Annual Report 2020
Year ended March 31, 2020

Profile

The Region’s Best Partner for Creating
a Prosperous, Dynamic and Bright Future
Founded in 1878, The Iyo Bank, Ltd. is a regional financial services institution boasting a solid operating base centered on the four prefectures of Shikoku and the seven prefectures surrounding
the Seto Inland Sea. With branches in Tokyo and Nagoya as well, we are Japan’s No.1 regionalbank in terms of broad regional coverage. In recent years, we have also enhanced our network ofoverseas bases primarily in the ASEAN region to support the international business expansion of
our clients. We at Iyo Bank are working to be the region’s best partner for creating a prosperous,
dynamic and bright future by offering friendly and trustworthy financial services to customers.

Corporate Credo

1

Creating a bright and prosperous future for the region

2

Offering the best service and being worthy of people’s trust

3

Rendering our best service with gratitude in our hearts

Contents
Our Operating Area∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙2
Message from the President∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙4
Efforts for SDGs∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙8
Corporate Governance / Compliance / Risk Management∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙10
Financial Section∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙12
Corporate Data / Directory∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙55

THE IYO BANK, LTD.
Annual Report 2020

Forward-Looking
Statements:
Statements contained in this report concerning plans, predictions, and strategies toimprove future performance (“Forward-Looking Statements”) are based information
currently available to the Bank’s management, and inevitably involve a certain elementof risk and uncertainty.

Annual Report 2020
Year ended March 31, 2020

005_0057401372009.indd

32020/06/25

4:59:46

Cover Photos (from the top):
Dogo Onsen
Mandarin Orange Field and Sea in Ehime
Shipbuilding company in Imabari

Head Office
1, Minami-Horibata-cho, Matsuyama 790-8514
Tel: (089) 941-1141
URL: http://www.iyobank.co.jp/

Year of Foundation
1878
Number of Employees(The Iyo Bank, Ltd. and its Consolidated Subsidiaries)
3,109
Number of Branches(As of March 31, 2020)
150 (Domestic 149, Foreign 1)

Global Network
Our global network comprehensively supports our clients’ overseas business endeavors.
We support our customers’ efforts to globalize their businesses through trade operations, the establishment of local corporations
and fund procurement by leveraging our network of three overseas sites consisting of the Singapore branch and two representative
offices in Shanghai and Hong Kong.
Our overseas network also involves business alliances and cooperations with banks, etc., in China, India, Indonesia, Mexico, Singapore, Philippines, Taiwan, Thailand, U.S.A. and Vietnam (as of March 31, 2020).
Bangkok, Thailand
Business alliance with Kasikorn Bank
Dalian, China
Business alliance with Bank of DalianHanoi, Vietnam
Business cooperation with BIDVJakarta, Indonesia
Business alliance with BNI
Mexico	Business cooperation with Jalisco, Aguascalientes, Guanajuato, Nuevo León and
Makati City, Philippines
Business alliance with Metropolitan Bank
Mumbai, India
Business cooperation with State Bank of India
Shanghai, China
Business alliance with Bank of Communications
Singapore
Business alliance with UOBTaipei, Taiwan
Business alliance with CTBC Financial Holding
Honolulu, Hawaii,U.S.A.
Business alliance with Central Pacific Bank

Banamex (Mexico City)

Shanghai, China

Representative OfficeHong Kong

Representative Office

Singapore
BranchOur Overseas Business Support• Provision of various types of information about entering overseas markets• Advice about entering overseas markets• Advice about trade operations and fund settlements• Support for funds procurement in the local area overseas• Implementation of overseas business matching• Holding of seminars about entering overseas markets
IYO BANK Annual Report 2020

1

Our Operating Area

Domestic Branch Network
The No. 1 regional bank in terms of broad regional coverage, Iyo Bank’s network consists of 149
branches located in 13 prefectures (as of March 31, 2020).

Imabari Region
Number of ocean-going vessels owned Towels (2017)by domestic ship owners (2018)¥58.0 billion shipped in Japan
3,573 total vessels in Japan

29.8%

5

63.2%

(1,063 ships)(¥36.7 billion)

No.1 in Japan

No.1 in Japan

Hiroshima

Automotive, shipbuilding,electronics* Number of ocean-going vessels owned by domestic ship owners (2017) are Iyogin
Regional Economy Research Center, Inc. (IRC) estimates.

Matsuyama Region

1

Yamaguchi

The Matsuyama region has companies with large shares in
products such as “small oncethrough steam boilers,” “farmmachinery,” and “dried bonito
shavings.”

Imabari

Shipbuilding, ocean transport,
oil, towels and garments

Matsuyama

Electronics, farm machinery, chemicals, tourism

117

2

Ehime

Fukuoka

Chemicals, electronics,
nonferrous metal, general machinery

Ozu
Yawatahama

6

Citrus, food processing

Steel, automotive,
electronics, tourism

Culture fishery

Sea culture industry (2018)¥486.1 billion total national production

14.1%(¥68.4 billion)

No.1 in Japan

Economic Indicators of the Setouchi Region
Total of ten
prefectures

17.0%
Total population(Population
estimate)(October 2019)(Prepared based on various statistical data)
2

IYO BANK Annual Report 2020

Total of nine
prefectures(excluding Hyogo)

12.7%
Total population(Population
estimate)(October 2019)

Total of ten
prefectures

15.7%
Gross prefectural
product(Nominal)(Fiscal 2017)

Total of nine
prefectures(excluding Hyogo)

11.8%
Gross prefectural
product(Nominal)(Fiscal 2017)

1

Kochi

UwajimaOita

Uwajima Region

NiihamaMain Industries in Ehime Prefecture• Industries with top national share concentrated in each region• Manufactured product shipments from Ehime Prefecture
totaled ¥4.3 trillion (45% of Shikoku) in 2018

Industrial Structure of the Setouchi
Region• The Setonaikai coastal region has established various industrial structures

2

3

Shikokuchuo Region

Hyogo

Pulp and paper industry (2018)

Okayama¥7,543.6 billion shipped in Japan

Automotive,
oil refining, steel

7.2%

3

(¥542.1 billion)

No.2 in Japan

Osaka

5

Niihama Region

KagawaShipbuilding, textiles

Manufactured product shipments (2017)¥1,622.5 billion
Shikokuchuo

Paper manufacturing and processing

Approx. 39% of shipments of manufactured

1

products in Ehime

As a corporate town under the Sumitomo Group, nonferrous metal,
chemicals, steel, machinery and equipment are concentrated
particularly in the Niihama region.

Tokushima

No. 1 Market Sharein Ehime

2

Tokyo

About Ehime Prefecture• Area5,676 km2 (As of January 1, 2020)• Population

1,329,285 (As of July 1, 2020)• Number ofhouseholds

599,855 (As of July 1, 2020)

Strengthen Measures
Toward Regional
Vitalization through the“Shikoku Alliance”• Formed the “Shikoku Alliance,” a comprehensive alliance between four regionalbanks aiming for revitalizing the Shioku
region in November 2016• Announced key measures and the logo in
April 2017

1

Aichi

* The numbers next to the prefecture names denotenumber of branches.
* These 149 domestic branches include our Internet
branch.

The region, customers and the four banks willsustainably grow and develop
Iyo Bank

Hyakujushi Bank

Build

Utilize

Support industrial
development

Shikoku resources
branding

FosterConnect

Support the formationof financial assets

Shikoku Bank

Support network
expansion

Cooperate

Awa Bank
IYO BANK Annual Report 20203

Message from the President

Kenji Miyoshi, President

Introduction

I would like to wholeheartedly thank you all for your continued support of Iyo Bank.
I assumed the office of President on April 1, 2020. It is agreat privilege to take the helm of Iyo Bank, a financial
institution with an important mission of supporting theregional economy. I will do everything within my means towork unfailingly for the sake of our customers, shareholders,and members of the local community.
The Bank’s operating environment is undergoing significant changes day by day, as evidenced by advances in globalization and digital innovation as well as diversifying customer
needs and values, while also experiencing a population
decline, a falling birthrate, and the increasingly aging population. Under these circumstances, Iyo Bank is working totransform itself into a “Digital-Human-Digital Bank,” whereby
we fully utilize digital technologies in the fields where they
have strengths, and concentrate the capabilities of people
into work that only humans can do such as consulting. Goingforward, we will strive to develop these initiatives into a
digital transformation, an effort to leverage IT to create newvalue so customers can enjoy prosperous lives.
Now that the spread of the novel coronavirus (COVID-19)
infection is a major issue, it is one of our important missions
to help affected customers. Iyo Bank is ready to serve thosecustomers by providing consulting services at its head office
and all its branches in Japan (the Minatomachi branch andsome Loan Plaza counters provide those services on holidays
as well), offering telephone consultation services on holidays
and providing loans. We hope that customers will take advantage of these services.
Under the corporate credo of “creating a bright andprosperous future for the region,” I will make an all-out effort
together with our officers and employees so that people in
the Setouchi region see Iyo Bank as a necessary financial
institution and that the bank can become the leading financial services group in the Setouchi region in terms of customer satisfaction. I hope for your continued patronage.

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IYO BANK Annual Report 2020

Financial and Economic Environment

Despite impacts of the consumption tax hike, the Japanese
economy in fiscal 2019, ended March 31, 2020, showedsigns of recovery in consumer spending against the backdrop
of a steady improvement in the employment and income
environment, while it saw sluggish growth in exports amid aslowdown in the global economy. However, the economic
environment underwent a drastic change due to COVID-19,
an infectious disease that began to spread toward the end of
the fiscal year, leading to growing concerns over a downturnin the global economy.
The economy of Ehime Prefecture continued to see
housing investments increase owing to an increase in thenumber of new housing constructions and public investments
increase backed by recovery and reconstruction projects
launched after the heavy rainfall disaster in western Japan.
The impact of COVID-19 has, however, made the outlook forthe prefecture’s economy uncertain as the regional economy
is forecast to stagnate.

Business Performance

Under these circumstances, in keeping with our spirit ofgratitude toward customers we worked to provide products
and services tailored to customer needs and create a structure
for that purpose. We endeavored to expand our fields ofoperation and strengthen profitability in the aim of being abank that is still needed 10 years in the future.

Regional Vitalization Initiatives

In line with its aim of growing sustainably along with its
region, Iyo Bank has been involved in a variety of regional
vitalization measures and provided support for realizing
customers’ bountiful lives and business development.
As an initiative for community development and tourism
promotion, in February 2020, we established Ozu Town
Creation Fund LLP, a management-based town creation fund,through joint investment with the Organization for Promoting
Urban Development. The fund invests in businesses thatcreate and operate accommodation facilities, restaurants, andmerchandise facilities by renovating and utilizing town houses
and traditional houses in Ozu City. By supporting thesebusinesses, we are promoting regional vitalization initiatives.
As an initiative for helping customers start businesses andfor supporting growth of customers’ businesses, we areengaged in a crowd-funding business, whereby we help
customers start businesses and support growth of theirbusinesses by subsidizing part of their contract fees. Under
the Shikoku Alliance, a group of four regional banks on theisland, the 3rd Shikoku Alliance Business Plan Contest wasorganized in February 2020 to continue to raise awareness ofentrepreneurship in the Shikoku region and provide businesses incubation services for parties with creative business plans.
As an initiative to build business continuity systems forcustomers, we held “BCP (Business Continuity Plan) Formulation Seminars” in each of the four prefectures of Shikoku in
July 2019 to prepare for natural disasters and emergencies,
utilizing the framework of the Shikoku Alliance. In March
2020, we entered into a Disaster Response Business Cooperation Agreement with the Development Bank of Japan Inc.
Under the agreement, we are working to provide businesssupport to customers who have been affected by COVID-19
and natural disasters and those who are considering disaster
response measures.
As an initiative to provide support for those affected by
COVID-19, we are ready to serve affected customers byproviding consulting services at our all branches in Japan,
offering telephone consultation services on holidays andproviding loans through close collaboration with related
institutions.

accommodate various inquiries from customers. In this way,
we have been upgrading our branches and strengthening ourcustomer service systems. We have also been working on
branch creation, which includes the relocation of the Takayama Branch to the Seiyo City Hall Akehama Branch in August
2019 (the fourth branch in government office buildings).
In addition, we have equipped the AGENT System, whichallows customers to perform procedures at a branch using
tablet devices, with a “listening function” enabling us toprovide optimal information tailored to each individual customer by listening to customers’ issues in a “3-minute talk”
via chat. Furthermore, we have introduced AGENT for Business, a document pre-preparation service for our officeclients, and are working to improve the efficiency of clerical
work by, for example, enabling office workers to use theirown personal computers to create forms in advance formaking deposits or withdrawals and for opening savings
accounts, which previously was done manually. This system
has been highly praised in Japan and overseas for its mechanism of improving customer convenience. In September
2019, the system won awards in two categories in the CX
Asia Excellence Awards 2019, which is an international award
presented to companies that have achieved a superior customer experience in the Asia region, and it also won the 2019
Good Design Award in October 2019.
We have installed out-of-store ATMs in 211 locations (asof March 31, 2020; excluding convenience store ATMs), thelargest number in Ehime Prefecture. We also offer a “no-fee
service when using other banks’ ATMs” in collaboration with
regional banks in Shikoku (Awa Bank, Hyakujushi Bank and
Shikoku Bank), Hiroshima Bank, San-in Godo Bank, JA EHIMEKENSHINREN, and agricultural cooperatives in Ehime Prefecture.

Head Office Organization

Products and Services

With regard to the organization of the head office, we established the Digital Development & Promotion Planning Department in August 2019 within the Corporate & Retail Banking
Planning Division with the aim of planning and promoting
new financial services utilizing digital technology. In addition,
we established the Wellness Management Promotion Department within the Human Resources Division with the aim of
improving the health promotion system for employees,
including through health guidance by public health nurses
and strengthened mental health measures.
Furthermore, we established the Loan Processing Support
Center in February 2020 within the Credit Division with theaim of making time for sales staff to spend on decision-making work and sales activities so that we can improve customer
service by concentrating financing-related work conducted atbranches as much as possible into the head office.

Bank Branches and ATMs

Iyo Bank has a broad-ranging branch network that covers 13
prefectures in Japan, the largest number of prefectures
covered by a regional bank. We aim to transition from a“place mainly for administrative tasks” to a “place where
customers’ issues are solved” so that customers can use ourservices more effectively.
With regard to next-generation branches that offer new
functions and new services, we placed the “Satto (quick)counter” in 62 branches (as of March 31, 2020) which provides semi-self-served cash transactions and tax payments
among others, and increased our consultation booths to

As for financing products, we began handling Flood Damage
Responsive Financing in August 2019 that forgives debt
obligation for a prescribed ratio of principal balance of loans
if a certain amount of precipitation is observed at a prescribedlocation. It also provides funding within credit limit even after
exemption. Thus, we are working to support customers’ BCP
and their natural disaster risk response.
Our consulting service initiatives included efforts to support customers’ use of intellectual property and intellectual
property management through measures such as management support for intellectual property with a focus on “manufacturing support teams” and various seminars held in
collaboration with attorneys at law and other specialized
institutions. These initiatives have been well received and in
January 2020 we became the first company in Shikoku to beawarded the Intellectual Property Utilization Support Encouragement Award (Financial Support Category) in the Japan
Patent Attorneys Association’s 6th Intellectual Property Utilization Awards.
As an initiative utilizing digital technology, we are promoting API collaboration linking the Bank’s system with Fintech
companies, and have made efforts to expand various services
that support asset formation and asset management. For
example, in May 2019, we started collaboration with Moneytree, which allows centralized management of bank andsecurities accounts, and in September 2019 we renewed
Money Manager, the Bank’s balance inquiry app, adding afunction that allows customers to check balances of new time
deposits, investment trusts, and loans. In December, webegan collaborating with Money Forward Cloud, which

IYO BANK Annual Report 20205

Message from the President

realizes greater efficiency of accounting operations, etc. byautomating the acquisition and journalizing of transaction
statement data.
Furthermore, in November 2019, we introduced HOME, aservice enabling customers to make applications for homeloans with a smartphone. Customers can select options via
chat and complete the application procedures simply by
uploading the required documents. Digital signing is now also
possible when executing the contract. We will continue toproactively utilize digital technology and provide high-valueadded financial services to increase ease-of-use and convenience for customers.

SDG Initiatives

In addition to its financial activities, to realize its mission to“create a bright and prosperous future for the region,” Iyo
Bank has worked on SDG initiatives, which are the goals forthe entire international community adopted by the United
Nations. In July 2019, we established the Iyogin Declaration
on SDGs in order to contribute to the achievement of SDGs
and overcome social and environmental issues in the region.
As an initiative for local economy and community, we areworking on social welfare activities by continuing to provide
scholarships and welfare equipment, etc. through the Iyo
Bank Social Welfare Fund, a public interest incorporated
foundation. As well as strengthening collaboration with local
governments, we entered into the Agreement Regarding a
Tourism Promotion Collaboration Agreement with Beppu City
in September 2019 in line with the 100th anniversary of the
opening of the Beppu Branch. We are working on regional
vitalization with a focus on the promotion of tourism.
We are undertaking initiatives for the realization of sustainable local community through financial and information
services. These include two projects launched in October
2019, which are “Future of Companies” a private placementbond whereby part of the bond issuance fee is used to partially subsidize the cost of goods purchased by the issuing
companies to enhance welfare benefits, and “SDGs Private
Placement Bonds,” bonds that give a preferential coupon rate
to those who work toward the achievement of SDGs. In
January 2020, we became the first regional bank to establish
a syndicated loan for the purpose of investing in green bonds
issued by customers in order to promote the expansion of
local ESG financing. These initiatives were well received. We
were awarded the Bronze Award in February 2020 at the ESG
Finance Awards Japan (Finance Category) sponsored by the
Ministry of the Environment.
As for initiatives to build a strong management foundation, we are a company with an Audit & Supervisory Committee, so the number of outside directors exceeds one third of
the total number of directors. We made efforts to strengthen
audit and supervisory functions and revitalize the Board of
Directors. We also formulated an AML program to appropriately combat money laundering and terrorism funding, andare systematically working on the upgrading of our systems
and ongoing customer management.
As an initiative for diversity and work style reforms, we
held the Work Style Reforms Seminar Utilizing RPA in August
2019 as part of our initiatives based on the Collaborative
Agreement for the Realization of an RPA-Advanced Matsuyama City, an agreement concluded in April 2019. In thisway, we are seeking to improve productivity utilizing RPA, andare also promoting initiatives aimed at customers’ work stylereforms.
As an initiative for environmental protection, as well as

6

IYO BANK Annual Report 2020

working on grants from Evergreen, the Iyo Bank Environment
Foundation (public trust), we are conducting proactive environmental activities, including Iyo Bank Evergreen Forest
activities, which are forest cultivating activities in four areas in
Ehime Prefecture.

Special Benefit Program for Shareholders

We have introduced a special benefit program for shareholders as a way of responding to the daily support of our shareholders and with the aims of making it more appealing to buy
shares in the Bank and ensuring that greater numbers ofpeople hold shares in the Bank.
Under this program, shareholders listed or recorded in the
Shareholder Register who hold not less than 100 shares andless than 1,000 shares as of March 31 each year will receive a
special gift (Imabari towel), and shareholders holding 1,000
shares or more can select one of the following options:“Shareholder Special Time Deposit,” “Ehime Prefecture
Special Product or TSUBASA Alliance Jointly Planned Specialty
Goods,” or “Donation to The Japanese Red Cross Society.”

IR Activities and Ratings

Iyo Bank is proactively working to improve disclosure. To
increase management transparency, we held annual results
briefings for analysts and institutional investors in Tokyo in
June and December 2019, and held results briefings accompanied by a special lecture presentation in six locations
around Ehime Prefecture (Matsuyama, Imabari, Niihama,
Shikokuchuo, Yawatahama and Uwajima) in July 2019.
To foster a deeper understanding of its management
activities by stockholders, suppliers and investors, the Bank israted highly, with an “AA” rating by Japan Credit Rating
Agency (JCR), an influential Japanese credit rating agency, an“A” rating by Standard & Poor’s (S&P), a global credit rating
agency, and an “A+” rating by Rating and Investment (R&I).
Furthermore, the Bank and its group company Shikoku
Alliance Securities Co., Ltd. both received “A+” ratings under
R&I’s Customer-Oriented Investment Trust Sales Company
Evaluation in January 2020.

