Integrated Reporthttps://www.dbj.jp/en2021

Integrated Report 2021

Development Bank of Japan Inc.

Printed in Japan

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

1

MissionContents

Value
Creation Story

Continue to expand financial frontiers;
Provide the best solutions forcustomers and society;Pursue sustainable development
for Japan and the world.

Management Foundation Strategy

P 22 Sector Strategy
P 30	
Dialogue with Customers to

P
P
P
P

Realize a Sustainable Society

Reliability

Corporate
Governance•	International Integrated Reporting
Framework of the International
Integrated Reporting Council (IIRC)

Integrated Report 2021 contains­forward-looking statements.
­Forward-looking statements are basedon information available at the time ofwriting and hypotheses or judgments
regarding uncertain factors.
Accordingly, actual results may differ
materially if conditions change.

https://www.dbj.jp/en/
The latest news; detailed information on
DBJ’s financial services; case studies
regarding its investments and loans; various reports; and information for investors
can be found on the Company’s website.
Details about CSR initiatives are also
posted on the DBJ website.

62 Risk Management System
62 Comprehensive Risk Management
65 Stress Tests
65 Business Continuity Initiatives
66	
Response to the TCFD
Recommendations

Corporate
Data
Data Section

P 68	
Financial and Non-Financial

P 73	
Summary of Changes to the DBJ

Highlights

P 70 Consolidated Financial Summary
P 72 Timeline
P 73 Shareholder Information

Act after Conversion to a JointStock Company

P 74 Organizational Structure

P 76 The Development Bank of Japan Inc. Act
P 95 Financial Condition
P 167 Corporate Information / Group Companies

Data Section•	Period: Fiscal 2020
(April 1, 2020–March 31, 2021)(Some information from outside thisperiod is also included.)

P
P
P
P
P

Corporate Data

Disclaimer

P 50 Message from the Chairman
P 52 Corporate GovernanceP 56	
Members of the Board of Directors,

P 60 Compliancestakeholders. The report’s content is decided upon by the Executive Committee.
Guidelines and Entities Referenced

Risk Managementof the Board of Directors

information to explain the DBJ Group’s business activities and initiatives in sustainable value creation to its broad spectrum of

Period Covered and ScopePFS and SIB that Solve Social
IssuesCorporate GovernanceP 59	
Messages from Outside Members

such communication with our stakeholders. Our latest Integrated Report 2021 is intended to provide financial and non-financial

42 Financial Strategy
44 Human Resource Development
46 Knowledge and Collaboration
49	
Taking the Initiatives to Spread

A presentation of the DBJ Group’s corporate governance and risk management
efforts toward the steady implementation of its strategies.

Audit & Supervisory Board
Members, and Executive Officers

Environmental Report for a Sustainable Society (published in fiscal 2003) was the DBJ Group’s first report dedicated to increasing•	Date of Publication:
October 2021

Business Strategy

P 32 Area Strategy
P 36 Function Strategy

Editorial Policy•	Guidance for Integrated Corporate
Disclosure and Company–Investor
Dialogues for Collaborative Value
CreationA presentation of the DBJ Group’s various sustainability management activities
from the perspectives of its business and management foundation strategies.

Corporate GovernancePublicmindedness

The realization of the DBJ Group’s mission can be traced to its four core corporate
values of “long-term perspective,” “impartiality,” “public-mindedness,” and “reliability,” which were created and passed down through the generations via thesharing and pursuit of DBJ’s corporate philosophy. Moreover, the core corporate
values underpin our business activities, representing a strength of the DBJ group.

•	Scope: In principle, the reportcovers DBJ and its 13 main
subsidiaries.

2 The DBJ Group’s Corporate Philosophy
4 Our History of Value Creation
8 Sustainability Management
10 Message from the President
15 Our Response to COVID-19
16 Fifth Medium-Term Management Plan
18 Key Initiatives toward Realizing Sustainability
20	Invigoration and Stabilization of Financial Markets through Partnerships andStrategy

Impartiality

P
P
P
P
P
P
P
P

Collaboration

Strategy

A Long-term
Perspective

A presentation of the DBJ Group’s corporate philosophy from a historical perspective, along with an explanation of its management policies rooted in thisphilosophy.

Value Creation Story

Design the Future withFinancial Expertise2

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

The DBJ Group’s Corporate Philosophy

3

The DBJ Group’s Corporate Philosophy—Design the Future with Financial Expertise—

Design the Future with Financial Expertise

With due consideration paid to progress it has made thus far, projected changes in the business environment, andoutstanding social issues, the DBJ Group has formulated a mission to relentlessly pursue, core values to share,and its long-term vision, Vision 2030, to follow as a guide into the future.
In connection with these elements of its corporate philosophy, the DBJ Group has identified four core corporate
values—long-term perspective, impartiality, public-mindedness, and reliability—that also embody its strengths
and long-term vision, areas of differentiation.

Sharing Our Corporate Philosophy
Further propagating and applying our corporate philosophy will improve awareness ofour social responsibility, enhance the sense of unity in the DBJ Group,
lower communication costs, and motivate our employees to growwith intention and a sense of mission.

Our unwavering
purpose andour incessantdetermination toshape the future

MissionDesign the Future with Financial ExpertiseContinue to expand financial frontiers;
Provide the best solutions for customers and society;Pursue sustainable development for Japan and the world.

Vision 2030

Leveraging the DBJ Group’s
unique strengths topursue its mission andrealize its vision

Business strategy
Sector strategy
Function strategy
Area strategy

Capital strategy
Sustainability
management

Financial capital
Human capitalIntellectual capital
Relationship andsocial capital

Values put into
practice define ourstrengths

Execute strategy
based on values

Action Guideline

ValuesOur vision for2030, embodied in
our mission andstrategies

As industry and infrastructure professionals skilled in handling all types of risk,
we will play a unique role in the economy and society of 2030—leading new
business and market creation while responding to crises and other social needs.

Our strategy to reach our vision for 2030
Medium-Term Management Plan
The DBJ Group’s unique strengths assist with strategy execution
Core corporate values A long-term perspective, impartiality,
public-mindedness, and reliability
Our guidelines
for taking
specific actions
that express
our values

Responsibility to future generations• We fulfill our responsibility to the future by pursuing both
economic and social value.

The customer’s perspective• We devote unequaled thought to each possibility—from thecustomer’s point of view.

Outstanding service• We review and enhance our services while improving productivity.

Commitment and cooperation• We work tirelessly to broaden frontiers and achieve best results.
• We respect diversity and work together for greater shared value.

Our unwaveringvalues sharedby management
and employees(base component)

Initiative

Integrity

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Integrated Report 2021

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Our History of Value Creation

The DBJ Group has provided solutions in tune
with the times, contributed to the sustainable
development of society, and, while changing
itself, stayed true to its values—initiative andintegrity—amid dramatic changes in the economy, the fabric of society, and social issues.

Development Bank of Japan Inc.
Integrated Report 2021

Expansion and reinforcement ofindustrial bases

Redevelopment of major industries
Kawasaki Steel Corporation (currently JFE SteelCorporation):
Construction of Chiba Steelworks (Chiba Prefecture)
Modernization of steelmaking through construction of
the first postwar blast furnace

Development of innovative financial
products focused on sources ofcorporate value

Development of domestic
technologies

Nippon Yusen Kabushiki Kaisha:Liner Sanuki Maru
Rebuilding Japan’s merchant shipping fleet with financeunder the government’s shipbuilding programSony Corporation:
Trinitron color television factory
Promotion of homegrown technologies through thecommercial application of new technologies

Financial solutions that
support communities, the environment,
and technology

Our History of Value Creation

Vision 2030

Stronger response to innovation

PASMO Co., Ltd.:
Development of the PASMO IC card that transformed
public transport convenience
Note: PASMO is a registered trademark of PASMO Co., Ltd.

Japan H2 Mobility, LLC (JHyM):
Financial support for realization of a hydrogen-basedsociety

7

Space One Co., Ltd.
Support for development of the domestic space industry
by commercializing a new generation of small rockets

As industry and infrastructure professionals skilled in handling
all types of risk, we will play a unique role in the economy and society of2030—leading new business and market creation while responding tocrises and other social needs.

Future Changes in the External Environment
Collections of NYK Maritime Museum

Roles played by DBJ

Photo provided by ENEOS Corporation

1951

1956

2008

The Japan Development Bank establishedThe Hokkaido Development Finance Public Corporation established

Development Bank of Japan establishedEconomic recovery

Rapid growth

Reconstruction
and self-reliance of theeconomyAfter World War II, DBJ began toprovide financing for the rationalization, modernization and growthof key industries that would
become the foundation of economic and industrial development.

High-growth infrastructuredevelopment
Japan Development Bank (JDB)
expanded and reinforced theenergy and transportation capabilities underpinning its industrial
infrastructure, and provided loans
to develop and modernize chemical fiber, machine tool, automobile,and other new industries, whichsteered economic growth.

We have identified changes in the external environment that could have a major impact on the DBJ
Group’s stakeholders in the future. These sync with the United Nations Sustainable Development
Goals (SDGs) and we aim to contribute to realizing those goals.

Stable growth

Economic bubble

Post-bubble economy

Strengthening ofinternational
competitivenessImprovements toquality of life

Seamless transformationof industrial structure

Creation of anaffluent society

Aiming to enhance international
competitiveness in accordancewith the transition to an open economic system, JDB focused on
support for industrial system
improvements and the development of domestic technologies.

In the 1970s, JDB engaged in antipollution measures, regional andurban development, and othersocial development efforts
addressing quality of life andregional inequality issues in tune
with economic growth.

From the mid-1980s, pressing
needs arose for increased domestic demand and an industrial structural shift against a backgroundof aggravating trade friction withother countries. JDB focused on
support for social capital improvement, creative technologicaldevelopment, and industrial transformation and other issues.

JDB focused on ongoing improvements to social capital and environmental measures as areas ofpriority and the support of new
businesses (venture businesses). It
swiftly implemented reconstructionloans in the wake of the Great
Hanshin-Awaji Earthquake andloans to stabilize the financial
system.

2015

2020

Amendments to the Development Bank of Japan Inc. Act

The global financial crisis
The Great East Japan Earthquake

Structural reform

Regional revitalization

Business regeneration

Through a united effort with
regional financial institutions, JDB
focused on providing long-term
solutions to such issues as economic growth, the establishmentof social infrastructure, and development of a wide business network, toward enriching thelifestyles of local communities.

Amid issues concerning uncollectible loans arising from an increasing number of bankruptcies andunfavorable performances among
businesses as well as the instabilityof financial systems since the late
1990s, JDB invested in a businessrestructuring fund to support therecovery of businesses toward therevitalization of the Japanese
economy.

Financial crisis response,
post-earthquake
reconstruction
The financial crisis in 2008 triggereda deterioration of corporate cash
flows and DBJ swiftly addressed
the situation through Financial
Crisis Response Operations. In
regard to the Great East Japan
Earthquake in 2011, DBJ teamed
up with other financial institutions
to engage in Earthquake Disaster
Crisis Response Operations and toprovide risk capital through its
Great East Japan Earthquake
Reconstruction Fund.

The COVID-19
pandemic

Population
problems

Climate change,
natural resources,and energy

GlobalizationAI, fintech, andother technologicalinnovations

Government
budgets, finances,and regulations

Provision ofrisk capital
DBJ established its Special
Investment Operations to provide
the growth capital needed to promote the competitiveness ofJapanese enterprises and regional
revitalization. Moreover, DBJ supported new businesses with theircommercialization efforts and contributions to society by engaging in
projects with diverse players overthe long term.

https://www.dbj.jp/en/co/info/history/

Realizing a sustainable society
Our Three Priority Areas
The DBJ Group has established infrastructure, industry, and the regions as its three priority areas
based on the roles it has played and the functions it has undertaken to date, the social value it hasrealized, and future changes in the external environment. Leveraging its professional strengths, theGroup is assessing long-term changes in the external environment to provide creative solutions to
issues confronting clients in infrastructure, industry, and the regions and thereby play a part in creating a sustainable society.

Please refer to DBJ’s website for more details on our history and timeline.

Promotion of antipollution measures
Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation): Conversion of manufacturing method for caustic soda (Yamaguchi Prefecture)
Promotion of conversion to non-polluting manufacturingmethod for chemical industry

Demonstration of safety net function(Reconstruction from theGreat Hanshin-Awaji Earthquake)
Hankyu Corporation: Earthquake reconstruction work
(Hyogo Prefecture)
Recovery work on traffic infrastructure damaged by theearthquake

Response to
the 2008 Global Financial Crisis

Great East Japan Earthquake disasterand crisis response

Crisis response to impact of
COVID-19

The financial crisis in the autumn of 2008 precipitateda global financial crisis. As this situation impaired thefunctioning of the bond markets, corporate cash flows
worsened. DBJ responded promptly with Financial Crisis
Response Operations.

Joban Kosan Co., Ltd.:
Spa Resort Hawaiians (Fukushima Prefecture)
Support for a theme park that became a symbol ofreconstruction after the Great East Japan Earthquake

Through the designation of the COVID-19 pandemic asa crisis by the Japanese government, DBJ, as a designated financial institution, responded to the issues surrounding COVID-19 by conducting Crisis Response
Operations in a timely and optimal manner through thecooperation of private financial institutions.

Rebuilding andReinforcement ofInfrastructure

Creation, Conversion,and Growth in Industry

Self-Reliance andRevitalization of
Local Economies

Rebuilding of energy systems, more advanced transportation networks, creationof attractive communities

Commercialization of newtechnologies, businessrestructuring to improve­productivity and hone competitiveness, business development in global markets

Industrial revitalization basedon regional characteristics,
overseas business development, response to inboundtourism, business succession

Rebuild energy andtransportation infrastructure,
upgrade public infrastructure
Promote urban growth

New technologies and businesses(promote innovation)
Reorganization
Overseas expansion

Solve issues specific to each region
Play a role connecting regions toTokyo, regions to regions,and regions to the world

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Development Bank of Japan Inc.
Integrated Report 2021

Sustainability Management

Sustainability Management

9

Value Creation Process

Value Creation Process

MissionVision 2030

Value Creation Story

As a leader in sustainability management, the DBJ Group seeks to promote sustainable development in Japan andworldwide by offering solutions to issues facing clients and society as a whole.
The sustainability management targeted by the DBJ Group consists of a business model that leverages Group capabilities in fields including integrated investments and loans and consulting and advisory services. Our business model isdesigned to raise economic and social value simultaneously in the pursuit of a sustainable society. We work constantly
to improve our value creation process through collaboration and dialogue with stakeholders, seeking to refine our sustainability management and enhance the value we create.

Our Three Priority Areas
Rebuilding and Reinforcementof Infrastructure

Creation, Conversion, and
Growth in Industry
Commercialization of new technologies,
business restructuring to improve productivity and hone competitiveness, businessdevelopment in global markets

Industrial revitalization based on regional
characteristics, overseas business development, response to inbound tourism, business succession

Solving Challenges in Priority Areas through Sustainability Management
For customers in priority areas (infrastructure, industry, and the regions, which were decided inview of DBJ’s functions to date and opinions received from stakeholders), the DBJ Group provides
integrated investments and loans commensurate with risk appetite along with consulting and advisory services. For our investor clients, we offer syndication and asset management services. As
financial professionals offering creative solutions for the different issues faced by its customers,
DBJ contributes to the creation of a sustainable society aligned with the SDGs.

Strategy

Rebuilding of energy systems, moreadvanced transportation networks, creationof attractive communities

Self-Reliance and Revitalization of
Local Economies

Sustainability Management
Integrated Investment and Loan
Services That Contribute to
Resolving Social and Client Issues

The DBJ Group’s Management
Capital Communication

Economic
Value
Creation

Corporate GovernanceOutcome of business activities

Risk Capital Finance

Financial CapitalSocialValue
Creation

Creation of Diverse Financial
Deal Opportunities

Balancing Economic and Social Value

Human CapitalBusiness
activities in tune
with risk
appetite

Increase andconversion ofcapital valueIntellectual
CapitalCrisis Response Operations• Financing• Investment• Consulting and advisory• Asset management• Special Investment Operations

Investment of management resources

The DBJ Group works to promote industries and initiatives withthe potential to serve as pillars for Japan’s economy and society. We offer up solutions for current issues affecting industries
and our customers and examine hypothetical and envisioned
changes to both groups amid the rapid changes occurring in
our society.
As mandated under the DBJ Act, we also rapidly and accurately undertake Crisis Response Operations as required byevents such as major natural disasters and financial market
instability. We contribute to the sustained growth of society

through Group measures to create new industries and support
while responding to crisis events, always taking the needs ofour customers and the community into consideration.
Implementing the DBJ Group’s business model requires
unique resources. While sound financial capital is a vital support, we also strive for the integrated expansion of financial andnonfinancial capital, using clear definitions for the human capital, intellectual capital, and relationship and social capital that
impact on our financial value creation in the long term.

Corporate Data

Relationship andSocial Capital

Sustainability
Management for Both
Economic andSocial Value

Provision of Our Knowledge• Crisis Response Operations

Corporate Governance and Risk Management

Communication with Stakeholders

Customers

Communities

Employees

Financial institutions

Investors

Shareholders etc.

Building a Foundation for Sustainability Management throughCommunication with Stakeholders
Communication with our stakeholders helps us continuously
improve our sustainability management, our unique value creation process. As part of this process, the Advisory Board, anadvisory body to the Board of Directors, and the Special
Investment Operations Monitoring Board, receive third-party
advice from outside experts and outside members of the Boardof Directors. Through communication in its daily operations
with stakeholders, including customers, regions, financial institutions, investors, and shareholders, the DBJ Group reaffirms
its functions and examines how those functions should evolvein the years to come.

Data Section

Advisory Board
Special Investment Operations Monitoring
Board

Long-running, continuous collaborationand dialogue

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Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Message from the President

11

Message from the President

Value Creation Story

In tune with the changing needs ofsociety and our customers, the DBJ Grouphelps realize a sustainable society by promoting
sustainability management while balancing
economic and social value.

Strategy

Hajime Watanabe
President and CEO
Development Bank of Japan Inc.

Corporate Governance

Our Response to the COVID-19 Crisis¥103.9 billion in financing to 64 cases. At the request of thegovernment, we set up a special team in March 2021 tostrengthen time-limited and concentrated support for businesses severely impacted by the ongoing pandemic, such as
those in the hospitality sector. Through these and other measures, we are focusing on rapidly and properly implementing
Crisis Response Operations while collaborating and coordinating with private financial institutions to address the needs ofcustomers adversely affected by COVID-19.
In Special Investment Operations, we created the GrowthFund for Coronavirus Revival in May 2020 with the aim ofbacking our customers’ initiatives to develop new businesses
and collaborate across different industries in order to recoverand grow from the impact of COVID-19.

The Role of the DBJ Group and Our Achievements to Datebubble economy and its collapse. In more recent years, wehave addressed the declining birth rate and aging population,and become a leader in the areas of globalization and growing
environmental and disaster awareness. The past decade alone
has seen dramatic change in the wake of the global financial
crisis and such major events as the Great East JapanAs we deal with the unprecedented, long-term impact of
COVID-19, the future is sure to present further changes andchallenges. While monitoring initiatives across all industries on
the path to carbon neutrality by 2050, a global movement, andin keeping with our unwavering mission, we will take a flexible
approach to issues faced by regions and our customers as awhole, staying true to our core values and being mindful of ouraction guidelines.
Our Mission: Design the future with financial expertise
Our Action Guidelines:• Responsibility to future generations• The customer’s perspective• Outstanding service• Commitment and cooperation
Our Values: Initiative and Integrity

Vision 2030 and Priority Areas
In 2015, with the aim of shaping our business vision around alonger-term outlook, we gave fresh thought to the role of DBJ
in the years leading up to 2030. In the course of our debate,
we identified a number of changes in the external environment
with a significant impact on our stakeholders: Japan’s declining

population and its climate and energy issues in the context ofthe global effort to build a sustainable society; intensifying
global competition; and innovations in digital technologies suchas AI and fintech. Based on the roles we have undertaken andthe value we have realized over this time, we determined theData Section

Since the days of its predecessors, Japan Development Bankand Hokkaido-Tohoku Development Finance Public
Corporation, the DBJ Group has worked to promote Japan’ssustainable development. We have achieved this by responding flexibly to the issues of the day, through the periods of
postwar reconstruction, high and stable growth, and theEarthquake. Against this backdrop, the DBJ Group has developed new initiatives to address social expectations with an eye
on the future, and the Group itself has undergone majorchanges. We have achieved this by responding flexibly to theissues of the day—for example, through the periods of postwar
reconstruction, high and stable growth, and the bubble economy and its collapse. In more recent years, we have addressed
the declining birth rate and aging population and become aleader in the areas of globalization and growing environmental
and disaster awareness.
Specifically, the DBJ Group has firmly established a unique,integrated investment- and loan-based business modelthrough the development of Crisis Response Operations tocope with extraordinary events such as earthquakes and global
financial crises, and through measures to enhance the supplyof risk capital for subsequent growth.

Corporate Data

COVID-19, having become a pandemic since its outbreak in
December 2019, has had an enormous impact on economic
activity in Japan, constricting the travel of people inside Japanand around the world. In response to the unprecedented crisis,
the DBJ Group is leveraging the experience it has gained
responding to other crises, such as the global financial crisisand the Great East Japan Earthquake. DBJ set up a consulting
service desk in January 2020. Then in March 2020, theJapanese government declared the COVID-19 pandemic acrisis. As a designated financial institution, the DBJ Group concentrated all of its energy on rapidly and appropriately implementing Crisis Response Operations.
As of March 31, 2021, we have already extended 345 Crisis
Response Operations worth ¥2,231.8 billion and, through theRegional Emergency Response Program, provided a total of12

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Message from the President

and our customers in industry and infrastructure, steadily
implementing each initiative while respecting the views of
stakeholders. We will take the lead in business and market creation by leveraging our ability to properly evaluate and addressa broad range of risks. At the same time, as we respond to the
COVID-19 crisis, take steps toward carbon neutrality and lookforward to 2030, we will fulfill our unique role in the economy
and society by taking action during times of crisis and otherwise responding to social demand.

Message from the President

Business Profit and Loss (Consolidated)(¥ billion)

FY2019FY2020YoY change

Gross ordinary income

164.3

164.1

(0.1)

Loans

76.6

91.7

15.0

Investment

68.2

47.0

(21.2)

19.3

25.3

5.9

Operating expenses

Fee and commission income(57.1)(56.7)

0.4

Net ordinary income

107.1

107.3

0.2

4.0

0.7

(3.3)

(28.1)(34.2)(6.1)

Other extraordinary items

Sustainability Management at the DBJ Group

Loans

4.5

(24.9)(29.5)(32.7)

(9.3)

23.3

Income before income taxes and minority interests

83.0

73.8

(9.2)

Total income taxes(31.5)(26.9)

4.5

Current net income

51.5

46.8

(4.7)

Net income attributable to non-controlling interests

1.0

1.5

0.5

Net income attributable to owners of the parent

50.4

45.2

(5.2)

Investment

Note: Business categories are those used in business management.

as a rallying cry, the DBJ Group will serve as a nodal point andcatalyst across industries, customers, and generations.
The third aspect to note is the GRIT Strategy (see page 17),concrete initiatives created by the Group to enable it to fulfill

the abovementioned role. With the realization of a sustainable
society as our ultimate goal, we will collaborate with customers
and all other stakeholders on Green, Resilience & Recovery,
Innovation, and Transition & Transformation initiatives.

Fiscal 2020 Results
In its results for fiscal 2020, DBJ generated net income of¥45.2 billion, a decline of 10% from the previous fiscal year,
due to owing to an increase in valuation allowance in light of
the COVID-19 pandemic. We will continue to focus Crisis

Response Operations on issues related to the pandemic, while
also helping our customers rebuild their finances and takemeasures to recover and grow from the pandemic.

issues become inseparable from the business challenges facedby our customers, we must work to solve issues from the customer’s perspective. With this in mind, we unveiled our Fifth
Medium-Term Management Plan for fiscal 2021 onward.
There are three key aspects to note in the Fifth MediumTerm Management Plan.
The first is that the most important tenet of the plan centerson the DBJ Group’s corporate philosophy: the balancing of
economic and social value.
As the second aspect, due to the pandemic the Group recognizes the need to accelerate its initiatives for digitalizationand sustainability given the global movement to becomecarbon neutral by 2050, a crucial milestone on the path to realizing a sustainability society. To advance these programs, wemust collaborate more with our customers and private-sector
financial institutions, as collaboration across sectors has
become even more important than before. With “connections”

The DBJ Group’s Special Investment Operations are conducted as mandated in revisions made in 2015 to theDevelopment Bank of Japan Inc. Act. Utilizing our experiencein supplying risk capital, through these operations we haveextended ¥931.5 billion in investments and loans to a total of
132 projects as of March 31, 2021. A total of ¥5,714 billion in
private-sector investments and loans have been triggered by
DBJ’s investments and loans worth ¥893.2 billion. The DBJ
Group will continue to supply growth capital in collaboration
with private financial institutions. The Group also has an extensive track record in regional revitalization projects and is keen
to engage in future initiatives with local financial institutions willing to help create distinctive regional communities.

In May 2020, DBJ established the Growth Fund forCoronavirus Revival to help customers recover and grow fromthe COVID-19 pandemic. In February 2021, DBJ created theGreen Investment Fund to strongly support initiatives that help
realize a greener society. In March of the same year, we also
set up the DBJ Innovation and Life Sciences Fund for the purpose of supporting innovation and sharpening competitivenessin the life sciences industry. At meetings of the Special
Investment Operations Monitoring Board, which convenes
twice a year, the opinions of stakeholders are taken into consideration when conducting operations.

 evelopment of Human Resources Focused on Best Practices inD
Sustainability Management
Sustainability management, a key to the DBJ Group’s value
creation process, relies above all on personnel who share thecore values of initiative and integrity and who display the four
elements of our core corporate values in the pursuit of balancing economic and social value. Officers and employees of the

DBJ Group have inherited the core corporate values of longterm perspective, impartiality, public mindedness, and reliability,
which have evolved over the years in the course of our business. Bolstered by these corporate values, the Group has consistently risen to meet the challenges of the times. We always

Data Section

The DBJ Group has drawn up and implemented four mediumterm management plans since it became a joint-stock company. While enhancing operations for supplying risk capital,
DBJ is working to expand financial services that integrate
investments and loans for customers in industrial fields andthree infrastructure fields: energy, transportation, and urban
development. In tandem with this effort, we are increasing thesophistication of our risk management capabilities.
With dramatic changes underway around the world amid
increasing uncertainty due to the pandemic, DBJ drew up its
Fifth Medium-Term Management Plan while backcasting fromits long-term vision, Vision 2030. The Bank is also taking heedof four major social issues that are having a significant impact
on economies and communities worldwide: the advancementof digitalization, the decline of working-age populations, internationalization, and sustainability. The idea of capitalism isbeing tested more than ever before by this pandemic. As social

Special Investment Operations

Corporate Data

Fifth Medium-Term Management Plan

Corporate Governancecapital to deal with related issues, the DBJ Group will take thelead in creating industries and initiatives that can serve as pillars of Japan’s economy and society in the years to come. At
the same time, Crisis Response Operations will play an important role, undertaken with flexibility and precision as required byevents such as major disasters and instability in financial markets.
As we move ahead with these services, we are also honing
our strengths in relationship capital (as exemplified by robust
networks in industry, government, and academia), sound financial capital, and human capital sharing a common set of corevalues. We believe in the importance of constantly improving
our sustainability management processes through dialogue
with external stakeholders, centering on the Advisory Boardand the Special Investment Operations Monitoring Board of DBJ.

Strategy

The DBJ Group practices sustainability management as a meansof creating value with a focus on three priority areas. By sustainability management, we mean working to create economic
and social value by providing the solutions needed to create
new industries and value through innovation, by responding
during times of crisis, and by making other contributions
toward the building of a sustainable society, all while being
guided by the needs of our customers and society as a whole.
To this end, we must accurately understand the current
issues affecting industries and our customers, in addition tolonger-term trends and issues in society and the impact they
may have on our customers and specific sectors. Leveraging
our knowledge to produce future visions through research andanalysis, and sharing these visions with customers and regional
communities while offering financial solutions such as risk

Gains on reversal of reserves, depreciation, etc.,
of written-off claims

Value Creation Story

best areas in which to use our strengths over the longer termin the interests of a sustainable society. Vision 2030 was theresult. Drawn up in 2017, this long-term vision sets infrastructure, industry, and regional economies as the three priority
areas (materialities) for the DBJ Group’s initiatives. Our contributions in these areas will be consistent with the Group’s
course so far, and we believe they will be in line with what society and stakeholders expect from us in the future.
To fulfill our mission, we will work as financial professionals
to enhance the added value provided to regional communities



13

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Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

15

Our Response to COVID-19

Message from the President

Implementation of Crisis Response Operations
Operations as a designated financial institution. DBJ will continue to collaborate and coordinate with private financial institutions to meet the needs of businesses that have been adversely
affected by the COVID-19 outbreak. DBJ will enhance collaboration with regional financial institutions and ready its uniquecapital supply systems, including the Regional Emergency
Response Program, while considering the nature of this crisisin terms of securing jobs and maintaining credit.

Value Creation Story

In response to the damage caused by the COVID-19 outbreak,the DBJ Group opened consulting service counters at the endof January 2020 and moved forward with its unique Regional
Emergency Response Program in February. On March 19, asa designated financial institution, DBJ concentrated on Crisis
Response Operations once the Japanese government designated the COVID-19 pandemic a crisis.
Led by the Coronavirus Response Headquarters, DBJ has
moved to rapidly and precisely implement Crisis ResponseState of Initiatives for Crisis Response Operations
2020

Timeline

Improving Collaboration with Stakeholders
in more efforts to contribute to SDGs, a global agenda for2030. On financial markets, interest in the flow of funds is
growing from an ESG perspective. To date, the DBJ Grouphas, through its certification programs and other means,advanced initiatives toward a sustainable society by proactively
evaluating intangible assets not shown on the financial statements based on dialogues with customers. Engaging in dialogue with stakeholders will remain a crucial endeavor as we
continue to fulfill our mission as a front-runner in sustainability
management. It is our sincere hope that this integrated reportwill lead to greater dialogue with all of our stakeholders.

Established Coronavirus Response Headquarters (headed by President and CEO
Hajime Watanabe)

March:Started Crisis Response Operations upon the Japanese government’s declaration ofa state of ­emergency over this crisis

April:First supplementary budget passed by government

May:

Growth Fund for Coronavirus Revival established

June:

Second supplementary budget passed by government

January:

Third supplementary budget passed by government

March:DBJ increased support for restaurant and hotel businesses

Agreements with Regional Financial Institutions
to Coordinate Disaster Response Operations*1• Cooperative agreements signed with approximately 70 regional financial institutions
with objective of appropriately responding to this crisis and contributing to regional
economic development

Status of Crisis Response Operations*1• Crisis Response Operations (total): 345 loans, ¥2,231.8 billion• Regional Emergency Response Program loans (total): 64 loans, ¥103.9 billion

Breakdown of Financing by Sector*1

Breakdown of Financing by Office Type*1

Amount (%)

Amount (billions of yen)

12%
7%
9%

Number (%)
14%

16%
20%

7%
24%

23%

36%
6%

26%

Transportationequipment
Other manufacturing
Transportation
Wholesale
Tourism*2
Othernon-manufacturing

Branches¥401.6 billion

Number (%)
Branches

Head Office

230

179

Head office
Branches

17%
83%

56%

44%

Head Office¥1,934.2 billion*1 As of March 31, 2021
*2 Total for hotels, retailers, and restaurants
Corporate Data

The situation around the world and in Japan, including theimpact of the pandemic, looks increasingly uncertain as majorchanges continue to occur. Over the next decade in particular,
given the aging and declining population in Japan, we expect
the advancement of digitalization to accelerate after the pandemic ends, resulting in sweeping changes in the economy andsociety as initiatives across industries for achieving carbon
neutrality by 2050 gain momentum. We also expect to see theintensification of global competition, new collaborations andcooperation across sectors and companies in the business
community, changes in business models, and the emergenceof new ecosystems. Based on its Fifth Medium-Term
Management Plan, the DBJ Group will continue to supply risk
capital through integrated investments and loans with theintention of leading the way toward a sustainable society in the
future, while taking on challenges for new initiatives together
with its customers.
Furthermore, DBJ will continue with efforts to build a moresustainable society in line with this global movement. Recently,
the public and private sectors have come together to engage

2021

March:

Corporate Governancetelecommuting and a flex-time work system, and we aim toenhance our paid parental and caregiving leave programs.
As part of our response to COVID-19, we are encouraging
employees to take a flexible approach to working at home orcoming to work on staggered schedules, because the healthand safety of our executives and employees are of paramountimportance. We are also making every effort to update our systems so that Crisis Response Operations can be smoothly
implemented.

Opened consulting service counters
Added this crisis to its unique Regional Emergency Response Program

Strategy

strive to enhance our skills in corporate and project assessment. Our know-how, capability, and developed networks reinforce the DBJ Group’s core asset of expertise in long-term
screening and assessment based on a comprehensive viewof regional and current issues.
The employees embodying the Group’s values should be
able to pursue their activities creatively and in good health, andwe are promoting workstyle reforms for this purpose. To bringmore flexibility to working patterns, we have introduced

January:
February:

Increase in Support for Restaurants and Hotels
Well over a year into the pandemic, the business environment
became even more difficult for companies operating restaurants and hotels, which have been major employers. At theirrequest, the government stepped in to provide further assistance to these companies.

In response to this request, to offer more support to companies operating restaurants and hotels during these trying times,
DBJ is implementing the following measures while fully utilizing
Crisis Response Operations as a temporary scheme while thepandemic lasts.

President and CEO
August 2021

(2) A ccelerate the screening of companies operating restaurants and hotels(4) Reduce interest rate burdens by adjusting interest rates of subordinatedcapital loans provided to mid-tier companies and large enterprises in therestaurants and hotels sector(3) P rovide support unique to DBJ by temporarily suspending private sector
collaborative financing rules in Crisis Response Operations(5) Establish a preferred stock underwriting fund targeting companies operating restaurants and hotels

https://www.dbj.jp/topics/dbj_news/2020/html/20210331_203199.html
Please refer to the DBJ website for more information about assistance for restaurant and hotel companies (Japanese only).

Data Section(1) Set up the Crisis Response Operations Special Response Office andestablish the Restaurants and Hotels Team therein

16

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Fifth Medium-Term Management Plan:

17

Fifth Medium-Term Management Plan: Innovation for Sustainability

Innovation for Sustainability

Response to drastic changes in the economy and society
financial institutions, the DBJ Group utilizes risk capital and its
knowledge to help customers solve their issues and thereby
contribute to sustainable growth. Against this backdrop, we
formulated as an action plan our Fifth Medium-Term
Management Plan: Innovation for Sustainability. Due to the still
unpredictable impact the COVID-19 pandemic will have on theeconomy and society, the plan spans five years, longer than
the three-year periods of previous plans.

Achievement of Goals with Customers

EnergyUrban
development

Transportation

New fields

G

Green

Connect industries
Draw out the potential of industries

Connect generations
Pass on a strong, resilient society to future generations

Areas

R

Resilience &RecoverySupport new regional development

T

Transition /Transformation

Knowledge creation

In line with its long-term vision, the DBJ Group devised the
GRIT Strategy as a core action for 2030, with the aim ofcontributing to the realization of a sustainable society by
2050 through the advancement of initiatives to marshal
resources. While starting with the specific needs of customers, the GRIT Strategy aims to build industry foundations aswell as resilient, safe and worry-free regions andSupport with integrated
investments and loans

GRIT Strategy

Monitor industries and regions and provide information

Intellectual capital
Reform work approaches
Shift to workstyles adapted
to changes in businessenvironment

communities, along with the realization of a green society.
Toward this goal, the DBJ Group is engaged in initiatives atinnovations that can be commercialized and objectively
assessed, as well as strategic initiatives for the transition to asustainable society on the basis of current business base.
To advance the GRIT Strategy, DBJ set up the 2050 Growth
Strategy Headquarters, directly led by the President.

Vision 2030

Realization of sustainability

Priority areas (materialities)
Infrastructure

Industry

G

R

Resilience &Recovery

Green

I

Innovation

Green

2030

Initiatives to become carbon neutral with established technologies

Relationship capital
Deepen collaboration andcooperation

Resilience & Recovery
Initiatives that support the construction of a flexible, strong, safe, and secure regional, social,and industrial infrastructurePublic–private collaborationand partnerships

T

Transition /Transformation

2020

DBJ plans to disclose financial targets for fiscal 2025 after revising them in May 2023.

Fiscal 2025
targets(consolidated)

2050 Growth Strategy Headquarters

Profitability

Financial soundness

Gross ordinary
income*1
About ¥200
billion

Net income attributableto owners of the parent

Cost ratio*2

Total assets

ROA*2

ROE*2

Capital adequacy ratio*3

About ¥85 billion

About 32%

About ¥21
trillion

About 1%

About 3%

About 14%

*1 Excludes credit costs*2 Cost ratio and ROA versus gross ordinary income. ROE versus net income*3 Common equity Tier 1 risk-weighted capital ratio (Fifth Medium-Term Management Plan estimates on a finalized Basel III basis)(Promotion of GRIT Strategy)

https://www.dbj.jp/en/co/info/plan.html
Please refer to the DBJ website for more information about the Fifth Medium-Term Management Plan.

Innovation
Initiatives for innovations that are commercially
feasible from a long-term perspective

Transition / Transformation
Strategic initiatives to steadily lead transition
toward carbon neutrality and other goals, basedon current business foundation

Data Section

Financial Targets

2050

Regions

Corporate Data

Outcomes of business activities

Collaboration and cooperation

Knowledge

G R I T Strategy

Growth of employees
supports growth oforganizations

Innovation

Reinforce platforms for supplying risk capitalImprove the managementof risks and returns
Increase sophistication ofcapital procurement
methods

Human capital
Train personnel for

Functions

Value creation

Financial capital

Non-financial capital

I

Connect regions

Managementfoundation strategy

Corporate GovernanceInput of management resources

GRIT Strategy

Industrial fields

catalysts that facilitate the taking on of new challenges
above and beyond the borders defining sectors andcorporations.
The DBJ Group will take on these challenges without fearing change itself, using change near at hand as a catalyst.

Crisis Preparation

Business Strategy

Infrastructure fields

Responding to changes in society caused by D.A.I.S.
requires efforts that exceed traditional concepts, and in thisregard it is important to collaborate and cooperate with customers and private-sector financial institutions. The DBJ
Group aims to create value with its stakeholders by advancing initiatives to bring them together through nodes andStrategy

Balance with Social Value

Sectorrepresents sustainability (contribution to a green and sustainable society).
The pandemic has accelerated the changes toward theabovementioned digitalization and sustainability megatrends,
which are also business issues faced by our customers.

Connecting industries, regions, and generations to create value

Response to drastic changes in the economy and society

Changes for the Future

The DBJ Group uses D.A.I.S. to refer to four megatrends
impacting the Japanese economy and society. “D” stands
for digitalization (digital transformation of business), “A”
means aging (the contraction in the working-age population
due to a declining birth rate and aging), “I” stands for internationalization (overseas business development), and “S”

Value Creation Story

Since becoming a joint-stock company in 2008, the DBJ
Group has implemented Medium-Term Management Plans
with the objectives of increasing the supply of risk capital for
integrated investments and loans and of advancing risk management functions.
Recently, sweeping changes have occurred in demographics and social structures, and social issues have become
inseparable from the business challenges faced by our customers. While collaborating and cooperating with private

18

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Key Initiatives toward Realizing SustainabilityAt the DBJ Group, we engage in a variety of initiatives aimed at realizing a sustainable society through a business model
built upon features such as integrated investments and loans and consulting and advisory services.

19

Key Initiatives toward Realizing Sustainability

Increasing Visibility on Social Values: DBJ SDGs Mapping

Achievements in Fiscal 2020

Policy on Sustainability

Scope: Fiscal 2020 investments and loans
Total amount: ¥5,786.7 trillion
Calculation method: The following process was used by
all DBJ employees.

To realize its mission of pursuing sustainable development for Japan and the world, the DBJ Group strives to achieve both economic
and social value through its unique business activities by embracing sustainability management. In 2017, we formulated our Policy
on Sustainability as a part of our efforts to continue to proactively engage in dialogue with all stakeholders and to enhance our value
creation process.
The DBJ Group’s main initiatives based on this policy are outlined below.

STEP 1 Select up to two SDGs categories for each person in

charge to contribute to
STEP 2 Check fairness of mapping (reviewed by a special
STEP 3 Express monetary amounts (verified twice) in five stages

https://www.dbj.jp/en/sustainability/management/regular.html
Please refer to the DBJ website for details on our Policy on Sustainability.

More than ¥2.0 trillion ¥1.5–¥2.0 trillion ¥1.0–¥1.5 trillion ¥0.5–¥1.0 trillion Less than ¥0.5 trillion 

Main Initiatives
DBJ will advance initiatives from the customer’s perspective based on its GRIT Strategy under theFifth Medium-Term Management Plan to realize a sustainable society.

See page 16

Renewable Energy Measures

With the aim of promoting the use of renewable energy, DBJ has engaged in solar and wind power
generation projects in Japan since their implementation and participated in advanced case studies
overseas.

See page 23

Signatory to Poseidon
Principles

DBJ has become a signatory to the Poseidon Principles, a commitment to help address climatechange in the marine transportation industry from a financial perspective.

See page 25* Crisis countermeasure loans in fiscal 2020 (¥2,229.3 billion) are counted as
initiatives that contribute to “SDG9: Industry, Innovation and Infrastructure” andtreated as outlying figures

Comments from experts on SDGs Mapping

Established in 2011, DBJ Green Building Certification recognizes buildings with exceptional consideration for society and the environment and provides support to those who own and operate such
real estate.

See page 26

Creation of DBJ Sustainability
Certification Programs and
DBJ Sustainability Linked
Loans with Engagement
Dialogue

DBJ supports the efforts of its customers on the environmental, disaster prevention, and healthmanagement fronts through a menu of investments and loans that take into account the non-financial information of companies through its proprietary screening system. Moreover, it created DBJ
Sustainability Linked Loans with Engagement Dialogue as a way to improve the visibility of customer initiatives on sustainability through dialogue.

See page 30

Issuance of Sustainability
Bonds

DBJ became the first issuer of green bonds in Japan (2014) and has also been issuing sustainability bonds each year since 2015.

See page 43

Adoption of Equator Principles

In accordance with the Equator Principles, DBJ will identify the environmental and social risks
associated with a project, assess their impact, and request that the project operator take the necessary measures to mitigate such risks and impact.

See page 66

TCFD (the Task Force on
Climate-related Financial
Disclosures) Scenario
AnalysisUpon identifying five technologies relevant to its business activities—carbon capture and storage(CCS), electric vehicles (EVs), biomass, hydrogen, and renewable energy—from those highly correlated to climate change, DBJ analyzed and assessed the growth opportunities for each sector
through separate scenarios based on the development and proliferation of technologies.

United Nations Environment Programme
Finance Initiative (UNEP FI)
Special Advisor

Cre-en Inc.
Representative Director

Takeshi Mizuguchi

Takejiro Sueyoshi

Ayako Sonoda

It is interesting that DBJ is trying to associate
SDGs with internal activities by scrutinizing thedetails of individual investment and loan projects and linking them to SDGs. As DBJ works
to deepen contributions to SDGs, such as byconducting evaluations at multiple stages,
I believe this will lead to changes in behavior
and the management of targets, from the standpoint of increasing the true impact of activities.

I think it is unique how DBJ uses the SDGs
framework to get stakeholders to better
understand the social value that DBJ provides.
Changes must be made in the economic andsocial structure in order to achieve SDGs. To
spur changes in the economy and society by
2030, it will be important for DBJ to convey its
vision and values in the priority fields it targets.

I totally understand this effort at SDGs
Mapping as it links individual projects down
to the level of the 169 targets of the SDGs.
I believe this effort will be useful in furthering
dialogue with stakeholders by using thecommon language of SDGs to describe DBJ’svalue system and strategies, as staff discussvisions for the future and recognize social
issues that need to be tackled.

Creation of Policy on Investments and Loans with Environmental and Social Considerations

See page 66

Businesses subject to this policy
1. Businesses prohibited from receiving
investments and loans regardless of sector
2. Businesses that require additional due
diligence for investments and loans
regardless of sector
3. Policies for specific sectors(1) Weapons(2) Coal-fired thermal power generation(3) Palm oil (4) Lumber(5) Coal mining (6) Oil & gas(7) Large-scale hydroelectric power

See page 54

https://www.dbj.jp/en/sustainability/
Please refer to the DBJ website for more information about the policy on Investments andLoans with Environmental and Social Considerations.

Data Section

Corporate Governance Framework

DBJ aims to balance economic value and social value in its unique business activities basedon sustainability management, with the objective of achieving its mission of sustainable
development in Japan and the world. In 2017, DBJ formulated its Policy on Sustainability tocontinuously improve the value creation process and enhance dialogue with stakeholders.
DBJ has formulated and disclosed the following initiative and policies for businesses andsectors with a strong likelihood of having significant risks or negative impacts on the environment and society, in the interest of extending environmentally and socially sound investments and loans.
The policy was put into practice on October 1, 2021,
and will be revised as deemed necessary in the future.

Corporate Data

Establishment of DBJ Green
Building Certification

Takasaki City University of Economics
President

Corporate Governance

Advance the GRIT Strategy

DBJ established the Sustainability Committee to identify important social issues from ESG andother perspectives and to incorporate these matters into its financing, asset management, andother business activities.

Strategy

department)

Establishment of
Sustainability Committee

Value Creation Story

With the aim of engaging in more dialogue with its stakeholders, the DBJ Group began a trial of SDGs Mapping to increase visibility of the social value created through its investment and loans operations. To instill this awareness within DBJ, we are working
to increase the literacy of all employees by creating an in-house portal and text summarizing related knowledge, while advancing
discussions across the organization through the 2050 growth strategy meeting. While advancing our GRIT Strategy, we will
come up with new ways to engage in additional dialogue.

20

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

21

Invigoration and Stabilization of Financial Markets throughPartnerships and Collaboration
The DBJ Group provides unique solutions through optimal partnerships, emphasizing cooperation andcollaboration with other financial institutions and non-financial companies.

Sweeping structural changes

on

Fin
a

esp

sR

Group Companies

In v

es

Governmentt

Government investments
and loans

Regional financial
institutions
Major financial
institutions

Investments
and loans, asset
management

SRI bonds

Business Strategy
P 22

P 22
Energy Sector
P 24
Transportation Sector
P 26
Urban Development Sector
P 28
Industrial Sectors
P 30 Dialogue with Customers to Realize a Sustainable Societysvice

Joint funds

ry

ser

IT andfoundations

iso

Investors

A

Asset management

Risingawareness ofsocial valueAsset

ma na gemen t

Sector Strategy

Area Strategy

P 32
P 32
P 35

Procurement and Management of Funds	DBJ receives funding in various formats, including the procurement and management of funds from institutional investors and financial institutions in Japan and abroad. We use
these funds to supply risk capital to domestic and overseas
customers in the industrial and infrastructure fields.

P 36

	Crisis Response Operations and Special Investment
Operations are mandated by the DBJ Act and are properly
undertaken as operations backed by the unique strengthsof the DBJ Group.

Regions
Overseas

Function Strategy
P 36
P 40
P 41

Special Investment Operations and Crisis Response Operations
Syndication, Advisory, and Consulting Services
Asset Management

Corporate Governance	Crisis Response Operations andSpecial Investment Operations

Strategy

Surveys andconsulting
serviceseAddressing
sustainability

i al(in d Inv e
u st s t
ri a
l

dg

S

Addressing sustainability

Spec

s

Bonds and loans

wle

Sustainabilitytio nOverseas
bases

Kno

I

Developing businessoverseas

s

eO

a
p er

dv

Internationalin gA presentation of the DBJ Group’s various sustainability management
activities from the perspectives of its business and managementfoundation strategiesi

Response to decline inworking-age populationnc

ts
a tio nenpermt O e nt)e n tmm nv e sA

D and S
movements accelerated
during pandemic

Aging

Social issues same as management
issues faced by customers

D

Utilization and development for
digital transformation business

Customers’
point of view

C ri si

DigitalRecovery frompandemic,
growthFinancial
institutions andoperatingcompanies

Value Creation Story

Collaboration andcooperation

D.A.I.S.

The DBJ Group’s
StrategyManagement Foundation Strategy

Provision of Knowledge

P 42
Financial Strategy
P 44
Human Resource Development
P 46
Knowledge and Collaboration
P 49 	Taking the Initiatives to Spread PFS and	Backed by its experience and know-how in industrial andinfrastructure fields as well as in risk analysis and structuring,the DBJ Group creates added value through the provision ofknowledge in such forms as surveys and analyses.

SIB that Solve Social Issues
Corporate Data

Supply of Risk Capital by the DBJ Group
DBJ’s financing operations address diverse risks. These operations include investments (balance of ¥1.6 trillion) and loans(balance of approximately ¥15.6 trillion), ranging from crisis
response loans for emergencies and risk-tailored project
financing to hybrid and mezzanine financing. DBJ AssetManagement Co., Ltd. (DBJAM) has ¥1.5 trillion in capital

entrusted by investors, regional financial institutions, and othercustomers desiring expert fund management. In its work inasset management, DBJAM focuses on assets that allow the
DBJ Group to best apply its strengths. We will continue toenhance the supply of risk capital in order to better meet thediverse needs of our customers.
Mezzanine financing

Investments¥0.9 trillion*¥1.6 trillion

2Overseas locations

Investments / Securities /Asset management• DBJ Singapore Limited• DBJ Europe Limited• DBJ Investment Consulting (Beijing) Co., Ltd.
• DBJ Americas Inc.

• DBJ Capital Co., Ltd.
• DBJ Investment Advisory Co., Ltd.
• DBJ Securities Co., Ltd.
• DBJ Asset Management Co., Ltd.

Research / Consulting

Real estate management /IT services / Shared Service

DBJAM (AUM)¥14.7 trillion¥1.5 trillion*

1(including Crisis Response Operations, structured-financing and asset-financing projects)*1 Portions entrusted by DBJ are eliminated from DBJAM’s assets under management (AUM).
*2 Overlapping portions for structured financing is eliminated from hybrid and mezzanine financing.

Working in unison, the DBJ Group provides diverse, high-value-added solutions forsolving various issues faced by its customers and for solving issues throughout society.

(As of March 31, 2021)• Japan Economic Research Institute Inc.
• Value Management Institute, Inc.

• DBJ Real Estate Co., Ltd.
• Consist, Inc.
• DBJ Business Support Co., Ltd.

Data Section

Loans

The DBJ Group22

Development Bank of Japan Inc.
Integrated Report 2021

Priority Areas

Sector Strategy

Development Bank of Japan Inc.
Integrated Report 2021

Rebuilding of energy systems, more advanced transportation networks, creation of attractive communities

23

Energy Sector

Rebuilding and Reinforcement of Infrastructure
Connect with DBJ

Energy Sector

Main Business Fields
Provision of financing and advisory services to companies and projects in thefollowing sectors•E lectricity
•G
 as
•O
 il

Balance of Loans in the Electricity, Gas, Oil Refinery, Heat, andWater Sectors¥

3.3 trillion

Identified Social Issues

Regardless of the issue, it is essential to take medium- andlong-term approaches to solving them as an industry, including
updates to systems. More specifically, it will be necessary to
focus on timelines for the commercialization of novel initiatives
and reaching carbon neutrality in stages, while monitoring theimpact on energy prices and the surrounding environment andscenery as renewable energy becomes a primary source ofelectricity.
The irreversible movement toward carbon neutrality willchange the dynamics of the energy industry, while creating
opportunities for innovation in terms of both software and hardware. We believe that the view that addressing global warming
will constrain economic growth and increase costs will bedebunked, instead holding that it will lead to further growth forJapan as more aggressive approaches are taken to addressing
climate change.

While maintaining strong relationships with customers, we will
focus on reliably supplying capital, including capital funding.
In particular, we are cooperating with other financial institutions to address demand for investments in renewable energy
and the staged transition toward carbon neutrality across entire
industries.
DBJ contributes to the realization of a carbon-neutral society
by supporting innovation in industry, while monitoring policymaking based on Japan’s Sixth Strategic Energy Plan.
Internationally, DBJ supports the business development ofJapanese firms overseas by bringing back home the knowhow it gains from providing investments and loans in foreign
markets.
Through asset management operations in the energy field,
the DBJ Group also endeavors to nurture markets so that institutional investors are able to participate in the domestic energy
market.

https://www.dbj.jp/case/list/?field=energy
Please refer to the DBJ website to see examples and case studies (Japanese only) in the energy sector.

Initiatives in the Renewable Energy Field
DBJ proactively supplies risk and other capital for projects toturn renewable energy into a primary source of electricity, andthe balance of investments and loans in such projects stood at¥276.8 billion as of the end of fiscal 2020.
DBJ gets involved from the initial stages of installation insolar and wind power generation projects in Japan. DBJ alsooffers financing for power transmission and distribution projects
that upgrade the power grid to handle more renewable energy.
To bring the benefits of overseas initiatives back home to
Japan, DBJ also provides financing to offshore wind power
projects in Europe.
The Japanese government has set targets for the energy
mix with the intention of achieving carbon neutrality by 2050.
To achieve these targets, DBJ contributes on the financial side
based on the special characteristics of each energy source,whether it be solar power, onshore or offshore wind power,
biogas, or hydroelectric power.

Renewable Energy* Investment and Loan Balance(¥ billion)
300

276.8
241.9
200

186.9

100

0

110.2

2016

124.2

2017

2018

2019

2020 (Fiscal year)* Renewable energy: Solar power, onshore wind power, offshore wind power, biomass,hydropower, and power grids.

To see details of the GRIT Strategy, please refer to pages 16–17.

Data Section

Strategy

G R I T Strategy Contribute to the Realization of a Sustainable Society

Corporate Data

Identified Risks and Opportunities

In August 2017, DBJ and U.S.-based Excelsior Energy Capital (EEC)—
whose managing partner is Chris Moakley—jointly established the
Excelsior Energy Capital Fund I to invest in renewable energy power
plants in the U.S. EEC was established for the purpose of managing thisfund. Its principal founders are former members of TerraForm Power, oneof the largest holders of renewable energy assets in the U.S.
As the U.S. government shows greater support for renewable energy,
investment opportunities, especially in solar and wind power, areexpected to grow. The fund invests mainly in small and medium-sized
renewable energy power plants, which are expected to be a growing
sources of renewable power. In December 2020, the fund raised morethan $500 million from Japanese investors and leading institutional investors in the U.S. and abroad.
With a high opinion of the fund’s foresight and originality, DBJ has been
involved as a founder and anchor investor. By supplying risk capital torenewable energy projects through the fund, DBJ will stay abreast of thelatest industry trends and expertise in the advanced U.S. electric power
market, facilitating further contributions to the development of Japan’s
energy industry and the realization of a carbon-neutral economy.

Corporate GovernanceIn an external environment experiencing changes in demographics and other aspects of the macro structure, advances in energy
conservation, and more frequent natural disasters, the government has set targets for reducing GHG emissions. To achieve thesetargets, it will be necessary to (1) make renewable energy a primary source of energy, (2) make entire industries carbon neutral instages by using ammonia and hydrogen as fuels, and (3) commercialize novel initiatives in carbon dioxide capture and storage (CCS);
carbon dioxide capture, utilization, and storage (CCUS); and direct air capture and storage (DACS).
With these undercurrents in motion, in order to maintain and expand safe and secure energy infrastructure, it is important to stabilize entire industries by drawing in more participants from a broad range of business fields, by having financial institutions supply asteady stream of capital.

The fund primarily invests in the manner
described above in a bid to boost the proliferation of the distributed power sources necessary for realizing a society with net-zeroemissions. Funds that invest in such projects
are rare. The successful fundraising is an indication that financial investors proactive on the
ESG front have given high marks for the fund’s
strategy.
Utilizing the latest knowledge in the U.S.
energy and financial markets gained throughits participation in the fund, DBJ will contributeto the advancement of ESG investment andthe development of the energy industry in Japan.

Strategy

As of March 31, 2021

Staff Comment

Establishment of Excelsior Energy CapitalFund I to Invest in Renewable Energy Power
Plants in the U.S.

Value Creation Story

The DBJ Group will contribute to the realizationof a decarbonized society worldwide and theglobalization of Japanese energy companies bytaking a leadership role in the financing ofchange in Japan’s energy markets.

