2019 Annual Report

Safeguarding your aspirations;connecting them with reality

Tokyo Kiraboshi Financial Group

Business name：Tokyo Kiraboshi Financial Group, Inc.

Head office

5-9-2 Shinjuku, Shinjuku-ku, Tokyo

Established

October 1, 2014

Capital¥27.5 billion

Exchangelisting

Tokyo Stock Exchange, First Section(Securities Code: 7173)

Websitehttps://www.tokyo-kiraboshifg.co.jp(As of March 31, 2019)

Kiraboshi Bank
Business name：Kiraboshi Bank, Ltd.

Kiraboshi Consulting

Kiraboshi CapitalBusiness name：Kiraboshi Consulting Co., Ltd.

Business name：Kiraboshi Capital Co., Ltd.

The origin of the bank’s name

The ideas we wanted to put into the logo and its color

Constellation. Twinkling stars.
We want to make the dreams of ourcustomers glitter even brighter in theTokyo area. Into this name we put ourdesire for something clean-cut that alsofeels easy to get to know, that takes thecustomers’ideas into safekeeping anduses them to bridge the way to the next
generation.

“Kiraboshi”is a design representing somebody facing forward
and beginning to walk with head held high, and represents our
feeling of wanting to move forward with and contribute to the
local community, as a bank that rises to the challenge.
Expressing our desire to become a bank that places greatvalue on the “ideas” of customers and employees, and to
become a gleaming presence in local communities, we useddark blue to symbolize“trustworthiness”and“sincerity,”while
yellow represents“future promise”and“independence.”

Management philosophy
To be a financial group for small and medium-sized enterprise customers and individual customers in the Tokyo
metropolitan area that will contribute to the development of local communities through comprehensive financial services

Management policy

1

Achieve enduring existence as a local regional bank through the provision of unique financial services

A bank that sparkles

Leverage the special features of the Tokyo area to continue to meet new challenges
in order to contribute to the development of our customers and of local economies

A bank that rises
to the challenge

We put great value on the “ideas” of customers, the region, and our
employees so as to become a necessary and always trusted presence

A bank that brings
together ideas

Message from management
I thank you all for your patronage and support.

As part of its efforts to strengthen competitiveness and management
efficiency still further, the Group took a step forward in the integration ofits business by way of a company holding structure with the merger ofthree subsidiary banks (Tokyo Tomin Bank, Yachiyo Bank and ShinGinko

Tokyo), effective May 1, 2018, and making a new start as Kiraboshi
Bank.

To reflect this merger, the business name of the holding company waschanged from Tokyo TY Financial Group, Inc. to Tokyo Kiraboshi
Financial Group, Inc.

With a management philosophy of“to be a financial group for small andmedium-sized enterprise customers and individual customers in theTokyo metropolitan area that will contribute to the development of local
communities through comprehensive financial services,”we aspire to

become the urban regional bank group most favored by customers in
the Tokyo metropolitan area.

President

Keizo Ajioka

Taking the opportunity presented by the merger of the three banks, theGroup began the medium-term business plan Start-up☆Kiraboshi in May

2018, which is scheduled to end in FY2020, and is based on a future image of the Group as“acomprehensive service business that is also strong in finance.”

Based on this policy, through our approach of building business models with dialogue as the starting
point, we will use dialogue with customers to create proposals aimed at solving their problems, seeking tobecome the bank to which customers give the“first call,”and further progressing our initiatives to createshared value with customers.

Going forward, we will maximize the positive effects of the integration and merger, leveraging thecollective strength of the Group and working with our customers in the region in order to contribute to
the sustainable development of the local economy and local communities.

On behalf of the Group, I ask for your continued support and encouragement in the future.
July 2019
Tokyo Kiraboshi Financial Group, Inc.

C o nte nts
Tokyo Kiraboshi Financial Group1

Message from management

Environmental protection

13

Contributing to local communities

15

2

Creation of shared value with the customer

17

Message from management (Kiraboshi Bank)

3

Message from top management

4

Employee’s work style reform andPromotion of diversity

23

Dialogue with shareholders and investors

24

Status of corporate governance25(Tokyo Kiraboshi Financial Group)

Establishing the“comprehensive service businessthat is also strong in finance”Group brand
7
Business model

9

Compliance system

30

Toward sustainable development

11

Risk management system

322

Message from management
First, I would like to express my gratitude to you all for your support.
Kiraboshi Bank came into being in May 2018 and, due to your good
offices, was recently able to celebrate its first anniversary.
I am deeply grateful for your patronage.
With regard to the cases of misconduct that were discovered in July
2018 and May 2019, I offer our heartfelt apologies for the anxiety andtrouble these have caused both to customers and to those living andworking in the region.
Taking the opportunity presented by the merger of the three banks, theBank began the medium-term business plan Start-up☆Kiraboshi in May
2018, based on a future image of the Group as“a comprehensive
service business that is also strong in finance.”
As we implement this plan, we at the Bank pay a great deal of attention
to dialogue with customers.
In order to enable the dreams of small and medium-sized enterprise andindividual customers to bloom magnificently, and contribute to thedevelopment of local communities, we are committed to staying close
Presidentwith our customers, responding to their increasingly diverse andsophisticated needs by engaging in dialogue with them.
Hisanobu Watanabe
The problems faced by customers are not limited to financial services.
The Bank works to solve problems by using dialogue as the starting
point to leverage the individual capabilities of our employees as well as
the collective strength of the Group companies.
Our aim is to be the bank to which the customer gives the first call when they encounter any kind ofproblem, and going forward we will continue to deal sincerely with each and every customer, providing
the optimal consulting business for them.
On behalf of the Bank, I ask for your continued support and encouragement in the future.
July 2019
Kiraboshi Bank, Ltd.

3

Tokyo Kiraboshi Financial Group, Inc.

Message from top management
Message from top management

Aiming to be acomprehensive
service businessthat is also strong
in finance, and theone to which thecustomer gives thefirst callTokyo Kiraboshi Financial Group, Inc.
President

Keizo Ajioka

Introduction
The business environment in which
regional banks operate is changing toan unprecedented degree, as a resultof such trends as the prolongation of
low-interest rate policies, the advanceof digital innovation and the aging of
the population, requiring theconstruction of a business model
predicated on, and that takes into
account, such changes.
It was in this environment that, taking
the opportunity presented by themerger of its three banks in May
2018, the Group drew up the
medium-term business plan Start-up☆
Kiraboshi, taking various measures
aimed at becoming the trusted bankto which the customer gives the first
call, constructing business models
with dialogue as the starting point,and strengthening our consulting
function.

In addition, in April 2019 we formed ateam to consider our brand strategy
going forward, with the assistance ofoutside officers who have insight andexperience in this area, and are in theprocess of developing individual
measures.
▶Business results for FY2018
Tokyo Kiraboshi Financial Group’s
consolidated business results for theyear ended March 31, 2019 (FY2018)
showed approximately ¥4.9 billion in
profit, which was an increase over the¥3.6 billion or so of the previous year,
and which also exceeded theestimated ¥4.2 billion, in a performance
befitting the first fiscal year of themedium-term business plan.
Gross business profit fell mainly due
to a year-on-year decline in loan
yields, but the realization of thepositive effects of the integration andmerger led to lower expenses andprovided support for profits.

In terms of the top line also, loan
yields rose on a new execution basis
due to the bolstering of lending tosmall and medium-sized enterprises,
resulting in the beginning of a bottomingout in yields on an outstanding loanbasis, while there were otherpromising developments that should
lead to profit growth in the future,such as a rise in fees and commissions
income stemming from thestrengthening of the consulting
function.

Our future business operations▶ Realizing maximum effects from
integration and merger
From the perspective of maximizing
the realization of integration andsynergistic effects, the Group hastaken various steps including (1)streamlining staff, primarily headquarters
personnel, (2) consolidating locations
using a“branch in branch”format for4

Top Message

neighboring branch offices, and (3)partially integrating systems.
As a result, in FY2018, the effects ofreductions in expenses and efficiency
gains exceeded the costs of themerger and systems integration.
Going forward, due to the complete
integration of systems scheduled for
May 2020, and the further consolidationand slimming-down of branches, these
integration effects are expected to
grow year by year, such that we
project ¥10.5 billion or more annuallyin expense-reduction effects in
FY2022 (equivalent to approximately
20% of expenses in FY2017, before
the merger).
Furthermore, based on progress
made in the streamlining of
headquarters personnel, the decision
has been taken to sell the Shinjuku
office, which is one of two head officelocations, so that headquarters canbe consolidated in the Aoyama office.
Various procedures to implement thisare now under way.
The issue of realizing maximum
positive effects as a regional banking
group, after the integration and merger,
will remain one of management’s top
priorities going forward.
▶ Leveraging the advantages of theTokyo area to tackle businesschallenges
The Tokyo area, which constitutes theoperational base of the Group, is anabundant market, and has Japan’sgreatest concentration of economic
strength.
The population is expected to growfor the time being, and as companies
from a variety of industries are
clustered here, the region also has arobust retail customer base.
In order to leverage these advantages,
we are focusing on (1) strengthening(by establishing the SF Division)
headquarters sales structure, which is
involved in the provision of highly
specialized financial support, such as
financing based on business feasibility
evaluations and structured finance, (2)collaborating with administrative andpublic financial institutions, and fundcompanies, to support companies
from start-up, through the growthphase, and into maturity, (3) using
trust products, such as publicconstruction cost credit trusts andreal estate management trusts, thatleverage our advantages as a bankengaged in trust business activities,and (4) strengthening customeroriented retail sales with the aim of
stable asset formation.
In addition, so as to respond with asense of speed to specific customer
and regional needs, substantial
authority has been delegated to theseven regional headquarters (Joto,
Johoku/Nishi Tokyo, Josai, Jonan,
Tama, Machida/Yokohama/Kawasaki,

5

appropriately to the varied needs ofSagamihara/Central Kanagawa) as
customers, we are actively promoting
well as large branches in Central
partnership with external organizations.
Tokyo area, with various initiatives
In addition to local government suchwith close ties to local communities
as the Tokyo Metropolitan
being implemented under theGovernment and related organizations,guidance of regional general
other financial institutions and funds, inmanagers of executive-officer level.
January 2019 we signed a▶ Strengthening consulting business“Comprehensive collaborationby using dialogue with the customer
agreement concerning support foras the starting point
small and medium-sized enterprises”
The medium-term business plan thatwith the Tokyo Chamber of Commerce
was drawn up on the occasion of theand Industry.
merger of the three banks recognizes
Going forward, we will maintain ouras an issue the transition from thepolicy of working closely with external
previous lending-centric businessorganizations, while striving to provide
model to a business model focused onvalue-added services as a regional
consulting, based on which there hasbank, such as support for customer
been a sharp turn towards a consulting
funding, management, technology,
business that uses dialogue with theand the recruitment and retention ofcustomer as the starting point.
personnel.
Based on this policy, the number of▶ Strengthening group management“first call”contacts has been set as a
In addition to promoting partnership
numerical target, in addition to figureswith external organizations in pursuit
for profit and expense ratios.
of the future image of“a comprehensive
This is the number of corporate
service business that is also strong incustomers to which proposals were
finance,”it is also important to raise
made to support their mainstay
the collective strength of the Group.
operations, and the number of
As well as the new companies
individual customers to which
established for strategic reasons, suchproposals were made to support theiras the consulting company, capitallife plans.
company and FinTech company, we
In FY2018, which was in effect theare also considering establishing afirst year after the merger, 11,290
securities company and a company insuch contacts were made, comparedwhich to consolidate the back office
to a target of 7,000, with about 6,000
operations of the Group (personnel,of these resulting in the conclusion ofgeneral administration, accounting,contracts.
etc.). In addition to these, our policy is
Rather than aiming for short-term
to strengthen and review structures
profits, this initiative puts theand functions from the perspective ofemphasis on profits over the medium
further enhancing the corporate value
to long-term, but in FY2018 we wereof the Group as a whole, including
able to generate more than ¥2.0
that of existing Group companies.
billion in profit from this.
Moreover, based on the recently
We received approximately 5,000
expressed needs of small to mediumresponses to a customer survey, in
sized enterprises, following on fromwhich 97% of respondents assigned
the existing consulting subsidiary in
us 4 stars or more out of 5 for the
Shanghai, China, we plan to open aoverall rating, and in which 82% gave
new consulting subsidiary in October
4 stars or more in response to the2019, in Ho Chi Minh, Vietnam.
question“Would you recommend thebank to your friends?”, whichwe believe indicates thatthe“first call”initiative hasachieved a certain level ofrecognition.
Going forward, while going
through the PDCA cycle byusing dialogue withcustomers and by
conducting customer
surveys, our policy is towork to enhance the addedvalue component of our
proposals, improve the skillsof the employees creating
the proposals, and work
steadily on human resources
development.
Signing ceremony for the “Comprehensive▶ Developing networks bycollaboration agreement concerning support
promoting partnershipfor small and medium-sized enterprises”withwith external organizations
the Tokyo Chamber of Commerce andIn order to respondIndustryIn addition to our previous initiativesof dispatching personnel to local
banks in Thailand and Vietnam, we
are working to further strengthen our
Asian strategy through such moves asinvesting in and sending personnel toa local fund in Singapore, andpromoting an alliance with ShinhanBank Japan, the Japanese subsidiaryof South Korea’s Shinhan Financial
Group.
▶ Business process re-engineering tostrengthen contact with customers
In order to strengthen contact withcustomers, it is necessary to promoteparallel improvements in operational
efficiency and productivity.
Accordingly, a specialized team has
been established in the headquarters.
In addition to making operations more
efficient, such as by using IT tocentralize expense settlements
administration, and promoting
improvements in the efficiency ofsales office administration, including
measures to streamline change-ofaddress procedures and inheritanceadministration, this team has begun
conducting teleworking trials using
tablet computers.
After the system integration scheduled
for completion in May 2020, the plan
is to move forward with fundamental
business process re-engineering
aimed at next-generation branches.
▶ Developing“Kiraboshi People”
who can win the trust of customers
The financial sector is a service
industry, and we believe that thevalue added in a service industry isdetermined by the people who
provide that service.
Accordingly, human resource
development should be the highest
priority for management.
The Group refers to people who areable to win the trust of customers,
think and act by putting themselves intheir shoes, and experience successas a result as“Kiraboshi People,”andis implementing a range of related
initiatives.
Specifically, as well as providing
education and business skills throughon-the-job training and group training,
we have implemented special
programs for individuals to pursue bythemselves, with the aim ofdeveloping personnel who take up
the challenge of innovation; training
camp for mid-career staff jointly with
officers; and an active program ofdispatching people to externalorganizations to allow them toexperience a diversity of viewpoints(administrative organizations,
economic organizations, graduate
schools, overseas banks, etc.).
Furthermore, it is important to put inplace a personnel data infrastructure
to enable the assignment of the righthuman resources to the rightpositions, as well as finetuned personnel management.
Partly due to the increase inscale resulting from themerger, we are putting inplace and utilizing new
infrastructure that uses
technologies such as AI.
Based on our view that“there
is no such thing as investing
too much in people,”we plan
to continue taking active
measures to develop“Kiraboshi People”going
forward.
▶ Strengthening governanceand riskmanagement
Strengthening governanceand risk management is an
important issue.
While promoting the strengthening of
the supervisory function by utilizing
the diverse perspectives and insightsof outside officers, we must ensurethat decision-making in relation tobusiness operations is transparent,
fair, speedy and bold.
In part due to this perspective, after
obtaining a resolution at the General
Shareholders Meeting held on June27, 2019, the number of outside
directors was increased from two to
three people.
In terms of compliance, we regard afundamental rethink of how we
prevent misconduct, and thestrengthening of measures to preventmoney laundering and combat thefinancing of terrorism to be the mostimportant issues in the short term,
and are taking proactive steps to deal
with these.
In terms of credit risk management, as
well as improving our monitoring of
warning signals for economic
slowdown, we are investigating the
introduction of basic internal credit
ratings to facilitate more sophisticatedrisk management.
In terms of managing market risk, wehave begun applying appropriate
control of interest rate risk, predicatedon new regulations (IRRBB).
For internal audits, as well as putting
in place an operational structure thatutilizes external experts in relation toimportant themes such as the system
integration project and measures toprevent money laundering, going
forward we will consider the use ofthird-party evaluation organizations.
Further, from the viewpoint ofachieving sustainable growth with agood balance of income, risk andcapital, we have started trial
implementation of Risk Appetite
Framework (RAF).
▶Basic policy on returns to shareholders
The Group takes into account the
public nature of its role as a bankholding company, so that as well as
striving to ensure financial soundness

