2019
Annual ReportCorporate Data (As of July, 2019)Name:

The Nomura Trust and Banking Co., Ltd.

Established:

August 24, 1993

Paid-in Capital: 35 billion yen
Outstanding
Shares:800,000 shares

Shareholder:

Nomura Holdings, Inc. (Number of shares held: 800,000 shares, holding
ratio: 100%)

Head Oﬃce:

2-2-2, Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan+81 (3) 5202-1600

Disclosure 2019
■ Message from the CEO ............................... 1■ Directors, Senior Managing Directors and Employees ... 16■ Overview of Our Business .......................... 2■ Business Description................................. 17■ Internal Control System ............................. 6■ Company History ....................................... 18■ Organizational Chart ................................ 15■ Financial Data............................................. 19

Issued in August 2019 by the Corporate Planning Department, The Nomura Trust and Banking Co., Ltd.

Message from the CEO

We sincerely appreciate your continuing support for The Nomura
Trust and Banking.

Message from the CEO

During the first half of the fiscal year, the Japanese economy
continued to face unforeseeable conditions, against abackground of an unstable overseas market environment andother factors, while the BOJʼs monetary policy, centered on yield
curve control and quantitative-qualitative easing, was continued.
During the second half of the ﬁscal year, the outlook remained
uncertain due to factors such as the inﬂuence of the Brexit negotiations and geopolitical risks, with
the Nikkei Stock Average temporarily falling below the ¥20,000 mark following concern over the
US‒China trade conflict, the partial government shutdown in the US, and other circumstances.
Against this backdrop, the Japanese economy showed a gradual recovery trend on a full-year basis,backed by an improvement in the employment and income environment, solid capital investment,
and other factors.
Under these circumstances, we, as a member of the Nomura Group, have followed Nomura's basic
philosophy of “placing clients at the heart of everything we do” and strengthened collaboration withother Group companies to offer high-quality products and services, while striving to expand ourbusiness.The investment trust assets under custody totaled 17.3194 trillion yen at the end of March
2019, due to high-quality trust services, client expansion, and other sales promotion eﬀorts; as a result,
the total trust balance was 21.6739 trillion yen.Due to strengthened sales promotion and further
increased collaboration with Nomura Securities, which is our banking agent, loan balance targeting
individual clients increased, and total loan balance was 601.5 billion yen at the end of March 2019.
Additionally, the volume of our inheritance-related services saw a steady increase.As a result of thesebusiness activities, for the ﬁscal year ended March 2019, we reported an ordinary proﬁt of 2.096 billion
yen and a net income of 1.359 billion yen.
As a member of the Nomura Group, we will further strengthen our relationship with other Nomura
Group companies, and strive to create new value for our clients by quickly capitalizing on changes
in markets and trends, in order to satisfy their increasingly sophisticated and diversiﬁed needs.
Furthermore, along with our efforts to promote opportunities for women in the workplace, we
ensure that the individual abilities of our diverse employees, with varied backgrounds, values, andother unique characteristics, are demonstrated eﬀectively in a variety of business settings.
As a bank with a trust business, we take the public nature of banking operation seriously, andcontribute to the smooth operation of finance by maintaining client trust and protecting ourdepositors. We are committed to operating a sound and well-regarded business by fulfilling our
responsibilities as a trust administrator. We appreciate your continuing support.
July 2019

Kenji Kimura
President and Chief Executive Oﬃcer

The Nomura Trust and Banking Co., Ltd. Disclosure 20191

Overview of Our Business
Key Management Indicators
Changes in Key Management Indicators
Item(Millions of yen)

FY2014FY2015FY2016FY2017FY2018

Profit and loss

Overview of Our Business

Ordinary income

29,576

26,28826,59725,907

24,810Net business profit

2,217

3,107

2,857

1,949

2,093

Ordinary profit

2,129

3,049

2,138

1,804

2,096

Net income

1,228

1,893

1,755

1,083

1,359

30,00035,00035,00035,00035,000Assets, liabilities and capital
Capital stock

600

800

800

800

800

Net assets

48,83560,567

61,58860,877

61,575

Total assets

1,202,925

2,552,876

1,381,347

1,289,563

1,475,334

Balance of deposits

517,881

1,846,875

751,084

818,364

981,328

Balance of loans

443,132

469,963458,238

529,275

601,520

Balance of securities

684,982

646,137

561,279

511,829

489,558

81,39275,70976,98576,09776,969

—

—

1,090

670

840

Issued stock (thousands)

Per share information
Net assets per share (yen)Annual dividends per share (yen)

2,048

3,145

2,194

1,354

1,699

Dividend payout ratio (%)——

49.66%

49.47%

49.43%

Number of employees

Net income per share (yen)

435

441

457

451

460

Non-consolidated capital
adequacy ratio (%)

12.95%

14.66%

16.51%

16.27%

16.99%

Return on equity (%)

2.54%

3.46%

2.87%

1.76%

2.22%

8,107

8,785

8,651

8,932

9,042

20,705,461

20,886,696

21,259,975

21,474,240

21,673,956

401,693451,414

329,081

303,222

319,1812,362,352

2,552,740

2,987,123

2,617,141

2,785,713

Trust accountTrust fees
Assets held in trust
Balance of loans and bills discounted
Balance of securities

2

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

1. Proﬁt Performance
Regarding the state of proﬁts, while net interest income increased by 3.724 billion yen from the last ﬁscal year, net otheroperating income decreased by 3.763 billion yen from the last ﬁscal year, and net fees and commissions also decreased by
673 million yen from the last ﬁscal year; therefore, gross operating proﬁt decreased by 602 million yen from the last ﬁscal
year, and net business proﬁt was 2.093 billion yen.
As a result, ordinary proﬁt was 2.096 billion yen and net income was 1.359 billion yen.

Item

(Millions of yen)

FY2018FY2014FY2015FY2016FY2017

16,971

18,625

17,635

16,96916,367

Trust fees

8,107

8,785

8,651

8,932

9,042

110

Net interest income

3,790

4,365

5,244

3,262

6,986

3,724

Net fees and commissions

1,140

3,245

2,271

2,003

1,329

(673)

9

5

2

0

—

0

3,923

2,221

1,465

2,771

(992)

(3,763)

Provision of general allowance forloan losses (deduction)

—

429

—

134

—

(134)

General and administrative expenses(excluding non-recurring expenses)

14,75315,087

14,77814,885

14,273(612)

Personnel expenses

4,888

5,218

5,213

5,282

5,236

(46)

Non-personnel expenses

9,337

9,222

8,857

8,975

8,466

(508)

527

646

707

628

570

(57)

2,217

3,107

2,857

1,949

2,093

143

(88)

(58)

(719)

(145)

2

148

Writing-off loans

—

—

(932)

—

—

—

Gain and loss on claims sold

—

—

—

—

(1)

(1)

Reversal of allowance
for loan losses (deduction)

75

—

409

—

142

142

Provision of specific allowance
for loan losses (deduction)

—

(2)

—

0

—

0

2,129

3,049

2,138

1,804

2,096

291

48

33

530

32

38

5

48

33

530

32

38

5

28

49

32

161

65

(96)

Loss on disposal of fixed assets

8

28

32

145

65

(80)

Impairment loss

—

—

—

16

—

(16)

Provision of contingency losses

19

20

—

—

—

—

Gross operating profit

Net trading income (loss)
Net other operating income

Taxes
Net business profit
Non-recurring profit (loss)

Ordinary profit
Extraordinary income
Other
Extraordinary loss

Net Increase (Decrease)

(602)

—

0

—

—

—

—

2,150

3,033

2,635

1,674

2,068

393

Income taxes-current

417

1,307

575

627

583

(44)

Income taxes-deferred (deduction)

503

(168)

304

(36)

126

162

921

1,139

879

591

709

117

1,228

1,893

1,755

1,083

1,359

276

Other
Income before income taxes

Total income taxes
Net income

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Overview of Our Business

Table of Proﬁt Performance3

Overview of Our Business
2. Status of Trust Assets
The balance of investment trusts remains over 17.3 trillion yen, as of the end of March 2019.
The total trust balance was 21.6 trillion yen.

Table of Balance of Trust Assets(Millions of yen)

Overview of Our Business

March 31,2015

March 31,2016

March 31,2017

March 31,2018

March 31,2019

Designated Money Trusts

759,433

792,270

621,927505,746

493,681Specified Money Trusts

1,052,514

1,324,153

1,599,972

1,509,603

1,578,833

105,551

77,29457,350

2,150

1,041

16,555,603

16,625,358

16,639,438

17,328,641

17,319,480

Pecuniary Trusts other than Money Trusts

273,968

200,830

197,010

199,866

252,469

Securities Trusts

487,747

523,145

1,071,924

968,234

1,064,651

Monetary Claims Trusts

23,054

20,225

16,339

4,582

3,719

Composite Trusts

1,447,586

1,323,418

1,056,013

955,415

960,077

Total

20,705,461

20,886,696

21,259,975

21,474,240

21,673,956

Liabilities

Pension Trusts
Investment Trusts

Ratio of Trust Assets
Composite Trusts
4.42%
Monetary Claims Trusts
0.01%
Securities Trusts
4.91%
Pecuniary Trusts otherthan Money Trusts
1.16%

Designated Money Trusts 2.27%
Specified Money Trusts 7.28%
Pension Trusts 0.00%(As ofMarch 31,
2019)

Investment Trusts
79.90%

4

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

3. Status of Capital Adequacy
The capital adequacy ratio at the end of March 2019 was 16.99% (domestic standard), maintaining a sound level.
Capital Adequacy Ratio on Non-consolidated Basis (Domestic Standard)
Item
[A]

Core capital: regulatory adjustments[B]

March 31,2016

March 31,2017

March 31,2018

March 31,2019

56,31859,641

60,116

60,79861,344

1,048

1,725

1,976

3,350

4,531

55,27057,916

58,13957,44756,813On-balance sheet items

359,964

342,137

300,688

305,374

291,400

Off-balance sheet items

24,616

13,594

11,758

10,688

7,617

CVA risks(divided by multiplying the capital requirement by 12.5)

13,140

7,908

7,048

3,538

3,416

Operational risks(divided by multiplying the capital requirement by 12.5)

28,802

31,16732,48433,42531,935426,523

394,807351,979

353,026

334,370

12.95%

14.66%

16.51%

16.27%

16.99%

Regulatory capital [C] (= [A] - [B])
Risk assets

Total
Capital adequacy ratio (domestic
standard)(= [C]/[D] x 100)

[D]

Overview of Our BusinessCore capital: instruments and reserves(Millions of yen)March 31,2015

(Note) Capital adequacy ratios are calculated with the formula speciﬁed in Notiﬁcation No. 19 of the 2006 Financial Services Agency, based on the provisions ofArticle 14:2 of the Banking Act.

Results of Main Business<Lending>
In addition to loans to corporate customers, we also extend loans broadly
to individual customers through loans secured by securities called“Nomura Web Loan” which is oﬀered via “Banking Service.”
The balance of loans as of the end of the current ﬁscal year stood at 601.5
billion yen.

Loan balance(Millions of yen)

Individual

700,000

Corporate

600,000

154,438

500,000

144,760
400,000

117,408

120,228

109,125300,000
200,000

334,006

352,555 338,009

384,515447,081

100,000

0March 31, March 31, March 31, March 31, March 31,
2015
2016
2017
2018
2019

(Note) Corporate includes loans to the trust account.

<Investment Trust Administration Business>

Balance of Investment trusts under custody(Billions of yen)

The balance of investment trusts under management decreased 9.1 billion
yen from the end of the previous ﬁscal year to 17,319 billion yen.
We received a qualified opinion in accordance with the Statement on
Standards for Attestation Engagements No.18 (SSAE 18) in an audit
performance by an independent auditor, and we are working hard tofurther improve the quality of our administrative operations.

17,40017,32817,31917,20017,00016,80016,60016,555

16,625

16,63916,40016,20016,000March 31, March 31, March 31, March 31, March 31,
2015
2016
2017
2018
2019

The Nomura Trust and Banking Co., Ltd. Disclosure 20195

Internal Control System – Management
Management StructureInternal Control System – Management

As a trust bank of Nomura Group, we are operating our business guided by the integrated strategy of Nomura Holdings, Inc. We have built a management
structure which delivers eﬃcient business operations in conformity with the business line of Nomura Group. Furthermore, by ensuring that our directors
and employees comply with the “Code of Ethics of Nomura Group,” we are promoting company management which is appropriate considering therelevant laws and regulations.
The Nomura Trust and Banking Co., Ltd. features a corporate structure with an audit and supervisory committee. We established the Board of Directors as
the body to decide on and to approve important management related matters. The Board of Directors makes decisions regarding our basic management
policy and the allotment of the duties and chain of command for the executive director. The Board entrusts decision-making related to business execution
to the president and representative director, who is also the executive director, in order to speed up the decision-making process.In addition, the Audit andSupervisory Committee, in which the majority of members are outside directors, performs audits of business execution, with the objective of strengthening
our management supervisory functions and improving our managerial transparency. Moreover, we regularly convene the Executive Management Board,chaired by the President and Representative Director, as a body to make decisions regarding, and to approve, important matters and proposals related tobusiness execution to facilitate the speedy execution of our business.The Audit and Supervisory Committee audits the suitability, validity and eﬃciencyof business operations and the execution of duties by the directors and senior managing directors by exercising its statutory authority and leveraging theexternal audit corporation as well as internal organizations. The methodology, progress of, and results of audits are reported to the Board of Directors on aregular basis. Our Audit and Supervisory Committee also collaborates with the Audit Committee of Nomura Holdings as necessary.Furthermore, we have
set up an Audit and Supervisory Committee Oﬃce with staﬀ members independent of business execution, in order to continue to ensure that the Audit
and Supervisory Committee can properly carry out its duties.
To enhance our internal control procedures, the following committees are established.
Deliberates and decides on important matters related to integrated risk management, based on risk
● Risk Management
appetite.
Committee:● ALM Committee:

Deliberates and decides on matters related to formulation and approval of the basic strategies for fundmanagement and procurement.

● New Products &Services Review
Committee:

Analyzes and evaluates the risks inherent in the provision of a new product or launch of a new businessand gives necessary information to the Executive Management Board when it is making decisions on
the provision of the new product or launch of the new business.

● Investment
Management
Committee:

In addition to deliberating and deciding on investment management policies for trust assets for which
the Bank has discretionary power, and the pros and cons of employing asset management companies
or incorporating investment products into the investment product lineup, as well as individual
management models, etc., also works to share data regarding performance and risk management
conditions of investment products, etc.

● Investment Audit
Committee:

In order to ensure the appropriateness of the management of trust assets for which the Bank has discretionary power, thisCommittee regularly veriﬁes the performance, risk management and status of interaction with customers. If necessary, it
recommends and instructs the Investment Management Committee to make improvements and keep all related parties
informed about matters.

● Compliance Committee: Deliberates and makes decisions on compliance with laws and other compliance-related corporate matters.
● Business Quality
Improvement
Committee:

Carries out measures to improve overall quality of administration, such as departmental selfinspections, as part of eﬀorts to build a highly eﬀective internal control system and improve the qualityof day-to-day operations and other business activities.

● Information Security
Committee:

Discusses and approves company-wide actions related to information security.

● Crisis Management
Committee:

Deliberates and makes decisions on the companyʼs crisis management measures.

● Operational Risk
Committee:

Deliberates and coordinates matters related to operational risks to facilitate appropriate and smooth
control of operational risks.

● Customer Protection
Committee

In order to protect legitimate interests and improve customer convenience we continue to enhance our customer explanation
management, customer support management, customer information management conﬂicts of interest management, andoutsourcing management.

● Speciﬁc Transaction
Committee

It is composed of members other than current or ex-members of Nomura Group and including external experts. It veriﬁes thatthe independence of bank management is secured when the Company management makes important decisions regarding
its business operations and submits the ﬁndings to the person authorized to make a decision regarding related matters.

Internal Audit System
We have established the Internal Audit Department, which is independent of all other operational divisions, to review the eﬀectivenessand adequacy of the internal control systems in business execution and risk management systems and to make recommendations for
improvement.
In light of the guidelines set forth by the Institute of Internal Auditors for internal audits, the Internal Audit Department identiﬁes thetype and degree of risks, draws up an annual internal audit plan in consideration of the depth and frequency of audits, and performs
eﬀective audits in accordance with the “Nomura Group Internal Audit Charter” and our “Internal Audit Charter.”
The results of audits are promptly reported to company management and the Audit and Supervisory Committee. Any issues
identiﬁed in the audits are communicated to the relevant operational divisions, so that follow-up for the corresponding situation
actions can be taken, in an eﬀort to further enhance the internal control system.
6

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Internal Control System – Compliance
Compliance Management System

Compliance Policy
As a member of Nomura Group, we strive to foster a corporate culture and build corporate ethics
focusing on compliance in conformity with the Code of Ethics of Nomura Group, and perform honest
and fair corporate activities without violating social norms.
1. Basic Stance Regarding Compliance
Constantly aware of the significance of our social responsibilities and public mission as a financial
institution, we regard the enhancement and establishment of a compliance system as one of ourforemost priority tasks for securing the soundness and appropriateness of operations, and we takeproactive steps to complete this task.
2. Individual Eﬀorts for ComplianceDirectors, senior managing directors and employees of the Company constantly strive to acquire
extensive knowledge, not only of laws and regulations required in business, but also social norms, andact in conformity with a higher level of corporate ethics.
3. Establishment of Social Credibility
We demonstrate our intention to perform honest and fair corporate activities focusing on compliancethrough our accountability to stakeholders, thereby establishing credibility as a member of society.

Internal Control System – Compliance

Constantly aware of the signiﬁcance of our social responsibilities and public mission as a ﬁnancial institution, we are determined
to provide high quality ﬁnancial services to customers in strict compliance with social norms as well as laws and regulations.
We regard compliance as one of the foremost priority management tasks and the Board of Directors has established the“Compliance Policy,” laying out our basic stance regarding compliance.
Furthermore, based on the above policy, the Executive Management Board established the “Compliance Regulations,” setting
initiatives for speciﬁc actions taken to put compliance into action.

In accordance with the “Compliance Regulations,” we have formed the Compliance Committee which, chaired by the president
and vice-chaired by the Compliance Oﬃcer appointed by the Executive Management Board, deliberates and makes decisions
regarding compliance related matters in the company. The details of discussions are regularly reported by the Chairman to
the Board of Directors, the Executive Management Board and the Audit and Supervisory Committee members. We draw up
the “Compliance Program” setting out objectives and various measures as an annual compliance action plan. This plan is thendeliberated and reviewed by the Compliance Committee and ﬁnally approved by Executive Managing Board. The progress andachievement status of the measures deﬁned in the “Compliance Program” are regularly reported to the Compliance Committee
and are also reported by the Chairman to the Audit and Supervisory Committee members.
In addition, the Compliance Officer convenes a compliance meeting, etc. for each division to review the progress andachievement status of compliance action plans drawn up by each department and discusses compliance-related issues with the
responsible executive oﬃcer and the heads of departments.
The Compliance Oﬃcer and the Compliance Control Department collaborate to control and manage compliance-related mattersof the Company, and each department appoints a Compliance Manager who promotes compliance activities. The ComplianceManager ensures that all employees pursue operations based on a compliance sprit and common sense and also monitors
compliance activities of the department in charge and makes regular reports to the Compliance Oﬃcer.

Policy on Antisocial Forces (Organized Crime)
Nomura Groupʼs policy is “not to deal with any antisocial force or group” under the “Code of Ethics of Nomura Group.”
We comply with this policy and have created a structure to eliminate antisocial forces. We promote eﬀorts to block dealings withthese forces.

The Nomura Trust and Banking Co., Ltd. Disclosure 20197

Internal Control System – Risk Management
Risk Management System

Internal Control System – Risk Management

We position enhancement of risk management as an important pillar of our management goals in order to ensure that ourmanagement is sound and appropriate.
By making disclosures in compliance with Basel Ⅲ and building an integrated risk management system, we comprehensively
look at various risks of the company and compare them against our management strength, thereby securing profits
commensurate with risks and appropriate allocation of management resources.

Risk Appetite
Appropriate risks to take and risk management are discussed by the Board of Directors and the Executive Management Board, andqualitative and quantitative risk appetites are determined, based upon which business strategies are drawn up.
In addition, we share Nomura Group's basic philosophy of “placing clients at the heart of everything we do,” and always work to operate
our business by putting our customer-oriented perspective (ﬁduciary duty) into practice.

Top Risk Management
The main types of risks that are considered highly inﬂuential in our business operations include• Liquidity risk,• Risk of portfolio damages with respect to banking accounts,• Risk of trust business operations not being performed in proper accordance with established procedures and standards,• System risk of cyber-attacks, and• Financial crime risk including money laundering etc,
among others.
These risks are discussed by the Executive Management Board and the Risk Management Committee to perform preventative risk
management.

Integrated Risk Management
The Board of Directors has formulated the “Integrated Risk Management Policy” as our basic risk management policy to establish
a proper management system of all risks. Based on this policy, the Executive Management Board has speciﬁed the “Regulations
on Integrated Risk Management” to clearly define and classify various risks and also determined various risk management
methodologies, thereby ensuring the eﬀectiveness of the rules.
To monitor risks, the Corporate Risk Management Department is established as a division responsible for integrated risk management
independent of the business promotion division. It is engaged in day-to-day integrated risk management activities under the guidance
and approval of the manager of the integrated risk management division. The integrated risk management division regularly reports
the status of risk management to the Executive Management Board, the Risk Management Committee and the Audit and Supervisory
Committee members. In addition, the Internal Audit Department reviews the appropriateness, validity and eﬃciency of risk management.
The risks deﬁned by the company consist of credit risk, market risk, operational risk, liquidity risk and the banking account interest rate risk.

Stress Tests
We perform comprehensive stress tests based on scenarios built around the impacts of possible signiﬁcant events, allowing us to perform
integrated risk evaluations, informing the Risk Management Committee, etc. Additionally, we also perform stress tests as necessary using
individual scenarios built around credit risk, market risk, and liquidity risk, in order to enhance our stress test-based risk management system.
Risk Management Classiﬁcation
Risk Classification
Credit Risk
Interest rate risk
Foreign exchange risk
Price fluctuation risk
Administrative risk
System risk
Information security risk
Legal and compliance risk
Operational Risk
Outsourcing risk
Human Risk
Tangible Risk
Other operational risks
Funding risk
Liquidity Risk
Market liquidity risk
Interest Rate Risk of Banking AccountMarket Risk
Integrated Risk
Management
Risk Control
Department

8

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Responsible Department
Corporate Risk Management Department
Corporate Risk Management Department
Operations Planning and Management Department
IT Planning & Control Department
Operations Planning and Management Department
Compliance Control Department
Operations Planning and Management Department
Human Resource and General Affairs Department
Human Resource and General Affairs Department
Corporate Risk Management Department
Corporate Risk Management Department
Corporate Risk Management Department

Risk Management Framework

Internal Control System – Risk Management

Credit Risk
Credit risk is deﬁned as the risk of incurring losses due to a decline or loss of the value of assets (including oﬀ-balance sheet
assets) as a result of deterioration of the ﬁnancial condition of debtors, etc. It also includes the risk of incurring losses due
to a serious decline or loss of the value of assets (including oﬀ-balance sheet assets) as a result of a series of deteriorationsof the ﬁnancial conditions of debtors, etc., owing to a heavy concentration of credit on a certain debtor or a certain groupwhich has close ﬁnancial ties with a certain debtor in comparison to our equity or management strength. This is called
credit concentration risk.
We have procedures and standards in place for controlling credit risks using risk diversiﬁcation and portfolio management
theories in accordance with the “Credit Risk Management Policy” and the “Credit Risk Management Regulations.” The
Corporate Risk Management Department centrally controls credit risk management activities and regularly reports thestatus of credit risk management to the Risk Management Committee.

