managing Executive Officer, General Manager,
Distribution Business Management Department, LifestyleBusiness Division
Apr. 2015 Senior Managing Director, Kintetsu Real Estate Co., Ltd.
June 2019 Executive Vice President, Kintetsu Real Estate Co., Ltd.
June 2020 Director, Kintetsu Group Holdings, Inc.
June 2020 President and Representative Director, Kintetsu Miyako
Hotels International, Inc. (current position)
June 2021 Group Executive Officer, Kintetsu Group Holdings, Inc.
(current position)
June 2023 Outside Director, Nanto Bank (current position)(Note)	Directors Hidetaka Matsuzaka, Kozue Nakayama, Takashi Nishimura,
Shuhei Aoki, and Yoshihiko Kasuya are outside directors as definedin Article 2, Item 15 of the Companies Act.
	All the outside directors satisfy the “Criteria for Independence”
specified by the Bank, and all have been reported to the Tokyo Stock
Exchange, Inc., as independent directors.

Outside Director
Audit and Supervisory Board Member

Yoshihiko Kasuya(Main concurrent positions)
Outside Corporate Auditor, Chino Corporation
Apr. 1979 Joined The Mitsubishi Bank, Ltd. (current The Bank ofTokyo-Mitsubishi UFJ, Ltd.)May 1994 Deputy General Manager, Bangkok Branch, MUFG
Mar. 1997 Deputy General Manager, Sales Department 3, Sales
Division 1, MUFG
Oct. 2000 Deputy General Manager, General Affairs Office, MUFG
May 2003 General Manager, International Operations Department,
MUFG
May 2006 General Manager, Kyoto Branch, MUFG
June 2006 Executive Officer and General Manager, Kyoto Branch,
MUFG
June 2008 President and Director, Chitose Kosan Co., Ltd. (current
Chitose Corporation)
June 2010 Director and Managing Executive Officer, Prince Hotel Co.,Ltd.
Apr. 2015 Vice President and Executive Director, Seibu Construction
Co., Ltd.
June 2023 Outside Corporate Auditor, Chino Corporation (current
position)
June 2023 Outside Director and Audit and Supervisory Board Member,
Nanto Bank (current position)
Nanto Report 2023, the integrated report of Nanto Bank

55

Stakeholder Engagement

Initiatives toward enhanced engagement with stakeholders
Basic thinking
The Nanto Bank Group places particular importance on its engagement with stakeholders, listening sincerely to the ideas andopinions of everyone, including our customers, local community residents, employees, and shareholders, and responding to theirrequests. We are steadily implementing our Action Plan while engaging in continuous dialogue and creating new value in cooperation
with our stakeholders as an avenue toward realizing sustainable management that grows with the community.
Nanto Bank
stakeholders
Customers

Means ofcommunication

Local
communities

Nanto BankGroup

Employees

Shareholders

Stakeholders

Main issues and needs

Primary means of communication

Customers

Diversification and growing complexity ofcustomer needs• Dialogue using customer feedback cards, etc.

Local
communities

Sustainable local communities
Developing human resources for the next
generation within the community• Crowdfunding• Donations through trusts• Financial and economic education• Volunteer river cleanup activities• Nanto Scholarship Society• Cherry Blossom Preservation Society• “Magokoro no Issatsu” (“sincere book”) campaign• Donations to the Nanto Manyo Charity Walk
• Nanto Bank Hockey Club

Employees

Ensuring a comfortable workplaceenvironment
Initiatives to reform work styles• Increases in basic and starting salaries• Childcare support program

Shareholders

Timely and appropriate information
disclosure
Appropriate returns to shareholders
Enhancement of corporate value• IR meetings• Publication of a management information magazine• General Meeting of Shareholders• Dialogue with institutional investors and analysts

Engagement with customers
The Nanto Bank Group strives to build relationships of trust with its customers by responding to their various opinions and requests.

Customer-oriented business operations
In its commitment to conducting business in the best interests of customers, the Nanto Bank
Group* has established an Action Plan for realizing its “Policy Initiative for Customer-oriented
Business Operations.”
The Policy for Customer-oriented Business Operations is a concrete expression of ourcommitment to contributing to customers’ stable asset formation in our sales of financial
products. We will put this policy into practice, establish indicators (KPIs) to confirm the resultsof these efforts, and review and disclose the results periodically.

Please refer to our website for details of our“customer-oriented business management.”* Group companies subject to the KPIs: The Nanto Bank, Ltd. and Nanto Mahoroba Securities Co., Ltd.

Customer feedback cards
We are directing efforts to raising awareness of CS activities and establishing a CS mindset by asking customers to evaluate ourdaily sales activities online using our customer feedback cards (questionnaires) on the LINE app. Seeking to enhance customer trust,
we gather information about customers’ potential complaints and needs and respond promptly to improve our products, services,and customer services.
How to complete friend registration on the LINE app:
(1) Using “Friend Search”(2) Using “Add Friend”

Search for “Nanto Bank” and register
as a friend.

Search for “@nantobank” in the ID search andregister.

(3) Using the QR code
Register via the QR code using a QR code reader.

* The LINE smartphone communication application is provided by LINE, Inc. We ask customers
to consider their own preferences when deciding whether to download the LINE app.

56 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Our Shared Vision

Business
model

Performance

Community engagement
The Nanto Bank Group is committed to sustainable management developed together with its local communities. We participate
actively in community activities and events.

Crowdfunding
We interconnect the diverse future aspirations of individuals, organizations, and communities by deploying crowdfunding to meetcustomers’ financing needs.
To date, we have mainly devoted the funds to shrines and temples, but we are accelerating our support for local arts, hospitals,
food and beverage providers, and tourism facilities.
Results

Nanto Bank

Fiscalyear

AmountTarget amountAchievement Number ofof support(thousand yen)rate (%)
supporters(thousand yen)

Crowdfunders

2022

Yamato Koriyama City Watamachi Nicoichi Row House Project

1,800

2,460

136

161

Religious Corporation Horyuji Temple

20,000 157,000

785

7,456

Saidaiji Temple

5,000

12,150243

546

Religious Corporation Ryubutsuji Temple (Okadera Temple)

2,500

4,176

167

278

Religious Corporation Possessor of the Way Emperor Shrine

10,000

6,230

62

270

Religious Corporation Daian-ji Temple

10,00013,225132352

Consultation

Customer
introduction

Business alliance

Introduction of
crowdfunding operators

Customer(crowdfunding
company)

Concept
publication

Crowdfunding
operator

Crowdfunding site

Funds

Supporters

Returns

Donations through trustsAgreement signatories (as of March 31, 2023)
Asuka Village Ando Town Ikaruga Town
Ikoma City
Uda City
Oji Town
Oyodo Town Kashiba City Kashihara City Katsuragi City Kawai Town Kawakami Village
Gojo City
Gose City
Sakurai City
Kawanishi Town Kanmaki Town Koryo Town
Shimokitayama
Tawaramoto
Sango Town Shimoichi Town
Soni Village Takatori Town
Village
Town
Totsukawa Village
Nara City
Higashiyoshino Village Heguri Town Miyake Town
Tenri City
Yamazoe Village Yamatokoriyama City Yamatotakada City Yoshino Town
Ide Town
Kizugawa City
Seika Town
Kyoto Prefecture
Nara Prefecture

Municipalities

To offer more accessible way to donate inheritedproperty to local governments or other entities, we haveentered into an agreement entitled the “Agreement
on Donations Through Trusts Instead of Wills” with 37
municipalities and educational institutions and 11 otherorganizations. The Nanto Anshin Todokeru Trust for
Family Happiness (donation course) makes it possible
for signed-up municipalities, educational institutions,and other entities to receive assets in donations thatwould otherwise be inherited, even when no will is left.

Kansai Guide Dogs for the Blind Foundation, National University Corporation Kyoto University, Religious Corporation
Kinpusenji Temple, Saidaiji Religgious Corporation, Daianji Religious Corporation, Doshisha Educational Corporation,
Educational
Social Welfare Corporation Nara Prefectural Council of Social Welfare, Public University Corporation Nara Medical
institutions, etc.
University, National University Corporation Nara Institute of Science and Technology, Independent Administrative
Institution National Research Institute for Cultural Properties, Nara, Religious Corporation Horyuji Temple

Nanto Anshin Todokeru Trust for Family Happiness [donation course] product plan
(1) At time of application(trustee)Trust foundation
management

Agreement(2) In the event of inheritance
Product application

Nanto Bank

ApplicantNanto Bank

(trustee and beneficiary)(trustee)

Conclusion of trust
agreement
Communication of
Designation
application details

Municipality, etc.
(second beneficiary)

Notification of death
Agreement

Notifier of death* In principle, theapplicant’s designatedheirs

Payment of trust funds

Municipality, etc.
(second beneficiary)

Notifier of death*	Donations under the agreement will
be made using the Nanto Anshin
Todokeru Trust “Family Happiness”
product.
	For product details, pleaserefer to the brochure of “Nanto
Anshin Todokeru Trust for Family
Happiness.”[About the Bequest Donation Program]
We have expanded our services related to inheritance issues by entering into agreements with 18 municipalities and 17 educational institutions to enhance ourbequest donation program.
When a municipality, educational institution, or other organization that has signed up with the Bank is offered a donation by means of a bequest, our
specialized staff provides support for preparation of a will and/or other documents in connection with the bequest and/or inheritance to fulfill the donor’s last wishes.
<Nara prefecture> Ikoma City, Kashiba City,
Kashihara City, Kawai Town, Kawakami Village,
Kawanishi Town, Kammaki Town, Koryo Town,
Sango Town, Tawaramoto Town, Tenri City, Nara
City, Yamazoe Village, Yamatokoriyama City,
Yamatotakada City
<Kyoto prefecture> Ide Town, Kizugawa City,
Seika Town

Educational
institutions, etc.

Municipalities

Agreement signatories (as of March 31, 2023)
Kansai Guide Dogs for the Blind Foundation, National University Corporation Kyoto University, Public Interest Incorporated
Foundation Kyoto University iPS Cell Research Foundation, Religious Corporation Kimpusenji Temple, Saidaiji Religious
Corporation, Daianji Religious Corporation, Educational Corporation Tezukayama Gakuen, Educational Corporation Tenri
University, Public Interest Incorporated Foundation Tenri Yorozu Consultaion Center, Educational Corporation Doshisha,Social Welfare Corporation Nara Prefectural Council of Social Welfare, Public University Corporation Nara Medical
University, National Institute of Technology Nara College, National University Corporation Nara Women's University,
National University Corporation Nara Institute of Science and Technology, Incorporated Administrative Agency Nara
National Institute of Cultural Properties, Religious Corporation Horyuji Temple

Nanto Report 2023, the integrated report of Nanto Bank

57

Stakeholder Engagement

Strengthening relationships with the community through social contributions
Promotion of financial and economic education

Volunteer river cleanup activities

We provided on-site work
experience classes and work
experience for local elementaryand junior high school students
to help them acquire basic
knowledge about monetary
matters.

We participate in the “Kizu River Basin
Cleanup Project,” a large-scale project
carefully organized by the Kizu River Basin
Cleanup Executive Committee, and the“Yamato River Simultaneous Cleanup Project”
organized by Nara Prefecture. The Nanto
Bank Group aims to achieve sustainableregional growth and development by providing
leadership in efforts to achieve the SDGs.

Nanto Scholarship Society

Cherry Blossom Preservation Society

The Magokoro no Issatsu Campaign

The Nanto Scholarship Society
offers scholarships for highschool and university studentsof outstanding character andacademic ability who reside in
Nara Prefecture. As of March
2022, the society had provided
scholarship support for 1,461
students since its establishment
in 1964.

The Bank is a special member of the Yoshino Cherry
Blossom Preservation Society, which was establishedcooperatively by the public and private sectors to protect
the Shiroyama Sakura cherry trees (approx. 30,000 trees)on World Heritage Site Yoshino Mountain (Yoshino-cho,Nara Prefecture), which have shown signs of remarkable
deterioration in recent years. As a regional financial
institution, Nanto Bank cooperates actively with efforts toprotect and nurture Yoshino’s cherry trees by such means as
dispatching volunteer staff to various related events.

Every year, the Bank donates books recommended by
its executive officers and employees to the Nara Training
School for Juvenile Delinquents for distribution as
Christmas presents.
This activity has been carried on since 1987 as partof our Magokoro no Issatsu Campaign for the purpose ofcontributing to the emotional education of juveniles.
Besides polular works recently published, thedonated books include dictionaries, reference books, andother resources of high value for education.

Donations to the Nanto Manyo Charity Walk

Nanto Bank Field Hockey ClubWe make annual donations to the Nanto Manyo Charity Walk
to improve the welfare of residents of our regional community.
Our 2022 donation was in the amount of 600,000 yen,unchanged from the previous year. The donations contributeto the operation of a children’s cafeteria and the activities ofvolunteer groups.

In 1982, the Bank established a women's field hockey club, which has
been contributing ever since to promoting sports in Nara Prefecture as the"Nanto Bank SHOOTING STARS." The club participates in Nara City sports
events, visits schools, and holds field hockey training sessions for local
elementary school students. The players are dedicated to contributing toand interacting with the local community through field hockey games.

Engagement with employees
The Nanto Bank Group seeks to be an organization in which every employee without exception feels a sense of fulfillment andcontinues to grow day by day. We are taking various steps to create an environment and develop initiatives to foster a corporate
culture of this kind.

Increases in basic and starting salaries
We raised basic salaries for our employees and hourly wages for senior staff and part-time workers for the first time in 28 years
in response to recent price hikes and also to make employees feel more motivated to deal with community and customer issues
and contribute to regional development. The starting salary increases were also designed to secure more talented, diverse humanresources for the next generation.

Childcare support systems
The Nanto Bank Group has established various childcare support systems as part of efforts to create a comfortable workplace forevery employee who seeks to balance work and childcare.
NameSystem overview

Paternity leave

Up to four weeks of paid childcare leave to be taken within eight weeks of the birth of a child.

Fertility Treatment Leave System

Employees undergoing fertility treatment are eligible for up to 12 days of paid leave per year.

Extension of the period during which employees can benefit from the existing
systems designed to support childcare, including shorter working hours

Employees raising children up to junior high school age will be eligible for shorter working hours.

Expansion of the Family Support Leave System

Employees can now take five days of paid leave before and after the birth of a child (or a grandchild).

Expansion of the Child Nursing Care Leave System

Employees caring for a child up to junior high school age can take five days of paid leave to care fora sick child.

58 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Business
model

Performance

Engagement with shareholders
The Nanto Bank Group strives to disclose information to shareholders in an appropriate and timely manner. We also engage inconstructive dialogue with our shareholders in order to achieve sustainable growth and to enhance our corporate value over the
medium to long term.

Investor relations (IR) activities
The purpose of the Bank’s IR activities is to provide our valued shareholders and investors with the information they need to makeinvestment decisions in a timely, continuous, and impartial manner as a means of ensuring appropriate evaluation of companies in
the capital markets.
The Nanto Bank Group employs IR activities to explain its management strategies and financial results to stakeholders.
In fiscal 2022, the following initiatives were implemented through Web conferencing and teleconferencing.
[IR Calendar]
July 2022
July
October
DecemberIntegrated report issued.

May 2023

Publication of disclosure leaflet (reference materials)

June

Annual report (English) published.

Fiscal 2022 full-year results briefing (large-scale
meeting) with both in-person and online attendees.
135th Ordinary General Meeting of Shareholders

Fiscal 2022 interim results briefing (large-scale inperson meeting) streamed live.

IR meetings

Publication of management information

Large meetings fordomestic and foreign
institutional investors
and analysts are held
twice a year.
We also hold one-onone and other meetings
as required.

In addition to the above presentationsof management information, we publish
an integrated
report and a minidisclosure leafletthat introduce theGroup’s initiatives.