by maintaining appropriate internal
reserves, it regards returning profits toshareholders as a key management
priority, having adopted a basic policyof implementing consistent and stabledividends.
▶SDG initiatives
The Group believes that initiatives toachieve the sustainable development
goals (SDGs) adopted by the 2015
UN summit play an important role increating societal value, and incontributing to the development oflocal communities.
Accordingly, the Group has drawn up
an SDG declaration in which the
major themes are (1) environmental
protection, (2) contribution to the
local community, (3) creation ofshared value with the customer, (4)employees’work style reform andpromotion of diversity, and (5)dialogue with shareholders andinvestors, and is carrying out a wide
range of related initiatives.
We regard the SDGs as a significant
pivot point for management, and willcontinue to take a variety of measuresrelated to them going forward.

Conclusion

The business environment in which
regional banks operate is changing toan unprecedented degree.
While realizing the maximum
integration and synergistic effects as aregional banking group after the
integration and merger, we willleverage the advantages of having theGroup’
s operational base in Tokyo,
which is Japan’s greatest concentrationof economic strength, aiming to be acomprehensive service business thatis also strong in finance, and the one
to which the customer gives the firstcall.
We humbly ask for your continued
gracious patronage and support of
the Group as we move forward into
the future.

6

Tokyo Kiraboshi Financial Group, Inc.

Establishing the“comprehensive service businessthat is also strong in finance”Group brandContinuation of negative interest rate policy

Declining birthrate and aging population

Entrants from other industries

Acceleration of FinTech

External
environment

Population decline

Internal
environment

Implementation of streamlining measures

Improvements in customer satisfaction

Conversion of traditional bank business model

Improvements in employee satisfaction

May 2018

Birth of Kiraboshi Bank

April 2016
October 2014

Birth of Tokyo TY
Financial GroupTokyo TY Financial Group

7

Business integration with
ShinGinko Tokyo

Tokyo TY Financial Group
ShinGinko Tokyo

Changed business name toTokyo Kiraboshi Financial
Group, Inc.
Safeguarding your aspirations;connecting them with reality.

Tokyo Kiraboshi FG

Future image

Medium-Term Business Plan/Start-up“A comprehensive
service businessthat is also strong
in finance”

Kiraboshi

PeriodMay 2018 – March 2021 (3 years)

Numerical targets
Tokyo Kiraboshi FG

Profit¥6.0 billion<Fiscal year ending March 31, 2021><

Progress status

Kiraboshi Bank, Ltd. Net core business income ¥12.5 billion
Fiscal year ending
March 31, 2021
OHR
80％
Number of first call contacts* 7,000 annuallyFirst call contacts

2019/3
results

Achievement
ratio

AnnualtargetConsulting
business

11,290161.2%

7,000(of which, financing
based on businessfeasibility evaluations)(1,153)(192.1%)(600)

Concept>*First call contacts•Number of proposals made to support mainstay
operations (corporates, own-er-managers)•Number of proposals made to support of life plans(individuals)

2019/3
results

2020/3plan

2021/3targetProfit¥4.9 billion ¥5.1 billion ¥6.0 billion

Net core business income¥13.0 billion ¥12.8 billion ¥12.5 billion(Tokyo Kiraboshi FG)(Kiraboshi Bank)OHR(Kiraboshi Bank)

80.7%

80.4%

80%

Main measures(1) Creation of a“new kind of urban regional bank for
the Tokyo area”(2) Commitment by the Group to contribute to thedevelopment of the Tokyo area(with a tangible presence in the Tokyo area)(3) Start-up spirit based on“Challenge & Speed”

Business model“Building a business model that takes dialogue as its starting point”
We aim at a management approach that, by maintaining“high-quality”contacts with customers, local communities,
investors and employees, improves satisfaction for everybody(1) Enrichment of consulting functions
Through enrichment of consulting functions, aim to
be a bank to which customers will give the first call.
(2) Human resources development focusing on dialogue
abilities for being chosen and trusted
Developing“Kiraboshi People”“Kiraboshi People” are able to win the trust ofcustomers, think and act by putting themselves intheir shoes, and experience success as a result(3) Business process re-engineering to strengthen contact
with customers
Realize work styles that make tangible themeaningfulness of work and enable emotional fulfillment
through reform of awareness and value of work.

Leverage the collective strength of the Group in pursuit of the future image[Consulting]◦Kiraboshi Consulting(established in April
2017)◦Kiraboshi Business
Consulting Shanghai[IT]◦Kiraboshi System[Guaranty company]◦Kiraboshi Credit
Guarantee◦Yachiyo Credit
Guarantee[Leasing]◦Tokyo Kiraboshi
Lease[Cards]◦Kiraboshi JCB◦Kiraboshi Credit
Service[Fund structuring /administration]◦Kiraboshi Capital(established in
September 2018)[Various services]◦Kiraboshi Business
Service◦Kiraboshi Service[Use of FinTech]◦Kiraboshi Tech(established in
November 2017)8

Tokyo Kiraboshi Financial Group, Inc.

Business modelTokyo Kiraboshi Financial Group’s Strengths◦Operational base in Tokyo area, Japan’s greatest concentration of economic◦Has a history of working for SMEs in collaboration with local governments such
◦ In addition to a lending-centric business model, is actively promoting a

INPUTManagement resources utilized(Financial capital)
・Sound loan assets
・Abundant net assets

Business model that takes dialogue as the startingP(Human capital)
・Diverse human resources
・Kiraboshi People*

The Kiraboshi KPI Concept

Aimed at activities yielding results in the future,
rather than on short-term performanceFirst call (Kiraboshi KPI)
7,000 annually

Proposals that meet customer needs (KPI)
Balance between customer satisfaction and Group performance*People who are able to win the trust of customers,
think and act by putting themselves in their shoes,
and experience success as a result

Achieving Kiraboshi KGIFY2022(Intellectual capital)
・Evaluation of business feasibility
・Consulting functions
・Diverse funding methods
・Trust functions
・Collaboration with FinTech(Social/related capital)

D・Branch network with close
ties to local communities
・Networks with external organizations
・Asian network(China, Thailand, Vietnam, etc.)
・Collective strength of Kiraboshi
Group・Customer baseProfit of ¥10.0 billion or more

PDCA cycle embodying the“Getting theA

Continuously review actions (improve skills) toincrease the number of more challenging proposals[First call proposal details]
Main proposal genres

C◦Support for mainstay operations / becoming
customers’main bank, etc.
◦M&A, business succession, etc.
◦Guidance, business matching, etc.
◦Loans, financial products, etc.

Becoming the bank customers
Creating shared value
Creating corporate value / Improving satisfaction
Contributing to the revitalization of the region/

A business model that starts with an understanding of the customer,[Robust management base that supports our business model]

Corporate governance, integrated risk management, compliance, financial capital, human capital,
intellectual capital, social/related capital9

Business model

strengthas Tokyo Metropolitan Government and related organizations
consulting business that makes dialogue with the customer as the starting point

Actions for Kiraboshi KPI targets
Person in charge

Process for KPI firstcall certification

Visit preparation
Customer contact
Understanding the situation

Sharingmanagement
themes withcustomer

Proposal - investigation
Proposal - implementation

first call”concept
Evaluation by customers(Carry out checks from a customer’s perspective)
Dialogue, customer surveys

OUTPUT

Services for individuals

Customer・Deposits
・Asset management / administration(investment trusts, government
bonds, insurance, etc.)
・Housing loans / loans for specificpurposes...etc.
・Providing highly specialized consulting
services through dialogue
・R e a l i z i n g c u s t o m e r - o r i e n t e d b u s i n e s soperations
・Enhanced convenience

Services for corporations
・Loans, forex, trust functions
・Equity finance・Consulting services
・Business matching・Supporting start-ups, M&A,
business succession
・Support for overseas expansion...etc.


Other・Regional headquarters structure

Evaluation by customers

Creating value withstakeholders

Product/service being proposed

・Intra-group collaboration

Creating shared value

point (the“first call cycle”)

Environment / local communities
・Initiative to contribute to environmental
problems such as the aging of society andclimate change・Contributing to the sustainable developmentof local communities, which is the operationalbase of the Group・Resolving societal issues through ourmainstay operations

Employees
・Developing“Kiraboshi People”

・Putting in place an environment in which
diverse human resources can work to
implement the business model・Achieving work-life balance by providing
flexible work styles

・Involvement of diverse human resources

・External collaboration
・Maekyu service

Confirming customer evaluation

・Internet banking

Shareholders and investors

・Kiraboshi Bank app
...etc.

call first・Maximizing shareholder value over the
medium to long-term
・Constructive dialogue
・Highly transparent disclosure including nonfinancial information

Expanding operational baseregional development

and in which being selected by them ultimately leads to profits[CSR management]

Based on its management philosophy, the Group seeks to help form sustainable local communities through the three action
areas of“contribution to the local economy,”“contribution to local communities,”and“initiatives for environmental problems.”

10Tokyo Kiraboshi Financial Group, Inc.

Toward sustainable development
Tokyo Kiraboshi Financial GroupSDG Declaration
The Tokyo Kiraboshi Financial Group aims to be“a comprehensive service business that is also strong in
finance.”Based on its management philosophy of“to be a financial group for small and medium-sizedenterprise customers and individual customers in the Tokyo metropolitan area that will contribute to thedevelopment of local communities through comprehensive financial services,”the Group is working,through its corporate activities, on initiatives related to the SDGs adopted by the United Nations summit,
and seeking to realize a sustainable society and to create shared societal value.

To achieve the Sustainable
Development Goals “( S D G s ”)
adopted by the United Nations in
2015, the Group has drawn up a
“Tokyo Kiraboshi Financial GroupSDG Declaration,”the main themesof which are (1) environmental
protection, (2) contributing to local
communities, (3) creation of sharedvalue with the customer, (4)Employee’s work style reform andPromotion of diversity and (5)dialogue with shareholders andinvestors, all of which have a closeaffinity to the management
philosophy and its three CSR action
areas, with the objective of working
to resolve societal needs andproblems through the provision ofa variety of products, services andthe CSR activities.

Local
communities

Environmental
protection

Management
philosophy

Society

Environmental protection
In order to leave to those people living
in local communities, and to the children
who will be the bearers of the next
generation, a future environment thatenables a safe and abundant future
lifestyle and one in which they can live
securely and healthily, the Group is
taking measures to conserve andprotect the environment that take into
account climate change and global
warming, and striving to help realize asustainable society by means of its local
environmental activities and financial
services.

Environment Economy

Shareholders
and investors

Dialogue with shareholders and investors
In order to achieve sustainable development for theCompany and enhance shareholder value, as well as
raise the transparency and objectivity ofmanagement, we are striving to assist in thedevelopment of local communities throughstrengthening structures associated with corporate
governance and working to ensure compliance.

11

While deepening our dialogue withcustomers and those living in local
communities, we take initiatives tocreate a safe and abundant society
in which everybody can live
securely and healthily, and work torealize a sustainable society.

By utilizing financing and various kinds of funds
based on business feasibility evaluations, as wellas providing sophisticated consulting functions insuch areas as business start-up, the expansion ofsales channels, and business succession thatmatch the company’s stage of life, we will createshared value with the customer, and contribute to
the sustainable growth of the local economy.

