Integrated Report 2023
Integrated Report 2023 DAISHI HOKUETSU INTEGRATED REPORTDAISHI HOKUETSU Financial Group, Inc.
Location ofprincipal head
office functions:1071-1 Higashiborimae-dori
7-bancho, Chuo-ku, Niigata-shi,
Niigata PrefectureTEL

025-224-7111 (representative)

URL

https://www.dhfg.co.jp/

Edited and issued by the Business Planning Division of
Daishi Hokuetsu Financial Group
Issued in August 2023

This Disclosure Magazine
is printed with vegetableoil ink.

The disclosure uses
easy-to-read universal
design font.

Daishi Hokuetsu FG and the
TSUBASA Alliance have set
SDGs Declarations.

Daishi Hokuetsu Bank is has
signed the Principles for
Financial Action for the 21stCentury.

DA I SH I HOK U E T S U

I N T E G R A T E D R E PO R T

Contents
Message from Management

03

Message from Management ‥‥‥‥‥‥P.03

Overview of theDaishi Hokuetsu FG

09Business Area

P.09‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥

Communication
with Stakeholders

65

Communication with Stakeholders ‥‥ P.65

Corporate Data

67

List of Executives

P.67‥‥‥‥‥‥‥‥‥‥‥‥‥

List of Group Companies ‥‥‥‥‥‥‥‥ P.69

Financial / Non-Financial Highlights ‥‥ P.11
History of the Daishi Hokuetsu Bank ‥ P.13
150 Years Since the Foundation of
the Daishi Hokuetsu Bank
Five Years Since the Establishment of
the Daishi Hokuetsu Financial Group ‥‥ P.15

Value Creation Story

17

Overview of Value Creation Story ‥‥‥ P.17
Increasing Diversiﬁcation and Complexityof the Needs of Regional Society andChanges in the Business Environment
Surrounding the FG ‥‥‥‥‥‥‥‥‥‥‥‥‥ P.19
The 2nd Medium-Term Management Plan P.20
Sustainability Initiatives‥‥‥‥‥‥‥‥‥P.21

New Value Creation ‥‥‥‥‥‥‥‥‥‥‥ P.32
Business Base to Support New Value
Creation ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ P.39
[Presentation of figures][Editorial Policy]
Daishi Hokuetsu Financial Group has prepared this DAISHI HOKUETSU INTEGRATEDREPORT 2023 in order to help all stakeholders gain a better understanding of thecompany s initiatives aimed at sustainable value creation. When compiling this report, wehave referred to the "International Integrated Reporting Framework" advocated by the IFRSFoundation (formerly the IIRC) the Ministry of Economy, Trade and Industry's "Guidance forCollaborative Value Creation," and other resources.
For detailed financial data, etc., please refer to Disclosure Magazine
2023 (the company s website: https://www. dhfg.co.jp/financial/ir/
disclo/).
This report contains forward-looking statements, but these are notguarantees of future performance and may differ materially from
actual results owing to changes in the business environment andother factors.

On January 1, 2021, the company s wholly owned subsidiaries, Daishi Bank andHokuetsu Bank, merged, with Daishi Bank as
the surviving company and Hokuetsu Bankas the dissolving company, with the company name changing to Daishi Hokuetsu Bank.
The figures for Daishi Hokuetsu Bank forthe fiscal year ended March 31, 2021, in
this document are calculated in accordance with the following rules from theperspective of making appropriate period
comparisons for each item.
●

The fiscal year ended March 31, 2021
Simple sum of the figures for Daishi Bankand Hokuetsu Bank for April ‒ December
2020 and the figures for Daishi Hokuetsu
Bank from January 2021 onwards* As a general rule, the figures in this document have been rounded down to the nearest unit.
* The Daishi Hokuetsu Financial Group may be referred to below as Daishi Hokuetsu FG,

FG or the company in this document.

* QR Code, which is referenced in this document, is a registered trademark of DENSO WAVE INCORPORATED.

Inquiries

1

Business Planning Division, Daishi Hokuetsu Financial Group TEL: 025-224-7111 (representative)

Philosophy

Management Philosophy

As a trusted ﬁnancial group,

ActionPrinciples

we will continue to provide services
that live up to the expectations ofcustomers and contribute to thedevelopment of regional society.

MissionWe will boldly take on challenge tocreate new value.

Vision andApproachAiming ﬁgure

Ideal Form
We establish ourselves as a ﬁnancial and information services
group that receives overwhelming support by creating
information intermediary function, increasing the eﬃciency ofmanagement, and continuing to contribute to the growth ofregional society.

DAISHI HOKUETSU REPORT 2023

new value through our ﬁnancial intermediary function and

2

DAISHI HOKUETSU REPORT 2023

CHAPTER01

Message from Management

Message from Management

Continuing to contribute to
the sustainable growth of the region
as a ﬁnancial and information
services group
President and Representative Director

Michiro Ueguri

Continuing to be a part of the community
This year marks the fifth anniversary of theestablishment of the Daishi Hokuetsu Financial
Group and the 150th anniversary of the foundingof the Daishi Hokuetsu Bank. Our success is entirely due to the warm support and patronage ofour customers, local communities, and shareholders over many years, and all of our officers andemployees would like to express their sincere
gratitude accordingly.
Since our founding in 1873, the Daishi Hokuetsu
Bank has built relationships of trust with the local
community and grown as a part of the community, by fulﬁlling our role and mission as a regionalbank while also responding to the ever-changing
environment, over a period of 150 years. Basedon these relationships of trust, all Group oﬃcers
and employees will continue to contribute to thedevelopment of the local community by leverag3

ing our diverse range of functions as a Group to
the maximum possible extent with unity of purpose, with the purpose being our Management
Philosophy, thus meeting the expectations of our
stakeholders.**People who share interests with the company, suchas customers, local communities, shareholders, andemployees

Continuing to be a partof the community

CHAPTER

01

Message from Management

02

03

04

05

Overview of the Daishi Hokuetsu FG

Value Creation Story

Communication with Stakeholders

Corporate Data

Increasingly complex and uncertain business environment
In the business environment surrounding thewhich sees responding to climate change risks andGroup, social and economic activities are normaliz-moves toward carbon neutrality as opportunities

ing from the COVID-19 pandemic. Structural social

for economic growth, as well as a further increase

issues, however, are becoming increasingly severe,in the necessity of improving productivity throughincluding population decline associated with a fall-DX (Digital Transformation). At the same time, var-

ing birthrate and aging society that is progressing

ious trends and events, such as the emergence ofat a faster rate than expected. In addition, the rap-

geopolitical risks, the global advance of inflation,

id progress of the digital society and the increaseand even the collapse of ﬁnancial institutions in thein companies entering the ﬁnancial sector from dif-United States and Europe, are having an impact

ferent industries, resulting in competition growing

and resulting in multifaceted change that is alsofiercer on a daily basis. In terms of major trends,

occurring at an accelerated pace, with increasing

it is likely that we will see a further increase in thecomplexity and uncertainty. Under these condi-

importance of sustainability management, whichtions, the Japanese government is advocating thebalances the maintenance and enhancement of theacceleration of a new form of capitalism," based

environment and society, which are the foundations

on measures such as "strengthening investment infor our business, with economic growth and corpo-

people to improve the value of human capital, as

rate activities, such as GX (Green Transformation),well as "asset income doubling plans.

Our Management Philosophy is Our Story of Sustainable Value Creation
The Group's Management Philosophy expresses

customers, and create and provide new value that

our story of sustainable value creation. In otherexceeds expectations. These measures will result

words, building on the foundation of trust, we willin the development of our customers and local

repeatedly enter into deep dialogue (engagement)

communities. At the same time, the Group's corpo-

with our customers, and adopt a stance of boldlyrate value and trust will also grow. The continuous

taking on challenge in this rapidly changing environ-pursuit of sustainable growth through this series,

ment and engaging in related training. In this way,

this cycle, of activities and results is the purpose

we will develop an understanding of the increas-of our Management Philosophy.

ingly diverse and complex issues and needs of our

As a trusted ﬁnancial group,
we will continue to provide services that
Philosophy

and contribute to the development ofregional society.
We will boldly take on challenge to create
new value.

DAISHI HOKUETSU REPORT 2023

Management Philosophy

live up to the expectations of customers

4DAISHI HOKUETSU REPORT 2023

CHAPTER01

Message from Management

Message from Management
The 2nd Medium-Term Management (April 2021 to March 2024)
Fiscal 2023 marks the final fiscal year of theGroup s 2nd Medium-Term Management Plan (theTSUBASA Alliance synergy," to achieve the pri-

MTP ) and is an important step toward achiev-

ority business challenges for the Group, namely

ing a new stage of growth. The Group aims to"strengthen profitability," "make management

achieve consolidated proﬁt of 20.1 billion yen in

more eﬃcient," and "maintain and improve sound-ﬁscal 2023 by maximizing the three synergies ofness."

1

Merger Synergy
Merger synergy is type of synergy in which

streamline headquarters, reform sales oﬃce oper-

we will enhance our top line and reduce costs,

ations, etc. Speciﬁcally, in the last ﬁscal year, we

thus strengthen our profit structure by sharing

completed the consolidation of 50 branches, as

expertise, information, and networks expanded

planned in the MTP, ahead of schedule, as wellby the merger of subsidiary banks, coordinating

as a fundamental review of sales and lending pro-overlapping functions, and reallocating businesscesses at sales offices and the consolidation of

resources.

operations into centralized divisions. As a result,

In order to maximize merger synergies during

we made approximately 740 employees available,

the MTP, we have set forth our aim to achieveof which we strategically reassigned approximate-

new structural reforms,

based on the three

ly 400 employees, excluding those who reach thepillars of sales reform, sales office operations

mandatory retirement age, etc., to sales divisions,reform, and head office operations reform, andGroup companies, and other operations. At theunder the leadership of the Structural Reform &same time, we are also transitioning to a system

DX Promotion Committee,

chaired by me, wein which all employees at sales oﬃces engage inare simultaneously promoting cross-organiza-

consulting sales, ensuring that we leverage merg-

tional eﬀorts to consolidate our branch network,

er synergy.

25" 1 merger synergy," " 2 group synergy," and " 3Group Synergy
Group synergy is a type of synergy that we

kind of hub, into "double-track collaboration," incan leverage by providing customers with a withwhich Group companies, including banks, mutual-a variety of functions offered by Group compa-

ly propose functions not only for their own line-up

nies in an optimal manner as a one-stop shop,of products and services, but also for other Group

thereby increasing our consulting functions andcompanies. In April this year, as part of the re-boosting eﬃciency through the sharing and con-structuring of our Group businesses, we changedsolidation of expertise. In order to solve the in-

the name ofcreasingly diverse and complex issues of our cus-

ness company with a customer base in Niigata

tomers, the Group is working together to develop

Prefecture, to Daishi Hokuetsu IT Solutions Co.,and strengthen core human resources for Group

Ltd., and made it a new subsidiary of the com-collaboration, through such measures as regularpany together with a regional trading company,

skill assessments for corporate sales represen-

Bridge Niigata Co., Ltd. Accordingly, the Grouptatives of the Daishi Hokuetsu Bank concerningcurrently has a structure consisting of 15 com-their understanding of the products and services

panies, including three banking subsidiaries (ex-of Group companies.

cluding the company). We will continue to take

N.C.S. Co., Ltd.,a system busi-

In addition, we will further strengthen collabo-

full advantage of our diverse range of Group func-

ration within the Group by enhancing "single-track

tions, and work to support customers to solve

collaboration," in which bank personnel act as atheir problems in all areas.

CHAPTER

01

Message from Management

3

02

03

04

05

Overview of the Daishi Hokuetsu FG

Value Creation Story

Communication with Stakeholders

Corporate Data

TSUBASA Alliance Synergy

TSUBASA Alliance synergy is a type of synergy

we have also been making steady efforts towardthat we will leverage by utilizing the economies

collaboration, including the joint use of branchesof scale and superior information-sharing of thefrom March of this year. To date, the cumulative

TSUBASA Alliance, the largest initiative for col-synergies from this alliance have amounted to 5.7

laboration across a wide area, in which 10 regionalbillion yen, and we intend to continue to deepenbanks participate, including the Daishi Hokuetsu

our collaboration across all areas, including re-Bank. The Alliance has expanded on a nationwide

gional revitalization & tourism promotion,

scale, from Hokkaido to Okinawa, and the total

rate solutions,assets of the participating banks have reacheddevelopment, and eﬀective use of real estate.

asset management,

corpo-

personnel

approximately 95 trillion yen, meaning that they
have grown to a size comparable to that of themegabanks. We are working on various measures
to enhance collaboration in all areas, not just thoserelated to systems and administration. Cumulativesynergies at the Daishi Hokuetsu Bank have totaled
10.6 billion yen to date. Going forward, we willcontinue to take full advantage of the Alliance's
economies of scale and superior information-sharing to strengthen our top line and reduce costs.
In relation to the

Gunma-Daishi Hokuetsu

Alliance, which we concluded in December 2021,

Sustainability Initiatives
With the Group, we position sustainability ini-

In March this year, the Group declared that we

tiatives ‒ which balance the maintenance and en-would achieve carbon neutrality by ﬁscal 2050, in

hancement of the environment and society, which

order to further accelerate our efforts to reduce

are the foundations for our business, with eco-

CO2 emissions. As concrete measures to achieve

nomic growth and corporate activities ‒ as a key

carbon neutrality, we are actively promoting themanagement priority. Under the Daishi Hokuetsu

establishment of environmentally friendly branches

Financial Group s Basic Sustainability Policy, we

and adopting

actively address local issues and environmental

from renewable energy, thus further reducing our

problems through our core businesses, while also

CO 2 emissions. Going forward, we will continue

striving to enhance information disclosure on risks

to support our customers in their eﬀorts to reduceand opportunities related to climate change.

CO2 emissions, as we work to create a decarbon-

In particular, while large and medium-sized com-

CO 2-free electric power

derivedized society in the region.

panies are currently taking the lead in decarbonization eﬀorts, such eﬀorts are expected to spread toan inevitable issue for SMEs as well. We recognizethat an important role of regional ﬁnancial institutions is to help resolve these issues, by providing
consulting and solutions such as transition ﬁnance,
utilizing the Group's wide variety of functions rooted in our dialogue (engagement) with business
partners.

DAISHI HOKUETSU REPORT 2023

the entire supply chain in the near future, making it

6

DAISHI HOKUETSU REPORT 2023

CHAPTER01

Message from Management

Message from Management
Initiatives Targeting DX
In the face of a growing shortage of human re-sources, improving operational eﬃciency throughDX is an urgent issue for business operators. The

tracts for many projects to promote DX from thenational and prefectural government.
As explained inGroup Synergy, by making

Group is rolling out a "DX All Branch Campaign,"

Daishi Hokuetsu IT Solutions and Bridge Niigata

ductivity, etc. This

enables the Group to complete the entire process

as a Group-wide eﬀort to improve customer proDX All Branch Campaign

was launched in October last year, and we havealready compiled a database of approximately

2,000 needs, which the Group is addressing. We

are also focusing on developing human resources
capable of assisting with customer productivi-

ty improvements, and providing year-round inhouse training related to DX throughout the year.
Additionally, as our support for obtaining certifications has resulted in more than 1,000 people
obtaining an IT Passport certiﬁcation.

subsidiaries, we have established a system thatin-house, from identifying issues based on our understanding of the DX promotion-related needsof companies and local governments in Niigata

Prefecture, to the adoption of IT. We also plan

to integrate our subsidiary, The Daishi Computer

Service Co., Ltd., into Daishi Hokuetsu Bank in
October of this year, and will work to strengthen
the in-house capabilities of our banking systems
department.

Going forward, as the largest financial and in-

In order to promote DX throughout the region

formation services group in Niigata Prefecture, wetion with the government, and at Bridge Niigata,to actively support our customers in improving

as a whole, we are also strengthening cooperaa regional trading company, we have won con-will continue to exercise our consulting functions
their productivity.

Efforts to Increase the Value of Human Capital
The importance of human capital management

ing the amount of investment in human resources

capabilities of personnel are regarded as a form

April of this year, we changed the third pillar ofis increasing. In this type of management, theof capital within the management resources of acompany, and the capabilities of human resources
are maximized by companies in order to improve
corporate value.

Based on our long-held recognition that ouremployees are an important asset, the Group refers to our personnel as "human resources," andwe have promoted management that prioritizes
these "human resources" in such ways as increas-each year. To further accelerate these efforts, inour basic strategies in the MTP from developing
and enhancing human resources" to "practicing
human capital management, and in May, we established the Office of Human Capital Strategy,

which oversees planning related to human capitalmanagement. In order to continuously improve

our corporate value, we must not only enhance
the knowledge and capabilities of each employee,
but also leverage these knowledge and capabili-ties as added value by putting them into practice,thereby raising the level of trust and expectations
held by our customers and local communities.

Going forward, in addition to general measures
to strengthen our human capital, such as empowering women, strengthening the development ofexpert human resources, and enhancing reskilling
and recurrent education for employees, we willcontinue to strengthen internal communications

to foster ethical values and build character, while
also developing unique knowledge and expertise

within the Group and strengthening our practi-

7

CHAPTER

01

Message from Management

02

03

04

05

Overview of the Daishi Hokuetsu FG

Value Creation Story

Communication with Stakeholders

Corporate Data

cal capabilities. In addition, we will accelerate ourFurthermore, our subsidiary the Daishi Hokuetsu

Group's unique human capital management, placing

Bank appointed its first female director in June ofcapital through such measures as the creation of ato nurture human resources within the company

special emphasis on improving the value of human

workplace environment that enables employees toexercise their capabilities to the maximum possible
extent.

this year. Going forward, we will continue working

with the aim of appointing female oﬃcers, throughour "Empowerment Program for Women," which willtrain the next generation of female leaders.

Capital Policy and Shareholder Returns
Under the premise of maintaining our soundness,over the medium to long term, and we have set a

into account the balance between investment inof the MTP. I think the fact that achieving an ROE ofthe Group engages capital management that takes
growth for the development of local communities andthe improvement of corporate value, and shareholder returns. Based on this approach, we maintained

a consolidated capital adequacy ratio of 10.23% for
the ﬁscal year ended March 31, 2023, exceeding ourtarget of 10% or more.

In addition, in order to further reduce cross-share-

holdings, in May of this year, we announced atarget to reduce cross-shareholdings held by Daishi
Hokuetsu Bank by 10 billion yen (carrying amount)target of 4.9% for the current ﬁscal year, the ﬁnal year
5% or more is within reach is the result of our ability

to exercise the synergies mentioned above. In lightof the fact that the Tokyo Stock Exchange, where thecompany s shares are listed, requires companies witha P/B ratio of less than 1x to disclose and implement
measures for improvement, we will continue working

to further enhance ROE, particularly by strengthening
Group proﬁtability, in order to improve the value of
our shares in the next ﬁscal year and beyond.

In October, the company will celebrate the ﬁfth an-by the end of March 2026 compared to the end ofniversary of our establishment, and Daishi Hokuetsu

With regard to shareholder returns, as announced

founding in November. For this reason, in the fiscal

March 2021.

in our policy for return to shareholders, we willcontinue to provide stable returns to shareholders

with a target shareholder return rate of 40%, while
taking into consideration the enhancement of internal
reserves to strengthen our revenue base. In the same

policy, we also aim to achieve an ROE of 5% or more

Bank will celebrate the 150th anniversary of ouryear ending March 31, 2024, we plan to pay a com-

memorative dividend to express our gratitude to
our shareholders, and we will therefore increase theannual dividend by 20 yen from the previous fiscal

year to 140 yen through both an increase in the ordinary dividend and the commemorative dividend.

Making Financial and Information Services More SophisticatedAs the environment undergoes rapid change, as I

mentioned at the outset, in addition to risks, there

ﬁnancial and information services.

Fiscal 2023 will be the ﬁnal ﬁscal year of this MTP.

will also be many more opportunities, such as the ad-

As in the past, I will take the lead and ensure that all

the Group, we intend to accurately identify and draw

purpose" to promote various measures, including thevance of GX and DX across society as a whole. Withinhave either already become apparent or that are potential needs. In doing so, we will seize or create op-

portunities. To this end, we will continue to strengthen the functions of each Group company in terms ofsystems and structures, collaboration capabilities, andhuman capital, thus enhancing our overall strength as
a Group. We will also boldly take challenges in new

business areas and increase the sophistication of ourinitiatives mentioned here, and thereby complete the

MTP. We intend to steadily advance toward the 3rd
Medium-Term Management Plan, which will comenext, and achieve sustainable development as a partof the community.

I encourage stakeholders to anticipate the future

activities of the Group.

July 2023

DAISHI HOKUETSU REPORT 2023

out the needs of a diverse range of customers that

our Group officers and employees share a "unity of

8

DAISHI HOKUETSU REPORT 2023

CHAPTER

02

Overview of the Daishi Hokuetsu FG

Overview of the Daishi Hokuetsu FG

The Daishi Hokuetsu Financial Group operates in Niigata
Prefecture as its main business base. Niigata Prefecture islocated on the Sea of Japan side of Honshu, and has long
had an active agriculture industry thanks to its geography
and climate. In addition, it is widely recognized for its production of rice confectionery, processed seafood products,
and other food products that utilize its abundant agriculturaland fishery resources, such as rice. Niigata Prefecture has
the 17th largest nominal GDP in Japan (ﬁscal 2019) and the15th largest population in Japan (ﬁscal 2022). In addition,
the area has high potential, including substantial transportation infrastructure, the area in the middle of the prefecturearound Sanjo City and Tsubame City, which are known for

Business Area

their metal goods, the Sado area, where a World Heritagesite is expected to be registered, and tourism resources
such as ﬁreworks displays and hot spring resorts.
On the other hand, the rate of population decline has
been faster than the national average, and the total population has been declining for 25 consecutive years since peaking in 1997.
Based on these characteristics of Niigata Prefecture andthe issues it faces, the company will create new value in order to continue contributing to the development of regionalsociety based on our Management Philosophy.
*Figures are quoted from the websites of the Ministry of Internal Aﬀairs andCommunications website, the Cabinet Oﬃce, and Niigata Prefecture.

Industries in Niigata Prefecture
In addition to agriculture, particularly rice, in each region within the prefecture, there are also various manufacturingindustries concentrated in various parts of Niigata Prefecture and supporting the regional economy and employment, including foodstuﬀs, machinery, metals, chemicals, electronic components, and textiles, taking advantage of the prefectures natural resources and excellent location, with convenient transportation to and from the Tokyo metropolitan area.
▲

Thriving Agricultural Industry Thanks to the Abundant Natural Environment

Niigata Prefecture is surrounded by many rivers and mountains,
including the Shinano River, thelongest river in Japan, and has
long been a region with thriving
agriculture thanks partly to its
relatively good weather fromspring to summer. The amountof rice produced in Niigata Prefecture amounts to 125.2 billion
yen, the highest in Japan, and theprefecture also has the largest
area planted with edamame (soybeans) in Japan. (Fiscal 2021)▲

Characteristic Industries Backed by Advanced Metalworking Technology

The Tsubame-Sanjo area is one of the leading centers of metalworking in Japan. This area s domestic share of the Western metal tableware market, such as spoons and forks, exceeds 90%. In addition, its
high quality has earned it a good reputation around the world, including cutlery from the area being used at the Nobel Prize banquet, andproducts from Tsubame being used as souvenirs for the leaders of other countries at APEC (Asia-Paciﬁc Economic Cooperation).
In recent years, there has been an increase in the number of facilities
where visitors can enjoy factory tours and experience the skills thatcraftsmen have cultivated over many years, as well as the ideas thathave been passed down to them, in actual hands-on experiences, andthere has been increasing anticipation surrounding these facilities as a
tourism resource.

9

01

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Message from Management

02

Overview of the Daishi Hokuetsu FG

03

04

05

Value Creation Story

Communication with Stakeholders

Corporate Data▲

Abundant Tourism Resources In this section, we introduce some of Niigata Prefecture's abundant tourism resources.

Sado

Fireworks Displays

Swimming Beaches and Hot Spring Resorts

Sado is Japan's largest remote island,
attracting approximately 500,000 tourists
every year. The gold and silver mines thatflourished mainly during the Edo period(17th century to late 19th century) are expected to be registered as a World Cultural Heritage site. In addition, in April 2022,
the Ministry of the Environment designated
Sado City as a Decarbonization Leading
Area," and the city is actively working toachieve carbon neutrality by 2050.

Fireworks displays are held in various
parts of Niigata Prefecture. In particular,
the fireworks displays held in Nagaoka,
Katakai, and Kashiwazaki are known as
the "three great fireworks displays of
Echigo." Of these, the Nagaoka ﬁreworks
display is held in memory of those whohave died, and in prayer for restorationand peace, and it attracts one million ormore visitors over the two days it is held.

There are 60 swimming beaches in
Niigata Prefecture, ranking ﬁrst in Japan
(ﬁscal 2022).
There are 137 hot spring resorts withaccommodation facilities, meaning theprefecture ranks third in Japan on thismetric (ﬁscal 2021).

Substantial Transportation Infrastructure
Niigata Prefecture's substantial high-speed transportation infrastructure, etc., enables quick and eﬃcient access from Kanto, Kansai, Tohoku, and other areas.
Advantages of the transportation network

Nihonkai Tohoku Expressway

Highways stretching out in ﬁve
diﬀerent directions(Kan-etsu, Hokuriku, Joshin-etsu,
Ban-etsu, and Nihonkai Tohoku)

Niigata Airport
Niigata Port

Joetsu Shinkansen

Hokuriku Shinkansen

Ban-etsu
Expressway

Niigata Airport
Niigata Port

Comprehensive ports, functionspeciﬁc ports:

Naoetsu Port
Hokuriku
Expressway

International container shipping
sectorDesignated as LNG (liqueﬁed
natural gas) sector
Naoetsu Port

Function-speciﬁc ports:

TowardTohokuJoshin-etsu Expressway
TowardHokuriku

natural gas) sector

TowardTokai

TowardKanto(As of June 30, 2023)

DAISHI HOKUETSU REPORT 2023

Designated as LNG (liqueﬁed

Hokuriku
Shinkansen

JoetsuShinkansen
Kan-etsu
Expressway

10

DAISHI HOKUETSU REPORT 2023

CHAPTER

02

Overview of the Daishi Hokuetsu FG

Financial Highlights
Daishi Hokuetsu FG (Consolidated)
Net income reverting to parent company
shareholders

177

100 million yen

Capital adequacy ratio
%

10.23

%

million yen
10.51

10.35

151
107

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

OHR (expense ratio)

ROE

%

%

4.2

%

84.7
71.2

68.5

3.5

%

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

2.6
Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

Daishi Hokuetsu Bank (Non-Consolidated)Core business net proﬁt

Net Income

100 million yen

100 million yen

342

million yen

236

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

Deposit balance

82,234

86,161

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

Loan balance

million yen

84,785

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

11

million yen

121

101

152

100 million yen

148

100 million yen

49,59652,881

million yen

51,305

Fiscal year ended March2021 Fiscal year ended March2022 Fiscal year ended March2023

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Message from Management

02

Overview of the Daishi Hokuetsu FG

03

04

05

Value Creation Story

Communication with Stakeholders

Corporate Data

Non-Financial Highlights
Customers
Business startups or
re-startups

1,963

Number of companies supported
in business succession

1,683

cases

1,704cases

1,628

Fiscal year ended March2022 Fiscal year ended March2023

Number of consultations on
staﬃng (cumulative)

1,429

cases

1,104 cases

cases

Number of companies
supported in M&A

43 cases

26

cases

Fiscal year ended March2022 Fiscal year ended March2023

Fiscal year ended March2022 Fiscal year ended March2023

Number of cases of support
for sales channel development(cumulative)

Number of cases of productivity
improvement support(cumulative)

497

560

201

cases

cases

99 cases

Fiscal year ended March2022 Fiscal year ended March2023

Fiscal year ended March2022 Fiscal year ended March2023

Fiscal year ended March2022 Fiscal year ended March2023(*Actual result at Daishi Hokuetsu Career Bridge)(*Actual result at Bridge Niigata)(*Actual result at Bridge Niigata)CO2 emissions reduction rate

Sustainable Finance track record(cumulative)

Regional Society
Donations through donationtype private placement bonds(cumulative)

181

million yen¥170 million yen

Fiscal year ended March2022 Fiscal year ended March2023(vs. ﬁscal 2013)

30.0%

34.4

244.6

billion yen%¥90.1 billion

Fiscal year ended March2022 Fiscal year ended March2023

Fiscal year ended March2022 Fiscal year ended March2023

External assessment of support
for child rearing

External assessment of active
participation of womenPlatinum Kurumin Plus certiﬁcation (May 2023)

Platinum Eruboshi certiﬁcation (May 2023)

Employees
External evaluation of Healthand Productivity Management

years of continuous
certiﬁcation

DAISHI HOKUETSU REPORT 2023

Six

12

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Overview of the Daishi Hokuetsu FG

History of the Daishi Hokuetsu Financial Group
Since the founding of the Fourth National Bank of Japan in 1873, we have quickly and accurately identiﬁed the issues
facing our customers and society as they have changed with the times, and we have continued to provide ﬁnancial andinformation services aimed at solving these issues. This has enabled us to earn the trust of stakeholders while achieving
sustainable growth and increasing our corporate value.

History of the company

1873

1917

The Fourth National Bank ofJapan founded

Corporate name changed to The
Daishi Bank, Ltd.

Founded in current-day Niigata
City as Japan s third nationalbank.

Although the name had been changed to
Niigata Bank in 1896, customers continued
to use the nickname Daishi when referringto the bank. Therefore, the name waschanged to The Daishi Bank.

1878
The Sixty-Ninth National
Bank of Japan founded

2019

Birth of theDaishi Hokuetsu
Financial Group

Daishi
Hokuetsu
Career Bridge

1948

1942

After the end of the Boshin
War, founded in current-day
Nagaoka City in order topromote economic growth.

2018

Daishi

Corporate name
The Nagaoka SixtyNinth Bank established changed to The
Established via a merger Hokuetsu Bank

1896

Hokuetsu

Securities

by The Sixty-Ninth Bankand The Nagaoka Bank.

The Nagaoka Bank
foundedbecame wholly
owned subsidiaries

Founded in current-day Nagaoka City in conjunction witheconomic growth such as a boom in the petroleum industry andestablishment of railway companies.

(million people)

2.5

1888
Niigata Prefecture
had the largest
population in Japan

Loans:(1.66 million)2

1 trillion¥

Deposits:

1.5

1

1 trillion

¥

1874

1880

Period of enriching the country, strengthening the armed
forces, and building new industries Modernization of Japan

Developments in
Niigata Prefecture

13

1890

1950

The Great Depression and twoworld wars

1868: Opening of Niigata Port (one ofﬁve ports opened)
1871: Creation of Niigata Prefecture
as part of the abolishmentof feudal domains andestablishment of prefectures
1876: Building of Chosei Bridge(Nagaoka City)

1880: Great ﬁre of Niigata
1886: Building of Bandai
Bridge (Niigata City)
1945: Bombing of Nagaoka
City

1960

Period of economic recovery

1970

Period of rapid economic growth

1964: National Sports
Festival in Niigata
1964: Niigata
earthquake

Period of stableeconomic growth

1973: Niigata Airport became aninternational airport

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2021

03

04

05

Value Creation Story

Communication with Stakeholders

Corporate Data

2022

Birth ofthe Daishi
Hokuetsu Bank

2023

The Daishi JCB Card

150 years since
the foundationof the Daishi
Hokuetsu BankThe Daishi DC Card
The Daishi Hokuetsu Lease

Daishi Hokuetsu Capital Partners Co., Ltd.

became wholly owned subsidiaries

Five years since theestablishment of the Daishi
Hokuetsu Financial GroupThe Hokuetsu Card
The Daishi Computer
Service

Daishi Hokuetsu IT Solutions
became a wholly owned
subsidiarybecame wholly owned
subsidiaries

Bridge Niigata became aconsolidated subsidiary(trillion yen)
9

1997
Peak population in
Niigata Prefecture(2.49 million)

8

Loans:

5 trillion

¥

7

6

5

Deposits:

4

5 trillion¥

3

Daishi Hokuetsu Bank deposits
Daishi Hokuetsu Bank loans

2

Niigata Prefecture population*Figures for 2020 and before are the totalof Daishi Bank and Hokuetsu Bank.

2000

1990

Bubble period

1982: Openingof Joetsu
Shinkansen

Prolonged economic stagnation

1988: Opening of theentire Hokuriku
Expressway was
openedBoom years of the earlyand mid 2000s

1997: The entire
Hokuhoku Lineon the Ban-etsu
Expressway was
opened2010

Global ﬁnancial crisis

2004: 7/13 ﬂood damage andChuetsu earthquake
2007: Chuetsu oﬀshore
earthquake and Niigata City
became a city designatedby government ordinance2009: National Sports Festival in
Niigata02 0 2 2 (years)

COVID-19 pandemic
Increased geopolitical risk

2011: Great East Japan Earthquake
2018: The temperature exceeded 40 degrees
Celsius for the ﬁrst time in the prefecture's
history
2020: Nationwide declaration of a state of emergency
in relation to the COVID-19 pandemic
2021: Sado Island Gold Mine nominated as a
UNESCO World Heritage Site

DAISHI HOKUETSU REPORT 2023

1980

1

Continue to contribute to the development of regional society

Daishi Hokuetsu Research & Consulting

Continuing to be a partof the community

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150 Years Since the Foundation of
the Daishi Hokuetsu Bank
Five Years Since the Establishment of
the Daishi Hokuetsu Financial GroupThe basic theme of the company s anniversary commemorative project is "sustainability," and weare implementing various initiatives aimed at sharing our ﬁrm commitment (message) to make a lasting contribution to the local community both internally and externally, thus enhancing the level oftrust and expectations in the company from stakeholders, and raising the awareness, responsibility,
and motivation of our employees. In this section, we introduce our main initiatives.

Continuing to be a partof the community

Anniversary Commemorative Logo
This anniversary is an important opportunity for us to further strength-

en our relationships with our stakeholders, so we have established alogo to encourage people to recognize the anniversary.

The logo uses deep blue and golden colors, which are known as our

corporate colors, as well as a classical typeface that expresses our long
history of 150 years. The line connected to the number 5 represents

the 150-year history of the Daishi Hokuetsu Bank and the ﬁve-year history of the Daishi Hokuetsu Financial Group, and it also uses the symbolfor inﬁnity ( ∞ ) to express the desire to continue contributing to theregion in perpetuity.

Anniversary Commemorative Logo

Payment of Commemorative Dividends
In order to thank our shareholders for theircontinued support, the company will pay a

FY2022

FY2023 (forecast)Commemorative
dividends

commemorative dividend of 5 yen per share

Per sharefor both the interim and year-end dividend in
the ﬁscal year ending March 31, 2024, equiv-

alent to an annual commemorative dividendof 10 yen per share.

The (forecast) annual dividend per share,including the commemorative dividend, willbe 140 yen, an increase of 20 yen from theprevious year, including a dividend increaseof 10 yen. See page 53 for more information

Per share120

10

yen per year

Dividend increase

yen per year

Per share10

Per share140

yen per year

yen per year

on the company s shareholder returns.

Presentation of Donations to Niigata University, a National University Corporation,
Celebrating its 75 Year Anniversary
In February 2023, the company presented a donation of 3 million yen

to Niigata University, which will celebrate its 75-year anniversary in 2024,
as part of our anniversary commemorative project. Our subsidiary, Daishi
Hokuetsu Bank, has collaborated with Niigata University in a variety ofﬁelds, having entered into a comprehensive partnership agreement withthe university in 2005, with the aim of contributing to mutual develop-

ment through cooperation across a wide range of ﬁelds, including culture,industry, education, and academia. The company supports the university's

goal of "contributing to the development of the next generation of humanresources and science, and contributing to society," and we will support

the development of human resources at the university through donations,Ceremony for presentation of donation to Niigata University

while also further deepening ties with the university to contribute to the development of local communities.

15

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Communication with Stakeholders

Corporate Data

Our subsidiary, Daishi Hokuetsu Bank, will celebratewith the local community and grown as a part of thethe 150-year anniversary of its founding in November

community, by fulﬁlling our role and mission as a re-2023, while the company will celebrate the ﬁve-year

gional bank while also responding to the ever-chang-anniversary of its establishment in October 2023.

ing environment, over a period of 150 years. Based

Our success is entirely due to the warm support andon these relationships of trust, all Group oﬃcers andpatronage of our customers, local communities, andemployees will continue to contribute to the develop-

shareholders over many years, and all of our oﬃcers

ment of the local community by leveraging our diverse

and employees would like to express their sincere

range of functions as a Group to the maximum pos-gratitude accordingly. Since our founding in 1873, thesible extent with a single purpose, thus meeting theDaishi Hokuetsu Bank has built relationships of trust

expectations of our stakeholders.

Creation of a New Sales Oﬃce forGroup Companies in the Nagaoka Area
In July 2023, as part of our anniversary commemorative project, the company consolidated and relocatedpart of its Group companies' sales oﬃces in the Nagaoka area, including the Nagaoka Head Office Business
Department of Daishi Hokuetsu Bank, our subsidiarybank, and the Head Office Business Department of
Daishi Hokuetsu Securities, to the Komehyakudawara
Place West Building, which was completed in the central urban area of Nagaoka City. By consolidating oursales oﬃces and sales personnel in this building, which
is located in the central urban area of Nagaoka City, we
will further strengthen our consulting functions throughinter-Group collaboration and contribute to the development of the local economy by maximizing Group synergies.

Komehyakudawara Place West Building

New Establishment of the Daishi Hokuetsu Museum
Within the building of our new sales oﬃce, we have created an exhibition space called Daishi Hokuetsu Museum ˜History of Nagaoka ˜, to show the history of Hokuetsu Bank, which has developed alongside Nagaoka, a key area forthe company, and the history of reconstruction and industrial development in Nagaoka. We will oﬀer this museum asa place for local residents to learn about the history of Nagaoka, while also keeping memories alive for the future.

DAISHI HOKUETSU REPORT 2023

Daishi Hokuetsu Museum

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Value Creation Story

Overview of Value Creation Story

Value Creation Story

Management
Philosophy

INPUT[ Capital to utilize ]Social andenvironmental issues●■

Declining birthrate,
aging society, and falling
population■

Advancement of DX■

Increased overseas
expansion by companies
in the prefecture
Shift to post-COVID-19
society■

Response to climatechange risk■

Growing importanceof sustainability
management■

Prolonged geopolitical risk

●

●

●

●

Financial instability inEurope and the UnitedStates■Transformation ofﬁnancial policies■

Intensiﬁcation ofcompetition with otherbanks
Increased participationin the banking businessby companies fromother industries

Sharing expertise in bothﬁnancial and non-ﬁnancial
ﬁelds by leveraging the Group's
collective strength
Accumulating expertise throughthe TSUBASA Alliance

ENGAGEMENTEngagement●(Dialogue)

A relationship of trust with thelocal community that has been
built over 150 years
A strong business foundation
Share of savings deposits andsavings in Niigata Prefecture:
40.9 %
Share of loans in Niigata Prefecture:
52.7 %▲■■

17

Prolonged low interest
rate environment andshifts in monetary policy

Ability to respond to change
and strengths as an organization
gained through the management
integration and merger

Social capital●

Changes in the business environment
surrounding the Group■

Large number of employees withﬁnancial qualiﬁcations

Intellectual capital

Issues for ﬁnancial
institutions

Environment
surrounding
ﬁnanceNumber of employees (consolidated
for the Group): 3,463▲■

Increasing Diversiﬁcation and Complexity of the
Needs of Regional Society

External
environment

Aimed atHuman capital(As of March 31, 2022, source: The
Journal of Finance)●

Nationwide Main Bank Trend Survey
Number of companies for whom
we are their main bank: 9th in
Japan(No. 5 among regional banks)(As of October 31, 2022, source:
TEIKOKU DATABANK)

Financial capital
Total assets (consolidated for the Group): 10,517.9 b i l l i o n yen● Deposits (non-consolidated): 8,616.1 b i l l i o n yen● Capital adequacy ratio (consolidated

Details

Continuing to be a partof the community

39

P.