General Meeting of Shareholders
Main questions raised at the 135th Ordinary General Meeting of Shareholders

Dialogue with institutional investors andanalysts
Items for discussion in interviews in FY2022

T he Bank’s efforts to improve its P/B ratio asrequested by the Tokyo Stock ExchangeImpact of the declining birthrate and aging
population on the Bank’s performanceChanges in the Board of Directors and impact ofparticipation by female directors
Strategies for overseas operations
Shareholder benefit programs

Improvement of shareholder returns
Investment with an awareness of the cost of capitalFuture outlook for Nanto Mahoroba Securities

Principal themes and concernsF uture policies for increasing income from services
Approach to unrealized losses on securities
Policies on future returns to shareholders andcapitalStatus of efforts to improve employee engagement

We are committed to the following activities to promote constructive dialogue with our shareholders.
1. Dialogue with shareholders
To assure constructive dialogue with shareholders, the Directorof the Corporate Planning Department, who oversees the Bank’s
IR activities, plays a central role by participating actively in the
dialogue.
2. Internal structure facilitating dialogue
The Corporate Planning Department responsible for IR activities has established a system of compiling information fromthe relevant departments and providing proper information toshareholders.
3. Means of dialogue other than individual meetings
IR activities are conducted as required to provide shareholders
with explanations. We will also continue to enhance our disclo-sure activities and to disseminate information widely by posting
it on our website.
4. Feedback on shareholder opinions, etc.
The Director of the Corporate Planning Department provides
management with feedback concerning opinions obtained
through dialogue with shareholders at meetings of the Board of
Directors and other meetings as appropriate.
5. Management of insider information
The Bank’s basic policy is to disclose information in a fair, timely,
and appropriate manner. It has accordingly established internal
rules for prevention of insider trading and has put a strict information management system in place.

Nanto Report 2023, the integrated report of Nanto Bank

59

Overview of the Nanto Bank Group(As of March 31, 2023)

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:

6,521.4 billion yen

Deposit balance:

5,727.6 billion yen

Loan balance:

3,966.6 billion yen

Loans to small andmedium-sizedenterprises:

1,473.8 billion yen

Domestic offices:

103 (64 in Nara Prefecture, including Internet branches, and 39 in other locations)

Employees:

2,275

Capital adequacy ratio: 9.25% (consolidated);
8.95% (non-consolidated)
https://www.nantobank.co.jp

URL:

Overview of Nanto Bank’s consolidated subsidiary operations
Company name

CapitalPercentage of subsidiaries’
voting rights heldby the Bank (%)

Location

Principal business

Nanto Management Service Co., Ltd.

Nara City,
Nara Prefecture

Subsidiary managementbusiness

40

100

Nanto Business Service Co., Ltd

Nara City,
Nara Prefecture

Bank’s administrative
agency business

10

100

Nanto Credit Guarantee Co., Ltd.

Nara City,
Nara Prefecture

Credit guarantee
business

10

100
(100)

Nanto Lease Co., Ltd.

Nara City,
Nara Prefecture

Leasing business

500

100
(100)

Nanto Computer Service Co., Ltd.

Nara City,
Nara Prefecture

Software development
business

10

100
(100)

Nanto DC Card Co., Ltd.

Ikoma City,
Nara Prefecture

Credit card business

50

100
(100)

Nanto Card Service Co., Ltd.

Ikoma City,
Nara Prefecture

Credit card business

50

100
(100)

Nanto Consulting Co., Ltd.

Nara City,
Nara Prefecture

Consulting business

45

100
(100)

Nanto Challenged Co., Ltd.

Nara City,
Nara Prefecture

Bank’s administrative
agency business

20

100
(100)

Nanto Mahoroba Securities Co., Ltd.

Nara City,
Nara Prefecture

Financial instrument
trading business

3,000

100
(100)

Nanto Capital Partners Co., Ltd.

Nara City,
Nara Prefecture

Investment business

100

100

(million yen)

Notes: 1. Figures in parentheses in the “Percentage of subsidiaries’ voting rights held by the Bank” column indicate the percentage of indirect voting rights.
2. Nanto Management Service Co., Ltd. is an intermediate holding company.

(Reference) Affiliated companies accounted for by the equity method
Company name

Percentage of subsidiaries’
voting rights heldby the Bank (%)

CapitalLocation

Principal business

Nara Mirai Design Co., Ltd.

Nara City,
Nara Prefecture

Regional
revitalization business80—(39.9)

Nara Kominka Machizukuri Partners Co., Ltd.

Nara City,
Nara Prefecture

Investment business

3

—
(—)

Frontier Nanto Investment LLC

Nara City,
Nara Prefecture

Investment business5—(50.0)(million yen)

Notes: 1. Figures in parentheses in the “Percentage of voting rights held by Nanto Bank” column indicate the percentage of indirect voting rights.
2. Nara Kominka Machizukuri Partners Co., Ltd. (“NKMP”) is owned by Nara Mirai Design Co., Ltd., an equity-method affiliate of Nanto Bank. Although the Bank holds lessthan 20% of NKMP’s voting rights, the Bank has substantial influence over NKMP’s operations and therefore includes 23.9% of NKMP’s net income/loss in its consolidated financial statements.
3. Frontier Nanto Investment LLC was newly established on May 16, 2022 as an equity method affiliate of the Bank.
4. In addition to the above, the Group includes four investment partnerships that are non-consolidated subsidiaries and five investment partnerships that are affiliates notaccounted for by the equity method.

60 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Developing Human
Value Creation by theGovernance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

Organizational
overview and external
environment

Current status of stock issuanceTotal shares issued:

Performance

Stock distribution by owner category

33,025 thousand

Government and local public bodies

Financial institutions*1

0.03%
10 thousand shares

Number of shareholders: 16,888

32.44%
10,715 thousand shares

Individuals/others*2

33.31%
11,000 thousand shares

Financial productbrokerages

1.75%
577 thousand shares

Foreigners

Other domestic corporations

13.79%
4,553 thousand shares

18.68%
6,168 thousand shares*1 Total of banks, trust banks, life insurance companies, non-life insurance companies, etc.
*2 Includes 1,200 thousand treasury shares*3 The number of shares owned is rounded down to the nearest thousand.

Major shareholders (top 10)

Name

Total shareholder returns (TSR)
Ratio of number
Number of of shares owned
shares held to total number(unit: 1,000)*4 of shares issued
(%)*5

Mar.
2021

Mar.
2022

Mar.
2023

Nanto Bank (%)

77.1

81.1

97.1

TOPIX
(including dividend) (%)

122.1

124.5

131.8

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

3,716

11.67

Custody Bank of Japan, Ltd. (trust account)

1,477

4.64

Dividends per share / Dividend payout ratio

Nippon Life Insurance Company (Standing proxy:
The Master Trust Bank of Japan, Ltd.)
Meiji Yasuda Life Insurance Company (Standing
proxy: Custody Bank of Japan, Ltd.)
Nanto Bank Employee Stock Ownership
Association
Sumitomo Life Insurance Company (Standing
proxy: Custody Bank of Japan, Ltd.)

1,053

3.30

Mar.
2021

Mar.
2022

Mar.
2023

1,043

3.27

Dividends per share (yen)80.00

110.00113.00959

3.01

Consolidated dividend
payout ratio (%)

24.0

30.1

76.4

662

2.08

DMG Mori Seiki Co., Ltd.

476

1.49

Kyoto Chuo Shinkin Bank

466

1.46

Daiwa Gas Co., Ltd.

462

1.45

DFA INTL SMALL CAP VALUE PORTFOLIO

459

1.44

(Note) *4 The number of shares owned is rounded down to the nearest thousand.
*5 The percentage of shares held is calculated excluding treasury stock (1,200 thousand shares)
and rounded down to the third decimal place. Treasury stock does not include the Bank’s stocks
held by the BIP Trust for directors’ remuneration (73 thousand shares).

Stock price trends
(JPY)
4,000

2,000

0

2020/32021/32022/32023/3

Nanto Report 2023, the integrated report of Nanto Bank

61

Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements• Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2023 and 2022
Thousands of
U.S. dollars(Note 1)Millions of yen

2023

Assets:Cash and due from banks (Notes 23 and 25) .................................................
Debt purchased (Notes 25 and 26) ................................................................
Money held in trust (Notes 25 and 26)............................................................
Securities (Notes 9, 10, 11, 14, 25 and 26) ....................................................
Loans and bills discounted (Notes 10, 11, 12 and 25) ....................................
Foreign exchanges (Note 10) .........................................................................
Lease receivables and lease investment assets (Note 11)...............................
Other assets (Notes 10, 11 and 15) ...............................................................
Tangible fixed assets (Note 13) .......................................................................
Buildings ....................................................................................................
Land ..........................................................................................................
Construction in progress ............................................................................
Other tangible fixed assets .........................................................................
Intangible fixed assets ....................................................................................
Software ....................................................................................................
Other intangible fixed assets (Note 11) .......................................................
Deferred tax assets (Note 30) .........................................................................
Customers’ liabilities for acceptances and guarantees (Note 10) ....................
Reserve for possible loan losses (Notes 3 and 25)..........................................
Total assets ................................................................................................
Liabilities and net assets:
Liabilities:
Deposits (Notes 11 and 25)............................................................................
Negotiable certificates of deposit (Note 25) ....................................................
Call money and bills sold (Note 25) ................................................................
Payables under repurchase agreements (Notes 11 and 25) ............................
Payables under securities lending transactions (Notes 11 and 25) ..................
Borrowed money (Notes 11, 25 and 35) ........................................................
Foreign exchanges.........................................................................................
Borrowed money from trust account ..............................................................
Other liabilities (Note 35) ................................................................................
Liability for retirement benefits (Note 28) .........................................................
Reserve for reimbursement of deposits ..........................................................
Reserve for contingent losses ........................................................................
Reserve for share-based payment .................................................................
Reserve under special laws ............................................................................
Deferred tax liabilities (Note 30) ......................................................................
Acceptances and guarantees.........................................................................
Total liabilities .............................................................................................
Net assets (Note 7):
Common stock: Authorized 64,000 thousand shares in 2023 and 2022
Issued 33,025 thousand shares in 2023 and 2022 ...............
Capital surplus ...............................................................................................
Retained earnings ..........................................................................................
Less treasury stock: Issued 1,273 thousand shares in 2023
and 472 thousand shares in 2022 ..................................
Total stockholders’ equity ...........................................................................
Valuation difference on available-for-sale securities (Note 26) .........................
Deferred gains or losses on hedges (Note 27) ................................................
Accumulated adjustments for retirement benefits (Note 28) ............................
Total accumulated other comprehensive income ......................................
Total net assets ..........................................................................................
Total liabilities and net assets......................................................................
See Notes to Consolidated Financial Statements.

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62 Nanto
62

2022

1,085,005
1,503
43,5791,320,545
3,944,387
1,354
26,221
72,00640,493
10,567
23,647
3,529
2,749
4,674
4,228
446
17,046
8,759(23,461)
6,542,117¥¥¥

5,715,665
8,140——
139,161
356,490806
4,659
32,69911,916
76
831
96
3
11
8,759
6,279,318¥

37,924

¥

¥

¥

¥

2023

1,495,598
1,466
44,0171,470,517
3,870,774
2,488
24,99055,92237,782
10,70823,915
313
2,845
4,858
4,411
447
7,247
8,261
(22,485)
7,001,441$¥

5,647,407
7,540
176,835
12,742
102,432
709,227473
5,467
31,586
11,976
104
834
61
3
12
8,261
6,714,967$ 42,804,351
60,960——1,042,170
2,669,737
6,036
34,891
244,881
89,238
569
6,223
718
22
82
65,595$ 47,025,522¥

37,924¥8,125,552
11,255326,361
9,889,500
29,539,331
10,140196,367
539,249
303,250
79,135177,091
26,42820,58735,003
31,663
3,340
127,656
65,595(175,698)$ 48,993,611$

284,01134,749200,383

34,749199,208

260,233
1,500,659(3,418)(1,799)(25,597)

269,639(6,537)95(398)(6,840)262,798
6,542,117

270,083
15,121
1,814(546)
16,390286,473
7,001,441

2,019,314(48,955)711(2,980)(51,224)
1,968,082$ 48,993,611¥

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements• Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2023 and 2022
Thousands of
U.S. dollars(Note 1)Millions of yen

2023

Income (Note 15):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 16) ..................................................................
Other income (Note 17) ..................................................................................
Total income ...........................................................................................

¥

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 18) ...............................................................
General and administrative expenses (Note 19) ..............................................
Other expenses (Notes 20 and 21) .................................................................
Total expenses .......................................................................................
Income before income taxes ............................................................................
Income taxes (Note 30):
Current ..........................................................................................................
Deferred.........................................................................................................
Total income taxes .....................................................................................
Net income ........................................................................................................
Net income attributable to owners of parent...................................................

¥

2022

¥

34,474
10,8651,523
16
23,662
4,268
3,043
77,85332,34014,2011,644
8
22,246
3,425
3,750
77,616

2023

$

294
1,408
1,569
469
12,916
12,914
39,481
2,483
71,537

350
151
34
366
12,3102,418
40,234
3,840
59,7062,201
10,544
11,7503,512
96,727
96,712295,671
18,595535,737

6,316

17,91047,300

1,380
203
1,584
4,731
4,731

5,885
156
6,042
11,867
11,867

10,334
1,520
11,86235,43035,430¥$U.S. dollars(Note 1)Yen

Per share of common stock:
Net income - basic (Note 33) .........................................................................
Dividends (Note 7)..........................................................................................

¥

258,174
81,367
11,405
119
177,203
31,962
22,788583,037

147.75113.00¥364.29110.00

$

1.10
0.84

See Notes to Consolidated Financial Statements.

• Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2023 and 2022
Thousands of
U.S. dollars(Note 1)Millions of yen

2023

Net income .........................................................................................................
Other comprehensive income (loss) (Note 22):
Valuation difference on available-for-sale securities .........................................
Deferred gains (losses) on hedges..................................................................
Adjustments for retirement benefits (Note 28) .................................................
Total other comprehensive income (loss) ....................................................
Total comprehensive income (loss) for the year....................................................
Total comprehensive income (loss) attributable to:
Owners of parent ...........................................................................................

2022

¥

11,867¥(21,659)(1,719)147(23,231)(18,499)¥(18,499)

¥

4,731

2023

$

35,430¥(16,099)(193)
142(16,151)(4,283)$(162,203)(12,873)
1,100(173,975)(138,538)¥(4,283)$(138,538)

See Notes to Consolidated Financial Statements.

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements• Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2023 and 2022
Millions of yen
Number ofshares ofcommonstock(thousands)

Commonstock

CapitalsurplusRetainedearnings

33,025¥ 37,924¥ 34,749¥ 189,973

Balance at April 1, 2021 ........................

Less treasury
stock

¥

Valuationdifferenceonavailablefor-salesecurities(1,693) ¥ 31,221

Deferred
gains orlosses onhedges

Accumulated
adjustments
for retirement
benefits

¥

¥

2,008

Stock
acquisitionrights(688) ¥

63

Total net
assets¥ 293,559

Cash dividends ..................................

(2,609)(2,609)Net income attributable to ownersof parent ............................................

11,867

11,867Purchase of treasury stock.................
Disposition of treasury stock ..............

(22)

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

22

(147)

(147)

41

18

(22)

—

Net changes in items other thanstockholders’ equity ............................
Balance at April 1, 2022 ........................

(16,099)
33,025¥ 37,924¥ 34,749¥ 199,208¥(1,799) ¥ 15,121

(193)
¥

1,814

¥

142

(63)

(16,214)(546) ¥—

¥ 286,473

Cash dividends .................................

(3,556)(3,556)

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

4,731

4,731

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

(0)

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

0(1,618)(1,618)

0

0

(0)

—

Net changes in items other thanstockholders’ equity...........................
Balance at March 31, 2023 (Note 7)......

(21,659)
33,025¥ 37,924¥ 34,749¥ 200,383¥(3,418) ¥(1,719)(6,537) ¥

95

¥

147

—

(23,231)(398) ¥—

¥ 262,798

Thousands of U.S. dollars (Note 1)

Commonstock

Balance at April 1, 2022 ........................ $284,011 $CapitalsurplusRetainedearnings

Less treasurystock

260,233 $ 1,491,859 $Valuationdifference
on availablefor-salesecurities(13,472) $113,240 $Deferred
gains orlosses onhedges

Accumulated
adjustments
for retirement
benefits

13,584 $(4,088) $StockacquisitionrightsTotal net
assets— $ 2,145,383

Cash dividends .................................

(26,630)(26,630)

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

35,43035,430Purchase of treasury stock ...............
Disposition of treasury stock ............

(0)

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

0(12,117)(12,117)

0

0

(0)

—

Net changes in items other thanstockholders’ equity...........................
Balance at March 31, 2023 (Note 7)...... $See Notes to Consolidated Financial Statements.

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64 Nanto
64(162,203)
284,011 $

260,233 $ 1,500,659 $(25,597) $(48,955) $(12,873)
711 $

1,100

—

(173,975)(2,980) $— $ 1,968,082

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements• Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2023 and 2022
Thousands of
U.S. dollars(Note 1)Millions of yen

2023

Cash flows from operating activities
Income before income taxes ......................................................................
Depreciation ...............................................................................................
Impairment loss..........................................................................................
Share of loss (profit) of entities accounted for using equity method .............
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 ...................................
Increase (decrease) in reserve for share-based payment ............................
Interest income ..........................................................................................
Interest expense.........................................................................................
Loss (gain) on 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..................................