S

SocialContributing to local
communities 

P15

Creation of shared value
with the customer 

P17

Initiatives for corporate customers

Employee’s work style reformand Promotion of diversity

Employees

Environment

Environmental protection  P13

Creation of shared value with the customer

CustomerE

Toward sustainable development

Contributing to local communities

Initiatives for individual customers

Employee’s work style reformand Promotion of diversity 

In addition to promoting Kenko Keiei(health and productivity management*)
by encouraging a work-life balance, theGroup is taking steps that include
supporting the contribution of women,
and creating an environment in which all
employees, irrespective of gender orage, can feel satisfaction in their work,
thus facilitating the development ofdiverse human resources and therealization of diverse work styles.

G

P23

Governance(corporate control)

Dialogue with shareholders
P25
and investors “* Kenko Keiei®”is a registered trademark of Workshop for
the Management of Health on Company and Employee

Tokyo Kiraboshi Financial Group’s basic policy on CSR
The Tokyo Kiraboshi Financial Group aspires tobecome the region’s No. 1 urban regional bank, andwe regard the practice of CSR management tocontribute to the formation of sustainable local
communities as one of management’s key priorities.
Based on its management philosophy, the Group is
actively involved in CSR activities in the three action
areas of “contribution to the local economy,”“contribution to local communities,”and“initiatives forenvironmental problems.”

Tokyo Kiraboshi Financial GroupManagement
philosophy

To be a financial group for small and medium-sized enterprise customers andindividual customers in the Tokyo metropolitan area that will contribute to thedevelopment of local communities through comprehensive financial services.

Contributing to local economy

Contributing to local communities

Initiatives for environmental problems

Forming sustainable local communities

12

E nviroment

Environmental protection
In order to leave to those people living in local communities, and to the children who will be the bearers of thenext generation, a future environment that enables a safe and abundant future lifestyle and one in which they
can live securely and healthily, the Group is taking measures to conserve and protect the environment that take
into account climate change and global warming, and striving to help realize a sustainable society by means of
its local environmental activities and financial services.

Investments in green bonds/green financeWith interest in Environmental, Social and Governance (ESG)
investing rising on a global scale, there has been an expansion ingreen investing initiatives that seek to deploy funds into
environmental businesses and businesses that generateenvironmental improvements, etc.
In addition to investing in the “Tokyo Green Bonds” that theTokyo Metropolitan Government sold in October 2017 as the firstsuch instruments issued by a local governmental entity in Japan,
the Group invested in the Green Jointly Operated DesignatedMoney Trust (product name“The UUR Green Trust”) structured
by Sumitomo Mitsui Trust Bank in September 2018.

Protection of the naturalenvironment (setting up parks)(Photo credit: courtesy of Tokyo
Metropolitan Government)

Response to climate change (installationof high-tide defense facilities)

Environmentally aware branch equipment
So as to reduce CO2 emissions, the Shinjuku and Aoyama offices
use environmentally friendly facilities such as solar power
generation, the reuse of rainwater, and the creation of rooftop
greenery. We are also moving forward with environmentallyaware branch designs, such as switching branch lighting to LED
bulbs.
Furthermore, we are working on initiatives to counter global
warming through our business activities, such as offering
financial products and services that lead to environmental
protection.

Shinjuku office

Aoyama office

Certified under the“Tokyo Forest Action”accreditation
With regard to the Kiraboshi Bank Aoyama head office and theTakinogawa branch (and central operations center) that wereconstructed using materials from Tama, the use of Tokyo forestry
resources was appreciated by the Tokyo Metropolitan
Government, which certified the Group under the“Tokyo Forest
Action accreditation system (recognition of CO2 volume fixed bymeans of buildings, etc.).”Takinogawa branch (and central
operations center)
Aoyama head officeSigning of collaboration agreement relating to planting of“Corporate Forests - Kiraboshi Forest”forestry resources
As part of the“the campaign for growing low pollen forests,”theGroup signed a collaboration agreement related to the planting of“Corporate Forests - Kiraboshi Forest”forestry resources in March
2019, through which it will encourage sustainable forestry
management through forest protection activities.

13

Environmental protection

Cooperating with“campaign for growing low pollen forests”
The Group’s Kiraboshi Bank is extending its cooperation to the “thecampaign for growing low pollen forests”in order to allow healthy forests to

be maintained into the future, while also contributing to efforts to prevent
global warming. As part of these efforts, it makes a donation every year to theTokyo Development Foundation for Agriculture, Forestry and Fisheries’“donation for growing low pollen forests.”

Provision of environmentally aware products
The Group’s Kiraboshi Bank offers environmentally aware financial products,
such as“growing low pollen forests”term deposit accounts and“Nikko Eco
Fund (an Internet-only product).”
Such deposits result in donations to the Tokyo Development Foundation for
Agriculture, Forestry and Fisheries’“donation for growing low pollen forests.”

Kiraboshi Eco Passbook (web passbook), Kiraboshi Bank app
The Kiraboshi Eco Passbook* (Web passbook) is a web passbook service
that, instead of a paper passbook, can be used to confirm up to 37 months oftransaction details in a Kiraboshi Home Direct account.

The Kiraboshi Bank app is a free smartphone app* that can be used to viewaccount activity and balance information in the way similar to that of a paper
passbook.This environmentally friendly service results in a reduction in paper
resource usage.
*Cannot be used with accounts at branches of the former Yachiyo Bank, Limited.

The actions of each and every individual are important
Our SDG initiatives are not limited only to the activities of the organization.
The actions of each and every individual are also required for theachievement of these goals. As the everyday behavior of each of ouremployees also relates to the SDGs, we will here introduce a selection of the
day-to-day actions taken by them. Going forward, our employees will work as
one toward the achievement of the SDGs.
・Drive to save electricity by turning off lights in places where no people arepresent
・Adoption of“Cool Biz”and“Warm Biz”
・Recommending use of own reusable bag and bottle
・PET bottle recycling programs etc.

14

S ocial（local communities）

Contributing to local communities
While deepening our dialogue with customers and those living in local communities, we take initiatives tocreate a safe and abundant society in which everybody can live securely and healthily, and work to realize
a sustainable society.

CSR initiatives through the promotion of sports
On“Kiraboshi Bank Day,”which we hold every year as a support eventin collaboration with TOKYO FOOTBALL CLUB Co., Ltd., which manages

the“FC Tokyo”J. League club, we award funds for children’s education.
We endorse the“SPORTS of HEART”project, which aims to create aJapan in which everybody can share a rich and fulfilling life, and we alsosponsored the“SPORTS of HEART 2018”sports and culture festival,
which can be enjoyed both by those with and without disabilities.
In addition, in April 2019 we hired two top athletes for the first time,and going forward we will continue to contribute to the development oflocal communities through the promotion of sports.

Kiraboshi Bank Day ©FC Tokyo

Dan Iwasa(speed skating - short track)

Shingo Sawa
(Athletics - pole vault)

Sponsorship of local marathon events
December 2018 saw the holding of “MINATO City Half Marathon 2018,” the first-evermarathon event held by Minato City, in which more than 5,000 runners took part. As afinancial institution whose head office is located in Minato City, we were sponsors of thismarathon event.
In March 2019, as part of the“Community Dialogue Project”run by the Johoku/Nishi Tokyo
regional headquarters, the Group sponsored the “Nerima Kobushi Half Marathon,” in
addition to which many employees played an active role as volunteers.

Cooperation with TEAM BEYOND
The Group is registered at the“TEAM BEYOND*”fan site set up by the Tokyo Metropolitan
Government for sports for those with disabilities (para sports), and cooperates in the
promotion of para sports.
*‌TEAM BEYOND is a Tokyo-based team that seeks to create a future in which everybody can express theirindividuality through para sports.

Initiatives for training“dementia supporters”
Against the backdrop of the rapid aging of society, we are carrying out initiatives to train“dementia supporters”with the aim of achieving local communities in which those sufferingfrom dementia and their families can have peace of mind in their daily lives.
The Group has implemented initiatives whereby people can obtain“dementia supporter”
qualifications, and“dementia supporters”are assigned to each department and branch.

Educational support for students and children
Through sponsorship of the Japan Football Association’s“JFA Kokoro Project,”we support
the“Dream Class”program in which“Dream-Teachers,”whose members include currently
active athletes and former alumni of the project, and who convey“the importance of having
a dream”mostly to audiences consisting mainly of 5th-grade elementary school children.
Dream-Teacher: Naohiro Ishikawa (soccer)

15

Staff and others who participated“Nerima Kobushi Half Marathon”

The Group hosts the“Dream Cup”as part of its CSR measures for the sound development of local

children. We sponsor sports events in local communities, such as soccer events for girls and local

Contributing to local communities

Certified as a“Tokyo Sports Promotion Company”

volleyball. These initiatives have received widespread recognition, leading to the Company beingcertified by the Bureau of Tokyo 2020 Olympic and Paralympic Games Preparation as a“2018 Tokyo

Sports Promotion Company.”We will continue to play an active part in sports promotion activities into
the future.

Cooperating with blood donations
As part of our activities to support local communities, we also cooperate with blood
donation drives. By continuing these activities so as to help save more lives, we cooperatewith the blood donation centers of the Tokyo Japan Red Cross to enable us to save theprecious lives of those who need blood transfusions due to illness or injury, and will carryon these endeavors into the future.

Cooperation with UNICEF fund-raising activities, etc.
The Group runs“a foreign coins collection program,”and the donations thus collected are
put to use in support activities for children conducted by UNICEF in 150 or more countries
and regions.
Also, within the Group, as part of our everyday volunteer activities we collect used stamps
and cards and donate them to the Minato Council of Social Welfare.

Donations to Ronald McDonald House
Ronald McDonald House is operated by Ronald McDonald House Charities Japan, andoffers accommodation to lighten the economic and emotional burden of seriously ill
children and their families. The Group makes donations to this charity every year. We willcontinue with this support to enable children with a future to be supported by theirfamilies while they are cured of their illnesses, allowing them to grow strong and healthy.

Initiatives for local art and cultural activities
The Group also sponsors the NIPPON STEEL Arts Foundation, which is based in the Kioi
Hall. In addition, by sponsoring the creation and communication of the arts and culture,and the training and education of people in this area, such as by sponsoring the Tokyo
Metropolitan Symphony Orchestra (support for seats for younger people), and by hostingthe“Kiraboshi Christmas Concert”at the Aoyama office, the Group actively supports local
art and cultural activities.

Kioi Hall16

S ocial（local communities）

Creation of shared value with the customer
By utilizing financing and various kinds of funds based on business feasibility evaluations, as well as
providing sophisticated consulting functions in such areas as business start-up, the expansion of sales
channels, and business succession that match the company’s stage of life, we will create shared value
with the customer, and contribute to the sustainable growth of the local economy.

A business model that makes“dialogue”as its starting point — Building a structure in which the customer gives us the first call —◆Building a customer-orientated sales structure◦By gaining high-quality time with the customer, understanding their“real”needs and offering information and advice, we will
establish a customer-orientated sales structure that will lead to enhanced customer satisfaction.

◦Obtaining“first call contacts,”to which proposals are made in relation to support for mainstay operations or life plans, has been
made a KPI, and in the fiscal year ended March 31, 2019 a total of 11,290 such contacts were made, significantly exceeding theannual target of 7,000. In addition, the survey that was carried out among those receiving such proposals has received a suitablelevel of appreciation.

P

D

The Kiraboshi KPI Concept

A

Continuously review actions (improve skills) toincrease the number of more challenging proposals

PDCA cycle
embodying the“Getting the ﬁrst call”
concept

Results of first call surveys (approximately 5,000 respondents)

5

4

C

Evaluation by customers(Carry out checks from a customer perspective)

Examples of the“customer feedback”◦Approximately 70% gave 5 stars for“Overall satisfaction”and 97% gave“4 stars”or more

Questions

Actions for Kiraboshi KPI targets▪Feel reassured by kind response and customer-oriented advice.

Ratings
3

2

1▪Response was prompt and accurate.Have been using the bank since
its inception.

(1) Satisfaction level with respect to bank employees’customer service

78.4% 18.8%

2.7%

0.1%

0.0%

(2) Satisfaction level with respect to proposals

66.8% 27.4%

5.5%

0.3%

0.0%

(3) Would you consider consulting on other matters in the future?

63.6% 25.2% 10.1%

0.7%

0.4%

▪ I would like to see that customers’perspective will be reflected(4) Would you like to recommend Kiraboshi Bank to your friends and acquaintances?

53.6% 28.5% 15.8%

0.9%

1.2%

▪I hope that you will be a bank that thinks of its customers proactively.

(5) Overall satisfaction

67.6% 29.3%

0.1%

0.0%

3.0%

▪We ask that Mr. (Ms.) ○○ remains in charge of our company.
▪ Compared to other banks, the employees are warmer, and makeme want to keep using them.
even further in customer interaction.
▪ I think it would be good if there were free consultations withspecialists on merits of financial transactions.

◆Enhancing the collective strength of the GroupThe Group is made up from the Company and 13 group companies and by providing a wide range of financial products and services
to local people, is enhancing its collective strength to enable it to become“a comprehensive service business that is also strong in
finance.”
To make the operations of all the Group companies more efficient, we have set up a specialized internal department in which backoffice operations (personnel, general administration, accounting, etc.) are being steadily centralized.

Kiraboshi Bank, Ltd.

Creditguarantee

Kiraboshi Credit Guarantee Co., Ltd.
Yachiyo Credit Guarantee Co., Ltd.

Kiraboshi Consulting Co., Ltd.
Kiraboshi Business Consulting Shanghai Co., Ltd.
Kiraboshi Business Consulting Vietnam Co., Ltd. (provisional name)(Opening scheduled for October 2019)

Consulting

Capital/leasing

Kiraboshi Tech, Inc.