Trust fromthe Local

Community●

for the Group)●: 10.23 %Details

43

P.

Human capital

Rating:A+ (JCR) (Daishi Hokuetsu FG andDaishi Hokuetsu Bank)

A3 (Moody s) (Daishi Hokuetsu Bank)

Business Base to Support

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05

Communication with Stakeholders

Corporate Data

As the external environment changes, the needs of regional society are becoming more diverse and complex, and the businessenvironment surrounding the company is undergoing signiﬁcant changes. Based on our Management Philosophy, the company
is boldly taking on the challenge of change, and creating new value through business activities that leverage our strengths.

As a trusted ﬁnancial group, we will continue to provide services
that live up to the expectations of customers and contribute to thedevelopment of regional society. We will boldly take on challenge
to create new value.

Creating New ValueOUTCOME[ Provide value to stakeholders ]Continue to contributeto the development oflocal communities

Value Creation Process
CONSULTING

Consulting

Customers●

Financial sector
Non-ﬁnancial sector

PROVIDINGSOLUTION

Oﬀering
solutions

Strengths of the Group
Details

Achieving Three Synergies

MergerSynergyGroup
Synergy

39

P.

TSUBASA Alliance
Synergy

Details53

P.

New Value Creation

Trusted ﬁnancial group●●

Achieving an aﬄuent lifestylethrough asset building
Increasing convenience through DX

Regional Society●

Creating a sustainable regionalsociety through solutions toenvironmental and social issues

Shareholders●●

Stable returns to shareholders
Enhancing corporate value
through timely and appropriate
information disclosure andconstructive dialogue

Employees●●

Developing a workplace environment
where employees can feel job
satisfaction and work with peace of mind
Workplace where each employee
can grow

DAISHI HOKUETSU REPORT 2023

Sound Financial Position

Provide services that live up to the expectations of customers

Continue boldly
taking on thechallenge tocreate new value

Business development by improving
proﬁtability and productivity

18

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Value Creation Story

Increasing Diversiﬁcation and Complexity of the Needs
of Regional Society and Changes in the Business
Environment Surrounding the FG
As the external environment changes, the needs of regional society are becoming more diverse and complex, and theenvironment surrounding the company is undergoing signiﬁcant changes.

External
environment
Declining birthrate,
aging society, and falling
population
Advancement of DX
Increased overseas
expansion by companies in
the prefecture

Increasing Diversiﬁcation and Complexityof the Needs of Regional Society
Financial sector
Want to raise business funds
Want to start investing in stocks● Want to introduce environmentallyfriendly equipment● Want to proceed with businesssuccession●●●

Shift to post-COVID-19
society

Non-ﬁnancial sector

Prolonged geopolitical risk

Want to hire senior managers andspecialist human resources● Want to expand sales channels● Want to enhance operational eﬃciency
through DX● Want to introduce a business process
management system● Want to conduct market and industry
research, etc.

Environment
surrounding
ﬁnanceChanges in the business environment
surrounding the Group

Response to climate change
risk
Growing importance ofsustainability management

●

Risks

Financial instability in Europe
and the United States

Decline in proﬁtability due to intensiﬁed
competition● Increase in credit costs due todeterioration in business performance ofbusiness partners

Transformation of ﬁnancial
policies

Opportunities

Intensiﬁcation of competition
with other banks
Increased participation in thebanking business by companies
from other industries●

Diﬀerentiation through consulting
capabilities● Expansion of new proﬁt opportunities
through cross-industry collaboration● Expansion of business scope based on
deregulation●

Accelerated and multifaceted changes

Prolonged low interest rateenvironment and shifts inmonetary policy

19

Want to proceed with the move tocashless payment in stores, etc.

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Corporate Data

The 2nd Medium-Term Management Plan

(Plan period: April 2021 ‒ March 2024)

Since April 2021, the company has been focused on the 2nd Medium-Term Management Plan, based on the overriding
theme of "three synergies," as we aim to create new value that meets the increasingly diverse and complex needs of regional society.
In April 2022, we added "practicing sustainability management" to our basic strategy V based on the growing importanceof addressing sustainability issues. Additionally, in April 2023, we changed our basic strategy III from "developing and enhancing human resources" to "practicing human capital management," as part of our aim to enhance the value of humancapital, which is the source of the Group's sustainable value creation and competitive advantage.

The 2ndMedium-Term
Management
Plan

After bank mergers and the birth of newbanks, we will move to a new stage
April
where we enjoy the results of mergers 2021

Priority businesschallenges

Basic strategies

FY2022
Second year of the Medium-Term
Management Plan
March
2022

March
2024

Most Important Theme
Details

Basic strategy I

Strengthen
proﬁtability
Makemanagement
more eﬃcientAchieve synergistic
effects

AchievingThree Synergies
Maximize merger
synergy

Basic strategy II

Dramatic improvements in productivity

●
●

●

New!
Basic strategy III

Maintainand improvesoundness

P.39(Changed in
April 2023)

Practicing humancapital management

Share expertise
Coordinate overlapping
functions
Reallocate businessresources

Maximize groupsynergy
Maximize the use of Group
company functions

Basic strategy IV

Improving risk
management(Added in April 2022)

Basic strategy V

Practicing sustainability
management

Take advantage of the scaleof being one of the largest
regional banks

DAISHI HOKUETSU REPORT 2023

Initiatives
essential forovercoming thepriority businesschallenges

Maximize TSUBASA
alliance synergy

20

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Sustainability Initiatives
Basic Sustainability Policy
With developments related to sustainability, including a response to climate change, gaining momentum both inJapan and overseas, the Group formulated the Daishi Hokuetsu Financial Group s Basic Sustainability Policy (the Basic
Sustainability Policy ) in order to clarify our stance and initiatives, and the Group is working as a whole to promote sustainability initiatives aimed at solving environmental and social issues facing the region.

Daishi Hokuetsu Financial Group Management Philosophy

Daishi Hokuetsu Financial Group s Basic Sustainability Policy(formulated in December 2021)

Based on our Management Philosophy, the Daishi Hokuetsu Financial Group contributes to the creationof a sustainable local community by proactively and independently addressing environmental and social issues surrounding the region from a medium- to long-term perspective.

Initiatives Targeting
Regional Issues

In order to solve environmental and other issues facing regional society, theGroup will use our collective strength to maximize our financial intermediaryfunctions and information intermediary functions in both risk management andopportunity creation, and pursue sustainable regional growth while also increasing the corporate value of the Daishi Hokuetsu Financial Group.

Initiatives Targeting
Environmental
Problems

Aiming to contribute to mitigating environmental risks such as climate change, wewill actively support customers who are tackling environmental issues, such as thecreation of a decarbonized society and the conservation of biodiversity. We will also
work to reduce the environmental impact of the corporate activities of the Daishi
Hokuetsu Financial Group.

We will respect human rights in all corporate activities.

We will comply with laws, regulations, and social norms, conduct fair and appro-

Establishing
relationships of trustwith society

priate transactions with our customers in good faith, and establish solid relationships of trust with our stakeholders through appropriate information disclosureand dialogue.

We will prioritize a stance of being close to and maintaining dialogue with re-gional society, and we will contribute to raising awareness of sustainability within
the region.

Human resource
development andimprovement of
the workplaceenvironment

As a member of the regional society, we will engage in human resource development
and awareness-raising activities to ensure that our oﬃcers and employees can act withinitiative and a sense of ownership in relation to various issues related to sustainability.
We will respect the values of each and every employee and create a healthy working
environment in which a diverse range of human resources can remain healthy and actively participate, based on fair and appropriate treatment.

Daishi Hokuetsu Financial Group ESG
Initiatives Policy

21

Daishi Hokuetsu Financial Group SDGs
Declarations

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Corporate Data

Disclosure of Status of Sustainability Initiatives Based on the Frameworkof the TCFD Recommendations
In recent years, damage from extreme weather events and large-scale natural disasters around the world has increasedin scale. In Japan, heavy rain, typhoons, and other events have caused signiﬁcant damage, contributing to the growing impact of climate change on corporate business activities.

In addition, economic security is growing in importance amid factors such as the Russian invasion of Ukraine and the

COVID-19 pandemic, and we must therefore not only continue our business operations, but also take measures to addressrisks that will impact the supply chains of our business partners.

Against this backdrop, the Group is working together to put sustainability management into practice, to maintain andimprove the environment and society while also achieving economic and corporate growth. Since the ﬁscal year ended

March 31, 2022, we have been working to enhance information disclosure, including disclosing information on sustainability initiatives, particularly climate change, based on the framework of the TCFD* (Task Force on Climate-related Financial
Disclosures) recommendations.

*TCFD (Task Force on Climate-related Financial Disclosure): A private-sector-led task force that encourages the corporate disclose of climate-related information, established by the Financial Stability Board (FSB) in December 2015.

Pro cess

1

Governance

We have established a Sustainability Promotion Committee, which is chaired by the President, and whose key members in-clude an oﬃcer responsible for operations, the Presidents of Group companies, managers of Daishi Hokuetsu Bank, and others,

as well as Internal Audit and Supervisory Committee Members from the company and Daishi Hokuetsu Bank as observers. The

committee analyzes risks and opportunities related to sustainability and deliberates strategies based on the analysis results, etc.
In May 2022, the frequency of meetings of the committee was changed from once a quarter to every month (11 meetings

were held in ﬁscal 2022), and in addition to strengthening the PDCA for sustainability initiatives, we have also established asystem for deliberating the contents of these initiatives at meetings of the Board of Directors. In such ways, we have created aframework that ensures the Board of Directors participates in decision-making and supervision related to sustainability.

Governance Organization

General Meeting of Shareholders

Board of Directors
Audit and Supervisory
Committee

Sustainability
Promotion
Committee

Human Resources
Planning Division

Regional
Revitalization
DivisionGroup Strategy
Promotion Division

Sustainability
Promotion Oﬃce

Subsidiary banks and Group companies

Auditing
Division

Risk Management
Department

General Aﬀairs
Division

DAISHI HOKUETSU REPORT 2023

Corporate Planning
Division

Executive Committee

22

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Sustainability Initiatives
Role of Each Committee, etc.

Committee, etc.

Roles related to sustainability

Main Reports and Deliberationsat Meetings of the Board of
Directors
April 2022

Receiving regular reports on
initiatives related to sustainability

Board ofDirectors●(including initiatives in responseto the TCFD recommendations),
and independently participating indecision-making and supervision

Formulation of Investment& Financing Policies thatconsider environment andsociety and setting of
Sustainable FinanceTargets and CO2 emissions
reduction targets

June 2022●

Deliberation of policies, plans,●

indicators, and target-setting

Executive
Committee

related to sustainability

Fiscal 2021 performance
report and policies forﬁscal 2022, in relation tosustainability initiatives

September 2022

Periodic reports to the Board of
Directors on the status of the FG

Outline of information
disclosure based on the
TCFD recommendations inﬁscal 2021●

s initiatives, etc., based on the
Basic Sustainability Policy

Fiscal 2022, ﬁrst quarter
performance report in relation
to sustainability initiatives

November 2022●

Performance report on
activities to promotesustainability for the ﬁrst halfof ﬁscal 2022

March 2023

Sustainability
Promotion
Committee

Deliberation of sustainability,●

formulation of strategies, etc.

Participation in "GX League"and declaration of "realizationof carbon neutrality by ﬁscal
2050"

May 2023●●

Head oﬃce of the Group, subsidiary banks,and Group companies

23

Performance report on
activities to promotesustainability for ﬁscal 2022
Policies on sustainability
initiatives in ﬁscal 2023

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Role of the Sustainability Promotion Committee
Recognizing that responding to climate change is a key

we have established subcommittees and working groupsof the TCFD. Accordingly, the Sustainability Promotion

the four categories of "utilization in business," "risk man-measures, and the Group implements measures that haveformation disclosure," and we implement the PDCA cycle

priority, the Group agrees with the recommendations

under the Sustainability Promotion Committee for each ofCommittee reviews climate change analysis and response

agement," "enhancement of human capital value," and "in-been reviewed and actively discloses related information.

for activities planned and implemented by each subcom-

In addition, in order to effectively utilize the results ofanalysis and ensure the sustainable development of theGroup, including risk management for the business con-tinuity of the Group and human resource development,

mittee and working group.

The Sustainability Promotion Committee also reviews

our response to increasing geopolitical risks, which we
consider an important issue.

Structure of the Sustainability Promotion Committee
Information
disclosure

Sustainability Promotion Committee
Chairperson: President of the FG

Utilization in business

Secretariat

Enhancement of
human capital value

Risk management

Regional Revitalization
Promotion Committee

Related togeopolitics

Coordination

CO2 Reduction
Subcommittee

Regional Business Promotion Subcommittee

Investment &Financing Policies
WG

CDP*1 WG

Scenario Analysis
WG

Portfolio Carbon
Analysis WG

Geopolitical Risk
Management
Subcommittee

BCM*2
Subcommittee

Human Capital
Value Enhancement
Subcommittee

ALM & Risk Management Committee(risk management for climate change andgeopolitical risks)

Related to climate change*1 CDP: CARBON DISCLOSURE PROJECT, a non-governmental organization (NGO) from the UK*2 BCM: Business Continuity Management

Roles of subcommittees and working groups of the Sustainability Promotion Committee
Subcommittee/WG

Role

Regional Business
Promotion Subcommittee

Utilize the results of analysis and reviews by each WG in consulting with business partners●

Conduct scenario analysis and review analysis sectors●

Calculation of credit in carbon-related sectors●

Acquisition of skills related to portfolio carbon analysis methods and implementation of analysis●

Development of engagement with business partners●

Continuous veriﬁcation of sustainable ﬁnance●Monitoring the status of investment & ﬁnancing policies●

Reviews of speciﬁed businesses●

Planning of overall measures for CO2 reduction●

Planning of overall measures to reduce energy consumption●

Planning of overall measures to reduce paper consumption

BCM Subcommittee●

Planning and implementing measures to achieve business continuity

Geopolitical Risk
Management Subcommittee●

Scenario Analysis WG

Utilization in business

Portfolio Carbon Analysis
WG
Investment & Financing
Policies WG

CO2 Reduction
Subcommittee

Risk management

Enhancement of humancapital value

Information disclosure

Human Capital
Value Enhancement
Subcommittee
Secretariat

CDP WG

Identiﬁcation of events aﬀecting the Group caused by geopolitical risks and consideration ofcountermeasures●

Consideration of measures to enhance human capital value●

Review of disclosure of information related to human capital●

Overall operation of the Sustainability Promotion Committee●

Formulation of measures for information disclosure●Collection of information related to sustainability●

Review of responses to CDP questionnaires

DAISHI HOKUETSU REPORT 2023●

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Strategy

Our Understanding of the Risks Associated with Climate Change

The Group recognizes physical risks, transition risks, and opportunities related to climate change risks on short-term (5years), medium-term (10 years), and long-term (30 years) time horizons, and we analyze their impact on the Group in both

qualitative and quantitative terms. Based on the results of these analyses, the Group works to strengthen our risk management systems and enhance our provision of information, consulting services, and solutions for customers.
Medium term (10 years):around 2030

Short term (5 years): around 2025

Long term (30 years): around 2050

Examples of physical risks
Examples of transition risks

Credit risk

Damage to customers' assets owing to ﬂoods, etc.

Market risk

Market turmoil owing to the eﬀects of extreme weather events and resulting ﬂuctuations in the valueof ﬁnancial instruments, etc.

Liquidity risk

Withdrawal of deposits and other actions by customers aﬀected by ﬂoods, etc.

Operational risk

Suspension of business operations owing to damage from ﬂoods, etc.

Examples of physical risks
Examples of transition risks

Credit risk

Negative impact on customers businesses and ﬁnancial positions
from their inability to respond to regulations and social changes

Market risk

Fluctuations in the value of ﬁnancial instruments aﬀected by thetransition to a decarbonized society, etc.

Liquidity risk

Lowering of external ratings owing to delays to our transition to a
decarbonized society and limited methods of raising funds

Operational risk

Reputational risk from our delayed transition to a decarbonizedsociety▲

Scenario Analysis Related to Climate Change

We have analyzed physical and transition risks, utilizing analysis expertise gained from the Pilot Program Support Projectfor Scenario Analysis of Climate Risks and Opportunities in Line with TCFD Recommendations (Ministry of the Environment),
in which Daishi Hokuetsu Bank participated in ﬁscal 2021. The results of the analysis are as follows.

Physical risks
We have analyzed the impact of damage to collateral, as well as the deterioration in business performance due to the stagnation of the business activitiesof our customers, in the event of a large-scale ﬂood
caused by climate change With regard to the amountof damage to collateral, we expanded the scopeof our analysis from "collateral properties in Niigata
Prefecture" accepted by Daishi Hokuetsu Bank infiscal 2021, to "all collateral properties," including
those outside Niigata Prefecture. With regard to theamount of decrease in sales, we have expanded thescope from borrowers of Daishi Hokuetsu Bank located throughout Niigata Prefecture (excluding large
corporations and public funds) to all borrowers ofDaishi Hokuetsu Bank located throughout Japan (excluding large corporations and public funds).

Transition risks
For transition risks, in addition to the electric
power and food sectors, which are sectors highly
aﬀected by climate change risk in the loan portfolio of Daishi Hokuetsu Bank, we have also added the property management and development
sectors to the scope of our analysis.

25

Scenario

Method of analysis

Scope of analysis

Results of analysis

Based on the 4°
C scenario,* we have estimated ﬂood damage based on theassumption that large-scale ﬂooding caused by climate change occurs once
every 100 years*One of the scenarios set by the Intergovernmental Panel on Climate Change(IPCC)(1)(2)

Estimate the amount of collateral
damage due to flood damage tobuildings and estimate credit costs
based on the results

Estimate the amount of sales lost
owing to the stagnation of borrowers business activities as a resultof ﬂoods, and estimate credit costs
based on the results

Real estate collateral categorized
as buildings that Daishi Hokuetsu
Bank has accepted

Borrowers of Daishi Hokuetsu Bank
(excluding large corporations andpublic funds)

Credit costs are expected to increase by around 900 million yen

Credit costs are expected to increase by around 9.6 billion yen

Credit costs are expected to increase by around 10.5 billion yen in total

Scenario

The International Energy Agency (IEA)'s Sustainable Development Scenario(SDS) and Net Zero Emissions Scenario (NZE)

Method of analysis

Under these scenarios, forecast the balance sheets and proﬁt and loss
statements of sample companies in a particular sector (2021 to 2050),
and assess business continuity for all companies in the sector● Estimate the increase in credit costs with simulations for diﬀerent categories of borrower in a particular sector based on the costs associated withtransition

Scope of analysis

Electric power, food, and property management and development sectors

Results of analysis

Credit costs are expected to increase by around 2.7 billion yen in total

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Corporate Data

Our Understanding of the Opportunities Associated with Climate
ChangeWe recognize that the primary role of ﬁnancial institutions in responding to climate change is to provide various solutions, including ﬁnancing for measures to combat climate change, to help customers transition to a decarbonized society.
Because the transition to a decarbonized society requires maintaining and improving the environment and society, while alsoachieving economic and corporate growth, the Group will contribute to raising awareness of sustainability in the region by actively sharing related information, while supporting customers' eﬀorts against climate change based on our engagement withthem.

Engagement

ConsultingOﬀering solutions

We identify and analyze
the risks and opportunities
faced by our customers as
a result of climate change
and other sustainability-related changes from various
perspectives, and share
our understanding of thebusiness environment surrounding our customers.

Based on this sharedunderstanding, we will discuss with our customers
initiatives to solve theirissues and improve sustainability.

Based on the results ofthese discussions withour customers, we will
provide appropriate solutions in both ﬁnancial andnon-ﬁnancial areas, while
making maximum use of
the company s group synergy.

Accumulation of expertise related to sustainability, including climate change
Contribution to raising awareness of sustainability in the region throughactively sharing information

TOPICS

Economic activity

Economic
activitySociety
Globalenvironment

Participation in the GX League
GX

Declaration" announced in March 2023, the Group isforming economic and social systems as a whole tomeasures such as the establishment of environmen-

On May 15, 2023, the company joined the

League*2, which was established with the aim of trans-

working to reduce our own CO2 emissions throughachieve carbon neutrality.*1

tally friendly branches with ZEB certification and theCompanies participating in the GX League are re-quired to work to achieve carbon neutrality themselvesin order to achieve carbon neutrality in the world as awhole, while also collaborating with various stakeholders to lead eﬀorts to achieve this transformation.

With the aim of achieving the "2050 Carbon Neutral

introduction of electric vehicles. At the same time, theGroup will also utilize the GX League framework toreturn our knowledge and expertise to customers andsupport initiatives aimed at reducing CO2 emissions

throughout the region as a whole based on our engagement with our customers.

*1 Reducing the total amount of CO2 emissions to net zero, by subtracting the amount absorbed through aﬀorestation, forest management,

Participated in May
2023

etc.

*2 A forum for companies actively engaged in GX to engage in discussions aimed at the transformation of economic and social systems asa whole and put initiatives for the creation of new markets into pracment, academia, and the ﬁnancial sector, established based on the

Ministry of Economy, Trade and Industry's GX (Green Transformation)
Basic Concept

DAISHI HOKUETSU REPORT 2023

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Risk management

The Group has established the Investment & Financing Policies that consider environment and society, thereby clarifying our commitment to contributing to the creation of a sustainable regional society through investment and ﬁnancing. While actively supporting customers who are working to solve environmental and social issues in local communities, we also identify businesses, etc., expected to have a negative impact on the environment and society, recognize
them as risks to local communities and the Group, and make prudent investment and loan decisions accordingly.
In our risk management framework, we recognize that climate change risk has a signiﬁcant impact on the global environment and the regional economy. Accordingly, we are building a risk management system that takes into accountthe results of these analyses in the management of credit risk, market risk, liquidity risk, and operational risk.

Daishi Hokuetsu Financial Group Investment & Financial Policies thatconsider environment and society (established May 2022)
Through investments and loans, Daishi Hokuetsu Financial Group will actively support a range of activities that
contribute to solving various environmental and social problems aﬀecting local communities.
In addition, with regard to investments and loans in the following speciﬁed businesses, etc., expected to impact
the sustainability of society, the Company will endeavor to mitigate or avoid the impact of such businesses, etc.,
according to the stated policy.

Coal-ﬁred thermal
power plants

Deforestation
projects

Palm oil plantation
development
projects

Arms manufacturingbusinesses

As a general rule, we will not invest in or ﬁnance the construction of new coal-ﬁred power plants.
When considering exceptional measures, however, in light of conditions related to electric power, resources, and other factors in countries and regions that have no choice but to rely on coal-ﬁred thermal power, we will carefully consider what measures to take, comprehensively taking into consideration international guidelines such as the OECD Arrangement on Oﬃcially Supported Export Credits,
power generation eﬃciency, impact on the environment and local communities, and other factors.

When considering investments and loans for deforestation projects, we will make decisions based on careful consideration of the status of acquisition of any internationallyrecognized certiﬁcations (FSC*1 and PEFC*2), consideration for the environment, the occurrence of any issues with local communities, and other factors.

With a view to protecting the environment and human rights, when considering investments and loans for palm oil plantation development projects, we will make decisions
based on careful consideration of the status of acquisition of any international certiﬁcations (RSPO*3), consideration for the environment, human rights violations, the occurrenceof any issues with local communities, and other factors.

We will not invest in or provide loans to companies that manufacture inhumane weapons,such as cluster munitions.

*1 Forest Stewardship Council An international organization that endorses "appropriate forest stewardship"*2 Programme for the Endorsement of Forest Certification Forest stewardship endorsement, in which a third party certifies that forestry is conducted inaccordance with international standards (intergovernmental process standards) established for sustainable forest stewardship*3 Roundtable on Sustainable Palm Oil A nonproﬁt organization operating in seven sectors related to palm oil (palm oil production, oil extraction and trade,consumer product manufacturing, retail, banking and investment companies, environmental NGOs, and social and development NGOs)▲

Ratio of Carbon-related Assets to Total Credit Outstanding

As of the end of March 2023, carbon-related assets* accounted for 18.5% of loans, etc., (including private placement
bonds) at Daishi Hokuetsu Bank.
* Carbon-related assets are deﬁned as the following four sectors: electric power and energy (excluding water supply and renewable energy power generation),transportation,materials and buildings, and agriculture, food, and forest products. The credit outstanding to customers whose main businesses are in thesefour sectors is aggregated.

27

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Corporate Data

Indicators and Targets

Sustainable Finance Target
The Group aims to execute sustainable ﬁnance totaling 1.5 trillion yen (including 1 trillion yen in the environmental sector) by ﬁscal 2030.
Fiscal 2030 target
Cumulative amountexecuted from ﬁscal
2021 onward¥1.5 trillion¥90.1 billion
Fiscal2021¥244.6

Details of target
Targetamount to
be executed¥1.5 trillion(including ¥1 trillion
in the environmental
sector)Deﬁnition

Loans, investments(including equity
investments), and leasetransactions that
contribute to theresolution ofenvironmental andsocial issues

Target period

Fiscal 2021 to ﬁscal
2030

billionFiscal 2022
(cumulative)

Fiscal 2030
(cumulative)

Cumulative results throughﬁscal 2022
(100 million yen)
Loan

2,302

Investments

121

Leases

23

Total

2,446

CO2 Emissions Reduction Target
In March 2023, the Group announced the 2050 Carbon Neutral Declaration, setting a goal of reducing our own CO2emissions (covering Scope 1 and Scope 2*) to net zero by ﬁscal 2050. Based on this declaration, the Group will accelerate
eﬀorts to reduce our own CO2 emissions, while also supporting our customers in their eﬀorts to reduce CO2 emissions, as
we work to create a decarbonized society in the region.

-

34.4%

Details of target

reduction

65%-

Fiscal 2050

reduction

CarbonneutralReduce the Group s CO2 emissions (Scope 1 andScope 2) by 65% from fiscal 2013 levels by fiscal
2030[Added in March 2023]
Reduce the Group s CO2 emissions (Scope 1 andScope 2) to net zero (carbon neutral) by ﬁscal 2050

Actual results in ﬁscal 2022
CO2 emissions reduction rate (vs.
Fiscal 2013

Fiscal 2022

Fiscal 2030

ﬁscal 2013)

Fiscal 2050

-34.4%*Scope 1: Direct emissions associated with fuel use by the company; Scope 2: Indirect emissions associated with the use of energy supplied by other companies< Trends in CO2 Emissions by Scope >Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Vs. ﬁscal 2013

Scope14,512t

3,797t

4,066t

3,677t3,304t-26.7%

Scope2

11,743t

9,136t

9,569t

7,706t

7,357t-37.3%

Total

16,255t

12,933t

13,635t

11,383t

10,661t-34.4%*CO2 emissions by Scope are measured based on the amount of each type of energy used (electricity, gas, etc.) and CO2 emissions factors (for each ﬁscal year and company) at each Group company.
Scope 2 CO2 emissions are aﬀected by the CO2 conversion factor of electric power (which varies annually depending on the amount of CO2 emitted by electric powercompanies during power generation). Therefore, even if the amount of electricity used is the same, the amount of CO2 emissions by users varies for each electric powercompany and ﬁscal year.

DAISHI HOKUETSU REPORT 2023

Fiscal 201328

Sustainability Initiatives
Scope 3 Category 15 Estimation▲

DAISHI HOKUETSU REPORT 2023

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Scope 3 category 15 emissions, which is refers to greenhouse gas emissions emitted by recipients of investments andloans, accounts for a large portion of Scope 3 emissions for ﬁnancial institutions. Accordingly, we have calculated theseemissions for investment and loans provided by Daishi Hokuetsu Bank to domestic corporations (excluding projectﬁnance), with reference to the measurement method of the PCAF*1 standard. We will continue to increase the sophistication of our measurement.
Industry

Emissions*2(t-CO2)

Carbon intensity*3

Industry

Emissions*2(t-CO2)Agriculture

91,679

8.05

Automobiles andparts

182,399

3.75

Paper and forestry

250,557

12.07

Electric power

952,408

29.08

Food and beverages

516,695

3.71

Real estate
management anddevelopment

133,242

1.09

Metals and mining

568,879

20.82

Land transport

352,995

3.51

Chemicals

295,193

6.27

Shipping

178,205

27.33

Oil and gas

123,780

2.83

Air transport

1,887

5.61

Building materials
and capital goods

946,466

4.93

Other

3,348,275

2.04

Total

7,942,660

Carbon intensity*3*1 Partnership for Carbon Accounting Financials: An international initiative to develop methods for measuring and disclosing greenhouse gas emissions in ﬁnancial
institutions' investment and loan portfolios*2 Emissions: The emissions of each industry are based on the total emissions of borrowers calculated based on the following deﬁnitions for each industry.
(1): Among borrowers with a head oﬃce in Niigata Prefecture, public ﬁgures for 10 listed companies (and four of their aﬃliates) that disclose theiremissions(2): For borrowers other than (1), the ﬁgure obtained by multiplying the estimated value calculated on the basis of emission intensity for each industry by the share of ﬁnancing attributable to Daishi Hokuetsu Bank (outstanding loan balance of Daishi Hokuetsu Bank/total funds procured by
the borrower)*3 Carbon intensity: Carbon intensity refers to the amount of CO2 emissions (t-CO2) per unit of sales (1 million yen) of the borrower, and is used to determine theamount of CO2 emissions according to the sales of the borrower. The higher the carbon intensity, the more CO2 is emitted relative to sales.
The "carbon intensity" in the table is calculated using the following formula for each industry, and we calculate the carbon intensity for eachindustry using the weighted average of the outstanding loan balance of Daishi Hokuetsu Bank (outstanding loan balance in the formula = outstanding loan balance of Daishi Hokuetsu Bank).
Carbon intensity = ∑ [borrower s carbon intensity × outstanding loan balance of the borrower] / total outstanding loan balance by industry

TOPICS

Portfolio carbon analysis in collaboration with banks participating in the TSUBASA AllianceUtilizing the framework of the TSUBASA Alliance, Daishi Hokuetsu Bank,
together with The Chugoku Bank, Ltd., The Musashino Bank, Ltd., and The
Gunma Bank, Ltd., which participate in the Alliance, performed "portfolio
carbon analysis,*" with advice from Deloitte Touche Tohmatsu LLC.
We will utilize the knowledge and expertise we have accumulated
through this initiative to provide higher quality information disclosure andsupport the decarbonization eﬀorts of our customers.
The results of the analysis for fiscal 2022 are provided in "Scope 3
Category 15 Estimation" above.
*A process whereby the greenhouse gas emissions of investment and loan recipients are calculated,
and the results are analyzed based on the investment and loan portfolios of ﬁnancial institutions

29

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Corporate Data

Provision of Consulting Solutions to Promote Sustainability Among Customers▲

Began Oﬀering Daishi Hokuetsu SDGs Consulting Service

Daishi Hokuetsu Bank and Daishi Hokuetsu Research &Feepaying

Free

SDGs
Consulting Service

SDGs
Diagnosis Service

Consulting oﬀer the Daishi Hokuetsu SDGs Consulting Service,in order to support eﬀorts to achieve the SDGs in the region. In

Free of charge up to "2 Provide results report"

Fee-paying from 3 “SDGs Consulting Service” (165,000 yen)

this service, we diagnose corporate clients' efforts to achieve
the SDGs and provide consulting based on the results. We also
support clients creating their own SDGs declarations. As of the

Check sheet
answers

Provideresults reportend of March 2023, we had provided support in a cumulative

SDGs
Consulting
services

Support forexternal PR

total of over 1,700 cases since the launch of the service.

▲Oﬀering of Sustainable Finance Products

Daishi Hokuetsu Bank oﬀers a variety of sustainable ﬁnance products, such as Sustainability Linked Finance, in whichcustomers set targets (SPTs) related to the SDGs and ESG, and the applicable interest rate and other terms of the loans or
private placement bonds ﬂuctuate according to the level of achievement of those targets. Under this system, an externalorganization will evaluate (third-party evaluation) the appropriateness of clients' SPTs, etc., and by obtaining an objective
evaluation, companies can eﬀectively publicize their eﬀorts to stakeholders.

Sustainable Finance Products oﬀered by Daishi Hokuetsu BankFor listed companies and large andmedium-sized companies

Loan agreement
Setting ESG and SDGs-related targets
Report on the results of eﬀorts
Reporting, etc.

Customers
Acquisition ofevaluation

Assessment by Rating and Investment Information, Inc.
(R&I)
Sustainability linked ﬁnance (from August 2021)
Sustainability ﬁnance (from August 2021)

Evaluation by
Positive Impact Finance (from March 2023)
SDGs Green Finance (from March 2023)

New!

SDGs-linked Finance (from June 2022)

For SMEs
SDGs Support Loan (from March 2022)

No need for
acquisitionof external
evaluation

Loan amount¥100 million

Fostering and promotingor less

awareness of SDGs

The Daishi Hokuetsu Lease was selected as a designated leasing company for the third consecutive year for the FY2023
ESG Lease Promotion Project for Building a Carbon-Free Society conducted by the Ministry of the Environment. This project promotes ESG leasing initiatives and supports decarbonization through subsidies for a certain percentage of total lease
payments from the Ministry of the Environment when companies introduce decarbonized equipment through leasing.

DAISHI HOKUETSU REPORT 2023▲

Selected for the FY2023 ESG Lease Promotion Project for Building a Carbon-Free
Society by the Ministry of the Environment30

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Sustainability Initiatives
The company s Sustainability Initiatives▲

Establishment of environmentally friendly branches

At the Sekiya Branch, which was newly constructed and relocated in September 2022, it was recognized that Daishi
Hokuetsu Bank would achieve a 100% reduction in primary energy consumption, resulting in the ﬁrst "ZEB*1 (Net Zero Energy
Building)" certiﬁcation in Niigata Prefecture. In addition, Daishi Hokuetsu Bank also obtained Nearly ZEB certiﬁcation at the
Shirone Branch and the Kamo Branch, which were newly constructed and relocated in November 2022 and January 2023,
respectively. In addition, the Sekiya and Kamo branches adopted carbon-neutral city gas.*2*1 ZEB (Net Zero Energy Building)An abbreviation for Net Zero Energy Building, which refers to buildings that aim to achieve a comfortable indoor environment, while reducing
primary energy consumption to zero by installing energy-saving and generating equipment. It is classiﬁed into three stages of certiﬁcation according to the rate of reduction in energy consumption.
ZEB : 100% reduction or more; Nearly ZEB: 75% reduction or more; ZEB Ready: 50% reduction or more
*2 Carbon-neutral city gas
By oﬀsetting (carbon oﬀset) the greenhouse gases generated in processes from natural gas extraction to combustion with CO2 credits, theCO2 generated is eﬀectively considered to be zero.

ZEB

Daishi Hokuetsu Bank Sekiya Branch

Nearly ZEB

Nearly ZEB

Daishi Hokuetsu Bank Shirone Branch

Daishi Hokuetsu Bank Kamo Branch▲

Introduction of CO2-free electric power generated from renewable energy sources

In April 2023, the Group introduced Yoriso, Renewable
Energy Electricity CO2-free electric power generated fromrenewable energy, oﬀered by Tohoku Electric Power Co.,
Inc., at 11 sites where Daishi Hokuetsu Bank and otherGroup companies operate.

31

Expected

reduction
in CO2

2,789 tons per year (equivalent to 17.2% of theGroup's CO2 emissions in 2013)

emissions

Locationsintroduced

Daishi Hokuetsu Bank Head Oﬃce, Abumi BusinessCenter, Mishima Business Center, Document Storage
Center, Niigata Training Center, Daishi Hokuetsu
Niihori Building, Hokuetsu Higashi Building, Niigata
Station South Branch, Sanjo Branch, Kashiwazaki
Branch, Takada Business Department

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New Value Creation
The company is committed to creating new value that contributes to the development of regional society through a process ofvalue creation based on dialogue (engagement).

Group Functions Aimed at Creating New Value
We are creating new value by linking the Group functions of the company to provide timely and optimal services in a onestop manner, with the aim of solving various issues facing customers and regional society.

BANK

Non-ﬁnancial
sectorIntroduction ofhuman resources
Want to hire senior
managers andspecialist humanresources

Banking

Securities

Want to raise business funds
Want to build assets for the future
Want to discuss issues
other than ﬁnancein stocks
Want to start investingin an investment trust

Regional
trading company

LeasesWant to introduce
environmentally friendly
equipment while
controlling upfront
expenses

Want to expand sales channels
Want to enhance
operational eﬃciency
through DX

Contributing to thedevelopment of regional society
by creating new value

New!
April 2023
Became consolidated
subsidiary of the GroupThe Hokuetsu
Leasing

Consulting andresearch
Want to makea business plan.
Want to conduct market
and industry research,

FinancialsectorFund management
Want to proceed withbusiness succession

Systems

Card

Want to introduce abusiness process
management system

Want to proceed with themove to cashless
payment in stores

The Daishi
Computer Service

New!
April 2023
100% subsidiaryof the FG +company namechangeWant to start a new
business

The Daishi JCB Card
The Daishi DC Card
The Hokuetsu Card

*In addition, The Daishi Guaranty and The Hokuetsu Credit Guarantee, which provide guarantee services for housing loans, etc., are both Group companies.

Reorganization to Expand Business Domain (April 2023) ‒ Strengthen Group Structure to Promote DX ‒By making Daishi Hokuetsu IT Solutions Co., Ltd. andBridge Niigata Co., Ltd. consolidated subsidiaries, which
the company did in April 2023, we have established a system that enables the Group to complete the entire process
in-house, from identifying issues based on our understandingof the DX promotion-related needs of companies and local
governments in Niigata Prefecture, to the adoption of IT. We

also plan to integrate The Daishi Computer Service Co., Ltd.
into Daishi Hokuetsu Bank in October 2023, as part of ouraim to strengthen the in-house capabilities of our banking
systems department, etc.
In order to resolve regional issues, we will further exercise
our consulting functions and work as a group to support theeﬀorts of our business partners to improve productivity.

Further increases in theimportance of DX

Building a system that enables the Group to complete
everything within the Group, from ascertaining needs toidentifying issues and the adoption of IT

Rapid progress in IT
technology●●

Actively supporting eﬀorts to improve productivity improvement among business partners and local governments in Niigata Prefecture

Systems

Regional trading company

Falling population,
declining birthrate, andaging society
Responding to environmental changes caused by the
impact of COVID-19

Promoting ﬁnancial DX in the Group●●●

Integration of The Daishi Computer Service into the banking systems department, etc. (scheduled for October 2023)
Strengthen IT human resources and further strengthen
the Group's in-house capabilities
Continuing to provide products and services using digital technology and improve business processes

Systems
Focusing on system development
for banks also undertaking
system administration for regional
companies
Strengths in banking systemdevelopment

New participation in the
Group

Transactions with companies ina wide range of industries bothwithin and outside the prefecture
Strengths in system development
at regional enterprises andregional government,

Strengths in consulting
to improve productivity

Next!

(from October 2023)
Consolidated into

DAISHI HOKUETSU REPORT 2023

Support for DX promotion by companies and local
governments in the prefectureContinued focus on
DX support and DX
utilization

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New Value Creation
Initiatives to Improve the Corporate Value of Local Companies andEnhance Convenience for Retail Customers▲

Initiatives For Financing Closely Linked to Local Communities

Daishi Hokuetsu Bank provides financial and information intermediation tofacilitate the smooth provision of funds to SMEs, which play an important role insupporting regional society and the local economy. In addition, we also actively

provide management support tailored to companies life stages. We will continue to contribute to the development of the regional society and economy by

Disclosure Magazine 2023

https://www.dhfg.co.jp/
financial/ir/disclo/providing solutions that meet the needs and challenges of our customers.

