2015(April 2014〜March 2015)
Annual Report

Mizuho Financial Group

Trust & Custody Services Bank, Ltd.

This document is a partial translation of TCSB’s Japanese Disclosure Report that has been preparedin accordance with the provisions of Article 21 of the Banking Law of Japan.

Note: This translation is provided for reference purposes only, and the Japaneseoriginal supercedes it in case of any discrepancy.
1

Contents

Message from Management

page 3

Corporate Data

page 4

Financial Data
Results of Operations

page 6■ Overview of Business in Fiscal 2014

Financial Statement

page 7■ Balance Sheets■ Statements of Income■ Statements of Changes in Net Assets

Results of Trust Banking Businesspage22■Statements of Trust Assets and Liabilities

Capital Adequacy Ratio (Basel III)

page 232

Message from Management
TCSB's Challenge: To Become Japan's Leading Player in the Area of Asset Administration
Services

I would like to start by once again thanking our shareholders and customers for constantly
supporting Trust & Custody Services Bank, Ltd. (TCSB).

Since TCSB's founding in 2001, we have adhered to the principle of growing our asset
administration services into competitive products, then developing further into a company that provides
comprehensive services associated with asset administration. Using this as a base, we haveconsistently worked on developing new services, reinforced our operational and IT infrastructure, andreformed our internal control structure with the aim of becoming Japan's leading player in the area ofasset administration services.
With our customers' support and understanding of our initiatives, we continued to further expand thesize of our business in fiscal 2014, when assets under custody and administration grew approximately¥10 trillion from the previous year to ¥380 trillion. We will continue to take on challenges with the aimof becoming “the Most Trusted Partner to be Chosen by Customers.”

The area of asset administration services has witnessed not only progress in a succession of
securities settlement system reforms, such as the shortening of settlement periods for Japanese
government bond transactions, but also an acceleration in developments such as a diversification of
investment choices, regions and styles. Customer needs have consequently become that much morediverse and sophisticated.

While keeping an eye on these changes, we shall focus thoroughly on improving excellent quality,
which is our top priority, and make untiring efforts to improve. At the same time, we shall continue
with our proactive efforts to strategically channel management resources into reinforcing ouroperational, IT and human resource infrastructure with a view to offering customers unchanged
services of higher quality and higher value-added. As a full-range custodian bank, we will work todevelop a wide array of new products and services in the area of asset administration and aim toprovide forward-looking solutions to meet the increasingly diverse and sophisticated needs ofcustomers at all times.

All of us at TCSB are committed to making concerted efforts in serving our customers as “the Most
Trusted Partner to be Chosen by Customers.”
We would greatly appreciate your support for and patronage of our company.

Akira Moriwaki, President & CEO

3

Corporate Data
■Profile (as of July 8, 2015)
Established:

January 22, 2001

Address:

Tower Z, Harumi Triton Square, Harumi 1-8-12, Chuo-ku, Tokyo 104-6228

TEL+81-3-6220-4000

Capital:¥50,000,000,000

Shareholders:Mizuho Financial Group, Inc.
(equity position in %) The Dai-ichi Life Insurance Company, Limited
Asahi Mutual Life Insurance Company
Meiji Yasuda Life Insurance Company
Fukoku Mutual Life Insurance Company

540,000 shares (54%)
230,000 shares (23%)
100,000 shares (10%)
90,000 shares (9%)
40,000 shares (4%)

Employees:
603 (as of March 31, 2015)* Number of employees includes persons on secondment from outside organizations. It does notinclude executive officers and temporary employees.
Main Activities

1. Asset Administration Services
Trust Services
Domestic Custody Services
Overseas Custody Services
Outsourcing Models for Comprehensive Securities Management Services
Asset Administration Services for Defined Contribution Pensions
Master Trust Services (Master Trust Record-keeping Services)
2.Other Services
Securities Lending Services
Administration Services for middle- and back-office operations of asset
management companies

URL:

http://www.tcsb.co.jp/■Credit Ratings (as of July 8, 2015)

S&P
Moody's
R&I

Long-term
A+
A1
AA−

* Bank financial strength rating

4

Short-term
A-1
Prime-1
a-1+

■Organization Chart (as of July 8, 2015)
Internal Audit Department
Corporate Planning Department

Accounting Office

Human Resources Department

Corporate Auditors
OfficeRisk Management Department
Compliance & Legal Affairs Department

Corporate
Auditors/Board of
Corporate Auditors

Internal Audit
Committee

Operations Planning Department

Quality Management Office

IT & Systems Planning Department

Information Technology
Risk Management Office

System Development Department
Treasury Department
GeneralMeeting of
Shareholders

Board ofDirectors

President &CEOBusiness
Promotion
Division

Investors Services Department
Securities Lending & Management Department

Domestic Custody Operations Department
International Custody Operations Department