Compliance and Risk Management

As part of our efforts for compliance, we are working tostrengthen our legal compliance system through initiatives toenhance the whistleblowing system, including our registration
for whistleblowing compliance management system certification (declaration-of-conformity registration system) in March
2020 under the jurisdiction of the Consumer Affairs Agency.
We have taken measures to sophisticate the risk appetite
framework for business management. Through regular
discussions and monitoring, we aim to ensure balanced,
sustainable growth and soundness. Also, we regularly review
our business continuity structure in order to appropriately
respond to natural disasters such as the Nankai Trough earthquake and heavy rainfall, the spread of infectious diseases
such as COVID-19, and cyberattacks.
Amidst the initiatives described above, we received thestrong support of our shareholders and business partners. As
a result of devoting the collective strengths of the Iyo Bank
Group to our business performance, we have achieved thefollowing business results.

Business PerformanceIssuesIn fiscal 2019, ended March 31, 2020, performance was asfollows: The term-end balance of deposits, including NCDs,
increased ¥41.7 billion over the previous fiscal year-end, to¥5,754.3 billion (US$52,874 million). The loan balance at theend of the fiscal year rose ¥205.8 billion from the previous
fiscal year-end, to ¥ 4,756.6 billion (US$43,707 million). Thebalance of securities at the end of the fiscal year increased¥134.3 billion from the previous fiscal-year end, to ¥1,707.6
billion (US$15,691 million). The balance of total assets at theend of the fiscal year rose ¥624.1 billion from the previous
fiscal year-end, to ¥7,764.9 billion (US$71,349 million).
Ordinary income decreased ¥824 million on a consolidated basis year on year, to ¥106,398 million (US$978 million),
due to a decrease in other ordinary income caused by theenforcement of the Act on Utilization of Funds Related to
Dormant Deposits to Promote Public Interest Activities by thePrivate Sector, despite higher investment income, stemmingfrom an increase in interest on loans and discounts. Meanwhile, ordinary expenses on a consolidated basis fell ¥1,057
million to ¥79,816 million, due to a decrease in other ordinary expenses caused by the enforcement of the Act on
Utilization of Funds Related to Dormant Deposits to Promote
Public Interest Activities by the Private Sector, despite anincrease in interest expenses. As a result, net ordinary income
rose ¥232 million to ¥26,581 million (US$244 million), while
profit attributable to owners of parent increased ¥240 million
to ¥18,502 million (US$170 million).
The capital ratio (Basel III standards), which measuresbank prudence and soundness, stood at 14.85%.

The spread of COVID-19 has had an enormous impact onvarious areas, as evidenced by the stagnancy of domestic andoverseas economic activities and the downturn in markets. In
addition, the Bank’s operating environment is undergoingsignificant changes, including changes in economic and social
structures due to the falling birthrate, increasingly aging
population, and population decline, as well as the acceleration of digital innovation.
Under these circumstances, we will do everything within
our means to support our customers and sincerely address
customers’ concerns based on our corporate credo to “createa bright and prosperous future for the region.”
This year is the final year of the Bank’s Fiscal 2018 Medium-Term Management Plan that we launched in April 2018.
In addition to striving to improve customer convenience andproductivity, while fully leveraging digital technologies torealize the vision in the plan, the Bank’s transformation into a
Digital-Human-Digital Bank, we aim to become the leading
financial services group in the Setouchi region in terms ofcustomer satisfaction, and would like to move ahead andgrow hand in hand with members of the local community inthe new era by perfecting our ability to provide value that
only humans can do.
While working to ensure sound management and further
strengthening the Bank’s business operations, we, as thefull-service financial institution in your hometown, will put
our full effort into realizing a sustainable and vital regional
community. In these endeavors, we ask for the ongoingsupport of our stockholders.

Kenji Miyoshi, President

Positioning of 10-year Vision and Medium-Term Management Plan
• Steady growth toward 10-year vision of the “leading financial services group in the Setouchi regionin terms of customer satisfaction”
10-year Vision
Goals forthe future

Sustainable growth of the Bankand revitalization of regions

Leading financial
services group

Fiscal 2021 Medium-Term
Management Plan
Third Stage for 150—Dramatic growth—in the Setouchi
region in terms ofcustomersatisfaction

Fiscal 2018 Medium-Term
Management Plan
Second Stage for 150—Transitioning to a new
growth trend—
Fiscal 2015 Medium-Term
Management PlanFirst Stage for 150—Take on new growthstrategies—

Goals forthe future

Strengthen ability to offer value tailored to each customer

II

Enhance productivity and reduce cost through optimum resource
allocation

III

Commit to regional revitalization actively

IV

2017

Ensure stable, long-term earnings power through overseas and market
investment
Develop organizational culture that diversity of every person
is leveraged and proactively and mutually enhanced

2018

2019

2020

2021

2022

Core Strategy

Core Policy

2016— Whenever, wherever, closer to you —

I

V

2015

Digital-Human-Digital Bank
Consulting strategy
Online business strategy
ICT strategy, Branch
strategy, BPR strategy
Regional revitalization
strategyMarket strategy
Personnel strategy

2023~

IYO BANK Annual Report 20207

Efforts for SDGs

“Iyogin Declaration on SDGs”
Based on our corporate credo, the Bank aims to realize a bright and prosperous local community by contributing to the achievement of the Sustainable Development Goals (SDGs) advocated by the United Nations and working to overcome social and environmental issues in the region including population decline
and an aging population.
1. Local economy and community	We will expand our efforts for promoting growth in local economies and regional development, and contributeto enriching the lifestyles and developing the businesses of our customers.
2. Financial and information services
	We will provide advanced, high-quality, and comprehensive financial and information services, and continue tomaintain the trust and meet the expectations of our customers.
3. Strong management foundation
	We will work to further strengthen and enhance our management foundation, and fulfill our social responsibilities as a regional bank.
4. Diversity and work style reforms
	We will promote diversity and work style reforms, and endeavor to create an organization in which various typesof human resources can actively perform their roles.
5. Environmental protection
	We will actively and continuously work to reduce the environmental burden and participate in activities for environmental conservation, and endeavor to preserve and protect the natural local environment.

• Efforts toward realizing sustainable local communities through the core business are promoted based on“Iyogin Declaration on SDGs”<Transaction status with businesses founded>

1. Local economy andcommunity(as of March 31, 2020)

 ontribution to revitalization of local economy andCcreation of employment through continual support forcommercialization of creative business plans<Results of IYO BANK Business Plan Contest>(Total for past six contests from 2014 to 2019)

8

Number of applicants

511

Number of businesses founded72

IYO BANK Annual Report 2020

Deposit transaction

69 businesses¥95 million

Loan transaction

19 businesses¥79 million

 ontinual efforts have been made such as donating welfareC
equipment and granting scholarships with a view to improving social welfare and assisting human resource development for the next generation<Iyo Bank Social Welfare Fund>(Public Interest Incorporated Foundation)
Cumulative total of ¥655 million has been granted
since its foundation in 1976

2. Financial andinformation services

4. Diversity and work
style reforms

E xpansion of ESG-related loan productsFinancial support for customers engaged in SDGs
The actual ESG-related loan amount for fiscal 2019 was¥10,980 million, exceeding the target of ¥10,000 million

Productivity improvement through work style reforms<ESG-related loan results (fiscal 2019)>
Product name

Numberexecuted

ExecutionamountSDGs private placement bonds

20¥1,910 million

Environment private placement
bonds

25

¥2,530 million“Manabiya” (schoolhouse)
hometown support private
placement bonds

55¥3,770 million“Chiiki no Mirai (future in theregion)” hometown support
private placement bonds

8¥1,730 million“Kaisha-no-Mirai (Future of theCompany)” welfare support
private placement bonds

13¥1,040 million

Total

121

¥10,980 million<Change in overtime work under the Labor Standards Act>

13.8
hours

6.6
hours

3.2
hours

January to December
2017

January to December
2018

January to December
2019<Change in paid leave utilization rate>

62.5%

65.2%

67.1%

January to December
2017

January to December
2018

January to December
2019

5. Environmental
protection
3. Strong managementfoundation
 ppropriate establishment and implementation of a whisAtle-blowing system which is an important element ofcorporate governanceFurther promotion of compliance management
Registered for the “Whistleblowing Compliance Management System certification” under the Consumer
Affairs Agency

P romotion of financial contributing toenvironmental preservation
The Bank received the Bronze Prize inthe “ESG Finance Awards Japan (loancategory)” sponsored by the Ministry of
the Environment<Number of arranged project finance for renewable energy>(Total as of March 31, 2020)

Solar power generation

12

Biomass generation

3<Number of other environmental loans executed>(Total as of March 31, 2020)

Loans relating to the interest subsidy business
implemented by the Ministry of the Environment

9

Arrangement of syndicated loans for investment
funds for green bonds

1

IYO BANK Annual Report 20209

Corporate Governance / Compliance / Risk Management

Corporate Governance
Basic Philosophy
Based on our corporate philosophy, to ensure the unshakeable
trust of our stockholders, customers, employees and otherstakeholders we believe it is vital to raise enterprise value andensure a more sound and transparent management system,
while remaining mindful of our social responsibilities as aregional bank. To meet these responsibilities, we will reinforce
and enhance our efforts at corporate governance, which we
consider one of our most important management priorities.
Through corporate governance appropriate to the Bank,
we seek to achieve sustainable growth and enhance enterprise value over the medium to long term. To this end, we
have formulated and publicized our Corporate Governance
Guide Line, which outlines our fundamental perspectives andframeworks on corporate governance.
Internal Control Systems• The Board of Directors’ granting of voting rights to directors
on auditing and the Audit and Supervisory Committee
members that include multiple outside directors is expected
to enhance the auditing and supervisory functions, as wellas corporate governance. At the same time, we believe thisdelegation of authority will contribute to swifter decisionmaking and heightened management efficiency. To achievethese aims, we have adopted the system of a “company
with an Audit and Supervisory Committee.”• The Bank has also separated the management decisionmaking and supervisory functions from business execution,
thereby strengthening the Board of Directors’ decisionmaking function. To further enhance corporate governance, wehave introduced an executive officer system.
• In principle, the Board of Directors meets once a month todecide on important matters stipulated in law and the Articles

Business Executive Functions, Oversight and Internal Controls

Audits/Supervises

Business Execution Directors

Audit and Supervisory Committee
ReportingPresident

ReportingExecutive Committee

Management Planning Council, Budgeting and Integrated Risk
Management Council, Screening Council, Compliance Council

Advisory Board

Compliance Committee

10

Operational Risk
Administration Committee

Whistleblowing

Directs/
Instruction

Credit Risk
Administration Committee
Head Office,Bank Branches

IYO BANK Annual Report 2020

Dismisses

Board of Directors

Cooperates

Appoints/Dismisses

Internal Audit
Division
Audits InternallyAppoints/
Dismisses

Independent
Auditors(CPAs)

Accounting
Audit/
Internal
controlaudit

Collaborates/
Coordinates

Consult
ReportingManagement Deliberation Committee

General Meeting of Stockholders
Appoints/Dismisses

Cooperates

of Incorporation, as well as to make important decisions
related to management policy and management strategy.
• In principle, the Audit and Supervisory Committee meets atleast once each month. In accordance with the law, Articles
of Incorporation and Audit and Supervisory Committee
Regulations, this committee and the Board of Directors
provide a supervisory function, as well as auditing theexecution of business by directors.
• In principle, the Executive Committee, consisting of managing directors and higher-ranked directors, meets once aweek to discuss important issues affecting all areas ofoperations, based on the fundamental policies decided
upon by the Board of Directors. The Executive Committee
comprises four councils, according to the content of matters to be discussed: the Management Planning Council, theBudgeting and Integrated Risk Management Council, theScreening Council and the Compliance Council. Standing
members of Audit and Supervisory Committee attend the
Executive Committee, where they provide appropriate
statements and advice.
The Bank established the Management Deliberation
Committee, comprising the Bank’s representative directors
and the Audit and Supervisory Committee members, todeliberate director nominations and compensation andother important matters.
The Management Deliberation Committee, which is
positioned as an advisory body to the Board of Directors, iscomposed of a majority of members who are independent
outside directors.
• In an effort to develop and enhance a structure for legal
observance and risk management, we have established theCompliance Committee (secretariat: the Compliance Division; held monthly) chaired by the director in charge of theCompliance Division, as well as the Operational Risk Administration Committee (secretariat: the Risk Management
Division; held at least quarterly) and the Credit Risk Management Committee (secretariat: the Risk Management
Division; held at least quarterly), both of which are chairedby the director in charge of the Risk Management Division.
• The Bank holds a semi-annual meeting of the Advisory
Board (secretariat: the General Planning Division) chaired by
the president. To ensure the management transparency andobjectivity of the Group, further strengthen the management base and contribute to the local community, we are
introducing external perspectives regarding the Group’s
management strategies and governance.

Compliance
As an institution with a public profile and social responsibilities,
the Bank regards a good compliance record as indispensable fordeepening the trust and support of our customers, shareholders
and the communities we serve. We ensure not only that all our
employees observe all laws, ordinances and regulations in theirduties, but also meet the highest ethical standards.

Compliance Organizations
We established a Compliance Council chaired by the President. This committee deliberates matters relating to compliance, and seeks to foster a corporate culture in which
compliance-related information is shared by all employees
from the branch level to top management.
At all head office and branch business departments, wehave appointed compliance officers, who assess progress incompliance-related matters and organize training and awareness-raising activities such as study groups.
The Compliance Division, working closely with the Compliance Committee and compliance officers, integrates collection and management of compliance-related information.

Risk Management
Basic Philosophy
In its daily business operations, a bank is exposed to credit
risks, market risks and other risks. These risks are growing indiversity and complexity as deregulation progresses and thebusiness of banking grows ever more complex. Therefore,
finding ways of appropriately managing risk has become avital challenge for a bank.
On the other hand, for a bank, risk-taking is essential for
generation of revenue. Only by assuming a reasonable levelof risk, it is possible to ensure acceptable earnings growth.
Accordingly, the bank sets reasonable profit targets afterfactoring in all conceivable risks, and takes every precaution
to manage risk Iyo Bank’s management treats risk management as a priority issue.
Each fiscal year, the Board of Directors compiles risk
management policies, and, based on these policies, takes
steps to strengthen risk management and improve the qualityof risk management.

Risk Management Framework

Board of Directors

Management Planning Council(Secretariat: General Planning Division)

Emergency Office

Risk
Categories

Audit and Supervisory Committee

Executive Committee
Management Planning Council(CS Enhancement Committee)(Secretariat: Corporate & Retail Banking Planning Division)

Budgeting and Integrated Risk Management Council(Secretariat: Risk Management Division)

Credit Risk
Administration Committee

Compliance Council(Secretariat: Compliance Division)Operational Risk
Administration Committee

Compliance Committee

Operational risk
Marketrisk

Liquidity
risk

Risk Management Division

Creditrisk
Administrativerisk

Divisions
responsible
for eachtype of risk
management

Risk Management Framework
The Bank’s risk management framework has four main pillars:
1. Legal observance under the Compliance Committee
2. Managing revenue-generating risk assets under the ALM
Committee
3. The Credit Risk Administration Committee undertakes
risk management that focuses on curbing credit risk
4. Management of operational risk to minimize administrative and system risk, under the Operational Risk Administration Committee
The Bank’s risk exposure is assessed by the ALM committee by quantifying market and credit risk, and optimal fundmanagement and procurement structures are put in place toassure stable earnings over the medium and long term.
Additionally, the Credit Risk Administration Committee
works to manage credit risk, design and evaluate frameworks
for the Internal Rating System, and resolve issues concerning
Basel Regulations.
At the same time, the Operational Risk Administration
Committee is taking measures to refine operational risk
management through organization-wide discussion andmonitoring regarding important topics arising from reviews ofactual operational risk. With regard to administrative risk,
system risk, legal risk, human-error risk, and fixed asset risk,
which together constitute operational risk, organization-wide
responses include establishment of offices for each categoryof risk, and rigorous risk management. At the same time, theRisk Management Division is responsible for coordination ofrisk management carried out by the departments in charge ofeach category of risk.
Moreover the Risk Management Division, which coordinates overall risk management, manages verification of risk
management at each department.

Risk Management Division

RiskManagement
Division
CreditRelated
Divisions

System
risk

Legal
risk

Systems
Operations
ComplianceManagement Development
Division
Division
Division

Human-error
risk

Fixed
asset risk

Human
Resources
Division

GeneralAffairs
Division

Reputational
risk

Compliance

Customer
Satisfaction
Enhancement
OfficeCompliance
DivisionInternal
Audit
Division

Bank Branches, Head Office

IYO BANK Annual Report 202011

Financial Section
Financial Highlights
The Iyo Bank, Ltd. and its Consolidated Subsidiaries

Millions of yen

2020

2019

2018

2017

2016

¥1,713,574
4,733,091
7,795,554¥1,574,849
4,527,810
7,165,655¥1,815,554
4,269,697
7,096,633¥1,735,981
4,021,442
6,849,283¥1,739,757
3,890,085
6,510,076

5,728,742
7,123,706

5,688,021
6,517,327

5,525,398
6,450,329

5,437,276
6,240,221

5,324,433
5,920,369

Total income
Total expenses
Income before income taxes
Profit attributable to owners of parent¥ 126,545
98,15328,32918,922¥ 126,291
98,16328,12918,527¥ 121,002
85,20935,791
23,639¥ 117,356
84,22833,127
21,797¥ 119,819
79,53140,28724,451

Net cash provided by operating activities
Net cash provided by investing activities
Net cash provided by financing activities
Cash and cash equivalents

49,279(134,032)(5,741)
717,887(150,925)
237,490(4,346)808,389

3,870(57,093)(4,106)726,157

226,523
6,797(7,401)
783,504(64,206)
38,624(19,106)
557,587

Years ended March 31:

At Year-End:
AssetsSecurities
Loans and bills discounted
Total assets

Liabilities
Deposits
Total liabilities

For the Year:Yen

Per Share Data:¥

Basic net income
Stockholders’ equity

59.77
2,052.46¥

58.54
1,975.54¥

74.73
1,969.99¥

68.93
1,864.28¥

77.34
1,790.53

Capital ratio (BIS standards) (%)
Return on equity (ROE) (%)
Price earnings ratio (PER) (Times)

14.85
2.95
9.15

14.38
2.99
10.01

14.31
3.83
10.71

14.58
3.77
10.86

15.42
4.27
9.52

Number of employee

3,109

3,147

3,122

3,082

3,024

Note: Japanese yen amounts, except net income per share, are presented in millions of yen and are rounded down to the nearest million.

Ratings [JCR]

Evaluation gain on securities(Non-consolidated)

Capital ratio(BIS standards)(Billions of yen)

(Yen)

25,000350

Iyo bank

21,454AA-(%)

16 15.42

21,20514.58

20,00014

234.4
234.9 15,000

12

140

10,000

10

BBB-

70

5,000

8

Iyo bank has obtained one of the best ratings
among Japanese banks including mega-banks
by Japan Credit Rating Agency, Ltd. (JCR).

(March 31) 2016

280
16,758A+A

210 217.7

18,909
218.4

234.9

14.85
14.31 14.38

18,917
227.6

ABBB+
BBB

12

IYO BANK Annual Report 202002017 2018 2019

2020

0

6

(March 31) 20162017 2018 2019 2020

Management Discussion and Analysis of Operations
 Business Environment
Despite impacts of the consumption tax hike, the Japanese
economy in fiscal 2019, ended March 31, 2020, showedsigns of recovery in consumer spending against the backdrop
of a steady improvement in the employment and income
environment, while it saw sluggish growth in exports amida slowdown in the global economy. However, the economic
environment underwent a drastic change due to COVID-19,
an infectious disease that began to spread toward the end of
the fiscal year, leading to growing concerns over a downturnin the global economy.
The economy of Ehime Prefecture continued to see
housing investments increase owing to an increase in
the number of new housing constructions and public
investments increase backed by recovery and reconstruction
projects launched after the heavy rainfall disaster in westernJapan. The impact of COVID-19 has, however, made theoutlook for the prefecture’s economy uncertain as theregional economy is forecast to stagnate.