FinTechCreditcards

Kiraboshi System, Inc.

17

Bank

Systemdevelopment

Associatedservices

Kiraboshi Capital Co., Ltd.
Tokyo Kiraboshi Lease Co., Ltd.

Kiraboshi Credit Service Co., Ltd.
Kiraboshi JCB Co., Ltd.
Kiraboshi Service Co., Ltd.
Kiraboshi Business Service Co., Ltd.

The Group has introduced a regional headquarters structure in preparation for“building a customer-oriented sales structure.”With eachregional headquarters providing the centers, going forward we will develop close-knit“dialogue”with customers and regions.

By using the regional headquarters structure and key satellite strategy, as well as opening locations in open territories
in such a way as to meet local characteristics and needs, we will build a network with“dialogue”as the starting point

Regional headquarters
structure

Key branches (full-line branches)

Johoku/Nishi Tokyo
headquarters

Tokyo Mirai Sales Division(entire Tokyo Metropolitan area)

Joto
headquarters

Consolidation of corporate transactions

Creation of shared value with the customer◆Regional headquarters structure and a key satellite strategy

Transfer of personnel
in charge of corporate
customers

Tokyo ward area
Central Tokyo areaJosai
headquarters

Tama
headquarters

Jonanheadquarters

Machida/Sagamihara,
suburban Tokyo area
Sagamihara/
Central Kanagawa
headquarters

Head Oﬃce Sales Division
Large branches

Satellite branches (branches focused on individual customers)
Branches focused on individual customers to devote
to making proposals on asset management, etc.

■ Substantial delegation of authority to
the seven regional headquarters■ Community-based sales activities■ Flexible deployment of personnel amongst
the regional headquarters

Machida/Yokohama/Kawasaki
headquarters
Respond to the needs speciﬁc to thespecial features of the area (market)
wi t h a se n se of sp e e d an d th ro u gh
dialogue with the community andcustomers.

Establish new branches in open territories thatrecognize the special features of the area
Kawasaki Corporate Business Oﬃce opened
in April 2019

Strengthen promotion of corporate lending
business in Kawasaki, a city with a concentration of business establishments
Next generation type branches
Consider opening locations
with new formats, such as
cashless, seal-less, and useof tablet computers◆Collaboration with external organizations
By strengthening consulting functions, as well as collaborating with local governments such as the Tokyo Metropolitan Government andrelated organizations, and other financial groups, we will respond to the diverse needs of customers, and aim to become the financialgroup to which they give the first call.

Tokyo Metropolitan Government

Sumitomo Mitsui Trust Bank, Limited
Sky Ocean Asset Management Co., Ltd.

Tokyo Metropolitan
Small and Medium Enterprise
Support Center

Jimoto Holdings, Inc.
Kirayaka Bank, Ltd.

Tokyo Foundation
for Employment Services
Tokyo Metropolitan Industrial
Technology Research InstituteTokyo Metropolitan University

Tokyo Labor Bureau
Tokyo Chamber ofCommerce and Industry

The Sendai Bank, Ltd.
Senshu Ikeda Holdings, Inc.
Kiraboshi BankThe Senshu Ikeda Bank, Ltd.
Kanagawa Institute ofIndustrial Science and Technology
Yokohama Industrial Development
Corporation
Kawasaki City

18

Creation of shared value with the customer
Support for expansion/operations overseas
From the perspective of the small and medium-sized enterprises in the Tokyo area that constitutes the operational base of theGroup, overseas markets, and those in Asian regions in particular, are becoming increasingly important as an extension of thedomestic market. At the same time, we believe that technology and services that are already mature in Japan will, going into the
future, be readily accepted among Asian regions that are still in their growth phase (the“time machine”model). Moreover, in thissituation local companies hold the potential to inherit businesses from Japanese companies, or to become joint operators ofbusinesses and growth drivers. We will act as a bridge between such local Asian companies on the one hand and our customers on
the other, developing the“New Overseas Strategy”described below in order to respond to customer needs.

◆Kiraboshi Bank’s new overseas strategy
1. Provide opportunities to small and medium-sized enterprise customers for alliances, business matching andcross-border M&A, etc., with local Asian companies by offering information on such organizations.

2. Invest in or collaborate with offshore funds in order to obtain information on local Asian companies(Strengthen information network in Asian regions)

3. Following on from the only consulting subsidiary in Shanghai (China) operated by a regional financial institution,
establish a consulting subsidiary in Ho Chi Minh, Vietnam (reinforce the China-plus-one support structure)

Asian business support in Japan and overseas<Domestic market>♦ Market saturation♦ Maturation of products andservices♦ Shrinking market / shortageof successors<ASEAN/Asian markets>♦ High economic growth♦ Market expansion♦ Market that can, now and in the future, take in technologies and services which in Japan are in their maturity stage(the “time machine" model)

South Korea(876 locations)

Asian markets as an extensionof the domestic market

Myanmar (1 location)

Hong Kong(2 locations)India (6 locations)

Needs of SMEs
● Overseas expansion● Business development of own products
and services in overseas markets● Local information● Alliance with local companies, etc.

Dispatching of personnel

Shanghai, China
Consulting subsidiary

China (18 locations)

Scheduled for October 2019

Ho Chi Minh, Vietnam
Opening of consulting subsidiary

Vietnam (30 locations)ThailandCambodia (6 locations)

The Philippines (1 location)

Singapore (1 location)

Investment in ASEAN-region funds
Indonesia (54 locations)

July 2019
Business alliance withShinhan Bank Japan

Shinhan Financial
Group locations

Our track record in terms of trade transactions handled is one of the best out of all regional banks nationwide (2019/3 results)
Import transactions(outward remittances/import settlements):

Export transactions(inward remittances/purchase of export bills):

Approx. 39,000

Approx. 11,000

Number of Kiraboshi Bank's counterparties in foreign exchange transactions (corporates and owner-managers) (as of March 31, 2019):

3,000 (up by about 100 year-on-year)

19Planning to invest in LP or send bank personnel to GP of offshore funds in order to respond to customers’needs in overseas
buyouts and alliances.We will also move forward with information gathering and human resources development.
Customer
Alliances

Investment proposal to local
companies / Alliance proposal
with local companies

Kiraboshi Bank
Investment

Investment / capital injection(business succession)・Business matching・Business alliances,
franchise agreements, etc.

Local companies in Southeast Asia

Collaboration

Collection of information regarding local companies in Southeast Asia

Personnel dispatch

Local company

Investment

Oﬀshore fundCreation of shared value with the customer◆Support through offshore funds

Interested in Japanese technologies and services (Japan angle)◆Support at diverse stages
Supporting business start-ups

Established“Kiraboshi Capital Co., Ltd.”The Company set up a “start-up support group,”
providing assistance for the various needs of founders
and entrepreneurs, as well as providing bridges toexternal start-up support agencies. We have also beenworking to expand our menu of support, such as throughan initiative with the Japan Finance Corporation for cofinancing, and through the structuring of a venture
capital fund with Free Bank Co., Ltd. called“ToKI Meki
Support Fund 1.”“Kiraboshi Capital Co., Ltd.,”established in September
2018, uses a variety of approaches, such as equity financeor mezzanine finance, to provide support for customers inboth growth and mature phases to secure a robust
financial position.
As well as structuring the“Yume Kagayaki Fund 1”forbusiness successions in November 2018, in March 2019 it
structured the new“Yume Habataki Fund 1,”which isintended as an“equity financing response to organizations
requiring additional capital in preparation for IPO, or
support for growth.”

Growth axis = corporate value

Investment domain of fund
IPO
Business succession

Support from early stage to pre-IPO stage

Buyout investment(1) ToKI Meki Oen Fund 1(3) Yume Habataki Fund 1
Business start-up(2) Yume Kagayaki Fund 1

Growth capital investment
Expansion investment

Venture investment

Stage
Start-up phase

Selected benchmarks

Growth phase

FY2016

Number of start-up support cases involving financial institutions
Support for drawing up start-up plans
Financing to customers during start-up period
Introducing financial agencies affiliated with the government and institutions supporting start-ups
Subsidies, financing and investment in venture businesses

Maturity phase

288

FY20173,012

FY2018
5,322

41

1,529

687

190

1,058

1,173

53

276

1,192

4

149

2,270

*FY2017 count also includes cases received at sales offices
Proprietary benchmarks
Number of start-ups supported in partnership with local government organizations, etc.

FY201652

FY2017194

FY2018

1,053

20

Creation of shared value with the customer
Status of initiatives related to the support of management for small and medium-sized enterprises, as well as the revitalization of the region<Offer consulting functions by leveraging contact with the broad customer base to which we haveaccess as a local regional bank to display the specialization within the overall Group>◆Demonstrating consulting functions and strengthening relationships by leveraging contact with the broad customer base
The Group continues to aim to be the main bank for small and medium-sized enterprises in the Tokyo area, working to provide support
for growth that helps raise customer productivity, demonstrating its consulting functions and striving to strengthen relationships.

◦Business matching

Selected benchmarks

The Group works actively to provide venues for business

FY2016FY2017FY2018

Local

480

745

891

Overseas

105

103

140

Total

585

848

1,031

discussions and for the exchange of information withcustomer companies, such as by assigning specialists inbusiness matching. We host a variety of business discussion
and information exchange meetings to support the
expansion of our customers’sales channels.

Number of companies
where support for
expanding sales
channels was provided◆Establishment of SF Division and strengthening of functions
Establishment of SF Division, which handles highly specialized financial support, resulting in achieving increase in first calls received

Kiraboshi Bank

Financing based on
business feasibility
evaluations

Tokyo Metropolitan
Government

SF Division

ABL(Established in January 2019)

Consolidationof functions

Structured ﬁnanceCollaboration

Japan FinanceCorporation○Share know-how○Accompany visits to andliaise with customers○Prepare complex contract
documents, etc.

Medical/welfare ﬁelds

Capitalsubordinated loan

Sales oﬃce

<Origin of the name SF Division>
Through use of an optimal“Solution,”
we aim to “Satisfy” the customer,

First callreceiving a“Smile,”and winning theSME“First call.”“SF” encompasses a variety of
meanings,

Initiatives for becoming customers’main bank
Actively support companies which may have ﬁnancial
challenges but are engaged in businesses with growthpotential
Seek enhancement of corporate value, including
improvement in ﬁnancial position by reviewing
borrowings in their entirety and repayment method, etc.

including “Structured

Finance,”“Specialty Finance,”and“Strategy Finance.”

Selected benchmarks

Total number ofcustomers andnumber ofcustomers by region

Total number of customers
Number ofcustomers byregion

Local

Tokyo
Kanagawa prefecture
Non-local

FY2016FY2017FY201828,16627,75026,39721,31021,04019,867

5,652

5,484

5,231

1,204

1,226

1,299

FY2016FY2017FY2018

Shared benchmarks

Among companies that conduct transactions with afinancial institution as their main bank, the number(group) that has shown improvements in management
indicators or increases in the number of employees

21

Number of companies using us as main bank

8,998

9,404

9,432

Value of financing to companies using us as main bank¥715.7 billion¥777.5 billion¥941.5 billion

Number of companies showing improvement in management indicators, etc.

6,480

6,747

6,126

Medical corporations, private practitioners, andbusiness operators in areas related to caregiving

In an environment characterized by the declining birthrate and aging population, we
have positioned the“medical/welfare field”as a growth area and a local industry

for the Tokyo Metropolitan area, to which we will provide multifaceted assistance

Financing activities

not only through financing but also through support for mainstay operations, etc.
Proprietary benchmarks

Number of consulting support deals withmedical and nursing care businesses

FY2016
Second half

FY2017FY201827

88

82

Cooperation withGroup companies, etc.

Specialized medical/
welfare department

Cooperation with Medical andWelfare Administrative Structure K.K.

Business mediation activities

Creation of shared value with the customer◦Multifaceted support for medical/welfare field<Leverage the special features of the Tokyo area to strengthen our functions and offer new value bybuilding broadly based networks as well as unearthing new business areas>◆“Maekyu”service
Maekyu is the banking industry’s first service that enables salary payment at any time, allowing people to receive money before payday,
within the limits of work done (a patent was received for the business model in June 2005). Against the backdrop of recent labor
shortages, it has been well received by companies aiming to secure staff and improve retention ratios, and with the increase in thenumber of companies deploying the service, the number of transactions is also rising nationwide.
We also established Kiraboshi Tech, Inc., which develops various kinds of apps and provides new services with FinTech and venturecompanies, and in August 2018 released the“Can day”smartphone app for users of the“Maekyu”service.
Furthermore, we have granted a license for the use of the“Maekyu”service to The Senshu Ikeda Bank*, which began full-scale provisionof the service in January 2019. Going forward, we will continue to actively pursue collaborations with regional banks, accelerating its
deployment over a wide area.
*‌Kiraboshi Bank and The Senshu Ikeda Bank are both banks whose base is in major conurbations, namely the Tokyo and Osaka areas respectively, andwhose goal is to contribute to the development and revitalization of economic society. With this in mind, on January 27, 2017, the two banks signed“anagreement on a Tokyo-Osaka partnership that“connects”the Tokyo and Osaka areas.

<Changes in external
environment and needs>

Expansion of services using“Maekyu”platform

Transaction
lending

Spread of smartphones
Travel andeducation
services

Apps and technology innovation“Maekyu”app

Acceptance of e-money through“Maekyu" service

E-wallet top-up function

Progress toward a cashless society

Use of users’consumption data

(Spread of e-money, possible law revisions, etc.)

