The Future ofRegional Communities
Together with Shinkin Banks

Annual Report

2023
Shinkin Central Bank

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank,
the Central Bank for Shinkin Banks
As the central financial institution for the cooperative regional financial
institutions in Japan, known as shinkin banks, the Shinkin Central Bank
(hereinafter the SCB) occupies a well-established position in Japan’s
financial services industry. Shinkin banks currently hold funds totalingsome ¥160 trillion (around US$1,200 billion).

Management Philosophy and Operational Policies
Management Philosophy
As the central bank for all shinkin banks, the SCB supports the growth of the shinkin bankindustry, 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, 2023)
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, 2023)

Shinkin Central Bank (SCB)
June 1, 1950
1,258
14
6
¥45,924 billion ($344 billion)¥44,176 billion ($330 billion)¥690 billion ($5,176 million)¥90 billion ($681 million)
22.09%254
A1 (Moody’s)
A (S&P)
A+ (R&I)
AA (JCR)

Shinkin Central Bank

Shinkin Banks

Total assets: ¥45,924 billion ($344 billion)
Domestic network: 14
Overseas network: 6
Number of employees: 1,258
Number of member shinkin banks: 254

Number of member shinkin banks:
254
Total assets: ¥175,028 billion($1,311 billion)
Number of branches: 7,106
Number of employees: 99,083
Number of members: 8,886,797(As of March 31, 2023)* The number of employees includes full-time Directors and Corporate
Auditors. Our overseas network includes Shinkin International Ltd., asubsidiary in London and Shinkin Singapore Pte. Ltd., a subsidiary in
Singapore.

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

2023

2022

Millions of US Dollars*
2021

2023

2022

2021

$2,549$1,765$2,053

For the Fiscal Year
Total income¥340,360 ¥216,095 ¥227,247

Total expenses

307,434

171,233

187,466

2,302

1,399

1,693

Net income (loss)

24,776

34,046

29,579

185

278

267

Net business profit (loss)

24,451

34,54833,814

183

282

305

¥43,757,754 ¥43,654,176$344,005$357,585$394,382

At the Year-end
Total assets¥45,924,710

Loans and bills discounted

9,514,890

7,758,748

8,451,005

71,272

63,404

76,348

Securities

13,634,845

16,163,857

17,744,905

102,133

132,090

160,311

Total liabilities

44,621,617

42,199,230

41,963,346

334,244344,849

379,106

Deposits

34,703,462

33,165,342

33,787,924

259,951

271,025305,248

Debentures

1,458,660

1,547,370

1,774,270

10,926

12,64516,0291,303,092

1,558,523

1,690,829

9,760

12,736

15,275

Net assets* US dollar amounts are given for convenience only, converted at the rate of ¥110.69, ¥122.37, and ¥133.50 per US$1.00, the prevailing rate as of March 31, 2021, 2022, and 2023
respectively.

Contents
Financial Highlights (Non-consolidated Financial
Summary) ................................................................................. 1
Message from the President and CEO ............................. 2
About Shinkin Central Bank ............................................... 8
The SCB Group ...................................................................... 9
About Shinkin Banks .......................................................... 10
Realizing a Sustainable Society .......................................... 12
Measures for climate change (TCFD) ............................. 13
Medium-Term Management Plan “SCB Strategy
2022” ...................................................................................... 18
Three Reforms (HaND) .................................................... 22
Overseas Networks ........................................................... 28

Corporate Management and Auditors ........................... 31
Business Overview (Non-consolidated) ....................... 33
Capital Adequacy ................................................................ 34
Asset Quality ....................................................................... 35
Corporate Governance ..................................................... 36
Compliance System ............................................................ 37
Risk Management ................................................................ 39
Preferred Shares ................................................................. 42
Financial Section .................................................................. 43
Organization ........................................................................ 112
International Directory .................................................... 113

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 ¥133.50 per US$1.00, the prevailing rate on March 31, 2023.

1

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Message from the President and CEO

The Japanese economy is seeing positive signs as supply constraints and social restrictions due tothe COVID-19 outbreak have eased. Meanwhile, risk factors are scattered in and outside Japan,such as soaring resource prices caused by the Russian invasion of Ukraine, ongoing tightermonetary policies taken by the central banks toward curbing inflation, and unstable financial
systems triggered by failed U.S. banks. The outlook of the Japanese economy is extremely
uncertain.
When looking at regional economies that are the operational foundation of shinkin banks, theirsituations are even more severe, together with conventional structural issues such as an aging
and declining population.
To enable regional economies to continue development in the future, it is essential to accelerate
initiatives such as DX and GX* that increase regional sustainability and thereby transform
economic activities, in addition to improving additional values that are suitable for respective
regional characteristics.
Shinkin banks are financial institutions that work hand-in-hand with regions. Until now, they havetaken various initiatives that contribute to regional problem solving. Currently, regional
economies and communities are facing a significant crossroads. The expectations for shinkinbanks and the roles to be played by shinkin banks have become more critical than ever before.
Amid these circumstances, in April 2022, the SCB started the “SCB Strategy 2022,” the threeyear Medium-Term Management Plan from fiscal 2022 to fiscal 2024.
Under this plan, the SCB sets the “vision” to be achieved by 2030 where “Shinkin Bank becomesthe most reliable bank in every local area” and is working on various measures with shinkinbanks toward realizing sustainable regional communities.
In this message, I would like to explain the measures that the SCB has taken to date and themeasures and other initiatives we will take going forward to achieve the “vision.”

President and CEO* GX (Green Transformation): Transforming the entire economic and social system to reduce emissions and improve industrial competitiveness by viewing efforts to achievecarbon neutrality and greenhouse gas emission reduction targets as an opportunity for economic growth.

2Ro ad to 2 0 3 0

Move Forward Together
With Shinkin Banks

3

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Progress in Medium-Term Management Plan
Under the Medium-Term Management Plan “SCB Strategy 2022,” the SCB plans to focus on the “4 Strategies”
to be implemented steadily in order to realize the “vision” with the three-pillar including “Humans assets,”“Network” and “Digital” that can be a strength and opportunity for the industry to provide new value, thereby
improving the competitiveness of the industry.
The year 2022 was the plan’s first fiscal year, which can be evaluated that the SCB Group’s officers andemployees worked together to address various measures set in this plan and made a good start.

Medium-Term
Management Plan “SCB
Strategy 2022,”
P18[Support for Customers’ Sales Channel/Overseas Business Expansion Through Utilizing the
Network of the Shinkin Bank Industry]
The shinkin bank industry has a significant strength in its networks: the SCB networks with large buyers insideand outside Japan and the network that shinkin banks have for connecting among their customers nationwide.
Utilizing the strength, we are working to support shinkin banks’ customers in expanding their sales channels
and overseas businesses, as support for small and medium-scale enterprises (SMEs) that is suitable for their life
stages.
The “Shinkin Connect” is a business matching website launched in September 2021 to support sales channel
expansion. About 6,400 companies have already registered as its members. In fiscal 2022, we enhanced
initiatives toward increasing the number of business negotiations and closed deals. For example, the head officeassigned the “coordinators” who provide large buyers and shinkin banks with potentially matching information.
Branch offices conducted matching projects with local buyers.
In supporting overseas business expansion, we utilized the network of “Shinkin Singapore Pte. Ltd.” a groupcompany that opened in July 2021 to conduct a PR project that exhibited products of shinkin banks’ customers
in restaurants in Singapore. We also held the “Singapore Shinkinkai” (or local networking) as a local interaction
event among various support agencies and shinkin banks’ customers. Based on the needs of shinkin banks’customers, we would like to continue to create local networking opportunities outside Japan, such asincreasing countries where the “Shinkinkai” is held and conducting various events.
[Promotion of Regional Community Innovation Through Serving as a “Hub” of Networks]
The SCB serves as a hub that connects the domestic and global networks of external specialized agencies andother organizations and the networks of regional communities and is working to promote regional community
innovation, together with regionally rooted shinkin banks.
“Shinkin Regional Innovation Co., Ltd.” a group company that established in July 2021, operates a regional
trading business and innovation consulting business. The company is also implementing many projects undercollaboration with shinkin banks. Taking the recent G7 summit as an opportunity, we contracted with
Hiroshima Prefecture for a food material matching business. We collaborated with four shinkin banks in theprefecture. We took activities such as events that communicated the attractiveness of the prefectural foodmaterials to restaurant business operators in and outside Japan.
The regional innovation promotion scheme “SCB Furusato Ouen Dan” utilizes a corporate version of the
Furusato Nozei (or hometown tax) donation program and others to donate to local governments and supports
regional innovation projects with shinkin banks. The "SCB Furusato Ouen Dan" donated a total of ¥2.435 billion
to the 246 regional innovation projects of 47 prefectures nationwide, which were recommended by shinkinbanks nationwide over the three years from fiscal 2020.
In addition, in January 2023, as a comprehensive compilation of this scheme, we held the online talk event “SCB
Furusato Ouen Taikai,” which aimed to introduce case studies and communicate to create opportunities for

4

Support for CrossBorder EC Utilization
P30

Shinkinkai (Local
Networking)P25

regional shinkin banks and local governments to obtain new perspectives and knowledge from pioneering casestudies and others of other regions.
Through following up on the projects donated by the “SCB Furusato Ouen Dan” and rolling out excellent caseexamples, we will continue to promote and share knowledge and know-how toward conducting a regiondriven innovation business in more expansive areas.
[Support for Business Succession That Stays Closer to Regions]
More and more support institutions are handling business succession and M&As. However, many of them focus
on large-scale deals and are located in Tokyo. Therefore, support for regional SMEs is currently insufficient.
Amid these circumstances, to ensure that the shinkin bank industry is familiar and stays closer to regions inbusiness succession and M&As, the group company “Shinkin Capital Co., Ltd.” opened seven new branches (inHokkaido, Tohoku, Hokuriku, Tokai, Kinki, Chugoku, and Fukuoka) from fiscal 2021. The company establisheda structure that can respond to the needs of shinkin banks’ customers more flexibly and effectively than everbefore.
As a result, the number of consultations on business succession and M&As has been increasing dramatically.
We want to continue support activities in the future to improve regional sustainability.

Measures for BusinessSuccession Issues
P25

Expectations for the Shinkin Bank Industry Toward 2030
Regional economies have been facing great difficulties, such as the declining birthrate, aging population, anddepopulation. Under these circumstances, shinkin banks are focused on issues tackled by each region and workon attentive problem solving every day that is suitable for respective regional characteristics.
Meanwhile, digitalization, such as emerging advanced generative AIs, has been accelerated, giving us an indicative
sign of significant lifestyle changes. For shinkin and shinkin banks’ customers, responding to these trends exactly
and building sustainable business models become an issue.
In addition, toward achieving the SDGs in the targeted year 2030, importance is also given to initiatives towardrealizing a sustainable society. Shinkin banks are required to improve the sustainability of regional communities
where each shinkin bank is based.

5

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

DX Driving for SMEs
Currently, SMEs are confronting severe labor shortages due to factors such as the declining labor force. They
are urgently required to drive DX from the standpoint of improving productivity.
Amid these circumstances, the SCB considers shinkin banks as appropriate DX drivers for SMEs because
shinkin banks are usually supporting the managerial challenges of their SMEs. The SCB will work together
with shinkin banks to support digitalization for SMEs.
[Digitalization of SMEs’ Daily Operations]
In August 2022, to promote DX in SMEs across Japan, we entered into business alliances with NIPPONTELEGRAPH AND TELEPHONE EAST CORPORATION and NIPPON TELEGRAPH AND TELEPHONE
WEST CORPORATION. We will combine the solid relations among shinkin banks and SMEs with the highexpertise and solutions of both companies to work on realizing DX for each SME.
As a concrete initiative based on the business alliances, we launched “Kei Yell (Coinage of “Corporate
Management” and “Support” in Japanese),” a portal service for SMEs, in October 2022. “Kei Yell” is a digital
service developed under the concept of “sending a yell to every management person” and has various functions
such as keeping track of cash management and responding to the invoicing scheme. By supporting SMEs indigitalizing their daily operations, we would like to contribute to their taking a first step in DX realization.

Kei Yell
P27[Development of Human Resources Responsible for DX in the Shinkin Bank Industry]
As an initiative based on the business alliance with both companies, we will work to conduct ICT consulting
services for SMEs and provide solutions for developing digital human resources.
In order to develop human resources who are well versed in digital technology, in the shinkin bank industry,
we started the “DX Human Resource Development Program” which aims at helping our employees acquire
digital technology-related skills.
This program has a training structure by level. In fiscal 2022, all of the SCB’s employees took courses related
to DX basic knowledge to improve their levels. In addition, we aim to develop human resources that will
drive the digitalization of the shinkin bank industry by gradually conducting measures such as courses thatconsider operational improvements utilizing DX.
In fiscal 2023, we started online courses that enable about 100,000 officers and employees of all shinkinbanks to learn DX-related basic knowledge as well as methods for utilizing digital technologies by scene, suchas doing sales activities and serving customers.
Through these initiatives, we aim to accumulate DX know-how in the shinkin bank industry to promote DX
for regions and SMEs.

DX Human Resource
Development
Program
P27

Toward the Realization of Sustainable Regional
Communities
The SCB Group adopts the “Declaration of Shinkin Central Bank Group on SDGs,” sets “sustainable
prosperity of a regional society,” “well-being to all the people,” and “conservation of the global environment”
as essential themes, and works on initiatives toward realizing a sustainable society.
[The SCB’s Promotion of the "Shinkin Green Project" to Become a Key Player in Realizing
Decarbonization]
Under the “conservation of global environment” among these themes, we are utilizing the network of 254
shinkin banks nationwide and conducting the “Shinkin Green Project,” unique to the shinkin bank industry,
toward realizing decarbonized regions and SMEs. Under three pillars of “finance,” “consulting,” and6

Declaration of
Shinkin Central Bank
Group on SDGs
P12

“ecoLocal*,” this project is working on various initiatives for realizing decarbonization.
As the first step, we executed the “Partnership Agreement for the Realization of Sustainable Local
Economies and Societies” with the National Association of Shinkin Banks and the Ministry of theEnvironment in June 2022.
In close collaboration with the shinkin bank industry and the Ministry of the Environment, we will promote
the greening of Japan’s regional communities by working on both sides of energy supply and demand:
supporting SMEs’ decarbonization initiatives and creating renewable energy power generation projects.
From fiscal 2021 to fiscal 2030, the target for ESG investments and loans to be executed is ¥3 trillion. We
have completed more than ¥800 billion of investments and loans in two years and are starting well.
We recognize that the role of the SCB is to think strategically about how it will make the entire regions
involved and increase the numbers of companies involved and projects beyond the initiatives taken by justpart of regions in the future to make GX go forward. By steadily proceeding with these initiatives, we will
strive to make shinkin banks key players in realizing decarbonized regional communities and establish a brandimage of "green" regarding shinkin banks.
* ecoLocal: is a coinage of combining “ecology” with “local.”[The SCB's Targeted Direction]
The SCB is working with shinkin banks to conduct various measures toward realizing sustainable regional
communities. The SCB aims to generate a positive cycle where these initiatives will result in the “growth” ofthe shinkin bank industry and thereby solve social issues further.
In order to be sustainable along with their respective
communities, shinkin banks themselves must develop theirown businesses while obtaining funds to contribute to theircommunities.
Through actions such as providing products and services
common to the shinkin bank industry, the SCB will strive togrow and develop the industry sustainably. To enable the SCB
itself to conduct these activities and permanently fulfill its
functions as the central bank for all shinkin banks, the SCB
will enhance its profitability and establish a stable financialbase.

In Conclusion
This fiscal year reaches the halfway mark in the Medium-Term
Management Plan and is essential for perfectly achieving it.
Now, regional economies and communities are facing asignificant crossroads. To enable shinkin banks to meet
expectations from regions and continue development with
regions, it is necessary to work on building robust businessmodels that adopt significant environmental changes.
In order to contribute to the development of local
communities together with shinkin banks, Shinkin Central
Bank will not be bound by existing frameworks but will always
look one step ahead and respond to changes in society. We
are determined to make our utmost efforts to achieve ourgoals through variety of measures with a steadfast resolve
and a willingness to take on new challenges.

7

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

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 bankindustry.

1. Functions to realize a sustainable society
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.

Regional
communities

SMEs

Individual
customers

IssuesSolutions

Value provided◦Regional revitalization◦Promotion of regional industry◦Increased use of cashless payments▪Provide Regional Revitalization Support Package▪Regional innovation in collaboration with externalorganizations▪Establishment of the SCB Furusato Ouen Dan▪An increase in linking shinkin bank accounts with cashlessbusiness operators

Prosperity ofregional society◦Expansion of sales channels◦Overseas expansion◦Business startups◦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▪Providing a platform to support business startups▪Provide a platform for M&A▪Provide funds and capital through our support fund
▪Provide services according to life stageSound
development of
SMEs◦Asset buildup◦Succession plannings◦Strengthening of financial literacy▪Provide products corresponding to life events▪Supplement services for assets under management at shinkin
banks▪Provide trust products for individual customers▪Provide digital skills training▪Providing a communication application

Realization ofpeople's
well-being

2. Central bank functions for shinkin banks
The SCB makes every effort to maintain an orderly financial system within the shinkin bank industry through the further strengthening of
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◦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▪Promote sharing of cash-related operations◦Strengthening of ability to manage risk
◦Nurturing and obtaining of human resources▪Assist sophistication in risk management▪Asset management consulting▪Provision of securities management tools▪Assist improvement of systems for cyber security▪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

Value provided

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 andloans that take ESG into consideration, such as forming project finance for private finance initiatives.

8

The SCB Group(As of July 31, 2023)

Regional trading
company operation

Securities

Support foroverseas businessexpansion

Consigned
clerical work

SHINKIN CENTRAL BANK

Data processing
consignment

Investment and
M&A advisory

Assetmanagement

Shinkin Securities¥20bn in capital (100% ownership);¥10bn capital reserve

Securities

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

Regional trading
company operation
Support foroverseas businessexpansion

Shinkin Regional Innovation¥100mn in capital (100%ownership)¥100mn capital reserve

Shinkin Singapore$9mn in caital (100%ownership)(Singapore local securities entity)

Personal loan
guarantees

Shinkin Guarantee

Assetmanagement

Shinkin Asset Management

Investment and
M&A advisory

Shinkin Capital

Data processing
consignment
Consigned
clerical work

Personal loan
guarantees¥1.0bn in capital (100% ownership)¥0.8bn capital reserve¥200mn in capital (100% ownership)¥490mn in capital (100% ownership)▪Dealing‌‌Brokerage▪
‌Underwriting▪
‌Underwriting new bonds and agency business▪
in the euro market▪
‌Dealing and brokering for existing euro bonds‌Foreign securities investment and consulting▪
▪Regional trading company business‌‌Regional innovation consulting business▪
‌Supporting the overseas expansion of shinkin▪
banks’ customers‌Supporting investments and loans of SCB▪
‌Conducting surveys and research for financial▪
innovation‌Nurturing human resources of the shinkin▪
bank industry‌Debt guarantee business (guarantees for▪
unsecured personal loans provided by shinkinbanks)‌Management services for discretionary▪
investment contract assets▪‌Management services for investment trust assets▪Investment banking‌‌M&A brokering▪
▪
‌Corporate business consulting

The Shinkin Banks
Information System Center▪Data processing consignment‌‌Software development▪
¥4.5bn in capital (50.7% stake;49.2% owned by shinkin banks); ▪
‌Computer consulting and training¥1.5bn capital reserve

Shinkin Chukin Business¥70mn in capital (100% ownership)(handles SCB administrative work)‌Computing▪
‌Promissory note exchange▪
‌Branch, dormitory, and other property▪
management

9Shinkin Central Bank Annual Report 2023

Shinkin Central Bank

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 business turnaround, business succession support,
business start-up support, and local-area revitalization.

Outline of Shinkin Banks

254 shinkin banks form an extensive network,with approximately 7,100 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 deeply rooted in theirrespective regions, and contribute to regional
development.
Total deposits outstanding at 254 shinkinbanks as of March 31, 2023, reached approximately ¥160 trillion ($1,200 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, 2023)
City Banks

2,423

Shinkin Banks

1,200

Second-tier Regional BanksManagement improvement /business turnaroundCo-financing

Succession support / M&As

Product and service expansion

Overseas expansion

Personal lending businessBusiness start-ups

Local-area revitalization

Hokuriku (15 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)
155.5(1,405)143.4(1,293)158.8(1,298)

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

160.2(1,200)145.2(1,336)

71.9
(648)

813
2

Shinkinbankcustomers

Nationwide Network of Shinkin Banks (254 banks)$3,455Agricultural Cooperatives

78.4
(708)

78.8
(643)

2021

2022

79.8
(597)

72.6
(668)

513

Credit Cooperatives

175

Labor Credit Associations

171

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.

10Shinkinbanks(Billions of US dollars)
2

Regional Banks2

Notes:

Shinkin Bank Services

2019

Note:

2020

2021

2022

2023

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥110.96, ¥108.71, ¥110.69,¥122.37 and ¥133.50 per US$1.00, the prevailingrate on March 31, 2019, 2020, 2021, 2022 and2023, respectively.
Source: The SCB.

2019

Note:

2020

2023

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥110.96, ¥108.71, ¥110.69,¥122.37 and ¥133.50 per US$1.00, the prevailingrate on March 31, 2019, 2020, 2021, 2022 and2023, respectively.
Source: The SCB.

Capital Adequacy Ratio of Shinkin Banks

12.26%

2019

12.48%

12.55%

2021

2022

The capital adequacy ratio of shinkin banksrose to 12.66% (preliminary figure) as of March
31 2023, from 12.55% at the end of the previous fiscal period.
The ratio maintains a level that is not inferior to that of domestic citybanks (12.62%),and is outperforming other domestic regionalbanks (10.01%).

12.66%

12.10%

2020

2023(Preliminary figure)

Source: The SCB.

Non-consolidated Capital Adequacy
Ratio by Bank Segment (%)(as of March, 31, 2023)

12.66%

12.62%
10.01%

Shinkin banks

Nonperforming-loan Ratioof Shinkin Banks (%)

City banks(Preliminary figure)

Regional banks

4.05%

2019

3.92%

2020

2021

3.97%

2022

4.03%

2023
(Preliminary figure)(Domestic)

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

3.80%

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 capital

11

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

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 Group
strives 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,
including 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 contribute to sustainable prosperity of regional societies by strengthening sustainability of shinkin banks
which support the regions and SMEs which constitute the business infrastructure for the regions, as well as
by activity supporting 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 strive to implement initiatives to bring well-being to senior generations,children and all people in the regions, and to contribute to realizing a diversified and inclusive society withthe 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 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.
Equator Principles
In April 2021, the SCB adopted the Equator Principles, a voluntary framework designed to ensure that in extendingloans to large-scale projects, financial institutions give due consideration to the impact of such projects on theenvironment and society.

12Measures for climate change (TCFD)
Introduction (Way of Thinking About Climate Change Initiatives)
The SCB formulated the “Declaration of Shinkin Central Bank Group on SDGs.” As the central bank for all shinkin banks, the SCB implements
initiatives together with shinkin banks throughout Japan toward the realization of a sustainable society by the principle of mutual support andnonprofit of a cooperative institution focusing on three important themes, namely the “region,” the “people” and the “environment.”
For environmental problems, including climate change, the SCB formulated the “SCB Group Environmental Policy” and is actively involved insolving these problems through its business and other activities.
In July 2019, the SCB endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Information isdisclosed in line with TCFD recommendations as follows.

Governance◇‌We hold an Executive Committee meeting to deliberate on our response policies regarding the SDGs including climate change, and thenresolve them at the Board of Directors.

We deliberate on the status of our initiatives based on the policies of the Board of Directors at meetings and then make reports to the Board of
Directors at least once a year.

We regularly deliberate on climate change risks at committees such as the Risk Management Committee, a subordinate body of theManagement Committee, and other committees.
Meeting structure

Past main matters for discussion

Board of Directors/ ・Formulation of the Declaration of Shinkin Central Bank
Executive
Group on SDGs
Committee
・Formulation of the SCB Group Environmental Policy
・Initiatives on SDGs in the SCB Group・Endorsement of the Recommendations of Task Forceon Climate-related Financial Disclosures (TCFD)・Formulation of the Guideline for Making Responsible
Investments and Loans by Type of Business・Adoption of the Equator Principles
・Strengthening the response to climate change
Risk Management
Committee

・Management of climate change risks in the Integrated
Risk Management
・Assessment of flows and importance of scenario
analysis concerning climate change risks
・Implementation of scenario analysis concerning climatechange risks

Promotion framework for SDGs
including climate change
Board of Directors

Executive Committee
Group Promotion
Committee on SDGs*

Group companies
Board of Directors* Chairperson: President and CEO
Members: President and CEO, executive officer in charge of SDGs Promotion
Division, and group company presidents
Executive office: SDGs Promotion Division◇‌From the standpoint of integrated management as one banking group, we hold the “Group Promotion Committee on SDGs” meetings twicea year, a committee comprised of executive officers of the SCB and SCB Group companies to discuss such matters as the SCB Group’s
policies and initiatives regarding the SDGs including climate change.
◇‌Initiatives about SDGs, including climate change, are being taken cross-organizationally, with the SDGs Promotion Division playing a central
role.