Credit Rating System
Credit ratings are determined not only by conducting scoring based on a rating model using the ﬁnancial information of
debtors, but also by utilizing the latest important information available including qualitative information on managerial risk,
legal risk etc. which may aﬀect the conditions of debtors and external credit ratings or the credit standing of associatedcompanies . These ratings are classiﬁed into 20 levels.

Screening of Credit Proposals
Screening of each credit proposal is performed by the Credit and Trust Risk Management Department, which makes
accurate and rigorous credit decisions based on the credit ratings, fully taking account of our public and social missions as aﬁnancial institution to maintain soundness of the bankʼs assets.

Exposure (Credit Amount) Management
With the identification of exposure for each debtor or each group of debtors positioned as the core of credit risk
management, we centrally and comprehensively control not only loans but also other on-balance and oﬀ-balance items.
Oﬀ-balance sheet transactions are managed using the current exposure method. Based on the above, we measure andmonitor credit risk.

Self-Assessment
As for self-assessment of assets involving credits, we implement self-assessments through strict classiﬁcation of credits based on
debtor categorization linked to credit ratings, in accordance with the “Asset Assessment Standard,” and carry out proper write-oﬀs ofcredits and provide allowances using the accumulated default ratio for each credit rating, etc.

The Nomura Trust and Banking Co., Ltd. Disclosure 20199

Internal Control System – Risk Management
Market Risk

Internal Control System – Risk Management

Market risk is defined as a risk of incurring losses due to fluctuation of the value of assets and liabilities (including offbalance assets and liabilities) as a result of changes in market risk factors such as interest rates, foreign exchange rates andsecurity prices. Market risks consist of interest rate risk, foreign exchange risk and price ﬂuctuation risk.
To properly control market risks, the Risk Management Committee clariﬁes the basic concept of market risk management,
and we set position limits, VaR limits, loss-cut rule etc. accordingly. In addition, we have established the Corporate Risk
Management Department which, as an independent department responsible for company-wide market risk management,
monitors the positions and proﬁt and loss on a daily basis and reports the compliance status of limits etc.

Foreign Exchange Transactions
We operate our business guided by a policy of, whenever possible, avoiding taking market risks. Accordingly, we set theminimum required position limits and VaR limits.

Fund Transactions
For general banking transactions, we also measure the positions and VaR and monitor proﬁt and loss on a daily basis.

Operational Risk
Operational risk is defined as a risk of incurring losses owing to inadequate business processes, activities of directors
and employees or systems, or external events. As the department responsible for management of operational risks, theCorporate Risk Management Department plays a central role in deﬁning the risk categories to be managed and conducting
operational risk management through the Risk and Control Self Assessment (RCSA) activities and collection and analysis ofloss data, etc.

Administrative Risk
Administrative risk is deﬁned as the risk of incurring losses owing to directors or employees failing to perform accurate
administration or committing errors or fraud. Both directors and employees of the company understand that administrativerisk is present in all business activities, recognize the importance of mitigating administrative risks and take measuresappropriate to mitigate this risk. Specifically, the Operations Planning and Management Department plays a leadershiprole in ensuring consistent enhancement of the administrative procedures and systems, and each department provides
guidance and training on administration to ensure proper administrative procedures.
In addition, the Business Quality Improvement Committee, which is comprised of members from each department,
promotes eﬀective self-inspections and deliberates on and proposes actions to enhance business activities in general.

System Risk
System risk is defined as the risk of incurring losses due to system troubles such as a computer system breakdown
or malfunction and the risk of incurring losses due to an unauthorized use of computers. The IT Planning & Control
Department assumes the responsibility for managing and controlling systems. Fully aware that risks arising from system
troubles and cyber attacks etc. may aﬀect not only our company but the entire market, we establish operational procedures
and deﬁne the actions to be taken in an emergency.
Also, to secure continuous operation of business even in a time of emergency such as a disaster, we have built the BusinessContinuity Site (*) as an alternative oﬃce, and the Disaster Recovery Center (*) in a remote location, and have conducted
drills on a regular basis. (* Refer to Page 12.)

Information Security Risk
Information security risk is deﬁned as the risk of incurring losses due to a failure to maintain the conﬁdentiality, integrity andavailability of information assets and the environments for retaining and using information assets. We have established the“Information Security Basic Policy” to set clear policies on handling of information assets and information security as theguiding principles to be followed by directors and employees in their day-to-day activities. We try to reduce the information
security risk by conducting proper management of information assets, taking actions according to the level of importanceof information assets, imposing limits on the right of access to information assets and giving regular training etc. to both
directors and employees.
Moreover, we have set up the Information Security Committee to discuss company-wide measures for information security,
supervise the actions taken and their implementation status and make necessary improvements.

10

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Legal and Compliance Risk

Outsourcing Risk
Outsourcing risk, which exists when part of a companyʼs businesses is outsourced, is deﬁned as the risk of incurring losses
by non-performance of outsourced companies from the viewpoint of customer protection and appropriate operation, suchas not complying with the local legal requirements, etc. We have set standards for making decisions on whether or not
to outsource our operations and the selection of outsourcing companies and have a system in place for ensuring proper
management by regularly monitoring the status of business execution at the outsourcing companies.

Internal Control System – Risk Management

Legal and compliance risk is defined as the risk of incurring losses due to our failure to comply with required laws andregulations, internal rules, bylaws on business activities etc. and as the risk of incurring losses due to execution of business
inappropriate for the protection of customers.
We have established the Compliance Control Department that specializes in management of legal and compliance risksetc. to ensure compliance with laws and regulations. The ﬁnancial business has been becoming increasingly sophisticatedand complicated in recent years. Accordingly, the risks to be dealt with by ﬁnancial institutions are also becoming morediversiﬁed.
Amid such circumstances, confirming not only laws but also other regulations and social demands has come to play asigniﬁcant role. At The Nomura Trust and Banking, potential legal issues that may arise in the course of business are dealt
with properly, mainly by the Compliance Control Department.

Human Risk
We define human risk as the possibility of causing disadvantage through unequal, unfair, or discriminatory personnel
management behavior. To manage human risks, our Human Resource and General Aﬀairs Department takes a leading rolein performing proper management and administration of human resources for matters such as employment status, as wellas in providing education, training, and guidance in the workplace.

Tangible Asset Risk
We deﬁne tangible asset risk as the possibility of causing damage or loss of tangible assets through disasters or other phenomena.
To manage tangible asset risks, our Human Resource and General Aﬀairs Department takes a leading role in ascertaining thecurrent states of the companyʼs tangible assets, and works to prevent damage or loss caused by disasters or illegal conduct.

Other Operational Risks
Operational risks other than those listed above are categorized as other operational risks, and the department responsible formanagement of operational risks is considering necessary actions.

Liquidity Risk
Liquidity risk is deﬁned as the risk of incurring losses when we have diﬃculty securing necessary funds or are forced toraise funds at an interest rate much higher than the usual rates due to a mismatch between investment and procurement
periods or unexpected cash outﬂow, and as the risk of incurring losses when we are unable to execute trades due to amarket disruption or forced to accept trades at an extremely unfavorable price.
We try to reinforce our liquidity management framework and upgrade our management approach, and at the same time, we
operate business by paying adequate attention to liquidity. For example, the monthly Risk Management Committee and the ALM
Committee checks the fund positions and the market trend etc. for each product we oﬀer and then sets a policy for the future.
We also monitor the fund-raising status of both yen and foreign currencies and report to Risk Management Committee and
ALM Committee which meet on a monthly basis. Furthermore, we set modes according to the market liquidity etc. andspecify management standards for each mode, and manage fund positions accordingly.

Interest Rate Risk of Banking Accounts
Interest rate risk of banking accounts is defined as the risk of incurring losses owing to changes in asset values in thebanking accounts as a result of interest rate fluctuations. We perform appropriate monitoring and management byreporting the risk status to the Risk Management Committee , etc.

The Nomura Trust and Banking Co., Ltd. Disclosure 201911

Internal Control System – Risk Management
Business Continuity

Internal Control System – Risk Management

We believe that to ensure sustainable development of the company, it is essential to deal appropriately with various
disasters that may have a signiﬁcant impact on company management.
Our mission is “to ﬁrmly protect assets entrusted by customers” and to continue to be a trust bank that earns the conﬁdence
and trust of customers.
To attain this purpose, we are making the following eﬀorts to prepare for contingencies guided by the concept, “developing
a business continuity plan for sustaining day-to-day operations and securing necessary data (market information andinformation on transactions and trades, settlement of funds and securities, social and economic condition, etc.)

Organizational Structure
We have established the Crisis Management Committee to review various measures for emergencies including disasters,
cyberterrorism and serious accidents and give suggestions and make reports to the Executive Management Board.
The Crisis Management Committee discusses actions to be taken in a case where the oﬃces or systems are not available foruse due to a disaster or other events, and in the event of an emergency, the Committee is expected to play a central role as
an emergency headquarters.

Formulation of a Business Continuity Plan
We have formulated a Business Continuity Plan to ensure the smooth implementation of measures when a disaster or acyberterrorism has occurred.
In addition to a basic policy on disasters, deﬁnition of damage and disaster scenarios, the plan stipulates an organization to deal
with emergencies, measures of securing safety of personnel and assets, and measures of securing communication tools, etc. toprepare for an emergency.
Each department defines priorities and alternative means for continuing business in an emergency, creates a checklist andreviews its eﬀectiveness in a business resumption drill.

Enhancement of Infrastructure
We take the following actions to enhance facilities in accordance with the Business Continuity Plan:
Establishment of a Business Continuity Site (BCS)
We built a BCS for sustaining the core businesses in a case where we are unable to continue operations at the Head Oﬃceof The Nomura Trust and Banking.
The location of the site was selected after taking into account a number of conditions including ﬁrmness of the ground,
distance from the Head Oﬃce and being within a residential urban area.
Establishment of a Disaster Recovery Center (DRC)
The servers in the Data Center used in daily operation are made duplex, so if any server fails, it can be immediately switchedwithin the Data Center. We established a DRC at a location suﬃciently far from the Data Center as to back up the data incase the Data Center was aﬀected by wide-scale disaster.

Normal time :Head Office

Data Center

When the Head Office isaffected by a disaster :When the Data Center isaffected by a disaster :

BCS

DRC

Business Continuity Site

Disaster Recovery
CenterBusiness Resumption Drill Based on the Business Continuity Plan
We regularly conduct an evacuation drill to the BCS and a business resumption drill based on a disaster scenario createdfrom the viewpoints of time, location and scope of the disaster. We also perform a drill of the process of switching functions
to the DRC at least once a year.

12

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Internal Control System – Customer Protection Management

We have established the Management Policy for Customer Protection and the Management Policy for Conflicts ofInterests as basic policies concerning customer protection in order to protect legitimate interests and improve customer
convenience, and we strive to enhance and reinforce our customer protection management system. The manager incharge will be assigned for customer explanation management, customer support management, customer information
management, outsourcing management, and conflict of interest management to ensure the effectiveness of internal
procedure concerning customer protection.
We have also established the Customer Protection Committee, which reports the situation to the Executive Management
Board regularly or as needed. The Executive Management Board verifies the effectiveness of the customer protection
management system of the company and reviews it if necessary.

Conﬂicts of Interest Management System
We have formulated the “Conﬂicts of Interest Management Policy” to properly manage transactions which may unduly undermine
customersʼ interests. The “Conflicts of Interest Management Policy” specifies and categorizes transactions involving conflictsof interest that need to be managed and provides rules on the conﬂicts of interest management system including methods ofmanaging conﬂicts of interest.
For our “Conﬂicts of Interest Management Policy,” please visit our company Website at https://www.nomura-trust.co.jp/.
(Japanese version only)Internal Control System – Customer Protection Management

Customer Protection Management

Solicitation Policy
We have established the “Solicitation Policy” in accordance with the “Law on Sales of Financial Products” and otherapplicable laws, and appropriately solicit customers for our ﬁnancial products based on this Policy.
For details of the “Solicitation Policy,” please visit our website at https://www.nomura-trust.co.jp/. (Japanese version only)

Personal Information Protection Policy
We have established the “Personal Information Protection Policy” in accordance with the Act on the Protection of Personal
Information, and based on this policy, we take various steps necessary to prevent leakage of personal information and tosafely control personal information to pursue appropriate personal information management.
For details of the “Personal Information Protection Policy,” please visit our website at https://www.nomura-trust.co.jp/.
(Japanese version only)

Basic Policy for the Handling of Speciﬁc Personal Information
We have established the Basic Policy for the Handling of Speciﬁc Personal Information in accordance with the Act on the
Use of Number to Identify a Speciﬁc Individual in Administrative Procedures. We take various steps as necessary to preventthe leakage of personal information, and to safely control speciﬁc personal information to pursue appropriate personal
information management.
For details on the Basic Policy for the Handling of Speciﬁc Personal Information, please visit our website at https://www.
nomura-trust.co.jp/. (Japanese version only)Best Execution Policy
When we have received an order for securities listed on domestic ﬁnancial instruments exchanges as part of operations of aregistered ﬁnancial institution stipulated in the Article 33-2 of the Financial Instruments and Exchange Act, we make eﬀorts
to mediate the execution of trades in accordance with the “Best Execution Policy” in cases where no instruction regarding
execution of trades is given by our customer.
For details of the “Best Execution Policy,” please visit our website at https://www.nomura-trust.co.jp/. (Japanese version only)

Policy on Customer-Oriented Business Conduct
We have established the Policy on Customer-Oriented Business Conduct, and, as a trust bank of Nomura Group, we strive toprovide services that truly satisfy our customers, based on the dynamism generated through the fusion of banking, trust, andsecurities operations, and which are in accord with our basic philosophy of “placing clients at the heart of everything we do.”For details of our Policy on Customer-Oriented Business Conduct, please visit our website at https://www.nomura-trust.co.jp/. (Japanese version only)
The Nomura Trust and Banking Co., Ltd. Disclosure 201913

Internal Control System – Finance Facilitation
Status of efforts to improve management of small and medium-sized enterprises(SMEs) and to revitalize regional communities
Internal Control System – Finance Facilitation(1) Our policy regarding eﬀorts to support management of SMEs
Both Our directors and employees are aware of the public nature and social responsibility inherent in our operations andare committed to fully performing our ﬁnancial intermediary function properly and actively while giving consideration tosecuring sound and appropriate operation of our business. When we receive applications for a new loan and a change interms and conditions of loans etc. from SME customers, we examine them based on the ﬁnancial condition etc. of theseenterprises and give proper and adequate explanations to the customers. If necessary, we properly offer management
consulting and guidance services and support their eﬀorts to improve management.
In addition, with regard to personal guarantee of the president, we promote financings not dependent on personal
guarantee of the president and take appropriate measures for the existence of guarantee agreements when reasonable.

(2) Enhancement of internal systems to support management of SMEs
We have appointed the Finance Facilitation Manager who centrally controls our finance facilitation management
system. The Finance Facilitation Manager offers management consultation and guidance services to SME customers incollaboration with the sales promotion division and the credit examination division to support their businesses and also
assists in the preparation of management reorganization plans. As we support the management of SME customers, weproperly collaborate with certiﬁed tax accountants, lawyers, certiﬁed public accountants and other outside experts andorganizations while paying attention to our conﬁdentiality obligation.

(3) Status of eﬀorts to support management of SMEs and to revitalize regional communities
We deal with customer inquiries and consultations sincerely and honestly, and we contribute to revitalizing regional
communities by oﬀering the best possible solutions after assessing their life stages and the degree of sustainability of theirbusinesses etc. both appropriately and carefully, actively leveraging our professional expertise as well as our network withoutside experts and organizations as necessary.

14

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Organizational Chart■ Organizational Chart (As of July 1, 2019)

Organizational Chart

The Nomura Trust and Banking Co., Ltd. Disclosure 201915

Directors, Senior Managing Directors and Employees
Directors, Senior Managing Directors and Employees■ Directors and Executive Oﬃcers (as of July. 1, 2019)
Directors
Chairman of the Board of Directors

Yoshihiro Namura

Representative Director

Kenji Kimura

Director

Masaharu Kambe

Director

Takehisa Yanai

Director

Shoji Ogawa

Director

Chie Toriumi

Director

Toru Otsuka

Senior Managing Directors
President & CEO

Kenji Kimura

Senior Corporate Managing Director

Toshiyuki Ikeda

Marketing & Business Strategy

Senior Corporate Managing Director

Natsuki Gomi

Corporate

Senior Corporate Managing Director

Norihiko Nishino

Corporate

Senior Managing Director

Nobuaki Araki

Marketing & Client Relations

Senior Managing Director

Mitsuru Oki

Marketing & Client Relations

Senior Managing Director

Yuzuru Yanagawa

Business Strategy

Senior Managing Director

Yasuhito Tominaga

Trust Business, Business Process Re-engineering

Senior Managing Director

Ichiro Hashimoto

Investment Trust Business, IT■ Employees
March 31, 2015

March 31, 2016

March 31, 2017

Number of employees

435

441

457

Average length of service

5 years and 6 months

5 years and 1 month

6 years and 0 month

552

545

535

Average monthly salary (thousand yen)March 31, 2018

March 31, 2019

451

460

6 years and 10 months 7 years and 5 months
549

560

■ Rating Information (as of July 1, 2019)
S&P

16

JCR

R&I

Long Term

Short Term

Long-Term Issuer Rating

Long-Term Debt

Short-Term Debt

A

A-1

AA-

A+

a-1

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Business Description■ Trust Business■ Inheritance Business● Specified Money Trusts and Specified Pecuniary
Trusts Other Than Money Trusts
Trust in which the funds are managed and invested,mainly in securities, according to the instructions
provided by the trustors.

● Testamentary Trust BusinessWe p e r f o r m m a n a g e m e nt o f n o t a r i z e d w i l l s
produced by testators, conﬁrmation of inheritors andproduction of property inventories after executionof inheritance, execution of wills (changes in nameregistrations, cash conversion, etc.), and related tasks.

● Jointly Operated Designated Money Trusts
Money trusts in which the trust funds are managed
and invested jointly with other trust funds on thebasis of the same contract and provisions.
● Composite Trusts
Trust undertaken as a set of assets comprised of anumber of properties including securities and money.
● Investment Trusts
Trust in which funds are invested in securities, realestate etc. based on the instructions provided by thetrustors (investment trust management companies),with the beneficiar y rights being divided andsold to investors. Investment trust administration
service / business based on instructions given by
the investment trust management companies, we
conduct settlement by delivery and payment of
securities, rights handling, custody and compute thedaily net asset value and unit price of each fund.
We follow the instruc tions of investment trust
management companies in conducting delivery
settlements for marketable securities, rights handlingand custody operations. We also verify net asset value
and unit price of each fund.
● Securities Trusts
Trust in which securities are used to set up atrust. There are three t ypes of securities trusts
depending on the purpose of the trustors; (1)securities administration trusts which are designed
to administer securities, (2) securities management
trusts for the purpose of management, and (3)securities disposition trusts for the purpose of
securities disposition.

● Inheritance Arrangement Business
After confirming inheritors, we provide support inproducing property inventories and agreementson division of inheritance, as well as inheritancearrangements (changes in name registrations, cash
conversion, etc.), after being entrusted by all inheritors
to perform inheritance arrangement matters.

■ Banking Business● Deposit BusinessWe handle ordinary deposits, current deposits, time
deposits, foreign currency deposits, negotiablecertiﬁcate of deposits, etc.

Business Description● Individually Operated Designated Money Trusts(“Shiteitan”) and Individually Operated DesignatedPecuniary Trusts Other Than Money Trusts (“Fund Trust”).
Trust in which the funds are managed and invested
at the discretion of the trustees within the scopein which the type of investment assets and theinvestment method are designated by the trustors.

● Lending BusinessWe handle loans on deed, overdrafts, etc.
● Domestic Exchange BusinessWe handle remittance, money transfer, etc.
● Foreign Exchange BusinessWe handle foreign remittances and various operations
concerning other foreign exchange transactions.

■ Securities Business● Investment Trust Over-the-Counter Sales and Account
Administration Business
Investment trust over-the-counter sales: we sell
primarily private placement investment funds which
are incorporated into fund-of-funds and/or preparedexclusively for a pension plan.
Account administration business: we provide accountadministration services for transferred investment
trusts, playing the role of supporter for investment
trust over-the - counter sales made by regional
financial institutions, including regional banks andsecond-tier regional banks.
● Corporate Bond Administration Business and Fiscal
Agent for Corporate Bond
Co r p o r ate b o n d a dminis t r atio n b usin e ss: weprovide services as a corporate bond administrator,
which must be designated from the viewpoint ofinvestor protection at the time of bond issue by theCompanies Act of Japan.
Fiscal agent for corporate bond: we handle fiscal
matters as an agent of an issuer company for bonds
without administrator, including issuance, prematureredemption and redemption at maturity of bonds(disbursement of principal and interest).
● Investment Advisor y and Agency Business andInvestment Management Business
We, based on trust agreements and /or discretionary
investment contracts, provide asset management
services to clients.

The Nomura Trust and Banking Co., Ltd. Disclosure 201917

Company History■ History
August 1993
OctoberJune 1994
September 1995
November
October 1997

Company History

November 1999

Established as The Nomura Trust and Banking Co., Ltd. (paid-in capital: 30 billion yen). <August 24>
Started business with 71 executives and employees. <October 1>
Designated as a bond registered organization.
Served as a Fiscal Agent for corporate bonds for the first time in Japan.
Joined Domestic funds transfer system.
Obtained business approval of specified money trusts and designated money trusts.
Obtained business approval of pension trusts and jointly operated designated money trusts.

October 2001

Nomura Securities Group (currently called “Nomura Group”) moved to a holding company system.

January 2002

Accepted entrustment of asset management institution operations in defined contribution pension plan.

February

Obtained business approval of real estate trusts stock transfer agency and various agency operations.

June 2003

Moved to a “company with committees” management system.

July 2004

Moved Head Office in Tokyo from Nihonbashi, Chuo-Ward, Tokyo to Otemachi, Chiyoda-Ward, Tokyo.

March 2005
June
NovemberFebruary 2006
July
SeptemberStarted business by designating Nomura Securities as a trust contract agent.
Handled security interest trust and intellectual property right trust. Obtained approval for business including
execution of wills and settlements of inheritance.
Balance of investment trust assets exceeded 5,000 billion yen.
Started marketing and handling “Mochi-loan” (employee stock-ownership plans tie-up loan).
Obtained approval for the discretionary investment contract related business.
Started business by designating Nomura Securities as a bank agent.
Started “Banking Service (internet banking)” services.