¥

6,316
3,412
43
14
976
151
(28)
(2)
35
(46,862)
3,741
7,820
152
(7,736)(37)(73,613)
68,258600(352,737)(83)(36)(189,578)
36,7291,134
332(1,364)(808)
47,352(2,645)(8,973)(507,436)(6,428)(513,864)

2022¥

17,910
3,296
62
9
716
419
(53)
(300)
61
(48,185)902(1,260)167(8,530)17(83,896)
207,439
3,500
82,526
1,077
361
152,500(4,032)(1,250)
(104)
135
(797)
48,537(972)
1,094
371,351(3,769)367,5812023$

47,30025,552
322
104
7,309
1,130
(209)
(14)
262
(350,947)
28,01658,563
1,138(57,934)(277)(551,284)
511,181
4,493(2,641,631)
(621)
(269)
(1,419,740)
275,061
8,492
2,486(10,214)(6,051)
354,616(19,808)(67,198)(3,800,164)(48,138)(3,848,303)

Cash flows from investing activities
Purchase of securities ................................................................................
Proceeds from sales of securities ...............................................................
Proceeds from maturities of securities ........................................................
Increase in money held in trust ...................................................................
Decrease in money held in trust .................................................................
Purchase of tangible fixed assets ...............................................................
Proceeds from sales of tangible fixed assets ..............................................
Purchase of intangible fixed assets.............................................................
Payments for asset retirement obligations ..................................................
Other .........................................................................................................
Net cash provided by (used in) investing activities ..........................................

(374,000)
397,341
91,188(321)
48(4,829)539(1,461)(48)(101)
108,355(362,645)
229,244
80,753(19,719)
15,578(1,753)426(1,209)(26)(13)(59,366)(2,800,868)
2,975,668
682,902(2,403)359(36,164)
4,036(10,941)
(359)
(756)
811,465

Cash flows from financing activities
Dividends paid ..........................................................................................
Purchase of treasury stock .........................................................................
Other .........................................................................................................
Net cash used in financing activities .......................................................
Effect of exchange rate changes on cash and cash equivalents ..................
Net increase (decrease) in cash and cash equivalents..................................
Cash and cash equivalents at beginning of year ...........................................
Cash and cash equivalents at end of year (Note 23) .....................................

(3,553)(1,618)0(5,171)
5(410,675)
1,493,835
1,083,159(2,609)(147)
0(2,756)9
305,468
1,188,367
1,493,835(26,608)(12,117)
0(38,725)37(3,075,526)
11,187,261$ 8,111,727¥¥

See Notes to Consolidated Financial Statements.

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2023 and 2022

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, 2023, which was ¥133.53 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 eleven (eleven in 2022) subsidiaries at March 31, 2023.
(Changes in scope of consolidation)
In the fiscal year ended March 31, 2022, Nanto Investment Advisors Co., Ltd. was excluded from the scope of consolidation because thecompany resolved to dissolve at the annual stockholders’ meeting held on June 30, 2021 and its liquidation was completed on December 9, 2021.
The Bank had four (three in 2022) unconsolidated subsidiaries in the fiscal year ended March 31, 2023, Nanto Sixth Industry Support
Investment Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership, Nanto CVC No. 3 Akebono Investment
Limited Partnership and Nanto TSUNAGU Fund Investment Limited Partnership. The unconsolidated subsidiaries were excluded from the scopeof 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.
(Establishment of unconsolidated subsidiaries)
In the fiscal year ended March 31, 2023, Nanto TSUNAGU Fund Investment Limited Partnership became an unconsolidated subsidiary due to its
new establishment.
In the fiscal year ended March 31, 2022, Nanto CVC No. 3 Akebono Investment Limited Partnership became an unconsolidated subsidiary due
to its new establishment on February 1, 2022.
The Bank had three (two in 2022) affiliates over which it had the ability to exercise significant influence over operating and financial policies, Nara
Mirai Design Co., Ltd., Nara Kominka Machizukuri Partners Co., Ltd. and Frontier Nanto Investment LLC, and these affiliates were accounted for by
the equity method.
(Changes in scope of the equity method)
In the fiscal year ended March 31, 2023, Frontier Nanto Investment LLC was included in the scope of the equity method due to its new
establishment.
In the fiscal year ended March 31, 2022, Nara Mirai Design Co., Ltd. was included in the scope of the equity method due to its new establishment
on April 1, 2021, and Nara Kominka Machizukuri Partners Co., Ltd. was included in the scope of the equity method due to the acquisition of its sharesby the Bank on January 20, 2022.
The Bank had four (three in 2022) unconsolidated subsidiaries not accounted for by the equity method in the fiscal year ended March 31, 2023,
Nanto Sixth Industry Support Investment Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership, Nanto CVC
No. 3 Akebono Investment Limited Partnership and Nanto TSUNAGU Fund Investment Limited Partnership. The Bank also had five (three in 2022)
affiliates not accounted for by the equity method, Nanto CVC Investment Limited Partnership, Nanto CVC No. 2 Investment Limited Partnership andNara Kominka Machizukuri Fund Investment Limited Partnership, Frontier Nanto Investment Limited Partnership and Yamato Social Impact Investment
Limited 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 been 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.
(Establishment of unconsolidated subsidiaries not accounted for by the equity method)
In the fiscal year ended March 31, 2023, Nanto TSUNAGU Fund Investment Limited Partnership became an unconsolidated subsidiary notaccounted for by the equity method due to its new establishment.
In the fiscal year ended March 31, 2022, Nanto CVC No. 3 Akebono Investment Limited Partnership became an unconsolidated subsidiary notaccounted for by the equity method due to its new establishment on February 1, 2022.
(Establishment of affiliates not accounted for by the equity method)
In the fiscal year ended March 31, 2023, Frontier Nanto Investment Limited Partnership and Yamato Social Impact Investment Limited Partnership
became affiliates not accounted for by the equity method due to their new establishment.
In the fiscal year ended March 31, 2022, Nara Kominka Machizukuri Fund Investment Limited Partnership became an affiliate not accounted forby the equity method because Nara Kominka Machizukuri Partners Co., Ltd., an affiliate accounted for by the equity method, was an unlimited liability
partner.
Potager Co., Ltd., of which the Bank owns between 20% and 50% of the voting rights (execution rights), was not recognized as an affiliate for the
fiscal years ended March 31, 2023 and 2022 because it is held by the Bank’s unconsolidated subsidiary for the purpose of incubating the investees
and not for the purpose of controlling the entity.

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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 straight-line method.
For the fiscal years ended March 31, 2023 and 2022, 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.
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 averagemethod. Stocks of affiliates accounted for by the equity method and 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. Unrealized gains andlosses on available-for-sale securities are reported, net of applicable income taxes, as a separate component of accumulated other comprehensive
income. Equity securities, etc., with no market price included in available-for-sale securities 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 individually managed money held in trust primarily for securities management purposes are measured at fairvalue.
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” (Japanese Institute of Certified Public Accountants (“JICPA”) Industry Committee Report No. 24, March 17, 2022). 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, suchas 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.

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Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
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, 2023 and 2022, the deducted amounts were
¥5,367 million ($40,193 thousand) and ¥6,233 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.
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 reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for possible losses on future claimsof 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 for share-based payment
To prepare for the delivery of the Bank’s shares through the Director Remuneration BIP (Board Incentive Plan) Trust, the estimated amount of shares
to be delivered in proportion to the points allocated to the Directors in accordance with the stock benefit rules is recorded as reserve for share-based
payment.
n. 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.
o. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
p. 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.
q. Criteria for recognizing lease income and costs for finance leases
Lease income and costs are recognized at the time of receiving lease fees.

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r. Criteria for recognizing revenue from contracts with customers
The Group has adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and the “Implementation
Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26, 2021), and recognizes revenue when control ofpromised goods or services is transferred to a customer in an amount that reflects the consideration to which it expects to be entitled in exchange forthose goods or services.
The Bank and its consolidated subsidiaries recognize information on transactions with customers based on 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.
Revenue from transactions with customers of the Bank and its consolidated subsidiaries, etc. relates mainly to transaction services that arerecognized when control of the promised goods or services is transferred to the customer and includes fees and commissions related to deposit
services, lending services, exchange services and others.

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) Reserve for possible loan losses
Credit operations are one of the major operations of the Group, and assets with credit risk, such as loans, occupy a very important place inconsolidated net assets on the consolidated balance sheet. So recognition of the reserve for possible loan losses has a large impact on the operating
results and financial position and is judged to be material in the accounting estimates.
(2) Amount recognized in the consolidated financial statements
The reserve for possible loan losses recognized in the consolidated balance sheets as of March 31, 2023 and 2022 was as follows:
Thousands of
U.S. dollars

Millions of yen

2023

Reserve for possible loan losses ...............................................................................

¥

23,461

2022¥

22,485

2023$

175,698

The details concerning the accounting estimates adopted when making the calculation are set forth below.
(3) Accounting estimates(a) 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 andclassifying 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 andbankrupt borrowers).
(b) Major assumptions used in calculating amounts
The Bank assumes that losses nearly equivalent to historical loan losses for each category of borrowers would be incurred. For the claims equivalent
to normal claims and claims which need attention, the Bank calculated the required reserve amount for each region using the expected loss ratetaking 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, theBank gives comprehensive consideration to the borrower’s sustainability, projected profitability, and ability to pay obligations based on their annual
repayable amount, appropriateness of their business improvement plans, and other factors in light of the borrower’s industry characteristics.
Furthermore, in the case that management reconstruction is thought to be proceeding in line with a drastic and highly feasible business
improvement plan and a reasonable and highly feasible business 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 fiscal years ended March 31, 2023 and 2022, the Bank anticipated that the impact of the new coronavirus would
continue for a certain period of time, and the individual category of borrowers was determined 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.
Accordingly, an additional reserve was not provided.
(c) The impact on the consolidated financial statements for the next 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 fiscal year, theamount expected to be recovered using collateral and guarantees, the impact of the new coronavirus and inflation, 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 impact of the new coronavirus and inflation is prolonged, there is a possibility
that such events would have an impact on the operating results and financial position for the next fiscal year, such as an increase in the reserve forpossible loan losses becoming necessary.

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Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
4. CHANGES IN ACCOUNTING POLICIESFiscal year ended March 31, 2023
Application of implementation guidance on accounting standard for fair value measurement
The Group has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021)
from the beginning of the fiscal year ended March 31, 2023 and will prospectively apply the new accounting policies stipulated by the Implementation
Guidance on Accounting Standard for Fair Value Measurement in accordance with the transitional treatment prescribed in Paragraph 27-2 of theguidance. There was no effect on the consolidated financial statements due to this application.
As for notes of investment trusts in financial instruments categorized by fair value hierarchy in Note 25, “FINANCIAL INSTRUMENTS AND
RELATED DISCLOSURES,” the comparative information for the fiscal year ended March 31, 2022 is not included in the said Note in accordance with
Paragraph 27-3 of the guidance.
Fiscal year ended March 31, 2022
(1) Application of accounting standard for revenue recognition
The Group has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) from the beginning of the fiscal
year ended March 31, 2022 and recognizes revenue when control of promised goods or services is transferred to the customer in an amount thatreflects the consideration to which it expects to be entitled in exchange for those goods or services.
The Group applied the Accounting Standard for Revenue Recognition in accordance with the transitional treatment prescribed in Paragraph 84
of the standard, and there was no effect on retained earnings at the beginning of the fiscal year ended March 31, 2022.
Any effects on the consolidated financial statements were immaterial.
(2) Application of accounting standard for fair value measurement
The Group has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) from the beginning of the
fiscal year ended March 31, 2022 and will prospectively apply the new accounting policies stipulated by the Accounting Standard for Fair Value
Measurement in accordance with the transitional treatment prescribed in Paragraph 19 of the standard and Paragraph 44-2 of the “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
The effects on the consolidated financial statements were immaterial.
In addition, the Group discloses financial instruments categorized by fair value hierarchy in Note 25, “FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURES.”(3) Change in criteria for recognizing income from installment sales transactions
The Bank’s consolidated subsidiary, Nanto Lease Co., Ltd., has adopted a method of recording income from installment sales transactions in theamount equivalent to interest expense in accordance with the “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16,
March 25, 2011).
The amount equivalent to interest expense was previously accounted for by the straight-line method, but this has been changed to the interest
method effective from the fiscal year ended March 31, 2022. This change was made based on the judgment that adopting the interest method, whichis the principle method, will more appropriately reflect the status of profit and loss, given the increasing trend of installment sales transactions.
This change in accounting policy has been applied retrospectively.

5. STANDARDS AND GUIDANCE NOT YET ADOPTED
The following standards and guidance were issued but not yet adopted.
• “Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, October 28, 2022)• “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, October 28, 2022)• “Implementation Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, October 28, 2022)(1) Overview
These standards and guidance set forth the accounting classification of current income taxes in the case where other comprehensive income istaxable, as well as the treatment of tax effect accounting on sale of shares of subsidiaries, etc. under the group taxation regime.
(2) Effective date
The Group is scheduled to apply the standards and guidance from the beginning of the fiscal year ending March 31, 2025.
(3) Effects of the application of the standards and guidance
The Group is currently evaluating the effects of the application of these standards and guidance.

6. ADDITIONAL INFORMATION
Director Remuneration BIP (Board Incentive Plan) Trust
The Bank has introduced a Director Remuneration BIP Trust for directors of the Bank (excluding outside directors and nonresidents in Japan;
hereinafter “the Bank’s directors”).
(1) Overview of transaction
The Director Remuneration BIP Trust is a board incentive plan designed to motivate the Bank’s directors to contribute to achieving mid- to longterm performance improvement and increasing corporate value. This is a stock-based compensation plan in which points are awarded to the Bank’s
directors based on their position and achievement of performance targets, etc. The Bank’s shares corresponding to the points and a cash payment
equivalent to the value of the Bank’s shares are delivered or paid to the Bank’s directors at the time of their retirement from office.
(2) Accounting treatment for transactions in which the Bank’s shares are delivered through the Trust
The Bank has followed the “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc., through Trusts” (Practical
Issues Task Force No. 30, March 26, 2015) with respect to the accounting treatment of this trust agreement.
(3) Matters on Bank’s shares held by the Trust(a) The book value of the Bank’s shares held by the Trust as of March 31, 2023 and 2022 was ¥143 million ($1,070 thousand) and ¥143 million,
respectively.
(b) The Bank’s shares held by the Trust are recorded as treasury stock under stockholders’ equity.
(c) The numbers of shares as of March 31, 2023 and 2022 were 73 thousand and 73 thousand, respectively, and the average numbers of shares
during the fiscal years ended March 31, 2023 and 2022 were 73 thousand and 47 thousand, respectively.

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Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements(d) The numbers of shares at the end of the fiscal years ended March 31, 2023 and 2022 and the average numbers of shares during the respective
fiscal years are included in treasury stock to be deducted for computing per share information.

7. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2023 and 2022
(Thousands of shares)

April 1, 2022
Shares issued
Common stock .....................................
Total ..................................................
Treasury stock
Common stock .....................................
Total ..................................................

2023
Decrease

Increase

Remarks

March 31, 2023

33,02533,025————33,02533,025

472
472

801
801

0
0

1,273
1,273

Notes 1, 2 & 3

Notes: 1. The number of shares of treasury stock as of March 31, 2023 includes 73 thousand shares of the Bank’s stock held by the Director Remuneration BIP Trust.
2. The increase of 801 thousand shares in common stock of treasury stock is attributable to an increase of 800 thousand shares due to the acquisition of treasury stock, which was resolved by
the Board of Directors, and an increase of 1 thousand shares due to the purchase of shares of less than one unit.
3. The decrease of 0 thousand shares in common stock of treasury stock is due to the sale of shares less than one unit.

(Thousands of shares)

April 1, 2021
Shares issued
Common stock .....................................
Total ..................................................
Treasury stock
Common stock .....................................
Total ..................................................

2022
Decrease

Increase

Remarks

March 31, 2022

33,02533,025————33,02533,025

407
407

74
74

9
9

472
472

Notes 1, 2 & 3

Notes: 1. The number of shares of treasury stock as of March 31, 2022 includes 73 thousand shares of the Bank’s stock held by the Director Remuneration BIP Trust.
2. The increase of 74 thousand shares in common stock of treasury stock is attributable to an increase of 73 thousand shares due to the acquisition by the Director Remuneration BIP Trust andan increase of 1 thousand shares due to the purchase of shares of less than one unit.
3. The decrease of 9 thousand shares in common stock of treasury stock is attributable to a decrease of 9 thousand shares due to the execution of stock options and a decrease of 0 thousand
shares due to the sale of shares of less than one unit.