International Settlement Office

Custody Client Services Department

Investment Information Services Office

Investment Trust Services Department

Customer Services Office

Executive Management Committee
Products
Division
Business Policy Committees*

Life Insurance Company Asset Custody Department

Settlement Management Department

Settlement Management Office

Management Administration Services Department* Business Policy Committees consist of eight committees including the Compliance Committee and others■Corporate Officers (as of July 8, 2015)
President & CEO Akira Moriwaki
Deputy President Yoshifumi Miyata
Senior Managing Director, Head of Business Promotion Division Atsushi Takahashi
Managing Director Makoto Ihori
Director Nobumitsu Watanabe
Director Koji Fujiwara
Director Yukihiro Fujioka
Director Koichi Nagao
Corporate Auditor Yutaka Yoshimura
Corporate Auditor Hiroto Uchino
Corporate Auditor Hidekatsu Take
Corporate Auditor Takehiko Watabe
Senior Managing Executive Officer, Head of Products Division Noboru Senni
Managing Executive Officer and General Manager, Operations Planning Department Makoto Saito
Executive Officer and General Manager, Life Insurance Company Asset Custody Department
Masafumi Yoshida
Executive Officer and General Manager, Corporate Planning Department
Executive Officer Yasushi Makino

5

Hiroyuki ObataFinancial Data
Results of Operations
Overview of Business in Fiscal 2014
The Financial and Economic Environment
During the period under review (fiscal 2014), the world economy continued to recover at a moderatepace although it showed weak elements in part. As an outlook for the future, we anticipate an ongoingrecovery trend, driven mainly by advanced nations. However, the current situation calls for the need tokeep a cautious eye on the impact associated with heightening geopolitical risk and falling crude oil
prices. Meanwhile, the Japanese economy showed improvements in employment conditions andcorporate earnings as it remained on a moderate recovery path. Looking ahead, there is anticipationthat the economy will continue to move upward due mainly to the growth in exports as consumer
spending strengthens on the backdrop of recovering employee incomes and the weak-yen trend takes
hold.

Business Developments and Results
TCSB has steadily pushed forward with operations with particular emphases on (a) establishing acompetitive advantage in existing business areas, (b) creating new markets and businesses, (c)pursuing structural reforms to achieve good balance between cost competitiveness and service quality,and (d) reinforcing the management structure to support business strategies.
At the end of the fiscal year under review, assets under custody and administration ― based on
entrusted trust assets and assets managed under custody agreements ― increased approximately¥10 trillion from the previous period to more than ¥380 trillion. This occurred on the back of efforts wemade to acquire new asset administration contracts and seek additional contracts from existingcustomers.
In the area of income and expenditures during the fiscal year, gross profits from operations
increased ¥704 million from the year before to ¥21,315 million mainly due to increases in fees andcommissions. Efforts to make the administration of expenditures more efficient while endeavoring toinvest in management resources to offer high-quality, high-value-added services resulted in a
¥815million increase in expenditures, excluding those from temporary measures taken from the last
fiscal year, to ¥19,489 million.
As a result, net business profits were ¥1,825 million (¥110 million decrease from the last year),ordinary profit was ¥1,792 million (¥118 million decrease from the last year) and net income for the
fiscal year was ¥1,129 million (¥39 million decrease from the last year).

6

Financial Statement■Balance Sheets(UNITS: Millions of yen)2012
As of 31.Mar.2013

2013
As of 31.Mar.2014

2014
As of 31.Mar.2015

AssetsCash and Due from Banks
Call Loans
Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Tangible Fixed Assets
Intangible Fixed Assets
Deferred Tax Assets
Total Assets

2,358,122
195,000
212,20998,565620
21,648609
13,462116
2,900,354

191,241
185,000
281,942
48,000967
14,904639
12,757
195735,648

1,385,985
145,000
337,556
100,000
1,215
7,381
593
15,615180
1,993,528

Liabilities
Deposits
Negotiable Certificates of Deposit
Call Money
Due to Trust Accounts
Other Liabilities
Provision for Bonus Payments
Provision for Retirement Benefits
Provision for Directors’ Retirement Benefits
Total Liabilities

44,281
2,258,094
305,888202,241
32,17825
48
51
2,842,808

43,29659,002319,263
215,71739,70727
65
33
677,11280,574
508,800
556,889
772,404
15,22773
82
56
1,934,108

50,0007,511
57,51133
33
57,54550,0008,520
58,52015
1558,53550,0009,409
59,4099
959,4192,900,354

735,648

1,993,528

Net Assets
Capital Stock
Retained Earnings
Shareholders’ Equity
Valuation Difference on Available-for-Sale Securities
Valuation and Translation Adjustments
Total Net Assets
Total Liabilities and Net Assets(NOTE 1) Amounts less than one million yen are rounded down.