Overview of Business Results, etc.
Consolidated ordinary income increased ¥220 million year
on year to ¥126,506 million (US$1,162 million). This was
mainly due to an increase in interest income from interest
on loans as well as an increase in other operating income of
consolidated subsidiaries in investment income, etc.
On the other hand, consolidated ordinary expenses
decreased ¥535 million to ¥97,093 million (US$892
million). This was mainly due to a decrease in operating
expenses due to a decrease in losses on sales of Japanese
government bonds and other bonds, despite an increase ininterest on deposits and other interest expenses. As a result,consolidated ordinary income increased ¥755 million year on
year to ¥29,413 million (US$270 million). Profit attributableto owners of parent increased ¥395 million to ¥18,922
million (US$173 million).
Profit Attributable to
Owners of Parent(Billions of yen)

Net Income per ShareOn a non-consolidated basis, gross profit from corebusiness increased ¥592 million year on year, to ¥76,768
million (US$705 million), mainly due to an increase in otheroperating profits resulting from an increase in gains on
foreign exchange transactions. Operating income increased¥1,017 million to ¥26,835 million (US$246 million) due toan increase gross operating profits from core business and adecrease in expenses, etc. Ordinary income increased ¥232
million to ¥26,581 million (US$244 million). As a result,net income increased ¥240 million year on year to ¥18,502
million (US$170 million).
 Segment Information
The Iyo Bank Group consists of the Iyo Bank and 16 consolidated
subsidiaries. The Group’s operations center on commercial
banking services, and also cover leasing and other financial
services.

Banking Operations
Ordinary income came to ¥107,743 million (US$990
million). This was due to ordinary income from customers of¥107,088 million and ordinary income from intersegment
transactions of ¥655 million. Segment profit increased ¥168
million, to ¥28,530 million (US$262 million).
Leasing Operations
Ordinary income came to ¥17,359 million (US$159.5
million). This was attributable to ordinary income from
customers of ¥16,905 million and ordinary income fromintersegment transactions of ¥454 million. Segment profit
increased ¥517 million, to ¥709 million (US$6.5 million).
Other Businesses
Ordinary income came to ¥4,384 million (US$40.3 million).
This was a result of ordinary income from customers of¥2,513 million, and ordinary income from intersegment
Loans andBills Discounted

Deposits

32

100

(Yen)

(Billions of yen)(Billions of yen)

24

75

3,600

4,500

16

50

2,400

3,000

8

25

1,200

1,500

0

(FY) 2016 2017 2018 2019 2020

0(FY) 2016 2017 2018 2019 2020

4,800

0

(March 31) 2016 2017 2018 2019 2020

6,000

0

(March 31) 2016 2017 2018 2019 2020

IYO BANK Annual Report 202013

transactions of ¥1,871 million. Segment profit increased ¥53
million, to ¥124 million (US$1.1 million).
The term-end balance of deposits, including NCDs,
increased ¥40.7 billion over the previous fiscal year-end, to¥5,728.7 billion (US$52,639 million).
The loan balance at the end of the fiscal year rose
¥205.2 billion from the previous fiscal year-end, to ¥4,733
billion (US$43,489.8 million).

The balance of securities at the end of the fiscal year rose¥138.7 billion from the previous fiscal year-end, to ¥1,713.5
billion (US$15,744.7 million).
The capital ratio (Basel III standards), which measuresbank prudence and soundness, stood at 14.85%.

Loans by Industry
Millions of yen

2020
Loans and bills
discounted outstanding

Share (%)

2019
Loans and bills
discounted outstanding¥4,584,038
650,562

Share (%)

100.0014.19¥4,425,405
643,028100.0014.53

Agricultural and forestry

3,115

Fishing

11,918

0.07

3,146

0.07

0.26

11,389Mining, quarrying and gravel extraction

0.26

7,131

0.16

8,614

0.19

Construction

116,0882.53

116,306

2.63

Electricity, gas and water utilities, sewage

154,4103.37

134,015

3.03

Communications

18,9400.42

22,0200.50

Years ended March 31:

Domestic total (excluding loans booked offshore)
Manufacturing

Transportation and postal service

769,705

16.79

717,925

16.22

Wholesale and retail504,305

11.00

511,642

11.56

Finance and insurance

159,666

3.48

174,959

3.95

Real estate and rental

514,00711.21

481,403

10.88

Service

467,63710.20

438,574

9.91

Local authorities
Others230,048976,500

5.02
21.30

234,824
927,554

5.31
20.96

Overseas total (including loans booked offshore)
Governments

149,053—

100.00—102,405—

100.00——149,053¥4,733,091—
100.00——102,405¥4,527,810—
100.00—Financial institutions
Others
Total

Total Assets

Return on Equity(Billions of yen)

(%)

(%)

6,000

12

4.5

4,000

8

3.0

2,000

4

1.5

8,000

0

(March 31) 2016 2017 2018 2019 2020

14

Capital Ratio(BIS standards)

IYO BANK Annual Report 2020

16

0

(March 31) 2016 2017 2018 2019 2020

6.0

0.0

(March 31) 2016 2017 2018 2019 2020 Financial Position and Business Results
Consolidated gross profit
Consolidated gross profit decreased ¥168 million to ¥66,375
million (US$609.9 million), mainly due to a decrease inprofits on investment trusts, stemming from a decreasein gains on cancellation of investment trusts, despite anincrease in profits on loans and discounts due to an increasein loans. Other income increased by ¥2,979 million to¥8,305 million compared to the previous fiscal year, mainly
due to an increase in gains on Japanese government bonds
and other securities resulting from the sale of foreign bondsthat reflect market trends, as well as an increase in gains on
foreign transactions and gains on derivatives. As a result,consolidated gross profit increased by ¥2,735 million fromthe previous fiscal year to ¥84,896 million.

Operating costs
Operating expenses decreased ¥707 million from theprevious fiscal year to ¥51,653 million (US$474.6 million)
due to a decrease in personnel expenses resulting from
improved operational efficiency, despite an increase in
nonpersonnel expenses mainly amid an increase in strategic
investments.
Credit costs
Credit costs increased ¥848 million to ¥7,379 million(US$67.8 million). This was mainly due to an increase inprovision for reserve for loan losses due to an increase in theactual ratio of bad debt, and an increase in bankruptcies anddowngrades.
Gain (loss) related to stock, etc.
Net gains on stocks decreased ¥2,502 million from theprevious fiscal year to ¥1,447 million (US$13.3 million)
due to losses on the sale of E T F (Listed Investment Trust),
stemming from a decline in stock prices.
Extraordinary income (losses)
Extraordinary income(losses) decreased by ¥492 million fromthe previous fiscal year to (¥1,021 million)(US$9.4 million)
due to impairment losses on fixed assets and other factors.

Deposits
With deposits held by individuals and corporations bothincreasing steadily, the balance of deposits, including NCDs,
increased ¥40.7 billion over the previous consolidated fiscal
year-end, to ¥5,728.7 billion (US$52,639 million).
Loans and bills discounted
With corporate and housing loans mainly to individuals bothincreasing steadily, loans and bills discounted grew ¥205.2
billion over the previous consolidated fiscal year-end, to¥4,733 billion (US$43,489.8 million).
Risk management loans
Risk management loans increased ¥6.2 billion over theprevious consolidated fiscal year-end, to ¥79.6 billion(US$731.4 million).
Risk management loans remained at the low level of
1.68% as a proportion of the outstanding balance of loans
and bills discounted.
Securities
The balance of securities increased by ¥138.7 billion fromthe previous fiscal year to ¥1,713.5 billion (US$15,744.7
million) mainly due to the acquisition of foreign currency
securities and other securities, despite a decrease in Japanese
government bonds as a result of sales and redemptions.
 Cash Flow Analysis

Consolidated Cash Flows
Cash flow used in operating activities was ¥49,279 million(US$452.8 million), due to an increase in borrowings andpayables under securities lending transactions.
Net cash provided by investing activities was (¥134,032
million) (US$1,231.6 million). Net cash used in financing
activities was (¥5,741 million) (US$52.8 million) due to the
cash dividends paid.
As a result, cash and cash equivalents at the end of
the term decreased ¥90,501 million, to ¥717,887 million(US$6,596.4 million).

IYO BANK Annual Report 202015

Consolidated Balance SheetThe Iyo Bank, Ltd. and its Consolidated Subsidiaries
March 31, 2020

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

2020

2020

¥ 719,086
355,563
8,173
727
7,074
1,713,574
4,733,091(31,374)
10,74133,803
119,495
72,2298,048
18,734
199
26,382¥7,795,554¥ 809,668—
10,921349
6,494
1,574,849
4,527,810(27,902)7,164
31,44390,43873,757
7,024
17,500197
35,937¥7,165,655$ 6,607,424
3,267,141
75,0986,680
65,00015,745,419
43,490,682(288,284)
98,695
310,603
1,097,996
663,686
73,950172,140
1,828
242,414$71,630,561

LIABILITIES AND NET ASSETS
Liabilities
Deposits (Notes 2-5)
Call money and bills soldPayables under repurchase agreements (Notes 2-5)
Payables under securities lending transactions (Notes 2-5)
Borrowed money
Foreign exchange
Borrowed money from trust account
Other liabilities
Accrued employees’ bonuses
Net defined benefit liability
Reserve for losses on repayment of dormant bank accounts
Reserve for contingent losses
Reverse for share-based payments
Reserve under the special laws
Deferred tax liabilities
Deferred taxes on revaluation excess (Note 2-7)
Acceptances and guarantees
Total liabilities¥5,728,742
217,618
30,357
198,436
770,378295
28
64,935
1,649
12,487
2,393
591
192
2
59,577
9,637
26,382
7,123,706¥5,688,021
178,31349,82076,968365,856249
31
39,677
1,659
12,281
3,301
516
86
1
54,835
9,769
35,937
6,517,327$52,639,364
1,999,614
278,939
1,823,357
7,078,728
2,710
257
596,664
15,152
114,738
21,988
5,430
1,764
18
547,43188,550242,41465,457,190

Net assets
Common stock
Authorized — 600,000,000 shares
Issued — 323,775,366 shares
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on derivatives under hedge accounting
Land revaluation excess (Note 2-7)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

20,948
14,578433,082(5,131)
463,478
166,775
792
19,315(650)
186,233
343
21,792
671,848¥7,795,554

20,948
11,604
418,320(5,189)445,684
160,696(1,545)
19,590779
179,519397
22,725648,327¥7,165,655

192,483
133,952
3,979,435(47,146)
4,258,733
1,532,435
7,277
177,478(5,972)
1,711,228
3,151
200,238
6,173,371$71,630,561

See Notes to Consolidated Financial Statements.

16

2019

ASSETSCash and due from banks
Receivables under resale agreements (Note 2-5)
Monetary claims purchased
Trading account securities
Money held in trust
Securities (Note 2-1, 2-5 and 2-9)
Loans and bills discounted (Note 2-3, 2-4, 2-5 and 2-6)
Reserve for loan losses
Foreign exchange (Note 2-4)
Lease receivables and investment assets
Other assets (Note 2-5)
Tangible fixed assets (Note 2-8)
Intangible fixed assets
Net defined benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Total assets

IYO BANK Annual Report 2020

Consolidated Statement of Income
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2020

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

INCOMEInterest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Interest on receivables under resale agreements
Interest on receivables under securities lending transactions
Other interest income
Fees and commissions
Other operating income
Other income
Total income
EXPENSESInterest expense:
Interest on deposits
Interest on borrowings and rediscounts
Interest on payables under repurchase agreements
Interest on payables under securities lending transactions
Other interest expense
Fees and commissions
Other operating expenses
General and administrative expenses (Note 3-1)
Other expenses (Note 3-2 and 3-3)
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total taxes
ProfitProfit attributable to noncontrolling interests
Profit attributable to owners of parent

2020

2019

¥ 54,492
23,594(6)—
1,522
15,40625,344
6,192
126,545¥ 52,758
23,966—
62
1,332
15,121
24,2208,831
126,292$ 500,707
216,796(55)—
13,985
141,560
232,876
56,896
1,162,776

4,416
1,699
716
1,864
4,529
5,190
17,03851,653
11,044
98,15328,392

3,548
1,823
625
1,308
4,269
4,829
18,89352,36010,503
98,16328,12940,577
15,611
6,579
17,127
41,61547,689156,556474,620
101,479
901,892
260,883

7,866
233
8,099
20,292
1,370¥ 18,922

7,953
420
8,374
19,755
1,227¥ 18,527

72,2772,140
74,418
186,455
12,588$ 173,867

Per share of common stock (yen and U.S. dollars):
Basic net income
Diluted net income
Dividends

2020

Yen

¥59.77
59.69
14.00

U.S. dollars (Note 1-1)

¥58.54
58.45
14.00

$0.54
0.54
0.12

See Notes to Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2020

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

ProfitOther comprehensive income (Note 4-1)
Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on derivatives under hedge accounting
Remeasurements of defined benefit plans
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Noncontrolling interests

2020

2019

2020

¥20,292
8,957
8,048
2,338
(1,429)¥29,249¥19,755(13,415)(7,220)(305)(5,890)¥6,339$186,455
82,302
73,95021,483(13,130)$268,758¥25,9103,339¥6,324
14$238,077
30,680

See Notes to Consolidated Financial Statements.

IYO BANK Annual Report 202017

Consolidated Statement of Changes in Net Assets
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2020

Millions of yen
Stockholders’ equity

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥20,948¥11,604¥418,320¥(5,189)(4,435)18,922
(0)
58

8
274
2,966

Total
stockholders’equity¥445,684(4,435)18,922
(0)
66
274
2,966

—

2,974

14,76157

17,793¥20,948¥14,578¥433,082¥(5,131)¥463,478

Thousands of U.S. dollars (Note 1-1)
Stockholders’ equity

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Retainedearnings

Treasury
stock

Total
stockholders’equityCommonstock

Capitalsurplus$192,483$106,625 $3,843,793$(47,679) $4,095,231(40,751)
173,867(40,751)
173,867
(0)
606
2,517

(0)
532

73
2,517
27,253—$192,483

27,32727,253

135,633$133,952 $3,979,435

523

163,493$(47,146) $4,258,733
Millions of yen

Total other comprehensive income

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

18

IYO BANK Annual Report 2020

Net
unrealized
holding gains(losses)
on securities

Net deferredgains (losses)
on derivatives
under hedge
accountingLandrevaluation
excess¥160,696¥(1,545)¥19,590

Remeasur- Total accumuements oflated otherdefinedcomprehenbenefit plans sive income¥779¥179,519

Stockacquisitionrights

Noncontrollinginterests

Total net
assets¥397¥22,725¥648,327(4,435)18,922(0)
66
274(2,966)

—

6,078

2,338

(274)

(1,429)

6,713

(54)

2,033

8,693

6,078

2,338

(274)

(1,429)

6,713

(54)

(932)

23,520792¥19,315¥ (650)¥186,233¥343¥21,792¥671,848¥166,775¥

Thousands of U.S. dollars (Note 1-1)
Total other comprehensive income

For the year ended March 31, 2020

Net
unrealized
holding gains(losses)
on securities

Balance at the beginning of
the accounting period$1,476,578
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
55,848
Total changes during
the accounting period
55,848
Balance at the endof the accounting period$1,532,435

Net deferredgains (losses)
on derivatives
under hedge
accountingLandrevaluation
excessRemeasur- Total accumuements oflated otherdefinedcomprehenbenefit plans sive income

Stockacquisitionrights$(14,196)$180,005$ 7,157 $1,649,535$3,647

Noncontrollinginterests

Total net
assets$208,811 $5,957,245(40,751)
173,867
(0)
606
2,517
(27,253)—

21,483(2,517)(13,130)

61,683(496)

18,68079,87621,483(2,517)(13,130)

61,683(496)(8,563)

216,116$ 7,277$177,478$ (5,972) $1,711,228$3,151$200,238 $6,173,371

Millions of yen
Stockholders’ equity

For the year ended March 31, 2019

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥20,948¥11,570¥404,181¥(5,255)

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period(4,431)
18,527
(232)
298

34
43

Total
stockholders’equity¥431,445(4,431)
18,527
(232)
332
43

—

34

14,13865

14,238¥20,948¥11,604¥418,320¥(5,189)¥445,684

Millions of yen
Total other comprehensive income

For the year ended March 31, 2019

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting periodNet
unrealized
holding gains(losses)
on securities

Net deferredgains (losses)
on derivatives
under hedge
accountingLandrevaluation
excess¥166,703¥(1,240)¥19,634

Remeasur- Total accumuements oflated otherdefinedcomprehenbenefit plans sive income¥ 6,669¥191,766

Stockacquisitionrights

Noncontrollinginterests

Total net
assets¥467¥22,624¥646,304(4,431)
18,527
(232)
332
43

(6,006)

(305)

(43)

(5,890)(12,246)

(70)

100

(12,215)(6,006)

(305)

(43)

(5,890)(12,246)

(70)

100

2,023

¥160,696¥(1,545)¥19,590¥179,519¥397¥22,725¥648,327¥

779

See Notes to Consolidated Financial Statements.

IYO BANK Annual Report 202019

Consolidated Statement of Cash Flows
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2020

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

2020

2019

Cash flows from operating activities
Income before income taxes
Depreciation
Impairment losses
Increase (decrease) in reserve for loan losses
Increase (decrease) in accrued employees’ bonuses
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Increase (decrease) in reserve for losses on repayment of dormant bank accounts
Increase (decrease) in reserve for contingent losses
Increase (decrease) in reserve for share-based payments
Increase (decrease) in reserve under special laws
Interest and dividend income
Interest expense
Securities losses (gains), net
Money in trust losses (gains), net
Foreign exchange losses (gains), net
Losses (gains) on disposal of tangible fixed assets, net
Net changes in loans and bills discounted
Net changes in deposits
Net changes in borrowed money (excluding subordinated borrowings)
Net changes in due from banks
Net changes in call loans
Net changes in call money
Net changes in payables under securities lending transactions
Net changes in foreign exchange assets
Net changes in foreign exchange liabilities
Net changes in lease receivables and investment assets
Interest income received
Interest expense paid
Net increase (decrease) in borrowed money from trust account
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities¥ 28,392
4,888
931
3,471
(10)
(1,234)
205
(908)
75
105
0
(79,601)
13,226(3,469)
(505)
5,606
89
(205,280)
40,721
404,52179(352,831)
19,841
121,468(3,576)46(2,360)79,013(13,638)(2)(2,920)56,345(7,066)49,279¥ 28,129
4,430
231
3,645
8
5,664
(221)
373
89
86
0
(78,119)
11,575(4,155)(408)(6,003)297(258,113)
162,622(53,484)890
22,811
125,201(149,181)
(72)
183
(848)
77,560(11,378)(8)(21,070)(139,262)(11,663)(150,925)$

Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash provided by (used in) investing activities(528,275)
258,254
141,891(438)—(2,393)90(3,160)(134,032)(416,769)
516,391
144,532(388)
616(3,627)155(3,420)237,490(4,854,130)
2,373,003
1,303,785(4,024)—(21,988)826(29,036)(1,231,572)

13(4,435)
(5)
(0)
0

92
(4,431)
(5)
(232)
231

119
(40,751)
(45)
(0)
0

(1,313)(5,741)—(4,346)(12,064)(52,751)(6)(90,501)
808,389¥ 717,887

13
82,231
726,157¥ 808,389(55)(831,581)
7,427,997$ 6,596,407

Cash flows from financing activities
Proceeds from share issuance to noncontrolling stockholders
Cash dividends paid
Cash dividends paid to noncontrolling stockholders
Purchases of treasury stock
Proceeds from sales of treasury stock
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Net cash provided by (used in) financing activities
Foreign currency translation adjustments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year (Note 5-1)
See Notes to Consolidated Financial Statements.