April 2007
May
AugustJuly 2008

Opened Osaka representative office (Closed in July 2016).
Started marketing and handling “E-Ship” (trust-type employee stock-ownership incentive plan).
Started servicing “Nomura Web Loan” (loans secured by securities) via “Banking Service .”October 2009

Made NikkoCiti Trust and Banking Corporation (trade name changed to NCT Trust and Banking Corporation in
March 2010) a subsidiary.

July 2010

The Nomura Trust and Banking merged with NCT Trust and Banking Corporation (surviving company: The
Nomura Trust and Banking Co., Ltd.) .

May 2011

Established the East Japan Restoration Support Fund jointly with Nomura Securities and Nomura AssetManagement.

October 2012

“Banking Service” systems totally renewed.

October 2013

20th anniversary since starting business.

April 2015

Started inheritance services using Nomura Securities as an agent.

April 2016

Started a connection between “Banking Service” and “Nomura Net & Call ,” which is offered by Nomura
Securities

January 2018
April 201918

Balance of investment trust assets exceeded 10,000 billion yen.

Started marketing and handling “TRUST-WRAP” (living trust as a will substitute) using Nomura Securities as anagent.
Changeover to new company structure as a company with an audit and supervisory committee.

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Financial Data
Contents
Financial Statements

20

Status of Main Business

36

Domestic and Foreign Exchange Transactions 39
Deposits

40

Loans

43

Securities

47

Fair Value of Securities

50

Derivatives Transaction

52

Trust Business

54

Management Indices58

Disclosure based on Pillar III of Basel III ‒ Composition of Capital 60
Disclosure based on Pillar III of Basel III ‒ Qualitative Disclosure (end of Mar. 2019) 62
Disclosure based on Pillar III of Basel III ‒ Quantitative Disclosure (end of Mar. 2019) 68
Disclosure based on Pillar III of Basel III ‒ Qualitative Disclosure (end of Mar. 2018) 76
Disclosure based on Pillar III of Basel III ‒ Quantitative Disclosure (end of Mar. 2018) 80

19

Financial Statements
Balance Sheets(Millions of yen)

Item

March 31,2018

March 31,2019

Assets:Cash and due from banks
Cash
Due from banks
Securities
Government bonds

346,7711

0219,109346,770

511,829

489,558

122,112

104,605

Financial Statements

Local government bonds

37,541

56,679Corporate bonds

163,350

105,143

Other securities

188,825

223,130

529,275

601,520Loans on bills

1,582

—

Loans on deeds

306,754354,920

Overdrafts

220,938

246,600

2,199

2,270

2,162

2,270

Loans

Foreign exchanges
Due from foreign banks (our accounts)
Foreign bills receivable
Other assets

37

020,75328,013

Prepaid expenses

162

217

Accrued income

3,768

4,522

Derivatives other than for trading-assets

15,345

5,700

—

1,772

Other

1,476

15,800

Tangible fixed assets

720

927

Buildings

179

168

Cash collateral paid for financial instruments

541

759

Intangible fixed assets

6,027

6,554

Software

3,887

4,138

Software in progress

2,087

2,389

Goodwill

51

25

Other

1

1

Other

Deferred tax assets

1,166

1,096

Allowance for loan losses(1,521)(1,379)1,289,563

1,475,334

Total assets

20

219,110The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Balance Sheets(Millions of yen)

Item

March 31,2018

March 31,2019Liabilities:

818,364

Deposits

981,328

7,522

16,769Ordinary deposits

260,579

387,123

Time deposits

437,802472,238

Other deposits

112,459

105,197

Negotiable certificates of deposit

34,551

31,951

Call money

25,052

20,928Borrowed money

142,331

145,554

142,331

145,554

Due to Trust Accounts

176,295

215,105

Other liabilities

29,948

16,845241

227

Accrued expenses

2,087

2,478

Unearned revenue

606

425

Derivatives other than for trading-liabilities

18,165

12,163

Cash collateral received for financial instruments

7,261

965

Borrowings from others

Income taxes payable

129

132

Other

1,457

452

Provision for bonuses

1,052

888

Asset retirement obligations

1,090

1,157

1,228,685

1,413,759

Capital stock

35,00035,000Capital surplus

13,27013,270Legal capital surplus

5,000

5,000

Other capital surplus

8,270

8,270

Provision for retirement benefits
Total Liabilities

Financial Statements

Current deposits

Net assets:

11,832

12,655

Legal retained earnings

1,321

1,428

Other retained earnings

10,510

11,226

10,510

11,226

Total shareholders' equity

60,10260,925

Valuation difference on available-for-sale securities

2,406

4,185

Deferred gains or losses on hedges(1,631)(3,535)Retained earnings

Retained earnings brought forward

Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

775

649

60,877

61,575

1,289,563

1,475,334

The Nomura Trust and Banking Co., Ltd. Disclosure 201921

Financial Statements
Statements of Income(Millions of yen)

Item
Ordinary Income

FY201825,907

24,810Trust fees

8,932

9,042

Interest income

10,535

12,370Interest on loans

4,353

5,212

Interest and dividends on securities

4,073

5,457

Financial Statements

Interest on call loans

4722Interest on due from banks

(82)

(124)

Interest on interest swaps

2,137

1,783

Other interest income
Fees and commissions
Fees and commissions on domestic and foreign exchanges
Other fees and commissions
Trading income
Income from trading-related financial derivatives transactions
Other operating income

5

19

2,956

2,433

448

471

2,507

1,962

0

—

0

—

3,482

819

Gains on foreign exchange transactions

1,547

89

Gains on sales of bonds

1,935

730

0

143

Reversal of allowance for loan losses (deduction)

—

142

Other

0

1

Ordinary expenses

24,102

22,714

Interest expenses

7,273

5,384

1,737

2,796

3

2

Interest on call money

329

479

Interest on borrowings

29

20

5,171

2,084

0

2

Other income

Interest on deposits
Interest on negotiable certificates of deposit

Interest on interest swaps
Other interest expenses

952

1,103

Fees and commissions on domestic and foreign exchanges

260

268

Other fees and commissions

692

835

710

1,812

Fees and commissions payments

Other operating expenses
Loss on sales of bonds

181

328

Expenses on derivatives other than for trading or hedging

529

1,483

15,031

14,412

General and administrative expenses
Other expenses
Provision of allowance for loan losses write-off of loan
Other
Ordinary profit

22

FY2017The Nomura Trust and Banking Co., Ltd. Disclosure 2019

134

1

133

—

0

1

1,804

2,096

Statements of Income (Continued)
Item(Millions of yen)

FY2017FY2018

32

38

Other

32

38

Extraordinary Loss

Extraordinary Income

161

65

Loss on disposal of noncurrent assets

145

65

Impairment loss

16

—

1,674

2,068

Income before income taxes

627

583

Income taxes-deferred (deduction)

(36)

126

Total income taxes

591

709

1,083

1,359

Net income

Statements of Changes in Net Assets
Item
Shareholders' equity:
Capital stock:
Balance at the beginning of the period
Changes of items during the period
Issuance of capital stock
Total changes of items during the period
Balance at the end of the current period
Capital surplus:
Legal capital surplus:
Balance at the beginning of the period
Changes of items during the period
Issuance of capital stock
Total changes of items during the period
Balance at the end of the current period
Other capital surplus
Balance at the beginning of the period
Changes of items during the period
Total changes of items during the period
Balance at the end of the current period
Total capital surplus
Balance at the beginning of the year
Changes of items during the period
Issuance of capital stock
Total changes of items during the period
Balance at the end of the current period
Retained earnings:
Legal retained earnings:
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Total changes of items during the period
Balance at the end of the current period(Millions of yen)

FY2017

Financial Statements

Income taxes-current

FY201835,00035,000——35,000——35,000

5,000

5,000

—
—
5,000

—
—
5,000

8,270
—
—
8,270

8,270
—
—
8,270

13,27013,270——13,270——13,270

1,147

1,321

174
174
1,321

107
107
1,428

The Nomura Trust and Banking Co., Ltd. Disclosure 201923

Financial Statements
Statements of Changes in Net Assets (Continued)
Item

Financial Statements
24

Other retained earnings
Legal retained earnings brought forward
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of the current period
Total retained earnings
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of the current period
Treasury stock:
Balance at the beginning of the period
Changes of items during the period
Total changes of items during the period
Balance at the end of the current period
Total shareholders' equity:
Balance at the beginning of the period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of the current period
Valuation and translation adjustments:
Valuation difference on available-for-sale securities:
Balance at the beginning of the period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of the current period
Deferred gains or losses on hedges:
Balance at the beginning of the period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of the current period
Total valuation and translation adjustments:
Balance at the beginning of the period
Total changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of the current period
Total net assets:
Balance at the beginning of the period
Total changes of items during the period
Dividends from surplus
Net income
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of the current period

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

(Millions of yen)

FY2017FY2018

10,473

10,510(1,046)1,083
36
10,510

(643)
1,359
716
11,226

11,62011,832

(872)
1,083
211
11,832

(536)
1,359
823
12,655

—

—

—
—

—
—

59,89060,102

(872)
1,083
211
60,102

(536)
1,359
823
60,925

4,689

2,406

(2,283)(2,283)
2,406

1,778
1,778
4,185

(2,992)(1,631)

1,361
1,361
(1,631)(1,904)(1,904)(3,535)

1,697

775

(921)
(921)
775

(125)
(125)
649

61,58860,877

(872)
1,083
(921)
(710)
60,877

(536)
1,359
(125)
697
61,575

Statements of Cash Flows (Non-Consolidated, Indirect Method)Item

Ⅱ Net cash provided by (used in) investment activities:
Purchase of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Purchase of tangible fixed assets
Purchase of intangible fixed assets
Net cash provided by (used in) investing activities
Ⅲ Net cash provided by (used in) financing activities:
Proceeds from issuance of stocks
Purchase of treasury stock
Cash dividends paid
Net cash provided by (used in) financing activities
Ⅳ Eﬀect of exchange rate change on cash and cash equivalents
Ⅴ Net increase (decrease) in cash and cash equivalents
Ⅵ Cash and cash equivalent at the beginning of the period
Ⅶ Cash and cash equivalents at the end of the period

FY2017FY2018

1,674
2,474
16
133
40
126
(32)
(10,535)
7,273(1,753)
4,879
145
270
(270)
4,745
(6,524)2,914(275)(71,037)
67,279
2,050

2,068
2,028
—
(142)
(164)
66
(38)
(12,370)
5,384
(401)
(1,377)
65
—
—
9,645
(6,002)(2,227)
34(72,393)
162,964(2,600)11,421

3,223

(7)

0

5,447
(60,202)2,683(111,829)
14,805(10,731)
2,090
(991)
(143,718)(450)(144,169)(23,118)(4,123)(70)
38,80912,614(5,952)543
154
106,621(581)
106,040(161,836)
51,999153,246(428)(3,820)39,160(137,071)
64,144
97,862(468)(2,311)
22,155

—
—
(872)
(872)

—
—
(536)
(536)

—
(105,881)
324,981219,100—
127,660
219,100
346,760

Financial Statements

ⅠNet cash provided by (used in) operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for loan losses
Increase (decrease) in provision for bonuses
Increase in provision for retirement benefits
Other extraordinary income
Interest income
Interest expenses
Loss (gain) related to securities
Foreign exchange losses (gains)
Gains (loss) on disposal of tangible fixed assets
Net decrease (increase) in trading assets
Net increase (decrease) in trading liabilities
Net decrease (increase) in derivative assets
Net increase (decrease) in derivative liabilities
Decrease (increase) in deferred losses on hedge
Increase (decrease) in deferred profits on hedge
Net decrease (increase) in loans
Net increase (decrease) in deposit
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money (excluding
subordinated borrowings)
Net decrease (increase) in due from banks (excluding deposit
paid to Bank of Japan)
Net decrease (increase) in cash collateral
Net increase (decrease) in call money
Net decrease (increase) in foreign exchanges-assets
Net increase (decrease) in due to trust accounts
Actual interest income
Actual interest expenses
Net decrease (increase) in temporary payment
Other
Sub total
Income taxes paid
Net cash provided by (used in) operating activities(Millions of yen)

[Scope of Cash and Cash Equivalents]
Cash and cash equivalents consist of cash and due from the Bank of Japan included in “Cash and due from banks” on thebalance sheets.

The Nomura Trust and Banking Co., Ltd. Disclosure 201925

Financial Statements■ Notes to Financial Statements
The amounts less than one million yen are rounded down.

Signiﬁcant Accounting Policies
1. Trading Assets & Liabilities and Trading Income & Expenses

Financial Statements

Trading transactions intended to capitalize on short-term fluctuations and arbitrage opportunities in interest rates,
currency exchange rates, market prices of ﬁnancial instruments markets and related indices (hereinafter called “Trading
Purposes”) are recognized on a trade-date basis and recorded in “Trading assets” or “Trading liabilities” on the balance
sheets. Income or expenses generated by the relevant trading transactions are recorded in “Trading income” or “Trading
expenses” on the statements of income.
Trading assets and trading liabilities are stated at fair value on the balance sheet date, and derivatives, such as swaps,
futures and options, are stated at their fair values, assuming that such transactions were terminated and settled on thebalance sheet date.
Trading income and trading expenses include interests received and paid during the ﬁscal year, gains or losses resulting
from any change in the value of securities and other monetary claims between the end of the preceding ﬁscal year andthe end of the current ﬁscal year and gains or losses resulting from any change in the value of derivatives between the endof the preceding ﬁscal year and the end of the current ﬁscal year, assuming they were settled at the end of the ﬁscal year.
2. Evaluation for Securities
Held-to-maturity debt securities are stated at amortized cost determined by the moving average method (the straightline method), and other available-for-sale securities are stated at the market value at the ﬁscal year end (with selling costs
being calculated mainly by the moving average method) in principle. However, securities whose fair values cannot be
reliably determined are stated at cost determined by the moving average method.
Unrealized gains and losses on other securities available for sale are included in net assets.
3. Basis and Methods of Derivatives
Derivatives are stated at fair value (excluding those for Trading Purposes).
4. Depreciation Method for Fixed Assets(1) Tangible Fixed Assets
Tangible ﬁxed assets are computed using the declining balance method (while the straight-line method is applied
to buildings (except for facilities attached to the buildings) acquired on April 1, 1998 or later, as well as structures andfacilities attached to the buildings acquired on April 1, 2016 or later).
Principal useful lives are as follows:
Buildings: 6 years to 45 years
Furniture and ﬁxtures: 3 years to 20 years(2) Intangible Fixed Assets
Depreciation for intangible ﬁxed assets is computed using the straight-line method. Especially, depreciation for capitalized
software for internal-use is computed using the straight-line method based on useful life determined by us (5 years).
5. Translation of Foreign Currencies
Assets and liabilities denominated in foreign currencies are translated into Japanese yen primarily at the exchange rateon the balance sheet date.
6. Allowances(1) Allowance for Loan Losses
Allowance for loan losses is provided as below, in accordance with the internally established standards for write-oﬀs
and provisions.
Claims to debtors in special mention and ordinary category, which are prescribed in the “Guideline for Practice Related
to the Veriﬁcation of Internal Control with respect to the Self-Assessment of the Assets of Banks and Other Financial
Institutions as well as the Audit of the Bad Debt Written Oﬀ and Allowance for Doubtful Accounts” (Report No. 4 of the
Ad Hoc Committee for the Audit of Banks etc. of JICPA)<July 4, 2012>, are classiﬁed into speciﬁc categories, and the26

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

7. Hedge Accounting(1) Hedges of Interest Rate Risk
As for the hedge accounting method applied to hedging transactions for interest rate risk arising from ﬁnancial assets
and liabilities, we, as a general rule, apply deferral hedge accounting using portfolio hedges or individual hedges
as stipulated in the “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial
Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24) <Feb 13, 2002>.
As for the method to assess hedge eﬀectiveness, the eﬀectiveness of portfolio hedges oﬀsetting market ﬂuctuations
is assessed for each identiﬁed (i) group of hedged instruments and (ii) corresponding group of hedging instrumentsin the same time-to-maturity bucket. Individual hedges oﬀsetting market ﬂuctuations are deemed as highly eﬀective
due to being arranged in a manner that makes hedged and hedging instruments identical to each other in important
requirements. For this reason, we have omitted an assessment of the eﬀectiveness of such hedges.
In addition, the exceptional accrual method for interest rate swaps is applied in order to hedge interest rate risks
arising from certain ﬁnancial assets.
(2) Hedges of Foreign Currency Fluctuation Risk
As for the hedge accounting method applied to hedging transactions for foreign currency ﬂuctuation risk arising fromforeign-currency-denominated ﬁnancial assets and liabilities, we apply the deferral hedge accounting stipulated in the“Treatment for Accounting and Auditing of Concerning Accounting for Foreign Currency Transactions in the Banking
Industry” (JICPA Industry Audit Committee Report No. 25)<July 29, 2002>.
As for the method of assessing the eﬀectiveness of hedging activities, we designate currency swap transactions andforeign exchange swap transactions as hedges against ﬂuctuation in foreign currency exchange rates arising frommonetary claims and liabilities denominated in foreign currencies, and assesses the eﬀectiveness of such hedges byverifying that we hold the foreign currency positions of the hedging instruments corresponding to hedged monetaryclaims and liabilities denominated in foreign currency.

Financial Statementsallowance is provided on the basis of the accumulated default ratio released immediately before the assessment day
by the external rating agency deﬁned in the Companyʼs guidelines. For claims to debtors who are possibly bankrupt,
an allowance is provided in the amount deemed necessary, net of the expected amount of disposable collateraland the estimated amount of recoveries from guarantees. For claims to debtors who are legally bankrupt or virtuallybankrupt, an allowance is provided for the full amount of such claims, net of the expected amount of disposable
collateral and the estimated amount of recoveries from guarantees. There were no loans to restructuring countries.
All claims are assessed by asset assessment divisions, in cooperation with the operating divisions, in accordance withthe guidelines for the self-assessment of asset quality.
(2) Provision for Bonuses
Provision for bonuses, which is provided for future bonus payments to employees, is maintained at the amountaccrued at the end of the ﬁscal year, based on the estimated future payments.
(3) Provision for Retirement Beneﬁts
Provision for retirement beneﬁts, which are provided to ensure future beneﬁt payments to employees, is recorded as
the required amount based on the projected obligation at the end of the ﬁscal year.

8. Consumption Taxes
Consumption tax and municipal consumption tax (hereinafter called “Consumption Taxes and Other”) are accounted forusing the tax-excluded method. However, non-deductible Consumption Taxes and Other related to tangible ﬁxed assets
are recorded in expenses for the current ﬁscal year.

The Nomura Trust and Banking Co., Ltd. Disclosure 201927

Financial Statements
Notes to the Financial Statements(Notes to the Balance Sheet)

Financial Statements

1. Loans to debtors who are legally bankrupt were nil and there were no non-accrual delinquent loans.
Claims to debtors who are legally bankrupt represent loans whose accrued interests are not recorded as the principal
and/or whose interest remains past due for some significant period of time and are not likely to be collectible orrepayable (hereinafter called “Unrecorded Accrued Loans,” excluding the write-oﬀ portion) and regarding which, events
have occurred as deﬁned in any of the provisions of (a) through (e) of Article 96, Paragraph 1, Item 3, or Item 4 of thesame Paragraph of the Corporate Tax Law Enforcement Ordinance (Government Ordinance No. 97, 1965).
Non-accrual delinquent loans are Unrecorded Accrued Loans, which exclude claims to debtors who are legally bankrupt
and loans in which the deferral of interest payments is granted in order to assist or facilitate the restructuring of debtors
in ﬁnancial diﬃculties.
2. There were no loans past due for three months or more.
Loans past due for three months or more are loans on which the principal and/or interest is three months or more past
due but exclude claims to debtors who are legally bankrupt or non-accrual delinquent loans.
3. There were no restructured loans.
Restructured loans represent loans on which contracts were amended in favor of debtors (e.g., the reduction of or
exemption from stated interest, the deferral of interest payments, the extension of maturity dates, or renunciation ofclaims) in order to assist or facilitate the restructuring of debtors in ﬁnancial diﬃculties, excluding loans to debtors who
are legally bankrupt, non-accrual delinquent loans or loans past due for three months or more.
4. There were no claims to debtors who are legally bankrupt, non-accrual delinquent loans, loans past due for threemonths or more and restructured loans.
5. With regard to participation loans, the principal amount of participation loans treated and presented in the balance sheet
as loans to original debtors in accordance with the “Loan Participation Accounting Treatment and Representation” Report
No. 3 issued on Nov 28, 2014 by the Accounting System Council of JICPA was 40,074 million yen. The principal amount ofparticipation loans treated as sold to other banks was 5,000 million yen.
6. The following assets were pledged as collateral.
Assets pledged as collateral
Securities: 133,838 million yen
Loans and bills discounted: 5,613 million yen
Liabilities collateralized by the above assets
Borrowings from others: 554 million yen
In addition to the above-mentioned assets, securities of 9,280 million yen were pledged as collateral for settlements offoreign exchange and securities transactions and as guarantee deposits for trust services, and so on.
Other assets included guarantee deposits of 15,149 million yen.
7. Contracts of overdraft and loan commitment limits are the contracts that we loan to customers up to the prescribed
limits in response to customersʼ application for loans as long as there is no violation of any condition in the contracts.
The unused amount within the limits related to these contracts total 18,207 million yen. The unused amount related
to contracts whose original terms expire within one year is 15,707 million yen and the amount for contracts whose
original terms expire more than one year to less than ﬁve years is 2,500 million yen, respectively. Since many of thesecommitments expire without being drawn down, the unused amount does not necessarily aﬀect our future cash ﬂows.
Most of these contracts have conditions that allow us to refuse the customersʼ application for a loan or decrease thecontract limits with proper reasons such as changes in ﬁnancial conditions, preservation of credit and other reasons.
At the inception of contracts, we obtain real estate, securities as collaterals if considered necessary. Subsequently,
we conduct periodic reviews of the customersʼ business results based on internal rules and reconsider conditions incontracts and/or take necessary measures to preserve credit when it is necessary.
8. Accumulated depreciation on tangible ﬁxed assets

28

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

3,017 million yen

9. There were no liabilities for guarantees on corporate bonds included in “Securities,” which are issued by private
placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Law).
10. There were no monetary claims for the directors and the executive oﬃcers arising from transactions with the directors
and the executive oﬃcers.
11. There were no monetary liabilities for the directors and the executive oﬃcers arising from transactions with the directors
and the executive oﬃcers.
43 million yen

13. Total amount of monetary liabilities for the aﬃliated companies

490 million yen

14. We are subject to restrictions on the payment of dividends of surplus, pursuant to the provision of Article 18 of the
Banking Act of Japan.
Notwithstanding the provision of Article 445, Paragraph 4 (Amounts of Capital and Amounts of Reserves) of theCompanies Act of Japan, in the case where we pay dividends of surplus, it shall record the amount equivalent to onefifth of the amount of the deduction from surplus as a result of the payments of such dividends of surplus as legal
capital surplus or legal retained earnings.
The amount of legal retained earnings arising from payments of such dividends of surplus for the current ﬁscal year was
107 million yen.