7

■Statements of Income(UNITS: Millions of yen)

2012
From 1.Apr.2012
To 31.Mar.2013

2013
From 1.Apr.2013
To 31.Mar.2014

2014
From 1.Apr.2014
To 31.Mar.2015

Ordinary Income
Fiduciary Fees
Interest Income
Fees and Commissions
Other Operating Income
Other Ordinary Income
Total Ordinary Income

9,935
1,528
9,638
420
2
21,526

9,894
1,869
10,576309
222,651

10,1182,064
11,278323
023,785

Ordinary Expenses
Interest Expenses
Fees and Commissions Payments
Other Operating Expenses
General and Administrative Expenses
Other Ordinary Expenses
Total Ordinary Expenses

589
1,163
18,45817
20,229740
1,298
18,697
3
20,740

941
1,494
32
19,512
10
21,992

Ordinary Profit

1,296

1,911

1,792

10
10

2
2

8
8

1,286
528
(36)
492
794

1,908
808
(69)
739
1,169

1,784
635
19
655
1,129

Extraordinary Loss
Loss on Disposal of Noncurrent Assets
Total Extraordinary Losses
Income Before Income Taxes
Income Taxes-Current
Income Taxes-Deferred
Total Income Taxes
Net Income(NOTE 1) Amounts less than one million yen are rounded down.

8

■Statements of Changes in Net Assets(UNITS: Millions of yen)

2012
From 1.Apr.2012
To 31.Mar.2013

2013
From 1.Apr.2013
To 31.Mar.2014

2014
From 1.Apr.2014
To 31.Mar.2015

50,00050,00050,00050,00050,00050,000

6,822

7,511

8,520

(105)
794
689
7,511

(160)
1,169
1,009
8,520

(240)
1,129
889
9,409

56,82257,511

58,520

(105)
794
689
57,511

(160)
1,169
1,009
58,520

(240)
1,129
889
59,409

3

33

15

30

(18)

(5)

30
33

(18)
15

(5)
9

56,82557,54558,535

(105)
794

(160)
1,169

(240)
1,129

30

(18)

(5)

719
57,545990
58,535883
59,419

Shareholder’s Equity
Capital Stock
Balance at the Beginning of the Current Period
Balance at the End of the Current Period
Retained Earnings
Balance at the Beginning of the Current Period
Changes of Items During the Period
Dividends from Surplus
Net Income
Total Changes of Items During the Period
Balance at the End of the Current Period
Shareholders’ Equity
Balance at the Beginning of the Current Period
Changes of Items During the Period
Dividends from Surplus
Net Income
Total Changes of Items During the Period
Balance at the End of the Current Period
Valuation and Translation Adjustments
Balance at the Beginning of the Current Period
Changes of Items During the Period
Net Changes of Items Other than Shareholders’EquityTotal Changes of Items During the Period
Balance at the End of the Current Period
Total Net Assets
Balance at the Beginning of the Current Period
Changes of Items During the Period
Dividends from Surplus
Net Income
Net Changes of Items Other than Shareholders’EquityTotal Changes of Items During the Period
Balance at the End of the Current Period(NOTE 1) Amounts less than one million yen are rounded down.

9Notes (Fiscal 2014)
Significant Accounting Policies
1． Evaluation Standards and Methods for Investment Securities
In regard to evaluation of securities, Other Securities are stated, in principle, at fair value basedon the market price, etc., on the settlement day (cost of sale primarily calculated using the moving
average method), except for those whose fair value it is deemed extremely difficult to measure.
These are stated on a cost basis using the moving average method. Valuation differences on
Other Securities are treated as comprehensive income.
2． Evaluation Standards and Methods for Derivative Transactions
Derivatives transactions are valued at fair value.
3． Methods for Depreciating Fixed Assets(1) Tangible Fixed Assets
Tangible fixed assets are depreciated using the declining balance method except for buildings(excluding equipment accessory to buildings), which are depreciated using the straight-line
method. Depreciation is mainly computed using the following range of useful lives:
Buildings 6 years to 50 years
Equipment 3 years to 20 years(2) Intangible Fixed Assets
Intangible fixed assets are depreciated using the straight-line method. Internally used software
items are amortized over their useful lives within the company (primarily five years).
(Changes in Accounting Estimates)
The useful life of internally used software had been conventionally recognized as primarily five
years based on the definition by the Company. With the decision to terminate part of businessapplications, however, the Company reviewed and revised the useful life of existing software
in March 2015 as a result of which the useful life of application software was changed to the
expected timing of termination (September 2015).
As a result of this change, ordinary income and income before income taxes for the fiscal year
under review decreased by ¥3 million respectively from the results posted under theconventional method.
4． Standards for Translating Foreign Currency-Denominated Assets and Liabilities into Yen
Foreign currency-denominated assets and liabilities are primarily translated into yen at theexchange rates prevailing on the balance sheet date.
5． Standards for Recording Reserves(1) Allowance for Loan Losses
Allowance for loan losses are stated as follows in accordance with standards for write-offs andprovisions stipulated in advance.
Claims equivalent to "normal credits" and "credits to need attention borrowers" as provided forin "Self-assessments of the Assets of Banks and other Financial Institutions, and Operating
Guidelines Concerning Audits of Loan-Loss Write-Offs and Provisioning against Possible
Loan Losses" (Report No. 4 of the Special Committee on Banking, etc., Supervision of theJapanese Institute of Certified Public Accountants) are classified into the corresponding
categories and posted on the basis of loan-loss ratios calculated according to individual
historical credit loss experiences.
Based on these asset self-assessment standards, asset assessment departments assess all
claims in cooperation with the business promoting divisions concerned.
At the end of the year, however, there is no balance of the allowance for loan losses.
(2) Provision for Bonus Payments
To provide for employees’ bonus, that portion of estimated bonuses payable to employees thatcan be attributed to the current fiscal year has been posted in the accounts under Provision
for Bonus Payments.
(3) Provision for Retirement Benefits
To provide for retirement benefits to employees (including executive officers), that portion of
estimated retirement benefit obligations payable to employees that can be attributed to thecurrent fiscal year has been posted in the accounts under Provision for Retirement Benefits.
(4) Provision for Directors’ Retirement Benefits
To provide for retirement benefits to directors, that portion of estimated directors’ retirement
benefits attributable to the current fiscal year has been recorded.