Strategy<Opportunities Associated With Climate Change>
To realize a sustainable society, we set the “Shinkin Green Project” in the Medium-Term Management Plan and are actively working on measures
such as promoting ESG investments and loans and decarbonizing regions.
By leading these initiatives to the growth of the shinkin bank industry, we aim to create a virtuous cycle for solving social issues further.
‌We regard the penetration of renewable energies and the advancement of technological innovations as investment opportunities. Toward the SDGs◇
target deadline of 2030, we have set a medium- to long-term goal of a cumulative total of ¥3 trillion in ESG investments and loans (from fiscal 2021
to fiscal 2030) and promoted ESG investments and loans.
We are also actively addressing transition finance for the transition to a decarbonized society. As a designated financial institution that conducts
business adoption promotion operations under the Act on Strengthening Industrial Competitiveness, we will support initiatives of business operators
toward realizing carbon neutrality.
 e recognize that encouraging decarbonization initiatives by regions or SMEs will create new businesses and obtain growth opportunities for SMEs and will◇‌W
also be important from the standpoint of revitalizing regional economies.
Together with shinkin banks nationwide, the Green Project Promotion Office, established within the Regional Innovation Division, is taking the lead inpromoting initiatives such as regional decarbonization in cooperation with government agencies and external organizations.

13

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Partnership Agreement

National Associationof Shinkin Banks

Ministry of
the Environment

The SCBBusiness
corporations

Specialized agencies

Cooperation

Collaboration

Collaboration

Regions

Shinkin banks

Regional economy
ecosystem*
Regional business
operators

Local public
entities

Creation of new businesses,
supply of funds

Energy supply

Creation ofrenewable power
generation businessSupply of green
electricity tofacilities of local
public entities

Energy demand

Realization of ZEB(net zero energy buildings)

Realization of ZEH(net zero energy houses)

Placement ofsolar panels
at local business
operators

Promotion ofenergy savingof local business
operators* It is a relationship in which corporations, financial institutions, local public entities, and governmental institutions play their respective roles and complement each other, while
maintaining close relationships with economic entities outside their respective local communities and collaborate and co-create in many ways.

<Risks Associated With Climate Changes>
As climate change risks, we recognize that the assumed risks include the risk associated with a transition to a low-carbon society, such astightening regulations and technological innovations relating to the climate (transitional risk) and the risk associated with physical damage due
to causes such as an increased number of the natural disasters and abnormal weather related to climate change (physical risk).
We establish a business continuity structure and take measures, such as assessing impacts on finance conditions of the SCB because these risks
are assumed to have a direct impact on our business activities and an indirect impact from affected investment and loan customers.
◇‌As the central bank for all shinkin banks, our business continuity plan (BCP) recognizes that in continuing to provide financial functions
required to maintain the economic activities of shinkin banks as well as stakeholders, storm and flood damage and other disasters are events
that have a material impact on performing businesses. We have established a structure that enables us to continue essential businesses whenthese become apparent.
◇‌To assess the impact on the financial conditions of the SCB quantitatively if customers are affected by climate change, we conducted ascenario analysis as follows.

Scenario Analysis for Climate Change

Based on the “Practical Guide for Scenario Analysis of Climate Change Risks and Opportunities in Accordance with TCFD Recommendations(for the Banking Sector) ver.2.0” released by the Ministry of the Environment, we analyzed two scenarios: "1.5 °C" and "4 °C." Based on the
TCFD recommendations, we selected loans and bills discounted as exposure to be analyzed.
(i) Organization of outlook of the world per scenario

The outlooks of the world in “the 1.5 °C scenario” and “the 4 °C scenario” are as follows.
[Outlook of the world in the 1.5 °C scenario]
Policies, laws and regulations, and customer preferences change toward net zero by 2050

14

(Possible Circumstances)
Policy/regulatory

Introduction of carbon tax, shift to low carbon emission energies, etc.

Technology

Transition costs, etc. due to penetration of low carbon technologies

Transitional risk

MarketChanges in supply/demand for handled commodities, rise in raw material prices, etc.

Reputation
Physical risk

Changes in carbon neutral awareness of customers and communities, etc.

Acute

Risk of physical or other damages due to more severe natural disasters decreases compared to the 4 °C scenario

Chronic

Risk of damage (such as sea level and the average temperature rises) due to more extended abnormal weather decreases compared to the 4 °C scenario(Possible Impacts)

The risks associated with the transition to a low-carbon society (transitional risk), such as tighter climate-related regulations and technologicalinnovation, will increase and affect the businesses and financial conditions of investment and loan customers, which can be expected toaffect a portfolio indirectly. At the same time, physical risks are assumed to be lower than those in the 4 °C scenario.
[Outlook of the world in the 4 °C scenario]
There are no changes in policies, laws and regulations, and customer preferences for decarbonization products, climate change measures do
not proceed, and disasters become more severe(Possible Circumstances)
Transitional risk

Climate change policies and regulations are tightened insufficiently, and transitional risks are lower than in the 1.5 °C scenario

Physical risk

AcutePhysical or other damage, such as flood damage due to events including escalated severity of extreme
weather, occurs

Chronic

Damages (such as sea level rise and the average temperature rise) due to extended extreme weather occurs(Possible Impacts)

A portfolio is assumed to be affected by increasing the risk associated with physical damage due to causes such as increased natural
disasters or abnormal weather related to climate change (physical risk) to affect investment and loan customers' business and financial
conditions. At the same time, transitional risks are assumed to be lower than in the 1.5 °C scenario.
(ii) Selection of important sectors

Given the degree of climate change impacts and the scale of exposure of loans and bills discounted, we selected the electricity and realestate sectors as important sectors for scenario analysis.
(iii) Organization of transmission channels for impacts on financial conditions of important sectors

We organized the transmission channels in which climate change impacts companies’ financial conditions in the important sectors in “the1.5 °C scenario” and “the 4 °C scenario.”
In organizing the transmission channels, we recognized important elements as listed in the table below.
[Important Elements That Impact Each Sector]
Electricity sector
Policies/laws andregulations
Technology

Introduction of carbon tax
Investments in R&D of low carbon technologies

Transitional risk
MarketReputation
Acute
Physical risk
Chronic

Changes in energy mix
Changes in carbon neutral awareness ofcustomers and communities
Damage to power generation stations andothers due to flood damage
Suspension of electricity supply grids due todamaged facilities

Real estate sector
Introduction of carbon tax
Investments in developing decarbonizationready properties and others
Shift of demand to environment-conscious
properties
Lower evaluations of non-environmentconscious properties
Damage to owned properties due to flood
damageLower labor productivity of workers due toglobal warming

15

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank(iv) Quantitative assessment of transitional and physical risks in important sectors

In line with the transmission channels, we estimated each company’s financial statements by 2050. We calculated the increase in creditrelated costs appropriate to the corporate credit strength changes derived from the resulting estimation.
[Transitional Risk (1.5 °C scenario)]
Base scenario

IEA-net zero emissions scenario

Analysis subject

Exposure of loans and bills discounted for electricity and real estate sectors

Analysis period

By 2050

Analysis method

Made a trial calculation of the impacts of the transition to a decarbonized society on the financial statements ofthe companies in the analysis sectors and estimated the increase in credit-related costs

Analysis result

Around ¥17.1 billion (cumulative)[Physical risk (4 °C scenario)]
Base scenario

IPCC-R8.5

Analysis subject

Exposure of loans and bills discounted for electricity and real estate sectors

Analysis period

By 2050

Analysis method

Overlaid hazard maps on business assets and others owned by the companies in the analysis sectors, make a trial calculation of
impacts on their financial statements from flood damage, and estimated the increase in credit-related costs

Analysis result

Slight amount(v) Scenario analysis results

For the important sectors, the transitional risk by 2050 is around ¥17.1 billion on a cumulative basis, while the physical risk is a slightamount, showing the impact of both risks on financial conditions is limited.
‌◇‌As of March 31, 2023, carbon-related assets accounted for 25.4% of total loans*. Based on TCFD recommendations, loans to the energy,transportation, materials and construction, and agriculture, food, and forest products groups are defined as carbon-related assets.

* Total direct lending to members (shinkin banks) and non-members (¥9,266.4 billion)

Risk management‌We manage climate change risks in the integrated risk management framework. Specifically, we recognize that these risks are causes of generating or◇
amplifying risks in risk categories (such as market and credit risks).
We add climate risk change events to a risk map that classifies and organizes them according to two criteria: “impact on the SCB" and "probability ofoccurrence," and visualize and share these.
The risk map is reviewed and revisions are approved as needed in the regular Risk Management Committee, which comprises executive officers andheads of related departments.
The risk events' measures are taken according to their impact and probability.
◇‌W e have distinguished those sectors whose financial conditions are susceptible to climate change and formulated the "Guideline for Making Responsible
Investments and Loans by Type of Business."
By making investments and loans in accordance with this Guideline, which is continually being revised, we are making a contribution to the realization of asustainable society as well as managing the financial impact on the SCB. In July 2021, we tightened our policy on investments and loans for coal-fired power
generation.
[Outline of the Guideline for Making Responsible Investments and Loans by Type of Business]
1. Cluster munition manufacturing businesses
Because of the inhumane nature of cluster munitions, we will not provide investments or loans to companies engaged in such business.
2. Coal-fired power plant businesses
Compared to other power generation methods, coal-fired power plants emit a significant amount of greenhouse gases, making such businesses amajor contributor to negative environmental impacts. With this in mind, we will not provide investments or loans that will be used to finance theconstruction of coal-fired power plants.
3. Palm oil farm development businesses and deforestation businesses
Palm oil farm development businesses and deforestation businesses run the risk of illegal logging and adversely affect the ecosystem.
Before providing investments or loans that will be used to finance such businesses, we will carefully consider any impact on regional communities
and the environment.

◇‌T he SCB adopted the Equator Principles in April 2021. Based on these principles, we assess the environmental and social impacts of projects in the decisionmaking process on project finance, etc., and continuously monitor the status of environmental and social considerations even after the project has been put
into operation.
In April 2022, we established the Procedures for the Equator Principles.
◇‌In the framework of credit screening, the impact of ESG factors on the creditworthiness of the credit recipient is qualitatively evaluated, and credit decisions
are also made based on the evaluation results.
In addition, when investing in funds, we evaluate the ESG investment stance of the entrusted asset management company and make investment decisions
based on the evaluation results.

16

Metrics and Targets◇‌W e have set a target of ¥3 trillion for the cumulative amount of ESG investments and loans from fiscal 2021 to fiscal 2030.
The scope of ESG investments and loans is defined as investments and loans that contribute to solving environmental and social issues (bonds, loans, funds,
project finance, PFI, etc.) with reference to international principles and government guidelines.
[Amount of ESG investments and loans executed]
TargetCumulative total of ¥3 trillion from fiscal 2021 to fiscal 2030

ActualCumulative total of ¥818.7 billion (including ¥185.9 billion in the environment category) from fiscal 2021 to fiscal 2022◇‌W
 e have set targets for reducing the balance of investments and loans used to finance the construction of coal-fired power plants by 50% by fiscal 2030 fromthe end of fiscal 2020 and to zero by fiscal 2040.
[Balance of investments and loans used to finance the construction of coal-fired power plants]
TargetReduce by 50% by fiscal 2030 from the end of fiscal 2020*1, and to zero by fiscal 2040

ActualBalance at the end of fiscal 2022: ¥7.3 billion*1 Balance at the end of fiscal 2020: ¥5.9 billion◇‌T o contribute to “carbon neutrality by 2050,” as outlined in the Paris Agreement and by the Japanese Government, the SCB has set a target to reducegreenhouse gas emissions (Scope 1 and Scope 2)*2 to virtually zero by fiscal 2030. Based on the road map for the target, we will contribute to realizing adecarbonized society by switching to electricity derived from renewable energy sources and saving energy.
[Greenhouse gas emissions]
Measurement Item

Fiscal 2022

Scope 1

1,878 t-CO2

TargetScope 2

9,679 t-CO2

Total

11,557 t-CO2

Virtually zero by fiscal 2030

*2 Scope 1: Direct emissions generated by the business operator itself (combustion of fuel, etc.)
Scope 2: Indirect emissions generated through use of electricity, etc. supplied by another party[Road map toward reduction of greenhouse gas emissions to virtually zero]
Phase 1 Reduction to less than 2,000 t-CO2
Before2021

Electricity

Fiscal2022

Fiscal2023

Fiscal2024

Gas
I. Decarbonization●Introduction of HV official vehicles ●Introduction of HV sales vehicles
measures▶●Trial introduction of EV vehicles
Automobile

Lighting
Air conditioning

III. Energy creation measures

Fiscal2027

Fiscal2028

Fiscal2029▶

Fiscal2030●Consideration (implementation) of introduction of new technologies●Consideration (implementation) of full-scale introduction of EV vehicles▶
●Consideration of emissions trading ●Trial introduction of emissions trading ●Introduction of emissions trading▶
▶
●Consideration (implementation) of participation in planting projects

OthersElectricity saving

Fiscal2026●Trial introduction of ●Introduction at all owned offices, including●Reassessment of green electricity contracts (utilities/types)
green electricity
tenants▶
▶
●Introduction of carbon neutral gas

II. Energy-saving
measuresPhase 2 Achievement of carbon neutrality

Fiscal2025●Electricity saving measures

▶
▶

▶
▶
▶
▶

●Introduction of LED (Head office/Kyobashi/computing centers/each sales branch) ●Consideration (implementation) of environment-conscious large-scale renovation▶
▶
●Introduction of high-efficient air conditioning and other equipment▶
●Construction of zero-emission branches●Consideration (implementation) of existing branch renovation for ZEB▶
●Consideration (implementation) of introduction of PPA▶
▶

◇‌In order to reduce CO2 emissions, efforts are underway to achieve electricity consumption reduction goals based on the "shinkin bank industry’s environmental
voluntary action plan," and have achieved actual reduction that exceeds the reduction target for fiscal 2030.
[Electric power consumption]
Target19% reduction in fiscal 2030 compared to fiscal 2009*3

ActualFiscal 2022 205 kWh/m2*4 (-45.0%)*3 Fiscal 2009 373kWh/m2*4 Electric power consumption rate = electric power consumption/total floor space17

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank

Medium-Term Management Plan "SCB Strategy 2022"
Overview of the Medium-Term Management Plan “SCB Strategy 2022”
The current environment surrounding the shinkin bank industry is characterized by a number of material issues that must be addressed,
including sustainability concerns of regional communities, accelerating digitization, climate change countermeasures, in addition to thepersistently low interest rate environment due to sustained monetary easing.
In light of these changes in the business environment, the SCB has formulated a new Medium-Term Management Plan, “SCB Strategy
2022,” which is based on the “Four Strategies” and “Three Reforms” that follow the initiatives of the previous Medium-Term Management Plan,
and the new Plan began from April 2022.
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.
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 bank’s field of expertise.

Vision by 2030

Achieving both increased corporate value and solutions to social issues= Sustainable Management

Shinkin Green ProjectMedium-Term Management Plan “SCB Strategy 2022”- Road to 2030 - The Future of Regional Communities Together with Shinkin Banks- Plan period Fiscal 2022 to fiscal 2024
(3 years)

HX

NX

DX

4S

Human assets

Network

Digital3X

Strategy

Transformation- Four Strategies -Strategy 1

Improve the capability to solve issues ofregional communities- Reforms through HaND -Shinkin Banks’ Strengths

Strategy 2Strengthen shinkin banks’ profitability andcapability to respond to risk

The SCB’s Strengths

Strategy 3

Build a sustainable and efficient business
operating structure

Strategy 4

Strengthen SCB’s financial base

Relationshipwithregional
communities

Face to facecustomer contact

Values to be shared

The SCB“Collaboration” with shinkin banks

Collaboration with the outside● Medium-term target level of
earnings● Levels of management indicesthat should be maintained

Profit attributable to owners of parent

Consolidated capital adequacy ratio (domestic standard)

Around18

Shinkin banks¥40.0 billion

At least

15%

Global network

Cooperation
withexternalorganizations

Practice of “Try & Learn”

Maximum amount available for dividend
At least¥200 billion

Three Reforms - HaND The nature of financial institution business is about to undergo a major transformation as a result of accelerating innovation due to dramaticadvances in digital technology, the resulting shift in industrial structure, and intensifying competition across industries and business categories.
Under these circumstances, it is necessary for the shinkin bank industry to reform its business model to increase its competitiveness as a whole.
The SCB will create reforms based on the three pillars including “Human assets,” “Network,” and “Digital,” which can represent strengths
and opportunities for the shinkin bank industry, and will enhance the competitiveness of the shinkin bank industry.

Reforms through HaND
Human assets × Network × Digital↓

Improving the competitiveness of the shinkin bank industry

Human assets transformation

Network transformation

Digital transformation

Advancement of diverse human resources

HX

Shinkin banks×

Regional communities

×

Acquisition of specialized skills

NX

Blending of real world and digital technology

External organizations

×
×

DX

Improved efficiency and productivity

Direction of HaND

Human assets
transformation

HaND will provide opportunities for diverse human resources to play an activerole in the industry and establish a system to enable each individual to acquire
highly specialized skills.
Through this, we aim to enhance the growth of the shinkin bank industry andincrease corporate value through the advancement and growth of “human assets.”

P22

Networktransformation

The SCB Group will serve as the hub of the shinkin bank industry, and by further
strengthening organic collaboration with external organizations such as businesscompanies and government agencies, we aim to sublimate the industry network
into a system that solves regional community and shinkin bank issues, and toenhance its value (maximize network value).

P24

Digitaltransformation

By combining shinkin banks’ strengths in “face to face” communication with digitaltechnology, we aim to create a new customer experience by increasing thedepth of all phases of customer contact, customer understanding, and problem
solving.

P26

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Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Medium-Term Management Plan “SCB Strategy 2022”

１

Improve the capability to solve issues of regional communities

Strategy

In order to meet the expectations of regional communities raised by the COVID-19 pandemic, we will focus on initiatives that makea significant contribution to solving issues of regional communities and increase the effectiveness of our measures.
We will aim to build a system in which the shinkin bank industry receives appropriate compensation for these initiatives andprovides quality services to regional communities on a sustainable basis.

Strategy 1

Achieve by 2030
H N D

[Focus Initiatives and Measures]Support for SMEs suitable for life stages

N

Driving DX for SMEs

D

Initiatives to realize a decarbonized society

N

Encouragin regional community innovation

N

Support for individuals suitable for life stages

N

Developing and securing human resources that
contribute to problem solving

H

H …Human assets

N …Network

２

Strategy● Shinkin banks will continuously demonstrate
their capability to solve regional community
issues as a regional community platformer● Shinkin banks will demonstrate their presence
Improve the capability ofshinkin banks to solve
problems faced by regional
economies (SMEs, regional
communities, and individuals)

as key players in the realization of SDGs anddecarbonization in regional communities

D …DigitalStrengthen shinkin banks’ profitability and capability to respond to risk

The SCB Group will work together as one to deepen its consulting functions for shinkin banks, including fund management and risk
management support.
We will promote the provision of products and services that contribute to the diversification of shinkin banks’ revenue sources.

Strategy 2[Focus Initiatives and Measures]

Achieve by 2030
H N D

Strengthening of fund management and risk
management support structureN● Achieve efficient fund management and risk
management in the shinkin bank industry as a

Developing data business in the shinkin bank industry

Providing comprehensive consulting services for fundmanagement

20

D

H

whole, while maintaining an appropriate level
Strengthening themanagement foundationnecessary for shinkin banks tosustainably solve problems ofregional communities

of profits

３

Build a sustainable and efficient business operating structure

Strategy

To make effective use of limited management resources, we will work to improve operational efficiency by promoting collaboration,
centralization, and outsourcing, while maintaining and improving the robustness and sustainability of our operations.
We will develop an environment that will serve as a foundation for business model reform in the shinkin bank industry.

Strategy 3[Focus Initiatives and Measures]

Achieve by 2030
H N D
● Introducing labor-saving measures for middle

Promoting operational efficiency in shinkin banks

N

Promoting operational efficiency at the SCB

D

and prioritizing allocation of management

Establishing an environment to accelerate industryDXD

regional communities

Establishing an environment to promoteadvancement and growth of human assets

H

Improving robustness and sustainability ofoperations

Nand back-office operations of shinkin banks
resources to front-office operations for

Building a structure to
improve operational
resilience and efficiency
in the shinkin bankindustry● Improving the status of working in the shinkinbank industry

４

StrategyStrengthen SCB’s financial base

While a commensurate cost burden is expected to be incurred in strengthening the functions of the shinkin bank industry, we will
aim to enhance profitability by upgrading our risk appetite framework management and developing specialized human resources.
As one of Japan’s leading institutional investors, we will promote initiatives to contribute to the improvement of social
sustainability through the promotion of ESG investments and financing.

Strategy 4[Focus Initiatives and Measures]

Achieve by 2030
H N D
● M aintain the profitability and soundness

Upgrading risk appetite framework management
Developing human resources with expertise ininvestment and loans-related operations
Promoting ESG investment and financing andenhancing climate change response
Making appropriate allocation of management
resources

necessary to fulfill its functions as a central
financial institution in a permanent and stableH

mannerEstablishing a mediumto long-term financialbase for the SCB to
fulfill its role as a central
financial institution● Contribute to the sustainable development ofsociety through ESG investments and financing

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Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

HX: Human assets transformation
Front Line of Diversity
Shinkin banks, which solve problems through approaches that are suitable
for regional characteristics, are a keeper of regional diversity“Diversity.” It is one of the words that have recently attracted attention worldwide.
As the world is shifting from a centralized society to a decentralized society, shinkinbanks are so-called the “front line of diversity” and a “keeper for regional diversity”
because they solve problems through approaches that are suitable for regional
characteristics such as respective history, cultures, and climates.
The officers and employees in the shinkin bank industry take roles in promoting regionoriginated initiatives that root in each region. The skills required for them are moreadvanced and diversified than ever.
To support shinkin banks that meet diverse regional needs, the SCB must generate
an environment where each employee can maximize one’s abilities, such as nurturing
free thinking and a try-to-do mind.
As measures for developing human resources appropriate for the central bank for theshinkin bank industry and steps for creating a comfortable work environment, the SCB
has implemented an employee engagement survey since fiscal 2019.
Employees highly expect backup for their challenges and support for the growth ofeach employee. In fiscal 2022, we took initiatives toward fostering an organizational
culture in which challenges are encouraged. For example, we introduced the“neXtry” program in which employees learn the process from idea conception to its
materialization.
We will focus more than ever on creating the ideal environment so that diverse
human resources can maximize their capabilities and play active roles for longer,
leading to a dynamic organization's realization.

Senior Managing Director

Yuzuru Nishino

Toward the Advancement and Growth of Human Assets
We will further work on fostering an organizational atmosphere and creating a comfortable work environment so that a diverse range of human assets,
including women and seniors, can play an active role, and by working to develop human assets with expertise and the flexibility to respond to changes inthe environment, lead to the growth of the shinkin bank industry and enhance our corporate value.

Advancement of diverse human assets

Acquisition of specialized skills
Establish
environments

Provideopportunities

Market operations

GenderAgeWork
experience

ValuesLifestyle

FinanceSME
finance

IT / digital

Businessstrategy

Shinkin banks

The SCB

Nationality

Recognition of their role and social
mission as officers and employeesof the shinkin bank industry

Consulting

Advancement and growth of “human assets”

Growth of the Shinkin Bank Industry and Enhancement of Corporate Value

22

Three Reforms(HaND)

Employee Engagement
As financial institutions are expected to reform their business models to create an environment in which employees can maximize their capabilities,
we recognize “employee engagement” as an essential notion and are working to improve it.
Specifically, we have implemented an employee engagement survey since fiscal 2019 to visualize employee engagement, follow the PDCA cycle andthereby improve engagement effectively.
We analyze survey results per attribute, such as departments and job positions, and then share the results with the management and department leaders.
We make efforts to enhance an organization-employee trust relationship through the engagement of the management and efforts at on-site levels.
In addition to the survey results which are quantitative data, we are working to consider and implement company-wide measures based on qualitative
data such as issues recognized at on-site levels.
PDCA toward improvement of engagement

Transformation of an organizational culture
We are working on the “transformation of an organizational
culture,” a key factor for improving engagement.

Implementationof a survey

Analysis ofsurvey results

Fostering an organizational culture in whichchallenges are encouraged
New business creation program “neXtry”
Career challenge program

Improvement ofengagement
Consideration/
implementationof measures

Supporting employees’ mental healthTop seminars

Share ofanalysis results

SCB peer bonus

Raising employees’ awareness of work engagement
One-on-one meeting with a management person of each department
Training by job level

New Business Creation Program

neXtryThe new business creation program “neXtry” is a system in which the SCB’s employees propose
new solutions to solve issues of regional communities, shinkin banks and others and work to realize
their ideas by the proponents themselves with organizational backup.
In this program, the employees who make new business proposals repeatedly test hypotheses tobrush them up, go through reviews and then commercialize based on the “Try & Learn” spirit. In
fiscal 2022, a proposal on fundamental operational reforms using AI chatbots was adapted. The
proponent is working toward its commercialization.
Through this program, the SCB is supporting growth opportunities for employees and fostering an
Final review successful proponents in 1st termorganizational culture in which challenges are encouraged.
OutlineIdea generation period
Idea generation

Business plan formulation / hypothesis planning period
1st review

Entry sheet preparation

Business plan preparation

Business hypothesis testing period

2nd review

Hypothesis testing

Ongoing implementation

Final review

Commercialization★

Provision of workshops and idea consultation sessions, mentoring for accompanying support
1st review
Review
methods

2nd review

Screening of documents by entry sheets

Main
entry
areas

Supporting local
communities

Profitability
enhancement

Matching

DX

Review
methods

Presentation review where 1st review successfulproponents make presentations for SCB executive officers

2nd review
scene

Final review
Review
methods

Presentation review where 2nd review successfulproponents make presentations for SCB executive officers

Scene offinal review
sessions

Productivity
improvement

23

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

NX: Network transformation
One Banking GroupThe shinkin bank industry is something
like the picture book “Swimmy”
Like the big fish made up of a group of smaller fish depicted in the picture book
“Swimmy,” the shinkin bank industry can function as if all 254 shinkin banks
nationwide were one f inancial institution when needed, while each acts
independently as an individual financial institution on a day-to-day basis. The
shinkin bank industry has ¥160 trillion in deposits, which is the third largest
deposit volume of any financial institution in Japan.
Shinkin banks, rooted as cooperative financial institutions in regions, connect
through the SCB Group as the central bank and hub, forming one of the widest anddeepest networks in Japan that cover from micro, small and medium businesses tolarge enterprises and from local governments to national governments andinternational organizations.
The SCB Group would like to utilize this network and solve issues tackled by eachregion, thereby opening up new potentials of regional communities.
To date, we have supported initiatives that utilize our network. For example,
overseas offices of the SCB hold the “Shinkinkai” (local networking) to support
shinkin banks’ customers in their overseas business/sales channel expansion. The“Shinkin Business Succession Consortium” was established to provide one-stopManaging Director Takehiko Murotani
consultation ser vices on business succession and coordinates appropriate
external organizations.
The SCB Group intends to serve as the hub of this network to further strengthen ties between the community and external organizations andenhance its value.

