Custody Bank of JapanDISCLOSURE

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

Management Message
We would like to express our sincere appreciation for your continued support.

Our Company was established on July 27, 2020, through the merger of three companies: JTC Holdings, Japan Trustee
Services Bank and Trust & Custody Services Bank.
We uphold the corporate philosophy that “As Japan’s No. 1 bank specializing in asset administration, we shall contribute to
the sound development of the economy and society by playing a role in the development of asset management businesses
and the asset formation of the people of Japan.” Based on this, we respond to the trust of society as a financial infrastructureby providing high-quality and reliable services and aim to become the best partner for our customers by meeting their diverse
needs and managing the changing environment.

The Reliable Bank—Be the one and only bank that can garner trust
All our officers and employees will make further efforts as asset administration professionals.
We look forward to your continued support.
Custody Bank of Japan
President & Representative Director

Masahiro Tsuchiya

Logo and Corporate Motto
Our logo and corporate motto represent our Company’s image and resolve to contribute sustainably to the sounddevelopment of the economy and society by ensuring the trust of our customers and financial markets through the provision of
stable services as Japan’s leading asset administration bank offering a wide range of custody services.

● Logo● Corporate Motto

The Reliable Bank

The abbreviation of Japan Custody Bank, “CBJ,” isdesigned in the motif of a golden spiral drawn according
to the golden ratio, which evokes a sense of utmost
stability and beauty in humans.

Becoming the one and only bank that can garner trust in
response to changes in the environment. Bearing in
mind our status as The Reliable Bank, each and every
one of our employees is committed to nurturing Japan
Custody Bank.

Corporate Philosophy, Vision and Action Guidelines of
Custody Bank of Japan

Corporate Philosophy
As Japan’s No. 1 bank specializing in asset administration, we shallcontribute to the sound development of economy and society by playing arole in the development of asset management businesses and the asset
formation of the people of Japan.

Vision●We respond to the trust of society as a financial infrastructure by providing
high-quality and reliable services●

We aim to become the best partner for our customers by meeting theirdiverse needs and managing the changing environment●

We shall always be the company that takes pride in being an asset
administration professional in which employees work to their full potential

Action Guidelines● Acknowledging our social responsibility, we shall act with a sense of ownership andintegrity● We shall place our customers first and provide high-quality services that satisfy them
● In compliance with laws, rules and social norms, we shall be sincere and fair in our
conduct● We shall respect and trust each other and create an open and active work
environment● We shall tirelessly improve ourselves to acquire advanced expertise and skills

Introduction of Our Company’s Business ····· 12

CONTENTS

Initiatives for Improving Operational Quality· 15
Proactive Initiatives for Securities
Settlement System Reforms, Etc. ················ 16
Risk Management System ·························· 17

Corporate Data ·········································02
Corporate Governance ·······························04
Strengthening Initiatives for SDGs ··············07
Action Policy on Fiduciary Duty ··················10
Review of Business Performance ················11Compliance Systems ································· 19Internal Audits ·········································· 20
As a Public Institution (Disaster Prevention
Measures) ················································ 21
Financial Section ······································ 23

1

Corporate Data (As of July 1, 2023)
Corporate Profile
Corporate name

Custody Bank of Japan, Ltd.
(Custody Bank of Japan, Ltd.)

Establishment

June 20, 2000

Location■Head Office8-12, Harumi 1-chome, Chuo-ku, Tokyo, 104-6228
Harumi Island Triton Square Tower Z■Harumi Branch Office
8-11, Harumi 1-chome, Chuo-ku, Tokyo, 104-6107
Harumi Island Triton Square Tower Y

Capital stock
Shareholders¥51.0 billion
Sumitomo Mitsui Trust Holdings, Inc.

680,000 shares (33.3%)

Mizuho Financial Group, Inc.

550,800 shares (27.0%)

Resona Bank, Limited

340,000 shares (16.7%)

The Dai-ichi Life Insurance Company, Limited
Asahi Mutual Life Insurance Company
Meiji Yasuda Life Insurance Company

163,200 shares ( 8.0%)
102,000 shares ( 5.0%)
91,800 shares ( 4.5%)

Japan Post Insurance Co., Ltd.

71,400 shares ( 3.5%)

Fukoku Mutual Life Insurance Company

40,800 shares ( 2.0%)

Number of employees 1,992 (as of March 31, 2023)*The number of employees includes personnel seconded from Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank, Resona Bankand other companies (549).

URL

https://www.custody.jp/

Lines of Business

Securities administration business, trust and banking businesses pertaining to asset
administration, business related to Japanese Master Trust

Long-term rating

Japan Credit Rating Agency, Ltd. (JCR)
Rating and Investment Information (R&I)
Moody’sAA+
AAA1

History
On July 27, 2020, three companies, Japan Trustee Services Bank (surviving company after the merger),
Trust & Custody Services Bank, and JTC Holdings, merged to form Custody Bank of Japan.
As Japan’s first trust bank specializing in the asset administration business, Japan Trustee Services Bank
was established by Daiwa Bank (currently, Resona Bank) and Sumitomo Trust & Banking (currently,
Sumitomo Mitsui Trust Bank) in June 2000. Capital participation by Mitsui Trust Holdings (currently
Sumitomo Mitsui Trust Holdings) in September 2002.
Trust & Custody Services Bank was established by Mizuho Trust & Banking, The Dai-ichi Life Insurance,
Asahi Mutual Life Insurance, Yasuda Life Insurance (currently Meiji Yasuda Life Insurance) and Fukoku
Mutual Life Insurance in January 2001. Capital participation by Japan Post Insurance in October 2016.
JTC Holdings was established in October 2018 as a bank holding company with the existing shareholdersof Japan Trustee Services Bank and Trust & Custody Services Bank as shareholders.

2Organization Chart
Internal Audit Department
Corporate Strategy Department
Human Resources & General Affairs
Department

System Planning Department
Risk Management Department
Compliance Department
System Risk Management Department

Planning and Administration
Departments

Operations Planning Department

Domestic Settlement Department
Treasury Department
Integration Management Department

General Meetingof Shareholders

Board of Directors

President & CEO
Customer Service Division
Business Promotion Department
Asset Services Department

Board of Corporate
Auditors

DivisionManager

Life Insurance Company Asset Custody
Department

Collateral Operations Department
Asset Investment Department

Fund Accounting Division
Fund Accounting Department 1

DivisionManagerFund Accounting Department 2
Domestic Custody Department 1
Domestic Custody Department 2

Overseas Custody Division
Overseas Custody Department 1

DivisionManager

Overseas Custody Department 2
Corporate Actions Department
Overseas Administration Department

Investment Trust Division
Investment Trust Services Department 1
Investment Trust Services Department 2

DivisionManager

BPO Services Department 1
BPO Services Department 2
BPO Services Department 3

System Division
System Infrastructure & Engineering
Department
System Development Department 1
System Development Department 2

Division
Head

System Development Department 3
System Development Department 4
System Development Department 5
System Development Department 6
System Operations Department

3

Corporate GovernanceFunctions, etc. of the Board of Directors and the Executive Management Committee
The Board of Directors makes decisions on important management matters and supervises the directors in the
conduct of their duties.
The Executive Management Committee (consisting of Executive Directors and Executive Officers with titles) is
responsible for deliberation, as part of the decision-making process in the conduct of business operations, regarding
basic management policies and important individual items. The Committee also works to share information and confirm
the status of the execution of business activities. Its responsibilities also include reporting important information to theBoard of Directors.

Board of Directors and Nomination of Candidates for Directors
To fulfill its functions, the Board of Directors requires its members to have knowledge, capabilities and experience
necessary to perform all duties of our Company, including financial literacy, expertise in our Company’s practices, risk
management and compliance, in addition to their competence.
In nominating candidates for Directors, the Company takes into consideration the degree of satisfaction of thefunctions of the Board of Directors, as well as individual knowledge, expertise and experience that can contribute to thecomplementary and effective functioning of the Board of Directors in addition to their competence.
Prior to the nomination of candidates for Directors (including those who are proposed to be reappointed with theexpiration of their terms of office), the Chairman of the Board of Directors convenes the “Performance Evaluation
Committee” consisting mainly of Independent Directors to examine the competence and capability requirements of thecandidates for Directors, and reports to the Board of Directors as necessary.

Functions, etc. of the Board of Corporate Auditors and Corporate Auditors
The Board of Corporate Auditors comprises all the Corporate Auditors, and, as necessary, the Corporate Auditors and theBoard of Corporate Auditors may express their opinions to Directors or the Board of Directors.
In addition, following the audit policies established by the Board of Corporate Auditors, Corporate Auditors may attend
meetings of the Board of Directors and the Executive Management Committee as well as other important meetings, monitor
the conduct of duties by the Directors and Executive Officers, among others, and, as necessary, express their opinions andmake various kinds of suggestions.
In addition to periodically exchanging opinions with the internal audit division (Internal Audit Department), Corporate
Auditors transmit advice and other points to the internal audit division, as well as exchanging information as needed.
The Corporate Auditors are responsible for reviewing important documents, including draft proposals; conducting various
kinds of hearings and fact-finding activities; on-site research; and other activities to gather information for their day-to-day
auditing activities. In addition, the Corporate Auditors hold periodic meetings with the Accounting Auditor, receive reports on
the status of auditing activities and the results of audits, and exchange opinions. The Corporate Auditors also work topreserve the independence of the Accounting Auditor and monitor auditing activities to ensure their proper conduct.
The status of auditing activities and the results of audits are submitted to the Representative Director as an Audit Report.
In periodic meetings with the Representative Director, Corporate Auditors confirm the management policies andexchange opinions on the issues, etc. to be dealt with by the Company.

Board of Corporate Auditors and Nomination of Candidates for Corporate Auditors
We believe it is desirable that the Board of Corporate Auditors be composed of Corporate Auditors with experienceand knowledge, etc. in operations related to our Company’s business, finance and accounting, risk management andlegal affairs, and auditing, in order to conduct audits on the execution of duties by Directors in an appropriate, fair andefficient manner.
The Board of Corporate Auditors reviews and deliberates on proposals for the election of Corporate Auditors, which
are to be submitted by Directors to the General Meeting of Shareholders, from such viewpoint in addition to thequalification requirements under the Companies Act.

4

Officers
Chairman

Hiroki Tanaka

Managing Executive
Officer

Takahiro Ishi

President & Representative
Director

Masahiro Tsuchiya

Managing Executive
Officer

Yasuhiro Ueda

Deputy President &Representative Director

Yasumasa Mukai

Managing Executive
Officer

Tsukasa Kotaka

Director & Senior Managing
Executive Officer

Hiroshi Takahashi

Managing Executive
Officer

Satoshi Sato

Director & Senior Managing
Executive Officer

Hiroyuki Obata

Managing Executive
Officer

Masato Maruyama

Director & Senior Managing
Executive Officer

Michihiro Masuda

Managing Executive
Officer

Yoshifumi Nishikido

Director & Senior Managing
Executive Officer

Ryuichi Yamamoto

Executive Officer

Taku Murakawa

Director (Part-time)

Munetaka Saito

Executive Officer

Ryoichi Ikeda

Director (Part-time)

Junichi Maeda

Executive Officer

Hiroshi Shiotsu

Corporate Auditor

Toshio Yamasaki

Executive Officer

Corporate Auditor

Makoto Saito

Executive Officer

Yoshinori
Tomiyama
Hiroyuki Kasama

Corporate Auditor

Takeshi Watanabe

Executive Officer

Eizaburo Ichikawa

Corporate Auditor

Takashi Miyauchi

Corporate Auditor (Part-time)

Katsuhiro Nakajima

Corporate Auditor (Part-time)

Masayuki Okamoto5

Skills Matrix for the Members of the Board of Directors
・ Our Company’s Board of Directors consists of six Executive Directors and three Independent Directors. The six
Executive Directors have abundant practical business experience at respective financial institutions as follows.
Further, they possess the knowledge, experience, capabilities, and expertise necessary to conduct our Company’s
asset administration business.
・ The three Independent Directors have specialized knowledge of financial institutions and systems, including thosegained at the Bank of Japan, Japan Securities Depository Center, and TOSHO SYSTEM SERVICE, and provide
accurate advice and support from a perspective independent from six Executive Directors to fulfill its supervisory
function over the Board of Directors.
ExpertiseName

6

Current position in our
Company

Major positions held
(excluding those at our Company and its
predecessor financial groups)Bankmanagement

Assetadministration
business

3 years or moreexperience as an
officer (senior
managing director orabove) of a listedbank, etc.

3 years ormore ofbusiness
experience

Hiroki Tanaka(Independent Director)
・ Executive Director, Bank of Japan
Chairman
Chairman of the Board ・ Special Advisor, IBM Japanof Directors○

Masahiro
Tsuchiya

・ Senior Managing Executive Officer,
Sumitomo Mitsui Trust Holdings
・ Director and Senior Managing Executive
President &Officer, Sumitomo Mitsui Trust Bank
Representative Director
・ Chairman, Sumitomo Mitsui Trust AssetManagement
・ Director, Japan Securities Depository Center○

Yasumasa
Mukai

・ Managing Executive Officer, Mizuho
Financial Group
Deputy President &・ President & CEO, Mizuho Information &Representative Director
Research Institute・ Deputy President & Representative Director,
Mizuho Research & Technologies○

Life
insurancebusiness

Securities
markets

Financial/settlement
systems

3 years or more 3 years orof businessmore ofexperience inbusinesscommercial
experiencebanking

3 years ormore ofwork
experience

3 years or 3 years or moreexperience inmorecharge of IT or
experience working in an IT
in planningcompany

Bankingbusiness

○

○

○

○

○

HiroshiTakahashi

Director & Senior
Managing Executive
Officer・ Managing Executive Officer, Sumitomo
Mitsui Trust Bank

○

○

○

Hiroyuki Obata

Director & Senior
Managing Executive
Officer・ Abundant practical business experience atMizuho Financial Group, Mizuho Trust &Banking, etc.