For details of our initiatives for ﬁnancing closely linked to local communities,

please refer to the "Disclosure Magazine" posted on the company s website.
▲

Support for Customers Considering Business Startups and Re-startups

The company is making concerted eﬀorts to maintain and create employment

opportunities in local communities, as part of eﬀorts to improve the issues ofthe falling population and low startup rate faced by Niigata Prefecture.

At Daishi Hokuetsu Bank, the Group acts as a whole to provide one-stop

support to prospective founders, business operators in the early years of theirbusiness, and business operators considering a second founding, covering
areas from business ideas to the formulation of specific earnings plans andfundraising. In the ﬁscal year ended March 2023, Daishi Hokuetsu Bank was involved in 1,963 startups and second startups. At the Niigata Power up Salon

held in cooperation with Daishi Hokuetsu Research & Consulting, we provide

a wide range of consultation services, from business ideas to speciﬁc earnings
plans and action plans, to business operators who are considering a startup or

second startups, those who have just founded businesses, and those who are

Information About Niigata Power Up Salon

considering measures to respond to the new normal.
▲

Support for Customers who Want to Proceed with Business Succession

In Niigata Prefecture, the rate of businesses without

worked closely with senior managers faced with a lack oforder to maintain employment opportunities in the local

lenges faced by clients, and collaborated with Group com-essential for us as a local ﬁnancial institution that we sup-and assets. In August 2022, Daishi Hokuetsu Bank playedin addition to curbing business closures.

M&A Alliance, together with ﬁve other ﬁnancial institutions

for customers in the areas of business succession andment in the region, while also contributing to the sustain-

which have been expanded as a result of the merger, toment of customers corporate value, by supporting smootha whole among neighboring branches.

ﬁnancial institutions bringing their customers' concerns andport for business succession to 1,683 clients, in which we

issue for regional companies in Niigata Prefecture.

successors is said to be more than 50%. Accordingly, in

successors to oﬀer tailor-made responses to various chal-community and achieve sustainable economic growth, it ispanies to ensure the smooth succession of management

port business succession through M&A and other means,a central role in establishing the Niigata Regional Finance

Daishi Hokuetsu Bank has further strengthened support

in the prefecture. This alliance aims to maintain employ-

M&A, by utilizing our business base and external networks,

able growth of the regional economy and the enhance-

share expertise and business activities covering the area as

business succession through M&A, with member regional

In the ﬁscal year ended March 2023, we provided sup-issues related to business succession, which is an urgent

Niigata Regional Finance M&A Alliance
Company seeking transfer
Needs

Support[Members] Financial institutions with ahead oﬃce in Niigata PrefectureMember ﬁnancial institutions

Secretariat

6 companies

Company seeking to acquire
Needs

Support(As of March 2023)

ObserverNiigata Prefecture Business Succession and Handover Support Center

33

01

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Message from Management

Overview of the Daishi Hokuetsu FG

TOPICSCHAPTER

03

Value Creation Story

04

05

Communication with Stakeholders

Corporate Data

Support for Business Succession, Startups, and Re-startups Through the Fund Business

Establishment of New Equity Business Line
Daishi Hokuetsu Capital Partners, a specialist invest-

with hands-on participation in management.

ment subsidiary of the company, established the No. 1

In April 2023, we established a new equity business

Daishi Hokuetsu Regional Initiatives Investment Limited

line within the Daishi Hokuetsu Bank Business Headquar-

Hokuetsu Regional Initiatives Investment Limited Partner-

Hokuetsu Capital Partners, we will provide capital funds

Partnership (December 2021) and the No. 2 Daishi

ters. Through efforts to further collaborate with Daishi

ship (April 2023) in partnership with Daishi Hokuetsu

and management support with hands-on participation

Bank, with the objective of supporting business succes-

in management, thereby contributing to the sustainablesion, startups, and new business development, which are

growth of the regional economy and the enhancement

pressing issues for local companies. Through the Fund,of the corporate value of investee companies.

we will provide capital funds and management support
Investment
Operation

Investee companies

Daishi Hokuetsu Regional
Initiatives Fund

Investment
Management
supportInvestment

Coordination

Business HQ: newly

Each Daishi Hokuetsu FG

established equity

Group company

business line

Management support

Outside experts(April 2023)▲

Support for Resolving Human Resources Issues Faced by Regional Companies

Daishi Hokuetsu Career Bridge, which commenced operations

faced by companies in the prefecture and to actively support

regional employment opportunities by supporting the resolution

personnel. Our business partners have signiﬁcant needs in thisin October 2019, is focusing on the maintenance and creation ofof human resource issues faced by companies in the prefecture

through two businesses: personnel-matching business and thepersonnel development solution business.

In the personnel-matching business, we support the matching

their growth by incorporating the expertise and skills of thesearea. From the launch of the recruitment business to the end of
March 2023, we received more than 1,400 consultations, andthe number of hiring decisions has climbed to over 300.

In the personnel development solutions business, we holdof human resources suited to the needs of regional companies,

training and seminars for the development of human resourcessary for the business continuity of regional companies and spe-areas such as the promotion of employment for students withincentering on senior management and managers who are necescialist human resources who can support business expansion,etc. In addition, we also provide personnel matching services

for part-time and secondary jobs to introduce employees withhighly specialized skills, mainly in the Tokyo metropolitan area,
to companies in the prefecture. It suggests the use of personnel

with dual or side occupations in order to solve the problems

and outside Niigata who are either coming or returning to theprefecture. We are steadily expanding this business, including
winning a contract for the Project for Development of Womenand Next Generation General Managers (Niigata Prefecture) in
September 2022.

Seminar at Project for Development of Women and Next
Generation General Managers

DAISHI HOKUETSU REPORT 2023

Seminar for New Employees in the
HR Development Support Programat companies in the prefecture, and we also provide support in

34

03

New Value Creation
Support for Customers Aiming to Expand Sales Channels▲

DAISHI HOKUETSU REPORT 2023

CHAPTER

Value Creation Story

Although Niigata Prefecture has strengths related to regional resources, such as abundant nature and distinctive
regional industries, as well as being a major transportation
hub on the Sea of Japan side of Japan, these strengths havenot been fully leveraged. In addition, an increasing numberof regional companies are interested in expanding their sales
channels outside the prefecture and overseas, in anticipationof a shrinking market in the prefecture due to a declining
and aging population. Taking advantage of the rich range of
information and extensive network of the Daishi Hokuetsu
Financial Group, Bridge Niigata, a regional trading company, is working to expand sales channels for regional companies in the sales channel development business.
At the Bridge Niigata permanent antenna shop that
opened in October 2019 in Nihonbashi, Chuo-ku, Tokyo,
Bridge Niigata manages all operations related to the sale ofproducts from Niigata Prefecture, from planning and procurement to in-store sales. The range of goods oﬀered has ex-

panded to approximately 800 products, with approximately
250 products available on its own e-commerce website. In
addition, the shop also has staff dedicated to developing
sales channels for corporations in the Tokyo metropolitanarea, and is actively sharing information on the attractivenessof local products, the technological capabilities of companies in Niigata, and other information. The shop also returns
market information, such as people s views of products from
Niigata in the Tokyo metropolitan area and related needs, tocompanies in the prefecture, thereby contributing to increasing the added value of prefectural products.
In addition, in July 2022, we won a contract for the "Fiscal
2022 Support Operations for Prefectural Product Marketing
Channel Development in Vietnam" (Niigata Prefecture), in
which we held seminars related to the development of marketing channels in Vietnam and provided opportunities forindividual online business negotiations between companies
in Niigata Prefecture and Vietnamese buyers.

Supporting the expansion of sales channels for Niigata Prefecture products

Bridge Niigata antenna shop

Full-scale operation of the Bridge Niigata
e-commerce website (from ﬁscal 2021)

Establishment of Bridge Niigata
antenna shop on the ﬁrst ﬂoor of theTokyo Branch of Daishi Hokuetsu
Bankavailable on the e-commerce website

Expansion in the number of
products oﬀered toapproximately

Exterior of the antenna shop

800

Expansion in the number of products

to approximately

250

Bridge Niigata online store

https://bridge-niigata.com/

Products▲

Support for Customers Working to Improve Management

Daishi Hokuetsu Research & Consulting provides management consulting services, such as management consulting,support for the formulation of management strategies andbusiness plans, support for applications for various subsidies, and support for the restructuring of personnel systems. In addition, Daishi Hokuetsu Research & Consulting
engages in economic surveys and research on industry
trends and other factors, provides human resource development services, such as holding seminars in conjunction
with Daishi Hokuetsu Career Bridge, and oﬀers membershipservices, such as issuing journals for members.
In the management consulting business, Daishi Hokuetsu
Research & Consulting provides support for the formula-

35

tion of management improvement plans to businesses thathave financial problems, such as the burden of repaying
to formulate their own management improvement plans,etc., thereby supporting management improvement, business revitalization, and a renewed sense of taking on new
challenges at SMEs, etc. Under the Small and Medium
Enterprise Agency's "Support for the Formulation ofManagement Improvement Plans (commonly referred to as"Project 405"), Daishi Hokuetsu Research & Consulting was
the company with the highest number of cases (42 in theﬁscal year ended March 2023) in Niigata Prefecture, which
in turn had the highest number of 405 cases in Japan (110cases).

01

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Overview of the Daishi Hokuetsu FG

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Value Creation Story

04

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Communication with Stakeholders

Corporate Data▲

Initiatives to Support the Eﬀorts of Customers to Improve Operational Eﬃciency and Improve
Convenience Through DX
Support for Customers Aiming to Improve Operational Eﬃciency through DX

In Niigata Prefecture, a labor shortage due to a declin-

region as a whole, we are also strengthening cooperationsuch as work-style reforms, have made the improvement

trading company, we have won contracts for many proj-

companies must promote DX.

ernment.

ing the DX All Branch Campaign, a Group-wide initiative

ﬁnancial institution in Niigata Prefecture to be certiﬁed as

improving the productivity of business partners, starting

tem established by the Ministry of Economy, Trade and In-

ready compiled a database of approximately 2,000 needs,

multifaceted problem-solving capabilities to actively

ing population and changes in the business environment,with the government, and at Bridge Niigata, a regionalof productivity a major issue for companies, meaning thatects to promote DX from the national and prefectural gov-

Since October 2022, the company has been implement-

In November 2022, the company also became the ﬁrst

to address this regional issue through measures such asa Certiﬁed DX Operator under the DX certiﬁcation sys-with business feasibility assessments. The Group has al-

dustry. The company will continue to exercise the Group's

including the introduction of online banking.

support the eﬀorts of customers to improve productivity

Additionally, in order to promote DX throughout thethrough the utilization of digital technologies.

< *Main operations consigned at Bridge Niigata >May 2022

Regional DX Promotion Activity Support Project (Fiscal 2022
/ Ministry of Economy, Trade and Industry)

July 2022

DX Promotion Support Operations (Fiscal 2022 / Ministry of
Economy, Trade and Industry)

April 2023

Project to Develop Regional DX Promotion Environment (Fiscal
2022 amendment / Ministry of Economy, Trade and Industry)

Provision of CONNECT-BIZ, a portal site for business operators
In April 2023, Daishi Hokuetsu Bank began offering

CONNECT-BIZ,

a portal site for companies and sole

proprietors, with the aim of supporting their eﬀorts to improve customer convenience and operational eﬃciency.

In CONNECT-BIZ, we provide functions to enhance

information sharing within companies, as well as welfare
services for employees. There are also functions for in-

ternal bulletin boards and group messages, in addition

to a safety conﬁrmation for employees in the event of adisaster and a video streaming function to view videos
shared by the bank. Fund management, invoice manage-

ment, and other services oﬀered by partners are also available.

Provision of My Page personalized online service
In April 2023, Daishi Hokuetsu Bank began oﬀering a personalized online service called "My

to perform actions such as submitting formal applications for mortgage loans and contacting
bank staﬀ online, through the creation of web pages dedicated to each customer. This allows

customers to apply for a mortgage loan at any time, regardless of time and location, and signiﬁcantly reduces the time required to complete the application process.

As an important channel for connecting customers with the bank, we are considering ex-

panding the functions of My Page to enable not only mortgage application procedures but
also the electronic delivery of mailings and acceptance of various procedures in the future.

DAISHI HOKUETSU REPORT 2023

Page," with the aim of improving convenience for customers. "My Page" enables customers

36

DAISHI HOKUETSU REPORT 2023

CHAPTER

03

Value Creation Story

New Value Creation
Provision of smartphone apps
To increase customer convenience, Daishi Hokuetsu
Bank offers smartphone apps such as the Daishi
Hokuetsu Little Bank app, which has functions such as
checking the balance of accounts, checking the detailsof deposits and withdrawals, and providing information
on financial products tailored to customer life events,
and the Daishi Hokuetsu Passbook App, a digital passbook app that enables customers to check the details of
deposits and withdrawals for up to 10 years.
In October 2022, we completely overhauled the"Daishi Hokuetsu Little Bank" smartphone app to makeYou can check yourdeposit details for up
to three years!

List the balances of time deposits,
investment trusts, foreign currency
deposits, and loans in one place!

it more convenient for customers. In addition to checking the balance of multiple accounts and the details of
deposits and withdrawals for up to three years, it is now
possible to perform transfers between accounts in theuser's name, as well as lending and repayment transactions for card loan accounts.
In the last four years, the number of free shared "Daishi
Hokuetsu IDs," which enable users to access these apps
and the services of partner companies such as household spending apps, has increased by about 200,000.

Card loans can be borrowed,
repaid, and transferred!

Number of Daishi Hokuetsu IDs (individuals) (approximate)(cases)210,000

In four years

Added more than

4,100
FY2018FY2022200,000
IDs

Support for improving the administrative eﬃciency of school operations
Daishi Hokuetsu Bank is implementing initiatives aimed at digitalizing school operations on a trial basis, in order toimprove administrative eﬃciency for school staﬀ and convenience for parents.
In March 2023, we launched a dedicated Online Account Transfer Application website for some private schools in
Niigata Prefecture. In April 2023, we gradually introduced BIZ-WEB, an online banking service for corporations oﬀered
by Daishi Hokuetsu Bank, to some public elementary and junior high schools in Niigata Prefecture.

I want to
reduceworking time

Online Account Transfer
Application Service

Trial establishment of a website
dedicated to schools

I want tocomplete theprocedures
without goingto thecounter

I don't wantto take mypersonal
information out"BIZ-WEB" online banking
Utilization for account transfers andother administrative functions ofelementary and junior high schools

No need to visit the counter in a branch, ﬁll out
an application form, or provide a seal
Applications are possible online 24 hours a day● Schools can obtain account transfer application
information as data
Prevents incorrect input of information and reduces working time●

Eﬀects after adoption

Needs of school staﬀ andparents/guardians

It is bothersome
to ﬁll out thedetails on paper●●●

No need to visit the counter in a branch
Reduces the risk of a loss of personal information

Increasing Customer Convenience by Standardizing Inheritance Procedures
In Niigata Prefecture, where the company is based, the population is aging faster than the national average, and thenumber of procedures related to inheritance is increasing year by year at ﬁnancial institutions in the prefecture. For inheritance procedures in the past, each ﬁnancial institution had diﬀerent forms for customers to ﬁll out and documents
to prepare, which was complicated for customers. For this reason, many residents of the prefecture gave us feedback
to the eﬀect that they wanted us to make it possible to complete inheritance procedures in a uniﬁed manner.
In response to this feedback, Daishi Hokuetsu Bank, together with The Taiko Bank,
Ltd., another regional bank in Niigata Prefecture, began standardizing inheritanceprocedures for deposits, etc. in November 2022, in order to improve convenience
for residents of the prefecture. In addition, since April 2023, all shinkin banks andcredit unions with head offices in Niigata Prefecture, as well as the Niigata Labor
Bank, have standardized these procedures.
Going forward, we will continue to actively enhance our cooperation in areas
where there is scope for ﬁnancial institutions in Niigata Prefecture to work together
to improve customer convenience.
Ceremony for the signing of an

37

agreement concerning thestandardization of inheritance procedures

01

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Overview of the Daishi Hokuetsu FG

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Value Creation Story

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Communication with Stakeholders

Corporate Data

Providing Products and Services that Contribute to Local Communities▲

Contributing to Local Communities by Promptly Establishing a Counter for Responding to theTorrential Rain DisasterIn August 2022, the impact of torrential rain in the
Shimoetsu area of Niigata Prefecture resulted in measures
such as the application of the Disaster Relief Act.
On the day of the disaster, Daishi Hokuetsu Bank
worked to promptly respond to consultations from individuals, corporations, and business owners who were aﬀected by the torrential rain, by establishing a "Consultation

Service for Loans Related to the Torrential Rain Disaster"and oﬀering "special emergency loans related to the torrential rain disaster," thereby responding to consultations
about funds required for recovery and business continuation, etc.
See page 63 for information about the company's business continuity response to the disaster.

▲

Returning Proﬁts to Local Communities through Donation-type Private Placement Bonds

Daishi Hokuetsu Bank is focusing on donation-based
private placement bonds, in which a portion of the private
placement bond issuance fees received from customers
are donated to local governments, educational institutions,etc. In September 2013, Daishi Hokuetsu Bank became
the ﬁrst bank in Japan to begin handling donation-based
private placement bonds, and as of the end of March
2023, donations had been made to 923 organizations,bringing the total amount of donations to 180 million yen.
In July 2022, we began oﬀering Green & Food Support
Private Placement Bonds as a joint project with The Gunma Bank, Ltd., our partner in the Gunma-Daishi Hokuetsu
Alliance, in order to support social initiatives such assupport for food banks and children's cafeteria operatorsin Niigata and Gunma Prefectures, and environmental initiatives such as carbon neutrality. A total of 65 companies
issued private placement bonds, which we offered for alimited period until March 2023, in support of this initiative. In June 2023, we donated a total of 9,276,000 yen infood and money to Niigata Prefecture.

In addition to regionally-limited donation-based private
placement bonds aimed at contributing to solving issues
unique to each area within Niigata Prefecture and the revitalization of these areas, in October 2022, we handled a
Private Placement Bond for Reconstruction Following
Torrential Rain in North Niigata (from October 2022 to
December 2022), in order to contribute to supporting thereconstruction of local governments subject to the Disaster Relief Act as a result of torrential rain that occurred in
the Shimoetsu area of Niigata Prefecture in August of thesame year.

Green & Food Support Private
Placement Bond donation ceremony▲

Returning Proﬁts to Local Communities Through the Niigata Future Japan
Stock Fund, a Donation-type Investment Trust

Inventory presentation ceremony for the
Niigata Future Japan Stock Fund

Information about the Niigata Future Japan Stock Fund

DAISHI HOKUETSU REPORT 2023

Starting in May 2019, Daishi Hokuetsu Securities has
been conducting sales for the Niigata Future Japan
Stock Fund (nicknamed Niigata no Kakehashi (Bridge to
Niigata)), a donation-type investment trust for supporting
the future of Niigata Prefecture.
This investment trust supports companies that contribute to the economy of Niigata Prefecture by investing a
portion of its funds in Niigata-related stocks, which arelisted companies headquartered in Niigata Prefecture. In
addition, a portion of the investment management fees
(trust fees) received from customers is donated to welfareorganizations in the prefecture, alongside a donation fromthe establishing company, to support the
future development of
Niigata Prefecture. As ofthe end of March 2023,
a cumulative total of approximately 45 million
yen had been donated.

38

DAISHI HOKUETSU REPORT 2023

CHAPTER

03

Value Creation Story

Business Base to Support New Value Creation
Strengths of the GroupIn this section, we introduce the "Strengths of the Group" that support the creation of new value as a managementfoundation for the continuous creation and provision of new value for regional society.

Trust from the Local Community
Daishi Hokuetsu Bank, a core company of the Group, has been building a relationship

Continuing to be a partof the communityof trust with the local community over many years, from the late 19th century to today,
by fulﬁlling our role and mission as a regional bank while supporting the local community as a regional bank headquartered in Niigata Prefecture. This ﬁscal year, we will cel-ebrate the ﬁve-year anniversary of the company's establishment in October 2023, andthe 150-year anniversary of the founding of Daishi Hokuetsu Bank in November 2023.
We believe that new value can be created through the value creation process based on
engagement (dialogue) only when there is a relationship of trust as the foundation, and
the Group's relationship of trust with local communities that we have developed overmany years is a valuable asset and strength.

▲

Share of Business

Daishi Hokuetsu Bank has a high share of both savings deposits and loans in Niigata Prefecture, at 40.9% and 52.7%,
respectively. In addition, according to the "Nationwide Main
Bank Trend Survey of Companies (2022)" (source: TEIKOKUDATABANK), we were the main bank for approximately
18,000 companies, which placed us ninth in Japan after mega-< Share of savings and deposits >Other:

55.6%< Share of loans >Other:

41.5%

Daishi
Hokuetsu Bank

Daishi
Hokuetsu Bank

40.9

52.7

%

Source:The Journalof Finance(March 31, 2022)

banks and ﬁfth among regional banks. The business foundation that Daishi Hokuetsu Bank has built up over many years
serves as a platform for the business development of theGroup, enabling us to provide services that meet the expectations of local residents.

%

Major
banks:

3.5%

Nationwide number of companies for whom
we are their main bank (2022)

Ranked9th

in Japan behindmegabanks, etc.

Majorbanks:

5.8%

Ranked5th among
regional banks

Source: TEIKOKU DATABANK (end of October 2022)

Achieving Three Synergies
In our 2nd Medium-Term Management Plan, launched in April 2021, we areworking to achieve synergistic eﬀects in the three areas of "merger synergy,""group synergy," and "TSUBASA Alliance synergy," which are the companys strengths. Please refer to the "Company Brieﬁng Materials" posted on thecompany s website for information about the current status of initiatives toachieve the three synergies.

POINT

https://www.dhfg.co.jp/
financial/ir/session/

Three Synergies and their Details
Maximizemerger synergy● Share expertise● Coordinate

overlapping functions● Reallocate businessresources

39

Company Brieﬁng
Materials

Maximizegroup synergy
Maximize the useof Group company
functions

Maximize TSUBASA
alliance synergy
Take advantage ofthe scale of being
one of the largest
regional banks

01

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Overview of the Daishi Hokuetsu FG

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Communication with Stakeholders

Corporate Data

Merger Synergy
Eﬀorts to Deepen Financial Intermediary Functions and Information Intermediary Functions by Reallocating
Management Resources and Sharing Expertise
Under our 2nd Medium-Term Management Plan, the company

human capital, Daishi Hokuetsu Bank is actively shifting its per-measures such as the consolidation of bank branches, stream-

number of sales representatives (external relations staﬀ at sales

is strategically redistributing human capital to key areas throughsonnel to the sales division. As of the end of March 2023, thelining of head oﬃce, and operations reform at sales oﬃces, withthe aim of further strengthening our systems to enhance ouroﬃces and head oﬃce consulting staﬀ stationed at sales oﬃces)
has increased by approximately 140 since the bank merger infinancial intermediary functions and information intermediary

January 2021. At the same time, by sharing our expertise, wefunctions. As a result of the bank merger in January 2021, weare taking steps to enhance our consulting functions in various

had made a cumulative total of approximately 740 employees
available through the ﬁscal year ended March 2023, which was
the second year of our 2nd Medium-Term Management Plan. Of
these employees, we reassigned approximately 400, both within and outside the Group. Through this strategic reallocation ofﬁelds, including business succession, M&A, and asset management. Going forward, we will continue to strategically reallocate
management resources and enhance our consulting functions toappropriately meet the increasingly diverse and complex needsof our customers.

Actual cumulative total for the second year of the 2nd
Medium-Term Management

Current three-year cumulative plan
Cumulative total:
Approximately(Bank merger in January 2021 to the ﬁscal year ended March 2023)

880

Cumulative total:
Approximately

Sales oﬃce

740

operations

Sales oﬃce
operations
reform:Approximately

Naturalreduction due
to statutory

reform:Reallocation to
strategic
areas

Approximately

240

curtailmentof hiring, etc.:

Streamlining

Approximatelyof head oﬃce:

340

Approximately

200

Streamlining

Cumulative total:
Approximatelyof head oﬃce:

Approximately

400

Bankingdivisions:

Approximately

350

Approximately

280

Number of personnel
made availableof hiring, etc.:
Approximately

450

Cumulative total:
Approximately

430

270

Group company divisions:
Approximately 60

Approximately 60of branches:to statutory
retirement,Group company divisions:
Consolidation

Naturalreduction due

curtailment

retirement,

190(Bank merger in January 2021 to theﬁscal year ending March 2024)

Consolidation

Personnel
matchingwith business
partners, etc.:
Approximatelyof branches:

Banking

Approximately

370

divisions:

Approximately

280

60

Number of personnel
made available

Number ofreassigned personnel

Personnel
matchingwith business
partners, etc.:
Approximately

100

Number ofreassigned personnel*Due to fractions, the accumulation of each area does not equal the total (cumulative total).

Changes in the number of employees at sales oﬃces (approximate numbers) (including head oﬃce personnel stationed at sales oﬃces)

Banking Division(Persons)

The 2nd Medium-Term Management Plan

■ Managers

2,480■ Administration

340

800

860

940

1,000

January2021

March2022

March2023

16

15

15

% by
operation

January
2021

49

43

March
2022

41
37

March
2023

Approximately
140

Approx. +since themerger47

12pt since+

the merger

70

people(Pre-merger + approx. 40 people)

SeniorConsultant(BranchManagerlevel)

Corporate

Individual

CM

CM(CM: Consultant Manager)*Due to fractions, the accumulation of each area does not equal the total (cumulative total).

DAISHI HOKUETSU REPORT 2023

980

34

Of which, head oﬃce
specialists stationed atsales oﬃces

320

1,230

At the time of the bank merger

(%)

2,110

2,250

400

■ Sales

Reinforce sales consultants

40

DAISHI HOKUETSU REPORT 2023

CHAPTER

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Value Creation Story

Business Base to Support New Value Creation
Strengths of the Group
Branch Consolidation Initiatives

Consolidation of branches

Daishi Hokuetsu Bank is working on initiatives such as thecoordination of overlapping functions and the consolidation of
branches, in order to strengthen our management structure.
In terms of branch consolidation, we have consolidated
a cumulative total of 50 branches since the bank merger. In
addition, we announced the consolidation of three additional
branches this ﬁscal year.
While consolidating branches, we also built three newbranches in the fiscal year ended March 2023, in order tostrengthen our consulting functions. Additionally, in July 2023,
we established a new sales office, which concentrates theGroup's sales offices and sales personnel in Nagaoka City,
Niigata Prefecture.

Banking Division

Changes in number of oﬃces*Number of brick-and-mortar branches (excluding branches in branches,Internet branches, etc.)(Branches)

The 2nd Medium-Term Management Plan

-30

Cumulative
total
Approximately

Reduced bybranches-20

50 branches
branches

201

171

151

148

January2021At the timeof the bank merger

March31 2022

March31 2023

March31 2024

Group Synergy
Restructuring and Strengthening Group Governance in Order to Exercise the Group s Collective Strength
As part of eﬀorts to maximize group synergy, the company
has been gradually reorganizing our Group companies since
the management integration.
In October 2022, the following four companies became
wholly owned subsidiaries of the company: The Daishi JCB
Card Co., Ltd., The Daishi DC Card Co., Ltd., The Hokuetsu
Card Co., Ltd., and The Daishi Computer Service Co., Ltd.
Additionally, in April 2023, we made N.C.S. Co., Ltd., a local
systems company, a wholly owned subsidiary, and changed
its name to Daishi Hokuetsu IT Solutions Co., Ltd., while also

making regional trading company, Bridge Niigata Co., Ltd.
a consolidated subsidiary. Accordingly, the Group currently
consists of 15 companies, including three banking subsidiaries(excluding the company).
In addition, in order to achieve further group synergy andstrengthen Group governance, we are implementing the PDCA
cycle in a cross-organizational and multi-layered governancestructure, such as holding monthly "Group Company Senior
Management Meetings," in which the Presidents of Group
companies participate.

October 2018 (at founding of the Group)

From April 2023

Daishi Hokuetsu Financial Group

Daishi Hokuetsu Financial Group

Daishi Bank, Ltd.

Subsidiary

Banking

Daishi Hokuetsu Bank

Subsidiary

Hokuetsu Bank

Subsidiary

Securities

Daishi Hokuetsu Securities

The Hokuetsu
Leasing

LeasesThe Daishi Hokuetsu Lease

LeasesNew!
Business restructuring andCredit guarantees
The Daishi Guaranty
The Hokuetsu
Credit Guarantee

Fund management

Daishi Hokuetsu Capital Partners Co., Ltd.

3 card companies

Daishi JCB Card / Daishi DC Card / Hokuetsu Card

Introduction ofhuman resources

Daishi Hokuetsu Career Bridgedomain expansion since
the establishment of FG(April 2023)

Consolidated subsidiaries, includingbanking subsidiaries

15company
framework

Consulting and research

Financial sector
Non-ﬁnancial sector

41

New!
Certiﬁed as a company foradvanced banking business inother industries (March 2023)

Daishi Hokuetsu Research & Consulting

Systems

The Daishi Computer Service

New!

Systems

Daishi Hokuetsu IT Solutions

New!

Regional trading
company< Business sectors >October 2022
Became wholly owned
subsidiaries of the Group

Bridge Niigata

October 2022
Became wholly owned subsidiary of
the Group
April 2023
N.C.S. become a wholly owned
subsidiary of the Group + changed
its name
April 2023
Became consolidated subsidiary of
the Group

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Corporate Data

TSUBASA Alliance Synergy
TSUBASA Alliance* Initiative
Since its establishment in October 2015, the TSUBASA Alliance, a framework for wide-range regional partnerships among
10 regional banks including Daishi Hokuetsu Bank, has expanded collaboration across all ﬁelds, not only in the systems ﬁeld,
but also in joint sales promotion and various types of administrative work, more sophisticated risk management, and initiatives targeting human capital and sustainability.
In the ﬁscal year ended March 2023, we implemented initiatives such as beginning operations at ONAD Co., Ltd., a joint
venture that provides online consulting services from a neutral
standpoint in areas such as asset management (April 2022);
jointly establishing the Diversity & Inclusion Declaration tostrengthen human capital (April 2022); and implementing portfolio carbon analysis to increase the level of carbon analysis
by calculating customers' greenhouse gas emissions (December
2022 to February 2023).
Cumulative synergy eﬀects of the Alliance at Daishi Hokuetsu
Bank totaled 10.6 billion yen, from its inception to the ﬁscal year
ended March 2023.
Going forward, we will continue to position this alliance,
which is among the largest among regional banks, as the "mainengine for accelerating innovation" within the Daishi Hokuetsu
Financial Group, as we look to provide ﬁnancial and information
services with higher added value.

* TSUBASA Alliance
In October 2015, the TSUBASA Alliance was launched as the TSUBASA Financial System Advancement Alliance, a framework for wide-range regional partnerships
by three banks, Daishi Hokuetsu Bank, The Chiba Bank, Ltd., and The Chugoku Bank, Ltd. The Iyo Bank, Ltd., The Toho Bank, Ltd., and North Paciﬁc Bank, Ltd., joinedin March 2016, The Musashino Bank, Ltd. in March 2019, The Shiga Bank, Ltd. in May 2019, Bank of The Ryukyus, Limited in April 2020, and The Gunma Bank, Ltd. in
December 2020. As a result, 10 banks are participating at present.
(September 2022)

In 7.5 years after

Established a common slogan

the launch of Allianceand participation

Surpassed

10.0 billion yen

BANK

October 2015 to March 2023

Cumulative amount of

10.6

billion yen

BANK

Total assets ofparticipating banks

Number ofparticipating banks

10

Synergies from collaborative

measures at Daishi Hokuetsu Bank

Exceeded

90

banks

trillion yen(On a consolidated basis for theﬁscal year ended March 31, 2023)(As of March 31, 2023)■ Location of principal head oﬃce
■ Location of branches

Gunma-Daishi Hokuetsu Alliance Initiative
We have been steadily expanding the scope of collaboration in
the Gunma-Daishi Hokuetsu Alliance, a partnership agreement between Daishi Hokuetsu Bank and The Gunma Bank, since its launchin December 2021, including the joint planning of donation-based
private placement bonds and the joint holding of customer seminars, as well as active networking between personnel through joint
training and the acceptance of trainees.
In March 2023, we moved the Takasaki Branch of Daishi Hokuetsu

Bank onto the premises of the Tamachi, Takasaki-city Branch of The
Gunma Bank, thus establishing the ﬁrst joint branch for both banks.
Cumulative synergy eﬀects of the Alliance for both banks totaled
5.7 billion yen, from its inception to the fiscal year ended March
2023.
Going forward, we will continue to implement measures that takeadvantage of the geographic characteristic of our adjacent sales areas as we work to further exercise synergies.

Collaboration eﬀect (synergies)
Expected

Initial plan(100 million yen)

Cumulative
total in ﬁve years

57(+27 vs. target)

To exceed

Initial plan95

15
December 2020
toﬁscal year ended
March2022

10.0+

billion yen

Takasaki

Relocation

Tamachi,Takasaki City

BANK

BANK

Relocated andopened on March
13, 2023

Initial plan

30

Fiscal year ended
March2023

Relocation of Daishi Hokuetsu Bank branches toGunma Bank branches

122

8.0

+
billion yen

Fiscal year ended
March2027 (Expected)

New!

Exterior of branch

DAISHI HOKUETSU REPORT 2023

Aggregate of thetwo banks
Cumulative basis

Joint use of branches

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Business Base to Support New Value Creation
Strengths of the Group
Human capital
The company has long referred to our personnel as "human resources," based on the recognition that our employees areimportant assets. The company also regards human resources an important form of capital, or "human capital," which forms
the foundation for the sustainable development of the company. Accordingly, we are focusing on practicing human capitalmanagement as a basic strategy in our Medium-Term Management Plan.

TOPICS

Change to Basic Strategy III of the 2nd Medium-Term Management Plan andEstablishment of the Oﬃce of Human Capital Strategy

In April 2023, we changed basic strategy III in our 2nd Medium-Term Management Plan from "developing and enhanc-

ing human resources" to "practicing human capital management," as part of our aim to enhance the value of human capital, which is the source of the Group's sustainable value creation and competitive advantage. In addition, we establishedthe new Oﬃce of Human Capital Strategy within the Personnel Division of Daishi Hokuetsu Bank to supervise the planning of human capital management.
Going forward, we will continue to actively create a workplace environment that enables a diverse range of employees to demonstrate their abilities, and we will continue working to increase the value of our human capital and further
strengthen the Group's competitive advantage.

Human Resources Strategy
When practicing human capital management, the company has established a vision for human capital based on the three perspectives of "collective strength as an organization," "human resource capabilities," and "workplace environment." To achieve this vision, we have formulated policies related to the development of human capital and our internal environment, and we will prioritize
ﬁve initiatives (see A through E in the ﬁgure below) that we will strengthen to achieve this vision.

Management Philosophy

Realization of Management Philosophy

Sustained enhancement
in corporate value

Stakeholders

Management strategy(sustainability management)
Human Resources Strategy

The 2nd Medium-Term
Management Plan

Disclosure
Dialogue

Strategy III Practicing humancapital management

Human Resources Development Policy
Exercise of collective
strength as anorganization

Strengthening of
human resources
capabilities

A
B

Ensuring the diversity of humanresources and promoting
empowerment

C

●

●

Improvement of theworkplace environment< Initiatives to be strengthened >

43

●

●

Improving Consulting Capabilities

Internal Environment Development PolicyD

Enhancement of employee
engagement

E

Strengthening our healthmanagement system

Investors

Employees,
etc.

Enhancement in value ofhuman capital

Aim of initiatives< Initiatives to be strengthened >Strengthening human resourcesmanagement

Customers
and local
communities

●

●

●

●

Timely allocation of appropriate
human resources into ﬁelds
where they are required
Establishment of leadershipthat draws out the fullcapabilities of human resources
Utilizing the diversity of humanresources to solve diverse andcomplex issues
Improving practical andprofessional skills to solve theissues of customers and the region

Ideal Form
Collective strength as an organization(synergy)
Collective strength as an organization toprovide new value to stakeholders and adapt
to changes in the environment, throughconsulting with advanced practical andprofessional skills

Human resource capabilities (core)
Diverse human resources with the ability
to learn and grow autonomously and workwith high enthusiasm (engagement) to solve
increasingly diverse and complex issues

Fostering a sense oforganizational unity
Establishing positive thinking
with autonomous thinking
and acting
Achieving employee
psychological and physicalwellbeing
Promotion of ﬂexible work
stylesWorkplace environment (foundation)
A workplace environment with a higher "easeof working" and "satisfaction of working," thatenables individuals to perform at their bestand encourages the sustainable growth ofindividuals and organizations
Fostering a positive organizational culture that
respects autonomous thinking and acting

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Corporate Data▲

Initiatives to Achieve our Human Resources Development Policy
Human Resources Development Policy

Through the following two policies and the enhancement of our internal environment, the Daishi Hokuetsu Financial Group willdevelop diverse human resources who will learn and grow autonomously, and who will take the initiative to solve increasingly
diverse and complex environmental and social issues with a sense of ownership. Then, through consulting with advanced practicalskills and expertise, we will provide new value to our stakeholders.

Ensuring Diversity in Human Resources andPromoting Empowerment (D&I)

Developing and appointing human resources to strengthen
consulting functions and create new value

We will respect the values of each and every employee
regardless of gender, internationality, work history, age,etc., and utilize the innovations generated from diversity tosolve social issues, based on the employment of diverse
human resources and fair and appropriate treatment.

As part of our eﬀorts to create new value by enhancing our expertise andpractical capabilities in relation to DX, SX, etc., and the strengthening of oursolution functions, we will hire, develop, and promote human resources withdiverse experience and skills in areas such as consulting sales ﬁelds, as well as
IT and systems ﬁelds, regardless of whether they are new graduates or mid-career employees (experienced personnel).

In order to achieve our Human Resources Development Policy, the Group will focus on the initiatives listed in A through C .

A Strengthening human resources management
This refers to our eﬀorts to exercise synergies related to "human resources" and transform them into our "collective strength as an organization." Speciﬁcally, we will build a portfolio of human resources with strengths in a variety of ﬁelds, assign them to important sales
oﬃces at appropriate times, and thus manage our human resources in a way that maximizes the power of our human resources as anorganization. At the same time, we will promote initiatives to establish leadership (inclusive leadership) within the Group to enable us
to draw out the full capabilities of our increasingly diverse human resources and transform these capabilities into our strength as anorganization.

Development of systems for the timely and appropriate allocation of personnel into ﬁelds
where they are required
The Group has long focused on eﬀorts to bolster our humanresources with strengths in various ﬁelds. Daishi Hokuetsu Bank
has a total of 289 holders of advanced ﬁnancial expert qualiﬁcations (FP Grade 1, Small and Medium Enterprises Management
Consultant, and securities analysts) (as of the end of March
2023). The bank is also working initiatives such as a challenge

program, in order to further enhance our expertise in consulting
capabilities to achieve our management strategies. In addition,
we will enhance the sophistication of our human resources portfolio management by rapidly identifying and visualizing the skills
and performance of human resources through the introductionof a talent management system, etc.