Project Spotlight

24

Development Bank of Japan Inc.
Integrated Report 2021

Priority Areas

Sector Strategy

Development Bank of Japan Inc.
Integrated Report 2021

Rebuilding of energy systems, more advanced transportation networks, creation of attractive communities

25

Transportation Sector

Rebuilding and Reinforcement of Infrastructure
Connect with DBJ
The DBJ Group aims to lead in a financial
aspect the growth of the transportation sector
and advancement of transportation networks inJapan. DBJ will also act as a bridge between
Japan’s financial market and the global transportation financing market.
Main Business Fields
Provision of financing to companies andfor projects in the transportation sector

•L
 and
transportation•M arinetransportation•A irtransportation

Balance of Loans in the Transportation
Infrastructure (Transportation Industry) Sector¥

3.2 trillion

Identified Social Issues

Strategy

A variety of issues need to be resolved in order to sustain
growth in the transportation sector and to make transport networks more sophisticated. Proactively contributing to globalscale frameworks for decarbonization will be essential for theborderless movement of people and goods. The DBJ Group
became a signatory to the Poseidon Principles to contribute
financial resources for addressing climate change in the marinetransportation sector, which will be key to achieving theInternational Maritime Organization’s targets for reducing
greenhouse gas emissions over the medium and long term.
To truly understand the issues faced by its customers, DBJ willcontinue to offer financial solutions tailored to diverse needs
and act as a bridge between the global transportation financemarket and Japan’s financial market.

While maintaining relations with customers in the transportation
sector, we will refine our ability to respond flexibly to changes inthe external environment and society. More specifically, DBJ
will further strengthen its optimal financial solutions for quality
projects and assets in the land, marine, and air transportation
fields, as well as supply risk capital to Japanese companies for
sharpening their international competitiveness. Additionally,
DBJ will provide financing opportunities to Japanese regionalbanks and other financial institutions and investors in the global
transportation financing market through improved syndicatedloans. DBJ will focus on providing a range of investment products based on transition financing and investment.

© Ecobunker Shipping Co., Ltd.

G R I T Strategy Contribute to the Realization of a Sustainable Society
Signatory to the Poseidon Principlesof the maritime industry. DBJ decided to become a signatory
to the Poseidon Principles, partly because they tie in with its
GRIT Strategy.
Based on the Poseidon Principles, DBJ will disclose its contribution to reducing greenhouse gases emissions through ship
financing. In addition, it will contribute to developing the marinetransportation sector through steady assistance on multiple
fronts, from addressing stricter environmental regulations in
the marine transportation sector to providing financing for
EBS, which was established to supply LNG fuel to ships inTokyo Bay.

https://www.dbj.jp/case/list/?field=transport
Please refer to the DBJ website to see case studies (Japanese only) in the transportation sector.

To see details of the GRIT Strategy, please refer to pages 16–17.

Data Section

DBJ became a signatory to the Poseidon Principles, a voluntary framework for financial institutions to contribute to initiatives in the marine transportation sector aimed at reducing
emissions of greenhouse gases over the medium and longterm. DBJ’s participation is a first among government-affiliatedfinancial institutions in Asia.
Since the end of the Second World War, DBJ has assisted
domestic operators and shippers in rebuilding the Japanesemerchant fleet through financing for shipbuilding. In recent
years, the Poseidon Principles have become a global movement for financial institutions to assist with the decarbonization

Corporate Data

Identified Risks and Opportunities

Corporate GovernanceIn the transportation sector, which has been greatly impacted by the COVID-19 pandemic, the market has temporarily contracted,
but over the medium and long term, the movement of people and goods will increase. Transportation infrastructure supporting thismovement will need to be constantly upgraded. At the same time, it will be necessary to create new services in line with people’schanging behavior, and to reduce environmental impacts. As the country adapts to a shrinking population and an aging society, safe
and secure transportation infrastructure is a field where Japan can proudly lead the world to greater heights.

Through its Special Investment Operations, DBJ has extended financing
to Ecobunker Shipping Co., Ltd (EBS), which supplies LNG fuel to ships
in Tokyo Bay.
In the marine transportation sector, environmental regulations concerning sulfur content in ship fuel were tightened in January 2020, making it
impossible to use traditional heavy fuel oil (HFO) as in the past. The
number of ships using LNG as an alternative fuel is expected to increase,
as LNG has a lower environmental impact, with 100% less sulfur and
25% less CO2 than HFO.
Against this backdrop, EBS was established by DBJ, Uyeno TranstechLtd., Sumitomo Corporation, and Yokohama-Kawasaki International Port
Corporation to deliver LNG fuel to ships in Tokyo Bay. DBJ supplied risk
capital for the construction of LNG bunkering vessels and for long-termbusiness financing.
This financing will facilitate the spread of LNG bunkering vessels withlower environmental impact. At the same time, it will also upgrade fuelsupply infrastructure and enhance the attractiveness and international
positioning of Tokyo Bay in Asia. Working in partnership with other shareholders in the venture, DBJ will help EBS take the marine transportationindustry to the next level.

Through financing of this project, as a financial
institution that evaluates and analyzes businesses, and also as a shareholder, DBJ is able
to get involved in negotiations with shipbuilders and new business development with customers. Through regular loan and investment
operations, DBJ was able to gain the perspective of marine transportation companies that isotherwise difficult to obtain.
DBJ supports the launch and growth of thisbusiness through financial support and audit
operations, while publishing reports about theship fuel market, including LNG. The LNG
bunkering project in Tokyo Bay is an unprecedented one with many uncertainties.
Leveraging the unique knowledge andstrengths of shareholders in this project, we
aim to help reduce environmental impact andreinforce the Tokyo Bay’s competitiveness as
an international port.

Strategy

As of March 31, 2021

Staff Comment

Upgrading LNG Bunkering Vesselsin Tokyo Bay

Value Creation Story

Transportation
SectorProject Spotlight

26

Development Bank of Japan Inc.
Integrated Report 2021

Priority Areas

Sector Strategy

Development Bank of Japan Inc.
Integrated Report 2021

Rebuilding of energy systems, more advanced transportation networks, creation of attractive communities

27

Urban Development Sector

Rebuilding and Reinforcement of Infrastructure
Connect with DBJ
The DBJ Group’s vision is to grow alongside cities
by helping with the maintenance, renewal, andexpansion of urban functions. The DBJ Groupalso aims to grow with the real estate financing
market as a market-stabilizing mechanism.
Main Business Fields
Loans and investments in urban development projects undertaken by developers; special-purpose companies forowning real estate; loans and investments for real estate investment trusts(REITs); and management of DBJ Green
Building Certification with the Japan Real
Estate Institute• Urban development business• Real estate
financing• DBJ Green
Building
Certification

Balance of Loans in the Real Estate Sector¥

1.9 trillion

Identified Social Issues

Strategy

The field of urban development is large in business scale, and it
has a major impact on society through investments, loans, andreal estate management. While addressing the decline in theworking-age population, the purpose and value provided byreal estate will probably have to be redefined to align moreclosely with evolving social values, including changes in workstyles. The sustainable development of cities in the future will
depend on how new communities are formed today, based on
projected changes in society and the economy with due consideration paid to the impact of the COVID-19 pandemic. As
ESG initiatives accelerate in the real estate industry, many new
businesses are likely to be created. A slow response to thesechanges would pose the risk of falling behind the competition.

DBJ will facilitate urban development through the supply of risk
capital, including financing for developers and individual development projects. With diverse investors becoming involved in
global real estate investment, DBJ will play the increasingly
important role of connecting real estate, a local asset, to global
financial markets. In the ESG field, DBJ and Japan Real Estate
Institute (JREI) continue to jointly operate DBJ Green Building
Certification, which was created in fiscal 2011 as a system toevaluate and certify real estate from an environmental andsocial perspective. We will also promote the use of a data platform for quantifying real estate management and ESG performance through an initiative at Arc Japan Inc., which wasestablished in fiscal 2020.

https://www.dbj.jp/en/service/program/g_building/Please refer to the DBJ website to see examples and case studies (Japanese only) in

Please refer to the DBJ website to see more information about DBJ Greenthe urban development sector.

Building Certification.

Establishment of Arc Japan Inc.
Data platform business that supports the decarbonization of society by monitoring
the environmental impact of real estate
DBJ jointly established Arc Japan, Inc. with Arc Skoru Inc. andWoonerf Inc.
Approximately 40% of the world’s indirect emissions of CO2
are said to come from the construction of real estate, including
homes. The real estate market is expected to step up its efforts
to decarbonize by improving the comprehensive monitoring ofenvironmental loads in real estate properties owned or used bya wide swath of businesses, in addition to buildings that haveobtained real estate environmental certifications.
Arc is the name of Arc Japan’s data platform for standardizing
the environmental performance of real estate. Users of the platform can compare similar types of real estate, including properties
located overseas. The online system scores the environmental
performance of buildings and spaces after users enter data on
water usage and historical greenhouse gas and waste emissions.
Since establishing the DBJ Green Building Certification
system in fiscal 2011, DBJ has promoted ESG in the realestate sector by working with several related parties. Throughthe promotion of the Arc platform, DBJ and Arc Japan intend
to provide a framework that links financing to efforts to visualize
and improve the environmental performance of real estate, thus
facilitating the transition to a carbon-free society and improving
the sustainability of real estate in Japan.

Data Section

https://www.dbj.jp/case/list/?field=development

G R I T Strategy Contribute to the Realization of a Sustainable Society

Corporate Data

Identified Risks and Opportunities

Online meeting between the Kansai Branch Officeand Asset Finance Department

Corporate Governance

Increasing the international competitiveness of cities in Japan is key to enhancing the country’s overall competitiveness. Urban infrastructure, built up since 1945, is due for an upgrade. Seamlessly upgrading urban infrastructure is important from the standpoint ofcreating communities that take the environment and society into account. In Japan, however, the decline in the working-age population is having an impact on demand for real estate. Meanwhile, IT and AI, as well as improvements in market mechanisms, haveincreased the transparency of real estate transactions and the availability of information. Funding and capital strength are likely to
become more influential in economic transactions.

In March 2021, DBJ invested in the JR West Fund No. 1, a privately
offered real estate fund established by West Japan Railway Company and
JR West Real Estate & Development Company (hereinafter, the “JR WestJapan Group”).
In its medium-term management plan, the JR West Japan Group calls
for “enhancing coexistence with local communities and taking on thechallenge of creating new value.” The creation of this privately offered realestate investment fund was in line with these values. The JR West Japan
Group is also looking into establishing a private real estate investment
trust (REIT) in a few years that will mainly invest in properties in areas
along railway lines operated by JR West Japan. As part of these efforts,
we are aiming to combine the JR West Japan Group’s cumulative expertise in integrated rail development with DBJ’s knowledge of real estate
securitization to further enhance the value of areas along the railway lines
by expanding opportunities for community development.
Through its Special Investment Operations, DBJ will support this project’s contribution to the revitalization of regional economies, supplying
capital in conjunction with the creation of real estate securitization markets in areas along the railway lines and improving the attractiveness ofthese areas by advancing the development of railway lines. The project isalso expected to enhance competitiveness by improving value along therailway lines and expanding the real estate business of the JR WestJapan Group.

In Japan, where the population is aging anddeclining, the maintenance and reinforcementof railways has become a serious social issue.
Railways are key infrastructure in cities andregions and play a major role in strengthening
the international competitiveness of cities andinvigorating regional economies.
This initiative to support the acceleration ofreal estate development, which is necessary for
railway companies to increase the value along
their railway lines, is an example of how DBJ’s
accumulated expertise in real estate asset
financing can be applied to urban development
in major cities, while contributing to regional
revitalization and increasing the competitiveness of railways. We believe this initiative helps
solve problems for both customers and society.

Strategy

As of March 31, 2021

Staff Comment

Investment in Private Real Estate Fund
Offered by JR West Japan Group

Value Creation Story

Urban Development
SectorProject Spotlight

To see details of the GRIT Strategy, please refer to pages 16–17.

28

Development Bank of Japan Inc.
Integrated Report 2021

Priority Areas

Sector Strategy

Development Bank of Japan Inc.
Integrated Report 2021

Commercialization of new technologies, business restructuring to improve productivity and honecompetitiveness, business development in global markets

29

Industrial Sectors

Creation, Conversion, and Growth in Industry
Connect with DBJ

Industrial Sectors

Main Business Fields•M anufacturing• Communications, broadcasting, media• Retail and foods•H ealthcare• Hotels, Japanese-styleinns, tourism, etc.

Identified Social Issues

Given the accommodative policies of central banks and theinnovations in fintech and other financial technologies, themeans of disbursing capital should continue to diversify in the
future. To help customers solve their problems, as a financial
institution, DBJ must add value and carve out solutions in
unique ways.
Our customers are ready to reinforce their business foundations through industry realignment, tap into changing demandduring the pandemic, and rebuild supply chains around theworld. At the same time, they will probably pursue innovations
and commercialize new technologies, in addition to developing
business overseas again in search of growth opportunities.
While staying abreast of these trends as a financial institution,
DBJ must flexibly and organizationally stay in step with its customers pursuing digital transformation and changes acrossindustry boundaries.

Backed by our deep specialist knowledge of the industrial sectors we cover and of individual customers, we fully leverage ourunique network rooted in various financing functions, knowledge, utility, and neutrality to support our customers andresolve issues in diverse fields. Such customer support encompasses assisting with growth, strengthening competition,
rebuilding business portfolios, developing new businesses, creating business overseas, collaborating with other companies
and sectors, optimizing capital policies, and cooperating withgovernment industrial policy.
In 2020, DBJ established the Chief Industry Strategy Officeover the Corporate Finance Department, Division 1, andCorporate Finance Department, Division 2, with the aim of creating new industries across sector boundaries. This office will
tackle issues that are common among industries in order toconnect disparate industries across existing boundaries related
to innovation, sustainability, and business transition. DBJ isalso enhancing teamwork within the Company through internal
collaborations and by polishing the skills of individual executives and employees, with a focus on fostering among its
employees the ability to present new ideas.

https://www.dbj.jp/case/list/?field=industry
Please refer to the DBJ website to see examples and case studies (Japanese only)
in industrial sectors.

Creation of Society 5.0 Investment Program
DBJ created the Society 5.0 Investment Program as a newframework for investing in activities that contribute to the creation of a more sustainable society, while aiming to create newindustries with new value systems to solve social issues inJapan. This program invests in projects that did not readilyalign with DBJ’s investment values in the past, due to an
Company nameBusiness domain (new sector classifications)

Exergy Power
Systems, Inc.

Next-generation nickel-hydrogen storage batteries(batteries × services)

SkyDrive Inc.

Flying cars and drones(automobiles × aircraft)

CROSS SYNC INC.
FLOSFIA Inc.

Remote ICU and medical digital transformation(medicine × digital)
Next-generation power semiconductors(materials × energy)

uncertain outlook for the timeline of commercialization andmonetization of business, even though the technologies andideas, and the combinations thereof, might have a major
impact on solving social issues in the future.
The program focuses on domains that combine both cyberand physical areas, as defined by Society 5.0,* and targets a
broad spectrum of hardware domains. Since its creation in
2020, the program has invested in four companies.
As the structure of industry in Japan undergoes majorchanges, DBJ will use this program and others to act as conduits among industries and bring related parties together fromacross industry lines, thereby continuing initiatives to create abetter society for all.
* Society 5.0 calls for a human-centric society that balances economic development withsolving social issues, using advanced systems that combine cyberspace and physicalspace. (It first emerged as a concept for future Japanese society in the 5th Science andTechnology Basic Plan.)To see details of the GRIT Strategy, please refer to pages 16–17.

Data Section

Strategy

G R I T Strategy Contribute to the Realization of a Sustainable Society
Corporate Data

Identified Risks and Opportunities

DBJ assists venture firms that are having an
impact on society by solving social issues andcreating new industries. In this case, DBJ provided financing to the company because its
products could become key devices in realizing a green society.
We believe messaging and networking will
be key to not only developing the product but
also spreading it for the venture firm, with theaim of entrenching this groundbreaking product in society. In addition to financial support,
DBJ helps with business planning and information disclosure to raise recognition andutilizes its broad customer base to create networks with downstream users and corporations, with the objective of enhancing the valueof the subject company and realizing a green
society.

Corporate Governance

While struggling to overcome the challenges presented during the COVID-19 pandemic, Japanese industry has accelerated efforts
to solve issues it has long faced, such as ensuring workplace safety, reforming workstyles, innovating with AI/MI, and realizing manufacturing not dependent upon the skills and intuition of veteran workers. Moreover, the Japanese government declared the goal of
becoming carbon neutral by 2050 amid the so-called green recovery, a global movement that has drawn much attention to newissues in sectors mainly responsible for generating CO2 emissions.
The efforts of individual companies will not be enough to overcome these issues. With digital transformation and sustainability as
new opportunities for change, we are likely to see unprecedented restructuring and collaboration across disparate industries, newbusinesses launched, and global production structures realigned. Industry in Japan, which has been called a global innovator, is in
position both to take the lead on quickly finding solutions and rolling them out into society and to seize the opportunity to win backthe global leadership position.

DBJ has extended financing to FLOSFIA Inc. as a part of its Society 5.0
Investment Program. FLOSFIA is a venture firm from Kyoto University thataims to be the first in the world to develop and produce next-generation
power semiconductors using alpha gallium oxide ( -Ga2O3; hereinafter,
GaO® power devices).
Power semiconductors are chips that convert and control electricity,
key devices for the efficient use of electricity. As the world moves toward
carbon neutrality and more devices are electrified in society, improving theperformance of power semiconductors to reduce electrical conversion
loss is garnering attention as a means of solving global environmental
problems.
The GaO® power devices being developed and manufactured by
FLOSFIA are expected to improve energy conservation by more than
10% compared with conventional products. In addition to common
household electrical appliances, these power devices hold the promise ofhigher energy efficiency in a variety of fields that use electricity, such astransportation, telecommunications, and manufacturing. If uptake in electric vehicles goes as expected, they are likely to have a major impact onsociety as development of such issues focuses on increasing convenience, such as longer-distance driving. Through funding for FLOSFIA,
DBJ contributes to strengthening the supply chain for power semiconductors in Japan, while also moving one step closer to a green and sustainable society.

Staff Comment

Strategy

Provision of financing andadvisory services for companies and projects in industrial
sectors

Moving toward a Greener Society by
Investing in FLOSFIA Inc., a Next-Generation
Power Semiconductor Venture Firm

Value Creation Story

In industrial fields seeing changes brought about
by technological innovation, the creation of new
businesses, and restructuring, the DBJ Groupwill take a direct approach to solving issues
faced by customers and society while searchingfor growth opportunities for itself. As an incubator that creates new businesses and markets,
the DBJ Group aims to play an essential role instrengthening the competitiveness of industries
in Japan.

Project Spotlight

30

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Dialogue with Customers to Realize a Sustainable Society

DBJ provides leading-edge sustainable financing solutions, such as the DBJ Sustainability Evaluation
Certification Program, and emphasizes dialogue with customers that aim to solve social issues through theirbusiness activities in order to realize a sustainable society.

31

Dialogue with Customers to Realize a Sustainable Society

Connect with DBJ

Project Spotlight

History of Sustainability at DBJ
Starting in the era of overcoming industrial pollution, DBJ has continued to adapt to the changing times and provide assistance toenvironmental businesses. Using the knowledge gained through over 40 years of experience and the provision of more than ¥3 trillion in investments and loans, DBJ supports corporate initiatives through dialogue and financing.
1950–

1990–

Events inside and outside Japan

DBJ Initiatives

Events inside and outside Japan

Minamata disease

Creation of pollution prevention loan programs

1958

Act on Regulation of Factory Effluent

1960

Wastewater treatment loan program

1963

Soot prevention loan program

1970

Flue gas desulfurization loan program

1967	Basic Law for Environmental Pollution
Control
1968
1973

Air Pollution Control Act
Oil crisis

1975	Resource recycling and energy
conservation loan programs

1985	Vienna Convention for the Protection of
the Ozone Layer

1988

Ozone layer protection loan program

1993

Basic Environment Law

2000	Basic Law for Establishing a RecyclingBased Society
2002

Kyoto Protocol

2003

UNEP FI Roundtable in Tokyo

2008

Global Financial Crisis

2011

Great East Japan Earthquake

2015

Paris Agreement

Creation of comprehensive loan programs forenvironmental measures
2004	
Environmental Rated Loan
Program launched2006E nterprise Disaster Resilience Loan
Program launched

2011

BCM Rated Loan Program launched2011 BJ Green Building Certification
D
Program launched2012E mployees’ Health Management
Rated Loan Program launched2020	
DBJ Sustainability Linked Loans withEngagement Dialogue createdleast 70% of its portfolio by 2030. In carbon recycling, one of
the six areas, it proposes (1) bio-based polymers, (2) chemical
and material recycling, and (3) CO2 capture and utilization as
concrete solutions.
In light of worldwide attention on the recycling of plastic
resources, through dialogue, this loan sets forth SPTs as quantitative targets for measuring progress on the chemical recycling project in the carbon recycling business domain. The
SPTs are linked to the commercialization of advanced chemical
recycling in Japan and should help facilitate the recycling ofplastic resources in Japan.

Strategy

1953

DBJ Initiatives

Mitsubishi Chemical Holdings Corporation is a holding company
that has Mitsubishi Chemical Corporation, one of the largest
diversified chemicals companies in Japan, under its umbrella.
In November 2020, DBJ extended a DBJ SLL with Engagement
Dialogue (hereinafter, “this loan”) to Mitsubishi Chemical Holdings
Corporation.
Management at Mitsubishi Chemical Holdings Corporation
aims to realize KAITEKI, an original concept coined by thegroup that refers to “the sustainable well-being of people,­society, and our planet Earth.”
Under KAITEKI Vision 30, its basic medium- to long-term
management strategy that was unveiled in February 2020,
Mitsubishi Chemical Holdings Corporation plans to transform
its business portfolio into one that solves social problems. It
lists social challenges that the Mitsubishi Chemical Groupshould tackle in order to realize its vision for society by 2050,
and identifies six areas of business with the potential for growththrough helping to solve these problems. Mitsubishi Chemical
Holdings Corporation aims for these businesses to make up at

Value Creation Story

Extension of DBJ SLL with Engagement Dialogue to Mitsubishi Chemical
Holdings Corporation

Managers from Mitsubishi Chemical Holdings Corporation (center of photo) and DBJ

Sustainable finance has gained traction in Europe and Japan,
and in 2020, DBJ began offering DBJ Sustainability Linked
Loans (SLL) with Engagement Dialogue. These DBJ SLL withEngagement Dialogue finance solutions are based both on
the Sustainability Linked Loan Principles (SLLP) developedby the Loan Market Association (LMA) and other expert groups
and on the Green Loan and Sustainability Linked Loan
Guidelines issued by the Ministry of the Environment in Japan.
Under this program, DBJ uses dialogue to support its borrowers in setting and achieving ESG-related targets (sustainability
performance targets, or SPTs) that serve to improve the borrower’s sustainability management.
For DBJ SLL with Engagement Dialogue, the Bank has created a process that emphasizes dialogue with customers in thecontext of the latest trends in sustainability, backed by DBJ’s
know-how in the sustainability field, accumulated over many
years through the DBJ Sustainability Evaluation Certification
Program. This dialogue entails the creation of multiple opportunities for discussion about setting optimal SPTs based on thecustomer’s business strategy and sustainability strategy.
Throughout the process, DBJ assists customers with devising
their external public relations activities and a more sophisticated sustainability strategy to accompany their non-financial
information.

Assessment Flow of DBJ Certification Programs
1

2

3

4

5

6

Preliminary

Interviews

Judgment

Evaluation

Financing

Feedback

meeting

decision

implementation

screening

Message from the Client

Corporate Finance Department, Division 1

Sustainable Solution Department

Mitsubishi Chemical Holdings Corporation

As the trend toward a sustainable society
accelerates around the world, the importanceof sustainability management has continued to
grow. This loan will help Mitsubishi Chemical
Holdings Corporation advance its chemical
recycling initiative and help solve the issues ofdecarbonization and resource recycling, twoissues that will influence structural changes in
the industry. DBJ will continue to proactively
support the initiatives of its customers to realize sustainability management.

DBJ has supported the sustainability strategyof Mitsubishi Chemical Holdings Corporation
through DBJ Environmentally Rated Loans andother programs. With the DBJ SLL withEngagement Dialogue, DBJ engaged ininsightful dialogue with the corporation about
its value creation process for 2050, setting
SPTs as metrics for the carbon recycling business, an area of importance going forward forsolving social issues related to climate change
and a circular economy, while taking into
account its basic medium- to long-term management strategy. DBJ will continue to assist
the corporation with its sustainability strategy
and back its efforts to achieve the SPTs.

Mitsubishi Chemical Corporation has decided
to construct one of Japan’s largest chemical
recycling plants as a concrete solution forthe problem of plastic waste. The company
will do its utmost to achieve the SPTs laid out
in this loan for advancing sustainability management, and provide solutions for social
issues after constructing the chemical recycling plant.

Track record for DBJ Sustainability Evaluation Certification Program
Environmental Rated

BCM Rated

Employees’ HealthManagement Rated

SLL with Dialogue
Engagement

Total

Total number of rated loans as of
fiscal 2020 (accumulated total)

32
(719)

18
(396)

24
(234)

2
(2)

76
(1,351)

Total amount of rated loans¥1,614.7 billion¥517.7 billion¥312.0 billion¥35.0 billion¥2,444.4 billion

Data Section

The DBJ Sustainability Evaluation Certification Program is a listof financing options based on the non-financial information ofcompanies screened with DBJ’s proprietary systems.
Having launched the world’s first environmentally rated loan
program in 2004, DBJ introduced the BCM Rated Loan
Program in 2006, which evaluates the disaster prevention andbusiness continuity plans of companies, and the Employees’
Health Management Rated Loan Program in 2012.
The most important feature of the DBJ Sustainability
Evaluation Certification Program is the evaluation process,which emphasizes direct dialogue with customers. We engage
in face-to-face conversations with clients about their initiatives
to fill in gaps around publicly available information. Evaluation
criteria, incorporating the latest trends, is reviewed every year
by a committee of advisors consisting of outside experts.
Once the evaluations are complete, DBJ hosts networking
events with an awards ceremony format, where senior managers from participating companies can share ideas. DBJ provides feedback, shares details of the evaluation of outcomes,
conveys future expectations, and shares examples of bestpractices at other companies, to boost its clients’ progress insustainability management.

Staff Comment

Corporate Data

DBJ Sustainability Linked Loans with Engagement Dialogue

Corporate Governance

DBJ Sustainability Evaluation Certification Program32

Development Bank of Japan Inc.
Integrated Report 2021

Priority Areas

Area Strategy

Development Bank of Japan Inc.
Integrated Report 2021

Industrial revitalization based on regional characteristics, overseas business development, response toinbound tourism, business succession

33

Regions

Self-Reliance and Revitalization of
Local Economies

Regions

Kushiro Representative Office

Hokkaido Branch

Hakodate Representative OfficeNiigata Branch

Aomori Representative OfficeToyama Representative Office
Hokuriku Branch
OutlineTohoku Branch

Okayama Representative Office

Provision by the DBJ Group ofservices tailored to the characteristics of the respective
regions in Japan from 10
branches and eight representative offices across thecountry• Investments and loans• Consulting services• Planning and researchservices

Total Number of Business Alliances with Financial Institutions

Matsue Representative Office

Head Office

Chugoku Branch
Kyushu Branch
Oita Representative Office
Minami-Kyushu Branch

Tokai Branch
Kansai Branch
Shikoku Branch
Matsuyama Representative Office
Strategy

As of March 31, 2021

112

By providing detailed solutions to regional problems, the
DBJ Group strives to increase the value of its human capital(e.g., the skills and experience of its executives and employees), and relationship capital (e.g., networks).

The regional economic outlook is severe with declining household spending and weaker demand for loans alongside a longterm downtrend in regional populations. Industries that dependon non-resident populations, such as tourism, a key industry
in outlying regions, have been heavily impacted by restrictions
on the movement of people during the COVID-19 pandemic.
On the other hand, regional demand may increase if people
remember the value of outlying areas, amid changes in workstyles, such as working remotely and the realignment of supply
chains.
As regional economies contract in these circumstances,
regional enterprises need growth strategies that include overseas business development, measures to improve corporate
value through business restructuring and succession, andascertainment of good opportunities in asset management.

DBJ provides services with the three following points in mind,
in order to support the new development of regions, while considering the impact of the COVID-19 pandemic on regional
economies and the values of each region.
1. Offer support on the knowledge side for discovering new
regional resources that attract people to the regions, while
maintaining the uniqueness of the regions, in response to
the sharp decline in people’s movement due to the COVID19 pandemic.
2. Provide support for business succession and the development of new local industry amid changing industry structurescaused by the movement toward carbon neutrality and thedeclining working-age population.
3. Collaborate and cooperate with regional financial institutions
on local initiatives.

Accomplishments and Initiatives to Date
Fiscal 2019

Special Investment
Operations

Others• Signed cooperative agreement for disaster response operations with regional financial institutions in response to COVID-19• Cooperated with regional financial institutions through funds• Issued reports about solving regional issues• Promoted PPP/PFI projects and made proposals for rebuilding public infrastructure• Offered advisory services to local public organizations related to comprehensive government policies• Provided knowledge to local governments, including assistance for managing public assets

Support for Regional Financial Institutions with BusinessFeasibility Studies
Working with regional financial institutions, DBJ provides to theclients of regional financial institutions support for assessing thefeasibility of businesses that propose solutions to management
issues. Based on an analysis of macroeconomic conditions
and individual companies, DBJ identifies management issues
at clients, and then presents its findings in an easy-to-understandformat.
DBJ subsequently comes up with various financial solutions
to the identified issues to help its clients formulate their own
growth strategies and drum up business. Employees dispatched to DBJ from regional financial institutions are given
opportunities to gain knowledge through on-the-job training
while performing business feasibility studies of the clients of
their own bank. DBJ holds study groups to help regional financial institutions gain a better understanding of business feasibility assessments.
Initiatives in PPP/PFI and Public Asset Management via
Collaboration with Local Governments and Regional
Financial Institutions“Public asset management” refers comprehensively to thereassessment of assets held by national and local governmentsfrom a management perspective. DBJ assists numerous local
governments in this regard, helping them create plans anddraw up individual projects with group think tanks.

https://www.dbj.jp/service/finance/area/index.html
Please go to the DBJ website to see the areas supported by each branch (Japanese only).

Regional Emergency Response Program
With a string of major natural disasters, including earthquakes
and typhoons, striking regions around Japan, DBJ has createdthe Regional Emergency Response Program to provide flexible
and rapid support to meet the demand for initial-response
emergency funds by those affected by natural disasters. This
program was created in conjunction with the Regional
Reconstruction Headquarters, which was established with theobjective of ensuring an adequate first response to regions
struck by disasters, through tight-knit collaboration among ourbranches and representative offices across Japan, as well as
our head office departments. DBJ also provides assistance forthe reconstruction of disaster-struck regions through the establishment of funds with regional financial institutions.

Collaboration for M&A of Local Companies andOverseas Information Dissemination
DBJ helps local companies address various management
issues, such as business restructuring and succession as well
as expansion of business domains, including overseas expansion. As part of efforts to revitalize regions through collaboration with regional financial institutions, DBJ creates M&A
opportunities for local companies through its network ofregional banks.

Data Section

Supply of risk capitalthrough collaboration andcooperation with regional
financial institutions

Fiscal 2020
• Invested in JR West Fund No. 1, which seeks to enhance
the attractiveness of regions by advancing development
along railway lines•H elped regional financial institutions change the businessmodels of local companies during the pandemic by providing subordinated capital loans to Precision System Science
Co., Ltd. through the Chiba Corporate Value Improvement
Fund, a joint fund set up with The Chiba Bank Ltd.

Collaboration and Cooperation with
Regional Financial Institutions

Corporate Data

Strategy

DBJ set up PPP/PFI Promotion Centers in June 2013. Whileplanning and holding its PPP/PFI Academy seminars, DBJ
offers regional platforms for cooperating at the national level.
In these and other ways, DBJ has made a concerted effort toexpand the use of PPP/PFI, putting into place a structure forpromoting their use, including broad scientific research commemorating the 20th anniversary since the enactment of the
PFI Act. In particular, the PPP/PFI Academy encourages
roundtable discussions and the sharing of advanced casestudies through a teleconference system that connects allof DBJ’s bases.

Corporate GovernanceLonger-Term External Environment and Social Issues• Supported upgrading of exchange centers, with a focus
on sports venues, through financing provided to XSM Flat
Hachinohe Co., Ltd. (Aomori), which owns Japan’s first­multi-purpose arena• Provided project financing to PPP Shinsakura K.K. (Toyama)
to advance a public–private project to create compact
communities

Value Creation Story

The DBJ Group provides solutions for regional
issues, connecting regions throughout Japan toTokyo, domestic regions to those overseas, andregions the world over to each other.

Head office
10 branches
Eight representative offices

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Priority Areas

Development Bank of Japan Inc.
Integrated Report 2021

Area Strategy

Priority Areas

Utilizing the Diverse Value of Forests

Regional Revitalization with Traditional Japanese-Style Homes
DBJ provides information and advice about creating economic
value with traditional Japanese-style homes with the aim ofusing such homes to stimulate regions. Research reports published by DBJ in recent years include one titled “Regional
Revitalization Using Traditional Japanese-Style Homes toCreate Economic Value,” which discusses the potential market
for repairing and remodeling traditional Japanese-style homes
and the economic boost from overseas tourists staying atthese homes, and “Key Points for Businesses Using Traditional
Japanese-Style Homes,” which introduces example businessmodels for using such homes and reference benchmarks forbusiness revenue.

Overseas

Positioning overseas operations within its sector
strategy and function strategy, the DBJ Group
engages in global operations in sectors providing high added value.

Subsidiaries in London, Singapore, Beijing (including a branch
office in Shanghai), and New York to coordinate operations
overseas

NIPPONIA Mino merchant family town

State of Community Creation during the Pandemic

https://www.dbj.jp/investigate/etc/index.html
Please refer to the DBJ website to see the Regional, Industry, and Economic Report(Japanese only).

Although the global economy has fallen sharply during the
global COVID-19 pandemic, economies have begun to recoveron a patchwork basis depending on vaccination rates and thescale of COVID-19 cases. Based on projections for continued
growth over the longer run, the DBJ Group is likely to see
robust demand for global business development from its corecustomers in domestic industries. Over the medium to longterm, however, growth is likely to return and increase needs for
global business development in domestic industries, whichmake up the DBJ Group’s core base of customers.
Demand for sustainability financing is projected to increasein the infrastructure field, including energy, as countries aroundthe world move to become carbon neutral. It will be importantto tap into these growth opportunities overseas and translatethem into sustainable growth in Japan’s economy and industries through effective domestic initiatives.

While monitoring the impact from COVID-19, DBJ will continue
to engage in overseas operations in line with its sector strategy
and function strategy.
1. In infrastructure fields such as energy and transportation,
DBJ will provide investments and loans for the overseas
development of Japanese industry and for projects thatbring overseas knowledge to domestic markets.
2. DBJ will provide investment and advisory services to support
the overseas industrial expansion needs of its customers,
including customers headquartered regionally in Japan.
3. DBJ Group companies will manage investments in infrastructure assets and corporate assets for the purpose ofproviding Japanese investors with investment opportunities
overseas.

Accomplishments and Initiatives to Date
Collaboration withother financial
institutions

Investment operations

OthersFiscal 2019

Fiscal 2020

• Entered into a business partnership with Business Finland Oy
for the purpose of soliciting innovation funds in Finland that
advance the formation of an innovation ecosystem throughindustry–academia–government collaboration• Jointly established Excelsior Energy Capital Fund I targeting
renewable energy power generation in the U.S. and solicited
investments from prominent institutional investors overseas aswell as several investors in Japan• Preferred equity financing for developing renewable energy
projects overseas (offshore wind power plants in Taiwan) with
JERA Co., Inc.
• Joint investment with Aica Kogyo Co., Ltd. (Aichi) to aggressively invest in Asia
• Signed financing agreement for a fund to invest in medical
equipment venture firms in Japan and the U.S.

• Signed an agreement to invest in Catalys Pacific Fund LP, aventure capital fund to advance the global development of drug
discovery innovations originating in Japan• Signed a financing agreement with other Japanese investors fora new fund set up by Airbus Ventures, a venture capital firm
belonging to the Airbus SE. (Operating from its office in Tokyo,
this fund will invest in Japanese venture firms and help themmake inroads into foreign markets after the investment)• Addressed M&A needs of customers in Asia

Data Section

Second meeting of experts (December 23, held remotely)

Under these circumstances, the DBJ Group set up a
council of experts consisting of representatives from various
circles to investigate from multiple angles the state of community creation and to elicit their recommendations for future
development, assuming the COVID-19 pandemic is here tostay and that it will have a lasting, irreversible impact oncompanies and people. Taking note of the following points inthese recommendations, DBJ will continue to engage in initiatives to revitalize regions and encourage private–public
sector collaboration.
1. Quantify the impact of the COVID-19 pandemic and measures to boost the economy.
2. Examine the direction of reforms for each type of city
based on the regional population and industrial
characteristics.
3. Create and use new metrics for evaluating the diverse value
and wealth of regions without relying on economic indicators.

Strategy

Corporate Data

In March 2021, the DBJ Group published the recommendations of a council of experts put together by the secretariat,
entitled “State of Community Creation during the Pandemic:
Initiatives to Leverage Diversity and Strengths of Communities
amid Changing Value Systems during the Pandemic.”
The prolonged COVID-19 pandemic has severely curtailed
the movement of people in the regions, while also accelerating teleworking and diversifying the value systems of people,
thereby creating new opportunities.

Longer-Term External Environment and Social Issues

Corporate Governance

DBJ welcomes consultation requests from local governments
and business owners considering upgrades to stadiums andarenas around the nation. In May 2020, DBJ published the
Smart Venue Handbook describing in detail main points andprocesses for making concepts for stadiums and arenas a reality.
In the joint research paper “Estimations of Economic Scaleof Japan’s Sports Industry: Japan’s Version of Sport Satellite
Accounts 2018,” published by Japan Economic ResearchInstitute Inc. and Doshisha University in September 2019, it isestimated that the economic scale of the sports industry inJapan was ¥7.6 trillion in 2016.

OutlineStrategy

Smart Venues and Estimations of Economic Scale ofSports Industry

Value Creation Story

DBJ has published a research report titled “Forestry Business
Innovation Research Group Report: Establishing Forestry
Businesses That Utilize the Diverse Value of Forests.” Forests,
which grow on roughly 70% of the land in Japan, are a natural
resource of diverse environmental, social, and cultural value, in
addition to providing economic value. This report details thefindings of the study group, which consisted of experts fromacross industry, government, academia, and financial circles,on establishing businesses that utilize these forests as natural
resources to realize regional revitalization as well as on solvingsocial issues.

Industrial revitalization based on regional characteristics, overseas business development, response toinbound tourism, business succession

Self-Reliance and Revitalization of
Local Economies

Self-Reliance and Revitalization of Local Economies

Provision of Knowledge about Local Issues

Area Strategy

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

Function Strategy

Overview of Special Investment Operations

The DBJ Group will provide optimal financing
solutions tailored to customer needs, from loans
to mezzanine financing and investments, while
reinforcing its ability to adequately evaluate various risks.

Addition

Fiscal 2021: ¥350 billion

Evaluation /verification

Special Investment
Operations Monitoring Board

Life Sciences FundIn May 2020, this fund was established to help
businesses affected by COVID-19 rapidly andsteadily recover and grow, in reflection of the April
7, 2020, Cabinet decision “Emergency Economic
Measures to Cope with COVID-19.”

This fund was created in February 2021, to support businesses that aim to improve the sustainability of natural resources and the environment,such as renewable energy businesses, in consideration of the December 8, 2020, Cabinet decision“Comprehensive Economic Measures to Secure
People’s Lives and Livelihoods toward Reliefand Hope.”

Complement and encourage
private-sector enterprises(including pump-priming)
Capital funds(including preferred shares andsubordinated loans)

Target company initiatives• Initiatives for effective use of management
resources• Initiatives to promote management innovation– Cultivate new business– Form alliances among various sectors
and groups etc.

Political targets• Encouragement of self-reliant development of regional economies• Increase in competitiveness of Japan anddomestic enterprises• Development of markets for growth capitalThrough these three funds in Special Investment Operations, DBJ aims to reinforce the competitiveness of Japanese companies
and invigorate regional economies while supplying growth capital to the private sector.
Special Investment Operations

DBJ Innovation andLife Sciences Fund

Growth Fund forCoronavirus Revival

Green Investment FundThis fund supports initiatives topromote innovation in Japaneseindustry and strengthen the competitiveness of the life sciences industry.

This fund helps companies impacted
by COVID-19 recover and grow.

This fund invests in renewableenergy projects toward the realization of carbon neutrality by 2050.

Connect with DBJ

Project Spotlight

Support for Building a Healthcare Delivery System Based on the “ICU Anywhere” Concept
By drawing on its Society 5.0 Investment Program, DBJ supports CROSS SYNC, Inc. through investments along withKonica Minolta, Inc., Toyota Tsusho Corporation, and FINDEX,
Inc. With the ICU Anywhere vision, CROSS SYNC was established as a “Yokohama City University venture capital firm”
in October 2019 by intensive care doctors working in the­intensive care units of hospitals affiliated with Yokohama City
University. With the intention of reducing the number of deaths
and patients who rapidly decline in health, CROSS SYNC isa start-up firm that is developing and operating the iBSEN
application for analyzing medical data and enabling the remotesimultaneous monitoring of multiple patients based on theirvital signs and diagnostic images.
Through its Special Investment Operations, DBJ invested in
CROSS SYNC based on its innovative concept of supporting
acute-stage healthcare, through the combination of the expert
and tacit knowledge of practicing physicians with AI and other

IT to identify and display relevant information for the patient’s
healthcare needs, and quickly determining and sharing thehealthcare priorities of patients, based on estimates of illness
severity.
DBJ will dispatch its own employees and connect the many
relevant parties to facilitate the development of this productand encourage its use. By solving various social issues causedby doctor shortages, we aim for a society where anyone canreceive the best medical treatment anywhere.

Data Section

Special Investment Operations(Managing investments and loansin special account)

Green Investment Fund

Corporate Data

Capital account(Budget for fiscal 2021:¥175 billion)

Japanese­government(industrial
investment)* According to the Japanese government’s “Study Panel Concerning the Promotion of
Expanding Growth Funding,” certain financial institutions, including DBJ, are expected
to serve in a pump-priming capacity for the foreseeable future to attract private-sector
investment by cultivating new capital providers, markets, and investors, thereby fostering the development of an investment cycle led by the private sector.

Enhance risk capital supporting growth

Capital increase(Budget for fiscal 2021:¥175 billion)

supervision of activities, an advisory body to the Board of
Directors was established—the Special Investment Operations
Monitoring Board—with participation from outside experts infinancial and capital markets, industry, and other professionalgroups (see page 53).
Based on the Act for the Partial Amendment of theDevelopment Bank of Japan Inc. Act (Act No. 29 of 2020),
which was enacted on May 22, 2020, Special Investment
Operations were extended—the investment decision term andgovernment financing term from March 31, 2021, until March
31, 2026, and the deadline for ending operations from March
31, 2026, until March 31, 2031.

Other financial institutions(megabanks, regional banks,
private funds, etc.)
Loans, etc.

DBJ

Growth Fund for Coronavirus Revival

Corporate GovernanceSpecial Investment Operations, established as an intensive but
temporary scheme to supply growth capital* from the perspective of promoting the competitiveness of Japanese enterprises
along with regional revitalization, draw only a portion of theinvestment (industrial investment) from the Japanese government, enough to encourage the private sector to supply growth
capital. Since launching the aforementioned operations in June
2015, DBJ has made ¥931.5 billion (as of March 31, 2021) ininvestments and loans (132 projects in total), the first ¥893.2
billion of which has spurred ¥5,714 billion in private-sector
investments and loans.
Special Investment Operations follow policy objectives,in accordance with the law, complementing and encouraging
private-sector enterprises and ensuring appropriate competitive
relationships. To improve the structure of Special Investment
Operations and thereby maintain objective evaluation and

DBJ Innovation andStrategy

Provision of loans and investments after analyzing businessprospects, evaluating risks, and creating financing schemes.
Taking into consideration the traits of each project and theintentions of participants, utilization of DBJ’s expertise in integrated investment and loan services that flexibly deploy loans,mezzanine financing, and investments

Special Investment Operations

For its Special Investment Operations, to clarify priority areas for assistance, DBJ has set up the following three funds.

In light of the July 17, 2020, Cabinet decision“Follow-up on the Growth Strategy,” in March
2021, we renamed the DBJ Innovation
Ecosystem Invigoration Fund, which was createdin March 2020, to clarify our support for strengthening the competitiveness of the life sciencesindustry.

Outline

DBJ’s Initiatives to Supply Risk CapitalSpecial Investment Operations and Crisis Response Operations

Value Creation Story

Special Investment
Operations andCrisis Response
Operations

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

Function Strategy

Crisis Response Operationsloans as a complementary risk measure, among other measures, to government-designated financial institutions that
supply necessary funds to address such damage.
In March 2020, the COVID-19 pandemic was designateda crisis (see “Our Response to COVID-19” on page 15). As adesignated financial institution, DBJ collaborated and coordinated with private-sector financial institutions to rapidly andeffectively implement Crisis Response Operations.

Special Investment Operations and Crisis Response Operations

Accomplishments and Initiatives to Date
2008/10

2008/12

Commenced Crisis
Response Operations as
a designated financial
institution

2011/3Main events that were designated a crisis:•	Great East Japan Earthquake•	Damage from heavy rainfall during Typhoon#18 in 2015

Designated financial institutions•	Kumamoto earthquakes in 2016

• Designated financial institutions conductbusiness in accordance with the Crisis
Response Operations Rules (based on
approval of the competent minister).
•D esignated financial institutions conductbusiness with complete double checks ofrequired compliance at their financing
departments and their departments
responsible for crisis response operations.

Total funds raised by the government in Crisis Response Operations¥206.5 billion

• Loans: ¥8,447.9 billion (1,494 projects)• Commercial paper acquisitions: ¥361.0 billion (68 projects)

Total Crisis Response Operations related to COVID-19
			¥2,231.8 billion (345 projects)(As of March 31, 2021)
Great East Japan Earthquake of 2011
In the fiscal 2011 supplementary budget passed in the wake of
the Great East Japan Earthquake, ¥2.5 trillion was earmarked
for Japan Finance Corporation for Crisis Response Operations
targeting medium- and large-sized enterprises. DBJ proactively
provided assistance for clients affected both directly and indirectly by the disaster.
Along with designated financial institutions in the disasterarea, DBJ arranged the Great East Japan Earthquake
Reconstruction Fund.
In December 2014, in response to the shift of the stage ofearthquake reconstruction from the restoration of production
facilities (the “restoration stage”) to efforts to open up a newenterprise-based market that resumes production, collaborates

among multiple enterprises to boost industry competitiveness,builds infrastructure, and reinforces functions (the “reconstruction and growth stage”), we established a reconstruction andgrowth support fund in collaboration with the Regional
Economy Vitalization Corporation of Japan.
In fiscal 2018, with demand for reconstruction seeming tosettle, we established a new fund for medium-to-long-term
capital funds and other forms of money with shared risk, aimed
at supporting the economic development of the affected areas.
Going forward, we will continue to work with local financial
institutions while promoting efforts to help stricken areas
according to their particular stage of recovery.

Corporate Data

Note: Capital increases related to Crisis Response
Operations before the 2015 revisions to the DBJ Act
were transferred from capital to a crisis response
reserve (¥206.5 billion). Capital increases for Crisis
Response Operations after the revisions are to be
added directly to the crisis response reserve.

Total loans for Crisis Response Operations, loans with loss guarantee agreements, and commercial paper purchases

Kumamoto Earthquakes in 2016

Data Section

In 2016, DBJ established the Kumamoto Recovery Officewithin its Kyushu Branch to better provide useful knowledge
and financial expertise for the restoration and reconstruction ofregions affected by the Kumamoto earthquakes.
In July 2016, DBJ formed the Kumamoto Reconstruction
Support Fund jointly with The Higo Bank, Ltd. and The
Kagoshima Bank, Ltd., financial institutions in the disasterstricken area. The fund supplies risk capital, through such
schemes as senior loans (repayment in full on maturity, uncollateralized, non-guaranteed loans) and subordinated loans, tobusinesses affected by the disaster.
Additionally, DBJ has provided beneficial information about
restoration and reconstruction through a cross-departmental
system, and has offered survey and planning services in conjunction with related local governments, national institutions,and economic groups, as well as local financial institutions.

Corporate Governance•	Extends the scope of Japanese government
recapitalization securing DBJ’s financial­structure, etc.
•	Establishes a new crisis response reserve
account, reflecting this obligation in the Articles
of Incorporation, and indicates mandatory
Japanese government ownership of more than
one-third of shares and other measures(As of March 31, 2021)

Project Spotlight
Provision offunds, etc.

Clients

Defines a new scope for DBJ’s­responsibilities, making Crisis Response
Operations obligatory for
an indefinite period

COVID-19 pandemic

Strategy

Private financial institution

Private financial institution

Private financial institution

Japanese Government• Capital
contribution• Lending of funds• Interest subsidies•	Prepares and announces “crisis
response facilitation guidelines”(approved by the competent minister)•	Implements complementary risk andother measures on the basis of agreements (approved by the competent
minister) with designated financial
institutions•	COVID-19 pandemic

DBJ

Two-step loans,etc.

Japan Finance Corporation(Crisis Response
Facilitation Account)

Earthquake Disaster Crisis Response Operations(through March 31, 2011)•	Turmoil in international financial markets(Global financial crisis)

Crisis Response Operations Scheme

Designated2020/3Financial Crisis Response Operations
and Earthquake Disaster Crisis
Response Operations

Value Creation Story

DBJ’s Crisis Response Operations function as a stabilizing
force during periods of instability in the economy, society, andmarkets.
The Finance Corporation Act (Act No. 57 of 2007, including
later revisions), consists of the provision of necessary funds
during such crises as disruptions in domestic or overseas
financial markets or large-scale disasters. In response to crisisrelated damage, Japan Finance Corporation provides two-step

39

Kumamoto Castle, damaged by the earthquakes(photo from the Ninomaru Parking Lot)

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Function Strategy

The DBJ Group mobilizes tie-ups and collaboration to provide syndicated loans and support for
M&A designed to promote Japanese companies’ growth strategies and strengthen theirinternational competitiveness, while offering
impartial consulting services with a long-term
perspective. Along with related services, thishelps clients solve the problems they face andstimulates activity in financial markets.

Asset Management

DBJ provides loans and investments after analyzing businessprospects, evaluating risks, and creating financing schemes.
Taking into consideration the traits of each project and theintentions of participants, DBJ utilizes its expertise in integrated investment and loan services that flexibly deploys
loans, mezzanine financing, and investments.

Syndication

Advisory Services

Research and Consulting
Utilizing its extensive network of connections to universities,
research institutions, experts, national governments, and local
governments, DBJ provides support through surveys andproblem-solving ideas related to business strategies and policy
formation for urban development, regional development, social
capital maintenance, energy, the economy, and industry.

Strategy and Initiatives to Date

Activities have included leveraging DBJ’s strengths in syndicated loans in the energy sector and reinforcing ties and partnerships with regional financial institutions through such means
as business cooperation agreements for syndicated loans. In
this way, DBJ is contributing to corporate fund-raising while
also providing financing opportunities for financial institutions.

As a result of its impartiality, DBJ has a wide network it can mobilize in providing its advisory services, including not only Japanesefirms but also overseas companies and private equity funds.
In fiscal 2017, DBJ entered into an overseas M&A advisorybusiness cooperation agreement with BDA Partners (headquartered in New York), which needed to develop business in
Asia and other parts of the world. The synergies generated
between BDA’s overseas network and the DBJ Group’s M&A
advisory organization and domestic and overseas networks
produced a more effective and efficient overseas M&A advisory
service for the client.
Research and Consulting
Japan Economic Research Institute Inc. is a comprehensive
think tank that conducts research in the public, solutions, andinternational fields. In the public–private partnership and project
financing initiative fields, it has a top-class track record inJapan backed by unparalleled experience and know-how.
Value Management Institute Inc., another comprehensive
think tank, excels in analysis using proprietary economic
models and insight into cutting-edge technologies. Its highly
specialized knowledge encompasses a broad range of policy
fields, including the formulation of integrated strategies for local
governments across Japan.

Achievements

Japan is a nation with considerable assets, including over
¥1,900 trillion in household financial assets and ¥400 trillion in
pension assets. With the Japanese economy confronted by adeclining population and an aging society, it is imperative that
this wealth (financial assets) is steadily expanded.
In realizing sustainable asset formation for the nation, it is anextremely important policy issue for Japan is to have a healthy
and efficient capital market. Financial institutions, pension funds,
and other institutional investors must also advance their investment capabilities in order to maintain a vibrant capital market.

DBJAM was established in 2006 as a real estate investment
management company. In 2012, DBJ increased its ownershipof DBJAM to 100%, clarifying its position as a core company inthe asset management business within the DBJ Group. Since
then, DBJAM has diversified from real estate into the private
equity (PE) and infrastructure investment fields, creating athree-pronged business structure.
DBJAM has launched and augmented various investment
operations and investment products to meet the growing anddiversifying needs for alternative investments among investors.
Such as a role of gatekeeper or fund of funds manager, weinvest in private real estate funds and private real estate investment trusts (REITs), as well as PE, infrastructure and real estate
funds around the world.
As a result of these activities, assets under management
totaled ¥2,153.9 billion as of March 31, 2021. While meetingthe expectations of investors, DBJAM will contribute to the
expansion and development of the alternative investment
market.

Strategy
As a member of the DBJ Group, DBJAM’s mission is to provide
quality investment opportunities and management services toinstitutional investors in the increasingly important field of alternative investments, in a bid to help resolve social issues.
The DBJ Group fully leverages its ability to provide investment opportunities backed by its extensive knowledge andnetwork built over the years as an alternative investor. Its firstand foremost management policy is to maximize profits forinvestors while fulfilling its fiduciary duty. In order to create value
for investors, fiduciary duty is instilled in employees throughextensive in-house training and reflected in business plans andperformance evaluations.
DBJAM has been strengthening ESG investment from thestandpoint of further improving its management capabilities.
Through continuous progress and improvement in ESG integration, or the inclusion of ESG elements into business processes, DBJAM is able to conduct a deeper analysis of risks
and returns for each investment from a longer-term andbroader perspective. DBJAM aims to further advance its
investment services and expand profits for investors.

Data Section

Syndication

Advisory Services

External Environment and Social Issues

Corporate Data

DBJ offers expert advice related to corporate M&A—ranging
from the formulation of strategies, screening of acquisition candidates, and assessment of corporate value to negotiations,structure policy, and post-merger integration assistance—for
a variety of situations, including industry restructuring, overseas
business development, business domain expansion, businesssuccession, and fund investments and exits.

DBJAM is one of the most unique investment managementcompanies that specializes in alternative investments in thefields of real estate, private equity, and infrastructure aroundthe world.

Corporate Governance

DBJ utilizes its impartial standpoint to call on a wide range of financial institutions in providing high-value-added syndicated loans thatdraw on DBJ’s lineup of sustainability certification programs andother original DBJ financing products.

DBJ has provided information to other regional financial
institutions about a natural disaster risk-adjusted product it
jointly developed with The Hiroshima Bank Ltd. in fiscal 2017to provide loans with special provisions that waive the original
principal in the event of an earthquake, as well as loans withspecial provisions that waive the original principle in the eventof damage caused by heavy rains (created in fiscal 2018).
Moreover, DBJ put together special deals, including a large
syndicated loan, for the Fukuoka Airport concession project.

OutlineStrategy

OutlineDBJ Asset Management Co. Ltd. (DBJAM) contributes to the activation of new money flows
and development of financial markets throughthe provision of quality investment opportunities
and management services to institutional investors in the alternative investments field, which
has been growing in importance, while leveraging its industry knowledge and networks as amember of the DBJ Group.

Value Creation Story

Syndication,
Advisory, andConsulting Services

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Management Foundation Strategy

Financial Strategy

DBJ Socially Responsible Investment Bonds

Financial Strategy

Bond Guidelines. DBJ will continue to support the sustainablegrowth of this market by continuing to issue SRI bonds andproactively engaging in international and domestic initiatives.