Formation of the Shinkin Ecosystem
The SCB Group will serve as the hub, organically combining the local community networks of shinkin banks nationwide with SCB’s extensive
networks of external organizations in Japan and overseas to create a problem-solving system that transcends the framework of the shinkin bankindustry.
By doing so, we aim to solve issues in Japan’s local communities and form a system (the Shinkin Ecosystem) in which participants in the network
mutually grow, co-exist, co-prosper and mutually support each other.
Research andeducational
Institutions

SMEs

Regional
community societies

Business
corporations

Organic combinationof networks

Network-based
Shinkinproblem solving
banks↓
Sustainable growthof Japan’s local communities

Externalorganizations

Co-existence andco-prosperity withlocal communities

Regional
community
residents
Local
governments

Specialists

Problem solvingproviding solutions
The SCB↓Business growth through solutions
to regional community social issues

Ecosystem*

Government
agencies

Overseasbusinesses* “Ecosystem” originally means a state in which organisms living in the same area depend on each other to survive. Here, it refers to the co-existence, co-prosperity, andmutual support of the many stakeholders in the network in which shinkin banks and the SCB are involved.

24Three Reforms(HaND)

N e t wo r k i ng by “ S h i n k i n k a i ” ( L oc a l N e t wor k i ng)
The primary purpose of the “Shinkinkai” is to exchange among shinkin banks’ customers and overseas local subsidiaries and provide information. It has
been held more than 90 times worldwide, such as in Hong Kong and Shanghai. As the local Shinkinkai events organized for the first time since the
COVID-19 pandemic, we held the “1st Singapore Shinkinkai” on the first anniversary of starting a business of the group company “Shinkin Singapore
Pte. Ltd.” in August 2022 and “16th Bangkok Shinkinkai” on the 10th anniversary of opening the SCB Bangkok Representative Office in February 2023.
With the “Shinkinkai” as one of opportunities, participating shinkin banks have raised their awareness on overseas-related operations. Activities such asdispatching trainees to the SCB and on-site touring are being taken actively.
Scene of Singapore Shinkinkai

Scene of Bangkok Shinkinkai

75 people from 52 organizations participated

316 people from 198 organizations participatedUtilizing the Shinkin Bank Network to Address Business Succession Issues
The group company “Shinkin Capital Co., Ltd.” provides solutions that relate to M&As and all aspects of succession planning of SMEs, such as succession
planning for family-owned business.
In fiscal 2022, the company expanded regional offices, including establishing two new offices. Dedicated employees in eight offices including the Tokyo
head office, are conducting flexible activities.
Through operating the “Shinkin Business Succession Consortium” built to facilitate succession planning of shinkin banks’ customers, Shinkin Capital Co.,
Ltd. receives various consultations concerning business succession at one stop and coordinates appropriate external specialized agencies.

Shinkin Business Succession Consortium

Establishment of a dedicated M&A platform for the shinkin bank industry

Ｍ&Ａ支援
M&A
supportCoordination withappropriate externalorganizations toaddress businesssuccession issues

Excess debt
elimination

Business succession support
for medical and nursing care

Subsidy applications

Tax consultation

HR recruitment Asset succession
supportCooperation with externalorganizations to establish a
dedicated M&A platform forthe industryMatching amongshinkin banks’ customers

Stock purchases

Organic Collaboration with Shinkin Banks and External Organizations
to Solve the Urgent Problem of Business Succession
Shinkin bank industry network to solve business succession issues

Shinkin CapitalStrengthening cooperation
with shinkin banks throughexpansion of officesMeticulous
response to the needs ofshinkin banks’ customers
In addition to five offices in fiscal 2021,
two new offices were established in fiscal 2022

Tokyo head office
Regional offices

Shinkin banks

Utilize nationwide network ofshinkin banks to collect businesssuccession needs of customers

254 shinkin banks nationwide

25

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

DX: Digital transformation
Players in DX Introduction
Shinkin banks, whi ch s tay cl os er to c u st o m e r s d a y - t o - d a y b a sis,would like to a s s i s t them i n i ntroduc in g D X
Driving DX in SMEs is one of the issues tackled by each region common acrossJapan. A first step of driving DX for SMEs could include keeping track of cash
management by visualizing account balances and responding to the invoicing scheme.
These could expect SMEs to improve productivity but are often given a low
priority for the SME management persons and sole proprietors who are alwaysbusy.
In these circumstances, shinkin banks, which stay closer to customers daily, and the
SCB, the central bank for all shinkin banks, are keen to assist busy customers indriving DX.
In October 2022, the SCB launched “Kei Yell,” a portal service for SMEs, as agateway for DX. The name Kei Yell contains the wish of “sending cheers to every
management person.”In August 2022, to drive DX in shinkin banks and SMEs, the SCB entered intobusiness alliances with NIPPON TELEGRAPH AND TELEPHONE EASTCORPORATION and NIPPON TELEGRAPH AND TELEPHONE WEST
CORPORATION.
The SCB will utilize insight from both companies to support the introduction of
Kei Yell and develop human resources proficient in digital technology in theshinkin bank industry.
Shinkin banks and the SCB will continue to assist SMEs nationwide in introducing
and supporting DX.

Deputy President

Hiroshi Nakahara

Toward DX Driving in the Shinkin Bank Industry
The “blending of the real world and digital technology” means that the SCB will provide real-time necessary support through smartphones and personal
computers, in addition to the “Face to Face” communications which are characteristics of shinkin banks.
In addition, using digital technology, we will further improve the efficiency and productivity of operations in the shinkin bank industry to a greater
extent than ever before, thereby allocating management resources to operations that contribute to solving regional community issues.
Blending of real world
and digital technology
・Increasing points of customer contact
・Deep understanding of customers
・Making customer-oriented proposals

Creation of
new customer
experiences

Industry DX

Allocationof more resources
to solve regional
community
issuesReform of operations,organization, and processes

Improvement of operational
efficiency and productivity“Face to Face” + digital technology

Digitalization
Portal service for SMEs

RPA

(Digitization of individual operations)Web conferencing

Telework

Without affixing seals

Data utilization
Digitization of documents

Digitization(Digitization of analog and physical data)

26

Electronic contracts

Three Reforms(HaND)

Provision of “Kei Yell,” a Portal Service for SMEs
In October 2022, the SCB released “Kei Yell,” a portal service for SMEs. The concept of “Kei Yell” is “gentle digital and warm fintech.”(The service has seven functions that are convenient for performing daily tasks, including keeping track of cash management, handling of electronic
invoices, and electronic bookkeeping. Introducing Kei Yell will enable users to digitalize daily operations.)
In launching Kei Yell, the SCB entered into business alliances with NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION and NIPPONTELEGRAPH AND TELEPHONE WEST CORPORATION.
While both companies have nationwide networks similar to that of the shinkin bank industry, they also have a high level of expertise in all aspects ofdigital technology.
By combining the shinkin bank industry, which has strengths in regional finance, with the strengths of NIPPON TELEGRAPH AND TELEPHONE EASTCORPORATION and NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION which provide regional communities with ICT services
widely, the SCB will contribute to solving problems of SMEs nationwide.
PosterScene of a press conference for announcing a business alliance* From left, SCB President and CEO Hiroyuki Shibata, NIPPON TELEGRAPH AND
TELEPHONE EAST CORPORATION President Naoki Shibutani

Acceleration of DX Human Resource Development in the Shinkin Bank Industry
To enable shinkin banks themselves to streamline operations through DX and allow them to support SMEs in introducing DX, it is urgent to develop
human resources with expertise in digital technology.
For this reason, the SCB started providing about 100,000 employees of the SCB and shinkin banks with training programs related to DX human resource
development.
As an opportunity for self-learning by the SCB’s employees, the SCB provides the online learning platform “Udemy Business.”
Through this program, the SCB will accelerate DX human resource development in the shinkin bank industry and proceed with supporting DX in shinkinbanks and SMEs.

Training by level

Self-development

Implementation situation (fiscal 2022)

Level 2
Held a three-day practical workshop
under the theme of BPR

Level 1alhnic
Tec ills
sk

Bus
ine
skill sss

Held a one-day workshop in which
participants considered operational
improvements through digitalization

Level 0Conducted e-learning for
all employees to learn
DX basic knowledge

The learning platform “Udemy Business,”which enables people to learn more than
10,000 courses, such as DX-related skills,
is provided charge-free for those whoare interested in learning* “DX Human Resource Development Program” in the
SCB (technical skill training will start from fiscal 2023)

27

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Overseas Networks
The SCB has offices in New York, London, Hong Kong, Shanghai, Bangkok and Singapore. Through these offices, we collectand disseminate up-to-date information relating to economic and financial conditions, the investment and financing 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 second 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.
Network of SCB Group’s overseas offices and allied banks

Shinkin International Ltd.
SCB New York Representative Oﬃce

Bank of China

LondonSCB Hong Kong Representative Oﬃce
Shanghai

The Bank of East Asia

New York

Shinkin Central Bank

BeijingTokyo

SCB Shanghai Representative Oﬃce

Hong Kong
ManilaBangkokBank of Shanghai

Ho Chi Minh City

Mexico City

Bank of Communications

Banco Mercantil del Norte, S.A.

BDO Unibank, Inc.

Singapore

Joint Stock Commercial Bank for
Investment and Development of Vietnam

Jakarta

Shinkin Singapore Pte. Ltd.
Maybank Indonesia
SCB Bangkok
Representative Oﬃce
Bangkok Bank… SCB Oﬃce…

Business Alliances(SCB employees seconded)… Business Alliances

Expanding our global network
Given the increase in the number of Japan’s SMEs expanding overseas, particularly in Southeast Asia, in July 2021, we opened a Singapore-based subsidiary,
Shinkin Singapore Pte. Ltd., as a new Asian base for the shinkin bank industry.
Together with shinkin banks, we are committed to bringing the growth potential of Asia into the future of the regional economy by providing
financing and supporting sales channel development for SMEs.

Mission of Shinkin Singapore Pte. Ltd.

28

Supporting the overseas expansion ofshinkin banks’ customers

Establishing a competitive advantage in the shinkin bank industry’s overseas support system by enhancing financefunctions and sales channel development functions.

Supporting investments andfinancing of SCB

Realize and maintain optimal asset allocation by utilizing the global network of the SCB head office and overseas
offices.

Conducting surveys and research forfinancial innovation

Utilizing examples of financial innovation in Singapore and other Asian countries to revitalize local communities
and offer solutions to social issues.

Nurturing human resources of theshinkin bank industry

Systematically develop and improve engagement of shinkin banks and SCB employees through practicalexperience in Asian markets.

Support for overseas business expansion and funding
The SCB has formed business alliances with nine local banks overseas to increase its capability to support shinkin banks’ customers who are expanding their businesses overseas.
Working with shinkin banks, the SCB and local banks, we provide a wide range of support to shinkin banks’ customers who conduct businessoverseas 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
We are collaborating with shinkin banks in the business areas such as overseas expansion, cultivation of overseas sales channels, overseas financing,effective use of overseas human resources, inbound tourism, and foreign exchange, thus providing various services to those shinkin banks’ customers who are considering overseas expansion.

“Shinkinkai” (local networking)We hold regular meetings of the “Shinkinkai” local information exchange events in order to build networks among shinkin banks’ customers who
are active in the region, involving not only the three Asian offices of Hong Kong, Shanghai, Bangkok and Singapore, but also Ho Chi Minh, Jakarta
and Manila, where staff have been seconded to local banks with which business alliances have been concluded.

Global Expansion by Shinkin Bank Customers

America: 221

China: 1,105
South Korea: 111
Mexico: 32
Hong Kong: 118
India: 44

Myanmar: 34
Thailand: 514

Laos: 7
Vietnam: 412

Taiwan: 94

Philippines: 115
Cambodia: 30
Malaysia: 77
Singapore: 51
Indonesia: 201

Source: Fourteenth Survey on the Overseas Business of Shinkin Bank Customers (2022)29

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Shinkin Global Summit
From perspectives of improving operational efficiency and productivity, SMEs
are urgently required to realize DX. Considering these circumstances, we held
the “Shinkin Global Summit 2023: Overseas Business Expansion/Inbound x DX
with Shinkin” in order to support shinkin banks’ customers for promoting DX
in their overseas business expansion, inbound business and conduct public
relations on the support structure of the shinkin bank industry.
This summit invited four speakers, including the Executive Vice President of theJapan External Trade Organization and the Representative Director and Okami
traditional manager of the Japanese ryokan Tsurumaki Onsen Motoyu Jinya
who is one of the shinkin banks’ customers and has appeared in media manytimes. They provided lectures such as introducing advanced case studies for DX promoted by shinkin banks’ customers and panel discussions.
More than 500 shinkin banks’ customers and related parties joined this event.

Support for Cross-Border EC Utilization
The “Japan Prime Selection” is a unique cross-border e-commerce store
available in Taiwan, Singapore, and Malaysia and exclusive to shinkin banks’customers to sell products. We collaborated with BeeCruise Inc., the store
operator, to support product sales and other activities.
We suppor ted the store's promotion by collaborating with a TaiwaneseYouTuber to distribute videos and placing adver tisements at the Chubu
Centrair International Airport of Japan.
In overseas local areas, we collaborated with a group company, “Shinkin
Singapore Pte. Ltd.” to create a special booth within the “JAPAN RAIL CAFE”
operated by the East Japan Railway Company Singapore Office, a partner ofthe local subsidiary. We exhibited products of shinkin banks’ customers sold at
the special exhibition store.
In addition, we conducted promotions collaborating with local influencers andquestionnaires for visiting customers.

Japan Brand Subsidy
The SCB was selected as a supporting partner for the “Fiscal 2022 Subsidy forJapan Brand Development & Assistance Project Expenses” which was a scheme
where the Small and Medium Enterprise Agency paid part of expenses when
SMEs worked to cultivate overseas sales channels.
As a supporting partner, we conducted to support shinkin banks’ customers in
opening up overseas sales channels in an integrated manner, from supporting
subsidy applications to supporting business implementation.
With the support of the SCB, 13 shinkin banks’ customers applied for thesubsidy, and three of them were adopted.
When the adopted customers implemented subsidy businesses, we collaborated
with overseas offices and other stakeholders to support these customers in
opening up overseas sales channels, such as supporting exhibitions in overseas
local areas and setting business negotiations with overseas local buyers.

30

Corporate Management and Auditors

Kenichiro Mimuro

Chairman of the Boardof Directors (Part-time)

Hiroshi Nakahara
Deputy President

Kenji Tanaka

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 ofHamamatsu Shinkin Bank
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)
August 2021
Chairman of the Board of
Directors of Hamamatsu
Iwata Shinkin Bank
(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 1987
Joined the SCB
April 2005
Representative Director
and President of Shinkin
International Ltd
June 2009
General Manager ofStrategic Planning Division
June 2013
Director and General
Manager of Osaka Branch
June 2016
Managing Director
June 2018
Senior Managing Director
June 2022
Deputy President(current position)

Hiroyuki Shibata

President and Chief
Executive Officer

Hiroshi Sudo

Deputy President

Career summary

Career summary

Career summary

April 1981
Joined the Ministry of Finance
June 2013
President of the Accounting
Center and President of the
Policy Research Institute,
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
June 2022
Deputy President(current position)

April 1987
Joined the SCB
April 2013
General Manager of Business
Promotion Division
April 2014
Seconded to shinkinbank with Personnel
Division benefits as
Senior Advisory Officer
June 2016
Director and General
Manager of Personnel
Division
June 2018
Managing Director
June 2022
Senior Managing Director(current position)

April 1988
Joined the SCB
April 2013
General Manager of
Personnel Division
June 2016
Director and General
Manager of Osaka
BranchJune 2019
Managing Director(current position)

Yuzuru Nishino

Senior Managing Director

Takehiko Murotani
Managing Director

Career summary

Career summary

Career summary

April 1991
Joined Yamaichi
Securities Co., Ltd.
October 2001
Joined the SCB
June 2015
General Manager ofTreasury Division
June 2019
Director and General
Manager of Financial
Management Division
June 2022
Managing Director(current position)

April 1992
Joined the SCB
June 2018
General Manager of
Personnel Division
June 2021
Director and General
Manager of Osaka
BranchJune 2023
Managing Director(current position)

April 1995
Joined the SCB
June 2018
General Manager ofStrategic Planning
Division
June 2021
Director and General
Manager of Nagoya
BranchJune 2023
Managing Director(current position)

Yuji Takahashi

Managing Director

Yoshinori Jinno

Managing Director

31

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank

Atsushi Toyoshima

Director
General Manager of SME
Business Division

Career summary

Career summary

Career summary

April 1994
Joined the SCB
June 2019
General Manager ofCorporate Business
Promotion Division
June 2021
Director and General
Manager of Corporate
Business Promotion
Division
June 2022
Director and General
Manager of SME
Business Division(current position)

April 1996
Joined the SCB
June 2021
General Manager ofStrategic Planning
Division
June 2022
Director and General
Manager of Strategic
Planning Division
June 2023
Director and General
Manager of Osaka
Branch (current position)

April 1991
Joined the SCB
April 2022
General Manager ofInternal Audit Division
June 2023
Director and General
Manager of Nagoya
Branch (current position)

Takehiro Suzuki

Director
General Manager of
Osaka Branch

Director
General Manager ofNagoya Branch

Career summary

Career summary

Career summary

April 1994
Joined the SCB
June 2021
General Manager ofGeneral Affairs
Division
June 2023
Director and General
Manager of General
Affairs Division(current position)

April 1995
Joined the SCB
June 2022
General Manager ofFinancial Management
Division
June 2023
Director and General
Manager of Financial
Management Division(current position)

April 1991
Joined the SCB
June 2019
General Manager ofGeneral Affairs
Division
June 2020
Director and General
Manager of General
Affairs Division
June 2021
Corporate Auditor(current position)

Atsushi Tada

Tomoaki Itabashi

Masafumi Shinagawa

Chairman of the Board of
Directors (Part-time)

Directors

Hiroyuki Shibata

Atsushi Toyoshima
Ikuo Sekiguchi
Takehiro Suzuki
Atsushi Tada
Tomoaki Itabashi

Kazuyoshi Takai
Seiji Sakuda
Tatsuo Takeda
Kazuo Ohashi
Hiromi Nomura
Mamoru Itagaki

Deputy Presidents

Directors (Part-time)

Corporate Auditor

Hiroshi Sudo
Hiroshi Nakahara

Shuichi Endo
Ikuo Higuchi
Tetsu Komori
Hiroshi Hiramatsu
Setsuo Gomi
Norikazu Shibuya
Toshiro Yagi
Kiyoshi Yamachi
Minoru Kondo
Koya Nakazawa
Takayuki Sakakida

Masafumi Shinagawa

Director
General Manager ofGeneral Affairs Division

Kenichiro Mimuro

President and Chief Executive Officer

Senior Managing Director
Yuzuru Nishino

Managing Directors
Takehiko Murotani
Kenji Tanaka
Yuji Takahashi
Yoshinori Jinno

32

Ikuo Sekiguchi

Director
General Manager of Financial
Management DivisionCorporate Auditor

Corporate Auditors (Part-time)
Akira Asanuma
Hirotsuna Sumida
Akio Okuyama
Naoyuki Yoshino(As of July 1, 2023)

Business Overview (Non-consolidated)
Earnings Performance

Asset Management

Looking at the financial results for fiscal 2022
(ended March 31, 2023), overall, operating income amounted to ¥340 billion ($2,549 million), up ¥124 billion ($931 million), or 57.5%,
year on year, mainly because of an increase inprofit from derivatives due to sale of hedged
bonds and an increase in dividends on securities.
Meanwhile, operating expenses came to¥307 billion ($2,300 million), up ¥135 billion($1,018 million) or 79.3%, year on year, due
mainly to an increase in interest on payables
under securities lending transactions as aresult of loss on sale of government andother bonds and Interest rate hike in foreign
currencies.
As a result, ordinary income came to ¥33
billion ($248 million), a decrease of ¥11 billion($86 million), or 25.8%, year on year. Profit
came to ¥24 billion ($185 million), a decreaseof ¥9 billion ($69 million), or 27.2%, year on
year.

The amount of assets under management in fiscal 2022 increased by ¥2,056 billion ($15,402
million) to ¥44,733 billion ($335,082 million).
Mainly due to lower government bondholdings, outstanding invested securities decreased by ¥2,529 billion ($18,943 million) during the fiscal year to ¥13,634 billion ($102,133
million) at fiscal year end.
Loans and bills discounted increased by¥1,756 billion ($13,154 million) during the fiscal
year to ¥9,514 billion ($71,271 million) at fiscal
year end.
The outstanding amount of short-termmoney market assets increased by ¥2,718 billion ($20,364 million) during the fiscal year to¥21,039 billion ($157,602 million) at fiscal year
end, mainly reflecting Bank of Japan current deposits.

Funding
In fiscal 2022, the total amount of funding increased ¥2,336 billion ($17,498 million) year on
year, for a total of ¥44,176 billion ($330,910 million). Of this figure, deposits received came to¥34,703 billion ($259,950 million), an increaseof ¥1,538 billion ($11,521 million), which mainlycomprised demand deposits from shinkinbanks.
After deducting redemptions, debenturesat the end of fiscal 2022 came to ¥1,458 billion($10,925 million), down ¥88 billion ($664 million) during the fiscal year, including ¥263 billion ($1,970 million) in debentures issued by the
SCB.
Borrowed money increased by ¥886 billion($6,641 million) during the fiscal year to ¥8,014
billion ($60,033 million), mainly comprisingborrowings under funding from markets.

Breakdown of Funding*Securities
To further diversify its 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, 2023, the outstanding amountof loans and bills discounted was ¥9,514 billion($71,272 million).

18.1%(¥8,014 billion)
3.3%(¥1,458 billion)
78.6%(¥34,703 billion)

Deposits
Debentures
Borrowed money

Breakdown of Asset Management*
1.2% (¥543 billion)

47.0%(¥21,039 billion)

21.3%(¥9,514 billion)

Short-term market
operation
Securities
Loans and bills
discounted
Others30.5%(¥13,634 billion)

Breakdown of Securities*
1.3%(¥172 billion)

23.1%(¥3,156 billion)

36.9%(¥5,024 billion)

4.8%(¥658 billion)
20.0%
13.9%
(¥2,733 billion) (¥1,889 billion)

Government bonds
Municipal bonds
Corporate bonds& short-term
corporate bonds
Stocks & investment
trust funds
Foreign securities
OthersBreakdown of Loans and Bills
Discounted*
9.2%(¥879 billion)

National andgovernment
agencies andorganizations

2.6%(¥248 billion)
41.2%(¥3,918 billion)

42.6%(¥4,050 billion)

Regional public
corporations
and charitableorganizations
and others
Business
corporations

4.4%(¥418 billion)

Agency loans
Others* As of March 31, 2023.
* The amount shown in the pie chart is rounded down
to the nearest whole number.

Ordinary Income and Net Income (Non-consolidated)

(Millions of yen)

FY2018FY2019FY2020

FY2021

FY2022

Ordinary income (loss)

58,562

52,63639,88444,82733,236

Net income (loss)

42,28637,92429,57934,046

24,77633

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

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, publicly issued of preferred sharesthat supplement common shares, and retained
earnings 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, 2023, was 22.09%.
Equity capital, the numerator for calculating the capital adequacy ratio, amounted to¥1,447 billion ($10,845 million).
Risk-weighted assets, the denominator for
calculating the capital adequacy ratio, amounted to ¥6,552 billion ($49,079 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

34

Capital adequacy ratio
Amount of capital
Amount of risk-weighted assets
Capital adequacy ratio(%, billions of yen)
FY2018
23.65
1,425
6,026
24.48

FY2019
24.31
1,476
6,071
25.18

FY2020
25.60
1,502
5,867
26.29

FY2021
24.35
1,508
6,194
24.84

FY2022
22.09
1,447
6,552
22.40

Asset Quality
Disclosed Claims under the Shinkin Bank Act and Disclosed Claims under the Financial Reconstruction Act
Total claims under the Financial Reconstruction Act (FRA) as of the end of March2023 decreased by ¥300 million to ¥22 billion from the end of the previous fiscal year.
The ratio of total claims under the FRA tototal loans was 0.23%.
The coverage ratio of claims under the
FRA (the total of the amounts deemed collectible with collateral and guarantees andthe allowance for possible loan losses) was
63.89%.
Bankrupt and quasi-bankrupt assets arerecorded for the remaining amount after
deducting the amounts deemed collectible
with collateral and guarantees, while doubtful assets are recorded for the loss-expected amount of the remaining amount after
similarly deducting the amounts deemed

collectible with collateral and guarantees,
respectively, in the specific allowance forpossible 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.

