Annual Report

Shinkin Central Bank

2020

Shinkin Central Bank,
the Central Bank for Shinkin Banks
As the central financial institution in Japan for the cooperative regional financial institutions, known asshinkin banks, the Shinkin Central Bank (hereinafter the SCB) occupies a well-established position in Japan’s
financial industry. Shinkin banks currently hold funds totaling some ¥145 trillion (around US$1,336 billion).

Management Philosophy and Operational Policies
Management Philosophy
As the central bank for all shinkin banks, the SCB supports the growth of the shinkin bank industry, thereby contributing to economic development
throughout Japan.

Operational Policies

1.

Strengthen the corporate base, broaden operational functions, and enhance the credit standing of shinkin banks.

2. Attract stable funds from shinkin banks and diversify funding sources.
3. Upgrade market operations and develop financial services.
4. Pursue new business to reflect changing financial circumstances.
5. Contribute to regional development and revitalization hand in hand with shinkin banks.
6. Achieve sound management through efficiency, capital adequacy, and strengthened risk management.
7.

Nurture professionals and create an attractive workplace.

8. Enhance public trust in the SCB.
Corporate Data (as of March 31, 2020)
Name:
Established:
Number of employees:
Domestic network:
Overseas network:
Total assets:
Total funds:
Paid-in capital:
Preferred shares:
Capital adequacy ratio(consolidated):
Number of member
shinkin banks:Long-term credit ratings:(as of July 31, 2020)

Shinkin Central Bank (SCB)
June 1, 1950
1,223
14
5
¥40,633 billion ($373 billion)¥38,656 billion ($355 billion)¥690 billion ($6,356 million)¥90 billion ($837 million)

Shinkin Bank
Shinkin Bank
Shinkin Bank
Shinkin Bank

24.31%255
A1 (Moody’s)
A (S&P)
A+ (R&I)
AA (JCR)* The number of employees includes full-time Directors and Corporate
Auditors. Our overseas network includes Shinkin International Ltd., asubsidiary in London.

Shinkin Bank
Shinkin Bank
Total assets: ¥40,633 billion ($373 billion)
Domestic network: 14
Overseas network: 5
Number of employees: 1,223
Number of member shinkin banks: 255

Number of shinkin banks: 255
Total assets: ¥158,599 billion($1,458 billion)
Number of branches: 7,237
Number of employees: 104,073
Number of members: 9,137,735(As of March 31, 2020)

Financial Highlights (Non-consolidated Financial Summary)Millions of Yen
For the years ended March 31,

2020

2019

Millions of US Dollars*
2018

2020

2019

2018

$2,451$2,332$2,594

For the Fiscal Year
Total income¥266,519 ¥258,767 ¥275,792

Total expenses

214,229

201,720

213,136

1,970

1,817

2,005

Net income (loss)

37,92442,28646,498

348

381

437

Net business profit (loss)

58,02542,79150,535

533

385

475

¥40,633,271 ¥39,432,740 ¥38,552,702$373,776$355,377$362,746

At the Year-end
Total assets
Loans and bills discounted

8,474,068

7,045,582

6,952,659

77,951

63,49665,418

Securities

16,477,301

16,613,593

17,137,785

151,571

149,725

161,251

Total liabilities

39,112,432

37,799,235

36,949,667

359,786

340,656

347,663

Deposits

31,208,596

30,966,816

30,260,341

287,081

279,080

284,722

Debentures

2,141,480

2,486,710

2,714,890

19,69922,41025,544

1,520,838

1,633,504

1,603,035

13,98914,721

15,083

Net assets* US dollar amounts are given for convenience only, converted at the rate of ¥106.28, ¥110.96, and ¥108.71 per US$1.00, the prevailing rate as of March 31, 2018, 2019, and 2020
respectively.

Contents
Financial Highlights (Non-consolidated Financial
Summary) ................................................................................. 1
Message from the President and CEO ............................. 2
Corporate Management and Auditors ............................. 6
About Shinkin Central Bank ............................................... 7

Overseas Networks ........................................................... 16
Business Overview .............................................................. 17
Capital Adequacy ................................................................ 18
Asset Quality ........................................................................ 19

About Shinkin Banks ............................................................. 8

Corporate Governance ..................................................... 20
Compliance System ............................................................ 21

Measures against the Novel Coronavirus Disease(COVID-19) .......................................................................... 10

Risk Management ..................................................................23
Preferred Shares ................................................................. 26

Medium-Term Management Plan “SCB Strategy
2019” ....................................................................................... 11
Realizing a Sustainable Society .......................................... 14

Financial Section .................................................................. 27
Organization / The SCB Group ....................................... 84
International Directory ..................................................... 85

This material contains certain forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties, while actual results may materiallydiffer from those contained in the forward-looking statements as a result of various factors.
US dollar amounts are converted for convenience only, at ¥108.71 per US$1.00, the prevailing rate on March 31, 2020.

1

Message from the President and CEO

Strive to Realize a Sustainable SocietyWith Shinkin BanksThe Shinkin Central Bank (the “SCB”) strives to realize “asustainable society” with shinkin banks so as to realize abright future for the shinkin bank industry and Japan’s
economy.
In this message as President and CEO, I would like to present my thoughts on how to face changes in external environments, what kind of visions, strategies and recognitionof issues to be held in steering the management, and how
to continue challenging under the drastically changing environments.
First of all, I would like to extend my sincere condolences
for those who lost the loved ones due to the novel coronavirus disease (COVID-19). Also, I pray for a quick recoveryof those who contracted the disease, and further pray foran early containment of damages caused by the infection.

President and CEO

70th Anniversary Since Establishment

the SCB has gone through many difficul-

medium-sized enterprises (SMEs), all ofties, such as the economic depression fol-which result in ailing regional economies.

The SCB is celebrating its 70th anniver-lowing the bankruptcy of Lehman Broth-In addition, the impact of COVID-19 onsary this year since its establishment.

ers and the Great East Japan Earthquake

economic activities is expanding. All ofSince its establishment in 1950, andand its catastrophic damages, all of whichthese factors have made the environment

with the change of its trade name to “thethe SCB and its group companies as one

surrounding the shinkin bank industry

Shinkin Central Bank” from “the Zenshin-have overcome together with shinkin

even more challenging.

ren Bank” in 2000, the SCB has now

banks throughout Japan.
However, if you look at the current

shinkin banks, the SCB will aim for con-tion for shinkin banks both in name andsituation, you will see fundamental prob-

structing operations as “one banking

reality, currently managing approximately

lems, such as a declining birthrate, aging

group,” to improve competitiveness of¥40 trillion of funds on a global scale.

population, overall population decrease,the shinkin bank industry, thereby over-

and a decrease in the number of small andcoming these difficult times and striving

Over the long period of its history,

2

With ever stronger cooperation withgrown to be the central financial institu-

to build a brighter future for the next ten
to twenty years.

In order to achieve this, the SCB willwith the total investment of ¥10 billion

promote increased commonality andfor the purpose of strengthening financial

joint usage for shinkin bank processing

bases of shinkin banks’ customers.

SCB’s Medium- to Long-Term
Visionoperations and administration business,

In addition, to cope with the future

and will also actively develop joint prod-

after the COVID-19 pandemic, the SCB

Our medium-term management plan thatucts and services.

has started a program that supports on-commenced in fiscal 2019 sets forth its

line business fairs in collaboration with“vision” for the medium to long term as

Current Key Measuresthat “together with Shinkin Banks, SCB

The SCB will steadily implement the vari-

Despite the continuous impacts being

will aim for constructing combined oper-

ous measures described in the current

made toward normalizing the economic

ations as one banking group, improving

medium-term management plan. In addi-

activities amid the remaining impacts ofcompetitiveness of Shinkin group, andtion, besides placing its top priority on

COVID-19, the outlook for the futureachieving the future where Shinkin Bank

the measures against COVID-19, the SCB

still remains uncertain. As such, assess-is the most reliable bank in every local

will accelerate its initiatives to the impor-ment of changing management environ-area, by allocating resources to eachtant issues such as realization of the re-ments after the end of the COVID-19

banks field of expertise.”gional innovation, promotion of shinkin

pandemic will be the key in steering thebanks’ digitalization, and advancement of

future management.

The SCB and the SCB Group as aexternal business partners.

whole will implement various measures

SDGs.

to realize this “vision.”[Measures against COVID-19]

sponses to COVID-19 our top priority,

To be more specific, the SCB aims to

The SCB has introduced the Novel Coro-and we will respond quickly and flexibly.

play its role as the hub or the connection

navirus Disease (COVID-19) Special Fi-[Initiatives for Realization of Re-

point to take full advantage of the power

nancing System as a special loan method

gional Innovation]of the network owned by the shinkin

to shinkin banks’ customer SMEs throughAmid the ailing regional economies beingbank industry, and, in addition, to build

shinkin banks. Moreover, the SCB togeth-

intensified, shinkin banks are expectedorganic partnerships with external or-

er with Shinkin Guarantee Co., Ltd., one

not only to provide the traditional finan-ganizations that transcend the confines ofof its group companies, extended a sup-cial services such as deposits and loans,the sector.

port program to flexibly respond to re-but also to play a new role.

This allows the SCB to build a “problem-solving system” that provides solu-

laxing the lending terms of the existingloans.

We will continue to keep our re-

In response to these expectations
from the regional societies, we believetions to various regional issues and re-

To provide assistance to shinkinthat promoting initiatives for realizationspond to the needs of the customers ofbanks’ customers who were experiencingof the regional innovation with extensive

shinkin banks, thereby increasing thedifficulties in procuring goods and materi-collaboration with government, industry

competitiveness of the entire shinkin

als due to supply-chain disruptions, theand academia in both financial and non-bank industry.

SCB has opened a matching site specifi-

financial

cally designed to address issues associat-

strengthen shinkin banks’ own earnings

ed with COVID-19.

and customer bases. Thus, we believe

Also, shinkin banks are the financial
institutions strongly connected to theirperspectives,

will

lead

to

respective regional economies. If they

Furthermore, in response to poten-that these initiatives will become everwish to increase their presence in the re-tial deterioration of business perfor-

more important from the viewpoint ofgions and become the most trusted re-mance and damage to equity capital inbuilding a sustainable business model ofgional financial institutions, they must

SMEs, the SCB, in collaboration withshinkin banks.

prioritize the allocation of management

Shinkin Capital Co., Ltd. established a

Based on this recognition, we estab-

resources to those initiatives that should

COVID-19 support fund “Shinkin no Ishi-

lished in April 2020 Regional Innovation

resolve the problems faced by regions.

zue, the Cornerstone of Shinkin Banks,”

Division toward realization of the region-3

al innovation.
We believe that by the SCB’s playing arole as a hub or a connection point (withinvestments and loans for ESG. In June

cation measures for marketing, making

2020, the SCB invested in the sustainable

use of big data.

development bond originally designed

Regional Innovation Division playing a

In the area of digital innovation, weand issued for the SCB by the World

central role) in the shinkin bank industry,

are collaborating with the shinkin banks

Bank, focusing on such theme as conser-

we will be able to transcend the bounda-

and external organizations to precisely

vation of the global environment.

ry of regions or scales and to build an or-

acknowledge rapid advances in innova-

ganic network including external organi-tions, and to handle the situations in anzations and covering many fields such as

agile manner.

human resources, knowhow, and infor-[Initiatives for SDGs]

mation.

The social inclusion concept of “leave no

Aiming to Make the Best out of a
Function as the Central Financial
Institution in the Shinkin Bank
Industry

We strongly believe that by mobilizing

one behind” in the area of SDGs is in line

The SCB is continuously working toeach shinkin bank and its uniqueness intowith “mutual support,” a fundamentalbuild a stable financial base in pursuit ofthis network, we will be able to increase

principle of cooperative financial institu-

an optimum balance among earnings,

the added value of the entire shinkin banktions.

risks, and capital, so as to perpetuallyindustry and further strengthen the abili-With this basic principle in mind,

ty of each shinkin bank to solve its issues.

shinkin banks throughout Japan are work-[Promote Shinkin Bank’s Digitali-

ing to resolve issues held by SMEs andzation]regions.

perform its duties as the central financial
institution for the shinkin banks.
Also, we intend to flexibly respond tothe changing times, to nurture human re-

While digitalization being accelerated and

The SCB is willing to share this princi-

sources capable of providing solutions toinitiatives by other businesses such as ITple, and to proceed toward realization of

the issues held by local economies andcompanies being activated in finance-re-

SDGs along with shinkin banks.

SMEs, and further to focus on preparing

lated operations, financial institutions are

Based on this recognition, the SCB

innovative working environments that

required to adapt their business models

made in September 2019 the Declarationencourage freewheeling thinking. By soto the changing times.

of Shinkin Central Bank Group on SDGs.

doing, we intend to make the best out of

For the purpose of promoting cash-

In this Declaration, the SCB has cho-

our function as the central financial insti-

less payments, in September 2019, thesen three important themes: namely,

tution for shinkin banks well into the fu-

SCB entered into a business collabora-“sustainable prosperity of a regional soci-ture, and to pursue and realize “a sustain-

tion with Nippon Telegraph and Tele-ety,” “well-being to all the people,” andable society” together with shinkin banks.

phone East Corporation, which provides“conservation of global environment.”[Construction of a Financial Base]services that can respond to multiple

Based on these themes, the SCB will

The SCB has constructed a risk appetite

cashless payment systems. Further, in

strive to implement initiatives together

framework (RAF). Within this frame-

January 2020, the SCB entered into busi-

with shinkin banks throughout Japan to-work, the SCB will make efficient risk-

ness collaboration with Mercari, Inc. andward realization of “a sustainable socie-

taking on the level of its capital, thereby

Merpay, Inc. Through these collaboratedty.”building a medium- to long-term financialtransactions, we are endeavoring to fur-Also, we have established SDGs Pro-

ther improve our services toward realiza-

motion Office within Strategic Planningtion of a cashless society and reactivation

Division in April 2020.

base.
In fiscal 2019, we formulated a risk appetite statement that documented theGoing forward, the SCB Group as acontents of RAF in writing so as to clarify

In addition, for the purpose of ad-whole and as one, with the SDGs Promo-

the basic concept of risk-taking and tovancing even more operational reforms intion Office playing a central role, will

strengthen the risk governance.

the shinkin bank industry, we opened instrengthen its initiatives for SDGs.

of regional economies.

April 2020 Shinkin Innovation Hub,

4

thereby carrying out studies in sophisti-

The SCB is also aggressively advancing

This statement clarifies the purpose
and risk culture, and based on them, sets

forth the target level of earnings to beresources that can generate innovations,and shall adapt to the changing societies

achieved and the levels of management

we have established a cross-organization-amid the spread of COVID-19. By so do-

indices to be maintained over the medi-

al project team. With this project team,ing, we believe that we shall be able toum term.

we are currently working to review ourmeet the needs of the new times and that

Also, we are currently executing op-

office environments for improving em-

shinkin banks will continue to provide

erations in accordance with the “PDCA

ployees’ productivity by encouraging ac-

high-value added services to their local

cycle.” Under this PDCA cycle, we draw

tive communication among them, as wellcustomers.

up a fiscal earnings plan for realization ofas working to promote digital-based busi-

these medium-term targets, execute, re-ness operations such as paperless confer-port, and amend the plan.

ence and electronic approval system.

In closing, I sincerely ask for your further support and understanding.

Currently, due to the impacts of
COVID-19, the outlook for the market

Challenge for a New Era

conditions is expected to remain ex-

As the digitalization is rapidly progress-

tremely uncertain for the time being.

ing, financial institutions are also required

However, we shall flexibly adapt to theto change their business models. We be-changing environments through operat-

lieve that this move is further accelerated

ing the RAF.

by the spread of COVID-19.

[Nurturing of Human Resources

We feel that we are being tested as toand Improvement of Work Envi-the ability of shinkin banks in providing

ronment]

added values to their respective areas

In order for the SCB to make the best out

even in the era after the end of the COV-

of its role as the central financial institu-

ID-19 pandemic.

tion for shinkin banks, every one of its

I cherish the word fuekiryukou, which

employees is required to recognize theliterally means “the immutable and the

SCB’s role and mission in society andtransient.” This is interpreted as “theneeds to be equipped with advanced fi-

core (‘the immutable’) will never change,

nancial knowledge and business execu-

but the rest (‘the transient’) will.”tion skills.

Shinkin banks’ fundamental principle

Also, in order to nurture an employeeof “mutual support” and their spirit “forwho can generate innovations, it is neces-the benefit of the regions”, together withsary more than ever to consciously de-

the SCB’s belief and mission to contributevelop a corporate culture that allows trial

to the progress of the regional econo-and error and encourages challenges.

mies and societies with shinkin banks, will

In order to realize these objectives,

never change. On the other hand, we

the SCB has established the “SCB Uni-

need to make changes in what needs toversity,” an educational system designed

be changed without hesitation and withto enhance special skills. Also, in order toboldness.

further improve employees’ engagements

I believe that even in the era after thetheir organization, the SCB has intro-

COVID-19 pandemic, we should continue

duced a process that continuously assess-to maintain the essentials such as our phi-es their engagements.

losophy and principles.

Also, in order to further develop a

On the other hand, we shall cope

corporate culture that nurtures humanwith rapidly progressing digitalization,

5

Corporate Management and Auditors

Kenichiro Mimuro

Chairman of the Boardof Directors (Part-time)

Hiroshi Nakahara

Senior Managing Director

Career summary

Career summary

Career summary

April 1968
Joined Hamamatsu Shinkin
Bank (current Hamamatsu
Iwata Shinkin Bank)
June 2005
President and Chief Executive
Officer of Hamamatsu Shinkin
Bank (current position)
June 2008
Director of the SCB
June 2020
Chairman of the Board of
Directors (current position)
June 2020
Chairman of the Board of
Directors of The National
Association of Shinkin
Banks (current position)

April 1980
Joined the SCB
April 2005
General Manager ofStrategic Planning Division
June 2007
Director and General
Manager of Strategic
Planning Division
June 2009Managing Director
June 2013
Senior Managing Director
June 2016
Deputy President
June 2018
President and Chief Executive
Officer (current position)

April 1981
Joined the SCB
June 2007
General Manager of
Personnel Division
June 2010
Director and General
Manager of Osaka Branch
June 2013
Managing Director
June 2016
Senior Managing Director
October 2017
Deputy President(current position)

Hiroyuki Shibata

President and Chief
Executive Officer

Hajime Hioki

Deputy President

Career summary

Career summary

Career summary

April 1981
Joined the Ministry of Finance
June 2013
General Manager of the
Accounting Center and General
Manager of the Policy ResearchInstitute, Ministry of FinanceJuly 2014
Director-General of the
Financial Bureau
July 2015
Commissioner of the
National Tax Agency
October 2016
Executive Consultant of the SCB
June 2017
Director and Executive
Consultant
October 2017
Senior Managing Director(current position)

April 1987
Joined the SCB
April 2005
Representative Director
and President of Shinkin
International Ltd
June 2009
General Manager of Strategic
Planning Division of the Bank
June 2013
Director and General
Manager of Osaka Branch
June 2016
Managing Director
June 2018
Senior Managing Director(current position)

April 1985
Joined the SCB
June 2010
General Manager of
Personnel Division
June 2012
Director and General Manager
of Personnel Division
April 2013
Director and General Manager
of Support & Advisory Division
for Shinkin Banks
June 2015
Managing Director
June 2019
Senior Managing Director(current position)

Hiroshi Sudo

Senior Managing Director

Norihiro Takano

Senior Managing Director

Chairman of the Board of
Directors (Part-time)

Directors

Makoto Shirahase

Hideki Sasaki

Norimasa Yoshino

Kenichiro Mimuro

Takashi Hanaoka

Tatsuo Takeda

Zon Suzuki

Shinya Yumiyama

President and Chief Executive Officer

Kenji Tanaka

Hiromi Nomura

Hiroyuki Shibata

Masafumi Shinagawa

Takayuki Goto

Deputy President

Directors (Part-time)

Corporate Auditor

Hajime Hioki

Masatoshi Masuda

Hiromichi Chisaka

Rinichi Hoshi

6

Senior Managing Directors

Ikuo Higuchi

Corporate Auditors (Part-time)

Hiroshi Nakahara

Tetsu Komori

Takashi Abe

Hiroshi Sudo

Hiroshi Hiramatsu

Seiji Sakuda

Norihiro Takano

Norikazu Shibuya

Akio Okuyama

Kotaro Omae

Naoyuki Yoshino

Managing Directors

Kuniyuki Hashizume

Keisuke Izutsu

Hirotsuna Sumida

Yuzuru Nishino

Minoru Kondo

Takehiko Murotani

Koya Nakazawa(As of July 1, 2020)

About Shinkin Central BankThe SCB was established as a cooperative financial institution funded by the shinkin banks, and serves as the central bank for shinkin banks
throughout Japan, which are also its members. Here we will explain the three major functions performed by the SCB in the shinkin bank industry.

1. Functions to resolve issues held by regions

Shinkin banks play a key role in supporting regional economies by lending to local organizations and SMEs in Japan. However, individual shinkin banks are
sometimes restricted in performing their banking functions because of their scale and limitations on their business area.
To address this issue, the SCB is involved in initiatives to assist in areas such as business matchmaking and overseas development services to SMEs, asset
buildup and inheritance services for individual customers, and revitalization measures and the use of fintech in the regions, In this way, the SCB supplements
services that shinkin banks cannot perform easily or efficiently on an individual basis, and enables shinkin banks to respond promptly to changes in the
management environment surrounding shinkin banks, such as the increasing sophistication and diversity of shinkin bank customer needs and to deal withintensifying competition from other business categories.

IssuesSolutions

Value provided◦Expansion of sales channels◦Overseas expansion◦Business succession and M&A▪Provide business matching opportunities▪Provide services corresponding to the needs of overseas
expansion▪Support business expansion and networking at overseas locations▪Provide a platform for M&A▪Provide fund and capital through our support fund
▪Provide services according to life stageSound
development of
SMEs

Individual
customers◦Asset buildup◦Succession of assets◦Strengthening of financial literacy▪Provide products corresponding to life events▪Supplement services for assets under management atshinkin banks▪Provide trust products for individual customers▪Provide digital skills training

Realization of anenriched life forpeopleRegional
communities◦Regional revitalization◦Promotion of regional industry◦Increased use of cashless payments▪Provide Regional Revitalization Support Package▪Implement initiatives to utilize dormant deposits▪Link shinkin bank accounts with Merpay▪Provide Shinkin SDGs Private Placement Bonds▪Implement initiatives to promote tourism and industry

Prosperity ofregional society

SMEs

2. Central bank functions for shinkin banks

The environment surrounding shinkin banks still remains difficult due to factors such as structural problems in regional economies, which are the shinkinbanks’ sales base, such as the progression of the aging population and overall population decrease, in addition to the continuation of negative interest rate
policies by the Bank of Japan, and the complexity of these issues is increasing.
In this environment, the SCB makes every effort to maintain an orderly financial system within the shinkin bank industry through the further strengtheningof consulting functions, and cyber security measures in the shinkin bank industry, as well as timely and appropriate operations of the Shinkin Bank Management
Reinforcement System, etc.

Support for
ensuring thesoundness ofshinkin banks

Maintaining andincreasing ofcredibility of theshinkin bankindustry

Solutions

Value provided◦Strengthening of investment management◦Strengthening of operational efficiency▪Provide deposit products▪Provide investment products using trust banking business
functions▪Provide loan products▪Handle administrative tasks for deposit assessment
operations◦Strengthening of ability to manage risk
◦Nurturing and obtaining of human resources▪Assist sophistication in risk management▪Implement profit simulations▪Establish Cyber Security Center▪Assist improvement of systems against money laundering orother illicit activities◦Early detection of management issues◦Management reinforcement▪Operate the Shinkin Bank Management Reinforcement
System▪Operate the Shinkin Bank Mutual Funding Support System

Development of regional economies
through strengthening managementof shinkin banks

Support forboosting earnings
capacity ofshinkin banks

Issues3. Functions as an institutional investor

The SCB is constructing a stable funding base through deposit operations and bond operations. With the funds procured with this base, the SCB makes
investments and loans for various products, etc. in money markets in Japan and overseas as one of the leading institutional investors in Japan.
Furthermore, with regard to investment and loan strategy, the SCB pursues efficient risk-return as well as promotes investments and loans that take ESG
into consideration, such as forming project finance for private finance initiatives and investing in the World Bank Sustainable Development Bond.

7

About Shinkin Banks
Shinkin banks are cooperative financial institutions. Their membership comprises local
residents and SMEs. Shinkin banks’ distinctive characteristics are that they are conveniently located; offer fine-tuned, personalized
services; and have a strong relationship of mutual trust with their customers and communities.
Cooperative financial institutions are orga­
nizations that operate under the fundamental
principle of mutual support.
Shinkin banks limit their lending, in principle, to members. However, their functions arealmost the same as those of commercial banks,
and they also deal with many people who are
not members, accepting deposits, providing
exchange services, accepting payments, including those for public utilities, and engaging inover-the-counter sales of public bonds, investment trust funds, and insurance.
Shinkin banks not only provide deposit, lending and exchange services, but also offer a diverse
range of services to customers and other members of the local community in such areas assupport for management improvement and enterprise renewal, business succession support, business start-up support, and local-area revitalization.

Outline of Shinkin Banks

255 shinkin banks form an extensive network,with approximately 7,200 offices across thecountry, from Hokkaido in the north to Kyushu
and Okinawa in the south.
Shinkin banks dedicate themselves to providing high-quality services to local residents,
as financial institutions that are deeply rooted
in their respective regions, and contribute toregional development.
Total deposits outstanding at 255 shinkinbanks as of March 31, 2020, reached approximately ¥145 trillion ($1,336 billion), which ranks
it in third place after Japan’s city and regionalbanks, and gives shinkin banks an important position in Japanese financial markets.
Shinkin banks continue to further deepen
their presence and roles as important infrastructure for regional economies and communities.

Deposits1 Outstanding by
Bank Segment (As of March 31, 2020)
City Banks

2,548

Shinkin Banks

1,336

Second-tier Regional BanksManagement improvement /enterprise renewal

Co-financing

Succession support / M&As

Product and service expansion

Overseas expansion

Personal lending businessBusiness start-ups

Local-area revitalization

Shinkinbankcustomers

Nationwide Network of Shinkin Banks (255 banks)

Hokuriku (16 banks)
Kinki (29 banks)

Hokkaido (20 banks)

Chugoku (20 banks)
Tohoku (27 banks)

Kyushu (26 banks)

Kanto (49 banks)

Tokyo (23 banks)
Tokai (34 banks)

Okinawa (1 bank)

Shikoku (10 banks)

Deposits Outstandingat Shinkin Banks(Trillions of yen / billions of US dollars)$3,597

Agricultural Cooperatives

134.7(1,195)137.9(1,229)140.9(1,326)143.4(1,293)

Loan and Bills Discounted
Outstanding at Shinkin Banks(Trillions of yen / billions of US dollars)

145.2(1,336)
67.3
(597)

69.1
(616)

70.9
(667)

71.9
(648)

72.6
(668)

2019

2020

957
2

574

Credit Cooperatives

194

Labor Credit Associations

192

1. Deposit includes domestic operations.
2. City banks, regional banks and second-tierregional banks do not include the special
international financial transactions account.
Sources: Japanese Bankers Association, the Norinchukin
Bank, National Central Society of Credit
Cooperatives, National Association of Labour
Banks and the SCB.

8

Shinkinbanks(Billions of US dollars)
2

Regional Banks2

Notes:

Shinkin Bank Services

2016

Note:

2017

2018

2019

2020

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥112.69, ¥112.19, ¥106.28,¥110.96 and ¥108.71 per US$1.00, the prevailingrate on March 31, 2016, 2017, 2018, 2019 and2020, respectively.
Source: The SCB.

2016

Note:

2017

2018

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥112.69, ¥112.19, ¥106.28,¥110.96 and ¥108.71 per US$1.00, the prevailingrate on March 31, 2016, 2017, 2018, 2019 and2020, respectively.
Source: The SCB.

Capital Adequacy Ratio of Shinkin Banks

The capital adequacy ratio of shinkin banks fell
to 12.10% (preliminary figure) as of March 31
2020, from 12.26% at the end of the previous
fiscal period. This decline was driven by theincrease in risk-weighted assets relating mainly
to loan growth.
The ratio maintains a level that is not inferior to that of other business categories,
and is outperforming other domestic regionalbanks (9.46%) and second-tier regional banks(9.34%).

13.08%
12.78%

2016

12.51%

201712.26%

2018201912.10%

2020(Preliminary figure)

Source: The SCB.

Nonperforming-loan Ratioof Shinkin Banks (%)

Non-consolidated Capital Adequacy
Ratio by Bank Segment (%)(as of March, 31, 2020)

5.30%

16.07%

4.75%

12.10%

Shinkinbanks

City banks(Preliminary figure)

9.46%

9.34%

Regional
banks

Second-tierregional banks(Domestic)

Sources: Bank disclosure document, Regional Banks Association of Japan, The
Second Association of Regional Banks.