20

IYO BANK Annual Report 2020

2020
260,883
44,914
8,554
31,893(91)(11,338)
1,883(8,343)689964
0(731,425)
121,528(31,875)(4,640)51,511817(1,886,244)
374,170
3,716,998
725(3,242,038)
182,311
1,116,126(32,858)422(21,685)
726,022(125,314)(18)(26,830)
517,734(64,926)
452,807

Notes to Consolidated Financial Statements
The Iyo Bank, Ltd. and Its Consolidated Subsidiaries
For the year ended March 31, 2020

1-1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Financial
Instruments and Exchange Act and its related accounting regulations
and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as
to application and disclosure requirements from International Financial
Reporting Standards.
The accompanying consolidated financial statements havebeen restructured and translated into English with certain expandeddisclosures from the consolidated financial statements of The Iyo Bank,
Ltd. (the “Bank”) prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Financeas required by the Financial Instruments and Exchange Act. Some
supplementary 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.
Japanese yen amounts are rounded down to the nearest million.
Translations of the Japanese yen amounts into U.S. dollar amounts were
included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2020, which was ¥108.83 to
U.S. $1.00. The translations should not be construed as representations
that the Japanese yen amounts have been, could have been or couldin the future be converted into U.S. dollars at this or any other rate ofexchange.
Under Japanese laws and regulations, including the Companies Act(the “Act”), the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolutionof the Board of Directors, designate an amount not exceeding one halfof the price of the new shares as additional paid-in capital, which isincluded in capital surplus.
Under the Act and the Banking Law, in cases in which a dividend
distribution of surplus is made, the smaller of an amount equal to 20%of the dividend or the excess, if any, of 100% of common stock over
the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legalearnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Act, legal earnings reserve and additional paid-in capitalcan be used to eliminate or reduce a deficit or can be capitalized by aresolution of the stockholders’ meeting. Additional paid-in capital andlegal earnings reserve may not be distributed as dividends. Under the
Act and the Banking Law, however, by resolution of the stockholders’meeting, all additional paid-in capital and all legal earnings reserve
may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Bank can distribute as dividends is
calculated based on the unconsolidated financial statements of the Bankin accordance with Japanese laws and regulations.
(Basis of Presenting Consolidated Financial Statements)
1 Scope of consolidation(1) Principles of consolidation
The consolidated financial statements include the accounts of the Bankand the following 16 consolidated subsidiaries.
• The Iyogin Credit Guaranty Company Limited• The Iyogin Business Service Company Limited• Iyogin Capital Company Limited• Iyogin Venture Fund Corporation Limited IV• Iyogin Venture Fund Corporation Limited V• Iyogin Venture Fund Corporation Limited VI• Iyo Evergreen Sixtiary Industrialization Support Fund Investment
Business Limited Partnership• Iyo Evergreen Agriculture Support Fund Investment Business Limited
Partnership• Iyo Evergreen Agriculture Support Fund II Investment Business Limited
Partnership• Iyo Evergreen Business Succession Support Fund Investment Business
Limited Partnership• Iyogin Regional Economy Research Center, Inc.
• Iyogin DC Card Co., Ltd.
• Iyogin Challenge & Smile Co., Ltd.
• Iyogin Leasing Company Limited• Iyogin Computer Service Company Limited• Shikoku Alliance Securities Co., Ltd.
(2) The consolidated financial statements exclude the following
subsidiary.
• Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership
Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership is excluded from the scope of consolidation
because its assets, ordinary income, net income, retained earnings
and accumulated other comprehensive income are immaterial to theconsolidated financial statements.
No unconsolidated subsidiary is accounted for by the equity method.
Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership is excluded from the scope of the equity
method because its net income and retained earnings are immaterial tothe consolidated financial statements.

2 Affiliated companies not accounted for by the equity method
The consolidated financial statements exclude the following affiliatedcompanies.
• Iyogin REVIC Investments Company Limited• Shikoku Alliance Capital Co., Ltd• Ozu Machidukuri Fund
Iyogin REVIC Investments Company Limited, Shikoku Alliance CapitalCo., Ltd and Ozu Town Creation Fund are excluded from the scope ofthe equity method because their net income and retained earnings are
immaterial to the consolidated financial statements.
3 The fiscal year of consolidated subsidiaries
The consolidated financial statements include the accounts of 7
consolidated subsidiaries with fiscal years that end December 31.
Appropriate adjustments are made for significant transactions during
the period from December 31 to March 31, the date of the consolidated
financial statements.
All significant intercompany balances, transactions and unrealized
profits and losses included in assets and liabilities are eliminated.
4 Significant accounting policies(1) Trading account securities
Trading account securities of the Bank and its consolidated subsidiaries
are stated at fair market value. Gains and losses realized on the disposal
and unrealized gains and losses from market value fluctuations of thesesecurities are recognized as gains and losses in the period of the change.
Realized gains and losses on the sale of such trading account securities
are computed using moving average cost.

IYO BANK Annual Report 202021

(2) Securities①	Held-to-maturity debt securities are stated at amortized cost by thestraight-line method. Available-for-sale securities with available fairmarket values are stated at fair market value. Realized gains andlosses on the sale of such securities are computed using moving
average cost. Available-for-sale securities with fair values that are
extremely difficult to determine are carried at cost using moving
average cost. Unrealized gains and losses on these securities arereported, net of applicable income taxes, as a separate component of
net assets.
②	Securities included in the money held in the trust account are treatedin the same manner as the securities mentioned above.
(3) Derivatives and hedge accounting
Derivative transactions are valued at fair value with changes in fair value
included in current income.
(4) Tangible and intangible fixed assets and lease assets①	Tangible and intangible fixed assets are generally stated at cost, lessthe accumulated depreciation.
		
Depreciation of tangible fixed assets, except for lease assets,of the Bank and its consolidated subsidiaries is recorded using thedeclining balance method. However, buildings acquired after April 1,
1998 and accompanying facilities and structures acquired on or after
April 1, 2016 are depreciated using the straight-line method. The
estimated useful lives of these assets are 15 – 40 years for buildings
and 5 – 10 years for equipment.
②	Depreciation for intangible fixed assets, except for lease assets, ofthe Bank and its consolidated subsidiaries is recorded using thestraight-line method. Internal use software costs of the Bank andits consolidated subsidiaries are depreciated using the straight-line
method over the estimated useful life of mainly five years.
③	Both tangible and intangible lease assets under finance leases thatare not deemed to transfer ownership of the lease property to thelessee are depreciated using the straight-line method over the leaseterm with zero residual value. In cases in which there is a residual
value guarantee in the contract, the residual value is the guaranteedvalue. In other cases, it is deemed to be zero.
(5) Reserve for possible loan losses
The Bank and its consolidated subsidiaries write off loans and makeprovisions for possible loan losses. For loans to insolvent customers who
are undergoing bankruptcy or other collection proceedings or who arein a similar financial condition, the reserve for possible loan losses isprovided in the full amount of such loans, excluding amounts written off
and the portion that is estimated to be recoverable due to the existenceof security interests or guarantees. For the unsecured and unguaranteed
portions of loans to customers not in the above circumstances but for who
there is a high probability of so becoming, the reserve for possible loan
losses is provided for the estimated unrecoverable amounts determined
after an evaluation of the customer’s overall financial condition.
With regard to other receivables, the Company principally posts
estimated losses for the next 1 year or the estimated losses for the next
3 years. The estimated losses are calculated based on actual averageloan loss ratios for certain 1 year or 3 years periods with necessary
adjustments.
Assessments and classifications are made by each business and credit
supervision department and are audited by the Credit Administration
Department, an independent department. The reserve for possible loan
losses is provided based on such procedures.

22

IYO BANK Annual Report 2020

The estimated unrecoverable portions of loans to insolvent
customers who are undergoing bankruptcy or other collection
proceedings or who are in a similar financial condition are written off.
The estimated unrecoverable amounts are determined after excluding
amounts considered recoverable due to the existence of security
interests or guarantees. As of March 31, 2020 and 2019, the estimatedunrecoverable amounts were ¥19,283 million ($177,184 thousand) and¥20,253 million, respectively.
The consolidated subsidiaries write off loans and make provisions forpossible loan losses based on the actual rate of loan losses in the past.
However, unrecoverable amounts of loans to customers who have a highprobability of becoming bankrupt are separately estimated and a reservefor possible loan losses is provided based on those estimations.
(6) Accrued employees’ bonuses
Accrued employees’ bonuses are provided for the future payment of
employees’ bonuses based on the estimated amounts of the future
payments that are attributed to the current fiscal year.
(7) Reserve for losses on repayment of dormant bank accounts
Reserve for losses on repayment of dormant bank accounts is provided inconnection with inactive bank accounts the balances of which have been
derecognized as liabilities. The reserve is provided for the possible future
demands on claims of withdrawal from these accounts in an amountbased on historical reimbursement experience.
(8) Reserve for contingent losses
Reserve for contingent losses is maintained to provide against possible
losses from contingencies which are not covered by other specificreserves. The amount of reserve is based on an estimate of the amountpossible future losses.
(9) Reserve for share-based payments
Reserve for share-based payments is provided for the estimated amountof share benefit obligations at the end of the current fiscal year inorder to prepare for delivery of the bank’s shares to the bank’s directors(excluding the audit committee members) and executive officers under
the internal share delivery regulations.
(10) Reserve under special laws
Reserve under special laws is provided for contingent liabilities fromfinancial instruments and exchange. This is a reserve pursuant to Article
46-5 of the Financial Instruments and Exchange Act and Article 175
of Cabinet Office Ordinance on the Financial Instruments Business toindemnify losses incurred in connection with the purchase and sale ofsecurities and derivatives and other financial related transactions.
(11) Accounting method for retirement benefits
In calculating benefit obligation, the portion of the projected benefit
obligation attributed to the current fiscal year is determined using
the benefit formula method. Prior service cost is amortized using thestraight-line method over 10 years. Actuarial differences are recognized
as expenses using the straight-line method within the average of theestimated remaining service years of employees commencing with thefollowing period.
Some consolidated subsidiaries use a simplified method to calculate
net defined benefit liability and retirement benefit cost. This simplified
method assumes the Company’s retirement benefit obligations to beequivalent to the benefits that would be payable upon the voluntary
retirement of all employees at the fiscal year-end to calculate net defined
benefit liability and retirement benefit cost.

(12) Foreign currency translations
Foreign currency assets and liabilities and the accounts of overseas
branches of the Bank are translated into yen at the rates prevailing at
the consolidated balance sheet date. Consolidated subsidiaries’ foreign
currency assets and liabilities are translated into yen at the rate prevailingat their respective balance sheet dates.
(13) Revenue Recognition①	Finance leases
	In connection with finance leases as the lessor, sales and cost of sales
are recognized at the time of receiving lease payment.
②	Operating leases
	As lessor under operating leases, lease related income is recognizedon a straight-line basis over the full term of the lease based on thecontractual amount of lease fees per month.
(14) Significant hedge accounting methods①	Hedge interest rate risk
	In order to hedge the interest rate risk associated with various
financial assets and liabilities, the Bank applies the deferred hedge
accounting method stipulated in JICPA Industry Audit Committee
Report No. 24, February 13, 2002, “Accounting and Auditing
Treatment of Accounting Standards for Financial Instruments in
Banking Industry.” The effectiveness of hedging is assessed for (i)each identified group of hedged items, such as deposits, loans andsimilar instruments and (ii) the corresponding group of hedging
instruments, such as interest rate swaps, in the same maturity bucket.
②	Hedge against fluctuation in foreign exchange rates
	For certain assets and liabilities, the Bank and its consolidated
subsidiaries apply the exceptional treatment permitted for interest
rate swaps. The Bank applies the deferred method of hedge
accounting to hedge foreign exchange risk associated with various
foreign currency denominated monetary assets and liabilities as
stipulated in JICPA Industry Audit Committee Report No. 25, July29, 2002, “Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in the Banking
Industry.” The effectiveness of the currency swap transactions,exchange swap transactions and similar transactions that hedge theforeign exchange risk of monetary assets and liabilities denominatedin foreign currencies is assessed based on a comparison of the foreign
currency positions of the hedged monetary assets and liabilities andthe hedging instruments.
		
The Bank also applies fair value hedge accounting to portfolio
hedges of the foreign exchange risk associated with foreign currency
denominated available-for-sale securities (other than bonds) identified
as hedged items in advance as long as the amount of spot andforward foreign exchange contracts payable exceeds the acquisition
costs of the hedged securities in foreign currency.
(15) Cash flow statements
In preparing the consolidated statements of cash flows, cash on handand deposits with the Bank of Japan are considered to be cash and cash
equivalents.
(16) Consumption taxes
National and local consumption taxes are accounted for mainly on a tax
exclusion basis.
(17) Application of consolidated tax reporting
The Bank and its wholly owned consolidated subsidiaries have adopted aconsolidated tax return system.

(18) Application of tax effect accounting for the transition fromthe consolidated tax payment system to the group taxation
systemIn relation to temporary differences that have been affected by thetransition to group tax sharing system and revision of single tax payment
system in response to the transition, which were established by “Act for
Partial Amendment of the Income Tax Act, etc” (Act No.8, 2020), theBank and some of its consolidated subsidiaries did not apply paragraph
44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No.28, February 16, 2018) but provisions of the previous
tax laws to calculate deferred tax assets and liabilities in accordancewith paragraph 3 of “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to
the Group Tax Sharing System” (PITF No.39, March 31, 2020).
(19) Per share data
Net income per share is based on the weighted average number ofshares of common stock outstanding during the year, excluding treasury
stock. Diluted net income per share reflects the potential dilution that
could occur if stock options were exercised. Diluted net income per shareof common stock assumes the full exercise of outstanding warrants atthe time of issuance.
Cash dividends per share shown in the accompanying consolidated
statements of income represent dividends declared as applicable to therespective year.

(Accounting standards not yet adopted)“Accounting Standard for Revenue Recognition” (ASBJ Statement
No.29, March 31, 2020) and “Implementation Guidance on AccountingStandard for Revenue Recognition” (ASBJ Guidance No. 30, March 31,
2020)
1 Overview
The above standard and guidance provide comprehensive principles
for revenue recognition. Under the standard and guidance, revenue isrecognized by applying following 5 steps:
Step 1: Identify 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 obligation in
the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performanceobligation.
2 Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
3 The impact of the adoption of this accounting standard is currently
under evaluation.
•	Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019)•	Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, July 4, 2019)•	Accounting Standard for Measurement of Inventories” (ASBJ Statement
No. 9, July 4, 2019)•	Accounting Standard for Financial Instruments” (ASBJ Statement No.
10, July 4, 2019)•	Implementation Guidance on Disclosure of Fair Value of Financial
Instruments (ASBJ Guidance No. 19, March 31, 2020)

IYO BANK Annual Report 202023

1 Overview
In order to enhance comparability with internationally recognizedaccounting standards, “Accounting Standard for Fair Value
Measurement” and “Implementation Guidance on Accounting Standard
for Fair Value Measurement” (together, hereinafter referred to as“Fair Value Accounting Standards”) were developed and guidanceon methods measuring fair value was issued. Fair Value AccountingStandards are applicable to the fair value measurement of the following
items:•	Financial instruments defined by in “Accounting Standard for Financial
Instruments”; and•	Inventories held for trading purposes defined by “Accounting Standard
for Measurement of Inventories.”
In addition, “Implementation Guidance on Disclosure of Fair Value of
Financial Instruments” was revised to require disclosure of fair valuelevels.
2 Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
3 The impact of the adoption of this accounting standard is currently
under evaluation.
•	“Accounting Standards for Disclosure of Accounting Policies, Changes
in Accounting, and Correction of Errors” (Corporate AccountingStandards No. 24, March 31, 2020)
1 Overview
This is intended to disclose an overview of adopted accounting principles
and procedures when related accounting standards do not provide clear
guidances.

2 Effective date
Effective from the beginning of the fiscal year ending March 31, 2021.
•	Accounting Standard for Disclosure of Accounting Estimates (ASBJ
Statement No. 31, March 31, 2020)
1 Overview
The purpose of this standard is to disclose information that contributes
to the understanding of financial statement users regarding theaccounting estimates of items recorded in the financial statements
for the current fiscal year that have the risk of materially affecting thefinancial statements for the following fiscal year.

2 Effective date
Effective from the beginning of the fiscal year ending March 31, 2021.
(Additional Information)
1 The share-based payment program using the trust
The Bank has introduced a share-based payment program using a trust
for its directors (excluding audit committee members) and executive
officers with the aim of raising awareness of contribution to the Bank’s
medium to long-term performance and enhancement of its corporate
value.
(a) Overview of transactions
The trust acquires shares of the Bank using funds contributed by theBank.
In accordance with internal share delivery policies set forth by the
Board of Directors of the Bank, the Bank grants points to its directors

24

IYO BANK Annual Report 2020

(excluding audit committee members) and executive officers. At thetime of retirement, shares of the Bank and money will be delivered inaccordance with the points through the trust.
(b) Shares of the Bank held by the trust①	Shares of the Bank held by the trust are recorded as treasury stock in
net assets at the book value in the Bank.
②	The book value of the trust at March 31,2020 and 2019 is ¥219
million and ¥231 million.
③	The number of shares of the Bank held by the Trust at March
31,2020 and 2019 was 284 thousand shares and 300 thousand
shares.

2 Impact of COVID-19
The Bank and its consolidated subsidiaries assume that the COVID-19
pandemic will continue to have an impact on the economy for an
uncertain period of time and principally, credit risks of loans will beaffected accordingly. A reserve for loan losses is provided based on
information available and certain assumptions deemed reasonable at theend of the fiscal year. However, these assumptions are too uncertain andthe amount of loss may increase due to the rise of the pandemic risk ora prolonged period until its termination.
(Notes to Consolidated Balance Sheet)
2-1. STOCKS AND INVESTMENTS IN UNCONSOLIDATEDSUBSIDIARIES AND AFFILIATES
Stocks in unconsolidated subsidiaries and affiliates amounted to ¥75
million ($689 thousand) and ¥75 million at March 31, 2020 and 2019,respectively.
Investments in unconsolidated subsidiaries and affiliates amounted
to ¥193 million ($1,773 thousand) and ¥94 million at March 31, 2020
and 2019, respectively.
2-2. S ecurities received under transactions with resale agreements andothers that are entitled to sale or (re)pledge were ¥355,563 million($3,267,141) and nil at March 31,2020 and 2019, respectively.
2-3. LOANS AND BILLS DISCOUNTED
Loans and bills discounted included the following:
Millions of yen

Loans to bankrupt customers
Non-accrual loans
Loans overdue threemonths or more
Restructured loans
Total

Thousands of
U.S. dollars(Note 1-1)

2020
¥ 4,544
57,1112019¥ 2,142
52,6522020$ 41,753
524,772

2,614
15,418¥79,690

2,811
15,883¥73,490

24,019141,670$732,242

Loans to bankrupt customers are loans to customers who are undergoingbankruptcy or similar proceedings or who are in a similar financial
condition. Interest is not being accrued on these loans as there is astrong likelihood that the principal and interest will be uncollectible.
Non-accrual loans are nonperforming loans that are not generatinginterest income because of nonpayment and for which accrued interest
income is not recognized, excluding loans to bankrupt customers andloans on which interest payments are deferred in order to support theborrower’s recovery from financial difficulties.
Loans overdue three months or more are loans not included in theabove categories or in restructured loans for which payments are past
due three months or more.

Restructured loans are loans not included in the above categories forwhich the Bank has granted concessions such as reduced interest rates
or deferral or waiver of interest and/or principal payments to support
customers experiencing financial difficulties.
Amounts described above are before the deduction of reserve forpossible loan losses.

2-4. COMMERCIAL BILLS
Bills discounted are accounted for as financing transactions in accordancewith JICPA’s Industry Audit Committee Report No. 24, February 13,
2002, although the Bank has the right to sell or pledge them without
restrictions. The total face value of commercial bills and purchased
foreign exchange bills obtained as a result of discounting was ¥18,514
million ($170,118 thousand) and ¥26,475 million at March 31, 2020 and
2019, respectively.
2-5. ASSETS PLEDGED
Assets pledged as collateral were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2020
Receivables under resaleagreements
Securities
Loans
Total

¥ 355,563
701,931
370,591¥1,428,086

2020

2019
¥—
336,215400,033¥736,248$—6,449,793
3,405,228$13,122,172

The above pledged assets secure the following liabilities:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Deposits
Payables under repurchaseagreements
Payables under securities
lending transactions
Borrowed money2020¥ 27,6842019¥ 10,283

2020$ 254,378

30,357

49,820278,939

198,436
760,024

76,968355,523

1,823,357
6,983,589

In addition to the above, assets pledged as collateral for transactions
such as exchange settlement transactions and others were as follows:
Millions of yen

Securities
Other assets

2020
¥ 437
50,0002019¥ 441
50,000Thousands of
U.S. dollars(Note 1-1)

2020
$ 4,015
459,432

Other assets included cash collateral paid for financial instrumentsof ¥9,363 million ($86,033 thousand), guarantees of ¥75 million ($689
thousand) and security deposits of ¥280 million ($2,572 thousand) at
March 31, 2020. Other assets included cash collateral paid for financial
instruments of ¥3,567 million, guarantees of ¥83 million and security
deposits of ¥285 million at March 31, 2019.