Financial Statements

12. Total amount of monetary claims for the aﬃliated companies(Notes to Statements of Income)
1. Income from transactions with subsidiaries and associated companies
Interest income:̶million yen

Fees and commissions:

14 million yen

Other operating income:̶million yen

Other income:̶million yen

Expenses from transactions with subsidiaries and associated companies
Interest expenses:
Fees and commissions payments :Other operating expenses:
Other expenses:

0 million yen
̶million yen
766 million yen
̶million yen

2. Related party transactions(1) Notes to a parent company or major aﬃliated companies
Description omitted for lack of importance(2) Subsidiaries and aﬃliated companies, etc.
Not applicable(3) Transactions between our sister companies
Description omitted for lack of importance(4) Directors or major individual shareholders, etc.
Not applicable
3. “Other income” includes 142 million yen of reversal of allowance for loan losses.
4. “Interest on due from banks” includes negative-interest-rate transactions.

The Nomura Trust and Banking Co., Ltd. Disclosure 201929

Financial Statements(Notes to Statements of Changes in net assets)
1. Class of stock and number of shares issued and outstanding, and class of treasury stock and number of shares(Thousands of shares)

Number of Shares
Outstanding at the
Beginning of the Period

Increase

Decrease

Number of Shares
Outstanding at the End of
Current Period

800

—

—

800

800

—

—

800

—

Issued shares
Common stock

Remarks

There were no treasury stocks.

Financial Statements

2. There were no stock acquisition rights or treasury stock acquisition rights.
3. Matters relating to cash dividends(1) Dividends paid during the ﬁscal year
Resolution

Type of stock

Total amount of cash
dividends paid
(Millions of Yen)

Per share amount(Yen)

Record date

Effectivedate

Board of directors
held on May 11, 2018

Ordinary

536

670

March 31, 2018

June 1,2018(2) Dividends with a record date during the ﬁscal year, but whose eﬀective date is after March 31, 2018
Resolution

Type of stock

Total amount of cash
dividends paid
(Millions of Yen)

SourcePer share amount(Yen)

Record date

Effectivedate

Board of directors
held on May 13, 2019

Ordinary

672

Other retained
earnings

840

March 31,2019

June 3,2019(Notes to Financial Instruments)
1. The Condition of Financial Instruments(1) Policy on Financial Instruments
We engage in the following three business areas as a trust bank of Nomura Group: “Banking business” which deals
with deposits, loans, and foreign exchange; “Trust business” which involves managing the assets entrusted by ourcustomers; and “Securities and asset management business” which includes securities transactions. Our agency
business, which designates Nomura Securities as our bank agent and trust contract agent, provides deposits forindividual customers through “Banking Service,” an internet banking service, and yen-denominated derivative
deposits for corporate customers. Our sources of ﬁnance include negotiable certiﬁcates of deposits and borrowed
money in addition to deposits channeled through the agents.
By taking advantage of the competitive edge of Nomuraʼs domestic sales infrastructure, we use the funds procured
to provide loans to wealthy people, loan products with securities pledged as collateral such as “Nomura Web Loan”
through our agency services, and loan products repackaged with securities, credit linked loan and to invest in
securities focusing on JGB, local government bonds, agency bonds, corporate bonds and credit linked bonds.
Market risk and liquidity risk arising from these financial assets and liabilities are comprehensively managed by,in addition to the front office, the independent middle office, the ALM Committee, and the Risk Management
Committee.
(2) Nature and Extent of Risks Arising from Financial Instruments
We primarily invest in securities and loans, which are exposed to customer credit risk and issuer default risk,
respectively. Loans secured by securities which account for some 50% of loan balance oﬀer good security and have alimited credit risk. On the other hand, loans other than loans secured by securities are extended mainly to customers
with high ratings on a short-term basis, but due to changes in the economic environment, it may be impossible for
debtors to implement performance of obligations in accordance with the terms and conditions.
Securities mainly consist of government bonds, local government bonds, agency bonds, corporate bonds and credit
link bonds, most of which are classiﬁed as “Available-for-sale securities.” In addition, interest rate swaps are used tohedge interest rate risks for certain securities and hedge accounting is applied to these transactions.
Funding from the ﬁnancial market such as call money is subject to possible diﬃculties preventing smooth funding due
to shrinking market aﬀected by ﬁnancial environment, however, we hold securities deemed eligible collateral to keep

30

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Financial Statements

liquidity risk at a certain level.
(3) Risk Management Framework for Financial Instruments(a) Credit risk management
At The Nomura Trust and Banking, the Credit Department conducts credit risk assessment of loans and securities
for each individual transaction and individual issuer in order to prevent a credit event as a result of deterioration ofan obligorʼs ﬁnancial position. In addition, we conduct daily exposure management for each individual obligor andindividual obligor group and utilize statistical methods to periodically measure credit risk.
In loan products, we take initiative in promoting pricing management based on credit ratings and enhancing thesophistication of credit portfolio management including the introduction of guidelines for each industry to control
credit concentration risk. In addition, we monitor the trading conditions of marketable securities of collateralizedloans regularly in order to maintain collecting risks under a certain level.
(b) Market risk management
1) Market risk management framework
At The Nomura Trust and Banking, the Board of Executive Officers identifies the basic market risk management
policy, accordingly, position limits, VaR limits and loss-cut rules are properly set to manage market risk. Foreignexchange transactions are, based on the policy of taking the least market risk, managed with the minimum
necessary position limits and VaR limits. For loans, deposits, funds and securities transactions, we set position
limits for each product and use interest rate swaps for hedge transactions to control risks arising from interest
rate fluctuations within acceptable limits. These management plans in the banking account are discussed
semiannually by the ALM Committee and the Risk Management Committee, and approved by the Board of
Executive Oﬃcers. The Corporate Risk Management Department reports daily position and proﬁt-and-loss status to
the executive oﬃcers and related departments each business day.
2) Quantitative information related to market risk
We use VaR with historical simulation model (confidence interval of 99% and holding period of 10 days for
trading and 20 days for banking) to measure the market risk equivalent, wherein we define market risk as therisk of incurring losses due to fluctuations in interest rates, exchange rates, securities prices, etc.
We conduct back-testing on trading activities, comparing VaR calculated by the model with actual proﬁt and loss.
The back-testing conducted in FY 2018 showed that VaR was not exceeded by actual profit and loss, whichindicates that the model we use captures the market risk with satisfactory accuracy. However, since VaR measures
the amount of market risk by certain occurrence probabilities which are statistically calculated based on historicalmarket ﬂuctuation data, there are cases in which VaR cannot capture risk under drastically changing conditions.
(c) Liquidity risk management
Our fundamental policy of liquidity risk management is to comprehensively grasp the nature of assets andliabilities, management plans, and ﬂuctuations in the market, to ensure the required smooth cash ﬂow, and prevent
unexpected losses. The fund position and the market trend for each type of financial product are confirmed
monthly at the ALM Committee which determines future policies.
Reports on the daily cash flow situation are submitted to the executive officers and related departments eachtrading day. We have established classiﬁcations for cash ﬂow conditions, ranging from “normal,” “caution” to “risky”
and “critical,” and have constructed a framework under which appropriate procedures for dealing with each caseare taken in a timely manner.
(4) Supplementary Explanation of Fair Value of Financial Instruments
Fair values of financial instruments include the values based on market prices, and the values deemed as market
prices obtained by reasonable estimates when the financial instruments do not have market prices. Since certain
assumptions and others are adopted to calculate such values, they may diﬀer when adopting diﬀerent assumptions
and others.
2. Matters Relating to Fair Value of Financial Instruments
The following are the balance sheet amounts, fair values and diﬀerences between them as of March 31, 2019. Unlisted stocks
and others, the fair values of which are extremely diﬃcult to determine, are excluded from the table below. (Refer to Note 2)

The Nomura Trust and Banking Co., Ltd. Disclosure 201931

Financial Statements(Millions of yen)Book Value

Fair Value

Difference

346,771346,771—

Held-to-maturity debt securities

32,06336,254

4,190

Available-for-sale securities

455,354455,354—

600,429

600,461

31

2,270

2,270

—

Total assets

1,436,889

1,441,112

4,222(1) Deposits

981,328

981,328—(2) Negotiable certificates of deposit

31,951

31,951—(3) Call money

20,92820,928—(4) Borrowed money

145,554

145,554—(5) Due to trust accounts

215,105

215,105—

1,394,868

1,394,868—

Derivative transactions not qualifying for hedge accounting

(227)

(227)

—

Derivative transactions qualifying for hedge accounting(6,234)(9,871)(3,637)(6,462)(10,099)(3,637)(1) Cash and due from banks(2) Securities(3) Loans
Allowance for loan losses (*1)

Financial Statements(4) Foreign exchanges

Total liabilities

601,520(1,090)Derivatives (*2)

Total derivatives(*1) General and specific allowances for possible losses on loans are excluded.
(*2) Net claims and debts that arose from derivatives are presented on a net basis and items which are net debts in total arepresented in brackets.

(Note 1) Method of calculating fair value of ﬁnancial instruments
Assets(1) Cash Deposits
For deposits with no maturity period, current prices are extremely close to book value, so we are treating the bookvalues concerned as the current prices. For deposits with a maturity period, for each division based on deposit period,
we are calculating current values with discounts from applicable interest rates based on an assumption of new
deposits.
(2) Securities
Fair values of bonds are based on the quote prices provided by the Japan Securities Dealers Association or
correspondent ﬁnancial institutions, and those of investment trusts are based on the publicly announced unit price.
The notes to Securities based on holding purpose are stated in “(Notes to Securities).”(3) Loans and bills discounted
Of the loans, for those with variable rates, as long as the credit quality of the customer has not changed considerably
since the loan was extended, because interest rates are reﬂected over a short period and fair values are expected toapproximate book values, we deem book values to be fair values. Fair values of loans with ﬁxed rates are, based on
categories according to the types, internal ratings and terms of the loans, calculated by discounting the total amountof the principal and interest by the interest rates considered to be applicable to similar new loans. As for loans whose
contractual terms are short (i.e., within one year), we deem the book values to be fair values as fair values of these
items approximate book values.
In addition, regarding claims to debtors who are legally bankrupt, virtually bankrupt and possibly bankrupt, since theestimated amount of bad debts is calculated based on the present value of the expected future cash ﬂows or theestimated amounts that we would be able to collect through the disposal of collateral or execution of guarantees, fairvalues approximate the value of the claims to debtors on the balance sheet as of the balance sheet date minus theamount of allowance for loan losses, and we thus deem such amount to be fair values.
For loans, due to loan characteristics such as limiting loans to within the value of pledged assets, we deem bookvalues to be fair values since fair values are expected to approximate book values based on the estimated loan
periods, interest rates and other conditions.

32

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

(4) Foreign Exchanges
Our foreign exchanges consist of foreign currency deposits with other banks (foreign bank deposits), foreignexchange-related short-term loans (foreign bank loans), and promissory note advances for import bills (foreign bills
receivable). These are deposits with no maturity period, and the current prices for each are extremely close to bookvalue, so we are treating the book values concerned as the current prices.
Liabilities

Financial Statements(1) Deposits and (2) Negotiable certiﬁcates of deposit
For demand deposits, we deem the payment amounts required on the balance sheet date (i.e., book values) to be
fair values. In addition, fair values of long-term time deposits are calculated by classifying them based on their terms
and by discounting the future cash ﬂows. The discount rates for such calculations are the interest rates used in swap
transactions on the balance sheet date. Since fair values of those whose deposit terms are short (i.e., within one year)
approximate book values, we mainly deem the book values to be fair values.
(3) Call money
Since contractual terms of call money is short (i.e., up to twelve months) and fair values approximate book values, wedeem the book values to be fair values.
(4) Borrowed money
Of borrowed money, for those with variable rates, as interest rates are reﬂected over a short period and our credit
quality has not been considerably changed since the implementation, fair values are thought to approximate bookvalues, so we deem book values to be fair values. Fair values of those with ﬁxed rates are calculated by discounting
the total amount of principal and interest of the borrowed money which is classiﬁed based on its terms (for those towhich the exceptional accrual method for interest rate swaps are applied, the total amount of principal and interestof the borrowed money based on the rates as used in such interest rate swaps) by the interest rates used in swap
transactions on the balance sheet date. Since fair values of those whose contractual terms are short (i.e., within oneyear) approximate book values, we mainly deem the book values to be fair values.
(5) Due to trust accounts
Since due to trust accounts is used to receive unused money without term limits and equivalent to demand deposits,
we deem the payment amount requested to pay out on the balance sheet date (i.e., book values) to be fair values.
Derivatives
Derivatives include interest rate-related transactions (interest rate swaps and others), currency-related transactions(forward exchanges, currency options, currency swaps and others), and are based on the discounted value of future cash
ﬂows and option pricing models.

(Note 2) Financial instruments whose fair values are deemed to be extremely diﬃcult to determine are indicated below, andare not included in “Assets (2) Available-for-sale securities” in fair value information of ﬁnancial instruments.
(Millions of yen)

ItemBook Value

other securities ( * )2,140( * ) We do not treat other securities as being subject to disclosure of fair values as there are no market prices and they are deemed
extremely difficult to determine fair values.

(Note 3) The amount of monetary claims and securities with contractual maturities to be redeemed after the balance sheet date(Millions of yen)Due in1 Year or Less

Due after
1 Year through3 Years

Due after
3 Years through5 Years

Due after
5 Years through7 Years

Due after
7 Years through10 Years

Due after
10 Years

Securities
Held-to-maturity debt securities

6,723

—

—

5,000

20,000—Available-for-sale securities

74,807179,082

87,70830,751

11,88035,651Loans ( * )404,162

98,17746,358

10,617

17,40824,797

Total

485,692

277,259

134,066

46,36849,28960,449( * ) There was no money which is not expected to be recovered, such as claims to debtors who are legally bankrupt, virtuallybankrupt,or possibly bankrupt.

The Nomura Trust and Banking Co., Ltd. Disclosure 201933

Financial Statements(Note 4) The amount of borrowed money and other interest bearing debts to be repaid after the balance sheet date(Millions of yen)Due in1 Year or Less

Due after
1 Year through3 Years

Due after
3 Years through5 Years

Due after
5 Years through7 Years

Due after
7 Years through10 Years

Due after
10 Years

Deposits ( * )749,448

9,480

—

600

10,900210,900

Negotiable certificates of deposit

31,951

—

—

—

—

—

Call money

20,928

—

—

—

—

—

1,554

3,000

—

—

18,000123,000

215,105

—

—

—

—

—

1,018,988

12,480—600

28,900333,900

Borrowed money
Due to trust accounts

Financial Statements

Total( * ) Of the deposits, demand deposits are included in “Due in 1 year or less.” There are no bonds payable.

(Note to Securities)“Government bonds,” “Local government bonds,” “Corporate bonds” and “Other securities,” in the balance sheet are included.
There are no trading securities, subsidiary shares and subsidiary companyʼs shares as well as aﬃliated companyʼs shares,
held-to-maturity debt securities sold during the ﬁscal year ended March 31, 2019, securities for which the holding purpose
has been changed.
Other securities with fair value, which the fair value is signiﬁcantly below the acquisition cost and a recovery to its fair value can
not be foreseen, we disposition the fair value as the book value and process the valuation diﬀerence as loss of the ﬁscal year.
1. Held-to-Maturity Debt Securities (as of March 31, 2019)Type
Securities for which thefair value exceeds thebook value
Securities for which
the fair value does notexceed the book value(Millions of yen)Book Value

Fair Value

Government bonds

25,36029,626

4,265

Foreign bonds

3,284

3,321

36

Subtotal

28,64532,9474,302

Foreign bonds

3,418

3,307

(111)

32,06336,254

4,190

Total

2. Available-for-Sale Securities (as of March 31, 2019)Type

Securities for which thebook value does notexceed the acquisition
cost

Book Value

Acquisition Cost

Difference

184,872

4,090

Government bonds

79,24575,785

3,459

Local government bonds

38,06537,98877

71,652

71,098553

Other securities

157,149

154,857

2,292

Foreign bonds

137,860

136,098

1,761

Corporate bonds

Others

19,28918,759530

Subtotal

346,112339,730

6,382

Bonds

52,104

52,129(24)

Local government bonds

18,614

18,618(4)

Corporate bonds

33,49033,510(20)

Other securities

57,13757,429(292)

Foreign bonds

47,30447,462(158)

Others

9,833

9,966

(133)

Subtotal

109,242

109,558(316)

455,354449,288

6,065

Total

34

(Millions of yen)

188,962

Bonds

Securities for which thebook value exceeds theacquisition cost

Difference

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

3. Available-for-Sale Securities Sold during the Fiscal Year (from April 1, 2018 to March 31, 2019)
Type

Amount Sold

Bonds
Government bonds

Gain(Millions of yen)Loss64,144730(158)

30,715546—

Corporate bonds

6,330

31

—

Foreign bonds

27,099152(158)

Other securities

10,008

0

(170)

Total

74,153730(328)

Financial Statements(Notes to Money Held in Trust)
There is no money held in trust.
(Deferred Tax Accounting)
1. The deferred tax assets and liabilities are broken down by reason as follows:
Deferred tax assets:
Allowance for loan losses
Provision for retirement beneﬁts
Provision for bonuses
Impairment loss
Accrued business tax
Credit reserve
Deferred consumption tax
Deferred gain or loss on hedges
Excess of depreciation
OthersSubtotal
Valuation allowance
Deferred tax assets

315 million yen
358 million yen
266 million yen
11 million yen
60 million yen
79 million yen
52 million yen
1,588 million yen
137 million yen
165 million yen
3,035 million yen(11) million yen
3,024 million yen

Deferred tax liabilities:
Valuation diﬀerence on available-for-sale securities
OthersDeferred tax liabilities

1,880 million yen
47 million yen
1,928 million yen

Net deferred tax assets

1,096 million yen（Per Share Information）
Net assets per share
Net income per share

76,969.52 yen
1,699.35 yen

The Nomura Trust and Banking Co., Ltd. Disclosure 201935

Status of Main Business
Breakdown of Proﬁts and Losses by Division
Type(Millions of yen)

FY2017FY2018

Status of Main Business

8,642
400
9,042
2,851
4,135
6,986
1,243
86
1,329
—
—
—
539
(1,532)(992)
13,276
3,090
16,367—
14,273
2,093
2
2,096

8,513
418
8,932
1,882
1,379
3,262
1,929
74
2,003
—
0
0
1,868
902
2,771
14,193
2,776
16,969134
14,885
1,949
(145)
1,804

Domestic operations
International operations
Total
Domestic operations
Net interest income
International operations
Total
Domestic operations
Net fees and commissions
International operations
Total
Domestic operations
Net trading income (loss)
International operations
Total
Domestic operations
Net other operating income
International operations(loss)
Total
Domestic operations
Gross operating profits
International operations
Total
Provision of general allowance for loan losses (deduction)
General and administrative expenses (excluding non-recurring expenses)
Net business profit
Non-recurring profit (loss)
Ordinary profits
Trust fees

(Note) Domestic operations are yen denominated transactions and international operations are foreign currency denominated transactions. Yen
denominated transactions with non-residents and oﬀshore accounts are included in international operations.

Breakdown of Net Interest Income
Type(Millions of yen)

FY2017FY2018

Breakdown of investment
Average balance
Domestic operations

Interest rates
Yield
Average balance

International operations

Total

Interest rates
Yield
Average balance
Interest rates
Yield

943,363
5,532
0.59%
260,142[37,267]
5,020
[18]
1.93%
1,166,238
10,5350.90%

973,879[27,347]
4,771
[17]
0.49%
284,501
7,616
2.68%
1,231,033
12,370
1.00%

Breakdown of funding
Average balance
Domestic operations

Interest rates
Yield
Average balance

International operations

Total
Profit margin
Domestic operations
International operations
Total

Interest rates
Yield
Average balance
Interest rates
Yield

1,032,774[37,267]
3,650
[18]
0.35%
124,984

1,059,671
1,919

2.91%
1,120,491
7,273
0.65%

0.18%
167,666[27,347]
3,481
[17]
2.08%
1,199,990
5,384
0.45%

0.24%
(0.98%)
0.25%

0.31%
0.60%
0.55%

3,641

(Note) 1. The ﬁgures in brackets ([ ]) are the average balance and interest (net) of fund transfers between domestic operations and international operations.
2. The average balance of foreign currency denominated transactions in international operations is calculated by the daily current method(whereby the T.T.M. rate of the day is applied to the non-exchange transactions of the day).
3. The average balance and interest of fund transfers between domestic operations and international operations are oﬀset against each otherin the total number.