○

○

○

Michihiro
MasudaDirector & Senior
Managing Executive
Officer・ Managing Executive Officer, Resona Bank

○

○

○

Ryuichi
Yamamoto

Director & Senior
Managing Executive
Officer・ Executive Officer and Corporate Auditor,
The Dai-ichi Life Insurance
・ Director, Japan Excellent AssetManagement

Munetaka Saito

・ Director and Senior Executive Officer, Japan
Securities Depository Center(Independent Director)
・ Managing Director, JASDEC DVP Clearing
Director・ President and Representative Director,
TOSHO SYSTEM SERVICE

Junichi Maeda

・ Nagoya Branch Manager, Bank of Japan,(Independent Director)
etc.
Director
・ Representative Director and Senior
Managing Director, Hokkoku Bank

IT

○

○

○

○

○

○

○

○

○

○

○

Strengthening Initiatives for SDGs
Custody Bank of Japan, Ltd. (hereinafter “CBJ”) considers the achievement of the Sustainable Development Goals(SDGs) to be an important management issue, and is strengthening its efforts for SDGs in order to improve corporate
value and contribute to the realization of a sustainable society, in line with its corporate philosophy.
In addition to aggressively promoting SDG initiatives, led by the SDGs Promotion Committee supervised by the Deputy
President & Representative Director, we have established the D&I Promotion Office within the Human Resources &Corporate Administration Department. We are focusing on developing a corporate culture and workplace environment inwhich each employee respects diverse values and can work more actively than ever before.

1. CBJ’s Corporate Philosophy and SDGs
CBJ’s corporate philosophy of “As Japan’s No. 1 bank specializing in asset administration, we shall contribute to thesound development of the economy and society by playing a role in the development of asset management businesses
and the asset formation of the people of Japan,” shares a philosophy and way of thinking with SDGs.
As a financial infrastructure, our Company recognizes that strengthening its efforts toward the SDGs is a social
responsibility, and as a leading company specializing in asset administration, it has been working aggressively to achieve
the SDGs.

2. Formulation of Materiality and Main Initiatives
Under a framework that combines our commitment to society, customers, and employees as set forth in the CBJ’s
Vision with the environment which is a prerequisite for corporate activities, our Company has formulated the following
nine material issues as priority issues.
The initiatives related to each material issue are described as below, and we have been working hard to promote these
SDG initiatives.

Framework

Materiality

1. Response tosocialresponsibility as afinancial
infrastructure

CBJ’s Vision[Society]
We respond to thetrust of society as afinancial
infrastructure byproviding highquality and reliable
services

2. Contribution to thedevelopment of
asset
managementbusiness

3. Contribution toeconomicdevelopment anda prosperous
national society

Initiatives

Related SDGs

• Development of robust IT infrastructure thatpays due consideration to the environment
and workstyles• Enhancement of management system forbusiness continuity in accordance withdisaster scenarios• Expanded donation of shareholder benefits
to social welfare corporations• Expanded collaboration with othercompanies in the same industry• Activities to promote paperless practices incooperation with customers• Accurate response to institutional changes,etc.

• Expanded provision of information tobeneficiaries through webinars, etc.
• Efforts to expand investment targets forbeneficiaries• Accurate execution of voting affairs

7

Framework[Society]
We respond to thetrust of society as afinancial
infrastructure byproviding highquality and reliable
services

CBJ’s Vision[Customers]
We aim to become
the best partner forour customers bymeeting theirdiverse needs andmanaging thechanging
environment[Employees]
We shall always be
a company thattakes pride in being
an assetadministration
professional inwhich employees
work to their fullpotential[Environment]
We will make every effort
to pay consideration to
the environment in our
corporate activities, suchas energy conservation,
resource conservation,and resource recycling

8

Materiality

Initiatives

4. Enhancement of
the governancesystem• Supervision by external Directors• Disclosure of skills matrix for the membersof the Board of Directors• Accurate response to revisions to laws andregulations• Enhancement of risk management system• Enhancement of AML/CFT risk management
system• Enhanced system security• Constant efforts to revitalize the organization
by utilizing town meetings, engagement
surveys, and executive officer opinion
boxes, etc.

5. Provision of highquality, highly
efficient services
based on acustomer-first
approach

6. Response todiverse customer
needs

7. Development ofprofessional
human resources• Initiatives for improving processing quality• Increased efficiency through promotion of
CBJ Kaizen activities such as improvementof processing flows and RPA*
*RPA is an abbreviation for Robotic Process
Automation. It stands for automating and improving
the efficiency of routine processing work throughrobotic technology of software.

• Response to diverse outsourcing needs
related to securities management• Expansion of products and services handled• Further strengthening of communication withcustomers using surveys• Unique treatment and job category systems• Enhancement of various training menus to
improve expertise (Harumi Custody
Academy video, etc.)• Enhancement of career support such as job
postings• Increased value of human resources
through reskilling

8. Promotion ofdiversity andinclusion• Health management initiatives• Establishment of the D&I Promotion Office• Establishment of a workplace environment
conducive to women’s active participationin the workplace• Support for people balancing work withchildcare or nursing care
• Initiatives for diverse workstyles• Promotion of employment of and enhanced
communication with persons with disabilities

9. Implementation of
corporate
activities with due
consideration for
the environment• Promotion of paperless practices throughweb-based meetings, digitization, andreduction of multifunction printers• Energy-saving through the use of cloudcomputing, LEDs and others• Reduced use of office space throughpromotion of ‘free address’ seating andefficient use of furniture and fixtures

Related SDGs

3. Establishment of New Offices in Consideration of the SDGs
Our Company opened a new office in Musashi Kosugi in Kawasaki
City, Kanagawa Prefecture in September 2022. At the new office, wecreated an office environment that uses paper as little as possible
and promotes paperless operations, and fully adopted ‘free address’
seating with concentration booths, etc. installed, in order to pursue
the ease of working for employees while taking into consideration the
SDGs. The office is also equipped with reskilling rooms to enhance
employee training and a disaster prevention meeting room withbackup office functions to prepare for a disaster.
In addition, we established the Okayama Center in Okayama City,
Okayama Prefecture in February 2023. At the Okayama Center, weplan to carry out some of the asset administration operations, such as securities settlement and fund settlement, in orderto strengthen Business Continuity Management in the event of a disaster affecting the greater Tokyo area.
Our Company will continue to promote the SDGs as a financial and settlement infrastructure company.

4. Certified Outstanding Organization of Health & Productivity Management in 2023 (Large
Enterprises Category)
Our Company was certified Outstanding Organization of Health &Productivity Management in 2023 (Large Enterprises Category),
selected jointly by the Ministry of Economy, Trade and Industry and the
Nippon Kenko Kaigi (Japan Health Council).
In 2022, our Company declared in the Health Management
Declaration that it is the responsibility of the officers of our Company,
Japan’s No. 1 bank specializing in asset administration, to work on
health management, and that it will work even more aggressively tomaintain and improve the health of its employees and ensure that it “takes pride in being an asset administration
professional in which employees work to their full potential.”
We will continue to work to prevent overwork, create a comfortable working environment, enhance mental health caretraining for managers, and develop internal systems based on the Mental Health Promotion Plan so that each employee
can be physically and mentally healthy and demonstrate their abilities to the full extent.

9Action Policy on Fiduciary Duty
I.

PrefaceIn order to fulfill our fiduciary duty under the Vision to “Become the best partner for our customers by meeting their diverse
needs and managing the changing environment,” Custody Bank of Japan has formulated and announced the Fiduciary Duty
Management Policy and Asset Administration Action Policy to practice measures that place our customers first in fulfilling the
Fiduciary Duty of overall asset administration business.

II. Fiduciary Duty Management Policy
Our Company shall establish and comply with the Fiduciary Duty Management Policy in carrying out asset administration
businesses that meet the diverse needs of our customers.

1. Management System
Concrete action plans shall be formulated and announced for the fulfillment of fiduciary duty, and the compliance divisionperiodically reports on the status of compliance to the Board of Directors and other organizations.

2. Performance Evaluation
An appropriate performance evaluation system shall be developed to evaluate initiatives that truly meet the needs andrealize the benefits of customers.

3. Management of Conflict of Interest
Conflict of interest shall be appropriately managed by identifying and classifying transactions that may cause a conflict ofinterest and determining specific management methods. We will also enhance the management on conflict of interest byproviding easy-to-understand information on the examples of conflict of interest.

4. Penetration of Corporate Culture
We will establish a corporate culture in which all officers and employees, among others, share awareness of and practicecompliance with the fiduciary duty by establishing training and other appropriate motivation frameworks.

III. Asset Administration Action Policy
Our Company shall establish and implement the following asset administration policies.

1. Strengthening Asset Administration Service Framework
We shall appropriately allocate resources such as human resources, administrative infrastructures, and systems in orderto improve reliability and speed of administrative work as a basis of asset administration services.
We shall strive to develop human resources equipped with high-level expertise in legislation and taxation related tosecurities and cash settlement necessary for asset administration services.

2. Sophistication of Administration, Systems, etc. as Financial Infrastructure
To meet the increasingly diverse and sophisticated asset management needs of our customers on a global scale, we shallpromote advancement of administration and systems.

3. Initiatives on Improvement of Service Quality and Development of New Services
While appropriately managing trust assets for assurance of customers, we shall constantly strive to develop new services
in a wide range of fields in the asset administration, with the aim of providing optimal solutions to meet customer’
increasingly diverse and sophisticated needs.
We shall provide appropriate information on asset administration fees for services provided to customers.

4. Enhancement of Information Service to Support Customers’ Investment Activities
In order to contribute to the sophistication of our customers’ investment activities, we shall strive to provide high-valueadded information (legislation, taxation, and market information) in a timely manner, based on various reports as well as
information from markets, etc.

IV. Action Plan
Please visit our Company website.
(https://www.custody.jp/corporate/ﬁduciary/index.html)

10

Review of Business Performance(1) Income Summary
As for income during the fiscal year under review, ordinary income increased ¥334 million year on year to¥58,000 million due to an increase in fiduciary fees and interest income despite a decrease in fees andcommissions. Key components included ¥38,516 million of fiduciary fees, and ¥21,209 million of fees andcommissions.

On the other hand, ordinary expenses rose ¥755 million year on year to ¥56,490 million due to an increasein general and administrative expenses, fees and commissions expenses and others. The principal
components of ordinary expenses were ¥53,340 million in general and administrative expenses, and ¥2,874
million in fees and commissions expenses.

As a result, ordinary profit decreased ¥420 million year on year to ¥1,510 million, with net income of ¥430
million, down ¥146 million year on year.

(2) Assets, Liabilities, Etc.
Total assets at the end of the fiscal year under review were ¥16,194,323 million, a drop of ¥1,053,885
million during the year due to decreases in cash and due from banks and securities. The principal
components were ¥15,387,568 million in cash and due from banks, ¥245,000 million in call loans and¥51,654 million in securities.

On the other hand, liabilities amounted to ¥16,074,199 million, down ¥1,054,202 million during the year
due to a decrease in borrowed money from trust account, etc. despite an increase in deposits, etc. The
principal components were ¥6,215,941 million in deposits, and ¥9,703,163 million in borrowed money fromtrust account.

Moreover, net assets were ¥120,124 million.

The capital adequacy ratio (Japanese standard) was 26.95%.

(3) Balance of Assets under Custody
At the end of the fiscal year under review, the balance of fiduciary assets and assets under custody basedon standing proxy contracts was ¥652,023,400 million, down ¥15,561,100 million during the year.

11

Introduction of Our Company’s Business

Our Company’s businesses are broadly divided into the following categories, with specialized departments inplace providing a wide range of services, to respond quickly and accurately to the increasingly sophisticated anddiverse needs of customers.

● Investment trust fund administration
We manage the overall administration related to asset administration entrusted by investment trust
management companies, and the main operations thereof are as follows.
1. Calculation of net asset value of investment trust
2. Report on the details of the fund to investment trust management companies
3. Procedures for acceptance, cancellation and redemption of funds
4. Closing of accounts
Each year, we conduct a questionnaire survey of investment trust management companies, to reflect
customers’ opinions in improving our services.

●Administration of funds such as pension assets
We manage the overall administration related to asset administration entrusted by customers, and the main
operations thereof are as follows.
1. Administration of B/S and P/L of funds (per contract)
2. Response to and report on inquiries from customers about the details of the fund, such as daily cash flows
3. Response to regulatory changes and administration of fiduciary fees
4. Administration of funds (principal)
5. Provision of various services to investment advisory and other asset management companies
6. Preparation of balance reports
7. Preparation of financial statements
8. Preparation of monthly reports and disclosure materials
For disclosure materials, we provide online services for some report forms.

● Domestic securities administration
For domestic securities administration, we manage the overall administration related to domestic securities,
and the main operations thereof are as follows.
1. Administration of execution related to domestic securities and assets, etc.
2. Administration related to dividends, principal and other rights concerning domestic securities and assets,etc.
3. Administration of execution, margin transaction execution, margins and collateral related to derivatives suchas futures and options
4. Administration related to lending, such as stock lending, bond lending, and repo transactions
We respond to instructions from fund managers via various kinds of electronic media (settlement matchingsystem of Japan Securities Depository Center, Inc., SWIFT, smart bridge, and XNET).

● Foreign securities management
For foreign securities management, we manage the processing of overall administration related to foreign
securities, and the main operations thereof are as follows.
1. Transaction of foreign securities
2. Administration of the preservation of ownership rights over foreign securities
3. Reconciliation of securities and cash balances
We respond to the special features and variability of individual markets by utilizing information provided by
global custodians, etc., and also regularly provide information to customers.

12

● Domestic and overseas custody services
We manage the overall administration related to securities management based on the delegation from
customers, and the main operations thereof are as follows.
1. Custody and agency for trade settlement of securities
2. Proxy receipt of interest and dividends
3. Administration service for shareholders benefits
4. Preparation of reports on transactions, balance, etc.
In Japan, we provide services through standing proxies and account management agencies, while overseas,
we provide services through the overseas offices of affiliated companies.

● Life insurance company asset custody service
We manage the overall administration of securities for life insurance companies, including securities
accounting, and the main operations thereof are as follows.
1. Settlement and administration of various securities (including derivative transactions) and incidental
transactions in Japan and overseas
2. Accounting such as asset valuation, preparation of accounting entry data and preparation of closing data
3. Preparation of various management and reporting materials
4. Administration service for preferential benefits of General Meeting of Shareholders
5. Automatic conversion of foreign exchange into yen
6. Securities lending services
We provide comprehensive outsourcing services for management and administrative functions, including
securities and cash settlement, and securities accounting.

● Middle- and back-office outsourcing services for asset management companies
We are entrusted with the administration related to overall post-trade operations of asset managementcompanies, and the main operations thereof are as follows.
1. Middle office operations (transaction processing, matching and management, etc.)
2. Back office operations (accounting, calculation of net asset value, closing of accounts, etc.)
3. Disclosure operations (preparation of prospectus and investment reports, etc.)
We provide flexible services, covering overall post-trade operations and responding to outsourcing needs forthe units of various investment trust operations.