Claims disclosed pursuant to the Shinkin Bank Act and Claims disclosed(millions of yen)pursuant to the Financial Reconstruction Act [Non-consolidated]
End of March
2022
163
3,344
18,92542
18,882
22,433End of March
2023
94
3,255
18,742
13
18,72822,092

Increase or
Decrease
(69)
(89)
(183)
(29)
(154)
(341)

192

192

—

Normal claims

7,772,335

9,539,484

1,767,149

Total loans (B)Ratio of total claims under the FRA to total loans (%) (A/B)

7,794,768
0.28

9,561,577
0.23

1,766,809(0.05)

706

693

(13)

10,051

10,022

(29)

3,719

3,400

(319)

14,477

14,116

(361)

64.53
57.48

63.89
57.32

(0.64)(0.16)

Bankrupt and quasi-bankrupt receivables
Doubtful receivables
Substandard receivables
Loans past due three months or more
Restructured loans
Total claims under the Financial Reconstruction Act (FRA) (A)Partial write-offs

Specific allowance for doubtful accounts (C)recorded on the total claims under the FRA (A)General allowance for doubtful accounts (D)recorded on the total claims under the FRA (A)Amounts deemed collectible with collateral andguarantees (E)Total coverage amounts on disclosed claims under the FRA (F)Coverage ratio (F)/(A)Allowance ratio (%) ((C)+(D))/((A)-(E))

Claims disclosed pursuant to the Shinkin Bank Act [Consolidated]

(millions of yen)

End of March
2022
163
3,344
42
18,882
22,433End of March
2023
94
3,255
13
18,72822,092

Increase or
Decrease
(69)
(89)
(29)
(154)
(341)

192

192

—

Normal claims

7,911,089

9,676,018

1,764,929

Total loans (B)Ratio of total claims under the FRA to total loans (%) (A/B)

7,933,522
0.28

9,698,110
0.22

1,764,588(0.06)

Bankrupt and quasi-bankrupt receivables
Doubtful receivables
Loans past due three months or more
Restructured loans
Total claims under the FRA (A)Partial write-offs

35

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

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 254 shinkin banks nationwide (asof March 31, 2023) 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
auditors. The SCB is confident that non-member corporate auditors are able to utilize theirprofessional knowledge and experience toconduct audits from an independent perspective.

36

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 Shareholders
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.
From the perspective of enhancing governance and ensuring the effectiveness of internal audits, the SCB’s governing body decided to build the Dual Reporting Line. It will
start operating from October 2023.
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 Act, other related laws,
and the Securities Listing Regulations of theTokyo Stock Exchange.
Enhancement of Group Governance
As a board chair who serves as a key in supervising functions, the SCB will create a chairposition at each group company one by one.
By doing so, the SCB will improve the functions of the Board of Directors further andenhance an environment that supports appropriate risk-taking, thereby establishing themanagement structure where the supervisionand the execution will be able to work closely
together for the growth strategy.

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 Officers andemployees 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 Officers and employees and employees, the
SCB has compiled a Compliance Manual asa practical compliance handbook.
5. A compliance supervisory division andcompliance-related divisions have been set
up, and their respective roles were clarified. A compliance supervisor and deputy,
both responsible for compliance, areappointed 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. In accordance with the Act on Provisionof Financial Services, the SCB has formulated and made public its Financial
Products Solicitation Policy. To ensurethat solicitation is carried out fairly, important points regarding a product must

be explained to the customer at the timeof sale.
12. Pursuant to the Act on Protection of Personal Information, the SCB has published
its Personal Information Protection Policy
on its website. The SCB takes necessary
and appropriate measures to protect personal information.
13. In addition to publishing its Outline forManaging Conflicts of Interest on its website, pursuant to the Shinkin Bank Act andthe Financial Instruments and ExchangeAct, 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 officers
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
Consulting 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

37

Shinkin Central Bank

Shinkin Central Bank Annual Report 2023

Countermeasures against Money Laundering and the Financing of Terrorism

The SCB has designated the prevention ofmoney laundering and terrorist financing as
one of the most important managerial issues,established the AML/CFT Division, and is
working to sophisticate anti-money laundering/countering the financing of terrorism (the“money laundering and financing of terrorism
countermeasures”) by means of a risk-based
approach.
The SCB appoints the director in chargeof the AML/CFT Division as a chief executive

for the money laundering and financing of terrorism countermeasures and establishes anorganizational structure where the AML/CFTDivision is a division for controlling thesecountermeasures.
The SCB builds the risk management system for anti-money laundering and countering
the financing of terrorism (the “Risk Management System against Money Laundering andthe Financing of Terrorism”) by taking measures such as conducting Customer Due Diligence at the time of transactions and notifying
suspicious transactions based on laws andregulations such as the “Act on Prevention ofTransfer of Criminal Proceeds,” and providing
training with officers and employees. In addition, the entire SCB Group is working to improve the effectiveness of the Risk Management System against Money Laundering andthe Financing of Terrorism.

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 AML/CFT Division)
Report/Consult

AML/CFT 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, Consulting Promotion Division, TrustBusiness Division, Treasury Operations Division, Transfer &Clearing Division, General Affairs Division (General Affairs
Group), others)

AML/CFT Division

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 AML/CFT Division)
Management deputy supervisor of money laundering and financing ofterrorism countermeasures (Deputy General Manager of AML/CFT Division)【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

38

Risk Management
Learning from the experience of the financial crisis, the SCB is exhaustively implementing more highly detailed and thoroughprocesses to manage risks 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 accord-

ance 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.

39

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank

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

Credit Planning & Supervision Division
Responsible for credit assessment

Responsible for overall management ofoperational risk

Responsible for integrated risk
management

Operations Division
Risk Management Division(Assessment)
Strategic Planning Division (Policy)
Financial Management Division(Calculation)

Responsible for market risk
management
Risk Management Division

Systems Division

Financial Management Division

Responsible for information technology
risk management

General Affairs Division

Risk Management Division, Credit
Planning & Supervision Division

Divisions stipulated by Risk
Management Division

Responsible for liquidity risk
management

Responsible for compliance risk
management

Responsible for the management of otheroperational risk

Responsible for credit control

Market Risk Management Framework

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

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 management
and heads of divisions related to market risk.

40

Risk Management Division

Responsible for administrative risk
management

Responsible for capital adequacy

Decisions

ALM
Committee

CreditCommittee

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.
In addition, the SCB manages our exposure on a variety of fronts, such as monitoring* 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 comprehensively manage operationalrisks, the SCB has formulated management
guidelines for operational risks, and to address administrative risks, system risks andcompliance risks, which we consider the
major operational risks, we have additionally formulated individual management
guidelines for each of those risks. Furthermore, the SCB has constructed a systemfor comprehensively managing operationalrisks. In addition to having in place a department to comprehensively manage operational risks as well as a department tomanage administrative risks, a department
to manage system risks and a department
to manage compliance risks, we also set up
risk management departments to manageother operational risks as necessary.
The SCB has established the Risk Management Committee as the body responsible fordeliberating and making decisions on mattersrelating to operational risk management. The
Risk Management Committee, comprising senior management and heads of related divisions,deliberates and makes decisions on comprehensive methods for managing operationalrisks, including administrative risks, systemrisks and compliance risks.
Regarding the SCB’s subsidiaries, the
SCB’s Internal Audit Division conducts auditsof the respective systems.
To calculate its operational risk capital requirements, the SCB uses the basic indicator
approach proposed under regulations con-cerning capital adequacy ratios.

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

• Compliance risk management
The General Affairs Division, which functions
as a department designated for compliancerisk management, manages compliance risks
by a series of processes involving identifying
compliance risks; analyzing and evaluating thecauses, background and range of impact, etc.
of each risk; taking necessary measures tominimize compliance risks; and verifying theresults of the aforementioned.

41

Shinkin Central Bank Annual Report 2023

Shinkin Central Bank

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 Act, 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. Margin 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 retained earnings, 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, 2023)
・Number of Investors (17,819)
Foreign institutions
and others
30(0.2%)
Other corporations
193(1.1%)
Financial institutions
202(1.1%)

Other corporations
29,329
(4.1%)(Closing price,yen)First day of listing (December 22, 2000) 200,500
Foreign institutions
and others
1,467(0.2%)

Highest price (March 15, 2006)

311,500

Lowest price (April 14, 2009)

102,400

Closing price (July 31, 2023)

274,200* The price of preferred shares is split-adjusted, reflecting
the stock split of preferred shares as at July 31, 2009.

Individuals
98,342(13.9%)

Individuals
17,383(97.5%)

42

Price of Preferred Shares*

・Number of Subscription (708,222)
Securities companies
7,617(1.1%)

Securities companies
11(0.1%)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 2023, the dividend for preferred shares was ¥6,500 ($48) per share,
which included a preferred dividend of ¥3,000($22) and a participating dividend of ¥3,500($26).

Financial institutions
571,467(80.7%)

Financial Section
Contents
43 Five-Year Summary (Consolidated)

51 Notes to Consolidated Financial Statements

44 Consolidated Balance Sheet

103 Independent Auditor’s Report

45 Consolidated Statement of Income

109 Non-Consolidated Balance Sheet

46 Consolidated Statement of Comprehensive Income

110 Non-Consolidated Statement of Income

47 Consolidated Statement of Changes in Net Assets

111 Statement of Trust Account (Consolidated)

50 Consolidated Statement of Cash Flows

Five-Year Summary (Consolidated)
FY2018FY2019FY2020(Millions of Yen)FY2021
FY2022

Total Income

293,808

301,954

261,011249,652

373,727

Trust Fees

399

759

1,258

1,921

2,391

Total Expenses

231,873245,596

217,585

201,470338,076

Profit Attributable to Owners of Parent

44,78140,22731,64935,942

26,221

Comprehensive Income

53,530(90,508)

196,771(110,723)(231,498)

Net Assets

1,660,465

1,550,287

1,727,321

1,596,329

1,345,160

Total Assets

39,693,375

40,868,096

43,843,528

43,931,795

46,095,333

Net Assets per Share (Yen)

306,594.84

283,111.71

320,620.85

292,802.41

239,364.73

Net Income per Share (Yen)

6,358.89

5,679.98

4,401.33

5,041.19

3,592.19

Dividends

19,603

19,603

19,603

19,603

19,603General Common Shares

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

3,000

3,000

3,000

3,000

3,000

Preferred Shares

4,603

4,603

4,603

4,603

4,603

807,201

1,320,957

2,015,700

2,708,486

3,015,058

Trust Assets

Notes:
1. National and local consumption tax incurred by the Shinkin Central Bank and its domestic consolidated subsidiaries are
excluded from transaction amounts.
2. The amount stated for the amount of trust assets is the amount of trust assets related to the trust business pursuant to the “Acton Engagement in Trust Business Activities by Financial Institutions”. Consolidated companies conducting such trust businesscomprised only the Shinkin Central Bank.

43

Consolidated Balance Sheet
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks (Note 2 (2), 27)
Bills Bought and Call Loans (Note 27)
Receivables under Resale Agreements (Note 27)
Monetary Claims Bought (Note 27)
Trading Assets (Note 3, 10, 27, 28)
Money Held in Trust (Note 27, 28)
Securities (Note 4, 8, 10, 27, 28)Loans and Bills Discounted (Note 5, 6, 7, 10, 27)
Foreign Exchanges Assets
Other Assets (Note 10)
Tangible Fixed Assets (Note 9, 15, 26)
Intangible Fixed Assets (Note 26)
Deferred Tax Assets (Note 24)
Customers' Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Total Assets

Millions of Yen

2022

19,019,069
1,573,215
295,304
172,200
485,686
78,136
13,598,793
9,511,310
22,701
1,044,086
72,02820,35465,440160,981(23,974)
46,095,333

16,764,225
1,329,496
34,216
204,459
333,867
118,623
16,139,087
7,754,789
19,622
1,006,582
72,884
17,675
4,407
157,170(25,312)43,931,795

142,464
11,784
2,212
1,289
3,638
585
101,863
71,245
170
7,820
539
152
490
1,205
(179)
345,283

Liabilities and Net Assets
Liabilities
Deposits (Note 27)
Debentures (Note 13, 27)
Trading Liabilities (Note 11, 27)
Borrowed Money (Note 10, 12, 27)
Bills Sold and Call Money (Note 27)
Payables under Repurchase Agreements (Note 10, 27)
Payables under Securities Lending Transactions (Note 10, 27)
Foreign Exchanges Liabilities
Borrowed Money from Trust Account
Other Liabilities (Note 12, 14)Reserve for Employee Bonuses
Reserve for Directors' Bonuses
Net Defined Benefit Liability (Note 25)
Reserve for Directors' Retirement Allowances
Reserve under Specific Law
Deferred Tax Liabilities (Note 24)
Deferred Tax Liabilities for Land Revaluation (Note 15)
Acceptances and Guarantees
Total Liabilities

34,652,817
1,452,960
86,702
3,998,680
6,804
2,620,729
1,362,132
652
43,534315,234
1,764
89
40,299
511
10
235
6,033
160,981
44,750,172

33,123,802
1,545,370
27,911
4,167,880
5,637
1,195,089
1,728,562
1,159
42,821
248,597
1,788
93
43,091569
139,885
6,033
157,170
42,335,466

259,571
10,883649
29,95250
19,630
10,203
4
326
2,361
13
0
301
3
0
1
45
1,205
335,207

Net Assets
Common Shares and Preferred Shares (Note 23)
Capital Surplus
Retained Earnings
Total Shareholders' Equity
Net Unrealized Gains (Losses) on Other Securities (Note 24, 28)
Deferred Gains or Losses on Hedges (Note 24, 29)
Land Revaluation Excess (Note 15)
Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans (Note 25)
Total Accumulated Other Comprehensive Income
Non-Controlling Interests
Total Net Assets
Total Liabilities and Net Assets

690,998
100,678
650,740
1,442,417(215,893)
94,174
14,772(2,238)(1,124)(110,310)
13,053
1,345,160
46,095,333

690,998
100,678
644,122
1,435,799
104,436
34,977
14,772(2,631)(3,650)147,904
12,626
1,596,329
43,931,795

5,176
754
4,874
10,804(1,617)
705
110
(16)
(8)
(826)
97
10,076345,283

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

44

2023

Millions of
U.S. Dollars(Note 1)2023

Consolidated Statement of Income
Shinkin Central Bank For the year ended March 31,
IncomeInterest Income:Interest on Loans and Discounts
Interest on Due from Banks
Interest on Bills Bought and Call Loans
Interest on Receivables under Resale Agreements
Interest on Receivables under Securities Borrowing Transactions
Interest and Dividends on Securities
OthersTrust Fees
Fees and Commissions (Note 17)
Trading Income (Note 18)
Other Operating Income
Other Income (Note 20)
Total Income

Expenses
Interest Expenses:
Interest on Deposits
Interest on Debentures
Interest on Borrowed Money
Interest on Bills Sold and Call Money
Interest on Payables under Repurchase Agreement
Interest on Payables under Securities Lending Transactions
OthersFees and Commissions (Note 17)
Trading Losses (Note 19)
Other Operating Expenses
General and Administrative Expenses
Other Expenses (Note 21)
Total Expenses

Profit before Income Taxes
Income Taxes (Note 24):
Current
Deferred
Total Income Taxes
ProfitProfit Attributable to Non-Controlling Interests
Profit Attributable to Owners of Parent

2023

Millions of Yen

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

2022

208,252
19,468
8,265
885
(616)
0
178,573
1,675
2,391
42,775
17,81991,882
10,605
373,727

175,199
15,7597,114(169)(1,174)
9
153,103554
1,921
42,124
1,548
16,52012,337
249,652

1,559
145
61
6
(4)
0
1,337
12
17
320
133
688
79
2,799

105,263
37,237
1,165
1,771
237
7,049
31,89725,903
15,075
186
159,263
57,580707
338,076

70,18329,222
1,160
1,782
7
50
1,481
36,47914,881
8
61,30654,603486
201,470

788
278
8
13
1
52
238
194
112
1
1,192
431
5
2,532

35,65048,181

267

9,521
(420)
9,101
26,549327
26,221

11,617279
11,89736,283341
35,942

71
(3)
68
198
2
196

2022
5,041.19
3,000.00
1,500.00
6,500.00

U.S. Dollars(Note 1)
2023
26.90
22.47
11.23
48.68

Yen

Net Income per Share (Note 33)
Dividend Declared per Share (General Common Shares)
Dividend Declared per Share (Specific Common Shares)
Dividend Declared per Share (Preferred Shares)

Millions of
U.S. Dollars(Note 1)2023

2023
3,592.19
3,000.00
1,500.00
6,500.00

45

Consolidated Statement of Comprehensive Income
Shinkin Central Bank For the year ended March 31,
ProfitOther Comprehensive Income (Note 22)
Net Unrealized Gains (Losses) on Other Securities
Deferred Gains or Losses on Hedges
Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans
Comprehensive Income
Comprehensive Income Attributable to Owners of Parent
Comprehensive Income Attributable to Non-Controlling Interests
The accompanying notes are an integral part of these financial statements.

46

2023

Millions of Yen

26,549(258,048)(320,330)
59,196392
2,692(231,498)(231,993)
494

2022

36,283(147,007)(203,457)
55,555
777
117(110,723)(111,068)
345

Millions of
U.S. Dollars(Note 1)2023
198
(1,932)(2,399)443
2
20(1,734)(1,737)3

Consolidated Statement of Changes in Net Assets
Shinkin Central Bank For the year ended March 31, 2023

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
644,122

1,435,799

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

Profit Attributable to Owners of Parent

26,221

26,221

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

-

-

6,618

6,618

690,998

100,678

650,740

1,442,417

Accumulated Other Comprehensive Income
Net Unrealized
Gains (Losses)
on Other
Securities
Balance at Beginning of Year104,436

Deferred Gains
Land Revaluationor Losses on
ExcessHedges34,977

14,772Foreign
Currency
Translation
Adjustments(2,631)

Total
Remeasurements Accumulated
Otherof Defined Benefit
Comprehensive
Plans
Income(3,650)147,904

NonControlling
Interests

12,626

Total Net
Assets

1,596,329

Changes during the Fiscal Year
Surplus Dividends(19,603)

Profit Attributable to Owners of Parent

26,221Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year

(320,330)

59,196

-

392

2,526

(258,214)427(257,787)

Total Changes during the Fiscal Year

(320,330)

59,196

-

392

2,526

(258,214)427(251,169)

Balance at End of Year

(215,893)

94,174

14,772(2,238)(1,124)(110,310)

13,053

1,345,160

47

Millions of U.S. Dollars (Note 1)
Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year

Capital Surplus

5,176

Retained Earnings
754

Total Shareholders' Equity
4,824

10,755

Surplus Dividends

(146)

(146)

Profit Attributable to Owners of Parent

196

196

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

-

-

49

49

5,176

754

4,874

10,804

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

782

Deferred Gains
Land Revaluationor Losses on
ExcessHedges
262

110

Total
Remeasurements Accumulatedof Defined Benefit
Other
Comprehensive
Plans
IncomeForeign
Currency
Translation
Adjustments
(19)

(27)

1,107

NonControlling
Interests

Total Net
Assets94

11,957

Changes during the Fiscal Year
Surplus Dividends(146)

Profit Attributable to Owners of Parent

196

Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year48

(2,399)

443

-

2

18

(1,934)

3(1,930)Total Changes during the Fiscal Year(2,399)

443

-

2

18

(1,934)

3(1,881)

Balance at End of Year

(1,617)

705

110

(16)

(8)

(826)

97

10,076

Shinkin Central Bank For the year ended March 31, 2022

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
627,964

1,419,641

(303)

(303)

627,661

1,419,338

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

Profit Attributable to Owners of Parent

35,94235,942

Reversal of Land Revaluation Excess

122

122

Cumulative Effects of Changes in Accounting Policies
Restated balance

690,998

100,678

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

16,46016,460690,998

100,678

644,122

1,435,799

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

307,894

Deferred Gains
Land Revaluationor Losses on
ExcessHedges(20,577)

14,894Foreign
Currency
Translation
Adjustments(3,408)

Total
Remeasurements Accumulatedof Defined Benefit
Other
Plans
Comprehensive
Income(3,764)

295,037

Cumulative Effects of Changes in Accounting Policies
Restated balance

307,894(20,577)

14,894(3,408)(3,764)

295,037

NonControlling
Interests

Total Net
Assets12,642

1,727,321

(294)

(597)

12,348

1,726,723

Changes during the Fiscal Year
Surplus Dividends(19,603)

Profit Attributable to Owners of Parent

35,942

Reversal of Land Revaluation Excess

122

Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year(203,457)

55,555

(122)

777

114

(147,132)

278(146,854)

Total Changes during the Fiscal Year(203,457)

55,555

(122)

777

114

(147,132)278(130,393)

Balance at End of Year104,436

34,977

14,772(2,631)(3,650)147,904

12,626

1,596,329

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

49

Consolidated Statement of Cash Flows
Millions of Yen(Note 1)
2023

Shinkin Central Bank For the year ended March 31,

2023

Cash Flows from Operating Activities:
Profit before Income Taxes
Depreciation
Impairment Losses
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) in Trading Payables
Net Decrease (Increase) in Loans and Bills Discounted
Net Increase (Decrease) in Deposits
Net Increase (Decrease) in Debentures
Net Increase (Decrease) in Borrowed Money (Excluding Subordinated Borrowings)
Net Decrease (Increase) in Due from Banks (Excluding Due from Central Bank)Net Decrease (Increase) in Call Loans and Others
Net Increase (Decrease) in Call Money and Others
Net Increase (Decrease) in Payables under Securities Lending Transactions
Net Decrease (Increase) in Monetary Claims Bought
Net Decrease (Increase) in Foreign Exchanges (Assets)
Net Increase (Decrease) in Foreign Exchanges (Liabilities)
Net Increase (Decrease) in Due to Trust Accounts
Interest Received
Interest Paid
Other, Net
Sub-total
Income Taxes Paid
Net Cash Provided by (Used in) Operating Activities

35,6509,858
52(1,338)(24)(4)(2,792)(58)(208,252)
105,263
120,682(2)(189,856)
315(151,818)
58,790(5,243)(1,756,520)
1,529,014(92,410)(169,200)(147,722)(504,806)
1,426,807(366,429)
32,259(3,078)(507)
713
173,377(134,553)
86,025(155,807)(16,126)(171,934)

48,181
9,776(4,651)
(18)
2
1,148
36
(175,199)
70,18337,374(95)(199,997)(6)(53,436)(3,714)(3,905)691,257(629,069)(225,500)
147,400
17,661(502,301)
903,539
25,606(24,149)
1,054
(895)
12,520198,753(75,813)50,614
316,356(9,555)306,800

267
73
0
(10)
(0)
(0)
(20)
(0)
(1,559)788903(0)(1,422)
2(1,137)440(39)(13,157)
11,453(692)(1,267)(1,106)(3,781)
10,687(2,744)
241
(23)
(3)
5
1,298
(1,007)644(1,167)(120)(1,287)

Cash Flows from Investing Activities:
Acquisitions of Securities
Proceeds from Sale of Securities
Proceeds from Redemption of Securities
Increase in Money Held in Trust
Decrease in Money Held in Trust
Acquisitions of Tangible Fixed Assets
Acquisitions of Intangible Fixed Assets
Proceeds from Sales of Tangible Fixed Assets
Net Cash Provided by (Used in) Investing Activities(8,107,365)
4,655,227
5,723,515
39,913(3,458)(9,522)193
2,298,503(9,619,387)
2,293,222
8,773,788(10,000)
1(3,776)(2,957)260
1,431,150(60,729)
34,87042,872
298
(25)
(71)
1
17,217

Cash Flows from Financing Activities:
Dividends Paid
Dividends Paid to Non-Controlling Interests
Net Cash Provided by (Used in) Financing Activities(19,603)(66)(19,670)(19,603)(66)(19,670)

(146)
(0)
(147)

1
2,106,900
16,211,098
18,317,999

0
1,718,281
14,492,817
16,211,098

0
15,782
121,431
137,213

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period (Note 2 (2))
The accompanying notes are an integral part of these financial statements.

50

Millions of
U.S. Dollars
2022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 accountbalances to U.S. dollars on a basis of ¥133.50 to U.S.$1, the exchange
rate prevailing as of March 31, 2023. 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. dollar amounts are included solely for theconvenience of readers outside Japan and this translation should not
be construed as representation that Japanese yen amounts have beenor could be readily converted, realized or settled in U.S. dollars at thator at any other rates.
2. Significant Accounting Policies:(1) Principles of Consolidation
The consolidated financial statements include the accounts of the
Bank and its nine consolidated subsidiaries as of March 31, 2023
listed below:
Ownership
Name
Location
Percentage
The Shinkin Banks Information
System Center Co., Ltd.
Tokyo
50.7%
Shinkin International Ltd.
London100%
Shinkin Chukin Business Co., Ltd.
Tokyo
100%
Shinkin Asset Management Co., Ltd.
Tokyo
100%
Shinkin Securities Co., Ltd.
Tokyo
100%
Shinkin Capital Co., Ltd.
Tokyo
100%
Shinkin Guarantee Co., Ltd.
Tokyo
100%
Shinkin Singapore Pte. Ltd.
Singapore100%
Shinkin Regional Innovation Co.,
Ltd.
Tokyo
100%
Unconsolidated subsidiaries
Shinkin no Kizuna Investment Limited Partnership
Shinkin no Tsubasa Investment Limited Partnership
Shinkin no Ishizue Investment Limited Partnership
Unconsolidated subsidiaries are excluded from the scope of
consolidation because their total assets, total income, net income(amount based on the equity method), retained earnings (amountbased on the equity method) and accumulated other comprehensive
income (amount based on the equity method) are immaterial and do
not hinder a rational judgment of the Bank’s financial condition andresults of operation when excluded from the scope of consolidation.
The fiscal year and the closing date thereof for the financial
statements of the consolidated subsidiaries are consistent with thoseof the Bank, except for Shinkin International Ltd. and Shinkin
Singapore Pte. Ltd., which have a fiscal year ending on December 31.