10

6． Accounting for Consumption Taxes, etc
Consumption taxes and local consumption taxes are excluded from transaction amounts.

11

Notes(Balance Sheets)
1. Entire amount of loans and bills discounted is for the Japanese Government.
2. The following assets have been pledged as collateral:
Assets pledged as collateral
Securities: ¥207,874 million
Loans and Bills Discounted: ¥100,000 million
Liabilities collateralized by the above assets
There are no outstanding liabilities as of the end of the fiscal year under review.
In addition to the above, securities to the value of ¥119,228 million have been pledged ascollateral for exchange settlement transactions, etc. or in substitution for margin, etc. associatedwith JGB OTC transactions.
Other Assets include guarantee money in the amount of ¥1,098 million.
3. Current account overdraft contracts are contracts by which the company is bound to extend loans
up to the prearranged amount at the customer's request unless the customer is in breach ofcontract conditions. The unutilized balance of these contracts amounts to ¥2,154,700 million, andthe original contractual terms for the total amount are one year or less.
Since many of these contracts expire without the rights being exercised, the unutilized balance
itself does not necessarily affect TCSB's future cash flows. A provision is included in many ofthese contracts that entitles TCSB to refuse applications for the execution of loans, or reduce themaximum contracted amount when there is a change in the financial situation, necessity topreserve a claim, or other similar reasons. Where necessary, TCSB also obtains real estate or
securities as collateral at the time the contracts are concluded and regularly monitors customer's
business conditions thereafter under in-house procedures established in advance, amending
contracts and taking other steps to control credit risks if needed.
4. Accumulated depreciation of Tangible Fixed Assets¥1,410 million
5. The principal amount promised to be indemnified for Money Trusts is ¥147 million.
6. Total monetary claims due to Related companies¥298 million
7. Total monetary liabilities due to Related companies¥102,001 million
8. TCSB is subject to the restriction on dividends from surplus in accordance with the provisions ofArticle 18 of the Banking Law of Japan.
If TCSB intends to distribute dividends from surplus, regardless of the provision of Article 445,
Paragraph 4, of the Banking Law of Japan, “Amounts of Capital and Reserves,” TCSB records anamount that corresponds to a decrease in the surplus by distributing the dividends from surplus,
multiplied by one-fifth (1/5) as the legal reserve.
The legal reserve recorded for the fiscal year under review related to the dividends from surplus is¥48 million.

(Statements of Income)
Income related to transactions with Related companies
Total revenue from trust transactions
Total revenue from service transactions
Total revenue from other ordinary transactions
Expenses related to transactions with Related companies
Total expenses related to financing transactions
Total expenses related to other ordinary transactions

12¥32 million¥2,442 million¥0 million¥55 million¥48 million

(Statement of Changes in Net Assets)
1. Types and number of shares issued and outstanding are as shown below.
(UNITS: Thousands of shares)

As ofApril 1,
2014

Increaseduring the
fiscal year

Decreaseduring the
fiscal year

As of
March 31,
2015

Remarks

Shares Issued andOutstanding

2.