● Collateral management services for over-the-counter (OTC) derivative transactions
We are entrusted with a series of collateral management services related to regulations on OTC derivativetransactions, and the main operations thereof are as follows.
1. Aggregation of unrealized gain or loss by transaction
2. Calculation of the collateral amount and negotiations (disputes) for adjustment of the collateral amount
3. Settlement of collateral securities and funds
We shall actively engage in the development and provision of value-added services in order to mitigate
administrative burdens and reduce system development costs for our customers.

13

Introduction of Our Company’s Business● Other operations
For other operations, we are implementing the following:
1. Securities lending
2. Administration related to entrusted assets of securities trusts under management, securities administration
trusts, and account management institution services, etc.
3. Administration related to the undertaking of financial institution services
Based on one of the nation’s largest asset sizes and accumulated know-how and experience, we shall provide
fine-tuned services to meet customer needs.

● Overview of business operations
Our Company’s services are indicated in the box.

Asset managementcompanies

Order placement

Securities
companies

Settlement

CustodiansStockexchanges

Execution/
instruction

Japan Securities
Depository Center, etc.

Various companies
providing fair value

Fair value/rights/issuanceterms data

Settlement

Domestic securities
administration

Fund accounting(Investment trusts,
pension assets, etc.)

Services of Custody Bank of Japan

Insurance
AccountingDomestic andoverseas custody
services

Collateral management
for OTC derivatives
securities lending, etc.

Various reports
Contract

Funds

Reports

Execution/
instruction

SWIFT etc.

Settlement

Foreign securities
administrationt

Middle- and back-officeoutsourcing services
for asset managementcompanies

Various information
services
Data provision

Customers

14

Order placement

Initiatives for Improving Processing Quality[Initiatives for Improving Operational Quality]● Activities to improve operational quality and efficiency

Our Company has established Operations Planning Department to oversee the overall operations, and is working
to improve the quality and efficiency of its operations.
The Operations Planning Department handles changes to institutions, taxation, and accounting, etc. and is
responsible for the overall processes for offering products and services to customers, investment trust managementcompanies, and investment advisory companies. The department is in charge of planning and the promotion of
measures pertaining to improvements in processes, standardization, and efficiency enhancement. Also, as noted in
the next section under Processing Risk Management Activities, this department is preparing the way for securing theeffectiveness of processing risk management activities.
● Processing Risk Management Activities

With the awareness that minimizing processing risk is one of the most-important issues for a company specializing
in asset administration, the Company has prepared its Processing Risk Management Rules, which contain basic
items for conducting proper and smooth processing operations and for the management of processing risk. Based onthese rules, the Company engages in control activities to take preventive measures (ex ante) and deal with risks thathave emerged (ex post).
<<Preventive measures>>
To prevent accidents and other incidents, the Company has established processing procedures manuals for all its
processing operations, forbidden non-standard processing, and been thoroughly conducting mutual checking as
standard procedure.
<<Dealing with risks that have emerged>>
In the event of an accident or other incident, the Company endeavors to accurately assess the situation, report itquickly, and take action with the top priority placed on the protection of managed assets. The Company also
analyzes the factors and issues that caused the incident, formulates measures to prevent reoccurrence and confirms
the effectiveness of these measures.

Improving operational
quality

Improving operational
efficiency“Stable and high-quality” operations

Department in overall charge of operations =“Operations Planning Dept.”

Operations Planning Department

Respective Departments

・ Taking overall charge of operations (including those related to
institutions, taxation, accounting, and providing products andservices to customers, investment trust managementcompanies and investment advisory companies)

・ Taking charge of improvements, etc., with
operating units

・ Promotion of processing improvements, standardization andproductivity enhancement

・ Promotion/implementation of measures
adopted by the Operations Planning
Department

・ Taking preventive (ex-ante) measures: preparation andupdating of the processing procedures manuals
・ Dealing with risks that have emerged (ex post): managementof processing errors, etc.

15

Proactive Initiatives for Securities Settlement System Reforms, Etc.

[Proactive Initiatives for Securities Settlement System Reforms, Etc.]
The securities settlement system plays an important role in Japan’s securities transactions as a coreelement in the institutional base. Our Company, as a leading company in the asset administration business, ispreparing actively to respond to the “Securities Settlement System” and “Domestic Securities Regulatory
Reforms” aimed at reducing settlement risk. In addition, other than the Securities Settlement System, ourCompany positions responding appropriately to the International Regulations for derivative transactions, andthe Extraterritorial Application of Individual Regulations in the United States and Europe, among others, as oneof the important issues and has been steadily doing so.
We will continue to take appropriate responses to provide customers with high-quality services.
<Major events in FY2023 and beyond>Category

Securities
Settlement
System Reforms

Content and CBJ’s Initiatives

Schedule

Extension of thesession time

The Tokyo Stock Exchange plans to extend thesession time of the cash markets by 30 minuteswith a view to improving market convenience. At
our Company, the impact is expected to be felt
mainly in the operation business regarding tosecurity, as well as in the stock lending andfutures operations. We will continue to work with
the Tokyo Stock Exchange, Trust Companies
Association of Japan, and other organizations to
respond.

November
2024

Foreign currency
exchangetransactions

Shift to CLS
settlement

Preparations are underway at relevantorganizations for enabling PVP settlements
through CLS banks for foreign currency
exchange transactions by investment funds.
Trust funds for which our Company serves astrustee are also gradually making transition.

Transition as
appropriate

Global securities
transactions

Preparation forcollateral requirement
for transactions suchas TBA transactions

According to the regulations of FINRA in theUSA, American companies are required to collect
collateral when carrying out transactions such as
TBA transactions. Our Company is also
preparing to accommodate it.

October 2023

Review of theoperation oftransaction reportingIn April 2024, the following three changes will bemade regarding weekly OTC derivative reportingto the Financial Services Agency.
1) Use of uniform reporting format based on
global standards with an increased number ofreporting items
2) Change to indirect reporting through the Trade
Repository (TR)3) Change in reporting frequency to daily
CBJ is also taking appropriate actions to
respond.

April 2024

Preparing for North
America T+1
Settlement

Securities settlement cycle in the U.S. andCanada will be shortened (from T+2 to T+1). We
have assessed the impact in Japan due to thetime difference from North America and theimpact on foreign exchange settlement for the
purpose of funding for securities settlement, andare working on preparing for the transition.

May 2024

Field

Tokyo Stock
Exchange

Upcoming Events

International
MarketRegulations, etc.
Reporting on
OTC derivativetransactions

Global securities
transactions

16

Risk Management System[Risk Management System]● Risk management policy

In order to fulfill its public mission as a bank specializing in asset administration, the Company has been developing
a risk management system as one of its most important management policies to appropriately manage and control
risks and ensure the soundness of its management. Furthermore, we are creating a corporate culture thatemphasizes risk management, and based on the concept of a three-line defense, we have built a risk management
framework for business execution to ensure the effectiveness and appropriateness of our risk management system.
● Fostering a risk culture

A sound risk culture is nurtured by all officers and employees involved in our Company’s business, to have a deep
insight into risk and a strong sense of ethics regarding the execution of their duties, which supports the framework of
the risk management system and leads to the maintenance of customer trust and the sustainable improvement ofcorporate value.
Through the formulation and dissemination of action guidelines on risk in line with our operations and theapplication of the guidelines by individual employees in their daily work, our Company strives to foster a sound risk
culture throughout the Company by instilling a risk mindset as employees of a bank specializing in asset
administration.
● Risk governance

Our Company ensures the effectiveness and appropriateness of our risk management system through a three-line
defense: autonomous control by each business unit (First line), risk management by the risk management unit
(Second line), and internal audits by the independent internal audit unit (Third line).
[Frist line] Each business unit: Autonomous control function
・ While carrying out daily operations in accordance with regulations and rules, each business unit has primary responsibility as theowner of risks associated with business execution, and autonomously conducts control activities such as identifying, assessing, andcontrolling risks.
[Second line] Risk management unit: Risk management function
・ The Risk Management Department and the risk management units monitor the autonomous control activities carried out by the firstline, and establish a risk management process by identifying and assessing the risks for our Company.
[Third line] Internal Audit Department: Internal audit function
・ Independent from individual business execution divisions, it verifies their activities, among others.

17

Risk Management System● Risk Management System

Recognizing that risk management is one of the most important management issues as a bank specializing
in asset administration, our Company is working to implement appropriate risk management across the entire
company and to improve our risk management system by formulating a basic framework for risk management,with the Board of Directors defining the various risks to be managed, creating the organizations and structures
for risk management, and in addition, establishing the Risk Management Deliberation Committee as a crossorganizational body chaired by the officer in charge of risk management.
Specifically, as shown in the table and figure below, we have classified risks incurred in the course of
executing business into categories such as “Operational risk,” “Liquidity risk,” “Credit risk” and “Market risk”
and established a risk management unit for each category to manage risks according to their characteristics,
while establishing the Risk Management Department as a department supervising unified management tomanage risks in an integrated manner. As part of the integrated risk management, we gain an understandingof the aggregate level of risk in each category through qualitative and quantitative assessments, and manage
the adequacy of capital by comparing such levels with the strength of our business.
In light of the risk profile specific to asset administration operations, our Company recognizes operationalrisk and liquidity risk as major risks. Accordingly, we engage in a variety of risk management activities, with abasic policy of preventing operational risk and minimizing its impact when it materializes, as well as a basic
policy of not taking on liquidity risk to the extent possible while developing a system for dealing with funding
crises.
<Content of Risk Category>
Risk to be managed and its content

Management method

Operational risk

Risk of incurring losses due to reasons such as
defects in the operational process, errors by officers
and employees, system malfunction, or external
events such as rumors.

・ Broad management by classification into individual risks
concerning administration, information security, systems, legal
affairs and compliance, human resources, tangible assets, andreputation.
・ Developing a risk assessment system through Control Selfassessment (CSA)

Liquidity risk

Risk of incurring losses due to reasons such as an
inability to secure necessary funds, funding
problems, or the need to procure high interest ratefunds.

・ Funding mismatch limit management and stress testing・ Establishing a crisis management system for a funding crisis

Credit risk

Risk of incurring losses due to a decline in orcomplete loss of asset value as a result of adeterioration in the financial condition ofcounterparties

・ Credit management based on the credit rating system
・ Setting credit limits and other limits for each counterparty

Market risk

Risk of incurring losses due to fluctuations in asset
value or income as a result of changes in the prices
of market transactions

・ Quantifying the amount of risk using interest rate sensitivity
・ Setting limits on the amount of risk and the amount of loss aswell as stress testing<Risk Management Structure>
Board of Directors
President - Executive Management Committee
Officer in charge of risk management - Risk Management Deliberation Committee(*)(*) An organization that deliberates
and coordinates risk
management across the entire
company.

Operational risk

Audit

Internal Audit
Department

Risk
Management
Department

Market risk

Credit risk

Liquidity risk

Audit

Reputationalrisk

Second line

Tangible asset
risk

ComplianceDepartment

Personnel risk

System Risk
Management
Department

Legal &
compliance
risk

18

System risk

First
line

Information
security risk

Processing
risk

Each business unit
Monitoring

Operations
Planning
Department

Third
line

Compliance Systems[Compliance Systems]
As Japan’s No. 1 bank specializing in asset administration, we shall contribute to the sound development of
economy and society by playing a role in the development of asset administration business and the asset formation of
the nation. Under this Corporate Philosophy and for its realization, we shall act with integrity and impartiality incompliance with laws, rules, and social norms as a pillar of our Action Guidelines. For this reason, our Company
positions legal and other kinds of compliance as one of our top priority management issues, in other words,
compliance with not only laws and regulations, but also social norms in a broad context. At our Company, bydeveloping a compliance management system in overall operation, we strive to ensure sound and appropriate
management based on self-discipline, and ensure our customers and society have full confidence in us.
● CBJ’s Compliance Structure

The Board of Directors makes decisions on basic compliance matters and oversees the implementation. The
President also oversees compliance at our Company, and the Executive Management Committee deliberates andreports on compliance matters.
Our Company has designated the Compliance Department as a department supervising compliance matters. The
department develops internal regulations required for the compliance management system, implements measuresand guidance, responds to issues, and improves training and education structures to manage overall compliance in
our Company. The Compliance Department regularly reports progress on compliance matters to the Board of
Directors, etc. and promptly reports when a serious violation of laws and regulations or an event with a grave impact
on management occurs.
In each department of our Company, the General Manager, who is responsible for compliance in each department,
and the Compliance Manager are positioned to secure the effectiveness of compliance in each department and carryout concrete measures in cooperation with the Compliance Department.

Board of Directors
Executive Management
Committee
ComplianceDepartment
Respective
Departments

General Manager
Person responsible for compliance ineach department

Compliance Manager
Implementing measures forcompliance in cooperation with theCompliance Department● Making All Personnel Aware of Compliance

In principle every year, the Compliance Department formulates a compliance program, and it is a specific action
plan for the achievement of compliance. This compliance program is disseminated across the entire organization,
after obtaining approval of the Board of Directors.
Our Company has also established the Compliance Manual as a practical guide for officers and employees toensure compliance. Formulation and important revision of the Compliance Manual are disseminated across theorganization after approval of the Board of Directors is obtained.
● Compliance Hotline System

Internal and external reporting desks (the Compliance Hotline) are established for officers and employees, etc. of
our Company to report acts of legal violations, or suspected violations within our Company. In order to protect
whistleblowers, this system ensures thorough information management and privacy protection, and strictly prohibits
disadvantageous treatment of whistleblowers. When a report is received, the Compliance Department reports to theofficer (Director) in charge of the Compliance Department and Corporate Auditors and takes appropriate action.
19

Internal Audits● Basic Action Policy

Our Company’s internal audit is a process, independent from the business lines, of verifying theappropriateness and effectiveness of governance process, risk management and controls for the achievementof management goals, objectively and holistically assessing the results, providing findings andrecommendations to correct issues, and following up on the status of improvements.
Our Company has established the Basic Policy on Internal Audit to ensure sound business, and carries out
the following initiatives to verify and assess the appropriateness and effectiveness of the internal management
system.
1) Establishment of the internal audit division that is independent from the business execution divisions andhas a sufficient check-and-balance function2) Based on the formulation of an internal audit plan, the internal audit division audits each business execution
division and provides findings and recommendations for improvements.
3) Results of internal audits and the progress of internal audit plans are reported to the Internal Audit
Committee and the Board of Directors in accordance with internal audit rules.
● Organizational structure

The Internal Audit Department has been established as an internal audit division independent of eachbusiness execution division, covering all units and operations in internal audits.
● Functions and roles

In line with the Basic Policy on Internal Audit, the Internal Audit Department formulates an internal audit plan
focused on material risk items of our Company. The plan is approved by the Board of Directors.
Results of internal audits are reported to the President and Corporate Auditors without delay, and are
periodically reported to the Internal Audit Committee and the Board of Directors.
Depending on the purpose of internal audits, general audits are conducted to audit matters related to theoperations under the jurisdiction of the units concerned, and theme audits to audit specific themes.