For the consolidation of these subsidiaries, the Bank makes
appropriate adjustments for any material transactions subsequent toDecember 31.
All significant intercompany balances and transactions havebeen eliminated in consolidation. The Bank’s share of net assets ofsubsidiaries is valued at fair value on acquisition. Non-controllinginterests in net assets of subsidiaries are valued at fair value on
acquisition in the consolidated financial statements. The excess of thecost over the fair value of the underlying net equity in subsidiaries onacquisition is expensed when incurred.
The application of equity-method to unconsolidated subsidiaries andaffiliates is as follows:
Non-consolidated equity-method subsidiaries:
N/A
Affiliated equity-method companies:
N/A
Unconsolidated subsidiaries that are not accounted for by the equity
method:Shinkin no Kizuna Investment Limited Partnership
Shinkin no Tsubasa Investment Limited Partnership
Shinkin no Ishizue Investment Limited Partnership
Unconsolidated subsidiaries that are not accounted for by theequity method are excluded from the scope of equity method because
their effect on the accompanying consolidated financial statements, interms of net income (amount based on the equity method) andretained earnings (amount based on the equity method), would not bematerial.
Affiliated companies to which the equity method is not applied due toimmateriality:
Aozora Loan Services Co., Ltd.
(2) Cash and Cash Equivalents
In the consolidated statement of cash flows, “Cash and Cash
Equivalents” consist of Cash and Due from Central Bank.
Reconciliation between Cash and Due from Banks in the
consolidated balance sheet and Cash and Cash Equivalents at March
31, 2023 and 2022 is as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Cash and Due fromBanks

19,019,069

16,764,225

142,464Due from Banks(Excluding Duefrom Central Bank)(701,070)(553,127)(5,251)

18,317,999

16,211,098

137,213

Cash and Cash
Equivalents(3) Trading Assets and Liabilities
Transactions for “Trading Purposes” (for purposes of seeking tocapture gains arising from short-term changes in interest rates,
currency exchange rates or market prices of financial instruments andother market related indices or from gaps among markets) are
included in “Trading Assets” and “Trading Liabilities” on the
consolidated balance sheet on a trade date basis. In addition, gains
and losses from “Trading Assets” and “Trading Liabilities” arerecorded as “Trading Income” and “Trading Losses” on the
consolidated statement of income on a trade date basis.

51

Securities and Monetary Claims Bought 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 theamounts that would have been delivered for settlement as of the fiscal
year end date.
(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 costamortized by the straight-line method using the moving-averagemethod. Investments in affiliates that are not accounted for by theequity method are stated at cost using the moving-average method.
Other securities are stated at fair value (and the cost of securities soldis mainly determined using the moving-average method). Stocks andother equity securities with no market prices are stated 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 Committee Practical Guidelines No. 24, March 17, 2022
“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
Committee Practical Guidelines No. 25, October 8, 2020 “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.

52

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
subjectivity and are appropriately executed by cover transactions
conducted in accordance with the standard articulated by Industry
Committee Practical Guidelines No. 24 and No. 25.
(d) Others
Given that deferred hedge using interest rate swaps and exceptional
treatment of interest rate swaps to offset market fluctuations onhedged items of loans, other securities (bonds) and held-to-maturity
debt securities are affected by the discontinuing publication of
London Inter-Bank Offered Rate (LIBOR) and transition toalternative reference rate, the Bank has adopted “Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR”(Practical Issues Task Force Report No. 40, March 17, 2022) to avoid
impact on the continuation of hedging relationship.
(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 years 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 internal rules for self-assessments of asset quality
and write-offs and provisioning criteria predetermined by the Bank asfollows:
The amounts of write-offs and provisions are calculated based on the
result of self-assessments of the borrower classification, etc. The
Bank has the credit risk rating system as a method for assessing credit
risk to determine the borrower classification appropriately. Based on
this system, the borrower classification for self-assessments isdetermined. The credit rating evaluates the degree of a borrower’s
creditworthiness, such as its debt servicing capacity, and classifies theborrower on a scale of 10. The classification reflects qualitative
factors such as the evaluation of industry in which the borrower
operates business and competitiveness within the industry, in addition
to the quantitative evaluation based on the borrower’s financial
information. The credit rating is reviewed on a regular basis once a
year, and is also reviewed as needed, such as when there are changes
in the creditworthiness of the borrower.
The reserve is provided for loans to borrowers who areclassified as substantially bankrupt or who are bankrupt in the legal
sense as a result of the self-assessment of asset quality, at 100% of thecarrying amount remaining after write-offs and deducting the amount
expected from the realization of collateral and the execution ofguarantees. In addition, a reserve is provided for loans to borrowers
who are not currently bankrupt but are highly likely to go bankrupt(“Probably Bankrupt Borrowers”). In such cases, the reserve isprovided at the amount deemed necessary based on the borrower’s
debt servicing capacity after deducting the amount expected from therealization of collateral and the execution of guarantees.
The Bank calculates the amount of reserve by the cash flow
estimate method. For borrowers classified as Probably Bankrupt
Borrowers, borrowers who have restructured loans (“Intensive
Control Borrowers”) or other borrowers who warrant special attention
for future management (“Other Special Attention Borrowers”) withreceivables exceeding a certain amount and to whom loan receivables
are renegotiated, the amount of reserve for possible loan losses is set
at the difference between the book values of the loans and theamounts calculated by discounting, by the original contractual interest
rates, cash flows that are reliably estimated based on the repayment
plan prepared by the borrowers, creditworthiness, the Bank’s lending
policies and default rates according to the creditworthiness ofborrower.
For all other loans to Intensive Control Borrowers and Other
Special Attention Borrowers, the Bank estimates the amount of
expected losses over the next three years. The amount of expected
losses is calculated by determining the expected loss ratio based on
the average of the historical charge-off ratios over the past three years,
and adding necessary adjustments such as future prospects.
For the borrowers (Performing) who are recognized to havegood business performance and no particular financial problems, areserve is expected for the next 1 year and provided based on the ratioof the average value of the bad debt rate calculated by the bad debt
record for 1 year with necessary adjustments such as future prospects.
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 ¥192 million ($1 million) as of March 31, 2023 and ¥192 million
as of March 31, 2022.
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 at the portion of theamount of estimated bonus payments to employees that corresponds
to this fiscal year.
(11) Reserve for Directors’ Bonuses
Reserve for Directors’ Bonuses is set aside at the portion of theamount of estimated bonus payments to directors and corporate
auditors that is attributable to this fiscal year.
(12) Reserve for Directors’ Retirement Allowances
Reserve for Directors’ Retirement Allowances 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) within
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) Revenue Recognition“Trust Fees” mainly arise from trustee services for trust assets and arerecorded as revenue over the period of the services.
(16) 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.

53

(17) 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.
(18) Amortization of Goodwill
Goodwill is fully amortized in the fiscal year incurred.
(19) Accounting Principles and Procedures Adopted when theProvisions of Relevant Accounting Standards, etc. are not Clear
Contract cancellation revenue and gains on redemptions ofinvestment trusts are included in “Interest Income (Interest andDividends on Securities)” and losses on cancellation and redemptionsof investment trusts are included in “Other Operating Expenses” inthe consolidated statement of income.
(20) Significant Accounting Estimates
Reserve for Possible Loan Losses(i) The amount recorded in the consolidated financial statements forthe current fiscal year
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Reserve for Possible
Loan Losses

23,97425,312

179(ii) Other information for users of the consolidated financial
statements to understand the details of accounting estimates(1) Method of calculation of the amounts recorded in the consolidated
financial statements for the current fiscal year
Method of calculation is described in the “Note 2 Significant
Accounting Policies (9) Reserve for Possible Loan Losses.”(2) Key assumptions used for the calculation of the amounts recordedin the consolidated financial statements for the current fiscal year(a) The impact of COVID-19 on economic activities and outlook ofborrowers’ performance when determining borrower classification
The Bank assumes that the impact of COVID-19 on economic
activities is gradually improving due to the Japanese government’s
policies aimed at coexisting with the virus, but would persist for aconsiderable period of time for certain industries, such as travel,
which is affected by the number of incoming and outgoing travelers.
These assumptions consider changes in the number of people
infected with COVID-19 and other factors, and use objective
information such as statistical data on international arrivals andoutlook of worldwide air travel demand of the International Air
Transport Association (IATA).
In the consolidated financial statements for the fiscal year ended
March 31, 2023, based on the above assumptions, classification of thespecific borrowers is determined considering such factors if their
future performance is expected to be significantly affected by theseassumptions.

(b) Inputs of the cash flow estimate method
The Bank calculates the amount of reserve for possible loan losses by
the cash flow estimate method if the borrowers are classified as
Probably Bankrupt Borrowers, Intensive Control Borrowers or Other
Special Attention Borrowers with receivables above a certain amount.
Key assumptions of the cash flow estimate are the repayment
schedule prepared by the borrower, creditworthiness, the Bank’s
lending policies and default rates according to the credit condition ofborrower.
(3) Effects on the consolidated financial statements in the fiscal year
ending March 31, 2024
Though the key assumptions include the impact of the COVID-19,
there are no precedents or widely-agreed view that can be used as
reference. Accordingly, the Bank makes a best estimate based on
certain assumptions, available external information and an approvalof decision-making body in accordance with the internal rules.
However, the assumptions used in the estimates incorporate
uncertainty and, if there are changes in conditions of the COVID-19
pandemic or changes in its impact on the economic activities, theperformance of borrowers may be affected and a reserve for possible
loan losses to be recorded in the consolidated financial statements forthe fiscal year ending March 31, 2024 may be significantly affected.
If the assumptions used in the initial estimate are changed due
to changes in the borrowers’ performance, inputs used for the cash
flow estimate method may significantly affect a reserve for possible
loan losses to be recorded in the consolidated financial statements forthe fiscal year ending March 31, 2024.
(21) Changes in Accounting Policies(i) Application of “Implementation Guidance on Accounting Standard
for Fair Value Measurement”“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (Accounting Standards Board of Japan (“ASBJ”)
Guidance No. 31, June 17, 2021; hereinafter referred to as “Fair Value
Measurement Guidance”) has been applied since the beginning of thecurrent fiscal year. The Bank has applied the new accounting policy
stipulated in the Fair Value Measurement Guidance prospectively inaccordance with the transitional provisions stipulated in Paragraph27-2 of the Fair Value Measurement Guidance. There is no impact of
this application on the consolidated financial statements.
As a result, investment trusts to which the transitional measures
stipulated in Paragraph 26 of “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31, July 4, 2019) were applied in the previous fiscal year are
included in the note related to breakdown of financial instruments by
the fair value hierarchy level of “27. Financial Instruments” in thecurrent fiscal year. However, in accordance with the transitional
provisions stipulated in Paragraph 27-3 of the Fair Value
Measurement Guidance, investment trusts for the previous fiscal year
are not provided in the note.
Furthermore, in the previous fiscal year, foreign bonds were
included in “Others” of Securities (Other Securities) in the note but,from the current fiscal year, they are categorized as “Foreign Bonds”
in order to have appropriate disclosure of the financial instruments.
As a result of the change, the information for the previous fiscal year
is disclosed in the same category as well.
(ii) Change in criteria of impairment of securities
Previously, impairment losses were recognized for, of Securities otherthan Trading Securities (excluding stocks and other equity securities,54

with no market prices and investment in investment partnerships),
those whose fair value falls by 30% or more compared with theacquisition cost and is determined as “significantly declined,” and is
not expected to recover up to the acquisition cost. However, from theend of the current fiscal year, the impairment accounting policy forbonds has changed. In accordance with the new rule, fair value ofbonds is determined as “significantly declined” based on
consideration of the issuer’s business condition and changes in thefair value for a certain past period in addition to the criteria of 30% ormore falling fair value. An impairment loss is then recognized for
those bonds whose fair value is not expected to recover up to theacquisition cost.
The Bank made the portfolio management focused on stability
and gradually increased the investments in ultra-long-term bonds
from the perspective of diversifying revenue sources. However, inlight of increasing volatility of the fair value of bonds due tosignificant changes in the market interest rates by global inflation
during the current fiscal year, the criteria to determine that fair valueof bonds is “significantly declined” was changed to consider causesof the decline in the fair value.
There is no impact of this change on the consolidated financial
statements for the current fiscal year.
Had the accounting policies as of the end of the fiscal year
ended March 31, 2023 adopted at the end of the interim period ended
September 30, 2022, there would have been no effect on the interim
consolidated financial statements.
(22) Changes in Accounting Estimates
Reserve for Possible Loan Losses
In response to the discussion paper entitled “Japanese Financial
Services Agency (“JFSA”)’s Supervisory Approaches to Lending
Business and Loan Loss Provisioning” published by JFSA in
December 2019, the Bank had been considering the methods for andmaking preparation for estimating the reserve based on thecharacteristics of the Bank’s financial portfolio of which loans assets
to major borrowers account for a certain proportion in order to refine
the amounts of expected losses.
As a result, since the preparation for applying the cash flow
estimation method has been completed, from the end of the second
quarter of the fiscal year ended March 31, 2023, the reserve for Other
Special Attention Borrowers with receivables above a certain amountis calculated by using the cash flow estimation method. The impact
on the consolidated financial statements for the current fiscal year isimmaterial.

3. Trading Assets:
The details of Trading Assets as of March 31, 2023 and 2022 are as
follows:
Millions of Yen
2023
2022
Trading AccountSecurities
Derivatives of Securities
related to Trading
Transactions
Trading-Related
Financial Derivatives

Millions of
U.S. Dollars
2023

19,895

19,228

149

3

－

0

86,771

28,612649

Other Trading Assets

379,014

286,026

2,839

Total

485,686

333,867

3,638

4. Securities:
The details of Securities as of March 31, 2023 and 2022 are as
follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Japanese Government
3,156,602 4,863,589
23,644
Bonds
Municipal Government
1,889,103 1,934,063
14,150
Bonds
2,733,951 3,460,466
20,479Corporate Bonds
Stocks65,34362,877489

Others5,753,793

5,818,089

43,099

Total

13,598,793 16,139,087

101,863

Notes:
1. Stocks include investments in affiliated companies totaling ¥189
million ($1 million) as of March 31, 2023 and 2022.
2. Others include common shares and investment in unconsolidated
subsidiaries totaling ¥9,104 million ($68 million) as of March 31,
2023 and ¥9,502 million as of March 31, 2022. Others also include
preferred shares issued by Shinkin Banks which were contributedin accordance with the Shinkin Bank Management Reinforcement
System. The amount was ¥147,319 million ($1,103 million) as ofMarch 31, 2023 and ¥162,499 million as of March 31, 2022.
Others also include foreign bonds and equities.

5. Status of Claims:
Claims under the Shinkin Bank Act and the Act on Emergency
Measures for the Revitalization of the Financial Functions are as
follows.
Claims consist of items recorded in Corporate Bonds in“Securities” (limited to those Corporate Bonds for which redemptionof the principal and payment of interest are fully or partiallyguaranteed and which are issued through private placement of
securities (Article 2, Paragraph 3 of the Financial Instruments andExchange Act)), Loans and Bills Discounted, Foreign Exchanges
Assets, Accrued Interest and Suspense Payments in “Other Assets,”and Customers’ Liabilities for Acceptances and Guarantees in the
consolidated balance sheet, as well as other securities disclosed asloaned securities in footnote (limited to those loaned under a loan-foruse or lease agreement).

Bankrupt and QuasiBankrupt Claims

Millions of
U.S. Dollars
2023

Millions of Yen
2023
2022
94

163

0

3,255

3,344

24

13

42

0

Restructured Loans

18,72818,882

140

Total

22,092

22,433

165

Doubtful Claims
Loans Past Due Three
Months or More

55

56

Bankrupt and Quasi-Bankrupt Claims represent claims held
against debtors with failed business status due to the grounds such ascommencement of bankruptcy proceedings, commencement ofreorganization proceedings, or commencement of rehabilitation
proceedings, and any other type of claims equivalent thereto.
Doubtful Claims represent claims whose debtor is not yet in thestatus of failure in business although such debtor’s financial status
and business performance are worsening, and for which it is highly
likely that the collection of principal or receipt of interest inaccordance with the contract is impossible, other than Bankrupt andQuasi-Bankrupt Claims.
Loans Past Due Three Months or More represent loans forwhich payment of the principal or interest is delinquent for the periodof three months or longer from the day immediately after thecontractual due date, other than Bankrupt and Quasi-Bankrupt Claims
and Doubtful Claims.
Restructured Loans represent loans for which an arrangement
favorable for the debtor has been made, such as reduction or
exemption of interests, granting of grace period for payment ofinterest, granting of grace period for payment of principal, waiver ofclaims, other than Bankrupt and Quasi-Bankrupt Claims, Doubtful
Claims, and Loans Past Due Three Months or More.
The above amounts are the amounts before exclusion ofreserves for possible loan losses.

7. 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 ¥26,427,632
million ($197,959 million) as of March 31, 2023 and ¥27,146,527
million as of March 31, 2022.
The amounts which the Bank could unconditionally cancel at
any time or of which the original contractual maturity is less than one
year are ¥26,250,133 million ($196,630 million) as of March 31,
2023 and ¥26,988,964 million as of March 31, 2022.

6. Loans and Bills Discounted:
Loans include subordinated loans with a lower priority for repaymentof principal and interests than that of other debt claims. The amountwas ¥9,000 million ($67 million) as of March 31, 2023 and ¥11,500
million as of March 31, 2022. Of these amounts, none as of March 31,
2023 and 2022, were provided to Shinkin Banks in accordance with
the Shinkin Bank Management Reinforcement System.
Bills Discounted are accounted for as financial transactions inaccordance with Industry Committee Practical Guidelines No. 24.
The face value of bills of lading amounted to ¥8 million ($0 million)
as of March 31, 2023 and ¥195 million as of March 31, 2022. The
Bank has the right to freely dispose of, sell or re-hypothecate suchbills.
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 ¥9,535 million ($71 million) as
of March 31, 2023 and ¥11,302 million as of March 31, 2022.

8.

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 ¥130,731
million ($979 million) as of March 31, 2023 and ¥128,869 million asof March 31, 2022.
Those held by the Bank without being disposed of as of March
31, 2023 amounted to ¥77,509 million ($580 million) and as ofMarch 31, 2022 amounted to ¥91,671 million.

9.

Tangible Fixed Assets:
Millions of Yen
2023
2022

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
2023

99,92599,894

748

1,764

1,764

13

(－)

(－)

(－)

10. Assets Pledged as Collateral and Associated Liabilities:
Assets pledged as collateral for the fiscal years ended March 31, 2023
and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Assets Pledged as Collateral
Trading Assets

17,44312,098130

5,779,541

6,001,280

43,292Loans and Bills Discounted 3,100,425

653,21223,224

6,666,590

66,647

Securities

Total

8,897,409

Liabilities associated with
Assets Pledged as Collateral
Borrowed Money

3,836,200

Payables under Repurchase
1,970,729
Agreements
Payables under Securities
1,362,132
Lending Transactions

4,005,400

28,735595,089

14,762

1,728,562

10,203

11. Trading Liabilities:
The details of Trading Liabilities as of March 31, 2023 and 2022 are
as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Trading Bonds Sold

5,895

3,228

44

Derivatives of Securities
Related to Trading
Transactions
Trading-Related Financial
Derivatives

－

2

－

80,807

24,680605

Total

86,702

27,911

649

Securities in the amount of ¥310,479 million ($2,325 million) as ofMarch 31, 2023 and ¥253,101 million as of March 31, 2022, were
pledged as collateral for exchange settlement transactions, etc. or as
substitute for margin in futures transactions, etc.
Assets pledged through GC repo transactions of Japanese
Government Bonds (JGBs) under subsequent collateral allocation
method as of March 31, 2023 amounted to ¥596,971 million ($4,471
million) and as of March 31, 2022 amounted to ¥602,851 million.
Other assets include Margin Deposits for Futures Transactions,
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
2023
2022
2023
Margin Deposits for
100－
0
Futures Transactions
Guarantee Money
Cash Collateral
Pledged for Financial
Instruments
Clearing Margin
Deposits for Central
Counterparty
Cash Collateral
Pledged for
Repurchase
Agreement

434

439

3

167,280

164,985

1,253

700,000

700,000

5,243

500

3,926

3

57

12. Borrowed Money and Lease Obligations:
Balance as of
Category
April 1, 2022
(Millions of Yen)

Balance as ofMarch 31, 2023
(Millions of Yen)

Borrowings

4,167,880

3,998,680

29,952

0.04－

Borrowed Money

4,167,880

3,998,680

29,952

0.04

May 2023 Mar. 2029

294

196

1

2.15

－

240

136

1

2.64

May 2024 Jan. 2029

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

Balance as of
Average
March 31, 2023
Interest Rate (%)(Millions of U.S. Dollars)

Maturity

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
1,379,800
972,400
711,600
772,400－
Borrowed Money
196
86
18
12
12
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

10,335
7,283
5,330
5,785
－
Borrowed Money
1
0
0
0
0
Lease Obligations
3. Borrowed Money includes subordinated borrowings of ¥162,480 million ($1,217 million) as of March 31, 2023 and 2022.

13. Debentures:
IssuerThe Bank

The Bank

The Bank
Total

Name of Issue

No. 329-400
5-yearInterest-bearing
debentures
No. 2
7-yearInterest-bearing
debentures
No. 2
10-yearInterest-bearing
debentures－

Issuance Date

Balance as of Balance as of Balance as ofApril 1,March 31,
March 31,
2022
2023
2023
(Millions of (Millions of (Millions of
Yen)
Yen)
U.S. Dollars)

2,995

58



Collateral

Redemption
Date

Apr. 2017Mar. 2023

1,515,370

1,432,960

10,7330.010.38－

Apr. 2022 Mar. 2028

Sep. 25, 2015

10,000

－

－

0.29

－

Sep. 27, 2022

Sep. 25, 2015

20,00020,000

149

0.52

－

Sep. 26, 2025－

1,545,370

1,452,960

10,883

－

－

－

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
399,930
292,900
248,750
249,740

Within 1 year

CouponRate (%)

Over 1 year,
within 2 years
2,194

Millions of U.S. Dollars
Over 2 years,
within 3 years
1,863Over 3 years,
within 4 years
1,870

Over 4 years,
within 5 years
261,640
Over 4 years,
within 5 years
1,959

14. 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, 2022 and as of March 31, 2023.

18. Trading Income:The details of Trading Income for the fiscal years ended March 31,
2023 and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars

15. 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.

Income from Trading
Account Securities
Income from TradingRelated Financial
Derivatives
Other Trading Income
Total

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.