Provision of new settlement
functions for employees ofcustomer companies

Overseas
remittanceElectronic
settlement

Study new initiatives for improving
user convenience incollaboration with Japan TCS“Maekyu”service

Number of companies signing:More than 700

Use of accumulated data

Number of uses per year:
Approx. 1,110,000

Aﬃnity with e-money(aggregate, as of March 2019)(April 2018 ‒ March 2019)

Growth of income through licensing of “Maekyu”services“Maekyu”
platform■ Further growth of“Maekyu”users■ Tool for securing human resources
and improving employee beneﬁts
for“Maekyu”customer companies■ Expansion of collaboration with
regional ﬁnancial institutions■ Development of new data utilization businessStarted handlingin January 2019

Regional
ﬁnancial
institution

Regional
ﬁnancial
institution

Regional
ﬁnancial
institution

Negotiating for possible partnershipwith multiple ﬁnancial institutions

22

S ocial（local communities）

Employee’s work style reform and Promotion of diversity
In addition to promoting health and productivity management by encouraging a work-life balance, theGroup is taking steps that include supporting the contribution of women, and creating an environment inwhich all employees, irrespective of gender or age, can feel satisfaction in their work, thus facilitating thedevelopment of diverse human resources and the realization of diverse work styles.

Setting up of“Diversity Promotion Section”
At Kiraboshi Bank, in addition to setting up a“Diversity Promotion Section”in October 2018,“Project team for the promotion of work style reform”was also launched. Various otherinitiatives have also been implemented in preparation for realizing“Kiraboshi-style”work stylereform, such as investigating measures to encourage both male and female employees to takechildcare leave, and the hosting of the“Kiraboshi Women’s Inclusion Network,”the aims ofwhich include promotion of women’s active participation and advancement.
In December 2018, in recognition of the quality of its initiatives related to the promotion of
women’s active participation and advancement, the Company was certified at the highest“Stage 3 level”of the“Eruboshi”by the Minister of Health, Labour and Welfare.

“Kiraboshi-style”work style reform

Certified“Eruboshi”mark(Stage 3 level)

Support for balancing work and home
●Enrich system for supporting balance
between work and childcare/caregiving

Supporting ﬂexible work styles●Support ﬂexible work styles that are
uncoupled from time and place, such as
considering the adoption of teleworking

Work-life balance

Establishing independent career formation●Establish female career path and raise therate of promotion for women in
management roles●Build development system for professional
human resources who can win against theexternal environment●Raise awareness and implement training
with regard to promotion to management

Raise motivation

Respect for diverse human resources

Increase productivity
to reduce
long working hours●Promote the reform of work and the value ofwork (Project ZERO)●Promote women’s active participation andadvancement,andutilize
personnel
irrespective of their nationality or whether
they have disabilities

30.0%
22.3%

25.0%
20.0%

●Reform awareness to facilitate appropriate
time management and resolve long working
hours

23.9%

27.1%

13.9%

15.4%

14.1%

FY2016FY2017FY2018

15.0%
10.0%
5.0%
0.0%

Organized acommemorative
event
Participated in by employees
and their families, andemployees of Group companies

23

Business process re-engineering
at sales oﬃces and headquarters

Proportion of women at deputy
section chief level or higher
Proportion of women in management(section chief level or higher)

Dialogue with shareholders and investors
In order to achieve sustainable development for the Company and enhance shareholder value, as well as
raise the transparency and objectivity of management, we are striving to assist in the development of local
communities through strengthening structures associated with corporate governance and working toensure compliance.

Information Disclosure Policy
Under our management philosophy, that is“to be a financial group for small and medium-sized enterprise customers
and individual customers in the Tokyo metropolitan area that will contribute to the development of local communities
through comprehensive financial services,”the Group is committed to making timely and appropriate disclosure andprovision of information that is easy to understand, not only on financial information but also on non-financial
information such as management strategies and issues and information on risks and governance, in an aim to win
more trust and reputation from our customers, shareholders, and local communities, etc.
The Group has established the“Information Disclosure Policy”for the timely and appropriate disclosure andprovision of information that is easy to understand to stakeholders, and strives to disclose information in a fair andequitable manner.

Holding briefing sessions for investors
The Group is engaged in IR activities such as holding briefing sessions for
institutional investors and private investors so that stakeholders including
our customers, local communities, shareholders understand the management
status and other aspects of the Group.

Results briefing (held on June 6, 2019)

Activities (timing in FY2018, etc.)
Japanese institutional investors and securities analysts

Business results briefing (June) and individual meetings (as necessary)

Individual shareholders and private investors

Results briefing for private investors (September, November, January, and February)

Employee’s work style reform and Promotion of diversity/Dialogue with shareholders and investors

G overnance

Establishment of Nomination/Remuneration Committee
To help enrich corporate governance, we have voluntarily established the“Nomination/Remuneration Committee”
as an advisory body with the intent of securing objectivity and transparency regarding personnel matters andremuneration of Directors. The“Nomination/Remuneration Committee”consists of one Director of the Company
and two Outside Directors of the Company and is chaired by an Outside Director.

Introduction of performance-based stock remuneration plan
Through the introduction of this plan, the Company will clarify the linkage between remuneration and theCompany’s performance and share value, and ensure that Directors will share benefits and risks due to share pricefluctuations with shareholders, thereby raising awareness of contributing to expand its performance and to improve
corporate value on a medium to long-term basis.

Establishment of AML/CFT group
In October 2018, we established AML/CFT group within the Compliance Section of Risk Management Departmentof Kiraboshi Bank, Ltd. as part of our efforts to strengthen measures for anti-money laundering and combating thefinancing of terrorism.

24

G overnanceStatus of corporate governance(From left in the back row)
Full-time Corporate
AuditorDirector

Corporate Auditor (Outside
Corporate Auditor)
Chairman

Corporate Auditor (Outside
Corporate Auditor)
Director

Mikio Makabe Hidenori Tsunehisa Nobuko Inaba Takashi Sakamoto Kayo Todo

Toru Narata

Full-time Corporate
Auditor

Satoru Nobeta(From left in the front row)
Director (Outside
Director)

Shoji Nishio

Deputy President

President

Yoshikazu Kitagawa Keizo Ajioka

Director (Outside
Director)

Deputy President

Director (Outside
Director)

Yuki Takahashi Hisanobu Watanabe Ryuji Miura

Basic approaches to corporate governance
The Company regards corporate governance as one of the top priority management issues, and, with the goal of therealization of its management philosophy, has established the“Basic Policy on Corporate Governance”as follows.

Basic Policy on Corporate Governance・The Board of Directors of the Company decides important matters such as
management policies and strategies in accordance with applicable laws
and regulations as well as the Regulations for the Board of Directors, andendeavors to put in place a system for supervising the execution of duties
by Directors through such measures as receiving reports on the status ofexecution of business delegated to the Management Meeting and Directors
and other important matters.
・The Company strives to ensure the appropriateness of management
supervision and audit functions as well as a system for efficient businessexecution, by effectively utilizing the management supervisory function
realized by the appointment of highly independent Outside Directors andOutside Corporate Auditors and the audit function performed by Corporate
Auditors and the Board of Corporate Auditors, and by enhancing theeffectiveness of corporate governance. As an organizational design for thispurpose, the Company has adopted a company with Board of Corporate
Auditors, and has voluntarily established the“Nomination/Remuneration
Committee,”the majority of which consists of Outside Directors, striving
to ensure the objectivity and transparency in Directors’appointment anddecisions about their remunerations.
・In order to put in place a system that ensures properness of business
operations, the Board of Directors will resolve the“Basic Internal Control
Policy”and endeavor to improve its effectiveness.
・In order to ensure the sound and appropriate business operations of eachGroup company, the Company endeavors to conduct suitable managementof various risks as a whole group under appropriate group business
management (governance).

25

・While striving to establish corporate ethics based on its social mission as aregional financial group, the Company endeavors to ensure the soundness
and appropriateness of business operations, upholding its basic policy offostering the corporate culture that emphasizes compliance and isaccredited by shareholders and trusted by customers and society.
・The Company takes appropriate steps to ensure that shareholders’rights
are substantially secured, including putting in place an environment thatenables shareholders to exercise their rights appropriately. The Company
will also make efforts to disclose information in a prompt, accurate, andequitable manner in order to enable its stakeholders to accurately
understand the current status of the Company for the purpose of achieving
sustainable growth of the stakeholders and the Company.
・The Company has established three action guidelines as basic approaches
to CSR, “contribution to the local economy,”“contribution to local
communities,” and “initiatives for environmental problems,” and iscommitted to practicing CSR management and contributing to the formationof a sustainable local community. In order to contribute to the achievementof the SDGs advocated by the United Nations, the Company has
established the“Tokyo Kiraboshi Financial Group SDG Declaration.”Under
the main themes of“environmental protection,”“contribution to the local
community,”“creation of shared value with the customer,”“employees’
work style reform and promotion of diversity,” and “dialogue withshareholders and investors,” the Company is committed to making
contributions towards the realization of a sustainable society, the aim ofSDGs, by understanding SDGs and acting for SDGs by each officer andemployee.

The Company is a company with Board of Corporate Auditors, and the Board of Directors, Corporate Auditors, andthe Board of Corporate Auditors supervise and audit the execution of duties by Directors. The Company believes
that the appropriateness of management supervision and audit functions as well as a system for efficient businessexecution are ensured by effectively utilizing the management supervisory function realized by the appointment ofhighly independent Outside Directors and Outside Corporate Auditors and the audit function performed by
Corporate Auditors and the Board of Corporate Auditors, and by enhancing the effectiveness of corporate

Status of corporate governance

Outline of corporate governance systemgovernance.
The main business management organizations involved in the management decision-making, execution, andsupervision of the Company are as follows.

Chart of corporate governance system(as of July 1, 2019)

General Shareholders Meeting
Appointment / Dismissal

Appointment / Dismissal
Close cooperation

Board of Corporate Auditors Corporate Auditors

Audit report

Appointment / Dismissal

Accounting Auditor

Corporate Auditor’s Oﬃce
Audit
Close cooperation

Board of Directors

Audit

Accounting audit

Nomination/Remuneration Committee

Audit report

Committees

Management Meeting
Internal Audit Division

Close cooperation

Compliance Committee
Risk Management Committee

Reporting / Presenting

Business Strategy Committee

Internal audit

Corporate Planning Division Business Strategy Division Risk Management Division System Integration Preparatory Oﬃce
Back Oﬃce Service Oﬃce Collaboration Promotion Oﬃce

Reporting

Kiraboshi Bank, Ltd.

Discussion

Kiraboshi Consulting Co., Ltd.

Kiraboshi Capital Co., Ltd.

Subsidiaries, etc.
・Kiraboshi Service Co., Ltd.

・Kiraboshi Business Consulting Shanghai Co., Ltd. ・Kiraboshi Credit Service Co., Ltd. ・Tokyo Kiraboshi Lease Co., Ltd.

・Kiraboshi Credit Guarantee Co., Ltd. ・Kiraboshi Tech, Inc.

・Kiraboshi System, Inc.

・Kiraboshi Business Service Co., Ltd.

・Kiraboshi JCB Co., Ltd.

・Yachiyo Credit Guarantee Co., Ltd.

26

G overnanceStatus of corporate governanceBusiness execution and supervisory function
Directors and Board of Directors
The Board of Directors consists of nine Directors (including three Outside Directors). The Board of Directors has a system in place thatenables the holding of one meeting in principle each month and other extraordinary meetings whenever the need arises in order todecide important matters such as management policies and strategies and to supervise the execution of duties by Directors through suchmeasures as receiving reports on the status of business execution and other important matters.

Nomination/Remuneration Committee
The Company has voluntarily established the Nomination/Remuneration Committee as an advisory body with the intent of securing objectivity
and transparency regarding personnel matters and remuneration of Directors. The Nomination/Remuneration Committee consists of four
Directors or less (including at least two Outside Directors) appointed by the resolution of the Board of Directors, with its chairperson being
appointed out of Outside Directors by the resolution of the Board of Directors.

Management Meeting
Under the Board of Directors, the Company has established the Management Meeting that consists of Directors, etc. of the Company and holds
one meeting in principle each week and other extraordinary meetings whenever the need arises. The Management Meeting decides importantmatters other than those to be resolved by the Board of Directors and matters delegated by the Board of Directors, and receives reports on thestatus of business execution and other important matters.

Committees
The Company has set up the“Compliance Committee,”the“Risk Management Committee,”and the“Business Strategy Committee”as thesubordinate organizations to the Management Meeting for each area of important management issues, and has established a system that
increases expertise and agility. Each Committee meets regularly and at any time whenever the need arises in accordance with their respective
rules.

Audit and supervisory functions
Corporate Auditors and Board of Corporate Auditors
The Company’s Board of Corporate Auditors consists of two full-time Corporate Auditors and two part-time Corporate Auditors (Outside
Corporate Auditors). The Board of Corporate Auditors strives to strengthen the audit structure by ensuring effective monitoring functions for
Directors’decision-making and business execution. Each Corporate Auditor conducts audits on execution of duties by Directors, internal control,and other related matters by engaging in such activities as attending the Board of Directors’meetings and other important meetings, reviewing
important approval and other documents, and conducting audits to each division of the Company and investigations on subsidiaries, in accordancewith audit policies and plans established by the Board of Corporate Auditors. Corporate Auditors and the Board of Corporate Auditors are striving
for effective audits by maintaining close cooperation with the internal audit departments, the Accounting Auditor, and other relevant parties, byexchanging opinions on priority audit issues in regular meetings with Representative Directors and other executives, or otherwise.

Internal audit
The Company’s internal audits have been conducted by the Internal Audit Division, a division established independently from the rest of theGroup, based on the“Medium-Term Internal Audit Plan”and the“Annual Internal Audit Plan”approved by the Board of Directors.Results of theaudit have been reported regularly to the Board of Directors.
The Company has a system in place that enables the close cooperation between audits by Corporate Auditors and accounting audits throughattending to regular meetings and exchanging opinions and information as appropriate. The system also ensures that internal control departments
provide explanations, reports, and supplementary materials for audits by Corporate Auditors at regular meetings, while explanations andsupplementary materials are provided to accounting audits as necessary.