4.32%

2016

2017

2018

4.05%

2019

3.92%

2020
(Preliminary figure)

Source: The SCB.

Difference between Shinkin Banks and Commercial Banks
Category

Shinkin Banks

Commercial Banks
Banking Act

Legal foundation

Shinkin Bank Act

Organization

Non-profit cooperative organization financed For-profit joint stockby its members
corporations

Membership qualifications(1) ‌Those who have an address or office in the Noneregion(2) Those who have a business office in the region(3) Those who work in the region(4) Executive officers of companies that have abusiness office in the region(In the case of businesses)
Businesses with no more than 300 employees orwith less than 900 million yen in capital9

Measures against the Novel Coronavirus Disease (COVID-19)
In light of the spread of COVID-19, we are securing safety of executives and employees and maintaining
continuity of our business by actively implementing work from home or staggered commuting, as well
as executing various activities to assist shinkin banks and their customers.

◆ Establish“Shinkin no Ishizue, the Cornerstone of Shinkin Banks,”a measures support fund against COVID-19
The SCB established in June 2020 in collaboration with Shinkin Capital Co., Ltd., one of its groupcompanies,“Shinkin no Ishizue,”a support fund against COVID-19, with the total investment of ¥10billion.
This Fund is intended to provide capital-like funding to shinkin banks’customers whose financial
resilience has been weakened due to the impact of COVID-19 in spite of their solid businessperformance, and to strengthen their financial bases.
Also, we provide the shinkin banks’customers who are using this Fund with the management
improvement plan that we have formulated in collaboration with Organization for Small & Medium
Enterprises and Regional Innovation, JAPAN (SME SUPPORT, JAPAN) and provide shinkin banks with the
management improvement support program dedicated to measures against COVID-19.
Provision of the management improvement support program for measures against COVID-19

Management improvement support
by the support program

Shinkin Central Bank Group
Shinkin Capital Co., Ltd.
[Unlimited liability partner]
Shinkin Central Bank (SCB)[Limited liability partner]

Investment

Investment limited
partnership
Investment “Shinkin no Ishizue”

Provision ofcapital-likefunding

Financial and business support

Customers

Customers

Collaboration

SME SUPPORT, JAPAN

Shinkin banks

Hands-on support

Customers◆Promote matching for shinkin banks’customers
To provide assistance to shinkinbanks' customers who were experiencing difficulties in procuring goods
and materials due to supply-chain disruptions, we opened a matching site specifically designed toaddress issues associated with COVID-19.
This is an initiative to promote matching between those shinkin banks’customers who are in need ofgoods and materials and those customers who can provide them, by making use of the shinkin bankindustry network.

◆Support the measures against COVID-19 through investment in the bond issued by the World Bank
In June 2020, we invested in the World Bank Sustainable Development Bond that focuses on importantinvestment themes of supporting sanitation and hygiene, and medical care including the measuresagainst COVID-19.

10

Medium-Term Management Plan “SCB Strategy 2019”
The current business environment surrounding shinkin bank industry involves a number of new and important issues that must be dealt with,such as falling earnings capacity caused primarily by the Bank of Japan’s unprecedented monetary easing, and the rapid advance of digitalization.
Based on this situation, the SCB has definitely decided the medium to long term “vision”, and in pursuit of this has drawn up the new
medium-term management plan “SCB Strategy 2019” that began in April 2019, with seven high-priority strategies as its key components.
In 2020, in addition to continuing to move forward in pursuit of our plans, we will respond flexibly to “new normal” resulting from thesocial changes caused by the spread of COVID-19, and further enhance the competitiveness of the shinkin bank industry.

Management Philosophy
Operational Policies
Medium-Term Management Plan “SCB Strategy 2019” (fiscal 2019 to fiscal 2021)
Our vision for the SCB for the next five to ten years
Together with Shinkin Banks, SCB will aim for constructing combined operations as one banking group, improving competitiveness of Shinkin group, and achieving the future where Shinkin Bank is the most reliable bank in every local area, by
allocating resources to each banks’ field of expertise.

Seven high-priority strategies
Strategy1

Strategy2

Strategy3

Encourage Shinkin Banks’sustainable business model

Improve Shinkin Banks’risk management

Promote Shinkin Bank's
digitalization

Strategy4
Promote to utilize network among Shinkin Banks, SCB and external organization

Strategy5

Strategy6

Strategy7

Pursue optimal balance among profit,
risk and capital distribute
managerial resources appropriately

Promote efficient operation

Nurture appropriate central
financial institution's employee,create an attractive workplace●Levels of management indices that should be maintained
Consolidated capital adequacy ratio(domestic standard)
At least 15%

Maximum amount available
for dividend
At least ¥200 billion●Target level of earnings
Profit attributable to ownersof parent
Around ¥40.0 billion●Results of the fiscal year ended March 31, 2020
Consolidated capital adequacy ratio(domestic standard)

24.31%

Maximum amount available
for dividend¥312.5 billion

Profit attributable to ownersof parent¥40.2 billion

11Strategy

1 Encourage Shinkin Banks’ sustainable business model

In order to continue providing a range of services and initiatives for resolving regional issues, shinkin banks mustensure an appropriate level of earnings, and shinkin banks themselves must grow and develop along with their customers. For that reason, we are seeking to strengthen shinkin bank’s investment management and operational efficiency.
• Strengthening Support for Investment Strategies
With the aim of strengthening shinkin bank’s investment management, and in order to put into practicethe support of shinkin banks based on the ideas jointly
held by all of the SCB group, we have drawn up the“Fundamental philosophy on support for shinkin banks
investment strategies”. By spreading this philosophy
among our group companies, we will bolster the support provided by the Group as a whole.
In order to enhance the collective ability of the
SCB and its subsidiaries to provide products, the SCB
will work to strengthen partnerships both within theGroup and with external agencies.

Strategy• Promotion of Commonalization and Cooperation ofWork
By collaborating with external agencies, subsidiaries
and affiliated companies, the SCB promotes the commonalization and cooperation of internal procedures,such as transactions with customers and payroll, that
individual shinkin banks are working on, and will fulfill
a role as the central processing division of the industry.
Furthermore, with digitalization and the shift to
cashless transactions expected to advance rapidly, we
will investigate joint branches as well as strategic allocation in ATM networks in the shinkin bank industry.

2 Improve Shinkin Banks’ risk management

To enable shinkin banks to assign management resources to initiatives aimed at resolving client issues, we will put
in place arrangements to support the strengthening of shinkin banks’ ability to manage risk, while reinforcing
mechanisms for ensuring financial soundness.
• Strengthen the Ability of Shinkin Banks to Manage Risk
We will implement countermeasures for money laundering and the financing of terrorism, publish information in relation to reinforcing cyber security and provide consulting services to individual shinkin banks inorder to raise the bar with regard to the shinkin bankindustry’s ability to manage risk.

Strategy• Ensuring the Soundness of Shinkin Banks
We will strive to ensure the soundness of shinkinbanks by taking into account the management issues
and the changes in financial administration, andstrengthening our arrangements for follow-up,
such as bolstering the management analysis and introducing measures when giving management advice.

3 Promote Shinkin Bank's digitalization

In addition to promoting the revitalization of regional economies through the utilization of cashless payments, wewill develop and provide new products and services in response to digitalization.
• Promotion of Cashless Payments Aimed at Regional
Revitalization
The SCB entered into a business collaboration with
Nippon Telegraph and Telephone East Corporation,
which provides services that can respond to multiple
cashless payment systems. Further, the SCB entered12

into business collaboration with Mercari, Inc. andMerpay, Inc. Through these collaborated transactions,
we will endeavor to further improve our services toward the realization of a cashless society and reactivation of regional economies.

Strategy

4

Promote to utilize network among Shinkin Banks,
SCB and external organization

As well as bolstering initiatives that make use of the shinkin bank industry network, we will utilize our role as the
hub and coordinator of the industry to the full, and move forward to build new platforms to resolve issues.
• Building a Problem-solving Scheme Using Partnerships Both Inside and Outside the Industry
In order to support the accounting operations of theSMEs that are the customers of shinkin banks, and also

Strategy5asset formation by individual customers, we will promote the building of schemes such as those for providing a range of services in partnership with industry
organizations and external agencies.

Pursue optimal balance among profit, risk and capital
distribute managerial resources appropriately

To enable the SCB to continue to play an enduring role as the central financial institution of the shinkin bank industry, we will strive to build a financial base for stability over the medium to long term through such measures as theconstruction of a risk appetite framework, and efficient risk-taking based on the level of capital.
• Ensuring Financial Stability and Permanence
As the central financial institution for the shinkin bankindustry, the SCB intends to ensure enhanced financial
stability and permanence by building and operating a risk
appetite framework, with the aim of facilitating the provision of support for shinkin bank operations and management.

Strategy• Optimal and Appropriate Allocation of Management Resources
By actively increasing operational efficiency and promoting scrap-and-build programs, we will strive
for the optimal and appropriate allocation ofmanagement resources for the SCB Group as awhole.

6 Promote efficient operation

As well as working to enhance the robustness of operations by promoting RPA and to reduce office works, we will
pursue improvements in operational efficiency through digitalization, centralization and outsourcing.
• Utilization of Digital Technology
Having actively implemented BPR(*1), we will promote RPA(*2), introducing
electronic approval and paperless workplaces in order to fundamentally
improve efficiency.
Another goal is to improve the efficiency, speed and accuracy of theoperations interface between shinkin banks and the SCB.
*1. BPR: Business Process Re-engineering. The comprehensive review and redesign of the content of existing
operations and operational flows.
*2. RPA: Robotic Process Automation. The use of software robots to replace and automate standardized tasks
performed by humans.

Strategy• Outsourcing of Various Operations
We will investigate the outsourcing
to external agencies of defined contribution pension operations, market-related operations, trust-related
operations and human resources related operations.

appropriate central financial institution's
7 Nurture
employee, create an attractive workplace

The SCB will also strive to strengthen skills required for central financial institution's human resources, work to
improve engagement, develop a corporate culture that nurtures human resources who generate innovation, andarrange attractive workplace.
• Transformation of Corporate Culture
The SCB will newly establish “project operations system” with the aimof transcending departmental barriers to bring together diverse humanresources to resolve problems and promote exchanges of personnel
that go beyond the financial industry.

• Improvement of Work Environments
We will create highly productive work
environments and promote diversitythat would generate new ideas.

13Realizing a Sustainable Society

Declaration of Shinkin Central Bank Group on SDGs
Shinkin Central Bank Group is a group in which the SCB plays its role as the central financial institution for shinkin banks. As such, the Groupwill strive to implement initiatives together with shinkin banks throughout Japan toward realization of a sustainable society based upon the
Sustainable Development Goals (SDGs) and in accordance with the principle of a cooperative institution focusing on three important themes,
namely the “region”, the “people” and the “environment”.

Sustainable prosperity of a regional society
Major initiatives

Relevant SDGs

■ Improving sustainability of shinkin banks■ Improving sustainability of SMEs
■ Initiative for regional revitalization in collaboration with shinkin banks
We will contribute to sustainable prosperity of regional societies by strengthening sustainability of shinkinbanks which support the regions and SMEs which constitute the business infrastructure for the regions, aswell as by promoting support for regional revitalization.

Well-being to all the people
Major initiatives

Relevant SDGs

■ Support for realization of children’s dream■ Enhancement of support for life planning of all generations■ Promotion of creating a workplace that values uniqueness of employees
Together with shinkin banks, we will strive to implement initiatives to bring well-being to senior generations,children and all the people in the regions, and to contribute to realizing a diversified and inclusive society
with the concept of “leave no one behind”.

Conservation of global environment
Major initiatives

Relevant SDGs

■ Promotion of ESG investments and loans■ Measures for climate change■ Reducing environmental burden associated with business activities
We will strive to reduce environmental burden associated with business activities. Furthermore, as a banking
group making investments and loans on a global scale, we will contribute to conservation of the global
environment by promoting investments and loans that are mindful of the environmental problems.

Support for initiatives
Task Force on Climate-related Financial Disclosures (TCFD)
The “Task Force on Climate-related Financial Disclosures (TCFD)” was established in December 2015 by the Financial
Stability Board at the request of G20 finance ministers and central bankers. In July 2019, the SCB endorsed therecommendations of the TCFD.

14

Measures for climate change
In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the SCB will disclose its information
as follows:

Governance
We will hold an Executive Committee meeting to deliberate on our policies and initiatives as to the SDGs including climate change, and thenwill report the result to the Board of Directors.
Also, from a standpoint of integrated management as one banking group, we have established the “Group Promotion Committee on SDGs”,
a new committee comprised of executives of the SCB and its group companies to discuss such matters as the SCB Group’s policies andinitiatives as to the SDGs including climate change.
Specific initiatives pertaining to SDGs including climate change are being taken on a cross-organizational basis with SDGs Promotion Office(established in April 2020) of Strategic Planning Division playing a central role.

Strategy
The environmental problems including climate change are the most important issues common to all human beings. As such, in accordance withthe “Declaration of Shinkin Central Bank Group on SDGs” formulated in September 2019, we recognize that this climate issue would bring
opportunities, risks and influences on our business activities in the following context. Accordingly, we will actively strive to solve the issues.
<Opportunities>‌Together with shinkin banks nationwide, we are actively implementing initiatives to realize a sustainable society. We recognize that these initiatives will◇contribute to regional revitalization as well as to an increased presence of the shinkin bank industry including the SCB.
‌Based upon our understanding the increased use of renewable energies worldwide and advancement of technological innovations as investment◇
opportunities, we are promoting ESG investments and loans.
(ESG investments and loans: ¥68.7 billion [actual]/fiscal 2019, ¥70.0 to ¥80.0 billion [estimate]/fiscal 2020)<Risks>‌We recognize the risk associated with a transition to a low carbon society such as regulatory tightening and technological innovations relating to the◇climate (transitional risk), and the risk of facing difficulties in business continuity due to an increased number of natural disasters or abnormal weather
associated with climate change (physical risk). All these are the risks that affect the businesses and financial conditions of the customers to whichshinkin banks make investments or provide loans, which then indirectly affects the portfolio of the SCB.
‌In consideration of the SCB’s special role of being a central financial institution for shinkin banks, we recognize that the risk of the SCB facing difficulties◇
in its business continuity due to the climate change (physical risk) is a major risk.

<Influences>◇‌Carbon-related assets (energy and public sectors) constitute 4.27% of total loans.

Risk management
We have distinguished those sectors whose financial conditions are susceptible to the climate change and formulated the “Guideline for Making
Responsible Investments and Loans by Type of Businesses” in March 2020. By making investments and loans in accordance with this Guideline,
we are making a contribution to realization of a sustainable society as well as managing financial impact on the SCB.

Index and target
In order to reduce CO2 emissions, we are endeavoring to achieve a reduction target of electric power consumption in accordance with the“Voluntary Environmental Action Plan of the Shinkin Bank Industry”. As for fiscal 2019, we have achieved reduction exceeding its reduction
target.
(Electric power consumption: medium- to long-term reduction target/actual)
Reduction target Medium term Fiscal 2020 in comparison with fiscal 2009: -10.5% Long term Fiscal 2030 in comparison with fiscal 2009: -19.0%
ActualFiscal 2009 373 kwh/m2*

Fiscal 2019 230 kwh/m2 (-38.4%)* Electric power consumption rate = electric power consumption/total floor space15

Overseas Networks
The SCB has offices in New York, London, Hong Kong, Shanghai, and Bangkok. These offices collect and disseminate information relating to economic and financial conditions, the investment and loan environment, and the laws, taxation regimes,
and employment situation of each region.
These offices also work with allied banks to support the overseas expansion of shinkin banks’ customers.
Moreover, as part of our support for the overseas business of SMEs, we dispatch employees to allied banks. The overseas
offices also provide shinkin bank employees with opportunities to improve their skills related to supporting the overseas businesses of their customers and contribute to human resources development in the shinkin bank industry.
Support for overseas business expansion and funding
The SCB has formed business alliances withnine local banks overseas to increase its capability to support shinkin bank’s customers
who are expanding their businesses overseas.
Working with shinkin banks, the SCB andlocal banks, we provide a wide range of support to shinkin bank’s customers who conduct business overseas by helping them open
local bank accounts, and providing local currency denominated financing using standby
L/C, for example.

Provision of services corresponding to
the needs of overseas expansion

Shinkin International Ltd.
LondonSCB New York Representative Oﬃce

Bank of China
BeijingTokyo

SCB Hong Kong Representative Oﬃce

SCB Shanghai Representative Oﬃce

Shanghai

The Bank of East Asia

Hong Kong

Mexico City

Bank of Communications

ManilaBangkokBank of Shanghai

Ho Chi Minh CityBDO Unibank, Inc.

SCB Bangkok
Representative Oﬃce
Bangkok BankNew York

Shinkin Central Bank

Banco Mercantil del Norte, S.A.

Joint Stock Commercial Bank for
Investment and Development of Vietnam

Jakarta

Maybank Indonesia

We are collaborating with shinkin banks in thebusiness areas such as overseas expansion,
cultivation of overseas sales channels, overseas financing, effective use of overseas human resources, inbound tourism, and foreignexchange, thus providing various services tothose shinkin banks’ customers who are considering overseas expansion.

… SCB Oﬃce…

Business Alliances(SCB employees seconded)… Business Alliances“Shinkinkai” (local networking)In a typical year we hold regular meetings of
the “Shinkinkai” local information exchange
events in order to build networks amongshinkin bank’s customers who are active in theregion, involving not only the three Asian offices of Hong Kong, Shanghai and Bangkok,
but also Ho Chi Minh, Jakarta and Manila,
where staff have been seconded to local bankswith which business alliances have been concluded.

Expansion into Asia by Shinkin Bank Customers
South Korea: 109
China: 1,079

Hong Kong: 136
Myanmer: 38
India: 51

Thailand: 495

Taiwan: 105

Laos: 10Vietnam: 405

Philippines: 120
Combodia: 36
Malaysia: 83
Singapore: 49
Indonesia: 194
Source: Thir teenth Survey on the Overseas Business of Shinkin Bank Customers (2019)16

Business Overview
Earnings Performance

Asset Management

Looking at the financial results for fiscal 2019(ended March 31, 2020) overall, operating income amounted to ¥266 billion ($2,451 million), up ¥7 billion ($71 million), or 3.0%, year
on year because of an increase in interest anddividends on securities from an increase individends from investment trusts, etc. and therealization of unrealized gain. Meanwhile, operating expenses came to ¥213 billion ($1,967
million), up ¥13 billion ($126 million), or 6.8%,
year on year due to an increase in expenses
on derivative transactions as part of the portfolio rebalancing. As a result, ordinary income
came to ¥52 billion ($484 million), a decreaseof ¥5 billion ($54 million), or 10.1%, year on
year.
Net income totaled ¥37 billion ($348 million), down ¥4 billion ($40 million), or 10.3%,
year on year.

The amount of assets under management in fiscal
2019 increased ¥926 billion ($8,521 million), or
2.4%, to ¥39,307 billion ($361,582 million).
Mainly due to lower government bond holdings, outstanding invested securities decreased¥136 billion ($1,253 million), or 0.8%, to ¥16,477
billion ($151,571 million) at fiscal year end.
Loans and bills discounted increased ¥1,428
billion ($13,139 million), or 20.2%, during the year
under review to ¥8,474 billion ($77,950 million)
as loans to national and government agencies andorganizations and business corporations increased.
The outstanding amount of short-termmoney market assets fell ¥498 billion ($4,586
million), or 3.4% to ¥13,867 billion ($127,562 million), primarily reflecting a decrease in call loans.

Funding
In fiscal 2019, the total amount of funding increased ¥1,269 billion ($11,677 million) year
on year, for a total of ¥38,656 billion ($355,589
million). Of this figure, deposits received cameto ¥31,208 billion ($287,081 million), an increase of ¥241 billion ($2,224 million), whichmainly comprised fixed-term deposits fromshinkin banks.
After deducting redemptions, debentures atthe end of fiscal 2019 came to ¥2,141 billion($19,699 million), down ¥345 billion ($3,175 million) during the fiscal year, including ¥293 billion($2,703 million) in debentures issued by the SCB.
Borrowed money amounted to ¥5,306 billion ($48,808 million), a year-on-year increaseof ¥1,372 billion ($12,628 million), mainly comprising borrowings under a funding provision to
support increased lending by the Bank of Japan.

Breakdown of Funding*Securities
To advance its diversified investment
portfolio, the SCB also invests in such risk
assets as stocks and investment trust funds
not subject to interest risk, while optimizing
its portfolio in response to shifts in the financing and investment environment.
The SCB also carries out interest rate
swaps and other derivative trading, to hedge
risks linked to assets under management.
Loans and Bills Discounted
As of March 31, 2020, the outstanding amountof loans and bills discounted was ¥8,474 billion($77,950 million).

13.7%(¥5,306 billion)
5.6%(¥2,141 billion)

80.7%(¥31,208 billion)

Deposits
Debentures
Borrowed money

Breakdown of Asset Management*
1.2% (¥489 billion)

35.3%(¥13,867 billion)

21.6%(¥8,474 billion)

41.9%(¥16,477 billion)

Short-term market
operation
Securities
Loans and bills
discounted
OthersBreakdown of Securities*
1.1%(¥187 billion)

29.7%(¥4,886 billion)

27.9%(¥4,599 billion)

3.9%(¥634 billion)
28.8%(¥4,743 billion)

8.6%(¥1,425 billion)

Government bonds
Municipal bonds
Corporate bonds& short-term
corporate bonds
Stocks & investment
trust funds
Foreign securities
OthersBreakdown of Loans and Bills
Discounted*
8.9%(¥752 billion)

National andgovernment
agencies andorganizations

4.3%(¥361 billion)
39.2%(¥3,324 billion)

43.4%(¥3,676 billion)

Regional public
corporations
and charitableorganizations
and others
Business
corporations

4.2%(¥359 billion)* As of March 31, 2020.

Ordinary Income and Net Income (Non-consolidated)

Agency loans
Others(Millions of yen)

FY2015FY2016FY2017FY2018FY2019Ordinary income (loss)

55,971

48,34260,67858,562

52,636

Net income (loss)

40,87541,38346,49842,28637,92417

Capital Adequacy
OutlineConsolidated Capital Adequacy Ratio

The SCB’s equity capital, as defined underregulations concerning capital adequacy ratio,
mainly comprises common shares from member
shinkin banks, public issues of preferred sharesthat supplement common shares, and internal
reserves accumulated to date by the SCB.
The SCB raises funds through the issuance of general common shares and specificcommon shares. The dividend payout ratio for
specific common shares differs from that for
general common shares.
Furthermore, in accordance with the
SCB’s articles of incorporation, the amountof residual assets distributed per specificcommon share is limited to a maximum of¥100,000 per share. This makes it possible toraise funds by issuing common shares without
diluting the residual assets distributed to preferred shareholders.
According to transitional measures basedon new Japanese domestic standards for regulations concerning capital adequacy ratio, equity capital also includes fixed-period andperpetual subordinated loans.

The SCB’s consolidated capital adequacy ratio
at March 31, 2020, was 24.31%.
Equity capital, the numerator for calculating the capital adequacy ratio, amounted to¥1,476 billion ($13,579 million).
Risk assets, the denominator for calculating the capital adequacy ratio, amounted to¥6,071 billion ($55,852 million).

Risk Management and Capital
Adequacy Assessment
The SCB has implemented policies to manage
its capital adequacy as part of its integrated
risk management. The capital assessment division evaluates capital adequacy using a holistic
approach, measuring various types of risks
under uniform criteria and comparing quantified risks with the SCB’s capital.
In order to assess the potential impacts ofshock on its capital, the SCB conducts stresstesting to estimate losses under various scenarios and the probability of their occurrence.
Risk limits and risk exposure are reported
to senior management at the Risk Management Committee and at other meetings. The
Risk Management Committee deliberates
measures in response to the results of capital
adequacy assessments, and implements measures as deemed necessary.

Capital Adequacy Ratio (Domestic Standard)

Consolidated
Non-consolidated

18

Capital adequacy ratio
Amount of capital
Amount of risk-weighted assets
Capital adequacy ratio(%, billions of yen)
FY2015
41.10
1,824
4,439
42.38

FY2016
37.03
1,764
4,765
38.28

FY2017
30.57
1,645
5,381
31.62

FY2018
23.65
1,425
6,026
24.48

FY2019
24.31
1,476
6,071
25.18

Asset Quality
Risk-Monitored Loans
The amount of risk-monitored loans as ofthe end of March 2020 was ¥75 million ($0.6
million) for loans to bankrupt borrowers,¥3,977 million ($36 million) for delinquentloans, ¥1 million ($0.0 million) for loans past
due three months or more, and ¥19,024 mil-lion ($174 million) for restructured loans.
Total risk-monitored loans decreased¥1,262 million ($11 million) to ¥23,079 million ($212 million) during the fiscal year. The
ratio of total risk-monitored loans to totalloans remained as low at 0.27%, and theRisk-monitored Loans (Non-consolidated)

(%, millions of yen)
End of March
2019
82
4,351
36
19,871
24,341Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total risk-monitored loans (A)End of March
2020
75
3,977
1
19,02423,079

Increase or
Decrease
(7)
(374)
(35)
(847)
(1,262)

355

320

(35)

7,045,582
0.34

8,474,068
0.27

1,428,486(0.07)End of March
2019
82
4,351
36
19,871
24,341

End of March
2020
75
3,977
1
19,02423,079

Increase or
Decrease
(7)
(374)
(35)
(847)
(1,262)

355

320

(35)

7,038,785
0.34

8,468,123
0.27

1,429,338(0.07)

Partial direct write-offs
Total loans (B)Ratio of total risk-monitored loans to total loans (%) (A/B)

Risk-monitored Loans (Consolidated)
Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total risk-monitored loans (A)soundness of the SCB’s loan assets remainedhigh.

(%, millions of yen)

Partial direct write-offs
Total loans (B)Ratio of total risk-monitored loans to total loans (%) (A/B)

Asset Assessment under
the Financial Reconstruction Law
As of the end of March 2020, bankrupt andquasi-bankrupt assets amounted to ¥323
million ($2 million), doubtful assets ¥3,729
million ($34 million), and substandard assets¥19,025 million ($175 million).
Accordingly, the total amount of bad debts
under the Financial Reconstruction Law decreased ¥1,262 million ($11 million) to ¥23,079
million ($212 million). The coverage ratio ofbad debts (the total of claims deemed collectible with collateral and guarantees and the allowance for possible loan losses divided bytotal bad debts) was 66.54%.
Bankrupt and quasi-bankrupt assets arerecorded for the remaining amount after
deducting the amounts deemed collectible withcollateral and guarantees, while doubtful assets
are recorded for the loss-expected amount of

the remaining amount after similarly deducting
the amounts deemed collectible with collateraland guarantees, respectively, in the specificallowance for possible loan losses.
For substandard assets, the anticipatedloss ratio is calculated based on the loan loss
ratio and recorded in the general allowance for
doubtful accounts.

Asset Assessment under the Financial Reconstruction Law (Non-consolidated)(%, millions of yen)
Bankrupt and quasi-bankrupt assets
Doubtful assets
Substandard assets
Total claims under the Financial Reconstruction Low (FRL) (A)Normal claims
Partial direct write-offs
Total loans (B)Ratio of total claims under the FRL to total loans (%) (A/B)
Total coverage amounts on disclosed claims under the FRL (C)Coverage ratio (%) (C/A)

End of March
2019
287
4,147
19,907
24,341
7,100,198

End of March
2020
323
3,729
19,02523,0798,556,323

Increase or
Decrease
36
(418)
(882)
(1,262)
1,456,125

355

320

(35)

7,124,539
0.34

8,579,402
0.26

1,454,863(0.08)

16,826
69.12

15,35966.54(1,467)(2.58)

19

Corporate Governance
The SCB strives to maintain fairness andtransparency in its management by fortifying
our corporate governance system as we
implement various operational strategies. The
SCB’s goal is to gain the trust of all our stakeholders by demonstrating the strong commitment to establishing a rigorous corporate
governance system and to becoming an evermore distinguished financial institution wellrespected in society.