(2) Stock acquisition rights
Fiscal years ended March 31, 2023 and 2022
Not applicable.
(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2023
Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars))
Resolution

Annual stockholders’ meeting held on
June 29, 2022
Board of Directors’ meeting held on
November 11, 2022

Type of shares

Aggregate amount ofdividends

Cash dividends per
share

Record dateCommon stock¥2,283 ($ 17,097)¥70.00 ($ 0.52)

March 31, 2022

June 30, 2022

Common stock¥1,273 ($ 9,533)¥40.00 ($ 0.29)

September 30,
2022

December 5, 2022

Effective dateNotes: 1. Aggregate amount of dividends resolved by the Annual stockholders’ meeting on June 29, 2022 includes dividends for the Bank’s shares held by the Director Remuneration BIP Trust of ¥5
million ($37 thousand).
2. Aggregate amount of dividends resolved by the Board of Directors on November 11, 2022 includes dividends for the Bank’s shares held by the Director Remuneration BIP Trust of ¥2 million ($14thousand).

(b) Dividends paid in the fiscal year ended March 31, 2022
Millions of yen, except per share amount (yen)Resolution

Annual stockholders’ meeting held on
June 29, 2021
Board of Directors’ meeting held on
November 12, 2021

Type of shares

Aggregate amount ofdividends

Cash dividends per
share

Common stock¥1,304¥40.00March 31, 2021

June 30, 2021

Common stock¥1,305¥40.00

September 30,
2021

December 6, 2021

Record date

Effective date(c) Dividends to be paid in the fiscal year ending March 31, 2024
Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars))
Resolution

Annual stockholders’ meeting held on
June 29, 2023

Aggregate amount ofdividends

Source ofdividends

Cash dividends per
share

Common stock ¥2,323 ($17,396)

Retainedearnings¥73.00 ($0.54) March 31, 2023 June 30, 2023

Type of shares

Record date

Effective date

Note: Aggregate amount of dividends includes dividends for the Bank’s shares held by the Director Remuneration BIP Trust of ¥5 million ($37 thousand).

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Consolidated Financial Statements

Consolidated Financial Statements
8. 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.

9. SHARES OR INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
Shares or investments in capital of unconsolidated subsidiaries and affiliates at March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

4,032

¥

2,979

2023

$

30,195

10. NONPERFORMING CLAIMSThe Bank reported claims based on the Banking Act and the Act on Emergency Measures for the Revitalization of the Financial Functions at March
31, 2023 and 2022. The claims consisted of those recorded in the consolidated balance sheets as corporate bonds in “Securities” (limited to thosefor which redemption of the principal and payment of interest are guaranteed in whole or in part and are issued by private placement of securities
in accordance with Article 2, Paragraph 3 of the Financial Instruments and Exchange Act), loans and bills discounted, foreign exchanges, accrued
interest and suspense payments in “Other assets”, customers’ liabilities for acceptances and guarantees, and securities in lending securities
transactions indicated in the Notes (limited to those under loan for use or lease contracts).
Thousands of
U.S. dollars

Millions of yen

2023

Bankrupt or quasi-bankrupt claims ...........................................................................
Doubtful claims .........................................................................................................
Claims past due for three months or more ................................................................
Restructured claims ..................................................................................................
Total ......................................................................................................................

¥

¥

3,665
46,239131
8,997
59,034

2022

¥

¥

3,592
42,510161
7,226
53,491

2022$$

27,447346,281981
67,378442,102

Bankrupt or quasi-bankrupt claims are claims made against obligors who have fallen into bankruptcy for reasons such as the commencement ofbankruptcy proceedings or reorganization proceedings, or the petition for commencement of rehabilitation proceedings, and claims similar to these.
Doubtful claims are claims that are made against obligors who are yet to have fallen into bankruptcy, but it is highly probable that the contractual
principal and interest cannot be collected/received due to deterioration of the obligor’s financial condition and business performance and those notclassified as bankrupt or quasi-bankrupt claims.
Claims past due for three months or more represent claims for which payments of principal or interest have been in arrears for three months or morefrom the day following the agreed-upon payment date, but do not meet the criteria for bankrupt, quasi-bankrupt claims or doubtful claims.
Restructured claims are claims that provide certain concession favorable to the obligors with the intent of facilitating the obligor’s restructuring orotherwise providing support, such as by reducing or exempting interest, postponing principal/interest payments, releasing credits, or providing otherbenefits and those that are not classified in any of the above categories.
The amounts of claims in the above table are before deduction of reserve for possible loan losses.
(Changes in presentation)“Cabinet Office Ordinance Partially Revising the Ordinance for Enforcement of the Banking Act” (Cabinet Office Ordinance No. 3, January 24, 2020)
became effective on March 31, 2022. Accordingly, the classification of “Risk management claims,” etc., under the Banking Act are presented inaccordance with the classification of claims requiring disclosure based on the Act on Emergency Measures for the Revitalization of Financial Functions
and other requirements.
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 Committee Report No. 24, March 17, 2022). 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 asa result of discounting was ¥13,371 million ($100,134 thousand) and ¥14,169 million at March 31, 2023 and 2022, respectively.
Regarding loan participation and based on the “Accounting Treatment and Presentation of Loan Participation” (JICPA Accounting System Committee
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 was ¥3,601 million ($26,967 thousand) and ¥3,602 million at March 31, 2023 and 2022,
respectively.

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Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

11. PLEDGED ASSETS
Assets pledged as collateral at March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

Assets pledged as collateral:
Securities ..............................................................................................................
Loans and bills discounted....................................................................................
Other assets .........................................................................................................
Liabilities corresponding to assets pledged as collateral:
Deposits ...............................................................................................................
Payables under repurchase agreements ...............................................................
Payables under securities lending transactions .....................................................
Borrowed money ..................................................................................................

¥

2022

440,547
141,347
178

¥

2023

555,826
387,045
178$

107,874
12,742
102,432
700,899

79,537—
139,161
346,534

3,299,236
1,058,541
1,333
595,648—
1,042,170
2,595,177

In addition to the above, the following were pledged as collateral for transaction guarantees or as a substitute for margin money for forward
transactions.
Thousands of
U.S. dollars

Millions of yen

2023

Other assets .............................................................................................................

¥

2022

26,219¥2023

21,514$

196,352

The following was pledged as collateral for borrowed money of ¥2,109 million ($15,794 thousand) and ¥2,173 million at March 31, 2023 and 2022,
respectively.
Thousands of
U.S. dollars

Millions of yen

2023

Unexpired lease contract claims ...............................................................................

¥

2022

2,978

¥

2023

3,085

$

22,302Other assets included initial margins of futures markets and security deposits and other intangible fixed assets included key money as follows:
Thousands of
U.S. dollars

Millions of yen

2023

Initial margins of future markets.................................................................................
Security deposits ......................................................................................................
Key money ...............................................................................................................

¥

2022

892
960
446

¥

2023

762
977
447

$

6,680
7,189
3,340

12. 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, 2023 and 2022 were
¥1,006,735 million ($7,539,391 thousand) and ¥1,027,166 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, 2023 and 2022 were ¥938,055 million ($7,025,050 thousand) and¥951,310 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.

13. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥43,802 million ($328,031 thousand) and ¥44,248 million at March 31, 2023 and 2022,
respectively. Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥805 million ($6,028
thousand) and ¥806 million at March 31, 2023 and 2022, respectively. For the fiscal years ended March 31, 2023 and 2022, the capital gain offset
from acquisition costs was nil.

14. 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 ¥42,633 million ($319,276 thousand) and ¥43,674 million at March 31, 2023 and 2022, respectively.

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
15. REVENUE(1) Revenue from contracts with customers
Ordinary income is not disclosed by disaggregating revenue from contracts with customers and other sources of revenue.
Revenue from contracts with customers on a disaggregated basis for the fiscal years ended March 31, 2023 and 2022 was as follows:
Millions of yen

2023
Reportable segments
Banking

Fees and commissions .................................................................... ¥Deposit and loan services ............................................................
Exchange services .......................................................................
Trust related services ...................................................................
Securities related services ............................................................
Agency services...........................................................................
Custody and safe deposit box services ........................................
Guarantee services ......................................................................
Other ...........................................................................................
Ordinary income from contracts with customers .............................. ¥Ordinary income other than the above .............................................
Ordinary income from outside customers......................................... ¥

8,912
1,887
2,170
134
—
2,943
226
—
1,549
8,912
56,09765,009

Leasing

¥

¥
¥

Other

—
—
—
—
—
—
—
—
—
—
9,308
9,308

¥

1,996
—
—
—
280
—
—
—
1,715
1,996
1,434
3,430

¥
¥

Total

¥

¥
¥

10,908
1,887
2,170
134
280
2,943
226
—
3,265
10,90866,83977,748Millions of yen

2022
Reportable segments
Banking

Fees and commissions .................................................................... ¥Deposit and loan services ............................................................
Exchange services .......................................................................
Trust related services ...................................................................
Securities related services ............................................................
Agency services...........................................................................
Custody and safe deposit box services ........................................
Guarantee services ......................................................................
Other ...........................................................................................
Ordinary income from contracts with customers .............................. ¥Ordinary income other than the above .............................................
Ordinary income from outside customers......................................... ¥

9,137
1,890
2,349
108
—
2,996
233
—
1,559
9,137
56,34665,483

Leasing

¥

¥
¥

Other

—
—
—
—
—
—
—
—
—
—
8,803
8,803

¥

1,676
—
—
—
283
—
—
—
1,392
1,676
1,568
3,244

¥
¥

Total

¥

¥
¥

10,813
1,890
2,349
108
283
2,996
233
—
2,951
10,81366,71877,531Thousands of U.S. dollars

2023
Reportable segments
Banking

Fees and commissions .................................................................... $Deposit and loan services ............................................................
Exchange services .......................................................................
Trust related services ...................................................................
Securities related services ............................................................
Agency services...........................................................................
Custody and safe deposit box services ........................................
Guarantee services ......................................................................
Other ...........................................................................................
Ordinary income from contracts with customers .............................. $Ordinary income other than the above .............................................
Ordinary income from outside customers......................................... $66,741
14,131
16,251
1,003—
22,0391,692—
11,60066,741
420,107486,849

Leasing

$

$
$

—
—
—
—
—
—
—
—
—
—
69,707
69,707

Other

$

$
$

14,947
—
—
—
2,096
—
—
—
12,843
14,947
10,73925,687

Total

$

$
$

81,68914,131
16,251
1,003
2,096
22,0391,692—
24,451
81,689500,554582,251

Note: “Other” is business segments which are not included in the reportable segments and include the following services: credit guarantees, real estate leasing and management, software development,
credit cards and securities.

(2) Receivables from contracts with customers
Receivables from contracts with customers of ¥492 million ($3,684 thousand) and ¥476 million as of March 31, 2023 and 2022, respectively, wasincluded in other assets.

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Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

16. OTHER OPERATING INCOME
For the fiscal years ended March 31, 2023 and 2022, other operating income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

Gains on sales of bonds ...........................................................................................
Gain on foreign exchange transactions .....................................................................
Other ........................................................................................................................
Total ......................................................................................................................

¥

2022

1,989
1,936
342
4,268

¥

¥

1,928
1,037
459
3,425

¥

2023

$

$

14,895
14,4982,561
31,962

17. OTHER INCOME
For the fiscal years ended March 31, 2023 and 2022, other income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

1,129
405
1,508
3,043

¥

¥

2,578
319
852
3,750

¥

2023

$

$

8,455
3,033
11,29322,788

18. OTHER OPERATING EXPENSES
For the fiscal years ended March 31, 2023 and 2022, other operating expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

10,873
2,041
12,914

¥

¥

2,415
2
2,418

¥

2023

$
$

81,427
15,28496,712

19. GENERAL AND ADMINISTRATIVE EXPENSES
For the fiscal years ended March 31, 2023 and 2022, general and administrative expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

18,947
1,523
19,01039,481¥¥

19,076
1,563
19,59440,234

¥

2023

$

$

141,893
11,405
142,365
295,671

20. OTHER EXPENSES
For the fiscal years ended March 31, 2023 and 2022, other expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

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

¥

¥

718
1,117
65
581
2,483

2022

¥

¥

1,194
1,157
687
802
3,840

2023

$

$

5,377
8,365
486
4,351
18,595

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Financial Data

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Consolidated Financial Statements
21. IMPAIRMENT LOSSThe Group reports impairment loss for the following asset groups.
Fiscal year ended March 31, 2023
Thousands of
U.S. dollars

Millions of yen

RegionNara Prefecture - outside
Nara Prefecture - inside
Nara Prefecture - outside
Nara Prefecture - inside

Principle use

1 business store, etc.
1 idle asset
1 idle asset
1 business store, etc.
Total

Type

Impairment loss

Buildings, etc.
Buildings, etc.
Buildings, etc.
Software

¥

¥

7
26
6
2
43

$

$

52
194
44
14
322

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 of ¥43 million ($322 thousand) in other expenses.
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 Headquarters, 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 recoverable amount of impaired assets was measured at the net selling price or value in use, whichever was higher. Net selling prices were
calculated based on Real Estate Appraisal Standards, etc., and the value in use was computed by discounting future cash flows at 0.7% to 1.4%.
Fiscal year ended March 31, 2022
Millions of yen

RegionNara Prefecture - inside
Nara Prefecture - inside
Nara Prefecture - outside

Principle use

3 business stores, etc.
1 idle asset
1 business store, etc.
Total

Type

Impairment loss

Buildings, etc.
Land
Buildings, etc.

¥

¥

34
11
16
62

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 of ¥62 million in other expenses.
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 Headquarters, 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 recoverable amount of impaired assets was measured at the net selling price or value in use, whichever was higher. Net selling prices were
calculated based on Real Estate Appraisal Standards, etc., and the value in use was computed by discounting future cash flows at 1.0% to 1.1%.

22. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the fiscal years ended March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

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 (losses) on hedges
Gains (losses) incurred during the year ..................................................................
Reclassification adjustments to net income ...........................................................
Amount before tax effect ...................................................................................
Tax effect ..........................................................................................................
Deferred gains (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) ...............................................................

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76¥¥(40,703)
9,727(30,976)
9,316(21,659)

2022

¥

2023

(22,457)(411)(22,868)
6,769(16,099)$(304,822)
72,845(231,977)
69,767(162,203)(2,379)(90)(2,470)751(1,719)

(448)
169
(278)
84
(193)

(17,816)(674)(18,497)5,624(12,873)

1
211
212
(64)
147
(23,231)

(14)
218
204
(62)
142
(16,151)

7
1,580
1,587
(479)
1,100
(173,975)¥$

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

23. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2023 and 2022 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

2023

Cash and due from banks on the consolidated balance sheets.................................
Current deposits due from banks ..............................................................................
Time deposits due from banks ..................................................................................
Other due from banks ...............................................................................................
Cash and cash equivalents on the consolidated statements of cash flows ................

¥

¥

2022

1,085,005
(41)
(600)
(1,204)
1,083,159¥

2023

1,495,598
(80)
(600)
(1,081)
1,493,835¥$$

8,125,552(307)(4,493)(9,016)8,111,727

24. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

197
489
686

¥

¥

2023

211
793
1,004

¥

$
$

1,475
3,662
5,137

As lessor:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

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

¥
¥

2022

7
24
31

¥
¥

2023

—
—
—

$
$

52
179
232

25. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESa. Status of financial instruments(1) Policy on financial instruments
The Group is composed of the Bank, its eleven (eleven in 2022) consolidated subsidiaries and its three (two in 2022) affiliates accounted for by theequity method and provides financial services such as banking, securities, leasing and credit guarantee services.
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 surpluses and deficits of funds, raises funds byborrowed money and bonds with consideration for the financial market conditions and the balance of length.
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. The Bankutilizes 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. 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.

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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 interest rate components of hedging instruments. Transactions which
do not meet the requirements of hedge accounting and derivative transactions for trading purposes are exposed to interest rate risk, foreign currency
risk, price fluctuation 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 Examination Department. The
Audit Department, which is independent from the said branches and department, audits the status of credit risk controls and its results. The status ofcredit risk controls is periodically evaluated and reported to the Management Meeting and the Board of Directors.
Credit risks associated with the issuers of securities are managed by the Market Operations Department 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.
(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 Market Operations
Department plays a part in investments for investment purposes, and the Corporate Solutions Department 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 Market Operations Department, 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, 2023, the Group’s total market risk (decrease in estimated economic value) was ¥45,514 million ($340,852 thousand) (¥56,464
million in 2022). In addition, the Group conducted back tests comparing actual profit or loss 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.