Audit by Corporate Auditors
Corporate Auditors conduct audits on execution of duties by Directors, internal control, and other related matters by engaging in such activities asattending the Board of Directors’meetings and other important meetings, reviewing important approval and other documents, and conducting
audits to each division of the Company and investigations on subsidiaries, in accordance with audit policies and plans established by the Board of
Corporate Auditors. Corporate Auditors and the Board of Corporate Auditors are striving for effective audits by maintaining close cooperation with
the internal audit departments, the Accounting Auditor, and other relevant parties, by exchanging opinions on priority audit issues in regularmeetings with Representative Directors and other executives, or otherwise. The Company has elected one Substitute Corporate Auditor to
prepare for the case where the number of Corporate Auditors falls below the number required by laws and regulations. In addition, two assistants
to Corporate Auditors are assigned to support audits by Corporate Auditors.

Accounting audit
The Group’s accounting audit is conducted by Ernst & Young ShinNihon LLC.

27

Functions, roles, and appointment of Outside Directors and Outside Corporate Auditors
Outside Directors have a wealth of experience and advanced insights as a corporate manager, certified public accountant, or managing
director of the Chamber of Commerce and Industry. They provide pertinent advice and recommendations from an independent standpoint
regarding the overall management of the Company, and are responsible for strengthening the decision-making and supervisory functions
about the management of the Company. Outside Corporate Auditors are responsible for strengthening the audit function on the executionof duties by Directors based on their specialized knowledge as an attorney or certified public accountant. The following“standards of
independence regarding outside officers”is established for and govern the appointment of Outside Directors and Outside Corporate
Auditors based on the functions and roles that outside officers should have in corporate governance.

Status of corporate governanceOutside Directors and Outside Corporate Auditors

Standards of independence regarding outside officers
The Company and its subsidiary banks (hereinafter the“Group”)
determine independence regarding candidates for Outside Director
and Outside Corporate Auditor based on the following standards.
1. (1) The person is not an Executive Director, Executive Officer, ora manager or other employee (collectively hereinafter the“Business Executors, etc.”) of the Group, and was not a
Business Executor, etc., of the Group within 10 years prior toappointment.
However, for candidates for Outside Corporate Auditor, therequirement of not having been a Non-executive Director (Note 1)of the Group within 10 years prior to appointment is added.
(2) For candidates for Outside Director that were Non-executive
Directors or Corporate Auditors of the Group within 10
years prior to appointment, these persons must not havebeen a Business Executors, etc., of the Group within 10 years
prior to appointment to that position.
For candidates for Outside Corporate Auditor that were
Corporate Auditors of the Group within 10 years prior toappointment, these persons must not have been Business
Executors, etc., or Non-executive Directors of the Group
within 10 years prior to appointment to that position.
(3) The party is not a spouse or a relative to within the second
degree of an officer, etc. (Note 2), manager or other important
employee (excluding those who are officers, etc.) of theGroup.
2.	The person is not a major shareholder (Note 3) of the Company or
an officer, etc., or employee (excluding those who are officers,etc.) of a company of which the Group is a major shareholder.
3. (1) The person does not hold the Group as a major transaction
partner (Note 4) and is not the parent company or a significant
subsidiary, and if that person is a company, is not a Business
Executor, etc., of said company and was not a Business
Executor, etc., within the past three years.
(2) The person is not a major transaction partner of the Groupand is not the parent company or a significant subsidiary,and if that person is a company, is not a Business Executor,
etc., of said company and was not a Business Executor, etc.,
within the past three years.

(3) The person is not an employee, etc., of an organization thatreceives donations, etc., over a certain amount (an averageof ¥10 million per annum for the past three years or 30% ormore of average annual expenses of said organization,
whichever is higher) from the Group.
4.	The person is not an officer, etc., of a company, parent companyof said company, or subsidiary of said company that receives
officers, etc., from the Group.
5.	The person is not the Accounting Auditor of the Group or an
employee, etc., of said Accounting Auditor and was not
responsible for the audit operations of the Group within thepast three years as said employee, etc.
6.	The person is an attorney, certified public accountant, or otherconsultant, etc., who has not received an average of ¥10 million
or more per annum for the past three years aside from officer
remuneration in cash or other property as profit from the Group.
Additionally, the person is not an employee, etc., of an advisory
firm such as a legal office, etc., that holds the Group as a majortransaction partner (an advisory firm that received payment fromthe Group of 2% or more of its consolidated net sales on
average over the past three fiscal years).
7.	The person is not a person with which a constant, essential
conflict of interest with general shareholders of the Company
may arise for reasons other than those considered above.
(Note 1) A“Non-executive Director”refers to a Director that is
not an Executive Director.
(Note 2) A n“officer, etc.,”refers to a Director (including an
Outside Director), Corporate Auditor (including an
Outside Corporate Auditor), Executive Officer,
Counselor, and Advisor.
(Note 3) A“major shareholder”is a person or company, etc.,that directly or indirectly possesses voting rights equal
to 10% or more of total voting rights as of the end of
the most recent fiscal year.
(Note 4) A“major transaction partner”is determined on thestandard of 2% or more of annual consolidated net
sales (annual consolidated ordinary revenue for theCompany) as of the end of the most recent fiscal year.

Status of putting in place the internal control system
Under the Companies Act and the Regulation for Enforcement of the Companies Act, in order to put in place the“system that ensuresproperness of business operations”of the Company and Group companies, the Board of Directors of the Company has resolved the“Basic
Internal Control Policy”as follows and endeavors to improve its effectiveness. We will continue to review and enhance the content as
appropriate.
1.	System to ensure that Directors and employees execute theirduties in compliance with laws and regulations and the Articles
of Incorporation(1) The Company will establish the Basic Compliance Policy toensure that officers and employees of the Company andGroup companies comply with laws and regulations, theArticles of Incorporation, and social norms, and the properand sound business operations. In addition, the Basic
Compliance Regulations will be established as specific action
guidelines for compliance.
(2) The Company will establish the Compliance Committee andthe division supervising compliance to have comprehensive
monitoring and management of the status of compliance by

the Company and Group companies and to put in place asystem for compliance.
(3) The Company will establish the Internal Audit Division that is
independent of the departments to be audited, and theInternal Audit Division will regularly audit the status ofbusiness operations by the Company and Group companies
and report the audit results to the Board of Directors.
(4) In accordance with the Whistleblowing Management Rules,
the Company will set up an organization for consultation andreceiving whistleblowing reports about violations of laws andregulations by officers and/or employees, handle theconsultations and reports properly, and put in place asystem to protect whistleblowers and relevant parties.

28

Status of corporate governance(5) T he Company will establish the Customer Protection
Management Policy and the Conflict of Interest Management
Policy, put in place a system for the improved protection andconvenience of customers of the Company and Group
companies, and put in place a system for managing conflictsof interest to prevent undue harm to the customers’interest.
(6) In accordance with the Basic Policy on Dealing with
Antisocial Forces which is established as a basic policy forthe elimination of any relationship with antisocial forces, theCompany will put in place a system for eliminating
relationships with antisocial forces that threaten the orderand safety of civil society. The Company will alsosystematically respond to unreasonable demands, etc. fromantisocial forces.
(7) I n a c c o r d a n c e w i t h t h e I n s i d e r T r a d i n g P r e v e n t i o nManagement Rules, the Company will put in place a system
to appropriately manage important undisclosed facts abouttransaction partners of the Company and the Group
companies that are learned in the course of business.
2.	System for retaining and managing information on the executionof duties by Directors
	The Company will establish a structure for retaining andmanaging information related to the execution of duties byDirectors for a considerable period of time. The Company will
also prepare and retain the minutes of important meetings
involving the Directors such as the General Shareholders
Meetings and the Board of Directors’meetings in accordancewith the Document Management Regulations.
3.	Regulations and other systems to the management of the risk ofloss(1) The Company will establish the Group Basic Policy for Risk
Management in order to establish the soundness in the
management of the Company and the Group companies andto secure proper profits appropriate to various risks.
(2) In order to ensure the appropriateness and soundness ofbusiness operations of the Company and the Group
companies, the Company will establish the Comprehensive
Risk Management Regulations and conduct proper risk
management corresponding to the type and extent of risks.
(3) T h e C o m p a n y w i l l e s t a b l i s h t h e R i s k M a n a g e m e n t
Committee and the division supervising risk management tomanage various risks in the Company and the Group
companies and to put in place a system for controlling therisk of loss.
(4) The Company will establish a system in which the Internal
Audit Division verifies the appropriateness and effectivenessof the risk management structure at the division supervisingrisk management, and strive to enrich and strengthen therisk management structure.
(5) In order to quickly restore business operations in the eventof a crisis, the Company will establish the Basic Policy on
Business Continuity and appropriately put in place thestructure for crisis management.
4.	System to ensure that Directors execute their duties efficiently(1) T he Company will set management targets, establish
management plans, and conduct business management
based on appropriate methods.
(2) The Company will establish the Regulations for the Board of
Directors, manage the Board of Directors appropriately, andset up the Management Meeting, etc., and the Board of
Directors will delegate the decisions on certain matters to
the Management Meeting, etc. The Management Meeting,etc. will, in addition to making decisions on the delegatedmatters, discuss matters to be resolved by the Board of
Directors beforehand in order to assist the Board of
Directors in its decision-making.
(3) The Company will stipulate the rules for duties, authorities,
and decision-making by formulating the Organization
Regulations, the Rules for Division of Duties, and the Job
Authority Rules, to ensure that Directors and all officers andemployees execute their duties efficiently.
5.	System to ensure properness of business operations of thecorporate group comprising the Company and the Group
companies(1) Based on the management philosophy, the Company and
the Group companies will share business strategies as acorporate group and conduct management on a group-widebasis. Regarding the management of the Group companies
by the Company, the Company will establish the Group
Business Management Regulations that stipulate basic rules
for discussion and reporting on important matters such as
management plans of subsidiaries, etc., and put in place asystem to ensure the sound, appropriate, and efficient
operation of the Group.
(2) The Company and the Group companies will put in place the29internal control structure for financial reporting of theCompany and the Group companies based on the Basic
Policy for the Internal Control Over Financial Reporting, andensure the appropriateness and credibility of financial
reports.
(3) T h e C o m p a n y a n d t h e G r o u p c o m p a n i e s w i l l t a k e
appropriate actions in accordance with laws and regulations
regarding intra-group transactions, and will conduct
appropriate management with an emphasis on ensuring thesoundness of the Group’s business operations, based on the
Basic Policy for Intra-Group Transactions, Etc. and the Basic
Policy for Intra-Group Business Alliance.
(4) The Company will establish the Basic Policy on Related Party
Transactions regarding transactions made between theparties stipulated in Article 8, paragraph 17 of the Regulation
on Terminology, Forms, and Preparation Methods ofFinancial Statements such as the Company’s officers, theGroup companies (consolidated subsidiaries and equity
method affiliates), and major shareholders (related party
transactions), and will ensure the soundness andappropriateness of each company’s business operations aswell as the common interests of shareholders in accordancewith laws and regulations.
(5) The Internal Audit Division will conduct audits to ensure theproper business operations based on the Basic Policy on
Internal Audits and provide necessary advice to optimize theoperations.
(6) The Company will put in place a system for immediately
reporting to the Company’s Directors when officers or
employees of the Company or the Group companies
discover material violations of laws and regulations or otherimportant matters related to compliance within the Group
companies. In addition, the Company will clearly state thestandards for reporting to the Company by its subsidiaries
and put in place a system for reporting the mattersnecessary for the management of the Group.
(7) The Company will put in place a system in which no officers
or employees who have reported in accordance withparagraph (6) above will be subject to disadvantageous
treatment due to the reporting.
6.	Matters concerning the assignment of employees who assist
duties of Corporate Auditors
	The Company will assign employees who assist duties ofCorporate Auditors (hereinafter the“Assistants”) to increase theefficiency and effectiveness of their duties.
7.	Matters concerning the independence of the Assistants
mentioned in item 6 from Directors(1) A p p o i n t m e n t , t r a n s f e r , p e r f o r m a n c e a p p r a i s a l , a n d
disciplinary action of the Assistants will require the priorconsent of the Corporate Auditors.
(2) The Company will put in place a system that prevents theAssistants from being in charge of execution of business inaddition to the assisting duties.
8.	System for reporting by Directors and employees to Corporate
Auditors and other systems involving reporting to Corporate
Auditors(1) When Directors and employees of the Company and theGroup companies discover that there is a risk of significant
damage to the Company and the Group companies, they willreport the fact to Corporate Auditors in accordance with theRegulations on Reporting to Corporate Auditors. In addition
to matters stipulated in laws and regulations and rules,
Corporate Auditors may request reports from Directors,
employees in internal audit departments, and other persons
if necessary. No person who has reported to Corporate
Auditors, etc. will be subject to disadvantageous treatment
due to the reporting.
(2) The Company will put in place a system for its internal audit
departments to report to Corporate Auditors the results ofinternal audits on the Company and the Group companies.
9.	Other systems to ensure that Corporate Auditors perform audits
effectively(1) The Company will put in place a system in which audits are
effectively conducted through the cooperation including theexchange of opinions between Corporate Auditors and the
Accounting Auditor, Representative Directors, risk
management departments, audit departments, and in-housedivisions responsible for internal control functions.
(2) T he Company will promptly prepay or reimburse such
expenses, or process such obligations that arise with regard
to execution of duties by Corporate Auditors if requested bythem. The Company will bear the costs for obtaining advice
from external experts if the Corporate Auditors consider it
necessary.

Compliance system
Status of putting in place the compliance system
The Group regards compliance as one of the top priority management issues, strives to establish corporate ethics based on
its social mission as a regional financial group, and endeavors to ensure the soundness and appropriateness of business
operations, upholding its basic policy of fostering the corporate culture that emphasizes compliance and is trusted byshareholders, customers, and society. The Group also has established the Compliance Committee to propose measures forthe compliance-related matters of the Group and to strengthen the compliance function. In addition, the Group has assigned
the officer in charge of the Risk Management Division as the chief compliance officer, established the Risk Management
Division as the division supervising compliance-related matters, and put in place the compliance system.