Establishment of leadership that draws out the full capabilities of human resources
As part our eﬀorts to establish leadership within the Group,
we have provided training for managers of Daishi Hokuetsu Bankon "unconscious bias," which is essential for leaders, as well as
training on the theme of "leadership for improving engagement,"such as "stimulating communication within organizations" and"psychological safety." Starting in ﬁscal 2023, Group companies
will provide joint training for managers, and we will also further

enhance the content of the training, thus strengthening our efforts to establish leadership based on themes such as "how todraw out the capabilities of diverse individuals and transformthem into strength as an organization in the age of VUCA*."*An acronym for four words: Volatility, Uncertainty, Complexity, and Ambiguity.
It means that the outlook is uncertain and it is diﬃcult to predict the future.

From the perspective of strengthening our human resource capabilities, it is essential that we ensure diversity in human resources
and utilize new insights and ideas generated by discussions among human resources with various approaches and professional experience to solve issues for customers and local communities. The Group is working to ensure the diversity of human resources mainly
through the development and appointment of women and mid-career human resources (experienced hires). We are also actively
focusing on employment for persons with disabilities, from the perspective of ensuring diversity in human resources and addressing social demands.

DAISHI HOKUETSU REPORT 2023

B Ensuring the diversity of human resources and promoting empowerment

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Business Base to Support New Value Creation
Strengths of the Group
Women s Empowerment and Appointment
Daishi Hokuetsu Bank is promoting the development of women through the "Empowerment Program for Women," which willtrain the next generation of female leaders, and is appointing
persons who have completed this program. The program lasts
for around one and a half years, during which training and interviews are conducted continuously at intervals, and womens qualities as leaders are improved from various perspectives.
Persons who have completed this program are selected for roles
such as Branch Manager-level positions at Daishi Hokuetsu Bankand the Presidents and managers of Group companies, and inJune 2023, one person who completed this program became
the ﬁrst female director of Daishi Hokuetsu Bank. The company
believes that promoting the development and appointment offemale human resources through such programs will strengthen
our human resource capabilities, increase the proportion of female managers, and contribute to the empowerment of women.
In addition, we are further strengthening our eﬀorts to support
the balance between work and childcare, and are actively working to recruit new female graduates.
Although the company does not have a gender wage gap
in our personnel systems and wage structures, the disparity inwages between men and women is mainly caused by the factthat there is a higher proportion of men than women among
managers, who have relatively higher wages. In addition, Daishi
Hokuetsu Bank has established a "region limitation system,"
which enables employees to limit where they work to areas they
are able to commute from, in order to support a variety of work

TOPICSstyles suited to employees lifestyles. Employees who choose
this system, which means they will not be transferred with relocation, receive approximately 85% to 90% of their salary prior
to selection, but they can assume all positions and there are no
restrictions on promotion or advancement. There is a gendergap (9.1% of male employees vs. 61.9% of female employees)
in the proportion of employees who choose to use this system,
which is one of the factors contributing to the disparity in wages
between men and women. We intend to rectify this disparity inwages by steadily focusing on the development and appointment of women through such measures as the aforementioned
Empowerment Program for Women.
(Daishi Hokuetsu Bank)

Disparity in wages between
men and women
FY2022All
employees

45.8%

Bank
employees

61.2%

Part-time,
etc.

66.5%
*Calculated based on the provisions ofthe "Act on the Promotion of Women's
Active Engagement in ProfessionalLife" (Act No. 64 of 2015)

Proportion women among
new graduate hires
FY2021

FY2022

44.9%

47.3%

Proportion of female managers
FY2021

FY2022

25.2%

25.8%

Empowerment Program for Women

We invite motivated female employees who are expected to serve as the next generation of leaders, and we conduct
training programs to develop the mindset and behavior required of leaders and to improve their knowledge and skills
through mutual study. This program supports the steady career advancement of female employees, while also contributing to the development of a highly engaged human resources base.

Feedback from program participants
I want to become a manager who is recognized as necessary, and someone withwhom others want to work alongside, while being able to fully understand theconcerns and worries of each and every one of my employees, and develop humanresources who are appreciated by our customers.
I learned how to approach and view things as a manager and the need to think
about things from a longer-term perspective. In addition, the program was an opportunity to get speciﬁc advice, review my strengths and weaknesses, and think once
again about my career.
I got a lot of inspiration from listening to the thoughts and opinions of the other

Program kick-oﬀ meeting

participants. I will continue to value the connections between participants, as I work
to solve issues faced by the bank, etc., in ways that are unique to the participants ofthe program.

TOPICSTSUBASA Cross-Mentor System

Daishi Hokuetsu Bank is implementing the TSUBASA Cross-Mentor System in collaboration with banks participatingin the TSUBASA Alliance, a wide-range regional partnership among regional banks, aimed at supporting the career development and enhancement of leadership qualities of women who are candidates for senior management positions. Byutilizing the Alliance's unique network to pair up mentors and mentees from diﬀerent banks who do not have seniority
relationships in their work, this system provides opportunities for women to see the career experience, knowledge, andhuman resource capabilities of management at other banks and to reexamine their own strengths and weaknesses fromperspectives that they do not notice within their own bank, while ensuring psychological safety. In this way, the system
contributes to the career development of women who are candidates for senior management positions.

45

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Corporate Data

Empowerment promotion and appointment of mid-career hire human resources
The company has long recognized the importance of promoting the empowerment of mid-career hire human resources (experienced personnel). In fact, mid-career hire human resources
have been empowered in ways such as playing an importantrole in system integration when the subsidiary banks mergedin 2021. As part of its more active focus on the empowerment
promotion and appointment of mid-career hire human resources, in 2021, Daishi Hokuetsu Bank introduced an expert system(professional appointment system) for the purpose of improving
the career paths of personnel with professional skills, etc. We
will continue to strengthen recruitment, particularly of human resources with specialized skills, while also promoting the empowerment and appointment of mid-career hire human resources
through the development of recruitment and training systems.

(Daishi Hokuetsu Bank)

Number of
mid-career (experienced)
hire employees

Proportion of
mid-career (experienced)
hire employees*

51 persons(March31, 2023)

FY2021

FY2022

9.2%

12.9%

Includingmanagers and
above

59.2%

*Percentage of employees hired as
mid-career hires

Active eﬀorts to employ people with disabilities(Daishi Hokuetsu Bank)

Recognizing the importance of ensuring the diversity of human resources and taking into accountsocial needs, when hiring people with disabilities, we have focused on achieving the statutory employment rate while also considering eﬀective solutions to the issue of how to match candidates
with employment opportunities in the limited recruitment market in regional areas.
With regard to proactive eﬀorts to employ people with disabilities, based on the above recognition of the related issues, we have been implementing measures such as expanding the scope of
applicable work within the Group and strengthening collaboration with support organizations. As
a result, in the ﬁscal year ended March 2023, our rate of employment of people with disabilities
was trending toward improvement. We will continue these initiatives as we endeavor to improve
our rate of employment of people with disabilities.

Rate of employment ofpeople with disabilities

2.50% or more
2.33%
Actual result forthe ﬁscal year
March 2023

Target for theﬁscal year
March 2024

C Improving Consulting Capabilities
In order for the company to meet the expectations of the local community and continue to grow together with it, we must continue
to support our customers in resolving their issues. At the time of the merger of the company's subsidiary banks in 2021, one of thepillars of our human resources strategy for realizing our management strategy was the improving consulting capabilities. Accordingly,
we developed a human resources development system, human resources evaluation system, etc., compatible with this strategy. Goingforward, in response to our management strategy, from the perspective of sustainability management, we will proactively work to
resolve the increasingly diverse and complex environmental and social issues of our customers and local communities. In order to doso, we will build on our past eﬀorts to enhance our solution capabilities across two axes ‒ practical and professional skills ‒ and thus
strengthen our eﬀorts to improve our consulting capabilities. In addition, as part of our eﬀorts to improve our consulting capabilities,
we will endeavor to enhance educational opportunities that employees can voluntarily participate in, including reskilling and recurrent
education, as well as opportunities for autonomous career selection, thereby improving the proactive mindset and willingness to takeon new challenges of each and every member of the Group s human resources, based on the fact that autonomous learning and the
choice of career promotes the growth of human resources and contributes to enhancing engagement.
We will continue to invest suﬃciently in the development of human resources, including improving our consulting capabilities, andpromote the development of human resources with advanced practical and professional skills, leading to the establishment of a humanresources portfolio capable of solving regional issues and providing new value.
< Amount of investment in
human resources development >Main
training

Training expenses per person*

55,000 yen(Daishi Hokuetsu Bank, ﬁscal year
ended March 2023)

Name oftraining(Partial)

Training by level

Operations and consulting training

E-learning

Leadership development training,

Asset management advice training, ﬁnancial solution

Sustainability training,career design training, Branchpromotion training, management improvement support

cybersecurity training,

Manager management training,training, decarbonization training, DX basic training,business succession

female employee development

digitalization support skill improvement training,and M&A training, trust

programs, diversity and inclusion

practical derivatives training, Loan Examination Division

promotion leader training,training

training, recruitment agency training

compliance training(Daishi Hokuetsu Bank, ﬁscal year ended March 2023)

Development of core sales personnel and personnel for Group collaboration
We intend to clarify the human resources profile, develop
training and on-the-job training systems, and improve the practical skills of core sales personnel, which form the core of ourconsulting sales, and personnel for Group collaboration, which
work toward collaboration within the Group, including humanresources who are capable of supporting improvements in thebusiness value of customers, particularly by addressing sustainability issues; personnel who can provide diversiﬁed consulting
services to customers through collaboration between Group

companies; and personnel who can practice advanced wealthmanagement for customers such as corporate owners.
In addition, Daishi Hokuetsu Bank will further accelerate thegrowth of human resources by enhancing our experience insolutions through measures including strategic circular assignments, such as sales offices, head office sales representatives,and external trainees, as well as assignments to cross-organizational projects for regional revitalization.

DAISHI HOKUETSU REPORT 2023

*Training expenses do not include expenses related to training facilities.

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Business Base to Support New Value Creation
Strengths of the Group
TOPICS

Sustainability Promotion Personnel Conference

Daishi Hokuetsu Bank has implemented a practical curriculum for sustainability promotion personnel at each salesoﬃce, in order to develop human resources capable of problem-solving activities from the perspective of management,with the aim of achieving our ideal form as a corporation from the viewpoint of sustainability.
Feedback
fromconference

participants

We were able to reaﬃrm the signiﬁcance of the Group s sustainability eﬀorts,
and my awareness of human resources development and solving customer problems at my own sales oﬃce increased. (Employee of Chuetsu Area Sales Oﬃce)
Through group discussions, we were able to share opinions from multiple perspectives and create new proposals for the customers we are responsible for.

Group discussion at theconference(Employee of Shimoetsu Area Sales Oﬃce)

TOPICS

Implementation of the New Structural Reform 2030 Project

We have been implementing this project as a cross-organizational initiative since the ﬁscal year ended March 2022.
In the ﬁscal year ended March 2023, young employees from the Group joined the project, and examined new businessmodels through repeated advance learning and groupwork, under the theme of "improving sustainability in regional areas
through regional revitalization project ideas. This project also provided opportunities for the development of human resources and skills among participants, through discussions to come up with ideas, planning and proposals, etc.
Feedback from project participants

I would like to take advantage of my experience in this project to engage inactivities aimed at solving customer problems. In addition, by spreading andsharing the skills gained through these activities with colleagues, I hope to
improve productivity in our day-to-day operations and improve the quality of
proposals. (Daishi Hokuetsu Bank, Joetsu Area Sales Oﬃce employee in 20s)
Through the project activities, I was able to feel my own growth in my ability to use the framework to isolate issues and gather opinions from mem-

Project workshop

bers. (Bridge Niigata, employee in 30s)
Through discussions with Group members from different professional
backgrounds and environments, I was able to cultivate diverse perspectives
and broaden my perspective, contributing to my growth. (Daishi Hokuetsu
Bank, head oﬃce employee in 20s)

Presentation of project results to oﬃcers

Securing and developing professional human resources
In order to secure and develop a diverse
range of professional human resources, including mid-career hires in areas such as consulting,
DX, SX, and risk management, the Group has
established an integrated training system tailored to business areas and specialized areas,
based on collaboration between Group companies. In addition, Daishi Hokuetsu Bank encourages the acquisition of IT Passport certiﬁcationand sustainability-related qualifications, andstrives to expand its base of professional talentrelated to DX and SX. In the ﬁscal year ended
March 2022, the bank launched an expert
system (professional appointment system), andwill strive to secure and develop professional
human resources by clarifying career paths anddeveloping a consistent personnel system.

Status of securing and developing professional human resources (actual)
FP Grade 1

192

persons

Information
Security
Management95

persons

Small and Medium
Enterprises Management
Consultant

48

persons

IT Passport

1,010

persons

Securities Analyst

IT Coordinator

49

15

persons

Persons passing
sustainabilityrelated tests

persons

Personsappointed underexpert system

1,087

6

persons

persons(Daishi Hokuetsu Bank, as of March 31, 2023)

Expansion of opportunities for voluntary learning and autonomous career selection
The company has long been enhancing the quality and quantity of opportunities for voluntary learning in the form of seminars on non-business days, independent study sessions, etc.
In the ﬁscal year ending March 2024, after integrating and systematizing these eﬀorts, we plan
to further expand the number of learning opportunities, including the establishment of the
Manabot business college within the Group, which is equipped with programs related to
DX that take into account reskilling, and the enhancement of self-development programs thatutilize online media. In addition, with regard to autonomous career selection, we will work to
expand opportunities for career selection by providing training opportunities where employees can develop their own strengths and areas of expertise, dispatching employees for external and cross-industry networking, expanding the existing Career Challenge System,* etc.

47

*A system for taking on the challenge of new careers both inside and outside the bank, based on requests from employees(Daishi Hokuetsu Bank)

Number of people utilizing theCareer Challenge System

80 persons

50 persons
Actual result for theﬁscal year March 2023

Target for the ﬁscal
year March 2024

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Corporate Data▲

Initiatives to Achieve our Internal Environment Development Policy
Internal Environment Development Policy
The Daishi Hokuetsu Financial Group will achieve psychological and physical wellbeing among employees by focusing on initia-

tives such as strengthening our health management system, while also improving engagement by fostering a positive organizational culture in which employees act autonomously to fulﬁll the trust of customers and local communities. In this way, the Group willdevelop an internal environment in which individuals perform at their best, that also promotes the sustainable growth of individuals and organizations.
In order to achieve our Internal Environment Development Policy, the Group will focus on the initiatives listed in D through E .

D Enhancement of employee engagement
The company was established in October 2018 with the aim of consolidating the management of two banking groups in Niigata Prefecture. Following the merger of our subsidiary banks in 2021, we have made it a priority to steadily promote harmony as an organization and a shared awareness, and we have prioritized initiatives such as brieﬁngs for
managers by the President and Oﬃcer Dialogue Exchange Meetings with all employees at
subsidiary banks.
As part of our eﬀorts to promote harmony as an organization and a shared awareness,
we have conducted regular employee awareness surveys and taken necessary measures
based on the survey results. We have thus conﬁrmed that we are making steady progress
toward a shared awareness and harmony as an organization, and at the same time, we
recognize that employee engagement is also improving. Two years after the merger of thesubsidiary banks, the company believes that we have largely completed our process aimed
at organizational harmony at Daishi Hokuetsu Bank. As the next step, the bank plans toshift its focus to eﬀorts to improve employee engagement, such as developing a sharedawareness across the Group, improving employee resilience (establishing positive thinking),
and improving job satisfaction (expanding opportunities for autonomous career selection
and utilizing a side job/dual employment program). In line with these eﬀorts, the bank is
considering the establishment of new engagement indicators.

TOPICS

Change in the percentage of
respondents who responded thatthe bank-wide organizational
harmony is progressing in
employee awareness surveys
(%)
+

43pt

94.6

(First time)

51.3
October 2019

December 2022

Dialogue exchange meetings between senior management and employees

As part of our eﬀorts to promote organizational harmonyand develop a shared awareness, we hold meetings such as
the Briefing session on Medium-Term Management Plan
and Officer Dialogue Exchange Meetings, where officers
and employees of the Group engage in direct dialogue.
These exchange meetings have also led to an increase inengagement and our collective strength as an organization, and we have continued to hold them in the ﬁscal year
ending March 2024.

Dialogue exchange meetings between senior
management and employees
Brieﬁng session on MediumTerm Management Plan

4,700

Approximately
participants

Dialogue exchange meetingwith an oﬃcer
Total ofapproximately

400 venues

Approximately

9,600

participants
Held semiannuallyat eachworkplace

Feedback from participants in an Oﬃcer Dialogue Exchange Meeting
The Group s Management Philosophy serves as afoundation for us as employees, and I hope that all
employees will continue working with a common set
oﬃce in Niigata City)
I intend to collaborate from all angles by gaining
knowledge not just of the products handled in securities, but also of banks, leases, etc. I hope we will
strengthen collaboration among Group companies

Dialogue exchange
meeting with an oﬃcer

Isshi Koryukai brieﬁng
for managers by the
President

Isshi Koryukai Next
brieﬁng for young employeesby the President

10 times
in total

Approximately

600

participants

2 times Approximately
in total
60
participants

and work toward group synergy. (Daishi Hokuetsu
Securities, Chuetsu Area Sales Oﬃce)

Held inJanuary 2023

I understood that, in order to raise awareness of sustainability among companies in Niigata Prefecture, it isimportant to accumulate knowledge and return it tolocal companies. (Daishi Hokuetsu Bank, Shimoetsu

Isshi Koryukai

Isshi Koryukai Next

DAISHI HOKUETSU REPORT 2023

of values in the future. (Daishi Hokuetsu Bank, sales

Brieﬁng session by the
President of the Group

Area Sales Oﬃce)

48

DAISHI HOKUETSU REPORT 2023

03

CHAPTER

Value Creation Story

Business Base to Support New Value Creation
Strengths of the Group
Introduction of Side Job/Dual Employment Program (March 2023)
Daishi Hokuetsu Bank has introduced a side job/dual employment program in order to enhance employee engagement by improving employees motivation for self-improvement encouraging them to engage in autonomous, multi-track career development,
and to contribute to the sustainable growth of the region through educational and cultural activities, community contribution activities, side jobs with local companies, etc., among employees utilizing their skills and abilities. As of June 2023, 10 people havealready taken advantage of the system.

Side job program
A program that enables employees to engage
in other businesses (mainly education, culture,community contribution, family businesses,etc.) outside the working hours of the bank

External dual employment
programSecond career business start-up
support program"Temporary and limited-time secondment"
program to meet the needs of local companies for human resources with side jobs

A program in which high-skilled employees who reachstatutory retirement age sign business entrustment
contracts with banks to support business start-ups

E Strengthening our health management system
Daishi Hokuetsu Bank announced its Health Management Declaration in 2018, in addition to
improving the workplace environment to support balancing work and child-rearing, the bank has
also been developing support systems for balancing work and child-rearing to contribute to a better
work-life balance, including the introduction of a leave system that can be used for fertility treatment,
which is often physically and mentally demanding, and introducing a ﬂextime system.
In recognition of these eﬀorts, since 2018, we have been recognized as a "Health & Productivity
Management Outstanding Organization (White 500) for six consecutive years under the Certiﬁed
Health & Productivity Management Outstanding Organizations Recognition Program sponsored by
Certiﬁcation ceremony for Platinum
the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi. Additionally, in May 2023,
Kurumin Plus and Platinum Eruboshi
we became the ﬁrst company in Niigata Prefecture to receive "Platinum Kurumin Plus" and "Platinum
Eruboshi" certiﬁcation from the Minister of Health, Labour and Welfare.
In order to achieve psychological and physical wellbeing for its employees, the company will further strengthen its systems for managing physical and mental health and improve the ease of working. We will also promote the development of an environment in which
each and every member of our diverse human resources can work in good physical and mental health.

Certiﬁed as a Health & Productivity
Management Outstanding
Organization for 2023 (March 2023)

Daishi Hokuetsu
Bank: Six consecutive years ofaccreditation

Acquired Platinum Kurumin Pluscertiﬁcation (May 2023)

Daishi Hokuetsu
Bank is the only com-

Acquired Platinum Eruboshi
certiﬁcation (May 2023)

Parenting support
Balancing fertility
treatment and work

Highest recognition for promoting
women s careers

First acquisition

First acquisition

by a company in Niigata
Prefecture

by a company in Niigata
Prefecturepany in Niigata Prefecture
to be accredited for six
consecutive years

Promotion of ﬂexible work styles
The reduction of long working hours through the promotion offlexible working styles is fundamental to the health managementthat the company is focusing on, and is also a prerequisite for adiverse range of human resources to work in an energetic manner.
Accordingly, we are promoting the development and utilization ofsystems that enable flexible working styles, including support systems for balancing work and child-rearing.
Under its new personnel system introduced at the time of themerger in 2021, Daishi Hokuetsu Bank has enhanced its leave system
and introduced staggered working and telework systems. In addition,in 2022, the bank began operating a ﬂextime system. Awareness of
the use of the childcare leave system is increasing, and as of March
2023, the usage rate is high among both men and women.
Going forward, the Group as a whole will work to enhance oursystems and strengthen eﬀorts to raise awareness to promote theuse of existing systems.
(Daishi Hokuetsu Bank)

Annual paid leave take-up rate

Take-up rate of childcare leave

62.5

64.1

(FY2021)(FY2022)

%

%

73.3

Overall

Overall%Female

98.7

Male

%

(FY2021)

48.8

%

103.7

%

Female

101.3

Male

%

106.0

%

(FY2022)*Calculated based on the provisions of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other

49

Family Members (Act No. 76 of 1991).

01

02

Message from Management

Overview of the Daishi Hokuetsu FG

CHAPTER

03

Value Creation Story

04

05

Communication with Stakeholders

Corporate Data

Enhancement of physical and mental health management systems
The company is developing a health management system topromote improvements in people s health, based mainly on
collaboration between health insurance societies, clinic staff,

the Personnel Division of Daishi Hokuetsu Bank, the HealthManagement Promotion Oﬃce, industrial health staﬀ, employee
unions, etc.

In the past, we have enhanced our system of medical check-ups for routine medical checkups and established systems forthe early detection and treatment of diseases, while also actively focusing on the vaccination of employees against COVID-19,

the counselor may be an industrial physician, clinic counselor,
external counselor, or other professional.
In the future, we will strengthen eﬀorts to enable employees

to manage their own health, to ensure they maintain a bettermental and physical condition, through such means as improving

health literacy and exercise habits. Daishi Hokuetsu Bank has already distributed wearable devices*2 to all applicants (81.7% of
all employees) to promote self-management of health in areas
such as exercise and sleep.

*1 Questionnaire survey toand thus limiting any worsening of employees' health during
the COVID-19 pandemic. In addition, with regard to mental
health care, we also assess employees mental health throughthe addition of questions to check mental health from various
angles to stress checks, and we conduct pulse surveys,*1 etc.,

for all employees of Daishi Hokuetsu Bank, and use the resultsof these checks to improve the wellbeing of employees. In addition, we have developed a counseling system for employees
who have individual concerns or issues related to mental health.
Depending on the circumstances of the person being counseled,conﬁrm employees' moti-< Medical check-up rate >100

vation toward work andgrowth every month*2 A device that users wear%

(Daishi Hokuetsu Bank, ﬁscal year ended Marchon their body to measure
health management datasuch as ﬁtness and sleep
conditions

2022 and ﬁscal year ended March 2023)

Health Management Promotion System of Daishi Hokuetsu BankManagement Philosophy
Practical measures

SystemFlexible work styles●

Oﬃcer in Charge of
Human Resources

Personnel
Division
HealthManagement
Promotion
Oﬃce

Practicing "healthmanagement" that enables●

Telework and ﬂextime systems●

Side job/dual employment program●

Eﬀorts to reduce total working hours (intervals between
shifts, etc.)●

Oﬃce of
Human Capital
Strategyof our human resources tobe physically and mentally
healthy, to work in an●

Employeeunion

maximum extent

Various measures for women's health●

Cost subsidies for various medical examinations
Infection prevention, free dental checkups, healthcounseling, and smoking cessation support●

Free rental of wearable devices●

Promotion of exercise habits (e.g., walking events), etc.

Mental health●●Stress check (utilizing results of organizational diagnosis)
Diverse range of counseling functions (physicians,
professionals, external counselors, etc.)●●●

Engagement measurement
Health literacy improvement support, training for
managers (psychological safety)
Leave of absence system, return to work support
system, etc.

DAISHI HOKUETSU REPORT 2023

Healthinsurance
society

ClinicIndustrial
health staﬀ

Routine medical checkups, medical checkups, andhealthcare leave system●●energetic manner, and toChildcare leave for men and women, support forbalancing fertility treatment and work, etc.

Physical healtheach and every member

exercise their abilities to the

Various leave systems (take-up promotion activities) andwork patterns

50

DAISHI HOKUETSU REPORT 2023

CHAPTER

03

Value Creation Story

Kazuyoshi
Hirokawa

Chairman, Daishi
Hokuetsu Bank
(Responsible for
Personnel Divisionat Daishi Hokuetsu
Bank)

Moving from the stage of organizational harmonyand shared awareness to the stage of practicing
human capital management‒ Starting in ﬁscal 2023, we have changed our human resources strategy. Please tell us why.
Hirokawa The company was established in 2018 as a holding
company for two regional banks (Daishi Bank and HokuetsuBank) headquartered in Niigata Prefecture. We have continued
the tradition of these former banks, which regarded employees
as important assets, and have promoted management with anemphasis on human resources.
In our human resources strategy, we believe that it is important to enhance our sense of unity as an organization in orderto realize the project of a bank merger that we planned after
the establishment of the company. Accordingly, we have been
focusing on organizational harmony and a shared awareness aspriority issues.
Specifically, in order to enhance the empathy of each employee toward our Management Philosophy and the senseof unity of the organization, since the establishment of thecompany, we have continuously held Brieﬁng sessions on theMedium-Term Management Plan, Oﬃcer Dialogue Exchange
Meetings and Executive Dialogue Exchange Meetings, inwhich the President and other oﬃcers engage in direct dialogue
with Group employees, and have also actively engaged inhuman resources exchanges. In January 2021, we successfullycompleted the Group's core bank merger project and launched
Daishi Hokuetsu Bank under the slogan of "unity of purpose,"with the Management Philosophy as the common purpose ofGroup oﬃcers and employees.
As a result of our multifaceted efforts to achieve management integration through organizational harmony and a sharedawareness, the percentage of employees at Daishi Hokuetsu
Bank who responded in the employee awareness survey thatbank-wide organizational harmony is progressing has risen
from 51.3% in the pre-merger survey conducted in October
2019 to 94.6% in the latest survey conducted in December
2022. Accordingly, we believe that we have generally completed our eﬀorts to achieve organizational harmony and a sharedawareness at the bank.
In light of these circumstances, the company has decided
that it is time to move forward with our human resources strategy to a more practical stage, and we have thus changed ourhuman resources strategy from the basic strategy of the 2nd
Medium-Term Management Plan, "developing and enhancing
human resources," to "practicing human capital management."‒ What do you aim to achieve by the human resources
strategy of practicing human capital management ?

51

Hirokawa In our human resources strategy "practicing humancapital management," we aim to strategically put the company's management strategy of sustainability management into
practice from the perspective of human capital. In this strategy,
we aim to enhance the diversity of human resources and ourconsulting capabilities, while promoting organizational harmony
and a shared awareness across the Group as a whole, and at
the same time improving engagement and achieving wellbeing.

Interview
Speciﬁcally, we aim to improve the value of our human capitaland practice sustainability management by strengthening our
initiatives and reforming them as our strategy, including ensuring diversity of human resources, improving consulting capabilities, and health management (enhancing mental and physicalhealth management systems and promoting ﬂexible and diverse
work styles), all of which we have been focusing on in parallelwith organizational harmony and the development of a sharedawareness since the establishment of the company.
Our Management Philosophy, which serves as the purposeof the Group's oﬃcers and employees, states that we will "continue to provide services that live up to the expectations of customers and contribute to the development of regional society.
Under our human resources strategy "practicing human capitalmanagement," we will promote multifaceted eﬀorts to improvethe value of our human capital, as a stage where each employee will work to achieve our Management Philosophy.

Strengthening the capabilities of our humanresources as the core of human capital management
practices‒ What are the central initiatives of the human resources
strategy of practicing human capital management ?
Tanaka The core of the human resources strategy practicing
human capital management is strengthening the capabilitiesof our human resources, and the central initiatives to that end
are "ensuring the diversity of human resources and promoting
empowerment (D&I)" and "improving consulting capabilities."
In order to improve our ability to respond to the increasingly
diverse and complex challenges and needs of our customers
and the local community, it is essential that we develop andsecure diverse human resources, including women, with diverse
attributes, perspectives, abilities, and professional backgrounds.
Increasing the diversity of human resources and our consulting capabilities will enable us to address major environmental
changes in the age of VUCA, and provide us with the driving
force to advance toward the creation of new value.
We are working to ensure the diversity of human resources
and promote empowerment (D&I) mainly through the development and appointment of women and mid-career human resources (experienced hires). With regard to the promotion of theempowerment of women, we have been focusing on their development through Daishi Hokuetsu Bank's "Empowerment Program
for Women," which we have been continuously implementing. In
June 2023, a person who completed this program was appointed as the ﬁrst female director of Daishi Hokuetsu Bank.
In fiscal 2022, we launched the TSUBASA Cross-Mentor
System as a new initiative between banks participating in the
TSUBASA Alliance. By providing opportunities for participants
to engage in dialogue and receive advice from senior management at other banks, we aim to promote the absorptionof knowledge from a broader perspective and create a higher
quality career development program aimed at developing thenext generation of leaders.
As part of our efforts to improve our consulting capabilities, we have been enhancing the quality and quantity ofvarious training programs, including the launch of a practical

01

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Message from Management

Overview of the Daishi Hokuetsu FG

CHAPTER

03

Value Creation Story

Interview with Oﬃcer in Chargeof Human Resources

training curriculum for employees responsible for sustainability atsales oﬃces of the bank branches from ﬁscal 2022. Additionally,in fiscal 2023, we established the Manabot business college
within the Group, where all Group employees can take practicalprograms concerning matters such as coaching methods and appbased methods for improving operational eﬃciency, to support
autonomous career development and reskilling. We will continue
to develop and expand our development and training systems tofurther enhance the capabilities of our human resources, which
will have a high level of both practical and professional skills.

Exercising our collective strength as an organization
as a synergy of human resource capabilities‒ How will we utilize the capabilities of our human resources, who will have a high level of both practical andprofessional skills, for the beneﬁt of both our customers
and local communities?
Tanaka By building a human resources portfolio and strengthening our human resources management, we will transform thecapabilities of our human resources with their diverse range ofstrengths, into our strength as an organization (collective strength
as an organization) and utilize it for the beneﬁt of our customers
and local communities.
In order to build our human resources portfolio, we are focusing on talent management to accurately ascertain capabilities,
skills, and experience, and to further enhance the eﬀectiveness of
our allocation of human resources in line with the issues, characteristics, etc., of our customers and local communities. We plan
to introduce a talent management system to serve as infrastructure for this purpose at Daishi Hokuetsu Bank in ﬁscal 2023.
In addition, with regard to strengthening human resourcesmanagement, we will continue to focus on training that focuses
on topics such as "unconscious bias" and "internal communication (psychological safety)," which are essential for the leadersof organizations, in order to improve employee engagement andestablish leadership across our organization that draws out thecapabilities of individual members of our human resources to the
maximum possible extent.
We believe that our continuous efforts in these areas andenhancement of such initiatives will lead to the creation of newvalue that exceeds expectations, by improving our collective
strength as an organization to solve the problems of our customers and local communities.

‒ A key factor in human capital management is whatsort of initiatives we implement to improve the workplace environment. Please tell us about these initiatives.
Tanaka The foundation for practicing human capital management
is a workplace environment that enables each and every employee to remain in good physical and mental health and work in anenergetic manner, while exercising their abilities to the maximum
possible extent, and that enables employees to learn and workon their own initiative. Based on this approach, we are strengthening our eﬀorts to strengthen our health management system

05
Corporate Data

Takayoshi
TanakaDirector, Daishi
Hokuetsu Financial
Group(Responsible for
Human Resources
Planning Division)and enhance employee engagement.
The Group has been focusing on health management andwork style reform as part of eﬀorts to strengthen our health management system. Accordingly, Daishi Hokuetsu Bank has beencertified as a Health & Productivity Management Outstanding
Organization (White 500) for six consecutive years, and we havealso obtained the highest level of certifications related to theempowerment of women and support for the next generation,such as Platinum Eruboshi and Platinum Kurumin Plus. In ﬁscal
2022, we introduced a ﬂextime system and enhanced our childcare leave system. By supporting the balance between work andchildcare in this way, we are creating a workplace environmentthat enables employees to fully exercise their abilities throughmore ﬂexible work styles.
Our initiatives to enhance employee engagement are aimed
at enhancing the sense of unity in our organization, enhancing the
motivation of each individual toward their work, and fostering anorganizational culture that respects the independent thoughts
and actions of individuals. Since our establishment, the company
has prioritized organizational harmony and the development ofa shared awareness. In addition, at Daishi Hokuetsu Bank, wehave expanded our system (Career Challenge System) for inviting
applicants for dispatch to Group companies, business partners,
local governments, and other organizations to take on new challenges in their career. The Bank has also introduced a side-job/
dual employment program to further boost employees life andjob satisfaction and enhance engagement by contributing to thesustainable growth of local communities through side-jobs in educational and cultural activities, etc., and dual job secondments
to companies, etc.
We believe that such measures to enhance the workplace environment will contribute to achieving mental and physical healthfor employees, as well as a sense of fulﬁllment in their work andsociety, and so-called well-being. We also believe that it will serve
as a driving force for each employee to autonomously enhancetheir abilities and maximize their performance to solve problems
for customers and local communities, and we will thus continue
to focus on achieving these goals.

Toward a sustained enhancement in corporate value‒ How will you improve corporate value in a drasticallychanging environment?
Tanaka The Group s human capital management practices aim toachieve a sustained enhancement in corporate value in order tocontinue contributing to the development of local communities,
by enhancing the value of our human capital, which means improving our human resources knowledge and skills and enhancing their adaptability and resilience to environmental changes.
These practices are thus based on the same approach as theGroup's Management Philosophy.
Through our eﬀorts in the three pillars of practicing human capital management, "strengthening of human resources capabilities,
exercise of collective strength as an organization, and improvement of the workplace environment, we will maximize the valueof our human capital by capturing the job aptitude and career
aspirations of a diverse range of human resources and thereby promoting the development of human resources over the medium andlong term, leading to a sustained enhancement in corporate value.

DAISHI HOKUETSU REPORT 2023

Workplace environment to improve engagement andwellbeing

04
Communication with Stakeholders

52

DAISHI HOKUETSU REPORT 2023

CHAPTER

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Value Creation Story

Business Base to Support New Value Creation
Strengths of the GroupSound Financial Position▲

Substantial Equity Capital

The Daishi Hokuetsu Financial Group s consolidated

Capital adequacy ratio (consolidated)

capital adequacy ratio for the ﬁscal year ended March2023 was 10.23%.

This figure exceeds both the domestic standard of

4% and the international standard of 8% based on the

10.35

Basel Accord, thus ensuring a sufficient level from the

10.51

10.23

%

viewpoint of soundness. Furthermore, the external ratingof the Daishi Hokuetsu Financial Group is "A+" from theJapan Credit Rating Agency (JCR), and Daishi Hokuetsu
Bank has received ratings of "A+" from the Japan Credit

Fiscal year ended Fiscal year ended Fiscal year ended
March2021
March2022
March2023

Rating Agency and "A3" from Moody's.

< Ratings >Japan Credit Rating Agency (JCR)

Moody s

A+

‒

A+

A3
(As of March 2023)▲

Policy for Return to Shareholders

While considering our public nature as a financial< Actual and forecast shareholder returns >group, in order to reward each one of our shareholders
Dividends per share (annual)moving forward, our basic policy is to continue stable
Sharereturns to shareholders while also ensuring an increase
Ordinary dividends Comholder
in internal reserves in order to strengthen our revenue
memorareturn
Inc.
Total
rate
base. Specifically, we aim to maintain a shareholder
dividend tive diviincrease dends
return rate of approximately 40%, when combining dividends and acquisition of treasury stock.
FY2020120 yen‒‒
120 yen 50.7%
In the fiscal year ending March 2024, in accordancewith this policy, the company plans to increase the orFY2021
120 yen‒‒
120 yen 36.1%
dinary dividend for the year by 10 yen, and to pay acommemorative dividend for the year of 10 yen to comFY2022
120 yen‒‒
120 yen 39.2%
memorate the fifth anniversary of the establishment of
the company and the 150th anniversary of the founding
FY2023 (forecast) 130 yen 10 yen 10 yen 140 yen‒
of Daishi Hokuetsu Bank.
Additionally, in the ﬁscal year ended March 2023, wepurchased treasury shares (470,600 shares), in order to ensure the stable return of proﬁts to shareholders and increase
our capital eﬃciency in accordance with our policy for return to shareholders.
Furthermore, consolidated ROE for the ﬁscal year ended March 2023 was 4.2%, an improvement of 0.7 percentage
points from the previous year. Over the medium to long term, we aim to achieve a consolidated ROE of 5% or more
based on enhancements to our proﬁtability.

53

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Overview of the Daishi Hokuetsu FG

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Value Creation Story

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Communication with Stakeholders

Corporate Data

Corporate Governance
Basic Approach to Corporate GovernanceIn order to achieve sustainable growth and increase corporate value over the medium to long term based on the Group s contributions to
the local community through the achievement of our Management Philosophy, the company has established a basic approach to corporate
governance, related basic policies, etc., and the contents thereof are disclosed in the Corporate Governance Guidelines.

Basic Approach to Corporate GovernanceIn order to obtain high recognition and establish unshakeable trusts from stakeholders including customers, local residents, andshareholders, the Group endeavors to improve ﬁnancial health and proﬁtability, while also striving to augment auditing and supervisory functions for corporate management, as well as to increase the transparency of management activities, based on our recognition that strengthening and enhancing corporate governance is an important management issue.

Overview of Corporate Governance Structure
The Board of Directors of the company is responsible for achieving
the Group's sustainable growth and medium- to long-term enhancement of corporate value, in order to obtain high recognition andestablish unshakeable trust from stakeholders including customers,
local residents, and shareholders. In order to fulﬁll this responsibility,
the Board of Directors makes decisions on basic management matters and important business execution for the Group as a whole, andsupervises the status of each Director's execution of their operations.
In addition, the company has established the Audit and Supervisory
Committee, which has a supervisory function, like the Board of
Directors, and also audits the execution of operations by directors,
and the Executive Committee, which determines matters related tothe execution of operations based on the policies of the Board of
Directors, manages the execution status of Group management plans
and strategies, and resolves and discusses matters delegated by the< Corporate governance organization chart >Board of Directors, as well as the Sustainability Promotion Committee,
ALM & Risk Management Committee, Compliance Committee, andRegional Revitalization Promotion Committee.
In addition, the Nomination and Compensation Committee has
been established as an advisory body to the Board of Directors, inorder to enhance fairness, transparency, and objectivity when considering important matters related to the appointment and dismissal of
directors, compensation, and succession planning, by securing opportunities for outside directors to appropriately participate and provide
advice. The important matters described above are determined by
the Board of Directors after deliberation and the receipt of a reportfrom the Nomination and Compensation Committee. In the eventthat the Nomination and Compensation Committee does not reach aunanimous agreement in a resolution on the content of this report, it
shall include all arguments in the report to the Board of Directors.
Appointment and dismissal

General Meeting of Shareholders

Appointment and dismissal

Nomination andCompensation Committee

Consultation and report

Human Resources
Planning Division

Cooperation and coordination

Auditing Division

Report

Audit

Risk Management
Department

Regional Revitalization
Promotion Division

Group Strategy Promotion
Division

Accounting Auditors

Compliance Committee

Secretariat of Audit andSupervisory Committee

Instructions
and orders

Executive
Committee

ALM & Risk Management
Committee

Corporate Planning
Division

Audit and Supervisory Committee

Audit

Committees

Sustainability Promotion
Committee

Regional Revitalization
Promotion Committee

Audit and supervision

Board of Directors

General Aﬀairs
Division

Regional Revitalization
Division

Guidance, management, and supervision

The Daishi Hokuetsu Lease

Daishi Hokuetsu Bank

Guidance, management, and supervision

Report and deliberation

Subsidiaries, etc.