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About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Management of liquidity risk associated with financing activities
The Market Operations Department manages the Bank’s cash position based upon the monthly funding plan designed by the ALM Committee, while
the Risk Management Division monitors the situation. The ALM Committee manages financing risk comprehensively by understanding the amount ofcash 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
Certain assumptions are used in measuring the fair value of financial instruments. Accordingly, the result of these fair value measurements may vary if
different assumptions are used.
b. Fair value of financial instruments
The table below summarizes the carrying amounts, fair values and differences for financial instruments as of March 31, 2023 and 2022. Equity
securities, etc., with no market price and investments in partnerships are not included in the following table (see Note 1 below).
Cash and due from banks, debt purchased, foreign exchange in assets and negotiable certificates of deposit, call money and bills sold, payables
under repurchase agreements, payables under securities lending transactions and foreign exchange in liabilities, whose fair value approximatescarrying amount, and because they are settled within a short term, are also omitted. In addition, immaterial financial instruments are omitted.
Millions of yen

2023
Carrying amountMoney held in trust (*1) ........................................................................................
Securities (*1)
Held-to-maturity debt securities .......................................................................
Available-for-sale securities ..............................................................................
Loans and bills discounted ..................................................................................
Reserve for possible loan losses (*2) ................................................................

¥

Total assets .........................................................................................................
Deposits ..............................................................................................................
Borrowed money .................................................................................................
Total liabilities .......................................................................................................
Derivative transactions (*3)
Hedge accounting not applied .........................................................................
Hedge accounting applied (*4) .........................................................................
Total derivative transactions .................................................................................

¥
¥
¥
¥
¥

43,57942,633
1,256,882
3,944,387(23,043)
3,921,344
5,264,439
5,715,665
356,490
6,072,156
3,285
204
3,490

Fair value¥

43,579Difference¥

42,471
1,256,882

¥
¥
¥
¥
¥

3,909,715
5,252,648
5,715,670
356,458
6,072,128
3,285
204
3,490

—
(162)
—

¥
¥
¥
¥
¥

(11,628)(11,791)
4
(32)
(27)
—
—
—

Millions of yen

2022
Carrying amountMoney held in trust ..............................................................................................
Securities
Held-to-maturity debt securities .......................................................................
Available-for-sale securities ..............................................................................
Loans and bills discounted ..................................................................................
Reserve for possible loan losses (*2) ................................................................

¥

Total assets .........................................................................................................
Deposits ..............................................................................................................
Borrowed money .................................................................................................
Total liabilities .......................................................................................................
Derivative transactions (*3)
Hedge accounting not applied .........................................................................
Hedge accounting applied (*4) .........................................................................
Total derivative transactions .................................................................................

¥
¥
¥
¥
¥

44,01743,674
1,411,347
3,870,774(22,059)
3,848,714
5,347,754
5,647,407
709,227
6,356,634(4,297)
2,625(1,671)

Fair value¥

44,017

Difference¥

43,678
1,411,347

¥
¥
¥
¥
¥

3,853,164
5,352,208
5,647,422
709,201
6,356,623(4,297)
2,625(1,671)

—
4
—

¥
¥
¥
¥
¥

4,449
4,453
14
(26)
(11)
—
—
—

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Thousands of U.S. dollars

2023
Carrying amountMoney held in trust (*1) ........................................................................................
Securities (*1)
Held-to-maturity debt securities .......................................................................
Available-for-sale securities ..............................................................................
Loans and bills discounted ..................................................................................
Reserve for possible loan losses (*2) ................................................................
Total assets .........................................................................................................
Deposits ..............................................................................................................
Borrowed money .................................................................................................
Total liabilities .......................................................................................................
Derivative transactions (*3)
Hedge accounting not applied .........................................................................
Hedge accounting applied (*4) .........................................................................
Total derivative transactions .................................................................................

$

Fair value

326,361$

Difference

326,361$

319,276
9,412,731
29,539,331(172,567)
29,366,764$ 39,425,140$ 42,804,351
2,669,737$ 45,474,095

29,279,674$ 39,336,838$ 42,804,388
2,669,497$ 45,473,886

$

$

$

$

318,063
9,412,731

24,601
1,527
26,136$—(1,213)—24,601
1,527
26,136$(87,081)(88,302)
29
(239)
(202)

$
$

—
—
—

$

(*1) These include investment trusts whose standard quotation is deemed as fair value by applying the treatment prescribed in Paragraphs 24-3 and 24-9 of the “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021).
(*2) General reserve for possible loan losses and specific reserve for possible loan losses corresponding to loans are deducted.
(*3) Assets and liabilities arising from derivative transactions are presented on a net basis, and net liabilities are presented in parentheses.
(*4) 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, March 17, 2022) is applied to these
hedging relationships.

(Note 1) The carrying amount of equity securities, etc., with no market price and investments in partnerships as of March 31, 2023 and 2022 are set
forth in the table below. These amounts are not included in “Available-for-sale securities” in the table for fair value of financial instruments.
Carrying amountThousands of
U.S. dollars

Millions of yen

2023

Unlisted equity securities (*1) (*2) ..............................................................................
Investments in partnerships (*3) ................................................................................

¥

2022

1,659
19,369

¥

2023

1,605
13,889$12,424145,053(*1) Unlisted equity securities are not subject to fair value disclosure in accordance with Paragraph 5 of “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ
Guidance No. 19, March 31, 2020).
(*2) No impairment loss was recognized for the fiscal year ended March 31, 2023, while the Group recognized impairment loss on unlisted equity securities of ¥108 million for the fiscal year ended
March 31, 2022.
(*3) Investments in partnerships are not subject to fair value disclosure in accordance with Paragraph 24-16 of “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021).

(Note 2) Redemption schedule of monetary claims and securities with maturities
Millions of yen

2023
Due within one
year or lessDue from banks ...................................................... ¥ 1,028,426
Debt purchased ......................................................
1,503
Securities ...............................................................
53,149Held-to-maturity debt securities ..........................
14,089Bonds .............................................................
14,089Available-for-sale securities with contractual
39,060maturities ............................................................
Japanese government bonds..........................
—
Japanese local government bonds..................
21,477
Corporate bonds ............................................
8,903
Other ..............................................................
8,679
473,350
Loans and bills discounted (*) .................................
Total ....................................................................... ¥ 1,556,429

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Due 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

¥

¥

¥

¥

¥

¥

—
—
28,854
18,975
18,975——28,980
8,335
8,335

—
—
58,955
1,233
1,233

—
—
106,019————
315,046——

9,878

20,64457,722106,019

315,046

—
3,552
6,326
—
799,217828,071

—
1,422
5,869
13,353591,805
620,785—
54,6222,700
400
371,197
430,153

10,00091,613
400
4,005
398,510504,529

74,0001,764
148,493
90,788928,985¥ 1,244,031

¥

¥

¥

About Nanto Bank

Our Shared Vision

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Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Millions of yen

2022
Due within one
year or lessDue from banks ...................................................... ¥ 1,439,653
Debt purchased ......................................................
1,466
Securities ...............................................................
69,900
Held-to-maturity debt securities ..........................
11,222
Bonds .............................................................
11,222Available-for-sale securities with contractual
58,678maturities ............................................................
Japanese government bonds..........................
12,500Japanese local government bonds..................
4,822
Corporate bonds ............................................
34,890
Other ..............................................................
6,465
491,586
Loans and bills discounted (*) .................................
Total ....................................................................... ¥ 2,002,607

Due 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

¥

¥

¥

¥

¥

¥

—
—
122,555
21,131
21,131——
19,56910,093
10,093——65,653
1,226
1,226

—
—
194,907————
232,878——

101,423

9,476

64,427

194,907

232,878

54,50024,542
14,425
7,955
740,993863,549

—
8,252
1,223
—
593,427
612,997—
43,752
6,200
14,474
379,604
445,258

20,000142,3131,900
30,693
405,578
600,485

34,0002,206
156,347
40,325
897,715¥ 1,130,593

¥

¥

¥

Thousands of U.S. dollars

2023
Due within one
year or lessDue from banks ...................................................... $ 7,701,834
Debt purchased ......................................................
11,255
Securities ...............................................................
398,030
Held-to-maturity debt securities ..........................
105,511
Bonds .............................................................
105,511Available-for-sale securities with contractual
292,518
maturities ............................................................
Japanese government bonds..........................
—
Japanese local government bonds..................
160,840
Corporate bonds ............................................
66,674
Other ..............................................................
64,9963,544,896
Loans and bills discounted (*) .................................
Total ....................................................................... $ 11,656,024

Due 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

$

$

$

$

$

—
—
216,086
142,102
142,102——
217,029
62,42062,420——441,511
9,233
9,233

—
—
793,971————2,359,364——

73,975

154,601

432,277

793,9712,359,364—
26,60047,375—
5,985,299$ 6,201,385—
10,64943,952100,000
4,432,000$ 4,649,030—
409,061
20,2202,995
2,779,877$ 3,221,395

74,889686,085
2,995
29,993
2,984,422$ 3,778,394

554,182
13,2101,112,057
679,9076,957,125$ 9,316,490(*) Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, which are not expected to be repaid, amounting to ¥45,069 million ($337,519 thousand) and ¥40,871
million at March 31, 2023 and 2022, respectively, are not included.
Loans whose payment terms were not determined amounting to ¥336,252 million ($2,518,175 thousand) and ¥320,997 million at March 31, 2023 and 2022, respectively, are not included.

(Note 3) Redemption schedule of borrowed money and interest bearing liabilities
Millions of yen

2023
Due within one
year or less

Deposits (*) ............................................................. ¥ 5,299,164
Negotiable certificates of deposit ............................
8,140
Call money and bills sold ........................................
—
Payables under repurchase agreements .................
—
Payables under securities lending transactions .......
139,161
53,944
Borrowed money ....................................................
Total ....................................................................... ¥ 5,500,409

Due 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

¥

¥

¥

¥

¥

¥

377,645————
148,395
526,040¥

38,856————
151,480
190,336

¥

—
—
—
—
—
—
—

¥

—
—
—
—
—
2,670
2,670

¥

—
—
—
—
—
—
—

Millions of yen

2022
Due within one
year or less

Deposits (*) ............................................................. ¥ 5,194,750
Negotiable certificates of deposit ............................
7,540
Call money and bills sold ........................................
176,835
Payables under repurchase agreements .................
12,742
Payables under securities lending transactions .......
102,432
458,150
Borrowed money ....................................................
Total ....................................................................... ¥ 5,952,451

Due 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

¥

¥

¥

¥

¥

¥

405,250————
187,693592,943¥

47,406————60,936108,343

¥

—
—
—
—
—
—
—

¥

—
—
—
—
—
2,447
2,447

¥

—
—
—
—
—
—
—

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Thousands of U.S. dollars

2023
Due within one
year or less

Deposits (*) ............................................................. $ 39,685,194
Negotiable certificates of deposit ............................
60,960Call money and bills sold ........................................
—
Payables under repurchase agreements .................
—
Payables under securities lending transactions .......
1,042,170
403,984
Borrowed money ....................................................
Total ....................................................................... $ 41,192,308

Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

$

$

$

$

$

2,828,165————
1,111,323
3,939,489$

290,990————
1,134,426
1,425,417

—
—
—
—
—
—
—

$

$

—
—
—
—
—
19,99519,995Due after ten
years

$

—
—
—
—
—
—
—

$

(*) Demand deposits are included in “Due within one year or less.”c. Financial instruments categorized by fair value hierarchy
The fair value of financial instruments is categorized into the following three levels depending on the observability and materiality of the inputs used to
calculate fair value.
Level 1: Fair values measured by using observable inputs that are quoted prices in active markets for identical assets or liabilities
Level 2: Fair values measured by using observable inputs other than those included within Level 1
Level 3: Fair values measured by using unobservable inputs
In cases where multiple inputs with a material impact on the fair value measurement are used, the fair value is classified into the lowest level fromwhich significant inputs were used.
(1) Financial instruments carried at fair value in the consolidated balance sheet
Millions of yen

2023
Fair value
Level 1

Money held in trust (trading purposes and other) (*1) .......................
Securities
Available-for-sale securities (*1)
Japanese government bonds and Japanese local government
bonds, etc. ..............................................................................
Corporate bonds .....................................................................
Stocks .....................................................................................
Other .......................................................................................
Derivative transactions (*3)
Interest rate related ......................................................................
Currency related ..........................................................................
Total assets .....................................................................................
Derivative transactions (*3)
Interest rate related ......................................................................
Currency related ..........................................................................
Total liabilities ...................................................................................

¥¥

Level 2

7,543¥

Level 331,990

¥

Total

—

¥

39,53381,591

171,301—

252,892—
73,789101,015

172,22350
656,190———

172,22373,839757,205——
263,939

3,511
5,171
1,040,438

—
—
—

3,511
5,171
1,304,377

¥

—
—
—

¥

¥
¥
¥

3,018
2,174
5,193

¥
¥
¥

¥

—
—
—

¥
¥

—

¥

3,018
2,174
5,193

Millions of yen

2022
Fair value
Level 1

Money held in trust (trading purposes and other) .............................
Securities
Available-for-sale securities (*2)
Japanese government bonds and Japanese local government
bonds, etc. ..............................................................................
Corporate bonds .....................................................................
Stocks .....................................................................................
Other .......................................................................................
Derivative transactions
Interest rate related ......................................................................
Currency related ..........................................................................
Total assets .....................................................................................
Derivative transactions (*3)
Interest rate related ......................................................................
Currency related ..........................................................................
Total liabilities ...................................................................................

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82

¥

¥
¥
¥

Level 29,200¥

28,756

Level 3¥

Total

37,957

120,589

224,764—

345,354—
73,292
43,792

217,10850
49,772———

217,108
73,342
93,564——
246,875

3,170
1,797
525,419

—
—
—

3,170
1,797
772,295

—
—
—

¥
¥
¥

267
6,373
6,640

¥
¥
¥

—
—
—

¥
¥
¥

267
6,373
6,640

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Thousands of U.S. dollars

2023
Fair value
Level 1

Money held in trust (trading purposes and other) (*1) .......................
Securities
Available-for-sale securities (*1)
Japanese government bonds and Japanese local government
bonds, etc. ..............................................................................
Corporate bonds .....................................................................
Stocks .....................................................................................
Other .......................................................................................
Derivative transactions (*3)
Interest rate related ......................................................................
Currency related ..........................................................................
Total assets .....................................................................................
Derivative transactions (*3)
Interest rate related ......................................................................
Currency related ..........................................................................
Total liabilities ...................................................................................

$$

Level 256,489$Level 3

239,571

$

Total

—

$

296,060

611,031

1,282,865—

1,893,896—
552,602756,496

1,289,770
374
4,914,176———

1,289,770
552,976
5,670,673——
1,976,626

26,29338,725
7,791,792———

26,29338,725
9,768,419

$

$

—
—
—

$

$
$

22,601
16,28038,890

$
$

—
—
—

$

$
$

22,601
16,28038,890$(*1) Investment trusts whose standard quotation is deemed as fair value by applying the treatment prescribed in Paragraphs 24-3 and 24-9 of the “Implementation Guidance on Accounting Standard
for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021) are not included in the above tables. The amount of investment trusts in the consolidated balance sheet at March 31, 2023 towhich the treatment of Paragraphs 24-3 and 24-9 is applied was ¥4,045 million ($30,292 thousand) and ¥721 million ($5,399 thousand), respectively.
(*2) Investment trusts, etc., to which the transitional treatment prescribed in Paragraph 26 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019) is applied are not included in the above table. The amount of such investment trusts, etc., in the consolidated balance sheet at March 31, 2022 was ¥688,038 million.
(*3) The amount of derivative transactions to which hedge accounting is applied in the consolidated balance sheet at March 31, 2023 and 2022 was ¥204 million ($1,527 thousand) and ¥2,625 million,
respectively.