◦Chart of compliance system

Board of Directors

Kiraboshi Bank, Ltd.

Corporate Auditors
Board of Corporate Auditors

Management Meeting

Sales offices and headquarters divisions
Instructions /Management

Reporting /Discussion

Employees

Compliance officer
Compliance administrator

Subsidiaries,
etc.

Compliance Committee

Kiraboshi Consulting Co., Ltd.

Risk Management Division

Kiraboshi Capital Co., Ltd.

Status of corporate governance/Compliance system

G overnance

Basic Compliance Policy
The Group regards compliance as one of the top priority management issues, strives to establish corporate ethics
based on its social mission as a regional financial group, and has established its basic policy to foster the corporate
culture that emphasizes compliance and is accredited by shareholders and trusted by customers and society. The
Group stipulates the following“Action Principles”to implement the basic policy.
1. Social responsibility and public mission of bank	We will recognize the importance of our social responsibility and public mission at all times and strive to win theunwavering trust through sound business operations.
2. Customer-first principle
	We will consider customers first, satisfy customer needs, leverage our creativity and ingenuity, and provide highquality financial services. We will live up to customers’trust and always pursue with a sincere attitude whatcustomers expect us to do.
3. Strict compliance with laws, regulations, and rules
	We will strictly comply with all laws, regulations, and rules and carry out sincere and fair corporate activities that do
not violate social norms.
4. Developing together with local communities
	We will contribute to the economic and cultural development of prosperous and vibrant local communities throughour financial services.
5. Respect for human rights of employees, etc.
	We will respect human rights and individuality of employees and ensure a safe and comfortable working
environment.
6. Elimination of relationship with antisocial forces	We firmly confront antisocial forces that threaten the order and safety of civil society and ensure to eliminate any
relationship with them.

Status of putting in place a system for eliminating antisocial forces
In order to eliminate any relationship with antisocial forces, the Company has established the“Basic Policy on Dealing with
Antisocial Forces”and the“Basic Rules on Dealing with Antisocial Forces”and puts in place the system for this purpose. The
Risk Management Division has the centralized function to control information on antisocial forces, and the Company and theGroup companies strive to collect and share information on antisocial forces.

30

Compliance system
Basic Policy on Dealing with Antisocial Forces
The Group eliminates and will eliminate any relationship whatsoever with antisocial forces that threaten the order andsafety of civil society, will comply with the following basic policy, and ensure sound and responsible business operations.
1.	Deal with antisocial forces that threaten the order and safety of civil society as an organization and maintain a firm
attitude against them.
2.	Endeavor to strengthen close cooperation with the police and other external specialized agencies in preparation for
unreasonable demands by antisocial forces even under normal circumstances.
3.	Eliminate any relationship whatsoever including transactions with antisocial forces.
4.	Reject firmly any unreasonable demands from antisocial forces, including taking civil or criminal actions.
5.	Reject firmly any requests for providing funds or benefits to antisocial forces.

Group Basic Policy for Protection of Personal Information
The Group recognizes that it is its social responsibility to handle personal information of customers in a proper and strict
manner. It has established the following basic policy and will do everything possible to protect personal information bycomplying with the policy.
1. Compliance with relevant laws and regulations
	The Group will comply with personal information
protection-related laws and regulations and othernorms with respect to the protection of customers’
personal infor-mation.
2. Proper acquisition of personal information	T h e G r o u p w i l l a c q u i r e c u s t o m e r s ’ p e r s o n a linformation in a lawful and fair manner to the extent
necessary for business.
3. Purpose of use
	The Group will notify or announce the purpose ofusing personal information and will use it only within
the scope of that purpose unless otherwise stipulated
in laws and regulations, and will not use it for any
other purpose.
4. Contracting-out	When contracting out the handling of personal
information, the Group will appropriately supervise thecontractor to ensure that the personal information ofcustomers will be safely managed.
5. Provision to third parties
	The Group will not provide personal information to

any third party without the consent of the person who
provided it or unless stipulated in laws and regulations.
6.	Responding to customers’inquiry, etc.
	The Group will establish the procedures for disclosure,correction, and deletion of personal data, and respondsincerely to questions, opinions, and complaints
regarding the handling of personal information, andinquiries regarding its contents and corrections.
7. Security control measures	When controlling personal information, the Group willtake appropriate security control measures to prevent
loss, falsification, and leakage, and put in place a responsibility system necessary for protecting personal
information.
8. Continuous improvement
	The Group will continuously review and strive toimprove the management system and initiatives toprotect personal information. In addition, the Groupwill educate all officers and employees to ensure thatthey understand the importance of protecting personal
information and handle personal information
appropriately.

Financial ADR system
Kiraboshi Bank, Ltd. of the Group has established a specialized
department for various consultations and complaints from
customers, and contracted with the “Japanese Bankers
Association Consultation Office,” a designated dispute
resolution body, to facilitate the quick and flexible solution ofissues.

The designated dispute resolution bodywhich Kiraboshi Bank, Ltd. has contracted withJapanese Bankers
Association

Contact: Japanese Bankers Association

Consultation Oﬃce

Telephone number: 0570-017109
or 03-5252-3772

Whistleblowing system
The Group has established the“Hotline System”as a mechanism for responding properly to an employee,
dispatched worker, part-time worker, or other staff who initiates whistleblowing or wishes to have aconsultation about compliance issues (including harassment).
Kiraboshi Bank, Ltd. has established a contact point for whistleblowing in the Compliance Section of Risk
Management Department and in the law firm which its legal counsel works for.
This whistleblowing system is strictly stipulated in the Group’s internal regulations as to the confidential
treatment of a whistleblower’s identity and the prohibition of disadvantageous treatment of a whistleblower.

31

Risk management system
Status of putting in place the risk management system
The Group considers the risk management as one of the top priority management issues and, in order to ensure the sound and appropriate
business operations of each Group company, endeavors to conduct suitable management of various risks as a whole group under appropriategroup business management (governance). The Group has established the Risk Management Committee that discusses the establishment,
revision, and abolishment of the Risk Management Regulations or other regulations and considers formulation of policies for the development
and establishment of the Group’s risk management system. In addition, the Group has established the Risk Management Division as the division
supervising the risk management in the Group and put in place the risk management system.

Group Basic Policy for Risk Management
1. Considering the risk management as the top priority issue in the management of the Group, the Group will recognize the importanceof risk management of the entire Group, including management of risks specific to the group system such as outline of thecharacteristics of various risks and the spread of risks. The Group will conduct suitable management by establishing the management
system for each type of risk.
2. The Group will manage subsidiaries so that the appropriate risk management is performed by them from the viewpoint of ensuringsoundness.

Compliance system/Risk management system

G overnanceIntegrated risk management
Integrated risk management within the Group means to manage the risk in the Group as a whole, by integrating the management of various
risks held by the Group companies, comprehensively identifying risks specific to the group system that individual Group companies alone
cannot deal with, such as the spread of risk within the Group, and comparing the risk with the Group companies’financial capability (netassets).
The Group estimates the maximum potential loss involving credit risk, market risk, and operational risk based on the measured amount of risk.
Then, in order to use limited capital effectively, the Group allocates risk capital by using core capital as allocation source and compares thecapital with the actual amount of risk to confirm that the Group has not taken excessive risks in comparison with its financial capabilities,
thereby maintaining and ensuring the soundness of management.

Credit risk management
Credit risk means the risk of incurring losses due to decreased or lost asset value caused by a deterioration in the financial condition of theparties to which the credit has been granted.
The Group strives to maintain the soundness of its credit portfolio by avoiding concentration risk through such measure as keeping thepercentage of credit in the total amount of credit below a certain level for large concentration risk that an excessive amount of credit is madeavailable to a specific party or for industry concentration risk that credit is concentrated to a specific industry.

Market risk management
Market risk means the risk of incurring losses due to fluctuations in the value of assets and liabilities and in the amount of generated revenue asa result of fluctuations in various market risk factors such as interest rates, stock prices, and exchange rates. It is roughly divided into interest
rate risk, price fluctuation risk, and exchange rate risk.
The Group controls the amount of market risk to avoid becoming excessive through such measures as setting limits for holdings and losses,monitoring the status of compliance, measuring the amount of risk such as VaR, and comparing it with the allocated risk capital.
In addition, the Group evaluates market risk comprehensively using the stress scenarios that reflect events that could have a significant impact
on the Group or other means.

Liquidity risk management
Liquidity risk is the risk of incurring losses caused by difficulty in securing the necessary funds or being forced to raise funds at a significantly
higher interest rate than usual due to a mismatch between investment and funding periods or an unexpected outflow of funds (cash flow risk),
and the risk of incurring losses caused by inability to trade in the market or being forced to trade at a significantly unfavorable price than usual
due to market turmoil or other factor (market liquidity risk).
The Group takes every possible measure to manage liquidity risk through such measures as appropriately managing the status of fundinvestment and procurement, maintaining stable funding, and holding above a certain amount of assets that can be liquidated in a short periodof time as current assets.

32

Risk management system
Operational risk management
Operational risk means a wide range of risks related to business operations in general, including the risk of incurring losses caused by businessprocess, activities of officers or employees, improper or non-functional systems, or external events.
The Group categorizes the operational risk according to its characteristics into administrative risk, system risk, legal risk, or other risk. The
Group has designated divisions responsible for each risk and an integrated management division, and puts in place a risk management systemthat covers business operations in general.

◦Chart of risk management system

Board of Directors

Corporate Auditors
Board of Corporate Auditors

Management Meeting

Kiraboshi Bank, Ltd.

Instructions /Management

Reporting /Discussion

Risk Management Committee

Subsidiaries,
etc.

Kiraboshi Consulting Co., Ltd.

Risk Management Division

Kiraboshi Capital Co., Ltd.
Credit risk

Market risk

Liquidity risk

Operationalrisk

Trial implementation of Risk Appetite Framework
The Risk Appetite Framework (RAF) is a framework for clarifying the risk appetite for the sake of achieving businessstrategies and financial plan, thereby conducting business management and risk management. Introduction of RAF
improves the transparency of the management plans, enables a company to seek more profit opportunities andconduct business management while controlling risks. The Group has started a trial implementation of RAF for the
purpose of achieving sustainable growth with a good balance of income, risk, and capital.

◦Construction of overall RAF

Risk appetite policy
Stress test of medium tolong-term simulation basedon the Medium-TermBusiness Plan
“forward-looking”()

Stress test of risk capital
allocation management“backward-looking”()▪Verify allocation of management resources▪Verify sustainability of the business model and monitor early warning risk signals

Initiatives for strengthening cyber security management
Considering the diversifying threats of cyber-attacks as one of the risks, we are stepping up efforts on cybersecurity measures. We have established a specialized organization for cyber security, and strengthened themonitoring structure to prevent damage. We also strive to raise awareness of employees by regularly delivering
emails that mimic targeted attack emails or other means.

33

Tokyo Kiraboshi Financial Group, Inc. and its Consolidated Subsidiaries
March 31, 2019 and 2018

Consolidated Balance Sheets

AssetsCash and due from banks........
Call loans and bills bought.......
Monetary claims bought..........
Trading account securities
Securities...............................
Loans and bills discounted......
Foreign exchanges..................
Other assets...........................
Tangible fixed assets...............
Buildings, net......................
Land...................................
Leased assets, net...............
Construction in progress.......
Other tangible fixed assets....
Intangible fixed assets.............
Software..............................
Leased assets.....................
Other intangible fixed assets....
Retirement benefit asset..........
Deferred tax assets.................
Customers' liabilities for
acceptances and guarantees....
Allowance for loan losses........
Total assets
Liabilities
Deposits.................................
Negotiable certificates of deposit....
Call money and bills sold.........
Payables under securities lendingtransactions.............................
Borrowed money......................
Foreign exchanges..................
Borrowed money from trust account....
Other liabilities........................
Provision for bonuses..............
Provision for bonuses for directors(and other officers).....................
Provision for share-based
compensation.........................
Retirement benefit liability.......
Provision for retirement benefits for
directors (and other officers).........
Provision for point card certificates....
Provision for loss on interest
repayment..............................
Provision for reimbursement ofdeposits.................................
Provision for loss on cancellationof system contracts..................
Provision for loss on transfer of business....
Provision for contingent loss....
Deferred tax liabilities..............
Acceptances and guarantees....
Total liabilities

Millions of Yen
2019
2018
¥

402,718
2,308
59,326973
1,095,059
3,696,398
5,984
47,52560,266
19,69635,451
1,538
226
3,354
3,097
2,054
116
926
14,1285,940¥

377,636
1,264
55,650707
1,208,629
3,676,146
13,556
84,062
59,627
19,60034,216
1,780
1,240
2,789
2,365
1,421
94
848
18,391
5,184

Thousands of
U.S. Dollars
2019$3,628,416
20,794
534,516
8,766
9,866,285
33,303,883
53,914428,191
542,985
177,457
319,40713,857
2,036
30,21827,90318,506
1,045
8,343
127,290
53,5185,596
5,677
50,418（26,195） （235,264）（26,112）¥ 5,373,212 ¥ 5,482,704 $48,411,676¥ 4,527,089
16,100113,329¥ 4,652,109
9,540
58,937$40,788,260
145,058
1,021,073