Institutional Structure

General Assembly of Representatives
The SCB is a cooperative financial institution
comprising 255 shinkin banks nationwide (asof March 31, 2020) that are its members andinvestors. The General Assembly of Representatives, equivalent to the general meetingof shareholders in a joint-stock company, isheld annually to elect directors and resolve
important issues.
Board of Directors
The SCB’s Board of Directors, comparable to
the Board of Directors in a joint-stock company, holds regular meetings nine times per
year, and makes decisions regarding importantbusiness matters.
There are no board members corresponding to the outside directors as defined by theCompanies Act, however, the Board of Directors includes 18 part-time directors selectedfrom among the executive officers of shinkinbanks from each region in Japan. This is in accordance with Article 32, paragraph 4 of the
Shinkin Bank Act, the SCB’s Articles of Incorporation stipulate that more than half the total number of board members must be executive officers of shinkin banks. The SCB is
confident that the appropriate check on management provided by the parttime directors
ensures that supervision and safeguard functions are in place and have a high degree ofobjectivity and transparency in business operations.
Corporate Auditors
The SCB’s corporate auditors, comparable
to the corporate auditors of a joint-stockcompany, audit the execution of duties by the
directors. The Board of Auditors, which consists of all the corporate auditors, regularly
holds discussions on matters concerning audit
policies and plans.
The SCB appoints one full-time corporate
auditor and two part-time corporate auditorsfrom among the executive officers of shinkinbanks, and two part-time corporate auditors
who are not executives of the SCB or shinkinbanks (non-member corporate auditors),
equivalent to outside corporate auditors as defined by the Companies Act. Non-member
corporate auditors are appointed from among
persons who meet the requirements stipulated in Article 32, paragraph 5 of the Shinkin
Bank Act. There are no stipulations of standards or guidelines regarding independence forthe appointment of non-member corporate

20

auditors. The SCB is confident that non-member corporate auditors are able to utilize theirprofessional knowledge and experience toconduct audits from an independent perspective.
One of the non-member corporate auditors is a certified accountant with a wealth ofknowledge and experience regarding financeand accounting.
There are no particularly notable conflicts of interest between the SCB and nonmember corporate auditors.
Part-time Directors and Corporate Auditors
The General Affairs Division provides information and other support for part-time directors,
and the staff members exclusively assisting corporate auditors under their direction provide
the same for part-time corporate auditors, inorder to facilitate the timely and appropriate
execution of duties by part-time directors andcorporate auditors.
General Meeting for Preferred Shares
A general meeting for preferred shareholders
may be held to protect their property rights
under the Law Concerning Preferred Sharesof Cooperative Financial Institutions.

Checks on Business Operations

Execution of Business Operations
At the SCB, the Board of Directors makes
decisions on important business operations.
Based on those decisions, the president
presides over the SCB’s business operations
and the Deputy president and other full-time
directors assist the president.
In addition, the SCB has established the
Executive Committee to deliberate and makedecisions on important managerial matters,
including ones to be resolved by or reported
to the Board of Directors.
The SCB has also established various
committees of the Executive Committee tofacilitate robust discussions on all aspectsof its business operations. To ensure that
deliberations and decisions are carried out ona cross-organizational basis, each committee
comprises several directors and general managers of divisions.
Supervision and Checks
At the SCB, the Board of Directors supervises
the execution of business by the directors.
More than half of the Board of Directors are
executive officers of shinkin banks, thereby
ensuring that the Board of Directors fulfills its
checking functions.
AuditsTo facilitate audits of the directors’ executionof duties, the corporate auditors at the
SCB attend Board of Directors’ and otherimportant meetings. The corporate auditors
also receive reports from directors regarding
their execution of duties, and inspect theminutes of the Executive Committee andother important documents. In addition, thecorporate auditors hold regular meetings withindependent corporate auditors to exchange
opinions and information.
Dedicated staff members are assigned toassist the corporate auditors to ensure that
directions are given efficiently, and to help
them perform their duties in a timely andappropriate manner.
Internal Audit System
The Internal Audit Division builds an audit system that aims to realize efficient and effective
business operations by examining and assessing compliance management systems, risk
management systems and operations management systems of each division, branch, and affiliated company of the SCB, to make sure thatthey are functioning appropriately and effectively.
At the internal audit, the Internal Audit Division examines and assesses the legal andregulatory compliance status, risk management status, and operations management status, of each division, branch, and affiliatedcompany of the SCB, to make sure that they
are functioning appropriately and effectively.
When deemed necessary, the Internal Audit
Division issues guidance so that corrective
measures may be undertaken.
In addition, each division and branch is
required to carry out its own internal inspections for the prevention and early detectionof administrative errors.
Use of Outside Specialists
The SCB has appointed Ernst & Young ShinNihon LLC as its corporate auditor.
The SCB utilizes the expertise of outside
specialists, including independent auditors,
attorneys, and tax accountants. To effectively
handle more sophisticated and diversified
operational requirements, the SCB consults
with, and receives advice from, such specialists on a regular basis and as the need arises.
Appropriate Information Disclosure
The SCB’s preferred shares are listed on theTokyo Stock Exchange. The SCB strives tomaintain appropriate disclosure of corporate
information, pursuant to the Financial Instruments and Exchange Law, other related laws,
and the Securities Listing Regulations of theTokyo Stock Exchange.

Improving Internal Control Systems

The SCB regards compliance as the basic
premise of all business activities. The SCB
continues to strengthen and operate internal
control systems, based on a policy of maintaining reliable financial reporting, managing
risks flexibly and effectively in response to
those characteristics, and implementing
internal audits by utilizing the Internal Audit
Division, which is independent from theoperational divisions and branches.

Compliance System
The SCB views compliance as one of thehighest-priority management agendas. In linewith this stance, the SCB is carrying out themeasures outlined below as it strives to further strengthen its compliance system.

Strengthen Compliance System

1. The SCB has formulated the Shinkin Central Bank Code of Ethics, which stipulates
the ethical rules and behavior standards
that must be upheld by all SCB directors
and employees.
2. In order to improve customer protection
and satisfaction, the SCB formulates Customer Protection Control Policy.
3. The SCB formulates an annual Compliance
Program, which lays out its specific compliance plan for each fiscal year.
4. To clarify the rules to be followed by directors and employees, the SCB has compiled a Compliance Manual as a practicalcompliance handbook.
5. A compliance supervisory division andcompliance-related divisions have been set
up, and their respective roles clarified. A
compliance supervisor and deputy, both
responsible for compliance, are appointed
to each division and branch of the SCB.
6. In order to deliberate compliance issues,customer protection issues, and serious

accidents, the SCB has established the Risk
Management Committee.
7. In addition to conducting regular lectures
and training seminars for directors andemployees, each division and branch also
carries out its own training programs as
part of the SCB’s efforts to strengthen
compliance education.
8. The audit items used by the Internal Audit
Division include compliance-related items,
and internal audits include investigation ofwhether the compliance system is functioning adequately.
9. In cases of compliance violation, re ports from the heads of the divisions or
branches concerned are promptly called
for, and appropriate actions are taken toprevent a recurrence.
10. The SCB operates a hotline to facilitate
repor ting of compliance breaches bydirectors and employees. The SCB also
has in place strict measures to protect
whistle-blowers.
11. Pursuant to the Law on Sales of Financial
Products, the SCB has formulated andmade public its Financial Products Solicitation Policy. To ensure that solicitation iscarried out fairly, important points regarding a product must be explained to thecustomer at the time of sale.

12. Pursuant to the Law on Protection of Personal Information, the SCB has published
its Personal Information Protection Policy
on its internet website. The SCB takes
necessary and appropriate safety measures
to protect personal information.
13. In addition to publishing its Outline forManaging Conflicts of Interest on its internet website, pursuant to the Shinkin BankAct and the Financial Instruments and Exchange Law, the SCB is taking appropriate
management steps to ensure that customers’ interests are not wrongfully violated.
14. Based on the financial Alternative Dispute
Resolution (ADR) system, to respond
expeditiously, fairly, and appropriately tocustomers’ inquiries, complaints, disputes,
and other issues, the SCB has overhauled
its internal management system and is
striving to enhance its reliability.
The SCB intends to review and update thecontent of its Compliance Manual and otherpolicies on an ongoing basis. All SCB directors
and employees are working to maintain strict
compliance through coordination among related divisions, and by strengthening internal
education programs.

Compliance System Overview
Customers
Divisions or branches

Corporate
lawyerCorporate
Auditors

Personnel responsible for compliance (appointed by the head of compliance administration)
Personnel deputy responsible for compliance (appointed by the compliance supervisor)
Compliance supervisor (head of division or branch)Compliance supervisory division（General Affairs Division）

Deputy head ofcomplianceadministration

Head of complianceadministration(General Manager ofLegal & Compliance Office)(General Manager ofGeneral Affairs Division)

Supervisor of compliance

Compliance-related divisions
Personnel Division
Strategic Planning Division
Business Promotion DivisionInternal Audit Division

Compliance hotline

Employees

Operations Division
Systems Division(Director in charge ofGeneral Affairs Division)

Risk Management Committee

Directors (full time)

Executive Committee
Board of Directors

21

Countermeasures against Money Laundering and the Financing of Terrorism

Based on societal demands related to theneed for countermeasures against money
laundering and financing of terrorism (the“money laundering and financing of terrorism
countermeasures”), the SCB has designatedthe prevention of money laundering and of
terrorist financing as one of the most important managerial issues, and is working to sophisticate its countermeasures by means of arisk-based approach.
The director in charge of General Affairs

Division is appointed supervisor of money
laundering and financing of terrorism countermeasures, and under the active involvement of
the management team will put in place risk
management arrangements in which the General Affairs Division is the second line of defense (administrative divisions), while also organizing a regulatory system. The General
Affairs Division is also providing with support,
checks and controls in relation to the first lineof defense (business divisions), and training for
employees.
Supervisors of and personnel responsible

for money laundering and financing of terrorism countermeasures are assigned to the firstline of defense (business divisions), and checks
are carried out at the time of the transactionin accordance with the Act on Prevention ofTransfer of Criminal Proceeds and so on, with
notifications being made for suspicious transactions.
The Audit Division, which is the third lineof defense (internal audit division), performs
verification of the effectiveness of money
laundering and financing of terrorism countermeasures.

Risk Management System against Money Laundering and the Financing of Terrorism
Board of Directors
ReportExecutive Committee
Resolve/Report

Risk Management Committee
Deliberate/ReportSupervisor of money laundering and financing of terrorism countermeasures(Director in charge of General Affairs Division)
Report/Consult

General Affairs DivisionFirst line: Business Divisions

Second line: Administrative and Related Divisions【Divisions responsible for money launderingand financing of terrorism countermeasures】【Divisions responsible for managing money launderingand financing of terrorism countermeasures】

Branch offices/Head office divisions(Operations Division, International Operations Center,
Operations Center, Business Promotion Division, TrustBusiness Division, Treasury Operations Division, Transfer &Clearing Division, General Affairs Division (General Affairs
Group), others)

General Affairs Division (Legal & Compliance Office)AssistCheck

Supervisor of money laundering and financing of terrorism
countermeasures (head of division or branch)
Personnel responsible for money laundering and financing ofterrorism countermeasures (personnel responsible forcompliance)

Management supervisor of money laundering and financing of terrorism
countermeasures (General Manager of General Affairs Division)
Management deputy supervisor of money laundering and financing ofterrorism countermeasures (General Manager of Legal & Compliance
Office)【Divisions involved in money laundering andfinancing of terrorism countermeasures】

Strategic Planning Division, Personnel Division, Systems Division

Verification of effectiveness

Third line: Internal Audit DivisionInternal Audit Division

22

Risk Management
Learning from the experience of the financial crisis, the SCB is exhaustively implementing more highly detailed and thoroughprocesses to manage risk by pursuing more sophisticated integrated, market and credit risk management and other measureswhile also advancing predictor and interim management for credit control.
Risk Appetite Framework

In order for the SCB to fulfill its role as thecentral financial institution of the shinkinbanks, it is necessary for it to take appropriate
risks, which are matched to its level of capitaland congruent with its own business modeland risk culture, to enable it to continue tosecure profits.
A “risk appetite framework” (*1, *2) has
been constructed and is being operated withthe aim of clarifying this basic concept of risktaking and strengthening risk governance.
*1. ‌Risk appetite: the type and size of risks that a financial
institution actively attempts to take in order to fulfill its
role*2. ‌Risk appetite framework: a framework for discussing andexecuting risk-taking policies and risk tolerances asprescribed by the required level of profits and capital

Setting the SCB’s risk culture and risk
appetite

We believe that what is required of SCB isthat it fulfill its function as the central financial
institution of the shinkin banks with a focus on
stability and continuity.
We recognize that, in order to achievethis, the SCB must secure a sound financial
position and stable profits, and that it has arisk culture that does not permit excessiverisk-taking.
In addition to setting risk appetite withreference to this risk culture, the SCB has
designated the consolidated capital adequacy
ratio (domestic standard) and maximum
amount available for dividend as management
indicators (risk appetite indicators).

Management of Risk Appetite Framework

Based on the objectives for which the risk appetite framework was introduced, and ourrisk culture and appetite, we have taken acomprehensive view of the balance between
earnings, risk and capital in order to set a
medium-term target level of earnings (profit
attributable to owners of parent).

Also, based on these medium-term targets, we are executing operations in accordance with a PDCA cycle, under which we formulate earning plans for a single fiscal year,
take on risk, provide status reports, verify
progress, and amend as required.
In addition, we have formulated a risk appetite statement to clarify the content of therisk appetite framework.

Basic Policy on Risk Management

In the wake of the global financial crisis, financial
institutions face significant changes in economic
and financial market conditions and otheraspects of their operating environment. To
respond promptly and appropriately to thesechanges, financial institutions require very finely
tuned risk management.
The SCB has positioned risk management
as a key management priority for ensuringsound management and securing adequate
profits. All directors and employees conduct
their daily duties with a full awareness of theimportance of risk management.
The SCB classifies risk in two broad categories—risk that must be controlled andrisk that must be absolutely minimized—
and manages the risks accordingly. The typesof risk that must be controlled are market,
liquidity, and credit risks. The type of risk thatmust be minimized is operational risk. The
Risk Management Division coordinates the
management of different risks to provide
comprehensive risk management.
The SCB has also established crossorganizational bodies—the Risk Management Committee, Credit Committee and ALM Committee—to manage risk from a Bank-wide perspective. These committees deliberate and makedecisions on specific issues relating to theirrespective risk management functions based on
the policies determined by the Board of Directors and the Executive Committee.
To ensure the effectiveness of its risk management systems, the SCB has also establishedthe Internal Audit Division—a body indepen­

dent from its risk management systems—tomonitor the SCB’s risk management activities.

Integrated Risk Management

To manage risk in a comprehensive manner,
the SCB employs the integrated risk management method to cope with quantifiable risk.
Integrated risk management is a way tomanage its diverse risks by calculating themwith uniform criteria, such as the Value-atRisk (VaR) method, and comparing theiraggregated value to the institution’s overall
financial strength (i.e., capital adequacy).
For market risk and credit risk, the SCB
calculates the VaR. For the calculation of operational risk capital requirements, the SCB
employs the basic indicator approach, proposed under regulations concerning capital
adequacy ratios.
The SCB defines capital under its integrated risk management system and allocates quantitative risk limits, operational risk and other types of risk.* Separately,
the SCB estimates losses under various
stress scenarios as part of its efforts tomonitor potential impacts on capital.
The quantit ative risk limits and re ser ve amounts for each f iscal year are
determined by the Executive Committee
following deliberation by the Risk Management Committee. The Risk Management
Division, which oversees integrated risk
management, measures the amount of risk
exposure both during and at the end of eachmonth, to ensure that quantitative limits
for each type of risk are not exceeded. The
Risk Management Division provides reports
on risk status to senior management andrelated divisions through the Risk Management Committee.
* With regard to subsidiaries within the SCB’s scope of
consolidation, the SCB monitors risk exposure at eachsubsidiary and allocates capital commensurate with theamount of risk. These allocations enable subsidiaries totake risks.

23

Risk Management System
Board of Directors
Division responsible for asset assessment
Credit Planning & Supervision Division

Executive Committee

Risk Management
Committee
Risk Management Division

Risk Management Division

Responsible for integrated risk
management

Responsible for overall management ofoperational risk

Risk Management Division(Assessment)

Operations Division

Strategic Planning Division (Policy)
Financial Management Division(Calculation)

Systems Division

Credit Planning & Supervision Division
Responsible for credit assessment

Responsible for administrative risk
management

Responsible for liquidity risk
management

Responsible for the management of otheroperational risk

Responsible for credit control

Market Risk Management Framework

In addition, the SCB manages our exposure on a variety of fronts, such as monitoring
stress losses at times of unexpected market
fluctuations, the basis-point-value (BPV)(changes in the valuation of the market value ofthe portfolio in response to changes in interest rates), and IRRBB (interest rate risk in scenarios specified by the FSA).
The status of these risk management
activities is reported to senior management at
biweekly meetings of the ALM Committee.

Board of Directors
Executive Committee
Decisions

Matters for discussion

Risk Management Committee
ALM Committee
Decisions

Decisions

Reports

Divisions responsible formarket risk management

Matters for discussion

Market divisions
Mutual checks

Mutual checks

Mutual checks

Administrative control divisions

Market Risk* Management
To maintain an accurate understanding ofmarket risk and rigorously manage this risk,
the SCB has issued a market risk management
policy. Furthermore, divisions responsible formarket risk management are clearly separated
from divisions involved in market operations,providing a risk management structure inwhich internal checks are maintained throughthe independent functions.
The SCB has established the ALM Committee as the body responsible for deliberating and making decisions on matters relating
to m arket risk m an age me nt . The A LM
Committee comprises senior management24

Responsible for market risk
management

Financial Management Division

Divisions stipulated by Risk
Management Division

Risk Management Division, Credit
Planning & Supervision Division

Risk Management Division

Risk Management Division

Responsible for information technology
risk management

Responsible for capital adequacy

ALM
Committee

CreditCommittee

and heads of divisions related to market risk.
Based on risk status information—obtained
via reports from divisions responsible formanaging market risk and other sources—
the ALM Committee deliberates widely and
expeditiously on policy relating to fundraising and management as well as proposed
market transactions.
For banking operations and trading activities, the divisions responsible for managing
market risk quantify and manage market risk
by VaR within the limit set by the Executive
Committee. In addition, market risk is further
divided into several categories, with risk
quantities monitored by category.

* Market risk includes interest rate risk and such equity­
related risk as stock price fluctuation risk.

Liquidity Risk Management
As the central financial institution for shinkinbanks, the SCB maintains a rigorous system
for managing liquidity risk to respond to
the needs of shinkin banks for daily working
capital and emergency funds.
To maintain an accurate understandingof liquidity risk and rigorously manage thisrisk, the SCB has formulated a liquidity risk
management policy. Divisions responsible
for liquidity risk management are clearly
separated from divisions involved in cash
management and market operations, allowinginternal checks to be maintained through theindependent functions. In addition, the ALM
Committee deliberates and makes decisions
on matters relating to liquidity risk management.
Methods used for managing liquidity risk
include the daily setting and monitoring ofrisk limit amounts relating to the gap between
cash receipts and payments. This is carriedout for individual currencies and periods. In
the event that a significant liquidity risk arises,
the SCB is prepared to respond rapidly, andeven secure funding sources.

Credit Risk* Management
To maintain an accurate understanding ofcredit risk and rigorously manage this risk, the
SCB has formulated a credit risk management
policy. Furthermore, the SCB has formulated
a Credit Policy, which sets out the SCB’s
fundamental philosophy. The SCB requires
strict adherence to the Credit Policy on thepart of all directors and employees involvedin credit operations. The SCB conducts ongoing internal communications emphasizing
the importance of sound ethics in all behavior
and decision making.
At the SCB, divisions responsible for
credit control, credit assessment and asset
assessment are clearly separated from divisions
involved in client services. In this way, we arebuilding a structure in which internal checks
are maintained through the independentfunctions given to each part of the system.
The SCB has established the Credit Committee and the Risk Management Committee
as the bodies responsible for deliberating andmaking decisions on matters relating to credit
risk management. The Credit Committee andthe Risk Management Committee comprisesenior management and the general managers
of related divisions. The Credit Committee deliberates on credit transactions thatexceed a designated amount, and the Risk
Management Committee deliberates broadly
and thoroughly matters relating to credit
risk management. The Executive Committee
deliberates, and makes decisions regarding,
the results of self-assessment of assets andmatters relating to self-assessment of asset
write-offs and asset reserve provisions.
Divisions responsible for credit control
manage the credit risk for each borrower
relating to loans and market trading activities.
An overall credit limit is set for each borrower according to their credit rating.
Credit ratings are based on quantitative
criteria, set by evaluating the borrower’s
financial statements, and qualitative criteria,
set by evaluating the borrower’s competitive
strength in the particular industry within
which it operates. Based on these assessmentsof credit strength, each borrower is given acredit rating on the SCB’s 10-step scale. The
credit ratings given to borrowers are reviewed
regularly, and flexibly revised as necessary.
Divisions responsible for credit control
analyze the SCB’s overall credit portfolio
according to credit rating, industry, country,
and other criteria. These analyses are used
to monitor the diversification of credit risk
as well as changes in portfolio credit risk.
Furthermore, credit risk is quantified andmanaged within the risk limit set by the Executive Committee.
The credit risk amount is measured
using VaR as well as the Monte Carlo simula-tion method.
The Credit Planning & Supervision Division—responsible for credit assessment—
accurately monitors each borrower’s financial
condition, the purposes for which funds areused, and repayment resources. In addition toappropriate assessment and post-transaction
management, the Credit Planning & Supervision Division continually inspects whether theclient service division is conducting appropriate credit controls, and provides guidanceas necessary. In the event that there should
be any problem on the borrower’s side, theCredit Planning & Supervision Division expeditously assesses the borrower’s management
situation and provides supervision. Where
necessary, action is taken to recover the loan.
The Credit Planning & Supervision Division is also responsible for asset assessment.
The division undertakes and manages operations relating to asset self-assessments, andthe calculation of asset write-offs and asset
reserve provisions.
* Credit risk includes such risk as counterparty risk forderivative transactions and securitization transaction
risk.

Operational Risk Management
To provide comprehensive management ofoperational risk, the SCB has issued a policythat governs operational risk management.
In addition, the SCB has separate policies tomanage two major types of operational risk:
administrative and information technology
risk. The Risk Management Division is responsible for overall operational risk management,
the Operations Division oversees administrative risk management, and the Systems Division is responsible for information technology
risk management. The SCB may also create
new divisions to cope with other types ofoperational risk as the need arises. With thisstructure, the SCB comprehensively manages
operational risk.
The SCB has established the Risk Management Committee to deliberate and makedecisions on matters relating to operationalrisk management. The Risk Management
Committee, comprising senior management
and heads of related divisions, deliberates andmakes decisions on comprehensive methods
for managing operational risk, including
administrative risk and systems risk.
To calculate its operational risk capitalrequirements, the SCB uses the basic indicator approach proposed under regulations
concerning capital adequacy ratios.

maintaining the administrative processing
system and administrative rules, and undertaking reviews of administrative procedures,the Operations Division conducts administrative instruction programs for divisions
involved in administrative processing. With
this system, the SCB appropriately manages
administrative risk.
Furthermore, the SCB is undertaking a
range of measures to ensure accurate andefficient administrative processing. These
include the systemization of administrative
processing, the provision of various training
programs, including programs, to encourage
staff to submit proposals to improve operatingprocesses at all branches. The SCB also controls the entire process of administrative risk
management, from the identification of risk to
the implementation of corrective measures.

• Information Technology Risk Management
The Systems Division takes charge of information technology risk management. It provides
control and guidance to divisions involved insystem development, operation, and utilization.
Recognizing t h at c y ber at t ack s are
becoming increasingly sophisticated and inge­
nious, the division is stepping up measures
to reinforce its cybersecurity, including theestablishment of the Shinkin Central Bank
Computer Security Incident Response Team.
In the event of a system failure that
seriously affects the execution of business
operations, an SCB-wide response is triggered based on crisis management procedures(contingency planning). In addition to periodically conducting crisis response drills, basedon system failure crisis scenarios, the SCB also
has in place a Disaster Recovery System andother precautions based on the Business Continuity Plan.

• Administrative Risk Management
The Operations Division oversees administrative risk management and administrative
instruction. In addition to developing and25

Preferred Shares
The SCB’s Preferred Shares

Trading of Preferred Shares

The SCB issues preferred shares under the
Law Concerning Preferred Shares of Cooperative Financial Institutions. The preferredshares, which are regulated by the Financial
Instruments and Exchange Law, are issued tocomplement members’ (shinkin banks’) common shares and offered publicly to increase thenet worth of cooperative financial institutions.
Although the preferred shares do notcarry the voting rights that holders of common shares receive, the preferred shares havecertain advantages over common shares, suchas the guarantee of priority in the payment
of dividends.

Like listed stocks, the SCB’s preferred sharescan be traded anytime during Tokyo Stock
Exchange trading hours through a securities
company. Credit transactions are also possible
for preferred shares, just as they are for stocks.

Listing of Preferred Shares
The SCB has issued preferred shares since
fiscal 1995 and, for the first time in Japan, thepreferred shares were listed on the Tokyo
Stock Exchange on December 22, 2000 (Securities Identification Code 8421). The SCB’s
preferred shares are marketable securities
that are very similar to preferred stocks,
and, basically, the same listing criteria anddisclosure rules apply to them.

Dividends of Preferred Shares
The SCB’s basic policy is to pay stabledividends while securing sound management,enhancing internal reserves, and boostingearnings power.
The SCB’s preferred shares pay a dividend
to the holders at the end of March of every
fiscal year. As the rule of interim dividends is
not provided in the Law Concerning Preferred
Shares of Cooperative Financial Institutions,
the SCB does not pay interim dividends.
Dividends of preferred shares comprise
preferred dividends and participating dividends.
Preferred dividends are paid before any
dividends are paid to common stock holders(shinkin banks). Participating dividends arepaid from retained earnings after preferred
dividends. They may vary depending on profits
of the SCB.

Composition of Preferred Shares (March 31, 2020)
・Number of Investors (18,803)
Foreign institutions
and others
29(0.1%)
Other corporations
199(1.1%)
Financial institutions
203(1.1%)

Other corporations
33,858(4.8%)(Closing price,yen)First day of listing (December 22, 2000) 200,500
Foreign institutions
and others
1,703(0.2%)

Highest price (March 15, 2006)

311,500

Lowest price (April 14, 2009)

102,400

Closing price (July 31, 2020)

230,000* The price of preferred shares is split-adjusted, reflecting
the stock split of preferred shares as at July 31, 2009.

Individuals
107,272(15.2%)
Individuals
18,362(97.7%)

26

Price of Preferred Shares*

・Number of Subscription (708,222)
Securities companies
7,789(1.1%)

Securities companies
10(0.0%)The SCB’s preferred shares are treatedas stocks in the taxation system, and are given
the same preferential treatment concerning
tax as stocks.
For fiscal 2019, the dividend for preferredshares was ¥6,500 ($59) per share, which
included a preferred dividend of ¥3,000 ($27)
and a participating dividend of ¥3,500 ($32).

Financial institutions
557,600(78.7%)

Financial Section
Contents
27 Five-Year Summary (Consolidated)

34 Notes to Consolidated Financial Statements

28 Consolidated Balance Sheet

78 Independent Auditor’s Report

29 Consolidated Statement of Income

81 Non-Consolidated Balance Sheet

30 Consolidated Statement of Comprehensive Income

82 Non-Consolidated Statement of Income

31 Consolidated Statement of Changes in Net Assets

83 Statement of Trust Account (Consolidated)

33 Consolidated Statement of Cash Flows

Five-Year Summary
Five-Year
Summary (Consolidated)(Consolidated)
FY2013
FY2015FY2014FY2016FY2015FY2017(Millions of yen)
FY2016FY2017FY2019FY2018

Total Income

308,171
302,154

307,894
319,307

302,154306,892

319,307
293,808

306,892
301,954

Trust Fees

597
665

600
595

665
351

595
399

351
759

Total Expenses

255,548
242,097

223,028
266,503

242,097
244,018

266,503
231,873

244,018
245,596

Profit Attributable to Owners of Parent

37,612
42,781

62,69643,87142,781
44,46643,87144,781

44,46640,227

Comprehensive Income

48,00418,303

173,512
11,05618,303
20,433

11,05653,53020,433(90,508)

Net Assets

1,276,826
1,632,969

1,433,756
1,625,842

1,632,969
1,626,605

1,625,842
1,660,465

1,626,605
1,550,287

Total Assets

31,184,564
35,092,905

33,516,073
37,464,593

35,092,905
38,790,449

37,464,593
39,693,375

38,790,449
40,868,096

Net Assets per Share (yen)268,795.17
301,512.71

301,997.98
299,542.84

301,512.71
299,587.63

299,542.84
306,594.84

299,587.63
283,111.71

Net Income per Share (yen)7,537.36
7,115.71

12,865.13
6,223.20

7,115.71
6,311.86

6,223.20
6,358.89

6,311.86
5,679.98

16,603
18,115

18,957
19,603

18,115
19,603

19,603
19,603

19,603General Common Shares

12,00014,00012,00012,00012,00012,00012,00012,000Specific Common Shares

1,512
－

3,000
－

1,512
3,000

3,000
3,000

3,000

Preferred Shares

4,603

4,957
4,603

4,603
4,603

4,603
4,603

4,603

Total Trust Assets

2,180,138
2,181,287

2,096,294
1,859,161

2,181,287
525,445

1,859,161
807,201

525,445
1,320,957

Dividends

Notes:
1. National and local consumption tax incurred by the Shinkin Central Bank and its domestic consolidated subsidiaries are
excluded from transaction amounts.
2. In the fiscal year ended March 31, 2017 the Shinkin Central Bank started trust business; “Trust Fees” and “Total Trust Assets”
have therefore been added to the above table.
3. “Total Trust Assets” is calculated
calculated by means of simple aggregation of the trust assets for each consolidated company conducting
trust business pursuant to the “Act on Engagement in Trust
Trust BusinessBusiness Activities by Financial Institutions”. Consolidated
companies conducting such trust
fiscal
year
ended
March
2016,
trust business comprised only Shinkin
Shinkin Trust
Trust Bank,
Bank, Ltd.
Ltd. untilin thethe
fiscal
year
ended
March
31,31,
2016,
ininfiscal
year
ended
March
2017
comprised
ShinkinCentralBank
Shinkin
Trust
Bank,
Ltd.,
in thethethefiscal
year
ended
March
31,31,
2017
comprised
thetheShinkinCentralBank
andandShinkin
Trust
Bank,
Ltd.,
andandfromthe fiscal
fiscalyear ended March 31, 2018 comprised the Shinkin Central Bank.