(a) Reconciliation from the beginning balance to the ending balance of investment trusts to which the treatment of Paragraphs 24-3 and 24-9 isappliedMillions of yen

2023
Income (loss) or other comprehensive
income for the current fiscal year
Beginningbalance¥

4,756

Recorded in income(loss) (*1)

Recorded in othercomprehensive
income (*2)

¥

¥

37

10

Net amount ofpurchase, saleand redemption¥

Amount ofinvestment trusts
whose standard
quotation isdeemed as fair
value

(37)

¥

—

Amount ofinvestment trusts
whose standard
quotation is notdeemed as fair
value

¥

Endingbalance—¥

Valuation gains (losses)
on investment trusts heldat year-end recorded inincome (loss) for the current
fiscal year (*1)

4,767

¥

37

Thousands of U.S. dollars

2023
Income (loss) or other comprehensive
income for the current fiscal year
Beginningbalance

Recorded in income(loss) (*1)

Recorded in othercomprehensive
income (*2)

$ 35,617

$

$

277

74

Net amount ofpurchase, saleand redemption

$

(277)

Amount ofinvestment trusts
whose standard
quotation isdeemed as fairvalue

Amount ofinvestment trusts
whose standard
quotation is notdeemed as fairvalue

Endingbalance$$$ 35,699——

Valuation gains (losses)
on investment trusts heldat year-end recorded inincome (loss) for the current
fiscal year (*1)

$ 277(*1) Included in “Other operating income” in the consolidated statements of income.
(*2) Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the consolidated statements of comprehensive income.

(b) Breakdown of restrictions on cancellation or claims for repurchase at year-end

Main restrictions on cancellation or claims for repurchase
Halted acceptance of cancellation due to being in the process of liquidation of funds ...............................

¥

Millions of yen

Thousands of
U.S. dollars

2023

2023

1,345

$

10,072Lock-up period: One year after purchase
Acceptance of cancellation: At the end of every quarter with 90 days’ advance notice required
Upper limit per cancellation: 25% of each investor’s initial investment value
Refund: Retain 5% of cancellation refund in funds and pay back after settlement of funds ........................

1,393

10,432

Acceptance of cancellation: At the end of every month with 4 months’ advance notice required
Upper limit per cancellation: 10% of the entire fund
Refund: Pay back after 2 months from the cancellation date .....................................................................

1,306

9,780

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Financial Data

Consolidated Financial Statements

Consolidated Financial Statements(2) Financial instruments not carried at fair value in the consolidated balance sheet
Millions of yen

2023
Fair value
Level 1

Securities
Held-to-maturity debt securities
Corporate bonds .....................................................................
Loans and bills discounted ..............................................................
Total assets .....................................................................................
Deposits ..........................................................................................
Borrowed money .............................................................................
Total liabilities ...................................................................................

¥

Level 2

—
—
—
—
—
—

¥
¥
¥

¥
¥
¥
¥

Level 3—50,61950,6195,715,670
349,275
6,064,946¥¥¥¥

42,471
3,859,096
3,901,567
—
7,182
7,182

Total

¥
¥
¥
¥

42,471
3,909,715
3,952,186
5,715,670
356,458
6,072,128

Millions of yen

2022
Fair value
Level 1

Securities
Held-to-maturity debt securities
Corporate bonds .....................................................................
Loans and bills discounted ..............................................................
Total assets .....................................................................................
Deposits ..........................................................................................
Borrowed money .............................................................................
Total liabilities ...................................................................................

¥

Level 2

—
—
—
—
—
—

¥
¥
¥

¥
¥
¥
¥

Level 3—47,44447,444
5,647,422
703,425
6,350,847¥¥¥¥

43,6783,805,719
3,849,398
—
5,775
5,775

Total

¥
¥
¥
¥

43,6783,853,164
3,896,842
5,647,422
709,201
6,356,623

Thousands of U.S. dollars

2023
Fair value
Level 1

Securities
Held-to-maturity debt securities
Corporate bonds .....................................................................
Loans and bills discounted ..............................................................
Total assets .....................................................................................
Deposits ..........................................................................................
Borrowed money .............................................................................
Total liabilities ...................................................................................

$
$
$
$

Level 2

—
—
—
—
—
—

$
$
$
$

—
379,083
379,083
42,804,388
2,615,704
45,420,100

Level 3$$$$

318,063
28,900,591
29,218,654—
53,78553,785

Total

$
$
$
$

318,063
29,279,674
29,597,738
42,804,388
2,669,497
45,473,886(Note) Valuation techniques and inputs used in fair value measurement
AssetsMoney 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 the price provided by the financial institutions, and classified according to the level of their components.
Money held in trust categorized by holding purposes is described in Note 26, “SECURITIES AND MONEY HELD IN TRUST.”
Securities:
The fair value of securities with unadjusted quoted prices in active markets are classified as Level 1. This includes mainly listed equity securities andJapanese government bonds.
Even when there are published quoted prices, however, fair values arising from markets that are not active are classified as Level 2. This mainly
includes Japanese local government bonds, corporate bonds and residential mortgage-backed securities. The fair value of investment trusts withno transaction price in markets is determined using a standard quotation if there are no material restrictions causing market participants to demandcompensation for risk of cancellation or claims for repurchase, and is classified as Level 2.
The fair value of private bonds guaranteed by the Bank is calculated by discounting the total amount of principal and interest at an interest
rate applicable to new similar bonds, following a division into certain periods, redemption methods and guarantee classification. For private bonds
guaranteed by the Bank issued by “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, an estimated loan loss is calculated
based on either a present value of estimated future cash flows or an amount expected to be recovered from collateral and guarantees. Therefore, theirfair value approximates the carrying amount of claims at the balance sheet date less reserve for possible loan losses, and such amount is used as fairvalue. The fair value of private bonds guaranteed by the Bank is classified as Level 3.
Securities categorized by the purpose for which they are held are described in Note 26, “SECURITIES AND MONEY HELD IN TRUST.”
Loans and bills discounted:
The fair value of loans and bills discounted is calculated by discounting the total amount of principal and interest at a discounted rate, that is a market
interest rate adjusted for credit risk, etc., following a division into loan type, internal rating and period. For loans with floating interest rates whichreflect market interest rates within a short period of time, fair value approximates carrying amount as long as the credit standing of the borrowers has
not changed significantly from the time of the transaction, therefore the carrying amount is used as the fair value. For loans to “bankrupt,” “effectively

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bankrupt” and “likely to become bankrupt” borrowers, the fair value is calculated based on the discounted present value of the estimated future cash
flows or that using an amount expected to be recovered from collateral and guarantees. These are classified as Level 3.
The fair value of embedded derivative loans is determined based on the discounted present value of future cash flows or a value calculated by
option pricing models, etc., using observable inputs, such as interest rates, and are classified as Level 2.
Liabilities
Deposits:
For demand deposits, the amount required to be paid if demanded on the consolidated balance sheet date is deemed to be the fair value. The fairvalue of time deposits is determined based on the present value by discounting future cash flows classified by a certain period. The interest rateapplicable to new deposits is used as the discount rate. For deposits whose contract period is short (within a year), the fair value approximatescarrying amount, which is therefore used as the fair value.
These are classified as Level 2.
Borrowed money:
The fair value of borrowed money is based on the net present value calculated by discounting the total amount of principal and interest classified bya certain period at an interest rate that takes the remaining period and credit risk into account. For borrowed money with floating interest rates whichreflect market interest rates within a short period of time, the fair value is deemed to approximate the carrying amount as long as the credit standing of
the Bank and its consolidated subsidiaries has not changed significantly after the transaction. In the cases, the carrying amount is used as fair value.
For borrowed money whose contract period is short (within a year), the fair value approximates the carrying amount, which is therefore used as fairvalue.
These are classified mainly as Level 2.
Derivative transactions:
The fair value of derivative transactions with unadjusted quoted prices in active markets available is classified as Level 1. This includes mainly bondfutures transactions and interest rate futures transactions.
However, as most derivatives are over-the-counter transactions and there are no published quoted prices, the fair value is determined based ona discounted present value of future cash flows or a value calculated by option pricing models, etc., depending on the transaction type and the period
to maturity. In cases in which unobservable inputs are not used or their impact is immaterial, fair value is classified as Level 2. These cases include
plain vanilla interest rate swaps and forward foreign exchange contracts. In addition, in cases in which significant unobservable inputs are used, the fairvalue is classified as Level 3.

26. SECURITIES AND MONEY HELD IN TRUSTThe securities in this note include “Trading account securities” and beneficial interests in trust assets under “Debt purchased,” in addition to “Securities”
classified on the consolidated balance sheets.
(1) Trading account securities and securities with available fair values at March 31, 2023 and 2022
(a) Trading securities
Not applicable for the fiscal years ended March 31, 2023 and 2022.
(b) Held-to-maturity debt securities
Millions of yen

2023
Carrying amount

Fair value

Unrealized gains (losses)

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

¥
¥

9,703
9,703

¥
¥

9,708
9,708

¥
¥

5
5

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

¥¥¥

32,93032,93042,633¥¥¥32,762
32,76242,471

¥
¥
¥

(168)
(168)
(162)

Millions of yen

2022
Carrying amount

Fair value

Unrealized gains (losses)

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

¥¥

21,07521,075¥¥

21,108
21,108¥¥32
32

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

¥¥¥

22,59822,59843,674¥¥¥22,56922,56943,678

¥
¥
¥

(28)
(28)
4

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Thousands of U.S. dollars

2023
Carrying amount

Fair value

Unrealized gains (losses)

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

$$

72,66572,665$$72,70272,702$$37
37

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

$$$

246,611
246,611319,276$$$

245,353
245,353
318,063$$$(1,258)(1,258)(1,213)(c) Available-for-sale securities
Millions of yen

2023

Carrying amount exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Carrying amount not exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Total ..............................................................................................

Carrying amount

Acquisition cost

¥

¥

¥

¥

¥
¥

73,034
89,17739,551
23,35826,26656,24236,390218,454805
335,938
42,039147,942
145,956
701,684
85,636
1,038,428
1,256,882

¥

¥

¥
¥

32,47487,70838,37523,25326,07955,24235,760175,425917
345,178
44,687
151,201
149,289
747,488
90,657
1,093,585
1,269,010

Unrealized gains (losses)

¥

¥

¥

¥
¥

40,560
1,468
1,176
104
187
999
630
43,028(112)(9,240)(2,648)(3,258)(3,333)(45,804)(5,021)(55,157)(12,128)

Millions of yen

2022

Carrying amount exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Carrying amount not exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Total ..............................................................................................

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Carrying amount

Acquisition cost

¥

¥

¥

¥

¥
¥

71,051
206,577
68,00255,70482,87095,78817,905
373,4172,290
355,884
52,587
169,059
134,237
679,755
83,276
1,037,930
1,411,347

¥

¥

¥
¥

31,526
204,585
67,12055,272
82,192
92,645
17,828
328,7562,547
360,183
54,007
170,679
135,497
700,840
90,215
1,063,572
1,392,328

Unrealized gains (losses)

¥

¥

¥

¥
¥

39,525
1,992
882
432
678
3,142
77
44,660(257)(4,298)(1,419)(1,619)(1,259)(21,085)(6,938)(25,641)
19,019About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Thousands of U.S. dollars

2023

Carrying amount exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Carrying amount not exceeding acquisition cost:
Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Subtotal.........................................................................................
Total ..............................................................................................

Carrying amount

Acquisition cost

$

$

$

$

$
$

546,948
667,842
296,195
174,926
196,704
421,193272,523
1,635,991

6,028
2,515,824
314,828
1,107,930
1,093,057
5,254,879
641,324
7,776,739
9,412,731

243,196
656,841
287,388
174,140
195,304
413,704
267,804
1,313,749

$

$

6,867
2,585,022
334,658
1,132,337
1,118,018
5,597,903
678,926
8,189,807
9,503,557$$

Unrealized gains (losses)

$

$

$

$
$

303,751
10,993
8,807
778
1,400
7,481
4,718
322,234(838)(69,197)(19,830)(24,399)(24,960)(343,024)(37,602)(413,068)(90,826)(2) Held-to-maturity debt securities sold for the fiscal years ended March 31, 2023 and 2022
Millions of yen

2023
Cost of sales

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

¥
¥

177
177
177

Sales amount

¥

177
177
177

¥

Gains (losses) on sales

¥
¥

0
0
0

Millions of yen

2022
Cost of sales

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

¥
¥

654
654
654

Sales amount

¥

656
656
656

¥

Gains (losses) on sales

¥
¥

2
2
2

Thousands of U.S. dollars

2023
Cost of sales

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

$
$

1,325
1,325
1,325

Sales amount

$

1,325
1,325
1,325

$

Gains (losses) on sales

$
$

0
0
0

(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, 2023 and 2022
Millions of yen

2023
Sales amount

Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Total ..............................................................................................

¥

¥

1,837
180,004
120,866
59,137—
115,100
96,366296,942

Gains on sales

Losses on sales

¥

¥

¥

1,123
1,502
1,357
145
—
491
327
3,117

¥

—
310
103
206
—
10,628
9,992
10,939

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Millions of yen

2022
Sales amount

Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Total ..............................................................................................

¥

¥

5,042
51,56651,356179
30
123,283
96,006
179,892

Gains on sales

Losses on sales

¥

¥

1,309
148
148
—
—
3,045
2,241
4,504

¥

53
8
7
0
0
3,040
2,408
3,102

¥

Thousands of U.S. dollars

2023
Sales amount

Stocks ...........................................................................................
Bonds ...........................................................................................
Japanese government bonds ....................................................
Japanese local government bonds ............................................
Japanese corporate bonds ........................................................
Others ...........................................................................................
Foreign securities included .........................................................
Total ..............................................................................................

$$

13,757
1,348,041
905,159442,874—
861,978
721,680
2,223,784

Gains on sales

Losses on sales

$

$

8,410
11,248
10,162
1,085
—
3,677
2,448
23,343

$

—
2,321
771
1,542
—
79,59274,82981,921$(4) Money held in trust at March 31, 2023 and 2022
Money held in trust for trading purposes
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

22,000¥2023

22,000$164,756

358

545

4,081

Money held in trust for purposes other than trading or held-to-maturity
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

21,57921,913
(334)
26
(361)

¥

22,01722,473
(455)
—
(455)

2023

$

161,604
164,105(2,501)
194(2,703)The principal amount in trust with contracts to compensate losses on the principal was as follows:
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

4,659

¥

5,467

2023

$

34,891(5) Components of the valuation difference on available-for-sale securities recorded under net assets at March 31, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

Valuation difference ...................................................................................................
Deferred tax assets (liabilities) ...................................................................................
Valuation difference on available-for-sale securities before adjustment fornoncontrolling interests .............................................................................................
Noncontrolling interests adjustment ..........................................................................
Valuation difference on available-for-sale securities ...................................................
(6) Securities reclassified for the fiscal years ended March 31, 2023 and 2022
Not applicable.

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2022

2023

¥

(12,413)
5,875¥

18,562(3,440)$(92,960)
43,997¥(6,537)¥

15,121$(48,955)¥—(6,537)¥—
15,121$—(48,955)

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements(7) Impairment loss on securities
In the event that the fair value of securities other than securities held for trading purpose (excluding stocks, etc. that do not have a market price andinvestments in partnerships) declines significantly from the acquisition cost and the fair value is not expected to recover, such securities are stated atfair 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 fairvalue 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. No impairment loss was recognized for the fiscal year ended March 31, 2023 while the Bank recognized impairment loss on stocks of¥143 million for the fiscal year ended March 31, 2022.

27. 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 and unrealized gains (losses) by transaction type as of March 31, 2023 and 2022 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

2023

Category

Transaction typeInterest 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 .................
Receive floating rate/pay fixed rate .................
Receive floating rate/pay floating rate..............
Interest rate options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

Contract amount

¥

¥

—
—

Contract amount due
after one year¥——

Unrealized gains(losses)

Fair value

¥

—
—

¥

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

38,11439,363—32,09333,342
—

(697)
986
—

(697)
986
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
288

—
—
288

¥

¥

¥

Millions of yen

2022

Category

Transaction typeInterest 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 .................
Receive floating rate/pay fixed rate .................
Receive floating rate/pay floating rate..............
Interest rate options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

Contract amount

¥

¥

—
—

Contract amount due
after one year¥——

Unrealized gains(losses)

Fair value

¥

—
—

¥

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

36,68038,409—36,68038,243
—

(78)
357
—

(78)
357
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
278

—
—
278

¥

¥

¥

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
Thousands of U.S. dollars

2023

Category

Transaction typeInterest 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 .................
Receive floating rate/pay fixed rate .................
Receive floating rate/pay floating rate..............
Interest rate options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

Contract amount$$Contract amount due
after one year——$

Unrealized gains(losses)

Fair value

—
—

$

—
—

$

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

285,433
294,787—

240,342
249,696—(5,219)7,384—(5,219)
7,384
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
2,156

—
—
2,156

$

$

$

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses), except as in Note 2 below, are recognized in the consolidated statements of income.
2. The following amounts for which the application of hedge accounting was cancelled since the requirements for hedge accounting were not met were included in “Receive floating rate/pay
fixed rate” of interest rate swaps.
Thousands ofMillions of yen
U.S. dollars

2023

Contract amount ......................................................................................................
Fair value ..................................................................................................................
Unrealized gains (losses) ...........................................................................................