<Internal Audit Structure>
Board ofDirectors

Placing planson the agenda,
reporting on
results

Corporate
AuditorReports

Business
Execution DivisionInternal Audits

Internal Audit
Department

Designated Dispute Resolution Organizations

Our Company has concluded contracts with the following designated dispute resolution organizations.
Name of designated dispute
resolution organization

Japanese Bankers Association

Trust Companies Association of Japan

Contact and telephone
numberConsultation Desk, Japanese Bankers
Association
0570-017109 or 03-5252-3772

Trust Consultation Desk
0120-817335 or 03-6206-3988* The Japanese Bankers Association is a designated dispute resolution organization under the Banking Act and the Norinchukin Bank Act.
* The Trust Companies Association of Japan is a designated dispute resolution organization under the Trust Business Act and the Act on
Engagement in Trust Business Activities by Financial Institutions.

20

As a Public Institution (Disaster Prevention Measures)

Custody Bank of Japan has established a system for business continuity in the event of a disaster based on its
recognition that it is a public institution in asset administration services.

● Disaster Countermeasures
In the event of a disaster or system failure with a significant impact on business operations, we shall strive tominimize the damage through speedy initial response, and secure early and smooth business continuity andrecovery.
A business continuity plan is established by the Business Continuity Management Deliberation Committee chairedby the President in times of normality, and new issues are addressed through regular drills on disaster response, etc.

Facilities (Installations and Equipment)
Our Head Office is located in the Harumi Island Triton Square complex and is designed to withstand magnitude 7(Japanese scale) earth tremors, such as the 2011 Great East Japan Earthquake. Further, as a financial institution,
our Company, in line with the standards issued by The Center for Financial Industry Information Systems (FISC), has
installed a dedicated electric power generator to secure a power supply, utilizes telecommunications lines frommultiple carriers to avoid communication breakdowns, and introduced an IC card system to strengthen crimeprevention measures.
In addition, our system centers and backup centers also have robust infrastructure, including anti-earthquake
construction, electric power sources, and security facilities.

Backup Systems
CBJ’s offices and system centers have backup facilities in preparation for possible disasters or contingencies.
Our Company has established backup offices of the Harumi Head Office as disaster countermeasures in Kawasaki
City and Chofu City, and backup centers of system centers in Okayama Prefecture, Osaka Prefecture and Saitama
Prefecture.
[Normal time]

Office environment

Harumi Head Office

System environment

System centers(Fuchu and Chofu)

21As a Public Institution (Disaster Prevention Measures)[When Harumi Head Office is damaged]
If the Harumi Head Office is affected by a disaster, operations will be continued at backup offices in the cities ofKawasaki and Chofu, as well as opening temporary counters (delivery counters for securities companies andother customers).

Office environment

System environment

Backup offices(Kawasaki and Chofu)

Harumi Head Office
When affected by adisasterTemporary counters
activated

System centers(Fuchu and Chofu)[When system centers are damaged]
If the system centers (Fuchu and Chofu Cities) are affected by a disaster, the system environment will betransferred and operations continued at the backup centers (Osaka and Saitama prefectures).

Office environment

System environment

Backup centers(Okayama, Osaka, andSaitama Prefectures)

System centers

Harumi Head Office

22(Fuchu and Chofu)

When affected by a disasterFinancial Section■ Key Indicators of Management Condition ..................................................... 24■ Balance Sheets ............................................................................................ 25■ Statements of Income ................................................................................... 26■ Statements of Changes in Net Assets .......................................................... 27■ Notes to Accounting Items (FY2022) ............................................................ 28■ Confirmation Statement from Management .................................................. 31■ Auditors’ Statement ...................................................................................... 31■ Fair Value Information of Securities, etc. ...................................................... 32■ Indicators for Banking Business ................................................................... 34■ Matters Concerning Bank Management ....................................................... 38■ Other Asset Situation .................................................................................... 38■ Indicators for Trust Business ........................................................................ 39■ Capital Adequacy Status, etc........................................................................ 42■ Disclosure of Compensation, etc. ................................................................. 50■ Consolidated Information .............................................................................. 51

23

Key Indicators of Management Condition

Key Indicators of Management Condition(¥ million)

FY2018
Ordinary income

FY2019FY2020

FY2021

FY2022

29,46730,75649,297

57,66558,000Ordinary profit

555

694

1,235

1,931

1,510

Net income

344

506

680

576

430

51,00051,00051,00051,00051,0002,040,000 shares

Capital stock
Total number of shares issued

1,020,000 shares

1,020,000 shares

2,040,000 shares

2,040,000 shares

Net assets

59,07659,582

119,382

119,808

120,124

Total assets

11,040,555

9,946,450

17,277,835

17,248,209

16,194,323

Deposits

5,309,477

3,631,072

7,410,882

5,766,452

6,215,941

Loans

167,951

97,13631,141

1,858

-

334

30,34975,28665,50451,654

Securities
Dividend payout ratio (*1)--

19.79%

19.80%

19.89%

Number of employees (*2)

1,067 persons

1,135 persons

1,969 persons

1,980 persons

1,992 persons

Non-consolidated capital adequacy ratio(Japanese standard) (*3)

36.54%

34.12%

34.26%

29.42%

26.95%

Fiduciary fees

21,95623,02432,75738,01238,516--

310,640--

116,317,170

123,178,561

217,702,529

153,512,487

150,072,380

Trust account crypto-assets andperformance-guaranteed crypto-assets

-

-

-

-

-

Trust account, electronically recorded,transferred-rights securities

-

-

-

-

-

291,898,563

303,754,597

467,599,890

421,659,447

418,442,386

Trust account loans
Trust account securities(Excluding trust account, electronicallyrecorded, transferred-rights securities)

Total entrusted assets
(*1)
(*2)

(*3)

(*4)

The dividend payout ratio for FY2018 does not include dividends from the business merger carried out in September 2018.
The number of employees includes personnel seconded from Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank, Resona Bank andother companies (590 in FY2020, 553 in FY2021, and 549 in FY2022), and those seconded from Sumitomo Mitsui Trust Bank, Resona
Bank and other companies (189 in FY2018, and 194 in FY2019).
The “Non-consolidated capital adequacy ratio (Japanese standard)” is calculated according to the “Standards for banks to judge theircapital adequacy in light of assets they held based on Article 14-2 of the Banking Act” (Financial Services Agency Notification No. 19 of
2006).
On July 27, 2020, our Company merged with JTC Holdings and Trust & Custody Services Bank, changing the trade name from Japan
Trustee Services Bank to Custody Bank of Japan. Figures up to FY2019 are those for the pre-merger period (Japan Trustee Services
Bank), and from FY2020 onwards, those for Custody Bank of Japan.

Former Trust & Custody Services Bank(¥ million)

FY2018
Ordinary income

25,498

Ordinary profit

740

328

Net income

939

64

50,00050,0001,000,000 shares

1,000,000 shares

Capital stock
Total number of shares issued
Net assets

59,47959,493

Total assets

6,494,669

5,972,264

Deposits

2,274,797

2,407,030

Loans

709,241-

Securities

295,307

174,817

Dividend payout ratio (*1)--

697 persons

821 persons

Non-consolidated capital adequacy ratio(Japanese standard) (*2)

37.84%

46.01%

Fiduciary fees

12,431

13,134

Trust account loans

1,745,329

1,556,509

Trust account securities(Excluding trust account, electronicallyrecorded, transferred-rights securities)

85,096,939

83,110,413

Trust account crypto-assets andperformance-guaranteed crypto-assets--

Number of employees

Trust account, electronically recorded,transferred-rights securities
Total entrusted assets
(*1)
(*2)

24

FY201925,113--

143,717,067

139,836,527

The dividend payout ratio for FY2018 does not include dividends from the business merger carried out in September 2018.
The “Non-consolidated capital adequacy ratio (Japanese standard)” is calculated according to the “Standards for banks to judge theircapital adequacy in light of assets they held based on Article 14-2 of the Banking Act” (Financial Services Agency Notification No. 19 of
2006).

Financial Data

Balance Sheets(¥ million)

FY2021(March 31, 2022)

AssetsCash and due from banks
Cash
Due from banks
Call loans
Securities
Government bonds
Local government bonds
Corporate bonds
StocksOther securities
Loans and bills discounted
Loans on deeds
Foreign exchanges
Due from foreign banks (our accounts)
Other assets
Prepaid expenses
Accrued income
Derivatives other than for trading-assets
CCP margin deposits
Other
Tangible fixed assets
Buildings
Leased assets
Other tangible fixed assets
Intangible fixed assets
Software
Other intangible assets
Prepaid pension expenses
Deferred tax assets
Total assets
Liabilities and net assets
Deposits
Current deposits
Ordinary deposits
Other deposits
Call money
Due to trust accounts
Other liabilities
Income taxes payable
Accrued expenses
Derivatives other than for trading-liabilities
Lease obligations
Asset retirement obligations
Suspense receipt
Other
Provision for bonuses
Provision for retirement benefits
Total liabilities
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Total shareholders’ equity
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

FY2022(March 31, 2023)

16,748,115
0
16,748,114
149,400
65,50430,00331,962
3,028
490
19
1,858
1,858
4,364
4,364
217,796
1,084
12,913
6
155,50348,287
4,284
2,294
44
1,945
55,39055,34544430
1,064
17,248,209

15,387,568
0
15,387,568
245,000
51,65423,004
27,120
1,017
490
20
6,644
6,644
439,716
1,111
11,09017
389,879
37,618
4,752
2,901
37
1,814
57,56057,51643487
938
16,194,323

5,766,452
4,866,975
871,746
27,7306,215,941
5,140,629
1,056,972
18,33890,3009,703,163
63,118
353
3,466
51
41
919
51,138
7,147
659
1,016
16,074,199
51,00059,07350,000
9,073
10,022
1,094
8,927
8,927
120,095
28
28
120,124
16,194,323

110,900
11,186,487
62,997
322
3,942
7
48
830
51,171
6,672
620
943
17,128,401
51,00059,07350,000
9,073
9,706
1,094
8,611
8,611
119,77928
28
119,808
17,248,209

25

Financial Data

Statements of Income(¥ million)

Ordinary income

FY2022(from April 1, 2022, toMarch 31, 2023)

57,66558,000

Fiduciary fees

38,01238,516

Interest income△ 2,771△ 1,726-0Interest on loans
Interest and dividends on securities

8

1

Interest on call loans

10△9△ 2,792△ 1,780

Other interest income

362

Fees and commissions

22,41921,209454

361

21,964

20,847

2

-

2

-

1

1

1

1

55,73456,490Interest on deposits with banks

Fees and commissions on domestic and foreign exchanges
Other fees and commissions
Other ordinary income
Gain on foreign exchange transactions
Other income
Other
Ordinary expenses
Interest expenses

7

10Interest on deposits00Interest on call money

00Interest on borrowings

0

0

Other interest expenses
Fees and commissions payments
Fees and commissions on domestic and foreign exchanges
Other fees and commissions
Other ordinary expenses
Loss on foreign exchange transactions

6

9

2,814

2,874

172

188

2,641

2,686

-

188

-

188

52,90953,340

2

77

2

77

Ordinary profit

1,931

1,510

Extraordinary loss

General and administrative expenses
Other expenses
Other

26

FY2021(from April 1, 2021, to
March 31, 2022)

1,086

887

Loss on disposal of noncurrent assets

617

887

Impairment loss

468-

Income before income taxes

844

622

Income taxes—current

290

66

Income taxes—deferred

△ 22

126

Total income taxes

267

192

Net income

576

430

Statements of Changes in Net Assets(¥ million)

FY2021 (from April 1, 2021, to March 31, 2022)
Shareholders’ equity
Capital surplus
Capitalstock

Balance at the beginning of
the period

Legalcapitalsurplus51,000

Other
capitalsurplus50,000Retained earnings

Total capitalsurplus

9,073

59,073

Other retained
earnings

Legalretainedearnings

Retainedearnings
brought forward

1,094

Changes of items during theperiodDividends of surplus
Net income
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiodTotal
retainedearnings

Total
shareholders’ equity

8,169

9,263

119,337

△ 134
576

△ 134
576

△ 134
576

-

-

-

-

-

442

442

442

51,00050,0009,073

59,073

1,094

8,611

9,706

119,779

Valuation and translation
adjustments
Valuation
Total valuationdifference on
andavailable-fortranslationsale
adjustments
securities

Balance at the beginning of
the period
Changes of items during theperiodDividends of surplus
Net income
Net changes of items
other than shareholders’equity45

45

Total net
assets119,382

△ 134
576
△ 16

△ 16

△ 16

Total changes of items
during the period

△ 16

△ 16

425

Balance at the end of theperiod28

28

119,808(¥ million)

FY2022 (from April 1, 2022, to March 31, 2023)
Shareholders’ equity
Capital surplus
Capitalstock

Balance at the beginning of
the period

Legalcapitalsurplus51,000

Other
capitalsurplus50,000Retained earnings

Total capitalsurplus

9,073

59,073

Other retained
earnings

Legalretainedearnings

Retainedearnings
brought forward

1,094

Changes of items during theperiodDividends of surplus
Net income
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiodTotal
retainedearnings

Total
shareholders’ equity

8,611

9,706

119,779

△ 114
430

△ 114
430

△ 114
430

-

-

-

-

-

316

316

316

51,00050,0009,073

59,073

1,094

8,927

10,022120,095

Valuation and translation
adjustments
Valuation
Total valuationdifference on
andavailable-fortranslationsale
adjustments
securities

Balance at the beginning of
the period

28

28

Total net
assets
119,808

Changes of items during theperiod△ 114

Dividends of surplus
Net income
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end of theperiod