Daishi Hokuetsu Research &Consulting

Audit

Daishi Hokuetsu Career Bridge

Daishi Hokuetsu CapitalPartners Co., Ltd.
Audit

The Daishi Computer Service

The Daishi JCB Card

The Daishi DC Card

The Hokuetsu Card

Daishi Hokuetsu IT Solutions

Bridge Niigata

DAISHI HOKUETSU REPORT 2023

Daishi Hokuetsu Securities

Report and deliberation

As of June27, 2023

54

DAISHI HOKUETSU REPORT 2023

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Value Creation Story

Business Base to Support New Value Creation
Corporate Governance< Board of Directors >Chair

President and Representative Director

Composition
Number of meetings
held in FY2022

Proportion of outside directors: 35.7% (5out of 14)
12 (once a month, in principle)
Director< Proportion of outside directors >October 2018 (at founding of the company)
Total numberof directors

Director

Outside directors

13

9

4

From June 2021

Proportion of outside directors

Number of meetings
held in FY2022

Director

Outsidedirectors

14

9

5

%

< Audit and Supervisory Committee >Composition

Total numberof directors

30.7(4/13)

Chair

Proportion of outside directors

35.7(5/14)%< Nomination and Compensation Committee >Full-time Audit and Supervisory
Committee Member
Proportion of outside directors: 83.3% (5out of 6)

Chair

President and Representative Director

Composition

Proportion of outside directors: 62.5% (5 out of 8)

Number of meetings
held in FY2022

12 (once a month, in principle)< Executive Committee >Chair

President and Representative Director

Composition

Directors (excluding members of the
Audit and Supervisory Committee)

Frequency of meetings

Outside directors

Main items
deliberated

Twice a month, in principle

Twice(1) Appointment and dismissal of directors(2) Selection and dismissal of representative directors(3) Selection and dismissal of directors with special duties(4) Compensation, etc., for directors (excluding members of
the Audit and Supervisory Committee) (maximum amountof compensation and individual compensation amounts)(5) Compensation, etc., for directors (members of the Audit
and Supervisory Committee) (excluding matters related
to allocation of individual compensation amounts)(6) Succession Planning< Knowledge, Experience, and Ability that the Board of Directors Needs to be Equipped with >The company has identiﬁed thirteen items as knowledge, experience and ability the Board of Directors need to be equipped
with, consisting of nine items common to ordinary corporations and four items special to the company as a regional ﬁnancial group.
Knowledge, experience, and abilities to be equipped with
Common to ordinary
companies
Special to a regional
ﬁnancial group(1) Corporate management, (2) Management strategy and sustainability, (3) Risk management, (4) HR management,(5) Sales, (6) Management theory, (7) Finance and accounting, (8) Legal aﬀairs and (9) IT systems(10) Corporate audit, (11) Market operations, (12) System administration and (13) Regional administration

The ﬁelds in which the internal directors have experience, and the ﬁelds in which outside directors are particularly expected tocontribute, are shown below. The Board of Directors as a whole has secured necessary skills for the company to practice management theory and realize the Medium-Term Management Plan.
Fields in which the internal candidates for director have experience(as a corporate oﬃcer or general manager)

(2)

Name

(3)

(4)

Management
Human
Risk
strategy andresources
management
sustainability
management

Directors who are not Audit andSupervisory Committee Members

Fujio Namiki●

Michiro Ueguri●

Makoto Takahashi●

Ken Shibata

●

●
●

(5)

(10)

(11)

Sales

Company
screening

Marketoperations

●

●

●
●

(12)

Fields in which the company s outside directors are
particularly expected to contribute

(1)

(6)

Systems and Corporate Management
operations management
theory

(7)

(8)

(9)

(13)

Financialaccounting

Law

IT andsystems

Regional
administration

●
●

●

●
●

●

Takayoshi Tanaka
Toshiyuki Maki●

Takashi Ishizaka●●

Tadanori Miyakoshi

Directors who are
Audit and Supervisory
Committee Members●

Takayoshi Konomura
Toshizo Oda

OutsideKazuaki Matsumoto

OutsideKunio Mori

OutsideTadashi Shirai

OutsideHiroyuki Kikuchi

Outside●●●●●Notes: 1. Outside indicates an outside director who fulﬁlls the independence criteria established by the Tokyo Stock Exchange Inc.
2. The table above does not represent all of the expertise held by the company s outside directors.

55

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Overview of the Daishi Hokuetsu FG

CHAPTER

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Value Creation Story

04

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Communication with Stakeholders

Corporate Data

Evaluation of the Eﬀectiveness of the Board of Directors in Fiscal 2022
The Board of Directors of the company analyzes
and evaluates the effectiveness of the Board of
Directors on an annual basis, including the composition and operation of the Board of Directors andthe status of the activities of Directors, and works to
improve the effectiveness of the Board of Directors
by using the PDCA cycle to implement measures toaddress issues that have been identiﬁed.
In ﬁscal 2022, the Board of Directors analyzed andevaluated the eﬀectiveness of the Board of Directors
as a whole after considering the results of self-evaluations conducted through surveys of all directors.
In the assessment of the Board of Directors, the effectiveness of the Board of Directors as a whole has
been ensured, for reasons such as those provided in
the table on the right under < Results of analysis andevaluation in ﬁscal 2022 >.
In ﬁscal 2023, we will consider and implement
measures based on the evaluation of eﬀectiveness inﬁscal 2022, as part of eﬀorts to further improve theeﬀectiveness of the Board of Directors. Furthermore,
the speciﬁc policies for initiatives are described in thetable below, < Status of initiatives in ﬁscal 2022 andpolicies for initiatives in ﬁscal 2023 >.

< Results of analysis and evaluation in ﬁscal 2022 >Details
●

●

●

●

●

●

Internal directors appropriately fulﬁll their duties and responsibilities as executive directors
or Audit and Supervisory Committee Members by utilizing their extensive experience in eachspecialized ﬁeld
As Audit and Supervisory Committee Members, outside directors actively speak at meetingsof the Board of Directors and provide appropriate advice and supervision based on their own
expert knowledge
As changes in the business environment surrounding the company have become more commonplace and complex, under the supervision of the Board of Directors, we have taken various measures to achieve unity of purpose and exercise the three major synergies set forthin the 2nd Medium-Term Management Plan (merger synergy, group synergy, and TSUBASA
Alliance synergy). We have achieved steady results from such measures, including exceeding
our target for consolidated proﬁt in ﬁscal 2022
With regard to sustainability initiatives, we added "practicing sustainability management" tothe basic strategies of our 2nd Medium-Term Management Plan in April 2022, and the Group
as a whole has been promoting such initiatives in accordance with the "Basic Sustainability
Policy" established in December 2021
With regard to initiatives related to human capital management, in April 2023, we changed
basic strategy III of our 2nd Medium-Term Management Plan from developing and enhancing
human capital to "practicing human capital management," and in May, we established theOﬃce of Human Capital Strategy at Daishi Hokuetsu Bank. In such ways, we have been
implementing initiatives aimed at enhancing the value of our human capital and practicing
health management
In addition, as measures to address the issues identiﬁed based on the eﬀectiveness evaluationin ﬁscal 2021, we have held information exchange meetings between outside directors andthe Presidents of Group companies, training sessions for officers by external lecturers to
support the accumulation of knowledge related to sustainability (six sessions in total), etc.
In such ways, we have been steadily making improvements aimed at enhancing the eﬀectiveness of the Board of Directors< Status of initiatives in ﬁscal 2022 and policies for initiatives in ﬁscal 2023 >Fiscal 2022

MatterPolicies for initiatives●

Human resources development witha view to appointing female directors
to ensure diversity on the Board of
Directors

Ensuring the diversity

Fiscal 2023
Main initiatives

Implementation of the "Empowerment
Program for Women" and the "TSUBASA
Cross-Mentor System" to train candidates forfemale directors within the company● In June 2022, a female executive oﬃcer was
appointed at Daishi Hokuetsu Bank, a subsidiary of the company●of the Board of
Directors●

Continued
development of
successors●

Further exerciseof the functions ofSuccessor development through feedback from representative directors
to directors concerning assessmentsof the development of successors
and training sessions, etc., to pass on
expertise, based on successor development plans
Further revitalization of the Board of
Directors and the Nomination andCompensation Committee throughcontinuous exchange of opinions
between outside directors and thePresidents of Group companies, etc.

outside directors

Holding of training sessions for officers by external lecturers, to support the accumulation ofknowledge on sustainability (six sessions in total)● The Board of Directors receives reports on matters discussed by the Sustainability Promotion
Committee, such as the status of sustainableﬁnance and CO2 reduction initiatives● In terms of information disclosure, the disclosure of information related to sustainability
initiatives based on TCFD recommendations
in securities reports, corporate governancereports, and integrated reports

sustainability

Operation of theBoard of Directors

-

-

●

●

●

Development of successor candidates through theimplementation of a range of development initiatives
that combine the utilization of internal resources
such as the passing on of knowledge to directors
by representative directors and the utilization of
external resources, such as the TSUBASA Alliance,
external experts, and industry associations, based on
successor development plans
Further revitalization of the Board of Directors and theNomination and Compensation Committee throughcontinuous exchange of opinions between outside directors and Presidents of Group companies, provisionof information on our company's activities, training foroutside directors, and other measures

Further enhancing the quality of discussions related tosustainability
Promotion of awareness of sustainability in thecompany and local communities led by the Board of
Directors● Enhancement of disclosure related to sustainability,
including disclosure based on the framework of the
TCFD recommendations and the disclosure of information related to human capital●●

DAISHI HOKUETSU REPORT 2023

Response to

Holding An information exchange meetings
between outside directors and the Presidentsof Group companies to explain and exchange
opinions on the outlines of Group companies
and the details of the businesses of eachcompany, as well as visits to sales oﬃces byoutside directors● From September 2022, monthly meetings of
the Audit and Supervisory Committee featured brieﬁngs on timely topics given by the
responsible general manager●

Further enhancement of discussions
on sustainability at meetings of theBoard of Directors with measures
such as the accumulation of expertisethrough independent self-study by directors aimed at practicing sustainable
management● Promotion of awareness of sustainability in the Group and local communities
led by the Board of Directors● Enhancement of disclosure related
to sustainability, including disclosure
based on the framework of the TCFD
recommendations●

issues surrounding

Held a training session for directors and Full-time
Audit and Supervisory Committee Members of
the company and our subsidiary banks by the
Chairman and Representative Director● Holding individual meetings to exchange
views with outside directors for directors of
the company●

Policies for initiatives
Human resources development with a view to appointing female directors through the continued implementation of development programs for female employees, to ensure diversity on the Board of Directors*In June 2023, a female director was elected at
Daishi Hokuetsu Bank (the ﬁrst female director at thebank), a subsidiary of the company● Appointment of persons with experience in otherindustries as directors and executive oﬃcers of Group
companies (including subsidiary banks) eligible to be
candidates for directors*In June 2023, Daishi Hokuetsu Bank selected a former
employee of a securities company (an experienced hire)as executive officer (concurrently serving as President
and Representative Director of Daishi Hokuetsu
Securities) (the ﬁrst such appointment at the bank)●Strengthening systems for timely and appropriate information coordination for outside directors●

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Business Base to Support New Value Creation
Corporate GovernanceOﬃcer Compensation▲

Outline of Policy for Determining Compensation, etc., for Directors

The amount of oﬃcer compensation for each director of
the company shall be determined each ﬁscal year based on
the following policy, by resolution of the Board of Directors
following deliberations and a report by the Nomination andRemuneration Committee for the amount of individual comCompensation shall be fair and highly reasonable, to ensure accountability to shareholders and other stakeholders.
● Levels of compensation, etc., shall take into consideration levels
at other companies, etc., and shall be appropriate to reward theroles and responsibilities of the Group's oﬃcers in aiming to become a ﬁnancial group that contributes to the regional economy
and society by achieving sustainable and stable growth throughthe sincere execution of business operations, etc.
● Compensation for directors who are not Audit and Supervisory
Committee Members shall consist of compensation able toensure that excellent human resources are retained for theGroup's senior management, and that also increases incentives
to performance in each ﬁscal year and increase corporate value●

pensation for directors who are not Audit and Supervisory
Committee Members, and by discussion among directors
who are Audit and Supervisory Committee Members for theamount of individual compensation for directors who are
Audit and Supervisory Committee Members.
over the medium to long term.
Speciﬁcally, compensation for directors who are not Audit andSupervisory Committee Members shall consist of basic compensation paid according to their roles and responsibilities, and for
directors who are not outside directors, bonuses linked to thedegree of achievement of performance indicators for a single
ﬁscal year, and trust-type stock compensation to increase incentives to increase corporate value over the medium to long term.
● Compensation for directors who are Audit and Supervisory
Committee Members shall be limited to basic compensationin consideration of the independence audit and supervisory
functions and independence of directors who are Audit andSupervisory Committee Members.
●

The company and the subsidiary banks have the same compensation system. In principle, the amount of compensation for directors who serve concurrently as directors of the company and a subsidiary bank, and who are not Audit and Supervisory Committee
Members, is the amount obtained by multiplying the amount of compensation of the subsidiary bank where they concurrently serveby a certain percentage.
▲Oﬃcer Compensation System
Basic Compensation
Classiﬁcation

Details

Directors who are not Audit
It shall consist of ﬁxed monthly compensation. The amount of basic compensation determined for each position shall be
and Supervisory Committee
determined by the Board of Directors after deliberation and a report by the Nomination and Compensation Committee.
Members
Directors who are Audit
It shall consist of ﬁxed monthly compensation. The amount of basic remuneration shall be determined according to whethand Supervisory Committee er the director is a full-time or part-time member of the Audit and Supervisory Committee, and shall be determined by
Members
discussion among the directors who are Audit and Supervisory Committee Members.

Performance-linked Compensation
Bonuses are performance-linked compensation based on
business performance in each fiscal year. Payment tables
in accordance with target levels of profit and the degree ofachievement of those targets are determined each ﬁscal yearby the Board of Directors after deliberation and a report by
the Nomination and Compensation Committee.
Details
Performance
Indicators andReasons for Selecting
the Performance
Indicators

Performance indicators consist of consolidated net income attributable to shareholders of the parent company, which is the basis
for calculating the shareholder return rate, and core business net
proﬁt, which indicates the level of proﬁts from the main businessesof the subsidiary banks, which are our major subsidiaries.

FormulaBonus = Standard amount of bonus for each position ×
Performance-linked coeﬃcient

Performance-linked coeﬃcient = Applicability ratio of consolidated
Performance-linked net income attributable to shareholders of the parent company forcoeﬃcient
the company × 0.5 + Applicability ratio of the core business net
proﬁt for the subsidiary banks × 0.5

Application rate

57

The application rate ﬂuctuates within a range of 70% to 130%, in
accordance with the level of achievement of targets for consolidated
net income attributable to shareholders of the parent company forthe company and core business net proﬁt for the subsidiary banks.
If consolidated net income attributable to shareholders of theparent company for the company or core business net proﬁt of
the subsidiary banks falls below 50% of the target, or the dividend is reduced, the application ratio will be deliberated by the
Nomination and Compensation Committee.
In addition, the Nomination and Remuneration Committee may deliberate the applicable ratio if it is deemed appropriate to evaluate
performance, etc., after eliminating the impact of any factors that
occur that should be considered as temporary special factors that
could not be expected when the payment table was set, etc.

The indicator target amounts and payment tables for ﬁscal
2023 are as follows.

< Fiscal 2023 target >Consolidated net income attributable to shareholders of theparent company for the company of 20.1 billion yen and corebusiness net proﬁt for the subsidiary banks of 27.8 billion yen
Ratio

Consolidated net income attributable to shareholders of theparent company of the company

Core business net proﬁt for thesubsidiary banks

130%

26.13 billion yen or more

36.14 billion yen or more

120%

24.12 billion yen or more andless than 26.13 billion yen

33.36 billion yen or more andless than 36.14 billion yen

110%

22.11 billion yen or more andless than 24.12 billion yen

30.58 billion yen or more andless than 33.36 billion yen

100%

20.1 billion yen or more and lessthan 22.11 billion yen

27.8 billion yen or more and lessthan 30.58 billion yen

90%

18.09 billion yen or more andless than 20.1 billion yen

25.02 billion yen or more andless than 27.8 billion yen

80%

16.08 billion yen or more andless than 18.09 billion yen

22.24 billion yen or more andless than 25.02 billion yen

70%Less than 16.08 billion yen

Less than 22.24 billion yen

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Corporate Data

Non-monetary Compensation
Non-monetary compensation consists of trust-type stockcompensation, and the standard amount of compensation
is determined for each position by the Board of Directors
after deliberation and a report by the Nomination andCompensation Committee. Points corresponding to theamount of compensation are granted once a year, and sharesof the company and money equivalent to the conversion
value of the company s shares equivalent to the accumulated points is delivered or paid through the trust when both
directors (including directors who are Audit and Supervisory
Committee Members) or executive officers of the company
and our subsidiary banks retire.

Composition Ratios of Compensation
Compensation for directors who are not Audit andSupervisory Committee Members consists of basic compensation, bonuses, and trust-type stock compensation, which
is non-monetary compensation, and standard amounts foreach position have been set for each type of compensation.

In terms of the composition ratios of compensation, a benchmark of 50:25:25 is generally used for the ratio of basic compensation to bonuses to trust-type stock compensation when
the performance-linked coeﬃcient for bonuses is 100%.

Succession Planning
In order to achieve sustainable growth and increase corporate value over the medium to long term, the company
has formulated a succession plan to ensure that the optimal
person succeeds to the position of President of the company,
who plays a central role in these eﬀorts, at the optimal time.
This plan consists of a "successor selection plan," which sets
forth a method for selecting the optimal person by ensuring
fairness, transparency, and objectivity when selecting candidates for the President and directors of the company, and a"successor development plan," which sets forth development
policies, methods of development, and methods for evaluating the status of the development of each candidate, in orderto ensure that candidates for the President and directors of
the company possess the qualiﬁcations and abilities requiredof them.
The status of the development of candidates for President
based on this plan, etc., is reported to the Nomination andRemuneration Committee on a regular basis.

Initiatives Related to Cross-shareholdings
The company has established the "Policy on Cross-shareholdings" based on the Corporate Governance Code, as follows.

Policy on Cross-shareholdings●

The company and Daishi Hokuetsu Bank will hold a limited number of cross-shareholdings, when it is judgedthat such cross-shareholdings will contribute to themaintenance and improvement of the corporate value ofour business partners and the Group over the medium
to long term, and will reduce cross-shareholdings after
suﬃcient dialogue with business partners, from the viewpoint of reducing risks associated with shareholdings,
capital eﬃciency, etc.

For individual cross-shareholdings, the Company has
established the "Cross-Shareholding Basic Policy, etc.,"
and the Board of Directors regularly veriﬁes and makesa comprehensive assessment of the appropriatenessof such cross-shareholdings, from the perspective of
medium- to long-term economic rationality, taking into
account returns and risks, the growth potential, future
potential, or revitalization, etc., of business partners, therelationship between business partners and the regional
economy, and business strategies, such as business alliances.

Carrying amount of cross-shareholdings
100 million yen

Down

5.4

billion yen

Down

678

666

612

578

March 31 2021

March 31 2022

March 31 2023

March 31 2026

10.0

billion yen

DAISHI HOKUETSU REPORT 2023

In line with this policy, with a view to further reducing cross-shareholdings, we set a target of reducing
cross-shareholdings held by Daishi Hokuetsu Bank by 10
billion yen (carrying amount) over a period of five years(from the end of March 2021 to the end of March 2026)
from ﬁscal 2020 (the year in which Daishi Hokuetsu Bank
was created by the merger), and announced it in May
2023.
As of the end of March 2023, we had reduced ourcross-shareholdings by 10 issues and 5.4 billion yen in carrying amount compared with the end of March 2022.

●

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Message
Message from Outside Director

Toshizo Oda
Director (outside)

Audit and Supervisory Committee Member

Daishi Hokuetsu Financial Group from theviewpoint of an outside director
As an outside director of the company, I was involvedin the establishment of the company (management inte-

gration) in October 2018, and the merger of Daishi Bank

company through regional contribution with people indivisions responsible for the execution of business operations.

century, these two banks had been competing as regional

Role and eﬀectiveness of the Board of
Directors

decision to integrate their management with a future-ori-

is to indicate to stakeholders the direction that the com-and Hokuetsu Bank in January 2021. Since the late 19thbanks based in Niigata Prefecture, but they made a boldented mindset, and achieved both a bank merger and theintegration of systems and administrative functions at thesame time. I believe the strong leadership of the Board of
Directors enabled the company to achieve this.

At Daishi Hokuetsu Bank, the exchange of personnel

between both banks began prior to the merger. After themerger, the company actively transferred personnel, regardless of the bank from which they originated, while of-ﬁcers repeatedly engaged in dialogue with employees toinstill the Management Philosophy as a common purpose.
As a result, nearly two and a half years after the merger,
I now feel that the company has steadily gone beyond

organizational harmony to become an organization with aunity of purpose.

Although the financial industry is often described as

more conservative than other industries, the company
has continuously moved forward, not only through theforward-looking management integration and bank merger, but also through measures such as the
Alliance,

TSUBASAa framework for wide-range regional part-nerships among regional banks, and the new Gunma-

Daishi Hokuetsu Alliance with The Gunma Bank, whosebusiness area is adjacent to that of the company within
the TSUBASA Alliance. The company is also expanding its
business areas, including restructuring its systems business to strengthen the collective strength of the Group.

As an outside director, I will continue to actively dis-59

cuss strategies targeting the sustainable growth of the

One of the important roles of the Board of Directors

pany should aim for over the medium to long term, andto lead the company toward the realization of that vision

through appropriate supervision. Speciﬁcally, I believe thatthe Board of Directors must lead the company, which is

required to be highly public as a leader in regional ﬁnance,

must to achieve its Management Philosophy of "continuing
to contribute to the development of local communities."

To this end, I recognize that an important role ofoutside directors is to make sure that the Management
Philosophy of "continuing to contribute to the develop-

ment of local communities" is achieved by utilizing ourprevious professional experience to ascertain the issues

facing local communities, examine from an objective

standpoint whether the company's initiatives have led
to the resolution of these issues, and adding a diﬀerent
perspective from that of persons within the company.
The company's outside directors are a diverse group of

members with a good balance of knowledge and experience. Many views are stated at meetings of the Board of

Directors, resulting in lively discussions. I myself try to use

my experience as a senior manager at a company thatpublishes a daily newspaper based in Niigata Prefecture

to express my opinions from a perspective that is conscious of the company's eﬀorts and its relationship withthe local community.

It is also important that outside directors develop a

deep knowledge of the company, in order to have open

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Corporate Dataand constructive discussions in the time-limited forum of

stances in society, but I believe there will be many new

are opportunities for outside directors to visit bank sales

Management Philosophy, the company must boldly takemeetings of the Board of Directors. In the company, thereoﬃces to hear real feedback from employees in the ﬁeld,
and to exchange information with the Presidents of Group
companies. Accordingly, I would like to exchange opinionswith employees in more frontline settings.

There are currently no women on the company s Boardof Directors. I have seen ﬁrsthand examples of cases in mybusiness opportunities for the company. As stated in theon the challenge of change and create new value.

Many stakeholders are eagerly anticipating the futureof the company. As an outside director of the largest ﬁnancial and information services group in Niigata Prefecture, I
will continue to fulﬁll my responsibilities.

own company and in many other companies where theselection of women as leaders has revitalized the organization and enhanced the organizational strength of the entire
company. There are various circumstances to consider,but I believe it is important to give female employees moreexperience as leaders and ensure that they enhance theirown abilities. The company has been actively promoting

the empowerment women while promoting work style reform. In June this year, Daishi Hokuetsu Bank appointed its

ﬁrst female director. I recognize the appointment of female
directors to ensure the diversity of the Board of Directors of

the company as an issue in the evaluation of the eﬀectiveness of the Board of Directors, and we are holding ongoing
discussions about this issue.

The future of the Daishi Hokuetsu Financial
Group
It is diﬃcult to forecast future changes in the environ-ment amid unprecedented rapid fluctuations in circum-

TOPICS

Information Exchange Meetings between Outside Directors and the Presidents of Group Companies

DAISHI HOKUETSU REPORT 2023

The company is implementing measures to enhance outside directors understanding of the Group, with theaim of further exercising the functions of outside directors on the Board of Directors and the Nomination andCompensation Committee.
In the ﬁscal year ended March 2023,
outside directors and the Presidents ofGroup companies held information exchange meetings, and outside directors
visited sales oﬃces of Daishi Hokuetsu
Bank.
In the future, we will continue toprovide information on the company's
activities and conduct training, etc., toenhance outside directors understanding of the Group, and thereby strengthen governance by further exercising thefunctions of outside directors.
Information exchange meeting between outside directors and the Presidents of Group companies

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Business Base to Support New Value Creation
Risk Management System
Basic Policy on Risk Management
The Group s basic policy of risk management is to stably secure proﬁts corresponding to risk and plan the appropriate
distribution of management resources, as well as to construct a system of mutual checks and balances for the various risks
faced by the Group. This is possible by accurately recognizing and ascertaining various risks, engaging in appropriate management and supervision of risks, and auditing these processes related to risks.

Outline of Risk Management System
Based on the above basic policy, the Group has established a Risk Management Department as a supervisoryorganization that understands and manages risk comprehensively, cutting across organizational boundaries. Furthermore,
the Group has established the ALM & Risk Management
Committee to comprehensively ascertain and manage
the status of ALM and risks throughout the Group, and tocontribute to maintaining a healthy Group and increasing
profitability by reviewing appropriate response measures,etc. Meetings of the ALM & Risk Management Committee
are held as necessary. Audit and Supervisory Committee
Members also attend meetings of the committee. Minutes
from meetings of the ALM & Risk Management Committee
are reported to the Board of Directors and other entities asappropriate in an eﬀort to resolve and reform problems related to risk.
Additionally, the Auditing Department (Internal Audit

Department) is under direct supervision of the Board of
Directors and is ensured independence from the department
being audited. The Auditing Department conducts strict
audits for overall business, and veriﬁes the appropriatenessand eﬀectiveness of internal controls systems.
Under this risk management system, the Group implements risk capital allocation at subsidiary banks in order tomaintain healthy business and achieve eﬃcient utilization ofcapital.
Additionally, the Group anticipates the interruption ofbusiness due to unexpected emergencies such as earthquakes and other large-scale disasters, and deﬁnes priority
business operations, etc., for continuity at Daishi Hokuetsu
Bank. The Group has established the Basic Rules for BusinessContinuity to deﬁne timely and accurate management andinstructions for the bank, and through such measures, hasconstructed a risk management system.

< Diagram of risk management system >Audit and supervision

Board of Directors

Audit and Supervisory Committee

ReportRisk Management Department(Risk Management
Administration Division)[Types of risks](considering climaterelated risks withineach type of risk)

Credit risk

Market risk

Liquidity risk

Instructions (development of risk management systems, etc.)

Bridge Niigata

Daishi Hokuetsu IT Solutions

The Hokuetsu Card

The Daishi DC Card

Departments with jurisdiction by risk category

The Daishi JCB Card

Cybersecurity risk

The Daishi Computer Service

Operational risk

Cybersecurity risk

Daishi Hokuetsu Capital Partners Co., Ltd.

ALM & Risk Management
Committee
Compliance Committee
IT Risk Management Committee

Daishi Hokuetsu Research & Consulting

Liquidity
riskOperational risk

The Daishi Hokuetsu Lease

Marketrisk

Audit

Daishi Hokuetsu Career Bridge

Credit risk

Risk Management Division(Risk Management Administration Division)

Audit

Auditing Division

Daishi Hokuetsu Securities

Committee

Management Meeting

Cooperation and coordination

Reporting & deliberation (risk status, response guidelines)

Board of Directors Audit and Supervisory[Types of risks](considering climaterelated risks withineach type of risk)

Instructions
and orders

Executive
Committee

ALM & Risk Management
Committee

Sales oﬃces, Head Oﬃce, Group companies
As of June 27, 2023

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Corporate Data

Deﬁnition of Each Type of Risk and Related Management Systems
Credit risk
Credit risk is the risk that the value of principal or interest of aloan will decrease or disappear due to bankruptcy, deterioration of
credit, etc., at a business partner to whom a bank has lent money,
thus resulting in a loss incurred by the bank.
The Group operates and manages credit risk in an appropriate
matter based on various rules concerning credit risk management.
In terms of structure, the Risk Management Department is responsible for controlling credit risks, and maintains various rules
concerning credit risk management, as well as for the planning andoperation of analysis, evaluation, and improvement activities.
At Daishi Hokuetsu Bank, credit divisions, completely detachedfrom sales promoting divisions, conduct strict screening and manage problematic loans appropriately. It also aims for sound management of assets through management improvement support

activities to customers, etc., the approach being promoted fully
across both banks. Credit rating and self-assessment of loans, etc.,
is strictly enforced through a two-stage assessment system, one
by the sales oﬃce and the other by the head oﬃce division. In addition, the appropriateness and validity of credit rating and self-assessment is veriﬁed in the audit conducted by the Audit division.
Regarding the credit portfolio, credit concentration management for specific areas, industries, companies, groups, etc., areconducted in an appropriate manner. Furthermore, credit risk
quantiﬁcation* is being conducted and credit risk limits in line withtotal equity are being set.
*Credit risk quantiﬁcation is to digitize and estimate the amount of credit risk
involved in the credit portfolio, using statistical methods.

Market risk
Market risk is the risk that assets and obligations may ﬂuctuate
in value due to changes in market factors, thus resulting in a loss
incurred by the Group. Such market factors include domestic andforeign interest rates, valuations on securities, and foreign exchange rates.
The Group has established an operation policy for ALM to adjust market risks to an appropriate magnitude and to secure stable

income, and determines the risk limits and loss limits in securities
operation in line with the policy.
Furthermore, important matters concerning risk management
are reviewed in the ALM & Risk Management Committee, and it isprepared to promptly report any important situation that may occur in securities operations to the management.

Liquidity risk
Liquidity risk is the risk of the Group incurring a loss due to diﬃculty of securing required funds during ﬁnancing or being forced to
procure funds at an interest rate which is much higher than normal(ﬁnancing risk). It is also the risk of incurring a loss due to being
forced to engage in market transactions at signiﬁcantly disadvantageous conditions or prices (market liquidity risk).
In the Group, Liquidity risk management rules have been es-

tablished at Daishi Hokuetsu Bank to grasp and analyze the status
of ﬁnancing by the administration division responsible for ﬁnancing
to raise funds from the market as necessary.
In addition, response measures and a reporting and communicating structure have been established in order to respondpromptly under various situations, in accordance with the degree
to which funds are required in unforeseen circumstances.

Operational risk
Operational risk is the risk that the Group s internal administrative procedures, actions of directors or employees, or systems
operations may be inappropriate or may fail to function, or that
other external factors will occur resulting in a loss incurred by thebank. Based on risk factors, the Group categorizes and manages
the following types of risk: 1) administrative risk, 2) systems risk, 3)
information-security risk, 4) compliance risk, 5) human-error risk, 6)
tangible-asset risk, 7) outsourcing risk, and 8) reputation risk.

In the Group, in order to manage operational risk appropriately,
the Risk Management Department (a management supervisoryorganization) conducts activities such as making proposals on important matters related to operational risk management, accepting
reports on operational risks from subsidiary banks and monitoring
those risks, and verifying/improving the efficacy of management
systems for operational risks.

Cybersecurity risk
eﬀectiveness of measures for improvement and the eﬀectiveness of BCP training. In addition, we will promote initiatives toensure operational resilience, namely mapping the interconnectedness of the Group's internal systems, third-party risk
management, and reﬁning IT human resource planning.
(2) We will enhance our cybersecurity measures by closely exchanging information with TSUBASA Alliance member banks,
while identifying changes in the environment.
(3) We have been working to improve and strengthen our Group
governance system, such as promoting Group companies becoming wholly owned subsidiaries, and will further strengthen
our IT risk management system as part of the creation of an IT
governance system for the Group as a whole.

DAISHI HOKUETSU REPORT 2023

Cybersecurity risk is the risk that the Group will incur a loss as theresult of threats on the Group s cybersecurity from cyberattacks. In
order to strengthen our response to cybersecurity, the Group has established a Basic Policy for Cybersecurity Management, and responsemanuals for diﬀerent types of cyberattacks, and we also take measures such as the advance prevention and predictive management ofcybersecurity incidents.
In fiscal 2023, we implemented various measures based on thefollowing three basic policies, and the Executive Committee receives
regular reports on the status of these measures.
(1) With regard to system failures, we will promote autonomous
improvement and work to enhance our systems throughveriﬁcation of the analysis of the true causes of failures and62

DAISHI HOKUETSU REPORT 2023

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03

Value Creation Story

Business Base to Support New Value Creation
Risk Management System
Business Continuity
In the event of a crisis, such as a disaster (natural disaster,
epidemic, etc.) or an accident (power failure, system failure,etc.), the company's basic policy, based on our role as a regional ﬁnancial institution group, is to prioritize ensuring thesafety of customers, officers and employees of the Group,
their families, and others above all else. At the same time, bycontinuing our business operations, we will endeavor to avoid
any impact on the settlement system, and to protect the as-

sets and management resources of customers and the Group.
In addition, we have established standards of conduct, organizational systems, etc., for officers and employees of theGroup in the event of a crisis. In order to ensure the effectiveness of these measures, we conduct regular drills during
peacetime and report the results to the Board of Directors,
thereby verifying any issues and points for improvement in thebusiness continuity system.

Compliance▲

Basic Policy on Compliance

The basic policy of the company is that we work to develop
and establish a compliance system for maintaining trust in theGroup, and for ensuring the health and appropriateness ofour business. At the same time, all directors and employees
in the Group always act in accordance with our Management

Philosophy, and recognize the social responsibility and public
mission that must be fulﬁlled by our Group. Furthermore, alldirectors and employees understand and follow the code of
conduct regulated by the Japanese Bankers Association.

▲

Compliance System

The Group has established the Risk Management
Department as a department for overseeing compliance. The
Department engages in activities such as formulating compliance-related measures and monitoring the status of compliance in the Group. In addition, the Group holds meetings of aCompliance Committee, which is connected directly with management, once a month, in principle. The Committee deliberates matters such as the status of compliance managementin the Group, and works to develop and establish compliancesystems for the Group as a whole.
Furthermore, as a plan for practicing business operations
that place the utmost priority on compliance, based on
the company s Management Philosophy, we formulate aCompliance Program for each fiscal year, by resolution of
the Board of Directors, and the Board of Directors regularly
manages and evaluates the progress of the program.

▲

Initiatives to Instill and Establish Compliance AwarenessWithin the Group, the President and other oﬃcers utilize various opportunities to provide explanations of the Management
Philosophy and business operations that place the utmost priority on compliance, including meetings to exchange dialogue
with employees. In addition, we also implement initiatives
aimed at instilling and establishing an awareness of compliance through various group training programs, e-learning,
compliance seminars held at each department and branch,and other measures.
In addition, we are taking steps to identify the status of
the instillation of compliance at each Group company andenhance initiatives aimed at strengthening the early discovery
and control of issues, while also endeavoring to ensure the effectiveness of compliance systems through monitoring by thecompany s Risk Management Department and veriﬁcation by
the Auditing Division.

▲

Internal Reporting System (Opinion Box)

The company has established an internal reporting system(Opinion Box) that enables officers and employees of theGroup to receive opinions, proposals, and requests that contribute to management, as well as reports of violations of laws
and regulations, etc. The contact points for reports are theRisk Management Department and the Audit and Supervisory
Committee of the company. In order to protect whistleblow-ers, information is thoroughly managed, and a system has
been developed to ensure that whistleblowers are not treateddisadvantageously for the reason of having submitted a report.
Matters such as the content of reports submitted via thissystem and the results of responses are reported to the Boardof Directors on a regular basis.

▲

Cutting Relations with Organized Crime

The Group has established the Basic Policy on Organized
Crime to block any relationship with organized crime, i.e.,groups and individuals who pursue economic interests using
violence, force, and fraud.
We will work in closer cooperation with external organizations with professional expertise, such as the police andlawyers, and will not engage in backroom deals with these63

elements nor provide them with inappropriate favors or funds.
Furthermore, we have established a system through which
the organization as a whole will deal with elements that posea threat to social order and safety. This involves taking a decisive stance of cutting oﬀ all relations and using both civil andcriminal legal measures to deal appropriately with any unreasonable demands.

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Overview of the Daishi Hokuetsu FG

CHAPTER

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04

05

Communication with Stakeholders

Corporate Data▲

System for Preventing Money Laundering, etc.

The Group recognizes that the prevention of money laundering and terrorist ﬁnancing is one of the most important responsibilities for a ﬁnancial institution to perform. Accordingly, we position it as an important issue in terms of business strategy, andwe are working to implement systematic measures in line withthe "Basic Policy on Countermeasures against Money Launderingand Terrorist Financing. laundering and terrorist ﬁnancing is oneof the most important responsibilities for a ﬁnancial institution
to perform.
In our company, the oﬃcer in charge of the Risk Management
Department is the person responsible for overseeing measures to combat money laundering, and the Risk Management
Department is the department overseeing these efforts. The●●

Identiﬁcation and assessment of risks associated with theuse of goods, services, etc., for money laundering and terrorist ﬁnancing, and the implementation of risk-mitigation
measures in accordance with the nature of these risks
Introduction of various IT systems to properly manage
risks associated with money laundering and terrorist financing

In addition, TSUBASA Alliance, Co., Ltd., which was jointly
established by Daishi Hokuetsu Bank with the participationof TSUBASA Alliance member banks, has established an AntiMoney Laundering Center (AML Center) within the company,

Group has a system in place to centrally manage measuresagainst money laundering and terrorist ﬁnancing throughout theGroup as a whole, and the status of the management of thesemeasures is regularly reported to the Compliance Committee,
the Board of Directors, etc.
In addition, at Group companies, including Daishi Hokuetsu
Bank, we have appointed persons responsible for these eﬀorts
from among their respective oﬃcers, and have also establisheddepartments to oversee these eﬀorts. In order to prevent money
laundering and terrorist ﬁnancing, as well as to protect customers' assets from various financial crimes, such as specialized
fraud, the Group is mainly implementing the following measures.

●

●

●

Regular conﬁrmation and updating of customer information in accordance with the Guidelines for Anti-Money
Laundering and Combating the Financing of Terrorism
formulated by the Financial Services Agency
Proactive appeals to customers to protect their assets
from ﬁnancial crimes, such as specialized fraud
Ongoing education and training for all Group oﬃcers andemployees

and work is underway to upgrade risk management systems
to prevent money laundering, terrorist ﬁnancing, etc., in collaboration with other participating banks.

▲

Customer-oriented Business Operations (Fiduciary Duty)

Daishi Hokuetsu Bank and Daishi Hokuetsu Securities havebeen conducting customer-oriented initiatives in the asset management advice business in accordance with our Basic Policy
on Customer-oriented Business Operations and Action Plan,
which the company announced in June 2019.
All our oﬃcers and employees will continue to work for thebest interests of our customers, contributing to their stable asset
building by proposing appropriate products and services thatmeet their investment objectives and life cycles, and by providing easy-to-understand information.
In addition, we will periodically announce the status of our initiatives, and review our basic policies and action plans as needed to achieve better business operations.