¥

2022

¥

1,249
(19)
(19)

2023

1,729
(49)
(49)

$

9,353
(142)
(142)

The following unrealized gains (losses) on “Receive floating rate/pay fixed rate” were deferred over the hedge period due to the cancellation.
Thousands of
U.S. dollars

Millions of yen

2023

Unrealized gains (losses) ...........................................................................................

¥

2022

¥

(57)

2023

81

$

(426)

(b) Currency related transactions
Millions of yen

2023

Category

Transaction type
Currency futures
Exchange
Sold ................................................................
transactions
Bought ...........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Over-the-counter Currency swaps .................................................
Forward foreign exchange contracts
transactions
Sold ................................................................
Bought ..........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

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90

Contract amount

¥

¥

—
—

Contract amount due
after one year¥——

Unrealized gains(losses)

Fair value

¥

—
—

¥

—
—

—
—
1,084,269——
1,002,207

—
—
2,995

—
—
2,995

16,077
14,906

10,164
9,265

(862)
863

(862)
863

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
2,996

—
—
2,996

¥

¥

¥

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Millions of yen

2022

Category

Transaction type
Currency futures
Exchange
Sold ................................................................
transactions
Bought ...........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Over-the-counter Currency swaps .................................................
Forward foreign exchange contracts
transactions
Sold ................................................................
Bought ...........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

Contract amount

¥

¥

—
—

Contract amount due
after one year¥——

Unrealized gains(losses)

Fair value

¥

—
—

¥

—
—

—
—
522,426——
435,097——(3,084)——(3,084)35,135
10,835

10,4198,828(2,397)905(2,397)
905

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
(4,575)——(4,575)¥¥¥

Thousands of U.S. dollars

2023

Category

Transaction type
Currency futures
Exchange
Sold ................................................................
transactions
Bought ...........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Over-the-counter Currency swaps .................................................
Forward foreign exchange contracts
transactions
Sold ................................................................
Bought ..........................................................
Currency options
Sold ................................................................
Bought ...........................................................
Other
Sold ................................................................
Bought ...........................................................
Total ................................................................................................

Contract amount

$

$

—
—

Contract amount due
after one year$——

Unrealized gains(losses)

Fair value

$

—
—

$

—
—

—
—
8,120,040——
7,505,481——
22,429——22,429120,399
111,630

76,117
69,385(6,455)
6,462(6,455)
6,462

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
22,436——22,436$$$

Note: The above transactions are measured at fair value, and unrealized gains (losses) are recognized in the consolidated statements of income.

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

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Financial Data

Financial Data

Consolidated Financial Statements

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, and fairvalue by transaction type and by hedge accounting method as of March 31, 2023 and 2022 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

2023

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,
deposits, andsecurities
denominated inforeign currencies

Contract amount¥—Contract amount due
after one year¥—

Fair value¥—

127,358

127,208

204

—
—
—

—
—
—

—
—
—

—

—

—

—

—
—

¥

—

—
¥

—

—
¥

204

Millions of yen

2022

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,
deposits, andsecurities
denominated inforeign currencies

Contract amount¥—Contract amount due
after one year¥—

Fair value¥—

25,06525,060

2,625

—
—
—

—
—
—

—
—
—

—

—

—

—

—

—

—

—

¥

—

¥

—

¥

2,625

Thousands of U.S. dollars

2023

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,
deposits, andsecurities
denominated inforeign currencies

Contract amount$—Contract amount due
after one year$—

Fair value$—

953,778

952,654

1,527

—
—
—

—
—
—

—
—
—

—

—

—

—

—
—

$

—

—
$

—

—
$

1,527

Note: Gain/loss on the above contracts is principally deferred until the maturity of the hedged items under the fundamental method in accordance with the “Treatment for Accounting and Auditing ofApplication of Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Committee Report No. 24, March 17, 2022).

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Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements(b) Currency related transactions
None.
(c) Stock related transactions
None.
(d) Bond related transactions
None.

28. 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.
Eleven 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 have adopted
funded defined contribution pension plans.
In addition, some 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

2023

Balance at the beginning of the fiscal year ................................................................
Service cost ..........................................................................................................
Interest cost ..........................................................................................................
Actuarial loss (gain) ...............................................................................................
Benefits paid .........................................................................................................
Prior service costs.................................................................................................
Balance at the end of the fiscal year..........................................................................

¥

¥

2022

12,191
607
80
(1)
(733)
—
12,145¥

12,072
627
80
14
(601)
—
12,191

¥

2023

$

$

91,297
4,545
599
(7)
(5,489)—90,953

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

(b) Movements in plan assets
Not applicable for the fiscal years ended March 31, 2023 and 2022.
(c) Reconciliation from projected benefit obligations and plan assets to liability (asset) for retirement benefits
Thousands of
U.S. dollars

Millions of yen

2023

Funded projected benefit obligations ........................................................................
Plan assets ...............................................................................................................
Funded assets under the SERAMA Scheme .............................................................
Unfunded projected benefit obligations .....................................................................
Net liability (assets) for retirement benefits recorded on the consolidatedbalance sheet ...........................................................................................................
Liability for retirement benefits ...................................................................................
Asset for retirement benefits .....................................................................................
Net liability (assets) for retirement benefits recorded on the consolidatedbalance sheet ...........................................................................................................

2022

2023

¥

482
—
(229)
252
11,663

¥

448
—
(215)
232
11,743$

3,609—(1,714)
1,887
87,343¥

11,916¥

11,976$89,238¥

11,916—¥

11,976—$89,238—¥

11,916¥

11,976$89,238

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

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Financial Data

Financial Data

Consolidated Financial Statements

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

Millions of yen

2023

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

¥

2022

607
80
—
211
—
899

¥

2023

¥

627
80
—
218
—
925

¥

$

$

4,545
599
—
1,580
—
6,732

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

2023

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

¥
¥

2022

212
212

2023

¥
¥

204
204

$
$

1,587
1,587

(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

2023

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

¥
¥

2022

(572)
(572)

¥
¥

2023

(784)
(784)

$
$

(4,283)(4,283)(g) Plan assets
Not applicable for the fiscal years ended March 31, 2023 and 2022.
(h) Actuarial assumptions
The principal actuarial assumptions for the fiscal years ended March 31, 2023 and 2022 were as follows:
Discount rate ............................................................................................................................................
Long-term expected rate of return ............................................................................................................
Estimated rate of increase in salary ...........................................................................................................

2023

2022

0.70%
—%
2.50%

0.70%
—%
2.50%

(3) Defined contribution plans(a) Retirement benefit costs for defined contribution plans
The amounts paid to defined contribution plans by the Bank and its consolidated subsidiaries was ¥626 million ($4,688 thousand) and ¥642 million for
the fiscal years ended March 31, 2023 and 2022, respectively.
(b) The amounts equivalent to contributions commensurate with risks
The contributions that are commensurate with risks required to be contributed from the next fiscal year onwards are ¥983 million ($7,361 thousand),and the number of years remaining for contributions equivalent to the contributions that are commensurate with risks is six and a half years.

29. STOCK OPTIONS(1) Items and amounts expensed related to stock options
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

—

¥

2023

3

Note: On August 31, 2021, the Bank abolished a system of stock options granted as stock-based compensation and shifted to a performance-linked stock compensation plan.

(2) Stock options outstanding at March 31, 2023
Not applicable.

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About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

30. INCOME TAXESThe Group is subject to a number of taxes based on income, including corporation tax, inhabitant 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, 2023 and 2022.
(1) Significant components of deferred tax assets and liabilities as of March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

Deferred tax assets:
Excess reserve for possible loan losses.................................................................
Liability for retirement benefits ...............................................................................
Depreciation..........................................................................................................
Write-down of land................................................................................................
Impairment loss ....................................................................................................
Valuation loss on securities ...................................................................................
Valuation difference on available-for-sale securities ................................................
Deferred gains or losses on hedges ......................................................................
Tax loss carryforwards ..........................................................................................
Other ....................................................................................................................
Subtotal deferred tax assets: .................................................................................
Valuation allowance pertaining to tax loss carryforwards (Note 3) ..........................
Valuation allowance pertaining to total of deductible temporary differences, 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 assets (liabilities) (Note 1)...........................................................

¥

2022

7,535
3,654
711
872
1,218
2,738
5,912
230
677
1,874
25,426(659)(7,266)(7,926)
17,499
(36)
(272)
(156)
(465)
17,034

¥

¥

2023

7,442
3,651
733
875
1,388
2,805
—
—
559
2,384
19,840(541)(7,686)(8,228)
11,612$(3,440)(792)(143)(4,377)
7,235¥

56,42927,364
5,324
6,530
9,121
20,50444,274
1,722
5,070
14,034
190,414(4,935)(54,414)(59,357)
131,049(269)(2,036)(1,168)(3,482)
127,566$

Notes: 1. Net deferred tax assets (liabilities) as of March 31, 2023 and 2022 are included in the following accounts in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen

2023

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

¥

2022

17,046
11

¥

2023

7,247
12

$

127,656
82

2. As described in Note 4, “CHANGES IN ACCOUNTING POLICIES,” the Group has changed the criteria for recognizing income from installment sales transactions from the fiscal year ended
March 31, 2022.
3. Amount of tax loss carryforwards and their deferred tax assets by carryforwards period
Millions of yen

2023

Tax loss carryforwards (*) ...
Valuation allowance .........
Deferred tax assets..........

One year or less

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

¥

¥

¥

¥

—
—
—

—
—
—

¥

—
—
—

¥

—
—
—

—
—
—

677
(659)
17

Total

¥

677
(659)
17

Millions of yen

2022

Tax loss carryforwards (*) ...
Valuation allowance .........
Deferred tax assets..........

One year or less

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

¥

¥

¥

¥

—
—
—

—
—
—

¥

—
—
—

¥

—
—
—

—
—
—

559
(541)
18

Total

¥

559
(541)
18

Thousands of U.S. dollars

2023

Tax loss carryforwards (*) ...
Valuation allowance .........
Deferred tax assets..........

One year or less

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

$

$

$

$

—
—
—

—
—
—

$

—
—
—

$

—
—
—

—
—
—

5,070
(4,935)
127

Total

$

5,070
(4,935)127(*) The tax loss carryforwards are the amounts multiplied by the statutory tax rate.

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements(2) Significant differences between the statutory tax rate and the effective tax rate for financial statement purposes for the fiscal years
ended March 31, 2023 and 2022
2023

2022

30.4%
(4.7)%
0.5%(2.7)%
1.0%
0.5%
25.0%

30.4%
3.0%
0.1%
(0.7)%
0.4%
0.3%
33.7%

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

31. 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 ordinary profit. Income arising from intersegment transactions is basedon arm’s length prices.
(Changes in measurement method of profit (loss) of reportable segments)
As described in Note 4, “CHANGES IN ACCOUNTING POLICIES,” the Group has changed the criteria for recognizing income from installment sales
transactions in the leasing business from the fiscal year ended March 31, 2022.
(3) Reportable segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the fiscal years ended March 31, 2023 and 2022 is summarized as follows:
Millions of yen

2023
Reportable segments
Banking

Ordinary income:Outside customers ......................................... ¥ 65,009
1,411Intersegment income ......................................
Total ............................................................ ¥ 66,421
Segment profit .................................................... ¥5,768
Segment assets.................................................. 6,521,463
Segment liabilities ............................................... 6,270,024
Others:Depreciation ...................................................
3,181
Interest income ...............................................
47,599Interest expense .............................................
3,739
Extraordinary gain ...........................................
105
Extraordinary loss ...........................................
105
Tax expense ...................................................
1,028
6,133
Increase in tangible and intangible fixed assets ...

Leasing

¥
¥
¥

Total

9,276
613
9,890
316
40,77335,793¥74,2852,025¥ 76,311¥
6,084
6,562,237
6,305,818

93
6
85
—
0
99
166

3,275
47,605
3,824
105
105
1,127
6,300

Other

¥
¥
¥

Total

3,312
2,648
5,961
1,522
31,413
13,319¥77,598
4,674¥ 82,273¥
7,607
6,593,651
6,319,138

109
654
7
—
6
434
42

3,385
48,259
3,832
105
111
1,562
6,343

Adjustment¥¥¥

Consolidated

149 ¥ 77,748(4,674)—(4,524) ¥ 77,748(1,285) ¥6,322(51,534) 6,542,117(39,819) 6,279,318
27(1,396)
(90)
—
—
22
(52)

3,412
46,862
3,741
105
111
1,584
6,290

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 ofother industry 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 from outside customers of ¥149 million is mainly the recovery of written-off claims included in “Others.”(2) Adjustment of segment profit of ¥(1,285) million is the elimination of intersegment transactions.
(3) Adjustment of segment assets of ¥(51,534) million is the elimination of intersegment transactions.
(4) Adjustment of segment liabilities of ¥(39,819) million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
(5) Adjustment of depreciation of ¥27 million is the elimination of intersegment transactions.
(6) Adjustment of interest income of ¥(1,396) million is the elimination of intersegment transactions.
(7) Adjustment of interest expense of ¥(90) million is the elimination of intersegment transactions.
(8) Adjustment of tax expense of ¥22 million is the elimination of intersegment transactions.
(9) Adjustment of increase in tangible and intangible fixed assets of ¥(52) million is due to 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.

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About Nanto Bank

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Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Millions of yen

2022
Reportable segments
Banking

Ordinary income:Outside customers ......................................... ¥ 65,483
1,402Intersegment income ......................................
Total ............................................................ ¥ 66,886
Segment profit .................................................... ¥ 17,455
Segment assets.................................................. 6,981,997
Segment liabilities ............................................... 6,706,723
Others:Depreciation ...................................................
3,107
Interest income ...............................................
48,920Interest expense .............................................
906
Extraordinary gain ...........................................
85
Extraordinary loss ...........................................
128
Tax expense ...................................................
5,550
2,766
Increase in tangible and intangible fixed assets ...

Leasing

¥
¥
¥

Total

Other

8,773
695
9,468
306
39,22034,364¥74,256
2,098¥ 76,354¥ 17,761
7,021,218
6,741,088

91
5
80
—
0
93
133

3,199
48,925
987
85
128
5,643
2,899

¥
¥
¥

Total

3,186
2,733
5,919
1,567
31,582
13,358¥77,442
4,831¥ 82,274¥ 19,329
7,052,800
6,754,446

113
739
6
160
92
376
67

3,313
49,664
994
246
220
6,020
2,967

Adjustment¥¥¥

Consolidated

88 ¥ 77,531(4,831)—(4,742) ¥ 77,531(1,347) ¥ 17,981(51,359)
7,001,441(39,479)
6,714,967(16)(1,478)
(91)
(160)
(63)
21
(4)

3,296
48,185
902
85
156
6,042
2,963

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 ofother industry 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 from outside customers of ¥88 million is mainly the recovery of written-off claims included in “Others.”(2) Adjustment of segment profit of ¥(1,347) million is the elimination of intersegment transactions.
(3) Adjustment of segment assets of ¥(51,359) million is the elimination of intersegment transactions.
(4) Adjustment of segment liabilities of ¥(39,479) million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
(5) Adjustment of depreciation of ¥(16) million is the elimination of intersegment transactions.
(6) Adjustment of interest income of ¥(1,478) million is the elimination of intersegment transactions.
(7) Adjustment of interest expense of ¥(91) million is the elimination of intersegment transactions.
(8) Adjustment of extraordinary gain of ¥(160) million is the elimination of intersegment transactions.
(9) Adjustment of extraordinary loss of ¥(63) million is the elimination of intersegment transactions.
(10) Adjustment of tax expense of ¥21 million is the elimination of intersegment transactions.
(11) Adjustment of increase in tangible and intangible fixed assets of ¥(4) million is due to 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

2023
Reportable segments
Banking

Ordinary income:Outside customers .........................................
Intersegment income ......................................
Total ............................................................
Segment profit ....................................................
Segment assets..................................................
Segment liabilities ...............................................
Others:Depreciation ...................................................
Interest income ...............................................
Interest expense .............................................
Extraordinary gain ...........................................
Extraordinary loss ...........................................
Tax expense ...................................................
Increase in tangible and intangible fixed assets ...