In fiscal 2014, DBJ became the first bond issuer in Japan toissue a green bond. Furthermore, DBJ has issued a DBJ
Sustainability Bond each year since 2015. In fiscal 2020, DBJ
issued €0.7 billion and $0.5 billion in such bonds as the only
Japanese issuer to do so for seven consecutive fiscal years.
The raised funds are allocated toward the creation of a sustainable society via financing for real estate properties eligible for
DBJ Green Building Certification, the Environmentally Rated
Loan Program, financing for renewable energy projects, financing in the green field, the BCM Rated Loan Program, and theRegional Emergency Response Program. Information on the
management and allocation of funds is evaluated by third parties to increase transparency.
In January 2017, DBJ became an issuer member of theGreen Bond Principles,* the first Japanese firm to attain sucha status, and in March 2020 it participated on a committee­created by the Ministry of the Environment to revise the Green* The Green Bond Principles are compiled by the International Capital Market Association(ICMA), investors, issuers, and securities companies. These parties are responsible for
updating annually the Green Bond Principles, which are voluntary process guidelinesthat recommend transparency and disclosure and promote integrity in the developmentof the green bond market by clarifying the approach for issuance of a green bond.
These parties also constitute a platform to share the latest information about green
bonds and disclose relevant information to society.

Issuance of SRI bonds

Value Creation Story

We target sustainable growth by constructing an
optimal risk–return portfolio while maintaining
and strengthening a robust financial base that
supports our unique business activities, including integrated investment and loan services.

(As of March 31, 2021)

Fiscal 2020

$520 million€700 million

Fiscal 2019 $1 billion
Fiscal 2018 €700 million
Fiscal 2017 $1 billion
Fiscal 2016 $500 million
Fiscal 2014 €250 million

Strategy

Fiscal 2015 €300 million

Capital Procurement (Non-Consolidated)(¥ billion)

Basic Policy

Businessstrategy

External
environment

Stress test

Fiscal 2020

3,153.4
922.7
580.0
150.2
192.5

3,790.8
643.3
300.0
150.2
193.0

3,951.8
1,142.9
800.0
150.2
192.7

5,786.7
1,497.3
1,050.0
150.2
297.1

100.2

100.3

100.2

—

535.8
589.5
1,005.0

549.4
446.3
2,051.4

579.3
583.1
1,546.1

618.7
2,479.1
1,191.4

IR Activities to Spread Understanding of DBJ’s Principles and WorkBusiness plan

Execution

Monitoring

Strategy for
financial capital

Financial Soundness Indicators
Issuer ratings
Common equity Tier 1 risk-weighted capital ratio

Fiscal 2019

A1 (Moody’s), A (S&P), AA+ (R&I), AAA (JCR)
16.65% 

A pillar of the DBJ Group’s business strategy is to provide longterm financing for infrastructure projects. To do so, the DBJ
Group procures long-term funds through corporate bonds andthe Fiscal Investment and Loan Program (FILP). In recent years,

DBJ has stably procured funds through FILP as well as byissuing corporate bonds, thereby augmenting its fund procurement activities with diversified maturities and methods. DBJ
has been issuing green bonds and sustainability bonds since
fiscal 2014. The issuance of these bonds has not only diversified our fund procurement base but also invigorated thesocially responsible investment (SRI) bond market.

https://www.dbj.jp/en/ir/
Please refer to the DBJ website for more information related to investor relations.

Data Section

Specific Initiatives to Improve the Value of
Financial Capital(As of June 30, 2021)(As of March 31, 2021)

In addition to procuring government credit through the Fiscal Investment and Loan Program (FILP) and the issuance of­government-guaranteed bonds, DBJ conducts its own fundraising activities, such as issuing corporate bonds (FILP bonds) todomestic and overseas investors and borrowing money from insurance companies and financial institutions, primarily regionalbanks. When conducting its own fundraising activities, DBJ places emphasis on having investors understand and support its
principles and work and, to that end, dispatches representatives to conduct proactive investor relations through face-to-facemeetings in all regions of Japan and overseas.
Particularly when raising funds through loans, DBJ takes care to further adeeper understanding of its work by giving examples of investments and loans
it has extended inside and outside Japan as well as within domestic regions.
DBJ also takes care to gain a deeper appreciation of the issues faced by theborrowing customer, viewing the interaction as an opportunity for further collaboration on investments and loans, in addition to borrowings.

Corporate Data

Scenarioplanning

Funds raised (flow)
Fiscal Investment and Loan Program		 Of which, borrowings from FILP		 Of which, government-guaranteed bonds (domestic)		 Of which, government-guaranteed bonds (overseas)	Government-guaranteed bonds with maturity of lessthan five years (domestic)
Corporate bonds (FILP bonds)
Long-term debt
Of which, recovered, etc.

Fiscal 2018

Corporate Governance

Financial capital is a vital element of our business foundation
implementing advanced business strategies centered on our
sector strategy (see page 22) and function strategy (see page36). A robust financial foundation of funds and capital is necessary for the DBJ Group to execute its sector strategy, supply
risk capital, and engage in Crisis Response Operations.

We aim to maintain and strengthen our financial capital bymanaging it within the context of a risk appetite framework
based on sophisticated analysis of risks and returns, with due
consideration paid to regulatory capital (management focusedon shareholders’ equity ratios) and economic capital (management of capital using stress tests).

Fiscal 2017

44

Development Bank of Japan Inc.
Integrated Report 2021

Management Foundation Strategy

We aim to be an organization with diverse
human resources that helps employees develop
skills while raising their motivation.

Human Resource Development

Specific Initiatives to Increase the Value of
Human Capital
Intensification of the Hiring and Exchange of Human
Resources across the DBJ Group
DBJ will strengthen its hiring processes and practices andsecure the personnel necessary across the entire Group to
implement its sector strategy, function strategy, and area
strategy.
The DBJ Group will also work to further disseminate its longterm vision, Vision 2030, and its value creation process bystrengthening the exchange of human resources across the
DBJ Group.
Skills Development* DBJ dispatches employees to national government agencies, Group companies aroundthe world, and companies that have received investments.

Human Resource Development Vision

To steadily implement the DBJ Group’s value creation process,which aims to create both economic and social value, and torealize Vision 2030, our long-term vision for our future, it isimperative for us to nurture excellent employees who can
implement the distinctive business models of the Group,
including its integrated investment and loan services.
To this end, we think it is important to create structures inwhich employees will be highly motivated. Improving the valueof human capital is one of our most important priorities, and
DBJ is taking concrete steps to achieve this goal.

DBJ’s role has evolved and developed substantially to meet theneeds of the times. DBJ considers such innovation crucial tomaintaining its leadership position in the constantly advancing
field of finance.
To develop its all-important human resource assets, DBJ
encourages autonomous and pioneering behavior in its
employees as financial professionals in keeping with the visionof “generalists who can be specialists in many fields.” While it isimportant to acquire specialist knowledge, responding to society’s constantly changing needs also requires broad experience, deep knowledge, and the ability to see the big picture.
We continue to build a wide variety of systems based on thisphilosophy.

Outline of Human Resource Training System
Dispatch outside DBJ

In-house training (required/optional)

GlobalDomestic

Selfstudy

Employees’ Use of Childbirth and Child-Rearing Support Systems,
Number of Employees in Training Courses (non-consolidated)
Ratio of employees returning to work after taking childcare leave(number of employees having completed childcare leave in
fiscal 2020)
Ratio of male employees taking childcare leave(employees who had a newborn child in fiscal 2020)

FinanceFinancialaccounting

Law

We constantly ask ourselves if we have laid the proper foundation for genuinely motivating officers and employees to take theinitiative in accordance with the DBJ Group’s corporate
philosophy.
•	DBJ conducts engagement surveys for employees, evaluates
the results of these surveys, and creates action plans thatenable each department to increase motivation throughimprovement activities.
•	In training about career formation, DBJ creates opportunities
for furthering understanding of its corporate philosophy andconstructive dialogue about improvements and practical
approaches.

Seminars and events for women empowerment and leadership training

22/22 (100%)111.4%

Rehiring system (number of registrants as of March 31, 2021)

25

Employees who use reduced working hours for childcare and­nursing care

63

Participants in “iku-boss” training (cumulative total)

About 240

Seminars for finding childcare facilities (cumulative total)

About 210

Data Section

Foreign languages, finance, law, financial skills, etc.

New
employees

Training for new employees

Global humanresources training
program for young
employees

Short-term study on external programs

Youngemployees

Career development program

Study at foreign graduate schools

Career development program

Financial skills-related training• Proposal and screening
capabilities• Financial modeling• Financial products• Sustainability etc.

Diversity training(Women empowerment, “iku-boss,”
understanding people with disabilities, etc.)

Pre-management training

Compliance training / information security training

Mid-level
employees

Strategic human resource development throughjob rotation and on-the-job training

Newly appointed manager training

Global leadershipprogram for
managers

Secondments to external institutions (national­ overnment agencies, Group companies, etc.)g

Coaching program

Short-term study at foreignbusiness schools

Managers

Life/career plan seminar

Motivation and Engagement

Corporate Data

Rank-based training•	New employees receive thorough growth assistance withapproximately three months of DBJ’s own accounting andfinancial analysis courses and a full year of new-employee
training programs.
•	In addition to work-related training, DBJ provides not only
supplementary programs for self-improvement but also askills development program, extensive in terms of both quality and quantity, that provides rank-based training forrequired subjects whenever necessary.
•	Opportunities to study abroad at overseas universities andtraining systems are made available for developing global
human resources. DBJ also operates its own leadershiptraining program (entirely in English) in collaboration with top
overseas universities for young employees and­management-level employees.
•	Almost all training has been moved online due to the COVID19 pandemic, and DBJ continues to proactively enhance theflexibility and sophistication of classroom training
environments.
•	DBJ plans to develop and advance initiatives to prepare­personnel for engaging in investment and loan activities torealize a sustainable society based on GRIT Strategy.

Corporate Governance

Basic Policy

To promote workplaces where diverse human resources canwork together, DBJ encourages mutual understanding andtakes steps to improve the productivity of each employee.
•	Improve productivity and resilience with systems that facilitate flexible work-styles, such as working from home, andflexible work schedules with core hours. Ensure a system
where work is pursued while placing the highest priority on
the health and safety of our executives and employees,
allowing work-from-home arrangements and staggered
working hours to mitigate the spread of COVID-19.
•	Hold seminars with care experts, to enhance work and leavesystems for child-rearing and elderly care—for example,
maternity leave, reduced working hours, and childcarep­ articipation leave.
•	Create and distribute a guide to balancing work with childrearing and elderly care, and holds “iku-boss” seminars formembers of management to enable them to support
employees using these systems while improving team­productivity. Also hold seminars for furthering understandingof people with disabilities and promotes the building of cooperative relationships among staff to further mutual
understanding.
•	Continue to advance initiatives while planning new interactive
events and seminars about career development to advancethe empowerment of women in the workplace.
•	Support the physical and mental well-being of its officers andemployees with courses about self-resilience, as well as byoffering a counseling system staffed by outside professionals,
in addition to periodic health checkups.

Strategy

The DBJ Group develops human resources through practicalon-the-job training and extensive training opportunities.
•	Employees are strategically rotated so that they steadily
develop highly specialized skills by gaining practical anddiverse experience and broad perspectives in multiple
departments and outside institutions.*

Diversity Management and Productivity Improvements

Value Creation Story

Human Resource
Development

On-thejob
training

45

Development Bank of Japan Inc.
Integrated Report 2021

46

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Management Foundation Strategy

Knowledge and Collaboration

Specific Initiatives to Improve the Value ofIntellectual Capital
Knowledge

https://www.dbj.jp/en/investigate/

Processes
Digital Strategy Office
In fiscal 2020, the Digital Strategy Office was created under the
Corporate Planning & Coordination Department consisting ofmembers across departments. Based on the newly drawn up
DBJ–DX Vision, the Digital Strategy Office is in charge of digitalizing in-house business processes and solving the issues ofcustomers. We endeavor to provide added value to customers
by advancing efforts regarding the digital transformation ofsociety, including updating frameworks for selecting new digital
tools and training the personnel needed to advance digitaltransformation.

Strategy

Industry Analysis
The role of the Economic & Industrial Research Department is
to analyze and disseminate information on economic andindustrial trends in Japan and overseas, including macroeconomic trends and trends in key industries, and to support
investment activity. DBJ proactively works to accumulate anduse intellectual capital, including information on recent trends insuch areas as big data, AI, computer-assisted software engineering (CASE), virtual and augmented reality, and fintech.
In April 2017, DBJ established the post of chief research
officer, who is in charge of the Sustainability Planning &Intellectual Capital Support Department. In June 2021, theEconomic & Industrial Research Department was newly created under this structure, and its name was changed to theChief Research Office.

formation of a sustainable economy and society from an academic and liberal standpoint. In recent years, the institute has
expanded the means for creating intellectual capital by establishing new committees for researching sustainability, publishing research papers through Springer, an international
academic publishing company, and holding international academic conferences in conjunction with overseas academic
journals and think tanks.

Value Creation Story

Knowledge andCollaboration

To improve intellectual, relationship, and social
capital using the management resources of the
DBJ Group, we are accumulating knowledge
while advancing collaboration with various
stakeholders.

47

Please refer to the DBJ website for more information.

Basic Policy
Intellectual Capital

Processes
We will improve operations, including via investments in information and communication technology (ICT), by clarifying andsimplifying business processes from the customer’s standpoint
in order to rapidly and properly address customer needs.

The DBJ Group defines social capital as a resource sharedacross society that underpins the foundations of market economics. Increasing the value of social capital is a basic tenet
for realizing a sustainable society. DBJ specifically engages inunique initiatives within the context of (1) the natural environment, (2) social infrastructure, and (3) system capital.
Social capital(1) Naturalenvironment

Forests, mountains,rivers, lakes, soil, air

Example of initiatives

Environmentally Rated
Loan Program
DBJ Green Building
Certification
Loans and investments
for infrastructure andindustrial projects
BCM Rated Loan
Program(3) System
capitalStabilization and stimulation of the financial
system, development
and invigoration offinancial markets

Crisis Response
Operations
Supply of risk capitalSocially responsible
investing bondissuance

Capital Investment Planning Survey
With a history of more than 60 years (since 1956), DBJ’s
Capital Investment Planning Survey looks at trends in corporate
capital investment in Japan as well as corporate activities
based on the “broad definition of investment,” including capital
investment overseas, and spending on R&D, M&A, and humanresources. The results of the survey are used for many purposes, such as furthering education at universities andresearch at R&D organizations, in addition to serving as a reference for national economic policy and corporate planning.

Customers• Provided DBJ Sustainability Certification Loan programs• Held a business plan competition for women• Provided platforms via DBJ Connect• Supported innovation with iHub

Financial institutions• Collaborated with LTIC• Coordinated operations with Bridges FundManagement Ltd. in the United Kingdom

Government• Participated in high-level panel about ESG finance• Participated in TCFD scenario analysis support project

Research institutions• Held DBJ Academy at RICF

Participation andassessment of outside initiatives

DISCLOSURE INSIGHT ACTIONADFIAPfinancing sustainable development

Data Section

Research Institute of Capital Formation
The Research Institute of Capital Formation (RICF) was established in 1964 with Dr. Osamu Shimomura, who advocated forthe principles behind Japan’s post-1940s, high economic
growth, as its first executive officer. The institute serves as avenue for creating intellectual capital through cooperation andcollaboration between DBJ and external experts at universities
and other organizations. Its research includes a focus on the

Collaboration and Dialogue with Stakeholders

Corporate Data(2) Social
infrastructure

Energy, transportation,
urban infrastructure,industrial value chains

Relationship Capital
Collaboration
The DBJ Group has built diverse networks with customers,
financial institutions, investors, and national and local government agencies for the purpose of exchanging information andavoiding conflicts of interest. The DBJ Group utilizes its unique
networks to identify issues affecting the economy and society
and to conduct investment and loan operations. We aim to
maintain our reputation and improve our brand value throughthe services we provide to customers.

Details

2050 Growth Strategy Headquarters Meeting
To achieve the GRIT Strategy outlined in the Fifth Medium-Term
Management Plan, in the fiscal year under review, DBJ set up
the 2050 Growth Strategy Headquarters Meeting as a crossdivisional assembly, including members of management.
The aim of this action is to advance initiatives through collaboration across existing organizational boundaries by engaging in discussions and through the sharing among departmentsof the latest trends and knowledge necessary to promote
Green, Resilience & Recovery, Innovation, and Transition /Transformation initiatives for society and customers. (In thefiscal year under review, the topics discussed included transition finance, ESG real estate, and carbon pricing.)

Concrete Measures to Increase the Value ofRelationship and Social Capital
Corporate Governance

Knowledge
We strive to improve skills as a core element of operations necessary to differentiate our business model through surveys,
research, analyses, and risk management centered on industry.

Social Capital

48

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Taking the Initiatives to Spread PFS and SIB that Solve Social Issues

Management Foundation Strategy

In 2011, the DBJ Women Entrepreneurs Center was launchedto provide comprehensive support, including entrepreneurial
know-how and networking opportunities, to nurture growthbusinesses led by women from new vantage points that couldchange society and the economy for the better. As a part ofthese efforts, DBJ has held a business plan competition eighttimes since 2012 for women entrepreneurs.
In the eighth competition, first-place awards were created inthree fields: Excellent Social Design Award, Excellent Growth
Potential Award, and Excellent Regional Impact Award. Fromamong these categories, the DBJ Women Entrepreneurs Prize
recipient is chosen. Excellent new business ideas are awarded
business grants of up to ¥10 million. After the competition finishes, the winners are connected with outside experts andexperienced entrepreneurs who help them turn their businessplans into reality by supporting the growth and development of
their business ideas.
More than 2,500 business plans have been submitted overthe past eight competitions. Some of the winners’ and finalists’competition plans have gone on to played a role in expanding
their respective entrepreneurs’ operations. DBJ also assists
other initiatives to support women entrepreneurs in regional
locations, helping expand thebreadth of women
entrepreneurs.

Beginning in June 2017, at the suggestion of our young
employees, we launched DBJ Connect in collaboration with
Creww, a company that operates the largest start-up community in Japan.
DBJ Connect is a program whereby DBJ facilitates all of thenecessary processes for collaboration between start-ups andmajor and mid-tier corporate customers. When major and midtier corporate customers evaluate starting a new business,start-ups are solicited to provide ideas for business collaboration over the internet to solve issues related to processes,
know-how, ideas and human resource shortages, for example.
DBJ Connect aims to maximize not only potential outcomesin short periods of time but also human resources as the various parties aim to start their experimental projects.
In fiscal 2020, the Hokuriku Start-Up Program attracted
more than 50 proposals from start-up firms, and five of these
proposals turned into collaborations between startups and Ryoki Kogyo Co.,
Ltd. and Being Holdings
Co., Ltd.

https://dbj-i.net/ja

https://www.jeri.or.jp/sctm/about/ihub.php
Please refer to the DBJ website for more information (Japanese only).

SIB
Financial
institutions, etc.

(2) P rovision ofcapital(6) Reimbursementof payment
based onoutcomePFS
Privatecompanies(3) P rovision ofservices
Servicebeneficiaries(1) Pay-for-success
contracts
Government(5) Payment based on
outcome(4) Evaluation andreport of outcome(4) Evaluation andreport ofoutcomeThird-party
evaluation agency

Initiatives to Date
DBJ views PFS and SIB as important means of public–private collaboration to solve social issues. Through market research and thedisclosure of information inside and outside Japan, DBJ has built networks with entities in the PFS and SIB market, including national
and local governments, intermediate support organizations, service providers and private-sector companies, and financial institutions. Here, we introduce two major initiatives in this field.
Entered into a Strategic Partnership with Bridges Fund Management (the U.K. Impact Investor)

In December 2016, DBJ and DBJ Asset Management Co., Ltd.
became signatories of the United Nations–supported Principles
for Responsible Investment (PRI) and have served as membersof the PRI Infrastructure Advisory Committee since February
2018. DBJ is also a member of the Long-Term Investors Club(LTIC), an international group of investors that emphasizes
investment activities with long-term time horizons. In May 2019,with Japan Bank for International Co-operation, DBJ held anannual meeting and sponsored events to exchange opinionswith financial institutions from G20 countries. Furthermore, DBJ
proactively participates in and contributes to outside initiatives
that promote sustainability management, as an investor
member of the Global Real Estate Sustainability Benchmark, aparticipant in high-level panels on ESG finance at the Ministryof the Environment, as well as a signatory to the Principles for
Financial Action for the 21st Century and chair of its Working
Group on Savings, Lending, and Leasing Operations.
In February 2019, DBJ received an award from the Associationof Development Financing Institutions in Asia and the Pacificrecognizing its participation in outside initiatives, specifically its
efforts in health management in February 2018 and its initiatives to address natural disasters and climate change.

In November 2019, DBJ signed a business cooperation agreement with Bridges Fund Management Limited(Bridges) in the U.K. to build a strategic partnership and invest in the Bridges Social Outcomes Fund II, afund that invests in SIBs.
Bridges is a major fund management company in the U.K. that specializes in social impact investments,
aimed at creating positive economic returns and social impacts. The U.K. has the largest number of SIB projects in the world. As an investor, Bridges provides not only capital but also support for putting together andmanaging projects for the successful achievement of key performance indicators. This innovative know-how
should bring a wealth of SIB opportunities in Japan, and DBJ plans to draw on this expertise through thefinancing of projects and cooperation on the operational side.

SIB for the prevention of mental
health and healthcare maladies
among elderly people in the U.K.

Launched PFS and SIB Conference
DBJ held PIF and SIB Workshops in collaboration with Social Value Japan, Social Innovation and
Investment Foundation (SIIF), and Sumitomo Mitsui Banking Corporation.
These workshops were made possible thanks to the relationships DBJ has cultivated withnational and local governments, investors, foundations, and other entities. A total of 56 companies
and groups participated as committee observers, including the Cabinet Office, the Ministry of
Economy, Trade and Industry (METI), the Ministry of Justice, 10 local governments, and seven financial institutions. Held three times between October 2020 and January 2021, the workshops provided a venue for lively discussions about PFS and SIB issues and future initiatives in Japan.

PFS and SIB Study Group

Aiming to Further Spread PFS and SIB
Utilizing its diverse networks and knowledge, DBJ intends to share information regularly and provide capital and assistance for theformation of individual PFS and SIB projects. DBJ will help solve social issues regionally while contributing to the growth and invigoration of this market by promoting Japanese versions of PFS and SIB contracts.

Data Section

Along with the Japan Economic Research Institute, DBJ seeks
to spur innovation through iHub and“value training” activities. By using its
impartial position and broad network,
DBJ aims to resolve social issues
through logical and innovative business solutions.

PFS and SIB Scheme

Corporate Data

DBJ iHub (DBJ innovation Hub)action plan calls for promoting the use of PFS and SIB in threepriority fields: healthcare, nursing care, and crime prevention.
The Basic Policy on Economic and Fiscal Management andReform 2021 (June 18, 2021, Cabinet decision) also clearlycalls for expansion in PFS and SIB initiatives.

Corporate Governance

Entrepreneurs Center (Japanese only).

Pay-for-success (PFS) contracts are subcontracts that pay preset amounts linked to the outcome of a project, as designatedby national or local governments. Social impact bonds (SIBs)
are a subset of PFS associated with the allocation of privatesector funds to social projects.
PFS and SIB comprise a new framework for private-sector
collaboration to solve social issues faced by national and local
governments that lead to new solutions that leverage theknowledge of private companies and private-sector financing,while keeping government expenditures in check.
PFS and SIB have gained traction overseas, mainly in the
U.K. and the U.S. In Japan, the Cabinet Office drafted theAction Plan for the Promotion of Pay-For-Success Contracts
with Private Service Providers (2020) based on the Growth
Strategy Action Plan (June 21, 2019, Cabinet decision). This

Please refer to the DBJ website for more information (Japanese only).

Participation in and Evaluation of Outside Initiatives

Please refer to the DBJ website for more information about the DBJ Women

What are PFS and SIB?

Strategy

DBJ Connect

Value Creation Story

DBJ Women Entrepreneurs Center (DBJ-WEC)

https://www.jeri.or.jp/wec/

49

50

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Corporate Governance

51

Corporate Governance overnance Suited to Our Unique Business Model and Dialogue withG
Stakeholders

Message from the Chairman

Creation of a Unique Business ModelChairmanAugust 2021

Data Section

After the Japanese government declared the COVID-19
pandemic a crisis in March 2020, as a designated financial
institution the DBJ Group concentrated on Crisis Response
Operations to address the impacts of the pandemic.
In light of the requests being made by the government andthe increasingly severely challenging business environment forcompanies during the persistent pandemic, we temporarily
strengthened our support for businesses in sectors that havebeen hit hard by the pandemic, such as the hospitality sector.
While continuing to concentrate on Crisis Response
Operations during the COVID-19 pandemic, DBJ will pursue
innovative ways to provide financing from a customer perspective based on its GRIT Strategy (see page 17), which sets
out the priority fields the DBJ Group is focusing on under its
Fifth Medium-Term Management Plan to realize a sustainable
society in the future.

supply of risk capital, in an effort to advance sustainability
management and maintain a balanced value creation process.
As the social significance of balancing these two types ofvalue increases, we will continue making every effort toengage in dialogue with our diverse stakeholders and ensure
robust and effective corporate governance, based on thenotion that nothing is more important than embodying bestpractices that will continue to earn us the trust of our customers and society.

Corporate Data

The DBJ Group practices sustainability management in accordance with the Development Bank of Japan Inc. Act, balancing economic and social value with the aim of building asustainable society. We supply risk capital to forward-looking
initiatives through our Special Investment Operations programand collaborate and cooperate with private financial institutions to stimulate new flows of risk capital in Japan. DBJ’s
investments and loans in new fields help strengthen Japan’s
economic competitiveness. We also address local issues
through risk capital supplied through joint funds created with
regional financial institutions.
Furthermore, DBJ functions as an emergency supplier ofcapital for responses to natural disasters and other crises. In
times of international financial turmoil, and following the Great
East Japan Earthquake, the Kumamoto earthquakes, andother events calling for rapid influxes of capital, DBJ has been
there to provide relief.

Given the adoption of the Sustainable Development Goals(SDGs), the Paris Agreement, and other recent initiatives, the
DBJ Group established the Sustainability Committee to deal
with the growing need to review corporate management froma sustainability standpoint. In fiscal 2020, directors engaged ininvigorating discussions about the DBJ Group’s initiatives
related to the global agenda for ESG and building a sustainable society while recognizing the impact from the COVID-19
pandemic. These discussions were reflected in the formulationof the Fifth Medium-Term Management Plan. In fiscal 2021,
we plan to discuss DBJ Group initiatives connected to theenvironment and society, including our approach to energy
and climate change–related issues, from a medium- to longterm perspective.
To realize a sustainable society while balancing economic
and social value, the DBJ Group offers solutions to issues
faced by society and by our customers. The Group has continued to create innovative business models, centered on the

Corporate Governance

A Value Creation Process That Balances Economic and Social Value

Strategy

deliberations by the Special Investment Operations Monitoring
Board are debated by the Advisory Board, an advisory bodyto the Board of Directors comprising outside experts anddirectors in fields including manufacturing, infrastructure,regional communities, and finance (see page 53). The Advisory
Board provides valuable ideas on matters concerning thesafeguarding of proper competition with private financial institutions and the DBJ Group’s management plans. In my view, adistinct aspect of corporate governance at the DBJ Group is
its continuous reassessment of its unique value creation process while engaging in dialogue with diverse stakeholders.
Living up to the trust placed in us by society, we want tokeep our initiatives one step ahead of the times, especially inregard to the supply of risk capital, and this means ensuringthat we operate in conformity with the Companies Act. For
this purpose, the Board of Directors formulated the Basic
Policy for Internal Control, which positions legal compliance,risk management, and internal audits as important subjects for
management.

Value Creation Story

With ongoing efforts tostrengthen governance,
DBJ contributes to sustainablegrowth through an innovative
process of value creation.

In order to continue playing this unique role, DBJ must haverobust corporate governance, ensure transparency in management, and consider the opinions of outside experts. To
realize this aim, we have created the Operations Audit
Committee, the Compensation Committee, and the Personnel
Evaluation Committee as advisory bodies to the Board of
Directors. Listening to the views of our stakeholders is imperative to strengthening this framework.
It is essential that DBJ collaborate and cooperate withrather than compete with private financial institutions. We holdregular events for this purpose, usually twice a year, involving
discussions with representatives of such institutions. We havealso created the Special Investment Operations Monitoring
Board (see page 53) as an advisory body to the Board of
Directors. The board meets twice a year to discuss and evaluate the status of the Bank’s business performance, as well as
its complementing and encouraging of private business andmaintenance of non-competitive relationships.
The opinions we obtain both through our outreach to private financial institutions and through the outcomes of52

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Corporate Governance

DBJ is governed by the Development Bank of Japan Inc. Act (the DBJ Act) in accordance with the following objective.

Development Bank of Japan Inc. (hereinafter referred to as the “Corporation”) shall be a joint-stock company (kabushiki-kaisha)
whose objective is to contribute to the smooth supply of funds to those needing long-term business funds, as well as to thesophistication of financial functions.

management and deliberate and evaluate business results,
including consistency with the policy objectives of Special
Investment Operations, ensuring that appropriate competitive
relations are maintained with private financial institutions.
DBJ’s Corporate Governance System
A company with a board of
directors and company auditors(Audit & Supervisory Board)

Institutional design configuration

10

In pursuit of sustainability management and DBJ’s corporate
objectives, the following committees have been established asadvisory bodies to the Board of Directors for the purpose ofmaintaining transparency in management and to reflect theknowledge of outside experts.

(2)
12
5
(3)

Operations Audit Committee

16

Adoption of executive officer system

Yes

Accounting auditor

Deloitte Touche Tohmatsu LLC

Overview of DBJ’s Corporate Governance System• Appointment and dismissal of representative members of the Board of Directors andAudit & Supervisory Board members

Audit & Supervisory
Board members,
Audit & Supervisory Board

Compensation
Committee• Mergers, corporate splits, and dissolutions

Executive Committee

AuditsSpecial Investment Operations
Monitoring Board

Advisory Board

Decision-making
bodiesDeliberative
bodiesGeneral Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panelon Investments
and Loans

Sustainability
Committee

Investment
Management
Committee

AuditsSince DBJ’s establishment as a joint-stock company in
October 2008, the Advisory Board has been in place as anadvisory body to the Executive Committee, providing advice on
overall management. Revisions in 2015 to the DBJ Act stipulate for an indefinite period obligatory measures to be considered—in particular, requiring that DBJ conduct its operations ina manner that would not obstruct appropriate competitive relations with other entities. Accordingly, this board is positioned

Honorary Advisor of Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama

Senior Advisor, IHI Corporation

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Yoshizumi Nezu

President, Tobu Railway Co., Ltd.

Outside Members of the Board of Directors
Akio Mimura

Honorary Chairman of Nippon Steel Corporation

Kazuo Ueda

Professor, Dean of Faculty of Business Studies at
Kyoritsu Women’s University

Special Investment Operations Monitoring Board
One of the measures of the 2015 revisions to the DBJ Act wasin regard to Special Investment Operations. The act stipulates
the establishment of a Special Investment Operations
Monitoring Board as an advisory body to the Board of
Directors. This monitoring board is tasked with deliberating
projects and evaluating their performance in terms of appropriateness against policy objectives and with emboldening private-sector enterprises and complementing their operations
while maintaining appropriate competitive relations. This board,whose members include outside experts in fields such as manufacturing, infrastructure, regional communities, and finance,
convened twice during the fiscal year ended March 31, 2021.
Moreover, in order to examine whether appropriate competitive relations with other entities are being maintained, roundtable discussions are held regularly with the Japanese Bankers
Association, the Regional Banks Association of Japan, and theSecond Association of Regional Banks, including these entities’ private financial institution members. Each group met
twice in fiscal 2020, for a total of six meetings. Disputes andopinions raised in these meetings are reported to and deliberated by the Advisory Board and the Special Investment
Operations Monitoring Board.
Outside Experts
Hideharu Iwamoto

Vice Chairman & Senior Executive Director of Japanese
Bankers Association

Masayuki Oku

Honorary Advisor of Sumitomo Mitsui Financial Group, Inc.

Katsunori Nakanishi

Chairman and CEO, The Shizuoka Bank, Ltd.

Takashi Yamanouchi Advisor, Mazda Motor Corporation
Keisuke Yokoo

President, Member of the Board
Chief Executive Officer, Japan Investment Corporation

Data Section

Subsidiaries

The Personnel Evaluation Committee, composed of outside
members of the Board of Directors and other outside experts,
evaluates personnel proposals on the selection of members of
the Board of Directors and Audit & Supervisory Board
members.

Internal
Audit Department

Advisory Board• Basic policy on business plans, redemption
plans, and fund procurement

Personnel Evaluation Committee

Cooperation
Reporting

Personnel Evaluation
Committee• Disposition of surplus funds

Departments

Accounting auditor

The Boston Consulting Group K.K. Co-Chairperson

Masayuki Oku

Corporate Data

Board of Directors

The Compensation Committee, the majority of which consistsof outside executives, considers the type of executive compensation structure that befits DBJ from the standpoint of ensuringtransparency and objectivity regarding compensation.

ReportingOperations Audit
Committee• Amendments to Articles of Incorporation

ALM & Risk
Management
Committee

The Board of Directors has established the Operations Audit
Committee, delegating to this body the authority to deliberate
important matters related to internal audits. This committee
met two times during the fiscal year ended March 31, 2021.
Compensation Committee

General Meeting of
Shareholders• Concurrent positions as members of theBoard of Directors

Advisory Bodies to the Board of Directors

Reiko Akiike

Corporate Governance

Number of members of the Board of
Directors Of whom are outside members of theBoard of Directors
Number of Board of Directors’
meetings in fiscal 2020
Number of Audit & Supervisory Board
members Of whom are outside Audit &Supervisory Board members
Number of Audit & Supervisory Board
meetings in fiscal 2020

Outside Experts

Strategy

DBJ is working to enhance its unique governance system in
addition to usual management supervision as a company witha board of directors and company auditors (Audit &Supervisory Board), through a business model built upon features such as integrated investments and loans and proper
execution of the preceding objective, in order to raise the valueof tangible and intangible management resources to beinvested and to realize sustainable management that aims forboth economic and social value.
Specifically, the 2015 revisions to the DBJ Act establishedSpecial Investment Operations and obligatory measures to beconsidered, requiring that DBJ conduct its operations in amanner that does not obstruct appropriate competitive relations with other entities, in particular, applying these requirements to the Advisory Board, made up of outside experts andoutside members of the Board of Directors, and the Special
Investment Operations Monitoring Board, composed of outside
experts, which function as advisory bodies to the Board of
Directors. These bodies provide advice on DBJ’s overall

The Audit & Supervisory Board comprises five members.
The Companies Act prescribes that a majority of Audit &Supervisory Board members be outside members (in DBJ’scase, three of the five). DBJ offices contribute three members(two members proper to DBJ and one an outside member).
Also, DBJ has created the Audit & Supervisory Board Office,which, under the board’s direction, assists board members,
including outside members, in performing their duties. The
Audit & Supervisory Board and Audit & Supervisory Board
members audit the execution of duties by members of theBoard of Directors, based on their audit policy and audit plans.
Audit & Supervisory Board members attend Board of
Directors’ and other important meetings and may query the
execution of business by members of the Board of Directors,
peruse documents, and conduct branch audits.

anew as an advisory body to the Board of Directors. As one of
its roles, even more than before, the Advisory Board is tasked
with deliberating and evaluating important affairs related toensuring that appropriate competitive relations are maintainedwith private financial institutions.
This board convened twice during the fiscal year ended
March 31, 2021. It is composed of the following outside members of the Board of Directors and outside experts in fields
including manufacturing, infrastructure, regional communities,
and finance.

Value Creation Story

Article 1

Matters requiring authorization ofcompetent minister

Corporate Governance	Audit & Supervisory Board Members,
Audit & Supervisory Board

Basic Position on Corporate Governance

53

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Development Bank of Japan Inc.
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Corporate GovernanceCorporate Governance

Executive Compensation

The Board of Directors has vested in the Executive Committee decision-making authority regarding the execution of business.
Accordingly, the Executive Committee makes important management decisions. The committee met 34 times during the fiscal year
ended March 31, 2021.

DBJ’s Compensation Committee is an advisory body to theBoard of Directors. It deliberates on the compensation structure for members of the Board of Directors and evaluates the
propriety of the compensation structure for the Company. The
majority of its members are outside executives.
DBJ takes the following basic approach to executive
compensation.
• Compensation should reflect social trends in regard to executive pay.
• Compensation should provide motivation for initiatives aimed
at realizing economic and social value during each fiscal year
and in the medium to long term.

Committees under the Executive Committee
Name

Role

This committee deliberates and makes decisions pertaining to portfolio risk management and asset–liability management.

General Risk Management
Committee

This committee deliberates and makes decisions on important items related to operational risk management, system risk
management, legal compliance, responses to antisocial forces, client protection management, and other important items.

Committee on Investment and Loan
DecisionsThis committee handles, deliberates, and makes decisions related to investments and loans, overseas business strategy, andoperations and management conditions.

New Operation Screening Committee

This committee deliberates and makes decisions on the commencement of initiatives involving new businesses.

Advisory Panel on Investments and
LoansThis panel handles the advance deliberation on and monitoring of investments and loans as well as deliberations on overseas
business strategy and operations and management conditions.

Sustainability Committee

This committee deliberates on items related to both economic and social value as well as dialogue with stakeholders.

Investment Management Committee

This committee monitors investment projects and enhances the monitoring system, as well as discusses planned proposals forinvestment policies.

Accounting Audits

DBJ has established the Internal Audit Department under the
direct supervision of the president and CEO of DBJ and independent of other operating departments. The department
conducts inspections to ensure the appropriateness and effectiveness of internal controls, including overall operational compliance and risk management, and performs evaluations andrecommends improvements. The Operations Audit Committee
deliberates and decides audit plans, audit reports, and otherimportant matters related to internal audits, and this information is reported to the Board of Directors. As of June 24, 2021,
22 people belonged to the Internal Audit Department.

DBJ has in place an agreement whereby Deloitte Touche
Tohmatsu LLC conducts accounting audits as its accounting
auditor.
Three-Pronged Auditing Approach
DBJ’s Audit & Supervisory Board members, the Internal Audit
Department, and the accounting auditor periodically and asnecessary exchange opinions and information, and communicate in an effort to ensure effective and appropriate audits.

The General Meeting of Shareholders held on June 29,
2017, passed a resolution that sets ¥270 million as the maximum annual amount for total compensation paid to membersof the Board of Directors. The Company’s first General Meetingof Shareholders held on September 22, 2008, passed a resolution that sets ¥80 million as the maximum annual amount for
total compensation paid to Audit & Supervisory Board members. The Articles of Incorporation set the number of Audit &Supervisory Board members to five or fewer.

The Compensation Committee was established in 2008
to ensure transparency and objectivity in the process for­determining compensation, and a majority of members of
the Compensation Committee comprises outside executives.
This composition allows independent outside executives to be
involved and give relevant advice.
Meetings of the Compensation Committee in fiscal 2020
Number of meetings held in
fiscal 2020
Compensation Committee

Members of the Compensation Committee

fiscal year ended March 31, 2020) is used as the performance indicator because it most accurately reflects DBJ’s
performance.
Please refer to the links below for detailed information regarding DBJ’s corporate governance.

https://www.dbj.jp/ir/financial/report.html

Internal Control System Basic Policy (Japanese only)
https://www.dbj.jp/co/info/governance_policy.html

Policy on Sustainability
https://www.dbj.jp/en/sustainability/management/regular.html

https://www.dbj.jp/co/info/stewardship.html

	Yasushi Kinoshita(head of the committee)

President

Hajime Watanabe

Outside member of the Board of
Directors

Akio Mimura

Outside member of the Board of
Directors

Kazuo Ueda

Outside Audit & Supervisory Board
memberToshio Yamasaki

Compensation paid to DBJ’s members of the Board of Directors
and Audit & Supervisory Board members in fiscal 2020
(¥ million)

Category

Number of people

Compensation, etc.

Members of theBoard of Directors(Excluding Outside
Members of theBoard of Directors)

10

202

Audit & Supervisory
Board members(Excluding Outside
Audit & Supervisory
Board Members)

3

39

Outside Executives

7

63

Total

20

305

Notes: 1. C ompensation amounts include provisions to reserves for executive
retirement benefits.
2. Numbers
of persons to be paid and compensation amounts include two
members of the Board of Directors and three members of Audit &Supervisory Board members who retired during fiscal 2020.

Data Section

Compliance with Japan’s version of the Stewardship Code (Japanese only)

Below is a description of the compensation structure formembers of the Board of Directors.
Compensation for full-time members of the Board of
Directors consists of fixed compensation, executive bonuses,and executive retirement benefits. To maintain their independence, part-time members of the Board of Directors receive
fixed compensation alone.
Compensation for full-time Audit & Supervisory Board members comprises fixed compensation, and executive retirement
benefits. Compensation for part-time Audit & Supervisory
Board members consists solely of fixed compensation.
The amount of compensation paid to members of the Boardof Directors is determined after deliberation by the Board of
Directors, within the maximum amount approved at theGeneral Meeting of Shareholders following discussions by theCompensation Committee. Compensation amounts are basedon the position and responsibilities of each member of the

Chairman

Corporate Data

Securities filings (state of corporate governance, etc.) (Japanese only)(3) Executive retirement benefits are paid out upon retirement in an amount reflecting successful service over the
longer term.

2
Corporate GovernanceInternal Audits

In accordance with this approach, DBJ provides compensation to its executives in three forms: fixed compensation, executive bonuses, and executive retirement benefits.
(1) Fixed compensation is paid monthly in an amount basedon the executive’s position.
(2) Executive bonuses are distributed after taking into consideration the performance of each member of the Boardof Directors in carrying out their duties during the fiscal
year. Bonuses start with a standard amount based on theposition of the member of the Board of Directors.
Bonuses also include a quantitative assessment portion
determined based on a preset distribution percentagethat reflects the achievement of the consolidated net
income target, as well as a qualitative assessment portion determined based on a preset distribution percentage that comprehensively considers each executive’sachievement of performance targets in their businessdivision. Consolidated net income (¥51,518 million in thelimit the number of directors to 13 or less.

Strategy

ALM & Risk Management Committee

Board of Directors, with due consideration given to social
trends, DBJ’s financial performance, and other standards balanced against employee salaries. The Articles of Incorporation
Value Creation Story

Executive Committee

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Development Bank of Japan Inc.
Integrated Report 2021

Members of the Board of Directors, Audit & Supervisory Board
Members, and Executive Officers (as of the end of August 2021)



57

Members of the Board of Directors, Audit & Supervisory Board Members, and Executive Officers

Members of the Board of Directors

Value Creation Story

President and CEO

Deputy President

Member of the Board of Directors,
Managing Executive Officer

Member of the Board of Directors,
Managing Executive Officer

Yasushi Kinoshita

Hajime Watanabe

Seiji Jige

Makoto Anayama

Norifumi Sugimoto

1979: Joined the Ministry of Finance2013: Vice-Minister of Finance2015: Deputy President of DBJ
2018: Chairman of DBJ

1981: Joined Japan Development Bank
2008:	General Manager,
Head of Urban Development Department
2009:	Executive Officer, Head of Corporate Planning &Coordination Department
2011: Director and Managing Executive Officer of DBJ
2015: Deputy President of DBJ
2018: President and CEO of DBJ

1986: Joined Japan Development Bank
2011: Executive Officer in Charge of Special Missions
2013:	Executive Officer, Head of Corporate Planning &Coordination Department
2015: Managing Executive Officer of DBJ
2018:	Member of the Board of Directors, Managing
Executive Officer of DBJ
2020: Deputy President of DBJ

In charge of Risk Management Department,
Accounting Department, Credit Analysis
Department, Legal Affairs & ComplianceDepartment, Research Institute of Capital
Formation

In charge of Corporate Planning & Coordination
Department, Information Resources Department,
General Affairs Department
1988: Joined Japan Development Bank
2013: General Manager, Secretariat Office
2015:	Executive Officer, Head of Corporate Planning &Coordination Department
2018: Managing Executive Officer of DBJ
2020:	Member of the Board of Directors,
Managing Executive Officer of DBJ

Corporate Governance

1986: Joined Japan Development Bank
2011:	Head of Economic & Industrial Research
Department
2013:	Executive Officer, Head of Business Planning &Coordination Department
2015: Managing Executive Officer of DBJ
2018:	Member of the Board of Directors,
Managing Executive Officer of DBJ

Strategy

Chairman

Corporate Data

Member of the Board of Directors,
Managing Executive Officer

Member of the Board of Directors,
Managing Executive Officer

Outside Member of the Board of Directors

Outside Member of the Board of Directors

Shoichiro Kubota

Takeshi Harada

Tsutomu Murakami

Akio Mimura

Kazuo Ueda

In charge of Strategic Finance Department,
Growth & Cross Border Investment Department,
Regional Investment Department, Business
Development Department

In charge of Treasury Department,
Syndication & Credit Trading Department,
Financial Institutions Department

In charge of Business Planning & Coordination
Department

Honorary Chairman of Nippon Steel Corporation,
Chairman of the Tokyo Chamber of Commerceand Industry, Chairman of the Japan Chamber ofCommerce and Industry

Professor and Dean of Faculty of Business Studies
at Kyoritsu Women’s University, Director of Tokyo
University’s Center for Advanced Research in
Finance2008: Outside Member of the Board of Directors at DBJ

2008: Outside Member of the Board of Directors at DBJ

1990: Joined Japan Development Bank
2014: Head of Real Estate Finance Department
2018:	Executive Officer, Head of Growth & Cross Border
Investment Department
2020:	Member of the Board of Directors,
Managing Executive Officer of DBJ

1988: Joined the Ministry of Finance2017:	Councilor of the Cabinet Secretariat
Deputy Director of the Office for the Promotionof Privatization of Postal Services, Cabinet
Secretariat
2019: Director-General, Tohoku Local Finance Bureau
2021:	Member of the Board of Directors,
Managing Executive Officer of DBJ

1988: Joined Japan Development Bank
2012: General Manager, Structured Finance Group
2015: General Manager, Secretariat Office2017:	Executive Officer, Head of Human Resources
Management Department
2019: Managing Executive Officer of DBJ
2021:	Member of the Board of Directors,
Managing Executive Officer of DBJ

Data Section

Member of the Board of Directors,
Managing Executive Officer

Notes:* Of the 15 members of the Board of Directors and Audit& Supervisory Board members, 14 are male and one isfemale, leaving the female to male ratio at 6.7%.
* Standards and policies related to independence in theselection of outside members of the Board of Directors
and outside Audit & Supervisory Board members are
not applicable.
* Akio Mimura, Honorary Chairman of Nippon SteelCorporation, is an outside member of the Board of
Directors of DBJ. DBJ has no special relationship with
Mr. Mimura, and its business with Nippon SteelCorporation is conducted normally. Outside Audit &Supervisory Board member Naoko Saiki is also an outside director of Sojitz Corporation. DBJ has no conflictsof interest with Sojitz Corporation, and its business isconducted normally with the Company.
DBJ has no special-interest relationship with anyother of its outside members of the Board of Directors
or outside Audit & Supervisory Board members.
* DBJ has signed liability limitation agreements with its
outside members of the Board of Directors and Audit &Supervisory Board, based on Paragraph 1, Article 427,of the Companies Act.

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Integrated Report 2021

Messages from Outside Members of the Board of Directors

Members of the Board of Directors, Audit & Supervisory Board Members, and Executive Officers

Audit & Supervisory Board Members

Akio Mimura

Leveraging Corporate Governance toHelp Solve Social Issues

Atsushi Kurashige

Shigeru Tamagoshi

Toshio Yamasaki

1986: Joined Japan Development Bank
2010: General Manager, Credit Analysis Department
2011: General Manager, Secretariat Office
2013:	General Manager, Head of Urban Development
Department
2017: Audit & Supervisory Board Member of DBJ

1989: Joined Japan Development Bank
2014: Head of Corporate Finance Department, Division 2
2016: Head of Corporate Finance Department, Division 5
2018:	Executive Officer, Head of Business Planning &Coordination Department
2020: Audit & Supervisory Board Member of DBJ

1982:	Joined The Sumitomo Trust and Banking Co., Ltd.
2017:	President of Sumitomo Mitsui Trust General
Service Co., Ltd.
2018:	Advisor of Sumitomo Mitsui Trust General Service
Co., Ltd.
2018: Audit & Supervisory Board Member of DBJ

Outside Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Masato Dogauchi

Naoko Saiki

Professor, Waseda University, Law School
Senior Counsel, T&K Partners

Visiting Professor, Graduate School of Public
Policy, The University of Tokyo
Outside Director, Sojitz Corporation

CareerApril 1963:	Joined Fuji Iron & Steel Co., Ltd.
April 2003:	Representative Director and President of
Nippon Steel Corporation
April 2008:	Representative Director and Chairman of
Nippon Steel Corporation
October 2008:	Outside Member of the Board of Directors at
DBJ (current position)
October 2012:	Director, Member of the Board, and Senior
Advisor of Nippon Steel & Sumitomo Metal
Corporation
November 2013:	Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation
Chairman of the Tokyo Chamber ofCommerce and Industry (current position)
Chairman of the Japan Chamber ofCommerce and Industry (current position)
June 2018:	Honorary Chairman of Nippon Steel &Sumitomo Metal Corporation(now Nippon Steel Corporation)
April 2019:	Honorary Chairman of Nippon SteelCorporation (current position)

2020: Audit & Supervisory Board Member of DBJ

Executive Officers (excluding those who are concurrently members of the Board of Directors)
Managing Executive Officer

Executive Officer

Hiroshi Shimizu

Keita Arakaki

Tomoya Sato

Yoshinari Furuta

In charge of Urban Development
Department,
Real Estate Finance Department,
Structured Finance Department

In charge of Corporate Finance
Department, Division 4

In charge of Corporate Finance
Department, Division 5

Head of Credit Analysis Department

Managing Executive Officer

Managing Executive Officer(Head of Kansai Branch)

Executive Officer

Executive Officer

Masao Masuda

Fumiyo Harada

In charge of Kansai Branch,
Chugoku Branch, Shikoku Branch

Head of Business Planning &Coordination Department, Chief
Manager of Crisis Response
Operations Office

In charge of GRIT, Chief Manager of
Sustainability Management Office,Corporate Planning & Coordination
Department

Managing Executive Officer

Managing Executive Officer

Executive Officer

Executive Officer

Masashi Kumagae

Seiji Tomosada

Isao Nishio

Hirofumi Maki

In charge of Planning & Coordination
Department (Regional Business
Planning Office), Economic &Industrial Research Department,
Regional Research & Planning
Department, Hokuriku Branch,
Kyushu Branch, Minami-Kyushu
BranchIn charge of Corporate Finance
Department, Division 3, Sustainable
Solution Department, Hokkaido
Branch, Niigata Branch, Tokai Branch

In charge of Financial Institution

Head of Corporate Planning &Coordination Department

Managing Executive Officer

Executive Officer

Executive Officer

Katsushi Kitajo

Takao Isozaki

Shingo Kobayashi

In charge of Corporate Finance
Department, Division 1 and 2

In charge of Internal Audit

Head of Human Resources
Management Department

Kazufusa Matsushima
In charge of Planning & Coordination
Department (Crisis Response
Operations Office), Corporate Finance
Department, Division 6, Tohoku
BranchToshiyasu Takazawa

Global interest in sustainability, as manifested in ESG and SDGs, has been
growing since the adoption of the Paris Agreement. To attain a carbonneutral and sustainable society, private-sector capital must be deployed alongwith advances in innovation. DBJ has provided solutions in tune with thetimes and constantly evolving social issues, such as by developing its sustainability certification programs and supplying risk capital through collaborative efforts with private-sector companies and financial institutions. We willclosely monitor global trends toward the achievement of a sustainable society, and redouble our efforts to coordinate with stakeholders and achievea balance between social and economic value.
DBJ must continue to carry out these efforts with medium-to-long-term
perspective of facilitating social and economic development and achieving asustainable society. Proper governance is therefore essential. The DBJ
Group’s Advisory and Special Investment Operations Monitoring Boards support the attainment of these goals and underpin DBJ’s unique businessmodel. As a member of the Advisory Board—in addition to my duties as
an outside member of the Board of Directors—I work closely with outside
experts to advise on overall management. I will do my part in pursuing thesustainable social development and sustainability management goals sharedthroughout DBJ.

CareerJuly 1980:	Assistant professor at the University of
British Columbia, School of Economics
April 1982:	Assistant professor at Osaka University,
School of Economics
April 1989:	Assistant professor at Tokyo University,
School of Economics
March 1993:	Professor at Tokyo University, School of
Economics
April 1998:	Member of the Bank of Japan’s Policy Board
April 2005:	Professor at Tokyo University,
School of Economics
October 2008:	Outside Member of the Board of Directors at
DBJ (current position)
April 2017:	Professor, Faculty of International Studies,
Head of Office for New Department Planning,
Kyoritsu Women’s University
Director of Tokyo University’s Center for
Advanced Research in Finance(current position)
April 2020:	Professor, Faculty of Business Studies at
Kyoritsu Women’s University (current position)
Dean of Faculty of Business Studies at
Kyoritsu Women’s University (current position)

Data Section

Managing Executive Officer

Outside Member of the Board of Directors

Corporate DataManaging Executive Officer

Kazuo Ueda

Reinforcing Corporate Governance toAdvance Sustainability Management

Corporate GovernanceOutside Audit & Supervisory Board Member

Strategy

Audit & Supervisory Board Member

I have served as an outside member of the Board of Directors since DBJ
became a joint stock company in 2008.
I am currently a member of the Advisory Board, an independent body thatfacilitates corporate governance by incorporating the opinions of outside
experts into the management of DBJ. In accordance with the amendment of
the DBJ Act in 2015, the Advisory Board is positioned as an advisory body to
the Board of Directors. The role of the Advisory Board is not only to advise
DBJ’s management on balancing economic and social value but also todeliberate on the matter of ensuring suitable competitive relations with private
financial institutions. I believe that the Advisory Board has fulfilled the responsibility of performing checks, from a third-party perspective, on the proper
execution of legally mandated Special Investment Operations, Crisis
Response Operations, collaboration with private financial institutions, andsustainability management by DBJ.
The COVID-19 pandemic has brought to the surface a number of issues
in Japan, such as digitalization, the risk of over-concentration in Tokyo, andstrengthening the supply chains of corporations. A variety of social changes
are needed to address these issues, requiring increasing amounts of risk capital from DBJ. To ensure that we meet these expectations with consistency,
while realizing both economic and social value, I will continue to fulfill my
responsibilities on the governance front in facilitating essential dialogue andcooperation with stakeholders.

Outside Member of the Board of Directors
Value Creation Story

Audit & Supervisory Board Member

2020: Audit & Supervisory Board Member of DBJ

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ComplianceCompliance

Basic StanceCompliance Practices

General Risk
Management
Committee

Executive Committee

Relevant departmentsin charge of compliance

Compliance officers at all departments
and Group subsidiaries

Audit &
Supervisory
Board Member

Measures to Prevent Insider Trading

Management of Conflicts of Interest

In the provision of various financial services including­investments and loans, the DBJ Group believes that complying with insider trading regulations is essential to maintaining
trust. For example, we have created rules for employees and­executives to follow when trading in securities. Moreover, DBJ
has established systems for preventing insider trading, as­demonstrated by our formulation of strict procedures for­confirming and executing transactions in our investment­operations. In research operations, we manage and handle
corporate information carefully.

When providing customers with financing, investment, consulting and advisory service, asset management, and other financial services, the DBJ Group applies systems for identifying
and managing transactions in order to prevent conflicts ofinterest and act fully in the interests of customers, based on
the transaction type and degree of risk. When obtaining consent from customers for a transaction, we provide them accurate and appropriate information.

Elimination of Anti-social Forces
The DBJ Group has a basic policy of not having any relationships with anti-social forces, and resolutely coping with them incooperation with the police and other external institutions. Ourrules and training programs have thus been carefully crafted toprevent relationships with anti-social forces. DBJ thoroughly
assesses and manages this risk for each project and takes
appropriate measures when necessary while communicatingwith special external institutions.

Management of Customer Information
In addition to following legal requirements and rules aboutsharing customer information among Group companies, preventing insider trading, and managing conflicts of interest, the
DBJ Group has created management structures and systems
for handling customer information, with particular attention paid
to minutiae in order to maintain the customer’s trust.