344,918
43,566533
245
24,561
1,701

357,265
73,558224
53
25,1672,140

3,107,649
392,52182,207
221,290
15,325

158

―

1,423

82
65

―
2,845

738
585

20
39

67
58

180
351

8

8

72

1,351

1,185

12,172

―
―
656
61
5,596
¥ 5,080,087

200
194
612
1,837
5,677
¥ 5,191,683

―
―
5910
549
50418
$45,770,673

Net assets
Capital stock...........................
¥27,500 ¥27,500 $247,770
150,473
Capital surplus........................
150,576
1,355,734
Retained earnings....................
109,053
106,206
982,547
Treasury shares......................
（804）
（625）
（7,243）
Total shareholders' equity.....
286,223
283,6572,578,817
Valuation difference on available7,923
6,075
71,384for-sale securities.....................
（242）
Revaluation reserve for land.....
（242）（2,180）Foreign currency translation
8
10
72
adjustment.............................
Remeasurements of defined
benefit plans...........................
（1,146）（11,262）（1,250）Total accumulated other
6,440
6,989
58,023comprehensive income.........
Share acquisition rights........
56
101
504
Non-controlling interests.......
404
271
3,639
Total net assets.....................
293,124
291,020
2,640,994
Total liabilities and net assets..... ¥5,373,212 ¥ 5,482,704 $48,411,676

Consolidated Income Statements and Consolidated
Statements of Comprehensive Income
Consolidated Income Statements

Ordinary income
Interest income....................
Interest on loans and discounts....
Interest and dividends on securities....
Interest on call loans and bills bought....
Interest on receivables under
securities borrowing transactions...
Interest on deposits with banks....
Other interest income........
Trust fees............................
Fees and commissions.........
Other ordinary income..........
Other income.......................
Recoveries of written off claims....
Other
Ordinary expenses
Interest expenses.................
Interest on deposits...........
Interest on negotiable certificatesof deposit............................
Interest on call money and bills sold....
Interest on payables under
securities lending transactions....
Interest on borrowings andrediscounts......................
Other interest expenses.....
Fees and commissions payments....
Other ordinary expenses.......
General and administrative expenses....
Other expenses....................
Provision of allowance forloan losses.......................
Other...............................
Ordinary profit
Extraordinary income
Gain on disposal of noncurrent assets......................
Extraordinary losses
Loss on disposal of noncurrent assets......................
Provision for loss on transferof business..........................
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent¥¥Millions of Yen
2019
2018
78,777 ¥
82,61658,49757,411
43,07943,992
14,121
12,13536
36

Thousands of
U.S. Dollars
2019$ 709,766
527,047
388,134
127,227
324

―
300
960
107
16,585
872
2,715
91
2,623
75,297
3,522
1,192

0
293
953
56
17,582
3,226
4,338
259
4,079
77,888
3,386
1,645

―
2,702
8,649
964
149,427
7,856
24,461
819
23,632
678,41231,732
10,739

2
817

2
448

18
7,361

1,340

1,140

12,073

88
81
3,286
1,200
57,502
9,785

88
61
3,473
2,935
61,235
6,857

792
729
29,606
10,811
518,082
88,161

3,732
6,053
3,480
0

1,480
5,377
4,727
647

33,62454,53631,354
0

0
111

647
639

0
1,000

111

444

1,000

―
3,368
1,079
（2,655）（1,575）4,944
30
4,914 ¥

Risk management system/Consolidated Financial Statements

Consolidated Financial Statements

194
―
4,735
30,345
1,107
9,721
（61）
（23,921）1,045（14,190）
3,689
44,54412
270
3,677 $44,274

Consolidated Statements of Comprehensive Income
Millions of Yen
2019
2018
4,944 ¥
3,689
6,250
（535）

Thousands of
U.S. Dollars
2019$44,544（4,820）

Profit¥
Other comprehensive income
Valuation difference on availablefor-sale securities..................
2,084
2,852
18,776
Revaluation reserve for land....
（32）――
Foreign currency translation adjustment....
（1）
2
（9）
Remeasurements of defined
benefit plans, net of tax........
（2,396）
3,362（21,587）
Share of other comprehensive
income of entities accounted
for using equity method........
66（2,000）（222）
Comprehensive income
4,408
9,940
39,715Comprehensive income attributable to0Comprehensive income attributableto owners of parent..................
4,364
9,918
39,318Comprehensive income attributable
to non-controlling interests........
¥43 ¥22 $387

U.S. dollar amounts are the yen equivalent, calculated for convenience only, at the rate of ¥110.99 = U.S. $1.

34

Consolidated Financial Statements
Consolidated Statements of Changes in Net Assets

Balance at beginning of current period.....
Changes of items during period.....
Purchase of shares of consolidated subsidiaries....
Dividends of surplus....................
Profit attributable to owners of parent......
Purchase of treasury shares.........
Disposal of treasury shares..........
Change in equity of subsidiaries.....
Net changes of items other than shareholders' equity.....
Total changes of items during period.....
Balance at end of current period.....

Balance at beginning of current period.....
Changes of items during period......
Purchase of shares of consolidated subsidiaries.....
Dividends of surplus....................
Profit attributable to owners of parent.....
Purchase of treasury shares.........
Disposal of treasury shares..........
Change in equity of subsidiaries.....
Reversal of revaluation reserve for land.....
Net changes of items other than shareholders' equity....
Total changes of items during period.....
Balance at end of current period.....

Balance at beginning of current period.....
Changes of items during period.....
Purchase of shares of consolidated subsidiaries......
Dividends of surplus....................
Profit attributable to owners of parent......
Purchase of treasury shares.........
Disposal of treasury shares..........
Change in equity of subsidiaries.....
Net changes of items other than shareholders' equity......
Total changes of items during period.....
Balance at end of current period.....

35

Millions of Yen
2019
Shareholders' equity
Accumulated other comprehensive income
Valuation
Total
Share
NonForeign
Total difference on Revaluation
Remeasurements accumulated acquisition controlling Total net
currency
Capital Capital Retained Treasury
assetsshareholders' available- reserve forof defined benefit otherrights interests
translation
stock
surplus earnings shares
equitylandplans comprehensive
for-saleadjustment
securities
income27,500 150,576 106,206（625）283,657
6,075
（242）
10
1,146
6,989
101
271 291,020（1）（2,066）
4,914
（7）
（93）
（102） 2,847―
27,500 150,473 109,053（1）（2,066）4,914（231） （231）
52
45
（93）
（178） 2,566（804）286,223

1,848
1,848
7,923

―
―
（242）

（1）（2,396） （549）（1）（2,396） （549）
8 （1,250） 6,440

（45）
（45）
56

（1）
（2,066）
4,914
（231）
45
（93）
133
（461）
133
2,104
404 293,124

Millions of Yen
2018
Shareholders' equity
Accumulated other comprehensive income
Valuation
Total
Share
NonForeign
difference
Total
Revaluation
Remeasurements accumulated acquisition controlling Total net
CapitalCapital Retained Treasury
currencyonassetsshareholders'
reserve forof defined benefit otherrights interests
stock
surplus earnings sharestranslation
availableequity
landplans comprehensive
adjustment
for-saleincomesecurities
27,500 150,733 104,574（632）282,175
3,166
（209）
8 （2,216）
748
95
337 283,357
7（2,078）
3,677

（5）
（158）

32

（157） 1,631―
27,500 150,576 106,206

7（2,078）3,677（38） （38）
44
38
（158）
32
6
1,481
（625）283,657

2,909
2,909
6,075

（32）
（32）
（242）

2
2
10

3,362
3,362
1,146

6,240
6,240
6,989

5
5
101

7
（2,078）
3,677
（38）
38
（158）
32
（65） 6,181（65） 7,662
271 291,020

Thousands of U.S. Dollars
2019
Shareholders' equity
Accumulated other comprehensive income
Valuation
Total
Share
NonForeign
Total difference on Revaluation
Remeasurements accumulated acquisition controlling Total net
currency
Capital Capital Retained Treasury
assetsshareholders' available- reserve forof defined benefit otherrights interests
translation
stock
surplus earnings shares
equitylandplans comprehensive
for-saleadjustment
securities
income247,770 1,356,662 956,897 （5,631）2,555,698
54,734 （2,180）
90
10,32562,969909
2,441 2,622,038（9）（18,614）44,274（63）（837）（919） 25,650―
247,770 1,355,734 982,547（9）（18,614）44,274（2,081） （2,081）
468
405
（837）
（1,603） 23,119（7,243）2,578,817

16,65016,65071,384――（2,180）（9）（21,587） （4,946） （405）（9）（21,587） （4,946） （405）
72 （11,262） 58,023504（9）（18,614）44,274（2,081）405（837）
1,198 （4,153）
1,198
18,956
3,639 2,640,994

2018

Thousands of
U.S. Dollars
2019

3,368 ¥
4,787
1,240
39
（83）
（438）
158
82
4,263
（2,780）
（46）
（19）
0
165
（200）
（194）
43
（58,497）
3,522（1,194）（6,098）111（266）（20,252）（125,019）
6,560（29,991）
1,481（4,719）54,392（12,346）
7,572
309
191
58,936（3,979）11,897（107,004）（450）
867（106,587）

4,735 $
3,254
1,008
（35）
（3,449）（72）――（4,265）（1,607）
（42）
1
（2）
175
―
194
（63）
（57,411）
3,386（1,206）
9,433
（202）
87
（54,773）（65,452）（11,800）（29,858）
9,170（7,203）
18,230（4,044）（5,972）（711）
53
57,753（3,413）（16,139）（160,241）（1,669）379（161,531）

30,345
43,13011,172351（747）（3,946）
1,423
738
38,408（25,047）
（414）
（171）
0
1,486
（1,801）（1,747）387（527,047）
31,732（10,757）（54,941）
1,000（2,396）（182,466）（1,126,398）
59,104（270,213）
13,343（42,517）490,062（111,235）
68,2222,784
1,720
531,002（35,850）
107,189（964,086）（4,054）
7,811（960,329）（219,130）
147,193
213,765（3,905）（815）
0（1,495）
307
135,919（473,425）
322,075
192,296（5,809）（118）
1,199（1,019）―35,197（1,974,322）
1,326,182
1,925,984（35,183）（7,343）
0（13,469）2,766
1,224,605
0（18,623）（9）（2,081）00（36）（4,225）（24,993）45
239,318
3,381,971
3,621,299

Millions of Yen
2019
Cash flows from operating activities
Profit before income taxes.....................................................................................................................
Depreciation.......................................................................................................................................
Retirement benefit expenses.................................................................................................................
Share of loss (profit) of entities accounted for using equity method...............................................................
Increase (decrease) in allowance for loan losses........................................................................................
Increase (decrease) in provision for bonuses.............................................................................................
Increase (decrease) in provision for bonuses for directors (and other officers)..................................................
Increase (decrease) in provision for share-based compensation....................................................................
Decrease (increase) in retirement benefit asset.........................................................................................
Increase (decrease) in retirement benefit liability.......................................................................................
Increase (decrease) in provision for retirement benefits for directors (and other officers)....................................
Increase (decrease) in provision for point card certificates...........................................................................
Increase (decrease) in provision for loss on interest repayment....................................................................
Increase (decrease) in provision for reimbursement of deposits....................................................................
Increase (decrease) in provision for loss on cancellation of system contracts...................................................
Increase (decrease) in provision for loss on transfer of business...................................................................
Increase (decrease) in provision for contingent loss....................................................................................
Gain on fund management....................................................................................................................
Financing expenses.............................................................................................................................
Loss (gain) related to securities..............................................................................................................
Foreign exchange losses (gains).............................................................................................................
Loss (gain) on disposal of non-current assets...........................................................................................
Net decrease (increase) in trading account securities.................................................................................
Net decrease (increase) in loans and bills discounted.................................................................................
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 deposit (excluding deposit paid to Bank of Japan)..................................................
Net decrease (increase) in call loans.......................................................................................................
Net increase (decrease) in call money.....................................................................................................
Net increase (decrease) in payables under securities lending transactions......................................................
Net decrease (increase) in foreign exchanges - assets................................................................................
Net increase (decrease) in foreign exchanges - liabilities.............................................................................
Net increase (decrease) in borrowed money from trust account....................................................................
Proceeds from fund management...........................................................................................................
Payments for finance...........................................................................................................................
Other, net..........................................................................................................................................
Subtotal.............................................................................................................................................
Income taxes paid...............................................................................................................................
Income taxes refund............................................................................................................................
Net cash provided by (used in) operating activities............................................................................
Cash flows from investing activities
Purchase of securities..........................................................................................................................
Proceeds from sales of securities...........................................................................................................
Proceeds from redemption of securities...................................................................................................
Purchase of tangible fixed assets...........................................................................................................
Payments for retirement of property, plant and equipment...........................................................................
Proceeds from sales of tangible fixed assets.............................................................................................
Purchase of intangible assets................................................................................................................
Proceeds from sale of businesses..........................................................................................................
Net cash provided by (used in) investing activities.............................................................................
Cash flows from financing activities
Cash dividends paid.............................................................................................................................
Dividends paid to non-controlling interests...............................................................................................
Purchase of treasury shares..................................................................................................................
Proceeds from sales of treasury shares...................................................................................................
Proceeds from exercise of share options..................................................................................................
Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation.....
Repayments of lease obligations............................................................................................................
Net cash provided by (used in) financing activities............................................................................
Effect of exchange rate change on cash and cash equivalents..............................................................
Net increase (decrease) in cash and cash equivalents..........................................................................
Cash and cash equivalents at beginning of period................................................................................
Cash and cash equivalents at end of period..........................................................................................

¥（2,067）（2,083）
（1）
（35）
（231）
（38）
0
2
0
0
（4）
（213）
（469）
（379）
（2,774）（2,747）5
1
26,562（129,078）
375,365
504,444¥401,928 ¥375,365 $Consolidated Financial Statements

Consolidated Statements of Cash Flows36

2019 Annual Report
Published in July 20195-9-2 Shinjuku, Shinjuku-ku, Tokyo 160-0022
https://www.tokyo-kiraboshifg.co.jp

This document contains forward-looking statements on the Group’s results.
These statements are not intended to guarantee future results, as they are
subject to risks and contain uncertainties. Please keep in mind that future
results may differ due to factors including changes in the business environment.