Status of Initiatives and Key Performance Indicators(KPIs) under the Basic Policy

The Basic Policy on Customer-oriented
Business Operations, Action Plan, and thestatus of initiatives and key performance indicators (KPIs) for ﬁscal 2022 are posted on
the company s website.

https://www.dhfg.co.jp/other/fiduciary/▲

Matters Related to the Internal Control System

Corporate Governance Report
For details of the company's basic approach
to internal control systems and the statusof their development, please refer to the"Corporate Governance Report" posted on
the company s website.

https://www.dhfg.co.jp/esg/governance/

DAISHI HOKUETSU REPORT 2023

The company has established the "Basic Policy on Internal
Controls" by resolution of the Board of Directors and we areworking to enhance its eﬀectiveness, in order to develop a "systems to ensure the properness of operations" at the company
and Group companies. Going forward, in order to respond appropriately to changes in the business environment, we will continue to strengthen and enhance our internal control systems bycontinuously reviewing these systems.

64

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04

Communication with Stakeholders

Communication with Stakeholders
The company builds relationships of trust through frequent communication with many stakeholders, including customers, local
communities, shareholders, and employees. In addition, in order to ensure the soundness and transparency of our management,
we actively engage in disclosure activities to create an understanding of the status of the company s management, sustainability
initiatives, and other matters.

Communication with Customers

Customers

Daishi Hokuetsu Bank works to improve services by sharing opinions and requests received from customers throughdialogue at counters, etc., in the head oﬃce and branches,
Customer Opinion Cards placed on counters at sales ofﬁces, the website, call centers, etc.

Products
Sales oﬃces

Services

Customer Opinion
Cards

Branches

WebsiteATM

Opinions and requests

Examples of service improvements based on customer feedback●●

Renewal of the Daishi Hokuetsu Little Bank smartphone app (see page 37 for details)
Standardization of inheritance procedures among ﬁnancial institutions in Niigata Prefecture (see page 37 for details)

Communication with Regional Society▲

Financial Education Activities

In order to support the physical and emotional development of children
in local communities, Daishi Hokuetsu Bank has held the Daishi Hokuetsu
Academy since the ﬁscal year ended March 2014, as an activity to provide ﬁnancial education. A total of 13,486 students participated during theperiod from when the academy opened until the ﬁscal year ended March
2023.

▲

Scholarships from the Daishi Hokuetsu Scholarship Association

Since 1962, Daishi Hokuetsu Bank has granted non-repayable scholarships to young people with outstanding academic records who are unable
to attend university for ﬁnancial reasons.

School visit

Number of
students
grantedscholarships

1,248

people(FY1962 to FY2022)▲

Initiatives to Promote Sports and Culture

Daishi Hokuetsu Bank is actively involved in the promotion of local sports, and has sponsored the Healthy Daishi Hokuetsu Bank Cup
Volleyball Tournament for Niigata Prefecture Elementary School Students
since 1989, and the Daishi Hokuetsu Bank Battle of the Flags YouthBaseball Tournament since 1999, while also providing support for local
sports clubs.
In order to promote regional music and artistic culture, Daishi Hokuetsu
Bank also holds the Daishi Life-Up Concert to provide high-quality music,
traditional performing arts, and other events.

Elementary school volleyball
tournament

Daishi Hokuetsu Hall

Ceremony for donation to the
Sado Japanese Crested Ibis Conservation Center

Donated snow blower▲

Volunteer activities by the Daishi Hokuetsu Magokoro Association

Daishi Hokuetsu Bank engages in volunteer environmental protection activities and donates to environmental protection and social welfare groups
in Niigata Prefecture through the Daishi Hokuetsu Magokoro Association,an organization operated through voluntary participation and donations
from executives and employees.

65

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Communication with Stakeholders

Corporate Data

Communication with Shareholders▲

Disclosure Activities

The company actively engages in disclosure activities to create anunderstanding of the status of management, sustainability initiatives,and other matters among shareholders.
In the fiscal year ended March 2023, we held company briefing
sessions for individual and institutional investors. Videos of company briefing sessions and related materials are available on thecompany s website.

Company brieﬁng session for individual investors

Company Brieﬁng Materials

https://www.dhfg.co.jp/
financial/ir/session/

Video of company brieﬁng▲

Shareholder Beneﬁts System

The company has implemented a shareholder beneﬁts
system in order to thank shareholders for their continued
support, to increase the appeal of investing in our company s
stock, and to encourage more people to engage in long-termownership of the company s stock.

Applicable
Shareholders

Details

Number of Shares Owned

Amount of Gift

100 shares to less than 1,000 shares

Equivalent to 2,500 yen

1,000 shares or more

Equivalent to 6,000 yen

Shareholders who have continuously owned at least 100 shares (1 unit) for at least one year (the same
shareholder number is listed continuously at least 3 times in the shareholder registry as of March 31 and
September 30 of each year), with March 31 as the date of record shall be applicable.
(1) Catalog listing special local goods from Niigata Prefecture and various types of donations(2) Catalog listing special local goods from other prefectures as a TSUBASA Alliance Joint Plan

Communication with Employees

Oﬃcer Dialogue Exchange Meeting

DAISHI HOKUETSU REPORT 2023

In order to achieve our Management Philosophy and ensure that all oﬃcers and employees can focus on their dayto-day operations with a unity of purpose, the company
holds Officer Dialogue Exchange Meetings, in which the
President and other oﬃcers directly communicate their views
and the importance of compliance to employees.
See page 48 for more information on Officer Dialogue
Exchange Meetings, etc.

66

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05

Corporate Data

List of Executives
Director (As of June 27, 2023)
Chairman and Representative
Director

President and Representative
Director

Number of years served as
director

4 years 9
monthsNumber of years served as
director

4 years 9
monthsAttendance at meetings ofthe Board of Directors

11 / 12

Attendance at meetings ofthe Board of Directors

12 / 12

Attendance at meetings of
the Nomination andCompensation Committee

2/2

Attendance at meetings of
the Nomination andCompensation Committee

2/2

Number of the Company's
shares held

9,200

Number of the Company's
shares held

4,500

Fujio Namiki

Senior Managing and Representative
Director

Director

Number of years served as
director

4 years 9
monthsNumber of years served as
director

3 years

Attendance at meetings ofthe Board of Directors

12 / 12

Attendance at meetings ofthe Board of Directors

12 / 125,050

Number of the Company's
shares held

3,200

Makoto Takahashi

Number of the Company's
shares held

Director

Takayoshi Tanaka

Number of years served as
director

Ken Shibata

Director

Toshiyuki Maki

2 years

Number of years served as
director

2 years

Attendance at meetings ofthe Board of Directors

12 / 12

Attendance at meetings ofthe Board of Directors

12 / 12

Number of the Company's
shares held

5,026

Number of the Company's
shares held

900

Director

Director

Newly appointed

Newly appointed

Takashi Ishizaka

Number of the Company's
shares held

67

Michiro Ueguri

1,500

Tadanori Miyakoshi

Number of the Company's
shares held

750

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Communication with Stakeholders

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Corporate Data

Director (As of June 27, 2023)
Director (Audit and Supervisory
Committee Member)

Takayoshi Konomura
Newly appointed

Number of the Company's
shares held

1,900

Outside directors (As of June 27, 2023)
Director (outside) Audit andSupervisory Committee Member

Director (outside) Audit andSupervisory Committee Member

Number of years served as
director
Attendance at meetings of theBoard of Directors

Number of years served as
director
Attendance at meetings of theBoard of Directors

Toshizo Oda

Attendance at meetings of the
Audit and Supervisory Committee
Attendance at meetings of theNomination and Compensation
Committee
Number of the Company's shares
held

4 years 9
months
12 / 1212 / 122/2
4,000

Kazuaki Matsumoto

Attendance at meetings of the
Audit and Supervisory Committee
Attendance at meetings of theNomination and Compensation
Committee
Number of the Company's shares
held

4 years 9
months
12 / 1212 / 122/2
200

Director (outside) Audit andSupervisory Committee Member

Director (outside) Audit andSupervisory Committee Member

Number of years served as
director

Number of years served as
director

Kunio Mori

Attendance at meetings of theBoard of Directors
Attendance at meetings of the
Audit and Supervisory Committee
Attendance at meetings of theNomination and Compensation
Committee
Number of the Company's sharesheld

2 years
12 / 1212 / 122/2
200

Tadashi Shirai
Attendance at meetings of theBoard of Directors
Attendance at meetings of the
Audit and Supervisory Committee
Attendance at meetings of theNomination and Compensation
Committee
Number of the Company's shares
held

1 year12 / 1212 / 122/2
200

Director (outside) Audit andSupervisory Committee Member

Hiroyuki Kikuchi

Attendance at meetings of the
Audit and Supervisory Committee
Attendance at meetings of theNomination and Compensation
Committee
Number of the Company's shares
held

1 year12 / 1212 / 122/20*Attendance at meetings of the Board of Directors, the Audit and Supervisory Committee, and the Nomination and Compensation Committee
is from the conclusion of the 4th ordinary general meeting of shareholders of the company in June 2022 until the 5th ordinary general meeting of shareholders of the company in June 2023.

DAISHI HOKUETSU REPORT 2023

Number of years served as
director
Attendance at meetings of theBoard of Directors

68

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CHAPTER

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Corporate Data

List of Group Companies
Status of Each Group Company(As of July 31, 2023)

Company names:

Main business activities

The Daishi Hokuetsu Bank, Ltd.

1071-1 Higashiborimae-dori 7-bancho, Chuo-ku, Niigata-shi, Niigata Prefecture

Daishi Hokuetsu Securities Co., Ltd.

Banking

Date of establishment

Capital stock

November 2, 1873

¥32,776 million

Komehyakudawara Place West Building, 6th Floor 3-10 Ote-dori2-chome,
Nagaoka-shi

Securities

August 8, 1952

¥600 million

Daishi Hokuetsu Career Bridge, Co., Ltd.

HR recruitment services andconsulting services related tocorporate HR

May 24, 2019

¥30 million

November 11, 1974

¥100 million

Consulting services and survey, research,and information provision services
related to the economy and society

July 1, 1997

¥30 million

Venture capital services

June 8, 1984

¥20 million

Computer-related business

May 10, 1976

¥15 million

November 12, 1982

¥30 million

March 1, 1990

¥30 million

June 1, 1983

¥20.45 million

March 20, 1970¥100 million

April 1, 2019

¥70 million

October 27, 1978

¥50 million

August 20, 1986

¥210 million

Hokuetsu Daiichi Bldg., 2nd Floor 2-25 Higashi-odori1-chome, Chuo-ku,
Niigata-shi

The Daishi Hokuetsu Lease Co., Ltd.

Leasing2-10 Akashi2-chome, Chuo-ku, Niigata-shi

Daishi Hokuetsu Research & Consulting, Ltd.

Daishi Kaijo Bldg., 1-18 Higashiodori2-chome, Chuo-ku, Niigata-shi

Daishi Hokuetsu Capital Partners Co., Ltd.

Daishi Kaijo Bldg., 1-18 Higashiodori2-chome, Chuo-ku, Niigata-shi

The Daishi Computer Service Co., Ltd.

1-17 Abumi1-chome, Chuo-ku, Niigata-shi (inside the Daishi Hokuetsu Bank
Business Center)

The Daishi JCB Card Co., Ltd.

Credit cards and credit guarantees

The Daishi DC Card Co., Ltd.

Credit cards

The Hokuetsu Card Co., Ltd.

Credit cards and credit guarantees

Daishi Hokuetsu IT Solutions Co., Ltd.

Computer-related business

Daishi Kaijo Bldg., 1-18 Higashiodori2-chome, Chuo-ku, Niigata-shi

Daishi Kaijo Bldg., 1-18 Higashiodori2-chome, Chuo-ku, Niigata-shi

Hokuetsu Higashi Bldg., 4th Floor 9-20 Kesajiro1-chome, Nagaoka-shi

11-21 Nuttari-Higashi2-chome, Chuo-ku, Niigata-shi

Bridge Niigata Co., Ltd.

1071-1 Higashiborimae-dori 7-bancho, Chuo-ku, Niigata-shi, Niigata Prefecture

Sales channel development,
tourism promotion, and productivity
improvement businesses

The Daishi Guaranty Co., Ltd.

Hokuetsu Daiichi Bldg., 3rd Floor 2-25 Higashi-odori1-chome, Chuo-ku, Niigata- Credit guaranteesshi

The Hokuetsu Credit Guarantee Co., Ltd.

Hokuetsu Daiichi Bldg., 3rd Floor 2-25 Higashi-odori1-chome, Chuo-ku, Niigata- Credit guaranteesshi

The Hokuetsu Leasing Co., Ltd.

Leasing

Hokuetsu Higashi Bldg., 5th Floor 9-20 Kesajiro1-chome, Nagaoka-shi

November 1, 1982

¥100 million

Information About The Daishi Hokuetsu Bank s Branch Network (as of July 31, 2023)
Number of branches: 204
190 branches within Niigata Prefecture(including 6 ﬁeld oﬃces)
14 branches outside of Niigata
Prefecture

Sado Area

Number of sites: 151(5 branches, 3 sites)*The number of sites shows the number of sales sites
after the integration of branches using the branch-inbranch method.
*The number of branches does not include three virtual
branches.

Click here forour website

Joetsu Area

Shimoetsu Area
(102 branches, 72 sites)

Chuetsu Area
(64 branches, 48 sites)(19 branches, 15 sites)

Please refer to the Daishi Hokuetsu Bank website for speciﬁc store locations,business hours, etc.

69

Outside Niigata(14 branches, 13 sites)Corporate Logo and Corporate Colorof the Daishi Hokuetsu FG

Corporate Logo

Based on the motif of geography in Niigata Prefecture, the corporate logo uses a golden color representing bountiful harvests ofrice to express the expansive land, and uses the corporate color
azure to express the rivers which moisten that land and the vast
Sea of Japan connecting with the rest of the world.
The elliptical shape in the center of the logo was designed in
the image of islands and rice in Niigata Prefecture.
The two lines rising upwards depict how Daishi Bank andHokuetsu Bank form a single massive surge, boldly challenging
changes for the future and continuing to contribute to regionalsociety.

Corporate Color

Azure
Blue colors create positive images such as trust, sincerity, andfuture orientation. Among blue colors, azure is a particularly richand beautiful shade.
In our logo, the color azure represents the vast Sea of Japan
which borders Niigata Prefecture; the Shinano River, Agano River,and other rivers which ﬂow into the Sea of Japan after moistening
the fertile land; and the clear expanse of blue skies. This color represents how our new ﬁnancial group will continuously grow in the
DAISHI HOKUETSU REPORT 2023

future while earning the trust of regional society.

70Financial Data
CONTENTS 
Consolidated Balance Sheets

72

Consolidated Statements of Income

74

Consolidated Statements of Shareholders' Equity

75

Consolidated Statements of Cash Flows78

Non-Consolidated Balance Sheets (Daishi Hokuetsu Bank)

91

Non-Consolidated Statements of Income (Daishi Hokuetsu Bank) 92

71

Consolidated Balance Sheet
Years ended March 31, 2023
Note: The translations of the Japanese yen amounts into US dollars are using the prevailing exchange rate at March 31,
2023, which was ¥133.53 to US $1.
■ Assets(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

Allowance for loan losses¥2,758,985
14,1153,018
2,501,271
5,114,102
16,304
175,270
56,855
13,91914,352
10,295
18,966(27,153)¥2,031,509
15,6092,558
2,871,378
5,265,963
19,566
213,92956,018
11,428
16,521
21,77820,738(29,048)$15,213,880
116,899
19,156
21,503,619
39,436,553
146,533
1,602,105
419,51785,590123,731
163,097
155,312(217,546)

Total assets¥10,670,304¥10,517,951$78,768,453

Cash and due from banks
Monetary claims bought
Trading account securities
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Assets related to retirement benefits
Deferred tax assets
Customersʼ liabilities for acceptances and guarantees■ Liabilities(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

Acceptances and guarantees¥8,207,503
233,401
37,006298,397
1,358,761
209
2,886
65,100
2,350
120
541
653
36
1,454
1,615
16
2,610
5,163
18,966¥8,367,554
213,228
175,576
308,046
902,795
463
8,386
91,348
2,354
107
697
625
37
1,189
1,910
16
2,541
4,907
20,738$62,664,231
1,596,857
1,314,883
2,306,945
6,760,995
3,470
62,809684,105
17,632
801
5,225
4,687
278
8,905
14,309127
19,03136,754
155,312

Total Liabilities¥10,236,798¥10,102,527$75,657,364

Deposits
Negotiable certificates of deposit
Receivables under resale agreements
Payables under securities lending transaction
Borrowed money
Foreign exchanges
Borrowed money from trust account
Other Liabilities
Provision for bonuses
Provision for directorsʼ bonuses
Provision for share-based payment
Retirement benefit related liabilities
Provision for directorsʼ retirement benefits
Provision for reimbursement of deposits
Provision for contingent loss
Reserves under the special laws
Deferred tax liabilities
Deferred tax liabilities for land revaluation

DAISHI HOKUETSU REPORT 2023

72

■ Net Assets(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

Treasury stocks¥30,000
98,865281,174(1,566)¥30,000
102,980
293,973(3,066)$224,668
771,218
2,201,554(22,966)

Shareholdersʼ equity

408,473423,887

3,174,474

8,030
464
6,251
5,240

(19,886)
288
5,724
5,409

(148,928)
2,158
42,87440,50919,9875,044(8,463)-(63,385)-

Capital stock
Capital surplus
Retained earnings

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for landRemeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total Liabilities and Net assets

73(Millions of Yen)

433,505

415,423

3,111,088¥10,670,304¥10,517,951$78,768,453

Consolidated Statements of Income
Years ended March 31, 2023
Ordinary income
Financing income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans and bills boughtInterest on receivables under securities borrowing
transactions
Interest on deposits with banks(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

¥135,711¥148,759$1,114,051

62,68445,612
16,008(69)

80,06047,053
28,861(78)

599,566
352,384
216,140
(585)

1

-

-

Other income

762
369
53
28,71534,066
10,190

2,524
1,698
117
30,49232,902
5,185

18,90812,718883
228,358
246,405
38,837

Ordinary expenses

112,166

123,710926,461

2,287
458
10
0
112

12,140
435
12
2,859

90,9193,262
93
21,416174

5,889

44,104

33
1,497
7,703
24,17965,07012,924

37
2,905
7,788
32,40462,5568,820

280
21,76258,330242,674
468,483
66,05323,54525,048

187,589

418

1,046

7,834

0
418

1,046
-

7,834
-

622

1,144

8,574

119
74

395
749

2,958
5,616

1

-

-

Other interest income
Trust fees
Fees and commissions
Other ordinary income

Financing expenses
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money and bills soldInterest on bills soldInterest on payables under securities lendingtransactions
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions payments
Other ordinary expenses
General and administrative expenses
Other expenses
Ordinary profit
Extraordinary income
Gain on disposal of noncurrent assets
Gain on reversal of subscription rights to shares
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss
Transfer to reserve for financial products transaction
liabilities
Provision for share-based payment

427

-

-

Income before income taxes

23,342

24,949186,849

Income taxes-current
Income taxes-deferred

8,281
(469)

6,699
366

50,171
2,747

Net Income

15,53017,883

133,929

385

115

865

¥15,144¥17,768$133,064

Profit attributable to non-controlling interests
Net income reverting to parent company shareholders

Consolidated Statements of Comprehensive
IncomeYears ended March 31, 2023

Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Retirement benefit adjustment amountComprehensive income(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

¥15,530(27,869)(33,600)
4,916
814¥17,883(28,526)(28,519)(176)
168$133,929(213,636)(213,580)(1,318)
1,262(12,338)(10,643)(79,707)(11,042)(10,156)(76,058)¥(1,296)¥(487)$(3,649)(Comprehensive income attributable to)Comprehensive income attributable to equities of parent
Comprehensive income attributable to non-controllinginterests

DAISHI HOKUETSU REPORT 2023

Net Income(Millions of Yen)

74

Consolidated Statements of Shareholders’ Equity
Year ended March 31, 2022

(Millions of Yen)

Shareholders’ equity

Balance at March 31, 2021

Capital stock

Capital surplus¥30,000¥87,665

Cumulative effect of changes
in accounting policies
Restated balance

Retainedearnings¥271,627

Treasury stocks

Shareholdersʼ
equity¥(808)¥388,485(121)
30,00087,665271,506

(121)
(808)

388,363

Changes of items during theperiodDividends from surplus(5,490)(5,490)Net income reverting toparent company
shareholders

15,144

15,144Purchase of treasury stock
Disposal of treasury stock(57)

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests(1,088)(1,088)

330

273

14

14

11,257

11,257

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at March 31, 2022-

11,199

9,668

(758)

20,110¥30,000¥98,865¥281,174¥(1,566)¥408,473

Accumulated other comprehensive income
Total
Subscription Non-controlling
Valuation
Total net assets
Deferred gains
Remeasuremen accumulated
rights to sharesinterests
difference on
Revaluation
or losses on
ts of defined
otheravailable-forreserve for land
hedgesbenefit plans comprehensive
sale securities
incomeBalance at March 31, 2021

¥39,948¥(4,452)¥6,266¥4,426¥46,188¥692¥18,479

Cumulative effect of changes
in accounting policies
Restated balance¥453,845(121)

39,948(4,452)

6,266

4,426

46,188692

18,479453,723

Changes of items during theperiodDividends from surplus(5,490)Net income reverting toparent company
shareholders

15,144Purchase of treasury stock(1,088)

Disposal of treasury stock273

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests75

14
11,257

Net changes of items otherthan shareholders’ equity(31,917)

4,916

(14)

814

(26,201)(692)(13,434)(40,328)

Total changes of items during
period(31,917)

4,916

(14)

814

(26,201)(692)(13,434)(20,218)

Balance at March 31, 2022

¥8,030¥464¥6,251¥5,240¥19,987-¥5,044¥433,505

Year ended March 31, 2023

(Millions of Yen)

Shareholders’ equity
Capital stock
Balance at March 31, 2022

Capital surplus¥30,000¥98,865

Retained earnings Treasury stocks¥281,174¥(1,566)

Shareholdersʼ
equity¥408,473

Changes of items during theperiodDividends from surplus(5,496)(5,496)

Net income reverting toparent company
shareholders

17,76817,768Purchase of treasury stock
Disposal of treasury stock(1,507)(1,507)6

6(0)

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests

526

526

4,115

4,115

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at March 31, 2023

-

4,115

12,798(1,500)15,413¥30,000¥102,980¥293,973¥(3,066)¥423,887

Accumulated other comprehensive income
Valuation
Total accumulated Non-controlling
Remeasurementsinterests
difference on Deferred gains or
Revaluation
otherof defined benefit
available-for-sale losses on hedges reserve for landcomprehensive
plans
securities
incomeBalance at March 31, 2022

¥8,030¥464¥6,251¥5,240¥19,987¥5,044

Total net assets¥433,505

Changes of items during theperiodDividends from surplus(5,496)

Net income reverting toparent company
shareholders

17,768Purchase of treasury stock(1,507)

Disposal of treasury stock6

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests

526
4,115

Net changes of items otherthan shareholders’ equity(27,916)

(176)

(526)

168

(28,451)(5,044)(33,495)

Total changes of items during
period(27,916)

(176)

(526)

168

(28,451)(5,044)(18,081)

Balance at March 31, 2023

¥ (19,886)¥288¥5,724¥5,409¥ (8,463)-¥415,423

DAISHI HOKUETSU REPORT 2023

76

Year ended March 31, 2023

(Thousands of U.S.Dollars)

Shareholders’ equity
Capital stock
Balance at March 31, 2022

Capital surplus$224,668$740,398

Retained earnings Treasury stocks$2,105,703$ (11,730)

Shareholdersʼ
equity$3,059,040

Changes of items during theperiodDividends from surplus(41,160)(41,160)

Net income reverting toparent company
shareholders

133,064

133,064

Purchase of treasury stock
Disposal of treasury stock(11,286)(11,286)

50

48

(1)

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests

3,946

3,946

30,82130,821

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at March 31, 2023-

30,81995,850(11,235)

115,434$224,668$771,218$2,201,554$(22,966)$3,174,474

Accumulated other comprehensive income
Valuation
Total accumulated Non-controlling
Remeasurementsinterests
difference on Deferred gains or
Revaluation
otherof defined benefit
available-for-sale losses on hedges reserve for landcomprehensive
plans
securities
incomeBalance at March 31, 2022

$60,137$3,477$46,820$39,247$149,683$37,780

Total net assets$3,246,503

Changes of items during theperiodDividends from surplus(41,160)

Net income reverting toparent company
shareholders

133,064

Purchase of treasury stock(11,286)

Disposal of treasury stock48

Reversal of revaluation
reserve for land
Change in ownership interestof parent due to transactions
with non-controlling interests

77

3,946
30,821

Net changes of items otherthan shareholders’ equity(209,066)(1,318)(3,946)

1,262(213,069)(37,780)(250,849)

Total changes of items during
period(209,066)(1,318)(3,946)

1,262(213,069)(37,780)(135,415)

Balance at March 31, 2023

$ (148,928)$2,158$42,874$40,509$ (63,385)-$3,111,088

The Status of Financial Results (Consolidated)

Consolidated Statement of Cash Flows
Years ended March 31, 2023

(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

¥23,342
6,959
74
2,709
214
(332)
(6)
541
(2,767)(40)¥24,949
6,695
749
1,895
295
4
(13)
156
(2,169)(27)$186,849
50,1385,616
14,197
2,211
31
(102)
1,171
(16,249)
(209)

(4)

1

8

(376)

(265)

(1,990)

(12)

-

-

(62,684)
2,287(1,133)(0)
119
215(176,640)
94,079156,525(80,060)
12,140
11,104
(0)
(651)
460
(151,860)
160,050(20,173)(599,566)
90,91983,159(7)(4,875)
3,449(1,137,277)
1,198,614(151,078)

695,158(455,966)(3,414,710)

(48)

170

1,280

(1,035)(74,125)(1,493)
138,569(11,186)
1,037,742

Cash flows from operating activities
Income before income taxes
Depreciation costs
Impairment loss
Increase (decrease) in allowance for loan losses
Increase (decrease) in provision for contingent loss
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in provision for share-based payment
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for retirement liability
Increase (decrease) in provision for directors’ retirement
benefits
Increase (decrease) in provision for reimbursement ofdeposits
Increase (decrease) in provision for system cancellation
lossesFinancing income
Financing expenses
Loss (gain) related to securities
Foreign exchange losses (gains)
Loss (gain) on disposal of noncurrent assets
Net decrease (increase) in trading account securities
Net decrease (increase) in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money (excluding
subordinated borrowings)
Net decrease (increase) in deposits (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 exchange-assets
Net increase (decrease) in foreign exchange-liabilities
Net increase (decrease) in borrowed money from trust
account
Revenue for finance
Payments for finance
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities

109,972

9,648

72,258497
22(3,262)
254(24,430)
1,902

2,683

5,500

41,19565,441(2,508)(35,267)
803,860(6,174)
797,685

71,668(10,065)(46,953)(328,647)(9,831)(338,479)

536,720(75,376)(351,633)(2,461,224)(73,630)(2,534,854)(1,099,541)
783,306
233,472(1,906)80(921)(85,510)(1,372,921)
835,385
159,980(3,747)
2,097(1,572)(380,777)(10,281,744)
6,256,166
1,198,089(28,065)
15,709(11,779)(2,851,624)(5,490)(10)(1,088)0(5,496)(2)(1,507)
6(41,160)(22)(11,286)
48(2,352)(1,049)(7,862)(8,942)0703,233
2,054,043¥2,757,277(8,049)0(727,305)
2,757,277¥2,029,972(60,282)7(5,446,755)
20,649,121$15,202,366

Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Net cash provided by (used in) investment activities
Cash flows from financing activities
Dividends paid to non-controlling interests
Purchase of treasury stock
Proceeds from sales of treasury stock
Purchase of shares of subsidiaries not resulting in change
in scope of consolidation
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 the year
Cash and cash equivalents at the end of the year

DAISHI HOKUETSU REPORT 2023

Cash dividends paid

78

The Status of Financial Results (Consolidated)

Notes (From April 1, 2022, to March 31, 2023)(Basic items that form the foundation for preparation of consolidated
financial results)
1. Matters regarding the scope of consolidation
(1)

(2)

2.

(3)

(4)

4.

Nonconsolidated subsidiaries subject to application of equity method
There are no applicable items
Affiliated companies subject to application of equity method
There are no applicable items
Nonconsolidated subsidiaries not subject to application of equity method: 4companies
Daishi Food and Agriculture Assist Fund Investment Limited Partnership, Daishi
Startup Support Fund Investment Limited Partnership, Hokuetsu Sixth Industry
Support Fund Investment Limited Partnership, No. 1 Daishi Hokuetsu Regional
Creation Investment Limited Partnership.
Nonconsolidated subsidiaries not subject to application of equity method have been
excluded from the scope of application of equity method since their net profit or loss
for the current term (amount corresponding to equity), retained earnings(amountcorresponding to equity), and other accumulated comprehensive income(amountcorresponding to equity), etc., do not have an important impact on the consolidated
financial statements.
Affiliated companies not subject to application of equity method
There are no applicable items

Matters related to the fiscal year, etc., of consolidated subsidiaries
The closing date for consolidated subsidiaries is as follows:
Last day of March: 13 companies

Matters related to accounting policies

(1)
(2)

(3)
(4)

(5)

79

(6)

Matters related to the application of equity method

(1)

(2)

3.

Consolidated subsidiaries: 13 companies
Company names:
The Daishi Hokuetsu Bank, Ltd., Daishi Hokuetsu Securities Co., Ltd., The Daishi
Hokuetsu Career Bridge Co., Ltd., The Daishi Hokuetsu Lease Co., Ltd., Daishi
Hokuetsu Research & Consulting Ltd., Daishi Hokuetsu Capital Partners Co., Ltd., The
Daishi Computer Service Co., Ltd., The Daishi JCB Card Co., Ltd., The Daishi DC Card
Co., Ltd., The Hokuetsu Card Co., Ltd., The Daishi Credit Guarantee Co., Ltd., The
Hokuetsu Credit Guarantee Co., Ltd., Hokuetsu Leasing Co., Ltd.
The Hokuetsu Leasing Co., Ltd.
Nonconsolidated subsidiaries: 4 companies
Daishi Food and Agriculture Assist Fund Investment Limited Partnership, Daishi
Startup Support Fund Investment Limited Partnership, Hokuetsu Sixth Industry
Support Fund Investment Limited Partnership, No. 1 Daishi Hokuetsu Regional
Creation Investment Limited Partnership.
Nonconsolidated companies have been excluded from the scope of consolidation
since their assets, ordinary income, net profit or loss for the current term (amountcorresponding to equity), retained earnings (amount corresponding to equity), andother accumulated comprehensive income (amount corresponding to equity), etc.,
have little relevance and will not prevent rational judgment from being maderegarding the financial status and management performance of the corporate group.

Valuation criterion and valuation method for trading account securities
Valuation of trading account securities is made using the market value method (costof securities sold is calculated mainly by the moving average method).
Valuation criterion and valuation method for securities
The amortized cost method (straight-line method) using the moving average method
is used for securities held for ownership until maturity. For other securities, themarket value method (cost of sale to be calculated using the moving average method)is used. However, the prime cost principle using the moving average method is used
for shares without market value.
The valuation difference for other securities is all processed by the net asset directentry method.
Valuation criterion and valuation method for derivative transaction
Valuation of derivative transactions is conducted using the market value method.
Depreciation method for fixed assets(i) Tangible fixed assets (excluding leased assets)
The straight-line method is mainly used for tangible fixed assets.
Major service life is as follows:
Buildings
10 to 50 years
Other
2 to 20 years(ii) Intangible fixed assets (excluding leased assets)
The straight-line method is used for intangible fixed assets. Software used by theCompany is amortized based on the usage period (5 to 9 years) determined by theCompany and its consolidated subsidiaries.
(iii) Leased assets“Tangible fixed assets” and “Intangible fixed assets” included in leased assets related
to finance leases exempt from passage of title are depreciated by the straight-line
method with the lease period set to the statutory service life. As for residual value, theguaranteed residual value shall be used in cases in which a residual value clause isincluded in the lease agreement and zero for all other leases.
Criteria for recording allowances for loan losses
Allowances for loan losses of consolidated subsidiaries in the banking business arerecorded as per the depreciation and allowance criteria set in advance, as follows:
Claims related to debtors who are legally insolvent, such as those facing bankruptcy
or special liquidation (“Bankrupt debtors”) or debtors under equivalent situations(“Effectively bankrupt debtors”) are recorded as follows: The recorded amount is theremaining balance after deduction from the book value after direct reduction as
stated in the proviso, from the possible marketable collateral amount andrecoverable amount from guarantees.
For claims against debtors not currently insolvent but with a high risk of future
insolvency (“Potentially bankrupt debtors”), anticipated losses over the next three
years on the amount of balance, after deduction of the possible marketable collateralamount and recoverable amount from guarantees from the claim amount, arerecorded. Amounts of anticipated losses are calculated by the loss rate based on
average values of bad debt ratio over a set period of time in the past (threecalculation periods), according to actual bad debt over the past three years. If theloss rate based on average values over a longer period of time taking the pastbusiness cycle into account is higher, then the difference is added to this calculation
as necessary corrections for future predictions and other factors. For debtors fromwhom losses are anticipated to exceed the loss ratio, the amount deemed necessary
is recorded after comprehensive judgment of the possible recoverable amount.

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

(15)
(16)

For claims against one classification of normal debtors, amounts of anticipated losses
over the next year are mainly recorded. Furthermore, for debtors requiring attention,
after they are classified into three based on whether business improvement plans andpayables requiring special attention are present, the amount of anticipated loss over the
next three years is mainly recorded for claims against the two classifications, which
include debtors requiring special attention, and the amount of anticipated loss over the
next one year for claims against the other classification for debtors requiring attention.
Amounts of anticipated losses were calculated by the loss rate based on average valuesof bad debt ratio over a set period of time in the past (three calculation periods),
according to actual bad debt over the past one or three years. If the loss rate based on
average values over a longer period of time taking the past business cycle into account
was higher, then the difference was added to this calculation as the necessary corrections
for future predictions and other factors.
Sales-related divisions have conducted asset audits on all claims based on asset selfassessment criteria and the assessment results have been audited by the asset auditing
division independent of the division being audited.
Provided, however, that for collateral and claims with guarantees against Bankrupt
debtors and Effectively bankrupt debtors, the balance after deduction of the validated
amount of collateral and the amount expected to be recoverable from the guarantee arededucted directly from the amount of the claim as the estimated uncollectable amount,and this stands at 6,853 million yen.
An amount acknowledged to be necessary, in consideration of the past loan loss rate forgeneral claims and estimated uncollectable amount in consideration of individual
recovery possibilities for specific claims, such as those with default possibilities, arerecorded as allowances for loan losses of other consolidated subsidiaries.
Criteria for recording provision for bonuses
In preparation for an expected bonus payment to employees, the amount of the
expected bonus payment pertaining to the relevant consolidated fiscal year has beenrecorded as a provision for bonuses.
Criteria for recording provision for directors’ bonuses
In preparation for expected bonus payments to directors, the amount of the expectedbonus payment pertaining to the relevant consolidated fiscal year has been recorded
as provision for directors’ bonuses.
Criteria for recording provision for share-based payment
In preparation for payment of compensation to directors of the Company and someconsolidated subsidiaries under the share-based payment plan, the amount of
anticipated compensation to directors acknowledged to have occurred before theclosing of the current consolidated fiscal year has been recorded as provisions forshare-based payment.
Criteria for recording provision for director’s retirement benefits
In preparation for payment of retirement benefits to directors of consolidated
subsidiaries, the amount of expected retirement benefits for directors acknowledged
to have occurred before the closing of the current fiscal year has been recorded asprovisions for director’s retirement benefits.
Criteria for recording provision for reimbursement of deposits
In preparation for reimbursement of deposits from depositors for deposits in which
recording as a liability has been suspended, a loss occurring from future
reimbursement claims has been estimated, and the amount deemed necessary has
been recorded as a provision for reimbursement of deposits.
Criteria for recording provision for contingent loss
Provisions for contingent loss are recorded by estimating the loss and recording theamount judged to be necessary, for possible loss occurring in the future forcontingent events other than events provided under other provisions.
Criteria for recording reserves under the special laws
Reserves under special laws are reserves for financial product transaction liabilities
for consolidated subsidiaries conducting the securities business. The amountcalculated under the provisions of Article 46-5 of the Financial Instruments andExchange Act is set aside to compensate for loss in incidents occurring related tosecurities future transactions, etc.
Accounting method related to retirement benefits
In the calculation of retirement benefit liabilities, the benefit formula standard isadopted as the method of attributing the expected amount of retirement benefits
within the current consolidated fiscal year. Furthermore, the methods of processing
profit and loss for prior service costs and actuarial gain or loss are as follows:
Prior service cost : Profit and loss processing using the straight-line method for acertain number of years (10 years) within the average employee
residual term of service at the time of occurrence
Actuarial gain or : Profit and loss processing of the amount pro-rated by thelossstraight-line method for a certain number of years (10 to 12
years) within the average employee residual term of service atthe time of occurrence, will be treated as profit or loss from thefollowing fiscal year
It must be noted that some consolidated subsidiaries have adopted a simplified
method in the calculation of retirement benefit, in which the amount to be paid forvoluntary retirement at the end of the term is taken as the retirement benefit liability
in the calculation of retirement benefit liability and retirement benefit cost.
Criteria for conversion of foreign currency-denominated assets and liabilities into
Japanese yen
Foreign currency-denominated assets and liabilities are converted into Japanese yen
using the rate of exchange on the consolidated closing date.
Criteria for recording of important profits and expenses
Criteria for recording profits and expenses related to finance lease transactions are
conducted by recording sales and cost of sales, when lease fees are received.
Important risk hedging methods(i) Interest risk hedge
As a method of hedge accounting of interest risk occurring from financial assets
and liabilities of consolidated subsidiaries in the banking industry, certain assets
and liabilities are accounted for by deferred hedging by applying “individual
hedging,” which directly corresponds to the hedging target and the hedging
instrument. The effectiveness of the hedge is evaluated by verification of whether
the interest risk subject to hedging has been diminished by the hedging method.
In addition, exceptional processing for interest swaps are made, and judgment
regarding the requirements for exception processing is used in lieu of the judgmentof hedge effectiveness.
(ii) Exchange fluctuation risk hedging
A deferred hedge is adopted as the hedge accounting method for foreign exchange
fluctuation risk arising from financial assets and liabilities denominated in foreign
currencies of consolidated subsidiaries engaged in the banking business asprovided in “Handling in accounting and audit of foreign currency-denominatedtransactions, etc., in the processing of accounts in the banking industry” (TheJapanese Institute of Certified Public Accountants (JICPA) Industry-specificCommittee Practical Guideline No. 25, October 8, 2020, hereinafter referred to as“Industry-specific Committee Practical Guideline No. 25.” The effectiveness of thehedge is evaluated with currency swap transactions and exchange swap
transactions, etc., conducted with the aim of diminishing exchange fluctuation
risks of foreign currency-denominated monetary debts and credits and theeffectiveness of the hedge is evaluated by confirming the existence of a foreign
currency position equivalent amount that matches the foreign currencydenominated debts and credits, which are the targets of the hedge.