27

Consolidated
Balance Sheet
Sheet
Consolidated Balance
Shinkin
ShinkinCentral
CentralBank
Bank As
AsofofMarch
March31,
31,
AssetsAssetsCash
CashandandDueDuefrom
fromBanks
Banks(Note(Note22(2),(2),26)
26)
Bills
BillsBought
BoughtandandCall
CallLoans
Loans(Note(Note26)
26)
Receivables
Receivablesunder
underResale
ResaleAgreements
Agreements(Note(Note26)
26)
Receivables
Receivablesunder
underSecurities
SecuritiesBorrowing
BorrowingTransactions
Transactions(Note(Note26)
26)
Monetary
Debts
Purchased(Note
26)
Monetary Claims Bought (Note 26)
Trading
TradingAssets
Assets(Note(Note3,3,9,9,26,
26,27)
27)
Money
MoneyHeld
HeldininTrust
Trust(Note(Note26,
26,27)
27)
Securities
Securities(Note(Note4,4,7,7,9,9,26,
26,27)
27)
Loans
LoansandandBills
BillsDiscounted
Discounted(Note(Note5,5,6,6,9,9,26)
26)
Foreign
Exchanges
AssetsForeign Exchanges Assets
Other
OtherAssets
Assets(Note(Note9)9)
Tangible
Fixed
Tangible FixedAssets
Assets(Note(Note8,8,14,
14,25)
25)
Intangible Fixed Assets (Note 25)
Intangible Fixed Assets (Note 25)
Deferred Tax Assets (Note 23)
Deferred Tax Assets (Note 23)
Customers’ Liabilities for Acceptances and Guarantees
Customers' Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Reserve for Possible Loan Losses
Total Assets
Total Assets

28

Millionsof YenMillionsof Yen
2017
2019
2018
2020

Millions
Millionsof of
Dollars
U.S.U.S.
Dollars
(Note
(Note
1) 1)
20182020

12,393,632
13,532,061
413,259
107,166
89,99920,725
15,3401,430
177,359
222,175
250,424
411,275
99,789103,727
17,108,434
16,456,230
6,952,660
8,468,123
20,46079,114
967,208
1,187,809
71,35374,613
12,99922,312
3,996
4,394
256,687
208,005(43,157)(31,070)
38,790,449
40,868,096

10,611,955
13,346,876
362,234
765,887
19,99939,99986,20623,229180,477
221,732
232,088248,586
150,317
17,164,425
16,583,668
7,995,391
7,038,785
20,514
21,130488,622936,752
73,89976,866
14,843
21,570
3,895
4,160
255,536
244,051(45,499)(30,238)
37,464,593
39,693,375

116,613
124,478
3,888 985
846 190
144 13
1,668
2,043
2,356
3,783
938 954
160,975
151,377
65,41877,896
192 727
9,100
10,926671 686
122 205
37
40
2,415
1,913
(406)
(285)
364,983
375,936

Liabilities and Net Assets
Liabilities and Net Assets
Liabilities
Liabilities
Deposits (Note 26)
Deposits (NoteDebentures(Note26)
12, 26)
Debentures(Note(Note12, 26)
Trading Liabilities
10, 26)
Trading
Liabilities
(Note
10,
Borrowed Money (Note 9,
11,26)
26)
Borrowed
Money(Note 9,11, 26)
Bills
Sold andCall Money
(Note
26)
Bills Soldunderand CallMoney (Note26) (Note 9, 26)
PayablesRepurchase
Agreements
Payablesunder
Repurchase
Agreements(Note(Note9, 26)9, 26)
Payables under Securities Lending Transactions
Payablesunder
Securities
Lending
Transactions(Note 9, 26)
Foreign Exchanges Liabilities
Foreign Exchanges
Liabilities
Borrowed
Money fromTrust Account
Borrowed
Money
from
Other
Liabilities(Note
11,Trust
13) Account
Other Liabilities(NoteBonuses
11, 13)
Reservefor Employee
Reservefor
forDirectors'
EmployeeBonuses
Bonuses
Reserve
ReserveforDirectors'
Bonuses
Net Defined Benefit Liability (Note 24)
Net Defined
Benefit Liability
(Note
24)
Reservefor Directors'
Retirement
Allowances
Reserveunderfor Directors'
Retirement Allowances
Reserve
Specific Law
Reserve underSpecific(NoteLaw 23)
Deferred
Tax Liabilities
Deferred
Land23)
Revaluation (Note 14)
DeferredTax
TaxLiabilities
Liabilitiesfor(Note
Acceptances
Guarantees
Deferred Taxand
Liabilities
for Land Revaluation (Note 14)
Total Liabilities
Acceptancesand Guarantees
Total Liabilities

30,230,956
31,173,847
2,705,490
2,134,520
66,63637,558
1,637,770
3,250,980
40,313
46,191
98,373232,066
1,789,012
1,788,395
447
1,413
5,375
22,021
204,426
335,863
1,721
1,812
89
41,525 90
44,539595
1650
78,321 1
6,100
33,770256,687
6,081
37,163,843
208,005
39,317,809

29,150,114
30,941,297
2,950,000
2,484,300
84,34572,165
1,203,870
1,967,180
27,82137,878
188,402
152,777
1,606,958
1,784,546
368
1,397
360
14,025
234,605
198,002
1,726
1,779
83
41,524 86
42,406535
1587
86,387 1
6,109
84,345
255,536
6,081
35,838,750
244,051
38,032,909

284,446
286,761
25,456
19,634626
15,409 345
29,905379
925 424
2,134
16,833
16,451450 13
1,923 202
3,089
16
0 16
390 0
5 409
0 5
736 0
57 3102,415 55
349,678
1,913
361,676

Net Assets
CommonShares and Preferred Shares (Note 22)
Net Assets
CapitalSurplus
CommonShares and Preferred Shares (Note 22)
Retained
Earnings
Capital Surplus
Total
Shareholders'
Retained
Earnings Equity
Net
Unrealized
GainsEquity(Losses) on Other Securities (Note 23, 27)
Total
Shareholders'
Net
Gains
(Losses)on on
Hedging(Note23,
23, 27)28)
NetDeferred
Unrealized
Gains(Losses)
OtherInstruments
Securities (NoteLand
Revaluation
Excess(Note
14)
Deferred Gains or Losses on Hedges (Note 23, 28)
Foreign
Currency Translation
Adjustments
Land Revaluation
Excess (Note14)
Remeasurements of Defined Benefit Plans (Note 24)
Foreign Currency Translation Adjustments
Total Accumulated Other Comprehensive Income
Remeasurements of Defined Benefit Plans (Note 24)
Non-controlling interests
Total Accumulated Other Comprehensive Income
Total Net Assets
Non-Controlling Interests
Total Liabilities and Net Assets
Total Net Assets
The accompanying notes are an integral part of these financial statements.
Total Liabilities and Net Assets

690,998
100,678
690,998
571,563
100,678
1,363,240
615,918
299,808
1,407,595(50,303)279,543
13,433(153,703)(2,848)14,894(7,681)(3,237)
252,409(7,014)
10,956130,482
1,626,605
12,20938,790,449
1,550,287
40,868,096

690,998
100,678
690,998
546,678
100,678
1,338,355
595,294
348,931
1,386,971(72,705)
323,683
13,455(66,632)(3,246)
14,894(9,351)(3,383)
277,083(6,892)
10,403
261,669
1,625,842
11,824
37,464,593
1,660,465
39,693,375

6,501
947
6,356
5,377 926
12,826
5,665
2,820
12,948
(473)
2,571
126
(1,413)(26)137(72) (29)
2,374
(64)
103
1,200
15,304112
364,983
14,260375,936

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Income

Consolidated Statement of Income
Shinkin Central Bank
Bank For
For thethe year
yearended
endedMarch
March31,
31,
IncomeInterest Income:
Income:Interest
Interest on
on Loans
Loans andand Discounts
Discounts
Interest
Interest on
on DueDue from
fromBanks
Banks
Interest
Interest on
on Bills
Bills Bought
BoughtandandCall
CallLoans
Loans
Interest
Interest on
on Receivables
Receivablesunder
underResale
ResaleAgreements
Agreements
Interest
Interest on
on Receivables
Receivablesunder
underSecurities
SecuritiesBorrowing
BorrowingTransactions
Transactions
Interest
Interest andand Dividends
Dividendson
onSecurities
Securities
OthersOthers
Trust
Trust Fees
Fees
Fees
Fees andand Commissions
Commissions (Note(Note16)
16)
Trading
Income(Note
17)
Trading Income (Note 17)
Other
Other Operating
Operating Income
IncomeOther
Other Income
Income (Note(Note 19)
19)
Total
Total Income
IncomeExpenses
Expenses
Interest Expenses:
Interest Expenses:
Interest on Deposits
Interest on Deposits
Interest on Debentures
Interest on Debentures
Interest on Borrowed Money
Interest on Borrowed Money
Interest on Bills Sold and Call Money
Interest on Bills Sold and Call Money
Interest on Payables under Repurchase Agreement
Interest on Payables under Repurchase Agreement
Interest on Payables under Securities Lending Transactions
Interest on Payables under Securities Lending Transactions
OthersOthersFees and Commissions (Note 16)
Fees and Commissions (Note 16)
Trading Losses (Note 18)
Trading Losses (Note 18)
Other Operating Expenses
Other Operating Expenses
General and Administrative Expenses
Generaland Administrative Expenses
Other Expenses (Note 20)
Other
Expenses (Note 20)
Total Expenses
Total Expenses

Profit before Income Taxes
Profit
Taxes
Incomebefore
TaxesIncome(Note 23):
Income Current
Taxes (Note 23):
Current
DeferredDeferred
Total Income Taxes
Profit Total Income Taxes
ProfitProfit attributable to non-controlling interests
Profit attributable
Attributabletotoowners
Non-Controllingof parent Interests
Profit Attributable to Owners of Parent

Net Income per Share (Note 32)
Dividend
Declaredper Share
Common Shares)
Net
Incomeper Share(Note (General
31)
Dividend Declared
Declared per
per Share
Share (Specific(GeneralCommon
CommonShares)
Shares)Shares) Shares)
Dividend Declared
Declared per
per Share
Share (Preferred(Specific Common
Dividend Declared per Share (Preferred Shares)
The accompanying notes are an integral part of these financial statements.

Millions
Yen
Millions
ofof
Yen
2019
2020
2017
2018

Millions
Millions
of ofU.S.
Dollars
U.S.
Dollars
(Note
(Note
1) 1)
2020
2018

220,528
207,202
17,597
20,371
8,417
9,026
706
670
0
(780)
131 0
193,032
176,804
642
1,109
351
759
42,77944,1513,904
2,001
24,40645,067
14,922
2,772
306,892
301,954

201,637
193,754
17,86919,518
8,448
8,466
753
946
0
(336)
148 6
173,879
164,344
538
810
595
399
42,68543,6705,260
4,078
59,02833,801
10,09918,104
319,307
293,808

2,074
1,906
165187
79 83
6 6
0 (7)
1 0
1,816
1,626
6 10
3 6
40240636 18229414140 252,887
2,777

121,559
113,700
37,83941,878
5,920
3,077
7,066
1,795
461
590
1,920
1,748
15,883
19,78452,46744,824
15,386
16,243
133
54,22854,11951,64753,645
1,063
7,888
244,018
245,596

122,381
119,534
39,68940,218
7,998
4,489
8,292
3,595
254
537
1,062
1,258
9,267
23,68755,81745,746
14,78415,758316
74,534
41,88352,04352,183
2,759
2,195
266,503
231,873

1,143
1,045
356
385
55
28
66
16
4
5
18
16
149
181
493
412
144
149
1
510
497
485
493
10
2,295 72
2,259

62,87356,35852,804
61,935591
518

16,38916,0661,490(409)
17,88015,65644,99240,701526
474
44,46640,227

12,19913,997(3,948)2,280
8,250
16,27844,55445,657682
875
43,87144,78115414147
168 (3)423144
4374
418 4
370

2017
6,223.20
2019
3,000.00
6,358.89
1,500.00
3,000.00
6,500.00
1,500.00
6,500.00

U.S. Dollars
U.S. Dollars(Note
1)(Note 1)
2018
59.38
2020
28.22
52.24
14.11
27.59
61.15
13.79
59.79

Yen
Yen
2018
6,311.86
2020
3,000.00
5,679.98
1,500.00
3,000.00
6,500.00
1,500.00
6,500.00

The accompanying notes are an integral part of these financial statements.

29

Consolidated
Statement ofComprehensive Income
IncomeConsolidated Statementof Comprehensive
Shinkin Central Bank For the year ended March 31,
ProfitOther Comprehensive Income (Note 21)
Net Unrealized Gains (Losses) on Other Securities
Net
Deferred
Gains(Losses)on Hedging Instruments
Deferred
Gains
or Losses
on Hedges
Land Revaluation Excess
Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans
Comprehensive Income
Comprehensive Income attributableparentAttributabletotoowners
Ownersofofthe
ParentComprehensive Income attributableinterests
Attributabletotonon-controlling
Non-Controlling
Interests
The accompanying notes are an integral part of these financial statements.

30

2018
2020

Millions of Yen

44,99240,701(24,559)(131,209)(49,122)(44,139)
22,401(87,070)
0398
145
1,762
(144)
20,433(90,508)
19,814(90,960)
618
451

2017
2019

44,55445,657(33,497)
7,873(129,013)
23,874
96,145(16,328)
13(1,593)
(534)
963
848
11,05653,530
10,32852,594727
935

Millions of
U.S. Dollars(Note 1)
2018
2020
423
374
(231)
(1,206)
(462)
(406)
210
(800)
031
16
(1)
192
(832)
186
(836)
54

Consolidated Statementof Changes
in NetConsolidated
Statement of
Changes in
Net Assets
Assets
Shinkin
For thethe yearyear ended
ended March
March31,201831, 2020
Shinkin Central
Central Bank
Bank For

Millionsof YenMillionsof YenShareholders'EquityShareholders'EquityCommonShares
SharesandandPreferredPreferred
CommonSharesSharesBalance
Balance at
at Beginning of Year

CapitalSurplusCapitalSurplus690,998
690,998

Retained
Earnings
Retained
Earnings

100,678
100,678

Total
Shareholders'EquityTotal
Shareholders’Equity595,294546,678

1,386,971
1,338,355

Surplus Dividends
Dividends
Surplus(19,603)(19,603)(19,603)(19,603)

Profit Attributable
attributable toProfittoowners
Ownersofofparent
Parent44,46640,22744,46640,22722

22

Fluctuation AmountAmount during the Fiscal
Fluctuation
Fiscal Year
Year

Net
Changesin Items
Other Than
Shareholders'
Reversalof Land
Revaluation
ExcessEquity during the Fiscal YearNet Changes in Items Other Than Shareholders’
Total
Fluctuation
AmountEquityduring the
Fiscalduring
Year the Fiscal Year--

20,623

20,623

Total Fluctuation
Balanceat End ofAmountYear during the Fiscal Year690,998

100,678

24,884615,918

24,884
1,407,595

Balance at End of Year690,998

Balance at Beginning of Year
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year

100,678

571,563

1,363,240

Accumulated Other Comprehensive Income
NonTotal Net
Accumulated Other Comprehensive Income
Controlling
AssetsTotal
NonTotal Net
Foreign
Net Unrealized
Interests
Remeasurements Accumulated controlling
Deferred Gains
AssetsTotal
Land Revaluation
Currency
Gains (Losses)
Foreign
Net Unrealized
Net
Deferredon
Otherof Defined Benefit
or Losses
Interests
ExcessTranslation Remeasurements Accumulatedon(Losses)
Other
Gains
GainsHedges(Losses) Land Revaluation
Currency
Comprehensive
Plans
Other
Adjustments of Defined Benefit
Securities
ExcessTranslationon
Other
on Hedging
IncomeComprehensive
Plans
Instruments
Adjustments
Securities
323,683(66,632)
14,894(3,383)(6,892) Income261,669
11,824
1,660,465
348,931(72,705)

13,455(3,246)(9,351)

277,083

10,403

1,625,842

Fluctuation Amount during the Fiscal Year
Surplus Dividends
Surplus Dividends
Profit Attributable to Owners of Parent
Profit attributable to owners of parent
Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Reversal of Land Revaluation Excess(19,603)(19,603)
40,22744,466(130,802)22(44,139)(87,070)

-

145

(122)

(131,187)

384

Total Fluctuation Amount during the Fiscal YearNet Changes in Items Other Than Shareholders’Equity during the Fiscal Year
Balance at End of Year
Total Fluctuation Amount during the Fiscal Year

(44,139)(49,122)(87,070)
22,401(153,703)
22,401(22)
14,894
(22)

145
398
(3,237)
398

(122)
1,670

(131,187)(24,674)384
552(110,178)(24,121)279,543(49,122)(7,014)
1,670

130,482(24,674)

12,209552

1,550,287
763

Balance at End of Year

299,808(50,303)(7,681)

252,40913,433(2,848)

10,956
1,626,605
Millions of U.S. Dollars (Note 1)

Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Balance at Beginning of Year

6,356
Common Shares and Preferred
SharesCapital Surplus

6,501

926

Retained Earnings

947

Profit Attributable to Owners of Parent
Surplus Dividends
Net Changes in Items Other Than Shareholders'Profit attributableto owners
Equityduring the Fiscal
Yearof parent

Net Changes
Items Other Than Shareholders’
Balanceat End ofinYear
Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year

Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Balanceat Dividends
Beginning of Year
Surplus5,475

Total Shareholders’ Equity

5,143

Surplus Dividends
Fluctuation Amount during the Fiscal Year

Total
Fluctuation
Amountduring the
Fiscal Year
Reversalof Land
Revaluation
ExcessMillions of U.S. Dollars (Note 1)
Total Shareholders' Equity

Capital Surplus
Retained Earnings
Shareholders' Equity

12,75812,592

(180)

(180)

370
(184)

370
(184)

418

418

-

-

0189

0 189

6,356

926

5,665

12,948234
234
Accumulated Other Comprehensive Income
NonTotal Net
6,501
947
5,377
12,826
Controlling
Assets
Total
Foreign
Net Unrealized
Interests
Remeasurements Accumulated
Deferred Gains
Land Revaluation
Currency
Gains (Losses)
Otherof Defined Benefit
or Losses on
Accumulated
Other Comprehensive
ExcessTranslationIncome
on Other
NonTotal Net
Comprehensive
Plans
HedgesAdjustments
Securities
controlling
Assets
Total
IncomeNet Unrealized
Net Deferred
ForeignInterests
Remeasurements Accumulated
Gains (Losses)
Gains(Losses)
Land
Revaluation
Currency
2,977
(612)
137
(31)
108
15,274of Defined Benefit(63) Other 2,407
on Otheron Hedging
ExcessTranslation
Plans
Comprehensive
Securities
Instruments
Adjustments
Income
3,283

(684)

126

(30)

(87)

2,607

97

15,297(180)

Fluctuation
Amount during
the Fiscal
Year
Profit Attributableto Ownersof Parent

Net
Changesin Items Other Than Shareholders'
SurplusDividends
Equity during the Fiscal Year
Profit attributable to owners of parent
Total Fluctuation Amount during the Fiscal Year
Reversal of Land Revaluation Excess
Balance at End of YearNet Changes in Items Other Than Shareholders’Equity during the Fiscal Year

370
(406)

(800)

-

1

(1)

(1,206)

3(184)(1,203)

(406)

(800)

-

1

(1)

(1,206)3418(1,013)

2,571(1,413)

137

(29)

(462)

210

(0)

3

(64)
15

1,200
(232)

112

0
14,2605(226)

Total Fluctuation Amount during the Fiscal Year

(462)

210

(0)

3

15

(232)

5

7

Balance at End of Year

2,820

(473)

126

(26)

(72)

2,374

103

15,30431

Shinkin Central Bank For the year ended March 31, 2019

Millions of Yen
Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year

Capital Surplus

690,998

Retained Earnings
100,678

Total Shareholders' Equity
571,563

1,363,240

Surplus Dividends(19,603)(19,603)

Profit Attributable to Owners of Parent

44,78144,781

Reversal of Land Revaluation Excess(1,447)(1,447)

Fluctuation Amount during the Fiscal YearNet Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year--

23,731

23,731

690,998

100,678595,294

1,386,971

Accumulated Other Comprehensive Income
Net Unrealized
Gains (Losses)
on Other
Securities
Balance at Beginning of Year

299,808

Deferred Gains
Land Revaluationor Losses on
ExcessHedges(50,303)

13,433Foreign
Currency
Translation
Adjustments(2,848)

Total
Remeasurements Accumulatedof Defined Benefit
Other
Plans
Comprehensive
Income(7,681)

252,409

NonControlling
Interests

10,956

Total Net
Assets1,626,605

Fluctuation Amount during the Fiscal Year
Surplus Dividends(19,603)

Profit Attributable to Owners of Parent

44,781

Reversal of Land Revaluation Excess(1,447)

Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year23,874

1,460

(534)

788

9,260

868

10,129Total Fluctuation Amount during the Fiscal Year23,874(16,328)

1,460

(534)

788

9,260

868

33,860

Balance at End of Year323,683(66,632)

14,894(3,383)(6,892)

261,669

11,824

1,660,465

The accompanying notes are an integral part of these financial statements.

32(16,328)

Consolidated
Statement ofof CashCash Flows
Flows
Consolidated Statement
Millions of
U.S. Dollars

Millions of Yen

2020
2018

Cash Flows from Operating Activities:
Profit before Income Taxes
Depreciation
Impairment Loss
Increase (Decrease) in Reserve for Possible Loan Losses
Increase (Decrease) in Reserve for Employee Bonuses
Increase (Decrease) in Reserve for Directors' Bonuses
Increase (Decrease) in Net Defined Benefit Liability
Increase (Decrease) in Reserve for Directors' Retirement AllowancesInterest Income
Interest Expenses
Net Losses (Gains) on Securities
Net Losses (Gains) on Money Held in Trust
Net Losses (Gains) on Foreign Exchange
Net Losses (Gains) on Disposal of Fixed Assets
Net Decrease (Increase) in Trading Assets
Net Increase (Decrease) in Trading Liabilities
Net Increase
Decrease(Decrease)(Increase) in Trading Payables
Receivable
Net Decrease(Increase) in Loans
Bills Discounted
Increase (Decrease)
Tradingand
PayablesNet Increase
Decrease(Decrease)(Increase) in Deposits
Loans and Bills Discounted
Net Increase (Decrease) in Debentures
Deposits
Net Increase (Decrease) in Borrowed
DebenturesMoney (Excluding Subordinated Borrowings)
Increase (Decrease)
Borrowed
Money(Excluding(ExcludingDue
SubordinatedBorrowings)
Net Decrease(Increase) in Duefrom Banks
from Central
Bank)
Net Decrease (Increase) in Calland Others
Due Loansfrom Banks(Excluding Due from Central Bank)
Call Loans andOthersNet Decrease (Increase) in Receivables
under
Securities Borrowing Transactions
Net Increase
Money and
OthersDecrease(Decrease)(Increase) in Call
Receivables
under
Securities Borrowing Transactions
Net Increase (Decrease) in Payables
underCall MoneyandSecurities
Others Lending Transactions
Net Decrease(Increase) in Monetary
ClaimsBought Lending Transactions
Increase (Decrease)
Payables under
Securities
Net Decrease (Increase) in Foreign
Exchanges(Assets)
Monetary
Debts Purchased
Net Increase
Decrease(Decrease)(Increase) in Foreign Exchanges (Liabilities)(Assets)
Net Increase (Decrease) in Dueto Trust
Accounts
Foreign
Exchanges(Liabilities)
Interest
Received
Net Increase(Decrease) in Due to Trust Accounts
Interest Paid
Received
Other,
InterestNet
Paid
Other, Net
Sub-total
IncomeTaxes Paid
Sub-total
IncomeTaxes
Paid by (Used in) Operating Activities
Net
Cash
Provided
Net Cash Provided by (Used in) Operating Activities

56,35862,873
11,266
9,691
86
60
832
(2,341)33(4)
46
2,13306359(207,202)(220,528)
113,700
121,559(7,908)23,339(529)
128
67,494
39,214266
117(162,689)(18,336)(34,607)(17,709)30,515101(1,429,337)
19,738232,549
1,042,731(349,780)
1,080,842
1,283,800(244,510)
650,100
88,688677,995
333,793(121,024)
21,79887,601
70,866
3,849(77,538)(443)
182,054(57,984)
3,117
16
54
7,996
78
261,547
5,015(136,007)
275,967(215,922)(142,068)
346,184(516,450)(13,440)
2,561,001
332,744(17,362)2,543,638

61,93552,804
10,26010,647
1,567(12,919)
(544)
57
(38)
(3)
3
881
1,105
(8)
(18)
(193,754)(201,637)
119,534
122,381(767)(32,002)112(224)(13,474)
43,797
(50)
11
1,838
42,064
5,529(45,116)
2,877
2,579
(86,124)
710,341(1,231,567)(221,190)
1,936,087
556,400(102,920)
482,700
116,589(302,627)
35,045(28,146)(7,889)51,96934,334(4,466)
98,023(44,372)
192,408(669)(2,788)949(6,714)8,650
112
250,883(2,964)(145,715)
268,378(62,350)(139,300)
803,994(352,062)(11,141)
1,176,436
792,853(18,665)
1,157,771

518
591
103
91
0
7
(22)
0
(0)
0
190
0
(1,906)(2,074)
1,045
1,143
(72)
219
(4)
1
620
368
21
(1,496)
(172)
(318)
(166)
2800
(13,148)
185
2,139
9,811
(3,217)
10,16911,809(2,300)
6,116
815
6,236
3,140
(1,138)
200
805
666
35
(729)
(4)
1,712
(533)
29
0
730
2,405
47
(1,251)
2,596(1,986)(1,336)
3,184(4,859)(123)
24,096
3,060(163)
23,933(3,688,121)
1,437,278(4,221,520)
2,182,320
2,326,190(60)
1,805,703
39,839(100,000)(2,724)(7,771)(1,775)(3,416)(39,240)
2,417(192,401)(4,304,819)
2,297,629(4,333,235)
2,607,537
2,195,709(50,210)
2,575,669(40,000)(11,835)
112,955(14,660)(4,542)153(4,007)523,793502,548(33,926)
13,221(39,720)
20,074
21,887(0)
16,990366(940)(25)(71)
(16)
(32)
(360)
22
(1,810)(19,603)(216,200)(66)(19,603)(19,670)(66)(235,870)(226,990)(19,603)(108,150)(66)(18,115)(246,660)(66)(126,332)(180)(2,034)
(0)
(184)
(180)
(0)
(2,219)(0)273,834(0)
12,853,693
2,115,366
13,127,527
9,668,340
11,783,706

0
1,069,986(0)
11,783,706
1,533,987
12,853,693
8,134,353
9,668,340

(0)
2,518
(0)
118,238
19,903
120,757
90,970110,874

Cash Flows from Investing Activities:
AcquisitionsofInvesting
Securities Activities:
Cash
Flows from
Proceeds
fromof Securities
Acquisitionsof SaleSecurities
Proceeds from Redemptionof Securities
Sale of Securities
Increase
Money
Held in Trust
Proceedsinfrom
Redemptionof Securities
Decrease
MoneyHeld
HeldininTrust
Trust
Increase ininMoney
Acquisitionsof Tangible
AssetsDecrease in Money
HeldFixed
in Trust
Acquisitions of Intangible
FixedAssets
AssetsTangible Fixed
Proceeds
fromof Tangible
Fixed Assets
Acquisitionsof SalesIntangible
Fixed Assets
Proceeds
Sales ofResulting in Change in Scope of Consolidation
Net
Cashfrom
Provided
byShares(Usedofin)Subsidiaries
Investing Activities
Net Cash Provided by (Used in) Investing Activities
Cash Flows from Financing Activities:
Repaymentof SubordinatedBorrowings
Cash
Flows from
Financing Activities:
Dividends
RepaymentPaidof Subordinated Borrowings
Dividends Paid to Non-Controlling Interests
Dividends
to Non-controlling
Interests Activities
Net
CashPaid
Providedby (Used in) Financing
Net Cash Provided by (Used in) Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net
Increase(Decrease)in Cash andCash andEquivalents
Effectof Exchange
Rate Changes
on CashCash Equivalents
at Beginningof Equivalents
PeriodCash
and Cash
Equivalents
Net Increase(Decrease)in Cashand CashCash and Cash Equivalents at End
of Period(Note 2 (2) )Beginningof Period
Cash and Cash Equivalents at End of Period (Note 2 (2) )The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.