Common Stock

1,000

−

−

1,000

Total

1,000

−

−

1,000

Dividend(1) Dividends paid during the year ended March 31, 2015
Total dividend
Type of sharesamountOrdinary General Meetingof Shareholders held on
Common stock¥240 million
June 19, 2014

Dividend
per share

Recorddate

Effective
date

¥240

March 31,2014

June 20,
2014(2) Of the dividends for which the record date belongs to the fiscal year ended March 31, 2015,
those for which the effective date of the dividends will be after March 31, 2015.
Total
Source ofType of
Dividend
RecordEffective
dividend
funds forsharesper sharedate
dateamountdividends
Ordinary General
Meeting ofCommonRetained
March 31,
June 19,
Shareholders¥230 million
¥230
stock
earnings
2015
2015
held on June 18,
2015(Financial Instruments)
1. Status of Financial Instruments(1) Policies on financial instruments
TCSB specializes in the asset management business and maintains a basic policy ofrisk-restrictive business administration. TCSB holds financial assets mainly consisting of“loans and bills discounted” to the Japanese Government, bonds such as government bondsand “call loans” on the asset investment side, as well as financial liabilities such as “callmoney” and “due to trust account” on the financing side.
TCSB is committed to the financing and asset investment of these financial instruments by
taking into account various risk factors while paying attention to appropriate management inresponse to each risk by financial instrument.
(2) Description of financial instruments and related risks
The major financial assets held by TCSB are loans and bills discounted to the Japanese
government, securities held to be deposited as collateral for settlement such as government
bonds and call loans to financial institutions. These financial assets are exposed to the risk(credit risk) that the value of the financial instruments could be reduced or lost due to thedeterioration of financial conditions at any borrower or issuer and the risk (market risk) that thevalue of the financial instruments could be reduced due to the fluctuation of interest rates.
Financial liabilities mainly refer to financing that uses call money and due to trust account.
These financing methods could face cash flow problems due to the deterioration of TCSB’s
financial conditions or TCSB could be exposed to the risk of incurring losses due to reluctant
financing because of significantly higher interest rates (liquidity risk).
Given the ongoing financial liberalization and internationalization, the financial assets andliabilities held by TCSB are becoming diversified and increasingly complicated, exposing
TCSB to various risks including the credit, market and liquidity risks detailed above.

13

(3) Risk management structure for financial instruments
1) Commitment to risk management
As a dedicated banking and trust company specializing in the asset management business,
TCSB maintains a basic policy of risk-restrictive business administration.
To raise its corporate value while ensuring sound and stable management, TCSB isproactively improving its risk management structure based on the recognition thatappropriately managing and controlling risks according to the characteristics of its
operations and risks is a critical managerial task.
At TCSB, the Board of Directors has stipulated basic policies on risk management. The
policies set forth diverse related matters: specific definitions of various risks, improvementof the structure for appropriate risk management and human resource development, andimplementation of audits to verify the appropriateness and effectiveness of the risk
management structure. TCSB endeavors to strengthen its risk management by drawing on
a variety of techniques compliant with its basic policies to ensure increasingly sophisticatedrisk management.
2) Comprehensive risk management
At TCSB, we classify the risks to which our various financial assets and liabilities are
exposed by factor into credit risk, market risk, liquidity risk, operational risk and so on, andmanage them according to their respective characteristics.
TCSB manages each type of risk individually. It has also established a comprehensive risk
management structure to identify and evaluate overall risk and, where necessary, to devise
appropriate responses to keep risk within manageable limits in both qualitative andquantitative terms.
3) Credit risk management
Credit risk management is carried out by the credit administration, which manages theprocesses from granting credit to collection, in order to control the losses that TCSB could
incur due to the emerging credit risk by transaction category based on the credit
investigation of customers.
At TCSB, the Board of Directors determines important credit risk related matters inaccordance with the Basic Policies on Credit Risk Management. Meanwhile, the ALM
Committee deliberates on and coordinates basic policies and administration-related mattersspecific to credit risk and credit risk monitoring. The Risk Management Department, whichis led by the officer responsible for the Department, draws up and executes plans andpromotes the basic matters concerning credit risk management.
Credit risk management is carried out in accordance with our internal credit rating system,
and individual credit lines, as a general rule, are set and controlled by the final decisions of
our credit assessment department every half year. The individual credit lines are set inaccordance with the credit business policies and determined through the screening of
ceiling limits compared with the total amounts of on-balance transactions and derivativetransactions (credit amounts are calculated with the current exposure method). Moreover,from the viewpoint of enhancing the check-and-balance function, the Internal Audit
Department is established as an internal auditing organ independent from the operating
departments.
4) Market risk management
At TCSB, the Board of Directors determines important market risk related matters inaccordance with the Basic Policies on Market Risk Management. Meanwhile, the ALM
Committee deliberates on and coordinates ALM-related basic policies, risk plans, market
risk administration related matters and countermeasures in case of emergencies such as asudden change in the market.
The officer responsible for the Risk Management Department holds jurisdiction overgeneral matters concerning the planning and administration of market risk management.
The Risk Management Department assumes practical operations such as monitoring,
reporting and analysis of and proposals on market risk, and setting limits thereon, as wellas drawing up and executing plans and promoting matters concerning market risk
management. The Risk Management Department also works to identify and evaluate
TCSB’s risk situation, reports to the President on a daily basis and periodically reports to
the Board of Directors and other relevant entities.
As a market risk management method, various limits are set and controlled. Although
TCSB does not engage in trading operations, ceiling limits are set on the losses that it could