The Status of Financial Results (Consolidated)(17)

Of the above hedging relationships, the exceptional treatment prescribed in the
PITF in question is applied to all hedging relationships included in the scope of
application of “Treatment of Hedge Accounting for Financial Instruments that
Reference LIBOR” (PITF No. 40, March 17, 2022). The details of the hedging
relationships to which this PITF is applied are as follows.
Hedge accounting ...Deferral hedge accounting and exceptional accounting formethods
interest rate swaps
Hedging...Currency swaps and interest rate swaps
instruments
Hedged items...Securities and loans and bills discounted
Types of hedging ...Cash flow hedges and hedges against market fluctuationstransactions
Scope of funds in consolidated statement of cash flows
The scope of funds in the consolidated statement of cash flows is cash and deposits
with the Bank of Japan listed in “Cash and deposits” in the consolidated balance
sheet.

(Significant accounting estimates)(Application of the Implementation Guidance on Accounting Standard for Fair Value
Measurement)
From the beginning of the current consolidated fiscal year, the Company has decided to apply
the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021, hereinafter referred to as the “Implementation Guidance on
Accounting Standard for Fair Value Measurement”), and to apply the new accounting policies
specified in the Implementation Guidance on Accounting Standard for Fair Value
Measurement in accordance with the transitional treatment specified in paragraph 27-2 ofthe Implementation Guidance on Accounting Standard for Fair Value Measurement. This has
no impact on the consolidated financial statements.

(Yet-to-be-applied accounting standards, etc.)

・ “Accounting Standard for Current Income Taxes, etc.” (ASBJ Guidance No. 27, October 28,
2022)
・ “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25,
October 28, 2022)
・ “Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, October 28,
2022)
(1)
Overview
Provisions on the accounting classification of income taxes when imposed on othercomprehensive income and the treatment of tax effects on sales of subsidiarycompany shares, etc., when the Group income tax system is applied.
(2)
Scheduled date of application
Scheduled to apply starting at the beginning of the fiscal year ending March 2025.
(3)
Impact of the application of the accounting standard, etc.
The impact of the application of these accounting standards, etc. is currently being
evaluated.

(Additional information)(Share-based payment plan using trusts)
1. Overview of transactions
The Company is implementing a trust-type, share-based payment plan (hereinafterreferred to as the “Plan”) that delivers shares of the Company to directors of the Company
who are not Audit and Supervisory Committee members (excluding outside directors andthose who are not residents in Japan) and directors who are not Audit and Supervisory
Committee members (excluding outside directors and those who are not residents inJapan) and executive officers (excluding those who are not residents in Japan) of The Daishi
Hokuetsu Bank, Ltd., which is a consolidated subsidiary of the Company (directors of theCompany who are not Audit and Supervisory Committee members, directors of The Daishi
Hokuetsu Bank, Ltd. who are not Audit and Supervisory Committee members, andexecutive officers of The Daishi Hokuetsu Bank, Ltd. are hereinafter collectively referred toas “Eligible Directors, etc.”).
The Plan establishes a trust by combining the amount of money within the range approvedby the resolution of the general meeting of shareholders of the Company and the amountof money contributed by The Daishi Hokuetsu Bank, Ltd. after the approval of the general
meeting of shareholders of the Bank with the Eligible Directors, etc. who meet certain
requirements as beneficiaries. The trust acquires the Company’s shares from the stock
market using the money in the trust as the source of funds.
During the trust period, in accordance with the predetermined provisions for the deliveryof shares, beneficiaries shall receive, after receiving a certain number of points, thenumber of the Company’s shares equivalent to 50% of the number of points at the time ofretirement (shares less than one unit shall be rounded up), and shall receive money
equivalent to the amount converted into cash within the trust for the remaining shares.
2. The Company’s shares held by the trust
The book value and number of shares of the Company held by the trust were 1,083 million
yen and 398 thousand shares at the end of the current consolidated fiscal year, and they
are recorded as treasury stock under net assets.

(Consolidated Balance Sheet related)

1. Total amount of shares or contribution in non-consolidated subsidiaries and affiliates
Contribution:¥854 million
2. Claims based on the Banking Act and the Act Concerning Emergency Measures for the
Revitalization of the Financial Functions are as follows. Claims are recorded in the accounts ofcorporate bonds in “Securities” on the consolidated balance sheets (only corporate bonds forwhich all or part of the redemption of the principal and the payment of interest is guaranteed,
and which were issued through the private placement of securities (Article 2, paragraph 3 of
the Financial Instruments and Exchange Act)), loans, foreign exchange, interest receivable andsuspense payments in “other assets,” and customers’ liabilities for acceptances andguarantees.
Bankrupt/substantially bankrupt claims and similar claims¥7,208 million
Doubtful claims¥115,087 million
Loans overdue for three (3) months or longer¥887 million
Loans with relieved loan conditions¥3,882 million
Total amount¥127,065 million“Bankrupt/substantially bankrupt claims and similar claims” refers to loans of debtors with abankrupt business due to reasons such as the start of bankruptcy procedures, the start ofreorganization procedures, or declaration for the start of reorganization procedures, or loans
to which these conditions apply.
“Doubtful claims” refers to loans for which the debtor has not entered business bankruptcy,
but is experiencing worsened financial status and economic performance, and there is a highpossibility that it may not be possible to recover capital or receive interest on the loan
according to the contract, and which do not fall under bankrupt/substantially bankrupt claims
and similar claims.
“Loans overdue for three (3) months or longer” refers to loans where payment of interest or
repayment of capital has been delayed for three (3) months or longer, from the day following
the contract due dates, and which do not fall under bankrupt/substantially bankrupt claims
and similar claims and doubtful claims.
“Loans with relieved loan conditions” refers to loans for which a reduction in interest, a grace
period for interest payment, a grace period for repayment of capital, debt forgiveness, orother agreements favorable to the debtor have been made for the purpose of assisting the
debtor with management reorganization or support, and which do not fall underbankrupt/substantially bankrupt claims and similar claims, doubtful claims, and loans overdue
for three (3) months or longer.
Note that the amount of loans above is the amount prior to deduction of allowance for loan
loss.
3. Discounting of bills is processed as a financial transaction, based on “Handling in accounting
and audit regarding the application of financial instruments accounting standards in thebanking industry” (JICPA Industry-specific Committee Practical Guideline No. 24, March 17,2022). The Bank retains the right to freely dispose of bank acceptance bills, commercial bills,
documentary bills, and foreign bills bought, etc., and thus received in the form of sales or(re)mortgaging and their face value is as follows:¥13,353 million

DAISHI HOKUETSU REPORT 2023

Items whose amount was recorded in the consolidated financial statements for the current
fiscal year based on accounting estimates, and which may have a significant impact on the
consolidated financial statements for the following fiscal year, are given below.
(Allowance for loan losses)
The Company has judged that the allowance for loan losses is important in accounting
estimates because the ratio of loans, etc. of consolidated subsidiaries engaged in thebanking business to the consolidated balance sheet of the Company group is relatively
high and the recording of the allowance for loan losses significantly affects the
management performance and financial status.
1. Amount recorded in the consolidated financial statements for the current consolidated
fiscal year
Allowance for loan losses¥29,048 million
Of this amount, the allowance for loan losses of consolidated subsidiaries engaged in thebanking business was 24,562 million yen, and corporate customers made up the majorityof the allowance for loan losses.
2. Information that contributes to understanding the nature of the significant accounting
estimates for the identified items(1)
Method of calculation
Estimated allowances for loan losses for consolidated subsidiaries engaged in thebanking business are calculated by conducting asset assessments under the asset
self-assessment criteria to determine “debtor classifications” (normal debtors,
debtors requiring attention, debtors requiring special attention, potentiallybankrupt debtors, effectively bankrupt debtors, and bankrupt debtors).
Depreciations and allowances are then made in accordance with the determined
debtor classifications under the depreciation and allowance criteria. Theseestimates include judgments and assumptions, the key details of which are as
given below. Moreover, the method of calculation, including assumptions fordepreciation and allowances, is described in “(5) Criteria for recording allowances
for loan losses” in “4. Matters related to accounting policies.”
In order to assess the estimated recorded amount of the allowance for loan
losses, consolidated subsidiaries engaged in the banking business perform
verification by considering various factors to determine whether the assumptions
used in estimating the allowance for loan losses are reasonable and whether thebalance of the allowance for loan losses is sufficient to cover potential future
losses.
(2)
Key assumptions
A key assumption is the “outlook on the borrower’s future performance when
determining debtor classifications.” This key assumption is the same as that
determined by the Company at the end of the previous consolidated fiscal year,
and has been determined as important again by the Company since any material
difference between the assumption and the actual results may have a material
impact on the Company’s business results.
The “outlook on the borrower’s future performance when determining debtor
classifications” is set based on individual assessments of each borrower’s ability
to earn income.
Each time a borrower discloses financial results or events that affect their
creditworthiness, we evaluate their financial position, cash flow, ability to repay
based on profitability, loan terms and conditions and their fulfillment,characteristics of their industry, etc., business continuity and profitability
outlook, and ability to repay debts based on cash flow, determining the debtor
classification by synthesizing these factors. Furthermore, in determining the
debtor classification, we consider both qualitative and quantitative information
about a borrower. Qualitative information includes assumptions about theborrower’s technical capabilities, growth potential, and future performanceoutlook. In addition, in cases where the borrower has drawn up a radical businessrestructuring plan that is highly feasible or a business improvement plan that isreasonable and feasible, the debtor classification will be determined by taking
into consideration the future business outlook in light of said plan.
Necessary corrections have been made to the depreciation and allowance inaccordance with “(5) Criteria for recording allowances for loan losses” in “4.
Matters related to accounting policies.” All of these measures are designed toprepare for future loan losses and include assumptions about the outlook for the
economic environment and the collectability of receivables.
The impact of the trend of COVID-19 on economic and business activities is
expected to gradually come to an end as the resumption and normalization of
economic activities based on the assumption of a post-COVID-19 time has
progressed. On the other hand, the outlook for the domestic economy remains
uncertain mainly due to concerns over an economic recession resulting fromglobal price hikes in energy and raw materials, monetary tightening, and others.
Although some customers have experienced losses such as loan losses due to theimpact of business performance and cash flow deterioration with the continued
stagnation of economic activities, we have confirmed that the Company group’s
allowance for loan losses is sufficiently secured as a result of taking into accountthe status, likelihood, and impact of loan losses directly caused by various
problems. Furthermore, the Company assumes that there will be no major
impact on the debtor classification, etc., as the Group will work to grasp at an
early stage changes in customers’ business conditions and continue making every
effort in activities to support their business improvement and revitalization. We
have also not changed the method of estimating allowances for loan losses as ofthe end of the current consolidated fiscal year. This is because we have taken aposition of taking the current deteriorating business performance into accountas soon as possible when determining debtor classification.
(3)
Effect on the consolidated financial statements for the following fiscal year
If the assumptions used for the initial estimate change, such as a significant
change in the economic environment including the effects of COVID-19, thedebtor classification and the estimated amount of collateral available for disposal
may change. This may have a significant impact on the allowance for loan losses
in the consolidated financial statements for the following fiscal year.

(Changes in the accounting policies)

80The Status of Financial Results (Consolidated)
4. Assets provided as security are as follows:
Assets provided as security
Securities¥1,347,782 million
Loans and bills discounted¥121,007 million
Total¥1,468,790 million
Liabilities corresponding to security assets
Deposits¥81,113 million
Receivables under resale agreements¥175,576 million
Payables under securities lending¥308,046 million
transaction
Borrowed money¥892,924 million
In addition to the above, the following has been tendered as a substitute for security forforeign currency settlement, short-term financial transactions, or futures market transaction
deposits, etc.
Trading account securities¥22 million
Securities¥1,008 million
Furthermore, financial instruments security deposits, central clearing organization security
deposits, and guarantees are included in other assets and their amount is as follows:
Financial instruments security deposits¥33,526 million
Central clearing organization security¥50,000 million
deposits
Guarantees¥1,494 million
5. Overdraft agreements and commitment line agreements for loans are agreements to provide
loans up to a prescribed limit, when application for a loan has been made by customers, inthe event that there is no breach of the terms as provided for in the agreement. Unexecutedloan balances related to these agreements are as follows:
Unexecuted loan balance¥1,774,720 million
Of which, those where the original term of loan
¥1,669,039 million
is within 1 year
(or those that can be cancelled unconditionally at any time)
Since many of these agreements terminate without the loan being executed, the unexecutedloan balance itself does not necessarily impact the future cashflow of the consolidated
subsidiaries engaged in the banking business or of some of the consolidated subsidiaries.
Many of these agreements contain a clause that the consolidated subsidiaries engaged in thebanking business or some of the consolidated subsidiaries may refuse the loan applied forexecution or decrease the limit amount of the agreement, in the event that there have beenchanges in the financial situation, securing of loans, and other reasonable reasons. In addition,
guarantees, such as real estate or securities, are secured at the time of agreement as
necessary. The business conditions of the customers are grasped regularly even after theagreement is concluded in accordance with the internal regulations set in advance. A reviewof the agreement and measures to secure credit, etc. are conducted as necessary.
6. Based on the Act on Revaluation of Land (Act No. 34, March 31, 1998), revaluation of businessuse land owned by The Daishi Hokuetsu Bank, Ltd. was conducted. For the valuationdifference, the amount equivalent to tax related to the subject valuation difference has beenrecorded in Liabilities, as “Deferred tax liability related to revaluation” and the amount after
deduction of this amount is recorded in net assets under “Land revaluation difference.”
Date of revaluation
March 31, 1998
Method of revaluation as provided in Article 3, paragraph 3 of said Act.
Calculated based on the method provided and published by the Director General of
the National Tax Administration Agency to calculate the value of land on which thetaxable value for the land tax, as provided in Article 16 of the Land-holding Tax Act (ActNo. 69 of 1991) and established in the Order for Enforcement of Act on Revaluation ofLand (Order No. 119 dated March 31, 1998) Article 2, item 4, with reasonableadjustments (rate of value correction by depth, etc.) made.
The difference between the total amount of market value of the business-use land
revaluated as provided for in Article 10 of said Act as of the end of the term and thetotal amount of book value after revaluation of said business-use land:¥11,969 million
7. Aggregate amount of depreciation of tangible fixed assets
Aggregate amount of depreciation¥77,039 million
8. Amount of compressed entry of tangible fixed assets
Amount of compressed entry¥8,044 million(Amount of compressed entry in(¥- million)
current consolidated fiscal year)
9. Amount of guarantee obligation for privately placed bonds (under Article 2, paragraph 3 of
the Financial Instrument and Exchange Act) in bonds included in “Securities.”¥117,157 million
10. Trust principal with principal compensation agreement
Money in trust¥8,386 million(Consolidated Statements of Income Related)

1. The following is included in other ordinary income.
Gain on sales of stocks and other¥3,777 million
securities
2. The following are included in general and administrative expenses.
Salaries and allowances¥29,736 million
Retirement benefit costs¥86 million
Depreciation¥6,508 million
3. The following are included in other expenses.
Written-off of loans¥2,131 million
Loss on sales of stocks and other¥3,082 million
securities

Loss on devaluation of stocks and other¥160 million
securities
4. Impairment loss
An impairment loss was recorded for the following asset groups:
During the current consolidated fiscal year, the Company recorded an impairment loss for thefollowing asset groups:
Mainly in Niigata Prefecture
Classification
Sales
Main use
24 sales offices, etc.
Type
Land and buildings
Impairment loss
643 million yen
Classification
Owned
Main use
30 idle assets, etc.
Type
Land and buildings
Impairment loss
106 million yen

81

As a result of the decision to change the method of use, etc., and the decline in market value,
the book value of these sales offices was reduced to the recoverable amount and the reduced
amount was recorded as an impairment loss (749 million yen) under extraordinary losses.
The method of grouping assets of consolidated subsidiaries engaged in the banking businessis as follows: Sales offices, etc. are grouped by office unit, the smallest classification for
management accounting purposes (however, for office areas where business is conductedcooperatively, such area will be the grouping unit). Assets planned for disposal and idle assets
are grouped by each asset. Headquarters, administrative centers, welfare facilities, etc. which
are assets of the entire bank are treated as common assets.
The Company and other consolidated subsidiaries are grouped primarily with each company
as one unit. However, some consolidated subsidiaries are grouped in the same manner as theconsolidated subsidiaries engaged in the banking business.
The recoverable amount used to measure impairment loss in the current consolidated fiscal
year is the net sale value, which is mainly calculated based on real estate appraisal standards.

(Consolidated Statements of Comprehensive Income Related)
1. Recycling and amount of tax effects related to Other comprehensive income(¥ million)

Valuation difference on available-for-salesecurities
Incurred cost for this term
Recycling
Before tax effect adjustment
Tax effect amount
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Incurred cost for this term
Recycling
Before tax effect adjustment
Tax effect amountDeferred gains or losses on hedges
Retirement benefit adjustment amount
Incurred cost for this term
Recycling
Before tax effect adjustment
Tax effect amount
Retirement benefit adjustment
amountTotal other comprehensive income(54,325)
13,316(41,008)
12,489(28,519)(9,687)
9,350
(337)
161
(176)
858
(615)
242
(73)
168
(28,526)(Consolidated Statements of Shareholders Equity Related)

1. Matters related to the type and total number of issued shares, and type and number oftreasury stocks(1,000 shares)

Current
Current
Current
Current
consolidated
consolidated
consolidated
consolidated
fiscal year
fiscal year
fiscal year
fiscal year
Number of shares
Number of shares
Increase in
Decrease inat the beginningat the end of thenumber of shares number of sharesof the term
term

Remarks

Number of shares
Ordinary shares
Total

45,94245,942--45,94245,942

539
539

473
473

2
2

1,010 (Note)
1,010

Treasury stocks
Ordinary shares
Total(Note) The breakdown of increase in the number of ordinary shares of treasury stocks is asfollows.
Increase due to acquisition of treasury stocks based on the
470 thousand shares
resolution of the Board of Directors
Increase due to request to purchase fractional unit shares
2 thousand shares
Breakdown of decrease in the number of ordinary shares of treasury stocks is as follows.
Decrease due to request to purchase fractional unit shares
2 thousand shares
The number of ordinary shares of treasury stocks at the end of the current consolidated
fiscal year includes 398 thousand shares of the Company held by the trust for the sharebased payment plan.
2. Matters related to right to subscribe to new shares and right to subscribe to new treasury
stocksThere are no applicable items
3. Matters related to dividends(1) Amount of dividends paid out during the current consolidated fiscal year
(Resolution)

Type ofsharesBoard of Directors,
May 13, 2022

OrdinarysharesBoard of Directors,
November 11, 2022

OrdinarysharesTotal amountof dividends Dividend per(¥ million)
share (¥)
(Note)
2,748
2,748

Reference date

Effective date

60.00

March 31, 2022

June 1, 2022

60.00

September 30,
2022

December 1,
2022(Note) The total amount of dividends includes dividends on the Company’s shares held by the trust for theshare-based payment plan (23 million yen, the Board of Directors, May 13, 2022 / 23 million yen, theBoard of Directors, November 11, 2022).

(2)

Dividends for which the reference date falls within the current consolidated fiscal yearwith the effective date occurring after the last day of the current consolidated fiscal
year(Resolution)

Type ofshares

Source offunds

Dividend
per share(¥)

Reference date

Effective date

Board ofDirectors, May
12, 2023

Total
amount ofdividends(¥ million)(Note)

Ordinaryshares2,719

Retainedearnings

60.00

March 31,2023

June 1, 2023

(Note) The total amount of dividends includes 23 million yen of dividends on the Company’s shares held by
the trust for the share-based payment plan.

The Status of Financial Results (Consolidated)(Consolidated Statement of Cash Flows Related)(ii) Market risk management
The Company group has established an operation policy for ALM to adjust market
risks to an appropriate magnitude and to secure stable income, and determines
the risk limits and loss limits in managing securities in line with the policy.
Furthermore, important matters concerning risk management are reviewed at the
ALM & Risk Management Committee. The Committee is established to promptly
report to the management if any critical situation occurs in managing securities.
As a rule, the Company group conducts quantitative analysis concerning market
risks for all financial instruments. The risks are calculated and managed by The
Daishi Hokuetsu Bank, Ltd. mainly using Value at Risk (VaR). Quantitative analysis
is not conducted on some of the financial instruments when there is little impact
on their amount, etc., and some of the financial instruments of some groupcompanies.
The Daishi Hokuetsu Bank, Ltd. mainly adopts VaR calculated by the historicalmethod (holding period: 120 days, confidence interval: 99%, observation period:
1,250 days). The amount of market risk as of the end of the current consolidated
fiscal year (excluding market risk of financial instruments without market prices
such as non-listed stock) was 39,463 million yen. Interest risks associated withdeposits and loans are recognized by defining liquid deposits remaining in banks
for a long time as core deposits and allocating those deposits to maturities of up
to 10 years based on an internal model.
A back test that compares the computed VaR with the theoretical profit and loss
(profit and loss assumed to have been generated when the portfolio is fixed as of
the timing of risk amount measuring) is conducted to confirm that themeasurement model captures market risks with sufficient accuracy.
However, as the VaR indicates the amount of risk under a fixed certainty
statistically computed from past market fluctuations, it may not be able to capturerisks that could occur if the market environment should change inconceivably. This
being the case, the approach is supplemented by separate stress tests, etc.

1. Relationship between the end of term cash and cash equivalents and the amount indicated in
the account titles in the consolidated balance sheet
Cash and deposit account¥2,031,509 million
Deposits (excluding Bank of Japan
(¥1,537 million)
deposits)
Cash and cash equivalents¥2,029,972 million(Lease transaction related)

Operating lease transactions<Borrower side>
Unearned lease fees concerning irrevocable operating lease transactions(¥ million)

One (1) year or lessExceeding one (1) year
Total

38
55
93

<Lender side>
Unearned lease fees concerning irrevocable operating lease transactions(¥ million)

One (1) year or lessExceeding one (1) year
Total

134
136
271

(Financial instruments related)

1. Matters concerning the status of financial instruments(1)
Policy regarding approach towards financial instruments
The Company group is engaged, with a focus on the banking business together withfinancial services covering lease operations, securities operations, credit guarantee
operations, credit card operations, and others. Funds raised by deposits andnegotiable certificates of deposits are mainly managed through loans and securities.
As the Company has financial assets and liabilities that are accompanied by interest
rate fluctuations, risks relating to assets and liabilities for the entire group arecomprehensively grasped and controlled to avoid any disadvantageous impact frominterest rate fluctuations. Comprehensive asset and liability management (ALM) is
implemented to improve profits as well as stability. Derivative transactions are
conducted as part of the activities.
(2)

(3)

Contents of financial instruments and their risks
Financial assets held by the Company group are mainly loans made to domestic
companies and individuals, and are exposed to credit risk in which recovery of capitaland interest on loans could be made difficult by bankruptcy of the customers or
deterioration of financial status.
Securities are mainly stocks, bonds, investment trusts, and investment in capital ofpartnerships. In addition to securities held for ownership until maturity, pureinvestment, and for business promotion purposes, trading account securities arebonds and are held for trading. These are exposed to market risks in which the asset
value held by the Company group may be reduced and incur a loss from the change
in credit risks of issuing entities and fluctuation of market factors, including domestic
and overseas interest rates, price of securities, etc., and foreign exchange rates.
Of the financial liabilities of the Company group, deposits, etc., and marketable
fundraising are exposed to liquidity risk. In addition to the possibility of an outflow
of deposits or inability to raise the necessary funds due to the deterioration of theCompany group’s credibility, a loss may be incurred by being forced to conclude
transactions under unfavorable conditions.
Derivative transactions conducted by the Company group include interest rate
swaps, forward exchange contracts, currency options, etc., to respond to needs tohedge risks related to interest rates and foreign currency of the customers.
Furthermore, as a part of ALM, interest rate swap transactions, currency swap
transactions, etc., are being conducted to control interest rate risk in banking
operations, as well as to adjust a fund surplus or deficit in banking operations and tostabilize fund liquidity.
In addition, subsidiary banks and some consolidated subsidiaries are conducting
credit futures transactions, etc., to pursue trading profits within the extent of earning
power and corporate strength.
Risks generated from these derivative transactions include credit risks incurred when
the counterpart of the transaction defaults and market risks in which a loss can be
incurred by fluctuation of interest rates and currency exchange. “Hedge accounting”
is adopted for derivative transactions aimed at hedging risks. Evaluation of hedging
effectiveness is verified quarterly as to whether the amount of derivative transaction
risk, as a hedge method, is within the range of allowable risk amount, as provided in
the operating criteria concerning hedge transaction management, and whether therisk subject to the hedge is reduced.

(4)

Supplementary explanation regarding matters concerning the market value offinancial instruments, etc.
In calculating the market value of financial instruments, certain presumptions are
adopted, and said price may differ if it is calculated based on different presumptions.

2. Matters concerning the market value of financial instruments, etc.
The amount recorded in the consolidated balance sheet, their market value, and thedifferences are as follows: Shares without market prices and investment in capital ofpartnerships, etc. are not included in the following table (see Note 1). The notes to cash anddue from banks, receivables under resale agreements, and payables under securities lendingtransactions are omitted because they are settled in a short period of time and their market
value approximates their book value. In addition, notes to accounting titles with little
relevance to the amounts recorded in the consolidated balance sheet have been omitted.
Amount recorded on
consolidated balance
sheet(¥ million)

Market value

Difference(1) Securities
Trading securities
Bonds to be held to maturity
Other securities(2) Loans and bills discounted (*2) (*3)
Allowance for loan losses (*1)
Total Assets(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money
Total Liabilities

1
32,8882,828,814
5,265,963(27,267)
5,238,695
8,100,400
8,367,554
213,228
902,795
9,483,578

1
33,1902,828,814

301-

5,279,963
8,141,969
8,367,579
213,228
902,786
9,483,594

41,267
41,569
24
(9)
15

121
(8,608)(8,487)121(8,608)(8,487)-

Derivative transactions (*2)
Hedge accounting not applied
Hedge accounting applied (*3)

Total derivative transactions(*1) General and individual allowances for loan losses corresponding to loans and bills discounted have been
deducted.
(*2) Derivative transactions recorded in other assets and liabilities are indicated together as a batch.
Net debts and credits generated from derivative transactions are indicated in net amount and items in which
the total will be a net debt are indicated in parentheses.
Provisions for contingent loss corresponding to derivatives have been directly reduced in the consolidatedbalance sheet amounts as they have little relevance.
Transactions subject to exceptional interest swap processing are included in the market value of loans to behedged.
(*3) These are interest rate swaps designated as hedging instruments to fix the cash flows of loans to be hedged.
In most cases, deferred hedge accounting is applied. For these hedge relationships, we have applied the“Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (PITF No. 40, March 17,2022).

DAISHI HOKUETSU REPORT 2023

Risk management structure related to financial instruments(i) Credit risk management
The Company group operates and manages credit risk in an appropriate mannerbased on various rules concerning credit risk management.
In terms of structure, the Risk Management Department is responsible forcontrolling credit risks and establishes various rules concerning credit risk
management. It plans and runs analysis, evaluation, and improvement activities as
well.
At The Daishi Hokuetsu Bank, Ltd., credit divisions, completely detached from sales
promoting divisions, conduct strict screening and manage problematic loans
appropriately. It also aims for sound management of assets through management
improvement support activities for customers, etc., and the approach is promoted
bank-wide. Credit rating and self-assessment of loans, etc., is strictly enforced
through a two-stage assessment system, one by the sales office and the other by
the head office division. In addition, the appropriateness and validity of credit
rating and self-assessment are verified in the audit conducted by the Audit
Division.
Regarding the credit portfolio, credit concentration management for specific areas,industries, companies, groups, etc., is conducted in an appropriate manner.
Furthermore, credit risk quantification (Note) is being conducted and credit risk
limits are corresponding to equity.
(Note) Credit risk quantification is to digitize and estimate the amount of credit risk
involved in the credit portfolio, using statistical methods.

(iii) Liquidity risk management
In the Company group, The Daishi Hokuetsu Bank, Ltd. has established “Liquidity
risk management rules” under which the division managing financing ascertains,
analyzes the financing status, and appropriately funds from the market as
necessary.
In addition, response measures and a reporting and communicating structure has
been established to be able to respond promptly under various situations
according to the financing urgency for preparing for unforeseeable circumstances.

82

The Status of Financial Results (Consolidated)(Note 1) The amounts of shares without market prices and investment in capital of partnerships
recorded in the consolidated balance sheet are as follows. These are not included in“Other securities.”(2)(¥ million)(¥ million)

Classification

5,440
4,653

Investment in capital of partnerships, etc. (*3)
(*1)
(*2)
(*3)

The market value of non-listed stocks is not disclosed in accordance with paragraph 5 of the “Implementation
Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020).
In the current consolidated fiscal year, no impairment (67 million yen) has been made for non-listed stocks.
The market value of investment in capital of partnerships, etc. is not disclosed in accordance with paragraph24-16 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31, June 17, 2021). Some of “other assets” are included in investment in capital of partnership, etc.

(Note 2) Expected amount of redemption of monetary claims and securities with maturity after
consolidated closing date(¥ million)
Exceeding 1 Exceeding 3 Exceeding 5 Exceeding 7
year but
years but
years but
years but Exceeding 10
Within 1 year
within 3
within 5
within 7
within 10
years
years
years
years
years
1,969,207-

Deposits
Securities
Bonds to be held tomaturity
Local government
bonds
Corporate bonds
Other securities withmaturity

140,975

359,747

425,503

383,047

429,118

879,375

-

-

-

5,400

28,171

-

-

-

-

4,100

27,111

-

-

-

-

1,300

1,060

-

140,975

359,747

425,503377,647

400,946879,375

Government bonds
Local government
bonds
Corporate bonds

43,00038,0003,000

19,000126,000

379,000

14,068164,487

207,114225,930

97,24531,84956,371

92,25648,17818,832

2,793

13,372Loans and bills discounted*

611,093976,738

777,936586,267

485,734

1,204,451

Total

2,721,276

1,336,485

1,203,440

969,314914,853

2,083,827

Loans and bills discounted do not include 120,628 million yen in cases in which the scheduled amount of redemption
cannot be foreseen nor 502,565 million yen without an agreed due date, against bankrupt debtors, effectively
bankrupt debtors, and potentially bankrupt debtors.

(Note 3) The amount of scheduled repayment of borrowed money and other interest-bearing
debts after the consolidated closing date(¥ million)
Exceeding 1 Exceeding 3 Exceeding 5 Exceeding 7
year but
years but
years but
years but Exceeding 10
within 3
within 5
within 7
within 10
years
years
years
years
years
7,843,909
452,405
62,870
2,144
6,224
-

Within 1 year
Deposits*
Negotiable certificates ofdeposit
Receivables under resaleagreements
Payables under securities
lending transaction
Borrowed money
Total

213,228

-

-

-

-

-

175,576

-

-

-

-

-

308,046

-

-

-

-

-

128,330

305,390

468,500

293

280

-

8,669,091

757,796

531,371

2,438

6,504

-

*Demand deposits in Deposits are included in “Within 1 year.”

3. Matters concerning the breakdown of the market values of financial instruments by level, etc.
The market value of financial instruments is classified into the following three levels according
to the observability and relevance of the inputs used to calculate the market value.
Level 1 market value : Market values calculated based on market prices of assets or
liabilities under calculation of the market value formed in an active
market among observable inputs for the calculation of market
value
Level 2 market value Market values calculated using inputs for calculation of market value
other than Level 1 inputs out of observable inputs for market value
Level 3 market value : Market values calculated using unobservable inputs for calculationof market value
If multiple inputs that have a significant impact on the calculation of market value are used,
the market value is classified as the level with the lowest priority in the calculation of themarket value among the levels to which those inputs belong.
(1)
Financial instruments recorded on the consolidated balance sheet at market value(¥ million)

Classification

Market value
Level 1

Level 2

Level 3

Total

Securities
Trading securities
Stocks1--1

129,057
603,097
519,425
122,471

20,493
737,700
105,474
134,364
325,548

125,503
5,679-

149,550
603,097
737,700
230,977
659,469
448,019

1,374,052

12,492
12,091
1,348,165

104
131,287

12,492
12,091104
2,853,504-

8,202
24,86333,066

104
104

8,202
24,863104
33,171Other securities
StocksGovernment bonds
Local government bonds
Corporate bonds
Foreign government bonds
Other
Derivative transactions
Interest-rate-related
Currency related
Other
Total Assets
Derivative transactions
Interest-rate-related
Currency related
Other
Total Liabilities

83

Classification

March 31, 2023

Non-listed stock (*1) (*2)

Financial instruments other than those recorded on the consolidated balance sheet
at market valueMarket value
Level 1

Level 2

Level 3

Total

30,8462,344
33,1908,367,579
213,228
902,786
9,483,594

5,279,963
5,279,963-

30,846
2,344
5,279,963
5,313,154
8,367,579
213,228
902,786
9,483,594

Securities
Bonds to be held to maturity
Local government bonds
Corporate bonds
Loans and bills discounted
Total Assets
Deposits
Negotiable certificates of deposit
Borrowed money
Total Liabilities-(Note 1) Explanation of evaluation techniques used in the calculation of market value and inputs
for the calculation of market value
AssetsSecurities
Securities whose unadjusted market prices in active markets are available are classified as
Level 1 market value. They mainly include shares, exchange-traded funds, and government
bonds. In the case of using published market prices, if the market is not active, they areclassified as Level 2 market value. They mainly include local government bonds andcorporate bonds.
In addition, investment trusts with no market transaction price are classified as Level 2
market value, provided that no significant restrictions exist that may cause market
participants to request compensation for the risks relating to the cancellation or repurchase.
Of privately placed bonds guaranteed by the issuing bank, those with floating interest rates
are short term, reflecting market interest rates. Since the market value is approximate to thebook value unless the credit status of the issuing body has not differed significantly after its
execution, the said book value is taken as the market value, and classified as Level 3 market
value. The market value of privately placed bonds with a fixed interest rate is calculated byadding guarantee fees for the accrued portion (unearned guarantee fees) to the total sumof capital and interest discounted by the interest rate that combines the swap interest rate
or other appropriate indices and credit spreads, for each classification based on type,internal rating, and period. Since the credit spreads and the unearned guarantee fees areunobservable, they are classified as Level 3 market value.
For securitized products (including some bonds), prices obtained from external business
operators (e.g., brokers) are recognized as market value based on periodic status checks,
such as a price comparison between similar products, time-series price comparison of asingle product, and analysis of consistency with published market indicators, and classified
as Level 3.
Loans and bills discounted
Loans and bills discounted with fixed interest rates are calculated by adding guarantee feesto the amount discounted by the interest rate added with a credit spread on appropriate
indices, such as a swap interest rate, on the total sum of capital and interest, for eachclassification based on type, internal rating, and period. Those with a floating interest rate
are short term and will reflect the market interest rate and are approximate to their bookvalue, unless the credit status of the borrower has not differed significantly after its
execution, and therefore said book value is taken to be the market value.
Since the estimated loan loss is calculated on claims, etc., for bankrupt debtors, effectively
bankrupt debtors, and potentially bankrupt debtors based on the present value of estimatedfuture cashflow or the expected recovery value from mortgages and guarantees, its market
value is approximate to the amount of recorded amount of claims in the consolidatedbalance sheet after deducting the recorded amount of allowance for loan losses, this amountis taken as the market value.
For loans and bills discounted with no due date for repayment set, for special characteristics,
such as restricting said loan within the extent of security assets, its market value, from theestimated repayment period and interest rate conditions, etc., is assumed to be approximate
to the book value, and this is taken as the market value.
Since the market value of those with a short agreed period (within one (1) year) isapproximate to the book value, this is taken as the market value.
These are classified as Level 3 market value.
Liabilities
Deposits and negotiable certificates of deposit
For call deposits, the payment amount (book value) when a payment request is made on the
consolidated closing date is deemed to be the market value. Furthermore, the market valueof time and savings deposits and negotiable certificates of deposit is segmented by a fixed
period and their present value is calculated by discounting the future cash flow. The discountrate used is the interest rate used when accepting new deposits. Since the market value andbook value is approximate to those with a short-term deposit period (within one (1) year),said book value is taken as the market value. These are classified as Level 2 market value.
Borrowed money
Of borrowed money, those with floating interest rates are short term, reflecting market
interest rates. Furthermore, since the credit status of the Company and its consolidated
subsidiaries has not differed much after their execution, the market value is considered tobe approximate to the book value, and the book value is taken as the market value. For thosewith fixed interest rates, the present value is calculated by segmenting the total amount of
capital and interest of the borrowed money into a fixed period, and discounting it with aninterest rate expected to be applied in a similar borrowing. Since the market value of thosewith a short agreed period (within one (1) year) is approximate to the book value, this istaken as the market value. These are classified as Level 2 market value.
Derivative transactions
Derivative transactions whose unadjusted market prices in active markets are available areclassified as Level 1 market value. They mainly include bond futures and share futures thatare exchange transactions.
However, since most derivative transactions are over-the-counter transactions without
published market prices, the market value is calculated using evaluation techniques such as
the present value technique and the Black–Scholes model according to the type oftransaction and the period until maturity. Major inputs used in these evaluation techniques
include interest rates, exchange rates, and volatility. Price adjustment is also made based on
the credit risk of the counterparty and the credit risk of the consolidated subsidiaries
themselves. If unobservable inputs are not used or their effect is not significant, the market
value is classified as Level 2. This includes interest-related transactions (e.g., interest rate
swaps, interest rate options) and currency-related transactions (e.g., foreign exchange
contracts, currency options, currency swaps). If important unobservable inputs are used or
the market value is calculated based on the amount currently required to refinance theasset’s service capacity, the market value is classified as Level 3. This includes earthquake
derivatives.

The Status of Financial Results (Consolidated)(Note 2) Information on the Level 3 market value of financial instruments recorded on the
consolidated balance sheet at market value(1) Quantitative information on important unobserved inputs
Important
Evaluation technique
unobservable inputs

Classification

Range of input

Weighted average of
inputsSecurities(Securities related)

1 “Trading account securities” are included in addition to “Securities” in the consolidatedbalance sheet.
2 “Subsidiary company stocks and affiliated company stocks” are included as notes to thefinancial statements.

1. Trading securities

Other securities

Valuation difference included in profit and loss of theconsolidated fiscal year

Corporate bonds
Private-placed
bonds

Present value
technique

Credit spread
Unearned guarantee
fee

0.0％-9.8％

0.7％

0.0％-1.4％

0.2％

2. Bonds to be held to maturity* Quantitative information for earthquake derivatives is not provided, since the market value of earthquake
derivatives is calculated based on the amount currently required to refinance the asset’s service capacity without
any inputs.

(2)

Adjustment table of beginning to ending balances and valuation profit and loss
recognized in profit and loss for the current term
Profit and loss forthe current term orother comprehensive
incomeNetamountofTransferpurchase
Beginnin
Recorded s, sales, to Level 3
g balance Recorded in othermarketissuancevalue
in profit compreh
andor loss
ensivesettleme(*1)
incoments(*2)
Securities
Other
securities
Corporatebonds
Foreigngovernment bonds
Derivativetransactions
Other
Short
commitmentLong
commitme
nt
(*1)
(*2)

139,041
5,705

31
(51)

(22)
43

(13,546)(17)-

TransferfromLevel 3marketvalue-(¥ million)
Valuation profit
and loss onfinancial assets
and financial
liabilities held
as of the dateEndingof thebalanceconsolidatedbalance sheet
in the amountrecorded in
profit and loss
for the current
term (*1)

125,503
5,679

-

(103)

229

-

(230)

-

-

(104)

126

103

(229)

-

230

-

-

104

(126)

Included in “Financing income,” “Other ordinary income,” and “Other ordinary expenses” in the Consolidated
Statements of Income.
Included in “Other securities valuation difference” of “Other comprehensive income” in the Consolidated
Statements of Comprehensive Income.