Staff
Regular reporting channel
Internal reporting (Compliance hotline)	Anti-Money Laundering (AML) and Combating the
Financing of Terrorism (CFT) Measures
As it develops business worldwide, the DBJ Group understands the importance of taking measures to prevent international money laundering and the financing of terrorism. In
addition to adhering to laws and regulations, DBJ takes extra
measures to prevent global financial crimes based on the risks
involved. DBJ has systems in place to ensure that proper procedures are taken, periodically conducts risk management
operations, and thoroughly trains its employees and executives. We also strive to continuously improve this structure byevaluating a variety of measures.

https://www.dbj.jp/en/privacy.html
DBJ has created and disclosed the Declaration on Personal
Information Protection for protecting such information. Pleaserefer to the DBJ website for more details about this declaration.
Corporate Data

The DBJ Group has determined basic policies and rules forcompliance, creates and distributes compliance manuals for
employees and executives to follow, and conducts training andexplanatory sessions to spread awareness of compliance.
Each fiscal year, all DBJ Group companies design complianceprograms and evaluate and implement concrete complianceaction plans tailored to their particular business characteristics.
DBJ has established relevant departments that report on thestatus of compliance with laws and regulations to the Executive
Committee and Board of Directors. Compliance officers havebeen assigned to each department to ensure compliance by
employees and executives at each department.
Compliance officers are in charge of internal management
as internal managers and function as contact points for reporting compliance matters while centralizing such matters within

Board of Directors

The DBJ Group has identified “the customer’s perspective” asa key element of its Action Guidelines. By taking the customer’s
perspective, we endeavor to improve customer protections
and convenience. Furthermore, we have created basic policies
for customer protections from the standpoint of ensuring thesoundness and fitness of our operations. Accordingly, we havetaken a management posture for ensuring customer protections. Employees and executives provide support to customers
by explaining and providing appropriate and adequate information to them.

Corporate GovernanceCompliance Framework

Internal Reporting System

The DBJ Group believes compliance with laws and regulations
is essential for maintaining the customer’s trust and ensuring
the soundness and fitness of its business operations. We recognize compliance as one of our most important management
priorities. Employees and executives are keenly aware of DBJ’s
public mission and social responsibilities, as well as initiatives
to mitigate conduct risk. We fairly engage in our business ingood faith and in compliance with not only all laws, regulations
and rules but also social norms, for supplying risk capital or
pioneering initiatives.

Strategy

The DBJ Group is a unique financial group which provides
financing, investment, consulting and advisory services, asset
management, and other various financial services. While reinforcing collaboration within the Group, DBJ creates proactive
and advanced business and core strategies.
As a financial institution, DBJ’s first duty is to address thelegitimate and logical expectations of its customers. Even in
its initiatives in Crisis Response Operations and Special
Investment Operations, DBJ carries out customer-oriented
business conduct. DBJ conducts operations in compliancewith all laws and regulations through appropriate function of
the Three Lines of Defense to mitigate conduct risk. To achieve
our corporate philosophy, all employees and executives
engage in work while pursuing both economic and social value
in accordance with our Action Guidelines, the basis for decisions and behavior by Group employees and executives.

their departments. Through compliance officers, relevant
departments in charge of compliance provide advice and guidance to each department when necessary, with the aim of
ensuring compliance. In order to quickly discover and resolve
any compliance matters, DBJ has set up an internal reporting
channel to relevant departments and Audit & Supervisory
Board members, which circumvents the normal reporting
channels in organizational structures. DBJ has also createdan external reporting channel through a law office.

Customer Protection Management

Value Creation Story

DBJ believes that compliance both is at the heart of our corporate management and complements our business model and strategy
like two sides of the same coin. In addition, compliance risk must be properly managed in our organization’s overall governance andcontrol structure in implementing our corporate philosophy based upon societal demand and expectation. We feel that compliance isachieved when each and every employee and executive actively engages in their work with compliance foremost on their minds.

Business Conduct and Compliance

61

Data Section

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Development Bank of Japan Inc.
Integrated Report 2021

Risk Management

Overview of Risk Management System
Board of Directors

Committee on Investment and Loan Decisions
New Operation Screening Committee

Executive Committee

Advisory Panel on Investments and Loans

Asset self-assessments are used to define asset classifications
that will offset recoverability risk or the degree of risk of value
loss based on the borrower rating, the corresponding borrower
Borrower Rating Classifications
Borrower
ratingBorrower category

Sustainability Committee
Investment Management Committee

General Risk Management Committee

Credit risk

Operational risk

Investment risk

System risk

Country risk

Compliance and legal risk

Market risk

Countermeasures for anti-social forces

Market credit risk

Countermeasures for laundering money andfunding terrorist organizations

Liquidity risk

Customer protection management

Comprehensive Risk Management

Normal borrowers

1–8

Borrowers with favorable business conditions who have been confirmed to have no particular
problematic financial circumstances.

Borrowers requiringcaution

9–11

Borrowers in this category are experiencing weak or unstable business conditions, or are having
issues with their finances. These borrowers need to be managed with caution.

Substandard
borrowers

12

Either some or all of the debt of these borrowers requiring caution is under management.

Substandard claims

Borrowers in danger
13of bankruptcy

Borrowers in this category are having financial difficulties but are not bankrupt.
Management improvement plans and the like are progressing poorly, and these borrowers arehighly likely to fall into bankruptcy.

Doubtful claims

Effectively bankrupt
borrowers

14

Although not legally or formally in bankruptcy, these borrowers are experiencing severe financial
difficulties and are realistically falling into bankruptcy as their lack of potential for restructuring
has been confirmed.

Bankrupt borrowers

15

These borrowers are in bankruptcy, legally and formally. Specifically, these borrowers are inbankruptcy or liquidation, under corporate reorganization, bankruptcy proceedings or civil rehabilitation, or have had transactions suspended by a bill clearinghouse.

Credit Risk

Portfolio Management

Investment Policy
The Executive Committee determines our investment policy
following deliberations each fiscal year by the Investment
Management Committee, based on our corporate philosophyof striking a balance between social value and economic value.
This policy takes into consideration the balance in risks andreturns in the overall portfolio, while also reflecting the externalbusiness environment, including changes in market conditions
and industrial structure, and a performance analysis of theexisting portfolio.

Credit Administration of Individual Loans

Investment risk refers to the risk of sustaining losses resulting
from a decline in or loss of the economic value of assets due toworsening financial conditions for entities receiving funds andto changing market environments. DBJ’s investments include
the provision of mezzanine and equity financing, particularly tounlisted entities, such as corporations, funds, infrastructure,and real estate. As a source of profits, investments represent
one of DBJ’s most significant risk categories as with credit risk.
DBJ makes investment decisions and manages individual
investments as well as its Bank-wide portfolio accordingly.
Type

Major risks

Returns

Corporate mezzanine
financing

Credit risk, etc.

Dividends, etc.

Corporate investment(including listed shares)

Business risk
Market risk

Capital gains

Real estate and infrastructure, etc.

Risk of change
in asset value
Operating risk at
operating entities

Investment decisions for individual projects are made after exit
strategies are determined in case a downside scenario materializes, and targets are set for returns based on the type ofinvestment, which is also examined for managing credit risk.
In project management, DBJ periodically monitors every
project and has established the Chief Investment Management
Office to enhance monitoring of key projects and improve themanagement of investment risks in the overall portfolio.
Overview of Investment Management System
Executive Committee

Decision on
investment policy
Investment Management Committee

Monitoring
Key projects
Debate overdirection

Deliberation on
investment policy

Income gains

Project information

Monitoring data,
etc.

Chief Investment Office

Loan and Investment
Management Division

Chief Investment
Management Office

Investment
recommendation

Information gathering andhub function

Portfolio management andindividual project monitoring

Data Section

When making an investment or loan, DBJ examines the entity’s
project viability and the project’s profitability from a fair andimpartial standpoint. Based on the Banking Act and the Act
on Emergency Measures for the Revitalization of Financial
Functions (Act No. 132 of 1998), DBJ carries out independent
asset assessments in an effort to properly grasp credit risk ina timely fashion. The results of self-assessments are subject
to an audit by an auditing corporation and are reported to
management.
The sales and credit analysis departments hold separate
roles in the screening and administering of credit for individual
projects, and each department keeps the operations of theother in check.

Borrower Rating System
DBJ’s borrower rating system measures creditworthiness by
combining an evaluation point rating and a borrower category
rating, with the results quantifying a potential client’s credit
circumstances.
The evaluation point rating selects indicator and evaluation
categories that are common across all industries, scoring thecreditworthiness of the potential borrower quantitatively andqualitatively. On the other hand, the borrower category rating
measures specific items related to the borrower, looking at theborrower’s realistic financial condition, cash flows, and debt
repayment history, generating a comprehensive assessment ofa borrower’s repayment capacity.

Credit Management of Individual Projects

Corporate Data

Credit risk refers to the risk of sustaining losses resulting froma decline in or loss of the value of assets due to deterioration in
the financial condition of the borrower. DBJ provides corporateloans and non-recourse loans, making credit risk acquisitiona source of profits. As such, it represents a significant risk category, and DBJ conducts credit management of individual projects as well as Bank-wide portfolio management, accordingly.

Claims in bankruptcy,
reorganization claims,
and similar claims

DBJ performs a statistical analysis of data based on borrower
ratings and calculates the loan portfolio’s overall exposure tocredit risk. Credit risk exposure is classified as unexpected loss
(UL), the maximum loss that could be incurred at a certain rateof probability minus the expected loss (EL), the average loss
expected during a specific loan period.
Large borrowers are identified based on standardized loanbalances defined by the borrower’s rating and monitored as
required in accordance with management policies.

Investment Risk
The Committee on Investment and Loan Decisions meets asneeded to deliberate important issues concerning the management and operation of individual projects.
These mutual checking functions serve to ensure the appropriateness of the finance operation and management system.

Normal claims

Corporate Governance

At DBJ, we measure the amount of each type of risk using uniform and logical methodologies to the greatest extent possible, whileconsidering the uniqueness of each risk category. As the sum total of this risk, comprehensive risk is managed within the context ofour risk guidelines. These risk guidelines are determined by the Executive Committee and reflect risk conditions in the existing portfolio and near-term business plans, within the framework for capital allocation based on the amount of our own capital.

Claims classified under the
Financial Revitalization Act

Definition

Strategy

ALM & Risk Management Committee

category, and the collateral or guarantee status. Such assessments help DBJ establish timely and appropriate amortization
schedules and reserve levels.
Value Creation Story

DBJ has a risk management system in place designed tohandle a variety of specific risks, with the aim of maintaining
the soundness and creditability of management as it pursues
business based on management plans. Specifically, risks are
identified, evaluated, monitored, and controlled in each risk
category and in comprehensive risk areas, and are managed
within the scope of our management capabilities from a comprehensive understanding of each risk.
The Board of Directors sets out basic policies for comprehensive risk management, receives reports about risk management conditions, and ensures the effectiveness of risk
management functions. The Executive Committee creates
related rules based on these basic policies and deliberates onmatters of importance that directly relate to management policies. In line with these basic policies and rules, the ALM & Risk
Management Committee discusses and makes decisions on
matters essential to the risk management system for financial
risk, such as credit risk, while the General Risk Management
Committee deliberates on non-financial risk, such as administrative risk. Both committees meet regularly, and whenevernecessary, conduct risk monitoring.

Risk Management

Asset Self-Assessment System

Risk Management System

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Development Bank of Japan Inc.
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Development Bank of Japan Inc.
Integrated Report 2021

Risk Management

Portfolio Management

Market Risk

Interest Rate Risk

Foreign Exchange Risk

Market Credit Risk

Administrative Risk Management
Administrative risk refers to the risk of sustaining losses resulting from employees neglecting to perform their duties correctlyor from accidents, fraud, and so on. To reduce or prevent
administrative risk, DBJ prepares manuals, performs checks on
administrative procedures, provides education and training,
and uses systems to reduce the burden of administrative duties.

Stress Tests
In addition to managing comprehensive risks based on risk
exposure, DBJ performs stress tests on its own capital adequacy in order to ensure uninterrupted financial functions,
including Crisis Response Operations, while maintaining thesoundness of management under stressful conditions. These
stress tests are also used in evaluating the degree of impact on
our own capital from the creation of and changes to mediumterm management plans and business plans, as well as in
examining of possible responses to various management
issues.

Based on the latest forecasts for economic conditions,these stress tests take into account DBJ’s financial position invarious scenarios for challenging conditions, such as a major
economic recession or strong market stressors. We evaluate
whether financial functions can be smoothly executed andadequate financial health maintained under stressful conditions,by factoring in various scenarios for how risk exposure andrisk-weighted assets increase as a result of erosion of our own
capital, and of changes in our portfolio of loans and investments.
Also, we verify the adequacy of our cash liquidity.

Business Continuity Initiatives
DBJ has prepared a business continuity plan (BCP) to protect
the interests of its stakeholders, including its clients, its shareholders, and its executives and employees, as well as to fulfill
its social mission. The BCP aims to ensure the continuity andrapid recovery of core operations in the event of emergencies,
such as natural disasters (in particular, large-scale earthquakes), influenza and other pandemics, system failures, andpower outages.

Measures to Ensure Business Continuity
We have prepared a variety of measures to ensure business
continuity.
Enhanced System Robustness

We have ensured advanced security levels at the main centerand created a backup center to operate in the event that themain center ceases to operate.
Multilayered Communication Procedures

We have introduced a safety confirmation system to quickly
determine the whereabouts and status of executives andemployees even at night and on holidays. In addition, we have
distributed satellite telephones to key locations and personnel
to ensure multilayered communication procedures.

The BCP describes in an easy-to-understand format the roleof the Disaster Response Committee, work priorities, and specific actions and procedures to be taken in the event of adisaster. When drawing up policies for business continuity andrestoration, the Company envisions specific incidents, such as
an earthquake underneath the Tokyo metropolis or a novel
virus outbreak, and methodically decides how to respond to
anticipated damage in each disaster scenario.

Chain of Command and Delegation of Authority

To assure that decision-making concerning the continuity ofcore operations is prompt and certain in the event it becomes
necessary to execute the plans of the Disaster Response
Committee, we have put in place a chain of command and analternative hierarchy by which authority can be delegated.
Clarification of Initial Response and Procedures for Continuing or
Recovering Core Operations

For individual business units, we have established in advancethe procedures for the initial response and the continuation or
recovery of core operations so that relevant divisions can
respond quickly and with certainty on core operations evenwhen in a state of confusion.

Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training of executives and regular employees to maintain or improve the viability of its BCP. Furthermore, employing a plan–do–check–act
cycle, we revise the BCP to reflect training results and recent
information, and the Executive Committee reviews it regularly
and amends it as necessary.

Data Section

DBJ aims to reduce counterparty risk in derivatives transactions through margin transfers by means of a centralizedexchange and mutual credit support annex. Financial institution
transactions are managed within the limits of the creditworthiness of the counterparty. Transactions with operating companies and other customers are managed within the frameworkof comprehensive risk management for fluctuation risks, andmeasurements of credit valuation adjustment (CVA) are basedon accounting standards.

DBJ defines operational risk as the risk of loss arising frominternal processes, people or systems that are inappropriate or
nonfunctioning, or from external events. DBJ works to establish
a risk management system to minimize risk and prevent potential risk from materializing. The General Risk Management
Committee has been established to deliberate topics concerning operational risk management.
Within operational risk management, DBJ conducts administrative risk management and system risk management as
described below.

system risk centrally, based on its system risk management
regulations. By determining security standards from a variety ofviewpoints—from information system planning and development to operation and use—the department extends the risk
management system Bank-wide and addresses appropriate
system risk management operations.

Corporate Data

Foreign Exchange risk is the risk of loss due to volatility inexchange rates, and this risk affects entities holding a net
excess of assets or liabilities denominated in foreign currencies.
Foreign Exchange risk derives from financing in foreign currencies and issuing foreign currency bonds. However, DBJ uses
Foreign exchange swaps and other instruments to limit this risk.

Operational Risk

System risk refers to the risk of loss due to a computer system
breakdown or malfunction, system defects, or improper computer use. DBJ has implemented the following internal processes to optimize system risk management and properly
manage risk with regard to system risk. The System Risk
Management Division is responsible for managing DBJ’s

Corporate GovernanceInterest rate fluctuations can create mismatches on rates ofinterest on assets and liabilities or on interest periods, creating
the risk of reduced profits or the risk of losses. Interest rate risk
can reduce the economic value of DBJ’s assets or interest
income.
Based on monitoring through multifaceted indices, such as
value at risk (VaR) and interest rate sensitivity analyses (duration
and basis point value), as well as ALM policies established by
the ALM & Risk Management Committee, DBJ conducts comprehensive management of current assets and liabilities to optimize net interest expenses and economic value by adequately
controlling interest rate risk.

Liquidity risk is the risk of a mismatch occurring in the periods
when funds are used and raised or of an unexpected outflow
of funds, causing differences in the flow of funds (cash liquidityrisk). Such situations make securing funds difficult and create
situations in which interest rates on borrowed funds are substantially higher than usual rates. At other times, because of
market complexities, entities in these circumstances may
become unable to participate in market transactions, compelling them to conduct transactions under substantially lessfavorable terms than otherwise would be the case. The risk oflosses for these reasons is known as market liquidity risk.
As its main methods of acquiring funds, rather than carryingout short-term funding by issuing commercial paper, DBJ relieson the stable procurement of long-term funds from theJapanese government’s Fiscal Investment and Loan Programand government-guaranteed bonds while issuing bonds andtaking out long-term loans. To prepare for unforeseen cash flow
crunches caused by shocks to financial markets, DBJ manages funds to ensure sufficient cash on hand to cover planned
capital outflows under envisioned stress conditions. DBJ has
formulated countermeasures based on contingency plans in
the event they become necessary depending on the modeclassification, and it has created different categories for fund operation modes based on the degree of constriction in cash flows.

System Risk Management

Strategy

The primary focuses in terms of market risk are interest raterisk and Foreign exchange risk. DBJ classifies market risk asrisk pertaining to investment and loan activities. DBJ does nothave any trading-related risk (specified transactions).

Liquidity Risk

Risk Management

Value Creation Story

The main assets in DBJ’s investment portfolio are unlisted
stock and mezzanine financing, and risk exposure is calculated
focusing on risk characteristics in each category of investment
and on differences in recovery methods.
More specifically, assets we aim to earn returns on from primarily business cash flows are evaluated with a focus on credit
risk. On the other hand, assets on which we expect to see
returns by selling to a third party or the market are evaluated in
the context of market risk. In this way, risk exposure is calculated by applying evaluations of credit risk and market risk.



65

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Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Response to the TCFD Recommendations

Metrics and Targets

When crafting its long-term vision, Vision 2030 (see page 7), DBJ identified climate change and natural resources andenergy as externalities that could have a major impact on stakeholders of the DBJ Group. DBJ has realized that
responding to the various climate-related risks and growth opportunities is a key aspect of its business strategies.
In fiscal 2019, with assistance from the support programs of the Ministry of the Environment, DBJ began a scenario
analysis to evaluate new business opportunities and business resilience to uncertainties related to climate change.
A particular focus was placed on evaluating transitional opportunities (please refer to the following page for details).
In fiscal 2021, DBJ is focusing on risk analysis, and working to identify and assess physical and transitional risks in its
portfolio. DBJ will also continue to increase information disclosure while refining and advancing its analysis with reference to global discussions about climate-related risks.
DBJ identifies, evaluates, monitors, and controls a variety of risks related to climate change. In August 2021, DBJ created its Investment Policy with Environmental and Social Considerations for financial transactions with specific sectors(coal-fired power generation, palm oil, weapons, and forestry) and businesses likely to pose major risks to, or have negative influences on, the environment and society. DBJ will carefully screen investments and loans in accordance with thispolicy and further enhance its investments and loans in ways that take greater account of the environment and society.
DBJ identifies, evaluates, and manages environmental and social risks associated with large-scale projects in accordance with the Equator Principles, which it adopted in 2020, based on guidance from the Environmental & Social
Assessment Office.
DBJ gauges the progress of its environmental initiatives in terms of the Greenhouse Gas Protocol’s Scope 1 (direct) and
Scope 2 (indirect) categories, which are concerned with the amount of greenhouse gas (GHG) emissions associatedwith corporate activities. Specific targets are set for DBJ and for each department in regard to the environmental
aspects of investment and loan operations and environmental protection initiatives such as educational programs thatencourage dialogue on relevant issues. In these ways, DBJ works systematically and consistently to help preserve theenvironment.
DBJ has set a target of ¥5.5 trillion in investments and loans related to its GRIT Strategy (see page 17) over the fiveyear period of its Fifth Medium-Term Management Plan. In line with this target, we will proactively support efforts totackle climate change at companies receiving investments and loans from us.

Financial institutions must draw up various socioeconomic
forecasts while taking into account future uncertainties associated with climate change, and then consider changes to theirportfolios and other actions accordingly. As an initial approachto scenario analysis, DBJ analyzed and evaluated the possible
impact on its operations through 2050 with a focus on transitional opportunities brought about by government policies andregulations, as well as technological innovations toward a lowcarbon or decarbonized society. More specifically, DBJ isemphasizing five types of technologies (carbon capture andstorage, electric vehicles, biomass, hydrogen, and renewableenergy) on an experimental basis from among the technologies
strongly related to climate change. For each scenario, DBJ
analyzes and evaluates growth opportunities and businessresilience in sectors covered by the analysis, with due consideration paid to technological development and proliferation.
Use of Shared Socioeconomic Pathways in
Scenarios
Even assuming a uniform rise in temperatures occurs as aresult of global warming, we believe there will be varied
degrees of expectations for technological progress and social
acceptance of solutions for the issue of climate change,depending on population and economic growth forecasts ineach country, among other factors. In light of these

uncertainties about socioeconomic trends around the world,
DBJ has adopted the Shared Socioeconomic Pathway (SSP)
approach to devise its scenarios to use as future assumptions
and conduct an analysis based on projected socioeconomic
trends in scenarios where global temperatures rise 1.5 ºC, 2.0 ºC,
and 4.0 ºC.
Analysis and Evaluation of Growth Opportunities by
Scenario in Each Sector
For each envisioned scenario, DBJ analyzes the degree of
impact from the five aforementioned types of technologies inboth qualitative and quantitative terms, and it conducts a comprehensive evaluation of growth opportunities and businessresilience in each analyzed sector, with consideration madefor Japan’s strengths.
DBJ will continue to expand the scope of its analysis andupdate the results, while monitoring the latest trends related
to climate scenarios. Using forecasting and scenario analysis
to generate a vision of the world in 2050, DBJ is engaging ininternal and external dialogue and discussion about topics
including how best to transition to a carbon-free society. DBJ
will further refine and advance its analysis in an attempt tobetter its understanding of related risks in the external environment, including climate change. While engaging in deeper conversations with customers and other stakeholders, DBJ will
provide financial assistance with the aim of moving closer toa low-carbon or decarbonized society, in addition to taking
appropriate actions to address climate change in terms of theopportunities that may arise.

Summary of Scenario Analysis
TCFD examples of climate-related risks and opportunities
Transitional risks• Technology• Market• Reputation
Physical risks• Acute• Chronic

Climate-related opportunities

Climate-related risks• Policy and Legal

Reflection in strategic planning and risk management
Financial impact
Disclosure in financial reports, etc.

Opportunities• Resource efficiency•E nergy resources•P roducts and services• Markets• Resilience

Corporate Data

Risk Management

The DBJ Group engages in business activities while considering its impact on the environment and society. In this light,
DBJ created its Policy on Sustainability in May 2017 with the objective of contributing to the realization of a sustainable
society while balancing economic value and social value. On the Sustainability Committee (see page 54), directors andexecutives discuss and monitor the risks, opportunities, and actions related to climate change. The findings of the
Sustainability Committee are reflected in the Group’s business strategies, risk management, and decision-making process for investments and loans.

Analysis Conducted with Focus on Transitional
Opportunities from Development and Proliferation of
Climate Change– Mitigation Technologies

Corporate Governance

Strategy* Published at the TCFD Summit (October 8, 2019) to guide investors and other people
on how to read and understand information disclosures based on TCFD
recommendations

Scenario Analysis of Transitional Opportunities

Strategy

Governancein line with the TCFD recommendations. Recognizing the risks andopportunities presented by climatechange, DBJ is advancing andexamining the expansion of information disclosures based on the
TCFD framework.
As a Supporter of the Green
Investment Guidance in the TCFD Consortium, DBJ evaluatesand engages in dialogue with companies receiving investments
and loans with reference to said guidance, ascertaining their
responses to climate change and their disclosures of information based on TCFD recommendations. In this way, we support
their efforts to increase corporate value over the medium andlong term.

Response to the TCFD Recommendations

Value Creation Story

Climate change is a major global problem that could destabilizefinancial markets. One of our important roles as a financial institution is to provide products and services that support thetransition toward a more sustainable society that aligns with theobjectives of the Paris Agreement. Stakeholder engagement is
crucial to this role.
Aware of the importance of disclosing climate-related financial information, DBJ declared its approval of the concepts
behind the Task Force on Climate-related Financial Disclosures(TCFD), which was established by the Financial Stability Board
in June 2018. In addition, DBJ took part in the TCFD
Consortium, which was created in May 2019 for companies
and other financial institutions to come together to discuss the
TCFD recommendations.
We played a leading role in the formulation of the Guidancefor Utilizing Climate-related Information to Promote Green
Investment (Green Investment Guidance)* and analyzed scenarios with assistance from the Ministry of the Environment’s
support program for analyzing climate risks and opportunities

67With a focus on transitional opportunities, analyze and evaluate growth opportunities in each scenario for covered sectors
SSP Scenarios

Relevant Technologies

Identify factors related toclimate change in covered
sectors and evaluate theirlevel of importance

Deploy SSPs in the scenarios with consideration paid
to recent government policy and the socioeconomic
environment

Based on an evaluation of relevant technologies,
qualitatively and quantitatively analyze growth opportunities in each sector

Selection of Four Scenarios

Five experimental types of technologies in focus

Global decarbonized society (1.5 °C increase)• SSP1• SSP3	Regionally segmented society with economic
disparities (4.0 °C increase)• SSP5-1	Low-carbon society with fossil fuels (2.0 °C increase)• SSP5-2	Traditional, developed society based on fossil
fuels (4.0 °C increase)

Carbon capture and storage
Electric vehicles

Renewable energy

Biomass

Hydrogen

Data Section

Covered Sectors

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Development Bank of Japan Inc.
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Development Bank of Japan Inc.
Integrated Report 2021

Financial and Non-Financial Highlights

Financial Highlights

69

Financial and Non-Financial Highlights

Non-Financial Highlights
Capital Adequacy Ratio* (Consolidated)

Balance of Investments and Loans in Renewable Energy(¥ billion)(%)(¥ billion)

Increase in Dialogues with Customers via the Sustainability
Certification Program(No. of engagements)

18,00020

1,686.7

300

17.22
854.6

952.1

1,129.3

13,772.3

13,467.7

13,584.6

12,0001,454.4

15,284.1

16.81

16.65

17.26

100

16.65

276.8
241.9

15

12,981.6

75

74

72

200

Target of Fourth Medium-Term Management Plan: about 14%

82

79

186.9
10

100

110.2

124.2

5

2016

2017

Loan balance

2018

2019

2020 (Fiscal year)

0

25

2016

2017

2018

2019

2020 (Fiscal year)

0

2016

2017

2018

2019

2020 (Fiscal year)

0

2016

2017

2018

2019

2020 (Fiscal year)* Common equity Tier 1 risk-weighted capital ratio

Investment balance

The balance of investments and loans (non-consolidated) stood at¥16.9 trillion as of the end of fiscal 2020. The loan balance increasedto ¥15.2 trillion as of the end of the fiscal year under review owing to¥2.2 trillion in crisis countermeasure loans being extended in responseto the COVID-19 pandemic. The investment balance expanded to¥1.6 trillion as of the end of fiscal 2020, reflecting DBJ’s focus on
investment operations.

The capital adequacy ratio (consolidated) was 16.65% as of the end of
fiscal 2020. This ratio may decrease as we supply risk capital for purposes including strengthening our investment operations, but we will
nonetheless strive to maintain a sound capital adequacy ratio.

(¥ billion)

Under the DBJ Sustainability Evaluation Certification Program (see page30), at the request of customers, we provide feedback from a third-party
perspective on the results of customers’ evaluations and help themunderstand the issues they should address and enhance their management capabilities. In addition to the above, the number of in-person
award ceremonies for executives and employees, which is usually at least
40 in a normal year, declined to 10 due to the pandemic. Through theuse of online tools, we provided advanced assistance for feedback initiatives, as in a typical year. Through dialogue, we will continue to support
our customers’ efforts regarding sustainability management.

Human Resource Development(No. of In-House Training Sessions)

Collaboration and Cooperation with Regional Financial
Institutions (No. of Collaborative Funds with Regional
Financial Institutions)(No. of sessions)

Corporate Governance

Gross Ordinary Income (Consolidated)

The balance of investments and loans in renewable energy stood at¥276.8 billion as of the end of fiscal 2020. With renewable energy
drawing more attention as the world moves away from carbon-basedenergy sources, the DBJ Group will provide financial support to ventures in solar power, onshore and offshore wind power, biomass, andhydropower based on the advantages of each type of energy source,with a view toward achieving the Japanese government’s goal ofachieving carbon neutrality by 2050.

Strategy

0

59

50

6,000

Value Creation Story

Balance of Investments and Loans (Non-consolidated)(No. of funds)

250

50

60
200

54

57.3

23.6
65.8

81.5

53

48
19.3
68.2

25.3

44

36

43

40

39

47.0

42

40

Corporate Data

28.3

150

25.2

30

100

30
25

85.4

84.8

80.9

20

91.7
76.6

20

50
10
0

Loans

2011
Investment

2012

2013

2014

2015

2016

2017

2018

2019

2020

(Fiscal year)

Fee and commission income

2016

2017

2018

2019

2020 (Fiscal year)

The DBJ Group provides abundant opportunities for training throughcombinations of rank-based and business-related training programs. In
fiscal 2020, in-person training was hampered by the COVID-19 pandemic, but we were able to move online almost all of our training programs. Doing so ensured employees had opportunities to develop theirskills and participate in sessions about women empowerment and leadership training. DBJ will continue to train personnel by proactively encouraging employees to enhance their skills through training seminars and byimproving the content of training based on DBJ’s management strategy.

0

2016

2017

2018

2019

2020 (Fiscal year)

As of the end of fiscal 2020, the DBJ Group had created 44 collaborative funds with regional financial institutions. The DBJ Group andregional financial institutions, each with its local customer base, supply
risk capital to local companies. We draw on the respective strengths ofeach financial institution with the aim of spurring initiatives to address
regional issues.

Data Section

In fiscal 2020, in loan operations, loan profits increased alongside growth in the average loan balance. In investment operations, profits declined due tosuch factors as investees deciding to postpone preferred dividend payments in order to secure cash on hand. Fee and commission income rose on an
increase in fee income. Accordingly, gross ordinary income amounted to ¥164.1 billion, roughly on a par with that of the previous fiscal year.

070Development Bank of Japan Inc.
Integrated Report 2021

71

Development Bank of Japan Inc.
Integrated Report 2021

Consolidated Financial SummaryConsolidated Financial Summary

Reference (Long-Term Profits / Losses, Financial Condition)(¥ billion)

Fiscal 2014

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

(April 1, 2014 toMarch 31, 2015)(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)(April 1, 2017 toMarch 31, 2018)(April 1, 2018 toMarch 31, 2019)(April 1, 2019 toMarch 31, 2020)(April 1, 2020 toMarch 31, 2021)

Total income

347.9

345.1

318.7

340.0

361.6

339.0

358.6

285.4

291.7

301.2

289.1

269.4

Income before income taxes

51.9

95.0

99.2

115.6

165.7

153.0

185.1

122.5

127.1

128.1

78.9

73.0

(26.7)

(2.9)

(1.3)

30.0

30.3

32.1

70.8

41.1

39.7

40.5

7.2

24.1

Extraordinary profit / loss

(0.8)

9.3

10.9

0.6

0.2

0.6

1.5

(0.0)

2.2

(1.3)

4.0

0.7

Income before income taxes and minority interests

51.1

104.3

110.2

116.2

166.0

153.6

186.7

122.4

129.4

126.7

83.0

73.8

Total income taxes(10.8)(1.3)(31.9)(44.5)(40.8)(58.9)(57.6)(34.6)(35.0)(33.5)(31.5)(26.9)Net income attributable to owners of the parent

39.8

101.5

77.3

71.3

124.3

92.7

128.9

87.6

91.9

91.9

50.4

45.2

Total dividend amount

10.0

50.0

37.3

35.2

30.8

22.5

29.2

19.7

22.1

21.0

9.9

8.1

Total assets

15,595.7

14,845.2

15,579.8

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

16,952.2

17,079.5

17,693.6

21,221.8

Loans

13,514.6

13,031.4

13,645.4

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

12,725.2

12,923.9

12,415.9

14,757.1

Securities

1,289.4

1,165.5

1,176.6

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

1,866.4

1,961.0

2,374.2

2,535.8

Total liabilities

13,268.2

12,435.2

13,118.8

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

13,842.1

13,783.2

14,259.6

17,518.4

Borrowed money

9,082.4

8,576.4

9,170.5

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

8,574.1

7,987.8

8,070.9

10,664.5

Debentures and corporate bonds

3,746.3

3,629.3

3,671.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

4,932.9

5,296.9

5,696.8

6,223.4

Total equity

2,327.5

2,409.9

2,461.0

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

3,110.1

3,296.3

3,434.0

3,703.4

Common stock

1,181.1

1,181.1

1,187.7

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

1,000.4

1,000.4

1,000.4

1,000.4

Total capital ratio (Basel II, BIS standard)

19.13%

20.50%

18.56%

—

—

—

—

—

—

—

—

—

Total capital ratio (Basel III, BIS standard)

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

16.94%

16.74%

17.37%

16.79%

Ratio of risk–monitored loans (Banking Act basis)

5.07%

1.28%

1.47%

1.23%

0.99%

0.77%

0.64%

0.54%

0.47%

0.40%

0.46%

0.76%

Return on assets (ROA)

0.27%

0.67%

0.51%

0.45%

0.76%

0.57%

0.80%

0.54%

0.55%

0.54%

0.29%

0.23%

Return on equity (ROE)

1.82%

4.31%

3.18%

2.86%

4.83%

3.47%

4.60%

2.99%

3.03%

2.88%

1.51%

1.27%

Number of employees

1,181

1,203

1,270

1,315

1,391

1,407

1,435

1,546

1,631

1,650

1,703

1,781

3,793.1

2,116.6

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

3,951.8

5,786.7

3,682.0

2,034.4

2,849.0

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

2,973.6

3,490.4

3,401.5

5,484.2

Investments

111.1

82.2

78.0

127.8

138.2

281.4

166.3

206.7

179.7

300.4

550.3

302.5

Funds raised (flow)

3,793.1

2,116.6

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

3,790.8

3,951.8

5,786.7840.9

1,212.8

691.7

502.2

1,307.5

1,129.9

1,639.7

1,526.1

1,005.0

2,051.4

1,546.1

1,191.4

Consolidated

Of which, equity and fund–related gains / losses

Investment and fund–raising flow (non–consolidated)
Loans and investments (flow)
Loans

Of which, recovered, etc.

2008–20102011–20132014–20162017–2019

First Medium-Term
Management Plan:
CHALLENGE 2010

Second Medium-Term Management Plan:
Endeavor 2013

Third Medium-Term Management Plan:
Supporting Japan’s Sustained Growth asa Global Innovator

Fourth Medium-Term Management Plan:
Initiate Change, Create the Future

Data Section

Fiscal 2013
(April 1, 2013 toMarch 31, 2014)

Corporate Data

Fiscal 2012
(April 1, 2012 toMarch 31, 2013)

Corporate GovernanceFiscal 2011
(April 1, 2011 toMarch 31, 2012)

Strategy

Fiscal 2010
(April 1, 2010 toMarch 31, 2011)

Value Creation Story

Fiscal 2009
(April 1, 2009 to
March 31, 2010)

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Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Timeline

Shareholder Information

Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation,and the Development Bank of JapanName

As of March 31, 2021
Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Month

Event

Finance Minister

1-1, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo

43,632

100.0

April

Japan Development Bank (JDB) established

Total

—

43,632100.0

JDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch),
Nagoya (now the Tokai Branch), and Fukuoka (now the Kyushu Branch)

1952
1956

June

Hokkaido Development Finance Public Corporation established

1957

April

Hokkaido Development Finance Public Corporation, reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) branches, opened in Sapporo (now the Hokkaido Branch) andSendai (now the Tohoku Branch)

1960

JDB branch opened in Takamatsu (now the Shikoku Branch)

1961

JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)April

JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) and Matsue

1963
July

1972

January

1985

June

1987

September

JDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
The Japan Development Bank Law revised1)	Investment function (pertaining to business in such areas as research and development,
urban development, and energy use stipulated by government ordinance) added
2) R&D fund investment function added
Low interest rate loan system funded partially by sale of NTT shares created by JDB and HTDFP
JDB representative offices opened in Oita, Matsuyama, Okayama, and Toyama
HTDFP representative offices opened in Hakodate and Aomori

1989

JDB loans to assist disaster recovery commenced

1995

February

1997

SeptemberBill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.,” approvedby the Cabinet (decision dissolving JDB and HTDFP and consolidating them as a new bank approved)

1998

December

JDB and HTDFP loans in response to changes in the financial environment commenced(March 31, 2001, sunset clause introduced)

1999

June

The Development Bank of Japan Law (Law No. 73 of 1999) approved
All rights and responsibilities of JDB and HTDFP and all financing operations of Japan Regional Development Corporation andJapan Environment Corporation transferred to the Development Bank of Japan
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (additional spot inspections by the Financial Services Agency introduced)

2002

May

2005

December

2006

May

The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government(Act No. 47 of 2006) approved

June

Policy-Based Financing Reform Plan decided upon by DBJ head office for the Implementation of Policy Finance Reform

2007

June

The Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

Important Policy of Administrative Reform approved by the Cabinet

government (industrial investment). This investment is to be used
for a new scheme, Special Investment Operations, to strengthen
and develop the Fund for Japanese Industrial Competitiveness. In
addition, with regard to the application of DBJ’s investment andloan functions toward crisis response and the provision of growth
capital, measures were introduced obliging the Japanese government to hold at least a certain percentage of DBJ’s shares.
As part of this structural revision, deliberations by the Japanese
government’s Study Panel Concerning the Promotion of Expanding
Growth Funding covered such topics as DBJ’s proper implementation of Crisis Response Operations, the importance of initiatives
for providing growth capital (equity and mezzanine financing) toaddress shortages in Japanese financial and capital markets, andan evaluation of DBJ’s initiatives following its conversion to a jointstock company.
In light of discussions in 2019 by the Japanese government’s
Study Panel Concerning the Future Vision of Special Investment
Operations at Development Bank of Japan Inc. under the Act for
Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 29 of 2020), which was enacted on May 22, 2020, Special
Investment Operations shall take the following required measures:(1) extend the investment decision term and government financing
term from March 31, 2021, until March 31, 2026 and(2) extend the deadline for ending operations from March 31, 2026,
until March 31, 2031.

Corporate GovernanceOctober

On October 1, 2008, DBJ transitioned from a special public corporation to a joint-stock company. In preparation for full-scale privatization following the disposal of all Japanese government-owned
shares, DBJ has continued working to enhance its corporate value
through integrated investment and loan services. These activities
include providing long-term loans; equity, mezzanine financing, andother types of risk capital; and M&A advisory services.
On the other hand, shortly after DBJ’s conversion to a jointstockcompany, the global financial crisis and the Great East Japan
Earthquake occurred. The Japanese government called on DBJ tosteadily mount large-scale Crisis Response Operations. Due tothese crises, the Development Bank of Japan Inc. Act (Act No. 85
of 2007) was amended twice, with DBJ accepting an additional
increase in Japanese government capital. Also, by the end of fiscal
2014, the Japanese government was to review DBJ’s organization,
including its shareholdings, as stipulated by the revision.
Based on the deliberations by the Japanese government’s
Study Panel Concerning the Promotion of Expanding GrowthFunding, the Act for Partial Amendment of the Development Bankof Japan Inc. Act (Act No. 23 of 2015), which was enacted on May
20, 2015, maintains the direction toward full-scale privatization. At
the same time, in order to fully ensure the provision of funding in
response to large-scale disasters and economic crises, theamended act makes DBJ’s Crisis Response Operations obligatory
for an indefinite period. From the perspective of promoting theprovision of growth capital to revitalize regional economies andincrease the competitiveness of enterprises, the amended act calls
for DBJ to accept a certain amount of capital from the Japanese

Strategy

1964

Summary of Changes to the DBJ Act after Conversion toa Joint-Stock Company

Value Creation Story

Year

1951

1962

73

Note: For the full text of the DBJ Act, please refer to the Data section.

Development Bank of Japan Inc.
Year

Month

2008

October

Event

Development Bank of Japan Inc. (DBJ) established (Capital: ¥1 trillion)

December
2009

June

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) approved

September

Capital increased to ¥1,103,232 million

November

DBJ Europe Limited launched

2010

March

2011

May

2012

DBJ Singapore Limited launched

Capital increased to ¥1,181,194 million
The Development Bank of Japan Inc. Act partially amended based on establishment of the Act for Extraordinary Expenditure
and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)

December

Capital increased to ¥1,187,364 million

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December

Capital increased to ¥1,206,953 million

June

DBJ Investment Consulting (Beijing) Co., Ltd. (formerly Japan Asia Investment Consulting (Beijing) Co., Ltd.) converted to wholly
owned subsidiary

2015

May

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of 2015) approved
Special Investment Operations started
Advisory Board positioned as an advisory body to the Board of Directors
Special Investment Operations Monitoring Board established

AugustCapital reduced by ¥206,529 million, and crisis response reserve increased by the same amount2018

October

DBJ Americas Inc. launched

2020

May

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 29 of 2020) approved

Measures maintaining direction toward full-scale privatization

Beforerevision2•	Conducting Crisis Response Operations as adesignated financial institution•	Enabling Japanese government recapitalization incrisis response by March 31, 2015

•	Assuming responsibility for Crisis Response Operations for an indefinite period(at the same time reflecting this obligation in the Articles of Incorporation)

After•	Extending for an indefinite period the scope of the Japanese government’s recapitalization
revisionsecuring DBJ’s financial structure, with the Japanese government having such obligations
as holding more than one-third of DBJ’s shares

Measures establishing new Special Investment Operations scheme to temporarily provide growth capital in a concentrated manner

Beforerevision

4•	No changes in the main provisions, including Article 1, which stipulates DBJ’s objectives

After•	Disposal of shares as soon as practicable (considering its effect on achieving DBJ’s
revision
objectives as well as on the market situation)

Measures ensuring appropriate implementation of Crisis Response Operations

Beforerevision3

Full-scale privatization and disposal of all Japanese
government-held shares, targeting around five toseven years from April 1, 2015

Provision of risk capital through the Fund for JapaneseIndustrial Competitiveness•	Reinforcement of the Fund for Japanese Industrial Competitiveness (a portion of the financial
resources for which are provided through measures for industrial investment); implementationof Special Investment Operations as a measure for a limited period of time, through fiscal
After2025 (at the same time reflecting this obligation in the Articles of Incorporation, complementrevision
ing and encouraging private-sector enterprises, etc.)•	Obligation that the Japanese government shall hold one-half or more of shares until theconclusion of Special Investment Operations

Provisions referencing consideration for private financial institutions through ongoing Japanese government involvement
As per the Third Medium-Term Management Plan,

Before sustainment of close communications, maintaining
revision a focus on operations in collaboration with other financial institutions•	The Corporation shall, for an indefinite period, pay special attention in conducting its business so that it will not affect its appropriate competitive relationships with other business

entities
Afterrevision •	The Japanese government shall hear the opinions of representatives of ordinary financial

institutions and other relevant persons concerning Japanese government revisions on an
as-needed basis regarding Crisis Response Operations and Special Investment Operations

Data Section

2014

1

Corporate Data

Crisis Response Operations begun by DBJ as a designated financial institution

Highlights of 2015 Revisions to the DBJ Act

74

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

75

Organizational Structure (as of August 1, 2021)

General Meeting of
Shareholders

Chief Industry
Strategy
OfficeAudit & Supervisory
Board OfficeInnovation Promotion OfficeFinancial Institutions Department

Global Business Planning OfficeUrban Development Department

Regional Business Planning Office

Corporate Finance Department, Division 1

Crisis Response Operating Office

Corporate Finance Department, Division 2

Aerospace Office

Corporate Finance Department, Division 3

Global Logistics Office

Corporate Finance Department, Division 4
Corporate Finance Department, Division 5

Energy Strategy Office

Corporate Finance Department, Division 6

Healthcare Industry Office

Data Section
P 76
P 95


The
Development Bank of Japan Inc. Act
Financial Condition

Value Creation Story

Audit & Supervisory
Board Members /Audit & Supervisory
Board

Business Planning & Coordination Department

Hokkaido Branch
Tohoku Branch
Board of Directors

Executive Committee

Tohoku Recovery & Growth Support OfficeNiigata Branch
Strategy

Hokuriku Branch
Tokai Branch
Advisory Board

Kansai Branch
Chugoku Branch
Shikoku BranchSpecial Investment
Operations
Monitoring Board

Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department

Growth & Cross Border Investment Department
Regional Investment Department
Structured Finance Department

Environmental & Social Assessment Office

Corporate Governance

Strategic Finance Department
Chief
Investment
OfficeSyndication & Credit Trading Department
Business Development Department
Chief
Research
OfficeOverseas Subsidiaries:
DBJ Singapore Limited
DBJ Europe Limited
DBJ Investment Consulting (Beijing)Co., Ltd.
DBJ Americas Inc.

Operations Audit
Committee

Regional Research & Planning Department
Research Institute of Capital Formation
Chief
Investment
Management
OfficeIndustrial Research &Customer Solution Planning Office
Corporate Management &Accounting Research OfficeSecretariat Office
Human Resources Management Department

Public Relations Office

Corporate Planning & Coordination Department

Sustainability Management Office

Risk Management Department

Digital Strategy OfficeInformation Resources Department
General Affairs Department
Accounting Department
Credit Analysis Department
Legal Affairs & Compliance Department
Treasury Department
Internal Audit Department

Settlement & Accounting Operation Office
Data Section

The Chief Investment Management
Office consists of the Corporate
Planning & Coordination
Department, Business Planning &Coordination Department, Credit
Analysis Department, Risk
Management Department andAccounting Department.

Economic Research Office
Economic & Industrial Research Department

Corporate Data

Representative Offices: Hakodate,
Kushiro, Aomori, Toyama, Matsue,
Okayama, Matsuyama, Oita

Sustainable Solution Department

76

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Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

77

The Development Bank of Japan Inc. Act(Act No. 85 of 2007)

Promulgated: June 13, 2007 by Act No. 85 of 2007
Enforced: May 22, 2020
Last Amended : May 22, 2020 by Act No. 29 of 2020

Chapter I General Provisions
those who need long-term business funds, as well as to thesophistication of financial functions.
Article 2 Restriction on Use of Trade Name
1. Any entity other than the Corporation shall not use the charactersof Development Bank of Japan Inc. (Kabushiki Kaisha Nippon
Seisaku Toshi Ginko), in its trade name.
2. The provision of Article 6, Paragraph 2 of the Banking Act (Act No.
59 of 1981) shall not apply to the Corporation.

Chapter II Business Operations(referred to as the“Cooperative Financial
Institutions”),
Development Bank ofJapan Inc.

Article 2, Paragraph 11;
Article 27-28, Paragraph 3;
Article 28, Paragraph 4;
Article 33, Paragraph 1;
Article 33-5, Paragraph 2;
Article 33-7; Article 58;
Article 60-14, Paragraph 1;
Article 66, and Article 202,
Paragraph 2, Items (1) and (2)Cooperative
Financial
Institutions

Cooperative Financial
Institutions,
Development Bank ofJapan Inc.

Article 33-8, Paragraph 1

are the financial
institutions

are the financial institutions, or if Development
Bank of Japan Inc. conducts the businessactivity referred to in
Article 3, Paragraph 1,
Item (16) of The
Development Bank ofJapan Inc. Act (Act No.
85 of 2007)

2. Any directors, accounting counsel (kaikei sanyo) (including, if an
accounting counsel is a firm, its members who should perform theduties as such; hereinafter in this Paragraph the same), statutory
auditors, executive officers (shikkoyaku) or employees shall notify
the Minister of Finance without delay as set forth in the Minister ofFinance Ordinance if they take up a position of director, accounting
counsel, statutory auditor or executive officer of a Financial
Instruments Firm (limited to the firms that engages in the securitiesrelated business set forth in Article 28, Paragraph 8 of the Financial
Instruments and Exchange Act; hereinafter in this Paragraph thesame) (including the cases where a director, accounting counsel,
statutory auditor or executive officer of a Financial Instruments Firmcome to concurrently hold a position of director, accounting counsel, statutory auditor or executive officer of the Corporation), or they
resign a director, accounting counsel, statutory auditor or executive
officer of a Financial Instruments Firm.
Article 5 Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan Bonds.
2. The provision of Article 702 of the Companies Act (Act No. 86 of2005) shall not apply where the Corporation issues theDevelopment Bank of Japan Bonds.
3. Only with respect to the Development Bank of Japan Bonds issued
outside of Japan, the Corporation may issue certificates representing the Development Bank of Japan Bonds (including interest
coupons appertaining thereto; hereinafter in this Paragraph, andArticle 13, Paragraphs 3 and 4, Item (1), the same), as prescribedin the Cabinet Order, in the event that it is necessary to deliver
replacement certificates to anyone who has lost those certificates.
Article 6 Method of Issue of the Development Bank ofJapan Bonds
1. If the Corporation issues certificates representing the Development
Bank of Japan Bonds, such certificates shall be in bearer form;
provided, however, that the Corporation may issue those certificates in registered form upon request of a subscriber or owner ofthe Bonds.
2. If the Corporation issues the Development Bank of Japan Bonds,
the Corporation shall not enter into a custody agreement with asubscriber of the Bonds in which matters set forth in the Ministry of
Finance Ordinance and the Cabinet Office Ordinance arecontained.

Data Section

Article 4 Application by Changing the Provisions of the
Financial Instruments and Exchange Act to Read
1. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act to the Corporation, the words and(referred to as the“Cooperative
Financial
Institutions”)

Corporate Data

(except in cases where it is intended for secondary distribution(uridashi)), or to handle primary offering (boshu) of theSpecified Bonds so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution of agreements which provides for lending money on behalf of banks(the banks set forth in Article 2, Paragraph 1 of the Banking
Act (Act No. 59 of 1981); hereinafter the same) and other entities engaged in the financial business stipulated in the Cabinet
Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange Act(other than those that fall within the securities-related derivatives transactions), except in cases where these business
operations fall within those operations referred to in Item (7);(12) To do the activities referred to in Article 2, Paragraph 8, Item(7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8, Item(9) of the Financial Instruments and Exchange Act (limited, inthe case of the handling of primary offering or secondary distribution, to those to be conducted upon entrustment byfinancial instruments firms engaged in the type I financial
instruments trading business set forth in Article 28, Paragraph
1 of the Financial Instruments and Exchange Act (the financial
instruments firms set forth in Article 2, Paragraph 9 of the
Financial Instruments and Exchange Act; hereinafter thesame), and for such financial instruments firms);(14) To do the activities referred to in Article 2, Paragraph 8, Item
(11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8, Item(13) of the Financial Instruments and Exchange Act;
(16) To do the activities referred to in Article 2, Paragraph 8, Item(15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are notissued, rights to be represented by such securities) or transactions referred to in each Item of Paragraph 2 of Article 33 of the
Financial Instruments and Exchange Act, to do the activities
set forth in each Item of the said Paragraph (other than thosereferred to in Items (3), (5), (7) through (9), (11) and (13));(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushiki iten),or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide

Article 2, Paragraph 8

Corporate Governance

Article 3 Scope of Business Operations
1. The Corporation shall engage in the following business operations
to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs) andother deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts and obligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forth in
Item (7), Short-term Notes, Etc.; the same in Item (8)) (otherthan those that fall within securities-related derivatives transactions (the securities-related derivatives transactions set forth in
Article 28, Paragraph 8, Item (6) of the Financial Instruments
and Exchange Act (Act No. 25 of 1948); hereinafter in this
Item and Item (11) the same), or enter into securities-related
derivatives transactions (limited to those made for investment
purposes), except in cases where these business operations
fall within those operations referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Bonds or Preferred Investment
Securities issued by a Specified Purpose Company (limited tothe cases where the Specified Purpose Company acquires
only monetary claims (excluding negotiable instruments payable to order set forth in Part III, Chapter I, Section 7,
Subsection 1 of the Civil Code (Act No. 89 of 1896), registered negotiable instrument payable to holder set forth in
Subsection 2 of the same Section, other registered negotiable
instruments set forth in Subsection 3 of the same Section andclaims regarding bearer instruments set forth in Subsection 4of the same Section and electronically recorded monetaryclaims set forth in Article 2, Paragraph (1) of the Electronically
Recorded Monetary Claims Act (Act No. 102 of 2007); hereinafter the same in this Item) or beneficial interests in trusts withwhich monetary claims are entrusted with cash proceeds
derived from issue of those Specified Bonds or Preferred
Investment Securities as set forth in the Asset Liquidation
Plans, and except for, in case of Specified Bonds, Specified
Short-term Notes; hereinafter the same in this Item), and othersecurities similar to Specified Bonds or Preferred Investment
Securities stipulated in the Ministry of Finance Ordinance(hereinafter in this Item referred to as the “Specified Bonds”)

phrases indicated in the center columns of the table below in theprovisions of that Act in the left columns shall be changed to read
the words and phrases indicated in the right column, respectively:

Strategy

Article 1 Purpose
Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall be a joint stock company (kabushiki-kaisha)
whose object is to maintain the foundations of investment andfinancing functions of long-term business funds as theDevelopment Bank of Japan by conducting business activities
utilizing the methods of combining investments and financing andother sophisticated financial methodologies, while maintaining theautonomy of management with the goal of realizing full-scale
privatization, thereby contributing to smooth supply of funds toi­nformation as required for the business operations of otherentities;(20) To conduct investigations, research or training regarding financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
2. In addition to the business operations of the preceding Paragraph,
the Corporation may engage in such business activities as necessary to attain its object, subject to authorization of the Ministerof Finance.
3. “Securities” in Items (5) and (6) of Paragraph 1 and Paragraph 5
mean the securities set forth in Article 2, Paragraph 1 of the
Financial Instruments and Exchange Act, and the rights which are
deemed as securities as set forth in Article 2, Paragraph 2 of the
Financial Instruments and Exchange Act.
4. “Short-term Notes, Etc.” in Items (5) and (9) of Paragraph 1, andthe next following Paragraph mean:(1) Short-term notes Etc. set forth in Article 66, Item (1) of the Act
Concerning the Central Depositary System of Corporate
Debentures, Shares, Etc. (Act No. 75 of 2001);(2) Short-term investment corporation notes set forth in Article
139-12, Paragraph 1 of the Act Concerning Investment Trusts
and Investment Corporations (Act No. 198 of 1951);(3) Specified short-term notes set forth in Article 2, Paragraph 8of the Act concerning Liquidation of Assets (Act No. 105
of 1998);(4) Rights to be indicated on debt securities (other than thosehaving the nature of corporate debentures with stock acquisition rights (shinkabu-yoyaku-ken-tsuki shasai)) to be issued
by foreign corporations, the ownership rights of which shall be
determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., which satisfy all of the following
requirements:		a. The amount of each right is not less than JPY100 million;		b.	It is stipulated that the principal amount of such debt securities shall be redeemed on a definitely specified date which
occurs a year after the date on which the aggregate amountof such rights is paid, and further that no payment shall bemade in installments; and		
c.	It is stipulated that interest shall become due and payable
on the same date as the maturity date of the principal
amount in Sub-item b.
5. The business operations referred to in Paragraph 1, Item (7) (in thecase of monetary claims represented by the certificates set forth in
the said Item which fall within Securities) and the business operations referred to in Paragraph 1, Item (9) (in the case of Short-term
Notes, Etc.) shall include the business operations to do the activities referred to in Article 2, Paragraph 8, Items (1) through (6), and(8) through (10) of the Financial Instruments and Exchange Act.
6. The terms “Specified Purpose Company,” “Asset Liquidation Plan,”“Specified Bonds,” “Specified Short-term Notes” or “Preferred
Investment Securities” referred to in Paragraph 1, Item (8) mean thespecified purpose company, asset liquidation plan, specified
bonds, specified short-term debentures or preferred investment
securities set forth in Article 2, Paragraphs 3, 4 or 7 through 9 of
the Act concerning Liquidation of Assets, respectively.
7. If the Corporation engages in the business activity referred toParagraph 1, Item (10), the provision of Article 52-36, Paragraph 1of the Banking Act and other provisions equivalent to that provisionof the said Paragraph which apply to those who engage in thefinancial business stipulated in the Cabinet Order set forth inParagraph 1, Item (10) and are prescribed in the Cabinet Order,
shall not apply.