19. Trading Losses:
The details of Trading Losses for the fiscal years ended March 31,
2023 and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars

16. Trusts with Contracts:
The details of principal amounts of trusts with contracts forcompensation of loss of principal for the fiscal years ended March 31,
2023 and 2022 are as follows:
Millions of
U.S. Dollars
Millions of Yen
2023
2022
2023
Money Trust
325
43,431
42,711

17. Fees and Commissions:
The details of Fees and Commissions for the fiscal years ended March
31, 2023 and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Deposit, Fixed Income
771
644
5
Securities and Lending
397
370
2
Exchange Business
10,638
10,175
79
Securities Related Business
2,024
2,153
15
Agency Business
Defined Contribution Plan
113
86
0
Business
7,670
8,106
57
Guarantee Business
20,446
19,984153
Trustee Business
712
603
5
OthersIncome on Fees and42,77542,124320
Commissions Businesses
167
207
1
Exchange553
701
4
Agency Loans Business
14,353
13,972
107
OthersExpenses on Fees and15,075
14,881
112
Commissions Businesses

Expenses from TradingRelated Securities

2023

2022

2023

627

606

4

17,137

942

128

54
17,819

－
1,548

0
133

2023

2022

2023

186

5

1

Other Trading Losses

－

2

－

Total

186

8

1

20. Other Income:The details of Other Income for the fiscal years ended March 31, 2023
and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Gains on Sale of Stocks and
9,264
7,634
69
Other Securities
Reversal of Allowance for
1,335
4,552
10
Loan Losses
Others5150
010,605
12,33779
Total

21. Other Expenses:
The details of Other Expenses for the fiscal years ended March 31,
2023 and 2022 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Losses on Sale of Stocks and
325
100
2
Other Securities
Impairment Losses on Equity
Securities

－

337

－

Impairment Losses on Fixed
Assets52－

0

Others
Total

329
707

48
486

2
5

59

22. Consolidated Statement of Comprehensive Income:For the fiscal years ended March 31, 2023 and 2022
Reclassification adjustment amount and tax effect amount related to Other Comprehensive Income
Millions ofMillions of Yen
2023

U.S. Dollars
2022

2023

Net Unrealized Gains (Losses) on Other Securities:
The Amount Arising during the Period(563,890)(318,782)(4,223)

Reclassification Adjustment Amount

119,273

36,279893

Prior to Tax Effect Adjustment(444,616)(282,503)(3,330)Tax Effect Amount

124,285

79,045930

Net Unrealized Gains (Losses) on Other Securities(320,330)(203,457)(2,399)The Amount Arising during the Period

122,785

48,631

919

Reclassification Adjustment Amount(40,659)

28,442(304)

Deferred Gains or Losses on Hedges:

Prior to Tax Effect Adjustment

82,12577,074615

Tax Effect Amount(22,929)(21,519)(171)

Deferred Gains or Losses on Hedges

59,19655,555443

Foreign Currency Translation Adjustments:
The Amount Arising during the Period

392

777

2

Reclassification Adjustment Amount

－

－

－

Prior to Tax Effect Adjustment

－

－

－

Tax Effect Amount

－

－

－

Foreign Currency Translation Adjustments

392

777

2

2,172

(1,324)16

Reclassification Adjustment Amount

1,613

1,489

12

Prior to Tax Effect Adjustment

3,785

164

28

Tax Effect Amount(1,092)(46)(8)

Remeasurements of Defined Benefit Plans

2,692

117

20

Other Comprehensive Income(258,048)(147,007)(1,932)Remeasurements of Defined Benefit Plans:
The Amount Arising during the Period6023. 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
April 1, 2022 (Thousand
March 31, 2023
Year (Thousand Units)
Year (Thousand Units)
Units)(Thousand 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, 2023
Resolution

Annual General Meeting of
Shareholders, June 24, 2022

Class of ShareTotal Dividend
Amount (Million Yen)

Amount Per Share(Yen)

Record Date

Effective Date

GeneralCommon Shares

12,0003,000

March 31, 2022

June 24, 2022

Specific
Common Shares

3,000

1,500

March 31, 2022

June 24, 2022

Preferred Shares(Type-A)

4,603

6,500

March 31, 2022

June 24, 2022

Among the dividends whose record date falls within the fiscal year ended March 31, 2023, those whose effective date will fall within thefollowing fiscal year:
Resolution

Annual General Meeting of
Shareholders, June 21, 2023

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, 2023 June 21, 2023

Specific
Common Shares

3,000

Retained Earnings

1,500

March 31, 2023 June 21, 2023

Preferred Shares(Type-A)

4,603

Retained Earnings

6,500

March 31, 2023 June 21, 2023

61

24. Income Taxes:(1) Breakdown of Deferred Tax Assets and Liabilities is as follows:
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Deferred Tax Assets:
Depreciation

2,635

2,788

19

Reserve for Possible Loan
Losses

182

121

1

Net Defined Benefit Liability

11,674

12,466

87

Write-Downs for Securities

1,276

1,376

9

Net Unrealized Gains (Losses)
on Other Securities

84,848

5

635

29

－

0

Others

3,136

3,689

23

Valuation Allowances(1,528)(2,379)(11)

Total Deferred Tax Assets

102,254

18,068765

Tax Loss Carryforwards

Deferred Tax Liabilities:
Net Unrealized Gains (Losses)
on Other Securities
Deferred Gains or Losses on
Hedges

25. 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, 2023 and 2022 is asfollows:(i) Reconciliation of beginning- and end-of-period balance ofRetirement Benefit Obligation
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Retirement Benefit
Obligation at Beginning
68,51566,526513
of Period
Service Cost

2,937

2,859

22

Interest Cost

261

253

1

Actuarial Difference
Incurred(6,929)557(51)

Retirement Benefits Paid

(2,265)(1,681)(16)

Prior Service Cost

－

－

－

－

－

－

62,51968,515468(236)(39,679)(1)(36,478)(13,548)

(273)

(335)

(318)

(2)

Total Deferred Tax Liabilities(37,049)(53,546)

(277)

Other

Net Deferred Tax Assets(Liabilities)

65,205(35,478)488

Retirement Benefit
Obligation at End of
PeriodOthers(2) Reconciliation between the effective statutory tax rate and theactual effective tax rate for the fiscal years ended March 31, 2023 and
2022:
2023
2022
Statutory effective tax rate

27.92 %

27.92 %

Change in Valuation Allowances(2.38) %(2.14) %Dividends received, not taxable(1.46) %(0.96) %Others1.44 %(0.13) %Actual effective income tax rate after
the application of tax effect accounting

25.52 %

24.69 %

(Adjustments)(ii) Reconciliation of beginning- and end-of-period balance ofPension Plan Assets
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2023
Balance of Pension Plan
Assets at Beginning of
25,423
24,583
190
PeriodExpected Return on
1,016
983
7
Pension Plan Assets
Actuarial Difference(4,757)(767)(35)
IncurredContributions by the
1,659
1,647
12
Employer and Employees
Retirement Benefits Paid
Other
Balance of Pension Plan
Assets at End of Period62(1,123)(1,023)

(8)

－

－

－

22,21925,423

166

(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
2023
2022
2023
Funded Plan Retirement
50,62656,513379
Benefit Obligation(v) Remeasurements of Defined Benefit Plan
Remeasurements of Defined Benefit Plan (before tax effects)
comprise the following.
Millions ofMillions of Yen
U.S. Dollars
2023
2022
2022

Pension Plan Assets

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

－

－

Actuarial Differences

3,785

164

28

(25,423)

(166)

Other

－

－

－

28,40631,089

212

Total

3,785

164

28

11,893

12,002

89

40,29943,091

301

Millions of
U.S. Dollars
2023

40,29943,091

301

Net Defined Benefit Asset

－

－

－

Net Amount of Liabilities
and Assets Presented on
the Consolidated Balance
Sheet40,29943,091(iv) Breakdown of Retirement Benefit Expense

Service Cost－

(22,219)

Millions of Yen
2023
2022
Net Defined Benefit
Liability

Prior Service Cost

Millions of Yen
2023
2022
2,937
2,859

301

Millions of
U.S. Dollars
202322(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
2023
2022
2022
Unrecognized－－－Prior Service Cost
Unrecognized
1,936
5,721
14
Actuarial Differences
Other

－

－

－

Total

1,936

5,721

14

(vii) Pension Plan Assets(a) The ratios by main asset categories in total pension plan assets are
as follows:
2023
2022
Bonds

59 %

58 %

Stocks

29 %

29 %

261

253

1

Cash and Deposits

8%

10 %

(1,016)

(983)

(7)

Other

4%

3%

1,613

1,489

12

Total

100 %

100 %

－

－

－

Other

(605)

(600)

(4)

Retirement Benefit
Expenses Related toDefined Benefit Plan

3,189

3,017

23

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

Note:
Other includes the employee contribution amount to the Employees’
Pension Fund.

(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, 2023 and2022 are as follows:

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



2023

2022

0.0 - 1.2 %0.0 - 0.6 %

4.0 %

4.0 %

0.0 - 8.5 %0.0 - 8.5 %63

Note:The discount rate applied at the beginning of the fiscal year ended
March 31, 2023 was 0.0 - 0.6%. However, after reevaluating thediscount rate at the end of the fiscal year, the rate has been changed to
0.0 - 1.2% because the change would cause a significant impact on
the amount of retirement benefit obligation.
26. Leases:
1. Finance Leases
Finance leases that do not transfer ownership(1) Outline of lease assets(i) Tangible fixed assets
Mainly, hardware related to computer equipment(ii) Intangible fixed assets
Software related to computer equipment(2) Lease asset depreciation method
Depreciation method is described in the “Significant Accounting
Policies.”
2. Operating Leases
Future lease payments related to non-cancelable operating leases:
Disclosure of data omitted due to immateriality.

27. 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 JGBs, corporate bonds and other bonds as well as foreign
securities such as government bonds, government-guaranteed bonds,
and agency bonds issued in the major industrialized countries. The
Group also invests in equity securities and investment funds todiversify its portfolio.

64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 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 selfassessments, 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,
enabling appropriate trading operations by setting specific loss cut
limits.
Market risks of consolidated subsidiaries are not directly added
to the market risk exposure 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 and foreignexchange instruments held for trading purposes within derivativetransactions. The VaR model is based on the delta method and uses a
99.0% confidence interval, a holding period of five business days andan observation period of one year. In addition, with regard 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-equivalent amount under the
regulations on banks’ capital ratio.
The market risk exposure (quantified potential loss) of theBank’s trading operations was ¥224 million ($1 million) as of March
31, 2023 and ¥44 million as of March 31, 2022, and the market risk
exposure (quantified potential loss) of the trading operations of theBank’s consolidated subsidiaries was ¥600 million ($4 million) as ofMarch 31, 2023 and ¥546 million as of March 31, 2022.
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, 2023, the Bank calibrated the VaR (used in
backtesting) conservatively. It should be noted that VaR measures themarket risk exposure at certain probability levels statisticallycalculated based on historical market fluctuation. Hence, there may
be cases where market risk exposure cannot be captured in situations
where market conditions change unprecedentedly.

65

(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.
The Group’s market risk exposure other than for trading
purposes was ¥663,175 million ($4,967 million) as of March 31, 2023
and ¥533,948 million as of March 31, 2022. The Bank conducts backtesting to compare VaR calculated using the model with actual losses.
Since the actual losses exceeded the VaR six times as the results ofback testing covering the fiscal year ended March 31, 2023, the Bank
calibrated the VaR (used in backtesting) conservatively. It should be
noted that VaR measures the market risk exposure at certain
probability levels statistically calculated based on historical market
fluctuation. Hence, there may be cases where market risk exposure
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, such as by providing overdraft facilities
for consolidated subsidiaries with operations involving fundmovements in relatively large amounts.
(4) Supplementary explanation concerning the fair values of financial
instruments
Since certain assumptions are adopted to determine the fair values offinancial instruments, the values may vary if the underlying
assumptions change.

66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. Stocks and other equity
securities, with no market prices and investment in investment partnerships are not included in the table below. (See Note 1.)
Notes to Cash and Due from Banks, Bills Bought and Call Loans, Receivables under Resale Agreements, Bills Sold and Call Money, Payables
under Repurchase Agreements and Payables under Securities Lending Transactions are omitted as the fair values approximate their carrying
amounts and they are mainly settled in a short period of time.
Notes on immaterial items have been omitted.
As of March 31, 2023
Millions of Yen
Carrying Value(1) Monetary Claims Bought

Fair Value

Difference

172,200

172,200－

Trading Securities

398,910

398,910－(3) Money Held in Trust

78,136

78,136－

879,720922,760

43,04012,511,681

12,511,681－

9,487,671

9,485,504(2,166)

Total Assets

23,528,320

23,569,194

40,873(1) Deposits

34,652,817

34,660,489

7,672(2) Debentures

1,452,960

1,451,523(1,436)

Trading Bonds Sold

5,895

5,895

－

(4) Borrowed Money

3,998,680

3,999,693

1,013

Total Liabilities

40,110,352

40,117,602

7,250(2) Trading Assets(4) Securities
Held-to-Maturity Debt Securities
Other Securities (*1)(5) Loans and Bills Discounted
Reserve for Possible Loan Losses (*2)

9,511,310(23,639)(3) Trading Liabilities

Derivatives (*3)
To which Hedge Accounting is not applied

6,625

6,625

－

To which Hedge Accounting is applied

64,70836,536(28,172)

71,333

43,161(28,172)

Total Derivatives

67Millions of U.S. Dollars
Carrying Value(1) Monetary Claims Bought

Fair Value

Difference

1,289

1,289

－

Trading Securities

2,988

2,988

－

(3) Money Held in Trust

585

585

－

6,589

6,912

322

93,72093,720－71,06871,052(16)

Total Assets

176,242

176,548306(1) Deposits

259,571259,62957(2) Debentures

10,883

10,872(10)

Trading Bonds Sold

44

44

－

(4) Borrowed Money

29,952

29,9607

Total Liabilities

300,452

300,50654(2) Trading Assets(4) Securities
Held-to-Maturity Debt Securities
Other Securities (*1)(5) Loans and Bills Discounted
Reserve for Possible Loan Losses (*2)

71,245(177)(3) Trading Liabilities

Derivatives (*3)
To which Hedge Accounting is not applied

49

49

－

To which Hedge Accounting is applied

484

273

(211)

534

323

(211)

Total Derivatives*1. Investment trusts to which the treatment that a net asset value (NAV) is regarded as the fair values has been applied in accordancewith Paragraphs 24-3 and 24-9 of “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31, June 17, 2021) are included in “Other Securities.”*2. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted.
*3. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are presented collectively.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables areshown in parenthesis.

68As of March 31, 2022
Millions of Yen
Carrying Value(1) Monetary Claims Bought

Fair Value

Difference

204,459

204,459－

Trading Securities

305,255

305,255－(3) Money Held in Trust

118,623

118,623－450,356

497,174

46,81815,476,710

15,476,710－

7,729,833

7,744,553

14,719Total Assets

24,285,238

24,346,777

61,538(1) Deposits

33,123,802

33,136,138

12,335(2) Debentures

1,545,370

1,543,995(1,374)

Trading Bonds Sold

3,228

3,228

－

(4) Borrowed Money

4,167,880

4,170,629

2,749

Total Liabilities

38,840,281

38,853,991

13,709(2) Trading Assets(4) Securities
Held-to-Maturity Debt Securities
Other Securities(5) Loans and Bills Discounted

7,754,789

Reserve for Possible Loan Losses (*1)

(24,955)(3) Trading Liabilities

Derivatives (*2)
To which Hedge Accounting is not applied(2,503)(2,503)－

To which Hedge Accounting is applied(6,853)(47,487)(40,633)(9,357)(49,990)(40,633)

Total Derivatives*1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted.
*2. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are presented collectively.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables areshown in parenthesis.
Note 1: Stocks and other equity securities, with no market prices and investment in investment partnerships are as follows and are notincluded in “Securities” in the fair value information of financial instruments.
Millions of Yen
Category
Stocks and other equity securities, with nomarket prices (*1) (*2)
Investment in investment partnerships (*3)
Total

2023

Millions of U.S. Dollars
2023

2022
154,001

168,681

1,153

53,38943,339399

207,391

212,021

1,553*1. Stocks and other equity securities, with no market prices are unlisted common stocks and the preferred shares issued by shinkin banks which
are held by the Bank. These stocks and other equity securities are not included in fair value disclosure information based on Paragraph 5 of
the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020).
*2 Impairment loss of ¥91 million was recognized for unlisted common shares in the fiscal year ended March 31, 2022.
*3 Investment in investment partnerships is not included in fair value disclosure information based on Paragraph 24-16 of the “Implementation
Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021).



69

Note 2: Amounts of monetary claims and securities with maturities scheduled for redemption after the balance sheet date
As of March 31, 2023
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
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Foreign Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Foreign Bonds
Loans and Bills Discounted (*2)

18,871,278
1,573,215
295,304－

20,000
－
－
5,936

－
－
－
972

－
－
－
16,150－－－25,2052,500－－
127,456

1,697
－
－
－
－
1,697
1,824,792
589,830
255,571－
718,308
261,081
5,149,822

79,75870,000
－
－
7,100
2,658
1,968,976－
632,850－
1,033,872
302,253
1,741,316

258,151
210,000
20,974－25,2881,889
1,118,451－
424,717－439,579
254,155
1,219,448

155,500
155,000－－
500－
726,177
215,000
154,277－
135,202
221,698
753,520

56,543－47,983－8,560－
1,668,884
705,000
359,080－
76,553528,250
485,626

323,350
310,000－－－
13,3502,501,771
955,000－－
289,880
1,256,890
159,479

Total

27,716,110

3,815,987

2,597,024

1,651,348

2,236,259

3,114,557

Millions of U.S. Dollars
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
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Foreign Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Foreign Bonds
Loans and Bills Discounted (*2)

141,357
11,784
2,212
－

149
－
－
44

－
－
－
7

－
－
－
120

－
－
－
188

18
－
－
954

12
－
－
－
－
12
13,668
4,418
1,914
－
5,380
1,955
38,575

597
524
－
－
53
19
14,748
－
4,740
－
7,744
2,264
13,043

1,933
1,573
157
－
189
14
8,377
－
3,181
－
3,292
1,903
9,134

1,164
1,161
－
－
3
－
5,439
1,610
1,155
－
1,012
1,660
5,644

423
－
359
－
64
－
12,501
5,280
2,689
－
573
3,956
3,637

2,422
2,322
－
－
－
100
18,739
7,153
－
－
2,171
9,414
1,194

Total

207,61128,584

19,45312,36916,751

23,330*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. Loans do not include those of ¥2,109 million ($15 million) with no expected schedule of redemption, including those to Bankrupt Borrowers,
Substantially Bankrupt Borrowers and Probably Bankrupt Borrowers.

70As of March 31, 2022
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

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

16,649,319
1,329,496
34,216527

22,237－－2,106

20,000－－30,887

－
－
－
7,293

－
－
－
25,408－－－139,283

8,544
7,000
－
－
－
1,544
2,089,460
711,150
263,911－
953,126
161,272
3,597,163

42,11140,000－－－2,111
2,994,042
635,000
556,499－
1,363,304
439,239
1,591,115

131,381130,000－－－
1,381
2,588,926
920,000
631,494－
646,921390,5101,129,673

130,000
130,000－－－－
982,747
50,000132,169－
152,412648,166
725,948

135,000
135,000－－－－
2,026,905
1,099,000
346,385－
61,128520,392
532,863

－
－
－
－
－
－
1,816,613
1,005,000－－
268,127
543,485
175,860

Total

23,708,729

4,651,612

3,900,869

1,845,989

2,720,177

2,131,757

Over 10 years*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. Loans do not include those of ¥2,206 million with no expected schedule of redemption, including those to Bankrupt Borrowers, Substantially
Bankrupt Borrowers and Probably Bankrupt Borrowers.
Note 3: Amounts of deposits, debentures and other interest bearing debt scheduled for repayment after the balance sheet date
As of March 31, 2023
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Deposits (*)

22,020,526

Debentures

399,930

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

10,286,368

601,532

265,390680,200

798,800

541,650

511,380－－－

1,379,800

1,684,000

772,400

162,480

－

－

6,804

－

－

－

－

－

Payables under Repurchase Agreements

2,620,729

－

－

－

－

－

Payables under Securities Lending
Transactions

1,362,132

－

－

－

－

－

Total

27,789,923

12,512,018

1,885,312

427,870

680,200

798,800

Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

164,947

77,051

4,505

1,987

Millions of U.S. Dollars

Deposits (*)

Over 7 years,
within 10 years Over 10 years
5,095

5,983

Debentures

2,995

4,057

3,830

－

－

－

Borrowed Money

10,335

12,614

5,785

1,217

－

－

Bills Sold and Call Money

50

－

－

－

－

－

Payables under Repurchase Agreements

19,630

－

－

－

－

－

Payables under Securities Lending
Transactions

10,203

－

－

－

－

－

Total

208,164

93,722

14,122

3,205

5,095

5,983

* Demand deposits, included in “Deposits,” are stated under amounts payable “Within 1 year.”71

As of March 31, 2022
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Deposits (*)

15,237,606

Debentures

351,850

Borrowed Money

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

17,695,931

63,4494,740

122,075－

691,830

501,690－－－

1,058,000

2,235,800

711,600

162,480

－

－

5,637

－

－

－

－

－

Bills Sold and Call Money

Over 10 years

Payables under Repurchase Agreements

1,195,089

－

－

－

－

－

Payables under Securities Lending
Transactions

1,728,562

－

－

－

－

－

Total

19,576,744

20,623,561

1,276,739

167,220122,075－* Demand deposits, included in “Deposits,” are stated under amounts payable “Within 1 year.”
3. Breakdown of financial instruments by the fair value hierarchy level
The fair value of financial instruments is classified into the following three levels on the basis of the observability and significance of the
inputs used to calculate the fair value.
Level 1 fair value:
Fair value measured by using quoted market prices in active markets as observable inputs related to fair value measurement for assets or
liabilities subject to fair value measurement
Level 2 fair value:
Fair value measured by using observable inputs related to fair value measurement other than those for Level 1
Level 3 fair value:
Fair value measured by using unobservable inputs related to fair value measurement
If multiple inputs that have a significant effect on the fair value measurement are used, the fair value is classified into the level with the lowest
priority in the fair value measurement among the levels to which each input is assigned.
(1) Financial instruments recorded at fair value in the consolidated balance sheet
As of March 31, 2023
Millions of Yen
Fair Value
Level 1
Monetary Claims Bought
Trading Assets (Trading Securities)
Money Held in Trust (Trading Purposes, Others)
Securities (Other Securities) (*1)
StocksLevel 3

Total

－

815

171,385

172,200

2,202

396,707－398,910－

78,136－

78,136

3,643,801

8,536,269

195,852

12,375,924

58,663－－58,663

Japanese Government Bonds

2,406,868－－

2,406,868

Municipal Government Bonds－

1,820,151－

1,820,151

Corporate Bonds－

2,691,967

546

2,692,513

Foreign Bonds

1,119,870

1,318,852

195,306

2,634,029

Investment Trusts

58,3992,705,298－

2,763,698

Total Assets

3,646,004

9,011,929

367,238

13,025,171

Trading Liabilities (Trading Securities)

5,895

－

－

5,895

Total Liabilities

5,895

－

－

5,895

Derivatives (*2)

72

Level 2



371,329－71,333

Interest-Rate-Related Transactions－

144,783－

144,783

Currency-Related Transactions－(73,454)－(73,454)

Bond-Related Transactions

3

－

－

3

Millions of U.S. Dollars
Fair Value
Level 1
Monetary Claims Bought

Level 2

Level 3－

6

Trading Assets (Trading Securities)

16

Money Held in Trust (Trading Purposes, Others)－

Securities (Other Securities) (*1)
Stocks

Total
1,283

1,289

2,971

－

2,988

585

－

585

27,29463,942

1,467

92,703

439

－

－

439

Japanese Government Bonds

18,028－－18,028Municipal Government Bonds－

13,634－

13,634

Corporate Bonds－

20,164

4

20,168Foreign Bonds

8,388

9,879

1,462

19,730Investment Trusts

437

20,264－20,701

27,31067,5052,750

97,566

Trading Liabilities (Trading Securities)

Total Assets

44

－

－

44

Total Liabilities

44

－

－

44

Derivatives (*2)

0

534

－

534

Interest-Rate-Related Transactions

－

1,084

－

1,084

Currency-Related Transactions

－

(550)

－

(550)

Bond-Related Transactions

0

－

－

0

*1. Investment trusts to which the treatment that a net asset value (NAV) is regarded as the fair values has been applied in accordance with
Paragraphs 24-3 and 24-9 of “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31,
June 17, 2021) are not included in the above table. The carrying value of investment trusts whose investment trust property is financial
instruments based on the provision stipulated in Paragraph 24-3 as of March 31, 2023 amounted to ¥89,276 million ($668 million), and thecarrying value of investment trusts whose investment trust property is real estates based on the provision stipulated in Paragraph 24-9 as ofMarch 31, 2023 amounted to ¥46,481 million ($348 million).
*2. Derivative transactions stated in Trading Assets and Liabilities, and Other Assets and Liabilities are presented collectively.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables are shown inparenthesis.

73As of March 31, 2022
Millions of Yen
Fair Value
Level 1
Monetary Claims Bought

Total

203,034

203,932

2,640

302,615－305,255－

118,623－

118,623

5,778,995

6,532,779

224,488

12,536,262

56,698－－56,698

Money Held in Trust (Trading Purposes, Others)
StocksLevel 3897－

Trading Assets (Trading Securities)
Securities (Other Securities) (*1)

Level 2

Japanese Government Bonds

4,418,385－－

4,418,385

Municipal Government Bonds－

1,934,063－

1,934,063

Corporate Bonds－

3,458,909

1,556

3,460,466

1,303,911

1,139,805

222,9312,666,648

5,781,635

6,954,915

427,523

13,164,074

Trading Liabilities (Trading Securities)

3,228

－

－

3,228

Total Liabilities

3,228

－

－

3,228

Derivatives (*2)(2)

(9,354)－(9,357)

Foreign Bonds
Total Assets

Interest-Rate-Related Transactions－

45,525－45,525Currency-Related Transactions－(54,879)－(54,879)

Bond-Related Transactions

(2)

－

－

(2)

*1. Investment trusts to which the transitional measures stipulated in Paragraph 26 of “Implementation Guidance on Accounting Standard for
Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019) have been applied are not included in the above table. The amount of theseinvestment trusts on the consolidated balance sheet was ¥2,940,447 million.
*2. Derivative transactions stated in Trading Assets and Liabilities, and Other Assets and Liabilities are presented collectively.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables are shown inparenthesis.
(2) Financial instruments other than financial instruments recorded at fair value in the consolidated balance sheet
As of March 31, 2023
Millions of Yen
Fair Value
Level 1
Monetary Claims Bought
Securities (Held-to-Maturity Debt Securities)
Japanese Government Bonds
Municipal Government Bonds
Corporate Bonds
Foreign Bonds

Level 3

Total

－

－

－

－

792,302130,458－

922,760

792,302－－792,30269,524－－－

41,762－

41,762

69,524－

19,170－19,170－－9,485,504

9,485,504

792,302130,458

9,485,504

10,408,265

Deposits－

34,660,489－

34,660,489

Debentures－

1,451,523－

1,451,523

Borrowed Money－

3,836,200

163,493

3,999,693

Total Liabilities－

39,948,213

163,493

40,111,707

Derivatives (*)－(28,172)－(28,172)－(28,172)－(28,172)

Loans and Bills Discounted
Total Assets

Interest-Rate-Related Transactions

74

Level 2Millions of U.S. Dollars
Fair Value
Level 1

Level 2

Monetary Claims Bought

Level 3

Total

－

－

－

－

5,934

977

－

6,912

5,934
－

－

5,934

520

－
－

Corporate Bonds

－

312

－

312

Foreign Bonds

－

143

－

143

－

－

71,052

71,052

5,934

977

71,052

77,964

Deposits－

259,629－

259,629

Debentures－

10,872－

10,872

Borrowed Money－

28,735

1,224

29,960Total Liabilities－

299,237

1,224

300,462

Derivatives (*)

－

(211)

－

(211)

－

(211)

－

(211)

Securities (Held-to-Maturity Debt Securities)
Japanese Government Bonds
Municipal Government Bonds

Loans and Bills Discounted
Total Assets

Interest-Rate-Related Transactions

520* The fair value of interest rate swaps for exceptional treatment of interest rate swaps is shown.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables are shown inparenthesis.
As of March 31, 2022
Millions of Yen
Fair Value
Level 1
Monetary Claims Bought

Level 2

Level 3

Total

－

－

527

527

492,0195,155－

497,174

492,019
－

－
－

－
－

492,019－

Corporate Bonds

－

－

－

－

Foreign Bonds

－

5,155

－

5,155

－

－

7,744,553

7,744,553

492,019

5,155

7,745,080

8,242,255

Deposits－

33,136,138－

33,136,138

Debentures－

1,543,995－

1,543,995

Borrowed Money－

4,005,400

165,229

4,170,629

Total Liabilities－

38,685,533

165,229

38,850,762

Derivatives (*)－(40,633)－(40,633)－(40,633)－(40,633)

Securities (Held-to-Maturity Debt Securities)
Japanese Government Bonds
Municipal Government Bonds

Loans and Bills Discounted
Total Assets

Interest-Rate-Related Transactions* The fair value of interest rate swaps for exceptional treatment of interest rate swaps is shown.
For net receivables and payables derived from derivative transactions, net amounts are stated. Sums that represent net payables are shown inparenthesis.