2-6. COMMITMENT LINES
Commitment line agreements related to loans are agreements which
oblige the Bank and its consolidated subsidiaries to lend funds up
to certain limits agreed to in advance. The Bank and its consolidated
subsidiaries will lend the funds upon the request of an obligor to draw
down the funds under the loan agreement as long as there is no breach of
the various terms and conditions stipulated in the relevant loan agreement.
The unused commitment balances related to these loan agreements at
March 31, 2020 and 2019 amounted to ¥1,180,388 million ($10,846,163
thousand) and ¥1,186,205 million, respectively. Of these amounts,¥1,053,999 million ($9,684,820 thousand) and ¥1,050,558 million asof March 31, 2020 and 2019, respectively, related to loans in which theterm of the agreement was one year or less or in which unconditional
cancellation of the agreement was allowed at any time.
In many cases, the term of the loan agreement runs its course
without the loan ever being drawn down. Therefore, unused loan
commitments do not necessarily affect future cash flows.
Conditions are included in certain loan agreements which allow the
Bank and its consolidated subsidiaries either to decline the request fora loan draw-down or to reduce the agreed limit when there is cause to
do so, such as when there is a change in the financial condition of theobligor or when it is necessary to protect the Bank’s or a consolidated
subsidiary’s credit. The Bank and its consolidated subsidiaries takevarious measures to protect their credit, including having the obligor
pledge collateral in the form of real estate, securities, etc., on signing
the loan agreement or in accordance with the Bank and its consolidated
subsidiaries’ established internal procedures for confirming an obligor’s
financial condition, etc., at regular intervals.
2-7. LAND REVALUATION EXCESSIn accordance with the Revaluation Act of Land Properties, the Bank
revalued land used in the ordinary course of business as of March
31, 1998. The revaluation excess, net of deferred taxes, is shown as
a separate component of net assets. The current market value of therevalued land was lower than the revalued amount by ¥13,177 million($121,078 thousand) and ¥15,801 million at March 31, 2020 and 2019,respectively.
2-8. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets at March 31, 2020
and 2019 amounted to ¥54,297 million ($498,915 thousand) and¥54,375 million, respectively. The amounts that were directly offset
against acquisition costs as of March 31, 2020 and 2019 were ¥8,256
million ($75,861 thousand) and ¥8,399 million, respectively.
2-9. GUARANTEE OBLIGATIONS
Guarantee obligations for private placement bonds in securities inaccordance with the Article 2-3 of the Financial Instruments andExchange Law amounted to ¥60,466 million ($555,600 thousand) and¥55,413 million at March 31, 2020 and 2019, respectively.
2-10. ACCEPTANCES AND GUARANTEESThe principal amount of money trusts to be indemnified by the Bank andits consolidated subsidiaries was ¥28 million ($257 thousand) and ¥31
million at March 31, 2020 and 2019, respectively.

IYO BANK Annual Report 202025

(Notes to Consolidated Statement of Income)3-1. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses included salaries and allowancesin the amount of ¥21,223 million ($195,010 thousand) and ¥21,699
million at March 31, 2020 and 2019, respectively.

With respect to the consolidated subsidiaries, in principle, eachcompany is treated as a separate and individual unit for impairment
accounting purposes.
In calculating impairment loss on fixed assets for the reporting
period, the amount deemed recoverable, i.e., the net proceeds from sale,
was estimated by deducting the cost of disposal from the real estateappraisal value based on official appraisal standards.

3-2. OTHER EXPENSES
Other expenses consisted of the following:
Millions of yen

2020
¥ 20
399

Loans written off
Securities written off(Notes to Consolidated Statement of Comprehensive Income)
4-1. RECLASSIFICATION ADJUSTMENTS AND THE RELATED TAX
EFFECTS CONCERNING OTHER COMPREHENSIVE INCOME

Thousands of
U.S. dollars(Note 1-1)

2019
¥ 15
1,004

2020
$ 183
3,666

Millions of yen

Net unrealized holding
gains (losses) on securities
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effectNet unrealized holding
gains (losses) on securities
Net deferred gains (losses)
on derivatives under hedge
accounting
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effect
Net deferred gains(losses) on derivatives
under hedge accounting
Remeasurements ofdefined benefit plans
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effectRemeasurements ofdefined benefit plans
The total amount of othercomprehensive income

3-3. IMPAIRMENT LOSS
Due to a continuous decline in land prices and a decline in operating
cash flow, the book value of the following asset groups has been written
down to the recoverable amount and this reduction of ¥931 million has
been recorded as an impairment loss under extraordinary losses.
Location

Major use

Inside Ehime
Prefecture

14 offices,
includingbranches

Inside Ehime
Prefecture

Idle assets2 items

Outside Ehime 1 branchPrefecture

Total

Type

Impairment loss
Thousands of
U.S. dollars
Millions of yen(Note 1-1)

Land andbuildings(Land)(Buildings)
Land andbuildings(Land)(Buildings)
Land andbuildings(Land)(Buildings)
Land andbuildings(Land)(Buildings)

912
(678)
(186)

8,380
(6,229)(1,709)

17
(16)
(0)

156
(147)
(0)

1
(0)
(0)

9
(0)
(0)

931
(696)
(188)

8,554
(6,395)(1,727)

Thousands of
U.S. dollars(Note 1-1)

With respect to the calculation of impairment loss on fixed assets,
the minimum operational unit recognized for management accounting
purposes by the Bank is a branch. However, where a number ofbranches operate as a group at the managerial level, the accounting unit
is the group rather than the individual branch.

2020

2019

2020

¥15,553(3,529)¥ (6,419)(4,156)$142,910(32,426)

12,023(3,975)(10,575)
3,355

110,475(36,524)

8,048(7,220)73,950

(287)
3,652

(4,334)
3,895(2,637)33,5563,365(1,026)(439)
133

30,919(9,427)

2,338

(305)

21,483(1,070)(985)(7,771)(704)(9,831)(9,050)(2,056)627(8,475)
2,585(18,891)
5,761(1,429)(5,890)(13,130)¥ 8,957¥(13,415)$ 82,302

0(Notes to Consolidated Statement of Changes in Net Assets)
1 Type and number of shares issued and treasury stock
Type and number of shares issued and treasury stock in the year ended March 31, 2020 were as follows:
Thousands
Number of shares at the beginningof the accounting period

Shares issued
Common stock
Total
Treasury stock
Common stock
Total

Increase in number of shares
during the accounting period

Decrease in number of shares
during the accounting period

Number of shares at the end of
the accounting period

323,775
323,775————

323,775
323,775

7,302
7,302

0
0

81
81

7,222
7,222

1 The increase in number of shares of treasury stock was from the purchase of fractional shares (0 thousand shares).
2 The decrease in number of shares of treasury stock was due to the delivered shares of the Bank through the Trust (15 thousand shares) and theexercise of stock acquisition rights (65 thousand shares).
3 The number of shares of treasury stock at the beginning of the current fiscal year and at the end of the current fiscal year includes the Bank’s shares
held by the Trust for the share-based payment system (300 thousand shares and 284 thousand shares, respectively).

26

IYO BANK Annual Report 2020

2 Stock acquisition rights and own stock acquisition rights
Stock acquisition rights and own stock acquisition rights in the year ended March 31, 2020 were as follows:

Division

Details of stockacquisition rights

Type of shares
to be issued

The Bank

Stock acquisition rights
as stock options

Number of shares subject to stock acquisition rights
Beginningbalance
Increase
Decrease
Closing balance

Total

Closing balance
Thousands of U.S.
Millions of yen dollars (Note 1-1)

—

343

3,151

—

343

3,151

Record date

Effective date

March 31, 2019

June 6, 2019

3 Dividends(1) The following dividends were paid in the year ended March 31, 2020

Date of resolution

Directors’ meeting held on
May 10, 2019
Directors’ meeting held on
November 8, 2019

Type of shares

Amount of dividends
Thousands of U.S.
Millions of yen dollars (Note 1-1)

Cash dividends per share
U.S. dollars
Yen(Note 1-1)

Common stock¥2,217$20,371

¥7.00

$0.06

Common stock¥2,217$20,371¥7.00$0.06 September 30, 2019 December 10, 2019

1. The total amount of dividends on common stock resolved at the Directors’ meeting held on May 10, 2019 includes ¥2 million in dividends to the
Bank’s shares held by the Trust for the share-based payment system.
2. The total amount of dividends on common stock resolved at the Directors’ meeting held on November 8, 2019 includes ¥1 million in dividends to the
Bank’s shares held by the Trust for the share-based payment system.
(2) Dividends whose record date is attributable to the year ended March 31, 2020 but which became effective after March 31, 2020

Date of resolution

Directors’ meeting held on
May 26, 2020

Type ofsharesCommonstock

Amount of dividends
Thousands of U.S.
Millions of yen dollars (Note 1-1)

¥2,217$20,371

Source ofdividends
Retainedearnings

Cash dividends per share
U.S. dollars
Yen(Note 1-1)

¥7.00

$0.06

Record date

Effective date

March 31, 2020

June 5, 2020

The total amount of dividends on common stock includes ¥1 million in dividends to the Bank’s shares held by the Trust for the share-based payment
system.

1 Type and number of shares issued and treasury stock
Type and number of shares issued and treasury stock in the year ended March 31, 2019 were as follows:
Thousands
Number of shares at the beginningof the accounting period

Shares issued
Common stock
Total
Treasury stock
Common stock
Total

Increase in number of shares
during the accounting period

Decrease in number of shares
during the accounting period

Number of shares at the end of
the accounting period

323,775
323,775————

323,775
323,775

7,422
7,422

302
302

422
422

7,302
7,302

1 The increase in number of shares of treasury stock was from the acquisition of shares by the Trust for the share-based payment system (300 thousand
shares) and from the purchase of fractional shares (2 thousand shares).
2 The decrease in number of shares of treasury stock was due to the disposal of treasury stock through the third-party allocation to the Trust for theshare-based payment system (300 thousand shares) and due to the exercise of stock acquisition rights (122 thousand shares).
3 The number of shares of treasury stock at the end of the current fiscal year includes the Bank’s shares held by the Trust for the share-based payment
system (300 thousand shares).

2 Stock acquisition rights and own stock acquisition rights
Stock acquisition rights and own stock acquisition rights in the year ended March 31, 2019 were as follows:

Division

Details of stockacquisition rights

The Bank

Stock acquisition rights
as stock options

Total

Type of shares
to be issued

Number of shares subject to stock acquisition rights
Closing balance
Beginningbalance
Increase
Decrease
Closing balance Millions of yen

—

397

—

397

IYO BANK Annual Report 202027

3 Dividends(1) The following dividends were paid in the year ended March 31, 2019

Date of resolution

Directors’ meeting held on
May 11, 2018
Directors’ meeting held on
November 9, 2018

Amount ofdividends

Cashdividends
per share

Type of shares

Millions of yen

Yen

Record date

Effective dateCommon stock¥2,214¥7.00

March 31, 2018

June 7, 2018

Common stock¥2,217¥7.00 September 30, 2018 December 10, 2018

The total amount of dividends on common stock resolved at the Directors’ meeting held on November 9, 2018 includes ¥2 million in dividends to the
Bank’s shares held by the Trust for the share-based payment system.
(2) Dividends whose record date is attributable to the year ended March 31, 2019 but which became effective after March 31, 2019

Date of resolution

Directors’ meeting held on
May 10, 2019

Amount ofdividends

Type ofsharesMillions of yen

Commonstock¥2,217

Source ofdividends
Retainedearnings

Cashdividends
per share
Yen

Record date

Effective date

¥7.00

March 31, 2019

June 6, 2019

The total amount of dividends on common stock includes ¥2 million in dividends to the Bank’s shares held by the Trust for the share-based payment
system.

(Notes to Consolidated Statement of Cash Flows)
5-1. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statements of cash flows
included due from banks, except for deposits with the Bank of Japan, as
follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Cash and due from banks
in the balance sheets
Due from banks, except
for deposits with the Bankof JapanCash and cash equivalentsin the statements ofcash flows

2020

2019

¥719,086¥809,668$6,607,424(1,198)(1,278)(11,007)¥717,887¥808,389

2020(2) Operating Leases
Future lease payment payables and receivables under noncancelable
operating leases were as follows:
As lessee
Millions of yen

Due within one year
Due after one year
Total(b) The method used to depreciate for lease assets
See “SIGNIFICANT ACCOUNTING POLICIES - Tangible and intangible
fixed assets and lease assets.”

2019
¥114
105
¥219

2020
$ 845
385
$1,231

As lessor
Millions of yen$6,596,407(Notes to Lease Transactions)
1. LEASE TRANSACTIONS(1) Finance Leases
Finance leases that do not transfer ownership of the lease assets(a) Details of lease assets(i) Tangible fixed assets
Automatic teller machines(ii) Intangible fixed assets
Not applicable

2020
¥ 92
42
¥134

Thousands of
U.S. dollars(Note 1-1)

Due within one year
Due after one year
Total

2020
¥ 65
147
¥213

2019
¥ 68
205
¥273

Thousands of
U.S. dollars(Note 1-1)

2020
$ 597
1,350
$1,957(Notes to Financial Instruments)
1 Financial instruments(1) Policy on financial instruments
The Bank and its consolidated subsidiaries engage mainly in thefinancial services business and provide lending services and leasing
services. Accordingly, the Bank holds financial assets and liabilities
that are subject to interest rate fluctuations and undertakes asset andliability management (ALM) in order to curb any unfavorable impact
from interest rate fluctuations. The Bank also engages in derivativetransactions as part of its ALM.
(2) Descriptions and risks of financial instruments
The financial assets of the Bank and its consolidated subsidiaries consist
mainly of loans to customers, which are subject to default risk. Also, theBank holds securities that are mainly stocks, bonds and mutual funds forinvestment, management or trading purposes. They are subject to theissuer’s credit risk, interest rate risk and market price risk.
The foreign currency denominated financial assets and liabilities
are subject to foreign currency risk. The Bank uses currency swaps tomanage the risk.

28

IYO BANK Annual Report 2020

The Bank’s derivative transactions include interest rate swaps. The
Bank applies hedge accounting to the interest on loans to hedge interest
rate risks regarding the interest rate swaps as hedge instruments. The
effectiveness is ensured by maintaining a balance of hedge instrumentsthat does not exceed the balance of the hedged items, which aregrouped by incidence and remaining period.
Other transactions not qualifying for hedge accounting expose the
Bank to foreign exchange and interest rate risks.
(3) Risk management system for financial products① Credit risk management
The Bank prescribes its credit risk management policy in its “RiskManagement Plan,” which is issued by the Board of Directors biannually.
In particular, the Bank diversifies credit risk by ensuring that credit
granted is not overconcentrated in certain customers, groups orindustries. The Bank periodically analyzes and evaluates the credit
conditions classified by internal ratings, business area and industry.
The Bank strives to optimize its credit portfolio by promoting effective
credit risk management. Feedback regarding credit risk management isreported to the Board of Directors on a regular basis.
The Bank manages each customer’s credit in compliance with its“Internal Rating System,” part of the Bank’s credit risk management.
The Risk Management Division (RMD), which is completely independent
from other banking business divisions, is responsible for planning andadministrating the internal rating system and conducting, coordinating
and monitoring the internal ratings. The Loan Group is responsible forsupervising the individual credit granted and examining each customers’
finances, purpose for the loan and ability to repay. The group is
independent from the business promotion group and is divided into
four divisions: the Credit Division - responsible for general loans, theShip Finance Division – responsible for the loans such as loans in the
shipping and shipbuilding industries, the Credit Management Division responsible for the planning of loan administration and troubled credit
and the Corporate Consulting Division - responsible for supporting
company rehabilitation. The assets are initially assessed by each branch
and then by the head office, followed by a validation by RMD, which isalso responsible for the formulation of the assessment standards.
The credit granted by the consolidated subsidiaries is managed foreach customer along with the credit granted by the Bank. RMD also
manages the credit risk of issuers and counterparty risk in derivativetransactions by monitoring and periodically evaluating credit informationand market prices.

(Quantitative information on market risk)
The Bank measures market risk based on the VaR method. The variancecovariance model (holding period: 120 business days; confidence
interval: 99.9%; and historical observation period: 1,200 business days)
is applied in the measurement of VaR.
The major market risks for the Bank are equity risk and interest raterisk. Financial instruments affected by interest rate risk are loans andbills discounted, available-for-sale securities, deposits, borrowed money,
interest swap transactions and interest rate cap derivative transactions.
At March 31, 2020 and 2019, the quantity of market risk (expected loss),which included equity risk and interest rate risk, amounted to ¥167.1
billion ($1,535 million) and ¥139.3 billion, respectively.
The Bank confirms the validity of the measurement model by
biannually performing back-testing which compares VaR with actualfluctuations in profit and loss during the observation period. However,
VaR, the quantity of market risk which is statistically measured withhistorical market fluctuations, may not reflect drastic changes in themarket.
③ Liquidity risk management
The liquidity risk management of the Bank is conducted through assetliability management (ALM) and the duration of funds procured withconsideration for the market environment.
(4) Supplementary explanation of matters related to fair values offinancial instruments and others
The fair values of financial instruments include values based on market
prices and values reasonably estimated when the financial instruments
do not have market prices. Since certain assumptions underlie theestimates of such values, the values may differ when other assumptions
are applied.

② Market risk management
In order to properly manage market risk and maintain the Bank’ssoundness and profitability, the Bank has established a comprehensive
risk management structure set forth by the ALM Committee. The ALM
Committee uses various measures such as the gap method, market
value analysis, periodic income/loss simulation and the VaR method tocontrol risk. The ALM Committee also coordinates risk management
plans and hedging strategies by analyzing the profitability structure andforecasting the market and the economic environment. RMD, set up
as an independent supervisor, evaluates the appropriateness of market
transactions dealt with by other divisions.
The Bank sets limits on the quantity of risk that may be undertaken
in its “Risk Management Plan,” which is developed by the Board of
Directors biannually. RMD monitors compliance with the plan and reports
to the Board of Directors on a monthly basis.

IYO BANK Annual Report 202029

2 Fair values of financial instruments
The following tables summarize book values, fair values and any differences between them. Unlisted stocks and others for which the fair value wasdeemed extremely difficult to determine were excluded from the tables below (see Note ii).

(1) Cash and due from banks(2) Call loans and bills purchased(3) Monetary claims purchased(4) Trading account securities
Trading securities(5) Money held in trust(6) Securities
Available-for-sale securities(7) Loans and bills discounted
Reserve for loan losses (*1)
Total Assets(1) Deposits(2) Negotiable certificates of deposit(3) Call money and bills sold(4) Payables under repurchase agreements(5) Payables under securities lending transactions(6) Borrowed money
Total Liabilities
Derivative Transactions (*2)
Derivative transactions to which hedge accounting is
not applied
Derivative transactions to which hedge accounting isappliedTotal Derivative Transactions

Book value

Millions of yen
2020
Fair value¥719,086
355,563
8,173¥ 719,086
355,563
8,173

727
7,074

727
7,074

—
—

1,694,560
4,733,091(29,591)
4,703,500¥7,488,686¥5,246,611
482,131217,618
30,357
198,436
770,378¥6,945,532

1,694,560
4,661,074—

4,661,074¥7,446,261¥5,246,865
482,131217,618
30,357
198,436
770,659¥6,946,068

Thousands of U.S. dollars (Note 1-1)
2020
Book value
Fair value
Difference

Difference

¥

—
—
—

$ 6,607,424 $ 6,607,424
3,267,141
3,267,141
75,09875,0986,680
65,000

$—
—
—

6,680
65,000———(42,425)¥(42,425)
¥
254
—
—
—
—
281
¥
535

15,570,706 15,570,706
43,490,682 42,828,944(271,901)
43,218,781 42,828,944$68,810,860 $68,421,032$48,209,234 $48,211,568
4,430,129
4,430,129
1,999,614
1,999,614
278,939
278,939
1,823,357
1,823,357
7,078,728
7,081,310$63,820,012 $63,824,937(389,828)$(389,828)$2,333
—
—
—
—
2,582
$ 4,915¥(2,439) ¥(2,439)¥—$(22,411) $(22,411)$—960¥(1,479) ¥960(1,479)

¥

—
—

$

8,821
(13,590) $8,821(13,590)—$—(*1) General and specific reserves for loan losses relevant to loans and bills discounted are excluded.
(*2) D erivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions arepresented on a net basis.
(*3) Immaterial items are omitted.

(1) Cash and due from banks(2) Call loans and bills purchased(3) Monetary claims purchased(4) Trading account securities
Trading securities(5) Money held in trust(6) Securities
Available-for-sale securities(7) Loans and bills discounted
Reserve for loan losses (*1)
Total Assets(1) Deposits(2) Negotiable certificates of deposit(3) Call money and bills sold(4) Payables under repurchase agreements(5) Payables under securities lending transactions(6) Borrowed money
Total Liabilities
Derivative Transactions (*2)
Derivative transactions to which hedge accounting is
not applied
Derivative transactions to which hedge accounting isappliedTotal Derivative Transactions

Book value

Millions of yen
2019
Fair value¥ 809,668—
10,921¥ 809,668—
10,921

349
6,494

349
6,494

—
—

1,555,923
4,527,810(26,114)4,501,696¥6,885,053¥5,228,365
459,656
178,31349,82076,968365,856¥6,358,979

1,555,923
4,473,089—

4,473,089¥6,856,447¥5,229,025
459,656
178,31349,82076,968366,014¥6,359,798(28,606)¥(28,606)
¥
659
0
—
—
—
158
¥
818

¥1,071

¥

1,071

¥

—

(4,494)¥(3,423) ¥(4,494)(3,423)¥——Difference

¥

—
—
—

(*1) General and specific reserves for loan losses relevant to loans and bills discounted are excluded.
(*2) D erivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions arepresented on a net basis.
(*3) Immaterial items are omitted.