2019
2017

(Note 1)
2020
2018

Shinkin Central Bank For the year ended March 31,

33

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements
1. Basis of Presentation:
The accompanying consolidated financial statements have been
prepared from the accounts maintained by Shinkin Central Bank (the“Bank”) and its consolidated subsidiaries in accordance withaccounting principles and practices generally accepted in Japan thatare different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards.
Certain items presented in the consolidated financial statements
have been reclassified for the convenience of readers outside Japan.
The amounts in Japanese yen are presented in millions of yen by
rounding down figures. As a result, the totals in yen shown in the
consolidated financial statements do not necessarily agree with thesums of the individual account balances.
U.S. dollar amounts represent the arithmetical results oftranslating original Japanese yen amounts of the respective account¥106.28 to U.S.$1, the exchangebalances to U.S. dollars on a basis of ¥108.71
rate prevailing as of March 31, 2018.
2020. The amounts in U.S. dollars arepresented in millions of U.S. dollars by rounding down figures. As aresult, the totals in U.S. dollars shown in the consolidated financial
statements do not necessarily agree with the sums of the individual
account balances. The U.S. dollars amounts are included solely forthe convenience of readers outside Japan and this translation should
not be construed as representation that Japanese yen amounts havebeen or could be readily converted, realized or settled in U.S. dollars
at that or at any other rates.
2. Significant Accounting Policies:(1) Principles of Consolidation
The consolidated financial statements include the accounts of the
2018
Bank and its seven consolidated subsidiaries as of March 31, 2020
listed below:
Ownership
Location
Name
Name
Percentage
The Shinkin Banks Information
Tokyo
System Center Co., Ltd.
50.7%
Shinkin International Ltd.
London100%
Shinkin Chukin Business Co., Ltd.
Tokyo
100%
Tokyo
Shinkin Asset Management Co., Ltd.
100%
Shinkin Securities Co., Ltd.
Tokyo
100%
Shinkin Capital Co., Ltd.
Tokyo
100%
Tokyo
Shinkin Guarantee Co., Ltd.
100%(*) Shinkin Trust Bank, Ltd. merged with Mitsubishi UFJ Trust and Banking
Unconsolidated
subsidiaries
Corporation on September
19, 2017, and, therefore, has been excluded from
Shinkin
Kizuna Investment
Partnershipthe scope noof consolidationfrom theLimited
second quarterof the current fiscal year.

Shinkin no Tsubasa Investment Limited Partnership
Unconsolidated
subsidiaries are excluded from the scope of
Unconsolidated subsidiaries
consolidation
becausetheir total
assets,total income, net income
LimitedPartnership
Shinkin no Kizuna Investment(amount
based
on Investment
the equity Limited
method),Partnership
retained earnings (amount
Shinkin no
Tsubasabasedon the equity
method) andother thecomprehensive
Unconsolidated
subsidiaries
are accumulated
excluded fromscope ofincome(amount
based
on
the
equitymethod)areimmaterial
and doconsolidation because their total assets, total income, net income
nothinderarational
judgmentof
theBank’sfinancialconditionand(amount based on the equity method), retained earnings (amountresultsof operation
excluded
from the scopeof consolidation.
based onthe equitywhen
method)and accumulated
othercomprehensiveThefiscal year
the equity
closingmethod)date thereof
for the financial
income(amount
basedandon theare immaterial
and dostatementsoftheconsolidated
subsidiaries
areconsistent
with those
not hinder a rational judgment of the Bank’s financial condition
andof
the Bank,
except whenfor Shinkin
International
Ltd.,ofwhich
has a fiscal
resultsof operation
excluded
from the scope
consolidation.
year endedon December
the consolidation
The fiscal
year and31.
theForclosing
date thereof offorthethesubsidiary,financial
theBank makes
appropriate
adjustments
for anytransactions
statementsof theconsolidated
subsidiaries
arematerial
in agreement
withsubsequent
Decemberthose of thetoBank,
except31.
for Shinkin International Ltd., which has afiscal year ended on December 31. For the consolidation of the
All significant intercompany accounts and transactions havebeen eliminated in consolidation. The Bank’s share of net assets of34

subsidiary, theany material
subsidiaries
is Bankvaluedmakes
at fairappropriate
value on adjustments
acquisition. forNon-controllingtransactions
31.are valued at fair value oninterests
in subsequent
net assets toof December
subsidiaries
acquisition in the consolidated financial statements. The excess of the
All thesignificant
accounts
and transactions
have
cost overfair valueintercompanyof the underlying
net equity
in subsidiaries
onbeen eliminatedin consolidation.
The Bank’s share of net assets ofacquisitionis expensed
when incurred.
subsidiaries is valued at fair value on acquisition. Minority interests
in netapplication
assets of subsidiaries
are valued
at fair value on
acquisitionandinTheof equity-method
to unconsolidated
subsidiaries
the consolidated
financial statements. The excess of the cost over theaffiliates
is as follows:
fair valueof the underlying
net equity insubsidiaries on acquisitionisNon-consolidated
equity-method
subsidiaries:
N/A
expensed
when incurred.
Affiliatedequity-method companies:
N/A

The application subsidiaries
of equity-method
to notunconsolidated
subsidiaries
andUnconsolidated
that areaccounted forby the equity
affiliates is as follows:
method:Non-consolidated
subsidiaries:
Shinkinno Kizunaequity-method
Investment Limited
Partnership N/A
Affiliatedcompanies:
Shinkinnoequity-method
Tsubasa Investment
Limited Partnership N/A
Unconsolidated subsidiaries that are not accounted for by the
Unconsolidated
subsidiaries
that areaccounted
by thebecause
equityequitymethod are
excluded fromthe not
scopeof equityfor
methodmethod:theireffect on the accompanying consolidated financial statements, inKizuna(amount
Investment
LimitedPartnershipterms Shinkinof net no
incomebasedon theequity method) and
Shinkinno Tsubasa
Limitedretainedearnings(amountInvestment
based on theequityPartnershipmethod), would not be
Unconsolidated subsidiaries that are not accounted for by thematerial.
equity method are excluded from the scope of equity method because
their effectcompanies
on the accompanying
financialstatements,inAffiliatedto which theconsolidated
equity method
is not applied
due toterms of net income (amount based on the equity method) andimmateriality:
retainedearnings
AozoraLoan(amountServicesbasedCo., onLtd.the equity method), would not bematerial.
(2) Cash and Cash Equivalents
Affiliatedcompanies tostatement
which the ofequityappliedtoIn
the consolidated
cashmethod
flows,is not“Cashand dueCashimmateriality:consist of Cash and Due from Central Bank.
Equivalents”
Aozora Loan Services
Co.,CashLtd. and Due from Banks in the
Reconciliation
betweenconsolidated balance sheet and Cash and Cash Equivalents at March(2) Cash31,2020 and Cash2019 Equivalents
is as follows:
In the consolidated statement of cash flows, “Cash Millions
and CashofEquivalents” consist of Cash and
Due from
Central Bank.U.S. Dollars
Millionsof YenReconciliation between
Due from Banks2020
in the2020Cash and 2019consolidated balance sheet and Cash and Cash Equivalents at March
Cash and Due from31, 2018 and 2017 is as follows:
13,532,061 13,346,876
124,478
Banks
Millions of
Due from Banks
Millions of Yen
U.S. dollars(Excluding Due(404,534)(493,182)(3,721)
2018
2017
2018
from Central Bank)
Cash and Due from
12,393,632
10,611,955
116,613
Cash
Banksand Cash
13,127,527 12,853,693
120,757
Equivalents
Due from Banks(Excluding Due(609,925)(943,615)(5,738)(3) Trading
fromCentralAssets
Bank)and Liabilities
Transactions for “Trading Purposes” (for purposes of seeking toCash andgains
Cash arising from short-term changes in interest rates,
capture11,783,706
9,668,340
110,874
Equivalents
currency
exchange rates or market prices of financial instruments andother market related indices or from gaps among markets) are(3) TradinginAssets
and Liabilities
included“Trading
Assets” and “Trading Liabilities” on theTransactions balance
for “Trading
Purposes”(for basis.
purposesof seeking
toconsolidated
sheet ona trade date
In addition,
gains
capturegains
arisingfrom Assets”
short-term
interest rates,
andlossesfrom“Trading
and changes“Tradingin Liabilities”
arecurrency exchange
rates ormarket pricesof financialLosses”
instruments
recordedas “Trading
Income”
and “Tradingon andtheother marketstatement
related ofindices
gaps
consolidated
incomeoronfrom
a tradedateamongbasis. markets) are
includedin “Trading
Assets” Claims
and “Trading
Liabilities”
on theSecurities
and Monetary
Bought fortrading purposes
consolidatedbalancea tradebasis. In addition,
gains
are
stated at fairvaluesheet
at theon
fiscalyear dateend. Trading-related
financialand losses suchfrom as“Tradingand options“TradingareLiabilities”
derivatives
swaps, Assets”
futures andstated at are
therecorded thatas would“Trading
and for“Trading
Losses”
onfiscaltheamounts
have Income”
been delivered
settlement
as of theconsolidatedyear
end date.statement of income on a trade date basis.
Securities and monetary debts purchased for trading purposes
are stated at fair value at the fiscal year end. Trading-related financial
derivatives such as swaps, futures and options are stated at the(4) Financial Instruments(i) Securities
The Bank and its consolidated subsidiaries classify securities into
three categories: held-to-maturity debt securities, investments inaffiliates that are not accounted for by the equity method, and othersecurities. Held-to-maturity debt securities are stated at cost and areamortized by the straight-line depreciation method using themoving-average method. Investments in affiliates that are notaccounted for by the equity method are stated at cost using themoving-average method. Stocks and investment trusts in othersecurities are stated based on the average quoted market price over amonth preceding the balance sheet date and others are stated at fairvalue based on quoted market prices at the balance sheet date andother applicable information (and the cost of securities sold is mainly
determined using the moving-average method). Other securities
where there is significant difficulty in determining fair value arestated at cost using the moving-average method.
The full amount of net unrealized gains or losses on othersecurities is recorded directly within Net Assets.
Securities included as trust property in “Money Held in Trust”
are stated in the same manner as above.
(ii) Derivative Transactions
Derivative transactions are stated at fair value.
(iii) Hedge Accounting(a) Hedge of Interest Rate Risk
The Bank applies the deferred method of hedge accounting describedin the Japanese Institute of Certified Public Accountants (JICPA)
Industry Audit Committee Report No. 24, February 13, 2002
“Accounting and Auditing Treatment of Accounting Standards for
Financial Instruments in Banking Industry” to transactions to hedge
against interest rate risk arising from the financial assets andliabilities.
Effectiveness of a fair value hedge is assessed for each of theidentified group of hedged items such as loans and deposits, andcorresponding group of hedging instruments such as interest rate
swaps with the same maturity bucket. Effectiveness of a cash flow
hedge is assessed based on the correlation between an interest raterisk factor of the hedged items and that of the hedging instruments.
For certain assets and liabilities, the exceptional treatment forinterest rate swaps is applied.
(b) Hedge of Foreign Exchange Fluctuation Risk
The deferred method of hedge accounting is applied to transactions tohedge against foreign exchange fluctuation risks associated with
monetary assets and liabilities denominated in foreign currencies inaccordance with the regulations set forth in JICPA Industry Audit
Committee Report No. 25, July 29, 2002 “Accounting and Auditing
Treatment of Accounting Standards for Foreign Currency
Transactions in the Banking Industry”.
To minimize foreign exchange fluctuation risk on monetary
assets and liabilities, the Bank has engaged in currency swaps,
foreign exchange swaps, and similar transactions. Effectiveness ofthese transactions in the hedging of foreign exchange risks ofmonetary assets and liabilities denominated in foreign currencies isassessed through comparison of the foreign currency position of thehedged monetary assets and liabilities and that of the hedging
instruments.
The Bank has also applied fair value hedge accounting to theforeign exchange risk of other securities in foreign currency (otherthan bonds) when the hedged foreign currency securities are specified

prior to the commencement of transactions, and there exists spot andforward liabilities exceeding the acquisition costs of the foreign
currency securities designated as hedged items on a foreign currency
basis.
(c) Internal Derivative Transactions
Internal derivative transactions between trading accounts and otheraccounts, which are designated as hedges, are not eliminated andrelated gains and losses are recognized in the consolidated statementof income or deferred under hedge accounting because the internalinterest rate swaps and currency swaps transactions, etc. designated as
hedging instruments are conducted in a manner without any
subjection and are appropriately covered by third party transactions
conducted in accordance with the standard articulated by JICPA
Industry Audit Committee Reports No. 24 and No. 25.
(5) Tangible Fixed Assets (excluding Leased Assets)
Tangible fixed assets of the Bank are depreciated by the decliningbalance method. However, buildings acquired on or after April 1,
1998 (excluding facilities installed in buildings), and facilities
installed in buildings and structures that are acquired on or after April
1, 2016, are depreciated by the straight-line method.
The estimated useful lives of major items are as follows:
Buildings ................. 5 to 50 years
Others ...................... 3 to 20 years
Tangible fixed assets of consolidated subsidiaries are, in
principle, depreciated by the declining balance method, based on theirestimated useful lives.
(6) Intangible Fixed Assets (excluding Leased Assets)
Intangible fixed assets are amortized by the straight-line method. The
costs of software for internal use are amortized by the straight-line
method, mainly 5 year period (the estimated useful life of thesoftware).
(7) Leased Assets
Leased assets of Tangible Fixed Assets and Intangible Fixed Assets
related to finance leases that do not transfer ownership are
depreciated by the straight-line method with estimated useful lives
equal to lease terms, and zero residual values.
(8) Deferred Debenture Charges
Debenture charges are expensed in the fiscal year of issuance.
(9) Reserve for Possible Loan Losses
Reserve for possible loan losses of the Bank is provided inaccordance with the Bank’s predetermined internal rules forwrite-offs and provisions as follows:
The reserve for loans to borrowers who are classified as
substantially bankrupt or who are bankrupt in the legal sense isprovided at 100% of the amount remaining after write-offs anddeduction of expected collection from the realization of collateral andthe execution of guarantees. In addition, a reserve is provided forloans to borrowers who are not currently bankrupt but are highly
likely to go bankrupt (“Probably Bankrupt Borrowers”). In such cases,
the reserve is provided at the amount deemed necessary based on the
borrower’s debt servicing capacity after deducting the estimatedcollectible amount from the realization of collateral and the executionof guarantees.
The Bank calculates the amount of reserve by the cash flow
estimate method if the borrowers are classified as Probably Bankrupt
Borrowers or the loan receivables are renegotiated of larger exposures

35

but the cash flows from repayment of principals and payment of
accrued interest can be reliably estimated. The cash flow estimate
method is an approach to determine the amount of reserve forpossible loan losses from the difference between the amounts
calculated by discounting the cash flows by the agreed interest rate
before renegotiation and their book values.
For all other loans, a reserve is provided based on the ratio of
historical experiences for similar type of loans for a certain period in
the past.
All claims are assessed by the Operating Related Division basedon internal rules for self-assessments of asset quality. Subsequently,
the Asset Auditing Division, that is independent from the Operating
Related Division, audits these self-assessments. The reserve isprovided based on the results of the assessments.
For loans to Bankrupt Borrowers and Substantially Bankrupt
Borrowers, amounts deemed uncollectible, which are calculated after
deduction of expected collection from the realization of collateral andthe execution of guarantees, are written off. The amount written off
was ¥320 million ($2 million) as of March 31, 2020 and ¥355 million
as of March 31, 2019.
Reserve for possible loan losses of the consolidated subsidiaries
for general claims is provided as the amounts deemed necessary
based on the default rate calculated from actual default during acertain period in the past, and for doubtful claims as the amounts
deemed uncollectible based on the assessment of each claim.
(10) Reserve for Employee Bonuses
Reserve for Employee Bonuses is set aside to pay employee bonuseswith respect to the portion of estimated bonus payments to employeesthat correspond to this fiscal year.
(11) Reserve for Directors’ Bonuses
Reserve for Directors’ Bonuses is set aside to pay directors andcorporate auditors bonuses with respect to the portion of estimatedbonus payments to directors and corporate auditors that correspond to
this fiscal year.
(12) Reserve for Directors’ Retirement Allowances
Reserve for Directors’ Retirement Allowances provided for by the
Bank is calculated based on the estimated allowances to be paid up to
the end of this fiscal year.
(13) Reserve under Specific Law
This reserve amount is calculated pursuant to Article 46-5, Paragraph
1 of the “Financial Instruments and Exchange Act” and Article 175 of
the “Cabinet Office Ordinance on Financial Instruments Business” toindemnify any losses incurred from accidents in the conduct ofmarket derivative transactions on behalf of clients.
(14) Employees’ Retirement Benefits
The Bank accounted for retirement benefit obligation based on the
projected benefit obligations. The projected benefit obligations are
attributed to periods on a benefit formula basis. The methods foramortizing prior service costs and actuarial differences are as follows:
Prior service costs:
Prior service costs are amortized, using the straight-line method overa certain number of years (10 years) within the average remaining
service period of current employees at the time the cost is incurred.
Actuarial differences:
Actuarial differences are amortized from the following year, using thestraight-line method over a certain number of years (10 years) within36

the average remaining service period of current employees at eachtime the cost is incurred.
Also, certain consolidated subsidiaries calculate the net defined
benefit liability and retirement benefit cost using the simplified
method which assumes the retirement benefit obligation to be equal
to the amount necessary to pay for the voluntary resignation for all
employees at the fiscal year-end.
(15) Translation of Foreign Currency-Denominated Assets andLiabilities
Foreign currency-denominated assets and liabilities are translated into
Japanese yen at exchange rates prevailing at the end of the fiscal year.
Foreign currency-denominated assets and liabilities of consolidated
subsidiaries are translated into Japanese yen at exchange rates
prevailing at the end of the fiscal year.
(16) Consumption Tax
National and local consumption tax incurred by the Bank and its
domestic consolidated subsidiaries are excluded from transaction
amounts. However, national and local consumption tax paid onpurchases of tangible fixed assets and intangible fixed assets, which
are not deductible as a tax credit, are expensed in this fiscal year.
(17) Amortization of Goodwill
Goodwill is fully amortized in the fiscal year incurred.
(18) Accounting Standards Issued but not yet Adopted- “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29, revised on March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, revised on March 31, 2020)- “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, revised on March
31, 2020)(i) Overview
This is a comprehensive accounting standard for revenue recognition.
Specifically, the accounting standard establishes the following
five-step model that will apply to revenue from customers:
Step 1: Identify the contracts with a customer
Step 2: Identify the separate performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the separate performanceobligations
Step 5: Recognize revenue when (or as) the entity satisfies a
performance obligation by transferring good or service(ii) Date of adoption
The Bank expects to adopt the accounting standard andimplementation guidance to the consolidated financial statementsfrom the beginning of the fiscal year beginning on April 1, 2021.
(iii) Effects of the adoption of the accounting standard and guidance
The Bank is evaluating the effect of the adoption of the accounting
standard and implementation guidance on its consolidated financial
statements.

- “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, issued on July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, issued on July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9, issued on July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10, issued on July 4, 2019)- “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, revised on March
31, 2020)(i) Overview
In order to improve the comparability with international accounting
standards, “Accounting Standard for Fair Value Measurement” and“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (“Fair Value Measurement accounting standards, etc.”)
were developed and the guidance on how to measure fair value wasestablished. Fair Value Measurement accounting standards, etc. apply
to the fair value of the following items:
・Financial instruments in the Accounting Standard for Financial
Instruments
・Inventories held for trading purposes under the Accounting Standard
for Measurement of Inventories
In addition, “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” was revised to specify notes such as
breakdown of the fair value of financial instruments by level.
(ii) Date of adoption
The Bank expects to adopt the accounting standards and guidance tothe consolidated financial statements from the beginning of the fiscal
year beginning on April 1, 2021.
(iii) Effects of the adoption of the accounting standards and guidance
The Bank is evaluating the effect of the adoption of the accounting
standards and guidance on its consolidated financial statements.
- “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections” (ASBJ Statement No. 24,
revised on March 31, 2020)(i) Overview
The purpose of this standard is to provide an overview of theprinciples and procedures for accounting measures adopted when therelevant accounting standards, etc. are not clear.
(ii) Date of adoption
The Bank expects to adopt this accounting standard to theconsolidated financial statements from the end of the fiscal year
ending on March 31, 2021.
- “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, issued on March 31, 2020)(i) Overview
The purpose of this standard is to disclose information that
contributes to the understanding of financial statement users
regarding the content of accounting estimates in items where theamount recorded in the financial statements for the current fiscal year
is based on accounting estimates and there is a risk of significant
impact on the financial statements for the following fiscal year.

(ii) Date of adoption
The Bank expects to adopt this accounting standard to theconsolidated financial statements from the end of the fiscal year
ending on March 31, 2021.
3. Trading Assets:
The details of Trading Assets as of March 31, 2020 and 2019 are as
follows:
Millions of
U.S. Dollars
2020

Millions of Yen
2020
2019
Trading AccountSecurities
Trading Bonds-Related
Financial Derivatives
Derivatives of Securities
related to Trading
Transactions
Trading-Related
Financial Derivatives

26,05142,721

239

－

10

－

－

6

－

31,034

31,824285

Other Trading Assets

354,189

174,023

3,258

Total

411,275

248,586

3,783

4. Securities:
The details of Securities as of March 31, 2020 and 2019 are as
follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Japanese Government
4,606,207 4,797,166
42,371
Bonds
Municipal Government
1,425,190 1,087,576
13,110Bonds
Short-Term Corporate
38,01645,015349
Bonds
4,705,432 4,704,289
43,284
Corporate Bonds
Stocks63,277

84,946582

Others5,618,106

5,864,673

51,679Total

16,456,230 16,583,668

151,377

Notes:
1. Stocks include investments in affiliated companies totaling ¥189
million ($1 million) as of March 31, 2020 and 2019.
2. Others include common shares and investment in unconsolidated
subsidiaries totaling ¥8,589 million ($79 million) as of March 31,
2020 and ¥9,181 million as of March 31, 2019. Others also include
preferred shares issued by Shinkin Banks which were contributedin accordance with the Shinkin Bank Management Reinforcement
System. The amount was ¥171,524 million ($1,577 million) as ofMarch 31, 2020 and ¥183,324 million as of March 31, 2019.
Others also include foreign bonds and equities.

37

5. Loans and Bills Discounted:
Loans and Bills Discounted include the following non-performing
loans:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Loans to Bankrupt
75
82
0
Borrowers
Delinquent Loans

3,977

4,351

36

1

36

0

Restructured Loans

19,024

19,871

175

Total

23,07924,341212

Loans Past Due Three
Months or More

The above amounts are the amounts before exclusion of reserves forpossible loan losses.
Loans to Bankrupt Borrowers represent non-accrual loans toborrowers who are legally bankrupt as defined in Article 96,
Paragraph 1, Item 3 (a)-(e) or Item 4 of the “Order for Enforcementof the Corporation Tax Act” (Cabinet Order No. 97 of 1965).
Delinquent Loans represent non-accrual loans other than Loans
to Bankrupt Borrowers and certain Restructured Loans withmoratorium on interest payments.
Loans Past Due Three Months or More represent loans forwhich the principal and interests are past due three months or moreother than Loans to Bankrupt Borrowers and Delinquent Loans.
Restructured Loans represent loans on which contracts weremodified in favor of the borrowers (e.g. the reduction of or exemption
from stated interests, the deferral of interest payments, the extensionof maturity dates, and the renunciation of claims in order to assist or
facilitate the business restructuring of borrowers under financial
difficulties) other than Loans to Bankrupt Borrowers, Delinquent
Loans and Loans Past Due Three Months or More.
Loans include subordinated loans with a lower priority forrepayment of principal and interests than that of other debt claims.
The amount was ¥13,500 million ($124 million) as of March 31, 2020and ¥16,500 million as of March 31, 2019. Of these amounts, ¥2,000
million ($18 million) as of March 31, 2020 and 2019, were provided
to Shinkin Banks in accordance with the Shinkin Bank Management
Reinforcement System.
Bills Discounted are accounted for as financial transactions inaccordance with JICPA Industry Audit Committee Report No. 24,
February 13, 2002 “Accounting and Auditing Treatment of
Accounting Standards for Financial Instruments in Banking Industry”.
The face value of bills of lading amounted to ¥148 million ($1million) as of March 31, 2020 and ¥206 million as of March 31, 2019.
The Bank has the right to freely dispose of, sell or re-hypothecate
such bills.
With respect to loan participation, in accordance with
“Accounting and Presentation of Loan Participation” (JICPA
Accounting Committee Report No. 3, November 28, 2014), theamount of the participation principal is accounted for as a loan to theoriginal debtor, and this amounted to ¥16,584 million ($152 million)
as of March 31, 2020 and ¥18,067 million as of March 31, 2019.

38

6. Commitments to Overdrafts and Loans:
Commitments related to overdrafts and loans represent agreements toextend overdrafts or loans up to a pre-agreed amount at thecustomer’s request as long as there is no violation of the conditions
stipulated in commitment agreements.
The amount of unused loan commitments may not necessarily
have a significant effect on the future cash flows of the Bank because
most of these loan commitments expire without being drawn down.
Most of these agreements have provisions which stipulate that the
Bank may not extend the loan or may decrease the amount ofcommitment when there are certain changes in the financial
conditions, certain issues relating to credit protection and otherreasons. The Bank limits the commitment to an amount not exceeding
the amount of the related customer’s time deposit. The Bank
periodically checks the financial condition of its customers based on
its internal rules and performs certain actions to secure loans orrevises the contracts, as necessary.
The amounts of unused loan commitments are ¥25,176,506
million ($231,593 million) as of March 31, 2020 and ¥25,277,846
million as of March 31, 2019.
The amounts which the Bank could unconditionally cancel at
any time or of which the original contractual maturity is less than one
year are ¥25,046,442 million ($230,396 million) as of March 31,
2020 and ¥25,163,792 million as of March 31, 2019.

7.

Special Contracts for Securities and Cash-Collateralized
Securities Lending and Borrowings:
Securities lending based on non-collateralized special contracts(securities lending and borrowings) are stated as Japanese
Government Bonds in “Securities”. The amount in total was ¥309,494
million ($2,846 million) as of March 31, 2020 and ¥349,299 million
as of March 31, 2019.
Of repurchase agreement and cash-collateralized securities
borrowings, those freely disposable for sale or re-hypothecated, andpledged as collateral amounted to none as of March 31, 2020 and¥538 million as of March 31, 2019. Those held by the Bank without
being disposed of as of March 31, 2020 amounted to ¥22,637 million($208 million) and as of March 31, 2019 amounted to ¥55,630
million.
8.

Tangible Fixed Assets:
Millions of Yen
2020
2019

Accumulated Depreciation
on Tangible Fixed Assets
Accumulated Deferred
Gains on Tangible Fixed
Assets(Deferred Gains recognized
for the fiscal year)

Millions of
U.S. Dollars
2020

93,77993,113

862

1,764

1,764

16

(－)

(－)

(－)

9. Assets Pledged as Collateral and Associated Liabilities:
Assets pledged as collateral for the fiscal years ended March 31, 2020
and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Assets Pledged as Collateral
Trading Assets
Securities
Loans and Bills Discounted
Total

11,956

13,036

109

4,813,193

3,991,073

44,275591,121

1,421,820

5,437

5,416,271

5,425,930

49,823

3,088,500

1,804,700

28,410152,777

2,134

1,784,010

16,451

Liabilities associated with
Assets Pledged as Collateral
Borrowed Money

Payables under Repurchase
232,066
Agreements
Payables under Securities
1,788,395
Lending Transactions

Trading Assets of ¥501 million ($4 million) as of March 31, 2020 and2019 and Securities in the amount of ¥257,071 million ($2,364
million) as of March 31, 2020 and ¥154,011 million as of March 31,
2019, were pledged as collateral for exchange settlement transactions,etc. or as substitute for margin in futures transactions, etc.