Leasing

Total$ 486,849
10,566$ 497,423$ 43,196
48,838,935
46,955,920

69,467
4,590$ 74,065$
2,366
305,347
268,052

23,822356,466
28,001
786
786
7,698
45,929

696
44
636
—
0
741
1,243

$

Other

Total

$ 556,316
15,165$ 571,489$ 45,562
49,144,289
47,223,979

24,803
19,830$ 44,641$ 11,398
235,250
99,74524,526
356,51128,637
786
786
8,440
47,180

816
4,897
52
—
44
3,250
314

$

Adjustment

Consolidated$ 581,127
35,003$ 616,138$ 56,968
49,379,547
47,323,732

1,115(35,003)$ (33,880)$(9,623)(385,935)(298,202)$ 582,251—$ 582,251$ 47,345
48,993,611
47,025,522

25,350361,40928,697786
831
11,69747,502

202(10,454)
(674)
—
—
164
(389)

25,552350,947
28,016786
831
11,862
47,105$

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 from outside customers of $1,115 thousand is mainly the recovery of written-off claims included in “Others.”(2) Adjustment of segment profit of $(9,623) thousand is the elimination of intersegment transactions.
(3) Adjustment of segment assets of $(385,935) thousand is the elimination of intersegment transactions.
(4) Adjustment of segment liabilities of $(298,202) thousand is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
(5) Adjustment of depreciation of $202 thousand is the elimination of intersegment transactions.
(6) Adjustment of interest income of $(10,454) thousand is the elimination of intersegment transactions.
(7) Adjustment of interest expense of $(674) thousand is the elimination of intersegment transactions.
(8) Adjustment of tax expense of $164 thousand is the elimination of intersegment transactions.
(9) Adjustment of increase in tangible and intangible fixed assets of $(389) thousand is due to 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.

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Financial Data

Financial Data

Consolidated Financial Statements

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

2023
Securities andinvestments

Lending

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

¥

35,771¥

Leasing

14,746

¥

Other

9,276

¥

Total

17,953¥77,748Millions of yen

2022
Securities andinvestments

Lending

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

¥

32,810¥

Leasing

19,540

¥

Other

8,773

¥

Total

16,406¥

77,531Thousands of U.S. dollars

2023
Securities andinvestments

Lending

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

$

267,887$

Leasing

110,432$

Other

69,467$

Total

134,449$

582,251

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 areas(a) 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, 2023 and 2022; 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% as of March 31,
2023 and 2022; 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 both fiscal years ended March
31, 2023 and 2022; therefore, information about major customers is not required to be disclosed.
(7) Impairment loss on fixed assets for each reportable segment
Millions of yen

2023
Reportable segments
Banking

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

¥

Leasing

40

¥

Other

—

¥

Total

2

¥

3

¥

14

$

43

Millions of yen

2022
Reportable segments
Banking

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

¥

Leasing

58

¥

Other

—

¥

Total

62

Thousands of U.S. dollars

2023
Reportable segments
Banking

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

$

299

Leasing$

Note: “Other” comprises financial product transactions.

(8) 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) Gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill.

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98 Nanto
98

Other

—

$

Total

322

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

32. RELATED PARTY TRANSACTIONS
For the fiscal year ended March 31, 2023, related party transactions were as follows:
Relationshipwith the Bank

Name

Location

Officers of the
Bank and theirrelatives

Haruyuki
Kakutani—

Kitamura
Forestry Co., Osaka City
A company in
Ltd.
Osaka
which a majority(Note 3)of voting rights
NIKKENare held byDaito City
BLAST CO.,
officers of the
Osaka
LTD. (Note 4)
Bank and their
Kyowa Shokai
relatives
Kizugawa
Yakuhin K.K.
City Kyoto(Note 5)Paid-in
VotingOccuparights
capitaltion/
ownership(millions
Business(%)
of yen)Relationship ofrelated parties

Details oftransactions

Officeworker—Executive Officer ofthe Bank
Loans

Lending of money(Note 2)
Interest receivable

32

Forestry

Directly
owned
1.31

Loans

10

Metal
processing—

10

Sales ofchemicals—¥—

Transaction Transaction
Year-end
Year-end
amountamountAccounting balancebalance(millions of (thousands of
title(millions of (thousands ofyen)
U.S. dollars)
yen)
U.S. dollars)
¥—
$—
Loans
¥10
$74
0

0

—

—

—

Lending of money
Interest receivable

200
2

1,497
14

Loans
—

200
—

1,497
—

Loans

Lending of money
Interest receivable

—
0

—
0

Loans
—

74
—

554
—

Loans

Lending of money
Interest receivable

98
1

733
7

Loans
—

89
—

666
—

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. Relatives of Matazaemon Kitamura (Director of the Bank) owned 100% of the voting rights 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.

For the fiscal year ended March 31, 2022, related party transactions were as follows:
Relationshipwith the Bank

Name

Location

Officers of the
Bank and theirrelatives

Haruyuki
Kakutani—

Kitamura
Forestry Co., Osaka City
Ltd.
Osaka
A company in(Note 3)
which a majorityof voting rights
NIKKENare held by
BLAST CO., Daito City
officers of the
LTD.
Osaka
Bank and their(Note 4)
relatives
Kyowa Shokai Kizugawa
Yakuhin K.K.
City
(Note 5)
Kyoto

Paid-in
VotingOccuparights
capitaltion/
ownership(millions
Business(%)
of yen)Relationship ofrelated parties

Details oftransactions

Officeworker—Executive Officer ofthe Bank
Loans

Lending of money(Note 2)
Interest receivable

32

Forestry

Directly
owned
1.28

Loans

10

Metal
processing—

10

Sales ofchemicals—¥—

Transaction
Year-end
amount Accounting balance(millions of
title(millions of
yen)
yen)
¥—
Loans
¥11
0

—

—

Lending of money
Interest receivable

200
2

Loans
—

200
—

Loans

Lending of money
Interest receivable

—
0

Loans
—

82
—

Loans

Lending of money
Interest receivable

76
0

Loans
—

80
—

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. Satoru Wada resigned as a Director of the Bank on June 29, 2021 and the loan balance to Mr. Masato Ibi, Mr. Wada’s son-in-law, was ¥24 million as of that date.

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Financial Data

Financial Data

Consolidated Financial Statements

Consolidated Financial Statements
33. PER SHARE INFORMATION
Net assets per share at March 31, 2023 and 2022 and net income per share for the fiscal years then ended were as follows:
Yen

U.S. dollars

2023

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

¥

2022

8,276.62
147.75¥2023

8,800.10
364.29

$

61.98
1.10

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

Millions of yen

2023(Net assets per share)
Net assets ................................................................................................................
Net assets attributed to common stock ....................................................................
Outstanding number of shares of common stock at end of year
(unit: thousands of shares) ......................................................................................
(Basic 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) ...

¥

2022

262,798
262,798

¥

4,731
4,731
32,024286,473
286,473$

1,968,082
1,968,082

32,55331,751¥2023¥

11,867
11,86732,577—$35,43035,430—Notes: 1. As described in Note 4, “CHANGES IN ACCOUNTING POLICIES,” the Group has changed the criteria for recognizing income from installment sales transactions from the fiscal year ended March
31, 2022.
2. Net income per share – diluted for the fiscal years ended March 31, 2023 and 2022 is not presented because there were no residual shares.
3. The Bank introduced the Director Remuneration BIP Trust. Shares of the Bank remaining in the Trust, which were recorded as treasury stock in stockholders’ equity, were included in treasury
stock to be deducted for computing net assets per share and net income per share.
The numbers of shares of treasury stock as of March 31, 2023 and 2022 that were deducted for computing net asset per share were 73 thousand and 73 thousand, respectively. In addition, theaverage numbers of shares of treasury stock during the fiscal years ended March 31, 2023 and 2022 that were deducted for computing net income per share were 73 thousand and 47 thousand,respectively.

34. SUBSEQUENT EVENTS.
Not applicable.

35. BORROWED MONEY AND LEASE OBLIGATIONS
a. The details of borrowed money as of March 31, 2023 and 2022 were as follows:
Thousands of
U.S. dollars

Millions of yen

2023

Borrowed money
Due from May 2023 through August 2030
Average interest rate: 0.74% p.a.. .........................................................................

¥

356,490

2022

¥

2023

709,227$

2,669,737

Annual maturities of borrowed money as of March 31, 2023 were as follows:
Thousands of
U.S. dollars

Millions of yen

2024 .........................................................................................................................................................
2025 .........................................................................................................................................................
2026 .........................................................................................................................................................
2027 .........................................................................................................................................................
2028 .........................................................................................................................................................
2029 and thereafter ..................................................................................................................................
Total..........................................................................................................................................................

¥¥

53,94486,89461,501150,975
505
2,670
356,490$$

403,984
650,745
460,578
1,130,644
3,781
19,9952,669,737b. Lease obligations
Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheets.
Annual maturities of lease obligation as of March 31, 2023 were as follows:
Thousands of
U.S. dollars

Millions of yen

2024 .........................................................................................................................................................
2025 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 thestraight-line method.
c. Other
The Group has not issued commercial paper by way of promissory notes to fund operating activities.

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100 Nanto100About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Independent Auditors’ Report

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

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Financial Data

Independent Auditors’ Report

Appropriateness of the estimates of the reserve for possible loan losses for loans and bills
discounted to small and medium-sized enterprises (SMEs)
The key audit matter

How the matter was addressed in ouraudit

The Nanto Bank, Ltd. (“the Company”) and its
consolidated subsidiaries reported loans and bills
discounted of ¥3,944,387 million, accounting for 60.2% of
total assets, and a related reserve for possible loan lossesof ¥23,043 million in the consolidated balance sheet.
Reserve for possible loan losses reported in the balance
sheet of the Company accounted for a significant portionin the consolidated balance sheet.

The primary procedures we performed toassess whether the Company’s estimatesof the reserve for possible loan losses forloans and bills discounted to SMEs wasappropriate included the following:

As described in the Notes to Consolidated Financial
Statements, 2. SUMMARY OF SIGNIFICANTACCOUNTING POLICIES i. Reserve for possible loan
losses and 3. SIGNIFICANT ACCOUNTINGESTIMATES, the Company classifies borrowers based on
their credit risk rating in accordance with thepredetermined standards for write-offs and reserves, andreports the reserve for possible loan losses by calculating
the loan loss ratio based on the category of borrowers byregion.

The category of borrowers is determined based on thecredit rating determined by the rating models and theborrower’s repayment ability based on their substantial
financial position, financing capacities, and profitability,
etc., and the terms and conditions of the loans andpayment 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 business improvement plans, andother factors in light of the borrower’s industry
characteristics.
The Company aims to increase Nara prefecture’s real
gross domestic product by 10% over 2016 in its
management plan, “Nanto Mission and Objectives for the
Next 10 Years,” targeted to be achieved by 2029. To
achieve this goal, the Company will contribute to thedevelopment of the region by taking the initiative in

102 Nanto Report 2023, the integrated report of Nanto Bank

(1) Internal control testing
In order to test the design and operating
effectiveness of certain of the Company’s
internal controls relevant to thedetermination of the category ofborrowers, we:







tested the effectiveness of internal
controls related to various
regulations for the internal selfassessment criteria, and the policy
for write-offs and provisions;tested the effectiveness of internal
controls to ensure the reliability ofborrowers’ financial informationentered into the financing support
system;tested IT application controls overthe quantitative determination of
the category of borrowers; andtested the effectiveness of internal
controls of the Credit Analysis
Division related to thedetermination of the category ofborrowers in consideration ofqualitative factors.

(2) Assessment of determination of thecategory of borrowers
In order to assess the appropriateness ofthe determination of the category ofborrowers, we selected borrowers to betested individually by considering
quantitative factors such as credit limits
and qualitative factors such as the
progress of the Company’s businessAbout Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

resolving regional issues, with the aim of “sustainablebusiness that grows together with the region.”

The Company operates mainly in Nara prefecture,neighboring prefectures, and Tokyo, but its businesscoverage area is limited. The main borrowers are SMEs,
and the Company’s balance sheet reported loans and bills
discounted to SMEs of ¥1,473,864 million.

improvement plans, the impact of the newcoronavirus and rising prices, andperformed the following procedures:
Since the fundamental business foundation of SMEs
generally tends to be weaker than medium to large-sizedenterprises, the Company determines the category of SME
borrowers by comprehensively considering not only theirfinancial conditions but their technical capabilities, sales
capacity and growth potential, their managements’ income
status, asset quality, and guarantee status and capacity, inlight of their business condition.
Therefore, there is judgment over the qualitative factors
including the estimate of reasonableness and feasibility ofthe business improvement plan which is important forborrowers categorized as needs attention borrowers(excluding claims corresponding to restructured loans)based mainly on the grounds that a drastic and highly
feasible or a reasonable and highly feasible business
improvement plan exists.
In addition, SMEs may be significantly impacted by the
new coronavirus and rising prices. Accordingly,
management’s judgment on the determination of thecategory of borrowers may have a significant impact on
the reported amount of the reserve for possible loan losses.

We, therefore, determined that our assessment of theappropriateness of the estimates of the reserve for possible
loan losses for loans and bills discounted to SMEs,
especially the appropriateness of the management’s
judgment on the category of borrowers, was of mostsignificance in our audit of the consolidated financial
statements for the current fiscal year, and accordingly, a
key audit matter.



compared the quantitative
information of borrowers,
including financial ratios, to the
supporting materials, in order toverify that the information is basedon accurate and the latest
information;
inspected related documents andinquired of personnel in therelevant divisions, such as theCredit Analysis Division, to assess
whether judgments based on
qualitative factors were made in atimely and appropriate manner,and assessed the appropriatenessof the determination of thecategories of borrowers based on
qualitative factors for borrowers
whose category have a relatively
high degree of dependence onmanagement’s judgment,
particularly including those underintensive credit monitoring andthose categorized as needs
attention borrowers (excluding
claims corresponding to
restructured loans) based mainlyon the grounds that a drastic andhighly feasible or a reasonable andhighly feasible business
improvement plan exists; andassessed whether the determinedcategories of borrowers wereappropriate, focusing on therecoverability from the current
business performance andfinancing situation by
understanding the latest businessconditions of borrowers andconsidering their industry
characteristics through theinspection of related documents
and the inquiries of personnel inthe relevant divisions, such as theCredit Analysis Division, toevaluate the impact of the newcoronavirus and rising prices onborrowers’ operating results.

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103

Financial Data

Independent Auditors’ Report

Other Information
The other information comprises the information included in the Integrated Report, but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
Management is responsible for the preparation and presentation of the other information. The audit andsupervisory committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the reporting process for the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the audit and supervisory committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting from104 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

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

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



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

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

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

Nanto Report 2023, the integrated report of Nanto Bank

105

Financial Data

Independent Auditors’ Report

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Manabu Matsumoto
Designated Engagement Partner
Certified Public Accountant
Yoshiyuki Sumihiro
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Osaka Office, Japan
November 10, 2023

106 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Consolidated
Developing Human
Value Creation by theGovernance Supporting Our
Resources for Value Creation Group’s Human Resources Proactive Human Resources Financial Statements

Financial Data

CapitalManagement
CapitalManagement• Consolidated Capital Adequacy Ratio
As of March 31, 2023 and 2022
Millions of yen

2023(1) Capital adequacy ratio ((2)/(3)) .................................................................................................................
(2) Capital ....................................................................................................................................................
(3) Risk-weighted assets ..............................................................................................................................
(4) Requisite capital ......................................................................................................................................

¥

2022

9.25%
272,924
2,948,007
117,920¥

9.60%
273,267
2,844,259
113,770

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, 2023 and 2022
Millions of yen

2023(1) Capital adequacy ratio ((2)/(3)) .................................................................................................................
(2) Capital ....................................................................................................................................................
(3) Risk-weighted assets ..............................................................................................................................
(4) Requisite capital ......................................................................................................................................

¥

8.95%
261,6122,920,859
116,834

2022

¥

9.29%
261,864
2,817,900
112,716

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.

Nanto Report 2023, the integrated report of Nanto Bank107

B-(3)-080031

This report is printed on paper made using raw materials from such properly managed supply sources as
FSC (Forest Stewardship Council) certified forests. Nanto Bank supports the Kizukai Movement organized topromote use of wood from Japan’s domestic forests.
Issued: October 2023
Nanto Bank, Ltd. Corporate Planning Department
16, Hashimoto-cho, Nara City, Nara Prefecture 630-8677, Japan
Tel.: +81-742-27-1599
Homepage: https://www.nantobank.co.jp/