36

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Changes in Interest Income and Interest Expenses
Type(Millions of yen)

FY2017FY2018Interest income
Domestic operations(decrease)
International operations(decrease)(1,463)
952
(511)
43
722
766
255

149
(910)
(761)
652
1,943
2,595
1,834

Change due to balance
Change due to interest rates
Net change
Change due to balance
Change due to interest rates
Net change

(486)
2,060
1,573
637
26
663
2,237
(1,982)48(1,779)(1,730)886(1,045)(159)(1,890)3,724

SubtotalInterest expenses
Domestic operations(decrease)
International operations(decrease)
Subtotal
Total

Status of Main BusinessChange due to balance
Change due to interest rates
Net change
Change due to balance
Change due to interest rates
Net change(Note) Regarding the reasons for change in the balance and the interest rates, when there is an overlap between the two, it is included in the reasonsfor “change due to balance .”Breakdown of Fees and Commissions
Type
Fees and commissions
Deposits and loans related
business
Exchange business

Securities related businessAgency business

Investment advisory business
Fees and commissions
payments
Exchange business(Millions of yen)

FY2017
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total

FY2018

2,827
128
2,956
385
43
429
364
83
448
620
0
620
1,207
0
1,208
22
—
22
898
54
952
231
28
260

2,308
125
2,433
381
37
418
384
86
471
602
0
603
508
0
509
5
—
5
1,065
38
1,103
239
28
268

The Nomura Trust and Banking Co., Ltd. Disclosure 201937

Status of Main Business
Breakdown of Trading Income and Expenses
Type(Millions of yen)

FY2017

International operations
Total

Gains (losses) on trading financial
derivatives

Domestic operations
International operations
Total

Status of Main Business

Domestic operations
Other trading gains (losses)

International operations
Total
Domestic operations

Total (losses)

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
0
0
—
—
—
—
0
0

Domestic operations
Gains (losses) on trading securities

FY2018International operations
Total

Breakdown of Other Operating Income and Expenses
Type
Gains (losses) on foreign exchangetransactions(Millions of yen)

FY2017

International operations
Total
International operations
Total
Domestic operations

Gains (losses) on financial derivatives

International operations
Total
Domestic operations

Other (losses)

International operations
Total
Domestic operations

Total (losses)

—
89
89
577
(175)
401
(37)
(1,445)(1,483)———539(1,532)
(992)

—
1,547
1,547
1,868
(115)
1,753
—
(529)
(529)
—
—
—
1,868
902
2,771

Domestic operations

Domestic operations
Gains (losses) on bonds such as JGB

FY2018International operations
Total

Breakdown of General and Administrative Expenses
Type
Salaries and allowances
Welfare expenses
Depreciation and amortization
Rent expenses on buildings and machinery
Supplies expenses
Communication expenses
Taxes and dues
Other
Subtotal
Non-recurring expenses
Total

38

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

(Millions of yen)

FY2017FY2018

4,494
805
2,474
558
53
475
628
5,395
14,885146
15,031

4,387
865
2,028
562
67
477
570
5,313
14,273
139
14,412Domestic and Foreign Exchange Transactions
Foreign Exchange Transactions(Millions of U.S. dollars)

Outgoing remittance
Incoming remittance

FY2018Foreign bills payable
Foreign bills receivable

Total

Foreign Currency Denominated Assets(Millions of U.S. dollars)

March 31,2018

Domestic Exchange Transactions

Received from
Paid toCollection
Received from

1,969

(Billions of yen, thousands of units)

FY2017

RemittanceMarch 31,2019

1,421

Balance of foreign-currency denominated assets

Paid to15,029—14,814
1
29,844

18,351—
18,301
3
36,655

Foreign bills sold
Foreign bills bought

Domestic and Foreign Exchange Transactions

FY2017

AmountUnit
AmountUnit
AmountUnit
AmountUnit

9,084.8
1,584
11,561.6
217
—
—
—
—

FY20189,195.5
1,648
13,125.4
222
—
—
—
—

The Nomura Trust and Banking Co., Ltd. Disclosure 201939

Deposits
Balance by Type of Deposits(Millions of yen, proportion in brackets)

Type

March 31,2018

March 31,2019

Deposits
Domestic operations
Liquid deposits

International operations
Total
Domestic operations

Interest-bearing deposits

International operations
Total

Deposits

Domestic operations
Time deposits

International operations
Total
Domestic operations

Fixed-rate time deposits

International operations
Total
Domestic operations

Variable-rate time deposits

International operations
Total
Domestic operations

Other

International operations
Total
Domestic operations

Total

International operations
Total
Domestic operations

Negotiable certificates of deposits

International operations
Total
Domestic operations

Grand total

International operations
Total

40

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

268,102(31.4%)—(—)
268,102(31.4%)
247,952(29.0%)—(—)
247,952(29.0%)
437,802(51.3%)—(—)
437,802(51.3%)
330,302(38.7%)—(—)
330,302(38.7%)
107,500(12.6%)—(—)
107,500(12.6%)
418(0.0%)
112,040(13.1%)
112,459(13.1%)
706,323(82.8%)
112,040(13.1%)
818,364(95.9%)
34,551(4.0%)—(—)
34,551(4.0%)
740,874(86.8%)
112,040(13.1%)
852,915(100.0%)403,893(39.8%)—(—)
403,893(39.8%)
316,991(31.2%)—(—)
316,991(31.2%)
472,238(46.6%)—(—)
472,238(46.6%)
349,938(34.5%)—(—)
349,938(34.5%)
122,300(12.0%)—(—)
122,300(12.0%)
3,641(0.3%)
101,556(10.0%)
105,197(10.3%)
879,772(86.8%)
101,556(10.0%)
981,328(96.8%)
31,951(3.1%)—(—)
31,951(3.1%)
911,723(89.9%)
101,556(10.0%)
1,013,279(100.0%)Average Balance by Type of Deposits
Type(Millions of yen, proportion in brackets)

FY2017FY2018Deposits
Domestic operations
Liquid deposits

International operations
Total
Domestic operations

Interest-bearing deposits

International operations
Total

Time deposits

International operations
Total
Domestic operations

Fixed-rate time deposits

International operations
Total
Domestic operations

Variable-rate time deposits

International operations
Total
Domestic operations

Other

International operations
Total
Domestic operations

Total

International operations
Total
Domestic operations

Negotiable certificates of deposits

International operations
Total
Domestic operations

Grand total

International operations
Total

286,316(32.1%)—(—)
286,316(32.1%)
256,635(28.8%)—(—)
256,635(28.8%)
446,759(50.2%)—(—)
446,759(50.2%)
329,575(37.0%)—(—)
329,575(37.0%)
117,183(13.1%)—(—)
117,183(13.1%)
3,903(0.4%)
115,125(12.9%)
119,028(13.3%)
736,979(82.8%)
115,125(12.9%)
852,104(95.8%)
37,207(4.1%)—(—)
37,207(4.1%)
774,186(87.0%)
115,125(12.9%)
889,311(100.0%)

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Deposits

Domestic operations

243,447(29.3%)—(—)
243,447(29.3%)
224,189(26.9%)—(—)
224,189(26.9%)
437,450(52.6%)—(—)
437,450(52.6%)
336,913(40.5%)—(—)
336,913(40.5%)
100,536(12.1%)—(—)
100,536(12.1%)
8,711(1.0%)
101,242(12.1%)
109,953(13.2%)
689,609(83.0%)
101,242(12.1%)
790,851(95.2%)
39,581(4.7%)—(—)
39,581(4.7%)
729,191(87.8%)
101,242(12.1%)
830,433(100.0%)41

Deposits
Time Deposits Balance by Remaining Period
Classification

Fixed-rate time deposits

Variable-rate time deposits

Deposits
Other time deposits

Period(Millions of yen)March 31,2018

March 31,2019Less than 3 months

75,13891,850From 3 months to less than 6 months

52,80953,031

From 6 months to less than 1 year

95,96995,975

From 1 year to less than 2 years

5,416

5,500

From 2 years to less than 3 years

2,967

3,979

3 years or more

98,00099,600Subtotal

330,302349,938

Less than 3 months—

300

From 3 months to less than 6 months——

From 6 months to less than 1 year——

From 1 year to less than 2 years——

From 2 years to less than 3 years——

3 years or more

107,500

122,000

Subtotal

107,500

122,300

Less than 3 months——

From 3 months to less than 6 months——

From 6 months to less than 1 year——

From 1 year to less than 2 years——

From 2 years to less than 3 years——

3 years or more——

Subtotal——

437,802472,238

Total

Balance by Depositor(Millions of yen, proportion in brackets)

Classification
Individual
Corporate
Other
Total
(Note) Negotiable certiﬁcates of deposits are not included.

42

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

March 31,2018

333,195

March 31,2019462,528(40.7%)(47.1%)

468,573

487,424(57.2%)(49.6%)

16,59531,375(2.0%)(3.1%)

818,364

981,328(100.0%)(100.0%)LoansBalance by Type of Loans(Millions of yen)

Type
Loans on bills

Loans on deeds

Overdrafts

Bills discounted

Total

March 31,2018

March 31,2019

Average Balance by Type of Loans(Millions of yen)

Type
Loans on bills

Loans on deeds

Overdrafts

Bills discounted

Total

FY2017

Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total

FY2018

—
1,196
1,196
225,03144,587
269,618
176,212
12,882
189,094———401,244
58,666459,910

Balance of Loans by Type and Remaining Period
PeriodFixed interest rates

Variable interest rates

Total

Loans

—
—
—
280,817
74,102354,920
231,452
15,148
246,600———
512,269
89,250601,520

—
1,582
1,582
249,434
57,320306,754
205,473
15,464
220,938———
454,907
74,368529,275

Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total
Domestic operations
International operations
Total

1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years
With no maturity
SubtotalMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years
With no maturity
Subtotal—
852
852
249,466
63,416
312,883
212,737
14,941
227,679———
462,204
79,210541,414(Millions of yen)March 31,2018

319,637
27,677
15,565
6,511
10,073—59,82781,001
29,284
7,036
32,487—
149,810529,275

March 31,2019

404,162
13,321
18,369
6,741
11,096—49,52884,85527,988
3,875
31,110—147,829
601,520

The Nomura Trust and Banking Co., Ltd. Disclosure 201943

LoansBalance of Loans by Type of Collateral
Type(Millions of yen)March 31,2018

March 31,2019

226,272

256,383

Claims——Commodities——

29,94029,268

Securities

Real estate
Other

7,385

4,945

Subtotal

263,598

290,596

Guarantees

23,80023,929Unsecured

241,876

286,994

Total

529,275

601,520

(531)

(554)

(Subordinated loans)

Loans

Balance of Customers' liabilities for acceptances and guarantees by Type of Collateral
There are no customers' liabilities for acceptances and guarantees.

Balance of Loans by Purpose of Use
Type
Equipment fundWorking capital
Total

44

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

(Millions of yen, proportion in brackets)

March 31,2018

March 31,2019

53,82563,555(10.1%)(10.5%)

475,450

537,964(89.8%)(89.4%)

529,275

601,520(100.0%)(100.0%)Breakdown of Loans by Industry
Type
Manufacturing(Millions of yen, proportion in brackets)

March 31,2018

March 31,2019

6,959

13,527(1.3%)(2.2%)

Construction

—

3,319

(—)

(0.5%)

Electricity, gas, heat supply
and water

9,131

9,332

(1.7%)(1.5%)

Communication andinformation services

1,940

880

(0.3%)(0.1%)

10,625

18,462(2.0%)(3.0%)

Transport
Wholesale and retail

Real estate
Goods rental andleasing
Various services
Other
Total

4,818

(0.6%)(0.8%)

92,547

92,256(17.4%)(15.3%)

63,95071,010(12.0%)(11.8%)

16,082

19,937(3.0%)(3.3%)

49,32358,912(9.3%)(9.7%)

275,029

309,061(51.9%)(51.3%)

529,275

601,520(100.0%)(100.0%)

Balance of Loans Regarding Small and Medium-Sized Enterprises(Number of loans, millions of yen)March 31,2018
Total loan balance (A)Balance of loans to SMEs (B)Ratio (%) (B/A)

Number of loans madeAmountMarch 31,2019

8,338

9,654

529,275

601,520

8,316

9,618

421,647434,881

Number of loans made

99.7%

99.6%

Amount

79.6%

72.2%

Number of loans madeAmountLoans

Finance and insurance

3,685(Note) Small and medium-sized enterprises means companies capitalized at 300 million yen or less (100 million yen or less for the wholesale industry
and 50 million yen or less for the retail, food, service industries), or companies with full-time employees 300 or fewer (100 or fewer for the wholesaleand service industries and 50 or fewer for the retail, food, service industry) and individuals.

The Nomura Trust and Banking Co., Ltd. Disclosure 201945

LoansBalance of Risk-Monitored Loans
Not applicable.

Amount of Assets Assessed in Accordance with the Financial Reconstruction Act(Billions of yen)March 31,2018

March 31,2019

Claims against bankrupt and substantially bankrupt debtors

0—

Doubtful claims——

Substandard claims——

Subtotal (A)0—Normal claims (B)

530.2

602.6

Total (A+B)

Loans

530.2

602.6

Coverage amount by collateral and guarantees——

Specific allowance for loan losses

0

—

0

—

100%

—

Total amount of coverage (C)Coverage ratio (C/A)

Allowance for Loan Losses and Their Changes during the Fiscal Year

(Millions of yen)March 31,2018
General allowance for loan losses
Change from the previous year-end (decrease)
Specific allowance for loan losses
Change from the previous year-end (decrease)

1,232

1,090

134

(141)

289

288

0

(1)

Allowance for specific overseas loans——

Change from the previous year-end

(—)

(—)

1,521

1,379

Total

Written-Oﬀ of Loans
Not applicable.

46

March 31,2019

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Securities
Balance of Securities by Type and Remaining Period
Type

Government bonds

Local government bonds

Short-term corporate
bonds

StocksForeign bonds

Foreign stocks

Other securities

Total

1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
Subtotal
1 year or lessMore than 1 year but less than 3 years
More than 3 years but less than 5 years
More than 5 years but less than 7 years
More than 7 years but less than 10 years
More than 10 years
With no maturity
SubtotalMarch 31,2018

2,000
72,031
5,214—
25,41017,456—
122,112
4,033
18,362
13,762
1,032
350
—
—
37,541
—
—
—
—
—
—
—
—
66,78960,44920,6122,891—
12,607—
163,350
—
—
—
—
—
—
—
—
16,892
74,63764,276——434—
156,242
—
—
—
—
—
—
15
15
—
2
6
3
2
0
32,55232,567
511,829

March 31,2019

10,01735,913—
5,133
32,45521,086—
104,605
9,808
23,595
19,180
2,213
1,882
—
—
56,679
—
—
—
—
—
—
—
—
30,26350,638
7,724
804—
15,712—
105,143
—
—
—
—
—
—
—
—
31,58070,112
61,14528,643—385—
191,866
—
—
—
—
—
—
14
14
—
5
5
2
3
0
31,23031,248489,558

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Securities

Short-term corporate
bonds

Remaining Period(Millions of yen)

47

Securities
Balance of Securities by Type(Millions of yen, proportion in brackets)

Type

March 31,2018
Domestic operations

Government bonds

International operations
Total
Domestic operations

Local government bonds

International operations
Total

Securities

Domestic operations
Short-term corporate bonds

International operations
Total
Domestic operations

Corporate bonds

International operations
Total
Domestic operations

StocksInternational operations
Total
Domestic operations

Foreign bonds

International operations
Total
Domestic operations

Foreign stocks

International operations
Total
Domestic operations

Other securities

International operations
Total
Domestic operations

Total

International operations
Total

48

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

122,112(23.8%)—(—)
122,112(23.8%)
37,541(7.3%)—(—)
37,541(7.3%)
—
(—)
—
(—)
—
(—)
163,350(31.9%)—(—)
163,350(31.9%)
—
(—)
—
(—)
—
(—)
—
(—)
156,242(30.5%)
156,242(30.5%)—(—)
15(0.0%)
15(0.0%)
19,497(3.8%)
13,070(2.5%)
32,567(6.3%)
342,502(66.9%)
169,327(33.0%)
511,829(100.0%)March 31,2019

104,605(21.3%)—(—)
104,605(21.3%)
56,679(11.5%)—(—)
56,679(11.5%)
—
(—)
—
(—)
—
(—)
105,143(21.4%)—(—)
105,143(21.4%)
—
(—)
—
(—)
—
(—)
—
(—)
191,866(39.1%)
191,866(39.1%)—(—)
14(0.0%)
14(0.0%)
17,706(3.6%)
13,542(2.7%)
31,248(6.3%)
284,135(58.0%)
205,423(41.9%)
489,558(100.0%)Average Balance of Securities by TypeType

FY2017
Domestic operations

Government bonds

International operations
Total
Domestic operations

Local government bonds

International operations
Total

International operations
Total
Domestic operations

Corporate bonds

International operations
Total
Domestic operations

StocksInternational operations
Total
Domestic operations

Foreign bonds

International operations
Total
Domestic operations

Foreign stocks

International operations
Total
Domestic operations

Other securities

International operations
Total
Domestic operations

Total

International operations
Total

162,184(29.5%)—(—)
162,184(29.5%)
47,921(8.7%)—(—)
47,921(8.7%)
—
(—)
—
(—)
—
(—)
168,362(30.6%)—(—)
168,362(30.6%)
—
(—)
—
(—)
—
(—)
—
(—)
147,669(26.8%)
147,669(26.8%)—(—)
15(0.0%)
15(0.0%)
15,160(2.7%)
8,435(1.5%)
23,596(4.2%)
393,628(71.6%)
156,120(28.3%)
549,749(100.0%)FY2018105,503(21.5%)—(—)
105,503(21.5%)
43,937(8.9%)—(—)
43,937(8.9%)
—
(—)
—
(—)
—
(—)
121,910(24.9%)—(—)
121,910(24.9%)
—
(—)
—
(—)
—
(—)
—
(—)
186,818(38.2%)
186,818(38.2%)—(—)
15(0.0%)
15(0.0%)
17,308(3.5%)
13,377(2.7%)
30,686(6.2%)
288,660(59.0%)
200,211(40.9%)
488,872(100.0%)

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Securities

Domestic operations
Short-term corporate bonds(Millions of yen, proportion in brackets)

49

Fair Value of Securities
Trading Securities
Not applicable.
Held-to-Maturity Debt Securities with Fair ValueType

Government bonds

Fair Value of Securities

Other securities

Total

March 31,2018

March 31,2019

Book value

25,41025,360Fair value

29,756

29,626

Difference

4,346

4,265

Gain

4,346

4,265

Loss

—

—

Book value

10,851

6,702

Fair value

10,1186,628

Difference

(732)

(74)

Gain

—

36

Loss

732

111

Book value

36,261

32,063

Fair value

39,87536,254

Difference

3,614

4,190

Gain

4,346

4,302

Loss

732

111

(Note) Fair values are based on the market prices at the end of the ﬁscal year.

50(Millions of yen)

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Available-for-Sale Securities with Fair ValueType

StocksMarch 31,2018

Acquisition cost——

Book value——

Valuation difference——

Acquisition cost

93,39375,785

Book value

96,702

79,245

Valuation difference

3,309

3,459

Unrealized gain

3,310

3,459

0

—

Acquisition cost

37,51556,606

Book value

Unrealized loss

Local government
bonds
Bonds
Corporate bonds

37,541

56,679Valuation difference25

72

Unrealized gain

47

77

Unrealized loss

22

4

Acquisition cost

162,909

104,609

Book value

163,350

105,143

Valuation difference

440

533

Unrealized gain

525

553

84

20

Acquisition cost

293,818

237,001

Book value

Unrealized loss

Sub total

Other securities

297,594

241,067

Valuation difference

3,775

4,065

Unrealized gain

3,883

4,090

Unrealized loss

107

24

Acquisition cost

177,252

212,287

Book value

176,965

214,287

Valuation difference

(287)

2,000

Unrealized gain

714

2,292

1,001

292

Acquisition cost

471,071449,288

Book value

Unrealized loss

Total

March 31,2019

474,559455,354

Valuation difference

3,488

6,065

Unrealized gain

4,597

6,382

Unrealized loss

1,109

316

Fair Value of Securities

Government
bonds(Millions of yen)

(Note) Amounts on balance sheet are recorded at fair values based on the market prices at the end of the ﬁscal year.

Breakdown of Securities without Fair Value and Their Book ValueType
Held-to-maturity debt securities(Millions of yen)March 31,2018

March 31,2019——

Available-for-sale securities
Unlisted foreign securities

15

14

Others993

2,125

The Nomura Trust and Banking Co., Ltd. Disclosure 201951

Derivatives Transaction
1. Derivatives Transactions Not Qualifying for Hedge Accounting
As for derivatives transactions not qualifying for hedge accounting, the contract amounts or notional principal, fair values
and unrealized gains or losses as well as calculation method of fair values for each type of hedged transactions as of thebalance sheet date are as follows:
Note that contract value amounts do not indicate the market risk related to derivatives transactions.
Interest Rate-Related Transactions(Millions of yen)March 31,2018
Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Receive-floating interest rate
Pay-fixed interest rate
Fair value (losses)
Unrealized gains (losses)
Over-thecounter
Contract amountOver one year
Receive-floating interest rate
Pay-floating interest rate
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Receive-fixed interest rate
Pay-fixed interest rate
Fair value (losses)
Unrealized gains (losses)
Total fair value (losses)
Total unrealized gains (losses)
Receive-fixed interest rate
Pay-floating interest rate

Interest rate swaps

Derivatives Transaction

197,700
197,200(3,096)(3,096)————150,100
149,600(3,955)(3,955)————(7,051)(7,051)March 31,2019

202,800
202,300
(293)
(293)
—
—
—
—
168,600
167,300(1,177)(1,177)————(1,471)(1,471)(Note) 1. Transactions above are marked to market, and unrealized gains (losses) are included in the statements of income.
2. Calculation of fair value
Fair values are based on the discounted present value.
3. Interest rate-related transactions
In addition to the abovementioned, the appraisal profit based on separate accounting of embedded derivatives of hybrid financial
instruments was 1,471 million yen at the end of March, 2019, and 7,051 million yen at the end of March, 2018.

Currency-Related Transactions(Millions of yen)March 31,2018

Swaps

Sold

Forwards
BoughtOver-thecounter

Sold

Options
BoughtTotal fair value (losses)
Total unrealized gains (losses)

Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)
Contract amountOver one year
Fair value (losses)
Unrealized gains (losses)

38,63813,5481,059
1,059
427,633
5,219
4,950
4,950
421,186—(4,564)(4,564)
19,501—
92
117
12,171
—
79
(57)
1,618
1,506

(Note) 1. Transactions above are marked to market, and unrealized gains (losses) are included in the statements of income.
2. Calculation of fair value: Fair values are based on the discounted present value.

52

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

March 31,2019

45,45936,580271
271
339,824
—
(819)
(819)
292,543—458
458
20,770
—
348
109
9,681
—
205
(7)
464
12

Stock-Related Transactions
Not applicable.
Bond-Related Transactions
Not applicable.
Commodity-Related Transactions
Not applicable.

Not applicable.
OthersNot applicable.
2.Derivatives Transactions Qualifying for Hedge Accounting
As for derivatives transactions qualifying for hedge accounting, the contract amounts or notional principal, fair values
and unrealized gains or losses as well as calculation method of fair values for each type of hedged transactions and byrespective hedge accounting method as of the balance sheet date are as follows:
Note that contract value amounts do not indicate the market risk related to derivatives transactions.
Interest Rate-Related Transactions
Hedge accounting
methodType(Millions of yen)March 31,2018
Primary
hedged item Contract amount Over one year Fair value

March 31,2019
Contract amount Over one year
Fair value

Deposit, loans,available forReceive-floating interest rate sale securities(bonds)Pay-fixed interest rate

126,230

105,230(3,803)

185,889

185,889(6,234)

126,230

105,230(3,803)

185,889

185,889(6,234)

Interest rate swaps
Exceptional
Securities
method for Interest
Receive-floating interest rate
rate swaps
Pay-fixed interest rate
Total

25,00025,000(3,701)

25,00025,000(3,666)25,00025,000(3,701)

25,00025,000(3,666)——(7,504)——(9,901)PrimarymethodInterest rate swaps

Derivatives Transaction

Credit Derivative Transactions(Note) 1. Primarily, the deferred hedge method using individual hedges, or, in certain cases, portfolio hedges, is applied under “Accounting and
Auditing Treatment Relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee
Report No. 24).
2. Calculation of fair value
Fair values are based on the discounted present value.

Currency-Related Transactions
Hedge accounting
MethodType

Appropriation
methodCurrency swaps

Total(Millions of yen)March 31,2018
Primary
hedged item Contract amount Over one year Fair value
Foreign currency
denominated
10,125—556
securities——
556

March 31,2019
Contract amount Over one year Fair value

6,723

—

29

—

—

29

(Note) 1. Primarily, the deferred hedge method is applied under “Accounting and Auditing Treatment Relating to Adoption of Accounting Standards
for Foreign Currency Transactions for Banks” (JICPA Industry Audit Committee Report No. 25).
2. Calculation of fair value
Fair values are based on the discounted present value.

Stock - Related Transactions
Not applicable.
Bond - Related Transactions
Not applicable.