Other assets include Guarantee Money, Cash Collateral Pledged
for Financial Instruments, Clearing Margin Deposits for Central
Counterparty, and Cash Collateral Pledged for Repurchase
Agreement. The amounts are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Guarantee Money
Cash Collateral
Pledged for Financial
Instruments
Clearing Margin
Deposits for Central
Counterparty
Cash Collateral
Pledged for
Repurchase
Agreement

353

328

3

348,459

182,652

3,205

700,000

700,000

6,439

500

500

4

10. Trading Liabilities:
The details of Trading Liabilities as of March 31, 2020 and 2019 are
as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Trading Bonds Sold

620

23,597

5

Trading-Related Financial
Derivatives

36,93848,568339

Total

37,55872,165345

39

11. Borrowed Money and Lease Obligations:
Balance as of
Category
April 1, 2019
(Millions of Yen)
1,967,180
Borrowings

Balance as ofMarch 31, 2020
(Millions of Yen)
3,250,980

1,967,180

3,250,980

29,905

0.05

812

285

2

1.82

－

756

567

5

2.46

Jan. 2022May 2026

Borrowed Money
Lease Obligations Due within One
Year
Lease Obligations (Excluding Those
Due within One Year)

Balance as of
Average
March 31, 2020
Interest Rate (%)(Millions of U.S. Dollars)
29,9050.05

Maturity－
July 2020Mar. 2029

Notes:
1. Average interest rates were computed by the weighted average method using the interest rates and the balances at the fiscal year-end.
2. The repayment schedule within 5 years after the balance sheet date is as follows:
Millions of Yen
Over 1 year,
Over 2 years,
Over 3 years,
Over 4 years,
Within 1 year
within 2 years
within 3 years
within 4 years
within 5 years
602,300
646,000
556,400
1,283,800－
Borrowed Money
285
242
144
126
46
Lease Obligations

Within 1 year

Millions of U.S. Dollars
Over 1 year,
Over 2 years,
Over 3 years,
within 2 years
within 3 years
within 4 years

Over 4 years,
within 5 years

5,540
5,942
5,118
11,809－Borrowed Money
2
2
1
1
0
Lease Obligations
3. Borrowed Money includes subordinated borrowings of ¥162,480 million ($1,494 million) as of March 31, 2020 and 2019, respectively.

12. Debentures:
IssuerThe Bank

The Bank

The Bank
Total

Name of Issue

No. 293-364
5-yearInterest-bearing
debentures
No. 2
7-yearInterest-bearing
debentures
No. 2
10-yearInterest-bearing
debentures－

Balance as of Balance as of Balance as ofApril 1,March 31,
March 31,
2019
2020
2020
(Millions of (Millions of (Millions of
Yen)
Yen)
U.S. Dollars)

CouponRate (%)

Collateral

Redemption
Date

Apr. 2014Mar. 2020

2,454,300

2,104,520

19,3590.010.25－

Apr. 2019Mar. 2025

Sep. 25, 2015

10,00010,000

91

0.29

－

Sep. 27, 2022

Sep. 25, 2015

20,00020,000

183

0.52

－

Sep. 26, 2025－

2,484,300

2,134,520

19,634

－

－

－

Note:
The redemption schedule within 5 years after the balance sheet date is as follows:
Millions of Yen
Over 1 year,
Over 2 years,
Over 3 years,
Within 1 year
within 2 years
within 3 years
within 4 years
596,160
475,940
351,690398,230

Over 4 years,
within 5 years
292,500

Millions of U.S. Dollars
Over 2 years,
Over 3 years,
within 3 years
within 4 years
3,235
3,663

Over 4 years,
within 5 years
2,690

Within 1 year
5,483



40

Issuance Date

Over 1 year,
within 2 years
4,378

13. Asset Retirement Obligations:
The disclosure of Asset Retirement Obligations was omitted because
the amount was one-hundredth or less of the total balance of Liabilities
and Net Assets as of April 1, 2019 and as of March 31, 2020.

14. Land Revaluation:
Based on the “Act on the Revaluation of Land” (Act No. 34,
promulgated on March 31, 1998), land used for business was revalued.
Deferred tax on the revaluation of the land was recorded as “Deferred
Tax Liabilities for Land Revaluation” under Liabilities, and unrealized
gain on the revaluation of the land, net of deferred tax, was recorded as“Land Revaluation Excess” under Net Assets.
Date of Revaluation: March 31, 1999
Revaluation method in accordance with Article 3, Paragraph 3 of Act
No. 34: Revaluations were made based on the method, determined by
the Commissioner of the National Tax Administration, which formed
the basis for calculating land value taxes (prescribed by the “Land
Value Tax Law”), as set forth in Article 2, Item 4 of the “Order for
Enforcement of the Act on Revaluation of Land” (Government
Ordinance No. 119, dated March 31, 1998), with appropriate
adjustments.

15. Trusts with Contracts:
The details of principal amounts of trusts with contracts forcompensation of loss of principal for the fiscal years ended March 31,
2020 and 2019 are as follows:
Millions ofU.S.
Dollars
Millions of Yen
2020
2020
2019
Money Trust200
21,831
13,724

16. Fees and Commissions:
The details of Fees and Commissions for the fiscal years ended March
31, 2020 and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Deposit, Fixed Income
787
517
7
Securities and Lending
422
400
3
Exchange Business
9,761
9,505
89
Securities Related Business
2,094
2,128
19
Agency Business
10,54010,705
96
Guarantee Business
19,812
19,691
182
Trustee Business
733
721
6
OthersIncome on Fees and44,151
43,670406
Commissions Businesses
225
221
2
Exchange
1,149
592
10
Agency Loans Business
14,868
14,945136
OthersExpenses on Fees and16,24315,758149
Commissions Businesses

17. Trading Income:The details of Trading Income for the fiscal years ended March 31,
2020 and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
Income from Trading
Account Securities
Income from
Trading-Related Securities
Income from
Trading-Related Financial
Derivatives
Other Trading Income
Total

2019

2020

499

351

4

199

－

1

1,084

3,690

9

218
2,001

36
4,078

2
18

18. Trading Losses:
The details of Trading Losses for the fiscal years ended March 31,
2020 and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
Expenses from
Trading-Related Securities
Total

2019

2020

－

316

－

－

316

－

19. Other Income:The details of Other Income for the fiscal years ended March 31, 2020
and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Gains on Sale of Stocks and
2,203
5,259
20
Other Securities
Reversal of Allowance for Loan
12,727－－
LossesOthers
568
117
5
Total
2,772
18,10425

20. Other Expenses:
The details of Other Expenses for the fiscal years ended March 31,
2020 and 2019 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2020
2019
2020
Losses on Sale of Stocks and
6,701
471
61
Other Securities
Impairment Losses on Fixed
Assets (*)

86

1,567

0

Others

1,099

156

10

Total

7,888

2,195

72



41

(*) Impairment losses on fixed assets:
Each business location such as head office, the assets used in the head office, facilities for employee welfare and branch office are the smallest
unit of asset group. Each consolidated subsidiary is treated as a single unit for the asset grouping.
Certain facilities and other assets are designated to be disposed due to obsolescence or other factors. The carrying amount is reduced to therecoverable amount and the reduction amount is recorded as impairment losses as below. The recoverable amount used for measurement of
impairment losses is the net selling value and this is derived from real estate appraisal value and others.
For the fiscal year ended March 31, 2020
Disclosure of data omitted due to immateriality.
For the fiscal year ended March 31, 2019
Millions ofLocation

Principal Use

Category

Kanagawa Prefecture, and others

EmployeehousingLand and buildings

Yen
1,567

21. Consolidated Statement of Comprehensive Income:For the fiscal years ended March 31, 2020 and 2019
Reclassification adjustment amount and tax effect amount related to Other Comprehensive Income
Millions ofMillions of Yen
2020

U.S. Dollars
2019

2020

Net Unrealized Gains (Losses) on Other Securities:
The Amount Arising during the Period(52,654)

33,048

Reclassification Adjustment Amount(8,095)

368

(484)
(74)

Prior to Tax Effect Adjustment(60,749)

33,416(558)

Tax Effect Amount

16,610(9,542)152

Net Unrealized Gains (Losses) on Other Securities(44,139)

23,874(406)(184,035)(65,666)(1,692)

Deferred Gains or Losses on Hedges:
The Amount Arising during the Period
Reclassification Adjustment Amount

63,23843,022581

Prior to Tax Effect Adjustment(120,797)(22,643)(1,111)Tax Effect Amount33,727

6,315

310

Deferred Gains or Losses on Hedges(87,070)(16,328)(800)

The Amount Arising during the Period

－

－

－

Reclassification Adjustment Amount

－

－

－

Prior to Tax Effect Adjustment－－

Tax Effect Amount

－

－
13

Land Revaluation Excess

－

13

－

The Amount Arising during the Period

145

(534)

1

Reclassification Adjustment Amount

－

－

－

Prior to Tax Effect Adjustment

－

－

－

Tax Effect Amount

－

－

－

Foreign Currency Translation Adjustments

145

(534)

1

Land Revaluation Excess:－Foreign Currency Translation Adjustments:

Remeasurements of Defined Benefit Plans:
The Amount Arising during the Period(1,907)

(609)

(17)

Reclassification Adjustment Amount

1,700

1,802

15

Prior to Tax Effect Adjustment

(206)

1,193

(1)

62

(344)

0

Tax Effect AmountRemeasurements of Defined Benefit Plans
Other Comprehensive Income


42

(144)

848

(1)

(131,209)

7,873(1,206)

22. Changes in Net Assets:(1) Class and Number of Shares Outstanding, and Class and Number of Shares of Treasury Shares
Number of Share Units at
Number of Share Units at
Increase During the Fiscal Decrease During the Fiscal
March 31, 2020
April 1, 2019 (Thousand
Year (Thousand Units)
Year (Thousand Units)(Thousand Units)
Units)
Shares Outstanding
General Common Shares

4,000

－

－

4,000

Specific Common Shares

2,000

－

－

2,000

Preferred Shares (Type-A)

708

－

－

708

6,708

－

－

6,708

General Common Shares

－

－

－

－

Specific Common Shares

－

－

－

－

Preferred Shares (Type-A)

－

－

－

－

－

－

－

－

Total
Treasury Shares

Total(2) Dividends
Dividends paid during the fiscal year ended March 31, 2020
Resolution

Annual General Meeting of
Shareholders, June 19, 2019

Class of ShareTotal Dividend
Amount (Million Yen)

Amount Per Share(Yen)

Record Date

Effective Date

GeneralCommon Shares

12,0003,000

March 31, 2019

June 19, 2019

Specific
Common Shares

3,000

1,500

March 31, 2019

June 19, 2019

Preferred Shares(Type-A)

4,603

6,500

March 31, 2019

June 19, 2019

Among the dividends whose record date falls within the fiscal year ended March 31, 2020, those whose effective date will fall within thefollowing fiscal year:
Resolution

Annual General Meeting of
Shareholders, June 24, 2020

Class of ShareTotal Dividend
Amount (Million Yen)

Resource ofDividends

Amount Per Share(Yen)

Record Date

Effective Date

GeneralCommon Shares

12,000Retained Earnings

3,000

March 31, 2020 June 24, 2020

Specific
Common Shares

3,000

Retained Earnings

1,500

March 31, 2020 June 24, 2020

Preferred Shares(Type-A)

4,603

Retained Earnings

6,500

March 31, 2020 June 24, 2020

43

23. Income Taxes:(1) Breakdown of Deferred Tax Assets and Liabilities is as follows:
Millions ofMillions of Yen
U.S. Dollars
2020

2019

2020

Depreciation

2,891

2,949

26

Reserve for Possible Loan
Losses

1,479

1,701

13

Net Defined Benefit Liability

12,874

12,257

118

Write-Downs for Securities

1,819

1,458

16

59,53625,809

547

112

－

1

Others

4,476

4,105

41

Valuation Allowances(3,839)(3,212)(35)

Total Deferred Tax Assets

79,35145,070729

Net Unrealized Gains on Other(108,312) (124,809)
Securities(996)

Deferred Tax Assets:

Deferred Gains or Losses on
HedgesNet Unrealized Gains on Other
Securities

Deferred Tax Liabilities:

Others

(415)

(445)

(3)

Total Deferred Tax Liabilities(108,728) (125,254)(1,000)Net Deferred Tax Liabilities(29,376)(80,184)(270)(2) Reconciliation between the effective statutory tax rate and theactual effective tax rate for the fiscal years ended March 31, 2020 and
2019:
2020
2019
Statutory effective tax rate

－ %27.92 %

Change in Valuation Allowances－ %0.00 %

Dividends received, not taxable－ %(1.01 %)

Others－ %(0.63 %)

Actual effective income tax rate after
the application of tax effect accounting－ %26.28 %

(Adjustments)

Note:
In the fiscal year ended March 31, 2020, since the difference between
the statutory effective tax rate and the actual effective income tax rate
after the application of tax effect accounting was less than 5% of thestatutory effective tax rate, notes on this are omitted.



44

24. Retirement Benefit Plans:(1) Retirement Benefit Scheme
The Bank and some of its consolidated domestic subsidiaries have adefined benefit plan that offers lump-sum payments upon retirement
and contributes to the Employees’ Pension Fund for all shinkin banks
nationwide.
With regard to notes related to employees’ retirement benefits
based on a multiple-employer plan, they are included in notes related
to employees’ retirement benefits based on a defined benefit plan.
(2) Defined Benefit Plan as of March 31, 2020 and 2019 is asfollows:(i) Reconciliation of beginning- and end-of-period balance ofRetirement Benefit Obligation
Millions ofMillions of Yen
U.S. Dollars
2020

2019

Retirement Benefit
Obligation at Beginningof Period

65,32564,366600

Service Cost

2,990

2,972

27

Interest Cost

251

247

2

Actuarial Difference
Incurred

(73)

(478)

(0)

(1,530)(1,781)(14)

Prior Service Cost

－

－

－

Other

－

－

－

66,96365,325615

Retirement Benefits Paid

Retirement Benefit
Obligation at End of
Period2020

(ii) Reconciliation of beginning- and end-of-period balance ofPension Plan Assets
Millions ofMillions of Yen
U.S. Dollars
Balance of Pension Plan
Assets at Beginning of
PeriodExpected Return on
Pension Plan Assets
Actuarial Difference
IncurredContributions by the
Employer and Employees
Retirement Benefits Paid

2020

2019

22,91922,841

210

916

685

8

(1,980)(1,088)

(18)

1,532

1,499

(964)

2019

2020

Service Cost

2,990

2,972

27

Interest Cost

251

247

2

(685)

(8)

1,700

1,802

15

－

－

－

14

Other

(563)

(556)

(5)

(1,018)

(8)

3,461

3,780

31

－

－

－

Retirement Benefit
Expenses Related toDefined Benefit Plan

22,423

22,919

206

2020

2019

Funded Plan Retirement
Benefit Obligation

55,19853,866507

Pension Plan Assets(22,423)(22,919)

32,775
11,76444,5392020

Note:
Other includes the employee contribution amount to the Employees’
Pension Fund.
(v) Remeasurements of Defined Benefit Plan
Remeasurements of Defined Benefit Plan (before tax effects)
comprise the following.
Millions ofMillions of Yen
U.S. Dollars
2020

2019

2020

Prior Service Cost

－

－

－

(206)

Actuarial Differences

(206)

1,193

(1)

30,946

301

Other

－

－

－

11,459

108

Total

(206)

1,193

(1)

42,406409

Millions of
U.S. Dollars

Millions of Yen
2020

2019

44,53942,406409

Net Defined Benefit Asset

－

－

－

Net Amount of Liabilities
and Assets Presented on
the Consolidated Balance
Sheet44,53942,406409

Net Defined Benefit
Liability

2020

(916)

(iii) Reconciliation of end-of-period balance of Retirement Benefit
Obligation and Pension Plan Assets with Net Defined Benefit
Liability and Net Defined Benefit Asset presented on the consolidatedbalance sheet
Millions ofMillions of Yen
U.S. Dollars

Unfunded Plan Retirement
Benefit Obligation
Net Amount of Liabilities
and Assets Presented on
the Consolidated Balance
Sheet

Millions of
U.S. Dollars

Millions of Yen

Expected Return on
Pension Plan Assets
Amortization ofActuarial Differences
Amortization of Prior
Service Cost

Other
Balance of Pension Plan
Assets at End of Period

2020(iv) Breakdown of Retirement Benefit Expense

2020(vi) Accumulated Remeasurements of Defined Benefit Plan
Accumulated Remeasurements of Defined Benefit Plan (before tax
effects) comprise the following.
Millions ofMillions of Yen
U.S. Dollars
2020
UnrecognizedPrior Service Cost
Unrecognized
Actuarial Differences

2019

2020

－

－

－

10,686

10,479

98

Other

－

－

－

Total

10,686

10,47998



45

(vii) Pension Plan Assets(a) The ratios by main asset categories in total pension plan assets are
as follows:
2020
2019
Bonds

66 %

63 %

Stocks22 %27 %Cash and Deposits

9%

7%

Other

3%

3%

Total

100 %

100 %

(b) Method for setting the Expected Long-Term Rate of Return
To set the Expected Long-Term Rate of Return on Pension Plan
Assets, the Bank takes into account past return performance and thecurrent and future expected rate of return on the diverse range ofassets that makes up the pension assets.
(viii) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2020 and2019 are as follows:

Discount Rate
Expected Long-Term Rate of
Return on Pension Plan Assets
Estimated Rate of Salary
Increase

2020

2019

0.0～0.6 %0.0～0.6 %

4.0 %

3.0 %

0.0～7.4 %0.0～7.4 %25. Leases:
1. Finance Leases(1) Finance leases that do not transfer ownership(i) Outline of lease assets(a) Tangible fixed assets
Hardware related to computer equipment(b) Intangible fixed assets
Software related to computer equipment(ii) Lease asset depreciation method
Depreciation method is described in the “Significant Accounting
Policies”.
(2) Finance leases that do not transfer ownership and are accounted
for in accordance with the ordinary lease transaction method
Disclosure of data omitted due to immateriality.
2. Operating Leases
Future lease payments related to non-cancelable operating leases:
Disclosure of data omitted due to immateriality.



46

26. Financial Instruments:
1. Matters concerning financial instruments(1) Policies on financial instruments
Shinkin Central Bank Group (the “Group”) works to ensure the stable
funding through the acceptance of deposits mainly from its Shinkin
Bank members and through the issuance of debentures. Additionally,
the Group takes steps to diversify its funding methods by procuring
funds from short-term money markets depending on market
conditions.
Procured funds are invested in short-term money market
instruments, marketable securities, and loans.
Moreover, the Group uses derivative transactions for the
purpose of risk-hedging in ALM (asset liability management)
activities and engages in short-term trading of securities andderivatives.
To appropriately manage the various risks that result from thesefinancial instruments, the Group engages in ALM activities including
the above-mentioned derivative transactions. For its trading activities,
the Group establishes risk limit and loss cut limits amounts andengages in transactions within the scopes of these risk limits, as a way
to maintain a financial soundness and to ensure stable earnings.
(2) Types and related risks of financial instruments
Financial assets held by the Group consist mainly of short-term funds,
securities, and loans assets.
Short-term funds are invested in the call loan.
These investments are exposed to the counterparty credit risk,
and market risks such as interest rate risk and foreign currency
exchange risk.
Securities portfolios of the Group consist of domestic securities
including Japanese government bonds (JGBs), corporate bonds andother bonds as well as foreign securities such as government bonds,
government-guaranteed bonds, and agency bonds issued in the majorindustrialized countries. The Group also invests in equity securities
and investment funds to diversify its portfolio.
These investments are exposed to the individual issuers’ credit
risk as well as market risks such as interest rate risk, price fluctuation
risk, and foreign currency exchange risk, and market liquidity risk.
Loans assets consist of direct loans to low-risk borrowers
including Shinkin Banks, central and local governments, public
service corporations, good standing domestic and overseas companies,
and agency loans provided through Shinkin Banks.
These loans are exposed to counterparty credit risk, and market
risks such as interest rate risk and foreign currency exchange risk.
Meanwhile, financial liabilities of the Group consist mainly of
deposits and debentures.
Deposits include current deposits, ordinary deposits, deposits at
notice, term deposits, and foreign currency-denominated deposits,
most of which are deposits from Shinkin Bank members.
These deposits are exposed to market risks such as interest raterisk and foreign currency exchange risk, and liquidity risk.
As a debenture issuer, the Group issues interest-bearing
debentures.
These debentures are exposed to interest rate risk and liquidity
risk.
Furthermore, the Group engages in derivative transactions.
Specifically, the Group trades interest rate derivatives (interest
swaps, interest futures, and interest options), currency derivatives

(foreign currency forwards and currency swaps) and bond derivatives(bond futures and bond futures options).
These transactions are exposed to counterparty credit risk, andmarket risks such as interest rate risk and foreign currency exchangerisk.
The Bank hedges market risks of its financial assets andliabilities through ALM activities.
The Group partially avoids exposure to market risks by
mitigating (i) interest rate risk through interest rate swaps and(ii) foreign currency exchange risk of foreign currency-denominatedassets through foreign currency-denominated funding, currency
swaps, and forex swaps.
Hedge accounting is applied to risk hedging through ALM
activities including the use of derivatives. With regard to hedge
accounting, hedging instruments, hedged items, hedging policies, andmethods of hedge effectiveness assessment, etc. are described in the“Significant Accounting Policies”.
(3) Risk management frameworks of financial instruments
In the basic risk management policy, the Bank divides risks into“risks to be minimized” and “risks to be controlled”. Credit risks,market risks and liquidity risks are classified into latter category.
Risks of both categories are managed by risk management divisions
that are independent of the client service divisions. The Risk
Management Division comprehensively manages these risks.
<Integrated risk management>
For the integrated management of risks, the Bank has introduced
integrated risk management for quantifiable risks. Integrated risk
management is a risk management method of measuring various risks
using a uniform risk measure such as Value at Risk (VaR),
aggregating the measurements, and comparing the aggregatedamounts with the Bank’s capital. The Bank measures credit risks andmarket risks using VaR methodology, and monitors them on a daily
basis to prevent risk limits from being breached.
These risk limits are reviewed each fiscal year by the Risk
Management Committee and determined at the Executive Committee.
The risk exposures are measured weekly by the Risk Management
Division, which takes steps to prevent any of the various risk limits
from being breached, and through the Risk Management Committee,
reports regularly to the management and relevant divisions.
The risk exposures at consolidated subsidiaries are aggregatedand managed through the integrated risk management framework.
(i) Credit risk management
For the accurate identification and strict management of credit risk,
the Bank has established credit risk management policies. Moreover,the Bank has created a structure in which divisions responsible for
credit control, credit management and credit assessment are clearly
segregated from divisions involved in client services, with mutuallyindependent tasks to ensure effective internal checking functions.
The Bank established the Credit Committee and the Risk
Management Committee, comprised of senior management and headsof divisions related to credit risk, as bodies to deliberate and makedecisions on matters relating to credit risk management. The Credit
Committee deliberates on credit transactions that exceed the credit
limit, while the Risk Management Committee deliberates on theestablishment and the review of policies regarding credit management.
The Executive Committee deliberates and makes decisions on mattersrelated to asset self-assessments including the results of asset
self-assessments, asset write-offs and asset reserve provisions.
Divisions responsible for credit control manage the credit riskfor each borrower relating to loans and market trading activities. An
overall credit limit is set for each borrower according to the credit
rating of the borrower. These divisions analyze the Bank’s overall
credit portfolio according to credit rating, industry, country and othercriteria. These analyses are used to monitor the diversification of
credit risk as well as changes in portfolio credit risk. Additionally,
divisions responsible for credit control quantify credit risk in VaR
methodology using Monte Carlo simulation methods and manage
credit risks based on the limits set at the Executive Committee.
Divisions responsible for credit management accurately monitor
each borrower’s financial condition, the purposes for which funds areused and repayment resources. In addition to appropriate assessment
and post-transaction management, these divisions continually check
whether the client service divisions are conducting appropriate credit
control, and provide guidance as necessary.
Divisions responsible for credit assessment undertake andmanage operations relating to asset self-assessments, and thecalculation of asset write-offs and asset reserve provisions.
Credit risks of consolidated subsidiaries are added to the credit
risk of the Bank by each borrower and monitored.
(ii) Market risk management
To maintain an accurate understanding of market risk and rigorously
manage this risk, the Bank has issued a market risk management
policy. Furthermore, divisions responsible for market risk
management are clearly separated from divisions involved in market
operations, providing a risk management structure in which internal
checks are maintained through independent functions.
The Bank has established the ALM Committee as the body
responsible for deliberating and making decisions on matters relating
to market risk management. The ALM Committee is comprised ofsenior management and heads of divisions related to market risk.
Based on risk status information—obtained via reports from divisions
responsible for market risk management and other sources—the ALM
Committee deliberates broadly and in a timely manner ALM related
policies and market transactions including the Bank’s fund-raisingand management as well as the usage of hedging transactions
involving derivatives such as interest rate swaps.
Divisions responsible for market risk management quantify andmanage market risk mainly by VaR within the limit set by the
Executive Committee. In addition, market risk is classified into
several categories, and the amount of risk for each category ismonitored. Market risk management at the Bank not only uses VaR
methodology but takes multi-faceted approaches, that is, monitoring
sensitivity to change in individual risk factors such as the basis pointvalue (BPV: the amount of the change in a portfolio’s market value
from a specific change in the interest rate), stress loss amounts from
unexpected market changes, and appraisal losses from financial
instruments. For stress loss amounts, in particular, a supplementary
framework has been incorporated into the integrated risk management,in addition to the above monitoring system. In this way, market risks
including those that cannot be captured through VaR methods alone
are managed.
Moreover, for trading operations, clear regulations are in placeconcerning the trading instruments and trading management methods,47

enabling appropriate trading operations by setting specific loss cut
limits.
Market risks of consolidated subsidiaries are not directly added
to the values of market risk of the Bank but are managed separately
under integrated risk management.
<Quantitative information on market risk>(a) Financial instruments held for trading purposes
The Bank uses VaR analysis for quantifying market risk of trading
securities held within securities and interest-rate andforeign-exchange instruments held for trading purposes withinderivative transactions. The VaR model is based on the delta method
and uses a 99.0% confidence interval, a holding period of fivebusiness days and an observation period of one year. In addition, withregard to market risk related to trading operations at consolidated
subsidiaries, which is managed separately within the integrated risk
management framework, the Bank uses a market risk-equivalentamount under the regulations on banks’ capital ratio.
The market risk amount (estimated loss amount) of the Bank’s
trading operations was ¥122 million ($1 million) as of March 31,
2020 and ¥67 million as of March 31, 2019, and the market risk
amount (estimated loss amount) of the trading operations of theBank’s consolidated subsidiaries was ¥964 million ($8 million) as ofMarch 31, 2020 and ¥922 million as of March 31, 2019.
The Bank conducts back testing to compare VaR calculatedusing the model with actual losses. Since the actual losses exceeded
the VaR five times as the results of back testing covering the fiscal
year ended March 31, 2020, the Bank made adjustments to the VaR
measures as appropriate. It should be noted that VaR measures themarket risks at certain probability levels statistically calculated basedon historical market fluctuation. Hence, there may be cases where
market risk cannot be captured in situations where market conditions
change unprecedentedly.
(b) Financial instruments other than those held for trading purposes
The Bank uses VaR analysis for quantifying market risk of due frombanks, securities not held for trading purposes, loans and bills
discounted, deposits, debentures, payables under securities lendingtransactions and, within derivative transactions, interest-rate andforeign-exchange instruments not held for trading purposes. The VaRmodel is based on the delta method and uses a 99.0% confidence
interval, a holding period of one year and an observation period offive years. In addition, with regard to market risk at consolidated
subsidiaries related to operations other than trading operations, which
is managed separately within the integrated risk management
framework, such risk is calculated in accordance with methods usedby the Bank.



48

The Group’s market risk amount (estimated loss amount) otherthan for trading purposes was ¥485,863 million ($4,469 million) as ofMarch 31, 2020 and ¥327,326 million as of March 31, 2019. The
Bank conducts back testing to compare VaR calculated using themodel with actual losses, and believes that the measurement model it
uses has an adequate level of accuracy to capture market risk.
However, it should be noted that VaR measures the market risks atcertain probability levels statistically calculated based on historicalmarket fluctuation. Hence, there may be cases where market risk
cannot be captured in situations where market conditions change
unprecedentedly.
(iii) Liquidity risk management related to fund-raising
For the accurate identification and strict management of liquidity risk,
the Bank has established liquidity risk management policies.
Divisions responsible for liquidity risk management are clearly
separated from divisions involved in cash management and market
operations, allowing internal checks to be maintained through theindependent functions. In addition, the ALM Committee deliberates
and makes decisions on matters relating to liquidity risk management.
Methods used for managing liquidity risk include the setting
and daily monitoring of risk limit amounts relating to the gap between
cash receipts and payments. This is carried out for individual
currencies and periods. In the event that a significant liquidity riskarises, the Bank has preparations to respond rapidly, including thesecuring of funding sources.
The liquidity risk management frameworks created by the Bank
include subsidiaries as well, by providing overdraft facilities forconsolidated subsidiaries with operations involving fund movements
in relatively large amounts.
(4) Supplementary explanation concerning the fair values of financial
instruments
Fair values of financial instruments, in addition to values based onmarket prices, also include values based on reasonable estimates ifmarket prices are unavailable. Since value estimates are predicated on
certain assumptions, values may vary if the underlying assumptions
change.