30

IYO BANK Annual Report 2020

Note i. Methods used to calculate fair value of financial instruments
Assets(1) Cash and due from banks
The fair value of due from banks with no maturity is considered equal
to the book value since the fair value approximates the book value. The
fair value of due from banks with maturity is calculated as the present
value discounted at rates that reflect the proper market risk and credit
risk per contractual terms. The fair value of due from banks with shortcontractual terms (within one year) is considered equal to the book value
since the fair value approximates the book value.
(2) Receivables under resale agreements
The fair value of receivables under resale agreements is considered equal
to the book value since the contractual term is within one year and thefair value of these items approximates the book value.
(3) Monetary claims purchased
The fair value of trustee beneficial rights in monetary claims purchasedis based on the price quoted by correspondent financial institutions. For
monetary claims purchased with short contractual terms (within oneyear), the fair value is considered equal to the book value since the fairvalue approximates the book value.
(4) Trading account securities
The fair value of securities such as bonds held for trading is based on themarket price or the price quoted by correspondent financial institutions.
(5) Money held in trust
The fair value of money held in trust is based on the price quoted bycorrespondent financial institutions. Information on money held in trustclassified by the purpose for which it is held is disclosed in (Notes to
Money held in trust).
(6) Securities
The fair value of stocks is based on market price. The fair value ofbonds is based on market price or the price quoted by correspondent
financial institutions. The fair value of investment trusts is based on the
publicly disclosed base value. The fair value of private placement bonds
is calculated as the present value discounted at a rate that reflects theproper market rate corresponding to the remaining period and credit risk
based on the internal rating. Information on securities classified by the
purpose for which they are held is disclosed in (Notes to Securities).
(7) Loans and bills discounted
The fair value of loans and bills discounted with floating rates are
considered equal to the book value since the rate reflects the market
rate in a short period, and the fair value approximates the book value
unless the creditworthiness of the borrower changes significantly after
the inception date. The fair value of loans and bills discounted with fixed
rates is calculated as the present value, discounting future cash flow at a
rate that reflects the proper market rate corresponding to the remaining
period and credit risk based on the internal rating. The fair value of loans
and bills discounted with short contractual terms (within one year) is
considered equal to the book value since the fair value of these items
approximates the book value.
In addition, the fair value of claims against bankrupt obligors,
substantially bankrupt obligors and intensive control obligors
approximates the consolidated balance sheet amount as of theconsolidated balance sheet date less the allowance for bad debt since
the bad debt is calculated based on the present value of the expected
future cash flow or the estimated collectable amount from collateral
and/or guarantees.

For loans and bills discounted, the fair value of loans and bills
discounted with no maturity due to conditions such as limiting theloans to the value of pledged assets is deemed the book value since thefair value is expected to approximate the book value considering theestimated loan period, interest rate and other conditions.
Liabilities(1) Deposits and (2) Negotiable certificates of deposit
The fair value of demand deposits is considered the payable amount asof the consolidated balance sheet date (the book value). In addition,
the fair value of fixed-term deposits is calculated as the present value,
discounting the future cash flow at a rate that reflects the proper market
rate corresponding to the remaining period and credit risk of the Bank.
The fair value of deposits with short contractual terms (within one year)
is considered equal to the book value since the fair value approximates
the book value.
(3) Call money and bills sold (4) Payables under repurchaseagreements and (5) Payables under securities lendingtransactions
The fair value of call money, bills sold and payables under securities
lending transactions is considered equal to the book value since thecontractual term is within one year and the fair value of these items
approximates the book value.
(6) Borrowed money
The fair value of borrowed money with a floating rate is consideredequal to the book value since the rate reflects the market rate in a shortperiod, the creditworthiness of the Bank and its consolidated subsidiaries
has not changed significantly since the inception date and the fair valueof these items approximates the book values.
The fair value of borrowed money with a fixed rate is calculated as
the present value, discounting future cash flow at a rate that reflects theproper market rate corresponding to the remaining period and credit riskof the Bank.
Derivative Transactions
Information on derivative transactions is disclosed in (Notes to Derivative
Transactions.)
Note ii. Financial instruments whose fair value is deemed extremely
difficult to determine are not included in “Available-for-salesecurities” in the table above.

Category

Unlisted stocks (*1) (*2)
Investments inpartnerships (*3)
Total

Consolidated balance sheet amount(2020)(2019)(2020)
Thousands of
U.S. dollars
Millions of yen Millions of yen(Note 1-1)

¥12,772¥12,476$117,357

6,242¥19,014

6,449¥18,925

57,355$174,712(*1) Unlisted stocks are not included in the disclosure of fair value since the fairvalue is deemed extremely difficult to determine.
(*2) The amount of impairment on unlisted stock during the year ended March
31, 2020 and the year ended March 31,2019 was ¥59 million ($542
thousand) and ¥1 million.
(*3) Investments in partnerships in which the partnership assets compriseunlisted stocks are not included in the disclosure of fair value since the fairvalue is deemed extremely difficult to determine.

IYO BANK Annual Report 202031

Note iii. Expected redemption of monetary claims and securities with maturities

Due from banks
Receivables under resale agreements
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Due from banks
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Within 1 year

1-3 years

Millions of yen
2020
3-5 years
5-7 years¥ 670,720
355,5634,447
204,308—
204,308
144,000
19,294
18,616
1,166,894¥2,401,933¥———
224,327—
224,327
91,10045,05338,383
863,408¥1,087,735¥———111,573—
111,573
9,500
27,35828,749653,800¥765,374

Within 1 year

1-3 years

Millions of yen
2019
3-5 years
5-7 years¥ 761,918
4,323
155,695—
155,695
90,70024,993
19,962
1,145,924¥2,067,861¥——373,276—
373,276
257,100
48,802
34,465
828,922¥1,202,199¥—173
84,768—84,768—25,80629,393626,203¥711,145¥———
139,899—
139,899
57,50055,054
4,586
485,150¥625,050¥—
1,800
141,199—
141,199
63,50035,151
9,533
477,829¥620,8287-10 years¥———
264,948—
264,948
10,00076,0332,314
516,944¥781,893

7-10 years¥——
236,887—
236,887
3,500
73,4871,797
490,230¥727,118

Over 10 years

¥—
—
3,703
234,992—
234,992
16,00038,414
13,676
950,875¥1,189,571

Over 10 years

¥—
4,503
79,418—79,41816,00036,563
4,880
867,610¥951,532

Thousands of U.S. dollars (Note 1-1)
2020

Due from banks
Receivables under resale agreements
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Within 1 year

1-3 years

3-5 years

5-7 years

7-10 years$6,163,006
3,267,141
40,861
1,877,313—
1,877,313
1,323,164
177,285
171,055
10,722,172$22,070,504$———
2,061,260—
2,061,260
837,085
413,975
352,687
7,933,547$9,994,808$———
1,025,204—
1,025,204
87,292
251,382
264,164
6,007,534$7,032,748$———
1,285,481—
1,285,481
528,346
505,871
42,1394,457,870$5,743,361$— $————34,0252,434,512
2,159,257——
2,434,512
2,159,257
91,886
147,018
698,640
352,972
21,262
125,663
4,750,013
8,737,250$6,681,227 $10,930,543

Over 10 years(*) Loans and bills discounted on which full repayment is not expected from debtors such as bankrupt obligors, substantially bankrupt obligors and intensively
controlled obligors amounted to ¥61,656 million ($566,534 thousand) and ¥54,795 million at March 31, 2020 and 2019, respectively, and loans and bills with nomaturities amounted to ¥34,361 million ($315,730 thousand) and ¥36,295 million at March 31, 2020 and 2019, respectively.

Note iv. Amounts to be repaid for borrowed money and other interest bearing liabilities

Within 1 year

Deposits (*)
Certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total¥4,877,705
482,131217,618
30,357
198,436
583,010¥6,389,259

1-3 years

Millions of yen
2020
3-5 years
5-7 years¥329,435
—
—
—
—
4,625
¥334,060¥ 36,061————
182,157¥218,219¥1,951————261¥2,213

7-10 years¥1,457————203¥1,660Over 10 years

¥—
—
—
—
—
120
¥120

Millions of yen
2019

Deposits (*)
Certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total
32

IYO BANK Annual Report 2020

Within 1 year

1-3 years¥4,838,849
457,826
178,31349,82076,968358,872¥5,960,650¥348,674
1,830
—
—
—
4,016
¥354,521

3-5 years¥36,992
—
—
—
—
2,146
¥39,138

5-7 years¥2,395————385¥2,781

7-10 years¥1,453————264¥1,717

Over 10 years

¥—
—
—
—
—
170
¥170

Deposits (*)
Certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total

Within 1 year

Thousands of U.S. dollars (Note 1-1)2020
1-3 years
3-5 years
5-7 years
7-10 years$44,819,489
4,430,129
1,999,614
278,939
1,823,357
5,357,070$58,708,618$3,027,060————
42,497$3,069,558$ 331,351————
1,673,775$2,005,136$17,927
—
—
—
—
2,398
$20,334$13,387
—
—
—
—
1,865
$15,253

Over 10 years

$—
—
—
—
—
1,562
$1,562(*) Demand deposits are included in “Within 1 year.”(Notes to Securities)*1 In addition to “Securities” on the consolidated balance sheets, this includes “Trading account securities” and trust beneficiary interests in “Monetaryclaims purchased.”
1 Trading securities:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2020
Unrealized gains (losses) included in profit
and loss for the fiscal year

2020

2019

¥(14)

$(128)¥(4)

2 Held-to-maturity debt securities:
None
3 Available-for-sale securities in the year ended March 31,2020:

Book value

Securities with unrealized gains
Equity securities
Bonds
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total
Securities with unrealized losses
Equity securities
Bonds
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total
Total

Millions of yen
2020
Acquisition
cost

Difference

Thousands of U.S. dollars (Note 1-1)
2020
Acquisition
Book value
cost
Difference¥ 268,844
561,236
266,666
198,109
96,461
467,537¥1,297,619¥

64,949548,412260,898
192,842
94,672415,228¥1,028,591¥203,895
12,823
5,768
5,266
1,788
52,309¥269,028$ 2,470,311 $ 596,793
5,156,997
5,039,161
2,450,298
2,397,298
1,820,352
1,771,956
886,345869,9074,296,030
3,815,381$11,923,357 $ 9,451,355$1,873,518
117,825
53,00048,387
16,429480,648$2,472,002¥¥¥ (6,513)(1,994)(1,336)(319)(338)(10,422)(18,930)¥250,097$

179,095 $ 238,950
1,548,764
1,567,095
627,970
640,255
626,757
629,697
294,027
297,133
1,953,716
2,049,490
3,681,585
3,855,536$15,604,943 $13,306,891$(59,845)(18,322)(12,276)(2,931)(3,105)(95,764)(173,941)$2,298,052

LossesThousands of U.S. dollars (Note 1-1)
2020
Amount sold
Gains
Losses19,491
168,552
68,342
68,21031,999212,623
400,667¥1,698,286

26,005
170,547
69,67968,53032,337223,046
419,598¥1,448,189

4 Available-for-sale securities sold in the year ended March 31, 2020
Millions of yen
2020
Amount sold
Gains

Equity securities
Bonds
Japanese government bonds
Corporate bonds
Other
Total

¥

4,357
37,29436,745548
144,560¥186,212¥3,171
222
221
1
3,245
¥6,638

¥

—
—
—
—
2,770
¥2,770$40,034
342,681
337,636
5,035
1,328,310$1,711,035$29,137
2,039
2,030
9
29,817$60,994$————
25,452$25,452

IYO BANK Annual Report 202033

5 Securities impaired
Available-for-sale securities which have readily determinable fair values
are written down to the fair value, and the difference between theacquisition cost and the fair value is treated as loss for the fiscal year
(impairment (devaluation)) if the fair value has significantly deteriorated
from the acquisition cost, unless it is deemed that there is a possibilityof a recovery in the fair value. The amount of impairment (devaluation)
for the year ended March 31, 2020 was ¥339 million ($3,114 thousand),including ¥339 million ($3,114 thousand) of equity securities. A
security is deemed to have “significantly deteriorated” if the fair value
has decreased to 50% or less of the acquisition cost. If the fair value
exceeds 50% but is 70% or less of the acquisition cost, the security
may be deemed “significantly deteriorated” considering the change inthe quoted market price during a certain period in the past, the related
business performance and other factors.

for the year ended March 31, 2019 was ¥1,086 million, including¥1,002 million of equity securities and ¥83 million of bonds. A security
is deemed to have “significantly deteriorated” if the fair value has
decreased to 50% or less of the acquisition cost. If the fair value exceeds
50% but is 70% or less of the acquisition cost, the security may bedeemed “significantly deteriorated” considering the change in thequoted market price during a certain period in the past, the related
business performance and other factors.

3 Available-for-sale securities in the year ended March 31,2019:

Money held in trust forinvestment
Book value (fair value)
Amount of net
unrealized gain (loss)
included in profit andloss for the fiscal year
Other money held in trustBook value (fair value)
Acquisition cost
Difference
Unrealized gains
Unrealized losses

Book value

Securities with unrealized
gains
Equity securities
Bonds
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total
Securities with unrealized
lossesEquity securities
Bonds
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total
Total

Millions of yen
2019
Acquisition
cost

Difference¥ 285,418
787,329¥

81,193
766,468¥204,224
20,861

438,138
252,660
96,530357,278¥1,430,026

427,245244,999
94,224340,206¥1,187,868

10,8937,661
2,306
17,071¥242,158¥¥¥ (1,597)
(294)

6,685
32,454

6,263—
26,191
93,390132,530¥1,562,556

8,282
32,7496,267—
26,481
95,848136,880¥1,324,749

(4)
—
(290)
(2,458)(4,350)¥237,807

4 Available-for-sale securities sold in the year ended March 31,
2019Millions of yen
2019
Amount sold
Gains

Equity securities
Bonds
Japanese government
bonds
Corporate bonds
Other
Total

¥

Losses

7,760
84,039¥4,964
262

¥

0
86

77,9296,109
188,560¥280,360

255
7
4,014
¥9,24173
13
3,920¥4,0075 Securities impaired
Available-for-sale securities which have readily determinable fair values
are written down to the fair value, and the difference between theacquisition cost and the fair value is treated as loss for the fiscal year
(impairment (devaluation)) if the fair value has significantly deteriorated
from the acquisition cost, unless it is deemed that there is a possibilityof a recovery in the fair value. The amount of impairment (devaluation)

34

IYO BANK Annual Report 2020

(Notes to Money Held in Trust)
The following table summarizes the book values (fair values) andamounts of net unrealized gains and losses for money held in trust
included in profit and loss for the fiscal year.
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2020

2020

2019

¥2,992¥2,994$27,492

¥

¥

$

8
4,081
3,821
260
260
—

(0)
3,500
2,974
526
526
—

73
37,49835,109
2,389
2,389
—

(Notes to Net Unrealized Holding Gains (losses) on Securities)
Unrealized holding gains on securities were as follows:
Millions of yen

Valuation gains
Available-for-salesecurities
Other money held in
trust
Deferred tax liabilities
Net unrealized holding
gains on securities(before adjustment forminority interests)
Noncontrolling interests
Net unrealized holding
gains on securities

Thousands of
U.S. dollars(Note 1-1)

2020

2019

2020

¥250,097¥237,807

260
76,747526(72,771)

173,610
6,835

165,562(4,866)

1,595,240
62,804¥166,775¥160,696$1,532,435$2,298,052
2,389
705,200

(Notes to Derivative Transactions)
At March 31, 2020
1 Derivative transactions to which hedge accounting was not applied
Derivative transactions to which hedge accounting was not applied are set forth in the tables below.
These items do not reflect the market risk of the derivative transactions themselves.
(1) Interest rate contracts

Contract
amountOver-the-counter transactions:Swaps:
Receive fixed rate and pay
floating rate
Receive floating rate and pay
fixed rate
Total

Millions of yen
2020
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Thousands of U.S. dollars (Note 1-1)
2020
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)¥61,085¥60,306¥ 2,149¥ 2,149$561,288$554,130$ 19,746$ 19,746

61,085—60,306—(1,523)¥ 625(1,523)¥ 625

561,288—554,130—(13,994)$ 5,742(13,994)$ 5,742

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.
(2) Currency and foreign exchange contracts

Contract
amountOver-the-counter transactions:
Currency swaps
Forward exchange contracts:
Sell
Buy
Currency options:
Sell
Buy
Total

Millions of yen
2020
Portionmaturing over
one year
Fair value¥439,183¥355,276¥

283,411404,592

109,966
21,79580,06080,060—55,62555,625—174

Recognized
gains(losses)¥Thousands of U.S. dollars (Note 1-1)
2020
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)

174$4,035,495$3,264,504$ 1,598$ 1,598(3,398)166(3,398)166

2,604,162
3,717,651

1,010,438
200,266(31,223)
1,525(31,223)
1,525(2,340)2,340¥(3,057)584
72¥(2,399)735,642735,642—

511,118
511,118—(21,501)
21,501$(28,089)

5,366
661
$(22,043)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on discounted present value.
(3) Credit derivatives

Contract
amountMillions of yen
2020
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Thousands of U.S. dollars (Note 1-1)
2020
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)Over-the-counter transactions:Credit default swaps
Sell
Buy
Total

¥1,000——¥1,000
—
—

¥(8)
—
¥(8)

¥(8)
—
¥(8)

$9,188——$9,188
—
—

$(73)
—
$(73)

$(73)
—
$(73)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.
(4) Others

Contract
amountMillions of yen
2020
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Thousands of U.S. dollars (Note 1-1)
2020
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)Over-the-counter transactions:
Earthquake derivatives
Sell
Buy
Total

¥2,440
2,440
—

¥—
—
—

¥(40)
40
—

¥—
—
—

$22,420
22,420—$———$(367)
367
—

$—
—
—

Transactions above for which the values were not readily determinable are stated at cost.

IYO BANK Annual Report 202035

2 Derivative transactions to which hedge accounting was applied
Derivative transactions to which hedge accounting was applied are set forth in the tables below.
These items do not reflect the market risk of the derivative transactions themselves.
(1) Interest rate contracts

Hedgeditems

Millions of yen
2020
Portionmaturing over
one yearContract
amountHedgeditems

Fair value

Thousands of U.S. dollars (Note 1-1)
2020
PortionContract
maturing overamountone year
Fair value

Method of hedge
accounting
Interest rate swaps
Receive fixed rate
and pay floating rate Loans
Receive floating rate
and pay fixed rate
—

Total

¥—

¥—

¥—

100,494—

100,494
—

(98)
¥(98)

—

$—

$—

$—

923,403—

923,403—(900)$(900)

1 The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry Audit Committee Report No, 24, February 13,
2002, “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”
2 The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.

(2) Currency and foreign exchange contracts

Hedged items

Method of hedge accounting
Currency swaps
Fund related swaps
Total

Foreign currency
monetary assets

Contract
amount¥149,709
213—

Millions of yen
2020
Portionmaturing over
one year¥127,728——

Fair value¥1,062(3)¥1,059Thousands of U.S. dollars (Note 1-1)
2020
PortionContract
maturing overamountone year
Fair value$1,375,622
1,957—$1,173,646——$9,758(27)$9,730

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry Audit Committee Report No. 25,
July 29, 2002, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.”
The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.
At March 31, 2019
1 Derivative transactions to which hedge accounting was not applied
Derivative transactions to which hedge accounting was not applied are set forth in the tables below.
These items do not reflect the market risk of the derivative transactions themselves.
(1) Interest rate contracts

Contract
amountOver-the-counter transactions:Swaps:
Receive fixed rate and pay
floating rate
Receive floating rate and pay
fixed rate
Total

Millions of yen
2019Portionmaturing over
one year
Fair value

Recognized
gains(losses)¥50,901¥33,985¥1,035¥1,03550,890—33,985
—

(847)
¥ 187

(847)
¥ 187

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.