Value Creation Story

Chapter I
General Provisions (Article 1 and Article 2)
Chapter II Business Operations (Article 3 through Article 25)
Chapter III	Miscellaneous Provisions(Article 26 through Article 29)
Chapter IV	Penal Provisions (Article 30 through Article 35)
Supplementary Provisions

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Article 12 Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of theCompanies Act (Act No. 86 of 2005) (hereinafter in Article 34,
Item (4) referred to as the “Shares Offered for Sale”) or stock acquisition rights offered set forth in Article 238, Paragraph 1 of theCompanies Act (hereinafter in Article 34, Item (4) referred to the“Stock Acquisition Rights Offered”), or to deliver shares or stockacquisition rights in connection with a share-for-share exchange,
the Corporation shall obtain authorization of the Minister of Finance.
2. Without delay after the delivery of shares upon exercise of stockacquisition rights, the Corporation shall submit a report thereon to
the Minister of Finance.

Article 16 Authorization of Concurrent Positions of Directors
1. Any director (or, if the Corporation is a company maintaining committees (iinkai secchi kaisha), any executive officer) who performs
the day-to-day business of the Corporation shall not perform the
day-to-day business of any other corporation without authorizationof the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for theauthorization referred to in the preceding Paragraph, grant his/herauthorization, except in cases where it is determined that any
matter so applied may interfere with sound and proper management of the Corporation.
Article 17 Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain authorization of the Minister of Finance, as stipulated in the Ministry of
Finance Ordinance. If the Corporation intends to revise it, the same
shall apply.
Article 18 Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings and obtain
authorization of the Minister of Finance, as stipulated in the Ministryof Finance Ordinance. If the Corporation intends to revise it, thesame shall apply.
Article 19 Subsidiaries Subject to Authorization
If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items (3),(4) and (7); hereinafter referred to as the “Subsidiaries Subject toAuthorization”) its subsidiary (the subsidiary set forth in Article 2,
Item (3) of the Companies Act), the Corporation shall obtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forth in
Article 2 of the Long-Term Credit Bank Act (Act No. 187
of 1952));(3) Financial Instruments Firms (limited to those who engage in typeI financial instruments trading business set forth in Article 28,
Paragraph 1 of the Financial Instruments and Exchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No. 32
of 1983), and exclude those who concurrently conduct thebusiness referred to in the preceding Items or fall within otherrequirements stipulated in the Ministry of Finance Ordinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of 2004));(6) Insurance companies (the insurance companies set forth in
Article 2, Paragraph 2 of the Insurance Business Act (Act No.
105 of 1995)); andData Section

Article 13 Corporate Debentures, Development Bank of Japan
Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation shall prepare its basic policy regarding the issue of corporate debentures(shasai) (other than the Development Bank of Japan Bonds,“Corporate Debentures”; hereinafter the same) and theDevelopment Bank of Japan Bonds (excluding the short-term
notes set forth in Article 66, Item (1) of the Act Concerning theCentral Depositary System of Corporate Debentures, Shares, Etc.
(Act No. 75 of 2001) from both the Corporate Debentures and theDevelopment Bank of Japan Bonds, respectively; hereinafter in this
Article and Article 18 the same), as well as regarding the borrowings (limited to those with more than one year to maturity;
hereinafter in this Article and Article 18 the same), which provides
for matters relating to the issue of the Corporate Debentures andthe Development Bank of Japan Bonds, and the borrowing of

Article 15 Resolution for Election of Representative Directors
and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment
and dismissal of audit committee members (kansaiin) shall not
become effective without authorization of the Minister of Finance.

Corporate Data

Article 9 Special Rules When Starting Acceptance of
Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set forthin Article 3, Paragraph 1, Item (1) or issue of the Development
Bank of Japan Bonds, the Corporation shall obtain the priorapproval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred to in
the preceding Paragraph, the Minister of Finance shall, in advance,
have a discussion with the Prime Minister and obtain his/her
consent.
3. The Prime Minister may request the Minister of Finance to provide
the Prime Minister with the required materials and explanations,whenever the Prime Minister deems necessary after the discussion
referred to in the immediately preceding Paragraph.
4. The Prime Minister may request the Corporation to cooperate with
the Prime Minister such as providing materials and explanations, tothe required extent, whenever the Prime Minister deems especiallynecessary after the discussion referred to in Paragraph 2.

Article 11 Fiscal YearThe fiscal year of the Corporation shall commence on April 1 ofeach year and end on March 31 of the following year.

Article 14 Limits on Borrowing and Limitation on Extensionof Credit
1. The aggregate amount of the items identified below shall not
exceed the amount equal to fourteen (14) times the total amount ofpaid-in capital and reserves (capital reserve and earned surplus
reserve; hereinafter in this Article the same); provided, however,that if it is necessary, to refinance the issued old bank debentures(the bank debentures set forth in Article 43, Paragraph 1 of theDevelopment Bank of Japan Act (Act No. 73 of 1999; hereinafterreferred to as the “Old DBJ Act”) before abolishment as set forth in
Article 26 of the Supplementary Provisions which were issued pursuant to the provision of Article 43, Paragraph 1 or Paragraph 4 of
the Old DBJ Act, the “Old Bank Debentures”; hereinafter thesame), the Corporate Debentures or the Development of Bank ofJapan Bonds, the Corporation may issue the Corporate
Debentures and the Development Bank of Japan Bonds, in excess
of such amount only within the period of time required for suchrefinancing:(1) Outstanding amount of deposits;(2) Outstanding amount of borrowings;(3) Outstanding amount of funds deposited pursuant to the provision of Article 42, Paragraph 5 of the Old DBJ Act;
(4) Outstanding amount of the obligations representing the principals of the Old Bank Debentures;(5) Outstanding amount of the obligations representing the principals of the Corporate Debentures and the Development Bankof Japan Bonds issued; and(6) Outstanding amount of those items which have the same
economic nature as those referred to in each of the foregoing,
howsoever described.
2. The aggregate amount of the items identified below shall not
exceed the sum of: (i) the amount of paid-in capital and reservesand (ii) the upper limit set forth in the main sentence of the preceding Paragraph:(1) Outstanding amount of the amounts of loans made andclaims acquired (other than those relating to Securities set
forth in Item (3));(2) Outstanding amount of obligations of guarantee;(3) Outstanding amount of Securities acquired (the Securities set
forth in Article 3, Paragraph 3 and exclude the Securities
referred to in Article 2, Paragraph 1, Items (1) and (2) of the
Financial Instruments and Exchange Act (including the rights
to be represented on such securities when such Securities
are not issued), and those relating to capital contributions
under the next following Item); and(4) Outstanding amount of capital contributions.

Corporate Governance

Article 8 M utatis Mutandis Application of the Currency andSecurities Counterfeiting Control Act
The Currency and Securities Counterfeiting Control Act (Act No. 28
of 1895) shall be applied mutatis mutandis to the counterfeiting ofcertificates representing the Development Bank of Japan to beissued by the Corporation.

Article 10 Mutatis Mutandis Application of the Banking Act
1. The provisions of Articles 12-2 (other than Paragraph 3), 13, 13-2,
13-4, 14, 14-2, 20, 21, 23 and 57-4 (limited to the portions relating to Item (1)) of the Banking Act shall apply mutatis mutandis
to the Corporation when the Corporation obtains the approvalreferred to in Paragraph 1 of the immediately preceding Article.
For this purpose, references to the “Prime Minister” and “Cabinet
Office Ordinance” in these provisions (other than the second sentence of Article 13-4 and Article 20, Paragraph 7 of the BankingAct) shall be changed to read the “Minister of Finance and thePrime Minister” and the “Ministry of Finance Ordinance and the
Cabinet Office Ordinance,” respectively, and reference to “Article
38, Items (1), (2), (7)” in Article 13-4 of the Banking Act shall bechanged to read “Article 38, Item (7)” and other necessary technical changes to read shall be prescribed in the Cabinet Order.
2. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act which shall be applied mutatis
mutandis after changing to read in Article 13-4 of the Banking Act
which is applied mutatis mutandis after changing to read in thepreceding Paragraph, reference to the “Cabinet Office Ordinance”
in those provisions shall be changed to read the “Ministry of
Finance Ordinance and Cabinet Office Ordinance.”
3. If the Government stipulates an ordinance pursuant to the provisions of the Banking Act which shall be applied mutatis mutandis
after changing to read in Paragraph 1, the Government shall pay
attention so that interests of users of business operations of the
Corporation such as money lending, when it gives the approvalreferred to in Paragraph 1 of the immediately preceding Article may
not be unreasonably infringed.

money, such as the amounts of issue and borrowings, denominated currency of the Corporate Debentures, the Development
Bank of Japan Bonds and the borrowings, as stipulated in the
Ministry of Finance Ordinance, and obtain authorization of the
Minister of Finance. If the Corporation intends to revise it, the same
shall apply.
2. If the Corporation issues the Corporate Debentures or theDevelopment Bank of Japan Bonds, or borrows money, theCorporation shall submit a report thereon to the Minister of Financewithout delay, as stipulated in the Minister of Finance Ordinance.
3. Only with respect to the Corporate Debentures issued outside ofJapan, the Corporation may issue certificates representing the
Corporate Debentures, as prescribed in the Cabinet Order, inthe event that it is necessary to deliver replacement certificatesto anyone who has lost those certificates.
4. The provisions of the second sentence of Paragraph 1, andParagraph 2 shall not apply to the following cases:(1) When the Corporation issues certificates representing the
Corporate Debentures or the Development Bank of Japan
Bonds (hereinafter in the following Item and Article 25,
Paragraph 2 referred to as the “Bond Certificates, Etc.”)
upon request for reissue which will be made after a decisionof nullification set forth in Article 699, Paragraph 2 of theCompanies Act; and(2) When the Corporation issues the Bond Certificates Etc. as set
forth in Article 5, Paragraph 3 or the immediately preceding
Paragraph.

Strategy

Article 7 Extinctive Prescription of the Development Bank ofJapan Bonds
The extinctive prescription periods of the principal of, and interest
on, the Development Bank of Japan Bonds to be issued by the
Corporation shall be fifteen (15) years and five (5) years, respectively, from the time when it has become possible to exercise therights under such Bonds.

5. The provisions of Article 4, Paragraph 1 of the Banking Act andArticle 4, Paragraph 1 of the Long-Term Credit Bank Act (Act No.
187 of 1952) shall not apply to the business operations to be conducted by the Corporation in the case that the Corporation obtains
the approval referred to in Paragraph 1.

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3. The Corporation may issue certificates representing theDevelopment Bank of Japan Bonds by way of a secondary distribution (uridashi). In that case, the Corporation shall determine the
distribution period.
4. If the Corporation issues certificates representing the Development
Bank of Japan Bonds, the Corporation shall indicate the following
matters on the face of those certificates:(1) Trade name of the Corporation;(2) Amount of the Bonds represented by the certificate;(3) Interest rates on the Development Bank of Japan Bonds represented by the certificate;(4) Method of redemption and maturity date of the Development
Bank of Japan Bonds represented by the certificate; and(5) Numbers of the certificate.
5. If the Corporation intends to issue the Development Bank of Japan
Bonds by way of a secondary distribution, the Corporation shallgive public notice of the following matters:(1) Distribution period;(2) Aggregate amount of the Development Bank of Japan Bonds;(3) If payment for the Development Bank of Japan Bonds is madein more than one installment, the amount of, and time schedule for, such payments;(4) Issue price or minimum price of the Development Bank ofJapan Bonds;(5) If the Corporation intends to issue the Development Bank ofJapan Bonds, the ownership rights of which shall be determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., description to the effect that theDevelopment Bank of Japan Bonds are subject to the said
Act; and(6) Matters referred to in Items (1) through (4) of the immediately­preceding Paragraph.
6. The Corporation may issue the Development Bank of Japan Bonds
at a discount.

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(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.

Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development Bank of Japan
Bonds (hereinafter in the following Paragraph, immediately following
Article and Article 25, Paragraph 1 referred to as the “Debentures,
Etc.”) to be issued by the Corporation to appropriate the resulting

Article 25 Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations (Act No. 24 of 1946), the Government may enter
into a guarantee agreement for the obligations relating to theDebentures, Etc., to the extent of the amount approved by the resolutions of the Diet.
2. In addition to the provision of the preceding Paragraph, theGovernment may enter into a guarantee agreement for the­obligations relating to the Bond Certificates, Etc. to be issued
by the Corporation upon request for reissue to be made after adecision of nullification set forth in Article 699, Paragraph 2 of
the Companies Act, for delivery to those who have lost theBond Certificates, Etc., or for the obligations relating to the Bond
Certificates, Etc. to be issued by the Corporation as set forth in
Article 5, Paragraph 3 or Article 13, Paragraph 3.

Chapter III Miscellaneous Provisions

Chapter IV Penal Provisions
Article 30
1. If any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) (if an accounting counsel is a firm, its members
who should perform the duties as such), statutory auditors, or
employees accept, solicit or promise to accept a bribe in connection with their duties, they shall be punished by imprisonment withwork for not exceeding three (3) years. If they conduct improper
activities or fail to conduct proper activities with the bribe, they shallbe punished by imprisonment with work for not exceeding five (5)years.

2. In the case of the immediately preceding Paragraph, the bribe
accepted by the criminal person shall be confiscated. If the bribe inwhole or in part cannot be confiscated, such amount shall becollected.
Article 31
1. Any person who gives, offers or promises to give a bribe referred
to in Paragraph 1 of the immediately preceding Article shall bepunished with imprisonment for not exceeding three (3) years or afine not exceeding 1,000,000 yen.

Data Section

Article 27 Reports and Inspections
1. If the competent minister deems necessary to secure sound andproper management of the Corporation and otherwise deems necessary to effectuate this Act, the competent minister may cause
the Corporation to make a report, or have any of officials of thecompetent ministry enter into premises of the Corporation such as
its office to inspect the condition of business or books, documents
and other properties required.
2. If the competent minister deems especially necessary to securesound and proper management of the Corporation and otherwise
deems especially necessary to effectuate this Act, the competent
minister may, to the extent necessary, cause any of the subsidiaries or entities engaged by the Corporation for any services of the
Corporation (hereinafter in this Paragraph, Paragraph 5 and Article
33, Paragraph 2 referred to as the “Contractors”) to make reports
relevant to the condition of business of the Corporation or haveany officials of the competent ministry enter into offices or otherpremises of the subsidiaries or the Contractors of the Corporation
to inspect the condition of business or books, documents andother properties required which may serve as reference relating
to the condition of business of the Corporation.

Article 29 Competent Ministers
1. The competent minister under this Act shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, the competent ministers for the following matters shall be the Minister ofFinance and the Prime Minister:(1) Matters regarding the provisions of the Banking Act which areapplied mutatis mutandis after changing to read in Article 10;(2) Matters regarding the directions and orders under Article 26,
Paragraph 2 (limited to those to be given when it is deemednecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph);(3) Matters regarding the direction for report and on-site inspections under Article 27, Paragraph 1 (limited to those to bemade and conducted when it is deemed necessary to securesound and proper management of the Corporation set forth in
the said Paragraph); and(4) Matters regarding the direction for report and on-site inspections under Article 27, Paragraph 2 (limited to those to bemade and conducted when it is deemed especially necessary

Corporate Data

Article 26 Supervisory Measures
1. The competent minister shall oversee and supervise the
Corporation in accordance with the provisions of this Act.
2. Whenever the competent minister deems necessary to securesound and proper management of the Corporation in light of thecondition of the business operations or properties of the
Corporation, or the properties of the Corporation and its subsidiaries (which are limited to those subsidiaries set forth in Article 2,
Item (3) of the Companies Act, which fall within the Subsidiaries
Subject to Authorization; hereinafter in Paragraphs 2 and 5 of theimmediately following Article, and Article 33, Paragraph 2, thesame) or to otherwise effectuate this Act, the competent ministermay request the Corporation to submit an improvement plan tosecure its sound management by indicating those matters forwhich the Corporation should take measures and the deadline forsubmission or direct the Corporation to revise the improvement
plan once submitted, or direct, to the extent necessary, theCorporation to suspend its business operations in whole or in part
during the designated period of time or to deposit its properties tothe competent deposit office, or give other orders concerning business necessary for supervision.

Article 28 Delegation of Authority
1. The Minister of Finance may delegate a part of the authority to
conduct on-site inspections pursuant to the provision of
Paragraphs 1 or 2 of the immediately preceding Article to the Prime
Minister, as stipulated in the Cabinet Order.
2. If the Prime Minister has had the on-site inspections conductedpursuant to the provision of Paragraphs 1 or 2 of the immediately
preceding Article based on the delegation of the authority under
the preceding Paragraph, the Prime Minister shall promptly report
the Minister of Finance on results of such inspections.
3. The Prime Minister shall delegate the authority delegated pursuant
to the provision of Paragraph 1 and the authority pursuant to theprovision of the immediately preceding Paragraph to theCommissioner of the Financial Services Agency.
4. The Commissioner of the Financial Services Agency may delegate
all or a part of the authority delegated pursuant to the provision of
the immediately preceding Paragraph to the director of the competent local financial bureau or local finance branch bureau, as
stipulated in the Cabinet Order.
5. If the Corporation obtains the approval referred to in Article 9,
Paragraph 1, each provision of the preceding Paragraphs shallnot apply.

to secure sound and proper management of the Corporation
set forth in the said Paragraph).
2. The Minister of Finance or the Prime Minister shall not be precluded from individually exercising the authority relating to thematters referred to in Item (3) or (4) of the preceding Paragraph as
set forth in the proviso of the preceding Paragraph.
3. If each minister referred to in each of the following Items exercises
his/her authority pursuant to the provision of the immediately
preceding Paragraph, he/she shall promptly inform the results
thereof to the minister set forth opposite to him/her in each of thefollowing Items:(1) Minister of Finance: Prime Minister(2) Prime Minister: Minister of Finance
4. In the cases stipulated in the proviso of Paragraph 1, reference tothe “Minister of Finance” in Article 3, Paragraph 2 shall be changed
to read the “Minister of Finance and the Prime Minister”; reference
to the “Minister of Finance” in Article 13, Paragraph 2 shall bechanged to read the “Minister of Finance (or, in relation to issue of
the Development Bank of Japan Bonds, the Minister of Financeand the Prime Minister)”; reference to the “Minister of Land,
Infrastructure and Transport” in Article 20, Paragraph 2 shall bechanged to read the “Minister of Land, Infrastructure and Transport
and the Prime Minister”; reference to the “, as stipulated in the
Ministry of Finance Ordinance, its balance sheet, profit and loss
statement and business report for interim fiscal year (the period
from April 1 to September 30 of the current fiscal year) of the current fiscal year” in Article 21 shall be changed to read the “, asstipulated in the Ministry of Finance Ordinance (or, in relation to thefiscal year and interim fiscal year (the period from April 1 to
September 30 of the current fiscal year; hereinafter in this Article
the same) in and after the fiscal year in which the date on which theapproval referred to in Article 9, Paragraph 1 is obtained isincluded, the Minister of Finance Ordinance and the Cabinet Officer
Ordinance), its balance sheet, profit and loss statement and business report for interim fiscal year of the current fiscal year”, andreference to the “Minister of Finance” in Article 21 shall be changed
to read the “Minister of Finance (or, in relation to the fiscal year andinterim fiscal year in after the fiscal year in which the date on which
the approval referred to in the said Paragraph is obtained isincluded, the Minister of Finance and the Prime Minister).”
5. In the case of the proviso of Paragraph 1, if the Minister of Financeintends to amend the Minister of Finance Ordinance referred to in
Article 3, Paragraph 1, Item (7) or (8) he/she shall obtain the priorconsent of the Prime Minister.
6. The Prime Minister shall delegate the authorities under this Act(other than those authorities pursuant to the provisions ofParagraphs 1 through 3 of the immediately preceding Article,
and other authorities set forth in the Cabinet Order) to theCommissioner of the Financial Services Agency.
7. The Commissioner of the Financial Services Agency may delegate
a part of the authorities delegated to him/her pursuant to the provision of the immediately preceding Paragraph to the director of local
finance bureau or local finance branch bureau.

Corporate Governance

Article 22 Special Exemptions from Management of Fiscal
Loan Funds
Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act (Act No. 100 of 1951), the fiscal loan
funds (the fiscal loan funds set forth in Article 2 of the Fiscal Loan
Funds Act; hereinafter the same) may be appropriated for loans(hereinafter in Article 24 referred to simply as the “Loans”) to the
Corporation when the Corporation borrows money for appropriation for expenses required for its operations set forth in Article 3,
Paragraphs 1 and 2.

Article 24
For the purpose of application of the provisions of the Act
Concerning Special Measures for Long-term Management of
Fiscal Loan Funds (Act No. 7 of 1973) to the fiscal loan funds to
be invested in making loans as set forth in Article 22 or the fiscal
loan funds to be invested in the Debentures, Etc. as set forth inParagraph 1 of the immediately preceding Article, the Corporation
shall be deemed as the corporation set forth in Article 10,
Paragraph 1, Item (7) of the Fiscal Loan Funds Act.

3. When the officials conduct on-site inspection pursuant to the provisions of the preceding two Paragraphs, those officials shall carry acertificate showing their identities and present it to the parties
concerned.
4. The authority of the officials to conduct on-site inspections pursuant to the provisions of Paragraphs 1 and 2 shall not be interpreted
as that for a criminal investigation.
5. The subsidiaries and the Contractors of the Corporation may reject
the report or on-site inspection pursuant to the provision of
Paragraph 2, if there is any reasonable cause.

Strategy

Article 21 Submission of Balance Sheet and Other Financial
Statements
For each fiscal year, the Corporation shall submit to the Ministerof Finance, as stipulated in the Ministry of Finance Ordinance, itsbalance sheet, profit and loss statement and business report for
the interim fiscal year (the period from April 1 to September 30 of
the current fiscal year) of the current fiscal year, and its balance
sheet, profit and loss statement and business report for the current
fiscal year.

proceeds for expenses required for its operations set forth in Article
3, Paragraphs 1 and 2.
2. If the fiscal loan fund is invested in the Debentures, Etc. or the Old
Bank Debentures, the fiscal loan fund shall not be used to underwrite, subscribe for or purchase (limited, in the case of the Old
Bank Debentures, to purchase; hereinafter in this Paragraphreferred to as the “Subscribe”) the Debentures, Etc. or the Old
Bank Debentures in excess of five-tenths (5/10) of the outstanding
amount of the Debentures, Etc. and the Old Bank Debentures or
six-tenths (6/10) of the total amount of the Debentures, Etc. to beissued by the Corporation at a time. In this case, the Debentures,
Etc. or the Old Bank Debentures to be Subscribed with the fiscal
loan funds shall be the same as those otherwise Subscribed forwith respect to the terms such as interest rate, collateral, methodof redemption and maturity.

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Article 20 Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of the
Corporation, disposition of surplus funds (other than disposition oflosses) such as distribution, merger, corporate split, and dissolution shall not become effective without authorization of the Ministerof Finance.
2. If the Minister of Finance intends to grant the authorization referred
to in the preceding Paragraph (limited to resolutions for merger,
corporate split and dissolution), the Minister of Finance shall have a
discussion with the Minister of Land, Infrastructure and Transport.

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2. If the person who committed the crime referred to in the immediately
preceding Paragraph surrendered to justice, his/her penalty may be
reduced or he/she may be exempted from the punishment.

Article 35
Any person who violates the provision of Article 2, Paragraph 1 shallbe punished with a non-penal fine not exceeding 100,000 yen.

Supplementary Provisions (Extract)

Article 2-2 Capital Contribution by the Government
The Government may make capital contributions to the Corporation,
to the extent of the amount approved by the budget, whenever theGovernment deems necessary, until March 31, 2012.
Article 2-3 Issue of the Government Bonds
1. The Government may issue the government bonds to use forsecurement of capital that become necessary to secure soundness of financial conditions of the Corporation in performing crisis
response business set forth in Article 2, Item (5) of the Japan
Finance Corporation Act (Act No. 57 of 2007) (hereinafter referred
to as the “crisis response business”), until March 31, 2012.

Article 2-5 Return of the Government Bonds
1. If there are any government bonds delivered as set forth in Article
2-3, Paragraph 2 of the Supplementary Provisions, those which
are not redeemed as of July 1, 2012, the Corporation shall returnthe unredeemed government bonds to the Government.
2. The Government shall immediately cancel the government bonds
when the government bonds are returned as set forth in the immediately preceding Paragraph.
3. In addition to those set forth in the preceding two Paragraphs,
other matters required for the return and the cancellation of thegovernment bonds delivered by the Government as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, shall be
stipulated in the Ministry of Finance Ordinance.
Article 2-6 Special Rules for Taxation of the Registration
License Tax
In case of the investment as set forth in Article 2-2 of the
Supplementary Provisions, or the redemption as set forth in Article
2-4, Paragraph 2 of the Supplementary Provisions, no registration
license tax shall be assessed on registration of the increase in theamount of the capital of the Corporation, limited to only those registered as set forth in the Minister of Finance Ordinance.

Article 2-9 C apital Contribution by the Government with
Regard to Crisis Response Business
The Government may, for an indefinite period, make capital contributions to the Corporation, to the extent of the amount approved by
the budget, whenever the Government deems necessary for proper
implementation of crisis response business by the Corporation.
Article 2-10 Implementation of Crisis Response Business1. The Corporation shall conduct crisis response business at thehead office or any other office designated by the Minister ofFinance (hereinafter in the following Paragraph and Article 2-31,
Paragraph 1, Item (1) of the Supplementary Provisions referred toas the “designated office”).
2. The Corporation shall neither suspend nor cease to conduct crisis
response business at the designated office, except in cases wherecrisis response business is temporarily suspended, in whole or inpart, at the designated office due to Acts of God or other reasons
beyond control, as stipulated in the Ministry of Finance Ordinance.
Article 2-11 Special Provisions, Etc., on Business Plan with
Regard to Crisis Response Business1. The Corporation shall include an implementation policy for its crisis
response business in its business plan provided for in Article 17,
as stipulated in the Ministry of Finance Ordinance.
2. The Corporation shall include the implementation status of its crisis
response business, based on the implementation policy set forth in
the immediately preceding Paragraph, in its business report provided for in Article 21, as stipulated in the Ministry of FinanceOrdinance.
3. In addition to matters set forth in each of the Items of Article 27 of
the Companies Act, matters regarding proper implementation ofcrisis response business shall be included or recorded in the
Articles of Incorporation of the Corporation.
Article 2-12 Special Investment Operations
1. The Corporation shall, in order to attain its objectives, conduct
special investment operations, in accordance with the provisions
set forth in this Article, Articles 2-15 to 2-20, and Articles 2-23 to
2-30 of the Supplementary Provisions.
2. In this Article and up to Article 2-20 of the Supplementary
Provisions, as well as in Articles 2-23, 2-25, 2-27 and 2-31 of the
Supplementary Provisions, “special investment operations” means,among the investment businesses in special business activities,
those that are deemed to particularly contribute to the facilitation of
supply of funds by financial institutions and others, for the revitalization of business activities taking advantage of regional
characteristics that contribute to autonomous development of local
economies, or for the enhancement of competitiveness ofJapanese companies that contribute to the improvement of

Data Section

Article 2 Disposition of Government-Owned Shares
1. Pursuant to the provision of Article 6, Paragraph 2 of the Act
Concerning Promotion of Administrative Reform for Realizing the
Simple and Effective Government (Act No. 47 of 2006), theGovernment shall make efforts to reduce the number of shares
held by it in the Corporation (hereinafter in the following Paragraphand the Article 3 of the Supplementary Provisions referred to as“Government-Owned Shares”), taking into account the effect on
the attainment of the objectives of the Corporation, as well as themarket situation, and shall dispose all of them as soon aspracticable.
2. For a period from the effectuation of this Act until the Government
disposes of all of the Government-Owned Shares, the Government
shall from time to time review matters, such as matters regarding
the method in which the Government-Owned Shares should be
disposed of and take the required measures based on the result ofsuch review, so that the foundation of the Corporation’s investment
and financing functions for long-term business funds will bemaintained.

Article 2-8 G overnment’s Holding of Shares with Regard to
Crisis Response BusinessWith a view to ensure proper conduct of crisis response businessby the Corporation, the Government shall, for an indefinite period,
hold more than one-third of the total number of issued shares of
the Corporation (excluding shares in respect of which voting rights
may not be exercised for all matters that may be resolved at a general meeting of shareholders; the same shall apply in Article 2-13of the Supplementary Provisions).

Corporate Data

Article 1 Enforcement Date
This Act shall come into force from the date of promulgation; provided, however, that the provisions set forth in the following Items
shall take effect from the date set forth in each Item:(1) The provisions of Paragraph 1, Items (5), and (11) through(17), Paragraph 3, Paragraph 4, Item (2), Paragraph 5 of
Article 3, Article 4, Article 10, Article 14, Paragraph 2, Item (3),Article 19, Item (3), and Article 21 of the Supplementary
Provisions: Date on which the Act Concerning Amendment toParts of the Securities and Exchange Act (Act No. 65 of 2006)
comes into force or the date on which this Act comes into
force, whichever is later.
(2) Provision of Article 19, Item (4): Date on which the Act
Concerning Amendment to Parts of the Act Concerning theRegulations on the Money Lending Business (Act No. 115 of2006) comes into force or the date on which this Act comes
into force, whichever is later.
(3) Provisions of Articles 26 through 60 and 62 through 65 of the
Supplementary Provisions: October 1, 2008.

Article 2-4 Redemption of the Government Bonds
1. The Corporation may request the redemption of the government
bonds delivered as set forth in Paragraph 2 of the immediately preceding Article, only within the amount calculated as stipulated by
the Ministry of Finance Ordinance that become necessary as theamount of the capital in response to the increase of assets related
to its crisis response business (limited to those conducted byMarch 31, 2012).
2. If the Government is requested by the Corporation to redeem all ora part of the government bonds delivered pursuant to the provisionof Paragraph 2 of the immediately preceding Article, theGovernment shall promptly redeem them.
3. When the redemption has been made pursuant to the provision of
the immediately preceding Paragraph, the amount of the capital of
the Corporation shall be the aggregate sum of the amount of thecapital immediately preceding such redemption and the amount ofsuch redemption.
4. As for application of the provision of Article 445, Paragraph 1 of theCompanies Act in the case where the provision of the immediately
preceding Paragraph applies, “Unless it is otherwise provided for inthis Act” therein shall be deemed to be changed to read “Unless it
is otherwise provided for in this Act and in cases where the provision of Article 2-4, Paragraph 3 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act (Act No. 85 of 2007)
applies.”
5. In addition to those set forth in each of the preceding Paragraphs,
other matters required for the redemption of the government bondsdelivered by the Government as set forth in Paragraph 2 of theimmediately preceding Article, shall be stipulated in the Ministry of
Finance Ordinance.

Article 2-7 Corporation’s Obligation to Conduct Crisis
Response Business
The Corporation shall, in order to attain its objectives, in accordance with the provisions set forth in Articles 2-10, 2-11, 2-22 andArticles 2-24 to 2-30 of the Supplementary Provisions, be obligated to conduct crisis response business, for an indefinite period,
to secure a smooth supply of funds to those who need funds toaddress the damages set forth in Article 2, Item (4) of the Japan
Finance Corporation Act.

Corporate Governance

Article 34
In any of the following cases, any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) or its members whoshould perform the duties as such, or statutory auditors of the
Corporation shall be punished with a non-penal fine not exceeding
1,000,000 yen:
(1) When he/she has conducted business activities in violation of
the provision of Article 3, Paragraph 2;(2) When he/she has not notified of his/her concurrent position in
violation of the provision of Article 4, Paragraph 2;

2. The Government, as set forth in the immediately preceding
Paragraph, shall issue the government bonds and deliver themto the Corporation, to the extent of the amount approved by
the budget.
3. The government bonds to be issued as set forth in Paragraph 1
shall be non interest-bearing.
4. The government bonds to be issued as set forth in Paragraph 1
may not be transferred, pledged as security, or otherwise disposed.
5. In addition to those set forth in the preceding three Paragraphs,
other matters necessary for the government bonds to be issued as
set forth in Paragraph 1 shall be stipulated by the Ministry of
Finance Ordinance.

Strategy

Article 33
1. Any directors, executive officers (shikkoyaku), accounting counsel(kaikei sanyo) (if an accounting counsel is a firm, its members whoshould perform the duties as such), statutory auditors, or employees of the Corporation who fail to make reports, or make false
reports on matters to be reported in accordance with the provisionof Article 27, Paragraph 1, or refuse, interrupt or avoid inspection inaccordance with the same paragraph, shall be punished with afine not exceeding 300,000 yen.
2. Any directors, executive officers (shikkoyaku), accounting counsel(kaikei sanyo) (if an accounting counsel is a firm, its members whoshould perform the duties as such), statutory auditors, or employees of the subsidiaries of the Corporation or the Contractors
who fail to make reports, or make false reports on matters to bereported in accordance with the provision of Article 27, Paragraph2, or refuse, interrupt or avoid inspection in accordance with thesame paragraph, shall be punished with a fine not exceeding
300,000 yen.

(3) When he/she has started acceptance of deposits or issue of
the Development Bank of Japan Bonds in violation of the provision of Article 9, Paragraph 1;(4) When he/she has solicited those who will subscribe for
Shares Offered for Sale or Stock Acquisition Rights Offered,or delivered shares or stock acquisition rights in connection
with a share-for-share exchange in violation of the provision of
Article 12, Paragraph 1;(5) When he/she has not submitted a report on the delivery ofshares in violation of the provision of Article 12, Paragraph 2;(6) When he/she has not obtained authorization for its basic
policy in violation of the provision of Article 13, Paragraph 1;(7) When he/she has not submitted a report on issue of the
Corporate Debentures or the Development Bank of Japan
Bonds, or borrowing money in violation of the provision of
Article 13, Paragraph 2;(8) When he/she has exceeded the limit or the total referred to in
Article 14, Paragraph 1 or Paragraph 2 in violation of the provision thereof;(9) When he/she has not obtained authorization for his/her concurrent position in violation of the provision of Article 16,
Paragraph 1;(10) When he/she has not obtained authorization for its businessplan in violation of the provision of Article 17;(11) When he/she has not obtained authorization for its redemption
plans in violation of the provision of Article 18;(12) When he/she has made Subsidiaries Subject to Authorization
its subsidiary in violation of the provision of Article 19;(13) When he/she has not submitted its balance sheet, profit andloss statement or business report, or has submitted the one
which includes false statements or records in violation of theprovision of Article 21;(14) When he/she has violated the orders referred to in Article 26,
Paragraph 2.

83

Value Creation Story

Article 32
1. The crime referred to in Article 30, Paragraph 1 shall comply with
Article 4 of the Criminal Code (Act No. 45 of 1907).
2. The crime referred to in Paragraph 1 of the immediately preceding
Article shall comply with Article 2 of the Criminal Code.

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Article 2-20 Completion of Special Investment Operations
1. The Corporation shall, taking into account economic conditions,the state of business of the business entities that will receive funds
from special investment operations, and other circumstances,transfer or otherwise dispose of all of the securities (which means
the securities listed in Article 2, Paragraph 1 of the Financial
Instruments and Exchange Act, and the rights which are deemedas securities pursuant to the provision of Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act) and receivables heldby it in the special investment operations, and seek to complete

Article 2-23 Special Investment Reserve and Special
Investment Surplus Funds
1. The Corporation shall establish a special investment reserve andappropriate to such reserve an amount equal to the total of theamount contributed by the Government pursuant to the provisionof Article 2-14, Paragraph 1 of the Supplementary Provisions, theamount by which the amount of paid-in capital or reserves isreduced pursuant to the provision of Paragraph 3 of this Article andthe amount reduced from the amount of surplus funds pursuant to
the provision of Paragraph 4 of this Article.
2. When the capital contributions have been made pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the Corporation shall, notwithstanding the provision of
Article 445, Paragraph 2 of the Companies Act, record the wholeof the amount contributed pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions as the amount of thespecial investment reserve. For this purpose, reference to “thisAct” in Article 445, Paragraph 1 of the said Act shall be changed toread “this Act or the Development Bank of Japan Inc. Act (Act No.
85 of 2007).”
3. The Corporation may reduce the amount of its paid-in capital orreserves and increase the amount of its special investment
reserve, whenever the Corporation deems necessary in order toimplement the special investment operations properly. For the purpose of application of the provisions of Article 447 through Article
449 of the Companies Act in this case, reference to “is to beappropriated to reserves” in Article 447, Paragraph 1, Item (2) of
the said Act shall be changed to read “is to be appropriated toreserves or to special investment reserve under Article 2-23,
Paragraph 1 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) (hereinafter referred to

Article 2-24 Special Provisions on Limits on Borrowing and
Limitation on Extension of Credit
For the purpose of application of the provision of Article 14, when
the amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds is recorded, the total of the amounts so recorded
shall be included in the amount of paid-in capital and reserves.
Article 2-25 Amount of Surplus Funds, Etc.
1. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the crisis response reserve,
the special investment reserve and the special investment surplus
funds as of the last day of the most recent fiscal year (the mostrecent fiscal year set forth in Article 2, Item (24) of the Companies
Act; the same in the following Paragraph) in the total amount ofpaid-in capital and reserves.
2. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the amounts set forth inItems (1) though (3) and the aggregate amount of the amounts set
forth in Items (4) through (6), in the aggregate amount of theamounts set forth in Article 446, Items (1) through (4) of theCompanies Act and the aggregate amount of the amounts set
forth in Items (5) through (7) of the said Article, respectively:(1) The amount by which the amount of the crisis response
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the crisis response
reserve provided for under Article 2-27, Paragraph 4, Item (1)of the Supplementary Provisions), if any;
(2) The amount by which the amount of the special investment
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special investment reserve provided for under Article 2-27, Paragraph 4,
Item (1) of the Supplementary Provisions which has been paid
to the national treasury), if any;
(3) The amount by which the amount of the special investment
surplus funds has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special investment surplus funds provided for under Article 2-27, Paragraph

Data Section

Article 2-16 Special Investment Guidelines
1. Guidelines to be followed by the Corporation in conducting special
investment operations (in the following Paragraph and Paragraph 1of the immediately following Article referred to as the “special
investment guidelines”) shall be established and issued by the
Minister of Finance.
2. The special investment guidelines shall provide for the following
matters:

Article 2-19 Status of Income and Expenditure with Regard toSpecial Investment Operations, Etc.
For each fiscal year, the Corporation shall, as stipulated in the
Ministry of Finance Ordinance, submit to the Minister of Financeand publish documents stating the status of income and expenditure of the following businesses by category for each fiscal year up
to the fiscal year including the date of completion of the special
investment operations:(1) Special investment operations; and(2) Businesses other than those listed in the preceding Item.

Article 2-22 Crisis Response Reserve
1. The Corporation shall establish a crisis response reserve andappropriate to such reserve the amount contributed by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions.
2. When the capital contributions have been made by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions, the Corporation shall, notwithstanding
the provisions of Article 445, Paragraph 2 of the Companies Act,
record the whole of the amount contributed pursuant to the provision of Article 2-9 of the Supplementary Provisions as the amountof the crisis response reserve. For this purpose, reference to “thisAct” in Article 445, Paragraph 1 of the said Act shall be changed toread “this Act or the Development Bank of Japan Inc. Act (Act No.
85 of 2007).”

Corporate Data

Article 2-15 S upplement or Encouragement of Financing
Conducted by Financial Institutions, Etc., in
Special Investment Operations
The purpose of the Corporation in conducting special investment
operations shall be to supplement or encourage financing conducted by financial institutions and investment conducted byprivate sector.

Article 2-18 Special Provisions, Etc., on Business Plan with
Regard to Special Investment Operations
1. The Corporation shall include the implementation policy for the
special investment operations in its business plans provided forunder Article 17, as stipulated in the Ministry of Finance Ordinance,
until the completion of the special investment operations.
2. The Corporation shall include the implementation status of the special investment operations based on the implementation policy
provided for under the immediately preceding Paragraph, in its business reports provided for under Article 21 for each fiscal year up to
the fiscal year including the date of completion of the special investment operations, as stipulated in the Ministry of Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27 of
the Companies Act, matters regarding proper implementation of
special investment operations shall be included or recorded in the
Articles of Incorporation of the Corporation, until the completion of
the special investment operations.

Article 2-21 Securing of Appropriate Competitive Relationships
1. The Corporation shall, for an indefinite period, pay special attention
in conducting its business so that it will not upset its appropriatecompetitive relationships with other business entities.
2. The Corporation shall, for an indefinite period, include, in its business plans provided for under Article 17, a policy concerning
securing of appropriate competitive relationships with other business entities as stipulated in the Ministry of Finance Ordinance.
3. The Corporation shall, for an indefinite period, describe, in its business reports provided for under Article 21, the state of
implementation of its business based on the policy mentioned in
the immediately preceding Paragraph as stipulated in the Ministryof Finance Ordinance.

as the “special investment reserve” in this Item, Paragraph 1, Item(2) of the following Article and Article 449, Paragraph 1),” reference
to “the amount to be appropriated to reserves” in the same Item
shall be changed to read “the amount to be appropriated toreserves or special investment reserve,” reference to “the paid-in
capital” in Article 448, Paragraph 1, Item (2) of the said Act shall bechanged to read “the paid-in capital or special investment reserve,”
and reference to “is appropriated to paid-in capital” in Article 449,
Paragraph 1 of the said Act shall be changed to read “is appropriated to paid-in capital or special investment reserve.”
4. The Corporation may reduce the amount of surplus funds andincrease the amount of its special investment reserve, whenever
the Corporation deems this necessary in order to implement the
special investment operations properly. For this purpose, the following matters shall be determined:(1) The amount by which the amount of surplus funds will be
reduced; and(2) The date on which the increase in the amount of the special
investment reserve will become effective.
5. The determination of the matters referred to in each Item of theimmediately preceding Paragraph shall be made by resolution of ashareholders’ meeting.
6. The amount provided for under Paragraph 4, Item (1) of this Article
may not exceed the amount of surplus funds as of the date provided for under Item (2) of the said Paragraph.
7. The Corporation shall establish the special investment surplus
funds and record the amount of profit or loss resulting from the calculation of profits and losses pertaining to the special investment
operations for each fiscal year as stipulated in the Ministry of
Finance Ordinance.

Corporate Governance

Article 2-14 C apital Contribution, Etc., by the Government
with Regard to Special Investment Operations
1. The Government may make capital contributions to the
Corporation, to the extent of the amount approved by the budget,whenever the Government deems necessary for proper implementation of special investment operations by the Corporation, until
March 31, 2026.
2. The Corporation shall not appropriate money provided throughcapital contributions provided for in the preceding Paragraph toany funds other than funds for special investment operations.

Article 2-17 Special Investment Operations Rules
1. The Corporation shall set rules regarding special investment operations (in the following Paragraph referred to as the “special
investment operations rules”) in line with the special investment
guidelines, with respect to matters concerning implementation of
special investment operations stipulated in the Ministry of FinanceOrdinance, and shall obtain authorization therefor from the Ministerof Finance. If the Corporation intends to revise such rules, thesame shall apply.
2. The Minister of Finance may order the Corporation to revise thespecial investment operations rules authorized pursuant to the provision of the preceding Paragraph, if he/she deems that such rules
have become inappropriate for the proper implementation of special investment operations by the Corporation.

the special investment operations, by March 31, 2031.
2. When the special investment operations are completed, theCorporation shall promptly notify the Minister of Finance tothat effect.
3. The Minister of Finance shall, when notified pursuant to the provision of the immediately preceding Paragraph, give public notice tothat effect.

Strategy overnment’s Holding of Shares with Regard to
Article 2-13 G
Special Investment Operations
With a view to ensure proper implementation of special investment
operations by the Corporation, the Government shall hold one-halfor more of the total number of issued shares of the Corporation,
until the Corporation completes the special investment operations.

(1) Standards to be followed in deciding the business entities thatwill receive funds from the special investment operations andthe particulars of such supply of funds;(2) Matters regarding appropriate financial management of thespecial investment operations;(3) Matters regarding securing of appropriate competitive relationships between the Corporation and other business entities;(4) Matters regarding the system to be established to evaluate
and supervise the implementation status of special investment
operations;(5) Matters regarding reporting to the Minister of Finance on theimplementation status of special investment operations; and(6) Any other matters necessary to ensure proper implementationof special investment operations.

85

Value Creation Storysocioeconomic vitality and sustainable development of Japan, as
well as for special business activities, and those of which the business entities that will receive funds from the said investment
business and the particulars of such supply are decided during theperiod from the date on which the authorization specified in Article
2-17, Paragraph 1 of the Supplementary Provisions is obtained
through March 31, 2026, and any other businesses incidental
thereto (including those conducted on and after April 1, 2026).
3. “Special business activities” set forth in the immediately preceding
Paragraph means the following business activities:(1) Business activities conducted by Japanese business entities
with the aim of improving productivity and profitability by cultivating new business through effective use of insufficiently its
management resources not sufficiently used, or by promoting
management innovation mainly through co-ordinated alignment with business entities in different fields and effective
combination of management resources; and(2) Business activities that provide funds to the business activities
set forth in the preceding Item.
4. “Investment business” set forth in Paragraph 2 means the following
businesses concerning supply of funds:(1) To lend money through subordinated loans (which means loans
made under loan agreements with special clause of subordinated contents with regard to the payment of principal andinterest, and stipulated in the Ministry of Finance Ordinance);(2) To make capital contributions;(3) To acquire subordinated corporate debentures (which means
corporate debentures with special clause of subordinatedcontents with regard to the payment of principal and interest,and stipulated in the Ministry of Finance Ordinance); and(4) In addition to those set forth in the preceding three Items, toprovide funds in the manner approved in advance by the
Minister of Finance.

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Data Section

Article 2-30 Mutatis Mutandis Application of theCompanies Act
1. The provisions of Article 449, Paragraph 6 (limited to the portions
relating to Item (1)) and Paragraph 7, and Article 828 (limited to the
portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5))
of the Companies Act shall apply mutatis mutandis to cases
where the amount of crisis response reserve, the amount of special investment reserve or the amount of special investment surplus
funds is reduced as set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions. For this purpose, references to “paid-in
capital” in Article 449, Paragraph 6, Item (1) of the said Act shall bechanged to read the amount of crisis response reserve set forth in
Article 2-26, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (crisis
response reserve set forth in Article 2-22, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in Article

Corporate Data

Article 2-29 Special Rules of the Act Concerning Restrictions
on Fiscal Assistance by the Government to
Corporations
Notwithstanding the provision of Article 1 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations, the Corporation shall comply with the preceding two
Articles with respect to the dividend or distribution of profit or surplus funds to the capital contributions under Article 2-9 of the
Supplementary Provisions or the capital contributions under Article
2-14, Paragraph 1 of the Supplementary Provisions.

828, Paragraph 1, Item (5) the same), the amount of special
investment reserve (special investment reserve set forth in Article
2-23, Paragraph 1 of the Supplementary Provisions of the said
Act; hereinafter in this Item the same), or special investment surplus funds (special investment surplus funds set forth in Article
2-23, Paragraph 7 of the Supplementary Provisions of the said
Act; hereinafter in this Item the same); “Article 447, Paragraph 1,
Item (3)” shall be changed to read “Article 2-26, Paragraph 1, Item(2) of the Supplementary Provisions of the said Act”; references to“paid-in capital of” in Article 828, Paragraph 1, Item (5) of the said
Act shall be changed to read “the amount of crisis response
reserve, the amount of special investment reserve, or special
investment surplus funds set forth in Article 2-26, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act concerning”; “on which the reduction in the amount ofpaid-in capital” shall be changed to read “on which the reduction in
the amount of the said crisis response reserve, the amount of special investment reserve, or the amount of special investment
surplus funds”; and references to “, the trustee in bankruptcy or acreditor, who did not give approval to the reduction in the amountof paid-in capital” in Paragraph 2, Item (5) of the said Article shallbe changed to read “or the trustee in bankruptcy.”
2. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of crisis response reserve is reduced as set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions. For this purpose, references to “paid-in capital or reserves (hereinafter in this
Article referred to as “Paid-In Capital, Etc.”)” in the main clause of
Article 449, Paragraph 1 of the said Act shall be changed to read“crisis response reserve as set forth in Article 2-27, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007) (crisis response reserve set forth in
Article 2-22, Paragraph 1 of the Supplementary Provisions of thesaid Act; hereinafter in this Article and Article 828, Paragraph 1,
Item (5) and Paragraph 2, Item (5) the same)”; “In cases where...
(excluding cases where the whole of the amount by which thereserves are reduced is appropriated to the paid-in capital)” shallbe changed to read “In cases where…”; “of Paid-In Capital, Etc.”
shall be changed to read “of crisis response reserve”; references to“Paid-In Capital, Etc.” in Paragraph 2, Item (1) of the said Article
shall be changed to read “crisis response reserve”; references to“Ordinance of the Ministry of Justice” in Item (2) of the saidParagraph shall be changed to read the “Ministry of FinanceOrdinance”; references to “Paid-In Capital, Etc.” in Paragraph 4 andthe proviso of Paragraph 5 of the said Article shall be changed toread “crisis response reserve”; references to “paid-in capital” inParagraph 6, Item (1) of the said Article shall be changed to read“crisis response reserve set forth in Article 2-27, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act”; “Article 447, Paragraph 1, Item (3)” shall be changed to read
“Paragraph 4, Item (2) of the said Article”; references to “paid-in
capital of” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “crisis response reserve set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed to read“on which the reduction in the amount of the said crisis response
reserve”; and references to “paid-in capital” in Paragraph 2, Item (5)of the said Article shall be changed to read “crisis response reserve
set forth in Article 2-27, Paragraph 1 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act.”
3. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of special investment reserve is reduced as set forth in
Article 2-27, Paragraph 2 of the Supplementary Provisions. For thisCorporate Governance

Article 2-27 Payment to National Treasury
1. If it is deemed that the financial basis necessary for proper implementation of the crisis response business has been sufficiently
secured, the Corporation shall pay to the national treasury anamount equivalent to all or a part of the amount of the crisis
response reserve. In that case, the Corporation shall reduce thecrisis response reserve by the amount equivalent to such amountto be paid to the national treasury.
2. If it is deemed unnecessary to maintain the current level of thespecial investment reserve for the proper implementation of thespecial investment operations taking into account the state of
implementation and the financial condition of the special investment operations, the Corporation may reduce the amount of thespecial investment reserve in whole or in part. In that case, theCorporation shall pay to the national treasury an amount calculated
as prescribed by the Ministry of Finance Ordinance as the amount,out of the amount of such reduction, that should belong to thenational treasury on the basis of the proportion of the amount of
the capital contributions made by the Government pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions to the amount of the special investment reserve.
3. If, in cases where the amount of the special investment surplus
funds exceeds zero, it is deemed unnecessary to maintain the current level of the special investment surplus funds for the proper
implementation of the special investment operations taking into
account the state of implementation and the financial condition of
the special investment operations, the Corporation may reduce theamount of the special investment surplus funds in whole or in part.
In that case, the Corporation shall pay to the national treasury anamount calculated as prescribed by the Ministry of FinanceOrdinance as the amount, out of the amount of such reduction,that should belong to the national treasury on the basis of the proportion of the amount of the capital contributions made by theGovernment pursuant to the provision of Article 2-14, Paragraph 1of the Supplementary Provisions to the amount of the special
investment reserve.
4. In the case of the preceding three Paragraphs, the following matters shall be determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds is reduced;and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus funds
becomes effective.
5. The resolution provided for under the preceding Paragraph shallnot become effective without authorization of the Minister ofFinance.
6. The aggregate of the amounts to be paid pursuant to the provisionof Paragraphs 1 through 3 of this Article may not exceed theDistributable Amount as of the date provided for under Paragraph
4, Item (2) of this Article.

Article 2-28
1. If the Corporation goes into liquidation and there still remains any
residual property after performance of its obligations, theCorporation shall pay to the national treasury an amount equivalent
to the total amount (if the amount of such residual property is lessthan the aggregate of the amount of the crisis response reserveand the amount calculated as described below, an amount of such
residual property) calculated as prescribed by the Ministry of
Finance Ordinance as the amount, out of the aggregate of theamount of the crisis response reserve as of the date of such liquidation (if, after reductions of the amount of the crisis response
reserve pursuant to the provision of Article 2-26, Paragraph 1 of
the Supplementary Provisions, the cumulative amount of theamounts of increases in the amount of the crisis response reserve
pursuant to the provision of Paragraph 6 of the said Article is lessthan the cumulative amount of the amounts of such reductions, anamount after adding the shortfall) and the amount of the special
investment reserve and the special investment surplus funds as ofthe same date (if, after reductions of the amount of the special
investment reserve pursuant to the provision of Paragraph 1 of thesaid Article, the cumulative amount of the amounts of increases in
the amount of the special investment reserve pursuant to the provision of Paragraph 6 of the said Article is less than the cumulative
amount of such amounts of reductions, or if, after reductions of theamount of the special investment surplus funds pursuant to theprovision of Paragraph 1 of the said Article, the cumulative amountof the amounts of increases in the amount of the special investment surplus funds pursuant to the provision of Paragraph 6 of thesaid Article is less than the cumulative amount of such amounts ofreductions, an amount after adding the respective shortfalls), thatshould belong to the national treasury on the basis of the proportion of the amount of the capital contributions made by theGovernment pursuant to the provision of Article 2-14, Paragraph 1of the Supplementary Provisions to the amount of the special
investment reserve.
2. The payment under the preceding Paragraph shall be made inadvance of the distribution of the residual property to shareholders.
3. The payment procedures or any other matters necessary in connection with the payments to be made pursuant to the provisionsof Paragraphs 1 through 3 of the immediately preceding Article andParagraph 1 of this Article shall be prescribed in the Cabinet Order.

Strategy

Article 2-26 R eduction in Amount of Crisis Response Reserve,
Etc., When Deficit Is Covered
1. If the amount of capital reserve and the amount of earned surplus
reserve have become zero, the Corporation may reduce theamount of the crisis response reserve, the amount of the special
investment reserve or the amount of the special investment surplus
funds (limited, as regards the amount of the special investment
surplus funds, to the case where such amount exceeds zero). For
this purpose, the following matters shall be determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds will be
reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus funds
will become effective.
2. The resolution provided for under the preceding Paragraph shall not
become effective without authorization of the Minister of Finance.
3. The amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds under Paragraph 1, Item (1) of this Article may notexceed the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special investment surplus funds, respectively, as of the date set forth in Item (2)of the said Paragraph.
4. The aggregate of the amount of the crisis response reserve, theamount of the special investment reserve and the amount of thespecial investment surplus funds as referred to in Paragraph 1,
Item (1) of this Article may not exceed the amount calculated by
the method prescribed by the Ministry of Finance Ordinance as theamount of deficit as of the date of the shareholders’ meetingreferred to in the said Paragraph.
5. If the amount of the special investment surplus funds is notexceeding zero, the amount of the special investment reserve as
referred to in Paragraph 1, Item (1) of this Article may not exceed
the amount calculated by the method prescribed by the Ministry of
Finance Ordinance as the amount by which the amount of thespecial investment reserve may be reduced.

6. If the amount of surplus funds of the Corporation exceeds zeroafter a reduction of the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds pursuant to the provision of
Paragraph 1 of this Article, the Corporation shall increase, in an
amount equivalent to such excess, the amount of the crisis
response reserve, the amount of the special investment reserve or
the amount of the special investment surplus funds until the time
when the cumulative amount of the amounts of the increases in
the amount of the crisis response reserve, the amount of the special investment reserve or the amount of the special investment
surplus funds pursuant to the provision of this Paragraph equals
the cumulative amount of amounts of reductions, as prescribed by
the Minister of Finance Ordinance.

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4, Item (1) of the Supplementary Provisions that have been
paid to the national treasury), if any;(4) The amount by which the amount of paid-in capital orreserves has been reduced after the last day of the mostrecent fiscal year to increase the amount of the special investment reserve, if any;(5) The amount by which the amount of surplus funds has been
reduced after the last day of the most recent fiscal year toincrease the amount of the special investment reserve, if any;and(6) In addition to those listed in the preceding two Items, the total
amount of the amounts recorded to each account as prescribed in the Ministry of Finance Ordinance.
3. If the Corporation calculates the distributable amount under Article
461, Paragraph 2 of the Companies Act (which shall, in Article
2-27, Paragraph 6 of the Supplementary Provisions, be referred toas the “Distributable Amount”), the Corporation shall deduct, fromthe total of the amounts set forth in Article 461, Paragraph 2, Items(1) and (2) of the said Act, the total of the amounts recorded toeach account as the amount of profit pertaining to the special
investment operations for the period set forth in Article 441,
Paragraph 1, Item (2) of the Companies Act in the case where the
Corporation obtains the approval referred to in Paragraph 4 of thesaid Article (or, in cases set forth in the proviso to the saidParagraph, the approval under Paragraph 3 of the said Article) of
the temporary financial statements referred to in Paragraph 1 of thesaid Article and any other amounts recorded to each account asprescribed in the Ministry of Finance Ordinance.