75Note 1: Explanation on valuation techniques used to measure fair value and inputs used in fair value measurement
Assets- Monetary Claims Bought
Of the Monetary Claims Bought, the beneficiary rights in trust accounted for in the same way as securities adopt the valuation priceobtained from a third party, such as a broker, as the fair value. If significant unobservable inputs, such as the default rate, recovery rate andprepayment rates, are used for valuation, the fair value is classified as Level 3 fair value, otherwise it is classified as Level 2 fair value. The
fair value of Monetary Claims Bought other than these beneficiary rights in trust is calculated by the same method as for loans, and isclassified as Level 3 fair value.
- Trading Assets
Regarding securities such as bonds held for trading purposes, the fair value for which unadjusted market price in active markets is used isclassified as Level 1 fair value. If the market is not active even if the published market price is used, or if the fair value is estimated bydiscounting the future cash flows using the market interest rate as of the valuation date, the fair value is classified as Level 2 fair value.
- Money Held in Trust
For securities managed as trust assets in Money Held in Trust whose main purpose is to trade securities, the fair value of stocks is based on
exchange prices, and that of bonds is based on market prices, etc. They are classified into Level 2 fair value based on the level of the main
components of the trust assets.
Notes regarding the trust of money for each purpose of holding are described in “Money Held in Trust.”- Securities
For securities, the fair value for which unadjusted quoted market price in active markets is used is classified as Level 1 fair value. These
securities mainly include listed stocks and government bonds. If the market is not active even if the published market price is used, or if thefair value is estimated by discounting the future cash flows using the market interest rate as of the valuation date, the fair value is classified
as Level 2 fair value. These securities mainly include municipal bonds, short-term corporate bonds and corporate bonds.
If the quoted market price is not available, the valuation price obtained from a third party such as a broker is used. When the valuation uses
important unobservable inputs, such as default rate, recovery rate, prepayment rates and credit spread, the fair value is classified as Level 3
fair value.
The fair value of investment trusts for which transaction price in active markets is used is classified as Level 1 fair value. If there are noquoted market prices and there are no material restrictions for which market participants would ask to bear the cost of risk with respect tosuch redemption or repurchase requests, the fair value of investment trust is based on a published net asset value (NAV) or the like andclassified as Level 2 fair value.
Notes regarding securities for each purpose of holding are described in “Securities.”- Loans and Bills Discounted
Of the Loans and Bills Discounted, those with variable interest rates reflect the market interest rate in a short period of time. For this reason,
as long as the credit status of the lender does not change significantly after drawdown, the fair value approximates the carrying value.
Accordingly, the carrying value is used as the fair value. For Loans and Bills Discounted with fixed interest rates, the fair value isdetermined by category based on loan type and credit rating, discounting the total amount of principal and interest using the interest rates,
determined by reflecting credit spread and other factors on market interest rates, that are expected when granting similar loans. For Loans
and Bills Discounted under short-term contracts, the carrying value is used as the fair value since the fair value approximates the carrying
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 thefair value therefore approximates the total loan value on the consolidated balance sheet at the closing date less the total recorded value ofthe reserve for possible loan losses, this value is used for the fair value. The fair values determined are classified into Level 3 fair value.

76Liabilities- Deposits
For demand deposits, the amount payable upon demand on the balance sheet date (carrying value) is used as fair value. Of term deposits,
those with variable interest rates reflect the market interest rate in a short period of time. For this reason, the fair value approximates the
carrying value. Accordingly, the carrying value is used as the fair value. For term deposits with fixed interest rates, the fair value iscalculated by discounting future cash flows using the interest rate that would be applicable to newly taken deposits. The fair values
determined are classified into Level 2 fair value.
- Debentures
The fair value of debentures issued by the Bank is based on the market price, and is classified as Level 2 fair value in consideration ofmarket liquidity.
- Trading Liabilities
The fair value of trading bonds sold is based on the unadjusted market price in an active market and is classified as Level 1 fair value.
- Borrowed Money
For borrowed money, the present value is calculated by type, discounting the total amount of principal and interest using the expectedinterest rate for similar borrowings. If the impact of unobservable inputs on the fair value is important, the fair value is classified as Level 3
fair value, and otherwise it is classified as Level 2 fair value.
For Borrowed Money under short-term contracts, since the fair value approximates the carrying value, the carrying value is used as the fairvalue and is classified as Level 2 fair value.
Derivative Transactions
For derivative transactions, exchange-traded transactions are valued on the basis of closing prices on exchanges, etc., while over the countertransactions are valued using discounted present value or calculation models for option prices, etc. The inputs used in the valuation techniquefor calculating the value of over the counter transactions are mainly interest rates, exchange rates and volatility. The fair value of exchangetraded transactions is classified as Level 1 fair value, and that of over the counter transactions is classified as Level 2 fair value if
unobservable inputs are not used or their impact is not significant.
Note 2: Information about the Level 3 fair value of financial instruments recorded at fair value in the consolidated balance sheet(1) Reconciliation of beginning balance to ending balance, unrealized gains (losses) recognized in profit (loss) for the fiscal year ended March 31,
2023 and 2022
As of March 31, 2023
Millions of Yen
Balance
as ofApril 1,
2022

Monetary Claims Bought
Securities(Other Securities)
Corporate Bonds
Foreign Bonds

Profit (Loss) or Other
Comprehensive Income for the
fiscal year ended March 31,
2023
Recognized in
Recognized
Other
in Profit
Comprehensive(Loss) (*1)
Income (*2)

Net ofpurchases,
sales,
issuances,andsettlements

Transfers
to Level 3
fair value

TransfersfromLevel 3fair value(*3)

Balanceas ofMarch
31, 2023

Amount of unrealized gains
or losses on financial assets
and liabilities held at March
31, 2023 that is recognizedin profit or loss for the
fiscal year ended March 31,
2023

203,034

0(2,470)(29,179)－－

171,385－

224,488

6,395

(556)

(25,094)－(9,379)

195,852

－

1,556

－

(3)

(1,006)

－

－

546

－

222,931

6,395

(553)

(24,088)－(9,379)195,306－

Balanceas ofMarch
31, 2023

Amount of unrealized gains
or losses on financial assets
and liabilities held at March
31, 2023 that is recognizedin profit or loss for the
fiscal year ended March 31,
2023

Millions of U.S. Dollars
Balance
as ofApril 1,
2022

Monetary Claims Bought
Securities(Other Securities)
Corporate Bonds
Foreign Bonds

Profit (Loss) or Other
Comprehensive Income for the
fiscal year ended March 31,
2023
Recognized in
Recognized
Other
in Profit
Comprehensive(Loss) (*1)
Income (*2)

Net ofpurchases,
sales,
issuances,andsettlements

Transfers
to Level 3
fair value

TransfersfromLevel 3fair value
(*3)

1,520

0

(18)

(218)

－

－

1,283

－

1,681

47

(4)

(187)

－

(70)

1,467

－

11

－

(0)

(7)

－

－

4

－

1,669

47

(4)

(180)

－

(70)

1,462

－

*1. Mainly included in “Other Operating Income” and “Other Operating Expenses” in the consolidated statement of income.
*2. Included in “Net Unrealized Gains (Losses) on Other Securities” in “Other Comprehensive Income” in the consolidated statement ofcomprehensive income.
*3. These are transfers from Level 3 fair value to Level 2 fair value because observable data for foreign bonds became available.
The transfers are made on the last day of fiscal year.
77

As of March 31, 2022
Millions of Yen
Balance
as ofApril 1,
2021

Monetary Claims Bought
Securities(Other Securities)
Corporate Bonds
Foreign Bonds

Profit (Loss) or Other
Comprehensive Income for the
fiscal year ended March 31,
2022
Recognized in
Recognized
Other
in Profit
Comprehensive(Loss) (*1)
Income (*2)

Net ofpurchases,
sales,
issuances,andsettlements

Transfers
to Level 3
fair value(*3)

TransfersfromLevel 3fair value

Balanceas ofMarch
31, 2022

Amount of unrealized gains
or losses on financial assets
and liabilities held at March
31, 2022 of recognized in
profit (loss) for the fiscal
year ended March 31, 2022

160,3770(938)

43,595－－203,034－

244,413

3,767

(734)

(30,049)

7,091－

224,488

－

5,094

－

(12)

(3,525)

－

－

1,556

－

239,318

3,767

(722)

(26,523)

7,091－

222,931－*1. Mainly included in “Other Operating Income” and “Other Operating Expenses” in the consolidated statement of income.
*2. Included in “Net Unrealized Gains (Losses) on Other Securities” in “Other Comprehensive Income” in the consolidated statement ofcomprehensive income.
*3. These are transfers from Level 2 fair value to Level 3 fair value due to a lack of observable market data resulting from reduced market
activities for foreign bonds.
The transfers are made on the last day of fiscal year.
(2) Explanation on the fair value measurement process
The fair value calculation department of the Group has established the policies and procedures for fair value measurement and determines fairvalue in accordance with these policies and procedures. In determining fair value, the Group uses the method that can most appropriatelyreflect the nature, characteristics and risks of each asset. Regarding the fair value measurement results and level classification, the Group
verifies the appropriateness of the valuation techniques and inputs used for the fair value measurement by comparing prices between similar
products, checking price trend of the same securities and matching with benchmarks published in the market for consistency. In addition,
when using the prices obtained from a third party, the Group verifies the appropriateness of those prices by confirming the valuation
techniques and inputs and comparing them with the fair values of similar financial products.
Note 3: Information about investment trusts to which the treatment that a net asset value (NAV) is regarded as the fair values has been
applied(1) Reconciliation of beginning balance to ending balance, unrealized gains (losses) recognized in profit or loss for the fiscal year ended March
31, 2023
As of March 31, 2023
Millions of Yen
Profit (Loss) or Other
Comprehensive Income for the
fiscal year ended March 31, 2023

Balance asof April 1,
2022
Recognized in
Profit (Loss)(*1)

Investment trusts whose
investment trust property isfinancial instruments
Investment trusts whose
investment trust property isreal estates78



Recognized in
Other
Comprehensive
Income (*2)

Net ofpurchases,
sales andredemption

Amount ofAmount ofinvestment
investment
Amount of unrealized gains ortruststrustslosses on investment trusts
whose net Balance as
whose net
held at March 31, 2023 that is
asset value of Marchasset value
recognized in profit or loss for(NAV) is31, 2023(NAV) isthe fiscal year ended Marchnotregarded as
31, 2023
regarded asfair value
fair value

49,305

4,262

2,344

33,364－－89,276－

37,615

191

757

7,917

－

－

46,481－Millions of U.S. Dollars
Profit (Loss) or Other
Comprehensive Income for the
fiscal year ended March 31, 2023

Balance asof April 1,
2022
Recognized in
Profit (Loss)(*1)

Investment trusts whose
investment trust property isfinancial instruments
Investment trusts whose
investment trust property isreal estates

Recognized in
Other
Comprehensive
Income (*2)

Amount ofAmount ofinvestment
investment
Amount of unrealized gains ortruststrustslosses on investment trusts
whose net Balance as
whose net
held at March 31, 2023 that is
asset value of Marchasset value
recognized in profit or loss for(NAV) is31, 2023(NAV) isthe fiscal year ended Marchnotregarded as
31, 2023
regarded asfair value
fair value

Net ofpurchases,
sales andredemption

369

31

17

249

－

－

668

－

281

1

5

59

－

－

348

－

*1. Mainly included in “Other Operating Income” and “Other Operating Expenses” in the consolidated statement of income.
*2. Included in “Net Unrealized Gains (Losses) on Other Securities” in “Other Comprehensive Income” in the consolidated statement ofcomprehensive income.
(2) Breakdown of restrictions related to redemption and repurchase requests of investment trusts whose investment trust property is financial
instruments
As of March 31, 2023
Restrictions related to redemption or repurchase requests
Restrictions that require a certain period for redemption or
repurchase due to factors such as limited redemption or
repurchase dates

Millions of Yen
Carrying value

Millions of U.S. Dollars
Carrying value
89,276668

28. 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 trust) in the consolidated balance
sheet.
(1) Trading Securities

Net Unrealized Gains (Losses)
Recognized as IncomeMillions of Yen
2023
(26)

2022
(32)

Millions of U.S. Dollars
2023
(0)

79

(2) Held-to-Maturity Debt Securities
As of March 31, 2023
Millions of Yen

649,375
68,851－40,200462
758,890
100,358
100－
1,237
19,133
120,829

694,152
69,425－40,525
470
804,573
98,15099－
1,236
18,700118,186

Unrealized
Gains (Losses)
44,776573－
325
745,683(2,208)
(0)
－
(0)
(433)
(2,643)879,720922,760

43,040Carrying 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
Total

80



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

4,864
515
－
301
3
5,684
751
0
－
9
143
905
6,589

Fair Value
5,199
520
－
303
3
6,026
735
0
－
9
140
885
6,912

Unrealized
Gains (Losses)
335
4
－
2
0
342
(16)
(0)
－
(0)
(3)
(19)
322

As of March 31, 2022
Millions of Yen

445,204－－－
3,097
448,301
－
－
－
－
2,054
2,054

492,019－－－3,138
495,157
－
－
－
－
2,016
2,016

Unrealized
Gains (Losses)
46,815－－－40
46,856
－
－
－
－
(37)
(37)

450,356

497,174

46,818Carrying 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, 2023
Millions of Yen
Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Total



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

56,7522,532,045
861,053405,975－
1,265,015
1,240,267
3,829,064
1,911
4,387,488
1,545,814
1,414,175－
1,427,497
4,564,810
8,954,210
12,783,275

Acquisition Cost
31,594
2,522,404
855,722405,054－
1,261,627
1,127,770
3,681,768
2,202
4,476,970
1,610,999
1,425,374－
1,440,596
4,923,572
9,402,744
13,084,513

Unrealized
Gains (Losses)
25,158
9,640
5,331
921
－
3,387
112,496
147,295(291)(89,481)(65,185)(11,198)－(13,098)(358,761)(448,534)(301,238)

81

Millions of U.S. Dollars

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others425
18,966
6,449
3,041
－
9,475
9,290

236
18,894
6,409
3,034
－
9,450
8,447

Unrealized
Gains (Losses)
188
72
39
6
－
25
842

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

28,682
14
32,865
11,57910,593－
10,692
34,19367,072
95,75427,57816
33,535
12,067
10,676－
10,79036,88070,432
98,011

1,103
(2)
(670)
(488)
(83)
－
(98)
(2,687)(3,359)(2,256)

Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Total

Acquisition Cost

As of March 31, 2022
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.

82

53,407
4,195,524
1,762,989
645,234－
1,787,300
3,084,409
7,333,341
3,290
5,617,391
2,655,396
1,288,829－
1,673,166
2,758,260
8,378,942
15,712,283

Acquisition Cost
27,284
4,152,204
1,728,552
643,151－
1,780,500
2,836,093
7,015,582
3,422
5,679,671
2,707,253
1,294,219－
1,678,198
2,870,871
8,553,965
15,569,547

Unrealized
Gains (Losses)
26,12343,32034,437
2,083
－
6,799
248,315
317,759(131)(62,280)(51,857)(5,390)－(5,032)(112,610)(175,022)
142,736(5) Other Securities Sold during the Fiscal YearFor the Fiscal Year Ended March 31, 2023

StocksAmounts ofSecurities Sold
31,144

Millions of Yen
Aggregate Gains on
Sale
9,222

Aggregate Losses on
Sale
(325)

Bonds

2,898,617

28,384(44,164)

Japanese Government Bonds

2,797,490

28,062(44,154)

Municipal Government Bonds

52,152

214－

Short-Term Corporate Bonds

－

－

－

48,974107(9)

OthersCorporate Bonds

1,049,422

1,089(101,418)

Total

3,979,183

38,695(145,908)

StocksAmounts ofSecurities Sold
233

Bonds

21,712

212(330)

Japanese Government Bonds

20,954210(330)

Municipal Government Bonds

390

1

－

Short-Term Corporate Bonds

－

－

－

Corporate Bonds

Millions of U.S. Dollars
Aggregate Gains on
Aggregate Losses on
Sale
Sale
69
(2)

366

0

(0)

Others

7,860

8

(759)

Total

29,806289(1,092)

StocksAmounts ofSecurities Sold
33,939Millions of Yen
Aggregate Gains on
Sale
7,606

Aggregate Losses on
Sale
(100)

Bonds

701,612

1,483(1,872)For the Fiscal Year Ended March 31, 2022

Japanese Government Bonds

700,812

1,482(1,872)

Municipal Government Bonds

100

－

－

Short-Term Corporate Bonds

－

－

－

700

0

－

OthersCorporate Bonds

1,070,455

13,024(26,927)

Total

1,806,007

22,114(28,900)(6) Impaired Securities
Of Securities other than Trading Securities (excluding stocks and other equity securities, with no market prices and investment in investment
partnerships), those whose fair value significantly declines compared with the acquisition cost and is not expected to recover up to the acquisition
cost, are devalued and the fair value is recorded as the carrying amount on the consolidated balance sheet. In addition, the difference between thefair value and the acquisition cost is recognized as impairment losses in the fiscal year. When determining that the fair value of stocks andinvestment trusts has significantly declined, the amount calculated based on the average market price for one month before the end of the current
fiscal year is used.
In the case where the issuer is classified as a Bankrupt Borrower, Substantially Bankrupt Borrower, or Probably Bankrupt Borrower,
impairment loss is recognized for securities when the market value is below the acquisition cost.
In the fiscal year ended March 31, 2023, there were no impairment losses.
In the fiscal year ended March 31, 2022, the amount of impairment losses on securities was \246 million (all impairment losses wereincurred on stocks).

83

Furthermore, the criteria are set to determine whether the fair value declines significantly, and the general outline is as follows:
Bonds:- The fair value is more than 50% and 70% or less of the acquisition cost, and changes in the fair value and the issuer’s business condition
meet certain requirements- The fair value is 50% or less of the acquisition cost
Stocks and investment trusts:- The fair value is 70% or less of the acquisition cost
2. Money Held in Trust(1) Money Held in Trust for Trading Purposes
As of March 31, 2023

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

29,993Carrying Value
Money Held in Trust for
Trading Purposes－
Millions of U.S. Dollars
Unrealized Gains (Losses)
Recognized as Income

224

As of March 31, 2022－

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

69,998－(2) Held-to-Maturity Money Held in Trust
Not applicable.
(3) Other Money Held in Trust (Money Held in Trust other than Held for Trading Purposes or Held-to-Maturity)
As of March 31, 2023
Millions of Yen
Carrying
Value
Other Money Held in Trust

48,142Acquisition
Cost
50,000

Unrealized
Gains(Losses)(1,857)

Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost－

(1,857)

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 Trust
360
374
(13)
－
(13)
Note:
Breakdown of “Unrealized Gains (Losses)” is shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying Valuenot Exceeding Acquisition Cost.”84As of March 31, 2022

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 Trust
48,62450,000(1,375)－(1,375)
Note:
Breakdown of “Unrealized Gains (Losses)” is shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying Valuenot Exceeding Acquisition Cost.”
3. Net Unrealized Gains (Losses) on Other Securities and Other Money Held in Trust
Breakdown of Net Unrealized Gains (Losses) on Other Securities in the consolidated balance sheet is as follows:
As of March 31, 2023
Millions of
U.S. Dollars
Millions of Yen
Other Securities(298,649)(2,237)

Other Money Held in Trust(1,857)(13)

Net Unrealized Gains (Losses)(300,506)(2,250)84,612633(215,893)(1,617)

Non-Controlling Interests’ Portion－－

Parent Company’s Portion of Net Unrealized Gains (Losses)
for Other Securities Held by Equity-Method-ApplicableCompanies－－(215,893)(1,617)

Deferred Tax Assets
Net Unrealized Losses(Prior to Equity Method Adjustment)

Net Unrealized Gains (Losses)

Note:Translation adjustments of foreign currency-denominated stocks and other equity securities, with no market prices, and Unrealized
Gains (Losses) on investment in investment partnerships are included in “Other Securities” within “Net Unrealized Gains(Losses).”
As of March 31, 2022
Millions of Yen
Other Securities

145,484

Other Money Held in Trust(1,375)

Net Unrealized Gains (Losses)

144,109

Deferred Tax Liabilities

39,673

Net Unrealized Gains(Prior to Equity Method Adjustment)

104,436

Non-Controlling Interests’ Portion－

Parent Company’s Portion of Net Unrealized Gains (Losses)
for Other Securities Held by Equity-Method-ApplicableCompanies－

Net Unrealized Gains (Losses)

104,436

Note:
Translation adjustments of foreign currency-denominated stocks and other equity securities, with no market prices, and Unrealized
Gains (Losses) on investment in investment partnerships are included in “Other Securities” within “Net Unrealized Gains(Losses).”85

29. 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 and net unrealized gains (losses) of theBank’s derivative transactions that do not qualify for hedge accounting as of the consolidated balance sheet date, which are classified by types offinancial instruments. Please note that the notional amount in themselves do not reflect the market risk associated with the Bank’s derivativetransactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2023
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

6,529,603

5,627,910(53,644)(53,644)

Floating Rate Receivable/Fixed Rate Payable

6,377,202

5,328,134

54,59354,593

Floating Rate Receivable/Floating Rate Payable

72,75061,750

37

37

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

1,279,800

767,600(1,007)(1,051)

Bought1,381,200

859,700

6,028

4,941

6,008

4,877

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

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total

86



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

48,91042,156

(401)

(401)

Floating Rate Receivable/Fixed Rate Payable

47,76939,911

408

408

Floating Rate Receivable/Floating Rate Payable

544

462

0

0

Fixed Rate Receivable/Fixed Rate Payable

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

9,586

5,749

(7)

(7)

Bought10,346

6,439

45

37

45

36

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

Interest Rate Swaps:

Interest Rate Options:

Others:

Total

Note:
Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.

87

As of March 31, 2022
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

3,847,075

3,218,135

6,620

6,620

Floating Rate Receivable/Fixed Rate Payable

3,924,176

3,068,971(6,479)(6,479)Floating Rate Receivable/Floating Rate Payable

80,75072,750

63

63

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

466,000

299,800

(71)

(71)

Bought442,200

303,500

855

17

987

149

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

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total

Note:
Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are recognized in the consolidated statementof income.

88(2) Currency-Related Transactions
As of March 31, 2023
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

－

－

－

－

15

－

0

0

Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:
Sold219,714

881

290

290

Bought338,306

760

441

441

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－Currency Options:

Others:

Total



－

－

731

731

89

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
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

0

－

0

0

Sold

1,645

6

2

2

Bought

2,534

5

3

3

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

5

5

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 recognized in the consolidated statementof income.
2. Fair value and Net Unrealized Gains (Losses) on currency swaps are stated at the amounts net of principal.

90As of March 31, 2022
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

－

－

－

－

30

30

0

0

Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:
Sold275,560－(11,888)(11,888)

Bought223,050

－

8,493

8,493

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－Currency Options:

Others:

Total

－

－

(3,394)(3,394)

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are recognized in the consolidated statementof income.
2. Fair value and Net Unrealized Gains (Losses) on currency swaps are stated at the amounts net of principal.

(3) Stock-Related Transactions
Not applicable.

91

(4) Bond-Related Transactions
As of March 31, 2023
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

2,373

－

3

3

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

3

3

Bond Futures Options:Over the Counter Transactions
Bond Options:

Others:

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

17

－

0

0

Bought－－－－Bond Futures Options:
Sold

－

－

－

－

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

－

－

－

－

Bought－－－－Others:
Sold

－

－

－

－

Bought

－

－

－

－

0

0

Total

Note:
Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are recognized in the consolidated statementof income.

92As of March 31, 2022
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

1,643

－

(2)

(2)

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

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

Others:

Total

－

－

(2)

(2)

Note:
Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are recognized in the consolidated statementof income.

(5) Commodity-Related Derivative Transactions
Not applicable.

(6) Credit Derivative Transactions
Not applicable.