430
0

0

0

0

0

316

28

28

120,124

27

Financial Data

Notes to Accounting Items (FY2022)
Amounts less than ¥1 million are rounded down.
Material accounting policies
1. Valuation standards and methods for securities
As with the valuation of securities, available-for-sale securities are valued by the market value method (with the sales price calculated primarily by the moving averagemethod). Provided, however, that regarding stocks and other securities for which market prices are not available, the original purchase prices are employed based on themoving average method.
Note that the full amount of adjustments in the value of available-for-sale securities is accounted for by adding such amounts directly to net assets.
2. Valuation standards and methods for derivative transactions
Valuation of derivative transactions shall use the market value method.
3. Depreciation methods(1) Tangible fixed assets (excluding leased assets)
Depreciation of tangible fixed assets is calculated by the declining-balance method, with the exception of buildings (excluding facilities attached to buildings), and facilities
attached to buildings and structures acquired on or after April 1, 2016, which are depreciated by the straight-line method.
Estimated useful lives of major items are as follows:
Buildings 3 to 50 years
Others 2 to 20 years(2) Intangible fixed assets (excluding leased assets)
Intangible fixed assets are amortized by the straight-line method. Software for internal use is amortized over its estimated useful life (mainly 5 years).
(3) Leased assets
Leased assets for which the ownership does not transfer and that are included in tangible fixed assets are depreciated using the straight-line method over the estimateduseful life. Note that for those that are based on lease contracts providing for guarantees of residual value, the assets are depreciated down to the specified residual value,
and all other assets are depreciated to zero.
4. Standards for translating foreign currency assets and liabilities into Japanese yen
Foreign currency assets and liabilities are translated into Japanese yen at the exchange rate prevailing at the balance sheet date.
5. Standards for calculating reserves(1) Provision for bonuses
To provide for the payment of bonuses, our Company sets aside a reserve for bonuses for employees in the amount of the estimated bonuses attributable to the fiscal
year under review.
(2) Provision for retirement benefits
To provide for the payment of retirement benefits to employees, CBJ sets aside the reserve necessary at the fiscal year-end to cover such benefits, based on estimatesof its retirement benefit obligations and the expected value of pension plan assets. In addition, in calculating retirement benefit liabilities, the expected amount of retirement
benefit payments through the end of the subject fiscal year is allocated to the fiscal year under the benefit formula standard. Please note that the method for amortizing
expenses or recognizing gains arising due to actuarial differences is as follows.
Actuarial differences: The unrecognized net actuarial difference accrued in each fiscal year is amortized proportionately using the straight-line method over a specified
number of years (5 years), which is within the average remaining years of service in each year when the obligations are incurred, commencing from the next fiscal year of
incurrence.
6. Method of recording revenue
Fiduciary fees, and fees and commissions include fees received as consideration for asset administration services, and the Company has obligations to perform theservices based on contracts, etc. Given that those obligations are satisfied by providing services over a period of time, revenue is primarily recognized over the period inwhich the services are provided.

Notes to Accounting Items(Balance Sheets)
1. Collateral for exchange settlement and other transactions has been posted in the form of securities amounting to ¥23,004 million.
Other assets include CCP guarantee deposits of ¥32,866 million and guarantee deposits and others of ¥3,422 million.
2. Overdraft contracts provide for making loans up to a specified limit, provided there are not violations of the provision of contracts, when loan requests are received from
customers. The unexercised balance of loan commitments under these contracts is ¥2,157,400 million, and the remaining contract terms are 1 year or less for the full amount.
Note that, since most of these contracts expire without requests for overdrafts, the unexercised balance of loan commitments under these contracts will not necessarily havean effect on the cash flow. Many of these contracts incorporate provisions that allow our Company to reject the loan or reduce the maximum loan amount to be accepted if
financial conditions change, claims need to be protected, or there are any other reasonable grounds. If necessary, real estate, securities and other collateral will be secured at
the time of contract, and even after the contract is concluded, the business conditions of customers are periodically monitored based on predetermined internal procedures,and contracts are reviewed and credit protection measures are taken as necessary.
3. Accumulated depreciation of tangible fixed assets:¥6,323 million
4. The principal amount of trusts with principal-guaranteed features is ¥403,442 million in money trusts.
5. Total monetary claims on affiliates:¥906 million
6. Total monetary obligations outstanding to affiliates:¥8,159 million(Statements of Income)1. The negative figures for interest on call loans and interest on due from banks in interest income are due to the fact that, as a consequence of the application of negativeinterest rates to the Bank of Japan current deposits and others, interest on due from banks became negative on a net amount basis.
2. Loss on disposal of fixed assets under extraordinary loss includes the disposal of software under development that is no longer expected to be used due to policy changes orcancellations in the amount of ¥486 million.
3. Income related to transactions with affiliates
Total income from trust transactions:¥5,521 million
Total income from fees and commissions:¥605 million
Expenses related to transactions with affiliates
Total expenses related to other businesses and other ordinary transactions:¥13 million(Statements of Changes in Net Assets)
1. Matters related to class and total number of shares issued and the class and number of treasury stock
Total number outstanding at
Increase during the period
Decrease during the period
the beginning of the period
Shares issued
Common stock
2,040
Total
2,040
(Note) There is nothing applicable in relation to treasury stock.

28(Thousand shares)
Total number outstanding at
the end of the period
2,040
2,040

Remarks

2. Dividends(1) Dividends paid during the fiscal year
(Resolved by)Type of shares
June 29, 2022
Ordinary General Meeting
Common stockof Shareholders

Total dividends

Dividends per share

Record date

Effective date¥114 million¥56

March 31, 2022

June 30, 2022

(2) Of dividends for which the record date belongs to the fiscal year under review, those whose effective date is after the last day of the fiscal year under review.
(Resolved by)Type of shares
Total dividends
Source of dividends
Dividends per share
Record date
Effective dateJune 29, 2023
Ordinary General
OthersCommon stock¥85 million¥42
March 31, 2023
June 30, 2023
Meeting ofRetained earnings
Shareholders(Financial Instruments)
1. Matters related to the status of financial instruments(1) Policy on financial instruments
As a bank specializing in asset administration, our Company conducts the operation of banking accounts with limited risks.
(2) Contents of and risks associated with financial instruments
Our Company’s financial assets, in addition to deposits in the Bank of Japan and other institutions, are primarily comprised of Japanese Government Bonds,
local government bonds, call loans, negotiable certificate of deposits and fixed-term deposits. Credit risk and market risk are limited by confining operations within
one year as a general rule, and restraining their size and content to the minimum necessary.
On the other hand, our Company’s financial liabilities are primarily borrowed money from trust accounts and deposits. The balance of such liabilities is kept at areasonable level, and our Company avoids liquidity risk by limiting its asset administration operations to highly liquid financial instruments.
(3) Risk management relating to financial instruments
1) Credit risk management
Our Company’s principal credit risks arise in the management of idle funds generated by our asset administration business. Our Company has establisheda “Credit Risk Management Policy,” which calls for restraint in the size and content of such investments to the minimum required for conducting business.
Moreover, the Risk Management Department sets various credit risk position limits based on the “Credit Risk Management Rules,” and monitors theobservance of these limits on a daily basis.
2) Market risk management
Our Company strives for safe and secure management, by establishing a “Market Risk Management Policy” that calls for limiting market risk to the size andcontent required in connection with business and not conducting management for the purpose of capital gains. Moreover, the Risk Management Department
sets various market risk position limits based on the “Market Risk Management Rules,” and monitors the observance of these limits on a daily basis.
Our Company’s market risks arise mainly from the effects of interest rate risk, and the major financial instruments subject to this risk are Japanese
Government Bonds, local government bonds, call loans, negotiable certificate of deposits and fixed-term deposits. For these financial instruments, CBJ
employs the Basis Point Value (BPV) method (which measures the change in the value of these assets for each one basis point (0.01%) movement in interest
rates) for quantitative analysis to manage their interest rate risk. As of March 31, 2023, analyses based on the BPV method indicate that the interest rate risk
for a basis point movement in interest rates is ¥3 million. Please note that this movement in asset prices assumes that risk factors, excluding interest rate risk,
remain unchanged, and does not take account of correlations between interest rates and other risk causal factors.
3) Liquidity risk management
Our Company manages idle cash generated by our asset administration business on a continuing basis and keeps such operation without liquidity risk to
the fullest extent possible as provided for in our “Liquidity Management Policy.” Moreover, the Risk Management Department sets various position limits
based on the “Liquidity Risk Management Rules,” and monitors the observance of these limits on a daily basis.
(4) Supplementary explanation of fair value of financial instruments
Since the fair value of financial instruments involves certain assumptions, in cases where assumptions are subject to change, the value of assets may alsochange.
2. Fair values of financial instruments
The balance sheet amounts, fair values, and differences between the two, as of March 31, 2023, are shown below. Stocks with no market prices available are notincluded in the following table (see (Note 1)). Cash and due from banks, call loans, foreign exchange (assets), deposits, call money, and borrowings from trust
accounts are mainly settled in a short period of time, and their fair values approximate their book values. Accordingly, notes are omitted.
(¥ million)
Balance sheet amount
Fair value
Difference
Securities
Available-for-sale-securities
51,142
51,142
Total assets
51,142
51,142Derivative Transactions*Those for which hedge accounting is not
△ 34
△ 34
appliedTotal derivative transactions
△ 34
△ 34
* Derivative transactions included in Derivatives other than for trading-assets and liabilities are presented collectively.
Net claims and obligations arising from derivative transactions are presented in net amounts. Items that are net liabilities in total are presented with a triangle “△”.
(Note 1) The balance sheet amounts of financial instruments for which market prices are not available are as follows, and they are not included in “Available-for-salesecurities” in the fair value information of financial instruments.
(¥ million)
Category
Balance sheet amountUnlisted stocks
511
Unlisted stocks are not included in fair value disclosure in accordance with Paragraph 5 of the “Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).
(Note 2) Redemption schedule of securities with maturity dates after the closing date(¥ million)
1 year or lessOver 1 year to 3 Over 3 years to 5 Over 5 years to 7 Over 7 years to 10
Over 10 years
years or lessyears or lessyears or lessyears or lessSecurities
Available-for-sale-securities with
51,122maturities
Total
51,122
3. Matters concerning breakdown by the level of fair value of financial instruments
The fair values of financial instruments are classified into the following three levels according to the observability and significance of the inputs used to calculate thefair values.
Level 1 fair value: Fair value calculated using the market prices of the assets or liabilities formed in an actively traded market for which fair value is to be
determined, among the inputs for the calculation of the observable fair value
Level 2 fair value: Fair value calculated using inputs for the determination of fair value other than Level 1 inputs among inputs for observable fair value
Level 3 fair value: Fair value calculated using inputs for the determination of unobservable fair value
Where multiple inputs that have a significant impact on the determination of fair value are used, the fair value is classified into the level with the lowest priority in thecalculation of fair value among the levels to which the inputs belong.

29

Financial Data

Financial instruments recorded on the balance sheet at fair value(¥ million)
Fair value

Category

Level 1

Securities
Available-for-salesecurities
Government bonds
Local government
bonds
Corporate bonds
Derivative Transactions
Currency-related
Total assets
Derivative Transactions
Currency-related
Total liabilities

Level 2

Level 3

Total

23,004--23,004-

27,120-27,120

-

1,017

-

1,017

23,00417
28,154-17
51,159

-

51
51

-

51
51

(Note 1) Explanation of valuation techniques used in the determination of fair value and inputs to the calculation of fair value
Securities
Securities for which unadjusted quoted prices in actively traded markets are available are classified as Level 1 fair value, and include government bonds.
Those for which quoted prices are used, but where the market is not active, are classified as Level 2 fair price, and include local government bonds andcorporate bonds.
Derivative Transactions
Since derivative transactions are currency-related transactions (forward exchange contracts), their fair value is calculated based on the discounted present
value method where interest rates and exchange rates are used in the valuation technique. They are classified as Level 2 because they do not use inputs thatare not observable.

(Securities)
Negotiable certificate of deposits in “Due from banks” are included in addition to “Government bonds,” “Local government bonds,” and “Corporate bonds.”
Available-for-sale-securities (as of March 31, 2023)(¥ million)
Type
Balance sheet amount
Acquisition cost
Difference

Those with the balance
sheet amount exceeding
the acquisition cost

Bonds
Government
bonds
Local government
bonds
Corporate bonds
SubtotalThose with a balance sheet
amount not exceeding theacquisition cost

Bonds
Local government
bonds
OthersSubtotal

Total

23,00423,003024,10824,070

38

1,017

1,016

0

48,13048,090

40

△0

3,011

3,011

55,00055,000-58,01158,011△0

106,142

106,102

40(Tax effect accounting items)
The breakdown of factors giving rise to the accrual of deferred tax assets and liabilities is as follows.
Deferred tax assets
Provision for retirement benefits¥311 million
Asset retirement obligations
281
Provision for bonuses
201
Enterprise tax payable
106
Impairment loss
82
Others316
Total deferred tax assets
Deferred tax liabilities
Tangible fixed assets
Prepaid pension expenses
Valuation difference on availablefor-sale securities
Total deferred tax liabilities
Net deferred tax assets

1,300
211
149
1
362
¥938 million(Transactions with related parties)(1) Parent company and major corporate shareholders(¥ million)

Type

Name ofcompany

Percentage
ownership

Relationship withrelated party

Other affiliated company

Resona Bank,
Limited

Owned
Directly 16.6%

Entrusts asset
administration
to CBJ

Type oftransactions
Reentrustment
fees, receipt offees(Note 1)

Transaction
amountTerms of transactions and the decision policies, etc.
(Note 1) Fees for re-entrustment and other fees that are based on cost are decided through negotiations.
(2) Subsidiaries and affiliates, etc.
Not applicable.

30

6,106

Accounting item

Balance at end of
periodAccruedincome54

Suspense
receipt

8,157

(3) Other companies with indirect capital affiliation
Name ofType
company

Percentage
ownership

Subsidiary of otheraffiliated company

Sumitomo
Mitsui Trust
Bank, Limited-

Subsidiary of otheraffiliated company

Mizuho Trust &Banking Co.,Ltd.

-

Relationship withType of transactions
related party

Transaction
amountEntrusts asset
administration
to CBJ

Re-entrustment
fees, receipt of fees
(Note 1)

23,830

Entrusts asset
administration
to CBJ

Re-entrustment
fees, receipt of fees
(Note 1)

15,741

Accounting item(¥ million)
Balance at end of
periodAccrued income

6,535

Suspense receipt

27,078

Accrued income

1,003

Suspense receipt

13,707

Terms of transactions and the decision policies, etc.
(Note 1) Fees for re-entrustment and other fees that are based on cost are decided through negotiations.
(4) Directors and other individual shareholders
Not applicable.