2. Fair value of financial instruments (and other information)
Carrying values stated on the consolidated balance sheet, fair value and differences between them are as follows. Unlisted stocks and similar
items with significant difficulty in determining fair value are not included in the table below. (See Note 2.)
Immaterial items have been omitted.
As of March 31, 2020
Millions of Yen
Carrying Value

Fair Value

Difference(1) Cash and Due from Banks

13,532,061

13,532,061－(2) Bills Bought and Call Loans

107,166

107,166－(3) Receivables under Resale Agreements

20,725

20,725－(4) Receivables under Securities Borrowing Transactions

1,430

1,430

－

222,169

222,175

6

Trading Securities

380,241

380,241－(7) Money Held in Trust

103,727

103,727－

451,414

520,433

69,01915,807,598

15,807,598－

8,441,191

8,504,756

63,565

Total Assets

39,067,727

39,200,317

132,590(1) Deposits

31,173,847

31,174,578

731(2) Debentures

2,134,520

2,134,462

(57)

620

620

－

(5) Monetary Claims Bought (*1)
(6) Trading Assets(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

8,468,123(26,932)(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money

3,250,980

3,257,310

6,330(5) Bills Sold and Call Money46,191

46,191－(6) Payables under Repurchase Agreements

232,066

232,066－(7) Payables under Securities Lending Transactions

1,788,395

1,788,395－

Total Liabilities

38,626,620

38,633,625

7,004(3,817)(3,817)－(205,586)(274,810)(69,224)(209,404)(278,628)(69,224)

Derivatives (*2)
To which Hedge Accounting is not applied
To which Hedge Accounting is applied
Total Derivatives

49Millions of U.S. Dollars
Carrying Value(1) Cash and Due from BanksFair Value

Difference

124,478

124,478－(2) Bills Bought and Call Loans

985

985

－

(3) Receivables under Resale Agreements

190

190

－

(4) Receivables under Securities Borrowing Transactions

13

13

－

2,043

2,043

0

Trading Securities

3,497

3,497

－

(7) Money Held in Trust

954

954

－

4,152

4,787

634

145,410

145,410－

78,233584(5) Monetary Claims Bought (*1)
(6) Trading Assets(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

77,896(247)
77,648

Total Assets

359,375

360,595

1,219(1) Deposits

286,761

286,7686(2) Debentures

19,634

19,634

(0)

5

5

－

29,90529,963

58

424

424

－

(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money(5) Bills Sold and Call Money(6) Payables under Repurchase Agreements

2,134

2,134

－

(7) Payables under Securities Lending Transactions

16,451

16,451－

Total Liabilities

355,318

355,382

64

(35)

(35)

－

(1,891)(2,527)(636)(1,926)(2,563)(636)

Derivatives (*2)
To which Hedge Accounting is not applied
To which Hedge Accounting is applied
Total Derivatives*1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Claims Bought are immaterial and have therefore been deducted directly from the carrying value.
*2. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are shown as a single amount.
For net claims and obligations derived from derivative transactions, net amounts are stated. Sums that represent net obligations areshown in parenthesis.

50As of March 31, 2019
Millions of Yen
Carrying Value

Fair Value

Difference(1) Cash and Due from Banks

13,346,876

13,346,889

12(2) Bills Bought and Call Loans

765,887

765,887－(3) Receivables under Resale Agreements

39,99939,999－(4) Receivables under Securities Borrowing Transactions

23,22923,229－(5) Monetary Claims Bought (*1)

221,725

221,732

7

Trading Securities

216,744

216,744－(7) Money Held in Trust

150,317150,317－546,171627,223

81,051

15,829,599

15,829,599－

7,011,721

7,059,621

47,899Total Assets

38,152,272

38,281,243

128,971(1) Deposits

30,941,297

30,942,413

1,116(2) Debentures

2,484,300

2,489,550

5,250

23,597

23,597－

1,967,180

1,975,337

8,157

37,87837,878－(6) Trading Assets(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

7,038,785(27,064)(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money(5) Bills Sold and Call Money(6) Payables under Repurchase Agreements

152,777

152,777－(7) Payables under Securities Lending Transactions

1,784,546

1,784,546－

Total Liabilities

37,391,577

37,406,102

14,524

To which Hedge Accounting is not applied(2,811)(2,811)－

To which Hedge Accounting is applied(94,109)(168,543)(74,433)(96,920)(171,354)(74,433)

Derivatives (*2)

Total Derivatives*1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Claims Bought are immaterial and have therefore been deducted directly from the carrying value.
*2. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are shown as a single amount.
For net claims and obligations derived from derivative transactions, net amounts are stated. Sums that represent net obligations areshown in parenthesis.
Note 1: Calculation method of fair value for financial instruments
Assets(1) Cash and Due from Banks
For deposits that do not mature and have maturities with variable-interest-rates, since fair value approximates carrying value, carrying value isused as fair value. For deposits that have maturities with fixed-interest-rate, present value is calculated by discounting future cash flows using the
expected interest rate that would be applied to new deposits. For term deposits with short maturities, since fair value approximates carrying value,
carrying value is used as fair value.
(2) Bills Bought and Call Loans, (3) Receivables under Resale Agreements and (4) Receivables under Securities Borrowing Transactions
Since contract durations are short-term and fair value approximates carrying value, carrying value is used as fair value.
(5) Monetary Claims Bought
Monetary Claims Bought is stated at amounts obtained from brokers, etc.

51

(6) Trading Assets
Securities including bonds held for trading are stated at market prices, etc.
(7) Money Held in Trust
Securities managed as trust assets of money held in trust whose main purpose is securities investment are valued at the prices quoted by theexchanges in the case of listed equity shares and at market prices in the case of bonds.
Note concerning securities categorized by holding purpose is stated in “Fair Value of Securities and Money Held in Trust”.
(8) Securities
Stocks are valued at the price quoted by the exchanges. Investment trusts are valued at the announced standard price. Bonds are valued at thequoted market prices or price calculated on the basis of rational estimation, etc.
Note concerning securities categorized by holding purpose is stated in “Fair Value of Securities and Money Held in Trust”.
(9) Loans and Bills Discounted
For floating rate loans, since market interest rates are reflected in fair value in short term and fair value approximates carrying value unless theborrower’s credit standing after the lending undergoes significant change, carrying value is used as fair value. For fixed rate loans, categorized bytype of loan and internal credit rating, fair value is determined by discounting loans to present value using the interest rate that would conceivably
be applied in case of a newly made loan of the same principal and interest total. For loans with short contractual maturities, since fair value
approximates carrying value, carrying value is used as fair value.
With regard to loans to Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably Bankrupt Borrowers, the Bank estimates loan
loss based on the present value of estimated future cash flows or the estimated recoverable value from collateral and guarantees. Since fair value
therefore approximates the total loan value on the consolidated balance sheet at the closing date less the total recorded value of the reserve forpossible loan losses, this value is used for fair value.
Liabilities(1) Deposits
For demand deposits, the amount payable upon demand on the balance sheet date (carrying value) is used as fair value. For term deposits, fairvalue is calculated by discounting future cash flows to present value. The discount rate is the interest rate that would be applicable to newly taken
deposits. For term deposits with short contractual maturities and term deposits with variable interest rates, since fair value approximates carrying
value, carrying value is used as fair value.
(2) Debentures
For debentures issued by the Bank, market prices are used as fair value.
(3) Trading Liabilities
For trading bonds sold, market prices, etc. are used as fair value.
(4) Borrowed Money
For borrowed money, categorized by types of loans, fair value is calculated by discounting borrowed money to present value using the interest
rate that would conceivably be applied in case of a newly made loan of the same principal and interest total.
In instances with short contractual maturities, since fair value approximates carrying value, the carrying value is used as fair value.
(5) Bills Sold and Call Money, (6) Payables under Repurchase Agreements, and (7) Payables under Securities Lending Transactions
Since contract durations are short term and fair value approximates carrying value, carrying value is used as fair value.
Derivative Transactions
With regard to derivative transactions, these are noted in “Derivatives”.
Note 2: The following financial instruments have significant difficulty in determining fair value and are not included in fair value
information of financial instruments.
Millions of Yen
Category
Unlisted stocks, etc. (*1)

2020

Millions of U.S. Dollars
2020

2019
177,796

190,498

1,635

Investment in investment partnerships (*2)

19,42017,398

178

Total

197,217

207,897

1,814*1. Unlisted stocks, etc. mean unlisted common shares and preferred shares held by the Bank. Since unlisted stocks, etc. have no market prices
and therefore have significant difficulty in determining fair value, unlisted stocks, etc. are not included in fair value disclosure information.
*2 Investment in investment partnerships is not included in fair value disclosure information given that investment partnership assets include
items such as unlisted stocks, etc., which have significant difficulty in determining fair value.



52Note 3: Amounts of monetary claims and securities with maturities scheduled for redemption after the consolidated balance sheet date
As of March 31, 2020
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

13,431,526
107,166
20,72568,871－－

20,871
－
－

－
－
－

－
－
－

－
－
－

1,430

－

－

－

－

－

43,845

3,026

38,82718,18816,404

101,745

717
－
－
－
－
2,306,666
812,800
89,31438,0001,031,921
4,162,113

9,103
7,000
－
－
－
4,188,256
1,531,000
442,188
－
1,845,795
1,611,877

41,80840,000－－－2,091,337
333,500
421,858－
1,081,048
1,157,384

130,071130,000－－－
1,069,332
160,000
259,517－
360,019605,173

265,000
265,000－－－
1,249,617
330,000
198,220－
140,960
724,631－－－－－
1,719,261
879,000－－
201,404
205,137

Total

20,074,192

5,881,134

3,350,228

1,822,766

2,255,653

2,026,144

Millions of U.S. Dollars

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions

Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

123,553
985
190

633
－
－

191
－
－

－
－
－

－
－
－

－
－
－

13

－

－

－

－

－

Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

403

27

357

167

150

935

6
－
－
－
－
21,218
7,476
821
349
9,492
38,28683
64－－－
38,526
14,083
4,067－
16,97914,827

384
367
－
－
－
19,237
3,067
3,880
－
9,944
10,646

1,196
1,195
－
－
－
9,836
1,471
2,387
－
3,311
5,566

2,437
2,437
－
－
－
11,494
3,035
1,823
－
1,296
6,665

－
－
－
－
－
15,815
8,085
－
－
1,852
1,887

Total

184,658

54,09930,818

16,767

20,74918,638*1. Current deposits, ordinary deposits, deposits at notice, and transfer deposits, included in “Due from Banks”, are stated under amounts
redeemable “Within 1 year”.
*2. The loans of ¥1,883 million ($17 million) which obligor categories are Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably
Bankrupt Borrowers and which amounts of redemption cannot be foreseen are not included in Loans and Bills Discounted.

53

As of March 31, 2019
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

13,156,294
765,887
39,999128,328－－

35,192
－
－

－
－
－

－
－
－

－
－
－

23,229

－

－

－

－

－

28,48817,52538,00815,98016,161

104,934

90,56990,000－－－1,731,264
713,900
77,19145,000675,2023,040,462

5,993
－
－
－
－
4,232,172
1,658,800
280,379－
1,782,122
1,449,739

8,996
7,000
－
－
－
2,856,155
856,500
324,865－
1,269,512
1,110,219

70,54270,000－－－1,256,941
272,000
276,783－
569,349
536,787

230,000
230,000－－－
1,217,951
160,000
112,464－
188,656
686,409

135,000
135,000－－－
1,131,576
419,000－－
151,246
213,302

Total

18,876,197

5,833,758

4,048,572

1,880,251

2,150,522

1,584,813*1. Current deposits, ordinary deposits, deposits at notice, and transfer deposits, included in “Due from Banks”, are stated under amounts
redeemable “Within 1 year”.
*2. The loans of ¥2,085 million which obligor categories are Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably Bankrupt
Borrowers and which amounts of redemption cannot be foreseen are not included in Loans and Bills Discounted.

54Note 4: Amounts of deposits, debentures and other interest bearing debt scheduled for repayment after the balance sheet date
As of March 31, 2020
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Deposits (*)

22,842,675

8,027,211

76,63837,307

189,015

1,000

Debentures

596,160

827,630

690,730

20,000－－Borrowed Money602,300

1,202,400

1,283,800－

162,480－

Bills Sold and Call Money46,191

－

－

－

－

－

Payables under Repurchase Agreements

232,066

－

－

－

－

－

Payables under Securities Lending
Transactions

1,788,395

－

－

－

－

－

Total

26,107,788

10,057,241

2,051,168

57,307351,495

1,000

Millions of U.S. Dollars
Within 1 year

Over 1 year,
within 3 years

Deposits (*)

210,124

Debentures

5,483

Borrowed Money
Bills Sold and Call Money

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years Over 10 years

73,840

704

343

1,738

9

7,613

6,353

183

－

－

5,540

11,06011,809

－

1,494

－

424

－

－

－

－

－

Payables under Repurchase Agreements

2,134

－

－

－

－

－

Payables under Securities Lending
Transactions

16,451

－

－

－

－

－

Total
240,159
92,514
18,868* Demand deposits, included in “Deposits”, are stated under amounts payable “Within 1 year”.

527

3,233

9

As of March 31, 2019
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Deposits (*)

24,216,923

5,405,506

135,447

25,165

1,158,255－

Debentures

637,930

1,074,790

751,580

20,000－－Borrowed Money

134,300

1,114,000

556,400－

162,480－

Bills Sold and Call Money37,878

－

－

－

－

－

Payables under Repurchase Agreements

152,777

－

－

－

－

－

1,784,546

－

－

－

－

－

Total
26,964,355
7,594,296
1,443,427* Demand deposits, included in “Deposits”, are stated under amounts payable “Within 1 year”.

45,165

1,320,735－

Payables under Securities Lending
Transactions



55

27. Fair Value of Securities and Money Held in Trust:
1. Securities
The following tables contain information relating to Securities, Trading Assets (trading account securities and short-term corporate bonds), Cashand Due from Banks (negotiable certificates of deposit) and Monetary Claims Bought (beneficiary rights) in the consolidated balance sheet.
(1) Trading Securities

Millions of Yen

Net Unrealized Gains (Losses)
Recognized as Income

2020
188

Millions of U.S. Dollars
2020

2019
412

1

(2) Held-to-Maturity Debt Securities
As of March 31, 2020
Millions of Yen

446,559－－－
4,491
451,051
－
－
－
－
363
363

515,464－－－
4,607
520,071
－
－
－
－
361
361

Unrealized
Gains (Losses)
68,904－－－115
69,020
－
－
－
－
(1)
(1)

451,414

520,433

69,019Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

Fair Value

Millions of U.S. Dollars
Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total



56

4,107
－
－
－
41
4,149
－
－
－
－
3
3
4,152

Fair Value
4,741
－
－
－
42
4,784
－
－
－
－
3
3
4,787

Unrealized
Gains (Losses)
633
－
－
－
1
634
－
－
－
－
(0)
(0)
634

As of March 31, 2019
Millions of Yen

537,259－－－
7,527
544,787
－
－
－
－
1,384
1,384

618,076－－－
7,786
625,862
－
－
－
－
1,361
1,361

Unrealized
Gains (Losses)
80,816－－－
258
81,074
－
－
－
－
(22)
(22)

546,171627,223

81,051

Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

Fair Value(3) Other Securities
As of March 31, 2020
Millions of Yen
Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

45,693
7,197,865
3,478,205
795,405
38,0162,886,238
3,749,648
10,993,207
11,3143,130,421
681,442629,785－
1,819,193
1,906,298
5,048,033
16,041,241

Acquisition Cost
19,472
7,077,397
3,382,735
791,00237,9982,865,660
3,422,636
10,519,506
14,192
3,146,777694,647
630,409－
1,821,721
1,966,749
5,127,719
15,647,225

Unrealized
Gains (Losses)
26,220120,468
95,4694,402
18
20,577
327,012473,701(2,878)(16,356)(13,205)(623)－(2,527)(60,451)(79,686)
394,015



57

Millions of U.S. Dollars

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others420
66,211
31,995
7,316
349
26,54934,492

179
65,103
31,117
7,276
349
26,36031,484

Unrealized
Gains (Losses)
241
1,108
878
40
0
189
3,008

Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

101,124
104
28,796
6,268
5,793
－
16,734
17,53546,435
147,559

96,766130
28,946
6,389
5,798
－
16,75718,091
47,168143,935

4,357
(26)
(150)
(121)
(5)
－
(23)
(556)
(733)
3,624

Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Acquisition Cost

As of March 31, 2019
Millions of Yen
Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
OthersTotal
Total(4) Held-to-Maturity Debt Securities Sold during the Fiscal Year
Not applicable.



58

72,434
8,919,357
4,144,366
988,868
45,015
3,741,106
4,341,116
13,332,908
5,341
1,177,430
115,540
98,707－963,182
1,548,126
2,730,898
16,063,807

Acquisition Cost
27,6298,723,559
3,989,590
982,604
44,996
3,706,368
4,096,590
12,847,778
5,439
1,178,563
116,279
98,745－963,538
1,583,875
2,767,879
15,615,658

Unrealized
Gains (Losses)
44,804
195,798
154,776
6,263
19
34,738244,526
485,129(98)(1,133)
(739)
(38)
－
(355)
(35,749)(36,980)
448,149

(5) Other Securities Sold during the Fiscal YearFor the Fiscal Year Ended March 31, 2020

StocksAmounts ofSecurities Sold
117,489

Millions of Yen
Aggregate Gains on
Sale
2,162

Aggregate Losses on
Sale(6,701)

Bonds

190,377

17,395(1,458)Japanese Government Bonds

186,874

17,392(1,458)Municipal Government Bonds

－

－

－

Short-Term Corporate Bonds

－

－

－

3,503

3

－

Others387,20921,009

(146)

Total

695,076

40,567(8,306)

StocksAmounts ofSecurities Sold
1,080

Corporate Bonds

Bonds

Millions of U.S. Dollars
Aggregate Gains on
Aggregate Losses on
Sale
Sale
19
(61)

1,751

160

(13)

Japanese Government Bonds

1,719

159

(13)

Municipal Government Bonds

－

－

－

Short-Term Corporate Bonds

－

－

－

Corporate Bonds

32

0

－

Others

3,561

193

(1)

Total

6,393

373

(76)

Amounts ofSecurities Sold
41,114

Millions of Yen
Aggregate Gains on
Sale
5,145

Aggregate Losses on
Sale
(471)

For the Fiscal Year Ended March 31, 2019

Stocks
Bonds

740,804

20,795(670)

Japanese Government Bonds

734,955

20,795(633)

Municipal Government Bonds

5,849

－

(36)

Short-Term Corporate Bonds

－

－

－

Corporate Bonds

－

－

－

Others

1,094,477

5,864(10,786)

Total

1,876,395

31,806(11,927)(6) Impaired Securities
Of Securities other than Trading Securities (excluding those where there is significant difficulty in determining fair value), if the fair value falls
by 30% or more compared with the acquisition price and it is not expected to recover up to the acquisition price in view of the rate of decline overpast periods, the securities are devalued and the fair value is recorded as the carrying amount on the consolidated balance sheet. In addition, thedifference between the fair value and the acquisition price is recognized as impairment losses in the fiscal year.
In the case where the issuer is classified as in bankrupted, de facto bankrupted, or doubtful borrower, impairment loss is recognized for
securities when the market price is below the acquisition price.
In the fiscal year ended March 31, 2020, the amount of impairment losses on securities was ¥0 million ($0 million) (all impairment losses
were incurred on stocks).
In the fiscal year ended March 31, 2019, the amount of impairment losses on securities was ¥1 million (all impairment losses were incurredon stocks).

59

2. Money Held in Trust(1) Money Held in Trust for Trading Purposes
As of March 31, 2020

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

59,995Carrying Value
Money Held in Trust for
Trading Purposes－
Millions of U.S. Dollars
Unrealized Gains (Losses)
Recognized as Income

551

As of March 31, 2019－

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

99,778－(2) Held-to-Maturity Money Held in Trust
Not applicable.
(3) Other Money Held in Trusts (Money Held in Trust other than Held for Trading Purposes or Held-to-Maturity)
As of March 31, 2020
Millions of Yen
Carrying
Value
Other Money Held in Trusts

43,732Acquisition
Cost
50,000

Unrealized
Gains(Losses)(6,267)

Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost－

(6,267)

Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost

Millions of U.S. Dollars
Carrying
Value

Acquisition
Cost

Unrealized
Gains(Losses)

Other Money Held in Trusts
402
459
(57)
－
(57)
Note:
Components of “Unrealized Gains (Losses)” are shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying
Value not Exceeding Acquisition Cost”.
As of March 31, 2019

Millions of Yen
Carrying
Value

Acquisition
Cost

Unrealized
Gains(Losses)

Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost

Other Money Held in Trusts
50,53850,000
538
538
－
Note:
Components of “Unrealized Gains (Losses)” are shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying
Value not Exceeding Acquisition Cost”.

60

3. Net Unrealized Gains on Other Securities and Other Money Held in Trust
Components of Net Unrealized Gains on Other Securities in the consolidated balance sheet are as follows:
As of March 31, 2020
Millions of
U.S. Dollars
Millions of Yen
Other Securities

394,015

3,624

Other Money Held in Trust(6,267)(57)

Net Unrealized Gains

387,747

3,566

Deferred Tax Liabilities

108,203995

Net Unrealized Gains(Prior to Equity Method Adjustment)

279,543

2,571

Non-Controlling Interests’ Portion－－

Parent Company’s Portion of Valuation Differential for Other
Securities Held by Equity-Method-Applicable Companies－－

279,543

2,571

Net Unrealized Gains

Note:
Unrealized Gains on foreign currency translations of foreign currency-denominated other securities where there is significant
difficulty in determining fair value are included in “Other Securities” under “Net Unrealized Gains”.
As of March 31, 2019
Other Securities
Other Money Held in Trust

Millions of Yen
447,958
538

Net Unrealized Gains

448,497

Deferred Tax Liabilities

124,814

Net Unrealized Gains(Prior to Equity Method Adjustment)

323,683

Non-Controlling Interests’ Portion－

Parent Company’s Portion of Valuation Differential for Other
Securities Held by Equity-Method-Applicable Companies－

Net Unrealized Gains

323,683

Note:
Unrealized Gains on foreign currency translations of foreign currency-denominated other securities where there is significant
difficulty in determining fair value are included in “Other Securities” under “Net Unrealized Gains”.

61

28. Derivatives:
1. Derivative transactions to which hedge accounting is not applied
The following tables summarize the notional amount or the contracted principal equivalents, fair values, net unrealized gains (losses) and thevaluation methods of the fair values of the Bank’s derivative transactions that do not qualify for hedge accounting as of the consolidated balance
sheet date, which are classified by types of financial instruments. Please note that the notional amount in themselves do not reflect the market risk
associated with the Bank’s derivative transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2020
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

5,466,663

4,247,094

115,004

115,004

Floating Rate Receivable/Fixed Rate Payable

5,598,564

3,977,614(111,535)(111,535)

Floating Rate Receivable/Floating Rate Payable

140,080

93,080

9

9

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

647,140

273,140(4,308)(1,192)

Bought793,500

416,700(1,505)(5,430)(2,335)(3,144)

Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total



62

Millions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

50,28639,068

1,057

1,057

Floating Rate Receivable/Fixed Rate Payable

51,49936,589(1,025)(1,025)

Floating Rate Receivable/Floating Rate Payable

1,288

856

0

0

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

5,952

2,512

(39)

(10)

Bought

7,299

3,833

(13)

(49)

(21)

(28)

Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

63

As of March 31, 2019
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

7,133,635

5,713,507

136,122

136,122

Floating Rate Receivable/Fixed Rate Payable

7,116,808

5,269,272(118,498)(118,498)

Floating Rate Receivable/Floating Rate Payable

204,130130,130

(122)

(122)

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

1,149,740

541,140(17,036)(6,433)

Bought1,335,100

655,000(3,151)(12,576)(2,686)(1,508)Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

64

(2) Currency-Related Transactions
As of March 31, 2020
Total Notional
AmountMillions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

5,932

2,644

46

46

Sold

151,881－(1,572)(1,572)

Bought75,550

－

171

171

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－(1,355)(1,355)Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:

Currency Options:

Others:

Total



65

Total Notional
AmountMillions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

54

24

0

0

Sold

1,397

－

(14)

(14)

Bought

694

－

1

1

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:

Currency Options:

Others:

Total

－

－

(12)

(12)

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)

66

As of March 31, 2019
Total Notional
AmountMillions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

6,652

6,120

67

67

Sold

278,790

1,804

501

501

Bought292,020

1,851

(494)

(494)

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

73

73

Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:

Currency Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)(3) Stock-Related Transactions
Not applicable.



67

(4) Bond-Related Transactions
As of March 31, 2020
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

2,135

－

(0)

(0)

Bought

762

－

－

－

Bond Futures Options:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Over the Counter Transactions
Bond Options:

Others:
Sold

－

－

－

－

Bought

－

－

－

－

(0)

(0)

Total

Millions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

19

－

(0)

(0)

Bought

7

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

(0)

(0)

Bond Futures Options:Over the Counter Transactions
Bond Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Osaka Exchange, Inc.
Over the counter transactions are valued using calculation models for option prices, etc.

68

As of March 31, 2019
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

8,876

－

(13)

(13)

Bought

3,059

－

6

6

Bond Futures Options:
Sold

－

－

－

－

Bought

7,000

－

10

1

Sold

－

－

－

－

Bought－－－－Over the Counter Transactions
Bond Options:

Others:
Sold

－

－

－

－

Bought

－

－

－

－

2

(6)

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Osaka Exchange, Inc.
Over the counter transactions are valued using calculation models for option prices, etc.

(5) Commodity-Related Derivative Transactions
Not applicable.

(6) Credit Derivative Transactions
Not applicable.

69

2. Derivative transactions to which hedge accounting is applied
The following summarizes the notional amount or the contracted principal equivalents, fair values and the valuation methods of the fair values of
the Bank’s derivative transactions that qualify for hedge accounting as of the consolidated balance sheet date, which are classified by types offinancial instruments and methods for hedge accounting. Please note that the notional amount in themselves do not reflect the market risk
associated with the Bank’s derivative transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2020
Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Millions of Yen
Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountInterest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

4,366,665

3,866,556(221,003)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,050,939

1,049,781

Interest Rate Swaps

Total

Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Fair Value(69,224)(290,227)

Items

Millions of U.S. Dollars
Notional Amount
Total Notional(Over 1 Year until
AmountSettlement or Expiry)

Fair Value

Interest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

40,16835,567(2,032)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

9,667

9,656

(636)

Interest Rate Swaps

Total(2,669)Notes:
1. Most of hedged items with respect to Basic Treatment are Interest-bearing assets and liabilities such as Loans and Bills Discounted,
Other Securities (Bonds) and Deposits.
2. Hedged items with respect to Exceptional Treatments for Interest Rate Swaps are Loans and Bills Discounted, Held-to-Maturity Debt
Securities and Debentures.
3. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the JICPA Industry Audit
Committee Report No. 24, February 13, 2002 “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in
Banking Industry”.
4. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

70

As of March 31, 2019
Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Millions of Yen
Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountFair Value

Interest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

4,004,924

3,606,831(96,756)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,144,962

1,020,889

Interest Rate Swaps

Total(74,433)(171,189)

Notes:
1. Most of hedged items with respect to Basic Treatment are Interest-bearing assets and liabilities such as Loans and Bills Discounted,
Other Securities (Bonds) and Deposits.
2. Hedged items with respect to Exceptional Treatments for Interest Rate Swaps are Loans and Bills Discounted, Held-to-Maturity Debt
Securities and Debentures.
3. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the JICPA Industry Audit
Committee Report No. 24, February 13, 2002 “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in
Banking Industry”.
4. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.
(2) Currency-Related Transactions
As of March 31, 2020
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountFair Value

554,330

445,714(565)

48,767

－

596

－

－

－

Forward Foreign Exchange Contracts:
Sold
BoughtTotal

31
Millions of U.S. Dollars

Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountFair Value

5,099

4,100

(5)

Sold

448

－

5

Bought－－－Forward Foreign Exchange Contracts:

Total

0

Notes:
1. Most of hedged items are foreign currency-denominated securities, Due from Banks, etc.
2. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the JICPA Industry Audit
Committee Report No. 25, July 29, 2002 “Accounting and Auditing Treatment of Accounting Standards for Foreign Currency
Transactions in the Banking Industry”.
3. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)71

As of March 31, 2019
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountFair Value

463,786

399,287(4,504)57,408

－

(74)

－

－

－

Forward Foreign Exchange Contracts:
Sold
BoughtTotal(4,579)Notes:
1. Most of hedged items are foreign currency-denominated securities, Due from Banks, etc.
2. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the JICPA Industry Audit
Committee Report No. 25, July 29, 2002 “Accounting and Auditing Treatment of Accounting Standards for Foreign Currency
Transactions in the Banking Industry”.
3. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)(3) Stock-Related Transactions
Not applicable.
(4) Bond-Related Transactions
Not applicable.