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be changed to read “special investment surplus funds set forth in
Article 2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed to read“on which the reduction in the amount of the said special investment surplus funds”; and references to “paid-in capital”
in Paragraph 2, Item (5) of the said Article shall be changed toread “special investment surplus funds set forth in Article 2-27,
Paragraph 3 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act.”

Article 10 Organizational Meeting
For the purpose of application of the provision of Article 65,
Paragraph 1 of the Companies Act concerning the incorporation of
the Corporation, reference to the “on and after either the dateunder Article 58, Paragraph 1, Item (3) or the last day of the period
under such item, whichever comes later,” shall be changed to read
“after allotment of shares set forth in Article 8, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act (Act No. 85 of 2007).”
Article 11 Establishment of the Corporation
Contributions to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions shall be made when theprovision of Article 26 of the Supplementary Provisions becomes
effective, and the Corporation shall be established, notwithstanding
the provision of Article 49 of the Companies Act.
Article 12 Registration of Incorporation
Notwithstanding the provision of Article 911, Paragraph 1 of theCompanies Act, the Corporation shall register its incorporation
without delay after the establishment of the Corporation.
Article 13 Transfer to the Government without Consideration
The shares to be acquired by DBJ through its capital contribution
shall be transferred to the Government without consideration at thetime of establishment of the Corporation.
Article 14 Exception from Application of the Companies Act
The provisions of Article 30 and Part II, Chapter 1, Section 3 of theCompanies Act shall not apply to the incorporation of the
Corporation.
Article 15 Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of DBJ

Data Section

Article 7 Shares to Be Issued upon the Incorporation of
the Corporation
1. The following matters regarding the shares to be issued upon theincorporation of the Corporation, and total number of shares which

Article 9 Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contribute allof its properties, except assets to be assumed by Japan pursuant
to the provision of Article 15, Paragraph 2 of the Supplementary
Provisions, to the Corporation.

Corporate Data

Article 6 Articles of Incorporation
The founding members shall prepare the Articles of Incorporationand have them authorized by the Minister of Finance.

Article 8 Subscription for Shares
1. DBJ shall subscribe for all shares to be issued by the Corporation
upon its incorporation, and the founding members shall allocate
them to DBJ.
2. The right as the subscriber for shares allocated pursuant to theprovision of the preceding Paragraph in connection with the incorporation of the Corporation shall be exercised by the Government.

Corporate Governance

Article 3 Abolition of This Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures to abolish this Act, as well as measures necessary to smoothly assign thebusiness operations, functions, and rights and obligations of the
Corporation to any organization to be formed as a bearer of thefunctions commensurate with the investment and financing functions held by the Corporation.

Article 5 Founding Members
The Minister of Finance shall appoint the founding members toserve as promoters for incorporation of the Corporation.

the Corporation can issue shall be determined in the Articles ofIncorporation:(1) Number of shares (or, if the Corporation is to be organized as
a company issuing class shares, classes of those shares andnumber of each class of shares);(2) Amount to be paid for shares (the amount of cash to be paidor amount of non-cash property to be contributed in
exchange for each share); and(3) Matters relating to the amounts of paid-in capital and capitalreserves.
2. Notwithstanding the provision of Article 445, Paragraph 2 of theCompanies Act, with respect to the shares to be issued by the
Corporation upon its incorporation, the Corporation may elect not
to account for the amount in excess of (as well as the amount notexceeding) a half of the amounts of properties contributed by DBJ
upon the incorporation of the Corporation as paid-in capital. For
this purpose, reference to “this Act” in Article 445, Paragraph 1 of
the Companies Act shall be changed to read “this Act or theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”

Strategy

Article 2-31 Penal Provisions
1. In any of the following cases, any directors, executive officers­(shikkoyaku), accounting counsel (kaikei sanyo) or its members
who should perform duties as such, or statutory auditors of the
Corporation shall be punished with a non-penal fine not exceeding
1,000,000 yen:
(1) When he/she has suspended or abolished crisis response
business at the designated office in violation of the provisionof Article 2-10, Paragraph 2 of the Supplementary Provisions;(2) When he/she has appropriated money provided through capital contributions as set forth in Article 2-14, Paragraph 1 toany fund other than the fund for special investment operations, in violation of the provision of Article 2-14, Paragraph 2of the Supplementary Provisions;(3) When he/she has violated the order referred to in Article 2-17,
Paragraph 2 of the Supplementary Provisions;(4) When he/she has not submitted or published documents
stating the status of income and expenditures for each category of business operations in each Item of Article 2-19 of the
Supplementary Provisions, or has submitted or publishedsuch documents containing false statements, in violation of
the provision of Article 2-19 of the Supplementary Provisions;(5) When he/she has not submitted a report on the completion of
special investment operations in violation of the provision of
Article 2-20, Paragraph 2 of the Supplementary Provisions.
2. With regard to the application of the provision of Article 34, Item (8)in the case where the provision of Article 2-24 of the
Supplementary Provisions applies, references to “limit” in the said
Item shall be changed to read “limit calculated by including theaggregate amount of crisis response reserve, special investment
reserve and special investment surplus funds in the amount ofpaid-in capital and reserves as set forth in the provisions of Article
2-24 of the Supplementary Provisions.”
3. With regard to the application of the provision of Article 34, Item(10) in the case where the provision of Article 2-11, Paragraph 1,
Article 2-18, Paragraph 1 or Article 2-21, Paragraph 2 of the
Supplementary Provisions applies, references to “Article 17” in thesaid Item shall be changed to read “Article 17, or Article 2-11,
Paragraph 1, Article 2-18, Paragraph 1 or Article 2-21, Paragraph
2 of the Supplementary Provisions.”
4. With regard to the application of the provision of Article 34, Item(13) in the case where the provision of Article 2-11, Paragraph 2,
Article 2-18, Paragraph 2 or Article 2-21, Paragraph 3 of the
Supplementary Provisions applies, references to “Article 21” in thesaid Item shall be changed to read “Article 21, or Article 2-11,
Paragraph 2, Article 2-18, Paragraph 2 or Article 2-21, Paragraph
3 of the Supplementary Provisions.”

Article 4 Special Rules for Business Operations during the
Preparatory Period
1. In order for the Corporation to smoothly start the business operations as soon as it is duly organized, The Development Bank ofJapan (hereinafter referred to as “DBJ”) may borrow Long-term
Loans, in addition to those set forth in Article 42, Paragraphs 1 and
2 of the Development Bank of Japan Act (Act No. 73 of 1999;
hereinafter, except for Article 26 of the Supplementary Provisions,referred to as the “DBJ Act”), during the Preparatory Period (theperiod from the date on which this Act comes into force up to
September 30, 2008; the same in Paragraph 5).
2. DBJ shall prepare its basic policy regarding the borrowing of Longterm Loans to be made pursuant to the provision of the preceding
Paragraph which provides for the matters relating to the borrowingof the Long-term Loans such as the amounts of borrowing andcurrency in which the Long-term Loans are denominated, andobtain authorization of the Minister of Finance, without delay after
the date on which this Act comes into force in the case of the
fiscal year during which such date is included, or prior to April 1,2008 in the case of the fiscal year beginning on April 1, 2008. If
the Corporation intends to revise it, the same shall apply.
3. If DBJ borrows a Long-term Loan as set forth in Paragraph 1, DBJ
shall notify the Minister of Finance thereof without delay as set forthin the Minister of Finance Ordinance.
4. The Long-term Loans as set forth in Paragraph 1 shall be deemedas the borrowed money under Article 42, Paragraph 1 of the DBJ
Act and the provisions of Article 44 of the DBJ Act shall apply thesaid Long-term Loans.
5. If DBJ borrows a short-term borrowing during the Preparatory
Period as set forth in Article 42, Paragraph 2 of the DBJ Act, reference to “within the current fiscal year” in Paragraph 3 of the said
Article shall be changed to read “within one year.”
6. If DBJ borrows a Long-term Loans as set forth in Paragraph 1, reference to “this Act, in Article 13, Paragraph 2, Item (1) of the DBJ
Act shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007) or order under these Acts”,
and reference to “this Act and the Cabinet Order under this Act” inArticle 48 of the DBJ Act shall be changed to read “this Act andthe Development Bank of Japan Inc. Act, and the Cabinet Orders
under these Acts.” Reference to “this Act” in Article 49, Article 50,
Paragraph 1, and Article 52 of the DBJ Act shall be changed toread “this Act and the Development Bank of Japan Inc. Act,” andreference to “this Act” in Article 54, Items (1) and (2) of the DBJ Act
shall be changed to read “this Act or the Development Bank ofJapan Inc. Act.”
7. “Long-term Loans” set forth in Paragraphs 1 through 4 and theimmediately preceding Paragraph mean the loans from financial
institutions such as banks, other than the short-term borrowings
set forth in Article 42, Paragraph 3 of the DBJ Act which is applied
after changing to read as set forth in Paragraph 5.
8. For the purpose of application of the provision of Article 22,
Paragraph 1 of the DBJ Act to the mid-term government policy
principles set forth in the said Paragraph for the period commencing on April 1, 2008, reference to the “three-year mid-term
government policy principles” shall be changed to read the “government policy principles for the term beginning on April 1, 2005.”

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purpose, references to “paid-in capital or reserves (hereinafter inthis Article referred to as “Paid-In Capital, Etc.”)” in the main clauseof Article 449, Paragraph 1 of the said Act shall be changed toread “special investment reserve as set forth in Article 2-27,
Paragraph 2 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) (special investment
reserve set forth in Article 2-23, Paragraph 1 of the Supplementary
Provisions of the said Act; hereinafter in this Article and Article 828,
Paragraph 1, Item (5) and Paragraph 2, Item (5) the same)”; “Incases where... (excluding cases where the whole of the amountby which the reserves are reduced is appropriated to the paid-in
capital)” shall be changed to read “In cases where…”; “of Paid-In
Capital, Etc.” shall be changed to read “of special investment
reserve”; references to “Paid-In Capital, Etc.” in Paragraph 2, Item(1) of the said Article shall be changed to read “special investment
reserve”; references to “Ordinance of the Ministry of Justice” in
Item (2) of the said Paragraph shall be changed to read the“Ministry of Finance Ordinance”; references to “Paid-In Capital,
Etc.” in Paragraph 4 and the proviso of Paragraph 5 of the said
Article shall be changed to read “special investment reserve”; references to “paid-in capital” in Paragraph 6, Item (1) of the said Article
shall be changed to read “special investment reserve set forth in
Article 2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act”; “Article 447, Paragraph 1,
Item (3)” shall be changed to read “Paragraph 4, Item (2) of thesaid Article”; references to “paid-in capital of” in Article 828,
Paragraph 1, Item (5) of the said Act shall be changed to read
“special investment reserve set forth in Article 2-27, Paragraph 2 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act concerning”; “on which the reduction in the amount ofpaid-in capital” shall be changed to read “on which the reduction in
the amount of the said special investment reserve”; and references
to “paid-in capital” in Paragraph 2, Item (5) of the said Article shallbe changed to read “special investment reserve set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act.”
4. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of special investment surplus funds is reduced as set forthin Article 2-27, Paragraph 3 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall be changed
to read “special investment surplus funds as set forth in Article
2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (special
investment surplus funds set forth in Article 2-23, Paragraph 7 of
the Supplementary Provisions of the said Act; hereinafter in this
Article and Article 828, Paragraph 1, Item (5) and Paragraph 2, Item(5) the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced is appropriated to the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofspecial investment surplus funds”; references to “Paid-In Capital,
Etc.” in Paragraph 2, Item (1) of the said Article shall be changed toread “special investment surplus funds”; references to “Ordinanceof the Ministry of Justice” in Item (2) of the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance”; references to“Paid-In Capital, Etc.” in Paragraph 4 and the proviso of Paragraph
5 of the said Article shall be changed to read “special investment
surplus funds”; references to “paid-in capital” in Paragraph 6, Item(1) of the said Article shall be changed to read “special investment
surplus funds set forth in Article 2-27, Paragraph 3 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act”; “Article 447, Paragraph 1, Item (3)” shall be changed to read
“Paragraph 4, Item (2) of the said Article”; references to “paid-in
capital of” in Article 828, Paragraph 1, Item (5) of the said Act shall

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Article 20 Transitional Measures for the Basic Policy
1. For the purposes of the basic policy, business plans and redemption plans for the first fiscal year of the Corporation, reference to“prior to the beginning of each fiscal year” in Article 13, Paragraph
1, Article 17 and Article 18 shall be changed to read “without delay
after the incorporation of the Corporation.”
2. For the purposes of the balance sheet, profit and loss statement
and business report for the first fiscal year of the Corporation, references to “For each fiscal year” and “the interim business period(the period from April 1 to September 30 of the current year) of thecurrent fiscal year, and its balance sheet, profit and loss statement
and business report for the current fiscal year” in Article 21 shall bechanged to read “For the fiscal year in which the date on which the
Corporation is established is included” and “the current fiscal year,”respectively.
3. For the purpose of application of the provision of the preceding
Paragraph when the Corporation obtains the approval under Article
9, Paragraph 1, the “Ministry of Finance Ordinance” and “Ministerof Finance” in Article 21 which are applied mutatis mutandis after
changing to read in the said Paragraph shall be changed to readthe “Ministry of Finance Ordinance and the Cabinet Office
Ordinance” and the “Minister of Finance and the Prime Minister,”respectively.

Data Section

Article 22 Special Rules for Taxation of the Registration
License Tax
1. No registration license tax shall be assessed on registration of theincorporation of the Corporation pursuant to the provision of Article
12 of the Supplementary Provisions, and registration or recordationof the Corporation in connection with provisions of properties upon
the capital contribution by DBJ pursuant to the provision of Article
9 of the Supplementary Provisions.
2. With respect to the registration license tax for registration or recordation of origination (hozen), creation (settei) or transfer (iten) of lien(sakidori token), pledge (shichiken) or mortgage (teitoken) tosecure the claims concerning business operations set forth in
Article 20, Paragraph 1, Item (1) of the Old DBJ Act which shall beassumed by the Corporation from DBJ pursuant to the provision of
Article 15, Paragraph 1 of the Supplementary Provisions, or registration of transfer of movable properties or transfer of claims, basedon the agreements executed by DBJ before the provision of Article
48 of the Supplementary Provisions comes into force, the provision of Schedule III-22 of the Registration Tax Act (Act No. 35 of

Corporate Data

Article 21 Special Rules for Operations ofRegistered Financial Institution
1. Within three (3) months of the date set forth in Article 1, Item (3) of
the Supplementary Provisions (or, if the registration under Article
33-5, Paragraph 1 of the Financial Instruments and Exchange Act
is rejected during such period or if abolition of the operations of theregistered financial institution (the operations of registered financial
institution set forth in Article 33-5, Paragraph 1, Item (3) of the
Financial Instruments and Exchange Act, including the operations
referred to in Article 3, Paragraph 1, Item (16) to be conductedpursuant to the provision of Article 33-8, Paragraph 1 of the same
Act which is applied after changing to read as set forth in Article 4,
Paragraph 1; the same in this Article) is ordered pursuant to theprovision of Article 52-2, Paragraph 1 of the Financial Instruments
and Exchange Act which is applied after the changing to read as
set forth in the immediately following Paragraph, the period up to
the date of such rejection or the date of order of such abolition),
the Corporation may, notwithstanding the provision of Article 33-2of the Financial Instruments and Exchange Act which is applied
after changing to read as set forth in Article 4, Paragraph 1, conduct the operations of the registered financial institutions. If the
Corporation applies for registration under the said Article during
such period, the same shall apply until the date of receipt of noticeof registration or the date of receipt of notice of no registration after
the elapse of such period.
2. If the Corporation conducts the operations of registered financial
institution pursuant to the provision of the preceding Paragraph,the provisions of the Financial Instruments and Exchange Act(except for Article 33-6; Article 37, Paragraph 1, Item (2); Article
37-3, Paragraph 1, Item (2); Article 50-2, Paragraph 2; Article
52-2, Paragraph 1, Item (2) and Paragraph 3; Article 54; andArticle 64, Paragraph 2) shall apply by deeming the Corporation as
the registered financial institution (the Registered Financial
Institution set forth in Article 2, Paragraph 11 of the Financial
Instruments and Exchange Act). For this purpose, reference to“rescind the registration under Article 33-2” in Article 52-2,
Paragraph 1 (except for Item (2)) of the Financial Instruments andExchange Act shall be changed to read “order the abolition ofoperations of registered financial institution,” reference to “rescind
the registration under Article 29 or 33-2 or the authorization under
Article 30, Paragraph 1 pursuant to the provision of Article 52,

Paragraph 1 or Article 52-2, Paragraph 1” in Article 54-2, Item (1)of the same Act shall be changed to read “order the abolition ofoperations of the registered financial institution pursuant to the provision of Article 52-2, Paragraph 1 which is applied after changing
to read as set forth in Article 21, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No. 85
of 2007),” reference to “registration under Article 29 or 33-2 isrescinded pursuant to the provision of Article 52, Paragraph 1,
Article 52-2, Paragraph 1, Article 53, Paragraph 3 or Article 54” inArticle 56, Paragraph 1 of the same Act shall be changed to readthe “abolition of operations of the registered financial institution isordered pursuant to the provision of Article 52-2, Paragraph 1
which is applied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act,” and reference to “rescission of registration
under Article 33-2 as set forth in Article 52-2, Paragraph 1” inArticle 194-3, Item (3) of the same Act and reference to “rescissionof registration under Article 33-2 as set forth in Article 52-2,
Paragraph 1 or 3 or Article 54” in Article 194-4, Paragraph 1, Item(5) of the same Act shall be changed to read “order of abolition ofoperations of the registered financial institution pursuant to the provision of Article 52-2, Paragraph 1 which is applied after changing
to read as set forth in Article 21, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act” and otherrequired technical changes to read shall be prescribed in the
Cabinet Order.
3. For the purpose of application of the provision of Article 33-5,
Paragraph 1, Item (1) of the Financial Instruments and Exchange
Act in the event that the Corporation is ordered to abolish the­operations of the registered financial institution pursuant to the­provision of Article 52-2, Paragraph 1 of the same Act which isapplied after changing to read as set forth in the immediately preceding Paragraph, the Corporation shall be deemed as the entity
whose registration under Article 33-2 of the same Act is rescindedpursuant to the provision of Article 52-2, Paragraph 1 of the same
Act, and the date on which such abolition is ordered shall bedeemed as the date of rescission of registration under the said
Article 33-2 pursuant to the provision of Article 52-2, Paragraph 1of the same Act.
4. For one year of the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Corporation may, notwithstanding
the provision of Article 64, Paragraph 2 of the Financial Instruments
and Exchange Act, cause any persons other than those who are
registered pursuant to the provision of Paragraph 1 of the said
Article to conduct the duties of sales representatives (gaimu-in). If
the Corporation applies for registration under the said Paragraphduring such period, the same shall apply until the date of receipt ofnotice of registration with respect to such application or the date ofreceipt of notice of no registration after the elapse of such periodwith respect to such application.

Corporate Governance

Article 17 T ransitional Measures in Connection with
Assumption of Rights and Obligations
1. With respect to the Old Bank Debentures and interest coupons
concerning the obligations to be assumed by the Corporation pursuant to the provision of Article 15, Paragraph 1 of the
Supplementary Provisions, the provisions of Article 43, Paragraphs

Article 18 Competent Ministers
The competent ministers under Article 26, Paragraph 2 and Article
27, Paragraph 1 for management of assets to be assumed by the
Corporation pursuant to the provision of Article 15, Paragraph 1 of
the Supplementary Provisions (hereinafter in this Article referred toas the “Assumed Assets”) shall, notwithstanding the provision of
Article 29, Paragraph 1, be as follows:(1) For management of the Assumed Assets set forth in the
Cabinet Order in the Hokkaido or the Tohoku Region (theareas of Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
and Niigata prefectures): Minister of Finance and Minister ofLand, Infrastructure and Transport; and(2) For management of the Assumed Assets other than the
Assumed Assets set forth in the preceding Item: Minister ofFinance.

Article 19 Transitional Measures for the Fiscal Year
Notwithstanding the provision of Article 11, the first fiscal year of
the Corporation shall commence on the date on which of the
Corporation is established and end on March 31, 2009.

Strategy

Article 16 Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as the“Assumed Properties”) shall be as evaluated by evaluation officers(hyoka iin).
2. If evaluation officers intend to make evaluations as set forth in thepreceding Paragraph, their evaluations shall be made based on themarket prices of the Assumed Properties as of the date on which
the Corporation is established; provided, however, that if it isdeemed inappropriate to use the market prices taking into accountthe matters of the Assumed Properties such as the kinds and purpose of use, their evaluations may be made not based on themarket prices of the Assumed Properties.
3. In addition to those set forth in the preceding two Paragraphs,
evaluation officers and other matters necessary for evaluations
shall be prescribed in the Cabinet Order.

5 and 6 of the Old DBJ Act shall remain effective and in force evenafter the provision of Article 26 of the Supplementary Provisions
becomes effective.
2. With respect to the old Hokuto bonds (the Hokkaido-Tohoku
Development Finance Corporation Bonds issued pursuant to theprovision of Article 27, Paragraph 1 of the Hokkaido-Tohoku
Development Finance Corporation Act (Act No. 97 of 1956; hereinafter in this Paragraph referred to as the “Old HTDFC Act”) before
abolishment under Article 17, Item (2) of the Supplementary
Provisions of the Old DBJ Act) and interest coupons to be
assumed by the Corporation pursuant to the provision of Article
15, Paragraph 1 of the Supplementary Provisions, the provisions ofArticle 27, Paragraphs 3 and 4 of the Old HTDFC Act shall remain
effective and in force even after the provision of Article 26 of the
Supplementary Provisions becomes effective.
3. The guarantee agreements executed by the Government pursuant
to the provision of Article 45, Paragraph 1 or 3 of the Old DBJ Act
with respect to the obligations concerning the Old Bank
Debentures to be assumed by the Corporation pursuant to theprovision of Article 15, Paragraph 1 of the Supplementary
Provisions shall continue to be effective upon the previous terms
and conditions with respect to such obligations concerning the Old
Bank Debentures even after the assumption thereof by the
Corporation.
4. The guarantee agreements executed by the Government pursuant
to the provision of Article 37-3, Paragraph 1 or 2 of the old Japan
Development Bank Act (Act No. 108 of 1951; hereinafter in thisParagraph referred to as the “Old JDB Act”) before abolishment
under Article 17, Item (1) of the Supplementary Provisions of the
Old DBJ Act with respect to the obligations concerning the foreign
currency-denominated bonds set forth in Article 37-2, Paragraph 1of the Old JDB Act issued pursuant to the provision of Article 37-2,
Paragraph 1 or 2 of the Old JDB Act to be assumed by the
Corporation pursuant to the provision of Article 15, Paragraph 1 of
the Supplementary Provisions shall continue to be effective upon
the previous terms and conditions with respect to such obligations
concerning the foreign currency-denominated bonds even after theassumption thereof by the Corporation.
5. The guarantee agreements executed by the Government pursuant
to the provision of Article 2, Paragraph 2 or 3 of the Act
Concerning Special Measures for Acceptance of Foreign Capitals
from the International Bank for Reconstruction and Development
and Other Organizations (Act No. 51 of 1953) with respect to the
obligations concerning the Old Bank Debentures to be assumed
by the Corporation pursuant to the provision of Article 15,
Paragraph 1 of the Supplementary Provisions shall continue to beeffective upon the previous terms and conditions with respect tosuch obligations constituting the Old Bank Debentures even after
the assumption thereof by the Corporation, and the public imposts
such as taxes on interests on and profits from redemption of the
Old Bank Debentures concerning those guarantee agreements
shall be the same as in effect under the previous arrangements.

91

Value Creation Story

shall be taken over by the Corporation, except for those assets tobe assumed by the Government as set forth in the following
Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of
the Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its future business operation shall be assumed by Japan at the time ofestablishment of the Corporation.
3. The scope of assets to be assumed by Japan pursuant to the provision of the immediately preceding Paragraph, and other mattersrequired for transfer of those assets to Japan shall be prescribed in
the Cabinet Order.
4. The fiscal year of DBJ commencing on April 1, 2008 shall end on
the day immediately preceding the date of dissolution of DBJ.
5. Settlement of accounts, and preparations, Etc. of list of properties,balance sheets, and profits and loss statements of DBJ for the
fiscal year commencing on April 1, 2008 shall be conducted by
the Corporation as previously conducted, except for the portions
relating to Article 38, Paragraph 1 (limited to the portions relating to
the Auditor’s opinions) and Article 40, Paragraph 1 (limited to the
portions relating to the Auditor’s opinions) of the Old DBJ Act. For
this purpose, the reference to “for each half-year from April to
September and from October to March of the following year” and“for each half-year and for each fiscal year” in Article 38, Paragraph
1 of the Old DBJ Act shall be deleted, and references to “within
two months after the end of the relevant half-year or three months
after the end of the fiscal year” in the said Paragraph shall bechanged to read “on or prior to December 31, 2008.” Reference to“the settlement of accounts for each fiscal year not later than May
31 of the following fiscal year” in Article 39 of the Old DBJ Act shallbe changed to read “the settlement of accounts for the fiscal year
commencing on April 1, 2008 not later than November 30, 2008.”
Reference to “November 30 of the following fiscal year” in Article 4,
Paragraph 3 of the Old DBJ Act shall be changed to read
“November 30, 2009.”
6. Disposition of profits and payment into the national treasury by DBJ
under Article 41 of the Old DBJ Act for the fiscal year commencing
on April 1, 2008 shall be conducted by the Corporation as previously conducted. For this purpose, references to “each fiscal year”
and “May 31 of the following fiscal year” in Article 41, Paragraph 3of the Old DBJ Act shall be changed to read “the fiscal year commencing on April 1, 2008” and “November 30, 2008,” respectively.
7. The matters regarding the registration of the dissolution in the casethat DBJ is dissolved pursuant to the provision of Paragraph 1,
shall be prescribed in the Cabinet Order.

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93

Act for Partial Amendment of the Development Bank of Japan Inc.
(Act No. 29 of May 22, 2020)

1967) before amendment under Article 48 of the Supplementary
Provisions shall still remain effective and in force.

Article 67 Utilization of the Corporation’s Investment and
Financing Functions for Long-Term Business Funds
If the Government utilizes the Corporation’s investment and financing functions for long-term business funds on or after the date set
forth in Article 1, Item (3) of the Supplementary Provisions, theGovernment shall take measures necessary to secure the equal
competition conditions, as well as other measures necessary for
utilization of such investment and financing functions, paying attention to the Corporation’s appropriate competitive relationships withother business entities.

Data Section

Article 27 T ransitional Measures for Abolition of theDevelopment Bank of Japan Act
1. Actions such as dispositions and procedures made, taken or done
pursuant to the provisions of the Old DBJ Act (except Article 10
thereof) before the provision of the immediately preceding Article
becomes effective shall be considered the actions such dispositions and procedures made, taken, or done pursuant to thecorresponding provisions of this Act.
2. The provisions of Article 16, Paragraphs 5 and 6 of the
Supplementary Provisions of the Old DBJ Act shall still remain
effective even after the provisions of the immediately preceding

Corporate Data

Article 26 Abolition of the Development Bank of Japan Act
The Development Bank of Japan Act shall be abolished.

Article 66 Examinations
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall examine measures to secure the equal competitive conditions with otherbusiness entities, with respect to the systems for which the investment and financing functions of DBJ are utilized pursuant to theprovisions of relevant laws (including ordinances under those laws),
such as the Act Concerning Collaterals for Borrowings of Electricity
Companies from The Development Bank of Japan (Act No. 145 of
1950), the Act Concerning the Securement of Oil Reserves, Etc.
(Act No. 96 of 1975), the Act Concerning Promotion of
Development and Promotion of Introduction of Alternative Energy to
Oil (Act No. 71 of 1980), the Special Measures Act Concerning
Promotion of Private Urban Development (Act No. 62 of 1987), theExtraordinary Measures Act Concerning Promotion of Business
Activities for Rationalization of Usage of Energy and Effective Use of
Resources (Act No. 18 of 1993) and the Act Concerning
Facilitation of the Improvement, Etc. of Public Facilities, Etc. by
Private Fund, Etc. (Act No. 117 of 1999), while considering theconvenience of users of those systems, and take the required
measures based on the results of such examination.

3. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives of ordinary financial institutions and other relevant persons.

Corporate Governance

Article 25 Delegation to the Cabinet Order
In addition to those set forth in Articles 2 to 24 of the
Supplementary Provisions, matters necessary for incorporation of
the Corporation and dissolution of DBJ, as well as other mattersnecessary for effectuation of these provisions shall be stipulated in
the Cabinet Order.

Article 29 to Article 65(Translation omitted)(Examination of Special Investment Business)
2. The Government shall, at the appropriate time after this Act takes
effect, examine the special investment operations (special investment operations set forth in Article 2-12, Paragraph 2 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act amended by this Act; hereinafter in this Paragraph the same)by Development Bank of Japan Inc. (hereinafter in this Paragraphreferred to as the “Corporation”) and the Government’s involvementin the Corporation based thereon, taking into consideration thefinancing conducted by ordinary financial institutions and investment conducted by private sectors, the Corporation’s­implementation of special investment operations, the changeof social and economic affairs and others, and in the perspectiveof further promoting the long-term and other financial supply for thesustainable growth of the Japanese economy, and whenever theGovernment deems necessary, the Government shall take required
measures based on the results of such examination.

Strategy

Article 24 Special Rules for Taxation of Local Taxes
No real estate acquisition tax or vehicle acquisition tax can be
imposed on acquisition of real estate or vehicle in connection withcapital investment to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions.

Article 28 Transitional Measures for Application of Penal
Provisions
Penal provisions which were applicable to acts conducted prior to
the implementation of the provision of Article 26 of the
Supplementary Provisions or acts conducted after the implementation of the provision of the said Article as to which the provisions
then in force remain applicable pursuant to the provisions of this Act
shall remain applicable even after the implementation of this Act.

(Enforcement Date)
1. This Act shall come into force from the date of promulgation.

Value Creation Story

Article 23 Special Rules for Taxation of the Corporation Tax
1. Capital investment in the Corporation to be made by DBJ pursuant
to the provision of Article 9 of the Supplementary Provisions (hereinafter in this Article referred to as the “Specified In-kind Contribution”)
shall be deemed as qualified in-kind contribution set forth in Article
2, Item (12-14) of the Corporation Tax Act (Act No. 34 of 1965), andthe Corporation Tax Act and other laws and ordinances relating to
the corporation tax shall be applied on such basis.
2. With respect to assets and liabilities of DBJ to be transferred by
the Specified In-kind Contribution which shall be subject to the
Corporation Tax Act and other laws and ordinances relating to thecorporation tax pursuant to the provision of the immediately preceding Paragraph, the value evaluated by evaluation officers
pursuant to the provision of Article 16, Paragraph 1 of the
Supplementary Provisions shall be deemed as the book value;
provided, however, that with respect to allowance for loan losses,
the amount purported to be assumed by the Corporation pursuant
to the provision of the immediately following Paragraph shall bedeemed as the book value, and the book values of the amounts ofallowances prescribed by the Cabinet Order such as allowance forretirement payments shall be nil.
3. If it is determined to apply the provisions of Article 52 of the
Corporation Tax Act in the fiscal year in which the day prior to thedate of the Specified In-kind Contribution of the DBJ is included (inthe immediately following Paragraph referred to the “Final Fiscal
Year”), the amount up to the upper limit of individual allowance forloan losses set forth in Article 52, Paragraph 1 as calculated in thesaid Paragraph or the amount up to the amount calculated as prescribed by the Cabinet Order as set forth in Paragraph 2 of thesaid Article shall, notwithstanding the provisions of Paragraph 7 ofthe said Article, be assumed by the Corporation. For this purpose
with respect to calculation of the amount of income for the fiscal
year in which the date of the Specified In-kind Contribution of the
Corporation is included, the amount assumed by the Corporation
shall be included in the amount of profits.
4. The Corporation shall submit the financial statements of DBJ for
the Final Fiscal Year set forth in Article 38, Paragraph 1 of the Old
DBJ Act to the director of competent district tax office within three(3) months of the date of the Specified In-kind Contribution.

Article takes effect, with respect to the lending of funds by the
Corporation to the designated entities under Article 2, Paragraph 5of the Act Concerning Facilitation of the Improvement, Etc. of
Public Facilities, Etc. by Private Fund (Act No. 117 of 1999). For
this purpose, reference to the “Bank” and reference to, “in accordance with the provision of Item (1), Paragraph 1, Article 20 hereof,
to provide funds required for businesses deemed under Article 13of the said Act” in Article 16, Paragraph 5 of the Old DBJ Act shallbe changed to read “Development Bank of Japan Inc.” and “toprovide funds required for business deemed under Article 13 of
the said Act”, respectively. References to “theinterest-free loans made by the Bank in accordance with the provisions of the preceding paragraph (excluding interest-free loans
using money deposited by the Private Urban Development
Promotion Organization provided in Article 3 of the Special
Measure Act concerning Promotion of Private Urban Development(Act No. 62 of 1987)” and “to the Bank” in Article 16, Paragraph 6of the Old DBJ Act shall be changed to read “the interest-freeloans made by Development Bank of Japan Inc. in accordancewith the provisions of the preceding paragraph” and “toDevelopment Bank of Japan Inc.,” respectively.
3. In addition to those set forth in the preceding two Paragraphs, transitional measures necessary for the abolition of the DBJ Act shallbe prescribed by the Cabinet Order.

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Financial Condition
Consolidated Financial Statements
Non-Consolidated Financial Statements
Capital Adequacy Ratio

Value Creation Story

P 96
P 149
P 153

Strategy
Corporate GovernanceCorporate Data
Data Section

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CONSOLIDATED BALANCE SHEETCONSOLIDATED STATEMENT OF INCOME

Development Bank of Japan Inc. and Consolidated Subsidiaries

Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2021

2020

2021

2021

2020

2021

Income¥ 2,187,820¥ 1,298,955$ 19,761,725

684,000

720,000

6,178,304

Interest income:¥159,422¥169,456$1,440,000

Interest on loans

132,099

138,413

1,193,203

Money held in trust (Notes 28 and 30)

17,85620,082

161,289

Interest and dividends on securities

21,66324,569195,677

Securities (Notes 3, 14, 28 and 30)

2,535,827

2,374,268

22,905,137

Interest on call loans and bills bought

120

31

1,088

Loans (Notes 4, 5, 14 and 28)

14,757,131

12,415,985

133,295,381

Interest on due from banks

38

108

347

Other assets (Notes 6, 11 and 14)

179,445

162,849

1,620,860

Interest on swaps

5,508

6,339

49,753

Tangible fixed assets (Notes 7, 11 and 14)

427,467

423,433

3,861,145

Other interest income

(7)

(6)

(68)

Intangible fixed assets (Notes 11 and 14)

39,40042,284355,893

Fees and commissions

20,922

17,167

188,988

Asset for retirement benefits (Note 23)

1,593

1,263

14,393

Other operating income (Note 19)

14,094

15,165

127,314

Deferred tax assets (Note 24)

2,800

23,235

Other income (Note 20)

76,221

91,688688,481446,616

267,306

4,034,110  Total income

270,661

293,477

2,444,783

Allowance for loan losses (Notes 8 and 28)(57,869)(35,528)(522,714)

Expenses

(33)

(36)

(300)

55,35778,730500,021¥21,221,829¥17,693,665$191,688,457

21,743

33,958

196,403

(84)

(72)

(767)

Allowance for investment losses  Total assets

Interest expense:
Interest on debentures
Interest on call money and bills soldInterest on payables under repurchase agreements

(69)

(60)

(624)

Liabilities:

Interest on borrowed money (Note 31)

29,00838,009262,020

Interest on short-term corporate bonds

62

947

566

4,504

5,730

40,690

191

216

1,733

Debentures (Notes 9, 14 and 28)¥ 3,483,570¥ 3,314,656$ 31,465,724

Borrowed money (Notes 10, 11, 14, 28 and 31)

10,664,537

8,070,948

96,328,580

Interest on corporate bonds

Corporate bonds (Notes 9, 11, 14 and 28)

2,739,904

2,382,226

24,748,485

Other interest expense

Other liabilities (Notes 12 and 31)

163,620

204,265

1,477,922

642

326

5,800

Accrued bonuses to employees

5,186

5,345

46,850

Other operating expenses (Note 21)

9,223

12,31083,309Accrued bonuses to directors
Liability for retirement benefits (Note 23)
Reserve for directors’ retirement benefits
Deferred tax liabilities (Note 24)
Acceptances and guarantees (Note 13)  Total liabilities

15

15

137

General and administrative expenses

56,72657,161

512,391

8,195

8,092

74,025

Other expenses (Note 22)

74,91061,924

676,637

127

146

1,151

  Total expenses

196,859

210,452

1,778,158

6,639

6,608

59,969   Income before income taxes

73,802

83,024

666,625

Current

32,852

31,637296,743

Deferred(5,865)(131)(52,980)446,616

267,306

4,034,110

17,518,413

14,259,611

158,236,955

Equity:Income taxes (Note 24):

Total income taxes

26,98631,505

243,763

1,000,424

1,000,424

9,036,438

Net income

46,81551,518422,863

Crisis response reserve (Note 16)

206,529

206,529

1,865,495

Net income attributable to non-controlling interests

Special investment reserve (Note 17)

1,368,000

848,000

12,356,607

Net income attributable to owners of the parent

28,172

12,436

254,473

Capital surplus (Note 15)

336,466

636,466

3,039,169

Retained earnings (Note 15)695,697

675,842

6,283,962

Unrealized gain on available-for-sale securities (Note 30)

40,73324,297367,926

Deferred gain on derivatives under hedge accounting

13,271

16,934

119,879(936)(1,414)(8,462)

Accumulated other comprehensive income:

Foreign currency translation adjustments
Accumulated adjustments for retirement benefits (Note 23)  TotalNon-controlling interests  Total equity   Total liabilities and equity
See notes to consolidated financial statements.

(693)

(958)

(6,267)

3,418,557

33,309,219

15,752

15,496142,283

3,703,415

3,434,054

33,451,502¥21,221,829¥17,693,665$191,688,457

14,168$  408,694

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 18)
Basic net income

3,687,663

1,062¥ 50,456

Cash dividend applicable to the year

¥867.21¥1,075.90

$7.83

186

228

1.68

See notes to consolidated financial statements.
Data Section

Special investment surplus (Note 17)

1,568¥ 45,246

Corporate Data

Common stock authorized, 160,000 thousand shares in 2021 and2020; issued, 43,632 thousand shares in 2021 and 2020 (Note 15)

Fees and commissions

Corporate Governance

Liabilities and equity

Strategy

2,572

Customers’ liabilities for acceptances and guarantees (Note 13)

Value Creation Story

Call loans and bills bought (Note 28)

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

AssetsCash and due from banks (Notes 2 (c), 11, 14 and 28)

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Development Bank of Japan Inc. and Consolidated Subsidiaries

Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Millions of Yen

2021

2020

2021

For the year ended March 31, 2021

Net income¥46,815¥ 51,518$422,863

Unrealized gain (loss) on available-for-sale securities

17,499(19,977)

158,068

Deferred loss on derivatives under hedge accounting(5,476)(5,432)(49,467)

Foreign currency translation adjustments

146

(75)

1,322

Adjustments for retirement benefits

264

(682)

2,389

1,074

(1,927)

9,702

13,508(28,095)

122,013

Balance at beginning of year
Investment from government Transfer from capital surplus to
special investment reserve
Cash dividends
Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus
Change in scope of equity method accounting
Net change during the year
Balance at end of year

¥60,323¥ 23,422$544,875

Owners of the parent¥58,761¥ 22,371$530,773

Non-controlling interests

1,561

1,050

14,102Other comprehensive income (loss) (Note 26):

Total other comprehensive income (loss)
Comprehensive income¥1,000,424

Crisis response
reserve¥206,529

Special investment Special investment
reserve
surplus¥  848,000
220,000¥12,436

Capitalsurplus¥ 636,466

300,000

Retainedearnings¥675,842(300,000)(9,948)45,246
15,736¥1,000,424¥206,529¥1,368,000¥28,172(15,736)292¥ 336,466¥695,697

Millions of Yen
Accumulated other comprehensive income

Total comprehensive income attributable to:
For the year ended March 31, 2021

Deferred gain
on derivatives
under hedge
accounting

Foreign­ urrencyctranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥24,297¥16,934¥(1,414)¥(958)

16,435¥40,733(3,662)¥13,271477¥  (936)264¥(693)

Noncontrollinginterests

Total¥3,418,557
220,000¥15,496

Total equity¥3,434,054
220,000(9,948)45,246—(9,948)45,246292
13,515¥3,687,663—
292
13,770¥3,703,415

255¥15,752

Millions of Yen

For the year ended March 31, 2020

Crisis response
reserve

Special investment Special investment
reserve
surplusCapitalsurplusRetainedearnings¥1,000,424¥206,529¥588,000¥ 5,412¥ 766,466¥651,887¥1,000,424¥206,529¥588,000
130,000¥ 5,412¥ 766,466

1,553¥653,441

130,000(130,000)(21,030)
50,456
7,023¥1,000,424¥206,529¥848,000¥12,436(7,023)¥ 636,466¥675,842

Corporate Data

Balance at beginning of year
 Cumulative effects of changes inaccounting policies
Restated balance
Investment from government Transfer from capital surplus to
special investment reserve
Cash dividends
Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus
Net change during the year
Balance at end of year

Commonstock

Corporate Governance

Balance at beginning of year
Investment from government Transfer from capital surplus to
special investment reserve
Cash dividends
Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus
Change in scope of equity method accounting
Net change during the year
Balance at end of year

Unrealized gain
on available-forsale securities

Strategy

See notes to consolidated financial statements.

Commonstock

Value Creation Story

For the year ended March 31, Share of other comprehensive income (loss) in affiliates
accounted for by the equity method

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Data Section

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CONSOLIDATED STATEMENT OF CASH FLOWSCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Development Bank of Japan Inc. and Consolidated Subsidiaries

Millions of Yen

Balance at beginning of year
 Cumulative effects of changes inaccounting policies
Restated balance
Investment from government Transfer from capital surplus to
special investment reserve
Cash dividends
Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus
Net change during the year
Balance at end of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreignc­ urrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥44,652¥23,766¥(1,202)¥(272)¥44,652¥23,766¥(1,202)¥(272)

Total equity¥3,285,663¥10,682¥3,296,345

1,553¥3,287,216
130,000¥10,682

1,553¥3,297,899
130,000—(21,030)
50,456(21,030)
50,456(20,355)¥24,297(6,831)¥16,934(212)¥(1,414)(685)¥(958)For the year ended March 31,

Noncontrollinginterests

Total(28,084)¥3,418,557

4,814¥15,496—(23,270)¥3,434,054

For the year ended March 31, 2021

Crisis response
reserve

Balance at beginning of year

$9,036,438$1,865,495

Investment from government Transfer from capital surplus to
special investment reserve

Special investment Special investment
reserve
surplus$ 7,659,651$112,332

Capitalsurplus$ 5,748,951

Retainedearnings$6,104,623

1,987,174
2,709,782(2,709,782)(89,858)

Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus

408,694
142,140(142,140)

Change in scope of equity method accounting

2,644

Net change during the year
Balance at end of year

$9,036,438$1,865,495$12,356,607$254,473$ 3,039,169$6,283,962

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income

For the year ended March 31, 2021

Balance at beginning of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreign­ urrencyctranslation
adjustments$219,469$152,964$(12,777)

Accumulated
adjustments
for retirement
benefits

Total$(8,658) $30,878,487

Total equity$139,977$31,018,464

1,987,174

1,987,174

Cash dividends(89,858)(89,858)

Net income attributable to owners of the parent Transfer from retained earnings to
special investment surplus

408,694

408,694

Change in scope of equity method accounting

2,644

2,644

—

—

Net change during the year

148,457(33,084)

4,315

Balance at end of year

$367,926$119,879$ (8,462)

See notes to consolidated financial statements.

2,391

122,079

2,305

124,384$(6,267) $33,309,219$142,283$33,451,502¥     73,802¥   83,024$    666,625

14,862
1,820
324
6,908
(159,422)
55,357(23,214)(792)(13,426)(1,029)14,677
1,838
165(4,541)(169,456)
78,730(6,983)(1,001)
9,445(4,197)

134,250
16,445
2,927
62,400(1,440,000)
500,021(209,686)(7,155)(121,279)(9,296)22,340
(3)
(159)
—
(329)
103
(2,341,056)
168,9142,593,588
357,678
19,99936,000—156,479(59,010)(60,890)
848,844(25,848)
822,995

191
(9)
279
0
974
122
508,654
124,119
83,088
275,763(3,000)(460,000)(93,761)
173,450(83,035)
135,395
663,934(30,320)
633,613201,797(30)(1,440)—(2,977)933(21,145,848)
1,525,734
23,426,866
3,230,768
180,652
325,174—
1,413,419(533,022)(549,999)
7,667,279(233,480)
7,433,798(368,417)
56,527
201,873(944)
4,199(18,228)
4,761(3,221)
1(123,449)(846,286)
82,195
319,425(4,255)
5,023(3,908)42,452(3,157)0(408,510)(3,327,772)
510,588
1,823,448(8,534)37,934(164,655)
43,005(29,099)
15(1,115,069)

220,000(9,948)130,000(21,030)

1,987,174(89,858)34(1,340)208,745761(5,330)104,400

313(12,110)
1,885,519

572
908,864
1,232,869—¥ 2,141,734(651)
328,851
903,817200¥1,232,869

5,170
8,209,418
11,136,029—$ 19,345,447

Data Section

See notes to consolidated financial statements.

2021

Corporate Data

Investment from government Transfer from capital surplus to
special investment reserve

Noncontrollinginterests

2020

Corporate GovernanceCash dividends

2021

Strategy

Thousands of U.S. Dollars (Note 1)
Commonstock

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Amortization of goodwill
Losses on impairment of long-lived assets
Equity in losses (earnings) of affiliates
Interest income
Interest expense
Gain on securities – net
Gain on money held in trust – net
Foreign exchange (gains) losses
Gain on sales of fixed assets – net
Changes in operating assets and liabilities:   Allowance for loan losses   Allowance for investment losses   Accrued bonuses to employees   Accrued bonuses to directors   Asset for retirement benefits   Liability for retirement benefits  Loans  Debentures  Borrowed money  Corporate bonds   Due from banks (excluding cash equivalents)   Call loans and bills bought   Payables under repurchase agreements
Interest received
Interest paid
Other – net  Sub-total   Payments for income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Payments for increase of money held in trust
Proceeds from decrease of money held in trust
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchases of intangible fixed assets
Proceeds from sales of intangible fixed assets
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from investment from government
Payments for cash dividends Proceeds from issuance of securities to non-controllingshareholders of subsidiaries
Dividends paid to non-controlling shareholders of subsidiaries
Net cash provided by financing activities
Foreign currency translation adjustments on cash andcash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents due to new consolidation
Cash and cash equivalents at end of year (Note 2(c))

Value Creation Story

For the year ended March 31, 2020

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Accumulated other comprehensive income

102

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Development Bank of Japan Inc.
Integrated Report 2021

103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Development Bank of Japan Inc. and Consolidated Subsidiaries

1. BASIS OF PRESENTATION

A silent partnership managed by AMR LLC. was excluded from the scope of consolidation since the silent partnershipagreement was terminated.

(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2021 was 28. One of the major affiliates
accounted for by the equity method as of March 31, 2021 was AIRDO Co., Ltd.
Changes in the scope of affiliates accounted for by the equity method:
Mezzanine Solution IV Limited Partnership and Japan Beta Lula Central S.a r.l. were included in the scope of the equity
method accounting due to incorporation and acquisition of shares, respectively. SPACE ONE CO., LTD. was excluded
from the scope of the equity method accounting due to a decline in ownership interest in the year ended March 31, 2021.
(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2021 was 125. One of the major affiliates
as of March 31, 2021 was New Perspective One LLC.
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded fromthe scope of the equity method because their aggregate effect in terms of net income, retained earnings and accumulated
other comprehensive income has no material impact on the consolidated financial statements of DBJ Inc.

Data Section

In the year ended March 31, 2021, six companies including a silent partnership managed by Godo Kaisha Asset 7 were
newly consolidated due to new investments and DBJ Food&Beverage/Hotel Support Fund Investment Limited Partnershipwas newly consolidated due to incorporation.

(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2021 was 51.
The major unconsolidated subsidiary not accounted for by the equity method was DBJ Regional Investment Co., Ltd.

Corporate Data(i) Consolidated subsidiaries
The number of consolidated subsidiaries as of March 31, 2021 was 39. The major consolidated subsidiaries as of March
31, 2021 were as follows:
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
DBJ Investment Consulting (Beijing) Co., Ltd.
Consist Inc.
DBJ Americas Inc.

(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.

Corporate Governance(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September 8, 2006.
The practical solution clarifies how the control and influence concept should be practically applied to the consolidation
scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai (silent partnership) and other entities
with similar characteristics.

(iii) Companies not classified as subsidiaries where DBJ Inc. holds the majority of voting rights
Kinugawa Rubber Industrial Co., Ltd.
ADVANIDE HOLDINGS PTE. LTD.
ORENO Corporation
GENTUITY, LLC
These companies were not treated as subsidiaries because the capital contributions were made for the purpose of
incubating their investees or earning capital gains, and not for the purpose of owning these investees under its control
through operational, personnel, capital or other form of transactions.

Strategy

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(ii) Unconsolidated subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2021 was 51. The major unconsolidated subsidiary as ofMarch 31, 2021 was DBJ Regional Investment Co., Ltd.
Unconsolidated subsidiaries were excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.

Value Creation Story

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for Accountingof the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial
Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2020 consolidated financial statements to conform to theclassifications used in 2021.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly,
the sum of each amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sumof the individual account balances. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan.
The rate of ¥110.71 = $1.00, the effective exchange rate prevailing as of March 31, 2021, has been used in the conversion.
The presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readilytranslated, realized or settled in U.S. dollars at that rate or any other rate.

104

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Business Combinations
Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees orprofessional fees, are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting for abusiness combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer
shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During themeasurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust theprovisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances thatexisted as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date.
Such adjustments shall be recognized as if the accounting for the business combination had been completed at theacquisition date. A parent’s ownership interest in a subsidiary might change if the parent purchases or sells ownershipinterests in its subsidiary. The carrying amount of non-controlling interests is adjusted to reflect the change in the parent’s
ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Any difference between thefair value of the consideration received or paid and the amount by which the non-controlling interests are adjusted isaccounted for as capital surplus as long as the parent retains control over its subsidiary.

Cash and cash equivalents

2021

2020

2021

¥2,187,820¥1,298,955$19,761,725(46,086)(66,085)(416,278)¥2,141,734¥1,232,869$19,345,447

2021

December 31

32

February 28 or 29

1

March 316(4) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
and loss resulting from transactions between DBJ Inc. and its consolidated subsidiaries are eliminated.

(e) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as hedging
instruments as discussed below, gains or losses on derivative transactions are recognized in the consolidated statement ofincome.

Data Section(5) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is amortized on a straight-line
basis over the estimated useful lives not exceeding 20 years. Minor differences are charged to expense in the year ofacquisition. The excess of the fair value over the cost of acquired subsidiaries (bargain purchase) is recognized as income
immediately as incurred.

Corporate Data

Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their year-end
balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect significant transactions that
occur between the year-end balance sheet date of the subsidiary and the consolidated balance sheet date.
DBJ Capital Investment Fund, which is a consolidated subsidiary whose balance sheet date was previously March 31,
changed its balance sheet date to December 31. Accordingly, the period of consolidation of the said company’s operating
results in the year ended March 31, 2021 was a nine-month period from April 1, 2020 to December 31, 2020.

(d) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using theweighted average method. Available-for-sale securities are carried at fair value with the corresponding unrealized gains andlosses, net of applicable taxes, recorded directly in a separate component of equity, after deducting the amount charged to
profit or losses by applying fair value hedge accounting. The cost of these securities upon sale is calculated principally using
the weighted average method. Financial instruments whose fair value cannot be reliably determined are stated at cost using
the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus DBJ Inc.’sinterest in earnings since acquisition and less any dividends received, based on the investees’ most recent financial
statements.
Securities which are components of trust assets in “Money held in trust” are accounted for based on the same standards
as other securities.

Corporate Governance

Number of subsidiaries

Thousands of
U.S. Dollars

Millions of Yen

Time deposits with banks

Strategy(c) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statement of cash flows are included in cash and due from banks. The
reconciliation between “Cash and cash equivalents” and “Cash and due from banks” in the consolidated balance sheet is asfollows:

Cash and due from banks(3) Balance Sheet Dates of Consolidated Subsidiaries
		 Balance sheet dates of consolidated subsidiaries are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Value Creation Story(iv) Entities not classified as affiliates where DBJ Inc. holds voting rights of between 20% and 50%
The following companies of which DBJ Inc. holds voting rights of between 20% and 50% are not affiliates accounted
for by the equity method, because the capital contributions were made for the purpose of incubating their investees or
earning capital gains, and not for the purpose of owning these investees under its control through operational, personnel,
capital or other form of transactions.
As of March 31, 2021
Socionext Inc.
PT. PETROTEKNOCMIC CMO Co., Ltd.
Wilsonart (Thailand) Co., Ltd.
Wilsonart (Shanghai) Co., Ltd.
Wilsonart Asia Limited
NATIONAL CAR PARKS LIMITED
Megabass Inc.
TAKUMIYA HOLDINGS Co., Ltd.
FUJIBAMBI HOLDINGS Co., Ltd.
INVOICE INC.
Art Japan Co., Ltd.
Nippon Heater Kiki Co., Ltd.
HIROFU CO., LTD.
SHIMONO CO., LTD.

105

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Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS*1.	If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities forwhich the swap contract was executed.
*2.	In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange
forward contracts and hedged items are accounted for in the following manner:(i)	If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference, if any,
between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at
the inception date of the contract and the book value of the asset or liability is recognized in the statement ofincome in the period since inception, and b) the discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translated using the contracted forward rate and that translatedusing the spot rate at the inception date of the contract) is recognized over the term of the contract.
(ii)	If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency, the futuretransaction is recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward
contract are recognized.
(g) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. are depreciatedusing the declining-balance method, except for buildings (excluding installed facilities) and installed facilities and structuresacquired on or after April 1, 2016 that are depreciated on a straight-line basis, and depreciation of tangible fixed assets ofconsolidated subsidiaries is computed principally using the straight-line method, based on the estimated useful lives of theassets.
The estimated useful lives are principally as follows:
Buildings : 3 years to 50 years
Others: 4 years to 20 years(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is amortizedusing the straight-line method over the estimated useful lives (mainly 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(h) Long-Lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount of anasset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment losses would be measured as the amount by which thecarrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.

Data Section(i) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to expense as incurred.

Corporate Data

(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, with respect to portfolio hedging activities, for interest rate swaps used to hedge market interest rate
fluctuations, hedge effectiveness is assessed on a specifically identifiable group of hedged items and a corresponding
group of hedging instruments, and for interest rate swaps used to hedge variability in cash flows, hedge effectiveness is
assessed based on the correlation between the base interest rate index of the hedged cash flows and the hedging
instrument. For currency swaps used to hedge foreign exchange risks of foreign currency denominated financial assets
and liabilities, the effectiveness is assessed by confirming that the total foreign currency denominated financial assets andliabilities of the hedged items are equal to or larger than that of hedging instruments.
With respect to hedging activities against foreign exchange risk of equity investments in overseas subsidiaries andaffiliates and foreign currency denominated available-for-sale securities (other than bonds), the effectiveness is assessedby confirming that the total foreign currency position of the hedged items is equal to or larger than that of hedging
instruments.

With respect to an individual hedge, for both interest rate swap contracts which meet the hedging requirements of theaccrual method (*1) and foreign currency swap contracts which meet the hedging requirements of the assignment method(*2), DBJ Inc. is not required to periodically evaluate hedge effectiveness.

Corporate Governance(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets and liabilities.
Individual or certain group contracts are drawn for each hedged item.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Strategy(2) Hedging Instruments and Hedged Items• Hedging Instruments: Interest rate swaps
Hedged Items:
Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments: Foreign currency swaps
Hedged Items:	Foreign currency denominated Debentures, Borrowed money, Corporate bonds, Securities and
Loans• Hedging Instruments: Forward liability denominated in foreign currency
Hedged Items:	Foreign currency denominated equity investments in overseas subsidiaries and affiliates andforeign currency denominated available-for-sale securities (other than bonds)

107

Value Creation Story(f) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge is accounted forby the method stipulated in “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial
Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public Accountants (JICPA Industry
Committee Practical Guidance No. 24 October 8, 2020; hereinafter, “JICPA Industry Committee Practical Guidance No.
24”). In addition, foreign currency swaps which are used to hedge foreign currency fluctuations are not stated at market
values but at contractual rates, as the foreign currency swap contracts meet the hedging criteria under the AccountingStandards for Financial Instruments. The portfolio hedge is accounted for by the deferral method provided in “Accounting
and Auditing Treatments on Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry
Committee Practical Guidance No. 25, October 8, 2020; hereinafter, “JICPA Industry Committee Practical Guidance
No. 25”).
In addition, DBJ Inc. applies portfolio hedges to hedge foreign currency fluctuations associated with equity investmentsin overseas subsidiaries and affiliates and foreign currency denominated available-for-sale securities (other than bonds).
The translation differences on hedging instruments are included in foreign currency translation adjustments in the case of
equity investments in overseas subsidiaries and affiliates; fair value hedges are applied to foreign currency denominatedavailable-for-sale securities (other than bonds).