The Nomura Trust and Banking Co., Ltd. Disclosure 201953

Trust BusinessStatement of Trust Account(Millions of yen)March 31,2018

March 31,2019

Trust Business

Assets:
Loans
Loans on deeds
Securities
Government bonds
Local government bonds
Corporate bonds
StocksForeign securities
Other securities
Securities held for investment trusts
Foreign investments held for investment trusts
Beneficiary rights
Securities held in custody accounts
Money claims
Money claims on life insurance policies
Other money claims
Other claims
Call loans
Due from banking accountCash and due from banks
Due from banks
Other assets
Other
Total

303,222
303,2222,617,141
318,451
52,983
240,605
485,992
909,032
610,076
9,337,499
6,434,049
26,479838,195
39,0689,136
29,931
172,931
1,338,997
176,295
190,336
190,33622
22
21,474,240

319,181319,1812,785,713
343,619
61,078267,637
470,864
968,458
674,055
8,997,952
6,655,278
26,444
823,950
40,6359,334
31,300305,706
1,318,787
215,105
185,201
185,201——
21,673,956

Liabilities:
Designated money trusts
Specified money trusts
Pension trusts
Investment trusts
Pecuniary trusts other than money trusts
Securities trusts
Money claims trusts
Composite trusts
Total

505,746
1,509,603
2,150
17,328,641
199,866
968,234
4,582
955,415
21,474,240

493,681
1,578,833
1,041
17,319,480
252,469
1,064,651
3,719
960,077
21,673,956(Note) 1. We do not handle employees' property formation beneﬁt trusts or loan trusts.
2. No trust assets are entrusted to other trust banks for asset administration.

Breakdown of Trusts in Which Repayments of the Principal Are Guaranteed
Jointly Operated Designated Money Trusts(Millions of yen)March 31,2018

54

March 31,2019

Assets:
Loans
Securities
Due from banking account
Other
Total

—
—
93,896—
93,896——
134,081—
134,081

Liabilities:
Principal
Reserve for possible impairment of principal
Other
Total

93,896—
0
93,896

134,080—0134,081

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Balance of Securities (by Type) Held in Money Trusts and Pension Trusts by TypeType

March 31,2018

Government bonds
Local government bonds
Corporate bonds

238,097

1,120

1,110

—

—

115,547

125,701
38,062

1,047,537

1,122,201

Balance of assets under management at the end of period

1,477,950

1,525,173

Government bonds——

Local government bonds——

Short-term corporate bonds——

Corporate bonds——

Stocks——Other securities

650

650

Balance of assets under management at the end of period

650

650

274,211238,097

1,120

1,110

—

—

Corporate bonds

115,547

125,701

Stocks39,53238,062Other securities

1,048,187

1,122,851

Balance of assets under management at the end of period

1,478,600

1,525,823

Government bonds
Local government bonds
Short-term corporate bonds
Total

Trust Business

39,532Other securities

StocksPension trusts

March 31,2019

274,211

Short-term corporate bonds
Money trusts(Millions of yen)

(Note) We do not handle employees' property formation beneﬁt trusts or loan trusts.

Balance of Principal of Money Trusts by Trust Period
PeriodMoney trusts(Millions of yen)March 31,2018

March 31,2019Less than 1 year

549,989753,578

From 1 year to less than 2 years

103,074

6,049

From 2 years to less than 5 years

3,690

8,245

495,640

478,133

5 years or more——

1,152,394

1,246,006

Others
Total

Balance of Loans Related to Money Trusts and Pension Trusts (by Category)Type
Loans on deeds
Loans on bills
Bills discounted
Total(Millions of yen, proportion in brackets)

March 31,2018

March 31,2019

298,951

302,946(100.0%)(100.0%)

—

—

(—)

(—)

—

—

(—)

(—)

298,951

302,946(100.0%)(100.0%)(Note) This is the balance of loans under trust account related to money trusts and pension trusts. The same applies to the tables of balance of loans(by Category), (by Contract Term), (by Type of Collateral), (by Industry) and (by Purpose of Use) and the tables for Loans to Small and Medium-Sized
Enterprises.

The Nomura Trust and Banking Co., Ltd. Disclosure 201955

Trust Business
Balance of Loans Related to Money Trusts and Pension Trusts (by Contract Term)
Period(Millions of yen)March 31,2018

March 31,2019

279,800

289,700

More than 1 year but less than 3 years——

More than 3 years but less than 5 years——

More than 5 years but less than 7 years——

7 years or more

19,151

13,246

Total

298,951

302,946

1 year or less

Balance of Loans Related to Money Trusts and Pension Trusts (by Type of Collateral)

Trust Business

Type

March 31,2018

March 31,2019

279,800

289,700

Claims——Commodities——

Real estate

—

—

Other

—

—

279,800

289,700

Securities

Subtotal
Guarantees——

Unsecured

19,151

13,246

Total

298,951

302,946

Balance of Loans Related to Money Trusts and Pension Trusts (by Industry)Type
Finance and insurance
Local governments
Total(Millions of yen, proportion in brackets)

March 31,2018

March 31,2019

279,800

289,700(93.5%)(95.6%)

19,151

13,246(6.4%)(4.3%)

298,951

302,946(100.0%)(100.0%)

Balance of Loans Related to Money Trusts and Pension Trusts (by Purpose of Use)
Type

56

(Millions of yen)

(Millions of yen)March 31,2018

March 31,2019

Equipment fund——Working capital

298,951

302,946

Total

298,951

302,946

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Loans to Small and Medium-Sized Enterprises Related to Money Trusts and Pension Trusts
March 31,2018(Millions of yen)March 31,2019

298,951

302,946

Balance of loans to SMEs (B)——Ratio (%) (B/A)——

Total loan balance (A)(Note) Small and medium-sized enterprises means companies capitalized at 300 million yen or less (100 million yen or less for the wholesale industry
and 50 million yen or less for the retail, food, service industries), or companies with full-time employees 300 or fewer (100 or fewer for the wholesaleand service industries and 50 or fewer for the retail, food, service industry) and individuals.

Balance of Loans and Securities (by Type) Held in Money Trusts and Pension Trusts by TypeMarch 31,2018

298,951

302,946

Securities

1,477,950

1,525,173

Total

1,776,901

1,828,119

Loans

—

—

650

650

Loans
Money trusts

Pension trusts

March 31,2019Securities

650

650

298,951

302,946

Total securities

1,478,600

1,525,823

Total loans and securities

1,777,551

1,828,769

Total
Total loans

Trust Business

Type(Millions of yen)

(Note) We do not handle employees' property formation beneﬁt trusts or loan trusts.

The Nomura Trust and Banking Co., Ltd. Disclosure 201957

Management Indices
Overall Proﬁt Margin(%)

FY2017

Yield on investments

Funding cost

Management Indices

Overall profit margin

FY2018Domestic operations

0.59

0.49

International operations

1.93

2.68

Total

0.90

1.00

Domestic operations

1.69

1.43

International operations

3.75

2.72

Total

1.98

1.64

Domestic operations(1.10)(0.94)

International operations(1.82)(0.04)

Total(1.08)(0.64)

Proﬁt Ratio(%)

FY2017Return on assets (ROA)

Return on equity (ROE)FY2018Net business profit to assets ratio

0.16

0.16

Ordinary profit to assets ratio

0.14

0.16

Net income to assets ratio

0.08

0.10

Net business profit to equity ratio

3.18

3.43

Ordinary profit to equity ratio

2.94

3.43

Net income to equity ratio

1.76

2.22

Gross Operating Proﬁt Ratio(%)

FY2017Gross operating profit ratio

FY2018Domestic operations

1.50

1.36

International operations

1.06

1.08

Total

1.45

1.32

Loan-To-Deposit Ratio(%)

FY2017
Balance at the end of
the period
Average balance during theperiodFY2018Domestic operations

61.4

56.2

International operations

66.3

87.6

Total

62.0

59.3

Domestic operations

55.0

59.7

International operations

57.9

68.8

Total

55.3

60.8

Security-To-Deposit Ratio(%)

FY2017
Balance at the end of
the period
Average balance during theperiod58

FY2018Domestic operations

46.2

31.1

International operations

151.1

202.2

Total

60.0

48.3

Domestic operations

53.9

37.2

International operations

154.2

173.9

Total

66.2

54.9

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Deposits, Loans and Trust Assets per Branch(Millions of yen)March 31,2018
Deposits
Loans
Amount of funds in trust account852,915

March 31,2019

1,013,279

529,275

601,5202,017,500

2,073,557(Note) Deposits include negotiable certiﬁcates of deposit.

(Millions of yen)March 31,2018

March 31,2019

Deposits

1,891

2,202

Loans

1,173

1,307

Amount of funds in trust account

4,473

4,507

(Note) Deposits include negotiable certiﬁcates of deposit.

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Management Indices

Deposits, Loans and Trust Assets per Employee

59

Disclosure based on Pillar III of Basel III – Composition of Capital
Disclosure based on Pillar III of Basel III – Composition of Capital

Disclosure based on Pillar III of Basel III
This section describes the information such as the capital adequacy situation specified by the Financial Services Agency
Commissioner, based on Article 19-2, Paragraph 1, Item 5, Subsection 2, etc., of the Ordinance for Enforcement of Banking Act.

Composition of Capital Disclosure(Millions of yen)March 31,2018

March 31,2019

Amounts excluded
under transitionalarrangements

Items
Core capital: instruments and reserves
Directly issued qualifying common share capital or preferred share capital with acompulsory conversion clause plus related capital surplus and retained earnings

59,56660,253of which: capital and capital surplus

48,27048,270of which: retained earnings

11,832

12,655

—

—

536

672

—

—

—

—

1,232

1,090

1,232

1,090

—

—

Eligible noncumulative perpetual preferred shares subject to transitional arrangements(amount allowed to be included in Core capital: instruments and reserves)——

Eligible capital instruments subject to transitional arrangements(amount allowed to be included in Core capital: instruments and reserves)——

Capital instruments issued through measures for capital enhancement by public institutions(amount allowed to be included in Core capital: instruments and reserves)——

Land revaluation excess after 55% discount(amount allowed to be included in Core capital: instruments and reserves)——

60,79861,344of which: treasury stockof which: earning to be distributedof which: other than above
Stock acquisition right to common shares and preferred shares with acompulsory conversion clause
Total of reserves included in Core capital: instruments and reservesof which: general allowance for loan losses included in Core capitalof which: eligible provision included in Core capitalCore capital: instruments and reserves(A)Core capital: regulatory adjustments
Total amount of intangible assets (excluding those relating to mortgage servicing rights)

824

4,531

51

—

25

of which: other intangibles other than goodwill and mortgage servicing rights

3,298

824

4,505

Deferred tax assets that rely on future profitability excluding those arising from
temporary differences (net of related tax liability)

—

—

—

Shortfall of eligible provisions to expected losses

—

—

—

Gain on sale of securitization

—

—

—

Gains and losses due to changes in own credit risk on fair valued liabilities

—

—

—

Prepaid pension cost

—

—

—

Investments in own shares (excluding those reported in the net assets section)

—

—

—

Reciprocal cross-holdings in common equity

—

—

—

Investments in the capital banking, financial and insurance entities that areoutside the scope of regulatory consolidation (“Other Financial Institutions”),
net of eligible short positions, where the bank does not own more than 10% of
the issued share capital (amount above the 10% threshold)

—

—

—

of which: goodwill (including those equivalent)

60

3,350

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

March 31,2019

Amounts excluded
under transitionalarrangements

Items

—

—

—

of which: significant investments in the common stock of Other Financial
Institutions, net of eligible short positions

—

—

—

of which: mortgage servicing rights

—

—

—

of which: deferred tax assets arising from temporary differences(net of related tax liability)

—

—

—

Amount exceeding the 10% threshold on specific items

—

—

—

of which: significant investments in the common stock of Other Financial
Institutions, net of eligible short positions

—

—

—

of which: mortgage servicing rights

—

—

—

of which: deferred tax assets arising from temporary differences(net of related tax liability)

—

—

—

Amount exceeding the 15% threshold on specific items

Core capital: regulatory adjustments

(B)

3,350

4,531

57,44756,813Disclosure based on Pillar III of Basel III – Composition of Capital(Millions of yen)March 31,2018

Regulatory capital
Regulatory capital ( (A) – (B) )(C)

Risk-weighted assets

319,601

302,434of which: total amount included in risk-weighted assets by transitionalarrangements824—

of which: intangible assets (excluding those relating to goodwill andmortgage servicing rights)

824

of which: deferred tax assets that rely on future profitability excluding
those arising from temporary differences (net of related tax liability)—of which: prepaid pension cost—of which: significant investments in the common stock of Other Financial
Institutions (net of eligible short positions)——of which: other than above——

Total amount of credit risk-weighted assets——

33,42531,935Credit risk adjustments——

Operational risk adjustments——

353,026

334,370

16.27%

16.99%

Market risk (divided by multiplying the capital requirement by 12.5)
Operational risk (divided by multiplying the capital requirement by 12.5)

Total amount of Risk-weighted assets(D)

Capital adequacy ratio
Capital adequacy ratio ( (C) / (D) )The Nomura Trust and Banking Co., Ltd. Disclosure 201961

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)

Qualitative Disclosure
Ⅰ.

Summary of method of raising capital (refers to the method of raising capital where all or part of the amount isincluded in the amount of basic items related to the core capital speciﬁed in the formula in the Notiﬁcation about
capital adequacy No. 37).
At The Nomura Trust and Banking, we aim to maintain suﬃcient capital, mainly common stock, which is stipulated in
Article 40 of the Financial Services Agency Notiﬁcation No. 19 (Notiﬁcation on Capital Adequacy), “the standard forwhich banks determine whether they hold adequate capital in light of assets they hold based upon Article 14-2 of the
Banking Act of Japan.” Other than raising capital by issuing common stock, we reserve a portion of annual earnings aslegally retained earnings or other retained earnings.

Ⅱ.

Outlines of the Capital Adequacy Assessment Method
As for credit risks and operational risks, we evaluate capital adequacy by comparing the amount equivalent to 8% of risk
assets with the amount of capital, as stipulated in the Notiﬁcation on Capital Adequacy.
We evaluate credit risks using the Standardized Approach, a method of calculating the non-consolidated capital
adequacy ratio in accordance with the Basel requirements based on the Notiﬁcation on Capital Adequacy. Also, we haveadopted the Standardized Approach to measure the operational risk amount.
As for risk capital, we set a planned amount compared with the regulatory capital (core capital), and then monitor theactual amount of risk capital and give monthly reports accompanied by a comparison with the regulatory capital (corecapital) to the Risk Management Committee. We recognize the current capital level as adequate.

Ⅲ.

Matters Relating to Credit Risk Management
A. Outlines of Credit Risk Management Policies and Procedures
The Nomura Trust and Banking strictly reviews and manages credit risks based on the Credit Risk Management Policy, theCredit Risk Management Regulations, the Credit Authorization Management Regulations, and the Collaterals Regulations
and the like. At the same time, we carefully pay attention to diversiﬁcation of risks and portfolios, and comprehensively
manage both on- and oﬀ-balance sheet transactions in pursuit of appropriate management of credit risks. The state of
portfolio diversiﬁcation is reported to the Risk Management Committee and then reviewed on a monthly basis.

62

1.

Credit rating system
Credit ratings are determined not only by conducting scoring based on a rating model using the financial
information of debtors but also by utilizing the latest important information available including qualitative
information on managerial risk, legal risk etc. which may aﬀect the certainty of debt assumption, external credit
ratings or the credit standing of associated companies . These ratings are classiﬁed into 20 levels.
To perform credit screening, we strictly manage credit risks based on credit ratings to maintain soundness of thebankʼs assets, fully taking into account our public and social missions as a ﬁnancial institution.

2.

Exposure (credit amount) management
With the identification of exposure for each debtor or each group of debtors positioned as the core of credit risk
management, we centrally control not only loans but also other on-balance and oﬀ-balance items in a comprehensive
manner. Oﬀ-balance sheet transactions are managed by the current exposure method. Based on the above, we performmeasurement and monitoring of credit risk quantity by quantitatively analyzing past default rates by credit rating.

3.

Self-assessment
To make a self-assessment of assets involving credits, we implement self-assessments through strict classiﬁcationof credits based on obligor categorization linked to credit ratings, in accordance with the “Asset Assessment
Regulations” which is based on the Financial Inspection Manual.

4.

Allowance for loan losses
Allowance for loan losses is provided as follows, pursuant to the rules regarding write-oﬀs/allowances for loan losses:
For claims to normal debtors and debtors requiring caution, the provision for allowance is calculated by multiplying
the amount of claims less the amount secured by eligible collateral or guarantees or expected to be collected
through their disposal or execution, by an accumulated default rate reﬂecting remaining years by credit rating.
For claims to possibly bankrupt debtors, the expected loss amount is calculated by multiplying the amount ofclaims classiﬁed as Category III by an expected rate of losses for each debtor, and then providing such amount asallowance for loan losses.

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

B. Matters Relating to Portfolios to Which the Standardized Approach Is Applied
1. Names of qualiﬁed rating agencies, etc. (deﬁned as qualiﬁed rating agencies, OECD, and export credit agencies; the same
deﬁnition applies below.) used to determine the risk weight (including reasons if qualiﬁed rating agencies were changed)
In order to determine the risk weight, we use the following four rating agencies as qualiﬁed rating agencies for all exposures.
Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody's Investors Service, Inc.
(Moodyʼs), and S&P Global Ratings (S&P)
2.

Ⅳ.

Names of qualiﬁed rating agencies used to determine the risk weight of each type of exposures
In order to determine the risk weight of each type of exposure, we use the following four rating agencies as
qualiﬁed rating agencies for all exposures.
Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody's Investors Service, Inc.
(Moodyʼs), and S&P Global Ratings (S&P)

Outlines of Credit Risk Mitigation Techniques

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)

For claims to virtually bankrupt debtors and bankrupt debtors, the total amount of claims classiﬁed as Category III
and Category IV for each debtor is regarded as the expected loss amount, and then an amount equivalent to the
expected loss amount is provided as allowance for loan losses or such amount is directly written oﬀ.

From the standpoint of risk management, we take measures to provide coverage for credit exposure by collateral andguarantees to mitigate counterparty credit risk.
In accordance with the Notiﬁcation on Capital Adequacy, we use (1) eligible ﬁnancial asset collateral, (2) guarantees or
credit derivatives, and (3) netting of loans and deposits held at our bank.
To treat financial assets as collateral against credit such as loans, the credit risk mitigation effect is reflected in acomprehensive approach, calculating credit risk exposure after making adjustments to portions covered by collateraland deducting them from the credit amount. Eligible ﬁnancial assets include cash, deposits held at our bank, debt
securities issued by the sovereigns (governments, central banks, public sector entities), bonds rated BBB- and above byexternal rating bodies, listed stocks, investment trusts, and other items.
In the case of guarantees and credit derivatives, the credit risk mitigation eﬀect is reﬂected in the replacement approach
whereby the risk weight of exposures to the obligor is replaced with the risk weight of the guarantee or the protection
provider. Eligible guarantors and protection providers include central governments, Japanese local authorities andgovernment related organizations, foreign non-central government public sector entities, multilateral development banks,
banks and securities companies with a lower risk weight than the original obligors, and companies which are rated by theappropriate rating agencies.
A netting of loans and deposits held at our bank shall be required to meet the following conditions; netting of loans
and deposits held at our bank is legally valid, loans and deposits under netting contracts with the same counterparty
are always identifiable, the possibility that deposits may not be further maintained at our bank is monitored andmanaged, and the netted amount is monitored and controlled.
Ⅴ. Outlines of Policies and Procedures for Counterparties of Derivatives and Transactions with a Long-Horizon
Settlement Period
In the case of derivatives, we calculate the amount of credit risk assets of counterparties by multiplying the creditequivalent amount by the risk weight. We employ the current exposure method to calculate the credit-equivalent amount.

Ⅵ.

1.

Policies regarding measures to secure transactions by collateral and allowance calculations
We take appropriate credit enhancement measures according to the creditworthiness of counterparties. We
have entered into the ISDA Credit Support Annex (CSA) and the like with some counterparties. As for allowances,
we calculate the credit reserves according to the amount of claims, depending on the creditworthiness ofcounterparties.

2.

Possibility providing additional collaterals due to deterioration of our creditworthiness
As for the transactions with ISDA Credit Support Annex (CSA) and the like, an obligation to provide additional
collaterals may arise due to deterioration of our creditworthiness, such as a downgrade of our credit rating.

Matters Relating to Securitization Exposures
A. Outlines of Risk Management Polices and Procedure
The Nomura Trust and Banking acts as an “investor” in securitization products, but we do not act as an “originator” or as a
The Nomura Trust and Banking Co., Ltd. Disclosure 201963

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)“servicers.”
When we engage in securitization transaction as an “investor,” the Risk Management Committee must analyze
the investment, assessing the investment policy as well as the associated risks of the investment products and set
investment limit. Also reviewing in new investment products or new investment techniques, we will consult with
the New Products & Services Review Committee and the Risk Management Committee.
We invest in securitized products with underlying assets such as loan claims and claims on lease payments. The
securitized products we held carries credit risk and interest rate risk, but this risk is no diﬀerent from the risk fromloan and securities trading. Also there is risk in changing fair value by changes in credit rating and default ratio.
B.

Matters relating to management system and operation status stipulated in the Provision of article No. 248-1-1 to 4of the Notiﬁcation on Capital Adequacy including cases of mutatis mutandis application in accordance with article
No. 302-2-2 of the Notiﬁcation on Capital Adequacy
We analyze and evaluate the underlying assets, degree of dispersion and the scheme etc and make a prudent
investment decisions when investing in individual securitization products. After the investment the rating agency
we appointed will continue monitoring, checking fair value and report to the Risk Management Committee
regularly.

C.

Policy for securitization transaction used as credit risk mitigation techniques
Not applicable

D. Calculation methods for determining the amount of credit risk asset with regard to securitization exposure
In accordance with the Notiﬁcation on Capital Adequacy, we evaluate credit risk asset with regard to securitization
exposure using the Standardized Approach.
E.

Calculation methods for determining the amount of market risk with regard to securitization exposure
We apply exceptional accrual method into the market risk equivalentF.

If conducting securitization transaction relating to a third partyʼs assets by using a special purpose entity by bank, the typeof the special purpose entity and whether the bank possesses securitization exposures by such securitization transactions.
Not applicableG.

Names of Bankʼs subsidiary companies (excluding consolidated subsidiary) or aﬃliate companies possessing securitization
exposures executed by the Bank (including securitization transaction carried out using special purpose entity)
Not applicable

H.

Accounting Policies for Securitization Transactions
Each ﬁnancial asset is treated according to the Accounting Standards for Financial Instruments.

I.

Names of eligible external credit assessment institutions used to determine the risk weight by each type of
securitization exposure (including reasons if eligible external credit assessment institutions were changed)
In order to determine the risk weight, we use the following four rating agencies as eligible external credit
assessment institutions.
Rating and Investment Information, Inc (R&I), Japan Credit Rating Agency (JCR), Moodyʼs Investor Service, Inc(Moodyʼs), and S&P Global Ratings (S&P)

J.

Any signiﬁcant changes to the Internal ratings-based approach for securitization exposures
Not applicableK.