14

incur with regard to the banking operations and position boundaries are set using theinterest-rate sensitivity analysis, as required.
Moreover, as for market operations, a middle office (Risk Management Department) is
established as an internal entity independent from the front office (market departments) andthe back office so that the check-and-balance function can effectively operate. The middle
office manages market risk in detail with diverse measures: managing risk indicators suchas 10 BPV (basis point value), conducting stress tests and applying the loss limits.
5) Status of market risk
TCSB has determined in the Basic Policies on Market Risk Management that its
operations be conducted in a restrictive manner to minimize market risk exposure for its
deals with customers and endeavors to ensure safe and reliable investments.
Major financial instruments at TCSB are government bonds and call loans, and they aremainly influenced by interest rate risk, which is a primary market risk. The Risk
Management Department computes the BPV on the financial instruments on a daily basis
and monitors whether the prearranged amounts (i.e., the upper limit) thereof are observed.
As of March 31, 2015, the BPV for the financial instruments held by TCSB was set to ¥36
million.
6) Financing-specific liquidity risk management
TCSB’s liquidity risk management structure is basically the same as the market risk
management structure described in the preceding item 4) “Market risk management.” In
addition, the Treasury Department assumes practical operations such as cash flow
management and draws up and executes plans and promotes matters concerning cash
flow management. The cash flow situation is reported to the ALM Committee and thePresident.
Liquidity risk is measured using cash flow related indicators such as the ceiling limits
concerning financing from the markets. The ALM Committee deliberates on andcoordinates the limits specific to liquidity risk and so forth. Furthermore, the Committee
determines the liquidity risk categories of “Ordinary,” “Concerned” and “Critical” in responseto the cash flow situation, as well as responsive actions to cope with the “Concerned” and“Critical” situations. The Committee has also established an emergency structure thatallows us to take swift action in case of an “emergency” that could have a negative effect on
TCSB’s cash flow situation.
(4) Supplemental explanation on fair value of financial instruments, etc.
The fair values of financial instruments include not only the amounts based on the market
value but also certain amounts reasonably calculated if no market value exists. As thecalculation of such amounts adopts certain preconditions, the resulting values may differ
depending on the preconditions used for calculation.

15

2.

Fair value of financial instruments, etc.
The following table indicates the amount on the balance sheet, the fair value and the unrealized
gain (loss) as of March 31, 2015, related to financial instruments. Unlisted stocks and the like, forwhich it is deemed extremely difficult to measure the fair value, are not included in the table below.
(Refer to (NOTE 2.))
(UNITS: Millions of yen)Amountshown in
Balance
sheet

Fair value

Difference

1,385,985

1,385,969▲15

145,000

144,942▲57

Other Securities

337,109337,109−(4) Loans and Bills Discounted

100,000

100,000−

Total Assets

1,968,095

1,968,021▲73(1) Deposits

80,57480,574−(2) Negotiable Certificates of Deposit

508,800

508,800−(3) Call Money556,889

556,889−(4) Due to Trust Accounts

772,404

772,404−

1.918,668

1,918,668

−

11

11

−

(1) Cash and Due from Banks(2) Call Loans(3) Securities

Total Liabilities
Derivative Transactions (*1)
(1) Those to which Hedge Accounting is not applied

Total Derivative Transactions
1111−(*1) The derivative transactions recorded in “Other Assets” and “Other Liabilities” are collectively
indicated above. Net receivables and payables, which were derived from derivativetransactions, are presented in net amounts.
(NOTE 1) Calculation method of the fair value of financial instruments
Assets(1) Cash and Due from Banks
As the fair value of the amounts of “due from banks” without maturity approximates thebook value, the book value concerned is recorded as the fair value.
For “due from banks” with maturity, the present value is calculated by discounting the future
cash flows for each of the certain fixed periods set. The market interest rate is used as thediscount rate. For those with short maturity periods (within six months) the fair value
approximates the book value, and therefore the book value concerned is recorded as thefair value.
(2) Call Loans
For a call loan, the present value is calculated by discounting the future cash flows for each of
the certain fixed periods set. The market interest rate is used as the discount rate. For those with shortmaturity periods (within six months) , since the fair value approximates the book value, the book value
concerned is recorded as the fair value. (3) Securities
The fair value of bonds is based on the prices traded at the stock exchange. The notes on
securities by holding purpose are stated in (Securities) below.
(4) Loans and Bills Discounted
As the residual period is short (within six months) and the fair value approximates the bookvalue, the book value concerned is recorded as the fair value.