29. Related Party Transactions:
For the Fiscal Year Ended March 31, 2020
There were no significant related-party transactions.
For the Fiscal Year Ended March 31, 2019
There were no significant related-party transactions.

30. Segment Information:(1) Description of Reportable Segments
The Group classifies the businesses of the Bank and its consolidated subsidiaries as single business segment, respectively. Among those businesssegments, the business of the Bank is determined as the reportable segment.
The Bank, as an individual financial institution, provides such services as deposits, debentures, lending, market fund management, trading
operations, clearing and trust business. As the central financial institution for Shinkin Banks, the Bank complements the functions of the Shinkin
Banks and operates the shinkin bank industry’s own safety net, including the Shinkin Bank Management Reinforcement System. By doing so, theBank strives to maintain an orderly financial system within the shinkin bank industry.
(2) Method of Calculating Amounts by Reportable Segment
The accounting methods of the reportable segment are consistent with those described in the “Significant Accounting Policies”. Reportablesegment profit is based on profit attributable to owners of parent.

72

(3) Amounts by Reportable Segment
For the Fiscal Year Ended March 31, 2020

(Millions of Yen)

Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers

263,337

38,649301,986(31)

301,954

3,182

1,729

4,912

(4,912)－

Total

266,519

40,379306,899(4,944)

301,954

Segment profit

37,924

3,164

41,089(862)

40,227

Segment assets

40,633,271

322,334

40,955,605(87,508)

40,868,096

Segment liabilities

39,112,432

237,069

39,349,501(31,691)

39,317,809

Depreciation
Interest Income

5,111
207,066

6,155
245

11,267
207,312(0)(109)

11,266207,202

Interest Expenses

113,68556

113,742(41)

113,700

Income Taxes

14,365

1,437

15,802(145)

15,656

Increase in Tangible andIntangible Fixed Assets

3,402

7,093

10,495－

10,495Inter-segment

Other items(Millions of U.S. Dollars)
Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers
Inter-segment
Total

2,422

355

2,777

(0)

2,777

29

15

45

(45)

－

2,451

371

2,823

(45)

2,777

Segment profit

348

29

377

(7)

370

Segment assets

373,776

2,965

376,741(804)

375,936

Segment liabilities

359,786

2,180

361,967(291)

361,676

Depreciation
Interest Income

47
1,904

56
2

103
1,907

(0)
(1)

103
1,906

Interest Expenses

1,045

0

1,046

(0)

1,045

Income Taxes

132

13

145

(1)

144

Increase in Tangible andIntangible Fixed Assets

31

65

96

－

96

Other items

Notes:
1. The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, asset management, consumer credit
guarantees, investment, M&A advisory operations, and data processing services.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥862 million ($7 million) comprises reduction of ¥474 million ($4 million) on
profit attributable to non-controlling interests and ¥388 million ($3 million) on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥87,508 million ($804 million) comprises reduction of ¥43,114 million ($396
million) on eliminations relating to capital consolidation and ¥44,394 million ($408 million) on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥31,691 million ($291 million) on the adjustment of segment liabilities
comprises inter-segment eliminations, etc.
3. Segment profit has been adjusted from profit attributable to owners of parent presented in the consolidated statement of income.

73

For the Fiscal Year Ended March 31, 2019

(Millions of Yen)

Reportable segment
Other

Shinkin Central Bank
business

Total

Amount presented
in the consolidated
financial statements

Adjustment

IncomeExternal customers

255,816

38,027

293,843(35)

293,808

2,951

1,679

4,630

(4,630)－

Total

258,767

39,707

298,474(4,665)

293,808

Segment profit

42,286

3,849

46,135(1,354)44,781

Segment assets

39,432,740

336,552

39,769,293(75,917)

39,693,375

Segment liabilities

37,799,235

254,239

38,053,474(20,565)

38,032,909

Depreciation
Interest Income

5,178
193,711

5,082
143

10,261
193,855(0)(100)

10,260193,754

Interest Expenses

119,523

49

119,573(38)

119,534

Income Taxes

14,7601,702

16,463(185)

16,278

Increase in Tangible andIntangible Fixed Assets

6,075

20,42026,496－

26,496

Inter-segment

Other items

Notes:
1. The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, asset management, consumer credit
guarantees, investment, M&A advisory operations, and data processing services.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥1,354 million comprises reduction of ¥875 million on profit attributable tonon-controlling interests and ¥478 million on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥75,917 million comprises reduction of ¥43,114 million on eliminations relating tocapital consolidation and ¥32,802 million on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥20,565 million on the adjustment of segment liabilities comprises
inter-segment eliminations, etc.
3. Segment profit has been adjusted from profit attributable to owners of parent presented in the consolidated statement of income.

(Related Information)
For the Fiscal Year Ended March 31, 2020
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

217,714

Lending operations

Other

20,371

Total
63,868301,954(Millions of U.S. Dollars)

Securities investment
operations
Income from externalcustomers



74

2,002

Lending operations
187

Other

Total
587

2,777

2. Information by geographic region(1) Income
Japan
132,751

Japan

United States
31,848EuropeUnited States

EuropeOther
26,964

110,390

Other

1,221
292
248
Note: Income from derivative transactions and Trading income are included in Other.

(Millions of Yen)
Total
301,954(Millions of U.S. Dollars)
Total
1,015
2,777

(2) Tangible fixed assets
The Group’s tangible fixed assets located in Japan account for over 90% of the tangible fixed assets presented in the consolidated balance sheet.
Consequently, this information is omitted.

3. Information by principal customer
Name of customer
The Government of Japan

IncomeName of customer
The Government of Japan

Income39,356(Millions of Yen)
Related segment
Shinkin Central Bank business

362(Millions of U.S. Dollars)
Related segment
Shinkin Central Bank business

For the Fiscal Year Ended March 31, 2019
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

Lending operations

197,358

19,546

Other

Total
76,904

2. Information by geographic region(1) Income
Japan

United States
EuropeOther
161,201
32,833
15,926
83,846
Note: Income from derivative transactions and Trading income are included in Other.

293,808(Millions of Yen)
Total
293,808(2) Tangible fixed assets
The Group’s tangible fixed assets located in Japan account for over 90% of the tangible fixed assets presented in the consolidated balance sheet.
Consequently, this information is omitted.
3. Information by principal customer
Name of customer
The Government of Japan

Income47,090(Millions of Yen)
Related segment
Shinkin Central Bank business

75

(Information related to Impairment losses of Fixed Assets by Reportable Segment)
For the Fiscal Year Ended March 31, 2020

Impairment losses

Reportable segment
Shinkin Central Bank business86

Impairment losses

Reportable segment
Shinkin Central Bank business
0(Millions of Yen)

Other

Total
86

－

(Millions of U.S. Dollars)
Other

Total
0

－

Note: The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, asset management, consumer credit
guarantees, investment, M&A advisory operations, and data processing services.
For the Fiscal Year Ended March 31, 2019

Impairment losses(Millions of Yen)

Reportable segment
Shinkin Central Bank business
1,567

Other

Total
1,567

－

Note: The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, asset management, consumer credit
guarantees, investment, M&A advisory operations, and data processing services.

(Information related to Amortization of Goodwill and Balance of Unamortized Goodwill by Reportable Segment)
Not applicable.
(Information related to Accrual of Income from Negative Goodwill by Reportable Segment)
Not applicable.

31. Amounts per Share:

Yen
2020

Net Assets per Share

283,111.71

306,594.84

2,604.28

Net Income per Share

5,679.98

6,358.89

52.24

－

－

－

Net Income per Share after Adjustment for Common
Share equivalents

76

U.S. Dollars
2020

2019

Notes:1. The basis for calculation of net assets per share is as follows:
2020

2019

2020

Total Net Assets

Millions of Yen

1,550,287

1,660,465

Millions of U.S.
Dollars

14,260

Amount Deducted from Total Net Assets

Millions of Yen

217,334

216,949

Millions of U.S.
Dollars

1,999

Non-Controlling Interests

Millions of Yen

12,20911,824

Millions of U.S.
Dollars112

Preferred Dividends

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

19

Dividend Attributable to SpecificCommon Shares

Millions of Yen

3,000

3,000

Millions of U.S.
Dollars

27

Distribution of Residual Assets
Millions of Yen
Attributable to Specific Common Shares

200,000

200,000

Millions of U.S.
Dollars

1,839

Millions of Yen

1,332,952

1,443,516

Millions of U.S.
Dollars

12,261

Number of Share Units at Fiscal Year-end
Used to Calculate Net Assets per ShareUnit

4,708,222

4,708,222－－

Number of General Common Share
Units

Unit

4,000,000

4,000,000－－

Number of Preferred Share UnitsUnit

708,222708,222－－

Net Assets at Fiscal Year-end Used to
Calculate Net Assets per Share* When calculating net assets per share, of dividend attributable to preferred shares, preferred dividends are deducted from total net assets
whereas participating dividends are not deducted from total net assets.
Dividend attributable to specific common shares and distribution of residual assets attributable to specific common shares are
deducted from total net assets, and the number of specific common shares is not included within the number of shares.
2. The basis for calculation of net income per share is as follows:
2020

2019

2020

Millions of Yen

40,22744,781Millions of U.S.
Dollars

Amount Deducted from Profit Attributable
Millions of Yen
to Owners of Parent

2,124

2,124

Millions of U.S.
Dollars

19

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

19

Profit Attributable to Owners of Parent
Used to Calculate Net Income per Share

Millions of Yen

38,10242,656

Millions of U.S.
Dollars

350

Average Number of Share Units for the
Fiscal YearUnit

6,708,222

6,708,222－－

Average Number of General Common
Share Units

Unit

4,000,000

4,000,000－－

Average Number of Specific Common
Share Units

Unit

2,000,000

2,000,000－－

Average Number of Preferred
Share UnitsUnit

708,222708,222－－

Profit Attributable to Owners of Parent

Preferred Dividend

370* When calculating net income per share, of dividends attributable to preferred securities, dividends attributable to preferred shares are
deducted from profit attributable to owners of parent whereas participating dividends are not deducted from profit attributable to ownersof parent.
3. Net income per share after adjustment for common share equivalents is not listed as there are no dilutive securities.

32. Subsequent Events:
Not applicable.


77Independent Auditor’s Report

The Board of Directors
Shinkin Central Bank
OpinionWe have audited the accompanying consolidated financial statements of Shinkin Central Bankand its consolidated subsidiaries (the Group), which comprise the consolidated balance sheet as
at March 31, 2020, and the consolidated statements of income, comprehensive income, changes
in net assets, and cash flows for the year then ended, and notes to the consolidated financial
statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2020, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and the Corporate Auditors for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditors are responsible for overseeing the Group’s financial reporting process.

78

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditors regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Corporate Auditors with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
79Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2020 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 to the consolidated financial statements.

Ernst & Young ShinNihon LLC
Tokyo, Japan
June 25, 2020/s/ Mutsuo Emi
Designated Engagement Partner
Certified Public Accountant/s/ Ryuji Takagi
Designated Engagement Partner
Certified Public Accountant/s/ Ken Komatsuzaki
Designated Engagement Partner
Certified Public Accountant

80Non-Consolidated Balance
Non-Consolidated
Balance Sheet
Sheet
Shinkin Central Bank As of March 31,
Shinkin Central Bank As of March 31,
AssetsAssetsCash and Due from Banks
Cash and Due from Banks
Call Loans
Call Loans
Receivables under Resale Agreements
Receivables under Resale Agreements
Monetary Claims Bought
Receivables under Securities Borrowing Transactions
Trading Assets
Monetary Debts Purchased
Money Held in Trust
Trading Assets
Securities
Money Held in Trust
Loans and Bills Discounted
Securities
Foreign Exchanges Assets
Loans and Bills Discounted
Other Assets
Foreign Exchanges Assets
Tangible Fixed Assets
Other Assets
Intangible Fixed Assets
Tangible Fixed Assets
Customers' Liabilities for Acceptances and Guarantees
Intangible Fixed Assets
Reserve for Possible Loan Losses
Customers’ Liabilities for Acceptances and Guarantees
Total Assets
Reserve for Possible Loan Losses
Total Assets
Liabilities and Net Assets
Liabilities
Liabilities and Net Assets
Deposits
Liabilities
Debentures
Deposits
Trading Liabilities
Debentures
Borrowed Money
Trading Liabilities
Call Money
Borrowed Money
Payables under Repurchase Agreements
Call Money
Payables under Securities Lending Transactions
Payables under Repurchase Agreements
Foreign Exchanges Liabilities
Payables under Securities Lending Transactions
Borrowed Money from Trust AccountForeign Exchanges Liabilities
Other Liabilities
Borrowed Money from Trust AccountReserve for Employee Bonuses
Other Liabilities
Reserve for Directors' Bonuses
Reserve for Employee Bonuses
Reserve for Employee Retirement Benefits
Reserve for Directors’ Bonuses
Reserve for Directors' Retirement Allowances
Reserve for Employee Retirement Benefits
Deferred Tax Liabilities
Reserve for Directors’ Retirement Allowances
Deferred Tax Liabilities for Land Revaluation
Deferred Tax Liabilities
Acceptances and Guarantees
Deferred Tax Liabilities for Land Revaluation
Total Liabilities
Acceptances and Guarantees
Total Liabilities
Total Net Assets
Total Liabilities and Net Assets
Total Net Assets
Total Liabilities and Net Assets

2020
2018

Millions of Yen
Millions of Yen

2019
2017

Millions ofMillions of
U.S. Dollars
U.S. Dollars
2020
2018

13,517,962
12,378,801
107,166
413,259
19,99989,999222,175
385,224
177,359
103,727
217,220
16,477,301
99,7898,474,068
17,137,785
79,114
6,952,659
1,181,019
20,46066,710961,269
5,774
68,994
23,6897,179(30,665)
70,653
40,633,271(42,730)
38,552,702

13,338,309
10,591,676
765,887362,234
39,99919,999221,732
77,522205,854
178,977
150,317205,696
16,613,593
7,045,582
17,204,776
21,1307,995,390
930,347
20,514
67,233
484,467
7,695
70,05454,8798,000(29,822)
83,63239,432,740(45,103)37,257,840

124,348
116,473
985
3,888
183
846
2,043
3,543
1,668
954
2,043
151,571938
77,951
161,251727
65,418
10,863
192
613
9,044
53
649
217
67
(282)
664
373,776(402)
362,746

31,208,596
2,141,480
30,260,341
36,9372,714,890
3,250,980
53,882
16,191
1,637,770
228,458
25,313
1,788,395
98,373
1,413
1,776,158
22,021447
325,971
5,375
1,371
196,352
90
1,334
24,82689489
22,02335,438456
6,081
80,10523,6896,100
39,112,432
70,65336,949,667
1,520,838
40,633,271
1,603,035
38,552,702

30,966,816
2,486,710
29,176,129
48,554
2,952,900
1,967,180
76,41322,8781,203,870
152,777
24,821
1,776,263
188,402
1,397
1,602,791
14,025368
190,350
74
1,329
227,760
86
1,311
23,461
83
435
20,33786,009389
6,081
88,97454,8796,109
37,799,235
83,63235,654,367
1,633,504
39,432,740
1,603,472
37,257,840

287,081
19,699284,722339
25,54429,905506
148
15,4092,101
238
16,451925
13
16,712
202
4
2,998
50
12
1,847
0
12
228
0
4
207
325
4
55
753
217
57
359,786664
347,663
13,989373,776
15,083362,746



81

Non-ConsolidatedStatement
StatementofofIncome
IncomeNon-Consolidated
Shinkin Central Bank For the year ended March 31,
Shinkin Central Bank For the year ended March 31,
IncomeIncomeInterest Income:Interest Income:Interest on Loans and Discounts
Interest on Loans and Discounts
Interest on Due from Banks
Interest on Due from Banks
Interest on Call Loans
Interest on Call Loans
Interest on Receivables under Resale Agreements
Interest on Receivables under Resale Agreements
Interest on Receivables under Securities Borrowing Transactions
Interest on Receivables under Securities Borrowing Transactions
Interest and Dividends on Securities
Interest and Dividends on Securities
OthersOthersTrust Fees
Trust Fees
Fees and Commissions
Fees and Commissions
Trading Income
Trading Income
Other Operating Income
Other Operating Income
Other Income
Other Income
Total Income
Total Income

Expenses
Expenses
Interest Expenses:
Interest Expenses:
Interest on Deposits
Interest on Deposits
Interest on Debentures
Interest on Debentures
Interest on Borrowed Money
Interest on Borrowed Money
Interest on Call Money
Interest on Call Money
Interest on Payables under Repurchase Agreement
Interest on Payables under Repurchase Agreement
Interest on Payables under Securities Lending Transactions
Interest on Payables under Securities Lending Transactions
Interest Payable on Interest Rate Swaps
Interest Payable on Interest Rate Swaps
OthersOthersFees and Commissions
Fees and Commissions
Trading Losses
Trading Losses
Other Operating Expenses
Other Operating Expenses
General and Administrative Expenses
General and Administrative Expenses
Other Expenses
Other Expenses
Total Expenses
Total Expenses

Income before Income Taxes
Income before Income Taxes
Income Taxes
Income Taxes
Current
Current
DeferredDeferred
Total Income Taxes
Total Income Taxes
Net Income
Net Income

Net Income Per ShareNet Income Per ShareDividend Declared per Share (General Common Shares)
Dividend Declared per Share (General Common Shares)
Dividend Declared per Share (Specific Common Shares)
Dividend Declared per Share (Specific Common Shares)
Dividend Declared per Share (Preferred Shares)
Dividend Declared per Share (Preferred Shares)

82

Millions of Yen
Millions of Yen

2020
2018

2019
2017

Millions ofMillions of
U.S. Dollars
U.S. Dollars
2020
2018

207,066
223,718
20,40917,597
9,010
8,407
670
706
(778)
0
115
176,645
196,249
1,109
642
759
117
8,630
8,295
1,502
3,600
45,79425,162
2,767
14,897
266,519
275,792

193,711201,454
19,546
17,868
8,454
8,431
946
753
(336)
0
4
133
164,286
173,730
809
536
399
0
8,289
8,263
3,727
4,738
34,54759,43418,092
10,127258,767
284,018

1,904
2,104
187
165
82
79
6
6
(7)
0
1
1,624
1,846
10
6
6
1
79
78
13
33
421
236
25
140
2,451
2,594

113,685
121,536
41,87937,841
3,080
5,930
1,775
7,040
591
463
1,750
1,920
19,782
15,87244,58350,964
241
1,502
7,353
6,520
136
54,13554,38931,16329,5007,891
1,052
214,229
213,136

119,523
122,340
40,21939,690
4,499
8,005
3,571
8,244
541
254
1,258
1,062
23,6869,265
44,79052,831
956
2,985
6,743
6,605
317
4
42,07574,76830,867
29,234
2,192
2,728
201,720
235,680

1,045
1,143
385
356
28
55
16
66
5
4
16
18
181
149
410
479
2
14
67
61
1
497
511
286
277
72
9
1,970
2,005

52,29062,65657,047
48,338481
589

14,697
14,389(332)
1,768
14,365
16,15737,92446,49812,18910,5552,570(3,601)
14,7606,954
42,286
41,383

135
135
(3)
16
132
152
348
437

2020
2018

Yen
Yen

5,336.77
6,614.86
3,000.00
3,000.00
1,500.00
1,500.00
6,500.00
6,500.00

2019
2017

5,987.00
5,852.33
3,000.00
3,000.00
1,500.00
1,500.00
6,500.00
6,500.00

U.S. Dollars
U.S. Dollars
2020
2018

49.09
62.23
27.59
28.22
13.79
14.11
59.79
61.15

Statement ofof Trust
Trust Account
Account (Consolidated)
Statement(Consolidated)
Shinkin Central Bank
As of March 31,
Shinkin Central Bank
As of March 31
AssetsAssetsSecurities
Securities
Beneficiary Rights
Beneficiary
RightsSecurities Held in Custody Accounts
Securities
Held
in Custody Accounts
Monetary Claims
Monetary
ClaimsOther Claims
Other
ClaimsDue from
Banking AccountDue
fromBanking
Cash and Due fromAccountBanks
Cash andDuefrom Banks
Total
AssetsTotal assets

Millions of Yen
Million of Yen
2019
2020
2017
2018
6,000
6,000
1,089,378
381,740
63,00063,000140,328
60,392
8
22,021 4
5,375
219
8,932
1,320,957
525,445

6,000
8,507
617,068
1,694,135
63,00063,000106,191
64,1632
14,025 891336028,986807,201
1,859,161

Millions ofMillions of
U.S. Dollars
U.S. Dollars
2020
2018
55
56
10,0203,591
579
1,290 592
0 568
202 0
2 50
12,151 84
4,943

Liabilities
Liabilities
Money Trust
24,86632,555
299
Money
Trust
81,36035,879Investment
Trusts
15,532
23,463215 337
Investment
1,450,501
Money HeldTrustsin Trust Other than Money Trust
16,077
14,805136 Money
Held
in
Trust
Other
than
Money
Trust
Securities Trusts
102,700
23,81487,200802 224
Monetary Trusts
Claims Trusts
107,190
Securities
116,300
140,523
1,292
111,000
1,044
CompositeClaims
Trusts Trusts
540,835
1,022,409
9,404 577
Monetary
65,14961,415807,201
TotalTrusts
Liabilities
1,320,957
12,151
Composite
145,849
293,335
2,760(NoteTotal
1) Consolidated
in Trust Business
Activities by Financial
1,859,161
liabilities companies conducting trust business pursuant to the “Act on Engagement
525,445
4,943
Institutions”
comprised
only
the
Bank
in
the
fiscal
years
ended
March
31,
2020
and
2019.
(Note1) The figures in this statement are calculated by means of simple aggregation of trust accounts for each consolidated company(Note 2) No
trustbusinessassets were
entrustedotherontrustbanks for in
asset
administration
as of March
31, 2020
and 2019. Consolidated companies
conducting
trust
pursuant
to theto“ActEngagement
Trust
Business Activities
by Financial
Institutions.”
conducting such trust business comprised only the Bank in the fiscal year ended March 31, 2018, and comprised the Bank and Shinkin Trust
Bank, Ltd. in the fiscal year ended March 31, 2017.
(Note2) No trust assets were entrusted to other trust banks for asset administration as of March 31, 2018 and 2017.



83Organization (As of July 31, 2020)
General Meeting of Members
Corporate Auditors
Board of Directors
Chairman of the Board of Directors (part-time)
President and Chief Executive Officer
Deputy President
Senior Managing Directors
Managing Directors
Directors

Chief Secretary
Internal Audit Division
General Affairs Division
Legal & Compliance Office
Personnel Division
Strategic Planning Division
SDGs Promotion Office
Cashless Business Promotion Office
Investor & Public Relations Office
Shinkin Innovation Hub
Financial Management Division
Risk Management Division
Credit Planning & Supervision Division
Trust Business Division
Business Promotion Division
Disaster Recovery & Reconstruction
Support Office*Regional Innovation Division
SME Business DivisionInternational Business DivisionInternational Operations Center
Retail Business Division
Support & Advisory Division for Shinkin Banks
Consulting Office
Portfolio Management Support OfficeTransfer & Clearing Division
Management Office for Domestic FundTransfer System
Operations Division
Shinkin Business Transformation Office
Operations Center
Systems Division
Systems Center
Corporate Business Promotion Division
Project Finance OfficeTreasury Business Division
Treasury Division
Credit & Alternative Investment Division
Treasury Operations Division(Shinkin Central Bank) Research Institute
SDB Office

Corporate Business Division I
Corporate Business Division II
Osaka Corporate Business DivisionTokyo Business Division
Kanto Business Division I
Kanto Business Division II
Hokkaido Branch
Tohoku Branch(Disaster Recovery & Reconstruction Support office)

Hokuriku Branch
Shizuoka Branch
Nagoya Branch
Osaka Branch
Kobe Branch
Okayama Branch
Chugoku Branch
Shikoku Branch
Fukuoka Branch
Minami-Kyushu Branch
New York Representative OfficeHong Kong Representative Office
Shanghai Representative Office
Bangkok Representative Office* Located in the Tohoku Branch.

The SCB Group (As of July 31, 2020)
The SCB Group
Securities

Personal loan
guarantees

Investment and
M&A advisory

Data processing
consignment

Consigned
clerical work

Shinkin
CapitalThe Shinkin Banks
Information
System Center

Shinkin
ChukinBusiness

Data processing
consignment(handles SCB
administrative work)

Softwaredevelopment

Computing

Shinkin
Securities

ShinkinInternational

Shinkin AssetManagement

Shinkin
Guarantee

Dealing

Underwriting new
bonds and agency
business in theeuro market

Management
services fordiscretionary
investment contract
assetsDebt guarantee
business(guarantees for
unsecuredpersonal loans
provided byshinkin banks)

Brokerage
Underwriting

Dealing andbrokering forexisting euro
bonds
Foreign securities
investment andconsulting¥20bn in capital(100% ownership);¥10bn capitalreserve84

Assetmanagement£30mn in capital(100% ownership)
London local
securities entity

Management
services forinvestment trust
assets¥200mn in capital(100% ownership)¥1.0bn in capital(100% ownership)¥0.8bn capitalreserve

Investment banking
M&A
brokering
Corporatebusiness
consulting¥490mn in capital(100% ownership)

Computer
consulting andtraining¥4.5bn in capital(50.7% stake;
49.2% owned byshinkin banks);¥1.5bn capitalreserve

Promissory
note exchange
Branch,dormitory, andother property
management¥70mn in capital(100% ownership)

International Directory (As of July 31, 2020)
Senior Managing Director(in charge of Corporate Business Promotion/
Treasury Operations/Reserch Institute)
Hiroshi Nakahara
Senior Managing Director(in charge of Strategic Planning/
International Business/
Credit & Alternative Investment/
Overseas Offices)
Hiroshi Sudo
Senior Managing Director(in charge of Treasury Business)
Norihiro Takano
Managing Director(in charge of Treasury)
Keisuke Izutsu
Strategic Planning Division(including International Planning)
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7624
Facsimile: +81-3-3278-7033
International Business Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7703
Facsimile: +81-3-3278-7035
International Operations Center(including Correspondent Banking)Address: 8-1, Kyoubashi 3-chome,
Chuo-ku, Tokyo 104-0031
Telephone: +81-3-5250-1700
Facsimile: +81-3-5250-1780
SWIFT: ZENB JPJT
Corporate Business Promotion Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7679
Facsimile: +81-3-3278-7045
Treasury Business Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7642
Facsimile: +81-3-3278-7040
SWIFT: ZENB JPJT

Overseas Offices
New York
New York Representative Office
Address: 655 Third Avenue, Suite 2620,
New York, NY 10017, U.S.A.
Telephone: +1-212-642-4700
Facsimile: +1-212-730-6000
Chief Representative: Kentaro Sone

New York

Hong Kong
Hong Kong Representative Office
Address: Suite 4008, 40/F, Central Plaza, 18
Harbour Road, Wan Chai, Hong Kong, P.R. of China
Telephone: +852-2537-3777
Facsimile: +852-2537-4002
Chief Representative: Masao Yamaguchi

LondonShanghai
Shanghai Representative Office
Address: Room 508, Shanghai International Trade
Center, 2201 Yan-An Xi Road
Shanghai, P.R. of China
Telephone: +86-21-6270-3091
Facsimile: +86-21-6270-3095
Chief Representative: Yosuke Abe

ShanghaiHong Kong
Bangkok

Bangkok
Bangkok Representative Office
Address: 19th Floor, 1903, Athenee Tower, 63
Wireless Road, Lumpini, Pathumwan, Bangkok
10330, Thailand
Telephone: +66-2-168-8796
Facsimile: +66-2-168-8799
Chief Representative: Naoto Seita

Overseas Subsidiary
LondonShinkin International Ltd.
Address: 1st Floor, 85 London Wall,London EC2M 7AD, UK
Telephone: +44-20-7562-0500
Facsimile: +44-20-7256-8544
Managing Director: Takuya Sakamoto

Hokkaido(Sapporo)

Treasury Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7660
Facsimile: +81-3-3278-7043
SWIFT: ZENB JPJT

Tohoku(Sendai)

Credit & Alternative Investment Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7664
Facsimile: +81-3-3278-7044
Treasury Operations Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7666
Facsimile: +81-3-3278-7046
SWIFT: ZENB JPJT
Research Institute
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7671
Facsimile: +81-3-3278-7048

Hokuriku(Kanazawa)
Chugoku(Hiroshima)

Okayama Kobe
Osaka
Shikoku(Takamatsu)

FukuokaMinami-Kyushu(Kumamoto)Head Office

NagoyaShizuokaHead Office
BranchOffice/subsidiary

Shinkin Central Bank Head Office3-7, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028, Japan
Telephone: +81-3-5202-7711
https://www.shinkin-central-bank.jp/85

Shinkin Central Bank Annual Report 2020

Shinkin Central Bank

3-7, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028, Japan
Telephone: +81-3-5202-7711
https://www.shinkin-central-bank.jp/
Printed in Japan