36

IYO BANK Annual Report 2020

(2) Currency and foreign exchange contracts
Millions of yen
2019Portionmaturing over
one year
Fair value

Contract
amountOver-the-counter transactions:
Currency swaps
Forward exchange contracts:
Sell
Buy
Currency options:
Sell
Buy
Total

¥547,099¥420,837

123,538
87,327
69,154
69,154—¥

Recognized
gains(losses)

166

¥ 166

13,781
13,882

479
241

479
241

50,20850,208—(2,200)
2,200
¥ 888

376
213
¥1,478The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on the discounted present value.
(3) Credit derivatives
Millions of yen
2019Portionmaturing over
one year
Fair value

Contract
amountRecognized
gains(losses)Over-the-counter transactions:Credit default swaps
Sell
Buy
Total

¥1,000——¥1,000
—
—

¥ (4)
—
¥ (4)

¥ (4)
—
¥ (4)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.
(4) Others
Millions of yen
2019Portionmaturing over
one year
Fair value

Contract
amountRecognized
gains(losses)Over-the-counter transactions:
Earthquake derivatives
Sell
Buy
Total

¥2,260
2,260
—

¥—
—
—

¥(37)
37
—

¥—
—
—

Transactions above for which the values were not readily determinable are stated at cost.

2 Derivative transactions to which hedge accounting was applied
Derivative transactions to which hedge accounting was applied are set forth in the tables below.
These items do not reflect the market risk of the derivative transactions themselves.
(1) Interest rate contracts
None(2) Currency and foreign exchange contracts

Hedged item

Method of hedge accounting
Currency swaps
Fund related swaps
Total

Foreign currency
monetary assets

Contract
amount¥161,992
36,510—Millions of yen
2019Portionmaturing over
one year¥116,336——

Fair value¥(4,507)13¥(4,494)

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry Audit Committee Report No. 25,
July 29, 2002, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.”
The fair value was calculated based on the discounted present value.

IYO BANK Annual Report 2020

37

(Notes to Retirement Benefits)
1 Outline of retirement and severance benefits plans
The retirement benefit plans of the Bank consist of a defined benefit
corporate pension fund plan and a retirement lump-sum grant system.
Extra retirement benefits may be paid upon the retirement of employees.
In addition, the Bank set up a retirement benefit trust. On April 1, 2014,
the Bank transformed its corporate pension fund plan to a cash balance
plan and established a defined contribution pension plan. Consolidated
subsidiaries use the simplified method in calculating net defined benefit
liability and retirement benefit expenses for their retirement lump-sum
grant systems.
2 Defined benefit plan
(1) Reconciliation of retirement benefit obligations between the
beginning and the end of the period
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Retirement benefit
obligations at the
beginning of the period
Service cost
Interest cost
Actuarial differences
incurred
Retirement benefits paid
Prior service cost
Retirement benefit
obligations at the end of
the period

2020

2019

2020

¥73,5812,402
116¥66,6162,178
154$676,109
22,071
1,065(981)(3,086)—

7,866(3,233)—(9,014)(28,356)—

72,032661,876

73,581(2) Reconciliation of pension assets between the beginning andthe end of the period
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Pension assets at the
beginning of the period
Expected return on
pension assets
Actuarial differences
incurred
Employer’s contributions
Retirement benefits paid
Pension assets at the endof the period(3) Reconciliation of retirement benefit obligations and pension
assets at the end of the period to net defined benefit liability
and net defined benefit asset in the consolidated balance
sheetsThousands of
U.S. dollars(Note 1-1)

Millions of yen

Retirement benefit
obligations of thesavings plan
Pension assets
Retirement benefit
obligations of thenon-savings plan
Net liabilities and assets
recorded on the
consolidated balance sheets
Net defined benefit liability
Net defined benefit asset
Net liabilities and assets
on the consolidatedbalance sheets

2020

2019

2020

¥ 71,619(78,279)(6,660)¥ 73,200(78,800)(5,600)$ 658,081(719,277)(61,196)

413

381

3,794

(5,218)(6,247)
12,487(18,734)

12,281(17,500)(57,401)
114,738(172,140)(6,247)(5,218)(57,401)(Note) Pension assets include assets in the retirement benefit trust.

(4) Retirement benefit cost and its breakdown
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Service cost
Interest cost
Expected return on
pension assets
Recognized actuarial
differences
Amortization of priorservice cost2020
¥ 2,209116

2019¥ 1,989154

2020$20,297
1,065(1,051)(1,028)(9,657)

(388)

(107)

(3,565)

(597)
289

(597)
410

(5,485)
2,655

2020

2019

2020

¥78,800¥77,278$724,065

1,051

1,028

9,657

(Note 1) Retirement benefit costs of consolidated subsidiaries using thesimplified method are included in “Service cost.”(Note 2) Employee contribution to the corporate pension fund is deducted from“Service cost.”(2,052)
2,722(2,242)94
2,579(2,181)(18,855)
25,011(20,600)(5) Remeasurements of defined benefit plans
The breakdown of items included in remeasurements of defined benefit
plans (before applicable tax effects) was as follows:

78,27978,800719,277

Thousands of
U.S. dollars(Note 1-1)

Millions of yen(Note) Pension assets include assets in the retirement benefit trust.

Prior service cost
Actuarial differences
Total

2020
¥ (597)(1,459)(2,056)2019¥ (597)(7,878)(8,475)2020$ (5,485)(13,406)(18,891)(6) Remeasurements of defined benefit plans
The breakdown of items included in remeasurements of defined benefit
plans (before applicable tax effects) was as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Unrecognized prior service
cost
Unrecognized actuarial
differences
Total

38

IYO BANK Annual Report 2020

2020

2019

2020

¥(2,656)¥(3,253)$(24,405)

3,592
935

2,132
(1,120)33,005
8,591

(7) Pension assets① Pension asset portfolio
Bonds
Equity securities
Other
Total

2020
52.3%
40.1%
7.6%
100.0%

2019
50.9%
42.1%
7.0%
100.0%(Note) 29.8% of the total pension assets as of March 31, 2020 (29.7% as ofMarch 31, 2019) represent assets in the retirement benefit trust for the
corporate pension fund, 3.6% of which as of March 31, 2020 (3.6% asof March 31, 2019) corresponds to the lump-sum grant system.

②	Determination of the long-term expected rate of return on pension
assetsThe long-term expected rate of return on pension assets is determinedbased on the average investment yield on the pension assets for the past
three years. When the average rate is below 1.25% or above 2.0%, it isstated as 1.25% and 2.0%, respectively.

(8) Actuarial assumptions
The weighted average rate for assumptions used for the actuarial
computation of the retirement benefit obligations for the years ended
March 31, 2020 and 2019 were as follows:
2020
2019
Discount rates
Retirement lump-sum
grant system
0.00%
0.00%
Corporate pension
fund plans
0.30%
0.20%
Long-term expected
return on assets
Pension assets ofcorporate pension fund
2.00%
2.00%
Retirement benefit trust(Retirement lump-sum
grant system andcorporate pension
fund plans)
0.00%
0.00%
(Note) A point system is applied to the substantive portion of the retirement
lump-sum grant system and a cash balance plan to defined benefit
corporate pension fund plans, respectively. The “Estimate rate of salary
increase” is not disclosed due to the insignificant impact it would haveon the calculation of retirement benefit obligations.

3 Defined contribution plan
The amount of required contribution by the Bank to the defined
contribution plans was ¥338 million ($3,105 thousand) and ¥340 million
at March 31, 2020 and 2019, respectively.
(Notes to Stock Options)
1 Stock options to be expensed
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2020
General and administrative
expenses

2020

2019
¥—

¥30

$—

(Note)At the 115th Ordinary General Meeting of Shareholders held on Jun. 28, 2018, the Bank abolished compensation type stock options and introduced a sharebased payment system using the trust.
In line with the introduction of this system, the Bank will not grant new stock options. However, the unexercised stock acquisition rights already granted as
stock options will continue to exist.

2 Outline of stock options and changes(1) Outline of stock options
2017
2016
2015
2014
2013
2012
2011
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Title and number
Directors of the
Directors of the
Directors of the
Directors of the
Directors of the
Directors of the
Directors of theof grantees
Bank: 8
Bank: 7
Bank: 7
Bank: 16
Bank: 18
Bank: 17
Bank: 17
Executive Officers Executive Officers Executive Officers Executive Officersof the Bank: 12of the Bank: 15of the Bank: 14of the Bank: 4
Number of stock
Common shares: Common shares: Common shares: Common shares: Common shares: Common shares: Common shares:
options (*)
140,900
184,600
79,500123,100
140,900
199,500
156,800
Grant dateJuly 14, 2017
July 15, 2016
July 15, 2015
July 16, 2014
July 16, 2013
July 17, 2012
July 15, 2011
Conditions for vesting
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Requisite service
period
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Exercise period
July 15, 2017 to July 16, 2016 to July 16, 2015 to July 17, 2014 to July 17, 2013 to July 18, 2012 to July 16, 2011 toJuly 14, 2047
July 15, 2046
July 15, 2045
July 16, 2044
July 16, 2043
July 17, 2042
July 15, 2041(*) Reported in terms of shares of stock

IYO BANK Annual Report 202039

(2) Stock options granted and changes
The table below represents stock options outstanding at the year-end and the number of stock options is converted into the number of stock.
① Number of stock options
2017
Stock Options
shares

2016
Stock Options
shares2015
Stock Options
shares2014
Stock Options
shares2013
Stock Options
shares2012
Stock Options
shares2011
Stock Options
shares114,300——
23,70090,600119,100——
29,30089,80045,700——10,50035,20058,600——16,50042,10047,500——15,60031,90062,000——15,20046,80034,100——6,300
27,800—23,70014,700—9,000—
29,30018,200—
11,100—10,500
5,600
—
4,900

—
16,500
8,800
—
7,700

—
15,60010,400—5,200—
15,200
7,600
—
7,600

—
6,300
—
—
6,300

2016
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥552 ($5)
per share2015
Stock Options
Yen (U.S. dollars)¥
1 ($0)
per share¥ 552 ($5)
per share2014
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥552 ($5)
per share2013
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥552 ($5)
per share2012
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥552 ($5)
per share

2011
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share

Average exercise
price

2017
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥552 ($5)
per share

Fair value at the
grant date

¥867 ($7)
per share¥601 ($5)
per share¥1,473 ($13)
per share¥989 ($9)
per share¥918 ($8)
per share¥550 ($5)
per share¥704 ($6)
per share

Before vesting
Previous fiscal
year-end
GrantedForfeited
VestedOutstanding
After vesting
Previous fiscal
year-end
VestedExercised
Forfeited
Exercisable② Price information

Exercise price(Notes to Income Taxes)
1 Significant components of deferred tax assets and liabilities
were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Deferred tax assets:
Excess reserve for loan
lossesNet defined benefit
liability
Reserve for losses on
repayments on dormant
bank accounts
Impairment loss on land
Excess depreciation
Accrued employees’
bonuses
Write-down of securities
Other
Valuation reserve
Total deferred
tax assets
Deferred tax liabilities:
Unrealized holding
gains on securities
Deferred gains on real
property
Retirement benefit
asset
Total deferred
tax liabilities
Net deferred tax liabilities:

2020

2019

2020

¥ 13,900¥ 13,171$ 127,722

774

966

7,112

730
648
548

1,049
576
541

6,707
5,954
5,035

504
440
1,933
(937)

507
406
2,726
(990)

4,631
4,043
17,761(8,609)18,543

18,956

170,385¥(76,674)¥(72,689)$(704,530)

(898)

(904)

(8,251)(347)—(3,188)(77,921)¥(59,377)(73,593)¥(54,637)(715,988)$(545,594)

2 A reconcilliation of the statutory tax rate and effective
tax rate for the years ended March 31, 2020 and 2019 is asfollows:
Statutory tax rate
(Adjustments)
Entertainment expenses
and other expenses notdeductible permanently
for income tax purposes
Dividend income and otherincome excluded
permanetly for income tax
purposes
Valuation reserve
Other
Effective income tax rate

2020
30.5%

IYO BANK Annual Report 2020

2019
—

0.4%

—

(1.4%)(0.5%)(0.4%)
28.5%

—
—
—
—

For the fiscal year ended March 31, 2019, a reconciliation of thestatutory tax rate and the effective income tax rate is not stated as thedifference between the two was less than 5% of the satutory tax rate.

(Notes to Business Combinations, etc.)
Transactions under common control
Additional acquisition of shares in subsidiaries
1 Summary of transaction(1) Combined entity’s name and businessIyogin Regional Economy Research Center, Inc. (research anddevelopment of industries, economics, finance, etc.)
Iyogin Computer Service Company Limited. (outsourced information
processing, software development, etc.)(2) Date of business combination
March 31, 202040—

(3) Legal form of business combination
Acquisition of shares from non-controlling shareholders(4) The Name of company
The names remain the same after the business combination.
(5) Other matters concerning the outline of transaction
The Company acquired a portion of the shares held by non-controllingshareholders in order to strengthen governance and group management.

(Notes to Asset Retirement Obligations)
The total amount of asset retirement obligations is not significant and istherefore omitted.
(Notes to Real Estate for Rent)
The total amount of real estate for rent is not significant and is therefore
omitted.

2 Accounting method
In accordance with the “Business Combination Standards” (ASBJ
Statement No. 21, Jan. 16, 2019) and the “Guidelines for the
Application of the Business Combination Standards and the BusinessSeparation Standards” (ASBJ Statement Application Guideline No. 10,
Jan. 16, 2019), we treat trading with entities under common control thesame as trading with non-controlling shareholders.
3 Additional acquisition of shares in subsidiary
Consideration paid for acquisition : Cash and due from banks in theamount of ¥1,313 million
4 Changes in portion held by the Company in connection withthe transactions with non-controlling interests(1) Main reasons for changes in capital surplus
Additional acquisition of subsidiary’s share(2) Increase in capital surplus due to transations with noncontrolling interest¥2.966 billion(Notes to Segment Information)
1 Summary of reportable segments
Reportable segments are components of the Bank and its consolidated subsidiaries for which separate financial information is available and is subject toperiodic examination by the Board of Directors to determine the allocation of management resources and assess performances.
The Bank and 16 consolidated subsidiaries (15 consolidated subsidiaries as of March 31, 2019) are engaged mainly in the financial services businessthat includes commercial banking services and leasing services. Therefore, the Bank and its consolidated subsidiaries’ reportable segments comprise‘Commercial Banking’ and ‘Leasing’ and are distinguished by the financial services provided. ‘Commercial Banking’ includes deposit services, lending
services, securities investment services and exchange services. ‘Commercial Banking’ represents the Bank’s banking services as well as the consolidated
subsidiaries’ business support services, credit guarantee services, credit card services, securities trading services and fund management services. ‘Leasing’
includes leasing services by Iyogin Leasing Company Limited, one of the consolidated subsidiaries.
2 Methods used to calculate ordinary income, profit and loss, amounts of assets, debt and other items by reportable segment
The accounting policies described int the Note in (Basis of Presenting Consolidated Financial Statements) have been adopted for the reportablesegments. Reportable segment profit corresponds to ordinary profits. Ordinary income arising from intersegment transactions is based on arm’s length
prices.

IYO BANK Annual Report 202041

3 Information about reported ordinary income, profits and losses, amounts of assets, debts and other items
Segment information as of and for the years ended March 31, 2020 and 2019 was as follows:
Millions of yen
2020
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment debt
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gain on disposal of noncurrent assets
Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Provision of reserve for financial products
transaction liabilities
Tax expense
Increase in tangible fixed assets
and intangible fixed assets

Total

Other
businesses¥ 107,088
655¥ 107,743¥ 28,530¥7,769,824¥7,114,784¥16,905454¥17,359¥ 709¥61,069¥39,954¥ 123,993
1,109¥ 125,102¥ 29,239¥7,830,894¥7,154,739¥ 2,513
1,871¥ 4,384¥ 124¥12,515¥ 6,002

¥

¥

¥

¥

4,928
79,596
13,207
39
(39)
986
(127)
(858)

25
120
120
—
—
—
—
—

4,954
79,716
13,328
39
(39)
986
(127)
(858)

Total

¥ 126,506
2,980¥ 129,487¥ 29,364¥7,843,410¥7,160,742

74 ¥
4
5
—
—
73
(0)
(72)

5,029
79,721
13,333
39
(39)
1,060
(128)
(931)

Adjustments

Consolidated
total

¥—
(2,980)¥ (2,980)¥48¥(47,855)¥(37,035)¥ 126,506—¥ 126,506¥ 29,413¥7,795,554¥7,123,706¥(140) ¥
(119)
(106)
—
—
—
—
—

4,888
79,601
13,226
39
(39)
1,060
(128)
(931)

—
7,805

—
234

—
8,039

(0)
56

(0)
8,096

—
3

(0)
8,099

5,695

4

5,699

61

5,761

(79)

5,682

Notes:
1. Ordinary income is presented as the counterpart of sales of companies in other industries. The difference between ordinary income and operating income in the
consolidated statement of income is in “Adjustments.”
2. “Other businesses” includes software development and information processing not included in the reportable segments.
3. Adjustments are as below.
(1) Adjustment of segment profit includes eliminations of intersegment transactions of negative ¥48 million ($441 thousand).
(2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥47,855 million ($439,722 thousand).
(3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥37,035 million ($340,301 thousand).
(4) Eliminations of intersegment transactions include adjustment of depreciation of negative ¥140 million ($1,286 thousand), adjustment of interest income receivedof negative ¥119million ($1,093 thousand), adjustment of interest expense paid of negative ¥106 million ($973 thousand), adjustment of tax expense ofnegative ¥3 million ($27 thousand) and adjustment of increase in tangible fixed assets and intangible fixed assets of negative ¥79 million ($725 thousand).
4. Segment profit is adjusted to ordinary income in the consolidated statement of income.
Millions of yen
2019
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment debt
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gain on disposal of noncurrent assets
Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Provision of reserve for financial products
transaction liabilities
Tax expense
Increase in tangible fixed assets and intangible
fixed assets

Total

Other
businesses¥ 107,879
537¥ 108,416¥ 28,362¥7,145,436¥6,512,183¥16,301
483¥16,784¥ 192¥55,124¥36,964¥ 124,180
1,021¥ 125,201¥ 28,554¥7,200,560¥6,549,148¥ 2,106
2,160¥ 4,266¥
71¥11,166¥ 4,646

¥

¥

¥

¥

4,484
78,126
11,555
5
(5)
533
(302)
(231)

32
106
124
—
—
—
—
—

4,517
78,232
11,679
5
(5)
533
(302)
(231)

Total

¥ 126,286
3,181¥ 129,468¥ 28,626¥7,211,726¥6,553,794

68 ¥
4
0
—
—
1
(0)
—

4,586
78,237
11,680
5
(5)
535
(303)
(231)

Adjustments

Consolidated
total

¥—
(3,181)¥ (3,181)¥32¥(46,071)¥(36,466)¥ 126,286—¥ 126,286¥ 28,658¥7,165,655¥6,517,327¥(156) ¥
(117)
(104)
—
—
—
—
—

4,430
78,119
11,575
5
(5)
535
(303)
(231)

—
8,265

—
59

—
8,325

(0)
51

(0)
8,376

—
(2)

(0)
8,374

7,535

1

7,536

73

7,610

(83)

7,526

Notes:
1. Ordinary income is presented as the counterpart of sales of companies in other industries. The difference between ordinary income and operating income in the
consolidated statement of income is in “Adjustments.”
2. “Other businesses” includes software development and information processing not included in the reportable segments.