Any signiﬁcant changes to the quantitative information
Not applicable

Ⅶ.

Matters Relating to Market Risk
Not applicable

Ⅷ.

Matters Relating to Operational Risk
A.

64

Outlines of Risk Management Policies and Procedures
Operational risk is defined as the risk of incurring losses owing to inadequate business processes, activities of
directors and employees or systems, or external events. Based on the Integrated Risk Management Regulations,
we manage administrative risk, system risk, information security risk, legal and compliance risk, outsourcing risk,

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

■ Departments in Charge of Each Operational Risk

Operational
Risk

B.

Ⅸ.

Administrative risk
System risk
Information security risk
Legal and compliance risk
Outsourcing risk
Human Risk
Tangible Risk
Other operational risk

Operations Planning and Administration Department
IT Planning & Control Department
Operations Planning and Administration Department
Compliance Control Department
Operations Planning and Administration Department
Human Resource and General Affairs Department
Human Resource and General Affairs Department
Corporate Risk Management Department

Methods Used to Calculate the Operational Risk AmountTo measure the operational risk amount under Basel requirements, we have used the Standardized Approachsince the beginning of the period ended March 2011. Under this approach, in accordance with the Notiﬁcation
on Capital Adequacy, we measure the amount of operational risk by ﬁrst allocating annual gross proﬁt (calculated
as “gross operating proﬁt” minus “gains on sales of bonds” and “gains on redemption of bonds,” and plus “loss on
sales of bonds” and “loss on redemption of bonds,” “loss on devaluation of bonds,” and “fees and commissions
payments”) into eight categories, and then multiplying gross income for each category by the ratio designatedto each operational category (ranging from 12% to 18%) accordingly (gross profit of business that cannot beallocated to one of the eight categories will be multiplied by an 18% ratio), and the amounts as a result for all
the categories are aggregated for a year. The average of the aggregated amounts for the last three years is theoperational risk amount.

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)

human risk and tangible risk and in association with these risks, set out the Administrative Risk Management
Regulations, the System Risk Management Regulations, the Basic Policies for Information Security, the Legal andCompliance Risk Management Regulations, the Outsourcing Risk Management Regulations.
Furthermore, the Corporate Risk Management Department manages operational risk comprehensively, while eachspecialized department manages speciﬁc risks in its jurisdiction.

Outlines of Risk Management Policies and Methods Regarding Investments and Other Related Exposures (“Investments”) or Equity
Exposures in Banking Account as Stipulated in the Article 4-6-3 of the Order for Enforcement of Banking Act (Order No. 40 of 1982)
Decisions to hold investments and equities exposures are made after approved by Risk Management Committee oranother equivalent committee, depending on their purpose and amount, etc., based on the Approval Authorization
Regulations, the Credit Authorization Management Regulations and the like.
As for an individual investment, we recognize and manage its risk using the VaR Approach, Net Asset Approach or the
like, depending on the investment attributes and the style.
In the accounting procedures, we follow the Companies Act, the Banking Act of Japan, the Corporate Accounting
Principles, “Ordinance on Accounting of Companies,” “Accounting Guidelines for Banks” announced by the Japanese
Bankers Association, and other generally-accepted standards.
Since we adopt the Standardized Approach to measure the amount of credit risks under Basel requirements, a risk
weight of 100% is applied to equity exposures of the stocks, etc. which are not material investments.

Ⅹ.

Matters Relating to Interest Rate Risk in the Banking AccountA.

B.

Outlines of Risk Management Policies and Procedures
As for the interest rate risk, we calculate this based on the Notification on Capital Adequacy, in accordance with
the Capital Management Regulations and the Market Risk Management Regulations. As for the risk management
procedures for interest-sensitive assets and liabilities in the banking account, the status of interest risk and the like arereported to the Risk Management Committee and the future management policies for assets and liabilities as well asother related issues are reviewed and determined.
Outlines of Methods Used to Calculate Interest Rate Risks(1) Outlines of Risk Management Policies and Procedures(a) Deﬁnition of Interest Rate Risk and Subject of Risk Management and Measurement
Interest rate risk is deﬁned as: “The risk of loss resulting from changes in interest rates. As a result of a mismatchof interest rates on its assets and liabilities and/or timing differences in the maturity thereof, a financial
institution may suﬀer a loss or a decline in proﬁt due to changes in interest rates.”
At the Nomura Trust and Banking, rate sensitive assets and liabilities, and oﬀ-balance-sheet transactions are
subject to risk management and measurement.
The Nomura Trust and Banking Co., Ltd. Disclosure 201965

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)(b) Risk Management and Mitigation Policies
As for the risk management procedures for interest-sensitive assets and liabilities in the banking account andfor off-balance-sheet transactions, the status of interest risk is properly reported to the Risk Management
Committee and other relevant organizations, and the future management policies for assets, liabilities, and oﬀbalance-sheet transactions, as well as other related issues are reviewed and determined.
(c) Interest Rate Risk Measurement Frequency
Interest rate risk is measured daily with the previous business day as the base date.
(d) Interest Rate Risk Mitigation Techniques Including Hedging
For the purpose of managing the risk of changes in market values, we use interest rate swaps to hedge
securities and loans. As for the accounting treatment of hedging instruments, we apply hedge accounting(deferral hedge using portfolio hedges or individual hedges). The exceptional accrual method for interest rate
swaps is applied for certain individual hedges.
(2) Outlines of Methods Used to Calculate Interest Rate Risks(a) Matters Relating to Changes in Economic Value of Equity (⊿ EVE) and Net Interest Income (⊿ NII) Subject toQuantitative Disclosures under Disclosure Notiﬁcation, and Relating to Interest Rate Risks to be Disclosed by
Banks in Addition Thereto(i)Average Maturity of Interest Rate Revision Assigned to Liquid Deposits
The average maturity of the interest rate revision assigned to all liquid deposits was 1.2 years as of March
31, 2019.

(ii)

The Longest Maturity of Interest Rate Revision Assigned to Liquid Deposits
The longest maturity of interest rate revision assigned to all liquid deposits was 4.5 years.

(iii) Method and Assumptions for Maturity Assignment for Liquid Deposits
We use an internal model for estimating the balances and holding periods of core deposits.
(iv) Assumptions for Prepayments of Fixed Interest Rate Loans and Cancellations of Time Deposits before
Maturity
As for the ratios of prepayments of loans and cancellations of time deposits before maturity, we use
values speciﬁed by the Financial Services Agency.
(v)

Aggregation Method and Assumptions for Multiple Currencies
In calculating interest risk, we target all applicable currencies and use a conservative method
for aggregation without taking into account the correlations between currencies. From an importanceperspective, we calculate the interest rate risk for certain currencies by translating them into othercurrencies for aggregation.

(vi) Assumptions for Spreads
We include spreads in the interest for statements of cash ﬂows prepared. Conversely, a risk-free rate is usedas the discount interest rate.
(vii) Other Assumptions Having Signiﬁcant Eﬀects on ⊿EVE and ⊿NII, such as Use of Internal Models
Not applicable(viii) Explanation Regarding Changes from Disclosure at the End of the Previous Fiscal Year
Not stated, as this is our ﬁrst ﬁscal year of disclosure

66

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

We think our ⊿EVE is appropriate for interest risk management purposes.
(b) Following Matters Relating to Interest Rate Risk Measured by Bank for the Purpose of Capital Adequacy
Evaluation, Stress Testing, Risk Management, Income Management, Business Decision-Making or Other
Purpose Other Than Changes in Economic Value of Equity (⊿EVE) and Net Interest Income (⊿NII) Subject toQuantitative Disclosures under Disclosure Notiﬁcation(i)

Explanation Regarding Interest Rate ShockWe use VaR to calculate the quantity of market price change risk from interest rates. In calculating VaR, weuse, as interest rate shock, the expected maximum change calculated with interest rate data from thepast two years.

(ii)

Interest Rate Risk Measurement Assumptions and their Meaning
For VaR, we apply the historical method and use an index volume-weighted average to assign weights
to changes calculated with data from the past two years. We then use the 1st percentile value as interest
rate shock. We apply a holding period of 20 days.

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2019)(ix) Explanation Regarding the Interpretation and Importance of Values Measured

67

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)

Quantitative Disclosure
Under the Notiﬁcation of the Financial Services Agency, The Nomura Trust and Banking calculates the non-consolidated
capital adequacy ratio based on the domestic standard. We use the Standardized Approach to measure credit risks. To
measure the operational risk amount we use the Standardized Approach.
Ⅰ.

Matters Relating to Capital Adequacy
A.

Amount of Required Capital against Credit Risk and Breakdown by Portfolio to Which the Standardized Approach Is
Applied(Millions of yen)

Breakdown by Portfolio

The
Standardized
Approach

Claims on foreign central governments andcentral banks
Claims on foreign non-central government
public sector entities
Claims on Japan Finance Organization for
Municipalities
Claims on Japanese government-affiliatedorganizations
Claims on financial institutions and Type I
financial instruments business operators
Claims on corporations
Claims on small and medium enterprises andindividuals
Claims on projects including acquisition of realestate properties
Other
Securitization
Exposures to Which Regarded Calculation of
Risk Weight is Applied

CVA risk
Total

B.

Required Capital
March 31, 2019

132
80
30
268
765
7,451
906
956
540
200
626
273
12,234

Amount of Required Capital against Credit Risk Concerning Equity Exposures to Which the IRB Approach Is Applied
and the Breakdown by Category
Not applicable as of March 31, 2019

C. Amount of Required Capital for Diﬀerent Exposure Categories against Credit Risk Concerning Exposures to Which
Regarded Calculation of Risk Weight is Applied(Millions of yen)

Exposure Categories
Exposures for which ratios calculated in accordance with Article 76-5, Section 2 of the Notification
on Capital Adequacy are used as the risk weights
Exposures for which ratios calculated in accordance with Article 76-5, Section 6 of the Notification
on Capital Adequacy are used as the risk weights
Exposures for which ratios stipulated in Article 76-5, Section 9, Item 1 of the Notification on
Capital Adequacy are used as the risk weights
Exposures for which ratios stipulated in Article 76-5, Section 9, Item 2 of the Notification on
Capital Adequacy are used as the risk weights
Exposures for which risk weights in Article 76-5, Section 10 of the Notification on Capital
Adequacy are used

Amount ofRequired Capital
As of end of
March 2019

617
—
—
—
9

Amount of Required Capital against Credit Risk Concerning Exposures to Which the Related-Method Are Applied
Not applicable as of March 31, 2019

68

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

E. Amount of Required Capital against Operational Risk
(Millions of yen)March 31, 2019
2,554

Required Capital

F. Non-Consolidated Total Required Capital (Domestic Standard)(Millions of yen)

Non-Consolidated Total Required Capital

Ⅱ.

March 31, 201913,374

Matters Relating to Credit Risk (Excluding Exposures to which Regarded Calculation of Risk Weight is Applied andSecuritization Exposures)A.

Balance of Exposures Related to Credit Risk and Breakdown by TypeB.

Breakdown of Amount by Category and Breakdown of Exposure by Type■ Balances of Exposures Related to Credit Risk
(By area, industry, and duration)

By area and industry
By duration

Manufacturing
Construction
Electricity, gas, heat supply and waterCommunication and information services
Transport
Wholesale and retail
Finance and insurance
Real estate
Goods rental and leasing
Various services
Government and local authorities
Other
Domestic
Overseas
Total
Due in 1 year or lessDue over 1 year to 3 years
Due over 3 years to 5 years
Due over 5 years to 7 years
Due over 7 years
With no maturity
Total

Securities
15,699
3,800
2,006
314
28,184
4,156
38,724
11,777
1,410—
216,853—
322,927
135,882
458,810
81,627179,253
87,64535,832
67,882
6,568
458,810Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)

D. Amount of Required Capital against Market Risk and Breakdown by Approach
Not applicable as of March 31, 2019

(Millions of yen)March 31, 2019
Loans
13,527
3,319
9,332
880
18,462
4,818
92,25671,01019,937
58,912
97,137
139,568
529,164
60,186589,350
404,162
98,17739,7108,440
38,860—589,350

Derivatives
—
—
—
—
—
—
9,009
—
2
—
—
—
9,011
657
9,669
5,954
557
270
265
2,620
—
9,669

Others
56
1
227
0
62
6
138,765
1,051
629
92
347,205
22,372
510,472
5,626
516,098
512,815
1,250
—
—
—
2,033
516,098

Total
29,284
7,121
11,566
1,194
46,7098,982
278,755
83,83921,98059,005661,196
161,940
1,371,575
202,353
1,573,928
1,004,559
279,238
127,626
44,538109,3638,601
1,573,928

The Nomura Trust and Banking Co., Ltd. Disclosure 201969

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)
Balances of Exposure Overdue for More Than Three Months or at Default and Breakdown by Category
Not applicable as of March 31, 2019

D.

General Allowance for Credit Losses, Specific Allowance for Credit Losses and Allowance for Loans to Specific
Foreign Borrowers■ Balances of General Allowance for Loan Losses(Millions of yen)

1,090

March 31, 2019
Against March 31, 2018(141)

■ Balances of Speciﬁc Allowance for Loan Losses（By area and industry）

By area andindustry

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)

C.

Other
Domestic
Overseas
Total

288
288
—
288

March 31, 2019
Against March 31, 2018
(1)
(1)
—
(1)

Allowance for loans to speciﬁc foreign borrowers is not applicable.

E. Amount of Written-Oﬀ of Loans by Industry or Counterparty
Not applicable.

70

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

(Millions of yen)

Balance of Exposures, Subject to Application of a Standard Method, after Consideration of the Effects from
Credit Risk Reduction Methods for Different Risk Weight Categories, and the Amounts of These Exposures
to Which 1,250% of Risk Weight is Applied in Accordance with Article 79, Section 5, Item 2-2; Article 177,
Section 2, Item 2-2; and Article 248 of the Notification on Capital Adequacy (Limited to Cases of Mutatis
Mutandis Application in Accordance with Ar ticle 125 and Ar ticle 127 of the Notification on Capital
Adequacy), as Well as Article 248, Section 4, Item 1-1 and Article 248, Section 4, Item 1-2 (Limited to Casesof Mutatis Mutandis Application in Accordance with Article 125 and Article 127 of the Notification on
Capital Adequacy)(Millions of yen)

Risk Weight

0%
10%
20%
30%
40%
50%
70%
75%
100%
120%
150%
1250%
Other than the above※

March 31, 2019
Rating Available
Rating Not Available
798,576
30,96467,717—
118,532
16,909
—
385
2,766
—
122,742—
4,063——
30,221
25,599148,736
2,001
—

—

2,311

—
—

18
15,270Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)

F.

In the above table, the columns corresponding to the risk weights of 40%, 70% and 120% are the results ofcombining risk weight of 20% with that of 20%, 50% and 100%, respectively.

※“Other than the above” partly includes funds with which we measure credit risk assets using the look-throughmethod.

G.

Among the Exposures to Which the IRB Approach Is Applied, Balances of Specialized Lending Exposures Subject toSupervisory Slotting Criteria and Equity Exposures Subject to the Market-Based Simpliﬁed Approach by Risk Weight
Category in the Case Where the Risk Weight as Stipulated in the Article 153-3, Article 153-5, and Article 166-4 of theNotiﬁcation on Capital Adequacy Is Applied
Not applicable as of March 31, 2019

H. Matters Relating to Portfolio to Which the IRB Approach Is Applied
Not applicable as of March 31, 2019
I.

Actual Credit Losses in the Current Period and Year On Year Change and Its Factors by Corporate，Sovereign andBank Exposures under the IRB Approach and Equity, Residential Mortgage, Qualiﬁed Revolving Retail and other
Retail Exposures under the PD/LGD Approach
Not applicable as of March 31, 2019

J.

Estimated and actual Credit losses over Long Periods by Corporate, Sovereign and Bank Exposures under the IRB
Approach and Equity, Residential Mortgage, Qualiﬁed Revolving Retail and other Retail Exposures under the PD/LGD
Approach
Not applicable as of March 31, 2019

The Nomura Trust and Banking Co., Ltd. Disclosure 201971

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)Ⅲ.

Matters Relating to Credit Risk Mitigation TechniquesA.

For a Portfolio under the Standardized Approach, Amount of Exposures to Which Credit Risk Mitigation Techniques
by Eligible Financial Asset Collaterals Are Applied(Millions of yen)March 31, 2019
223,962B.

For a Portfolio under the Standardized Approach or the IRB Approach, Amount of Exposures to Which the
Guarantees or Credit Derivatives Are Applied
For a portfolio under the Standardized Approach, amounts of exposures to which the guarantees wereapplied were 39,782 million yen for March 31, 2019. These amounts were calculated based on the replacement
approach.

Ⅳ . Items Pertaining to Counterparty Risk on Derivative Transactions and Long-Settlement Transactions(Millions of yen)March 31, 2019
Gross
Replacement Cost

Gross Add-On

Credit-Equivalent
AmountGross Credit-Equivalent Amount(Before Credit Risk Mitigating Effect is Recognized)

3,579

14,964

18,543

Derivative Transactions

3,579

14,964

18,543Forex Related

2,805

7,409

10,215

773

7,554

8,327

—

—

—

(2,114)(6,760)(8,874)

Interest Rate-RelatedLong-Settlement Transactions
Credit-Equivalent Amount Reduction EffectThrough Close-Out Netting Agreement
Net Credit-Equivalent Amount(Before Credit Risk Mitigating Effect is Recognized)

9,669

Eligible Financial Collateral Associated462

Cash and own bank deposits

348

Bonds

113

Net Credit-Equivalent Amount(After Credit Risk Mitigating Effect is Recognized)

9,206(Note) 1. The credit-equivalent amount is calculated by applying the current- exposure method.
2. Does not apply to credit derivatives trading72

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Matters Relating to Securitization Transactions
A. Matters Relating to Securitization Exposures Originated by the Bank
Not applicable as of March 31, 2019
B. Matters Relating to Securitization Exposures in Which the Bank Invests
1. Amount of securitization exposures held and breakdown of major underlying assets by type(Millions of yen)Type of Underlying
AssetsLoan claims
Claims on lease payments
OthersTotal

Amounts of Exposures
March 31, 2019
Re-Securitization
9,796
—
2,758
—
9,903
—
22,458—

2. Balance and amount of required capital of securitization exposures held by appropriate risk weight category(Millions of yen)Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)

Ⅴ.

March 31, 2019
Risk Weight18.75%
20%
30%
1250%
Other than the above
Total

1,877
10,293385
09,903
22,458

Balance
Re-Securitization
—
—
—
—
—
—

Required Capital
Re-Securitization
3
—
95
—
1
—
0
—
100
—
200
—

(Note) Shown here are balances for diﬀerent risk weight categories before consideration of transitional arrangements, as well asamount of required capital after consideration of transitional arrangements.

3.

A breakdown of the amount of securitization exposures, for which 1,250% of risk weight is applied inaccordance with Article 248, as well as Article 248-4, Section 1, Item 1 and Item 2, of the Notification on
Capital Adequacy, and by types of categories of original asset(Millions of yen)

Securities

4.

March 31, 20190

Breakdown of re-securitization exposure to apply for credit risk mitigation technique and to apply for
Guarantor or appropriate guarantor
Not applicable as of March 31, 2019

The Nomura Trust and Banking Co., Ltd. Disclosure 201973

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)C.

Matters relating to calculate the market risk amount regard to securitization exposure in which the Bank
originates
Not applicable as of March 31, 2019

D.

Matters relating to calculate the market risk amount regard to securitization exposure in which the Bank
invests
Not applicable as of March 31, 2019

Ⅵ.

Matters Relating to Market Risk
Not applicable as of March 31, 2019Ⅶ.

Matters Relating to Capital Subscriptions or Equity Exposures in the Banking AccountNot applicable as of March 31, 2019

VIII.

Amounts of Exposures to Which Regarded Calculation is Applied as Shown for Diﬀerent Exposure Categories(Millions of yen)Amount as ofMarch 31, 2019

Exposure Categories
Exposures for which ratios calculated in accordance with Article 76-5, Section 2 of the Notification on
Capital Adequacy are used as the risk weights
Exposures for which ratios calculated in accordance with Article 76-5, Section 6 of the Notification on
Capital Adequacy are used as the risk weights
Exposures for which ratios stipulated in Article 76-5, Section 9, Item 1 of the Notification on Capital
Adequacy are used as the risk weights
Exposures for which ratios stipulated in Article 76-5, Section 9, Item 2 of the Notification on Capital
Adequacy are used as the risk weights
Exposures for which risk weights in Article 76-5, Section 10 of the Notification on Capital Adequacy
are used

14,375———18

Amount of exposures to which regarded calculation of risk assets used is applied
Not applicable.

IX.

Matters Relating to Interest Rate Risk

(Millions of yen)Interest Rate Risk
A

B
⊿EVE
End of March 2019
End of March 2018

Order

1

Upward parallel shift

1,947

2

D ow nwa rd p a r a l l e l
shift

262

3

Steepening

540

4

Flattening

393

5
6
7

8

74

Shor t-term interest
rate rise
Shor t-term interest
rate decline
Maximum value

Regulatory capital

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

C

D
⊿NII
End of March 2019
End of March 2018

988
424
1,947
E
End of March 2019F
End of March 2018

56,81357,447

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2019)75

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)
Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)

Qualitative Disclosure
Ⅰ.

Summary of method of raising capital (refers to the method of raising capital where all or part of the amount isincluded in the amount of basic items related to the core capital speciﬁed in the formula in the Notiﬁcation about
capital adequacy No. 37).
At The Nomura Trust and Banking, we aim to maintain suﬃcient capital, mainly common stock, which is stipulated in
Article 40 of the Financial Services Agency Notiﬁcation No. 19 (Notiﬁcation on Capital Adequacy), “the standard forwhich banks determine whether they hold adequate capital in light of assets they hold based upon Article 14-2 of the
Banking Act of Japan.” Other than raising capital by issuing common stock, we reserve a portion of annual earnings aslegally retained earnings or other retained earnings.

Ⅱ.

Outlines of the Capital Adequacy Assessment Method
As for credit risks and operational risks, we evaluate capital adequacy by comparing the amount equivalent to 8% of risk
assets with the amount of capital, as stipulated in the Notiﬁcation on Capital Adequacy.
We evaluate credit risks using the Standardized Approach, a method of calculating the non-consolidated capital
adequacy ratio in accordance with the Basel requirements based on the Notiﬁcation on Capital Adequacy. Also, we haveadopted the Standardized Approach to measure the operational risk amount.
As for risk capital, we set a planned amount compared with the regulatory capital (core capital), and then monitor theactual amount of risk capital and give monthly reports accompanied by a comparison with the regulatory capital (corecapital) to the Risk Management Committee. We recognize the current capital level as adequate.

Ⅲ.

Matters Relating to Credit Risk Management
A. Outlines of Credit Risk Management Policies and Procedures
The Nomura Trust and Banking strictly reviews and manages credit risks based on the Credit Risk Management Policy, theCredit Risk Management Regulations, the Credit Authorization Management Regulations, and the Collaterals Regulations
and the like. At the same time, we carefully pay attention to diversiﬁcation of risks and portfolios, and comprehensively
manage both on- and oﬀ-balance sheet transactions in pursuit of appropriate management of credit risks. The state of
portfolio diversiﬁcation is reported to the Risk Management Committee and then reviewed on a monthly basis.