16

Liabilities(1) Deposits
For the demand deposits, the amount paid (book value) when requested at the end of theyear under review is deemed the fair value.
(2) Negotiable Certificates of Deposit
The maturity period of negotiable certificates of deposit is short (within six months) and thefair value approximates the book value, therefore the book value concerned is recorded as
the fair value.
(3) Call Money
As the current maturity is short (within six months) and the fair value approximates the bookvalue, the book value concerned is recorded as the fair value.
(4) Due to Trust Account
The amount paid (book value) when requested at the end of the year under review isdeemed the fair value.
Derivative Transactions
Derivative transactions to which Hedge Accounting is not applied
For derivative transactions to which hedge accounting is not applied, the contract amount at
the closing date by transaction type or notional amount specified in the contract, fair value
and unrealized gains (losses), as well as the calculation method of the fair value concerned,
are as shown below. The contract amounts, etc., do not show a market risk related toderivative transactions.
1) Currency-related(UNITS: Millions of yen)Type of derivativetransaction

Category

Contract value

Fair value(*1)

Over oneyear

Unrealized
gains(losses)

Forward exchange
contracts
Over thecounter

Sold

65,934−▲1,282▲1,282

Bought69,127

−

1,294

1,294

135,062

−

11

11

Total

(*1) The fair value of the above transactions is measured, and the resulting profits and losses
are recorded on the statements of income. The calculation method of fair value is based on
the forward foreign exchange rates.
(NOTE 2) Financial instruments for which it is deemed extremely difficult to measure the fair value
are as shown below, and they are not included in Other Securities in (3) Securities of“Fair value of financial instruments, etc.”(UNITS: Millions of yen)

Category
Unlisted stocks (*1)
TotalAmount shown inBalance sheet
446446(*1) As unlisted stocks have no market value and it is deemed extremely difficult to measure
the fair value thereof, they are not subject to the disclosure of fair value information.

17

(NOTE 3)

Redemption schedule of monetary claims and securities with maturity dates for years
subsequent to the closing date (March 31, 2015)(UNITS: Millions of yen)

Within1 year

7-10
years

Over
10 years

1-3 years

3-5 years

5-7 years

1,385,860

−

−

−

−

−

145,000

−

−

−

−

−

Securities with Maturity
Dates included in“Other Securities”

209,427

127,682

−

−

−

−

Loans and Bills Discounted

100,000

−

−

−

−

−

Total

1,840,288

127,682

−

−

−

−

Cash and Due from Banks
Call Loans
Securities(NOTE 4)

Redemption schedule of borrowings and other interest-bearing debt for years subsequent
to the closing date (March 31, 2015)(UNITS: Millions of yen)

Within1 year

1-3 years

3-5 years

5-7 years

7-10
years

Over
10 years

Deposits (*1)

80,574

−

−

−

−

−

Negotiable Certificatesof Deposit

508,800

−

−

−

−

−

Call Money556,889

−

−

−

−

−

Due to Trust Accounts

772,404

−

−

−

−

−

Total

1,918,668

−

−

−

−

−

(*1) Of the deposits in the banking business, demand deposits are disclosed under “Within 1
year.”

18

(Securities)
Other than government bonds, corporate bonds, stocks and other securities on the balance sheets,
negotiable certificates of deposit in “Cash and Due from Banks” are included.
Other securities (As of March 31, 2015)(UNITS: Millions of yen)Amount shown inBalance sheet

Acquisition cost

Government Bonds

168,093

168,038

55

Corporate Bonds

6,568

6,568

0

Subtotal

174,662

174,606

55

Corporate Bonds

162,447

162,489

▲41

Other

103,000

103,000−

265,447

265,489▲41

440,109440,095

14Type

Difference

Japanese Bonds
Those of which
the amount on thebalance sheet
exceeds theacquisition costThose of which
the amount on thebalance sheet
does not exceed
the acquisition
cost

Japanese Bonds

Subtotal
Total(NOTE) Other securities for which it is deemed extremely difficult to measure the fair value(UNITS: Millions of yen)Amount shown inBalance sheet
Stocks

442

Other

4
Total

446

As these securities have no market value, they are not included in “Other securities” in the list
above.