(Revenue recognition)
Information which provides a basis for understanding revenue is as per the description in “6. Method of recording revenue” in “Material accounting policies.”(Per share information)
Net assets per share of common stock:
Net income per share of common stock:¥58,884.64¥211.08

Confirmation Statement from Management
I have confirmed that the financial statements (balance sheets, statements of income, andstatements of changes in net assets) for the third term, covering the period from April 1,
2022, to March 31, 2023, are presented appropriately and that the internal auditing related
to the preparation of these financial statements functioned effectively.
June 29, 2023
Custody Bank of Japan, Ltd.
President & Representative Director

Masahiro Tsuchiya
Auditors’ Statement
The Company has been audited by Accounting Auditor KPMG AZSA LLC in accordancewith Paragraph 1, Article 396 of the Companies Act, and received the Audit Report
indicating that all material items pertaining to assets and income have been presented
appropriately in the documents prepared pursuant to the provisions of Paragraph 1, Article
20 of the Banking Act.

31

Financial Data

Fair Value Information of Securities, etc.
Securities
Under this item, negotiable certificates of deposit in “Due from banks” are included inaddition to “Government bonds,” “Local government bonds,” and “Corporate bonds.”○ Available-for-sale-securities with fair value(¥ million)

FY2021
Type

Those with the balance sheet
amount exceeding theacquisition costThose with a balance sheet
amount not exceeding theacquisition cost

Bonds
Local
government
bonds
Corporate
bonds
Subtotal
Bonds
Government
bonds
Local
government
bonds
OthersSubtotal

Total

Balance sheet amount

Acquisition cost

Difference

29,01642

29,058
3,028

3,027

0

32,08732,04443

30,00330,004

△1

2,903

2,904

△0

40,00040,000-72,906

72,908△2

104,994

104,953

41(¥ million)Type

FY2022
Balance sheet amountThose with the balance sheet
amount exceeding theacquisition costThose with a balance sheet
amount not exceeding theacquisition cost

Bonds
Government
bonds
Local
government
bonds
Corporate
bonds
Subtotal

Acquisition cost

Difference

23,00423,003024,10824,070

38

1,017

1,016

0

48,13048,090

40

△0

Bonds
Local
government
bonds
Others

3,011

3,011

55,00055,000-Subtotal

58,01158,011△0

106,142

106,102

40

Total○ Valuation difference on available-for-sale securities(¥ million)

FY2021
Valuation difference
Available-for-sale-securities
Deferred tax assets (△ indicates deferred tax liabilities)
Valuation difference on available-for-sale securities

FY2022
41

41

41

41

△ 12

△ 12

28

28

(Note) Foreign currency translation adjustments for foreign currency-denominated stocks without market prices areincluded in “Available-for-sale securities” in “Valuation difference.”

Money in trust
Not applicable.

32

Derivative Transactions○ Derivative transactions for which hedge accounting is not applied
Regarding unhedged derivative transactions, the contract amount or the amount ofprincipal equivalent stipulated in the contract, fair value, and unrealized gain or loss asof the closing date for each type of transaction are as follows. Contract amount, etc.
do not per se indicate the market risk of derivative transactions.
・ Interest-related Transactions
Not applicable.
・ Currency-related Transactions(¥ million)

FY2021Category

TypeContract
amount, etc.

Contract amount, etc. of
those exceeding one year

Fair value

Unrealized gain or
loss

Exchange
contracts
Overthecounter

△7

△7

Sold

6,610

-

Bought

3,305

-

6

6

/

/

△0

△0

Total

(¥ million)

FY2022Category

TypeContract
amount, etc.

Contract amount, etc. of
those exceeding one year

Fair value

Unrealized gain or
loss

Exchange
contracts
Overthecounter

△ 51

△ 51

Sold

12,018-

Bought

6,009

-

17

17

/

/

△ 34

△ 34

Total

(Note) The above transactions are recorded at fair value, with unrealized gain or loss included in the statements of income.

・ Transactions related to stocks, bonds and commodities, and other derivative transactions
Not applicable.
Crypto-assets
Not applicable.

33

Financial Data

Indicators for Banking Business(1) Indicators showing the status of key business○ Gross business profit(¥ million)

FY2021
Global Business
Division

Domestic
Business Division

FY2022Global Business
Division

Domestic Business
Division

Total

Total

Gross business profit

54,837

3

54,84155,054△ 128

54,925Gross business profit
margin

0.34%

0.10%

0.34%

0.36%

△ 2.06%

0.35%

Fiduciary fees

38,012-38,01238,516-38,516

Net interest income△ 2,7801△ 2,779△ 1,795

59△ 1,736

Net fees andcommissions

19,6040

19,605

18,3340

18,334

Net trading income

-

-

-

-

-

-

Other net operating
income

-

2

2

-

△ 188

△ 188

(Note) Gross business profit margin = Gross business profit / Average balance of interest-earning assets × 100○ Net business profit(¥ million)

FY2021

FY2022Net business profit

1,941

1,620

Effective net business profit

1,941

1,620

Net business profit from core operations

1,941

1,620

Net business profit from core operations(excluding gain or loss on cancellation of investment trusts)

1,941

1,620

○ Average balance of interest-earning assets and interest bearing liabilities(¥ million)

FY2021

FY2022

Domestic Business Global Business
Division
DivisionInterest-earning
assetsAveragebalance(1,093)
15,902,888

Interest
Averagebalance

15,905,622

15,259,785

3

6,208

15,259,934

62△ 1,726(0)△ 2,771△ 1,789(1,093)
16,037,767

Interest

3,827

Total

(6,059)(0)△ 2,774

Interest bearing
liabilities

Total Domestic Business Global Business
Division
Division(6,059)3,813

16,040,487

15,479,613

(0)

6,194

15,479,748

(0)

6

1

7

6

3

10

Yield on interestearning assets△ 0.01%0.08%△ 0.01%△ 0.01%1.01%△ 0.01%

Yield on interest
bearing liabilities

0.00%

0.04%

0.00%

0.00%

0.05%

0.00%

△ 0.01%0.03%△ 0.01%△ 0.01%0.95%△ 0.01%

Net interest
margin(Note) 1. The interest-earning assets are shown after deducting the average balance of non-interest earning due frombanks (¥456 million in FY2021 and ¥697 million in FY2022).
2. The figure inside the brackets shows the average balance and interest on loans between the Domestic Business
Division and the Global Business Division.

○ Analysis of increase or decrease in interest income and expenses(¥ million)

Net changes in interest earned
Increase or decrease due
to balance
Increase or decrease due
to interest rate
Net change in interest paid
Increase or decrease due
to balance
Increase or decrease due
to interest rate

FY2021
Domestic Business Global Business
Division
Division
1,291
1
△ 176
△1

Total
1,293
△ 176

Domestic Business
Division
984
108

FY2022Global Business
Division
59
3

Total
1,044
108

1,468

2

1,469

876

56

936

△9
0

0
0

△9
0

0
△0

1
1

2
△0

△ 10

△0

△ 10

0

0

2

(Note) Where the increase/decrease factors due to the balance and interest rate overlap each other, they are prorated
according to their respective portion of change.

34

○ Rate of return(%)

FY2021

FY2022

Ordinary profit to total assets

0.01

0.00

Ordinary profit to capital

1.76

1.36

Return on assets

0.00

0.00

Return on equity

0.52

0.38

(Note) 1. Ordinary profit (net income) to total assets = Ordinary profit (net income) / Average balance for total assets (excluding
customers’ liabilities for acceptances and guarantees) × 100
2. Ordinary profit (net income) to capital = Ordinary profit (net income) / Shareholders’ equity and average balance of
valuation and translation adjustments × 100(2) Indicators for deposits○ Average balance by type of deposit(¥ million)

Domestic
Business Division
Deposits
Liquid deposits

FY2021
Global Business
Division

FY2022Global Business
Division

Domestic
Business Division

Total

Total

7,347,650-

7,347,650

6,082,096-

6,082,096

7,336,660-

7,336,660

6,070,409-

6,070,409

-

-

-

-

-

-

10,990-10,99011,686-

11,686

-

-

-

-

-

-

Time and savings
deposits
Other deposits
Negotiablecertificate ofdeposits(Note) 1. Liquid deposits = Current deposits + Ordinary deposits + Saving deposits + Deposits at notice
2. Time and savings deposits = Time deposits○ Balance of time deposits by average life
Not applicable.
(3) Indicators for loans, etc.
○ Average balance by loan item(¥ million)

Domestic Business
Division
Loans on bills

FY2021
Global Business
Division

Total

Domestic
Business Division

FY2022Global Business
Division

Total

-

-

-

-

-

-

Loans on deeds

16,109-16,109

1,445

-

1,445

Overdraft

25,546-25,54629,244-29,244

-

-

-

-

-

-

41,655-41,65530,689-30,689

Discounted bill
Total

○ Balance of loans and bills discounted by average life(¥ million)

FY2021

FY2022

1,858-

Floating interest rate--

Fixed interest rate

1,858

-

1,858

-

Floating interest rate--

Fixed interest rate

1,858

-

1 year or less

Total

35

Financial Data

○ Breakdown by collateral for loans and bills discounted(¥ million)

FY2021

FY2022

Securities--

Claims--Commodities--

Real estate--

Guarantees--

Unsecured

1,858

-

Total

1,858

-

○ Balance of loan guarantees (acceptances and guarantees)
Not applicable.
○ Balance of loans and bills discounted by purpose(¥ million)

FY2021Fund for capital investment

FY2022--Working capital

1,858

-

Total

1,858

-

○ Balance of loans and bills discounted by industry(¥ million)

FY2021
Balance Composition ratio
1,858
100.00%1,858
100.00%Government of Japan
Total

FY2022
BalanceComposition ratio-○ Balance of loans to SME
Not applicable.
○ Balance of specific foreign claims
Not applicable.
○ Loan-deposit ratio(%)

Domestic Business
Division

FY2021
Global Business
Division

Domestic Business
Division

Total

FY2022Global Business
Division

Total

Loan-deposit ratio

36

Balance at end of
period

0.03

-

0.03

0.00

-

0.00

Average during
the period

0.56

-

0.56

0.50

-

0.50

(4) Indicators for securities○ Average balance of trading securities
Our Company does not own trading securities.
○ Balance of securities by average life(¥ million)

FY2021
Over 1 year to 3 Over 3 years to 5 years
Over 5 years
years or lessor less

1 year or lessThose with noprescribed period

Total

Government bonds

30,003----30,003

Local government
bonds

4,819

27,142---

31,962

Corporate bonds

2,002

1,026

-

-

-

3,028

Stocks

-

-

-

-

490

490

Other securities

-

-

-

-

19

19

-

-

-

-

19

19

36,82528,169--510

65,504Foreign stocks
Total(¥ million)

FY2022
1 year or lessOver 1 year to 3
years or lessOver 3 years to 5 years
or less

Over 5 Those with no prescribed
years
periodGovernment bonds

23,004----23,004

Local government
bonds

27,120----27,120

Corporate bonds

Total

1,017

-

-

-

-

1,017

Stocks

-

-

-

-

490

490

Other securities

-

-

-

-

20

20

-

-

-

-

20

20

51,142

-

-

-

511

51,654Foreign stocks
Total○ Average balance of securities(¥ million)

Domestic
Business Division

FY2021
Global Business
Division

Domestic
Business Division

Total

FY2022Global Business
Division

Total

Government bonds

32,808-32,80830,440-30,440Local government
bonds

33,355-33,35530,634-30,634

Corporate bonds

4,149

-

4,149

2,008

-

2,008

490

-

490

490

-

490

-

19

19

-

19

19

-

19

19

-

19

19

70,80319

70,82363,574

19

63,593

Domestic
Business Division

FY2022Global Business
Division

StocksOther securities
Foreign stocks
Total○ Security-deposit ratio(%)

Domestic
Business Division

FY2021
Global Business
Division

Total

Total

Security-deposit ratio
Balance at end of
period

1.13

-

1.13

0.83

-

0.83

Average during theperiod

0.96

-

0.96

1.04

-

1.04

37

Financial Data

Matters Concerning Bank Management○ Initiatives to improve the management of SMEs and revitalize local communities
As a bank specializing in asset administration, our Company provides customers
with services dedicated to asset administration. Due to our operational
characteristics, we currently do not provide loans for business funds to companies,
including small and medium-sized enterprise customers, or for customers who wish
to use housing loans. For this reason, there are no direct activities taken to improvethe business of SMEs and revitalize local communities.

Other Asset Situation○ Claims pursuant to the Banking Act and the Financial Revitalization Act(¥ million)

FY2021

FY2022Claims to bankrupt and substantially bankrupt debtors--

Doubtful claims--

Claims being closely monitored--

Loans that are delinquent for three months or longer--

Restructured loans

-

-

-

-

Ordinary loans

1,858

-

Total

1,858

-

Subtotal(Note) There are no applicable items for trusts with principal-guaranteed features○ Amount of write-off of loans
Not applicable.
○ Balance of allowance for loan losses and its changes
Not applicable.

38

Indicators for Trust Business(1) Balance table of assets in trust(¥ million)

FY2021

FY2022(Assets)
Securities

153,512,487

150,072,380

Government bonds

28,025,752

27,887,238

Local government bonds

2,962,296

3,125,308

Short-term bonds

970,611

964,094

Corporate bonds

6,811,947

6,556,878

Stocks65,619,647

60,474,339

Foreign securities

38,857,561

40,424,053

Other securities

10,264,670

10,640,466

Securities in investment trusts

65,851,776

75,001,448

Foreign securities in investment
trusts40,892,086

38,030,301

Interests in trusts

79,151,418

75,093,482

Trust securities

24,887,467

25,807,856

Monetary claims

13,233,846

14,075,358

Life insurance claims

496,427

500,546

Housing loan claims

3,308,370

3,004,537

Other monetary claims

9,429,047

10,570,274

Other claims

9,552,285

10,186,168

Call loans

10,093,784

7,160,197

Loans to banking account11,186,487

9,703,163

Cash and due from banks

13,297,808

13,312,031

Due from banks
Total assets

13,297,808

13,312,031

421,659,447

418,442,386(Liabilities)
Designated money trusts

733,749-

Corporate investment fund7,444,116

7,854,547

Monetary trusts other thanmoney in trust

3,446,297

3,464,735

Trust of securities

3,711,719

3,118,448

Monetary claims in trust

3,308,370

3,004,537

403,015,192

401,000,117

421,659,447

418,442,386

Composite trusts
Total liabilities

39

Financial Data

(2) Acceptance of money trusts, etc.
○ Fiscal year-end balance of trust(¥ million)

Money trusts

FY2021

FY2022

8,177,866

7,854,547(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of principal by trust period(¥ million)

FY2021

FY2022

Money trusts
Less than 1 year
1 year or more to less than 2 years
2 years or more to less than 5 years
5 years or more

4,305

2,400

6,133,534

5,199,461--

2,021,325

2,585,102

Others

320,417

403,442

Total

8,479,582

8,190,406

FY2022

Securities

FY2021
4,950,556

4,781,778

Total

4,950,556

4,781,778(Note) There is nothing applicable for loan trusts.