76

1.

Credit rating system
Credit ratings are determined not only by conducting scoring based on a rating model using the financial
information of debtors but also by utilizing the latest important information available including qualitative
information on managerial risk, legal risk etc. which may aﬀect the certainty of debt assumption, external credit
ratings or the credit standing of associated companies . These ratings are classiﬁed into 20 levels.
To perform credit screening, we strictly manage credit risks based on credit ratings to maintain soundness of thebankʼs assets, fully taking into account our public and social missions as a ﬁnancial institution.

2.

Exposure (credit amount) management
With the identification of exposure for each debtor or each group of debtors positioned as the core of credit risk
management, we centrally control not only loans but also other on-balance and oﬀ-balance items in a comprehensive
manner. Oﬀ-balance sheet transactions are managed by the current exposure method. Based on the above, we performmeasurement and monitoring of credit risk quantity by quantitatively analyzing past default rates by credit rating.

3.

Self-assessment
To make a self-assessment of assets involving credits, we implement self-assessments through strict classiﬁcationof credits based on obligor categorization linked to credit ratings, in accordance with the “Asset Assessment
Regulations” which is based on the Financial Inspection Manual.

4.

Allowance for loan losses
Allowance for loan losses is provided as follows, pursuant to the rules regarding write-oﬀs/allowances for loan losses:
For claims to normal debtors and debtors requiring caution, the provision for allowance is calculated by multiplying
the amount of claims less the amount secured by eligible collateral or guarantees or expected to be collected
through their disposal or execution, by an accumulated default rate reﬂecting remaining years by credit rating.
For claims to possibly bankrupt debtors, the expected loss amount is calculated by multiplying the amount ofclaims classiﬁed as Category III by an expected rate of losses for each debtor, and then providing such amount asallowance for loan losses.

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

B. Matters Relating to Portfolios to Which the Standardized Approach Is Applied
1. Names of qualiﬁed rating agencies, etc. (deﬁned as qualiﬁed rating agencies, OECD, and export credit agencies; the same
deﬁnition applies below.) used to determine the risk weight (including reasons if qualiﬁed rating agencies were changed)
In order to determine the risk weight, we use the following four rating agencies as qualiﬁed rating agencies for all exposures.
Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody's Investors Service, Inc.
(Moodyʼs), and S&P Global Ratings (S&P)
2.

Ⅳ.

Names of qualiﬁed rating agencies used to determine the risk weight of each type of exposures
In order to determine the risk weight of each type of exposure, we use the following four rating agencies as
qualiﬁed rating agencies for all exposures.
Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody's Investors Service, Inc.
(Moodyʼs), and S&P Global Ratings (S&P)

Outlines of Credit Risk Mitigation Techniques

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)

For claims to virtually bankrupt debtors and bankrupt debtors, the total amount of claims classiﬁed as Category III
and Category IV for each debtor is regarded as the expected loss amount, and then an amount equivalent to the
expected loss amount is provided as allowance for loan losses or such amount is directly written oﬀ.

From the standpoint of risk management, we take measures to provide coverage for credit exposure by collateral andguarantees to mitigate counterparty credit risk.
In accordance with the Notiﬁcation on Capital Adequacy, we use (1) eligible ﬁnancial asset collateral, (2) guarantees or
credit derivatives, and (3) netting of loans and deposits held at our bank.
To treat financial assets as collateral against credit such as loans, the credit risk mitigation effect is reflected in acomprehensive approach, calculating credit risk exposure after making adjustments to portions covered by collateraland deducting them from the credit amount. Eligible ﬁnancial assets include cash, deposits held at our bank, debt
securities issued by the sovereigns (governments, central banks, public sector entities), bonds rated BBB- and above byexternal rating bodies, listed stocks, investment trusts, and other items.
In the case of guarantees and credit derivatives, the credit risk mitigation eﬀect is reﬂected in the replacement approach
whereby the risk weight of exposures to the obligor is replaced with the risk weight of the guarantee or the protection
provider. Eligible guarantors and protection providers include central governments, Japanese local authorities andgovernment related organizations, foreign non-central government public sector entities, multilateral development banks,
banks and securities companies with a lower risk weight than the original obligors, and companies which are rated by theappropriate rating agencies.
A netting of loans and deposits held at our bank shall be required to meet the following conditions; netting of loans
and deposits held at our bank is legally valid, loans and deposits under netting contracts with the same counterparty
are always identifiable, the possibility that deposits may not be further maintained at our bank is monitored andmanaged, and the netted amount is monitored and controlled.
Ⅴ. Outlines of Policies and Procedures for Counterparties of Derivatives and Transactions with a Long-Horizon
Settlement Period
In the case of derivatives, we calculate the amount of credit risk assets of counterparties by multiplying the creditequivalent amount by the risk weight. We employ the current exposure method to calculate the credit-equivalent amount.

Ⅵ.

1.

Policies regarding measures to secure transactions by collateral and allowance calculations
We take appropriate credit enhancement measures according to the creditworthiness of counterparties. We
have entered into the ISDA Credit Support Annex (CSA) and the like with some counterparties. As for allowances,
we calculate the credit reserves according to the amount of claims, depending on the creditworthiness ofcounterparties.

2.

Possibility providing additional collaterals due to deterioration of our creditworthiness
As for the transactions with ISDA Credit Support Annex (CSA) and the like, an obligation to provide additional
collaterals may arise due to deterioration of our creditworthiness, such as a downgrade of our credit rating.

Matters Relating to Securitization Exposures
A. Outlines of Risk Management Polices and Procedure
The Nomura Trust and Banking acts as an “investor” in securitization products, but we do not act as an “originator” or as a
The Nomura Trust and Banking Co., Ltd. Disclosure 201977

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)
Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)“servicers.”
When we engage in securitization transaction as an “investor,” the Risk Management Committee must analyze
the investment, assessing the investment policy as well as the associated risks of the investment products and set
investment limit. Also reviewing in new investment products or new investment techniques, we will consult with
the New Products & Services Review Committee and the Risk Management Committee.
We invest in securitized products with underlying assets such as loan claims and claims on lease payments. The
securitized products we held carries credit risk and interest rate risk, but this risk is no diﬀerent from the risk fromloan and securities trading. Also there is risk in changing fair value by changes in credit rating and default ratio.
B.

Matters relating to management system and operation status stipulated in the Provision of article No.249-4-3 to 6of the Notiﬁcation on Capital Adequacy “including when modiﬁcations on Provision of article No.254-2 and No.
302-4-1 of the Notiﬁcation on Capital Adequacy”
We analyze and evaluate the underlying assets, degree of dispersion and the scheme etc and make a prudent
investment decisions when investing in individual securitization products. After the investment the rating agency
we appointed will continue monitoring, checking fair value and report to the Risk Management Committee
regularly.

C.

Policy for securitization transaction used as credit risk mitigation techniques
Not applicable

D. Calculation methods for determining the amount of credit risk asset with regard to securitization exposure
In accordance with the Notiﬁcation on Capital Adequacy, we evaluate credit risk asset with regard to securitization
exposure using the Standardized Approach.
E.

Calculation methods for determining the amount of market risk with regard to securitization exposure
We apply exceptional accrual method into the market risk equivalentF.

If conducting securitization transaction relating to a third partyʼs assets by using a special purpose entity by bank, the typeof the special purpose entity and whether the bank possesses securitization exposures by such securitization transactions.
Not applicableG.

Names of Bankʼs subsidiary companies (excluding consolidated subsidiary) or aﬃliate companies possessing securitization
exposures executed by the Bank (including securitization transaction carried out using special purpose entity)
Not applicable

H.

Accounting Policies for Securitization Transactions
Each ﬁnancial asset is treated according to the Accounting Standards for Financial Instruments.

I.

Names of eligible external credit assessment institutions used to determine the risk weight by each type of
securitization exposure (including reasons if eligible external credit assessment institutions were changed)
In order to determine the risk weight, we use the following four rating agencies as eligible external credit
assessment institutions.
Rating and Investment Information, Inc (R&I), Japan Credit Rating Agency (JCR), Moodyʼs Investor Service, Inc(Moodyʼs), and S&P Global Ratings (S&P)

J.

Any signiﬁcant changes to the Internal ratings-based approach for securitization exposures
Not applicableK.

Any signiﬁcant changes to the quantitative information
Not applicable

Ⅶ.

Matters Relating to Market Risk
Not applicable

Ⅷ.

Matters Relating to Operational Risk
A.

78

Outlines of Risk Management Policies and Procedures
Operational risk is defined as the risk of incurring losses owing to inadequate business processes, activities of
directors and employees or systems, or external events. Based on the Integrated Risk Management Regulations,
we manage administrative risk, system risk, information security risk, legal and compliance risk, outsourcing risk,

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

■ Departments in Charge of Each Operational Risk

Operational
Risk

B.

Ⅸ.

Administrative risk
System risk
Information security risk
Legal and compliance risk
Outsourcing risk
Human Risk
Tangible Risk
Other operational risk

Operations Planning and Administration Department
IT Planning & Control Department
Operations Planning and Administration Department
Compliance Control Department
Operations Planning and Administration Department
Human Resource and General Affairs Department
Human Resource and General Affairs Department
Corporate Risk Management Department

Methods Used to Calculate the Operational Risk AmountTo measure the operational risk amount under Basel requirements, we have used the Standardized Approachsince the beginning of the period ended March 2011. Under this approach, in accordance with the Notiﬁcation
on Capital Adequacy, we measure the amount of operational risk by ﬁrst allocating annual gross proﬁt (calculated
as “gross operating proﬁt” minus “gains on sales of bonds” and “gains on redemption of bonds,” and plus “loss on
sales of bonds” and “loss on redemption of bonds,” “loss on devaluation of bonds,” and “fees and commissions
payments”) into eight categories, and then multiplying gross income for each category by the ratio designatedto each operational category (ranging from 12% to 18%) accordingly (gross profit of business that cannot beallocated to one of the eight categories will be multiplied by an 18% ratio), and the amounts as a result for all
the categories are aggregated for a year. The average of the aggregated amounts for the last three years is theoperational risk amount.

Disclosure based on Pillar III of Basel III – Qualitative Disclosure (end of Mar. 2018)human risk and tangible risk and in association with these risks, set out the Administrative Risk Management
Regulations, the System Risk Management Regulations, the Basic Policies for Information Security, the Legal andCompliance Risk Management Regulations, the Outsourcing Risk Management Regulations.
Furthermore, the Corporate Risk Management Department manages operational risk comprehensively, while eachspecialized department manages speciﬁc risks in its jurisdiction.

Outlines of Risk Management Policies and Methods Regarding Investments and Other Related Exposures (“Investments”) or Equity
Exposures in Banking Account as Stipulated in the Article 4-6-3 of the Order for Enforcement of Banking Act (Order No. 40 of 1982)
Decisions to hold investments and equities exposures are made after approved by Risk Management Committee oranother equivalent committee, depending on their purpose and amount, etc., based on the Approval Authorization
Regulations, the Credit Authorization Management Regulations and the like.
As for an individual investment, we recognize and manage its risk using the VaR Approach, Net Asset Approach or the
like, depending on the investment attributes and the style.
In the accounting procedures, we follow the Companies Act, the Banking Act of Japan, the Corporate Accounting
Principles, “Ordinance on Accounting of Companies,” “Accounting Guidelines for Banks” announced by the Japanese
Bankers Association, and other generally-accepted standards.
Since we adopt the Standardized Approach to measure the amount of credit risks under Basel requirements, a risk
weight of 100% is applied to equity exposures of the stocks, etc. which are not material investments.

Ⅹ.

Matters Relating to Interest Rate Risk in the Banking AccountA.

Outlines of Risk Management Policies and Procedures
As for the interest rate risk, we calculate this based on the Notification on Capital Adequacy, in accordance with
the Capital Management Regulations and the Market Risk Management Regulations. As for the risk management
procedures for interest-sensitive assets and liabilities in the banking account, the status of interest risk and the like arereported to the Risk Management Committee and the future management policies for assets and liabilities as well asother related issues are reviewed and determined.

B.

Outlines of Methods Used to Calculate Interest Rate Risks in the Banking Account for Internal Management Purposes
We manage interest rate risk in the banking account to maintain the amount of decline of the present value asa result of interest shocks not greater than 20% of the capital, with considering core deposits. This amount iscalculated based on a 99.0% conﬁdence interval, a 1-year holding period, and a 10-year observation period.
The state of interest rate risk control in the banking account is reported to the Risk Management Committee andthe Board of Executive Oﬃcers on a monthly basis.

The Nomura Trust and Banking Co., Ltd. Disclosure 201979

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

Quantitative Disclosure
Under the Notiﬁcation of the Financial Services Agency, The Nomura Trust and Banking calculates the non-consolidated
capital adequacy ratio based on the domestic standard. We use the Standardized Approach to measure credit risks. To
measure the operational risk amount we use the Standardized Approach.
Ⅰ.

Matters Relating to Capital Adequacy
A.

Amount of Required Capital against Credit Risk and Breakdown by Portfolio to Which the Standardized Approach Is
Applied(Millions of yen)

Required Capital
March 31, 2018

Breakdown by Portfolio

The
Standardized
Approach

Claims on foreign central governments andcentral banks
Claims on foreign non-central government
public sector entities
Claims on Japan Finance Organization for
Municipalities
Claims on Japanese government-affiliatedorganizations
Claims on financial institutions and Type I
financial instruments business operators
Claims on corporations
Claims on small and medium enterprises andindividuals
Claims on projects including acquisition of realestate properties
Other
Securitization (other than originating bank)
Out of assets with multiple underlying
assets (so-called “funds”), the assets whose
underlying assets are difficult to measureindividually

138
76
57
176
658
8,220
949
937
1,120
109
195
283
12,925

CVA risk
Total

B.

Amount of Required Capital against Credit Risk Concerning Equity Exposures to Which the IRB Approach Is Applied
and the Breakdown by Category
Not applicable as of March 31, 2018

C. Amount of Required Capital against Credit Risk Concerning Exposures to Which the Related-Method Are Applied
Not applicable as of March 31, 2018
D. Amount of Required Capital against Market Risk and Breakdown by Approach
Not applicable as of March 31, 2018
E. Amount of Required Capital against Operational Risk
(Millions of yen)

Required Capital

March 31, 2018
2,674

F. Non-Consolidated Total Required Capital (Domestic Standard)(Millions of yen)

Non-Consolidated Total Required Capital80

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

March 31, 201814,121Matters Relating to Credit Risk
A.

Balance of Exposures Related to Credit Risk and Breakdown by TypeB.

Breakdown of Amount by Category and Breakdown of Exposure by Type■ Balances of Exposures Related to Credit Risk
(By area, industry, and duration)

By area and industry
By duration

Manufacturing
Construction
Electricity, gas, heat supply and waterCommunication and information services
Transport
Wholesale and retail
Finance and insurance
Real estate
Goods rental and leasing
Various services
Government and local authorities
Other
Domestic
Overseas
Total
Due in 1 year or lessDue over 1 year to 3 years
Due over 3 years to 5 years
Due over 5 years to 7 years
Due over 7 years
With no maturity
Total

Securities
13,976
3,800
1,514
326
31,412
4,353
34,62010,5235,799
700
255,792
14,803
377,622130,284
507,906
89,722
223,672
104,0103,929
53,76632,805507,906(Millions of yen)March 31, 2018
Loans
6,959
—
9,131
1,940
10,625
3,685
79,352
63,95016,082
49,32370,340140,860
452,251
63,828516,080
319,637
108,675
42,121
7,099
38,545—516,080

Derivatives
—
—
—
—
—
—
10,887—————
10,8873,940
14,82812,371
380
43
54
1,977
—
14,828Others
19
1
403
0
43
4
99,333572
646
85
219,473
9,117
329,702
5,264
334,966
329,984
2,292
—
—
—
2,689
334,966

Total
20,955
3,801
11,0492,266
42,081
8,043
224,19375,04722,52850,109545,605
164,781
1,170,463
203,317
1,373,781
751,716
335,021
146,175
11,083
94,28935,495
1,373,781

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

Ⅱ.

81

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)
Balances of Exposure Overdue for More Than Three Months or at Default and Breakdown by Category
Not applicable as of March 31, 2018

D.

General Allowance for Credit Losses, Specific Allowance for Credit Losses and Allowance for Loans to Specific
Foreign Borrowers■ Balances of General Allowance for Loan Losses(Millions of yen)

1,232

March 31, 2018
Against March 31, 2017134

■ Balances of Speciﬁc Allowance for Loan Losses（By area and industry）

By area andindustry

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

C.

Other
Domestic
Overseas
Total

289
289
—
289

(Millions of yen)March 31, 2018
Against March 31, 20170
0—
0

Allowance for loans to speciﬁc foreign borrowers is not applicable.

E. Amount of Written-Oﬀ of Loans by Industry or Counterparty
Not applicable.

82

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Balance of Exposures to which the Standardized Approach Is Applied after Allowing for the Credit Risk
Mitigation Ef fect by Risk Weight Category and Amounts of Exposures for Which 1250% Risk Weight Is
Applied in Accordance with the Notification on Capital Adequacy(Millions of yen)

Risk Weight

0%
10%
20%
40%
50%
70%
75%
100%
120%
150%
1250%
Other than the above※

March 31, 2018
Rating Available
Rating Not Available
632,583
21,722
52,767—
131,509
10,1772,642—
118,062
95
3,860
—
—
31,66050,663
125,191
5,708
—

—

7,016

—
—

1
7,729

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

F.

In the above table, the columns corresponding to the risk weights of 40%, 70% and 120% are the results ofcombining risk weight of 20% with that of 20%, 50% and 100%, respectively.

※“Other than the above” partly includes funds with which we measure credit risk assets using the look-throughmethod.

G.

Among the Exposures to Which the IRB Approach Is Applied, Balances of Specialized Lending Exposures Subject toSupervisory Slotting Criteria and Equity Exposures Subject to the Market-Based Simpliﬁed Approach by Risk Weight
Category in the Case Where the Risk Weight as Stipulated in the Article 153-3, Article 153-5, and Article 166-4 of theNotiﬁcation on Capital Adequacy Is Applied
Not applicable as of March 31, 2018

H. Matters Relating to Portfolio to Which the IRB Approach Is Applied
Not applicable as of March 31, 2018
I.

Actual Credit Losses in the Current Period and Year On Year Change and Its Factors by Corporate，Sovereign andBank Exposures under the IRB Approach and Equity, Residential Mortgage, Qualiﬁed Revolving Retail and other
Retail Exposures under the PD/LGD Approach
Not applicable as of March 31, 2018

J.

Estimated and actual Credit losses over Long Periods by Corporate, Sovereign and Bank Exposures under the IRB
Approach and Equity, Residential Mortgage, Qualiﬁed Revolving Retail and other Retail Exposures under the PD/LGD
Approach
Not applicable as of March 31, 2018

The Nomura Trust and Banking Co., Ltd. Disclosure 201983

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

Ⅲ.

Matters Relating to Credit Risk Mitigation TechniquesA.

For a Portfolio under the Standardized Approach, Amount of Exposures to Which Credit Risk Mitigation Techniques
by Eligible Financial Asset Collaterals Are Applied(Millions of yen)March 31, 2018
187,231

B.

For a Portfolio under the Standardized Approach or the IRB Approach, Amount of Exposures to Which the
Guarantees or Credit Derivatives Are Applied
For a portfolio under the Standardized Approach, amounts of exposures to which the guarantees wereapplied were 39,016 million yen for March 31, 2018. These amounts were calculated based on the replacement
approach.

Ⅳ . Items Pertaining to Counterparty Risk on Derivative Transactions and Long-Settlement Transactions(Millions of yen)March 31, 2018
Gross
Replacement Cost

Gross Add-On

Credit-Equivalent
AmountGross Credit-Equivalent Amount(Before Credit Risk Mitigating Effect is Recognized)

8,811

14,95623,767

Derivative Transactions

8,811

14,95623,767Forex Related

8,666

8,643

17,310

144

6,312

6,457

—

—

—

(3,038)(5,901)(8,939)Interest Rate-RelatedLong-Settlement Transactions
Credit-Equivalent Amount Reduction EffectThrough Close-Out Netting Agreement
Net Credit-Equivalent Amount(Before Credit Risk Mitigating Effect is Recognized)

14,828Eligible Financial Collateral Associated6,050

Cash and own bank deposits

5,821

Bonds
Net Credit-Equivalent Amount(After Credit Risk Mitigating Effect is Recognized)

229
8,777

(Note) 1. The credit-equivalent amount is calculated by applying the current- exposure method.
2. Does not apply to credit derivatives trading84

The Nomura Trust and Banking Co., Ltd. Disclosure 2019

Matters Relating to Securitization Transactions
A. Matters Relating to Securitization Exposures Originated by the Bank
Not applicable as of March 31, 2018
B. Matters Relating to Securitization Exposures in Which the Bank Invests
1. Amount of securitization exposures held and breakdown of major underlying assets by type(Millions of yen)Type of Underlying
AssetsLoan claims
Claims on lease payments
OthersTotal

Amounts of Exposures
March 31, 2018
Re-Securitization
9,785
—
3,843
—
1
—
13,630—2. Balance and amount of required capital of securitization exposures held by appropriate risk weight category(Millions of yen)Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

Ⅴ.

March 31, 2018
Risk Weight
20%
1250%
Total

3.

Balance
Re-Securitization
13,629—1—
13,630—Required Capital
Re-Securitization
109
—
0
—
109
—

A breakdown of the amount of securitization exposures, for which 1250% of risk weight is applied inaccordance with Article 247, Section 1 of the Notiﬁcation on Capital Adequacy, and by types of categories oforiginal asset(Millions of yen)

Securities

4.

March 31, 20181

Breakdown of re-securitization exposure to apply for credit risk mitigation technique and to apply for
Guarantor or appropriate guarantor
Not applicable as of March 31, 2018

The Nomura Trust and Banking Co., Ltd. Disclosure 201985

Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)
Disclosure based on Pillar III of Basel III – Quantitative Disclosure (end of Mar. 2018)

C. Matters relating to calculate the market risk amount regard to securitization exposure in which the Bank originates
Not applicable as of March 31, 2018
D. Matters relating to calculate the market risk amount regard to securitization exposure in which the Bank invests
Not applicable as of March 31, 2018
Ⅵ.

Matters Relating to Market Risk
Not applicable as of March 31, 2018

Ⅶ.

Matters Relating to Capital Subscriptions or Equity Exposures in the Banking AccountNot applicable as of March 31, 2018

Ⅷ.

Amount of Regarded Exposures Relating to Funds
Not applicable as of March 31, 2018

Ⅸ.

For the Interest Rate Risk in the Banking Account, Gains and Losses or Changes in Economic Values Due to Interest Rate
Shocks under the Internal Control Management(Millions of yen)March 31, 2018
3,228

86

The Nomura Trust and Banking Co., Ltd. Disclosure 2019