Development Bank of Japan Inc.
Integrated Report 2021

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Development Bank of Japan Inc.
Integrated Report 2021

109(j) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc., except for shares of subsidiaries and affiliates
translated at historical rates, have been translated at the exchange rates prevailing as of the balance sheet date. Foreign
currency accounts held by consolidated foreign subsidiaries are translated into the currency of the subsidiaries at therespective year-end exchange rates. The foreign exchange gains and losses from transactions are recognized in thestatement of income to the extent that they are not hedged by forward exchange contracts. The balance sheet accounts ofthe consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet
date except for equity, which is translated at the historical rate. Differences arising from such translation are shown as “Foreign
Currency Transaction Adjustments” in a separate component of equity. Income and expense accounts of consolidated foreignsubsidiaries are translated into yen at the exchange rate prevailing as of the balance sheet date.

(n) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries havea lump-sum severance indemnity plan and defined contribution plans, and some overseas consolidated subsidiaries haveretirement benefit plans which are typically defined contribution plans. The projected benefit obligations are attributed toperiods on a straight-line basis. Actuarial gains and losses and service costs that are yet to be recognized in profit or loss
are recognized with in equity (accumulated other comprehensive income), after adjusting for tax effects and are recognizedin profit or loss over ten years no longer than the expected average remaining service period of the employees.

(q) Consumption Taxes
Income and expenses subject to consumption taxes are presented net of related consumption taxes paid or received.
(r) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement of income.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax rates to the temporary differences.
(s) Per Share Information
Equity per share is computed by dividing total equity less crisis response reserve, special investment reserve attributable to
the National Treasury, special investment surplus attributable to the National Treasury and non-controlling interests by theoutstanding number of shares of common stock as of March 31, 2021 and 2020.
Basic net income per share is computed by dividing net income available to owners of the parent related to common
stock by the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted for stock
splits. Diluted net income per share for the years ended March 31, 2021 and 2020 is not disclosed because there are no
dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable tothe year including dividends to be paid after the end of the year.

Corporate Data(m) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2021 and 2020.

(p) Lease Transactions
Finance Lease transactions are capitalized by recognizing lease assets and lease obligations in the consolidated balance sheet.

Corporate Governance(l) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.

(o) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors retired at
the balance sheet date.

Strategy(k) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessment ofcredit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively
bankrupt is provided for based on the amount of claims, after the write-off described below, net of amounts expected to be
recovered through disposal of collateral or execution of guarantees. The allowance for claims on debtors who are not legallybankrupt, but are likely to become bankrupt, and for which future cash flows cannot reasonably be estimated (possibly bankrupt), is provided for at the amount considered to be necessary based on an overall solvency assessment performed on theclaims, net of amounts expected to be recovered through disposal of collateral or execution of guarantees. With respect tothe claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future cash flows can reasonably be estimated, the allowance is provided for as the difference between the present value of expected future cash
flows discounted at the contracted interest rate and the carrying value of the claims. The allowance for claims on debtors
other than those described above is provided based on the amount of loss expected during the average remaining period,
which is calculated based on the average default rate in a certain historical period, added with necessary adjustments in lightof latest conditions and other factors. All claims are assessed initially by the investment and lending departments and then by
the Credit Analysis Department, which is independent of the investment and lending departments based on internal policies
for self-assessment of credit quality. The allowance is provided for based on the results of the self-assessment. With respect
to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amount of claims exceeding
the estimated market values of collateral or guarantees which are deemed uncollectible were written-off, and totaled ¥13,226
million ($119,471 thousand) and ¥10,556 million for the years ended March 31, 2021 and 2020, respectively. The consolidated
subsidiaries calculate the general reserve for “normal” categories based on the specific actual historical loss ratio, and thespecific reserve for the “possibly bankrupt,” “effectively bankrupt” and “legally bankrupt” categories based on estimated losses, considering the recoverable value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Value Creation StoryNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Data Section

110

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In light of the circumstances that the IASB and the FASB provides nearly identical guidance on fair value measurement, that is,
IFRS 13 “Fair Value Measurement” and FASB Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurement,”
the ASBJ had been working to align Japanese accounting standards with international accounting standards mainly
concerning guidance and disclosures about the fair value of financial instruments, and therefore issued “Accounting Standard
for Fair Value Measurement” along with other standards and guidance.
As a basic policy of the ASBJ in developing accounting standards for fair value measurement, from the viewpoint ofenhancing comparability of financial statements among the domestic and foreign companies by using unified measurement
methods, the ASBJ determined to introduce principally all the provisions of IFRS 13 and defined other treatments for specificmatters as long as they do not significantly impact the comparability among financial statements considering the practices
prevailing in Japan.
DBJ Inc. expects to apply these standards and guidance effective April 1, 2021 and is in the process of measuring the effectsof their application.

(v) Changes in Presentation
Consolidated Statement of Income
Expenses related to investment income which were included in “General and administrative expenses” in the year ended
March 31, 2020 have been reclassified into “Other expenses” from the year ended March 31, 2021.
Against the background of an increase in the monetary significance of expenses related to investment income, whichwere previously included in “General and administrative expenses,” and an expected increase in such investment income andexpenses under the new medium-term management plan that was developed in the year ended March 31, 2021, the abovechange was made to more accurately reflect the results of operations of DBJ Inc. by presenting investment related income
and expenses in “Other income” and “Other expenses,” respectively.
In order to reflect this change in presentation, “General and administrative expenses” of ¥10,185 million, which waspresented in the consolidated statement of income for the fiscal year ended March 31, 2020, has been reclassified into
“Other expenses.”
Adoption of “Accounting Standard for Disclosure of Accounting Estimates”
DBJ Inc. adopted “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March
31, 2020) in the consolidated financial statements as of March 31, 2021 and therefore a note on significant accounting
estimates is provided in the consolidated financial statements.
However, the note does not include the contents for the fiscal year ended March 31, 2020 pursuant to the transitional
treatment prescribed in the proviso in Paragraph 11 of the Accounting Standard.

Corporate GovernanceCorporate Data(u) New Accounting Pronouncement
Accounting Standards for Fair Value Measurement“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on July 4, 2019)“Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4, 2019)“Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2020)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Strategy

2. Valuation of securities whose fair value cannot be reliably determined(1) Securities of ¥2,535,827 million ($22,905,137 thousand) and securities whose fair value cannot be reliably determined of¥1,130,164 million ($10,208,336 thousand) were recorded in the consolidated financial statements as of March 31, 2021.
(2) Information to facilitate the understanding on significant accounting estimates made on the identified items
Information regarding securities whose fair value cannot be reliably determined are disclosed in Paragraph (2) under Note 28“FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES.” When substantial value significantly declines from the carrying
amount, an impairment loss or allowance for investment losses are recognized, unless recoverability is supported by sufficientevidence. Determining that recoverability is supported by sufficient evidence is based on the management’s judgment that theinvestees’ business plans, etc. are reasonable.
As it is uncertain how the market environment for investees will change due to factors such as the impact of COVID-19,
any changes in conditions assumed in the management’s decisions that the business plans, etc. are reasonable may cause
unexpected losses due to the recording of an impairment loss or allowance for investment losses in the following fiscal year.

111

Value Creation Story(t) Significant Accounting Estimates
Significant accounting estimates which DBJ Inc. used in preparing the consolidated financial statements are as
follows:
1. Allowance for Loan Losses(1) Allowance for loan losses of ¥57,869 million ($522,714 thousand) was recorded in the consolidated financial statements
as of March 31, 2021.
(2) Information to facilitate the understanding on significant accounting estimates made on the identified items
DBJ Inc. records an allowance for loan losses to provide for the risk of loss caused by a decrease in value or disappearanceof assets such as loans, etc. due to the deteriorated financial position of credit counterparties.
DBJ Inc. assumes that the impact of COVID-19 on economic and business activities would continue through the following
fiscal year onward and may affect the credit risk of its debtors.
The method DBJ Inc. takes to calculate its allowance for loan losses is stated in (k) “Allowance for Loan Losses” under Note
2 “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.” Based on the assumption above, DBJ Inc. records allowance forloan losses upon reflecting information available as of the date of preparation of the financial statements on the individual
debtor category as needed.
These assumptions are decided based on the best estimates and judgements of the management, but as it is uncertain
how the ongoing pandemic will impact the economy and credit risk of the debtors of DBJ Inc., any changes in its impact may
result in the amount of allowance for loan losses in the consolidated financial statements for the following fiscal year tofluctuate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SECURITIES

5. COMMITMENTS

Securities as of March 31, 2021 and 2020 are as follows:
Millions of Yen

Japanese government bonds*3

2021

2020

2021

¥  129,047¥  134,664$ 1,165,639

Corporate bonds*2

812,512

830,952

7,339,103

Equities*1

822,641

687,0207,430,594

Other securities*1

771,626

721,630

6,969,801¥2,535,827¥2,374,268$22,905,137

Total*1.	Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2021 and 2020, are ¥59,854 million ($540,638 thousand) and ¥57,242 million, respectively.
Investments in unconsolidated subsidiaries and affiliates included in “Other securities” as of March 31, 2021 and 2020, are ¥203,022 million ($1,833,819 thousand) and ¥194,159 million,
respectively.
*2.	DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article 2, Paragraph 3 of Financial Instruments and ExchangeAct), which amount to ¥4,022 million ($36,330 thousand) and ¥4,462 million as of March 31, 2021 and 2020, respectively.
*3.	Japanese government bonds include securities lent in accordance with the unsecured securities lending agreement in the amount of ¥32,348 million ($292,191 thousand) and ¥37,689
million as of March 31, 2021 and 2020, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any terms and conditions in the contracts. As of March 31,
2021 and 2020, the amounts of unused commitments are ¥798,060 million ($7,208,570 thousand) and ¥1,054,844 million,
respectively. As of March 31, 2021 and 2020, the amounts of unused commitments with remaining contract term within one year
are ¥568,245 million ($5,132,738 thousand) and ¥719,776 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily represent a
future cash requirement. Most of these contracts have terms and conditions whereby DBJ Inc. and its subsidiaries can rejectcustomers’ applications for loans or decrease the contract limits with proper reason (e.g., changes in financial situation,
deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its consolidated subsidiaries obtain liens
on customers’ real estate, securities or other assets as collateral as deemed necessary. Subsequently, DBJ Inc. and its
consolidated subsidiaries perform periodic reviews of the customers’ business results based on internal rules, and take necessary
measures to reconsider the terms and conditions of contracts and/or require additional collateral and guarantees.

Strategy

6. OTHER ASSETS
 ecurities available-for-sale (excluding whose securities those fair value cannot be reliably determined), whose fair valueSsignificantly declined compared with the acquisition cost, and is considered to be an item other than recoverable decline,
were written down to the respective fair value which is recorded as the carrying amount on the consolidated balance sheets.
The criterion for determining whether the fair value is “significantly declined” are as follows:
Fair value declined by 50% or more of the acquisition cost.
Fair value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

Other assets as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

4. NON-PERFORMING LOANS

2020

2021

Prepaid expenses¥  3,842¥  3,514$   34,709

Accrued income

25,07625,187

226,503

Derivatives

76,43871,758690,436

Cash collateral paid for financial instruments

13,326

17,572

120,373

Margin deposits with the central clearing house

24,022

10,273

216,985

Other

36,73934,543331,855

Total¥179,445¥162,849$1,620,860

The amounts of non-performing loans included in “Loans” as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

Loans to bankrupt debtors*2
Delinquent loans*3
Loans past due three months or more*4
Total

2021

—

¥     8$—  

81,49430,341

736,105———

30,99926,914

280,005¥112,493¥57,264$ 1,016,111*1.	The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2.	“Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law Enforcement Regulation.
*3.	“Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments are deferred in order to assist or facilitate the restructuring
efforts of borrowers in financial difficulty.
*4.	“Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not fall under the category of “Loans to bankrupt debtors” or“Delinquent loans.”*5.	“Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a reduction or exemption of interest rates, postponement ofprincipal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent loans,”
or “Loans past due three months or more.”

7. TANGIBLE FIXED ASSETS
Tangible fixed assets as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

Buildings
Land

2020

2021

¥ 17,953¥ 17,704$  162,164

90,15190,794814,299

586

635

5,301

Leased assets
Construction in progress

285

425

2,575

Other

318,491

313,873

2,876,806

Total¥427,467¥423,433$3,861,145

Corporate Data

Restructured loans*5

¥

2020

Corporate GovernanceImpairment losses were recognized on other securities in an amount of ¥110 million ($995 thousand) for the year ended March
31, 2021 and on equity securities in an amount of ¥3,984 million for the year ended March 31, 2020.

Value Creation Story

Thousands of
U.S. Dollars

113

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2021 and 2020, is ¥48,099 million ($434,462 thousand) and ¥39,825 million, respectively.

8. ALLOWANCE FOR LOAN LOSSES
Allowance for loan losses as of March 31, 2021 and 2020 is as follows:

2021

2020

2021

General allowance for loan losses¥29,098¥19,358$262,831

Specific allowance for loan losses

28,771

16,169259,883

Total¥57,869¥35,528$522,714

Data Section

Thousands of
U.S. Dollars

Millions of Yen

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. DEBENTURES AND CORPORATE BONDS

Scheduled redemptions of above debentures and corporate bonds for the following 5 years subsequent to March 31, 2021 are
as follows:

Debentures and corporate bonds as of March 31, 2021 and 2020 are as follows:

Maturity date

2021

2020

2021

(Issuer: DBJ Inc.)
Debentures
Japanese governmentguaranteed bonds
12, 14, 15, 17, 19, 20, 22*1,7Jun. 2006– 2.0–
Jun. 2008 2.2

Jun. 2021–
Jun. 2023¥  210,002[90,003]¥   210,005

Japanese governmentguaranteed bonds
3, 4, 9, 11, 14, 16, 19, 22–69

Dec. 2008– 0.001–
Dec. 2020 2.1

Sep. 2020–
Jun. 2060

1,510,937[360,168]

1,631,134

13,647,702[3,253,259]

Japanese governmentguaranteed foreign bond 67*2,7Sep. 1998

Sep. 2028

25,03025,034226,088$ 1,896,867[812,968]

Non-recourse
corporate bonds

The fiscal year ending March 31, 2022

¥839,991¥—$7,587,316

$—

2023

840,272—

7,589,854

—

2024

855,078—

7,723,591

—

2025

702,316—

6,343,747

—

2026

676,777—

6,113,068—

Sep. 2014– 0.5–
Jan. 2021 3.25

Sep. 2021–
Jan. 2031

1,291,611[55,276]

982,494

11,666,624[499,288]

FILP agency domestic bonds
20, 31, 34–36, 42, 49*4,7Aug. 2005– 1.7–
Jun. 2008 2.74

Jun. 2020–
Mar. 2047

74,972

94,970677,198

Euro MTN FILP agency bond
2*4,5,7

Sep. 2008

Sep. 2023

2,000

2,000

18,0652.032

Sep. 2022–
Nov. 2027

369,016

369,017

Borrowed money as of March 31, 2021 and 2020 is as follows:

3,333,179

Average interest rate (%)

Due date of repayment

2021

2020

2021

Borrowings

0.243

Apr. 2021– Mar. 2041

¥10,479,970¥7,882,672$94,661,464

Non-recourse borrowings

0.755

Dec. 2021– Dec. 2036

184,566

188,276

1,667,116

Total

0.252

¥10,664,537¥8,070,948$96,328,580

Scheduled repayments of above borrowings and non-recourse borrowings for the following 5 years subsequent to March 31,
2021 are as follows:
Millions of Yen
Borrowings

Corporate bonds
Nov. 2012– 0–
Jan. 2021 1.183

Jun. 2020Jul. 2070

1,522,001[190,600]

1,357,601

Corporate bonds through private
placement 3–25, 27, 28, 31, 32,
34, 35, 39–50, 52–118

Feb. 2015– 0–
Jan. 2021 1.16

Apr. 2020–
Mar. 2058

427,000[58,000]

433,000

Corporate bonds Euro MTN
45, 48, 49, 52, 54, 55, 57,
60–87*6

Oct. 2013– 0.01–
Mar. 2021 3.749

Apr. 2021–
May. 2049

785,777[85,943]586,499

13,747,643[1,721,616]

3,856,926[523,891]
7,097,624[776,295]

Thousands of U.S. Dollars

Non-recourse borrowings

Borrowings¥ 7,096

Non-recourse borrowings

The fiscal year ending March 31, 2022

¥1,460,836$13,195,162$ 64,1012023

1,048,928

6,930

9,474,559

62,604

2024

920,726

7,012

8,316,560

63,345

2025

949,9146,267

8,580,205

56,608

2026

1,013,582

71,0799,155,290

642,034

11. NON-RECOURSE DEBTS
Non-recourse debts in consolidated special purpose companies as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

2020

2021

Corporate Data

Corporate bonds through public
placement
31, 40, 47, 50, 54, 56, 57, 59,
60, 62, 63, 65, 66, 68, 69, 71,
72, 74–138

Thousands of
U.S. Dollars

Millions of Yen

Corporate GovernanceJapanese governmentguaranteed Euro MTN bonds
10, 12-23 *3

Non-recourse debts:(Issuer: Core Investment Japan TMK)
Jun. 20190.27909

Jun. 2026

5,000

5,000

45,163(Issuer: Hiratsuka Holding TMK)
Total

Debentures/
corporate bonds

Strategy

Dec. 2002– 1.05–
Nov. 2007 4.75

Specified corporate bond 5*8

Non-recourse
corporate bonds

10. BORROWED MONEY
1.81

Japanese governmentguaranteed foreign bonds
5–7, 10, 11, 14*1,7Specified corporate bond 3*8Thousands of U.S. Dollars

Debentures/
corporate bonds

Value Creation Story

Issue dateMillions of Yen

Thousands of
U.S. Dollars

Millions of Yen

Interest rate(%)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sep. 2019

0.37909

Sep. 2026

125

125

1,129

¥6,223,475¥5,696,882$56,214,209¥184,566¥188,276$1,667,116

Corporate bonds

5,125

5,125

46,292

Cash and due from banks

13,41019,235

121,132

Other assets

3,412

4,208

30,823

Tangible fixed assets

225,666

219,630

2,038,357

Intangible fixed assets

4,847

5,130

43,787

Assets corresponding to non-recourse debts:

Data Section*1.	These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2.	This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3.	These bonds are unsecured guaranteed bonds issued based on Medium Term Note program (“MTN program”).
*4.	Fiscal Investment and Loan Program (FILP) agency bonds (“FILP bonds”) are not government-guaranteed. These bonds are issued by the Development Bank of Japan.
*5.	This bond is a FILP bond issued based on MTN program.
*6.	These bonds are unsecured corporate bonds issued based on MTN program.
*7.	General mortgage under the DBJ Inc. Act (17 of the Supplementary Provisions) and the DBJ Act (Article 43).
*8.	These bonds are non-recourse debts.
*9.	Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

Borrowed money

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117



12. OTHER LIABILITIES

15. EQUITYOther liabilities as of March 31, 2021 and 2020 are as follows:

Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:

Thousands of
U.S. Dollars

Millions of Yen

2021

2020

2021

Accrued expenses¥ 10,300¥ 13,794$   93,038

Unearned income

516

1,072

4,669

Accrued income taxes

17,59913,001

158,971

Derivatives

29,52336,530266,670

511

572

4,618

Lease obligations
Asset retirement obligations

5,768

5,746

52,100Other

99,401

133,545897,856

Total¥163,620¥204,265$1,477,922

Acceptances and guarantees as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

Guarantees¥446,6162020¥267,306

2021$4,034,110(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year, in addition to the year-end
dividend, upon resolution at the shareholders meeting. Additionally, for companies that meet certain criteria such as (1) having
a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors, and (4) the term of service ofthe directors is prescribed as one year rather than two years of normal term in its articles of incorporation. With respect to thethird condition above, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal
year, if the Board of Directors can declare dividends as prescribed in the company’s articles of incorporation. DBJ Inc.,
however, shall not distribute such dividends based on resolution of the Board of Directors, since its articles of incorporation do
not prescribe that the Board of Directors can take such action. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. Article 20 of the DBJ Inc. Act provides that the timing andamounts for dividends shall be authorized by the Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged
for dividends, until the total aggregate amount of legal reserve and additional paid-in capital equal 25% of Common stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation.
The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be reclassified among the accounts under certain conditions and upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount to theshareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
The treasury stock acquisition rights are presented as a separate component of equity or deduction of stock acquisition rights.

Corporate Data(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

Corporate Governance

14. ASSETS PLEDGED AS COLLATERAL

16. CRISIS RESPONSE RESERVEDBJ Inc. recorded the accumulated amounts of the government’s contribution to implement the crisis response operations inaccordance with the provision of Article 2-22 of the supplementary provision of the DBJ Inc. Act (hereinafter the “Act”) as “Crisis
response reserve.”
The reserve is characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amount of crisis response reserve is included in the total amount ofcommon stock and capital surplus based on the provision of Article 2-25 of the supplementary provision of the Act.
(b)	In the event of a deficit, the amount of crisis response reserve may be decreased when the capital surplus and legal retained
earnings become nil based on the provision of Article 2-26 of the supplementary provision of the Act. When the surplus
becomes positive after the decrease in the amount of crisis response reserve, the amount of crisis response reserve shall be
increased based on the provision of Article 2-26 of the supplementary provision of the Act.

Data Section

Cash and due from banks of ¥13,410 million ($121,132 thousand), other assets of ¥3,412 million ($30,823 thousand), tangible
fixed assets of ¥225,666 million ($2,038,357 thousand) and intangible fixed assets of ¥4,847 million ($43,787 thousand) arepledged as collateral for borrowed money of ¥184,566 million ($1,667,116 thousand) and corporate bonds of ¥5,125 million($46,292 thousand) as of March 31, 2021.
Cash and due from banks of ¥19,235 million, other assets of ¥4,208 million, tangible fixed assets of ¥219,630 million andintangible fixed assets of ¥5,130 million are pledged as collateral for borrowed money of ¥188,276 million and corporate bondsof ¥5,125 million as of March 31, 2020.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥169,189 million ($1,528,222 thousand) and ¥840,231 million ($7,589,483 thousand), as of March 31, 2021, respectively. Suchsecurities and loans are pledged as collateral for transactions, including exchange settlements as of March 31, 2021. On behalfof the investees who borrow from third parties, ¥15,451 million ($139,566 thousand) of securities are pledged as collateral as ofMarch 31, 2021. Additionally, ¥13,326 million ($120,373 thousand) of cash collateral paid for financial instruments and ¥24,022
million ($216,985 thousand) of margin deposits with the central clearing house are included in other assets as of March 31, 2021.
Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations created by thebonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc. The face value of thesedebentures amounts to ¥681,289 million ($6,153,816 thousand) as of March 31, 2021.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥154,643 million and ¥923,054 million, as of March 31, 2020, respectively. Such securities and loans are pledged as collateral
for transactions, including exchange settlements as of March 31, 2020. On behalf of the investees who borrow from third parties,¥11,782 million of securities are pledged as collateral as of March 31, 2020. Additionally, ¥17,572 million of cash collateral paid
for financial instruments and ¥10,273 million of margin deposits with the central clearing house are included in other assets asof March 31, 2020. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations
created by the bonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc. The face value ofthese debentures amounts to ¥701,289 million as of March 31, 2020.

Strategy

13. ACCEPTANCES AND GUARANTEESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Value Creation StoryNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(c)	In case DBJ Inc. determined that a sufficient financial base required for the proper implementation of crisis response
operations has been secured, DBJ Inc. shall pay the full or partial amount of crisis response reserve to the National Treasury
according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in accordance with theprovision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amount of crisis response reserve to the National Treasury based on
the provision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

18. PER SHARE INFORMATION119NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity per share of common stock as of March 31, 2021 and 2020 and basic net income per common share (“EPS”) for theyears ended March 31, 2021 and 2020 are as follows:
Thousands of Shares

Yen

U.S. Dollars

Equity related tocommon stock

Outstanding numberof shares used to
calculate equity per share

Equity per share

Equity per share

43,632¥64,719.67$584.59

43,632¥63,755.66

Equity per share

17. SPECIAL INVESTMENT RESERVE AND SPECIAL INVESTMENT SURPLUS
DBJ Inc. recorded the amounts transferred from the government’s investment and capital surplus to implement the special
investment operations in accordance with the provision of Article 2-23 of the supplementary provision of the Act as “Special
investment reserve”. In addition, profit or loss arising from special investment operations is transferred from retained earnings to“Special investment surplus.”

Items deducted from total equity¥3,703,415
879,543   (Crisis response reserve)

206,529  (Special investment reserve
attributable to the National Treasury)

644,000  (Special investment surplus
attributable to the National Treasury)

13,262  (Non-controlling interests)

15,752Equity related to common stock¥2,823,872

StrategyYear ended March 31, 2020

Equity per share
Total equity
Items deducted from total equity¥3,434,054
652,244   (Crisis response reserve)

206,529  (Special investment reserve
attributable to the National Treasury)

424,000  (Special investment surplus
attributable to the National Treasury)

6,218

  
(Non-controlling interests)

15,496Equity related to common stock¥2,781,810

Year ended March 31, 2021

Corporate GovernanceSpecial Investment Reserve and Special Investment Surplus are characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amounts of special investment reserve and special investment
surplus are included in the total amount of common stock and capital surplus based on the provision of Article 2-25 of the
supplementary provision of the Act.
(b)	In the event of a deficit, the amounts of special investment reserve or special investment surplus may be decreased when thecapital surplus and legal retained earnings become nil based on the provision of Article 2-26 of the supplementary provision of
the Act. When the surplus becomes positive after the decrease in the amounts of special investment reserve or special
investment surplus, the amounts of special investment reserve or special investment surplus shall be increased based on theprovision of Article 2-26 of the supplementary provision of the Act.
(c)	In case that DBJ Inc. determined that these amounts became unnecessary to implement special investment operations
properly, DBJ Inc. may pay the full or partial amount of special investment reserve or special investment surplus to the National
Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in accordancewith the provision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amounts of special investment reserve and special investment surplus
corresponding to the amount attributable to the National Treasury to the National Treasury based on the provision of Article
2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

Total equity

Value Creation Story

Year ended March 31, 2021

Millions of Yen

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income attributable toowners of the parent

Weighted average shares

EPS

EPS

Basic EPS
 Net income attributable to ownersof the parent

Net income attributable to owners of
the parent related to common stock¥45,246
Corporate Data

 Net income not attributable to common shareholders (Amount attributable to
the National Treasury related to special
investment operations)

7,408¥37,838

43,632¥867.21

43,632¥1,075.90$7.83

Year ended March 31, 2020

Basic EPS
 Net income attributable to ownersof the parent

Net income attributable to owners of
the parent related to common stock

3,511¥46,944

Note: Diluted net income per share for the years ended March 31, 2021 and 2020 is not disclosed because there are no dilutive securities.

Data Section Net income not attributable to common shareholders (Amount attributable to
the National Treasury related to special
investment operations)¥50,456

120

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Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. OTHER OPERATING INCOME

22. OTHER EXPENSES

Other operating income for the years ended March 31, 2021 and 2020 is as follows:

Other expenses for the years ended March 31, 2021 and 2020 are as follows:

Gains on derivatives

¥

2020

—

¥

2021

762

$

—

13,83814,065

124,999

Other

256

336

2,314

Total

¥14,094¥1 5,165$ 127,314

20. OTHER INCOME
Other income for the years ended March 31, 2021 and 2020 is as follows:

2020

2021

¥32,758$ 84,473

Equity in losses of affiliates

6,908

—

62,400Losses on investments in limited partnerships and othersimilar partnerships

12,762

5,377

115,276

Depreciation

8,954

9,052

80,884

Provision of allowance for loan losses

23,9701,734

216,516

Other

12,962

13,001

117,088

Total¥74,910¥61,924$676,637

2021$212,402

Gains on redemption of securities

359

7,727

3,250

Equity in earnings of affiliates

—

4,541

—

Gains on sales of fixed assets

1,199

4,333

10,831

Collection of written-off claims

423

6,255

3,822

Gains on investments in limited partnerships andother similar partnerships

21,652

26,575

195,575

Rental income on land and buildings

12,52012,273113,096

Sales of electric power

10,946

12,747

98,876

Other

5,605

6,738

50,628

Total¥76,221¥91,688$688,481

21. OTHER OPERATING EXPENSES
Other operating expenses for the years ended March 31, 2021 and 2020 are as follows:

23. EMPLOYEES’ RETIREMENT BENEFITS
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension
benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions under which
the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or caused by death,the employee is entitled to greater payment than in the case of voluntary termination.
(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the years ended March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

2020

2021

¥36,167¥35,372$326,683

Service cost

1,591

1,574

14,377

Interest cost

393

385

3,557

Balance at beginning of year

Actuarial losses

931

542

8,418

Benefits paid

(1,816)(1,707)(16,412)¥37,267¥36,167$336,622

Balance at end of year

Corporate Governance2020¥10,494

Strategy

2021¥23,515

Thousands of
U.S. Dollars

Millions of Yen

2020

2021

Foreign exchange losses¥6,909¥ 9,996$62,408

Debenture issuance costs

936

817

8,456

1,263

1,486

11,412

Other

114

10

1,034

Total

¥9,223¥12,310$83,309(2) The changes in plan assets for the years ended March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year
Expected return on plan assets
Actuarial (losses) gains

2021

2020

2021

¥29,338¥29,641$265,007

146

148

1,325

1,108

(529)

10,017

Contributions from the employer

965

945

8,722

Benefits paid

(894)

(866)

(8,081)¥30,665¥29,338$276,990

Balance at end of year

Corporate Data

2021

Corporate bonds issuance costs

2021¥ 9,352

Write-off of equities

Thousands of
U.S. Dollars

Millions of Yen

Gains on sales of equities and other securities

Thousands of
U.S. Dollars

Millions of Yen

Value Creation Story

2021

Gains on sales of bonds

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S. Dollars

Millions of Yen

121

Data Section

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Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(3)	Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and the balances ofretirement benefit obligations and plan assets for the years ended March 31, 2021 and 2020 are as follows:

2021

2020

2021

Funded retirement benefit obligations¥ 29,072¥ 28,074$ 262,598

Plan assets(30,665)(29,338)(276,990)(1,593)(1,263)(14,393)

8,195

8,092

74,025Net liability for retirement benefits recorded in
the consolidated balance sheet¥   6,601¥   6,828$  59,632

Liability for retirement benefits¥   8,195¥   8,092$  74,025

Asset for retirement benefits(1,593)(1,263)(14,393)

Unfunded retirement benefit obligations(7) Plan assets
		 (i) Components of plan assets
		 Plan assets as of March 31, 2021 and 2020 consisted of the following:
2021

73%

Equity13%

9%Others

14%

18%

Total

100%

100%

		

73%

(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expectedcurrently and in the future from the various components of the plan assets.

(8) Assumptions used for the years ended March 31, 2021 and 2020 were set forth as follows:¥   6,601¥   6,828$  59,632

2021

Discount rate(4) The components of net periodic retirement benefit costs for the years ended March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2020

2021

Service cost

¥1,591¥1,574$14,377

Interest cost

393

385

3,557

Expected return on plan assets

(146)

(148)

(1,325)

Amortization of net actuarial losses

196

81

1,775

Amortization of prior service cost

7

7

68

¥2,042¥1,900$18,452(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of adjustments for retirement
benefit for the years ended March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2021

2020

Expected salary increase rate
Expected rate of return on plan assets

2.1%–6.7%

1.7%–5.3%

0.5%

0.5%

24. INCOME TAXESDBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 30.62% for the years ended March 31, 2021
and 2020.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the years ended March 31, 2021
and 2020 is as follows:

2021

2020

30.62%

30.62 %

Change in valuation allowance

2.38%

8.96 %

Equity in earnings of affiliates

2.86%(1.67) %

Other

0.70%

0.03 %

36.56%

37.94 %¥   7$   68

Normal effective statutory tax rate

Actuarial gains (losses)

373

(990)

3,374

Increase (decrease) in taxes resulting from:

Total

¥381

¥(983)$3,443

Actual effective tax rate

Corporate Data

2021

¥  7

Thousands of
U.S. Dollars

Millions of Yen

2021

1.1%

(b) Defined Contribution Plans
The amounts of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries for theyears ended March 31, 2021 and 2020 are ¥273 million ($2,468 thousand) and ¥243 million, respectively.

Prior service cost(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of adjustment for
accumulated retirement benefit as of March 31, 2021 and 2020 are as follows:

2020

1.1%

Corporate Governance2021

Net periodic retirement benefit costs

2020

Debentures

Strategy

Net liability for retirement benefits recorded in the consolidatedbalance sheet

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Value Creation Story

Thousands of
U.S. Dollars

Millions of Yen

123

2020

2021

¥  (4)¥   (11)$   (40)

Unrecognized actuarial losses(980)(1,353)(8,854)

Total¥(984)¥(1,365)$(8,894)

Data Section

Unrecognized prior service cost

124

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities as ofMarch 31, 2021 and 2020 are as follows:(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2021 and 2020 are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S. Dollars

Millions of Yen

2021

2020

2021

¥ 20,153¥ 12,589$ 182,043

Losses from revaluation of securities

25,15921,313

227,258

Excess of fair value over assets of consolidated subsidiaries

3,120

3,426

28,189Liability for retirement benefits

2,027

2,014

18,314

Tax goodwill

1,135

1,275

10,256

26. OTHER COMPREHENSIVE INCOME (LOSS)Tax loss carryforwards

7,275

6,498

65,712The components of other comprehensive income (loss) for the years ended March 31, 2021 and 2020 are as follows:

Other

16,357

16,961

147,750

Sub-total

75,22964,080679,523(47,967)(46,208)(433,275)(47,967)(46,208)(433,275)

27,262

17,871

246,248

Deferred tax assets:

Sub-total*1
Total

2021

Due within 1 year

¥ 5,695¥ 6,151$ 51,445

Due after 1 year

18,322

21,891

165,497

Total¥24,017¥28,043$216,942(16,282)(7,278)

Thousands of
U.S. Dollars

Millions of Yen

2021

2020

2021

(Gain) loss arising during the year

¥ 37,501¥(22,805)$ 338,738

Reclassification adjustments to profit or loss

(11,129)(6,035)(100,528)

26,372(28,840)

238,210

Unrealized gain (loss) on available-for-sale securities:   Amount before income tax effect

Deferred tax liabilities:
Unrealized gain on available-for-sale securities

2020   Income tax effect(8,872)

8,862(80,142)

17,499(19,977)

158,068

Loss arising during the year

(2,682)(704)(24,232)

Reclassification adjustments to profit or loss

Deferred gain on derivatives under hedge accounting(5,962)(8,398)(53,853)  TotalOther(9,084)(6,002)(82,053)

Deferred loss on derivatives under hedge accounting:Total(31,328)(21,679)(282,982)

Net deferred tax assets (liabilities)*2¥ (4,066)¥   (3,808)$ (36,734)*1. Changes in valuation allowance are principally due to an increase in that for allowance for loan losses.
*2. Net deferred tax assets are included in the following items in the consolidated balance sheets.

(5,210)(7,126)(47,067)   Amount before income tax effect(7,893)(7,830)(71,299)   Income tax effect

2,417

2,397

21,832  Total(5,476)(5,432)(49,467)

Adjustments arising during the year

146

(75)

1,322

Reclassification adjustments to profit or loss

—

—

—

Foreign currency translation adjustments:
Thousands of
U.S. Dollars

Millions of Yen

2020

2021

Deferred tax assets¥ 2,572¥ 2,800$ 23,235   Amount before income tax effect

146

(75)

1,322

Deferred tax liabilities(6,639)(6,608)(59,969)   Income tax effect

—

—

—

  Total

146

(75)

1,322

Adjustments arising during the year177

(1,071)

1,599

Reclassification adjustments to profit or loss

204

88

1,843

   Amount before income tax effect

381

(983)

3,443

   Income tax effect

(116)

301

(1,054)  Total

264

(682)

2,389

Gain (loss) arising during the year879

(1,820)

7,948

Reclassification adjustments to profit or loss

194

(107)

1,754

1,074

(1,927)

9,702

Adjustments for retirement benefits:

25. LEASE TRANSACTIONS(a) Finance Leases
Information about finance leases is omitted since the amounts are not material.
(b) Operating Leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2021 and 2020 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2020

2021

Due within 1 year

¥1,710¥1,757$15,448

Due after 1 year

6,251

2,255

56,469

Total¥7,961¥4,013$71,917

Share of other comprehensive income (loss) in affiliates
accounted for by the equity method:   Amount before income tax effect   Income tax effect  Total
Total other comprehensive income (loss)

—

—

—

1,074

(1,927)

9,702¥ 13,508¥(28,095)$ 122,013

Data Section2021

Corporate Data

2021

Corporate Governance(147,076)

Strategy Less-valuation allowance on total of temporary differences deductible
in future periods

2021

Value Creation Story

Thousands of
U.S. Dollars

Millions of Yen

Allowance for loan losses

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Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27. SEGMENT INFORMATIONDBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportable segment
information is omitted.

Millions of Yen

Year ended March 31, 2021

Ordinary income from external customers

Loan business¥132,522

Securities investment¥67,192

Other¥69,747

Total¥269,462

Millions of Yen

Year ended March 31, 2020

Ordinary income from external customers

Loan business¥144,669

Securities investment¥70,141

Other¥74,332

Total¥289,144

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating system, grants credit amount, setscollateral and guarantee. The sales and credit analysis departments hold separate roles in the screening andadministering of credit for individual loans and each department keeps the operations of the other in check. The
Committee on Investment and Loan Decisions meets as needed to deliberate important issues concerning themanagement and governance of individual loans. DBJ Inc. performs a comprehensive analysis of data based onborrower ratings, and calculates the loan portfolio’s overall exposure to credit risk, which is measured regularly toensure that such risk remains within specified range of capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly monitors
changes in the market value of securities with market value. As for counterparty risk arising from derivativetransactions, DBJ Inc. manages derivative transactions by setting a limit after continually monitoring the cost ofrestructuring its transactions and the creditworthiness of each counterparty and also manages risk by utilizing central
clearance organization and through receipt/payment of margin money based on Credit Support Annex (CSA) between
counterparties.

Value Creation Story

Related Information:
Segment information by service for the years ended March 31, 2021 and 2020 is following:

127

Thousands of U.S. Dollars
Loan business

Ordinary income from external customers$1,197,026

Securities investment$606,921

Other$630,005

Total$2,433,951

28. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

4) Derivative Transactions
In conducting derivative transactions, segregation of duties is maintained in the front office, the back office and therisk management department based on in-house regulations.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments for the
purposes other than trading.
Market risk exposure (estimated loss) is based on VaR methods through interest rate sensitivity analyses(BPV) and variance-covariance method (holding period of 1 year, observation period of 5 years or more, andconfidence interval of 99.9%). The amount of market risk (risks pertaining to the changes in interest rates, foreignexchanges and market prices) as of March 31, 2021 and 2020 was ¥61,135 million ($552,210 thousand) and¥48,910 million, respectively. From the year ended March 31, 2021, DBJ Inc. has changed its measurement
method from 100 BPV to BPV (100BPV, -50BPV). Such measurements are conducted by the risk management
department on a regular basis and reported to the ALM & Risk Management Committee to utilize for establishing
ALM operating policies.

Data Section(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio management forinvestments and loans. When making an investment or loan, DBJ Inc. examines the entity’s viability and the entity’s3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available market
quotations, it follows in-house regulations and policies which have been developed taking into account market
fluctuation risks, and the risk management department is involved in decision-making, as necessary. Throughregular monitoring, price volatility risks are reviewed on a timely basis and reported to the ALM & Risk Management
Committee periodically.

Corporate Data

(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans in domestic customers, which are exposed to credit
risk that stems from customers’ default of contracts or decline of their creditworthiness. Main categories of industries ofdebtors are transportation, postal service, electricity, gas, thermal supply, water supply, manufacturing and others as ofMarch 31, 2021. The changes of economic circumstances surrounding these industries may influence the fulfillment of
their obligations. DBJ Inc. holds securities such as bonds, equities and investments in limited partnerships and othersimilar partnerships, which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and other risks. DBJ Inc.
does not have any trading-related risk because it does not engage in trading (specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks arehedged or controlled by matching of financing and investing activities, interest-rate swap agreements and othertransactions.
Foreign currency denominated investments, loans and others are exposed to exchange rate risk. DBJ Inc. mitigatesthis risk by matching foreign currency investments, loans and others with foreign currency corporate bonds ascorresponding foreign currency denominated liabilities and by using exchange swaps and currency swaps.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or manage the risks related to interest and currency. DBJ Inc. applies hedge accounting asnecessary. Details for hedging instruments, hedged items, hedging policy and assessment of effectiveness of the hedges
are described in Note 2 (f) “Hedge Accounting.”

2) Foreign Exchange Risk Management
Foreign currency investments, loans and others are exposed to exchange rate risk, therefore those risks arehedged or managed not only by offsetting some foreign currency denominated investments, loans and otherswith foreign currency denominated corporate bonds and debentures but also by using exchange swaps andcurrency swaps.

Corporate Governance(a) Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As the main methodsof acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on the stableprocurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since the majority of
its assets are long-term with a fixed rate, DBJ Inc. raises its funds mainly with long-term, fixed rate liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management in orderto mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc. utilizes
derivative financial instruments in order to hedge or manage the risks related to interest and currency.

(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation and future plans.
In addition, the risk management department monitors the interest rate and term of financial assets/liabilities overall.
ALM & Risk Management Committee conducts regular monitoring with interest rate sensitivity analyses (duration,basis point value (BPV)), value at risk (VaR), and other methods. As part of asset/liability management, interest-rate
swaps are used to avoid or hedge interest rate risk.

StrategyYear ended March 31, 2021

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Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession amount of cash liquidity and the cash flow ladder andreports it to the ALM & Risk Management Committee periodically in line with in-house regulations of liquidity risk
management on financing. The ALM & Risk Management Committee manages liquidity risk by appropriate
operations of financing and investing activities based on the risk situation.

Millions of Yen

2020
Carrying amount¥ 1,298,955¥ 1,298,955

Call loans and bills bought

720,000

720,000—

Money held in trust

18,467

19,155688

456,324459,3433,019

1,001,977

1,001,977

—

2,612

2,272

(340)

12,380,522

12,885,374

504,852

Total assets¥15,878,859¥16,387,078¥ 508,219

Debentures

3,314,656

3,399,500

84,844

Borrowed money

8,070,948

8,139,492

68,544

Corporate bonds

2,382,226

2,396,272

14,045¥13,767,831¥13,935,265¥ 167,434

Derivative transactions not qualifying for hedge accounting

33,36733,367—

Derivative transactions qualifying for hedge accounting

1,859

1,859

—

¥    35,226¥    35,226

Held-to-maturity debt securities
Available-for-sale securities
Investments in affiliates
Loans
Allowance for loan losses*1¥ 2,187,820¥—

684,000—

Money held in trust

16,824

16,981

156

389,976

396,408

6,431

1,039,769

1,039,769

—

2,846

3,360

513

Securities

Investments in affiliates
Loans
Allowance for loan losses*1

14,757,131

2021
Fair value

Cash and due from banks$ 19,761,725$ 19,761,725

Call loans and bills bought

6,178,304

6,178,304—

151,973

153,390

1,418

Held-to-maturity debt securities

3,522,507

3,580,604

58,096

Available-for-sale securities

9,391,828

9,391,828—

25,71530,3504,634

132,773,640

137,038,686

4,265,046

Total assets$171,805,691$176,134,886$4,329,195

Debentures

31,465,724

32,050,981

585,257

Borrowed money

96,328,580

96,325,108(3,472)

Money held in trust

15,171,552

472,183¥19,499,893¥479,285

Debentures

3,483,570

3,548,364

64,793

Borrowed money

10,664,537

10,664,152(384)

Corporate bonds

2,739,904

2,742,260

2,355¥16,888,012¥16,954,777¥ 66,765

Derivative transactions*2
Derivative transactions not qualifying for hedge accounting

51,42751,427—

Derivative transactions qualifying for hedge accounting(4,512)(4,512)—¥    46,915¥    46,915¥—

Difference$—

Securities

Loans
Allowance for loan losses*1

Corporate bonds
Total liabilities

133,295,381(521,741)

24,748,485

24,769,762

21,277$152,542,789$153,145,851$ 603,062

464,524

464,524—

Corporate Data

14,699,369¥19,020,608

Total derivative transactions—

Carrying amount

Investments in affiliates(57,761)

Total assets

Total liabilities¥

Thousands of U.S. Dollars

684,000

Available-for-sale securities(35,463)

Difference

Call loans and bills bought

Held-to-maturity debt securities

12,415,985

Corporate Governance¥ 2,187,820—

Securities

Total derivative transactions

2021
Fair value¥

Derivative transactions*2

Millions of Yen
Carrying amount

Difference

Cash and due from banks

Total liabilities(b) Fair Values Information of Financial Instruments
	The following are the carrying amount, fair value and differences between them as of March 31, 2021 and 2020.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).

Fair value

Strategy(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at quoted market prices. If a quoted price is not available, DBJ Inc.
measures fair value based on a reasonably assessed price. Because an assessed price is computed using certain
assumptions, price could differ if different assumptions are used.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Value Creation Story

VaR or BPV measures the market risk volume under a definite probability of incidence calculated based on thehistorical market movements and therefore, it may fail to capture risks which arise under exceptional market
conditions affected by drastic change.
DBJ Inc. recognizes that rigid risk management is being conducted as risks that cannot be captured by themodel alone are identified in detail by conducting backtesting to compare the risk volume calculated by the modelwith hypothetical performances calculated based on the actual market movements as well as performing
measurement using other risk indices and stress tests.

Cash and due from banks

129

Development Bank of Japan Inc.
Integrated Report 2021

Derivative transactions*2
Derivative transactions not qualifying for hedge accounting*1. General and specific allowances for loan losses are deducted.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.

(40,759)(40,759)$    423,765$    423,765—$—

Data Section

Derivative transactions qualifying for hedge accounting
Total derivative transactions

130

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(ii) Call loans and bills bought
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as such carrying amount approximates the fair value.

(iv) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds is measured at
the market price or the quoted price from third party. For bonds without such price, the fair value is determined bydiscounting contractual cash flows at the rates that consist of the risk free rate and the credit risk premium based on
types of securities, internal ratings and tenor.
Notes on securities by holding purpose are described in Note 30.

Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as such carrying
amount approximates the fair value. This is on the basis that the market interest rate is reflected in the fair value ofsuch debentures because the terms of these were set within a short time period and that there has been no significant
change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentures with market prices,
the fair value is determined based on their market price. For fixed rate debentures without market prices, the fair value
is determined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap
contracts which meet the hedging requirements of the accrual method is qualified to debentures, the contractual cash
flows are based on the interest rate swap) at the rates that consist of the risk free rate and the rate of certain costs
applicable to DBJ Inc. Certain foreign currency denominated debentures with foreign currency swaps which qualify
for the hedging requirements of assignment method are translated using forward contract rates. As a result of thistranslation, the present value of the contractual cash flows is the same as Japanese yen denominated debentures.
(ii) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as such carrying amount approximates the fair value. This is on the basis that the market interest rate is reflected in the fair value of such borrowed
money because the terms of these were set within a short time period for such variable rate borrowings and that there
has been no significant change in the creditworthiness of DBJ Inc. nor consolidated subsidiaries before and after suchborrowings were made. For fixed rate borrowed money, the fair values are determined by discounting contractual cash
flows based on types of maturity lengths (when interest rate swap contracts which meet the hedging requirements of
the accrual method is qualified to borrowings, the contractual cash flows are based on the interest rate swap) at therates that consist of the risk free rate and the rate of certain costs applicable to DBJ Inc. or consolidated subsidiaries.
Certain foreign currency denominated borrowed money with foreign currency swaps which qualify for the hedging
requirements of assignment method is translated using forward contract rates. As a result of this translation, the­present value of the contractual cash flows is the same as Japanese yen denominated borrowed money.

Corporate Data(iii) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc. and its consolidated subsidiaries, the carrying amount ispresented as the fair value, as such carrying amount approximates the fair value. This is on the basis that the market
interest rate is reflected in the interest rate set within a short time period and that there has been no significant change
in the creditworthiness of DBJ Inc. or its consolidated subsidiaries before and after the issuance. For fixed rate
corporate bonds with market prices, the fair value is determined based on their market price. For fixed rate corporate
bonds without market prices, the fair value is determined by discounting contractual cash flows based on types ofmaturity lengths (when interest rate swap contracts which meet the hedging requirements of the accrual method isqualified to corporate bonds, the contractual cash flows are based on the interest rate swap) at the rates that consistof the risk free rate and the rate of certain costs applicable to DBJ Inc. or its consolidated subsidiaries. Certain foreign
currency denominated corporate bonds with foreign currency swaps which qualify for the hedging requirements ofassignment method are translated using forward contract rates. As a result of this translation, the present value of thecontractual cash flows is computed regarding them as Japanese yen denominated corporate bonds.

Corporate Governance(v) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk free rate
and the credit risk premium that is based on types of loans, internal ratings and tenor. Foreign currency swap
contracts which meet the hedging requirements of the assignment method is limited to loans for which the contractual
cash flows are matched with the interest rate swap and foreign currency swap. For loans which have short contract
terms (1 year or less), the carrying amount is presented as the fair value, as such carrying amount approximates thefair value. With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and forwhich future cash flows can reasonably be estimated, the fair values are determined by discounting expected cash
flows that reflect expected loss at the risk free rate. For loans to obligors who are “legally bankrupt,” “effectively
bankrupt” and “possibly bankrupt,” the reserve is provided based on the discounted cash flow method, or based onamounts expected to be collected through the disposal of collateral or execution of guarantees. Carrying value net ofthe reserve as of the consolidated balance sheet date is a reasonable estimate of the fair value of those loans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Strategy(iii) Money held in trust
The fair value of financial assets that are the components of money held in trust is measured in the same manner as(v) “Loans.”
Notes on money held in trust by holding purpose are described in Note 30.

131

Value Creation Story(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. For deposits with maturity, the carrying amount is presented as the fair value, as suchcarrying amount approximates the fair value because the remaining maturity period of the majority of such deposits isshort (maturity within 1 year).

Development Bank of Japan Inc.
Integrated Report 2021

Derivatives
Derivatives consist of interest rate related derivatives (interest rate swaps), currency related derivatives (currency
swaps, forward foreign exchange contracts) and credit derivatives. Fair value of these derivatives is determined basedon the discounted present value, quoted prices presented by the financial institutions, etc.
Data Section

132

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2)	Following are the financial instruments whose fair value cannot be reliably determined as of March 31,
2021 and 2020:		These securities are not included in the amount in the table summarizing fair values of financial instruments.

2020

2020

Call loans and bills bought

2021

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,298,950

¥

¥

¥

¥

¥

—

720,000

—

—

—

—

—

—

—

—

—

Securities

Money held in trust*1¥    1,031¥  1,615$     9,316

Unlisted equities*2,3

441,874

328,439

3,991,282 Held-to-maturity debt securities
with market values

99,488157,180

50,30385,24061,1093,000   Japanese government bonds—

15,077

10,061

10,07045,315—Investments in limited partnerships and othersimilar partnerships*1

379,875

327,173

3,431,265

Unlisted other securities*2,3

308,414286,597

2,785,789

Total¥1,131,196¥943,826$10,217,652(3) 	Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2021 and 2020 are
as follows:

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years¥2,187,816

¥

¥

¥

¥

—
—

—
—

—

—

—

—

—

—

  Corporate bonds

59,382

102,328

28,28654,628

5,794

3,000

  Other

40,10539,775

11,955

20,541

10,000— Available-for-sale securities with
contractual maturities

33,425133,269

163,245

78,661

67,079156,098   Japanese government bonds

5,069

25,44718,483

5,139

—

—

   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

28,355

107,713

144,762

73,522

67,079156,098

—

108

—

—

—

—

—
—

—
—

Due after
10 years¥

Loans*2

2,180,066

3,194,175

2,553,222

1,975,325

1,793,140

689,705

Total¥4,331,931¥ 3,484,626¥ 2,766,772¥ 2,139,226¥ 1,921,329¥848,803

Due after
10 years—Thousands of U.S. Dollars

—

2021

Securities Held-to-maturity debt securities
with market values

70,957

116,450

91,33664,857

46,373—Due from banks   Japanese government bonds

10,035

10,015

10,04810,04540,279—Call loans and bills bought

—

—

—

—

—

—

Securities   Japanese local government bonds   Short-term corporate bonds

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years$19,761,693

$

$

$

$

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

44,93175,64663,30823,357

6,094— Held-to-maturity debt securities
with market values

640,930

1,051,856

825,009585,835

418,877  Other

15,99030,78817,98031,455——   Japanese government bonds

123,653

160,332

70,95958,310175,570   Japanese government bonds

25,136

5,109

18,378

—

—

—

—

—

—

—

—

—

   Japanese local government bonds   Short-term corporate bonds  Corporate bonds  Other

90,651

90,46390,762

90,739363,826—   Japanese local government bonds

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

  Corporate bonds

405,847

683,287

571,841

210,975

55,051—  Other

144,431

278,105

162,406

284,121——640,953

526,692

1,585,859

—

—

—

—

—

—

33,834

118,543

141,954

70,95958,310175,570 Available-for-sale securities with
contractual maturities

532,660

1,116,909

1,448,225   Japanese government bonds

—

—

—

—

—

—

Loans*2

2,503,573

3,415,686

3,172,485

2,482,452

2,172,577

928,861

Total¥5,505,318¥3,655,790¥3,424,155¥2,618,269¥2,277,261¥1,104,432

46,152

166,002

—

—

—

—

—

—

—

—

—

   Short-term corporate bonds

—

—

—

—

—

—

305,616

1,070,757

1,282,223

640,953

526,692

1,585,859

—

—

—

—

—

—

  Corporate bonds  Other
Loans*2

22,613,795

30,852,561

28,655,820

22,423,016

19,624,041

8,390,043

Total$49,727,381$33,021,325$30,929,054$23,649,804$20,569,611$9,975,903*1.	Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥81,494 million ($736,105 thousand) are not included as of March 31, 2021.
*2.	Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥30,349 million are not included as of March 31, 2020.

Data Section

227,044   Japanese local government bonds

Corporate Data

58,970—6,178,304  Corporate bonds Available-for-sale securities with
contractual maturities$

Corporate GovernanceDue in1 year or lessDue after
1 year through3 years

684,000——  Other

2021

Due from banks——  Corporate bonds

Millions of Yen

Call loans and bills bought——

Strategy*1.	Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined, such as unlisted equities and other securities, are not subject tofair value disclosures.
*2.	Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject to fair value disclosures.
*3.	Impairment loss on financial instruments whose fair value cannot be reliably determined for the years ended March 31, 2021 and 2020 was ¥9,316 million ($84,153 thousand) and ¥28,734
million, respectively, which consist of unlisted equities of ¥1,611 million ($14,560 thousand) and ¥28,692 million and unlisted other securities of ¥7,704 million ($69,593 thousand) and ¥41
million for the years ended March 31, 2021 and 2020, respectively.

   Japanese local government bonds   Short-term corporate bonds

Value Creation Story

Due from banks

Thousands of
U.S. Dollars

2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Millions of Yen

Carrying amountMillions of Yen

133

134

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(4) 	Maturity analysis for debentures, borrowed money and other interest-bearing liability as of March 31,
2021 and 2020 are as follows:

Thousands of U.S. Dollars

2021
Contract amountMillions of Yen

Borrowed money
Debentures and Corporate bonds
Total

Due after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Swaps¥1,467,933¥1,983,598¥2,040,843¥1,400,061¥1,554,376¥2,217,724

839,991

1,695,351

1,379,093

919,213

1,024,238

365,586   Receive float/ Pay fixed¥3,678,950¥3,419,937¥2,319,274¥2,578,614

Unrealized gains(losses)

Fair value

Over-the-counter
Due after
10 years   Receive fixed/ Pay float¥2,307,924

Due after 1 year

¥2,583,310$8,345,042$7,428,803

8,328,324

7,416,929(210,121)(210,121)——$ 249,780$ 249,780

Total$ 459,901$ 459,901

Value Creation Story

Total

2021
Due in1 year or less135

*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values for the over-the-counter transactions are based primarily on discounted present values.