(3) Investment in money trusts, etc.
○ Investment balance(¥ million)

Money trusts(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.
There is nothing applicable for loans and crypto-assets.

○ Balance of securities by type(¥ million)

Money trusts

FY2021

FY2022Government bonds

657,694

507,994

Local government bonds

11,40818,617

Corporate bonds

195,673

218,697

Stocks2,343,140

2,245,898

Foreign securities

1,081,880

1,166,061

Other securities

660,759624,509

Total
4,950,556
4,781,778(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

40

○ Balance of loans by accounting item
○ Balance of loans by contract period○ Balance of loans by type of collateral○ Balance of loans by purpose○ Balance of loans by industry and the proportion in total amount of loans○ Balance of loans to SME and the proportion in total amount of loans
There is nothing applicable for any of money trusts, annuity trusts, employees’ property
formation benefit trusts, and loan trusts.
(4) Status of trusts with principal-guaranteed features○ Fiscal year-end balance of trusts (including trusts that have been re-entrusted for the investmentof trust assets)(¥ million)

Money trusts

FY2021

FY2022Others

320,417

403,442

Total assets

320,417

403,442

Principal

320,417

403,442

Total liabilities

320,417

403,442(Assets)(Liabilities)(5) Balance of crypto-assets by typeNot applicable.

41

Financial Data

Capital Adequacy Status, etc.
This section is intended to disclose matters that are specified separately by the Commissioner of the Financial Services
Agency regarding the status of capital adequacy, etc. (Financial Services Agency Notification No. 7 of 2014), in accordance with
Paragraph 1 (5) (d), Article 19-2 of the Ordinance for Enforcement of the Banking Act (Ordinance of the Ministry of Finance No.
10 of 1982).

● Disclosure Concerning the Composition of Capital
Summary table of the non-consolidated capital adequacy ratio (Japanesestandard)(¥ million)

FY2021

FY2022

Core Capital: Instruments and reserves (1)Directly issued qualifying common shares or preferred shares mandatorily
convertible into common share capital plus related capital surplus andretained earnings
Of which, capital and capital surplus

119,665

120,010110,073

110,073

Of which, retained earnings

9,706

10,022

Of which, treasury stock (△)

-

-

114

85

Of which, other than above
Subscription rights to acquire common shares or preferred shares
mandatorily convertible into common shares

-

-

-

-

Reserves included in Core Capital: Instruments and reserves

-

-

-

-

-

-

-

-

-

-

-

-

Of which, planned distribution of income (△)

Of which, general allowance for loan losses
Of which, eligible provisions
Eligible non-cumulative perpetual preferred shares subject to transitionalarrangements included in Core Capital
Eligible capital instruments subject to transitional arrangements included
in Core Capital
Capital instruments issued through the measures for strengthening capitalby public institutions included in Core Capital
Amount equivalent to 45% of land revaluation excess subject totransitional arrangements included in Core CapitalCore Capital: Instruments and reserves
(a)

-

-

119,665

120,010

38,42939,935

Core Capital: Regulatory adjustments (2)Total intangible fixed assets (excluding those relating to mortgage
servicing rights)
Of which, goodwill (including those equivalent)
Of which, other than goodwill and mortgage servicing rights--

38,42939,935

Deferred tax assets (excluding those arising from temporary differences)--

Shortfall of eligible provisions to expected losses--

Capital increase due to securitization transactions--

Gains and losses due to changes in own credit risk on fair valued liabilities

-

-

298

338

-

-

-

-

-

-

10,063

10,740--Prepaid pension costs
Investments in own shares (excluding those reported in the Net Assets)
Reciprocal cross-holdings in capital instruments issued by other financial
institutions for raising capital that are held by the Bank
Investments in the capital of banking, financial and insurance entities thatare outside the scope of regulatory consolidation
Amount exceeding the 10% threshold on specified items
Of which, significant investments in the common stock of other financial
institutions
Of which, other than goodwill and mortgage servicing rights
Of which, deferred tax assets arising from temporary differences
Amount exceeding the 15% threshold on specified items
Of which, significant investments in the common stock of other financial
institutions
Of which, intangible fixed assets relating to mortgage servicing rights
Of which, deferred tax assets arising from temporary differences
Core Capital: Regulatory adjustments--

10,063

10,740

-

-

-

-

-

-

-

-

(b)

48,79251,014(c)70,873

68,996

Capital
Total amount of capital ((a) – (b))

42(¥ million)

FY2021
Risk-Weighted Assets

FY2022(3)

Total credit risk-weighted assets
Of which, total of items included in risk-weighted assets subject totransitional arrangements
Of which, exposure to other financial institutions
Of which, other than above

133,953

148,670

-

-

-

-

-

-

-

-

106,927

107,326

Credit risk-weighted assets adjustments--

Amount equivalent to operational risk adjustments--

240,880

255,99629.42%

26.95%

Amount equivalent to market risk divided by 8%
Amount equivalent to operational risk divided by 8%

Total risk-weighted assets(d)Capital Adequacy Ratio
Capital Adequacy Ratio ((c) / (d))● Qualitative Disclosure
1. Main features of regulatory capital instruments
Capital is raised by common stocks.
2. Assessment of capital adequacy under Pillar 2
As a method of assessing capital adequacy, our Company implements management
based on required capital according to the Capital Adequacy Framework (Pillar 1) andthrough integrated risk management according to internal management (Pillar 2).
(1) Capital management
As a bank complying with Japanese standards, we strive to maintain and secure acertain level of required capital in accordance with the Capital Adequacy Framework.
(2) Integrated risk management
Our Company carries out integrated risk management based on the “CapitalManagement Policy,” “Risk Management Policy,” and “Risk Management Rules.”Specifically, after setting limits on capital that consider a certain buffer in times of stress,
we confirm that the integrated risk amount of credit, market and operational risks are within
the limits. In addition, for liquidity risks that cannot be captured by the integrated risk
amount, stress tests are conducted and regular reporting is made to the Executive
Management Committee and the Board of Directors, including the status of compliancewith the limits.
3. Credit risk
(1) Overview of risk management policies and procedures
1) Definition of credit risk
Credit risk refers to “the risk of incurring losses due to a decline in or complete lossof asset value (including off-balance sheet assets) as a result of the deterioration in thefinancial condition of borrowers.”
2) Characteristics of credit risk
The major credit risk in our Company arises from investment transactions of surplus
funds accompanying asset administration operations, resulting in a large amount of bad
debts (or provision of allowance) due to defaults by major borrowers or deterioration in
their credit standing.
3) Risk management policy
We have established the “Risk Management Policy” which provides the credit risk
management policy of keeping credit risks to be risk-limiting in size and nature.

43

Financial Data

4) Credit risk management structure
The Risk Management Department, which manages credit risk, supervises
compliance with various limits and verifies the rating system. Monitoring results ofcredit risk amounts, changes in ratings, compliance with limits, etc. are regularly
reported to the Risk Deliberation Committee.
5) Credit rating, self-assessment, and write-off and reserve, etc.
A. Credit rating
As the basis of credit management, “credit rating” represents the credit status ofobligors and the possibility of default and loss in stages. Our Company assigns“internal ratings” to financial institutions, etc. as credit ratings with reference toexternal ratings.
B. Self-assessment
Self-assessment is a preparatory process for write-offs and reserves, etc.
conducted by individually examining the contents of assets owned andcategorizing them according to the risk level of recovery or impairment of values.
Our Company has established the “Risk Management Policy” and “Asset
Assessment Management Rules” for proper implementation of self-assessment. A
borrower is judged for the “obligor category” according to its financial condition ateach time of the disclosure of its financial results or upon each incident that affects
its credit. In addition, a “classification category” is periodically determined for each
asset based on the assessment result of the obligor category and the protection
status, etc., reflected in write-offs and reserves, etc. appropriately, and also used
for credit risk management.
C. Write-offs and reserves, etc.
Write-offs and reserves, etc. refer to estimating the expected amount of future
losses based on the actual results of self-assessment, and considering thehistorical loan losses, etc. in a timely and appropriate manner, and making anallowance for or write-off of such amount in the account settlement for each halfterm. Our Company has established rules, etc. on write-off and reserves, etc. toensure proper management of write-offs and reserves, etc.
(2) Portfolios to which the Standardized Approach is applied
Name of qualified rating agency, etc. used for determining risk weight
Our Company uses the following five qualified rating agencies to determine
risk weights, etc.
〇 Japan Credit Rating Agency, Ltd. (JCR)〇 Rating and Investment Information, Inc. (R&I)
〇 Moody’s Investors Service, Inc. (Moody’s)〇 S&P Global Ratings (S&P)
〇 Fitch Ratings
4. Overview of risk management policies and procedures concerning credit risk mitigation(1) Credit risk mitigation
Credit risk control is achieved not only by reducing the balance of credit, but also by
obtaining protection of claims using collateral, guarantees, etc. Such protection of claims
is collectively referred to as the “credit risk mitigation.”
In calculating credit risk-weighted assets, our Company reflects the effects ofcredit risk mitigation through eligible collateral and guarantees in accordance with theNotification.
(2) Major types of collateral
Our Company is currently mitigating credit risks by accepting qualified financial
collateral, etc., which are regularly evaluated.
5. Overview of risk management policies and procedures for the risks of counterparties ofderivatives transactions and long-settlement transactions
Not applicable.

44

6. Securitization exposure
Not applicable.
7. Market risk
Not applicable.
8. Operational risk
(1) Overview of risk management policies and procedures
Recognizing operational risk as a significant risk in the “Risk Management Policy” due toour risk profile as a trust bank specializing in asset administration services, we haveprescribed a basic policy of establishing a solid internal management system to prevent suchrisk and minimizing their impact on business when they materialize.
In order to appropriately manage operational risk in accordance with the above policy, ourCompany has established the “Operational Risk Management Rules,” stipulating that risk
management departments shall carry out risk management activities for each risk
subcategory described below (Processing Risk, Information Security Risk, System Risk,
Legal and Compliance Risk, Tangible Asset Risk, Personnel Risk, and Reputational Risk),
and that the Risk Management Department shall establish a management system forplanning, promoting, and coordinating all aspects of operational risk management, as adepartment that comprehensively manages operational risk.
Risk management departments and activities for each risk subcategory are as follows.
1) Processing risk
・ The Operations Planning Department is responsible for processing risk to plan andpromote the management of processing risk.
2) Information security risk
・ Of information security risks, the Operations Planning Department is responsible forthose other than information systems, and the System Risk Management Department
is responsible for those related to information systems, to plan and promote various
risk management.
3) System risk
・ The System Risk Management Department is responsible for system risk to plan andpromote the management of system risk.
4) Legal & compliance risk
・ The Compliance Department is responsible for legal and compliance risks to plan andpromote legal and compliance risk management.
5) Tangible asset risk
・ The Human Resources & Corporate Administration Department is responsible fortangible asset risk to plan and promote various types of tangible asset risk
management.
6) Personnel risk
・ The Human Resources & Corporate Administration Department is responsible for
personnel risk to plan and promote personnel risk management.
7) Reputational risk
・ The Risk Management Department is responsible for reputation risk to plan andpromote various types of reputation risk management.

45

Financial Data

The following activities are carried out as management activities across risk
subcategories.
1) Outsourcing management
・ As various operational risks are inherent in the outsourcing of our Company
business, the Risk Management Department has established the “Outsourcing
Management Rules” to comprehensively coordinate the management ofoutsourcing.
2) Response to severe accidents
・ The “Operational Risk Management Rules” (administered by the Risk
Management Department) set forth standards for the severity of materialized
operational risks, and stipulate actions to be taken according to the severity.
3) Risk Management Deliberation Committee
・ The Risk Management Deliberation Committee (operational risk) has been
established for company-wide coordination for operational risk, run by the Risk
Management Department.
As comprehensive operational risk management activities, company-wide Control
Self Assessment (CSA) is conducted regularly in order to identify, assess, andmonitor operational risks. Countermeasures are formulated with regards to risks
identified as the result of CSA to control and reduce risks.
(2) Calculation of amount equivalent to operational risk
Calculation method
Our Company calculates operational risk equivalents using the “Basic Indicator
Approach.”
9. Overview of risk management policies and procedures for capital contribution or equity
exposures
Our Company has a credit risk management system in place to manage default andother risks. Regarding the valuation of stocks for which market prices are notavailable, the original purchase prices are employed based on the moving averagemethod.
10. Interest rate risk
(1) Overview of risk management policies and procedures
1) Definition of interest rate risk in the banking bookInterest rate risk in the banking book (hereinafter, “IRRBB”) refers to the current
or prospective risk to a bank’s capital and to its earnings, arising from the impactof adverse movements in interest rates on its banking book.
The present value is regarded as the economic value (EVE), and themagnitude of loss at the current interest rate level is measured as ⊿EVE for eachposition. The scope of measurement includes positions with interest rate risk inthe banking book.
⊿NII is measured as a decrease in interest income during the period from therecord date for calculation of interest rate shocks until the date 12 months haveelapsed.
2) Characteristics of IRRBBIRRBB is incurred by a maturity mismatch (gap risk), interest rate mismatch(basis risk), and other factors in the banking book position. The Ratio of ⊿EVE toCore Capital for our Company is well below the regulatory level of 20%,
maintaining a low level of IRRBB.