(3)

(4)

(¥9 million)

Explanation of the valuation process for market value
The Company group has established policies/procedures for the calculation of market
value and procedures for the use of market value valuation models in the Middle andBack Office departments. For calculated market values and the classification of theirlevels, the appropriateness of evaluation techniques and inputs used for the
calculation of market value is verified.
The calculation of market value uses evaluation models that best reflect the nature,
characteristics, and risks of individual assets. Even when using market prices obtained
from third parties, the appropriateness of those prices is verified through appropriate
methods such as the confirmation of evaluation techniques and inputs used and thecomparison with market value of similar financial instruments.
Explanation of the effect of changes in important unobserved inputs on market value
Credit spread
Credit spreads are calculated based on the expected default rate by rating, the period
spread by rating, and the exposure at default.
In general, a significant increase (decrease) in credit spreads results in a significant
decrease (increase) in market value.
Unearned guarantee fee
Guarantee fees are calculated based on credit ratings. Unearned guarantee fees,
which constitute market value, are the accrued portion of guarantee fees.
In general, unearned guarantee fees decrease over time, causing a decline in market
value.

Type

Market value exceeds the amountrecorded in the consolidatedbalance sheet
Market value does not exceed theamount recorded in the
consolidated balance sheet
Total

Local government
bonds
Corporate bonds

Amount recordedin consolidatedbalance sheet(¥ - million)

Market value(¥ - million)

30,53030,846315

758
31,2881,600
1,600
32,888768
31,615
1,575
1,575
33,190

10
326
(24)
(24)
301

Subtotal
Corporate bonds
Subtotal

Difference(¥ - million)

3. Other securities
Type
StocksAmount recorded in consolidatedbalance sheet exceeds cost of
acquisition

Bonds
Government
bonds
Local
government
bonds
Corporate
bonds
Other
Foreigngovernment
bonds
Subtotal
Stocks

Bonds
Government
bonds
Local
government
Amount recorded in consolidated
bonds
balance sheet does not exceed cost
Corporateof acquisition
bonds
Other
Foreigngovernment
bonds
Subtotal
Total

Amount recordedin consolidated Acquisition costbalance sheet(¥ - million)(¥ - million)

Difference(¥ - million)

128,209448,364

80,124
443,733

48,084
4,631

214,233

210,416

3,817

136,944

136,574

369

97,18596,742443

301,136

293,520

7,616

191,419

187,9633,455

877,710
21,3401,123,410

817,378
23,9281,148,160

60,332(2,587)(24,749)

388,863406,624(17,760)

600,755

606,697(5,942)

133,791

134,838(1,046)806,351

868,963(62,611)

468,049504,206(36,156)

1,951,103
2,828,814

2,041,052
2,858,430(89,948)(29,616)

4. Bonds to be held till maturity sold during the current consolidated fiscal year
There are no applicable items
5. Other securities sold during the current consolidated fiscal year
Type
Stocks
Bonds
Government bonds
Local government bonds
Corporate bonds
Other
Foreign government bonds
Total

Amount of sale(¥ - million)

18,006
172,776
170,874
1,901
364,469
227,784555,251

Total gain on sale Total loss on sale(¥ - million)(¥ - million)

2,178
1,064
1,063
0
2,951
349
6,193

1,378
456
454
1
15,035
12,94916,870

6. Securities with changes to the purpose of ownership
There are no applicable items

DAISHI HOKUETSU REPORT 2023

7. Securities written-down
For securities other than trading securities (excluding shares without market prices andinvestment in capital of partnerships) in cases in which the market value has fallen significantly
from the acquisition price and the market price is not expected to return to the acquisition
price, said market price is recorded in the consolidated balance sheet and the valuationdifference is processed as a loss for the applicable consolidated fiscal year (“Write-down”).
The amount of Write-down in the current consolidated fiscal year is ¥369 million (of which,¥92 million is in shares, ¥277 million is in bonds).
The criterion of judging the market value to have “fallen significantly” is provided in the selfassessment criteria. For bonds, Write-down is conducted in the event that the market value
has fallen by 30% or more from its acquisition price or in consideration of the financial
conditions, etc., of the issuing company. For stocks and investment trusts, Write-down for thefull amount is made in the case of stocks for which the market price as of the end of the term
has fallen by 50% or more from the acquisition price, and for stocks whose market price has
fallen by 30% or more but not exceeding 50%, Write-down is made, judged by the possibilityof recovery of the market price, taking into account trends in the market price for a fixed
period prior to the reference date and the financial conditions, etc., of the issuing company.

84

The Status of Financial Results (Consolidated)(Monetary trust related)(1)

There are no applicable items

Method of hedge
accounting(Valuation difference on available-for-sale securities)

The breakdown of valuation difference on available-for-sale securities recorded in the
consolidated balance sheet is as follows:
Amount (¥ million)(29,615)(29,615)―
9,728

Valuation difference
Other securities
Other monetary trust
Deferred tax assets to be added
Valuation difference on available-for-sale securities(before adjustment for equity)
Non-controlling interests equivalent to be deducted(19,886)―(19,886)

Valuation difference on available-for-sale securities(Note) Valuation difference includes valuation difference on other securities that constitute assets of partnerships,
etc.

(Derivative transactions related)

1. Derivative transactions where hedge accounting has not been applied
The contract amount on the consolidated closing date or the amount equivalent to capital incontract, and their market value and valuation profit and loss, for each transaction subject
type for derivative transactions where hedge accounting has not been applied are as follows.
It must be noted that the amount of contract itself does not indicate the market risk related
to the derivative transaction.
(1)
Interest-rate-related transactions
Cla
ssifi
cati
on

Sto
re

Type
Interest swap
Fixed receipt, floating
payment
Floating receipt, fixed
payment
Interest options

Contract amount,
Of which,etc.
exceeding 1 year(¥ - million)(¥ - million)

Market value(¥ - million)

Valuation profit
and loss(¥ - million)

108,089

106,079

190

190

108,089

106,079

1,364

1,364

-

-

1,554

1,554

Short commitment
Long commitment
Total(Note) Market valuation is made for the above-mentioned transactions and the valuation profit or loss is recorded in
the consolidated statement of income.

(2)
Cla
ssifi
cati
on

Currency-related transactions
Type

Currency swap

Contract amount,
Of which,etc.
exceeding 1 year(¥ - million)(¥ - million)

Market value(¥ - million)

Valuation profit
and loss(¥ - million)

24,564

21,40792

92

128,198
25,19819,23318,656(3,711)
2,539(3,711)
2,539

642,054642,054-544,313544,313-

7,860(8,209)(1,428)27,977(18,484)
8,413

Forward exchange contract
StoreShort commitment
Long commitment
Currency option
Short commitment
Long commitment
Total(Note) Market valuation is made for the above-mentioned transactions and the valuation profit or loss is recorded in
the consolidated statement of income.

(3)

Stock-related transactions
There are no applicable items(4)

Bond-related transactions
There are no applicable items(5)

Commodity-related transactions
There are no applicable items

(6)
(7)

Sto
re

Contract amount,
Of which,etc.
exceeding 1 year(¥ - million)(¥ - million)

Market value(¥ - million)

Valuation profit
and loss(¥ - million)

(104)
104
-

126
(126)
-

Earthquake derivative
Long commitment
Total

16,31016,310-Interest swap
Floating receipt, fixed
payment
Interest swap
Exceptional
Fixed receipt, floatinginterest
swap
payment
processing
Floating receipt, fixed
payment
Total
Generally applied
processing
methodContract
amount, etc.
(¥ - million)

Of which,exceeding
1 year(¥ - million)

Market value(¥ - million)

501,178

501,178

2,735

Loans and bills
discounted

3,000

3,000

(Note 2)

16

-

-

-

-

Major hedge
subjects
Other securities

2,735(Notes) 1. A deferred hedge was adopted as the method of hedge accounting for interest risks occurring fromfinancial assets and liabilities.
2. Transactions subject to exceptional interest swap processing are processed together with loans and bills
discounted to be hedged. Therefore, their market value is included in the market value of the applicableloans and bills discounted in “(Financial instruments related).”(2)

Currency-related transactions

Method of hedge
accounting

Type

Major hedge
subjects

Contract
amount, etc.
(¥ - million)

Market value(¥ - million)

Generally applied
processing
methodCurrency swap

Foreigncurrency
denominatedsecurities, andloans and bills
discounted

Of which,exceeding
1 year(¥ - million)

138,049

116,978(11,343)--(11,343)

Total-(Note) Conducted primarily by deferred hedge in accordance with Industry-specific Committee Practical Guideline
No. 25.

(3)

Stock-related transactions
There are no applicable items(4)

Bond-related transactions
There are no applicable items(Retirement benefit related)

1. Summary of the adopted retirement benefits scheme
The consolidated subsidiaries engaged in the banking business have established a defined
contribution pension plan as a defined benefit plan, in addition to the corporate pension fundscheme and lump-sum retirement allowance scheme.
In addition, extra retirement payments may be paid upon employees’ retirement, etc.
In other consolidated subsidiaries, in addition to a lump-sum retirement allowance scheme
being established, some of the consolidated subsidiaries have also established a defined
contribution pension plan.
Furthermore, liabilities related to retirement benefits and retirement benefit costs of a lumpsum retirement allowance scheme held by some of the consolidated subsidiaries arecalculated using the simplified method.
In addition, consolidated subsidiaries engaged in the banking business have set up a
retirement benefit trust.
2. Defined benefit plan
(1)
Adjustment table of retirement benefit liabilities, as of the beginning and end of theterm (excluding schemes adopting the simplified method)
Beginning of term retirement benefit liability balance¥64,825 million
Service costs¥1,293 million
Interest costs¥387 million
Actuarial gain or loss amount generated(¥471 million)
Amount of retirement benefits paid(¥3,677 million)
Other¥3 million
End-of-term retirement benefit liability balance¥62,361 million
Adjustment table of pension assets, as of the beginning and end of the term
(excluding schemes adopting the simplified method)¥79,177 million
Expected operational earnings¥1,573 million
Actuarial gain or loss amount generated¥387 million
Contribution from employers¥394 million
Amount of retirement benefits paid(¥2,652 million)
Other¥3 million
End-of-term pension assets balance¥78,883 million
Beginning-of-term pension assets balance

Other

Short commitment

Type

(2)

Credit and derivative transactions
There are no applicable items

Classification

Interest-rate-related transactions-(Note) Market valuation is made for the above-mentioned transactions and the valuation profit or loss is recorded in
the consolidated statement of income.

2. Derivative transactions where hedge accounting has been applied
The contract amount on the consolidated closing date or the amount equivalent to capital incontract, and their market value, for each transaction subject type and for each hedge
accounting method for derivative transactions where hedge accounting has been applied are
as follows. It must be noted that the amount of contract itself does not indicate the market
risk related to the derivative transaction.

(3)

Adjustment table for debts related to retirement benefit liabilities as of the beginningand end of the term for schemes adopting the simplified method
Beginning-of-term retirement benefit-related debts¥653 million
Retirement benefit costs¥64 million
Amount of retirement benefits paid(¥92 million)
End-of-term retirement benefit-related debts¥625 million(4)

Adjustment table for end of term balance of retirement benefit liabilities and pension
assets, and debts and assets related to retirement benefits recorded in the
consolidated balance sheet
Retirement benefit liability of savings-type scheme¥62,361 million
Pension assets(¥78,883 million)(¥16,521 million)
Retirement benefit liability of non-savings-type scheme¥625 million
Net amount of liabilities and assets recorded in the consolidated balance
sheet(¥15,895 million)(Note) Includes schemes where the simplified method is adopted.
Retirement benefit-related liabilities
Assets related to retirement benefits
Net amount of liabilities and assets recorded in the consolidated balance
sheet

85

¥625 million(¥16,521 million)(¥15,895 million)

The Status of Financial Results (Consolidated)(5)

Retirement benefit costs and its itemized breakdown¥1,293 million¥387 million(¥1,573 million)(¥404 million)(¥211 million)¥64 million¥101 million(¥341 million)

Service costs
Interest costs
Expected operational earnings
Actuarial gain or loss processing amountPrior service cost processing amount
Retirement benefit costs calculated by the simplified method
Other
Retirement benefit costs related to the defined benefit plan

(6)

Retirement benefit adjustment amountThe breakdown of items recorded in the adjustment amount related to retirement
benefits (before deduction of tax effects) is as follows:
Prior service cost(¥211 million)
Actuarial gain or loss
¥453 million
Total¥242 million(7)

Aggregate amount of adjustment related to retirement benefits
The breakdown of items recorded in the aggregate adjustment amount related toretirement benefits (before deduction of tax effects) is as follows:
Unrecognized prior service cost(¥1,582 million)
Unrecognized actuarial gain or loss(¥6,200 million)
Total(¥7,783 million)(8)

Matters related to pension assets(i) Ratio for each major classification in total pension assets is as follows:

Bonds
StocksGeneral life insurance accountCash and deposits
Other
Total

26%
48%
22%
0%
1%
100%

(Note) Total pension assets include 16% from retirement benefit trust established on the corporate pension
plan and 24% from retirement benefit trust established on the lump-sum retirement allowance
scheme, respectively, for the current consolidated fiscal year.

2. Breakdown of major items that caused significant difference between the statutory effective
tax rate and the income tax burden rate after the application of tax effect accounting of thecompany submitting consolidated financial statements
Statutory effective tax rate
30.5%
(Adjusted)
Items including entertainment expenses
permanently excluded from deductible expenses

0.4%

Items including dividends income permanently
excluded from gross revenue(1.5%)

Inhabitant tax on per capita basis

0.3%(2.4%)
1.0%

Increase/decrease in valuation allowance
Other
Income tax burden rate after the application oftax effect accounting(Business combination, etc. related)<Transactions under common control, etc.>
In October 2022, the capital structure of the Company’s consolidated subsidiaries, namely,
The Daishi JCB Card Co., Ltd., The Daishi DC Card Co., Ltd., The Hokuetsu Card Co., Ltd., andThe Daishi Computer Service Co., Ltd. was reviewed, making them wholly-owned subsidiaries
where the Company directly holds each of their shares.
An overview of the share acquisition is as follows.
1. Acquisition of shares of subsidiaries by dividends in kind(1)
Overview of transactions(i) Name and business activities of the combined company concerned
Name of the combined company concerned

Credit card and credit guarantee businesses

The Daishi DC Card Co., Ltd.

Credit card business

The Hokuetsu Card Co., Ltd.

Credit card and credit guarantee businesses

The Daishi Computer Service Co., Ltd.

Computer-related business(ii) Date of business combination
Name of the combined company concerned

October 5, 2022

The Daishi DC Card Co., Ltd.

October 7, 2022

The Hokuetsu Card Co., Ltd.

October 5, 2022

The Daishi Computer Service Co., Ltd.

October 3, 2022(iii) Legal form of business combination
Dividends in kind from consolidated subsidiaries(iv) Name of the combined company
The name of the combined company remains the same.
(v) Other matters concerning the overview of transactions
The purpose is to further contribute to the local economy and maximize theCompany’s consolidated profit by deepening business through reorganization ofGroup companies and exploring new business areas in light of deregulation, as well
as by making the most use of Group company functions and strengthening intraGroup partnerships.

0.8%

Long-term expected ROR

2.0%
2.0% to 2.3%
2.8%

Corporate pension fundRetirement benefit trust
Expected salary increase rate(2)

* The expected salary increase rate for this consolidated fiscal year is expressed as a weighted average.

3. Defined contribution scheme
Amount of required contribution to defined contribution schemes of consolidated
subsidiaries for the current consolidated fiscal year is ¥428 million.

(Stock option related)

There are no applicable items

1. Breakdown of major causes generating deferred tax assets and deferred tax liabilities

Subtotal deferred tax assets
Valuation reserve related to total future subtracted
temporary difference, etc.
Subtotal valuation reserve
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Retirement benefit trust establishment benefit
Deferred gains or losses on hedges
Book value correction for fair market valuation
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Overview of accounting procedures performed
In accordance with the “Accounting Standards for Business Combinations” (ASBJ
Statement No. 21, January 16, 2019) and the “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, January 16, 2019), the transaction was treated as a transaction
under common control.

2. Acquisition of treasury stock by consolidated subsidiaries(1)
Overview of transactions(i) Name and business activities of the combined company concerned
Name of the combined company concerned(Tax effect accounting related)

Deferred tax assets
Allowance for loan losses
Retirement-benefit-related liabilities
Depreciation costs
Valuable securities amortization
Book value correction for fair market valuation
Valuation difference on available-for-sale securities
Other

Date of business combination

The Daishi JCB Card Co., Ltd.

Matters regarding the basis of actuarial calculation
Major actuarial calculation basis

Discount rate

Business activities

The Daishi JCB Card Co., Ltd.

(ii) Method to set long-term expected rate-of-return (“ROR”)
To determine the expected long-term ROR for pension assets, consideration is
given to the distribution of current and expected pension assets and the current
and expected long-term ROR on diverse assets that comprise the pension assets.
(9)

28.3%

¥9,982 million¥2,302 million¥2,044 million¥1,817 million¥2,582 million¥11,772 million¥4,728 million¥35,229 million

Credit card and credit guarantee businesses

The Daishi Computer Service Co., Ltd.

Computer-related business(ii) Date of business combination
Name of the combined company concerned

Date of business combination

The Daishi JCB Card Co., Ltd.

October 5, 2022

The Daishi Computer Service Co., Ltd.

October 3, 2022(iii) Legal form of business combination
Acquisition of treasury stock by consolidated subsidiaries from non-controllinginterests(iv) Name of the combined company
The name of the combined company remains the same.
(v) Other matters concerning the overview of transactions
The purpose of the share acquisition is as described in 1. (1)(v) “Other mattersconcerning the overview of transactions” above.

(¥4,944 million)(¥4,944 million)¥30,285 million(¥2,043 million)(¥2,073 million)(¥137 million)(¥5,793 million)(¥999 million)(¥11,048 million)¥19,237 million

Business activities

The Daishi JCB Card Co., Ltd.

Overview of accounting procedures performed
In accordance with the “Accounting Standards for Business Combinations” (ASBJ
Statement No. 21, January 16, 2019) and the “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, January 16, 2019), the transaction was treated as a transaction with
non-controlling interests under common control.

(3)

Matters concerning acquisition of treasury stock by consolidated subsidiaries(i) The Daishi JCB Card Co., Ltd.
Cash and due from¥680 million
Acquisition pricebanks
Acquisition cost(ii) The Daishi Computer Service Co., Ltd.
Cash and due fromAcquisition pricebanks
Acquisition cost

(4)¥680 million¥302 million¥302 million

Matters concerning change in ownership interest of the Company on transactions
with non-controlling interests(i) Major factors for changes in capital surplus
Acquisition of treasury stock by consolidated subsidiaries(ii) Increase in capital surplus due to transactions with non-controlling interests¥3,792 million

DAISHI HOKUETSU REPORT 2023

(2)

86

The Status of Financial Results (Consolidated)
3. Acquisition of subsidiary shares by the Company(1) Overview of transactions(i) Name and business activities of the combined company concerned
Name of the combined company concerned
The Daishi DC Card Co., Ltd.

(ii)

Business activities
Credit card business

Date of business combination

Name of the combined company concerned
The Daishi DC Card Co., Ltd.

Date of business combination
October 7, 2022(iii) Legal form of business combination
Acquisition of shares from non-controlling interests(iv) Name of the combined company
The name of the combined company remains the same.
(v) Other matters concerning the overview of transactions
The purpose of the share acquisition is as described in 1. (1)(v) “Other mattersconcerning the overview of transactions” above.
(2) Overview of accounting procedures performed
In accordance with the “Accounting Standards for Business Combinations” (ASBJ
Statement No. 21, January 16, 2019) and the “Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures”(ASBJ Guidance No. 10, January 16, 2019), the transaction was treated as atransaction with non-controlling interests under common control.
(3) Matters concerning additional acquisition of subsidiary shares
The Daishi DC Card Co., Ltd.
Cash and due¥67 million
Acquisition pricefrom banks
Acquisition cost
¥67 million(4) Matters concerning change in ownership interest of the Company on transactions with
non-controlling interests(i) Major factors for changes in capital surplus
Additional acquisition of subsidiary shares(ii) Increase in capital surplus due to transactions with non-controlling interests¥323 million(Real estate related, such as lease, etc.)

Some consolidated subsidiary companies own real estate for lease. However, the information
has been omitted as it lacks materiality.

87The Status of Financial Results (Consolidated)(Segment information, etc.)[Segment information]
1. Outline of reporting segments
The Company group consists of the Company, which is the bank holding company, and 13 consolidated subsidiaries, including The Daishi Hokuetsu Bank, Ltd. The Group provides a wide range offinancial instruments and services to local customers, mainly through the banking business, together with leasing, securities, credit guarantees, credit card businesses, etc. Financial information byGroup companies is reported regularly to the Company’s Board of Directors.
Therefore, while the Company group is formed by segments of the Company and each of the consolidated subsidiaries, we have established “Banking,” which accounts for the majority of all segments,“Leasing,” and “Securities,” in view of their importance as the three reporting segments.
“Banking” focuses on deposit and loan businesses, and carries out securities investment, domestic exchange, and foreign exchange businesses, serving as the contact point for the sales of publicbonds, investment trusts, insurance policies, etc. It is positioned as the Group core.
Furthermore, “Leasing” conducts the integrated leasing business, while “Securities” conducts the securities business.
2. The method of calculation for ordinary income, profit or loss, assets, liabilities, and other items of each reporting segment
The accounting method adopted for each reporting segment is identical to the preparation policy for consolidated financial statements. Internal transactions between the segments are based on
the actual amount of transaction.
3. Information regarding the amount of ordinary income, profit or loss, assets, liabilities, and other items of each reporting segment
Fiscal 2022 (April 1, 2021, through March 31, 2022)
Reporting segment
Banking

Leasing

Securities

Total

Other

Total

Adjustments(¥ million)
Amount recorded inconsolidated
financial statements

Ordinary income
Ordinary income from outside customers
Internal ordinary income between segments
Total
Segment profits
Segment assets
Segment liabilities

106,101
1,484
107,585
18,267
10,612,770
10,225,200

20,654335
20,989759
63,253
44,662

5,600
64
5,665
2,811
25,228
10,294132,356
1,884
134,240
21,83810,701,252
10,280,157

5,123
11,225
16,34811,306366,250
25,002

137,479
13,109150,589
33,145
11,067,503
10,305,160(1,768)(13,109)(14,878)(9,599)(397,199)(68,361)

135,711
135,71123,545
10,670,304
10,236,798

6,677
63,864
2,252
2,460

237
228
141
218

21
164
2
28

6,935
64,257
2,396
2,707

66
8,390
8
25

7,002
72,647
2,405
2,733

(43)
(9,963)
(117)
94

6,959
62,684
2,287
2,828

Other items
Depreciation costs
Financing income
Financing expenses
Increase in tangible and intangible fixed asset amount(Notes) 1. Ordinary income is indicated instead of amount of sales used generally for corporations. “Adjustment difference” refers to the difference between ordinary income and the recorded amount of ordinary income in the consolidated
statement of income.
2. “Other” refers to the business segments not included in the reporting segments, and includes the credit guarantee business and credit card business.
3. The amount of adjustments is as follows:(1) The adjustment amount of (¥1,768 million) in ordinary income from outside customers includes ordinary income adjustment of (¥1,230 million), accompanying the adoption of the purchase method.
(2) The adjustment of segment profit of (¥9,599 million) is from elimination of transactions between segments, etc.
(3) The adjustment of segment assets of (¥397,199 million) is from elimination of transactions between segments, etc.
(4) The adjustment of segment liabilities of (¥68,361 million) is from elimination of transactions between segments, etc.
(5) The adjustment of (¥43 million) in depreciation costs is the amount of adjustment accompanying purchase method, etc.
(6) The adjustment of (¥9,963 million) in interest income is for elimination of transactions between segments, etc.
(7) The adjustment of (¥117 million) in interest expenses is for elimination of transactions between segments, etc.
(8) The adjustment of ¥94 million in increase in tangible and intangible fixed asset amount is mainly the acquisition cost of lease items acquired by contracts with the Leasing segment, in segments other than the Leasing segment.
4. Segment profit has been adjusted with ordinary income of consolidated statement of income.

Fiscal 2023 (April 1, 2022, through March 31, 2023)
Reporting segment
Banking

Leasing

Securities

Total

Other

Total

Adjustments(¥ million)
Amount recorded inconsolidated
financial statements

Ordinary income
Ordinary income from outside customers
Internal ordinary income between segments
Total
Segment profits
Segment assets
Segment liabilities

120,376
2,262
122,639
22,56810,455,650
10,090,319

20,154346
20,501366
67,562
48,414

4,131
51
4,183
1,268
24,724
9,478

144,662
2,661
147,323
24,204
10,547,938
10,148,213

4,966
10,64915,616
10,434
369,781
27,099149,629
13,311
162,940
34,638
10,917,719
10,175,312(870)(13,311)(14,181)(9,589)(399,768)(72,784)

148,759
148,759
25,04810,517,951
10,102,527

6,417
79,413
12,101
4,864

223
284
142
188

19
170
1
0

6,660
79,86912,246
5,052

71
7,592
7
143

6,731
87,461
12,2535,196(36)(7,401)
(112)
123

6,695
80,06012,1405,320

Other items
Depreciation costs
Financing income
Financing expenses
Increase in tangible and intangible fixed asset amount(Notes) 1. Ordinary income is indicated instead of amount of sales used generally for corporations. “Adjustment difference” refers to the difference between ordinary income and the recorded amount of ordinary income in the consolidated
statement of income.
2. “Other” refers to the business segments not included in the reporting segments, and includes the credit guarantee business and credit card business.
3. The amount of adjustments is as follows:(1) The adjustment amount of (¥870 million) in ordinary income from outside customers includes ordinary income adjustment of (¥741 million), accompanying the adoption of the purchase method.
(2) The adjustment of segment profit of (¥9,589 million) is from elimination of transactions between segments, etc.
(3) The adjustment of segment assets of (¥399,768 million) is from elimination of transactions between segments, etc.
(4) The adjustment of segment liabilities of (¥72,784 million) is from elimination of transactions between segments, etc.
(5) The adjustment of (¥36 million) in depreciation costs is the amount of adjustment accompanying purchase method, etc.
(6) The adjustment of (¥7,401 million) in interest income is for elimination of transactions between segments, etc.
(7) The adjustment of (¥112 million) in interest expenses is for elimination of transactions between segments, etc.
(8) The adjustment of ¥123 million in increase in tangible and intangible fixed asset amount is mainly the acquisition cost of lease items acquired by contracts with the Leasing segment, in segments other than the Leasing
segment.
4. Segment profit has been adjusted with ordinary income of the consolidated statement of income.

DAISHI HOKUETSU REPORT 2023

88

The Status of Financial Results (Consolidated)[Related information]
Fiscal 2022 (April 1, 2021, through March 31, 2022)
1. Information by each service(¥ million)
Loan operations

Securities investment operations

50,832

Ordinary income from outside customers

Lease operations

28,220Other

20,427

Total

36,231

135,711(Note) Ordinary income is indicated instead of amount of sales for corporations.

2. Information for each region(1)
Ordinary income
Listing has been omitted since the amount of ordinary income of the Company group, segmented into external customers in Japan, accounts for over 90% of the ordinary income in the
consolidated statements of income.
(2)
Tangible fixed assets
Listing has been omitted since the amount of tangible fixed assets of the Company group existing inside Japan accounts for over 90% of the tangible fixed assets of the consolidated balance
sheet.
3. Information by each major customer
Listing has been omitted since there are no specific customers from which ordinary income accounts for 10% or more of the ordinary income in the consolidated statements of income.
Fiscal 2023 (April 1, 2022, through March 31, 2023)
1. Information by each service(¥ million)
Loan operations

Securities investment operations

52,802

Ordinary income from outside customers

Lease operations

35,560Other

19,871

Total

40,525

148,759(Note) Ordinary income is indicated instead of amount of sales for corporations.

2. Information for each region(1)
Ordinary income
Listing has been omitted since the amount of ordinary income of the Company group, segmented into external customers in Japan, accounts for over 90% of the ordinary income in the
consolidated statements of income.
(2)
Tangible fixed assets
Listing has been omitted since the amount of tangible fixed assets of the Company group existing inside Japan accounts for over 90% of the tangible fixed assets of the consolidated balance
sheet.
3. Information by each major customer
Listing has been omitted since there are no specific customers from which ordinary income accounts for 10% or more of the ordinary income in the consolidated statements of income.
[Information regarding impairment loss of fixed assets for each reporting segment]
Fiscal 2022 (April 1, 2021, through March 31, 2022)
This information is omitted because it lacks materiality.
Fiscal 2023 (April 1, 2022, through March 31, 2023)(¥ million)
Reporting segment
Banking

Impairment loss

Leasing

685

Securities

-

Other

Total

64

749

Total

-

749

[Information concerning amortization of goodwill and unamortized balance by reporting segment]
There are no applicable items[Information concerning negative goodwill generation profit by each reporting segment]
There are no applicable items(Related party information)

There are no material matters to be stated regarding transactions with related parties.

(Per share information)

Net assets per share¥9,245.50
Net income per share for the current term
¥391.79
Net income per share for the current term after adjustment forpotential shares(Note 1) The basis for calculation of net assets per share is as follows:
Total amount of net assets¥415,423 million
Amount to be deducted from total net assets¥- million(of which, subscription rights to new shares)¥- million(of which, non-controlling interests)¥- million
Net asset amount at end of term concerning ordinary¥415,423 million
sharesNumber of ordinary shares at the end of term used to44,932 thousand sharescalculate the amount of net assets per share(Note) The Company’s shares remaining in the trust recorded as treasury stocks inshareholders’ equity are included in the number of treasury stocks to be
deducted in the calculation of the number of shares at the end of the term forcalculating net assets per share.
Number of treasury stocks at the end of the term deducted for calculating net
assets per share
398 thousand shares
Current consolidated fiscal year
(Note 2) The basis for calculation of net income per share for the current term and the net
income per share for the current term after adjustment for potential shares are as
follows.
Net income per share for the current term
Net income reverting to parent company shareholders¥17,768 million
Amount not reverting to ordinary shareholders¥- million
Net income reverting to parent company shareholders¥17,768 million
related to ordinary shares
Average number of ordinary shares during the term
45,350 thousand shares
Net income per share for the current term after adjustment
for potential shares
Amount of adjustment of net income for the current term¥- million
reverting to parent company shareholders
Increase in number of ordinary shares- thousand shares
Of which, subscription rights to new shares- thousand shares
Summary of potential voting shares not included for lack ofdiluting effects, in the calculation of net income per sharefor the current term after adjustment for potential shares.
(Notes) 1.The Company’s shares remaining in the trust that are recorded as treasury
stocks in shareholders’ equity are included in the number of treasury stocks
to be deducted in the calculation of the average number of shares during theterm for calculating the net income per share for the current term and thenet income per share for the current term after adjustment for potential
shares.
Average number of treasury stocks during the term deducted for calculationof net income per share for the current term and the net income per sharefor the current term after adjustment for potential shares
Current consolidated fiscal year
398 thousand shares
2. Net income per share for the current term after adjustment for potential
shares is not presented as there are no potential shares.

89(Significant subsequent events)< NCS Co., Ltd. and Bridge Niigata, Ltd. as subsidiaries>
Based on the resolution of the Board of Directors held on December 9, 2022, the Company
acquired the shares of NCS Co., Ltd., and Bridge Niigata, Ltd. on April 3, 2023, to make themits consolidated subsidiaries. An overview is as follows.
1. Overview of business combinations(1)
Name and description of the businesses of the acquired companies
Name of the acquired company

Description of business

NCS Co., Ltd.

Computer-related business

Bridge Niigata, Ltd.

Local trading company business(2) Main reasons for the business combination
The purpose is to further contribute to the local economy and maximize theCompany’s consolidated profit by strengthening Group governance through thereorganization of the system business and demonstrating the Group’s
comprehensive capabilities.
(3) Date of business combination
April 3, 2023
(4) Legal form of business combination
Acquisition of shares from non-controlling interests and dividends in kind fromconsolidated subsidiaries(5) Name of the company after combination
Name of the concerned company before combination

Name of the concerned company after combination

NCS Co., Ltd.

The Daishi Hokuetsu IT Solutions Co., Ltd.

The name of Bridge Niigata, Ltd. remains the same.
(6) Voting rights ratio acquired
Name of the concerned
company before combination

Voting rights ratio held
immediately prior to thebusiness combination

NCS Co., Ltd.
Bridge Niigata, Ltd.

14.9%
14.3%

Voting rights ratioacquired on the date ofbusiness combination

85.0%
71.4%

Voting rights ratio after
acquisition

100.0%
85.7%(7) Main basis for determining the company to be acquired
It is based on the acquisition decision factors under the Accounting Standards for
Business Combinations.
2. Matters concerning calculation etc., of acquisition cost(1)
Acquisition cost of the acquired company
Market value of common shares held immediately prior to
the business combination on the date of the businesscombination
Market value of common shares additionally acquired
Acquisition cost(2)

¥235 million¥737 million¥973 million

Difference between the acquisition cost of the acquired company and the totalacquisition cost of each transaction acquired
Gain on step acquisitions¥109 million

The Status of Financial Results (Consolidated)
3. Matters concerning allocation of acquisition costs(1) Major breakdown of assets accepted and liabilities assumed on the date of businesscombination
Current assets¥2,179 million
Fixed assets¥1,559 million
Total assets¥3,738 million
Current liabilities¥939 million
Non-current liabilities¥464 million
Total liabilities¥1,404 million(2) Amount of negative goodwill arising and its cause(i) Amount of negative goodwill arising¥1,343 million(ii) Cause
The market value of net assets at the time of the business combination exceeded
the acquisition cost of the acquired company.
<Transaction to deliver Company shares to employees, etc. through trust>
The Company’s Board of Directors held on May 12, 2023, resolved the introduction of the“Trust-type Employee Shareholding Incentive Plan (E-Ship®)” (hereinafter referred to as the“Plan”) to provide the Group employees with incentives to increase corporate value over the
medium to long term and to expand the benefits package.
This system is an incentive plan for all employees who are members of “The Daishi Hokuetsu
Financial Group Employee Shareholding Association” (hereinafter referred to as“Shareholding Association”). Under this system, the Company will establish “The Daishi
Hokuetsu Financial Group Employee Shareholding Association Exclusive Trust” (hereinafterreferred to as “E-Ship Trust”) in a trust bank. The E-Ship Trust will acquire in advance thenumber of Company shares expected to be acquired by the Shareholding Association over acertain period after the establishment. Thereafter, if the Company shares are sold from the EShip Trust to the Shareholding Association on an ongoing basis, and the amount equivalent to
the gain on sale of shares is accumulated in the E-Ship Trust at the time of termination of thetrust, such amount equivalent to the gain on sale of shares will be distributed as residual
assets to persons who meet the requirements for eligibility as beneficiaries. As the Company
will guarantee E-Ship Trust the borrowings to acquire the Company shares, if the amountequivalent to the loss on sale of shares is accumulated in the E-Ship Trust due to a decline in
the Company’s share price, and there are outstanding borrowings equivalent to such loss onsale of shares in the E-Ship Trust at the time of termination of the trust, the Company will
repay such balances.
The timing of the trust establishment relating to the Plan, the total monetary amount to beborrowed by the trust, and the trust period, among others, are to be determined.

DAISHI HOKUETSU REPORT 2023

90

Non – Consolidated Balance Sheet
Years ended March 31, 2022 and 2023
Note: The translations of the Japanese yen amounts into US dollars are using the prevailing exchange rate at March 31,
2023, which was ¥133.53 to US $1.
■ Assets(Millions of Yen)

Item

(Thousands of U.S.Dollars)

2022

2023

2023

Cash and due from banks¥2,758,710¥2,031,155$15,211,225

Monetary claims bought

14,115

15,609116,899

Trading account securities

2,956

2,497

18,704

Securities

2,493,036

2,859,579

21,415,255

Loans and bills discounted

39,602,433

5,130,559

5,288,112

Foreign exchanges

16,304

19,566

146,533

Other assets

102,503

136,671

1,023,529

Tangible fixed assets

65,79062,830470,534

Intangible fixed assets

13,684

11,202

83,891

Prepaid pension cost

7,853

9,482

71,011

Deferred tax assets

11,40822,767

170,505

Customersʼ liabilities for acceptances and guarantees

18,966

20,738155,312

Allowance for loan losses(23,119)(24,562)(183,950)¥10,612,770¥10,455,650$78,301,887

Total assets■ Liabilities(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

¥8,229,330¥8,387,619$62,814,497

Negotiable certificates of deposit

249,241

228,518

1,711,363

Receivables under resale agreements

37,006

175,576

1,314,883

Payables under securities lending transaction

298,397

308,046

2,306,945

Borrowed money

1,346,000

892,900

6,686,886

Foreign exchanges

209

463

3,470

Borrowed money from trust account

2,886

8,386

62,809Other Liabilities

29,97855,565416,127

Provision for bonuses

2,020

2,021

15,138Provision for directorsʼ bonuses

85

85

639

Provision for share-based payment

380

516

3,870

Provision for reimbursement of deposits

1,454

1,189

8,905

Provision for contingent loss

1,615

1,910

14,309Deposits

Deferred tax liabilities for land revaluation

7,627

6,780

50,778

Acceptances and guarantees

18,966

20,738155,312¥10,225,200¥10,090,319$75,565,938

Total Liabilities■ Net Assets(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

Capital stock¥32,776¥32,776

Capital surplus

60,13860,138450,372

Retained earnings

271,683

280,347

2,099,512

Shareholdersʼ equity

364,598373,263

2,795,349

Valuation difference on available-for-sale securities

12,396(16,501)(123,577)

464

288

2,158

10,1108,281

62,017

Deferred gains or losses on hedges
Revaluation reserve for land

$245,465

Total valuation and translation adjustments

22,971(7,931)(59,401)

Total net assets

387,569

365,3312,735,948¥10,612,770¥10,455,650$78,301,887

Total Liabilities and Net assets

91(Millions of Yen)Non-Consolidated Statement of Income
Ordinary income
Financing income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans
Interest on receivables under securities borrowing
transactions
Interest on deposits with banks(Millions of Yen)

(Millions of Yen)

(Thousands of U.S.Dollars)

2022

2023

2023

¥107,585¥122,639$918,438

63,86445,406
17,398(69)

79,41346,81528,457(78)594,725
350,600
213,114
(585)

1

-

-

Other income

760
12
354
53
22,841
10,695
10,130

2,523
1,276
419
117
23,827
11,5697,710

18,897
9,559
3,139
883
178,442
86,64057,745

Ordinary expenses

89,317100,070

749,420

2,252
458
10
0
112

12,101
435
12
2,859

90,6293,263
9621,416174

5,889

44,104

0
1,485
10
8,553
5,902
59,988
12,620

0
2,907
(3)
8,517
14,08057,4507,919

021,774(25)
63,789105,451
430,242
59,307

18,26722,568169,018

237

1,046

7,834

0
237

1,046
-

7,834
-

460

3,134

23,473

117
62
280

393
2,741
-

2,944
20,528-

Income before income taxes

18,044

20,480

153,378

Income taxes-current

6,219
(317)

5,108
524

38,256
3,926Interest on interest swaps
Other interest income
Trust fees
Fees and commissions
Other ordinary income

Financing expenses
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money
Interest on bills soldInterest on payables under securities lendingtransactions
Interest on borrowings and rediscounts
Interest on interest swaps
Other interest expenses
Fees and commissions payments
Other ordinary expenses
General and administrative expenses
Other expenses
Ordinary profit
Extraordinary income
Gain on disposal of noncurrent assets
Other extraordinary income
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss
Provision for share-based payment

Income taxes-deferred
Total income taxes
Net Income
Net Income

5,901

5,632

42,183¥12,143¥12,143¥14,847¥14,847$111,195

DAISHI HOKUETSU REPORT 2023

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