Millions of Yen

2020

Borrowed money
Total

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,104,333¥2,048,497¥1,406,720¥1,013,993¥1,056,239¥1,441,165

557,653

1,677,754

1,246,749

912,840

988,613313,271¥1,661,986¥3,726,252¥2,653,469¥1,926,833¥2,044,852¥1,754,436

Thousands of U.S. Dollars

Debentures and Corporate bonds

2021
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter¥  5,226¥5,226¥    61¥    61  Sold132,607—(4,275)(4,275)  Bought

522,151—

27,98827,988——¥23,774¥23,774

Forwards

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years$13,259,264$17,917,068$18,434,137$12,646,206$14,040,071$20,031,834

7,587,316

15,313,446

12,456,815

8,302,894

9,251,542

3,302,196$20,846,579$33,230,514$30,890,952$20,949,101$23,291,613$23,334,031

Total

Millions of Yen

2020
Contract amountTotal

29. DERIVATIVE TRANSACTIONS

Due after 1 year

Over-the-counter(a) Derivative Transactions to which Hedge Accounting is Not Applied(1) Interest rate-related transactions

Swaps

2021
Contract amountTotal¥  5,226¥5,226¥   71¥   71  Sold188,973

—

3,867

3,867

  Bought

234,247

—

259

259

—

—

¥4,198¥4,198Forwards
Millions of Yen

Due after 1 year

Fair value

Unrealized gains(losses)

Total

Over-the-counter

Thousands of U.S. Dollars

2021   Receive fixed/ Pay float¥923,879¥822,442   Receive float/ Pay fixed

922,028

821,128(23,262)(23,262)——¥ 27,653¥ 27,653

Total¥ 50,915¥ 50,915

Millions of Yen

2020
Due after 1 year

Total

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Swaps$   47,211$47,211$    556$    556  Sold1,197,795—(38,622)(38,622)  Bought

4,716,392—

252,809

252,809——$214,743$214,743

Forwards

Contract amount
Total

Contract amountCorporate Data

Swaps

Fair value

Unrealized gains(losses)Over-the-counter

Total

Swaps
¥968,637¥807,300¥ 62,460¥ 62,460   Receive float/ Pay fixed

965,871804,875(33,290)(33,290)——¥ 29,169¥ 29,169*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values are based primarily on discounted present values.
Data Section   Receive fixed/ Pay float
Total

Unrealized gains(losses)

Fair value

Corporate Governance

Total

Millions of Yen

Swaps

2021

Borrowed money(2) Currency-related transactions

Strategy

Debentures and Corporate bonds

Due in1 year or lessDue after
1 year through3 years136

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(3) Equity-related transactions
Not applicable.

137

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(b) Derivative Transactions to which Hedge Accounting is Applied(1) Interest rate-related transactions
Millions of Yen(4) Bond-related transactions
Not applicable.
Hedged item

Deferral method(5) Commodity-related transactions
Not applicable.

Swaps
		

(6) Credit derivative transactions
There were no credit derivative transactions as of March 31, 2021.

Swaps
2020

Contract amount
Total

Receive float/ Pay fixed

Accrual method
Millions of Yen

Due after 1 year

Unrealized gains(losses)

Fair value		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Borrowed money,
Loans and Securities

Debentures, Borrowed money,
Corporate bonds and Loans

Total

Due after 1 year

Fair value¥   82,376¥   74,573¥(2,798)

2,546,678

2,518,472

*3

9,111

6,130

—

—

Total

Over-the-counter¥(2,798)
Strategy

Millions of Yen

2020

Credit default options  Sold¥1,500¥—¥6¥6  Bought

1,500

—

(7)

(7)

—

—

¥(1)

¥(1)

Total

Value Creation Story

2021
Contract amount*1.	The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statement of income.
*2.	Fair values are based on discounted present values or the counterparties’ tendered price.
*3.	“Sold” means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

Contract amount
Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
Swaps
Receive fixed/ Pay float

		

Receive float/ Pay fixed

Debentures, Borrowed money,
Corporate bonds and Loans

Due after 1 year

Fair value¥   73,200¥   65,246¥(3,977)

2,059,552

2,038,302

*3

9,111

9,111

—

—

Total

¥(3,977)

Thousands of U.S. Dollars

2021

Corporate Governance		

Borrowed money and Loans

Total

Contract amount
Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
		Receive fixed/ Pay float

		

Receive float/ Pay fixed

Total

Debentures, Borrowed money,
Corporate bonds and Loans

Due after 1 year$   744,070   $   673,596  

23,003,147

22,748,372

82,30455,374——

Fair value$(25,279)*3

Corporate Data

Swaps

Borrowed money,
Loans and Securities

Total$(25,279)*1. The deferral method or the accrual method is applied as a hedge accounting method.
*2.	Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3.	The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured at fair value but the differential paid or received under the swap
agreements are recognized and included in interest expense or income. In addition, the fair value of such interest rate swaps in Note 28 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds, securities and loans.

Data Section

138

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

30. FAIR VALUE OF SECURITIES AND MONEY HELD IN TRUST(2) Currency-related transactions

Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” as ofMarch 31, 2021 and 2020 is summarized below.

Millions of Yen

2021

Swaps

Foreign currency
denominated loans

Total

Due after 1 year¥  5,503¥  5,503

Fair value(a) Securities(1) Held-to-maturity debt securities as of March 31, 2021 and 2020 are as follows:¥   (54)

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds

267,332

156,660*3

Forwards

Foreign-currency
available-for-sale securities

30,075—(1,659)—¥(1,713)

Translated at contractual rates

Millions of Yen

2021
Carrying amount

Total

—

Fair value exceeds
carrying amountMillions of Yen

2020

Deferral method

Total

Due after 1 year

Fair value

Foreign currency
denominated loans¥  5,503¥  5,503¥  142

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds

267,332

267,332*3

Forwards

Foreign-currency
available-for-sale securities

66,320

—

5,694

—

—

¥5,836

Swaps
Translated at contractual rates

Total

Deferral method
Swaps

Foreign currency
denominated loans

Total

Due after 1 year$   49,711$   49,711

2,414,711

1,415,055

Forwards

Foreign-currency
available-for-sale securities

271,664—(14,985)——$(15,480)

Total

*3

*1.	These derivatives are primarily accounted for by the deferral method of hedge accounting provided in the Industry Committee Practical Guidance No. 25.
*2.	Fair values are based primarily on discounted present values.
*3.	The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosure of fair value information. In addition, the fair value ofsuch foreign currency swaps in Note 28 “Financial Instruments and Related Disclosures” is included in that of hedged items such as foreign-currency debentures, borrowed money andcorporate bonds.

Sub-total
Fair value does notexceed carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total

Fair value¥ 50,241——
171,981
66,739288,963
30,282——81,43955,638167,360¥456,324

Difference¥ 5,428
—
—
2,029
410
7,868
(21)
—
—
(2,905)(1,921)(4,849)¥ 3,019

Thousands of U.S. Dollars

2021
Carrying amount(3) Equity-related transactions
Not applicable.

¥ 55,670——
174,010
67,150296,831
30,261——78,53353,716
162,511¥459,343

Corporate Data

Swaps

Foreign-currency debentures, Borrowed money, andCorporate bonds

Translated at contractual rates¥4,340
—
—
2,222
682
7,245
(112)
—
—
(491)
(209)
(813)
¥6,431

2020
Carrying amount

Fair value$   (495)¥ 54,510——
167,91351,355
273,779
30,141——
47,15645,331
122,628¥396,408
Millions of Yen

Contract amount
Hedged item

¥ 50,170——
165,691
50,672
266,534
30,253——47,64745,541
123,442¥389,976

Difference

Corporate Governance2021

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total

Fair value exceeds
carrying amountThousands of U.S. Dollars

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Fair value

Strategy

Sub-total
Fair value does notexceed carrying amountContract amount
Hedged item

Value Creation Story

Contract amount
Hedged item

Deferral method

139

Fair value exceeds
carrying amount(4) Bond-related transactions
Not applicable.

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total
Note: Fair value is based on the closing price at the consolidated balance sheet date.

$  453,170——
1,496,624
457,7092,407,504
273,272——430,378
411,354
1,115,003$3,522,507$  492,372——
1,516,701
463,873
2,472,946
272,252——
425,942
409,464
1,107,658$3,580,604

Difference$39,202——
20,0776,164
65,442(1,020)——(4,436)(1,890)(7,346)$58,096

Data Section

Sub-total
Fair value does notexceed carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Fair value

140

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2) Available-for-sale securities as of March 31, 2021 and 2020 are as follows:

Thousands of U.S. Dollars

2021

Millions of Yen
Carrying amount(Fair value)

2021

Carrying amountexceeds cost

Difference$452,490

Bonds

3,253,320

3,216,755

36,565439,198

433,941

5,257

Bonds

360,175

356,126

4,048

48,62348,041

581

Japanese local government bonds

—

—

—

—

—

—

Short-term corporate bonds

—

—

—

2,814,123

2,782,814

31,308105,134

84,53820,596Other
Sub-total———

311,551

308,0853,466Japanese government bonds

Corporate bonds
Other

11,639

9,359

2,280

Sub-total

745,666

689,242

56,423Carrying amount does
not exceed cost

6,735,310

6,225,659

509,651

Equities

36,74045,794(9,054)

Bonds

2,597,9782,613,888(15,910)

4,067

5,069

(1,002)

Bonds

287,622289,383(1,761)

Japanese government bonds

—

—

—

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

Short-term corporate bonds

—

—

—

Corporate bonds

287,622289,383(1,761)42,41342,526

(112)

Other
Sub-total
Total

334,103

336,979(2,876)¥1,079,769¥1,026,222¥53,547(1,017)

3,043,803(25,981)

Total$9,753,132$9,269,462$483,670

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

Bonds

249,726

246,558

3,167

54,13953,246893

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

195,586

193,3122,274

12,652

8,199

4,453

610,830

575,717

35,112Equities

7,516

8,913

(1,397)

Bonds

Proceeds from sales

Total amount ofgains on sales

Equities¥44,011¥20,199

¥ 0

Bonds

1,998

—

1

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

—

—

—

1,998

—

1

Short-term corporate bonds
Corporate bonds
Other

10,638

3,200

85

Total

¥56,648¥23,399¥88

381,944386,158(4,213)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

2020
Total amount ofgains on sales

Short-term corporate bonds
Corporate bonds
Other

Total amount oflosses on sales

Millions of Yen

—

—

—

381,944386,158(4,213)Equities¥16,148¥ 9,634

61,68561,754

(69)

Bonds

451,146456,826(5,679)¥1,061,977¥1,032,544¥29,433

Proceeds from sales

Total amount oflosses on sales

¥92

299

5

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

55,303

299

5

Other

10,584

1,321

—

Total

¥82,035¥11,256¥98

Data Section

55,303

Japanese government bonds

Corporate bonds

Corporate Data

¥27,491

Sub-total

384,1213,017,822

2021¥  320,959

Other

Other

Difference¥  348,451

Corporate bonds

383,104

Sub-total

Millions of Yen
Acquisition cost

Equities
Japanese government bonds—(15,910)(3) Available-for-sale securities sold during the years ended March 31, 2021 and 2020 are as follows:

2020
Carrying amount(Fair value)—
2,613,888

Corporate GovernanceMillions of Yen—
2,597,978

Strategy

Equities

Corporate bonds

Total$2,924,366¥50,095

Corporate bonds

Sub-total

Difference$3,376,856¥  323,756

Short-term corporate bonds

Carrying amount does
not exceed cost

Acquisition cost

Equities¥  373,851

Japanese local government bonds

Carrying amountexceeds cost

Carrying amountexceeds cost

Equities
Japanese government bonds

Carrying amount does
not exceed cost

Acquisition cost

Value Creation Story

Carrying amount(Fair value)

141

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Development Bank of Japan Inc.
Integrated Report 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2021
Total amount oflosses on sales

Equities$397,539$182,454

$  9

Bonds

18,049—16

31. RELATED PARTY TRANSACTIONSJapanese government bonds

—

—

—

Related party transactions for the years ended March 31, 2021 and 2020 are as follows:

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds

—

—

—

18,049

—

16

Other

96,09428,905772

Total$511,681$211,359

$797

2021
Transaction Amount
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1(2) Other (other than for the purpose of investment and held to maturity)
2021
Unrealized gains (losses)

Other money held in trust¥17,856

Carrying amountexceeds costNet

¥17,154¥701¥20,082¥704¥3

Related party

Finance
Minister

Payment forinterest

Accruedexpenses

18,934

171,028

4,755

42,952

Guarantees*3—

3,416,988

30,864,317——$161,289$154,953

Category

Description

Shareholder Receipt ofcontribution*1

Account item—¥  130,000

—

¥597

Payment forinterest

Accruedexpenses

23,485

6,277

Guarantees*3—

3,226,516

—

¥388

¥986

Carrying amountexceeds costNet

$6,336$6,365800,000¥4,816,195

363,739

	According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥1,433,843 million from Japan Finance Corporation relating to the crisis response operations.
*1. Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The last redemption period is December 20, 2039
without posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

(Carrying amount does
not exceed cost)$29

On June 24, 2021, the shareholders approved the following appropriations of retained earnings. On the same day, the Finance
Minister authorized the timing and amounts for dividends as of June 25, 2021:
Appropriations of retained earnings as of March 31, 2021

Thousands of
U.S. Dollars

2020

2021

Unrealized gain on¥54,674¥27,727$493,851

Other money held in trust

411

986

3,716

Deferred tax liabilities(17,260)(8,387)(155,907)

Unrealized gain on available-for-sale securities before interest
adjustments

37,82520,325

341,660

—

—

—

2,907

3,971

26,266¥40,733¥24,297$367,926

Year-end cash dividends-Common stock (¥186–$1.68 per share)¥8,115

Thousands of
U.S. Dollars$73,305

Data Section

Available-for-sale securities

Millions of Yen

Corporate Data

32. SUBSEQUENT EVENT
Millions of Yen

Unrealized gain on available-for-sale securities, net of taxes

Millions of Yen

Borrowed
money

2021

DBJ Inc.’s interest in net unrealized gain on available-for-sale securities
held by affiliates accounted for by the equity method

Balance at March 31, 2020

Millions of Yen

Repayments(c) Unrealized Gain on Available-for-Sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:

Amount corresponding to non-controlling interests

Transaction Amount(Carrying amount does
not exceed cost)

Unrealized gains (losses)

Other money held in trust$49,491,957

Carrying amountexceeds cost

2021
Acquisition
cost¥5,479,254

Repayments

Borrowings*2

Thousands of U.S. Dollars

Carrying
amount3,495,086—

Unrealized gains (losses)
Net¥19,693386,940—

Corporate Governance

Other money held in trust

9,484,238

Thousands of
U.S. Dollars

2020

2020
Acquisitioncost$ 1,987,174

1,050,000(Carrying amount does
not exceed cost)

Millions of Yen

Carrying
amount¥  220,000

Millions of Yen	According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥3,335,948 million ($30,132,313 thousand) from Japan Finance Corporation relating to the crisis
response operations.
*1. Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The last redemption period is December 20, 2040
without posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

Millions of Yen

Acquisition
cost—

Millions of Yen

Strategy(b) Money Held in Trust(1) Money held in trust for the purpose of investment and held to maturity
Not applicable.

Account item

Balance at March 31, 2021

Thousands of
U.S. Dollars

Borrowed
money

Borrowings*2

Carrying
amountValue Creation Story

Proceeds from sales

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS*1.	The gain of ¥4,737 million ($42,791 thousand) and the loss of ¥5,565 million recognized by applying the fair value hedge accounting, which were reflected in profit or loss, are deductedfrom the above unrealized gains and losses, net of taxes, as of March 31, 2021 and 2020, respectively.
*2.	Unrealized gain includes foreign currency translation adjustments on available-for-sale securities and other money held in trust denominated in foreign currency whose fair value cannot be
reliably determined as of March 31, 2021 and 2020.

Thousands of U.S. Dollars

Total amount ofgains on sales

143

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Independent Auditor’s Report

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Integrated Report 2021

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Independent Auditor’s Report

Value Creation Story
Strategy
Corporate GovernanceCorporate Data
Data Section

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Independent Auditor’s Report

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Integrated Report 2021

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Independent Auditor’s Report

Value Creation Story
Strategy
Corporate GovernanceCorporate Data
Data Section

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Independent Auditor’s Report

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Integrated Report 2021

NON-CONSOLIDATED BALANCE SHEET (UNAUDITED)Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

As of March 31,

2020

2021

Cash and due from banks
Call loans¥ 2,124,938¥ 1,252,106$ 19,193,734

684,000

720,000

6,178,304

Money held in trust

18,467

151,973

2,612,535

2,400,948

23,598,008

Loans

14,837,718

12,521,358

134,023,288

Other assets

164,520

151,158

1,486,047

Tangible fixed assets

110,369

110,442996,926

Intangible fixed assets

10,776

12,03897,338Prepaid pension costs

1,078

1,191

9,745

Customers’ liabilities for acceptances and guarantees

446,616

267,306

4,034,110

Allowance for loan losses(57,935)(35,578)(523,306)

Allowance for investment losses

(33)

(36)

(300)

¥20,951,409¥17,419,402$189,245,867

Debentures¥ 3,483,570¥ 3,314,656$ 31,465,724

Borrowed money

10,479,945

7,882,447

94,661,238

Corporate bonds

2,734,779

2,377,101

24,702,193

Other liabilities

150,445

187,896

1,358,914

Accrued bonuses to employees

4,734

4,831

42,762

Accrued bonuses to directors

15

15

137

Reserve for employees’ retirement benefits

6,447

6,419

58,235Reserve for directors’ retirement benefits

117

136

1,061

Total assets

Strategy

16,824

Securities

Value Creation Story

2021

AssetsLiabilities and equity
Liabilities:

Acceptances and guarantees
Total liabilities

3,654

5,047

33,011

446,616

267,306

4,034,110

17,310,326

14,045,859

156,357,385

Corporate GovernanceDeferred tax liabilities

Equity:1,000,424

1,000,424

9,036,438

Crisis response reserve

206,529

206,529

1,865,495

Special investment reserve

1,368,000

848,000

12,356,607

Special investment surplus

28,172

12,436

254,473

Capital surplus

336,466

636,466

3,039,169

Retained earnings

651,840629,290

5,887,817

Unrealized gain on available-for-sale securities

37,51920,709338,900

Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

12,131

19,687

109,583

3,641,083

3,373,542

32,888,482¥20,951,409¥17,419,402$189,245,867
Data Section

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥110.71 = $1.00, the effective exchange rate prevailing as of March 31, 2021, hasbeen used in the conversion.

Corporate Data

Common stock authorized, 160,000 thousand shares in 2021 and2020; issued, 43,632 thousand shares in 2021 and 2020

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Development Bank of Japan Inc.
Integrated Report 2021

NON-CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)NON-CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)Development Bank of Japan Inc.

Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2021

2020

2021

Millions of Yen

For the year ended March 31, 2021

Common stock

Crisis response
reserve

Balance at beginning of year

¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥  848,000¥160,461¥174,958$1,449,388

Investment from government

220,000

Interest on loans

132,477

139,508

1,196,621 Transfer from capital surplus to special investment reserve

300,000

Interest and dividends on securities

22,32428,976201,650

Interest on call loans

120

31

1,088

Interest on due from banks

38

108

344

Interest on swaps¥12,436

Capital surplus¥ 636,466(300,000)

Cash dividends
Net income Transfer from retained earnings to special investment surplus

15,736

5,508

6,339

49,753

Other interest income

(7)

(6)

(68)

Fees and commissions

15,026

11,561

135,729

Other operating income

14,095

15,172

127,318

Other income

49,84558,475450,234

For the year ended March 31, 2021

239,429

260,167

2,162,669

Balance at beginning of year

53,72077,086

485,240 Transfer from capital surplus to special investment reserve

Interest on debentures

21,743

33,958

196,403

Cash dividends(9,948)(9,948)Interest on call money

(84)

(72)

(767)

Net income

48,234

48,234

Interest on payables under repurchase agreements

(69)

(60)

(624)

 Transfer from retained earnings to special investment surplus(15,736)

27,60636,605249,356

62

947

566

4,490

5,723

40,563

(28)

(15)

(257)

Fees and commissions

442

130

3,996

For the year ended March 31, 2020

Common stock

Crisis response
reserve

Other operating expenses

8,901

12,31680,400

Balance at beginning of year

¥1,000,424¥206,529

130,000
130,000

Expenses
Interest expense:

Interest on borrowed money
Interest on short-term corporate bonds
Other interest expense¥1,368,000¥28,172

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain on derivatives under hedge
accounting¥629,290¥20,709¥19,687

Investment from government

Balance at end of year

52,98253,644

478,566

52,75439,856

476,511 Transfer from capital surplus to special investment reserve

168,800

183,033

1,524,713

Income before income taxes

70,628

77,133637,956

Current

29,01029,817

262,037——¥651,840

16,810(7,555)9,254¥37,519¥12,131¥3,641,083

Special investment Special investment
reserve
surplus¥588,000

Net change during the year

Deferred(6,616)

408(59,765)

Balance at end of year

202,272$  435,684

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of¥110.71 = $1.00, the effective exchange rate prevailing as of March 31, 2021,
has been used in the conversion.

¥ 766,466(130,000)

7,023¥1,000,424¥206,529¥848,000¥12,436¥ 636,466
Corporate Data

30,225¥ 46,908¥ 5,412

Capital surplus

Net income Transfer from retained earnings to special investment surplus

22,393¥3,373,542

Cash dividends

Total expenses¥ 48,234

Total equity

Millions of Yen

Other expenses

Income taxes:¥ 336,466

220,000

Net change during the year

General and administrative expenses

Net income¥206,529

Millions of Yen

Investment from government

Total income taxes¥1,000,424

Corporate GovernanceInterest on corporate bonds

Net change during the year
Balance at end of year

Strategy

Total income

Value Creation Story

IncomeInterest income:

151

Millions of Yen

For the year ended March 31, 2020

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain on derivatives under hedge
accounting¥610,436¥ 42,079¥23,745

Investment from government

Total equity¥3,243,093
130,000 Transfer from capital surplus to special investment reserve—

Cash dividends(21,030)(21,030)

Net income

46,90846,908 Transfer from retained earnings to special investment surplus(7,023)—¥629,290(21,369)(4,057)(25,427)¥ 20,709¥19,687¥3,373,542

Data Section

Net change during the year
Balance at end of year

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Development Bank of Japan Inc.
Integrated Report 2021

Capital Adequacy Ratio

NON-CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2021

Commonstock

Crisis response
reserve

Special investment Special investment
reserve
surplus$9,036,438$1,865,495$ 7,659,651

Investment from government

1,987,174 Transfer from capital surplus to special investment reserve

2,709,782$112,332

Capitalsurplus$ 5,748,951(2,709,782)

Cash dividends
Net income Transfer from retained earnings to special investment surplus

142,140

Net change during the year
Balance at end of year

$9,036,438$1,865,495$12,356,607$254,473$ 3,039,169

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2021

Retained earnings$5,684,132$187,057

Deferred gain onderivatives underhedge accounting$177,831

Investment from government

Total equity$30,471,889
1,987,174 Transfer from capital surplus to special investment reserve

Capital Structure Information (Consolidated)—Cash dividends(89,858)(89,858)

Net income

435,684435,684 Transfer from retained earnings to special investment surplus(142,140)

Net change during the year
Balance at end of year

[1] Capital Structure Information$5,887,817—
151,842(68,248)

83,594$338,900$109,583$32,888,482

Items

March 31, 2020

Common Equity Tier 1 capital: instruments and reserves (1)Directly issued qualifying common share capital plus related capital surplus
and retained earningsof which: common stock and capital surplusof which: retained earningsof which: treasury stockof which: planned distribution of incomeof which: other than the above
Rights to acquire new common shares
Accumulated other comprehensive income and other disclosed reserves
Adjusted non-controlling interests, etc. (amount allowed to be included in group Common Equity Tier 1)
Common Equity Tier 1 capital: instruments and reserves

(A)

March 31, 2021

Basel III
Template No.

2,302,784

2,024,471

1a+2–1c–26

1,636,890

1,336,890

1a675,842695,696

2

—

—

1c

9,948

8,115

26

—

—

—

—

1b

1,105,824

1,655,075

3

—

—

5

3,408,609

3,679,548

6

Corporate GovernanceNote: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥110.71=$1.00, the effective exchange rate prevailing as of March 31, 2021,
has been used in the conversion.

(Units: Millions of yen, %)Strategy

Balance at beginning of year

Unrealized gain on
available-for-salesecurities

Although DBJ is not subject to Article 14-2 of the Banking Act, the capital adequacy ratio has been calculated in accordance with
“Standards for Bank to Examine the Adequacy of Its Capital Based on Assets, etc., under the Provision of Article 14-2 of the
Banking Act” (2006, Financial Services Agency Notification No. 19, hereinafter, the “Capital Adequacy Ratio Notification”), andtherefore effectively conforms to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and the operational risk equivalent amount was calculated using the basic indicator approach. DBJ Group has not
introduced procedures in line with market risk regulations.
As a complementary indicator to the capital adequacy ratio, the leverage ratio is calculated on a consolidated basis in accordancewith “Standards for Determining the Soundness of Leverage, Defined as a Complementary Indicator for the Standard to Determine
the Capital Adequacy of a Bank in Light of the Assets Owned by the Bank and Other Factors, Based on Article 14-2 of the
Banking Act.”

Value Creation Story

Balance at beginning of year

153

Common Equity Tier 1 capital: regulatory adjustments (2)37,50934,8938+9

of which: goodwill (including those equivalent) of which: other intangible assets other than goodwill and mortgage servicing rights
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability)
Deferred gains or losses on derivatives under hedge accounting

24,494

22,6738

13,015

12,219

9

1,455

2,319

10

16,934

13,271

11

Shortfall of eligible reserves to expected losses

—

—

12

Capital increase due to securitization transactions

36

—

13

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

—

—

14

876

1,105

15

—

—

16

Reciprocal cross-holdings in common equity
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation (“Other Financial Institutions”),
net of eligible short positions, where the bank does not own more than 10%of the issued share capital (amount above the 10% threshold)Amount exceeding the 10% threshold on specified items of which: significant investments in the common stock of Other Financial Institutions, net of eligible short positionsof which: mortgage servicing rights of which: deferred tax assets arising from temporary differences (net of related tax liability)
Amount exceeding the 15% threshold on specified items

—

—

17

—

—

18

—

—

19+20+21

—

—

19

—

—

20

—

—

21

—

—

22

Data Section

Assets for retirement benefits
Investments in own shares (excluding those reported in the Equity section)

Corporate Data

Total intangible assets (excluding those relating to mortgage servicing rights)

154

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Development Bank of Japan Inc.
Integrated Report 2021

Capital Adequacy Ratio(Units: Millions of yen, %)Items

March 31, 2020

—

23

(C)

—

—

24
25

—

—

27

56,812

51,59028

3,351,796

3,627,957

29

—

—

—

—

—

—

—

30

—

Basel III
Template No.

47

—

—

49

19,35829,09850

19,35829,098

50a

—

—

50b

19,77529,53951

Investments in own Tier 2 instruments

—

—

52

Reciprocal cross-holdings in Tier 2 instruments and other TLAC liabilities
Non-significant investments in the Tier 2 capital and other TLAC liabilities of Other Financial Institutions, net of eligible short positions (amount above the
10% threshold)
Significant investments in the Tier 2 capital and other TLAC liabilities of Other Financial Institutions, net of eligible short positions(I)
Tier 2 capital: regulatory adjustments

—

—

53

—

—

54

Tier 2 capital: instruments and reserves

(H)

Tier 2 capital: regulatory adjustments (5)

31b

—

—

55

—

—

57

(J)

19,77529,53958(K)

3,373,441

3,659,354

59

19,418,634

21,787,451

60

17.26%

16.65%

61

Tier 2 capital (T2) ((H)-(I))
Total capital (TC = T1 + T2)

34–35

—

—

33+35

Risk weighted assets (6)

—

—

33

Risk weighted assets

—

—

35

Common Equity Tier 1 risk-weighted capital ratio (consolidated) ((C)/(L))

1,887

1,875

36

Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))

17.27%

16.66%

62

Total risk-weighted capital ratio (consolidated) ((K)/(L))

17.37%

16.79%

63

102,567

106,410

72

3,830

3,538

73

—

—

74

6,377

6,394

75

Total capital (TC = T1 + T2) ((G) + (J))

Capital ratio (consolidated) (7)

—

—

37

—

—

38

—

—

39

17

17

40

—

—

42

17

17

43

Additional Tier 1 capital (AT1)
(F)

1,870

1,858

44

(G)

3,353,665

3,629,815

45

Tier 1 capital (T1 = CET1 + AT1)

Regulatory adjustments (8)Non-significant Investments in the capital of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Significant investments in the common stock of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Mortgage servicing rights that are below the thresholds for deduction (before risk weighting)Deferred tax assets arising from temporary differences that are below the thresholds for deduction (before risk weighting)Reserves included in Tier 2 capital: instruments and reserves (9)General allowance for loan losses

19,35829,09876

Cap on inclusion of general allowance for loan losses
Eligible reserves for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap)
Cap for inclusion of reserves in Tier 2 under internal ratings-based approach

240,116

269,591

77

—

—

78

—

—

79

—

—

82

Corporate Data

1,875

Corporate Governance

1,887

Investments in own Additional Tier 1 instruments

Capital instruments subject to transitional arrangements (10)
—

—

—

—
46

—

—

—

—

416

441

48–49

—

—

47+49

Current cap on Additional Tier 1 instruments subject to transitional arrangements
Amount excluded from Additional Tier 1 due to cap (excess over cap after redemptions and maturities)
Current cap on Tier 2 instruments subject to transitional arrangements
Amount excluded from Tier 2 due to cap (excess over cap after redemptions and maturities)

—

—

83

—

—

84

—

—

85

Data Section

Tier 2 capital: instruments and reserves (4)Directly issued qualifying Tier 2 instruments plus related capital surplus of which:classified as equity under applicable accounting standards and its breakdown
Rights to acquire new shares in relation to Tier 2 instruments
Directly issued qualifying Tier 2 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Tier 2 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Tier 2)
Eligible Tier 2 capital instruments subject to transitional arrangements included in Tier 2: instruments and reserves—

March 31, 2021

Tier 2 capital (T2)

Reciprocal cross-holdings in Additional Tier 1 instruments
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions,where the bank does not own more than 10% of the issued common sharecapital of the entity (amount above the 10% threshold)
Significant investments in the Additional Tier 1 capital of Other Financial Institutions (net of eligible short positions)
Regulatory adjustments applied to Common Equity Tier 1 due to sufficient Additional Tier 2 to cover deductions
Additional Tier 1 capital: regulatory adjustments
(E)

Tier 1 capital (T1 = CET1 + AT1) ((C)+(F))

March 31, 2020of which: eligible reserves

32

Additional Tier 1 capital: regulatory adjustments

Additional Tier 1 capital ((D)-(E))

Items

of which: general allowance for loan losses

31a—(Units: Millions of yen, %)Strategy

Additional Tier 1 capital: instruments (3)Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as equity under applicable accounting standards
and the breakdown
Rights to acquire new shares in relation to Additional Tier 1 instruments
Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitional arrangements included in Additional Tier 1 capital: instrumentsof which: instruments issued by banks and their special purpose vehicles of which: instruments issued by subsidiaries (excluding banks’ special purpose vehicles)
Additional Tier 1 capital: instruments(D)

of which: instruments issued by banks and their special purpose vehicles of which: instruments issued by subsidiaries (excluding banks’ special
purpose vehicles)
Total of general allowance for loan losses and eligible reserves included in Tier 2

Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B))

Capital Adequacy Ratio

Basel III
Template No.

—

—



Value Creation Story of which: significant investments in the common stock of Other Financial Institutions, net of eligible short positionsof which: mortgage servicing rights of which: deferred tax assets arising from temporary differences (net of related tax liability)
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments
(B)

March 31, 2021

155

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Integrated Report 2021

Capital Adequacy Ratio



157

Capital Adequacy Ratio[2] Qualitative DisclosurePlease refer to page 62 to 65, Section Four: “Risk Management”.

4. Credit Risk(a) Overview of Risk Management Policies and Procedure	Please refer to page 62 to 63, “Credit Risk in Comprehensive Risk” in Section Four:“Risk Management”.
(b) Rating Agencies Eligible to Weight Risks
	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to type of
exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

5. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of theamount certain to be recovered based on a reasonable evaluation of the collateral.
In principle, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices and theCredit Analysis Department manage credit risk based on valuation results. In principle, the valuation of
all collateral property is reviewed once or twice each year to ensure DBJ is aware of the current statusof its collateral property.

(a) Overview of Risk Management Policies and Risk Characteristics
	Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the category of
specialized lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard corporate
credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialized lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
	  DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b)	Overview of status of implementation and operation of systems stipulated in Article 248,
Paragraph 1, Items 1–4, of the Capital Adequacy Ratio Notification
	DBJ has created the systems necessary for operating within its credit risk management framework.
Specifically, as one aspect of our credit risk management, our sales department endeavors toappropriately collect information related to comprehensive risk characteristics and performance,
and DBJ monitors conditions to determine any changes in the borrower’s creditworthiness. Related
information is also provided to the credit analysis department, which may revise borrower ratings or
make other adjustments on the basis of this related information as necessary.
(c)	Name of Special Purpose Entity and its securitization exposure status in case DBJ
securitizes third party’s assets through Special Purpose Entity and, of subsidiaries andaffiliated companies of the Consolidated Group, name of those which hold securitization
exposure implemented by the Consolidated Group and whose management are involved oradvised by the Consolidated GroupNot applicable.
(d)	Name of Special Purpose Entity providing credit enhancement other than an agreement,
and effect of the credit enhancement other than the agreement on Capital Adequacy bySpecial Purpose Entity
Not applicable.
(e) Method of Accounting for Securitized Transactions
	DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the “Accounting Standard for Financial Instruments.”(f) Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has named
eligible to perform such weighting. Eligible rating agencies are not selected according to type of
securitization exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

8. Market Risk

DBJ includes in its calculation method no market risk equivalent amount.

9. Operational Risk(a) Overview of Risk Management Policies and Procedures
	Please refer to page 64, “Operational Risk” in Comprehensive Risk in Section Four:“Risk Management”.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.

Data Section

3. Overview of Risk
Characteristics and Risk
Management Policies,
Procedures andStructure of theConsolidated Group

7. Securitization Exposure

Corporate Data

Please refer to page 62 to 65, “Comprehensive Risk Management” in Section Four: “RiskManagement”.

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine theadvisability of entering a transaction or to understand the risks of existing transactions.

Corporate Governance2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

6. Overview of Risk
Management Policies
and Procedures Related
to Risk Involving
Counterparties in
Derivative ProductTransactions andTransactions with Long
Settlement Periods

Strategy(1)	Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976) related tothe companies belonging to the group of companies included in the scope of calculation of theconsolidated capital adequacy ratio as provided in Article 3 of the Notification (hereinafter, the“Consolidated Group”), and the language, format and preparation method of their consolidated
financial statements (hereinafter, the “Scope of Accounting Consolidation”)
No differences.
(2)	Within the Consolidated Group, the number of consolidated subsidiaries and the names and main
businesses of principal consolidated subsidiaries
The number of consolidated subsidiaries as of March 31, 2021 is 39.
	Please refer to page 167, “Group Companies” in “Corporate Information” for major consolidated
subsidiaries.
(3)	Number of affiliated companies that conduct financial business to which Article 9 of the Notification
applies, the names of affiliated companies conducting such related financial business and theirprimary businesses
Not applicable.
(4)	Companies that belong to the Consolidated Group but are not included in the Scope of
Accounting Consolidation and companies that do not belong to the Consolidated Group but areincluded in the Scope of Accounting Consolidation, as well as the amount of total assets and net
assets on their balance sheets, and their primary businesses
Not applicable.
(5) Overview of limitations related to the transfer of funds or capital within the Consolidated GroupNot applicable.

Value Creation Story

1. Scope of Consolidation

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10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure to
Shares and Other
Equity Investments
and Capital Injections

Please refer to page 63 “Comprehensive Risk: Investment Risk” in “Risk Management.”

11. Interest Rate Risk(a) Overview of Risk Management Policies and Procedures
	Please refer to page 64, “Comprehensive Risk: Market Risk, Interest Rate	Risk” in “Risk Management.”(b) Overview of Methods for Calculating Interest Rate Risk
	The quantitative disclosure items, ΔEVE (changes in Economic Value of Equity) and ΔNII
(changes in Net Interest Income), are calculated as stated below.
	  First, as stipulated in the FSA Notification No. 7 in 2014, the changes in economic value ofequity and annual net interest income caused by interest rate shocks are measured for eachcurrency. Then, ΔEVE is calculated by adding up the amounts of such changes only if the changes
for the currency result in loss, and ΔNII is calculated by adding up the amounts of such changes.
	  In addition, DBJ measures interest rate risks using the following methods.
(1) VaR: Holding period of one year, Observation period of 10 years, Confidence interval of 99.9%,
using Delta method,(2) 100BPV: changes in economic value when interest rates are shifted by 1% (parallel)

159

Capital Adequacy Ratio[3] Quantitative Disclosure
Quantitative Disclosure (Consolidated)(Unit: Millions of yen)
Risk Weighted Assets

March 31, 2020

Capital Requirement

March 31, 2021

March 31, 2020

March 31, 2021

Credit Risk

10,446,939

12,220,757

835,754

977,660 Of which, exposure to which standardized approach applied

9,988,828

11,759,354

799,106

940,748

Other

461,403

36,64836,912

227,502

168,745

18,19813,498 Of which, exposure to which current exposure method applied

45,79744,178

3,663

3,534

181,396

124,286

14,511

9,942

309

281

24

22

Of which, CVA risk
 Of which, exposure for central counterparty clearing house
Other

—

—

1,354,133

1,711,562

108,330

136,924

Equity investments in funds (mandate-based approach)

2,200,381

2,091,820

176,030

167,345

Equity investments in funds (simple approach (subject to 250% risk weight))

—

—

—

—

Equity investments in funds (simple approach (subject to 400% risk weight))

—

—

—

—

1,356,243

1,348,517

108,499

107,881

—

—

—

—

Securitization exposure subject to calculation of credit risk assets

3,598,594

4,001,100

287,886

320,086 Of which: securitisation external ratings-based
approach (SEC-ERBA)

32,24831,984

2,579

2,558

 Of which: securitisation standardised approach(SEC-SA)

1,176,328

1,187,906

94,10695,032

Of which, exposure with a risk weight of 1,250%

2,390,018

2,781,210

191,201

222,496

Operational risk

209,315

220,111

16,745

17,608 Of which, exposure to which basic indicator approach applied

209,315

220,111

16,745

17,608

Exposure with related to specified items not included in adjustments

25,521

24,833

2,041

1,986

Equity investments in funds (fall-back approach; 1.250% risk weight)
Unsettled transactions

Amount of items included in risk weighted assets subject to transitional arrangements
Total

—

—

—

—

19,418,634

21,787,451

1,553,483

1,742,988

Corporate Data—

Corporate Governance—

Equity investments in funds (look-through approach)

Strategy

458,111

Counterparty Credit Risk

Value Creation Story

1. Overview of Risk Weighted Assets

Data Section

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Capital Adequacy Ratio

2. Items Related to Credit Risk

Amounts of credit risk exposure (after applying CCF and credit risk mitigation techniques)(Unit: Millions of yen)

Asset Class / Risk Weight

Domestic

19,796,204

Cash

Overseas

63,331
19,859,536(2) By industry and transaction counterparty

(Unit: Millions of yen)March 31, 2021

Manufacturing

4,224,290

Agriculture and forestry

205

Fisheries

20

0%

10%

20%

50%

100%

150%

250%

1,250%

Total

2

—

—

—

—

—

—

—

2

Japanese government and Bank of Japan

1,455,788

—

—

—

—

—

—

—

1,444,670

Foreign central governments and central banks

—

—

—

—

—

—

—

—

—

Bank for International Settlements and other

—

—

—

—

—

—

—

—

—

Municipal governments in Japan

13,434

—

—

—

—

—

—

—

13,434Foreign public bodies other than central banks

—

—

500

—

—

—

—

—

500

Multilateral Development Bank

—

—

—

—

—

—

—

—

—

187,781Construction

62,938Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

3,143,855

Japanese government agencies

—

—

—

—

—

—

—

—

—

304,964

Three local public corporations

—

—

—

—

—

—

—

—

—

Transportation and postal

3,258,878

Wholesale and retail

1,152,127

Finance and insurance

3,527,730

Financial institutions and Type I Financial Instruments Business
Operators

1,509,167

Real estate and leasing of goods

2,833,852

Electrical, gas, heat supply and water
Information and communications—

1,475,218

13,813

9,018

—

—

—

121,358

956,610

7,970,118

5,415,653——— 14,500,740

Small and medium-sized enterprises and individuals

—

—

—

—

—

—

—

—

356,620

Municipal government

13,434

Other

792,836Mortgage loans (loans secured by residential properties)

—

—

—

—

—

—

—

—

—

Total

19,859,536

Real estate investment business

—

—

—

—

871,027———

871,027

Delinquent for 3 months or more (excluding mortgage loans)

—

—

—

168

1,116

5,718

—

—

7,002

Mortgage loans that are delinquent for 3 months or more

—

—

—

—

—

—

—

—

—

Bills and checks in process of collection

—

—

—

—

—

—

—

—

—

Guaranteed by Credit Guarantee Association and
other

—

—

—

—

—

—

—

—

—

Guaranteed by Regional Economy Vitalization
Corporation of Japan and other

—

—

—

—

—

—

—

—

—

Investments (excluding significant investments)

—

—

—

—

963,308———

963,308

1,506,225

121,358

2,432,328

7,984,099

7,260,122

5,718

—

— 19,309,850(3) By period to maturity

(Unit: Millions of yen)March 31, 2021

Five years or less

10,133,119

More than five years, up to 10

5,433,370

More than 10 years, up to 15

1,364,740

More than 15 years

1,403,578

No maturity date

1,524,728

Total

19,859,536(b) Credit Risk Mitigation Techniques(Unit: Millions of yen)March 31, 2021
Exposure notsecured

Loans

Exposure
secured

Exposure secured
by collateral

Exposure secured
by guarantee

Exposure secured
by credit derivatives

972,570—

845,398—

Securities (debt securities)

927,886

12,384—

12,384—

Other on-balance sheet assets(debt instruments)

684,023

—

—

—

—

14,468,419

984,954—857,782

—

7,003

—

—

—

—

Total
Of which, default items

Total

Data Section

12,856,510—

Corporate Data

Services

Corporate Governance—
37,001

Corporations

Strategy

Mining, quarrying and gravel extraction

Value Creation Story

March 31, 2021

Note: “Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

		(Unit: Millions of yen)March 31, 2021

Total

		

Capital Adequacy Ratio(c) Standardized Approach - Credit risk exposure by asset class and risk weight(a) Fiscal year-end credit risk exposure, broken down as follows:		 (1) By region

161

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

3. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(a) Counterparty credit risk		 (1) Counterparty credit risk exposure by technique

Capital Adequacy Ratio(c) Composition of collateral for counterparty credit risk exposure
Collateral used in derivative transactions(Unit: Millions of yen)

Current exposure method

Amount ofrisk weighted assets

172,774

44,178(2) Counterparty credit risk exposure by industry and risk weight

(Unit: Millions of yen)March 31, 2021
Credit equivalent amount (after taking credit risk mitigations into account)
0%

10%

20%

50%

75%

100%

150%

Other

Total

Collateral used in repo transactions

Fair value of collateral received

Fair value of posted collateral

SegregatedUnsegregatedSegregatedUnsegregatedCash (domestic currency)

—

—

—

—

—

—

Cash (foreign currency)

—

—

—

—

—

—

Domestic sovereign bonds

—

—

—

—

—

—

Other sovereign bonds

—

—

—

—

—

—

Government-related agency bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Equity

—

—

—

—

—

—

Other collateral

—

—

—

—

—

—

Total

—

—

—

—

—

—

Fair value ofFair value ofcollateral received posted collateral

—

—

—

—

—

—

—

—

—

Foreign central governments and central banks

—

—

—

—

—

—

—

—

—

Bank for International Settlements and others

—

—

—

—

—

—

—

—

—

Municipal governments in Japan

16

—

—

—

—

—

—

—

16

Foreign public bodies other than central banks

—

—

—

—

—

—

—

—

—

Single-name credit default swaps——

Index credit default swaps——

Total return swaps——

Credit options——

Other credit derivatives

—

—

—

—

Positive fair value (Assets)——

Negative fair value (Liabilities)

—

—

—

—

—

—

—

—

—

—

—

Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

Japanese government agencies

—

—

—

—

—

—

—

—

—

Three local public corporations

—

—

—

—

—

—

—

—

—

Financial institutions and Type I Financial Instruments Business
Operators——

160,139

—

—

—

—

—

160,139

Corporations

—

—

297

459

—

11,803——

12,559Small and medium-sized enterprises and individuals

—

—

—

—

—

—

—

—

—

Other

—

—

—

—

—

57

—

—

57

Total

(Unit: Millions of yen)March 31, 2021
Protection purchased

Protection provided

Notional amount

Total notional amount
Fair value

16—

160,436459—

11,860——(Unit: Millions of yen)

Exposure after applying acredit risk mitigation
technique

Total portfolio subject to the standardized risk measurement approach

176,035

March 31, 2021
Exposure for central
clearing house(after applying a credit risk
mitigation technique)

172,771

March 31, 2021
Amount of risk weighted
assets (Amount calculatedby dividing CVA risk
equivalent by 8%)

124,286(Unit: Millions of yen)

Exposure for Qualified Central Counterparty Clearing House (Total)

Amount ofrisk weighted assets/

281 Trade exposure for Qualified Central Counterparty Clearing House(excluding initial margin)

14,097281   (i) Derivative product transactions (other than listed transactions)

14,097281   (ii) Derivative product transactions (listed transactions)——   (iii) Repurchase / reverse repurchase transactions——   (iv) Netting set in case where cross-product netting is approved——

Initial margin maintained in segregated accounts

/

—

—

Pre-contributed Clearing Fund——

Uncontributed Clearing Fund——

Data Section

32,000Initial margin not maintained in segregated accounts

Corporate Data(b) Capital requirement for CVA risk

(e) Exposure for central counterparty clearing house

Corporate Governance

Multilateral Development Bank(d) Exposure for central counterparty clearing houseStrategy

Japanese government and Bank of Japan

Value Creation Story

Exposure after applying acredit risk mitigation
technique

Asset Class / Risk Weight(Unit: Millions of yen)March 31, 2021
March 31, 2021

		

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

4. Securitization Exposure

Composition of Leverage Ratio Disclosure (Consolidated)

Capital Adequacy Ratio(1)	Securitization exposure by underlying asset type (limited to the securitization exposure subject to calculation of credit risk assets)
(Unit: Millions of yen)March 31, 2020

March 31, 2021

(Unit: Millions of yen)

Corresponding Line No.
on Basel III Disclosure Template

DBJ as theoriginator

DBJ as thesponsor

Traditional
securitization

Synthetic
securitization

Subtotal

Retail (Total)

—

—

—

—

—

Wholesale (Total)——

1,494,479—

1,494,479

Structured Finance——1,494,479—

1,494,479

Other

—

—

—

—

—

Resecuritization

—

—

—

—

—

(2) Securitization exposure subject to calculation of credit risk assets and required capital amounts

(Unit: Millions of yen)March 31, 2021

On-balance sheet exposures before deducting adjustments items

17,337,028

19,358,916

Total assets reported in the consolidated balance sheet

17,693,665

19,895,296

1a1 The amount of assets of subsidiaries that are not included in the scope of the leverage ratio on a consolidated basis (–)

—

—

1b

2

 The amount of assets of subsidiaries that are included in the scope of the leverage ratio on a consolidated basis (except those includedin the total assets reported in the consolidated balance sheet)

—

—

1c

7

356,636536,3801d3 The amount of assets that are deducted from the total assets reported in the consolidated balance sheet (except adjustment
items) (–)
The amount of adjustment items pertaining to Tier 1 capital (–)
Total on-balance sheet exposures

Securitization exposure by risk weight of 20% or less

69,436

Exposures related to derivatives transactions (2)Securitization exposure by risk weight of over 20% and 50% or less

1,907

Securitization exposure by risk weight of over 50% and 100% or less

1,192,157 Replacement cost associated with derivatives transactions, multiplied by 1.4

Securitization exposure by risk weight of over 100% and below 1,250%

8,481

Securitization exposure by risk weight of 1,250%

222,496

Required capital amounts (by calculation method)
2,558

Required capital amounts for securitization exposure to which SEC-SA is applied

95,032Required capital amounts for securitization exposure to which 1,250% risk weight is applied

222,496

5. Interest Rate Risk (Non-consolidated)(Unit: Hundred Millions of yen)March 31, 2020
ΔEVE

March 31, 2021
ΔNII

ΔEVE

ΔNII

1

82

3

94

Parallel down

458

(141)

1,157

(225)

Steepener

15

/

13

/

Flattener

492

/

811

/

Short rate up

185

/

125

/

Short rate down

26

/

20

/

Maximum

492

82

1,157

94

Tier 1 capital

March 31, 2020

March 31, 2021

33,34636,12538,3362

19,320,579

3

4

—

—

Add-on amount associated with derivatives transactions, etc.

147,336

135,643

PFE associated with derivatives transactions, multiplied by 1.4—— The amount of receivables arising from providing cash margin in relation to derivatives transactions, etc.

70,17478,693 The amount of receivables arising from providing cash margin in relation to with derivatives transactions

17,572

13,326 The amount of collateral paid for derivative transactions deducted from the consolidated balance sheet—— The amount of receivables arising from providing cash margin, provided where deducted from the consolidated balance sheet
pursuant to the operative accounting framework—— The amount of deductions of receivables (out of those arising from providing cash variation margin) (–)

—

—

7

 The amount of client-cleared trade exposures for which a bank or bank holding company acting as clearing member is not obliged tomake any indemnification (–)

—

—

8

1,500

—

9

Adjusted effective notional amount of written credit derivatives The amount of deductions from effective notional amount of written credit derivatives (–)

5

6

—

—

10

236,582

227,66211

The amount of assets related to repo transactions, etc.

—

—

12

The amount of deductions from the assets above (line 12) (–)

—

—

13

The exposures for counterparty credit risk for repo transactions, etc.

—

—

14

The exposures for agent repo transactions

—

—

15

—

—

16

1,797,519

1,695,244

17

Total exposures related to derivative transactions

(b)

7

4

Exposures related to repo transactions (3)Total exposures related to repo transactions, etc.

(c)Corporate Data

Parallel up

39,85917,297,169

Corporate GovernanceRequired capital amounts for securitization exposure to which SEC-ERBA is applied(a)1Strategy

Amount of exposure (by risk weight)

Table 1On-balance sheet exposures (1)Value Creation Story

Table 2

March 31, 2021
DBJ as an investor

165

5

Exposures related to off-balance sheet transactions (4)Total exposures related to off-balance sheet transactions(d)666,306

510,137

18

1,131,213

1,185,107

19

6

Data Section

Notional amount of off-balance sheet transactions The amount of adjustments for conversion in relation to off-balance sheet transactions (–)

166

Development Bank of Japan Inc.
Integrated Report 2021

Development Bank of Japan Inc.
Integrated Report 2021

Corporate Information

Capital Adequacy Ratio

Composition of Leverage Ratio Disclosure (Consolidated)March 31, 2021

(Unit: Millions of yen)

Corresponding Line No.
on Basel III Disclosure Template
Table 2

The amount of capital (Tier 1 capital)

(e)

3,353,665

3,629,815

20(f)

18,664,965

20,733,349

21

17.96%

17.50%

22

Leverage ratio on a consolidated basis ((e)/(f))

Amount of deposits for Japanese banks
Total amount of exposure when including deposits
for Japanese banks

(f’)

20,733,349/

1,326,532/

22,059,881/

16.45%Key Indicators (Consolidated)
September 30, 2020

¥1,000,424 million (All capital is funded by the government of Japan.)Number of
employees

1,781 (non-consolidated 1,230)(As of March 31, 2021)

Overseas locations

March 31, 2021

3,475,068

3,627,957

Tier 1 capital

3,353,665

3,476,759

3,629,815

Total capital

3,373,441

3,500,944

3,659,355

19,418,634

20,904,569

21,787,451 Common Equity Tier 1 risk-weighted capital ratio(consolidated)

17.26%

16.62%

16.65%

Tier 1 risk-weighted capital ratio (consolidated)

17.27%

16.63%

16.66%

Total risk-weighted capital ratio (consolidated)

17.37%

16.74%

16.79%

Risk weighted assets
Capital ratio

DBJ Singapore Limited

DBJ Singapore Limited is a Singapore-based subsidiary established in December 2008. It mainly provides support for investments and loans
as well as advisory services in the Asia-Pacific region, and also collects and disseminates information locally.

DBJ Europe Limited

DBJ Europe Limited is a London based subsidiary established in November 2009. It mainly provides support for investment and loan services
in Europe, and also collects and disseminates information locally.

DBJ Investment Consulting(Beijing) Co., Ltd.

DBJ Investment Consulting (Beijing) Co., Ltd. became a wholly owned subsidiary in June 2014 and is based in Beijing and Shanghai. It mainlyoffers support for investment and loan services in China, and also collects and disseminates information locally.

DBJ Americas Inc.

Launched in October 2018, DBJ Americas Inc. is a local subsidiary based in New York, U.S.A. It mainly provides support for investment andloan services in the Americas, and also collects and disseminates information locally.

Investments / Securities / Asset Management
DBJ Capital Co., Ltd.
DBJ Investment
Advisory Co., Ltd.

Leverage ratio (consolidated)
20,050,980

20,733,349

17.96%

17.33%

17.50%DBJ Capital Co., Ltd. is the venture capital arm of the DBJ Group. It mainly makes early-stage equity
investments in venture firms, and supports their growth through hands-on management.
DBJ Investment Advisory Co., Ltd. provides advice related to DBJ’s VG (Value for Growth) Investment Program.** Value-added equity investment that supports growth strategies

DBJ Securities Co., Ltd.

DBJ Securities Co., Ltd. is a securities subsidiary that assists the DBJ Group with investment and loan
services. It supports optimal capital procurement, centered on alternative product fields, provides asset
management opportunities, and flexibly fulfills diverse needs.

DBJ Asset Management
Co., Ltd.

DBJ Asset Management Co., Ltd. Is an asset management company focused on real estate, private
equity, and infrastructure investments. It provides quality investment opportunities to investors with thecomprehensive financial backing of the DBJ Group.

Corporate Data

18,664,965

Corporate Governance

3,351,796

Leverage ratio (consolidated)

CapitalThe DBJ Group provides diverse services that satisfy the needs of its customers.

Common Equity Tier 1 capital

Total exposures

Otemachi Financial City South Tower, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan
Tel: +81-3-3270-3211

Group Companies

CapitalRisk weighted assets

Head office(Unit: Millions of yen, %)March 31, 2020

October 1, 2008

Strategy

Consolidated leverage ratio when including deposits
for Japanese banks((e)/(f’))/

Established8

Consolidated leverage ratio when including deposits
for Japanese banks (6)(f)

Development Bank of Japan Inc.

Table 1

Leverage ratio on a consolidated basis (5)Total exposures ((a)+(b)+(c)+(d))

Name

Value Creation Story

March 31, 2020

Total amount of exposure 

167

Research / Consulting
Japan Economic ResearchInstitute Inc.

Japan Economic Research Institute Inc. is a comprehensive think tank that primarily conducts surveys
and consulting. It meets customer needs from a comprehensive viewpoint, leveraging synergies in its
three survey fields: public, solutions, and international.

Value Management Institute, Inc.

Value Management Institute, Inc. is a comprehensive think tank with strengths derived from its insight
into advanced technologies and analysis using proprietary economic models. It provides tailor-madesolutions to a broad range of government policy issues.

Real estate management / IT services / Shared Service

Consist, Inc.

DBJ Business Support Co.,Ltd.

DBJ Real Estate Co., Ltd. Handles administrative functions for the DBJ Group for office building
leasing, rental conference rooms, and business libraries.
Consist, Inc. provides one-stop consulting services for developing, maintaining, and operating IT, using
technology to help solve social issues.
DBJ Business Support Co., Ltd. is a shared services company of the DBJ Group. It supports DBJ Group companies business by consolidating
their administrative operations and also streamlining processes with its operational expertise.

Data Section

DBJ Real Estate Co., Ltd.