46

3) Management structure of IRRBBThe Risk Management Department regularly measures IRRBB and reports to the Risk
Deliberation Committee and others.
(2) Overview of interest rate risk calculation methods
1) Calculation method of interest rate risk
The assumptions used in calculating IRRBB are as follows.
・ Core deposits are not set, but liquid deposits are set as funds with no maturity
・ There is nothing applicable in terms of early cancellation of time deposits, early
redemption of personal loans and handling of foreign currencies.
2) Interest rate risk other than ⊿EVE and ⊿NII
The BPV (basis point value) is used to measure and manage interest rate risks.

● Quantitative Disclosure(1) Capital○ Non-consolidated required capital by portfolio category(¥100 million)

FY2022

FY2021Credit risk
Standardized Approach

35.0

43.6

For CCP

18.5

15.7

Operational risk
42.7
Total amount of non96.3
consolidated required capital
Operational risk equivalents are calculated using the Basic Indicator Approach.

42.9
102.3

(2) Credit risk
○ Credit risk exposure status
Note: For off-balance sheet exposures, credit equivalents are shown. Exposures are not included when it is notnecessary to calculate the amount of credit risk-weighted assets.
There was no significant difference between the year-end balance of credit risk exposures and the averagerisk position during the fiscal year for both the previous fiscal year and fiscal year under review.

Breakdown by region

Domestic
Overseas
Total

Off-balance sheet
exposures other thanloans, commitments andderivatives
18
18(¥100 million)

FY2021
Securities

Derivatives

Others

Total

654
0
654

-

169,27643
169,320

169,949
43
169,993(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

Derivatives

Others

Total

Domestic

-

515

-

156,602

157,118

Overseas

-

0

-

66

66

Total

-

516

-

159,668

157,185

FY202247

Financial Data

Breakdown by counterparty

For sovereign
For financial
institutions andothersOthersTotal

Off-balance sheet
exposures other thanloans, commitments andderivatives
18(¥100 million)

FY2021
Securities

Derivatives

Others

Total

619
20

-

166,398

167,036

-

2,261

2,281

-

660
169,320675
169,993

18

15
654

(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

Derivatives

OthersTotal

For sovereign
For financial
institutions andothersOthers-500-

152,597

153,098

-

-

-

3,421

3,421

-

15

-

649

664

Total

-

516

-

156,668

157,185

FY2022

Breakdown by period

1 year or lessOver 1 year
OthersTotal

Off-balance sheet
exposures other thanloans, commitments andderivatives
18
18(¥100 million)

FY2021
Securities

Derivatives

Others

Total

368
281
5
654

-

169,147172
169,320

169,534
281
177
169,993(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

Derivatives

OthersTotal

1 year or less

-

511

-

156,503

157,014Over 1 year

-

-

-

-

-

Others

-

5

-

165

171

Total

-

516

-

156,668

157,185

FY2022○ Overdue exposure status

Not applicable.

○ Allowance for loan losses and write-off of loans

Not applicable.

○ Exposure to which the Standardized Approach is applied
Breakdown by risk-weight category (after applying credit risk mitigation effects)(¥100 million)(Risk weight)

0%
10%
20%
100%
250%
1250%
Total

FY2021On-balance
sheet
167,036
2,741
124
80
169,983

Off-balance sheet

Total

-

167,036
2,741
124
80
169,983-

FY2022(Risk weight)

0%
10%
20%
100%
250%
1250%
Total

48

On-balance
sheet
153,098
3,879
117
79
157,174(¥100 million)

Off-balance sheet

Total

-

153,098
3,879
117
79
157,174

○ Amounts of capital deduction/Exposure to which risk weight of 1,250% is applied
Not applicable.

(3) Credit risk mitigation○ Breakdown of exposures to which credit risk mitigation is applied(¥100 million)

FY2021
Financial asset
collateral

Creditderivatives

Guarantees

Total

Standardized Approach
For sovereign

-

-

-

-

-

-

-

-

-

-

-

-

Mortgage loans

-

-

-

-

Securitization

-

-

-

-

Others

-

10

-

10

-

10

-

For financial institutions andothersFor corporate and others

Total

10
(¥100 million)

FY2022Financial asset
collateral

Guarantees

Credit derivatives

Total

Standardized Approach
For sovereign
For financial institutions andothersFor corporate and others

-

-

-

-

-

-

-

-

-

-

-

-

Mortgage loans

-

-

-

-

Securitization

-

-

-

-

Others

-

10

-

10

-

10

-

10

Total

(4)

Counterparty risk in derivative and long-term settlement transactions:Not applicable.

(5)

Securitization exposure: Not applicable.

(6)

Market risk
Our Company does not include market risk equivalents in the calculation of its capital
adequacy ratio.

(7)

Risk of equity exposures○ Balance sheet amounts and fair value
FY2021

FY2022(¥100 million)

Balance sheet amount

Fair value

Balance sheet amount

Fair value

Listed equity exposures

-

-

-

-

Equity exposures other than above

5

-

5

-

Total

5

-

5

-

○ Gains/losses on sale and redemption of capital contribution or equity exposure
Not applicable.
○ Amount of gain or loss by write-offs and unrealized gain or loss in relation to equity
exposures
Not applicable.

49

Financial Data

○ Unrealized gains/losses recognized in the balance sheets and not recognized in thestatements of income
Not applicable.
○ Unrealized gains/losses not recognized in the balance sheets and the statements ofincomeNot applicable.

(8) Interest rate risk
IRRBB1: Interest rate risk(¥ million)⊿EVE

Item No.
FY2021⊿NIIFY2021

FY2022

FY2022

1

Parallel shift up

716

312

△ 1,545△ 3,024

2

Parallel shift down

△ 716

△ 312

1,545

3,024

3

Steepening

-

-

-

-

4

Flattening

-

-

-

-

5

Short-term rates up

-

-

-

-

6

Short-term rates down

-

-

-

7

Largest

716

312

8

Amount of Core Capital

1,545
FY2022
68,996FY202170,8733,024

Disclosure of Compensation, etc.
This section shall relate to compensation, etc. based on the provisions of Article 19-2, Paragraph 1, Item 6, etc.
of the Ordinance for Enforcement of the Banking Act (Ordinance of the Ministry of Finance No. 10 of 1982), anddisclose the case specified separately by the Commissioner of the Financial Services Agency as a matter that
may have a material impact on the status of business operations or assets of banks, etc. (Financial Services
Agency Notification No. 21 of 2012).
1. Matters related to the development of organizational structure for compensation, etc. ofApplicable Officers and Employees of our Company(1) Scope of “Applicable Officers and Employees”
The following shall describe the scope of “Applicable Officers” and “Applicable
Employees, etc.” (collectively referred to as “Applicable Officers and Employees”) set
forth in the compensation notification to be disclosed.
1) Scope of “Applicable Officers”
Applicable Officers include our Company’s Directors and Corporate Auditors,
excluding external Directors and Corporate Auditors.
2) Scope of “Applicable Employees, etc.”
Of officers and employees who are not Applicable Officers, our Company shallsubject “Persons receiving a high amount of compensation, etc.” and having amaterial impact on the business management or financial condition of ourCompany and the major consolidated subsidiaries to disclosure as “Applicable
Employees, etc.” Information on our Company’s consolidated subsidiaries isomitted as there are no such companies.
There are no “Applicable Employees, etc.” among officers and employees otherthan “Applicable Officers” at our Company.
(A) Scope of “Persons receiving a high amount of compensation, etc.”
Persons receiving a high amount of compensation, etc. shall refer to those
who receive compensation, etc. exceeding the threshold amount from ourCompany. Our Company has set the threshold amount at ¥24 million. The
standard amount is set based on the average amount of compensation forApplicable Officers of our Company.

50

(B)

(2)

Scope of “Person having a material impact on the business operations or financial
condition of our Company”
A “Person having a material impact on the business operations or financial conditionof our Company” shall refer to a person whose transactions conducted or mattersmanaged in his/her usual course of business have a considerable impact on theoperation of our Company’s business or whose transactions, etc. could cause loss witha significant impact on the financial condition of our Company.

Determination of compensation, etc. for Applicable Officers and Employees
1) Determination of compensation, etc. for Applicable Officers
At our Company, the General Meeting of Shareholders determines the total amountof compensation (the maximum amount) for officers. The Board of Directors is wholly
trusted with the allocation of compensation to individual Directors resolved by theGeneral Meeting of Shareholders. Allocation of compensation to individual Corporate
Auditors is wholly determined by consultation among Corporate Auditors.

2. Matters concerning the evaluation of the appropriateness of the design and operation of thesystem for compensation, etc. for Applicable Officers and Employees of our Company(1) Policies concerning compensation, etc.
1) Policies concerning compensation, etc. for Applicable Officers
At our Company, the General Meeting of Shareholders determines the maximum
total amount of compensation for officers. Directors’ compensation is resolved by the
Board of Directors, and Corporate Auditors’ compensation is determined byconsultation among Corporate Auditors within the limit of the total amount ofcompensation resolved by the General Meeting of Shareholders.
3. Consistency between our Company’s compensation system for Applicable Officers andEmployees and risk management, and linkage between compensation, etc. and performance
There is a mechanism in place where the total amount of compensation for all officers is
resolved by the General Meeting of Shareholders, in determining compensation, etc. forApplicable Officers. In determining compensation, etc. for Applicable Employees, etc., abudget is set aside with our Company’s financial condition and other factors taken into
consideration.
4. Types, total amount and payment method of compensation, etc. for Applicable Officers andEmployees of our Company
Total amount of compensation, etc. for Applicable Officers and Employees of our Company(from April 1, 2022, to March 31, 2023)(¥ million)

Category

Applicable Officers(excluding external
officers)

Numberofpersons8

Total amount ofcompensation,
etc.

148

Total amount ofBasicfixed compensation compensation
148

148

Retirement
Total amountbenefitsof variable
Bonusescompensation

Stock
option----5. Other reference matters related to the system of compensation, etc. for the Applicable Officers
and Employees of our Company
There is no particular matter applicable other than those listed in the preceding paragraphs.

Consolidated Information
As our Company has no subsidiaries, consolidated accounting is not implemented.

51

List of items fordisclosure

Ordinance for Enforcement of the Banking Act
1. Overall Business and Organization○ Management organization○ List of major shareholders○ Management○ Name of Accounting Auditors○ List of offices○ Matters concerning bank agent

2. Key Business
3. Matters concerning Key Business○ Business overview in the latest business year
○ Indicators showing the status of key business in the last 5
business years
・ Ordinary income
・ Ordinary profit or loss
・ Net income or loss・ Capital and total number of shares issued
・ Net assets
・ Total assets
・ Deposits
・ Loans・ Securities
・ Non-consolidated capital adequacy ratio
・ Dividend payout ratio
・ Number of employees
・ Fiduciary fees
・ Trust account loans
・ Trust account securities(Excluding trust account, electronically recorded,transferred-rights securities)
・ Trust account crypto-assets and performanceguaranteed crypto-assets
・ Trust account, electronically recorded, transferred-rights
securities
・ Total entrusted assets○ Matters shown in a separate table as indicators showing thestatus of business in the last 2 business years(1) Indicators showing the status of key business・ Gross business profit, gross business profit margin, net
business profit, effective net business profit, net businessprofit from core operations, and net business profit fromcore operations (excluding gain or loss on cancellation of
investment trusts)
・ Net interest income, net fees and commissions, net
trading income, other net operating income
・ Average balance, interest, yield and net interest marginof interest-earning assets and interest bearing liabilities
・ Increase or decrease in interest income and expenses
・ Ordinary profit to total assets and ordinary profit tocapital・ Return on assets and return on equity(2) Indicators for deposits
・ Average balance of liquid deposits, time and saving
deposits, negotiable certificate of deposits, and otherdeposits
・ Balance of time deposits by average life(3) Indicators for loans, etc.
・ Average balance of loans on bills, loans on deeds,
overdrafts, and discounted bills
・ Balance of loans by average life
・ Balance of loans by type of collateral and customers’
liabilities for acceptances and guarantees
・ Balance of loans by purpose
・ Balance of loans by industry and the proportion in total
amount of loans

・ Balance of loans to SME and the proportion in total
amount of loans
・ Balance of specific foreign claims by country, which
account for 5% or more of the total
・ Year-end and average loan-to-deposit ratios(4) Indicators for securities
・ Average balance of trading account securities by type・ Balance of securities by type and average life
・ Average balance of securities by type・ Year-end and average security-to-deposit ratios(5) Indicators for trust business・ Balance table of assets in trust・ Balance of money trusts, etc.
・ Balance by type of trusts with principal-guaranteedfeatures・ Balance of principal of money trusts and loan trusts bytrust period・ Balance of loans by type of money trusts, etc. andinvestment balance by security and crypto-asset
category
・ Balance by loan item related to money trusts
・ Balance of loans pertaining to money trusts, etc. bycontract period・ Balance of loans pertaining to money trusts, etc. by typeof collateral・ Balance of loans pertaining to money trusts, etc. bypurpose・ Balance of loans pertaining to money trusts, etc. byindustry and the proportion in total amount of loans
・ Balance of loans pertaining to money trusts, etc. for SME
and the proportion in total amount of loans
・ Balance of securities pertaining to money trusts, etc. by
type
・ Balance of crypto-assets by type

4. Matters concerning Business Operation○ Risk management structure○ Management structure for legal compliance○ Initiatives to improve the management of SMEs and revitalize
local communities○ Name of designated dispute resolution organization

5. Matters concerning Status of Assets in Last 2 Business
Years○ Balance sheets, statements of income, and statements ofchanges in net assets○ Amount of risk-monitored loans○ Amount of risk-monitored loans for trusts with principalguaranteed features○ Capital adequacy status○ Fair value information on securities, money in trust,
derivative transactions, and crypto-assets○ Allowance for loan losses at fiscal year-end and its changes
during fiscal year
○ Amount of write-off of loans○ Auditors’ Statement

6. Matters related to Compensation, etc.
7. Consolidated Information

The Ordinance for Enforcement of the Act
on Emergency Measures for the
Revitalization of the Financial Functions○ Asset assessment status
・ Ordinary loans
・ Claims being closely monitored
・ Doubtful claims
・ Claims to bankrupt and substantially bankrupt debtors

DISCLOSURE 2023
The document is a disclosure material prepared in accordance with Article 21 of
the Banking Act.
Published

July 2023
Corporate Planning Department, Custody Bank of Japan, Ltd.
8-12, Harumi 1-chome, Chuo-ku, Tokyo, 104-6228
TEL 03-6220-4000
Website https://www.custody.jp/
Mixed
Paper | Supporting
responsible management offorests

Financial Data

54