19

(Tax-Effect Accounting)
1. Principal deferred tax assets and liabilities, broken down by cause, are shown below.
Deferred tax assets
Asset retirement obligations¥46 million
Accrued business and business facility taxes
45
Provision for retirement benefits and provision for directors’ retirement benefits
44
Intangible Fixed Assets
23
Valuation difference on Available-for-Sale Securities
13
Other
54
Total deferred tax assets
228
Deferred tax liabilities
Tangible Fixed Assets
26
Valuation difference on Available-for-Sale Securities
17
Other
4
Total deferred tax liabilities
48
Net deferred tax assets
180 million
2. Following the promulgation of the Act on Partial Revision of the Income Tax Act, etc. (Act No. 9 of 2015)
on March 31, 2015, corporation tax rates are reduced effective the business year starting on or after April
1, 2015. Consequently, the statutory effective tax rate for the calculation of deferred tax assets anddeferred tax liabilities will be lowered from the previous 35.64% to 33.06% for temporary differences
expected to be eliminated in the business year beginning on April 1, 2015 and to 32.26% for temporary
differences expected to be eliminated in the business year beginning on April 1, 2016. As a result of thischange, deferred tax assets decreased by ¥16 million, valuation difference on available-for-sale securities
increased by ¥0 million, and income taxes-deferred increased by ¥16 million.

(Related party transactions)(1) Transactions with the parent company and principal corporate shareholders, etc.
(UNITS: Millions of yen)

Category

Name ofcompany,etc.

Percentage
of votingrights (orownership)
Directownership
23%

Relationshipwith related
party

Details oftransactions

Transactio
n amounts(Note 2)

Balance
Account
at termclassification
end

Other
The
Entrustment
Entrustment
2,372 Accrued
related
Dai-ichiof securities
of securities
incomecompanies Lifeadministration administration
Insurance
operations
operations
Company,(Note 1)
LimitedTransaction terms and determination thereof(NOTE 1) Fees for the performance of outsourced securities administration operations are set
according to the company’s fee rates table.
(NOTE 2) Transaction amounts do not include consumption tax. Balance at term end includes
consumption tax.

20

270

(2) Sister companies, etc.
(UNITS: Millions of yen)

Category

Name ofcompany,
etc

Subsidiary Mizuho
of Parent
Trust &
Company Banking
Company,
Limited

Percentage
of votingrights (orownership)
None

Relationshipwith related
party

Details oftransactions

Transaction
Balance
Account
amounts
at termclassification(Note 3)end

Performance
Performance
9,069 Suspenseof trustof trust
receipt
services forservices fortrust banktrust bank
Sharing of(Note 1)
directors
Subsidiary Mizuho
None
Performance
Outsourcing
3,772−
of Parent
Trustof outsourced of system
Company Systems
systemoperation
Company,
operation and Outsourcing
7,209−
Limitedsoftwareof softwaredevelopment
development
servicest(Note 2)
Transaction terms and determination thereof(NOTE 1) Fees for the performance of outsourced trust services are determined throughnegotiations based on fee amounts calculated by the company.
(NOTE 2) Fees for the performance of outsourced system operation and software development
services are determined through negotiations based on fee amounts calculated by
MHTS Co., Ltd.
(NOTE 3) Transaction amounts do not include consumption tax. Balance at term end include
consumption tax.
(Per share information)
Net assets per share¥59,419.42

Net income per share¥1,129.20

21

9,665

−

−

Results of Trust Banking Business■Statements of Trust Assets and Liabilities(UNITS: Millions of yen)2012
As of 31.Mar.2013

2013
As of 31.Mar.2014

2014
As of 31.Mar.2015

AssetsSecurities
Beneficiary Rights to the Trusts
Securities Held in Custody Accounts
Money Claims
Call Loans
Due from Banking AccountCash and Due from Banks
Other Assets
Total Assets

100,981,285
15,023,397
4,357,127
1,131,658
2,941,544
202,241
7,009,287
10,002,858
141,649,400

103,945,600
17,392,887
4,433,320
589,576
3,390,783
215,717
6,229,435
11,881,265
148,078,586

91,898,870
19,195,919
5,664,579
665,181
5,167,614
772,404
5,853,250
16,612,545
145,830,365

Liabilities
Money Trusts
Investment Trusts
Money Entrusted Other than Money Trusts
Securities Trusts
Composite Trusts
Total Liabilities

81,992,173
21,46861,8596,881,445
52,692,452
141,649,400

79,467,630
69,56862,371
7,393,969
61,085,047
148,078,586

68,200,546
110,464
48,3699,774,682
67,696,301
145,830,365(NOTE 1) Amounts less than one million yen are rounded down.

22Capital Adequacy Ratio (Basel III)

Core capital: instruments and reserves
Core capital: regulatory adjustments
Capital (A) – (B)

2013

2014

As of
31.Mar.2014

As of
31.Mar.2015

(A)
(B)
(C)
(D)

Risk-Weighted Assets
Capital Adequacy Ratio (C)÷(D)×100(NOTE 1) Amounts less than one million yen are rounded down.

23

58,28058,280148,287
39.30%

59,1793,123
56,056141,252
39.68％