93

2. Derivative transactions to which hedge accounting is applied
The following summarizes the notional amount or the contracted principal equivalents and 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 of financial instruments and methods forhedge accounting. Please note that the notional amount in themselves do not reflect the market risk associated with the Bank’s derivativetransactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2023
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

2,486,000

2,486,000

797

Floating Rate Receivable/Fixed Rate Payable

2,664,239

2,494,400

138,096

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,012,182

977,382(28,172)

Interest Rate Swaps

Total

Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Fair Value

110,721

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

18,621

18,621

5

Floating Rate Receivable/Fixed Rate Payable

19,956

18,684

1,034

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

7,581

7,321

(211)

Interest Rate Swaps

Total

829

Notes:
1. Most of hedged items subject to Basic Treatment are Interest-bearing assets and liabilities including Loans and Bills Discounted, Other
Securities (Bonds) and Deposits.
2. Hedged items subject to Exceptional Treatments for Interest Rate Swaps include 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 Industry Committee
Practical Guidelines No. 24.

94As of March 31, 2022
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

640,000

640,000(98)

Floating Rate Receivable/Fixed Rate Payable

2,837,500

1,981,584

44,730

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,035,638

1,017,638(40,633)

Interest Rate Swaps

Total

3,998

Notes:
1. Most of hedged items subject to Basic Treatment are Interest-bearing assets and liabilities including Loans and Bills Discounted, Other
Securities (Bonds) and Deposits.
2. Hedged items subject to Exceptional Treatments for Interest Rate Swaps include 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 Industry Committee
Practical Guidelines No. 24.

(2) Currency-Related Transactions
As of March 31, 2023
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
Amount701,162

Fair Value

550,345(4,246)

40,735

－

(701)

－

－

－

Forward Foreign Exchange Contracts:
Sold
BoughtTotal(4,948)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
Amount
5,252

4,122

Fair Value(31)

Forward Foreign Exchange Contracts:
Sold

305

－

(5)

Bought

－

－

－

Total

(37)

Notes:
1. Most of hedged items include foreign currency-denominated securities and Due from Banks.
2. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the Industry Committee
Practical Guidelines No. 25.
3. Fair value on currency swaps is stated at the amount net of principal.

95

As of March 31, 2022
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountCurrency Swaps

514,851

Fair Value

403,667(1,997)37,446－(1,679)－－－Forward Foreign Exchange Contracts:
Sold
BoughtTotal(3,677)

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 Industry Committee
Practical Guidelines No. 25.
3. Fair value on currency swaps is stated at the amount net of principal.
(3) Stock-Related Transactions
Not applicable.

(4) Bond-Related Transactions
Not applicable.

30. Related Party Transactions:
For the Fiscal Year Ended March 31, 2023
There were no significant related-party transactions.
For the Fiscal Year Ended March 31, 2022
There were no significant related-party transactions.

31. Revenue Recognition:
Disaggregation of Revenue from Contracts with Customers is provided in Note 32.

32. 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.

96(3) Amounts by Reportable Segment
For the Fiscal Year Ended March 31, 2023

(Millions of Yen)

Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers
Inter-segment
Total

337,262

36,497373,759(32)

373,727

3,097

2,274

5,372

(5,372)－

340,360

38,771

379,131(5,404)

373,727

Segment profit

24,776

2,092

26,868(646)

26,221

Segment assets

45,924,710

272,082

46,196,793(101,460)

46,095,333

Segment liabilities

44,621,617

178,383

44,800,001(49,829)44,750,172

Depreciation
Interest Income

3,909
208,050

5,948
293

9,858
208,344

－
(91)

9,858
208,252

Interest Expenses

105,2769105,285(22)

105,263

Income Taxes

8,149

1,075

9,225

(124)

9,101

Increase in Tangible andIntangible Fixed Assets

7,190

5,790

12,980－12,980

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

2,526

273

2,799

(0)

2,799

23

17

40

(40)

－

2,549

290

2,839

(40)

2,799

Segment profit

185

15

201

(4)

196

Segment assets

344,005

2,038

346,043(760)

345,283

Segment liabilities

334,244

1,336

335,580(373)

335,207

Depreciation
Interest Income

29
1,558

44
2

73
1,560

－
(0)

73
1,559

Interest Expenses

788

0

788

(0)

788

Income Taxes

61

8

69

(0)

68

Increase in Tangible andIntangible Fixed Assets

53

43

97

－

97

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, regional business supports operations,overseas business support, consumer credit guarantees, asset management, investment and M&A advisory operations, and dataprocessing services.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥646 million ($4 million) comprises reduction of ¥327 million ($2 million) on
profit attributable to non-controlling interests and ¥318 million ($2 million) on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥101,460 million ($760 million) comprises reduction of ¥44,295 million ($331
million) on eliminations relating to capital consolidation and ¥57,164 million ($428 million) on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥49,829 million ($373 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.
97For the Fiscal Year Ended March 31, 2022

(Millions of Yen)

Reportable segment
Other

Shinkin Central Bank
business

Total

Amount presented
in the consolidated
financial statements

Adjustment

IncomeExternal customers
Inter-segment
Total

212,986

36,674

249,660(8)

249,652

3,109

2,142

5,251

(5,251)－

216,095

38,816

254,911(5,259)249,652

Segment profit

34,0462,534

36,580(638)

35,942

Segment assets

43,757,754

262,701

44,020,455(88,659)

43,931,795

Segment liabilities

42,199,230

170,82142,370,052(34,586)

42,335,466

Depreciation
Interest Income

3,864
174,827

5,911
467

9,776
175,295

(0)
(96)

9,776
175,199

Interest Expenses

70,18034

70,214(30)

70,183

Income Taxes

10,815

1,183

11,998(101)

11,897

Increase in Tangible andIntangible Fixed Assets

4,810

1,935

6,745

(11)

6,734

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, regional business supports operations,overseas business support, consumer credit guarantees, asset management, investment and M&A advisory operations, and dataprocessing services. Shinkin Regional Innovation Co., Ltd. was established on July 1, 2021 to provide regional business supports
operations, etc.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥638 million comprises reduction of ¥341 million on profit attributable to noncontrolling interests and ¥297 million on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥88,659 million comprises reduction of ¥44,295 million on eliminations relating tocapital consolidation and ¥44,364 million on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥34,586 million on the adjustment of segment liabilities comprises intersegment eliminations, etc.
3. Segment profit has been adjusted from profit attributable to owners of parent presented in the consolidated statement of income.
(4) Disaggregation of Revenue from Contracts with Customers
For the Fiscal Year Ended March 31, 2023

(Millions of Yen)

Reportable segment

Investment Trust Commission

98

Shinkin Central
Bank business
5,622

Other

Total

6,808

12,431

Adjustment

Amount presented
on the consolidated
statement of income(2,974)

9,456

Trust Fees

2,391

－

2,391

－

2,391

Fund Transfer Operations Commission

1,561

－

1,561

(1)

1,560

Others

2,005

23,18025,186(1,584)23,602

Revenue from Contracts with Customers

11,581

29,98841,570(4,560)37,010

Other Total Income

328,7788,782

337,561(844)

336,716

Total Income

340,360

38,771

379,131(5,404)

373,727

(Millions of U.S. Dollars)
Reportable segment
Other

Shinkin Central
Bank business
Investment Trust Commission

Total

Adjustment

Amount presented
on the consolidated
statement of income

(22)

70

42

50

93

Trust Fees

17

－

17

－

17

Fund Transfer Operations Commission

11

－

11

(0)

11

Others

15

173

188

(11)

176

Revenue from Contracts with Customers

86

224

311

(34)

277

Other Total Income

2,462

65

2,528

(6)

2,522

Total Income

2,549

290

2,839

(40)

2,799

Notes:
1. “Investment Trust Commission” mainly arises from investment trust management services and is recorded under “Fees andCommissions” in the consolidated statement of income.
2. “Trust Fees” mainly arise from trustee services for trust assets and are recorded under “Trust Fees” in the consolidated statement ofincome.
3. “Fund Transfer Operations Commission” mainly arises from fund transfer services and is recorded under “Fees and Commissions” in the
consolidated statement of income.
4. “Others,” services not included in 1-3 above, mainly arise from contracted data processing services, etc. and are recorded under “Feesand Commissions” in the consolidated statement of income.
For the Fiscal Year Ended March 31, 2022

(Millions of Yen)
Reportable segment

Investment Trust Commission

Shinkin Central
Bank business
5,297

Other

Total

6,687

11,984

Adjustment

Amount presented
on the consolidated
statement of income(2,908)

9,075

Trust Fees

1,921

－

1,921

－

1,921

Fund Transfer Operations Commission

1,648

－

1,648

(1)

1,646

Others

1,684

22,554

24,239(1,433)22,805

Revenue from Contracts with Customers

10,55029,242

39,792(4,343)35,449Other Total Income

205,5449,574

215,118(916)

214,202

Total Income

216,095

38,816

254,911(5,259)249,652

Notes:
1. “Investment Trust Commission” mainly arises from investment trust management services and is recorded under “Fees andCommissions” in the consolidated statement of income.
2. “Trust Fees” mainly arise from trustee services for trust assets and are recorded under “Trust Fees” in the consolidated statement ofincome.
3. “Fund Transfer Operations Commission” mainly arises from fund transfer services and is recorded under “Fees and Commissions” in the
consolidated statement of income.
4. “Others,” services not included in 1-3 above, mainly arise from contracted data processing services, etc. and are recorded under “Feesand Commissions” in the consolidated statement of income.



99

(Related Information)
For the Fiscal Year Ended March 31, 2023
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

Lending operations

216,928

Other

19,468

Total
137,330

373,727(Millions of U.S. Dollars)

Securities investment
operations
Income from externalcustomers

Lending operations

1,624

Other

145

Total
1,028

2. Information by geographic region(1) Income
Japan
203,605

Japan

United States
40,248EuropeUnited States

EuropeOther
11,746

118,127

Other

1,525
301
87
Note: Income from derivative transactions and Trading income are included in Other.

2,799(Millions of Yen)
Total
373,727(Millions of U.S. Dollars)
Total
884
2,799

(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

Income19,309(Millions of Yen)
Related segment
Shinkin Central Bank business

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

For the Fiscal Year Ended March 31, 2022
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

174,607

Lending operations
15,759

Other

Total
59,285

2. Information by geographic region(1) Income
Japan

United States
EuropeOther104,932
24,61015,632
104,476
Note: Income from derivative transactions and Trading income are included in Other.

249,652(Millions of Yen)
Total
249,652(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.

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

Income26,642(Millions of Yen)
Related segment
Shinkin Central Bank business(Information related to Impairment Losses of Fixed Assets by Reportable Segment)
For the Fiscal Year Ended March 31, 2023
Disclosure of data omitted due to immateriality.
For the Fiscal Year Ended March 31, 2022
Not applicable.
(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.
33. Amounts per Share:

Yen
2023

U.S. Dollars
2023

2022

Net Assets per Share

239,364.73

292,802.41

1,792.99

Net Income per Share

3,592.19

5,041.19

26.90

－

－

－

Net Income per Share after Adjustment for Common
Share equivalents
Notes:
1. The basis for calculation of net assets per share is as follows:
2023

2022

2023

Total Net Assets

Millions of Yen

1,345,160

1,596,329

Millions of U.S.
Dollars

10,076

Amount Deducted from Total Net Assets

Millions of Yen

218,178

217,751

Millions of U.S.
Dollars

1,634

Non-Controlling Interests

Millions of Yen

13,053

12,626

Millions of U.S.
Dollars97

Preferred Dividends

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

15

Dividend Attributable to SpecificCommon Shares

Millions of Yen

3,000

3,000

Millions of U.S.
Dollars

22

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

200,000

200,000

Millions of U.S.
Dollars

1,498

Millions of Yen

1,126,982

1,378,578

Millions of U.S.
Dollars

8,441

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.
101

2. The basis for calculation of net income per share is as follows:
2023

2022

2023

Millions of Yen

26,22135,942Millions 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

15

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

15

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

Millions of Yen

24,09733,817

Millions of U.S.
Dollars

180

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

196* 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.

34. Subsequent Events:
Not applicable.

102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, 2023, 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, 2023, 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 ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.

103

Reasonableness of determination of the borrower classification in light of the effect of
COVID-19 and the appropriateness of the inputs applied to the cash flow estimate method
Description of Key Audit Matter

Auditor’s responses

The Group extends loans to central and local
governments, public service corporations, as wellas domestic and overseas companies mainly
including listed companies, and recorded Loans
and Bills Discounted of ¥ 9,511,310 million,
representing 20.6% of total assets, on its
consolidated balance sheet as of March 31, 2023.

We performed the following audit procedures to
examine the reasonableness of determination of theborrower classification and the appropriateness of
the inputs applied to the DCF method, among
others:･ We evaluated the design and operating
effectiveness of the Group’s internal control over
It is possible that these loans may default due toassignment of internal credit ratings anddomestic and global economic situation,
determination of the borrower classification as
fluctuations in the real estate and stock markets,
well as application of the DCF method.
deterioration in the business conditions of･ We involved our credit risk assessment experts
individual borrowers, and the impact of stagnant
to examine the appropriateness of the credit
economy caused by COVID-19 .
rating system used as the basis for determining
Consequently, the Group calculates the amount of
the borrower classification, by inspecting the
expected losses from future defaults and records
results of the Group’s validation of its internalthem as Reserve for Possible Loan Losses.
rating model in the credit rating system andcomparing the internal rating model with
As of March 31, 2023, the Group had Reserve forindustry practices.
Possible Loan Losses of ¥23,974 million on its
consolidated balance sheet. The specific principles ･ In order to examine the reasonableness of theto calculate reserve for possible loan losses are
assumptions made by the Group about thestated in Note 2 Significant Accounting Policies
timing when the spread of COVID-19 will be(9) Reserve for Possible Loan Losses and (19)contained and its effect on the borrower’s debt
Significant Accounting Estimates.
servicing capacity, we compared thoseassumptions
withavailable
external
The reserve for possible loan losses is calculated in
information such as economic forecasts
accordance with the Group’s internal rules for selfpublished by public institutions.
assessment of asset quality and writeoffs/provision, and the calculation process ･ In order to examine the appropriateness of the
includes determination of the borrowerclassification of individual borrowers, weclassification in the self-assessment of asset
selected sample borrowers, taking into accountquality based on the credit rating system, by which
factors such as borrowers’ industry, repayment
the Group evaluates the borrower’s debt servicing
history,financial
position,
operatingcapacity in terms of the borrower’s repayment
performance and the effect of COVID-19 on
history, financial condition, business performancethe borrowers’ debt servicing capacity, inand prospects thereof. For certain borrowers’
addition to the monetary impact of theloans, the reserve for loan losses is calculated using
migration of the borrower classification on thethe cash flow estimate method (hereinafter referred
amount of the reserve for possible loan losses.
to as the “DCF method”).

104

In determining the debtor classification, the Group ･ In order to comprehend the recent repayment
assumed that the impact of COVID-19 on
history, financial condition and operating
economic activity is generally improving due toperformance of the borrowers selected as
the government's measures to tackle the COVIDsamples, we inspected the sets of the
19 pandemic and that for certain industries such as
documents used for self-assessment of asset
airline industry susceptible to lesser flyers, thequality by the Group, which include but are notimpact will continue for a considerable period oflimited to explanatory materials on thetime. For specific obligors whose businessborrowers’ business profile, supporting
performance is expected to be significantly
materials on historical experiences ofimpacted based on this assumption, we categorize
borrowing activities, supporting materials to
obligors taking into consideration such impact. In
understand the actual financial condition,
applying the DCF method, the expected loss
financial statements and trial balances in lightamount is calculated based on key assumptionsof the available external information. In
such as the repayment plan formulated by theaddition, we made inquiries of the Credit
obligor, credit status, lending policy, and thePlanning & Supervision Division as necessary.
default rate according to the obligor's credit status.
･ In order to examine the reasonableness of theProspects of such factors as the individualGroup’s prospects of individual borrowers, weborrowers’ performance are highly uncertain
comprehended the Group’s analysis of effectbecause they are affected by changes in theofCOVID-19 on the individual borrowers andbusiness environment surrounding the borrowers,
the borrowers’ repayment history. We thenincluding the spread of COVID-19, and theanalyzed the trend from the past in respect ofoutcome of the borrowers’ business strategies. If
forecasts of major income statement items,
the borrower classification is downgraded, thesuch as net sales and ordinary income, andcredit cost may increase, significantly affecting the
major balance sheet items, such as
financial performance and financial position of theshareholders’ equity of the borrowers, in theGroup. In addition, since the various inputs used inGroup’s analysis, and compared theassumptions used in these forecasts with thethe DCF method cannot be objectively or uniquely
available external information on the industry
determined, there is a high degree of reliance onin which the borrower operates.
management’s judgment.

Therefore, we have determined that thereasonableness of determination of theborrower classification and theappropriateness of the inputs applied to the
DCF method are key audit matters.

･ In order to examine the appropriateness of theGroup’s assessment of the reasonableness andfeasibility of the repayment plan which
underlies the future cash flows used as inputs
for the DCF method, we compared theassumptions in the repayment plan withavailable external information and the Group’s
lending policies, and compared the cash flows
estimated in the previous year with the actual
results.

･ In order to assess the reasonableness of theprobability of default used as an input for
the DCF method, we compared it with thedefault rates available in external
information. Also, we recalculated thepresent value of the cash flows using those
inputs.
Other Information
The other information comprises the information included in the Annual Report that contains
audited consolidated financial statements but does not include the consolidated financial
statements and our auditor’s report thereon. Management is responsible for preparation anddisclosure of the other information. The Corporate Auditors are responsible for overseeing theGroup’s reporting process of the other information.

105

Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is toread the other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
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, andfor such 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.
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 ofaccounting estimates and related disclosures made by management.

106

・ 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 ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue 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 presentationin accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. 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 in internal 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 consolidated financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Corporate Auditors, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
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.

107

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2023 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 1 to the consolidated financial
statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
September 21, 2023
/s/ Ryuji Takagi
Designated Engagement Partner
Certified Public Accountant/s/ Yasuo Iwasaki
Designated Engagement Partner
Certified Public Accountant/s/ Mitsutaka Kumagai
Designated Engagement Partner
Certified Public Accountant

108

Non-Consolidated Balance Sheet
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks
Call Loans
Receivables under Resale Agreements
Monetary Claims Bought
Trading Assets
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges Assets
Other Assets
Tangible Fixed Assets
Intangible Fixed Assets
Deferred Tax Assets
Customers' Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Total Assets

Millions of
U.S. Dollars

Millions of Yen
2023

2022

19,004,519
1,573,215
289,999
172,200
465,786
78,136
13,634,845
9,514,890
22,701
1,036,294
67,042
6,902
61,003
20,867(23,693)
45,924,710

16,755,378
1,329,496
31,999204,459
314,639
118,623
16,163,857
7,758,748
19,622
999,560
67,614
4,309
14,456(25,013)43,757,754

142,355
11,784
2,172
1,289
3,489
585
102,133
71,272
170
7,762
502
51
456
156
(177)
344,005

Liabilities and Net Assets
Liabilities
Deposits
Debentures
Trading Liabilities
Borrowed Money
Call Money
Payables under Repurchase Agreements
Payables under Securities Lending Transactions
Foreign Exchanges Liabilities
Borrowed Money from Trust Account
Other Liabilities
Reserve for Employee Bonuses
Reserve for Directors' Bonuses
Reserve for Employee Retirement Benefits
Reserve for Directors' Retirement Allowances
Deferred Tax Liabilities
Deferred Tax Liabilities for Land Revaluation
Acceptances and Guarantees
Total Liabilities

34,703,462
1,458,660
80,807
3,998,680
6,804
2,617,988
1,347,527
652
43,534
307,119
1,283
89
27,729378
6,033
20,86744,621,617

33,165,342
1,547,370
24,6804,167,880
5,637
1,191,685
1,719,877
1,159
42,821
242,749
1,296
93
27,224430
40,492
6,033
14,45642,199,230

259,951
10,926605
29,95250
19,61010,093
4
326
2,300
9
0
207
2
45
156
334,244

Total Net Assets
Total Liabilities and Net Assets

1,303,092
45,924,710

1,558,523
43,757,754

9,760
344,005



2023

-

109

Non-Consolidated Statement of Income

Shinkin Central Bank For the year ended March 31,
IncomeInterest Income:Interest on Loans and Discounts
Interest on Due from Banks
Interest on Call Loans
Interest on Receivables under Resale Agreements
Interest and Dividends on Securities
OthersTrust Fees
Fees and Commissions
Trading Income
Other Operating Income
Other Income
Total Income

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

Millions of
U.S. Dollars

Millions of Yen
2023

2023

2022

208,050
19,489
8,238
885
(610)
178,371
1,675
2,391
9,686
17,192
92,567
10,471
340,360

174,827
15,786
7,112(169)(1,170)152,714
553
1,921
9,132
942
17,24812,023
216,095

1,558
145
61
6
(4)
1,336
12
17
72
128
693
78
2,549

105,276
37,238
1,166
1,771
237
7,072
31,894
19,885
6,009
8,501
186
159,196
33,632641
307,434

70,18029,222
1,163
1,771
7
55
1,480
36,39088
7,925
861,35331,398368
171,233

788
278
8
13
1
52
238
148
45
63
1
1,192
251
4
2,302

32,92544,861

246

8,521
(372)
8,149
24,776

10,459355
10,81534,046

63
(2)
61
185

Income before Income Taxes
Income Taxes
Current
Deferred
Total Income Taxes
Net Income

U.S. Dollars

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

110



2023

3,376.65
3,000.00
1,500.00
6,500.00

2022

4,758.56
3,000.00
1,500.00
6,500.00

2023

25.29
22.47
11.23
48.68

Statement of Trust Account (Consolidated)
Shinkin Central Bank As of March 31,
AssetsBeneficiary Rights in Trust
Securities Held in Custody Accounts
Monetary Claims
Other Claims
Due from Banking AccountCash and Due from Banks
Total Assets
Liabilities
Money Trust
Investment Trusts
Money Held in Trust Other than Money Trust
Securities Trusts
Monetary Claims Trusts
Composite Trusts
Total Liabilities

Millions of
U.S. Dollars

Millions of Yen
2023

2022

2023

2,564,599
63,000343,778
043,534145
3,015,058

2,248,331
63,000354,167
42,821166
2,708,486

19,210
471
2,575
0
326
1
22,58445,681
129,645
7,567
67,100343,878
2,421,185
3,015,058

54,46028,961
7,557
70,100354,274
2,193,133
2,708,486

342
971
56
502
2,575
18,136
22,584(Note 1) Consolidated companies conducting trust business pursuant to the “Act on Engagement in Trust Business Activities by Financial
Institutions” comprised only the Bank in the fiscal years ended March 31, 2023 and 2022.
(Note 2) No trust assets were entrusted to other trust banks for asset administration as of March 31, 2023 and 2022.



111

Organization (As of July 31, 2023)
General Meeting of Members
Corporate Auditors

Chief Secretary
Internal Audit DivisionCorporate Business Division I

General Affairs Division

Board of Directors
Chairman of the Board of Directors (part-time)
President and Chief Executive Officer

Legal & Compliance Office
BCP Management Office

Corporate Business Division II

Osaka Corporate Business Division

AML／CFT Division
Personnel Division

Nagoya Corporate Business Division

Deputy President
Strategic Planning Division

Senior Managing Directors
Managing Directors
Directors

Investor & Public Relations Office
Shinkin Innovation Hub

Tokyo Business Division

Kanto Business Division I

SDGs Promotion Division
Financial Management Division

Kanto Business Division II

Risk Management Division
Credit Planning & Supervision Division
Trust Business Division

Hokkaido Branch

Tohoku Branch

Consulting Promotion Division
Regional Innovation Division

Hokuriku Branch

Green Project Promotion Office
SME Business DivisionInternational Business Division

Shizuoka Branch

Nagoya BranchInternational Operations Center

Retail Business Division
Support & Advisory Division for Shinkin Banks

Osaka Branch

Kobe Branch

Portfolio Management Support OfficeTransfer & Clearing Division
Management Office for Domestic FundTransfer System

Okayama Branch

Chugoku Branch

Operations Division
Shinkin Business Transformation Office

Shikoku Branch

Operations Center

Fukuoka Branch
Systems Division
Systems Center

Minami-Kyushu Branch

Corporate Business Promotion Division
Project Finance Office

New York Representative OfficeTreasury Business Division

Hong Kong Representative OfficeTreasury Division
Credit & Alternative Investment Division

Shanghai Representative OfficeTreasury Operations Division(Shinkin Central Bank) Research Institute112

Bangkok Representative OfficeInternational Directory (As of July 31, 2023)
Deputy President(in charge of Strategic Planning)
Hiroshi Sudo
Deputy President(in charge of Reserch Institute)
Hiroshi Nakahara
Managing Director(in charge of Treasury Business)
Takehiko Murotani
Managing Director(in charge of International Business/
Overseas Offices)
Kenji Tanaka
Managing Director(in charge of Treasury/
Credit & Alternative Investment)
Yuji Takahashi
Managing Director(in charge of Corporate Business Promotion/
Treasury Operations)
Yoshinori Jinno
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: Yuya Watanabe
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: Hiroyuki Narita

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

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: Susumu Makino

ShanghaiHong Kong
Bangkok
Singapore

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: Naotaka Yoshikawa

Overseas Subsidiaries
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: Takaaki Ando

Hokkaido(Sapporo)

Singapore
Shinkin Singapore Pte. Ltd.
Address: 8 Marina View, #15-07B Asia Square Tower
1, Singapore
Telephone: +65-6360-9500
Facsimile: +65-6223-2558
Managing Director: Satoshi Igarashi

Tohoku(Sendai)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
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

New York

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/

113

Shinkin Central Bank Annual Report 2023

ShinkinCENTRAL
Central BANKBankSHINKIN
SCB supports the Sustainable Development Goals.

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