42

IYO BANK Annual Report 2020

3. Adjustments are as below.
(1) Adjustment of segment profit includes eliminations of intersegment transactions of negative ¥32 million.
(2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥46,071 million.
(3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥36,466 million.
(4) Eliminations of intersegment transactions include adjustment of depreciation of negative ¥156 million, adjustment of interest income received of negative ¥117
million, adjustment of interest expense paid of negative ¥104 million, adjustment of tax expense of negative ¥2 million and adjustment of increase in tangible
fixed assets and intangible fixed assets of negative ¥83 million.
4. Segment profit is adjusted to ordinary income in the consolidated statement of income.
Thousands of U.S. dollars (Note 1-1)
2020
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers$ 983,993
Intersegment
6,018
Total
$ 990,011
Segment profit$ 262,151
Segment assets$71,394,137
Segment debt
$65,375,209
Other items
Depreciation$
45,281
Interest income received
731,379
Interest expense paid
121,354
Extraordinary income
358
Gain on disposal of noncurrent assets(358)
Extraordinary losses
9,060
Losses on disposal of fixed assets(1,166)
Impairment loss
(7,883)
Provision of reserve for financial products
transaction liabilities—
Tax expense
71,717
Increase in tangible fixed assets and intangible
fixed assets
52,329

Total

Other
businesses

Total

Adjustments

Consolidated
total$155,334 $ 1,139,327
4,171
10,190$159,505 $ 1,149,517$ 6,514 $ 268,666$561,141 $71,955,288$367,123 $65,742,341$ 23,091 $ 1,162,418
17,191
27,382$ 40,283 $ 1,189,809$ 1,139 $ 269,815$114,995 $72,070,293$ 55,150 $65,797,500$— $ 1,162,418(27,382)—$ (27,382) $ 1,162,418$441 $ 270,265$(439,722) $71,630,561$(340,301) $65,457,190

$

$

$

229 $
1,102
1,102
—
—
—
—
—

45,520732,481
122,466
358
(358)
9,060
(1,166)(7,883)

679 $
36
45
—
—
670
(0)
(661)

46,209732,527
122,512
358
(358)
9,739
(1,176)(8,554)

—
2,150
36

(1,286) $(1,093)
(973)
—
—
—
—
—

44,914
731,425
121,528
358
(358)
9,739
(1,176)(8,554)—73,867

(0)
514

(0)
74,391—27(0)74,41852,366560

52,935(725)

52,209(4) Related information
Information by service
Millions of yen
2020
Loans

Ordinary income customers¥58,321

Securities
investments

Otherbusinesses

Lease¥31,156¥16,905¥20,123

Total¥126,506

Millions of yen
2019
Loans

Ordinary income customers¥55,878

Securities
investments

Otherbusinesses

Lease¥34,058¥16,301¥20,048

Total¥126,286

Thousands of U.S dollars (Note 1-1)
2020
Loans

Ordinary income customers$535,890

Securities
investments

Otherbusinesses

Lease$286,281$155,334$184,903

Total$1,162,418

Millions of yen
2020
Reportable segments
Commercial
Banking
Leasing¥858

Impairment loss

Other
businesses

Total

¥—

¥858

¥72

Total

¥931

(Note) Amounts of “Elimination or common assets” are eliminations of intersegment transactions.
Millions of yen
2019
Reportable segments
Commercial
Banking
Leasing

Impairment loss

¥231

¥—

Other
businesses

Total

¥231

¥—

Total

¥231

IYO BANK Annual Report 2020

43

(Note) Amounts of “Elimination or common assets” are eliminations of intersegment transactions.
Thousands of U.S dollars (Note 1-1)
2020
Reportable segments
Commercial
banking
Leasing$7,883

Impairment loss

$—

Other
businesses

Total$7,883

Total

$661

$8,554

Account

Outstandingbalance(Millionsof yen)(Notes to Related Party Transactions)
For the year ended March 31, 2020
(1) Transactions between the Bank and related parties.
Directors or major individual stockholders

Type

Name

Capital(Millions
Location of yen)

Ability Center, Ehime
Companies inIncwhich a majority of voting
rights is owned Chuo Doryoku, Ehime
Inc.
by a director or
the director’s
Tatsumi Kogyo, Oita
close relatives
Inc.

Type

Name

¥55

Temporarystaffing—

Temporary Temporary
staffing
staffing¥ 2

50

Construction—

Banking

Loaing25

10Construction—

Banking

LoaingCapital(Thousandsof U.S.
Location dollars)

Ability Center,
Inc

Ehime
Companies inwhich a majority of voting
rights is owned Chuo Doryoku, Ehime
Inc.
by a director or
the director’s
Tatsumi Kogyo, Oita
close relatives
Inc.

Business

Transaction
amountOwnerships of(Millionsvoting rights (%) Relationship Transactionsof yen)Business$505

Temporarystaffing

459
91

—

¥—

Loans
and bills
discounted
Loans
25 and bills
discounted

Transaction
amount(Thousands
Ownerships ofof U.S.
voting rights (%) Relationship Transactions
dollars)—

Temporary Temporary
staffing
staffing$ 18

Construction—

Banking

Loaing229

Construction—

Banking

LoaingAccount—

Loans
and bills
discounted
Loans
229 and bills
discounted—
20
Outstandingbalance(Thousandsof U.S.
dollars)

$ —
—
183

(Notes)1. The conditions of the above transactions were the same as these of arm’s length transactions.
2. Loan transaction amounts were reported at the average balance for the period.
3. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.
4. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of parent of Chuo Doryoku, Inc.
and Tatsumi Kogyo, Inc.

(2) Transactions between consolidated subsidiaries of the Bank and related parties.
Directors or major individual stockholders

Type

Name

Companies inwhich a majority of voting
rights is owned
by a director or
the director’sclose relatives

Ability Center,
Inc

Type

Name

Companies inwhich a majority of voting
rights is owned
by a director or
the director’sclose relatives

Ability Center,
Inc

Capital(Millions
Location of yen)

Ehime

¥55

Capital(Thousandsof U.S.
Location dollars)

Ehime

$505

Business

Ownerships ofvoting rights (%) Relationship Transactions

Temporarystaffing

Direct Temporary Temporary
19.2% holding
staffing
staffing

Business

Temporarystaffing

Transaction
amount(Millionsof yen)¥28

Account

Otherliabilities

Transaction
amount(Thousands
Ownerships ofof U.S.
voting rights (%) Relationship Transactions
dollars)

Account

Direct Temporary Temporary
19.2% holding
staffing
staffing

Otherliabilities$257(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

44

IYO BANK Annual Report 2020

Outstandingbalance(Millionsof yen)¥0

Outstandingbalance(Thousandsof U.S.
dollars)$0For the year ended March 31, 2019(1) Transactions between the Bank and related parties.
Directors or major individual stockholders
Capital(Millions
Location of yen)

Type

Name

Companies inwhich a majority of voting
rights is owned
by a director or
the director’sclose relatives

Ability Center,
Inc

Ehime

¥55

Business

Ownerships ofvoting rights (%) Relationship Transactions

Temporarystaffing—

Temporarystaffing

Temporarystaffing

Transaction
amount(Millionsof yen)¥3

Account—

Outstandingbalance(Millionsof yen)¥—(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

(2) Transactions between consolidated subsidiaries of the Bank and related parties.
Directors or major individual stockholders
Capital(Millions
Location of yen)

Type

Name

Companies inwhich a majority of voting
rights is owned
by a director or
the director’sclose relatives

Ability Center,
Inc

Ehime

¥55

Business

Ownerships ofvoting rights (%) Relationship Transactions

Temporarystaffing

Direct Temporary
19.2% holding
staffing

Temporarystaffing

Transaction
amount(Millionsof yen)¥17

Account

Otherliabilities

Outstandingbalance(Millionsof yen)¥0(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

(Consolidated Supplementary Schedules)
1 BORROWED MONEY AND LEASE LIABILITIES
Borrowed money consisted of the following:Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Borrowings from banks
Lease liabilities(due within one year)
Lease liabilities(due after one year)

2020¥770,378

2019¥365,8562020$7,078,728

252

288

2,315

502

627

4,612

The weighted average interest rates on the outstanding balances at
March 31, 2020 and 2019 were as follows:
2020
2019
Borrowings from banks
0.32%
0.39%
Lease liabilities(due within one year)——
Lease liabilities(due after one year)——(Note) The “average interest rate“ is not shown for lease obligations because the
Bank uses a method in which amounts equal to the interest in the total
capital lease obligations are spread equally over each fiscal year of the lease
period.

IYO BANK Annual Report 202045

Independent Auditor’s Report
To the Board of Directors of The Iyo Bank, Ltd.:

OpinionWe have audited the accompanying consolidated financial statements of The Iyo Bank, Ltd. and its
consolidated subsidiaries (collectively referred to as “the Group"), which comprise the consolidated balance
sheet as at March 31, 2020, and the consolidated statement of income, statement of comprehensive income,statement of changes in net assets and statement of cash flows for the year then ended, and notes, comprising asummary of significant accounting policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2020, and its consolidated financial performanceand cash flows for the year then ended in accordance 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 Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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 statementsin 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 in accordance withaccounting principles generally accepted in Japan and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but todo so.
The audit and supervisory committee are responsible for overseeing the directors’ performance of their duties
including the design, implementation and maintenance of the Group’s financial reporting process.

46

IYO BANK Annual Report 2020

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 awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee 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 to influence the economic decisions ofusers 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, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

●	Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Group’s internal control.

●	

●	

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
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’s report 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 to cease to continue as a going concern.

●	

Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordancewith accounting standards generally accepted in Japan, the overall presentation, structure and content of
the consolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.

●	

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.

●	

We communicate with the audit and supervisory committee regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.

IYO BANK Annual Report 202047

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 and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2020 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
1-1 to the consolidated financial statements.

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 theCertified Public Accountants Act of Japan.

奥田

賢

㊞

Satoshi Okuda
Designated Engagement Partner
Certified Public Accountant

小池

亮介

㊞

Ryosuke Koike
Designated Other Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
July 31, 2020

48

IYO BANK Annual Report 2020

Nonconsolidated Balance Sheet (Unaudited)
The Iyo Bank, Ltd.
March 31, 2020

Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

ASSETSCash and due from banks
Receivables under resale agreements
Monetary claims purchased
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Reserve for loan losses
Foreign exchange
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Customers’ liabilities for acceptances and guarantees
Total assets¥ 718,427
355,563
8,173
727
4,948
1,707,613
4,756,637(26,847)
10,741
102,789
71,154
8,051
20,597
26,382¥7,764,961¥ 808,815—
10,921349
4,759
1,573,300
4,550,809(23,137)
7,164
74,78872,635
6,982
17,45235,937¥7,140,776$ 6,601,369
3,267,141
75,0986,680
45,465
15,690,645
43,707,038(246,687)
98,695
944,491
653,808
73,977
189,258
242,414$71,349,453

LIABILITIES AND NET ASSETS
Liabilities
Deposits
Call money
Payables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Foreign exchange
Borrowed money from trust account
Other liabilities
Accrued employees’ bonuses
Employees’ severance and retirement benefits
Reserve for losses on repayment of dormant bank accounts
Reserve for contingent losses
Reserve for share-based payment
Deferred tax liabilities
Deferred taxes on revaluation excess
Acceptances and guarantees
Total liabilities¥5,754,395
217,618
30,357
198,436
764,056295
28
53,8471,494
13,002
2,393
591
192
56,242
9,637
26,382
7,128,972¥5,712,677
178,31349,82076,968360,251249
31
30,427
1,511
12,9733,301
516
86
52,823
9,769
35,937
6,525,658$52,875,080
1,999,614
278,939
1,823,357
7,020,637
2,710
257
494,780
13,727
119,470
21,9885,430
1,764
516,787
88,550242,41465,505,577

Net assets
Common stock
Authorized — 600,000,000 shares
Issued — 323,775,366 shares
Capital surplus
Legal reserve
Other retained earnings
Treasury stock
Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on hedging instruments
Land revaluation excess
Stock acquisition rights
Total net assets
Total liabilities and net assets

20,948
10,48020,948406,442(6,611)
163,329792
19,315343
635,989¥7,764,961

20,948
10,48020,948392,106(6,683)
158,875(1,545)
19,590397
615,117¥7,140,776

192,483
96,296
192,483
3,734,650(60,746)
1,500,771
7,277
177,478
3,151
5,843,875$71,349,453

IYO BANK Annual Report 202049

Nonconsolidated Statement of Income (Unaudited)
The Iyo Bank, Ltd.
For the year ended March 31, 2020

Thousands of
U.S. dollars

Millions of yen

INCOMEInterest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Interest on receivables under resale agreements
Interest on receivables under securities lending transactions
Other interest income
Fees and commissions
Other operating income
Other income
Total income
EXPENSESInterest expense:
Interest on deposits
Interest on borrowings and rediscounts
Interest on payables under repurchase agreements
Interest on payables under securities lending transactions
Other interest expense
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses
Total expenses
Income before income taxes
Income taxes:
Current
Deferred
Net income

2020

2019

2020

¥ 54,574
23,323(6)
0
1,515
13,833
6,871
6,326
106,437¥ 52,834
23,770—62
1,327
13,5596,746
8,927
107,228$501,460
214,306(55)
0
13,920127,106
63,135
58,127
978,011

4,418
1,679
716
1,864
4,527
6,718
1,395
49,065
10,42380,811
25,626

3,549
1,802
625
1,308
4,267
6,495
3,868
49,7709,717
81,40725,821

40,595
15,427
6,579
17,12741,596
61,72912,818450,840
95,773
742,543
235,468

6,961
162¥ 18,502

7,035
523¥ 18,262

63,962
1,488$170,008

Yen

Basic net income per share
Diluted net income per share

50

IYO BANK Annual Report 2020

¥58.45
58.37

U.S. dollars¥57.71
57.61

$0.53
0.53

Nonconsolidated Statement of Changes in Net Assets (Unaudited)
The Iyo Bank, Ltd.
For the year ended March 31, 2020

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Millions of yen
Stockholders’ equity
Capital surplus
Other capital
Common stock Capital reserve
surplus¥20,948¥10,480

Total capitalsurplus¥—¥10,480

(5)

(5)

5

5

—

—

—

—

¥20,948¥10,480¥—¥10,480

Thousands of U.S. dollars
Stockholders’ equity
Capital surplus
Other capital
Common stock Capital reserve
surplus

Total capitalsurplus$192,483$96,296$ —$96,296

(45)

(45)

45

45

—

—

—

—

$192,483$96,296$ —$96,296

Millions of yen
Stockholders’ equity
Retained earnings
Other retained earnings
Retained
Total retained
Deferred gains
Generalearnings
Legal reserve on real property
earnings
reservebrought forward¥20,948¥2,059¥370,594(11)
14,000¥ 19,452¥413,054(4,435)(4,435)

11(14,000)
18,502——
18,502

Treasury stock

Total
stockholders’equity¥(6,683)¥437,800(4,435)

(0)
72
(5)
274

(5)
274

18,502
(0)
66
—
274

—

(11)

14,000347

14,33671

14,408¥20,948¥2,048¥384,594¥19,799¥427,390¥(6,611)¥452,208

IYO BANK Annual Report 202051

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Thousands of U.S. dollars
Stockholders’ equity
Retained earnings
Other retained earnings
Retained
Total retained
Deferred gains
Generalearnings
Legal reserve on real property
earnings
reservebrought forward$192,483$18,919(101)$3,405,255

128,640$178,737$3,795,405(40,751)(40,751)

101(128,640)
170,008——
170,008

(45)
2,517

(45)
2,517

Treasury stock

Total
stockholders’equity$(61,407)$4,022,787(40,751)

(0)
661

—
2,517

—

(101)

128,640

3,188

131,728652

132,389$192,483$18,818$3,533,896$181,925$3,927,134$(60,746)$4,155,177

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Valuationdifference
on availablefor-salesecurities

Deferred gains
and losses onhedges

Revaluation
reservefor land

Total valuationand translation
adjustments

Subscription
rights tosharesTotal net assets¥158,875¥(1,545)¥19,590¥176,919¥397¥615,117(4,435)18,502
(0)
66
274
4,453

2,338

(274)

6,517

(54)

6,463

4,453

2,338

(274)

6,517

(54)

20,871¥163,329¥792¥19,315¥183,437¥343¥635,989

Thousands of U.S. dollars
Valuation and translation adjustments

For the year ended March 31, 2020

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

52

IYO BANK Annual Report 2020

170,008(0)606

Valuationdifference
on availablefor-salesecurities

Deferred gains
and losses onhedges

Revaluation
reservefor land

Total valuationand translation
adjustments

Subscription
rights tosharesTotal net assets$1,459,845$(14,196)$180,005$1,625,645$3,647$5,652,090(40,751)

170,008
(0)
606
2,517
40,91721,483(2,517)59,882(496)

59,38640,91721,483(2,517)59,882(496)

191,776$1,500,771$7,277$177,478$1,685,537$3,151$5,843,875

For the year ended March 31, 2019

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

For the year ended March 31, 2019

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Millions of yen
Stockholders’ equity
Capital surplus
Other capital
Capital reserve
surplus

Commonstock¥20,948¥10,480

Total capitalsurplus¥—¥10,480

(56)

(56)

56

56

—

—

—

—

¥20,948¥10,480¥—¥10,480

Millions of yen
Stockholders’ equity
Retained earnings
Other retained earnings
Retained
Total retained
Deferred gains
Generalearnings
Legal reserve on real property
earnings
reservebrought forward¥20,948¥2,066(6)¥352,594

18,000¥23,627¥399,236(4,431)(4,431)

6(18,000)
18,262——
18,262

(56)
43

(56)
43

Treasury stock

Total
stockholders’equity¥(6,839)¥433,826(4,431)(232)
388

18,262
(232)
332
—
43

—

(6)

18,000(4,175)

13,817155

13,973¥20,948¥2,059¥370,594¥19,452¥413,054¥(6,683)¥437,800

Millions of yen
Valuation and translation adjustments

For the year ended March 31, 2019

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Reversal of deferred gains onreal property
Provision of general reserve
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Valuationdifference
on availablefor-salesecurities

Deferred gains
and losses onhedges

Revaluation
reservefor land

Total valuationand translation
adjustments

Subscription
rights tosharesTotal net assets¥163,880¥(1,240)¥19,634¥182,274¥467¥606,568(4,431)

18,262(232)332
43(5,005)

(305)

(43)

(5,354)(70)(5,424)(5,005)

(305)

(43)

(5,354)

(70)

8,549

¥158,875¥(1,545)¥19,590¥176,919¥397¥615,117

IYO BANK Annual Report 202053

Corporate Data
(As of March 31, 2020)

Year of Foundation
1878

Board of Directors and Corporate Auditors(As of June 26,2020)

Common Stock
Authorized 600,000,000 shares
Issued323,775,366 shares
Capital¥20,948 million

President

Kenji Miyoshi

Deputy President

Kenji Takata

Senior Managing Director

Tetsuo Takeuchi

Number of Stockholders
24,204

Managing Directors

Haruhiko Kono
Kensei Yamamoto

Directors(Audit and Supervisory
Committee Members)

Shiro Hirano
Kaname Saeki
Takeshi Ichikawa
Yasunobu Yanagisawa
Junko Miyoshi
Keiji Joko

Major Stockholders
NameJapan Trustee Services Bank, Ltd.
The Master Trust Bank of Japan, Ltd.
Nippon Life Insurance Company
Meiji Yasuda Life Insurance Company
Sumitomo Forestry Co., Ltd.
Sumitomo Life Insurance Company
Employee stock ownership of Iyo Bank
JP MORGAN CHASE BANK 385151 (Standing proxy Mizuho
Bank, Ltd. Settlement & Clearing Services Department)
Sompo Japan Nipponkoa Insurance Inc.
MUFG Bank, Ltd.

Shares(thousands)%

47,978
16,836
8,878
8,867
5,911
5,415
4,811
4,691

15.14
5.31
2.80
2.79
1.86
1.70
1.51
1.48

4,293
3,988

1.35
1.25

Number of Employees(The Iyo Bank, Ltd. and its Consolidated Subsidiaries)
3,109
Number of Branches
150 (Domestic 149, Foreign 1)

Senior Managing Executive Officers Kenji Morioka
Managing Executive Officers

Shinya Fujita
Yasuji Fujita
Masamichi Ito
Hiroshi Nagata
Keijiro Joko
Hirohisa Semba
Koichi Kihara

Executive Officers

Kazuya Chikata
Shinichi Doi
Seiji Komoda
Yoshiki Kume
Toshiki Hamaguchi
Yasumi Inada
Naoaki Fujita
Norihiko Kawasaki
Takashi Tokunaga

Directory(As of March 31, 2020)

Head Office
1, Minami-Horibata-cho, Matsuyama 790-8514
Tel: (089) 941-1141
http://www.iyobank.co.jp/

Singapore Branch
8 Marina View #15-02 Asia Square Tower 1, Singapore
018960, Singapore
Tel: (65) 6394-9830

International Division
Tel: (089) 931-9899
SWIFT Address: IYOBJPJTHong Kong Representative Office
Suite 801, The Hong Kong Club Building, 3A Chater Road
Central, Hong Kong
Tel: (852)2869-0466

Treasury and Foreign Exchange Department
Tel: (03) 3242-1801
SWIFT Address: IYOBJPJTShanghai Representative Office
Room 1603 Shanghai International Trade Center, 2201 Yan-an
Road (West), Shanghai 200336, People’s Republic of China
Tel: (021) 6270-7488

IYO BANK Annual Report 2020

55

HEAD OFFICE
1, Minami-Horibata-cho, Matsuyama 790-8514
Tel: (089) 941-1141
URL: http://www.iyobank.co.jp/

Printed in Japan